Core Insights - The U.S. cannabis industry is rapidly maturing with larger markets and more efficient operators, despite ongoing federal restrictions on full legalization [1] - Federal policy changes are gradually occurring, indicating a potential long-term shift in the cannabis landscape [2] - State-level leaders are crucial for monitoring growth and investment opportunities in the cannabis sector [1][23] Federal Legalization Efforts - Cannabis remains illegal federally, but the Department of Justice is considering rescheduling it from Schedule I to Schedule III, which would acknowledge its medical use and lower abuse risk classification [2] - This rescheduling would not legalize recreational use but would ease research restrictions and reduce tax burdens under Section 280E [2] Banking Reform - The SAFER Banking Act aims to normalize banking for cannabis businesses, reducing cash usage and improving transparency [4] - This reform would provide legal protection for banks, allowing more institutions to serve the cannabis industry, thus lowering costs and enhancing capital access for operators [4] Growth Projections - Cannabis sales are projected to reach approximately $31.4 billion in 2024, with steady double-digit growth expected into 2025 [5] - By 2030, total sales are anticipated to exceed $67 billion, with some estimates reaching nearly $87 billion by 2035, contingent on expanded legalization and consumer shifts from the illicit market [5] State-Level Success Stories - **Michigan**: Market surpassed $3 billion in 2024, with strong demand despite falling prices due to competition [6] - **Missouri**: Sales reached $1.46 billion in 2024, driven by streamlined licensing and moderate taxes [7] - **Illinois**: Sales exceeded $2 billion in 2024, with tax revenues over $490 million, supported by social equity programs and strong urban demand [8] - **New Jersey**: Revenues surpassed $2 billion, benefiting from early access for medical operators [9] - **Florida**: Medical-only market with nearly 900,000 registered patients, showing significant sales potential [10] - **New York**: Sales on track to reach the billion-dollar mark, with improving licensing and supply chains [11] Tax Revenues and Community Impact - Since 2014, adult-use states have collected nearly $25 billion in tax revenue, supporting education, public health, and social equity initiatives [12] - Legal markets reduce illicit activity and provide consumers with tested and labeled products, benefiting communities through job creation and reinvestment [12] Future Considerations - Federal rescheduling and the SAFER Banking Act could significantly improve industry fundamentals [13] - State ballot measures and legislative sessions will influence growth trajectories, with tax debates being crucial for margins and expansion [13] Leading Companies - **Trulieve Cannabis Corp.**: Dominates Florida's medical market with over 190 dispensaries, reporting billions in annual revenue [15] - **Curaleaf Holdings Inc.**: Operates over 150 dispensaries across high-growth states, with strong revenue growth exceeding a billion dollars [17] - **Green Thumb Industries Inc.**: Operates more than 90 dispensaries, known for strong consumer brands and solid revenues above $1 billion annually [19][20] Investor Considerations - Investors should focus on efficient operators, evaluate tax structures, and consider municipal support [22] - Strong brands with consistent quality are likely to gain market share, and balance sheets will be critical post-280E reform [22]

Industry Overview - The Canadian cannabis sector is gaining investor attention as the U.S. market approaches broader reform, with the U.S. cannabis market projected to reach approximately $38.5 billion in 2024 and grow at a CAGR of 11-12% through the late 2020s [1][3] - Legislative changes in the U.S., such as Delaware's adult-use cannabis sales starting August 1, 2025, and potential federal rescheduling of marijuana, are creating strong thematic tailwinds for Canadian cannabis stocks with U.S. exposure [1][3] Company Highlights Tilray Brands (TLRY) - Tilray has established a strong global identity by combining cannabis, wellness, and beverages, significantly expanding its U.S. footprint through acquisitions [4][6] - The company reported record revenue exceeding $820 million for fiscal 2025, with gross margins averaging around 40%, showcasing strong cost management [8][9] - Tilray's strategic pivot into hemp-based beverages and wellness products allows it to build a presence in the U.S. market despite federal restrictions [10][7] Canopy Growth Corporation (CGC) - Canopy Growth is recognized as a leading cannabis company in Canada, with ambitions to enter the U.S. market through strategic partnerships and acquisitions, notably its option to acquire Acreage Holdings [10][12] - The company generated nearly $300 million in revenue but reported a net loss exceeding $650 million, highlighting ongoing profitability challenges [14][15] - Canopy's U.S. strategy is designed to unlock value upon legalization, with a strong brand portfolio and rights to Acreage Holdings representing potential growth [16] Village Farms International (VFF) - Village Farms operates in both agriculture and cannabis, leveraging its expertise in greenhouse cultivation to strengthen its cannabis operations in Canada [18][19] - The company reported net income above $25 million in 2025, with adjusted EBITDA reaching nearly 30% of total sales, demonstrating strong profitability and revenue growth [20] - Village Farms' focus on cultivation efficiency and vertical integration has allowed it to achieve profitability, distinguishing it from many cannabis peers [20][21] Conclusion - Tilray, Canopy Growth, and Village Farms each demonstrate unique strategies for growth and financial improvement in the evolving cannabis landscape [21] - These companies are well-positioned to capitalize on potential U.S. legalization and changing market dynamics, offering various investment opportunities [21]

