Q2 2025 Trulieve Cannabis Corp Earnings Call

Your host for today's conference Christine Hersey, Vice President of Investor Relations for truly you may begin.

Thank you good morning, and thank you for joining us during today's call Kim Rivers, Chief Executive Officer, and Ryan Blust interim Chief Financial Officer will deliver prepared remarks on our financial performance and outlook for true leaf following their prepared remarks, we will open the call to question.

This morning, we reported second quarter 2025 results a copy of our earnings press release, and Powerpoint presentation may be found on the Investor Relations section of our website Www Dot Trulia dot com.

An archived version of today's conference call will be available on our website later today.

As a reminder statements made during this call that are not historical fact constitute forward looking statements and these statements are subject to risks uncertainties and other factors that could cause our actual results to differ materially from our historical results or from our forecast, including the risks and uncertainties described.

In the Companys filings with the Securities and Exchange Commission, including item one a risk factors of the company's most recent annual report on Form 10-K, as well as our periodic quarterly filings.

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

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

These measures should not be considered in isolation or as a substitute for true lease financial results prepared in accordance with GAAP.

A reconciliation of these non-GAAP measures to the most directly comparable GAAP measures is available in our earnings press release that is an exhibit to our current report on form 8-K that we furnished to the SEC today and can be found in the Investor Relations section of our website.

Lastly at times during our prepared remarks or responses to your questions. We may offer metrics to provide greater insight into the dynamics of our business or our financial results.

Christine Hersey: I won't be the young fire talking.

Keith: Good morning, everyone, and welcome to the Trulieve Cannabis Corp.'s second quarter 2025 financial results conference call. My name is Keith, and I will be your conference operator today. As a reminder, this conference is being recorded. I would now like to introduce your host for today's conference, Christine Hersey, Vice President of Investor Relations for Trulieve. You may begin.

Please be advised that we may or may not continue to provide these additional details in the future.

I'll now turn the call over to our CEO Kim rivers. Thank.

Thank you Christine good morning, everyone and thank you for joining US today, we are pleased to share our second quarter results that demonstrate momentum in our core business.

Our team continues to deliver stellar performance underpinned by strong margins and cash flow, while our core business remains strong we are optimistic on the prospects for a meaningful federal cannabis reform a central part of Trillions mission is to reduce stigma and expand access to cannabis we are pushing tirelessly for change and we will continue.

To lead from the front.

Speaker #2: Thank ou. Good morning and thank you for joining us. During today's call, Kim Rivers, Chief Executive Officer and Ryan Blust, Interim Chief Financial Officer, will deliver prepared remarks on the financial performance and outlook for TruLieve.

Christine Hersey: Thank you. Good morning, and thank you for joining us. During today's call, Kim Rivers, Chief Executive Officer, and Ryan Blust, Interim Chief Financial Officer, will deliver prepared remarks on the financial performance and outlook for Trulieve. Following the prepared remarks, we will open the call to questions. This morning, we reported second quarter 2025 results. A copy of our earnings press release and PowerPoint presentation may be found on the Investor Relations section of our website, www.trulieve.com. An archived version of today's conference call will be available on our website later today. As a reminder, statements made during this call that are not historical facts constitute forward-looking statements.

Moving now to our results second quarter revenue of $302 million was comparable to last year and up 1% sequentially gross margin at 61% improved by 1% compared to last year, representing industry, leading margin driven by scaled operations and disciplined promotional activity adjusted EBITDA of one one.

Speaker #2: Following the prepared remarks, we will open the call to questions. This morning, we reported second quarter 2025 results. A copy our earnings press release and PowerPoint presentation may be found on the Investor Relations section of our website www.trulieve.com.

<unk> hundred $11 million or 37% margin increased by 2% versus last year attributable to higher gross margin and strict expense control.

Operating cash flow of $86 million contributed to cash of $401 million at quarter end.

Speaker #2: An archived version of today's conference call will be available on our website later today. As a reminder, statements made during this call that are not historical fact constitute forward-looking statements and these statements are subject to risks, uncertainties, and other factors that could cause our actual results to differ materially from our historical results or from our forecast, including the risks and uncertainties described in the company's filings with the Securities and Exchange Commission, including item 1A, risk factors of the company's most recent annual report on Form 10K, as well as our periodic quarterly filings.

Quarter results underscore a strong demand for cannabis retail traffic and units sold increased by 8% and 9% year over year offset by pricing compression and loyalty point redemption.

Christine Hersey: These statements are subject to risks, uncertainties, and other factors that could cause our actual results to differ materially from our historical results or from our forecast, including the risks and uncertainties described in the company's filings with the Securities and Exchange Commission, including item 1A risk factors of the company's most recent annual report on Form 10-K, as well as our periodic quarterly filings. Although the company may voluntarily do so from time to time, it undertakes no commitment to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. During the call, management will also discuss certain financial measures that are not calculated in accordance with the United States' Generally Accepted Accounting Principles, or GAAP. We generally refer to these as non-GAAP financial measures.

Months ago, where we recognized a shift in consumer preferences towards value and mid tier products broadly in line with national economic conditions. We quickly adapted production in retail to increase availability of approachable products in order to meet customers, where they are these changes resulted in market share growth in Arizona and Florida.

Speaker #2: Although the company may voluntarily do so from time to time, it undertakes no commitment to update or revise these forward-looking statements whether as a result of new information, future events, or otherwise, except as required by law.

And higher truly branded product sales in Pennsylvania.

Second quarter customer trends continued into July with traffic and units up 7% versus last year during the southern pen holiday and with value products comprising the largest segment.

Speaker #2: During the call, management will also discuss certain financial measures that are not calculated in accordance with the United States Generally Accepted Accounting Principles or GAAP.

Our recipe for success in retail remains unchanged, we are laser focused on delighting customers with high quality products and exceptional service.

Wholesale revenue grew 27% compared to last year, demonstrating solid execution and the strength of our brands. We are thrilled with the progress. Our team has made with expanded in new relationships, particularly in Maryland and Pennsylvania.

Speaker #2: We generally refer to these as non-GAAP financial measures. These measures should not be considered in isolation or as a substitute for TruLieve's cial results prepared in accordance with GAAP.

Christine Hersey: These measures should not be considered in isolation or as a substitute for Trulieve's financial results prepared in accordance with GAAP. A reconciliation of these non-GAAP measures to the most directly comparable GAAP measures is available in our earnings press release that is an exhibit to our current report on Form 8-K that we furnished to the SEC today and can be found in the Investor Relations section of our website. Lastly, at times during our prepared remarks or responses to your questions, we may offer metrics to provide greater insight into the dynamics of our business or our financial results. Please be advised that we may or may not continue to provide these additional details in the future. I'll now turn the call over to our CEO, Kim Rivers.

Speaker #2: A reconciliation of these non-GAAP measures to the most directly comparable GAAP asures is available in our earnings press release that is an exhibit to our current report on Form 8K that we furnished to the SEC today and can be found in the Investor Relations section of our website.

In Ohio, our affiliated partner continued to ramp production, while increasing wholesale revenue.

We are expanding our wholesale business as conditions permit well with careful monitoring of the credit quality of customers and industry developments.

Turning now to our strategic objectives for this year. We previously outlined four key areas of focus reform branded products distribution and customers. We have made demonstrable progress and we will remain focused on these areas in the second half of the year.

Speaker #2: Lastly, at times during our prepared remarks or responses to your questions, we may offer metrics to provide greater insight into the dynamics of our business or our financial results.

Speaker #2: Please be advised that we may or may not continue to provide these additional details in the future. I'll now turn the call over to our CEO, Kim Rivers.

I want to address cannabis performed first given the recent excitement around this topic. The drumbeat for change is growing louder as Americans of all ages and political parties overwhelmingly support reform the vast majority of voters support medical cannabis and recognize the inconsistency and keeping cannabis as a scheduled one drug alongside heroine.

Speaker #3: Thank you, Christine. Good morning, everyone, and thank you for joining us today. We are pleased to share second quarter results that demonstrate momentum in our core business.

Kim Rivers: Thank you, Christine. Good morning, everyone, and thank you for joining us today. We are pleased to share second quarter results that demonstrate momentum in our core business. Our team continues to deliver stellar performance underpinned by strong margins and cash flow. While our core business remains strong, we are optimistic on the prospects for meaningful federal cannabis reform. A central part of Trulieve's mission is to reduce stigma and expand access to cannabis. We are pushing tirelessly for change and will continue to lead from the front. Moving now to our results, second quarter revenue of $302 million was comparable to last year and up 1% sequentially. Growth margin at 61% improved by 1% compared to last year, representing industry-leading margin driven by scaled operations and disciplined promotional activity.

Speaker #3: Our team continues to deliver stellar performance, underpinned by strong margins and cash flow. While our core business remains strong, we are optimistic on the prospects for meaningful federal cannabis reform.

And synthetics button all the Trump administration has an opportunity opportunity to and ask the first real meaningful cannabis reform in over 50 years by rescheduling cannabis to schedule III.

Speaker #3: A central part of TruLieve's mission is to reduce stigma and expand access to cannabis. We are pushing tirelessly for change and will continue to lead from the front.

This would represent an acknowledgment of the medical value of cannabis and open the door for scientific discovery and further delineation of the medicinal properties of the plan.

Speaker #3: Moving now to our results. Second quarter revenue of $302 million was comparable to last year and up 1% sequentially. Gross margin at 61% improved by 1% compared to last year, representing industry-leading margin driven by scaled operations and disciplined promotional activity.

Rescheduling would not legalized cannabis, but it would remove the punitive tax burden on state level operators, enabling greater conversion from the illicit market.

Long side rescheduling safer banking enjoys strong bipartisan support safer banking would allow illegal operators broader access to basic banking services, reducing the amount of cash transactions and providing greater safety for employees at dispensaries.

Speaker #3: Adjusted EBITDA of $111 million or $37% margin increased by 2% versus last year, attributable to high-growth margin and strict expense control. Operating cash flow of $86 million contributed to cash of $401 million at quarter-end.

Kim Rivers: Adjusted EBITDA of $111 million, or 37% margin, increased by 2% versus last year, attributable to high-risk margin and strict expense control. Operating cash flow of $86 million contributed to cash of $401 million at quarter end. Second quarter results underscore strong demand for cannabis. Retail traffic and units sold increased by 8% and 9% year over year, offset by pricing compression and loyalty point redemption. Several months ago, we recognized a shift in consumer preferences towards value and mid-tier products, broadly in line with national economic conditions. We quickly adapted production and retail to increase availability of approachable products in order to meet customers where they are. These changes resulted in market share growth in Arizona and Florida and higher Trulieve-branded product sales in Pennsylvania.

Industry workers would have normalized access to banking services, including deposit accounts and mortgages.

Recently introduced stages Ciudadano legislation would directly address the gap between federal and state law by removing cannabis from the controlled substances Act and allowing states the autonomy to regulate their own cannabis programs.

Speaker #3: Second quarter results underscored strong demand for cannabis. Retail traffic and units sold increased by 8% and 9% year-over-year. Offset by price and compression and loyalty point redemption.

It's really been actively engaged in federal reform efforts working independently and alongside industry peers to drive change.

Speaker #3: Several months ago, we recognized a shift in consumer preferences towards value and mid-tier products, broadly aligned with national economic conditions. We quickly adapted production and retail to increase availability of approachable products in order to meet customers where they are.

In our home state of Florida. This Martin say, Florida campaign for adult personal use of marijuana has collected over 900000 raw signatures.

Through July over 660000 signatures have been validated representing 75% of the total required by February 2026 for a valid inclusion.

Speaker #3: These changes resulted in market share growth in Arizona and Florida and higher TruLieve-branded product sales in Pennsylvania. Second quarter customer trends continued into July, with traffic and units up 7% versus last year during the 7/10 holiday, and with value products comprising the largest segment.

We expect Florida Supreme Court review of about language in summary will be concluded as required by April one of next year.

