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$GTBIF Officially consolidates $RYM
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Isn’t that what RYM is and why GTI spun it off
RYM is quietly showing a bit of strength this week. Tough to say if it means anything given the low float. Trying to figure out if I should be taking some profit off here.
from a post fwiw... Ben & Co. are letting RYM run up! They already said they have no current plans to exercise the RYM warrants, only consolidate the financials with GTBIF. That means RYM will continue to trade as a standalone NASDAQ listed company with only 2 million shares in the public float.
Hill Street (now Hill Incorporated) went [bankrupt last year](https://www.thenewswire.com/press-releases/1ArbF4mvN-hill-incorporated-makes-assignment-in-bankruptcy-under-the-bankruptcy-and-insolvency-act-canada.html), so idk if Lexaria has regained those rights or not. >**November 21, 2025.**... Hill Incorporated....announces today that it has made an assignment in bankruptcy pursuant to the *Bankruptcy and Insolvency Act*. >Due to dramatic price compression, difficulty in collections of accounts receivable, and other significant challenges in the cannabis industry affecting the Company’s DehydraTECH licensing business, along with the significant cash outlays and costs... I just know Lexaria specfiically said they had "renewed corporate interest" from both CBD and nicotine sectors. So yea, my initial though was something regarding Cannadips. I initially found Lexaria's comment about renewed interest from the CBD sector after Tilray released their pouch product. That made me go look at Lexaria again, as they are the main connection I know to CBD/THC pouch products. And pouches are like the key product for big tobacco maintaining their sales right now. Cannadips also had an ex-Altria guy running them for a while, and Cannadips are an investment by Poseidon Asset Management. Besides being longtime cannabis investors, Poseidon has also invested in hemp beverages (RYM), and they were early investors in JUUL. So they already have experience selling companies to Altria.
If the dea doesnt reschedule all cannabis then there are still 2 options as I see it. 1) All States with full rec flip a switch to make all cannabis sold in those states "medical". Some states are already getting this readt. 2) GTI sells all medical to RYM.
But will it impact the bottom line? Since it's mostly just changing from equity method accounting to full consolidation of RYM, the impact on net earnings post minority interest should not be meaningful until there is a meaningful change in the % of RYM that GTBIF owns.
Actually, a lot changes now from a balance sheet perspective for GTII with their ownership now over 49.99%, RYM can be consolidated on the balance sheet. This means the 16M licensing fee which GTII “pays” RYM was captured COGS trailing into FCF, OI and NI. Now, GTII is able to classify this as a instra company transfer and use RYM as a vehicle for their non-plant touching division (beverages etc)
Some were just spotting what I thought was value and sniping a long position. That's VFF, Auxly, Decibel, MAPS, ACB, LEEF. The more recent ones are MAPS/LEEF. I have mostly just taken profits on these companies. Not as much actively trading these. RYM, TLRY, Jones Soda are hemp beverage plays, but I trade them more actively. Vireo is because I've talked for a long time about how effective a small company roll-up strategy would be. That's why I've also had Miracle Gro for years. They were talking about that sort of strategy years ago. Green Thumb for obvious reasons. They were the only true MSO until Vireo that I was comfortable with in recent years, due to their financials. Glass House has long been my other top US cannabis pick. They're the only US company who would actually want interstate commerce. InterCure is an Israel/International play I've talked about for years. Fortunate to have traded them pretty well with all the war stuff. OGI/CRON were my favorite LPs because of big tobacco, no debt, and good cash/financials (OGI at the time). OGI also because I follow BAT very closely because of my CWEB investment. CWEB was my biggest position by far for the last few years. It still is my biggest position, but I took a bunch of profits on its huge runup recently. Main thesis for starting an investment in them was in [2023 with the Farm Bill](https://www.reddit.com/r/weedstocks/comments/13jxax4/comment/jkiuaxc/?utm_source=share&utm_medium=web3x&utm_name=web3xcss&utm_term=1&utm_content=share_button) discussion starting up again. [I was expecting hemp/CBD regulations to come back into focus](https://www.reddit.com/r/weedstocks/comments/125j0xo/comment/je5a70c/?utm_source=share&utm_medium=web3x&utm_name=web3xcss&utm_term=1&utm_content=share_button), which paid off nicely. I spend quite a bit of time researching this sector, so I'm pretty comfortable managing this many companies. Definitely would like to pare it down some though.
