Week 18

Update for Cannabis Industry between March 9th and March 20th.

There was no M&A activity in the recent days for Canadian Market, only MTL Cannabis being finally acquired by Canopy Growth Corporation.

I recently took a closer look at High Tide, a cannabis retail company operating across Canada, the United States, and international markets. They released their first quarter 2026 results a few days ago, and here are my key takeaways.

Revenue growth came in strong, increasing by over 25%, while costs rose by 24.5%. This is a positive sign, as the company is maintaining operating leverage while scaling.

Digging deeper into the financials, depreciation and amortization increased from 5,847 to 8,026. This likely reflects an expansion in leased assets, consistent with a company actively growing its retail footprint. Finance and other costs also rose significantly, from 2,731 to 6,113, largely driven by prior M&A activity and the associated obligations.

Despite these increases, the company reported a net loss of 352. However, this figure is not as concerning as it may initially appear. Much of the downward pressure comes from non-cash expenses like depreciation and amortization, along with transaction-related costs. Adjusting for these factors presents a much healthier underlying income profile.

From a strategic standpoint, High Tide’s current momentum appears to be driven largely by its white-label segment. This represents a compelling growth avenue, particularly because the company leverages its customer data to better understand consumer preferences and tailor its offerings accordingly.

One aspect I find particularly interesting (though I could be mistaken) is their membership model. They seem to be one of the only major retailers in this space offering a subscription-style program. This could provide more predictable cash flows and improve valuation visibility by reducing uncertainty around future revenues.

Additionally, their exposure to the U.S. market could become a significant tailwind, especially if regulatory conditions continue to ease over time.

Looking back at their 2025 financials, another noteworthy element is their data analytics revenue. The company generated a substantial amount nearly $600 million by monetizing consumer data, effectively selling insights to vendors. This reinforces the idea that their data strategy is not only supporting their white-label business but also serving as a standalone revenue stream.

Some critics argue that High Tide’s performance is only “average” due to recurring quarterly losses. However, I see this differently. The company is clearly in expansion mode, consistently opening new stores and reinvesting capital into growth initiatives that are already showing traction. If profitability were the immediate goal, management could easily scale back expansion efforts or optimize lease structures.

Overall, the current losses appear to be a byproduct of deliberate growth investments rather than operational weakness.