Blüm Holdings’ Turnaround Gamble: Revenue Gains, Margin Boosts, But Solvency at Risk

There is no credible source to confirm the assertion in the primary WSJ headline that Blum Capital (the private equity investor) is on a “losing streak”; our review found no recent reports matching that description. It seems likely there has been a mis-reference or confusion between the firm Blum Capital and the operator Blüm Holdings, Inc., which is the subject of recent financial distress and operational volatility.

Focusing on Blüm Holdings, the data shows a mix of structural improvement and ongoing operational risk. Year-over-year revenue growth has been inconsistent but improving: Q1 2025 revenue was up ~26% relative to Q1 2024, followed by further sequential growth through Q3. Gross margin has improved from the low 40s to near 50%, showing product mix and pricing discipline, though new acquisitions and promotional launches have dampened it somewhat.

On the cost side, SG&A has dropped dramatically during 2024 and 2025, especially due to restructuring, divestitures, and reduced litigation exposure. But these headwinds persist, especially around integrations, operating expenses for new stores, and one-time transition costs.

Liquidity is the central concern. Blüm had just US$370,000 in cash at mid-2025, working capital deficits exceeding US$20 million, large tax liabilities (both current and accrued), and liabilities exceeding assets. Management has stated “substantial doubt” about continuing as a going concern absent further capital.

Efforts to stabilize include converting debt to equity (e.g., ~$3.05M converted under a fixed valuation with associated warrant cancellations), acquisitions of retail locations (EWCR, GDR, etc.) often using stock or management agreements rather than cash, and portfolio optimization (selling non-core dispensaries). Each helps in theory, but risks are dilution, margin pressure, and execution strain.

Strategic implications: Investors or partners considering exposure to this segment must weigh the upside of emerging from restructuring (if Blüm delivers sustained cash flow, margin expansion, and addresses tax liabilities) versus the downside of insolvency, dilution, tax reform risks (notably Section 280E), and legal/control weaknesses. This makes Blüm a high-risk/high-optional return case, not a stable “losing streak” in which a large fund like Blum Capital is faltering.

Open questions include: What is the cash-flow breakpoint where new retail adds become positive contributors rather than cash drags? How dependent is Blüm on federal tax reform or favorable regulatory changes (Section 280E) to reduce tax burden? How deep is the material weakness in internal controls, and how quickly can those be remedied? And how much dilution is baked in through outstanding convertible securities and future financings?