I have tons of holdings, including VFF. In no particular order: US cannabis: Glass House, Vireo, Green Thumb, LEEF US non-cannabis: CWEB, RYM, Jones Soda, MAPS, Miracle Gro Canada/Global: OGI, CRON, InterCure, TLRY, Auxly, VFF, ACB, Decibel The size of these positions vary a decent bit, and I'm always actively trading on pumps/dumps.
I literally quoted the press release. They had worse margins this quarter without material from their ranch. I'm not saying it's a problem with the company long term. Just that it's funny to highlight margins in your headline while also saying margins were a problem this particular quarter. **I'm an investor in LEEF lol** I'm also an investor in Vireo, Glass House, and Green Thumb. If you count non-MSOs I'm also in CWEB, RYM, MAPS, Jones Soda, Miracle Gro....I talk about these companies quite a bit. You people really just see whatever you want online to find reasons to be angry.
Q2 reported as if RYM were consolidated (as proposed): https://x.com/CapitalMattkets/status/2085128549283856542 Also, good ol' CannaV dong a bit of sleuthing on GTI's quiet m&a: https://x.com/CannaVestments/status/2085052467700539421
Here's what I have off the top of my head. Maybe missing some. Tier 1 (heavy focus/interest) - RYM, Tilray, Canopy, Jones Soda, Boston Beer Tier 2 (smaller part of business) - Organigram, SNDL, Trulieve, Curaleaf Tier 3 (micro caps) - cbdMD, LFTD Partners Then there are also other alcohol companies with a history in cannabis beverages. Constellation, Molson, etc.. Some have suggested that if the hemp ban does happen, it's basically just a short term ban so big alcohol can swoop in and buy up the good brands. Then there are companies like Alimentation Couche-Tard (Circle K) and Target that are retailers moving into THC beverages. Circle K would be much more affected by THC beverages gaining popularity though. Also SNDL would benefit if Canadian liquor stores were allowed to sell THC beverages.
Revisit those charts. RYM is up roughly 20% of last week's low, as opposed to MSOS being up roughly 8% of the low. I'd also argue that both are not responding directly to this bit of news. Also, the hemp delay is just a temporary reprieve as of now. Signs of upper level political support, but no certainty as of now. So, again, this particular bit of news is one factor among many that are influencing price action of late. Finally, I've noticed that RYM's intraday moves seem to inverse MSOS fairly often. Overall, they trend similarly but the volatile price action seems to happen separately. Just a causal observation and not something I've tracked closely enough to know if it's legit or not.
Thats why im confused....why is MSOs rallying and RYM down on this news ? Lol
I'll caveat this by saying i don't care **that** much about them doing buybacks. But I don't like them at all. I don't think stock buybacks should even exist. And don't feel like you have to respond to all this. Just rambling a bit because I can't sleep. I really don't get the sudden fear of any integration whatsoever. Companies should just stop expanding? The top operator among the public companies can't handle any sort of small acquisition in cannabis? But they can handle the moves with RYM that have massive regulatory risk. Just shows they are willing to take risks for hemp beverages, but not for cannabis. Also a single state operator wouldn't come with any integration. Glass House is partnered with Vireo now, but what if GTI had taken an equity stake in Glass House instead of starting buybacks? Their investment value would've increased, they'd have a perfect hedge against interstate commerce, and be spreading their branding through California. Just one hindsight example that proves buybacks weren't the only option. GTI could buy into like a Copperstate Farms or another large grower like that. They don't have assets in Arizona right now. They've spent many millions on buybacks. They could've bought the tip top of the smallest operators. Doesn't have to be struggling companies. GTI could've thrown a little money at Auxly or someone. Another hindsight example that would've been better than doing buybacks. Otherwise we are assuming there isn't one single good place to invest money anywhere in the entire cannabis industry. Then what are any of us even doing here? GTI has done way more buybacks than Cronos, right? So why invest in Cronos? Isn't their entire thesis that they've kept their cash pile intact to make a move, while generating interest on it? * GTI could buy debt in failing companies with actual good assets. Go the predatory debt angle. * They could buy CBD assets, or buy some supplement assets and build those retail relationships for hemp gummies * They could buy emulsion technology. Could they own Sorse and be the one charging other beverage companies to use their tech? * They could just buy more retail stores. Why not expand more in Florida? They are falling behind in one of the best markets. * They could buy non-alc beer assets? Not targeting the beer market at all in beverages? * They could invest in a hemp input company like Open Book Extracts. Control some of the supply chain. * Delivery assets? Data/marketing assets? Genetics/seed companies? * I'm sure I can come up with more ideas. I'm not the billion dollar company though. My **hope** is that they've already found their CPG/alcohol partner. So they are just sitting tight because they have the cannabis assets that partner wants and/or that the financial aspects of the deal are built around. So they are doing buybacks just to keep the status quo until the deal can be completed. But at the end of the day, large buybacks in a "growth" sector just don't make sense to me in general. No matter how we can excuse them.
