Glass House costs are expected to remain near $110 per pound in the fourth quarter of 2026, the cannabis producer said on October 19, as record production meets pressure from lower selling prices. Its preliminary, unaudited third-quarter results showed revenue rising to $56.8 million, but gross profit declining from the preceding quarter. The company reaffirmed a long-term production-cost target of $95 per pound, not a fiscal 2026 average.
Key Takeaways
- Fourth-quarter production costs are expected to match the third quarter’s approximately $110 per pound.
- Record production supported revenue, but lower selling prices and the sales mix squeezed gross margin.
- Management maintained its annual production forecast and said export preparations remain a priority.
Table of Contents
- Glass House costs fall, but selling prices drop faster
- Record volume supports revenue growth
- Expansion funding and export preparations
- Conclusion
Glass House costs fall, but selling prices drop faster
Glass House’s preliminary third-quarter results announcement put production costs at approximately $110 per pound for the quarter ended September 30, down from $122 in the second quarter. President and Chief Cannabis Officer Graham Farrar said costs had fallen more than 37% from $175 in the first quarter.
The operational improvement did not prevent margin pressure. Average selling prices fell to $150 per pound from $211 in the second quarter, a sharper decline than the reduction in production costs.
Gross profit was expected to total $14.9 million, compared with $15.8 million in the preceding quarter. Gross margin narrowed to 26% from 34%. Chief Executive Officer Kyle Kazan attributed the pressure to seasonally lower pricing and a sales mix weighted toward trim.
| Item | Details |
|---|---|
| Quarter-end liquidity | $39.7 million in cash, restricted cash and cash equivalents, versus $22.1 million at the previous quarter-end. |
| Third-quarter ATM proceeds | $18 million raised at an average price of $8.11 per share. |
| Third-quarter warrant proceeds | $10 million raised during the quarter. |
| Board change | John “Jay” Nichols Jr. resigned as a director. |
Record volume supports revenue growth
Preliminary biomass production reached approximately 317,000 pounds, up from 246,000 pounds in the second quarter. Revenue increased to $56.8 million from $47.0 million sequentially and $26.2 million a year earlier.
Higher volume helped keep gross profit close to the second-quarter level despite weaker pricing. Management reiterated its forecast for approximately 1 million pounds of production in 2026, while retaining the $95-per-pound cost goal as a longer-term target.
The financial results generally reflect continuing operations, with prior periods recast to exclude Glass House Retail, which was deconsolidated on June 12, 2026. The company separately noted that its comparative operating cash-flow figures still include that business.
Expansion funding and export preparations
Third-quarter operating cash flow was negative $0.4 million. Kazan said management believed the company had sufficient capital to complete farm improvements and reach positive cash flow, and that it had turned off its at-the-market share offering program. That is management’s expectation, not an achieved cash-flow milestone.
Capital raised during the quarter supported greenhouse expansion, automation, climate controls and other facility improvements. These projects are intended to improve yields and reduce production costs.
Farrar also said GACP certification was laying the groundwork for exports from California, which he described as a top priority. The announcement did not identify completed export sales, so the opportunity remains a strategic initiative rather than demonstrated export revenue.
Conclusion
The fourth-quarter results will test whether Glass House can maintain its lower production costs while improving margins and cash generation. Its confirmed outlook remains approximately 1 million pounds of annual production, with $95 per pound a long-term cost target.
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