Issue #47

When the cycle turns, these names may already be ahead

The cannabis industry is entering a defining phase — where survival is no longer about hype or expansion at any cost, but about profitability, scale, and regulatory endurance. After years of margin pressure, oversupply, and policy uncertainty, a clear separation is emerging between companies merely staying afloat and those positioning themselves for the next upcycle.

👉 One company is the digital backbone of the U.S. cannabis ecosystem, monetizing software and advertising while staying profitable even in a downturn.
👉 The other is a market-leading producer executing a real turnaround, backed by scale, operational discipline, and a powerful strategic partner.
👉 Both trade at depressed valuations — yet each offers leverage to a potential regulatory and industry reset.

In this edition, we break down two cannabis stocks under $2 that represent very different approaches to winning in a constrained market — and why patient investors are starting to look ahead to what comes next.

WM Technology (NASDAQ: MAPS)

WM Technology, Inc. (NASDAQ: MAPS) is a leading software and technology solutions provider for the cannabis industry, best known for operating the popular online marketplace, Weedmaps. Founded in 2008, the company has positioned itself as the essential digital infrastructure connecting cannabis businesses—retailers and brands—with consumers in U.S. state-legal and international markets. WM Technology aims to streamline operations, ensure compliance, and drive growth for businesses in this highly regulated sector.

Business Model and Revenue Streams 📦

WM Technology operates a two-sided marketplace and offers a suite of B2B software, generating high-margin, recurring revenue, primarily from the businesses on its platform.

• Online Marketplace and Advertising (Weedmaps): This is the core revenue driver, functioning as a directory and e-commerce platform where consumers can discover products, view daily deals, and place orders for pickup or delivery from participating licensed retailers. Revenue is generated from two main sources:
• Subscription-Based Listings (SaaS): Licensed cannabis retailers and brands pay monthly subscription fees to list their menus, products, and general information on the Weedmaps platform (WM Listings). This forms a predictable, recurring revenue base.
• Advertising (WM Ads): Businesses purchase higher-visibility placements, such as Featured and Deal Listings and other advertising solutions, to drive traffic and sales, serving as a higher-margin, discretionary spending stream.
• Business Software Solutions (WM Business): The company also provides various e-commerce and compliance software tools (WM Orders, WM Store, WM Connectors, WM Insights) to help businesses manage their operations efficiently and comply with complex state regulations.

Impact of Current Macroeconomic Policies:

The cannabis industry exists in a unique and challenging macroeconomic environment driven by regulatory policy. The persistent federal prohibition (Schedule I classification) forces cannabis-related businesses (CRBs) to operate with significant hurdles, including the inability to access traditional banking services and the impact of the Section 280E tax code, which disallows CRBs from taking normal business deductions, leading to extraordinarily high effective tax rates.

This creates an intense pricing and margin compression environment for WM Technology's clients. As their retailer and brand customers feel the financial pinch, they reduce discretionary spending, directly impacting MAPS's higher-margin revenue from Featured and Deal Listings. While WM Technology is an ancillary business and not directly affected by 280E, its revenue is highly dependent on the financial health of its customers. The company notes this pressure is particularly acute in mature markets.

Recent Performance and Corporate Developments 📈

WM Technology continues to navigate a challenging market, focusing on operational discipline to maintain a positive bottom line.

Q3 2025 Financial Highlights: 💰

• Total Revenue: $42.2 million, a 9% year-over-year decline and a miss on analyst expectations. This decline was attributed to persistent pricing and margin pressure in core markets, which weighed on clients' marketing budgets, particularly for premium advertising placements.
• Net Income (GAAP): $3.6 million, a decrease from $5.3 million in the prior-year period, but marking the seventh consecutive quarter of positive net income.
• Adjusted EBITDA: $7.6 million, a decrease from the prior year, though the company cited effective cost management and operational efficiency as key to maintaining profitability.
• Client Metrics: Average Monthly Paying Clients increased to 5,221 (up 2% YoY), driven by new acquisitions in developing cannabis markets. However, Average Monthly Revenue per Paying Client decreased significantly to $2,693 (down 12% YoY), reflecting the reduced discretionary spending from clients.

