On Thursday, cbdMD (AMEX:YCBD) discussed third-quarter financial results during its earnings call. The full transcript is provided below.
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Summary
cbdMD Inc reported a 20% year-over-year increase in net sales to $5.6 million for Q3 2026, driven by a strong performance in the wholesale channel, which grew by 61%.
Despite top-line growth, the company experienced a wider operating loss due to deliberate investments and one-time costs, although adjusted EBITDA loss narrowed compared to the previous year.
Strategic initiatives included the expansion of distribution for Oasis, a new distribution partner in Texas, and the launch of a zero-proof kava beverage to capture opportunities amidst regulatory changes.
The acquisition of Bluebird Botanicals contributed over $500,000 in revenue, with management expecting further revenue and earnings contributions as synergies are realized.
Management expressed cautious optimism about regulatory developments, highlighting potential legislative changes that could impact the industry, and emphasized ongoing cost-reduction efforts targeting $100,000 to $150,000 in monthly savings.
Full Transcript
Tiffany, Operator
Good afternoon. Welcome to cbdMD Inc.'s June 30, 2026 third fiscal quarter 2026 earnings call and update. This afternoon the company issued a press release that provided an overview of its third quarter results, which followed the filing of its quarterly report on Form 10-Q. Today's conference call is being recorded and will be available online along with our earnings press release covering our financial results and non-GAAP presentation at cbdmd.com, in accordance with cbdMD's retention policies.
All participants on this call will be in a listen-only mode. The call will be followed by a question-and-answer session. At this time, I would now like to turn the conference over to Brad Whitford, the company's Chief Accounting Officer. Brad, please go ahead.
Brad Whitford, Chief Accounting Officer
Thank you, Tiffany, and thank you all for joining cbdMD's June 30, 2026 third quarter of fiscal 2026 earnings call and update. On the call today, we also have Ronan Kennedy, our Chief Executive Officer and our Chief Financial Officer. We'd like to remind everyone that various remarks about future expectations, plans, and prospects constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. cbdMD cautions that these forward-looking statements are subject to risks and uncertainties that may cause our actual results to differ materially from those indicated, including risks described in the company's Quarterly Report on Form 10-Q for the third quarter ended June 30, 2026 and our other filings with the SEC, all of which can be reviewed on the company's website at www.cbdmd.com or on the SEC's website at www.sec.gov. Any forward-looking statements made on this conference call speak only as of today's date, Thursday, August 13, 2026, and cbdMD does not intend to update any of these forward-looking statements to reflect events or circumstances that would occur after today's date except as may be required by federal securities laws. With that, I'd like to turn the call over to Ronan.
Ronan Kennedy, Chief Executive Officer and Chief Financial Officer
Thanks, Brad. Good afternoon, everyone, and thank you for joining us. The third quarter of fiscal 2026 was another quarter of top-line growth and one of the most active periods we've had both in our own business and across the regulatory landscape we operate in. Let me start with the headline. Net sales grew 20% year over year to 5.6 million. For the first nine months of fiscal year, the revenue is up 12% to 16.2 million. That growth was led by our wholesale channel, which was up 61% year over year, reflecting continued momentum in Oasis and ongoing execution in our core cbdMD brand, and the first full quarter of contribution from Bluebird Botanicals.
Excluding revenue from Bluebird, our business grew approximately 10% year over year during the third quarter, something we are proud of especially considering the regulatory headwinds. I want to be direct with you about the quarter because transparency matters. We grew top line, but we were not satisfied with our bottom line. Our operating loss was wider than a year ago, and that was largely by design. We made a series of deliberate investments and absorbed some one-time costs I'll walk through, but underneath those items the business is healthier, and importantly our adjusted EBITDA loss actually narrowed year over year.
Brad will take you through the detail. Let me spend a few minutes on parts of our business that are working well. Oasis, our hemp-derived THC brand, continues to accelerate. We recently added distribution in South Carolina and transitioned to a new distribution partner in Texas, a change that more than quadrupled the number of stores where Oasis has access to in the market, and we're already seeing that translate into market growth in the fourth quarter.
