It turns out fewer people enjoyed consuming cannabis through a softgel pill or oil than Canopy Growth Corp. had first hoped.

That lack of consumer interest in those cannabis products led Canopy Growth, the world's largest cannabis company, to report $47.9 million in charges, including a $15.9 million inventory write-down, while booking a steeper-than-expected loss in its fiscal second-quarter.

The Smiths Falls, Ont.-based pot producer reported a $374.6 million net loss in the quarter, mainly attributed to a restructuring of its portfolio of cannabis softgels and oils after recording “returns, return provisions, and pricing allowances” during the period.

Canopy said the loss amounted to $1.08 per share for the quarter ended Sept. 30 compared with a loss of $330.6 million or $1.52 per share a year ago when it had fewer shares outstanding. The company reported an adjusted EBITDA (earnings before interest, tax, depreciation and amortization) loss of $155.7 million

Net revenue in the quarter totalled $76.6 million, which took into account a restructuring charge of $32.7 million related to its softgel and oil products. That compared with $23.3 million in the same quarter last year before the legalization of recreational cannabis in Canada, but down from $90.5 million from the prior quarter.

Meanwhile, Canadian cannabis sales fell seven per cent from the prior quarter to $76.6 million after the company recorded a drop in business-to-business sales in the period. Canopy sold a total of 10,913 kilograms of cannabis products in its second quarter, up three per cent from its prior quarter.

"The last two quarters have been challenging for the Canadian cannabis sector as provinces have reduced purchases to lower inventory levels, retail store openings have fallen short of expectations, and Cannabis 2.0 products are yet to come to market," said CEO Mark Zekulin in a release.

"However, we believe these conditions are a short-term headwind in what is a brand-new industry, and Canopy continues to be best positioned with cash-on-hand, a world-class infrastructure, and a portfolio of intellectual property to deliver sustained, long-term market leadership."

Canopy said it has $2.74 billion of cash, cash equivalents, and marketable securities as of its second-quarter, a sizable war chest that remains ahead of the rest of its industry peers, but that amount is down 39 per cent from the same period a year earlier. The company said they used $404.7 million in cash in the quarter, primarily for its operations as well as the construction of its manufacturing and beverage production facilities. It also noted its Canadian infrastructure and global M&A programs are “substantially completed.”

Canopy’s rough quarter may see investors remain on the sidelines in the cannabis sector until they companies report several consecutive periods of profitable results, said Gordon Reid, president and CEO of Toronto-based Goodreid Investment Counsel Corp.

“This is eight out of the last 11 quarters that Canopy has missed expectations, and they’re not alone,” Reid said on BNN Bloomberg Thursday. “From an investing standpoint, this is a minefield. We’ve been asked, ever since legalization happened [in Oct. 2018], if we want to take a position and we’ve straight out said: ‘No, thank you.’ We’ll wait and see. I’d much rather be paid a much higher price for much greater certainty than get into what is a black hole at this point.”

Last month, Canopy began to unveil some of the next-generation cannabis products the company's management hopes will be part of its drive to profitability. The cannabis producer showcased its new chocolate products, several new drink offerings, including a "distilled" cannabis-infused beverage, while its new vape devices with "proprietary" technology will be launched later this month.

This is also likely the last quarter Zekulin be a part of Canopy’s management team. Zekulin, who assumed the sole top position after his co-CEO Bruce Linton was fired by Canopy's board in July, said a new chief executive will take over the company by the end of the year. ​