Cronos Group CEO Mike Gorenstein says company remains agile despite challenges posed by COVID-19

It was a mixed week for investors in Canadian cannabis companies

The Cronos Group's Peace Naturals brand launched a new line of vaporizers in March. Photo by Peace Naturals

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A Toronto-based weed company that’s banking on the growing use of CBD didn’t quite deliver the numbers that investment-house analysts were anticipating on Friday (May 8).

As a result, the share price of Cronos Group fell by 3.04 percent, closing the day at US$5.42 on NASDAQ.

Cronos Group reported first-quarter revenues of US$8.4 million and an adjusted operating loss of US$40.7 million. A group of analysts polled by Bloomberg was forecasting US$8.75 million in revenue.

CEO Mike Gorenstein pointed out in the quarterly report that the company is moving closer to entering the Israeli medical cannabis market with its Peace Naturals dried flower products.

“Despite the challenges and uncertainty posed by the COVID-19 pandemic, we remain agile and focused as a business,” Gorenstein said. “Our brand portfolio continues to launch innovative products to consumers as we adapt to an online-first distribution model in both the U.S. and Canada. We continue to reach our stakeholders and consumers through creative digital marketing.”

In 2018, Cronos Group became the first Canadian cannabis company to be traded on NASDAQ. Its portfolio includes the following brands: Peace Naturals, Lord Jones, Spinach, Cove, and Peace+.

Cronos Group is well capitalized, with US$1.34 billion in cash, cash equivalents, and short-term investments.

It stated that its “decrease year-over-year was primarily driven by an inventory write-down of $8 million on dried cannabis and cannabis extracts, as well as an increase in the marginal production cost on dried cannabis and cannabis extracts”.

In March, it launched the Peace Naturals–branded cannabis vaporizers.

Also in the first quarter, Lord Jones launched the Acid Mantle Repair CBD Moisturizer skincare product, which is being sold through Sephora, Beautylist, C.O. Bigelow, and online through the Lord Jones website.

Cronos Group shares lost US$0.18 over the past week, which also saw some other high-profile Canadian cannabis producers experience declines.

Shares in Canopy Growth Corp., which is based in Smith Falls, Ontario, lost $1.56 on the week on the Toronto Stock Exchange, closing on Friday at $21.34. That was a 7.3 percent decline over five days.

Edmonton-based Aurora Cannabis Inc. fell nine percent to close the week at 91 cents in Toronto. Ottawa-based Hexo Group shares fell two cents to close at 68 cents.

Leamington, Ontario–based Aphria Inc., on the other hand, held its value, closing the week at $4.78, the same as its opening price on Monday (May 4).

One of the better performers was Nanaimo-based Tilray, which rose 6.5 percent on the week to close at US$7.78 on NASDAQ. It will be reporting its first-quarter results on Monday (May 11).

Another winner on the week was Concord, Ontario–based Aleafia Health Inc., which shot up 41 percent to close at 76 cents in Toronto.

For those more interested in companies with larger market capitalizations, one of the stars this week was Scotts Miracle-Gro. Its Hawthorne line offers gardening products that enhance cannabis production.

Due to the growing interest in home cultivation during the pandemic, Scotts Miracle-Gro jumped 11.8 percent on the New York Stock Exchange over the past week to close on Friday at US$139.82.

Charlie Smith

I'm the editor of the Georgia Straight newspaper in Vancouver, as well as a CannCentral contributor.

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