Strategic Initiatives and Mergers: 🤝

There were no significant mergers or acquisitions in the most recent quarter. The company's strategic focus is entirely on operational efficiency and cost discipline. Management has emphasized a strategy of "control what we can control," which involves reducing personnel-related and product development costs while focusing on long-term growth by acquiring new clients in emerging markets and exploring international expansion opportunities. The company has an exceptional balance sheet, ending Q3 2025 with $62.6 million in cash and no debt, which provides a strong cushion for future strategic investment.

Path to Profitability and Fair Value 🎯

WM Technology has achieved profitability, reporting consistent GAAP net income, primarily through aggressive cost-cutting measures and efficient platform management. The path to sustained and growing profitability hinges on two factors:

1. Macro/Regulatory Headwinds: The greatest catalyst for a revenue growth rebound would be federal regulatory reform, such as the passage of the SAFE Banking Act or outright federal legalization/descheduling. Such a move would significantly ease the financial burden on their clients (CRBs), immediately freeing up capital for increased advertising spend on the Weedmaps platform.
2. Monetization of New/Emerging Markets: The company's growth in paying clients is coming from new and developing markets. As these markets mature and regulations stabilize, the average revenue per client is expected to increase, offsetting the declines seen in established states.

In terms of fair value, the stock's current price-to-earnings (P/E) ratio of approximately 14.53 is relatively low compared to the average P/E of the overall business services sector, which could suggest it is undervalued when considering its dominant position as the essential tech platform in a high-growth (though currently challenged) industry. Its strong cash position and debt-free balance sheet further support a valuation floor. The stock's current price is around $1.10.

Analyst Estimates and Ratings: 📊

• Consensus Rating: The consensus rating from the limited analyst coverage is a "Hold". However, the most recent individual firm rating in the last 30 days is a "Strong Buy" from Westpark Capital, which reiterated its rating.
• Price Target: The average 12-month price target is approximately $2.61, representing a substantial potential upside of over 100% from the current share price. The highest and lowest targets currently match the average.

Investor-Focused Takeaway: Is MAPS Right for Your Portfolio?

WM Technology offers investors exposure to the cannabis sector through a capital-light software model, insulating it from the direct risks of cultivation and inventory management. The stock's current valuation appears heavily discounted due to the ongoing regulatory and macroeconomic pressures crippling its clients' spending power.

What to Watch in the Near Term: 📈

• Federal Regulatory Reform: Any movement on federal legalization or banking reform would be an immediate and powerful catalyst for the stock, as it would directly inject capital into the customer base.
• Average Revenue Per Paying Client (ARPPC): Monitor this metric. An increase would signal that pricing pressure is easing or that new clients are beginning to scale their spending.
• Cash Reserves: The company’s strong cash balance and positive cash flow should be watched as the source for future strategic investments in technology or market expansion.

Recommendation:

WM Technology (MAPS) represents a high-risk, high-reward bet on the maturation and eventual regulatory reform of the US cannabis market. While its recent earnings show revenue contraction, the company has proven it can remain profitable through disciplined cost management. The significant gap between the current share price and the average analyst price target suggests a belief in a major market turnaround, making it a potential Strong Buy for investors with a high-risk tolerance and a long-term view of the cannabis industry's future.

Organigram Holdings Inc. (NASDAQ: OGI)

Organigram Holdings Inc. (NASDAQ: OGI) is a major Canadian Licensed Producer (LP) focused on cultivating, processing, and supplying cannabis products for the recreational adult-use and medical markets in Canada, as well as for select international medical markets. The company has successfully shifted its focus to high-volume, high-quality, and popular product categories, aiming for dominance in the competitive Canadian landscape.

Business Model and Revenue Streams 📦

Organigram’s business model is vertically integrated, spanning cultivation and processing to distribution of a diversified portfolio of cannabis products. The company benefits significantly from a strategic partnership with a global tobacco giant.

