Q3 2024 Cresco Labs Inc Earnings Call
For the next session there will be an opportunity to ask questions. To ask a question you may press the star key then 1 on your touchtone phone. To withdraw your question, please press star and then the number 2.
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Speaker Change: I would now like to turn the call over to TJ Cole, Senior Vice President, Corporate Development and Investor Relations for Cresco Labs. Please go ahead.
Speaker Change: Thank you. Good morning. Welcome to Cresco Labs third quarter 2024 earnings conference call. On the call today we have Chief Executive Officer and co-founder Charles Bachtell, Chief Financial Officer Dennis Olis, and President Greg Butler who will be available for the Q&A.
Speaker Change: Prior to this call, we issued our third quarter earnings press release, which has been filed on CDAR and is available on our investor relations website.
Speaker Change: These preliminary results for the third quarter 2024 are provided prior to completion of all internal and external reviews and therefore are subject to adjustment until the filing of the company's quarterly financial statements.
Speaker Change: We plan to file our corresponding financial statements and MD&A for the quarter ended September 30th, 2024 on CDART and EDGAR later this week.
Speaker Change: Before we begin, I want to remind you that statements made on today's call may contain forward-looking information. Actual results may differ materially.
Speaker Change: The risks, uncertainties, and other factors that could influence actual results are described in our earnings press release and in the MD&A filed with the securities regulators.
Speaker Change: This call also contains non-GAAP measures also outlined in our earnings press release and in the MD&A filed with the securities regulators. Please also note that all financial information on today's call is presented in U.S. dollars and all interim financial information is unaudited.
With that, I'll turn the call over to Charlie.
Charlie: Good morning, everyone, and thank you for joining us on the call today.
Charlie: I'm happy to be here to discuss another successful quarter for Cresco Labs, but first I want to touch on this week's election.
Charlie: While we're disappointed that the Florida initiative didn't reach the 60% supermajority threshold that needed to pass, we still saw substantial bipartisan majority support at 56% for cannabis legalization in a very influential state.
Charlie: For the first time ever, we entered a presidential election with both party candidates expressly pledging to support cannabis reform.
Charlie: Throughout his campaign, President-elect Trump confirmed his support for common-sense cannabis laws, support for safe banking and for rescheduling, the fact that no one should be arrested for personal cannabis use, and a states' rights approach to cannabis legalization.
Charlie: We're committed to working with the new administration to further the development of a responsible, respectable, and robust cannabis industry that will be one of the largest consumer products categories in the country.
Speaker Change: Thanks to our sustained operational excellence, Presco Labs is well positioned for the future.
Speaker Change: Our execution has bolstered our bottom line and underlines the success of our relentless pursuit of profitability and cash flow while we position ourselves to strategically invest in new markets and other growth opportunities.
Speaker Change: In the quarter, we generated $180 million in revenue and delivered a strong 53% adjusted gross profit margin and 29% adjusted EBITDA margin.
Speaker Change: We delivered $51 million in adjusted EBITDA, a 5% improvement year over year.
Speaker Change: And we've generated our best operating cash flow yet, getting $49 million in the quarter and $103 million a year to date, which is $41 million more than the first nine months last year, despite slightly lower revenue.
Speaker Change: We're holding our leading branded market share position out competing in retail and generating significant free cash flow, our North Star. This allows us to enter new markets and growth verticals, reinvest in fortifying our core markets, all while improving our balance sheet and paying down debt.
Speaker Change: Now I'm going to share more on the three pillars we're executing against to create the strongest and most valuable Cresco labs for the years to come.
Speaker Change: Number one, we're ensuring that we have the most strategic footprint.
In Ohio, we demonstrated our successful adult use conversion playbook.
Speaker Change: We achieved the top three branded market share position in Q3, up 220 basis points year over year. This is thanks to improved efficiencies, yields, potency, and a proven house of brands that delivers in an adult use environment.
Speaker Change: Ohio is the fourth state that's expected to become a billion-dollar market where we've achieved scale and hold a top three market share position.
Speaker Change: In Florida, we've doubled our market share on the same store base by refining our approach to cultivation and capitalizing on our productive retail platform. Under the current medical program, Florida has become another cash flow engine for Cresco Labs as we continue to scale up in the state.
Speaker Change: Again, we're disappointed that Amendment 3 didn't pass despite majority support from voters, but we knew this was a possibility. We've taken a thoughtful and incremental approach to expanding our capacity, focused only on what we need to meet the growing demand for our products under either outcome.
Speaker Change: In Pennsylvania, we're feeling optimistic about the governor's support for bipartisan adult use legislation in the first half of next year. We're strategically spending to round out our retail footprint in the state while we prepare for this next phase of growth.
Speaker Change: The past year has been all about making smart investments in our core markets, where our proven retail and wholesale capabilities can add value quickly. We're confident in our core's stability, which has enabled us to identify and forge paths to new markets and unlock additional revenue and profitability.
Number two, we remain the leader in branded wholesale products.
Speaker Change: Consumers know that quality is at the heart of our branded product portfolio, which again, are the number one overall share positions in Illinois, Pennsylvania, and Massachusetts, and is the driver behind our climb to number three in Ohio.
Speaker Change: For BDSA, we also have a top portfolio position nationally in branded flour, concentrates, vapes, and edibles.
Speaker Change: We're holding this lead because our quality at scale focus makes us more efficient with every quarter. For example, this quarter we ship more branded products year over year while reducing our cost of goods sold by 11%.
Speaker Change: This proficiency is an essential competitive advantage, especially as price compression remains a challenge in unregulated and dangerous synthetic hemp products compete for consumer's attention.
Speaker Change: Our brand and portfolio strength is a testament to our operational excellence as we continue finding new ways to improve our cost structure without sacrificing the quality of our products.
Speaker Change: And number three, we're building a highly productive retail platform in the most strategic states.
Speaker Change: In Q3, we improved our retail fair share, which was up to 1.4 times on average across our markets, the highest in Cresco Labs history.
Speaker Change: We're proud to have increased our competitive lead in Illinois, where we're more than twice as productive as the average store.
Speaker Change: One of the best demonstrations of the Sunnyside operating model can be found by comparing an acquired store's performance before and after converting to Sunnyside.
Speaker Change: In Pennsylvania, the two dispensaries that we acquired in Q2 saw a 76% increase in sales year over year after adopting the Sunnyside platform, which includes a complete overhaul of the assortment strategy, e-commerce, in-store workflows, pricing and promotion architectures, branding, loyalty, and marketing.
Speaker Change: We continue achieving above retail productivity because we've embedded our strengths in every part of the Sunnyside Standard. Our tried and tested operating procedures and proprietary technology will ensure that we continue to perform in highly competitive markets.
Speaker Change: In closing, we exited Q3 steadfast in our commitment to profitability and cash flow. We're continuously refining our core capabilities and shifting our approach alongside market conditions.
Speaker Change: We are ready to take on the strategic opportunities that are going to come our way.
Speaker Change: With that, I'll turn it over to Dennis for his last call with Cresco Labs to provide more details on our Q3 performance.
Dennis Olis: Thank you, Charlie. Good morning, everyone. We've built an organization that's operating from a place of financial strength.
Dennis Olis: Our continued focus on profitability and cash flow has enabled us to improve the balance sheet and invest deeper in our core markets.
Dennis Olis: As a sharper, stronger company, we're in a position to seek new growth verticals and market expansion to strategically build out our foundation and footprint.
Dennis Olis: In the quarter, we generated revenue of $180 million. We saw a 1.6 times lift in Ohio from the phased adult use launch and continue to hold the number one overall branded share in positions in Illinois, Pennsylvania and Massachusetts.
Dennis Olis: Having said that, revenue was down 2% sequentially, driven predominantly by the first statewide year-over-year decline in Illinois, continued retail fragmentation, and price compression.
Dennis Olis: This revenue erosion was understandable given the 46% increase in Illinois stores year-over-year and a 0.5% decline in total state revenue.
Dennis Olis: In the quarter, our adjusted gross margin was 53%, an increase of 250 basis points year-over-year and 60 basis points sequentially.
Dennis Olis: We are pleased to have achieved these results despite revenue deleveraging and significant price compression across our key markets.
This is a testament to our team's efficiency and resourcefulness.
Dennis Olis: To give some context, we shipped more branded units and saw a 5% increase year-over-year in the number of units sold through Sunnyside, all while lowering our cost of goods by 11%.
Dennis Olis: The Cresco team continues to find new ways to improve our cost structures.
Dennis Olis: This is evident in adjusted SG&A, which was $53 million, down 6% year-over-year and up only 1% sequentially, inclusive of purchasing two new dispensaries and staffing up in Ohio to prepare for adult use.
Q3 adjusted EBITDA was $51 million or 29% of revenue.
Dennis Olis: The improvements in efficiency and cost controls in COGS and SG&A is allowing us to hold margins relatively flat sequentially.
Unknown Speaker 0
Dennis Olis: In Q3, we're proud to have generated a record $49 million in operating cash flow and $43 million in positive free cash flow.
Dennis Olis: At $103 million over nine months, we've generated 66% more operating cash than we did during the same period last year.
Speaker Change: As Charlie mentioned, cash flow is key to reinvesting in the business and identifying new growth channels, both within our core and through new market opportunities.
Speaker Change: We continue making smart investments to fortify our core, investing $6 million on CapEx and Q3.
Speaker Change: We expect to spend $20 to $25 million in the fourth quarter to bring our full-year CapEx to $35 to $40 million.
Speaker Change: Subsequent to the quarter, we retired $40 million of our 2026 notes.
Speaker Change: This matches the size of the UTP we will record on our balance sheet in Q4 related to our 2023 taxes.
Speaker Change: We are maintaining and improving our leverage ratios as we get closer to refinancing.
Speaker Change: Q3 saw some softness driven by Ohio's limited adult use conversion and Illinois consumer slowdown which was particularly noticeable after Labor Day.
Speaker Change: Considering the late Q3 dip, we now expect Q4 revenue to be down mid single digits from last quarter.
Speaker Change: While we expect some pressure due to lower operating leverage over the next few quarters, targeting gross margins around 50% remains the appropriate operating and pricing structure for our business.
We expect to keep absolute SG&A relatively flat throughout Q4.
Speaker Change: We continue to deliver on our promise of generating strong, sustainable operating and free cash flow.
Speaker Change: We have already achieved record operating cash flow year over year and expect to continue driving that even higher.
Speaker Change: On a quarterly basis, like in Q2, Q4 will have lower cash flow because of our semi-annual interest payments.
Speaker Change: This quarter was another proof point for our strategy of focusing on profitability and cash flow.
Speaker Change: While I'm happy to be here to help demonstrate the strength of our plan, this call is a bittersweet one for me.
Speaker Change: I've been with Cresco Labs for the past four and a half years, and I'm incredibly proud of what we've built as I've watched the company grow stronger.
Speaker Change: Since I started annual revenue has gone from 125 million dollars to over 700 million dollars and has transitioned from an unprofitable company to one that's well on its way to generating over a hundred million dollars in free cash flow this year.
Speaker Change: I have complete faith in the future of Cresco Labs, and I know the best days are still ahead, especially when the industry finally gets the federal support it deserves.
Speaker Change: I've been looking forward to retirement, but only plan to leave after it was clear Cresco was positioned to thrive going forward.
Speaker Change: We've made incredible profitability gains in the last two years, so is Sharon Shuler ready to take the reins? Now is the time.
Speaker Change: Sharon joined Cresco Labs in September and has quickly gotten integrated.
Speaker Change: I'll continue supporting her transition and year-end planning in the months ahead.
Speaker Change: Sharon will officially begin her tenure as CFO on November 11th.
Speaker Change: Sharon is joining with a wealth of experience in the retail and CPG sector, including most recently at BJ's Wholesale Club, a multi-state warehouse retail chain.
Speaker Change: In the short time that she has been at Crestville Labs, she's embedded herself in the organization and infused energy and confidence in every interaction with the leadership and finance teams. I'm excited to watch her guide this company as it embarked on the next phase of growth.
And with that, I'll pass it to Charlie.
Charlie: Thank you, Dennis. It truly has been a pleasure to work together. On behalf of the entire Cresco team, I can't say enough about what you've done for this company, and we all wish you very well in your next chapter.
Speaker Change: This industry requires vigor and creativity like no other. To be successful, cannabis companies must be as dynamic as the market conditions, have a balance sheet that enables flexibility and growth, and maintain an unwavering focus on the bottom line. This is where Cresco Labs shines.
Speaker Change: We continue to prove out our strategy in every state we operate in, maintaining and gaining share in some of the country's largest and most competitive markets.
Speaker Change: We're leaning into our improved operating cash flow and profitability to seize on our business' momentum.
Speaker Change: We're making smart, high ROI investments in our core markets, reinforcing the capabilities and infrastructure needed to win, and exploring accretive incremental M&A and new business opportunities.
And we're reinforcing our balance sheet with every decision.
Speaker Change: We'll also continue to lead the way on federal reform, as this is the ultimate unlock for the industry and its stakeholders.
Speaker Change: A big thank you and congratulations to the Cresco teams on the quarter and with that I'll open the call for questions.
Unknown Executive, Charles Bachtell, Megan Kulick, TJ Cole
Speaker Change: Thank you. We will now begin the question and answer session.
Speaker Change: As a reminder, if you would like to ask a question today, please do so now by pressing start followed by the number one on your telephone keypad. If you change your mind, or you feel like your question has already been answered, please press start followed by two to remove yourself from the queue.
Speaker Change: Our first question comes from Aaron Gray with Alliance Global Partners. Please go ahead Aaron.
Aaron Gray: Good morning. Thank you for the questions and Dennis. Congrats and best of luck for your future endeavors.
Um...
Speaker Change: First question for me just wanted to talk a bit on Florida Charlie you mentioned in prepared remarks how it's become a cash flow engine and you look to continue to scale up in the state So just a love some additional commentary in terms of
Speaker Change: You know what opportunity you're still seeing in the Florida medical market. I know you still have room to grow on the retail side, so just how you're thinking about continuing to build out in the state, particularly as there's still some uncertainty in terms of how the competitive environment might evolve now within the medical market. Thank you.
Unknown Executive, Charles Bachtell, Megan Kulick, TJ Cole
Yeah, good morning, Aaron.
Speaker Change: So, you know, the Florida medical market is still a strong growing market itself.
Speaker Change: And so, as we had said on prior calls, our approach to Florida was a bit of a measured approach where we were going to make sure that our
Speaker Change: sort of the next phase of investment down there would be appropriate for us to continue to take share under a medical market type scenario or prepare us for what would be like phase one of adult use.
So for us, the outcome.
Speaker Change: Fortunately, it doesn't change our strategy down there. We've been executing very well in the market, Florida, because of that forced vertically integrated structure, it rewards execution and differentiated products, and that's our strength.
Speaker Change: So for us, it's a, the strategy remains the same as we look forward over the, over the coming year and on. We expect that that medical program will still develop, grow, and, and also
Speaker Change: You know, I'm sure we'll be evaluating other opportunities to pursue adult use as an industry down there.
Unknown Executive, Charles Bachtell, Megan Kulick, TJ Cole
Unknown Executive, Charles Bachtell, Megan Kulick, TJ Cole
Speaker Change: Okay, great. Thanks for that color there. Second question for me, just wanted to talk a bit on wholesale. I may have missed some prepared remarks, but just in terms of how wholesale trended during the cold run, I'll get it later in the queue. And then
Speaker Change: You know, long term, how you're looking for growth opportunities within wholesale. I know CPG has always been a big focus for you guys. You alluded to it a bit in the answer before in terms of product differentiation. So where you're seeing some potential opportunities, you know, Ohio W is being one obvious one, but otherwise, in terms of returning
Speaker Change: the wholesale side back to growth with your CPG strategy. Thank you.
Unknown Executive, Charles Bachtell, Megan Kulick, TJ Cole
Unknown Executive, Charles Bachtell, Megan Kulick, TJ Cole
Speaker Change: Yes, so, I mean, as it relates to wholesale strategy, we continue to believe in the long-term thesis of cannabis, which is brands matter, and, you know, you need to give the consumer what the consumer wants, and that's offering the highest perceived value.
Speaker Change: in your your branded suite of products. So long term thesis we still still maintains and still holds. It just depends on when you're looking at it market by market. It's the evolution and the maturity of the markets and the in the way that they develop.
Speaker Change: where retail and wholesale sometimes don't move in the same direction at the same time. And that's why we've developed this state-by-state strategy that we've been executing against for the last couple of years.
Speaker Change: which has allowed us to lean into both strengths that we've developed across our org.
Speaker Change: both on the branded product side and on the on the retail side. I don't know, Greg, you want to add any other color on wholesale? The only thing I'd add to it is our market position. We feel confident in the strength of our brand. We know we have some of the best velocities of brands out there. So we're creating.
Products that consumers want to buy.
Speaker Change: There's obviously lots of movement happening with consumers of the shift down the value, but
Speaker Change: offering the best quality product that drives velocity is a winning strategy with consumers and as independents and retailers continue to grow, having the best velocities that drive the best profit in those stores is a great sales story as well. So we feel really confident on our ability to continue to grow with our brand.
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Unknown Executive, Charles Bachtell, Megan Kulick, TJ Cole
Unknown Executive, Charles Bachtell, Megan Kulick, TJ Cole
Speaker Change: Our next question comes from Andrew Semple with Ventum Financial. Andrew please go ahead.
Speaker Change: Good morning, congrats on the Q3 results. Also just want to extend best wishes to Dennis in retirement and share my personal thanks for your support over these past few years.
First question. Thank you. We're just beyond that. No problem.
Speaker Change: Even as we had more stores come online in that state.
Speaker Change: I know price compression was probably one major factor there, but still probably a bit of a surprise to see the market shrink.
given how underserved it has been historically with retail coverage.
Unknown Executive, Charles Bachtell, Megan Kulick, TJ Cole
Unknown Executive, Charles Bachtell, Megan Kulick, TJ Cole
Charles Bachtell: Thanks Andrew, this is Charlie. I'll start it off and then Greg will add some more color.
Charles Bachtell: But Illinois from that respect, look, still an incredibly strong market that has a lot of energy behind it. You're seeing stores open, there's a lot of consumer demand.
Charles Bachtell: It's a competitive environment, though, and so we continue to refine even our approach to our home state to make sure that we're maximizing in those two strengths that we were talking about from branded product standpoint and also our retail strengths.
Charles Bachtell: All markets evolve and mature, and so, as we say often, it's the responsibility of every company in this space to be as dynamic as the markets and the industry that we're in. You have to be that dynamic to make sure that you're always at the forefront of change.
Charles Bachtell: and Greg in specifics on Illinois. I think Illinois in general as a market really surprised everyone Memorial Day weekend. We saw a pretty healthy growing market up until Memorial Day. Softness coming out of Memorial Day that has stuck. I think really as you look and try to dissect what's causing that, consumers are feeling the pinch. They have tighter wallets and are looking for ways to...
Charles Bachtell: make their dollars go further? So it's kind of similar to the answer we gave last time, as we think of Illinois,
Charles Bachtell: The strategy has to be how do you offer the best products because if you look at a grams consumed basis
Consumers are still consuming more grams than ever before.
Charles Bachtell: They're still consuming cannabis. The love for cannabis is still there, but they're looking for ways to make their allocation of cannabis spend go further. And so we believe our house-to-brand approach of offering them a value product
Charles Bachtell: But also a premium product when they want to treat themselves is a way for us to continue to drive growth in the category and set the right partnerships with retailers in this state. We offer them some of the best performing brands and also work together to really help grow the category.
Speaker Change: Great, that's helpful. And maybe just to follow up to that, you know, with pricing conditions softening across a number of markets.
I'm just wondering if.
you know Cresco's given any thought to.
Speaker Change: Adjusting production capacity. I would imagine with underlying volume growth that we're still seeing demand. There's probably no need to make adjustments to capacity.
Speaker Change: and probably in fact the opposite, but I'm just wondering if I might be mistaken in that assumption or whether you have considered capacity curtailments in some states.
Speaker Change: So, Andrew, again, I would say this is an area where this is something we've actively managed for a couple years now, as all of these markets go through their evolution.
Speaker Change: from hyper growth to some stability and level off to potentially additional price compression states come on around you so again going back to our state by state approach to pulling on the right levers
Speaker Change: Leaning into what we do well and making sure that we are prioritizing what that market and that consumer base
Speaker Change: needs from us in every market has been something that we've been really relentlessly focused on for the last 18-24 months as we've seen it develop across our footprint and across the industry.
Speaker Change: Yeah, I would say that we are incredibly proud of the Krepsco Labs team. What they have proven this quarter and what they've proven in previous quarters is that they can find ways to help bring down either the cost of our products
Speaker Change: on more interesting ways to bring our products to market at a lower price or serve more shoppers in an efficient way. And that's what's driving our margin improvement. We are selling more grams of cannabis. We are continuing to sell more units, even if the price per unit has come down.
So consumption is there.
Speaker Change: And it's on our team, and I know this team will do it, which is to continue to find ways to drive efficiencies to hold margins so as pricing does what it does, we can continue to offer superior products, a superior shopping experience at a great margin. And I think Q3 is a demonstration of our ability to do that.
Great, that's helpful. I'll get back into queue.
Unknown Executive, Charles Bachtell, Megan Kulick, TJ Cole
Unknown Executive, Charles Bachtell, Megan Kulick, TJ Cole
Speaker Change: Our next question comes from Federico Gomez with ATB Capital. Please go ahead.
Unknown Speaker
Good morning. Thanks for taking my questions.
Speaker Change: First question on Ohio. Is that market evolving in line with your expectations?
Unknown Executive, Charles Bachtell, Megan Kulick, TJ Cole
Speaker Change: Over or under supply in that market. I know that Charlie, you talked a little bit about this before the actual start of sales there, but just curious what you're seeing right now.
Speaker Change: Yeah, no, I think it's a good question. I'll tell you internally.
Speaker Change: I think we've stopped referring to, um, Ohio's adult youth launch.
Speaker Change: because it really hasn't launched yet and this it's in it's in further into what
Speaker Change: would happen in Q3 for a variety of reasons, and one of those is
Speaker Change: The adult use rules still have not been finalized. So in reality, we are still operating the medical program there with just the ability to allow non patients to come in the door too. But from a form factor standpoint, from a marketing, advertising, communications with a consumer based standpoint, this is still a medical program, medical structure, medical products.
in Ohio. So as those final rules continue to...
Speaker Change: come out, get finalized and implemented, which we expect we'll go into early next year. We do expect to see additional uplift in that market. It's gonna be a ramp because the program itself is.
unfolding in a ramp-like manner.
Um...
Speaker Change: and I just want to make sure that Dennis has an opportunity here on his final call to participate. So Dennis, what are you seeing from a finance standpoint?
Dennis Olis: expectations for Ohio? No, I think I think we're we're still bullish on, as Charlie noted on what's going to happen here in Ohio. You know, there was a big buildup of inventory across all of us, leading up to the
Dennis Olis: Adult Use Launch. I think there's some, I think we'll continue to see
You know the the sales ramp up and and that
Speaker Change: Thank you for that. And I guess the question for Dennis then, in terms of your comment on COP X-44, the guidance there, planning to 25 million.
Speaker Change: Thanks, Andrew.
Speaker Change: The next question comes from popular as monarch with Zelman <unk> Associates. Please go ahead Pablo.
