(This story was updated with information from Auxly about the number of job losses.)
Toronto-based Auxly Cannabis is the latest Canadian cannabis company to take a critical look at its international footprint.
Auxly “has chosen not to proceed with planting for the 2020-2021 growing season nor with the development of extraction capabilities with a view to reducing headcount and keeping operating expenditures to a minimum,” it said in a press release updating shareholders on its Uruguayan subsidiary.
Auxly owns 80% of Montevideo, Uruguay-based Inverell S.A.
The job cuts will impact about a dozen people, the company said in a statement to Marijuana Business Daily.
Auxly cited “the slower than anticipated pace of cannabis-specific regulatory development in Latin America and, consequently, the slower development of viable near-term commercial channels in the region.”
Slow regulatory development has often been cited as an excuse by Canadian cannabis producers for their poor financial performance overseas.
Oftentimes, however, those firms have grown their international asset base too fast, without a clear picture of the near-term revenue opportunities in those markets.
Auxly expects to save about 7 million Canadian dollars ($5.1 million) annually from its Uruguay cutbacks, which it plans to redirect into the Canadian market “with a view to driving more immediate revenue,” according to the press release.
Auxly said Inverell completed its 2019-2020 harvest, resulting in about 43,000 kilograms (95,000 lbs) of packed hemp biomass.
“Auxly will maintain the optionality Inverell provides and continue to monitor the regulatory landscape in LATAM, while exploring extraction opportunities as well as sales channel opportunities for the current stored biomass into legally permissible jurisdictions,” the release stated.
“A few” jobs will be maintained for that purpose, the company said in its statement to MJBizDaily.
Auxly is powering ahead with its joint-venture Sunens Farms in Leamington, Ontario.
The Toronto company said the first phase of the joint-venture secured a standard cultivation license.
The licensed area amounts to 360,000 square feet of cultivation, processing and storage space.
Future phases could increase that to 1.1 million square feet.
That move comes as Canadian producers are cutting back on greenhouse capacity amid an industry wide glut in production.
Auxy also said its large-scale outdoor project in Hortonville, Nova Scotia secured a standard cultivation licence.
But the company will not commence cultivation this planting season “given timing for the optimal outdoor planting season and the operational challenges posed by COVID-19.”
In the same press release, Auxly said it is ceasing cultivation at its Kolab Project Inc. facility in Carleton Place, Ontario.
Kolab’s operations will be focused on preroll manufacturing and innovation.
Shares of Auxly Cannabis Group are traded on the TSX Venture Exchange as XLY.
Written by Matt Lamers.
View the original article at here.
Marijuana Business Daily