• Core Product Sales (Recreational and Medical): This is the primary revenue stream, generated from the sale of a wide array of products across various price points, including dried flower, pre-rolls (especially under the popular SHRED brand), vapes, edibles (like SHRED’ems gummies), and concentrates. Sales are channeled through provincial and territorial wholesalers and retailers in Canada.
• International Sales: OGI is expanding its global footprint by exporting medical cannabis to international partners, particularly in Germany and Australia. This segment offers higher average selling prices and margins compared to the bulk of the Canadian recreational market.
• Strategic Partnership Revenue: The company has a significant strategic investment and product development partnership with British American Tobacco (BAT). This relationship provides a crucial injection of capital and an exclusive collaborative Product Development Collaboration (PDC) agreement to develop next-generation cannabis products, offering a competitive edge and potential future revenue from innovative formats.
• New U.S. Hemp-Derived Products: OGI has recently initiated sales of hemp-derived THC beverages in the U.S. under its newly launched happly brand, allowing it to generate revenue from the massive U.S. consumer market without violating federal cannabis prohibition.

Impact of Current Macroeconomic Policies:

Unlike U.S. operators, Canadian LPs like OGI operate in a federally legal environment. However, they face immense price compression and oversupply within the highly fragmented Canadian market. Macroeconomic policies, particularly high excise taxes levied by the Canadian government, remain a significant headwind, drastically reducing the net revenue and margins for LPs. OGI’s focus on high-margin product categories and stringent cost-management, bolstered by the large BAT investment, has allowed it to better withstand these pressures compared to many peers. The recent launch of U.S. hemp-derived products is a strategic move to access growth outside of the saturated Canadian regulatory structure.

Recent Performance and Corporate Developments 📈

Organigram has shown strong revenue momentum and improved operational efficiency, driven by strategic acquisitions and market share gains, positioning it as a Canadian market leader.

Q3 Fiscal 2025 Financial Highlights (CAD): 💰

• Net Revenue: Reported a record $70.8 million (approximately $51.14 million USD), representing a substantial 72% increase year-over-year, and beating analyst consensus. This growth was attributed to the full quarter contribution from the Motif Labs acquisition, organic growth in recreational sales, and a surge in international exports.
• Adjusted Gross Margin: The margin was approximately 31.9%, indicating improved operational performance.
• Adjusted EBITDA: The company reported $5.7 million in Adjusted EBITDA, marking its second consecutive quarter of positive Adjusted EBITDA, a critical sign of operational leverage and efficiency.
• Net Income (GAAP): OGI reported a net loss of $0.03 per share, missing the consensus estimate of a -$0.01 loss, mainly due to one-off items and higher costs associated with the integration of recent acquisitions.

Strategic Initiatives and Mergers: 🤝

• Market Leadership: The company successfully secured the #1 market share position in the competitive Canadian recreational cannabis market (as of recent internal estimates).
• Acquisition Synergy: The acquisition of Motif Labs in December 2024 is on track to deliver an estimated $15 million in annualized cost synergies, providing a major boost to future margins.
• U.S. Expansion: The launch of the happly hemp-derived THC beverage brand in the U.S. in October 2025 marks a concrete step towards diversifying revenue geographically and entering the high-growth U.S. functional beverage space.
• New CEO: In November 2025, OGI announced the appointment of James Yamanaka, formerly the Global Head of Strategy for British American Tobacco, as its new CEO, effective January 2026. This move strongly reinforces the strategic alignment and partnership with BAT.

Path to Profitability and Fair Value 🎯

Organigram has demonstrated a clear path to achieving sustained profitability, having successfully delivered positive Adjusted EBITDA for two consecutive quarters, with the goal of achieving positive Free Cash Flow by the end of Fiscal Year 2026.

This path is driven by:

1. Cost Synergies and Efficiency: Fully realizing the $15 million in cost synergies from the Motif Labs acquisition and continued capital expenditure discipline.
2. Higher-Margin Channels: Increasing the contribution of international sales and new, high-value product formats (like vapes, edibles, and beverages) developed through the BAT partnership.
3. Market Share Leverage: Using its #1 market share position in Canada to command more favorable terms with provincial buyers and leverage its production scale.

