Why marijuana companies are laying off workers as the industry grows

The legal cannabis industry is booming in North America. Both Canada and many U.S. states where recreational marijuana is legal have had record-breaking sales year after year. As we did before reportedExperts predict that marijuana sales will hit a staggering $33 billion in 2022. Given these numbers, it’s hard to imagine cannabis companies reducing their size, and yet some are doing so.

In recent years, several large cannabis companies have laid off a significant percentage of their workforce. Little by little, although the cannabis industry has been resilient during the COVID-19 pandemic, more and more companies have announced that they would be reducing the fat. In some cases, entire locations were shut down.

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TThese recent layoffs are a surprising result in an industry that continues to grow. However, if you take a closer look at why these companies are shedding jobs, you can understand the new vision these companies need, as well as certain mistakes that companies in the industry are learning from.

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For some companies, the layoffs come after they haven’t yet seen a return on huge investments. “The layoffs came after the cannabis sector spent billions building cultivation facilities but ended up destroying cannabis it couldn’t sell. The supply glut has also led to properties being sold at a fraction of their construction costs market observation. With money on the table and a plentiful workforce, some large companies had to make difficult decisions.

Aurora is a company that has invested heavily in cannabis in return for investments in facilities and land. It’s had to make several layoffs over the past year as it tries to downsize its operations to stem the bleeding and eventually turn a profit. “Several cannabis companies, including Aurora, have overhauled their operations to better match supply with demand in hopes of becoming profitable over the next few years,” according to the Canadian Broadcasting Company (CBC). wrote. Aurora will struggle to streamline its operations, even announcing it will be closing three facilities as the big company looks to the future and tries to get out of the red.

Aurora isn’t the only company that appears to be reducing its workforce this year. As opportunities in the marijuana industry continue to grow, companies must contend with ever-increasing market competition to survive, which means constant involution and often lower prices than they wish to offer.

Canopy Growth, another major cannabis company, is laying off 250 employees to reduce commodity costs and streamline operations. Profits continue to be an issue for them. “These necessary changes are being implemented to ensure that the size and scope of our operations reflect current market realities and support the long-term sustainability of our business,” Canopy Growth CEO David Klein told a company press release.

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Even marijuana tech companies are having to scale back. The over-commitment is being felt by many organizations, including Dutchie, a tech company that has announced layoffs amid uncertain financial times ahead. “Dutchie is the latest tech company to lay off employees in response to the general ongoing economic uncertainty. Several cannabis software companies have cut staff over the past few weeks, including Eaze and Akerna GeekWire.

The common thread running through many of these layoffs seems to be a narrowing of focus, scope, and size to achieve desired profits. While these layoffs may set off some red flags for investors, it’s important to remember that this isn’t uncommon in the economy. Other industries have experienced these growing pains as they navigate uncharted waters. The important part going forward is learning from this fat loss era to ensure fewer affected jobs and higher profits in the years to come.