Elevated LeverageA materially higher debt-to-equity (~1.28 TTM) raises interest and refinancing risk, reducing balance-sheet flexibility. If margins or pricing weaken, higher leverage constrains capital choices, increases fixed costs, and limits capacity to fund opportunistic expansion or absorb regulatory-driven revenue swings.
Michigan Excise Tax & Pricing PressureA structural 24% excise increases the sector's cost base and often cannot be fully passed to consumers. Combined with persistent pricing pressure in mature markets, this erodes sustainable ASPs and compresses long‑term margins, making margin recovery dependent on cost or yield improvements.
Regulatory & Timing RisksRegulatory timing and approvals directly affect capacity activation and revenue recognition in new markets. Delays (and related staffing/badging constraints noted in New Jersey) can defer expected production, hinder scale benefits from new facilities, and prolong fixed-cost absorption challenges.