RE:BlindsideThis is an explanation they gave for the Loss in the the discussion MD&A.
Management would also note that gross profitability in the Company’s wholesale cannabis segment was negatively impacted during the three-month period ending September 30, 2020 due to a one-time sale of aging bulk cannabis inventory at a sales price per gram which is below inventory cost, resulting in a gross profit (loss) of approximately ($207,000). Management determined that it would be of strategic value to the Company to relieve that aging inventory at a loss rather than be subject to a potential future writedown as well as freeing up physical storage space and other resources towards other products which will produce improved gross profitability in the future. In the Company's retail cannabis business segment, management anticipates that the addition of higher margin cannabis extract products will assist in improving overall gross profitability in 2020. These strategies are intended to drive gains in overall gross profitability over the fourth quarter of 2020 and into 2021. Gross profit, after accounting for changes in the fair value of biological assets, for the three-month and nine-month period ending September 30, 2020 was $1,623,595 (12% of net revenue) and $16,360,366 (43% of net revenue) versus $3,422,930 (51% of net revenue) and $11,181,466 (53% of net revenue) for the three-month and nine-month period ending September 30, 2019. Management would note the relatively large unrealized loss from changes in the fair value of biological assets for the three-month period as contributing a negative impact on overall gross profit. This loss is attributed to the one-time sale of aging biological asset inventory, as noted above, which contributed to a gross profit (loss) of approximately ($2,047,500).