Q2 2025 Curaleaf Holdings Inc Earnings Call

After today's remarks, there will be an opportunity to ask questions to ask a question you May Press Star then one on your Touchtone phone.

Your question. Please press Star then two please note that this event is being recorded I would now like to turn the conference over to Camilo Lyon Chief Investment Officer. Please go ahead.

Good afternoon, everyone and welcome to securely Holdings second quarter 2025 conference call.

Today Im joined by Chairman and Chief Executive Officer, Boris Jordan, and Chief Financial Officer at Kramer.

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

<unk> or outcomes to differ materially from those expressed in the forward looking statements on a certain material factors or assumptions that were applied in drawing a conclusion or making a forecast in such statements.

These forward looking statements speak only as of the date of this conference call and should not be relied upon as predictions of future events. We undertake no obligation to update or revise any forward looking statements, whether as a result of new information future events or otherwise, except as required by applicable law.

Additional information about the material factors and assumptions, forming the basis of the forward looking statements and risk factors can be found in the company's filings and press releases on SEDAR and Edgar.

During today's conference call in order to provide greater transparency regarding <unk> operating performance, we will refer to certain non-GAAP financial measures and non-GAAP financial ratios that involve adjustments to GAAP results.

Such non-GAAP measures and ratios do not have a standardized meaning under U S. GAAP.

Any non-GAAP financial measures presented should not be considered to be an alternative to financial measures required by U S. GAAP to now be considered measures of purely liquidity.

Unlikely to be comparable to non-GAAP financial measures provided by other companies and non-GAAP financial measures referenced on this call are reconciled to the most directly comparable U S. GAAP financial measure under the heading reconciliation of non-GAAP financial measures in our earnings press release issued today and available on our Investor Relations Web.

Speaker #2: Good afternoon and welcome to the Curaleaf Holdings Inc. second quarter 2025 conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a ference specialist by pressing the star key followed by zero.

Speaker #2: After today's remarks, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone.

Site at IR <unk> Dot com.

With that I will turn the call over to chairman and CEO Boris Jordan.

Speaker #2: To withdraw your question, please press star then two. Please note that this event is being recorded. I would now like to turn the conference over to Camilo Lyon, Chief Investment Officer.

Thank you Camilo good afternoon, everyone and thank you for joining us to discuss our second quarter 2025 results.

Speaker #2: Please go head.

Over the past 10 years, we've strategically built purely into a global cannabis leader now operating in 17 U S States, plus 7% plus 15 countries worldwide with our infrastructure in place and our asset base established with sharpening our focus on product quality customer service and supply chain excellence.

Speaker #3: Good afternoon, everyone, and welcome to Curaleaf Holdings' second quarter 2025 conference call. Today, I'm joined by Chairman and Chief Executive Officer Boris Jordan and Chief Financial Officer Ed Kremer.

Speaker #3: Before we begin, I'd like to remind everyone that the comments on today's call will include forward-looking statements within the meaning of Canadian and United States securities laws.

To ensure every customer receive the best possible experience every time in every store.

Speaker #3: Which, by their nature, involve estimates, projections, plans, goals, forecasts, assumptions. Including the successful integration of acquisitions and our subject-to-risk and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements.

From the outset rapidly growing the business has been central to my vision, recognizing that scale would be essential to navigating the inevitable volatility of the cannabis industry.

Our current pricing pressures are affecting the entire sector subscale operators are bearing the brunt.

Speaker #3: On a certain material factors or assumptions that were applied in drawing the conclusion or making a forecast in such statements. These forward-looking statements speak only as of the date of this conference call.

Exiting markets and shedding assets at an accelerating pace. This ongoing industry rationalization strengthens our long term position as we continue investing in growth initiatives and capitalize on emerging opportunities.

Speaker #3: And should not be relied on as predictions of the future events. We undertake no obligation to update or revise any forward-looking statements. Whether as a result of new information, future events, or otherwise, except as required by applicable law.

In the second quarter, we generated revenue of $315 million up one 5% compared to the first quarter consistent with our guidance for low single digit growth.

Speaker #3: Additional information about the material factors and assumptions forming the basis of the forward-looking statements and risk factors can be found in the company's filings and press releases on Cedar and Edgar.

Price compression across most of our markets kept domestic sales were roughly flat compared to the first quarter, while our international segment continued to impress with another solid quarter of 17% sequential growth.

Speaker #3: During today's conference call, in order to provide greater transparency regarding Curaleaf's operating performance, we will refer to certain non-GAAP financial measures and non-GAAP financial ratios that involve adjustments to GAAP results.

Adjusted gross margin of 49% decreased 130 basis points from the first quarter due to higher levels of promotional activity, particularly around $4 20 holiday compared to the first quarter, we generated $66 million and adjusted EBITDA, resulting in a 21% EBITDA margin with international and health.

Speaker #3: Such non-GAAP measures and ratios do not have a standardized meaning under US GAAP. Any non-GAAP financial measures presented should not be considered to be an alternative to financial measures required by US GAAP.

Speaker #3: Should not be considered measures of Curaleaf's quidity and are unlikely to be comparable to non-GAAP financial measures provided by other companies. Any non-GAAP financial measures referenced on this call are reconciled to the most directly comparable US GAAP financial measure under the heading reconciliation of non-GAAP financial measures in our earnings press release issued today.

Accounting for 260 basis point of margin drag.

For now we've made the strategic decision to keep those two businesses consolidated as momentum around federal reform and potential 280 relief from rescheduling continues to build.

Heading into Europe.

Speaker #3: And available on our investor relations website at ir dot curaleaf dot com. With that, I'll turn the call over to Chairman and CEO Boris Jordan.

That said if meaningful reform fails to materialize, we are prepared to pursue alternative paths such as spinning out these businesses to unlock significant value that we believe is not currently reflected in our valuation as neither of these businesses are subject to.

Speaker #3: Boris?

Speaker #4: Thank you, Camilo. Good afternoon, everyone, and thank you for joining us to discuss our second quarter 2025 results. Over the past 10 years, we've strategically built Curaleaf into a global cannabis leader.

We ended the second quarter with cash of $102 million after paying $47 million in interest and principal debt payments and generated $9 million in operating cash flow from continuing operations.

Speaker #4: Now operating in 17 US states plus 15 countries worldwide. With our infrastructure in place, and our asset-based established, we're sharpening our focus on product quality, customer service, and supply chain excellence.

In the U S. Our primary focus for the past few quarters has been to manage pricing headwinds and stabilize the domestic business through an unrelenting pursuit of producing consistent high quality flower improving customer service levels, enhancing our marketing and branding and optimizing our supply chain in.

Speaker #4: To ensure every customer receives the best possible experience, every time in every store. From the outset, rapidly growing the business has been central to my vision, recognizing that scale would be essential to navigating the inevitable volatility of the cannabis industry.

In the second quarter, we achieved stabilization of sales were essentially flat compared to the first quarter sequential growth in Massachusetts, Ohio, Florida, Pennsylvania, and New Jersey was offset by pressure in the balance of our network continued gains in our cultivation facilities were offset by an underwhelming and promotional for 'twenty holiday that landed on Easter.

Speaker #4: While current pricing pressures are affecting the entire sector, subscale operators are bearing the brunt. Exiting markets and shedding assets at an accelerating pace. This ongoing industry rationalization strengthens our long-term position as we continue investing in growth initiatives and capitalize on emerging opportunities.

Impacting the results.

That said, we made meaningful advancements in our product portfolio April was a pivotal month for purely innovation engine marked by the launch of several strategically developed products aimed at enhancing our competitive position and fueling long term growth.

Speaker #4: In the second quarter, we generated revenue of $315 million up 1.5% compared to the first quarter. Consistent with our guidance of for low single-digit growth.

In New York, we introduced <unk>, our proprietary aqueous cannabis extraction of oil which has received exceptional early feedback. Unlike traditional distillate oils Ace is the next evolution of oil that delivers of ultra clear ultra pure product with minimal plant material offering a smoother more refined consumer experience.

Speaker #4: Price compression across most of our markets kept domestic sales roughly flat compared to the first quarter, while our international segment continued to impress with another solid quarter 17% sequential growth.

Speaker #4: Adjusted gross margin of 49% decreased 130 basis points from the first quarter due to higher levels of promotional activity particularly around 420 holiday compared to the first quarter.

We view this as a disruptive advancement in the cannabis oil category and we expect strong consumer adoption as awareness and trial increase.

Speaker #4: We generated $66 million in adjusted EBITDA resulting in a 21% AEBITDA margin, with international and health accounting for $260 basis points of margin drag.

