I am going to let these guys clear the room and shut the door and all the things. I will not tell a joke to start. I do not have any. You have all read in detail our disclaimer up here, I am sure. Before I get too far, my name is Margaret Brodie, and I am with Rubicon Organics. I know many of you in the room, which is really nice. Whether you have followed us for quite a while or you are hearing our story for the first time, I would really like you to leave today with a clear understanding of what we have built, where we are today, and where we are going in the next 12-24 months.
We are in a particularly interesting moment of growth and value creation for Rubicon. The cannabis industry has gone through many ups and downs, and it is changing yet again.
Rubicon now, from a few years ago, has two cultivation facilities with a clear pathway to approximately 20,000 kilos of production, almost doubling our capacity from a couple of years ago. We recently completed, and it was announced last week, a CAD 3 million strategic financing that will enable us to hit that capacity target. We also continue to have strong demand for our products, both domestically and internationally, in key markets that we have expanded into this year. So buckle up. Rubicon Organics at a glance. A quick picture of who we are. We are Canada's leading premium cannabis producer, and we are really a one-of-one company. Based in B.C., we operate two facilities cultivating premium cannabis for both the domestic and international markets. We have built a trusted house of brands.
Many of you, if you do frequent a Canadian cannabis store, will have recognized 1964 Supply Co., Simply Bare Organic, and Wildflower. Each of them is positioned to capture a different segment of the premium market. Backed by trusted brands and loyal customers, we have consistently been able to grow our revenue and generated positive Adjusted EBITDA for the last four consecutive years. So where are we today? We have had a busy year in 2026, and it has been a year of scale. We are executing in four critical areas. One, investing in our capacity, two, improving our manufacturing efficiency, three, improving our yields, and four, developing our channels and routes to market internationally. Different from many companies, demand has not been our constraint. It has really been our sales channels can absorb the existing production, and we really need more supply.
We have been addressing that supply gap, and you can see this here in the step changes that we have been making. Firstly, we are ramping our new Cascadia facility. It is coming. We purchased it, and I will talk about that in 2025. I will talk about that in a minute. Secondly, per last week's announcement, we are upgrading our lighting at our Pacifica facility, which will increase our production in that facility by about 40%, and we expect to be at that annualized rate of 20,000 kilos by June of next year. So June of 2027. At foundation, we are an agriculture business, and a lot of people do not realize that yield is incredibly important. It is a major driver for our story. The more we can produce from the same operational footprint really is more product that we can sell.
It gives us a higher operating leverage over a pretty fixed cost base. We are very focused on, and focusing on that operational footprint. We have also grown our addressable market. Very important. We have secured new partnerships that will enable us to access the international markets, and that is just ramping up right now. We are focused on growing the top line, but revenue growth alone is not the story. We have talked about yield increases, but also being disciplined on managing our costs as we become a bigger business. All of these together, driving more revenue, getting more yield, looking at our margins, and managing our costs, really, we believe, will have meaningful margin expansion as we scale. Our focus now is execution, completing the upgrades, validating the results, and translating those investments into profitable growth.
This is a moment where I was at Smallcap Discoveries a couple of weeks ago, or three weeks ago now, when I said, "These are the moments when you are in scale that you hate being a public company." I think this is a great thing to say, I think, as a private company. You want to make sure that you are staying on strategy and doing all the right things. It is tough to do when you are measured quarter- over- quarter, but you want to be that bigger company. You want to scale more. To get that, you need to make investments. What we are going to talk about today is really about that whole story. What we have been building, why we believe those investments position us well as we move towards 2027, and translating into a stronger revenue growth, improved margin, and increased shareholder value.
At our core, as I said, cultivation and agriculture, that is who we are. Pacifica is our original flagship facility in Delta, British Columbia, 30-ish minutes from downtown Vancouver, depending on traffic. Probably could be an hour if you get a bad day. We have just moved it from 11,000 kilos to 15.5 tons. It is a certified organic facility, which makes us very unique in the world of cannabis. It is GACP certified. We can talk about what that means. If you are very interested later, you can come meet with me. It is a hybrid greenhouse. We have developed cultivation expertise, operational discipline, and product quality, which has helped establish our brands be leaders in the Canadian industry.
Since the early days, our growth has not been limited by demand. It has been limited by supply. In the past few years, we have been really careful at navigating supply shortages.
Starting in 2023, we relied on strategic third-party cultivation and manufacturing to grow the top line. Obviously, that is at the cost of margin. Now what we are doing, taking that asset-light approach, and we have been bringing that back in-house to grow the business and get more profitable. As part of that, we acquired Cascadia, the next facility here. It is about an hour to an hour and a half away from the Delta Pacifica facility. We purchased it for just CAD 4.5 million, really a fraction of the replacement cost. If you think about the world of cannabis, the capital markets and the equity is not going in to build these facilities anymore. These facilities really have value and will have value over the coming years.
