10-K: Village Farms International Reports Strong 2025 Growth

Village Farms International achieved significant financial improvements in 2025, driven by strong Canadian and Netherlands cannabis sales and strategic operational efficiencies.

Summary

• Net income attributable to shareholders increased to $32,441 thousand in 2025 from a loss of $35,851 thousand in 2024.
• Sales increased by 10% to $215,937 thousand in 2025 from $195,907 thousand in 2024.
• Gross profit surged by 91% to $87,682 thousand in 2025 from $45,801 thousand in 2024.
• Adjusted EBITDA from continuing operations increased by 576% to $49,852 thousand in 2025 from $7,374 thousand in 2024.
• Canadian Cannabis sales increased by $14,854 thousand (10%), driven by a 517% increase in international sales.
• Netherlands Cannabis commenced sales in Q1 2025, contributing $9,858 thousand in net sales and $4,903 thousand in gross profit.
• U.S. Cannabis sales decreased by 17% to $14,439 thousand due to new state restrictions and unregulated hemp products.
• The company repurchased 812,923 shares for $2,971 thousand in Q4 2025 under a $10 million authorization.
• Remediated material weaknesses in internal control over financial reporting as of December 31, 2025.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a positive report, driven by strong growth in cannabis segments and significant financial improvements, despite ongoing regulatory challenges in the U.S. CBD market and delays in U.S. federal cannabis policy.

Positives

• Net income attributable to shareholders significantly improved to $32,441 thousand in 2025 from a loss of $35,851 thousand in 2024.
• Total sales increased by 10% to $215,937 thousand in 2025.
• Gross profit increased by 91% to $87,682 thousand in 2025, with gross margin as a percentage of net sales rising to 44% from 21%.
• Adjusted EBITDA from continuing operations surged by 576% to $49,852 thousand in 2025.
• Canadian Cannabis international export sales increased by 517% year-over-year, driven by strong demand in Germany and other markets.
• Canadian Cannabis maintained a top five overall market share and the number one position in dried flower in Canada as of February 2026.
• Netherlands Cannabis operations are at full capacity with strong profitability and operating cash flow, achieving 91% market penetration in participating coffeeshops.
• Successful launch of 10 new product offerings in the Netherlands, including the first regulated blunt.
• Remediation of previously identified material weaknesses in internal control over financial reporting.
• Board authorized a $10 million share repurchase program, with $2,971 thousand already utilized in Q4 2025.
• Amended Pure Sunfarms Secured Credit Facilities, increasing loan commitments by CAD $15 million and extending maturities to February 2029.
• Published peer-reviewed research highlighting natural THC variability, reinforcing focus on quality over potency.
• Won Business Vancouver's (BIV) 2026 BC Export Awards in the Consumer Products category.

Negatives

• U.S. Cannabis net sales decreased by 17% to $14,439 thousand in 2025, primarily due to new state restrictions on CBD sales in eight additional states and the proliferation of unregulated hemp-derived products.
• The November 2025 Appropriations Act will make most hemp-derived products illegal starting November 12, 2026, potentially eliminating the entire U.S. hemp industry unless further legislative action is taken.
• Canadian Cannabis branded sales decreased by 12% and non-branded sales decreased by 14% in 2025.
• Canadian Cannabis continues to face a burdensome excise tax, totaling $59,950 thousand (C$83,744) in 2025, representing 38% of gross branded sales.
• Produce segment gross profit decreased by 75% to $857 thousand in 2025 due to a new sales commission under the supply agreement with Village Fresh Canada.
• The Texas medicinal marijuana license application remains under review, with no guarantee of approval, and requires a separate private company structure if awarded due to Nasdaq listing rules.
• The DEA rescheduling process for marijuana is stalled, with the administrative proceedings pending for nearly a year.
• The company recorded a non-cash inventory impairment of $10,436 thousand (C$15,000) in 2024 due to older manufactured products requiring rework costs higher than resale value.

Risks

• Inability to maintain profitability or continue future growth, especially given the limited operating history in the cannabis industry.
• International expansion, including Leli, may heighten operational risks due to political, economic, and legal uncertainties, and the Netherlands Experiment is scheduled to end in April 2029.
• Acquisitions, joint ventures, or expansions may not have a beneficial impact or could present unforeseen integration obstacles and costs.
• Need for additional financing, which may not be available on acceptable terms or could be dilutive.
• Risks associated with debt, including refinancing risk and restrictive covenants under credit facilities, with past non-compliance requiring waivers.
• Dependence on attracting and retaining customers in competitive cannabis and produce markets.
• Vulnerability to rising energy costs, inflationary effects on cultivation and transportation, and recessionary impacts on demand.
• Exposure to natural catastrophes (e.g., severe weather, earthquakes) and uninsured/underinsured losses, including lack of crop loss insurance.
• Product recalls due to defects, contamination, or inadequate labeling, potentially leading to decreased demand and regulatory scrutiny.
• Competitive position affected by rapid technological advances and the emergence of new industry standards.
• Risks related to intellectual property, including difficulty in registration, maintenance, enforcement, and potential infringement claims.
• Negative impact from reliance on third-party transportation services, including security breaches during transit.
• Unfavorable publicity, adverse scientific findings, or negative consumer perception of cannabis and CBD.
• The November 2025 Appropriations Act will make most hemp-derived products illegal in the U.S. starting November 2026, materially affecting the U.S. cannabis business.
• Uncertainty regarding federal legalization or rescheduling of cannabis in the U.S. and its impact on business and competitive position.
• Canadian and Dutch cannabis operations require licenses, and failure to maintain or renew them would have a material adverse impact.
• Canadian cannabis operations are subject to marketing restrictions under the Cannabis Act and supplier standards.
• Uncertainty in laws and regulations governing cannabis, U.S. hemp, or CBD-derived products, including potential FDA scrutiny.
• Restricted access to banking services for cannabis-related businesses in the U.S. due to federal anti-money laundering statutes.
• Product liability claims for cannabis and produce products.
• Evolving government regulation of the Internet and e-commerce, potentially leading to increased compliance costs or liability.
• Environmental, health, and safety regulations, with potential for material expenses for compliance or unforeseen issues.
• Controversy surrounding vaporizers and vaporizer products, potentially leading to reduced market demand and increased regulation.
• Labor availability issues, including reliance on government-sponsored foreign labor programs in Canada.
• Dependence on key executives, with loss potentially hindering operations and growth.
• If classified as a passive foreign investment company (PFIC) for U.S. federal income tax purposes, adverse U.S. federal income tax consequences could apply to U.S. investors.
• Potential challenges from the IRS and Canada Revenue Agency regarding transfer pricing.
• Changes in tax treatment of e-commerce companies.
• U.S. Holdings may be considered a U.S. real property holding corporation, leading to U.S. federal income tax for VF Opco.
• Volatility in the market price of Common Shares.
• Future issuances or sales of Common Shares could cause dilution.
• Certain Canadian laws could delay or deter a change of control.
• Effect of sanctions and escalation of the conflict in Ukraine may further disrupt supply chains and adversely impact business.

Future Outlook

The company expects international expansion to enhance profitability and broaden brand presence in emerging legal cannabis markets. It plans to continue launching new and innovative products in the Netherlands in 2026, with the Phase II facility in Groningen expected to be operational in Q2 2026, quintupling total annualized production to approximately 10,000 kilograms. The company believes it is poised to benefit from President Trump's Executive Order to reschedule marijuana, which could modernize U.S. cannabis policy and support a more aligned regulatory framework. If awarded a Texas medicinal license, the company plans to work with its listing authority to structure an acceptable ownership structure and comply with regulatory requirements. The conversion of the remaining half of the Delta 2 greenhouse to cannabis production is expected to commence in summer 2026, with sales ramping up in H2 2026 and full ramp-up in 2027, increasing cannabis production by 33%. The company believes its existing cash, cash generated from operations, and available credit facilities will provide sufficient liquidity for the next 12 months. Health Canada's proposed amendments to the Cannabis Tracking System Order are expected for consultation in fall 2026. The Netherlands Controlled Cannabis Supply Chain Experiment is scheduled to last for at least 4 years from April 7, 2025, with a potential extension of up to 18 months. The company is continuing to monitor the November 2025 Appropriations Act and assess strategic alternatives, as it could materially affect BHB's ability to sell most current product lines after November 12, 2026. The administrative proceedings for marijuana rescheduling remain stalled, with no briefing schedule set for the interlocutory appeal. The Attorney General retains authority to make scheduling decisions and is not required to await completion of the administrative hearing process to issue a final rule, which could render the pending ALJ hearing moot. CMS Administrator Dr. Mehmet Oz announced CMMI planning a model that would allow Medicare beneficiaries to receive hemp-derived CBD products at no charge if recommended by their physicians, potentially beginning as early as April 2026.

