Q1 2024 Trulieve Cannabis Corp Earnings Call

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Operator: Good morning, and welcome to the Trulieve Cannabis Corporation first quarter 2024 financial results conference call. My name is Chris, and I will be your conference operator today. As a reminder, today's event is being recorded. I would now like to introduce your host for today's conference, Christine Hersey, Vice President of Investor Relations for Trulieve. You may begin.

Speaker Change: Good morning, and welcome to the truly <unk> Cannabis Corporation first quarter 2024 financial results Conference call.

Chris: My name is Chris and I will be your conference operator today.

Chris: As a reminder, today's event is being recorded I would now like to introduce your host for today's conference Christine Hersey, Vice President of Investor Relations for <unk> you may begin.

Chris: Okay.

Christine Hersey: Thank you. Good morning, and thank you for joining us. During today's call, Kim Rivers, Chief Executive Officer, and Wes Getman, Chief Financial Officer, will deliver prepared remarks on the financial performance and outlook for Trulieve. Following the prepared remarks, we will open the call to questions. This morning, we reported first quarter 2024 results. A copy of our earnings press release and PowerPoint presentation may be found on the investor relations section of our website, www.trulieve.com. An archived version of today's conference call will be available on our website later today.

Christine Hersey: Thank you good morning, and thank you for joining us during today's call Kim Rivers, Chief Executive Officer, and West Getman, Chief Financial Officer will deliver prepared remarks on the financial performance and outlook for truly.

Speaker Change: Following their prepared remarks, we will open the call to questions.

Speaker Change: This morning, we reported third quarter 2024 results a copy of our earnings press release, and Powerpoint presentation may be found on the Investor Relations section of our website www dot truly dot com.

Speaker Change: An archived version of today's conference call will be available on our website later today.

Christine Hersey: As a reminder, statements made during this call that are not historical facts constitute four forward-looking statements, and these statements are subject to risks, uncertainties, and other factors that could cause our actual results to differ materially from our historical results or from our forecast, including the risks and uncertainties described in the company's filings with the Securities and Exchange Commission, including Item 1A, risk factors, of the company's annual report on Form 10-K for the year ended December 31 Although the company may voluntarily do so from time to time, it undertakes no obligation to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.

Speaker Change: As a reminder statements made during this call that are not historical facts constitute forward looking statements and these statements are subject to risks uncertainties and other factors that could cause our actual results to differ materially from our historical results or from our forecast, including the risks and uncertainties described in the company's fine.

Speaker Change: <unk> with the Securities and Exchange Commission, including item one a risk factors of the company's annual report on Form 10-K for the year ended December 31st 2023, as well as our periodic quarterly filings.

Speaker Change: Although the company may voluntarily do so from time to time it undertakes no commitment to update or revise these forward looking statements whether as a result of new information future events or otherwise except as required by law.

Christine Hersey: During the call, management will also discuss certain financial measures that are not calculated in accordance with the United States Generally Accepted Accounting Principles, or GAAP. We generally refer to these as non-GAAP financial measures. These measures should not be considered in isolation or as a substitute for Trulieve's financial results prepared in accordance with GAAP. A reconciliation of these non-GAAP measures to the most directly comparable GAAP measures is available in our earnings press release, which is an exhibit to our current report on Form 8K that we filed with the SEC today and can be found in the investor relations section of our website.

Speaker Change: During the call management will also discuss certain financial measures that are not calculated in accordance with United States generally accepted accounting principles or GAAP, we generally refer to these as non-GAAP financial measures.

Speaker Change: These measures should not be considered in isolation or as a substitute virtually financial results prepared in accordance with GAAP.

Speaker Change: Reconciliation of these non-GAAP measures to the most directly comparable GAAP measures is available in our earnings press release that is an exhibit to our current report on form 8-K that we furnished to the S. E. T. Today and can be found on the Investor Relations section of our website.

Christine Hersey: Lastly, at times during our prepared remarks or responses to your questions, we may offer metrics that provide greater insight into the dynamics of our business or our financial results. Please be advised that we may or may not continue to provide these additional details in the future. I'll now turn the call over to our CEO, Kim Rivers.

Speaker Change: Lastly at times during our prepared remarks or responses to your questions. We may offer metrics that provide greater insight into the dynamics of our business or our financial results. Please be advised that we may or may not continue to provide these additional details in the future.

Speaker Change: Now I'll turn the call over to our CEO Kim rivers.

Kimberly Rivers: Thank you, Christine, and good morning, everyone, and thank you for joining us today. Trulieve is in the best position that we have been in for several years. With stellar performance in our core business and several meaningful catalysts on the horizon, the outlook has never been brighter. Since our last call, definitive progress has been made on two major catalysts. First, the DEA has publicly confirmed its recommendation to reclassify cannabis as a Schedule III drug, and the administrative rulemaking process is underway.

Kimberly Rivers: Thank you Christine and good morning, everyone and thank you for joining us today truly other than the best position that we have been in for several years with stellar performance in our core business in several meaningful catalysts on the horizon. The outlook has never been brighter since our last call definitive progress has been made on key major catalysts first the D.

Kimberly Rivers: EBITDA has publicly confirmed its recommendation to reclassify cannabis as a schedule III drug and the administrative rulemaking process is underway, we remain optimistic that rescheduling what progressed this year, marking the first major step in long overdue federal the federal requirement.

Kimberly Rivers: We remain optimistic that rescheduling will progress this year, marking the first major step in long overdue federal reform. Second, the Florida Supreme Court issued an affirmative ruling allowing the Smart and Safe Florida Adult Use Amendment on the ballot this November. Kudos to the entire team who worked tirelessly to clear this hurdle. We are thrilled to be one step closer. However, we recognize that much work remains ahead. We believe passage with 60% approval is achievable, but we are not taking a single vote for granted.

Kimberly Rivers: The part of Supreme Court issued an affirmative ruling, allowing the Martin place, Florida adult use amendment on the ballot. This November.

Speaker Change: Kudos to the entire team who worked tirelessly to clear that hurdle.

Speaker Change: We're thrilled to be one step closer however, we recognize that much work remains ahead, we believe passage with 60% of people is achievable, but we are not taking a single dose for granted the campaign has kept its okay to raise awareness and support for amendment three well educating voters about the many benefits of legal access for adult to Libra.

Kimberly Rivers: The campaign has shifted focus to raise awareness and support for Amendment 3 while educating voters about the many benefits of legal access for adults. Trulieve remains the lead financial supporter of the initiative and is pleased to see other Florida operators support the campaign. As we approach November, we anticipate the noise level around the election will be amplified, but we have full confidence that the campaign's strategic approach will result in passage at the polls.

Speaker Change: <unk> elite financial supporter of units then and is pleased to see other Florida, operator support the campaign as we approach November we anticipate the noise level around the election will be amplified, but we have full confidence that the campaigns strategic approach will result in package at the pole. While the campaign is working diligently to drive victory in November.

Kimberly Rivers: While the campaign is working diligently to drive victory in November, the team at Trulieve continues to deliver fantastic results. Ongoing efforts to achieve incremental improvement are paying off, particularly in retail operations and production, as shown by customer satisfaction scores, customer retention, and units sold. The team remains disciplined, keeping operating expenses in check while supporting revenue growth. This is an important year for Trulieve, and we are allocating resources with intentionality to balance operational improvement and preparations for future catalysts.

Speaker Change: The team had to leave continues to deliver fantastic results.

Speaker Change: Ongoing efforts to achieve incremental improvement or paying off particularly in retail operations and production as shown by customer satisfaction scores customer retention and units sold the team remains disciplined keeping operating expenses in check while supporting revenue growth. This is an important year for Chile, and we are allocating resources with attention.

Speaker Change: <unk> to balance operational improvement in preparation for future calculus, I am continually inspired by the commitment of our team and their ability to deliver on our strategic plan.

Kimberly Rivers: I am continually inspired by the commitment of our team and their ability to deliver on our strategic plan. First quarter results were impressive, beating expectations with sequential improvements in revenue, gross margin, and adjusted EBITDA. Revenue increased quarter over quarter 4% to $298 million, driven by increased traffic, basket size, and our disciplined approach to pricing. Gross margin of 58% improved 5% due to lower production costs, reduced promotional activity, and higher capacity utilization. Adjusted EBITDA improved by 21% sequentially and 35% year-over-year to $106 million, or a 36% margin, representing our 25th consecutive profitable quarter. First quarter operating cash flow was $139 million, and free cash flow was $124 million.

Speaker Change: First quarter results were impressive leading expectations with sequential improvements in revenue gross margin and adjusted EBITDA revenue increased quarter over quarter, 4% to $298 million driven by increased traffic basket size and our disciplined approach to pricing.

Speaker Change: Gross margin of 58% improved 5% due to lower production costs reduced promotional activity and higher capacity utilization adjusted EBITDA improved by 21% sequentially and 35% year over year to 106 million or 36% margin, representing our 25th consecutive proper.

Speaker Change: <unk> quarter for us.

Speaker Change: First quarter operating cash flow was $139 million and free cash flow was 124 million.

Kimberly Rivers: Strong first quarter performance during what is typically a seasonally slower quarter was underpinned by strength across our retail platform. Traffic and basket size were each up 3% sequentially. Elevated performance across our retail operations is due in part to several initiatives designed to enhance the customer experience. Our relentless focus on the customer stems from our core belief that building a satisfied and loyal customer base is critical for lasting success. We incorporate customer feedback into process improvements on an ongoing basis to strengthen retail KPIs.

Speaker Change: Strong first quarter performance during what is typically a seasonally slower quarter with underpinned by strength across our retail platform.

Speaker Change: Click and basket size were each up 3% sequentially.

Speaker Change: The latest performance across our retail operations is due in part to several initiatives designed to enhance the customer experience.

