Markham, Ontario-based medical cannabis producer MedReleaf (TSX: LEAF) reported results for Q2 2018 ending September 30. Sales volume increased to 1.05 million grams, a 23% increase from same period year ago (YAG).

Revenue figures were lower versus YAG, as expected, due to reductions in the past year by the Veterans Affairs Policy (VAC) in the price and volume of cannabis for which veterans can be reimbursed. The VAC rule now stipulates veterans can be reimbursed for a maximum of 3 grams per day at a price of $8.50 per gram.

As a result, MedReleaf’s price per gram dropped from $12.29 in Q2 2016, to $9.34 in recent Q2 2018. This caused its total revenue to decrease 9% to $9.8 million, despite an increase of 23% in grams sold.

MedReleaf is still the second largest cannabis producer by revenue, second only to Canopy Growth in North America. It is 5th largest by market cap with $1.24 billion CAD.

Management noted that financial results versus year ago will improve as the VAC changes fall further in the past and are no longer captured in year over year stats.

In other news, the company recently announced it will launch MedReleafRx in January 2018. This is the first genetic test, administered as a cheek swab, that will enable physicians to determine a patient’s relative rate of cannabis absorption, making doctors’ dosage prescriptions more accurate.

MedReleaf has increased production capacity by 80% since April 2017.

Source: MedReleaf press release

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