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OrganiGram to Reduce Workforce by 45% Due to COVID-19

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OrganiGram Holdings (NASDAQ:OGI) has joined the list of cannabis companies, like Canopy Growth (NYSE:CGC) and Aurora Cannabis (NYSE:ACB), that will reduce their workforce. On April 6, OrganiGram announced that it will temporarily lay off 400 employees to maintain the social distancing initiatives amid the COVID-19 outbreak. The company announced that it offered voluntary layoffs to certain staff. The employees, who opted for the voluntary layoff, formed the majority of the workforce reductions. Meanwhile, the company also added that some of the administrative, support, and other functions became redundant in the short term amid the pandemic. The layoffs will reduce OrganiGram’s workforce by 45%.

Meanwhile, OrganiGram’s management stated that they’re paying a lump-sum amount to laid-off employees. The company said that it will pay the employees part of the health, dental, and short-term disability premiums during this difficult time.

OrganiGram plans to have a group of experienced employees at its Moncton facility. The employees will have flexible skillsets to work across production and packaging lines to meet New Brunswick demand levels. The company will also keep its offices in Moncton, Toronto, and Ottawa open.

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Notably, OrganiGram has taken the necessary measures recommended by health organizations amid the pandemic. During this period, the company expects a reduction in the cultivation, harvest, production, and packaging of cannabis products. However, the company plans to utilize the inventory to meet the demand. Meanwhile, management hopes to maximize its automated and efficient lines of production. Also, OrganiGram will deprioritize products, which are of lower value and require higher manual labor. The company reported no disruption from external suppliers for vaporizer products and packaging materials until now.

OrganiGram’s update on its new product launches

Despite the gloomy situation, OrganiGram maintained that it will launch its Edison + PAX ERA distillate vape cartridges in the second quarter of 2020. The company plans to introduce the product where vape products are legal. Meanwhile, the company couldn’t provide the launch date for its Ankr Organics branded products. Although the product is ready for packaging, the company is still in the process of assessing the impact of the reduced workforce. Similarly, OrganiGram wasn’t able to provide the launch date for its powdered beverage product. Earlier, the product was scheduled to launch in the second quarter of fiscal 2020.

Stock performance

So far in 2020, OrganiGram has lost 25.1% of its stock value. Despite the fall, the company has outperformed its peers and cannabis ETFs. During the same period, Canopy Growth, Aurora Cannabis, and Aphria (NYSE:APHA) have fallen by 25.9%, 59.9%, and 37.5%, respectively. The ETFMG Alternative Harvest ETF (NYSE:MJ) has declined by 35.7%. The impressive first-quarter performance and an upgrade from Bank of America reduced the impact of the COVID-19 outbreak on OrganiGram’s stock price. The company will report its second-quarter earnings on April 14.
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