Speaker Change: Let's focus on the customer stems from our core belief that building are satisfied and loyal customer base is critical for lasting success, we incorporate customer feedback into process improvements on an ongoing basis to strengthen retail kpis.

Kimberly Rivers: Following reinforcement of targets and incentive alignment with our retail team, first quarter retail KPIs, including overall satisfaction scores and wait times, improved sequentially. We view customer retention as an important indicator of the efficacy of our approach. Customer retention held steady, with 65% of customers company-wide and 74% in medical-only markets returning to stores.

Speaker Change: Following reinforcement of targets and incentive alignment with our retail teams first quarter retail kpis, including overall satisfaction scores and lead times improve sequentially. We view customer retention is an important indicator of the efficacy of our approach customer retention held steady with 65% of customers companywide and 74% in <unk>.

Speaker Change: The only markets returning to source.

Kimberly Rivers: As part of our ongoing efforts to reinforce the Trulieve Retail brand while efficiently serving our customer base, we are launching a revamped loyalty platform and web experience across all markets this year. The rollout of both programs across markets is modular, with a new loyalty program in place in Arizona and Maryland and the new web platform live in Florida, Georgia, Maryland, Pennsylvania, and West Virginia. We have seen tremendous responses to both programs where they are available to date.

Speaker Change: As part of our ongoing efforts to reinforce the truly retail brand while efficiently serving our customer base. We are launching a revamped loyalty platform and web experience across all markets. This year the rollout of those programs across markets as modular with a new loyalty program in place and Arizona in Maryland, and the new web platform live in Florida.

Speaker Change: Roger, Maryland, Pennsylvania, and West, Virginia, we have seen tremendous responses to both programs were available to date.

Kimberly Rivers: The untapped potential of our retail platform was on full display recently with our results on 420. We shattered all prior records for traffic and customer service, up 5% and 6% respectively versus last year's record-breaking results. Comparing a 14-day period of 420's performance year over year on a same-store sales basis, net revenue was up 3% driven by a 6% increase in traffic and offset by a 3% decrease in basket for 173 stores. The team effectively managed higher traffic on 420, keeping average wait times reasonable at seven minutes.

Speaker Change: The untapped potential of our retail platform was on full display recently with our results on for 'twenty, We shattered all prior record for traffic and customer served up 5% and 6% respectively versus last year's record breaking results comparing the 14 day period for 'twenty performance year over year on a same store sales basis.

Speaker Change: Net revenue was up 3% driven by a 6% increase in traffic and offset by a 3% decrease in basket for 173 stores. The team effectively managed higher traffic on board 20, keeping the average wait times reasonable at seven minutes, our ability to quickly flex up capacity in order to effectively meet sharp increases in demand.

Kimberly Rivers: Our ability to quickly ramp up capacity in order to effectively meet sharp increases in demand highlights the power of our platform. Another strategic focus meant to bolster brand equity for Trulieve is distribution of branded products through branded retail. Today, Trulieve has the largest cannabis retail network with 196 dispensaries supported by over 4 million square feet of production capacity. In the first quarter, we sold over 11 million branded product units, comparable to the fourth quarter, and up 6% versus last year.

Speaker Change: And highlights the power of our platform.

Speaker Change: Another strategic focus meant to bolster brand equity for truly is distribution of branded products through branded retail today can move has the largest cannabis retail network with 196 dispensaries supported by over 4 million square feet of production capacity in the first quarter, we sold over 11 million branded product units comparable to the fourth quarter.

Speaker Change: <unk> and up 6% versus last year.

Kimberly Rivers: Value and mid-tier brands Roll One and Modern Flower continue to resonate with customers, gaining popularity and driving sales. Similar to last quarter, we saw signs of consumer strength with a greater willingness to spend to move up into premium or mid-tier or take advantage of basket building promotions. Producing high-quality products at scale is another core competency that we continue to build upon. During the first quarter, production of the 750,000 square foot indoor cultivation facility in Jefferson County improved with higher yields and lower cultivation cost per gram compared to last quarter.

Speaker Change: Value and mid tier brands roll, one and modern flower continue to resonate with customers gaining popularity and driving sales similar to last quarter, we saw signs of consumer strength with greater willingness to spend to move up in a premium or mid tier or take advantage of basket building permission.

Speaker Change: Producing high quality products at scale is another core competency that we continue to build upon during the first quarter production of the 750000 square foot indoor cultivation facility in Jefferson County, improved with higher yield and lower cultivation costs per gram compared to last quarter. We are extremely pleased with the quality and variety of products.

Kimberly Rivers: We are extremely pleased with the quality and variety of product our team has been able to cultivate consistently at this site. Following the success of our plan to elevate product quality in Florida, we have rolled out our hashtag Only Grow Fire initiative across other markets. While we continue to deliver strong results across the organization, the team is also preparing for several potential catalysts, including adult e-cigarette sales in Florida, Ohio, and Pennsylvania. If the Florida Adult Use Campaign is successful this November, we anticipate sales would begin six months after voter approval.

Speaker Change: Our team has been able to cultivate consistently at the site.

Speaker Change: Following the success of our plan to elevate product quality in Florida, we have rolled out our hashtag only grew up buyer initiative across other markets.

Speaker Change: We continued to deliver strong results across the organization. The team is also preparing for several potential catalysts, including adult use sales in Florida, Ohio and Pennsylvania.

Speaker Change: Before adult use campaign a successful. This November we anticipate sales will begin six months after better approval, we estimate the Florida market can ultimately reach $6 billion with expansion to include adult use.

Kimberly Rivers: We estimate the Florida market could ultimately reach $6 billion, with expansion to include adult use. With 22 million residents and 138 million annual tourist visits, we believe Florida will be the best cannabis market in the world. Today, Trulieve operates 135 stores in Florida and over 3 million square feet of production capacity. The conversion to an adult-use market represents the largest near-term opportunity for Trulieve and the industry. Trulieve remains the clear market leader, with 21% of stores in Florida selling over 135% more flowers than the state average.

Speaker Change: With 22 million residents and 138 million annual tourists visits we believe Florida will be the best cannabis market in the world today truly operates 135 stores in Florida and over 3 million square feet of production capacity the conversion to an adult use market represents the largest near term opportunity for to lead in the industry.

Speaker Change: Truly remains the clear market leader with 21% of stores in Florida, selling over 135% more power than the state average given our ability to ramp idle capacity and fund additional investments we plan to build upon our leading position at launch in May 2025.

Wes Getman: Given our ability to ramp idle capacity and fund additional investment, we plan to build upon our leading position at launch in May 2025. Turning to retail, we've added four new locations in Florida year-to-date, including our second Pickup Express store. We will continue to expand our retail network this year to serve the growing medical market as we prepare for future adult use sales. Moving on to other state catalysts, the launch of AdultEast sales in Ohio is expected to commence this year.

Speaker Change: Turning to retail we have added four new locations in Florida year to date, including our second pick up Express store, we will continue to expand our retail network. This year to serve the growing medical market as we prepare for future don't you feel.

Speaker Change: Moving onto other catalysts the launch of adult use sales in Ohio is expected to commence this year truly operates one medical dispensary today in Columbus and expects to receive an additional license for development pending completion and final regulatory approval of the settlement with harvest of Ohio, We expect to acquire additional operational dispensaries and licenses will.

Wes Getman: Trulieve operates one medical dispensary today in Columbus and expects to receive an additional license for development. Pending completion and final regulatory approval of the settlement with Harvest of Ohio, we expect to acquire additional operational dispensaries and licenses. We'll provide additional details as appropriate. We look forward to converting another market in the Northeast to serve AdultEast customers. In neighboring Pennsylvania, momentum continues to build for bipartisan AdultEast legislation. Companion bills have been introduced in the House and the Senate, and several committee hearings have been conducted.

Speaker Change: Additional details as appropriate we look forward to converting another market in the northeast to serve adult use customers.

Speaker Change: Neighboring Pennsylvania momentum continues to build for bipartisan adult use legislation companion bills have been introduced in the house and the Senate and several committee hearings have been conducted we are encouraged by the level of discourse and thoughtful consideration by lawmakers will continue to monitor progress and we'll be prepared to serve adult use customers when permissible truly currently operate.

Wes Getman: We are encouraged by the level of discourse and thoughtful consideration by lawmakers. We will continue to monitor progress and be prepared to serve AdultEast customers when it is permissible. Trulieve currently operates 20 affiliated retail locations and three grower processor sites. We plan to open an additional dispensary this year. In summary, the team has done a phenomenal job carrying forward the momentum from last year while driving performance across the core business. With that, I'd like to turn the call over to our CFO, Wes Getman. Please go ahead.

Speaker Change: 20 affiliated retail locations and three grower processors sites, we plan to open an additional dispensary. This year in summary, the team has done a phenomenal job carrying forward the momentum from last year, while driving outperformance across the core business with that I'd like to turn the call over to our CFO West Coast Gutman. Please go ahead.

Wes Getman: Thank you, Kim, and good morning, everyone. First quarter revenue was $298 million, an improvement of 4% sequentially and year-over-year, driven by continued strength across our retail platform. First Quarter Gap Gross Profit was $174 million with a 58% margin, representing a 5% improvement over Q2. Gross margin will continue to fluctuate quarter to quarter depending on product and market mix, inventory sell-through, promotional activity, and oil capacity costs. SG&A expenses in the first quarter were $101 million, or 34% of revenue, holding steady on a percentage basis compared to the fourth quarter.

Speaker Change: Thank you Kim and good morning, everyone.

Speaker Change: First quarter revenue was $298 million, an improvement of 4% sequentially and year over year, driven by continued strength across our retail platform.

Speaker Change: First quarter GAAP gross profit was 174 million with 58% margin, representing a 5% improvement sequentially gross margin will continue to fluctuate quarter to quarter, depending on product and market mix inventory sell through promotional activity and oil capacity calls.

