Canadian cannabis producer Canopy Growth Corp. (WEED) is selling its BioSteel sports drink unit as it continues to restructure amid mounting losses.
News of the sale comes as the Smiths Falls, Ontario-based company obtained creditor protection from the Ontario Superior Court of Justice for BioSteel Sports Nutrition.
Canopy Growth said that it sought creditor protection, which typically occurs in a bankruptcy filing, because it said it no longer has access to funding for the business unit.
The cannabis producer has long said that BioSteel is a drag on its earnings, attributing as much as 60% of its financial losses to the sports drink maker.
Canopy Growth bought 72% of BioSteel in 2019 at a time when it was seeking to diversify its operations as cannabis sales slumped.
BioSteel was started in Toronto in 2009 and quickly became popular with consumers due to its sponsorship deals with the Toronto Raptors and Toronto Blue Jays sports teams.
However, the professional sponsorship deals were costly and ultimately unprofitable for BioSteel and Canopy Growth.
In court filings, Canopy Growth said that it has spent more than $350 million trying to keep BioSteel afloat. BioSteel has also had accounting problems and been forced to refile several financial statements in recent years.
The sale of BioSteel comes as Canopy Growth restructures its business through layoffs, facility closures, and cost cutting measures.
Earlier this summer, the company announced plans to sell its headquarters and main production facility back to original owner, chocolate maker Hershey (HSY), for $53 million.
Canopy Growth has reported multi-billion-dollar losses in recent years as its cannabis business falters amid stiff competition from the black market and a lack of movement on legalization of the recreational drug in the U.S.
The stock of Canopy Growth has declined 97% over the last five years and currently trades at $1.70 per share.