Thank you. Good morning, and thank you for joining us. During today's call, Kim Rivers, Chief Executive Officer, and Jan Reese, Chief Financial Officer, will deliver prepared remarks on the financial performance and outlook for Trulieve. Following the prepared remarks, we will open the call to questions. This morning, we reported third quarter 2025 results. A copy of our earnings press release and PowerPoint presentation may be found on the investor relations section of our website, www.trulieve.com. An archived version of today's conference call will be available on our website later today.
As a reminder, statements made during this call that are not historical fact constitute forward-looking statements, and these statements are subject to risks, uncertainties, and other factors that could cause our actual results to differ materially from our historical results or from our forecast, including the risks and uncertainties described in the company's filings with the Securities and Exchange Commission, including item 1A, risk factors of the company's most recent annual report on Form 10-K, as well as our periodic quarterly filings. Although the company may voluntarily do so from time to time, it undertakes no commitment to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. During the call, management will also discuss certain financial measures that are not calculated in accordance with the United States Generally Accepted Accounting Principles, or GAAP.
We generally refer to these as non-GAAP financial measures. These measures should not be considered in isolation or as a substitute for Trulieve's financial results prepared in accordance with GAAP. A reconciliation of these non-GAAP measures to the most directly comparable GAAP measures is available in our earnings press release that is an exhibit to our current report on Form 8-K that we furnish to the SEC today and can be found in the investor relations section of our website. Lastly, at times during our prepared remarks or responses to your questions, we may offer metrics to provide greater insight into the dynamics of our business or our financial results. Please be advised that we may or may not continue to provide these additional details in the future. I'll now turn the call over to our CEO, Kim Rivers.
Thank you, Christine. Good morning, everyone, and thank you for joining us today. First, I'd like to extend a warm welcome to Jan Reese, our new Chief Financial Officer. Jan brings a wealth of leadership experience and has already made impactful contributions since joining the team. We're thrilled to have him on board. Turning to the third quarter, we are pleased to report results that highlight the continued strength of our core business. Despite seasonal pressure in the quarter, the team delivered robust margins and strong cash generation while also expanding our customer base. As we prepare for the busy holiday season, we remain encouraged by the momentum behind meaningful cannabis reform. Trulieve continues to lead the industry forward, pushing for impactful change while reducing the stigma surrounding cannabis. Moving to our results. Third quarter revenue of $288 million was in line with guidance and typical seasonal trends.
Industry-leading gross margin at 59% reflects pricing compression partly offset by operational efficiencies. Adjusted SG&A expense declined by $9 million compared to last year, demonstrating the team's commitment to reducing expenses in our core business. Adjusted EBITDA of $103 million improved by 7% versus last year to 36% margin, underscoring tight expense control. Operating Cash Flow of $77 million contributed to cash of $458 million at quarter-end. Yesterday, we announced the planned redemption in December of our notes due in October 2026. Depending on terms, we may issue new notes for up to $150 million. During the third quarter, retail traffic and units sold increased by 6% and 7% year- over- year, highlighting strong demand for cannabis. Consumers continue to lean in towards value and mid-tier products, reflective of general economic conditions. Wholesale revenue grew 16% compared to last year, highlighting continued execution.
Outperformance in wholesale was driven by strength in Maryland, Ohio, and Pennsylvania. We are expanding our wholesale business as conditions permit, with careful monitoring of the credit quality of customers and industry development. In our core markets October traffic has improved compared to September, in line with historical seasonal patterns. We are continuing to monitor consumer behavior closely for any changes in preferences and spending. As we approach year-end, our team remains focused on four key areas: reform, customers, distribution, and branded products. I'd like to start by discussing federal and state cannabis reform, given the importance for our industry. We remain optimistic that the Trump administration will address cannabis reform by rescheduling marijuana to Schedule III. This important milestone would acknowledge the medical value of cannabis and open the door for additional research.
