A few BLUE highlights in: Earnings Call Transcript: Green Thumb Industries Inc. (GTBIF) CEO Ben Kovler on Q3 2020 Results - Earnings Call Transcript
Nov. 11, 2020 11:21 PM ET
Green Thumb Industries Inc. (OTCQX:GTBIF) Q3 2020 Results Conference Call November 11, 2020 5:00 PM ET
Company Participants
Jennifer Dooley - Chief Strategy Officer
Ben Kovler - Founder and CEO
Anthony Georgiadis - CFO
Conference Call Participants
Lee Cooperman - Omega Family Office
Vivien Azer - Cowen.
Matt McGinley - Needham
Eric Des Lauriers - Craig-Hallum
Pablo Zuanic - Cantor Fitzgerald
Michael Lavery - Piper Sandler
Graeme Kreindler - Eight Capital
Aaron Grey - Alliance Global
Andrew Partheniou - GMP
Matt Bottomley - Canaccord Genuity
Mike Hickey - Benchmark Company
Scott Fortune - Roth Capital
Andrew Semple - Echelon Partners
Glenn Mattson - Ladenburg
Russell Stanley - Beacon Securities
Howard Penney - Hedgeye
Operator
Good afternoon. And welcome to Green Thumb’s Third Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the conclusion of formal remarks. [Operator Instructions]
As a reminder, a live audio webcast of the call is available on the Investor Relations section of Green Thumb’s website and will be archived for replay. I would like to remind everyone that today’s call is being recorded.
I will now turn the call over to Jennifer Dooley, Chief Strategy Officer. Please go ahead.
Jennifer Dooley
Thanks, Rob. Good afternoon. And welcome to Green Thumb’s third quarter 2020 earnings call. I am here today with Founder and Chief Executive Officer, Ben Kovler; and Chief Financial Officer, Anthony Georgiadis.
Today’s discussion and responses to questions may include forward-looking statements, which are subject to various risks and uncertainties that could cause our actual results to differ materially from these statements.
These risks and uncertainties are detailed in the Company’s reports filed with the United States Securities and Exchange Commission, and Canadian Securities Regulators, including our quarterly report on Form 10-Q which we expect will be filed tomorrow. This report, along with today’s earnings press release, can be found under the Investors section of our website. Green Thumb assumes no obligation to update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this call.
Throughout the discussion, Green Thumb will refer to non-GAAP financial measures, including EBITDA and adjusted operating EBITDA. A reconciliation of non-GAAP financial to the most directly comparable GAAP measures is included in our earnings press release and SEC and SEDAR filings. Please note all financial information is provided in U.S. dollars unless otherwise indicated.
Thanks, everyone. And now, here’s Ben.
Ben Kovler
Good afternoon. And thank you for joining our third quarter earnings call. And a special thank you to all of those who served, on this special day. Against the backdrop of this unprecedented year, I would like to begin by thanking our entire team for their efforts to make our mission of promoting well-being through cannabis a viable and credible reality. Amid all the uncertainty, Green Thumb’s mission, strategy and execution of our Enter, Open, Scale playbook remain our North Star, as this combination delivered strong top line growth, and for the first time since we have been public, bottom line profitability.
Following a clean sweep of cannabis legislation measures across five states, the green wave is big and real. In fact, it’s like a tidal wave as consumers demand cannabis for well-being. People want a natural alternative to dangerous opioids, chemical pharmaceuticals and painful hangovers. People are alarmed by the social, economic and health disparities brought on by the war on drugs. The ingredients are in place as the political and capital climates warm up to this tremendous new industry. Well-being through cannabis is the next great American growth story.
While the U.S. cannabis stocks are posting strong revenue growth, the S&P is posting consecutive quarterly revenue declines. It’s important to note the cannabis industry is becoming a significant contributor to both, federal and state economies through job creation and tax revenue. And in response, the capital markets are continuing to open up with a greater inflow of quality institutional participants. Prudent capital allocation has always been the bedrock of our story, which we think positions us well to be a leader in the capital markets.
Cannabis is set up to be one of the best U.S. stories of our time and we welcome the comparison to the great growth stories out there today, like cloud computing, online gaming, and hard seltzer. The animal spirits are not going to sleep through cannabis.
The U.S. cannabis industry is rapidly evolving into an estimated $100 billion consumer packaged goods category with projected annual growth rate of 20% for the next decade. It makes cannabis larger than the U.S. wine and spirits industry, U.S. confections, and U.S. beauty & personal care, to give you a sense. Five years in the legal cannabis in our home state of Illinois, and only 10 months into adult-use here, industry-wide cannabis sales for the state are approaching $1.5 billion on an annual run rate basis.
Illinois adult-use grew double-digits for the month of October and over 330% year-over-year. That’s impressive growth, but amazingly, nowhere near the top. We began shipping from our second production facility in Illinois in the third quarter, and in October, we opened the first adult-use store in Naperville, a Chicago suburb that is the third largest city in Illinois. We have eight open stores across the state with the potential for 10.
We believe what is happening in Illinois will happen across the country. It is a matter of when, not if. In a divided country, we are united on this issue. In the green wave, Americans voted in support of cannabis. Mississippi opens up for medical use, and South Dakota, Montana, Arizona and New Jersey join the adult-use 21 and over roster.
New Jersey is great news for Green Thumb, and we began the timely production and distribution of our brand portfolio there in the third quarter. Furthermore, this 9 million-person state in the densely populated East Coast region, raises the states for neighbors to follow the adoption of adult-use. In fact, after the New Jersey vote, Governor Cuomo called on New York to legalize adult-use in 2021. We have one of the 10 licenses in New York. In Connecticut, Governor Lamont is also awake to what’s happening around him in New Jersey and Massachusetts, as he expressed interest in adding adult-use on top of a successful medical program in 2021. As a reminder, we have one of the four licenses in Connecticut.
And in Pennsylvania, Governor Tom Wolf is urging legislators to legalize adult-use to provide a new revenue stream to aid his economic recovery and restore social justice. Pennsylvania has over 11 million people, just like Illinois and its legal cannabis industry is big and growing, and has not yet opened for adult-use.
We started shipping our new capacity in Pennsylvania this quarter, allowing us to distribute more of our Rhythm products to more stores and more consumers.
In October, we opened Rise Monroeville in a suburb of Pittsburgh. This is the 13th Rise store in the state (PA) and our 49th store across the country. Next week, we’ll open our 50th store in Kendall Florida.
Same-store sales across our entire retail fleet exceeded 65% on a base of 25 stores for the quarter. It is worth noting that the three Essence stores we acquired in June of 2019 were added to the base for the first time in the third quarter of this year. On a sequential basis, comp sales were up 18% on a base of 42 stores. And for those of you that remember, that compares to 8% on a base of 40 stores last quarter. While we work to optimize our brick and mortar presence, we continue to think forward about the future of cannabis retail in this evolving digital age.
