RYTHM, Inc. (NASDAQ: RYM) entered into amended trademark and recipe license agreements with an indirect wholly‑owned subsidiary of Green Thumb Industries effective April 1, 2026. The new contracts cover the use of RYTHM’s brands—RYTHM, incredibles, Beboe, Dogwalkers, Doctor Solomon’s, &Shine, and Good Green—and establish a fixed annual cash fee of $70 million, indexed to the Consumer Price Index with an annual increase equal to twice the CPI‑based escalator.
The $70 million fee represents a dramatic increase over RYTHM’s 2025 licensing revenue of $7.8 million and is roughly nine times the amount the company earned from licensing in the prior year. For a company that reported Q4 2025 revenue of $10.7 million, a gross profit of $8.0 million, and an operating loss of $12.9 million—largely driven by an $8.5 million non‑cash impairment—this new stream provides a predictable, high‑margin income that can offset cash burn and fund growth initiatives.
The agreement also addresses Nasdaq listing compliance concerns that arose from discussions with Nasdaq staff about revenue derived from the federally illegal cannabis industry. By converting variable royalty income into a fixed fee, RYTHM can demonstrate stable, compliant revenue streams, thereby supporting its continued Nasdaq listing and reducing regulatory risk.
For Green Thumb Industries, the transition from variable royalties to a fixed $70 million annual fee increases its recurring fixed costs but also secures long‑term access to a portfolio of brands it has helped grow for more than a decade. The transaction is a related‑party deal, as Green Thumb indirectly owns about 33 % of RYTHM’s common stock, aligning the interests of both companies.
Ben Kovler, Chairman and Interim CEO of RYTHM, said, "These amendments create a framework that strengthens our licensing arrangement with Green Thumb over the long term and supports RYTHM's Nasdaq listing. We have established predictable, long‑term revenue in a way that is virtually unmatched in the THC space. As the regulatory and legal landscapes evolve, this structure provides our business and investors with clarity and stability that positions us well to maximize value for our shareholders." Ben Kovler, Founder, Chairman and CEO of Green Thumb, added, "As a significant shareholder in RYTHM, Green Thumb shareholders are positioned to benefit from RYTHM's long‑term growth and value creation. Green Thumb has grown and scaled these brands for more than a decade, and we remain as committed as ever to expanding their reach."
RYTHM’s shift to a licensing‑centric model follows a period of financial struggle, including a negative return on equity of –165.27 %, a three‑year revenue growth rate of –87.2 %, and operating and net margins of –138.08 % and –192.43 % as of April 2026. The new fee is intended to provide the company with a stable revenue base that can support its cash burn and enable it to pursue growth initiatives in both licensed and direct‑to‑consumer channels.
The content on EveryTicker is for informational purposes only and should not be construed as financial or investment advice. We are not financial advisors. Consult with a qualified professional before making any investment decisions. Any actions you take based on information from this site are solely at your own risk.