(Reuters) -Canopy Growth Corp said on Wednesday it would close some Canadian sites, affecting about 220 employees, the latest cost cuts as top boss David Klein steps up efforts to turn the world's most valued pot producer into a profitable one.
The plant closures will impact about 17% of Canopy's indoor cultivation and all of its outdoor growing capacity in Canada, and follow its exit from some international operations and closure of other Canadian greenhouses earlier this year.
Profits have been elusive for most cannabis firms in Canada, which legalized recreational cannabis in October 2018, weighed down by fewer-than-expected retail stores, cheaper rates on the black market and sluggish overseas growth.
Klein took the top job at Canopy in January, moving over from the role of finance chief at the company's largest shareholder Constellation Brands Inc (NYSE:STZ), months after the Corona beer maker expressed disappointment over heavy losses.
The company said on Wednesday it would close indoor production sites in four Canadian cities, including Edmonton, Alberta and Bowmanville, Ontario, and outdoor plants in Saskatchewan, leading to charges of about C$350 million ($273 million) to C$400 million in the third and fourth quarters of fiscal 2021.
"We are confident that our remaining sites will be able to produce the quantity and quality of cannabis required to meet current and future demand," Klein said in a statement.
The steps are part of a four-pronged approach he and other company executives had outlined last month on a call with analysts, aimed at improving margins and turning profitable by the end of fiscal 2022.
Canopy's U.S.-listed and Canadian shares both fell over 3% in afternoon trading.
($1 = 1.2802 Canadian dollars)