Jushi Hldgs Inc Cl B

Good afternoon. My name is Rochelle and I will be your conference operator today. At this time, I would like to welcome everyone to Jushi Holdings Inc Q3 2026 earnings conference call. Today's call is being recorded. I will now turn the call over to Trent Woloveck, Co-Chief Strategy Director. Thank you. Please go ahead.

Good afternoon and thank you for joining us today on Jushi's third quarter 2026 earnings conference call. My name is Trent Woloveck and I am the Co-Chief Strategy Director at Jushi Holdings Inc. With me on today's call are Jim Cacioppo, our Chairman and Chief Executive Officer, Michelle Mosier, our Chief Financial Officer, and John Baric, 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.juchico.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 CEDAR, 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 especially disclaims any obligation to update this forward-looking information. I will now turn the call over to Jim.

Thank you Trent. Thank you everyone for joining our call today. This afternoon I will begin with a high level review of our third quarter financial performance and the key drivers of our results. I will then discuss our preparations for adult use sales in Virginia along with our corporate initiatives and key regulatory developments before turning the call over to Michelle for detailed financial review. Beginning with our financial results, third quarter revenue increased by $4.8 million or 7.3% to $70.5 million compared to $65.7 million in the prior year quarter. This was our second consecutive quarter with revenue above $70 million supported by continued wholesale growth and higher retail sales in Ohio and Virginia. Wholesale revenue increased 40% year-over-year to an all-time quarterly record of $9.7 million, compared with $6.9 million in the prior year quarter. This marked our second consecutive quarter of record wholesale revenue, exceeding $9 million in each quarter. This growth reflects our continued expansion into new third-party dispensaries and an increase of 44 additional dispensaries purchasing our products year-over-year, strengthening relationships with wholesale partners and improved product availability, allowing us to reach more patients and consumers across our markets. These results reflect stronger execution across and many more. In Virginia, we have increased our cultivation canopy with an additional flowering room now operational, while in Pennsylvania, improvements to our existing facility over the last year have increased productive cultivation capacity by converting an underutilized flowering room into three more efficient rooms. The Pennsylvania results are particularly encouraging given the maturity of its medical market. In Ohio, we believe and the U.S. Department of Agriculture. Retail revenue increased 3.5% year-over-year to $60.8 million compared with $58.8 million in the prior year quarter. Retail units sold increased 8.4% and transactions increased 4.5% while lower average selling prices continue to weigh on revenue growth. Ohio was the largest contributor to retail growth, supported by our newer dispensaries and higher unit volumes. We also believe the state's restrictions on intoxicating hemp products and related enforcement are helping direct demand toward license operators. That dynamic is particularly relevant as we continue to develop both our retail and wholesale presence in the market. Virginia achieved an all-time quarterly retail sales record for the second consecutive quarter with revenue increasing 7.6% year-over-year, reflecting growth across all six of our dispensaries. Home delivery in Virginia also reached a new quarterly high. These results reinforce the strength of our existing medical business as we prepare for the transition to adult use. Our Little Ferry New Jersey dispensary, which opened in the fourth quarter of 2025, also contributed to retail growth. These gains were partially offset by lower revenue in Massachusetts, Illinois, Pennsylvania, Nevada, and California. Growth profit increased $1.7 million to $32.3 million, or Thank you for joining us. Continued improvements in production efficiency and product costs help offset the impact of lower average selling prices and competitive pricing pressure across certain markets. Adjusted EBITDA increased to $13.6 million, representing an adjusted EBITDA margin of 19.3%, compared with $12.8 million, or 19.5%, in the prior year quarter. Importantly, this increase was achieved with lower employee retention credit income, which was approximately $108,000 this quarter compared with $790,000 in the prior year quarter. Turning to the federal tax framework, the third quarter was our first full quarter following the April 28th rescheduling of qualifying state-licensed medical cannabis to Schedule III. That change removed the Section 280e deduction disallowance for qualifying medical cannabis activities and remains an important development for our business. The Treasury Department and the IRS have now made Section 280E cannabis tax guidance an official priority for 2026 and 2027, with resources being devoted to the issue during the federal fiscal year running from October 1st, 2026 through September 30th, 2027. We continue to monitor that process closely, including the potential implications for prior taxable years. Our DEA registration process also continues to advance. Inspections of our retail and grower processing facilities are in process, and our teams have had positive interactions and productive conversations with the agency. We remain focused on working constructively through the registration process. Turning to Virginia, we are preparing for the commencement of adult use sales on July 1st, 2027. We believe this represents a significant long-term growth opportunity for Jushi and Virginia, remains a top priority for investment across our grower processor footprint. As an existing medical cannabis operator, we expect to transition into the adult use market under the dual use provisions of Virginia's new cannabis legislation, which allow licensed medical operators to serve both medical patients and adult use consumers. This transition requires a $10 million conversion fee, which we expect to pay in installments over a three-year period. We anticipate regulations will be in place in early 2027 and look forward to completing the application process so that we are prepared to serve adult use consumers when sales commence. We believe Virginia has the potential to become a multi-billion dollar state regulated cannabis market compared with the approximately $180 million in annual medical sales today. Estimates discussed during the legislative process pointed to an approximately $3 billion unregulated market outside of the license system. Given expected demand and the time required to add cultivation capacity, we believe supply could become constrained for the first 24 to 36 months following the adult use launch. Our expansion plans are designed to help us meet the expected demand. We are advancing Three cultivation expansion products. Together, we expect these projects to increase annual harvest from approximately 29 in 2025 to 115 or more in