Strategic Operational Drivers
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Achieved record cannabis harvest yields at Delta facilities through the first half of 2026, including the first harvest from the Delta 2 expansion phase.
Realized nearly 10 percentage points of year-over-year gross margin expansion, attributed to record yields, greater operating efficiencies, and a favorable sales mix.
Leveraged the world’s largest EU GMP certified cannabis facility to drive a 74% year-over-year increase in international export sales.
Gained top 10 market share in all major Canadian convenience product categories, including vapes and infused pre-rolls, through entirely organic growth.
Maintained a competitive advantage in Germany by holding 4 of the top 10 market share strains and achieving the widest pharmacy distribution of any cultivator.
Successfully transitioned the legacy produce business to a private model, resulting in the fifth consecutive quarter of positive net income and EPS.
Optimized the cannabis supply chain by significantly improving the sales mix of higher-margin EU GMP certified products over GACP products.
Growth Outlook and Strategic Initiatives
Commencing the second half of the Delta 2 expansion on September 1st, targeting an incremental 15 metric tons of production in 2026 and 25 tons in 2027.
Projecting a full 40 metric ton incremental run rate by Q3 2027, bringing total annualized Delta production to approximately 160 metric tons by 2028.
Expecting the Groningen facility in the Netherlands to ramp to full production capacity by the end of Q1 2027, positioning the segment for step-function growth.
Anticipating entry into new European jurisdictions in the second half of 2026 while monitoring potential expansion of the Netherlands pilot program.
Forecasting stronger free cash flow and a growing cash balance for the remainder of the year as capital expenditures for major expansions are nearly complete.
Financial and Regulatory Context
Reported a one-time $4.3 million vendor settlement in the prior year’s results, which impacted year-over-year EBITDA and net income comparisons.
Updated transfer pricing policies following the produce business sale, resulting in a higher allocation of corporate expenses directly to the cannabis segment.
Paid $17 million in Canadian income taxes during the first half of 2026, reflecting a full year and a half of obligations and a shift to sustainable profitability.
Completed a $15 million equity placement with U.S. institutional investors to strengthen the balance sheet and increase institutional ownership.