Our recently launched Oasis Mixer has been very well received and is contributing to brand growth as well. The fourth quarter is off to a strong start. Depletions from distributors, which is unit sales from our distribution, hit a record in July, up 35% over the third quarter average, and August is on pace to more than double. We continue to monitor shelf space, ordering patterns, and tracking inventory carefully going into the end of the year. Today we are also excited to announce the launch of our zero-proof kava Oasis beverage, and I want to be clear why it matters.
Strategically, as we move closer to the regulatory deadlines, we are seeing real gaps begin to open on the THC beverage shelf, and we believe those gaps represent a meaningful opportunity to capture shelf space with compliant, great-tasting product that retailers and consumers still want. Kava is a natural fit for that opening. Unlike many functional and botanical beverages that promise calm but deliver little, kava produces a real, fast-acting sense of ease and a gentle lift, yet it carries none of the impairment or regulatory complexities that come with THC and other cannabinoids.
That lets us keep our partner shelves productive regardless of how the THC rules ultimately evolve. Kava is one of several botanicals we are building line extensions around specifically to create revenue visibility into 2027 and to help mitigate the regulatory uncertainty. Functional non-alcoholic products that help people relax and unwind are one of the clearest growth vectors we have, and Oasis is increasingly the tip of the spear. Turning to Bluebird, this was Bluebird's first full quarter as part of cbdMD, and it contributed more than a half a million in revenue.
You'll recall the acquisition was an earnings drag last quarter as we absorbed transition and integration costs. This quarter drove additional revenue, and we expect Bluebird to contribute both revenue and earnings going forward as we roll out additional products and capture cost synergies. Just as importantly, Bluebird validates our M&A thesis: a loyal customer base, a brand not defined solely by CBD, meaningful SG&A synergies, and self-GRAS status on its full-spectrum products.
We continue to evaluate additional disciplined acquisitions. We can use our infrastructure, marketing engine, and NYSE American listing to unlock value. Let me address the costs directly because I don't want to gloss over them. During the quarter we incurred legal and due diligence expense pursuing additional M&A opportunities that would further diversify our revenue and reduce regulatory exposure. We continue to invest in new product development, the kava beverage innovation I just described.
We worked through supply chain and state-level compliance issues, including repacking and testing costs, and an increase in inventory reserves as we prepare for pending regulatory changes. And we continue to invest behind our clinical healthcare initiatives, including our GRAS for our broad-spectrum CBD formulations. Those are choices, but we've also taken hard action on costs. Beginning in the fourth fiscal quarter we implemented a cost-reduction program targeting 100,000 to 150,000 in monthly savings through payroll reductions, renegotiation of warehouse leases, renegotiating existing vendor contracts, and we've identified additional supply chain savings which we expect to begin to realize later this quarter. The goal is straightforward: improve EBITDA and contribution margins and make sure we enter the post-regulation world leaner and more flexible than we are today. Let me turn to the regulatory environment, which has been remarkably dynamic. As a reminder, Section 781 of H.R. 5371, signed into law last November, is currently scheduled to take effect this November 12, 2026. It would narrow the federal definition of hemp and impose strict per-container THC limits.
The single most important recent development is the Senate stopgap appropriations proposal that would, through December 11, 2026, temporarily exempt naturally occurring cannabinoids from those revised restrictions. The point that I want to stress is that it's not just about buying time to comply. The greater value is the procedural runway it creates for Congress to put a durable industry-wide framework in place so that the fix is permanent rather than temporary.
The continuing resolution, H.R. 6500, now moves to the House of Representatives for a vote by the end of September, and we are engaged constructively to help advance the lasting solution. And the activity to build a durable framework is growing. There is now a meaningful and growing number of bipartisan bills aimed at repealing, delaying, or replacing Section 781. In July, Representative Barr and Representative Craig introduced the White House–supported Lawful Hemp Protection Act, which would establish a permanent federal framework.
And just this week on August 10th, Representatives Van Dyne and Landsman introduced the bipartisan Beverage Regulatory Parity Act, which would regulate hemp-derived beverages much like alcohol with age restrictions, testing, permits, and a federal excise framework. That bill is directly relevant to OASIS and reflects the kind of sensible regulation we've been advocating for on Capitol Hill. cbdMD believes a ban on full-spectrum hemp-derived delta-9 would be bad for public health.
