What changed in this filing

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Item 1A. Risk Factors

2026-03-25 compared with 2025-03-26 · 77 added, 43 removed, 660 unchanged (15% of the section changed)

35 unchanged sentences

Risks Related to our Business and Operations

The full effect of the COVID-19 pandemic on our operations is unknown at this time, and it may cause a significant negative effect on us in the future.

We face increasing competition that may materially and adversely affect our business, financial condition and results of operations.

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Increased prices and inflation could negatively impact our margin performance and our financial results.

We are a developing company and have only recently begun to generate positive cash flow.

We are a developing company and we do not generate positive cash flow every fiscal year.

Our business is exposed to risks inherent in an agricultural business.

Climate change could disrupt operations and adversely affect our financial results

We are dependent on the popularity of consumer acceptance of our brand portfolio to generate revenues.

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Our actual financial position and results of operations may differ materially from the expectations of management.

Increases in the cost or reduced availability of materials, equipment, commodities, or energy due to inflation, tariffs, trade policies, or geopolitical events could adversely affect our profitability and operating results.

Our business, financial condition, results of operations, and cash flow may be negatively impacted by challenging global economic conditions.

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There is uncertainty surrounding the U.S.

federal government and Attorney General Pam Bondi and their influence and policies in opposition to the cannabis industry as a whole, and their actions could result in significant fines penalties, convictions or criminal charges, which could have a material adverse effect on us.

As a result of the conflicting views between state legislatures and the federal government regarding cannabis, investments in cannabis business in the United States are subject to inconsistent legislation and regulation.

The response to this inconsistency was addressed in the Cole Memorandum.

The Cole Memorandum was addressed to all United States district attorneys acknowledging that notwithstanding the designation of cannabis as a controlled substance at the federal level in the United States, several U.S.

states have enacted laws relating to cannabis for medical purposes.

The Cole Memorandum outlined certain priorities for the DOJ relating to the prosecution of cannabis offenses.

In particular, the Cole Memorandum noted that in jurisdictions that have enacted laws legalizing cannabis in some form and that have also implemented strong and effective regulatory and enforcement systems to control the cultivation, distribution, sale and possession of cannabis, conduct in compliance with those laws and regulations is less likely to be a priority at the federal level.

Notably, however, the DOJ has never provided specific guidelines for what regulatory and enforcement systems it deems sufficient under the Cole Memorandum standard.

In light of limited investigative and prosecutorial resources, the Cole Memorandum concluded that the DOJ should be focused on addressing only the most significant threats related to cannabis.

States where medical cannabis had been legalized were not characterized as a high priority.

On January 4, 2018, former U.S.

Attorney General Jeff Sessions issued a memorandum to U.S.

district attorneys which rescinded the Cole Memorandum.

With the Cole Memorandum rescinded, U.S.

federal prosecutors can exercise their discretion in determining whether to prosecute compliant state law cannabis-related operations as violations of U.S.

federal law throughout the United States.

The potential impact of the decision to rescind the Cole Memorandum is unknown and may have a material adverse effect on our business and results of operations.

Through September 30, 2021, DOJ appropriations prohibit use of funds for enforcement actions against medical cannabis.

federal government and the policies of the Department of Justice regarding the cannabis industry, and federal enforcement actions could result in significant fines, penalties, convictions or criminal charges, which could have a material adverse effect on our business.

As a result of the conflicting views between state legislatures and the federal government regarding cannabis, investments in cannabis-related businesses in the United States are subject to inconsistent legislation and regulation.

Although a number of U.S.

states have legalized cannabis for medical and/or adult use purposes, cannabis remains classified as a Schedule I controlled substance under the U.S.

Controlled Substances Act.

As a result, the cultivation, manufacture, distribution, sale and possession of cannabis remains illegal under U.S.

federal law, regardless of state law compliance.

In August 2013, the U.S.

Department of Justice (“DOJ”) issued guidance commonly referred to as the Cole Memorandum, which directed federal prosecutors to focus enforcement resources on certain specified priorities and indicated that conduct in compliance with strong state regulatory systems was less likely to be a federal enforcement priority.

However, on January 4, 2018, then-Attorney General Jeff Sessions issued a memorandum rescinding the Cole Memorandum and related guidance.

As a result, U.S.

federal prosecutors retain broad discretion to enforce federal cannabis laws in jurisdictions that have legalized cannabis under state law.

Since fiscal year 2015, Congress has included provisions in federal appropriations legislation, commonly referred to as the Rohrabacher–Blumenauer amendment, that prohibit the DOJ from using federal funds to prevent states from implementing their medical cannabis laws.

Courts have interpreted this rider to limit DOJ enforcement actions against individuals and businesses that are strictly compliant with state medical cannabis laws.

However, this protection must be renewed annually by Congress and does not apply to adult-use cannabis activities.

