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 1,800 workers in the sector as a whole.
On Thursday, 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.
On Tuesday, 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. And 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 expensive than in other industries.
It has also become much more difficult 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 Marijuana Index, a composite of cannabis and cannabis-related stocks in the US and Canada, lost about half its value last year. CannTrust has seen its value crater since its high in March after the company was found to be illegally growing cannabis following an investigation by Health Canada, the regulatory agency responsible for overseeing legal cannabis.
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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