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High Tide Inc. (HITI) has quietly become one of the most interesting risk/reward setups in global cannabis. While many Canadian operators are shrinking or fighting for survival, High Tide has leaned into a Costco-style discount-club strategy in cannabis retail, used that model to grab share, and is now pushing into Germany’s rapidly scaling medical market.

From our perspective at DeepValue, High Tide sits squarely in the “potentially mispriced execution story” camp. The business is posting real free cash flow, running a differentiated loyalty program, and layering in an international wholesale platform, all while the market still values it more like a middling Canadian retailer with balance-sheet hair.

But this is not a “set it and forget it” stock. The margin of safety here depends on earnings durability and disciplined leverage management, not on hard assets or a fortress balance sheet. Investors need to watch Canadian same-store sales closely, track how Germany actually lands post-acquisition, and be ready to reassess if management leans too hard on its C$100 million capital-raising shelf.

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In this breakdown, we’ll walk through how the business really makes money, why the discount-club moat matters, what Remexian changes, where the downside lives, and how we’re thinking about valuation into 2026.

High Tide’s Business: A Discount-Club Engine With Global Ambitions

High Tide is best understood as a scaled, value-focused cannabis retailer with some high-margin add-ons, not as an e-commerce story.

According to the Q1 FY25 financial results PR, Mar 2025, Canadian brick-and-mortar retail generated about $484 million of High Tide’s $522 million FY24 revenue. E-commerce in the U.S. and abroad contributed only around $38 million. That mix means the equity case rests primarily on:

The economics of the Canna Cabana discount-club model in Canada
The stickiness and growth of Cabana Club and ELITE memberships
The incremental upside from German medical distribution via Remexian and Purecan
The ability to do all of this without stretching the balance sheet too far

Over the last five years, High Tide has transitioned from an accessories-heavy, online-focused operator into Canada’s largest cannabis retailer by store count. The key inflection point was the October 2021 launch of the Canna Cabana discount-club structure, which shifted the business mix toward high-frequency, value-oriented in-store sales. Since then, management has layered on:

White-label brands like Queen of Bud and Cabana Cannabis Co.
The paid ELITE membership tier (launched November 2022)
Cabanalytics, a data and advertising platform monetizing store-level insights

As chronicled in the FY24 recap, Dec 2024, this evolution has translated into real numbers: revenue grew from about $13.7 million in FY20 to $522.3 million in FY24, while operating income swung from losses to roughly $5 million in FY24.

How Does High Tide Actually Make Money?

At a high level, High Tide converts demand into revenue through four main streams:

Canadian retail cannabis and CBD products – the core engine, at roughly $452.8 million revenue in FY24
Consumption accessories – about $32.8 million
Data, analytics, advertising, and other services – about $36.7 million, including Cabanalytics and membership fees
International and U.S. e-commerce – a small but still meaningful contribution

Most revenue is recognized at the point of sale, but data and membership services are recognized over time. That matters for investors because it adds some smoothing to cash flows, even as quarterly working capital swings can be noisy, according to the 40-F (2025).

On the cost side, lease and labor costs are semi-fixed at the store level, while cost of goods sold scales with sales. As High Tide has grown, we’ve seen operating leverage show up in the numbers. In Q3 FY25, salaries and benefits fell to 12.2% of revenue, and adjusted EBITDA hit C$10.6 million on C$149.7 million revenue, as reported in the Q3 FY25 results PR, Sep 2025.

For the quarter ended July 31, 2025, High Tide delivered:

Revenue: C$149.7 million (+14% YoY, +9% QoQ)
Operating income: C$3.7 million
Net income: C$0.6 million (EPS C$0.0074)
Free cash flow: C$8.4 million on operating cash flow of C$10.7 million

Those data points come from the financial snapshot cited via FMP and the same Q3 FY25 PR, Sep 2025.

Membership-Driven Customer Behavior

The real story, though, is not just revenue and EBITDA—it’s how customers behave.

According to the FY24 40-F, over 90% of in-store transactions come from Cabana Club members. ELITE members visit more frequently and spend more per trip, effectively creating a subscription-like relationship with the store network.

