LEEF Brands Wipes Slate Clean, Eyes Aggressive Cannabis Expansion

VANCOUVER, British Columbia – December 29, 2025 – In a decisive move to fortify its financial foundation, multi-state cannabis operator LEEF Brands, Inc. (CSE: LEEF, OTCQB: LEEEF) today announced it has completed the full early conversion of its remaining Canadian-dollar convertible debentures. The transaction, valued at approximately CAD $237,000, marks the final step in a comprehensive balance sheet overhaul that began earlier this month with the conversion of roughly US$10.5 million in U.S.-dollar denominated debentures.

This strategic financial restructuring effectively eliminates all convertible debenture debt from the company's books, a move management says will unlock significant financial flexibility. The company now enters 2026 with a cleaner capital structure, positioning it to accelerate ambitious growth plans in the key markets of California and New York, backed by impressive operational momentum.

A Strategic Financial Overhaul

The pair of conversions, completed in a span of weeks, represent a significant pivot for the vertically integrated cannabis firm. The most recent transaction, effective December 15, 2025, saw debenture holders convert their debt into approximately 946,309 units under an incentive program. Each unit consists of one common share and one common share purchase warrant, with the shares priced at CAD $0.25 and the warrants exercisable at CAD $0.30 for 36 months.

This follows the much larger conversion announced on December 5, which saw approximately US$10.5 million in debt and interest converted into nearly 59.2 million units under identical terms. Combined, these actions have resulted in the issuance of over 60 million new common shares and an equal number of warrants. While this introduces notable dilution for existing shareholders, the move was framed as a crucial step toward long-term value creation and received a strong vote of confidence from the debt holders themselves, many of whom are long-standing investors.

With the conversions complete, LEEF's balance sheet is substantially deleveraged. The company has shed a significant liability and is projected to save over $1 million in annual interest expenses. Its remaining debt is now confined to two real estate notes: a $4.2 million note at a favorable 4% interest rate and a second $7 million note at 0% interest. This streamlined debt profile provides a stable platform for future growth.

“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. “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.”

Bolstered by Strong Operational Momentum

The timing of this financial cleanup is not coincidental. It coincides with a period of powerful operational performance for LEEF Brands, suggesting the restructuring is a strategic maneuver from a position of strength, not a defensive necessity. The company's third-quarter results for 2025 painted a picture of a business hitting its stride.

LEEF reported Q3 revenue of $8.4 million, a 24% increase year-over-year, driven by growing market share in its home state of California and its first sales trickling in from its new operations in New York. More impressively, gross margins for the quarter doubled to 45% from just 22% in the same period last year. The company attributes this dramatic margin expansion to lower input costs from its in-house cultivation and higher-margin product sales in the nascent New York market.

This top-line growth was matched by disciplined cost control, with operating expenses falling 12% year-over-year to $3.9 million. The combination of higher revenue, wider margins, and lower expenses propelled the company to a positive Adjusted EBITDA of $0.7 million, a stark reversal from the negative $2.4 million recorded in Q3 2024. Furthermore, LEEF generated positive free cash flow of $0.2 million, demonstrating its ability to fund operations internally.

Investor confidence was further evidenced by an oversubscribed $1.5 million private placement completed during the quarter, signaling that the market is taking note of the company's improving fundamentals.

Fueling Growth in Key Markets

With its balance sheet fortified and operations humming, LEEF Brands is now poised to deploy capital more aggressively into its primary growth initiatives. The company's strategy is twofold: vertically integrating in California to control costs and quality, and expanding its specialized extraction services into the high-growth New York market.

In California, the centerpiece of its strategy is the Salisbury Canyon Ranch, a sprawling 1,900-acre property in Santa Barbara County. LEEF has already completed its first successful harvest from 65 planted acres, with the raw material feeding its extraction lines since August. This in-house cultivation is the engine behind its margin improvement, with the company projecting it can reduce raw material costs by 50-60%. The ranch, which holds a permit for 187 acres of cannabis cultivation and boasts an independent valuation of $40 million, is central to LEEF’s plan to become a low-cost, high-quality producer.

Simultaneously, LEEF is executing an “asset-light” expansion into New York. After securing a processor license in June, the company rapidly brought a 7,000-square-foot extraction lab online, with initial production commencing in September. Demand has been robust, with the company reporting that its entire 2025 output in the state is already committed. By focusing on extraction and manufacturing—the core components for products like vapes, edibles, and tinctures—LEEF is positioning itself as a critical B2B supplier in a market where over half of all cannabis products sold rely on concentrates.

Navigating a Competitive Landscape

In the hyper-competitive U.S. cannabis industry, LEEF Brands has carved out a distinct niche. While many multi-state operators (MSOs) focus on building retail dispensary footprints, LEEF has positioned itself as the manufacturing backbone for the industry. It specializes in producing the high-quality oils, resins, and distillates that other brands use to create their finished consumer products.

This strategy, combined with its vertical integration in California, provides a significant competitive moat. By controlling its supply chain from cultivation to extraction, LEEF can ensure product consistency and protect its margins from the price compression that has plagued many operators in mature markets. Its proprietary extraction technology, which reportedly boosts efficiency by up to 66%, further solidifies its role as a premier supplier.

The recent debt conversions enhance this strategic position. By shedding liabilities and freeing up cash flow, LEEF is better equipped to fund the expansion of Salisbury Canyon Ranch and scale its New York operations without being beholden to costly external financing. The willingness of long-term debt holders to convert to equity, rather than cash out, serves as a powerful endorsement of this long-term vision, signaling their belief that the company’s future growth offers more upside than its debt obligations. This financial reset allows LEEF to focus entirely on execution as it works to dominate the burgeoning “concentrates economy” in North America’s largest cannabis markets.