Q2 2025 Green Thumb Industries Inc Earnings Call

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On today's call management will provide prepared remarks, and then we will open up the call for your questions to ask a question Analyst May Press Star then one on your Touchtone phone. If you are using a speakerphone. Please pick up your handset before pressing the key and to withdraw your question.

Speaker #1: Good afternoon. the Green Thumb Industries call will be starting momentarily. Thank ou.

<unk>. Please press Star then two please note this event is being recorded.

Speaker #3: After we're done, then five minutes to, iron out our cold evaluation. Options.

I would now like to turn the conference over to Shay cap lease <unk>.

Speaker #4: Yeah. We're, we're online.

Director of communications for Green thumb. Please go ahead.

Thank you Debbie good afternoon and welcome to.

<unk> second quarter 2025 earnings call I'm here today, with founder and CEO of Banco Blair, President, Anthony Giordano, and Chief Financial Officer, Matt Foster.

Speaker #3: No problem. I'd love to.

Today's discussion and responses to questions may include forward looking statements, which are subject to various risks and uncertainties that could cause our actual results to differ materially from these statements.

These risks and uncertainties are detailed in the earnings press release issued today, along with our reports filed with the United States Securities and Exchange Commission and Canadian Securities regulators, including our most recent annual report filed on Form 10-K.

This report along with today's earnings release can be found under the investors section of our website.

Green thumb assumes no obligation to update or revise any forward looking statements to reflect events or circumstances that may arise. After the date of this call.

Throughout the discussion green thumb will refer to non-GAAP financial measures, including EBITDA and adjusted EBITDA.

A reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures is included in our earnings press release, and SEC and SEDAR clause filings. Please note that all financial information is provided in U S dollars unless otherwise indicated.

Thanks, everyone and now here's Ben.

Thank you Shay.

Good afternoon, everyone and thank you for joining our second quarter 2025 conference call.

On a macro level THC demand and consumption remain at all time highs.

Our brands, including rhythm dog walkers, and Incredibles are showing real strength, along with record awareness as we increase their brand power and introduce the brand lifestyle to more Americans.

However.

Clarity on policy ever confusion and lack of institutional investment is made the sector challenging.

You would think that an industry is doing more than $35 billion in sales in 2025 that is fueled entirely by domestic demand.

Employing more than 420000 Americans full time.

Or do some goods cultivated exclusively in the United States, we received more low from Washington.

Cannabis companies are about as close as you can get to Trumps America first agenda.

Green thumb continues to actively advocate for federal regulatory change and with this president anything is possible.

So as you've heard me say many times our approach has been to turn out the noise and focus on what we can control.

Our second quarter performance reflects that our entire team is on the same page in doing just that and delivering strong results. Despite the persistent price compression across certain key markets.

Q2 revenue was 293 million% to 5% gain over the comparable period.

Adjusted EBITDA was $83 million or 28% of revenue in our second quarter cash flow from operations was $56 million.

Speaker #5: Have you been ready to start the call?

Of note. We also bought back five 6 million shares for $24 million, which is an average cost of $4 28 per share.

Speaker #1: We are ready to start the call. Good day and welcome to Green Thumb Industries' second quarter 2025 earnings call. All participants will be in listen-only mode.

By now most of you know the foundational values that have been our north star since we started green thumb 10 years ago.

Speaker #1: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. On today's call, management will provide prepared remarks, and then we will open up the call for your questions.

Cash is king high conviction capital allocation strong balance sheet and outstanding execution.

Along the way, we built an amazing portfolio of brands rhythm Incredibles people dog walkers rise, we believe we've only scratched the surface of their opportunity. So for now our main focus continues to be unlocking the potential of our brand currency in the market and that plan is well underway.

Speaker #1: To ask a question, analysts may press star, then one on your touchstone phone. If you are using a speakerphone, please pick up your handset before pressing the key, and to withdraw your question, please press star, then two.

First we have a deep understanding of the consumer relationship to candidates and we are successfully leveraging that insight to connect consumers to our brands through experiences that foster connection create buzz build loyalty and strengthen our market position.

Speaker #1: Please note this event is being recorded. I would now like to turn the conference over to Shay Caplice, Director of Communications for Green Thumb.

Speaker #1: Please go ahead.

Speaker #6: Thank you, Debbie. Good afternoon and welcome to Green Thumb's second quarter 2025 earnings call. I'm here today with founder and CEO, Ben Kovler, president, Anthony Georgiadis, and chief financial officer, Matt Faulkner.

In Q2, we kicked off our three city series of the rhythm bug balls with events in New York, Philadelphia and Chicago.

For the fifth year in a row, but ball celebrates the candidates professionals, who fuel the industry every day, while showcasing what it really means to live the rhythm lifestyle.

Speaker #6: Today's discussions and responses to questions may include forward-looking statements, which are subject to various risks and uncertainties that could cause our actual results to differ materially from these statements.

You have a huge thanks to our team for all the hard work they put in to bring these events to life.

Next up is the mirrors, what I'm on the line on September six and seven.

It gets us selling fast for our third annual music Festival presented by rhythm alongside partners, including rise dispensaries and senior read a THC margaritas.

Speaker #6: These risks and uncertainties are detailed in the earnings press release issued today along with the reports filed with the United States Securities and Exchange Commission and Canadian Securities Regulators, including our most recent annual report filed on Form 10-K.

The festival features onsite candidates consumption in a star studded lineup, including Damian and Stephen Marley de La Soul, Humphreys Mcgee and more.

Speaker #6: This report, along with today's earnings release, can be found under the Investors section our website. Green Thumb assumes no obligation to update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this call.

Second we strongly believe in the future of THC dreams, especially as alcohol consumption continues to decline.

