Cann Group’s $15 Million Obsidian Facility Ended in a Buyout

Cann Group never collected the A$15 million New York placement floated in March 2024. The firm behind that term sheet later advanced A$750,000 in convertible notes, then took a cash buyout on 3 July 2026.

The original notice was an indicative, non-binding term sheet, released while the Mildura cultivator was already drawing small cheques from the same New York shop and asking the ASX for time on its bank lines.

Obsidian’s First Cheque Was $2 Million

On 21 November 2023, Cann Group said it had raised A$2 million under a convertible securities facility. Extra money was optional. The company said it would have access to further drawdowns of up to A$13 million, with no single draw more than A$3 million and each draw subject to agreement between the parties.

That optional extra is the closest the public file gets to a A$15 million ceiling. A cleansing notice lodged in March 2026 later named the November 2023 paper as a convertible securities and share placement agreement with Obsidian, varied by a deed dated 27 February 2025.

Four months after the first draw, Cann was selling surplus kit and stretching National Australia Bank. On 25 March 2024 it told the ASX it had an indicative, non-binding term sheet from Obsidian Global Partners, LLC for up to A$15 million as an equity placement facility, and that it was in active talks with several other parties to fund operations as it scaled the Mildura plant.

THE OBSIDIAN FILE

1. 21 November 2023: Raises A$2 million on a convertible facility, with further draws up to A$13 million subject to agreement.
2. 25 March 2024: Tells the ASX it holds a non-binding term sheet from Obsidian Global Partners for up to A$15 million.
3. 16 March 2026: Enters a new convertible securities agreement with Obsidian Global GP, LLC for A$750,000 before costs.
4. 30 June 2026: Agrees to redeem the 350,000 notes still on issue; cash moves on 3 July 2026 and the facility ends.

The March 2024 sheet sat in an ASX query response, not in a completed placement. Trading in the shares had already been under pressure that month as the auditor pressed for evidence of future funding, and the company was simultaneously extending bank lines and selling equipment to keep cash coming in.

Terms of the $750,000 Convertible Note

The cheque that actually cleared arrived two years later. On 16 March 2026 Cann said it had entered a new convertible securities agreement with Obsidian Global GP, LLC to raise A$750,000 before costs, plus a A$10,000 legal contribution, as working capital toward an EBITDA-positive target.

Obsidian paid US dollars for notes with a face value of US$1.15 each. Cann issued 527,100 unquoted notes, nil coupon, maturing 18 months after execution. Conversion was Obsidian’s call at any time. The premium price was A$0.015 a share, well above the A$0.007 print on the announcement day, so the live formula was the discount to volume-weighted prices.

MARCH 2026 NOTE TERMS

If Cann raised more than A$2.5 million, Obsidian could force up to 20% of that money into a redemption. Cann could redeem in slices of at least A$175,000, but a conversion notice from Obsidian jumped the queue. Without shareholder approval the company could not issue more than 195,000,000 shares on the paper.

A discounted VWAP formula is how a small note becomes a large register. Each conversion prints stock below the recent tape, and the next conversion uses a still-lower window. That is why boards that can fund a buyout often do so before the 18-month clock runs.

194 Million Shares Came From the Notes

The 18 March 2026 cleansing notice, issued so conversion shares could be sold on without a fresh prospectus, put 1,596,783,332 shares then on issue. At the lowest allowed conversion price, the notes could have added 186,583,333 shares and taken the register to 1,783,366,665. Cash would have risen by A$740,000 after the A$10,000 cost, to a pro forma A$1.70 million against a 31 December 2025 cash line of A$955,000.

The same notice booked a maximum redemption liability of US$551,000, then A$787,000, equal to 105% of face. Accumulated losses already stood at A$165.4 million. Issued capital sat at A$197.3 million.

The year-end accounts show how much stock actually moved. During the year to 30 June 2026, 657,910 notes converted into 194,030,110 ordinary shares. Of the March purchase, 177,100 notes converted and 350,000 remained. Earlier Obsidian paper made up the rest of that conversion tally.

