Curaleaf Holdings is closing the majority of its operations in Oregon as well as Colorado and California, the Massachusetts company announced Thursday.
Curaleaf landed in Oregon in 2019 when it announced the acquisition of Portland-based Cura Partners Inc., the makers of Select branded extracts. The deal was a blockbuster at the time — all stock with a value of nearly $1 billion — but quickly came down to earth by the time it closed in 2020 to $390 million. Cura Partners was an early success story out of Oregon's new recreational cannabis market.
"Today's announcement reflects a decision that we did not arrive at lightly, and one that makes sense for our business at this time," CEO Matt Darin said in a written statement. "We have a fiduciary responsibility to our shareholders to improve margins and fortify our balance sheet by controlling what we can in our business.”
The company said it will exit production and cultivation facilities in Oregon, Colorado and California. Management noted the difficult operating environments in the three states. The company is focusing efforts on cash generation and its core revenue markets.
“We believe these states will represent opportunities in the future, but the current price compression caused by a lack of meaningful enforcement of the illicit market prevent us from generating an acceptable return on our investments,” Darin said. “We are confident that these moves, made to improve our cashflow and margins, are the right ones to bolster the future success and profitability of Curaleaf.”
The company has one dispensary in Oregon, according to its website. It is unclear how many Oregon employees will be affected by this move. The company's single retail location in Oregon will remain open, said spokesperson Jordon Rahmil, while the company seeks a buyer for its Oregon assets. In 2019, before the acquisition, Cura had 250 employees in Oregon according to a Business Journal survey.
"We thank each and every departing team member for their commitment and service and will strive to support them during this transition," Rahmil said.
The company’s troubles are another sign of the challenges cannabis operators face in Oregon, where consumer demand is soft and oversupply is depressing wholesale prices.
Additionally, the company said it is “reducing payroll” by 10%, which along with other cost saving initiatives is expected to see $60 million in gross run-rate expense savings this year. Companywide less than 4% of the workforce was affected by reductions. The company does expect to take a non-cash restructuring and impairment charge in the fourth quarter.
The company had been undergoing “aggressive” cost-cutting measures in these states last year, according to a news release including facility closures and layoffs. The company said these markets contributed less than $50 million in revenue last year. The company expects to see immediate gain on its adjusted margins as a result of these moves.
In its most recent quarter the company, which is traded on the Canadian stock exchange, reported revenue of $339.7 million and a net loss of $51.5 million, or 7 cents per share.
Before this announcement the company had 6,000 total employees and operations in 21 states with 147 dispensaries and 29 cultivation sites.