Kim Rivers: Second quarter customer trends continued into July, with traffic and units up 7% versus last year during the 7/10 holiday and with value products comprising the largest segment. Our recipe for success in retail remains unchanged. We are laser-focused on delighting customers with high-quality products and exceptional service. Wholesale revenue grew 27% compared to last year, demonstrating solid execution and the strength of our brand. We are thrilled with the progress our team has made with expanded and new relationships, particularly in Maryland and Pennsylvania. In Ohio, our affiliated partner continued to ramp production while increasing wholesale revenue. We are expanding our wholesale business as conditions permit, with careful monitoring of the credit quality of customers and industry developments. Turning now to our strategic objectives for this year. We previously outlined four key areas of focus: reform, branded products, distribution, and customers.

The language for the 2026 ballot includes explicit provisions designed to protect children ban smoking in public out additional operator licenses and clear the way for legislative approval of homegrown.

Speaker #3: Our recipe for success in retail remains unchanged. We are laser-focused on delighting customers with high-quality products and exceptional service. Wholesale revenue grew 27% compared to last year, demonstrating solid execution and the strength of our brands.

To date truly has been the primary financial contributor to this effort leading the charge for change in Florida, We firmly believe Florida can set the standard for successful state cannabis programs striking an appropriate balance between individual freedom and responsible consumption.

Speaker #3: We are thrilled with the progress our team has made with expanded and new relationships, particularly in Maryland and Pennsylvania. In Ohio, our affiliated partner continued to ramp production while increasing wholesale revenue.

With over 23 million residents and 143 million tourists visits per year, Florida could be the strongest market in the U S and.

Speaker #3: We are expanding our wholesale business as conditions permit, with careful monitoring of the credit quality of customers and industry developments. Turning now to our strategic objectives for this year.

In Pennsylvania support for adult use remains high and lawmakers continue to work on legislation.

Speaker #3: We previously outlined four key areas of focus. Reform, branded products, distribution, and customers. We have made demonstrable progress and will remain focused on these areas in the second half of the year.

Adult use is increasingly viewed as a potential source for meaningful tax revenue and an inevitable step given the adoption by virtually all neighboring states.

Kim Rivers: We have made demonstrable progress and will remain focused on these areas in the second half of the year. I want to address cannabis reform first, given the recent excitement around this topic. The drumbeat for change is growing louder as Americans of all ages and political parties overwhelmingly support reform. The vast majority of voters support medical cannabis and recognize the inconsistency in keeping cannabis as a Schedule I drug alongside heroin and synthetic fentanyl. The Trump administration has an opportunity to enact the first real meaningful cannabis reform in over 50 years by rescheduling cannabis to Schedule III. This would represent an acknowledgment of the medical value of cannabis and open the door for scientific discovery and further delineation of the medicinal properties of the plant.

Adult use has launched in Pennsylvania to leave us well positioned given our established retail footprint strong brands in retail and wholesale and scaled production capabilities. We believe that adult use will be enacted in Pennsylvania in the near future.

Speaker #3: I want to address cannabis reform first, given the recent excitement around this topic. The Drumbeat for Change is growing louder as Americans of all ages and political parties overwhelmingly support reform.

Really we'll continue to push for reform allocating time and resources to highlight the need for action, we remain confident that real change can happen.

Speaker #3: The vast majority of voters support medical cannabis and recognize the inconsistency in keeping cannabis as a Schedule 1 drug alongside heroin and synthetic fentanyl.

Advocacy efforts are ongoing our team remains focused on three operational areas branded products distribution and customers, providing customers consistent access to high quality products at the right price isn't a central part of our strategy to build lasting brand equity with over 4 million square feet of production capacity our scale.

Speaker #3: The Trump administration has an opportunity to enact the first real meaningful cannabis reform in over 50 years, by rescheduling cannabis to Schedule 3. This would represent an knowledgment of the medical value of cannabis and open the door for scientific discovery and further delineation of the medicinal properties of the plant.

Platform as a meaningful competitive advantage our production team continues to outperform driving costs lower while consistently delivering great products high quality helps differentiate our products in an increasingly competitive landscape.

Speaker #3: Rescheduling would not legalize cannabis, but it would remove the punitive tax burden on state legal operators, enabling greater conversion from the illicit market. Alongside rescheduling, safer banking enjoys strong bipartisan support.

Kim Rivers: Rescheduling would not legalize cannabis, but it would remove the punitive tax burden on state legal operators, enabling greater conversion from the illicit markets. Alongside rescheduling, safer banking enjoys strong bipartisan support. Safer banking would allow legal operators broader access to basic banking services, reducing the amount of cash transactions and providing greater safety for employees at dispensaries. Industry workers would have normalized access to banking services, including deposit accounts and mortgages. Recently introduced state 2.0 legislation would directly address the gap between federal and state law by removing cannabis from the Controlled Substances Act and allowing states the autonomy to regulate their own cannabis programs. Trulieve is actively engaged in federal reform efforts, working independently and alongside industry peers to drive change. In our home state of Florida, the Smart and Safe Florida Campaign for Adult Personal Use of Marijuana has collected over 900,000 raw signatures.

Really manufacturers themselves a combination of in house and partner brands, bringing customers a wide assortment of products and form factors during the second quarter, we sold over $12 5 million branded product units truly brand's modern power enrolled one continue to gain momentum representing 50% of the branded products sold in the second quarter.

Speaker #3: Safer banking would allow legal operators broader access to basic banking services, reducing the amount of cash transactions and providing greater safety for employees at dispensaries.

Speaker #3: Industry workers would have normalized access to banking services, including deposit accounts and mortgages. Recently introduced states 2.0 legislation would directly address the gap between federal and state law by removing cannabis from the controlled substances act and allowing states the autonomy to regulate their own cannabis programs.

Sure.

According to data from Hoodie analytics in Pennsylvania, Modern power was the number one or number two flower brand throughout the first half of this year, we are launching new monarch tower, and rowen products, including all in one beeps and concentrates in several markets.

Speaker #3: TruLieve is actively engaged in federal reform efforts, working independently and alongside industry peers to drive change. In our home state of Florida, the Smart and Safe Florida campaign for adult personal use of marijuana has collected over 900,000 raw signatures.

Last month, we launched purpose led brand redemption cannabis in West Virginia building upon our existing relationship with redemption in Maryland, and Pennsylvania redemption cannabis was founded by Ryan base or who served time in federal prison for cannabis related charges.

Speaker #3: Through July, over 660 thousand signatures have been validated, representing 75% of the total required by February 2026 for ballot inclusion. We expect Florida Supreme Court review of the ballot language and summary will be concluded as required by April 1 of next year.

Kim Rivers: Through July, over 660,000 signatures have been validated, representing 75% of the total required by February 2026 for ballot inclusion. We expect Florida Supreme Court review of the ballot language and summary will be concluded as required by April 1 of next year. The language for the 2026 ballot includes explicit provisions designed to protect children, ban smoking in public, add additional operator licenses, and clear the way for legislative approval of homegrow. To date, Trulieve has been the primary financial contributor to this effort, leading the charge for change in Florida. We firmly believe Florida can set the standard for successful state cannabis programs, striking an appropriate balance between individual freedom and responsible consumption. With over 23 million residents and 143 million tourist visits per year, Florida could be the strongest market in the U.S.

Portion of every sale is reinvested by redemption to support individuals and families impacted by cannabis prohibition laws. We are proud to partner with purpose led brands like redemption cannabis turning now to the beverage category in February we launched onward align a farmville compliant THC beverages. The initial pilot included five Cox.

Speaker #3: The language for the 2026 ballot includes explicit provisions designed to protect children, ban smoking in public, add additional operator licenses, and clear the way for legislative approval of homegrow.

Sale alternatives formulated with CBD and THC feedback from customers and critics alike has been overwhelmingly positive with cases sold in the second quarter of almost 300% compared to the pilot launch all five original on Merck flavors recently received metals from the civil words in international spirits competition or the.

Speaker #3: To date, TruLieve has been the primary financial contributor to this effort, leading the charge for change in Florida. We firmly believe Florida can set the standard for successful state cannabis programs striking an appropriate balance between individual freedom and responsible consumption.

It's done by consumers, we are thrilled to win such recognition in this exciting new category building. Upon the success next month, we're launching four new 10 milligram onward flavors very smash cosmopolitan lemon drop Martini and Paloma.

Speaker #3: With over 23 million residents and 143 million tourist visits per year, Florida could be the strongest market in the US. In Pennsylvania, support for adult use remains high and lawmakers continue to work on legislation.

Kim Rivers: In Pennsylvania, support for adult use remains high, and lawmakers continue to work on legislation. Adult use is increasingly viewed as a potential source for meaningful tax revenue and an inevitable step given the adoption by virtually all neighboring states. If adult use is launched in Pennsylvania, Trulieve is well-positioned given our established retail footprint, strong brands in retail and wholesale, and scaled production capabilities. We believe that adult use will be enacted in Pennsylvania in the near future. Trulieve will continue to push for reform, allocating time and resources to highlight the need for action. We remain confident that real change can happen. While advocacy efforts are ongoing, our team remains focused on three operational areas: branded products, distribution, and customers. Providing customers consistent access to high-quality products at the right price is an essential part of our strategy to build lasting brand equity.

Similarly early response to our recently launched upward energy drink has been very positive upward beverages are now available online and in stores with four flavors five milligram lemonade Peach nectarine, and Strawberry tea and 10 milligram Pink Lemonade, we plan to launch a new upward flavored next month 10 milligram half and half.

Speaker #3: Adult use is increasingly viewed as a potential source for meaningful tax revenue, and an inevitable step given the adoption by virtually all neighboring states.

Speaker #3: If adult use is launched in Pennsylvania, TruLieve is well-positioned given our established retail footprint, strong brands and retail and wholesale, and scaled production capabilities.

Ice tea eliminated sale.

Speaker #3: We believe that adult use will be enacted in Pennsylvania in the near future. TruLieve will continue to push for reform, allocating time and resources to highlight the need for action.

Sales of onward, and upward beverages allow us to reach new customers, who may not visit cannabis dispensaries, we recently expanded distribution of onward and upward into all ABC fine wine and spirits and total wine locations in Florida totaling 167 stores.

Speaker #3: We remain confident that real change can happen. While advocacy efforts are ongoing, our team remains focused on three operational areas: branded products, distribution, and customers.

In addition, we launched new distribution deals with Anheuser Busch, covering northern Florida, and Romano beverage in Illinois visit drink on wherein dot com to find our retail location near you order online.

Speaker #3: Providing customers consistent access to high-quality products at the right price is an essential part of our strategy to build lasting brand equity. With over 4 million square feet of production capacity, our scaled platform is a meaningful competitive advantage.

Distribution support customer and branded product sales growth in both retail and wholesale channels year to date, we have opened nine stores in Arizona, Florida, and Ohio, expanding our total retail network to 231 stores, we expect to open one additional truly branded store in Ohio in the coming weeks pending regulatory approval this year.

Kim Rivers: With over 4 million square feet of production capacity, our scaled platform is a meaningful competitive advantage. Our production team continues to outperform, driving costs lower while consistently delivering great products. High quality helps differentiate our products in an increasingly competitive landscape. Trulieve manufactures a combination of in-house and partner brands, bringing customers a wide assortment of products and form factors. During the second quarter, we sold over 12.5 million branded product units. Trulieve brands Modern Flower and Roll One continue to gain momentum, representing 50% of the branded products sold in the second quarter. According to data from Hoodie Analytics in Pennsylvania, Modern Flower was the number one or number two flower brand throughout the first half of this year. We are launching new Modern Flower and Roll One products, including all-in-one vapes and concentrates in several markets.

Speaker #3: Our production team continues to outperform, driving costs lower while consistently delivering great products. High quality helps differentiate our products in an increasingly competitive landscape.

Speaker #3: TruLieve manufactures themselves a combination of in-house and partner brands, bringing customers a wide assortment of products and form factors. During the second quarter, we sold over 12.5 million branded product units.

Third we plan to refresh our remodel up to 45 stores with 27 stores already completed and wholesale distribution in Maryland, and Pennsylvania is expanding while our partner in Ohio continues to ramp sales of branded products, including modern flower enroll one.