Speaker Change: SG&A expenses in the first quarter were $101 million was 34% of revenue holding steady on a percentage basis compared to the fourth quarter.

Wes Getman: The first quarter net loss was $23 million compared to a net loss of $33 million in the fourth quarter, representing an improvement of 31% sequentially and 64% year-over-year. First quarter loss per share was $0.17 compared to a loss of $0.18 in the fourth quarter. Excluding non-recurring charges, first quarter loss per share would have been $0.05 compared to $0.12 in the fourth quarter.

Speaker Change: First quarter net loss was $23 million compared to a net loss of $33 million in the fourth quarter, representing an improvement of 31% sequentially and 54% year over year.

Speaker Change: First quarter loss per share was <unk> 17, compared to a loss of <unk> 18 in the fourth quarter excluding.

Speaker Change: Nonrecurring charges first quarter loss per share would have been Boston compared to 12 in the fourth quarter.

Wes Getman: First quarter adjusted EBITDA improved by $18 million to $106 million with a 36% margin. First quarter adjusted EBITDA margin reflects higher revenue and gross margin, as well as continued operating expenses. Turning now to our balance sheet and tax strategy, we ended the quarter with $327 million in cash and $482 million in debt. As a reminder, Trulieve adopted a tax position challenging the applicability of 280E to our business last year, filing amended returns for the tax years 2019 through 2021.

Speaker Change: First quarter adjusted EBITDA improved by $18 million to $106 million was 36% margin first quarter adjusted EBITDA margin reflects higher revenue and gross margin as well as continued operating expenses.

Wes Getman: To date, we have received refund checks for these amendments totaling $113 million, including the previously disclosed $50 million this quarter. For 2022, we filed as a normal way corporate taxpayer, resulting in overpayment claims of $148 million. Final resolution to our approach may ultimately take years to conclude.

Speaker Change: Turning now to our balance sheet and tax strategy, we ended the quarter with 327 million in cash and $482 million of debt.

Speaker Change: As a reminder, truly be adopted a tax position challenging the applicability of two eight each of our business last year filing amended returns for the tax years 2019 through 2021.

Speaker Change: We've received refund checks for these amendments totaling $113 million, including the previously disclosed $50 million this quarter.

Speaker Change: For 2022, we filed as a normal way corporate taxpayer, resulting an overpayment claims of $148 million.

Speaker Change: Final resolution to our approach and we ultimately take years to conclude if rescheduling of candidates are scheduled to reoccur. This year. The two H E tax burden would be removed effectively capping the downside risk to our tech challenge in the interim we continue to accrue an uncertain tax position on our balance sheet, while realizing lower cash tax payments.

Wes Getman: If rescheduling of cannabis to Schedule III occurs this year, the 280E tax burden would be removed, effectively capping the downside risk to our tax challenge. In the interim, we continue to accrue an uncertain tax position on our balance sheet while realizing lower cash tax payments. Notably, we would have realized positive net income for the first quarter if rescheduling had been in effect and the incremental impact of 280E had been removed. First quarter cash flow from operations totaled $139 million, inclusive of $50 million in cash tax refunds from our amended return. Capital expenditures were $16 million, with free cash flow of $124 million.

Speaker Change: Notably we would have realized positive net income for the first quarter. If rescheduling was in effect and the incremental impact of $2 80 was removed.

Speaker Change: First quarter cash flow from operations totaled $139 million inclusive of $50 million cash tax refunds tomorrow amended returns capital expenditures were $16 million with free cash flow of $124 million.

Wes Getman: Turning now to our outlook, based upon the visibility that we have today, we anticipate second quarter revenue will be flat to down in the low single digits. Strong 420 results and continual momentum across the retail platform are contributors to replicating the top-line performance in the first quarter, balanced by historical seasonal trends, specifically in Arizona, and the initial impact of deferred revenue from the rollout of our Refresh Loyalty Program in our remaining markets. We anticipate gross margins will be at least in the mid-50s for the remainder of the year.

Speaker Change: Turning now to our outlook based upon the visibility that we have today, we anticipate second quarter revenue will be flat to down low single digits strong for 'twenty results and continued momentum across our retail platform our contributors to replicating the topline performance in the first quarter balanced by historical seasonal trends, specifically in Arizona and the initial impact of deferred revenue from the role.

Speaker Change: Out of a refresh loyalty program in our remaining markets. We anticipate gross margins will be at least in the mid fifties for the remainder of the year.

Wes Getman: Full year targets are unchanged with at least $225 million in cash flow from operations and capital expenditures of $70 million. We are on track to open at least 25 stores this year. We may refresh our forecast later this year, depending on the timing and progress for industry catalysts, including adult use in Florida, Ohio, and Pennsylvania. The team remains focused on executing on our plan. With that, I'll turn the call back over to Kim.

Speaker Change: Full year targets are unchanged with at least $225 million cash flow from operations and capital expenditures of $70 million. We are on track to open at least 25 stores. This year, we may refresh our forecast later this year, depending on the timing and progress for industry catalysts, including adult use in Florida, Ohio, and Pennsylvania. The team remains focused on.

Speaker Change: Executing to our plan with that I'll turn the call back over to Kim Thanks Les.

Kimberly Rivers: Thanks, Les. This is an incredibly exciting time for Trulieve and the industry. Our organization is in the strongest position that we have been in recently. Just as our team is hitting its stride, several historic industry catalysts are on the near-term horizon. Looking at state catalysts, the opportunities set in Florida cannot be overstated. With favorable demographics and a business-friendly environment, we believe our home state could set an example for other markets, demonstrating how to implement a well-crafted adult youth program without opening the floodgates for illicit market activity.

Kimberly Rivers: This is an incredibly exciting time for truly any industry. Our organization is the strongest is in the strongest position that we have been in recently just as our team is hitting its stride several historic industry catalysts on the near term horizon looking at state catalysts, the opportunity set in Florida cannot be overstated with favorable demographics and a business friendly environment.

Kimberly Rivers: We believe our home state could set an example for other markets demonstrating how to implement a well crafted adult use program without opening the floodgates for illicit market activity, providing adult the options you can see them responsibly, while maintaining regulatory control over production retail and distribution strikes an appropriate balance ultimately leading to.

Kimberly Rivers: Providing adults with the option to consume responsibly while maintaining regulatory control over production, retail, and distribution strikes an appropriate balance, ultimately leading to increased state revenue and economic opportunity. We intend to remain out front in Florida, pushing for the passage and common-sense implementation of Amendment 3. The $6 billion market opportunity in Florida is tremendous, and we hope to see other operators continue to step up and actively support the campaign. Turning to other states, Ohio is poised to launch adult youth sales this year following an affirmative vote last November.

Kimberly Rivers: Increased state revenue and economic opportunity, we intend to remain out front in Florida, pushing for passage and common sense implementation of amendment three the $6 billion market opportunity in Florida is tremendous and we hope to see other operators continue to step up and actively support the campaign.

Kimberly Rivers: Turning to other states, Ohio is poised to launch adult use sales. This year. Following an affirmative vote last November we estimate this market can reach $2 billion in annual sale in Pennsylvania efforts to enact bipartisan adult use legislation continued to gain momentum bolstered by strong support from Governor Shapiro, we estimate the Pennsylvania market could reach approximately $4 billion.

Kimberly Rivers: We estimate this market could reach $2 billion in annual sales. In Pennsylvania, efforts to enact bipartisan adult youth legislation continue to gain momentum, bolstered by strong support from Governor Shapiro. We estimate the Pennsylvania market could reach approximately $4 billion in sales.

Kimberly Rivers: While states continue to embrace adult youth programs, lobbying efforts are ongoing in D.C. Activity at the federal level remains high, with continued progress on rescheduling to move cannabis to Schedule III and ongoing efforts to advance safer banking legislation. We continue to believe that federal rescheduling of cannabis would represent a watershed moment and could be the first domino to set off a series of major reforms. Voters across all demographics increasingly support some form of legalization and access to cannabis.

Kimberly Rivers: While states continue to embrace adult use program lobbying efforts are ongoing in D C.

Kimberly Rivers: Pivoting at the federal level remains high with continued progress on rescheduling cannabis to schedule three and ongoing efforts to advance safer banking legislation. We continue to believe that federal rescheduling of cannabis would represent a watershed moment and could be the first domino to start off a series of major reforms.

Kimberly Rivers: That is across all demographics increasingly support some form of legalization and access to cannabis we remain optimistic that the federal government will eventually catch up to evolving attitudes and address the growing divide between state and federal laws.

Kimberly Rivers: We remain optimistic that the federal government will eventually catch up to evolving attitudes and address the growing divide between state and federal laws. We are marching toward a meaningful inflection point, and Trulieve is the best position for the coming wave of growth catalysts. With strong financial performance and significant scale in key markets, I wouldn't trade hands with anyone in the industry. Thank you for joining us today. And as I always say, onward and yes on three. At this time,

Kimberly Rivers: We are marching toward a meaningful inflection point and truly the best positioned for the coming wave of growth catalysts with strong financial performance and significant scale in key markets I wouldn't trade hands with anyone in the industry.

Speaker Change: You you for joining us today, and as I always say onward, and yes I'm sorry.

Christine Hersey: At this time, Kim Rivers and Wes Getman will be available to answer any questions. Operator, please open up the call for questions.

Kimberly Rivers: At this time, Kim rivers, and Westgate men will be available to answer any questions. Operator, Please open up the call for questions.

Kimberly Rivers: Okay.

Operator: Thank you. We will now begin the question and answer session. As a reminder, to ask a question, you may press star, then 1 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 addressed and you would like to withdraw it, please press star then 2. At this time, we will pause momentarily to assemble our roster. And today's first question comes from Luke Hannan with Canaccord Genuity. Please proceed.

