💸 The Tape

There is a version of the Canadian cannabis story that never gets told, mostly because it isn't very dramatic. No dilution death spiral. No going-concern language buried on page 47. No press release explaining why a writedown is actually a strategic realignment.

Auxly Cannabis Group just filed that version for the second quarter of 2026, and the numbers are worth sitting with.

Net revenue of $45.8 million, up 18% against the $38.8 million it posted a year ago. Adjusted EBITDA of $14.3 million, up 24%, landing at 31% of net revenue. And the line that separates real operators from spreadsheet artists: cash flow from operations before working capital changes of $13.4 million, up 31%, representing a 94% conversion from Adjusted EBITDA.

That conversion figure deserves the emphasis. Adjusted EBITDA in this sector has historically been a genre of creative writing — a number arrived at by removing whatever happened to go wrong that quarter. When 94 cents of every EBITDA dollar shows up as operating cash, the adjustments are doing considerably less lifting than usual.

Where the growth actually came from

The revenue build is a mix story, and a fairly clean one. Higher incremental volumes across the core portfolio, improved pricing across the flower portfolio, and continued strength in flower and pre-rolls on better demand and wider distribution.

Working against that: price compression on vape products. This is the more interesting half of the sentence. Vape has been the category where Canadian LPs went to compete on price, and Auxly is telling you plainly that it's still happening. That the company grew revenue 18% while absorbing vape compression says the flower and pre-roll engine is carrying real weight.

Margins moved the right way too. Gross Margin on Finished Cannabis Inventory Sold hit 55%, up from 52%. Management attributes it to manufacturing process improvements, efficiency gains at Auxly Charlottetown, and strategic procurement. None of those are one-time events, which matters — margin expansion built on cost structure tends to stick in a way that margin expansion built on a favourable pricing window does not.

The net income asterisk, explained

Net income came in at $7.7 million, or $0.08 per basic share and $0.07 diluted — technically down $0.4 million year over year. Anyone stopping at that line gets the wrong impression.

Strip out fair value adjustments on biological transformation and inventory, and net income was up $2.0 million, driven by improved gross profits and lower interest and accretion expense, partially offset by higher SG&A. IFRS biological asset accounting has been generating misleading headlines in this industry since 2018. This is one of them, just pointed in the friendlier direction than usual.

SG&A: the one line to keep an eye on

Selling, general and administrative expenses were $12.5 million, or 27.4% of net revenue, against $10.3 million and 26.6% a year ago. Management frames it as investment to support higher sales, which is fair — and 80 basis points is hardly an emergency.

But it is a data point rather than a footnote. Revenue grew 18%; SG&A grew roughly 21%. Operating leverage in a scaling CPG business is supposed to run the other direction. One quarter is noise. Three quarters of the same pattern is a trend, and it's the number to track from here.

A balance sheet that doesn't need a caveat

Current assets of $108.0 million, including $38.6 million of cash. Total debt of $43.6 million. Total Debt to TTM Adjusted EBITDA of 0.8x.

Read that leverage ratio again. In a sector where covenant renegotiation has been a recurring press release format, sub-1x is a genuine differentiator — and it's the reason Auxly can fund growth and buy back stock in the same quarter without a financing.

Speaking of which: the company repurchased roughly 2.6 million shares for $5.7 million during the quarter, at an average of $2.19 per share, with capacity remaining under an NCIB that runs to April 19, 2027 or until the maximum is hit. Weighted average shares were 102.3 million basic and 117.3 million diluted.

Those share counts and that buyback price are pre-consolidation. Auxly effectuated a 14:1 share consolidation effective July 28, 2026 — housekeeping aimed at capital structure and, in management's phrasing, capital markets quality. Translation: the optionality that comes with not trading at penny-stock optics.

Leamington, and the case for patience

Capital allocation is where the forward story lives. Auxly expects to put $10 million to $12 million of operating cash flow into capital projects in 2026, and up to $30 million through the end of 2028 inclusive of this year. All of it within Auxly Leamington's existing footprint, and all of it expected to deliver a 30% increase in production capacity from 2025 levels, alongside efficiency gains across cultivation and processing.

Funded from operating cash flow. Not a raise. Not a convert. That distinction is the whole thesis.

International is the wildcard, and management is refreshingly unwilling to oversell it. Auxly points to its partnership with Imperial Brands, scalable production, and export evaluation — while describing its deliberations as "purposefully rigorous and measured," with an explicit commitment that international activity be accretive to profitability and not compromise "winning at home."

That is either admirable discipline or a polite way of saying don't put it in your model yet. Probably both. Either way, it's a marked departure from the 2019-era habit of announcing an MOU with a Balkan republic and calling it a growth vertical.

The read

Auxly has quietly become something the Canadian market produces rarely: a cannabis company that generates cash, converts it at a high rate, carries manageable debt, self-funds expansion, and returns capital to shareholders.