In parallel we rolled out our new cylindrical style pre roll line across six major markets, New York, New Jersey, Florida, Arizona, Massachusetts, and Illinois anthem is already outperforming expectations and we are accelerating production to meet surging demand while scaling to add additional states.

Speaker #4: For now, we've made the strategic decision to keep those two businesses consolidated as momentum around federal reform and potential 280 relief from rescheduling continues to build heading into year-end.

According to a putting sell through data.

<unk> is the fastest growing pre roll brand in New York building on the strong brand momentum we are expanding into a full scale pre roll line with a clear goal of establishing it as a national market share leader as part of this expansion, we will launch anthem Bowl, our new line of infused pre rolls in late September.

Speaker #4: That said, if meaningful reform fails to materialize, we are prepared to pursue alternative paths such as spinning out these businesses to unlock significant value that we believe is not currently reflected in our valuation as neither these businesses are subject to 280.

Across key markets, including New York, New Jersey, Illinois, and Arizona.

Speaker #4: We ended the second quarter with cash of $102 million after paying $47 million in interest and principal debt payments and generated $9 million in operating cash flow from continuing operations.

Our innovation pipeline is backed by industry, leading R&D and continues to reinforce our brand leadership select remain the number one brand in the U S. During quarter, two while grassroots our premium flower offering was a top III flower brand according to BDSI.

Speaker #4: In the US, our primary focus for the past few quarters has been to manage pricing headwinds and stabilize the domestic business through an unrelenting pursuit of producing consistent high-quality flour, improving customer service levels, enhancing our marketing and branding, and optimizing our supply chain.

These gains reflect ongoing improvements in our cultivation practices supported by our genetics program specifically over the past 15 months, we have overhauled our genetics library to deliver high quality consistent flower across our state footprint.

Speaker #4: In the second quarter, we achieved stabilization as sales were essentially flat compared to first quarter. Sequential growth in Massachusetts, Ohio, Florida, Pennsylvania, and New Jersey was offset by pressure in the balance of our network.

The acquisition of Dark heart nursery highly regarded west coast Genetics lab, we completed a couple of years ago is bearing significant fruit in our gardens.

Speaker #4: Continued gains in our cultivation facilities were offset by an underwhelming and promotional 420 holiday that landed on Easter impacting the results. That said, we made meaningful advancements in our product portfolio, April was a pivotal month for Curaleaf, innovation engine, marked by the launch of several strategically developed products aimed at enhancing our competitive position and fueling long-term growth.

In quarter, two we saw overwhelming success in the markets, where we first began harvesting. These genetics states such as New York, Florida, Arizona, and Utah as these strengths continue to rollout across additional markets in quarter. Three we see strong momentum building ahead flower remains the cornerstone of the cannabis category and we are.

Laser focused on ensuring purely delivers the best in class quality consistency and assortment our progress to date gives us confidence our ability to win.

Speaker #4: In New York, we introduced ACE, our proprietary aqueous cannabis extraction oil, which has received exceptional early feedback. Unlike traditional distillate oils, ACE is the next evolution of oil that delivers an ultra-clear, ultra-pure product with minimal plant material offering a smoother, more refined consumer experience.

When in this critical product segment.

We're just getting started.

Operating as a fully legal medical business purely for international functions much like a pharmaceutical company.

Giving us greater flexibility to capitalize on the strategic investments we've made over the past four years. This structure continues to deliver scale advantages and brand momentum is clearly demonstrated by a robust second quarter results in which the segment generated $41 million in revenue and a 17% sequential increase.

Speaker #4: We view this as a disruptive advancement in the cannabis oil category and we expect strong consumer adoption as awareness and trial increase. In parallel, we rolled out Anthem, our new cylindrical style pre-roll line, across six major markets, New York, New Jersey, Florida, Arizona, Massachusetts, and ois.

Speaker #4: Anthem is already outperforming expectations and we are accelerating production to meet surging demand while scaling to add additional states. According to Hoodie, sell-through data, Anthem is the fastest growing pre-roll brand in New York.

A 62% year over year growth driven by robust demand in Germany, and the UK and Germany, we continue to see healthy patient growth one year after the government passed the.

Country Cannabis act, removing cannabis as a narcotic and streamlining patient access official data from the German regulators shows that 43 tons of dried flower was imported into Germany in quarter. Two 2025, a four fold increase over quarter two of 2024, while pricing pressures to become more prevalent in the market.

Speaker #4: Building on the strong brand momentum, we are expanding Anthem into a full-scale pre-roll line with a clear goal of establishing it as a national market share leader.

Speaker #4: As part of this expansion, we will launch Anthem Bold, our new line of infused pre-rolls in late September across key markets including New York, New Jersey, Illinois, and Arizona.

Team has navigated these dynamics well by leading with our premium for 'twenty flower brand complemented by our mid tier.

Speaker #4: Our innovation pipeline is backed by industry-leading R&D and continues to reinforce our brand leadership. Select remain the number one vape brand in the US during quarter two, while Grassroots, our premium flour offering, was a top three flour brand.

And value offerings.

Last year's introduction of Koala.

Our value flower brand is performing above expectations and in the second quarter was boosted by addition of new shred options in the U K. The team did a fantastic job of adding new patients to our platform through our pure leaf clinic, where we're focused on delivering high levels of service and product quality to our patients and <unk>.

Speaker #4: According to BDSA, these gains reflect ongoing improvements in our cultivation practices, supported by our genetics program. Specifically, over the past 15 months, we have overhauled our genetics library to deliver high-quality, consistent flour across our state footprint.

<unk> the U K business benefited from the new wholesale partnerships and ensuing quarters.

Speaker #4: The acquisition of Darkheart Nursery highly regarded West Coast Genetics Lab, we completed a couple of years ago as bearing significant fruit in our gardens.

<unk> International achieved three significant milestones this quarter that further solidify our global leadership position first we completed the buyout of our minority partner and now own 100%.

Speaker #4: In quarter two, we saw overwhelming success in the markets where we first began harvesting these genetics. States such as New York, Florida, Arizona, and Utah.

Of purely for international this moves simplifies our structure increases operational flexibility and reinforces our long term commitment to global expansion, we think our partner for their collaboration and continued support of purely position.

Speaker #4: As these strains continue to roll out across additional markets in quarter three, we see strong momentum building ahead. Flour remains the cornerstone of the cannabis category and we are laser-focused on ensuring Curaleaf delivers the best-in-class quality consistency and assortment.

Second we are pleased to announce we have received a license to enter Turkey, providing us a first mover advantage in the countries nascent medical market, Turkey with a population of 87 million people represents a large and underpenetrated opportunities subject to the finalization of the scope of the secondary regulations, we aim to commercialize our brand portfolio in the market with.

Speaker #4: Our progress to date gives us confidence that our ability to win in this critical product segment and we're just getting started. Operating as a fully legal medical business, Curaleaf International functions much like a pharmaceutical company.

<unk> 2026, we will provide more detail as rules and timelines become clear.

Speaker #4: Giving us greater flexibility to capitalize on the strategic investments we've over the past four years. This structure continues to deliver scale advantages and brand momentum as clearly demonstrated by robust second quarter results in which the segment generated $41 million in revenue and a 17% sequential increase.

Third we achieved EU medical device registration certification for our worlds first medically certified liquid cannabis inhalation device.

This is a significant regulatory breakthrough that establishes a new standard for inhaled candidate medicines in Europe designed to deliver consistent metered doses. The devices currently the only handheld solution legally permitted under EU medical device regulations.

Speaker #4: A 62% year-over-year growth driven by robust demand in Germany and the UK. In Germany, we continue to see healthy patient growth one year after the government passed the Kanji Cannabis Act.

We're launching the device in the U K this month with plans to expand into key European and Australian markets as regulators as well as regulations evolve.

Speaker #4: Removing cannabis as a narcotic and streamlining patient

This innovation positions clearly at the forefront of a differentiated pharma grade delivery platform that addresses growing global demand for.

Precision cannabis therapies.

Our international strategy continues to deliver results driven by disciplined execution and a focus on scalable high growth markets.

Recent milestones, including new market entries product launches and regulatory wins are not just symbolic they translate directly into near and long term revenue opportunities in fact purely for internationals current total addressable market, including the UK, Germany, Poland, Australia, New Zealand and now Turkey rivals that of the U S.

While these are primarily medical markets that are earlier in their development curve. The long term growth potential is significant.

To support the momentum we're seeing today, we've expanded cultivation capacity to a more asset light model than in the U S. Prioritizing leased infrastructure over owned assets to maintain flexibility and maximize returns on invested capital.

Speaker #1: New wholesale partnerships and ensuing orders. Curaleaf International achieved three significant milestones this quarter that further solidify our global leadership position. First, we completed the buyout of our minority partner and now own 100% of Curaleaf International.

