Earnings call transcript: Green Thumb Q4 2024 revenue rises 6%

Green Thumb Industries (OTC:GTBIF) reported a robust financial performance in the fourth quarter of 2024, with revenue climbing to 294 million dollars, marking a 6% increase year-over-year. The company also posted a net income of 13 million dollars, or 0.04 dollars per diluted share. Despite facing ongoing pricing pressures, Green Thumb maintained a strong balance sheet and expanded its market presence. According to InvestingPro data, the company currently has a market capitalization of $30.57 million, with its stock showing significant volatility over the past year. InvestingPro analysis indicates the stock has experienced both strong recent momentum and longer-term challenges, with a 791% return over the past six months despite a 68% decline over the past year.

Key Takeaways

• Q4 2024 revenue increased by 6% year-over-year to 294 million dollars.
• Net income reached 13 million dollars with earnings per share at 0.04 dollars.
• Strong operational cash flow of 191 million dollars.
• Continued investment in new product lines and market expansion.
• Pricing pressures expected to persist into 2025.

Company Performance

Green Thumb Industries demonstrated solid growth in the fourth quarter of 2024, driven by strategic investments and market expansion. The company opened 10 new stores during the year, bringing its total to 101, and expanded wholesale operations in key states like New Jersey and Virginia. This growth is set against a backdrop of increasing demand for cannabis products, with 43 million Americans reporting THC consumption in the past month. InvestingPro subscribers can access detailed analysis of Green Thumb’s financial health, which currently rates as "FAIR" based on comprehensive metrics including cash flow and price momentum scores. The platform offers 8 additional exclusive ProTips and a complete financial analysis in the Pro Research Report.

Financial Highlights

• Revenue: 294 million dollars, up 6% year-over-year.
• Gross Profit: 158 million dollars, representing 54% of revenue.
• Net Income: 13 million dollars, or 0.04 dollars per diluted share.
• Adjusted EBITDA: 98 million dollars, with a 33% margin.
• Cash Flow from Operations: 191 million dollars.
• Cash reserves: 172 million dollars.

Outlook & Guidance

Looking ahead to 2025, Green Thumb expects capital expenditures to remain consistent with 2024 levels at approximately 80 million dollars. The company plans to focus on store renovations in Minnesota, Virginia, Ohio, and Pennsylvania, while continuing investments in New Jersey, New York, and Connecticut facilities. Despite anticipated mid-single-digit revenue declines in the first quarter, Green Thumb remains optimistic about its strategic direction.

Executive Commentary

"We win because of the team and we believe in the direction Green Thumb is heading," said Ben Koehler, CEO. This sentiment echoes the company’s confidence in navigating the competitive cannabis market. Anthony Georgiades, President, highlighted the robust consumer demand for THC products, reinforcing the company’s growth prospects.

Risks and Challenges

• Continued pricing pressures could impact profit margins.
• Regulatory uncertainties around federal cannabis reform.
• Potential market saturation in key states.
• Economic conditions affecting consumer spending.
• Competition from other cannabis brands and products.

Green Thumb Industries remains focused on strategic growth and operational efficiency, positioning itself to capitalize on the increasing demand for cannabis products. As the company navigates potential challenges, its strong financial foundation and market presence provide a solid platform for future growth.

Full transcript - Global Tech Industries Group Inc (GTII) Q4 2024:

Conference Operator: Good day and welcome to the Green Thumb Industries Fourth Quarter and Full Year twenty twenty four Earnings Conference Call and Webcast. All participants will be in a listen only mode. Please note this event is being recorded. I would now like to turn the conference over to Shay Caplis, Director of Communications for Green Thumb. Please go ahead.

Shay Caplis, Director of Communications, Green Thumb Industries: Thank you, Betsy. Good afternoon and welcome to Green Thumb’s fourth quarter and full year twenty twenty four earnings call. I’m here today with Founder and CEO, Ben Koehler President, Anthony Georgiades and Chief Financial Officer, Matt Faulkner. 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. These risks and uncertainties are detailed in the earnings press release issued today along with the reports filed with the United States Security and Exchange Commission and Canadian security regulators including our most recent annual report filed on Form 10 ks.

This report along with today’s earnings release can be found under the investor 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 plus filings. Please note that all financial information is provided in U.

S. Dollars unless otherwise indicated. Thanks everyone. And now here’s Ben.

Ben Koehler, Founder and CEO, Green Thumb Industries: Thanks Shay. Good afternoon everyone and thank you for joining our fourth quarter year end ’20 ’20 ’4 conference call. It’s been an interesting start to the new year as the new administration takes office in DC. There were high hopes for federal reform under Biden that did not materialize despite favorable conditions for a change to cannabis regulations. With the new administration, Trump’s recent picks are not inciting optimism for progress.

Yet THC demand is on the rise, hitting record highs. As we’ve said from the beginning though, we have set ourselves up to succeed regardless of what does or does not happen at a federal level. Our North Star continues to be the American consumer. A 2023 study twenty twenty three study saw that nearly 43,000,000,000 Americans reported THC consumption in the last thirty days, which is a new high and makes the S curve of adoption begin to go vertical. These trends are the lifeblood of our business and the reason we know cannabis in America is big and getting bigger despite the out of touch DEA and their goal of limiting access to well-being for Americans and our veterans.

The DEA is clearly asleep at the wheel. But the Green Thumb team is wide awake, focused on the factors we can control to grow our business over the long term and tuning out the noise. A quick note on the math of pricing pressure. Remember, if pricing is down 20%, the team has to deliver 25% more units to breakeven. And that math is tremendously powerful.

So with that backdrop and in the face of pricing pressure, the Green Thumb team continued to deliver. You would not know if looking at the stock price, which is hovering at a fifty two week low, but in the fourth quarter we achieved record revenue of $294,000,000 record adjusted EBITDA of $98,000,000 I think 33% margin and our full year 2024 cash flow from operations was $195,000,000 after paying $131,000,000 in taxes. These numbers are quite an accomplishment to which I credit our team and senior leadership. I have been fortunate to work alongside an incredibly smart and loyal team with leaders who have been together for many years and that consistency and longevity matters. We win because of the team and we believe in the direction DreamThumb is heading and our bright future ahead for several reasons.

First, our focus on cash flow and disciplined capital allocation has been critical to executing our strategy. Our cash flow and balance sheet allow us to sleep well. We ended 2024 with a strong balance sheet that gives us the optionality to maximize shareholder return through thoughtful CapEx, share repurchase programs and strategic M and A. In 2024, we engineered an historic industry first one hundred and fifty million dollars syndicated bank loan, which helped us retire $225,000,000 in senior secured debt that was due in April 2025. With new financing in place, we delevered our balance sheet, maintained our cash interest expense and added duration another five years to execute our growth plan.

The interesting reality is that is only $150,000,000 of leverage on what was just three seventy million dollars of EBITDA. Second, our ability to innovate and evolve rapidly to seize opportunity in a dynamic environment. Today’s most successful companies are masters of reinvention who see both disruption and new trends emerging simultaneously. They move quickly to capitalize on opportunities while others are dangerously complacent. We have tried to model green thumb in that way as we do not want to be the ostrich and stick our heads in the sand and miss something.

Instead, we focus on what is best for the American consumer because after all, we are the American consumer. As consumers, we clearly see the trends that can propel green thumb forward and we’re positioning ourselves to benefit. The changes in alcohol consumption versus cannabis consumption are too dramatic to ignore. We have all discussed the potential harmful effects of alcohol before and on January 3, the Surgeon General advised the public on the now established link of alcohol and cancer. It’s no surprise alcohol consumption rates continue to decline, especially with younger generations.

Meanwhile, we are seeing more consumers turn to cannabis products as an alternative. Recently, we invested in Agrify, the owner of Senorita, the award winning best tasting THC beverage on the market. We’ve been in the THC beverage space for years and bringing Seniorita into the portfolio of brands is a great example of how we were able to act quickly when something makes sense like THC beverages. We are excited about our investment in Agri Fi as we believe tens of billions of Americans will become THC consumers in the coming years who are not today. One example to reach many of these new consumers is the Incredibles partnership with Magnolia Bakery.

Not only do we sell these products at dispensaries around the country, but we sell the same product made from hemp on the Incredibles website and buy local delivery in 23 markets across The United States through DoorDash (NASDAQ:DASH). E commerce and home delivery are changing the game by offering new convenient ways for customers to access product and allowing our brands to reach new markets and consumers. Turning to our traditional offerings, Rhythm continues to be the premier choice for cannabis consumers across the country and we are always looking for ways to bring the premium cannabis brand to more consumers. We launched a first of its kind partnership with Chicago’s renowned music venue, The Salt Shed to showcase the Rhythm lifestyle. The venue hosts around 150 music shows a year, drawing over 600,000 people.

In addition to showcasing the Rhythm brand, the partnership includes our new on-site retail experience, Rise at Salt Shed, which offers THC products from Bebo, Incredibles and Srina Rita. In addition, Srina Rita is the venue’s exclusive THC beverage available for purchase at all venue bars. So, you can legally buy the best tasting THC drink on the market at Chicago’s recently awarded best music venue. We are excited to continue exploring the potential of similar concepts to connect even more consumers to our brands through unique experience and quality products. Lastly, let’s talk about something we all have in common, sleep.

According to the recent Harris poll, seventy one percent of adults 21 and over wish they slept better. The survey also highlights the popularity of cannabis infused edibles as a sleep aid. Our incredible snoozeberry line is among the nation’s best selling cannabis products for sleep because we know that when you snooze, you win. It has been a very busy and productive year over here at Greed Thumb. Thanks to each and every one of our 4,800 plus amazing team members who show up every day to work hard and share their passion for the plant.

We are right on target doing what we said we would do, maximize the assets we have in place to generate long term value for our stakeholders. Now, I’m going to turn the call over to Anthony to cover our operations. Anthony?

Anthony Georgiades, President, Green Thumb Industries: Thanks Ben. As you just heard, despite facing significant challenges, our team delivered another exceptionally strong quarter, closing out a record setting year for Greenbelt. Let’s highlight some of the key achievements from both the quarter and the year. Expansion. In Q4, the company opened three new stores in Florida, Minnesota and Nevada.

Throughout 2024, we invested $80,000,000 in CapEx, opening 10 new stores and bringing our total store count to 101 by year end. We also made additional wholesale investments in New Jersey, Virginia, Connecticut and Florida, markets with significant growth potential. Brand performance, our award winning brands including Rhythm, Dog Walkers, Incredibles and Bebo, continue to perform exceptionally well. We are particularly proud of our market share gains in Ohio, Florida, Illinois, New Jersey, Maryland, Minnesota and Pennsylvania. Our commitment to operational excellence, product quality and innovation, combined with our focus on the consumer has led to improvements in distribution and brand performance.

Ohio launch. Our successful adult use launch in Ohio was a major highlight. The cross functional collaboration between our retail, CPG and corporate teams was inspired and the results were even more exciting. Green Thumb branded products have quickly become the market leader in Ohio and with dog walkers set to launch there at some point this year, we’re confident about our prospects in the Buckeye State for 2025. Team execution.

Finally, our team executed nearly flawlessly throughout the year. On the CPG side, in addition to brand performance, we operationalized two large scale facilities in Virginia and New Jersey and made substantial investments to upgrade and expand our cultivation, extraction and production capabilities. In retail, we invested into our omni channel offering, launched a new consumer facing website and began a comprehensive review of our physical asset infrastructure, including store locations that will guide a large part of our 2025 retail CapEx spend. Two months into 2025 and in many ways it feels like deja vu in the cannabis industry. One, we remain skeptical about the timing of any significant federal reform.

As a reminder, we’ve been left at the altar the past two years, first with safe banking in 2023 and then with rescheduling last year. At the moment, it’s hard to think anything anything will fundamentally change given the new administration’s appointees who seem to be descendants of the Just Say No campaign of the ’80s and early ’90s. Two, we anticipate continued price erosion in many of our markets. The combination of supply demand imbalances, competition from unregulated and or farm milk compliant products, and the current state of the consumer, leads us to believe that pricing and margins will remain under pressure throughout 2025. Despite these concerns, we are confident in the following.

First, in our team’s ability to navigate these regulatory and pressure related challenges. Second, consumer demand for THC. Although it’s difficult to measure aggregate cannabis consumption with the proliferation of farm bill compliant products, it’s undeniable that the demand for THC in The U. S. Is both robust and growing.

Couple this with the recent negative press and decline in alcohol consumption and the setup is there for THC to take center stage with The U. S. Consumer for the next decade. Looking ahead to 2025, our overall capital plan is expected to closely align with the $80,000,000 we spent in 2024. The majority of our 2025 retail spend will be directed to renovations and relocations across Minnesota, Virginia, Ohio and Pennsylvania, as well as select number of new store openings in Nevada, Ohio and Florida.

Additionally, we intend to continue making targeted investments in our wholesale business via additional cultivation capacity and automation initiatives. In terms of strategy, within CPG, we plan to continue to invest into our New Jersey, New York and Connecticut facilities, innovate and expand our brand and product portfolios, leverage strategic partnerships to build to build visibility and grow share with new audiences, and focus on driving operational efficiency and product quality. In retail, we plan to continue to invest into our ARISE retail brand, further refine our omni channel business and strategy, and push ourselves to optimize the consumer experience with a focus on where and when consumers shop for cannabis. Additionally, we have already started our prep work for the launch of adult use sales in Minnesota, which is expected to commence before year end. Our success in executing these strategies will be determined by our relentless focus on the consumer.

Our ability to strengthen our competitive market positions, our commitment to investing capital and projects that maximize shareholder returns, and our ongoing investment in our team, who are the foundation of our organization and central to everything we do. With that, I’ll turn the call over to Matt to review our financial results.

Matt Faulkner, Chief Financial Officer, Green Thumb Industries: Thanks, Anthony. And hello, everyone. In the fourth quarter, we delivered over $294,000,000 in revenue, a 6% increase compared to the prior year period. Revenue was primarily driven by increased consumer packaged goods sales. Overall retail revenue increased 1% versus the fourth quarter of twenty twenty three, reflecting continued growth in existing markets of New York, Florida and Maryland, the addition of adult use sales in Ohio and the opening of 10 incremental rides dispensaries since the prior year period.

The increase was mostly offset by continued price compression in many of our markets. Fourth quarter twenty twenty four comparable sales for stores opened at least twelve months decreased 2.6% versus the prior year on a base of 84 stores due to continued pricing pressures. Consumer packaged goods net revenue for the fourth quarter twenty twenty four increased 22% versus the prior year period, driven by continued growth in existing markets, New York and New Jersey, and the addition of adult use sales in Ohio. Looking forward, we expect first quarter sequential revenue to be down mid single digits as we anticipate seasonality and pricing declines. Gross profit for the fourth quarter was $158,000,000 or 54% of revenue, up from $143,000,000 or 51% of revenue year over year.

Operational efficiencies as well as lower prices on retail inventory helped offset price compression in many markets. Turning to OpEx, selling, general, administrative expenses for the fourth quarter were $101,000,000 or 34% of revenue compared to $92,000,000 or 33% of revenue for the fourth quarter last year. Total (EPA:TTEF) expenses increased primarily due to increased compensation costs. SG and A excluding depreciation, amortization, one time transaction costs and stock based comp, which we refer to as normalized operating costs, approximated $71,000,000 compared to $61,000,000 in the fourth quarter of last year. The increase year over year is mainly attributed to the 10 incremental retail stores.

The company generated net income of $13,000,000 or $0.04 per diluted share, up from net income of $3,000,000 or $0.01 per diluted share in the prior year period. Adjusted EBITDA, which excludes non cash stock based compensation and other non operating costs was $98,000,000 up from $91,000,000 for the fourth quarter of twenty twenty three. Along with continued pricing challenges that will pressure margins in the coming quarters, we plan to continue to invest in our brands, which will weigh upon SG and A. This in turn will push adjusted EBITDA below our long standing 30% target. We ended the fourth quarter with a strong balance sheet including cash of $172,000,000 and working capital of $239,000,000 Cash flow from operations for the year came in at $191,000,000 after paying $131,000,000 in income taxes.

In conclusion, we are pleased with our team’s outstanding performance in 2024 and appreciate their ongoing commitment and contributions to Greenbelt. Together, we remain committed to driving long term growth while ensuring prudent capital allocation and cost efficiency. We also appreciate the trust and confidence of our shareholders and look forward to providing further updates in our next call. With that, I’ll open the call to your questions. Operator.

Conference Operator: We will now begin the question and answer session. The first question today comes from Matt Bottomley with Canaccord Genuity. Please go ahead.

Matt Bottomley, Analyst, Canaccord Genuity: Good evening, everyone. Thanks for the question. I’m just wondering if you can provide a little more color in whatever level of detail you can at this point with respect to the distribution model or the potential for increasing hemp derived THC products. So you’ve had some of your peers whether U. S, even some in Canada, that have kind of started to maybe crawl before they walk in that space.

And it’s something that you guys have alluded to already in your prepared remarks. But there’s obviously the Circle K relationship in terms of what was originally planned in Florida. You mentioned Agrify a little bit. And I’m just curious if you think this is something for maybe investors to be a little more cautious about or if you think the ability for growth in this sector through channels other than just the state by state traditional THC regulation, if this is something that maybe has some legs to it in the coming years here?

Ben Koehler, Founder and CEO, Green Thumb Industries: Sure. Thanks, Matt. It’s Ben. I can attempt to take that. I’m not positive exactly the specific question.

But look, the product is available via DoorDash. So if you’re in 23 markets across The U. S, you can get Incredibles chocolate bar which is the best tasting chocolate cannabis bar, arguably the best tasting chocolate bar around within an hour. So for investors to not pay attention to that would be silly. I think if

Matt Faulkner, Chief Financial Officer, Green Thumb Industries: that was your question,

Ben Koehler, Founder and CEO, Green Thumb Industries: we can deliver it, we can sell Bebo online, we’re developing memberships and all sorts of things. And basically the whole reason for this, that’s the output of people want the product, it’s safe, they’re demanding alternatives and market forces are coming true. So we’re heavily focused on the demand and the consumer and making life better for the consumer. And that’s what we’re up to. So you don’t wanna have to drive somewhere far away and go through a production in a parking lot and all kinds of things.

There are many, many easier ways. You can go to specs, ABC, Binney’s, Total Wine, and you can get the product there. So it’s a pretty exciting time if you’re in the cannabis supply space and you understand the consumer.

Matt Bottomley, Analyst, Canaccord Genuity: Got it. I’m wondering if I could just ask quickly on the CapEx of $80,000,000 that you guys mentioned. So obviously, the sector overall is kind of starved for capital. And if you look at some of the CapEx projections within the industry, they’re significantly lower. And I think some of that is probably just a function of not others not having the capital to do it.

But just in terms of return on investment of those dollars, you guys are in pretty good shape from a cash flow yield perspective and it’s not really a commentary on whether that’s too much relative to the size of your operations. But just given how limited it seems to be in the industry, is that really just a function of others not having the capital given that your guided number is somewhat higher?

Ben Koehler, Founder and CEO, Green Thumb Industries: Yes. I mean, look at the last few years. I think we’ve been a massive majority of the CapEx in the business, which is propelling the business because we got the right product that people want on the right brand. I can’t say full circle situation. I do not understand where other companies are going to get the money to invest in their business when they don’t have the money to pay taxes or interest, let alone invest in growth.

So it’s a real has and have not situation. It’s pretty stark, it’s pretty dire, and we’re going to invest the money bottom up on where we can get the returns with a long term focus on continuing to invest in the business that we have that’s really awesome, spitting out cash and go play, you know, offense while we defend what we have. But you’re totally right. And this is a stat we’ve been calling out for years. If you don’t invest in your business, you can’t grow.

And if you don’t pay taxes, you become insolvent.

Matt Bottomley, Analyst, Canaccord Genuity: Okay. Thanks guys. I’ll leave it there.

Conference Operator: The next question comes from Aaron Grey with Alliance Global Partners (NYSE:GLP). Please go ahead.

Aaron Grey, Analyst, Alliance Global Partners: Good evening and thank you for the question. Just want to talk a bit about the margin profile. I believe you mentioned in the prepared remarks potential for it to fall below the long term of 30% temporarily, had a very strong 4Q both in terms of gross margin as well as EBITDA margin. So just that may be a bit deeper as you’ve done a great job of offsetting some of the broader pricing pressure. As you look forward to 2025, do you see potential with that pricing pressure to worsen, getting some of the troubles that your competitors have?

Or are you potential seeing opportunity to play offense that is disregarded then to get more aggressive to drive growth while others are, struggling with their balance sheet, may not have the ability to do so? So any color there will be appreciated. Thank you.

Matt Faulkner, Chief Financial Officer, Green Thumb Industries: Yes. Thanks for the question, Aaron. So I think, you know, when you think about pricing pressures, you know, we’ve seen double digit declines. We’re, we’re anticipating similar results for, for 2025. And, you know, the industry is, is feeling the pressures, you know, across pretty much every state that, that we operate in, we’re seeing, similar trends.

It clearly varies depending upon some of the, the markets, but, we do expect that to continue and weigh on the top line, which is then going to have an impact on an adjusted EBITDA as a percentage of the top line there. So, you know, hard to predict where it goes, but we definitely have braced ourselves for continued pricing pressures to happen in 2025.

Aaron Grey, Analyst, Alliance Global Partners: Okay, great. Thanks for the detail of that. I’ll jump back in the queue.

Conference Operator: The next question comes from Eric De Laurye with Craig Hallum. Please go ahead.

Eric De Laurye, Analyst, Craig Hallum: Great. Thanks for taking my questions and congrats on the very strong CPG growth and overall efficiency management. My question is on marketing expense increases. Certainly makes sense, your guys’ ability and willingness to sort of play offense as others are stepping back here. I’m just wondering if you could expand a bit more on sort of your plans for marketing in 2025.

Is this just kind of more advertising, more dollars towards DoorDash and the like, more partnerships? Just wondering if you could provide a bit more color. I mean, it certainly seems like a winning strategy at this time and I was wondering if you have any more to share. Thank you.

Ben Koehler, Founder and CEO, Green Thumb Industries: Yeah. Hey, Eric, it’s Ben. Sadly, I don’t think we have much more to share. Not crazy to go give you the plans. I’d rather you see it and be impressed and surprised and excited.

Look, the country is turning to weed. We need to show them with a credible way how to do it. We need to educate and we need to do it with people with influence that people look up to and respect and show everybody that cannabis is real and it’s out there, it’s healthy and it’s a better way. And lucky for us, lucky for our shareholders, we’ve got the balance sheet, we’ve got the cash and we’re ready to go put it to work. And we’ve figured out how to work in this weird environment of how to get money out there and have it be clean and not tainted and operate in a cannabis, non cannabis, cannabis world, which is really quirky but we’re pretty good at it.

So we’re really, really excited about what’s ahead as we can drive major, major awareness around the country’s best cannabis brands. We’re excited to get behind them.

Eric De Laurye, Analyst, Craig Hallum: Great. Thanks for the color. Congrats again.

Conference Operator: Sure. The next question comes from Federico Ghosn with ATB Capital Markets. Please go ahead.

Federico Ghosn, Analyst, ATB Capital Markets: Hi. Good evening. Congrats on the quarter. Thanks for taking my question. Just a question on Minnesota, given that I think that’s the only state starting adult use this year.

Could you remind us about your expectations for the size of that market, the competitive environment once adult use sales start later this year?

Anthony Georgiades, President, Green Thumb Industries: Yeah. Great question, Anthony here. Look, I’ll say the crystal ball is not showing us a lot right now on Minnesota. You know, zoom out, what you have here is you have a you have a medical market with two operators. You’ve got a population of 6,000,000 plus.

And you’ve got massive consumer demand for cannabis. It’s unclear how that market is going to unfold in terms of timing and structure. You know, we’re all kind of sitting here waiting. We know the state is working hard on the regs as we speak and working on the plan. But I’ll tell you right now, this one is very murky for us.

And so in terms of the prep, I’ll just kind of tell you some of the prep work that we’ve done. We’ve tried to get the stores ready for hopefully increased traffic and we just continue to refine our product line and our product quality in the state to get ready for, for adult use. We’ve got great Rhythm Flowers there. I’d say, you know, across board, we’ve got some one Budd A’s in the market. It’s a hell of a hell of a market to be a patient in and, we’re excited for for Adobe (NASDAQ:ADBE) Muse to start whenever that may be in 2025.

Thank you very much.

Conference Operator: The next question comes from Pablo Zuwanek with Zuwanek and Associates. Please go ahead.

Pablo Zuwanek, Analyst, Zuwanek and Associates: Thank you. Anthony, just going back to the same derivatives, can you explain why are you doing the drinks outside of Greensam via AgriFi? And in the case of Eddy Wolfs, you are doing it apparently through Greensam on the deal with Magnolia Bakery. I’m just trying to understand the logic of how you’re managing that. Thanks.

Ben Koehler, Founder and CEO, Green Thumb Industries: Sure. I mean, I can say that, Pablo. It’s Ben. The landscape is forming as we go. We’re trying to optimize every dollar for shareholders and we’re keeping maximum flexibility.

But in a fully legal business, it makes no sense not to do it on a NASDAQ listed company that can show how great the growth is going to be, in this country with THC. You know, why do it in a Canadian company where really no institutional investors have the ability to buy the stock? And so we’re trying to be optimistic opportunistic for shareholders. We see this as a massive opportunity for green thumb holders and a not yet fully understood market, that soon will be more understood. So we think we’re in the right place ahead of time and a good spot to be for shareholders.

Pablo Zuwanek, Analyst, Zuwanek and Associates: But on that point, I mean, the opportunity where it’s hemp edibles or hemp drinks is just as good or do you think that one is better than the other?

Ben Koehler, Founder and CEO, Green Thumb Industries: It depends. It depends on the cash. It depends on a lot of things that happen. We think both are material opportunities. Billions and billions of dollars of opportunities, and to quantify those has a lot of ifs.

But if something is going to go from zero to billions, we want to be there. One is already well off and started and the other isn’t.

Pablo Zuwanek, Analyst, Zuwanek and Associates: Got it. Thank you. Lukan, just a follow-up. Of course, congrats on the 20% growth in wholesale. That’s amazing in the current environment.

Specifically regarding New York, right, we’re seeing a lot of new stores open, maybe more AR risk there. Just to talk about how you’re managing that, it seems like a lot of your peers in New York did not expand on time. So I mean, it’s a great opportunity, but I’m just trying to understand how you’re managing the risk to a lot of new stores opening. I think it’s 200 now. Some may be weaker customers out there.

How do you manage that? Thanks.

Anthony Georgiades, President, Green Thumb Industries: Yeah, Pablo. Yeah. Another really good question. I mean, look, we’re becoming tremendously excited about New York. We started to see some, some real kind of real growth starting in the back half of last year and we’re starting to really invest into it.

You know, anecdotally, we’re hearing that our flower is from the top of the state. Not a lot of folks have indoor capacity, so it’s kind of a competitive advantage that we’re really leaning on as we speak. But looking ahead, we’ve got we’ve got big plans for New York in ’twenty five and beyond. We’re going to build this thing from the ground up. It’s going to take some time.

And I would say, you know, we’re just going to do it in our methodical process where, you know, we just look for incremental gain month after month, quarter after quarter, week after week. It’s the same playbook we’ve run-in other states and we’re pretty excited about, about the possibilities given the population and tourism in that state.

Pablo Zuwanek, Analyst, Zuwanek and Associates: That’s great. Thank you. Look, Ben, if you don’t mind, I’m gonna add one more. I mean, obviously, you have to plan based on what you can control. I understand that.

But compared to some of your peers, I mean, you sound a little more negative on the reform front. I mean, some people are talking about promises made, promises kept, the two social tweets by the president. Other people are very excited about Kennedy Jr. Being the HHS secretary. Maybe just help me connect that disconnect, right?

I mean, other people are quite positive, you sound a little more negative.

Ben Koehler, Founder and CEO, Green Thumb Industries: I mean, Pablo, we’ve seen things differently than our peers for a long time. I think it shows up in the balance sheet, in the cash flow, in the net income. And we are not optimistic on changes from DC. Look at the appointees and look at Kennedy’s total 180. So instead, we’re going to play offense exactly where we can control into massive growth markets where nobody else is.

So it’s exactly where you want to play. I mean, it’s the setup if you zoom out to look back of exactly the right time to go very aggressive into a market. We are flushed with cash, we are spitting out cash and everybody is scared. So, you know, we’re not. We love the product, we love the brands and we think the people in DC are out to lunch.

We think the DEA is corrupt and misguided and out to lunch. So, you know, it’s not a popular opinion, it’s controversial, but it guides how we allocate dollars, it helps us understand who the consumer is and allows us to win. So being on an island away from our peers is welcome over here, no problem.

Pablo Zuwanek, Analyst, Zuwanek and Associates: Got it. Thank you and congrats again.

Anthony Georgiades, President, Green Thumb Industries: Thank you.

Conference Operator: The next question comes from Bill Kirk with Roth Capital Partners (WA:CPAP). Please go ahead.

Shay Caplis, Director of Communications, Green Thumb Industries0: Good evening, everybody. Ben, I would love to take a step back and rather than try to handicap those regulatory scenarios, could you spend maybe a couple of minutes on what your dream federal scenario among those reasonable possibilities would be? Because the way I see it operationally, the existing scheduling setup seems to suit you quite well. You can see it in the results. However, the capital markets perspective, you don’t get credit or full credit for it.

So some change there would obviously be welcomed. So what is or what would be your ideal best federal treatment for green thumb balancing those considerations?

Ben Koehler, Founder and CEO, Green Thumb Industries: It’s a great question. Thanks Bill. You know, I think you’re right. I don’t know. I mean, my candid answer, and I don’t mean to be flippant, I just don’t spend a lot of time dreaming.

I mean, it’s like look at the cards you’ve got and play the game that’s out there. So we understand Farm Bill being closed. We think that this product that is dangerous for kids should be regulated, obviously. And so we go with the common sense approach, bottom up on every single thing. To go in and try to change the scheduling, the tax regime and, you know, add a cannabis branch to the federal government and figure out a federal surcharge tax and handle all it’s like it’s not a place that we spend a lot of time in a dream scenario.

It’s sort of like what’s in front of us, safe banking or not, Farm Bill or not, reschedule, deschedule. I mean, remember that discussion? Like, obviously, this thing should be rescheduled. Obviously. And obviously, the product should be available for US Veterans that are at the ultimate moment choosing to kill themselves every day without access to cannabis.

I mean, just common sense approach with a little empathy, not a hundred acronyms in DC to figure out, you know, who’s gonna regulate or what. So I think it’s a very good question, but pushing on a string and, you know, playing in Fantasyland is not our game. We understand, you know, we want the product available for consumers that want it. That’s our ultimate. So we want when people are going out, everywhere they’re drinking a beer or where they can smoke cigarettes safely outside, they should be able to smoke a joint, buy a joint, buy a cannabis drink and be able to consume because we think that’s a better America.

That’s a better tomorrow. That’s more well-being, less hangovers, less fights, less problems. The evidence shows that it’s just going to take the country several more years, if not a decade.

Shay Caplis, Director of Communications, Green Thumb Industries0: Thank you. I like that answer and good luck.

Ben Koehler, Founder and CEO, Green Thumb Industries: Thank you.

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

Ben Koehler, Founder and CEO, Green Thumb Industries: So thanks, it’s Ben. Head over to senioritadrinks.com. Buy these drinks, check them out. I guarantee you’re going to like them. If you don’t, send me an email, code KOVLER25 for 25% off on a big order.

Send pictures, post it. We’ve got a lot of good things going on here. Thanks for joining. We’ll talk to you guys in ninety days.

Conference Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.

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