Leef Brands (LEEEF) Q2 2026 Earnings Report

The call portrayed a company in transition: Q2 showed temporary softness with a 16% revenue decline, negative adjusted EBITDA for the quarter and volume pullbacks due to running purchased biomass. Offsetting those near-term headwinds are strong strategic and operational developments — an oversubscribed capital raise (~$14.2M YTD), completion of the largest harvest with exceptionally high-quality oil (95% THC, passed CAT4), acquisition of HIMALAYA (added ~$1M revenue), materially improved gross profit (+62% YoY) and margin expansion (33% vs 17% prior year), a growing acreage footprint targeting 180 acres in 2027, new processing capacity, and active regulatory and customer engagement positioning the company for interstate and export opportunities. Overall, management presented these negatives as temporary and solvable via vertical integration and recent investments.

The company guided that its Q2 softness was temporary and tied to running third‑party biomass, with revenue down 16% to $7.3M, unit volumes down ~20% partially offset by a ~5% ASP improvement, and adjusted EBITDA of negative $631k (first half adjusted EBITDA still +$1.7M vs -$2.1M YoY), while gross profit rose 62% to $2.4M and gross margin nearly doubled to 33% from 17% as hydrocarbon products became the largest revenue category; operationally Leef completed an oversubscribed $9.3M financing, raised roughly $9M in H1 plus $5.2M in July (≈$14.2M YTD) to buy a processing facility, acquired Himalaya (≈$1M contributed in the partial quarter), filed DEA registration applications, finished its largest harvest with the first several hundred liters in July testing ~95% THC / ~99% total cannabinoids and passing CA CAT4 screens, and expects acreage to reach ~122 acres this fall (an 88% YoY increase) en route to operating the full 180‑acre permit in 2027 (plus contracted/partnered 21‑acre blocks), inventory grew to $7.1M (WIP $4.2M), cash was $5M (from $2.2M), working capital turned to a surplus of $8.7M, and management reiterated that running its own biomass historically drives gross margins toward ~50% (vs ~33% on bought material), with margin and distillate volume recovery expected in late Q3 and into Q4 and longer‑term cost targets like distillate < $0.50/gram (vs CA sell price ~$1/g and potential out‑of‑state prices of $3.50–$12/g) implying very high incremental margins.