Cannabis retailer MedMen Enterprises is laying off more than 190 employees as part of a restructuring plan aimed at achieving an operating profit by the end of 2020.
The layoffs are expected to contribute about $10 million toward MedMen’s goal of reducing corporate overhead to $85 million by the end of next year’s third quarter from $154 million as of the December 2018 quarter.
MedMen said Friday the restructuring also involves selling non-core assets including its stake in Treehouse REIT, scaling back store openings, and delaying investments in certain markets, including New York and Arizona.
“We have a clear plan to increase our market share, while at the same time enhancing our margins and reducing our corporate overhead,” CEO Adam Bierman said in a news release. “We must unlock our operating leverage and bring the company to positive EBITDA.”
MedMen shares fell 3% to $1.99 in trading Friday as the company indicated it plans to take additional cost-cutting steps, referring to the layoffs as an “initial headcount reduction.”
As The Real Deal reports, “It’s been far from smooth sailing ever since the nearly 10-year-old MedMen became the first U.S.-based cannabis company to go public on the Canadian Securities Exchange in 2018 (it’s also traded in the U.S.).”
The retailer’s stock price has fallen 65% so far this year and it had roughly $105.6 million in debt at the end of March, according to a company document.
According to CNBC, it has been “racing to raise cash to cover its mounting losses” and its struggles “show the challenge that cannabis companies face in operating in states where high taxes and dispensary restrictions have driven up prices for legal marijuana.”
Several other cannabis companies, including Weedmaps, Pax Labs and Eaze, have also recently slashed their workforces.
MedMen’s layoffs will affect about 20% of its corporate employee base. As of Oct. 28, it had more the 1,300 employees, with half of those in retail.
“We believe this decision is in the best interest of our company as we position ourselves for growth in the years ahead,” Bierman said.