Jushi Hldgs Inc Cl B

Ladies and gentlemen, greetings and welcome to the Zushi Holdings Inc. Q1 2026 Earnings Conference Call. At this time, all participants are in the listen-only mode. A brief question and answer session will follow the formal presentation. If anyone requires operator assistance during the conference, please signal the operator by pressing star and zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host for today, Trent Wolovec, Chief Strategy Director. Please go ahead.

Good afternoon, and thank you for joining us today on Jushi's first quarter 2026 earnings conference call. My name is Trent Wolovec, and I am the Co-Chief Strategy Director at Jushi Holdings, Inc., With me on today's call are Jim Cassioppo, our Chairman and Chief Executive Officer, Michelle Mosier, our Chief Financial Officer, and John Barrick, our President and Chief Revenue Officer. This call is also being broadcast live over the internet and can be accessed from the Investor Relations section of the company's website at ir.jushico.com. In addition to the company's GAAP results, Management will also provide supplementary results on a non-GAAP basis. Please refer to the press release issued today for a detailed reconciliation of GAAP and non-GAAP results, which can be accessed from the investor relations section of the company's website. Additionally, we would like to remind you that during this conference call, we will make forward-looking statements. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance, and business. Although Jushi believes our estimates and assumptions to be reasonable, they are subject to a number of risks and uncertainties beyond our control and may prove to be inaccurate. We caution you that actual results may differ materially from any future performance suggested in the company's forward-looking statements. The risk factors that may affect actual results are detailed in Jushi's Form 10-K and other periodic filings and registration statements, which may be accessed via EDGAR and SEDAR, as well as the investor relations section of our website. These forward-looking statements speak only as of the date of this call and Jushi expressly disclaims any obligation to update this forward-looking information. I will now turn the call over to Jim.

Thank you, Trent, and thank you, everyone, for joining our call today. Before jumping into our call, I'd like to reiterate my appreciation for President Donald J. Trump and his administration for finalizing the rescheduling of medical cannabis produced by state-licensed operators like Jushi from Schedule 1, to Schedule III under the Controlled Substances Act. This bold and historic action represents a clear example of promises made and promises kept. The administration's move reflects a commonsense commitment to listening to science, advancing medical research, and delivering meaningful reform. This continues to put an America-first approach to work by supporting American patients businesses, and communities. We look forward to the new administrative hearing scheduled for June 29th regarding the proposed rescheduling of all forms of cannabis from Schedule 1 to Schedule 3 and to see the lengthy process finally come to a positive conclusion. This afternoon, I will provide a high-level overview of our financial results for the first quarter of 2026, followed by a discussion of the recent federal rescheduling action, as well as an update on our corporate initiatives, including redomiciling to the United States and our recent refinancing. I will then discuss our retail and wholesale performance, along with key regulatory developments across our markets, before turning the call over to Michelle to review our financial results in more detail. From a performance standpoint, the quarter was characterized by modest top line growth alongside continued margin expansion. Revenue for the first quarter of 2026 was $66.4 million, representing an increase of 4% compared to the prior year quarter. In our retail channel, revenue increased modestly by $1 million compared to the prior year quarter. This growth was primarily driven by Ohio and Virginia. In Ohio, Increased revenue reflected the addition of four new dispensaries since Q1 of last year. In Virginia, revenue growth was driven by strong performance across all six of our Virginia stores. More broadly, pricing pressure remained a factor across our markets and impacted average selling prices. In our wholesale channel, revenue increased 22.2% year-over-year, driven by strong growth in Massachusetts and Ohio. We also saw continued momentum in third-party packaged goods, achieving an all-time quarterly sales record. In Massachusetts, sales increased $1.2 million compared to the prior year quarter, reflecting increased bulk sales, expanded wholesale distribution, including placement in new dispensaries, and higher production volumes that supported greater product availability. In Ohio, revenue increased by approximately $400,000 year-over-year driven by increased production capacity. This performance was also supported by continued improvements in product quality, which are driving a greater