Cannabis Startups Flowr And Leafly Cite COVID-19 Fears For Layoffs

Two cannabis companies have blamed the coronavirus pandemic for affecting their operations.

The Flowr Corporation (TSX.V: FLWR) FLWPF said Monday it has placed its efforts in minimizing annual headcount expenses, by restructuring around 25% of its workforce globally. That same day, Leafly confirmed it had to let go of 91 employees.

The news comes as the number of U.S. coronavirus cases increases to at least 49,619 people across every state, plus Washington, D.C., and three U.S. territories, according to the New York Times.

See Also: Analyst: Cannabis Companies Cautious About The First Half Of 2020

Toronto-based Flowr expects the restructuring will lead to a reduction of yearly headcount costs of more than $6 million.

Vinay Tolia, CEO of Flowr, called it "an extremely difficult decision" that will hopefully lead to "a leaner, more efficient organization.”

Tolia also cited "the anticipated macro-economic headwinds stemming from COVID-19,” as a reason for reducing costs.

To become cash flow positive during the second half of 2020, Flowr has decided to invest more in the Premium Canadian dried flower market. More precisely, it plans to support the positive sales momentum experienced with its BC Pink Kush and other high THC strains that are expected to reach the marketplace this year.

In addition, Flowr announced it has enhanced its Kelowna Campus to provide growing, processing and packaging services in Canada, to postpone the launch of its live resin products until its dried flower activities in Canada don’t start to bring positive cash flow, signed a strategic research and development (R&D) alliance with Hawthorne to build a large state of the art, R&D facility in Canada.

Flowr’s shares closed Monday’s market session 9.38% lower at 31 cents per share.

As for Leafly, this would be the second time in the last three months that the Seattle-based cannabis information company had to lay off a significant part of its workforce. Last time, at the end of January, Leafly discharged 54 employees, accounting for 18% of its staff, among which, 33 were employees from its headquarters, wrote the technology news website.

These layoffs led to the company having around 140 employees from previously about 300.

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Leafly explained that the newest firings were due to the COVID-19 outbreak, which has frightened investors.

“We’re heartbroken to have to let so many talented people go in such an uncertain time,” Leafly CEO Tim Leslie told GeekWire. “Although Leafly continues to grow and rapidly deploy pickup and delivery services for retailers and brands across North America, COVID-19 has rocked global financial markets and put further capital investments we were expecting on pause.”

Leslie added that with a small number of employees, the company would be “financially self-sufficient” during coronavirus pandemic.

One week of severance pay was provided to fired work staff, reported the website.

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