Canopy Growth sells former Smiths Falls, Ont. chocolate factory back to Hershey Canada

Hershey Canada is returning to Smiths Falls, Ont., buying back its former chocolate factory in the eastern Ontario community

Canopy Growth Corp. announced Thursday that it has signed an agreement to sell its Hershey Drive facility to chocolate maker Hershey Canada for $53 million.

"How sweet is it to have Hershey return," Mayor Shawn Pankow says.

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Canopy Growth's decision to sell the main site for flower and edibles production at 1 Hershey Drive comes months after it announced plans to close the building and lay off 800 workers across the company. Approximately 350 of the 800 layoffs affected the Smiths Falls area.

A spokesperson for The Hershey Company confirms to CTV News Ottawa that it signed an agreement to purchase the 700,000 sq. ft. facility in Smiths Falls, but said it is premature to discuss potential hiring or production plans for the future.

"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," Todd Scott, Hershey's senior communications manager, said in an email.

"The facility provides us with the flexibility to support growth across the CMG portfolio."

Hershey Canada arrived in Smiths Falls in 1961. The company announced in 2007 it would phase out production of its products at the Smiths Falls plant, eliminating hundreds of jobs.

Pankow says he spoke with officials from Hershey Canada on Wednesday to discuss the planned purchase of the building.

"Hershey, they told us, they recognize an opportunity, they have a growth plan and they see that facility in Smiths Falls as an opportunity to fill that growth plan," Pankow told Newstalk 580 CFRA's Ottawa at Work with Patricia Boal.

Smiths Falls, Ont. Mayor Shawn Pankow (centre) and city officials pose for a picture with Hershey chocolate products after Hershey Canada purchased 1 Hershey Drive from Canopy Growth. (Dylan Dyson/CTV News Ottawa)

Pankow says the 1 Hershey Dr. building is now state-of-the-art after Canopy Growth spent hundreds of millions of dollars to upgrade the facility.

"Hershey's, I think, simply recognized Smiths Falls is a big part of their history, they're a big part of our history and the facility was available for the right price and they know our workforce will be here to support the operations."

Hershey Canada's headquarters are located in Mississauga, Ont. The company has plants in Saint-Hyacinthe and Granby, Que.

Canopy Growth will continue to operate its post-harvest manufacturing facility on Lorne Street in Smiths Falls.

"We are pleased to have reached an agreement with Hershey on this important sale. This is the latest milestone in our focused effort to reduce costs and further enhance our balance sheet," David Klein, Chief Executive Officer of Canopy Growth, said in a statement.

"Each of the steps we have taken as part of our transformation to a simplified, asset-light operating model supports our ability to deliver in-demand products from brands our customers love, with greater agility and less execution risk."

At its peak, Canopy Growth employed 1,500 people in Smiths Falls. The mayor says there are approximately 400 to 500 employees still in the town.

Since April 1, Canopy Growth has sold seven of its properties. The company says net proceeds from the sale of the Smiths Falls facility will be used to pay down the company's senior secured credit facility.

In 2013, Tweed Inc. set up its corporate headquarters in the abandoned Hershey's chocolate factory in Smiths Falls. In 2015, Tweed was renamed Canopy Growth after a merger with Bedrocan Canada.

Canopy Growth purchased the full factory at 1 Hershey Drive in 2017 for $6.6 million. 

With files from The Canadian Press