Speaker #3: TruLieve brands Modern Flower and Roll 1 continue to gain momentum, representing 50% of the branded products sold in the second quarter. According to data from Hoodie Analytics and Pennsylvania, Modern Flower was the number one or number two flower brand throughout the first half of this year.

Consistently offering trusted brand branded products through an established distribution network allows us really to make meaningful customer connections since our very first sale nine years ago. Our primary focus has been on the customer our business has grown from serving a single customer in July 2016 to serving more than $3 5 million.

Speaker #3: We are launching new Modern Flower and Roll 1 products, including all-in-one vapes and concentrates in several markets. Last month, we launched purpose-led brand redemption cannabis in West Virginia.

Kim Rivers: Last month, we launched purpose-led brand Redemption Cannabis in West Virginia, building upon our existing relationship with Redemption in Maryland and Pennsylvania. Redemption Cannabis was founded by Ryan Basor, who served time in federal prison for cannabis-related charges. A portion of every sale is reinvested by Redemption to support individuals and families impacted by cannabis prohibition laws. We are proud to partner with purpose-led brands like Redemption Cannabis. Turning now to the beverage category, in February, we launched Onward, a line of farm-bill-compliant THC beverages. The initial pilot included five cocktail alternatives formulated with CBD and THC. Feedback from customers and critics alike has been overwhelmingly positive, with cases sold in the second quarter up almost 300% compared to the pilot launch. All five original Onward flavors recently received medals from the SIP Awards, an international spirits competition where the judging is done by consumers.

Customers in the past five years, including a 775000 unique customers in the second quarter alone.

Speaker #3: Building upon our existing relationship with redemption in Maryland and Pennsylvania, redemption cannabis was founded by Ryan Basor, who served time in federal prison for cannabis-related charges.

All of this incredible growth our commitment to our customers has never change from start to finish we strive to provide exceptional experiences through all stages of the customer journey over the past two years, we've upgraded many customer facing aspects of our business, including retail associate training programs website and technology platforms and our own.

Speaker #3: A portion of every sale is reinvested by redemption to support individuals and families impacted by cannabis prohibition laws. We are proud to partner with purpose-led brands like Redemption Cannabis.

Speaker #3: Turning now to the beverage category. In February, we launched Onward, a line of Farm Bill compliant THC beverages. The initial pilot included five cocktail alternatives, formulated with CBD and THC.

Royalty program.

<unk> designed to improve the online and in store experience for our customers have paid off our team reinforces our commitment to customer service by tracking customer metrics and linking performance to instead of program for retail associates.

Speaker #3: Feedback from customers and critics alike has been overwhelmingly positive, with cases sold in second quarter up almost 300% compared to the pilot launch. All five original Onward flavors recently received medals from the SIPP Awards, an international spirits competition where the judging is done by consumers.

While retail traffic increased by 8% compared to last year overall satisfaction and net promoter scores across our markets remain high in the second quarter.

Two our entire retail team for taking such excellent care of our customers.

Speaker #3: We are thrilled to win such recognition in this exciting new category. Building upon this success, next month we are launching four new 10 milligram Onward flavors.

Kim Rivers: We are thrilled to win such recognition in this exciting new category. Building upon this success, next month, we are launching four new 10 milligram Onward flavors: Berry Smash, Cosmopolitan, Lemon Drop Martini, and Paloma. Similarly, early response to our recently launched Upward energy drink has been very positive. Upward beverages are now available online and in stores with four flavors: 5 milligram lemonade, peach nectarine and strawberry tea, and 10 milligram pink lemonade. We plan to launch a new Upward flavor next month: 10 milligram half and half iced tea and lemonade. Sales of Onward and Upward beverages allow us to reach new customers who may not visit cannabis dispensaries. We recently expanded distribution of Onward and Upward into all ABC fine wine and spirits and total wine locations in Florida, totaling 167 stores.

One year ago, we completed the rollout of our revamped loyalty program. The new program has surpassed our expectation.

Speaker #3: Berry Smash, Cosmopolitan, Lemon Drop Martini, and Paloma. Similarly, early response to our recently launched Upward Energy drinks has been very positive. Upward beverages are now available online and in stores with four flavors: 5 milligram Lemonade, Peach Nectarine, and Strawberry Tea, and 10 milligram Pink Lemonade.

Reaching over 725000 rewards members at the end of June.

Royalty members accounted for 71% of transactions during the second quarter, we continue to see greater retention and monthly spend among rewards members, who spend on average 2.4 times more than non members. We recently added a new program features including early access to new products and popular back in stock.

Speaker #3: We plan to launch a new Upward flavor next month, 10 milligram Half and Half Iced Tea and emonade. Sales of Onward and Upward beverages allow us to reach new customers who may not visit cannabis dispensaries.

Products as well as early notifications for special events, including in store Activations.

Consistently delivering elevated experiences high quality branded products and generous loyalty rewards reinforces customer retention second quarter retention improved by 1% sequentially to 67% companywide and 76% and medical only markets overall, we are making real progress across our focus areas.

Speaker #3: We recently expanded distribution of Onward and Upward into all ABC fine wine and spirits and total wine locations in Florida totaling 167 stores. In addition, we launched new distribution deals with Anheuser-Busch, covering Northern Florida, and Romano Beverage in Illinois.

Kim Rivers: In addition, we launched new distribution deals with Anheuser-Busch covering Northern Florida and Romano Beverage in Illinois. Visit drinkonward.com to find a retail location near you or order online. Distribution supports customer and branded product sales growth in both retail and wholesale channels. Year to date, we have opened nine stores in Arizona, Florida, and Ohio, expanding our total retail network to 231 stores. We expect to open one additional Trulieve-branded store in Ohio in the coming weeks pending regulatory approval. This year, we plan to refresh or remodel up to 45 stores, with 27 stores already completed. In wholesale, distribution in Maryland and Pennsylvania is expanding, while our partner in Ohio continues to ramp sales of branded products, including Modern Flower and Roll One. Consistently offering trusted branded products through an established distribution network allows Trulieve to make meaningful customer connections.

Speaker #3: Visit drinkonward.com to find a retail location near you or order online. Distribution supports customer and branded product sales growth in both retail and wholesale channels.

Reform branded products distribution and customers with continued momentum and significant flexibility in our core business. We are set to expand our leadership position, while pushing for cannabis reform with that I'd like to turn the call over to our interim CFO Ryan Blust. Please go ahead.

Speaker #3: Year-to-date, we have opened nine stores in Arizona, Florida, and Ohio, expanding our total retail network to 231 stores. We expect to open one additional TruLieve-branded store in Ohio in the coming weeks, pending regulatory approval.

Thank you Tim Good morning, everyone second.

Second quarter revenue was $302 million comparable to last year of new store openings adult use sales in Ohio and growth in the wholesale channel was offset by pricing compression and wallet crusher.

Speaker #3: This year, we plan to refresh or remodel up to 45 stores, with 27 stores already completed. In wholesale, distribution in Maryland and Pennsylvania is expanding, while our partner in Ohio continues to ramp sales of branded products, including Modern Flower and Roll 1.

Second quarter gross profit was $183 million or 61% margin an improvement of 1% compared to last year.

Gross margin will continue to fluctuate quarter to quarter, depending on product and market mix inventory sell through promotional activities in idle capacity cost.

Speaker #3: Consistently offering trusted brands, branded products through an established distribution network allows TruLieve to make meaningful customer connections. Since our very first sale, nine years ago, our primary focus has been on the customer.

SG&A expenses in the second quarter were $101 million or 33% of revenue comparable to last year.

Kim Rivers: Since our very first sale nine years ago, our primary focus has been on the customer. Our business has grown from serving a single customer in July 2016 to serving more than 3.5 million customers in the past five years, including 775,000 unique customers in the second quarter alone. Throughout this incredible growth, our commitment to our customers has never changed. From start to finish, we strive to provide exceptional experiences through all stages of the customer journey. Over the past two years, we have upgraded many customer-facing aspects of our business, including retail associate training programs, website and technology platforms, and our loyalty program. Investments designed to improve the online and in-store experience for our customers have paid off. Our team reinforces our commitment to customer service by tracking customer metrics and linking performance to incentive programs for retail associates.

Speaker #3: Our business has grown from serving a single customer in July 2016 to serving more than 3.5 million customers in the past five years, including 775 thousand unique customers in the second quarter alone.

SG&A included a new store opening expenses technology and infrastructure investments and catalyst campaign support.

Second quarter net loss was $14 million compared to a loss of $12 million last year.

Second quarter loss per share was <unk> <unk> versus a loss of five some flush or <unk>.

Speaker #3: Throughout this incredible growth, our mitment to our customers has never changed. From start to finish, we strive to provide exceptional experiences through all stages of the customer journey.

Reported results include income tax expense was $55 million, which incorporates both normal corporate tax and punitive curated detox.

Speaker #3: Over the past two years, we have upgraded many customer-facing aspects of our business, including retail associate training programs, website and technology platforms, and our loyalty program.

Truly for taxes, the ordinary corporations absent the impact of QAD second quarter net income would've been positive.

Excluding nonrecurring charges second quarter loss per share would have been four six compared to breakeven result, plus here.

Speaker #3: Investments designed to improve the online and in-store experience for our customers have paid off. Our team reinforces our commitment to customer service by tracking customer metrics and linking performance to incentive programs for retail associates.

Second quarter, adjusted EBITDA was $111 million or 37% a margin improvement of 2% compared to last year.

Second quarter, adjusted EBITDA margin reflects industry, leading gross margins and expense control in our core business.

Speaker #3: While retail traffic increased by 8% compared to last year, overall satisfaction and net promoter scores across our markets remain high in the second quarter.

Kim Rivers: While retail traffic increased by 8% compared to last year, overall satisfaction and net promoter scores across our markets remain high in the second quarter. Kudos to our entire retail team for taking such excellent care of our customers. One year ago, we completed the rollout of our revamped loyalty program. The new program has surpassed our expectation, reaching over 725,000 Rewards members at the end of June. Loyalty members accounted for 71% of transactions during the second quarter. We continue to see greater retention and monthly spend among Rewards members, who spend on average 2.4 times more than non-members. We recently added new program features, including early access to new products and popular back-in-stock products, as well as early notifications for special events, including in-store activation. Consistently delivering elevated experiences, high-quality branded products, and generous loyalty rewards reinforces customer retention.

Now onto our balance sheet.

We ended the quarter with $401 million in cash and $478 million of debt.

Given the strength of our cash generation, we remain well positioned to address our near term financial obligations. As we previously indicated we are prepared to retire our senior secured notes due in 2026 later this year with a target to refinance up to half of the 368 million outstanding share.

Speaker #3: Kudos to our entire retail team, for taking such excellent care of our customers. One year ago, we completed the rollout of our revamped loyalty program.

Speaker #3: The new program has surpassed our expectations. Reaching over 725 thousand rewards members at end of June. Loyalty members accounted for 71% of transactions during the second quarter.

Turning to cash flow.

Second quarter cash flow from operations for $86 million capital expenditures were $12 million and free cash flow of $75 million.

Speaker #3: We continue to see greater retention and monthly spend among rewards members, who spend on average 2.4 times more than non-members. We recently added new program features, including early access to new products, and popular back-and-stock products, as well as early notifications for special events, including in-store activations.

Absent the catalyst campaign contributions cash flow from operations would have been $90 million and free cash flow would have been $79 million.

Turning now to our outlook, we anticipate third quarter revenue will be down mid single digits percentage sequentially in line with historical seasonal patterns.

Anticipate gross margin will fluctuate quarter to quarter and expect full year gross margin will be comparable to 2024.

Speaker #3: Consistently delivering elevated experiences, high-quality branded products, and generous loyalty rewards reinforces customer retention. Second quarter retention improved 1% sequentially to 67% company-wide and 76% in medical-only markets.

We expect full year cash flow from operations of at least $250 million and capital expenditures of up to $40 million.

