Blüm Holdings Q3 Revenue Grows 182% YoY, Subsidiary Unrivaled Brands Files For Bankruptcy

California-based cannabis retailer Blüm Holdings, Inc. BLMH announced its financial results Wednesday for the third quarter ended Sept. 30, 2024, with revenue of $4.36 million, compared to $1.55 million in the third quarter of 2023. The company attributes the 182% increase in revenue to the consolidation of the Northern California stores and growth in the Korova brand.

"The Northern California stores and the implementation of consistent operational practices have significantly strengthened our financial and operational foundation," stated CFO Patty Chan. "We are confident that these enhancements position us well for continued growth and profitability."

Q3 Financial Highlights

• Gross profit was $2.45 million, compared to $526,000 in the third quarter of 2023.
• Gross margin was 56.1%, compared to 34% in the same period last year.
• Net loss amounted to $3.74 million, compared to $3.36 million in the corresponding quarter of the prior year.
• Total operating expenses for the period reached $4.65 million, compared to $6.45 million in the same period of 2023.

Read Also: LEEF Brands Cannabis Co. Reports Revenue Growth, Higher Operating Expenses In Q3

Get Benzinga's exclusive analysis and the top news about the cannabis industry and markets daily in your inbox for free. Subscribe to our newsletter here. If you're serious about the business, you can't afford to miss out.

Unrivaled Brands Bankruptcy

Blum Holdings' subsidiary Unrivaled Brands filed for Chapter 11 bankruptcy due to ongoing legal battles initiated by People's California LLC and activist investor Frank Kavanaugh. The litigation, which started in 2022, includes multiple lawsuits accusing Unrivaled of breaches like corporate waste and unjust enrichment.

In Tuesday's press release, Unrivaled argued that People's California was attempting to seize the company's signage and Blüm Santa Ana parking spaces. Despite the "implacable" litigation by People's, Blüm's management was still able to reduce total liabilities by a net of $90.8 million (from $125.3 million as of December 2021 to $34.5 million as of September 2024), execute a corporate reorganization, and pay many deserving vendors.

However, the repeated legal actions destabilized the company, leading to the bankruptcy filing.

The latest lawsuit comes after People's has received over $60 million of value from Unrivaled since 2021, including $9 million as recently as July 2024 pursuant to a settlement agreement that should have ended all litigation with People's and Kavanaugh. Despite the settlement agreement, People's continues to sue for more.

"Kavanaugh's history of destabilizing companies to seize control and extract assets is well-documented. Unrivaled paid deserving vendors to the best of its abilities while withstanding the barrage of litigation by People's. Unrivaled saved jobs for two years and operated in communities where businesses deserve to keep their doors open. If you or your company have had a similar experience with Frank Kavanaugh, Fort Ashford Funds, or any of his other affiliates, please reach out," stated CEO Sabas Carrillo.

This filing is limited to Unrivaled and Halladay Holding, meaning only their assets and liabilities are included in the Debtor-in-Possession estates. The value of the assets held by Unrivaled and Halladay Holding is unknown but estimated to be approximately $6.0 million at the time of filing and the total value of the liabilities is approximately $35.0 million. Blum Holdings, Inc., along with all other operations of the company, remains unaffected by this filing and will continue its operations as usual outside of the Chapter 11 proceedings.

Price Action

Blum Holdings shares closed Tuesday's market session 42.50% lower at 23 cents per share.

Read Next:

• AYR Wellness Q3 Revenue Flat, Net Loss Soars 160% Amid Consumer Wallet Pressure

Photo: Courtesy of Plateresca via Shutterstock