Cronos Group stock and other marijuana stocks fell on Thursday after the Canadian cannabis producer reported a steeper-than-expected second-quarter loss, as lower pot prices in Canada and coronavirus-related store closures in the U.S. triggered millions in impairments and write-downs.

The company said it expected those also racked up costs related to a review of last year's financial results. That review concerned purchases and sales made through its business-to-business channel.

Cronos reported the results as the marijuana industry reckons with layoffs, coronavirus restrictions and overvalued assets.

Cronos Group Earnings

Sales rose 29% from a year ago to $9.883 million, beating forecasts for $8.45 million. Cronos Group (CRON) sales got a boost from the launch of vaping products in Canada and the acquisition of Redwood, which makes CBD products in the U.S. under the name Lord Jones.

However, the company lost 31 cents per share. That was worse than the 6 cents expected by Zacks Investment Research.

More broadly, the bottom line was hurt by costs related to extra hires, marketing and research.

During the quarter, "responses to requests for information from various regulatory authorities" related to the restatement cost it $3.5 million. The company has spent $7.9 million on the matter over the past six months.

Cronos said it took a write-down of $3.1 million on dried cannabis and extracts, due to lower prices in the Canadian weed market. Rivals have rolled out cheaper cannabis products to compete with the illicit market, where product is cheaper.

Gross margins, adjusted for the write-downs, were 1%.

'Material Impact' To Cronos Group Stock

The company also said the coronavirus pandemic had a "material impact" on sales growth in the U.S., after the crisis shut down many of the retailers that sell Lord Jones' CBD products. The conditions forced Cronos to record a $35 million impairment charge in its U.S. business and $5 million worth of impairments on Lord Jones.

Cronos added that it had reduced the number of people working on-site at production facilities in the U.S., Canada and in Israel due to the pandemic.

The company also said it had entered the Israeli medical cannabis market, as its Cronos Israel segment began selling its Peace Naturals dried cannabis products to medical patients.

Cronos Group Stock, Marijuana Stocks

Cronos Group stock slid 16% to 5.87 in the stock market today. The stock was in a consolidation pattern. Cronos Group stock has a 52 Composite Rating and a 41 EPS Rating.

Among other marijuana stocks, Canopy Growth (CGC) fell 8.8% to 17.52. The stock is in a cup base with a 22.29 buy point.

Tilray (TRLY) lost 4.3%. Aphria (APHA) fell 3.1%. Aphria stock fell last month after quarterly results disappointed investors.

Aurora Cannabis (ACB) retreated 3.7%.

While marijuana stocks like Cronos Group stock and Canopy Growth stock have begun consolidating, the stocks are still well off their highs, making the conditions for buying them less than ideal, IBD research indicates.

Non-U.S. Cannabis Sales Rise

Cronos' U.S. business reported revenue of $2.174 million, down slightly from the previous quarter. No year-over-year comparisons were available.

Revenue in its "rest-of-world" business — that outside the U.S. — crept 0.7% higher from a year ago to $7.709 million, helped largely by gains in Canada.

The company said its rest-of-world business was not significantly affected by the pandemic. But it noted that in Canada, some physical stores have gone to online pickup in-store purchases, cut hours or closed entirely. And it said province-level buyers and private retail shops have cut staff, leading to reduced delivery availability and smaller, less frequent orders.

The company also named Summer Frein general manager of its U.S. hemp CBD business. That followed the resignation of Robert Rosenheck in July.

Cronos Group eventually wants to run a business where others do the heavy-lifting on cultivation. The company has also intends to develop products focused on individual cannabinoids — compounds within the cannabis plant said to have a variety of precise effects.

Analysts, however, expressed more caution over Cronos Group stock following the earnings.

"Once again, little to get excited about at Q2, as the market continues to wait for evidence to validate its long term strategy of building 'iconic brands with disruptive IP,'" Jefferies analyst Owen Bennet said in a research note.

"Further, CRON indicated that it expects inventory writedowns to continue from retail price compression in Canada," Cowen analyst Vivien Azer said. "With low levels of revenue generation mitigating CRON's ability to scale, we do not anticipate full margin recovery in the near term and anticipate negative margins for the duration of 2020."