Canopy Growth Corp. has laid off 500 workers and shut down two of its biggest greenhouses in British Columbia, in a move to “improve production efficiencies” as the legal cannabis industry wrestles with an oversupply of cannabis, supply chain hiccups and ever-changing consumer preferences.
“When I joined Canopy Growth earlier this year, I committed to focusing the business and aligning its resources to meet the needs of our consumers,” said Canopy Growth chief executive David Klein. “Today’s decision moves us in this direction, and although the decision to close these facilities was not taken lightly, we know this is a necessary step to ensure that we maintain our leadership position for the long-term.”
The company also said it would no longer go forward with plans to open another greenhouse in Niagara-on-the-Lake, Ont., as part of an overall effort to “align supply and demand.”
Under the guidance of former CEO Bruce Linton, Canopy had purchased the Niagara property for $9 million in September 2017. Six months later, the company spent $400 million to purchase the B.C. greenhouses in Delta and Aldergrove, hiring hundreds of workers — mostly new immigrants and temporary foreign workers.
The pot company had hoped for the “BC Tweed” facilities, as they were known, to generate the bulk of supply to its processing headquarters in Smiths Falls, Ont. But when the Financial Post visited Canopy’s Aldergrove facility a year ago, it appeared under-utilized. Sources told the Post at the time that the greenhouse was struggling to scale up and battling various growing issues.
A year later, Canopy appears to have the opposite problem — it sits on more than $600 million in inventory, and even acknowledged an oversupply problem in its most recent earnings call.
The Aldergrove facility was also the subject of numerous complaints from residents in the area made to the B.C. Farm Industry Review Board about the strong cannabis smell it emitted, and constant bright lights.
These facilities in Aldergrove and Delta are no longer essential to (our) cultivation footprint
Canopy Growth statement
“Following an organization strategic review of production capacity and forecasted demand, the company announced today that these facilities in Aldergrove and Delta are no longer essential to its cultivation footprint,” read a statement released Wednesday evening.
“It was absolutely necessary that Canopy Growth right-size its growing operations to better fit the size of the cannabis market in Canada,” said Chris Damas, an independent cannabis industry analyst and author of The BCMI Report.
“The company sold only 44 per cent of its harvested cannabis in the past quarter…. Production was bound to jump this spring and summer, yet we estimate only 500 tonnes will be required in 2020. Canopy was on track to grow more than this amount with the current facility slate,” he added.
A worker at Canopy Growth in Aldergrove, B.C.
Mark Yuen/Postmedia
Canopy added that it intends to rely more on outdoor production for “cost-effective cultivation” of cannabis extracts in particular, following the legalization of vape pens, edibles and topicals last October.
The company also announced it would take a $700 million to $800 million pre-tax charge for the quarter ending March 31, 2020 due to the layoffs and greenhouse closures as well as “additional changes related to its organizational and strategic review.”
“We believe the production from Canopy’s other facilities, including two sizeable greenhouses in southern Ontario and Quebec, as well as biomass purchases from other LPs should provide sufficient supply for the company,” wrote BMO cannabis analyst Tamy Chen in a note to clients.
Chen said the shutdowns and layoffs would “meaningfully reduce” Canopy’s quarterly cash burn.
Canopy is the latest in a string of cannabis companies to retrench by cutting staff and taking major writedowns related to their operations, as the cannabis industry’s growth sputters to a halt due to a combination of investor over-exuberance, weak product quality, high prices and stringent government regulation. Last month, Tilray Inc. and Aurora Cannabis Inc. each laid off 10 per cent of their respective workforces.
Aurora, too, temporarily shut down a flagship greenhouse in Medicine Hat and sold off another massive facility in Exeter, Ont. at a loss late last year.
TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.
Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.
Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).
SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.
The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.
WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.
SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.
SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.
SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.
The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.
Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.
“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.
“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”
Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.
On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.
If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.
These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.
If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.
However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.
He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.
“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.
Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.
The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.
Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.
Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.
Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.
Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.
Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”
In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.
“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.
This report by The Canadian Press was first published Nov. 12, 2024.
TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.
The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.
The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.
RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.
The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.
RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.
This report by The Canadian Press was first published Nov. 12, 2024.
