Canadian license holder Pure Global Cannabis has become the latest marijuana firm to shed part of its workforce to conserve cash amid the challenging capital market conditions facing the industry.
“This is about cost containment,” CEO Mel Panchal said in an interview. “It’s just prudent fiscal measures to ensure that we’re not burning unnecessary cash. When the time comes, they’ll be brought back in.”
Panchal did not state how many workers were let go.
Securing financing has been difficult, the Pure Global CEO said, but a deal is “very close.”
Pure Global is reviewing two options, one of which may close by the end of the year.
“We’re sort of in a holding pattern, waiting to be able to buy more inventory and commence certain operations, so there are certain staff that just couldn’t be utilized. It’s just a prudent fiscal measure of containing costs where we possibly can,” Panchal said.
“It gives us enough of a buffer to ensure the company secures the right financing.”
Pure Global’s wholly owned subsidiary, PureSinse, is licensed by the federal government for cannabis sales, processing and cultivation.
PureSinse’s main site is an 18,000-square-foot facility in Brampton.
In a recent regulatory filing, Pure Global said its current capital resources “are not sufficient to pay overhead expenses for the next twelve months and is currently seeking additional funding to fund its overhead expenses and its continuous search for other business opportunities.”
Pure Global is yet to generate significant sales and relies on external financing to generate capital.
As of Sept. 30, Pure Global held cash and cash equivalents of 146,000 Canadian dollars ($111,000), down from CA$7.7 million on Dec. 31, 2018.
Panchal acknowledged that the cannabis industry has gone through tough times recently.
“There’s a real world that’s now emerging and I think those operators that have a lean perspective have the best chance of surviving,” he said.
“We have operations now commencing in China, so we want to allocate more of our resources to ensuring that is progressing. Canada is really our R&D hub, so we don’t really need a hefty organization here. We’re really just making adjustments to hone in more.”
The company recently received its Canadian manufacturing license.
“Now our focus can shift to that key area of bulk extracts, pre-formulated co-manufacturing, white labeling, and indoor cultivation of high-quality GMP-grade (cannabis) for exporting,” said the CEO.
Pure Global’s shares trade on the TSX Venture Exchange under the trading symbol PURE.