GTBIF

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How GTBIF rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

Text kept

81%

of sentences unchanged

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new sentences

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sentences removed

Length

+205

words, now 16,324

New in FY2025

These risks include, among others, the following: • Cannabis remains illegal under U.S. federal law, and enforcement of cannabis laws could change. • Future state regulation of cannabis is uncertain. • We may not be able to obtain or maintain necessary permits and authorizations. • We may face limitations on ownership of cannabis licenses. • We may become subject to U.S.
Food and Drug Administration or Bureau of Alcohol, Tobacco, Firearms and Explosives regulation. • As a cannabis business, we are subject to applicable anti-money laundering laws and regulations and have restricted access to banking and other financial services. • We may face difficulties acquiring additional financing. • We operate in a highly regulated sector and may not always succeed in complying fully with applicable regulatory requirements in all jurisdictions where we carry on business. • We face intense competition. • We face competition from the illicit market as well as actual or purported 2018 Farm Bill compliant hemp products. • We are dependent on the popularity and of consumer acceptance of our brand portfolio, which we license from a third party. • We have limited trademark protection. • As a cannabis business, we are subject to unfavorable U.S. tax treatment and may incur significant tax liability. • We are subject to proceeds of crime statutes. • We face exposure to fraudulent or illegal activity. • We face risks due to industry immaturity or limited comparable, competitive or established industry best practices. • We face risks related to our products. • Our business is subject to the risks inherent in agricultural operations. • We face an inherent risk of product liability and similar claims. • Our products may be subject to product recalls. • We may face unfavorable publicity or consumer perception. • We may be adversely impacted by rising or volatile energy costs and availability. • We face risks related to our information technology systems and potential cyber-attacks and security breaches. • We rely on third-party software providers for numerous capabilities we depend upon to operate, and a disruption of one or more or more of these systems could adversely affect our business. • We rely on the expertise of our management team and other employees experienced in the cannabis industry, and the loss of key personnel could negatively affect our business, financial condition and results of operations. • Our voting control is concentrated. • Our capital structure and voting control may cause unpredictability. • Sales of substantial amounts of Subordinate Voting Shares by our shareholders in the public market may have an adverse effect on the market price of our Subordinate Voting Shares.
The Controlled Substances Act (21 U.S.C. § 811) classifies cannabis as a Schedule I controlled substance, and as such, medical and adult-use cannabis use is illegal under U.S. federal law.
In those states in which the use of cannabis has been legalized, its use remains a violation of federal law pursuant to the Controlled Substances Act.
Even if cannabis is re-scheduled to Schedule III under the Controlled Substances Act by executive order or legislative action, medical and adult-use cannabis would remain illegal under U.S. federal law without additional statutory changes.
Federal law regarding cannabis is a significant risk and would greatly harm our business, prospects, revenue, results of operation and financial condition.
As of December 31, 2025, 40 states (and the territories of Guam, Puerto Rico, the U.S.
Ten of those states legalized adult-use sales within the last five years.
In 2024 and 2025, two states legalized (Nebraska) or expanded (Texas) medical cannabis access.
Future state regulation of cannabis is uncertain.
For example, in 2025, citizen ballot initiatives in three states have sought to repeal all or some portion of their state’s adult-use cannabis laws.
Although the Company’s operations are legal under the laws of the states in which the Company’s business operates, local governments have the ability to limit, restrict and ban cannabis businesses from operating within their jurisdiction.
We have investments in companies, including RYM, that produce, sell and/or market hemp-derived THC products.
While the hemp-derived THC products we have invested in, to our knowledge, are not intended for use in the diagnosis, cure, mitigation, treatment, or prevention of a disease or condition, we can provide no assurance that those products or operations will be deemed in compliance with federal regulations, including those enforced by the Food and Drug Administration, which could severely impair or eliminate the value of our investments.
More recently, the 2026 Appropriations Act, enacted on November 12, 2025, includes a provision (section 781) to amend the definition of hemp in the 2018 Farm Bill to effectively eliminate the currently commercialized hemp-derived THC products.
There can be no guarantee or assurance whatsoever that the upcoming federal prohibition of hemp-derived THC products will be resolved favorably for the hemp derived products industry.
Additionally, various states and municipalities have declared that the sale of certain hemp-derived products are illegal.
