...disclaimers on financial measures and forward-looking statements, which are available to be read in detail at sedarplus.ca. I will now turn the call over to Cannara Biotech CFO, Nicholas Sosiak, who will be leading today's presentation.

He'll be joined by our Founder and CEO, Zohar Krivorot, for a live Q&A session following this presentation.

Thank you, Scott. Good morning, everyone, and thank you for joining Cannara's earning presentation for the fiscal quarter 2026 ended November 30th, 2025.

I'm pleased to share Cannara's fiscal results, another record quarter across key financial metrics. Importantly, this marks our 19th consecutive quarter of positive adjusted EBITDA and our 13th quarter of positive operating cash flow, which reinforces that Cannara is building a stable, repeatable, and scalable platform.

Stepping back, Cannara is emerging as a clear leader in Canada. We are now number one licensed producer here in Quebec and number seven in Canada by sales, supported by a disciplined operating model and a portfolio that continues to win at retail.

A major highlight this quarter was Quebec's vape category rollout. We entered the launch with 5 of the 25 approved SKUs, and the retail data shows clearly how successful our launch was, with Cannara capturing over 29.7% of category retail sales across November and December.

Leadership in our home province has been a core objective here at Cannara since day one, and we believe it reflects the strength of our premium products at a competitive price point. Under the hood, our advantage is scale and cost discipline with our two owned mega facilities purpose-built for cannabis production.

Today, we are operating at 50,000 kg of annualized production. For illustrative purposes, at an average price of roughly $3 per gram, this would equate to an estimated $150 million in net revenue.

From here, the growth plan is straightforward and capital-efficient. We have a $30 million capex plan over the next 3 years designed to double our capacity and our revenue opportunity.

At Valleyfield, we remain on track to complete the post-processing expansion by end of this year, which is the key unlock that enables the next stage of cultivation ramp-up at Valleyfield. In advance of that, we are currently operationalizing 3 additional grow rooms at Valleyfield, representing roughly 15,000 kg of incremental capacity, or 30% more production, for approximately $3 million in capex.

That is the type of high ROI, measured expansion that we believe can compound the value for our shareholders. The message is simple: strong brands, scaled low-cost capacity, and disciplined, cash flow positive growth, with low investment and a clear expansion levers we can pull as our demand continues to build.

Turning over to our financial performance, in Q1 of 2026, at the top line, gross revenues were $42.8 million, up from $35.9 million in the prior period, and up 7% sequentially, reflecting strong demand and continued national momentum. We delivered net revenue of $30.1 million, up 20% year-over-year and 6% quarter-over-quarter, driven by deeper market penetration in our existing markets, continued strength across our brand portfolio, and of course, the introduction of vape cartridges in Quebec, and ongoing genetic development and product innovation.

Profitability scaled meaningfully this quarter. We generated $13.5 million in gross profit before fair value adjustments, up 38% year-over-year and 14% quarter-over-quarter, and delivered a record-high 45% gross margin, up from 39% last year and 42% last quarter.

This margin expansion reflects increased production capacity following the activation of Zone 11 and 12 in the second half of 2025, combined with our ongoing cultivation and post-processing improvements that enhanced our yields and our overall efficiency. Adjusted EBITDA was a record $8.8 million, up 47% year-over-year and 19% quarter-over-quarter, representing a 29% margin versus 24% last year and 26% last quarter.

This marks our 19th consecutive quarter of positive adjusted EBITDA, underscoring the consistency of our profitability model. Net income was $1 million, while down year-over-year, the decrease is related to non-cash adjustments related to fair value changes of inventory and share-based compensation.

From a cash perspective, we generated $8 million of operating cash flow, up 36% year-over-year and nearly tripling quarter-over-quarter, translating to a 26% operating cash flow margin versus 10% last quarter. Free cash flow was $3.3 million, up significantly quarter-over-quarter and down year-over-year, primarily due to the growth capex we are investing in the Valleyfield construction and post-processing expansion.

Overall, the takeaway is that Cannara continues to execute on growth, expanding margins, and strong cash conversion, while maintaining a disciplined reinvestment plan to support our next phase of capacity-driven growth. Building on our profitability and cash generation this quarter, I'll now walk you through our balance sheet and how we're deploying capital, particularly at Valleyfield, to support our next phase of growth.

We ended fiscal Q1 with $16.5 million in cash and $53.5 million in working capital, up $5.5 million or 11.5% from August 31st, 2025. Total assets were $173.8 million, and net assets were $111.2 million, reinforcing that Cannara remains well-capitalized to support both our operating plan and our internal expansion strategy.

A key milestone during this quarter involved one of our major shareholders converting the remaining $6.2 million of the 2021 convertible debenture and accrued interest into equity at an original conversion price of $1.80 per share, which was at a premium to the average market price over the prior 30-day period. This conversion fully eliminates our convertible debt, simplifies our capital structure, demonstrates confidence from our investor base, and reduces high-interest debt we had on our balance sheet.