People also don’t under that GTII did 50M in buybacks and are sitting on 200M more in cash waiting for the right opportunity. The consolidation of RYM on August 10 will boost GM back to 48-50% range as that licensing fee came out of COGS.
> They could also be buying international stuff. They could be buying beverage manufacturing, to support RYM and include co-packing for others into their revenue stream. They could buy more brands to add to their RYM licensing. They could take an equity stake or buy a single state operator with very cheap flower similar to Glass House to hedge against interstate commerce. Arguably, those are all hedges that come with significant regulatory risk. My sense is that GTI is timid about stepping on thin ice. I don't really blame them. When looking at your list of potential acquisitions, brand acquisition is the only thing I see as being a potentially sensible move. Everything else is regulatory gambling, with integration challenges as well as acquisition of assets in often struggling markets. > Even just investing it so your cash pile grows while other companies are failing would make more sense to me than using it for buybacks. I'm also surprised they haven't been more active in that arena.
Honestly yes they *could* buy into any of those. It is my opinion that they are not because they just simply don't see the value, risk/reward in doing so. International has proven to be as much of a shitshow with super minuscule gains to show from it. I'm sure GTI has a better grasp on private companies than we do, I can't imagine they haven't looked into it at all, they just decided not to. RYM kind of got stuck in a hard place, as soon as they took a stake in them, the loop hole got closed. I'm sure that really made them rethink trying to navigate this cesspool. I'd imagine they're seriously just sitting on their hands and the safest place to put that money is back into their own company/shareholders. Imagine how low GTI would have gone without the buybacks, even with the continued "good news" it is barely hanging in above lows. Until we have clarity at any level, in any markets, about ANYTHING I doubt they make moves. They can be picky, they're best positioned in the industry, have a bunch of cash available, and a lot of leverage with their actual profitability and strength in negotiations. It really feels like they're just looking at everyone else flounder, both LPs and MSOs, with their expansion, buying top line, big headline M&A, and completely doing a 180 on that and it has kept them strong so far.
I think there are plenty of good assets out there. We have absolutely no idea about most of the financials of smaller private companies. They don't have to be underperforming assets. They could also be buying international stuff. They could be buying beverage manufacturing, to support RYM and include co-packing for others into their revenue stream. They could buy more brands to add to their RYM licensing. They could take an equity stake or buy a single state operator with very cheap flower similar to Glass House to hedge against interstate commerce. Even just investing it so your cash pile grows while other companies are failing would make more sense to me than using it for buybacks. If they are so worried about the cannabis industry at this moment that they can't find a single place to invest, then why invest in GTI at this moment?
I expected a cycle shift right about now, thought you might have missed the boat. But its starting to look like you might have the better read. I still have RYM and TRLV orders in that range as well, so ready if it goes there.
I expected a cycle shift right about now, thought you might have missed the boat. Sure looks like you might have the better read. I still have RYM and TRLV orders in that range as well, so ready if it goes there.
RYM has more cash on hand than some MSOS on a 20+M run rate. You don’t understand this complexity of this agreement. Conjecture is a poor word choice.
SG&A costs went up due to store expansion costs and some pricing pressures. It definitely doesn’t account for all of it, there was talk on the call also about some timing of items that fell into the balance sheet. I am expecting this to normalise especially with RYM consolidated reporting in August.
