Blum Holdings Inc's Business Segments

The registrant operates in the cannabis industry, focusing on the development and sale of cannabis products and dispensary businesses. Its activities include obtaining necessary permits, expanding its product line, and maintaining relationships with manufacturers and strategic partners to utilize its intellectual property. The company faces risks such as competition from synthetic products, challenges inherent to agricultural businesses, and potential unfavorable consumer perception. It has undergone significant operational changes that complicate forecasting and profitability. Historically, the registrant has incurred substantial losses, reporting a net income of $33.1 million for the year ended December 31, 2024, and an accumulated deficit of $421.08 million as of that date. The company anticipates requiring additional capital to sustain operations, which may be difficult to secure due to the federal illegality of marijuana and other factors. Its subsidiaries, Unrivaled Brands, Inc. and Halladay Holding, LLC, have filed for Chapter 11 bankruptcy, presenting additional risks. The registrant's financial reporting contains material weaknesses, and its independent auditor has qualified its ability to continue as a going concern. The company is engaged in negotiations for settlements and debt restructuring but cannot guarantee successful outcomes. Overall, the registrant is an early-stage company with limited capital resources, facing significant operational, financial, and regulatory challenges that may materially impact its business and stockholder value.

The Company operates in two segments: Cannabis Retail and Cannabis Distribution. The Cannabis Retail segment involves operating medical marijuana and adult-use cannabis dispensaries in California, offering a range of products including flower, concentrates, and edibles. The Cannabis Distribution segment involves distributing the Company's branded products under the Korova brand, as well as third-party products, to retail dispensaries in California through a licensed distributor. The Chief Executive Officer serves as the chief operating decision maker, reviewing consolidated and segment financial information, including revenue, gross profit, operating income, and income (loss) before taxes, to assess performance and allocate resources. For the year ended December 31, 2024, Cannabis Retail generated $12,801,000 in revenue, representing 98.5% of total revenue, while Cannabis Distribution generated $189,000, or 1.5% of total revenue. For the year ended December 31, 2023, Cannabis Retail generated $7,440,000, or 95.9% of total revenue, and Cannabis Distribution generated $316,000, or 4.1% of total revenue.