share of wholesale revenue toward higher-priced SKUs, including flower foundry and hijinks. Year-over-year, both flower foundry and hijinks achieved mid- to high-single-digit growth in revenue and units, reflecting continued momentum in our premium product portfolio. We were especially pleased with the expansion of our wholesale distribution during the quarter, which was the key driver of growth, as we added 32 new dispensary customers across our markets, including 20 in Massachusetts and 8 in Ohio. In addition, we continued to broaden our product assortment with the introduction of 567 new SKUs during the quarter, representing a 45% increase year-over-year, supporting continued growth and differentiation across our portfolio. Gross profit was $29.9 million or 45% of revenue compared to $25.8 million or 40.4% of revenue in the prior year quarter. Operational execution remains a central focus for the organization. Across our grower processor footprint, we continue to see improvements in operational performance, including product quality and higher production volumes. These improvements are supporting both retail and wholesale channels, and contributing to margin expansion. These benefits were partially offset by continued pricing pressure and increased promotional activity across our retail footprint. Adjusted EBITDA was $11.4 million, representing an adjusted EBITDA margin of 17.2% compared to $9.8 million, or 15.4%, in the prior year quarter. The year-over-year increase in adjusted EBITDA primarily reflects stronger underlying operating performance, Furthermore, adjusted EBITDA in the prior year period included $2.8 million of employee retention credits that did not reoccur this year. Cash flows from operations totaled $8.6 million for the quarter compared to $7.5 million in last year's first quarter, also highlighting the strength of our operating performance. As I mentioned at the opening of the call, a significant development for the industry occurred last when a final order became effective on April 28th, rescheduling state-licensed medical marijuana to Schedule III. This represents a historic milestone for the cannabis industry and one of the most significant federal cannabis policy developments in decades. Importantly, the final order notes that state medical marijuana licensees will no longer be subject to the deduction disallowance under Section 280E of the Internal Revenue Code, which we expect will positively impact our tax expense on an ongoing basis. Medical sales represented approximately 60% of our total revenue in 2025, positioning us to significantly benefit from this change. The order also encourages the Department of Treasury to consider retroactive relief for taxable years in which a state licensee operated under a medical marijuana license. we will continue to monitor forthcoming Treasury guidance closely. Separately, the Department of Justice has announced a new administrative rulemaking process following the withdrawal of the prior proceeding initiated in 2024 to consider the broader rescheduling of cannabis under the Controlled Substances Act. We plan to initiate the DEA registration process in near term as the application portal opened on April 29th. and we expect to progress through the federal registration process thereafter. DEA registration represents a major milestone for the state regulated medical cannabis operators across the country. While additional clarity is still needed around implementation, we are excited about what this development means for Jushi and for the broader industry. Over time, we believe rescheduling has the potential to enhance profitability lower costs to customers and patients, and create a more normalized operating and financial environment for state-licensed cannabis operators. Beyond our financial performance, we recently announced our intention to pursue a proposed redomiciling of our parent entity from British Columbia, Canada, to the state of Nevada in the United States as part of our ongoing efforts to optimize our corporate structure. We believe this better aligns our corporate structure with our existing operations. Over time, this initiative is intended to enhance our long-term strategic flexibility and support potential capital markets opportunities. As we previously announced during the first quarter, we completed our refinancing through the issuance of a $160 million first lien senior secured term loan issued at a 4% original issued discount, with a 12.5% coupon structured as interest-only payments over a 36-month term. The proceeds were used to fully repay our previous first and second lien debts, including accrued interest and related fees, with excess cash proceeds used to strengthen our balance sheet. The transaction was completed with the participation from a syndicate of lenders, including our two largest shareholders, myself included. As part of the refinancing, I contributed additional capital, increasing my overall position relative to my prior participation in the first and second lien debts. reflecting my continued confidence in the strength of our business and our long-term strategy. It is important