Just to strengthen our position in this category Greenbelt became a major investor in Agra by Corporation, and we are supporting growth for senior read a THC Margarita is by securing distribution of top retailers, establishing notable partnerships and event presence and driving awareness in our direct to consumer channels.

Speaker #6: Throughout the discussion, Green Thumb will refer to non-GAAP financial measures, including EBITDA and adjusted EBITDA. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures is included in our earnings press release and SEC and CEDAR Plus filings.

We are now supporting antibodies next step to further expand its presence in the drink category by licensing rhythm THC beverages to Agra by bringing the rhythm lifestyle to more Americans and a new fast acting format.

Speaker #6: Please note that all financial information is provided in US dollars unless otherwise indicated. Thanks, everyone, and now here's Ben.

Rhythm beverages coming too bold formulations designed to match your mood rhythm sativa fuels your day with the uplifting blend of THC and naturally sourced caffeine delivering a smooth energizing boost and rhythm Kush of your online with a calming makes a THC CBD and other goodies crafted to relax the body.

Speaker #7: Thank you, Shay. Good afternoon, everyone, and thank you for joining our second quarter 2025 conference call. On a macro level, THC demand and consumption remain at all-time highs.

Speaker #7: Our brands, including Rhythm, Dog Walkers, and Incredibles, are showing real strength along with record awareness as we increase their brand power and introduce the brand lifestyle to more Americans.

Without clouding the mind.

Bold truth hit shelves in mid July in Illinois, and New Jersey, and direct to consumers via rhythm dreams Dot com and for those of you on the phone now for the next 24 hours. If you use the cold drink rhythm 25 on the site. If you go to 25% discount on your first order and a big Thank you from anthem.

Speaker #7: However, lack clarity on policy and confusion and lack of institutional investment has made the sector challenging, you would think, that an industry doing more than 35 billion dollars in sales in 2025 that is fueled entirely by domestic demand employing more than 420,000 Americans full-time and producing goods cultivated exclusively in the States would receive more love from Washington.

We've got the opportunity to share rhythm traced with attendees that bump off Chicago and they were a homerun.

We look forward to introducing rhythm beverages to more markets in the coming months and having them available at the Miracle I'm on the line. This September.

Finally, we will continue to innovate with our brands for meaningful partnerships and carefully manage our balance sheet, which gives us the flexibility to be opportunistic, especially in this capital constrained environment.

Speaker #7: Cannabis companies are about as close as you can get to Trump's America First agenda. Green Thumb continues to actively advocate for federal regulatory change and, with this president, anything is possible.

We have the best team in the business to continue moving our plan forward and we thank them all for their hard work next I will turn the call over to Anthony to review operations Anthony.

Speaker #7: So as you've heard me say many times, our approach has been to tune out the noise and focus what we can control. Our second quarter performance reflects that our entire team is on the same page in doing just that, and delivering strong results despite persistent price compressions across certain key markets.

Thanks, Ben as you just heard the team delivered another strong quarter generating $293 million of revenue.

<unk> 3 million in EBITDA, a 5% sequential increase in topline growth.

Walking through a few key developments from Q2, and where we're focused in the back half of the year.

Speaker #7: Due revenue was $293 million a 5% gain over the comparable period. Adjusted EBITDA was $83 million, or 28% of revenue, and our second quarter cash flow from operations was $56 million.

First capex, we invested $19 million capital during the quarter retail investments included store relocations renovations and openings in Pennsylvania, Minnesota, Ohio and Florida.

Speaker #7: Of note, we also bought back $5.6 million shares for $24 million which is an average cost of $4.28 per share. By now, most of you know the foundational values that have been our North Star since we started Green Thumb 10 years ago.

On the wholesale side, we made selective investments with a focus on expanding capacity and efficiency.

We still anticipate full year capex to approximate $80 million, our threshold for new spending remains high and we will continue to be.

Second CPG market share as we discussed.

Speaker #7: Cash is king. High conviction, capital allocation, strong balance sheet, and outstanding execution. Along the way, we built an amazing portfolio of brands: Rhythm, Incredibles, Bebo, Dog Walkers, Rise.

Last quarter, we continue to lean into markets and verticals, where we see room to grow since.

Since the start of the year, we've grown our CPG market share in key states, including Illinois, Pennsylvania, and New Jersey.

While the foundation of our brand strategy remains rhythm premium flower, we are encouraged by our share gains within the pre roll and bag categories.

Speaker #7: And we believe we've only scratched the surface of their opportunity. So for now, our main focus continues to be unlocking the potential of our brand currency in the market, and that plan is well underway.

This will remain a strategic focus for us going forward.

Third don't use opportunities.

Speaker #7: First, we have a deep understanding of the consumer relationship to cannabis, and we are successfully leveraging that insight to connect consumers to our brands through experiences that foster connection, create buzz, build loyalty, and strengthen our market position.

The company remains focused on its adult use opportunities in Minnesota, Pennsylvania and Virginia.

<unk> is expected to launch adult use sales this fall and our team is ready.

In parallel we are active in Pennsylvania, and Virginia educating decision makers in the various adult use frameworks that have experienced success and failure.

Speaker #7: In Q2, we kicked off our three-city series of Rhythm bugballs with events in New York, Philadelphia, and Chicago. For the fifth year in a w, bugballs celebrate the cannabis professionals who fuel the industry every day while showcasing what it really means to live the Rhythm lifestyle.

We remain cautiously optimistic that either in Virginia, or Pennsylvania will pass adult use legislation in the next 12 months.

Last near term outlook overall, we remain cautious about the near term outlook for our business in the industry.

Speaker #7: I want to give a uge thanks to our team for all the hard work they put in to bring these events to life. Next up is the miracle of Mundelein on September 6th and 7th.

The challenges we previously highlighted include systemic price compression.