Millions of Americans rely on medical cannabis for relief, a fact that contradicts the current Schedule I classification. Rescheduling would not legalize Cannabis, but it would remove the punitive tax burden on state legal operators, enabling greater conversion from the illicit market. We believe rescheduling represents the first major domino in federal reform. Additional steps are needed to address challenges with banking and the growing divide between federal and state laws. Safer Banking enjoys widespread bipartisan support as elected officials from both parties recognize the need to remove excess cash from dispensaries to ensure safety for workers and discourage criminal activity such as money laundering. In our home state of Florida, Trulieve continues to support the Smart & Safe Florida campaign for adult use legalization. The 2026 ballot language includes revisions to address concerns raised during the 2024 campaign, which narrowly missed the 60% threshold required for passage.
The new ballot language prohibits products and packaging that could be attractive to children, prohibits smoking in public, directs issuance of new non-vertical licenses, and expressly clears the way for the state legislative body to allow home-grown marijuana. Signature-gathering efforts are ongoing, and the campaign expects to reach the required number of validated signatures prior to the February 1 deadline. As of November 1, more than 1.1 million raw signatures have been submitted, with over 675,000 signatures validated. We expect Florida Supreme Court review of the ballot language and summary will be concluded as required by April 1 of next year. To date, Trulieve has been the primary financial contributor to this effort, leading the charge for change in Florida.
While we firmly believe in the potential for Florida to serve as a model for successful state cannabis programs, we are preserving optionality in deciding whether to contribute meaningful financing to the 2026 campaign. Trulieve's ongoing support of the campaign will be determined based upon data and the political landscape heading into the 2026 election. In Pennsylvania, we remain optimistic that a compromise can eventually be reached to enact adult use legalization. We believe state legislators recognize the potential for adult use to satisfy constituent demand for cannabis while generating revenue for the state. Several bills have been filed this year, and many constructive sessions and hearings have been conducted. If adult use is launched in Pennsylvania, Trulieve is well-positioned given our established retail footprint, strong brands in retail and wholesale, and scaled production capabilities.
With adult use programs already launched in five of six neighboring states, we expect Pennsylvania will enact adult use in the near term. In addition to reform efforts, we are driving operational improvements in three key areas: customers, distribution, and branded products. Since inception, Trulieve has grown with customers at the forefront of everything we do. By providing a normalized retail environment alongside superior service, we strive to deliver exceptional customer experiences throughout the customer journey. Personalized customer messaging and engagement continues to evolve as we add new capabilities to our customer data platform and analytical tools. During the third quarter, we implemented new product recommendation schemas, including prompts for suggestions and repurchases. Similarly, we added enhanced customer segmentation features to allow predictive modeling for shopping patterns, frequency, and anticipated order dates. These tools allow identification of customers and personalized timing of recommendations to drive re-engagement.
Our Generous Rewards program continues to grow, reaching 820,000 members at the end of September. We continue to see greater retention and monthly spend among members, who spend on average 2.5 times more than non-members. Rewards members completed 77% of third-quarter transactions. We recently introduced new monthly reward statements that highlight key milestones achieved to enhance program engagement and visibility. Building upon the success of our rewards program, today we launched a new mobile app available for download in the Apple App Store. The Trulieve mobile app is uniquely designed to deliver a best-in-class experience that centralizes shopping, deals, gamification, and rewards. The app gives customers an effortless and engaging way to browse and reserve products, push notifications to learn about special promotions, or when orders are ready for pickup, provides a more seamless experience compared to email and text messaging.
We are excited to bring these new features to our Apple customers in Florida, and we look forward to launching the app in additional markets and on Android devices in 2026. Personalized messaging, loyalty rewards, and seamless digital experiences all contribute to customer retention. Third-quarter retention improved by 1% sequentially to 58% company-wide, with 76% retention in medical-only markets. While customer retention metrics are strong, we're amplifying the Trulieve brand through local engagement to attract new customers. Across our market, we are recalibrating community events to focus on four key areas: helping patients, serving veterans, assisting seniors, and promoting restorative justice. Through community activities, partnerships, and charitable work, we are directly addressing the needs of these stakeholder groups. In October, we raised awareness and funding to fight breast cancer through register roundups, specialty products, and charitable walks.
