Q1 Revenue Up 28% to $9.16M, Swings to $2.21M Net Loss; Funds Illinois Expansion with $3M Dilutive Preferred Unit Sale

summarizeSummary

Grown Rogue reported a 28% revenue increase in Q1 2026 but swung to a $2.21 million net loss. The company is expanding into Illinois, funded by a $3 million sale of preferred units in a subsidiary, which are convertible into common shares at a premium to the current stock price.

check_boxKey Events

• Q1 2026 Financial Performance

  Revenue increased 28% year-over-year to $9.16 million. The company reported a net loss of $2.21 million, a significant swing from a $0.74 million net income in Q1 2025. Adjusted EBITDA, however, increased to $1.56 million from $1.19 million in the prior-year quarter. Operating cash flow turned positive at $2.53 million, compared to a negative $1.00 million in Q1 2025.

• Illinois Expansion & Financing

  Grown Rogue acquired a 49% interest in Sea Craft, LLC, an Illinois Adult Use Cannabis Craft Grower, for $1 million paid via promissory notes. To fund this expansion, the company sold a 20% non-controlling interest in its subsidiary GRMA for $2.985 million net proceeds. These GRMA units carry a 15% preferred return and are convertible into common shares at $0.65 per share, which is a premium to the current stock price of $0.36.

• Functional Currency Change & Warrant Reclassification

  Effective January 1, 2026, the company changed its functional currency from Canadian Dollar to U.S. Dollar. This resulted in the reclassification of 4,000,000 warrants from equity to a derivative liability, initially valued at $1.54 million, and an unrealized gain of $0.77 million on changes in fair value during the quarter.

• Uncertain Tax Liability

  The uncertain tax liability increased to $9.28 million as of March 31, 2026, up from $8.38 million at December 31, 2025. This liability is primarily related to the treatment of certain transactions and deductions under IRC Section 280E.

auto_awesomeAnalysis

Grown Rogue International reported a 28% increase in Q1 2026 revenue, reaching $9.16 million, driven by growth in its New Jersey, Oregon, and Michigan operations. However, the company swung to a net loss of $2.21 million, compared to a net income of $0.74 million in the prior-year quarter, primarily due to increased operating expenses and unrealized losses on a warrant asset. Despite the net loss, operating cash flow turned positive, providing $2.53 million. The company is strategically expanding into Illinois by acquiring a 49% interest in Sea Craft, LLC, a cannabis craft grower. This expansion is partly funded by a $3 million sale of preferred units in its subsidiary, GRMA, which are convertible into common shares at $0.65 per share. This financing is dilutive but secures capital for growth. A significant and growing uncertain tax liability of $9.28 million, primarily related to IRC Section 280E, remains a material risk. The company also extended a commercial lease with its CEO, a related party transaction.