Blum Holdings announced on January 7 2026 that it had completed a debt‑for‑equity conversion and issued a new senior secured promissory note on December 31 2025. The company converted $3.05 million of outstanding unsecured debt, including accrued interest, into common stock at a fixed price of $0.98 per share, issuing 3,248,547 new shares to the debt holders.
The conversion eliminated a sizable portion of Blum’s unsecured obligations, reducing the company’s leverage and simplifying its capital structure. In exchange, the holders received equity that dilutes existing shareholders, a trade‑off that management said is justified by the long‑term benefits of a cleaner balance sheet.
Alongside the conversion, Blum issued a $525,000 senior secured promissory note that bears 8.0 % interest and matures on December 31 2027. The note is secured by substantially all of the company’s assets and may be prepaid at any time without penalty. Warrants that had been issued in connection with the earlier unsecured notes were cancelled as part of the transaction.
Blum’s CEO, Sabas Carrillo, explained that the actions “reflect continued progress in simplifying our capital structure and reducing legacy obligations.” The move removes recurring interest expense while adding a new, asset‑backed debt line that provides liquidity for future growth initiatives, but it also introduces a new fixed‑cost obligation that the company will need to service until 2027.
The restructuring comes after a period of high debt and net losses. In Q2 2025 Blum reported a $1.9 million net loss on revenue of $3.5 million, while gross margins had improved to 49 % from 56 % in Q3 2024. The company’s debt load had been driven by prior financing rounds and asset‑sale proceeds that were used to fund expansion in the highly regulated cannabis sector. By converting debt to equity, Blum reduces its unsecured liabilities and positions itself to pursue new opportunities without the burden of high interest payments.
The new secured note, while adding debt, is backed by the company’s assets and offers a lower interest rate than the previous unsecured debt. The combination of debt reduction and new secured financing is intended to improve liquidity, support operational initiatives, and signal to investors that Blum is actively managing its capital structure to support long‑term growth.
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