Ben Kovler, Green Thumb Industries Founder & CEO joins the Yahoo Finance Live panel to discuss the company’s latest earnings.
ZACK GUZMAN: Welcome back to Yahoo Finance Live. It's another day and another big pop for a US multi-state operator here in cannabis company-- Chicago-based cannabis company Green Thumb Industries seeing shares in the green today after reporting their latest quarter. Revenue for that period grew 131% year over year to $157.1 million. The company also posted adjusted operating EBITDA, jumping 50% to hit $53.2 million.
And that is potentially just the beginning in terms of the cannabis wave we're seeing play out here in the wake of five more states voting to legalize marijuana in those respective states. I want to bring on the CEO of Green Thumb Industries, as well as the founder, Ben Kovler joins us now. And, Ben, obviously, we've been highlighting here a lot of the companies, not just yours, seeing revenues jump here as more states come on board. What did you make of the quarter here? And how prepped are you to kind of capitalize on those new states coming on board? I know you're operating in Jersey right now.
BEN KOVLER: Great. Yeah, thanks, Zack. Thanks for having us back. We make the quarter as an excellent quarter, but we think it's just an example of what's happening here in the United States, that this is a monstrous new consumer industry, and we think that cannabis-- that consumers choosing well-being through cannabis-- is the next great American growth story. So $157 million in sales and profitable on the bottom line to shareholders and setup-- like you said, New Jersey hasn't even started.
You got a 10x coming from the state of New Jersey with 9 million people and a multibillion market all across the East Coast and everywhere East of the Mississippi. So we're very excited about where we are. This is just one piece of evidence that the United States is a massive story about to unfold.
ZACK GUZMAN: Yeah, Ben, I mean, looking at what you guys learned from Illinois, of course, the latest state in terms of legalizing and actually opening up their market, you guys are based in Chicago, what did you learn from that rollout and how quickly you can get things off the ground in New Jersey?
BEN KOVLER: Great question. Illinois accelerated the rollout six months, with flipping of a switch and a tight supply for the current operators to get up and running. But what we learned broadly is wanting to partner with many of the operators. This is a big game, there's a big pie, there's plenty of operators to come in-- licenses and ways to operate. But it's got to work as a partnership in order to flip the switch quickly. Usually, we think six months to a year to allow supply, because, remember, consumers are going to want a ton of the product. And if there's not enough product, it's not set up to win. But that will all come in time. We're very optimistic, very bullish on the demand. And we're responsible for the supply. And so we're ready for that.
AKIKO FUJITA: Ben, I imagine that you're likely to see the biggest growth in some of these states that have just legalized, but I'm curious if you can speak to some of your brands-- specific products where you think there are real growth opportunities on the back of this green wave we saw on election day.
BEN KOVLER: 100%. We think, stepping back, we've been saying from the beginning, this is prohibition 2.0. And the way to win is brands distributed at scale. And whether it's Rhythm or Dog Walkers and other brands out there, these are developing, unique, and honest, consistent relationships with different consumers. If I told you that prohibition was about to end and we were going to go from bathtub gin, you know, to now all of a sudden brands of Jack Daniels, Jim Beam, and Jose Cuervo and how are those going to look and was there growth in those-- of course.
There's massive growth in this sector. Like I said, it's a decade coming up of 20% compound growth. So we look towards categories and consumers. We want to be speaking directly to consumers, and consumers who think about a pre-roll or think about a better night's sleep or think about less pain, which is a topical. And they're turning to brands like Incredibles or Dr. Solomons for that kind of relief. And really, we broadly categorize it as well-being. And we think the choice for cannabis is a choice for well-being-- happy, healthy, comfortable. And we can communicate that with our brands-- Vivo, Dog Walkers, Rhythm, et cetera.
ZACK GUZMAN: Well, Ben, I hope you can give me a bold prediction here, because we've had a few cannabis CEOs on. You know, this sector has gotten all buttoned up now. You guys don't want to make bold predictions anymore-- a surprise, but maybe you can here. When we look at the timeline, we had Senator Sherrod Brown on the show earlier and I was asking him about what it looks like in terms of some regulatory changes. Obviously, we're still waiting to see who's going to have control the Senate here.
But what are you seeing come through as a catalyst for the sector, when we think about the Safe Banking Act, letting cannabis companies finally access the banking sector here, the House is going to vote on the Moore Act, which could legalize cannabis nationally, even though it might not move past the Senate. What are you seeing play out in terms of legalization and that being the next wave at a federal level and beyond?
BEN KOVLER: Right. 100%. So one thing about Green Thumb and US operators-- the business is set up to win regardless of regulatory change. We do not need a federal change in order to ramp parabolically into this industry. I'm speaking as a US operator broadly. That's hugely important. Bold prediction-- I think it's pretty bold to say the industry is going to grow at 20% for a decade and become $80 billion, which is bigger than US wine, bigger than US spirits, bigger than US confectionary, with no brands that are recognizable, with no national marketing campaign, with millions-- tens of millions-- of consumers that don't yet know there's a choice for a better night's sleep, there's a choice for less pain, you don't need as many opioids.
Hangovers suck. Nobody likes to be hung over. And there's an alternative. There's wellness. There is an option. So that's the bold prediction. What's going to happen in DC, not our game, but we react. We're studying it, we're obviously a participant in it, and very heavily levered to it. But all we can say is we're hiring like crazy. As an industry and as Green Thumb, we are hiring massively as quickly as we can. And we're paying a ton of taxes-- as a company and as an industry, both state and federal taxes in order to fuel the economy. So we think we're all in this together, and this is a massive growth engine. And that's a bold prediction that I'm 100% confident in making.
AKIKO FUJITA: So, Ben, let's try to flip the script then. You've put forward your bold prediction-- 20% growth over the next decade. Clearly, you're bullish on it. You're in the sector. What is the one risk that you think could derail that?
BEN KOVLER: Excellent question. We don't see a risk to the industry. For us, it's execution. I tell the team all the time, we say, you know, head down, execute. It's focused on execution. We think we differentiate ourselves by executing and really watching the cash and focusing on the balance sheet. The biggest risk is tipping over. The biggest risk is running out of money in an industry where there is no bank and no line of credit at a reasonable cost to capital.
So we funded the balance sheet with cash. We spend it like it's our own. And now it's buoyant, and now it's producing cash. So we're out there-- look, we don't know what we don't know. I'm focused on the disruption risk and what we don't see coming, but we're not threatened in any way by international risk. And we focus on the consumer, and they're lining up every day to buy this product. We focus on that, there is no risk.
ZACK GUZMAN: Yeah, I mean, it's a good point. We talk about our analysts that come on to watch this-- [INAUDIBLE] at Cowan points to you guys as one of those companies that's been able to do this profitably-- building cash, obviously, an important thing to watch when you talk about the financial risks there. But Ben Kovler, CEO of Green Thumb Industries, appreciate you taking the time to chat.
BEN KOVLER: Thanks so much for having me.