This month, we are supporting veteran organizations to serve those who have sacrificed so much for our country. This weekend, Trulieve is sponsoring a weekend retreat for Operation Resilience, led by the Independence Fund, which is an event designed to help veterans who are at high risk for suicide. We are proud to give back to these worthy causes and partner with groups that support our mission to expand access to cannabis. Alongside engagement efforts, we are investing in retail and wholesale distribution to reach new customers and drive sustainable growth. We met our 2025 retail target by opening 10 new stores in Arizona, Florida, and Ohio, expanding our network to 232 stores. In September, we relocated one Arizona store from Scottsdale to Bisbee, broadening our reach by entering an underserved area. We are on track to refresh or remodel up to 45 stores this year.
In wholesale, Maryland and Pennsylvania continue to outperform. In Ohio, our production partner continues to ramp sales of branded products, including Modern Flower and Roll One. With over 4 million sq ft of production capacity, our scaled platform provides a meaningful competitive advantage, including strong gross margins and the flexibility to adapt to evolving market conditions. Our production team continues to identify operational efficiencies, driving costs lower while delivering great products. Consistent product quality differentiates our brands in an increasingly competitive landscape. During the third quarter, we sold over 12.5 million branded product units. In-house brands Modern Flower and Roll One continue to resonate with customers, representing almost half of the branded products sold. In Florida, we recently launched a new Roll One clutch all-in-one vape. This new compact disposable vape cart sold out in less than two weeks.
We plan to launch additional Modern Flower and Roll One SKUs, including new all-in-one vapes in several markets. Turning now to the beverage category. Last February, we launched a new line of Farm Bill-compliant THC and CBD cocktail alternative beverages called Onward. Throughout the year, we have added new flavors and expanded distribution. In July, we added a line extension of CBD and THC energy drinks called Upward. In September, we launched new 10mg flavors for Onward and Upward. Onward Berry Smash, Cosmopolitan, Lemon Drop Martini, and Paloma, and Upward Half and Half Iced Tea and Lemonade flavors are performing well, enjoying positive customer feedback. These Farm Bill-compliant THC beverages provide an opportunity to reach new customers with approachable products in familiar outlets.
Onward and Upward beverages are available online and in more than 440 stores, including ABC Fine Wine and Spirits and Total Wine in Florida, and specialty grocers and convenience stores in Florida and Illinois. We recently launched distribution through Anheuser-Busch in Florida and Romano Beverages in Illinois, and we are actively working to expand distribution with new and existing partners. Visit drinkonwards.com to find a retail location near you or order online. Overall, we are making real progress across our focus areas: reform, customers, distribution, and branded products. With continued momentum and significant flexibility in our core business, we are set to expand our leadership position while pushing for cannabis reform. With that, I'd like to turn the call over to our CFO, Jan Reese. Please go ahead.
Good morning, and thank you, Kim.
I'm thrilled to join Trulieve, and I'm focused on driving profitable growth at a leading company and industry pioneer. Third-quarter revenue was $288 million, up 1% year-over-year, driven by new store openings, drug use in Ohio, and wholesale growth, partially offset by pricing compression and wallet pressure. Gross profit was $170 million, or 59% margin. Margin performance driven by increased pricing compression, loyalty point reduction, and product mix. Partially offset by lower production costs, we continue to expect quarterly fluctuation based on product mix, market mix, inventory sales through promotional activity, and idle capacity costs. SG&A expenses were $99 million, or 34% of revenue, a significant improvement driven by reduced operating expenses and lower campaign support. Adjusted SG&A declined to 30% of revenue, 34% last year, due to ongoing operational efficiencies. Net loss in Q3 was $27 million, or $0.14 per share, versus $0.33 last year.
Excluding non-recurring items, net loss per share would have been $0.07. Adjusted EBITDA was $103 million, up 7% year-over-year, or 36% margin, reflecting expense leverage in our core business. Turning now to our tax strategy. As a reminder, we have filed amended returns starting 2019 and continue through today, challenging the applicability of 280E to our business. To date, we have received refunds totaling over $114 million. While we are confident in our position and strategy, final resolution may take years. We continue to accrue an uncertain tax position while realizing lower tax payments. Important to note, rescheduling to Schedule III would have removed 280E burden. Q3 and year-to-date results would show positive net income under those conditions. Moving now to the balance sheet and cash flow. We ended Q3 with $458 million in cash and $478 million in debt.