Aggressive law enforcement against the hemp-derived products industry by federal, state or local authorities and agencies may have a material adverse effect on the value of our investments in companies that produce hemp-derived products.
While it has not done so in the more than ten years since the FinCEN Memorandum, the Department of Justice continues to have the right and power to prosecute crimes committed by banks and financial institutions, such as money laundering and violations of the Bank Secrecy Act, that occur in any state including states that have in some form legalized the sale of cannabis.
Thus, most banks and other financial institutions in the United States do not appear comfortable providing banking services to cannabis-related businesses or relying on this guidance given that it has the potential to be amended or revoked by the current or future administrations.
There is renewed interest in banking reform following President Trump’s Executive order directing the Department of Justice to reschedule cannabis, however, there can be no assurance that it will be passed as presently proposed or at all.
Furthermore, the effect of relevant governmental authorities’ administration, application and enforcement of their respective regulatory regimes and delays in obtaining, or failure to obtain, applicable regulatory approvals which may be required may significantly delay or impact the development of markets, products and sales initiatives and could have a material adverse effect on our business, prospects, revenue, results of operation and financial condition.
Noncompliance with state law could also make the Company a target for federal criminal enforcement.
Additionally, governmental authorities may change their administration, application or enforcement procedures at any time, which may adversely impact our ongoing costs relating to regulatory compliance.
Additionally, if cannabis is rescheduled to a Schedule III drug, there may be a surge of additional competitors in the market, including from well-capitalized companies such as those in the pharmaceutical, tobacco, or alcohol industries.
Because of the early stage of the industry in which we operate, we face additional competition from new entrants.
We face competition from the illicit market as well as actual or purported 2018 Farm Bill compliant hemp products.
In addition to the competitor types discussed above, we face and expect to continue to face competition from hemp-derived THC products and illicit cannabis businesses, some of which are unlicensed and unregulated.
At least until November 2026, hemp-derived THC products are generally not subject to the intensive and costly state-level regulatory regimes that medical and adult-use cannabis are subject to.
In addition, although not subject to the same quality and health and safety regulations applicable to medical and adult-use cannabis businesses, if hemp-derived THC products cause harm to their users, that could result in a material adverse effect on the perception of cannabis use and its legality.
We are dependent on the popularity of consumer acceptance of our brand portfolio, which we license from a third party.
As the number of available cannabis licenses increase in the markets in which we operate, and the illicit market and hemp-derived THC products proliferate, additional competition and increased product availability may result in competitors undercutting our prices.
We license our consumer packaged goods brands, including &Shine, Beboe, Dogwalkers, Doctor Solomon’s, Good Green, incredibles and RYTHM, from RYM, a third party of which we own approximately 33% of the outstanding common stock.
We pay RYM a monthly license fee based on sales of products using the licensed intellectual property.
Our license agreements with RYM automatically terminates upon certain insolvency events involving our indirect, wholly owned subsidiary, GTI Core, LLC, and may be terminated by GTI Core, LLC beginning on the five-year anniversary of the license agreement which is August 27, 2030.
If the license agreement were to terminate, we may need to rebrand our products, which may necessitate a reduction in our prices, which could materially reduce our revenues, and our future growth may depend upon our ability to maintain our licensing arrangements with RYM.
We need more double-blind placebo clinical trials in the U.S. to demonstrate the benefits of cannabis or isolated cannabinoids (such as CBD and THC), safe dosing, and safe and effective product formats for specific medical conditions.
Further, because of the federal illegality of cannabis and associated limits on our ability to properly fund and conduct research on cannabis and the lack of formal Food and Drug Administration oversight of cannabis, there is limited information about the long-term safety and efficacy of cannabis in it various forms, when combusted or combined with various cannabis and/or non-cannabis derived ingredients and materials or when ingested, inhaled or topically applied.
Under Section 280E of the IRC, no deduction or credit shall be allowed for any amount paid or incurred during the taxable year in carrying on any trade or business if such trade or business (or the activities which comprise such trade or business) consists of trafficking in controlled substances (within the meaning of Schedule I and II of the Controlled Substances Act) which is prohibited by Federal law or the law of any state in which such trade or business is conducted.
While Section 280E may have a lesser impact on cannabis cultivation and manufacturing operations, it has outsized impacts on retail operations.

and 15 more.

