Executive Summary

Q2 2025 missed on revenue and profitability versus both prior year and S&P Global consensus: revenue $26.85M vs $31.09M (-13.6% YoY) and below the $28.2M consensus; GAAP EPS -$0.04 vs -$0.03 consensus; adjusted EBITDA -$2.4M vs -$1.5M consensus estimate *. Values retrieved from S&P Global.
Management leaned into an aggressive pricing strategy in Nevada to defend share, while initiating company-wide cost reductions; gross margin fell to 43.4% (from 50.9% YoY) on industry-wide price compression and competitive intensity in Florida .
Net loss widened to $13.3M (vs. $8.1M YoY), and cash declined to $15.9M from $23.4M at year-end as the company drew its $9.75M secured revolver (subsequently extended to June 30, 2026) .
Key catalysts/considerations: pricing repositioning and loyalty relaunch (NV) , continued Florida footprint expansion (32 dispensaries operating) , and heavy 280E tax burden amplifying net losses; no formal guidance was issued .

What Went Well and What Went Wrong

What Went Well
- Executed strategic pricing reset in Nevada to leverage scale and defend traffic: “we took bold steps to maximize our scale advantage in Nevada, moving to a more aggressive pricing strategy” (Larry Scheffler, Co‑CEO) .
- Cost actions underway: “operational discipline, tightening expenses… necessary steps to build a more efficient and resilient organization,” with early savings contributing to a 4.6% YoY decline in total expenses in Q2 .
- Commercial initiatives: launched a revamped loyalty program in July to support traffic/retention post-pricing moves .
What Went Wrong
- Revenue contraction and margin pressure: revenue down 13.6% YoY to $26.85M; gross margin contracted to 43.4% (from 50.9%) on broad pricing pressure and competition, particularly in Florida .
- Profitability deterioration: adjusted EBITDA swung to a -$2.4M loss (vs. +$3.2M YoY); GAAP net loss widened to -$13.3M, reflecting lower gross profit and deleveraging .
- Heavy tax burden under 280E continues to inflate tax expense and suppress net income; Q2 current tax expense was material and management reiterates 280E materially elevates effective taxes relative to non‑cannabis peers .

Financial Results

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($USD)	$30.3M	$28.03M	$26.85M
Gross Profit ($USD)	$13.1M	$12.01M	$11.66M
Gross Margin (%)	43.2%	42.8%	43.4%
Total Expenses ($USD)	$35.8M (incl. $18.9M impairment)	$18.62M	$18.48M
Adjusted EBITDA ($USD)	$0.0M	-$2.5M	-$2.4M
Adjusted EBITDA Margin (%)	0.0%	-9.0%	-9.1%
Net Loss ($USD)	-$26.4M	-$2.05M	-$13.30M
Diluted EPS ($USD)	n/a disclosed for Q4 table	-$0.01	-$0.04

Revenue channel mix (Q2 2025 vs. Q2 2024):

Retail revenue: $24.20M vs $27.62M YoY; Wholesale revenue: $2.66M vs $3.46M YoY .

Product category (Q2 2025 vs. Q2 2024):

Flower $9.91M vs $11.58M; Concentrates $8.50M vs $9.62M; Edibles $4.95M vs $5.03M; Topicals/Other $0.84M vs $1.39M; Wholesale $2.66M vs $3.46M .

Balance sheet highlights:

Cash $15.85M (6/30/25) vs $23.38M (12/31/24); Total liabilities $103.05M vs $94.02M; Revolver balance $9.75M; uncertain tax positions $26.90M (vs $19.32M at YE) .

Non‑GAAP reconciliation (Q2 2025):

EBITDA -$3.3M; add-backs include $0.50M share-based compensation and $0.3M El Capitan-related expenses → Adjusted EBITDA -$2.4M .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Company guidance	FY/Q3 2025	None disclosed in prior quarter filings/press releases	None provided in Q2 2025 8-K/10-Q	Maintained: No guidance

Earnings Call Themes & Trends

Note: The company scheduled a Q2 2025 call (Aug 13, 2025) but no transcript was available in our document set. Interim CFO Steve McLean participated following the May CFO transition .

