Q1 2024 Curaleaf Holdings Inc Earnings Call

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Operator: Good day, and welcome to the Curaleaf Holdings first quarter 2024 conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on your TouchTown phone. To withdraw your question, please press star, then 2. Please note, this event is being recorded. I would like now to turn the conference over to Camilo Lyon, Chief Investment Officer. Please go ahead.

Good day and welcome to the Cura leaf Holdings first quarter 2024 conference call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero after today's presentation.

Operator: <unk> there will be an opportunity to ask questions to ask a question you May Press Star then one on your Touchtone phone to withdraw your question. Please press Star then two please note. This event is being recorded I would like now to turn the conference over to Camilo Lyon Chief Investment Officer. Please go ahead.

Camilo Russi Lyon: Good afternoon, everyone, and welcome to Curaleaf Holdings' first quarter 2024 conference call. Today I'm joined by Executive Chairman Boris Jordan, Chief Executive Officer Matt Darin, and Chief Financial Officer Ed Kremer.

Camilo Russi Lyon: Afternoon, everyone and welcome to <unk> Holdings first quarter 2024 conference call today, I'm joined by Executive Chairman, Boris Jordan, Chief Executive Officer, Matt Darin, and Chief Financial Officer, Ed Kramer before.

Camilo Russi Lyon: Before we begin, I'd like to remind everyone that the comments on today's call will include forward-looking statements within the meaning of Canadian and United States securities laws, which by their nature involve estimates, projections, plans, goals, forecasts, and assumptions, including the successful integration of acquisitions, and are subject to risks and uncertainties that can cause actual results or outcomes to differ materially from those expressed in the forward-looking statements on certain material factors or assumptions that were applied These forward-looking statements speak only as to the date of this conference call and should not be relied upon as predictions of future events.

Camilo Russi Lyon: Before we begin I'd like to remind everyone that the comments on today's call will include forward looking statements within the meaning of Canadian and United States Securities laws, which by their nature involve estimates projections plans goals forecasts and assumptions, including the successful integration of acquisitions and are subject to risks and uncertainties that could cause actual results or I.

Camilo Russi Lyon: We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, further events, or otherwise, except as required by applicable law. Additional information about the material factors and assumptions forming the basis of the forward-looking statements and risk factors can be found in the company's filings and press releases on CDAR and EDGAR. During today's conference call, in order to provide greater transparency regarding Curaleaf's operating performance, we will refer to certain non-GAAP financial measures and non-GAAP financial ratios that involve adjustments to GAAP results.

Camilo Russi Lyon: It comes to differ materially from those expressed in the forward looking statements on certain material factors or assumptions that were applied in drawing the conclusion or making a forecast in such statements.

Camilo Russi Lyon: Such non-GAAP measures and ratios do not have a standardized meaning under US GAAP. Therefore, any non-GAAP financial measures presented should not be considered to be an alternative to financial measures required by US GAAP, should not be considered measures of Curaleaf's liquidity, and are unlikely to be comparable to non-GAAP financial measures provided by other companies. Any non-GAAP financial measures referenced on this call are reconciled to the most directly comparable U.S. GAAP financial measures under the heading Reconciliation of Non-GAAP Financial Measures in our earnings press release issued today and available on our investor relations website at ir.curaleaf.com. With that, I'll turn the call over to Executive Chairman Boris Jordan. Boris? Thank you, Camilo.

Camilo Russi Lyon: These forward looking statements speak only as of the date of this conference call and should not be relied upon as predictions of future events. We undertake no obligation to update or revise any forward looking statements whether as a result of new information further events or otherwise except as required by applicable law additional information about the material factors and assumptions.

Speaker Change: The basis of the forward looking statements and risk factors can be found in the company's filings and press releases on SEDAR and Edgar.

Camilo Russi Lyon: During today's conference call in order to provide greater transparency regarding <unk> operating performance, we will refer to certain non-GAAP financial measures and non-GAAP financial ratios that involve adjustments to GAAP results, such non-GAAP measures and ratios do not have a standardized meaning under U S GAAP and.

Camilo Russi Lyon: Any non-GAAP financial measures presented should not be considered to be an alternative to financial measures required by U S. GAAP should not be considered measures of purely for liquidity and are unlikely to be comparable to non-GAAP financial measures provided by other companies and the non-GAAP financial measures referenced on this call are reconciled to the most directly comparable U S GAAP financial measures.

Camilo Russi Lyon: Under the heading reconciliation of non-GAAP financial measures in our earnings press release issued today and available on our Investor Relations website at IR Dot <unk> dot com with that I will turn the call over to executive Chairman Boris Jordan Force.

Boris Alexis Jordan: Thank you, Camilo. Good afternoon, everyone, and thank you for joining us to discuss our first quarter results. The decision last week by the DEA to reschedule cannabis to Schedule 3 is one that ignores the game-changing catalyst we've been eagerly anticipating for nearly 10. I believe this long overdue change will create a seismic shift for us and the industry, and we're grateful to the Biden administration for moving it forward. Important medical research on the plant can finally proceed unencumbered, a crucial development for consumers seeking alternatives to opiates and other pharmaceuticals.

Boris Alexis Jordan: You Camillo and good afternoon, everyone and thank you for joining us to discuss our first quarter results.

Boris Alexis Jordan: The decision last week by the DEA to reschedule cannabis to schedule III is one of the.

Boris Alexis Jordan: Game changing catalysts.

Boris Alexis Jordan: Anticipating for nearly 10 years I believe it is long overdue change will create a seismic shift for us and the industry.

Boris Alexis Jordan: Grateful to the by the administration for moving it forward.

Boris Alexis Jordan: <unk> medical research of the plant can finally proceed unencumbered a crucial development for consumers seeking alternatives to opioids and other pharmaceuticals. Most immediately for us of course, it means an end to the punitive.

Boris Alexis Jordan: Most immediately, for us, of course, it means an end to the punitive 280E tax, which, as the largest beneficiary, could save us over $150 million in 2024. But there is more work to be done to put cannabis on the same plane as other consumer products. The industry still lacks proper access to banks and credit cards, seasoned service providers, and established stable technology stacks.

Boris Alexis Jordan: <unk> tax, which is the largest beneficiary could save us over $150 million.

Boris Alexis Jordan: For taxes.

Boris Alexis Jordan: But there is more work to be done to put candidates on the same plane as other consumer products the industry still lacks proper access to banks and credit cards seasonal service providers.

Boris Alexis Jordan: Establish stable technology stack all of this can be remedied if leadership in Congress moves to pass the safer banking Bill.

Boris Alexis Jordan: All of this can be remedied if leadership in Congress moves to pass the Safer Banking Bill. The process continues to move forward, albeit more slowly than we would like. However, the rescheduling news strengthens the case for expediting SAFER. On the issue of taxes, Curaleaf has further reviewed with legal counsel the basis for filing federal tax returns on the grounds that Section 280E of the tax code does not apply to its business

Boris Alexis Jordan: Process continues to move forward, albeit more slowly than we would like however, the rescheduling news strengthens the case, we're expediting safer.

Boris Alexis Jordan: Subject to completing that review, Curaleaf anticipates it will file as a normal taxpayer for 2023 and 2024. We also anticipate amending certain prior year returns to claim refunds of excess federal income tax that was paid based upon the application of Section 280. Now, I'd like to provide an update on Custody Solutions.

Boris Alexis Jordan: On the issue of tax currently has further reviewed its legal counsel with legal counsel the basis for filing federal tax returns on grounds of section 280, <unk> of the tax code does not apply to its business.

Boris Alexis Jordan: After completing that review currently anticipates that we'll file is it normal taxpayer for 2023 and 2024, we also anticipate amending certain prior year returns to claim refunds of excess federal income tax that was paid based upon application of section 200 <unk>.

Boris Alexis Jordan: I'd like to provide an update on custody solutions. We recently added another global custodian euroclear to our list of financial institutions or custody our shares euroclear as the custodian of the international investment community with <unk> Mellon State Street, and now Euroclear, we have three of the top four largest custodians in the world able to.

Boris Alexis Jordan: We recently added another global custodian, Euroclear, to our list of financial institutions that will custody our shares. Euroclear is the custodian of the international investment community. With BNY Mellon, State Street, and now Euroclear, we have three of the top four largest custodians in the world able to hold our shares. This, in concert with our TSX listing, makes Curaleaf eligible for index inclusion, specifically the MSCI Small Cap Canada, S&P TSX Small Cap, and the FTSE Canada index. Based on the parameters set by these indices, we believe we meet the necessary criteria for inclusion. This leads me to our first quarterly highlight.

Boris Alexis Jordan: Hold our shares.

Boris Alexis Jordan: This in concert with our TSS listing makes <unk> eligible for index inclusion, specifically msci's woke up Canada, S&P <unk> small cap and the FTSE, Canada indices.

Boris Alexis Jordan: Just on the parameters set by these industries, we believe we meet the necessary criteria for inclusion. This leads me to our first quarter highlights we started the year off on a good note consistent with our expectations first quarter revenue grew 2% to $339 million.

Boris Alexis Jordan: We started the year off on a good note. Consistent with our expectations, first quarter revenue grew 2% to $339 million, compared to last year's first quarter revenue of $333 million. With our facilities fully operational, our first quarter gross margin improved by 120 basis points from the fourth quarter. We're making solid strides in our objective of achieving our stated 2024 gross margin target of 50%. Adjusted EBITDA margin was 23%, representing year-over-year margin expansion of 40 basis points. We ended the first quarter with $105 million of cash on the balance sheet and generated operating cash from continuing operations of $46 million and free cash flow of $33 million.

