Alberta-based cannabis producer Sundial announced today that it will be laying off about 85 people as part of a financial “rightsizing”.
The company, located in Olds, Alberta issued a press release on Monday, February 13, indicating that the move was part of a plan to cut costs by nearly $9 million in labour and operational costs.
The announcement is another in a long line of similar announcements from other large, publicly traded companies. Canopy Growth announced last week they were laying off 850 employees and closing several facilities.
In a press release, Sundial CEO Zach George blamed an oversupply of cannabis for the company’s financial realignment.
“We have made the difficult decision to materially reduce staffing and activity levels in Olds, Alberta, in order to improve the efficiency of our operations as one of Canada’s largest adult-use cannabis manufacturers.”
“We estimate that more than one billion grams of flower are sitting in Canadian vaults today. Oversupply and excess capacity has resulted in high-quality flower being widely available and sold well below the marginal cost of production,” added George.
The town of Olds, Alberta has fewer than 10,000 residents. When Sundial announced the opening of its facility in 2019, it said it would consist of 140 state-of-the-art, individually controlled cultivation rooms capable of producing over 100 million grams of cannabis annually.
The move comes in part in response to Sundial’s recent acquisition of another cannabis producer, Valens, for $138 million. George says the acquisition will allow Valens, which focuses on extraction, to enable Sundial to create value-added products from their unsold flower.
“The Valens Company Inc. transaction has accelerated the need to optimize and rationalize SNDL’s manufacturing and operational footprint to better address market saturation and oversupply,” notes the company press release.
“The Company’s ongoing focus on high-quality cannabis cultivation operations, combined with Valens’ low-cost biomass procurement capabilities, will enhance SNDL’s ability to offer a wide range of customized, innovative products to meet customer demand and current market conditions.”
Sundial was also recently in the news after Alberta’s labour relations board found that the company attempted to intimidate employees attending a union information session.
In 2021, Sundial bought retail chain Spiritleaf for $131 million in cash and shares. Sundial also holds a majority interest in Nova Cannabis, a large retail chain with stores in multiple provinces.
In 2020, Sundial became eligible for the Canada Emergency Wage Subsidy (CEWS) and received $4.1 million in subsidies for the periods June 6 to July 4, 2020, July 5 to August 1, 2020, August 2 to August 29, 2020 and August 30 to September 26, 2020.