Glass House Expects Record Cannabis Output of 317,000 Pounds as Prices Fall
Key Facts
Glass House Brands, a California cannabis producer, forecast record biomass production of about 317,000 pounds in the third quarter of 2026, according to its preliminary, unaudited results announcement. That compares with output of about 246,000 pounds in the second quarter, according to the company's earlier disclosure of results for that period. The previous quarter's production was itself a record, the company said in its announcement published through GlobeNewswire. The latest increase in output came with an estimated cost per pound of $110, compared with $122 in the second quarter. The improvement in unit costs coincided with lower selling prices and pressure on gross margin, according to the company's estimates and its chief executive's explanation of the performance.
On sales, Glass House forecast third-quarter revenue of $56.8 million in its preliminary figures for the period. It estimated an average biomass selling price of $150 per pound, compared with $211 per pound in the second quarter, according to the company's disclosures for the two periods. The expansion in production volumes was thus accompanied by a decline in the average price realized per pound between the quarters. On profitability, the company forecast gross profit of $14.9 million, representing a margin of 26% of revenue. Gross margin fell from the previous quarter despite lower unit production costs, according to the preliminary results announcement.
The chief executive attributed part of the pressure on margins to a higher share of trim in the third-quarter sales mix. He described the mix as "trim-heavy" in his explanation of profitability in the company's announcement. The factor identified by the chief executive concerned the composition of products sold, alongside the decline in average selling prices between the two periods. He attributed margin pressure partly to this factor, while the company's estimates showed an improvement in production costs per pound. The expected production record was thus accompanied by improved unit costs, while gross profitability came under pressure from prices and the sales mix, according to the company's announcement.
On liquidity, the company forecast negative operating cash flow of $0.4 million in the third quarter of 2026 as part of its preliminary results. This figure relates to cash generated by operating activities during the period, compared with the gross profit the company reported for its business. The expected quarter-end balance of cash, restricted cash and cash equivalents was $39.7 million, according to the statement. This total includes restricted cash alongside cash and cash equivalents, under the classification Glass House used in its disclosure. Alongside the announcement of these estimates, the chief executive announced the suspension of the company's at-the-market share sale program.
Against the backdrop of plans to expand beyond its domestic market, Glass House announced that its Casitas and Padaro farms had received Good Agricultural and Collection Practices certification. The certification covers the company's two farms, while its announced international plan concerns exports of cannabis flower to medical markets, according to its statement on the certifications. The company said the certifications open a potential pathway to international medical markets offering higher prices for its products. Glass House linked the opportunity to secure those prices to the potential to support profitability and cash generation in its presentation of the possible impact of international expansion. But it made exports conditional on permission under U.S. federal law and the importing country's laws, leaving the plan dependent on legal authorization on both sides.
Looking ahead, Glass House maintained its 2026 production forecast at about 1,000,000 pounds, according to its preliminary third-quarter results announcement. The guidance covers annual biomass production within the business for which the company announced its operating and financial estimates. Over the longer term, the company reaffirmed its goal of reducing production costs to $95 per pound, maintaining its stated focus on unit costs. The disclosure did not tie that goal to a specific date during the year, presenting it instead as a long-term target. As for entering international medical cannabis markets, the company intends to proceed when U.S. laws and the laws of importing countries permit cannabis flower exports to those markets.