Cannabis producer Canopy Growth (CGC) has announced that it is closing its Aldergrove and Delta, British Columbia, Canada, facilities, eliminating about 500 jobs, and reducing its greenhouse production space by about 3 million square feet.

With the announcement, the company said it is also ending its plans to add a third greenhouse in Niagara-on-the-Lake, Ontario, Canada. The move is part of Canopy Growth’s strategy to align supply and demand while also improving production efficiencies.

Canopy Growth began cannabis production in the two British Columbia facilities to be shuttered in February 2018 as the company scaled up for the Canadian market. Canopy Growth said legal adult-use of cannabis in the Canadian recreational market has developed slower than it expected.

The company also cited federal regulations that now allow outdoor cultivation were enacted over this timeframe. Canopy Growth said it has begun outdoor production, is a more cost-effective method to cannabis production, which will help it meet the demand for products that are dependent on cannabis extracts.

“When I joined Canopy Growth earlier this year, I committed to focusing the business and aligning its resources to meet the needs of our consumers,” David Klein, CEO at Canopy Growth, said in a statement.

“Today’s decision moves us in this direction, and although the decision to close these facilities was not taken lightly, we know this is a necessary step to ensure that we maintain our leadership position for the long-term.”

The company is expecting a pre-tax charge of about $700 to $800 million in the quarter that ends on March 31, based on the decision.

Shares of Canopy Growth stock were down 5.02% as of 1:56 p.m. EST on Thursday.

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