Q3 2022 4Front Ventures Corp Earnings Call
Section of the company's filings and disclosure materials.
Any forward looking statements should be considered in light of these factors.
No a safe harbor any outlook presented in today's.
As of today and forefront management does not undertake any obligation to revise any forward looking statements in the future I will now turn the call over to Andrew to Chief investment Officer of forefront ventures. Please go ahead.
Thank you and welcome everyone.
I'm joined today.
On the call by the Chief Executive Officer Lee <unk>.
Baker President Karl just Gano, Chief Financial Officer, Keith Adams, President of California operations, Ray land graph, and our EVP of finance Jake.
Because <unk> was a bit under the weather today I'll begin today's call with a review of our ongoing strategy before walking through our operational trends and highlighting our quarter quarterly milestones.
I'll, then hand, the call over to Carl who will expand on our Q3 financial results and provide US an update on continued activity through the second half of the year.
Before looking ahead to what what's the common early 'twenty three.
We will conclude with a question and answer session, where the entire management team will be available for any follow ups.
So at forefront, we're guided by our winning strategy of replicating operational excellence, beginning with our success in Washington, and learning from our experience and experiences and best practices from each of our other cornerstone markets.
We've built a robust platform and unmatched operating model that we're replicating across our footprint our strategy and methodologies continue to evolve as we optimize our high margin production capabilities and expand our product portfolio state by state.
Our belief is that the sweet spot in the candidates supply chain manufacturing low cost high quality consumer cannabis packaged goods at scale.
As the U S cannabis industry continues to mature and pricing compresses the market is coming to us as our focus turns to operational efficiencies and experience in competitive markets translate into market share gains.
As we reflect on our achievements to date, we cannot be more excited for how our company is positioned in this evolving industry.
In an effort to not buried the lead let me start out with this quarter's key headlines.
First we continue to see strong operating momentum across our business posting a 9% sequential revenue increase and a 13% increase from Q3 2021.
We were able to achieve the sequential growth with no new material assets coming into our portfolio.
Next are our core strategy of replicating low cost production methodologies and introducing our quality products to new markets continue.
<unk> to play out.
In the third quarter in Massachusetts, we doubled the amount of flower sold over the second quarter posting record revenue and margins in our state despite pricing headwinds.
We believe our market share in Massachusetts is now in the mid single digits with plenty of room to go up.
Third due to our focus on cost controls operational efficiency and profitable growth. We are expecting positive operational cash flow by December of 2022 next month.
Next, California, and Illinois are shaping up to be meaningful growth drivers of our business in 'twenty three and beyond.
And last we are more than adequately capitalized to achieve our growth plans and as mentioned expect to return to positive operational cash flow.
We ended the quarter with over $5 $3 million in cash on the balance sheet and anticipate an additional $8 million to $10 million of cash to be added to our balance sheet, but through the end of the year in the form of advances against employee retention tax credits.
These are non dilutive.
We have already received trade confirmations for the first $5 7 million tranche.
Tranche of these tax credits expected to fund later this week or early next week.
Now to the detail.
Our retail operations are performing at or above expectations across the board with growing customer counts as we continue to raise the bar with product innovation and quality improvements.
We believe we are poised to meaningfully accelerate the trajectory of our growth as we leverage our investments in state of the art automation and manufacturing process facilities in California, Illinois and Massachusetts.
Through this approach we are poised to triple or quadruple the revenues of our company within the existing geographic footprint over the next three years without a significant significant capital requirements.
The cannabis industry's unique challenges have not deterred our confidence in this enormous opportunity in fact, the obstacles that many other companies are facing only served to strengthen our conviction and our unique positioning in the U S cannabis landscape.
With the automation and scale in our manufacturing facilities, we can drive efficiencies and savings that no one else can match.
The existing $100 billion U S. Cannabis market is shifting from the illicit and gray markets to state licensed operators and despite inconsistent capital markets and onerous tax system and delayed state Rollouts that trend should continue as customers today in safety and consistency in their branded products in states looked.