Those 194,030,110 shares are the cost of using a New York convertible as working capital. They hit the register at a discount to the tape, which is the feature of the instrument, not a glitch in it.

Why Cann Redeemed the Leftover in July

On 30 June 2026 the board agreed to take out every leftover note. The 30 July quarterly said the remaining Obsidian convertible notes redeemed in full at face, with the early-redemption premium waived.

THE JULY BUYOUT

• Notes retired: 350,000, the balance of the March purchase.
• Face value: US$402,500, with the 5% premium of US$20,125 waived.
• Set-off: US$38,796 that Obsidian still owed on placement shares.
• Cash paid: US$363,704 on 3 July 2026, after which the notes were cancelled and the facility ended.

The preliminary final report booked a A$206,000 loss on early redemption in finance costs, because the notes had been issued at US$1.15 of face for each US$1 advanced and were being cleared only three and a half months later. Cann did not pay that cheque from spare cash. It held A$0.49 million at 30 June 2026. On 3 July 2026 it increased its private credit line by A$2.0 million, drawable for the redemption and agreed working capital, and settled the same day.

Buying the paper in was cheaper than leaving a holder that could keep converting at 92% of the worst recent prints. Once those notes are gone, that seller is out of the book.

NAB Took $15.3 Million on $70.6 Million

The Obsidian cheques were never the large recapitalisation. That was the National Australia Bank settlement.

On 18 March 2024, a week before the A$15 million term-sheet disclosure, Cann announced a NAB working capital facility extension on a A$15.6 million line that was already fully drawn, pushing expiry to 31 March 2025, and a 12-month deferral of principal on a A$49.4 million construction book. It also sold surplus equipment to Biortica Agrimed Ltd for A$1.7 million in cash, or A$1.9 million if part paid in equity.

On 15 December 2025 the group executed a settlement deed under which A$70.6 million of NAB indebtedness was discharged for A$15.3 million, with all security released, producing a A$55.3 million gain on forgiveness. The payment was funded by a new A$15.4 million facility with an Australian private credit fund, maturing December 2027, and by A$9.0 million of equity before costs, split as a A$6.5 million placement and a A$2.5 million share purchase plan.

Net assets at 30 June 2026 were A$29.1 million, against a A$2.8 million deficiency a year earlier. Current liabilities fell from A$80.9 million to A$7.3 million. Statutory profit of A$20.3 million against a A$22.3 million loss the year before is almost entirely that bank haircut, set against a A$19.0 million impairment of Mildura property, plant and equipment recognised at the half and a A$1.7 million inventory write-down.

A Cheaper Domestic Flower Market

The plant the convertibles were meant to feed is a large GMP glasshouse at 23 Greentek Court, Koorlong, near Mildura. In FY25, trimmed dried-flower output rose 34% to 5.94 tonnes from 4.43 tonnes, and May 2025 set a monthly record of 771 kg. Own-brand Botanitech flower sales up 100% reached A$4.4 million, including Chemist Warehouse franchise distribution signed in the second half of that year.

FY26 did not convert that scale into a higher top line. Revenue from customer contracts fell 24% to A$8.6 million from A$11.3 million, which the 31 August 2026 preliminary final report blamed on domestic dried-flower price pressure and a choice to drop low-priced bulk volume. Other income fell to A$1.1 million from A$2.0 million. Operating expenses were cut 29% to A$13.0 million from A$18.3 million. Normalised EBITDA improved A$1.4 million, or 27%, to a loss of A$3.7 million from a A$5.1 million loss.

FY25 TO FY26, AS REPORTED

The 30 July 2026 Appendix 4C is the cash view. Receipts from customers were A$10.03 million for the year. Operating cash outflow narrowed to A$1.08 million from A$9.61 million. The June quarter produced a A$0.24 million operating inflow, the second in the group’s history after the December quarter, helped by a A$0.39 million R&D incentive in that quarter.

