Muskoka Grown issues 14 layoffs at Bracebridge facility due to Ontario's cannabis regulatory delays

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Photo: Muskoka Grown Website

Agatha Farmer

Poor performance in sales of cannabis in Ontario and lack of retail stores in the province was felt by employees at Muskoka Grown in Bracebridge this past month.

The Muskoka based 65,000 square foot growing facility recently downsized 14 positions across the organization.

"In response to challenging industry conditions and regulatory delays resulting in fewer than anticipated stores across the province, we’ve had to review our priorities and unfortunately had to make the very difficult but strategic decision to right-size the company to position us for the long-term," said Andrea Grand, Director of Marketing.

The lack of cannabis stores in the province of Ontario has been lamented by industry leaders, producers, and retailers alike. In September 2019 the province reported that Ontario government-owned cannabis business lost $42 million in the last fiscal year. The province collected barely half the amount of excise taxes it estimated it would generate in Canada’s most populous province.

Slow retail coverage has been an issue across Canada since cannabis was legalized in October of 2018. Alberta, however, with over 300 licensed private cannabis providers seems to have the most successful retail system in the country. Alberta's population is 4.37 million people. Ontario with 14.57 million people or 40 per cent of the nation’s population, has just 24 stores, the government is in the process of increasing that number to 75. Proportionate to population Ontario should have close to 1000 retail stores at this time, that is a far cry from where the industry sits currently.

Online cannabis stores from across the country — most of which are operated by provincial wholesalers — made approximately $120 million in the year following legalization, while brick-and-mortar stores made up the remaining $788 million in sales.

On a per capita basis Ontario reported sales values at $15 per capita in the year following legalization. Alberta, by contrast, had one of the highest per capita sales values at $45.

Statistics Canada attributed these vast differences to varying access to cannabis stores. In Ontario just nine per cent of residents lived within a three kilometre distance to a cannabis store, whereas in Alberta 50 per cent of residents lived within three kilometres of a cannabis store.

Last week the Ford government announced it will be launching consultations in order to provide consumers more choice and convenience on cannabis while giving the private sector enhanced ability to compete against and combat the criminal market.

"Ontario continues to take a responsible approach to cannabis retail sales across Ontario, allowing private sector businesses to build a safe and convenient retail system to combat the illegal market while keeping our kids and communities safe," said Attorney General Doug Downey. "We are asking Ontarians to share their feedback as we explore certain expanded cannabis-related business opportunities as part of our responsible approach to protecting families and communities. What we hear from the public and expert groups will help to inform possible next steps."

As the government continues to drag its feet on expanding retail stores in the province, Canopy Growth Corp. chief executive officer Mark Zekulin said Canada’s market “is simply not living up to expectations."

“At the risk of oversimplifying, the inability of the Ontario government to license retail stores, right off the bat, has resulted in half of the expected market in Canada simply not existing," said Zekulin

While he is pleased that the Ford government is exploring a further move toward an open allocation of retail licences where the number of stores will only be limited by market demand, he notes that "this is a big deal but it cannot come soon enough."

Unfortunately for 14 of Muskoka's residents and Muskoka Grown it has not come soon enough and the company is "saddened by this turn of events."

"It's a struggle that all small businesses face and we are confident that with the imminent increase in cannabis retail stores across Ontario, demand will once again return and we can then focus on rescaling the company," Grand said.

People interested in participating in the provinces cannabis consultations can submit their feedback online by visiting the Ontario Regulatory Registry.

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