Ascend Wellness Q3 2026 Earnings Results & Report

Ascend Wellness EPS Results

• Actual EPS: -$0.14
• Consensus EPS: -$0.13
• Beat/Miss: Missed by -$0.01
• One Year Ago EPS: N/A
• EPS Beat Rate: 1 of last 6 quarters

Ascend Wellness Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Ascend Wellness (OTCMKTS:AAWH) Holdings is a U.S. cannabis company that cultivates, processes, and sells cannabis products in regulated state markets. Its business combines cultivation and manufacturing facilities with a network of retail dispensaries.

The company offers products including cannabis flower, edibles, concentrates, and vape products. Its portfolio includes brands such as Ozone and Simply Herb, alongside products from other suppliers sold through its retail stores.

Founded in 2018, Ascend has developed operations across markets including Illinois, Michigan, Ohio, Massachusetts, New Jersey, and Pennsylvania. Its activities and product availability are subject to the laws and regulations of each state.

Ascend Wellness Q3 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Third-quarter net revenue rose 3.1% sequentially and 4.2% year over year to $130 million; Adjusted EBITDA increased 7% sequentially to $31.1 million, with margin expanding to 23.9%. Operating cash flow was positive at $5.4 million despite a $19.1 million interest payment.
• Positive Sentiment: Ascend reached 61 stores after quarter-end, ahead of its 60-store target, and retail sales grew 5.5% sequentially to 75.2% of revenue. Transactions hit a company record, while management said new stores and further acquisitions remain central to its expansion strategy.
• Positive Sentiment: Management reported cultivation yields up 21% since the first quarter of 2025, alongside improved premium-flower output and product quality. It also cited brand strength across core markets and plans to begin licensing select products in Canada in early 2027.
• Negative Sentiment: For the fourth quarter, management expects only 1%–2% top-line growth and Adjusted EBITDA margin roughly in line with Q3, citing seasonal discounting, continued price compression, and the time required for new stores to ramp.
• Neutral Sentiment: Wholesale revenue fell 3.6% sequentially, largely due to the July Illinois work stoppage, though September was the channel’s strongest month of the quarter. Management said the broader shift toward retail is intentional, as it reduces reliance on wholesale and supports higher margins.

Presentation

[Operator]

Good afternoon, and thank you for standing by. Welcome to Ascend Wellness Holdings Third Quarter 2026 Earnings Call. Before we begin, the company would like to remind you that the following discussion and presentation contain various forward-looking statements and forward-looking information. These statements and information are subject to risks and uncertainties that may cause actual results to differ from historical or anticipated results. For more information on the risks and uncertainties, please refer to today's earnings release and filings with the SEC and on SEDAR+, including Ascend's most recent annual report on Form 10-K and quarterly report on Form 10-Q. During today's call, management will also refer to certain non-GAAP financial measures, such as Adjusted EBITDA. Reconciliations to the most directly comparable GAAP measures are included in the appendix to the presentation and in the company's earnings release.

[Operator]

I'm pleased to introduce members of Ascend's management team joining us on today's call. Sam Brill, Chief Executive Officer and Director, will begin with an overview of the key operational developments during the third quarter of 2026. Roman Nemchenko, Chief Financial Officer, will then review the company's financial results for the quarter. Following their prepared remarks, we will open the line for questions. I will now turn the call over to Sam.

[Sam Brill, CEO and Director at Ascend Wellness]

Thank you, operator. Good afternoon, everyone, and thank you for joining today's call. On our last call, we said our growth strategy was delivering system-wide results, and we expected that momentum to continue through the back half of the year. It did, and I'm pleased to report a strong third quarter. Net revenue was $130 million, growing 3.1% sequentially and 4.2% from a year ago, marking a return to year-over-year growth, even as price compression remains a headwind. We also reached our 60-store target ahead of schedule, and that larger footprint is reshaping our mix. Retail sales grew to 75.2% of total net revenue, up from 73.5% last quarter. Retail sales grew to 75.2% of total net revenue, up from 73.5% last quarter. That top-line growth, built on the strong platform we put in place, is creating operating leverage and flowing through to the bottom line.