Speaker #7: Tickets are selling fast for our third annual music festival, presented by Rhythm, alongside partners including Rise Dispensaries and Seniorita THC Margaritas. The festival features on-site cannabis consumption and a star-studded lineup including Damian and Stephen Marley, De La Soul, Humphreys McGee, and more.

Wholesale and retail largely due to increased competition oversupply.

Regulatory uncertainty whereby regs surrounding hemp and cannabis makes it very difficult to allocate capital with a long term lens and.

Macroeconomic pressure with consumers feeling the squeeze amid widening wealth disparity.

While the outlook on rescheduling has improved rescheduling alone does not address the systemic challenges to.

Speaker #7: Second, we strongly believe in the future of THC drinks, especially as alcohol consumption continues to decline. To strengthen our position in this category, Green Thumb became a major investor in Agrify Corporation, and we are supporting growth for its Seniorita THC Margaritas by securing distribution at top retailers and establishing notable partnerships and event presence and driving awareness in our direct-to-consumer channels.

To combat these pressures we are doubling down on the fundamentals.

Operational discipline brand strength scale, and a well capitalized balance sheet.

Strategy is simple quicker.

Putting the consumer at the center of everything we do.

Do you see demand in the U S not only growing its diversifying and new formats and channels for consumption rapidly emerge.

Speaker #7: We are now supporting Agrify's next step to further expand its presence in the drink category by licensing Rhythm THC beverages to Agrify, bringing the ythm lifestyle to more Americans in a new, fast-acting format.

Over the long term, we're confident in both our team and our approach we.

We believe we're well positioned to navigate near term headwinds, while staying in lock step with the evolving U S. Consumer one who is increasingly discovering the many ways THC can enhance their lives.

Speaker #7: Rhythm beverages come in two bold formulations designed to match your mood. Rhythm's Sativa fuels your day with an uplifting blend of THC and naturally sourced caffeine, delivering a smooth, energizing boost.

Before I close a quick reminder, our third Miracle in Monday wind takes place September six and seven.

This two day ground breaking music festival is held at our Monday minded window, a dispensary and allows for open candidates consumption.

Speaker #7: And Rhythm Kush helps you unwind with a calming mix of THC, CBD, and other goodies crafted to relax the body without clouding the mind.

It's going to be a vibe and hope to see you there.

I'll turn the call over to Matt to review our financial results.

Speaker #7: Both drinks hit shelves in mid-July in Illinois and New Jersey, and direct-to-consumers via Rhythmdrinks.com. And for those of you on the phone now for the next 24 hours, if you use the code DRINKRHYTHM25 on the site, you'll a 25% discount on your first order and a big thank you from Anthony.

Thanks, Anthony and Hello, everyone.

The second quarter, we delivered over $293 million in revenue, a 5% increase compared to the prior year period.

Revenue was driven by increased consumer packaged goods sales.

Overall retail revenue was up slightly versus the second quarter of 2024 due to new stores offset by significant pricing pressures across all markets.

Speaker #7: We had the opportunity to share Rhythm drinks with attendees at Bug Ball Chicago and they were a home run. We look forward to introducing Rhythm beverages to more markets in the coming months and having them available at the Miracle of Mundelein this September.

Second quarter 2025 comparable sales for stores opened at least 12 months decreased 4% versus the prior year period on a base of 91 stores due to continued price compression.

Speaker #7: Finally, we will continue to innovate with our brands for meaningful partnerships and carefully manage our balance sheet, which gives us the flexibility to be opportunistic especially in this capital-constrained environment.

Consumer packaged goods net revenue for the second quarter 2025 increased 17% versus the prior year period, driven by continued growth in New York and the addition of adult use sales in Ohio.

Speaker #7: We have the best team in the business to continue moving our plan forward. And we thank them all for their hard work. Next, I'll turn the call over to Anthony to review operations.

Looking forward, we expect third quarter sequential revenue to be flat to down low single digits, assuming the launch of adult use of Minnesota does not occur in the third quarter.

Speaker #7: Anthony?

Speaker #8: Thanks, Ben. As you just heard, the team delivered another strong quarter, generating $293 million of revenue and $83 million in EBITDA. A 5% sequential increase in top-line growth.

Gross profit for the third quarter was $146 million or 50% of revenue down from 151 million or 54% of revenue year over year. The decrease in gross profit was primarily driven by price compression.

Speaker #8: Let me walk you through a few key ments from Q2 and where we're focused for the back half of the year. First, CapEx. We invested $19 million in capital during the quarter.

Speaker #8: Retail investments included store relocations, renovations, and openings in Pennsylvania, Minnesota, Ohio, and Florida. On the wholesale side, we made selective investments with a focus on expanding capacity and efficiency.

Turning to the Opex selling general administrative expenses for the second quarter were $107 million or 36% of revenue compared to 97 million or 34% of revenue for the second quarter last year.

The increased total expenses was primarily attributable to an increase in comp and benefit expenses.

Speaker #8: While we still anticipate full-year CapEx to approximate $80 million, our threshold for new spending remains high, and we'll continue to be. Second, CPG market share.

SG&A, excluding depreciation amortization and onetime transaction costs and stock based comp, which we referred to it as normalized operating costs approximated 74 million compared to $67 million in the second quarter of last year.

Speaker #8: As we discussed last quarter, we continue to lean into markets and verticals where we see room to grow. Since the start of the year, we've grown our CPG market share at key states including Illinois, Pennsylvania, and New Jersey.

The increase year over year is mainly attributed to the 14th incremental retail stores, along with increased cash based compensation incentives.

Speaker #8: While the foundation of our brand strategy remains Rhythm Premium Flour, we are encouraged by our share gains within the pre-roll and bake categories. This will remain a strategic focus for us going forward.

The company incurred a net loss of 1 million or <unk> <unk> per basic and diluted share down from net income of $21 million or <unk> <unk> per basic and diluted share in the prior year due to the $12 million loss in assets it exclude.