If international is now on pace to be one of our top three revenue contributors by yearend. We expect this segment to play a significant and growing role in our long term value creation strategy.

Our hemp business continues to gain momentum driven by a clear strategy focused on expanding distribution and increasing access to low dose sessional products that resonate with both core consumers and new entrants to the category. This quarter, we successfully launched formula X and brick and mortar retail.

Speaker #1: This move simplifies our structure, increases operational flexibility, and reinforces our long-term commitment to global expansion. We thank our partner for their collaboration and continued support of Curaleaf's vision.

Speaker #1: Second, we are pleased to announce we have received a license to enter Turkey. Providing us a first-mover advantage in the country's nascent medical market.

And made it available on door dash further broadening our omnichannel reach in addition to total wine and door dash, we deepened our distribution footprint across key markets, including Connecticut, Indiana, Kentucky, New Jersey, Georgia, Ohio, and Illinois.

Speaker #1: Turkey, with a population of 87 million people, represents a large and under-penetrated opportunity. Subject to the finalization scope of the secondary regulations, we aim to commercialize our brand portfolio in the market within 2026.

Speaker #1: We will provide more detail as rules and timelines become clear. Third, we achieved EU medical device registration certification for our world's first medically certified liquid cannabis inhalation device.

We're also optimizing our supply chain by bringing beverage fulfillment in house at our Kentucky facility and initiatives that enhances production control and expect it to drive stronger margin capture moving forward.

Speaker #1: This is a significant regulatory breakthrough that establishes a new standard for inhaled cannabis medicines in Europe. Designed to deliver consistent metered doses, the device is currently the only handheld solution legally permitted under EU medical device regulations.

I'd like to provide an update on our upcoming debt refinancing over the past several months, we've engaged with a broad range of investors, including public and private credit funds as well as regional banks. The initial response has been highly encouraging with strong.

<unk> interest in constructive dialogue, we remained focused on securing the most favorable outcome procure aligned with our long term capital strategy. We are on track to complete the refinancing by year end and are confident it will enhance our financial flexibility and support our growth priorities.

Speaker #1: We're launching the device in the UK this month with plans to expand into key European and Australian markets as regulators evolve. As regulations evolve.

Speaker #1: This innovation positions Curaleaf at the forefront of a differentiated pharma-grade delivery platform that addresses growing global demand for precision cannabis therapies. Our international strategy continues to deliver results driven by disciplined execution and a focus on scalable, high-growth markets.

This earnings call marks my one year anniversary as CEO and I'm proud of the meaningful progress we've made through our return to our roots program over.

For the past 12 months, we've laid critical groundwork to strengthen the business. We said in cargo yields elevating flower quality across our network expanding gross margins, reducing costs and fueling growth in key areas, including International and New York, Ohio, and our hemp business, while price compression remains a headwind and many of our markets driven in large part by the rapid expanse.

Speaker #1: Recent milestones, including new market entries, product launches, and regulatory wins, are not just symbolic; they translate directly into near and long-term revenue opportunities. In fact, Curaleaf International's current total addressable market, including the UK, Germany, Poland, Australia, New Zealand, and now Turkey, rivals that of the US.

<unk> of the loosely regulated hemp sector, which benefits from Interstate commerce, low operating cost and freedom from the 280 <unk> tax burden, we remain confident in the long term trajectory of the cannabis industry. That's why.

Speaker #1: While these are primarily medical markets that are earlier in their development curve, the long-term growth potential is significant. To support the momentum, we're eing today, we're anding cultivation capacity through a more asset-light model than in the US, prioritizing least infrastructure over owned assets to maintain flexibility and maximize returns on invested capital.

We continue to invest in the five core pillars of sustainable success people product quality R&D distribution and customer experience.

Domestically, we've upgraded cultivation facilities improved our flower quality implemented automation and made meaningful progress on our retail build outs internationally. We've expanded production capacity entered new markets and broadened our brand portfolio to support. This next phase of growth. We've also made key additions to our leadership team at the core.

Speaker #1: Curaleaf International is now on pace to be one of our top three revenue contributors by year-end. We expect this segment to play a significant and growing role in our long-term value creation strategy.

Speaker #1: Our hemp business continues to gain momentum driven by a clear strategy focused on expanding distribution and increasing access to low-dose sessionable products that resonate with both core consumers and new entrants to the category.

Level recently, we welcomed four senior executives, who bring deep experience from best in class consumer and retail organizations.

<unk> joins us as president in our newly created role overseeing revenue innovation and brand critical drivers of topline growth.

Speaker #1: This quarter we successfully launched formula X in brick-and-mortar retail and made it available on DoorDash. Further broadening our omnichannel reach. In addition to Total Wine and DoorDash, we deepened our distribution footprint across key markets including Connecticut, Indiana, Kentucky, New Jersey, Georgia, Ohio, and Illinois.

Brings a strong background from albertson's, Pepsico and <unk>.

Scott Crawford, our new head of merchandising comes to us from <unk> foods, fresh direct and whole foods offering deep expertise and category management.

And Miller now leading brand marketing brings brand building experience from Diageo and Williams, Brent swaps and Helen Shan, our new head of digital joins us from <unk>, USA, Pepsico and Mackenzie with a mandate to enhanced consumer engagement and drive our digital transformation.

Speaker #1: We're also optimizing our supply chain by bringing beverage fulfillment in-house at our Kentucky facility, an initiative that enhances production control and is ected to drive stronger margin capture moving forward.

Speaker #1: I'd like to provide an update on our upcoming debt refinancing. Over the past several months, we've engaged with a broad range of investors including public and private credit funds as well as regional banks.

These hires reflect our disciplined focus on leadership excellence and position us to execute with great precision drive margin expansion that unlock long term shareholder value.

Speaker #1: The initial response has been highly encouraging, with strong indicative interest in constructive dialogue. We remain focused on securing the most favorable outcome for Curaleaf, aligned with our long-term capital strategy.

Global consumer demand for cannabis is not only robust it's accelerating with the right team strategies infrastructure in place purely is uniquely positioned to lead and capture the next wave of industry growth with meaningful momentum building around federal reform and the potential for rescheduling combined with many strategic initiatives underway at <unk>.

Speaker #1: We are on track to complete the refinancing by year-end and are confident it will enhance our financial flexibility and support our growth priority. This earnings call marks my one-year anniversary as CEO, and I'm proud of the meaningful progress we've made through our return to our roots program.

I have never been more confident in our future as we enter the next phase with a stronger foundation made possible by the relentless dedication of our 5000 global employees to our entire team. Thank you with your continued focus and execution I believe purely is exceptionally well positioned to lead the next era of candidates.

Speaker #1: Over the past 12 months, we've laid critical groundwork to strengthen the business we set in guarding yields, elevating flower quality across our network, expanding gross margins, reducing costs, and fueling growth in key areas including international and New York, Ohio, and our hemp business.

With that I'll turn the call over to our CFO, Ed Kraemer Ed. Thank.

Speaker #1: While price compression remains a headwind in many of our markets driven in large part by rapid expansion of the Lucy-regulated hemp sector, which benefits from interstate commerce, low operating costs, and freedom from the 280 tax burden, we remain confident in the -term trajectory of the cannabis industry.

Thank you Boris.

Total revenue for the second quarter was $315 million.

A one 5% sequential increase compared to the first quarter and an 8% decrease compared to the same period last year.

Speaker #1: That's why we continue to invest in the five core pillars of sustainable success. People, product quality, R&D, distribution, and customer experience. Domestically, we've upgraded cultivation facilities, improved our flower quality, implemented automation, and made meaningful progress on our retail buildouts.

Strength in our International segment, Ohio, Missouri in Utah was offset by pricing pressure in Pennsylvania, and New Jersey and Illinois.

Our domestic retail metrics showed signs of stabilization in the second quarter as transactions were flat in units per transaction increased 1%, while AUR decreased 3% compared to the first quarter.

Speaker #1: Internationally, we've expanded production capacity, entered new markets, and broadened our brand portfolio. To support this next phase of growth, we've also made key additions to our leadership team at the corporate level.

By channel retail revenue was $229 million compared to $264 million in the second quarter of 2024.

A decline of 13% year over year.

Speaker #1: Recently, we welcomed four senior executives who bring deep experience from best-in-class consumer and retail organizations. Rahul Pinto joins us as president in our newly created role overseeing revenue innovation and brand, critical drivers of top-line growth.

Partially offset by strength in wholesale which increased 8% year over year to $83 million.

Representing 26% of total revenue and driven by growth in the international, Missouri and Ohio.

