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Earnings Call Transcripts·

Jushi Holdings Inc. Q3 2026 Earnings Conference Call - Jushi Holdings Inc.

JUSHF

  • Explicit Guidance:

    • FY2026 CapEx: Full-year capital expenditures expected to be $12–15 million, primarily for Virginia cultivation renovations and early Pennsylvania adult-use preparations.
    • FY2027 Revenue/Volume: No specific revenue or earnings guidance provided; however, annual harvest is projected to increase from ~29k lbs (2025) to 115+ k lbs in the first full year post-Virginia adult-use launch (2028).
    • FY2026 CapEx Specifics: Targeting $40 million in construction costs plus equipment for the Manassas, VA indoor cultivation expansion (expected to double flowering canopy to ~45,000 sq. ft.).
    • Virginia Adult Use Fees: Expect to pay a $10 million conversion fee over a three-year period starting upon regulation implementation.
    • Financing: Exploring conventional bank financing for VA projects; term sheet targeting finalization in Q4 2026.

  • Business-Segment Outlook:

    • Virginia (Adult Use Launch): Commencement of sales scheduled for July 1, 2027; expected to be a multi-billion dollar market compared to current ~$180M medical sales.
    • Virginia Capacity Expansion: Three concurrent projects to increase harvest by ~300% (29k to 115k+ lbs):
      • Project 1 (Indoor): 2 additional flowering rooms + hydrocarbon extraction; target ~40 indoor harvests in 2026 and 25% biomass increase vs. 2025.
      • Project 2 (Greenhouse): 10-acre leased property (20,000 sq. ft.); construction underway, production expected early Q1 2027.
      • Project 3 (Warehouse): Permitting phase; construction to begin Q4 2026, first harvest in 2028.
      • Combined 2027 Impact: First two projects expected to increase 2027 harvest by ~60% vs. 2026.
    • Retail Footprint: 42 stores across 8 states; identifying 5–7 additional relocation candidates; 2 relocations to complete over the next two quarters.
    • Wholesale Growth: Continuing to expand distribution to new third-party dispensaries; expecting runway for growth in Pennsylvania (adding small rooms by early 2027) and Massachusetts (yield improvements), while Ohio growth is capital-dependent.
    • Pennsylvania: Awaiting adult-use regulatory clarity; prepared to accelerate cultivation capacity expansion if legislation passes.

  • Market and Competitive Outlook:

    • Supply Constraints (VA): Anticipates supply could be constrained for the first 24–36 months following the July 2027 adult-use launch due to demand outpacing capacity build-out.
    • Pricing & Competition: Continued pricing pressure from competitive markets and illicit/unregulated products; expects federal enforcement of hemp restrictions (Nov 2026, Dec 2027) to benefit regulated operators.
    • Product Strategy: Focus on increasing harvest yield per square foot, product quality, and diversity to offset average selling price (ASP) declines.
    • New Jersey Benchmark: Believes VA retail performance could mirror NJ's transition, with potential for individual store annualized revenues ranging from $8M to $35M depending on location and capacity (based on historical IL data).
    • Market Share: Aims to capture $3 billion unregulated market share in Virginia by transitioning medical patients to dual-use status.

  • Macro / Industry Outlook:

    • Federal Rescheduling: DEA registration inspections ongoing; briefing schedule to conclude Nov 5, 2026; rescheduling to Schedule 3 expected to remain an IRS/Treasury priority for 2026–2027.
    • Hemp Regulation: Federal restrictions on intoxicating hemp-derived products scheduled for December 2027; semi-synthetic cannabinoid restrictions effective November 2026.
    • Pennsylvania Politics: Monitoring 2026 midterm elections for potential impact on adult-use legislation and skill-gaming revenue integration; believes tax revenue needs may drive reform regardless of party control.
    • Economic Environment: Balanced view on capital markets; seeking conventional bank financing for lower cost of capital vs. private credit; monitoring FX and tax rate implications of rescheduling.

  • Strategic Initiatives:

    • Redomiciliation: Completed move from Canada to Nevada on July 30, 2026, to align corporate structure with US operations.
    • Virginia Capital Projects: Advancing $40M+ cultivation expansion and $10M conversion fee; preparing six "Superstore" retail locations (pre-designed for adult use) with minimal incremental retail capex.
    • Store Relocations: Relocating underperforming stores to higher-traffic locations to improve productivity; Johnstown to Belle Vernon (PA) relocation completed in July 2026 exceeded expectations.
    • Debt Reduction: Fully satisfied promissory notes for Mansfield/Oxford (Ohio) and Toledo/Warren (Ohio) dispensaries via cash payments.
    • Financing: Targeting completion of bank term sheet for VA expansion in Q4 2026; exploring leasing for equipment to fund remaining investment post-cash runway.

  • Risks and Headwinds to Outlook:

    • Regulatory Timing: Uncertainty regarding the final date of federal rescheduling to Schedule 3 and the timeline for Virginia adult-use regulations.
    • Capital Availability: Progress on Virginia and Ohio expansions contingent on securing favorable financing (banks vs. private credit) and capital availability.
    • Supply Chain: Risk of supply constraints in Virginia for 24–36 months post-launch if capacity additions are delayed.
    • Market Dynamics: Persistent pricing pressure, competition from illicit markets, and potential volatility in average selling prices.
    • Operational Execution: Risks associated with construction delays, permitting timelines, and ramp-up speed of new facilities.
    • Political Risk: Uncertainty in Pennsylvania legislative outcomes regarding adult-use timing and the interplay with skill-gaming tax revenue.

  • Management Tone on the Future:

    • Confidence: High confidence in Virginia as the primary near-term growth driver ("big kahuna"); optimistic that the company will be the "fastest growing cannabis company" once the market flips.
    • Pace: Expectations for financial quarters to remain "boring" until the July 2027 launch; long-term horizon focused on the 2028 harvest peak.
    • Capital Discipline: Committed to balancing growth opportunities with disciplined capital allocation; avoiding over-leverage while preparing for significant expansion.
    • Hedges: Explicitly notes that actual results are subject to "risks and uncertainties," including regulatory delays, financing availability, and market conditions.

  • Miscellaneous:

    • Tax Impact: First full quarter post-April 28, 2026 rescheduling saw elimination of Section 280E impact, resulting in lower income tax expense ($6.8M vs. $8.8M prior year).
    • Employee Retention: Lower employee retention credit income ($108k this quarter vs. $790k prior year) impacted adjusted EBITDA comparability.
    • Acquisitions: Paid off debt for Ohio dispensary acquisitions to strengthen retail presence; Peoria, IL location removed from operating results in Jan 2026.