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Tilray Inc. Dismissed mistakenly that the legalization of recreational cannabis in Canada would temper the demand for medical marijuana, a prognosis that it says has given the company a shortage of offers and patients encrypt to find alternatives.
The cannabis company is located in Nanaimo, BC, on Tuesday said that due to inaccurate forecasts, it was not possible to make enough of a popular medical product. It also sold marijuana in the wholesale market to other manufacturers and increased its exports abroad because it was expected that medical patients would buy recreational cannabis when it became legal on 17 October.
Instead, the demand for medical marijuana spiked, Brendan Kennedy said at a conference call on Tuesday with analysts after Tilray reported quarterly earnings.
"I think most of the industry expected some decline in patient demand," he said. "What happened was that we saw a significant increase in the demand from patients for days and weeks before legalization. It was quite counter-intuitive to what we expected."
Patients across the country have faced shortcomings since recreational marijuana was legalized and manufacturers have struggled to meet the demand. The lack of supply has led to complaints from patients and doctors who raised questions about the design of Canada's two-way medical and recreational marijuana tracking system, which does not require manufacturers to prioritize medical sales.
Tilray's online medical store is almost sold out. The company sells two types of cannabis oil and does not have any flower available from Tuesday. One day earlier, it gave a third product, the most popular oil containing a high dose of cannabidiol (CBD), as the company says is often used for inflammation. On Monday it could have been bought by phone – not online – and the customers could have bought only two bottles each. On Tuesday it was sold out.
Tilray said it expects to release a type of oil and a flowering in limited quantities in the middle of the month, according to a 45-day plan for forthcoming product releases sent on Sunday to patients. It expects to revive several other blooms in late November and through December.
Tilray is not alone in its food crisis. By the end of last week, Canopy Growth Corp., Aurora Cannabis Inc., Aphria Inc. and CannTrust Holdings Inc. had more choices than Tilray, but were still sold out of some strains, oils and capsules for medical patients, according to their websites. Some manufacturers are waiting weeks for new cannabis plants to grow or meet delays in getting products tested, packaged and sent to clients.
Mr. Kennedy said it's hard to predict whether patients will stick to the medical market or go to recreational bargaining.
Shares in Tilray, a market purchase since US listing in July, fell 2 percent in post-trading on NASDAQ. The company's market value is USD 10.4 billion, with a stock price of 556 percent since IPO.
In the last three months ended September 30, Tilray posted an operating profit of $ 26 million and a turnover of $ 13 million. Half of the sales were from bulk mailings to other legal producers. The prices for these sales were less than the company burdened patients. It did not send any recreational products during the period, saying that several provincial distributors did not have the green light to receive the supplies.
"We are not planning enough CBD," said Mark Castaneda, Chief Executive Officer of Tilray, that the company's bulk sales were of THC oils and was negotiated a year ago. THC is the psychoactive ingredient in cannabis. "We felt that We wanted plenty of THC oil, but on the CBD side we could not continue. It is also a very popular international product. "
Mr. Kennedy said that Tilray wants to buy products that it can sell to its patients from other manufacturers. But he said not much is for sale and what is available does not meet Tilray's quality standards.
" None can keep up with the demand, "said Castaneda." We are in the same boat as everyone else. We can not produce product quickly enough as demand comes. "
Toronto-based cannabis growers Cronos Group Inc. also reported revenue on Tuesday. It generated USD 3.8 million in sales in the third quarter ended September 30. The company's stock is valued at $ 2 billion. Contrary to the fact that competing manufacturer Aurora Cannabis Inc., which has a market value of $ 8.7 billion, said on Monday that it booked 30 million dollars in revenue in the same three month period.
These results come with a fierce price tag for Aurora, though. The Edmonton company reported a quarterly operating loss of $ 112 million, while Cronos had an operating loss of $ 5 million.
Cannabis producers grow beyond the medical market in Canada to the recreation system. Analysts expect most of their early recreation tning has taken place after September 30, the end of reporting periods for both companies. Aurora, for example, ordered $ 553,000 in sales from recreational cannabis to provincial distributors. Cronos did not reveal a figure, but the CEO said that it was "a big part" of quarterly earnings.
Mike Gorenstein, CEO of Cronos, said that the company is not in a hurry to buy cannabis from other manufacturers in the event of poor quality, which can hinder the company's efforts to build a reputation with consumers. Instead, racing is building more growing space and exploring ways to make the most important cannabis ingredients in a laboratory – and without the plant.
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