Boris Alexis Jordan: Compared to last year's first quarter revenue of $333 million with our facilities fully operational our first quarter gross margin by 120 basis points from the fourth quarter, we're making solid strides on our objective of achieving our stated 2020 for gross margin target of 50% adjusted EBITDA.

Boris Alexis Jordan: Margin was 23% representing year over year margin expansion of 40 basis points. We ended the first quarter with $105 million of cash on the balance sheet and generated operating cash from continuing operations of $46 million and free cash flow of 33 billion. We are deploying some of this cash into reducing leverage on our balance sheet and we'll discuss our.

Boris Alexis Jordan: We are deploying some of this cash into reducing leverage on our balance sheet, and we'll discuss our efforts in greater detail. Through the team's execution of my strategic vision, Curaleaf has evolved from an MSO to an MCO, a multi-country operator. As the lone U.S. MCO, this descriptor more accurately represents our global vision and business that today spans over 15 countries across the world. Our ambition is to leverage the expanding global platform we have created through the distribution of our brand portfolio. With each ensuing quarter, we will create further separation from our peers as a result of the global strategic lens through which we operate.

Boris Alexis Jordan: In greater detail.

Boris Alexis Jordan: Through the team's execution of my strategic vision has evolved from an MSL to an mcl a multi country operator as the loan use mcl. This descriptor more accurately represents our global vision and business that today's spans over 15 countries across the world. Our ambition is to leverage the expanding global.

Boris Alexis Jordan: We have created with the distribution of our brand portfolio with Egypt during quarter, we will create further separation from our peers as a result of the global strategic lens through which we operate and we expect our European growth catalysts to emerge more fully in the second half of the year and into 2025.

Boris Alexis Jordan: And we expect our European growth catalyst to emerge more fully in the second half of the year and into 2025. These strategic investments made over the past few years are beginning to pay off. In the first quarter, our international business grew 59% year over year and 12% sequentially, and remains on track to hit $100 million in revenue this year.

Boris Alexis Jordan: These strategic investments have been made over the past few years are beginning to pay off in the first quarter, our international business grew 59% year over year, and 12% sequentially and remains on track to hit $100 million in revenue this year.

Boris Alexis Jordan: We are seeing solid gains in our key markets of the UK, Germany, and Poland. In the UK, we are benefiting from strong patient reception of our recently introduced edibles and vapes. In Poland, we acquired Canformed, a highly regarded pharmaceutical distributor. With a population of 38 million people, Poland is proving to be a strong market for us, much like Germany, as demand for our indoor flower continues to outstrip supply. On April 1st, Germany enacted its Pillar 1 legislation, which decriminalized cannabis by removing it from the narcotics list, the benefit of which is far greater access to medical cannabis for all its citizens.

Boris Alexis Jordan: We are seeing solid gains in our key markets of the UK, Germany and Poland.

Boris Alexis Jordan: In the U K, we are benefiting from strong patient reception of our recently introduced edibles and Vapes and Poland. We acquired <unk>, a highly regarded pharmaceutical distributor with a population of 38 million people Poland is proving to be a strong market for us much like Germany as demand for our indoor flower continues to out.

Boris Alexis Jordan: <unk> support.

Boris Alexis Jordan: On April 1st Germany enacted its pillar, one legislation, which decriminalize cannabis by removing it from the <unk> list the benefit of which is far greater access.

Boris Alexis Jordan: To medical cannabis for all citizens and the first month since the law took effect, we have seen a substantial increase in patient counts entering the marketplace.

Boris Alexis Jordan: In the first month since the law took effect, we have seen a substantial increase in patient counts entering the marketplace. These increases have surpassed expectations, and while still early, the signs are very promising for what this market will ultimately contribute to Curaleaf. To further bolster our position in Europe, in late March, we announced the acquisition of Northern Green Canada, an EU GMP-certified producer of high-quality indoor flour. Not only is NGC's transaction accretive to our international gross margins, but it also ensures the stability of our supply chain into Europe.

Boris Alexis Jordan: These increases have surpassed expectations and while still early the signs are very promising for what this market will also make contribute securely.

Boris Alexis Jordan: To further bolster our position in Europe in late March we announced the acquisition of Northern Canada.

Boris Alexis Jordan: Canada.

Boris Alexis Jordan: GMP certified producer of high quality indoor flower.

Boris Alexis Jordan: Not only is NGC transaction accretive to our international gross margins, but it also ensures the stability of our supply chain into Europe and added benefit from those transaction is the ability to study to other high growth medical cannabis markets NGC currently sells into Australia, and New Zealand. This acquisition represents another key pillar and the.

Boris Alexis Jordan: An added benefit from this transaction is the ability to study two other high-growth medical cannabis markets NGC currently sells into, Australia and New Zealand. This acquisition represents another key pillar in the development of our global brand strategy. We welcome NGC to the Curaleaf family. Returning stateside, I was encouraged to see the Florida Supreme Court decide in favor of putting the recreational cannabis measure on the November ballot. As active contributors to the Smart and Safe campaign, we are deeply committed to helping Amendment 3 pass the 60% threshold.

Boris Alexis Jordan: Development of our global brand strategy, we welcome <unk> to the purely family.

Boris Alexis Jordan: Returning stateside I was encouraged to see the Florida Supreme Court decided in favor of putting the recreational cannabis measure on the November ballot.

Boris Alexis Jordan: Active contributors to the smart safe campaign, we are deeply committed to helping amendment III passed the 60% threshold and acting as a United industry Coalition. We believe there is ample support for it.

Boris Alexis Jordan: And acting as a united industry coalition, we believe there is ample support for it. In fact, we are moving forward with our capacity expansion and new store build-out plan to meet the expected surge in demand that could increase the market two to three times to five to six billion dollars. At the expected time of the adult use launch in 2025, Curaleaf will have the necessary cultivation capacity and retail footprint in place to compete for the leadership position in Florida. In Ohio, we are actively preparing for an adult use conversion that could come in the next few months.

Boris Alexis Jordan: In fact, we are moving forward with our capacity expansion and new store build out plan to meet the expected surge in demand that could increase the market two to three times to $5 billion to $6 billion.

Boris Alexis Jordan: At the expected time of adult use launch in 2025 shareholders will have the necessary cultivation capacity and retail footprint in place to compete for the leadership position in Florida.

Boris Alexis Jordan: In Ohio, we are actively preparing for adult use conversion that could come in the next few months, the Ohio adult use market shows great growth potential.

Boris Alexis Jordan: The Ohio adult use market shows great growth potential, as it is the seventh largest state in the U.S. by population and has an underpenetrated medical market. We are excited for Ohio and the potential $2 billion market opportunity that will come after adult use sales. Our long-term strategic success rests on expanding our brands into as many points of distribution as possible. We have spent a good deal of time exploring the hemp category, and we feel it is important to enter the hemp-derived THC market with safe, tested products, which, by some estimates, is as big as the regulated cannabis market. As such, we will begin shipping a fully compliant line of hemp-derived THC beverages and edibles under our select brand in the second half of the year.

Boris Alexis Jordan: Seventh largest state in the U S by population with an Underpenetrated medical market.

Boris Alexis Jordan: We're excited for Ohio, and the potential $2 billion market opportunity that will come after adult use sales commence.

Boris Alexis Jordan: Our long term strategic success unexplained our brands into as many points of distribution as possible. We have spent a good deal of time exploring the hemp category and we feel it is important to enter the hemp derived THC market with safe tested products, which by some estimate is as big as the regulated cannabis market.

Boris Alexis Jordan: As such we will begin shipping a fully compliant lineup hemp derived THC beverages and edibles under our select brands in the second half of the year.

Boris Alexis Jordan: Like our foray into Europe, this is another long-term growth driver that will unfold and develop over the coming quarters and years. Taken together, all of the investments we have made domestically and internationally set the foundation for accelerated growth and market share gains in 2025 and 2026 and beyond. Lastly, on our outlook. We are reiterating our full-year guidance. We continue to expect revenue to grow in the mid-single digits and industrial EBITDA margin to be in the mid-20%.

Boris Alexis Jordan: Like our foray into Europe. This is another long term growth driver that will unfold and develop over the coming quarters and years.

Boris Alexis Jordan: Taken together all of the investments we have made domestically and internationally set the foundation for accelerated growth and market share gains and 25% to 26 and beyond.

Boris Alexis Jordan: Lastly on our outlook, we are reiterating our full year guidance. We continue to expect revenue to grow in the mid single digits and adjusted EBITDA margin to be in the mid 20%.

Boris Alexis Jordan: I'd like to end my remarks by thanking all the members of our team around the world who contribute to making Curaleaf the global leader in cannabis. We are very encouraged by the recent catalysts that are providing an important inflection point for our industry and our company. Our success in the future potential would not be possible without our entire team who believe in the mission and bring it to life every day. With that, I'll turn the call over to our CEO, Matt Darin. Matt. Thanks, Boris.

Boris Alexis Jordan: I'd like to end my remarks by thanking all the members of our team around the world that contribute to making clearly the global leader in cannabis. We are very encouraged by the recent catalysts that are providing an important inflection point for our industry and our company our success in the future potential would be possible without our entire team who believe in the mission.

Matthew S. Darin: And bring them to life every day with that I'll turn the call over to our CEO Dr.

Boris Alexis Jordan: Matt.

Matthew S. Darin: Thanks for us.

Matthew S. Darin: As the cannabis market continues to develop, distribution of our brands across all channels has become increasingly important. To this point, we are laser-focused on expanding the global reach of our brand portfolio, with select Grassroots, Curaleaf, and 420 in Europe leading the way.

