Cresco Labs Inc. (CRLBF) Q3 2026 Earnings Call Transcript

And, therefore, are subject to adjustment until the filing of the company's quarterly financial statements. We filed our corresponding financial statements and MD&A for the quarter ended September 30, 2026 on Cedar and Edgar earlier this morning. Before we begin, I want to remind you that statements made on today's call may contain forward-looking information. Actual results may differ materially. The risks, uncertainties, and other factors that could influence actual results are described in our earnings press release and in the most recent annual information form and MD&A filed with the securities regulators. This call also contains non-GAAP measures also outlined in our earnings press release and in the MD&A filed with the securities regulators. Please also note that all financial information on today's call is presented in U.S. dollars and all interim financial information is unaudited. With that, I'll turn the call over to Charlie.

Good morning, everyone, and thank you for joining Cresco Labs' third quarter 2026 earnings call. The quarter delivered as planned. We expected Q3 to look a lot like Q2 on revenue while we worked through higher cost inventory, integrated new stores, and brought Kentucky online. We generated $173 million in revenue, up 5% year-over-year. We produced $81 million in adjusted gross profit. We produced $35 million in adjusted EBITDA, resulting in a 20% margin. And we generated $26 million in operating cash flow, up from $15 million in Q2, and $21 million in free cash flow. Cash is our North Star. In this quarter, the business converted over 60% of adjusted EBITDA into free cash flow. The Cresco team executed this quarter as we closed on an acquisition, improved cultivation, and ramped up a new state, all while keeping the base business running at a high level. I'll now walk you through the quarter by touching on three themes. First, executing on our growth plan. Second, winning where we operate. And third, building the company for its next chapter. First, our growth plan. We remain disciplined and consistent in our growth strategy. Where we lead, we go deeper. Where we see structural advantages, we find compelling inroads. And every opportunity is evaluated on the same thresholds. It must have accretive economics and be in a market with a durable structure. On September 2nd, we closed the acquisition of the nine Pennsylvania dispensaries, a state where our scaled position gives us operating leverage. While the state approval process took longer than anticipated, we can now fully implement our operating model from top to bottom. In Q4, we're putting the playbook into effect and working toward moving the stores under the Sunnyside banner. With 27 locations alongside the number one branded share, we operate the largest retail network in Pennsylvania, the second largest medical market in the country. In Ohio, we captured a full quarter of contribution from our completed eight-store retail network, and we've also done important work to upgrade our cultivation. In the first half of the year, we transitioned our greenhouses to allow full environmental control and under-canopy lighting, and we made similar improvements in Massachusetts. These are great examples of how we invest. Targeted, capital light, and a high level of execution certainty. While this construction had an impact on cultivation in the first half of the year, resulting in less sellable material and higher cost products that we're selling through in the second half of 2026, the harvests coming out of Ohio and Massachusetts today have materially higher yields, and that additional supply will let us expand product sizes and categories in 2027. We're also encouraged by Ohio's enforcement of intoxicating hemp rules, which can serve as a successful case study for other states. The entire market is up over 30% year-over-year, and consumers are embracing safer products that are lab-tested, accurately labeled, and sold through the regulated retail channel. In Kentucky, we completed our first full quarter of commercial sales. The market is developing broadly in line with the ramp-up we expected, and subsequent to quarter-end, we opened our first Sunnyside dispensary in the state on October 23rd. New medical programs take time to build, and Kentucky's contribution in the near term will be modest. This is a multi-year opportunity, and we're pacing our investment to market growth. Second, we win where we operate. For Cresco, winning means managing competitive and pricing pressure while running the most productive retail in our markets, getting more out of every square foot of cultivation, and building brands that consumers revisit again and again. Looking at retail productivity, Sunnyside dispensaries generate nearly 30% more revenue per store than state averages. In Illinois, Ohio, and Pennsylvania, that productivity translates into a top-two retail share position in each of these core states. Our House of Brands products achieve in wholesale what Sunnyside does in retail. They bring repeat consumers back. In Pennsylvania, we expanded our number one branded product market share lead. In Illinois, we lead the state in flour, edibles, and concentrates market share. While we've lost share in vape, this is by design. The category's growth is driven by larger formats sold at the same price, pushing price per gram down by more than a third in two years. We're not chasing that trend. Our vape portfolio commands the highest price per gram of any major producer in the state. In Massachusetts, we lead in market share led by our branded flower share. Winning where we operate also means innovating where we operate. We're thrilled to be introducing two exciting innovations that give consumers an approachable way to choose cannabis for more occasions. Last month, we launched Slips, an oral pouch under the high supply brand that landed on Sunnyside shelves in Illinois in 4 and 10 milligram formats. Consumers are already enthusiastic about the unique, convenient format that allows for discreet, fast-acting consumption. This week, our Wonder brand introduced 5-milligram single-serving beverage mixes designed for occasions like exercising, sleeping, or socializing. Learning from the hemp beverage boom and leaning into the wellness beverage trend, each mix also includes ingredients such as creatine and caffeine for the exercise formulation and chamomile and melatonin for the sleep formulation. Both products align with a broader shift in consumer behavior towards products that are portable, low-profile, and easy to incorporate into everyday routines. We're initially launching in our own Illinois stores because our retail and loyalty data lets us measure repeat purchases precisely. It's a test and learn approach, and we'll scale using that data. Cannabis is still poised to be one of the largest consumer goods categories in the country, which is why Cresco continues applying our CPG playbook to understand unmet consumer needs and occasions, develop products that meet those needs, and build trusted brands that provide meaningful choices. I couldn't be prouder of this team as they continued expanding traditional cannabis forms to reach new consumers in wellness categories. And third, we're building the company for its next chapter. Last quarter, we said that we were executing on everything within our control so that when federal regulations allow, we'll be ready to capitalize on the next phase of regulated cannabis. Last week at our annual general and special meeting, shareholders approved three special resolutions, each with over 94% of votes cast in favor. Each of the resolutions are structural steps that together do three things. They simplify our corporate structure, they align the company with the U.S. investor base that will increasingly own this industry as it normalizes, and they put the pieces in place to prepare for uplisting on a senior U.S. exchange. This means we are ready for Cresco's next phase as we watch federal reform continue to unfold. The federal backdrop continues to move in our direction. Earlier this week, our medical operations began receiving DEA registrations under Schedule 3. The administrative process on broader rescheduling continues to progress. And in December, federal restrictions on intoxicating hemp are set to take effect, which, as we've seen in Ohio, supports the health of both consumers and this industry. That said, we don't build our plan around federal reform timelines. As always, we plan for the business we have today so that we're well positioned regardless of future reform outcomes. Before I hand it over, I want to welcome Mark Stortz, who is serving as our interim chief financial officer. With that, I'll let Mark walk you through our Q3 financial performance in more detail.