to note that the refinancing was completed without issuing any warrants or equity-linked securities, resulting in no dilution to shareholders. The new facility provided $13.7 million of incremental liquidity, and we ended the quarter with approximately $42 million of total cash. Additionally, The new facility includes only a single financial covenant requiring the maintenance of a minimum liquidity, which we believe provides meaningful flexibility going forward. Overall, we believe this transaction strengthens our balance sheet, enhances financial flexibility, and positions the company to support future growth initiatives. From an operational standpoint, we are continuing to deploy targeted high-return investments across our facilities in Virginia, Pennsylvania, and Ohio to meet current demand, and position the business for future growth, consistent with what we outlined last quarter. These investments are being sequenced carefully and remain tied to regulatory clarity and cost of capital considerations. Turning to retail, we ended the quarter with 42 stores across our footprint, following the opening of a new location in Springdale, Ohio, during the quarter. Also during the quarter, we entered into an agreement to sell our Peoria, Illinois location subject to regulatory approval. This store is no longer in our operating results as it is being operated under an MSA with the prospective purchaser while the parties await regulatory approval for the ownership transfer. As we outlined on our last earnings call, we are actively evaluating four to five potential store relocations to improve our profitability and we continue to assess retail license and store acquisition opportunities in Ohio, Massachusetts, New Jersey, and other states to further optimize our footprint and drive productivity. We were also encouraged by our performance around the 420 holiday, where the retail portfolio delivered year-over-year growth across net sales, units, and orders, both on a total and same-store basis. The performance was driven by strong results in the Ohio and Virginia markets, partially offset by more competitive dynamics in Illinois, Massachusetts, and Pennsylvania. On the regulatory front, there were several notable developments during the quarter and post-quarter end. In Virginia, the General Assembly passed adult use legislation during the session, which was subsequently amended by the governor and sent back to the legislature. The proposed changes, including adjustments to the timing of retail sales, as well as modifications to certain regulatory enforcement provisions. The General Assembly has rejected the Governor's amendments, and the bill has now been returned to the Governor. Under Virginia law, the Governor has until May 23 to sign the bill, veto the bill, or let the bill become law. The Governor cannot further amend the bill. Additionally, while not typical, there remains a possibility that adult use legislation could be addressed as part of the state budgetary process. Separately in Virginia, legislation has been enacted into law to strengthen enforcement across hemp and cannabis products, including SB 543, which enhances the state's ability to regulate non-compliant hemp-derived products. Additional measures have also been passed to update penalties related to unlawful cannabis activities. We believe these steps are intended to support a more consistent and regulated marketplace over time. In Massachusetts, legislation was passed during the quarter to modernize the state's cannabis regulatory framework, which has been signed by the governor and has become law. Among other changes, legislation increases the retail license cap, allowing operators to own up to six retail locations, up from the prior limit of three. We believe this change could support greater scale and operating efficiency over time, while also creating additional opportunities for consolidation across the market. In Pennsylvania, SB 49 continues to move through the legislative process. The bill would establish a new cannabis control board to oversee both cannabis and hemp, creating a more unified regulatory framework. In addition, recent amendments align Pennsylvania's hemp regulations with updated federal standards, tightening definitions, and strengthening enforcement across hemp-derived products. In Ohio, new legislation restricting the sale of intoxicating hemp-derived products became effective in March, effectively limiting these products to licensed dispensaries. The law is intended to close existing regulatory gaps and direct THC-containing products into the regulated cannabis market. Enforcement is expected to be carried out by both state and federal agencies over time, which we believe could support a more balanced competitive environment. At the federal level, legislation has been enacted to address the Farm Bill loophole, with changes scheduled to take effect in November 2026. Discussions also continue around broader legislative initiatives, such as the CLIMB Act, though timing and outcomes remain uncertain. With that, I will turn the call over to Michelle for a detailed review of our financial results.