Speaker Change: Thank you we will now begin the question and answer session. As a reminder to ask a question you May Press Star then one on your Touchtone phone.

Speaker Change: If youre using a speakerphone please pick up your handset before pressing the keys if at any time. Your question has been addressed and you would like to withdrawing. Please press Star then two at this time, we will pause momentarily to assemble our roster.

Kimberly Rivers: Okay.

Kimberly Rivers: Okay.

Kimberly Rivers: Okay.

Kimberly Rivers: And today's first question comes from Luke Hannan with Canaccord Genuity. Please proceed.

Luke Hannan: Thanks and good morning everyone. Congratulations on the strong results. Kim, maybe we'll start with just overall what you're seeing as far as trends in consumer behavior. You gave great color in your prepared remarks as far as what's going on from a basket and a traffic perspective. But I guess I'm more curious specifically when it comes to reactions to promos, what you're seeing exactly there and across the price spectrum as well. When we think about good, better, best, what are the trends specifically when it comes to reactions to promos across the price spectrum?

Luke Hannan: Thanks, and good morning, everyone. Congratulations on the strong results Kim maybe we'll start with just overall, what you're seeing as far as trends in consumer behavior. You gave great color in your prepared remarks as far as what's going on from a basket and a traffic perspective, but I guess I'm more curious specifically when it comes to the reactions to promos.

Kimberly Rivers: What youre seeing exactly there and across the price spectrum as well when we think about good better best what are the trends specifically backups reaction of promos across the price spectrum.

Kimberly Rivers: Sure. As we mentioned in the prepared remarks, we were really pleased with, you know, consumer behavior in the first quarter. I think we said on the last quarter call that really, you know, this quarter, specifically, March behavior was going to be critical to performance, and consumer sentiment did continue to carry over from what we saw in Q4 into Q1. We certainly continue to see responsiveness to promos that were focused on building baskets and really targeted to drive increased AOT, along with frequency promos.

Kimberly Rivers: Sure.

Kimberly Rivers: I think you mentioned in the prepared remarks, we were really.

Kimberly Rivers: Really pleased with I am you know consumer behavior in the first quarter I think we've said on the last quarter call that really you know this quarter, specifically March behavior was going to be critical to performance and consumer sentiment did continue to carryover from what we saw in Q4 into Q1 and.

Kimberly Rivers: You know, we certainly continue to also see responsiveness to an promos that we're focused on building basket and really targeted to drive increased L. T along with frequency promos, so and some win back parameters are punch card promos also did exceptionally well in the quarter. So again.

Kimberly Rivers: Some win-back promos or punch card promos also did exceptionally well in the quarter. So, again, I think more carryover from what we saw in Q4, but, of course, with the backdrop of lower overall promotional activity in Q1.

Kimberly Rivers: And I think more carryover from what we saw in Q4, but of course with the backdrop in Q1 of lower overall promotional activity and led to some of the outstanding results that we saw in the quarter.

Kimberly Rivers: Yeah.

Luke Hannan: Okay, great. And then when it comes to the gross, excuse me, the gross margin performance as well, very, very strong. Can you help us think about what were the biggest factors in the quarter-on-quarter increase in gross margin? And realize, of course, there's a lot at play when it comes to the balance of the year. Your guidance allows for at least a mid-50s gross margin for the balance of the year. But what would help you sustain the gross margin performance that you saw in Q1 for the balance of the year? What would need to go right there, I guess, in order to sustain that?

Speaker Change: Okay, Great and then when it comes to the gross excuse me the gross margin performance as well very very strong can you help us think about what were the biggest factors in the quarter on quarter increase in gross margin and realizing of course, there's a lot at play when it comes to the balance of the year. Your guidance allows for at least mid 50.

Speaker Change: Yes.

Kimberly Rivers: Margin for the balance of the year, but what would help you sustain the gross margin performance that you saw in Q1 for the balance of here what would need to go right. There I guess in order to sustain that.

Kimberly Rivers: Sure. So, speaking to the quarter, of course, when you have revenue increases, it certainly helps support a higher growth margin. You know, as we mentioned, Jefferson County is now firing on all cylinders, and really that came in as a critical support point in the quarter. Additionally, we have a reduction in pressure from our inventory wind-down efforts, again, specifically in Florida, which takes that pressure off of growth margin. And we've been signaling that those things are coming for a while, and it continues to show up in the financials. And then, you know, I would also kudos to the team for continuing our discipline and our targeted promotional strategy.

Luke Hannan: That also continues to show up in a meaningful way. And so, you know, I think that those things will need to continue, and we believe that they will continue throughout the remainder of the year as support for growth. But I think it's also important to note that, look, there are fluctuations, of course, that happen from quarter to quarter. Again, as we mentioned, we have a couple of things happening in Q2 that will provide pressure on the top line, and as we mentioned, you've got seasonality that will begin to show up, particularly in Arizona, which we know, you know, is somewhat seasonal for us in the coming months in the back part of Q2.

Kimberly Rivers: Horse that happened from quarter to quarter again, as we mentioned and we have a couple of things happening in in queue too that will provide you know pressure to top line and as you mentioned you know you've got seasonality that will begin to show up, particularly in Arizona, and which we know you know is is somewhat seasonal for us and the and the the.

Kimberly Rivers: I'm coming months Uhm in the back part of two two and then in addition, specifically in Q2 for US we've got our our <unk> deferred revenue hit that will take for rolling out loyalty in Florida, We're super excited about that program and again the results that we've seen and market to this deployed today, specifically, Arizona, Maryland have been.

Luke Hannan: And then, in addition, specifically in Q2 for us, we've got our deferred revenue hit that we'll take for rolling out loyalty in Florida. We're super excited about that program. And, again, the results that we've seen in markets that we have deployed to date, specifically in Arizona and Maryland, have been very positive, so we know it's the right move for the long term. But there will be pressure in the near term in the quarter, and we estimate that to be, you know, 1%, 1.5%, something like that for both the top line and for growth margin in Q2.

Kimberly Rivers: <unk> had been very positive that we know it's the right move for the longterm, but there will be pressure in the near term in the corner and we estimate that to be you know one one and a half per cent something like that and for for both top line in for gross margin and and Q2.

Kimberly Rivers: Got it. Okay. Thanks. Last one, quick one, and then I'll pass the line here. On that higher-cost inventory in Florida, is that fully sold through at this point, or is there still some to come for the balances?

Kimberly Rivers: Last one.

Kimberly Rivers: Possible on your on that higher cost inventory in Florida.

Kimberly Rivers: Throughout this pointers are still some.

Kimberly Rivers: For the both of Us here.

Luke Hannan: Yeah, I mean, I don't have in front of me in terms of if every single penny is sold through, as we said, the majority, the vast majority of that is out of the inventory at this point in time and has sold through, so it would be a de minimis contribution at this point. Okay. Okay, great. Thank you very much.

Speaker Change: Yeah, I mean, I I'm not gonna I don't have it in front of me in terms of if it's every single Penny is is sold through as we said the majority. The vast majority of that is is out of is out of the is out of the out of the you know the inventory at this point in time and hassle through so it would be at the minimum contribution at this point.

Speaker Change: Okay, great. Thank you very much.

Speaker Change: Thanks.

Operator: And the next question comes from Aaron Grey with Alliance Global Partners. Please proceed.

Speaker Change: And the next question comes from Aaron Green with a lion's Global partners. Please proceed.

Aaron Thomas Grey: Hi, good morning, and thank you for the question. It's a nice quarter there.

Aaron Thomas Grey: [noise] Hi, good morning, and thank you for the questions are nice core there first questions for me I just wanted to come up with that deliver the last question in terms of the loyalty programs you mentioned some tremendous performance very positive Arizona, Maryland.

Aaron Thomas Grey: First question for me, I just want to come back a little bit to the last question in terms of the loyalty program. You mentioned some tremendous performance, very positive, Arizona, Maryland. Any type of KPIs or metrics you could provide in terms of maybe basket size increases there versus other markets, percentage of sales that you're seeing from members of the loyalty program, and how that's kind of trended versus what you're expecting in terms of any key metrics that you're watching? Thanks.

Aaron Thomas Grey: Any type of K P eyes or metrics you could provide in terms of maybe back it's size increases their birth southern mortgage percentage of sales that you're seeing from Amazon loyalty program and how that is kind of trained it versus what you were expecting in terms of any key metrics that you're watching thanks.

Kimberly Rivers: Sure, thanks for the questionnaire. We had a question you were gonna ask it.

Speaker Change: Sure. Thanks, Thanks for the questionnaire and we had a complete you were gonna ask at so yeah happy to happy to give you. Some additional details on our on our loyalty result, and we'll just against the Arizona and just because there's a larger of our customer base. There you know we saw frequency actually increase by approximately 50 per cent.

Kimberly Rivers: So yeah, happy to give you some additional details on our loyalty results. And we'll just dig into Arizona just because there's a larger customer base there. We saw frequency actually increase by approximately 50% for folks that are enrolled in that loyalty program versus folks who have not. Plus, we saw significant AOT increases.

Speaker Change: That has enrolled in not loyalty programs versus folks who had not plus Lisa and significant air T increases I think also importantly, particularly in markets, where we have adult youth programs and when you think about right. The the the fact that a lot of those customers are buying anonymously and so having this loyalty program has really.

Kimberly Rivers: I think it is also important, particularly in markets where we have adult youth programs and we think about the fact that a lot of those customers are buying anonymously. And so having this loyalty program has really increased our data capture rate, which allows us to then, more specifically, lean into our CDP and our personalization platform to bring those customers back to shop with us and to make sure that we're serving up promotions and serving up product launches, et cetera, to them that meet their particular preferences.