Whether physical or virtual, we are committed to delivering superior experiences for our consumers. Our brands are now being distributed across 11 states coast to coast. These are states including California, Colorado, Connecticut, Florida, Illinois, Maryland, Massachusetts, Nevada, Pennsylvania, and new to the list in the third quarter, strong economies we have a lot of faith in Ohio, and of course, New Jersey. Collectively, this is roughly 130 million Americans or 40% of the population of this country.
As we have always contended, distributing brands at scale is the key to strong organic growth, and we love our brands. Rhythm, incredibles, Dogwalkers, Beboe, Dr. Solomon’s, it is really about the connections they’re forming with the consumers.
This quarter incredibles launched Snoozzzeberry, a gummy, aiming to help them millions of people struggling to find that good night sleep. We’re very pleased to get the positive feedback so far as Americans across the country reach for the snores.
There is growth and opportunity across our platform. Our team continues to show resilience and adaptability. With thoughtful positioning and through these unique times, we delivered a very strong quarter with $157 million of revenue, a 31% increase quarter-on-quarter, and a 131% increase versus 2019.
Adjusted EBITDA improved by 50% quarter-over-quarter to $53 million. These quarterly results were largely driven by the production expansions that came on line during the quarter in New Jersey, Ohio, Illinois and Pennsylvania, as well as the bounce back in Nevada and Massachusetts.
Our growing scale drove operating leverage and nearly 3x revenue and 8x adjusted EBITDA year-to-date compared to last year. These results are the outcome of continual investments, and constant evolution of our people and policies over the years. We know there’s more to do, but we feel good about what’s ahead for Green Thumb. We have two highly complementary businesses that present a tremendous opportunity for outsized growth over time, right here in the United States.
And when we compare our industry’s growth with other sectors of the S&P 500, we feel pretty good. Our thesis is proving out and we have a great team to keep the momentum going.
With that, I’ll turn the call over to the best CFO in the business, to review our financial results for the third quarter. Anthony?
Anthony Georgiadis
Thanks, Ben. And good afternoon, everyone.
Before I begin, I’d like to thank all those who served. Without their sacrifices we would not be here today.
If you just turn to the third quarter, Green Thumb posted record quarterly revenue, EBITDA, and for the first time in Company history, positive earnings per share, performance that truly speaks to the breadth and depth of our team, as well as our daily commitment to excellence.
In backdrop of this financial performance, you cannot ignore the macro trend that is unfolding before our eyes. The tidal wave of demand that Ben has been preaching to us for years, was fully on display during last week’s election. For key takeaway as a management team, build a bigger boat. The green tsunami is on our doorstep and the walls of prohibition are directly into the path.
In the third quarter, the Company generated the robust $157 million of revenue. Our top-line growth of 31% was primarily driven by earlier than expected contribution from our recently completed cultivation expansion in Illinois and Pennsylvania, as well as the rebounding of Nevada and Massachusetts to pre-COVID levels.
Gross revenue for our consumer packaged goods business, CPG, grew by $18 million, or 33%, quarter-over-quarter. On a net basis, which accounts for intercompany revenue, our growth approximated $13 million, or 41%.
In retail, revenue increased $24 million or 28% driven by new store openings and same-store sales growth that exceeded 65%.
On a gross basis, our revenue split for the quarter was approximately 60% retail, 40% CPG. On a net basis, 71% retail, 29% CPG. These numbers are similar to Q2, just slightly more tilted toward CPG. As a reminder, the difference between gross and net is in intercompany revenue, which approximated $30 million in Q3 and $24 million in Q2.
During the quarter, we completed our wholesale facility expansions in Illinois, Pennsylvania, and Ohio. All three facilities contributed to our Q3 financial results and are well on our way to being positive profitability centers for the Company. Hats off again to our team for their execution, as our Illinois and Pennsylvania expansions ended up contributing more to our business in the third quarter than we initially anticipated. As such, their incremental contribution in Q4 will be somewhat temporary.
Turning to profitability, the Company generated gross margin in excess of 55%, 200 basis points greater than last quarter. While our intrinsic goal of keeping this very important metric above 50% remains, we are witnessing the true potential of our platform when combined with solid execution in highly attractive limited license markets.
Below the gross margin line, our SG&A of $50 million was essentially flat to Q2. Excluding D&A and stock-based comp, our normalized operating costs totaled $34 million, or $2 million greater than last quarter. It helps that the same quarter we increased cash operating costs by $2 million and increased revenue by $37 million.
Other expenses for the quarter approximated $2 million, which reflected a favorable valuation adjustment to our strategic investment portfolio, as well as interest in the warrant expenses associated with our senior debt. Net of these expenses, the Company generated $39 million in pre-tax income and over $9 million in net income, providing our shareholders with its first positive EPS of $0.04 a share.
The Company also experienced significant improvements with adjusted operating EBITDA, which totaled $53 million, just under 34% of revenue. Year-to-date, the Company has generated $114 million in adjusted operating EBITDA, four times greater than our full year 2019 figure, another monster achievement for the team.
Turning to our balance sheet, we ended the quarter with $78 million in cash. This is $4 million less than last quarter, as the Company made substantial payments to Uncle Sam, and also kept its foot on the gas on the CapEx front. Subsequent to quarter-end, we executed an agreement with Innovative Industrial Properties that will provide an additional $25 million in funding to build out our Ohio cultivation margins.
On our Public Float, over 70% of our shares are currently freely traded, representing 150 million shares and over $3 billion in value. We continue to believe that liquidity brings confidence.
In summary, we are incredibly proud of our Q3 and year-to-date financial results. Looking ahead, it’s impossible to ignore the opportunity ahead of us. And I’ll leave you with an interesting data point. Colorado with the population of just under 6 million with 80 million annual tourists is now averaging over $200 million of cannabis spend per month, with an annual run rate in excess of $2.4 billion. If Colorado can hit these sorts of numbers, from year since legalization, what’s going to happen in Illinois, New Jersey, New York, Pennsylvania and others over the next several years. We can certainly have our thoughts.
While the world around us continues to evolve, many things for us largely stay the same. As we look ahead to 2021, I’d expect us to continue to do the following: Being with the consumer; stay focused on markets where we have or can create edge; build and invest in our team; play hard and play to win; and last, continue to wave that Green Thumb flag, wide and hot.
Until next time, hope everyone has a safe holiday season with their loved ones. And see you all in the New Year. Back to you, Ben.
Ben Kovler
Thank you, Anthony. As always, your remarks are both, informative and colorful, a rare combination in CFO commentary.
I believe the key takeaway from our third quarter is that our continued execution and prudent capital allocation strategy has led to steady, profitable growth. We have strong revenue, improved profitability on nearly every metric down the income statement and a balance sheet that leads to a good night’s sleep.