Demand exists, and as the saying goes, you can't put the toothpaste back in the tube. If the legitimate industry is banned, consumers will be driven to unregulated black-market products, especially in areas where no legal cannabis access exists. We applaud Washington, D.C. leadership focused on finding a sensible way to continue to permit full-spectrum hemp products millions of Americans use on a regular basis. Our view has not changed: as regulatory clarity emerges, it favors operators built for it—well-capitalized, compliance-focused, with strong quality, safety, and clinical standards.
That is the company we've built, and we are actively engaged in Washington to help shape the outcome. At the same time, I'd be remiss not to flag the state-level environment, which remains a genuine headwind. Changing rules across multiple states continue to drive packaging changes, repacking, new testing requirements, and they continue to narrow what we can sell and where. During the quarter, state-level shipping restrictions, label changes, and other rules impacted both wholesale and, more tangibly, our direct-to-consumer revenues.
We're managing through it, but it's a real cost of operating in the category today, and it's part of what makes the federal pathway I've described so important. With that, I'll turn the call back over to Brad.
Brad Whitford, Chief Accounting Officer
Thanks, Ronan. Turning to the financials for the third quarter of fiscal 2026, net sales increased to $5.6 million, representing a 20% increase compared to $4.6 million in the prior-year period. For the first nine months of fiscal 2026, net sales totaled $16.2 million, up 12% compared to $14.5 million in the prior-year period. The increase reflects growth across both our direct-to-consumer and wholesale business. We continue to see particularly strong momentum in wholesale.
Wholesale sales increased approximately $629,000, or 61%, during the quarter and represented approximately 30% of our total sales, compared with 22% in the prior year. For the first nine months, wholesale represented approximately 30% of sales versus 23% last year, reflecting the continued expansion of our distribution business. The Bluebird acquisition also contributed to the growth, generating more than $500,000 of revenue during the quarter. We believe the acquisition continues to provide us with an attractive customer base, a complementary brand, and additional opportunities to leverage our existing infrastructure.
Gross margin was 54.7% for the quarter compared to 61.5% in the prior-year period, and for the first nine months, gross margin was 57.3% compared to 63.5% last year. The decline was primarily attributable to the continued shift towards wholesale, which generally carries lower margins, as well as higher warehouse labor associated with product repacking required by changing state regulations. We also recorded an additional $187,000 increase in inventory reserves during the quarter.
As we prepare for pending regulatory changes, we recognize that improving gross margin is an important component of our path to profitability, and we are continuing to evaluate pricing, product mix, manufacturing, and supply chain opportunities, while also working to improve product quality and documentation and streamline our response to changing regulatory requirements. Operating expenses were approximately $4.2 million for the quarter, an increase of approximately $432,000, or 12%, from the prior-year period.
A significant portion of that increase reflects investments associated with new product development and additional warehouse staffing required to support higher sales and regulatory-related product rework. We also incurred approximately $200,000 of additional professional fees during the quarter associated with the Medicare Initiative, Bluebird valuation work, settlements, other M&A activity, and our reported loss from operations was approximately $1.1 million compared with a loss of approximately $905,000 in the prior-year period.
While the quarter was impacted by these investments and regulatory-related costs, we have already begun implementing actions to reduce our fixed cost structure. In particular, beginning in the fourth quarter, we implemented a cost reduction and right-sizing program targeting approximately $100,000 to $150,000 of monthly savings, or approximately $1.2 to $1.8 million on an annualized basis. These initiatives include payroll reductions, renegotiating our warehouse lease, and renegotiating or exiting certain vendor contracts, as well as identifying additional supply chain savings.
Adjusted non-GAAP EBITDA loss for the quarter was approximately $507,000 compared with approximately $624,000 in the prior-year quarter. For the first nine months of fiscal 2026, adjusted EBITDA loss was approximately $764,000. The quarter included approximately $120,000 of additional inventory reserve expense, $53,000 of regulatory and legal matters, $126,000 of M&A and financing-related expenses, and $65,000 of employee and director stock compensation.
Importantly, we believe the cost actions we've initiated should provide a meaningful benefit to adjusted EBITDA and contribution margin as we move through the fourth quarter. Net loss attributable to common shareholders was approximately $1.2 million, or $0.11 per share, compared to a net loss of approximately $1.2 million, or $0.21 per share, in the prior-year quarter. While the absolute net loss remained relatively consistent, the improvement in the per-share result reflects the significant increase in our weighted average common share count following the conversion of our former Series A preferred stock and other equity activity.
