Canopy Growth to sell Smiths Falls HQ back to Hershey

Cannabis company Canopy Growth Corp. announced Thursday it's shutting down its Smiths Falls, Ont., headquarters and selling the building back to its original owner, Hershey Canada Inc.

In a statement, Canopy Growth said it has entered into an agreement to sell the facility back to the chocolate maker for approximately $53 million.

"They were a great corporate citizen when they were here for 45 years," said Mayor Shawn Pankow at a press conference on Thursday. "We're confident that they will be again."

Selling the facility was part of a "focused effort to reduce costs and further enhance our balance sheet," said Canopy Growth CEO David Klein in a statement.

Hershey confirmed to CBC that it has signed an agreement to purchase the 700,000-square-foot facility.

The purchase is "another step in our continuing investment in our supply chain network" that "provides us with the flexibility to support growth" Todd Scott, Hershey's senior communications manager, wrote in an email Thursday.

Last month, Canopy Growth signed agreements with lenders to reduce its debt by $437 million over the next six months.

The Smiths Falls facility will be the seventh property the company has sold since April 1. The sold properties will total $155 million.

Other cost-saving measures announced by Canopy Growth earlier this year include laying off 800 workers and consolidating some of its cultivation operations.

While Pankow admitted that details on Hershey's new operation are sparse, he's confident that the chocolate maker will help fill the hole left by Canopy.

"We went through a real euphoric stage six or seven years ago when legalization was coming," he said. "We recognize that the industry itself has not advanced the way we anticipated."

Challenging times for legal pot industry

Canopy Growth purchased the shuttered Hershey chocolate factory in Smiths Falls in 2017. At the time, the facility at 1 Hershey Dr. was the largest indoor cannabis production facility in Canada.

The building has served as Canopy Growth's main production facility for flower and edibles, and also housed office space.

The company will now complete post-production flower activity at 99 Lorne St., which is across the street from 1 Hershey Dr., and already houses a regional distribution centre and bottling facility for cannabis beverages.

This restructuring comes as the Canadian legal cannabis sector faces stiff competition from the still-thriving illicit market.