Cash flow from operations totaled $77 million, with capital expenditure of $12 million, and free cash flow of $64 million. Turning now to our outlook, we expect low single-digit sequential revenue growth in Q4. We expect full-year gross margin will be comparable to 2024. We anticipate at least $250 million in cash from operations for the full year. CapEx of $45 million, up to prior target of $40 million, reflects investments to relocate stores and minor cultivation upgrades in Ohio and Pennsylvania. We remain focused on finishing the year strong, delivering results aligned to our strategic priorities. With that, I will turn the call back over to Kim.
Thanks, Jan. Cannabis has gained widespread support across the U.S., with public opinion shifting significantly over time as more Americans recognize its therapeutic benefits. Today, nearly 90% of Americans favor some form of legalization for medical or recreational cannabis.
Currently, 40 states have established programs for medical cannabis, providing millions of patients access to relief from chronic pain, anxiety, sleep disorders, epilepsy, and symptoms associated with serious illnesses, including cancer, multiple sclerosis, and PTSD. While federal and, in some cases, state policy lags public opinion, momentum for reform is gaining traction. The Trump administration can deliver on campaign promises to address cannabis reform by rescheduling cannabis to Schedule III. In Florida, we remain supportive of signature-gathering efforts for the Smart & Safe Florida ballot initiative to legalize adult use. With over 23 million residents and 143 million tourist visits per year, we believe Florida could be the strongest market in the U.S., striking an appropriate balance between individual freedom and responsible consumption. In Pennsylvania, we are hopeful that bipartisan adult use legislation can pass in the coming years.
We believe both Florida and Pennsylvania will eventually enact adult use programs. As an industry leader, we remain firmly committed to pushing for meaningful reform and expanded access to cannabis. Given the strength of our core business and flexibility across our platform, Trulieve is poised and ready to define the future of cannabis. Thank you for joining us today, and as I always say, onward.
At this time, Kim Rivers and Jan Reese will be available to answer any questions. Operator, please open up the call for questions.
Thank you. We will now begin the question-and-answer session. To ask a question, you may press Star, then 1 on your touchscreen phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press Star, then 2.
As a reminder, please limit yourself to one question and one follow-up. The first question comes from Luke Hannan from Canaccord Genuity. Please go ahead.
Thanks. Good morning, everyone. Kim, you touched on in your prepared remarks there you continue to generate an industry-leading EBITDA margin. There's a couple of things underscoring that, obviously, a very efficient cultivation footprint. But then also, as you pointed out, you are a little bit more efficient when it came to adjusted SG&A as well. If we just think about those two components, I'm not necessarily asking for guidance here, but when it just comes to opportunities, I suppose, to potentially improve on that margin, what do you see as sort of the lower-hanging fruits going forward?
Yeah. I'm very, very proud of the team for continuing to be laser-focused on.
Bringing as much of that top line down all the way through the P&L. I think that we stand out among our peer set for our consistency as it relates to being able to do that efficiently and effectively, kind of regardless of what's happening at the macro level. I would tell you that really, in terms of what we're seeing coming into Q4, it's going to be somewhat dependent on what happens with the customer, right? Certainly, obviously, the holiday season is something that we've got our eye on, which is typical this time of year. Given, I would say, we have a little bit of opaqueness, candidly, as it relates to the consumer. At the end of Q3, coming into Q4, we saw some trading down and some price compression.
I would tell you, to answer your question, the fact that we have the ability in our platform to meet the consumer where they're at and be strategic in how we do so, I am confident in our ability to continue to deliver a strong margin. That has to be, again, coupled with the reality, again, of the consumer profile. It will be impacted by product mix and promotion, again, also keeping in mind that we have an amazing and flexible and modular production footprint that we're able to flex, again, to meet the consumer where they're at. I would say that, again, in line with what we've said all year, we expect that full year to be consistent with, again, last year as it relates to margin. I think given the.
Sort of differences in this year's consumer profile, I think that's pretty—I'm very, very happy with that.
That's great. Thanks for that. For my follow-up here, you touched on the launch of the mobile app and then also some of the benefits associated with that. It sounds like more customer engagement is chief among them. You also place, Trulieve places emphasis on data and analytics and being able to use that effectively when it comes to the entire sort of go-to-market strategy. I guess I'm curious, does the app make you any more efficient when it comes to being able to gather insights from that data, or does it give you a richer set of data points to be able to sift through as well?
