Thank you Irwin. I would like to now review Q1 results, how we are building synergies into our business model, our cash and liquidity position, and the specifics of the MedMen transaction.
As Irwin discussed, we are working hard every day to build a stronger, more diversified, and profitable Company, and we are executing on this through our 4 key competitive differentiators so that we can create sustainable value for our shareholders now and over the long term. Recall that in the prior-year quarter as a result of the arrangement between Aphria and Tilray our results are based on Aphria's financial statements, but were adjusted to follow U.S. GAAP and is presented in U.S. dollars.
Additionally, in July, we published an appendix to our Investor deck located on our website that contains an analyst primer, which breaks down Aphria's U.S. GAAP financial statements for 2020 and 2021 by quarter.
As a reminder, this primer was not audited. Throughout our call today, we will reference both our financial results in accordance with GAAP, as well as our adjusted financial results. Please refer to our press release for a reconciliation of our reported financial results under GAAP to the non-GAAP financial measures identified during our call.
Our Q1 net revenue grew 43% compared to Q1 last year.
Although the comparison itself is not apples to apples, because the year-ago quarter does not include any contributions from legacy Tilray. We know that as with other CPG companies, the Delta variant quell with consumer confidence and impacted revenue in key consumer-facing markets. In our Canadian Cannabis Business we held our Number 1 position in Canada for LP revenue and held our market share of approximately 16%, all while largely maintaining our prices. Nonetheless, the COVID Delta variant, unquestionably impacted results, and our Canadian cannabis business experienced flat net revenue during the quarter due to the provincial boards buying patterns. Late in the quarter, we began to see the board's increase their purchases. A rise that we attribute to rising vaccination rates in Canada. We believe that based upon retail sales data, consumer demand is continuing to rise. The key to this rise is ongoing education of funds [Indiscernible], as the influencer in shifting consumers from price-based brands to margin-based brands.
Our beverage business SweetWater continues to experience a reduction in [Indiscernible] demand for its on-premises channel, as well as restaurants operating below full capacity, coupled with a softer off-premises channel. All being experienced by other beer producers. After managing through the changes associated with moving from branded product at a big box retailer to a white-label product We are pleased with the revenue contribution from Manitoba Harvest during Q1.
Finally, while CC Pharma experienced a slight improvement in the global supply chain that resulted in a modest increase in net revenue.
As we discussed on our last call, operations were shut down in July for 4 days due to flooding and then more in Germany. This resulted in lost revenue of almost $5 million, which was slightly higher than the high end of our initial estimate of 2.5 million to $4 million. To offset the loss revenue, we booked insurance reserves related to our business interruption policy that bolstered EBITDA.
However, this did not benefit the top line revenue figure.
So, as Irwin noted, despite the COVID-related headwinds impacting the top line, we worked hard to optimize our performance. And the results in the quarter was that we held our gross margin steady on a year-over-year basis, and grew our adjusted EBITDA from 8.1 million to 12.7 million, representing our 10th consecutive quarter of increasing and positive adjusted EBITDA.
Importantly, our profitability would have been even higher if more of our operating synergies were already embedded within our business model, particularly fully converting the legacy Tilray brands to Aphria's cost structure. To illustrate this, if Aphria's cost structure had been applied the legacy Tilray brands during this quarter, we believe the adjusted EBITDA for Q1 would have been closer to $17.6 million. This is because pre-business combination Aphria was already a low cost producer with state of the art cultivation, processing, and manufacturing facilities. And we are now accelerating our work on pulling additional costs out of that structure so that we can gain further efficiencies and increase margins. This work also includes improving product potency and quality to meet market demand.
Our Q1 net loss increased to $34.6 million versus a net loss of 21.7 million in the prior year, while adjusted free cash flow decreased to negative $61.2 million from negative 70.1 million in the prior year quarter. Several items led to the figure in the current quarter, including paying income tax balances at a free [Indiscernible] of year-end accruals, and an increase in accounts receivable as we experienced late in the quarter purchasing from the provincial boards. We specifically know that inventory decreased in the quarter.
And so this was not a part of the decreased adjusted free cash flow. Last quarter, you may recall we express how pleased we were to have generated free cash flow in Q4. How we believe that the first few quarters as a combined entity could see negative cash flows as we achieved our synergies. And how we view free cash flow as an important element of our investment thesis, that has not changed. And while we did not meet this goal in Q1, we are working diligently towards sustaining free cash flow generation in future quarters.