Topic	Previous Mentions (Q4’24, Q1’25)	Current Period (Q2’25)	Trend
Pricing pressure/competition	Price compression cited; targeted discounting in FL . Q1: persistent pricing pressure .	Continued pricing pressure; aggressive NV pricing to bolster scale advantage .	Deteriorated vs Q1 (price-led margin pressure persists).
Demand/tourism	Q1: softness in tourism/consumer spend .	Fewer customers at Las Vegas Superstore; weaker NV consumer environment .	Softness continues.
Florida expansion	Ongoing expansion; 30+ stores by YE’24 .	32 dispensaries operating; new openings in April (Orange Park, Edgewater) .	Footprint expanding, but competitive intensity rising .
Cost control/efficiency	Entering 2025 focused on productivity/efficiency .	Company-wide cost reductions, early savings evident .	Improving execution; benefits to accrue over time.
Loyalty/consumer programs	n/a	Revamped loyalty program launched July 11 .	Positive initiative to support traffic/retention.
Regulatory/tax (280E)	Heavy tax drag historically .	280E continues to materially inflate taxes and suppress profitability .	Unchanged structural headwind.
Macro/tariffs/supply chain	n/a	Tariffs not material to profitability in 2025 .	Neutral.

Management Commentary

Strategic pricing and scale: “we took bold steps to maximize our scale advantage in Nevada, moving to a more aggressive pricing strategy. Even as we lean in on price, customers continue to choose us for our consistent quality and standout retail experience.” — Larry Scheffler, Co‑CEO .
Cost discipline: “tightening expenses, protecting our balance sheet, and deploying targeted pricing strategies… necessary steps to build a more efficient and resilient organization. We expect these actions to contribute to improved financial performance over time” — Bob Groesbeck, Co‑CEO .
Operating focus areas: Early cost savings reduced total expenses YoY; loyalty relaunch and Florida openings support growth vectors .

Q&A Highlights

No Q2 2025 earnings call transcript was available. The company hosted its call on Aug 13, 2025 with Interim CFO Steve McLean; no published Q&A transcript found in our search set .

Estimates Context

S&P Global consensus (Q2 2025): Revenue $28.2M; EPS -$0.03; EBITDA -$1.5M*. Actuals: Revenue $26.85M; EPS -$0.04; EBITDA -$3.62M*. Result: revenue miss, EPS miss, and EBITDA below consensus *. Values retrieved from S&P Global.

Metric	Consensus*	Actual	Surprise
Revenue ($USD)	$28.20M*	$26.85M	-$1.35M
EPS (Primary) ($)	-0.03*	-0.04	-$0.01
EBITDA ($USD)	-$1.50M*	-$3.62M*	-$2.12M

*Values retrieved from S&P Global.

Key Takeaways for Investors

Expect near-term estimate resets: revenue and EPS came in below S&P Global consensus amid industry-wide price compression and Florida competition; 280E tax remains a structural drag *. Values retrieved from S&P Global.
NV pricing pivot plus loyalty relaunch should stabilize share/traffic, but margin recovery requires easing competitive pressure and improved mix; monitor gross margin trajectory and retail traffic at the Las Vegas Superstore .
Florida scale (32 dispensaries) is an asset; watch competitive dynamics, new store productivity, and wholesale development to 3rd party doors in IL later in 2025 .
Liquidity is adequate but tighter: cash $15.9M with $9.75M revolver drawn/extended; watch cash burn, working capital movements, and progress on asset sales (post-Q2 property sale with $0.5M loss to be recognized in Q3) .
Cost reduction efforts are tangible (expenses down YoY in Q2) and should support operating leverage once pricing normalizes; track quarterly OpEx run-rate and Adjusted EBITDA inflection .
Leadership transition: Interim CFO installed in May; continuity risk appears managed, but execution on finance, cost, and cash priorities is key through 2H’25 .
Regulatory/tax optionality: any federal movement reducing 280E impact would be a material upside lever to net income and cash flows; absent that, focus remains on gross margin/cost control to narrow losses .

Supporting Detail (Prior Two Quarters)

Q1 2025: Revenue $28.03M; gross margin 42.8%; Adjusted EBITDA -$2.5M; net loss -$2.05M; EPS -$0.01. Commentary cited persistent pricing pressure and tourism softness; cost alignment underway .
Q4 2024: Revenue $30.3M; adjusted EBITDA ~$0.0M; included $18.9M impairment; management entered 2025 focused on efficiency and margin resilience .

Additional Notes (Documents Searched/Read)

Q2 2025 8-K earnings press release (Item 2.02; Exhibit 99.1), including full financial tables and non-GAAP reconciliation .
Q2 2025 10‑Q with detailed financial statements, disaggregated revenue, MD&A, liquidity, revolving line of credit extension (subsequent event), and 280E tax discussion .
Q1 2025 8-K (prior quarter) and Q4 2024 8-K (two quarters prior) for trend analysis .
CFO resignation 8-K (May 20, 2025) for leadership context .

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