Yeah. Certainly, we are excited about the ability to connect in a more personal way to our customers.
I would tell you that the ability to, again, have more of an interactive platform with our customers will be important as we continue to develop our strategies around consumer personalization. I mentioned that even on our existing web platform, we're now able to more suggestive sell based on someone's past buying patterns, as well as to be more predictive in terms of when he or she may be coming back into the store based again on past behavior, which is very exciting. Being able to bring those features into an app landscape that, again, is a bit more real-time, and then to be able to also seamlessly integrate our loyalty platform into an app shopping platform is, I would say, the best of both worlds. We think that it's critical as we think about getting away from the confines because we are.
In cannabis, we're restricted in terms of what we can do via text messaging. Given the fact that we're all mobile these days, the ability to have push notifications to remind folks when they have points available, to remind folks when there's certain things happening within our stores that that particular shopper may be interested in, I just think is going to be very dynamic as we move forward into this next stage of our connectivity journey here.
That's great. Appreciate the commentary. All the best.
Thanks.
The next question comes from Russell Stanley from Beacon Securities.
Please go ahead.
Good morning, and thank you for taking my questions. First, just around retail, you've refreshed and remodeled a significant number of sites this year. I don't know if you have this handy, but can you provide any data points regarding the impact of those efforts on.
Traffic or basket size, what you've seen relative to expectations, and any lessons that you've learned through the process that will inform your refresh remodel plans next year?
Sure. I, for one, think it's very important for companies to keep an eye on the aesthetics of their stores. I think there's lots of lessons that we can go over on companies that did not do that and where they ended up with their customer base. That's going to be, I would say, something that you should expect from us on a pretty regular basis. We will be analyzing, and it's a constant review of stores across the platform, especially with our business, since many stores, as everyone will recall, were initiated in a different regulatory landscape where there were different restrictions.
In Florida, for example, at the very beginning, we had to have—there were very strict rules about where we could be located. The types of lobbies we had to have, the security features between showroom and lobby, etc. Opening up those floor plans as those regulations have changed to make a more welcoming environment for customers and improving customer flow. Vault size, how product moves from back-of-house to front-of-house, etc., is certainly important from an efficiency standpoint and then, of course, from a customer experience standpoint as well. We are going to always be looking for those types of opportunities across the platform. I think it is just good hygiene to make sure that you have got welcoming, fresh, bright environments for our customers that are adapting to what the expectations of a premier retail experience would be.
Thanks for that.
Maybe just on a balance sheet, given the planned redemption, and you talked about another debt issue for up to $150 million, I think. I guess, can you talk—it's a relatively modest amount given what you're redeeming—but can you talk about what you're seeing in terms of appetite out there, especially given the recent seemingly short-lived blip in credit spreads? Just wondering what kind of environment you're seeing from would-be lenders and the appetite that you're seeing relative to three, six months ago. Thank you.
Sure. We haven't gone to market yet, Russ. I think that color on that should be probably reserved for future commentary. I can tell you that, again, we have flexibility in our ability to, whether to complete or not complete, depending on terms and depending on appetite. Again, I think that our balance sheet is strong. Our cash generation is strong.
Our core business is very solid. I think our consistency in our core business is very solid in terms of our ability to generate cash and bring that, again, like we talked about before, bring that revenue down to bottom-line profitability. I would say stay tuned, but I feel pretty confident that we'll have optionality there. Then we'll be in a decision, of course, with the board to make a determination as to how much or if we decide to move forward with the raise. Again, we're generating cash every quarter, and feel good about where we sit.
That's great. Thanks for the color. I'll get back in the queue.
Thanks.
The next question comes from Bill Kirk from MKM Partners. Please go ahead.
Good morning, everybody. In 2024, the Florida initiative didn't seem to get the kind of deserved monetary support from other MSOs.
Do you expect those other MSOs to better contribute, either monetarily or in other ways, this time around?