From a cash flow perspective, cash used in operating activities was approximately $2 million for the first nine months compared with $1.2 million in the prior-year period. The primary working capital uses were accounts receivable and inventory. As the business has grown, accounts receivable increased approximately $691,000 and inventory increased approximately $283,000 during the nine months. At June 30, we had approximately $2.1 million in cash and $4.7 million of working capital, compared with $2.3 million of cash and $3.4 million of working capital at September 30, 2025.
We also generated approximately $2 million of financing cash during the nine months, primarily from the issuance of preferred stock earlier in the year. Looking ahead, we are encouraged by the underlying revenue momentum while remaining very focused on profitability and cash generation. We are also taking a proactive approach to the changing regulatory environment. During the quarter, restrictions on shipping certain products to additional states affected approximately $150,000 of direct-to-consumer revenue.
At the same time, we are actively evaluating product reformulation, channel diversification, and other alternatives to mitigate the potential impact of the November regulatory changes. Overall, we remain encouraged by the continued double-digit revenue growth, the expansion of our wholesale distribution footprint, and the contribution from Bluebird and the opportunities we see in new product categories. Just as importantly, we are taking decisive action on our cost structure.
Our focus in the fourth quarter is on converting the revenue growth we are generating into improved contribution margin, lower fixed cost, and stronger adjusted EBITDA, while maintaining disciplined working capital and inventory management. We believe these initiatives, combined with continued revenue diversification and the opportunities created by our expanded distribution platform, position cbdMD Inc to navigate the current regulatory environment and continue progressing towards sustainable profitability.
With that, I'll turn the call back to Ronan.
Ronan Kennedy, Chief Executive Officer and Chief Financial Officer
Thanks, Brad. Stepping back, let me leave you with how we're thinking about the balance of fiscal 2026 and beyond. First, the core business and Oasis. We're going to keep pushing on what's working: driving Oasis sell-through in our distribution footprint, building on the Mixer momentum and Kava launches, and driving disciplined customer acquisition across cbdMD, Paw CBD, and Bluebird. Second is M&A. We continue to pursue acquisitions that will deliver our revenue base, grow our customer database and retail relationships, and de-risk the business against regulatory change.
We'll continue to evaluate creative, disciplined opportunities that broaden our portfolio, add durable revenue, and reduce our exposure to any single product category or regulatory outcome. Third, cost and margin. The cost reduction program we put in place is a deliberate step to improve profitability. We had to invest in the short term to position the business for changes coming in the coming months and into 2027, and we are now tightening down.
Combined with our margin initiatives, we expect these actions to show through our results in the next quarter. On the regulatory front, I would describe our view as cautious optimism. There's real work still ahead, first securing a House vote on the extension before the end of September and then a more comprehensive and durable solution before the end of the year. With the midterm elections approaching, the politics may also be moving in a constructive direction.
A growing body of polling, including national surveys of likely voters and more recent statewide polls in Louisiana, show that more than 70% of voters favor sensible regulation of hemp-derived THC rather than an outright ban, and that support is consistent across Democrats, Republicans, and Independents. We believe this is an issue that the candidates in competitive races will find increasingly hard to ignore. We are generally encouraged by the growing leadership in Washington and by a widening slate of bipartisan bills that approach this category the way it should be approached, with common sense and data rather than hyperbolic tactics that too often get used to scare people. That shift matters. Are there bad actors in this industry? Of course there are, as there are in any young category. But they do not represent the super majority of the industry that was built to help consumers—an industry of responsible operators who invest in quality, safety, testing, and science. We believe that the more conversation is grounded in evidence, the better the outcome will be for consumers and for operators like cbdMD who have built their business the right way.
We're going to keep making the case constructively everywhere we have a seat at the table. Let me close with this. We understand that we're in a very dynamic environment, and we are treating it as an opportunity rather than simply a risk. We are actively pursuing opportunities to capture market share, in many cases while others in our category are pulling back. If regulation moves in our direction, we believe cbdMD is positioned not just to participate, but to accelerate growth meaningfully.