Thank you, Charlie, and good morning, everyone. As we outlined last quarter, we expected Q3 revenue to be roughly in line with Q2, gross margin in the high 40s as we worked through higher cost inventory, adjusted SG&A essentially flat in dollar terms, and adjusted EBITDA margin of approximately 20%. Against that framework, the quarter was in line with our expectations. Our growth initiatives helped offset supply constraints caused by construction in several markets this quarter, a full quarter of our newest Ohio stores, the start of Kentucky sales, and a one-time step-up in Illinois basket sizes following the increase in purchase limits. As a result, we reported $173 million in revenue, up 5% year-over-year, and roughly flat sequentially. Retail revenue was $121 million, and net wholesale revenue was $52 million, both flat sequentially. On margin, cost of goods sold was up as we worked through the higher-cost inventory tied to the facility upgrades completed in the first half, as we said we would. Together, that resulted in adjusted gross profit of $81 million, or 47% revenue. We were able to absorb a full quarter of Kentucky operations in our newest Ohio stores while reducing adjusted SG&A by $1 million, its productivity gains across the base business and corporate functions, including our continued deployment of AI and automation, offset growth-related costs. Adjusted SG&A was $54 million, or 31% of revenue, compared to $55 million and 32% of revenue in Q2. Holding gross margin within our range while decreasing SG&A produced adjusted EBITDA of $35 million, or 20% of revenue. Turning to cash flow, the business generated $26 million in operating cash flow in the quarter. We invested $5 million in capital expenditures, primarily cultivation upgrades in Ohio and Massachusetts in our Kentucky dispensary, resulting in free cash flow of $21 million, ending the quarter with $76 million in cash and restricted cash. Looking ahead to Q4, we expect net revenue to be down low single digits sequentially, reflecting typical seasonality in wholesale and continued pricing pressure in our more competitive markets. We expect gross margin similar to this quarter as the majority of the higher cost inventory from the construction period sells through. Adjusted SG&A should be up modestly in dollar terms as we rebrand acquired Pennsylvania dispensaries and open our new dispensary in Kentucky. With that, I'll turn it back to Charlie for closing remarks.

