10-K: Ascend Wellness Reports 2025 Loss Amid Revenue Decline

Ascend Wellness Holdings, Inc. reported a significant net loss of $118.2 million in 2025, driven by an 11% revenue decrease and increased operating expenses, despite improved gross margins.

Summary

• Ascend Wellness Holdings, Inc. (AWH) reported a net loss of $118.2 million for the year ended December 31, 2025, an increase from $85.0 million in 2024.
• Revenue decreased by 11% to $500.6 million in 2025, down from $561.6 million in 2024, primarily due to increased competition and pricing pressure in Illinois, New Jersey, and Massachusetts.
• The company recorded an operating loss of $17.0 million in 2025, a significant shift from an operating profit of $4.7 million in 2024, which included a $17.0 million settlement expense related to an arbitration matter.
• Gross profit margin improved to 33.9% in 2025 from 32.8% in 2024, attributed to better cultivation realization and production output, particularly in Illinois and Massachusetts.
• Wholesale product sold increased to approximately 225,000 pounds (gross basis) in 2025, up from 187,000 pounds in 2024, but wholesale revenue declined by $28.3 million due to price compression.
• AWH expanded its retail footprint to 47 open and operating locations (including 9 retail partner locations) as of December 31, 2025, up from 39 in 2024, with fully-financed plans to reach 60 total locations.
• The company issued an additional $15.0 million and $50.0 million in term notes in January and May 2025, respectively, under the July 2024 Loan Agreement, and fully prepaid the remaining $60.0 million outstanding under the 2021 Credit Facility.
• A $9.3 million Mortgage Note was issued in September 2025 for general corporate purposes and growth initiatives.
• A registration statement on Form S-3 was filed, effective January 22, 2026, to offer and sell up to $100 million in various securities for strategic flexibility.
• Abner Kurtin's employment agreement was extended to March 31, 2027, with a base salary of $175,000, a $175,000 Restricted Stock Unit (RSU) grant, and a one-time cash payment of $70,000.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this as a challenging period for Ascend Wellness, marked by significant financial losses and revenue decline, despite some operational improvements and strategic capital management. The ongoing regulatory and competitive pressures, coupled with the stock's underperformance, indicate a high-risk investment environment.

Positives

• Gross profit margin improved to 33.9% in 2025 from 32.8% in 2024, driven by better cultivation realization and production output.
• Wholesale product sold increased to 225,000 pounds in 2025 from 187,000 pounds in 2024, indicating increased production capacity.
• Expanded retail footprint to 47 locations (including 9 retail partner locations) as of December 31, 2025, up from 39 in 2024, with fully-financed plans to reach 60 total locations.
• Launched two new brands, High Wired and Honor Roll, and introduced over 550 new SKUs, fortifying product offerings.
• Strengthened capital structure by fully prepaying the $60.0 million 2021 Credit Facility and issuing new term notes.
• Generated $38.1 million of net cash from operating activities in 2025, demonstrating operational cash generation.
• Ended 2025 with $85.7 million in cash and cash equivalents, which management believes is more than adequate to support operations for the next twelve months.
• No significant debt maturities are due until 2029, providing financial stability in the medium term.
• Successfully settled the Green Thumb Industries arbitration for $17.0 million, resolving all claims and avoiding prolonged litigation.
• Management's assessment of internal control over financial reporting was effective as of December 31, 2025.

Negatives

• Net loss increased significantly to $118.2 million in 2025 from $85.0 million in 2024, indicating worsening profitability.
• Revenue decreased by 11% ($61.0 million) in 2025 compared to 2024, primarily due to increased competition and pricing pressure in Illinois, New Jersey, and Massachusetts.
• The company reported an operating loss of $17.0 million in 2025, a substantial decline from an operating profit of $4.7 million in 2024.
• A $17.0 million settlement expense was recognized in 2025 for the Green Thumb Industries arbitration, impacting operating results.
• Wholesale revenue declined by $28.3 million due to increased competition and price compression across certain markets.
• Higher write-downs of inventory items totaling $13.0 million were recorded in 2025, related to net realizable value adjustments, expired products, and obsolete packaging.
• Interest expense increased by $6.0 million (13%) in 2025 due to new term notes and higher interest on finance leases.
• The company has an accumulated deficit of $518.5 million as of December 31, 2025.
• The Ann Arbor, Michigan retail store closed in January 2026.
• Michigan enacted the Comprehensive Road Funding Act (CRFA) in October 2025, imposing a 24% tax on wholesale adult-use marijuana, with an unclear impact on the company's operations.
• Ohio legislature passed Senate Bill 56 (S.B. 56) in December 2025, imposing an additional 10% tax on retail adult-use marijuana sales and tightening rules, with an unclear impact on the company's operations.
• The company is a holding company, dependent on its subsidiaries' earnings, which are subject to state-specific laws and regulations.
• The market price for Class A common stock has been volatile, declining from $100.00 on May 4, 2021, to $7.69 on December 31, 2025, indicating significant shareholder value erosion.
• The automatic conversion of Class B common stock on May 4, 2026, may create uncertainty regarding governance and stock price volatility.
• The company is subject to a complaint filed by the Attorney General of Ohio alleging anticompetitive collusion among multi-state operators.

