Canadian cannabis cultivator Organigram Holdings published its Q3 earnings last week, reporting falling revenues and a net loss of $213.5m.
In the three months to May 31, 2023, Organigram reported net revenues of C$32.8m, down 14% from C$38.1m year-on-year.
Meanwhile, it reported a net loss of C$213.5m compared to just C$2.8m in the same period a year earlier, which it attributed to an impairment loss.
This impairment loss, which takes into account the revaluation of assets which have depreciated in value, amounting to $191.2m largely ‘in relation to property, plant and equipment’.
It also cited ‘THC inflation’ as a ‘meaningful contributing factor’ its fall in revenues and profits, impacting ‘flower sales and margins’.
According to the company, the industry practice of dishonestly labelling cannabis products to exaggerate THC levels was ‘more widespread’ this year.
So-called THC inflation saw consumers favour supposedly higher potency products, with half of all cannabis sales during the quarter coming from flower labelled as over 26% THC or more.
Its CEO Beena Godenberg said: “We see that there are some licensed producers who were averaging sales of flower in the 21% (to) 22% range … and now are showing 28% to 32%.
“This is not something that even the most advanced cultivation techniques could make happen.”
She added that this ‘increasing behaviour’ was starting to impact the company’s results, forcing it to cut flower pricing to ‘address the value equation to consumers’.