Cannabis Professional’s daily roundup of industry news. View archive here.
Zenabis lays off 40 employees
Vancouver-based licensed cannabis producer Zenabis has laid off nearly 10 per cent of its workforce, Cannabis Professional has learned.
Company spokesperson Jonathan Anthony confirmed “about 40” positions have been eliminated, mostly from the company’s headquarters. Zenabis had recently more than doubled its headcount, growing from roughly 200 employees at the start of 2019 to 489 as of June 30, according to regulatory filings.
“Colleagues were told about the change on January 7, and everyone in the company is sad to say goodbye to talented colleagues,” Mr. Anthony said. “Zenabis is completing its ramp-up phase of major financing and construction, and is now a significant cultivator of cannabis [and] we have the right team to make Zenabis a profitable, viable long-term industry leader.”
Staff were informed of the layoffs one day after Zenabis announced Eric Rasmussen was joining the company as chief financial officer.
In late October 2019, the company’s Toronto Stock Exchange-listed shares plummeted 40 per cent in a single day after Zenabis announced it would raise $20.8-million by offering new shares at just $0.15 apiece. The rights offering represented a whopping 73-per-cent discount to the company’s mid-October average trading price of $0.49 a share.
Zenabis shares have never recovered, with a January 7 closing price of just 16 cents apiece.
– Jameson Berkow
Canadian beer sales fall during first year of legal cannabis
Canadians purchased less beer in 2019 and one analyst says legal weed is at least partially to blame.
The decline of three per cent by volume compared to 2018 beer sales was the steepest decline in at least six years, Cowen analyst Vivien Azer said in a report. Industry Group Beer Canada released the data on which the Cowen report is based.
“This is far worse than the trends seen between 2014-2018, where beer industry volumes fell an average 0.3%,” she said, adding the steepest annual decline during that period was 1.2 per cent in 2017. Legalized recreational cannabis being available across the country throughout 2019 played a direct role in the steeper decline, Ms. Azer said, despite what she described as a “tough cannabis ramp” that included supply shortages and limited retail access points.
“To be sure, the cannabis market remains small, delivering run-rate retail revenues of ~$1.5 [billion] most recently,” she said. “This pales in comparison to the Canadian beer market, which is sized at ~$9.2 [billion] in retail sales, or total Canadian alcohol at ~$23.2 [billion].”
Cowen released a similar report nearly one year ago in January 2019 in which Ms. Azer called 2018 the “worst year for beer sales in the near decade we have been covering the alcohol industry, and we continue to believe that growing cannabis use is a factor.” That report included references to several surveys showing cannabis consumption often leads to lower alcohol consumption.
In her latest report, Ms. Azer said “the launch of new form factors” such as legal cannabis vapes, edibles, beverages and topicals, “will likely perpetuate this trend," concluding: “We continue to favour cannabis over mainstream beer.”
- Jameson Berkow