Risks

• Cannabis remains illegal under U.S. federal law, posing risks of federal criminal prosecution, civil liability, and asset forfeiture, despite state-level legalization.
• Uncertainty regarding federal enforcement of cannabis laws, especially after the rescission of the Cole Memorandum, means federal prosecutors retain broad discretion.
• U.S. state and local regulation of cannabis is complex, evolving, and uncertain, potentially restricting operations, increasing compliance costs, or limiting market expansion.
• Potential for new or increased special taxes or fees on cannabis businesses by states could materially adversely affect financial performance.
• Federal legalization or rescheduling of cannabis could significantly alter market dynamics, increasing competition from large, well-capitalized companies and disrupting current in-state production models.
• Competition from illicit or unlicensed cannabis operators and hemp-derived cannabinoid products could place downward pressure on pricing and divert consumers from regulated markets.
• Limitations on cannabis license ownership in certain states may constrain growth and operational flexibility, requiring reliance on alternative contractual arrangements.
• The ability to expand product offerings and dispensary services may be limited by competitive and regulatory environments.
• Risks associated with licensing relating to supply, supply chain, and market constraints could lead to mismatches between cultivation, production, and retail capacity.
• Potential for FDA or ATF regulation if cannabis is reclassified, imposing additional costly and burdensome requirements on manufacturing, labeling, and marketing.
• Restricted access to traditional banking and other financial services due to federal anti-money laundering laws, posing unique operational challenges.
• U.S. tax provisions, specifically Section 280E of the Internal Revenue Code, prohibit deducting ordinary business expenses, leading to a high effective tax rate and potential challenges from the IRS.
• Business is concentrated in a limited number of U.S. states (Illinois, Maryland, Massachusetts, Michigan, New Jersey, Ohio, and Pennsylvania), making it highly dependent on conditions in those jurisdictions.
• Difficulties in enforcing contracts in U.S. federal courts and certain state courts due to the federal illegality of cannabis.
• Limited trademark and intellectual property protection under federal law, making intellectual property vulnerable to infringement or misappropriation.
• Constraints on marketing products due to strict state regulations, limiting the ability to compete for market share.
• Unknown health impacts associated with the use of cannabis and cannabis derivative products, potentially leading to increased regulatory scrutiny, product recalls, or product liability claims.
• Inherent risk of product liability and similar claims due to product defects, contamination, or adverse reactions.
• Adverse changes in wholesale and retail prices for cannabis products due to increased competition, oversupply, or changes in consumer preferences could result in earnings declines.
• Unfavorable publicity or consumer perception regarding cannabis products could adversely affect brand recognition and demand.
• Competition from pharmaceutical, synthetic cannabinoid, and other alternative products could reduce demand for organic cannabis products.
• Increased labor costs and operational constraints as a result of union activity, with approximately 33% of the workforce represented by collective bargaining agreements.
• Risk of products becoming obsolete, less competitive, or less marketable as the cannabis market matures and consumer preferences evolve.
• Lack of access to U.S. bankruptcy protections due to the federal illegality of cannabis.
• Exposure to fraudulent or illegal activity by employees, contractors, and consultants.
• Risks related to information technology systems, potential cyber-attacks, and security breaches.
• Risks from using artificial intelligence technologies, including inaccurate results, data privacy concerns, and reputational harm.
• Insurance coverage may not cover all potential risks or be available on acceptable terms.
• Potential for litigation, arbitration, or other legal proceedings to adversely affect the business.
• Challenging global economic conditions, including inflation, interest rates, and supply chain disruptions, may negatively impact business and consumer spending.
• Risks arising from epidemic diseases, which could disrupt operations and supply chains.
• Political and economic instability in operating jurisdictions.
• Internal controls over financial reporting may not be effective, potentially leading to regulatory scrutiny and loss of investor confidence.
• Broad discretion in the use of cash, cash equivalents, and investments, which may not always improve results or enhance stock value.
• Proposed legislation in the U.S. Congress, including changes in U.S. tax law and the Inflation Reduction Act of 2022, may adversely impact the company.