While that is very exciting for us, we remain focused on being a leader in this brand new industry here in the United States. That means several things. We must stay focused on leveraging our strength and executing our strategic plan while being innovative and adaptable. We must stay dedicated to our core values by promoting social equity, diversity and inclusion, community engagement and environmental stewardship. We must continue to do what we say we’re going to do. We must never lose sight that first and foremost, this is a people business. And being people first means listening and taking care of our team, customers and communities. We are very proud of our commitment to those who we serve. First day profits from all new store openings go directly to community organizations such as the Last Prisoner Project, Loaves & Fishes in Illinois, 412 Food Rescue in Pennsylvania, and next week, to the Florida Rights Restoration Coalition.
Today being Veterans Day, it is also a timely reminder to thank those who protect our democracy, our freedoms, and the right to choose cannabis. In November, our brand, Dogwalkers and Operation 1620 team up to help bring awareness, education and support to veterans, who choose cannabis as an alternative to pharmaceuticals.
And finally, our main job collectively is to promote well-being through the power of cannabis, and in doing so, create opportunity and long-term sustainable value for all of our stakeholders.
I want to thank our team, our customers, partners and new, our shareholders for your continued contribution and support of Green Thumb. And everyone, please stay safe and well during this holiday season.
Thank you, everybody. And with that, I’ll turn the call over to operator, and we welcome your questions.
Question-and-Answer Session
Operator
[Operator Instructions] And your first question comes from the line of Lee Cooperman from Omega Family Office.
Lee Cooperman
Yes. I hesitate asking a question. I think, I had the honor of asking the first question on your call as a public company. The very next thing I see my picture in New York Post, and underneath my picture is they refer to me, the cannabis king knowing very little. But anyway, first, let me congratulate you on outstanding results. I’m kind of making a loose analogy. At the turn of the century, there were a very, very large number of automobile companies producing automobiles, and of course, the industry consolidated. There are a large number of companies in this space, do you see an opportunity to consolidate the space, given superior job you’ve done, and having a great CFO that you referenced, on the team? That will be first question. If I could speak to the second, what is your attitude towards listed on the New York Stock Exchange?
Ben Kovler
Thanks, Lee. We really appreciate the kind words, and we’re focused on the execution over here. You’re right, turn of the century, whether it’s automobiles or prohibition, and we use the phrase Prohibition 2.0. And I believe the history doesn’t repeat, it rhymes. So, we really look to history for those lessons, and you’re totally right. There’s monstrous consolidation opportunities. You’re seeing probably the industry finish, in the U.S., the first wave of consolidation that happened at the capital markets that obviously calm down. Maybe they’ll come back, but there’s massive opportunity, given how big the sector is. There’s no $50 billion or $80 billion space, which is where we’re going to be where the biggest companies only do $2 billion, $3 billion, $4 billion in sales. You’re exactly right of where it goes over time. The question is, how quickly and when. For us, with the CFO, with the lens and shareholder capital and really shareholder returns with every dollar we spend, it’s when does it make sense? Like always, everything’s on the table, if it makes sense for shareholders and it’s accretive, and it depends on lots of factors. We have a huge opportunity within the portfolio. But, that’s not to say there’s tuck-in acquisitions that are accretive, and especially as this industry evolves. We can see the field pretty well and we’re excited about what’s out there, and we’re excited about the current portfolio.
To the second question, on New York Stock Exchange, I think just backing up a second. Green Thumb is registered with the SEC, the U.S. Securities and Exchange Commission, which puts us in a unique spot. That includes we file GAAP financials, see the 10-Q in the morning; we file 8-Ks, 10-Qs,10-Ks GAAP, standard stuff, and we have registration with the SEC. There’s currently not enough clarity in the federal government for listing on the New York Stock Exchange. But, I can tell you we’ve positioned ourselves, like has been our history, even since before we went public to be a first mover in the capital markets. And I would describe it as we’re knocking on the door. We’re getting ourselves ready. It obviously doesn’t make any real sense that the only access on the New York Stock Exchange is to Canadian operators who don’t have a exposure to U.S. consumers. And here’s where the monstrous business is. But, we understand that regulatory structure, which creates a moat around our business and makes us extremely bullish about what’s ahead. But, you’ve seen us put out things like an S-1, which is a registered offering with the U.S. Securities and Exchange Commission, which really just gives us optionality, another tool in the toolbox, as we used, over history, things like that sale leaseback, all with the lens of what’s most accretive for shareholders.
Operator
Your next question comes from the line of Vivien Azer from Cowen. Your line is open.
Vivien Azer
So, in terms of the revenue growth sequentially, it’s certainly better than I was expecting. I was wondering if you could unpack or dimensionalize the relative contributions from Illinois and Pennsylvania, coming on line a little faster than expected, relative to Massachusetts and Nevada, reopening and recovering from the COIVD lockdown. Thanks.
Ben Kovler
Yes. Great question. The truth is, kicking on a lot of cylinders last quarter, and as Anthony mentioned, somewhat of a tempered outlook versus a 30%, or whatever the last quarter it was. But, to your question, lots of factors, you’re exactly right. Production turned on in Illinois, Pennsylvania, drove a lot, Ohio and New Jersey as well, new markets turn on. And then, two things on Massachusetts and Nevada is how to describe it. One is the recovery; and two, growth within that market. So, sort of all things being equal, there would have been growth out of Massachusetts and Nevada, had there not been the dip. But with the dip, which was really in April, right, and half of May, which that’s what we’re comping in the third quarter, there’s some factor there. But really, I would say, the vast majority probably, beyond those 75% is a result of organic growth in the portfolio, versus lapping the COVID situation. But, that’s because the business execution turned these things, we talked about last quarter, it happened to be the third quarter, it could have been fourth quarter. But that’s a big step up.
Vivien Azer
That’s great. Super helpful. Thank you. And for my follow-up, Ben, I really appreciate the commentary around New York, very attractive, potential limited license, adult-use marketplace, and it does seem like the Cuomo administration really means at this time in terms of legalizing adult-use. I am curious though, if you have any thoughts around what a potential licensing framework could look like, in particular, given the sizable COVID-driven budget deficit and state saving?
Ben Kovler
Thanks. There are total ingredients of a successful rollout from medical to adult-use, and we welcome a conversation with regulators, industry participants, those who are not yet industry participants. There certainly got to be a place for new folks to come in. This is a massive business, the pie is very big. There’s plenty of winners, plenty of ways to win. You can say it in many different ways. However, relying on the operators that can stand it up and deliver that supply, whether it’s tax revenue, [ph] jobs, capital to get this thing going, it’s very big. And we’re here, we’re constructive. Lot of people are talking and a lot of people are brainstorming. And so, we are excited about what’s ahead broadly across the East Coast.
Operator
Your next question comes from the line of Matt McGinley from Needham. Your line is open.
Matt McGinley
Thank you. The increase in retail revenue growth was quite impressive, but it was especially impressive given most of that was productivity increases. Was that broad-based across the entire portfolio, or did you have specific assets or states where it drove most of that? And I guess, importantly, has that productivity held into the fourth quarter?