Management Comments

• Our mission is to apply decades of innovation in intensive agriculture to build a sustainable path forward for the global cannabis industry.
• We believe that Pure Sunfarms is the leading low-cost, high-quality producer in the Canadian market and its low-cost structure, primarily driven by economies of scale and large-scale greenhouse experience, is sustainable and provides a competitive industry advantage.
• Management expects that continued international expansion will enhance profitability while broadening the company's brand presence and capabilities in emerging legal cannabis markets.
• We believe our Canadian cannabis business is well-positioned for future growth with best-selling brands, backed by a low-cost large-scale structure and continued pursuit of future opportunities to expand sales, products and footprint in Canada and internationally.
• We believe that BHB is uniquely positioned to ensure seamless sourcing, manufacture and sale of its affordable, high-quality family of cannabinoid brands to target the diverse health and wellness needs and preferences of their consumers.
• In the event that the FDA regulates CBD, and the overall Food, Drug and Mass Merchandise (FDM) channel accepts ingestible CBD products, we believe that BHB is uniquely positioned to immediately capitalize on the opportunity.
• We believe we are poised to benefit from President Trump's Executive Order to reschedule marijuana, which, if enacted, would represent a consequential step in modernizing U.S. cannabis policy and support the development of a regulatory framework more aligned with international drug policies.
• We believe that our existing facilities are adequate for our needs. Should we require additional facilities in the future, we believe that such facilities can be acquired or leased on commercially reasonable terms.
• We believe that our existing cash, cash generated from our operating activities, together with availability under the Pure Sunfarms Secured Credit Facilities, will provide sufficient liquidity to meet our working capital needs, repayments of our long-term debt, future contractual obligations and planned capital expenditures for the next 12 months.

Industry Context

StockSavvy.ai notes that Village Farms International's strong performance in Canadian and Netherlands cannabis segments aligns with the global trend of increasing cannabis legalization and market expansion, particularly in medical and regulated recreational markets. The company's focus on low-cost, high-quality production positions it well against competitors in Canada. However, the challenges faced by its U.S. Cannabis segment due to evolving and restrictive CBD regulations reflect broader industry uncertainty in the fragmented U.S. market, where federal clarity is still lacking. The strategic move to convert more greenhouse space to cannabis production in Canada indicates confidence in the long-term growth of regulated markets, while the Netherlands' 'weed experiment' represents a unique, albeit time-limited, opportunity in a nascent European market. The potential rescheduling of marijuana in the U.S., as indicated by President Trump's executive order, could be a significant catalyst for the entire U.S. cannabis industry, potentially opening new avenues for companies like Village Farms, but regulatory hurdles remain substantial.

Comparison to Industry Standards

• Pure Sunfarms is described as 'one of the largest and most respected cannabis growers in the world' and 'the leading flower brand in Canada,' suggesting strong competitive positioning.
• Pure Sunfarms is also noted as 'one of the lowest-cost greenhouse producers' in Canada, providing a 'competitive industry advantage' compared to other licensed producers.
• Pure Sunfarms is believed to be 'the largest exporter of medicinal cannabis in the world,' indicating a leading position in international medical cannabis markets, potentially outperforming peers in export volumes to countries like Germany, the UK, Australia, New Zealand, and Israel.
• Rose LifeScience holds the 'number three position in Quebec in terms of market share during 2025,' demonstrating strong regional performance compared to other Quebec-based cannabis producers.
• Balanced Health Botanicals is described as 'one of the leading brands in the hemp-derived CBD and other cannabinoids markets' in the U.S., suggesting it holds a significant position in its niche despite broader market challenges.
• Leli Holland is one of 'ten licensed legal producers of cannabis in the Netherlands,' placing it among a select group in a unique, government-controlled experiment.
• The company's gross margin of 44% for Canadian Cannabis in 2025, up from 21% in 2024, indicates a significant improvement in profitability that may exceed industry averages, especially considering the price compression and oversupply issues mentioned in the Canadian market.
• The U.S. Cannabis segment's decline in sales due to 'proliferation of unregulated hemp-derived products' highlights a common challenge for compliant CBD companies, contrasting with the potentially lower-cost, less regulated offerings from competitors.