Turning now to the business integration, we are making meaningful progress, optimizing operations. and as we focus on reaching at least $80 million of synergies within the first team -- first 18 months of the transaction.
As of September 30th, the synergies achieved are $55 million slightly ahead of pace.
Our most recent actions include closing the Enniskillen facility, and the announcement of our intention to close the Nanaimo facility in a phased approach that will be completed next spring. Included in this quarter's results is a $5 million provision to cover closing costs associated with this announcement.
Going forward, we will be concentrating our British Columbia cultivation in the Broken Coast facility on Vancouver Island, and international production and manufacturing in Portugal and Germany.
Beyond these closures we are working to embed other meaningful lasting efficiencies in our business processes operating in marketing initiatives, IT infrastructure, compliance costs, and through attrition.
Moving on to other events in the quarter, as Irwin noted, in mid-August our majority-owned subsidiary acquired the outstanding senior secured convertible notes of MedMen along with certain warrants to acquire MedMen's Class B subordinated voting shares. The total value of the MedMen notes and MedMen [Indiscernible] was $170.9 million of which 117.8 million represents the ownership interest of Tilray. And 52.9 million represents the ownership interest of the unrelated minority owners. Purchased notes and purchase warrants were accounted for debt and equity securities and recorded in long-term investments with an offsetting current liability for the outstanding consideration due. The only P&L impact with respect to the MedMen transaction this quarter and in the near-term until U.S.. federal legalization is recording of interest on the notes and any future fair value adjustments to the notes themselves.
Now let's discuss Q1 in greater detail. In our Cannabis business.
Our medical business grew due to the contributions from legacy Tilray.
Although we experienced a lower number of existing patient renewals and a lower number of new patients in both independent and clinic channels. Still the average gross retail selling price of medical cannabis rose slightly to $6.08 per gram in Q1 compared to $5.95 last year.
Our adult use business grew year-over-year due to the business combination along with numerous retail sales, promotional programs, innovations, social media visibility, and efforts to increase new accounts. It also grew on a quarter-over-quarter basis, as last quarter only included four weeks of legacy Tilray sales.
However, similar to Q4 last year, we dealt with consumers more focused on price-based brands, which contributed to a decline in average selling price to $3.17 per gram in Q1.
Importantly, we did not lower our prices to secure our market-leading share of the market, and our cannabis gross margin fell not because of price compression per se, but rather that the Tilray brands represent a greater share of the mix in sales in the current quarter. With those Tilray brands carrying their higher production costs until all our effort in synergies are achieved and we have sold through all the inventory produced at legacy Tilray facilities. Similar to last quarter, the selling price decline was related to pricing being the primary means. The brands were able to differentiate themselves coupled with limited consumer interactions with bartenders. We view the ability of bartenders to educate consumers about the attributes and quality of products such as ours, as critical to encouraging impulse purchases while shifting customers away from price-based brand purchases in general. We think that through more education and a reduction in budtender turnover, which has also been very high during the lockdown period, and as new dispensaries opened and ramped up we will be very well-positioned, because we believe purchasing decisions will shift the margin-based brands over price-based brands. Similar to how consumers behave with regards to other products such as alcohol.
Our cash cost to produce program decreased to $0.77 per gram at our Leamington facilities. This was due to improved yield, potency, and cost control efforts that began in January of the prior year, and that continue to benefit us. Net revenue from our Cannabis business in the first quarter rose 37.6% to $70.4 million compared to the same period of the prior year. In our distribution business, net distribution revenue was $67.2 million for the quarter, virtually unchanged from the 66.3 million last year.
During the quarter, our distribution business was negatively impacted by the strengthening of the U.S. dollar against the euro, which if normalized, would represent an additional $3 million in revenue. Also impacting quarterly revenue was the heavy flooding which caused a temporary business closure at CC Pharma over a four-day period and consequently resulted in almost $5 million of loss revenue. In our beverage alcohol business net revenues at SweetWater were $15.5 million, down slightly on a sequential basis, and reflecting a reduction in keg demand from the on-premises channel, coupled with a decrease in off-premises consumption. We believe the impact of the Delta variant affected consumer behavior both within restaurants and groceries alike. Net revenue from our wellness business, Manitoba Harvest, were $14.9 million, which we view positively and for which there is no comparable to the previous year.