Anthony Georgiadis
Sure. Thanks for the question, Anthony here. Obviously, we historically haven’t kind of broken down kind of state-by-state performance. But holistically, we see strength across the platform. Certain markets, obviously more than others, but we have a business here, given the limited license markets that we operate in. We’re bullish on all of them, literally. So, we’re in a situation where we continue to see nice organic growth same-store sales within each of the markets that we operate in. In terms of Q4, it’s a little early to speak to that. But, it’s been a strong year, and obviously, with COVID, we had no idea what to expect when it hit in the first quarter. And we’ve been pleasantly surprised by the pickup that we’ve seen across the entire platform since the first quarter.
Matt McGinley
Okay. And then, as far as gross margin, I would think that the retail gross margin wouldn’t be that volatile. And most of the gross margin upside in this quarter came from production leverage. If the CPG business grows at a faster rate than your retail operation in the fourth quarter. Is there anything with the mix or, I guess, a product mixture, or geographic standpoint that would prevent you from expressing continued upside of those gross margin rates, or how should we think about that in terms of what happened in the quarter in terms of the leverage that you saw in gross margin? And how would that look into the fourth quarter, should there be any way we should be thinking about that could keep up growing up even more?
Ben Kovler
Sure. This is Ben, I’ll take that one. We don’t really talk quarter-to-quarter on how to think about it. I’d say, over time, you’re exactly right. The retail gross margin does not have a lot of upside to what the retail business is, in fact, it’s probably downside, or slow mode. The other thing that works against gross margin is obviously price, nothing but costs horizon, certainly the risks to model. And if you look at our business and you’re modeling it out, just real levers that will drive it, which pieces are driving the biggest piece of that production? Where are we making the most products? And then what’s the profitability at the places that have the largest products or product mix, and state weightings. And really, we see both, kind of slow and steady with the constant awareness around price. That’s kind of how I would think about it.
We continue to optimize, we continue to think about capital investments that can drive down gross margin or cost per unit, sets up pretty nicely for that sort of exercise. And if you tell me where price is going, I can tell you where gross margin is going. But we don’t know. A lot of action is in market and you don’t try to play with pricing. And we try to serve customers and we certainly try to serve patients who are using this product for well-being.
Operator
Your next question comes from the line of Eric Des Lauriers from Craig-Hallum. Your line is open.
Eric Des Lauriers
First question is a bit of a follow-up on one of the previous questions regarding up-list in federal reform, especially with the green wave, and now prospect of a Democratic President. Certainly a lot of talking about federal reform, and especially up-listing to major exchanges. You guys mentioned that you are ahead of your peers in terms of registering with the SEC and GAAP reporting. First, is there anything else that you guys need to do to be able to up-list or is it just a matter of federal reform at this point? And then, second, given your discussions with the exchanges, in your opinion, would safe banking potentially give the exchanges enough cover to allow for an up-listing? Thanks.
Ben Kovler
Sure. This is Ben. Your question is a great question without a great answer. We can’t speak for anybody else. But, the truth is, the situation right now does not have a lot of clarity. We see ourselves on the doorstep with SEC registration. I mean, with the U.S. Securities and Exchange Commission with the registered offering, we’re there. I think that’s very unique and differentiated from where things were a year or two ago, right? We went public 2.5 years ago, plus or minus. So, the capital market has been evolving.
When we see things like banking reform and changes to this, what that screams to me is a reduction and a change in cost of capital, that indicates the cost of capital reduction. And that’s really good for shareholders. And so, listing is one thing, but when you think about things, and I think it’s important, as I mentioned, sources of capital, not just equity -- and I wouldn’t make shareholders -- shareholders without an overhang here, business is profitable. So, what’s really interesting about banking change, the cost of capital and thinking about our debt, and what that cost of debt might be for the risk profile of the business that’s not profitable at 12%.
I think that listing happens one day, and it’s hard for me to say if it’s 2021, 2022 or later. And frankly, for us, that’s not the focus, the focus is to execute the business and think about the cost of capital as we allocate into this massive business and how to be accretive for shareholders in order to big and monstrous enterprise in where industry that’s bigger than U.S. wine, are bigger than U.S. beauty and personal care. Those are big, big numbers and big, big industries that have been around for generations. And we believe our relationship with the consumer effectively has been around for generations, we know it. And that’s the opportunity to execute into, and we are a participant in what’s happening, we’re watching what’s happening. Obviously, we’re paying tens of millions, hundreds of millions of dollars in taxes, not going unnoticed.
So, it’s just a matter of time setting ourselves up, and putting credibility whether it’s high quality U.S. institutional capital into the business, paying taxes, having profitability, as an industry, not as a single operator, but really as a U.S. cannabis industry to make it so obvious that it should be listed. Because, we are -- this is USA and America first in a big way. There’s no reason to transfer the wealth to another country for the cannabis business, so native here.
So, we just focus on the day to day execution of the business to deliver the product to the consumers that want it. And we believe change is coming. We know, change is happening. But again, no semblance of timing and faith, what’s going to happen in the relief bill and Senate. And there is just too many variables and too many adds for us to speculate on. And we’re just focused on what we can control.
Eric Des Lauriers
That makes sense. And I appreciate the color there. It certainly seems obvious to me, for you guys to be up-listed here. But anyway, last question for me, I’d like to just drill in on Illinois, given the very impressive growth we’ve seen there. So, in the press release, you guys mentioned that you completed the initial phase of construction at the Oglesby facility. I know you guys generally don’t give much state by state information here. But, could you provide any color on how big that initial build out is, or perhaps give us a sense of order of magnitude? How much further you can expand before reaching your square footage cap? And then, any comments on timing would of course be helpful too?
Ben Kovler
Yes. I mean, great question. Thanks, Eric. And feel free to talk -- to the first part of your question, feel free to talk to anybody about that belief that we should be listed, because more education that occurs in the industry with all kinds of participants, the better, and you’ve done a great job. So, thank you. We don’t do a lot of details about what’s going on in Illinois. So, I would say, we build more, we got more coming, and we have plenty of room to go bigger. We are focused head down on what we do within new building to optimize the product in order to make it for the consumer, so not worried about the rec cap.
We know about the unlimited medical. We have two sites. The business is at $100 million now, right, last month, we see going bigger, very simple to see how big Illinois could be whether -- I mean, if you go crazy and use Anthony’s numbers of $200 million a month in Colorado, the numbers get very, very big very, very quickly. So, we even like the $3 billion number for Illinois. And we see those dollars being invested into Illinois being very accretive for shareholders in terms of this $1 on the balance sheet that becomes many dollars of EBITDA or some dollars EBITDA, that then become a multiple in the equity value, enterprise value. So, we’re focused on that. And there’s plenty of room to grow. We welcome you and anybody else to tour.
Operator
Your next question comes from the line of Pablo Zuanic from Cantor Fitzgerald.
Pablo Zuanic
Ben, could you just talk about New Jersey in terms of your expectations of how soon direct sales will you start? On average, you’ve taken about two years from ballet approval in other states, of course Illinois exception, six months. And just briefly in the case of Pennsylvania with a Democratic Governor there and Republican legislature there, still there a compromise would be to implement rec or have the state owned liquor stores sell rec cannabis. How do you think about that? Thanks.
