LEEF Brands Clears Debt for Aggressive Cannabis Expansion

VANCOUVER, British Columbia – December 29, 2025 – Multi-state cannabis operator LEEF Brands, Inc. announced today it has completed a full financial reset, eliminating all of its outstanding convertible debenture debt. The final step in this strategic overhaul was the full early conversion of approximately CAD $237,000 in Canadian-dollar-denominated debentures, a move that follows the much larger conversion of roughly US$10.5 million in debt earlier this month.

This comprehensive deleveraging initiative strengthens the company’s balance sheet at a pivotal moment, providing significant financial flexibility as LEEF Brands accelerates its expansion plans in the lucrative but challenging cannabis markets of California and New York. The move signals a new chapter for the company, underpinned by strong operational performance and a significant vote of confidence from its long-term investors.

A Strategic Financial Overhaul

The debt conversions represent a critical milestone in LEEF Brands' corporate strategy, effectively wiping its slate clean of complex convertible notes. The final CAD $237,000 conversion, effective December 15, 2025, was executed under amended incentive terms. Debenture holders were offered the opportunity to convert their debt into units at a price of CAD $0.25 per unit. Each unit consists of one common share and one common share purchase warrant, which is exercisable at CAD $0.30 for a 36-month period. This final transaction will result in the issuance of approximately 946,309 units.

This smaller conversion was the capstone on a much larger transaction announced on December 5, 2025, which saw the company convert approximately US$10.5 million in principal and accrued interest under similar incentive terms. That conversion resulted in the issuance of nearly 60 million units and saw significant participation from insiders, including CEO Micah Anderson, who settled his entire debenture holding.

With these actions, the company has eliminated a significant overhang on its capital structure. "With this milestone, the convertible debenture that originally helped capitalize the Company has now been fully eliminated from our balance sheet,” stated Micah Anderson, Chief Executive Officer, in a press release. “We’re grateful to our debenture holders for their years of support and partnership. This marks the start of a new chapter, giving us the flexibility to strengthen and leverage our balance sheet as needed to support future growth and create long-term value.”

The company's balance sheet is now considerably stronger, with its only remaining debt consisting of two real estate notes: one for $4.2 million at a favorable 4% interest rate, and a second for $7 million at 0% interest. This streamlined debt profile not only improves the company's financial health but also makes it a more attractive partner for future strategic initiatives, including potential mergers or acquisitions.

Riding a Wave of Operational Momentum

The timing of this financial restructuring is no coincidence. It comes as LEEF Brands is demonstrating significant operational momentum, validated by impressive third-quarter financial results. The company reported a 24% year-over-year revenue increase in Q3 2025, reaching $8.4 million. This growth reflects a successful strategy of capturing greater market share in its home state of California while making a strong entry into the burgeoning New York market.

Even more striking was the improvement in profitability. Gross margins more than doubled to 45% in the third quarter, a substantial leap from 22% in the same period of 2024. Management attributes this margin expansion to two key factors: lower input costs achieved through the first harvests from its in-house cultivation project in California, and the sale of higher-margin products in New York.

This operational efficiency has translated directly to the bottom line. The company trimmed its operating expenses by 12% year-over-year and achieved a positive adjusted EBITDA of $0.7 million, a stark reversal from the negative figure reported in Q3 2024. Perhaps most importantly for a growth-stage company in the capital-intensive cannabis industry, LEEF Brands generated positive free cash flow of $0.2 million, showcasing a newfound discipline and a sustainable operating model. This strong performance has bolstered investor confidence, as evidenced by the stock's 9.26% surge following the Q3 earnings announcement.

Fueling Expansion in Key Markets

The newfound financial flexibility is not an end in itself but a means to fuel ambitious growth. LEEF Brands is now better positioned to fund its two primary strategic initiatives: the expansion of its Salisbury Canyon Ranch in California and scaling its new processing operations in New York.

In California, the company is developing the 1,900-acre Salisbury Canyon Ranch into a massive cultivation hub, with plans to scale its footprint to 187 acres by 2027. Having already invested over $7 million in the property and infrastructure, the company planted its first 65 acres in the spring of 2025. The positive impact on gross margins is already being felt, and this is expected to accelerate as more of the company's production is sourced in-house, insulating it from market price volatility for raw materials. This vertical integration is crucial in a state like California, which, despite recent temporary tax cuts, remains a highly competitive and complex market battling a persistent illicit trade.

Simultaneously, LEEF Brands has made a swift and capital-efficient entry into New York. The company secured a processor license and launched its extraction lab in a 7,000-square-foot facility during the third quarter. All of its 2025 production capacity was immediately committed to leading brand partners in the state. New York's legal market is projected to become one of the largest in the nation, with some forecasts predicting annual sales could surpass $4 billion. By focusing on extraction and processing—where concentrates are a component in over half of all cannabis products—LEEF is positioning itself as a key B2B supplier in this high-growth environment.

A Vote of Confidence in a Volatile Industry

The full conversion of the debentures is more than a line item on a balance sheet; it is a powerful signal of investor confidence. In a sector where access to capital is a constant challenge and many companies struggle with debt, the willingness of long-standing debenture holders to convert their debt to equity speaks volumes about their belief in the company's long-term strategy and management team.

The participation of insiders, particularly the CEO, in the conversion further aligns leadership with shareholder interests and reinforces the narrative of a company poised for success. This alignment is critical for navigating the cannabis industry's inherent volatility, which includes shifting regulations, intense price compression, and the ever-present competition from unlicensed operators in both California and New York.

While the company currently lacks formal coverage from Wall Street analysts, its recent stock performance and the successful debt restructuring indicate that sophisticated investors are taking notice. By cleaning up its capital structure and demonstrating a clear path to profitable growth through vertical integration and strategic market entry, LEEF Brands has crafted a compelling story of resilience and ambition. The company's ability to secure its financial foundation while executing on complex operational goals positions it as a formidable player in the ongoing evolution of the North American cannabis market.