“Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended May 31, 2025 includes a discussion of our known material risk factors, other than risks that could apply to any issuer or offering. A summary of our risk factors is included below. Except for the below risk factors, there have been no material changes from the risk factors described in our Form 10-K.
| ● | We may not achieve the expected revenue or other benefits from the craft beer operations we acquired in fiscal years 2024 and 2025. |
| ● | We may experience difficulties integrating operations and realizing the expected benefits of recent acquisitions, including the Craft brands acquisitions. |
| ● | Our cannabis business is dependent upon regulatory approvals and licenses, ongoing compliance and reporting obligations, and timely renewals. |
| ● | Government regulation is evolving, including potential regulatory developments in the United States to reschedule cannabis from Schedule I to Schedule III under the Controlled Substances Act. In November 2025, new U.S. federal legislation was enacted that banned the production or sale of hemp-derived cannabis, including Delta-9. This restriction is scheduled to go into effect on November 12, 2026. |
| ● | We are subject to potential modifications to existing regulatory frameworks outside of North America, as well as uncertainties and potential delays in receiving required export/import permits in Europe and Australia. Any unfavorable changes to or lack of commercial legalization, or extended delays in receipt of required permits, could negatively impact our businesses and the potential planned expansion of our business. |
| ● | We face intense competition, including from the illicit cannabis market, and anticipate competition will increase, which could hurt our business. |
| ● | Our production and processing facilities are integral to our business and adverse changes or developments affecting our facilities may have an adverse impact on our business. |
| ● | Regulations constrain our ability to market and distribute our products in Canada. |
| ● | United States regulations relating to hemp-derived CBD products, Delta-9 products, and medical cannabis products are new and rapidly evolving, and changes may not develop in the timeframe or manner most favorable to our business objectives. |
| ● | Changes in consumer preferences or public attitudes about alcohol could decrease demand for our beverage products. |
| ● | SweetWater, Breckenridge, Montauk and our recently-acquired craft beer brands each face substantial competition in the beer industry or the broader market for beverage products, which could impact our business and financial results. |
| ● | We are subject to litigation, arbitration and demands, which could result in significant liability and costs, and impact our resources and reputation. |
| ● | Our business may be materially adversely affected by the imposition of duties and tariffs and other trade barriers and retaliatory countermeasures implemented by the U.S. and other governments. |
| ● | Additional impairments of our goodwill and impairments of our long-lived assets could have a material adverse impact on our financial results. |
| ● | We have a limited operating history and a history of net losses, and we may not achieve or maintain profitability in the future |
| ● | Our strategic alliances and other third-party business relationships may not achieve the intended beneficial impact and expose us to risks. |
| ● | We may not be able to successfully identify and execute future acquisitions, dispositions or other equity transactions or to successfully manage the impacts of such transactions on our operations. |
| ● | We are subject to risks inherent in an agricultural business, including the risk of crop failure. |
| ● | We depend on recurring customers for a substantial portion of our revenue. If we fail to retain or expand our customer relationships or these customers reduce their purchases, our revenue could decline significantly. |
| ● | Our products may be subject to recalls for a variety of reasons, which could require us to expend significant management and capital resources. |
| ● | Significant interruptions in our access to certain supply chains for key inputs such as raw materials, supplies, electricity, water and other utilities may impair our operations. |
| ● | Management may not be able to successfully establish and maintain effective internal controls over financial reporting. |
| ● | The price of our common stock in public markets has experienced and may continue to experience severe volatility and fluctuations. |
| ● | The volatility of our stock and the stockholder base may hinder or prevent us from engaging in beneficial corporate initiatives. |
| ● | We may not have the ability to raise the funds necessary to settle conversions of the convertible securities in cash or to repurchase the convertible securities upon a fundamental change. |
| ● | Our cryptocurrency strategy faces high risk and uncertainty in light of market volatility and an evolving regulatory landscape. |
| ● | We are subject to other risks generally applicable to our industry and the conduct of our business. |
There are regulatory risks associated with the rescheduling of cannabis in the U.S. and uncertainties in the implementation of our planned medical cannabis platform.
The recently announced U.S. federal cannabis rescheduling order has introduced significant uncertainty regarding the scope, timing, and ultimate impact of potential changes to U.S. federal cannabis regulation. Our business, financial condition, and results of operations may be materially adversely affected if such changes do not occur as or when anticipated or impose requirements we are unable to meet. Although federal cannabis rescheduling is expected to create expanded opportunities for our business in the U.S., including our planned launch of a medical cannabis platform in 2026, the final outcome of federal rulemaking—along with related DEA and FDA oversight, enforcement priorities, and interaction with state-level regulatory frameworks—remains unclear and may materially differ from current expectations. Legal challenges to rescheduling, shifts in federal or state regulatory priorities, or the imposition of restrictive compliance, manufacturing, or distribution requirements could delay, limit, or prevent our ability to commercialize medical cannabis products in the U.S. If the resulting regulatory environment is more restrictive than anticipated, is not implemented on a timely basis, or otherwise fails to permit a viable market pathway, we may be unable to pursue our planned U.S. medical cannabis strategy as intended, which could adversely impact our growth prospects, strategic objectives, and anticipated investments.
We may be exposed to financial losses and operational risks due to our decision to self-insure certain real property assets.
We recently transitioned several of our real property assets from third‑party insurance coverage to a self‑insurance model. Under this approach, we bear the financial risk associated with potential losses, damages, business interruption, remediation costs, or other liabilities relating to these properties. While we believe this strategy appropriately balances cost management and risk, it exposes us to risks that could materially and adversely affect our business, financial condition, and results of operations. Loss events such as fire, flooding, natural disasters, equipment failures, structural degradation, theft, or other property‑related incidents, could require significant out‑of‑pocket expenditures. Depending on the nature and magnitude of any such event, we may incur substantial unplanned costs, experience facility downtime, or have reduced capacity to cultivate, manufacture, store, or distribute products. These outcomes could disrupt supply chains, delay production, impair revenue generation, or necessitate capital expenditures not otherwise planned. In addition, our determination of appropriate reserves and internal risk‑mitigation processes may prove inadequate. If the scope, frequency, or severity of property‑related losses exceeds our expectations, we may experience materially higher expenses or capital requirements. Any of these factors, individually or in the aggregate, could materially and adversely impact our operating results, cash flows, and liquidity.