To maximize tax revenues and drive employment.
We remain increasingly optimistic we will we will see incremental candidates reform at the federal level. This year and we're encouraged by President Biden actions last month partnering thousands of Americans convicted of simple cannabis possession, and calling for a schedule review of candidates.
However, until that time arrives we remained focused on what we can control and and perfecting what we do best.
Manufacturing and cultivating high quality products at scale and honing our strategy to keep costs low while enhancing product quality.
This has resulted in one of the most nimble in diverse lineups product lineups and the industry further insulating us against pricing pressures and ultimately benefiting our consumers.
With a variety of price points they deserve.
Our thesis continues to play out in real time and in the third quarter, we saw a meaningful shift in our growth markets of Massachusetts and California.
<unk>, the third quarter for Massachusetts, with its top quarter and net sales to date as our new genetics and post production upgrades were introduced and performed extremely well in an otherwise difficult quarter for many in the state.
We've made considerable progress strengthening our position in our cornerstone markets throughout the growth of our existing operations and advancements with strong pipelines of potential partners.
We believe this has set us up to continue this positive momentum through year end and into 'twenty three.
I will now provide a brief update on our core markets.
First in Massachusetts.
Our market share continues to grow steadily up approximately 40% from January 21 for the latest data and hitting an all time high of what we believe to be mid single digit market share.
We owe this achievement to our exceptional operations team and the improvements we have made the product quality and bulk pricing.
We have always operated and excelled in competitive markets with pricing pressure and our experience of doing so continues to serve us very well.
The quality of our flower and our genetic portfolio in Massachusetts has improved dramatically due in no small part to our acquisition of <unk> and its holliston facility.
Q1 of this year.
Our company's focus on always finding ways to offer even better products and market leading price points.
Improvements to our growing techniques and postproduction procedures have supplemented our already top tier operating efficiencies and industry leading yield.
In fact, we have already incorporated these meaningful methodologies from holliston, the best designed facility, we've ever seen across our Worcester, Georgetown and outgrow facilities.
Finally, we are currently in the process of adding them to our Washington managed facilities as well.
When prices softened in Massachusetts earlier this year, we were able to meet the challenge head on and we are now seeing great sell through rates at our retail locations due to new wholesale pricing and product innovation.
For example, we've been doing we've been able to successfully drive more sales of our popular mini bud shape, allowing us to make room for the excellent new products coming onto the shelves from our Houston facility.
Our low cost production is allow us to drive volumes of higher quality flower.
And as a result, we also saw a quarter over quarter increase of approximately 101% and flower sold in Massachusetts in the third quarter.
Also noteworthy is the increase in volumes for our Vapes and edibles.
Each of which saw double digit increase of 45% and 21% respectively.
<unk> over quarter.
In the third quarter, we also launched four new brands in Massachusetts, one of them being island.
For island debut in the base fee, we unveiled 11, new strains of package flower produced particularly for this market.
In the five weeks since the island.
<unk> launched the brand we've sold 30, 33% more revenue than the previous quote Unquote Best brand, which is our private reserve brand did during the during the five weeks prior to the island launch.
This gives us early indications that we can support a premium price with the addition of this California brand and improved quality.
We are also seeing a consumer following being established and this is even before we introduced the island pre roll and infused pre rolled products, which are set to hit the market and several varieties in the coming weeks.
Moving to California.
We continue to build momentum our strategy is progressing and as our sales continue to ramp and opportunities for expansion evolve.
As a reminder, we are pursuing a four part strategy in Cali.
One direct sales of our award winning and proven product suite.
Two.
Third party processing and manufacturing three select brand acquisitions and for the opening of select retail locations.
Before I address each of those individually, let me share a few observations on the California market.
First most legacy brands in the state continue to suffer as pricing for both flower and derivative products remains challenge.
New operations have a low cost production capabilities or the capital to compete overtime.
In the near term struggling operators are selling their products at severely discounted prices in an effort to stay alive.
This is unsustainable and over time will allow us to opportunistically tuck in brands that we desire with advantageous economics.
Second retailers are actively trying to expand the percentage of of shelf space dedicated to their private label products and indeed quality third party processing and manufacturing to achieve that goal.
Not only is our facility a one stop shop, allowing customers to achieve other savings such as fuel costs.
But due to our scaled automated processes Nolan can beat us on price.
Third no capital is coming into California, right, now, which not only ensures that no one will replicate what we've built but also as a sense of urgency for operators to switch to our service as they look to cut costs and maximize profitability.
The momentum around our E. Commerce facility continues to build and we see steady market and market share gains month over month in our direct sales effort is.
The quality and pricing of our products is driving deeper penetration into existing accounts and we continue to add new accounts.
On the branded front islands high quality products continued to perform since introducing and integrating island into our California product suite. The brand has been well received in our sales force is love having established branded flower in their sales bag.
Island is back in growth mode, and selling through flower about as fast as it hits the menu.
Just this month, we expanded our offering of island.
California's with a launch of many infused pre rolls.
These new pre rolls are crafted with single strain all natural flower infused with highly potent THC a diamond.
And are offered and convenient.
Five grand format and fixed premium strains.
We anticipate a positive reception to this new product with increases of our competitiveness within the infused category.
We believe island dispute poised for even further growth as we continue to introduce additional strains to its popular lineup and drive volumes to enable consistent fulfillment to our partners as demand picks up alongside the expansion of our offering.
In addition to Ireland or a Pas are popular award winning brands are increasing their penetration in California.
Our crystal clear vape products have become the fastest growing brand in our California portfolio.
And surpassed $300000 in monthly sales in both August and September we.
We expect this growth to persist as we continue to introduce new innovative skus.
Our hybrid.
<unk> is the number one performing edible in our portfolio.
And Mara Gummies continued to gain traction as we continue to innovate with recently added CB and SKU that became a top performer in its first month debut.
Some innovative new packaging is also coming for both <unk> and <unk> to market evolution, both top selling brands.
And in the third quarter, we closed our acquisition of Bloom farms Ah brand known for its collection of California crafted products. Its range of products include tinctures Vapes concentrates. In addition to its wellness line that offers various hemp derived products such as Vapes tinctures and topical.
We began manufacturing balloon for products at our Commerce facility in August and we will leverage its active partnerships with leading retailers and distributors to further expand availability of these products in California and beyond.
Bringing this brand online diversifies, our vape offering which remains one of our fastest growing category categories in California to date.
While also expanding our topical offering.
We continue to explore new ways to further diversify our product offerings.
As a function of where we sit in the supply chain and the automation and scale in which we operate we.
We have a multiple levers dials and knobs, we can adjust as market conditions and preferences dictate and we're always actively reviewing and tweaking our portfolio to optimize results and drive future growth.
On the private label side, we have active partnerships with five of the leading retailers in the state, including several large region, leading operators with numerous dispensary locations.
A leading statewide delivery service and a national publicly traded operators.
We are now producing and packaging gummies vape infused pre rolls distillate diamonds, you name it and we're making we're making it for these major operators significantly cheaper and more profitably, while continuing to provide competitive margins with little to no comparably scaled competitive operators in the state.
We have a robust private label pipeline in California, as well with our strategic focus on top retail partners, where we can secure shelf space within their retail footprint.
Large strategic partners, where theres material revenue and growth opportunity combined with other strategic alignments, such as toll processing.
We have not yet been beaten on price for these deals and are working at least at a 40% gross margin line of business in today's market.
Private label partnerships in California, typically start with small batch orders or tests to establish reorders over time, we believe we can move some of these partnerships to more formal private label contracts.
But this is not yet standard practice in California outside of toll processing and supply contracts.
This is a solid business switching costs are high once partners are on the forefront platform.
So we believe we can land and expand with many of these partners to grow revenue over time, while minimizing churn and maximizing the value of our assets.
We've said before that we view California's a flywheel business as.
As we progressed through the end of the year and into 'twenty three we expect to see steady and continued increase in utilization of our commerce facility.
While the California market continues to have its challenges we remain very confident that we are incredibly well positioned to continue to profitably take share in what is now the biggest cannabis market in the world.
Additionally, we believe forefront as one of the best positioned companies.
Companies in the country to leverage California's low biomass costs once the state can supply the rest of the nation through Interstate commerce.
Our highly scaled low cost automated platform, we'll be able to prove produce and export products that no operator in the country will be able to compete with on price.
If no one can beat us on price in California, No one will beat us on price in the U S.
Next in Illinois, we continue to see improved product yield quality and sales volume.
Due to the excellence of the techniques and methodologies acquire from Holliston facility.
Other refinements to our production processes, we have made striking improvements to the quality of our flower during the first half of this year.
After recently introducing are infused pre roll TERP stick to <unk>, and Illinois, they've quickly become the fastest growing product line in our history.
Additionally, we expect to launch premium flower before the end of the year.
And we continue to see solid performance from our Q2 retail locations and we haven't even rolled out derivative products, yet, which can drive significant upside.
Notably in the third quarter, we saw double digit sequential growth in new retail customer acquisitions and daily sales across the mission dispensary presence.
Our near term plan includes an increased focus on expanding our retail footprint in the coming months as our 250000 square foot cultivation and production facility in Madison rats, construction and print and prepares to commence operations in 'twenty three.
We hope to have up to three retail location retail licenses under LOI. This coming week and have plans to further expand our retail footprint in the coming months.
The opportunity in Illinois is right and we are ready to go after it with our next Gen facility coming online.
<unk> of the retail store and addition of ancillary products to our product portfolio.
Couldn't be more excited to leave our mark on the Illinois market.
With that I'll now hand, the call over to Carl for a deeper look at our Q3 performance Carl.
Thanks, Andrew.
So I'm, a little less strict than Leo I get to bring home the baton I apologize in advance for any unexpected pauses in the auction.
Need for coffee and attacks.
As discussed our belief is that the sweet spot in the cannabis value chain lies in the low cost high quality production that Ken just consumer package goods for sale.
That's precisely where we are positioned for for instance, a company and as a result, we are now witnessing started significant leg of growth that will play out over the next 12 months augmented by strategic and accretive M&A.
I do note I want to.
Emphasize that the high quality.
Elements of that change in our thesis is proving over and over to be probably one of the most important to us.
Okay.
Jesus.
We are incredibly happy with our performance in the third quarter.
<unk>.
As we have made significant strides across retail and ramped up production and accelerate wholesale actively despite continued pricing challenges in the market.
Also as Andrew mentioned, we posted our top quarterly revenue in Massachusetts to date.
Eastern corner, we're tremendously proud of this achievement.
On the streets.
The significant work, we have put in chi improves the quality of our flower and leverage our low cost constancy and production capabilities to serve this growing market.
Now to highlight some noteworthy stats in the third quarter.
Demonstrate our strength in this market.
Quarter over quarter, we saw an approximate.
71% increase in total wholesale customers.
23% increase in retail and wholesale revenues.
15% increase in retail average daily sales.
Double digit sequential growth.
New retail customer acquisition.
And again as mentioned by <unk> earlier, you were thrilled to have increased our market share in that seat now into the mid single digits.
The ever improving quality of our flower.
Still working itself into demand using uncertain about that.
Very optimistic about this progress continues as we close out the year.
I'll reiterate that our model is a stepwise process.
Adult feeds from our success in Washington State.
Oleg analyzing what is selling and what using an.
And adjusted Accordingly.
We are adapting in real time to the ever shifting consumer demand and in each iteration, we further improve our efficiency and our bottom line issues.
And very much remains a gorilla industry.
That's what we do.
In California.
Demonstrating our ability to enter the market with our proven and award winning portfolio of products that are priced as much as 50% lower than the leading incumbents.
