Gatineau cannabis company Hexo lays off 200 employees
Delays, pricing pressures, regulatory uncertainty among reasons cited
Gatineau cannabis company Hexo Corp. is laying off 200 workers as it struggles to become profitable.
The company made the announcement Thursday, saying the layoffs were necessary for its long-term stability.
Hexo is one of Canada’s largest cannabis companies and a major employer in Masson-Angers, about 40 kilometres northeast of Ottawa.
As of last May, the company had 1,072 employees, according to its financial filings.
“This has been my hardest day at Hexo Corp.,” Sébastien St-Louis, chief executive and co-founder of the company, said in a statement. “While it is extremely difficult to say goodbye to trusted colleagues, I am confident that we have made sound decisions to ensure the longterm viability of HEXO Corp.”
The layoffs are across departments and locations and include executives, said the statement. Besides its main plant in Gatineau, Hexo has facilities in Belleville, Montreal, Niagara and Brantford.
Earlier this month, the company announced that revenue for the quarter was lower than expected and withdrew its financial outlook for 2020, which had predicted up to $400 million in net profit.
Hexo began life as Hydropothecary, a Health Canada-approved grower of medical marijuana. Now Hexo also sells recreational cannabis across the country. It’s a major supplier to Quebec’s government-run shops.
In its statement, Hexo cited a number of reasons for the layoffs: the delay in opening retail cannabis stores; regulatory uncertainty; pricing pressures; and “jurisdictional decisions to limit the availability and types of cannabis derivative products (that) have contributed to an increased level of unpredictability.”
In Ontario and Quebec stores have been slow to open since Canada legalized recreational marijuana a year ago. Customers can buy online, but many prefer to shop in person.
Only 24 cannabis stores are operating in Ontario and 22 in Quebec.
Many Canadians also continue to buy their weed on the black market, where prices are considerably lower. The latest Statistics Canada survey found that legal cannabis on average was $10.23 per gram, compared to $5.59 per gram on average in the illicit market.
Hexo fought back earlier this month with an announcement it plans to sell a “value brand” called Original Stash for $4.49 a gram.
The company also faces regulatory challenges in Quebec.
The province has moved to ban the sale of cannabis-infused sweets and confectionaries. In its financial filings, Hexo said it is developing candies and chocolates.
Health Canada just approved the sale of such edible products, along with cannabis drinks, concentrates like the liquids found in vape pens, and topicals like lotions. Those products are expected to be on sale by the end of the year. However, Quebec wants more restrictive regulations.
Hexo also has a joint partnership with Molson Coors Canada to develop cannabis-infused drinks under the brand Truss. Truss has announced one drink, a CBDinfused spring water, and five more to come under the brand. jmiller@postmedia.com twitter.com/JacquieAMiller