Neptune Wellness (TSX: NEPT) is throwing in the towel on Canadian cannabis. The firm this morning announced that it will be focused on consumer packaged goods on a go-forward basis, and as a result will be divesting of its cannabis operations.

The decision to close the operation is a part of a strategic review of the firms business that took place last year. That review concluded that the cannabis business should be divested, while at the same time the firm realigns its efforts towards the firms CPG business.

The divesture will see the company cut its workforce by a total of 50%, although hard numbers on employee reductions were not provided. Payroll costs as a result are expected to be reduced by 30%, resulting in annual cost savings of $5.8 million. Additional savings are expected in the area of professional fees and overhead costs.

it should be noted that while its presented to the market as a divesture of the firms cannabis operations, the company is currently in the process of winding up what is left of the business. The process is said to begin, “pending a transaction,” meaning that the company will likely be selling off its brands, Mood Ring and PanHash, to obtain what remaining value they may have, while little else is likely salvageable from the operation given the current climate within the Canadian cannabis industry.

As for the firms growing facility, the firms Sherbrooke, Quebec facility is said to have been recently appraised at $21 million by a third party, however the ultimate sale price is likely to be lower.

The divesture is expected to enable the company to raise funds more easily as a result of no longer being associated with cannabis, and the lower amount of capital required to continue its operations.

“Together with management, the Board has worked carefully to explore all possible avenues and we are confident that the decision to exit the Canadian cannabis sector and realign focus on our consumer goods brands is the best next move for both the Company and its shareholders,” said company chair Julie Phillips.

Separately, the company this morning also announced that it will be consolidating its share structure. The company has reportedly received conditional approval by the TSX to conduct a share consolidation on the basis of one post consolidation share for every thirty five pre-consolidation shares held.

The consolidation is expected to result in the company having just 5.7 million common shares outstanding on a post-reverse split basis. A date for the consolidation was not provided.

Neptune Wellness last traded at $0.18 on the TSX.

Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.