Speaker #8: Third, adult use opportunities. The company remains focused its adult use opportunities in Minnesota, Pennsylvania, and Virginia. Minnesota is expected to launch adult use sales this fall, and our is ready.

Excluding this loss net income would have been $11 million or <unk> <unk> per share.

Adjusted EBITDA, which excludes noncash stock based compensation and other non operating cost was $83 million down from 94 million for the second quarter of 2024.

Speaker #8: In parallel, we are active in Pennsylvania and Virginia educating decision-makers on the various adult use frameworks that have experienced success and failure. We remain cautiously optimistic that either Virginia or Pennsylvania will pass adult use legislation in the next 12 months.

Part of the decline due to the shift in long term incentives to a larger cash portion, which impacted SG&A and adjusted EBITDA.

Speaker #8: Last, near-term outlook. Overall, we remain cautious about the near-term outlook for our business in the industry. The challenges we previously highlighted include systemic price compression, at both wholesale and retail, largely due to increased competition and versupply.

We expect to continue to experience pricing challenges that will keep margins and adjusted EBITDA to below 30% in the coming quarters.

Wins in the second quarter with a strong balance sheet, including cash of $177 million and working capital of 226 million.

Speaker #8: Regulatory uncertainty, whereby regs surrounding hemp and cannabis made it very difficult to allocate capital with a long-term lens. The macroeconomic pressure, with consumers feeling the squeeze amid widening wealth disparity.

Hello from operations for the quarter came in at $56 million.

In conclusion, we're pleased with our team's performance so far in 2025 and appreciate their ongoing commitment and contributions to green thumb.

Together, we remain committed to driving long term growth, while ensuring prudent capital allocation and cost efficiency.

Speaker #8: And while the outlook on rescheduling has improved, rescheduling alone does not address these systemic challenges. To combat these pressures, we are doubling down on the fundamentals.

With that I'll kick it back to Beth.

Thanks, Matt as we move into our second decade of operations. We are proud of what our team has built and the dedication and commitment they bring to work every day.

Speaker #8: Operational discipline, brand strength, scale, and a well-capitalized balance sheet. Our strategy is simple. Put the consumer at the center of everything we do. THC demand in the US is not only growing, it's diversifying as new formats and channels for consumption rapidly emerge.

I firmly believe that our team is our biggest differentiator and our greatest asset.

And I want to thank everyone for their hard work, we are optimistic and energized about the opportunity ahead.

Speaker #8: Over the long term, we're confident in both our team and our approach. We believe we're -positioned to navigate near-term headwinds while staying in lockstep with the evolving US consumer.

That said, we will take a pause and holding quarterly conference calls Green.

Green thumb as long term focused on creating value given the obstacles to wider investor support that we have repeatedly discussed.

Speaker #8: One who is reasingly discovering the many ways THC can enhance their lives. Before I close, a quick reminder. Our third miracle in Mundelein takes place September 6th and 7th.

We see the market is not focused on and does not recognize the fundamentals of the business quarter to quarter.

I think this is a practical and realistic decision and importantly will be back when the timing is right.

Speaker #8: This two-day groundbreaking music festival is held at our elein, Illinois dispensary, and allows for open cannabis consumption. It's going to be a vibe, and we hope to see you there.

In the meantime, we will continue to fully communicate to our quarterly press releases securities filings and other announcements.

Speaker #8: With that, I'll the call over to Matt to review our financial results.

We will continue to provide robust reason disclosures and our team will continue to be available for analysts and investors as requested for Nam noted, we're working hard to build long term value for our shareholders. Thank you all and now I'll pass the call back to operators.

Speaker #3: Thanks, Anthony, and hello, everyone. From the second quarter, we delivered over $293 million in revenue, a 5% increase compared to the prior year period.

Speaker #3: Revenue was driven by increased consumer packaged goods es. Overall, retail revenue was up slightly versus the second quarter of 2024 due to new stores offset by significant pricing pressures across all markets.

To the operator for questions.

We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.

Speaker #3: Second quarter of 2025 comparable sales for stores open at least 12 months decreased 4% versus the prior year period on a base of 91 stores due to continued price compression.

If you are using a speakerphone. Please pick up your handset before pressing the keys if at any time. Your question has been addressed and you would like to withdraw. Your question. Please press Star then two at this time, we will pause momentarily to assemble our roster.

Speaker #3: Consumer packaged goods net revenue for the second quarter of 2025 increased 17% versus the prior year period, driven by continued growth in New York and the addition of adult use sales in Ohio.

The first question comes from Pablo <unk> from <unk> and Associates. Please go ahead.

Speaker #3: Looking forward, we expect third quarter sequential revenue to be flat to down low single digits assuming the launch of adult use in Minnesota does not occur in the third quarter.

Good afternoon, everyone. This is rahul on for Pablo we have two questions. So first.

Speaker #3: Gross profit for the third quarter was $146 million or 50% of venue, down from $151 million or 54% of revenue year over year. The decrease in gross profit was primarily driven by price compression.

We have.

Can you talk about any changes you have made in Minnesota regarding cultivation capacity product assortment expansion store relocations or refurbishing and the second one would be are you gaining wholesale share in New York State. If yes could you give any color in terms of distribution penetration and.

Speaker #3: Turning the opex, selling general administrative expenses for the second quarter were $107 million or 36% of revenue compared to $97 million or 34% of revenue for the second quarter last year.

Speaker #3: The increased total expenses was primarily attributable to an increase in comp and benefits expenses. SG&A excluded depreciation, amortization, one-time transaction costs, and stock-based comp, which we refer to as normalized operating costs, approximated $74 million compared to $67 million in the second quarter of last year.

Products and brands sold.

Sure.

