TORONTO — Shares of Canada's largest cannabis producers took a dive Wednesday after a number of them reported disappointing earnings this week.
Shares in Canopy Growth, which reported a wider quarterly loss and a revenue slowdown as operating expenses soared ahead of legalization, were down some 13 per cent as of 1:30 pm ET Wednesday. Shares in rival Tilray were down nearly 9 per cent while Aurora Cannabis was down 8 per cent.
The slowdown in Canopy Growth's revenues during the quarter ended Sept. 30 stemmed from "hiccups'' in shipping medical cannabis to Germany and the "hubbub'' around the legalization of adult use pot on Oct. 17 distracting its medical patient base, said Canopy's co-chief executive Bruce Linton.
Watch: What will legal weed mean for Canada's economy?
There was little revenue during the quarter from the Canadian adult use market, with only limited shipments "stress testing'' the system with provinces and territories, he added.
"It is the first time in our history that I'm aware of that we actually had a slowdown, but it was more of a distraction than a pattern,'' Linton told analysts on a conference call Wednesday.
The Smiths Falls, Ont.-based company reported a loss of $330.6 million in the quarter, amounting to $1.52 per share compared with a loss of $1.6 million or a penny per share a year ago. Analysts had expected a loss of 12 cents per share, according to Thomson Reuters Eikon.
Earlier on HuffPost Canada:
While the latest quarter did not encompass sales of recreational pot in Canada on and after legalization day on Oct. 17, Canadian cannabis producers had ramped up production and embarked on a marketing blitz in the lead up to the historic shift in drug policy.
Analysts had likely anticipated provincial and territorial government entities tasked with the sales and distribution of recreational pot would have accepted a "material'' amount of product in the latest quarter ahead of Oct. 17, said Linton.
"If you look across the entire sector, the provinces were not ready to take product,'' during the quarter, he said, echoing a similar statement made by Tilray's chief executive Brendan Kennedy to analysts on Tuesday.
The roll out of recreational pot in Canada — only the second country in the world to do so, after Uruguay — has been riddled with widespread product shortages in many markets as demand outstripped supply. Several provinces have signalled that they are receiving less product than anticipated and expect these product shortages to linger for months.
Canopy said it remains "on track to meet all commitments on an annualized basis'' and it is working with all its provincial and territorial partners to address supply shortages across the country.
The average number of kilograms in its daily shipments to the provinces and territories between Nov. 1 and 12 has "more than doubled'' compared to between Oct. 17 and 31, the company added.
Canopy estimates that it has a 30 per cent share of all the recreational cannabis products on offer in stores cross the country, said Linton.
"You're going to see that as we go through the first six-months sprint, that the revenues come up.''
— Armina Ligaya, The Canadian Press, with a file from HuffPost Canada