Thank you, Mark. Let me close by pulling the quarter together. In Q3, we delivered on what we said we would deliver. We closed Pennsylvania and took full ownership of nine stores. We completed the Ohio retail buildout while upgrading our cultivation and brought Kentucky online. In Illinois, we're answering a more consolidated market with brand strength, retail productivity, and new formats. And importantly, our shareholders just approved the critical steps required to put the company's structure where it needs to be for this next phase of cannabis. In the near term, we're prioritizing cash flow with our mission for 2027 to find scale and efficiencies across our core. We're up for the challenge. We're looking at every corner of the organization to identify untapped opportunities to make us more productive and more profitable, incorporating AI and other transformative tech solutions to maximize those efficiencies. We're working hard to provide our shareholders with multiple pathways to win. The first is through the business itself, a disciplined team, a tightly executed growth plan, and a cost structure that converts that growth into cash. The second is the environment around the business, federal reform that strengthens cash flow and balance sheets across the industry, and access to the capital and investors that have been closed to this sector since the beginning. Plus, an electorate that continues reaffirming public support for regulated cannabis, as seen in this week's election results throughout the country. The first pathway stands on its own, and the work we completed this quarter means that CRESCO will be ready to act quickly when the second pathway arrives. Thank you to the entire CRESCO team for your execution this quarter, and to our shareholders for your continued support. With that, we'll open the call for questions.

We will now begin the question and answer session. Please unmute yourself to one question and one follow-up. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Aaron Gray with Alliance Global Partners. Your line is open. Please go ahead.

Hi, good morning, and thank you very much for the questions here. First off, I just want to touch more on the gross margin, right? So came in at the low end of the guide you had offered last quarter, understand, you know, some of the reasons for that and higher cost inventory. So it looks like it's going to be, you know, flat and four Qs. Just want to get a better sense in terms of, you know, early indicator for 27 and how we should think about gross margin expansion opportunities and potentially getting back to more of the 50% level. Thank you.

Yeah, good morning, Aaron. As you called it, and as we mentioned on the last call, in Q3 and Q4, through the rest of the year, we're going to be selling through some of this higher-costed inventory in some of the markets where we had made capital improvements that impacted productivity, and therefore we had this higher-costed inventory, again, that we'll be selling through the rest of the year and a little bit into Q1. We do expect to see, of course, recovery when we get back to now the normal costed items and really the opportunity for improvement there based on those improvements that we made. The initial results, the harvests that are coming out of those facilities now are showing the benefit of the investment. And look, at Cresco, we're just going to continue to do what we need to do to make sure that we're equipped, positioned, structured to be as competitive as we need to be in the quarters ahead. Just like we always have, we'll continue to focus on that.

Okay, great. Thanks for that, Charlie. Talking about some of the innovation, maybe more so on the drink side or drink mixes, you know, we talked about in the past, you guys didn't get into the hemp THC drinks, you know, category, you guys have been evaluating, you know, how much of An opportunity do you now see, given that that market could go away or is looking to go away next month, and how much was that a driver in terms of your own launch now? Do you believe there's a lot of opportunity to bring those consumers into your dispensaries? How big do you think it could become?

