Adding to a worrying trend in the cannabis industry, Canopy Growth (CGC -4.75%) has enacted a new round of employee layoffs. The company confirmed to Bloomberg Thursday that it had eliminated an unspecified number of positions. Like other businesses in the cannabis sector, which was struggling with myriad issues even before the coronavirus pandemic, Canopy Growth has been searching for ways to cut costs lately.
Over the past year, a great many of Canopy Growth's peers have laid off workers or announced plans to do so. Companies reaching for the pink slips included Aurora Cannabis, Tilray, and HEXO.
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Prior to this announcement, Canopy Growth had already cut roughly 800 employees as part of a wider effort to not only reduce expenditures, but to speed up its course down the road to profitability. Other elements in that strategy include a rationalization of its rather sprawling product assortment, and the introduction of budget-priced marijuana flower offering. It also remains optimistic about the future of cannabis derivative products, particularly drinks.
Investors don't seem to be sharing the bullish outlook, however, either for Canopy Growth particularly or the marijuana industry in general. Share prices of stocks in the sector have eroded over the past year -- at times, dramatically. This trend has been exacerbated by the coronavirus pandemic, despite the fact that cannabis dispensaries remained open during most of the broader economic closures in many states, where they were classified as "essential businesses."
The market is not high on Canopy Growth stock just now. On Friday, the shares were down nearly 1% in late afternoon trading, in contrast to the modest gains of the major equity indexes.