By geography domestic revenue declined 14% compared to the same period last year, largely driven by price compression as both flower and vape pricing was down mid teens.

Speaker #1: He brings a strong background from Albertsons, PepsiCo, and Bacardi. Scott Crawford, our new head of merchandising, comes to us from Valde Foods, Fresh Direct, and Whole Foods.

Conversely International was again the standout performer as revenue grew by 62% year over year, driven primarily by Germany and the UK.

Speaker #1: Offering deep expertise in category management. Justin Miller, now leading brand marketing, brings brand building experience from Diageo and William Branton Subs. And Helen Chen, our new head of digital, joins us from Pernopa Car, USA, PepsiCo, and McKinsey, with a mandate enhance consumer engagement and drive our digital transformation.

We continue to strategically leverage our cultivation facility in Portugal, which enables us to supply high quality flower at scale across multiple markets.

By introducing mid tier and value tier flower offerings in our portfolio, we have effectively managed to fend off price compression in our key markets, while expanding our reach across patient segments.

Speaker #1: These hires reflect our disciplined focus on leadership excellence and position us to execute with great precision, drive margin expansion, and unlock long-term shareholder value.

These results underscore the strength and resilience of our international platform as well as our ability to scale profitably and diverse regulatory environments.

Speaker #1: Global consumer demand for cannabis is not only robust, it's accelerating. With the right team, strategy, and infrastructure in place, Curaleaf is uniquely positioned to lead, and capture the next wave of industry growth.

Our second quarter adjusted gross profit was $154 million, resulting in a 49% adjusted gross margin and.

Speaker #1: With meaningful momentum building around federal reform and the potential for rescheduling, combined with many strategic initiatives underway at Curaleaf, I have never been more confident in our future as we enter the next phase with a stronger foundation made possible by the relentless dedication of our 5,000 global employees.

An increase of 120 basis points compared to the prior year period.

The primary drivers of this expansion, where continued cultivation productivity and efficiency gains.

And an increase in vertical mix, partially offset by price compression and higher promotions.

Sequentially adjusted gross margin contracted by 130 basis points, primarily due to the.

Speaker #1: To our entire team, thank you. With your continued focus and execution, I believe Curaleaf is exceptionally well positioned to lead the next era of cannabis.

Product mix dynamics from international as higher than anticipated demand for our value flower in Germany weighed on the segment's margins.

Speaker #1: With that, I'll turn the call over to our CFO, Ed Kremer. Ed?

We expect the segment's product mix and gross margin to normalize.

Speaker #2: Thank you, Boris. Total revenue for the second quarter was $350,000. A $1.5% sequential increase compared to the first quarter and an 8% decrease compared to the same period last year.

An increase in the fourth quarter as we return to selling a balanced assortment of high end mid tier and value flower.

SG&A expenses were $105 million in the second quarter, a decrease of $4 million from the prior year ago period core SG&A was $102 million also a $4 million decrease from the prior year.

Speaker #2: Strength in our international segment, Ohio, Missouri, and Utah was offset by pricing pressure in Pennsylvania, New Jersey, and Illinois. Our domestic retail metrics showed signs of stabilization in the second quarter as transactions were flat and units per transaction increased 1%, while AUR decreased 3% compared to the first quarter.

Year over year decrease in our core SG&A, primarily reflects reductions in payroll and marketing expenses as we're laser focused on.

Managing all elements of our cost structure.

Core SG&A was 32, 5% of revenue in the second quarter, a 160 basis point increase compared to the prior year due to the reduced sales base.

Speaker #2: By channel, retail revenue was $229,000,000 compared to $264,000,000 in the second quarter of 2024. A decline of 13% year over year. Partially offset by strength in wholesale, which increased 8% year over year to $83,000,000.

Second quarter net loss from continuing operations was $51 million or a loss of <unk> <unk> per share adjusted net loss from continuing operations was $48 million or a loss of <unk> <unk> per share.

Speaker #2: Representing 26% of total revenue and driven by growth in international, Missouri, and Ohio. By geography, domestic revenue declined 14% compared to the same period last year, largely driven by price compression, as both flower and vape pricing was down mid-teens.

Second quarter, adjusted EBITDA was $66 million <unk>.

A decrease of 10% compared to last year, while adjusted EBITDA margin was 21% a decrease of 40 basis points versus last year. Our international segment was 100 was a 180 basis point drag on total EBITDA margins in the quarter, primarily due to the aforementioned product mix dynamics.

Speaker #2: Conversely, international was again the standout performer as revenue grew by 62% year-over-year, driven primarily by Germany and the UK. We continue to strategically leverage our cultivation facility in Portugal.

As I previously mentioned, while international margins will fluctuate from quarter to quarter, we anticipate international margins to rebound in the back half of the year separately and as expected our hemp business weighed on our total EBITDA margins by 80 basis points as we continue to invest in marketing brand building and product development.

Speaker #2: Which enables us to supply high-quality flower at scale across multiple markets. By introducing mid-tier and value-tier flower offerings in our portfolio, we have effectively managed to fend off price compression, and our key markets while expanding our reach across patient segments.

Turning to our balance sheet and cash flow.

Speaker #2: These results underscore the strength and resilience of our international platform, as well as our ability to scale profitably in diverse regulatory environments. Our second quarter adjusted gross profit was $154,000,000.

We ended the quarter with cash and cash equivalents of $102 million.

Inventory decreased $2 million or 1% compared to the same period last year comprised of a 6% reduction in domestic inventory, partially offset by 62% growth international inventory to support robust demand.

Speaker #2: Resulting in 49% adjusted gross margin. An increase of $120 basis points compared to prior year period. The primary drivers of this expansion were continued cultivation productivity and efficiency gains, and an increase in vertical mix, partially offset by price compression and higher promotions.

Capital expenditures in the second quarter were $15 million for 2025, we continue to expect capital expenditures to be approximately $50 million with investments focused on international facility expansion at infra.

Speaker #2: Sequentially, adjusted gross margin contracted by 130 basis points, primarily due to the product mix dynamics from international, as higher than anticipated demand for our value flower in Germany weighed on the segment's margins.

Infrastructure and new store openings.

In the second quarter, we generated operating cash from continuing operations of $9 million driven by changes in working capital as we saw an increase in wholesale sales in the last month of the quarter, coupled with material reductions in our payables and accrued liabilities scouts.

Speaker #2: We expect the segment's product mix and gross margin to normalize and in the fourth quarter as we return to selling a balanced assortment of high-end, mid-tier, and value flower.

We expect a meaningful improvement in operating cash flow in the second half of the year in line with our historical pattern of stronger cash generation in the back half.

Speaker #2: SG&A expenses were $105,000,000 in the second quarter, a decrease of $4,000,000 from the prior year-ago period. Poor SG&A was $102,000,000, also a $4,000,000 decrease from the prior year.

Our outstanding debt was $561 million after the quarter end period, we opportunistically repurchased $3 $2 million of our 2026 notes at an 875% discount.

Speaker #2: The year-over-year decrease in our core SG&A primarily reflects reductions in payroll and marketing expenses, as we're laser-focused on managing all elements of our cost structure.

During the quarter, we reduced our acquisition related debt by $7 million, we will continue reducing various components of our debt throughout the year, while maintaining ample liquidity to support our operations and growth objectives.

Speaker #2: Core SG&A was $32.5% of revenue in second quarter, a $160 basis point increase compared to the prior year due to the reduced sales base.

The consumer is facing many macro headwinds and while our demand for cannabis as strong pricing pressure has not abated as.

Speaker #2: Second quarter net loss from continuing operations was $51,000,000, or a loss $0.07 per share. Adjusted net loss from continuing operations was $48,000,000, or a loss of $0.06 per share.

As such for the third quarter, we expect total revenue to be flat to up low single digits sequentially from the second quarter and with that I'll turn the call back over to the operator to open the line for questions.

Speaker #2: Second quarter adjusted EBITDA was $66,000,000. A decrease of 10% compared to last year. While adjusted EBITDA margin was 21%, a decrease of 40 basis points versus last year.

Thank you and ladies and gentlemen, we will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.

If youre using a speakerphone please pick up your handset before pressing the keys to withdraw your question. Please press Star then two we currently ask that you. Please limit yourself to one question and one follow up and you may re queue for additional questions.

Speaker #2: Our international segment was $180 basis point drag on total AEBITDA margins, in the quarter, primarily due to the aforementioned product mix dynamics. As I previously mentioned, while international margins will fluctuate from quarter to quarter, we anticipate international margins to rebound in the back half of the year.

This time, we will pause momentarily for the first question.

And our first question will come from Aaron Grey with Alliance Global Partners. Please go ahead.

