Canadian marijuana producer Pure Sunfarms reported a small increase in net sales in the January-March quarter compared to the preceding three months, bucking an industry trend in which most large licensed producers lost momentum in the early part of this year.
British Columbia-based Pure Sunfarms, a wholly owned subsidiary of Village Farms International, booked net sales of $17.5 million (20.5 million Canadian dollars) for the three months ended March 31.
Sales were $17.3 million in the previous three months.
Some competing Canadian producers had a much harder time selling cannabis in the early part of this year.
For instance, before its merger with Aphria closed, Tilray recorded recreational cannabis revenue in the January-March period of $19.4 million, or 23% lower compared to the preceding three months.
Village Farms’ cannabis division experienced a net loss of $2.8 million in the January-March period, compared with a $1.7 million loss for the three months ended Dec. 31, 2020, according to the company’s financial statement.
The company said the higher net loss between the two periods was driven by a lower gross margin, which it mostly attributed to a lower average selling price for wholesale sales to other licensed producers, as well as higher stock-based compensation.
Pure Sunfarms credited the sequential revenue growth to an increase in sales to provincial wholesalers.
For the three months ended March 31, almost three-quarters of Pure Sunfarms’ revenue was generated from dried-flower sales to provincial wholesalers. Another 13% of its revenue came from tinctures and Cannabis 2.0 products such as cannabis oil, edibles and vapes.
In the previous quarter, 56% of revenue came from dried-flower sales to provincial wholesalers as well as 12% from tinctures and Cannabis 2.0 products, according to the financial statement.
Analysts were generally upbeat about Pure Sunfarms’ sales.
“While the headline numbers were a little light, we believe that looking behind such headlines reveals a company that is rapidly gaining market share, especially in the largest markets and largest category,” investment dealer Beacon Securities wrote in a note to clients.
Pure Sunfarms was one of the smaller companies that grew market share last year at the expense of larger producers.
Aside from its cannabis sales, Village Farms reported $34.9 million in produce sales.
Village Farms International’s net loss for the quarter was $7.4 million, but its adjusted EBITDA was a gain of $400,000.
Village Farms also owns a 65% interest in Village Fields Hemp USA.
Shares of Village Farms International are traded as VFF on the Nasdaq and Toronto Stock Exchange, respectively.
