Q1 2025 Canopy Growth Corp Earnings Call

The correlation between any non-GAAP measures to their closest reported GAAP measures are included in our earnings release.

Please note that all financial information is provided in Canadian Dollars unless otherwise stated. Following remarks by David and Judy, we will conduct a question and answer session where we will take questions from analysts. With that, I will turn the call over to David. David, please begin.

Tyler Burns: are included in our earnings release. Please note that all financial information is provided in Canadian dollars unless otherwise stated. Following remarks by David and Judy, we will conduct a question and answer session where we will take questions from analysts. With that, I will turn the call over to David. Thanks, Tyler. Good morning, everyone.

David Klein: Thank you for joining us today to discuss Canopy Growth's results for the first quarter of Fiscal 25. I'm excited to review the continued progress we've made as an organization reinforcing our path towards sustained profitability and leadership in the global cannabis market. This quarter demonstrates that our strategic focus is paying off, which is evident in the sustained improvement of our key financial metrics and profitable revenue generation across all of our businesses. On our call today, I'll cover three topics.

David: Thanks, Tyler. Good morning, everyone. Thank you for joining us today to discuss canopy growth results for the first quarter of fiscal 25.

Operator: are included in our earnings release.

Operator: Please note that all financial information is provided in Canadian dollars and let's otherwise state it.

David: I'm excited to review the continued progress we've made as an organization reinforcing our path towards sustained profitability and leadership in the global cannabis market.

Operator: Following remarks by David and Judy, we will conduct a question and answer session where we will take questions from analysts.

Speaker Change: This quarter demonstrates that our strategic focus is paying off, which is evident in the sustained improvement of our key financial metrics and profitable revenue generation across all of our business units.

David Klein: With that, I will turn the call over to David. David please begin. Thanks Tyler. Good morning everyone. Thank you for joining us today to discuss Canopy Growth's results for the first quarter of fiscal 25. I'm excited to review the continued progress we've made as an organization reinforcing our path towards sustained profitability and leadership in the global cannabis market. This quarter demonstrates that our strategic focus is paying off which is evident in the sustained improvement of our key financial metrics and profitable revenue generation across all of our business units.

David Klein: First, our drive to profitability through focus on efficiency in our operations as well as profitable revenue generation over chasing market share at all costs. Second, the well-advanced factions within our commercial businesses that set the stage for growth in the second half of Fiscal 25. And third, I'll provide an update on the rapid advancement of Canopy USA. Following my remarks, Judy will review our financial results, including some of the market dynamics we're seeing and the actions we've taken to further strengthen our financial position.

Speaker Change: During our call, I'll cover three topics. First, our drive to profitability through focus on efficiency in our operations, as well as profitable revenue generation over chasing market share at all costs.

David Klein: During our call, I'll cover three topics. First, our drive to profitability through focus on efficiency in our operations as well as profitable revenue generation over chasing market share at all costs. Second, the well-advanced actions within our commercial businesses that set the stage for growth in the second half of fiscal 25 and third, I'll provide an update on the rapid advancements of Canopy, USA.

Speaker Change: Second, the well-advanced actions within our commercial businesses that set the stage for growth in the second half of fiscal 25. And third, I'll provide an update on the rapid advancement of Canopy USA. Following my remarks, Judy will review our financial results including some of the market dynamics we're seeing.

David Klein: Following my remarks, Judy will review our financial results including some of the market dynamics we're seeing and the actions we've taken to further strengthen our financial position. Let's begin with our drive to profitability. In Q1, fiscal 25 Canopy achieved the key profitability milestone. For the first time, thanks to the hard work of all of our teams, all of our business units delivered profitable, quarterly, adjusted EBITDA. We achieved this through continued work to enhance operational efficiency paired with strong cost management and above all a resolute focus on driving profitable revenue.

David Klein: Let's begin with our drive to profitability. In Q1, Fiscal 25, Canopy achieved a key profitability milestone for the first time thanks to the hard work of all of our team. All of our business units deliver profitable, quarterly-adjusted EBITDA. We achieve this through continued work to enhance operational efficiency paired with strong cost management and, above all, a resolute focus on driving profitable revenue. Against this backdrop, we've generated notable improvements across a range of key financial metrics, including a significant reduction in our overall cost of goods sold, down 31%, as well as a 24% reduction in SG&A expenses. Both of those are year-over-year.

Judy: and the actions we've taken to further strengthen our financial position.

Judy: Let's begin with our drive to profitability.

David Klein: Against this backdrop, we've generated notable improvements across a range of key financial metrics, including a significant reduction in our overall cost of goods sold down 31%, as well as a 24% reduction in SGNA expenses. Folks are year over year. On the revenue side, our focus on profitable revenue over market share is driving us to direct certain products into the higher market channels of Canadian medical and international markets. In part, this contributed to our Canadian medical business delivering its six consecutive quarter of growth and record top line, within which is arguably the most attractive cannabis segment in Canada.

Judy: In Q1, Fiscal 25 Canopy achieved a key profitability milestone for the first time thanks to the hard work of all of our teams.

Judy: All of our business units deliver profitable quarterly adjusted EBITDA. We achieve this through continued work to enhance operational efficiency paired with strong cost management and, above all, a resolute focus on driving profitable revenue.

Judy: Against this backdrop we've generated notable improvements across a range of key financial metrics including a significant reduction in our overall cost of goods sold down 31% as well as a 24% reduction in SG&A expenses. Both of those are year-over-year.

David Klein: On the revenue side, our focus on profitable revenue over market share is driving us to direct certain products into the higher-margin channels of the Canadian medical and international markets. In part, this contributed to our Canadian medical business delivering its sixth consecutive quarter of growth and record top line, which is arguably the most attractive cannabis segment in Canada. Additionally, this prioritization, paired with supply challenges, led to a softer top line for our adult use business in Q1.

Judy: On the revenue side, our focus on profitable revenue over market share is driving us to direct certain products into the higher margin channels of Canadian medical and international markets.

Judy: In part, this contributed to our Canadian medical business delivering its sixth consecutive quarter of growth and record top line, within which is arguably the most attractive cannabis segment in Canada.

Judy: Additionally, this prioritization paired with supply challenges led to a softer top line for our adult use business for Q1.

David Klein: Additionally, this prioritization paired with supply challenges led to a softer top line for our state supply challenges, which we believe led to a strengthened foundation for growth over the coming quarters. Looking to gross margin, we're pleased with the quarter, including the material improvement in our Canada cannabis gross margins, which increased year over year to 32%, despite paying close to $9.6 million in X-Type packages during the quarter. This improvement drove Canopy's consolidated gross margins up year over year to 35% in Q1.

David Klein: We've already taken action to address these supply challenges, which we believe lays a strengthened foundation for growth over the coming quarter. Looking to gross margin, we're pleased with the quarter, including a material improvement in our Canada cannabis gross margins, which increased year over year to 32%, despite paying close to $9.6 million in excise taxes during the quarter. This improvement drove Canopy's consolidated gross margins up year-over-year to 35% in Q1, having demonstrated that Canopy can deliver consistent healthy growth margins across all our businesses. Our sights are firmly set on driving top-line growth.

Judy: We've already taken action to address these supply challenges, which we believe lays a strengthened foundation for growth over the coming quarters.

Judy: Looking to gross margin, we're pleased with the quarter including the material improvement in our Canada cannabis gross margins, which increased year-over-year to 32% despite paying close to $9.6 million in excise taxes during the quarter.

Judy: This improvement drove Canopy's consolidated gross margins up year-over-year to 35% in Q1.

Judy: Having demonstrated that Canopy can deliver consistent healthy gross margins across all our businesses, our sights are firmly set on driving top-line growth.

David Klein: Having demonstrated that Canopy can deliver consistent healthy gross margins across all our businesses, our sites are firmly set on driving top line growth. In Canada, we've made prudent investments to increase both our internal flower and pre-roll joint production capacity. We've also secured additional partnerships across a range of segments to fortify our supply chain. Overall, we expect to hire flower yields from upgrades that our Kim Kardashian facility, our investment in pre-roll joint production capacity, additional supply agreements, and price actions already implemented to help drive stronger top-line performance in the coming quarters.

David Klein: In Canada, we've made prudent investments to increase both our internal flower and pre-roll joint production capacity. We've also secured additional partnerships across a range of segments to fortify our supply chain. Overall, we expect higher flower yields from upgrades at our Concardin facility, our investment in pre-roll joint production capacity, Additional Supply Agreements, and price actions already implemented to help drive stronger top line performance in the coming quarters. Our team is also encouraged by the performance of the broad range of new products that we delivered to the Canadian adult use market in the latter half of the first quarter.

Judy: In Canada, we've made prudent investments to increase both our internal flower and pre-roll joint production capacity.

Judy: We've also secured additional partnerships across a range of segments to fortify our supply chain.

Judy: Overall, we expect the higher flower yields from upgrades at our Kincardine facility. Our investment in pre-roll joint production capacity.

Judy: additional supply agreements and price actions already implemented to help drive stronger top-line performance in the coming quarters.

Judy: Our team is also encouraged by the performance of the broad range of new products that we've delivered to the Canadian adult use market in the latter half of the first quarter.

David Klein: Our team is also encouraged by the performance of the broad range of new products that we've delivered to the Canadian adult use market in the latter half of the first quarter. This includes 17 new and exciting SKUs. To highlight a few, we've launched two Quebec exclusive flowers from flower strings, from Tweed and Matrix, and views pre-rolls from Tweed and Seven Agers. Preverages, including the Tweed, Sugarfree Cola, and Seven Agers, Cafe Vanilla, and Unique, all-in-one vapes from Tweed and Seven Agers without standing flavor profiles.

David Klein: This includes 17 new and exciting SKUs. To highlight a few, we've launched two Quebec-exclusive flower strains for its weed and maize, infused pre-rolls from Tweed at 7-8, beverages including a Tweed sugar-free cola and 7 Acres Café Vanilla, and unique all-in-one bakes from Tweed and 7 Acres with outstanding flavor profiles.

Judy: This includes 17 new and exciting SKUs. To highlight a few, we've launched two Quebec-exclusive flower strains from Tweed and Maytree.

Judy: infused pre-rolls from Tweed in 7 Acres.

Judy: Beverages including a Tweed sugar-free cola and 7 Acres Cafe Vanilla and unique all-in-one vapes from Tweed and 7 Acres with outstanding flavor profiles.

David Klein: We believe the innovation we're bringing to market, in addition to the pipeline of NPD products landing later this year, will contribute to growth in our Canadian adult use top line over the coming quarter. Moving to distribution, our Canadian cannabis business implemented a new hybrid sales model during the first quarter with a mission to enhance distribution for key brands within our portfolio. This complements our in-house sales capabilities in a cost-efficient manner and has already delivered positive results, with distribution increasing 7% sequentially to 61,000 points nationally.

Judy: We believe the innovation we're bringing to market, in addition to the pipeline of NPD landing later this year, will contribute to growth in our Canadian adult use top line over the coming quarters.

David Klein: We believe the innovation will bring you to market, in addition to the pipeline of NPD landing later this year, will contribute to growth in our Canadian adult use top-line over the coming quarters. Moving to distribution, our Canadian cannabis business implemented a new hybrid sales model during the first quarter, with the mission to enhance distribution for key brands within our portfolio. This complements our in-house sales capability in a cost-efficient manner, and has already delivered positive results with distribution increasing 7% with sequentially to 61,000 points nationally.

Judy: Moving to distribution, our Canadian cannabis business implemented a new hybrid sales model during the first quarter with a mission to enhance distribution for key brands within our portfolio.

Judy: This complements our in-house sales capabilities in a cost-efficient manner and has already delivered positive results with distribution increasing 7% sequentially to 61,000 points nationally.

David Klein: We expect these new points of distribution to support stronger brand and top-line performance in the second half of fiscal 25. In our international markets as well as in stores in Bickel, we continue to feel Canopy is well-placed for leadership and growth. Backed by surging demand post-legalization, Storz and Bickel posted revenue growth of over 100% in Germany within the quarter, which offset a decline in Australia due to the implementation of a regulatory. Paired with expanding U.S. distribution, we forecast sustained growth for stores in Bickel in the coming quarter. For international markets, in addition to an especially strong quarter in the Polish market, we are highly focused on seizing the opportunity for rapid growth in Germany.

Judy: We expect these new points of distribution to support stronger brand and top-line performance in the second half of fiscal 25.

David Klein: We expect these new points of distribution to support stronger brand and top-line performance in the second half of fiscal 25. In our international markets as well as Storzenbickel, we continue to feel canopy as well-plates for leadership and growth. Back by searching demand post-legalization, Storzenbickel posted revenue growth of over 100% in Germany within the quarter, which offset a decline in Australia due to the implementation of a regulatory change. Compared with expanding US distribution, we forecast sustained growth for Storzenbickel in the coming quarters.

Judy: In our international markets, as well as stores in Bickel, we continue to feel Canopy is well-placed for leadership and growth.

Judy: Backed by surging demand post-legalization, Storz and Bickel posted revenue growth of over 100% in Germany within the quarter, which offset a decline in Australia due to the implementation of a regulatory change.

Judy: Paired with expanding U.S. distribution, we forecast sustained growth for stores in Bickel in the coming quarters.

Judy: For international markets, in addition to an especially strong quarter in the Polish market, we are highly focused on seizing the opportunity for rapid growth in Germany.

David Klein: For international markets, in addition to an especially strong quarter in the Polish market, we are highly focused on seasoning the opportunity for rapid growth in Germany. In line with our asset-light strategy and to meet the increasing demand for medical cannabis across Europe, actions are underway to augment our Canadian ground flower with EU-based supply. This preserves canopy's flexibility, limits the upfront investments required to serve these growing markets, and will enable our international markets business to continue delivering robust growth margins.

David Klein: In line with our asset-light strategy and to meet the increasing demand for medical cannabis across Europe, actions are underway to augment our Canadian-grown flower with EU-based supply. This preserves Canopy's flexibility, limits the upfront investments required to serve these growing markets, and will enable our international markets business to continue delivering robust growth margins. This work is already well advanced, and we've signed multiple agreements with EU-based flower suppliers to deliver new and exclusive high-TH strains to the market.

Speaker Change: In line with our Asset Light strategy and to meet the increasing demand for medical cannabis across Europe , actions are underway to augment our Canadian-grown flower with EU-based supply.

David Klein: This work is already well advanced, and we look to sign multiple agreements with EU-based flower suppliers to deliver new and exclusive high-th strings to the market. As EU source flower comes into our supply chain, we expect strengthen performance in our German medical cannabis business in the latter half of fiscal 25. We also envision that over time our use of EU-based third-party supply will free up more of our Canadian-based supply for use domestically to the benefit of our Canadian business.

Speaker Change: This preserves Canopy's flexibility.

Speaker Change: limits the upfront investments required to serve these growing markets and will enable our international markets business to continue delivering robust gross margins.

Speaker Change: This work is already well advanced and we've signed multiple agreements with EU-based flower suppliers to deliver new and exclusive high pH strains to the market.

David Klein: As EU-sourced flour comes into our supply chain, we expect strengthened performance in our German medical cannabis business in the latter half of fiscal 25. We also anticipate that over time, our use of EU-based third-party supply will free up more of our Canadian-based supply for use domestically to the benefit of our Canadian business. Next, I'd like to speak about the rapid advancements that CanopyUSA is making and their resulting growth opportunities. Since our last discussion in May, Canopy USA has closed the acquisitions of Jetty and two of 3-1-X. That's a full acquisition of Juana expected by the end of summer.

Speaker Change: As EU source flour comes into our supply chain, we expect strengthened performance in our German medical cannabis business in the latter half of fiscal 25.

Speaker Change: We also envision that over time, our use of EU-based third-party supply will free up more of our Canadian-based supply for use domestically to the benefit of our Canadian business.

David Klein: In fact, Jetty and Juana are already leveraging a joint sales force to engage retail in New York as the brands of Canopy USA begin to realize opportunities and synergies together. Focusing further on the performance of each of the CanopyUSA entities, WANA has entered Connecticut and New York State while also launching three new hemp-derived edibles, which opens up a new national customer base. Moving to the West Coast, JETI has expanded its solventless bait product offering in California with the launch of a new all-in-one and hybrid bait.

Speaker Change: Next, I'd like to speak about the rapid advancements that Canopy USA is making and the resulting growth opportunities.

David Klein: Next, I'd like to speak about the rapid advancements that Canopy USA is making and the resulting growth opportunities. Since our last discussion in May, Canopy USA has closed the acquisitions of Jetty and two of three wanted entities, but the full acquisition of one expected by the end of summer. In fact, Jetty and Wana are already leveraging a joint sales force to engage retail in New York as the brands of Canopy USA begin to realize opportunities and synergies together.

Speaker Change: [inaudible]

Speaker Change: Since our last discussion in May, CanopyUSA has closed the acquisitions of Jetty and two of three Juana entities.

Speaker Change: So it's a full acquisition of Juana, expected by the end of summer.

Speaker Change: In fact, Jetty and Juana are already leveraging a joint sales force to engage retail in New York as the brands of Canopy USA begin to realize opportunities and synergies together.

Speaker Change: focusing further on the performance of each of the CanopyUSA entities.

David Klein: Focusing further on the performance of each of the Canopy USA entities, Wana has entered Connecticut in New York State, while also launching three new Hemp-to-Ride Edibles, which opens up a new national customer base. Chifting to the West Coast, Jetty has expanded its solvent-less-based product offering in California with a launch of a new all-in-one and hybrid base. And as an indication of the strength of this brand, Jetty continues to occupy the number one position in solvent-less-based nationally.

Speaker Change: Juana has entered Connecticut and New York State while also launching three new hemp-derived edibles which opens up a new national customer base.

Speaker Change: Shifting to the West Coast, JETI has expanded its solventless vape product offering in California with the launch of a new all-in-one and hybrid vapes.

David Klein: And as an indication of the strength of this brand, Steady continues to occupy the number one position in solventless vapes nationally. Additionally, following its credit challenge, Anchorage is focused on execution across the highest potential states in the U.S., including in the Northeast and Midwest, where they hold an incumbent position. As I mentioned on the last call, Acreage's operations are well-positioned in Ohio, likely the most exciting U.S. state right now for adult-use cannabis, with botanist dispensaries located in the largest population centers in the state and a Tier 1 cultivation and processing facility with significant expansion potential. This is critical.

Speaker Change: And as an indication of the strength of this brand, Steady continues to occupy the number one position in solventless vapes nationally.

Speaker Change: Additionally, following its credit challenges, acreage is focused on execution across the highest potential states in the U.S., including in the Northeast and Midwest, where they hold an incumbent position.

David Klein: Additionally, following its credit challenges, acreages focused on execution across the highest potential states in the US, including in the Northeast and Midwest, where they hold an income in position. As I mentioned on the last call, acreages operations are well-positioned in Ohio, likely the most exciting US state right now for adult East Canada. The botanist dispensaries located in the largest population centers in the state and a Tier 1 cultivation and processing facility with significant expansion potential.

Speaker Change: As I mentioned on the last call, Acreage's operations are well positioned in Ohio, likely the most exciting U.S. state right now for adult-use cannabis.

Speaker Change: The botanist dispensary is located in the largest population centers in the state and a Tier 1 cultivation and processing facility with significant expansion potential.

David Klein: Despite a slow start to this year, due in large part to their credit challenges, we feel that Acreage is capable of returning to its previous run rate, which saw them generate significant adjusted EBITDA. I'd like to quickly congratulate the Acreage team on their preparation for the launch of non-medical sales in Ohio, which commenced on Tuesday of this week, and we look forward to seeing their growth in the state. We remain upbeat about Canopy USA and look forward to sharing future updates on this platform as we provide Canopy shareholders with this unique exposure to the U.S. cannabis market.

Speaker Change: This is critical.

David Klein: This is critical, as despite the slow start to this year due to large, due in large part to their credit challenges, we feel that acreages capable of returning to their previous run rate would saw them generate significant adjusted EBITDA.

