Tantalus Labs Sheds Workers, Restructures Amid Industry Shakeup

Cannabis producer Tantalus Labs may be the next casualty of the cannabis bust across the greater portion of the North American West. The Canadian cannabis producer filed a Notice of Intent for Restructuring in Canadian federal court. The move comes as the company lays off most of its employees, leaving only a few key people to help it through its restructuring.

The situation at Tantalus Labs confirms what many have long suspected. There is an increasing lull in the cannabis industry, predominantly in the western half of North America, impacting cannabis companies in Canada, Washington, Oregon, California, and Colorado. As Tantalus Labs works to restructure and recover from its losses, how can the company teach others what it takes to survive in the marijuana wild west? 

Who Are Tantalus Labs?

Tantalus Labs touts itself as one of the leading high-quality cannabis producers in Canada. Their cannabis growing operation utilizes elite genetics, triple-filtered rainwater, and natural, full-spectrum sunlight to grow some of the most highly sought-after cannabis strains nationwide.

Founded in 2012 by Dan Sutton, Tantalus Labs started as a medical cannabis cultivation operation. Sutton says he loved the thought of cultivating cannabis to a premium standard in a greenhouse environment. The goal was to cultivate cannabis with help from agricultural experts, leading to a more efficient grow methodology and higher-quality strains. In 2017, Health Canada approved Tantalus Labs’ Medical Marijuana License, paving the way for them to acquire the materials needed to grow and produce cannabis.

In 2018, the Canadian government legalized the production, distribution, sale, possession, and import of cannabis for recreational use among adults with the passage of the Cannabis Act. The hope was that by legalizing cannabis consumption, the Canadian government could control and regulate marijuana and minimize the harm associated with cannabis use.

In the years following cannabis legalization, Tantalus Labs positioned itself as one of the country’s leading cannabis producers. The company spent four years designing and building its unique grow operation to provide the masses with a wide range of sought-after cannabis products.

Dan Sutton noted that in the cannabis industry, there are no “get rich quick” schemes and wanted to position his company for a long, slow burn that would eventually benefit cannabis industry entrepreneurs with staying power.

Growing Problems in the Canadian Marijuana Industry

Unfortunately for Canadian cannabis businesses, the industry is coming down from its marijuana high. Several Canadian producers are scaling back their operations. Many are turning to layoffs, some even closing their doors for good.

What’s behind the Canadian marijuana bust? Several factors are colliding to create the perfect storm for Canadian cannabis cultivation. Some cannabis business owners say that high taxes and strict federal rules and regulations make conducting business impossible. Five Canadian cannabis CEOs recently discussed the extent of layoffs and facility closures at a joint press conference. The press conference, aimed at getting the attention of Canadian lawmakers, outlines the perils the cannabis industry is currently facing. Canopy Growth Corp., one of the country’s largest cannabis producers, announced it would lay off at least 800 workers. That amounts to nearly 35 percent of the company’s workforce.

However, high taxes and fees aren’t the only things holding back Canadian cannabis companies. The oversupply of cannabis hitting the legal market is driving down cannabis prices. A glut of cannabis on the market is excellent for price-conscious consumers but bad for businesses trying to keep their doors open. Delta 9 Cannabis CEO John Arbuthnot says oversupply is weakening the cannabis market causing price and margin compression. The result? Companies are no longer profitable. In the case of Delta 9 Cannabis, it shuttered its Osborne Medical Clinic as part of significant cutbacks. The board and executive staff also took pay cuts. The hope is that the measure will leave retail stores untouched, at least for now.

Other cannabis companies point to the influx in competition. The growing number of legal cannabis retailers means prices go down even more, making it harder for some retailers to stay in business amid fierce customer competition. Some cannabis retailers in Winnipeg say there should be a moratorium on new stores in the area, allowing existing stores to grow.

The Impact on Tantalus Labs

Amid the harsh economic climate for cannabis producers, Tantalus Labs is just one of the many casualties. The company cannot afford to conduct business as usual, leading to the decision to lay off workers and restructure the business. Founder Dan Sutton says he hopes the restructuring process helps the company find a new path forward so the company can continue to deliver high-quality cannabis products to the public. Sutton says regulatory burdens and taxation hurt the cannabis industry and other business leaders like himself.

Toronto-based Fire & Flower Holdings and Ontario-based Phoena Group recently secured an order for creditor protection, putting more cannabis workers in limbo. A growing number of cannabis companies in Canada cannot pay their excise bills and are seeing their debts skyrocket. Statistics indicate that federally licensed Canadian cannabis producers owed the Canada Revenue Agency more than 192.7 million Canadian dollars, three times more than what has been owed in previous years.

Unfortunately, these problems aren’t unique to Canada. Several states in the Western United States also feel the pain from oversupply, dipping prices, a drop in post-pandemic cannabis sales, and high taxes. California faces growing concerns as retailers and cultivators struggle to pay their bills. The story is similar in states like Oregon, Washington, and Colorado.

Problems may be mounting for the cannabis industry, but many say the industry is here to stay. Its continued success could depend on cannabis leaders finding innovative solutions to today’s unique challenges. Tantalus Labs hopes to continue its mission to be one of those innovative leaders.

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