Feb 27, 2023
Matt Maurer quoted by mg Magazine on Canopy Growth Corporation
Matt Maurer, Chair of our Cannabis Law and Franchise Law Groups, was quoted by mg Magazine on Canopy Growth Corporation's plans to lay off 35 percent of its workforce. Canopy will also consolidate its cultivation division, closing its headquarters in Smiths Falls, Ontario.
Canopy Growth Corporation, one of the world’s largest cannabis cultivators and manufacturers, announced plans to lay off 35 percent of its workforce—roughly 800 jobs—in an effort to rebound from its recent CAD $266.7 million (about U.S. $196 million) net loss last quarter, following a CAD $115.5 million loss in the same quarter in 2021.
Canopy also will consolidate its once-vast cultivation division, closing its signature 1 Hershey headquarters in Smiths Falls, Ontario. The company said the facility will be repurposed for other uses.
So, what can the industry learn from Canopy’s tribulations?
“You look at these [Canadian licensed producers], they were spending money for years, hand over fist, to expand facilities in different provinces, facilities in Africa, and facilities in Europe,” said Matt Maurer, chair of the Cannabis Law Group at Torkin Manes. “They always justified it as ‘well, we’re losing money now to gain market share, and it will more than pay off down the road.’ That didn’t work for most, if not all, of them who took that path.”
In Maurer’s opinion, many of the companies that are doing well today never had the ability or interest to expand on such a grand level. They focused on simply making the best cannabis products and having the best distribution they could for the market they serve, he said.
“The lesson might be, ‘You need to be cautious with how you expand and why you expand, because it could come back to bite you later on,’” he said.
He also opined that during Linton’s tenure at Canopy, innovation was a big part of the company’s mission. “They pushed the envelope with some products, and there were multiple times where they were the envy of other companies,” Maurer said.
He’s not sure how things will pan out for Canopy.
“To say you’re going to focus on products and source inputs from third parties, instead of growing yourself, you’re basically transforming, in a large way, what your company actually does. If your products now don’t sell, then you have nothing,” Maurer said. “I can understand why they’re doing it, but it also seems risky. Now you’ve got to climb to the top of the consumer loyalty mountain.”
To read the full article, please visit mg Magazine's website.
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