Two of Canada’s leading companies have reported a reduction in the per-gram price of cannabis in Canada’s legal market. Tilray, Inc. and Cronos Group released financial results for the third quarter on Tuesday, November 12. Although both companies welcomed fair financial results, they each reported a reduction in the per-gram price of their bud.
Net selling price per gram of Tilray’s weed sinks 30 percent
During the third quarter of this year, Tilray sold – equivalent to – 10,848 kilograms of cannabis. This is more than double what Tilray managed to sell in the previous quarter. While this is good news for the company, the net average selling per-gram price of weed shrunk to $3.25 – a 30 percent reduction.
On a positive note, revenue soared 408.6 percent to USD$51.1 million; in comparison with Q3 2018. Driving factors are the expansion of Canada’s adult-use cannabis market, as well as the recent acquisition of Manitoba harvest. The company also yielded a healthy profit as a direct effect of receiving GMP certification for its facility in Portugal. After the deduction of excise taxes, Tilray’s tax revenue rested at $48.2 million.
Licensed Canadian cannabis producer Tilray also reported how the company saw its third-quarter loss more than double, in spite of the fact that sales have risen as of late. The losses were attributed to Tilray expanding into the hemp market and broadening business operations on an international scale, thus increasing overhead costs.
Based in Nanaimo, B.C., Tilray published a net loss amounting to $35.7 million for the quarter concluding on September 30. A year prior to this, Tilray’s net loss was $18.7 million. For the third quarter of this year, revenue climbed $12 million; jumping to $67.8 million.
In regards to who is buying Tilray’s cannabis products, the report suggests that a mere 30 percent of the company’s total revenue was made up of adult-use sales; a two percent reduction from the second quarter.
Cronos Group sees 48 percent drop in year-over-year per-gram prices
The other company that has seen its per-gram price of weed drop was Cronos Group, which pulled in just over USD$10 million in gross sales for the third quarter. Excise taxes were subtracted from the sales, leaving Cronos with $9.5 million in third quarter earnings. Cronos’ quarterly profit amounted to $593 million; mainly due to a huge cash injection that occurred following the revaluation of derivative liabilities associated with Altria Group-owned warrants.
These figures could have been better if legal per-gram prices hadn’t dropped 48 percent year-over-year. Cronos attributed the plummeting per-gram prices to a lack of legal channels in which supply can be distributed.
More dispensaries must open for Canada’s cannabis industry to thrive
More supply chains are proliferating throughout Canada’s legal cannabis market all of the time, resulting in facilities churning out more weed than consumers are demanding. Retailers like Tilray and Cronos are slashing their per-gram weed prices as a method of ensuring oversupply does not go to waste.
With delays in the roll-out of dispensaries spread across various Canadian provinces, there is a noticeable lack of licensed shops in which Canada’s cannabis supply can be legally distributed. Until more dispensaries open their doors, oversupply and low per-gram price predicaments are likely to linger.
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