[Sam Brill, CEO and Director at Ascend Wellness]

As a result, Adjusted EBITDA was $31.1 million, with a margin of 23.9%. Cash flow from operations also improved. Our biannual interest payments typically pressure our first and third quarter cash flow. Even with the third quarter payment, cash flow from operations was positive and increased year over year, and we ended the quarter with $63.6 million in cash. Generating consistent cash flow remains a core priority for us, both in the near term and as we build the business for the long term. Before I get into the operational highlights, I want to provide an update on where things stand from a regulatory standpoint. On broader rescheduling, the DEA hearing concluded in July, and after a brief procedural pause, it is now with the judge for his recommendation.

[Sam Brill, CEO and Director at Ascend Wellness]

We won't guess at timing, and the outcome remains uncertain, but in our view, this is a procedural step rather than a change in direction, and it does not affect the Schedule III reclassification of state-licensed medical cannabis, which has been in effect since April. The federal deadline to close the intoxicating hemp loophole moved from November 12th to December 11th, and it's possible it could shift again, but our view hasn't changed. When those products come off the shelves, we expect a meaningful share of that demand to move into the regulated market. We are also watching closely as some states implement their own bans ahead of the federal deadline, which could bring similar benefits sooner, as we saw in Ohio. Finally, in Massachusetts, voters rejected the repeal of adult-use cannabis, with more than 75% voting no.

[Sam Brill, CEO and Director at Ascend Wellness]

It was the first time voters anywhere were asked to reconsider legalization, and the answer was clear. It is nearly impossible to get 75% of voters to agree on anything, so this result reinforces our confidence in the long-term durability of adult-use cannabis. Moving to our third quarter highlights, new doors continue to drive revenue. Total transactions grew 6% sequentially and 14.9% year-over-year, and we processed the most transactions of any quarter in Ascend's history. New Jersey is a good example. Transactions across our New Jersey doors, including partner-owned and operated locations, were up 18% sequentially and 37% year-over-year as our newer doors ramped. On innovation, we launched 103 new products this quarter after recording 199 in the second quarter. That's by design.

[Sam Brill, CEO and Director at Ascend Wellness]

We are focused on scaling our house brands and putting our energy behind the products that earn their place on the shelf, not just maximizing SKU count, and our brands are holding their ground. Per BDSA, Ascend held its position as the number two brand house by sales and units across Illinois, New Jersey, and Massachusetts combined in the third quarter. New Jersey was a standout, with our share up roughly 14% quarter-over-quarter. We also grew share across the rest of our footprint, except for Illinois, which was temporary and reflected the work stoppage at our Barry facility we discussed last quarter. Our 2026 priorities have not changed: driving retail densification, deepening our customer-first retail model, and advancing our CPG strategy. These pillars are key to driving meaningful free cash flow. The third quarter showed execution across all three pillars.

[Sam Brill, CEO and Director at Ascend Wellness]

I'm pleased to report that we reached our 60-store target ahead of schedule. We set that medium-term goal at the end of 2024 and have reported our progress against it every quarter. We ended the quarter at 56 stores, and with openings since quarter end, we now stand at 61 stores, including partner-owned and operated locations. In just over two years, we've grown from 39 stores to 61, a net increase of about 60%. Every retail door has widened our customer reach, reinforced our brands, improved our market share, increased vertical sales, and provided additional operating leverage to drive margins, EBITDA, and cash flow. We continue to open stores in New Jersey. On October 23rd, we opened our Ascend of Evesham dispensary in Marlton, which we own and operate with a social equity partner.

[Sam Brill, CEO and Director at Ascend Wellness]

We have two additional partner store opportunities in our New Jersey pipeline, which have been delayed by local and state regulatory challenges, but we expect them to open early next year. This would put us at nine locations in the state, up from four at the beginning of 2026. Importantly, our scaled production capacity within New Jersey will be able to support vertical sales at all planned dispensaries. In Massachusetts, we are leveraging the state legislature's cap increase on retail licenses from three to six. After the quarter, on October 9th, we began operating two dispensaries in Worcester and Shrewsbury under a consulting agreement while we await regulatory approval to close the acquisition. When it closes, we will gain a vertically integrated medical license, which we expect to extend to all our Massachusetts stores and our cultivation facility in Athol.

[Sam Brill, CEO and Director at Ascend Wellness]

That means that every one of our stores in the state will be able to serve medical patients. We have scaled production in Massachusetts with plenty of capacity to support additional dispensaries. Today, our Massachusetts retail footprint spans 10 locations, including partner-owned and operated dispensaries that we support. Ohio remains one of our strongest performing retail markets. After the quarter, we opened our Lewis Center dispensary, our seventh Ascend store in Ohio, which celebrated its grand opening on October 9th. In Illinois, our partner opened a new dispensary in Plano, which marks our 17th location in the state, including partner-owned and operated stores. Reaching 60 stores is a milestone, not a finish line. We are engaged in dozens of active M&A conversations, and our recent $11 million mortgage financing gives us non-dilutive capital to keep expanding our retail footprint beyond that target. Our customer-first strategy keeps compounding.

[Sam Brill, CEO and Director at Ascend Wellness]

We are consistently delivering a strong experience across our network, with menus tailored to each market, knowledgeable store teams, a fast and convenient checkout, and compelling value, particularly for loyalty members. Customers are responding, with new traffic up 19% across our full network, and our average Google rating held at 4.66 across all stores. Loyalty members now account for 86% of our transactions. Our average ticket held steady, up slightly from the second quarter despite continued price compression. Ascend Pay was used by customers for over 11% of transactions in the third quarter and approximately 12% in September. In order to add convenience for our customers, we are also rolling out our contactless tap-to-pay across the network. Sustained investment in our operations has meaningfully improved product quality across our portfolio over the last 18 months.

[Sam Brill, CEO and Director at Ascend Wellness]

As a result, our products keep getting better, helping our brands gain market share and improve our revenue per gram. Ozone held the number three brand ranking by dollar sales and number one in units across Illinois, Massachusetts, and New Jersey combined, and remain number two in New Jersey. Ozone is also the number one non-infused pre-roll brand in New Jersey. In recognition of our improved quality, we launched Ozone Signature across our core markets during the quarter. It is a new premium flower lineup of select strains that further differentiates our most coveted top-shelf flower. The vape flavor expansion we talked about last quarter is paying off for Simply Herb. Simply Herb vapes climbed up four spots to number eight across our core markets and reached number six in New Jersey. Simply Herb also was voted Best Everyday Flower Brand at the Illinois Budtender's Choice Awards.

[Sam Brill, CEO and Director at Ascend Wellness]

High Wired is now the number one infused flower in New Jersey. High Wired is growing about twice as fast as the category. It is now the number two infused pre-roll by sales and units in New Jersey. Our infused lineup now ranks number four across our core markets. Honor Roll keeps climbing, moving up to number 13 in non-infused pre-rolls in New Jersey. Later this quarter, we will launch new Honor Roll formats, including a premium glass-tip 1.2-gram single, a convenient 10-pack option, and a two-pack format. In edibles, we launched Effin' Tabs in October in New Jersey, Massachusetts, and Illinois, marking a new format for our brand. The line of precision-dose THC tablets includes seven effects-led formulas, combining minor cannabinoids with functional nutraceuticals. We also recently upgraded our Effin' Gummy portfolio with a new fast-acting formula, offering quicker onset across the effects-based lineup.

