Organigram’s Cannabis Woes: $162 Million Loss Amidst THC Inflation Surge

Organigram’s <a rel="nofollow" title="Cannabis" href="https://en.wikipedia.org/wiki/Cannabis">Cannabis</a> Revenue Plunge: <a href="https://leafyleaks.com/tag/thc/" class="st_tag internal_tag " rel="tag" title="Posts tagged with THC">THC</a> Inflation Surges, Leading to $162 Million Loss

Organigram’s Cannabis Revenue Plunge: THC Inflation Surges, Leading to $162 Million Loss

New Brunswick-based cannabis grower and manufacturer Organigram Holdings has faced a significant setback, with a net loss of 213.5 million Canadian dollars ($162.1 million) in its third-quarter financial report. The driving force behind this staggering loss was a massive CA$191.2 million impairment charge, marking a worrisome trend of THC inflation within the industry.

During the quarter ended May 31, Organigram experienced impairment charges, which included CA$37.9 million in intangible assets and goodwill, along with a substantial CA$153.3 million related to property, plant, and equipment. These losses were largely due to the deceptive practice of THC inflation, leading to diminished flower sales and margins.

In a candid statement, Organigram CEO Beena Goldenberg admitted that THC inflation is not a new occurrence, but it had become more prevalent in recent times. She revealed that nearly half of the cannabis flower sales during the third quarter consisted of labeled with 26% THC or higher. Shockingly, the number of stock-keeping units (SKUs) boasting THC levels above 26% had doubled over the past 10 months. Even more concerning, the SKUs labeled above 30% had multiplied tenfold compared to the previous year.

Organigram has particularly felt the brunt of THC inflation in the bulk 28-gram cannabis flower category. Goldenberg pointed out that certain licensed producers, who previously averaged sales of flower in the 21% to 22% range, are now claiming THC levels between 28% to 32%. The company believes that these improbable increases in THC levels cannot be attributed to advanced techniques, indicating a growing concern affecting the entire industry.

To address the issue and retain consumer trust, Organigram decided to flower , aiming to restore the value equation for their customers. Additionally, the company is focused on increasing cannabis potency through proper THC testing and has been actively engaging with key stakeholders, including Health and provincial cannabis wholesale boards, to find sustainable solutions.

Despite facing with THC inflation and other obstacles, Organigram managed to achieve a 7% growth in adult-use net revenue from the second to the third quarter. However, the total net revenue of CA$32.8 million marked a 14% decline from the same period last year and a sequential drop of 17% from Organigram’s second quarter.

Goldenberg attributed the disappointing quarterly results to lower-than-expected growth in the flower category, in international cannabis shipments, and the unfortunate inability to sell the popular Edison Jolts cannabis lozenge product due to a disputed decision by Health Canada. A judicial review regarding the Jolts product is scheduled to take place in late July.

In light of the recent financial challenges, Organigram recently consolidated its shares to maintain its U.S. listing on the Nasdaq exchange. However, the company’s shares experienced a decline in value in early trading following the release of the quarterly report.

Despite the hurdles faced, Organigram remains optimistic about its financial stability, reporting cash reserves of CA$75 million as of May 31. The company assures stakeholders that it possesses sufficient liquidity to navigate the near to medium-term future.

In conclusion, Organigram’s $162 million loss amid the THC inflation surge highlights the urgent need for the cannabis industry to address deceptive practices and work collectively to ensure and consumer confidence.

Malvin Felix
I'm Malvin, a cannabis news enthusiast who finds joy in staying updated about the latest industry trends. My passion led me to become a dedicated writer, entrepreneur, and investor in the cannabis space. Through my writing, I aim to educate and spark discussions, while my entrepreneurial ventures and strategic investments reflect my commitment to driving positive change in the industry.

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *