💸 The Tape

Green Thumb Industries (CSE: GTII) (OTCQX: GTBIF) posted second-quarter revenue of $306.7 million, up 4.6% — a respectable number in a sector where most operators are explaining declines. Ben Kovler framed it as real momentum built on a disciplined approach and a solid balance sheet.

The balance sheet part is unarguable. The momentum requires reading one line further down.

The growth is geographic

Retail revenue rose 3.6%. Consumer Packaged Goods gross revenue rose 3.7%. Both driven, by the company's own account, by Minnesota's adult-use launch last September plus continued gains in Connecticut, Florida, Ohio and New Jersey — partially offset by price compression and increased competition.

Then the number that reframes all of it: comparable sales fell 1.1% across a base of 103 stores.

Every dollar of growth came from new markets and new doors. The mature footprint — the stores open at least twelve months, which is most of the business — shrank. That's not a Green Thumb problem specifically; it's the sector's defining condition. But it does mean the growth engine is capex and licensing, not throughput, and that engine costs money to keep running. Two more doors opened after quarter-end: adult-use at RISE Paramus in New Jersey on July 13, and RISE Hanover in Pennsylvania on July 31.

Squeezed from both ends

Gross profit came in at $137.9 million, or 45.0% of revenue — down from $146.3 million and 49.9%. That's nearly five points of gross margin, attributed to price compression and to RYTHM brand licensing fees.

SG&A moved against them at the same time: $117.9 million, or 38.4% of revenue, versus $106.8 million and 36.4%. Anthony Georgiadis is refreshingly direct about why — increased compensation and benefits, a deliberate call to retain and reward staff, and he acknowledges outright that it weighed on EBITDA margins. You can argue with the timing; you can't fault the disclosure.

Net the two and operating income fell to roughly $20.0 million from about $39.5 million — down close to half on revenue that grew. Margin contracted on the cost of goods and on overhead simultaneously, which is the least pleasant combination available.

The RYTHM line deserves a second look

Reported EBITDA was $53.1 million, or 17.3% of revenue, down sharply from $69.1 million and 23.6%. Normalized EBITDA — the figure in the highlights — was $84.3 million, or 27.5%, described as up from $82.7 million.

The bridge between those two numbers is $15.8 million of licensing fees, $10.6 million of stock-based compensation, and $4.8 million of other adjustments.

Stock comp is a standard exclusion. The licensing fee is not. It's paid to RYTHM, Inc. — the entity Green Thumb sold its incredibles intellectual property and hemp business to in the prior year, and the same Rolling Meadows manufacturer now putting Señorita THC beverages into Lollapalooza and the United Center. The fee appears in both the gross margin explanation and the normalization add-backs, and it has no counterpart in the year-ago quarter.

Treat a recurring brand licensing payment as an operating cost — which is what it is — and normalized EBITDA looks more like $68.5 million, down roughly 17% year-over-year, with margin closer to 22% than 27.5%. The reconciliation is disclosed plainly, so this isn't a gotcha. But "normalized EBITDA up" and "normalized EBITDA down 17%" are both defensible sentences from the same release, and investors should know which one they're holding.

The tax line rescued the print

Income tax expense fell to $12.5 million from $21.6 million, a $9.1 million improvement, attributed directly to the DOJ's final order reclassifying state-legal medical cannabis to Schedule III, effective April 28, ending 280E across portions of the business.

Net income was $4.9 million, or $0.02 per share, against a $0.6 million loss last year.

Without the tax relief, this quarter is a net loss of roughly $4.2 million. Same pattern as Jushi's print last week: rescheduling is showing up below the operating line, it's carrying the headline, and it is a one-time step-change rather than a recurring growth driver. The 2027 comparison will be brutal for anyone who models it as ongoing improvement.

Helping separately: other expense dropped to $4.0 million from $17.1 million, mostly because last year's period absorbed the loss on that incredibles sale.

Capital allocation, and what it costs

The balance sheet remains the company's genuine advantage — $624.3 million of current assets, $283.6 million of cash, and $283.0 million of total debt. Roughly one-to-one. Very few operators in this sector can say that.

What they did with it is more debatable. Green Thumb repurchased 7.9 million Subordinate Voting Shares for $48.3 million at an average of $6.11. Cash flow from operations was $29.0 million — meaning the buyback consumed 167% of operating cash flow and about 2.4x operating income before a dollar of capex on those new stores.

