Glass House Brands 2022 Sales Improve as California Flower Prices Rise

The company plans to expand capacity at its Southern California farm.

California-based single-state operator Glass House Brands (OTC:GLASF) has positioned itself to benefit from rising flower prices in the state as more competition bounces out of the cultivation business.

The company released its financial results for the fourth quarter and full year of 2022.

Fourth-quarter revenue hit a new record of $32.2 million, a 75% year-over-year increase. That beat the Yahoo Finance average analyst estimate by $1.2 million.

Net loss was $17.3 million in the quarter, a slight improvement versus $18.7 million net loss in the same period the previous year.

Glass House’s cultivation facilities have been a major focus of its growth strategy, with the company expanding its cultivation space by more than 80% in the past year.

Demand for biomass also accelerated, and the company has been able to sell every pound they produced, CEO Kyle Kazan noted in a Monday statement.

Kazan highlighted the potential of the company’s marquee asset, a 5.5 million square foot farm in Southern California, which is being augmented to hold an additional greenhouse capable of producing 250,000 pounds of biomass annually.

Glass House has seen a sustained rise in pricing since prices bottomed in July and August last year, the company said. Its average selling price for biomass in first quarter 2023 is expected to be $275 per pound, up from $236 per pound in the fourth quarter of 2022.

The company said that the low cost of production in the fourth quarter of $127 per pound will allow the company to have a positive gross margin in wholesale biomass under almost any scenario.

“We are focused on maintaining the highest quality flower with the lowest cost structure in the industry to maximize our cashflow over the long run, and we believe that the events of the past two years have validated this approach,” Kazan said.

Wholesale revenue increased by 140% versus Q4 2021, while retail revenue increased by 64% sequentially and 106% year-over-year, primarily driven by four retail locations acquired in the third quarter.

Gross profit was $10.2 million, or 32% of net revenues, versus negative 2% in the same period in 2021 and 31% in Q3 2022.

Adjusted EBITDA loss shrunk to $2.6 million, a substantial improvement from the loss of $9.1 million in Q4 2021 and a slight decrease from the $2.7 million loss in Q3 2022.

The year-end 2022 financial results show net revenues of $90.9 million, a 31% increase versus 2021, primarily due to incremental wholesale biomass production and sales from the company’s Southern California farm and expansion of the company’s retail footprint. Net loss for the year was $36.2 million versus $44.3 million in 2021.

Glass House’ cash balance at the end of the quarter was $14.1 million, down 19% from the previous quarter end.


First-quarter revenue is expected to be between $27 million and $29 million due to seasonal reduction in production and a decline in consumer packaged goods sales of up to 20%. The company expects a cash balance of approximately $12.5 million at the end of the quarter.

Gross margins are expected to improve slightly from fourth-quarter levels of 32%, the company said, and adjusted EBITDA should improve in Q1 from Q4 but be slightly negative.

Cash flow guidance has been accelerated to achieve positive free cash flow excluding expansion capex from Q2 2023. Adjusted EBITDA is expected to be positive in Q2 2023 and maintained for the remainder of the year.

Fiscal year 2023 revenue guidance is maintained at $160 million, with increased wholesale revenue projection from $60 million to $85 million and reduced CPG revenue guidance to $25 million from $35 million.

Retail revenue guidance was reduced to $50 million from $65 million due to changes in how excise tax is collected and the difficult retail market.

Prior to Jan. 1, 2023, California distributors were responsible for collecting and remitting excise tax to the state on behalf of retailers. However, with the new regulation, retailers are now responsible for collecting and remitting the excise tax themselves. As a result, the cost of inventory for retailers is reduced by the amount of the excise tax that they no longer have to pay to distributors.

While the change reduces revenue by the amount of excise tax that is no longer included, it does not change the total gross margin dollars collected, as the excise tax is now charged directly to the consumer as a tax. In fact, this change results in a higher gross margin of around 10 percentage points, as inventory costs and revenue are reduced by the same amount.

The company expects to produce 310,000 pounds of biomass with a cost of production below $130 per pound for the fiscal year, representing an increase of 62% vs. 2022 production and a reduction in costs of 9%.

“And Glass House will doubly benefit from flower prices rebounding because there has been tremendous competition on the CPG side of their business, which has struggled mightily,” Seeking Alpha author Fund Letter Stock Ideas wrote. “Smaller startup CPG companies have popped up and profited from the extremely low-priced flower, thus enabling them to offer inexpensive CPG products made with that flower. Since those newer CPG companies don’t control supply, these competitors will be squeezed as prices go higher, which should finally provide relief to Glass House’s struggling CPG business.”

None of the above guidance includes any impact from the potential greenhouse expansion, the company said.

Adam Jackson

Adam Jackson writes about the cannabis industry for the Green Market Report. He previously covered the Missouri Statehouse for the Columbia Missourian and has written for the Missouri Independent. He most recently covered retail, restaurants and other consumer companies for Bloomberg Business News. You can find him on Twitter at @adam_sjackson and email him at

One comment

  • michael g mclaughlin

    March 13, 2023 at 8:23 pm

    Only borrowed money is keeping these companies afloat. A business (remembering business school) axiom says when the cost to produce the goods is more than the selling price a company will fail. It seems this company and others are one dip in the price of flower away from BK.


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