Trulieve Cannabis Q3 2026 Earnings Results & Report

Trulieve Cannabis EPS Results

• Actual EPS: $0.09
• Consensus EPS: $0.09
• Beat/Miss: Met Expectations
• One Year Ago EPS: N/A

Trulieve Cannabis Revenue Results

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

Trulieve Cannabis (NYSE:TRLV) is a vertically integrated cannabis company that cultivates, processes and sells medical and adult-use cannabis products. Its offerings include flower, pre-rolls, concentrates, vaporizers, edibles, tinctures, capsules and topical products, sold through retail dispensaries and other approved channels under brands such as Trulieve, Cultivar Collection, Muse, Roll One and Alchemy.

Founded in 2015, Trulieve initially built its business around Florida’s medical cannabis market and later expanded into additional U.S. states through organic growth and acquisitions. The company has operated in markets including Florida, Arizona, Pennsylvania, Ohio, Connecticut, Massachusetts and West Virginia, with its activities and product availability varying according to each state’s cannabis regulations.

Trulieve is led by Chief Executive Officer Kim Rivers, who has been associated with the company since its early development. The company is publicly traded in Canada under the symbol TRUL and in the United States on the OTCQX market under the symbol TCNNF; “NYSE: TRLV” does not appear to be its current standard listing designation.

Trulieve Cannabis Q3 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Trulieve reported third-quarter revenue of $230 million, up 4% year over year and sequentially, with a 64% gross margin and $89 million in adjusted EBITDA (39% margin). Operating cash flow was $74 million.
• Positive Sentiment: Rescheduling of state-licensed medical cannabis to Schedule III has enabled DEA registration for Trulieve’s medical operations, removal of the 280E tax burden going forward, and its NYSE listing. Management says these changes are improving access to investors and potential business partners.
• Positive Sentiment: Georgia demand is growing faster than the company initially expected: patient enrollment topped 60,000, and Trulieve received approval for two more dispensaries. The company is adding production capacity; Texas could provide another growth opportunity, pending final licensure.
• Neutral Sentiment: Trulieve expects fourth-quarter revenue to rise by a low single-digit percentage, with gross margin comparable to recent quarters but some pressure from holiday promotions. It anticipates a reported net loss because of non-cash purchase-accounting adjustments related to its Harvest investment.
• Negative Sentiment: Although the company says 280E will not apply to its Schedule III medical operations going forward, it still carries an uncertain tax position covering 2019 to the present, including more than $102 million in IRS refunds received and related interest. The position remains unresolved.

Presentation

[Operator]

Good morning, everyone, and welcome to the Trulieve Cannabis Corporation Third Quarter 2026 Financial Results Conference Call. My name is Chuck, and I will be your conference operator today. As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host for today's call, Ms. Christine Hersey, Chief Corporate Affairs and Strategy Officer for Trulieve. Please go ahead.

[Christine Hersey, Chief Corporate Affairs and Strategy Officer at Trulieve]

Thank you. Good morning, and thank you for joining us. During today's call, Kim Rivers, Chief Executive Officer, and Jan Reese, Chief Financial Officer, will deliver prepared remarks on the financial performance and outlook for Trulieve. Following the prepared remarks, we will open the call to questions. This morning, we reported third quarter 2026 results. A copy of our earnings press release and PowerPoint presentation may be found on the Investor Relations section of our website, www.trulieve.com. An archived version of today's conference call will be available on our website later today.

[Christine Hersey, Chief Corporate Affairs and Strategy Officer at Trulieve]

As a reminder, statements made during this call that are not historical fact constitute forward-looking statements, and these statements are subject to risks, uncertainties, and other factors that could cause our actual results to differ materially from our historical results or from our forecast, including the risks and uncertainties described in the company's filings with the Securities and Exchange Commission, including Item 1A, Risk Factors, of the company's most recent annual report on Form 10-K, as well as our periodic quarterly filings. Although the company may voluntarily do so from time to time, it undertakes no commitment to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. During the call, management will also discuss certain financial measures that are not calculated in accordance with the U.S. Generally Accepted Accounting Principles, or GAAP.

[Christine Hersey, Chief Corporate Affairs and Strategy Officer at Trulieve]

We generally refer to these as non-GAAP financial measures. These measures should not be considered in isolation or as a substitute for Trulieve's financial results prepared in accordance with GAAP. A reconciliation of these non-GAAP measures to the most directly comparable GAAP measures is available in our earnings press release that is an exhibit to our current report on Form 8-K that we furnished to the SEC today and can be found in the Investor Relations section of our website. Lastly, at times during our prepared remarks or responses to your questions, we may offer metrics to provide greater insight into the dynamics of our business or our financial results. Please be advised that we may or may not continue to provide these additional details in the future. I'll now turn the call over to our CEO, Kim Rivers.

[Kim Rivers, CEO at Trulieve]

Thank you, Christine. Good morning, everyone, and thank you for joining us today. We are thrilled to report third quarter results that exceeded guidance with higher revenue, margins, and cash generation. Third quarter results represent medical-only markets and our first full quarter listed on the New York Stock Exchange. This is an incredibly exciting time for our company. For anyone new to Trulieve, we are the largest U.S. medical cannabis operator with 208 dispensaries and 3.5 million square feet of production capacity. We are in the early stages of an accelerated growth period fueled by organic market development, acquisition opportunities, regulatory catalysts, and continued adoption of cannabis. Before we discuss our quarterly results, I would like to share some perspective on rescheduling and how Trulieve is positioned. The Trump administration made history by completing the first major cannabis policy reform in over 50 years.

