Portugal: Tilray lays off 49 workers and adds fruits and vegetables to its cultivation
The beginning of the year for cannabis giant Tilray, listed on the New York Stock Exchange Nasdaq, began with the announcement of a new company strategy. According to the company's CEO, Irwin Simon, the changes will involve reducing the company's cost structure and diversifying production, which may now include fruit and vegetables. In Portugal, more than 30 workers have already been laid off, with 49 layoffs expected.
According to Irwin Simon, CEO of Tilray, the company's excess production and the delay in legalizing the use of cannabis, whether for medicinal use or for adult use, whether in Europe or in America, are factors that are make the company rethink its strategy and consider other ways to earn revenue. Regarding the subsidiary company, based in Portugal, Tilray Portugal, the redundancy process is already underway.
Diversify production: From cannabis to fruit and vegetables
Although Tilray is one of the largest companies in the cannabis industry today, as reported by Bloomberg, and in a statement to investors, Tilray's CEO considers managing the company's excess production capacity in another way. The unusual decision to dedicate some of the company's facilities to the cultivation of fruits and vegetables, as well as the possibility of transferring the facilities to other companies interested in growing them, raised some criticisms on the part of analysts.
“There are food shortages in the world of lettuce, tomatoes, strawberries,” Simon said on the conference call, reassuring those who would be most concerned. “If we have excess capacity, why not start growing fruits and vegetables in some of these facilities and provide food for the world?” The company's CEO also valued other company assets, namely in the alcoholic beverages sector, noting that these are the types of products on which the company will focus more on international markets.
This strategic realignment seeks to respond to excess installed capacity, especially on the American continent, and is the company's adaptation to the lower-than-expected revenue figure.
Redundancies in Portugal
According to report to Lusa Agency and the Newspaper (JN), Tilray Portugal, which has been operating in the country since 2019, will over the next 3 months lay off 49 of its approximately 200 workers from its facility located in Cantanhede, in a process of resizing the company's structure.
The 49 jobs that will be affected span different areas of operation within the company, from production, manufacturing, quality, laboratory quality control, cultivation, supply chain, facilities, storage, logistics, purchasing and information.
Tilray explains that these changes “are in line with the resizing of Tilray to respond to current economic needs and the state of the legalization processes for medical cannabis and for adult use” and that this restructuring is not due to economic difficulties, but “ with the need to adapt the size of the company to the true dimensions of the market, which was expected to be larger (internationally) at this time. Thus, the company had to reduce its size and costs, in order to be in line with the current market.”
“It was expected that the legislative process for the authorization of medicinal cannabis in several countries, especially in Europe, would be faster, with the company having grown to face these markets that should exist. The market, which was expected to be of a certain size, is much smaller than it is supposed to be”, explained the company to JN.
According to information provided to CannaReporter by a source close to the Portuguese company, around 30 employees will have already been dismissed. With the new information advanced by the company, the reduction will extend to 49 employees, which represents a reduction of about 25% of the company's workforce in Portuguese territory.
Status of sales in Portuguese territory
Although a large part of Tilray Portugal's production is destined for export, both within Europe and outside Europe, the company is the only one operating in the country that has an ACM (Marketing Authorization) for one of its products, Tilray Flor Seca THC 18%, which are on sale in national pharmacies, under medical prescription, since April 2021.
However, given the data from the report published by Infarmed in September 2022, the situation regarding sales in the first year in national territory, 2021, a total of 460 packs were prescribed, corresponding to 6,9kg of dried cannabis flower produced by the installation in Cantanhede, and in the 1st half of 2022, 363 were prescribed packaging, which totals approximately a production of 5,4 kg of dried flower.
Since Tilray obtained the ACM for its Dried Flowers, 18% make up a total of 823 prescribed packages, which results in around 12kg of dried cannabis flower that were produced and processed by the company in Cantanhede for sale in the national territory, in the However, it should be remembered that there is a lack of data for the 2nd half of 2022, which makes it difficult to know for sure the totality of prescriptions, and consequently the company's production volume with regard to the national market.
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