Village Farms Cannabis Sales Hit Record as Gross Margin Falls

The Tip Desk · November 9, 2026 · 3 min read

Cannabis net sales reached a record $55.0 million in the third quarter, while cannabis gross margin compressed to 48% from 55% a year earlier.

Village Farms International (VFF), a global cannabis operator, posted record cannabis net sales of $55.0 million in the third quarter ended September 30, 2026, up 3% from $53.5 million a year earlier, as international exports held near the prior quarter’s record and Canadian branded sales receded.

Consolidated net sales were $66.9 million, essentially unchanged from $66.7 million a year earlier. Cannabis accounted for the bulk of that total. International export sales increased 75% year-over-year to $20.8 million, in line with the previous quarter’s record of $20.9 million. Canadian branded cannabis sales declined to $25.3 million from $26.8 million a year earlier, and Canadian non-branded sales fell to $3.3 million from $7.3 million. U.S. cannabis sales were $2.8 million versus $3.3 million a year earlier, and Netherlands branded sales were $2.8 million versus $3.6 million.

President and Chief Executive Officer Michael DeGiglio said the quarter was driven by the record cannabis revenues and by approximately 43% of cannabis sales from international markets. He said the company delivered its sixth consecutive quarter of positive net income and EPS. Consolidated net income attributable to shareholders was $10.0 million, or $0.08 a share, versus $10.2 million, or $0.09 a share, a year earlier.

Cannabis gross margin compressed to 48% from 55% a year earlier as cost of sales rose 21% to $28.9 million. The company attributed the variance primarily to a softer spot trim market in the Canadian wholesale channel. Cannabis net income fell to $7.8 million from $12.0 million a year earlier, with the company citing lower gross margins and increased operating expenses to support future growth. Cannabis adjusted EBITDA from continuing operations declined to $14.7 million, or 27% of sales, from $20.2 million, or 38% of sales. Consolidated adjusted EBITDA from continuing operations was $18.2 million, or 27% of sales, versus $20.7 million a year earlier. Cannabis cash flow from operations was $7.3 million versus $20.6 million.

DeGiglio said wholesale trim volumes and pricing reached trough levels in the Canadian wholesale channel during the third quarter and that the company expects those conditions to begin normalizing in the fourth quarter given October order-book visibility and new supply agreements with stronger contracted pricing. He said the company continues to expect its competitive advantage with the world’s largest single-site EU-GMP certified cannabis facility will result in continued increases in demand for compliant production capacity, and that the Delta 2 expansion is expected to contribute to stronger international sales growth next year along with entry into multiple new European jurisdictions.

During the third quarter, Netherlands production was temporarily reduced by propagation activities. The Groningen facility is now fully planted, and the company continues to expect it will ramp to maximum annualized production capacity in early 2027. The Delta 2 greenhouse expansion in British Columbia remains on track to be completed during the first quarter of 2027 and is expected to reach a 40-metric-tonne run rate by mid-2027, bringing total Delta campus capacity to approximately 160 metric tonnes of dried, trimmed flower annually.

The company closed the quarter with $80 million in cash and a net cash position of $41 million. DeGiglio said sequential cash flow improved as capital expenditure from the Netherlands and Delta 2 expansion projects was substantially complete.

In the fourth quarter, the company notified Verdexa Holdings that it had exercised its right to convert approximately 25% of its 60-acre Delta 1 greenhouse to cannabis production. The company had not formalized conversion plans; the notice provided optionality to convert 16 acres to cannabis production during 2027. It also began mobilizing a standalone 30-acre greenhouse in Monahans, Texas, for cannabis production. Balanced Health Botanicals continues to pursue pathways into a U.S. Medicare CMMI pilot for CBD products and is awaiting regulatory clarity related to a pending December 11, 2026 federal hemp ban.