It has been a rough few years for cannabis stocks, but a generally solid performance in April has buoyed the industry. Still, investors looking for upside and growth might be left wanting considering the revenue numbers of some of the sector’s leading companies. Verano, a prominent multi-state operator, reported revenue down 4% from the prior quarter and 5% year-over-year. Green Thumb Industries nudged 1% higher in the first quarter compared to the same period last year. Curaleaf revenues dipped 9% from the year prior, and 6% compared to Q4 2024.
Meanwhile, cannabis sales figures in April slowed across much of the United States compared to April 2024 according to leading cannabis data company BDSA. New York, in just its third full year of legal sales, bucked that trend. It is estimated New York generated $120.7 million in sales for the month, up ~189% from April 2024’s $41.8 million figure. The state is ramping up licensing approvals and anticipates hitting $1.5 billion in sales for 2025. There are currently 384 adult-use dispensaries operating in the state, up about 48% from the 260 that were open as of December 2024.
So we have a very young industry that is getting another look from investors at a time when growth in the more mature markets has stagnated somewhat and many of the biggest companies are posting flat or declining revenue numbers. Where is the value?
The LEEF Brands Value Proposition
LEEF Brands Inc. (CSE: LEEF) (OTCQB: LEEEF) presents an interesting case of a growth opportunity that isn’t yet recognized by many investors. The various industry indexes haven’t taken note of the company yet, but there is a compelling story here that plays on industry trends and should be heard.
LEEF Brands uses proprietary technology to turn bulk cannabis into a wide variety of the most in-demand products on the market – edibles, vapes, concentrates, topicals, and beverages. Together these account for about half of overall sales in the industry. The company has its own small retail operation and brands which allow it to experiment with formulations, but the vast majority of its business is focused on providing retail brands with the extracts that will fuel their success.
LEEF has been generating about $30 million in revenue annually for the past three years in California alone. The company works with a high percentage of the state’s top retail brands, and many of those brands have operations in other states. The brand partners have been asking LEEF about expanding to other markets, and the company is opening up shop in New York. LEEF is acquiring an existing license with a 7,000 square foot facility and already has the extraction equipment ready to implement in New York.
The Revenue Picture
LEEF recently reported Q1 2025 and FY 2024 results. Bucking the trend of flat or decreasing revenue, LEEF increased sales 19% in Q1 compared to the same period in 2024. Without yet realizing any revenue from the New York expansion, LEEF’s $9.4 million quarter would translate to about $37.6 million over the course of a full year. These are hypothetical projections, but if the company hit that figure it would represent over 30% annual revenue growth.
We don’t know what LEEF’s sales will look like in New York, but they will be additive to the growth the company is already experiencing. The company is nearing cash flow positive, reporting quarterly net income of $2.0 million. Adjusted EBITDA was -0.8 million, down from a positive $1.2 million the year prior as LEEF invested significant resources in the planting of the company’s Salisbury Canyon Ranch cannabis farm in Santa Barbara County, California.
The first 65 acres, out of 187 acres licensed for cannabis farming, was planted this spring. There will be two crops this year, and by 2027 all 187 acres are scheduled to be planted. At full production it will be one of the very largest cannabis farms in the world, capable of meeting LEEF’s existing levels of extract production while saving the company from 40% – 60% on material costs.
The Outlook for Investors
LEEF stock closed April 1, 2025 at $0.134/share, and closed yesterday at $0.147, up about 10% for the period. The company is growing revenue at a time when many in the industry are reporting stagnant sales figures, and LEEF believes revenues will grow even more as investments in infrastructure and efficiency take hold. And of course there is the capital-light move into the explosive New York market to kick things into an even higher gear.
The Salisbury Canyon Ranch itself, wholly owned by LEEF Brands, was independently valued at about $40 million, offering risk protection to investors eyeing the company’s ~$24 market capitalization. Add in the significant margin improvements made possible by growing its own feedstock, and you’ve got all the signs of value creation coming together for California’s expert extractors.
