We are focused on integrating the assets and implementing our operating playbook to increase same-store sales and drive customer traffic. We continue to believe that New Mexico provides a unique opportunity to address a highly fragmented market and will continue to optimize our operations as we grow market share in the state. We experienced a 55% sequential increase in customer loyalty members in the third quarter to approximately 144,000 members in New Mexico as we integrated Everest Apothecary into our operations. Similar to Colorado, we believe there is an opportunity to capitalize on customer loyalty and will continue to develop the program across the state. Our wholesale business grew 41% year-over-year, primarily due to our entry into New Mexico.
New Mexico wholesales in quarter three now approximately is 22% of our wholesale business and growing. In Colorado, we have expanded our wholesale portfolio and our current offerings include flower, pre-rolls and vapes along with bulk distillate. Schwazze now sells into seven of the 10 largest operators in each state. Our licensed premium pre-roll brand from Lowell Farms is now in over 132 doors in Colorado and has become the number two pre-roll in Colorado by the end of Q3. Turning to our cultivation and manufacturing operations. Our divisional cultivation leaders have made solid progress on improving both our indoor and outdoor growth, leading to higher flower yields, quality and lower cost of goods. In addition to improved quality, these efforts resulted in a 16% sequential reduction in our average cost of flower in quarter three.
We are in the process of optimizing our inventory across the system through a new ERP implementation across our acquired cultivation and manufacturing facilities. As many of you know, these projects are not quick and easy to implement. They take time and careful diligence to ensure an effective deployment and these efforts will enable us to improve our visibility and control of our inventory levels, enhance supply chain efficiencies, and uncover various cost saving opportunities in the future. Before passing the call on to Forrest to review our financials in more detail, I’d like to take this opportunity to thank the entire Schwazze team across Colorado and New Mexico. Their dedication to executing our operating playbook to drive results regardless of the challenging market conditions is a testament to the quality and culture of our team.
Forrest, over to you.
Forrest Hoffmaster: Thanks, Nirup. Jumping right into our results, as a reminder, all financials are in U.S. dollars and variance commentary is on a year-over-year basis unless otherwise stated. Total revenue in the third quarter of 2023 increased 8% to $46.7 million compared to $43.2 million for the same quarter last year. The increase was primarily due to growth from new stores compared to the prior year period and increased wholesale revenue, partially offset by pricing pressure from the proliferation of new licenses in New Mexico. Gross profit for the quarter was $21.4 million, or 45.9% of total revenue, compared to $22.5 million, or 52% of total revenue in the third quarter of 2022. The decrease in gross margin was primarily driven by a year-to-date true-up expense reclassification from SG&A into cost of goods sold as well as increased lower margin medical sales mix in Colorado and lower initial gross margin from our acquisition of Everest Apothecary’s inventory.
This was partially offset by improvements to product mix across our retail footprint. Operating expenses for the third quarter of 2023 were $12.5 million, compared to $11.4 million for the same quarter last year. The increase was primarily due to four-wall SG&A increases associated with 28 additional stores in Colorado and New Mexico that are still ramping. As a result, income from operations for the quarter was $8.9 million, compared to $11.1 million in the third quarter of last year. Net loss was $0.3 million, compared to net income of $1.8 million for the third quarter of 2023 or 2022. Adjusted EBITDA for the third quarter of 2023 was $14.1 million, or 30.2% of revenue compared to $15.9 million, or 36.7% of revenue for the same period last year.
The decrease in adjusted EBITDA margin was primarily driven by the temporary lower gross margin and higher four-wall SG&A associated with new stores that are still ramping into our system. We generated positive operating cash flow of $6.9 million, compared to $10.5 million in the third quarter of 2022. As of September 30, 2023, cash and cash equivalents were $19.6 million compared to $38.9 million in — on December 31, 2022, while operating working capital decreased by $3.5 million to $0.6 million during this period. Total debt as of September 30, 2023 was $155.1 million, compared to $127.8 million on December 31, 2022. As Nirup mentioned earlier, we’re focused on revenue growth, customer acquisition and generating positive cash flow, all while making further progress on integrating our recent acquisitions to drive operational efficiencies and cost synergies at scale.
