According to major headline news, as the year comes to an end, the marijuana industry in California is desolate. A Sacramento based company, Top Tax Brass, announced that from January 1, 2020, the rates on the rates on their products would be increased. Besides, businesses and consumers are still talking about the recent outbreak of vaping-related lung illnesses. What is making the situation in California even worse is the announcement about laying off of employees by the marijuana companies.
The news about the layoff has been on the rise, and it is an indication of more significant problems for the state-legal industry valued at $3.1 billion, which is still lagging behind the black market.
Speaking to the Press Democrat, the founder of CannaCraft, Dennis Hunter, said the company would be laying off 16% of its employees, which is approximately 49 workers. Hunter further noted that the company was doing well, and all of a sudden, they were not achieving the set target, and buyers were retracting. And this forced them to cut costs through job cuts.
According to a report from East Bay Express, Grupo Flor laid off 30 employees, which is about 35% of its workforce. They said that a deal that they were working on fell through, left the strained for funds.
On November 14, Flow Kana laid off 20% of its workers. Speaking to Sacramento Bee, the CEO of Flow Kana, Mikey Steinmetz said that laying off the employees was the hardest decision he had to make.
MedMen announced in November and said that 190 employees would be let go. The company said that it is going through a restructuring phase and that it is struggling financially. The company’s stock price has dropped to 84%.
In a press release, the CEO of MedMen said that although it is not easy letting go of some of the MedMen family, the company had to let them go for the interest and growth of the company as we head into the new year and years to come.
The layoffs discussed above are from the month of November alone. In October, several companies such as Eaze, Weedmaps, Pax Labs, and Hexo announced that they had to lay off some of their workforces.
Speaking the Sacramento Bee, Steinmetz said that it feels like an outbreak since all marijuana companies are going through the same issue.
During the first year of recreational sales, California went through aggressive growth; however, it is quite clear that the industry is going through a contraction phase. The increase in tax on marijuana products is also not helping the situation. Marijuana companies are blaming the drop in business on the imbalance between supply and demand, which means that consumers are not buying legal marijuana due to price increase. The consumers are buying weed from the black market, which is the reason why the illicit market continues to overtake the legal market in California.
At the beginning of October, the Bureau of Cannabis Control counted a total of 700 retail storefronts in California. However, the Bureau estimates that the marijuana market in California will continue to develop on a compound annual growth of 19% in the next few years.
At the beginning of October, the Bureau of Cannabis Control counted a total of 700 retail storefronts in California. However, the Bureau estimates that the marijuana market in California will continue to develop on a compound annual growth of 19% in the next few years. Company restructuring and market adjustments will continue to render workers vulnerable to job cuts.