Five years after opening a huge cannabis cultivation facility in Olds, Alberta, Canadian cannabis producer SNDL SNDL is shutting it down, ostensibly “to enhance the competitiveness” of its marijuana operations segment.
The company has reported losses surpassing CA$1.1 billion ($800 million) up to 2022 and estimates an annual saving of about CA$10 million with this closure. SNDL had invested a minimum of CA$102.5 million in this 448,000-square-foot establishment from 2019 to 2021.
Big Plans Gone Awry
In its 2018 announcement, Sundial Growers, as it was known then, projected employing 500 people and producing over 100,000 kilograms of cannabis annually with its 140 advanced cultivation rooms.
The exact number of employees affected by the shutdown remains undisclosed, noted MJBizDaily, which first reported this story.
“In the past year, we’ve transformed our facility footprint with a clear goal of achieving profitability in our cannabis operations by 2024,” SNDL president Tyler Robson said in a statement. “As a result, we have taken the difficult but necessary steps to simplify operations throughout our business, which includes the closure of our Olds, Alberta facility.”
Robson said the company expects to capture increased margins from “more sustainable” fixed operating costs.
Potential impairment charges due to the closure are expected to be noted in 2023’s fourth quarter. SNDL aims to merge all cultivation at its New Brunswick facility and centralize other operations in British Columbia.
Canadian Market Struggling
The cannabis sector in Canada has seen numerous facilities shut down, grappling with a substantial supply-demand disparity. Over recent years, a 32% reduction has been observed in the nation’s licensed cannabis cultivation area. While 2.2 million square meters were licensed for cultivation in 2020, this figure dwindled to 1.5 million by March 2023.
Stock Movement
SNDL’s stock was trading down 2.76% at $1.41 per share at the close on Monday.
Read more at MJBizDaily
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