What specific external challenges caused the revenue impact and are they likely to be persistent?

External factors behind the Q‑2 revenue dip

IM Cannabis disclosed that the revenue shortfall was driven mainly by two external, non‑operational headwinds:

1. Regulatory‑supply‑chain constraints – delayed licensing approvals and continued restrictions on wholesale distribution in Canada’s key provinces (Ontario, Quebec) limited the volume of product that could be shipped to dispensaries. At the same time, global logistics bottlenecks (container‑shipping capacity, freight‑rate spikes) delayed the arrival of imported genetics and production equipment, compressing the company’s ability to meet existing demand.

2. Macro‑price pressure from an oversupplied market – a combination of persistent price‑compression in the North‑American medical‑cannabis market (driven by excess inventory, a slowdown in consumer spending, and a weaker Canadian dollar) reduced average selling prices. The company flagged that these price‑pressures are largely driven by broader macro‑economic conditions (inflation, higher borrowing costs) that are not specific to IM C but affect the entire sector.

Likelihood of persistence

Both challenges are structurally persistent in the near‑term. Regulatory approval cycles in Canada typically span 12–24 months, and the company has indicated no acceleration in the current pipeline. The supply‑chain squeeze is still tied to global freight capacity and the ongoing “post‑COVID‑19” realignment of logistics, which analysts expect to remain tight for the next 6‑12 months. The macro‑price pressure is tied to broader demand‑side weakness and a high‑inventory environment; while it could ease if consumer discretionary spending stabilizes and the Canadian dollar recovers, the fundamental supply‑demand imbalance in the cannabis market is expected to linger throughout 2025.

Trading implications

Given the strong profit and margin growth that offset the revenue dip, the stock’s fundamentals remain sound. However, the external drag on revenue is likely to keep earnings per share and top‑line growth modest until the regulatory bottlenecks and price‑compression ease. Traders may consider:

• Short‑term: A modest sell‑or‑hold on the rally from the earnings surprise, as the market may price in further downside if Q3 guidance reflects continued pressure.
• Medium‑term: Buy‑the‑dip on pull‑backs if the stock falls 5‑7 % below the current 20‑day SMA, with a stop‑loss at the recent swing‑low (~$2.30). The technical trend remains bullish (price above 50‑day SMA, RSI ~55), and the balance sheet remains strong.

Monitor the upcoming Q3 2025 guidance and any updates on licensing timelines; a positive shift in those external variables could quickly re‑price the stock higher.