Cronos Group Inc. (NASDAQ: CRON) (TSX: CRON) reported financial results in Canadian dollars for the second quarter and first-half ending June 30, 2019, with net revenue climbing 202% to $10.2 million over last year’s $3.4 million. The revenue increased 58% sequentially from $6.5 million in the first quarter of 2019. The company attributed the increase to sales in CBD oil, which carries no excise tax reduction and increased sales of dry flower.
“During the second quarter, Cronos Group expanded its R&D capabilities, innovation expertise and global infrastructure network in what has been a year of tremendous growth,” said Mike Gorenstein, CEO of Cronos Group. “We opened Cronos Device Labs, our new global R&D center in Israel, announced the acquisition of our new state-of-the-art fermentation facility and added Dr. Todd Abraham as Chief Innovation Officer to our executive leadership team.”
The stock though slid by over 3% to lately trade at $13.96 as shareholders showed their displeasure with the company only selling 1,584 kilograms of cannabis during the quarter. For example, HEXO Corp. (NYSE: HEXO) reported that it sold 2904 kilograms in its last quarter. Still, it was an increase of 232% over the 477 kilograms sold in last year for the same time period.
The company also reported that its cost of sales before fair value adjustments per gram sold increased 14% to $3.01 in the quarter over last year’s $2.6. This was an increase of 12% sequentially over the first quarter’s cost of $2.69. Cronos Group said that the increased costs were due to higher processing cost on a per gram basis.
The company also reported a gain on the revaluation of derivative liabilities of $263 million that resulted in a net income of $250 million.
Abraham added, “We also took steps to enter the U.S. market with our recent acquisition of Redwood Holding’s hemp-based CBD platform. As we look ahead, we will continue to capitalize on this momentum by building on our partnerships with Altria and Gingko Bioworks and leveraging our collective resources and expertise to realize the significant potential in the growing cannabis industry.”