Just more color in terms of what went to that decision and why now. Thanks.

Yeah, for us, and we've talked about it. The benefit, it's the duality of the hemp experience over the last couple years, right? The benefit of it is the introduction to a lot of consumers to not only formats, but accessibility of THC-based products. That we've seen the demand for. We've seen the interest from the consumer. And so the idea that as the availability of hemp-derived THC products will be going away, we recognize that as a consumer that we want to appeal to, that we want to make sure that we have product offerings for, and that we can bring them into the regulated channel to satisfy that need. So, hence, innovation follows. We always had, also, I would say, a R&D approach where we would be prepared for whatever the outcome is there. So, what you're seeing is us move forward with the version of that product that we think is best suited for the regulated market. And, again, we look forward to welcoming that consumer. And then, Greg, you want to add more color?

Sure. Sure. Good morning, Aaron. I think, you know, we are, as you said, encouraged by the opportunity that's coming, but I think one of the things we are not totally going to do is build a plan around it right now. As we look at it, I think enforcement's going to be a big piece. If you look at Ohio, when enforcement's done right, you can see material growth in the market, but we have to see how that rolls out across Illinois as we get through that date. Second part, we're looking at demand shifts. I think some of this, as Charlie said, will come back dispensaries, but I also think a portion of that hemp volume will either return back to alcohol occasions. It might just be an occasion that goes away because the product and price It doesn't exist. They're non-hemp space. Some of it will turn to the illicit market, and some of it will go into dispensaries, and so we're watching that. I think, as you look at the innovation we've launched, we're really encouraged by these two new platforms. We have a variation of both as a hemp and a non-hemp option. I wouldn't say necessarily we think. For example, Wonder Beverage Mix is a perfect substitute for the hemp ready to drink cocktail, but we do think innovation serves us two points. One is, do we have the right Lower-dose offerings in our stores that those consumers are used to. And then also, as we think of innovation, it actually goes back to more of your first question, which is how do we continue to build innovation that helps grow consumption and consumption opportunities at higher margins? And both the high supply slips and the wonder drink mix does that for us.

Really appreciate that, caller, both Charlie and Greg. I'll jump back in the queue.

Your next question comes from the line of Neil Gilmer with Haywood Securities. Your line is open. Please go ahead.

Yeah, thanks very much. Good morning. On the acquisition of the stores in Pennsylvania, I know you said closed at the beginning of September. Just wondering how that integration is going and sort of what you expect sort of the timeline to get them sort of operating like your framework for the Sunnyside Shops.

Yeah, thanks, Neil. So it was great to get the official closing across the finish line there in September. So we're now entering that phase of full integration. While we operated those stores under an MSA for months, once you have full ownership, then you really get into full adoption of the operating model. That'll, of course, kind of play itself through this quarter. And in the beginning of next year, but once we get loyalty up, and really once we start to drive our traditional assortment on those shelves, that's when we'll see those stores act and feel more like Sunnyside stores do across the footprint.

Great. Thank you. And then maybe you touch on, you know, in the past, you've talked, you're sort of dabbling on the international side of the market, what your sort of current thinking is or approach and strategy for international.

Yeah, it's a good question. It is still in that observe, test, and learn phase. What we're seeing develop over there is It's relatively akin to what we've seen develop here in the U.S. on a state-by-state basis, where there's the shifts that come from growth phase to pricing pressures. Some of those markets over there right now are experiencing an oversupplied position. And so I think it validates our approach to take a light touch and to see how those markets do evolve and what parts of the supply chain are most durable and that you want to invest in. We definitely... We know that the international markets are viable for the future, and that participation makes a ton of sense, but making sure that you get it right based on the lessons that you've learned in a decade-plus in U.S. cannabis is the approach that we're going to take.

Okay, great. Thank you very much.

Your next question comes from the line of Kenrick Tai with Canaccord Genuity Capital Markets. Your line is open. Please go ahead.