Membership growth has been robust:

Cabana Club members: from 1.55 million in 2024 to about 2.4 million by late 2025
ELITE members: from 73k to roughly 139k over the same period

At the same time, same-store sales (SSS) grew 6–7% YoY, even as Canada’s non-medical cannabis market growth slowed to around 4% and national cannabis revenue fell roughly 3.3% in 2024, per the Custom Cones USA consumer report, Feb 2025. That combination indicates real share gains, not just riding a buoyant market.

Membership-driven behavior is what underpins High Tide’s moat.

The Discount-Club Moat: Is High Tide’s Advantage Durable?

We view High Tide’s core competitive edge as a loyalty-powered cost and traffic advantage.

The Canna Cabana discount club and ELITE tiers effectively let High Tide run with lower gross margins per unit, but higher revenue and gross profit dollars per store than the typical Canadian retailer. With Cabana Club members accounting for the vast majority of transactions, the company can:

Drive repeat visits and higher basket sizes
Use scale and data to negotiate better purchasing terms with licensed producers
Sustain everyday low prices that undercut smaller peers

Evidence for this edge is strong:

Same-store sales for Canna Cabana increased 142% between October 2021 and December 2024, while the average operator in High Tide’s five core provinces saw a 4% decline, per the Q1 FY25 PR, Mar 2025.
Retail sales per square foot sit around C$1,735, ahead of many top general retailers.
Revenue per store runs at about 2.1–2.3x peers, according to management commentary in the Q2 FY25 results, Jun 2025.

That level of outperformance over several years is rare in a commoditized, price-sensitive category like cannabis. It suggests something structurally different about the model.

Where Could the Moat Fail?

We don’t think this advantage is bulletproof. The biggest threats we see are:

1. Copycat discount clubs

If other large chains replicate the membership-plus-discount model at scale, High Tide’s price advantage could erode, compressing margins.

2. Overexpansion toward 300–350 stores

Management’s long-term roadmap envisions 300–350 Canadian locations, as highlighted in the Cabana Club 4-year anniversary PR, Oct 2025. If new stores start cannibalizing existing locations and SSS drops below market growth, the value of scale diminishes quickly.

3. Regulatory shifts

Changes in Canadian retail caps or German rules around telemedicine and import quotas could damage segment economics. High Tide itself warns in the 40-F (2025) that plateauing or declining SSS and gross margins would materially affect results.

In other words, the moat is real but highly execution- and regulation-dependent.

Germany and Remexian: High-Reward Second Act or Risky Distraction?

The Remexian acquisition is the most important new variable in the High Tide story.

Per the Remexian acquisition PR, Aug 2025, High Tide is acquiring a majority stake in a German medical cannabis importer and wholesaler that:

Generates around €70 million in revenue
Produces roughly €15 million in EBITDA
Operates at about 21% EBITDA margin
Controls about 16% share of imported flower in Q2 2025

In a market where patient counts have grown from roughly 250k in April 2024 to nearly 900k by May 2025, with projections of around 1.5 million by year-end 2025, according to the Cannabis Business Times op-ed, Aug 2025, that is a meaningful platform.

For High Tide, the prize is clear: if Remexian can sustain something like its current share and margins, it could add €15 million+ of EBITDA to the group, lifting total EBITDA above C$40 million and supporting a much higher valuation.

The Structural Risks in Germany

The catch is that German regulation is in flux. Multiple sources, including an OpenLeafy briefing, Oct 2025 and Business of Cannabis coverage, Aug 2025, point to potential tightening around:

Telemedicine and online prescribing
Mail-order fulfillment
Import quotas and channel rules

Our thesis breakers explicitly flag a scenario where, within 24 months of closing, new rules plus price competition drive Remexian’s EBITDA margin below 10% for at least four quarters. In that world, the economics of the deal deteriorate, and the “international growth pillar” narrative weakens significantly.

The acquisition structure—mix of equity, cash, and seller loans priced at 3.6–4x EBITDA, as described in Cannabis Business Times M&A coverage, Aug 2025—is reasonable on paper. But it still adds leverage and complexity just as High Tide’s contractual obligations in Canada remain sizable.

Our view: Germany is a high-upside call option, not yet a core underwriting pillar. We like the risk/reward, but we want to see at least a few quarters of post-closing performance before giving it full credit.