In terms of fair value, Organigram is considered by several analysts to be trading at a discount. With a Price-to-Sales (P/S) ratio of approximately 1.33 and a Price-to-Book (P/B) ratio of less than 1 (around 0.92), the company appears significantly undervalued relative to its growth rate, strong balance sheet (aided by BAT's investment), and proven operational turnaround. The stock is currently trading around $1.81.

Analyst Estimates and Ratings: 📊

• Consensus Rating: The consensus rating from analysts is a "Strong Buy". Recent ratings have consistently been "Buy" or "Outperform" from firms including Canaccord Genuity and ATB Capital Markets.
• Price Target: The average 12-month price target is approximately $3.00 CAD (roughly $2.19 USD at current exchange rates), suggesting a potential upside of around 20% to 30% from the current share price, with some targets as high as $3.60 CAD. Crucially, all analyst ratings over the last six months have been either "Buy" or "Outperform."

Investor-Focused Takeaway: Is OGI Right for Your Portfolio?

Organigram Holdings Inc. is a leading Canadian cannabis producer that has executed a successful operational turnaround, evidenced by its record revenue and consecutive positive Adjusted EBITDA quarters. The core investment thesis rests on its confirmed market leadership in Canada and the strategic, capital-backed relationship with BAT, which provides stability, access to R&D, and a clear expansion pathway into the U.S. hemp-derived market.

What to Watch in the Near Term: 📈

• Q4 Fiscal 2025 Earnings (Dec 16, 2025): The upcoming earnings release will be crucial to see if OGI can sustain revenue growth and continue its positive Adjusted EBITDA streak.
• Synergy Realization: Monitor the progress on the $15 million in cost synergies; this is key to translating Adjusted EBITDA into sustained GAAP profitability.
• U.S. Hemp Growth: Watch for updates on the distribution and sales performance of the new U.S. hemp-derived products, which represents a critical growth engine.

Recommendation:

Organigram (OGI) is viewed as a compelling Strong Buy opportunity among Canadian LPs. Its combination of dominant market share, financial discipline, a robust balance sheet, and a powerful strategic partner in BAT significantly de-risks the investment and provides a clear and funded path toward sustainable long-term profitability and growth.

Final Take: Two Cannabis Survivors Built for the Next Cycle

The cannabis sector isn’t about hype anymore — it’s about who can endure, adapt, and profit while waiting for the next regulatory and demand-driven upcycle. WM Technology (MAPS) and Organigram (OGI) represent two very different, but highly complementary, ways to position for what comes next.

💻 WM Technology (MAPS) — The Picks-and-Shovels Play
✔ Profitable, capital-light SaaS and advertising model
✔ Essential digital infrastructure for U.S. cannabis operators
✔ Strong balance sheet with no debt and meaningful cash reserves
➤ Best for: Investors looking for leveraged upside to U.S. regulatory reform without cultivation risk.

🌱 Organigram (OGI) — The Turnaround Leader
✔ #1 market share in Canada with record revenue
✔ Consecutive positive Adjusted EBITDA quarters
✔ Backed by British American Tobacco with U.S. expansion optionality
➤ Best for: Investors seeking an operational turnaround with scale, discipline, and strategic backing.

Investor Insight

💡 Want software-driven resilience with regulatory upside? → MAPS
​ 🚀 Want production scale, execution, and a clear profitability path? → OGI

Bottom Line:

These are not speculative lottery tickets — they are survivors in a shaken-out industry. With depressed valuations, improving fundamentals, and optionality tied to regulatory change, MAPS and OGI offer patient investors a way to position before sentiment turns.

When the cannabis cycle resets, the companies that stayed profitable, disciplined, and relevant are the ones that tend to lead the recovery — not the ones chasing growth at any cost.

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Happy Trading
​— Team Premium Stock Alerts