Kim Rivers: Second quarter retention improved by 1% sequentially to 67% company-wide and 76% in medical-only markets. Overall, we are making real progress across our focus areas: reform, branded products, distribution, and customers. With continued momentum and significant flexibility in our core business, we are set to expand our leadership position while pushing for cannabis reform. With that, I would like to turn the call over to our interim CFO, Ryan Blust. Please go ahead.

We may refresh your forecast later this year are dependent on macroeconomic conditions and the timing and progress for <unk>.

Speaker #3: Overall, we are making real progress across our focus areas. Reform, branded products, distribution, and customers. With continued momentum and significant flexibility in our core business, we are set to expand our leadership position while pushing for cannabis reform.

Forward to working with the team as we execute our plan with that I'll turn the call back over to Jim.

Thanks, Brian.

<unk> enjoys broad support in the U S. With recent data is shared by Pew Research Center, showing 88% of Americans in favor of <unk>.

Medical and or adult use legalization today 40 states have medical cannabis programs and millions of Americans rely on these products as part of their health regimen.

Speaker #3: With that, I'd like to turn the call over to our interim CFO, Ryan Blust. Please go head.

Speaker #4: Thank you, Kim. Good morning, everyone. Second quarter revenue was $302 million comparable to last year, as new store openings, adult use sales in Ohio, and growth in the wholesale channel was offset by price and compression and wallet pressure.

Ryan Blust: Thank you, Kim. Good morning, everyone. Second quarter revenue was $302 million, comparable to last year, as new store openings, adult use sales in Ohio, and growth in the wholesale channel was offset by pricing compression and wallet pressure. Second quarter gross profit was $183 million, or 61% margin, an improvement of 1% compared to last year. Gross margin will continue to fluctuate quarter to quarter, dependent on product and market mix, inventory sell-through, promotional activity, and idle capacity costs. SG&A expenses in the second quarter were $101 million, or 33% of revenue, comparable to last year. SG&A included new store opening expenses, technology and infrastructure investments, and catalyst campaign support. Second quarter net loss was $14 million, compared to a loss of $12 million last year. Second quarter loss per share was $0.07 versus a loss of $0.05 last year.

Voice is supporting reform are growing louder consistently calling for rescheduling to set an even playing field for legal American cannabis companies.

Easing restrictions on medical research and removing the punitive tax burden of 280 E legal operators can unleash a new wave of investment in research leading to job creation.

Speaker #4: Second quarter gross profit was $183 million, or 61% margin, an improvement of 1% compared to last year. Gross margin will continue to fluctuate quarter to quarter, dependent on product and market mix.

The U S has an opportunity to take the lead in cannabis by demonstrating how our legal regulated industry can provide consumers with access to state testing products and free up resources for law enforcement to address dangerous Street drugs, such as putting all the Trump administration has a unique opportunity to make history and deliver on campaign promises to address.

Speaker #4: Inventory sell-through, promotional activity, and idle capacity costs. SG&A expenses in the second quarter were $101 million, or 33% of venue comparable to the last year.

Speaker #4: SG&A included new store opening expenses, technology and infrastructure investments, and catalyst campaign support. Second quarter net loss was $14 million, compared to a loss of $12 million last year.

Cannabis reform.

In Florida, we continue to push for expanded access to cannabis by supporting the Smart and say, Florida campaign. The campaign is on track to complete the signature gathering before the February deadline, we believe the revised language addresses many of the concerns raised in 2020 for election cycle positioning the new campaign for a higher likelihood of voter approval and Pennsylvania.

Speaker #4: Second quarter loss per share was $0.07 versus a loss of $0.05 last year. Reported results include income tax expense of $55 million, which incorporates both normal corporate tax and punitive 280(b) tax.

Ryan Blust: Reported results include income tax expense of $55 million, which incorporates both normal corporate tax and punitive 280(e) tax. If Trulieve were taxed as an ordinary corporation absent the impact of 280(e), second quarter net income would have been positive. Excluding non-recurring charges, second quarter loss per share would have been $0.04 compared to breakeven results last year. Second quarter adjusted EBITDA was $111 million, or 37%, a margin improvement of 2% compared to last year. Second quarter adjusted EBITDA margin reflects industry-leading gross margin and expense control in our core business. Moving on to our balance sheet. We ended the quarter with $401 million in cash and $478 million in debt. Given the strength of our cash generation, we remain well-positioned to address our near-term financial obligations.

Speaker #4: If TruLieve were taxed an ordinary corporation, absent the impact of 280(e), second quarter net income would have been positive. Excluding non-recurring charges, second quarter loss per share would have been $0.04, compared to break-even results last year.

Bipartisan efforts to pass adult use legislation are ongoing we believe both Florida, and Pennsylvania will eventually enact adult use programs truly will continue to allocate time and financial resources to reform efforts and expanded access to cannabis as an industry leader, we remain firmly committed to driving forward progress with <unk>.

Speaker #4: Second quarter adjusted EBITDA was $111 million, or 37%, a margin improvement of 2% compared to last year. Second quarter adjusted EBITDA margin reflects industry-leading gross margins and expense control in our core business.

Margins and cash flow scaled operations and flexibility across our platform truly miss poised and ready to define the future of cannabis. Thank you for joining us today and as I always say at Martin at this time, Kim rivers, and Ryan Blust will be available to answer any questions. Operator, Please open up the call for questions.

Speaker #4: Moving on to our balance sheet. We ended quarter with $401 million in cash and $478 million in debt. Given the strength of our cash generation, we remain well-positioned to address our near-term financial obligations.

Speaker #4: As we previously indicated, are prepared to retire our senior secured notes due in 2026 later this year, with a target to refinance up to half of the $368 million outstanding.

Ryan Blust: As we previously indicated, we are prepared to retire our senior secured notes due in 2026, later this year, with a target to refinance up to half of the $368 million outstanding. Shifting to cash flow. Second quarter cash flow from operations sold $86 million. Capital expenditures were $12 million and free cash flow of $75 million. Absent the catalyst campaign contribution, cash flow from operations would have been $90 million, and free cash flow would have been $79 million. Turning now to our outlook, we anticipate third quarter revenue will be down mid-single-digit percentage sequentially, in line with historical seasonal patterns. We anticipate gross margin will fluctuate quarter to quarter and expect full-year gross margin will be comparable to 2024. We expect full-year cash flow from operations of at least $250 million and capital expenditures of up to $40 million.

Thank you.

I will begin the question and answer session.

Quick question refresh Star then one.

Speaker #4: Shifting to cash flow. Second quarter cash flow from operations sold $86 million. Capital expenditures were $12 million, and free cash flow of $75 million.

You bet.

Speaker phone please pickup your handset before pressing.

Hi, My question has been addressed please press Star then two.

Speaker #4: Absent the catalyst campaign contribution, cash flow from operations would have been $90 million, and free cash flow would have been $79 million. Turning now to our outlook.

As time pass momentarily to assemble the roster.

And the first question comes from with.

Canaccord Genuity.

Speaker #4: We anticipate third quarter revenue will be down mid-single-digit percentage sequentially, in line with historical seasonal patterns. We anticipate gross marginal will fluctuate quarter quarter and expect full-year gross margin will be comparable to 2024.

Thanks, Good morning, everyone. Jim I wanted to start just asking about capital allocation you guys are at somewhat.

Unique point in the company's history, there's lots of initiatives you have going on both from US reform perspective, but also from an organic growth perspective. Your gross margin continues to be very impressive is there any room for improvement there and overall I mean, I guess, how would you rank order your capital allocation priorities in the near term of course recognizing that.

Speaker #4: We expect full-year cash flow from operations of at least $250 million, and capital expenditures of up to $40 million. We may refresh our forecast later this year, dependent on macroeconomic conditions and the timings, and progress for catalysts.

Ryan Blust: We may regress our forecast later this year, dependent on macroeconomic conditions and the timing and progress for catalyst. I look forward to working with the team as we execute our plan. With that, I'll turn the call back over to Kim.

Speaker #4: I look forward working with the team as we execute our plan. With that, I'll turn the call back over to Kim.

You reiterated you will be looking to retire we have private placement notes that you have outstanding leaders here.

Speaker #2: Thanks, Ryan. Cannabis enjoys broad support in the US, with recent data shared by Pew Research Center showing 88% of Americans in favor of medical and/or adult use legalization.

Kim Rivers: Thanks, Ryan. Cannabis enjoys broad support in the U.S., with recent data shared by Pew Research Center showing 88% of Americans in favor of medical and/or adult use legalization. Today, 40 states have medical cannabis programs, and millions of Americans rely on these products as part of their health regimen. Voices supporting reform are growing louder, consistently calling for rescheduling to set an even playing field for legal American cannabis companies. Easing restrictions on medical research and removing the punitive tax burden of 280(e) on legal operators can unleash a new wave of investment in research, leading to job creation. The U.S. has an opportunity to take the lead in cannabis by demonstrating how a legal, regulated industry can provide consumers with access to safe, tested products and free up resources for law enforcement to address dangerous street drugs such as fentanyl.

Yeah, I think look at so.

I am incredibly proud of this team as we continue to lead the industry.

With industry, leading gross margin and as we have previously stated we expect gross margin to come in around 60% for the year and that remains that remains true.

Speaker #2: Today, 40 states have medical cannabis programs and millions of Americans rely on these products as part their health regimen. Voices supporting reform are growing louder, consistently calling for rescheduling to set an even playing field for legal American cannabis companies.

As a reminder, obviously Q3 is a quarter that has some pressure on it given seasonality in our in our platform.

Speaker #2: Easing restrictions on medical research and removing the punitive tax burden of 280(e) on legal operators can unleash a new wave of investment and research, leading to job creation.

Alongside of course, the consumer patterns that we've all been experiencing throughout 2025, so there'll be a little bit of pressure on the business and in Q3, but again, we reiterated the fact that we expect gross margins to continue to be strong throughout the year and ending at that 60%, which again is best in class for the.

Speaker #2: The US has an opportunity to take the lead in cannabis by demonstrating how a legal, regulated industry can provide consumers with access to state, tested products, and free up resources for law forcement to address dangerous freak drugs such as fentanyl.

Industry, So and that's no easy feat and again, just a quick if I if I can shout out to our team for continuing to really focus on and on performance there.

Speaker #2: The Trump administration has a unique opportunity to make history and deliver on campaign promises to address cannabis reform. In Florida, we continue to push for expanded access to cannabis by supporting the Smart and Safe Florida campaign.

Kim Rivers: The Trump administration has a unique opportunity to make history and deliver on campaign promises to address cannabis reform. In Florida, we continue to push for expanded access to cannabis by supporting the Smart and Safe Florida campaign. The campaign is on track to complete signature gathering before the February deadline. We believe the revised ballot language addresses many of the concerns raised in the 2024 election cycle, positioning the new campaign for a higher likelihood of voter approval. In Pennsylvania, bipartisan efforts to pass adult use legislation are ongoing. We believe both Florida and Pennsylvania will eventually enact adult use programs. Trulieve will continue to allocate time and financial resources to reform efforts and expanded access to cannabis. As an industry leader, we remain firmly committed to driving forward progress.

As it relates to capital allocation and we reiterated again that we will be looking at paying down that debt and we feel like we're in a really strong position to do so and you know more to come on that as we execute on that.

Speaker #2: The campaign is on track to complete signature gathering before the February deadline. We believe the revised ballot language addresses many of the concerns raised in the 2024 election cycle, positioning the new campaign for a higher likelihood of voter approval.

On that throughout the rest of the year and we'll have an announcement on that at some point here in the near future.

Speaker #2: In Pennsylvania, bipartisan efforts to pass adult use legislation are ongoing. We believe both Florida and Pennsylvania will eventually enact adult use programs. TruLieve will continue to allocate time and financial resources to reform efforts and expanded access to cannabis.

We want to make sure that that's done successfully right and that we're able to again make sure that the terms that are as strong as they possibly can be and then I think we'll have more information as it relates to additional capital allocation. Although I will say right. We are committed as I mentioned on the call to making sure that the right resources are allocated to continue to.

