As wholesale and retail prices continue to tumble in Pennsylvania’s medical cannabis market, Columbia Care Inc. is the latest multistate operator to announce a mass layoff in the Keystone State.
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The New York-based company’s layoff will affect 73 workers at its cultivation and processing facility in Saxton, Pa., according to the state’s Department of Labor and Industry (L&I). Saxton is a borough of roughly 700 people in the southern part of the state.
While the mass layoff is expected to be permanent, there was a hint of optimism for an adult-use market in a Columbia Care statement provided to Cannabis Business Times.
“In order to meet the appropriate supply and demand levels of the [current medical] market, it was necessary for us to reduce the workforce at our cultivation and production facility,” the statement reads. “It is never an easy decision to make as an operator, and we are grateful to all our employees who have been instrumental in bringing the medical cannabis program online and providing our patients with the best quality product. We are hopeful that with adult use on the horizon, this facility will be back up to full capacity in the future.”
The Saxton facility still operates as Green Leaf Medicals LLC (gLeaf), which Columbia Care acquired as part of a $240 million cash-and-stock deal that was set in motion in December 2020 and closed in June 2021.
In March 2021, gLeaf executives announced a $40-million expansion project for the facility that they projected would quadruple their workforce in Saxton, from 125 to 525 employees, the Bedford Gazette reported at the time.
Now, amid concerns over supply and demand, the reduction in staff affecting 73 individuals will take full effect Feb. 28, 2023, according to a Worker Adjustment and Retraining Notification (WARN) notice obtained by CBT. Since the affected employees are nonunion, there was no chief elected official to notify within the workforce, gLeaf Chief Legal Officer Kevin Goldberg wrote in the notice sent Dec. 28 to the state’s L&I Department.
“Instead, gLeaf has notified each employee individually in writing of their separation dates and that their separation from employment will be permanent,” he wrote. “Those employees are expected to be separated from employment on February 28, 2023. gLeaf will continue employee benefits for all impacted employees for as long as they remain employed with gLeaf, through and including February 28, 2023.”
Under the WARN Act of 1988, if 50 to 499 employees are involved in a mass layoff during any 30-day period, and those employees make up at least 33% of the active workforce, then the employer is required to provide notice 60 days in advance to the affected workers or their representatives.
The Columbia Care/gLeaf notice came on the heels of fellow multistate cannabis operator Trulieve announcing worker layoffs last month for its cultivation and processing facility in McKeesport, Pa., just outside of Pittsburgh. Trulieve officials attributed their worker reduction to greater efficiencies throughout the company’s operations.
Trulieve did not reveal the number of employees affected by its McKeesport layoffs, and the company did not submit a WARN notice to L&I, according to the department’s communications team. The triggers that require a company to submit a WARN notice can be found here.
The Trulieve and Columbia Care layoffs come as wholesale flower prices have plunged nearly $3,000 per pound from January 2021 to October 2022 (as tabled above), representing a 61% decrease, according to the Pennsylvania Department of Health. In addition, the average retail flower price has dipped more than $100 per ounce during that time period.
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Medical cannabis active patient certifications have also slowed in the state: As of Oct. 31, there were 423,433 active patients in Pennsylvania, representing an average increase of 2,100 patients per month for an eight-month period, according to the Health Department.
However, monthly retail sales figures remain strong with licensed dispensaries recording more than $120 million in sales in each month from March through October, representing year-over-year growth throughout that timeframe, according to the Health Department. There were 171 operational dispensaries in the state as of Oct. 31.
According to Trulieve’s third quarter 2022 earnings presentation, the company’s internally produced product sales almost doubled compared to the first quarter, and it experienced higher sales of mid- and value-tier products.
At Columbia Care, not only are the 73 layoffs permanent, but there will be no bumping rights for the affected employees, Goldberg wrote in the WARN notice. “So, employees will not be able to displace more junior employees out of their job positions as a result of this mass layoff,” he wrote.
However, the state’s L&I officials are currently engaged with local management to determine what services can be made available to the workers, department Communications Director Erin James told CBT.
“During upcoming Rapid Response informational meetings, individuals will have the opportunity to learn about job search and placement assistance through the PA CareerLink network, career counseling, health insurance options, unemployment compensation rules and regulations, as well as budgeting and financial assistance, among other services,” James said.
Rapid Response services are routinely offered to Pennsylvania employees and employers alike in the event of a layoff to help both businesses and local communities cope with the effects.
Green Leaf Medicals LLC WARN notice by Tony Lange on Scribd