Leef Brands Inc.

Leef reported Q2 net revenue of $7.3 million versus $8.7 million in Q2 last year, a 16% decline. Gross profit was $2.4 million, up 62% year over year from $1.5 million, and gross margin improved to 33% from 17%. Adjusted EBITDA was negative $631,000 for the quarter; first-half adjusted EBITDA was positive $1.7 million versus negative $2.1 million a year ago. Cash at quarter end was $5 million, up from $2.2 million at year-end, and inventory was $7.1 million versus $3.4 million at year-end. Management said it raised roughly $9 million in the first half and another $5.2 million in July, or about $14.2 million for the year. For the second half, management expects gross margin to move back toward roughly 50% as Salisbury Canyon Ranch material returns in the second half of Q3 and Q4, with hydrocarbon and solvent line margins also improving; no formal companywide revenue or EPS guidance was given.

Micah Anderson said the quarter validated Leef’s strategy of building its own cultivation base rather than relying on third-party biomass. He emphasized that the completed harvest, stronger balance sheet, higher-quality oil, and expanded cultivation footprint put the company in what he called its strongest position yet. His tone was upbeat and long-term focused, repeatedly pointing to 2027 as the year when full 180-acre operations and broader market opportunities could start to matter more.

Kevin Wilson focused on the margin swing from using own-grown biomass versus purchased inputs, saying margins were closer to 50% when SCR material was used and fell to 33% in Q2 without it. He noted Q2 net revenue of $7.3 million, gross profit of $2.4 million, adjusted EBITDA of negative $631,000, cash of $5 million, and inventory of $7.1 million, including $4.2 million of work in process. He said the company raised about $14.2 million year to date, which funded capex at the farm and inventory build ahead of the second half.

Analysts focused on how Leef could fit into potential interstate commerce and export supply chains, and management said larger MSOs appear interested in using Leef for concentrates while they focus on brands and retail. Management also said international expansion will likely require identifying target markets, meeting the relevant GMP standards, and upgrading facilities, with possible readiness in 2027. On margins, Micah said the company expects a return toward roughly 50% gross margins as owned biomass returns in the second half of Q3, with extra help from frozen hydrocarbon and solvent material. On the ranch, he said acreage could potentially go beyond 180 acres through a conditional use permit process, though that would require more work and timing is uncertain.