22nd Century Group (NASDAQ:XXII) reported modest sequential revenue growth in the first quarter of 2026 while management said its focus has shifted fully toward commercial execution and expanding distribution for its VLN reduced-nicotine cigarette products.
Chief Executive Officer Larry Firestone said the company had expected first-quarter results to look similar to the fourth quarter of 2025, as initial VLN stocking orders were worked through and retailers completed in-store placement, setup, education and awareness efforts. He said 2026 is now centered on expanding retail outlets, increasing points of distribution and investing in marketing and merchandising aimed at adult smokers.
Revenue Rises Sequentially, Losses Remain
For the quarter ended March 31, 2026, 22nd Century reported net revenue of $4.1 million, up from $3.5 million in the fourth quarter of 2025, an increase of about 16.1% sequentially. The company reported a gross loss of $0.6 million, compared with a gross loss of $0.8 million in the prior quarter.
Operating loss was $3 million, compared with $2.8 million in the fourth quarter of 2025. Net loss from continuing operations was also $3 million, versus $2.8 million in the prior quarter. Adjusted EBITDA was negative $2.6 million, compared with negative $2.4 million in the fourth quarter.
The company said profitability metrics remain under pressure, but described the sequential improvement in revenue and gross margin as an early sign of commercial progress as distribution expands and product mix changes. 22nd Century ended the quarter with $9.5 million in cash and cash equivalents.
VLN Rollout Moves Into New Markets
Firestone said the company has secured distribution for Pinnacle-branded VLN products with what he described as the third-largest purveyor of tobacco products in the U.S. He said that retailer ranks first on a sales-per-retail-outlet basis, calling the placement an important early step in the VLN relaunch.
According to Firestone, sales activity has begun across those stores, with some locations moving Pinnacle VLN products “quite nicely” and others showing a slower start. He said the initial launch used limited marketing to establish a baseline, and the company has now begun cross-promotions with other products and digital promotions through a fuel rewards program.
22nd Century has also secured distribution of 22nd Century VLN with what Firestone called the second-largest purveyor of cigarettes in the U.S., initially in a limited Illinois market. He said results there have been similar, with some stores selling consistent volume and others beginning to show movement.
The company said it expects to add distribution in New York, New Jersey and Southern California for Pinnacle VLN and other Pinnacle-branded products during the rest of the second quarter and third quarter, covering about 200 outlets. In the third quarter, 22nd Century expects to add distribution in the Southeast for Pinnacle VLN with a new retailer, with initial shipments expected in late third quarter and early fourth quarter.
Management said those additions should bring the company close to its target of 5,000 retail outlets by the end of 2026.
Marketing Investment Becomes a Priority
Firestone said the company is increasing its focus on consumer marketing as retail distribution expands and its balance sheet has been restructured. He said 22nd Century is hiring a new vice president of marketing to build consumer marketing capabilities and lead efforts to drive awareness and adoption of VLN products among adult smokers.
“Consumer adoption is the unlock from here,” Firestone said.
Firestone positioned VLN as a “disruptive” product in the cigarette market because it is designed around reduced nicotine content. He said the company believes many smokers want the ritual and experience of smoking without nicotine dependence. He also said the company has received feedback from some VLN consumers who reported using the product to make smoking a more casual or social activity.
Company Seeks Margin Improvement
On the financial side, Firestone said 22nd Century is addressing remaining low-margin or no-margin products by focusing first on pricing and continuing to exit unprofitable contracts while maintaining supply continuity for customers. He said those actions, along with branded product initiatives including VLN, are expected to improve gross profit as the year progresses.
The company said its capital allocation remains focused on distribution growth, VLN commercial support, marketing initiatives and advancement of its reduced-nicotine pipeline. Management also said it expects the back half of 2026 to have the potential for stronger commercial momentum than the first half, though improvements may not be linear from quarter to quarter.
Firestone closed the call by reiterating that 22nd Century’s priorities for 2026 include expanding distribution, increasing retail outlets, improving VLN marketing campaigns, broadening the Pinnacle franchise and advancing the regulatory and product pipeline behind the company’s VLN reduced-nicotine platform.
About 22nd Century Group (NASDAQ:XXII)
22nd Century Group, Inc, founded in 1998 and headquartered in New York, is a plant biotechnology company that applies proprietary breeding and gene modulation technologies to tobacco, hemp and related plant species. The company’s core mission is to develop and commercialize plant-based solutions that address public health, consumer wellness and agronomic needs. Its flagship reduced nicotine tobacco platform is engineered to deliver significantly lower levels of nicotine than conventional tobacco products while retaining the sensory characteristics sought by adult smokers.
Through its branded reduced nicotine tobacco products, marketed under the NEXT Generation™ portfolio, and its GenCanna® subsidiary focused on hemp cultivation and cannabinoid extraction, 22nd Century serves both commercial markets and contract research clients.