Accordingly, there can be no assurance that these appropriations protections will continue in future federal budgets.

Federal policy toward cannabis continues to evolve.

Federal agencies and policymakers have recently considered potential reforms, including proposals related to cannabis banking access and the possible rescheduling of cannabis under federal law.

However, as of the date of this report, cannabis remains illegal under federal law, and the timing, scope, or outcome of any federal legislative or regulatory reforms remains uncertain.

Pam Bondi was sworn in on February 5, 2025 as the 87th U.S.

Attorney General, and it remains unknown what position he or President Trump’s administration will take regarding federal enforcement actions against the cannabis industry.

With the repeal of the Cole Memorandum by former Attorney General Jeff Sessions, the Department of Justice could allege that we and our Board and, potentially our shareholders, “aided and abetted” violations of federal law by providing finances and services to our portfolio cannabis companies.

Under these circumstances, it is possible that the federal prosecutor would seek to seize our assets and to recover the “illicit profits” previously distributed to shareholders resulting from any of the foregoing financing or services.

In these circumstances, our operations would cease, shareholders may lose their entire investment and our directors, officers and/or shareholders may be left to defend any criminal charges against them at their own expense and, if convicted, be sent to federal prison.

Violations of any federal laws and regulations could result in significant fines, penalties, administrative sanctions, convictions or settlements arising from civil proceedings conducted by either the federal government or private citizens, or criminal charges, including, but not limited to, disgorgement of profits, cessation of business activities or divestiture.

This could have a material adverse effect on us, including our reputation and ability to conduct business, our holding (directly or indirectly) of cannabis licenses in the United States, the listing of our securities on stock exchanges, our financial position, operating results, profitability or liquidity or the market price of our publicly traded Common Stock.

In addition, it is difficult to estimate the time or resources that would be needed for the investigation of any such matters or its final resolution because, in part, the time and resources that may be needed are dependent on the nature and extent of any information requested by the applicable authorities involved, and such time or resources could be substantial.

Attorney General.

It remains uncertain what enforcement priorities the DOJ or the current presidential administration will adopt with respect to the cannabis industry.

Any shift in federal enforcement priorities could increase the risk of enforcement actions against businesses operating in compliance with state cannabis laws.

Because cannabis remains illegal under federal law, the DOJ could theoretically allege that we and our directors, officers, employees, or shareholders “aided and abetted” violations of federal law by providing financing or services to cannabis-related businesses.

Under such circumstances, federal authorities could seek civil or criminal penalties, asset forfeiture, or other remedies, including disgorgement of profits.

Any such enforcement actions could result in significant fines, penalties, administrative sanctions, civil proceedings, criminal charges, or settlements.

Violations of federal law could have a material adverse effect on our business, financial condition, and results of operations.

In particular, enforcement actions could result in penalties, the seizure of assets, the cessation of business activities, the loss of licenses or regulatory approvals, or the delisting of our securities from stock exchanges.

Any such developments could materially harm our reputation, financial position, operating results, liquidity, or the market price of our publicly traded common stock.

Our business interests in the United States include the cultivation and provision of cannabis and cannabis-infused products.

We are not aware of any non-compliance with the applicable licensing requirements or regulatory framework enacted by the states in which any of our customers or partners are operating.

We believe that our operations and those of our customers and partners comply with the licensing requirements and regulatory frameworks enacted by the states in which they operate.

However, compliance with state law does not protect against potential federal enforcement actions.

The industry in which we operate is still developing and subject to extensive regulation.

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Due to the classification of cannabis as a Schedule I controlled substance under the CSA, banks and other financial institutions which service the cannabis industry are at risk of violating certain financial laws, including anti-money laundering statutes.

Because the manufacture, distribution, and dispensation of cannabis remains illegal under the CSA, banks and other financial institutions providing services to cannabis-related businesses risk violation of federal anti-money laundering statutes, the unlicensed money-remitter statute and the Bank Secrecy Act.

These statutes can impose criminal liability for engaging in certain financial and monetary transactions with the proceeds of a “specified unlawful activity” such as distributing controlled substances which are illegal under federal law, including cannabis, and for failing to identify or report financial transactions that involve the proceeds of cannabis-related violations of the CSA.

Because the manufacture, distribution, and dispensing of cannabis remains illegal under the CSA, banks and other financial institutions providing services to cannabis-related businesses risk violation of federal anti-money laundering statutes, the unlicensed money-remitter statute and the Bank Secrecy Act.

These statutes can impose criminal liability for engaging in certain financial and monetary transactions with the proceeds of a “specified unlawful activity” such as distributing controlled substances which are illegal under federal law, including cannabis, as well as for failing to maintain appropriate compliance programs and to identify, monitor and report suspicious financial transactions.

