Canopy Growth, the Canadian cannabis company with the largest market capitalization at about $5.8 billion, is closing three million square feet of greenhouse space in British Columbia, laying off 500 workers, and abandoning plans for a new Ottawa growing center.
The cutbacks will result in a charge of as much as $800 million to the company’s first-quarter earnings this year, and Canopy Growth’s stock price fell 2 percent after the announcement.
Cannabis companies expanded exuberantly after Canada legalized recreational marijuana, but the market failed to grow as fast as the suppliers built infrastructure. Many growers and processors are reducing operations to ensure long-term survival.
TRENDPOST: High government taxes and bureaucratic regulations have pushed the prices in the legal markets far above what can be bought on the streets.
Thus, the demand for cannabis products has not changed, only the retailers have. Indeed, just as during the days of alcohol prohibition, there has never been a shortage of supply or for buyers to find sellers, despite laws making it illegal.
