Canadian cannabis producer Organigram Holdings reported a continued slide in net revenue for the third quarter of 2020, down by 22% from the second quarter to $18 million Canadian dollars ($13.4 million).
Organigram previously warned investors about the revenue decrease for the quarter ended May 31.
Organigram’s own large-format value product, Trailer Park Buds, “did not launch until the end of April 2020 due in part to a reduced workforce from COVID-19,” the company said, hinting at a lost opportunity to capture a greater share of the value market in the quarter.
Following concerns about Trailer Park Buds’ compliance with Canada’s strict laws on cannabis promotions, Organigram said the product’s logo will be changed to “Buds” while the company works on revising the brand name.
That name change resulted in “some disruption to supply” in the first month of Organigram’s fourth quarter, the company said.
Organigram’s third-quarter net loss was CA$89.9 million, compared with CA$6.8 million in the previous quarter.
The company recorded a nearly CA$3 million provision for “returns and price adjustments on slow-moving and aged product” in the quarter.
A CA$19.3 million write-off of “excess and unsaleable inventories” – including CA$11.9 million related to cannabis trim and concentrate – increased Organigram’s cost of sales to CA$44.4 million in the quarter, from CA$15.8 million in the second quarter.
Organigram also reported CA$7.9 million in charges related to COVID-19 workforce reductions, including CA$5 million in “extraordinary plant culling.”
Meanwhile, Ray Gracewood, senior vice president of marketing and communications, has left Organigram “to pursue other interests,” the company said Tuesday.
Going forward, Organigram said it plans to launch value-priced cannabis chocolate bars under its Trailblazer brand during the ongoing fourth quarter as well as a beverage mix powder in the first quarter of fiscal 2021.
New value flower products were launched under the Trailblazer brand in mid-July, in 7- and 15-gram sizes.
According to Organigram, that brand offers “increasingly higher THC levels versus what was offered when originally launched (near the start of adult-use cannabis legalization), at a competitive price point such that the company believes it will have the ability to compete in the growing large format value segment of the market.”
Organigram trades as OGI on the Toronto Stock Exchange and the Nasdaq.