Speaker Change: Increased our data capture right and which allows us to then more specifically you know lead into our N D P and our personalization platform to bring those customers back to Dr shop, with us and to make sure that we're serving and serving up promotions and serving up and product launches et cetera to them that meet their particular.

Kimberly Rivers: So it makes sense that the more data we can get and the more folks we can get to sign in to our loyalty platform, the better, of course, we'll have as it relates to frequency and AOT and all those other good metrics. And I'm super proud of the Arizona team.

Speaker Change: Preferences. So it makes sense that the more data, we can get and the more cause we can get to sign into our loyalty platform. The better of course, we'll have as it relates to frequency and a a T and all this other good metrics and Super proud of the Arizona team and you know we had what else he in Marquette for approximately 60 days in that <unk>.

Kimberly Rivers: We had loyalty in the market for approximately 60 days in that market, and during that period of time, we had a 30% adoption rate for the loyalty program. And so that will be, ultimately, a real game changer in that market. And as we think about Florida, right? And the shift to adult youth, again, a really important tool for us to have as we are able to talk to folks about signing up and so that we can get them into our data platforms.

Speaker Change: <unk> and during that period of time, we had a 30% adoption rate them into the loyalty program and so that will be ultimately we feel a real game changer in that market and I didn't think about Florida, right and it's the shift to adult youth again, and really important tool for us to have as we are able to talk to folks about.

Speaker Change: Signing up and so that we can get them into our our data platforms.

Aaron Thomas Grey: I appreciate that, Colorado; that's helpful. Second question for me on Florida and the potential adult use market, and Florida's a unique market as we see it, just given this one where, you know, there are some with size and scale, and there's some level of barrier to entry given the capital requirements out there. So given you are the market leader today and particularly kind of the top four that control a strong position there, how do you feel the adult use market could be different than other ones we've seen where you guys and others in the top four kind of leverage that scale to further entrench yourself, you know, whereas in other markets, you've seen the initial market leaders have the market share leadership and then lose it over time, whereas now you might be able to leverage How do you potentially leverage that in an adult use scenario?

Speaker Change: Mmm appreciate that cause that's that's helpful. Second quest for me on Florida, and Central adult use market <unk> meat market as we see just give them is one word.

Speaker Change: And what size and scale and there's some level barrier to entry, it's giving the capital requirements out there. So giving you are the market leader today in particular kind of the top four that control shrunk physician there.

Speaker Change: How do you feel the adult market could be different than other ones received with you guys and I was going to talk some kind of leverage that scale to further entrench yourself.

Speaker Change: Whereas in other markets you've seen the initial market leaders have them all to share leadership, losing overtime, whereas now you might be able to leverage our skills kind of maintain leadership for a longer duration, how do a substantial leverage that I'm an adult Houston. Thanks.

Kimberly Rivers: Yeah, no, I appreciate the question. I mean, I think that first, we should talk about our platform today, right? I mean, we have 135 locations in Florida and, as I mentioned, millions of square feet of cultivation and production capacity. So I think that there has not been another operator that I'm aware of anywhere in the country that has had that type of scale and significance in a market pre-conversion. I think that the other closest was approximately 20 locations that would convert to adult use. So the magnitude of what we're talking about as it relates to if it were to convert today, right?

Speaker Change: Yeah No I appreciate the question I mean, I think that first let's talk about our platform today right. I mean, we have 135 locations in Florida, and as I mentioned millions of square feet of cultivation and production capacity. So I think that you know there has not been another operator that I'm aware of them anywhere in the country that has had that.

Kimberly Rivers: And as we've said, we plan to have additional stores and capacity come online between now and launch. And secondly, I think that in all of my conversations with lawmakers, it is absolutely a goal to ensure that Florida is unique and that we, you know, there is a very specific desire to maintain the integrity, if you will, of Florida and of our program. And so I don't believe that we're going to see a scenario where there's, you know, sort of the floodgates opening, if you will, as it relates to the marketplace here in Florida, at least again, based on the conversations that I've had to date.

Speaker Change: Type of scale insignificant and in Marquette pre conversion and I think that together closest was approximately 20 locations that would convert into a don't use so the magnitude of what we're talking about as it relates to it if it were to convert today right and as we as we said we plan to have additional stores and could I ask.

Speaker Change: He come online between now and launch and secondly, I think that and and all of my conversations with lawmakers and it is absolutely a goal to ensure that Florida is unique and that we and you know there is a very specific desire to maintain the integrity. If you will.

Speaker Change: All of them are Florida and of our program and so I I don't believe that we're going to see a scenario, where there's you know the sort of the floodgates open if you will and as it relates to to the market place here in Florida at least again based on based on conversations that I've had today I do think that there will be.

Kimberly Rivers: I do think that there will be very strict regulatory control in the marketplace. I think that there will likely be product differentiation from medical versus adult use products. I think there will be a focus on maintaining the integrity of the medical program, which I am also a very big proponent of in the state of Florida, as we've got, you know, hundreds of thousands of people that rely on our products as part of their, you know, medication regime.

Speaker Change: Very strict regulatory control in the market place I think that there will be likely product differentiation from medical versus adult youth products. I think there will be a focus on maintaining the integrity of the medical program, which I also have a very big proponent of and the state of Florida is we've got you know hundreds of thousands of people that rely on.

Speaker Change: Our products as part of their you know medication regime. So I think that again in a lot of that has yet to be seen and will will happen posts uhm posed to vote, but I I think we're in a an enviable position I do think it's a very unique one given where we're where we're starting from.

Kimberly Rivers: So I think that, again, a lot of that is yet to be seen and will happen post-vote, but I think we're in an enviable position. I do think it's a very unique position, given where we're starting from.

Aaron Thomas Grey: Okay, great. I appreciate the detail there, and I'll go ahead and jump back into the queue.

Speaker Change: Okay, great appreciate the detail there and I'll go into the back of the queue.

Operator: Our next question comes from Frederick Smith with ATB Capital. Please proceed.

Speaker Change: Our next question comes from Frederick Smith, with a T. B capital. Please proceed.

Frederick Smith: Hi, good morning. Thanks for taking my question. My first question is, just on your loyalty program, can you just provide a bit more clarity on the deferred revenue coming from that in terms of the cadence of that and how that gets recognized from an accounting standpoint? Thank you.

Frederick Smith: Hi, good morning.

Frederick Smith: Thanks for taking my question just the first question is just on your loyalty program can you just provide a bit more clarity on the you'll be <unk> deferred revenue coming from that in terms of the cadence of that and how.

Speaker Change: <unk> recognized from an accounting standpoint, thank you.

Wes Getman: This is Wes. In the early days, obviously, there won't be any redemptions that come through because people build a points balance. Details are out there on the state websites as far as how it all works. The program is fairly simple. Points are redeemed for cash rebates at the point of sale, and so in the early days of that program, we don't get flow-through and redemption of those points, so we expect to see an uptick that's kind of outsized in the first six to eight months of that program.

Speaker Change: Sure. Yeah. This is what I mean is it.

Speaker Change: Early days.

Speaker Change: Obviously, there won't be redemptions raw that come through because people will be able to <unk> details are out there on the on the state websites as far as how it all works. So you know you know what the.

Speaker Change: Fairly simplistic you know pulling so redeem for cash rebates at that particular point of sale and still in the early days of that program. We don't think kind of flow through and redemption of those points. So we would expect to see an uptick that's kind of outsize in the first you know six to eight months of that program I'm not sure how much more color you'd like them out but that's just.

Frederick Smith: I'm not sure how much more color you'd like than that, but that's the gist.

Wes Getman: So that's helpful. Thank you.

Speaker Change: Alright. That's helpful. Thank you and then just second question is just capsule location. You know you have built a lot of cash on the balance sheet now and just curious how do you look at the cash what are the options you are considering in terms of allocating that.

Speaker Change: Would you consider buybacks would you look to repay someone for that earlier would you know you have that besides for M&A and information about the market just some clarity on your captor location strategy. Thank you.

Speaker Change: Yeah. So I mean, we love the fact that we've got Optionality and given and given R N capital.

Speaker Change: Capital on hand, and and believe that we you know we want to see some additional clarity come through prior to making any concrete decision, but and certainly as we've seen us we are very proactive in terms of managing and aren't that physician at rate recently, we and we took some.

Speaker Change: About $50 million off the table there at a discount and so we'll continue to monitor our our options as it relates to to the debt, but certainly intend to be very proactive and and in a in a in the best position as possible when that does become a scale and believed that were.

Speaker Change: We're building to again, how 'bout flexibility. In addition, and as we said we add are excited about the opportunity here in Florida and want to make sure that we also have the capital necessary to be able to lean in as appropriate and see that opportunity and that we think it's the single biggest.

Speaker Change: In a play that we have in front of US and then of course, there's other markets there too right I mean, Pennsylvania could absolutely I'll go with though if for Ohio router. We are anxiously awaiting the finalization of that settlement and regulatory approval. They are so there's there's lots for us to do and we want to have the.

Speaker Change: <unk> to make those moves and.

Speaker Change: When they when they come into focus for us.

Speaker Change: Thank you very much for the call back thanks.

Speaker Change: The next question comes from Russell Stanley with speaking Securities. Please proceed.

Frederick Smith: And then just a second question, just on capital allocation. You have built a lot of cash in the balance sheet now. And just curious, how do you look at that cash? What are the options you are considering in terms of allocating that, you know? Would you consider buybacks? Would you look to repay some of your debt earlier? Would you know, do you have an appetite for M&A and expansion to other markets? Just some clarity on your capital allocation strategy. Thank you

Russell Stanley: Good morning, and thank you for taking my question just some Florida Congrats on a bunch of course performance. So I'm just wondering last couple of quarters, you've been bringing some electricity capacity back online I'm just wondering how much remains idled and how you strengthen your bill <unk> back into the market driven the improve.