In the event that any of our investments, or any proceeds thereof, any dividends or distributions therefrom, or any profits or revenues accruing from such investments in the United States are found to be in violation of money laundering legislation or otherwise, such transactions may be viewed as proceeds of crime under one or more of the statutes noted above or any other applicable legislation.

This finding could restrict or otherwise jeopardize our ability to declare or pay dividends, effect other distributions or subsequently repatriate such funds back to Canada.

Furthermore, while we have no current intention to declare or pay dividends in the foreseeable future, in the event that a determination is made that any such investments in the United States could reasonably be shown to constitute proceeds of crime, we may decide or be required to suspend declaring or paying dividends without advance notice and for an indefinite period of time.

Federal policy toward cannabis continues to evolve, including ongoing federal rulemaking proceedings considering the potential rescheduling of marijuana under the CSA.

However, as of the date of this report, marijuana remains a Schedule I controlled substance under federal law, and the timing, scope or outcome of any potential federal reforms remains uncertain.

Even if federal scheduling were to change in the future, marijuana-related activities could remain subject to significant regulatory requirements and may continue to present compliance risks for financial institutions.

As a result of the foregoing, many banks and other financial institutions may be unwilling to provide banking, lending, payment processing or other financial services to cannabis-related businesses, or may provide such services only on limited or restrictive terms.

If financial institutions decline to provide, or subsequently withdraw, services to us, our portfolio companies, or the operators with whom we conduct business, our ability to operate efficiently, manage cash flows, receive or remit payments, or obtain financing could be adversely affected.

In addition, if any of our investments, or any proceeds thereof, dividends or distributions therefrom, or any profits or revenues attributable to cannabis-related activity in the United States are determined to involve proceeds of activity deemed unlawful under U.S.

federal law, such funds could be subject to regulatory scrutiny or restrictions.

Such circumstances could restrict or otherwise jeopardize our ability to declare or pay dividends, effect other distributions, or repatriate funds, which could have a material adverse effect on our business, financial condition and results of operations.

Furthermore, while we have no current intention to declare or pay dividends in the foreseeable future, if circumstances arise in which payments, distributions or transfers are delayed, restricted or challenged due to the banking limitations or regulatory concerns described above, we may decide, or may be required, to suspend declaring or paying dividends or other distributions for an indefinite period of time.

The re-classification of cannabis or changes in U.S.

controlled substance laws and regulations could have a material adverse effect on our business.

If cannabis is re-classified as a Schedule II or lower controlled substance under the CSA, the ability to conduct research on the medical benefits of cannabis would most likely be more accessible; however, if cannabis is re-categorized as a Schedule II or lower controlled substance, the resulting re-classification would result in the need for approval by the FDA if medical claims are made about our medical cannabis products.

As a result of such a re-classification, the manufacture, importation, exportation, domestic distribution, storage, sale and use of such products could become subject to a significant degree of regulation by the DEA.

In that case, we may be required to be registered to perform these activities and have the security, control, recordkeeping, reporting and inventory mechanisms required by the DEA to prevent drug loss and diversion.

Obtaining the necessary registrations may result in delay of the manufacturing or distribution of our products.

The DEA conducts periodic inspections of registered establishments that handle controlled substances.

Failure to maintain compliance could have a material adverse effect on our business, financial condition and results of operations.

The DEA may seek civil penalties, refuse to renew necessary registrations, or initiate proceedings to restrict, suspend or revoke those registrations.

In certain circumstances, violations could lead to criminal proceedings.

Cannabis is currently classified as a Schedule I controlled substance under the U.S.

Controlled Substances Act (“ CSA ”).

Federal policymakers have recently considered potential changes to the scheduling of cannabis, including a proposed rulemaking process initiated in 2024 to transfer cannabis to Schedule III.

However, as of the date of this report, cannabis remains a Schedule I controlled substance under federal law, and the timing, scope, and outcome of any federal legislative or regulatory changes remain uncertain.

If cannabis were reclassified under the CSA as a Schedule II, Schedule III, or lower controlled substance, the ability to conduct research on the medical benefits of cannabis could become more accessible.

However, such a reclassification could also subject cannabis and cannabis-derived products to a broader range of federal regulatory requirements.

For example, products marketed with claims to diagnose, cure, mitigate, treat, or prevent disease, or otherwise intended to affect the structure or function of the body, may be regulated as drugs under the Federal Food, Drug, and Cosmetic Act (“ FDCA ”), and generally require approval from the FDA before they can be lawfully marketed in interstate commerce.

In addition, if cannabis were rescheduled and our activities, or the activities of our portfolio companies or business partners, were determined to involve controlled substances regulated under the CSA, the manufacture, importation, exportation, distribution, storage, sale, and use of such products could become subject to significant oversight by the U.S.

Drug Enforcement Administration (“DEA”).