Speaker Change: As despite a slow start to this year due in large part to their credit challenges, we feel that Acreage is capable of returning to their previous run rate, which saw them generate significant adjusted EBITDA.

Speaker Change: I'd like to quickly congratulate the ACREAGE team on their preparation for the launch of non-medical sales in Ohio, which commenced on Tuesday of this week, and we look forward to seeing their growth in the state.

David Klein: I'd like to quickly congratulate the acreage team on their preparation for the launch of non-medical sales in Ohio, which commenced on Tuesday of this week, and we look forward to seeing their growth in the state. We remain upbeat about Canopy USA and look forward to sharing future updates on this platform as we provide canopy shareholders with this unique exposure to the US cannabis market. As we close the quarter, Canopy stands on a firm foundation and we're showing progress in every corner of our operations.

Speaker Change: We remain upbeat about Canopy USA and look forward to sharing future updates on this platform as we provide Canopy shareholders with this unique exposure to the U.S. cannabis market.

David Klein: As we close the quarter, Canopy stands on a firm foundation, and we're showing progress in every corner of our operation. We have a robust corpus, significantly strengthened financials, and a unique strategy for seizing the opportunity of growth in the U.S. via CanopyUSA. Our focus remains on leveraging this foundation to achieve multi-market cannabis leadership, and we are more prepared than ever to navigate the complexities of the global cannabis market while delivering substantial value to our shareholders and customers. I'll now turn the call over to Judy Holt.

Speaker Change: As we close the quarter, Canopy stands on a firm foundation and we're showing progress in every corner of our operations. We have robust core businesses.

David Klein: We have robust core businesses, significantly strengthened financials, and a unique strategy preceding the opportunity of growth in the US via Canopy USA. Our focus remains on leveraging this foundation to achieve multi-market cannabis leadership and where more prepared than ever can navigate the complexities of the global cannabis market while delivering substantial value to our shareholders and customers.

Speaker Change: significantly strengthened financials and a unique strategy for seizing the opportunity of growth in the U.S. via Canopy USA.

Speaker Change: Our focus remains on leveraging this foundation to achieve multi-market cannabis leadership. And we are more prepared than ever to navigate the complexities of the global cannabis market while delivering substantial value to our shareholders and customers.

Speaker Change: I'll now turn the call over to Judy who will discuss our financials in greater detail.

Judy Hong: Thank you very much, David, and good morning, everyone. I'll start by reviewing our first quarter fiscal 2025 results. I'll then discuss continued progress we've made on our balance sheet and cash flow, followed by a discussion on our priorities and outlook for the balance of fiscal 2025. So, let's begin with our first quarter results.

Judy Hong: I'll now turn the call over to Judy, we'll discuss our financials in greater detail. Thank you very much, David, and good morning everyone. I'll start by reviewing our first quarter fiscal 2025 results. I'll then discuss continued progress we've made on our balance sheet and cash flow, followed by a discussion on our priorities and outlook for the balance of fiscal 2025.

Judy: Thank you very much, David, and good morning, everyone. I'll start by reviewing our first quarter fiscal 2025 results. I'll then discuss continued progress we've made on our balance sheet and cash flow, followed by a discussion on our priorities and outlook for the balance of fiscal 2025.

Judy Hong: 2.1 FY 2025 demonstrated continued progress in our financial performance as evidenced by significant year-over-year improvement in gross profit dollars, adjusted EBITDA, and free cash flows. Canopy delivered consolidated net revenues of $66 million in Q1, a decrease of 13%, or down 3%, excluding the impact of divestitures' businesses compared to Q1 of last year, but consolidated gross profit dollars grew 67% year-over-year The consolidated growth margin in Q1 was 35%, again a significant improvement compared to 18% last year.

Judy: Let's begin with our first quarter results.

Judy Hong: Let's begin with our first quarter results. We want to fight 2025 demonstrated continued progress in our financial performance as evidence by significant year-over-year improvements in close profit dollars, adjusted EBITDA and three cash flow. Canopy delivers consolidated net revenues of $66 million in Q1, a decrease of 13%, which allows 3% excluding the impact of the best businesses compared to Q1 at last year, but consolidated gross profit dollars, grew 67% year-to-year. Consolidated gross margin in Q1 was 35%, again, a significant improvement compared to 18% last year.

Speaker Change: 2 on F-2020-5 demonstrated continuous progress in our financial performance as evidence by significant year-of-year improvement in growth profits dollar, adjusted EBITDA and free cash flow.

Speaker Change: Canopy delivers consolidated net revenue of $66 million in Q1, a decrease of 13%, or down 3% excluding the impact of divestment businesses compared to Q1 of last year.

Speaker Change: and consolidated gross profit dollars grew 67% year-over-year.

Speaker Change: The consolidated growth margin in Q1 was 35%, again a significant improvement compared to 18% last year.

Judy Hong: Following a dip in growth margin in Q4, I'm pleased to report a return to solid growth margin performance in Q1, which I'll provide additional details later on the call. If you want to just believe that that was a loss of $5 million, an improvement of 77% versus last year.

Speaker Change: Following a dip in growth margin in Q4, I'm pleased to report a return to solid growth margin performance in Q1, which I'll provide additional details later on the call.

Judy Hong: Following a dip in gross margin in Q4, I'm pleased to report a return to solid gross margin performance in Q1, which are provided additional details later on the call. Q1 adjusted if it's that was a loss of $5 million, an improvement of 77% for this last year. Precasual was an outflow of $56 million, an improvement of $52 million compared to Q1 at last year. Note that we typically incurred negative working capital in the first half of the fiscal year with improvement in the back half due to the timing of certain payments.

Speaker Change: If you want adjusted EBITDA with a loss of $5 million, an improvement of 77% versus last year.

Judy Hong: Pre-cash flow was an outflow of $56 million, an improvement of $52 million compared to Q1 of last year. Note that we typically incur negative working capital in the first half of the fiscal year with improvement in the back half due to the timing of certain payments. I'd like to now review the results of our key businesses in more detail, including progress against our path to profitability. Scottingwood, Canada, won that revenue with $38 million, a decline of 6% compared to a year ago.

Speaker Change: Free cash flow was an outflow of $56 million, an improvement of $52 million compared to Q1 of last year. Note that we typically incurred negative working capital in the first half of the fiscal year with improvement in the back half due to the timing of certain payments.

Judy Hong: Canada Medical had another record revenue quarter, increasing 20% compared to last year, continuing to benefit from customer mix towards a greater number of insured patients and larger product assortment in the spectrum online stores. We're pleased with the outperformance of our Canada Medical business, which is also a high-margin business for us. Our adult youth business was down 22%, which was softer than planned. We continue to be disciplined in the highly competitive adult youth segment in Canada by not chasing market share at all costs.

Speaker Change: I'd like to now review the results of our key businesses in more detail, including progress against our path to profitability.

Judy Hong: As I said, I review the results of our key businesses in more detail, including progress against or past the possibility. Starting with Canada, Q1 that revenue was $38 million, a decline of 6% compared to a year ago. Canada Medical had another record revenue quarter, increasing 20% compared to last year, continuing to benefit from customer mix for the greater number of insurer patients and larger product supportments and spectrum online stores. We're pleased with the outperformance of our Canada Medical, which is also a high margin business for us.

Speaker Change: Starting with Canada, Q1 net revenue was $38 million, a decline of 6% compared to a year ago.

Speaker Change: Canada Medical had another record revenue quarter, increasing 20% compared to last year, continuing to benefit from customer mix towards a greater number of insured patients and larger product assortment in the Spectrum Online store.

Speaker Change: We're pleased with the outperformance of our Canada Medical which is also a high margin business for us.

Speaker Change: Our adult youth business was down 22% which was softer than planned.

Judy Hong: Our adult youth business was down 22%, which was softer than planned. We continue to be disciplined in the highly competitive adult youth segment in Canada, by not chasing market share at all costs. Q1 revenue was impacted by supply constraints of certain products due in part to lower fulfillment by our CMO partners who are facing financial difficulties. We're working to expand our pool of CMO partners, but given the evolving market dynamics and landscape, it is taking some time to ensure we have redundant season plates.

Speaker Change: We continue to be disciplined in the highly competitive adult youth segment in Canada by not chasing market share at all costs.

Judy Hong: Q1 revenue was impacted by supply constraints of certain products due in part to lower fulfillment by our CMO partners who are facing financial difficulties. We're working to expand our pool of CMO partners, but given the evolving market dynamics and landscape, it is taking some time to ensure we have redundancies in place. With an improved cost structure, we've also taken targeted pricing actions and increased promotions in select categories where we still expect to see good margins.

Speaker Change: Q1 revenue was impacted by supply constraints of certain products due in part to lower fulfillment by our CMO partners who are facing financial difficulties.

Speaker Change: We're working to expand our pool of CMO partners, but given the evolving market dynamics and landscape, it is taking some time to ensure we have redundancies in place.

Speaker Change: With an improved cost structure, we've also taken targeted pricing actions and increased promotions in select categories where we still expect to see good margins.

Judy Hong: With an improved cost structure, we've also taken targeted pricing actions and increased promotions in select categories where we still expect to see good margins. We also launched a number of new products towards the latter part of Q1 with additional new products launching in the fall. All in all, we do expect modest improvement in revenue in Q2 with stronger decline in revenue. Canada growth profits dollars increased to 12 million in Q1 of the Q25 versus under a million in Q1 of last year.

Judy Hong: We also launched a number of new products in the latter part of Q1, with additional new products launching in the fall. All in all, we do expect modest improvement in revenue in Q2, with stronger year-over-year growth in Q3 and Q4. Despite a decline in revenue, Canada's gross profit dollars increased to $12 million in Q1 of 2025 versus under $1 million in Q1 of last year. Canada's growth margin in Q1 was 32%, and its cash growth margin, adding back non-cash depreciation costs and costs, was 45%. Let me provide key drivers of Canada's growth market performance in Q1. First, we continue to see the benefits from cost reduction programs that were completed during fiscal 2024 with a significant year-over-year reduction in costs.

Speaker Change: We also launched a number of new products towards the latter part of Q1, with additional new products launching in the fall.

Speaker Change: All in all, we do expect modest improvement in revenue in Q2, with stronger year-over-year growth in Q3 and Q4 for a Canada cannabis business.

Speaker Change: Despite a decline in revenue, Canada's gross profit dollars increased to $12 million in Q1 of fiscal 25 versus under $1 million in Q1 of last year.

Speaker Change: Canada growth margin in Q1 was 32% and cash growth margin adding back non-cash depreciation costs and costs was 45%.

Judy Hong: Canada growth margin in Q1 was 32% and cash growth margin adding back non-cash depreciation costs and cost was 45%. Let me provide key drivers of Canada growth margin performance in Q1. First, we continue to see the benefits from cost reduction that was completed during fiscal 2024 with significant year-over-year reductions in cost. 2. The growth in our medical business, which carry higher margins than our adult use business, also contributed to stronger growth margin performance.

Judy Hong: Second, the growth in our medical business, which carried higher margins than our adult youth business, also contributed to stronger gross margin performance. During Q1, our medical business accounted for approximately half of revenue in Canada. Third, Q1 saw improved utilization in our manufacturing operations, which also positively impacted work margins. We continue to target Canada's cash growth margins to be in the mid to high 30% based on the historical channel mix and are focused on further improving Canada's growth margins driven by increase in our cultivation yields in the winter months following installation of new LED lighting at King Carden in the first half of fiscal 25, strategic sourcing of flower supply at favorable cost, and increased throughput in pre-roll production and reduction in labor costs with a new and flexible pre-roll machine now up and running.

Speaker Change: Let me provide key drivers of Canada's growth market performance in Q1.

Speaker Change: First, we continue to see the benefits from COGS reduction programs that were completed during fiscal 2024 with significant year-over-year reductions in COGS.

Speaker Change: Second, the growth in our medical business, which carried higher margins than our adult youth business, also contributed to stronger gross margin performance.

Speaker Change: During Q1, our medical business accounted for approximately half of revenue in Canada.

Judy Hong: During Q1, our medical business accounted for approximately half of revenue in Canada. 3. Q1 saw improved utilization in our manufacturing operations, which also positively impacted growth margins. We continue to target Canada cash growth margins to be in the mid to high 30 percent based on the historical channel mix and are focused on further improving Canada growth margins, driven by increase in our cultivation yields in the winter months, following installation of new LED lighting at King Carden in the first half of fiscal 25, strategic sourcing of flower supply at favorable cost, and increased throughput in pre-row production and reduction in labor costs with a new and flexible pre-row machine now up and running.

Speaker Change: Third, Q1 saw improved utilization in our manufacturing operations, which also positively impacted works margins.

Speaker Change: We continue to target Canada's cash flows margins to be in the mid to high 30% based on the historical channel mix.

Speaker Change: and are focused on further improving Canada's growth margins, driven by

Speaker Change: increase in our cultivation yields in the winter months following installation of new LED lighting at King Cardin in the first half of Fiscal 25.

Speaker Change: strategic sourcing of flower supply at favorable costs, and increased throughput in pre-roll production and reduction in labor costs with a new and flexible pre-roll machine now up and running.

Judy Hong: International market cannabis net revenue of $10 million in Q1 was down 1% compared to Q1 of last year. We saw strong double-digit growth in Europe, notably in Poland, which was partially offset by the decline in sales in Australia and U.S. CBD, which would have been winding down ahead of transitioning the business over to Canopy USA. International markets cannabis growth margin was 36% in Q1 fiscal 2025, up from 34% in Q1 of fiscal 24, driven by a favorable shift in country mix with higher-margin Poland contributing to a greater portion of sales this year as compared to the prior year period.

Speaker Change: International market cannabis net revenue of $10 million in Q1 was down 1% compared to Q1 of last year.

Judy Hong: International market cannabis net revenue of 10 million in Q1 was down 1 percent compared to Q1 of last year. We saw strong double-digit growth in Europe notably in Poland, which was partially offset by the decline in sales in Australia and USDBD, which within winding down ahead of transitioning the business over to Canada, USA. International market cannabis growth margin was 36 percent in Q1 fiscal 2025 up from 34 percent in Q1 of fiscal 24, driven by a favorable shift in country mix with higher margin Poland contributing to a greater portion of sales this year as compared to the prior year period.

Speaker Change: We saw strong double-digit growth in Europe , notably in Poland, which was partially offset by the decline in sales in Australia, and U.S. CBD, which would have been winding down ahead of transitioning the business over to Canopy USA.

Speaker Change: International markets cannabis growth margin was 36% in Q1 fiscal 2025 up from 34% in Q1 of fiscal 24 driven by a favorable shift in country mix

Speaker Change: with higher margin Poland contributing to a greater portion of sales this year as compared to the prior year period.

Judy Hong: Sorenson-Bickel revenue of $18 million in Q1 was up 2% compared to last year. We saw continuous healthy consumer demand for the new Venti portable vaporizer that was launched in Q3 of last fiscal year, as well as strong sales from its Mighty vaporizer this quarter. Sales increased in many of its key markets, including over 100% growth through the combined B2B and B2C channels in Germany. This was partially offset by a significant decline in shipments to Australia following a recent regulatory change. We note that Sors and Vickle medical vaporizers, the Mighty Medic, the Mighty Medic Plus, and the Volcano Medic are the only whole cannabis vaporizers on the market in Australia.

Speaker Change: Northern Bickel revenue of $18 million in Q1 was up 2% compared to last year.

Judy Hong: Tourism vehicle revenue of 18 million in Q1 was up 2 percent compared to last year. We saw continuous healthy consumer demand for new venture portable vaporizer that was launched in Q3 of last fiscal year as well as strong sales from its mighty vaporizer this quarter. Sales increased in many of its key markets including over 100 percent growth through the combined B2B and B2C channels in Germany. This was partially offset by a significant decline in shipment to Australia following a recent regulatory change.

Speaker Change: We saw continuous healthy consumer demand for Uventi Portable Vaporizer that was launched in Q3 of last fiscal year, as well as strong sales from its Mighty Vaporizer this quarter.

Speaker Change: Sales increased in many of its key markets including over 100% growth through the combined B2B and B2C channels in Germany.

Speaker Change: This was partially offered by a significant decline in shipments to Australia following a recent regulatory change.

Speaker Change: We note that Sors and Vickle's medical vaporizers, the Mighty Medic, the Mighty Medic Plus, and the Volcano Medic are the only whole cannabis vaporizers on the market in Australia, and we believe that this positions Sors and Vickle devices very well in the medical channel of that market.

Judy Hong: We note that tourism vehicle medical vaporizers, the mighty medics, the mighty medics plus, and the volcano medics are the only whole cannabis vaporizers on the market in Australia. I would believe that this position, tourism vehicle devices very well in the medical channel of that market. Tourism vehicle growth margin was 40 percent compared to 43 percent driven primarily by higher rebates on certain product lines. Looking at our SGNA expenses for Q1 of fiscal 2025, sales and marketing and GNA expenses declined 24 percent year by year, primarily due to cost reduction program undertaken during fiscal 2024.

Judy Hong: And we believe that this positions Sors and Vickle devices very well in the medical channel of that market. The tourism vehicle growth margin was 40% compared to 43%, driven primarily by higher rebates on certain product lines. Looking at our SG&A expenses for Q1 of fiscal 2025, sales and marketing and G&A expenses declined 24% year-over-year, primarily due to a cost reduction program undertaken during fiscal 2024. In Q1, Fiscal 25, adjusted EBITDA with a loss of $5 million, an improvement of $18 million compared to a loss of $23 million a year ago.

Speaker Change: The tourism vehicle growth margin was 40% compared to 43%, driven primarily by higher rebates on certain product lines.

Speaker Change: Looking at our SG&A expenses for Q1 of fiscal 2025, sales and marketing and G&A expenses declined 24% year-over-year, primarily due to cost reduction program undertaken during fiscal 2024.

Speaker Change: In Q1 Fiscal 25 adjusted EBITDA was a loss of $5 million, an improvement of $18 million, compared to a loss of $23 million a year ago.

Judy Hong: Q1's fiscal 25 adjusted EBITDA was a loss of 5 million, an improvement of 18 million compared to a loss of 23 million a year ago. We estimate that our three business units achieved positive adjusted EBITDA with all of the Q1 adjusted EBITDA losses driven by unallocated corporate overhead costs, including public company costs, and as we indicated during our Q4 calls, we've identified an additional 10 to 15 million of cost reduction opportunities, mostly in corporate GNA, including savings in professional fees, legal, and other public company costs that we expect to realize by the end of fiscal 2025.

Judy Hong: We estimate that our three business units achieved positive adjusted EBITDA with all of the Q1 adjusted EBITDA losses driven by unallocated corporate overhead costs, including public company costs. And as we indicated during our Q4 call, we've identified an additional 10 to 15 million cost reduction opportunities, mostly in corporate GNA, including savings and professional fees, legal, and other public company costs that we expect to realize by the end of fiscal 2025.

Speaker Change: We estimate that our three business units achieved positive adjusted EBITDA with all of the Q1 adjusted EBITDA losses driven by unallocated corporate overhead costs including public company costs.

Speaker Change: And as we indicated during our Q4 call, we've identified an additional $10 to $15 million of cost reduction opportunities, mostly in corporate GNA, including savings in professional fees, legal, and other public company costs that we expect to realize by the end of fiscal 2025. Thank you.

Judy Hong: I'd like to now review our cash flow and balance. Pre-cash flow was an outflow of $56 million in Q1, an improvement of 49% compared to the prior year. Cash used from continuing operations was $52 million. This included cash interest payments in the quarter of $18 million, down from $30 million in Q1 of last year.

Speaker Change: I'd like to now review our cash flow and balance sheet.

Judy Hong: I'd like to now review our cash flow and balance sheet. Three cash flow was an outflow of 56 million Q1, an improvement of 49% compared to the prior year. Cash used from continuing operation was 52 million. This included cash interest payments in the quarter of 18 million down from 30 million in Q1 of last year. And as expected, we had negative working capital in Q1 driven by timing of certain payments as well as the build-up of bulk flower inventory to ensure supply continuity in Canada.

Speaker Change: Free cash flow with an outflow of $56 million Q1, an improvement of 49% compared to the prior year.

Speaker Change: Cash used from continuing operations was $52 million. This included cash interest payments in the quarter of $18 million, down from $30 million in Q1 of last year.

Judy Hong: And as expected, we had negative working capital in Q1, driven by the timing of certain payments, as well as the buildup of bulk flour inventory to ensure supply continuity in Canada. CapEx of $4 million in Q1 was also an increase versus the prior year due to the LED lighting investment in Kincardine that will drive improved cultivation yields and lower costs over time. All in all, we expect free cash outflows to narrow significantly in the second half of fiscal year versus the Q1 run rate to reflect the timing of payments and the phasing of working capital. Cash flow from investments was an outflow of $33 million in Q1.

Speaker Change: And as expected, we had negative working capital in Q1, driven by timing of certain payments, as well as the buildup of bulk flour inventory to ensure supply continuity in Canada.

Speaker Change: CapEx of $4 million in Q1 was also an increase versus the prior year due to LED lighting investment in King Cardin that will drive improved cultivation yields and lower costs over time.

Judy Hong: Half X of 4 million in Q1 was also an increase versus the prior year due to LED lighting investment in King Carden that will drive improved cultivation yields and lower costs over time. All in all, we expect to cash outflow to narrow significantly in the second half of fiscal year versus Q1 run rate to reflect the timing of payment and phasing of working capital. Cash flow from investment was an outflow of 33 million in Q1.

Speaker Change: All in all, we expect free cash outflow to narrow significantly in the second half of fiscal year versus Q1 run rates to reflect the timing of payments and phasing of working capital.

Speaker Change: Cash flow from investments was an outflow of $33 million in Q1. This included net cash use of $67 million to fund the acquisition of acreage debt during Q1, and an inflow of $10 million of additional distribution from biofuels restructuring process.

Judy Hong: This included a net cash use of $67 million to fund the acquisition of acreage debt during Q1, and an inflow of $10 million of additional distribution from the biofuels restructuring process. Turning to the balance sheet, as of June 30, 2024, we have $195 million in cash and short-term investments and a total principal debt balance of $585 million. The principal debt balance declines $40 million in Q1 versus Q4, and the major drivers include a reduction of USD $8 million of the term loan principal balance resulting from the paydown from asset sale proceeds, elimination of CAD $100 million of the promissory note held by Constellation, and net addition of USD $50 million from the convertible note transaction in May.

Judy Hong: This included net cash used of 67 million to fund the acquisition of acreage debt during Q1 and an inflow of 10 million of additional distribution from bio fields restructuring process. Turning to the balance sheet, as of June 30, 2024, we had 195 million in cash and short-term investment and total principal debt balance of 585 million. The principal debt balance declined 40 million in Q1 versus Q4. And the major drivers include reduction of USC 8 million of term loan principal balance resulting from pay balance from asset sale proceeds, elimination of CAD 100 million of the promissory note held by consolation, and net addition of USC 50 million from the convertible note transaction in May.

Speaker Change: Returning to the balance sheet, as of June 30, 2024, we have $195 million in cash and short-term investments and total principal debt balance of $585 million.

Speaker Change: The principal debt balance declines $40 million in Q1 versus Q4, and the major drivers include reduction of USD $8 million of term loan principal balance resulting from paydown from asset sale proceeds.

Speaker Change: elimination of CAD $100 million of the promissory notes held by Constellation and net addition of USD $50 million from the convertible note transaction in May.

Judy Hong: This morning, we announced an amendment to our credit agreement with a senior secure term loan that extends maturity out to December of 2026, with an option to further extend maturity out to September of 2027. Pursuant to this agreement, we will be making an initial cash payment of U.S. dollars. $97.5 million to reduce the principal by U.S.D. $100 million by December 31, 2024, with an option to pay down additional U.S.D. $97.5 million to reduce the principal by $100 million by March 31, 2025.

Speaker Change: This morning, we announced an amendment to our credit agreement with a senior secure term loan that extends maturity out to December of 2026 with an option to further extend maturity out to September of 2027.

Judy Hong: This morning, we announced an amendment to our credit agreements with a senior secure term loan that extends maturity out to December of 2026 with an option to further extend maturity out to September of 2027. If we went to this agreement, we will be making an initial cash payment of USC 97.5 million to reduce the principal by USC 100 million by December 31, 2024 with an option to pay down additional USC 97.5 million to reduce the principal by 100 million by March 31, 2025.

Speaker Change: Pursuant to this agreement, we will be making an initial cash payment of U.S.D. $97.5 million to reduce the principal by U.S.D. $100 million by December 31, 2024, with an option to pay down additional U.S.D. $97.5 million to reduce the principal by $100 million by March 31, 2025.

Judy Hong: We are pleased to come to this agreement with our lenders that will provide us with cash interest savings and improved balance sheet flexibility. In early June, we also launched an at-the-market equity offering program of up to USD$250 million. During Q1, we issued 4.7 million shares for total proceeds of CAD $46 million. Subsequent to Q1, we have issued an additional 3.7 million shares for total proceeds of CAB$33 million.

Speaker Change: We are pleased to come to this agreement with our lenders that will provide us with cash interest savings and improved balance sheet flexibility.

Judy Hong: We are pleased to come to this agreement with our lenders that will provide us with cash interstaving and improved balance sheet flexibility. In early June, we also launched an asset market equity offering program of up to USC 250 million. In Q1, we issued 4.7 million shares for total proceeds of CAD 46 million. Subsequent to Q1, we have issued an additional 3.7 million shares for total proceeds of CAD 33 million. Following a significantly reduced debt balance and extended maturity of the turn most, the ATM program provides us with flexibility to invest in strategic growth initiative.

Speaker Change: In early June , we also launched an at-the-market equity offering program of up to USD$250 million.

Speaker Change: During Q1, we issued 4.7 million shares for total proceeds of CAD $46 million.

Speaker Change: Subsequent to Q1, we have issued an additional 3.7 million shares for total proceeds of CAB 33 million.

Judy Hong: Following a significantly reduced debt balance and extended maturity of the term loans, the ATM program provides us with flexibility to invest in strategic growth initiatives. I'd like now to briefly discuss Canopy USA. This is the first quarter that CanopyUSA's financials have been deconsolidated from Canopy Growth's results, and as a result, Canopy's non-controlling investments in CanopyUSA are now presented as equity method investments and in other financial assets on our balance sheet. As David mentioned, Canopy USA is progressing with its acquisition of Vonna, Jetty, and Acres.

Speaker Change: Following a significantly reduced debt balance and extended maturity of the term loans, the ATM program provides us with flexibility to invest in strategic growth initiatives.

Judy Hong: Canopy Growth currently does not have audited financials for the Consolidated Canopy USA entities and is not disclosing the financials of each entity at Canopy USA at this time. However, let me provide some commentary on the financial performance of each entity. In the first half of calendar 2024, Acreage has seen revenue and EBITDA decline compared to last year due to its credit challenges.

Speaker Change: I'd like to now briefly discuss CanopyUSA.

Judy Hong: I'd like to now briefly discuss Canopy USA.

Speaker Change: This is the first quarter that Canopy USA's financials have been deconsolidated from Canopy Growth's results. And as a result, Canopy's non-controlling investments in Canopy USA is now presented as equity method investments and in other financial assets on our balance sheet.

Judy Hong: This is the first quarter that Canopy USA's financials have been deconsolidated from Canopy growth results. And as a result, Canopy's non-controlling investments in Canopy USA is now presented as equity-messed investments and in other financial assets on our balance sheet. As David mentioned, Canopy USA is advancing with its acquisition of ona, jettie, and acreage.

Speaker Change: As David mentioned, Canopy USA is advancing with its acquisition of Wana, Jetty, and Acreage.

Speaker Change: Canopy Growth currently does not have audited financials for the consolidated CanopyUSA entities and is not disclosing the financials of each entity at CanopyUSA at this time. Let me provide some commentary on financial performance of each entity.

Judy Hong: Canopy growth currently does not have audited financials for the consolidated Canopy USA entities and is not disclosing the financials of each entity at Canopy USA at this time. Let me provide some commentary on financial performance of each entity. In the first half of calendar 2024, acreage has been revenue and EBITDA decline compared to last year due to its credit challenges. Acreage management is now focused on improving performance in its core markets, including Ohio, or acreage projects revenue to double by end of calendar 2025 versus current loan rates.

Speaker Change: In the first half of calendar 2024, Acreage has seen revenue and EBITDA decline compared to last year due to its credit challenges.

Judy Hong: Acreage management is now focused on improving performance in its core markets, including Ohio, where Acreage projects revenue to double by end of calendar 2025 versus current Monday. Juana is also focused on expanding into new states while maintaining an attractive margin in a highly competitive edibles category. There have been delays in New York and Ohio due to market dynamics, and WANUS performance has also been impacted by price compression, retail inventory destocking, and skew rationalization in Colorado.

Acreage management: Acreage management is now focused on improving performance in its core markets, including Ohio, where Acreage projects revenue to double by end of calendar 2025 versus current run rate.

Acreage management: WANA is also focused on expanding into new states while maintaining an attractive margin in a highly competitive edibles category.

Judy Hong: Ona is also focused on expanding into new states while maintaining an attractive margin in a highly competitive edible category. There have been delays in New York and Ohio due to market dynamics and want us performance has also been impacted by price compression, retail, inventory destocking, and skewer rationalization in Colorado. However, trends are expected to improve later this year on the back of New York and Ohio launching. And in addition, as David mentioned, Ona has introduced its hemp derived offerings with its own marketplace website set to launch this month.

Speaker Change: There have been delays in New York and Ohio due to market dynamics, and WANUS performance has also been impacted by price compression, retail inventory de-stocking, and skew rationalization in Colorado.

Judy Hong: However, trends are expected to improve later this year on the back of New York and Ohio launching. And in addition, as David mentioned, WANA has introduced its HempSurvive offering with its own marketplace website set to launch this month.

Speaker Change: However, trends are expected to improve later this year on the back of New York and Ohio launching, and in addition, as David mentioned, WANA has introduced its HempSurvive offering with its own marketplace website set to launch this month.

Judy Hong: JETI is seeing good underlying momentum for its solvent-based products with expanded offerings. JETI is currently in the process of also changing distributors in California, which will improve routes to market and lower costs over time. This change is expected to create some noise in its shipments in the near term. However, once Canopy USA closes on its acquisition of Juana and Acreage and with expected revenue contributions from Ohio's non-medical sale of Acreage, we expect that Canopy USA has the potential to generate annual revenue of upwards of USD $300 million.

Speaker Change: Jetty is seeing good underlying momentum for its solvent-based products with expanded offerings. Jetty is currently in the process of also changing distributors in California, which will improve routes to market and lower costs over time.

Judy Hong: Daddy is seeing good underlying momentum for its solvenment state products with expanded offering. Daddy is currently in the process of also changing distributors in California, which will improve routes to market and lower cost over time. This change is expected to create some noise to chipments in the near term. Once canopy USA closes on its acquisition of ona and acreage and with expected revenue contribution from Ohio's non medical fail for acreage. We expect that canopy USA has the potential to generate annual revenue of upwards of USC 300 million.

Speaker Change: This change is expected to create some noise to shipments in the near term.

Speaker Change: Once CanopyUSA closes on its acquisition of WANA and Acreage,

Speaker Change: And with expected revenue contributions from Ohio's non-medical sales for Acreage, we expect that Canopy USA has the potential to generate annual revenue of upwards of USD $300 million.

Judy Hong: I'd like to now provide our key priorities and outlook for the balance of Fiscal 25. In Canada Cannabis, we remain focused on driving growth and profitably gaining market share in both the adult use and medical channels. We expect Q2 to be impacted by continuous supply challenges with certain third-party produced products, with stronger growth in the back half of this fiscal year, driven by expanded distribution, improved sales velocity, and new product launches.

Speaker Change: I'd like to now provide our key priorities and outlook for the balance of fiscal 25.

Judy Hong: I like to not provide our key priorities and outlook for the balance of fiscal 25. In Canada, cannabis, we remain focused on driving growth and profitably gaining market share in both the adult use and medical channel. We expect Q2 to be impacted by continuous supply challenges with certain third party produced products with stronger growth in the back half of this fiscal year driven by expanded distribution, improved fail velocity and new product launches.

Speaker Change: In Canada Cannabis, we remain focused on driving growth and profitably gaining market share in both the adult use and medical channeling.

Speaker Change: We expect Q2 to be impacted by continuous supply challenges with certain third-party-produced products, with stronger growth in the back half of this fiscal year, driven by expanded distribution, improved sales velocity, and new product launches.

Judy Hong: In international markets, cannabis, we're focused on accelerating growth in Europe, including in our key markets of Germany and Poland. We're focused on ensuring a consistent supply of high quality products, as well as launching new products into these markets in the near term. For Sewers and Bickel, we're focused on accelerating growth in the U.S. and other key markets, as well as opportunistically expanding distribution into new markets. Note that for SMB, Q2 is historically the lowest revenue quarter of the year. And finally, the impact on divested businesses will continue to negatively impact reported sales growth throughout FY25. Due to FY24 revenue of $69.6 million, which included approximately $8.3 million of revenue from divested businesses.

Speaker Change: In international market cannabis, we're focused on accelerating growth in Europe , including in our key markets of Germany and Poland. We're focused on ensuring consistent supply of high-quality products, as well as launch new products into these markets in the near term.

Judy Hong: In international market cannabis, we're focused on accelerating growth in Europe, including in our key markets of Germany and Poland. We're focused on ensuring consistent supply of high quality products as well as launch new products into these markets in the near term. We're through the vehicle, we're focused on accelerating growth in the US and other key markets as well as opportunistically expand distribution into new markets.

Speaker Change: For Storz and Bickel, we're focused on accelerating growth in the U.S. and other key markets, as well as opportunistically expand distribution into new markets.

Judy Hong: Note that for SMB, Q2 is historically the lowest revenue quarter of the year and finally the impact on the vested businesses will continue to negatively impact recorded sales growth throughout FY25. Q2 FY24 revenue of $69.6 million included approximately $8.3 million of revenue from the vested businesses. From a savings standpoint, we continue to expect stronger year-ever-year growth in the second half of our fiscal 25, driven by increased supply and ramp-up of new products as well as lessening impact from the vested businesses.

Speaker Change: Note that for SMB, Q2 is historically the lowest revenue quarter of the year.

Speaker Change: And finally, the impact on divested businesses will continue to negatively impact reported sales growth throughout FY25.

Speaker Change: Due to FY24 revenue of $69.6 million, we included approximately $8.3 million of revenue from divested businesses.

Judy Hong: From a phasing standpoint, we continue to expect stronger year-over-year growth in the second half of our fiscal 25, driven by increased supply and the ramp-up of new products, as well as a lessening impact from divested business. We believe we remain firmly on a path to achieve positive adjustability besides the consolidated level, inclusive of corporate costs driven by sales growth, improvement in growth margins, and additional GNA savings. In closing, we intend to build on the improved financial performance in Q1 and drive profitable growth while continuing to strengthen our financial position over time. This concludes my prepared comments. We will now take questions.

Speaker Change: From a phasing standpoint, we continue to expect stronger year-over-year growth in the second half of our fiscal 25, driven by increased supply and ramp up of new products, as well as lessening impact from divested businesses.

Speaker Change: We believe we remain firmly on a path to achieve positive adjustability besides the consolidated level, inclusive of corporate costs driven by sales growth, improvement in growth margins, and additional GNA savings.

Judy Hong: We believe we remain firmly on a path to achieve positive adjustity beside the consolidated level, inclusive of corporate costs driven by sales growth, improvements in growth margins and additional GNA savings. For enclosing, we intend to build on the improved financial performance in Q1 and drive profitable growth while continuing to strengthen our financial position over time.

Speaker Change: In closing, we intend to build on the improved financial performance in Q1 and drive profitable growth while continuing to strengthen our financial position over time.

Speaker Change: This concludes my prepared comments. We will now take questions.

Judy Hong: This concludes my prepare comments.

Operator: Thank you, ladies and gentlemen. We will now begin the question and answer session. Should you have a question, please press star followed by the number on your touch-tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the. If you are using a speakerphone, please lift the handset before pressing. One moment, please, for your first question. Your first question comes from Aaron Grey with Align Global Partners. Your line is now open.

Operator: We'll now take questions. Thank you ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star follow the one on your touch tone phone. You will hear prompts that your hand has been raised. Should you wish to sign from the polling process, please press star follow by the two. If you are using a speaker phone, please touch the hand before pressing any key. One moment, please for your first question.

Speaker Change: Thank you, ladies and gentlemen. We will now begin the question and answer session. Should you have a question, please press star followed by the one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the two.

Speaker Change: If you are using a speakerphone, please lift the handset before pressing any keys.

Speaker Change: One moment, please, for your first question.

Speaker Change: Your first question comes from Aaron Grey with Alliant Global Partners. Your line is now open.

Aaron Grey: Your first question comes from Erin Gray with a live global partner. Your line is now open. Hi, good morning and thank you very much for the questions. So first one for me, morning. You guys have done a lot in terms of, you know, cleaning up and simplifying the story in terms of divestitures and what can it be USA. So as we look forward, Kenpia say you're waiting for some, I think audits to be finished before you can consolidate and also for eight groups to close.

Aaron Grey: Hi, good morning, and thank you very much for the questions. Good morning, Aaron. So, first one for me this morning.

Aaron Gray: Hi, good morning, and thank you very much for the questions. So first one for me.

David Klein: You guys have done a lot in terms of, you know, cleaning up and simplifying the story in terms of divestitures and Canopy USA. So, as we look forward, Kent PSA, you're waiting for some. I think audits need to be finished before you can consolidate, and also for acreage to close. So just if you can give us some more in terms of the timing, acreage, I think you said first half of calendar 2025.

Aaron Gray: Good morning. You guys have done a lot in terms of, you know, cleaning up and simplifying the story in terms of divestitures and with CanopyUSA. So as we look forward...

Kent: Kent PSA, you're waiting for some...

Speaker Change: I think audits to be finished before you can consolidate and also for acreage to close. So just if you can give us some more in terms of the timing. Acreage, I think you said first half of calendar 2025 so

Aaron Grey: So just if you can give us some more in terms of the timing, eight groups of things that first half of counter 2025. So just more color in terms of what you're waiting on for that to be able to close in terms of I think it might be some state of provost or otherwise and then how we should think about everything build to come in terms of additional disclosure in terms of the financial performance there when you'll be able to disclose that fully. Thank you.

David Klein: So just more color in terms of what you're waiting on for that to be able to close in terms of, I think it might be some state approvals or otherwise, and then how we should think about everything being able to come in terms of additional disclosures in terms of the financial performance there and when you'll be able to disclose that fully. Thank you.

Speaker Change: Just more color in terms of what you're waiting on for that to be able to close in terms of I think it might be some state approvals or otherwise, and then how we should think about everything being able to come in terms of additional disclosure in terms of the financial performance there, when you'll be able to disclose that fully. Thank you.

Judy Hong: Okay, I'll start, Aaron. So, from a timing standpoint, as David mentioned, during Q1, JETI is fully closed. So, Canopy USA owns approximately 75% of JETI at this point. Two of the three entities under WANA have already been closed, and we expect to complete the WANA acquisition, or Canopy USA expects to complete the WANA acquisition by end of this summer. And then Canopy USA is in the process of acquiring Acreage, so that is really a regulatory process.

Speaker Change: Okay, I'll start, Aaron. So, from a timing standpoint, as David mentioned, during Q1, JETI is fully closed. So, Canopy USA owns approximately 75% of JETI at this point. Two of the three entities under WANA have already been closed, and we expect to complete WANA acquisition, or Canopy USA expects to complete the WANA acquisition by the end of this summer. And then Canopy USA is in the process of acquiring Acreage. So, that is really a regulatory process. It's a state-by-state regulatory approval. Our expectation is sometime in the spring of next calendar year, we'll get all of the state approval.

