Canopy Growth closing two facilities, firing 500 people

The continued struggles with profitability among Canadian cannabis companies are in the headlines again this week after Canopy Growth announced the closure of two of its facilities.

In a press release, Canopy said it is shutting down two of its greenhouses in British Columbia, in Aldergrove and Delta, resulting in the laying-off of 500 employees as part of efforts “to align supply and demand while improving production efficiencies over time.”

Additionally, Canopy, which is based in Smiths Falls, Ontario, said it no longer plans to open a third greenhouse in Niagara-on-the-Lake.

“Nearly 17 months after the creation of the legal adult-use market, the Canadian recreational market has developed slower than anticipated, creating working capital and profitability challenges across the industry,” the company explained the decision. 

Last month, both Tilray and Aurora Cannabis announced similar cost-cutting measures, with the latter losing its CEO Terry Booth in the restructuring as well.

As the legalization of edibles in Canada failed to boost profits, at least for the time being, the coming months could prove pivotal for the survival of a number of marijuana companies. 

Shares of Canopy Growth were down over 3% to $22.93 in early trade on the Toronto Stock Exchange. 

Psychedelics go public

Meanwhile, Canopy’s former chief executive and co-founder Bruce Linton, whose ouster last summer led to more turmoil for pot stocks, has crossed over to the world of psychedelics. Linton, along with businessman Kevin O’Leary, is now investing in pharmaceutical start-up Mind Medicine Inc.

The company just debuted on the Canadian NEO exchange, making it the first psychedelics business to go public. According to its website, Mind Med “develops and deploys psychedelic inspired medicines to alleviate suffering and improve health.”

One of their projects includes exploring the therapeutic potential of microdosing LSD in the treatment of ADHD patients.  

“They are called psychedelics or psychoactives because they, in fact, have a neural effect. What they haven’t been through is a protocol to determine what indications could they most be effective at remedying, and what dosage and what delivery methods,” Linton told Yahoo Finance

Mind Med managed to raise $24 million ahead of its initial public offering.

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