Delta 9 Cannabis is laying off staff at its Winnipeg-based production facilities and closing its Osborne Village medical clinic as part of cost-cutting measures announced Monday.
The company said the layoffs will affect roughly 40 per cent of production staff — 40 employees — in Winnipeg.
“Nothing makes this easy … obviously these are the hard, hard decisions to make,” Delta 9’s CEO John Arbuthnot told 680 CJOB’s The NEWS.
“(It’s) a reflection of the challenges that the cannabis industry is seeing as a whole.
“We’re seeing a very difficult or challenged market and in cannabis across Canada and, you know, looking to do what we need to do, I think, from our side to demonstrate that our business and our industry can be sustainably profitable.”
Arbuthnot said the company’s Delta 9 Lifestyle Cannabis Clinic on River Avenue will close under the measures, although no retail locations will be shuttered.
He said the numbers of medical users have decreased across the country in the years since legalization.
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A press release from Delta 9 said while the company’s retail operations have achieved profitability and positive operating cash flows since legalization, its cultivation and wholesale business has struggled due to “continued price and margin compression in the Canadian cannabis market.”
Arbuthnot said oversupply has seen the wholesale price of cannabis fall from more than $7 a gram to closer to $2 to $3 a gram in today’s market.
“We’re seeing that hardest hit in our cultivation and wholesale business with the bulk prices of cannabis really just driving through the floor in the last 12 months,” he said.
The company said under the strategic plan its board of directors and executive have also agreed to reducing compensation.
“All of this is coming in an effort to drive our company to near-term profitability,” Arbuthnot said.
In its media release, Delta 9 called the layoffs temporary and said it is working “closely with employees to reduce the impact of this decision including continuing to cover costs for company benefits and other transitional services.”
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