The Canadian weed company that’s going to destroy $77 million worth of illegal cannabis plants and inventory, is slashing the jobs of a quarter of its workforce. It is the second major cannabis company to announce hundreds of layoffs this week amid a big downturn in the weed industry, a year after recreational pot was legalized.

CannTrust Holdings today announced that it is temporarily cutting 140 positions as it works to comply with Health Canada regulations. The licenced producer is dealing with an illicit weed scandal that forced out its CEO and raised questions about how the legal cannabis industry operates.

The scandal involved illegal grow rooms hidden behind fake walls, which produced at least five metric tons of pot, some of which was exported outside Canada. High-ranking CannTrust employees reportedly knew about the illegal grow op and didn't stop it.

Robert Marcovitch, interim CEO, CannTrust, told VICE via email that downsizing was a “difficult decision.” He wrote that “reducing the company's current operating expenses supports our financial sustainability, and places us in the best position to fully resume production upon the reinstatement of our licenses. We look forward to rehiring at that time, and once again delivering high-quality, innovative products to both our customers and patients."

The CannTrust cuts will happen in phases until the end of the year. The layoffs will result in monthly savings of about $400,000 and cost as much as $800,000 in severance payments if employees aren’t called back within the next 9 months. These are estimates though, because it all depends on when, or if, Health Canada reinstitutes CannTrust’s licences, which were suspended after the discovery of its illegal weed production.

Quebec-based licensed producer Hexo this week announced that it is laying off 200 people, roughly 20 percent of staff, including executives. In a press release Hexo’s CEO Sebastien St.-Louis described the move as something the company has to do to be profitable in the long-run.

He also said that the day of the announcement was his “hardest day” at Hexo and it was “extremely difficult to say goodbye to trusted colleagues.”

Many of the affected employees were originally part of the Newstrike Brands company, which was backed by The Tragically Hip. Hexo bought Newstrike in May in a $260 million deal.

Cannabis stocks—which were on a tear between 2016 and the first few months of this year—have been beaten down over the past six months.

It’s not all bad news though. Cannabis stocks across the board are struggling, but there are some companies that are growing as Canada’s edibles, drinkables and topicals market starts to roll out. On Tuesday, James E. Wagner Cultivation Corporation (JWC) held a job fair for the 400 positions it’s looking to fill; an estimated 800 people attended.