What does $4.8B merger of marijuana firms mean for local workers?

Twitter icon

The merger of two of Canada’s largest cannabis companies could bring mixed news for workers at the firms’ Southwestern Ontario operations, says a leading industry analyst.

Leamington-based Aphria and Nanaimo, B.C.-based Tilray announced this week they’re merging to create a $4.8-billion company in the new year.

The all-stock deal, if approved, could bring job stability to workers at Tilray’s processing plant in London, while the future is less certain for staff at its greenhouse near Petrolia, said Craig Wiggins, a marijuana industry analyst and managing director of the Cannalysts.

“I do think the greenhouse is in jeopardy.” Wiggins said of the five-hectare greenhouse in Enniskillen Township. “Simply because Aphria has a tremendous amount of capacity at low cost.”

Aphria has two large-scale greenhouses in Leamington, employing 700 workers.

Licensed pot producers across Canada went on building sprees ahead of the legalization of recreational marijuana in 2018, a trend that continued in the following months.


But an oversupply of product — combined with a slow rollout of brick-and-mortar retail stores, especially in Ontario, Canada’s largest cannabis market — left many companies in dire financial straits, leading to layoffs and other cost-cutting measures.

“There are so many companies that overbuilt cultivation only to find out that they couldn’t sell what they are cultivating,” Wiggins said.

In London, Tilray operates a 5,200-square-metre plant that processes pot from the Enniskillen Township greenhouse into edibles, beverages, vapes and other products.

Tilray struggled to get a significant slice of the adult recreational market and had turned to cost-cutting measures including slashing jobs — there have been two rounds of layoffs at the London plant this year — in a bid to break even, Wiggins said.

“Those facilities were at risk, like the entire operation at Tilray was at risk,” he said of the company’s Southwestern Ontario’s operations.

But now, Tilray will be in a much stronger position, Wiggins said.

“It’s better to have a processing facility secured forever and lose the greenhouse than lose them both,”
he said.

A Tilray spokesperson said the London processing plant was part of a “strategic rationale” for the merger, saying the deal will provide a path to market leadership in the manufacturing of vapes, edibles and beverages.

“After the transaction closes, we anticipate increasing the utilization of that facility by likely running additional brands and products there,” spokesperson Berrin Noorata said in an email.

During a Zoom call with Tilray chief executive Brendan Kennedy on Wednesday, workers at the London plant were told there wouldn’t be any moves until the end of June, one employee said.

e-mail icon Facebook icon Twitter icon LinkedIn icon Reddit icon
Rate this article: 
Regional Marijuana News: