Alberta-based cannabis producer Sundial confirmed Tuesday that it has laid off “less than 10 per cent” of its workforce.
In a statement to Global News, it said: “In the spirit of continuous optimization for efficiency and effectiveness, Sundial has made some organizational changes… It’s important we remain agile in responding to the realities of the evolving cannabis market.”
Sundial did not confirm how many people 10 per cent equated to.
Low product quality
A cannabis expert said supply is not the problem — it’s product quality.
Maurizio Terrigno, founder of the Canadian Cannabis Chamber, said the main question is: Are you able to produce a high-quality product at a low cost?
Cost overruns, crop failures and inefficiencies are hurting Sundial, he said, adding its products are “average at best.”
“When you overspend and you’re not making your requirements and you’re not meeting your targets, the first people to go — you cut back on your staff,” he said, adding that this happens in any industry.
“There’s a lack of quality people to grow a high-quality product in this industry and everything flows downhill after that… That’s what’s stifling this industry: no one could produce high-quality cannabis. They can, but most people are spending too much money to do so. Effectively, what we’re looking for is high quality, low-cost. Sundial has not been doing that.”
Sundial Cannabis has laid off “less than 10 per cent” of its workforce. File/Global News Money mismanagement and lack of variety
Terrigno said the industry is in a headwind right now and Sundial is just another victim.
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“Money to promote and activate new funding in this industry has effectively stopped. Institutional lending has ground to zero,” he said.
“That means there is no longer any cheap money for any new innovation, which has stifled not just Sundial but the industry as a whole. So cutbacks are a requirement and a necessity to stay afloat and to continue productivity.”
READ MORE: Alberta sees most money spent on cannabis since legalization: StatCan
Industry officials were overspending and mismanaging money with the encouragement of innovation, Terrigno said.
“People are reining everybody in… It’s too little, too late. I think Sundial is on the wrong side of efficiency and they’re not being proactive. They’re being reactive,” he said.
Marijuana plants are shown at a cultivation facility in Olds, Alta., Wednesday, Oct. 10, 2018. THE CANADIAN PRESS/Jeff McIntosh
Terrigno said there is no variety in the market and it’s oversaturated with poorer-quality products.
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“If you walk into your local cannabis retail store, you’re still only buying Pepsi and Coke. There is literally no variety in this market and the limited variety is scooped up too quickly,” he said.
Black market
The other problem? Cost-control measures to take away the black market. Right now, there is no enforcement so legal producers have to “compete with one hand tied behind our back,” Terrigno said.
“Here we are in the retail market producing or trying to produce a high-quality product where we’re heavily taxed, heavily legislated with a talent pool that is very limited,” he said.
“The black market has no repercussions, no enforcement, and yet it is allowed to flourish.”
READ MORE: Hundreds of cannabis stores in Alberta but users still turning to black market
Terrigno said producers need to consider the size and scale of their operations.
“A lot of these growers have taken up the opportunity and they believe in the growers by saying, ‘Well, if you’re able to grow in a 2,000-square-foot basement, you’re able to scale it into a 20,000-square-foot facility,’ and it fails every time,” he said.
“If you keep putting money towards something that keeps failing, it just adds to your cost.”
In a statement to Global News, it said: “In the spirit of continuous optimization for efficiency and effectiveness, Sundial has made some organizational changes… It’s important we remain agile in responding to the realities of the evolving cannabis market.”
Sundial did not confirm how many people 10 per cent equated to.
Low product quality
A cannabis expert said supply is not the problem — it’s product quality.
Maurizio Terrigno, founder of the Canadian Cannabis Chamber, said the main question is: Are you able to produce a high-quality product at a low cost?
Cost overruns, crop failures and inefficiencies are hurting Sundial, he said, adding its products are “average at best.”
“When you overspend and you’re not making your requirements and you’re not meeting your targets, the first people to go — you cut back on your staff,” he said, adding that this happens in any industry.
“There’s a lack of quality people to grow a high-quality product in this industry and everything flows downhill after that… That’s what’s stifling this industry: no one could produce high-quality cannabis. They can, but most people are spending too much money to do so. Effectively, what we’re looking for is high quality, low-cost. Sundial has not been doing that.”
Terrigno said the industry is in a headwind right now and Sundial is just another victim.
Story continues below advertisement
“Money to promote and activate new funding in this industry has effectively stopped. Institutional lending has ground to zero,” he said.
“That means there is no longer any cheap money for any new innovation, which has stifled not just Sundial but the industry as a whole. So cutbacks are a requirement and a necessity to stay afloat and to continue productivity.”
READ MORE: Alberta sees most money spent on cannabis since legalization: StatCan
Industry officials were overspending and mismanaging money with the encouragement of innovation, Terrigno said.
“People are reining everybody in… It’s too little, too late. I think Sundial is on the wrong side of efficiency and they’re not being proactive. They’re being reactive,” he said.
Terrigno said there is no variety in the market and it’s oversaturated with poorer-quality products.
Story continues below advertisement
“If you walk into your local cannabis retail store, you’re still only buying Pepsi and Coke. There is literally no variety in this market and the limited variety is scooped up too quickly,” he said.
Black market
The other problem? Cost-control measures to take away the black market. Right now, there is no enforcement so legal producers have to “compete with one hand tied behind our back,” Terrigno said.
“Here we are in the retail market producing or trying to produce a high-quality product where we’re heavily taxed, heavily legislated with a talent pool that is very limited,” he said.
“The black market has no repercussions, no enforcement, and yet it is allowed to flourish.”
READ MORE: Hundreds of cannabis stores in Alberta but users still turning to black market
Terrigno said producers need to consider the size and scale of their operations.
“A lot of these growers have taken up the opportunity and they believe in the growers by saying, ‘Well, if you’re able to grow in a 2,000-square-foot basement, you’re able to scale it into a 20,000-square-foot facility,’ and it fails every time,” he said.
“If you keep putting money towards something that keeps failing, it just adds to your cost.”