It's really good question stuff example, here and I'll I'll take them both.

The first answer on Minnesota is up.

Yes, we've done all of the things you kind of mentioned.

We have expanded capacity that was completed last year, we'd have renovated as well as relocating some stores to comp gives them ready.

Speaker #3: The increased year-over-year is mainly attributed to the 14 incremental retail stores along with increased cash-based compensation incentives. The company incurred a net loss of $1 million or 1 cent per basic and diluted share down from net income of $21 million or 9 cents per basic and diluted share in the prior year due to the $12 million loss on asset sales.

Conversion.

But I mentioned in my prepared remarks.

We expect to take place this fall and then we have increased our.

In fact, we are brand offering to additional SKU registration. So we did all our work in advance.

And since then we've been focused on staffing and training and were ready for <unk> for the game, we start in Minnesota.

Speaker #3: Excluding this loss, net income would have been $11 million or 5 cents per share. Adjusted EBITDA, which excludes non-cash stock-based compensation and other non-operating costs, was $83 million down from $94 million for the second quarter of 2024.

In New York.

We've seen a lot of.

We've seen nice growth on the CPG side of the business retail.

A bit of a hit where stores have opened up.

Speaker #3: Part of the decline is due to the shift in long-term incentives to a larger cash portion, which impacted SG&A and adjusted EBITDA. As we expect to continue to experience pricing challenges that will keep margins and adjusted EBITDA to below 30% in coming quarters.

The data for New York is a bit murky. However, we can see is that we're confident is is through our own land which is.

How many stores were shipping to what our total sales and what's the total amount of biomass the word CPE.

CPG channel.

Speaker #3: Moving to the second quarter of the strong balance sheet including cash of $177 million and working capital of $226 million. Cash flow from operations for the quarter came in at $56 million.

Unfortunately, all three of those shrunk through up into the right.

My guess, because we'll have probably more detail on how that continues to evolve in the coming quarters, but so far we're pretty excited about the progress that we've seen in New York and Super excited about the rest of the year.

Speaker #3: In conclusion, we're pleased with our team's performance so far in 2025 and appreciate their ongoing commitment and contributions to Green Thumb. Together, we remain committed to driving long-term growth while ensuring prudent capital allocation and cost efficiency.

Got it thank you and can we add one more.

Okay.

Are you able to sell your adult nine drinks in your dispensaries.

Speaker #3: With that, I'll kick it back to Ben.

Speaker #7: Thanks, Matt. As we move into our second decade of operations, we are proud of what our team has built and the dedication and commitment they bring to work every day.

We were able to sell adult Tonight drinks in our dispensaries, yes, as a finished goods manufacturing process has to be different by state. So it's not sourced from the same place, but at the same and the product.

Speaker #7: I firmly believe that our team is our biggest differentiator and our greatest asset. And I want to thank everyone for their hard work. We are optimistic and energized about the opportunity ahead.

Got it Perfect example, the real conundrum.

Today.

The mix really no sense.

Got it thank you.

Speaker #7: That said, we will take a pause in holding quarterly conference calls. Green Thumb is long-term focused on creating value and giving the obstacles wider investor support that we have repeatedly discussed, we see the market is not focused on and does not recognize the fundamentals of the business quarter to quarter.

Sure.

The next question is from Bill Kirk with Roth Capital Partners. Please go ahead.

Yes. This is Nick on for Bill. Thanks for taking the question just one for me on New York and the zoning miscalculations there. It looks like over 100 locations may have to be moved in another 44 pending now don't comply I'm just wondering if you've heard anything incremental around what may happen to these locations and just your sense from the near term future of New York, and how they'll kind of resolve this.

Speaker #7: I think this is a practical and realistic decision and, importantly, we'll be back when the timing is right. In the meantime, we will continue to fully communicate to our quarterly press releases, securities filings, and other announcements.

Thank you.

Speaker #7: We will continue to provide robust written disclosures and our team will continue to be available for analysts and investors as requested. For now, know that we're ing hard to build long-term value for our shareholders.

Yeah.

Anthony here another good question.

It's murky right.

We saw the announcement kind of scratched our heads like everybody else. It sounds like there's a couple ways. This could evolve and play out one could be a legislative fix that would kind of solve the issue and so that folks would not have to move.

Speaker #7: Thank you , and now I'll pass the call back to operators to the operator for questions.

Speaker #1: We will now begin the question and answer session. To ask a question, you may press star, then one on your touchstone phone. If you are using a speakerphone, please pick up your handset before pressing the keys.

The other is we've heard that they've offered up.

Some sort of payment to compensate folks for the amount of work that they would that.

That they're going to have to embark upon to move their stores.

Unfortunately, the comedy of errors in New York, just kind of continues through this is just reflective of really what we've seen.

Speaker #1: If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster.

With that rollout since since really.

Took place.

Fortunately for us none of our stores were impacted but.

Our Hearts go out to those that are impacted because we know.

Speaker #1: The first question comes from Pablo Zuanic from Zuanic & Associates. Please go head.

We can only imagine kind of emotions when they got that notice you can state.

Speaker #9: Good afternoon, everyone. This is Rahul on for Pablo. We have two questions, so first, we have can you talk about any changes you have made in Minnesota regarding cultivation capacity product assortment expansion store relocations or refurbishings?

Understood I appreciate the color.

Sure. Thanks, Bob.

Okay.

The next question is from John Chapman with Alliance Global Partners. Please go ahead.

Good afternoon, and thanks for the question. This is John on for Aaron Grey.

Speaker #9: And the second one would be are you gaining wholesale share in New York State? If yes, could you give any color in terms of distribution and penetration and products and brands sold?

So I know you touched on in the prepared remarks, some aggregate by licensing agreement, but could you provide smart color around the strategy you are looking to to deploy them.