RYM is only producing like $1.6 million income from operations though right? So this doesn’t explain it all? Have to admit I don’t know what combined look of these 2 companies will look like
There’s a bit more to this story. I agree there is a bit of price compression going on. Keep in mind that they paid a 17M licensing fee this quarter to RYM. If you look at their earnings report today they realized 23M in revenue, 17M in which was via GTII. The 17M on GTII balance sheet is captured via cost of goods sold. It would decrease gross margins, income from ops, ebidta etc. This doesn’t explain it all, however, people have to realize that RYM now has 42M in cash and is building out their beverage brand roughly 5M/per Q and growing. GTII can use RYM to build out a brand via the hemp derived market which is open via the 2018 farm bill. GTII owns the brand + option to take over. Why is this important? If hemp derived beverage market continues they can remain status quo use cash from GTII can leverage this as a growth mechanism in a very important space. If hemp ban takes effect, the brand that RYM is building out (senorita) they can essentially use cannabis instead of hemp and continue the brand. This story isn’t told well. However, it is very strategic and gives a head start.
The play generally is going to be beverages, it’s why they set up the deal with RYM to get going on building this brand out. They can play in the unregulated farm bill market while continuing operations, if that changes then they can roll up the assets and just make cannabis based drinks under the brands that are being marketed. I’m with you.. buying distressed real estate assets turns you into a debt riddled company like high tide.
The strategy is pretty clear, RYM is the hemp derived market play to get started on beverages as this sorts itself out. There has to be a couple regulatory hurdles to be cleared for it to either be rolled up into GTII or continue to exist as a standalone venture. There’s balance sheet rules when it comes to ownership percentage. Each threshold has different reporting requirements. It’s a pretty smart strategy imo to play in hemp land while also maintaining current cannabis operations for GTII.
My understanding based on what was said today is that shareholders will be asked to authorize GTI to acquire a majority stake, at which point they would be able to consolidate the financials ***as if*** RYM was majority controlled (and thus not separate companies). Doing so would allow them to collapse the licensing fees as effectively wash (I believe?), but more importantly they would begin to report Rythm's self produced revenue including hemp beverages such as Senorita, etc. Honestly, it was a bit confusing. And the delivery of that particular news felt a bit amateur hour. Pablo Zuanic didn't help by posing some awkward and leading questions. As always with GTI...solid financial results but a lack of clarity as to the larger strategy.
The reduced gross margin can be explained. They pay RYM 16.5M in licensing fees which is basically their hemp derived shell that regardless roll into GTII. This is captured in cost of goods sold. The GM are around 48-50% normalized then you have the ability for RYM to continue growing the senorita brand. If hemp gets banned and there’s no carve out.. Gtii takes control of RYM + the 42M cash balance.
Announced that they plan to consolidate RYM financials into their reporting beginning as soon as next quarter, pending shareholder approval.
RYM is just a hemp drived vehicle for GTII to take over. While relevant it’s not entirely.
RYM Looks great, which bodes very well for GTI
I was picturing it like Curaleaf being the GTI and Cronos being the RYM in that scenario. Just trying to force a Cronos/Curaleaf fit for the discussion. I don't think they are ideal partners. Cronos has Altria (and through them AB InBev) connections, so distribution of hemp could be something Cronos is good at. Cronos could then license brands to Curaleaf, while shifting Gotham Green cannabis assets to Curaleaf. That would boost Curaleaf's revenue, which in turn would increase the payments to Cronos. But yea Cronos feels like the original one who was setting up for a Vireo type play. With Gotham Green all over the place. But even Gotham has been quiet lately. I could definitively make the case for Cronos/Vireo. However with Miracle Gro being the biggest fish currently in the Vireo pond, I am looking for a Vireo move Miracle Gro would do. That's one reason I'm kind of focusing on brands at the moment. Miracle Gro has described their strategy in the past, and it's [exactly what they are doing with Vireo now](https://www.reddit.com/r/weedstocks/comments/1t3d4g7/comment/ojyeqry/?utm_source=share&utm_medium=web3x&utm_name=web3xcss&utm_term=1&utm_content=share_button). But Miracle Gro was also clear they believed brands are what win in the end. From a late 2021 interview: >*We’ve talked to a lot of these people who own these great businesses but remember, the way at least the United States is organized today, it’s state by state.* ***People who are powerful from California, aren’t powerful from Colorado****, but they’re all state by state. When we talk to them and say,* *“We want to create long-term and equity,” the best equity in history in the space.* > They know all the more specialized people, whereas MSOs got spread thin. Says long terms they do want to focus on brands and not cultivation. >
I've actually been wondering if Vireo was operating at Cronos' behest. I don't actually think it's the case, but Cronos would be a great suitor for that sort of strategy. Cronos could buy and license a hemp brand. But that seems...I don't know...unnecessary for them? If they were going to do that, why not just buy into something like RYM, as opposed to trying to make it work within bloated Curaleaf? Curaleaf's international assets may be the better fit for Cronos. I honestl don't know much about Cura, though, so may be totally off base on that. Cronos has refused to chase international hope. Very deliberate in where and how they've built the global network. So, would be surprised if Cura's managed to build something they actually want for the expected price. Maybe if they got it on fire sale. Just spewing some random thoughts at the end of a long work session. Hope you and the fam are holding up well, geo.