WHAT MILDURA WAS SELLING

• Botanitech: Own-brand flower held margins, while the consignee channel softened under tighter clinic oversight of higher-THC flower.
• Mallee Bloom: Launched in the June quarter with two new SKUs aimed at prescribers and patients.
• Bulk and export: Repeat United Kingdom orders followed a first own-grown shipment of about 120 kg in the March quarter, with German first shipments then targeted for the second half of calendar 2026 through an AMRadV-licensed partner.

After year end the TGA finished a GMP surveillance inspection of Mildura at an A1 (good compliance) rating, with no critical or major deficiencies. Imports from Canada and Thailand still sat on the same domestic price, which is the constraint the extra convertible cash was never going to lift on its own.

After the Debt Cut, the CEO Resigned

Jenni Pilcher, who joined the board in September 2020 and became chief executive in early 2024 to run the recut, tendered her resignation on 5 May 2026. Chairman Mike Ryan became interim executive chairman from 6 May 2026 while the board ran a search. Pilcher stayed on as a consultant on financial and strategic work.

The 29 August 2025 results release had put an EBITDA-positive FY26 on the public record. That target was missed. The 31 August 2026 accounts still show a A$3.7 million normalised EBITDA loss, even after the cost cuts she oversaw.

On behalf of the Board, I would like to thank Jenni for her dedication and leadership in guiding the Company through such a transformative period which included the critical restructuring of the Company’s debt and operating cost base. Her focus on financial discipline, operational efficiency and strategic positioning has materially strengthened the business.

Mike Ryan, Chairman, 5 May 2026 ASX announcement

Ryan’s note is about the NAB haircut and the opex cut, not about New York equity. The 30 July quarterly also said Cann was looking at partnering and M&A after the Little Green Pharma and Cannatrek merger in May 2026, with no binding deal and no certainty of one.

Frequently Asked Questions

Did Cann Group Receive the A$15 Million From Obsidian?

No. The March 2024 notice was an indicative, non-binding term sheet for an equity placement facility. The only large ceiling already on the file was the November 2023 convertible line, which had funded A$2 million and left further draws of up to A$13 million subject to agreement, with no draw allowed above A$3 million. The binding 2026 agreement was A$750,000 of notes.

What Extra Securities Did the March 2026 Deal Grant Obsidian?

Subject to shareholder approval at the next annual general meeting, Cann had to issue Obsidian 25,000,000 options with a A$0.015 exercise price and a two-year life. If shareholders voted the options down, Cann had to pay A$50,000 cash instead. Commitment shares were nil.

When Did the Obsidian Convertible Facility End?

The redemption notice went out on 30 June 2026 and the US$363,704 was paid on 3 July 2026 from an extra A$2.0 million of private credit. On payment the notes were cancelled and the facility ended. The accounts record a A$206,000 loss on that early redemption in finance costs.

How Much NAB Debt Did Cann Group Clear in December 2025?

A settlement deed dated 15 December 2025 discharged A$70.6 million of bank debt for a A$15.3 million payment, a A$55.3 million forgiveness gain, with all NAB security released. The replacement book is a A$15.4 million private credit facility due December 2027, alongside A$9.0 million of equity raised before costs.

Has Obsidian Used the Same Structure at Other Cannabis Companies?

Heritage Cannabis Holdings entered an equity financing with Obsidian Global Partners, LLC in November 2022 for up to US$20 million; that agreement was later cancelled, according to later Canadian court papers. Creso Pharma and Althea Group Holdings have also disclosed convertible or funding arrangements with the same New York group.

The 31 August 2026 accounts closed the year with export orders still delivering into August and with the convertible book gone. The A$15 million heading from March 2024 is now a cancelled note, a US$363,704 cheque, and a private-credit line that had to be increased so that cheque could clear.

Disclaimer: This article is news reporting and analysis of Cann Group Limited’s ASX filings and related company notices. It is informational only and is not investment advice, a solicitation to buy or sell ASX:CAN or any other security, or a recommendation of any financing structure. Readers who are considering an investment, a trade, or any action tied to these figures should consult a licensed Australian financial adviser or stockbroker who can assess their own position. Share counts, cash balances, conversion prices and facility status are taken from the cited company documents as they stood on those dates and can change with later issues, conversions, raisings or announcements.