In recent months, some of the top players in the Canadian cannabis industry were forced to layoff hundreds of employees. For the most part layoffs were due to lower than expected Q4 revenues and were necessary for these companies to maintain long term stability.
HEXO Leads the Pack
The HEXO plant in Gatineau, Quebec laid off 200 employees in October as well as withdrew its financial outlook for 2020 which predicted over $400 million in net profits. The company cited a handful of reasons for the layoffs including delays in retail store openings, regulatory uncertainty, pricing pressures, and “jurisdictional decisions to limit the availability and types of cannabis derivative products (that) have contributed to an increased level of unpredictability.”
HEXO layoffs occurred across departments and company locations and included many executives. Sébastien St-Louis, chief executive and co-founder of the company, stated, “This has been my hardest day at Hexo Corp. While it is extremely difficult to say goodbye to trusted colleagues, I am confident that we have made sound decisions to ensure the long-term viability of HEXO Corp.”
CannTrust Under Investigation
CannTrust was also forced to lay off employees to boost their bottom line, however some of their layoffs were also due to problems with the company’s product and how it was being produced.
Health Canada determined that CannTrust products did not meet federal requirements and auditors found cannabis that was being produced in unlicensed areas of the CannTrust plant in Pelham, Ontario.
All of CannTrust’s products are currently frozen from being sold on the recreational market.
Grey Market Influence
Considering the grey market is still thriving, it is no wonder top cannabis companies aren’t meeting their financial targets. Until recreational cannabis companies can match the lower prices of the grey market, layoffs will likely continue to happen.