Speaker #10: Sure. Both really good estions. This is Anthony here and I'll take them both. The first answer on Minnesota is yes. We've done all the things that you kind mentioned.

Leveraging your Canada, France, the THC hemp market, allowing for potential national distribution is teaming with rhythm.

THC beverages, and how are you aiming to approach this strategy given the federal legality uncertainty that remains.

Speaker #10: We have expanded capacity. That was completed last year. We have renovated as well as relocated some stores to kind of give them ready for use conversion.

Yeah, It's a great question, John It's Ben I'll take it I think it's insightful.

Look we think we build real brands since we now have an opportunity to operate with rhythm brand not constrained by schedule, one schedule three or anything like that its fully illegal farmville compliant product and we can act that way.

Speaker #10: That I mentioned in my prepared remarks was we expect to take place this fall. And then we have increased effectively our brand offering through additional SKU registration.

Speaker #10: So we did all that work in advance. And since then, we've been focused on staffing and training. And we're ready for the game to start in Minnesota.

And we plan to and we are it's.

It really just the beginning and it's really quite an exciting time, because the common denominator like the question a second ago as the other products. The same we know consumer demand, we know what consumers know how to make consumers feel really good with THC.

Speaker #10: In New York, you know we've en a lot of we've en nice growth on the CPG side of the business. Retail has taken a bit of a hit as more stores have opened up.

And so now it's just the continuation of that so we're able to take advantage of these sort of capital market anomalies lower our cost of capital invest appropriately to build brands American book same strategy in the products that are now available in thousands literally thousands of locations overnight.

Speaker #10: The data for New York is a bit murky. However, what we can see is that we're confident in is through our lens, which is how many stores are we shipping to?

Speaker #10: What are total sales? And what's the total amount of biomass that we're moving from the CPG channel? Unfortunately, all three of those charts are up and the right.

It has never before been possible in what was called marijuana that I don't even really know what that is anymore.

Because of how murky the rules are on the definitions.

Speaker #10: My guess is we'll have probably more detail on how that continues to evolve in the coming quarters. But so far, we're pretty excited about the progress that we've seen in New York and super excited about the rest of the year.

But we're all in on the investment.

And we love what's going on in the landscape, because we see consumers reaction to the product.

Amazingly positive.

So you're invited and everybody's divide it out to the Miracle I'm on the line coming up in a few weeks or any of our other events or onto the rhythm site to buy the drags and see what you think but we're excited.

Speaker #9: Got it. Thank ou. And can we add one more?

Speaker #10: Sure.

Speaker #9: Are you able to sell your Delta 9 drinks in your dispensaries?

Great. Thanks.

High level with wholesale it's continued to grow year over year, and putting analytics data indicates that <unk>.

Speaker #10: Are we able to sell Delta 9 drinks in our ensaries? Yes, as a finished good, the manufacturing process has to be different by state.

Performed well the past few quarters.

Speaker #10: So it's not sourced from the same place, but it's the same end product.

Is there maybe some more color on how much of this has been driven by expanded distribution and third party doors versus greater velocity in existing doors and maybe any other color you can provide on.

Speaker #9: Got it.

Speaker #10: Perfect example of the real conundrum in cannabis today. That makes really no sense.

Speaker #9: Got it. Thank ou.

A third party credit risk is a risk of spend.

Speaker #10: Sure.

Speaker #1: The next question is from Bill Kirk with Roth Capital Partners. Please go ahead.

Recently called out by some of your peers.

Yeah, another really good question.

You know the vast majority of the CPG grocery scene has been through third party doors.

Speaker #11: Yeah. This is Nick on for Bill. Thanks for taking the estions. Just one for me on New York and the zoning miscalculations there. It looks like over 100 locations may have to be moved and another 44 pending now don't comply.

We already had healthy bird accounting kind of coming into the year.

And so we really didn't have a lot of kind of room to grow that Berta county within a number of markets. So really focused on on third parties really leaning into a number of kind of key T States right I talked about in my prepared remarks, two nice share gains in Illinois, Pennsylvania, and New Jersey, We've added a lot of new doors, and New York and it's something that.

Speaker #11: I'm just wondering if ou've heard anything incremental around what may happen to these locations and just your sense for the near-term future of New York this.

Speaker #11: Thank ou.

Speaker #10: Yeah. You know, Anthony here. Another good estion. It's murky, right? We've, you know, we saw the announcement. We kind of scratched our heads like everybody else.

As the.

As the retail business has softened its an area that we've really focused and the other thing that we're constantly kind of tracking as the velocity and how fast kind of skus are turning both within our doors as well as third party and so what we're seeing is that the velocity is also increasing which is which is super exciting because we know that's the way we.

Speaker #10: It sounds like there's a couple of ways this could evolve and play out. One could be a legislative fix. That would kind of ve the issue and so that folks would not have to move.

Speaker #10: The other is we've heard that they've offered up some sort of payment to compensate folks for the amount of work that they would that they're going to have to embark upon to move their stores.

Can you kind of drive the business forward so.

Speaker #10: You know, unfortunately, the comedy of errors New York just kind of continues. And this is just reflective of really what we've seen with that rollout since it really, you ow, took place.

Team has done a really nice job and pumped to see what they can do in the back half of the year.

Great. Thanks for the questions.

Speaker #10: Fortunately for us, none of our stores are impacted, but you know our hearts do go out to those that are impacted because we know we can only imagine kind of the emotions when they got that notice from the state.

The next question is from Brenna.

Brenna Huntington with ATB capital markets. Please go ahead.

Perfect. Thank you and thanks for taking our questions just kind of curious on your thoughts on that.

Speaker #11: Understood. I reciate the color.

And like what we're seeing in the market with some companies going under and restructuring.

Speaker #10: Sure. Thanks, Bill.

Speaker #9: Thanks.

