Canadian cannabis company SNDL Inc. announced on Tuesday its decision to cut 106 full-time employees as part of a broader strategy to reduce costs in response to an oversupply in the cannabis market. This move is projected to save the Calgary, Alberta-based company more than $20 million annually by optimizing corporate overhead spending.
The restructuring will unfold over the next 18 months and will cost approximately $11 million during that time. Despite the significant announcement, SNDL’s stock remained unchanged by the close of Tuesday’s trading session.
One of the notable departures includes Marcie Kiziak, the current CEO of Nova Cannabis Inc., who will be leaving her position on August 1. Grant Sanderson, currently serving as the chief operating officer, will take over as CEO of Nova. SNDL holds a controlling 63% stake in Nova Cannabis, which is part of its extensive network of 188 privately operated cannabis stores across Canada.
A company spokesperson did not respond to MarketWatch’s request for information regarding the company’s total headcount before the layoff announcement.
In addition to the workforce reduction, SNDL has been actively acquiring the debt of various cannabis companies in both Canada and the United States. On July 5, SNDL completed the C$28.1 million ($20.6 million) acquisition of Delta 9 Cannabis Inc.’s principal debt from Servus Credit Union Ltd. and Connect First Credit Union. That same day, SNDL also announced plans to acquire Indiva Ltd., a Canadian cannabis edibles manufacturer, through a stalking-horse purchase valued between C$25 million ($18.3 million) and C$28 million ($20.5 million) as part of a debt-restructuring deal.
In May, SNDL revealed that its joint venture, SunStream USA Group, would proceed with acquiring equity positions in U.S. cannabis assets. The Nasdaq Stock Market confirmed that the structure of SunStream USA complies with all applicable laws and Nasdaq listing rules. SunStream USA’s credit portfolio includes companies such as Ascend Wellness Holdings, Columbia Care Inc., Jushi Holdings Inc., SkyMint Brands, and Surterra Holdings Inc.
Earlier in 2023, SNDL finalized its C$138 million ($100.9 million) acquisition of The Valens Company. This acquisition provided SNDL with manufacturing facilities across all major product segments in the cannabis industry and a procurement arm that has allowed the company to take advantage of the oversupply and mispricing in the Canadian market for biomass and flower.
These strategic moves reflect SNDL’s efforts to streamline operations, manage financial challenges, and expand its footprint in the evolving cannabis industry. Despite the cost-cutting measures and acquisitions, the company aims to position itself for sustainable growth in a highly competitive market.
In a related development, SNDL’s joint venture, SunStream USA Group, continues to expand its influence in the U.S. cannabis market. SunStream USA controls a diverse credit portfolio, including investments in prominent cannabis companies like Ascend Wellness Holdings, Columbia Care Inc., Jushi Holdings Inc., SkyMint Brands, and Surterra Holdings Inc. This joint venture aligns with SNDL’s broader strategy to diversify its holdings and capitalize on emerging opportunities within the cannabis sector.
Moreover, SNDL’s recent activities highlight its strategic approach to consolidating market share and strengthening its financial position amid challenging market conditions. By acquiring significant debts and assets of other cannabis companies, SNDL is poised to enhance its operational capabilities and competitive edge in both the Canadian and U.S. markets.
These developments come at a time when the cannabis industry is experiencing rapid changes, with companies striving to adapt to regulatory shifts, market dynamics, and evolving consumer preferences. SNDL’s proactive measures, including workforce optimization and strategic acquisitions, underscore its commitment to navigating these challenges and achieving long-term success in the cannabis industry.
The company’s recent moves reflect a broader trend of consolidation and strategic restructuring within the cannabis sector, as companies seek to streamline operations, reduce costs, and leverage synergies to enhance profitability and market presence. As SNDL continues to implement its strategic initiatives, industry observers will closely watch its progress and impact on the competitive landscape of the cannabis market.