Cuts constitute about 20 percent of company-wide layoffs by beleaguered cannabis producer
BY JOHN CHICK
Special to the VOICE
UPDATE: The Globe & Mail, and various investor websites, reported on Friday evening, September 13, that CannTrust will be delisted from the S&P/TSX Composite Index at the start of business on September 23.
Thirty-five workers at CannTrust’s Fenwick operation were among the 180 layoffs the beleaguered cannabis producer announced late last Thursday, the company’s communications specialist Morgan Cates told the Voice.
The cuts constitute about 12 percent of the workforce at the Pelham site, and 20 percent of the overall company layoffs. According to information previously provided to the Voice by Ward 1 Councillor and Cannabis Control Committee member Mike Ciolfi, only about five percent of the employees in Fenwick as of July were residents of Pelham.
According to a CannTrust statement, the majority of the affected employees worked in cannabis cultivation or customer service support roles. The company stated the cuts would save about $9 million dollars.
“We have made the extremely difficult decision to restructure our workforce to reflect the current requirements of our business,” interim CEO Robert Marcovitch said. “Over the past two months, we have moved swiftly to assess and address the Health Canada report indicating areas of non-compliance in our operations. We remain fully committed to building the organization we need for future success and rebuilding the trust of all of our stakeholders.”
Despite CannTrust’s corporate nosedive in the wake of the aforementioned multitude of regulatory violations, one affected individual seemed surprised by the cuts.
“We were shocked, just shocked,” an unnamed employee, who was laid off from the Pelham site, told the Financial Post. “There was a reassurance from my senior manager that the company would not lay off this many people all at once. I didn’t think this was going to happen because it was business as usual at the company, despite all the news reports about the unlicensed growing.”
That may sound difficult to believe, given that less revenue has been flowing back to CannTrust since both a Health Canada and voluntary hold took tens of millions of dollars worth of product off the market, following news in June of illegal cannabis growing at the Fenwick facility. The scandal resulted in the removal of the company’s top two executives, and has erased about $500 million in CannTrust market value. As typically occurs after companies announce cost-cutting layoffs, its stock price spiked marginally in trading on Friday, September 6, closing at $2.33 a share, up 13 cents from a day prior. Still, the value of the stock is down about 65 percent from where it was before the scandal began, and there has been recent market analyst speculation that it may be delisted from the New York Stock Exchange.