Ben Kovler
Thanks, Pablo. Great question. I appreciate all the work you’re doing as well. In terms of OpEx, the PA one, and then Anthony, maybe hit New Jersey. To tell you -- we don’t think that’s very likely. We think the regulatory for state owned enterprise, we’re going to leave that to our friends up north, we think the regulatory structures that are in place and protect the integrity of the industry, right, why was there ever 3 tier or other sorts of things. It’s about inventory and tax. Making sure nothing’s leaving out the backdoor, and there’s a tight inventory tracking system, see the sales, and everybody knows, in PA, wither it’s with MJ Freeway in other states, whether it’s BioTrack, that works and tracking inventory, you can go and see a lot of upside to that. And so, that’s not something to worry about. So, we think it’s a lot about how the sausage is made here, as people become educated in the structure that might work and might not work. And there’s a lot of discussion, a lot of progress to be made. So obviously, bullish on PA, we continue to invest in the market, we continue to open stores, and serve the consumer in the Pennsylvania market. For the patients now massive opioid problem, and it’s really a pleasure to operate in that state. And I’ll let Anthony talk about New Jersey.
Anthony Georgiadis
Sure. Pablo, good question. It’s really hard to say how quickly the rollout of New Jersey will actually take place. Illinois took about six months, plus or minus, and that was very, very fast. I would tell you, it feels like there’s just a ton of momentum. Last night 10 o’clock at night during a bed reading kind of latest summary of one of the bills that seems to be getting internal momentum within the state. And look, I think they should be writing on the wall, they want to be a first mover in the Northeast, and you see an opportunity to take advantage of that time. An average, I guess, we’ve seen different markets take as long as two years, some shorter and then depending on the thing that no one’s really talking about yet is, how are the local municipalities going to play a role in that. And once they set up the regime, how quickly can operators actually get to market? We’ve seen a situation in Massachusetts where clearly the number of retail stores that have opened up in the last few years with is a lot lower than anyone would have initially anticipated, heading in. It’s hard to say, I can tell you there is a lot of momentum, you can feel it. And I wouldn’t be shocked if some point next year the program goes live.
Pablo Zuanic
And I know you’re guiding tempered growth in the fourth quarter. But just remind us, as new capacity that came in, was that like, early July or late September, because it was still a big benefit of new capacity, the full quarter -- utilization in the fourth quarter, right? Can you give some color on that?
Ben Kovler
Yes. Really, most of the quarter was there, because you’re just on the last quarter, say, hey, we got all these things coming, that it’s been all that free capital investment. So yes, obviously, if it only turned on in the last week, there will be hidden organic growth, but that’s not the story.
Operator
Your next question comes from the line of Michael Lavery from Piper Sandler.
Michael Lavery
You’ve talked about how important brand equity is. And obviously, as the category evolves, that will probably keep growing in importance. Can you give a sense of what if any metrics you look at in terms of tracking that? Is sort of any loyalty measures or price gaps and price premium -- pricing power? What is it that you look at in terms of understanding how you’re building equity with consumers and how sticky that might be going forward?
Ben Kovler
Thanks for your question. So, we’re really focused on. We think that and insights, and certainly having a portfolio across the country of the 50 open stores, our consumers and medical. But, we don’t really like to talk about those sorts of specific metrics. But, to give us brand traction, brand loyalty, it’s sell-in sell through. And we’re studying what consumer is saying how are they feeling, talking to people, collecting data. I think there is extreme power in the data that our business is building and collecting.
The consumer business, like all consumer businesses that are in late stage or maturity or wherever, we rely on data for decision making, things we had here. But so, we feel a lot of traction. At the end of the day, we want to be making more, consumers want more. They want more Dogwalkers, they want more Rhythm premium flower, they want Beboe, they want to feel better with Dr. Solomon’s. So, we can feel it. And we’re pleased with where we are. But it’s not a done deal, right? This is kind of a no finish line situation as we build and cultivate that relationship with this consumer. As they evolve and get educated and experience this product in a new way, it’s truly happening as a new experience to talk to American consumers. It’s 50% plus of the product is not smoked anymore and who, when, where, and I think that we just welcome the spotlight of this and the data for everybody to see as it matures.
Michael Lavery
And just a follow-up on the same-store sales growth. You called out a couple of drivers there, obviously, very, very strong. Little bit of a clarification included in this, when you talked about the comparable sales growth primarily being driven by increased transactions. Is that the number of transactions similar to the foot traffic you call out and your sequential gains, or that increased volume of -- size of transactions where they’re getting bigger or is it possibly both? And just curious about that, what you point to with some of the key drivers? Is it gains from illicit trade, is it share from competitors, a bit of both? How do you think about where you’re sourcing that?
Ben Kovler
A great question, pretty basic. It’s the former, I mean it’s more transactions. What’s going to drive it is either ticket size or number of tickets, I think there is much else, and we’re seeing more tickets, which is more people. There’s been evolution of the ticket size, and certainly there was pantry loading in March. And we’ve seen that spike and we’ve seen come down. And maybe it hasn’t hit the pre-COVID levels and a little bit different, but you’re not back there, but marching back there slowly, maybe versus the air traffic control kind of -- so.
Operator
Your next question comes from Graeme Kreindler from Eight Capital.
Graeme Kreindler
I wanted to follow up on the comments made earlier in the call about building a bigger boat. And I understand, there’s been an intense focus on Green Thumb on allocating capital to opportunities with the highest return. And also really running the company, I like you didn’t have to raise another dollar. There were some questions earlier on the call with respect to Illinois. So, that appears to be really top of the list here on capital priorities. But, as you look at everything going on in existing portfolio and then what’s going to happen in New Jersey and what might happen in places like New York and Pennsylvania, wanted to get more color in terms of you go down that list, how you make the capital decision from there on outside of what’s happening in Illinois in the short-term here?
Ben Kovler
The decision on capital allocation on what’s best, based on where the market is, first mover market opportunity, what the licenses are, where we can put it. This is really a return on invested capital gain, as we’ve been talking about, for a long time. Everything’s on the table. We’re constantly playing the game on where we can get the highest returns in the most protected way. There is a massive green wave going on here. So, we don’t want to have our head down too much. We got to be watching what’s happening everywhere.
So, we’re studying, we’re learning, but the basic principles of capital are there. So, if we can put $50 million into something, what does it equal in terms of just like EBITDA and what year and what rate and free cash flow, when and how, and what does it look like against the competitive set, or the inevitable, we don’t know what we don’t know. And so, worried all the time about disruption or something else. And so, we’re focused on building our brands, and our relationships with consumers, which I think we’re doing, we’re in the beginnings of it, but that’s the value over time to the portfolio. So, that’s really what drives the capital decision, there is accretive opportunities and great things, not just in Illinois, Pennsylvania, New Jersey, Ohio, and other markets across the country.
