SNDL Inc. announced plans to cut 85 jobs at its cultivation facility in Olds, Alberta, as part of an effort to streamline the company’s manufacturing and operational footprint following its acquisition of The Valens Company.
"We have made the difficult decision to materially reduce staffing and activity levels in Olds, Alberta, in order to improve the efficiency of our operations as one of Canada's largest adult-use cannabis manufacturers," said SNDL CEO Zach George. "With the Olds facility already in operation when I joined SNDL, I am proud of the cultivation capabilities and high quality flower that our teams have developed and produced.
“We estimate that more than 1 billion grams of flower are sitting in Canadian vaults today. Oversupply and excess capacity have resulted in high quality flower being widely available and sold well below the marginal cost of production. Using available and existing biomass, we will be better equipped to leverage the current pricing environment to materially improve our cost of goods sold and margins. We are taking a proactive approach with our cultivation and manufacturing strategy to evolve with the market while continuing to deliver exceptional products across a variety of product and price segments."
SNDL said the workforce reduction is part of a larger program that is expected to deliver close to $9 million in savings across labor and operational costs. The company said its cost savings initiatives are expected to exceed its previously announced integration savings target as a result of the acquisition of Valens. SNDL expects to complete most of this transition within the first quarter of 2023, and the cost savings will be immediately accretive to adjusted EBITDA. SNDL said it expects to report record net revenue and net cash provided by operating activities for the fourth quarter of 2022, with the year-end and fourth quarter of 2022 results expected to be announced at the end of March 2023.