From a leverage perspective, we maintain a conservative profile with approximately $34.3 million of total debt at a blended average interest rate of 5.30%, with Bank of Montreal as our senior lender. Importantly, we remain undrawn on our $10 million capex credit facility, providing additional flexibility as we execute the Valleyfield post-processing expansion and our broader growth initiatives.

Overall, we view the balance sheet as our strategic asset: strong liquidity, improving working capital, and ample capacity to fund high ROI growth while we maintain our objective of being financially disciplined. From a cap table standpoint, our estimated 30-day average market capitalization was approximately $171 million, based on an average closing share price of $1.80, with 95.8 million shares outstanding, which represents a 10.9% year-to-date increase in our stock price.

With a strong financial foundation in place, let's look at the demand signals and why we are confident in Cannara's momentum heading into this year. The national retail environment softened this quarter, with total Canadian retail sales down approximately 4% quarter-over-quarter.

Against that backdrop, Cannara delivered growth. In Q1 of 2026, our estimated national retail sales increased to $53.6 million, up $1.6 million or 3% quarter-over-quarter.

What's notable is the relative performance. Among Canada's top 10 licensed producers, Cannara delivered the strongest sequential growth, while most peers reported quarter-over-quarter declines.

This indicates continued market share gains and expanding retail traction, supported by the strength of our branded portfolio and disciplined execution across supply, quality, and innovation. Cannara is growing through the cycle, outperforming the broader market, and reinforcing the foundation that supports our consistent profitability and cash flow generation.

Building on the national retail sales outperformance we just discussed, this slide shows how that momentum is translating into market share across Canada. In Q1 of 2026, Cannara reached 4.1% national estimated retail market share, up from 3.8% in fiscal 2025 and 2.9% in fiscal 2024.

Momentum continued into December 2025, with national market share reaching 4.4%, our highest reported level to date. At the same time, our estimated retail penetration remains approximately 2.9% to 3%, which means a meaningful runway to expand distribution and listings over time.

Quebec remains our key proof point, though. Following the launch of vape cartridges, Cannara achieved the number one market share position in Quebec by retail sales in December.

We view this as a validation of our strategy and the strength of our product offering in a market where performance is primarily driven by a product value proposition. Beyond Quebec, we also reached new quarterly highs in several other provinces, including Ontario, British Columbia, and Manitoba, supported by improved supply availability and continued sell-through across our branded portfolio.

Importantly, these share gains are supported by operational progress made in fiscal 2025. Cultivation and R&D improvements implemented in the second half of fiscal 2025 increased in-house yields by over 25%, strengthens our service levels, and our ability to consistently fulfill demand.

As that increased output continues to flow through inventory, we expect it to support further gains in retail penetration and market share through fiscal 2026. Diving deeper into Quebec's vape launch, Cannara generated approximately $2.2 million in vape retail sales, and captured an approximately 29.7% of the vape category by retail sales, ranking number one among participating producers during the launch period.

Strategically, our lineup is positioned in the premium segment, with a focus on full spectrum, live resin, and live rosin formulations. We believe that early traction reflects a combination of product quality, consistency, and strong consumer pull, supported by our vertically integrated operating model.

Importantly, this performance strengthens Cannara's overall position in Quebec. With the addition of vapes, Cannara is now officially number one in Quebec at approximately 14.7% market share, reinforcing our leadership in our home province.

Looking ahead, the key takeaway is that vapes in Quebec will be a meaningful contributor to continued market share gains and revenue growth throughout 2026. Cannara continues to build one of the strongest branded CPG portfolios in Canadian cannabis, with leading positions across multiple categories and formats.

Across Nugz, Tribal, and Orchid, we are winning where it matters most: concentrated share in high-velocity categories. Nugz remains the leading hash rosin brand nationally and continues to perform strongly in infused pre-rolls.

In flower, Tribal remains a leading mass premium brand, and Orchid continues to hold number one CBD flower year-over-year, reinforcing our ability to compete across both high-THC and wellness products. Importantly, these leadership positions have been durable.

In Q1 of 2026, our national share in hash rosin was 16.3%, and in premium vapes was 18%, with both strengthening further into December to approximately 19.7% and 19.5% respectively. In mass premium flower, our share was 10.4% in Q1 and remained stable into December.

Quebec remains a key proof point for portfolio strength. In infused pre-rolls, we maintained a leading position with approximately 67% share in Q1 of 2026.

The Quebec vape rollout further reinforced our premium vape leadership. We are also seeing tangible momentum in Ontario.

Our 14 g flower share increased from 3.8% in Q4 of 2025 to 6.1% in Q1 of 2026, and improved further into December to 7.4%, reflecting expanded distribution and a stronger consumer adoption in Canada's largest market. Our branded strategy is scalable and is winning through consistent product quality, targeted innovation in premium formats, and disciplined execution, supported by a strong price-to-quality value proposition that continues to resonate with consumers across Canada for the past 5 years.

