Organigram Holdings Inc. is letting go of at least 220 workers - and warns that more bad news could be forthcoming. The Moncton-headquartered cannabis producer on Friday announced that the retrenchment will affect 25 percent of the company's headcount.
The group is warning of falling sales and writedowns as it reschedules its financial report, citing the ongoing global health crisis and the changing market dynamics. The New Brunswick-headquartered firm said it the job cuts are part of moves to slim down to fit a less bigger legit cannabis market.
According to Organigram chief executive officer Greg Engel, such a decision to lay off employees are "never easy to make, but we're committed to ensuring the company is appropriately sized to market conditions," Tara Deschamps of The Canadian Press wrote, as published in BNN Bloomberg.
A media release disclosed that Organigram will move forward with 433 workers at its plant in Moncton and 609 staff overall, including 84 who are classified as being on 'temporary layoff' who may be recalled if and when needed as the business requires.
Organigram said it is looking at options to minimize output for the foreseeable future. The producer will cultivate less than the target output capacity of cannabis at its Moncton facility but will continue to concentrate on bringing new cultivars to meet customer demand.
The cannabis producer also stated that it will work to right-size its production and evaluate its financial status and assets.
Both could cause the company to post a drop in net sales in its third quarter results and incur writedowns on inventory and its Moncton campus, the group disclosed.
Citing the negative effects of the coronavirus pandemic, Organigram announced a temporary cut of around 400 staff in April. Engel said at the time that their return would depend in part on the growth in the market. It pointed out that it plans to ease production at their facility in order to introduce new high-THC strains to meet its consumers' requirements.
The company's reductions come as other Canadian cannabis producers including Canopy Growth Corp and Aurora Cannabis Inc. have also initiated job cuts, restructurings, and writedowns in a bid to survive in the business.
The restructuring also comes after a series of measures aimed at shoring up the firm's balance sheet. Organigram completed its on-the market program late last month, which enabled the company to secure $49 million in extra funding.
This took place a month after it restructured its debt agreement with the Bank of Montreal, stretching deadlines on a $115 million loan and a $25 million credit deal.