Speaker #2: As an industry leader, we remain firmly committed to driving forward progress. With strong margins and cash flow, scaled operations and flexibility across our platform, TruLieve is poised and ready to define the future of cannabis.

Kim Rivers: With strong margins and cash flow, scaled operations, and flexibility across our platform, Trulieve is poised and ready to define the future of cannabis. Thank you for joining us today, and as I always say, Onward. At this time, Kim Rivers and Ryan Blust will be available to answer any questions. Operator, please open up the call for questions.

Pushed from the front for meaningful reform and to.

And to again be poised to take advantage of that reform.

Speaker #2: Thank you for joining us today, and as I always say, onward.

When it comes to fruition.

Speaker #3: At this time, Kim Rivers and Ryan Blust will be available to answer any questions. Operator, please open up the call for questions.

And again I think that as we're seeing there is additional pressure on other operators. We believe strongly that there will be additional opportunities for.

Speaker #5: Thank you. And as mentioned, we will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad.

Keith: Thank you. As mentioned, we will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your headset before pressing the keys. If at any time your question has been addressed and you would like to withdraw it, please press star then two. At this time, we will pause momentarily to assemble the roster. The first question comes from Luke Hannan with Canaccord Genuity.

For potential M&A.

M&A in the future I don't think we're there yet I think that we're just starting to see some of those processes come to market.

Speaker #5: If you are using a speakerphone, please pick up your handset before pressing the keys. At any time, your questions been addressed and you would like to withdraw it, please press star then two.

Not interested in taking on.

Loads of other debt from from other operators, but we think that the asset sales and potentially attractive markets, maybe coming down the pipe and the name of the game with Optionality and making sure that you've got the ability to move when those opportunities present themselves.

Speaker #5: At this time, we will pause momentarily to assemble the roster. And the first question comes from Luke Hannon with Canacore Genuity.

Speaker #6: Thanks. Good morning, everyone. Kim, I wanted to start just asking about capital allocation you guys are at somewhat of a unique point in the company's history.

Luke Hannan: Thanks. Good morning, everyone. Kim, I wanted to start just asking about capital allocation. You guys are at somewhat of a unique point in the company's history. There are lots of initiatives you have going on, both from a reform perspective, but also from an organic growth perspective. Your gross margin continues to be very impressive. Is there any room for any improvement there? Overall, I guess how would you rank order your capital allocation priorities in the near term? Of course, recognizing that, as you reiterated, you will be looking to retire at least half of the private placement notes that you have outstanding later this year.

I appreciate that thanks, My follow up here and then I'll pass it along you did touch on this.

Your prepared remarks, and your answer there, but the consumer does appear to be under pressure and that's not true just for the cannabis industry, but also it seems like a consumer as a whole, but we have also.

Speaker #6: There's lots of initiatives you have going on, both from a reform perspective but also from an organic growth perspective. Your gross margin continues be very impressive.

Speaker #6: Is there any room for any improvement there? And overall, I mean, I guess how would you rank order your capital allocation priorities in the near term?

I guess, a little bit of a bounce back when it comes to consumer sentiment consumer confidence.

Yes, I'm not asking you necessarily do you expect a full bounce back in the consumer going forward, but are there any signs of stability overall that you're noticing from within your customer base.

Speaker #6: Of e, recognizing that, as you reiterated, you be looking to retire at least half of the private placement notes that you have outstanding later this year.

Yeah, I mean to your point right. I mean, this is not unique to the cannabis sector, we're seeing it across all kinds of different different sectors and certainly ones that are retail that are retail focused.

Speaker #2: Yeah. Thanks, Luke. So I am incredibly proud of this team. As we continue to lead the industry, with industry-leading gross margin, as we have previously stated, we expect gross margin to come in around 60% for the year.

Kim Rivers: Thanks, Luke. I am incredibly proud of this team as we continue to lead the industry with industry-leading gross margin. As we have previously stated, we expect gross margin to come in around 60% for the year, and that remains true. As a reminder, obviously, Q3 is a quarter that has some pressure on it, given seasonality in our platform, alongside, of course, the consumer patterns that we have all been experiencing throughout 2025. There will be a little bit of pressure on the business in Q3. Again, we reiterated the fact that we expect gross margins to continue to be strong throughout the year, ending at that 60%, which again is best in class for the industry. That is no easy feat. Again, just a quick shout out to our team for continuing to really focus on performance there.

And it's been a bit of a mixed bag also to your point right and theres been some some sort of bouncing around if you will as respects to either of the impacts consumer sentiment and consumer behavior.

Speaker #2: And in that remains true. As a reminder, obviously, Q3 is a quarter that has some pressure on it, given seasonality in our platform. Alongside, of course, the consumer patterns that we've all been experiencing throughout 2025.

We I think are unique and that because of the scale platform that we have across production and distribution, we have been able to really lean into patterns that we've been able to identify and I mean again shout out to our data insights team and our customer insights team for being able to fly to those early so that we can make.

Speaker #2: So there'll be a little bit of pressure on the business in Q3, but again, we reiterated the fact that we expect gross margins to continue be strong throughout the year and ending at that 60%, which again is best-in-class for the industry.

Adjustments in our portfolio and again meet customers, where they are very quickly and again being able to have our modularity throughout the platform to scale up scale down bring different products and be able to serve additional customers because really what we're seeing is we're seeing frequency increased.

Speaker #2: And that's no easy feat. And again, just a quick, if I can, shout out to our team for continuing to really focus on performance there.

Speaker #2: As it relates to capital allocation and we reiterated again that we will be looking at paying down that debt and we feel like we're in a really strong position to do so.

Kim Rivers: As it relates to capital allocation, we reiterated again that we will be looking at paying down that debt, and we feel like we are in a really strong position to do so. More to come on that as we execute on that throughout the rest of the year. We will have an announcement on that at some point here in the near future. We want to make sure that that is done successfully, and that we are able to, again, make sure that the terms are as strong as they possibly can be. I think we will have more information as it relates to additional capital allocation.

Barely dramatically candidly with customers coming back more often and but again that basket and that spend per visit lowering and then looking for additional value in their purchase and so.

Speaker #2: And more to come, on that, as we execute on that throughout the rest of the year. And we'll have an announcement on that at some point here in the near future.

Our retail teams being able to handle that additional volume was still outstanding best in class NPS and customer service scores, while again, our production team and pivoting to ensure that we've got the right types of products at the right price point available when those customers come back without frequency has really been.

Speaker #2: We want to make sure that that's done successfully, right? And that 're able to, again, make sure that the terms are as ong as they possibly can be.

Speaker #2: And then I think we'll have more information as it relates to additional capital allocation, although I will say, right, we are committed, as I mentioned on the call, to making sure that the right resources are allocated to continue to push from the front for meaningful reform and to, again, be poised to take advantage of that reform when it comes to fruition.

A difference maker for us and so to your point, we're continuing to monitor trends and I would say that we're not seeing anything consistent right now we're seeing pockets of change across different markets and but again I think that we've got best in class and across the supply chain and across our retail to be able to respond to those two.

Kim Rivers: I will say, we are committed, as I mentioned on the call, to making sure that the right resources are allocated to continue to push from the front for meaningful reform and to, again, be poised to take advantage of that reform when it comes to fruition. Again, I think that as we are seeing there is additional pressure on other operators, we believe strongly that there will be additional opportunities for potential M&A in the future. I do not think that we are there yet. I think that we are just starting to see some of those processes come to market. We are not interested in taking on loads of other debt from other operators, but we think that asset sales and potentially attractive markets may be coming down the pipe.

Speaker #2: And again, I think that as we're seeing there's additional pressure on other operators, we believe strongly that there will be additional opportunities for potential M&A in the future.

Those shifts as we as we identify them.

Got it appreciate it thank you very much.

Thank you and the next question comes from.

Alliance Global partners.

Speaker #2: I don't ink that we're there yet. I think that we're just starting see some of those processes come to market. We're not interested in taking on loads of other debt from other operators, but we think that asset sales and potentially attractive markets may be coming down the pipe.

Hi, good morning, and thank you for the questions here.

First question for me.

Margins remained really healthy for you guys, even remarks about 37% past three quarters sales are about flat year over year for the first half. So just curious if you could provide some colors in terms of how youre looking at your Pie chart prioritize margins and cash flow versus growth you guys are having best in class margins right. Now. So I was just curious in terms of whether or not that relative strength.

Speaker #2: And the name of the game is optionality and making sure that you've the ability to move when those opportunities present themselves.

Kim Rivers: The name of the game is optionality and making sure that you have got the ability to move when those opportunities present themselves.

Speaker #5: Appreciate that. Thanks. My follow-up here, and then I'll pass it along. You did touch on this. In your prepared remarks and your answer there, the consumer does appear to be under pressure, and that's not true just for the cannabis industry, but also it seems like the consumer as a ole.

Luke Hannan: Appreciate that. Thanks. My follow-up here, then I will pass it along. You did touch on this in your prepared remarks and your answer there, but the consumer does appear to be under pressure. That is not true just for the cannabis industry, but also it seems like the consumer as a whole. We have also seen, I guess, a little bit of a bounce back when it comes to consumer sentiment, consumer confidence. I guess I am not asking necessarily if you expect a full bounce back in the consumer going forward, but are there any signs of stability overall that you are noticing from within your customer base?

For some opportunity for you to get more aggressive just start trying to drive some more sales growth in three of our main focus on the cash flow for now thank you.

Speaker #5: But we have also seen, I guess, a little bit of a bounce back when it comes to consumer sentiment, consumer confidence. I guess I'm not asking necessarily if you ect a full bounce back in the consumer going forward, but are there any signs of stability overall that you're noticing from within your customer base?

Thanks, I think that's always the question right and so I think it is a balance right. I think that also we are mindful of the fact that and it's not always a one for one right and so we want to make sure that we're mindful of how we're utilizing promotions and how were utilized.

Speaker #2: Yeah. You know, I am, to your point, right? I mean, this is not unique to the cannabis sector. We're seeing it across all kinds of different sectors and certainly ones that are retail and focused.

Kim Rivers: Yeah, you know, to your point, this is not unique to the cannabis sector. We are seeing it across all kinds of different sectors and certainly ones that are retail-focused. It has been a bit of a mixed bag, also to your point. There has been some sort of bouncing around, if you will, as respects other impacts consumer sentiment and consumer behavior. We, I think, are unique in that because of the scaled platform that we have across production and distribution, we have been able to really lean into patterns that we have been able to identify. Again, shout out to our data insights team and our customer insights team for being able to flag those early so that we can make adjustments in our portfolio and, again, meet customers where they are very quickly.

Pricing to unlock right top line, while also of course, making sure that we're again meeting customers, where they are and and not necessarily.

Speaker #2: And it's been a bit of a mixed bag also to your point, right? And there's been some sort of bouncing around, if you will, as respects to other impacts consumer sentiment and consumer behavior.

Unintentionally changing customer behavior over over that same period of time, and so again, it's a complex equation and one that we evaluate regularly and we of course did guide to.

Speaker #2: We, I think, are unique in that because of the scaled platform that we have across production and distribution, we've been able to really lean into patterns that we've been able to identify.

Right.

Slightly down mid single digits or low single digits, rather for next quarter.

Given seasonality, but again I think that the team is very focused on ensuring that we're providing the right product mix and that we are and meeting customers, where they are and again, we do believe that we are positioned strategically to continue to grow our customer base into the back half of the year. So.

Speaker #2: And I mean, again, shout out to our data insights team and our customer insights team for being able to flag those early so that we can make adjustments in our portfolio and again meet customers where they are very quickly.

Speaker #2: And again, being able to have a modularity throughout the platform to scale up, scale down, bring different products and be able to serve additional customers because really what we're seeing is we're seeing frequency increase, you ow, fairly dramatically candidly with customers coming back more often.