Winning at retail only matters if we can supply consistently. This slide shows how we are expanding this capacity in a disciplined, demand-aligned way within our existing Valleyfield footprint.

Our stepwise plan is to scale from roughly 50,000 kg today up to 100,000 kg of annualized output over time as additional grow rooms are activated. The key point is that growth is staged and paced against our conservative view of Canadian demand.

We have already proven we can scale up to 50,000 kg while building profitability, and we are now executing the same playbook with substantially much more operating experience. To maintain quality and consistency as our volume increases, post-processing throughput is the key enabler.

We have commenced an approximately $10 million post-processing expansion at Valleyfield in 2026, and we expect a further $8 million in subsequent years to finalize this expansion. We remain on track to complete Phase 1 of this project by end of fiscal 2026, and once fully completed, it unlocks the ability to activate the remaining 50% of cultivation rooms at Valleyfield, effectively doubling our capacity in line with our demand.

In parallel, we are preparing the first 3 of the remaining 12 cultivation rooms to be ready for activation at the beginning of fiscal 2027. These 3 rooms represent approximately 15,000 kg of incremental annual capacity, or roughly 30% of additional output versus our current levels.

The rooms are already ready-built, and activation capex is modest, primarily HVAC, lighting, and tables at approximately $1 million per room. Illustratively, using our planning assumptions of roughly 95 g per plant and an average realized selling price of about $3 per gram, each incremental room has the potential to contribute more than $10 million of annualized net revenue.

In total, the total post-processing expansion and full activation pathway represents approximately $30 million of total capex and a clear runway to materially expand our revenue opportunity. Before we open it up to Q&A, I want to step back and summarize our core investment narrative.

Cannara is executing a clear strategy, translating it into repeatable execution, and delivering measurable results. Our strategy is straightforward: we focus on delivering premium quality at scale, with a structural cost advantage that allows us to compete aggressively on a price-to-quality value.

Our execution is what differentiates us. We operate a vertically integrated platform from cultivation through extraction to packaging, which gives us control over quality, consistency, and margin.

We continue to refresh our portfolio through genetic innovation and new product development, while maintaining and building flagship brands through community-driven demand rather than relying on short-term promotional tactics. Alongside that, we are continuously optimizing operations to improve yields and efficiency.

The results are evident: in Q1 of 2026, we delivered record performance and profitability, extending our track record of sustained adjusted EBITDA and operating cash flow generation, and achieved a huge milestone of obtaining number one market share position in Quebec. Importantly, we see a clear runway from here.

Retail penetration remains underdeveloped relative to our market share, which supports additional distribution upside. On the supply side, our Valleyfield expansion plan provides a capital-efficient path to scale capacity within an already-built asset base, with post-processing expansion acting as the key unlock to stage cultivation room activation over time.

In short, we have a scalable, cash-generating platform and a proven playbook to grow profitability in line with demand. With that, thank you for your continued support and interest in Cannara.

We will now open the line for questions.

Thank you, Nick. We will now begin the Q&A portion of our webcast.

We received a number of questions sent directly by email, and you may also ask questions today via the Q&A feature on this platform, direct chat to myself, or we welcome live questions by raising your hand via the reactions option, and I'll unmute your line. Should any of the questions not be addressed, we will follow up accordingly via email.

Zohar and Nick, to start, as the first question received by email: can you provide more color on working capital this quarter, particularly inventory and biological assets, and how that supports growth in fiscal year 2026?

Absolutely. We had a great increase to our working capital, both on the asset side and decrease on the liability side.

It was about $54 million or so, continuously building on that working capital. The inventory and biological assets, they are increasing, but that's as a result of us getting ready and continuously being able to support future quarter-over-quarter growth.

We turned rooms 11 and 12 on in June and July of 2025. It takes 3 to 4 months for cannabis to produce, all that cannabis from both rooms came into this quarter, and most of it was sold.

There was a slight increase. In addition to increasing, most of the balance in our inventory that increased was raw material inventory.

Getting closer to December-January is Chinese New Year. We buy a lot of product from China, packaging products that we have to get ahead.

In addition, the vape launch where we bought 6 to 8 months' worth of vape carts so that we're prepared for the vape launch. Majority of the increase on our inventory side, again, like I said, was our raw material.

Biological assets increased as a result of the rooms 11 and 12. Other than that, cash balance is increasing, accounts receivable is increasing, our liabilities, keeping it in check, accounts payable, accruals.

We converted the loan. We're paying off the only current debt now that we have is our line of credit, which is flexible all the way up to December 2027 with BMO, and our term loan, which is the same maturity period.

BMO is a very good financial partner of us. We've been continuously paying and meeting all the covenants.

We're at the top tier of their interest spread discounts, we're being a very good client to BMO, and they will continue to support Cannara.

Thank you, Nick. Next question received by Q&A is as follows: congrats on another fantastic quarter.

How do you translate your leading market position in Quebec through the rest of Canada?

What we've been doing. Zohar is in the garden with consistency and quality.

