The once red-hot cannabis industry is coming back down to earth.
In the past few months, cannabis companies — including venture-backed startups like Pax and giants like MedMen — have announced a series of job cuts, amounting to over 2,000 workers in the sector as a whole.
The North American Marijuana Index, which tracks a basket of cannabis and cannabis-related stocks, has lost over 30% this year, after slumping by half in 2019.
Acreage Holdings eliminated 40 positions in a company-wide cost-cutting effort, Business Insider reported last week.
Earlier in February, Canadian cannabis giant Aurora’s longtime CEO stepped down, and the company laid off 500 workers, including 25% of its corporate workforce, due to what the company says is slower than expected short-term growth in the cannabis industry. Plus, the cannabis retailer Caliva said it would cut more than 200 workers as it refocuses its business on selling and delivering cannabis directly to consumers. Canadian cannabis giant Tilray said it would cut 10% of its global workforce of approximately 1,443, in a bid to reduce costs.
The reasons for the job cuts across the industry include illnesses linked to vaping, lower-than-expected retail revenues in Canada and legal states like California, and legislative and regulatory hurdles that make accessing capital much more difficult than in other industries.
It has also become tough for companies to raise money, thanks to cratering share prices for public companies and a shortage of investors for private firms. Industry analysts and experts say the operating environment for cannabis companies has entered a uniquely challenging phase, as companies contend with the aftermath of a period of rapid growth.
The decline in valuations has also made big cannabis megamergers harder to close, with companies like the dispensary operator MedMen pulling out of deals altogether. MedMen laid off 190 employees in November and divested stakes in a number of brands it invested in as part of its push to become cash-flow positive.
Business Insider is tracking these job cuts here and will keep updating as we learn more:
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This article was published on October 25 and has been updated with new information.
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