Gone since FY2024

These risks include, among others, the following: • Cannabis remains illegal under U.S. federal law, and enforcement of cannabis laws could change. • State regulation of cannabis is uncertain. • We may not be able to obtain or maintain necessary permits and authorizations. • We may face limitations on ownership of cannabis licenses. • We may become subject to U.S.
Food and Drug Administration or Bureau of Alcohol, Tobacco, Firearms and Explosives regulation. • As a cannabis business, we are subject to applicable anti-money laundering laws and regulations and have restricted access to banking and other financial services. • We may face difficulties acquiring additional financing. • We operate in a highly regulated sector and may not always succeed in complying fully with applicable regulatory requirements in all jurisdictions where we carry on business. • We face intense competition. • We face competition from the illicit market as well as actual or purported Farm Bill compliant hemp products. • We are dependent on the popularity and of consumer acceptance of our brand portfolio. • We have limited trademark protection. • As a cannabis business, we are subject to unfavorable U.S. tax treatment and may incur significant tax liability. • We are subject to proceeds of crime statutes. • We face exposure to fraudulent or illegal activity. • We face risks due to industry immaturity or limited comparable, competitive or established industry best practices. • We face risks related to our products. • Our business is subject to the risks inherent in agricultural operations. • We face an inherent risk of product liability and similar claims. • Our products may be subject to product recalls. • We may face unfavorable publicity or consumer perception. • We may be adversely impacted by rising or volatile energy costs and availability. • We face risks related to our information technology systems and potential cyber-attacks and security breaches. • We rely on third-party software providers for numerous capabilities we depend upon to operate, and a disruption of one or more or more of these systems could adversely affect our business. • We rely on the expertise of our management team and other employees experienced in the cannabis industry, and the loss of key personnel could negatively affect our business, financial condition and results of operations. • Our voting control is concentrated. • Our capital structure and voting control may cause unpredictability. • Sales of substantial amounts of Subordinate Voting Shares by our shareholders in the public market may have an adverse effect on the market price of our Subordinate Voting Shares.
Cannabis is illegal under U.S. federal law.
In those states in which the use of cannabis has been legalized, its use remains a violation of federal law pursuant to the Controlled Substances Act (21 U.S.C. § 811).
The Controlled Substances Act classifies cannabis as a Schedule I controlled substance, and as such, medical and adult-use cannabis use is illegal under U.S. federal law.
Even if cannabis is re-scheduled to Schedule III under the Controlled Substances Act, medical and adult-use cannabis would remain illegal under U.S. federal law without additional statutory changes.
Since federal law criminalizing the use of cannabis pre-empts state laws that legalize its use, enforcement of federal law regarding cannabis is a significant risk and would greatly harm our business, prospects, revenue, results of operation and financial condition.
As of December 31, 2024, 40 states (and the territories of Guam, Puerto Rico, the U.S.
Ten of those states legalized adult-use sales within the last four years.
Two states legalized medical cannabis in 2024.
State regulation of cannabis is uncertain.
Federal actions against any individual or entity engaged in the cannabis industry or a substantial repeal of cannabis related legislation could adversely affect the Company, our business and our assets or investments.
Although the Company’s operations are legal under the laws of the states in which the Company’s business operate, local governments have the ability to limit, restrict and ban cannabis businesses from operating within their jurisdiction.
An immaterial portion of our business in the last fiscal year involved products containing psychoactive hemp.
Our psychoactive hemp-derived products are not intended for use in the diagnosis, cure, mitigation, treatment, or prevention of a disease or condition.
We can provide no assurance that our products or operations will be deemed in compliance with federal regulations, including those enforced by the Food and Drug Administration.
In deference to the Food and Drug Administration, various states and municipalities have declared that the sale of certain hemp-derived products are illegal.
There can be no guarantee or assurance whatsoever that the Food and Drug Administration’s regulatory concerns about hemp-derived products will be resolved favorably for the hemp derived products industry.