Thank you, and good morning. Just with respect to the enforcement action and state-level enforcement, In your response to the earlier question on Illinois, there sounded to be a real degree of caution as to, you know, see how it will evolve. But let's sort of maybe have that discussion around, you know, how it will evolve relative to Ohio, and is your caution just a lack of visibility? Part two to the question would be is if Illinois goes as hard as Ohio did on enforcement, you know, what could that look like both for the state and for your operations in the state, given how material Illinois is?

Might take it in reverse. You know, I think the level of enforcement in Illinois definitely has the potential to have a strong impact on the regulated channel in the state. And I would say our apprehension is just more around the conversion of the hemp consumer into the regulated market more than whether or not there will be enforcement in Illinois and Ohio or both states that recently passed. laws that allow them to wrap their arms around this issue independent of what happens at the federal level. And we know that there's conviction from the Illinois administration to see this through. There was recently just a letter or directive that was sent by the Illinois State Administration to the federal government of, you know, making sure that they knew where Illinois stood on keeping the loophole closed at a federal level. So we're encouraged on the approach that Illinois will take. I think what you're hearing from us is, like we talked about on the last call, too, I think, is how much of that demand, that hemp demand, can you convert into the regulated market?

Right. Thanks, Charlie. That's some good insight. Man, just on Kentucky, perhaps help us understand what some of those key hurdles are that will, you know, sort of. Are there any other things specific or unique to the program, the program rules, that are going to result in sort of a slower cadence of growth or rather a very considered growth cadence in the early days?

No, it's a valid question. Kentucky is one of the first. You know, new medical programs to launch in a while. So I think it's just, it's us remembering back to what it was like when states like Illinois launched their medical program. And it takes time for patient adoption to ramp up. So other than, to your question, other than sort of the standard, it's a new medical market components, I would add in there that the structure of Kentucky, it's fairly limited retail licenses. I want to say it's 48 off the top of my head. You're seeing some affiliated stores. A good number of these stores that have opened so far are affiliated directly with some producers. And so there's a preference for that verticality type assortment in those stores. It's not only the new medical program adoption path, but structurally, Kentucky, we need to see broader store opening, and we need to see broader patient adoption through the state, and that's when you'll see that market really accelerate. But in fairness, that's something that plays out through 27 and into 28.

That's great. Thanks, Charlie. I'll get back in queue.

Thanks, Kendrick.

Your next question comes from the line of Bill Kirk with Roth Capital Partners. Your line is open. Please go ahead.

Hey, good morning, everybody. I don't think Texas was mentioned in the opening remarks, so is there any update on the dispute there over the conditional license? I guess what is the appeal status, and when would you expect to know more?

Sure. So the pending litigation there is related to the conditional license that we were awarded and then had taken away. I think this is probably the great opportunity to touch on what happened across the country with the elections just the other day. Texas has a very different look and feel to it today than it did three days ago. And how that's going to impact THC in that state overall is to be determined. You definitely have more pro-cannabis views that are in all of the related components and positions within that state of Texas. But even on a broader level, you saw that happen across the country. You've got states like what happened in Pennsylvania. We're incredibly excited about the results in Pennsylvania and what that can mean for adult use in one of our most meaningful markets in the near term. But states like Wisconsin and North Carolina and even Ohio, as we look at the Ohio market, you've got a new governor that's going to be taking the seat there at the beginning of the year that's replacing a governor that did not like cannabis. So everything that we've seen in Ohio play out in the last couple of years was done with a governor who reluctantly was allowing that program to proceed. So overall, very encouraged by the results from the elections, and that applies to the opportunity in Texas. I think you're going to see a more appropriate level of interest in making sure that that medical program there is viable. And that, you know, residents of Texas have access to THC-based products.

Thank you, Charlie. And then I do want to go back to gross margin. Just given the magnitude of the contraction year over year, quarter over quarter, it surprised us. So I have to ask if there's any maybe new promotional or pricing actions within the gross margin pressure, or if it's purely just that higher cost of inventory.

