Glass House Says It Can Do $200 Million In Revenue

Glass House Brands Inc. (OTCQX: GLASF) (OTCQX: GHBWF) has announced it will buy three retail assets: two operating retail dispensaries and one retail dispensary slated to open in the third quarter of 2022. Glass House also said that with these acquisitions and its other moves, it could do over $200 million in revenue in the next year.

The retail dispensaries currently operate under the name Natural Healing Center (NHC), one of the pre-eminent retail dispensary chains in California, located in the Central Coast area.

“This acquisition will advance us further in our goal of becoming one of the largest retailers in the state; provide incremental outlets for flower sales as the SoCal facility comes online; and add further support to our CPG business, including PLUS, our recently acquired and leading cannabis edibles company based in California. It also represents an immediate opportunity to drive significant expansion in our gross margin profile. Glass House-branded products currently represent approximately 5% of NHC revenue, versus an average of about 25% in Glass House-owned or -operated stores,” said Kyle Kazan, Glass House Chairman and CEO.

“In addition, we anticipate that the soon-to-open Turlock dispensary, which is located just off Exit 215 of the heavily trafficked Highway 99, and near the entrance to a Costco, will be one of NHC’s highest-grossing locations. Notably, Turlock is also the home of California State University, Stanislaus. We do not believe the city governments in these three NHC locations will issue more licenses any time soon.”

Glass House said in a statement that the two operating retail dispensaries had revenue of $15.3 million from April 2021 through March 2022 with EBITDA margins above 20%. Glass House is acquiring the two operating retail dispensaries in Lemoore and Morro Bay for approximately $22.6 million, through a combination of approximately $5.7 million in cash and the remainder in Glass House equity shares.

The third retail dispensary, currently under construction and located in Turlock, California, is expected to open in Q3 2022. The company said it expects to complete the acquisition of the Turlock store upon its opening, with Glass House Brands owning 100% of the equity interests. Based on the current performance of NHC’s operating dispensaries and the market fundamentals in Turlock, Glass House believes the Turlock store can eventually achieve ‘steady state’ annual revenues of approximately $10 million with an EBITDA margin of roughly 20%.

Improved Outlook

Kazan said, “Glass House had $21.7 million in retail revenues from its three wholly-owned dispensaries in 2021. With the addition of NHC’s 3 dispensaries to our portfolio, plus The Pottery and our new Farmacy dispensaries in Isla VistaSanta Ynez and Eureka that are all slated to open in late Q3, we will have the potential to nearly triple our annual retail dispensary revenues to more than $60 million. The increased retail footprint will also provide a significant revenue opportunity for our CPG business including PLUS. Furthermore, we expect incremental Wholesale Biomass revenues from Phase I of the SoCal Facility to reach an annualized $50-75 million by early 2023. With our recent addition of PLUS’ $14m in annual revenues on top of that, Glass House now has the potential to reach an annual revenue run rate in excess of $200 million within the next 12 months, versus the company’s 2021 revenue of $69 million. This transaction is expected to be immediately accretive to Glass House on both a sales and EBITDA basis, with all of NHC’s open locations currently generating positive EBITDA.”

Debra Borchardt

Debra Borchardt is the Co-Founder, and Executive Editor of GMR. She has covered the cannabis industry for several years at Forbes, Seeking Alpha and TheStreet. Prior to becoming a financial journalist, Debra was a Vice President at Bear Stearns where she held a Series 7 and Registered Investment Advisor license. Debra has a Master's degree in Business Journalism from New York University.


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