CanadaBis Weathers Market Storms With Strategic Profitability Pivot

CALGARY, AB – December 30, 2025 – CanadaBis Capital Inc. (TSXV: CANB) today presented a telling, two-sided financial story for its first fiscal quarter of 2026, revealing a company navigating significant market turbulence by prioritizing financial discipline over sheer revenue. Despite a sharp decline in top-line sales and the impact of a crippling labour strike in British Columbia, the vertically integrated cannabis firm reported positive operating cash flow and a notable improvement in gross margin, underscoring a deliberate pivot toward long-term sustainability.

For the three months ending October 31, 2025, CanadaBis recorded gross revenue of $5.7 million, a stark 40% decrease from the $9.6 million posted in the same period last year. This resulted in a net loss of $128,539, a reversal from the $321,569 net income reported in the first quarter of fiscal 2025. However, a closer look at the company's operational metrics reveals a different narrative, one of resilience and strategic refinement.

A Pivot to Profitability Amidst Headwinds

The most significant bright spots in the quarterly report were metrics that speak to operational health. CanadaBis achieved a positive operating cash flow of $0.4 million and a positive Adjusted EBITDA of $197,029. Furthermore, its gross margin expanded to 27.0%, a substantial improvement from 22.3% in the prior quarter and 22.9% in the year-ago period. This margin growth, achieved even as revenue fell, points to a successful strategic shift.

This outcome appears to be the direct result of a plan to streamline operations and focus on more lucrative product categories. Like many in the crowded Canadian cannabis space, the company is moving away from a volume-at-all-costs approach and concentrating on higher-margin “Cannabis 2.0” products, such as extracts and infused pre-rolls, while discontinuing less profitable items. This trend reflects a maturing industry where efficiency and profitability are replacing market share as the primary indicators of success.

"We are pleased to see the positive results generated from the extensive cost and labour efficiency initiatives implemented over recent months, coupled with the continued refinement of our product offerings toward higher margin formats," said Travis McIntyre, Chief Executive Officer of CanadaBis. "Despite temporary market disruption during the Quarter, the business delivered positive Adjusted EBITDA and operating cash flow, reflecting improved margin sustainability and disciplined execution."

Navigating a Crippled Supply Chain

The market disruption McIntyre referenced was no minor hiccup. A prolonged labour strike by the BC General Employees' Union (BCGEU) severely impacted the British Columbia Liquor Distribution Branch (LDB), the province's sole legal cannabis wholesaler. The job action, which began in early September, escalated to a full shutdown of the LDB’s cannabis distribution center from September 22 to October 27, 2025. This move effectively brought the province’s legal cannabis supply chain to a grinding halt.

CanadaBis estimates it lost approximately $0.5 million in sales as a direct result. The broader impact was catastrophic for the provincial market, with BC's monthly cannabis sales plummeting from $69.5 million in September to just $31.3 million in October—a drop that also contributed to a 5% decline in national sales figures for the month. The crisis emptied shelves, strained retailers, and highlighted the vulnerability of a system reliant on a single distribution chokepoint, sparking renewed calls from industry stakeholders for regulatory reform in the province.

That CanadaBis managed to generate positive cash flow amidst this external chaos makes its operational achievements all the more noteworthy, demonstrating a newfound resilience in its business model.

The High Cost of Cash Preservation

Further evidence of the company’s intense focus on financial stability came with the announcement of its plan to handle an upcoming interest payment on its convertible debentures. Rather than paying in cash, CanadaBis received approval from the TSX Venture Exchange to issue 2,766,452 common shares to satisfy the obligation.

This “shares for debt” strategy is a clear move to preserve precious cash on the balance sheet. An analysis of the company's recent financial statements reveals a tight liquidity position, with an interest coverage ratio below 1.0, indicating that earnings were insufficient to cover interest expenses. In this context, conserving cash becomes paramount for funding operations and growth initiatives.

However, this strategy comes at a cost to existing shareholders: dilution. The issuance of new shares reduces the ownership percentage and potential voting power of every current investor. This effect could be compounded by a separate proposal to lower the debenture conversion price from $0.10 to $0.075, which would result in even more shares being issued if and when debenture holders choose to convert their debt to equity. While dilution is often a concern, the practice is a common and accepted tool among TSXV-listed companies in capital-intensive sectors like cannabis to navigate financial tightropes and prioritize long-term survival.

A Challenging Path in a Crowded Market

CanadaBis's strategic pivot is taking place against the backdrop of a Canadian cannabis market that is both growing and intensely challenging. While the legal market continues to expand and capture share from illicit sources, producers face relentless pressure. A key source of this pressure is the federal excise tax structure. The flat $1 per gram tax floor becomes an increasingly heavy burden as wholesale flower prices decline, with the effective tax rate climbing from 11% in 2019 to over 24% in 2024 for many producers.

As a smaller player compared to industry giants like Tilray Brands and Canopy Growth, CanadaBis is carving out its existence by focusing on its niche in high-quality concentrates and maintaining rigorous operational control. Recent federal regulatory amendments in 2025, designed to reduce administrative and security burdens, may provide some modest relief across the sector.

Looking ahead, management has affirmed its commitment to this disciplined path. McIntyre stated the focus remains on "strengthening liquidity, enhancing operating performance, and advancing initiatives that support long term cash generation and stability." This approach suggests CanadaBis is playing the long game, building a foundation it hopes will allow it to not only survive the industry's current pressures but thrive in the more stable market that may eventually emerge.