[Kim Rivers, CEO at Trulieve]

Last December, President Trump issued an executive order opening the door for medical cannabis research and supporting rescheduling of state-licensed medical marijuana to Schedule III. Following the executive order in April, Attorney General Todd Blanche took two major actions. First, he issued a final order to reschedule state-licensed medical marijuana to Schedule III, and second, he restarted the rulemaking process to reschedule marijuana more broadly to Schedule III. The first action, rescheduling of state-licensed medical marijuana, triggered three major positive developments for Trulieve. One, registration with the DEA. Two, removal of the 280E punitive tax burden. And three, uplisting to the NYSE. I will touch briefly on each area. First, Trulieve registered all of its medical-only marijuana dispensaries and production facilities with the DEA, complying with the final order. Since then, the DEA has completed inspections and began issuing final registrations at all of our medical dispensaries and production sites.

[Kim Rivers, CEO at Trulieve]

With DEA registration and state licensure, Trulieve is a federally legal Schedule III operator. This is an important differentiator for us as it opens the door for new strategic partnerships and service providers. Second, concurrent with rescheduling of state-licensed medical marijuana, the Treasury Department issued a press release confirming that punitive 280E tax does not apply to state-licensed medical operators under Schedule III. From this year forward, we are taxed the same as any U.S. corporation. This parity is important because it improves profitability and cash flow while acknowledging the medical status of our business. Third, state-licensed medical marijuana rescheduling enabled Trulieve to list on the NYSE. As the largest U.S. medical operator, Trulieve was uniquely positioned to segregate its business into two parts, separating the non-medical mixed-use market from our medical-only business. Trulieve listed its medical-only Schedule III business on the NYSE in June.

[Kim Rivers, CEO at Trulieve]

Since uplisting, we have realized higher daily trading volume, reduced swap exposure, expanded access to institutional investors, and inclusion in several indices, such as the S&P Total Market Index and the Morningstar Total Stock Market Index. We expect Trulieve will be added to additional indices in the coming year. Altogether, Trulieve has realized meaningful benefits from rescheduling of state-licensed medical marijuana. Turning now to our third quarter results. As a reminder, results include markets serving only medical patients. During the third quarter, the team outperformed in multiple ways, delivering impressive execution in our core markets while rapidly expanding in Georgia and preparing to build out vertical operations in Texas. Third quarter revenue of $230 million grew 4% year-over-year and sequentially compared to medical-only revenue in prior periods. Medical revenue exceeded guidance and outperformed typical seasonal trends.

[Kim Rivers, CEO at Trulieve]

Compared to medical-only results last year, third quarter gross margin of 64% improved 1%, reflecting operational efficiencies, low production costs, and our disciplined approach to promotional activity. Adjusted EBITDA of $89 million, or 39% margin, was driven by expense control in our core business. During the quarter, we generated $74 million in operating cash flow, which contributed to our quarter-end cash balance of $327 million. Subsequent to quarter end, we fully repaid a $65 million mortgage secured by our cultivation campus in Jefferson County, Florida. The reduction in debt lowers annual interest expense, improving profitability and cash flow. Retail revenue grew 2% sequentially due to growth in Georgia and Pennsylvania. Traffic increased 3%, partially offset by a slight sequential decline in average basket size. Units sold were up 2%. In Georgia, traffic and units increased sevenfold with market expansion and new product types, including concentrates, flower, and vapes.

[Kim Rivers, CEO at Trulieve]

In Pennsylvania, higher traffic and strength in the wholesale channel contributed to revenue growth. Results in Florida were consistent with typical seasonal trends. Trulieve sold 55% more flower per store than the state average across 170 stores, totaling 657,000 ounces. We sold 1.4 billion milligrams of oil, more than two times the next highest competitor. Across our branded retail platform, customer trends have been consistent throughout the year, with some mid-tier customers leaning into value products, while the premium segment remains unchanged with a focus on exclusive top-shelf products. Our investment in Harvest performed well in the third quarter, with revenue growth and margin expansion compared to the second quarter, driven largely by growth in Ohio. As we approach year-end and the busy holiday season, our team is carrying the momentum forward. At the start of the year, we identified four strategic initiatives to focus on.

[Kim Rivers, CEO at Trulieve]

One, expanding access to cannabis. Two, investing in growth initiatives. Three, elevating our branded product portfolio. And four, growing our loyal customer base. Year to date, we have made significant progress in all four areas. First, I'd like to discuss expanding access to cannabis, which is central to our mission here at Trulieve. 2026 has been a pivotal year with historical federal policy changes and expansion in state markets such as Georgia. Federal rescheduling of state-licensed medical marijuana removes barriers for research, reduces stigma for patients and physicians, and provides a level playing field for lawful operators, enabling additional investments in patient access. We remain optimistic that broader rescheduling will happen in the near term. We expect the Treasury Department will issue additional guidance on tax treatment, including potential retroactive relief, following completion of the rescheduling process. Following the midterm elections, cannabis reform remains a central theme across the country.

