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Item 1A. Risk Factors.
For information regarding factors that could affect our results of operations, financial condition and liquidity, see the risk factors discussed in Part I, Item 1A in the Annual Report. TheExcept as set forth below, there have been no material changes to the risk factors previously disclosed in Part I, Item 1A in our Annual Report.
The 2025 Budget, if passed, could adversely affect the Companys profitability and medical cannabis revenues.
The Company's revenue from medical cannabis sales could potentially decline due to changes announced in the Government of Canada's proposed 2025 federal budget released on November 4, 2025 (the "2025 Budget"). Among other things, the 2025 Budget proposes adjusting medical cannabis benefits by decreasing the reimbursement rate for medical cannabis offered by the Royal Canadian Mounted Police (the "RCMP") and Veterans Affairs Canada ("VAC") to eligible RCMP members and veterans respectively, from $8.50 per gram to $6.00 per gram (the Proposed Reimbursement Adjustment). The 2025 Budget is expected to be voted on by the House of Commons in November 2025. The Company cannot predict the entire impact of the Proposed Reimbursement Adjustment or the date upon which the Proposed Reimbursement Adjustment would be implemented if the 2025 Budget is passed. The decreased reimbursement rate for eligible RCMP members and veterans will require that these RCMP members and veterans pay for any un-reimbursed cost of medical cannabis unless we reduce the price of our medical cannabis products. As such, there is a risk that our medical cannabis revenues and gross margins may materially decline if the 2025 Budget passes. This reduction could adversely impact the Company's profitability, financial performance and cash flow.