Recently, we also just closed a CAD 3 million strategic private placement to support the next stage of growth and increase that yield out of Pacifica, and I am going to talk about that next because it is exciting. So here we go. What did we do last week? You are all waiting on bated breath, I can tell. We announced a private placement for CAD 3 million. That private placement was no finder's fees, no warrants, just really at market with a strategic investor. Do we love to do that? No, but this is an economic decision. And why did we do it? It is because we can increase the lift on the facility considerably. Again, it is about the same team, the same fixed cost base, delivering higher yield, which impacts our gross margin, gives us more to sell, and when we are supply constrained.
It increases our total capacity to about 20,000 kilos, which is a great sweet spot. I have always said I would love to be about 25. I am looking here and I am smiling at Mel Ramsey, our COO, who never comes to these, so be kind to her. But if you want to talk brand or cannabis, she is your lady to talk to. This is strategic specific capital. That is why we made the investment. We rack and stack our investments. Economics 100 was a course I loved. Opportunity cost, looking at your cost of capital. We are constantly doing this, and this project just made sense. I can tell you these lights in the first compartment have already been installed.
Plants are underneath them. The second compartment is being installed right now as we speak. Probably most of the lights are already in, and all of the lights are on site.
We were moving at this project. It was so compelling for me to move forward. We found a way to get it done. It is about serving unmet demand, improving gross margins, and it brings in some friendly capital with a gentleman named Ted Reid. I have known Ted for a long time. He is brilliant. He is the CEO of Siwash Rock Investments, Inc. If you followed the Paladin Securities story, he has been involved in that, and the sale of Paladin Technologies, he was an owner of that last year. He has scaled businesses dramatically and honestly been a mentor to me, so I am very excited to have him paying attention, and he thought this was very compelling, and that is exciting. Where are we, financial performance? You guys can all see this. This is all our recently published results.
Q2 2026 was our best quarter in terms of revenue, up to CAD 18.5 million, 23% year-over-year and 35% sequentially. Now, remembering, the first quarter of the year, the dry January effect always hits the seasonality of our business. We kind of skate through that and then move on to look at the rest of the year. Our gross profit before fair value adjustment is about CAD 5.4 million in the quarter. Look, our gross margins look like they fell down to 30%, but what you have got to remember is we expense the production costs. We are not inventorying the production from Cascadia, so we are getting increased volume out of there, and those costs hit our gross margin. And our Adjusted EBITDA was CAD 1.1 million.
This is a pullback from what we've had in the past, but again, it's in the idea of scale and investing this year in the business to be a bigger business in 2027. It's a timing dynamic, not a structural one, which I really like to say because it feels really good and it's true. Excluding pre-revenue costs, we would be gross margins around 36%. Again, all of the work we're doing this year is driving incremental margins. We'd like to be in the mid-40s. We've got some work to do. Some of our competitors are better than that. Some of our competitors are worse than that. I would like to be where the best competitors are, so we're working on it. Cascadia's ramp should allow us to spread our operating costs over more production.
At Pacifica, the lighting project will really lower those per unit costs, and those cultivation gains actually sit alongside a whole bunch of manufacturing efficiencies that I'm going to speak to in a minute. As we do that, this stuff isn't being reflected this year. We go into 2027, we've really set ourselves up. Taking the hit to be bigger, right? That's the things you got to do. So who are we and how have we achieved consistent revenue growth? It comes down to our brands and what's behind them, and actually the lady behind them is in here today. Why do we compete here? Well, we're not as big and we didn't have the capital other companies had, and it's something that we can do very well. So we are very focused on playing in premium.
Our vision is to be the most trusted house of premium brands, elevating experiences for people everywhere. I say it every day. We talk about quality every day, and that's what builds a brand promise. I often think, and many of you have probably heard from me before, you open up a can of anything, you just take a sip, you don't look inside. That's not true of cannabis. People evaluate the product. That quality brand trust is not there. We're working on delivering that. 1964 and Simply Bare are doing that and creating that. They're doing what premium brands are supposed to do. They're growing in dollar share through consistent, outstanding quality. The quality starts with genetic selection. We'll talk about it a bit later. Those of you who are interested in genetics, come and talk to me because we've got some fun things going on.