[Kim Rivers, CEO at Trulieve]

We look forward to continuing to work with Congress to advance cannabis policy into 2027. Alongside rescheduling, we remain supportive of additional reform, including updated FinCEN guidance and SAFE Banking. These measures reduce friction for operators, support credit card payments in dispensaries, and ease restrictions on banking and service providers. Our second strategic growth priority is investing in growth initiatives, which includes both organic and acquisition opportunities. We believe Georgia and Texas present meaningful organic growth opportunities for Trulieve. In Georgia, following changes to the state medical marijuana program and federal rescheduling for state-licensed operators, we are pursuing two pathways for growth. The first is expansion of our licensed medical dispensary network. Today, we own and operate seven dispensaries that serve qualified patients with our branded products. Yesterday, we received approval to open our eighth and ninth dispensaries, which we anticipate will open in the coming months.

[Kim Rivers, CEO at Trulieve]

The state program is designed to provide expanded access as the patient count grows. With 80% patient growth since the start of the year, the patient count recently surpassed 60,000. We can request an additional location for every 10,000 patients that enroll. We plan to apply for our 10th dispensary this month once the patient count reaches 65,000 patients. The second growth area is wholesale distribution of branded products to independent pharmacies. In Georgia, independent pharmacies can register with the state and the DEA to dispense approved medical marijuana products to registered patients. Today, we are shipping to almost 20 pharmacies. While development of this channel remains ongoing, early progress is encouraging. Over 30 more pharmacies are ready to commence sales of Trulieve products pending licensure, and over 125 independent pharmacies previously expressed interest.

[Kim Rivers, CEO at Trulieve]

Our team is meeting with pharmacy owners across Georgia to discuss medical cannabis and share information on how to apply for state and DEA licenses. In support of growth in Georgia, we have been increasing production capacity since last spring. Our Georgia operations are fully vertically integrated, where we produce all of the cannabis products that we sell in our dispensaries. As I mentioned, third quarter units sold increased by seven times the amount sold in the second quarter. Newly launched in-house brands Modern Flower and Roll One accounted for 70% of our branded units sold in Georgia. Our team has done a fantastic job managing through the period of rapid growth. Today, we have adequate supply to service our current business, and we are adding capacity in stages into 2027 to meet growing demand in all channels.

[Kim Rivers, CEO at Trulieve]

While the Georgia market is rapidly expanding now, we believe Texas represents the largest medical cannabis opportunity in the U.S. Last December, Trulieve was awarded a conditional license. We are working through the process to convert the conditional award to a final license. We expect the next steps include completion of financial review and site inspections. Our initial production capacity is ready for inspection, and we have a robust retail pipeline of stores covering all regions. Pending final licensure, our team is ready to quickly ramp to serve Texas patients. New patients can enroll in the program through convenient telehealth consultations. Easy program entry, greater price variety, and increased awareness all support rapid program growth. We plan to replicate the success we've had in other markets like Florida and Georgia by scaling modularly as the patient count increases over time.

[Kim Rivers, CEO at Trulieve]

Alongside investments in Georgia and Texas, we are actively evaluating acquisition opportunities ranging from tuck-in assets to larger single and multi-state operations. We expect consolidation in the cannabis industry will continue for the foreseeable future. Our stringent evaluation criteria includes price, strategic fit, quality of assets, and market framework. The strength of our core business and cash flow generation allow us the flexibility to consider acquisition opportunities while remaining disciplined to ensure transactions enhance long-term shareholder value. While reform and growth initiatives continue to advance, we remain committed to operational excellence in our core business. This brings us to our third initiative, which is elevating our branded product portfolio. Serving our customers consistently with high-quality branded products is a key ingredient to our success. Our branded product portfolio includes both in-house brands and partner brands.

[Kim Rivers, CEO at Trulieve]

In the third quarter, we sold over 10 million branded product units in our medical dispensaries, with in-house brands Modern Flower and Roll One accounting for 55% of the units sold. We complement in-house brands with partner brands to add variety for our customers. In September, we closed on a master licensing agreement with Connected. This agreement affords us exclusive, perpetual, royalty-free rights to genetics, trademarks, and know-how for Alien Labs and Connected branded products in Florida and Texas, and has a payback period of less than two years. Since 2022, Trulieve has been the exclusive provider of Alien Labs and Connected premium flower in Florida. We plan to introduce new Alien Labs and Connected categories and form factors in Florida, including vapes and concentrates, as soon as the first half of 2027.

[Kim Rivers, CEO at Trulieve]

The agreement provides Trulieve with the right of first refusal for exclusive licensing rights in additional expansion markets. Availability of top-shelf premium products supported with collaborative marketing campaigns reinforces customer acquisition and retention. We will continue to enhance our assortment with new and innovative branded products. Turning now to our fourth initiative this year, growing our loyal customer base. Since inception, Trulieve has embraced a customer-centric approach to building our company, reinforcing acquisition and retention. We use a combination of digital outreach, paid media, and in-person events to attract new customers to Trulieve. Across our platform, we conduct over 100 community and physician engagement events per month, partnering with a wide variety of nonprofit organizations to raise awareness for cannabis. Establishing and maintaining reciprocal relationships with our customers is essential for customer retention. Customer retention remains strong at 75%, highlighting the success of our approach.

