Glass House production reached a record approximately 317,000 pounds in the third quarter of 2026, but lower selling prices outweighed production-cost savings and narrowed gross margins. In preliminary, unaudited results announced October 19 for the quarter ended September 30, Glass House Brands projected revenue of $56.8 million, up from $47.0 million in the preceding quarter.
Key Takeaways
- Biomass output rose about 29% from the second quarter, while production cost fell to approximately $110 per pound.
- Average selling prices declined to $150 per pound, and gross margin narrowed to 26% from 34%.
- Management switched off its at-the-market equity program and retained its approximately 1 million-pound annual production forecast.
Table of Contents
- Glass House production grows faster than revenue
- Lower prices limit the benefit of higher volumes
- Equity funding supports farm upgrades as cash flow remains negative
- Conclusion
Glass House production grows faster than revenue
The company’s preliminary third-quarter results put biomass production at approximately 317,000 pounds, compared with 246,000 pounds in the second quarter. Revenue increased about 21% sequentially and was more than double the $26.2 million recorded a year earlier.
The larger harvest came with lower unit costs. Production cost declined to approximately $110 per pound from $122 in the second quarter, a reduction of about 10%. President and Chief Cannabis Officer Graham Farrar said costs had fallen from $175 per pound in the first quarter.
The financial results generally reflect continuing operations. Prior-period operating results were recast to exclude Glass House Retail, which was deconsolidated on June 12, 2026.
| Item | Details |
|---|---|
| Quarter-end cash, restricted cash and cash equivalents | $39.7 million, compared with $22.1 million at the end of Q2. |
| Q3 at-the-market offering proceeds | $18 million at an average price of $8.11 per share. |
| Q3 warrant proceeds | $10 million. |
Lower prices limit the benefit of higher volumes
Average selling price fell to $150 per pound from $211 in the second quarter and $155 a year earlier. That sequential decline of about 29% was substantially larger than the reduction in production cost.
Chief Executive Kyle Kazan attributed the margin pressure to seasonally lower California cannabis prices and a sales mix weighted toward trim from second-quarter production. Higher volumes kept gross profit relatively close to the previous quarter, but did not prevent a decline: preliminary gross profit was $14.9 million, versus $15.8 million.
The year-over-year comparison was stronger. Gross profit increased from $5.6 million, while gross margin improved from 21% to 26%, despite the sequential contraction.
Equity funding supports farm upgrades as cash flow remains negative
Glass House reported preliminary operating cash outflow of $0.4 million for the quarter. Its second-quarter and year-earlier cash-flow comparisons include Glass House Retail, limiting direct comparability with the current period.
Kazan said the company had switched off its at-the-market equity facility after raising $46 million in gross proceeds through the program during 2026. Management believes available capital is sufficient to complete farm optimization and reach positive cash flow; that remains an expectation rather than an achieved result.
Funding is supporting the Greenhouse 2 expansion and improvements across the Camarillo farm, including automation and climate controls. Glass House reaffirmed its approximately 1 million-pound production forecast for 2026 and its long-term production-cost target of $95 per pound. It expects fourth-quarter production cost to remain in line with the third quarter.
Conclusion
The fourth-quarter benchmark is management’s expectation that production cost will hold near the third-quarter level while annual output reaches approximately 1 million pounds. Positive cash flow remains a goal, not a result established by this preliminary update.
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