[Sam Brill, CEO and Director at Ascend Wellness]

Lastly, I'm excited to share that Ascend will be taking its brands international for the first time. Through a capital-efficient licensing agreement with Atlantic Cultivation, a Canadian craft cannabis producer, we plan to bring select products from two of our flagship brands to Canada, High Wired infused pre-rolls and Ozone Liquid Diamonds vapes. Products are expected to begin reaching shelves in the first quarter of 2027, with additional details to be shared closer to the launch. We are relentless in our pursuit to find every opportunity to improve the scale and efficiency of our facilities. Our cultivation team continues to execute by getting more out of every square inch of our facilities. Yield has climbed 21% since the first quarter of 2025 and has risen in five of the last six quarters. The improvements are not just quantity. The quality of our flower is getting better too.

[Sam Brill, CEO and Director at Ascend Wellness]

Premium flower output is up, and premium flower per square foot is also up. Across our network, our facilities also improved unit labor hour productivity in the third quarter compared to the first half of the year. Finally, on the capital markets front, our shareholders approved the reverse stock split on August 28th. Thank you to everyone who voted. The approval gives our board the flexibility to set the ratio and the timing of a split, and we intend to use it when an uplisting to a major U.S. exchange is permissible. To close, I'm proud of what the Ascend team delivered in the third quarter. We kept our momentum, and we delivered on our goals we set. A second consecutive quarter of sequential growth and margin expansion. Our 60-store target reached ahead of schedule, and positive operating cash flow in a quarter that carries a significant interest payment.

[Sam Brill, CEO and Director at Ascend Wellness]

Our top-line growth is creating operating leverage, and our platform is generating improved margins as a result. Cash flow generation remains a key focus, and it will continue to guide how we manage the business. As we head into the holiday season, our new stores will continue to ramp, and we're ready for an anticipated shift in demand as intoxicating hemp eventually leaves the unregulated market. None of this happens without the people behind it, and I want to recognize the exceptional Ascend team for another quarter of execution. With that, I'll turn the call over to Roman to walk through our third quarter financial results.

[Roman Nemchenko, CFO at Ascend Wellness]

Thank you, Sam, and good afternoon, everyone. For the third quarter of 2026, the company generated $130 million of net revenue, which is an increase of $3.9 million, or 3.1% quarter-over-quarter. Retail sales for the quarter were $97.8 million, up by $5.1 million, or 5.5% sequentially. New stores drove most of the increase, while the same-store portfolio followed third-quarter seasonality trends, although declining at a slightly lower rate than it did over the same period last year. Wholesale revenue was $32.2 million, down $1.2 million, or 3.6% sequentially. The decline was driven primarily by the union strike in Illinois, which affected deliveries for the entire month of July. However, the facility has been back and operating at full capacity since early August. Inventory has returned to pre-strike levels, and wholesale sales finished the quarter with its strongest month in September.

[Roman Nemchenko, CFO at Ascend Wellness]

Adjusted gross profit was $62.9 million, an increase of $4.6 million, or approximately 8%, while adjusted gross profit margin expanded to 48.4% from 46.2% in Q2. Adjusted EBITDA was $31.1 million, up by $2 million, or 7% from Q2. This is consistent with growth in sales and adjusted gross profit. Adjusted EBITDA margin also increased from 23.1% to 23.9% this quarter. Turning to our balance sheet. We finished the quarter with $63.6 million of cash, and down $3.4 million sequentially. This net change reflects $5.4 million of positive operating cash flows, $8.6 million used in investing, and $0.2 million used in financing activities. Cash flow from operations includes the $19.1 million biannual interest payment made in July. Despite this payment, operating cash flows was positive for the quarter, compared with a negative $2 million in the third quarter of last year.

[Roman Nemchenko, CFO at Ascend Wellness]

Maintaining lean working capital, continuous cost management, and driving more sales through the retail channel were the largest contributors to the positive cash flow this quarter. Investing outflows of $8.6 million includes $4.8 million of total CapEx and approximately $3.8 million of M&A-related payments. Total CapEx includes $2.1 million related to new store build-outs, while the remaining $2.7 million used for projects across the cultivation and manufacturing facilities, as well as maintenance at existing retail stores. Financing outflows of $0.3 million mostly reflect finance lease payments. CapEx for the full year is still expected to be about $20 million. With $15.7 million already deployed this year, most of the remaining CapEx would be allocated to new store openings, as well as maintenance CapEx for our cultivation and manufacturing facilities. Additional capital will continue to be available for tuck-in acquisitions to continue driving our densification strategy.