Speaker #2: Separately and as expected, our hemp business weighed on our total AEBITDA margins by 80 basis points as we continue to invest in marketing, brand building, and product development.

Yeah.

Hi, good evening and thank you for the questions.

So first question for me just wanted to touch on international specifically in Germany.

Speaker #2: Turning to our balance sheet and cash flow. We ended the quarter with cash and cash equivalents of $102,000,000. Inventory decreased $2,000,000, or 1% compared to the same period last year, comprised of a 6% reduction in domestic inventory partially offset by 62% growth international inventory to support robust demand.

Color you could offer in terms of the growth youre seeing in that market and also in terms of.

We are seeing in terms of the pricing tier I believe you mentioned increase in terms of value products. There has been some conversation around some pricing pressure starting to come in Germany. So any color around those dynamics and also from the regulatory front.

Any kind of.

Risks you might see in terms of some proposals that have been made restricting telematics and another one in the market. Thank you.

Speaker #2: Capital expenditures in the second quarter were $15,000. For 2025, we continue to expect capital expenditures to be approximately $50,00,000 with investments focused on international facility expansion, IT infrastructure, and new store openings.

Thanks, Darren for that question.

And Germany has been very very strong I think we outlined those growth rates in the call.

We don't see them abating here in the third quarter, and we see them continuing into.

Speaker #2: In the second quarter, we generated operating cash from continuing operations of $9,000,000, driven by changes in working capital as we saw an increase in wholesale sales in the last month of the quarter, coupled with material reductions in payables and accrued liabilities gaps.

The fourth quarter as well, obviously, Germany is still very underpenetrated.

Around 1%, we've seen medical markets like this usually talk from.

Two 4%, 8% depending on the program.

Speaker #2: We expect a meaningful improvement in operating cash flow in the second half of the year. In line with our historical pattern of stronger cash generation in the back half.

Structure of the program. So we anticipate continued growth.

The next several years in the German market as.

Speaker #2: Our outstanding debt was $561,000,000. After the quarter-end period, we opportunistically repurchased $3.2 million of our 2026 notes at an 8.75% discount. During the quarter, we reduced our acquisition-related debt by $7,000,000.

The patient patient pool continues to expand there have been proposals by the conservative government to rain then.

The telemedicine platforms, we don't believe that that will actually happen. We think there may be some limitations put on and for instance, not being able to use.

Speaker #2: We will continue reducing various components of our debt throughout year while maintaining ample liquidity to support our operations and growth objectives. The consumer is facing many macro headwinds, and while our demand for cannabis is strong, pricing pressure has not abated.

European Union platform, but only being able to use German platforms, however that could be a violation of EU rules and so it'll be very difficult. It's too early to tell right now, where we think Germany will end up we'll know probably.

October and November, but thats not going to change the growth trajectory of the business that may change, even if there was a negative.

Speaker #2: As such, for the third quarter, we expect total revenue to be flat to up low single-digit sequentially from the second quarter. And with that, I'll turn the call back over to the operator to open the line for questions.

More negative response, when we anticipate that all of that would do would push out the growth a little bit longer because people have to go back to a medical clinics to get there.

Speaker #3: Thank you. And ladies and gentlemen, we will now begin the question and answer session. To ask a question, you may press the star then one on your touch tone phone.

Our prescriptions rather than online.

Speaker #3: If ou're using a speaker phone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. We kindly ask that you please limit yourself to one question and one follow-up, and you may re-queue for additional questions.

As I said earlier everything we're seeing we think that there'll be very minor changes and that there will be a major change to the trajectory has been obviously all the Canadian growers.

Speaker #3: And at this time, we'll pause momentarily for the first question. And our first question will come from Aaron Gray with Alliance Global Partners. Please go head.

Well as African grower to South American growers are buying to get into this market. There's a lot of product that's entering the market and so we've seen definitely some price compression.

In that market.

It's been about 35% year over year price compression, however, purely being on one of the largest operators if not the largest we have a very diversified portfolio, where we're playing in the premium segment and we're the largest player in the premium segment. We're also playing in the mid segment and the lower cycle in the market. So we're capturing all aspects of the market and we.

Speaker #4: Hi. Good evening and thank you for the questions. So first question for me, I just want to touch on international specifically in Germany. Any color you uld offer in terms of, you know, the growth you're seeing in that market and also in terms of, you know, 're seeing in terms of the pricing tier.

Speaker #4: I believe you mentioned, you ow, increase in terms value products. You know, there has been some conversation around some pricing pressure, you know, starting to come in Germany.

So far our margins have held up reasonably well and we continue to believe that those margins will actually expand into the second half of the year on year.

Speaker #4: So any color around those dynamics, and also from the regulatory front, just in terms any side of, you know, risk you might see in terms of some proposals that have been made restricting telemedicine and otherwise from the market.

Okay. That's great I really appreciate that commentary second question for me just around happens.

You speak to some of the marketing initiatives.

Speaker #4: Thank you.

Speaker #5: Thanks, Aaron, for that question. Growth in Germany has been very, very strong. I think we outlined those growth rates in the call. We don't see them abating here in a third quarter.

I plan to help drive velocity, given that you have more marketing levers available for him THC that aren't available for cannabis two.

Do you see the opportunities that were available in the summer essentially key ops to increased marketing and drive growth given the seasonality that we've seen.

Speaker #5: And we see them continuing into the fourth quarter as well. Obviously, Germany is still very under-penetrated. At less than around 1%, we've en medical markets like this easily go from to 4% to 8%.

Other categories that would probably be similar to him drinks. Thank you yes.

On the cusp of signing some very interesting marketing transactions were also on the cusp of sizing symmetric.

Speaker #5: Depending on the program and the structure of the program. So we anticipate continued growth over the next several years in the German market as the patient pool continues to expand.

<unk> sponsorship deals.

Marketing for hemp products and self service is almost the same for any other.

Drinks that are out there and so the options are very wide and very big obviously, they do cost quite a bit of money. So we want to be very careful to pick the right ones, but we are looking at some very very interesting sponsorship.

Speaker #5: There have been proposals by the conservative government to rein in the telemedicine platforms. We don't believe that that will actually happen. We think there may be some limitations put on it.

And marketing.

Cooperations here over the next several months that will be coming out with its too early to announce anything now.

We feel very good we can use all of obviously all of the social media channels and we can use also we're starting to talk to a sports teams and other things. So we do think that this product will continue to get widely accepted and as I said My view as I said many years ago, I think that the beverage will be at least 50% of the <unk>.

Canada segment, but it will take five to 10 years to get there.

Okay, great. Thanks for that detail go and jump back into the queue.

Okay.

And our next question will come from Bill Kirk with Roth Capital Partners. Please go ahead.

Hey, good afternoon everybody.

I wanted to I wanted to ask about New York.

With the OCM, saying some formulary approved sites are now Noncompliant and I guess, while we're there it looks like they pause the seed to sale implementation deadline, yes.

Yesterday, I guess, so what's the status of that program, what's the status of some of these licenses.

And the product that's been coming from California.

I think on the storefront.

These stores are affected by this.

The state has come under tremendous pressure.

Believe the state will also be sued this.

Because it's obviously a mistake that the state made.

The $250000 that Theyre offering these stores to relocate it is way too low.

And we think that they will change the legislation to allow these stores to be located where they are just going to take them a little bit of time, they have to get back into session to do it I don't think its a difficult lift and I think the lawsuits will be such that almost be forced to do so I personally believe the state will move on the issue of the stores because it was a mistake.

The state made it not the fault of any of the store owners.

But it does represent 60 stores that have I think it's almost 450 stores that are open now and the stakes and more openings on the seed to sale.

The state obviously under pressure over the issue of the stores.

And the acquisition recently of metric of bio track, which is the system that we have moved to New York and a lot of the smaller players not being ready is made a decision to postpone the seed to sale program. The seed to sale tracking system. We're obviously very upset by that.

That's something that we feel would take out the illicit product thats in the system right now we will be making a statement on that shortly.

Taking legal action with the state on that issue.

Keep there keep them to implementing the program the original implementation was.

Supposed to be finished by October middle of October, which would have made the whole system. The whole tracking system working by call. It early November which would've probably removed most of the products that are in the system now.

Or are there going to come out on timing is.

Unknown at the moment and we're going to continue the pressure on the stake in order to to implement the system. We know the state is committed to doing it many of the smaller players in the in the state just weren't ready to do it and they're using the excuse of the takeover.

Biotech by metrics to give people more time, we're going to keep their feet to the fire and make sure that they do what they promised they were going to do in the program.

Okay. Thanks.

Thank you for that and then some.

