💸 The Tape

GTI Is Best In Class Yet Again

Green Thumb Industries just rolled out their third-quarter 2024 financials, and it's clear they are the top dog in the industry. With revenue up 4% year-over-year to a cool $287 million, the cannabis heavyweight seems to be planting seeds for long-term growth while keeping an eye on the bottom line.

First, let's talk cash—because who doesn't love a company with a robust stash? GTI ended the quarter with $174 million in the coffers. CEO Ben Kovler highlighted the company's "impressive results," noting $89 million in Adjusted EBITDA, which clocks in at a healthy 31% of revenue. Not too shabby for an industry that's still navigating a labyrinth of regulations and market volatility.

One of the standout moves this quarter was securing a $150 million, five-year credit facility at an industry-leading interest rate of SOFR plus 5.00%. The new facility allowed GTI to retire a $225 million senior secured debt due in 2025, effectively pushing out their debt maturity to 2029. As Kovler quipped, "It's still Day One—every day." With five extra years, they now have plenty of time to execute their growth strategy without watching the clock.

GTI isn't just hoarding cash and refinancing debt; they're expanding their empire. The company opened four new RISE Dispensaries during the quarter—three in Florida and one in New York. They also launched legal sales in Ohio in early August. President Anthony Georgiadis praised the team's efforts, citing "meaningful market share gains" across their Consumer Packaged Goods brand portfolio. It seems GTI is on a mission to make their brands as ubiquitous as Starbucks, but with a lot more buzz.

However, it's not all sunshine and green pastures. Retail revenue only nudged up 0.3% compared to the same quarter last year. Comparable sales for stores open at least 12 months actually decreased by 2.7%. The culprit? Continued price compression in certain markets—a fancy way of saying they're making less per joint sold. But GTI managed to offset these headwinds through operational efficiencies and favorable pricing on retail inventory purchases, boosting their gross profit margin to 51.4% from 48.6% last year.

On the expense side, SG&A costs rose to $105 million, up from $84.8 million. The increase was primarily due to ongoing claims and litigation, as well as higher employee compensation. Legal fees and talent retention don't come cheap, especially when you're aiming to be the top dog in a rapidly growing industry.

Net income dipped slightly to $8.6 million, or $0.04 per share, down from $10.5 million, or $0.05 per share, in the prior year. EBITDA also saw a decrease, landing at $71.1 million versus $74.7 million previously. But Adjusted EBITDA tells a happier tale, increasing to $89.2 million from $83 million after excluding non-cash stock-based compensation and other non-operating adjustments.

In a move likely to make shareholders smile—or at least smirk—GTI authorized a $50 million share repurchase program. It's a savvy way to signal confidence in the company's future and could help prop up the stock price in a market that's been, shall we say, a bit hazy.

Kovler remains bullish on the industry's prospects. "As we begin our second decade as a company, we are even more confident in the future of cannabis in America as a means for well-being," he stated. With a fortified balance sheet, expanding retail footprint, and a focus on building brands that Americans "want and love," GTI seems poised to ride the green wave well into the future.

So, what's the takeaway? Green Thumb Industries is navigating the challenges of a budding industry with strategic financial moves, expansion into new markets, and a clear focus on profitability. They continue to march to their own Rhythm.

📈 Dog Walkers

MindMed Reports Q3

Mind Medicine Inc. is gearing up for what could be the journey of a lifetime—or at least a pivotal moment in their clinical saga. CEO Rob Barrow announced they're about to embark on Voyage, their first Phase 3 study of MM120 ODT for Generalized Anxiety Disorder (GAD). But they're not stopping there; Panorama, another GAD trial, and Emerge, targeting Major Depressive Disorder (MDD), are also on deck. It's like a clinical trial trifecta, aiming to tackle conditions affecting approximately 51 million adults in the U.S.

Their game plan? Leverage high-performing sites from Phase 2 and harmonize protocols to streamline enrollment across GAD and MDD studies. With Voyage set to kick off in Q4 2024 and Emerge in the first half of 2025, MindMed is hitting the gas pedal.

Financially, they're sitting pretty with a hefty $295.3 million in cash and equivalents as of September 30, 2024—a substantial leap from $99.7 million at the end of 2023. They confidently assert this war chest will fund operations into 2027, well beyond their first Phase 3 topline data readout.

Sure, R&D expenses climbed to $17.2 million this quarter (up $4 million), but when you're charting new territory in brain health disorders, that's the price of admission. Net loss narrowed to $13.7 million from $17.9 million last year, thanks in part to favorable shifts in warrant valuations.

In a nutshell, MindMed is poised to potentially redefine treatments for anxiety, depression, and even autism. With a solid cash cushion and a pipeline revving up for late-stage trials, investors might find this psychedelic biotech's journey worth tuning into—after all, they're aiming to make waves in a market hungry for innovation.

Leafly Reports

Leafly Holdings, the online cannabis marketplace helping consumers navigate the ever-expanding green universe, has reported its third-quarter financials—and things are looking up. CEO Yoko Miyashita summed it up best: “With two consecutive quarters of positive adjusted EBITDA and a retail business that has largely reached a point of stabilization, we’re poised to capitalize on the growth opportunities ahead. We’ll continue our laser focus on building a lean and efficient business operation to capitalize on the stabilizing revenue trajectory of the retail business.”

In the third quarter, Leafly's retail revenue was essentially flat compared to the previous quarter—a performance that, given recent industry headwinds, feels more like a small victory than a stagnation. The decline in retail accounts has leveled off, suggesting that the most significant challenges are in the rearview mirror. Targeted price hikes on subscriptions and add-on products, along with reduced account churn, have helped steady the ship.

While brand revenue took a customary seasonal dip—nothing like a summer slowdown to dampen spirits—expectations are high for a fourth-quarter rebound fueled by holiday marketing spends. By diligently managing operating costs and focusing on collections recovery, Leafly achieved a positive adjusted EBITDA of $0.4 million for the second consecutive quarter. It seems their lean and efficient approach is starting to bear fruit—or perhaps, buds. Investors might find this a high point worth noting as Leafly positions itself for growth in the burgeoning cannabis market.

👾 Number Of The Day

$112.8M Total sales in Arizona in the month of October.

🗞️ The News

Cresco Labs Demonstrates Success of Cash Flow Focused Strategy with Third Quarter 2024 Financial Results

Green Thumb Industries Reports Third Quarter 2024 Results

Gold Flora Confirms Stay of Limited Purpose Receivership

MindMed Reports Third Quarter 2024 Financial Results and Business Updates

Leafly Holdings, Inc. Reports Third Quarter 2024 Financial Results

📺 YouTube

Curaleaf & TerrAscend Executives Talk Cannabis Earnings, Future Trends | Trade to Black

What we covered:

✅ On a special Trade to Black podcast at 4 PM Eastern Time today, we continue our coverage of the latest earnings reports from two of the largest MSOs in the cannabis industry.

First up is Curaleaf (OTC:CURLF), with CEO Boris Jordan. He will discuss their latest numbers, highlight key successes from the past quarter, and address some of the challenges and trends the company anticipates heading into 2025.

Following Curaleaf, TerrAscend (TSX:TSND) Chairman Jason Wild and CEO Ziad Ghanem will join us to share their recent performance and discuss their announcement about entering the Ohio cannabis market.

Plus, we’ll cover audience feedback on this week’s news surrounding Amendment 3 in Florida and get their insights on the future of the industry as we approach 2025.