Mr. Eric Ronsse reports

MERCANTO SECURES KEY LISTINGS IN QUEBEC'S NEW VAPE CATEGORY

Mercanto Holdings Inc. has received preliminary acceptance from the Quebec cannabis authority for three vape cartridge products under its Velada and Nordique Royale brands. This marks a significant milestone as Quebec prepares to launch its vape category -- the last major provincial market in Canada to do so.

Positioned at the forefront of Canada's last cannabis gold rush

Mercanto's approved products include:

• Cherry Blossom: a high-CBD and moderate-THC vape cartridge available in all retail stores across Quebec;
• Afghan Gold: a potent formulation featuring high THC and moderate CBD mirroring the company's popular hash and hash-infused preroll. This SKU (stock-keeping unit) will also be available in all stores;
• Peach Sumo: a high-CBD vape offered online through the Quebec cannabis authority's e-commerce platform.

With only 25 vape cartridges approved for retail stores province-wide at launch, Mercanto will hold 8 per cent of the physical shelf space, and with 30 SKUs approved for on-line sales, it will command 10 per cent of that segment. While this does not necessarily equate to 8 to 10 per cent of sales, as product velocity will ultimately determine market share, it is a strong starting point that underscores the trust Mercanto has built as a supplier in Quebec over the past three years.

"This is an important stepping stone for Mercanto and the culmination of our experience in Quebec," said Eric Ronsse, chief executive officer. "Vape cartridges represent the last true gold rush in Canadian cannabis. With no entrenched incumbents in Quebec, we are as well positioned as any competitor, starting on equal footing in a market with enormous potential."

Preliminary acceptance and next steps

While this acceptance is preliminary and conditional upon final reviews of packaging and the cartridges themselves by the Quebec cannabis authority, Mercanto does not anticipate any hurdles that would prevent these products from proceeding to full launch.

Market opportunity and timing

The Quebec cannabis authority projects that vape products will account for 11 per cent of total cannabis sales within the first year of launch, approximately $68-million annually, with roughly 50 per cent of this volume expected to be incremental to the market. In comparison, vape cartridges comprise about 15 per cent of total sales in Alberta, Ontario and British Columbia.

Mercanto's vape cartridges are expected to launch across all 105 retail stores and on-line in November, 2025 (Q2 fiscal 2026), alongside the two authorized batteries for the category, one of which the company will supply. This synchronized rollout means Mercanto enters Quebec's vape segment with a holistic strategy: providing not only cartridges but also the essential hardware to support the entire category.

"For the first time, we're entering a new category where no player holds an advantage. This levels the field and lets quality and execution speak. While our products won't be the cheapest on the shelf, and we expect to be mid-tier in pricing, they are crafted with a focus on quality, balanced formulations and consumer experience. We're confident that's where the long-term value lies," added Ronsse.

Elimination of nursery program supports scale

In addition, the Quebec cannabis authority will eliminate its nursery program this October. Previously, new products were tested in roughly 25 per cent of stores for six months before either expanding to full distribution or being delisted. Going forward, approved SKUs will be placed directly into all stores, which benefits established, trusted suppliers like Mercanto. One factor that remains unknown, however, is how frequently products will be reviewed for potential delisting and how long they will typically remain on shelves before such reviews occur. The company currently has four products in the nursery phase and expects clarity on their status in the coming months.

Outlook

Mercanto believes this launch marks the beginning of a new growth chapter. With a resilient, cash-focused model and a reputation built over years of consistent supply to the Quebec cannabis authority, the company sees the vape rollout as a catalyst that could materially impact future revenues.

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