[Roman Nemchenko, CFO at Ascend Wellness]

Subsequent to quarter end, we closed a series of mortgage loans for total proceeds of approximately $11 million at 8.5% annual interest rate. The loans are secured by five properties, including two in Illinois, two in Maryland, and one in Massachusetts, and will mature in October of 2031. By leveraging our existing real estate assets, we've secured lower-cost, non-dilutive capital that we'll use to drive our densification strategies in markets where we see the biggest growth opportunities. Looking ahead to next quarter, we expect top-line growth of approximately 1%-2%, driven by the ramp-up of new store openings and our M&A pipeline. This will be partially offset by seasonal discounting and continued price compression. We expect adjusted EBITDA margin to remain similar to Q3. The growth in retail sales will be a meaningful source of EBITDA and cash flow growth into 2027.

[Roman Nemchenko, CFO at Ascend Wellness]

Overall, we are encouraged by the financial results and opportunities our densification strategy has brought this quarter, as well as what we are seeing ahead. We would like to thank the entire Ascend team for their continued hard work and dedication towards executing on the strategy. We also appreciate everyone who joined this call and look forward to our next update. With that, I will turn the call over to the operator for questions.

[Operator]

Thank you, ladies and gentlemen. We will now begin the question-and-answer session. Should you have a question, please press the star key followed by the number one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star key followed by the number 2. One moment, please, while we assemble the queue. Your first question comes from Kenric Tyghe of Canaccord Genuity. Please go ahead.

[Kenric Tyghe, Analyst at Canaccord Genuity]

Thank you, and good evening. If I could, just to lead off on the commentary around wholesale, a strong September post the Illinois strike, and yet a very conservative sounding commentary as it relates to fourth quarter and the wholesale recovery. Could you help us reconcile and speak to the momentum in wholesale and how you are thinking about a potential return to growth in wholesale, both in the fourth quarter and as we look to 2027?

[Sam Brill, CEO and Director at Ascend Wellness]

Thanks, Kenric. The wholesale decline is not If you look at the BDSA rankings of our products, we are selling more products than we ever have in our history, and it is just moving from the wholesale channel to the retail channel. So, we are gaining more vertical shares as we open up more stores. The store additions have really shifted a lot of the wholesale revenue into retail, so it is reflected more in the margins and the margin improvements that are in the numbers. That is by design. We are not trying to move things out of We are trying to sell things in wholesale, rather, that we want to sell. We do not want to be forced to sell because we have excess biomass coming out of the facilities.

[Sam Brill, CEO and Director at Ascend Wellness]

And by expanding the retail footprint, we are lessening our dependence on wholesale in order to be able to sell what's coming out of the facilities and gain a higher margin as a result, and be much more competitive with the wholesale shelf with those products that we think really stand out because they move and because customers want them. And the independents love them because you're getting a great price for products that don't stay on the shelves very long, and that's really what we're focused on. We're focused on brands that actually sell themselves, and being able to do that is through that new mix of more retail and controlling that channel and really controlling what we put out for wholesale.

[Sam Brill, CEO and Director at Ascend Wellness]

So, as we improve our yields, which we have, and we hope to continue to do that into next year, we'll have more biomass, but we'll see if that can grow faster than we can grow our store count. Does that make sense?

[Kenric Tyghe, Analyst at Canaccord Genuity]

That's great. Thank you. And then just with respect to your Q4 guide, you've got sort of a 10% increase here, let's call it, in retail doors. Granted, there's obviously a curve to that ramp. So help us perhaps reconcile the 1%-2% top line, given that increase indoors, even allowing for the ramp. I mean, that implies some very marked or even more marked than typical promotional pricing pressure in the fourth quarter.

