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VFF's Cannabis Business Gains Scale: What's Fueling the Growth?
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Key Takeaways
Village Farms expanded cannabis operations in Q3, with the segment a key contributor.
VFF's Canadian net sales rose 29% to $46.6 million as the mix shifted to higher-margin products.
VFF saw export sales surge 758%, led by Germany, while the Netherlands facility ran full.
Village Farms International (VFF - Free Report) continued to expand its cannabis operations in the third quarter of 2025, driven by stronger performance in Canada and a sharp increase in international medical cannabis exports. During the quarter, the cannabis segment remained a key contributor to consolidated operating results.
Canadian cannabis net sales increased 29% year over year to $46.6 million. The growth reflected improved execution across targeted sales channels and a continued shift toward higher-margin product offerings. Management stated that portfolio rationalization efforts are progressing, with reduced exposure to lower-value products and greater emphasis on differentiated formats and brands. These actions, along with operational improvements, contributed to a cannabis gross margin of 56% in the quarter compared with 26% in the prior-year period.
International medical cannabis exports also increased significantly. Export sales rose 758% year over year, led primarily by shipments to Germany, with additional sales to other international markets. Management highlighted that international medical cannabis carries a higher-margin profile compared with domestic sales.
The Netherlands cannabis business added further scale during the quarter. The Phase I cultivation facility in Drachten operated at full capacity, generating $3.6 million in net sales and $1.3 million in adjusted EBITDA. Products from the facility were available in 91% of participating coffeeshops under the regulated program.
Village Farms is continuing to invest in capacity to support further growth. In Canada, the company has a 40-metric-ton expansion underway. In the Netherlands, construction of the Phase II facility remains on track, with the site expected to be operational in the first quarter of 2026 and increase the total annual production capacity to approximately 10,000 kilograms.
What the Latest Metrics Say About Village Farms
Village Farms, which competes with The Scotts Miracle-Gro Company (SMG - Free Report) and Mission Produce, Inc. (AVO - Free Report) , has seen its shares soar 338.8% in the past year against the industry’s decline of 13.8%. Shares of Scotts Miracle-Gro have declined 9.2%, while Mission Produce tumbled 6.6% in the aforementioned period.
Image Source: Zacks Investment Research
From a valuation standpoint, Village Farms’ forward 12-month price-to-sales ratio stands at 1.62, lower than the industry’s 2.03. VFF carries a Value Score of C. Village Farms is trading at a premium to Scotts Miracle-Gro (with a forward 12-month P/S ratio of 1.03) as well as Mission Produce (0.66).
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Village Farms’ current and next financial year bottom line implies year-over-year growth of 165.6% and 14.3%, respectively.
Image: Bigstock
VFF's Cannabis Business Gains Scale: What's Fueling the Growth?
Key Takeaways
Village Farms International (VFF - Free Report) continued to expand its cannabis operations in the third quarter of 2025, driven by stronger performance in Canada and a sharp increase in international medical cannabis exports. During the quarter, the cannabis segment remained a key contributor to consolidated operating results.
Canadian cannabis net sales increased 29% year over year to $46.6 million. The growth reflected improved execution across targeted sales channels and a continued shift toward higher-margin product offerings. Management stated that portfolio rationalization efforts are progressing, with reduced exposure to lower-value products and greater emphasis on differentiated formats and brands. These actions, along with operational improvements, contributed to a cannabis gross margin of 56% in the quarter compared with 26% in the prior-year period.
International medical cannabis exports also increased significantly. Export sales rose 758% year over year, led primarily by shipments to Germany, with additional sales to other international markets. Management highlighted that international medical cannabis carries a higher-margin profile compared with domestic sales.
The Netherlands cannabis business added further scale during the quarter. The Phase I cultivation facility in Drachten operated at full capacity, generating $3.6 million in net sales and $1.3 million in adjusted EBITDA. Products from the facility were available in 91% of participating coffeeshops under the regulated program.
Village Farms is continuing to invest in capacity to support further growth. In Canada, the company has a 40-metric-ton expansion underway. In the Netherlands, construction of the Phase II facility remains on track, with the site expected to be operational in the first quarter of 2026 and increase the total annual production capacity to approximately 10,000 kilograms.
What the Latest Metrics Say About Village Farms
Village Farms, which competes with The Scotts Miracle-Gro Company (SMG - Free Report) and Mission Produce, Inc. (AVO - Free Report) , has seen its shares soar 338.8% in the past year against the industry’s decline of 13.8%. Shares of Scotts Miracle-Gro have declined 9.2%, while Mission Produce tumbled 6.6% in the aforementioned period.
Image Source: Zacks Investment Research
From a valuation standpoint, Village Farms’ forward 12-month price-to-sales ratio stands at 1.62, lower than the industry’s 2.03. VFF carries a Value Score of C. Village Farms is trading at a premium to Scotts Miracle-Gro (with a forward 12-month P/S ratio of 1.03) as well as Mission Produce (0.66).
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Village Farms’ current and next financial year bottom line implies year-over-year growth of 165.6% and 14.3%, respectively.
Village Farms currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.