JOBS - Layoffs Mark Next Stage of Cannabis Industry Cutbacks

As of January 2022, cannabis supported 428,000 full-time jobs in America. That equates to more than 107,000 jobs added in 2021, according to the 2022 Jobs Report from Leafly.

While that marks the fifth year of industry job growth above 27%, 2022 might break that trend.

Amid several waves of layoffs, cannabis companies have been shifting gears and tightening budgets to boost bottom lines. Despite the brutal reality of job loss, most respondents tell Green Market Report that they understand layoffs come with startup markets, especially when a global market downturn is underway.

Layoffs amid restructuring

The layoff wave of 2022 is the latest in industry cutbacks over the past several years. In 2018, cannabis was in the middle of a bear market, with hirings outpacing company performance.

Then the COVID-19 pandemic upended the grim market prospects. While the world faced the global tragedy, the cannabis industry saw gains from the essential status granted across many states. In an untold number of cases, jobs were likely saved by the market’s pandemic performance.

Good fortunes began to turn in 2021 and into 2022, as the global market downturn impacted virtually every industry imaginable. With cannabis still a high-risk investment, scores of investors divested their holdings.

Currently, cannabis is feeling the crunch at every industry touchpoint.

“There are financial stressors at each level of the supply chain, likely leading to a hit to the P&L, which is most simply rectified by cutting costs such as payroll,” said Juliana Whitney, founder of consulting firm Cann Strategy .

Whitney said low sales impact a company’s ability to pay staff or justify the need for some staff members. At the same time, slumping sales lead retailers to seek the lowest prices possible from cultivators and producers, who typically suffer from excessive inventory during this period.

Cannabis companies cited various reasons for their workforce reductions, with improving bottom lines a driving force, including:

• Flowhub, which laid off 15% of its staff over the summer, citing slow sales in states like California and Colorado and the challenges of finding funding, according to a report in Insider. The company said that the “tough decision” came as it restructured around a new product direction.
• Dutchie, which laid off 8% of its workforce in June 2022. Confirming the news, CEO and co-founder Ross Lipson told Geekwire that “the dramatic market shift” led to restructuring to focus on growth.
• Canada’s Canopy Growth announced 250 job cuts in April. The company then announced plans to leave the Canadian retail market in September.

Other recent examples include Eaze , Weedmaps , Aurora Cannabis , Common Citizen , Calypso Enterprises , and Scotts Miracle-Gro .