[Sam Brill, CEO and Director at Ascend Wellness]

Yeah. I think we're trying to take that into account and predict where price compression will be. People get extremely promotional in the fourth quarter, especially with wholesale as the year ends and they're trying to move as much out of So it doesn't age. They're trying to move as much product out of wholesale as they can. And we've seen this year after year, where especially in December, you see a lot of pricing pressures, and we're trying to just take that into account and be conservative but realistic given what we've seen historically. So, I get that. They are new stores. New stores typically take more than a quarter to ramp to real levels where they're contributing. But we should see more of that, I think, in Q1 versus Q4 in terms of impact.

[Kenric Tyghe, Analyst at Canaccord Genuity]

Fair enough. If I could just squeeze in one more quick one. The step-up in G&A spend this quarter, I think it was up quite markedly. Just in the context of your fourth quarter guide, that would imply that you see a normalization of G&A spend and sort of pullback in G&A margins. Can you just help us reconcile the cadence of spend in quarter and give us some comfort around or some indication as to how you're thinking about run rate SG&A, going forward?

[Roman Nemchenko, CFO at Ascend Wellness]

Yeah. I will take this one.

[Kenric Tyghe, Analyst at Canaccord Genuity]

Excellent

[Roman Nemchenko, CFO at Ascend Wellness]

The largest sequential increase really had to do with the incentive comp accrual. We did take a $2 million charge in Q3 that was substantially less in Q2. When you look at SG&A, normalizing for that accrual, I think you're pretty consistent. Retail as a percentage of sales is also up, and SG&A typically moves up with that as you're paying for rent, comp, associated with that top line. But I do think incentive comp accrual drove the largest portion of that increase quarter over quarter.

[Kenric Tyghe, Analyst at Canaccord Genuity]

Thank you. That's great. Congrats on the quarter. I will get back in queue.

[Sam Brill, CEO and Director at Ascend Wellness]

Thank you.

[Operator]

Your next question comes from Ben Stonkus of Haywood Securities. Please go ahead.

[Ben Stonkus, Analyst at Haywood Securities]

Yeah. Hi there. This is Ben on for Neal. Thanks for taking my question, and congrats on the strong quarter. Just wanted to start off on same-store sales. I think you mentioned in your prepared remarks that same-store sales declined at a slower rate than the same period last year. Could you just give us a bit of a sense of what's driving that improvement and what you're seeing so far in October and November?

[Sam Brill, CEO and Director at Ascend Wellness]

I think the main driver of that improvement, I think, is that one of our three core pillars, which is that in-store experience that I described, where we really have that retail first or customer-first model within retail, and it's just improving that experience, improving the menu, having great products, and a great loyalty program that keeps people coming back. That certainly was part of it. I think also, I would say the other part is in 2025, I think you really saw more price compression in general in those markets. If you just look at price compression year-over-year, there's some of the just, I would say, market-level pressures on a comparative basis, 2025 versus 2026. It's just a little less than it was previous year.

[Sam Brill, CEO and Director at Ascend Wellness]

So far, we have seen some price compression in the beginning of this quarter, which is why we have the guidance where it is, and we will see where we end up for the year. But it is hard to really be more specific than that, because we do not give state-by-state numbers or same-store sales specific numbers.

[Ben Stonkus, Analyst at Haywood Securities]

Yeah. No, I appreciate the color. Maybe just switching gears to capital allocation. Given that you have cleared your 60-store target, how should we think about your store count going into 2027? And more broadly speaking, how is the M&A pipeline looking, and what type of opportunities are you seeing out there?

