Despite a quieting of headline-making layoffs in the cannabis industry over the past year, the industry continues to face challenges ranging from a robust illicit market to the lack of any progress on federal legislation. And as a result, cannabis companies continue to quietly downsize their operations, as revealed by recent company filings with the Canadian Securities Exchange.
4Front (OTC: FFNTF) laid off 58 employees in June, according to the company’s Form 7 update from Friday.
“Across all subsidiaries, in June 2023, the Issuer hired seven employees and terminated 83 employees,” the company wrote. Of the 83 terminated employees, 58 were laid off.”
Trulieve (OTC: TCNNF) also appears to have lost approximately 99 employees, although this could be through attrition, according to its monthly report. The company “had new hires of 289 and terminations and resignations of 388.” The company stated it will be winding down its operation in Massachusetts. which will lead to further contraction in jobs.
“Unfortunately, it doesn’t look like the downsizing of the cannabis industry will stop this year,” wrote Alpharoot Managing Director Eric Scheider in a report about the insurance company’s outlook for employment in the industry this year. “The pandemic was an unexpected boon for the cannabis industry, and in the years since, growth has stagnated. Investors have pulled back funding and projected revenue targets have been missed by miles. To try to hit profitability, changes had to be made. The trickle-down effect was unstoppable once word of layoffs at the multi-state organizations got out.”
Scheider concluded, “It would be best if you had a lean operation and a lot of positivity to stay strong in the cannabis industry over the next few months.”
The cannabis industry had 417,493 full-time equivalent jobs as of February 2023, according to Vangst’s “2023 Jobs Report.” That’s down from 428,059 FTEs in 2022.
Cannabis isn’t alone in this pullback. The broader job market showed some signs of weakness lately as well.
“Last week, we saw some evidence of cooling in the labor market,” Argus Equity Research wrote. “The June employment report surprised on the downside with 209,000 nonfarm payroll jobs, down from a revised 306,000 in May.”
Despite the gloom, there are some sliver linings. Vangst noted that it believed the job market in cannabis would rebound in 2023 with the addition of new markets in Connecticut, Maryland, Missouri, New Jersey, New Mexico, and New York.
California, which boasts the most cannabis jobs of any state by far with more than 85,000 full-time gigs, could even add jobs, according to Vangst. The cannabis recruitment firm estimates that market could support 133,000 cannabis jobs.
However, companies also also pulling up stakes in the state. Wana Brands and Curaleaf decided that it wasn’t worth it to be in California, while Trulieve scaled back its operations there. That will make it very hard to increase job growth as big companies conclude it’s a losing proposition.