We have to cater to Quebec and make sure that all our supply and whatever Quebec wants, we're selling the product to them. Then we got to continuously increase our production to meet the current demand that's outside of Quebec.

We got to continuously innovate in genetics and product innovation. We got to deploy marketing and sales, which we've been doing.

It's a crawl, walk, run approach, because if we do it too fast, it's not going to be sustainable. We're developing products that customers want, that become staples and stand the test of time.

Then we layer products and products and new genetics over that to keep that market share momentum, to keep that stability, to keep customers interested, and to keep customers coming back to our old products. It's what we're doing.

Continuously, we're going to turn on the next 12 rooms. We focus on genetics and innovation.

We got a whole pipeline this year of new products and genetics going into the next 2, 3, 4 years. We're going to deploy the added resources that we have on sales and marketing.

We're going to continuously invest in sales and marketing while we're investing in our assets. And 2, 3 years from now, we see our asset base producing the full 24 rooms and catering to Canada all the cannabis that we produce here in Quebec.

Thank you, Nick. Next question received by email is as follows: can you give us a ballpark of how the BC strike affected sales in the quarter?

As some of you are not aware, BC was on strike. It was a 5-week strike, there is not a single licensed producer outside of British Columbia that could ship product to British Columbia.

There's a few flow-through LPs that were able to support during that 5-week period. We missed 5 weeks of sales, but overall, we maintained market share.

Post-strike, we actually increased market share. For us, it was pretty much a halt.

We missed 5 weeks of sales, but customers during that period of time unloaded inventory, and following that strike, there was a huge re-up of our inventory, we made up for it. It actually proved beneficial, because our market share increased and customers went to choose our product when coming back to the stores.

Great. Thank you, Nick.

Next question received via Q&A is as follows: a few years ago, in one of your investor webinars, you mentioned the potential of a fourth premium brand. What are your thoughts about a fourth brand at this time?

Would love to see an organic, soil, sun, premium flower grown in the top floor greenhouse to compete with some of the flower coming out of BC in the premium market.

I don't think premium and soil has anything to do with each other. I think you can grow premium in the same media we grow, which is Rockwool.

We do have plans to activate that rooftop greenhouse, but that's 2029 once all 24 zones are active. It's all about the genetics, choosing the right genetics, and your quality.

Consistency starts at the genetic and finishes in the garden. If you're growing in soil media or Rockwool media or coco media, I don't think

has anything to do with the final product. I may have referred to a fourth brand.

We definitely have brand ideas that are in the pipeline, in the works, but really what we're focused now on is our three flagship brands: Tribal, Nugz, and Orchid CBD. We still see, maybe we didn't see this 4 years ago, but we still see huge runway for these brands.

These brands are succeeding in market. They've been in market for the past 6 years.

There's not many brands that have stood the test of time and continuously increased, over the past 6 years have increased in dollars and cents and market share. I don't see that the path where it ends, and there's still a lot of innovation to put into these brands.

We have other ideas in the pipeline. And—

Also one thing to remember: brands cost money. You need to maintain the brand, you need to promote the brand.

There's a lot behind the scene when you have a brand. I think our brands are good, I think our brands resonate really well with our clients.

I think it's really delivering the consistency behind those brands. You don't see Coca-Cola having 100 different brands.

They acquire a few, but yeah, they still push innovation through their existing brands.

Great. Thank you, Zohar and Nick.

Next question received by email is as follows: what were the main drivers of gross margin expansion this quarter, and how should we think about margins going forward?

It's twofold. One was the benefit that we did in 2025, the second half of 2025, the cultivation improvements where we increased our yield by 25%.

On top of that, turning on rooms 11 and 12. Economies of scale that we invested in the second half of 2025 started to go into our inventory during 2025 and then get sold into Q1 of 2026, seeing that margin improvement relates to that, as well as the vape launch in Quebec.

Our vapes are high-margin products because we're fully vertically integrated where we grow the product, we harvest the product, we transform the product, and we fill the product. We're able to achieve that same economies of scale down to the vape carts, and launching in Quebec is a high-margin product, and we're seeing that fruition come through to our overall gross margin of 45%.

How do we think about it in the future? I've always said that 40% is our baseline, I think that's rearview mirror now, and 45% is our target.

We hit it this quarter. There's many factors that affect that margin: economies of scale, the product mix that we're selling during that quarter.

I would be very happy to stay at 45% in the near future. Of course, it can increase as we continue doing what we're doing, but I'd still be very happy with 45%.

Can it go up to 50%? Absolutely.

We want that flexibility to have that while we're improving our margins in the grow, then we're able to get more competitive on our products, on our pricing, and increase ultimately our volume to get to 100,000 kg that we're looking to sell.

Thank you, Nick. As a follow-up question received was: what are your thoughts around the potential for input costs to increase once Valleyfield is no longer enjoying the current electricity rates received by Hydro-Québec?

