By LeeWEpstein

November 21, 2019

In recent weeks, North American cannabis companies have announced numerous layoffs. More than 900 jobs have been affected.

The dismissals of each company are due to different reasons, however, indicating that the current environment for cannabis companies is complicated. Among the reasons cited were the crisis in adulterated vape products, lower than expected retail incomes in Canada and states such as California, but also legislative and regulatory barriers that make access to capital much more costly than in other sectors, not to mention the shortage of investors for private companies.

MedMen: 190 employees

The pre-legalization of cannabis in Canada has also declined. An indication of a rationalization of the valuation of cannabis companies: The Marijuana Index, a mix of cannabis-related company stocks in the United States and Canada, has lost more than 50% of its value since its peak in January 2018. This economic downturn also prevented the merger of large groups such as MedMen, which withdrew from a $680 million deal with PharmaCann. Also,MedMen laid off 190 employees in November and sold interests in several brands in which the company had invested to recover the cash.

Weedmaps: 100 employees

Weedmaps, a Californian IT and cannabis media giant, had to sell a quarter of its workforce in October. So,President and CEO Chris Beals said the layoffs were the result of the slow deployment of legal cannabis clinics in California and other states such as Massachusetts.

“In addition, financial markets for technology and cannabis tightened until 2019, limiting the ability to raise external capital in a predictable way to fuel growth during periods of rapid expansion,” said Chris Beals.

Weedmaps was also the subject of controversy for having identified illicit cannabis dispensary and delivery services on its site and application. Therefore,in September, the company published a plan to remove all unlicensed clinics from its database by requiring them to provide their state license numbers.

Pax Labs and Eaze: 100 employees

The San Francisco-based vaporizer manufacturer has separated 65 employees, following the crisis in the United States of America with adulterated vape products. The company had raised $420 million in April. Its CEO, Bharat Vasan, has been fired in September.

At Eaze, 36 employees left the company. The company also replaced its long-time CEO, Jim Patterson, with Rogelio Choy, former COO of the startup. Eaze faces several challenges, including a long legal battle with a Canadian company claiming that Eaze used front companies to conceal credit card payments for cannabis products. However,the start-up was forced to reduce its ambitions to deliver $1 billion worth of cannabis. It estimates that it will sell about $412 million worth of cannabis products on its platform in 2020.

Hexo: 200 employees

The Quebec cannabis producer had to lay off 200 people at the end of October. The company highlighted the slow deployment of legal cannabis in Canada, and lower than expected associated sales, delays in the approval of cannabis products and early signs of downward pressure on cannabis prices.

The company also announced the closure of several facilities. “The measures taken this week are aimed at restoring the organization to the revenues we expect to achieve in 2020,” said CEO Sebastian St-Louis in a statement.

CannTrust: 320 employees

Some companies have been even harder hit: CannTrust has lost 90% since its peak in March following the discovery of illegally cultivated areas in an investigation conducted by Health Canada, the regulatory body responsible for monitoring the cannabis industry in Canada. So,the company dismissed 140 people at the end of October, after having already dismissed 180 in August, to be able to bear the unexpected expenses related to their infringement. The company’s CEO was landed, and CannTrust had to destroy 60 million euros of cannabis.

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