Russell Stanley: <unk>.

Kimberly Rivers: Yeah, so, we love the fact that we've got optionality, given our capital on hand, and believe that we, you know, want to see some additional clarity come through prior to making any concrete decisions, but certainly, as you've seen us do, we are very proactive in terms of managing our debt position, right? Recently, we took about $50 million off the table there at a discount, and so we'll continue to monitor our options as it relates to the debt but certainly intend to be very proactive and in the best position as possible when that debt becomes due, and believe that we're building to, again, have that flexibility.

Speaker Change: Yeah, So and as you noted and <unk>, we do have idle capacity and we have begun to bring that online and paste and really keep pace with demand and as as you know throughout the country really are platform is built in a very modular fashion and so we're able.

Kimberly Rivers: And then, of course, there's other markets there, too, right? I mean, Pennsylvania could absolutely go adult use. Ohio, rather, we are anxiously awaiting the finalization of that settlement and regulatory approval there. So, there's lots for us to do, and we want to have the ability to make those moves when they come into focus for us. Thank you.

Frederick Smith: Thank you very much for the call, and I'll be back in a few. Thanks.

Speaker Change: To flex up and down and as dictated by demand and I'll say bye bye trends that we see in the marketplace. So we'll continue to do that I'm in the state of Florida, and we do have an capacity significant capacity that is currently offline that we certainly wouldn't be leaning into you know in advance.

Speaker Change: Yep.

Speaker Change: Commiserate with adult youth coming online again, that's capacity that's already built and it's really just waiting for us to turn on and we can turn on that capacity fairly quickly.

Speaker Change: So again, a ramp up period. There is is fairly minimal and again as a reminder, there is a six month window from the day of the boat to the data for sale.

Speaker Change: Great. Thanks for that and and my second question also around Florida Uw's campaign beyond the Governor's public comments, just wondering how strong sense of competition or the opposition rather works at this point, how it's lining up especially given other items on the on the ballot. This November.

Speaker Change: Thank you.

Speaker Change: Yeah, I mean, it's and you know <unk>.

Speaker Change: [noise] of all right, there's a 60 per cent threshold in Florida for for any for any of this then and so regardless of the regardless of the you know the other side and we've always known that we're gonna have to run a very N you know.

Speaker Change: Personal campaign, and it's gonna have to be run well and run in a very strategic way you know, Florida is a very diverse state and and it's a very big state and it's also very critical state as it relates to not in the national conversation and so and you know we we our plans have not changed and.

Speaker Change: The sense that we plan to run and a hard intentional strategic campaign and that speaks to all voters, both Republicans and Democrats because as we know this is this is a bipartisan issue as it relates to the opposition and welcoming I think the governor has made it clear.

Speaker Change: And you know he is and he's not in favor of of our amendment and that being said I think that it also is very clear that I think in terms of prioritization I don't think that that marijuana is the the top amendment, that's that and he'll be focusing on but again, regardless and we're we're excited about.

Speaker Change: Having the opportunity to be in front of voters and to be on the ballot and to be able to educate the public on I don't use cannabis and what it can look like and what it means for floridians.

Speaker Change: That's a great color I'll get back to the queue congrats on the corner.

Speaker Change: Thanks.

Operator: The next question comes from Russell Stanley with Beacon Securities. Please proceed.

Speaker Change: The next question comes from Gerald Pasquarelli with Wedbush. Please proceed.

Russell Stanley: Good morning, and thank you for taking my question. Just on Florida, congrats on Jeffco's performance. I'm just wondering over the last couple quarters, you've been bringing some legacy capacity back online. I'm just wondering how much remains idled and how you're thinking about pacing that back into the market, given the improved odds on adult use.

Gerald Pasquarelli: Great. Thanks very much.

Kimberly Rivers: Yeah, so as you noted, Russ, we do have idle capacity, and we have begun to bring that online at a pace and really keep pace with demand. As you know, throughout the country, our platform is built in a very modular fashion, and so we're able to flex up and down as dictated by demand and also by trends that we see in the marketplace. So we'll continue to do that in the state of Florida.

Kimberly Rivers: We do have, you know, capacity, significant capacity that is currently offline that we certainly would be leaning into, you know, in advance of and, you know, kind of consistent with adult use coming online. Again, that's capacity that's already built, and it's really just waiting for us to turn it on, and we can turn on that capacity fairly quickly. So again, our ramp-up period there is fairly minimal, and again, as a reminder, there is a six-month window from the day of the vote to the day of first sale.

Gerald Pasquarelli: Came on the on the Florida ballot.

Gerald Pasquarelli: Initiatives.

Gerald Pasquarelli: Some recent polls the results.

Gerald Pasquarelli: Having looked overly favorable and I understand that it's still very early.

Gerald Pasquarelli: Polling is likely to change as we get closer to the election and on that point. When do you expect the bulk of advertising around this issue to step off this year and I I'd just like to ask.

Russell Stanley: Great, thanks for that. And my second question also concerns Ford and the adult use campaign, beyond the governor's public comments, just wondering how strong or intensive competition or the opposition looks at this point, how it's lining up, especially given other items on the ballot this November. Thank you.

Kimberly Rivers: Yeah, I mean, first of all, right, there's a 50% threshold in Florida for any, for any initiative. And so, regardless of the, regardless of the, you know, the other side, and we've always known that we're going to have to run a very intentional campaign, and that's going to have to be run well and run in a very strategic way. You know, Florida is a very diverse state, and it's a very big state, and it's also a very critical state as it relates to the national conversation.

Kimberly Rivers: And so, you know, we, our plans have not changed in the sense that we plan to run a hard, intentional, strategic campaign that speaks to all voters, both Republicans and Democrats, because, as we know, this is a bipartisan issue. But again, regardless, we're excited about having the opportunity to be in front of voters and to be on the ballot and to be able to educate the public on adult-use cannabis and what it can look like and what it means for Floridians.

Speaker Change: And your spirit.

Speaker Change: When we can establish a reasonable time frame ahead of the election, when we could you know start to better assess the veracity of at this point.

Speaker Change: Yeah. So.

Speaker Change: Yeah don't don't believe everything you read [laughter] I wouldn't say this is gonna get very noisy.

Russell Stanley: That's a great color. I'll get back in the queue. Congratulations on the quarter.

Speaker Change: And then prepared remarks, right, there's gonna be a lot of posturing and and data points that are out there just a couple for you on the last round of polling and <unk>. The two poles that you're referencing did not focus on registered voters. So they had over 10% of people that responded to those polls that <unk>.

Speaker Change: [noise] weren't even registered to vote. So how you pull matters and you're pulling sources matter, but there are reasons that people put those pulls out it could be that the other side is attempting to drum up support or attempting to fund raise and you know so I would just say at this point certainly and you know I wouldn't.

Speaker Change: <unk> emphasized pulling them, except for Directionally all of our internal data still points to the fact that we are I feel very comfortable and confident in our current position.

Speaker Change: And you know advertising will begin to ramp, but again I would say the last two and a half months and of the campaign are really when things start to solidify and right now it's really about just trying to reinforced and the base and if you will and then it'll move into trying to influence her sweat.

Speaker Change: <unk> you know the the Undecideds, which really will come into play in the in the last couple of months of.

Speaker Change: And the last couple of months of the the campaign and that being fed I, just someone who's been around Florida politics for awhile now and the 60% threshold is real and so you know this will likely be a conversation mm right up until the night of elections. So you know.

Speaker Change: Then it's then that's just how it goes in Florida on and it gives us nearly every every issue on the medical side just to give you an idea the past by the way overwhelmingly with over 70% approval rating. There were still mixed pulling that was coming out and having it having at the beach.

Speaker Change: Being defeated weeks before election night so.

Speaker Change: We're all in this together [laughter] and and well will continue because you guys updates along the way, but it's it's likely going to come to come down to to right before.

Speaker Change: Got it. Thanks. Thanks, so much for the color second <unk> housekeeping question. If I heard you prepared remarks correctly, you said basket was down on 420 this year versus last year.

Speaker Change: Is there anything to read into that I, just asked that into contact with your basket was was up in the quarter. So just trying to <unk> I understand it's a highly promotional day, so just trying to understand.

Speaker Change: You know with basketball and down into on 420 should be overly addictive before we can.

Speaker Change: You know put a broader second quarter. Thanks.

Speaker Change: Yeah, I wouldn't read too much into that and again that was ever a 14 day period, and so and because we're trying to compare you know, it's a little bit of apples to oranges a bit because it just went in for 20 falls year over year and then the series of sequencing of promotions, which also depends somewhat on next and how we're running you know bundle.

Speaker Change: So we we tended to end in this in this period really lean into you because we're also doing a lot of testing around consumer behavior as it relates to basketball thing in bundles and so some of this was a little bit of a test to learn period for us this quarter as well and I wouldn't really read into that and again, we were very enthusiastic about.

Speaker Change: The fact that traffic was up and significantly which was the goal for our team for this for 23.

Speaker Change: Perfect. Thanks, so much for the color.

Speaker Change: Yep.

Operator: The next question comes from Gerald Pasquarelli with Redbush. Please proceed.

Speaker Change: The next question comes from Eric Day, Laurie with Craig Hallum Capital Group. Please proceed.

Gerald Pasquarelli: Great, thanks very much. Kim, on the Florida ballot initiatives, you know, there's been some recent polls. The results, you know, haven't looked overly favorable, and I understand that it's still very early, and polling is likely to change as we get closer to the election. And on that point, when do you expect the bulk of advertising around this issue to step up this year? And I guess I ask that in the spirit of when we can establish a reasonable timeframe ahead of the election when we can, you know, start to better assess the veracity of this polling. Thanks.

Kimberly Rivers: So yeah, don't believe everything you read. I would say this is going to get very noisy.

Gerald Pasquarelli: That's what we said in the prepared remarks, right? There's going to be a lot of posturing and data points that are out there. Just a couple of things on the last round of polling; the two polls that you're referencing did not focus on registered voters. So they had over 10% of people that responded to those polls that actually weren't even registered to vote. So how you poll matters, and your polling sources matter, but there are reasons that people put those polls out.

Eric Des Lauriers: Great. Thanks for taking my questions and congrats on a very strong quarter here.

Gerald Pasquarelli: It could be that the other side is attempting to drum up support or attempting to fundraise. So I would just say at this point, certainly, I wouldn't overly emphasize polling except for directionally. All of our internal data still points to the fact that we are very comfortable and confident in our current position.

Kimberly Rivers: Advertising will begin to ramp up, but again, I would say the last two and a half months of the campaign are really when things start to solidify. Right now, it's really about just trying to reinforce the base, if you will, and then it will move into trying to influence or sway the undecideds, which really will come into play in the last couple months of the campaign. That being said, as someone who has been around Florida politics for a while now, the 60% threshold is real.

Kimberly Rivers: So this will likely be a conversation right up until the night of the election. So again, that's just how it goes in Florida. Again, it's nearly every issue. On the medical side, just to give you an idea, that passed, by the way, overwhelmingly with over 70% approval ratings. But there was still mixed polling that was coming out and having it defeated weeks before election night. We're all in this together, is what I would say, and we'll continue to give you guys updates along the way, but it's likely going to come down to right before.

Gerald Pasquarelli: Got it. Thanks. Thanks so much for the color.

Eric Des Lauriers: So a follow up from one of the earlier questions on gross margin you don't understood, Oklahoma, which is driven by both price and cost improvements you already mentioned reduced promotion and improve capacity utilization. There's one of your comments on which had a greater impact this corner price of your class.

Kimberly Rivers: Second, quick, just a housekeeping question. If I heard your prepared remarks correctly, I think you said that basket ball was down on 420 this year versus last year. Is there anything to read into that? I just asked that in the context that your basket was up in the quarter. So just trying to understand, you know, a basket being down on 420 should be overly indicative of what we could expect, you know, for the broader second quarter. Thanks.

Gerald Pasquarelli: Yes, I wouldn't read too much into that. And again, that was over a 14-day period.

Kimberly Rivers: And so, because we were trying to compare apples to oranges, a bit because of just when 420 falls year over year and then the series or sequencing of promotions, which also depends somewhat on mix and how we're running, you know, bundles. So we tended to, in this period, really lean into it because we're also doing a lot of testing around consumer behavior as it relates to basket building and bundles.

Kimberly Rivers: And so, some of this was a little bit of a test and learn period for us this quarter as well, and I wouldn't overly read into that. And again, we were very enthusiastic about the fact that traffic was up significantly, which was the goal for our team for this 420 period. Perfect. Thanks.

Gerald Pasquarelli: Perfect. Thanks so much for the call.

Operator: The next question comes from Eric DeLaurier with Craig Hallam Capital Group. Please proceed.

Speaker Change: Yeah I mean.

Speaker Change: Eric I mean again, we're giving you that we're giving you the the outline in terms of what and what impact it <unk> I'm not gonna do a walk for Ya [laughter] in terms of where the ordering of of magnitude and again I mean, I think that you know for us and being really excited about the fact that a number of things.

Eric Des Lauriers: Great, thank you for taking my questions and congratulations on a very strong quarter here. So a follow-up from one of the earlier questions on gross margin, you know, understood outperformance is driven by both price and cost improvements. You mentioned reduced promotion and then improved capacity utilization. Just wondering if you can comment on which had a greater impact this quarter, pricing or cost.

Kimberly Rivers: Yeah, I mean, Eric, I mean, again, we're giving you the outline in terms of what impacted birth margin. I'm not going to do a walk for you in terms of the ordering of magnitude.

Eric Des Lauriers: And again, I think that, you know, for us, being really excited about the fact that a number of those things came together and really coalesced. And I mean, to be fair, right, a lot of those feed off of one another as well. And so, you know, and again, I think we were pretty straightforward around what was contributing to performance and growth margin. And, you know, I will say again, JustCo performance really continues to be very, very solid.

Speaker Change: Came together and really coalesce and I mean to be fair right a lot of those feed off of one another as well and so and you know and again I think we were we were pretty trying to be pretty and straightforward around what was contributing.

Speaker Change: To performance and Grace Martin M and you know I I will say again and the Jessica performance and really continues to be very very solid and you know I think that we're approaching kind of <unk>.

Eric Des Lauriers: And, you know, I think that we're approaching kind of full utilization, if you will, on Jeffco and kind of, I think, coalescing around sort of steady state productivity there. And, and again, I think it's just leaning into any, any of the other variables that we're able to continue to control.

Speaker Change: [noise] utilization, if you well on on <unk>, and and and kind of I think coalescing around toward it for 30 state productivity, there and and again I think it's been it just and leaning into and you know any any of the other variables that we're able to continue to to control.

Kimberly Rivers: No, that makes sense. I appreciate the color there. That actually kind of leads into my next question.

Speaker Change: Oh that makes sense.

Speaker Change: I appreciate the color there actually kind of leads into my next question. You know you mentioned the full utilization of just go.

Eric Des Lauriers: You know, you mentioned the full utilization of GEFCO. I was going to ask you if you see room for further improvement in yields and quality in GEFCO. It sounds like, you know, just based on that comment there, we're perhaps sort of expecting to maintain these yields and qualities going forward. So just a clarification there, and then in terms of the, you know, legacy production facilities in Florida, beyond Jefferson County, how have yields and qualities trended there?

Speaker Change: I was gonna ask you know if you see room for further improvement audio quality <unk>. It sounds like you know just based on that on that comment.

Speaker Change: Sort of expected to maintain the deals and qualities going forward. So just a clarification there and then in terms of the you know legacy production facilities in Florida.

Speaker Change: Jefferson County, how have yields and quality is trying to bear you know should should we think of you as a sort of consistent with their historical average or I've ever been you know April operational improvements that you've seen some yoga quality improvements outside <unk> as well.

Eric Des Lauriers: You know, should we think of these as sort of consistent with their historical average? Or, you know, have there been, you know, overall operational improvements that you've seen, some yields and quality improvements outside GEFCO as well?

Kimberly Rivers: Yeah, so I mean, again, Jeffco continues to be kind of our crown jewel as it relates to efficiency and really just, you know, the design of that building coupled with the team's ability to really have incredible talent as it relates to placing genetics that have, that really like the environmental specific controls that we have in that footprint. And what's great about our platform is that, again, we do have some variability, and so there are certain genetics that perform fantastically in Jeffco and that maybe didn't historically perform great in our other growth types and vice versa.

Speaker Change: Yeah. So I mean again, I, just coke and he needs to be kind of our a crown jewel as it relates to efficiency and and really just you know the design of that building, coupled with and the team's ability to really have.

Speaker Change: You know incredible talent as it relates to placing genetics that have and that really like the environmental uhm.

Speaker Change: It controls that we have and not and not and not footprint and what's great about our platform is that again, we do have some variability and so there's certain internet access perform fantastic and <unk> that maybe didn't historically perform at great and our other or other and gross heightened in my <unk>.

Speaker Change: And so what we're able to do and what the team has been focused on is really matching you know genetic profiles to environments and two building styles and and really dialing nine in so we're gonna continue to focus on incremental improvement across the entire platform and we always have and we always won't part of our D. N a.

Kimberly Rivers: And so what we're able to do, and what the team has been focused on, is really matching, you know, genetic profiles to environments and to building styles and really dialing that in. So we're going to continue to focus on incremental improvement across the entire platform, and we always have, and we always will. It's part of our DNA.

Eric Des Lauriers: Great, thanks for taking my questions.

Speaker Change: Great actually all my questions.

Operator: Our next question comes from Scott Fortune with Roth Capital. Please proceed.

Speaker Change: Our next question comes from Scott Fortuna with Roth Capital. Please proceed.

Scott Thomas Fortune: Yeah, good morning, and thanks for the questions. A lot have been answered, but I just wanted to follow up on the capital markets here. Obviously, you have a strong cash position, but just an update on the rescheduling coming through, but that does not necessarily open up the exchanges. Kim, any additional color on new discussions with the exchanges and thoughts around capital markets looking for a kind of additional safe harbor language or an attorney general memo? And then, I'll follow up that kind of discussion with lenders and the potential pending rescheduling here and lowering the cost of capital. Just some thoughts or discussions around those two topics.

Scott Thomas Fortune: Yeah, good morning, and thanks for the questions are logged in answered, but just wanted to follow up on the capital markets. Here. Obviously, you have a strong cash position, but just need to update their obviously with rescheduling.

Speaker Change: Coming through but that does not necessarily open up the exchanges the.

Speaker Change: Kennedy additional color or discussions with the exchanges and thoughts around capital markets looking for kind of additional safe Harbor language or attorney General memo.

Speaker Change: And follow up that kind of discussions with lenders and the potential pending rescheduling here and lowering the cost of capital just kind of thoughts or discussions around those two topics.

Kimberly Rivers: Sure. So we're in, you know. We've got a good relationship and are certainly in communication with the exchanges. I think, look, I think there's a desire to list cannabis companies, but I think they've got compliance departments and legal departments, and until there is, you know, either broader federal reform or specific safe harbor language included in or coming out of Congress, you know, I think they're not able, right, to currently at least accept cannabis companies.

Kennedy: Sure. So we're in and you know we've got a good relationship and certainly are in communication with the with the exchanges and I think I think there's a desire to let's cannabis companies, but I think they've got complaints departments and legal departments and until there is you know either brought her federal reform or.