Right now we're at a 10% discount. There was a 30, back when we started, there was a 35, 40% discount on our electricity.

Right now we're 10% discount from the average price in Quebec. Quebec already has an extremely low price compared to the rest of the provinces.

There's not going to be a material change. There will be, of course, as we lose that 10%, but we're going to benefit from the economies of scale when we're operating at 24 rooms, the efficiencies that we have.

I don't think it's going to net off, and that's why I keep saying 45% there's pluses and minuses to pull, and I think the 45% is the target, and that's including going into losing the 10% discount as we go into the next 2 years from Hydro-Québec, but still profiting from a very, very favorable electricity rate.

Quebec has the lowest electricity rate across Canada. I think we recently benefited from a really interesting natural gas contract that we just secured.

You win some, you lose some, but we're still probably the best province as far as energy cost, either getting natural gas or electricity in Canada.

Great. Thank you, Zohar and Nick.

Next question received by email is as follows: what differentiates Cannara's product portfolio versus other Canadian LPs competing in the same categories?

What differentiates us, each one has their flavors, our genetics, I think we're all fighting for the same consumers, but consumers want choice. Our job is to bring them the choice they want, the flavors they want, the potency, the different formats, and let the best man win.

We do have the platform to grow for a very low price, and we take that low price and give it to the consumers to benefit. If you got consistency, quality, and price, it's going to be hard to compete.

We welcome the competition. I think it's a fair competition.

We're starting to see who the real players are, and we're all friends, there's no secrets here. It's quality, consistency, and price, which was the message we said from day one.

Great. Thank you, Zohar.

Next question received by email is as follows: what do you believe drove Cannara's early leadership in the Quebec vape launch, and how sustainable is that performance?

The quality. The amount of R&D that we spent on taking what was already one of Canada's or is Canada's number one live resin product, and having a challenge where these products succeed one because of the quality, but two because they're high-THC, 80% vape cartridges, and turning that formula into a 30% THC formula while giving the same sensorial experience from a taste perspective.

That was a very hard challenge, and not a lot of people were able to succeed in that, and there's two reasons: one, we're vertically integrated, we have the advantage of growing cannabis that produces THC with a flavor profile that we're looking for and cannabis that are producing CBD and being able to combine through our vertical integration and transformation production equipment, transform that and blend product into one product that gives us what we're looking for. That amount of R&D is really paying dividends here in Quebec, and plus the brand loyalty that we built over the 5 years that we've been in Quebec.

And— I would also add that we stayed away from distillate, we stayed away from isolates. We're giving our clients here in Quebec pure, straight from flower to either rosin or resin.

No isolates, no fillers, no distillate, and I think that sits well with consumers. They want to smoke something that's pure, true to flower, and that's what we deliver.

We figure we will be the leaders, continue to be the leaders in this space. You can't compete on THC in this market, really the only thing you can compete on is price.

There's going to be licensed producers winning on a price standpoint on the lower end of the bracket. Our products are one of the highest-priced in Quebec because of the quality, and I think that is going to the quality of the cart, the consumer is price-conscious, but they need another factor to be able to choose from, and if THC is not, it has to be the flavor and the overall experience, the easiness of vaping the product.

I think that's what we've succeeded on. Our hardware is extremely high quality, and I think customers will continue repeat buying.

We haven't seen a decrease from our current position, and we have a lot more products in the pipeline that will cater to Quebec's needs for vape cartridges.

Great. Thank you, Zohar and Nick.

Next question received by email is as follows: net income was positive again, but down year-over-year. Can you please add more detail on the key drivers behind that change?

Absolutely. One of the bigger key drivers was the fair value change.

Net income gets altered by changes in fair value of biological assets and inventory. These are non-cash adjustments, these are adjustments that are required by accounting to fair value your inventory.

It's a model that's ongoing every quarter to quarter that we continuously roll forward, and there's a lot of assumptions in this model. This quarter, we just took an approach of being more conservative on our assumptions, and it resulted in just doing a one-time kind of rollback of the fair value of what's held in inventory.

If you look at our inventory, we have $33 million of cost, and then the rest of $12 million of fair value non-cash adjustments. It's that value that we decided to kind of just adjust it so that the inventory is not overinflated.

That hit your change in fair value and hit ultimately the net income, in addition to some increases in share-based compensation relating to the Q4 bonuses, year-end bonuses that were done previously and going into 2026, but that's going to get normalized over the next quarters.

Great. Thank you, Nick.

Next question received by email was as follows: apologies if missed, but what is the timeline for the Valleyfield post-processing expansion, and what milestones should investors track through fiscal year 2026?

The processing. Processing, we started 4 months ago, and that's going to be the entire 2026, and fiscal 2026.

Fiscal 2026, and hoping that Q1 2027 is where we're going to start transitioning our drying rooms into that support building. The support building does three things: it dries and cures the cannabis, it either hand-trims or machine-trims, and it has our BHO lab and our vault.