Matthew S. Darin: As the cannabis market continues to develop distribution of our brands across all channels becomes increasingly important.

Matthew S. Darin: To this point, we are laser focused on expanding the global reach of our brand portfolio.

Matthew S. Darin: Select.

Matthew S. Darin: Grassroots pure leaf and $4 20, and Europe, leading the way.

Matthew S. Darin: In a seasonally slower first quarter, our team came together and executed well to gain 33 basis points of total market share across all BDSA states. Specifically, we expanded our share in some of the largest markets throughout the U.S. Specifically, Arizona, Pennsylvania, Nevada, Illinois, and Massachusetts.

Matthew S. Darin: In a seasonally slower first quarter, our team came together and executed well to gain 33 basis points of total market share across all BDSI states, specifically, we expanded our share in some of the largest markets throughout the U S, specifically, Arizona, Pennsylvania, Nevada, Illinois, and Massachusetts.

Matthew S. Darin: Select was again the number one vape brand in the first quarter, a testament to the quality and innovation we continue to bring to the category, with Brick still driving outsized gains eight months after its market debut. We will continue to build on the Select platform to further extend our lead in the US, while also taking the brand abroad to our key European markets over time. In Flower, we have made significant strides in improving all key metrics, including strain diversity, average potencies, yields, and bud-to-trim ratios. These efforts are gaining traction, as evidenced by Grassroots and Fine Flour holding two of the top five brand positions in the category, according to BDSA.

Matthew S. Darin: Select was again the number one vape brand in the first quarter, a testament to the quality and innovation, we continue to bring to the category with brick still driving outsized gains eight months after its market debut.

Matthew S. Darin: We will continue to build on the select platform to further extend our lead in the U S. While also taking the brand abroad to our key European markets over time.

Matthew S. Darin: And flower, we have made significant strides in improving all key metrics, including extreme diversity average potencies yields and bud to trim ratios.

Matthew S. Darin: These efforts are gaining traction as evidenced by grassroots and find flower holding two of the top five brand positions in the category. According to BDSI.

Matthew S. Darin: We have great talent across our cultivation and operations teams, and through research and development and iterative process improvements, I have no doubt we will further increase our quality and efficiency metrics. Flower continues to drive the market, and winning in this category is our North Star. I'm confident we're on the right trajectory with our relentless focus on quality and innovation, but there is still so much opportunity in front of us. One such opportunity is infused flour and pre-rolls, both of which are helping to mitigate pricing pressure as these products command higher prices and are showing significant incremental growth in the flour category.

Matthew S. Darin: We have great talent across our cultivation and operations teams and through research and development and iterative process improvements I have no doubt, we will further increase our quality and efficiency metrics.

Matthew S. Darin: Flower continues to drive the market and winning in this category is our north star.

Matthew S. Darin: I am confident we are on the right trajectory with our relentless focus on quality and innovation, but there is still so much opportunity in front of us.

Matthew S. Darin: One such opportunity is infused flower and pre rolls both of which are helping to mitigate pricing pressure as these products command higher prices and are showing significant incremental growth in the flower category.

Matthew S. Darin: Demand for these innovations is insatiable, and our operations team is quickly moving to increase supply. For instance, our grassroots-infused pre-rolls are instant sellouts in New Jersey, Nevada, Arizona, Maryland, and Illinois. Success that we will be replicating as we roll out these product lines across more states. By channel, consistent with our expectations, our domestic retail sales were down 3.6% sequentially, impacted by seasonality and accelerated independent dispensary openings in Jersey and Illinois.

Matthew S. Darin: Demand for the installations is insatiable and our operations team is quickly moving to increase supply.

Matthew S. Darin: For instance, our grassroots infused pre rolls are instant sellouts in New Jersey, Nevada, Arizona, Maryland, and Illinois.

Matthew S. Darin: Success will be replicating as we roll out these product lines across more states.

Matthew S. Darin: By channel consistent with our expectations, our domestic retail sales were down three 6% sequentially impacted by seasonality and accelerated independent dispensary opening <unk> in Illinois.

Matthew S. Darin: To catalyze our retail growth, we are leaning into our product assortment, industry-leading rewards program, and customer service. We continue to evolve our retail experience both in-store and online, especially through our mobile app, which has gained significant traction and is approaching 200,000 downloads. In our domestic wholesale segment, we generated 3.2% growth, which helped curb the retail decline.

Matthew S. Darin: Catalyze our retail growth, we are leaning into our product assortment industry, leading rewards program and customer service.

Matthew S. Darin: We continue to evolve our retail experience both in store and online, especially through our mobile App, which has gained significant traction and is approaching 200000 downloads.

Matthew S. Darin: In our domestic wholesale segment, we generated three 2% growth, which helped curb the retail decline.

Matthew S. Darin: Wholesale growth was broad-based, with nearly all states showing solid sequential growth. This is a primary focus as more dispensaries open in key markets such as New York, New Jersey, and Illinois. Pricing at retail is showing signs of stabilization, with some of our states showing sequential increases. The most impactful lever we can pull to stabilize and drive prices higher is innovation. We are seeing this play out in real time with our infused flower and pre-row program, and we saw it earlier with Brick, our two ground baits.

Matthew S. Darin: The wholesale growth was broad based with nearly all states showing solid sequential growth.

Matthew S. Darin: This is a primary focus as more dispensaries open in key markets, such as New York, New Jersey and Illinois.

Matthew S. Darin: Pricing at retail is showing signs of stabilization with some of our states showing sequential increases.

Matthew S. Darin: Most impactful lever, we can pull to stabilize and drive prices higher innovation.

Matthew S. Darin: We are seeing this play out in real time, with our infused flower and pre rolled program and we saw it early with brick or two Gram base.

Matthew S. Darin: On a program basis, flower pricing increased versus the fourth quarter. We attribute this to improved strain diversity, greater consistency of our flower production, and a more targeted pricing and promotional strategy. In VAPES, the rate of decline is moderated from the fourth quarter; however, we are yet to see pricing turn overall positive. Digging deeper into key states, despite many of the headlines, the New York adult-use market is open for business with over 100 approved dispensers.

Matthew S. Darin: On a per gram basis flower pricing increase versus the fourth quarter.

Matthew S. Darin: We attribute this to improve strain diversity greater consistency of our flower production and more targeted pricing and promotional strategies.

Matthew S. Darin: And <unk> the rate of decline has moderated from the fourth quarter. However, we are yet to see pricing turn overall positive.

Matthew S. Darin: Digging deeper into key states.

Matthew S. Darin: Many of the headlines and New York Adult use market is open for business with over 100 approved dispensaries.

Matthew S. Darin: We were pleased with our first full quarter of adult-use sales in New York, as our Newberg store has ramped up very well and is performing to our expectations. We are finalizing the sites for our next two adult-use dispensaries, which we expect will be high-volume storage. Wholesale, we saw a 51% sequential surge in growth as we were diligent and adding key wholesale accounts every month. Curaleaf has shelf space in the most productive independent stores in the state.

Matthew S. Darin: We were pleased with our first full quarter of adult use sales in New York as our Newberg store has ramped very well and is performing to our expectations.

Matthew S. Darin: We are finalizing the site for our next two adult use dispensaries that we expect will be high volume stores.

Matthew S. Darin: Wholesale we saw a 51% sequential surge in growth as we were diligent and adding key wholesale accounts every month.

Matthew S. Darin: Early past shelf space in the most productive independent stores in the state.

Matthew S. Darin: With more licenses being issued, we are excited about the continued growth that will come from this $5 billion plus market opportunity. As I alluded to earlier, the story in New Jersey and Illinois is a tale of two channels.

Matthew S. Darin: With more licenses being issued we are excited about the continued growth that will come from this $5 billion plus market opportunity.

Matthew S. Darin: As I alluded to earlier the story in New Jersey, and Illinois is a tale of two channels.

Matthew S. Darin: With over 100 new dispensaries opening in each state in the last few quarters, retail has faced increasing pressures; however, we have been pleased with the strength of our wholesale business that has served to offset much of the decline. With respect to New Jersey, we have replanted our Belmar Cultivation Facility in order to meet demand from the growing population of independent doors in the state. Arizona deserves another mention.

Matthew S. Darin: With over 100, new dispensaries open in each state in the last few quarters retailers face increasing pressures. However, we have been pleased with the strength of our wholesale business that is served to offset much of the declines.

Matthew S. Darin: With respect to New Jersey, we have replanted, our belmar cultivation facility in order to meet demand from the growing population of independent doors in the state.

Matthew S. Darin: Arizona deserves another mentioned.

Matthew S. Darin: Despite the market contracting in the first quarter, we held sales stable from the fourth quarter and, as a result, grew market share by 125 basis points. Arizona is a core market for us with 16 high-performing dispensaries and a growing wholesale business. Our teams on the ground are performing well week after week, yet they are hungry for more games.

Matthew S. Darin: Despite the market contracting in the first quarter, we held sales stable from the fourth quarter and as a result grew market share by 125 basis points.

Matthew S. Darin: Arizona is a core market for us with 16 high performing dispensaries and a growing wholesale business.

Matthew S. Darin: Our teams on the ground are performing well week after week, yet they are hungry for more gains.

Matthew S. Darin: We've been busy on the international front, and the foundation we have built for Curaleaf got stronger in the first quarter. We rebranded our Sapphire clinics in the UK into Curaleaf clinics, and the power of the Curaleaf brand has been on display with the positive feedback we've received from patients. We announce the strategic acquisition of a key supplier, Northern Green Canada, that cements our supply of high quality indoor EU GMP certified flour for our key European markets while also enhancing our margins at an accretive purchase price.

