Article by Marijuana Business Daily
Canadian cannabis producer Organigram Holdings reported a continued slide in net revenue for the third quarter of 2020, down by 22% from the second quarter to $18 million Canadian dollars ($13.4 million).
Organigram previously warned investors about the revenue decrease for the quarter ended May 31.
The New Brunswick-based company attributed the revenue slump to lower volumes of flower sales as well as lower average net selling prices as competition increased and Canada’s market for value cannabis flower grew.
Organigram’s own large-format value product, Trailer Park Buds, “did not launch until the end of April 2020 due in part to a reduced workforce from COVID-19,” the company said, hinting at a lost opportunity to capture a greater share of the value market in the quarter.
Following concerns about Trailer Park Buds’ compliance with Canada’s strict laws on cannabis promotions, Organigram said the product’s logo will be changed to “Buds” while the company works on revising the brand name.
That name change resulted in “some disruption to supply” in the first month of Organigram’s fourth quarter, the company said.
Organigram’s third-quarter net loss was CA$89.9 million, compared with CA$6.8 million in the previous quarter.
The company recorded a nearly CA$3 million provision for “returns and price adjustments on slow-moving and aged product” in the quarter.
A CA$19.3 million write-off of “excess and unsaleable inventories” – including CA$11.9 million related to cannabis trim and concentrate – increased Organigram’s cost of sales to CA$44.4 million in the quarter, from CA$15.8 million in the second quarter.
Organigram also reported CA$7.9 million in charges related to COVID-19 workforce reductions, including CA$5 million in “extraordinary plant culling.”