Judy Hong: Okay, I'll start, Erin. So for some of the timing standpoint, as David mentioned, during Q1, Jedi is fully closed. So Kenpia say owns approximately 75% of Jedi at this point. Two of the three entities under WANA have already been closed and we expect to complete WANA acquisition or Kenpia say expect to complete the WANA acquisition by end of this summer. And then Kenpia say is in the process of acquiring eight glitch.

Judy Hong: It's a state by state regulatory approval. Our expectation is that sometime in the spring of next calendar year, we'll get all of the state approvals required for Canopy USA to complete its acquisition. In terms of financial disclosure, as we sit here today, Canopy USA obviously has not fully closed all of its entities under Canopy USA. So, once we do have Canopy USA fully closing on WANA and Acreage,

Judy Hong: So that is really a regulatory process. It's a state by state regulatory approval. Our expectation is sometime in the spring of next calendar year we'll get all of the state approval to require or Kenpia say to complete its acquisition. In terms of financial disclosure, as we sit here today, Kenpia say obviously has not fully closed all of its entities under Kenpia say. So once we do have Kenpia say fully closing on WANA and eight glitch and we would intend to share audited financial and also provide some supplemental financial metrics of Kenpia say that will likely to be sometime after the eight glitch acquisition.

Speaker Change: will close on Wednesday, August 28. 1

Speaker Change: and we would intend to share audited financials and also provide some supplemental financial metrics of Canopy USA that will likely to be sometime after the Acreage acquisition closes.

David Klein: Yeah, and Aaron, just to add to that, so the gating item, really, on closing the final component of WANA, as well as ACREG, is, in fact, the regulatory approvals at the state level, all of which have been applied for. So now we're... We're just working our way through each state's process, and we'll close as soon as we get all of those approvals in place. In terms of financial disclosure, you know, Judy outlined in her script just a rough view of what CUSA believes they'll be able to achieve from a top-line standpoint. And, you know, we believe that you can look at other MSOs to understand EBITDA margins.

Speaker Change: Yeah, and Aaron, just to add to that, so all of the, so the, the,

David Klein: Yeah, and Aaron just to add to that. So all of the gating item really on closing the final component of Wana as well as acreage is, in fact, the regulatory approvals at the state level, all of which have been applied for. So now we're just working our way through each state's process and we'll close as soon as we get all of those approvals in place. In terms of financial disclosure, Judy outlined in our script just a rough view of what he believes they'll be able to achieve from a top line standpoint.

Speaker Change: the gating item really on closing the the final component of WANA as well as acreage is in fact the regulatory approvals at the state level all of which have been applied for so now we're

Aaron Gray: We're just working our way through each state's process and we'll close as soon as we get all of those approvals in place.

Aaron Gray: In terms of financial disclosure...

Speaker Change: Judy outlined in her script just a rough view of what CUSA believes they'll be able to achieve from a top line standpoint. And we believe that you can look at other MSOs to understand even down margins, also keeping in mind that as we're...

David Klein: And we believe that you can look at other MSOs to understand. Even down margins, also keeping in mind that as acreages operating as a standalone public company today, we'll be able to realize a fair amount of public company synergies when that business becomes part of the Q supply form. So yeah, we'll provide detailed financial statements through QSA as soon as we can, but I think that just provides a good kind of outline as to where that business is today.

Speaker Change: as Acreage is operating as a standalone public company. Today, we'll be able to realize a fair amount of public company synergies when that business becomes part of the QSA platform. So, yeah, we'll provide detailed financial statements through QSA as soon as...

Speaker Change: as soon as we can, but I think that just provides a good kind of outline as to where that business sits today.

Operator: Your next question comes from Frederico Gomez with ATB Capital Markets. Your line is now open.

Speaker Change: Your next question comes from Federico Gomez with ATB Capital Markets. Your line is now open.

Frederico Gomes: Your next question comes from Fred Rico Gomez with ATB capital markets. Your line is now open. Hi, morning, I think forward to my question. Just on the Canadian medical kind of this segment, quite impressive growth there. And sequentially six quarters of sequential growth. So can you give a bit more clarity on what's driving that growth and how much more society is in areas of that segment, just given that I think we've seen that the overall market is sort of flat. The medical fighting Canada, so how much more growth do you think can come from that segment?

Frederico Gomez: Hi, good morning. Thanks for taking my question. Just on the Canadian medical cannabis segment, quite impressive growth there, and sequentially, six quarters of sequential growth. So can you give a bit more clarity on what's driving that growth and how much more upside do you think there is to that segment, just given that I think we've seen that the overall market is sort of flat on the medical side in Canada? So how much more growth do you think can come from that segment? Thanks.

Federico Gomez: Hi, good morning. Thanks for taking my question. Just on the Canadian medical cannabis segment, quite impressive growth there, and sequentially six quarters of sequential growth.

Federico Gomez: Can you give a bit more clarity on what's driving that growth and how much more upside you think there is to that segment just given that I think we've seen that the overall market is sort of flat on the medical side in Canada so how much more growth do you think can come from that segment? Thanks.

David Klein: Yeah, so you know we've had several quarters in a row of growth in that market. We expect that to continue, and it's really coming as a result of strong execution by our medical team. It is a marketplace, so it's not just canopy products. It's a marketplace with products hand-selected by our team, and we give what we believe is best-in-class service to the participants in that channel, and yeah, it's just day in and day out execution on the medical side that's really driven much of our growth. Yeah, and to your point.

Speaker Change: Yeah, so, you know, we've had several quarters in a row of growth in that market. We, you know, expect that.

David Klein: Thanks. Yeah, so, so, you know, we've had several quarters in a row of growth in the market. We, we, you know, expect that to continue. And it's really coming as a result of strong execution by our medical team. It is a marketplace, so it's not just canopy products. It's a market with products hand-elected by our team. And we give what we believe is best in class service to the participants in that channel.

Speaker Change: to continue, and it's really coming.

Speaker Change: As a result of strong execution by our medical team, it is a marketplace so it's not just canopy products.

Speaker Change: It's a market.

Speaker Change: with products.

Speaker Change: and elected by our team and we give what we believe is best-in-class service to the participants in that channel and yeah it's just it's just day in and day out execution on the medical side that's really driven much of our growth.

David Klein: And yeah, it's just, it's just day in and day out execution medical science. It's really driven much of our growth. Yeah, and to your point, Patrick, go on the market is, you know, stagnant to declining, just because the ships into the adult use channel. But we're gaining market shares. As you can see in the numbers, then we think we're well positioned to continue to gain market share with continuation of really offering high quality products to patients, not just our products, but even third party products that really provides patients with a very broad assortment of offer.

David Klein: Yeah, and to your point, Federico, the market is stagnant to declining just because of the shift into the adult use channel, but we're gaining market share, as you can see in the numbers, and we think we're well-positioned to continue to gain market share with a continuation of really offering high-quality products to patients, not just our products, but even third-party products that really provide patients with a very broad assortment of offers.

Michael Lavery: Your next question comes from Michael Lavery with Piper Chandler. Your line is now open. Thank you.

Speaker Change: Yeah, and to your point, Federico, the market is, you know, stagnant to declining just because of the shift into the adult-use channel, but we're gaining market share, as you can see in the numbers.

Speaker Change: We think we're well-positioned to continue to gain market share with continuation of really offering high-quality products to patients, not just our products but even third-party products that really provide patients with a very broad assortment of offerings.

Operator: Your next question comes from Michael Lavery with Piper Sandler. Your line is now open.

Speaker Change: Thank you so much for watching!

Michael Lavery: I just wanted to understand the supply dynamics a little better. You said you wanted to source more EU-origin product from third parties. Can you maybe help us understand if that, you know, if Germany or the broader market there is growing and so attractive, who has excess product and, I guess really, at what cost? And, you know, it seems like that's kind of the...

Speaker Change: Thank you. Good morning.

Speaker Change: Good morning.

Speaker Change: I just wanted to understand the supply dynamics a little better. You said you want to source more EU or origin product from third parties.

David Klein: Good morning. I just wanted to understand the supply dynamics a little better. You said you want to source more EU or origin products from third parties. I guess can you just maybe help us understand if Germany or the broader market there is growing and so attractive who has excess product and I guess really at what cost. It seems like that's kind of the place where product is a little bit more scarce, is that maybe a misunderstanding and then when you talk about freeing up some supply back in Canada, certainly over supply has long been the problem there. Did you over correct? Do you need more supply in Canada? How do we just think about both sides of the ocean there?

Speaker Change: I guess, can you just maybe help us understand if that, you know, if Germany or the broader market there is so, is growing and so attractive, who has excess product and, I guess, really at what cost? And, you know, it seems like that's kind of the...

David Klein: The place where the product is a little bit more scarce, is that maybe a misunderstanding? And then when you talk about freeing up some supply back in Canada, you know, certainly oversupply has long been the problem there, or did you overcorrect? Or do you need more supply in Canada? How do we just think about both sides of the ocean there? No, so...

Speaker Change: the place where product is a little bit more scarce, is that maybe a misunderstanding? And then when you talk about freeing up some supply back in Canada, you know, certainly oversupply has long been the problem there.

Speaker Change: Did you overcorrect? Do you need more supply in Canada? How do we just think about both sides of the ocean there?

David Klein: So, Michael, I'll kind of take it in two points, and I'll start with Canada first. I think, you know, in Canada, we had some supply constraints during the quarter that were driven by performance with some of our third-party suppliers, right? And so we're making our supply chain more robust in Canada, and you're right, there is product available. However, you know, we just remain focused on when we launch a product in the market; we're simply putting it into the higher margin channels. As it relates to Europe, there is product available. That's really not the issue in the European channel, and that product is available from Canada, but it's also available from in-market producers.

Speaker Change: So, Michael, I'll kind of take it in two points, and I'll start with Canada first.

David Klein: No, so Michael, I'll kind of take it in two points and I'll start with Canada first. I think in Canada we have some supply constraints during the quarter that were driven by performance with some of our third party suppliers, right? And so we're making our supply chain more robust in Canada and in your right there is product available, however we just remain focused on when we do a product in the market we're simply putting it into the higher market channels.

Michael: You know, in Canada, we have some supply constraints during the quarter that were driven by

Michael: performance with some of our our third-party suppliers right and so we're making our supply chain more robust in Canada and you're right there's there is product available.

Michael: However, you know, we just remain focused on when we do a product in the market, we're simply putting it into the higher margin channels.

Michael: As it relates to Europe , there is product available, that's really not the issue in the European channel.

David Klein: As it relates to Europe, there is product available that's really not the issue in the European channel and if that's available from Canada but it's also available in market producers and so the point of the comments in the script is that over time as we bring on European producers we would then free up product out of our Canadian supply chain which would allow us to optimize margin across our total business. And the thing I think that the way we're thinking about this is that every single market that has opened up broadly in every geography we've seen starts out in supply and strain then goes long in supply then prices compress and then people have assets that they don't know how to deal with.

Michael: And that's available from Canada, but it's also available from in-market producers.

David Klein: And so the point of the comments in the script is that over time, as we bring on European producers, we would then free up product out of our Canadian supply chain, which would allow us to optimize margin across our total business. And, you know, the thing I think... the way we're thinking about this is that every single market that is opened up broadly in every geography we've seen. It starts out supply constrained, then goes long in supply, then prices compress, and then people have assets that they don't know how to deal with.

Michael: The point of the comments in the script is that over time, as we bring on European producers, we would then free up product out of our Canadian supply chain, which would allow us to optimize margin across our total business.

Michael: And, you know, the thing I think...

Michael: that the way we're thinking about this is that every single...

Michael: market that is opened up broadly.

Michael: In every geography we've seen, it starts out supply constrained, then goes long in supply, then prices compress, and then people have assets that they don't know how to deal with.

David Klein: We're actually managing our supply chain in Canada to be an asset-light supply chain. And admittedly, we have some things that we need to do to optimize that asset-light supply chain, but we're all over that. We're thinking about Europe the same way. So instead of going in heavily with investment, which will potentially compress our margins going forward, we're deploying our strategy in Europe. And based on what we're seeing at the moment, we're quite happy with that.

Michael: We're actually managing our supply chain in Canada to be an asset like supply chain and

David Klein: We're actually managing our supply chain in Canada to be an asset like supply chain and admittedly we have something that we need to do to optimize that asset like supply chain but we're all over that. We're thinking about Europe the same way and so instead of going in heavily with investment which will potentially compress our margins going forward we're deploying our strategy into Europe and based on what we're seeing at the moment we're quite happy with that approach.

Michael: Admittedly, we have some things that we need to do to optimize that.

Michael: Asset Light Supply Chain, but we're all over that. We're thinking about Europe the same way. And so instead of going in heavily with investment, which will potentially compress our margins going forward, we're deploying our strategy into Europe and, you know, based on what we're seeing at the moment, we're quite happy with that approach.

Operator: Your next question comes from Bill Kirk with Roth Capital Partners. Your line is now open.

Michael: Your next question comes from Bill Kirk with Roth Capital Partners. Your line is now open.

William Kirk: Your next question comes from Bill Kirk with Roth's Capital Partners. Your line is now open. Hey good morning. Thank you for taking the questions. Mind related to the last topic because margins seem to differ a lot by market, very different margins in each market. So how do you determine where your available supply goes? How do you balance that maybe immediate margin potential for some of the sales with the longer term potential that some markets may have that aren't profitable just yet?

Bill Kirk: Hey, good morning. Thank you for taking the questions. Mine's related to that last topic, you know, because margins seem to differ a lot by market, you know, very different margins in each market. So how do you determine where your available supply goes?

Bill Kirk: Hey, good morning. Thank you for taking the questions. Mine's related to the last topic, because margins seem to differ a lot by market, very different margins in each market. So how do you determine where your available supply goes? How do you balance that?

Speaker Change: Maybe immediate margin potential for some of the sales with the longer term potential that some markets may have that aren't profitable just yet.

David Klein: Yeah, I would say, Bill, that's a good question because we haven't interrupted supply into the European markets from Canada, right? So when we say that we're going to allocate to the highest-margin areas, we're not doing anything that's choking off supply into Europe and don't intend to do that in the near term, meaning supply coming from Canada. It's within Canada when we have any sort of supply constraints, we allocate amongst the provinces effectively or the channels, meaning medical versus recreation in Canada in a way that optimizes for profitability. So, yeah.

Speaker Change: Yeah, I would say, Bill, that's a good question because we haven't interrupted supply into the European markets.

William Kirk: Yeah, I would say Bill, that's a good question because we haven't interrupted supply into the European markets from Canada, right? So when we say that we're going to allocate to the highest margin areas, we're not doing anything that's choking off supply into Europe. Indone intend to do that in the near term, meaning supply coming from Canada. It's within Canada, when we're, if we have any sort of supply constraints, we allocate amongst the cost amongst the provinces effectively or the channels, meaning medical versus rack in Canada in a way that optimizes for profitability.

Speaker Change: from Canada, right? So when we say that we're going to allocate to the highest

Bill Kirk: the highest margin areas, we're not doing anything that's choking off supply into Europe and don't intend to do that in the near term, meaning supply coming from Canada. It's within Canada when we're...

Bill Kirk: If we have any sort of supply constraints, we allocate amongst the provinces effectively or the channels, meaning medical versus REC in Canada, in a way that optimizes for profitability.

David Klein: You know, and I also want to make sure that the comments that we made in our script around the NPD that's coming to market are really, it's not, it's really just launches of new strains and a few new offerings that we think will be really attractive that we're already getting listings for that will drive revenue growth in Canada later in the year. So I think the supply allocation is really mostly related to Canada, and then we, As I said, we have activities underway to improve the supply chain in Canada and make it more robust.

Speaker Change: you know and I also want to make sure that the comments that we made in our script to around the NPD that's that that's coming to market is really it's not it's really

William Kirk: And I also want to make sure that the comments that we made in our script to around the NPD that's coming to market is really, it's not, it's really just launches of new strains and a few new offerings that we think will be really attractive that we're already getting listings for that will drive revenue growth in Canada later in the year. So I allocation is really mostly related to Canada and then we, as I said, we have activities underway to improve the supply chain in Canada and make it more robust and we also have new products coming down the pipeline.

Speaker Change: Just bunches of new strains and a few new offerings, I would think.

Speaker Change: will be really attractive that we're already getting listings for that will draw a revenue growth in Canada later in the year. So I think it's the supply allocation is really mostly related to Canada, and then you know, we...

Speaker Change: As I said, we have activities underway to improve the supply chain in Canada and make it more robust. And we also have new products coming down the pipeline.

David Klein: And we also have new products coming down the pipeline. The only addition I would have would be just, when you look at the flower supply in Canada, we have a bit of a hybrid model, right? So we've got our internally... internally sourced Kincardin facility and Doja, and then we are looking at partners. So whether it's strategic sourcing of flour or, at this point, I think we're doing a bit more spot buying, and the market's a little bit finicky, to be honest, and I think over time there will be more of the strategic sourcing opportunities that will come online, and really, we're focused on capturing favorable costs so that we can have good margins even from third-party sourced flour across our Canadian adult use.

William Kirk: The only ad I would have would be just, if when you look at the flowers supply in Canada, we have a bit of a hybrid model, right? So we've got our internal, internally source, can carton facility and doja and then we are looking at partners. So whether it's strategic sourcing of flower or at this point, I think we're doing a bit more spot buying and the market's a little bit finicky to be to be honest.

Speaker Change: have would be just when you look at the flower supply in Canada, we have a bit of a hybrid model, right? So we've got our internal

Speaker Change: internally sourced kindergarten facility and DOJA and then we are looking at partners so whether it's strategic sourcing of flower or

Speaker Change: At this point, I think we're doing a bit more spot buying and the market's a little bit finicky, to be honest. And I think over time, we do think there will be more of the strategic sourcing opportunities that will come online. And really, we're focused on capturing favorable calls so that we can have good margins, even from third-party sourced flour across our Canadian adult use business.

William Kirk: And I think over time we do think there will be more of a strategic sourcing opportunity that will come online and really we're focused on capturing favorable costs so that we can have good margins even from third-party source flower costs or Canadian adult use business.

Operator: There are no further questions. I will now turn the call over to Mr. Klein for closing remarks.

Speaker Change: Go to Beadaholique.com for all of your beading supply needs!

Speaker Change: Thank you very much for watching, please subscribe, like, comment, and share this video with your friends.

Speaker Change: There are no further questions. I will now turn the call over to Mr. Klein for closing remarks.

David Klein: I know for the questions, I will now turn the call over to Mr. Klein for closing remarks. Great, thank you for attending today's conference call and as you enjoy the rest of the summer I'd encourage you to try some of our outstanding products from our innovative brands including beverages like tweed sugar, three cola as well as our new all-in-one vapes from tweed and seven acres. Our investor relations team will be available to answer additional questions. Thank you.

David Klein: Thank you for attending today's conference call, and as you enjoy the rest of the summer, I'd encourage you to try some of our outstanding products from our innovative brands, including beverages like Tweed Sugar-Free Cola as well as our new all-in-one vapes from Tweed and 7-Eleven. Our investor relations team will be available to answer additional questions.

Mr. Klein: Great, thank you for attending today's conference call and as you enjoy the rest of the summer I'd encourage you to try some of our outstanding products from our innovative brands including beverages like Tweed Sugar-Free Cola as well as our new all-in-one vapes from Tweed and 7 Acres.

Speaker Change: Our investor relations team will be available to answer additional questions. Thank you.

Operator: This concludes Canopy Growth's first quarter fiscal 2025 financial results conference call. A replay of this conference call will be available until November 7, 2024, and can be accessed following the instructions provided in the company's press release issued earlier today. Thank you for attending today's call, Operator.

Speaker Change: This concludes Canopy Growth's first quarter fiscal 2025 financial results conference call. A replay of this conference call will be available until November 7, 2024, and can be accessed following the instructions provided in the company's press release issued earlier today.

Operator: Discussing the canopy growth thrift quarter fiscal 2025 financial results conference call. Our replay of this conference call will be available until November 7th, 2024 and can be accessed following the instructions provided in the company's press release issued earlier today. Thank you for attending today's call operator.

Speaker Change: Thank you for attending today's call, Operator.

Speaker Change: [inaudible]