Glass House Wholesale Revenue Up, Nears Break-Even for Quarter

Overall sales grew 71% year-over-year.

California-based Glass House Brands (NEO: GLAS.A.U) (NEO: GLAS.WT.U) (OTCQX: GLASF) (OTCQX: GHBWF) appears to be on the right financial path, with revenue up and losses down significantly in the third quarter of 2023.

The company posted a loss of just $210,000, an enormous improvement over its Q2 loss of almost $25 million, it reported Monday.

Revenue topped $48 million for the quarter, up 8% from Q2 and up 71% from the same period a year ago. Operating cash flow hit $9.1 million, up from $8.3 million in the second quarter.

CEO Kyle Kazan highlighted that the company’s increase in production capacity helped it garner more market share in the highly competitive California landscape.

“We achieved record revenue of $48 million, largely driven by an increase in production, which grew 36% from Q3 2022 to over 101,000 pounds. This is quite impressive given we were able to accomplish this with the same cultivation capacity we had from last year,” Kazan said.

“On the production side, we achieved a record low (cost) of $118 per pound this quarter, and this accomplishment has given us an even greater sense of confidence that we are well on our way to achieve our goal of less than $100 per pound,” Kazan added. “Driving down the cost of production, while staying focused on quality, is the key to cash flow generation.”

Kazan added that the company still plans to finish retrofitting another cannabis cultivation greenhouse in the first quarter of next year, with production starting in Q2.

Wholesale Bump

The biomass wholesale side of the marijuana industry is where Glass House is truly making its mark, with a 142% sales increase year-over-year to $33.8 million.

Wholesale sales were also up 10% sequentially, thanks in part to a slight increase in wholesale prices themselves. Glass House flower fetched an average selling price of $336 per pound, up 65% year-0ver-year.

Retail revenue, by contrast, was just $10.1 million for the quarter, an increase of 56% year-over-year, though flat sequentially. Glass House attributed the increase primarily to the acquisition of four dispensaries in the third quarter last year, as well as three other stores that it opened this year.

Consumer packaged goods revenues were $4.3 million, down 45% year-over-year but up 9% sequentially.

“The retail and brand segments of the California market continue to be distressed, and we are maintaining our strategy of only selling to stores that pay. This approach has kept our accounts receivables risk low,” the company stated in a release.

For the fourth quarter, Glass House projects revenue of $38 million to $40 million, which would be up 21% year-over-year but down 19% from Q3. The company said that would likely be due to “decrease in flower as a percent of total biomass production” because of “unseasonably low sunlight, high humidity, and higher temperatures” that made cultivation tougher than normal in Q3.

At the close of September, Glass House had $341.5 million in total assets, including $37.8 million in cash, and $170.5 million in total liabilities.

John Schroyer

John Schroyer has been a reporter since 2006, initially with a focus on politics, and covered the 2012 Colorado campaign to legalize marijuana. He has written about the cannabis industry specifically since 2014, after being on hand for the first-ever legal cannabis sales on New Year’s Day that year in Denver. John has covered subsequent marijuana market launches in California and Illinois, has written about every aspect of the marijuana trade, and was part of the team that built the cannabis industry’s first-ever trade show, MJBizCon. He joined Green Market Report in 2022.

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