Matthew S. Darin: We've been busy on the international front and the foundation, we have built for Chili's got stronger in the first quarter.

Matthew S. Darin: We rebranded our sapphire clinics in the U K securely clinics and the power of the purely brand has been on display with the positive feedback we've received from patients.

Matthew S. Darin: We announced the strategic acquisition of a key supplier Northern Greene, Canada.

Matthew S. Darin: It cements, our supply of high quality indoor EU GMP certified flower for our key European markets, while also enhancing our margins.

Matthew S. Darin: And an accretive purchase price.

Matthew S. Darin: We also announce the acquisition of Canformed, a distributor in the rapidly growing Polish market that is already paying dividends. We are taking the many learnings from the U.S. and applying them to Europe, including how we enter new markets and how we go about building our supply chain so that we can realize greater success earlier. The expansion and development of our Portuguese cultivation and processing facilities is progressing according to plan. We anticipate we will begin shipping EU GMP flower from Portugal to Germany and Poland in the third quarter, which will complement our NGC indoor flower, thus rounding out our product portfolio.

Matthew S. Darin: We also announced the acquisition of <unk>, a distributor in the rapidly growing Polish market and is already paying dividends.

Matthew S. Darin: We are taking the many learnings from the U S and applying them to Europe, including how we enter new markets and how we go about building our supply chain. So that we can realize greater success earlier.

Matthew S. Darin: The expansion and development of our Portuguese cultivation and processing facilities is progressing according to plan.

Matthew S. Darin: We anticipate we will begin shipping EU GMP flower from Portugal to Germany, and Poland in the third quarter, which will complement our NGC indoor flower, thus rounding out our product portfolio.

Matthew S. Darin: We are the only truly global operator with a vertical supply chain, and we will continue to press our advantage to drive further market share gains. As a leader in the global cannabis industry, we believe it is imperative to have our brands available to consumers in both physical and digital channels. Consistent with this view, we are entering the hemp-derived THC business with an expanded assortment of select edibles and select zero-proof beverages ready to launch by the third quarter.

Matthew S. Darin: We are the only truly global operator, with a vertical supply chain and we will continue to press our advantage to drive further market share gains.

Matthew S. Darin: As a leader in the global cannabis industry. We believe it is imperative to have our brands available to consumers in both physical and digital channels.

Matthew S. Darin: Consistent with this view, we are entering the hemp derived THC business with an expanded assortment of select edibles and select zero proof beverages ready to launch by the third quarter.

Matthew S. Darin: We are launching these products the same way we've done in state-regulated cannabis programs over the past decade, through safe, compliant, third-party tested, properly labeled products that consumers can trust will deliver a positive experience. The hemp category continues to grow at a rapid pace, and this new channel opens the door to a much wider audience than those currently shopping in dispensaries. We will start small and learn how consumers interact with our brands outside of our dispensary.

Matthew S. Darin: We are launching these products the same way we've done in state regulated cannabis programs over the past decade through safe compliant third party tested properly labeled products that consumers can trust will deliver a positive experience.

Matthew S. Darin: And category continues to grow at a rapid pace and this new channel opens the door to a much wider audience than those currently shopping and dispensaries we.

Matthew S. Darin: We will start small and learn how consumers interact with our brands outside of our dispensaries.

Matthew S. Darin: Our team has a continuous improvement mindset, and we are constantly adapting to the ever-evolving cannabis landscape. We have unique exposure to the most significant catalyst on the horizon. Continued expansion of the New York market and expansion of Pillar 1 in Germany, Ohio, Florida, and Pennsylvania Adult Use set us up for robust growth, especially in 2025 and beyond. The global cannabis industry is still in its infancy, and we have built a foundation for long-

Matthew S. Darin: Our team has a continuous improvement mindset and we are constantly adapting to the ever evolving cannabis landscape.

Matthew S. Darin: Our unique exposure to the most significant catalysts on the horizon continued expansion of the New York market expansion expansion of pillar, one in Germany, Ohio, Florida, and Pennsylvania adult use.

Matthew S. Darin: Sets us up for robust growth, especially in 2025 and beyond.

Matthew S. Darin: Global cannabis industry is still in its infancy, and we have built a foundation for long term success.

Matthew S. Darin: I'll close by thanking all our team members across the organization who are instrumental in making our results possible. Their tireless effort and commitment to win are felt by our loyal customers. With that, I'll turn the call over to our CFO, Ed Kremer.

Speaker Change: I'll close by thanking all our team members across the organization, who are instrumental in making our results possible.

Edward Kremer: Our tireless effort and commitment to win is felt by our loyal customers.

Edward Kremer: With that I'll turn the call over to our CFO Ed Kraemer.

Matthew S. Darin: Ed.

Edward Kremer: Thank you, Matt. Today, I'll review our Q1 2024 results and provide additional color on our outline. Total revenue for the first quarter was $339 million, representing a year-over-year increase of 2%. Growth was driven largely by strength in Maryland, Connecticut, New York, Arizona, and 59% growth in our international segment. By channel, retail revenue was $268 million compared to $271 million in the first quarter of 2023, down 1% year-over-year, while wholesale revenue increased 16% year-over-year to $70 million and represented 21% of total revenue.

Edward Kremer: Thank you Matt today I'll review, our Q1 2024 results and provide additional color on our outlook.

Edward Kremer: Total revenue for the first quarter was $339 million.

Edward Kremer: Representing a year over year increase of 2%.

Edward Kremer: Growth was driven largely by strength in Maryland, Connecticut, New York, Arizona, and 59% growth in our international segment.

Edward Kremer: By channel retail revenue was $268 million compared to $271 million in the first quarter of 2023 down 1% year over year, while wholesale revenue increased 16% year over year to $70 million and represented 21% of total revenue.

Edward Kremer: Looking at our consumer metrics, transactions increased 1% year over year in the first quarter, but we're down 4% sequentially due to normal seasonality. Average order value was down 4% compared to the first quarter last year, largely driven by a 6% decline in units per transaction. That said, UPTs have been steady for the past three quarters, and AUR was flat year over year.

Edward Kremer: Looking at our consumer metrics transactions increased 1% year over year in the first quarter, but were down 4% sequentially due to normal seasonality.

Edward Kremer: Average order value was down 4% compared to the first quarter last year, largely driven by a 6% decline in units per transaction that.

Edward Kremer: That said <unk> have been steady for the past three quarters and AUR was flat year over year.

Edward Kremer: Adjusted gross profit was $161 million, resulting in a 48% gross margin. Sequentially, Q1 Adjusted Gross Margin increased 120 basis points compared with the fourth quarter largely due to improved absorption costs as we planted more rooms to meet demand. SG&A expenses were $104 million in the first quarter, a decrease of $6 million from the year-ago period, despite investments in new stores and international growth initiatives. The year-over-year decrease in SG&A primarily reflects continued focus on operating efficiencies and lower professional costs.

Edward Kremer: Adjusted gross profit was $161 million, resulting in a 48% gross margin sequentially Q1, adjusted gross margin increased 120 basis points compared with fourth quarter, largely due to improved absorption cost as we planted more rooms to meet demand.

Edward Kremer: SG&A expenses were $104 million in the first quarter, a decrease of $6 million from the year ago period, Despite investments in new stores and our international growth initiatives.

Edward Kremer: The year over year decrease in SG&A, primarily reflects continued focus on operating efficiencies and lower professional fees.

Edward Kremer: SG&A as a percentage of revenue was 31% in the first quarter, an improvement of 240 basis points compared to the year-ago period. Our first quarter SG&A included approximately $4.5 million of addbacks, resulting in our core SG&A expenses of $100 million in Q1, or 29.5% of revenue, and an improvement of 100 basis points year-over-year. The first quarter net loss was $48 million, or $0.07 per share, and we ended the first quarter with $736 million fully diluted shares outstanding.

Edward Kremer: SG&A as a percentage of revenue was 31% in the first quarter, an improvement of 240 basis points compared to the year ago period.

Edward Kremer: Our first quarter SG&A included approximately $4 $5 million of add backs, resulting in our core SG&A expenses of $100 million.

Edward Kremer: One or 29, 5% of revenue an improvement of 100 basis points year over year.

Edward Kremer: First quarter net loss was $48 million or <unk> <unk> per share and we ended the first quarter was 736 million fully diluted shares outstanding.

Edward Kremer: Adjusted EBITDA for the first quarter was $77 million compared to $74 million last year, a 4% increase, resulting in an EBITDA margin of 23% and 22%, respectively. However, sequentially, our adjusted EBITDA margin decreased by 140 basis points from the fourth quarter due to a seasonally lower sales base and increased payroll expenses.

Edward Kremer: Adjusted EBITDA for the first quarter was $77 million compared to $74 million last year, a 4% increase resulting in an EBITDA margin of 23% and 22% respectively.

Edward Kremer: Sequentially, our adjusted EBITDA margin decreased by 140 basis points from the fourth quarter due to seasonally lower sales base and increased payroll expenses, we achieved our Q1 EBITDA margin. Despite a drag of 180 basis points from international for.

Edward Kremer: We achieved our Q1 EBITDA margin despite a drag of 180 basis points from international. For the year, we expect the international drag to improve to 130 basis points as international sales growth will continue to outpace the U.S. Now turning to our balance sheet and cash, we ended the quarter with cash and cash equivalents of $105 million. Inventory increased 3 million, or 1% sequentially compared to the fourth quarter, driven by a normal seasonal build into the 420 holiday season.

Edward Kremer: For the year, we expect the international drag to improve to 130 basis points as international sales growth will continue to outpace the U S.