the first full year after all three expansions are completed and operating at an annualized run rate. This would represent an approximately 300% increase in the annual harvest. The first project is the expansion of our existing indoor cultivation facility with the two additional flowering rooms, one of which is already complete, together with hydrocarbon extraction capabilities to broaden our product offerings. With this expansion, we expect to complete approximately 40 indoor room harvests in 2026 and increase harvested biomass by approximately 25% compared with 2025. The second project is a lease for a 10-acre secured agricultural greenhouse property with approximately 20,000 square feet of an agricultural structure. Construction is underway with production capacity expected to come online early in the first quarter of 2027. We view this as a high return on investment opportunity with the potential to provide a reliable source of biomass. Together, the first two Virginia projects are expected to increase harvest by approximately 60% in 2027 compared with 2026. The third project is a new warehouse expansion that will approximately double our indoor biomass production capability. The project is currently in permitting with the goal of beginning construction in the fourth quarter and completing the first harvest in 2028. We are exploring financing with conventional commercial banks that could provide a more favorable cost of capital than private credit providers. As I mentioned earlier, following the completion of all three projects in Virginia, we anticipate a roughly 300% increase in harvest, which we believe will position us well to meet anticipated adult use demand and capitalize on significant market expansion opportunity. Importantly, our six Virginia dispensaries were designed years ago as a larger format superstore locations in anticipation of adult use. These have large footprints, more than 50 parking spaces at most locations, and sufficient sales floor capacity to add point of sale terminals. Because that capacity is already built into the footprint, we expect only limited incremental retail capital investment will be needed for launch. We will also maintain dedicated areas in each of our stores for medical patients. Based on publicly available market data from New Jersey's transition to adult use and subject to product availability, we believe our six Virginia dispensaries are well positioned to generate annualized retail sales growth comparable to those achieved by New Jersey dispensaries during the initial transition from medical to adult use. Our focus is on aligning cultivation capacity, product availability, and the retail experience to prepare for the first mover opportunity. Beyond Virginia, Ohio and Pennsylvania remain our secondary cultivation investment priorities. In Pennsylvania, we have the ability to expand at an accelerated pace within our existing facility once there is greater clarity around the timing of adult use sales. In Ohio, we are finalizing drawings for potential expansion with any decision to proceed dependent on capital availability, the cost of capital, and market conditions. Turning to our retail footprint, we ended the quarter with 42 stores across eight states compared with 41 stores across seven states in the prior year quarter. In August, we completed the relocation of our Johnstown, Pennsylvania dispensary to Bell Vernon and saw positive results during the new location's first two months of operation. We have identified five to seven additional potential relocation candidates, with two expected to be completed over the next two quarters and the remaining opportunities representing longer-term projects. These moves remain an important part of our effort to improve the productivity and profitability of our existing retail portfolio. Turning to our corporate initiatives, on July 30th, 2026, we completed the re-domiciling of our parent company from British Columbia, Canada to the state of Nevada following shareholder approval on June 24th, 2026. This move better aligns our corporate structure with our U.S. operations and supports our long-term strategy. Across our other markets, we continue to monitor regulatory developments that could influence future growth. In Pennsylvania, we are closely following the upcoming midterm elections and ongoing discussions around adult use cannabis legalization. We are also monitoring developments surrounding the regulation of skill games as both skill games and adult use cannabis represent potential sources of additional tax revenue for the Commonwealth. We believe discussions around these two industries could become increasingly connected through the Commonwealth budget negotiations and may influence the timing of future legislation. While the timing of cannabis reform remains uncertain, we will continue to monitor these developments and align our investment decision with greater regulatory clarity. At the federal level, we remain actively engaged in opposing efforts to weaken or further delay the statutory language closing the Farm Bill loophole, and we continue to believe the current framework will remain in place. Under the existing legislation, restrictions on certain synthetic cannabinoids are scheduled to take effect in November of 2026 with the broader restrictions on intoxicating hemp derived products scheduled to take effect in December of 2026. Some HEP industry participants continue to argue that semi-synthetic cannabinoids, which are chemically converted outside the plant, can continue to be manufactured and sold commercially. We believe this reinforces the need for full supply chain custody and visibility for all active ingredients so consumers know where every ingredient in their products come from and how they were naturally produced from plant biomass grown here in the USA. The performance of Ohio's regulated cannabis market following the state's intoxicating hemp ban reinforced our view that consumers turn to licensed operators when regulatory loopholes are closed. We believe effective implementation at the federal level could strengthen the competitive position of regulated operators and support industry growth over the longer term. Finally, we continue to await a final ruling on the broader rescheduling of cannabis to Schedule 3. The proceedings remain temporarily stayed as the administrative law judge considers additional procedural requests. However, the judge recently denied the request to reopen the hearing for additional testimony and discovery, which we view as a positive development that could help avoid further delays. The current briefing schedule is expected to conclude on November 5th, at which point the stay is scheduled to expire. We are encouraged by the DEA's continued support for rescheduling and its opposition to further delays. Thank you for joining us today. improve product quality and availability, expand third-party distribution, optimize our retail footprint, and prepare for adult use sales in Virginia. We will continue to balance those opportunities with disciplined capital allocation. With that, I will turn the call over to Michelle for a detailed review of our financial results.