First Akerna (NASDAQ: KERN) and now Eaze seem to be laying off cannabis tech workers. Akerna had announced it was looking at strategic alternatives for the company as the CFO left. Then last week, it announced was cutting its workforce and operating costs to save money.
CEO Jessica Billingsly said, “We can see a path to positive cash flows and profitability, and the board and the management team are committed to getting there on an accelerated timetable. While we continue to deal with liquidity concerns, our headcount reduction and additional cost savings measures represent a material annual cost savings. As part of this restructure, executive leadership team has also collectively agreed to a 25% reduction in salary to help support the company’s cost savings initiatives. As we noted on our last earnings call, bookings have been strong and our CARR is $21.1 million, and we are looking to continue to grow our top-line through a combination of enterprise wins as well as the opportunity we see in new market expansion from the SMB side of the business.”
The company said in a statement that it hopes to report $690,000 in total costs in its second quarter of 2022 to implement the reduction in force, including the following cost elements: $630,000 in severance and associated payroll taxes; $40,000 in legal costs; and $20,000 in employee insurance benefits. Of the total cost, $440,000 in salaries, payroll taxes, and benefits costs would have been reported in its second-quarter if the reduction in force had not been implemented.
Business Insider reported that Eaze has made similar layoffs. The company wouldn’t confirm the layoffs to BI, but some of the people affected apparently said as many as 25 were let go on Wednesday this week. They were supposedly members of Eaze’s engineering team and live operations team, which handles its delivery service. Eaze has been working its way away from being just a delivery company towards becoming more of a dispensary brand. In 2021, Eaze bought the MSO Green Dragon which provides service to customers and patients in California, Colorado, Michigan, and Florida. Eaze said in a statement that the combined company would operate 42 delivery and storefront retail locations.
In 2020, Eaze raised $35 million in order to pivot to become a plant-touching operation. Crunchbase says that Eaze has raised $202 million to date, while BI reports that Pitchbook says the company raised an additional $60 million in September.
Even if these employees have been released into the job market, with a healthy tech environment, they are sure to land on their feet soon. Still, it seems as if companies are facing some reckoning and harsh bites of reality if revenues can’t match expenses.
Coco Brown, who was a high-ranking executive during the dotcom boom and bust and is currently CEO/Founder of Athena Alliance, a networking organization of the country’s foremost female executives said, “I am worried about today’s workforce, particularly in tech and particularly those who didn’t experience the dotcom boom/bust,” says Coco. “Just a few months ago we were hosting salons to explore all the incentives and perks employers needed to consider to compete in this very tight labor market. But now, so quickly, we are hearing about layoffs, or talks of layoffs, and slowed-down hiring.”