Speaker Change: Thank you good morning, everyone, Charlie where do you surprise that no MSR was chosen to.
Speaker Change: Testify at the upcoming ALJ hearing.
Speaker Change: And along those lines is there any way for companies like yourself, especially given your high profile.
To get your voice into a process through somewhere this ignite participants. Thank you.
Speaker Change: No.
How that how that process in the selection was done.
Speaker Change: Is it purely administration's decision over there.
Speaker Change: And I think.
Speaker Change: What we can take also from the the order that the judge issued is that he is going to want to see exactly how that selection was done at the December 2nd hearing.
Speaker Change: As far as making sure that the industry.
Speaker Change: Yourself and have their their voice occurred.
Speaker Change: I think with with confidence I can tell you that the voice has been heard the fact that we're where we're at with the evaluation with the recommendations.
Speaker Change: There was a there was a great coalition.
Speaker Change: Industry stakeholders that.
Speaker Change: We're heavily involved and very influential in and making sure that this question got asked that it got.
The attention that it deserves that we find ourselves in a spot that we're in now so.
Speaker Change: Looking forward to see what happens here through the <unk>.
Speaker Change: Hearing process, which again, we will have more line of sight on in December 2nd and then actual hearings like you said January February so early next year, hoping and expecting that we will see a positive outcome on the rescheduling effort.
Luca: Thank you and just a quick follow up Luca.
Luca: Regarding sham.
Luca: Two three years ago.
Luca: We're on track.
Luca: But you know things have changed.
Luca: You know that there.
Luca: There are companies in the space and the economy space.
Luca: Already entering hymnary, whether you saw some thinking about it.
Luca: We don't have a Republican Senate.
Luca: The farm Bill Mei Mei Mei, maybe helpful to the champion industry.
Luca: It also assumptions that we're making on right.
Speaker Change: How are you thinking of all of that space. I mean is that something that you would participate and follow some of the other economy as companies that are permanently doing vessels. Thank you that's it.
Speaker Change: Yes, I would say for a while now the hemp.
Speaker Change: The hemp opportunity and risk is has been a part of our evaluation and developing an opinion on it is something that we.
Speaker Change: Continuing to work on it's one of those things like you mentioned.
The farm Bill.
Speaker Change: In the future.
Of the perceived ability to participate in that in that.
Speaker Change: The perceived carve out.
Speaker Change: And also with certain types of products or at certain.
Cannabinoid profiles is very up in the air So we're monitoring we're developing.
Speaker Change: Our position.
Speaker Change: Because like you said.
Speaker Change: It's an opportunity and its potential.
Potential risk.
Speaker Change: Our what I would say by fundamental.
Speaker Change: Pinion on this is.
Speaker Change:
Speaker Change: As you know and everybody knows we're hyper focused on developing a responsible respectable and robust cannabis industry, but that really is a cannabinoid industry.
Speaker Change: And so others that are interested in developing.
Speaker Change: Irresponsible and respectable cannabinoid industry or we're fans of and we're supportive of.
Speaker Change: But the issue with intoxicating hemp is.
If it's going to create risk to the future of our ability to get reform for a responsible and respectable <unk> approach to cannabinoid then that's the issue and so that's as we look at hemp, we see opportunity we see risk.
Speaker Change: Course, where we're constantly evaluating developing our opinion in position and we will see what happens here in the quarters ahead.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: There's no other questions. We have received today and so I'll turn the call back to Charlie for closing remarks.
Charles Bachtell: Excellent want to thank everybody for participation today.
Charles Bachtell: Thank the <unk> team for really turned it in a very good quarter in <unk>.
Charles Bachtell: Absolutely want to thank Dennis for everything that he has brought not only to our organization, but to this sector has been a great CFO great leader and.
Charles Bachtell: Can't thank them enough Shirley. Thank you Dennis Alright, Thanks, everybody, we'll talk to you after the new year happy holidays.
Speaker Change: Thank you everyone for joining us today. This concludes our call and you may now disconnect your lines.
Speaker Change: Yeah.
[music].
Speaker Change: Yeah.