Pot producer Hexo withdraws 2020 forecast, shares slump

FILE PHOTO: A Hexo Corp logo is pictured behind cannabis plants at their facilities in Gatineau, Quebec, Canada, September 26, 2018. REUTERS/Chris Wattie

(Reuters) - Canadian cannabis producer Hexo Corp HEXO.TO pulled its 2020 forecast on Thursday, blaming an uncertain environment and slow store rollouts due to delays in cannabis derivative approvals, sending its U.S. shares tumbling 23%.

The company said it expects fourth-quarter revenue to be in the range of C$14.5 million ($10.89 million) to C$16.5 million, compared with the about C$26 million it estimated in June.

“The delay in retail store openings in our major markets has meant that the access to a majority of the target customers has been limited,” Chief Executive Officer Sebastien St-Louis said in a statement.

Other major Canadian pot producers such as Aurora Cannabis ACB.TO and Canopy Growth Corp WEED.TO have also flagged slow retail rollouts in major markets like Ontario and Quebec as a reason for delays in turning profitable.

Hexo, which is double testing vape products amid increased regulatory scrutiny on the devices, also said jurisdictional decisions to limit the availability and types of cannabis-based products added to the uncertainties.

The U.S. Centers for Disease Control and Prevention said late last month that an investigation into 805 confirmed or probable cases of vaping-related respiratory illnesses suggested that products containing THC, the psychoactive element in cannabis, likely played a role.

The vape crisis is making matters worse for an industry already mired in a capital crunch, Roth Capital Partners analyst Scott Fortune said on Wednesday.

Reporting by Shariq Khan and Arundhati Sarkar in Bengaluru; editing by Patrick Graham and Sriraj Kalluvila