We also do our planting, conditioning, and harvesting, we're planning to do it in the support building. Those are the major activities that are going to be conducted in the support building, and that's going to allow us to fully complete the 24 rooms, because right now we have 12 active rooms, we have 3 more that are coming online, and then after that, we need the support building in order to complete the entire facility, which is 24 rooms.

Yeah, 2020 fiscal 2026 is where the support building should be hopefully finished.

We'll keep investors updated on a quarterly basis, every press release that we do, our earnings release and anything in between, we'll provide our investors with updates, but as Zohar said, by end of 2026 fiscal, August 2026.

It's a big project. It's 175,000 square feet, the support building, and it's state-of-the-art.

We put everything we learned in drying and curing in our Farnham facility into that new support building, so that's really going to pave the way for us to be more efficient and allow us to open, like I said, the balance of 9 rooms once Zone 1, 2, and 3 is open. We have several investors on the line that visited the facility, so— We should do a video, maybe a drone video.

Because

right now once you go into that and it was rock and an open warehouse, 200,000 square feet of open warehouse, you have a concrete floor, and we're going into the next steps of—

Yeah. The next step is the epoxy, getting all the fridge panels up, the doors ordered.

There's a lot behind the scene. We have a good general contractor who's in charge of that, and I'm supervising it along with our maintenance crew, making sure that it's within budget, that's important.

Far, good.

Great. Thank you, Zohar and Nick.

As a follow-up, how confident are you that demand will support moving from 50,000 kg to 100,000 kg, and what signals are you watching?

We're watching many signals for sure. We're watching internally, we're watching our demand, we call it the demand gap.

Where we have our production runway, we have our sales, and then we have what we call demand gap if we're overproducing or underproducing. That's the main check to see if we have to turn on another room to meet the demand.

You have to forecast, right? It's not what the demand is coming up in the next 6 months, because once you turn on a room, it takes 3 months to get the cannabis out of it, and then you have to fill that demand 3-month whatever within that 6-month period.

We're looking at it internally, signals internally, as soon as we see our sales outpacing our own internal production across every product that we make from fresh frozen to hash products, then we make the productive decision to open more rooms. Then we look at it from an external standpoint, right?

We look at it from market share, we look at it from a revenue generation, we look through market penetration. If we see those factors going up, we see brand growth going up quarter-over-quarter, and then yeah, our internal signals are showing that we've reached capacity, and that's how we've done it over the past 12 rooms.

For me, that's a signal that we turn on either 1, 2 rooms depending on the demand gap that we have. Then we operate like that, and then it's a live forecast that we're always monitoring on a weekly basis.

It happens like this, right? Because we sell more products through product calls with the governments, and at some point in time on a quarterly basis, and we'll deliver, could be anywhere between 5 new products or 15 new products.

We have to be ready if we've done our job right on the innovation side, and the quality side, and the consistency side. Once we have those products out there, they normally take off.

They take a couple of weeks, a month, 2 months to take off, and then we have to be in a position to cater to that demand. We are very confident the next 12 rooms within our existing three brands, if we have to throw another fourth brand in there as we scale up, but right now these three brands I think could—

I can also assure investors that I will not turn on a room if sales don't back it up. Like I'm not just going to grow cannabis to sit in the vault.

Far the team's been did a phenomenal job, they they delivered. I gave them the rooms, they delivered.

I don't see a reason why I should lose confident. I'm always challenging our our sales team, and but yeah, they delivered through, and, they wanted three more rooms, I'm giving them three more rooms in 2026, Zone 1, 2, and 3.

The entire west wing of the build the facility is currently active, Zone 13 till 24, and now we're starting on the east side with Zone 1, 2, and 3. We're confident.

Great.

Thank you, Zohar and Nick. Next question received by email is as follows: can you talk about your pricing strategy across product categories, and how you protect margins while staying disruptive on price?

It's margin-based. We kind of innovate, we innovate a product or we'll find an opportunity in the market that we want to play in.

Then we kind of do a price analysis against our peers to see who's selling what and who's selling more and at what price. Then we do our exercise of figuring out how to create the product agnostically to what they're doing.

We create our product, and from the packaging to the design, to the quality of the inputs, to wherever that we innovate to compete in that category. Then we'll create the product, and then we'll price it out.

We'll cost it out. I'm creating the product, but I also know my numbers, I'm able to price it out, cost it out, and see the margin that we're going to be producing from that, and I'm confident that we usually hit those margins.

Then from there becomes a decision. Sometimes with that idea and that pathway, we'll come up with a 60% margin, and it's a no-brainer.

We'll compete in the market, and we'll win. Then sometimes it's a 45%, 50% margin, and we'll make a decision.

Sometimes it's a 20, 30 30% margin, and depending on the volume and the product mix, we'll also decide to compete if it's a very high-volume category and we really want to make our dent, our brands to compete in that category. We'll take that 30, 35% margin, and then we do an analysis that we're always on a average basis keeping our margins between 40, 45%.

