Local Dispensaries Announce Layoffs

Slower sales, supply chain issues, and a string of burglaries have hurt San Francisco’s cannabis industry.

The hope that San Francisco’s cannabis industry would survive COVID-19 unscathed has gone up in smoke. Now, over three months after the city’s shelter-in-place orders first went into effect, at least two local pot shops have announced workforce reductions as a result of reduced sales. 

Last week, The Apothecarium furloughed roughly 20 percent of its staff. With locations in the Castro, Marina, and SoMa, Apothecarium is one of the most prominent local chains on San Francisco’s legal cannabis scene.

As co-founder and CEO Ryan Hudson explained, increased online sales in the form of delivery and pick-up have not made-up for the massive hit to foot traffic caused by the pandemic and the related city and state restrictions.

“Even though online orders for delivery and pickup have increased significantly, our business is facing a difficult time,” Hudson said in a statement provided to SF Weekly.

From a local industry standpoint, the timing of COVID-19 could not have been worse. Not only was 2020 set to be the first year that San Francisco fully embraced its new event permitting policy — first showcased at last year’s Outside Lands Festival — the shutdown orders also arrived about a month before 4/20; the annual cannabis holiday traditionally accounts for a sizable portion of yearly revenue for dispensaries. 

In addition to the furloughs, Hudson also confirmed that “a much smaller number” of employees were laid-off as a result of financial hardships — 25 people were affected in total.

“These were very difficult decisions involving staffers we love and respect,” his statement concluded. “As business returns to normal, we hope to welcome back our furloughed staff.”

The message is similar at SPARC, which also has three locations throughout the city.

Speaking with the Bay Area Reporter, SPARC’s Michael Bossart confirmed that the company recently furloughed seven employees from their staff of 120. (SPARC did not respond to multiple requests for comment.) Bossart further said that internal reorganization, role consolidation, and executive team salary pay cuts were also being implemented as cost-saving measures.

In addition to reduced profits as a result of COVID-19 restrictions, there is also the matter of the spree dispensary break-ins. As protests over the murder of George Floyd reached a boiling point during the last weekend in May, dispensaries in San Francisco and across California were hit in what appear to be pre-planned attacks. 

Both SPARC and Apothecarium were among the local pot shops targeted, which led to temporary closures as well as damage and property losses. While it’s undoubtedly a chaotic moment to be a legal dispensary right now, the reach of COVID-19 extends beyond the customer-facing aspects of the industry, too.

As the co-founder of Potli, Christine Yi approaches the industry from a manufacturer’s viewpoint. Along with her business partner, Felicity Chen, the two produce both THC-infused pantry products, like olive oil and honey, as well as a CBD-only line. Since 2018, Potli has operated out of a facility in the Bayview — one of the only areas in San Francisco where non-retail cannabis businesses are allowed.

According to Yi, logistics have been Potli’s biggest hurdle since COVID-19 hit.

“That’s probably how the pandemic has impacted us most directly,” Yi told SF Weekly. “We get a lot of our jars and bottles from China, so we started feeling the effects of that very early-on. Lead times have been longer. With the CBD side of the business, at one point, shipping to our customers was taking 10 business days. That’s an eternity in the e-commerce world.”

Despite these hurdles, Yi reports that Potli has “fared okay” overall thus far. She does voice concern, however, that the bullseye apparently hovering over California’s legal operators at the moment may cause them to be more frugal in what and how they order moving forward.

“We haven’t had damaged storefronts or anything like that,” Yi noted, “but our business isn’t built around a high-frequency product, like prerolls, so I do think retailers are potentially going to be more mindful of what they carry and that could definitely impact us.”

In total, there are currently 34 dispensaries legally operating in San Francisco. Factor in manufacturers, distributors, cultivators, and delivery services operating within the city and the number of San Franciscans relying on regulated cannabis for their livelihoods grows even larger. 

Should they be worried? That’s what industry veteran David Bienenstock thinks. 

In an email to SF Weekly, the longtime cannabis reporter and co-host on the popular Great Moments in Weed History with Abdullah and Bean podcast suggested that recent furloughs and layoffs were merely fresh symptoms of a long-established condition.

“The challenges facing the cannabis industry long predate both coronavirus and the recent civil unrest around abusive policing,” Bienenstock said. “These layoffs show that even long-established brands and retailers now face a future that’s uncertain at best. Weed may indeed prove recession-proof, but with dispensary prices so high due to taxes and regulations, will consumers increasingly move into the unregulated market?”

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