Flow Kana, which bills itself as “California’s No. 1 selling cannabis flower brand,” is cutting up to a fifth of its workforce and its chief executive is faulting the state for failing legal marijuana companies.
The company, which is based in California’s Emerald Triangle — Humboldt, Mendocino and Trinity Counties — is cutting “non-core” staff, CEO Mikey Steinmetz said. He did not disclose a specific number of layoffs.
Flow Kana employs between 201 and 500 people, according to its LinkedIn page.
“It was one of the toughest decisions that I’ve ever had to make,” he said.
“It almost feels like an epidemic of companies of similar size going through similar processes,” Steinmetz said.
The layoffs reflect challenges in California’s fledgling recreational cannabis industry. Voters legalized recreational marijuana in 2016, with sales beginning in 2018.
The intent was to create a lucrative, lawful and licensed marijuana market, but in practice state lawmakers have spent the past two years working to address several industry-identified hurdles.
This year, Gov. Gavin Newsom signed laws aimed at helping the cannabis industry, including one that allows businesses to claim state tax deductions, and another that allows businesses to donate product to medicinal users.
But, other proposals failed, including one that would have allowed cannabis businesses to have access to limited banking services.
One hurdle that Steinmetz identified is the lack of sufficient retail space for marijuana products.
California’s patchwork of legal statuses for marijuana retail means that there is just one retailer in the state for every 34,256 adults 21 and older, according to a survey conducted by BDS Analytics and ArcView Market Research.
“We need more retail, and it’s not in a few months. We need more retail immediately,” Steinmetz said.
He said that while there’s a place for unlicensed cannabis enforcement, the state should create an easier path to allow illicit retail operators to come into the legal market.
“If they were paying taxes the state would be better off,” he said.