Q1 2026 Trulieve Cannabis Corp Earnings Call

May 7, 2026

Operator 2: She couldn't help thinking that there was a little more to life somewhere else. After all, it was a great big world. With lots of places to run to. Yeah, then she had to start trying to keep that one little promise she was gonna keep. Oh, yeah. All right. Take it easy, baby. Make it last all night. She was an American girl. Well, it was kinda cold that night. She stood alone on the balcony. Yeah, she heard all the cars roll by. At 04:41. Like waves crashing on the beach. For one desperate moment there, she cursed that. Oh, yeah. All right. Take it easy, baby. Make it last all night. She was an American girl.

Speaker #3: Somewhere else, after all, it was a great big world. With lots of places to run to. Yes, if she had the dots, try and cheat.

Speaker #3: Have one little promise she was gonna keep. Oh, yeah. All right. Take it easy, baby. Make it last all night. Make it last all night.

Speaker #3: She was an American girl. Well, it was kinda cold that night. She stood alone on a balcony. Yes, she put here the cars roll by.

Speaker #3: An old 441 like a wave crashing on the beach. There for one desperate moment there. He clipped that in her memory. Got a full paint for something that is so close.

Speaker #3: Still feels so far out of reach. Oh, yeah. All right. Take it easy, baby. Make it last all night. Make it last all night.

Speaker #3: She was an American girl.

Speaker #4: Good morning, everyone, and welcome to the TrueLeaf Cannabis Corp. first quarter 2026 financial results conference call. My name is Chloe, and I will be your conference operator today.

Operator 3: Good morning, everyone, and welcome to the Trulieve Cannabis Corp. Q1 2026 Financial Results Conference Call. My name is Chloe, and I will be your conference operator today. As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Christine Hersey, Chief Corporate Affairs and Strategy Officer for Trulieve. You may begin.

Operator: Good morning, everyone, and welcome to the Trulieve Cannabis Corporaion Q1 2026 Financial Results Conference Call. My name is Chloe, and I will be your conference operator today. As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Christine Hersey, Chief Corporate Affairs and Strategy Officer for Trulieve. You may begin.

Speaker #4: As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Christine Hersey, Chief Corporate Affairs and Strategy Officer for TrueLeaf.

Speaker #4: You may begin.

Speaker #5: Thank you. Good morning, and thank you for joining us. During today's call, Kim Rivers, Chief Executive Officer in Jan Reese, Chief Financial Officer, will deliver a prepared remarks on the financial performance and outlook for TrueLeaf.

Christine Hersey: Thank you. Good morning, and thank you for joining us. During today's call, Kim Rivers, Chief Executive Officer, and Jan Reese, 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 Q1 2026 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.

Speaker #5: Following the prepared remarks, we will open the call to questions. This morning, we reported first quarter 2026 results. A copy of our earnings press release and PowerPoint presentation may be found on the investor relations section of our website www.trueleaf.com.

Speaker #5: 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 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 10-K, as well as our periodic quarterly filings.

Christine Hersey: As a reminder, statements made during this call that are not historical facts constitute forward-looking statements. 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 forecasts, 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.

Speaker #5: 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.

Speaker #5: 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.

Speaker #5: We generally refer to these as non-GAAP financial measures. These measures should not be considered in isolation or as a substitute for TrueLeaf's financial results prepared in accordance with GAAP.

Christine Hersey: We generally refer to these as non-GAAP financial measures. These measures should not be considered in isolation or as a substitute for Trulieve's financial results prepared in accordance with GAAP. A reconciliation of these non-GAAP measures to the most directly comparable GAAP measures is available in our earnings press release 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 #5: 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.

Speaker #5: 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 #5: 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 #6: Thank you, Christine. Good morning, everyone, and thank you for joining us today. This is an incredibly exciting time for the cannabis industry. President Trump delivered on his promise to address cannabis reform with two decisive actions.

Kim Rivers: Thank you, Christine. Good morning, everyone, and thank you for joining us today. This is an incredibly exciting time for the cannabis industry. President Trump delivered on his promise to address cannabis reform with two decisive actions. First, Attorney General Todd Blanche reclassified medical marijuana to Schedule III, effective immediately. Second, AG Blanche announced the continuation of the formal rulemaking process to more broadly reclassify marijuana. We applaud President Trump and his administration for this historic shift in federal policy that more closely aligns with scientific evidence, current medical practice, and state laws. These developments have major positive implications for Trulieve. First, reclassifying medical marijuana to Schedule III acknowledges the medical benefits of marijuana and eases restrictions on research. Robust scientific research can now be conducted using medical marijuana that Americans buy in dispensaries every day.

Speaker #6: First, Attorney General Todd Blanch reclassified medical marijuana to Schedule III, effective immediately. Second, AJ Blanch announced the continuation of the formal rulemaking process to more broadly reclassify marijuana.

Speaker #6: We applaud President Trump and his administration for this historic shift in federal policy that more closely aligns with scientific evidence, current medical practice, and state laws.

Speaker #6: These developments have major positive implications for TrueLeaf. First, reclassifying medical marijuana to Schedule III acknowledges the medical benefits of marijuana and eases restrictions on research.

Speaker #6: Robust scientific research can now be conducted using medical marijuana that Americans buy in dispensaries every day. This research can help delineate which doses and form factors are most likely to benefit patient groups with specific indications and symptoms.

Kim Rivers: This research can help delineate which doses and form factors are most likely to benefit patient groups with specific indications and symptoms. Second, state licensed operators can register with the Drug Enforcement Administration to manufacture, distribute, and dispense medical marijuana. For Trulieve, this is important because the majority of our business serves medical patients. Today, we have 206 dispensaries supported by over 3.5 million square feet of production capacity in four states that are strictly medical marijuana operations. As outlined in the final order by DOJ, state licensed operators have 60 days to apply for registration, and those applications are deemed approved in the interim period until final registration. We have already applied to register our 206 dispensaries in medical-only markets. We would like to thank Attorney General Blanche and his team for having the registration portal launched quickly.

Speaker #6: Second, state-licensed operators can register with the Drug Enforcement Agency to manufacture, distribute, and dispense medical marijuana. For TrueLeaf, this is important because the majority of our business serves medical patients.

Speaker #6: Today, we have 206 dispensaries, supported by over $3.5 million square feet of production capacity in four states that are strictly medical marijuana operations. As outlined in the final order by DOJ, state-licensed operators have 60 days to apply for registration, and those applications are deemed approved in the interim period until final registration.

Speaker #6: We have already applied to register our 206 dispensaries in medical-only markets. We would like to thank Attorney General Blanch and his team for having the registration portal launched quickly.

Speaker #6: Third, following the reclassification of medical marijuana, the Treasury Department announced that state-licensed medical marijuana businesses are able to deduct ordinary expenses as medical marijuana is no longer subject to the punitive 280(e) tax burden.

Kim Rivers: Third, following the reclassification of medical marijuana, the Treasury Department announced that state licensed medical marijuana businesses are able to deduct ordinary expenses as medical marijuana is no longer subject to the punitive 280E tax burden. This change applies to the current tax year and is reflected in our Q1 results. We look forward to additional guidance from the Treasury Department and appreciate the clarity provided on this issue. The formal process to address the classification of marijuana more broadly has resumed with a new hearing scheduled to begin on 29 June and conclude no later than 15 July. Given the expedited timeline and significant body of data that has already been examined, we are optimistic that marijuana rescheduling can be finalized this year. We expect that reclassification to Schedule III will remove the 280E tax burden from non-medical operations.

Speaker #6: This change applies to the current tax year and is reflected in our first quarter results. We look forward to additional guidance from the Treasury Department and appreciate the clarity provided on this issue.

Speaker #6: Finally, the formal process to address the classification of marijuana more broadly has resumed with a new hearing scheduled to begin on June 29th and conclude no later than July 15th.

Speaker #6: Given the expedited timeline and significant body of data that has already been examined, we are optimistic that marijuana rescheduling can be finalized this year.

Speaker #6: We expect that reclassification to Schedule III will remove the 280(e) tax burden from non-medical operations. This comprehensive approach demonstrates the commitment by the administration to definitively reschedule marijuana.

Kim Rivers: This comprehensive approach demonstrates the commitment by the administration to definitively reschedule marijuana. Given all of these changes, we are actively exploring options for Trulieve to uplist to a major US exchange and address the outstanding uncertain tax position. We remain confident in our overall strategy and our ability to further solidify our position as an industry leader. Turning now to our Q1 results. Our team continues to deliver stellar financial and operational performance with industry-leading margins and robust cash generation underpinned by outstanding customer retention. Q1 revenue of $287 million was in line with guidance and seasonal trends. Q1 gross margin of 59% reflects operational efficiencies, low production costs, and our disciplined approach to promotional activity. Adjusted EBITDA of $100 million, or 35% margin, was driven by expense control in our core business.

Speaker #6: Given all of these changes, we are actively exploring options for TrueLeaf to uplift to a major U.S. exchange and address the outstanding uncertain tax position.

Speaker #6: We remain confident in our overall strategy and our ability to further solidify our position as an industry leader. Turning now to our first quarter results.

Speaker #6: Our team continues to deliver stellar financial and operational performance with industry-leading margins and robust cash generation underpinned by outstanding customer retention. First quarter revenue of $287 million within line with guidance and seasonal trends.

Speaker #6: First quarter gross margin of 59% reflects operational efficiencies, low production costs, and our disciplined approach to promotional activity. Adjusted EBITDA of $100 million, or a 35% margin, was driven by expense control in our core business.

Speaker #6: During the quarter, we raised $60 million in senior notes and generated $56 million in operating cash flow, both of which contributed to our quarter-end cash balance of $353 million.

Kim Rivers: During the quarter, we raised $60 million in senior notes and generated $56 million in operating cash flow, both of which contributed to our quarter-end cash balance of $353 million. Q1 retail results were in line with seasonal patterns as traffic dipped slightly and average basket size was flat compared to Q4. Our team did a phenomenal job managing through the post-holiday period in January to meet customers where they are while maintaining margins. Traffic improved in March, rebounding to the same traffic level as December. Holiday performance on 4/20 was strong, with traffic and units up 40% and 26% respectively compared to last year. Record wholesale revenue increased 37% compared to last year, reaching $22 million due to strength in Maryland and Pennsylvania. In Ohio, our production partner realized higher sales of branded products, including Modern Flower and Roll One.

Speaker #6: First quarter retail results were in line with seasonal patterns as traffic dipped slightly and average basket size was flat compared to the fourth quarter.

Speaker #6: Our team did a phenomenal job managing through the post-holiday period in January to meet customers where they are while maintaining margins. Traffic improved in March, rebounding to the same traffic level as December.

Speaker #6: Holiday performance on 4/20 was strong, with traffic and units up 40% and 26%, respectively, compared to last year. Record wholesale revenue increased 37% compared to last year, reaching $22 million, due to strength in Maryland and Pennsylvania.

Speaker #6: In Ohio, our production partner realized higher sales of branded products, including modern flower and roll-on. While wholesale demand remained strong, our team continues to carefully balance growth and counterparty risk.

Kim Rivers: While wholesale demand remains strong, our team continues to carefully balance growth and counterparty risk. Turning now to our key initiatives this year, we are concentrating efforts in 4 strategic areas. 1, expanding access to cannabis. 2, investing in growth initiatives. 3, growing our loyal customer base. 4, elevating our branded product portfolio. I'll begin with expanding access to cannabis, which is a critical part of our mission. For over a decade, Trulieve has been working tirelessly to open up markets, bring more products to patients, and reduce the stigma associated with cannabis. Advocacy efforts at federal, state, and local levels highlight the many benefits of regulated cannabis to key stakeholders. Rescheduling cannabis to Schedule III sends a powerful signal that reform is achievable, setting the stage for additional measures. The majority of Americans favor common sense cannabis reform, we look forward to supporting these efforts.

Speaker #6: Turning now to our key initiatives this year, we are concentrating efforts in four strategic areas. One, expanding access to cannabis; two, investing in growth initiatives; three, growing our loyal customer base; and four, elevating our branded product portfolio.

Speaker #6: I'll begin with expanding access to cannabis, which is a critical part of our mission. For over a decade, TrueLeaf has been working tirelessly to open up markets, bring more products to patients, and reduce the stigma associated with cannabis.

Speaker #6: Advocacy efforts at federal, state, and local levels highlight the many benefits of regulated cannabis to key stakeholders. Rescheduling cannabis to Schedule III, since a powerful signal that reform is achievable.

Speaker #6: Setting the stage for additional measures. The majority of Americans favor common-sense cannabis reform, and we look forward to supporting these efforts. In Texas, TrueLeaf was granted a conditional license for the Texas Compassionate Use program, or TCUP, medical marijuana program.

Kim Rivers: In Texas, Trulieve was granted a conditional license for the Texas Compassionate Use Program, or TCUP, medical marijuana program. Our team has submitted due diligence materials and is working to finalize the license. A recent poll by Fabrizio, Lee, and Associates showed that while the majority of Texans approve having medical marijuana available in the state, only 11% of those surveyed were aware of the TCUP program. We believe there is a meaningful opportunity to raise awareness and provide greater access for patients in need. With over 145,000 patients today, telehealth consultations for patients in satellite pickup locations, the TCUP program is poised for meaningful growth over the next few years. We look forward to contributing to the success of the program with education and high-quality products.