Future Outlook

Ascend Wellness Holdings, Inc. anticipates continued growth by opening new dispensaries under existing licenses, expanding its retail footprint through partner-operated locations, and enhancing current cultivation facilities, driven by increased consumer demand. The company has fully-financed expansion plans to achieve a target of 60 total retail locations in the medium-term. Management expects to fund future operations and strategic initiatives primarily through operating cash flows and existing financing arrangements, noting no significant debt maturities until 2029. The company projects approximately $20.0 million in net capital expenditures for 2026 and expects to cease qualifying as an emerging growth company by December 31, 2026. The board has approved a performance-based RSU grant of 3,000 units, though not yet formally granted, tied to stock price targets and continued service.

Management Comments

• "We believe in bettering lives through cannabis. Our mission is to improve the lives of its customers, employees, and the communities we serve through the use of the cannabis plant."
• "AWH believes that location is critical when it comes to the success and long-term sustainability of a dispensary."
• "AWH has a disciplined capital allocation strategy. The Company only deploys capital in markets and on projects which it believes will be accretive to its stockholders."
• "Management believes its current cash and cash equivalents, combined with anticipated cash flows from operating activities, is more than adequate to support operations for the next twelve months."

Industry Context

StockSavvy.ai notes that Ascend Wellness operates in a highly dynamic and challenging U.S. cannabis market, characterized by conflicting federal and state laws, intense competition from both MSOs and SSOs, and the persistent presence of an illicit market. The company's strategy of focusing on limited-license, adult-use or near-term adult-use states, and vertical integration is a common approach among leading MSOs to navigate regulatory complexities and capture market share. The overall revenue decline, despite an increase in wholesale product volume, reflects broader industry pressures such as price compression and increased competition, particularly in mature markets like Illinois, New Jersey, and Massachusetts. The ongoing legal and tax uncertainties (e.g., Section 280E, state-level tax changes in Michigan and Ohio) continue to pose significant headwinds for all licensed cannabis operators, impacting profitability and operational flexibility.

Comparison to Industry Standards

• Ascend's Class A common stock performance from May 4, 2021, to December 31, 2025, shows a significant decline from $100.00 to $7.69, substantially underperforming both the S&P 500 Index (which rose to $176.08) and its peer group (which declined to $14.05), indicating a severe erosion of shareholder value relative to benchmarks.
• The company's gross margin of 33.9% in 2025, while an improvement, should be assessed against industry averages for vertically integrated cannabis operators, which can vary widely but often aim for higher margins to offset high operating costs and Section 280E tax burdens.
• The increase in wholesale product sold (225,000 pounds in 2025 vs. 187,000 pounds in 2024) suggests growing production capacity, but the decline in wholesale revenue indicates significant price compression, a trend observed across the industry in states with increasing supply.
• The peer group for comparison includes Ayr Wellness Inc., The Cannabist Company Holdings Inc., Cresco Labs Inc., Curaleaf Holdings, Inc., Green Thumb Industries Inc., Jushi Holdings Inc., TerrAscend Corp., Verano Holdings Corp, and Trulieve Cannabis Corp.

Management Changes

Corporate Governance

Legal Proceedings

• **Green Thumb Industries Arbitration Matter**: On February 5, 2026, an arbitrator awarded Green Thumb Industries (GTI) approximately $19.8 million net against the Company for breach of contract. The Company settled the matter for $17.0 million on February 11, 2026, and paid the amount on February 12, 2026, resolving all claims.
• **State of Ohio Complaint**: On February 6, 2026, the Attorney General of the State of Ohio filed a complaint against the Company and eight other multi-state operators (MSOs) in the cannabis industry, alleging anticompetitive collusion to exclude single-state operators from the Ohio cannabis market. The Company denies the claims and plans to vigorously contest the case.
• **MedMen NY Litigation**: On September 5, 2025, the New York Supreme Court entered a default judgment in favor of Ascend against MedMen Enterprises Inc. for $10.3 million, covering a prior deposit and working capital advances. The Company is considering its options to collect on this unsecured judgment.