Speaker #1: The next question is from John Chapman with Alliance Global Partners. Please go head.

Sure I'll take that thanks Bruce.

You know always remains interesting I think the headline is we're being measured we're opportunistic but several bankruptcies restructurings or whatever words, you want to use means theres massive sale of assets going on.

Speaker #12: Good afternoon. Thanks for the question. This is John on for Aaron Gray. So I know you touched on in the prepared remarks on the Agrify licensing agreement, but could you provide some more color around the strategy you're oking to deploy?

As equity values are gone.

And so we are being as opportunistic as we can at the same time not wanted to inherit other problems.

Speaker #12: Leveraging your cannabis brands for THC hemp market, allowing for potential national distribution as seen with Rhythm Hemp THC beverages, and how are you aiming to approach this strategy given the federal legality uncertainty that remains?

Setting tax issues dealing with folks things like that.

Do not look for us to do a transformational deal we're being more surgical strategic on what can help us where we can measure the ROI I keep in mind, our business trades at a very low multiple so we're not likely to do a deal at a higher multiple and it's hard to trust the whole multiple and find a deal that will work. So we're very active but it's hard to get things over the line.

Speaker #10: Yeah. That's a great estion, John. It's Ben. I'll take it. I think it's insightful. Look, we think we've real brands. And we now have an portunity to operate with the Rhythm brand not constrained by Schedule 1, Schedule 3, or anything like that.

<unk> industry, but we're here and.

Speaker #10: 's fully legal. It's Farm Bill compliant product. And we can act that way. And we plan to. And we are. It's really just the beginning, and it's really quite an exciting time because the common denominator, like the question a second ago, is the end product the same.

We're talking to folks.

I understand so kind of as a follow up to that with regard with regards to your capital allocation priorities. What would you say the top three priorities are for the excess cash on hand and is expansion into international markets a potential.

Speaker #10: We know consumer demand. We know what umers want. We know how to make consumers feel really good with THC. And so now it's just the continuation of that.

Sure I can tell you that its Ben again.

Speaker #10: So we're able to e advantage of these sort of capital market anomalies, lower our cost of capital, invest appropriately to build brands, Americans love, same strategy, into products that are now available in thousands, literally thousands of locations overnight.

We're watching international we're studying it we're gonna go back and listen to the conference call is going on now to learn more.

And I still think our capital it's hard for me to get my head all the way around the return on invested capital you know overseas. We think we're building brands Americans Love and eventually that's going to create material value for shareholders and we see that happening in Europe, but we think it will happen in other places, but today, that's not high on the list.

Speaker #10: That has never before been possible in what was called marijuana. That I don't even really know what that is anymore. Because of how murky the rules are and the definitions.

Speaker #10: But we're all in on the estment. And we love what's going on in the landscape because we see consumers' reaction to the product. And it's amazingly positive.

Uses of capital are you always have enough cash on hand to be able to sleep very well, we understand our debt, we love our balance sheet.

And we're investing in the facilities, we're investing in growth, we're investing as Anthony talked about in Minnesota, New York and other places. We're ahead of the adult use markets in a couple of states as they come hopefully Virginia.

Speaker #10: So you're ited, and everybody's invited out to miracle in Mundelein coming up in few weeks, or any of our events or onto the ythm site, to buy the drinks and see what you ink.

Speaker #10: But we're excited.

And then we have funds looking for strategic M&A that could make sense.

Speaker #11: Great. Thanks. And high level, with wholesale, it's continued to w. Year over year. And putting analytics data into case is performed well the past few quarters.

But we're we're okay sleeping with a lot of cash excess cash.

Okay perfect. Thank you very much that's all for me I'll jump back in the queue.

Speaker #11: Is there maybe some color on how much of this has been driven by expanded distribution and third-party doors versus greater velocity and existing doors?

Thank you.

The next question is from Andrew simple with Bantam financial Please go ahead.

Speaker #11: And maybe any further color you can provide on third-party credit risk as AR risk has been recently called out by some of your peers?

Good evening, Thanks for taking my question here.

Just a single question, but I'm going to leave it pretty broad I imagine the world will look a bit different for the cannabis industry.

Speaker #10: Yeah. Another really good estion. You know, the vast majority the CPG growth we've en has been through third-party doors. You know, we already had healthy verticality kind of coming into the year.

Circle off for a detailed earnings call here.

Hoping that you could leave us with a two to three year Road map.

To the extent that it's possible to do so in an ever evolving cannabis industry.

Speaker #10: And so we really didn't have a lot of kind of room to grow that verticality within the number of markets. And so really focused on third parties.

Sure.

What are some of your most important strategic objectives for the next few years.

Speaker #10: And really leaning into a number of kind of key states, right? I talked about in my prepared remarks seeing nice share gains in OIS, Pennsylvania, and New Jersey.

So that.

We have the checklist.

Ah things to evaluate the business on those investors and analysts.

Speaker #10: We've added a lot of new doors in York. And you ow, it's something that as the retail business, you know, has softened, it's an area that 've really focused.

Over the next over the next few years here.

Where do you where.

Where are the strategic priorities for the business.

Speaker #10: Because the other thing that we're constantly kind of tracking is the velocity. And how fast kind the SKUs are turning both within our doors as well as third-party.

Great I can take that it's a good question, maybe the last I don't know anybody else in the queue, but.

Speaker #10: And so what we're seeing is that the velocity is also increasing, which is super exciting because we know that's the way we can continue to kind of drive the business forward.

I'd say the headline answer to that is what is the power of our brands wherever they exist who knows about them and what do they mean and what do I mean, what is the awareness factor what is our pricing power.

Speaker #10: So the team's done a really nice job and pumped to see what they can in the back half of the year.

Heads up against anybody else, what's that distribution look like and how are we doing.

Speaker #11: Great. Thanks for the estions.

