Leef Brands Is Not a Good Idea for Cannabis Investors

I don't follow Leef Brands (LEEEF) closely at all. I became aware of it recently, when it hired Jesse Redmond to be Head of Investor Relations and Business Development in January. I have never met Redmond before, but he has been involved in the cannabis industry for a while, working at Water Tower Research, where he shared research from early 2023 until late 2024. I have seen him on Higher Exchanges Podcast. You can learn more about him at LinkedIn or X.

I looked at Leef Brands when Jesse moved to it, and wondered why he would go there. He said in the press release, "I'm confident Leef will be one of the most exciting companies in cannabis. I look forward to sharing our story with investors and contributing to Leef's growth"

Here is the company's press releases by title since he joined:

• LEEF Brands Signs Binding Letter of Intent to Acquire a Tier 1 Processing License in New York, Paving the Way to Enter the $1.5B Cannabis Market in 2025

• LEEF Brands to Participate in CEM’s Whistler Capital Conference

• LEEF Brands Begins Planting Salisbury Canyon Ranch, One of the Largest Cannabis Farms in the World

• LEEF Brands Reports First Quarter 2025 and Full-Year 2024 Financial Results

• Glass House Brands and LEEF Announce MSA for The Leaf El Paseo Dispensary and Off-take Agreement

• LEEF Brands to Attend Bitcoin 2025 Conference

• LEEF Brands Announces Successful Completion of Acquisition of its New York License

• LEEF Brands Announces CAD $1 Million Private Placement

Yay, Bitcoin! Yay, New York. Yay, Glass House! Yay, whatever!!!

Bad Chart

Here is the chart of the stock in Canada, where it is listed. It trades with the symbol LEEF on the CSE. Note that the company did a 1:10 reverse-split in November:

The stock is currently near C$0.25, where that private placement was being offered (with warrants). LEEEF is right now at $0.1875, which is down 12.3% year-to-date.

Bad Fundamentals

One can learn more about the company by visiting its website or going to SEDAR to see its filings. The website has a tab for investor relations, and here is the most recent presentation. Sadly, it is from February and reflects only through 9/30.

Looking at the filings for Q1, which were filed in early May, revenue increased by 19% to $$9.4 million. The gross margin, though, fell, and gross profits declined by 23% to $2.5 million. LEEEF reported an operating loss of $1.9 million compared to an operating profit of $666K a year earlier. The operating cash flow was -$1.4 million. The company ended Q1 with $915K. Total assets of $42.8 million fell slightly, while total liabilities of $51.7 million fell by almost $4 million. Equity, then, is negative. The big items are $13.5 million tax payable within a year, Convertible debentures of $10.2 million and notes payable of $10.4 million ($0.9 million within a year). That's a lot of debt! By the way, the current assets are way lower than the current liabilities.

I don't know the CEO at all, Micah Anderson, but his LI profile says that he has been at the company since 1996, when medical cannabis became legal in California. I have had interaction with one of the other three directors, Andrew Glashow. He was the CEO for about two years of CLS Holdings (CLSH), which was just delisted in Canada and was highly promotional in my view. A filing says that Anderson owns 16.6 million shares, and Emily Heitman, another director and also Chief Revenue Officer, owns 7.3 million. The CFO, who has been there since 2022, owns only 105K shares.

Silly Valuation

The company indicated in its filings that there are 173 million shares outstanding. At $0.1875, the stock has a market cap of $32 million. There are 7 million restricted stock units that could become shares, and there are warrants and options and a lot of debt, some of which is convertible. The filings suggested that the shares outstanding increased by 46% over the past year. There are no analysts covering this money-losing company.

Conclusion

If you want to own LEEEF, go ahead, as it is your money, and you can decide how to invest it. I have explained why I don't care a bit. I don't cover it, and I don't expect to ever cover it. Good luck to you! Good luck to all cannabis companies and their investors!