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Be the first with the news that moves the market- Acreage Holdings Inc (CSE:ACRG.U) is withdrawing its guidance and temporarily laying off more than 120 staff to cut costs, due to the impact of COVID-19 on an already struggling cannabis industry
- In a further effort to cut costs, Acreage is closing two dispensaries and two wholesale operations located in the US
- A planned merger with Deep Roots Medical LLC, which was announced last April, has also been terminated
- Alongside this news, the company announced that Steve Hardardt, Acreage’s Executive Vice President is resigning, effective immediately
- Acreage Holdings Inc (ACRG.U) is down 2.49 per cent, with shares trading for C$1.96 and a market cap of $137.1 million
Acreage Holdings Inc (CSE: ACRG.U) is implementing drastic cost-saving measures, amid a struggling cannabis industry.
Toward this end, the company has implemented widespread temporary layoffs, affecting more than 120 employees. Furthermore, Acreage is closing two dispensaries and two wholesale operations located in the US.
A planned merger with Deep Roots Medical LLC, which was announced last April, has also been terminated. Acreage had planned to acquire a 100 per cent interest in Deep Roots in a cash-share deal worth around $120 million.
The company claims that a moratorium imposed by the Nevada Department of Taxation delayed the merger’s relevant approvals being processed.
Consequently, the planned date for the merger has passed and the company declined to keep pursuing the deal.
Amid all this upheaval, the company has chosen to withdraw its 2020 guidance and will provide an update on first quarter earnings around the middle of May.
The company attributed this move to the ongoing COVID-19 pandemic and other factors negatively impacting the industry.
The industry at large has been struggling since before the pandemic’s effects became apparent. A number of Canada’s cannabis giants have been hit by talk of overvaluation and rampant cashflow problems.
The S&P/TSX Cannabis Index, which tracks the performance of the TSX’s 21 largest cannabis companies, has been trending steeply downward since the start of the year.
Acreage Chair and CEO, Kevin Murph, believes these steps are necessary to ensure the company’s viability moving forward.
“Although we are facing difficult times, I remain optimistic about the U.S. cannabis industry and Acreage in particular.
“These bold measures will help to ensure that we emerge from this very challenging situation stronger than ever before,” he said.
Alongside this news, the company announced that Steve Hardardt, Executive Vice President,is resigning.
Steve was also the company’s Chief People Officer and Administration and is leaving both positions, effective immediately.
Acreage Holdings Inc (ACRG.U) is down 2.49 per cent, with shares trading for C$1.96 at 10:16am EST.
