Village Farms International, Inc. sold USD$36.5 million worth of cannabis in Canada in the third quarter of 2024, with $9.6 million in gross profit, and $1.2 million in net income (all figures in US dollars).
Village Farms’ Q3 2024 results are for the three months ended September 30, 2024.
Village Farms is the parent company of Pure Sunfarms, a greenhouse cannabis grower based in BC.
The company also sells cannabis products in the US: CBD-based health and wellness products, including ingestible, edible and topical applications.
Village Farms’ US cannabis sales in Q3 2024 were $3.9 million, bringing in $2.5 million gross profit but a $192,000 loss after all associated expenses, before taxes.
This most recent quarter’s Canadian cannabis sales are up 27% from $28.8 million in the same quarter in the previous year, but down from $40.7 million from the previous quarter.
Gross profit on Canadian cannabis sales was down slightly from $9.9 million in Q3 2023, and net income before taxes was down from $1.9 million. The company attributes the decrease in net income primarily to an increase in tax provisions and an increase in selling, general and administrative expenses.
US cannabis sales figures were also down year over year, from $5 million in sales in Q3 2023, with $3.2 million in gross profit and income before taxes of $79,000.
Village Farms International operates two cannabis facilities for the Canadian legal adult use (recreational) market and for export to international markets like Israel, Germany, Australia, and the United Kingdom. The company’s Canadian Cannabis segment comprises Pure Sunfarms in BC and an 80% ownership in Rose LifeScience in Quebec.
The company also holds one of only ten licenses to participate in the Dutch recreational cannabis program. In the most recent quarter, its ownership of Netherlands producer Leli Holland increased from 85% to 100%.
Some 75% of the company’s cannabis sales were in Canada, down from 80% in the same quarter last year, while 25% were in various international markets, up from 20% in Q3 2023.
Branded cannabis sales were $45 million, non-branded sales were $7.4 million, and international sales were $1.4 million for the three months ended September 30, 2023.
The company attributes its 27% year-over-year increase in sales to an 18% increase in net branded sales and a 66% increase in non-branded sales. The increase in net branded sales was because of increased market share across the flower, pre-roll and milled categories. The increase in non-branded sales was from “improved industry supply dynamics and pricing supported by a shift of many producers toward asset-light models and sales of non-brand-spec inventory. International sales increased by 94% primarily due to higher sales to Germany, the United Kingdom, and Australia.”
In the most recent quarter, the company incurred $17.7 million in excise duties (Canada’s $1 per gram cannabis tax), representing 39% of gross branded sales. The cannabis producer says the Canadian excise duty is its single largest cost of participating in the branded adult-use market in Canada.
“As we close out fiscal year 2024, we are focused on driving more profitable sales in Canadian Cannabis, prioritizing profitable growth as we manage inventory levels with evolving supply dynamics and increasing international demand,” said Michael DeGiglio, president and CEO of Village Farms International.
“We are looking forward to more exciting catalysts for our business in fiscal year 2025, with continued international expansion and contributions from sales in the Netherlands. We believe our Netherlands business has the potential to become a strong contributor of profitability and cash flow generation, driven by more favourable pricing and taxes in the Dutch market compared to Canada.”
“We are also increasingly benefitting from our international cannabis focus. Exports from Canada increased 111% from the third quarter last year, with continued increases in sales to our German, Australian, and UK partners. Our EU-GMP certification was also recently renewed, and we are optimistic heading into next year about our opportunities to expand our international business with additional markets and customer wins. In the Netherlands, we received final approval to commence cultivation, are in production now, and remain on target to begin sales to participating jurisdictions in the first quarter of 2025.”