Kennedy: Specific savings Safe Harbor language included and Uhm are coming out of Congress and you know I I think there there are not able to currently at least except cannabis companies.

Kimberly Rivers: And, you know, as it relates to safer banking and again and rescheduling, I think both of those things continue to be, continue to be optimistic about both of them. I do believe that rescheduling is underway, and we're going to enter into the proposed rulemaking period here, soon, and then there'll be a public comment period, et cetera. And so, you know, we are certainly hopeful that that could wrap up this year, and it certainly would be exciting for us to have clarity as it relates to 2AD relief for calendar year 2024.

Speaker Change: And you know as it relates to.

Speaker Change: For banking and again and rescheduling I think both of those things continue.

Speaker Change: To be continued to be optimistic about both of them and I do believe that rescheduling and you know is underway and we're gonna enter into the rule making period here.

Speaker Change: Soon and then there'll be a public comment period et cetera, and so and you know, we're certainly hopeful that could rap and this year and and it certainly would be exciting for us to have clarity as it relates to 280 relief uhm for calendar year 2024, and so.

Kimberly Rivers: So, you know, I don't think there's anything really, you know, kind of earth shattering to report on the capital markets posture, although, again, I think each incremental step gets us, you know, gets us, again, one step closer.

Speaker Change: You know I don't think anything really you know kind of Earth shattering to report on the capital markets posture. Although again I think you know each incremental stop and get some <unk> gives us again, one step closer.

Scott Thomas Fortune: I appreciate the call. Thank you.

Speaker Change: I appreciate that thank you.

Speaker Change: Yep.

Operator: The next question is from Andrew Simple with Echelon Capital Markets. Please proceed.

Speaker Change: The next question is from Andrew simple with echelon capital markets. Please proceed.

Andrew Partheniou: Good morning. Congratulations to the full Trulieve team on the strong Q1 results here. I just want to go back, first of all, to the balance sheet strategy and just maybe ask you a clarifying question there. Obviously, it's great to see over $300 million of cash on the books. You know, that gives you a lot of flexibility. But just around the strategy of that, are you planning to hold that sizable cash balance on the books while you're waiting for a definitive outcome on the 280E tax situation? Or are you viewing that available as, you know, available for deployment in the business or, you know, potentially to return capital to debtor shareholders?

Andrew Partheniou: Good morning, Congrats to the full truly team on those drunk you one results here I just let me go back first of all to the balance sheet strategy and just maybe I should be clarifying question. There uhm, obviously, great to see over $300 million in cash on the books, because you'll want to <expletive>.

Kimberly Rivers: Yeah, no, we, so we are not, we are not holding, if the question is, are we holding kind of a reserve or restricted reserve as it relates to 280E, the answer to that is no, we are not. And, you know, it is reflected, of course, in the financials, as Wes went over in his prepared remark about the uncertain tax position, but we are not looking at that as restricted capital. We are looking at, again, as I said before, in terms of option, having optionality in terms of where to appropriately invest that capital, and, of course, that includes debt repayment, alongside Investing in the Business, a division of Catalyst.

Speaker Change: Ability.

Speaker Change: Around the strategy of that are you planning on hold.

Speaker Change: Dot sizable cash balance on the books, while you're waiting for a definitive they'll come on.

Speaker Change: Tax situation or you're viewing that available as you know it's available for deployment in the business or you know potentially to return capital to better shareholders.

Speaker Change: Yeah, No. We say we are not we are not holding if the question is are we holding kind of Ah Ah Ah reserve or shifted reserve as it relates to do any easy answers out of nowhere or not and you know it is reflected of course and the financials as in Westwood over in his prepared remarks, and the uncertain tax position.

Speaker Change: But we are we are not looking at that as a certain capital. We are looking at again S. As I said before and stopped in terms of option, having optionality in terms of where to appropriately invest and that capital and of course is N. Davis include debt repayment.

Speaker Change: Alongside Uhm investing in the business I had a catalyst.

Andrew Partheniou: And, you know, maybe as we look ahead a few years and, you know, the significant cash flow Trulieve is now generating, there's not an active share repurchase program in place. You know, some, you know, notably one of your peers has gone ahead with that. Is that something that Trulieve's team would evaluate if you continue to build cash and just given the CapEx outlook seems to, you know, seems to be at a more moderated pace than in prior years?

Speaker Change: Great and you know maybe it was we look.

Speaker Change: A few years.

Speaker Change: Significant cash flow truly no generating you know there's not an active share repurchase program in place you know some.

Speaker Change: One of your peers have gone ahead with that is that something that truly team would evaluate if you continue to build cash and just give them. The capex at work seems to.

Speaker Change: She had a more badri based on a prior yours.

Kimberly Rivers: Yeah, I mean, it's something that the board has discussed and will discuss in the future. I mean, I think it should be noted that we have, you know, made meaningful contributions to the campaign here in Florida. It would be great if those other operators could also, you know, contribute in a more meaningful way to the catalysts that are ahead that will help us all to continue to generate that great cash balance.

Speaker Change: Yeah, I mean, it is it's something that the board has discussed and will discuss in the future I mean, I think it should be noted that we have you know made meaningful contribution to the campaign here in Florida. It would be great. If there's other operators could also and you know contribute in a meaningful way to the catalyst that are ahead that will.

Speaker Change: Help us all to continue to generate that great cash balance and and so you know we've got some pretty big move ahead of us in in the coming months that we want to make sure that we can get through but you know absolutely and you know look as the largest shareholder of this company Uhm, absolutely you know, making sure that we continue to have the best interest of shareholders.

Kimberly Rivers: And, and so, you know, we've got some pretty big moves ahead of us in the coming months that we want to make sure that we can get through. But, you know, absolutely. And, you know, look, as the largest shareholder of this company, absolutely, you know, making sure that we continue to have the best interests of shareholders in mind with our investment decision remains our top priority. Great, that's very helpful.

Speaker Change: And mine with our investment decision remains the top priority.

Andrew Partheniou: Great. That's very helpful, Kim. I appreciate the additional colors. Thank you.

Speaker Change: Great. That's very helpful. Can appreciate the additional colors. Thank you yep.

Operator: And the next question comes from Mike Regan with Excelsior Equities. Please proceed.

Speaker Change: And the next question comes from Mike Regan with Excelsior Equites. Please proceed.

Mike Regan: Hi, everyone. Thanks for the question and congrats on a really strong quarter. In terms of taxes, is there any feedback or additional updates on, I think you still have about $30 million of refunds that you filed that are still outstanding. Is there any feedback from the IRS on receiving those or being denied those?

Mike Regan: <unk>. Thanks for the question and cause that's really shrunk order in terms of the taxes or any feedback or just want. This on could you spell out about 30 million of the funds that you filed that are still outstanding is there.

Mike Regan: Feedback from the I R. S on uhm, receiving those are being denied those.

Wes Getman: Yeah, there's really been no material updates since we last talked to you guys about 60 days ago, as reflected in the Q and financials and the remarks. Yeah, really nothing to report on that front. Our position remains as it was, and we continue to monitor and be optimistic.

Speaker Change: Yeah, there's really been no material updates since we last talked to you guys about 60 days ago. You is reflected in the queue and financials and remarks really nothing to report on that front opposition remains as it was and we continue to monitor and should be optimistic.

Mike Regan: Okay, and then, in terms of the second question about talking about basically Florida adding additional capacity in Florida ahead of the adult use launch, if that happens. Obviously, you have a lot of idle capacity there, so. Would it be, is that just meaning turning on the idle capacity, or is that actually also adding additional capacity, I guess, what, after the ballot actually passes, or would you actually start to build additional capacity ahead of the ballot passing?

Speaker Change: Okay and then the second question on the they're talking about basically the Florida.

Speaker Change: Patsy in Florida heavy adult use long ship that happens obviously have a lot of idle capacity there. So.

Speaker Change: Would it be is that just meeting turning on me I don't capacity or is that actually also adding additional capacity I guess, what's after the ballot actually passes or would you actually start to build additional capacity ahead of.

Speaker Change: <unk> <unk> <unk>.

Kimberly Rivers: Yeah, so again, I think we're in an enviable position and that we have, again, we have optionality, which is, I think, the word of the call. And so we've got, you know, idle capacity that, no question, we'll be able to lean into and bring back online as needed. And that being said, you know, we, of course, will continue to look at what makes sense as it relates to investment. And, you know, we absolutely are committed to maintaining our leadership position in Florida with the opportunity for adult youth.

Speaker Change: Yeah. So again I mean, I think we're in an enviable position in that we have again, we have optionality right, which is I think the the worst [laughter] [laughter].

Mike Regan: Great, thanks a lot.

Speaker Change: Of the call and so we've got you know I don't capacity that no question right will be able to lean into and and bring back online and as as needed and that being said you know we of course will continue to look at and what makes sense as it relates to investment and and you know we absolutely.

Speaker Change: We are committed to maintaining our leadership position in Florida with the opportunity of adult youth.

Speaker Change: Alright, Thanks, a lot.

Speaker Change: Mmm.

Operator: And at this time, we are showing no further questionnaires in the queue. And this does conclude our question and answer session. I would now like to turn the conference back over to Christine Hersey for any closing remarks.

Speaker Change: And at this time, we are showing no further questionnaires in the queue and this does conclude our question and answer session.

Speaker Change: Now I'd like to turn the conference back over to Christine Hershey for any closing remarks.

Christine Hersey: Thank you everyone for your time today. We look forward to sharing additional updates during our next earnest call. Thanks again, and have a great day.

Christine Hersey: Thank you everyone for your time today, we look forward to sharing additional update during our next earnings call.

Christine Hersey: Thanks, again and have a great day.

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

Speaker Change: The conference has now concluded. Thank you for attending today's presentations and you may now disconnect.