MONTREAL – Mercanto Holdings Inc., formerly The Good Shroom Co Inc., a Canadian cannabis and wellness product company, reported its financial results for the second quarter ended January 31, 2025.
Q2 2025 Financial Overview (Compared to Q2 2024)
- Revenue: $1.00 million (vs. $1.13 million)
- Net revenue (after excise taxes): $0.84 million (vs. $0.93 million)
- EBITDA: ($96,038)
- Long-term debt: $0 (Mercanto remains debt-free)
- Net loss: ($109,215) (vs. net profit of $56,017)
- Working capital: $417,814 (vs. $563,617 as at July 31, 2024)
CEO Eric Ronsse commented, “While our Q2 results reflect ongoing industry challenges and temporary softness in our core Quebec market, we remain confident in our long-term strategy. Our financial discipline is a constant — reflected in our lean structure and efficient operations. Mercanto continues to operate with focus and the cash flow stability required to carry forward without interruption.”
Challenges and strategic response
In the context of rising global trade tensions, including the current trade dispute with the United States, many industries are facing significant uncertainty and risk related to cross-border tariffs. The Canadian cannabis industry, however, remains largely insulated from these pressures due to its strictly domestic supply chains. Additionally, in periods of economic slowdown, cannabis—like alcohol—tends to be a resilient category, as consumers often continue these discretionary purchases despite broader market challenges.
Mercanto’s core market, Quebec — which has historically represented over 93% of revenue — is undergoing a product rationalization process initiated by the province’s cannabis board. This has temporarily impacted sales volumes and contributed to the decline seen in Q2.
“Despite recent stagnation in Quebec, it’s a market that has historically been very strong for us, and we remain optimistic about renewed growth once the rationalization process concludes — a process that is expected to persist through Q4 and into early Q1. While several high-performing SKUs were removed entirely as part of this process — leading to a measurable hit to revenue in past quarters — sales have since stabilized. To mitigate this impact and support future growth, our innovation-driven national expansion strategy is well underway, with multiple product launches across new provinces and medical channels.”
Strategic response and execution roadmap
Mercanto is actively executing a multi-pronged growth strategy designed to reduce dependence on Quebec and expand into new high-potential verticals and markets.
Four new products launching in May (Q4)
Three of these are expected to positively impact the Company’s bottom line and re-energize sales in Quebec.
Entry into Quebec’s vape category (Fall 2025)
The vape category, previously restricted in Quebec, is expected to open in Fall 2025. With only an estimated 15 vape cartridges and 2 compatible batteries approved for sale across all 104 authorized stores, and the category already ranking as the third largest in most provinces, this represents a significant opportunity for suppliers. Given Mercanto’s strong standing as a reliable and well-regarded supplier within the provincial system, the Company expects to secure a listing — or multiple — in this high-growth category.
“If secured, this will provide significant recurring value to Mercanto and position us as a leader in a new and lucrative product category in Quebec,” added Ronsse.
National rollout of THC pouches
- Already launched in Alberta (late Q2) and Ontario (Q3).
- Launching in New Brunswick (late Q3) and Saskatchewan (Q4 expected).
This new product line is part of Mercanto’s innovation-forward approach to diversify its revenue base and expand nationally. Early consumer reception has been positive, including unsolicited praise across online communities such as Reddit, where our THC pouches have received strong user feedback[^1]. The Company has also begun exploring opportunities in medical markets and specialty channels, including platforms offering cannabis products to medical patients across Canada.
Gross margin commentary
Mercanto has remained focused on improving margins through the introduction of higher-margin products. Gross margin has steadily increased in past quarters and is expected to continue trending upward in the quarters ahead. In Q2 2025, however, gross margin was temporarily impacted by one-time reworking costs related to products returned from Alberta and Quebec. Rather than allowing these units to accumulate in inventory, the Company chose to rework and resell them in alternate markets, converting them into revenue and reducing excess inventory — albeit at a reduced gross margin. Unless a similar situation arises again, Mercanto expects to continue improving margins over time through disciplined product and channel strategy.
Near-term outlook
Mercanto remains committed to maintaining a debt-free balance sheet and continues to prioritize cost-efficiency and operational discipline across the organization. The Company reduced trade payables during the quarter and brought certain outsourced services in-house to reduce professional fees. Additionally, targeted marketing and selling initiatives that did not yield sufficient returns were promptly discontinued.
While the Company does not expect a significant rebound in Q3, it remains confident in its long-term positioning. The effects of the Quebec rationalization process have already been felt, and while it is expected to persist through early Q1, Mercanto’s strategic response — including national expansion and new product rollouts — is already in motion.
“The Canadian cannabis sector is undergoing a reset, and while many companies are struggling — with CCAA filings increasingly common — we believe the bottom is near. Our disciplined approach has allowed us to weather the storm and emerge more resilient. In fact, as a direct result of recent industry consolidation, we’ve begun to benefit. For example, a competitor in Quebec in the capsule category ceased operations, enabling us to secure a prized listing with our Velada CBD capsules in Q2. We are well-positioned to emerge stronger by staying focused on innovation, cash flow management, and smart execution,” said Ronsse.
About Mercanto Holdings Inc.
Mercanto Holdings Inc. (TSX-V: MUSH), formerly The Good Shroom Co Inc., is a Canadian cannabis and wellness product company known for its deep roots in Quebec’s cannabis market. With national expansion underway and a growing portfolio of regulated products, Mercanto is positioning itself as a leader in Canada’s evolving cannabis landscape.