Switching switching to Turkey since it's obviously, a potentially large market could you give us a sense of how you see that market structure developing there.

From what I understand their program seems to be setting up a little bit more I guess nationalistic than other international markets is that a fair characterization and what would that mean would you have to maybe produce there or would they be accepting of product from other other countries.

Havent setup there.

The final rules, yet, but we have been involved from day one in that program.

Clearly fled.

The initiatives there, it's obviously a massive opportunity to 87 million people just to put things into perspective, Germany is 84 million people there.

They're looking at this as purely a medical market and yes, they are going to.

At least in the early part of the development of the program. They are going to require us to produce the products in Turkey, Turkey has a good climate, Turkey grows a tremendous amount of hemp today.

Have a good climate for growing cannabis.

And it'll be easy to formulate.

We're hoping that they will allow us to buy hemp products to formulate our products that we can bring in our technologies in order to do it it's much more medical in structure than the U S.

Most of the European market, but.

But it will be I believe 16 licenses have been issued and pure leaf was one of the 16 licenses at the moment I believe the only foreign issued licenses at the moment.

And our next question will come from Federico Gomez with <unk> capital markets. Please go ahead.

Hi, good evening, thanks for taking my questions.

I just wanted to go back to a comment that you made on the prepared remarks here.

You could spin out.

Your international business or your hemp business to unlock some value if we don't see at.

Federal reform Materializing soon so could you talk more about that.

How long would you be willing to wait for that regulatory change in the U S. Before you would make that decision and how do you envision that happening and how much value could be unlocked here, we can't discuss the numbers in the value I cannot really play but the.

Met with bankers and the value on our European business.

Okay.

Basically a biotech or pharma business would.

Would be substantial.

And it's definitely not recognized in any way today in the evaluation of purely.

When we make that decision I really think it will depend on.

What we get here during this calendar year.

On reform if the U S moves ahead with the reform and obviously, we're pretty close to that process and feel good about it.

Then we would keep it consolidated at this point in time.

We don't get reform in the United States of those businesses both the emphasis.

The medical business in Europe would obviously be probably better off.

Spun out from under a purely because of.

The value that's attributed to those businesses and the growth profile of those businesses and the fact that none.

None of those businesses are subject to $2 81 of our competitors has already done that in spinning out the hemp business that they have.

At the moment have decided to keep it consolidated we think the company is better together, especially if we get the critical reform that we're looking for however, if it's not there then we would work.

Work with advisors and bankers on looking at the best option for shareholders and the spin spinning out those businesses as separate entities.

Perfect. Thanks for that second question, just on Australia, I know that you launched some new products there recently.

Could you talk about that market or those products, performing and what sort of growth youre seeing.

In Australia.

We just just launched our product portfolio in Australia, it's too early to speak about the.

Individual countries there and.

And we've just broken out the overall European revenues you know so we're not going to talk about the individual countries, but I can say, though that we see a huge opportunity with over $1 billion market right now.

And we see a lot of opportunities in Australia.

We are eager to continue with the expansion we are going vertical in that vertical.

In a sense that we're growing but we are integrated and we're buying a wholesaler, we're looking at becoming a local distributor of our products in that marketplace.

Currently looking at licensing and other things so not only distributing through third parties, but also distributing ourselves and controlling our own brands and that's something that we're looking at.

On the cusp of executing on that shortly.

And our next question will come from Russell Stanley with Beacon Securities. Please go ahead.

Good afternoon, and thanks for taking my question, so maybe coming back to Cherokee and understanding I think you said the secondary market regulations are still a finalized. So wondering if you can compare what patient access is likely to look at look like compared to for example, Germany and secondly, I guess when you when you think or what.

The timeline might be to first revenue there.

We think that.

Again, it's a little bit early to tell I would say somewhere in that we would hope that.

The program will get launched somewhere around the third quarter, obviously, we've got to build our facilities, there, which we'll start doing very shortly.

Build our processing facilities and our facilities to make product.

Listen 87 million people I think it's.

It's probably.

All of these medical market starts out slow there is an education process you have to educate doctors and doctors have to work with patients.

But it's a big and candidates is a widely used product in Turkey.

So we are pretty optimistic about it.

And as I've said in my prepared comments with Turkey coming online, we now have an international Tam in markets.

That rivals that of the United States. So.

Obviously.

Early stage I Wouldnt want to.

Any make any dramatic predictions on it but if you remember, even though Germany took a while to get to a 150000 patients and then all of a sudden with some reforms.

It is now.

Over 1%.

I think it's over 1 million patients now $1 2 million patients in Germany.

As of.

This quarter and so we've gone in one year from 150000 to $1 2 billion.

A small degree of reform.

Turkey, I think we'll start out like Germany, and like the UK slow as we go through the education process and then it will accelerate over time, but it's 87 million people limited licenses.

Pretty excited about it.

Thanks for that and maybe coming back to Germany apologize if I missed it but can you elaborate on what transpired there with respect to the sales mix in Q2, and I guess more importantly, I guess what drives the rebalance later this year. Thank you.

I think the only thing that happened to purely in the sales mix was that.

Because of permitting and moving products don't forget we do grow.

We also a byproduct in Canada, we move it to two.

To Germany. We also are growing product. Unfortunately, we're moving up to sometimes when you have export.

Holdups I think some of the Canadian companies mentioned that.

More of our mid and lower tier product got permits to go into Germany versus our higher tier product and so we werent able to get as much of our higher margin product in Germany. However, we did get those permits on the last day of the quarter. So so this quarter, we have all that product now in market.

Overall, though as I have said that there's been a lot of mid and lower tier product to enter the German market and so there's been quite a bit of price pressure at that level. However.

Speaker #5: For instance, not being able to use European Union platforms, but only being able to use German platforms; however, that could be a violation of EU rules.

Premium product continues to hold very well and we're the largest operator.

Speaker #5: And so it'll be very difficult. It's too early to tell right now where we think Germany will end up. We'll know probably somewhere in October or November.

Premium segment in Germany, So we feel pretty good about where we are.

And our next question will come from Jesse <unk> with <unk> Securities. Please go ahead.

Speaker #5: But that's not going to change the growth trajectory of the business. That may change even if there was a negative or more negative response than we anticipate.

Hey, good evening, just staying on the international business can you talk about.

Speaker #5: That all that would do is push out the growth a little bit longer because people would to go back to medical clinics. To get their prescriptions rather than online.

The amount of headroom that you ultimately see in that business for driving margins, even higher just as you further integrate your supply chain globally.

Yes listen.

It's all about scale now for us.

Speaker #5: However, as I said earlier, everything we're seeing, we think that there'll very minor changes and there won't be a major change to the trajectory.

As we get to scale, obviously, our margins get better.

And.

We're expecting margin expansion in the second half of the year, we think we're going to close out the year around the 45% gross margin that's up.

Speaker #5: There have been obviously all the Canadian growers as well as African growers, South American growers are vying to get into this market. There's a lot product that's entering the market.

From about 34% last year.

Okay. That's helpful. And then just as a follow up in your prepared remarks, you talked about.

Speaker #5: And so we've seen definitely some price compression. In that market, I think it's been about 35% year over year. Price compression. However, Curaleaf being one of the largest operators if not the largest, we have a very diversified portfolio.

Some of the rationalization and describe what youre seeing in the U S market can you speak to how that landscape has evolved over the past six months.

Sorry about U S U S pricing.

Speaker #5: Where we're ing in the premium segment and we're the largest player in premium segment. We're also playing in the mid-segment and the lower segment in the market.

Our U S U S competitive environment more with respect to distressed assets in peninsula I Shouldnt training.

Speaker #5: So, we're capturing all aspects of the market. So far, our margins have held up reasonably well, and we continue to believe that those margins will actually expand into the second half of the year in Europe.

I've been saying this for some time the price pressures in the United States have nothing to do with the regulated market the price pressures in the United States has to do with two things one is <unk>.

And two is the illicit market, which there's very little enforcement, where historically has been very little enforcement with the Trump administration, we've seen a lot more enforcement in the illicit market. We believe we will continue to see that so that will put pressure on the illicit grows and the illicit products that are sold in the market and on the hemp side listen we're waiting for some.

Speaker #3: Great. That's great to hear. Really appreciate that commentary. Second question for me, just around hemp. Could you speak to some of the marketing initiatives, you know, that you have planned to p drive velocity given that you have more marketing levers available for MTHC that aren't available for cannabis?

Speaker #3: Do you see any portunities that were, you know, available this summer potentially as kiosks to increase premium and drive growth given the seasonality that we've seen in other categories that would probably be similar to hemp drinks?

Guidance from the federal government, where they're going to end up on there, but as a hedge as to the reason we went into the market.