You manage to get in? Looks like a potential low was set with today's bounce. Time will tell. If the hemp carveout holds (to be fair...its just 30 days....more of a political tell than an actual reprieve), RYM may catch a bid.
I absolutely think we want hemp drinks, but only drinks. I could make a case for gummies too, but definitely drinks. Drinks target a completely different consumer than those who shop at dispensaries. The distribution is within a completely different system. And the manufacturing is a high barrier to entry. I think having them would be a **rising tide lifts all boats scenario**. It opens the door to more GTI/RYM type deals, which are just backdoor ways of advertising cannabis when you aren't typically allowed to. We are also already seeing lots of celebrities and athletes getting behind THC drinks. Even those already in the cannabis market. * From 2023: [Dwyane Wade Launches Cannabis Brand, 'Hall Of Flame'](https://www.essence.com/news/money-career/dwyane-wade-cannabis-hall-of-flame/) * From Today: [The THC Drink Dwyane Wade Wanted Didn’t Exist — so He Created It](https://www.foodandwine.com/dwyane-wade-cann-collaboration-half-and-half-cannabis-drink-12032436) >The NBA Hall of Famer’s new Cann collaboration includes a microdosed THC beverage and the brand’s first THC-free drink, each made with yerba mate for a gentle caffeine lift Drinks are just so much better for brand building, and brands are what win in developed markets. * Smoking isn't going to be advertised by major companies, and pre-rolls all look the same. * Gummies are eaten in a moment, and they are tiny. * Drinks take a while to consume, while prominently displaying the brand name. No cannabis brands have ever mattered though. People who are smoking only care if it's cheap with high THC, and maybe about terpenes if they know their stuff. But they don't care whose brand it is. That's been clear for many years. Recreational flower is just a commodity. Lowest price wins. However when you are going to be holding onto a drink for an extended period of time in public, brands will matter more. And the goal with drinks is really to mainstream THC use. Beverages are a familiar format. Lots of people will stick to low dose options and that's great for them. But the rising tide lifts all boats part is when new low dose THC consumers realize they really like THC. Then those people go to a dispensary. Then all of a sudden cannabis brands DO matter, because **if they were drinking Rythm drinks to get them into the dispensary, they are far more likely to choose a Rythm cannabis product.** In theory. It's much easier to advertise a brand to a novice THC consumer, than to try to convince a stoner to buy Wiz Khalifa's overpriced mids.
You are 100% correct that they are buying local brands that are performing well. That is critical to the strategy as i see it, to be essentially a collective of single state operators. However, along with each of them selling their local brands, i think they would benefit from the synergy of a national brand. Because they could set up a GTI/RYM scenario where they have a national hemp brand for beverages, but the Vireo cannabis retailers also all carry that brand in the form of cannabis. So you have local brands proven to work in their markets. And then a national brand to drive new people to your stores/marketplace/delivery/etc.. Because national hemp brands will likely have much less restrictive advertising/sponsorship rules than cannabis. I was even thinking that could make sense with their ancillary purchases. If they are able to standardize the equipment/inputs/etc being used in each state, that would allow them to retain brand consistency even with grows operating in different states. So your national brand Vireo flower in New York is the same as the national brand in California.
Sector seems pretty beat down right now. I'm anticipating a bounce and maybe even a run on rescheduling certainty. Have a mix of equity and options plays on RYM, TRLV, CRON, SNDL and MSOS, the majority of which are intended to be near/mid term volatility trades. And then i continue to hold some core positions in GTBIF and CRON. Big picture, I will continue to trade the sector's volatility cycles until that trade no longer works. I'd probably walk away altogether if I didn't understand the market participants and emotional cycles so damn well.
You live, you learn. RYM is a great stock to practice the art of taking profit on the way up.
Very likely and am waiting as well. RYM, TSND and CL will be my plays. I've already bought into HITI and OGI the last couple of weeks.
RYM, TRLV. Bit of CRON and MSOS.