Edward Kremer: Net capital expenditures in the quarter were $13 million. We expect 2024 CapEx to be approximately $50 to $70 million, a $10 million increase to the higher end of the range, dependent on the timing of our Florida expansion initiatives ahead of the adult year. We generated operating and free cash flow from continuing operations of $46 and $33 million, respectively. Our outstanding debt was $580 million net of unamortized debt discounts and deferred financing fees, of which 82% is not due until December 2020.

Edward Kremer: Now turning to our balance sheet and cash flow.

Edward Kremer: We ended the quarter with cash and cash equivalents of $105 million.

Edward Kremer: Inventory increased $3 million or 1% sequentially compared to the fourth quarter driven by normal seasonal build into the 420 holiday season.

Edward Kremer: Net capital expenditures in the quarter with $13 million, we expect 2020 for capex to be approximately $50 million to $70 million or $10 million increase to the higher end of the range dependent on the timing of our Florida expansion initiatives ahead of adult use.

Edward Kremer: We generated operating and free cash flow from continuing operations of 46% and $33 million respectively.

Edward Kremer: Our outstanding debt was $580 million net of unamortized debt discount and deferred financing fees of which 82% is not due until December 2020.

Edward Kremer: In an effort to reduce leverage on our balance sheet, subsequent to quarter end, we began buying back our December 2026 notes in open market transactions. To date, we have repurchased $15 million of our bonds at a 7.75% discount, which combined with our interest savings will save the company approximately $4 million that would have been paid through maturity. We will continue to be opportunistic with future bond purchases. As Boris mentioned, in coordination with Council, Curaleaf is investigating its options for seeking refunds of federal income tax paid on the basis that Internal Revenue Code Section 280E does not apply to its business activities.

Edward Kremer: In an effort to reduce leverage on our balance sheet subsequent to quarter end, we began buying back our December 2026 notes in open market transactions.

Edward Kremer: To date, we have repurchased $15 million of our bonds at a 775% discount which combined with our interest savings will save the company approximately $4 million that would have been paid through maturity.

Edward Kremer: We will continue to be opportunistic with future bond purchases.

Edward Kremer: As Boris mentioned in coordination with counsel surely is investigating its options for seeking refunds of federal income tax paid on the basis that internal revenue code section 280. He does not apply to this business activities. If supported by legal Vice generally anticipates it will file as a normal taxpayer.

Edward Kremer: If supported by legal advice, Curaleaf anticipates it will file as a normal taxpayer for 2023 and 2024 and amend certain prior year returns. We're off to a good start, and the many growth catalysts we have are beginning to materialize, with more coming over the next few quarters. While macro pressures on the consumer continue to be felt, particularly on the lower-income demographic, we are reiterating our fiscal 2024 guidance of mid-single-digit revenue growth.

Edward Kremer: For 2023, and 2024 and amend certain prior year returns.

Edward Kremer: We're off to a good start and the many growth catalysts. We have are beginning to materialize with more coming over the next few quarters, while macro pressures on the consumer continue to be felt particularly on the lower income demographic.

Edward Kremer: We are reiterating our fiscal 2024 guidance of mid single digit revenue growth.

Edward Kremer: We continue to expect fully or adjusted EBITDA margins to be in the mid 20% range. And for the second quarter, we expect revenue to grow low single digits versus the first quarter. Excluding any benefit the company would receive by filing as a normal taxpayer, we still expect to generate operating cash flow in excess of $100 million. And with that, I'll turn the call back over to the operator to open the line for the question and answer session. To ask a question, you may press the star then.

Edward Kremer: We continue to expect full year adjusted EBITDA margins to be in the mid 20% range and for the second quarter, we expect revenue to grow low single digits versus the first quarter.

Edward Kremer: Excluding any benefit the company would receive by filing as a normal taxpayer, we still expect to generate operating cash flow in excess of $100 million.

Edward Kremer: And with that I'll turn the call back over to the operator to open the line for questions.

Operator: We will now begin the question and answer session. To ask a question, you may press star, then one on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been answered and you would like to withdraw it, please press star, then two. We request that you limit yourself to one question only. At this time, we will pause momentarily to assemble our roster. Our first question comes from Aaron Grey of Alliance Global Partners.

Edward Kremer: We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.

Operator: You are using a speakerphone please pick up your handset before pressing the keys and if at any time. Your question has been addressed and you would like to withdraw it. Please press Star then two.

Operator: We request that you limit yourself to one question only at this time, we will pause momentarily to assemble our roster.

Operator: Our first question comes from Aaron Grey of Alliance Global Partners. Please go ahead.

Aaron Thomas Grey: Hi, good evening, and thank you for the question. For my question, I want to touch on Germany.

Aaron Thomas Grey: Hi, good evening and thank you for the question.

Aaron Thomas Grey: The question I want to touch on Germany, obviously still early days of cannabis reform that effective April one, but if you could give any color in terms of what youre seeing in terms of initial demand of additional physicians.

Aaron Thomas Grey: Obviously, it's still early days for cannabis reform there that took effect on April 1st. But if you give me color in terms of what you're seeing in terms of initial demand for additional physicians through telemedicine, more pharmacies starting to dispense cannabis, and also patient growth. So I know just five weeks in, but any color you could provide. And then also, on your initiatives, you have to increase education for both physicians and patients there. Thank you.

Aaron Thomas Grey: Telemedicine more pharmacy, starting to dispense our candidates and also the patient growth. So I know just five weeks in but any color you can provide and then also on your initiatives you have to increase education for both physicians and patients there. Thank you.

Boris Alexis Jordan: Thank you, Aaron, for that. I'll take that.

Aaron Thomas Grey: Yes.

Speaker Change: Thank you for that and I'll take that.

Boris Alexis Jordan: Through our relationships with the largest telemedicine platforms in Germany, we can say that most of the telemedicine platforms have added more patients in April than they've added in their whole history on the medical program in Germany. So that is definitely more ambitious and more aggressive than we originally anticipated. So that's good news on that front.

Boris Alexis Jordan: So we have through our relationships with the.

Boris Alexis Jordan: The largest telemedicine platforms in Germany, we can say that most of the telemedicine platforms have added more patients in April then they've added in their whole history.

Boris Alexis Jordan: And the medical program in Germany, So that is definitely more ambitious and more aggressive than we had originally anticipated. So that's good news on that front are clearly from terms of its revenue has also seen.

Boris Alexis Jordan: Curaleaf, in terms of its revenue, has also seen stronger growth than we originally anticipated for the business, but it's still from, as you know, small numbers and growing. So it's early for us to be able to say what this program is going to look like, but all the early signs are very, very positive. If there's any impediment to the program, it's signing up the telemedicine platforms and getting doctors trained and signed up so that they can write more scripts.

Boris Alexis Jordan: Stronger growth than we originally anticipated on the business, but it's still from as you know small numbers.

Boris Alexis Jordan: And growing so it's early for us to be able to say.

Boris Alexis Jordan: What this program is going to look like but all the early signs are very very positive.

Boris Alexis Jordan: If there's any impediments to the program.

Boris Alexis Jordan: Finding up the telemedicine platforms getting doctors trained and signed up so that they can write more scripts, we're definitely seeing excitement from the pharmacies more pharmaceutical starting to order. The only bottleneck with pharmacies is that these <unk> are reasonably small and don't have large packaging facilities.

Boris Alexis Jordan: We're definitely seeing excitement from the pharmacies. More pharmacies are starting to order them. The only bottleneck with pharmacies is that they are reasonably small and they don't have large packaging facilities, so that could become an impediment, but they're all starting to invest in that area. So, as we originally told everyone, we believe that the German program will be very substantial in size. And we're certainly seeing that early demand from patients. However, there are some things that the industry needs to get over in order for that demand to flow through. We anticipate seeing more color in our next quarterly update in terms of how the industry is developing, but all looks very, very positive so far.

Boris Alexis Jordan: So that could become an impediment, but they are all starting to invest in that area. So as we originally told everyone. We believe that the German program will be very substantial in size, we're certainly seeing that early.

Boris Alexis Jordan: <unk> from patients. However, there are some things that the industry needs to get over in order for that to bear to to flow through we anticipate seeing at the end of this quarter being able to give more color in our next <unk>.

Boris Alexis Jordan: Quarterly update in terms of how the industry is developing but all looks very very positive so far.

Russell Stanley: The next question comes from Russell Stanley from Beacon Securities. Please go ahead.

Boris Alexis Jordan: The next question comes from Russell Stanley from Beacon Securities. Please go ahead.

Russell Stanley: Good afternoon, and thanks for taking my question. Just around gross margin improvement, congrats on that. Understanding asset utilization, the big driver there, up 120 beats quarter to quarter, the press release notes that a reduced vertical mix was a bit of a headwind in the quarter. So I'm wondering what the gross improvement was out of asset utilization and what you're seeing in terms of third-party product man. Thanks.

Russell Stanley: Good afternoon, and thank you for taking my question just around the gross margin improvement congrats on that.

Russell Stanley: Im understanding assay utilization the big driver there.

Russell Stanley: 120 bps quarter over quarter in the press release notes that.

Russell Stanley: Reduced vertical mix was was a bit of a headwind in the quarter. So I'm wondering what the gross improvement was.

Russell Stanley: The assay utilization and what Youre seeing in terms of third party product man. Thanks.

Russell Stanley: Yes.

Edward Kremer: Russell, I'll go ahead and take that. This is Ed. We did, we did have some vertical mix. I mean, vertical mix was very, very small, and it's, and it's decreased. Most of the, as you noted, most of the increase did come from our rooms coming online through the first quarter, and we expect that to continue to yield improvement in subsequent quarters. I can't give you the specific sort of impact from one to the other, but in the aggregate, obviously, the utilization outpaced the decline of the vertical mix.

Russell Stanley: Okay.

Russell Stanley: Ross I'll go ahead and take that this is Ed.

Edward Kremer: We did we did have some vertical magazine vertical mix was very very small and its and its decrease more.

Edward Kremer: Most of the.

Edward Kremer: As you noted most of the increase did come from our.

Edward Kremer: Rooms coming alive.

Edward Kremer: Through the first quarter, and we expect that to continue to yield improvement.

Ed: In subsequent quarters I can't give you the specific.

Edward Kremer: Sort of impact from one to the other but in the aggregate.

Edward Kremer: Obviously, the utilization outpaced the decline of the of the vertical mix.

Matthew Robert McGinley: The next question comes from Matt McGinley of Needham. Please go ahead. Thank you. Thanks. Can you give us some color on what drove that 46 minutes?

Matthew Robert McGinley: The next question comes from Matt McGinley of Needham. Please go ahead.

Edward Kremer: The next question comes from Matt Mcginley of Needham.

Matthew Robert McGinley: Please go ahead. Thank you.

Matthew Robert McGinley: Can you give us some color on what drove that $46 million in operating cash flow. We don't have a full balance sheet, our cash flow, but I think you mentioned that inventory was a $3 million drag.

Matthew Robert McGinley: I'm not sure like how should we think about that in terms of the guide that you gave last quarter for $100 million.

Matthew Robert McGinley: Halfway to that target or does some of this reverse in this this is more of an anomaly, where you generate more cash flow relative to what you're expecting for the full year.

Edward Kremer: I think, Matt, again, this is Ed. I think the way you should think about that in my comment of generating 100, over 100 million as a normal under our current conditions, I mean, I think that what benefited Q1 was the fact that we did not make a full tax payment for the reasons aforementioned about our position. So that helped generate sort of outsized operating cash in a quarter. We're on track to just put a pin in it. We're on track, according to our guidance, as I gave that we will still achieve our initial target, as we mentioned, over $100 million, irrespective of any tax benefit.

Matthew Robert McGinley: Thank.

Matthew Robert McGinley: Matt again this is Ed I think the way you should think about that in my comment of generating 100 over $100 million of normal.

Edward Kremer: Under under our current conditions I mean, I think that what benefited Q1 was the fact that we did not.

Edward Kremer: Make a full tax payment for the reasons that aforementioned on our position so that helped generate.

Edward Kremer: Instead of outsized operating cash in the quarter.

Edward Kremer: We are on track to just to put a pin in it we are on track.

Edward Kremer: According to our guidance as I gave that we will still achieve our initial target as we mentioned over $100 million irrespective of any tax benefit.

Matt Bottomley: Our next question comes from Matt Bottomley of Canaccord Genuity.

Edward Kremer: Our next question comes from Matt Bottomley of Canaccord Genuity.

Matt Bottomley: Please go ahead.

Matt Bottomley: Good evening, everyone. This question is maybe more for Boris or anyone else to jump in, but just on some of the commentary you've given in this quarter and in the past about, you know, increased, you know, custodial considerations of who's able to hold the stock. I'm just wondering how that relates to cannabis still being a Schedule 1 drug. I mean, is it going to be something that we really need to see pen to paper on as a Schedule 3?

Matt Bottomley: Good evening, everyone. This question is maybe more for Boris already wants to jump in but just on some of the commentary you've given in this quarter in the past about incur.

Matt Bottomley: Increased.

Matt Bottomley: Custodial.

Matt Bottomley: Considerations of who's able to to hold the stock I'm, just wondering how that relates to cannabis still being as a schedule. One drug I mean is it going to be something that we really need to see pen to paper on a schedule three or do you think the headlines with respect to <unk>.

Matt Bottomley: Or do you think the headlines with respect to just maybe a notice of a rule amendment with the DEA might be something that moves the needle? I know this isn't a typical earnings question, it's more about your stock, but I'm just curious if you think some of the headlines that we might get in the coming months here to confirm what's been reported as of last week would be something that actually moves the needle with respect to more capital coming into this space. Yeah, I mean,

Matt Bottomley: Just maybe a notice of a rule amendment with the DEA might be something that moves the needle I know this isn't a typical earnings question. It's more about your stock, but I'm just curious if you think.

Matt Bottomley: Some of the headlines that we might get in the coming months here to confirm what's been reported as of last week would be something that actually moves the needle with respect to more capital coming into this space.

Boris Alexis Jordan: Thanks for the question. I was referring specifically to Curaleaf and our situation. Because of our TSX uplist and because of our restructuring we put in place at the end of last year prior to the uplist to the TSX, we were able to achieve the custody from both Bank of New York, Pershing, State Street, and Euroclear, indices, the MSCI, the TSX, and the S&P indices, Canadian S&P indices, which we believe we've now met all the requirements to be able to be included in those indices, the first of which I understand is reviewing sometime over the next 30 days, and then the rest probably sometime in September.

Matt Bottomley: Yes.

Speaker Change: Thanks for the question.

Boris Alexis Jordan: So I was referring specifically to pure leaf and our situations so because of our tier flex uplift and because of our restructuring we've put in place at the end of last year prior to the uplift to the Tia effects.

Boris Alexis Jordan: We were able to achieve.

Boris Alexis Jordan: The custody from both bank of New York Pershing State Street, and Euroclear that relates specifically to the actions taken by curl, if I cannot speak for our colleagues for the other companies in terms of what their plans are but in our plans. We always wanted to create a situation where we could be held in and we can at least solve.

Boris Alexis Jordan: The plumbing problem.

Boris Alexis Jordan: For holding purely stock and so that problem. The last of the three which was zero clear. We received last week that was also important for us because of the inclusion into the global indices.

Boris Alexis Jordan: MSCI that PSX and the S&P indices.

Boris Alexis Jordan: Canadian.

Boris Alexis Jordan: At the end of June.

Boris Alexis Jordan: We believe we have now met all the requirements to be able to be included in those indices are the first of which I understand is reviewing sometime over the next 30 days.

Boris Alexis Jordan: And then the rest probably sometime in September.

Boris Alexis Jordan: But in terms of the industry as a whole, I think that we need to wait and see what the rule is going to look like and what the guidance from DOJ will be like on the back of rescheduling. The one thing is that we are highly confident that rescheduling is going to happen. I know there's a lot of talk out there about whether it will happen, but every piece of information that we have included, plus more information we got today, is that this rescheduling will happen from Schedule 1 to Schedule 3.

Boris Alexis Jordan: But in terms of the industry as a whole.

Boris Alexis Jordan: I think that we would need to wait and see.

Boris Alexis Jordan: What the rule is going to look like and what the guidance from the from Doj will be like on the back of research. One. The one thing is that we are highly confident that rescheduling is going to happen I know theres a lot of talk out there whether it will happen.

Boris Alexis Jordan: Every information we have included.

Boris Alexis Jordan: More information we have today is this rescheduling will happen from schedule under schedule III now the important thing will be what will the Doj say on the back of that will the Doj come out with guidance, which then finfet will pick up on and well since then come out on these things. These are things that are out of our control today to understand we need to see what the final rule looks like.

Boris Alexis Jordan: Now, the important thing will be, what will the DOJ say on the back of that? Will the DOJ come out with guidance, which then FinCEN will pick up on? And where will FinCEN come out on these things? These are things that are out of our control today to understand.

Boris Alexis Jordan: We need to see what the final rule looks like, and then we need to see where the DOJ is, whether there's going to be a DOJ memo on the back, which we believe there will be, but we don't know 100%. Based on that DOJ memo, then we know that Janet Yellen's position has been that she wants this sector banked. So our view is that it's more likely than not that FinCEN will probably, depending on this rescheduling, give positive guidance to financial institutions. But will that be enough for uplisting and full banking services? We don't know for sure.

Boris Alexis Jordan: And then we need to see where the Doj, whether there's going to be a doj memo on the backwoods, which we believe that will be but we don't know 100%.

Boris Alexis Jordan: Based on that Doj mammal, then we know that Janet Yellen position has been that she wants the sector bank. So our view is that it's more likely than not that since then we'll probably depending on this rescheduling will give positive guidance to financial institutions will that be enough for up listing.

Boris Alexis Jordan: And full banking services, we don't know, obviously safer banking would really be the.

Boris Alexis Jordan: Obviously, safer banking would really be the sort of solution to this problem. But safer banking definitely is not going to be, as we all know now, voted on here in May with the FAA, which was what the original target was going to be. There is conversation now between McConnell and his Republicans about doing something at the end of the year, but we don't really want to speculate on that. So far, the Republicans have been a big disappointment, particularly Senator McConnell on safer banking.

Boris Alexis Jordan: The sort of the solution to this problem.

Boris Alexis Jordan: Safer banking definitely is not going to be as we all know now.

Boris Alexis Jordan: Voted on here in May with the FAA, which is what the original target was going to be there is conversation now between Mcconnell and as Republicans about doing something at the end of the year, but we don't really want to speculate on that so far the Republicans have been a big disappointment, particularly.

Boris Alexis Jordan: Our mcconnel unsafe for banking he.

Boris Alexis Jordan: He is stepping down in November, so there is some optimism that maybe in the lame duck, we might be able to get safer banking. But again, that's all. Conjecture, we don't know for sure, but obviously, we're not stopping our work in Washington to get it. So the short of it is, we're hopeful that the rescheduling might get some guidance out of FinCEN and the Treasury that will help the industry in either uplifting or getting better banking.

Boris Alexis Jordan: Stepping down in November so there is some optimism that maybe in the lame duck, we might be able to get safer banking, but again that's all.

Boris Alexis Jordan: Uh huh.

Boris Alexis Jordan: Conjecture, we don't know for sure, but obviously, we're not stopping our work in Washington to get it. So the short of it is we're hopeful that the.

Boris Alexis Jordan: The rescheduling might get some guidance out of <unk> and the treasury that will help the industry in either uplifting or getting better banking services.

Scott Thomas Fortune: The next question comes from Scott Fortune of Roth MKM.

Boris Alexis Jordan: The next question comes from Scott Fortune of Roth and km.

Scott Thomas Fortune: Please go ahead.

Scott Thomas Fortune: Good afternoon. Thanks for the call.

Scott Thomas Fortune: Good afternoon, and thanks for the call.

Scott Thomas Fortune: Follow up here.

Scott Thomas Fortune: I just wanted to kind of follow up on Aaron's question about Germany, and provide a little color on that market as you called out the Tele medicine is demand is really adding potential patients from that side of things.

Boris Alexis Jordan: Here. Boris, I just want to kind of follow-up on Aaron's question about Germany and provide a little color on that market. As you called out, telemedicine demand is really adding potential patients from that side of things. But more importantly, can you step us through the kind of key for prescribing physicians or even consumer patients to kind of gravitate toward Curaleaf brands as a leading option? Any initiatives or marketing or education allocations that you need to really build your brand recognition for doctors and consumers in the EU? Just kind of step us through that process to really start garnering market share there for the Curaleaf brands. We're working on it.

Boris Alexis Jordan: But more importantly can you step us through the kind of the key for prescribing physicians.

Boris Alexis Jordan: Even consumer patients to kind of gravitate towards security brands as a leading option.

Boris Alexis Jordan: Any initiatives or marketing or education allocations that you need to really build your brand recognition for the doctors and consumers in the EU, just kind of step us through that process to really.

Boris Alexis Jordan: Garnering market share and therefore for the care of the plan.

Boris Alexis Jordan: We are working very closely with all the telemedicine platforms. We just signed an agreement last week with one of the largest telemedicine platforms in Germany to distribute our products and market our products on their marketplace part of their site. So they have both the telemedicine platform, and they have a marketplace. And Curaleaf, through its 420 brand, is very much present in that. Curaleaf will also start shipping at the end of June for the first time Curaleaf branded products, which will compete in a different category. So 420 is competing in the premium category, and 420 is the absolute leader in Germany at the premium level.

Boris: We're working very closely with all the telemedicine platforms, we just signed.

Boris Alexis Jordan: Agreement last week with one of the largest telemedicine platforms in Germany.

Boris Alexis Jordan: To distribute our products and market our products on their on their marketplace part of their sites. So they have both the telemedicine platform.

Boris Alexis Jordan: Place and clearly for us.

Boris Alexis Jordan: Through its 420 brand.

Boris Alexis Jordan: Very much present on that clearly we will also start shipping at the end of June for the first time purely branded products, which will play in the different categories. So for 'twenty is playing in the premium category and 401 is the absolute leader in Germany.

Boris Alexis Jordan: The premium level and now we will start to ship, our <unk> products, which will play in the mid tier level, because there's a lot of volume going through the mid tier.

Boris Alexis Jordan: And now we'll start to ship Curaleaf products, which will play in the mid-tier level because there's a lot of volume going through in the mid-tier, you know, more price-sensitive level for patients in Germany. So we're working with telemedicine platforms, we're working with doctors, we're working with pharmacies. I mean, we make a very large investment in infrastructure in Germany to promote our brands. We know that being early and being aggressive is the way to win brand loyalty and have superior products.

Boris Alexis Jordan: More price sensitive level or for the patients in Germany. So we're working with telemedicine platforms. We're working with doctors, we're working with currencies I mean, we have a very large effort in infrastructure in Germany to promote our brands, we know that being early and being aggressive is the way to win brand loyalty and having a superior product.

Boris Alexis Jordan: These are all things that we're doing, trying to stay on the edge of it. And we think we have a pretty strong position at the moment, and we're seeing that reflect in the numbers that are coming across, albeit still not at

Boris Alexis Jordan: These are all things that we're doing try and stay on the edge of it and we think we have a pretty strong position at the moment and we're seeing that reflect in the numbers that are coming across albeit still not at a very high level not at central level, but the growth rates are impressive.

Boris Alexis Jordan: Our next question comes from Gerald Pastorelli of Wedbush Securities.

Boris Alexis Jordan: Our next question comes from Gerald <unk> of Wedbush Securities. Please go ahead.

Gerald Pastorelli: Great, thank you. Good evening. I just had a question about Hemp Derived, the Hemp Derived Product Commentary. I guess, you know, what, like, why now? What drove your decision to enter into Hemp Derived Products? I assume that you believe that they are having, or will eventually have, a meaningful impact on traditional cannabis sales. So just looking to confirm the why now aspect of that. And then I apologize if I missed this. But as you look to roll out these products initially, are there certain channels that you're going to look to prioritize?

Gerald Pastorelli: Great. Thank you good evening.

Speaker Change: Had a question on hemp derived.

Gerald Pastorelli: Derived product commentary.

Gerald Pastorelli: I guess.

Gerald Pastorelli: What right now what drove your decision.

Gerald Pastorelli: Enter into hemp derived products I assume that you believe that they are having where they will eventually have a meaningful impact to traditional Canada sales. So just looking to confirm.

Gerald Pastorelli: The why now aspect of that and then I apologize if I missed this but as you look to roll out. These products. Initially are there certain channels that youre going to look to prioritize thank you.

Gerald Pastorelli: Thank you. Yes. Yes. Thank you for that.

Boris Alexis Jordan: Yes, yes. Thank you for that.

Speaker Change: Yes, thank you for that so.

Boris Alexis Jordan: I want to make it clear that clearly did not approach the slightly we have spent the better part of three years you might remember that.

Boris Alexis Jordan: So I want to make it clear that Curaleaf did not approach this lightly. We have spent the better part of three years. You might remember that I mentioned about three years ago that Curaleaf was looking at a new line of business, and this was the one. We spent an enormous amount of time developing a supply chain that was fully compliant. In the early efforts to do that, we ran into certain problems in that the supply chain, the Curaleaf, which was fully compliant under federal law that we put in place, had a higher cost than a lot of these synthetic products that are being produced by these small operators around the country.

Boris Alexis Jordan: I mentioned about three years ago, but clearly it was looking at the new line of business.

Boris Alexis Jordan: And this was the one we spent an enormous amount of time.

Boris Alexis Jordan: On developing a supply chain, which was fully compliant.

Boris Alexis Jordan: The early efforts of doing that we ran into certain problems in that.

Boris Alexis Jordan: The supply chain that.

Boris Alexis Jordan: But we're fully compliant under federal law that we put in place had a higher cost than a lot of these synthetic products that are being produced by the small operators around the around the country, we cannot afford to go to the market without a fully compliant fully tested product.

Boris Alexis Jordan: We cannot afford to go to the market without a fully compliant, fully tested product that reflects the same standards that we sell our other products in. And so, we took a breather about a year and a half into the process where we could not figure out a way to come up with a compliant, or rather, cost-effective, commercially viable supply chain. We have now been able to do that.

Boris Alexis Jordan: Which reflects the same standards that we sell our other products.

Boris Alexis Jordan: And so we took a breather about a year and a half into the process, where we could not figure out a way to come up with a compliant.

Boris Alexis Jordan: Or rather cost effective commercial cost effective supply chain, we have now been able to do that and so because of the fact that we have been able to put our supply chain together for two specific products, which is.

Boris Alexis Jordan: And so, because of the fact that we have been able to put a supply chain together for two specific products, which are our filters, as well as our edibles, we've made a decision to start a process of launching these products. We've done some test cases around the country, very small at the moment, but now we're going to go wider, and we're going to work with your traditional national distributors, and we'll have more information on that in the coming months on who we're working with and what we're doing.

Boris Alexis Jordan: Our.

Boris Alexis Jordan: Our smelters as well as our edibles because of that we've made a decision to start a process of launching these products. We've done some test cases around the country very small at the moment, but now we're going to go more wide and we're going to work with your traditional national distributors and we will have more.

Boris Alexis Jordan: Information on that in ensuing months on who we're working with and what we're doing but we're going to be distributing as an omnichannel around the country only in those states where.

Boris Alexis Jordan: But we are going to be distributing as an omni-channel around the country, only in those states where these products are compliant. We're being very, very careful in making sure that we don't step outside the line, but we believe this is a very large market segment. We believe that the industry is growing at a very, very fast pace, and we believe that not being part of that as the largest cannabis company in the world would be a mistake. And so, we took three years to prepare for this, and we are finally able to launch products that will be competitive and safe for our customers.

Boris Alexis Jordan: These products are compliant.

Boris Alexis Jordan: Very very careful in making sure that we don't step outside the line, but we believe this was a very large market segment. We believe it's growing at a very very fast pace.

Boris Alexis Jordan: We believe that not being part of that is the largest cannabis company in the world would be a mistake and so we took three years to prepare for this and we finally were able to launch products that will be competitive and safe for our customers.

Boris Alexis Jordan: Okay.

Pablo Ernesto Zuanic: The next question comes from Pablo Zuanic of Zuanic and Associates.

Boris Alexis Jordan: The next question comes from Pablo <unk> of <unk> Associates. Please go ahead.

