An industry martyr and the hill where he died
Published on June 30, 2023 by David Wylie
“Live by the sword, die by the sword.”
Add outspoken Tantalus Labs CEO Dan Sutton to that list.
Few people have been as visible and vocal in the legal cannabis industry as Sutton. He’s a familiar face, regularly seeking press coverage and appearing often in Business In Vancouver and other publications; he’s done Reddit AMAs; and enthusiastically picked fights with the federal government.
Rumours began circulating Wednesday morning on social media that Tantalus was “toast.” Sutton later told StratCann that Tantalus Labs is in deep trouble and trying to restructure. He said the company has laid off the majority of its staff and that they filed a Notice of Intent for Restructuring in Canadian federal court. “Despite continued market success by firms like Tantalus, the regulatory and taxation environment is persistently so burdensome that even today, five years into recreational legalization, free cash flow in the Canadian cannabis industry remains systemically challenged,” he was quoted saying. He’s since sent similar statements to other media.
Sutton made himself the personification of the excise tax reform movement. So it’s no surprise that’s what he blames for the Lower Mainland BC-based company’s significant woes.
That said, it’s unclear how much in excise tax Tantalus owes the feds, what kind of action the government might be taking against them, or how much they owe others.
You could argue, however, that the root of the problem facing the business is that consumers are of the opinion Tantalus mainly sells expensive mids.
Tantalus falls victim to itself
The company also has an image problem of their own doing. Tantalus is the poster child of failing cannabis companies because that’s how they present themselves to the public—weak and starving from overtaxation. Desperation is not a great look.
Seeking public attention has its upsides and downsides. Like anyone under the spotlight, Sutton has both fans and detractors. When you become a public figure it’s a calculated risk, doubly so if you are polarizing and attract controversy. While that can be a good strategy for increasing your own notoriety, it can hurt sales of the product with which you’re associated.
Someone else who regularly enjoyed the limelight was Bruce Linton, former CEO of Tweed.
Earlier this week, I was a guest on the CBC Radio show Daybreak South. They reached out to me to discuss Canopy Growth’s staggering $3.3 billion loss over the past fiscal year and the health of the cannabis industry overall. At one point in the interview, the show’s host, Chris Walker, asked if there was still room for the cannabis sector to shrink. That answer is easy: Yes, there is lots of room.
Too many companies are still out there peddling mediocre products, trying to eke out market share against thousands of others. We are almost five years into legalization and crumbly crap doesn’t cut it. There are a lot of fantastic growers competing against each other and they’ve proven weed grows great in small batches. Agile micros with minimal expenses have an edge. A state-of-the-art multi-million-dollar greenhouse isn’t the game changer it was once thought to be.
Add to that, cannabis consumers are picky and fickle. Even brands consistently dropping fire are only as good as their last lot… or their CEO’s last public appearance.
By the way, if you’re wondering where Tantalus got its name, it’s from a southern BC mountain range that was actually named after a Greek God who was banished to the underworld and surrounded by water that he could never drink and fruit he could never eat.
Sutton may find himself with a similar fate, having fought for changes to the excise tax but never being able to enjoy the reward.