MRMD

• Overall Quarterly Performance

  • The quarter delivered the highest quarterly revenue in company history, with positive year-over-year and sequential growth across both segments, a sequential increase in adjusted EBITDA, and positive operating cash flow.
  • The balance sheet remains healthy, providing flexibility for strategic investments and market changes.
  • Non-GAAP adjusted gross margin held steady at 40% sequentially, and adjusted EBITDA came in at $3.9 million, up 10% sequentially from $3.6 million in Q1 2026.

• Branded Product & Wholesale Operations

  • The company's branded product portfolio grew 70 basis points faster than the broader cannabis industry across core markets, gaining or maintaining market share across most core categories. Distribution expanded 100 basis points sequentially to 85% of available core market storefronts (trailing 12-month).
  • Top-performing brands hold leading positions: Betty's Eddies is the #1 edible brand across wholesale markets (already #3 in Maine after a late 2025 launch), with other key brands holding top 10 market share positions in their categories.
  • Newer brand Nature's Heritage has gained significant traction in Illinois, improving market share rankings by at least 10 positions across its vape, pre-roll, and concentrate lines.

• Retail Operations

  • In response to industry-wide average order volume pressure from pricing competition, the company focused on growing customer engagement and repeat visits rather than aggressive discounting. Key initiatives include expanding the ThriveWorks loyalty program, targeted promotions, localized marketing, and in-store customer events.
  • These efforts delivered a 7% sequential increase in transactions, and Thrive Perks loyalty membership has grown 14% year-to-date; loyalty members have stronger purchasing behavior than non-members, supporting long-term repeat revenue.
  • The Massachusetts market faces ongoing pressure from high dispensary per capita saturation that drives elevated promotional activity and price compression, particularly at the Quincy and Middleborough locations. The company is actively working to improve throughput and customer experience at these stores.

• Strategic Growth Priorities

  • The core growth strategy is to build a leading national cannabis consumer product company with top-selling brands in high-demand categories, focused on product innovation, deepening presence in existing markets, and capital-light entry to new markets.

• Pricing and margin pressure from industry-wide competition is viewed as transitional rather than structural, with clear long-term opportunity for margin expansion as cultivation utilization improves, newer operations mature, and the branded wholesale business scales.
  • The new Columbus, Ohio dispensary remains on schedule to open and begin contributing revenue in 2026, and will add higher-margin retail revenue that supports overall margin improvement in the second half of the year.
  • The planned New York market launch remains on schedule for the first half of 2027.
  • Management expects to maintain disciplined operating expense control (excluding isolated one-time items) in the second half of 2026, with existing operational levers expected to hold margins steady through the end of the year.
  • Additional clarity on U.S. federal cannabis policy reforms, including potential recreational cannabis rescheduling, 280E tax relief, and banking reform, is expected by the end of 2026.

Consolidated total revenue hit a new quarterly record of $41.9 million, up 6% sequentially and 6% year over year.

• Wholesale Segment: Revenue increased 6% sequentially and 8% year over year. Wholesale contributed 44% of total product revenue. Sequential wholesale growth was 4% in Illinois, 13% in Maryland (following resolution of prior isolated manufacturing issues).
• Retail Segment: Revenue increased 7% sequentially and 4% year over year. 12 of the company's 13 dispensaries achieved sequential revenue growth, and 10 of 13 achieved sequential transaction growth. Sequential retail growth was 7% across the 5-store Illinois network, and 32% in Delaware driven by seasonal tourism.

• The cannabis industry remains highly competitive with ongoing widespread price compression across most markets, and elevated promotional activity that pressures gross and EBITDA margins.
  • The Massachusetts market faces structural saturation pressure from one of the highest dispensary per capita ratios in the U.S., which drives continued pricing pressure and margin compression for the company's locations in the state.
  • One wholesale partner operating across multiple of Meramed's markets declared bankruptcy in Q2 2026, leading to a one-time receivable write-off that increased operating expenses for the quarter; management notes this is expected to be an isolated incident.
  • All forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from management expectations, as detailed in the company's SEC filings.
  • Federal cannabis policy changes remain uncertain, though management expects incremental clarity by the end of 2026.

Q: Can you detail Illinois retail performance, and confirm how many stores Meramed operates in the state? / A: Meramed has 5 retail stores in Illinois, which delivered 7% sequential revenue growth. Growth is driven by customer experience-focused strategies including loyalty programs, targeted promotions, and thoughtful pricing. Additional tailwinds include favorable impacts from hemp regulations in nearby Tennessee and new rules increasing customer purchase allotments, which are expected to continue supporting performance.

Q: What is the current state of the Massachusetts market for Meramed — has it stabilized, or does price compression continue? / A: Massachusetts delivered 4% sequential overall growth, which is more stable than in past periods, but it remains a challenging operating environment. Meramed holds strong brand share in the market, and will continue focusing on growing share, extending leadership in key categories, and outperforming competitors despite ongoing industry pressure.

Q: Meramed maintained stable margins while most other multi-state operators have seen margin declines — what is your margin expectation for the second half of 2026? / A: Improved cultivation utilization and manufacturing efficiencies have offset pricing pressure in some markets, and a sequential shift to higher-margin retail revenue also supported steady margins. These same factors, plus the addition of the new higher-margin Ohio dispensary, are expected to support stable margins through the second half of 2026.

Q: What is the status of your DEA registration following cannabis rescheduling, and have you applied in all operating states? / A: Meramed has submitted DEA registration applications for all states where it holds medical cannabis licenses. The first DEA inspection is scheduled within the next week, and the company is positioned to benefit from ongoing progress on federal cannabis reform.