If that path proves slower or less certain, we are not standing still. We are building toward durable 2027 revenue and a revenue base with the scale, product flexibility, and diversification to absorb and manage the impact whatever regulatory outcomes emerge. Either way, our intent is to come out of this period stronger, more diversified, and with a larger share of the market than we hold today. We like our position. I want to thank our employees, partners, and shareholders for their continued support.
With that, I'm happy to take questions.
Tiffany, Operator
At this time, if you would like to ask a question, press star then the number one on your telephone keypad. To withdraw your question, simply press star one again. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Adam Waldo with Lismore Partners LLC. Please go ahead.
Adam Waldo, Analyst at Lismore Partners LLC
Good afternoon, Ronan and Brad. Thanks for taking my questions.
Ronan Kennedy, Chief Executive Officer and Chief Financial Officer
Hi, Adam. Happy to.
Adam Waldo, Analyst at Lismore Partners LLC
So when we chatted last quarter on the results conference call, you were feeling fairly good about your ability to have a cash flow breakeven level with revenue in a given quarter, as you put it, somewhat below $7 million. You posted $5.6 million this quarter, obviously a noisy quarter with a lot of non-cash charges. And obviously you have the cost reductions you implemented in the July quarter. So as we put it all together, a couple questions. First, on the guidance you gave for OPEX reduction, is the $100,000 to $150,000 a month that you're setting as the guidance range on a cash basis or an accrual accounting basis?
And if there's a major difference, can you just give us a better sense for what the cash OPEX savings would be?
Brad Whitford, Chief Accounting Officer
Yeah, those numbers were cash-related, Adam. And they come mostly out of our operating expenses, with some identified cost savings through our supply chain, which we think will start being realized more so in September. The supply chain savings.
Adam Waldo, Analyst at Lismore Partners LLC
And so they're being phased in over the quarter. Is it fair to say, Ronan, would you expect by the end of the current fiscal fourth quarter that those cash operating expense savings would be fully captured?
Ronan Kennedy, Chief Executive Officer and Chief Financial Officer
For the most part it would be. The warehouse lease update occurs in October when the legacy lease flips into the new amendment.
Adam Waldo, Analyst at Lismore Partners LLC
Okay. All right. So there will be some bleed-over probably into the middle of the fiscal first quarter of ’27. Is that fair? In terms of the timing of fully realizing those savings, that's about 10 grand a month on the lease. That should... Oh, okay. So pretty small. Okay, all right, fair enough. So lion's share, call it 90-plus percent captured by the end of the current fiscal fourth quarter. Okay, so that's encouraging. So that leaves us at a point where, absent meaningful change in the revenue run rate, where our cash burn is in the couple hundred thousand a quarter range, if we're doing the math right.
And so obviously that gives you pretty good runway to see how things will progress on the federal regulatory development side. And so my final question is, from a product strategy standpoint and a marketing spend standpoint, is it fair to infer that you intend to be fairly cautious on major new marketing initiatives and product launches until you get much better regulatory clarity, hopefully before the election? Okay, and so final comment. So as I sort of take all of your commentary, which is very helpful on the call to build on what you put in the press release, it seems that, back of the envelope, the break-even quarterly revenue run rate now from a cash standpoint is now in the low 6 millions a quarter. Is that directionally correct? Low 6 millions to mid 6 millions. Great. Okay, thank you very much and best wishes on perhaps achieving break-even here in the near term.
Ronan Kennedy, Chief Executive Officer and Chief Financial Officer
Fair. We are working very hard to get that in place by end of—fully as much as we can by the end of this month. I think that's fair. We do have a few new launches that we're planning, but I think, you know, it's leveraging existing distribution channels that we have and, you know, existing customer bases that we're focused on. But I think we are being as cautious as we can in sort of that marketing spend as we sort of look to the end of the calendar year.
That is. That is how we are modeling this out right now. And, you know, our goal is clearly to get it as low as possible. Thank you, Adam. Appreciate it.
Tiffany, Operator
Your next question comes from the line of Thomas McGovern with Maxim Group. Please go ahead.
