Canopy Growth Announces Changes To Global Operations To Drive Strategic Focus

 

The Company continues to expect to incur approximately $700-800MM pre-tax charge in Q4 Fiscal 2020.

CANADA: Canopy Growth Corporation (“Canopy Growth” or the “Company”) (TSX:WEED, NYSE:CGC) today announced a series of global operational changes designed to further optimize production, better align supply and demand, and improve efficiencies in its global operations. As part of its ongoing strategic review of the business, the Company announced today the following changes to its operations:

  • Africa: Canopy Growth has exited its operations in South Africa and Lesotho, transferring ownership of all of its African operations.
  • Canada: The Company will shut down its indoor facility in Yorkton, Saskatchewan, to further align production in Canada with market conditions.
  • Latin America: Canopy Growth will cease operations at its cultivation facility in Colombia, moving to an asset-light model that leverages local suppliers for raw materials and Procaps for formulation and encapsulation activities as outlined in the previously announced agreement between the two companies. These activities will support the position of Colombia as the Company’s LATAM production hub and the ongoing development of its cannabis industry.
  • United States: Canopy Growth will cease its farming operations in Springfield, New York, due to current market demand for hemp.

“When I arrived at Canopy Growth in January, I committed to conducting a strategic review in order to optimize our cost structure and reduce our cash burn,” said David Klein, CEO, Canopy Growth. “I believe the changes outlined today are an important step in our continuing efforts to focus the Company’s priorities, and will result in a healthier, stronger organization that will continue to be an innovator and leader in this industry. I want to sincerely thank the members of the teams affected by these decisions for their contributions in helping build Canopy Growth.”

The Company continues to expect, based upon information currently available to management, to record estimated pre-tax charges of approximately $700-800MM in the quarter ending March 31, 2020. This relates to this announcement and previous announcements, as well as any additional changes made during the organizational and strategic review. The organizational changes announced today include a headcount reduction of approximately 85 full-time positions.

All figures reported above with respect to the quarter ending March 31, 2020 are preliminary and are unaudited and subject to change and adjustment as the Company prepares its consolidated financial statements for the year ending March 31, 2020. Accordingly, investors are cautioned not to place undue reliance on the foregoing information. The Company does not intend to provide preliminary results in the future. The preliminary results provided in this news release constitute “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 and “forward-looking information” within the meaning of applicable Canadian securities legislation, are based on several assumptions and are subject to a number of risks and uncertainties. Actual results may differ materially. See “Notice Regarding Forward Looking Statements”.

Halo Labs Announces Strategic Partnership In Lesotho Africa

LESOTHO: Halo Labs announced it has signed a letter of intent to enter into a partnership with Bophelo Bioscience and Wellness Pty Ltd, a Lesotho based cannabis company. Halo will provide management services and expertise to build, design and operate cGAP cultivation and cGMP extraction facilities in exchange for a 20% equity position in Bophelo Bioscience, as well as a royalty on future extracted products. The Company has also entered into an off-take agreement whereby Halo will acquire all of Bophelo Bioscience’s production at prevailing market rates at time of production.

Screenshot 2018-12-14 07.57.35Bophelo Bioscience is the holder of one of a limited number of licenses in Lesotho to import, cultivate, manufacture and export cannabis products. Bophelo Bioscience also holds a 98-year lease over a 14 hectare land package with an option on an additional 194 hectares. Bophelo Bioscience expects to establish a 5 hectare greenhouse facility in the first quarter of 2019, which they will use to cultivate high quality, low cost cannabis products for extraction and export to international markets. Bophelo Bioscience’s site is located near the town of T’sakholo; which is approximately 70 km south of Maseru, Lesotho’s capital city. The site has good soil conditions, access to an abundant and naturally occurring pure water supply, as well as access to cheap electricity. To service the large scale grow operation will be a full cannabis extraction facility capable of producing over 4 million grams of concentrates and oils per year.

Lesotho was the first African country to legalize the cultivation and manufacturing of cannabis and has attracted international investments from major cannabis companies such as Canopy, Aphria and Supreme. Lesotho is a small, mountainous, high altitude country entirely landlocked by South Africa, with a temperate, low humidity climate boasting an abundance of sunshine, clean air and pristine spring water; all of which provide ideal conditions for greenhouse cultivation. First cannabis was exported from Lesotho in early 2018 and the Lesotho government has indicated that outdoor cultivation may be permitted from 2019, while the outdoor cultivation of hemp is already permitted. Lesotho has international trade agreements with over 30 countries including Canada, United Kingdom, Australian and the EU and has low tax structure of 10% with full deductibility of expenses.

Kiran Sidhu, CEO and Director for Halo comments: “We are very excited to partner with Bophelo Bioscience as they have the largest land package in Lesotho, which has an ideal environment to grow low cost cannabis which can be extracted into high quality oils and concentrates to be sold internationally. As the global cannabis market continues to mature and open up around the world, having a cGMP facility in Lesotho with abundant cGAP extractable cannabis will provide Halo with a competitive advantage to serve international markets, including Europe.”

South Africa Parliament Introduces Bill To Legalize Dagga

SOUTH AFRICA: The Medical Innovation Bill, a bill to legalize Cannabis in South Africa for medical, economic and industrial purposes, was introduced in parliament today.

The bill was submitted by Member of Parliament, Mario GR Oriani-Ambrosini from the Inkatha Freedom Party. The Medical Innovation Bill aims to make provision for innovations in medical treatments by legalizing the use of cannabis for medical, economic and industrial purposes.

Last year Oriani-Ambrosini was diagnosed with stage four, inoperable lung cancer, which forms the background to this bill. People with life-threatening diseases such as cancer are legally denied access to a medicine that they could be growing themselves. Under current legislation, medical practitioners are legally denied the right to prescribe proven to be effective and harmless medication to their patients, which includes cannabis, on the basis that it hasn’t been approved in terms of the legally required double blind clinical studies.

Liberia To Burn $4 Million Worth Of Marijuana, Smuggled In Via Presidential Motorcade

LIBERIA: Liberia’s Drug Enforcement Agency has arrested the head of the presidential motorcade for allegedly using an official vehicle to smuggle 654 pounds of marijuana into Liberia from neighboring Sierra Leone, officials said Monday.

The motorcade commander, Perry Dolo, was arrested over the weekend along with three other men after crossing from Sierra Leone via the town of Bo Waterside, said DEA Director Anthony Souh. The other three men were a Liberian official, a Guinean and a Sierra Leonean believed to be a member of the armed forces, Souh said. He did not provide further details about the men. [Read more…]