Tobacco and cannabis company 22nd Century Group Inc. (Nasdaq: XXII) saw its fortunes take a significant dip in the third quarter this year, as revenue declined both sequentially and year-over-year to $17.8 million, with a $72.7 million loss for the quarter alone.
A year prior, 22nd Century posted $19.4 million in revenue, and in Q2 revenue hit $23.4 million. The company chalked up the dip to challenges with both its tobacco and hemp divisions.
Losses for the calendar year so far are at $111.4 million, 22nd Century reported, a hefty increase from the $33.5 million loss for the same time frame in 2022.
The quarterly loss included $57 million in “non-cash goodwill, impairment, and restructuring charges,” the company reported.
22nd Century continued producing and shipping hemp-based cannabinoids through the quarter, but reported that distribution problems led to a slowdown in sales. Still, the company shipped “cannabinoid ingredient volumes totaling more than 49,000 kilograms.”
It also “resumed production of CBD distillate products and initiated new CBD crude extract operations in July 2023,” inked “new hemp biomass cultivation programs” that should be harvested in Q4 this year, and announced plans to relaunch a CBD isolate production in the first quarter next year.
The overall loss is despite skyrocketing growth of 22nd Century’s special VLN line of nicotine-light cigarettes, which are marketed as “the first cigarette that helps you smoke less,” with 95% less nicotine than typical cigarettes and formal approval by the U.S. Food and Drug Administration. VLN products expanded in Q3 to more than 4,550 stores from just 1,100, particularly in California, Florida and Texas, the company reported, but sales didn’t immediately shoot up.
“Our dynamic store count growth did not translate into immediate revenue. Sales of VLN were modest in the quarter as the brand is still largely unknown to our target market and our marketing capabilities are limited given our current financial condition,” John Miller, interim CEO of 22nd Century Group, said in a statement.
Also in the third quarter, 22nd Century implemented several cost-cutting measures that it reported should save the business at least $15 million a year annually. Following the close of Q3, the company in October also paid down some of its outstanding debt by $8 million, while also raising $5.25 million in capital the same month by selling equity.
As of Sept. 30, the company had $10.4 million in the bank, and $50.4 million in total liabilities.