Thomas McGovern, Analyst at Maxim Group
Thanks for taking the question here. So we're seeing a lot of momentum with the Oasis brand. I was just curious if you could dive a little bit deeper into what's driving the acceleration in depletions. How should we look at this? Is this more of a story of expanding distribution points or is it reflective of just a higher sell-through rate at existing doors? Got it. Right. And speaking of finding the right partner—right—it's great you guys have the new distribution partner down in Texas.
It seems that'll make a substantial difference at least in the state. I'm curious, you know, as you guys are expanding to these additional distribution points, I think you said it was quadruple what the prior distributor had you at. Can you comment at all? I mean, first of all, when did you sign with this new distributor and then how have you seen sell-through rates at this point with them? You know, it's great to get into the doors, but just curious at, you know, kind of what the momentum is of the product once they're on the shelves.
Ronan Kennedy, Chief Executive Officer and Chief Financial Officer
Great question, Thomas. I think it's a little bit of both. I think we've been very focused on our territory and investing in sales, resources, and programming within our distributors and retailers. So it's a conscious effort of making sure that we're aligned with the right partners that can cast as wide of a net as possible in the territories we're in, and then making sure that we're driving sell-through through those accounts as well. Yeah, yeah, great question. Look, I think we made that move right at the end of June. So I think some of the revenue from the quarter came from some of that from the post move. But since then we've seen things strengthen and are seeing good results both in adding doors and sell-through in some of the doors as well. I think especially in Texas there have been some updates since August 1st, where they've restricted other sort of categories and synthetic cannabinoids.
So I think you could actually see the sales of sort of hemp-derived THC—that's sort of just the THC and CBD demand in those products—accelerate as some of the other categories have been restricted since then.
Thomas McGovern, Analyst at Maxim Group
Gotcha. Thanks for that color. And speaking of products that are compliant with existing regulations, you guys recently launched the Kava Oasis brand. You mentioned just high level that it's performing well, but I'm curious, how did that go-to-market strategy look different being that it's not a cannabinoid-derived product? Have you guys thought about does it change the demographic, does it change the marketing? And just high level also—I mean, I'm not sure if it was mentioned earlier—but was that also launched during the quarter?
Is that, you know, subsequent to quarter end?
Ronan Kennedy, Chief Executive Officer and Chief Financial Officer
Thomas, that was launched today. So today is sort of the first day that that product is available. And where that, you know, that came from is we have been looking at a number of other botanicals to help support the Herbal Oasis brand. Knowing that, you know, customers have moved into the hemp—there's been a strong movement into the hemp-derived THC sort of beverage space. And part of that is they're seeking a non-alcoholic solution that's going to help them, you know, relax and unwind.
And kava is one of those ingredients that, you know, you're able to do that. It's a different experience. But I think, you know, what we've spent extra time on this year is making sure that we can get the flavor correct. Some of these botanicals are challenging to flavor-mask. And I think we've worked with our partners and processes to create a really—what we think is one of the best-tasting flavors of kava product out there. And then as we look to kind of the problem that we're seeing at the retailers and distribution footprint right now is with the looming regs, people are starting to pull back.
Retailers are starting to pull back shelf space or sort of not reorder or be more disciplined in what they're ordering. And that's creating opportunities of empty shelf space. So it's really sort of how do we find another product that is mildly euphoric, it helps you relax, and it's a natural botanical. And it's a product that we think can help fill the need of our retail partners as well and allow us to capture some shelf space as the regs create further uncertainty.
Thomas McGovern, Analyst at Maxim Group
Absolutely. I mean, that makes a ton of sense to me—just kind of position yourselves to have a little bit of protection against potential regulatory shifts. So that's great to hear. You just commented on it, right. So you guys are going to be examining or evaluating other botanicals or, you know, functional ingredients that are not intoxicating. So I'm just curious, do you have any expectation of a timeline and whether or not these products would be developed in-house or sought through an acquisition?
Ronan Kennedy, Chief Executive Officer and Chief Financial Officer
As mentioned, we have one or two other ingredients that we're working on formulations with. So we, you know, we're moving as aggressively as we can. Part of this is making sure we get the right flavor, and some of these are a little bit more challenging, and it's newer categories to do that with. So would expect before the end of the year, you know, some announcements around some other botanicals. We're always open for discussions on acquisitions around this category as well.
And we're looking beyond just sort of a functional beverage from an acquisition standpoint.