Now just returning on the retail thing, come up with something. It’s really more tickets, more consumers coming in. So, one thing I would say about that, it’s been unique as people buy more, unlike consumer staple, like toilet paper that lasts you twice as long if you buy twice as much. People buy twice as much cannabis, so they have more cannabis, they consume more. That’s not a bad thing for the business. We don’t think that’s a bad thing for the consumer. But the fact, it drives velocity into the stores. And so, we’re studying that, to your question on what’s driving that. But, at the end of the day, it’s tickets over transaction price or even units, but we’re watching all of those in order to serve the customer in the best way possible.
Graeme Kreindler
And then, just a follow-up question here regarding the continued scale then. With respect to the normalized operating costs, which had a very minimal change quarter-over-quarter. If we look into next year and adding even more states with states getting even figure. Are we at a point here where the businesses is sufficiently scaled up from that operating expense side of things, or will there be a need to add on more of that, as we continue to grow and more market value continues to get larger?
Anthony Georgiadis
Sure. Anthony here. Yes. My comment about building a bigger boat, part of that is the team, in addition to the infrastructure. And I don’t think -- we’re still kind of building out those retail and wholesale pieces of our business. And as the business grows, the complexity grows, and the opportunity grows. So, I think, what you’ll see from us is we will continue to invest in people, obviously the right people. We focus on cost, just as decent business operators, just trying to run a good business. So, I’ve got -- at the same time, we kind of underwrite these decisions from a ground up basis, without kind of saying to ourselves, hey, the target is X number. So, it’s not like we’re sitting here saying, okay, the SG&A in Q2 of 2021 should approximate X, Y or Z. You can’t do that. The businesses is moving too fast, and there’s a lot of variables around us. The one thing that we are going to continue to do is invest in the community, continue to build the community, so that we can execute on the opportunity ahead of that we know is just massive. So, I would expect to see that gross number increasing on a relative basis, quarter-after-quarter. And a lot of that just has to do with when certain facilities turn on, or how quickly we can find additional team members that can grab an order and help grow this thing that we’re building.
Operator
Your next question comes from the line of Aaron Grey from Alliance Global.
Aaron Grey
I’ll add my congrats on the quarter. I just want to add on to a question that was asked early in terms of, obviously, the capital and what states that’ll be specifically allocated to. One state in particular, being Florida has given you just recently opened up another store there when the first ones you’ve opened in about a year. So, just wondering just given the regulation the same, there being no wholesale market. Are there any plans for any type of cultivation expansion in the state, and/or any additional store openings, just kind of simply focused on Florida?
Anthony Georgiadis
Look, we are big fans of the Florida market, may not sound like it, but we are. Look, I think, if you rewind, call it 9 to 12 months ago, we had some very difficult decisions to make. And it all came down to return on invested capital. And we effectively -- we looked at our portfolio, we had to earmark dollars that perhaps could have been earmarked for Florida and moving elsewhere because we thought it was better for the business.
I think, if we look ahead to Florida, we continue to do the work, we continue to assess it, and it’s something we talk about on a regular basis. But again, here we are now that New Jersey passed, call it last week, that adds another layer of complexity. And so, as we sit here in our shoes and try to allocate capital discussion with shareholders, we’re constantly reassessing the chips on the table and looking at them. We’re bullish on the Florida market. We see the growth, we see some of the performances, it’s in the operators down there have in the discussion.
I think for us, what we’ll do is, we’ll just continue to assess it week after week, month after month, and if that makes sense, we’ll go ahead and pull the trigger. But right now, I think it’d be premature to communicate anything that relates to 2021.
Aaron Grey
Second question for me, then, obviously treaty is something that still hinders you and the other operators out there. Just as we think about you guys getting more and more profitable, and the impacts on free cash flow, specifically between retail and wholesale. Can you talk about the impacts that treaty might have on the difference between the two and how having more sales flow through either retail or wholesale could impact the free cash that you guys get versus what you have to pay out on the on the taxes side?
Ben Kovler
So, look, obviously [indiscernible] plays a role in -- within the business. And we’ve been able to, obviously, now that we’re cash flow positive and paying big tax things to Uncle Sam. Now, the nice part is, we have a business that generates healthy after tax free cash flow.
In terms of the impact on the business, look, obviously the retail is a bit more pivoted. And so, - but I’ll just sit here and say that doesn’t play a major role in how we kind of run the business. It’s something we watch and something that we understand so that if we do see growth of X, Y, or Z, within the retail versus the wholesale side of the business, the impact that will have, from a cash basis. But look, here we are sitting and it’s not like a situation where we don’t have the dollars on a pre-tax basis to pay the tax. So, we can keep our foot on the gas and still generating healthy after tax cash flow returns for the shareholders. And we’ll continue to do that.
Operator
Your next question comes from the line of Andrew Partheniou from GMP.
Andrew Partheniou
Congrats on the incredible, guys. I wanted to just talk a little bit about New Jersey a bit more. Within the enabling legislation that’s currently going through state Congress, if it gets passed, as it’s written, I believe there’s a certification process, where operators need to certify that they can meet existing medical patient demand to the state before serving rec customers. Do you have any color on what that entails? And assuming -- or at the point where rec sales starts to New Jersey, do you think that could impact pricing in Massachusetts at all or demand?
Anthony Georgiadis
I think, the details of the certification are still bit kind of ambiguous. The supply-demand imbalance will exist for a period of time. How long? No one really knows. There’s just too many variables to kind of put your finger on. I didn’t fully understand your question about the impact of Massachusetts in New Jersey. So, maybe if you could just kind of shed a little bit more right there?
Andrew Partheniou
When New Jersey rec comes online, perhaps there might be some customers that shop in Massachusetts that would prefer to shop in New Jersey, or if there could be any impact at all, to the Massachusetts rec market as a result of New Jersey rec coming online?
Ben Kovler
This is Ben. I mean, look, if I had to just boil it real simplistically, at this moment in time, this is water in the desert. It won’t be that way forever. Right now, Massachusetts pricing as a result of New Jersey coming online is not a risk factor. Pricing broadly, as I mentioned, is a constant risk factor and something we’re thinking about how to do it. But, all the supply in New Jersey and income is needed, heavy on the income. Because Anthony’s bigger boat is needed, because there’s a huge amount of demand on the east coast.
Andrew Partheniou
Can definitely recognize that with still the underserved market in New Jersey. Maybe switching gears and talking a little bit about the health of the consumer, have you seen any kind of trends, like a shift in more purchasing of value products? You talked about the number of tickets increasing? What about returning customers? How have their purchasing patterns changed or perhaps not changed over the past several months? And particularly in Illinois or any other state that you would like to call out, are there still purchasing restrictions in place? And when do you think that could end?
Ben Kovler
When we think what could end? I just missed that last part of your question. Sorry, Andrew.
Andrew Partheniou
Any purchasing restrictions that could be in place, particularly in Illinois, or any other state that you’d like to call out?
