The Supreme Cannabis Company (TSX:FIRE) became the latest Canadian cannabis producer to announce layoffs Tuesday – an epidemic of cost cutting measures spreading across an industrial environment full of well-backed cultivators who have all struggled to turn a profit.

By Supreme Cannabis’ own count, they laid off 33% of their corporate staff and 13% of their operational staff, amounting to 15% of the total staff. The “rightsizing of production, overhead and capital expenditures,” comes only 13 days after Supreme sent around an email celebrating the completion of construction at their 7 Acres facility in Port Elgin, ON, and two days before the company is due to report its financial results for the period ending December 31, 2019.

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As ugly as the P&L looks, it’s Supreme’s balance sheet that represents the existential threat. Supreme issued $100M in convertible debentures in October of 2018 to finance the 7 Acres build out and its very expensive administration. That debt can be converted to equity at $1.45/share $2.45/share or paid off by October of 2021, both of which look unlikely, because Supreme doesn’t generate cash, it burns it, a condition that has their stock trading in the $0.40 range ($FIRE was up +$0.035 Tuesday to close at $0.445 following the announcement about the staffing cuts).

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Supreme Cannabis layoffs: A deeper look