(Reuters) – U.S. cannabis producer Green Thumb Industries Inc posted higher third-quarter sales and core profit on Wednesday, as strong demand in newly legalized New Jersey and home market Illinois helped ward off some of the hit from inflation.
Industry experts believe New Jersey, which became the 19th U.S. state to allow recreational pot sales, could rake in over $2 billion in annual weed sales over the coming years.
Support to federal marijuana reform from U.S. President Joe Biden last month is expected to benefit cannabis products further.
“Even with new stores opening, we continue to ramp up production (in New Jersey),” Green Thumb Chief Executive Ben Kovler told Reuters, adding that the state “continues to show strength” in terms of sales.
Green Thumb’s revenue rose 3% in the three months ended Sept. 30 from the previous quarter, partly helped by more people visiting its 77 open stores across 15 U.S. states during the quarter, the company said.
However, same store sales – which accounts only for the stores open for more than a year – declined 1.6% from the previous quarter, as price cuts offset the advantage from traffic and volume growth.
Roaring inflation through the quarter ended Sept. 30 forced customers to cut spending, especially on recreational products including cannabis, and also hit companies with higher energy, labour and raw materials costs.
Green Thumb said its third-quarter net income fell to $9.8 million, or $0.04 per share, from $20.2 million, or $0.08 per share, a year earlier.
However, adjusted earnings before interest, tax, depreciation and amortization (EBITDA) rose 4% to $84.5 million.
“Inflation is real…However, with the measures we put in place, we were able to control costs and increase margins,” Kovler said.
(Reporting by Ankit Kumar; Editing by Shinjini Ganguli)