[Kim Rivers, CEO at Trulieve]

Consistent customer retention requires availability of high-quality products, timely and informative messaging, and exceptional service. Over the past three years, we've invested significantly in talent, technology, and training to reinforce our customer messaging and service. As our marketing capabilities evolve, we are adding more sophisticated functionality. Together, personalized messaging, rewards program, and mobile app provides customers with convenient real-time updates. Earlier this year, we launched an initiative called Project Hyper that uses generative AI to enable personalized customer messaging at scale. This initiative is on track, and we expect to begin realizing efficiency and speed-to-market benefits in the first quarter of 2027. Our rewards program added over 45,000 members in the third quarter, surpassing 700,000 members. Rewards members spend on average 2.1x more than non-members, comprising more than 80% of third-quarter transactions.

[Kim Rivers, CEO at Trulieve]

In May, we added tiers to the rewards program in Florida, giving our most loyal customers greater rewards. Following the early success in Florida, we are rolling out tiered rewards in Georgia this month. One year ago, we launched our Florida mobile app, giving patients a more convenient way to browse products, access deals and rewards, and place orders. Adoption continues to exceed expectations, with more than half a million orders, or 30% of all online orders, placed through the app in the third quarter. We plan to launch the mobile app in Georgia soon, followed by additional markets in 2027. In summary, we have made substantive progress on our strategic priorities, with notable wins across reform, growth initiatives, branded products, and customers. As we approach year-end, our team is laser-focused on maintaining operational excellence in our core business while prepping for the next wave of accelerated growth.

[Kim Rivers, CEO at Trulieve]

With that, I would like to turn the call over to our CFO, Jan Reese. Please go ahead.

[Jan Reese, CFO at Trulieve]

Good morning, and thank you, Kim. As a reminder, third-quarter reported results include Trulieve Medical operations. Following the deconsolidation of Harvest, the Harvest results are reported as an equity investment. Please refer to our earnings presentation for additional details. Third-quarter medical revenue was $230 million, compared to medical-only revenue of $221 million in Q3 last year and $222 million in Q2 this year, up 4% compared to both periods. Third quarter revenue exceeded guidance, outperforming typical seasonal trends driven by growth in Georgia and Pennsylvania. Third quarter gross profit totaled $148 million, or 64% margin, up from $139 million in Q3 last year and $140 million in Q2 this year. Gross margin improved by 1% year-over-year and sequentially. Gross margin strength reflects economies of scale, operational efficiencies across our platform, and disciplined promotional management.

[Jan Reese, CFO at Trulieve]

We expect quarterly gross margin to vary based on product and market mix, inventory sell-through, promotional activity, and idle capacity costs. Third quarter SG&A was $88 million, or 38% of revenue. Adjusted SG&A was $78 million, or 34% of revenue, a 1% improvement from last quarter. We expect SG&A may fluctuate based on the timing of investments in growth opportunities and infrastructure. Third quarter net income was $1 million. Excluding non-recurring items, third quarter net income would have been $18 million, or $0.09 per share. Third quarter Adjusted EBITDA was $89 million, representing a 39% margin and reflecting expense leverage across our corporations. Turning now to our tax strategy. As a reminder, we filed amended returns challenging the applicability of Section 280E to our business. Our balance sheet includes an uncertain tax position covering 2019 to the present.

[Jan Reese, CFO at Trulieve]

The UTP includes 280E tax liability, refunds received from the IRS totaling more than $102 million, and include interest. Third quarter income tax expense does not include 280E tax liability. The increase in our uncertain tax position includes $18 million in interest on the UTP and $9 million of ordinary taxes covered by overpayments. Ordinary taxes were impacted by the equity loss in Harvest and other non-deductible operating expenses. We remain confident in our position and our ability to address the outstanding UTP. Moving on to the balance sheet and cash flow. We ended the quarter with $327 million in cash and $289 million in debt. Third quarter operating cash flow was $74 million, capital expenditure were $29 million, and free cash flow totaled $45 million. In June, the company adopted a share repurchase program of up to the lesser of $50 million, or approximately 8.5 million shares.

[Jan Reese, CFO at Trulieve]

During the third quarter, no shares were repurchased. Turning to the outlook. Our expected fourth quarter revenue to be up low single digits compared to the third quarter. Growth is expected to accelerate into the year-end with holiday season and continued strength in Georgia. Gross margin is expected to be comparable to recent quarters, with some pressure due to holiday promotions. We anticipate purchase accounting adjustments for the Harvest deconsolidation will result in a net loss for the fourth quarter. This non-cash accounting treatment will influence the Harvest investment and consequently flow through these reported results. For full year 2026, we anticipate operating cash flow of at least $225 million. With increased investment in growth markets to meet demand, capital expenditures are now expected to be approximately $105 million, up from $95 million. Year-to-date, we have opened nine new dispensaries and refreshed or remodeled 43 locations.

[Jan Reese, CFO at Trulieve]

We plan to open at least two additional dispensaries and complete seven more refreshes or remodels by the end of this year. With that, I will turn the call back to Kim.

