Around 500 employees of a major cannabis production company will soon lose their jobs as the company announced plans to close the doors at two of its facilities in the Lower Mainland.

Canopy Growth, which is based in Smiths Falls, Ont, announced its decision Wednesday to close greenhouses in Aldergrove and Delta, B.C., as well as scrapping its plan for a third greenhouse in Niagara-on-the-Lake, Ont.

The company says it was a difficult decision but one that needed to be made to better align its supply of cannabis with demand across the country.

The facilities were opened in February of 2018 in anticipation of its need to scale up supply for B.C. and Canada's new recreational-use market.

"Nearly 17 months after the creation of the legal adult-use market, the Canadian recreational market has developed slower than anticipated, creating working capital and profitability challenges across the industry," David Klein, CEO of Canopy Growth, said in a statement.

"These facilities are no longer essential to [our] cultivation footprint."

Klein also said that outdoor production sites allow for more cost-effective growth of marijuana but the federal government only approved outdoor cultivation after the company had already invested in the greenhouses.

Marijuana plants inside Canopy's Aldergrove greenhouse. The plants would have been harvested and turned into dried cannabis flowers, gel capsules or oils for medical marijuana use. (Lien Yeung/CBC)

Canopy now operates an outdoor production site that's made cultivation more cost-effective. It believes that site will play an important role in meeting demand for products necessitating cannabis extracts.

The company expects a pre-tax charge of up to $800 million in its latest quarter, due in part to the closures.

Latest in industry cuts

The restructuring is the latest in a string of troubles for Canopy Growth and the industry.

The company announced in early January that the debut of its cannabis drinks — it has 13 planned — will be delayed because it requires more time to develop its beverage facility and "the scaling process is not complete."

In February, it recorded a $124-million loss in its third quarter of 2020.

Canopy's job cuts announcement comes nearly a month after Aurora Cannabis Inc. slashed 500 jobs, took roughly $800 million in goodwill writedowns and announced the departure of Terry Booth, the Edmonton-based company's CEO.

Aurora's news was preceded by Tilray Inc. saying it would lay off 10 per cent of its workforce in a bid to cut costs, Sundial Growers axing some of its workforce, and Zenabis Global Inc. laying off about 40 staff, mostly in head office roles in Vancouver.

The Canopy Growth layoffs announced Wednesday will only affect the two greenhouses in B.C.

B.C.'s Minister of Public Safety and Solicitor General, Mike Farnworth, said that while the layoffs are unfortunate, he is optimistic about the cannabis retail market as a whole.

"Sixteen months in, we are making significant progress in establishing a well-regulated legal retail and distribution system. We have the second highest number of legal cannabis retail stores in Canada with over 200 authorized retailers across B.C., in addition to the online store," he said in a statement.

Farnworth acknowledges that the illegal cannabis industry won't be shut down overnight, but B.C. has had the fastest retail sales growth of any province in Canada.

Statistics Canada data shows that for the month of November, B.C.'s sales increased by 47 per cent — or $6 million —compared to October, Farnworth said.

He says retail sales and revenues are expected to continue to increase with the roll-out of cannabis edibles, extracts and topicals.