Related Party Transactions

• The Massachusetts Note, which was settled in September 2025, involved a borrower partially owned by an entity managed by one of the Company's founders.
• Abner Kurtin and Frank Perullo, founders and directors, control AGP Partners, LLC, which holds Class B common stock, granting them significant voting power (approximately 35% as of December 31, 2025).
• No other significant related party transactions were disclosed for 2025, 2024, and 2023, beyond those detailed in the Notes Receivable and Stockholders Equity sections.

Stakeholder Impact

• **Shareholders**: Negative impact due to significant net losses, revenue decline, and volatile stock price. Potential for further dilution from future equity issuances. Uncertainty from Class B common stock conversion on May 4, 2026.
• **Employees**: Positive impact from competitive compensation packages and opportunities for career growth. Potential for increased labor costs and operational constraints due to union activity (33% of workforce unionized).
• **Customers**: Benefit from expanded product offerings (new brands, SKUs) and enhanced omni-channel shopping experiences (eCommerce platform, loyalty program, delivery, curbside pickup). Potential negative impact from increased taxes on adult-use cannabis in Michigan and Ohio.
• **Suppliers**: Potential for supply chain disruptions and increased costs due to macroeconomic conditions and dependence on key inputs.
• **Creditors**: Debt covenants and financial ratios must be maintained. A breach of these covenants could result in an event of default and acceleration of debt payments.
• **Communities**: The company maintains a commitment to social equity initiatives, including hosting expungement clinics, sponsoring diversity events, and donating to social equity partners and grassroots organizations.

Next Steps

• Open new operational facilities and dispensaries under current licenses.
• Expand retail footprint through partner-operated retail locations, where permitted by applicable law.
• Expand existing cultivation facilities and pursue opportunities to partner with additional social equity license holders.
• Continue to refine cultivation operations to scale output without sacrificing quality and consistency.
• Standardize and increase capacity in hydrocarbon and ethanol extraction to enhance throughput and improve crude yields.
• Invest in manufacturing and extraction technology, including high-speed flower packaging, cartridge filling, and automated pre-rolling.
• Expand the vape offering, including live products and ratio products, and broaden pre-roll offerings.
• Expand edibles manufacturing capabilities to provide micro-dose product forms and other market-desired forms.
• Complete certain expansion projects across cultivation facilities and other enhancements and general maintenance activities across the portfolio.
• Provide funding for partner dispensaries and the build out of additional dispensaries across the network during 2026.
• Vigorously contest the complaint filed by the Attorney General of the State of Ohio alleging anticompetitive collusion.
• Consider options to collect on the $10.3 million default judgment against MedMen.
• Manage the automatic conversion of Class B common stock to Class A common stock on May 4, 2026.
• Comply with new income tax disclosure requirements (ASU 2023-09) effective January 1, 2025.
• Evaluate the impact of ASU 2024-03 (Disaggregation of Income Statement Expenses) effective for annual periods beginning after December 15, 2026.
• Evaluate the impact of ASU 2025-03 (Business Combinations and Consolidation) effective for the Company beginning January 1, 2027.
• Evaluate the impact of ASU 2025-05 (Financial Instruments Credit Losses) effective for annual reporting periods beginning after December 15, 2025.
• Evaluate the impact of ASU 2025-11 (Interim Reporting) effective for interim periods beginning January 1, 2028.

Key Dates

Recommendation

Ascend Wellness Holdings, Inc. faces substantial headwinds, as evidenced by the significant net loss of $118.2 million and an 11% revenue decline in 2025. While gross margins improved, the shift to an operating loss and the $17.0 million arbitration settlement highlight operational and legal challenges. The stock has severely underperformed both the broader market and its cannabis industry peers since its IPO. Ongoing regulatory uncertainties, including the federal illegality of cannabis and the impact of Section 280E, continue to burden profitability. The Ohio Attorney General's antitrust complaint adds another layer of legal risk. Despite expansion plans and cash on hand, the company's accumulated deficit and the highly competitive, price-pressured market suggest continued financial strain. The upcoming conversion of Class B super-voting shares also introduces governance uncertainty. Given these factors, a seasoned investor would likely recommend selling due to persistent losses, revenue contraction, significant legal and regulatory risks, and poor stock performance relative to benchmarks.

Keywords

Cannabis, Multi-state operator, SEC filing, 10-K, Financial results, Revenue, Net loss, Gross margin, Operating expenses, Debt, Acquisitions, Retail expansion, Cultivation, Restricted Stock Units, Employment agreement, Abner Kurtin, Green Thumb Industries, Arbitration, Ohio Attorney General, Section 280E, Regulatory risk, Capital raise, Share buyback, Corporate governance, Dual-class stock