Cannara Biotech Conference Summary Company Overview - **Company Name**: Cannara Biotech Inc. - **Stock Symbol**: LOVE (TSXV) - **Industry**: Canadian Cannabis - **Founded**: 2018 - **Headquarters**: Quebec, Canada - **Facilities**: Operates over 1.6 million square feet across two fully owned facilities in Quebec [2][5] Core Business and Market Position - Cannara Biotech is a vertically integrated cannabis company focused on producing premium-grade cannabis at scale, emphasizing profitability, innovation, and long-term value creation [2][4] - Currently the **seventh largest producer** in Canada by sales and **second largest** in Quebec, with a **12.8% market share** in Quebec, up from 9.7% a year ago [5][17] - Annualized production run rate is approximately **50,000 kilograms** (50 million grams) [5][6] Financial Performance - **Q3 2025**: Best quarterly financial results in the company's history - **Nine months of 2025**: - Net revenue: **$80 million** - Gross profit: **$32.7 million** - Gross margin: **41%**, with steady quarter-over-quarter increases [9][10] - Adjusted EBITDA: **$20.7 million** (26% of revenues) [10] - Net income: **$9.8 million**, a **53% increase** from the previous year [10] - **Cash Flow**: Generated **$17.2 million** in operating cash flow and **$12.3 million** in free cash flow in the first nine months of 2025 [11] Operational Highlights - Achieved a **26% increase** in capacity over the past year without additional capital costs [6][9] - Vertical integration allows full control over the cannabis supply chain, enhancing quality and efficiency [7][24] - Upcoming launch of a new vape category in Quebec, with **20% retail shelf space** already secured [8][17] Competitive Advantages - Strong operational platform with a focus on premium quality, scalable operations, and cost leadership [8][9] - Access to Quebec's low electricity rates of **$0.059 per kilowatt**, significantly lower than other provinces [26] - High barriers to entry in Quebec due to strict regulations on sales and marketing, allowing Cannara to thrive without heavy promotional activities [26][27] Strategic Initiatives - Plans for a **$10 million investment** in a new dedicated processing center to support growth and expand capacity to **100,000 kilograms** annually [16][24] - Focus on internal growth rather than external acquisitions, emphasizing operational discipline and quality [25][27] Market Trends and Outlook - The Canadian cannabis market is experiencing a shift, with a **41% surge** in estimated retail sales year-over-year, positioning Cannara as a leader in growth [16][17] - The company is well-prepared to meet unserved demand and capitalize on upcoming market opportunities, particularly in the vape segment [8][17] Conclusion - Cannara Biotech is positioned as a dominant player in the Canadian cannabis market, with a strong financial performance, operational efficiencies, and a clear growth strategy focused on quality and innovation [2][9][27]

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 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]

Core Insights - MJBizCon and Budist are launching the MJBowl, a bi-coastal competition to highlight the Most Valuable Products (MVP) from California and New York across five categories, with winners announced on December 4 [1][5] - The competition runs from August 14 to October 3, 2025, and is open to licensed cannabis companies in the respective states [2] - Judging will be conducted by Budist's panel of critics using a standardized scoring rubric to ensure credibility, with winning brands featured in consumer judging kits [3][4] Industry Context - The MJBowl aims to bridge the gap between East and West cannabis markets, promoting product excellence and national recognition for the cannabis industry [5] - Budist is positioned as a professional review platform, enhancing transparency and community engagement in cannabis product evaluations [8] - MJBiz is recognized as a leading B2B resource for the cannabis industry, producing the largest cannabis trade show, MJBizCon, which has been consistently ranked among the top trade shows in the U.S. [7]

Industry Overview - Canadian cannabis stocks are gaining momentum as the U.S. cannabis market is projected to reach nearly $45 billion by 2025, with legal sales expanding in over 20 states [1] - Renewed interest in federal reform is evident, with lawmakers pushing for rescheduling and broader legalization, despite local regulatory challenges [1] - Canadian firms with U.S. exposure are expected to benefit from these developments, leading to increased investor optimism [1] Company Highlights - **Sundial Growers Inc. (SNDL)** has transformed into a diversified cannabis and liquor operator, expanding its retail presence in the Southeastern U.S. and managing dozens of dispensaries [5][8] - For Q1 2025, Sundial reported net revenue exceeding $200 million, with significant gross profit growth and improved operational efficiency, despite still reporting an operating loss [8] - **Cronos Group Inc. (CRON)** has adopted a partnership strategy to gain U.S. exposure, allowing it to distribute branded products without direct ownership of retail stores [9] - In Q1 2025, Cronos saw a meaningful revenue increase, with gross profit more than doubling year-over-year and adjusted earnings turning positive for the first time in several quarters [11] - **High Tide Inc. (HITI)** operates the largest non-franchised cannabis retail chain in Canada and has a strong e-commerce presence in the U.S. [12] - The company reported over 10% revenue growth in Q2 2025, maintaining positive adjusted EBITDA for 21 consecutive quarters and expanding its store count to over 200 [14] Investment Outlook - August 2025 brings renewed interest in the cannabis sector, with Sundial, Cronos, and High Tide showing distinct strengths and operational momentum [15] - Each company demonstrates resilience and strategic growth, making them worthy of consideration for investors looking to tap into North America's cannabis potential [16]

Core Insights - Cronos Group Inc. reported a 28% year-over-year increase in net revenue for Q1 2025, reaching $32.3 million, with a 33% increase on a constant currency basis [1][11] - The company maintains a strong balance sheet with $838 million in total cash and cash equivalents and short-term investments [1] - PEACE NATURALS remains the leading cannabis brand in Israel, achieving record net revenue and market share [3][19] Financial Performance - Net revenue for Q1 2025 was $32,262 thousand, up from $25,288 thousand in Q1 2024, marking a $6,974 thousand increase [6][11] - Gross profit increased to $13,734 thousand in Q1 2025, a rise of $9,251 thousand from Q1 2024, resulting in a gross margin of 43% compared to 18% in the previous year [6][8] - Net income for Q1 2025 was $7,723 thousand, a significant improvement of $10,207 thousand from a loss of $2,484 thousand in Q1 2024 [8][11] Market Position and Brand Performance - The Spinach brand ranked as the second most popular brand in Canada with a 4.6% market share and third in the flower category with a 5.1% market share [13] - SOURZ by Spinach captured a 20% market share in the gummy category, making it the best-selling gummy brand in Canada [14] - Lord Jones Chocolate Fusions™ achieved a 9.6% market share, ranking as the third best-selling chocolate cannabis edible brand in Canada [16] Strategic Initiatives - Cronos GrowCo's expansion is on track for completion in Q2 2025, which is expected to significantly increase cultivation capacity and meet growing demand [2][22] - The company has authorized a share repurchase program of up to $50 million, expected to commence on May 14, 2025 [10] - New product launches in Q1 2025 include strain-specific cannabis oils under the PEACE NATURALS brand, aimed at enhancing product offerings in international markets [19][20] Regulatory Environment - An anti-dumping duty of up to 165% on Canadian medical cannabis imports into Israel was proposed but later vetoed, although the Ministry of Economy intends to pursue the duty process [23]