We continue to do that, and then it becomes easier. There's always that push and pull because every quarter we're getting more efficient, our costs go down, but then we can decide to play in different categories and compete in different categories when that happens.

So— It often happened where we started with a lower margin, the SKU really picked up, and then we all sat down and see, okay, how do we turn around, make it more efficient and maximize and make more profits out of it? Sometimes it happens, sometimes it doesn't, but we've been pretty successful in launching a product, sometimes just to get in against our competitors, we'll drop the margin down, and then as that SKU picks up, we sharpen our pencils and figure out how to be more efficient and bring those margin numbers back up to where we need to be.

Yeah.

Great. Thank you, Zohar and Nick.

Next question received by email is as follows: what would you say is driving double-digit growth in market share for Ontario versus Alberta's relative stagnation?

Although Ontario is a more competitive market, more dispensaries, more players, more SKUs, Alberta is a more challenging market because they're more key account driven. What that means is that the retail network in Alberta is less independently owned from mom-and-pop stores or somebody that has 5 to 10 stores versus companies that have 40 to 100s to 300 stores.

With those, there's always challenges in trying to figure out your distribution and trying to get into the stores. When it's innovative products, you have to pitch it to them as well, and they become a client as well.

In Ontario, although that exists, and Ontario there is a lot of key accounts, there's a lot of independents, and customers really want the product, they're walking into the stores and they're demanding the product, and that's when our products get into the shelf. I believe that the double-digit growth in Ontario is one that, and two is our focus, right?

Part of our sales and marketing strategy this year was Quebec is always our number one focus, but our other number one focus this year was Ontario, and to win in Ontario. Then once we win in Quebec and Ontario, we can then win in Alberta and BC.

Sales and marketing, and the events that we're doing and budtender interactions and customer interactions are driving the quarter-over-quarter growth, and eventually that's going to get to Alberta, which is the part of our strategy.

Great. Thank you, Nick.

As a follow-up, next question was received by email as well: what does community-led brand building mean in practice, and how do you measure whether that strategy is driving repeat purchase and loyalty?

Community-led brand building means that we're not building a brand and the products around it for just to generate money and for ourselves. This is a product for customers.

We listen to the customers. There's a community of cannabis customers, and these form majority of the budtenders that are behind the counters at all these retail shops across Canada, these budtenders are part of a community, a cannabis community that they share, exchange ideas, product reviews, personal issues, whatever it is.

There's a community, and we have to listen to that community, we have to understand them, and we have to create products for them. Some strategies that we do is our Discord, where we have a Discord and it's open to anybody.

We invite budtenders, customers, and people that grow at home to share their information and create this environment where people can interact, but more importantly, give us feedback, tell us what we're doing right, tell us what we're doing wrong, tell us what you want to see, and we listen to that and we adapt and we improve. Same thing for social media: the Reddit is a amazing hub to get real-time feedback on your product, and it's up to us to decide to take that and do nothing with it or take it and build upon it and see what customers enjoy, see what they don't.

That's what community-led brand building means, is looking and understanding what the community wants to see the brand and how it envisions the brand, and taking that and actioning it into giving that to them. We see that as an important trait to our brands while we're creating brand loyalty, and especially in cannabis where the interaction and the sharing of information of product reviews is so rampant that we have to do that if we want to succeed.

Great. Thank you.

Next question received by Q&A was as follows: any thoughts about moving more into the edibles market, now that restrictions on single item per package regulations haven't changed? It's still a small market, unfortunately.

The regulations, although we were hoping that it would bring change, unfortunately, it just brought more competition, and it really just didn't make sense because they require the same amount of information on a single bag into a multipack of 10, and you still can only put individual 10 mg units in a bag. You can have a bigger bag, but you still have to have 10, 20, 30, 40 individual bags inside of this bigger bag, and that just increased costs, it doesn't give what the customer was asking for, which is they don't want to go to the store and end up with 100 bags or 20 bags and they have to rip them open.

It just doesn't make sense. They're still turning to the black market, the legacy market for edibles, and until regulations change, it's honestly we say cannabis is race to the bottom, price compression is there, but in edibles, it's really a race to the bottom.

It's gone to where producers are making 10, 20 cents a unit. For us, that just doesn't make sense, and we still look at the market, we have our pipeline for it, but until regulations change, Cannara won't play in it as a major role.

Great. Thank you, Nick.

Next question received by email is as follows: outside of facility expansion, do you have any other capital deployment strategies? Anything you're missing from a competency standpoint that could be acquired?

No, not really. We're just focusing on our facility, expanding our facility.

We have 1.6 million square foot of real estate that we own. If it's the right deal at the right time, at the right price, anything's for sale, anything could be a good deal, but are we actively looking?

The answer is no. Another $27 million greenhouse at the— If I can get another 10 cents on a dollar purpose-built greenhouse, I'll look at it, but again, we have 12 more rooms to complete, and a rooftop greenhouse that we have another 2 acres that we can expand as well.

Yeah.

