Green Thumb beats quarterly revenue estimates on adult-use legalization in New Jersey

Green Thumb Industries

28/02/2023 21:03

By Arshreet  Singh
       Feb 28 (Reuters) - U.S. cannabis producer Green Thumb
Industries Inc  GTII.CD  beat fourth-quarter revenue estimates
on Tuesday, on the back of legalization of adult-use in New
Jersey, but price compression caused adjusted net income to
halve from a year earlier.
    New Jersey gave out licenses to existing medical cannabis
operators, including Green Thumb, in April for the sale of
recreational pot. The state is poised to become one of the
largest adult-use cannabis markets on the East Coast.
    Green Thumb, which is one of the top three U.S. weed
producers by market value, said total revenue for the quarter
rose 6.4% to $259.3 million from $243.6 million last year,
beating analysts' expectation of $256.8 million.
    On an adjusted basis, the company's net income was $12
million, or 5 cents per share, almost half from a year earlier,
hurt by lower prices and higher costs related energy, labor and
raw materials. Analysts expected a profit of 6 cents per share,
according to Refinitiv.
    "Inflation is creating higher costs, so it puts pressure on
the margin," Chief Executive Officer Ben Kovler told Reuters in
an interview. He added cannabis industry was battling a fall in
prices even amid decades-high inflation, calling it a "double
whammy".
    Same-store sales - which account for sales in stores open
for more than a year - in the quarter rose 3.4% from a year
earlier, driven by new stores and increased footfall in
established locations.
    Kovler sees capital expenditures to be over $100 million for
2023, down from over $200 million over the last few years, as
"access to capital and cannabis has become severely restricted".
    Established in 2014, Green Thumb has operations across 15
U.S. markets, with 18 manufacturing facilities and 77 open
retail locations.
    Medical cannabis has been legalized in 36 states while 17
states now allow adult use, according to the National Conference
of State Legislatures.    

 (Reporting by Arshreet Singh; Editing by Krishna Chandra Eluri)
 ((Arshreet.Singh@thomsonreuters.com; Twitter: https://twitter.com/Arshreets;))