[Kim Rivers, CEO at Trulieve]

Thanks, Jan. So far, 2026 has been a monumental year for Trulieve. Many historic milestones were reached, with federal rescheduling of state-licensed medical marijuana and uplisting to the New York Stock Exchange making the top of the list. In the third quarter alone, we had several accomplishments. In August, we re-domiciled the company to Delaware from British Columbia, making Trulieve eligible for U.S.-based market index inclusion. In September, Trulieve was added to several indices, including the S&P Total Market Index, broadening awareness and creating passive investor demand driven by benchmarking. We fully expect greater liquidity provided on the NYSE, index inclusion, and broader access to capital markets will help drive long-term shareholder value. Looking ahead, we believe additional cannabis reform is on the horizon. Broader rescheduling of marijuana, SAFE Banking, updated FinCEN guidance, and Treasury Department guidance on 280E tax treatment all further align federal policy and state-licensed marijuana programs.

[Kim Rivers, CEO at Trulieve]

Allowing state-licensed marijuana businesses unfettered access to capital, normalized tax rate, and service providers is critical to supporting long-term success of the regulated marketplace. Our team is ready for future catalysts, including credit card processing and potential conversion of customers from the intoxicating hemp market once the federal ban takes effect next month. Alongside policy reform, Trulieve is poised to realize significant growth in Georgia and Texas. We are already scaling production and retail in Georgia to meet increased demand. In Texas, our team is ready to scale alongside market growth, pending final regulatory approvals. Our mission at Trulieve is to expand access to cannabis while serving customers with high-quality products and exceptional experiences. Since day one, our approach hasn't changed. Trulieve grows one patient at a time.

[Kim Rivers, CEO at Trulieve]

With meaningful opportunities in Georgia and Texas, robust cash generation to fuel investments in organic growth and M&A, and a proven track record for capturing outsized market share, I couldn't be more excited about the road ahead. Thank you for joining us, and as I always say, onward.

[Christine Hersey, Chief Corporate Affairs and Strategy Officer at Trulieve]

At this time, Kim Rivers and Jan Reese will be available to answer any questions. Operator, please open up the call for questions.

[Operator]

Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. We ask that you please limit yourself to one question and one follow-up. If you have further questions, you may re-enter the question queue. Today's first question will come from Luke Hannan with Canaccord Genuity. Please go ahead.

[Luke Hannan, Analyst at Canaccord Genuity]

Thanks. Good morning, everyone, and congratulations on the results. Kim, I just wanted to frame up, I guess, what the near term and perhaps 2027 will look like. I'm sure we'll get a more fulsome view on that once you report your Q4 results. From a high level, it sounds like everything in Georgia is going well and you're investing more to meet demand there. You'll likely also need to invest a little bit more in Texas as well to meet the expected demand there, especially now with the midterms. It seems like potentially recreational will be more on the table in the next few years. From a high level, I think it's probably fair to say that 2027 will be a little bit more CapEx-intensive than perhaps what we've seen in the past.

[Luke Hannan, Analyst at Canaccord Genuity]

But specifically, I guess what I'm looking for is, what rank order capital allocation priorities? I imagine it's Texas and Georgia first, and then where specifically would M&A show up on that list? Thanks.

[Kim Rivers, CEO at Trulieve]

Yeah. Thanks, Luke. So as we noted, we're certainly going to focus on the opportunities that are directly ahead of us. Right now, we are executing. I think the team is doing a wonderful job executing against the opportunity that we have in Georgia. We're going to continue that momentum and are very excited about what we're seeing from a growth trajectory in Georgia, not only in our branded retail platform, but as mentioned on the call, the opportunities that we have to expand our pharmacy network and partnerships in the state of Georgia as well. Also, right in Georgia, I think we could have an opportunity for some potential expansion, again, the results of the election there. So we're excited to get to work and continue to partner with the legislature in Georgia as that program really begins to fully realize.

[Kim Rivers, CEO at Trulieve]

In Texas, as I've said all along, I think Texas is going to be a massive market. I think similarly, we've got folks now in Texas who have taken the leadership roles with the governor and obviously the senator-elect, as well as the lieutenant governor, who all voted in favor of and were very supportive of the regulated medical program along with the expansion to that medical program. So again, remain very bullish on not only kind of the current state in Texas, but hopefully some acceleration and some additional momentum behind that program. We believe that licensure is relatively imminent there and are very much looking forward to launching Texas in 2027, which of course will be a huge focus for our team just because of, again, the sheer size of that market we believe is going to be fairly massive.

[Kim Rivers, CEO at Trulieve]

In addition to that, from a capital allocation standpoint, I also should say that we are very bullish on Pennsylvania. Now with both the governor and the legislature being the same team, I guess, if you will, that removes some potential barriers that have existed previously for program expansion there. So interested, of course, in expanding our reach in existing markets, which we said on the call, whether that's going to be a tuck-in or some additional either single states or multi-state. Our approach as it relates to M&A has not changed. I think we have been very disciplined in M&A. Pennsylvania, for example, was grown 100% via M&A, and so we're very comfortable both via organic and expansion through M&A. We will remain disciplined as we think about how expansion impacts our leadership teams, how we can manage those businesses, how we can share resources across markets.

[Kim Rivers, CEO at Trulieve]

We've previously been very descriptive about our regional hub strategy. Again, that has not changed either. We'll be focused on, again, accretive opportunities that make sense with respect to our specific portfolio.

