Neptune Wellness Solutions (NEPT) is selling its cannabis production facility and the two
recreational cannabis brands that it owns citing a lack of profitability.
The cannabis sale will result in Neptune Wellness, which primarily sells hand sanitizer, laying off
half of its staff, the company said.
Neptune Wellness said a lack of profits and need to reduce costs are the reasons it is divesting
its cannabis unit.
Neptune is the latest company to withdraw from Canada’s recreational cannabis market
following similar moves by FSD Pharma (HUGE) and Harvest One Cannabis (HVT) amid
profitability challenges, steep competition, and an onerous domestic tax regime.
Neptune said it has hired investment bank Stifel GMP to help sell its Sherbrooke, Quebec
production facility, valued at $21 million, as well as its Mood Ring and PanHash cannabis
brands.
The company said it will redirect its efforts to its consumer products business, which focuses on
organic baby and toddler foods and hand sanitizer.
Neptune’s decision to get out of cannabis will lead to cost savings of $5.8 million a year, the
company said.
Neptune Wellness generated $23.2 million in cannabis sales over the past 12 months,
according to industry data tracker Hifyre, but was making less than $3 million in revenue a
month. The company was ranked 24th in Canada’s cannabis market by sales, according to
Hifyre data.
Neptune’s stock is down 97% from a peak of $7.86 reached in 2019. Today, NEPT shares are
trading at $0.17 each.