Headlines here would be what's the balance sheet.

Speaker #1: The next question is from Brenna Cummington with ATB Capital Markets. Please go head.

We've got our balance sheet is in a precarious position things did not go well. So we want to keep the balance sheet well under control rainy day situation feel really good about what we're doing and I think the third checking would be and again, we're gonna have annual meetings and were available for anybody to ask any questions and we invite everybody to come to the annual meeting.

Speaker #13: Perfect. Thank you. And thanks taking our questions. Just curious on your thoughts on the M&A given like what 're seeing in the markets with some companies going under and restructuring.

The team do.

You know the secret to our success is the team I've mentioned that over time, we really believe in it we're investing in the team and keeping the team together, there's obviously going to be changes over time, but making sure that people are working liking where they were having a good time and enjoying what we're up to remains key to what we do so brands balance sheet.

Speaker #10: Sure. I'll take that. Thanks, Bree. It's en. You know, always remains interesting. I think the headline is we're being measured. We're opportunistic. But several bankruptcies, restructurings, or atever words you want to use means there's massive sale of assets going on.

Speaker #10: As equity values are gone. And so we are being as opportunistic as we can at the same time not wanting to inherit other problems, understanding tax issues, dealing with folks, things like that.

<unk>.

Yeah.

That's great. That's helpful I'll turn the call back over thank you.

Okay.

Yeah.

Speaker #10: You know, do not look for us to do a transformational deal. We're being more surgical, strategic on what help us, where we can measure the ROI.

This concludes our question and answer session I would like to turn the conference back over to Ben Cobbler for any closing remarks.

Speaker #10: Keep in mind, our business trades at a very low multiple. So we're likely to do a deal at a multiple. And it's hard to trust the low multiple and sign a deal that'll .

Thanks, everybody and those who have been with US 29 conference calls in a row. We appreciate that a few of you are out there we noticed that we liked it.

Speaker #10: So we're very active but I, you know, it's hard to get things over the line at the difficult industry. But we're here. And you know, we're talking to folks.

And we will be live at the annual meeting coming up in June, but Florida that funnel up everybody should be an interesting fall enjoy the rest of your summer. Thank you.

Speaker #13: I understand. So kind of as a follow-up to that, with regards to your capital allocation priorities, what would you say the top three priorities are for the excess cash on hand?

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Speaker #13: And is expansion to international markets a potential?

Speaker #10: Sure. I can take that. 's Ben, again. You know, we're ching international. We're ying it. We're going to go back and listen to the conference call that's going on now to learn more.

Speaker #10: And I still think our capital is hard for me to get my head all the way around the return on invested capital. You know, overseas.

Speaker #10: We think we're building brands, Americans love, and eventually that's going to create, you know, material value for shareholders. And we see that happening in Europe.

Speaker #10: And we think it'll happen in other places. But today, that's not high on the list. Uses of capital are, you know, always have enough cash on hand to be able to sleep very well.

Speaker #10: We understand our debt. We love our balance sheet. And we're investing in the facilities. We're esting in growth. We're esting as Anthony talked about in Minnesota and New York and other places.

Speaker #10: We're ahead of the adult use markets in a couple of states as they come. Hopefully, Virginia. And then we have funds looking for strategic M&A that could make sense.

Speaker #10: But we're okay sleeping with a lot of cash, excess cash.

Speaker #13: Okay. Perfect. Thank you very much. That's all for me. I'll jump back in the queue.

Speaker #10: Thank you.

Speaker #1: The next question is from Andrew Simple with Bentham Financial. Please go ahead.

Speaker #14: Good evening. Thanks for taking my question here. Just a single question, but I'm going to leave it pretty broad. I imagine the will look a bit different for the cannabis industry next time we circle up for a GTI earnings call here.

Speaker #14: So was hoping that you could leave us with a two to three-year roadmap to the extent that it's ible to do so in the never-evolving cannabis industry.

Speaker #14: In short, you know, what are some of your most important strategic objectives for the next few years? So that you know we have a checklist of things to evaluate the business on as investors and analysts.

Speaker #14: Over the next few years here, where do you where are the strategic priorities for the business?

Speaker #10: Great. I can take that. It's a good question. Maybe last. I don't know if anybody else is in the queue, but you know I would say the headline answer to that is what is the power of our brands?

Speaker #10: Where do exist? Who knows about them and what do they mean? And what do they mean? You know, what is the awareness factor? What is our pricing power?

Speaker #10: Heads up against anybody else. What's distribution look like? And how are we ing? Headline two would be what's the balance sheet? If we've got a balance sheet that's in a precarious position, things did not go well.

Speaker #10: So we want to keep the balance sheet well under control. Rainy day situation. Feel really good about what we're ing. And I think the third check-in would be, and again, we're going to have annual meetings and we're available for anybody to ask any questions.

Speaker #10: And we invite everybody to come to the annual meeting. Is how's the team doing? You know, the secret to our success is the team.

Speaker #10: I've mentioned over time. We really believe in it. We're investing in the team. And keeping the team together, there's obviously going to changes over time.

Speaker #10: But making sure that people are working, liking where they work, having a good time, and enjoying what we're to, remains key to what we do.

Speaker #10: So brands, balance sheet, team.

Speaker #14: That's great. That's helpful. I'll turn the back over. Thank you.

Speaker #10: Sure.

Speaker #1: The this concludes our question and answer session. I would like to turn the conference back over to Ben Covler for any closing remarks.

Speaker #10: Thanks, everybody. Those of you that have been with us 29 conference calls in a row. We appreciate that. A few of you are out there.

Speaker #10: We noticed that. We like it. And we will be live at the annual meeting coming up in June. Look forward to that. Buckle up, everybody.

Speaker #10: It should be an esting fall. Enjoy the rest of your summer. Thank you.