It goes to disciplined craft cultivation methods designed to bring out the best expression of each cultivar. Our consumers come back time and time again, and budtenders recommend us, and you can see that up here a lot. Our reputation for quality has carried forward into other formats. So when the premium quality of the flower really expands into the trust into the pre-rolls, which is the fastest growing category in Canada, and vapes. Consumers are shifting right now into those formats. So, in premium pre-rolls, we're the number two with almost 5% market share last quarter. Pre-rolls are only as good as the quality of the input into them, and the quality and consistency in which you can deliver. It all has to start with great flower. So we're doing both.
Plus, we've brought in pre-roll automation and expanding that, and I'll talk about that in a sec. Vapes, it's another fast-growing category. We're already participating meaningfully in that market with our 1964 live resin vapes, both in Canada and just recently launched in the U.K. For this next platform, there's an opportunity for us to get significant margin expansion. We're bringing that oil extraction in-house. I can tell you, I saw photos of the things getting put down on a concrete pad on Monday, I believe it was. We expect that we'll be getting the benefits of that in 2027. Then we've got topicals. They're steady and they're very profitable. Our Wildflower brand, the one SKU has 30% of the topical market in Canada, which is really quite outstanding. Optimizing yield.
Every gram we produce from the same footprint has a direct impact on revenue and margin. It's the rationale behind both our ongoing yield initiatives and the planned Pacifica lighting investment, which is, as I said, underway and being installed. Prior to initializing that, we had been doing a lot of targeted yield improvements, including we trialed the lights that we purchased, so we have high confidence in what's going to come through. That first set of initiatives already increased yield 20% over the existing base at Pacifica, but we believe there's quite a bit more we can do. Higher yields at Pacifica are the direct result of the increase in revenue that we had in Q2. Obviously more supply matters. All of that learning is helping us to scale at Cascadia, and the quality and the cost at Cascadia have been spot on.
What we've been a little slower on than we would like is the yield. That is now coming, and a big part of that is we installed new lights in the summer. Helpfully, BC Hydro gave us a rebate for about 80%-90% of the cost back, which makes it very economic to do things like that. But there's still more work to do there, and we have been a little delayed, and we've been very open in terms of that. It's a little frustrating because we've got the quality there and we've got the demand, so I just want that flower to come. I can't sing to the plants and have them grow a little faster.
Look, overall, all of these things together mean our output from, if you look back two years ago, you would have seen this slide and it would have said 11,000 kilos of production. We're becoming a much bigger business to 20,000 kilos of production. Really largely the fixed cost base and a lot of the scale costs have been incurred this year in 2026. Next, optimizing production. After everything, all the plants get cut down and moved through the harvest door, they move into a manufacturing environment. There's two projects I want to talk to today that are dramatically improving our efficiency. The first is pre-roll automation. As our pre-roll business has really grown, we are looking to automate more, and we have done that. We now have three machines on site and they're running.
It is fun to watch them pop out, and they have really got great consistency, so I am really, really happy with that project. Second is hydrocarbon, and it is the benefit that we have not yet seen. We are currently outsourcing our oil production. We take our fantastic quality flower and we think about whole plant utilization. You want to use every part of it other than the stalks that you can. That goes out to somebody else.
They are making the oil. I think about it like we have grown all the strawberries and someone else makes the jam, and it brings it back to us for us to fill. We are giving them a bit of margin. We do not want to be doing that, and what you will see with this project is we are taking that margin back. It allows us to compete in a more meaningful way and drive margin.
We are very excited about it. We expect that project, everything should be running in December, but we do not think we are going to get the benefits from it really until the second half because it is going to take a minute to commercialize. After my Cascadia being slightly slower on the yield there, maybe I am being a little nervous about it, but I want to make sure we deliver on it. It is very important. Both of these together really look to improve margins in addition to the yield. Genetics. Those of you who consume know that new genetics matter.
They are exciting in market, and they bring a lot of energy and excitement. Genetics, for those of you who are not familiar with cannabis, it is a lot more like wine. Do you like a Pinot? Do you like a Cab Sav? Whatever your choices are, genetics are similar.
I would also attribute genetics very similarly to fashion and fashion houses. The high fashion stuff that they do, the Chanel runway show, they sell a lot of Chanel perfume, which is what they make their money off of. But it is very important to have the glow on the brand of the very interesting new news in genetics. People go out with their basket and they walk into store. They often buy, and you probably often buy the same beer every time. But maybe you will pick the interesting different things from different brands that you like. It is the same thing with cannabis.
It is very important in terms of premium and super premium brands to maintain that. Mel, did I explain it properly? Marketing expert over here. We have been developing a very sought-after library of genetics. We have worked very hard on it, and the proof is in the pudding.