Yeah. I would say that certainly, I would love for you guys to ask that question on their earnings call. I have been in talks with the other CEOs, and I think that we're going to have some pretty robust conversations after Supreme Court review, just like we said in our prepared remarks, once we have additional data and visibility into the political landscape, polling, right, all of the things. I do think that folks are certainly at the table in a different way than they were the last cycle. I also think that some of it's going to be dependent on where everyone sits as it relates to available cash. Of course, 280E has a big contributor there. We shall see.
I would say that I think that the MSOs, at least, are working together as it relates to reform. I think that that is a positive. Definitely, we could see that also come over to the Florida effort.
Awesome. Are you seeing any increased momentum for regulating intoxicating hemp differently or possible closing of what people call the Farm Bill loophole? I guess if we step back, how would you like to see intoxicating hemp treated by the federal government and states?
Yeah. I mean, certainly, as you know, it's a checkerboard out there as it relates to the states and how they're treating intoxicating hemp. We have a little bit of a front row seat to it, not only, of course, from the regulated cannabis side of the business, but also from the beverage side of the business. In Florida, there were.
New rules that were issued mid-year this year, and a big crackdown across the state. Beverage products in Total Wine and ABCs were taken off shelves because of labeling challenges among some other regulatory concerns. Our branded beverage products Onward and Upward were actually able to stay on shelf. We are and were compliant, which I think is actually becoming a little bit of a differentiator for us because we're very used to, right, having to have all of our testing back up and making sure that consumers can scan back to a finished product test and that the labeling is accurate and all of those things. Certainly, we have seen a step up in enforcement, I would say, across markets. I think that's in line with sort of an increase in attention that it's getting, again, at both state and at the federal level. I think.
I hear what you hear as it relates to the federal. Differences in terms of potential. Pathways for regulating intoxicating hemp. And I think. We'll see where that. Lands. It does seem to me that, similar to the states, the intensity of the conversation is increasing both at the state level and at the federal level.
Thank you, Kim.
The next question comes from Brenna Cunnington from ATB Capital Markets. Please go ahead.
Hey, it's Brenna for Puerto Rico. Thanks for taking our questions and congrats on the results this quarter. Just continuing on the theme of the Florida ballot measure, we all know that Florida legalization would be a game changer, but the 60% approval threshold does seem to be a bit of an issue since we saw that the majority of Floridians do actually want to legalize.
So just trying to understand here, theoretically speaking, what about this time could be different? Do you think it's more of a factor of raising more voter awareness, or was there specific verbiage that needed to be changed last time to address potential voter issues or perhaps something else?
Sure. I think there's a couple of main differences. Maybe actually three. One, I think that there will be a big component of this that centers around, just again, the political landscape. We're in a gubernatorial race this time as opposed to a presidential race. The dynamics in Florida, in particular, shift sometimes dramatically in terms of profile of voters that turn out between those two different types of races. I think that's an important thing that we'll certainly be analyzing and watching. Two, the ballot initiative itself had some.
Changes, as mentioned in the prepared remarks, that were specifically responsive to polling and feedback from the last campaign. Particularly, voters indicated that they wanted more certainty around what the legalization program would look like in the state of Florida, specifically around confirmation that these products would not be attractive to children, that there is, of course, age gated for adults over the age of 21, that there would be no smoking allowable in public, and that there would be additional licenses that would be issued for additional competition in the marketplace, as well as a pathway for homegrow. And so really, by addressing those specific concerns, it does, and early polling indicates that that does, change the chances on a just plain ballot read perspective. I would say the third thing is really about just the landscape. There's been obviously quite the.
News cycle around what happened in the last campaign as it relates to some public dollars being spent and taxpayer money, etc. The legislature passed a package of laws last legislative session that clarifies and candidly locks down that activity such that we believe that there will not be that same level of opposition, at least from those particular paths in this next election, which we think is very important. At the end of the day, right, I think that just a fair and straightforward election process could definitely be a game changer as well. I do think that at least early indicators are that it's going to be a more positive backdrop. Again, we want to make sure that that's confirmed by, again, the data and the political backdrop before we decide to move forward.
Understood. Thank you.
Our second question is just regarding the hemp beverages, which we do know is a small category. We were just loving the additional color you could add on how sales are ramping in Florida and Illinois, and also specifically how online sales are doing.
