Costs are important to finally know how much the profitability of the company will be. Good business management always aims at reducing costs, since the main objective of any business is to obtain maximum profit, and the best way to achieve this is to have a large volume of sales. Companies that are profitable in the marijuana industry can benefit from cost-cutting strategies to create an even higher profit margin on their products or services.
This is a strategy that Canopy Growth has just announced as it begins to make plans toward profitability.
The world’s leading diversified cannabis and hemp device company recently announced that it will begin a series of initiatives and plans in an effort to reduce costs and drive a faster path to profitability. The actions the company is taking appear to be in line with Canopy Growth’s FY23 strategic review.
Among the plans announced, the company said it intends to implement a flexible manufacturing platform that includes contract manufacturing for certain product formats. It also seeks to reduce the cost of goods sold in the company’s Canadian cannabis business. In order to achieve this, it will seek to reduce cultivation costs per gram through increased cultivation-related efficiencies and facility improvements.
Also announced was the alignment of selling, general and administrative (SG&A) costs with near-term business expectations through the reduction of third-party professional fees and office costs. Indirect costs will be corrected and efficiencies generated throughout the supply chain and procurement. And finally, Canopy Growth says it wants to further streamline the organization to drive process-related efficiencies.
While the changes may be challenging, the company said they are sorely needed. As a result, dedicated team members are expected to be affected as the company begins to operate with a reduced number of employees. Even so, the management team has recognized all the effort put in during the stay and appreciates all the contributions made.