An industry analyst said the recent downsizing of Aurora Cannabis, which was preceded by Canopy laying off employees earlier in the year, shows companies are discovering how big they should be.
On Monday, the company announced it is closing five facilities across the country and laying off approximately 700 employees, about 30 per cent of its workforce.
Several months earlier, Canopy Growth, another massive Canadian cannabis firm, also laid off hundreds of employees.
Jay Rosenthal, president of the analytical firm Business of Cannabis, said the companies were adjusting to actual consumer demand, the COVID-19 pandemic forcing stores to close and reducing profits.
He told Global News the recreational cannabis market suffered from a staggered start, with not all products being available at once, and overly optimistic projections about how much Canadians would buy.
Now, he told Global News, companies are refocusing and no longer aiming to be all things to all consumers and are focusing on consumer demands.
“And even if you did that perfectly, Canada’s a relatively small country,” he said, speaking via Zoom from Toronto.
“So a massive footprint, a massive company, several products a relatively small market — although a market that loves cannabis — it still doesn’t equate to millions of square feet of cultivation capacity.”
Brent Zettl, founder of Zyus Life Sciences Inc., a company working to develop cannabis-based treatments to diseases, said Aurora is clearly “still in the process of trying to get a grip on turning this business into a profitable venture.”
Zettl, who started the country’s first licensed medical marijuana company CanniMed Therpeutics — which became Aurora’s Saskatoon facility when he sold it in 2018 — said the Edmonton-based corporation is likely divesting itself of its medical marijuana projects.
“You need to be focused on the market you’re in,” he said, on the phone in Saskatoon.
“I think the historians will see it’s very, very difficult to straddle two macro markets, a recreational market and a medical market.”
Neither Zettl nor Rosenthal said the available products will be affected.
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