RYTHM, Inc.

What they do

RYTHM sells hemp-derived THC beverages and edibles, led by the Señorita cocktail-style margarita line in four flavors and the two-flavor RYTHM beverage. It also licenses its brands to third parties for manufacturing and distribution in exchange for licensing fees, and sells edibles including incredibles and Beboe online and through direct-to-retail partnerships. The Company formerly sold cannabis cultivation and extraction equipment, exited the extraction business on March 30, 2025 and sold the cultivation business on December 31, 2024, with both treated as discontinued operations.

Revenue drivers

• Licensing Revenue — Fees from licensing RYTHM brands to be manufactured and distributed; fixed annual cash licensing fees of $70 million from Green Thumb Industries took effect April 1, 2026.
• Hemp-derived THC beverages (Señorita and RYTHM) — Beverages sold at retailers, online and direct-to-retail; Señorita was available in fifteen U.S. states and Canada per the 10-K and eighteen U.S. states per the latest 10-Q, at retailers including Total Wine, ABC Fine Wine & Spirits and Binny's.
• Hemp-derived edibles (incredibles, Beboe) — Edible products sold primarily online and through direct-to-retail partnerships, alongside other portfolio brands including &Shine, Doctor Solomon's and Good Green.

Recent performance

Second quarter 2026 revenue from continuing operations was $23.0 million, up 73% from $13.3 million in the prior quarter and above prior guidance of 65% growth. Net income was $1.2 million and Adjusted EBITDA was $6.4 million, compared with approximately breakeven in the prior quarter. Cash rose to $41.9 million, driven by $8.7 million of cash flow from operations. THC beverage depletions reached approximately 25,000 cases across 18 states in June 2026, versus approximately 7,000 in June 2025, and hemp-derived product revenue rose 67% sequentially. Full-year 2025 revenue was $17.3 million with a net loss of $33.3 million, following 2024 revenue of $18 thousand.

Strategy

The Company is focused on growing hemp-derived THC beverages and edibles while monetizing its brand portfolio through licensing, most notably the amended Green Thumb Industries agreement that took effect April 1, 2026. It is expanding brand presence in live entertainment venues, with Señorita named official THC beverage partner of Lollapalooza and Opry Entertainment Group venues and RYTHM the official THC beverage partner of Chicago's Navy Pier. Direct-to-consumer websites include senoritadrinks.com, 1777spirit.com, rythmdrinks.com, iloveincredibles.com and beboe.com. Management states it is prioritizing execution and building iconic brands amid regulatory uncertainty, and is not providing third-quarter 2026 outlook.

Risks

• Federal hemp amendment — Section 781 of the 2026 Appropriations Act amends the 2018 Farm Bill hemp definition to effectively prohibit currently commercialized hemp-derived THC products, effective November 12, 2026, unless repealed, replaced or delayed.
• State regulatory patchwork — States are passing their own laws regulating, restricting or prohibiting hemp-derived THC products, creating a difficult patchwork within which the Company must operate.
• Enforcement and product limits — Hemp-derived THC products may be illegal if they exceed applicable limits, and the Company faces potential enforcement actions from federal agencies such as the FDA.
• Competition — The Company faces competition from the illicit market, larger competitors and licensed cannabis sellers.

Outlook

Management did not provide third-quarter 2026 guidance due to uncertainty from forthcoming federal law changes affecting hemp-derived THC products scheduled to take effect November 12, 2026. It said the regulatory environment for THC beverages remains uncertain with limited near-term visibility. Management nonetheless expressed conviction in the long-term viability of the category and the durability of demand, and said it is focused on execution, disciplined spending and building trusted brands.