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Wednesday, Sep 28, 2022
Mugglehead Magazine
Alternative investment news based in Vancouver, B.C.

COVID-19

Organigram lays off 220 workers, warns of declining weed sales

Moncton-based company will also cut production and expects writedowns due to Covid-19

Organigram lays off 220 workers, warns of declining weed sales
Organigram lays off 220 workers, warns of declining weed sales

Organigram Holdings Inc. (TSX: OGI) is laying off 220 employees while warning of declining cannabis sales and writedowns.

On Friday, the New Brunswick-based company said with 25 per cent of its staff removed, it will move forward with a leaner workforce and production capacity that’s better aligned with current market conditions.

“These decisions are never easy to make, but we are committed to ensuring the company is appropriately sized relative to market conditions,” Organigram chief executive Greg Engel said in a statement.

The company said the cuts will leave it with 609 employees including 84 employees who remain temporarily laid off, but could return if the business requires.

Organigram had temporarily laid off 400 workers in early April due to the Covid-19 pandemic.

Read more: Organigram lays off 400 workers due to Covid-19

The company said it will cut back production at its Moncton facility for the foreseeable future due to Covid-19 and changing market dynamics.

“As the company right-sizes its production to market demand and reviews its asset carrying values, it expects to report negative adjustments to inventories and an asset impairment on its Moncton facility,” Organigram said.

“The company expects to report a decline in net revenue for fiscal Q3 2020 compared to fiscal Q2 2020 impacted by insignificant wholesale revenue being recorded in the quarter.”

Organigram lays off 220 workers, warns of declining weed sales

Organigram’s production facility in Moncton, New Brunswick. Press photo

Organigram expects to file its third-quarter earnings report July 21, after receiving permission to delay the filing by Canadian securities regulators by almost one week.

The company is the latest Canadian cannabis producer to make major cuts to its workforce and production levels.

Last month, Aurora Cannabis Inc. (TSX: ACB) said it laid off 700 staff and will close five facilities across the country by the end of 2020.

Read more: Aurora Cannabis to close 5 facilities, lay off 700 staff in search for profits

Canopy Growth Corp. (TSX: WEED) terminated operations at two B.C. greenhouses in March, which accounted for 3 million square feet of licensed growing space and 500 jobs.

Tilray Inc. (NASDAQ: TLRY) shutdown its High Parks Gardens facility in Leamington, Ontario in May cutting 120 workers in the process.

According to Statistics Canada, only 29 per cent of consumers buy all their cannabis from legal sources.

The federal agency’s data also shows legal sales are on pace to reach $2 billion this year, about one third of the estimated $6 billion Canadians spend on weed annually.

Top image via Organigram

 

jared@mugglehead.com

@JaredGnam

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