So, it's, you know, multi-components, but main driver of it is that high-cost inventory that we're selling through. But also, especially as we get into the fourth quarter of the year, which is usually high promotional activity and seasonality, you're going to see that develop also. Greg, any additional call you want to add?

Before heading into market and the cost side, the inventory, I think if you look at it from a price perspective, you are seeing a consumer trend in the marketplace of- Value sizes in major markets. It's both consumers are seeking it out. You've got more operators offering that in assortment. We have been limiting how much of value sizing we put it in. That's why you're seeing some of the top-line decisions we've made to ensure that we are not chasing value pricing down. But we also have to follow suit on the growth of larger sizes, and so you're seeing some pricing activity remain competitive, not as aggressive as we could be taking the Chase overall share, but nothing that's just a price action that is driven by us, and Mark will talk a little bit about kind of the inventory we saw.

Yeah, thanks, Greg. Thank you. I think, you know, just to add to that what is interesting and what we've talked about before, On this call as well is, you know, some of the facility upgrades that we've been making, particularly in Ohio and Massachusetts. And, you know, while we're seeing the impact of the higher costed product flow through our P&L this quarter, and we expect that to continue a little bit going forward in the next quarter as well, you know, we are excited about the opportunity of those investments to reduce our cost to produce and eventually flow through our gross margin. So, you know, so we do expect, you know, as those things complete and mature, that we will see some good benefit there in the future. So, I think that that's an exciting component as well as we think through managing our inventory mix on a go-forward basis.

Thank you. Those are some useful details. I appreciate it.

Thank you.

Your next question comes from the line of Frederico Gomez with ATB Cormac Capital Markets. Your line is open. Please go ahead.

Good morning. Thanks for taking my questions here. I want to ask about Pennsylvania. Given the, I guess, the potential there for adult use legalization following the election, How are you positioned in terms of capacity in the state, cultivation and manufacturing? What sort of investments do you think would be needed if that actually happens next year? Thank you.

Yeah, thanks, Fred. Yeah, very excited about the results in Pennsylvania. You now have a governor who has put cannabis adult use in his budget for the last three years, I think. You've had a House that's supportive of it, and now you have a Democratic-controlled Senate. So we think that the opportunity for adult use there is better today meaningfully than it was pre-election. You've seen us position ourselves there over the last year to prepare ourselves not only for the market that it is today, which we like, which, of course, we have a really strong leader position on both sides from a retail and a production wholesale side, but also for that potential for adult use. It's the second largest medical market in the country, and it still has legs. To grow under an adult use scenario. Keep in mind, Pennsylvania is surrounded by adult use already. So to sort of bring that business back into the state, it's going to have a meaningful impact. And from a production or capacity standpoint, we have our second facility there that still has an opportunity for investment to. Uh, increased capacity and, and there's other opportunities that we'll evaluate too, but as you've seen us be very judicious and very disciplined in capital allocation, uh, over the last few years, it's, this is new information that we're going to now, uh, start to evaluate and see what happens in the next couple of months as, as the legislature comes back into session. And you'll see us continue to evolve in the way that we're approaching our leadership position in PA for today and for the next phase of it.

Thank you. And then a second question on your wholesale segment, I guess, on a net basis here, with sales declining, I guess. Can you talk about the outlook for wholesale? How much of this is you deliberately, I guess, shifting product into your own stores? How much of it is just the pricing pressure or competitive pressures selling into third-party stores?

Greg, you want to start this one?

Sure. You know, overall, from our wholesale portfolio perspective, our wholesale brands remain incredibly strong. If you look at distribution and velocities, we are in every account we want to be in our major four states, and our brands continue to be performing at some of the top velocities in the states. There's a couple of things that we are looking at our wholesale business as we go forward, and one I touched on just a couple of minutes ago, which is... As we look at the market shift to larger value sizes, there is a way for us to play there that drives top line that can come up the expense of margin. There's a way for us to play there that forgoes some top line in pursuit of maximizing margin in cash. So we are managing the mix of how much we're putting into the market to maximize the margin on our business. There's a couple of shifts that are also happening this quarter. As we look at the next quarter, in some of our court markets, if you look at Illinois, some of the retail doors that we tend to be very strong with independents have now changed ownership. When a door changes ownership, that does change some of the potential of that door, and so you're going to feel that in quarter as a shift that we have to then figure out where we're making a round. But it also relies on us looking at innovation, like we just launched with high supply slips, which is making sure that we also have items that are the gotta-have items across the state that also carry an improved margin on them. So, I think if you look at Q3, a little bit of this is due to where the volume is shifting to value sizes. It's also what's happening with how the retail landscape is playing out, but that's what we're going to be managing through as we get into next year.