Pablo Ernesto Zuanic: Thank you. Boris, just to follow up on the first question, when you talk about large opportunities, can you give us an idea of the size of the total purchaseable market that you're looking at there? And if I may, separately, regarding Florida, do you wait until the ballot to start adding more capacity and adding more stores, or do you do it now? And just talk about how well the industry is working together ahead of the campaign to get the ballot passed. Thank you.

Pablo Ernesto Zuanic: Thank you.

Pablo Ernesto Zuanic: Just to follow up on that last question when you talk about chargeable joining the contiguous.

Pablo Ernesto Zuanic: On the idea of the size of the total addressable market are you looking at there and if I may separately regarding Florida.

Pablo Ernesto Zuanic: Do you wait until the dialogue to start off with more capacity and adding more stores or do you do it now and just talk about how well the industry is working together.

Pablo Ernesto Zuanic: Pain to get the bottle past thank you.

Boris Alexis Jordan: Yeah, so I'll address, I believe your connection was great, but I'll address the first part of the question. Matt, I'll address the second.

Boris: So I'll address I believe your connection with great, but I'll address the first part of the question on metal dropped the second I believe your first part of the question was on <unk> with the addressable market is there.

Boris Alexis Jordan: I believe your first part of the question was about hemp and what the addressable market is there. We think that the addressable market for hemp is probably somewhere around where the cannabis sector, the regulated cannabis sector, is now. It may be a little bit less, maybe a little bit more, but we think it's about the same.

Boris Alexis Jordan: We think that the addressable market and hampers, probably somewhere around aware the cannabis sector. The regulated cannabis sector is now it may be a little bit less maybe a little bit more but we think it's about the same so it's.

Boris Alexis Jordan: So it's definitely a multi-billion dollar market. And more importantly, it's one where you can distribute it centrally. So the cost of distribution in that market is going to be substantially more efficient and lower. For instance, we only have to build one bottling plant instead of numerous bottling plants in order to, which we have done. We have our own bottling lines in order to deliver these products, but we're also going to be working with third parties on that as well, in terms of co-packers and things like that.

Boris Alexis Jordan: Definitely a multibillion dollar market and more importantly, it's one where you can distribute centrally so the cost of distribution in that market is going to be substantially more efficient and lower for instance, we only have to build one bottling plant instead of numerous bottling plants in order to and which we have done we have our own bottling lines.

Boris Alexis Jordan: In order to deliver in order to deliver these products. We're also going to be working with third parties on that as well in terms of co Packers and things like that so we've been able to as I said created supply chain now that is commercially viable in a safe and we think that will attract a lot of customers because a lot of the products that are on shelf today.

Boris Alexis Jordan: So we've been able to, as I said, create a supply chain now that is commercially viable and is safe. And we think that will attract a lot of customers because a lot of the products that are on shelves today have a lot of synthetics in them that are not desirable, are not necessarily tested or regulated, and our products are going to be very similar, if not identical, to the product that we would be selling in any other highly regulated market. With that, I'll hand over the Florida issue to Matt. He's leading that. That's on Florida.

Matt Bottomley: Or have a lot of synthetics in them that are not desirable or not necessarily.

Matt Bottomley: Tested or regulated and our products are going to be very similar if not identical to the product that we would be selling and adding other highly regulated market.

Matt Bottomley: With that I'll hand over the Florida issue, he's leading that.

Matthew S. Darin: That's on Florida, you know, we're moving forward with plans to continue to add cultivation capacity and to fill out our store portfolio that was already in the works, you know, we had built out the shell of a building that we're able to on a modular basis build out grow rooms to meet the demands of the market, you know, today we've got a very efficient operation with the capacity that we have and the store locations that we have open, so we have opportunity just in the medical market to continue to invest there, which we're doing, but the way we're doing it is in the, you know, unlikely event that November does not go well, we have every ability to kind of throttle back the spend there and to slow down the pipeline of new stores, so we're keeping optionality, we're moving things forward because we have need for it, you know, today, but depending on the results of that in the event that the amendment does not pass, we will not be over it. The next question comes from Frederico Gomes of ATB Capital Markets. Please go ahead. Hi, this is Brennan for Frederico. Thank you for taking our question.

Matt Bottomley: And so on Florida, we're moving forward with plans to continue to add cultivation capacity and to fill out our store portfolio that was already in the works. We had built out the shell of a building that we were able to on a modular basis build out grow rooms to meet the demands of the market today.

Brennan: Today, we got a very efficient operation with the capacity that we have in the store locations that we have open. So we have opportunity just in the medical market to continue to invest there, which we're doing but the way we're doing it is in the unlikely event that November does not go well, we have every ability to kind of.

Brennan: Rotl back the <unk>.

Brennan: There is a slowdown in the pipeline of new stores. So we're keeping optionality, where we're moving things forward because we have need for it.

Matthew S. Darin: Hey.

Brennan: But depending on the results of that in the event that.

Brennan: The amendment does not pass we will not be over extended there.

Boris Alexis Jordan: I think that in international, the issue is volume and scale. You know, we're going to reach a little bit over 100 to 100 plus million this year. And at the end of this year, we'll take a look at how that growth is developing. But as you've seen, we've been growing at, you know, 100 or 50 or 60% on an annualized basis from a small scale when we bought the business. And now we will take a look at how German, particularly German and Polish, businesses are developing at the end of this year.

Frederico Yokota Choucair Gomes: The next question comes from Frederico Gomes of ATB Capital Markets.

Speaker Change: The next question comes from Frederico Gomez of ATB capital market. Please go ahead.

Frederico Yokota Choucair Gomes: Hi, This is Dan on for Federico Thank you for taking our question.

Frederico Yokota Choucair Gomes: I have been bullish on the international business and the continued strategic expansion, so that definitely seems to be shaping up well.

Frederico Yokota Choucair Gomes: Bear in mind that certain segments of the international business will be more or less margin accretive I just wanted to get some color on where you see there being some easy levers that can be pulled to narrow the international segment margin drag.

Frederico Yokota Choucair Gomes: I think that on the international the issue is is volume and.

Frederico Yokota Choucair Gomes: And scale.

Frederico Yokota Choucair Gomes: We're going to reach a little bit.

Frederico Yokota Choucair Gomes: <unk> to a 100 plus million this year.

Frederico Yokota Choucair Gomes: And we will we will at.

Frederico Yokota Choucair Gomes: At the end of this year, we'll take a look at how that growth is developing.

Frederico Yokota Choucair Gomes: But as you've seen we've been growing at.

Frederico Yokota Choucair Gomes: 100, or 50 or 30% to 50% on an annualized basis.

Frederico Yokota Choucair Gomes: From a small scale when we bought the business.

Frederico Yokota Choucair Gomes: And now we will take a look at the end of this year on how the German, particularly the German and Polish businesses are developing.

Boris Alexis Jordan: The UK business is pretty easy to model out. The German and Polish businesses are a little bit more difficult because they're brand new, and they're in the early stage. So I think that by the fourth quarter, we'll have a pretty good idea of how we're looking at next year. But if you look at the comparables to other medical markets like Florida and others that have just launched, this is going to be a very large market.

Boris Alexis Jordan: The U K business is pretty easy to model out the German in Poland business is a little bit more difficult because they are brand new and the early stage.

Boris Alexis Jordan: So I think that by the fourth quarter will have a pretty good idea of how we're looking at next year, but if you look at the comparable to other medical markets like Florida, and others that got launched this is going to be a very large market and so far the results as I said that we've seen in the first five weeks have been very impressive and above our own.

Boris Alexis Jordan: And so far, the results, as I said, that we've seen in the first five weeks have been very impressive and above our own expectations. And I think the industry knows I've been very bullish on Europe, and it's been above our own expectations. So we're hopeful going into the latter part of the second part of this year that we'll be able to make much more accurate predictions about growth going into 2025.

Boris Alexis Jordan: And I think the industry knows I have been very bullish on Europe, and it's been above our own expectations. So we're hopeful.

Boris Alexis Jordan: Going into the latter part of the second part of this year that we'll be able to make it much more accurate predictions about growth going into 2025.

Matthew S. Darin: From a margin standpoint, I would just add, you know, we're building a vertical supply chain, very similar to what we did in the states where we have been in a leading market share position. So that was part of the rationale behind the Northern Green acquisition, which was a supplier of high-quality EGMP flour to Germany. Now bringing that captive into our supply chain is going to increase margins, give us more certainty, and more control of the supply chain. And, you know, it's a playbook that we've found to be very successful and that we're seeing a lot of opportunity in Europe and additional countries.

Boris Alexis Jordan: From a from a margin standpoint, I would just add we're.

Matthew S. Darin: We're building a vertical supply chain very similar to what we've done in the states that we.

Matthew S. Darin: We've been in a leading market share position. So that was part of the rationale behind the northern Greene acquisition, which was the supplier supplying high quality GMP flower to Germany, now, bringing that captive into our supply.

Matthew S. Darin: Hi chain is going to increase margins give us more certainty more control of the supply chain.

Matthew S. Darin: It's a playbook that we found to be very successful in that.

Matthew S. Darin: And a lot of opportunity in Europe and.

Matthew S. Darin: Additional countries.

Operator: This concludes our question and answer session. I would like to turn the conference back over to Mr. Matt Darin for any closing remarks. Thank you, everyone, for joining us.

Matthew S. Darin: This concludes our question and answer session I would like to turn the conference back over to Mr. Matt Darren for any closing remarks.

Matthew S. Darin: Thank you everyone for joining us, and we'll look forward to seeing you next quarter.

Matthew S. Darin: Thank you everyone for joining and we look forward to seeing you next quarter.

Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Matthew S. Darin: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Operator: Yes.

Operator: [music].