Aggressive law enforcement against the hemp-derived products industry by federal, state or local authorities and agencies may have a material adverse effect on us and the trading price of our Subordinate Voting Shares.
The FinCEN Memorandum refers to the Cole Memorandum’s enforcement priorities.
The Department of Justice continues to have the right and power to prosecute crimes committed by banks and financial institutions, such as money laundering and violations of the Bank Secrecy Act, that occur in any state including states that have in some form legalized the sale of cannabis.
Thus, most banks and other financial institutions in the United States do not appear comfortable providing banking services to cannabis-related businesses or relying on this guidance given that it has the potential to be amended or revoked by the current administration.
The potential future passage of the bill is further complicated by the change in party control and the current narrow majorities in both chambers of the U.S.
There can be no assurance that it will be passed as presently proposed or at all.
The effect of relevant governmental authorities’ administration, application and enforcement of their respective regulatory regimes and delays in obtaining, or failure to obtain, applicable regulatory approvals which may be required may significantly delay or impact the development of markets, products and sales initiatives and could have a material adverse effect on our business, prospects, revenue, results of operation and financial condition.
Furthermore, governmental authorities may change their administration, application or enforcement procedures at any time, which may adversely impact our ongoing costs relating to regulatory compliance.
Because of the early stage of the industry in which we operate, we face additional competition from new entrants, participants in the illicit market that face significantly lower costs to operate, and sellers of unregulated psychoactive hemp-based products.
We face competition from the illicit market as well as actual or purported Farm Bill compliant hemp products.
We face and expect to continue to face competition from unregulated psychoactive hemp-based products, including actual or purported Farm Bill compliant hemp products and illicit cannabis businesses, some of which are unlicensed and unregulated.
Psychoactive hemp-based products, including Farm Bill compliant hemp products, are generally not subject to the intensive and costly state-level regulatory regimes that medical and adult-use cannabis are subject to.
In addition, although not subject to the same quality and health and safety regulations applicable to medical and adult-use cannabis businesses, if actual or purported Farm Bill compliant hemp products cause harm to their users, that could result in a material adverse effect on the perception of cannabis use and its legality.
We are dependent on the popularity of consumer acceptance of our brand portfolio.
As the number of available licenses increase in the markets in which we operate, and the illicit market and psychoactive hemp-based products proliferate, additional competition and increased product availability may result in competitors undercutting our prices.
There have been relatively few clinical trials on the benefits of cannabis or isolated cannabinoids (such as CBD and THC).
Further, the federal illegality of cannabis and associated limits on our ability to properly fund and conduct research on cannabis and the lack of formal Food and Drug Administration oversight of cannabis, there is limited information about the long-term safety and efficacy of cannabis in it various forms, when combusted or combined with various cannabis and/or non-cannabis derived ingredients and materials or when ingested, inhaled or topically applied.
Under Section 280E of the IRC, we are not allowed to take any deductions or credits for any amounts paid or incurred during the taxable year in carrying on business if the business (or the activities which comprise the trade or business) consists of trafficking in controlled substances (within the meaning of Schedules I and II of the Controlled Substances Act).
Section 280E may have a lesser impact on cannabis cultivation and manufacturing operations.
Accordingly, Section 280E has a significant impact on the operations of cannabis companies and an otherwise profitable business may operate at a loss, after taking into account its U.S. income tax expenses.
We may invest in companies which may not be able to meet anticipated development targets or be successful in the future .
We may make investments in companies with no significant sources of operating cash flow and no revenue from operations, that are in early stages of development, or that have high-risk profiles.

and 15 more.

Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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