By Nikki Wentling Denver Business Journal
Denver-based cannabis retail software company Flowhub laid off employees this summer in a company-wide restructuring, Flowhub CEO Kyle Sherman confirmed.
Business Insider, citing three former employees who remained anonymous, reported Monday that Flowhub cut a dozen employees, or about 15% of its staff. In a statement to the Denver Business Journal, Sherman said Flowhub restructured in July because of “a new product direction and the current macroeconomic environment.”
In a public post on LinkedIn, one former employee wrote that half of Flowhub’s implementation team was laid off.
“It was a tough decision, but the reality of the current environment required us to re-examine operational costs against future business plans,” Sherman said in the statement.
Flowhub was founded in 2015 and has raised a total of $50 million in venture capital. It announced a $19 million capital raise in October, which included an investment from Shawn “Jay-Z” Carter.
The company works with dispensaries by providing platforms that provide inventory tracking, point-of-sale and compliance services, as well as business intelligence data. As of October, Flowhub worked with more than 1,000 dispensaries in 14 states, processing more than $3 billion in cannabis sales annually.
Flowhub joined a growing number of cannabis companies that have reported layoffs in recent months.
Layoffs.fyi, which tracks cuts in the tech industry, lists five other cannabis companies in the United States and Canada that have eliminated workers since the beginning of June. Oregon-based Dutchie, a competitor of Flowhub, laid off 66 employees in June, and Canada-based Aurora Cannabis Inc., a licensed cannabis producer, announced in June it would cut about 12% of its workforce, or 100 employees.
Los Angeles-based Weedmaps, a cannabis advertiser, cut about 60 employees last month. In a memo to employees, Weedmaps CEO Chris Beals cited market contractions in California, Colorado and Oklahoma as part of its reasoning for the layoffs. Beals wrote that the three states had experienced “meaningful slowdown in legal cannabis sales.”
In Colorado, cannabis sales figures are falling.
According to sales numbers reported by the Marijuana Enforcement Division of Colorado’s Department of Revenue, the state’s marijuana sales are trending downward year over year and have been since June 2021.
The state of Colorado collected $9 million less in total cannabis taxes and fees in April 2022 compared to April 2021. In the four months ending April 30, 2022, Colorado saw its total taxes and fees from marijuana sales reach $117 million, down $26 million from the same period in 2021.
Denver-based Marijuana Policy Group’s co-founder Adam Orens pointed toward post-Covid-19 consumer trends and rising inflation as the reason for dropping sales.
Others suggest the market is normalizing after a pandemic bump that saw record sales. However, sales in June 2022 fell below monthly sales in June 2019, according to the Colorado Marijuana Enforcement Division.
In his statement, Sherman said that Flowhub restructured in order to ensure its longevity as a market leader in the industry. The company plans to launch a new platform experience for its clients soon, he said.
“We are confident about the future, and are excited to launch a new platform experience soon in order to continue on our mission of helping dispensaries increase access to safe cannabis products through innovative, efficient technology solutions,” Sherman said.
