Prices for weed have taken a hit in Canada as demand has lagged expectations set last year, when the nation became the first among G7 countries to legalize recreational marijuana.
The cannabis industry in the country is also facing a supply glut as companies ramp up production to dominate the nascent industry.
Cronos’ net product revenue per gram sold outside the United States fell to C$3.75 in the third quarter, while Tilray’s average net selling price per gram also nearly halved to $3.25.
Higher spending on research and development, acquisitions and expanding in new markets have also weighed on cannabis companies’ profitability, with an alternative harvest ETF (MJ.P), which tracks cannabis-related stocks, down about 25% this year.
Sales and marketing costs spiked nearly five fold at Tilray, while Cronos’ operating expenses also rose to C$34.8 million.
Tilray’s net loss widened to $35.7 million in the third quarter from $18.7 million a year earlier. Cronos’ adjusted core loss rose over 7 times to C$23.9 million.
Net revenue at Tilray and Cronos rose as both sold more pot during the quarter.
Reporting by Shariq Khan and Shanti S Nair in Bengaluru; Editing by Shinjini Ganguli and Shounak Dasgupta