So that we can at least.

Speaker #3: Thank you.

Speaker #5: Yeah. We are on the cusp of signing some very interesting marketing transactions. We're also on the cusp of signing some interesting sponsorship deals. Marketing for hemp products and seltzers is almost the same for any other drinks that are out there.

Produce products that are federally compliant and be able to distribute them on a national basis.

But hemp is the real cause of the problem, particularly as a synthetic products that are coming through are the real cause of what we're seeing is price compression in the regulated market the regulated market.

Speaker #5: And so the options are very wide and very big. Obviously, they do cost quite a bit of money. So we want to be very careful to pick the right ones.

Testing costs.

No.

Tax cost regulatory costs, all the types of costs you're doing there.

Speaker #5: But we are looking at some very, very esting sponsorship and marketing cooperations here over the next several months. That will be coming out with.

And the standard CPG business.

The market has very very different cost because it doesn't have a state by state.

Speaker #5: It's too early to announce anything now. But we feel very good. We can use all of obviously all of the social media channels and we can use also we're starting to talk to sports teams and other things.

Manufacturing cost doesn't have state by state growing costs. It doesn't have any of the tax cost it doesn't have any of the testing.

We have to do in the in the regulated market and so it's very difficult to compete against that product and that product is.

Speaker #5: So we do think that this product will continue to get widely accepted. And as I said, my view, I said many years ago, I ink that the beverage will be at least 50% of the cannabis segment.

Getting into almost every <unk> in every store around the country and that's what's been the real price pressure on the regulated cannabis sector. I don't believe myself that that will be allowed to continue I do believe that there will be regulation in the hemp sector and I do believe that will happen over the next 12 months.

Speaker #5: But it'll take 5 to 10 years to get there.

Speaker #3: Okay. Great. Thanks, Artista. I'll go ahead and jump to the queue. And our next question will come from Bill Kirk with Roth Capital Partners.

I don't believe they will shut it down which I think is the right thing, but I do think that there'll be regulation of hemp products, particularly synthetic products and particularly flower products today.

Speaker #3: Please go head.

Speaker #6: Hey. Good afternoon, everybody. I wanted to k about New York with the OCM saying some formerly approved sites are now non-compliant. And I guess while we're there, it oks like they paused the seed-to-sale implementation deadlines yesterday, I guess.

Our claiming are compliant, but really arent compliant.

And so I think we will get regulation and I do think we'll get federal reform in the regular and the regulated part of the business and so I think things will hopefully start getting better in terms of price compression in the regulated market.

Speaker #6: So what's the status of that program? What's the status of some of licenses? And the products that's been coming from California?

In the meantime, it's forced all of us to get better at what we're doing and we continue to get better.

Speaker #5: Yeah. I ink on the storefront, you know, 60 stores are affected by this. The state has come under a tremendous amount of pressure. We believe the state will also be sued over this because it's obviously a mistake that the state made and the $250,000 that they're fering these stores to relocate is way too low.

And as a reminder, if you would like to ask a question. Please press Star then one our next question comes from Pablo <unk> with <unk> Associates. Please go ahead.

Good evening, everyone. This is muhammed on for Pablo.

Moving back to Germany, do you have an estimate for <unk> market share in Germany, and can you remind us of your plants about 45, 45% stake that you do not own a $4 1 million.

Speaker #5: I personally ink that they will change the legislation to allow these stores to be located where they are. It's just going to take them a little bit of time.

Speaker #5: They have to get back into session to do it. I don't think it's a difficult lift. And I think the lawsuits will be such that they'll almost be forced to do it.

We will be buying in that space that we have a both a put and call option on that so that stake will be bought as we bought.

Speaker #5: So I personally believe the state will move on the issue of the stores because it was a mistake that the state made and not the fault of any of the store owners.

The.

The stake in <unk>.

International business, which represented 31% earlier this year will be buying the <unk> stake as well.

Speaker #5: But it does represent 60 stores out of, you know, I think it's almost 450 stores that are open now in the state. And more opening.

First quarter of next year.

And sorry, what was the other question on Terminix our market share.

Speaker #5: On the seed-to-sale, you ow, the state obviously under pressure over the issue of the stores. And the acquisition recently of Metric of BioTrack, which is the system that's being implemented New York and a lot of the smaller players not being ready.

Very difficult to tell it's not public information there, but we recommend a market share of somewhere between 15% to 20%.

Thank you second question is about Florida culinary that Florida will have a bell recreational sales by November 2026.

Speaker #5: Has made a ision to postpone the seed-to-sale program. The seed-to-sale tracking system. We're obviously very upset by that. It's something that's something that we feel would take out the illicit product that's in the system right now.

Listen I think that.

Tim and truly if we're doing a gallon effort in.

Getting the signatures and.

We also know that.

Midterm elections are better for cannabis reform, we had this very similar problem, Arizona, where we sell on the first round.

Speaker #5: We will be making a statement on that shortly and probably take legal action with the state on that issue in order to keep them implementing the program.

We also had a 60% hurdle thresholds.

<unk> threshold.

We were able to get a test in the midterm elections two years later, so given that I'm <unk>.

Speaker #5: The original implementation was supposed to be finished by October middle of October, which would have made the whole system and the whole tracking system working by call it early November, which would have probably removed most of the illicit products that are in the system now.

Actually optimistic we'll be able to get it done as long as we can get all the signatures and get it on about but I think truly from.

Rivers are better to ask that question. She is on top of that issue and also that issue completely.

Speaker #5: Where are they going to come out on timing is unknown at the moment. And we're going to continue the pressure on the state in order to implement the system.

And this will conclude our question and answer session I would like to turn the conference back over to Ryan for any closing remarks.

Speaker #5: We know the state's committed doing it. Many of the smaller players in the state just weren't ready to do it. And they're using the excuse of the takeover of BioTrack by Metric to give people more time.

Thanks, everyone for joining us today, we will catch up again in 90 days.

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Speaker #5: We're going to keep their feet to the fire and make re that they do what they promised they were going to do in the program.

Speaker #6: Okay. Thank you for that. And then switching to Turkey since it's obviously a potentially large market. Could you give us a sense of how you see that market structure developing there?

Speaker #6: From what I understand, their program seems to be setting up a little bit more I guess nationalistic than other international markets. Is that a fair characterization?

Speaker #6: And what would that mean? Would you have to maybe produce there or would they be accepting a product from other countries?

Speaker #5: They haven't set up their final rules yet. But we've been involved from day one in that program. Curaleaf led the initiative there. It's viously a massive opportunity.

Speaker #5: $87 million people just to put things into perspective, Germany's $84 million people. They're oking at this as purely a medical market. Yes, they are going to at least in the early part of the development of the program, they are going to require to produce the products in Turkey.

Speaker #5: Turkey has a good climate. Turkey grows a tremendous ount of hemp today. They have a good climate for growing cannabis. And it'll be easy to formulate.

Speaker #5: You know, we're hoping that they'll allow us to buy hemp products to formulate our products so we can bring in our technologies in order to it.

Speaker #5: It's much more medical and structured than the US. As is most of the European market. But it will be I believe 60 licenses have been issued and Curaleaf was one the 16 licenses.

Speaker #5: And at the moment, I believe the only foreign-issued license at the moment.

Speaker #3: And our next question will come from Federico Gomez with ATB Capital Markets. Please go head.

Speaker #7: Hi. Good evening. Thanks for taking my estions. Just want to go back to a comment that you made on the prepared marks here. That you could spin out your international business or our hemp business to unlock some value if we don't see federal reform materializing soon.

Speaker #7: So could you talk more about that? You know, how long would you be willing here to wait for that regulatory change in the US before you would make that decision?

Speaker #7: And how do you envision that happening and how much value could be unlocked here? Thanks.

Speaker #5: We can't discuss the numbers and the value. I can only say that the, you know, we've met with bankers and the value on our European business is as a basically a biotech or a pharma business would be substantial.

Speaker #5: And it's itely not recognized in any way today in the valuation of Curaleaf. When we make that decision, I really think will depend on what we get here during this calendar year on reform.

Speaker #5: If the US moves ahead with the reform and obviously we're pretty close to that process and feel good about it, then we would keep it consolidated at this point in time.

Speaker #5: If we don't get reform in the United States, those businesses, both the hemp business and the medical business in Europe, would obviously be probably better off spun out from under Curaleaf because of the value that's attributed to those businesses and the growth profile of those businesses and the fact that they none of those businesses are subject to 280E.

Speaker #5: One of our competitors has already done that and spinning out the hemp business that they have. We at the moment have decided to keep it consolidated.