In such circumstances, entities involved in handling controlled substances may be required to obtain DEA registrations and comply with applicable regulatory requirements relating to security, recordkeeping, reporting, and inventory controls designed to prevent diversion.

Obtaining any necessary registrations or regulatory approvals could result in delays in the manufacture or distribution of products.

The DEA also conducts inspections of certain registered establishments that handle controlled substances to assess compliance with applicable requirements.

Failure to maintain compliance could result in civil penalties, administrative actions, the refusal to issue or renew necessary registrations, or proceedings to suspend, restrict, or revoke registrations.

In certain circumstances, violations could also result in criminal proceedings.

In December 2025, the President issued an executive order titled “Increasing Medical Marijuana and Cannabidiol Research,” which directs federal agencies to accelerate the process of reclassifying marijuana under the Controlled Substances Act and to expand federal research into marijuana and cannabidiol (“ CBD ”).

The executive order contemplates potential rescheduling of marijuana from Schedule I to Schedule III;

however, the rulemaking process required to implement any such change remains ongoing and there can be no assurance as to the timing or outcome of that process.

Until any final rule is adopted, marijuana remains classified as a Schedule I controlled substance under federal law.

Even if marijuana were rescheduled, marijuana and marijuana-derived products would remain subject to significant federal regulation.

We, and/or contract counterparties that are directly engaged in the trafficking of cannabis, may incur significant tax liabilities due to limitations on tax deductions and credits under section 280E of the Code.

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If inflation in these costs increases beyond our ability to control for them through measures such as implementing operating efficiencies, we may not be able to increase prices to sufficiently offset the effect of various cost increases without negatively impacting customer demand, thereby negatively impacting our margin performance and results of operations.

We are a developing company and have only recently begun to generate positive cash flow.

We are a developing company and do not generate positive cash flow every fiscal year.

It is extremely difficult to make accurate predictions and forecasts of our finances.

6 unchanged sentences

Although we expect that any such growing will be completed under climate-controlled conditions, there can be no assurance that natural elements will not have a material adverse effect on any such future production.

Climate change could disrupt operations, and adversely affect our financial results.

Climate change presents physical, transition, and adaptation risks that may adversely affect our operations, customers, suppliers, and financial results.

Physical risks associated with climate change include the increasing frequency and severity of extreme weather events such as hurricanes, floods, wildfires, extreme heat, extreme cold, and other natural disasters.

These events may disrupt our operations or those of our customers, subcontractors, reduce productivity, damage facilities or equipment, increase insurance costs, or result in injuries, fatalities, or reputational harm.

We are dependent on the popularity of consumer acceptance of our brand portfolio to generate revenues.

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We rely on our executive officers, our key research and development personnel and our key growth and extraction personnel for our future success, and if any such persons were unable to continue in their present positions, we might not be able to replace them.

Our success has depended, and continues to depend, upon our ability to attract and retain key management, including our Co-CEOs, Chief Financial Officer, Chief Administrative Officer, Vice-President of Operations, General Counsel and technical experts.

Our success has depended, and continues to depend, upon our ability to attract and retain key management, including our Co-CEOs, Chief Financial Officer, Vice-President of Operations, General Counsel and technical experts.

We will attempt to enhance our management and technical expertise by continuing to recruit qualified individuals who possess desired skills and experience in certain targeted areas.

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In addition, the assumptions used in planning may not prove to be accurate, and other factors may affect our financial condition or results of operations.

Our operations require raw materials, equipment, commodities, and energy, and we are exposed to market risks that may increase costs or limit availability.

We have experienced, and may continue to experience, cost volatility and supply disruptions resulting from inflationary pressures, changes in tariffs or trade policies, supply chain disruptions, regulatory actions, geopolitical conflicts, sanctions, or other international trade restrictions.

Increases in fuel and energy prices may further increase operating expenses.

Changes in trade policies, retaliatory tariffs, sanctions, or other governmental actions may increase the cost of imported materials or restrict the availability of certain products used in our operations.

In addition, geopolitical conflicts or global economic instability could negatively impact supply chains, reduce global trade, or increase competition for limited resources.

Rising input costs may also affect customer budgets, which could reduce demand for our products.

Our business, financial condition, results of operations, and cash flow may be negatively impacted by challenging global economic conditions.

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Although we are not aware of any specific liabilities, such liabilities may be unknown and, accordingly, the potential monetary cost of such liability is also unknown.

The issuance of a significant number of shares of our Common Stock in connection with potential equity financings or future acquisitions could adversely affect the market price of our Common Stock.

The issuance of a significant number of Common Shares in connection with potential equity financings or future acquisitions could adversely affect the market price of our Common Shares.

Potential equity financings and/or shares of common stock issued on future acquisitions could result in a significant number of additional shares of Common Stock being issued and available for trading in the public market.

103 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors