Green Thumb Industries, Inc. Q2 FY2026 earnings call

• Federal Regulatory Progress

  • Medical cannabis has been reclassified to Schedule 3 of the Controlled Substances Act, and a DEA decision on full cannabis rescheduling is expected later in 2026.
  • Green Thumb has registered some state-licensed medical operations with the DEA, and site inspections have begun, making these operations federally legal.
  • The company is preparing to uplist to a major U.S. stock exchange (NYSE or NASDAQ) as regulatory barriers are removed, with ongoing open dialogues with both major exchanges.

• State Level Growth Opportunities

  • Virginia adult-use cannabis launches July 1, 2027; Green Thumb is one of only five licensed medical operators in the state, with 6 operating dispensaries and 2 cultivation facilities, and pre-built additional capacity in anticipation of adult-use legalization. The state serves ~9 million residents and is proximate to multiple neighboring states with limited cannabis access.
  • Green Thumb was awarded a conditional license for Texas' Compassionate Use Program in Q2 2026, and is completing regulatory requirements and finalizing its real estate entry strategy; significant long-term upside exists if Texas expands the program further.
  • Post-quarter end, the company converted its Paramus, New Jersey dispensary from medical-only to include adult-use sales, and opened a new dispensary in Hanover, Pennsylvania, bringing the total retail footprint to over 120 stores.

• Market and Category Dynamics

  • Following Ohio's ban on intoxicating hemp products, the state's regulated cannabis market has grown over 10%, with consumers shifting to regulated markets; a planned federal hemp ban taking effect November 2026 is expected to benefit scaled, established operators with existing brands and shelf space.
  • Green Thumb remains bullish on the THC beverage category, which it views as distinct from unregulated intoxicating hemp products. THC beverages are already sold in mainstream retail locations including Circle K, Target, and Total Wine, and at major public events, with growing consumer adoption driven by favorable product attributes relative to alcohol.
  • Early signs of price stabilization have appeared in some markets, though broad pricing compression and competition persist.

• Capital Allocation and Governance

  • The company repurchased 8 million shares in Q2 2026 at an average price of ~$6 per share; since Q4 2023, it has repurchased ~29.5 million shares (roughly 13% of outstanding shares) at an average price of $7 per share, returning over $200 million to shareholders in a tax-efficient structure. The company will continue repurchasing shares at current valuations when it makes strategic sense.
  • A August 10, 2026 shareholder vote on a Rhythm Inc. proposal would allow Green Thumb to consolidate Rhythm into its financial statements (from the current equity method of accounting) as early as October 10, 2026; no economic changes to the business will occur, but reported financial results will change.
  • Green Thumb was named the highest-ranked cannabis company on Time Magazine's 2026 list of America's best companies.

Green Thumb Industries reported total Q2 2026 revenue of $307 million, a 5% year-over-year increase. The Retail segment generated revenue that grew just under 4% year-over-year, with strong contributions from Minnesota, Connecticut, and Florida; same-store sales across a 103-store base declined approximately 1% year-over-year. The Consumer Packaged Goods (CPG) segment also generated gross revenue that grew just under 4% year-over-year, led by growth in Minnesota, Ohio, New Jersey, and New York. The company holds the number one wholesale market share position in Illinois, Pennsylvania, Ohio, Maryland, and Minnesota. Normalized EBITDA for the total company was $84 million, equal to approximately 28% of total revenue. Gross profit was $138 million (45% of revenue), down from $146 million (50% of revenue) year-over-year, with the gross margin decline driven by $17.5 million in brand licensing fees incurred in the quarter. Selling, general and administrative (SG&A) expenses were $118 million (38% of revenue), up from $107 million (36% of revenue) year-over-year, with the increase driven by higher compensation costs, incremental investments in the business, and costs associated with newly acquired and opened retail stores. GAAP net income was $4.9 million, or $0.02 per basic share. Total capital deployed in the quarter was $20 million: $5 million for retail CapEx supporting store relocations and buildouts, and $15 million for wholesale CapEx supporting capacity expansions and maintenance. The company ended the quarter with $284 million in cash on its balance sheet.

• Full-year 2026 capital expenditure guidance is maintained at approximately $80 million.
• Q3 2026 sequential revenue is expected to be flat, driven by ongoing industry-wide pricing pressures.
• Management expects Virginia's adult-use market will face initial supply constraints at the July 1, 2027 launch, with the duration of constraints dependent on how quickly the state issues new licenses and how much consumer demand shifts from the existing unregulated hemp market to the regulated cannabis market.

• Ongoing industry-wide pricing compression and competition remain headwinds, with pricing pressure particularly pronounced in Massachusetts, New Jersey, and Pennsylvania.
• Federal regulatory progress on cannabis rescheduling has an uncertain timeline, and the ultimate outcome of policy changes is not guaranteed.
• Consumer discretionary spending pressure continues to act as a near-term headwind for the business.
• Supply-demand imbalances persist in multiple state markets, and it will take time for these imbalances to clear even with a federal hemp ban.
• If cannabis rescheduling leads to a large influx of new industry capital, new supply-demand imbalances could occur that prolong pricing pressure.
• The level and timing of additional capacity that Green Thumb will need to add for the Virginia adult-use launch remains uncertain, dependent on unknowable future demand levels and competitor activity.

Q: With flat Q3 revenue expected and early signs of pricing moderation, how do you expect gross margins to evolve in the second half of 2026, and how is Virginia's supply constraint expected to play out ahead of its 2027 launch? / A: Pricing pressures remain broad even with moderation in select markets, continuing to weigh on top-line results. For Virginia, Green Thumb pre-built additional cultivation capacity 18 months ago in anticipation of earlier adult-use legalization, and is currently assessing how much more capacity to add. Management expects initial supply constraints at launch, but the duration of these constraints will depend on how quickly the state issues new licenses and how much demand shifts from unregulated hemp if the federal hemp ban closes the existing loophole. (298 chars)

Q: Could you provide more detail on your uplisting plans, including whether uplisting requires full adult-use rescheduling, and does Rhythm consolidation relate to your uplisting strategy? / A: Rhythm consolidation is a separate initiative intended to deliver clearer, more consistent financial reporting for investors, not specifically tied to uplisting. Uplisting requires the DEA to complete the rescheduling of adult-use cannabis; once that is complete, management expects a fast path to listing, and the company is already prepared and in discussions with both major U.S. exchanges. (291 chars)

Q: Why does Green Thumb expect THC beverages to be treated as a distinct category from other cannabis and hemp products, and what is your outlook for this category? / A: Management's distinction is not only policy-focused, but reflects current market reality: THC beverages are already sold in mainstream non-dispensary retail locations like liquor stores, convenience stores, and national retail chains. Unlike high-dose unregulated hemp products, low-dose THC beverages are viewed as having limited health and safety risk, and consumer demand is growing rapidly driven by favorable attributes relative to alcohol. Management is confident the category will become a permanent, meaningful part of the cannabis market once unregulated hemp products are removed. (397 chars)

Q: Why do you not plan to have Rhythm (already NASDAQ-listed) acquire Green Thumb for a faster uplisting, instead of consolidating Rhythm into Green Thumb? / A: Once the proposed Rhythm shareholder measure passes, Green Thumb will hold controlling interest in Rhythm, so GAAP accounting requires Green Thumb to consolidate Rhythm, making reverse consolidation impossible from an accounting perspective. Structuring a Rhythm acquisition of Green Thumb would create significant complex tax complications and more friction than simply listing Green Thumb directly on a U.S. exchange, which management views as a faster and simpler path. (325 chars)