Hershey has struck a deal to acquire a facility in Canada it sold in 2007.

The Reese’s maker is to buy The Hershey Drive site in Ontario from cannabis company Canopy Growth.

Under the terms of the agreement, the confectionery giant will pay around C$53m ($39.2m) for the facility, which is in Smiths Falls.

In February 2007, Hershey announced it would close the site amid a series of factory closures in North America.

Canopy Growth acquired the site in 2017. The company has been looking to cut costs and strengthen its balance sheet amid competition in Canada from illicit sources and the slowness of the federal legalisation of cannabis in the US.

A spokesperson for Hershey said it was “premature for us to speculate” on which brands could be made at the 700,000 sq ft facility and on when the site could get up and running.

In a statement, the spokesperson said: “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. The facility provides us with the flexibility to support growth across the CMG [candy, mint and gum] portfolio.”

According to Hershey’s 2022 annual report, the company has a distribution facility in Brantford in Ontario, which supports its business across North America. Hershey has its local office in Canada in Mississauga. It does not disclose the sales it generates in the country.

In 2022, Hershey generated net sales of $10.42bn, up 16.1% on a year earlier. On an organic basis and excluding the impact of exchange rates, the company’s net sales increased 12%.

Hershey’s reported net income also rose 12%, reaching $1.64bn.