The SARS-CoV-2 coronavirus continues to ravage the world and squeeze economies. Like many other business sectors, marijuana is feeling the pinch too. And although it might be a bit more resistant to the economic damage that's being caused, last week we saw indications that many companies in it might not come through in particularly good shape -- if at all.

On the microeconomic level, two prominent companies in the sector delivered their latest quarterly results. Perhaps they wish they hadn't, though.

Close-up of a flowering marijuana plant.

Image source: Getty Images.

Sales slowdown

In late March, as the coronavirus-related economic slowdown really set in, cannabis stock investors saw a few rays of hope. Sales of the drug were rising; it seems both medical and recreational cannabis users were making sure they had enough product for this current "stay-in-place" period.

On top of that, several states deemed weed retail to be an "essential" business, so many dispensaries stayed open while more traditional retailers were forced to close.

That jump in sales might just have been a blip, though. According to data compiled by a consultancy called Headset and disseminated by Marijuana Business Daily, revenue growth for licensed product in three states fell dramatically after hitting a sharp peak in mid-March.

That's worrying, because the trio -- California, Colorado, and Washington state -- have all famously legalized recreational marijuana, and are bellwether locations for the legitimate cannabis industry. Each saw a significant year-over-year increase in sales in mid-March; on one particular day, in fact, California saw a mighty 159% gain, Washington rose 100%, and Colorado increased a more modest but still impressive 46%.

That buzz didn't last very long at all, though. Roughly two weeks later, those numbers were 9% for California, with a flip into negative territory at a 12% pace for Washington and a queasy 46% fall for Colorado.

We need a longer time stretch to get a better read on what these figures mean for the broader cannabis industry. As is, though, they imply that weed isn't a constant and top priority for American consumers, at least during the coronavirus outbreak.

So it appears that cannabis companies are just as vulnerable as their traditional counterparts during the slowdown. Unfortunately, many don't have the capital or the profitability of big companies in other sectors, so at least a few might fall by the wayside in the coming weeks and months. Watch this space for developments. 

Cronos Group and HEXO report their quarterlies

Those late-March sales slowdowns are going to be reflected in the fundamentals of top marijuana companies as they report in the coming months. For now, though, they're publishing the results of quarters that ended in those glorious pre-pandemic days. Two pot players that did so last week were Cronos Group (CRON -2.49%) and HEXO (HEXO).

Neither demonstrated impressive performance. Net revenue in Cronos' Q4 of fiscal 2019 rose a beefy 71% on a year-over-year basis to just over $7.3 million, although that figure was below the restated amount of $7.6 million from the company's Q3. It was also well under analyst expectations of around $12.5 million.

Cronos' bottom line showed that rarest of all things for a cannabis company -- a net profit, specifically of almost $61.6 million. This was due, however, to an adjustment in the value of derivative liabilities arising from Altria's famous $1.8 billion investment into the company. A more revealing figure is EBITDA, which fell steeply to almost $52 million from the Q4 2018 shortfall of $5.8 million.

As for HEXO, its stock cratered by almost 30% the day its Q2 of fiscal 2020 numbers were published. However, unlike Cronos it showed sequential net revenue growth, specifically by 17% over Q1 to $17 million Canadian ($12 million).

It also managed to slim its net loss, although this remains considerable -- it came in at over CA$298 million ($210 million) against the previous quarter's deficit of $364 million ($256 million).

To be fair, much of the loss was in accounting charges. HEXO ate CA$138 million ($97 million) for a cultivation facility in Niagara that it's now trying to sell, and booked CA$112 ($79 million) worth of goodwill impairment. In the early days of the legitimate marijuana industry when companies were flush with cash, many went on somewhat reckless buying streaks. Now, quite a few of those over-valued assets are being accounted for.

Neither of these stocks delivered an investor-pleasing quarter. That, plus the news of those general sales slowdowns in the three key states, made for a fairly gloomy week for the pot sector. Here's to hoping the coming period is at least a little less discouraging.