[Luke Hannan, Analyst at Canaccord Genuity]

That's helpful. Thanks. For my follow-up, I appreciate in your prepared remarks and in the presentation as well, you called out the prevalence of Modern Flower and Roll One amongst your branded products and branded retail. I'm curious to know, as far as the mix of those two brands in particular, but maybe the mix of your broader brand portfolio, I mean, are you comfortable with that figure? Would you like to see that go up, or would you like to see a prevalence of or greater distribution of other brands that, own brands that you have? Just curious how you look at the brand portfolio from here.

[Kim Rivers, CEO at Trulieve]

Yeah. I mean, I think that, look, it's our job to make sure that we have brands that resonate with customers, where we can meet those customers where they're at. What I mean by that is, it's our goal to have strength in brand at each tier of customer across the platform. We're very excited that the momentum that we have behind both that Modern Flower and Roll One brands. Both of those brands cover a number of different form factors, with innovation in both of those brands across form factors. For example, we launched and are actually in the process of launching a number of live products in that Modern category in many of our markets, utilizing fresh frozen, and has gotten a very positive patient response, as well as some concentrate products.

[Kim Rivers, CEO at Trulieve]

Similarly, in Roll One, we launched Clutch, which is an all-in-one, which has really taken off across our markets as an all-in-one vape product in that category. Then, of course, our genetics and our flower pipeline in both of those categories as well. So, we think it's important, right, because those two categories together comprise the largest portion of patients in our platform. But that being said, we have also been leaning into premium, right, via our own in-house brand, Cultivar, as well as our partnerships. I mentioned Alien Labs and Connected on the call, which we're very, again, bullish on the expansion of those portfolios, not just in additional form factors, but also expanding genetics and genetic availability across Florida, and then bringing that into Texas. We're also exploring expansion of that brand into some other markets.

[Kim Rivers, CEO at Trulieve]

In addition, we recently launched a Seed Junky partnership in Pennsylvania in that premium slot, which is going to be, I think, it's showing very positive results early, and I think will continue to perform well. It's important for us to, again, have concrete strategies from a branded product standpoint in each of those price tiers, and to make sure that we're not just staying stagnant. The cannabis consumer demands us to keep up, and to make sure that we're providing newness and innovation to the product lineup, which we'll continue to focus on.

[Luke Hannan, Analyst at Canaccord Genuity]

That's great. Thank you very much.

[Operator]

Your next question will come from Bill Kirk with ROTH Capital Partners. Please go ahead.

[Bill Kirk, Analyst at ROTH Capital Partners]

Hey. Good morning, everyone. I wanted to ask about the quarter-over-quarter gross margin improvement. I guess, how much of that would be cost control or yield efficiency-type items? How much would be a better price environment if it's out there and exists? And how much are things like mix benefits from higher-margin states like Georgia as they get bigger impacting that gross margin improvement?

[Jan Reese, CFO at Trulieve]

Yes. Thanks for the question. It is multifold. First off, we continue to be very disciplined with our promotional activities, which enables us to obviously accelerate a little bit on the margin profile. Second, yes, there is a component of newness as we go into the new territories like Georgia, where we do have future opportunities as well. I would argue that the quarter-over-quarter gross margin is what we expected and what we reported in the recent quarters for the Trulieve side.

[Bill Kirk, Analyst at ROTH Capital Partners]

Perfect. Thank you. Kim, when you were talking about federal legal DEA status, I think you mentioned it opening the door for strategic partners. I wanted to go back to see if I heard that right. If so, have you seen any specific increased interest from strategics, and what could partnerships look like?

[Kim Rivers, CEO at Trulieve]

Yeah. I would say that, yes, you did hear that right. The first we will just point out is NYSE. That, I think, is a pretty strategic partner that we can point to. Aside from that one, we have certainly seen an increased availability of vendor relationships, primarily across marketing as well as some tech partnerships. I do not want to name specific names, but I will tell you that our ability to partner in the marketing channel with larger providers and services, including them reaching out to us at this point, we have definitely seen an increase there. We continue to have meaningful conversations with folks in the credit card space. I do think that they are looking for some updated guidance from FinCEN specifically, and through kind of some formal banking updates.

[Kim Rivers, CEO at Trulieve]

They are definitely engaged at this point, which I While, sure, they would maybe take a phone call before, they certainly were not leaning in at this level that they are now. When we were able to open the conversation with, "Maybe you did not know, but we are actually a fully Schedule III DEA-registered business listed on the NYSE and feel that we should be treated no differently than CVS and/or Walgreens." Being able to have that direct conversation has definitely changed, I will call it, the tone of those conversations. It is going to maybe take a little bit of time, but we have been able to start that process.

[Bill Kirk, Analyst at ROTH Capital Partners]

Perfect. Thank you, Kim.

[Kim Rivers, CEO at Trulieve]

Yep.

[Operator]

The next question will come from Aaron Grey with Alliance Global Partners. Please go ahead.

[Aaron Grey, Analyst at Alliance Global Partners]

Hi, good morning. Thanks for the questions, and congrats on the results here. First question from me, just outlook for Florida, potentially post a change in governorship, sticking strictly to medical and not pertaining to potential adult use. But are there changes you potentially believe could be on the horizon, just given the prior governor wasn't as favorable to cannabis? And what would be on your ask from regulators to create a better medical market in the state, particularly given the potential for increased demand post the intoxicating hemp ban?