Kim Rivers: Again, being able to have a modularity throughout the platform to scale up, scale down, bring different products, be able to serve additional customers. Because really what we are seeing is we are seeing frequency increase fairly dramatically, candidly, with customers coming back more often. But again, that basket and that spend per visit lowering and then looking for additional value in their purchase. Our retail teams being able to handle that additional volume with still outstanding best-in-class NPS and customer service scores, while, again, our production team pivoting to ensure that we have got the right types of products at the right price point available when those customers come back with that frequency has really been a difference maker for us. To your point, we are continuing to monitor trends.

And I would say that we certainly will look to be aggressive when it makes sense and when we believe that we can attract.

New customers in particular throughout our platform and looking at that as an area of growth for us in the second half.

Speaker #2: But again, that basket and that spend per visit lowering and then looking for additional value in their purchase. And so you know our etail teams being able to handle that additional volume, with still, you ow, outstanding best-in-class NPS and ustomer service scores, while again, our production team pivoting to ensure that we've got the right types of products at the right price point available when those customers come back with that frequency, has really been a difference maker for us.

Okay. Thank you for that color there and then second question for me I know Luke.

You touched on it a bit just diving again in terms of potential inorganic growth opportunities.

Any potential for some M&A opportunities that could come with some assets out of receivership you mentioned some of the debt that does come with some operators. So is there some opportunity there. So we could get some attractive assets and not have some of the liabilities that come along with it.

Speaker #2: And so to your point, we're continuing to monitor trends and I would say that we're not seeing anything consistent right now. We're seeing pockets of change across different markets and, but again, I think that we've got best-in-class across the supply chain and across our retail to be able to respond to those shifts as we identify them.

And then also secondly in terms of just organic license wins, particularly looking at Texas and the opportunity that Youre seeing there now with the new Bill that passed that opens up the medical market. There. So any commentary there would be I appreciate it. Thank you.

Kim Rivers: I would say that we are not seeing anything consistent right now. We are seeing pockets of change across different markets. Again, I think that we have got best-in-class across the supply chain and across our retail to be able to respond to those shifts as we identify them.

Sure Yeah, as I mentioned right I mean, we are always opportunistic as it relates to M&A and it certainly show not in the past and now remains remains true our team evaluating the opportunities that come our way.

Speaker #5: Got it. Appreciate it. Thank ou very much.

Luke Hannan: Got it. Appreciate it. Thank you very much.

Speaker #6: Thank you. And the next question comes from Aaron Gray with Alliance Global Partners.

Keith: Thank you. The next question comes from Aaron Grey with Alliance Global Partners.

All the time I think it's important to have that pipeline open.

Speaker #7: Hi. Good morning. And thank you for the questions here. Of course, first question for me. Margins remain really healthy for you guys, EBITDA gins at about 37% past three quarters.

Luke Hannan: Hi. Good morning, and thank you for the questions here. Of course, first question for me. Margins remain really healthy for you guys. EBITDA margins about 37% past three quarters. Sales about flat year over year for the first half. So, just curious if you could provide some colors in terms of how you are looking to prioritize margins and cash flow versus growth. You guys are having best-in-class margins right now. So, just curious in terms of whether or not that relative strength offers some opportunity for you to get more aggressive to start trying to drive some more sales growth or if you are going to remain focused on the cash flow for now. Thank you.

And not review that review cadence going and that certainly is true today.

I'm, just saying I think that in and many of those it's early days for some of those processes and I think that you know again, we will see right. I think there are a lot of companies that have them.

Speaker #7: Sales about flat year over year for the first half. So just curious if you could provide some colors in terms of, you ow, how you're looking to prioritize, you know, margins and cash flow versus growth.

Speaker #7: You know, you guys are having best-in-class margins right now. So just curious in terms of whether or that relative strength, you know, offers some opportunity for you to more aggressive to start trying to drive some more sales growth or if you're going to remain focused on the cash flow for now.

Some debt coming due and likely will have to make some decisions as it relates to potential shutting of.

Certain parts of their business and so I think that's only going to become more attractive as we move into 2026 and beyond.

Speaker #7: Thank you.

Speaker #2: Thanks. Thanks, Aaron. That's always the question, right? So I think it is a balance, right? I ink that, you know, also we are mindful of the fact that it's not always a one-for-one, right?

Kim Rivers: Thanks, Aaron. That is always the question, right? I think it is a balance, right? I think that, you know, also, we are mindful of the fact that it is not always a one-for-one, right? We want to make sure that we are mindful of how we are utilizing promotions and how we are utilizing pricing to unlock, right, top line, while also, of course, making sure that we are, again, meeting customers where they are and not necessarily unintentionally changing customer behavior over that same period of time. Again, it is a complex equation and one that we evaluate regularly. We, of course, did guide to slightly down mid-single digits or low single digits, rather, for next quarter given seasonality. But again, I think that the team is very focused on ensuring that we are providing the right product mix and that we are meeting customers where they are.

Absolutely we're open.

We're actively reviewing opportunities and as it relates to Texas. We are in the mix in Texas, I mean listen, it's a big pool, and but we applied and certainly would love to be there and that's that's been on our radar for quite some time, it's in line with our strategy of expansion, particularly.

Speaker #2: And so we want to make sure that we're mindful of how we're ing promotions and how we're ing pricing to unlock, right, top line.

Speaker #2: While also of course making sure that we're again meeting customers where they are and not necessarily, you ow, unintentionally changing customer behavior over that same period of time.

Really across across the south and the southeast and the medical vein, so we'd love to be we'd love to be in that market and are excited about the fact that there is attention now on actually growing the regulated medical program there.

Speaker #2: And so again, it's a complex equation and one that we evaluate regularly. We, of course, did guide to, ou know, slightly down mid-single-digit or low-single-digits rather for next quarter given seasonality.

Okay, great. Thanks for the color I'll jump back into the queue.

Thanks.

Yes.

Thank you and the next question comes from Russell Stanley with Beacon Securities.

Speaker #2: But again, I think that the team is very focused on ensuring that we're providing the right product mix and that we are meeting customers where they are.

Good morning, and thanks for taking my question just coming back to the Florida adult use initiative.

I noted some of the changes.

Speaker #2: And again, we do believe that we are positioned strategically to continue to grow our ustomer base into the back half of the year. So I would say that we certainly will look to be aggressive when it makes sense.

Kim Rivers: Again, we do believe that we are positioned strategically to continue to grow our customer base into the back half of the year. You know, I would say that we certainly will look to be aggressive when it makes sense and when we believe that we can attract new customers, in particular, throughout our platform and looking at that as an area of growth for us in the second half.

Got it made to this proposed amendment.

Yes, that's that are that are there to I think address the public criticisms of the prior initiatives I'm just wondering what you can say around the feedback you have.

Received to date from those relating to those changes, perhaps one acres, even if it's behind the scenes just any anecdotes or would help there.

Speaker #2: And when we believe that we can attract new customers in throughout our platform and looking at that as an area of growth for us in the second half.

Yeah, I mean, I think that and there is.

Of course, a lot of them.

Post-mortem review that happens and.

Speaker #5: Okay. Thank you for that color there. And then second question for me. I know Luke touched on it a bit, but just diving again in terms potential inorganic growth opportunities.

Anytime a campaign of of that magnitude is run and certainly I think and it became clear that there were some areas that had some concern and in the last campaign and again in Florida right I mean.

Luke Hannan: Okay. Thank you for that color there. My second question for me: I know Luke Hannan touched on it a bit, but just diving again in terms of potential inner branded growth opportunities, is there any potential for some M&A opportunities that could come with some assets out of receivership? You mentioned some of the debt that does come with some operators. So is there some opportunity there to where we could get some attractive assets and not have some of the liabilities that come along with it? Secondly, in terms of just via organic license wins, particularly looking at Texas and the opportunity that you are seeing there now with the new bill that passed that opens up the medical market there, any commentary there would be appreciated. Thank you.

Speaker #5: Any potential for some M&A opportunities that could come with some assets, you know, out of receivership? You mentioned some of the debt that does come with some operators.

57% of the vote is nothing to nothing to sneeze at but the reality is you know you have to have 60, and so every every point matters in every concern matters to the extent they can be addressed within the requirements to pass Supreme Court review so.

Speaker #5: So is there some opportunity there that we could get some attractive assets and not have some of the liabilities that come along with it?

Speaker #5: And then also secondly, in terms of just via organic license wins, particularly looking at Texas and the opportunity that you're seeing there, now with the new bill that passed that opens up the medical market there.

In that in that vein is or that's why those changes were made and candidly those changes would have been enacted in an amendment three by the legislature, but I think the public just wanted it a little bit more clearly stated on the face of the amendment for assurance that that those actually were requirements.

Speaker #5: So any commentary there would be appreciated. Thank ou.

Speaker #2: Sure. Yeah. As I mentioned, right, I an, we are always opportunistic as it relates to M&A. And I've certainly shown that in the past.

Kim Rivers: Sure. As I mentioned, we are always opportunistic as it relates to M&A, and it has certainly shown that in the past, and that remains true. Our team evaluates opportunities that come our way all the time. I think it is important to have that pipeline open and that review cadence going, and that certainly is true today. I am just saying I think that in many of those, it is early days for some of those processes. I think that, again, we will see. I think there are a lot of companies that have some debt coming due, and likely will have to make some decisions as it relates to potential shedding of certain parts of their business. I think that is only going to become more attractive as we move into 2026 and beyond. We are absolutely open and are actively reviewing opportunities.

Speaker #2: And that remains true. Our team evaluates opportunities that come our way all the time. I ink it's important to have that pipeline open and that review cadence going.

If the measure where the path so.

I think it's it's certainly clear that that would be an improvement.

Look we're continuing to monitor and continuing to evaluate the landscape and theres a lot of moving parts, including turn out and what the what the field looks like in the in the Governor's race in others in Florida moving into into 2026 and of course Supreme Court review has happened as well so look theres.

Speaker #2: And that certainly is true today. I'm just saying I think that in many of those, it's early days for some of those processes. And I think that, you know, again, we'll see, right?

Speaker #2: I ink there are a lot of companies that have some debt coming due and likely will have make some decisions as it relates to potential shedding of certain parts of their business.

A lot of a lot of.

Game left to play if you will and we're and we're continuing to evaluate but I think the language on our space was certainly a move in the right direction.

Speaker #2: And so I think that's only going to become more attractive as we move into 2026 and beyond. But, you ow, absolutely, we're open in our actively reviewing opportunities.

Thanks for that and maybe just a follow up question I'm wondering what you can say around Georgia in that program or that market development.

Speaker #2: As it relates to, you know, Texas, we are in the mix in Texas. I mean, listen, it's a big pool. But, you know, we applied and certainly would love to be there.

Kim Rivers: As it relates to Texas, we are in the mix in Texas. Listen, it is a big pool, but we applied and certainly would love to be there. That has been on our radar for quite some time. It is in line with our strategy of expansion, particularly across the South and the Southeast in the medical vein. We would love to be in that market and are excited about the fact that there is attention now on actually growing the regulated medical program there.

It's performed relative to your expectations.

Yeah.

Georgia is and I think an exciting potential market for us and we knew going in that it was going to be a bit of a slower ramp.

Speaker #2: And that's been on our radar for quite some time. It's in line with our strategy of expansion. Particularly across the south and the southeast in the ical vein.

Just because of sort of the political startup if you will they are and where the program was starting and it was starting in a kind of a.

Speaker #2: So would love be in that market. And our excited about the fact there is a tension now on actually growing the regulated medical program there.

Just the way that some of the mechanics work and how someone has to get.

Speaker #5: Okay. Great. Thanks for the color there. I'll jump back into the queue.

Luke Hannan: Okay. Great. Thanks for the call there. I will jump back into the queue.

Approve to get a card there and how the car distribution model works and how the store model works and I think the the false start there and we're thinking about pharmacies, we're going to be able to be.

Speaker #2: Thanks.

Kim Rivers: Thanks.

Speaker #5: Thank you. And the next question comes from Russell Stanley with Beacon Securities.

Keith: Thank you. The next question comes from Russell Stanley with Beacon Securities.