Great, thank you.

Your next question comes from the line of Pablo Zunic with Zunic and Associates. Your line is open. Please go ahead.

Thank you, and good morning, everyone. Charlie, can I go back to the Texas question? Given your litigation, I just want to confirm that given your litigation, there's been a state, an injunction put in the program, so the regulator cannot go ahead with the program. Am I interpreting that right, or that's not true?

No, I don't think that we've had any decisions in the three litigations that are pending there that have stayed the program. I think the timing of moving forward or issuing the unconditional licenses is independent from anything that's happened in our cases so far.

Thank you. And then just talking, I guess, about competitors, you know, a two-part question. In the case of Florida, we're seeing quite a few of your competitors expanding in that market, right? And I guess the numbers are looking better. I mean, how is Cresco thinking about that market? And then similar question regarding Illinois. I mean, you saw Green Sun get to 26 stores with their deal. Obviously, you expanded through acquisitions also in Pennsylvania. But in the case of Illinois for the sunny side banner, do you think that you have to ramp up the number of stores or make acquisitions to get to a 20-plus number there? Thank you.

So, we'll take those in order. Florida expansion or Florida, some are peer set, seeing growth in the state. You have to remember some of the peers down there were preparing for adult use back in 2024. And then when that did not happen, they've had extra capacity that's sitting there for us. We've always needed to manage that Florida positioning. To make sure that we weren't overbuilt, but also not unprepared for something that's going to happen down there. I think Florida is a state that you'll see us continue to evaluate for further investment. We think it's a strong state. Again, another state that had an outcome on the election night that could be seen or should be seen as pro-cannabis. And so, again, Florida is a great state, and you'll continue to see us evaluate that for further investment. As it relates to Illinois, sure, it's our largest market. We're the largest operator in the space. We're constantly evaluating opportunities for us to grow our impact on the market. And whether it's with affiliated stores or otherwise, you'll continue to see us lean in to Illinois to make sure that it continues to be one of the strongest components of the business.

Thank you. Just one more, if I may. I mean, obviously, you and your team have been very close to the Pennsylvania regulatory side of things and how things have evolved there. But, you know, I know we all made the assumption that because Democrats now control both chambers, that's great news for legalization of REC. And of course, I agree with that. But I would argue that in the past, the holdup wasn't so much the Republicans in the Senate, but it was Democrats within Pennsylvania, the two chambers, not being able to agree on a final program. Do you want to give some thoughts on that, and should we keep that in mind as we try to temper our excitement on Pennsylvania? Thanks.

Well, I think there's a healthy dose of caution that we always have to apply to anything that requires legislative change or regulatory overhauls or administrative action at a federal level. It's lessons learned by all of us that have been in cannabis for a sufficient period of time. But what I do know about Pennsylvania is the likelihood of a real, balanced, responsible approach to adult use moving forward became better after the election results. There's, of course, again, the inherent risk of the unknown and of legislative action. Pennsylvania has been close for years, and the sort of the format of or the dynamics that existed between the House and the Senate was always the crux of adult use moving forward, and we do think that that has improved in the last three days.

Thank you.

There are no further questions at this time. I will now turn the call back to Charlie Bachtel for closing remarks.

Yeah, I want to thank everybody for joining us today. This is the last call that we're going to have this year. Hope everybody has a wonderful holidays, and we'll talk to you in 2027. Thank you.

This concludes today's call. Thank you for attending. You may now disconnect.