The Canadian weed company that is going to destroy $77 million worth of illegal cannabis plants and inventory is slashing the jobs of a quarter of its workforce. It is the second major cannabis corporation to announce hundreds of layoffs this week, a year after recreational weed was legalized.
CannTrust Holding announced today that it is temporarily cutting 140 positions as it works to comply with Health Canada regulations. The licensed producer is dealing with illicit cannabis scandal that forced out its CEO and raised questions about how the illegal cannabis industry operates.
The scandal involved illegal grow rooms hidden behind fake walls which produced at least five metric tons of pot, some which was exported outside Canada. High ranking CannTrust employees reported they knew about the illegal grow and didn’t stop it. Robert MarCovitch, interim CEO, CannTrust, told VICE via email that downsizing was a “difficult decision. Reducing the company’s current operating expenses supports our financial sustainability, and places us in the best position to fully resume production upon the reinstatement of our licenses. We look forward to rehiring at that time, and once again delivering high quality, innovative products to both our customer and patients.”
The CannTrust cuts will happen in phases until the end of the year. The layoffs will result in monthly savings of about $400,000 and cost as much as $800,000 in severance if employees aren’t called back within the next 9 months. CannTrusts licenses were suspended after the discovery of its illegal weed productions. These numbers are estimates, it all depends on if, or when Health Canada reinstated CannTrust licenses.
Quebec-based licensed producer Hexo announced this Adweek that it is laying off 200 people, roughly 20% of staff, including executives. HEXO’s CEO Sebastien St.-Louis described the move as something the company has to do to be profitable in the long-run.
He also said that the day of the announcement was his “hardest day” at HEXO and it was “extremely difficult to say goodbye to trusted colleagues.”
Many if the affected employees were originally part of the Newstrike Brands Company, which was backed by the tragedy hip. HEXO bought Newstrike in may in a $260 million deal. Cannabis stocks across the board is struggling, but there are some companies that are growing as cannabis edibles, drinkable and topicals market starts to roll out. On Tuesday, James E. Wagner Cultivation Corporation (JWC) held a job fair for the 400 positions its Looking for. An estimated 800 people showed up.