Yeah. It is ramping, candidly, ahead of what our initial expectations were. I think as we have developed our partnerships with both Total Wine and ABC, they have grown pretty dramatically since inception. In addition, our ability to successfully land additional distribution partnerships has also been a positive, and there will be more announcements from us on that in the near term. We are being thoughtful in terms of how we.
Ramp simply because we want to make sure—I mean, we believe very strongly, truly, even this goes back, it's in our DNA since inception—that it's important to launch and penetrate and make sure that you're understanding and getting as much data as possible about the consumer and making pivots early. To get it right so that we're able to, again, really have lasting brand equity with those customers. I could tell you that candidly, we could be ramping faster, but we want to make sure, again, that we've got the opportunity to really have a presence in those stores and in those markets by doing things such as tasting events, trainings with the employees in those stores to make sure that they're actually educated on.
THC and how our beverages are different than all the other brands that may be on shelf, why they should feel comfortable recommending our beverages to consumers. How to read a label as it relates to our beverages, etc. We are making sure that we do this the right way, which I think will pay dividends for the long term.
Perfect. Thank you, Kim and team. I will jump back into Q.
All right. Thanks.
As a reminder, if you have a question, please press star one. The next question comes from Aaron Gray from Alliance Global Partners. Please go ahead.
Hi, good morning. Thanks for the questions. Congrats on the quarter. First question for me, just on some of the consumer engagement initiatives, loyalty program, now mobile app.
Obviously, it would seem like you're most able to leverage that in states where you might have more of an existing moat, like Florida as well as Arizona. I am also curious to know how you might be looking to leverage that and build a larger presence in markets where smaller today and maybe you rely more on wholesale. Maybe just some more color in terms of how you're able to leverage some of these products and learnings to build out a market share where you're smaller today. Thank you.
Sure. Again, our loyalty program has had incredible success across all of the markets in which it's launched. I would not say, of course, in our bigger markets like Florida, you're going to have more of an adoption rate. I will also tell you that some of our other markets.
Like Arizona, for example, it's been a huge tool for us because—and really the big learning there is, to your point, Aaron, as markets go adult use, right, we don't necessarily have as much required data on a particular patient. When you think about it in a market like Florida or Pennsylvania, we have a lot of information because they have to have a patient identification card, and we have to allocate and make sure that we've got the tracking of the product that's dispensed across their recommendation from their physician. There's a lot more already known components of those purchases and of those customers. You contrast that with an adult use market where someone is just—we have to age gate, of course, and take their license information, confirm that they are an adult, age 21 and up.
Aside from that, you can really be more anonymous in those markets. The loyalty program has been phenomenal in terms of having those customers actually voluntarily engage with us in a more regular way so that we can, again, begin to get to know them and have that truly reciprocal relationship where we're understanding their buying patterns. We're able to offer them additional product suggestions or deals that they may have not known about, right, because there's no reason for—previously, there would have been no necessary reason for them to connect with us in that way. We think the app is going to take that to a completely different level. Right, you'd have the ability to pre-order online, track your order.
It'll push you a notification just like Starbucks or other places where we all use apps across our normal retail experience to say, "Hey, your order is ready for pickup." In addition, we can talk about, as it relates to our wholesale business, "Hey, we just launched this new all-in-one. Find it near you," right "We saw that you purchased an all-in-one vape previously. It's available a mile from your house at this particular location," right? There are all kinds of capabilities that are going to be available through the app. Initially, we are definitely using it to reinforce our in-store branded products through branded retail being our core business driver. Aaron, to your point, in a state like Maryland, for example, where we only have three stores, but we have a bigger wholesale business, being able to leverage things like an app to offer.
Gamification, etc., of products that are available and our in-house brand products that are available throughout the state certainly is something that we'll be looking forward to as we further develop it.
Really helpful call there, Kim. Appreciate that. Second question for me, just on Florida in-store saturations and opportunities, any color you could provide in terms of how you're feeling about the Florida market today, additional opportunities for you to open up stores, both for the level of Trulieve and more broadly where you're seeing that, and then how that might differ for the different store model types that I know Trulieve has and whether or not that would be dependent on adult use becoming legalized in the state. Thank you.
