Two of Sonoma County's best-known cannabis manufacturers are cutting more than 100 jobs combined, a fresh sign that California's adult-use market has not found its floor. CraftForce Services, the manufacturing arm of CannaCraft, will lay off nearly 60 employees at its Santa Rosa facility on Sept. 20, according to a state-mandated WARN notice. NorCal Cannabis Co., operating as GB2 LLC and also headquartered in Santa Rosa, is cutting about 49 workers on Sept. 13, per a separate filing first reported by The Santa Rosa Press Democrat.
The cuts land at the production level - trimmers, packaging staff, production technicians - the workers who turn cultivated flower into the finished, lab-tested, compliant packaging that eventually reaches dispensary shelves. Most of the affected CraftForce employees are represented by United Food and Commercial Workers Local 5; NorCal's packaging and trimming staff are not unionized, according to the Press Democrat. That distinction matters operationally, since union shops carry different severance and notice obligations that can shape how a manufacturer times a reduction in force. For retailers managing wholesale menus and inventory through platforms like cannabis e-commerce and POS systems, disruptions upstream at manufacturing partners can ripple quickly into SKU shortages and reordering headaches, particularly for private-label lines tied to a single processor. cannabis e-commerce and POS
A Contraction, Not a Blip
Bret Peace, CEO of parent company Groundwork Holding, framed the layoffs as a structural correction rather than a one-off. "It's not a decision we made lightly," he told the Press Democrat, adding that the industry has shifted toward operators who do more with less space and specialized labor. "It was sized to a scale of industry that didn't materialize," he said. That's a blunt admission, and it echoes what plenty of Sonoma County operators have been saying quietly for a while: the facilities, headcount and capital structures built during the early rush no longer match the revenue the market actually produces.
The numbers back him up. California retailers reported $3.9 billion in cannabis sales in 2025, down from $4.2 billion in 2024, according to state tax data. That's the third straight annual decline, following $4.4 billion in 2023. For a market regulators once described as capable of billion-dollar growth, three consecutive down years is not a rounding error - it's a trend line operators, landlords and investors have to plan around, not wish away.
Wholesale Pressure Meets Fixed Costs
Here's the mechanism worth understanding: manufacturers like CraftForce and NorCal sit downstream of cultivators and upstream of dispensaries, absorbing wholesale price compression from both directions. When flower prices fall and retail margins stay thin, processors are the ones squeezed between a shrinking wholesale ceiling and fixed costs - leases, payroll, 280E tax exposure, compliance overhead tied to seed-to-sale tracking through METRC. Vertical integration was supposed to insulate companies from exactly this kind of pressure. In practice, though, scale built for a bigger market becomes a liability once demand contracts, and consolidation or downsizing becomes the only lever left to pull.
Local Governments Are Responding, Slowly
Sonoma County's Board of Supervisors approved a tax break in April, cutting the cannabis business rate to $0 for qualifying operators in fiscal 2026-27, the Press Democrat reported, alongside a new annual licensing system with fees starting above $500 to fund the county's commercial cannabis program. Whether that arrives fast enough to matter is a fair question. Tax relief helps operators already standing; it does little for the workers already handed a WARN notice.
The pattern isn't confined to California. Multistate operator The Cannabist Co. has shuttered cultivation operations in Colorado and New Jersey, and the U.S. Cannabis Jobs Report 2026 from Vangst and Whitney Economics found the legal industry employed 412,500 people in early 2026, a 2.7% decline from 425,002 the year before. For dispensary owners, wholesale buyers and compliance teams, the takeaway is straightforward: vetting supplier stability, diversifying wholesale sourcing, and watching a manufacturing partner's balance sheet has become as important as checking a COA before a purchase order goes out.