And additive to actual dispensaries, and then of course that not not working out so theres been a bit of Sutter steps that have happened in Georgia, but again I think like the rest of the country, Georgia is starting to wake up to the fact that you know strictly regulated medical cannabis and is helpful for us.

Speaker #8: Good morning. And thanks for taking my question. Just coming back to the Florida adult use. Initiative, you noted some of the changes that are made to this proposed amendment.

Russell Stanley: Good morning, and thanks for taking my question. Coming back to the Florida Adult Use Initiative, you noted some of the changes that are made to this proposed amendment that are there to, I think, address the public criticisms of the prior initiative. I am just wondering what you can say around the feedback you have received to date from those relating to those changes, perhaps from lawmakers, even if it is behind the scenes, just any anecdotes that would help there. Thanks.

Speaker #8: You know that are there to, I ink, address the public criticisms of the prior initiative. I'm just wondering, what ou can say around the feedback you've to date from those relating to those changes, perhaps from lawmakers, even if it's behind the scenes, just any anecdotes would help there.

<unk> for folks in Georgia, and beginning not conversation of expansion on that.

We're excited to participate in.

For US, Georgia is a wonderful market because there's a lot of our operations as you know are in north, Florida, and so our ability to share resources of course, non non cannabis resources and because we can't cross state lines, but personnel resources equipment et cetera, Theres a lot of synergy there. So there's a lot.

Speaker #8: Thanks.

Speaker #2: Yeah. I mean, I think that, you know, there's, of course, a lot of postmortem review that happens any time a campaign of that magnitude is run and certainly I think, you ow, became clear that there were some areas that had some concern in the last campaign.

Kim Rivers: Yeah, I mean, I think that, you know, there's, of course, a lot of postmortem review that happens anytime a campaign of that magnitude is run. And certainly, I think it became clear that there were some areas that had some concern in the last campaign. Again, in Florida, right, I mean, 57% of the vote is nothing to sneeze at. But the reality is, you know, you have to have 60. So every point matters and every concern matters to the extent they can be addressed within the requirements to pass Supreme Court review. In that vein, that's why those changes were made. Candidly, those changes would have been enacted in Amendment 3 by the legislature, but I think the public just wanted it a little bit more clearly stated on the face of the amendment for assurance that those actually were requirements if the measure were to pass.

Left to unlock as that as that market growth.

Speaker #2: And again, in Florida, right, I mean, 57% of the vote is nothing to sneeze at. But the reality is, you ow, you have to have 60%.

That's great. Thanks for the color I'll get back in the queue.

Sure.

Thank you.

Question comes from Brian Chin with ATV capital markets.

Speaker #2: And so every point matters and every, you ow, concern matters to the extent they can be addressed within the requirements to pass Supreme Court review.

Hi, it's front of Oncor, Craig Thanks for taking my questions and congrats on the strong margins this quarter.

Speaker #2: So in that vein, that's why those changes were made. And candidly, those changes would have been enacted in amendment three by the legislature. But I think the public just wanted it a little bit more clearly stated on the face of the amendment for assurance that those actually were requirements if the measure were to pass.

So just starting off with Arizona and Merrill Lynch. My question is essentially twofold. So firstly just looking at the retail competition. So as you know like Arizona, we haven't really seen the store count move over the past two years and we've seen some articles about Maryland being delayed but looking likely to maybe start issuing licenses later on this year. So since youre. So in tune with both of these market.

And so the regulatory environment would you be able to provide any additional color on the future for retail licenses in these markets and we're just started also lessen overall.

Speaker #2: So I think it's certainly clear that that would be an improvement. You know, look, we're continuing to monitor and continuing to evaluate the landscape and there's a lot of moving parts including, you ow, turnout and what the field looks like in the governor's race and others in Florida.

Kim Rivers: So I think it's certainly clear that that would be an improvement. You know, look, we're continuing to monitor and continuing to evaluate the landscape. There's a lot of moving parts, including turnout and what the field looks like in the governor's race and others in Florida moving into 2026. Of course, Supreme Court review has to happen as well. So look, there's a lot of game left to play, if you will, and we're continuing to evaluate. But I think the language on its face was certainly a move in the right direction.

Dynamic color for both of these markets as well.

Sure So in Arizona, and just a reminder, that the number of licenses in Arizona is actually fixed by.

Speaker #2: Moving into 2026. And of course, Supreme Court review has to happen as well. So look, there's a lot of game left to play, if you will, and we're ing to evaluate but I think the language on its face was certainly a move in the right direction.

In the Constitution, So Arizona was a market that possibly be a constitutional amendment and that amendment. The number of licenses is actually lifted so that's a fixed a fixed number in Arizona, but.

But what we are seeing in Arizona is we're actually starting to see some consolidation.

With some smaller.

Operators on the retail front shuttering.

Speaker #8: Thanks for that. And maybe just a follow-up question wondering what you can say around Georgia and that program's or that market's development now. How it's performed relative to your expectations?

Russell Stanley: Thanks for that. Maybe just a follow-up question, wondering what you can say around Georgia and that program's or that market's development, how it's performed relative to your expectations.

And our team has done a fantastic job at really are leaning in to the opportunity there and we're finally at a point where all of our stores have been rebranded and we have great now production of our internal brands that were selling again, it's branded products are branded retail is a core tenet of the Trillium <unk>.

Speaker #2: Yeah. So Georgia is, ou know, I think in an exciting potential market for us. We knew going in that it was going to be a bit of a slower ramp.

Kim Rivers: Yeah. So Georgia is, you know, I think, an exciting potential market for us. We knew going in that it was going to be a bit of a slower ramp just because of sort of the political setup, if you will, there and where the program was starting. It was starting in a kind of a just the way that some of the mechanics work and how someone has to get approved to get a card there and how the card distribution model works and how the store model works. I think the false start there with thinking that pharmacies were going to be able to be an additive to actual dispensaries and then, of course, that not working out. There's been a bit of stutter steps that have happened in Georgia.

Speaker #2: Just because of sort of the political setup, if you will, there and where the program was starting. It was starting in a kind of a just the way that some of the mechanics work and how someone has to get approved to get a card there and how the card distribution model works and how the store model works.

And we're executing against that now in Arizona, we're seeing.

Significant and meaningful growth of our internal brands through through that branded retail now in Arizona, which is which is exciting for us and in addition, we're again starting to see.

Our stores perform.

Speaker #2: And I ink the false start there with thinking that pharmacies were going to be able to be an additive to actual dispensaries and then, of course, that not working out.

I would say outperformed the market in.

In the face of some of that some of the challenges that other operators are facing in Arizona.

Speaker #2: So there's been a bit of stutter step that have happened in Georgia. But again, I think like the rest of the country, Georgia is starting to wake up to the fact that, you know, strictly regulated medical cannabis is helpful.

It relates to Maryland, and Maryland, as you know there's limited our retail for operators and say really Marilyn while we have been doing fantastic and at our retail locations.

Kim Rivers: But again, I think like the rest of the country, Georgia is starting to wake up to the fact that, you know, strictly regulated medical cannabis is helpful for folks in Georgia and beginning that conversation of expansion that we're excited to participate in. You know, for us, Georgia is a wonderful market because a lot of our operations, as you know, are in North Florida. So our ability to share resources, of course, non-cannabis resources, because we can't cross state lines, but personnel resources, equipment, etc. There's a lot of synergy there. So there's a lot left to unlock as that market grows.

That's really a.

Speaker #2: For folks in Georgia and beginning that conversation of expansion that we're, you know, we're cited to participate in. You know, for us, Georgia is a wonderful market because there's a lot of our operations, as you ow, are in North Florida.

<unk> market I think I've said this in my prepared remarks, where we've been growing wholesale and are continuing to continuing to do that so and again in Maryland. Our branded products are are really have.

Caught on we're producing them at a regular club and are also growing our wholesale channels and in Maryland. So additional licenses for us in Maryland would be and I think a net positive as it relates to our wholesale business in America.

Speaker #2: And so our ability to share resources, of course, non-cannabis resources, because we can't cross state lines, but personnel resources, equipment, etc., there's a lot of synergy there.

Speaker #2: So there's a lot left to unlock as that market grows.

Perfect understood.

And then you just spoke to Georgia, a little bit.

Speaker #8: That's great. Thanks for the color. I'll get back in the queue.

So we don't typically hear a lot about so would just love any further elaboration on what you're seeing in that state.

Russell Stanley: That's great. Thanks for the color. I'll get back in the queue.

Speaker #2: Sure.

Keith: Sure. Thank you. The next question comes from Ryan Turrington with ATB Capital Markets.

Speaker #5: Thank you. And the next question comes from Ryan Turrington with ATV Capital Markets.

Sure. So again I mean, I think Georgia is an exciting opportunity for us for the future and it's going to be incremental in Georgia and.

Speaker #9: Hi. It's Franna on 440 Growth. Thanks for taking our questions and congrats on the strong margins this quarter. So just starting off with Arizona and Maryland, my question is essentially twofold.

Brenda: Hi. It's Brenda on 440 Growth. Thanks for taking our questions and congrats on the strong margins this quarter. Just starting off with Arizona and Maryland, my question is essentially twofold. Firstly, just looking at the retail competition. As you know, Arizona, we haven't really seen the store count move over the past two years. We've seen some articles about Maryland being delayed but looking likely to maybe start issuing some licenses later on this year. Since you're so in tune with both of these markets and the regulatory environment, would you be able to provide any additional color on the future for retail licenses in these markets? Would just also list some overall market dynamic color for both of these markets as well.

I think that history, there is that that state and certainly the legislature moves in a very purposeful at a very purposeful club.

Speaker #9: So firstly, just looking at the retail competition, so as you know, like Arizona, we en't really seen the store count move over the past two years.

Speaker #9: And we've seen some articles about Maryland being delayed but looking likely to maybe start issuing some licenses later on this year. So since you're so in tune with both of these markets and the regulatory environments, would you be able to provide any additional color on the future for retail licenses in these markets?

Again, we're continuing to be I think instrumental in involved in those conversations and as we try to just bring common sense reforms allow folks to have increased access that's really the name of the game in Georgia right now is for folks who do qualify too to ensure that they can they can get to a doctor and they can get a card.

Speaker #9: And would just also like some overall market dynamic color for both of these markets as well?

And they can get into the program with US as you know the least amount of friction as possible and we think that'll be a meaningful kind of change rate in Georgia, that's really important.

Speaker #2: Sure. So in Arizona, just a reminder, that the number of licenses in Arizona is actually fixed by in the Constitution. So Arizona was a market that passed via constitutional amendment.

Kim Rivers: Sure. In Arizona, just a reminder that the number of licenses in Arizona is actually fixed in the Constitution. Arizona was a market that passed via a constitutional amendment. In that amendment, the number of licenses is actually listed. That is a fixed number in Arizona. What we are seeing in Arizona is we are actually starting to see some consolidation with some smaller operators on the retail front shuttering. Our team has done a fantastic job at really leaning into the opportunity there. We are finally at a point where all of our stores have been rebranded, and we have great production of our internal brands that we are selling. Again, it is branded products through branded retail as a core tenet of the Trulieve model.

Ground level stop.

Speaker #2: And in that amendment, the number of licenses is actually lifted. So that's a fixed number in Arizona. But what we are seeing in Arizona is we're actually starting to see some consolidation with some smaller operators on the retail front shuttering.

Thank you for that I'll jump back into the queue.

Thank you and the next question comes from Bill Quirk with Roth Capital Partners.

Hey, Good morning. This is Nick on for Bill. Thanks for taking the questions first one for me just on the federal outlook, Tim I know you put in a lot of time in D. C. That you mentioned the drumbeat from kind of outside of the traditional Echo Chamber would you say you have gotten more confident over the past three months to six months around either banking reform are rescheduling materializing and just what makes the conversation.

Speaker #2: Our team has done a fantastic job at really leaning in to the opportunity there. And we're finally at a point where all of our stores have been rebranded and we have great now production of our internal brands that we're selling again.

Different than the ones we've had in the past thank you.