Sure. I would tell you that in Florida, it's interesting because it's a little bit of a mixed bag right now.
As I mentioned, we're certainly seeing across the entire system, not just in Florida, but we're certainly seeing some price compression and some wallet pressure and some trade-down activity. Florida is a big state, and I would tell you that one of the things we've been focused on is really ensuring that we can manage down to that specific store level and that we understand because not every store is positioned the same, right? We have some stores that have very little competition around them. We have other stores that are in highly competitive environments. We have some stores that cater more towards maybe a more higher-end kind of store crowd, other stores that are more value-oriented crowds. Being able to strategically differentiate and ensure that we have the right product mix, we have the right promotional cadence, we have the right.
Messaging techniques on a store-by-store basis is something that we have been. We're really excited about and that we have been really focusing on. Thankfully, we have the. We've made the correct investment through our customer data platform and other tools that we are able to segment more specifically and effectively down to that store level. We look at it in Florida as really a store-by-store landscape. You'll be seeing us launch different strategic initiatives to further lean into that. I would say that as it relates to new stores, I'll answer that as it depends, right? I think what we are seeing in Florida is we're seeing some of our competitors actually close stores and shutter stores, which we believe is a tremendous opportunity for us to absorb those customers and let them rediscover Trulieve and hopefully bring them into our fold.
It also gives us an opportunity to reevaluate the landscape and see if there are areas where we feel like we need to reposition or even potentially open an additional location. I would just say stay tuned on that. That analysis is ongoing. Absolutely, it will depend on the specifics of the location, to your point, as it relates to whether or not we would consider opening a full service, a flagship, or an express type model, as well as, of course, if adult use is on the table. Obviously, that does change the narrative a bit as it relates to where store attractiveness, the attractiveness of certain stores may change depending on that.
Okay. Great. That's really helpful, Dietrich. I appreciate that, Kim. I'll go ahead and jump back into the Q.
Thanks, Aaron.
The next question comes from Andrew Semple from Echelon Capital Markets.
Please go ahead.
Hi there. Good morning. Thanks for taking my questions here. Start off with a pair of questions on capital expenditures. Just want to hone in on the capital budget of $45 million for the year. I believe you're already at $40 million in the first nine months. Just want to check in on that. Anticipate if you're expecting to see a slowdown in the fourth quarter here on capital spending. Then just secondly on capital budgeting, I'm wondering if you have a capital budget for next year, just kind of directionally how much you would think to spend, maybe whether it's higher or lower or roughly the same as what we're about to see in 2025.
Thank you. Let me take this question, Kim. First off, yes, we do have a very robust capital expenditure process and review process.
We do take opportunities, though, when we do have the opportunity to relocate stores to a more customer-facing program. If you look at the $45 million that we have currently in the forecast, you can divide this into two main buckets. One is relocation store in Arizona, and the other one is the cultivation in Pennsylvania and Ohio. Both investments, long and short term, will yield a much better return. We went forward and made this investment, as we always do with our review process. The good things we will execute and will yield higher returns as we promise ourselves.
Okay. Thanks for that, Jan. Maybe just pivoting to inventory balances. The inventory levels continue to inch higher. Do you have any color or thoughts about your inventory balances, or are you happy where that sits today? Just any thoughts around that would be appreciated.
Yeah.
As we have said consistently, our inventory is going to fluctuate a little bit from quarter to quarter. I think that it was $2 million increased in, $1.8 million in Q3. To us, that was not really anything to cause any sort of alarm. Again, we believe that it is going to fluctuate quarter to quarter. Yes, we are happy with it now. I mean, I think a couple of things just to note that we will, of course, ramp inventory prior to some store openings, which we have had in Ohio. Additionally, as we mentioned in the prepared remarks, we have got in some markets some new products launching, as well as in Ohio, some of our brand portfolio coming through for the first time. Like we said, there is going to be slight swings, but I do not think that.
is really anything out of the ordinary, though, for us as it relates to inventory.
Great. Appreciate the color. Thanks for taking my questions. I'll get back into Q.
This concludes our question and answer session. I would like to turn the call back to Christine Hersey for closing remarks.
Thank you for your time today. We look forward to sharing additional updates during our next earnings call. Thanks, everyone. Have a great day.
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.