Ontario, Canada--On August 17, 2023, confectionery titan Hershey sealed a deal to repurchase the Hershey Drive site in Smiths Falls, Ontario, from cannabis producer Canopy Growth.
According to a news report in Just Food, the facility, which had been under Hershey's ownership before being sold in 2007, is set to be reacquired for a sum of C$53m ($39.2m). This move comes after Canopy Growth's ongoing financial struggles and its decision to shut down the facility.
History of the Facility
A report by Morning Star states that before its closure in 2007, the Smiths Falls facility was a renowned Hershey chocolate factory and the first significant Hershey establishment outside the U.S.
It was a popular tourist attraction for nearly five decades, employing about 3,000 locals. However, Hershey's decision to cease operations in 2008 meant the loss of these jobs, leaving the facility vacant until 2017.
Canopy Growth's acquisition of the site in 2017 was initially celebrated. Transforming it into its corporate headquarters, the company established Canada's largest indoor cannabis production facility. But the once-bustling site saw its workforce reduced, and Canopy Growth eventually moved to a new headquarters across the street.
Canopy Growth's Financial Struggles
The Canadian cannabis market has faced numerous challenges, including oversupply, overspending, and regulatory missteps, making profitability elusive.
The Morning Star report stated that despite initial investments and the boom of the cannabis sector in Canada, major players like Canopy Growth have struggled financially. Canopy's share price has dipped under $1 since May 2023, marking an over 80% decline in 2023.
Currently, Canopy Growth is trying to streamline its operations and bolster its balance sheet, including cutting costs and divesting non-core assets. The sale of the Hershey Drive site is in line with these objectives.
Hershey's Forward Vision
Hershey has yet to announce specific plans for the newly reacquired 700,000 sq ft facility.
As per the Just Food report, a company spokesperson mentioned that speculation about which brands might be produced there and when the site would be operational would be "premature."
However, they emphasized the acquisition aligns with Hershey's strategic vision, stating, "This project is a strategic acquisition and is another step in our continuing investment in our supply chain network to enable our leading snacking powerhouse vision."
As per their 2022 report, Hershey maintained robust sales, reporting a net income rise of 12%, amounting to $1.64bn