Cannabis giant Aurora Cannabis Inc. will receive $23.7-million from the Canada Emergency Wage Subsidy program for 2020, despite laying off almost a third of its workforce in three rounds of downsizing that started last June.
The Edmonton-based cannabis company disclosed in its quarterly earnings Thursday that it had been approved to collect $23.7-million from the federal grant program for the six months ended Dec. 31, 2020. CEWS was launched by the federal government last March to cover part of employee wages for industries and businesses that have seen declines in revenue due to COVID-19, and thereby help them prevent job losses and rehire workers who had been laid off.
But over the course of 2020, Aurora significantly downsized its operations, shuttering five of its production facilities across the country – including its massive 1.8-million-square-foot Aurora Sun cultivation operation in Medicine Hat, Alta. – to rein in expenses given slow sales and oversupply in the sector.
This cost-cutting exercise impacted almost 1,000 employees in 2020.
Just weeks ago, for example, the company outsourced its sales and distribution work to Great North Distributors Inc., laying off at least 15 employees. In December, the company laid off 214 workers, just six months after culling the jobs of 700 employees across all departments.
The company does not intend to rehire employees in the near future, according to CEO Miguel Martin, though it will use the federal funding to maintain its current Canadian employee base of 1,800 workers. “I don’t think the layoffs and the wage subsidy program are connected. The program has very specific requirements in it … we applied for it in good faith and we are using it in good faith,” Mr. Martin said in an interview.
He added that the decision to lay off the company’s entire sales team and outsource their work was not linked to cutting costs. “Great North’s technology was better than ours. They have better connectivity to the provinces for distribution. They are simply better than what we had internally,” he said.
A recent Globe and Mail analysis of company filings and public data from the CEWS registry showed at least 20 publicly traded cannabis companies cumulatively collected more than $40-million in CEWS payments. Others had been approved to receive the subsidy but did not disclose the amount in financial filings.
Many cannabis companies, however, were struggling before the pandemic and their revenue declines were not necessarily linked to COVID-19. Some, including Canopy Growth Corp. and Aphria Inc. , which both received CEWS funds, posted revenue increases during the pandemic.
Aurora booked $67.7-million in revenue for its fiscal second quarter ended Dec. 31, 2020, a slight decrease from the previous quarter, but a 22-per-cent increase from the same period a year earlier. It incurred a $292.8-million loss attributed to restructuring, specifically the closing of the Medicine Hat facility and the retooling of its Aurora Sky operation in Edmonton, which the company plans to use to grow premium-grade cannabis flower.
Mr. Martin confirmed the company is exploring an option to lease the Aurora Sun facility. “We have very few employees left at Sun at this point and we’ll figure out what the best way to treat that is,” he said.
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