I would encourage you to go back and look at the genetics that we have launched and the responses to them. They have been very positive. We are very proud of that. If you need recommendations, our Caviar Z that is just out in market here in Ontario, is our first bred genetic that we have had. We are very excited by that. I would also encourage you to look at the Pink Drip, which is now in 1964, and a fantastic flower. Guess what? It is the best yielder we have ever had on a consistent basis, and the pests do not like it.
Not only did it win Flower of the Year last year, but we are getting better with genetics. We can monetize them better. Here is what a lot of people come to listen about for cannabis. Yes, they care about the genetics, but they really care about global expansion.
We are in a fascinating moment in global cannabis where countries are turning on. We are going to have ups and downs. We are going to have lumpy sales. That is happening to many companies in this space. But the excitement is the volume and the desire. I opened up CBC this morning, and the first news article was about the illicit market from Canada dropping product into Europe and the amount of marijuana from Canada going to Europe. The illicit market in Europe is more expensive than the legal market. Go figure. People do not know that. The illegal market in Germany has grown unbelievably. I believe it is now, and last year, Canada exported almost CAD 300 million. It is certainly much more than that.
CAD 134 million last year to Australia, and growing. We have signed four new agreements into the international markets. We are very proud of that.
We expect to have further spot sales in various ways. We have launched 1964 in the U.K., both flower and vape. The proof point of the brand equity we built in Canada is portable, and it is proven. Most interestingly in the international markets, these are patients. These are not consumers. They are looking for, and doctors are looking to prescribe, consistent product quality. That has been a challenge for anywhere but Canada to do, and there are very, very few premium operators in the world. Like anything, there are people that want a spectrum of different types of products. There are people who want highest THC, lowest cost tonnage, and there are connoisseurs, and those are the people that we appeal to. We do expect to continue to see more growth in those markets, and we are very excited about it.
Our positioning in Canada as being the consistent national premium brands, I believe there are two to four in the country. One of them is sitting in this room, and I give a shout-out to Cannara. They are a great competitor of ours with their Tribal brand. There are very few premium brands that have been able to do what we have been able to do. We are very proud of it, and we expect that to come to the world. There are rumors, I am going to say this stat, whether you believe it or not, is that the legal medical market in Europe will be EUR 13 billion by 2034. Now, we have seen those before in those types of stats. We will see how quickly that all turns on. But it is coming, and the demand for supply and consistent supply is tremendous. We need this capacity.
It is why we are moving faster to get more capacity and yield out of our own projects. Why ROMJ now? We are in a meaningful moment. Firstly, the industry has entered a more mature state. We are seeing weaker operators have exited. The shelf has been concentrated. Brands have really emerged in the Canadian space. We are a national premium producer. There are very few of us. Secondly, cannabis stocks are just starting to see volumes come back. If you look at the stocks in the last year, they are starting to move because people are investing and seeing what is coming because the companies that are here have proven themselves. Last, Rubicon is in the investment cycle. We have been doing the things this year to benefit for next year and beyond, and we think we are positioned very uniquely in this space as a one-of-one asset.
Let's be clear, that's the plan. We are having more supply with established demand, better use of our existing assets, and several operational improvements to drive better results in 2027. That's us in a snapshot. I do have some product if you come and visit us for a meeting. Not too much. Some put aside for some investors that I know will always ask me for things. Any questions? You know who you are. Here's our cap table. Yes, please go ahead. Hi.
Thank you for the presentation. Going back to the international markets, are you able to capture a premium in Europe as you had in Canada? I know that in Europe there's some large brands, maybe brands even from the U.S., I've been selling in Germany, [Inaudible].
Yeah, you could go online. The question was, can you capture increased margins in Europe? Product quality and consistent quality supply. There are a lot of growers in Canada that can produce, but they tend to produce for yield, so they don't produce what a consumer is looking for, or they produce smaller lots, so 10, 20, 30 kilos. Because they're small production houses, we can actually do larger scale than that. That's extremely important to consumers and to build a brand promise. Our pricing reflects that. I won't tell you what it is. But if you go onto the [U.K. MedBud.wiki], you can just Google it, you'll see where the pricing of 1964 is, and it's quite high. What you often see is you'll see things priced higher than that. I can tell you the rate of sale is pretty low.
Yes, you may see pricing out there. It's kind of like walking into a bar and seeing the weird tequila bottle in the top corner that's CAD 100 a shot. It gets two sales a year from the rich guy who won the lottery and buys a round for the bar. That stuff doesn't scare us. You need to be priced appropriately to value for rate of sale. Yeah. Anything else? No. Well, I hope to see many of you in the one-on-ones, and have a great day. There we go.