After only 12 weeks in business, Canadian legal cannabis retailer Cannabis NB has revealed they will be laying off nearly 60 employees. While most of the employees being laid off were on seasonal contracts, some full and part-time employees will be impacted. The layoffs leave Cannabis NB with only about 20 full-time, part-time and casual workers, leaving “an average of three team members per store.” The company is citing supply issues in the past stemming from lost crops, lack of proper licensing and large demand. The company has even had to close stores the day after legalization in the past due to lack of inventory after they reportedly sold $945,000 worth of cannabis in the first 24 hours.
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That inventory issue is a major factor in the decision.
Empty Shelves Post-Launch
While the stores list about 67 available products, 64 percent of them were sold out at all 20 retail stores in New Brunswick. About 13 other products were sold out in the vast majority of stores. Cannabis NB’s communications specialist Marie-Andrée Bolduc released a statement on the matter saying,
“This decision is representative of normal new retail industry operations and long-term fiscal responsibility. This is because on a store by store basis, it is necessary to ensure that the mix of roles in the store is optimized. In some cases, now that the operation has normalized, the mix of roles had to be adjusted,” Bolduc continued.
Some employees who were laid off received letters saying they would be laid off effective immediately and receive two weeks of severance pay.
“We wish to thank you for your contribution, your passion, and dedication to CANNABIS NB since the beginning. You were a key part of something historical and have been instrumental to the team’s success,” one termination letter read.
The Costs of Business
Part of Cannabis NB’s biggest issues to deal with is the competition in terms of pricing with other legal cannabis retailers. The price per gram for many strains can be as high as $15.50, nearly a full dollar more than strains from nearby competitors in Prince Edward Island and Nova Scotia.
Just as one example, the same strain that costs $15.50, including taxes, from Cannabis NB retailed for $14.50 in Newfoundland, $14 in Labrador and $13.43 in Nova Scotia. That $15.50 price is one of the most expensive throughout all of Canada.
Prices for the same product dipped even lower in the western regions, costing $14.25 in Ontario, $12.60 in Manitoba and $11.22 in British Columbia. On top of the relatively high cost per strain and the previously mentioned in-store inventory issues, many customers only chance to pick up certain product is to order it online via Cannabis NB’s website.
However, shipping those online orders will cost customers an extra $7 delivery fee, along with requiring them to use their credit card for the purchase, something Canadian officials have warned against when buying cannabis.
When you compare that price with the average street price of $7 per gram according to Statistic Canada, it’s easy to understand why the cost of legal cannabis might make the black market option look favorable.
Cannabis NB’s CEO Brian Harriman, despite the big disparity in pricing options, took steps back in October 2018 by introducing bigger packages and keeping their product supply more consistent. The larger packaging is designed with customers in mind, allowing folks to buy cannabis in larger quantity for a “better price,” according to Herriman.
“Price is a key factor,” Harriman said. “But … the feedback we had was that New Brunswickers wanted a chance to buy legal cannabis, they wanted it safe and controlled, they wanted it regulated, and they wanted it in a nice environment.”
On top of the packaging issues, Harriman believes a part of that supply issue might lie in the current licensing system in Canada. According to Harriman, only 34 of the 107 companies licensed to grow cannabis have the necessary secondary licenses to sell it.
Despite some of the initial struggles, Harriman is confident that Cannabis NB will continue to improve and “evolve.”
“It’s a brand new business,” Harriman said. “The shoppers will vote with their feet.”
What’s Next for Cannabis NB?
While it’s easy to look at the layoffs for Cannabis NB as indicative of problems with the legal cannabis industry, it’s not exactly an accurate picture. This round of Cannabis NB layoffs was a perfect stew of inventory and supply chain issues, high demand and prohibitively high costs for consumers. Other provinces have lower prices, some by multiple dollars, but the key seems to be having enough product to meet the supply demands.
Cannabis NB has yet to reveal what exactly was behind the layoffs but the company is expected to release its quarterly sales figures by the end of the month.
“Cannabis NB has reviewed its current business needs on a store-by-store basis and a decision was made to reduce the existing staff complement to ensure alignment with the needs of the business,” Bolduc said.
“The teams and roles were structured to allow flexibility in the delivery of the customer experience needed and manage expectations that staffing of stores may change after launch.”
Workers Answer With Unionization
After the layoffs, Cannabis NB employees at two stores took the first steps in unionizing. According to the New Brunswick Union president Susie Proulx-Daigle, a majority of employees from the Campbellton and Miramichi signed cards with the union.
“In these specific stores, we had a large majority,” said Proulx-Daigle. “We decided that those employees should have the right to freedom of association, which is in the Charter of Rights and Freedoms.”
This move comes after a failed push to unionize from CUPE 963, the union representing New Brunswick’s liquor workers.
After this round of layoffs, which Cannabis NB’s Bolduc called “representative of normal new retail industry operations and long-term fiscal responsibility,” it’s no wonder that the remaining employees may be looking to ensure their own job security.
Proulx-Daigle said that employees told her they felt “there’s no honest one-on-one discussion happening with employees to help them improve if they need improvement, or help them understand what they need to do to fit the corporate image.”
“People are afraid to even say that they’re talking about a union,” she continued. “I think they just want a fair shot at continuing to do the job that they do.”