Management Changes

Corporate Governance

Legal Proceedings

• The Company is not involved in any legal proceedings other than ordinary routine litigation arising in the normal course of business, none of which the Company believes will have a material adverse effect on the Company's business, financial condition or results of operations.
• No environmental matters requiring disclosure pursuant to Item 103(c)(3) of Regulation S-K.

Related Party Transactions

• Leases its Rose office building from a Company employee who also owns a minority interest in Rose, with payments of C$253 thousand in 2025.
• A former employee related to an executive management team member received approximately $99 thousand in salary and benefits in 2025.
• Entered into a Transition Services Agreement and a multi-year Sales, Marketing & Distribution Agreement with Village Fresh (a Vanguard subsidiary) after the Produce Transaction. Recorded revenues of $21,999 thousand from Village Fresh in 2025, with outstanding receivables of $637 thousand.

Stakeholder Impact

• Shareholders: Positive impact from increased net income, Adjusted EBITDA, and share repurchase program. Potential for dilution from future equity issuances. Uncertainty regarding U.S. cannabis regulations could impact share price.
• Employees: New executive roles created (Global Chief Strategy Officer, CITO). Good working relationship with employees and competitive benefits. Labor availability is a risk, especially for foreign labor programs.
• Customers: Continued focus on high-quality products and customer service. New product innovations in the Netherlands. U.S. CBD customers face uncertainty due to potential recriminalization of many hemp-derived products.
• Suppliers: Reliance on third-party transportation services poses risks. Vendor settlements for ToBRFV losses indicate ongoing relationships.
• Creditors: Compliance with all financial covenants as of December 31, 2025, and successful waivers obtained in 2024. Amended credit facilities provide increased loan commitments and extended maturities.

Next Steps

• Continue international expansion to enhance profitability and broaden brand presence.
• Launch new and innovative products in the Netherlands in 2026.
• Complete construction of Phase II facility in Groningen, expected to be operational in Q2 2026.
• Monitor and assess strategic alternatives regarding the November 2025 Appropriations Act to mitigate impacts on the U.S. cannabis business.
• Continue working to ensure a fair and transparent process for marijuana rescheduling and advocate for Schedule III.
• If awarded a Texas medicinal license, set up a private company to own and operate it due to Nasdaq listing requirements.
• Commence cannabis production in the converted Delta 2 greenhouse in summer 2026, with sales ramping up in H2 2026 and full ramp-up in 2027.
• Health Canada's proposed amendments to the Cannabis Tracking System Order are expected for consultation in fall 2026.
• The Netherlands Controlled Cannabis Supply Chain Experiment will be evaluated after its experimental phase (at least 4 years from April 7, 2025) to determine if an extension will be granted.
• The Attorney General may finalize the marijuana rescheduling rule through direct agency action, potentially rendering the pending ALJ hearing moot.
• CMS Administrator Dr. Mehmet Oz announced CMMI planning a model for Medicare beneficiaries to receive hemp-derived CBD products at no charge if recommended by their physicians, potentially beginning as early as April 2026.

Key Dates

Recommendation

Village Farms International demonstrates strong operational execution and significant financial turnaround in 2025, with substantial increases in net income and Adjusted EBITDA driven by robust Canadian and Netherlands cannabis segment growth. The company's strategic international expansion and leading market positions in key cannabis categories are compelling. While regulatory uncertainty in the U.S. CBD market and the stalled federal rescheduling process present headwinds, the company's proactive share repurchase program and improved liquidity indicate management confidence. The potential for U.S. federal cannabis reform, as hinted by the Executive Order, could unlock substantial future value. The remediation of internal control weaknesses also signals improved operational integrity. For investors with a higher risk tolerance, the current valuation may not fully reflect the company's growth trajectory and potential catalysts in the evolving global cannabis landscape.

Keywords

Cannabis, Hemp, CBD, Produce, Renewable Natural Gas, SEC Filing, 10-K, Financial Results, Market Share, International Expansion, Regulatory Risk, Share Repurchase, Controlled Environment Agriculture, Pure Sunfarms, Rose LifeScience, Balanced Health Botanicals, Leli Holland, Vanguard Food LP