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Balance Sheet, Margin of Safety, and Why Position Sizing Matters

Here’s the uncomfortable truth: High Tide’s margin of safety is earnings-based, not balance-sheet-based.

At a share price around $2.71 (market cap about $236 million), the stock trades at roughly 10.3x EV/EBITDA with:

Negative trailing EPS of about -0.0545
ROE around -3.1%
Net debt/EBITDA of 0.81x
Interest coverage of 0.13x

These metrics are sourced from FMP and the Q3 FY25 financial data, Sep 2025.

On the positive side:

FY24 operating cash flow was about $35.5 million, per the 40-F (2025).
High Tide has posted five-plus consecutive quarters of positive free cash flow, totaling roughly C$21.8 million over that stretch, according to the 2025 milestones recap, Dec 2025.

On the negative side, the same filings highlight:

Contractual financial liabilities of about $107.2 million, including $62.6 million due within one year
Lease obligations of roughly $40.2 million
Intangibles and goodwill of about $92.8 million, plus repeated impairments in e-commerce cash-generating units

In plain English: if Canadian same-store sales or gross margins roll over, there is not a robust asset backstop. The company has meaningful fixed obligations and a balance sheet that can support growth if things go right—but not a lot of room for prolonged errors.

We define the downside boundary roughly as the point where High Tide can no longer comfortably cover lease and debt service from operating cash flows while retaining access to reasonably priced external capital. That boundary gets breached if:

Canadian SSS stagnates or declines and EBITDA falls, pushing interest coverage deeper below 1x
Net debt/EBITDA jumps above ~2.5x due to aggressive M&A or store build-out funded via the C$100 million shelf and high-coupon loans
Germany turns from upside to drag, with Remexian margins crushed in a tougher regulatory regime

In that world, permanent capital impairment via dilutive equity raises or restructuring is a real risk.

This is why we think position sizing is critical. High Tide makes more sense as a measured position in a diversified portfolio than as an outsized core holding, unless you have very high conviction on Canadian unit economics and German policy.

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Is HITI Stock a Buy in 2026?

Given that backdrop, how do we frame the stock today?

Our base, bull, and bear scenarios help clarify the skew:

Base case (50% probability)

Assumes 4–6% SSS growth in Canada
Annual free cash flow of C$20–25 million
Store count grows by 20–30, largely funded by internal cash generation
Group EBITDA steps into the mid-C$30 million range

In this scenario, we think a 12–13x EV/EBITDA multiple is reasonable given the cash generation, the moat, and some optionality from Germany. That implies an equity value around $3.50 per share, roughly 30% upside from $2.71.

Bull case (25% probability)

Remexian delivers ~€15 million+ of EBITDA on a sustained basis
Group EBITDA climbs above C$40 million
Free cash flow exceeds C$30 million annually

Under those conditions, we see a path to mid-teens EV/EBITDA, supporting a share price around $4.50, or 60%+ upside.

Bear case (25% probability)

Canadian same-store growth slows below 2%
German EBITDA margin compresses under 10%
Cash flows get squeezed, limiting internal funding for growth

That set-up points to a fair value closer to $2.00, with the equity behaving more like an option on a leveraged, highly regulated business.

Our judgment from the one-pager: POTENTIAL BUY, with a conviction level of 4 (on a 1–5 scale), a trim-above zone around $4.00, and an attractive entry zone near $2.40. We recommend a formal re-assessment in 6–12 months, once we have:

Full FY25 results, which should clarify whether trailing C$16.6 million FCF and 6–7% SSS growth are sustainable beyond ~220 stores
At least initial numbers from the consolidated Remexian business in Germany

What Should Investors Monitor Over the Next 12–18 Months?

To own HITI intelligently, you need a short checklist of metrics and triggers.

Core Canadian Retail Health

Key data points coming out of each quarter:

Same-store sales growth (SSS): We want to see 4–6%+ in line with our base case. If SSS drops to ≤2% for two consecutive quarters while new stores keep opening, that’s a red flag for saturation or competitive pressure.
Sales per square foot and revenue per store: Sequential declines, especially relative to national averages, would suggest the network is approaching a quality limit.

The Q3 FY25 PR, Sep 2025 is a good template for how management reports these metrics.

