Cannabis derivative manufacturer Valens Co. said it is liquidating most of its oil inventory, citing industry trends such as outdoor marijuana harvests and falling prices.
Marijuana Business Daily has reported extensively on Canada’s glut of dried cannabis, edibles and extracts.
The Toronto-headquartered company cited:
Valens said the decision to liquidate the majority of its cannabis oil inventory led to a one-time financial hit of up to 10 million Canadian dollars ($7.9 million) in the fourth quarter of 2020.
That includes a write-down of almost CA$5 million, according to the company’s news release.
Valens said the liquidation achieves two core objectives:
- The company can rebuild its inventory with targeted strains of dried cannabis sourced at “opportunistic, lower price points.”
- Free of its old, more expensive inventory, Valens is more nimble and better positioned to offer a broader range of products at lower prices – “an attractive advantage to existing and potential new partners, including large consumer packaged goods (CPG) companies.”
CEO Tyler Robson said in that, “looking into 2021, we wanted to clear the deck and increase our flexibility to make a much more aggressive push into the market with new, innovative products, including several exciting opportunities in the Health & Wellness category, at highly competitive prices.”
Valens also previewed its fiscal 2020 fourth quarter.
The company expects gross revenue to fall between CA$17 million and CA$18.5 million when it posts its financial results in late February.
Shares of Valens trade on the Toronto Stock Exchange as VLNS.