Two cannabis companies in California recently announced they would be cutting jobs. CannaCraft and Grupo Flor will both be initiating a wave of layoffs to help save costs in the face of financial challenges. This comes at the same time that industry experts say they are expecting more cannabis jobs to be cut across the market due to the combination of a lack of profits and poor managerial decisions.
CannaCraft operates out of Sonoma County and oversees several retail shops. The company distributes several well-known marijuana brands. According to CannaCraf, 40 employees were laid off, accounting for roughly 16% of its staff. The company attributes the layoffs to the “slower-than-anticipated growth” of the legal marijuana market in the state of California.
Grupo Flor is based in Monterey County. The cannabis company runs multiple cannabis storefronts and a cultivation operation. According to Grupo Flor CEO Gavin Kogan, 30 employees were let go, roughly 35% of the company’s staff. Kogan says that an investment deal that fell through left the company without enough cash to complete its ambitious plan to create a statewide distribution wing in California. Kogan also said Grupo Flor has paused plans for a proposed business venture in Colombia.
Although both companies are trying to get over major hurdles, each has said that the future is still bright and that with significant adjustments to their business models, they should be able to right the course.
Speaking about having to layoff so many employees, Kogan said, “It’s not the end of the world. It’s just a difficult time in the industry for everybody.” Kogan also said that if marijuana businesses had access to traditional banking services, more companies in the state would be able to avoid layoffs.
Although the U.S. House passed the SAFE Banking Act, traditional lenders haven’t been jumping up to give loans to cannabis business owners. However, more banks and other financial institutions are starting to express interest in the marijuana industry as it becomes more likely the Senate could pass a measure before the end of 2019.
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