[Kim Rivers, CEO at Trulieve]

Sure. So, we definitely have been having a lot of conversations with this incoming administration, along with, of course, leadership on both the House and the Senate side. I think it's a little early maybe to give concrete specifics, Aaron, but what I can point you to is there was a bill that was filed last year that we were supportive of that pointed to some structural improvements within the Florida program. Things like aligning patient certifications with card renewals, extending the time of those additional physician telehealth visits that folks have to do in Florida. In Florida, there's just a lot of different points, and each of those points produces friction and oftentimes requires payment from patients. So, trying to streamline that process also while potentially reducing costs for patients is certainly something that we have been supportive of.

[Kim Rivers, CEO at Trulieve]

Expanding access for veterans is another initiative that we've championed with the legislature as well. I think that there are a number of things that could be improvements to the program. I do think that we are entering a new era in Florida as it relates to the ability to get some of those things done.

[Aaron Grey, Analyst at Alliance Global Partners]

Okay, great. Appreciate that commentary. Then just switching over to Georgia. First and foremost, how has the increase in demand been relative to your expectations, now a couple months post July 1? As we think about the upcoming months, how do you think the market could grow even further with potential intoxicating hemp ban coming into place? Do you think there's any potential bottlenecks that could come into the system there? Thank you.

[Kim Rivers, CEO at Trulieve]

Yeah. I think Georgia has been growing faster, candidly, than what we initially had modeled. That's a great problem, and we know how to deal with that, thankfully, at Trulieve. We have been making sure, again, due to our modular setup, we've been able to meet that demand and are though now investing ahead of what we see as our new reality, which is a step up in accelerated growth. When you hear us talk about that CapEx, for example, growing by about $10 million, a chunk of that is definitely in the cultivation and production side of the Georgia business to start that next phase into 2027, along with the additional stores that we mentioned on the call that are now being triggered that we can go ahead and build out. So, lots of excitement as it relates to Georgia.

[Kim Rivers, CEO at Trulieve]

I, at the moment, don't necessarily see any bottlenecks ahead into 2027. Like I said, I think that there's greater opportunity for additional pharmacies to enter the mix. I think there was a little bit of confusion around the DEA process with a lot of those independent pharmacies because they also have licensing through a separate DEA channel with their pharmacy license, and just how all those pieces weren't necessarily working. They were not working together. Now, I believe that that has been sorted, and so we are starting to see again those additional folks come into play in Georgia. So, I think that it's exciting to be able to have that conversation now with the legislature that, "Hey, finally, the program that you put in place is starting to work," and to again be able to talk with them about future opportunities for expansion and demand in Georgia.

[Aaron Grey, Analyst at Alliance Global Partners]

Okay, great. Appreciate that color. I'll jump back in the queue.

[Operator]

The next question will come from Gabie Ingoglia with Cantor Fitzgerald. Please go ahead.

[Gabie Ingoglia, Analyst at Cantor Fitzgerald]

Hey, guys. Good morning, and congrats on the quarter. I wanted to frame the questions back to 2027. Historically, Florida has driven a pretty seasonal pattern for you guys, which is maybe some softness in the summer, post-holiday dip in Q1, and then strength around 4/20 and the holidays. This year, Georgia and Pennsylvania helped to offset the typical Q3 pressure, and your 4Q guide is up low single digits on revenue. As we start to think about 2027, how much did Georgia and then potentially Texas and potentially the hemp conversion change that seasonality? Should we maybe expect some smoother quarterly cadence, or anything you can speak to there would be helpful.

[Kim Rivers, CEO at Trulieve]

Yeah. Thanks, Gabie. I would tell you that I think we haven't been through a holiday with Georgia kind of performing as a normalized, I will call it more normalized clip. This will be our first Georgia holiday season with a full product suite. So, it's a little difficult to give a full outlook there without having gone through at least one cycle, full cycle in Georgia. Really, with Georgia, we really got started, call it mid-year. So, I'm going to politely table the Georgia question until we get through a full year there, just because of, again, a little bit of lack of visibility. We'll also be able to, though, I think in Q4, beginning of the year, be able to do a look back on holiday and probably can extrapolate a little better at that time.

[Kim Rivers, CEO at Trulieve]

That being said, Georgia is growing right now, which is going to somewhat skew or mask a bit of what I will call a normalized pattern for probably the next, definitely into 2027. Again, I know I am saying kind of two different things there, but it may not be completely helpful because I think it is going to continue. You are going to have that growth uptick as we are able to open new stores and patient counts are increasing. That is going to kind of, again, maybe overshadow any, I will call it typical seasonality that you might otherwise have in that market. Texas is going to all be dependent on when that actually comes into the portfolio. Obviously, we did see, I think, maybe we can anchor on Pennsylvania a little bit. Pennsylvania is different than Florida.

[Kim Rivers, CEO at Trulieve]

It always has been because, right, Pennsylvania is seasonal in that there is pressure in Pennsylvania actually in the winter months, as opposed to the summer months, and Florida is kind of the opposite. Those businesses obviously aren't the same exact size, to put it mildly. So, you have some offset, but not complete offset between the two. In this quarter, what we said is that we did kind of, we held a little bit better, I would say, in Florida than what we typically see in a Q3 seasonal pattern. Plus, we had, again, Pennsylvania performing, again, kind of one of their maybe stronger quarters, and then we also had Georgia growth in Q3. Everything is rowing in the right direction here.

