In the second quarter the company sold approximately 131,501 gram equivalents; which represents a 9% increase over the previous quarter and a 45% increase compared to the previous year. The weighted average cost of dried cannabis sold per gram was $0.97 CAD, representing a 9% decrease from the previous quarter and a 44% decrease compared to the previous year.
With a debt free balance sheet, the company has approximately $264.5 million in cash on-hand and short term investments.
Revenue for the second quarter increased by 29% to approximately $1.2 million, compared to $914,000 in the previous year. The higher revenue was due to higher sales volume but was offset by lower average selling prices.
Operational losses increased in the second quarter from $774,000 in the same period last year to $4.7 million, but was due largely to the higher expenses associated with operational expansions made in preparation for when cannabis become legal in Canada later this year.
The company has also two expansion projects currently underway, which included a 250,000 square foot greenhouse facility, which is expected to be complete in July 2018, and will be capable of producing 25,000 kilograms of cannabis per year. The second expansion, which is scheduled to be complete by the end of 2018, will increase the company’s annual capacity to 108,000 kilograms of cannabis.
Additionally, the company signed a letter of intent with Société des alcools du Québec (SAQ), the provincial crown corporation responsible for cannabis distribution in Quebec, to supply the province with 20,000 kilograms of cannabis for the first year of legalization. Negotiations with SAQ to reach a definitive agreement regarding the first year, and the years hereafter, are still ongoing.
‘‘We have achieved excellent revenue visibility as we approach the legalization of recreational cannabis, with the 20,000 kg supply commitment under our letter of intent (LOI) with SAQ and our medical cannabis sales. Predictable revenue streams from the recreational and medical markets, a debt-free balance sheet, two fully-funded expansion projects, and additional liquidity for corporate purposes, provide strong business certainty through Year 1 post-legalization and beyond. Without a doubt, this achievement is the most important milestone to date in our company’s history,’’ said Hydropothecary co-founder and CEO, Sébastien St-Louis, in a statement.