The Hershey building in Smiths Falls, Ontario, will return to the hands of the company that made it famous.
Cannabis company Canopy Growth announced Thursday that it had signed an agreement to sell the building to chocolate maker Hershey Canada for approximately $53 million.
“This project is a strategic acquisition and is another step in our continued investment in our network of supply chains to enable our vision as a leader in snacks,” said Todd Scott, spokesperson for the Hershey Company. , in an email.
“The facility gives us the flexibility to support the growth of our entire consumer goods portfolio. »
It’s premature to talk about potential hiring plans or what the company might produce at the 700,000-square-foot factory it sold in 2007, he added.
David Klein, managing director of Canopy, meanwhile said he was pleased with the transaction, which he described as a significant sale.
“This is the latest step in our focused efforts to reduce costs and improve our balance sheet,” he said in a statement.
The deal marks a key moment for Canopy, which has been restructuring for several years to cut expenses and streamline operations.
Marijuana companies, including Canopy, have been largely successful in cutting costs despite several pressures: consumer demand for cannabis is not what they anticipated, illicit sellers still have a stranglehold on a large part of the market and the United States is moving much more slowly towards legalization than it had imagined.
The iconic site of 1 Hershey Dr. — once Canopy’s headquarters and main flower and edibles production site — wasn’t in the spotlight until February, when the company announced it would be closing the building and consolidate its activities.
The company said some 800 employees — about 35% of its workforce — would be laid off as part of the move and the decision to stop sourcing flowers in Mirabel, Quebec, and consolidate its operations in Kincardine, Ontario and Kelowna, British Columbia.
When the Hershey sale closes, Canopy expects to have disposed of seven properties for a total gross amount of approximately $155 million since April 1.
The net proceeds from the sale of the Hershey Building will be used primarily to repay Canopy’s senior secured credit facility.
In the last quarter, Canopy posted a net loss of nearly $42 million, compared to a net loss of about $2.1 billion a year ago.
Net loss for the first quarter was about seven cents per share, compared to a loss of $5.24 per share a year ago.
However, the company behind the Tweed, Doja, Ace Valley and BioSteel brands has managed to cut costs by $47 million, bringing the cost reductions it has achieved since the start of the previous year to $172 million. .
When Canopy acquired 1 Hershey Dr., the marijuana market was growing rather than shrinking, with federal cannabis legalization just around the corner.
She bought the building for $6.6 million, including 923,980 shares, from a group of investors including former Canopy chief executive Bruce Linton and the company Guy Saumure.
As co-owner of the facility prior to the transaction, Bruce Linton received 70,800 of the 94,397 shares issued. These shares were subject to a blocking period of four months.
Once the agreement is reached with Hershey, Canopy will conduct its flower post-production activities across the street from 1 Hershey Dr. at 99 Lorne St., where it already has a regional distribution center, a bottling and beverage production capacities.