Veritas Lays Off Staff, Closes Grow to Sell Third-Party Cannabis

Veritas Fine Cannabis has undergone another round of layoffs and is cutting back heavily on its cultivation output, according to president and CEO Jon Spadafora.

Perhaps Colorado's first notable wholesale cannabis grower, Veritas once operated several cultivations across the state and was the first to supply flower to Cookies when the Bay Area brand entered Colorado in 2020. Veritas began closing facilities and laying off staff in 2022, however, and went through another round of downsizing in late January.

According to Spadafora, Veritas has shut down its growing facility in Denver and will now outsource flower from other growers in Colorado. A growing operation in Aurora previously used for tissue-culture breeding will become a small-batch cultivation, but the vast majority of Veritas flower will be grown by a farm in Durango that Spadafora declines to name, as well as "small farms in the area putting out great product," he says.

"At the end of the day, we'll see if it's the right move, but we felt we had to make some significant changes to maintain our spot as an original cannabis brand in Colorado, and we've seen some Colorado titans fall lately," he says. "We feel Veritas has a distribution network that can highlight smaller farms. It's a big shift, but this feels like the right move."

Multi-state cannabis giant Curaleaf exited the Colorado market last year, followed by longtime edibles brands Coda Signature and 1906, both of which were founded in this state but left for states newer to legalization.

After increasing for seven straight years to a record $2.2 billion in 2021, dispensary sales have been falling in Colorado, hitting just over $1.5 billion for 2023. Record-low cannabis prices and a 30 percent decline in employment have also hit pot businesses during that span, while Colorado Department of Revenue data shows that the number of recreational growing licenses fell over 21 percent from December 2022 through December 2023.

Veritas has been able to survive, but not without paying a hefty price. At its height, the company had nearly 150 employees and operated a marketing and sales service for other cannabis brands such as Happy Fruit edibles, Sunshine Labs and Olio extracts. Although Olio and Veritas share a co-owner, Spadafora says their relationship ended in 2022. That same year, Veritas laid off 33 employees.

Veritas announced partnerships with cannabis brands Garcia Hand Picked in 2022 and Compound Genetics in 2023, but the revenue didn't rebound and the loss of staff continued. After more layoffs in 2023, Veritas laid off an additional fifteen employees in late January of this year; today the company has 28 employees, Spadafora says. All sales and marketing efforts for outside brands other than the Compound Genetics partnership have ended, he adds.

"There were certainly times where trying to do too much led to us putting out things we wish we wouldn't have. The reality is that we found success during a time where there was so much energy and opportunity," Spadafora admits. "The biggest problem we were facing at the time was that we could never produce enough product fast enough. If we had had a better understanding of where the market was going to be after COVID and the new markets coming online, we probably would have made different decisions."

Spadafora acknowledges that Veritas erred in strategic planning around the cultivation over the last few years, as well, and that ownership invested too heavily in LED lighting and not enough on growing automation.

"We didn't pay enough attention to technology and what was happening around us," he says. "So many people are turning out really good weed right now, and they're able to do it with limited staff."

A former hospitality executive in Las Vegas, Spadafora believes that Colorado's lack of success in cannabis delivery and hospitality may have contributed to the current industry recession. Still, there isn't a single cannabis business in Colorado that has been immune to the current state of the industry, he notes.

"There are people navigating it better than others, I'm sure, or people who made investments at the right time, but we're all part of this. There are less customers in stores, and that makes it take longer for our bills to get paid — and then it takes longer for us to pay our bills," he says. "The amount of life being taken out of the market makes me believe that it will get better at some point, but I'm past the part of thinking it can't get worse, because we just keep seeing more and more slide."