The risks are real and mostly external. Vape compression hasn't resolved. The 30% capacity build assumes demand keeps pace — capacity is only an asset when it's utilized. SG&A leverage needs to reassert itself. And international remains a slide, not a segment.

But the second half is seasonally stronger, the balance sheet is clean, and the capital plan doesn't depend on the equity market cooperating. In this sector, that last point may be the most valuable asset Auxly owns.

📈 Dog Walkers

$VREOF ( ▼ 3.08% ) Share Buyback Program

Vireo Growth has authorized a share buyback program, and the framing is the most interesting part.

Starting August 17, 2026, the company may repurchase up to 2,426,872 subordinate voting shares in the open market under a normal course issuer bid. Against the 48,517,509 Subordinate Voting Shares outstanding as of August 13, that's roughly 5% of the float — the standard NCIB ceiling, not a token gesture. There are also 7,718 Multiple Voting Shares outstanding, convertible into another 771,800 subordinate shares.

CEO John Mazarakis was direct about the reasoning: the company believes its "current market valuation does not fully reflect the strength of our business" — a phrase that appears in roughly every buyback release ever written, but lands differently when the company is mid-integration on what management calls transformative transactions.

The mechanics are worth noting. Purchases run through the CSE via Haywood Securities, and Vireo has entered an automatic repurchase plan with Haywood — meaning buying can continue through blackout periods when the company would otherwise be sidelined. Haywood has discretion up to US$18.75 per share, within pre-set parameters. The APP was established while the company held no material non-public information. All repurchased shares are cancelled. The program expires August 17, 2027.

The read: an NCIB is optionality, not obligation — Vireo is explicit that it's under no requirement to buy a single share. But choosing buybacks over hoarding cash mid-integration is a real signal about how management views its own stock. Whether they actually use it is the number to watch.

$GLAS ( ▼ 3.11% ) Reports Q2

Glass House Brands delivered a quarter that reads very differently depending on which line you start with — and both readings are legitimate.

Start with production. Equivalent Dry Pound Production hit a record 245,746 pounds, up from 151,531 in Q1 and 230,748 a year ago, ahead of guidance. Cost per Equivalent Dry Pound fell to $122, a substantial improvement from Q1's $175. After a genuinely ugly first quarter, the farms are running again.

Start with margin instead and the picture darkens. Gross Profit Margin was 34%, against 55% in Q2 2025 — recovered from Q1's 14%, but a long way from where this business operated a year ago. Management attributes it to a higher proportion of trim in the production mix and elevated cost of production. Notably, cost per pound is still $31 above the $91 posted in Q2 2025.

Revenue of $47.0 million was essentially flat against $47.6 million a year ago, though up sharply from $28.6 million in Q1. Wholesale biomass carried $41.7 million, or 89% of total revenue. Encouragingly, average selling price reached $211 per pound, up from $206 — California pricing is firming.

Adjusted EBITDA was positive $5.7 million, versus $18.1 million last year. Operating cash flow was barely positive at $0.2 million. Cash finished at $22.1 million, up modestly from $20.7 million, after $2.1 million of capex and $2.9 million in preferred dividends — a fixed charge worth watching against that cash balance.

The structural news is larger than the quarter. Glass House deconsolidated its retail business, converted its cultivation and processing licenses to medical, registered them with the DEA, and uplisted to the NYSE. CEO Kyle Kazan says the remaining business is "fully medically licensed and Schedule III compliant" — positioning explicitly for interstate commerce and export.

Management reaffirms 1 million pounds for 2026 and a 1.1 million-pound exit run rate, with Greenhouse Two contributing from quarter-end. The $95 cost target remains the stated goal.

The read: volume is fixed, structure is transformed, margin is not. The second half has to prove the trim mix was transitional.

Full Report

📺 Trade To Black

What This Week Means For Cannabis M&A | TTB Presented by Flowhub

• High Tide is guiding to another record. Preliminary Q3 fiscal numbers point to CAD $195M–$200M in revenue, CAD $51M–$53.5M in gross profit, and CAD $15.2M–$16.5M in adjusted EBITDA — strong year-over-year growth across every major metric.

• The low end beats the high end of the Street. Even the bottom of the range clears the highest analyst estimate, driven by continued scale, operating leverage, and added flexibility from a new CAD $40M senior secured credit facility.

• Consolidation just got hostile. Curaleaf (TSX: CURA) launched a hostile takeover attempt for Aurora Cannabis (NASDAQ/TSX: ACB), with CEO Boris Jordan stating he's contacted every Canadian LP — a signal that sector M&A may be arriving faster than anyone modeled.

• Raj Grover reads the landscape. The High Tide CEO joins Shadd Dales and Anthony Varrell to break down what operators should be preparing for as consolidation accelerates, and where High Tide fits in the broader narrative.