[Sam Brill, CEO and Director at Ascend Wellness]

The M&A pipeline is robust, but obviously, getting to actual signings is a real task, and it can vary in terms of timing and getting things to the finish line. We are pretty optimistic about what is out there. That is why we did the mortgage. It was much lower cost of capital, non-dilutive financing, so that kind of just gives us a better war chest to go out there and execute on the M&A, which, look, we added a total of 15 stores this year, and we are not stopping there. We are going to see how the dust settles with this current round of, I think, sales that are out there or opportunities that are out there in our markets. But it is the same thing. We are focused on core markets.

[Sam Brill, CEO and Director at Ascend Wellness]

The key thing is that we have that fixed-cost hub, and it is adding as many spokes as we can to create that operating leverage and the verticality that drives margins and really allows us to be that 900-pound gorilla in the markets that we are in. We are a top player in four core markets, and we continue to press on that gas. We want to be number one in every single market, and we are going to chase that until we are there.

[Ben Stonkus, Analyst at Haywood Securities]

Yeah. Thanks for that. Appreciate the color there, and I will pass the line.

[Sam Brill, CEO and Director at Ascend Wellness]

Thanks.

[Operator]

As a reminder, if you would like to ask a question, please press star one. Your next question comes from Frederico Gomes of ATB Cormark. Please go ahead.

[Frederico Gomes, Analyst at ATB Cormark]

Hi. Good evening. Thanks for the questions, and congrats on the great quarter here. I want to ask about the store economics. If you could just remind us, when you are thinking about your expansion and M&A, what is the payback period, and how do you square the, I guess, the expectation that we are going to continue to see price compression into the multiple that you agreed to pay? And just looking at the previous, I guess, M&A that you have done over the past year or so, how has that compared to the assumptions that you made when you were acquiring those stores? I mean, are they performing better or worse than you were assuming? Thank you.

[Sam Brill, CEO and Director at Ascend Wellness]

So far, I would say that things are performing in line with what we expected. We are pretty conservative in our underwriting, and we are very disciplined on what we pay. I think I talked about this on the last quarter, but when we look at capital allocation, especially with the cost of capital so high, we have a very high bar to clear to feel comfortable about how we spend our investors' money. It is a core focus on what is really going to drive free cash flow. The number I quoted last quarter was, we were getting north of 30% return on invested capital. That is a very high bar, I think, in any industry.

[Sam Brill, CEO and Director at Ascend Wellness]

There are a lot of interesting opportunities out there, especially when you consider the synergies that we get in that hub-and-spoke model that I discussed in terms of the verticality and the benefits that that brings to the rest of the organization. Especially when you look at our core markets and having that dominant position that we've been able to create in those four core, I think is going to continue to help drive the growth of the company in the future. That's the focus and the drive for us. The return has been fantastic so far.

[Frederico Gomes, Analyst at ATB Cormark]

Great. Thank you. I want to ask about this Canadian licensing deal that you did. I'm just curious about the rationale behind it. Where do you see this going? I understand that's probably very small right now, but what's the strategy behind it? Do you see an outlook here where you could do more of those deals going forward? Thank you.

[Sam Brill, CEO and Director at Ascend Wellness]

It honestly was not something that we were seeking. It was actually very flattering that there was an interest in our brands to bring them to Canada. So, I think we were looking at that as an opportunistic way to see how successful our brands can travel internationally. So, it's a sort of a dipping the toe in the water. We're not doing the full brand portfolio. We're doing two of the strongest brands that we have in some of our markets. We're going to start there and kind of see where it goes. We don't have any of that in the projections yet, and we're going to have more to talk about, I think, when we have a deeper announcement when they start to roll out in each province.

[Frederico Gomes, Analyst at ATB Cormark]

Great. Thank you very much.

[Sam Brill, CEO and Director at Ascend Wellness]

Got it.

[Operator]

There are no further questions at this time. Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.

Participants

Executives

• Sam Brill, CEO and Director
• Roman Nemchenko, CFO

Analysts

• Kenric Tyghe, Analyst at Canaccord Genuity
• Ben Stonkus, Analyst at Haywood Securities
• Frederico Gomes, Analyst at ATB Cormark