Emerald Health Culls 65 Jobs Amid Profitability Concerns

Emerald Health Therapeutics, Inc. has culled 65 jobs over the past three months as it wrestles with the challenges of securing long-term profitability.

It announced that it eliminated 20 positions yesterday and that brings the total to 65 since Aug. 1, 2019. That represents a third of its workforce.

Chief financial officer Rob Hill and chief operating officer Sean Rathbone are among the senior executives to lose their jobs as part of the cull. “Although such decisions are difficult, we will evolve our strategy, structure, and capabilities as necessary to be able to capitalize on key trends in the changing cannabis sector,” said president and chairman Dr. Avtar Dhillon.

Dhillon is vacating the role of president as part of this internal reorganization. He will continue as executive chairman, while current chief executive Riaz Bandali will also serve as president going forward.

The announcement comes just days after HEXO Corp. (TSX: HEXO) cut its workforce by 200 as part of a plan to reduce costs and achieve profitability. The Quebec-based cannabis producer said the move to eliminate the positions came in response to a changing market and regulatory environment, and it followed its decision to launch a budget brand that costs consumers just $4.49 per gram.

Supply is set to vastly exceed demand for legal cannabis in Canada amid a rush to expand capacity at facilities across the country. Producers are now trying to undercut the black market, but they are still grappling with how to achieve long-term profitability.

Emerald feels that streamlining its operations to achieve material cost savings from Q1 2020 will help it enjoy a sustainable future. The firm has a 50% stake in a facility called Pure Sunfarms, which has the capacity to produce 75,000 kg of cannabis per year, with production set to double to 150,00 kg by 2021.

Emerald did not exercise its right to purchase 40% of the cannabis produced at Pure Sunfarms during the three months to Sept. 30, 2019. The JV sold the allocation earmarked for Emerald at $7 million less than the amount it would have received under the sales agreement from Emerald, citing a decline in the wholesale market price, and billed Emerald for the difference.

Yet Emerald said it is not obliged to pay up, arguing that the way in which Pure Sunfarms went about the sales does not create a liability under the sales agreement.

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Martin Green
Martin Green is an experienced journalist with a strong focus on the cannabis, alcohol, and gambling industries. He is particularly interested in the political issues affecting the global marijuana trade, and he has a keen focus on regulation changes and legal topics. He holds a BA English Literature, MA Creative Writing and a National Qualification in Journalism diploma. He has worked in journalism since 2009 and written for a broad range of newspapers, business titles and magazines, including The Sun, The Metro, The Journal, Livestrong, Drinks Retailing News, Harpers, Sportsbook Review, Vital Football, Essex Live and Surrey Live. Address: 682 Indian Road, Toronto, Ontario, M6P 2C9. Phone: 416-721-8257.
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