Cresco Labs Inc

Good day and welcome to the Cresco Labs first quarter 2026 conference call. All lines will be in listen only mode. Should you need assistance, please signal for pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press the star key, then one on your touchtone phone. To withdraw your question, press star one again. Please note this event is being recorded. I would now like to turn the call over to TJ Cole, Senior Vice President, Corporate Development and Investor Relations for Cresco Labs. Please go ahead.

Thank you. Good morning and welcome to Cresco Labs' first quarter 2026 earnings conference call. On the call today, we have Chief Executive Officer and Co-Founder Charles Bochtel, Chief Financial Officer Sharon Shuler, and President Greg Butler, who will be available for the Q&A. Prior to this call, we issued our first quarter earnings press release, which has been filed on CDAR and is available on our investor relations websites. These preliminary results for the first quarter are provided prior to the completion of all internal and external reviews and, therefore, are subject to adjustment until the filing of the company's quarterly financial statements. We filed our corresponding financial statements and NDNA for the quarter ended March 31, 2026, on CDAR and EDGAR earlier this morning. Before we begin, I want to remind you that statements made on today's call may contain forward-looking information. Actual results may differ materially. The risk, uncertainties, and other factors that could influence actual results are described in our earnings press release and in the most recent annual information form and MD&A filed with the securities regulators. This call also contains non-GAAP measures also outlined in our earnings press release and in the MD&A filed with the securities regulators. Please also note that all financial information on today's call is presented in U.S. dollars and all interim financial information is unaudited.

With that, I'll turn the call over to Charlie. Good morning, everyone, and thank you for joining Cresco Labs' first quarter 2026 earnings call. We started 2026 with a distinct plan, build for growth from a scaled foundation and go deeper in markets that have structural advantages, all while maintaining margin and cost discipline. In the first quarter, we delivered against each of those priorities. As we outlined last quarter, following our exit from California and the impact of excise taxes in Michigan, Q1 establishes the baseline for our 2026 growth trajectory and beyond. With growth initiatives that have or will materialize subsequent to the quarter, we expect to build through the balance of the year. In Q1, we generated $151 million in revenue. We produced $77 million in adjusted gross profit and $33 million in adjusted EBITDA. These results are in line with our expectations and reflect the efficiency gains we've made over the past two years. As this efficiency intersects with growth initiatives, increasing scale and optionality, performance will improve throughout the year, with this momentum translating into meaningful growth and value creation well into 2027. First, I want to thank the Cresco team. They continue to be incredibly focused and intentional in how they make decisions across wholesale, retail, and capital allocation. That's what's driving our momentum in 2026. Now I'll walk through how Q1 delivered against our plan. First, a strategic footprint and a return to growth. We're building for growth by strengthening our leadership positions in priority markets while adding new markets that have compelling long-term value. Pennsylvania is a clear example of this. We already hold the number one branded share in the state, supported by a scaled cultivation platform and 18 existing Sunnyside locations. Building on that, we entered into a highly accretive agreement to acquire nine dispensaries in the state of Pennsylvania. Subsequent to the quarter, we began operating the nine stores under a management service agreement, bringing our total footprint in Pennsylvania to 27 stores, and they're already contributing to our second quarter results. We're applying a proven integration playbook and see a defined path to improving productivity and returns. The transaction is expected to close following standard regulatory approvals. This is a well-structured transaction that builds on our leading position in the second largest medical market in the country, further preparing us for a likely adult use catalyst. In Ohio, we are expanding our position. Subsequent to the quarter, we completed our strategic retail build-out with two new Sunnyside dispensaries, Bridgeport in April and Aberdeen this week, bringing our total to eight stores in the state. Both locations expand our presence in key border markets, which remains a differentiator in our approach to the state. In newer markets, we're growing through organic expansion, including successful license application wins. In Kentucky, we reached a significant milestone with our first harvest in April, demonstrating the development of Kentucky's program and a shift from CapEx build-out to revenue production. We expect branded products to reach patients in the second quarter. New medical programs take time to ramp up, so Kentucky's contributions this year will be modest, matching the pace of patient enrollment and dispensary openings. That said, the program is expected to scale materially over time later this year and into 2027. In Texas, we are very excited to have received one of only 15 merit-based licenses for what we expect to be one of the most attractive long-term growth opportunities in the industry. This provides yet another low-cost, high-return entry as the regulatory framework evolves in the second most populous state in the country. We look forward to helping that market develop, consistent with how we have executed in our core markets that we helped launch. Second, we win where we operate. While we continue to identify opportunities to deepen and expand our footprint, we're equally focused on improving our base business, ensuring our operations, brands, and teams are consistently high performing in every state we serve. Our wholesale business remains a core strength. We hold leading positions across our core states of Illinois, Pennsylvania, Massachusetts, and Ohio. That's driven by the consistency of our cultivation, the strength of our brands, and our established distribution strategy across both our retail network and third-party stores. On retail, Sunnyside dispensaries generate over 30% more revenue per store than state averages, and we've sustained that outperformance over multiple quarters despite heightened competition and pricing pressure. This reflects the strength of our operating model from site selection to in-store execution. I also want to highlight the performance of our cultivation team. Despite operating within a largely fixed footprint, we are driving incremental improvements in both yield and quality. Through continued optimization of our genetics, environmental controls, and post-harvest processes, we're producing higher volumes and better quality from the same assets. This enables us to supply the wholesale market while maintaining our targeted mix of own brands in our stores and supporting exclusive offerings at Sunnyside. Florida is a good example of this. We've held our share position despite increased capacity coming online from competitors, driven by operational gains within our existing footprint. These efforts have improved product quality with average flower potency up materially year over year, alongside higher yields and a broader strain portfolio, with new harvests already entering the market in the second quarter. Together, our scaled brands and our retail footprint allow us to drive demand, optimize shelf space, and capture margin across our footprint. Before I pass it to Sharon, I want to address what rescheduling means for Cresco Labs and outline the next steps. Moving state legal medical cannabis from Schedule 1 to Schedule 3 is the most consequential reform we've seen. It's a win for all patients nationwide and will usher in a new era of healthcare where cannabis has a federally confirmed medical use. For Cresco, this will immediately benefit the medical side of our business, including through the removal of 280E, which also further validating the role cannabis plays for our patients. More broadly, this is an important step in a longer path towards normalization. We look forward to the hearings on the general rescheduling of cannabis on June 29th and expect that continued progress will, over time, improve profitability, strengthen balance sheets, and expand access to capital across the industry. With that, I'll turn it over to Sharon to walk through our Q1 financial performance in more detail.