CannTrust, Eaze, Hexo, Pax, Weedmaps: layoffs in the cannabis industry

Over the past few weeks, North American cannabis companies have announced numerous layoffs. Over 900 jobs have been affected.

Each company's redundancies are attributable to different reasons, indicating however that the current environment for cannabis companies is complicated. Among the reasons cited: the adulterated vaper products crisis, These include lower-than-expected retail revenues in Canada and states like 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 cannabis soufflé in Canada has also died down. An indication of a rationalization of cannabis company valuations: the Marijuana Index, a mix of cannabis-related company stocks in the US and Canada, has lost over 50% of its value since its high in January 2018. This cyclical downturn has also prevented the merger of big groups like MedMen, which pulled out of a $680 million deal with PharmaCann. MedMen laid off 190 employees in November and sold stakes in several brands in which the company had invested to recover cash.

Weedmaps: 100 employees

Weedmaps, the Californian cannabis IT and media giant, was forced to shed a quarter of its workforce in October. President and CEO Chris Beals said the layoffs resulted from the slow rollout of legal cannabis dispensaries in California and other states such as Massachusetts.

«In addition, technology and cannabis capital markets have tightened through 2019, limiting the ability to predictably mobilize external capital to fuel growth during periods of rapid expansion,» a explained Chris Beals.

Weedmaps has also been the subject of controversy for listing illicit cannabis dispensary and delivery services on its site and app. In September, the company has published a to remove all unlicensed dispensaries 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 shed 65 employees, in the wake of the adulterated vaping crisis in the US. The company had raised $420 million in April. Its CEO, Bharat Vasan, was laid off in September.

At Eaze, 36 employees have left the company. The company has also replaced its long-time CEO, Jim Patterson, with Rogelio Choy, the startup's former COO. Eaze faces several challenges, including a long-running legal battle with a Canadian company that claims Eaze used shell companies to conceal credit card payments for cannabis products. The start-up has been forced to scale back its ambitions to deliver $1 billion worth of cannabis. It estimates that it will sell around $412 million worth of cannabis products on its platform in 2020.

Hexo: 200 employees

The Quebec-based cannabis producer was forced to lay off 200 staff at the end of October. The company pointed to the slow roll-out of legal cannabis in Canada, and associated lower-than-expected sales, delays in the approval of cannabis-derived products and the first signs of downward pressure on cannabis prices.

The company also announced the closure of several facilities. «The measures taken this week are aimed at returning the organization to the revenues we expect to achieve in 2020,» said CEO Sebastian St-Louis in a press release.

CannTrust: 320 employees

Some companies have been hit even harder: CannTrust has lost 90% since its peak in March as a result of the discovery of illegally cultivated areas during an investigation by Health Canada, the regulatory body responsible for overseeing the cannabis industry in Canada. The company laid off 140 people at the end of October, after having already laid off 180 in August, in order to meet the unforeseen expenses associated with their infraction. The company's CEO was unloaded, and CannTrust had to destroy 60 million euros worth of cannabis.