Industry Overview - The U.S. cannabis industry is evolving with increasing legalization momentum and rising consumer demand [1][14] - Despite challenges such as oversupply and price compression, leading operators are positioning for future growth [1][14] - Multi-state operators with strong market share are expanding while maintaining financial discipline [1][14] Company Highlights Trulieve Cannabis Corp. (TCNNF) - Trulieve is one of the largest cannabis operators in the U.S., with over 190 dispensaries, primarily in Florida [3][5] - The company has a vertically integrated model, producing and selling a variety of cannabis products [3][6] - Recent financials show strong quarterly revenue and profitability, with effective cost-control strategies [5][6] Glass House Brands Inc. (GLASF) - Glass House operates large-scale greenhouses and a network of dispensaries in California, focusing on sustainable cultivation [7][9] - The company has maintained steady quarterly revenue and improved gross margins despite competitive pricing pressures [9] - Its cultivation capacity positions it as a cost leader in the U.S. market [7][9] Verano Holdings Corp. (VRNOF) - Verano operates over 140 dispensaries across 13 states, with a strong presence in Illinois, Florida, and New Jersey [10][11] - The company emphasizes quality control and cost efficiency through its vertically integrated operations [11][13] - Recent financial performance shows modest revenue growth and improved operating margins, despite industry challenges [13]

Financial Data and Key Metrics Changes - SNDL reported net revenue of $245 million for Q2 2025, reflecting a 7.3% increase year over year [8] - Gross profit reached $67.6 million, a 16.2% growth year over year, matching the record gross margin of 27.6% achieved in Q1 2025 [9] - Adjusted operating income was $5.8 million, marking a 226% increase year over year, with the first positive operating income in the company's history [10] Business Segment Data and Key Metrics Changes - The cannabis retail segment achieved net revenue of $84.4 million, representing 11% year over year growth, driven by an 8.2% increase in same store sales [16] - The liquor retail segment delivered net revenue of $141.9 million, marking a 1% year over year increase, supported by a 2.7% growth in same store sales [14] - Cannabis operations segment reported net revenue of $35.8 million, reflecting a 43% growth compared to the prior year, driven by edibles and international sales [17] Market Data and Key Metrics Changes - The cannabis business expanded at nearly three times the rate of the Canadian recreational market, outperforming direct competitors [4] - International sales for cannabis amounted to $3.8 million in Q2 2025, indicating growth in export revenues [48] Company Strategy and Development Direction - The company focuses on three strategic pillars: growth, profitability, and people, with a commitment to expanding its cannabis retail footprint in Canada [19][20] - SNDL is actively monitoring the U.S. market while expanding its international presence, serving patients in the UK and Continental Europe [6] - The company aims to achieve sustainable long-term value for shareholders through operational improvements and cost management [5] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued growth and operational efficiency, despite challenges in the broader market [5][21] - The company is optimistic about international sales growth, although it will be off a slow base [29] - Management highlighted the importance of maintaining a strong balance sheet with no debt and over $200 million in unrestricted cash [6] Other Important Information - The company achieved a $5 million reduction in overhead expenses year over year, despite inflationary pressures [22] - The Rise Rewards loyalty program is in early stages, with a six-figure membership count [30] Q&A Session Summary Question: International sales growth and domestic sales prioritization - Management indicated that international sales growth does not detract from focus on the Canadian market and expects meaningful growth in the second half of the year [29] Question: Update on the Rise Rewards loyalty program - Management confirmed progress in member sign-ups, with announcements planned as key milestones are reached [30] Question: Potential expansion of cultivation footprint - Management noted that current cultivation efforts meet about 15% of total biomass needs and are cautious about capital investments in new facilities [32] Question: Satisfaction with current supply chain and margins - Management acknowledged early days in Europe with high margins but noted volatility and external shocks affecting supply chains [38] Question: Commentary on liquor segment growth - Management attributed liquor segment growth to effective banner management and consumer engagement, particularly in the Wine and Beyond banner [44] Question: Clarification on wholesale revenue for cannabis - Management disclosed that international sales for cannabis amounted to $3.8 million in Q2 2025 [48] Question: Aspirations for market share in Canadian recreational sales - Management expressed a focus on profitable growth rather than solely increasing market share, acknowledging the oligopolistic nature of the market [51] Question: Update on U.S. assets and consolidation - Management indicated that consolidation of U.S. assets is pending the resolution of ongoing legal processes [53] Question: Management's role in Parallel operations - Management clarified that SNDL is not engaged in plant-touching activities in the U.S. to maintain compliance with NASDAQ [57]