After a difficult year defined by corporations laying off hundreds of workers amid declining wholesale pricing and diminishing demand, the once-high-flying cannabis sector is anticipated to experience more layoffs and hardship in 2023 – and possibly beyond.
Numerous enterprises, including big multistate operators like Curaleaf Holdings and Trulieve Cannabis as well as smaller tech firms, have been affected by the layoffs. A number of prominent business leaders have also left the scene, highlighting how the repercussions has reached the C-suite level. “I don’t believe layoffs have reached a high. Sara Gullickson, CEO and creator of The Cannabis Business Advisors, told TOMORROW420 via email, “I think this will continue beyond 2024 for sure. People were getting government aid during the early stages of the COVID-19 pandemic, and many were working from home. Sales skyrocketed.
According to Gullickson, this climate encouraged more spending in the cannabis industry. Consumer spending is now declining as they get ready for a potential recession. Investors have noticed this, along with the absence of progress on SAFE Banking or any significant federal reform in the US Cannabis Sector. Gullickson continued, “Capital has fallen by the wayside and enterprises are having to course-correct.” The cannabis industry had many exaggerations and exorbitant valuations during the end of 2020 and the beginning of 2021.
There has been extensive damage. US Cannabis Sector Layoffs have been recorded during the previous few months by:
- Dutchie, an Oregon-based company that provides technology for cannabis retailers, cut 8% of its staff last June and then again in November, according to a company representative.
- WM Technology, a cannabis technology business, reduced its workforce by 175 employees, or 25%, in November. Later, the business that runs Weedmaps’ CEO Chris Beals, COO Juanjo Feijoo, and CTO Justin Dean all resigned from their positions.
- Curaleaf, a Massachusetts-based company, laid off 50 workers in August and 220 in November. The MSO closed down its facilities in Sacramento, California.
- Leafly Holdings, a Seattle-based cannabis e-commerce platform, cut 56 employees, or 21% of its employment, in October. Sam Martin, the COO, left in December.
- Trulieve, a Florida-based company, fired up to 36 employees in Pennsylvania in December and an unspecified number in Florida.
- Leaflink, a New York-based wholesale cannabis marketplace, eliminated 80 positions in December.
- Akerna, a Denver-based provider of compliance software, let go of 56 employees in May.
- Springbig, a Florida-based provider of cannabis marketing technology, cut 37 employees from its workforce, or 23%, through “layoffs and attrition.”
- With effect from February 28, 73 employees at Green Leaf Medical, a division of Columbia Care, a New York-based MSO, would lose their jobs in Saxton, Pennsylvania.
Technology and the “trickle-down” impact in cannabis
The cannabis business was hit particularly hard in 2022, as evidenced by layoffs at Akerna, Leaflink, Leafly Springbig, Weedmaps, and other software and technology companies. According to a news release, Akerna’s layoffs were a part of a bigger US Cannabis Sector’s cost-cutting strategy to hasten the company’s route to profitability. A 25% pay cut was also approved by the executive team.
Akerna revealed last week that it has sold 365 Cannabis back to some of the company’s original investors for about $2.8 million. That was a lot less money than Akerna had to spend to buy 365 Cannabis in 2021. Shares of Akerna (KERN), which are traded on the Nasdaq, rose as a result of the sale.
Even though the cannabis industry as a whole needs their specialized services, Gullickson asserts that non-plant-touching ancillary businesses are also being affected by producers’ and merchants’ concerns. She wrote, “We’re seeing a trickle-down effect.” Many auxiliary firms that depend on plant-touching operators for their customer base are choked off as capital and income on that side of the industry dwindle.
A peak in IT job losses?
According to California-based consultant Andrew DeAngelo, some cannabis marketing tech companies recently lowered their prices in order to remain competitive in a crowded market. Others may be right-sizing as a result of going public, expanding too quickly, or both.
But he said that having fewer employees has a price, and in the tech industry, layoffs may have peaked in 2022. Without really harming their current operations, he continued, “I’m not convinced they can cut any more employees than they have.” But in terms of layoffs going into this year, I’m a little more concerned about the people that work at the facility.
Cannabis workers are urged to join unions, according to Ademola Oyefeso, international vice president of the United Food and Commercial Workers International Union (UFCW), because doing so benefits both employees and employers.
He said in an email to TOMORROW420 that employers gain from the regularity and reliability that come with a collective bargaining agreement at the same time as US Cannabis Sector layoff workers gain from the job security that a union contract delivers, such as family-sustaining wages and inexpensive health care. In numerous states, the UFCW and Teamsters have been organizing cannabis employees, and they’ll keep doing so in 2023.
According to Oyefeso, “it is obvious from the layoffs experienced over the previous few months that the cannabis industry is not exempt from the effects of the rest of the economy.”
