(Reuters) – Canadian pot manufacturer Canopy Growth Corp stated Wednesday that C3 Cannabinoid Compound Co GmbH will be selling its German pharmaceuticals business to a local entity due to revenue losses caused by the pandemic.

Canopy shares were trading at C$8.85, down 3.4% in afternoon trade

According to the Ontario-based company, it will receive an upfront payment of C$115.5 Million ($89.51M) from German pharmaceutical group Dermapharm Holding SE after the deal is closed in January. A milestone-based payment could be up to C$61.4 Million.

It is less than C$342.9million Canopy paid to purchase C3, which the company had described as “transformational” for its business.

The recent COVID-19 lockdown in Germany, resulting from soaring viral cases, restricted the ability of people to see doctors and pharmacies. This has also hampered C3’s income in the previous quarter.

Canopy’s second quarter earnings report revealed that sales for the unit declined 13%, to C$11.9 Million.

Canopy explained that C3’s future operations will be streamlined and short-term capital investment reduced. Dermapharm would retain C3 employees.

David Klein, Canopy’s chief executive officer stated that Canopy is committed to the service of the market for medical cannabis. He also said that Canopy will leverage its existing high-quality supply to satisfy patient demand worldwide.

($1 = 1.2903 Canadian dollars)