Thomas McGovern, Analyst at Maxim Group
Understood. And then last question for me is on the wholesale side of the business. So we saw meaningful growth year over year there—accounted for about 30% of your revenue mix—and that was commented at least twice as you guys are kind of shifting to more wholesale revenue versus your historically very strong in DTC. I'm just curious, how should we look at this from a company-wide level as you see it currently? How do you think this will kind of shake out?
Will we start to see the mix at some point favor wholesale, or is it going to settle around 50/50? I mean, just any kind of color you can give there would be helpful so that we can kind of better understand how we should look at margins and just the business on the whole.
Ronan Kennedy, Chief Executive Officer and Chief Financial Officer
Yeah, look, I wish I could give you great clarity, but some of it's relying on sort of regulatory changes. I think it would be prudent to think that, as regulators—when you look at some of the regulation that's coming out, like the hemp parity bill that came out this week—what they're fundamentally doing is saying, look, if people are concerned about keeping these products away from kids, using the alcohol, the traditional alcohol industry is a very logical way to think about regulating this product.
And that means that could end up ultimately going through a three-tier system, which would, by result, force more of the revenue into sort of a wholesale-type business for intoxicating kind of Delta-9 level products. Yeah. So I think you are seeing a shift at states as well. Like Tennessee made some changes where they banned sort of the sale direct-to-consumer, you know, THC-containing products, but it's able to go through registered distribution.
So we are seeing a little bit more shift in that being driven by regulatory pressure.
Thomas McGovern, Analyst at Maxim Group
Got it. That makes sense as well. Well, I appreciate you taking the time to so thoroughly answer all my questions. I'll hop out of queue.
Ronan Kennedy, Chief Executive Officer and Chief Financial Officer
Thanks, Thomas.
Tiffany, Operator
Your next question comes from the line of Adam Waldo with Lismore Partners LLC. Please go ahead.
Adam Waldo, Analyst at Lismore Partners LLC
So, Ronan, given the commentary you gave in both your prepared remarks and then in response to Thomas's questions around M&A, a couple follow-ups on that topic to conclude. How should we think about your thought process or philosophy with respect to structuring acquisition consideration amidst the current uncertainty on the regulatory front on the one hand, and all the moving parts with respect to your accelerating revenue growth and cash cost reductions on the other?
Ronan Kennedy, Chief Executive Officer and Chief Financial Officer
Look, I think we are trying to be as flexible and opportunistic as we can. I think, you know, can appreciate, as you highlighted, some of the noise. I think we are looking at opportunities where we think our infrastructure can create a one-and-one-equals-three opportunity and continue to pursue those in ways that we believe create value for the targets as well as for our shareholders.
Adam Waldo, Analyst at Lismore Partners LLC
Sorry to just draw you up slightly more on that. Is it fair to say that you'd rather see more regulatory clarity before moving further on the M&A front, or are you at a point where you feel you can structure potential M&A transactions in such a way that there's significant upside for your equity and you can minimize the share of that that goes to the target, given your one-plus-one-equals-three strategies?
Ronan Kennedy, Chief Executive Officer and Chief Financial Officer
Look, I think we are focused on getting transactions done that we think will be accretive and irrespective of changes in regulation. And we're on a mission to drive shareholder value and have to make decisions in light of some uncertainty, you know, looking out over the next 12 months.
Adam Waldo, Analyst at Lismore Partners LLC
Okay, and so you're targeting—are you targeting immediate cash flow accretion in one to two quarters after closing in the way you're approaching M&A?
Ronan Kennedy, Chief Executive Officer and Chief Financial Officer
We are. We are trying to drive, you know, short-term cash flow as quickly as we—as quickly as possible, both in the core business and with any M&A that we pursue.
Adam Waldo, Analyst at Lismore Partners LLC
Okay, thank you very much and best of luck.
Ronan Kennedy, Chief Executive Officer and Chief Financial Officer
All right, thank you, Adam.
Tiffany, Operator
That concludes our question and answer session. I will now turn the call back over to Ronan Kennedy for closing remarks.
Ronan Kennedy, Chief Executive Officer and Chief Financial Officer
Thank you, everyone, for attending the call today. We will continue to update the company as we have updates, and we look forward to jumping on our year-end call in December. Have a great evening.
Tiffany, Operator
Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.
Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.
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