22nd Century Group, Inc. (NASDAQ: XXII) issued a mid-year stockholder letter from Chairman and Chief Executive Officer Lawrence Firestone, outlining the company's commercial progress and distribution targets for its low-nicotine cigarette products.

The company reported that its VLN® cigarettes are currently available in approximately 2,000 retail outlets across the U.S., with a target of roughly 5,000 outlets by year-end 2026. Same-store sales have grown each month since the beginning of the year, and volume in non-promotion periods has increased by an average of 10% per month, according to the letter. The company estimates that active VLN® user trial has exceeded 5,000 cases.

22nd Century recently launched Pinnacle Pure alongside Pinnacle VLN® in select states and is initiating retail trials in California, metro New York, and northern New Jersey. A direct-to-consumer home delivery platform is planned for the fourth quarter of 2026.

The company said gross margin improvement is a priority, with a shift toward branded products carrying positive gross margins occurring in the third quarter of 2026. The letter described the overall U.S. combustible cigarette market as exceeding $50 billion annually at retail.

Firestone stated that the company's VLN® cigarette remains the only low-nicotine combustible cigarette authorized by the U.S. Food and Drug Administration to reduce smoking-related harm. The product contains 95% less nicotine compared to conventional cigarettes, according to the company.

The letter noted that the company plans additional distribution announcements in the second half of 2026 and intends to expand its intellectual property portfolio around its low-nicotine tobacco technology. The information is based on a press release issued by 22nd Century Group.