Speaker #2: It's branded products through branded retail as a core tenet of the TruLieve model. And we're executing against that now in Arizona. We're seeing, you ow, significant and meaningful growth of our internal brands through that branded retail.

Yeah.

Yes, I have gotten more confident over the last three to six months for sure.

Kim Rivers: We are executing against that now in Arizona. We are seeing significant and meaningful growth of our internal brands through that branded retail now in Arizona, which is exciting for us. In addition, we are again starting to see our stores perform, and I would say outperform the market in the face of some of those challenges that other operators are facing in Arizona. As it relates to Maryland, as you know, there is limited retail for operators. Really, Maryland, while we have been doing fantastic in our retail locations, that is really a market. I think I said this in my prepared remarks where we have been growing wholesale and are continuing to do that. In Maryland, our branded products really have caught on. We are producing them at a regular clip and are also growing our wholesale channels in Maryland.

And I think that and really again and you've got a president and you have an administration who specifically.

Speaker #2: Now in Arizona, which is exciting for us. And in addition, right, we're again starting to see our stores perform and I would say outperform the market in the face of some of the challenges that other operators are facing in Arizona.

Campaigned on and on.

Federal reform and specifically on rescheduling.

If you look back during the campaign and Miami, Inc. Actually put out an around cannabis reform and with President Trump.

Speaker #2: As it relates to Maryland and Maryland as you know, there's limited retail for operators. And so really Maryland, while we have been doing fantastic in our retail locations, we also that's really a market I think I saw this in my prepared remarks where we've been growing wholesale and are continuing to do that.

Specifically, stating that he is a pro rescheduling specifically.

Those ads ran in swing states and we know based on pulling data that.

All voters rescheduling is incredibly popular it has over 80% of the total vote and when you really drill down to a very key demographics of 18% to 35, which of course, we know that the president really leaned on and counted on for the win.

Speaker #2: So again, in Maryland, our branded products are really have, you know, caught on. We're producing them at a regular clip. And are also growing our wholesale channels in Maryland.

Speaker #2: So additional licenses for us in Maryland would be I ink a net positive as it relates to our wholesale business in that market.

Kim Rivers: Additional licenses for us in Maryland would be, I think, a net positive as it relates to our wholesale business in that market.

And it showed up for him.

Those those folks in particular are well over 80% in terms of their support for rescheduling and I would say similarly, and importantly going into mid terms independence.

Speaker #9: Perfect. Understood. And then you just spoke to Georgia a little bit via the state that we don't typically hear a lot about. So would just love any further elaboration on what you're seeing in that state.

Brenda: Perfect. Understood. You just spoke to Georgia a little bit, but that is a state that we do not typically hear a lot about. We would just love any further elaboration on what you are seeing in that state.

<unk> are overwhelmingly in favor of a rescheduling in the high eighties and so when you look at when you look at not only of course from a political standpoint, which we just talked about but then on the policy side. When we think about it right. When you think about the fact that cannabis is a schedule one is scheduled right alongside against synthetic Sentinel.

Speaker #2: Sure. So again, I mean, I think Georgia is an exciting opportunity for us for the future. You know, 's going to be incremental in Georgia.

Kim Rivers: Sure. Again, I mean, I think Georgia is an exciting opportunity for us for the future. It is going to be incremental in Georgia. I think that history there is that that state and certainly the legislature moves in a very purposeful and very purposeful clip. Again, we are continuing to be, I think, instrumental and involved in those conversations as we try to just bring common sense reform to allow folks to have increased access. That is really the name of the game in Georgia right now, is for folks who do qualify to ensure that they can get to a doctor and they can get a card and they can get into the program with the least amount of friction as possible. We think that will be a meaningful kind of change, right, in Georgia. That is a really important ground-level step.

Heroine.

Speaker #2: You know, I think that history there is that that state and certainly the legislature moves in a very purposeful and a very purposeful clip.

Versus a schedule III and the movement to schedule III on what that would do as it relates to an unlock for American American businesses and American led research.

Speaker #2: Again, we're continuing to be I think instrumental and involved in those conversations. As we try just bring common sense reform to allow folks to have increased access, that's really the name of the game in Georgia right is for folks who do qualify to ensure that they can they can get to a doctor and they can get a card and they can you know get into the program with as you know the least amount of friction as possible.

For the cannabis industry and I think it becomes very common sense, which look I'm very confident of the president actually you can say what to say what you want but I mean common sense led reform is I think one of his one of his strong suit so.

Again I feel.

As positive as I as I can of course, it's politics, so anything can happen and we don't have control over.

Speaker #2: And we think that'll be a meaningful kind of change right in Georgia that's really important you know ground-level step.

When and how and the timing of it but I do think that and we are leaning in and look I think it's one thing also that I will just say that it is encouraging to housing industry working together I think that's really an important point here because as an industry. We have really failed at that in the past.

Speaker #9: Thank you. Thank you for . I will jump back into the queue.

Brenda: Beautiful. Thank you for that. I will jump back into the queue.

Speaker #5: Thank you. And the next question comes from Bill Perk with Roth Capital Partners.

Keith: Thank you. The next question comes from Bill Kirk with Roth Capital Partners.

Speaker #10: Hey, good morning. This is Nick on for Bill. Thanks for taking the questions. First one for me, just on the federal outlook. Kim, I know you put in a lot of time in DC and you ioned the drumbeat from kind of outside the traditional echo chamber.

Russell Stanley: Hey, good morning. This is Nick on for Bill. Thanks for taking the question. First one for me, just on the federal outlook. Tim, I know you've put in a lot of time in D.C., and you mentioned the drumbeat from kind of outside the traditional echo chamber. Would you say you've gotten more confident over the past three to six months around either banking reform or rescheduling materializing? Just what makes these conversations different than the ones we've had in the past? Thank you.

And we've been really fragmented and the fact that everyone is generally rowing in the same direction. I think can also be a big game changer, and that's that's really come to fruition over the last three to six months as well.

Speaker #10: Would you say you've gotten more confident over the past three to six months around either banking reform or rescheduling materializing? And just what makes these conversations different than the ones we've had in the past?

Understood I appreciate that color second from me just on the <unk> energy drink line curious to hear your thoughts around how regulators will treat a THC beverage with that energy component in there as well we've seen those gained good traction within the alcohol category, but there are always kind of a focal point for regulators. So just your thoughts there would be helpful. Thank you.

Speaker #10: Thank you.

Speaker #2: Yeah. Yes. I have gotten more confident over the last three to six months for sure. And I think that you know really again, you've got a president and you have an administration who specifically campaigned on federal reform and specifically on rescheduling.

Kim Rivers: Yes, I have gotten more confident over the last three to six months, for sure. I think that, you know, really, again, you have a President and you have an administration.

Yeah sure I mean look I mean, I think our upper line I think it's important to note that it's naturally derived caffeine at I would say reasonable levels, but you know we're not talking about something that's pushing the boundaries here.

Christine Hersey: specifically campaigned on federal reform and specifically on rescheduling. If you look back, during the campaign, MAGA Inc. actually put out ads around cannabis reform, with President Trump specifically stating that he is pro rescheduling specifically. Those ads ran in swing states. We know, based on polling data, that among all voters, rescheduling is incredibly popular. It has over 80% of the total vote. When you really drill down to very key demographics of 18 to 35, which of course, we know that the President really leaned on and counted on for the win, and they showed up for him, those folks in particular are well over 80% in terms of their support for rescheduling. I would say similarly and importantly, going into midterms, independents also are overwhelmingly in favor of rescheduling in the high 80s.

Speaker #2: You know, if you look back during the campaign, MAGA Inc. actually put out ads around cannabis reform with President Trump. You know, specifically stating that he is pro-rescheduling specifically.

Notwithstanding intentionally and and I also will say that we are very very focused on ensuring that we are compliant in every market and that's been actually a differentiator for us even even to date, even though this is a relatively new line for US as an example in Florida there were new regulations that came.

Speaker #2: You know, those ads ran in swing states and we know right based on polling data that among all voters, rescheduling is incredibly popular. It has over 80% of the total vote.

<unk> that came out and that will begin enforcement over the summer and there was a period of time, where actually in total wine.

Speaker #2: And when you really you know drill down to a very key demographics of 18 to 35, which of course you ow we know that the president really leaned on and counted on for the win you ow and they showed up for him.

The majority of products that were on shelves in Florida were pulled.

With regulators going in and checking labeling et cetera, and we were one of the only brands that were compliant and so and I think that that's also becoming a differentiator.

With us among the big distribute distributors, they're comfortable with the fact that look we understand how to be compliant rate, we have to do that across all of our all of our markets and have had to do it for a long time.

And we go above and beyond and then beginning to ensure that it's properly.

Proper labeling proper testing and that we're are ingredients nutritional information et cetera are not only there, but they're available and transparent and all the way through to the consumer so.

Christine Hersey: When you look at not only, of course, from a political standpoint, which we just talked about, but then on the policy side, when we think about it, and we think about the fact that cannabis as a Schedule I is scheduled right alongside, again, synthetic fentanyl and heroin, versus a Schedule III and the movement to Schedule III and what that would do as it relates to an unlock for American businesses and American-led research for the cannabis industry. I think it becomes very common sense, which, look, I'm very confident that this President actually, you can say what you want, but I mean, common sense-led reform is, I think, one of his strong suits. Again, I feel as positive as I can. Of course, it's politics. Anything can happen, and we don't have control over when and how and the timing of it.

Then I will re track and have robust compliance teams across across all markets that we're in and we will continue to be a market leader and making sure that we're in touch and having active conversations with regulators to get ahead of any any changes that may come our way.

Okay.

Great. That's it for me congrats on another good quarter.

Thanks.

Thank you and this concludes our question and answer session.

The conference back over to Christine <unk> for any closing comments.

Thank you thanks, everyone for your time today, we look forward to sharing additional updates during our next earnings call. Thanks, again and have a great day.

Thank you and as perhaps the conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.

Christine Hersey: I do think that we are leaning in. I think it's one thing also that I'll just say that it's encouraging to have the industry working together. I think that's really an important point here because as an industry, we have really failed at that in the past, and we've been really fragmented. The fact that everyone is generally rowing in the same direction, I think, can also be a big game changer. That's really come to fruition over the last three to six months as well.

Keith: Understood. I appreciate that, Kim. Second from me, just on the THC energy drink line, curious to hear your thoughts around how regulators will treat a THC beverage with that energy component in there as well. We have seen those gain good traction within the alcohol category, but they were always kind of a focal point for regulators. Just your thoughts there would be helpful. Thank you.

Christine Hersey: Yeah, sure. I mean, look, I mean, I think our Onward line, I think it's important to note that it's naturally derived caffeine at, I would say, reasonable levels. You're not talking about something that's pushing the boundaries here. That was done intentionally. I also will say that we are very, very focused on ensuring that we are compliant in every market. That's been actually a differentiator for us even to date, even though this is a relatively new line for us. As an example, in Florida, there were new regulations that came out and that will begin enforcement over the summer. There was a period of time where actually in total wine, the majority of products that were on shelves in Florida were pulled, with regulators going in and checking labeling, et cetera. We were one of the only brands that were compliant.

Christine Hersey: So, I think that that's also becoming a differentiator with us among just big distributors. They're comfortable with the fact that, look, we understand how to be compliant, right? We have to do that across all of our markets and have had to do it for a long time. We go above and beyond in the beginning to ensure that it's proper labeling, proper testing, that our ingredients, nutritional information, et cetera, are not only there, but they're available and transparent all the way through to the consumer. So, again, I will, we track and have robust compliance teams across all markets that we're in. We'll continue to be a market leader in making sure that we're in touch and having active conversations with regulators to get ahead of any changes that may come our way.

Keith: Great. That's it for me. Congrats on another good quarter.

Christine Hersey: Thanks.

Conference Operator: Thank you. This concludes our question and answer session. I would like to turn the conference back over to Christine Hersey for any closing comments.

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

Conference Operator: Thank you. As mentioned, the conference has now concluded. Thank you for attending today's presentation. We now disconnect your lines.