Blum (OTC:BLMH), a California-based cannabis retailer and brand operator, released its earnings for the second quarter of fiscal 2025 on August 14, 2025. The main headline from the release was a sharp quarter-over-quarter revenue increase to $3.5 million (GAAP), driven mainly by the opening of a new Bay Area dispensary. However, performance compared to Q2 2024 remained below expectations, and the period closed with a wider net loss from continuing operations (GAAP) than in the prior quarter. With no analyst estimates provided for comparison, the results show the impact of ongoing restructuring and new investments. Overall, the quarter demonstrated improved cost control, but expanding stores resulted in short-term pressure on profit and liquidity.
| Metric | Q2 2025 | Q1 2025 | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| Revenue | $3.5 million | $2.2 million | $3.8 million | -7.9% |
| Gross Margin | 49% | 53% | 42% | 7 pp |
| Operating Expenses | $2.5 million | $2.5 million | $8.0 million | (68.8%) |
| Net Income (Loss) from Continuing Operations | $(1.9 million) | $(0.6 million) | $7.3 million | N/A |
| Adjusted EBITDA (Loss) from Continuing Operations (Non-GAAP) | $(0.6 million) | $(0.4 million) | N/A | N/A |
About Blum: Business Overview and Strategic Focus
Blum operates in California’s regulated cannabis market, running retail dispensaries and developing branded cannabis products. It manages a portfolio of stores under well-known retail banners, and its product mix emphasizes high-potency goods—most notably via its Korova line. Korova is a high-potency cannabis brand that caters to the premium enthusiast segment. The company’s revenue comes from a blend of in-store sales, management fees, and branded products sold to third parties.
Recent months illustrate a pivot in strategy. Blum embarked on cost reduction, restructuring, and the sale of lower-performing assets to regain financial footing. A key element of its model now involves expanding high-traffic locations in Northern California, with emphasis on flagship products and branding to retain customer loyalty. Success for the company depends largely on building operating scale.
Quarter in Review: Financial and Operating Performance
Blum’s topline (GAAP revenue) surged 59% quarter-over-quarter as a new Bay Area dispensary began contributing sales. Although there are no analyst expectations for the quarter, management highlights the sharp increase as an indicator that recent store openings are gaining traction. The year-over-year decrease, down 8.3%, reflects the impact of recent divestitures like the sale of Blüm Santa Ana. This transition marks a noteworthy change in the company’s revenue composition, showing how retail expansion and asset decisions swing total turnover.
Gross margin improved to 49% compared to 42% in Q2 2024. Management attributed this margin recovery to a shift in product mix and stronger pricing. However, gross margin declined by 4 percentage points from Q1 2025, as initial inventory and promotions for the new retail site offset some gains. While improved year over year (gross margin increased to 49% from 42% in Q2 2024), watching for persistent margin pressure in upcoming periods is warranted as retail expansion continues.
On the cost side, operating expenses fell sharply year over year, coming in at $2.5 million—a drop of $5.5 million or nearly 69%. These savings stem from cost-cutting, reductions in litigation expense, and the conclusion of an earlier phase of restructuring. Compared to Q1 2025, operating expenses held steady at $2.5 million, even as the company absorbed the cost of the new store. This suggests that Blum’s overhead structure is now better aligned with its current level of activity.
Despite stronger sales and lower operating costs, Blum posted a net loss from continuing operations of $1.9 million (GAAP), compared to a loss of $0.6 million for Q1 2025 (GAAP). This widening is mainly due to lower gross margins in the new store and integration costs. The year-over-year comparison is inflated by a one-time $7.3 million gain from the sale of a property in the prior year and is not suggestive of ongoing profit trends.
The company’s asset base expanded as it added a new Northern California retail facility. Total assets (GAAP) rose to $39.4 million as of June 30, 2025, up from $24.8 million at December 31, 2024, mainly due to this acquisition. Liabilities climbed to $46.0 million from $29.6 million at year-end 2024, reflecting the consolidation of tax obligations and debt related to acquired sites. Most of these new liabilities are tax-related—a result of operating in California’s regulated cannabis sector where federal tax law can create substantial burdens. Management notes that future regulatory changes, such as cannabis legalization at the federal level, could have a material impact on these liabilities. Mezzanine equity and the stockholders’ deficit also deepened in this period, indicating continued financial pressure.
On the strategic front, Blum reported progress in revitalizing the Korova brand and expanding its in-house product range. Blum signed a binding term sheet to acquire an additional dispensary, which, if completed, is expected to contribute approximately $4.1 million in annual revenue. In August 2025, the company also secured $0.5 million in new funding—raising a total of $2.1 million for the calendar year 2025. However, ongoing capital needs and financial caution from the market are apparent, with private placements rather than large institutional backing funding operations.
Looking Forward: Outlook and Investor Focus Areas
Management’s commentary presented a directionally positive tone, emphasizing the expectation of further improvement in sales and profit margins as new stores mature and operational synergies are realized, as discussed in the Q2 2025 earnings release. The recent move into Northern California and a pipeline of pending acquisitions suggest continued top-line opportunity, but also bring additional short-term integration costs and financial risk.
Blum continues to carry a significant working capital deficit, with short-term liabilities far outpacing short-term assets as of June 30, 2025. The company’s success will depend on its ability to drive cash flows from the newly acquired retail sites and carefully manage the tax liabilities that dominate its balance sheet. Any material legal or regulatory relief, especially federal action on cannabis taxation, could improve the outlook.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
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