Ben Kovler
Purchasing restrictions, what I would call is really sort of opportunities for retailers to sort of serve more consumers in a place where there’s really not enough water to go around. So, what’s happening in the consumer basket has been pretty steady. Unlike what happened last year, say in the vape case, at the end where consumers really shifted quick away from vaporizers and vape pens, and then understood quickly after, as I think the media and everybody did a good job, educating folks that it was truly untested and unregistered pens that were making people sick and not legal. And consumer reacted back. We thought maybe consumers would go away from inhalables, given COVID and the respiratory elements. And as we said before, that did not happen. And I think what’s really happened, the bottom line to the core of your question is, more people are consuming cannabis. That translates the category growth across the board. And the nuances, while very interesting, important and incredibly detailed there a lot happening, core concept is massive new adoption by U.S. consumers and that is more consumption by those consuming. So, it’s pretty heavy and we’re excited about that opportunity.
Operator
Your next question comes from the line of Matt Bottomley from Canaccord Genuity.
Matt Bottomley
Ben, you described a little bit before that the potential growth that we saw, very roughly there is obviously about 25% of that rebounding in Nevada and Massachusetts. And then, there were some specific dates mentioned in the press release for the other 75%. One that we haven’t really chatted on this call is Ohio. So, given that there’s a bit more of hard cap there on the retail side, can you give any dynamics on your ability to carve out greater market share there, whether it’s a wholesale channel or just other dynamics in that market with respect to condition uptake and where Ohio might rank and then, what you consider your core market?
Ben Kovler
Look, we’ve seen the movie before. They’re pretty transparent with what kind of data is going on there. And the 10 million plus persons say [indiscernible]. And we know what that demand on those consumers look like. We’re excited to have the maximum number of retail stores open. We’ve got great market position, places like Lakewood, Lorain, Toledo, unbelievable team out there. So, we’re excited about where they stand, and we’ll be putting capital into Ohio that will drive really sort of high level 2022 and beyond. So, we’ll stay tuned.
Matt Bottomley
And then, just a follow-up question on one of the other sort of anecdotes you gave with respect to Florida. Are there any other markets, and when one that sort of notable, as you sort of look through where your exposure is, is it maybe California where -- that’s not where lion’s share of the capital allocation is right now. But, a lot of different MSOs and other operators in the space that are much more capital constrained than you guys at this time seem to be going narrower as opposed to wider. So, is this an opportunistic time for GTI to start expediting capital allocation in other markets or if you could line up everything [Technical Difficulty] going to be doing in New Jersey, and in some of your core markets, which still have very high growth rates, is that something that again would be maybe a nice to have, as opposed to something to focus on right now? And any anecdotes on other markets that you think might make sense in the near term here would be to be helpful.
Ben Kovler
Sure. I would summarize this by saying everything is on the table if it makes sense. And we are watching a massive green wave, transform this country and create the next great American growth industry. So, it’s happening everywhere, because people are everywhere. And we understand the supply-demand by those markets, see this green wave. We are studying, we are watching, we’re playing an ROIC game, in order to grow for shareholders and put it back in the game. To understand what’s happening. We love our current portfolio, broadly east of the Mississippi, everywhere, we love, we see the flower shortages happening there. And then, just watching what we call internally, the state of the states, and you really watch the growth happening across this country. It’s quite tremendous. And we’re excited for everybody else to eventually wake up.
Operator
Your next question comes from the line of Mike Hickey from Benchmark Company.
Mike Hickey
I guess just one question. I guess, it’s still early days, green wave is building here, but it’s going to be a monster, you continue to scale. And I’m just wondering how you think about sort of the construct of your business between CPG and retail that if you think there is long-term harmony there between those two or if you think over time, maybe there’s benefit to separating those two separate companies?
Ben Kovler
There is great harmony there. The one plus one equals something bigger than five. And we’re focused on building our brand and the relationship with consumers. So that’s about being where consumers are, about understanding the market and investing in those two businesses. It’s a different kind of business, to grow the source of millions of dollars and build an e-com platform [indiscernible] in the state of Pennsylvania in order to build supply and make -- map consumer products at scale to be distributed across the entire state. So, we love both those businesses. My job and team’s is to support those two businesses, build teams that make sure that those folks who go execute. It’s about optimizing distribution channels, getting Dogwalkers to every consumer that wants them. Very easy message. And by the way, it might lead to a nice evening at home. Try for yourself is sort of a message, and we watch what happens. And isn’t it a pleasure to own the booze and the bar. It’s quite simple as the same thesis from day one. And we continue to optimize those and what we can do to unlock shareholder value in the future? That’s the piece that’s exciting and it’s fortunate for me that I get to think about those sorts of things. And we believe we’re just getting done.
Mike Hickey
Ben, you’ve seen -- I think we’re talking for a couple years now, this is the most fired up, I think, I’ve heard from you. I mean, is it the quarter or is it the politics, is it the growth in front of you? Like, what’s really driving, I guess, your enthusiasm sort of metered up here on this call?
Ben Kovler
Thanks. Yes. I mean, not a big tempered, but there’s a tidal wave of demand that we’ve been talking about for six years in a row. And it’s helping people feel better, and makes me excited to help more people feel better through this product, and then what comes out is these numbers.
Again, like, I just got to bang the table, and this is a U.S. story. It’s still misunderstood in the media, literally. Like the wrong ticker symbols are on TV. And I don’t think the average consumer is understanding how to take advantage of the American story here, for all of us, and we’re fired up about that. And we’re fired up about the tens of thousands of people that we can help, and really like big picture, small picture and the team. Team fires me up because you got to do a good job, and then making it fun for everybody, so.
Operator
Your next question comes from line of Scott Fortune from Roth Capital.
Scott Fortune
Real quick, just want a follow-up kind of strategically Ben around California and the market. We’ve seen 31 municipalities come on board now to really start opening up legalized cannabis here in the state. What’s your thought around brands, your focus east Mississippi, but coming from California and your strategy in California to graduate, build that out with your brands, just from a long term perspective?
Ben Kovler
We’re certainly very, very close that we have been for a long, long time. Just because it’s the biggest doesn’t mean it’s the best, it might be the best way to lose money. That maybe a backward looking statement, we hope. We are studying of course. We obviously have a big presence in Nevada, in Las Vegas. A lot of close geographically, we have licenses in Southern California we plan to execute on and we are watching the entire supply chain of that market, pricing, participants, brands, retailers and every part of that supply chain. I mean, team does a really good job.
Scott Fortune
Okay. And then, last question for me, can you provide an update on kind of number of stores that you’re serving? At one point, it was about 700? You had good 33% quarter-over-quarter CPG growth. But, it sounds like that mainly coming through throughput in your existing stores. But, where are we as far as an inflection point in -- production into actually getting more distribution into a higher number of stores? What’s that level at, if you have a number?
