Why Curaleaf Remains a Strong Sell Despite Recent Analyst Upgrades

The recent surge in analyst upgrades for Curaleaf Holdings (CURLF) has ignited a wave of optimism in the cannabis sector. Firms like Cormark and ROTH Capital Partners have reiterated “Buy” or “Outperform” ratings, citing regulatory tailwinds and international expansion. Yet, beneath this veneer of confidence lies a company grappling with unsustainable debt, operational fragility, and a regulatory environment that remains a minefield. For investors, the question is not whether Curaleaf can capitalize on short-term momentum but whether its long-term fundamentals justify the risk.

The Illusion of Optimism

The market's enthusiasm is fueled by two primary factors: the potential passage of the SAFER Banking Act and Curaleaf's global expansion. Analysts argue that federal banking reform would alleviate liquidity constraints, while the company's 74% year-over-year international revenue growth in markets like Germany and Turkey is hailed as a triumph. Indeed, Curaleaf's stock surged 14% following a rating upgrade in late July 2025, despite a Q1 net loss of $54.8 million and $561 million in debt.

However, this optimism overlooks a critical truth: Curaleaf's financial health is a house of cards. The company's adjusted EBITDA of $65.5 million in Q2 2025, while positive, masks a $50.6 million net loss and a debt-to-equity ratio that has ballooned to 1.2x. reveals a trajectory far worse than its competitors, who have either deleveraged or exited unprofitable markets.

The Cost of Expansion

Curaleaf's aggressive international push—spanning 15 countries and 17 U.S. states—has become a double-edged sword. While its 66th U.S. retail location in Florida and a new license in Turkey signal growth, these ventures require capital expenditures of $31.3 million in just six months. The company's free cash flow of $19.8 million over the same period is insufficient to service its debt, let alone fund expansion.

Moreover, the cannabis industry's regulatory volatility cannot be ignored. The U.S. federal classification of cannabis as a Schedule I substance remains a barrier to mainstream banking access, and the DEA's reclassification to Schedule III—while promising—is far from guaranteed. shows that even minor shifts in policy can erase years of progress.

Product Diversification and Market Realities

Curaleaf's pivot to hemp-derived THC products, such as seltzers under The Hemp Company brand, is another touted strength. Yet, this strategy hinges on the success of a $1.5 billion market that is still in its infancy. The company's Q1 2025 gross margin expansion of 50% is impressive, but it comes against a backdrop of declining prices in mature markets like Canada and California. Analysts' average price target of 525% above current levels assumes a best-case scenario: regulatory clarity, stable pricing, and no further debt accumulation.

The Case for a Sell

For all its strategic moves, Curaleaf's financial structure is unsustainable. Its $561 million in debt, coupled with a net loss of $105.4 million in the first half of 2025, raises red flags. Even if the SAFER Banking Act passes, the company's ability to service its debt without a material increase in EBITDA remains questionable. illustrates a widening gap that could force asset sales or restructuring.

Investors must also consider the operational risks of its global footprint. Regulatory hurdles in Turkey, supply chain bottlenecks in Europe, and fierce competition in the U.S. retail market all threaten to erode margins. The recent hiring of senior executives, while a positive, does not address the root issue: Curaleaf is overextended.

Conclusion: A Cautionary Bet

Curaleaf's recent upgrades and regulatory optimism are seductive, but they obscure a company in financial distress. While the cannabis sector's long-term potential is undeniable, Curaleaf's current valuation—trading at an 8.14x EV/EBITDA—fails to account for its debt burden and operational risks. For investors, the prudent move is to sell or avoid the stock. The risks are not priced in; they are baked into the company's balance sheet. Until Curaleaf can demonstrate a path to profitability without relying on speculative regulatory outcomes, it remains a high-risk, low-reward proposition.

underscores its volatility, a stark reminder that in the cannabis sector, momentum is often a fleeting illusion.