Boom and bust. The cannabis industry exploded in the last decade and nobody really knew when the growth was going to dip or at least stabilize. With new markets constantly opening up globally, the profit predictability is anything but predictable. The ebb and flow of legalization and recreational markets growing had created a lot of anticipated quick growth for the cannabis industry. Due to the fluctuation in all the sectors in the industry, we have been seeing many well-known cannabis companies begin downsizing from their overestimation of the industry.
Vertically integrated marijuana company MedMen, one of the most high-profile cannabis retailers in the U.S., slashed jobs to shore up its bottom line at the end of 2019, adding them to the list of cannabis companies that since mid-2019 have let workers go amid falling stock prices and a lack of outside funding.
In September 2019, embattled licensed producer CannTrust laid off 20 percent of its workforce in an effort to “restructure” the company’s workforce given recent regulatory troubles that forced it to halt all cannabis sales. The layoffs came as CannTrust faced a probe from the Ontario Securities Commission for misleading disclosures and possible insider trading in relation to the unlicensed growing. Health Canada is also investigating the licensed producer to determine penalties it will face for violating the department’s rules.
In February of 2020, Licensed producer Tilray Inc. announced late Tuesday afternoon that it will be laying off 10 percent of its staff, in an effort to cut costs. The Nanaimo, British Columbia based company had been struggling to make a dent in the domestic adult-use market and posted a larger-than-expected loss of US $35.7 million in its most recent earnings. Roughly 30 percent of the company’s product was sold to other licensed producers, something some analysts believe could become problematic due to the growing inventory piles throughout the industry.
More recently, Canopy Growth announced plans to close two cultivation facilities in British Columbia, resulting in the layoffs of 500 employees. The company also scrapped plans to open a greenhouse in Ontario. In the statement about the layoffs the company said “… the Canadian recreational market has developed slower than anticipated, creating working capital and profitability challenges across the industry.” The announcement follows these similar downsizing efforts by other major players in the cannabis industry. Some experts say companies need to do more to compete with the black market and or many won’t make it beyond this year.
In the largest cannabis market in the world by annual sales, the US, high tax rates have made it virtually impossible for legal-channel weed to compete with the unregulated market pricing in the early going. Efforts to compete with the black market brings to the table choices made like CannTrust, the company announced that it had grown cannabis illegally in five unlicensed rooms at its flagship Niagara facility for a period of six months (Oct. 2018 – March 2019).
Perhaps there is a regulatory issue to circumvent this lack of competition in some markets between the legal and illicit markets.
This blog was originally written by Anthony Dutcher but has been updated with new information as states continue to change their regulations nationwide. Looking to find your medical cannabis in a state that hasn’t yet legalized it? It may be tempting to drive across neighboring state lines with more cannabis-friendly laws. However, the number of states…
One of the biggest drivers of cannabis legalization has been the allure of tax revenue. While there are many reasons cannabis ought to be legalized, such as the medical benefits and the harm wrought upon marginalized communities by the War on Drugs, the practical benefits of tax revenue have helped to move the needle when…
Transporting cannabis is a tricky business, thanks in large part to the fact that cannabis is still illegal at the federal level. Even when you’re transporting cannabis from a state where it’s legal to another state where it’s legal—for example, driving across the border from California to Oregon—there’s a chance you might run into trouble….
Note: Veriheal does not support illegally consuming therapeutic substances such as cannabis, psilocybin, and other psychedelics. But it’s acknowledged that it transpires because of the current illicit status, which we strive to change by advocating for research, legal access, and responsible consumption. Psychedelics and music have long had a love affair but now, their relationship…
Note: Veriheal does not support or endorse any political candidate or their policies. We merely report on the facts as they are presented and their implications in regards to cannabis. The state of California has a very lucrative illicit cannabis market despite legalizing it long ago, but proposed legislation might help the state combat it….
Note: Veriheal does not support illegally consuming therapeutic substances like cannabis and psilocybin but acknowledges that it transpires because of the current…
Cannabis glass art is a functional art of spectacular proportions. There are many different variances of functional glass art created by a…
With cannabis still breaking free from the chains of stigma and propaganda used to ruin its reputation, many who are using cannabis…