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The once red-hot cannabis industry is coming back down to earth. 

Over the past few weeks, cannabis companies — ranging from venture-backed startups like Pax to giants like CannTrust — have announced a series of job cuts, amounting to close to 600 laid-off workers in the sector as a whole.

There are unique reasons for the job cuts at each company, but industry analysts and experts say the operating environment for cannabis companies has entered a uniquely challenging phase. Headwinds include illnesses linked to vaping, lower-than-expected retail revenues in Canada and states like California, as well as legislative and regulatory hurdles that make accessing capital much more expensive than in other industries.

It’s also become much more difficult for companies to raise money, thanks to cratering share prices for public companies and a shortage of investors for private firms.

The Marijuana Index, a composite of cannabis and cannabis-related stocks in the US and Canada, has lost over 60% of its value since its high in January of last year. CannTrust has seen its value crater close to 90% since its high in March after the company was found to be illegally growing cannabis after an investigation by Health Canada, the regulatory agency responsible for overseeing legal cannabis.

The decline in valuations has also made big cannabis mega-mergers harder to close, with companies like dispensary-operator MedMen pulling out of deals altogether.

An analyst at the investment bank Stifel summed it all up as a “toxic” operating environment. 

“It’s put a cloud over the industry,” Peter Horvath, the CEO of cannabis company Green Growth Brands, told Business Insider in an interview on Thursday. “The market has corrected — but has it corrected far enough? I don’t know.” 

Business Insider is tracking these job cuts here and will keep updating as we learn more:

Got a tip? Contact this reporter via email jberke@businessinsider.com, or Twitter DM @jfberke. Encrypted messaging app Signal number available upon request. 

Hexo Corp – 200 layoffs

cannabis Employees sort through harvested cannabis plants at Hexo Corp’s facilities in Gatineau, Quebec, Canada. REUTERS/Chris Wattie

Canadian cannabis producer Hexo Corp announced 200 layoffs on Thursday evening, amounting to a quarter of its workers. Chief Marketing Officer Nick Davies and Chief Manufacturing Officer Arno Groll were among those laid off.

The company cited the slow rollout of retail stores in Canada, delays in government approval for cannabis derivative products, and early signs of pricing pressure on cannabis as reasons for the layoffs and stock declines. 

The company said it was shutting down several facilities as well.

“The actions taken this week are about rightsizing the organization to the revenue we expect to achieve in 2020,” CEO Sebastian St-Louis said in a statement.

CannTrust – 140 layoffs

trimming cannabis marijuana weed plants.JPG Jaime Saldarriaga/Reuters

CannTrust’s woes continue. On Thursday evening, the embattled cannabis producer announced it would lay off 140 employees — or around a quarter of its workers — as the company seeks to pare back expenses following the revelations that it was growing illicit cannabis in one of its facilities.

In August, CannTrust laid off 180 employees or about 20% of its workforce as it faced an investigation from Health Canada into its operations. The federal agency suspended CannTrust’s growing license in September.

The company’s former CEO, Peter Aceto, stepped down amid the fallout as well. Earlier this month, CannTrust was forced to destroy $77 million worth of cannabis in order to regain regulatory approval in Canada. 

Weedmaps – 100 layoffs

FILE - This Thursday, Dec. 21, 2017 file photo shows the MedMen marijuana dispensary in Los Angeles. Marijuana stocks have come down hard from their highs a year ago, and the skid isn't just spooking investors. On Tuesday, Oct. 8, 2019, MedMen Enterprises Inc., which sells legal cannabis in California and 11 other states, backed out of a blockbuster deal to buy PharmaCann, a Chicago-based marijuana company with operations in eight states. (AP Photo/Richard Vogel, File) This Thursday, Dec. 21, 2017 file photo shows the MedMen marijuana dispensary in Los Angeles. Associated Press

Weedmaps, an online cannabis dispensary directory, laid off a quarter of its workforce — around 100 employees — earlier in October as a response to what CEO Chris Beals said in a Medium post was the slow rollout of legal cannabis dispensaries in California and other legal states like Massachusetts.

“Additionally, both the overall tech and cannabis capital markets have experienced tightening through 2019 that has limited the ability to predictably leverage outside capital to fuel growth during rapid expansion periods,” Beals said. 

Weedmaps has faced regulatory scrutiny over listing illicit cannabis dispensary and delivery services on its site and app. In September, the company released a plan to remove all unlicensed dispensaries from its database by requiring them to provide their state license numbers.

Pax Labs – 65 layoffs

pax labs pax 3 review 0282 Melia Robinson

Vape startup Pax laid off 25% of its workforce — amounting to 65 workers — on Monday, amid a spate of vape-related lung injuries which have caused 34 fatalities in the US so far.

Pax had been something of an investor darling this year, landing a $420 million funding round in April from a range of institutional investors including Fidelity and Tiger Global Management. The round, first reported by The Information, pushed the company into unicorn territory, valuing it at $1.7 billion.

Pax in September let go of its CEO, Bharat Vasan, after a little over a year on the job.

In an interview with Business Insider in January, Vasan said the company was talking to bankers about a potential IPO in 2020. That seems to not be the case anymore, according to statement Pax gave to Crunchbase News.

“[A]ny talk of an IPO timeline was premature,” Pax’s head of communications, Dianne Gleason, said.

Eaze – 36 layoffs

cannabis Cannabis plants grow inside a hothouse. REUTERS/Rafael Marchante

California-based cannabis delivery startup Eaze laid off 36 workers or 20% of its staff earlier in October. The company also replaced its longtime CEO, Jim Patterson, with Rogelio Choy, formerly the startup’s COO.

Eaze previously laid off 136 workers in May, including 115 delivery drivers, according to a report from The San Francisco Chronicle.

Eaze is facing a protracted legal battle with Toronto-based cannabis company DionyMed, after DionyMed alleged Eaze was using shell companies to hide credit card charges for cannabis products. 

In August, Business Insider broke the news that Eaze was seeking to raise another $50-75 million at a $300-400 million valuation on top of the $65 million the company had raised in December. 

The startup has been forced to scale back its lofty ambitions of delivering $1 billion worth of cannabis. The company said in documents obtained by MarketWatch that it would sell about $412 million worth of cannabis products on its platform in 2020. 

More: Health Features Cannabis Marijuana

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