All of this led to net revenue increasing 43% to 168 million in Q1 over the prior year period, with the increase primarily driven by the contributions from legacy Tilray and SweetWater, for which there were no comparable in the one period last year. Adjusted Cannabis gross profit increased to $30.3 million in Q1, compared to 25.4 million in the prior year.
Although adjusted Cannabis gross margin fell to 43% from 50% in the prior year, but only down 1% from last quarter. The decrease in margins was related to a shift in sales mix to more Tilray brands that have higher cost to brews than our legacy brands.
As a result of including 13 weeks of revenue versus 4 weeks in the prior quarter for legacy Tilray. And that deliberate and one-time buildup of inventory levels as part of our integration plan to shutdown facilities such as Enniskillen and Nanaimo. That another way, as we worked to adjust our cost structure and reduce production costs through the integration process, we incurred some temporary inefficiencies during this transitional phase that will ultimately result in greater efficiencies. Adjusted distribution gross profit decreased to 7.9 million in Q1 from 9.5 million in the prior year.
While adjusted distribution gross margin declined to 12% from 14% as a result of the impacts of COVID-19 on CC Pharma sales mix. Adjusted beverage alcohol gross profit was 8.8 million in Q1 and there was no comparable in the prior year as the acquisition was completed last November. Adjusted beverage alcohol gross margin was 57%, which was below the 66.5% we achieved in the previous quarter. We overachieved based on current expectations for on-premise versus our off-premise mix. Adjusted wellness gross profit was 4 million and adjusted gross margin was 27%, which was in line with our expectations and for which there were no comparable last year. Sequentially, adjusted wellness gross profit more than doubled from 1.6 million in Q4. In aggregate, adjusted gross margin held study at 30% compared to the prior year while adjusted gross profit rose 46% to 51 million from 35 million.
As we continue to achieve our synergy plan over the coming quarters, and as our [Indiscernible] distribution revenues increased their share of our total revenues, we expect to see continued improvement in this metric. General and admin costs increased to 49.5 million in Q1 or 29.5% of net revenue compared to 26 million or 22.1% in the prior year, which did not include the acquisitions of legacy Tilray and SweetWater. The increase in general and admin costs was primarily the result of the costs associated with the SweetWater and Tilray acquisitions. Most particularly amortization of intangible assets and $5 million in cost due to the plan deniable facility closure. Transaction costs totaled 25.6 million compared to $2.5 million last year. And we're related to the solicitation of shareholder votes supporting an increase in the number of authorized common stock shares.
Our investment in the purchase notes and purchase warrants of MedMen, transaction closing costs, remaining costs associated with the arrangement, and the evaluation of other potential acquisitions and one-time litigation costs.
For the quarter, we reported a net loss of $34.6 million or $0.08 per share compared to a net loss of $21.7 million or $0.09 per share in Q1 last year, representing an improvement of $0.01 per share. Note that our weighted average share count increased to 449.4 million shares from 241.9 million shares during the same period.
Turning to cash flow and liquidity. Adjusted free cash flow was negative 61.2 million during Q1 and reflected 93.2 million of net cash used for operations, 16.3 million in investments in capital and intangible assets offset by 48.4 million of cash expended related to our acquisitions. Again, as I said earlier, we view achieving free cash flow on a consistent basis as a priority for this business.
While we certainly fell short in Q1, it was anticipated as a result of the synergy plans, and as we push forward with integration, we view this goal as well within our reach in the coming quarters. Even after the increase in cash used from operations, we still maintain a strong cash position of 376 million as of August 31st, 2021, to both support our existing working capital requirements and our business plan.
While the last 18 months has certainly proven that there are numerous factors outside of our control, our focus remains on what we can do.
Specifically business integration so that we can better manage costs, and the opportunities we have ahead of us as we execute on our highest return priorities across our 5 key competitive differentiators. Thank you for your interest in Tilray, and this concludes our prepared remarks.
Before we take questions from our covering analysts, Irwin and I will answer a few questions from our retail shareholders from the same platform. Rey, what is the first question?