Balance Sheet and Capital Allocation

Monitor:

Net debt/EBITDA: We get nervous above 2.5x, especially if free cash flow turns negative.
Interest coverage: Already low; needs to trend up as EBITDA grows.
Use of the C$100 million base shelf and ATM program: Large equity or high-coupon debt raises primarily for growth (not refinancing) would make us re-underwrite the risk profile.

The FY24 40-F and subsequent 6-K/A (2025) provide the detailed obligations and capital structure context you should track.

Germany and Regulatory Backdrop

For Remexian, we care about:

Reported revenue and EBITDA margins post-closing
Any commentary around patient growth, import volumes, and channel mix
Official updates from Germany’s Health Ministry around telemedicine and mail-order, as flagged by OpenLeafy, Oct 2025

If, within 18–24 months, Remexian’s EBITDA margin slides under 10% and management guides to flat or declining earnings from Germany, we would treat that leg of the thesis as capped and value the stock almost purely on Canadian cash flows.

Membership and Moat Metrics

Finally, keep tracking:

Cabana Club membership: Are we on track toward ~3 million members?
ELITE membership: Does it approach or exceed ~200k in the medium term?
The relationship between membership growth and SSS—if membership keeps rising but SSS flattens, incremental members may be lower quality or more price-sensitive than early cohorts.

The Cabana Club 4-year anniversary release, Oct 2025 and 2 million member milestone PR, Jul 2025 are good benchmarks for pace and trajectory.

Will High Tide Deliver Long-Term Growth?

We think High Tide has a credible path to long-term growth, but it’s more of a compound-if-execute story than a simple secular winner.

The long-term roadmap calls for:

Converting the Cabana club model into a 300–350 store Canadian footprint, while preserving strong SSS and unit-level margins
Building Cabanalytics and advertising/data services into a material EBIT contributor as the store base and membership grow
Scaling a German medical import and wholesale platform and potentially exercising options on the remaining Remexian stake if performance justifies it

If management can hit those goals while keeping net debt in check and free cash flow positive, the earnings power of the business in 3–5 years could be meaningfully higher than what’s implied by today’s 10x EV/EBITDA multiple.

But we need to be honest about the industry context. The Canadian market is maturing and increasingly consolidated, as highlighted by the AQIC/Zuanic report, Apr 2025. Value is flowing downstream to efficient retailers like High Tide, but overall category growth has slowed to low single digits. Meanwhile, Germany is a structurally high-growth but regulatory-volatile landscape, where today’s winners can stumble quickly.

In that kind of environment, we view High Tide as a scaled, high-productivity operator with above-average odds of compounding, but with enough regulatory and balance-sheet risk that investors need to be selective about entry points and disciplined on valuation.

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Bottom Line: How We’d Approach High Tide Today

Putting it all together, here’s how we, as the DeepValue team, think about HITI right now:

The business quality of the Canadian retail engine is better than the average cannabis name, thanks to the discount-club model, loyalty economics, and tangible share gains.
The German Remexian acquisition is a meaningful upside lever, with credible EBITDA and margin levels today, but subject to non-trivial regulatory risk.
The balance sheet is serviceable but not bulletproof: positive free cash flow and modest leverage give some comfort, yet fixed obligations and low interest coverage leave limited room for extended missteps.
At around 10x EV/EBITDA, the stock reflects decent operations but, in our view, underprices the sustainability of free cash flow and the upside from Germany if things go reasonably well.

Our stance: HITI is a potential buy for investors who:

Are comfortable underwriting regulatory and balance-sheet risk
Are willing to monitor Canadian SSS, membership metrics, leverage, and German regulation closely
Size positions conservatively and reassess if net debt/EBITDA climbs above 2.5x or SSS drops toward the low single digits

We’d be more aggressive near or below our $2.40 attractive entry level and start trimming exposure as the stock approaches $4.00, assuming fundamentals track our base/bull expectations.

For investors willing to do the work—or to let DeepValue do that work programmatically—High Tide offers a compelling, though volatile, way to play scaled cannabis retail in a consolidating Canada plus a high-growth German medical market.

High Tide Inc. (HITI) Deep Research Report: Discount-Club Moat, German Expansion, And What 2026 Investors Should Watch