Ottawa·Q&A

Canopy Growth won't cut jobs despite losses, interim CEO insists

Canopy Growth interim CEO Mark Zekulin discusses the lead-up to the company's $374.6 million quarterly loss — and what employees of the Smiths Falls, Ont. facility can expect.

'We simply don't have enough places to sell our product in Ontario'

Canopy Growth said its second-quarter results included a $32.7 million restructuring charge for returns, return provisions and pricing allowances related to changes to the company's oil and softgel products. (Sean Kilpatrick/Canadian Press)

Canopy Growth Corp. employees shouldn't expect job losses, interim CEO Mark Zekulin says, despite the cannabis company reporting a $374.6 million quarterly loss earlier this week.

The company, based in Smiths Falls, Ont., saw share prices plunge to a 2019 low Thursday.

Zekulin attributed the loss to weak sales of oil and softgel products and the Ontario government's lack of licensed retail stores.

The following Q&A between Zekulin and Ottawa Morning host Robyn Bresnahan has been edited for length.


Q: This doesn't seem like particularly good news for you. How did you get into this situation?

A: We took our return provision to address the fact that some of our oils and softgels weren't selling as we expected, and that basically had a very negative impact throughout our numbers. 

But if you park that, we're still looking at a market share in the recreational market of over 25 per cent across the country. Gross revenues were up to $118 million.

Canadian medical sales were up, international sales were up, our retail sales were up and overall cannabis shipments were up. 

So there is some good in there, but certainly clouded by the fact that we had to take these write-offs and provisions and certainly clouded by the fact that we simply don't have enough places to sell our product in Ontario. 

Q: If I'm an employee — and there are more than a thousand of them — and I see that the company lost $374 million in its second quarter, I'm wondering whether I'm still going to have a job. Are there going to be job losses?

A: There are not going to be job losses.

First, we do have to divide out the accounting number [of the losses] versus the sort of cash number, because our losses reflect the value of change in option holdings or the value of change of our number of plants in the ground. 

And while we're still losing money, in the grand scheme of what we have in the bank, in the grand scheme of what the future looks like, we actually remain quite bullish on the future. 

Zekulin said Ontario made "tough choices" on the way the province rolled out retail stores. THE CANADIAN PRESS/ Tijana Martin (Tijana Martin/The Canadian Press)

Q: You've blamed the Ontario government for not licensing retail stores quickly enough. What were you expecting?

A: Blame is maybe a strong word. We take our share of responsibility for the fact that in the early days, there was inconsistency in supply, and that's in some ways to be expected.

The result is governments made tough choices about the retail store rollout.

There are clearly not enough stores in Ontario. There is enough supply now to support more. And we need the government to move quickly. 

Q: How many more stores do you need?

A: In Ontario, there is [currently] one store for every 600,000 people. In Colorado, for example, it's one store for every 10,000 people.

So you could literally see hundreds and hundreds — and probably upwards of a thousand stores — in Ontario to properly support the market. 

Canopy Growth's share price tanked after news of huge losses. 5:26

With files from CBC Radio's Ottawa Morning

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