Good News For LEEF Brands, But It Is Still a Bad Cannabis Stock

I have written three pieces now on LEEF Brands (LEEEF), which rallied sharply on Friday, rising 20% to $0.189. This gets it back to where it was when I wrote in mid-November that it was a terrible company and a worse stock. When I wrote about it the first time in early August, I explained why I don't view it as a good idea for cannabis investors. The stock, despite surging Friday, is down since then. In the last article, I reviewed the Q3 filings, and one of the things that continued to bother me was the balance sheet. The company announced some major news on the debt on 12/5, and today I want to address this.

LEEEF Issues 59.2 Million Shares

When I reviewed the company a month ago, I wrote: "The balance sheet should alarm investors." I pointed out that the negative operating cash flow in 2025 had been -$1.7 million, and the company had just $1.9 million cash with total liabilities of $27.9 million. In the first piece I wrote three months earlier, I noted that the liabilities included $10.2 million of convertible notes.

On 12/5, the company issued a press release detailing that it had converted this debt into common shares. The press release detailed that that C$10.59 million of 11% notes due 9/9/27 had been converted into 59.21 million shares of common stock, which was a lower conversion price than originally. The original units for conversion included one common share and one warrant to buy shares at C$0.30 and had a conversion price of C$0.25. The debt was converted into shares at C$0.179, a 28% discount.

The bad news is that the share-count has soared. The good news is that the debt is gone and that interest paid by the firm goes away. It is also positive that one of the lenders, the CEO, Micah Anderson, converted his debt and an additional note of C$982K.

LEEEF Has Underperformed

While LEEEF rallied sharply on Friday, four full days after this news came out, the rally was not related to this news. The volume was very heavy, with over 1.073 million shares trading, the highest in over a year. The stock closed at C$0.245 in Canada and at C$.189 on the OTC in the U.S. Here is the U.S. chart over the past year:

LEEEF, with the 20% gain on Friday, has increased now 13.7% over the past year, but is down 11.6% year-to-date. Cannabis stocks, as measured by the New Cannabis Ventures Global Cannabis Stock Index, have gained 12.4% in 2025 so far. AdvisorShares Pure US Cannabis ETF (MSOS) has gained a stunning 52.2%.

Even with the big jump on Friday, LEEEF is lagging the sector. MSOS gained 54.3% on Friday, as investors became excited again about potential cannabis rescheduling. At a close of $5.80, the price was higher than the peak closing price since August. I think that MSOS is horrible as an investment due to its reliance upon three stocks at about 70% of the ETF, which is bad enough in itself but worse because I really don't like two of them at their current prices. Here is the chart over the last year of LEEEF compared to MSOS:

I doubt that many investors would ever swap MSOS for LEEEF, but LEEEF has outpaced MSOS over the past year.  Going back to November 5, 2024, the elections last year, MSOS has underperformed LEEEF:

For most investors, LEEEF has too many challenges (small size in revenue and market cap, trading on the OTC and not a higher exchange, low trading volumes and Canadian financial reports not filed with the SEC) and negative cash flow and valuation issues.

LEEEF Has Too High of a Valuation

When I discussed the valuation a month ago, I cited the market cap as $39 million on 185 million shares. I did not include the debt to get an enterprise value, but now these are shares. I am calculating shares outstanding now of 244 million, which at $0.189 gives a market cap of $46.1 million, which is C$60.5 million. This could be higher due to RSUs that are outstanding and could get converted into stock. There are also some in-the-money options. Debt is down a lot but not zero. We will have to wait until April, when they are required to provide Q4 financials, to learn more (perhaps they will be earlier).

Through the first three quarters of 2025, the company reported negative adjusted EBITDA. The balance sheet will be better (less debt), but book value was -$C16.2 million. It will still be negative.

Conclusion

LEEEF does not look attractive to me. It just rallied 20%, and it could rally more. I think that there are better ideas for cannabis investors and wish those that hold it the best. There are no analysts covering the stock, though a former sell-side analyst works there and does pump the stock. Again, why isn't Jesse Redmond seeing this?