Doing this while still maintaining healthy margins, which you expect to continue to improve.
<unk> costs were leveraged in our key categories product something Tom soon an inevitable land.
Because you started the year with a revenue basis zero in California, the pricing pressures, having created a group withdraw before us in fact, we are bringing our scale low cost production to bear in a market where.
Monetization is already largely housing.
California is the largest Kim just marketing world and the land of the brand.
While other operators are shifting operations away from this date, we are leaning in building brand and taking share.
As a steep steep wide reach continue to grow during merging encouraging signs that the California legal challenges the industry itself, we will see some relief.
A combination of factors, including the repeal of the contribution tax.
The crackdown on the Lucy grows and water usage and the continued expansion of retail licenses all proves to be tailwind.
And this is all before Interstate commerce, and some day allow our regional hubs to serve as neighboring states.
We're already seeing more and more repeat buying from our retail customers improving our monthly and 90 day average branded retail customers each month since March very important for us.
All the while our 90 day average wholesale customer accounts have grown to over announced 300 locations from a base of zero when they entered the market less than a year ago and 21.
We continue to see a married.
You see a myriad of expansion opportunities in California in terms of brands addition, retail locations and strategic partnerships.
Our market position allows us to take a methodical and disciplined approach as we seek to profitably build our California business.
We believe that in this state continues to heal.
We are well positioned.
Positioned to emerge as one of the market share leaders do towards scaled automated platform little genome skills competition.
Onto Illinois.
Which I'm, particularly excited about.
In Illinois construction of our approximately 250000 square foot mountain cultivation and production facility remains largely on schedule.
Last quarter, we are working through some customary challenges getting power to the site.
Current projections from the power provider comment extend power connection to the end of Q2 'twenty three.
Whilst we are putting full energy into expediting this delivery date.
Nevertheless, our considering the cost effectiveness of introducing temporary repower and scope cez, India events improvement diseases.
But for clarity.
These common challenges are not expected to negatively affect young time substantial completion of construction at the end of this year.
We expect to achieve success in Illinois at an accelerated rate benefiting from our best practices methodologies and techniques used in Massachusetts as we continue to bring this best in class facility.
Speed improved yet again, the deficiency high quality products and processes, we will outperform.
In Bull and bear market conditions, bringing from Washington into Massachusetts, and Illinois.
Let me reiterate a point I made on our debt and remain on previous quarters call about Illinois.
With only two open dispensaries out of our allowable tenant steam we have enormous room for growth as we expand our retail footprint. In addition to expanding our wholesale presence.
Low price quality products in the immediate term.
Especially.
Exciting is the manner in which matteson perfectly lends itself to the methodologies and state of the art techniques.
We have brought from Washington and maps.
And.
Our holliston, Massachusetts.
Consequently, we'll be extremely well positioned to take advantage of the increase in the retail which is expected to come online over the next few years.
Meanwhile, we have great market penetration as it is we have already sold into 90% of retailers in the state.
With the recently announced 185, new retail licenses coming onboard we are actively seeking opportunities to build or acquire.
And partner those relationships even further.
We're hoping to have up to three such relationships under LOI.
Later this week.
Now, let me take a minute to underscore the growth engine that Illinois can be to our story.
We are currently run rating just over $40 million out of Illinois between two retail locations and a small 9000 square <unk>.
<unk> growth.
Quickly eyeball in some other Amazon lessons alright.
Some.
Other msos in Illinois, with large cultivation and production.
<unk> and a full complement of 10 retail locations I estimate that they're doing in the neighborhood of $2 50 $300 million of revenues.
It's Matthew coming online the first box for achieving this kind of scales chip set.
Second box buttressing, our wholesale capabilities and capturing the upside by additional by adding additional retail. So stay tuned. There is you have a lot of unrealized potential and the stage and we're just getting started.
Now, let me review the numbers for Q3.
System wide pro forma revenue for Q3, 2022 was 37 3 million that's up 9% from Q2 2022.
And up 13% from Q3 2021 gas.
GAAP revenue for Q3, 2022, with $32 5 billion up 14% from the prior quarter and up 25% from Q3 2021.
This increase is as planned due to increased revenue in the company's wholesale revenue as.
It ramps those portions of the business in California, Illinois, and Massachusetts.
Q3, 2022, adjusted EBITDA was $9 3 million.
A couple of percent in the prior quarter, but up 24% from Q3 2021.
Presenting an adjusted EBITDA margin of 25%.
Continued growth in adjusted EBITDA and margins is expected to persist through 2023.
As our operations drive increased production and higher sales volumes without material increases to overhead.
Now on to the balance sheet.
As of September 32022, we had $5 3 million of cash and $49 $5 million of related party long term debt just doesn't come due until may 2024.
We expect an additional $8 million to $10 million of non diluted cash to be added to our balance sheet as Andrew mentioned earlier through the end of the year in the form of advances against the employee retention tax credits.
<unk> already received trade confirmations for the first $5 7 million tranche expected to fund.
Andrew said either later this week or early next week.
And we will be filing the additional returns to get residual amounts shortly.
With this additional $8 million to $10 million combined with as Andrew mentioned earlier on the call our expectation of being cash flow positive from operations next month.
We are in a relatively comfortable cash position.
Further.
As Andrew sorry for them.
As we execute on our strategy our thesis continues to flex.
Continuously improving and actively introducing our brands products and best in class Mlps into new markets and growing scale successfully.
We're adding new skus on a monthly basis, having developed and launched almost a dozen new products. Upon varieties in Q3 alone and roughly over 680, new skus year to date across our footprint.
Which brings me to my final point.
Our goal has always been to become a larger company by design is how our model offerings stuffs.
While we are of course open to the right opportunity to be part of a larger enterprise, we will not compromise to do so.
We will remain heavily invested.
Continued creation shareholder value by perfecting, our low cost production and manufacturing and quality products and proving our thesis time.
And again.
Everything we are doing today builds our company and grows our value in the marketplace. While also positioning us to be the ideal merger partner of the standard bearers of automation and efficiency at scale.
To conclude we are.
Confident we found the sweet spot for outside value creation by the low cost high quality production with cannabis consumer packaged goods.
We are proving herself.
Ourselves to be a major piece of the cannabis landscape.
Some of the most exciting Canada markets in the country and we cannot wait to sharing our continued success as we move forward.
We're excited about our brands and saw loose and incredibly proud of our team and their dedication to providing consumers with a terrific user experience.
<unk> a great price.
I am convinced that the next 12 months will demonstrate the power of our model at scale.
Getting away from a robust sustained group growth in the long term value for our shareholders with that I'll now turn the call over to the operator to open the lines for Q&A.
Thank you.
And gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by one on your next time.
At this time.
Your request.
I would like to withdraw your request. Please press star followed by <unk>.
Using a speaker phone please Mr <unk>.
Let me see.
Your first question.
Genuity Your line is open.
Hey, there how are you.
Hi, This is actually a one on for Shaun.
Correct.
Alright. Thank you final question and congrats on the quarter. Michelle I was wondering if you guys could speak to the mix between house brands and third party brands in Massachusetts operation and if Theres been any view internally to ship more supply through your own retail channel.
And I'm asking because we've seen a lot of other players within the market kind of moving towards more vertical integration.
As a way to kind of combat the price dynamics throughout this year it seem in Massachusetts. So I was just wondering if this is something that you are discussing internally and what kind of room that you have at your stores to increase their portfolio of products.
Yeah, Thanks, I'm going to turn that over to Leo.
But you have to apologize for Leos, Croaky voice, but I think he's best.
So today answer that.
Thanks, Andrew.
Well it would have a bottler quarter subject here.
Yeah.
Excuse me.
In Massachusetts, we have definitely moved in that direction.
Excuse me.
And.
We've doubled the sales of our in house flower all through our own retail.
And we feel like we've reached a point, where we're actually selling through.
Everything that we produce about two thirds of that going through our own retail and a third of it go in wholesale.
We're at about 90% sell through of our own flower.
There's a few products that we still source third party and it's always a good mix to have some third party product as it helps us.
Swapped swap shelf space and get our own wholesale going for some derived goods.
But with 90% good about where we're at.
They are at 90% in store through our own retail of our own flower.
Which is actually up for us from where it was last year.
Definitely feel very good about that and currently selling everything we produce with the majority of that going through our own retail.
There might be a little room for us to become a little more vertically little more vertical, but we also like spreading the product and having a little bit of wholesale. So we can make sure that our customer base.
[laughter] gets access across the whole state.
That answer your question.
Yes. Thank you so much and hope you feel better.
Okay. Thank you.
Ladies and gentlemen, as a reminder, should you have a question. Please press star followed by one.
Your next question comes from Colin George from Haywood. Please go ahead.
Hey, guys are undergoing.
Good how are you you had into Vegas.
No no.
And back in the office holding the Fort Nirvana Fright rate out of Vegas, he might be listening into the call, but I don't know what they are.
<unk> got enough for him to chime in here, but.
I assume you guys are on their way down to Vegas, if not already there.
Some contingent.
Okay.
Well congrats on the quarter seems like pretty much every market progressing pretty well in California, Massachusetts, Illinois.
Just looking for maybe a little bit more color. If you have any with regards to those rois relating to the LNR it expenses.
Not really a clear idea of when these expenses.
Might start opening one of your peers mentioned that they thought they expected at least a couple of them to be opening in the next few weeks here do you have any visibility in terms of the timing on when doors mile than on some of those retail locations are working to finalize with or is it still kind of up in air.
I will I'll let.
Let carl jump on them.
Hey, Collyn.
Yes, with the with the current.
Licenses that we have.
Anticipation for LOI under this this week.
Would not anticipate for us to be opening those prior to the opening.
Of the Madison facility, so I could see them kind of dovetailing on parallel paths sometime into Q2 Q3.
2023.
Okay that does not mean that we're not that does not mean that we're not actively seeking other retail opportunities to enhance our footprint 10, which means and do include already active retail locations.
Okay. Thanks, Yeah that makes sense and I guess that was kind of.
Segways into my next question.
Kind of a schedule and the timing of that new cultivation facility to come online.
After some of these new retail locations office to give me some sort of software. So I think that all makes sense.
Maybe one more if I can just with regards to sort of what might've been the offset in terms of the growth.
During the quarter there was a lot of strong metrics, whether it be from Massachusetts, vape, and edibles or flowers or Illinois progressing along average daily sales.
So is that offset that pricing pressure felt across the various various markets.
Yes, I mean, we saw great growth in Massachusetts on an absolute basis on same in California.
Actually Keith do you want to just sort of talk to some of the puts and takes there.
Sorry to get off of me, yes mass as you as you just described is the pricing pressure.
Offset by more of our own products sell to as Leo mentioned close to 90%, Illinois, We're just coming into market with some mobile I think was five streams coming on the south and our internal stores.
Inside of December So we would expect to see.
So more sell through there, but there's also pricing pressure in that state and then also in California.
This pricing pressure in all three states, but as we continue to move more and more branded sales onto.
Into the digital channel and so in all three states were seeing top down pricing pressure offset by more of our own products selling shoe in both Illinois and mass, Illinois, I think of it as probably two to three months behind the progress we made in Massachusetts.
Okay. Thanks Thats helpful.
And that's really all my questions it looks like you've got a.
A couple of exciting weeks coming up here with those rois in some of those products better covenants. So.
That's on the quarter and looking forward.
Hearing some more positive news out of you guys over the coming months.
Appreciate it thanks Paul.
There are no further questions at this time, ladies and gentlemen. This concludes your conference call for today, we thank you for participating.
Your line.
Okay.
[music].