Cumulatively the program has retired 29.5 million shares for $203.4 million at an average of $6.90, with $62.3 million of authority remaining through September 22. At this quarter's average price, that cumulative position sits underwater.

Meanwhile weighted average shares were 221.0 million basic. Had this quarter's repurchase not happened, $4.9 million of net income still rounds to $0.02 per share. Forty-eight million dollars, no EPS movement, $48.3 million less cash heading into a Virginia build.

The 2027 case is the real case

And it's not a weak one. Virginia authorized adult-use sales beginning July 1, 2027, where Green Thumb has operated since 2021 and holds one of five vertically integrated licenses, six RISE dispensaries and a grower-processor facility. Add a conditional license under Texas's Compassionate Use Program, and Kovler notes the two states together represent roughly 12% of the US population.

The hemp read is also correct. Ohio pulled most intoxicating hemp from general retail and routed consumers into licensed dispensaries — an incumbent-protection regime that rewards exactly what Green Thumb has: number one brand share in Illinois, Pennsylvania, Ohio, Maryland and Minnesota, scale, and shelf space already built.

The read

Best-capitalized operator in the sector, market-leading brands, and two of the strongest 2027 catalysts available. Also negative comps, operating income down by half, a $15.8 million recurring fee doing quiet work in the adjusted numbers, and a quarter that was a loss before the tax change.

Green Thumb is well positioned for 2027. 2026 is the part that has to be funded.

📈 Dog Walkers

$SNDL ( ▼ 1.22% ) Lands EU GMP Cert

SNDL Inc. (NASDAQ: SNDL) (CSE: SNDL) announced the successful completion of an EU-GMP audit at its Atholville, New Brunswick cultivation facility, with certification anticipated within 90 days.

The asset is substantial. Atholville runs roughly 380,000 square feet with more than 110,000 square feet of cultivation canopy, currently supporting about 4,500 kilograms per quarter — call it 18 tonnes annually — with stated potential to exceed 30 tonnes with targeted investment. That's a two-thirds capacity increase available, but only if the capital shows up behind it.

CEO Zach George called it another example of disciplined execution and singled out Tim Main and Rebecca Knight alongside the New Brunswick team. Nice to see named credit in a press release rather than the usual anonymous gratitude.

Now the part worth understanding. Last week's Q2 showed Cannabis Operations gross margin collapsing to 1.8% from 25.8%, on revenue down 10.1% — the ugliest line in the print, attributed to Jeeter ramp-up costs. Domestic Canadian cannabis is, at present, barely a gross-margin business at all.

International medical is a different animal. It sells into regulated pharmaceutical channels at pharmaceutical pricing, and EU-GMP is the gate. SNDL's international sales were C$5.0 million in the quarter, up from C$3.8 million — small, but the fastest-growing thing in the segment. Tilray's international medical business, for reference, grew 34% last fiscal year and is the healthiest part of that company.

So the read is straightforward: SNDL just qualified its largest, lowest-cost cultivation asset for the only cannabis channel currently generating real margin, at precisely the moment its domestic channel stopped generating any.

Certification is still 90 days out, and export contracts are a separate exercise entirely. But this is the right fix for the segment that broke.

📺 Trade To Black

Cannabis Earnings Season Is Here -- Here's What To Watch | TTB Presented by Flowhub

• IIPR (NASDAQ: IIPR) grew everywhere except its core business. Net income jumped 62% to $40.7 million while rental revenue rose just 0.7% — the bulk of the gain came from a $270 million investment in IQHQ, a life sciences developer outside cannabis. Meanwhile defaulted tenant payments from PharmaCann and 4Front are falling sharply, and IIP applied security deposits toward rent owed this quarter.

• High Tide (NASDAQ: HITI) pre-announced a record quarter. Preliminary Q3 2026 guidance calls for record revenue, gross profit and adjusted EBITDA, with management noting the low end of the range beats every current analyst estimate.

• Green Thumb reports live on the broadcast — and the brand data cuts both ways. Branded sell-through is up 8.8% year over year with own-brand penetration on GTI shelves reaching 60.4%, but retail share fell in 12 of 13 states, including a swing of more than 1,000 basis points in Minnesota.

• The RYTHM licensing structure is drawing scrutiny. Shadd Dales and guest host Seth Yakatan dig into the arrangement behind GTI's flagship brand — one that recently prompted a sell-side analyst to lower EBITDA estimates.