Ben Kovler
The way we look at it really is how penetrated by states. So when we’re 100% penetrated in a state, it’s impossible to grow the doors, and we’re 98%. So, it’s not like there’s a lot of opportunity out there for new doors in many of the states that dominate our portfolio, whether it’s Illinois, Pennsylvania, Maryland, et cetera. So, that’s the best measure I can give you and tell, those become more stores and we plan to continue. Illinois gets 75 new stores out. We’re trying to have products in the doors there, new stores open, it’s important for us to have products on the shelf for those consumers.
Operator
Your next question comes from the line of Andrew Semple from Echelon Partners.
Andrew Semple
So, my first question is just on the balance sheet. It appears to be in great shape. When you look at debt of about $100 million, and you compare that to about $50 million of EBITDA being generated this quarter and that figure is obviously growing quite quickly. It would appear that there is capacity to add leverage. What’s your thoughts on potentially looking at debt financing to accelerate capital expansion programs, or else accelerate your M&A pipeline? Where you see the accretive opportunities? And if you had any comments on whether there’s anything holding you back from pursuing debt financing?
Ben Kovler
I think, we mentioned how accretive it is and what happens with the cost of capital. As you know and I think everybody knows, the depths of capital markets in U.S. cannabis is not deep. We’ve been forging new ground for 2.5 years publicly and five, six years privately. So, somebody would like to refinance our debt at 6%, we think our interest cash costs to stay the same as we borrowed $200 million. And we can put that money to work for shareholders and create huge amounts of equity value, and we’re ready to go.
So, we’re also very careful where partners are, the methodical approach, we’re evaluating everything on the table. And I think that top two, kind of where the best places are, like this for shareholder accretion, non-dilution. And it’s not that we need to raise equity capital, I just would kind of emphasize that we don’t need to raise the capital. There are attractive ways, and we’re measuring that all the time, being prudent stewards of that capital. And as cost of debt goes down, our refi opportunity becomes interesting.
Andrew Semple
Just my next question and speaking about putting shareholder money to work. We’re nearing the end of 2020. Just wondering, if you would perhaps clarify what’s on the agenda for 2021 in terms of capital projects and what your overall capital budget for next year may be?
Ben Kovler
Look, no surprise, I get this one. No high level on CapEx. We spent $100 million in 2019, we spent a little over $90 million so far this year. And there’s no reason to slowdown. I would look for us going bigger in 2021. And no surprise on the list of where that capital is going. I’ve rattled it all off and we have great opportunities and we’re excited about what’s going to happen.
Operator
Your next question comes from the line of Glenn Mattson from Ladenburg.
Glenn Mattson
Building on that last question about capital. This quarter, a lot of capacity came on line all at once and really created this surge in revenue and stuff. Do you imagine more uniform or should we expect kind of stair step increases in capacity next year?
Anthony Georgiadis
It really depends. So, Anthony here. The retail is easy, that’s more kind of linear, just given kind of a -- just given the spend there for sure, and then, also where it’s very lumpy. Now, as we kind of build out more facilities, we optimize our build out even more efficiently. And so, I’d say, the size of our best kind of get bigger, because our competency gets bigger. I don’t think that’ll change much on a go forward basis.
Glenn Mattson
One more quick one. Hopefully by spring, this isn’t an issue anymore, given the various vaccines that are out there, everything, but there appears to be a significant increase in COVID cases out there. You’ve been through this once before, the industry and you guys have been very well through it. But what -- can you make any plans or contingencies or how do you prepare the business for what could -- or any potential disruptions display are related to COVID?
Ben Kovler
For sure. Expect the unexpected, keep the team ready for adaptability, and, invest in the team. So [indiscernible] procedures, SOP adjusting, PPE, split shifts, flexibility, casting, temp checks, all the standard stuff. That was new before when we invented it as did everybody across the country and all over is now in the playbook part of the SOP. Unfortunately, we got to kind of ramp a few things up in different levels on different facilities. But, that’s where we’re at. We want to invest in the team to keep it safe. But the plans don’t stop. And the consumer wants the product and that motivates us. So, we got to be safe. We got to watch what’s going on in the building, so we continue to operate.
Operator
Your next question comes from a line of Russell Stanley from Beacon Securities.
Russell Stanley
I guess the first one with respect to Illinois and Pennsylvania and understanding your comments around water in the desert. But just wondering, given the supply expansion you brought on line and your peers having -- some of your peers having initiated the same? Have you seen any evidence of supply shortages or tightness, easing at all? Where’s the race between demand and supply, or where does that look now relative to where it was three to six months ago?
Ben Kovler
October in Illinois is way better than January without a doubt. There is flower, many operators have come online, they had $100 million versus whatever was out of the gate, and 25 in December. PA has pockets of sizes. High quality flower remains in demand. So, there’s ebbs and flows. Cost that comes online effectively doesn’t go back. I’ve said before the stair step function. So, once the supply comes on, there’s more to go, there’s more to go, there’s more to go, but it’s better now than it’s been in any of these markets and each year continues to get better. The thing is, the consumer base grows brand loyalty grows. So, it continues, but it’s not a dire situation in Illinois the way it might have been in the beginning, but there’s still massive unmet demand.
Russell Stanley
Excellent. And just as my follow-up. I wanted to clarify I think something you said earlier with respect to Nevada, Massachusetts and the depths we saw in those markets. Have you fully returned to pre-COVID shutdown levels in both of those markets? I know you’ve mentioned a lot of recovery but just wondering if you’ve pressed above water, if there is still a little bit more work to be done there?
Ben Kovler
Yes, quickly. As a state, one of those are both pre-COVID levels, pockets of signs, assigning opportunities within each what’s happening, but as a state they are above and growing.
Operator
Your next question comes from the line of Howard Penney with Hedgeye.
Howard Penney
Thank you so much for the question. As institutional investors continue to come into the space and GTI looks to attract those institutional investors, have you contemplated giving long-term targets to growth in revenues, EBITDA, profitability, whatever you think might be deemed important to contextualize your growth relative to the industry?
Ben Kovler
If I thought, we thought, you thought that that would mean that things would change in the capital markets? Sure. But that’s a non-factor. It’s not that hard for the underwriting to happen here. It’s not a portfolio manager gating item here. It’s a compliance officer gating item. So, the investment case is there. This is very, very simple to see massive growth, getting anywhere what’s happening in our profitability, cash flow and all the other kinds of fun things, not about your targets, because it’s 20% compound annual growth for industry that’s a little bit bigger, and businesses growing over 100% us included and others. That’s a massive opportunity. And whether your values are -- growth, you can find pockets of amazing opportunity here. We’re seeing that. But, I don’t think targets would add to the bit.
Operator
And there are no further questions at this time. Ben, I turn the call back over to you for some closing remarks.
Ben Kovler
Sure. Thanks, everybody. I know, we got a little long. We’re excited about what’s happening here, for everybody to see. Business is in a good spot. There’s not a need for capital, but there is a great use for capital. We’re on that path to over $1 billion in sales. And as the world wakes up to the U.S. cannabis opportunity, we’re excited, we feel the privilege of this. Happy Veterans Day to everybody, safe holiday season. We’ll talk to you in March. Thanks, everybody.
Operator
Ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect.
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