Two hemp and CBD startups just laid off workers as the industry confronts a uniquely challenging phase

hemp

Hemp and CBD companies have laid off workers in recent weeks, Business Insider has learned.
Colorado-based Mile High Labs laid off 20 staffers on Thursday, concentrated among entry-level sales roles, the company confirmed.
Kentucky-based hemp grower and CBD manufacturer GenCanna laid off 65 employees in December, the company confirmed.
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Times are tough in the cannabis industry, and hemp companies are no exception.

Hemp-and-CBD startups GenCanna and Mile High Labs have laid off a number of employees in recent weeks, Business Insider has learned.

Mile High Labs laid off 20 staffers on Thursday, concentrated among entry-level sales roles, the Colorado-based CBD manufacturer's chief financial officer, Jon Hilley, told Business Insider in an interview. Kentucky-based hemp grower and CBD manufacturer GenCanna laid off 65 employees in December, Steve Bevan, the company's president and executive chair, said.

For Mile High Labs, the layoffs represent just under 10% of total staffers, out of a headcount of 250 prior to the layoffs, Hilley said.

'The business has to evolve'

"It's part of the learning process as you go from a company of 30 people to 250 people in under a year," Hilley said. "The business has to evolve."

Mile High Labs purchased an $18 million CBD manufacturing facility in Broomfield, Colorado, and relocated the company's operations there last fall. The Denver Post reported on the job cuts at the company earlier on Friday.

In a Friday afternoon interview, GenCanna's Bevan pointed to increasing automation of the hemp-and-CBD supply chain as one of the reasons for the layoffs.

"Because of significant advances in technology, we need fewer people to do more," Bevan said.

He said that the company's headcount — excluding seasonal farm workers who harvest the hemp crop — has fluctuated over 2019.

GenCanna hired Goldman Sachs to advise on 'strategic alternatives'

The company started 2019 with 162 employees and ended the year with 224 employees following the layoffs.

"With hemp at the intersection and cutting edge of federally legal cannabis [hemp] and agriculture, ebbs and flows are to be expected," Bevan said. "During 2019, pricing for products declined across the industry, due to less-than-predicted demand while constraints — common in new agriculture — were greater than expected."

GenCanna is an early entrant to the hemp market. Founded in 2014, the company has remained private but hired Goldman Sachs in September to advise on a potential IPO or other "strategic alternatives."

Business Insider has previously reported that companies in the broader cannabis industry, from startups to publicly traded behemoths, have cut over 1,000 jobs as the industry enters a uniquely difficult phase.

The Marijuana Index, a composite of cannabis and cannabis-related stocks in the US and Canada, lost about half its value last year.