[Kim Rivers, CEO at Trulieve]

Again, the hope is that we will, to your point, get to a point where we are not talking as much about dips in the business because of seasons.

[Gabie Ingoglia, Analyst at Cantor Fitzgerald]

Okay, that is really helpful. Then if I could just one more on Texas. As we wait for the final licensure, can you help level set how many retail doors you could open in the first six and then 12 months?

[Kim Rivers, CEO at Trulieve]

Sure. Well, the program in Texas allows for unlimited dispensaries, so long as you have opened one in each of the mandated 11 regions. We have locations in each of those 11, and so after those are open, which has to go through an inspection period, et cetera, right? We have to have them inspected and fully open, then we would be able to call for inspection and open additional stores. Really the trigger point in Texas is getting those first 11 open, which we would be moving to do so in short order as soon as licensing is finalized.

[Gabie Ingoglia, Analyst at Cantor Fitzgerald]

Okay. Super helpful. Thanks, guys.

[Kim Rivers, CEO at Trulieve]

Thanks.

[Operator]

Your next question will come from Frederico Gomes with ATB Cormark. Please go ahead.

[Frederico Gomes, Analyst at ATB Cormark]

Good morning. Thanks for taking my questions. Congrats on the great quarter here. I want to ask about the DEA registration. Just curious, are there any new compliance costs related to that registration, or is it just business as usual considering you're getting it in the medical-only markets? Thank you.

[Kim Rivers, CEO at Trulieve]

Sure. I would tell you, Frederico, it's non-material. It's very light. I mean, there's certainly some additional legal costs that we've incurred. We've got folks that have been in market interacting with the DEA inspectors. In Georgia, there are, due to the wholesale nature of that business, and again, the relationship with the pharmacies, in the Georgia marketplace, they're issuing MOUs that have to be reviewed and signed prior to issuing finals. I think that's going to be a very common practice in markets where wholesale exists. Those MOUs, we do have to ensure that the folks that we're transacting with also have DEA registrations. There's a little bit of additional, I'll call it compliance, around that. But again, nothing material.

[Kim Rivers, CEO at Trulieve]

I think maybe to that point, because I think this question I've seen floating out there, as it relates to, is the DEA going to impact our ability to wholesale in other markets? Again, in all of our markets, there has been almost unanimous or definitely majority of our partners who also are DEA registered. We have done a full analysis, and that is a super minimal, almost not worth mentioning impact on the wholesale business.

[Frederico Gomes, Analyst at ATB Cormark]

Thank you. Appreciate that. Then second question just on Florida, I guess in the competitive environment there. How saturated do you think Florida is today from a retail location perspective, just in terms of the overall retail dispensary count in the state? We know that several other companies have been opening stores there. At what point do you think that that gets saturated and we see that store count in the state sort of stabilizing?

[Kim Rivers, CEO at Trulieve]

Yeah. I mean, we certainly look at productivity of our stores on a store-by-store basis. Of course, we also track our same-store sales. We have positive momentum there. I can tell you that the patient count continues to grow in Florida. When you look at Q3 versus Q2, there were an additional 200 patients per week that were being added to the registry. I think in addition to your point, there is a significant intoxicating hemp market in Florida. I think that there was like 7,000 points of distribution based on some numbers that I recently saw. There's 700 plus, 786 dispensaries in Florida. I do think that there is likely continued room. I think the question is at what rate and at what time.

[Kim Rivers, CEO at Trulieve]

We will continue to invest in Florida in locations that we feel make sense for our customer base based on the data and information that we have in terms of where customers are coming from and convenience of purchase. All of our stores are not the same as it relates to size and/or type. We have super small stores which are literally pickup only, to very large stores with drive-throughs and kind of the full suite of services, and everything in between. So, I think we are very strategic in terms of not only where we put stores, but the type of store that we put there. And we will continue to look for those fill-in and/or white space opportunities, which we do believe still exist in Florida, although certainly at a lower rate than you saw from us in early days.

[Frederico Gomes, Analyst at ATB Cormark]

Thank you.

[Operator]

This will conclude our question and answer session. I would like to turn the conference back over to Ms. Christine Hersey for any closing remarks. Please go ahead.

[Christine Hersey, Chief Corporate Affairs and Strategy Officer at Trulieve]

Thanks, everyone, for your time today. We look forward to sharing additional updates during our next earnings call. Thanks again, and have a great day.

[Operator]

The conference has now concluded. Thank you for your participation. You may now disconnect.

Participants

Executives

• Kim Rivers, CEO

Analysts

• Christine Hersey, Chief Corporate Affairs and Strategy Officer at Trulieve
• Jan Reese, CFO at Trulieve
• Luke Hannan, Analyst at Canaccord Genuity
• Bill Kirk, Analyst at ROTH Capital Partners
• Aaron Grey, Analyst at Alliance Global Partners
• Gabie Ingoglia, Analyst at Cantor Fitzgerald
• Frederico Gomes, Analyst at ATB Cormark