Toronto-based cannabis software startup Ample Organics has made company-wide layoffs, reducing its staff by around 16 percent, BetaKit has learned.
A seed-to-sale software company, Ample assists cannabis companies with growth, production, client management, and quality assurance. In recent LinkedIn posts, a number of now-former employees noted that they had been let go this week as part of these “company-wide layoffs.”
“It’s been an interesting time in the cannabis industry. There’s a lot…of turmoil happening.”
-John Prentice, Ample Organics CEO
BetaKit has since confirmed with Ample that the company has laid off approximately 20 employees. Prior to the cuts, Ample’s head count sat at about 120, with its current number now between 98 to 102, John Prentice, president and CEO of Ample, told BetaKit. The cuts were across departments, affecting senior management as well as software developers and designers. The majority of layoffs came from Ample’s Toronto headquarters, with a couple involving contract workers in South America and other international regions.
“It wasn’t an easy business decision to make…those that we had to say goodbye to were more than just employees, a lot of them were very close friends and family,” the CEO told BetaKit.
Prentice called the layoffs part of Ample’s go-forward plan to become more lean and efficient in order to create a sustainable future for its clients and employees. He pointed to recent changes in the Canadian cannabis industry that have squeezed Ample as well as its current and potential customers.
“It’s been an interesting time in the cannabis industry. There’s a lot…of turmoil happening. I think that capital is drying up in the space, and really Ample is a bellwether for everything else that’s going on in the industry,” Prentice stated.
He argued that it has become more difficult for cannabis license growers (Ample’s main clientele) to raise capital, causing the rate of viable applicants, applying to Health Canada for licensing, to go down. On top of that, Health Canada made substantial changes earlier this year to its licensing protocols, requiring new applicants to have a fully-built site that meets all Cannabis Regulations requirements prior to applying. The change was meant to decrease wait times for “mature applicants” but Prentice argued it has limited the amount of new licenced growers, in turn affecting Ample’s growth in 2019.
Company growth, industry decline
As is true for the majority of the Canadian cannabis industry, 2018 marked a year of rapid growth for Ample. Prentice noted that the Toronto company entered 2018 with just 27 employees and come out of the year with 120.
“Handling that kind of explosive growth is very difficult. And, you know, we’re doing the best we can to be here for the long term,” he said.
Founded in 2014, Ample touts itself as a global leader in cannabis tech, noting that its platform is used by the majority of Canada’s licensed cannabis producers. Operating in four countries, Ample promotes its ability to facilitate compliance between its customers and government regulators, like Health Canada.
Earlier this year, the cannabis software company announced the completion of an integration with Shopify that looked to open up more possibilities for Ample’s licensed producers and create increased accessibility for medical cannabis patients. In January, Ample finalized its acquisition of sales data analytics and visualization platform Last Call Analytics. At the time, Prentice called the data insights gleaned from the acquisition critical for any company’s success in the emerging cannabis retail model.
But the recent changes in the broader cannabis industry forced the startup to make what Prentice called difficult decisions. “There’s no doubt that this industry is in turmoil with the kind of recent announcements from various license holders in the space,” he said.
Capital drying up
The legalization of recreational cannabis in Canada came with significant hype, as international and Canadian investors made big bets. All that seems to have changed.
According to the Financial Post, investors have been turning away from the industry as of late, focusing on the US where cannabis companies are reportedly performing better. Financial Post’s reporting pointed to a number of recent issues in the industry, from the abrupt firing of the CEO of one of Canada’s largest cannabis companies, to that same company’s $323 million losses, as well as failing stocks.
“The investment community is a little disappointed about how recreational cannabis is rolling out in Canada.”
“Backers are starting to judge their investments by profitability instead of hype, and patience is wearing thin,” the article stated.
Prentice acknowledged that he’s also seen a lot of investment capital being focused into the US market as it continues to evolve and state regulations relax. He emphasized that this means there is less capital available for Canadian entities looking to fund and build their own facilities.
“The investment community is a little disappointed about how recreational cannabis is rolling out in Canada,” he added. “It’s been a very slow, methodical process and they’re not getting the returns that I think a lot of people thought there would be. They just haven’t materialized yet.”
Prentice noted that despite these industry changes Ample’s business economics and client base continues to grow – for now. He told BetaKit that while Ample is on-boarding new clients in “the next little while,” he predicts the rate of licensing to continue to slow down, stating that there will eventually be fewer and fewer new cannabis producers in the space for Ample to work with.
“We just need to be proactive about kind of what we saw on the horizon, and make sure that Ample Organics is around to continue servicing the industry and take care of the employees that were able to stay,” he said.