That's our message, right? That's our message, I think, through the presentation today, and what we've been saying is, we have all the assets we need.

We built this platform. We've been working on this for the past 7 years building this platform.

When the industry's been going crazy and there's been a lot of noise, we've been focused heads down on building a platform where we envision we don't need others to succeed. We don't need to dream and hope and something will happen that we will provide shareholder returns.

No, we have the plan, we're going to execute it. We have to be focused.

If there's opportunities, major opportunities that are going to drive shareholder return, we'll look at it, we'll absolutely look at it, and we'll assess it, and we'll judge if it'll defocus us from the main opportunity. Otherwise, that's the benefit of Cannara, is where you're investing into something that has everything in place right now to double our current capacity and sales.

Great. Thank you, Zohar and Nick.

Next question was as follows, received by email: do you have an updated strategy on the international market?

Not since last quarter. We're still staying out of it.

We still think that it's a little bit all over the place. The medical in Germany is going through so many overhauls right now.

It's all over the place, we'll let some other friendly competitors go out and try to conquer that. If it ever does become a real business, believe me, it's really easy to get into.

It's quality and price, similar to what's happening here in Canada, but we don't foresee anything anytime soon.

Great. Thank you, Zohar.

Next question received by email is as follows: you've highlighted vertical integration as a key advantage. What do you see as the biggest cost and quality benefit coming from that model today?

I think to succeed in our business where margins are important, you've got to be vertically integrated. If we are going to spend money, I'd rather spend money in becoming even more efficient and more vertically integrated.

For example, our BHO lab where we're going to be overhauling that entire facility and getting it to be more efficient. We recently signed up a new vendor, we get even cheaper butane prices, little things like that, but in our scale, it represents a lot of money.

Being vertically integrated is a must to succeed in our business.

Like I said before, that shows through our vape carts, right? If you had to buy the biomass to make the vape carts that we do, one, we wouldn't be able to get the quality that we're looking for; two, we wouldn't be able to get the consistency we're looking for; and three, we wouldn't be able to get the margin we're looking for.

That, hands down, any transformation product, being vertically integrated is an automatic benefit and represents over 50% of our revenues right now. 50% is flower and pre-rolls, and about 50% is all the other concentrate stuff.

It's a big part of our business. Then same thing if you look out on the flower side, if we were just a brand or if we were a retailer and buying cannabis to put into our stores, you wouldn't have that quality and consistency and that innovation and all that we're doing on the flower standpoint.

For us, it's honestly the only way to build a brand, a cannabis brand, is that if you're not vertically integrated, it's pretty much impossible.

It's hard to compete if you're not vertically integrated.

Thank you, Zohar and Nick. We are coming close to time, I'll open the floor to you both for closing remarks.

You want to go first?

Sure. I think we demonstrated a great solid quarter.

I think we're continuing staying focused. We're here for our investors.

Our emails are here to answer any questions. Nick is always available by phone.

I think if you're looking at the top 10 publicly listed cannabis companies out there, I think if you do your due diligence, you can start really seeing the ones that are going to succeed in this business. It's a tough business, it's a CPG business.

We have the platform, and we have the resource, and I think that we just got to stay focused, keep doing what we're doing, and make this a company that's going to be definitely top 3.

I echo the same thing as Zohar. For new shareholders, we've been here, Zohar started the company in 2018, went public in 2019, raised at $1.80—there was a 10-to-1 split during our time, but it was $1.80 a share that we raised at that time, and then fast-forward, 7 years later, we're still the same team working on this project, the founders vested in this project.

We have the same three brands we created in 2019 from $0 all the way to a $100 and $100 million-plus this last year. I think we've shown execution, I think we've shown diligence, financial stability, leadership, and for me is the past 5 years has been a learning experience, right?

We didn't create cannabis products before and learn how to grow and all this stuff, and if we can do it during the past 5 years while acquiring a mega facility, while learning how to grow, while creating all these products, pheno hunting, and going from 0 to 500-plus employees, and getting to where we are, I think the next 12 rooms, which is the identical to what we've done over the past 5 years, the next 12 rooms should be easier for us, right? I think that's the game plan.

I think the market's realizing we've achieved our 52-week high, just crossed today a little bit over the $2 mark. Shareholders, investors are realizing the benefit of our platform, and there's still a lot to grow.

Cannabis is a new industry, right? There's a lot to be developed here in Canada.

Again, what's important here in Canada is that it's government-run. Our clients are the government, and this is a sustainable business.

We're excited to continue sharing the hard work that Zohar and I put into this business on a quarterly basis or on a weekly basis with all of you. Our facility is open-door policy, anyone just feel free to reach out to me for a tour if you haven't had it.

With that, thank you very much for listening to our Q1 2026 financial earnings webcast, and have a great day.

Thank you.

Thank you, Zohar and Nick, and thank you everyone for joining today. Should you have any additional questions that were not answered today, you can reach out to us at [email protected].

Have a great day.

Thank you, everyone. Thanks.