Speaker #5: We think the company's better together. Especially if we get the critical reform that we're looking for. However, if it's not there, then we would, you know, work with advisors and bankers on looking at the best option for shareholders in the spinning out those businesses as separate entities.

Speaker #6: Perfect. Thanks for that. Second question just on Australia. I know that you launched some new products there recently. Could you talk that market? You know, how are those products performing and what sort of growth you're eing in Australia?

Speaker #5: I an, we just launched our product portfolio in Australia. It's too early to speak about the individual countries there. And we've broken out the overall European revenues, you ow.

Speaker #5: So we're not going to talk about individual countries. I can say, though, that we see a huge opportunity. It's at over a billion dollar market right .

Speaker #5: And we see lot of opportunity in Australia. And our eager to continue the expansion, we are going vertical, not vertical, not in a sense that we're growing, but we are integrating we're buying wholesaler we're looking at becoming a local distributor of our ts in that marketplace.

Speaker #5: So we're currently looking at licensing and other things. So not only distributing through third parties, but also distributing ourselves and controlling our own brands.

Speaker #5: And that's something that we're looking at. And on the cusp of executing on that shortly.

Speaker #3: And our next question will come from Russell Stanley with Beacon Securities. Please go head.

Speaker #8: Good afternoon. Thanks for taking the question. So maybe coming back to Turkey and understanding, I think ou said the secondary market regulations are still being finalized.

Speaker #8: But wondering if you can compare what patient access is likely to look at look like compared to, for example, Germany and secondly, I guess when you think or what the timeline might be to first revenue there.

Speaker #5: We think that it's, in, it's a little bit early to tell. I would say somewhere in the we would hope that the program would get launched somewhere around the third quarter.

Speaker #5: Obviously, we've got to build our facilities there, which will start doing very shortly. In order to build our processing facilities and our facilities to make product.

Speaker #5: Listen, $87 million people, I think it's probably, you ow, as all these medical markets start to flow, there's an education process. You have to educate doctors.

Speaker #5: And then doctors have to work with patients. But it's a big and cannabis is a widely used product in Turkey. And so we are pretty optimistic about it.

Speaker #5: And as I said in my prepared comments, you know, with Turkey coming online, we now have an international TAM and markets that we're in that rivals have the United States.

Speaker #5: So, you know, obviously, early stage, I wouldn't want to, you ow, any make any dramatic predictions on it. But if you remember, you know, Germany took a while to get to 150,000 patients and then all of a sudden with some reforms, you ow, it's now, you ow, over 1%.

Speaker #5: And I think it's over a million patients now. 1.2 million patients in Germany as of this quarter. And so, you know, we've one in one year from 150,000 to, you know, 1.2 million, with a small degree of reform.

Speaker #5: Turkey, I think, will start out like Germany and like the UK, slow as we go through the education process. And then it will accelerate over time.

Speaker #5: But it's $87 million people, limited licenses, we're pretty excited about it.

Speaker #6: Thanks for that. And maybe coming back to Germany. Apologies if missed it. But can you elaborate on what transpired there with respect to the sales mix in Q2?

Speaker #6: And I guess more importantly, I guess what drives the rebalance later this year? Thank you.

Speaker #5: I think that the only thing that happened to Curaleaf in the sales mix was that, you know, because of permitting and moving products, don't get, we do grow and we also buy products in Canada.

Speaker #5: We move it to Germany. We also are growing products in Portugal, moving it. So sometimes when you have, you know, export holdups, I think that some of the Canadian companies mentioned it.

Speaker #5: More of our mid and lower tier product got permits to go into Germany versus our higher tier product. And so, you know, we weren't able to get as much of our higher margin product into Germany.

Speaker #5: However, we did get those permits on the last day of the quarter. So this quarter, we have all that product now in market. And overall, though, as I said, that there's been a lot of mid and lower tier product that's entered the German market recently.

Speaker #5: And so there's been quite a bit of price pressure at that level. However, the premium product continues to hold very well. And we're the largest operator in the premium segment in Germany.

Speaker #5: So still pretty good about where we are.

Speaker #3: And our next estion will come from Jesse Pytlak with Cormark Securities. Please go head.

Speaker #9: Hey. Good evening. Just staying on the international business, can you talk about the amount of headroom that you ultimately see in that business for driving margins even higher just as you further integrate our supply chain globally?

Speaker #5: Yeah. Listen, it's all about scale now for us. As we get to scale, obviously our margins get better. And, you know, we're ecting margin expansion the second half of the year.

Speaker #5: We think 're going to close out the year around a 45% gross margin. That's up, you know, from about 34% last year.

Speaker #3: That's helpful. And then just as a follow-up, and you prepared on March, you talked about some of the rationalization and distress that you're seeing in the market.

Speaker #3: Can you speak to how that landscape's volved over the past six months?

Speaker #5: Sorry. About US pricing?

Speaker #3: The US competitive environment more with respect to distressed assets and the ed for.

Speaker #5: Yeah. I've been trained this, yeah. Thanks. I've been saying this for some time. The price pressures in the United States have nothing to do with the regulated market.

Speaker #5: The price pressures in the States have to do with two things. One is hemp. And two is the illicit market, which there's very little enforcement.

Speaker #5: Where historically, it's been very little enforcement. With the Trump administration, we've seen a lot more enforcement in the illicit market. We believe we'll continue to see that.

Speaker #5: So that will put pressure on the illicit growth and the illicit products that are sold in the ket. And on the hemp side, listen, we're waiting for some guidance from the federal government where they're going to up on there.

Speaker #5: But as a hedge, it's the reason we went into the hemp market. So that we can at least produce products that are federally compliant and be able to distribute them on a national basis.

Speaker #5: But hemp is the real cause of the problem, particularly the synthetic products that are coming through hemp. Are the real cause of at we're seeing as price compression in the regulated market.

Speaker #5: The regulated market has, you know, testing costs, you know, tax costs, regulatory costs, all the types costs you're ing in the standard CPG business.

Speaker #5: The, you know, the hemp market has very, very different costs because it doesn't have, you know, state by state manufacturing costs. It doesn't have state by state growing costs.

Speaker #5: It doesn't have any of the tax costs. It doesn't have any of the testing. We have to do in the regulated market. And so it's very difficult to compete against that product.

Speaker #5: And that product is permeating into almost every bodega and every store around the country. And that's what's been the real price pressure on the regulated cannabis sector.

Speaker #5: I don't believe myself that that will be allowed continue. I do believe that there will be regulation in the hemp sector. And I do believe that will happen over the next 12 months.

Speaker #5: I don't believe they'll shut it down, which I think is the right thing. But do think that there'll be regulation of hemp products, particularly synthetic products.

Speaker #5: And particularly flower products that today people are claiming are compliant but really aren't compliant. And so I think that we will get regulation. And I do think we'll get federal reform in the regulated part of the business.

Speaker #5: And so I think things will hopefully start getting better in terms of price compression in regulated market. In the meantime, it's forced all of us to get better at what 're doing.

Speaker #5: And we continue to get better at it.

Speaker #3: And as a reminder, if you would like to ask a question, please press star then one. Our next question comes from Pablo Zunic with Zunic and Associates.

Speaker #3: Please go head.

Speaker #10: Yeah. Good evening, everyone. This is Mohammed on for Pablo. Going back to Germany, do you have an estimate of 420s market share in Germany?

Speaker #10: And can you remind us of your plans to buy the 45% stake that you do not own of 420?

Speaker #5: We will be buying that stake. We have both a put and call option on that. So that stake will be bought as we bought the stake in our international business, which represents 31% earlier this year.

Speaker #5: We'll be buying the 420 stake as well. In the first quarter of next year. And sorry, what was the other question on Germany? Oh, our market share.

Speaker #5: You know, it's very difficult to tell. It's not public information there. But we reckon our ket share is somewhere between 50 and 20 percent.

Speaker #3: Thank you, and my second question is about Florida. How confident are you that Florida will have a ballot on recreational sales by November 2026?

Speaker #5: Listen, I think that Kim and truly for doing a gallant effort in getting the signatures. And we also know that midterm elections are better for cannabis reform.

Speaker #5: We had this very similar problem in Arizona where we failed on the first round. And we also had a 60% hurdle. Threshold. And we were able get it passed in the midterm elections two years later.

Speaker #5: So given that, I'm cautiously optimistic we'll be able to get it done as long as we can get all the signatures and it on the ballot.

Speaker #5: But I think truly and Kim Rivers are better to ask that question. She's on top of that issue and owns that issue completely.

Speaker #3: And this will conclude our question and answer session. I'd like to turn the conference back over to Camilo Lyon for any closing remarks.

Speaker #11: Thanks, everyone, joining us today. We will catch up again in 90 days.