(Reuters) - Cannabis producers Tilray Inc and Aurora Cannabis Inc on Tuesday reported a surge in quarterly revenue, boosted by increased demand following the legalization of recreational cannabis in Canada.
Canada has become the first industrialized nation to legalize recreational use of cannabis, in an effort to keep pot out of the hands of underage users and defeat the black market.
Tilray said total kilogram equivalents of cannabis sold in its first quarter ended March 31 rose more than twofold to 3,012 kg. The average selling price per gram, however, fell to $5.60 from $5.94 a year earlier.
“Our growth internationally and in Canada continue to be limited by lack of supply that we expect to improve over time,” Tilray Chief Financial Officer Mark Castaneda said on a conference call with analysts.
The company said it expected demand and supply to reach an equilibrium in about a year to two years.
Aurora said marijuana sales in its third quarter ended March 31 rose to 9,160 kg from 6,999 kg in the second quarter.
The Edmonton, Alberta-based company’s gross revenue rose to C$75.2 million ($55.87 million) from C$62 million ($46.07 million) in the second quarter. Analysts on average were expecting C$77.16 million ($57.33 million), according to IBES data from Refinitiv.
Total cannabis sales in the consumer market were C$29.6 million ($21.99 million) in the third quarter, versus C$21.6 million ($16.05 million) in the second quarter.
Tilray posted revenue of $5.6 million from food products in its quarter. It has raised its exposure to hemp, a type of cannabis plant with little to no concentration of THC, by buying Manitoba Harvest for up to C$419 million in February.
The Nanaimo, British Columbia-based company’s revenue nearly tripled to $23 million, beating analysts’ estimates of $20.2 million.
Shares of Tilray rose 4.7% to $51.15 in extended trading on Tuesday. Aurora’s New York Stock Exchange-listed shares rose following the report but fell 2% after the bell.
Reporting by Nishara Karuvalli Pathikkal and Tamara Mathias in Bengaluru; Editing by Shinjini Ganguli and Peter Cooney