Speaker #6: Our team has submitted due diligence materials and is working to finalize the license. A recent poll by Fabrizio Leon Associates showed that while the majority of Texans approve having medical marijuana available in the state, only 11% of those surveyed were aware of the TCUP program.

Speaker #6: We believe there is a meaningful opportunity to raise awareness and provide greater access for patients in need. With over 145,000 patients today, telehealth consultations for patients in satellite pickup locations, the TCUP program is poised for meaningful growth over the next few years.

Speaker #6: We look forward to contributing to the success of the program with education and high-quality products. In Georgia, legislation to expand the medical cannabis program is expected to be signed by Governor Kemp, or automatically commenced next week.

Kim Rivers: In Georgia, legislation to expand the medical cannabis program is expected to be signed by Governor Kemp or automatically commenced next week. The medical cannabis program expansion includes new qualifying conditions such as HIV, IBS, and lupus, and new form factors, including vapes. Rulemaking to allow sale of new products could be completed as early as Q4 of this year. The patient count in Georgia recently passed 35,000, and we have applied to open 1 additional dispensary to meet growing demand. Given the reclassification of medical marijuana to Schedule III, we are hopeful that sales of approved medical marijuana products through independent pharmacies in Georgia will resume. As a reminder, Georgia was the first state to allow licensed independent pharmacies to dispense medical cannabis to registered patients. Trulieve supplied cannabis products to pharmacies for a short period until the DEA required the pharmacies to cease dispensation.

Speaker #6: The medical cannabis program expansion includes new qualifying conditions such as HIV, IBS, and lupus, and new form factors including vapes. Rulemaking to allow sale of new products could be completed as early as the fourth quarter of this year.

Speaker #6: The patient count in Georgia recently passed 35,000, and we have applied to open one additional dispensary to meet growing demand. Given the reclassification of medical marijuana to Schedule III, we are hopeful that sales of approved medical marijuana products through independent pharmacies in Georgia will resume.

Speaker #6: As a reminder, Georgia was the first state to allow licensed independent pharmacies to dispense medical cannabis to registered patients. TrueLeaf supplied cannabis products to pharmacies for a short period until the DEA required the pharmacies to cease dispensation.

Speaker #6: With rescheduling and our applications for DEA registration, we are hopeful that pharmacies may again dispense medical cannabis products in the future. Alongside efforts to expand access to cannabis, we are investing in growth initiatives that align with our long-term objectives to build a leading cannabis company.

Kim Rivers: With rescheduling and our applications for DEA registration, we are hopeful that pharmacies may again dispense medical cannabis products in the future. Alongside efforts to expand access to cannabis, we are investing in growth initiatives that align with our long-term objectives to build a leading cannabis company. Investments this year include retail and production upgrades and expansion in our existing footprints, new market expansion in Texas, and technology to advance hyper-personalization of customer messaging. Year to date, we have opened 7 new retail dispensaries in Florida and refreshed or remodeled 10 locations. In Texas, we began our initial investment, breaking ground on our production campus. Pending regulatory approvals, we plan to quickly launch production and retail operations to serve patients across the Lone Star State. Alongside expansion within our existing markets, we are actively evaluating potential acquisition opportunities.

Speaker #6: Investments this year include retail and production upgrades and expansion in our existing footprint, new market expansion in Texas, and technology and to advance hyper-personalization of customer messaging.

Speaker #6: Year to date, we have opened seven new retail dispensaries in Florida, and refreshed or remodeled 10 locations. In Texas, we began our initial investment, breaking ground on our production campus.

Speaker #6: Pending regulatory approvals, we plan to quickly launch production and retail operations to serve patients across the Lone Star State. Alongside expansion within our existing markets, we are actively evaluating potential acquisition opportunities.

Speaker #6: Investments in technology that enables more sophisticated hyper-personalization and targeted outreach kicks off in the first quarter. During our last call, we introduced Project Hyper, a multi-year project that upgrades our messaging capabilities by using AI to automate segmentation, decisioning, and execution to accelerate speed to market and real-time engagement.

Kim Rivers: Investment in technology that enables more sophisticated hyper-personalization and targeted outreach kicks off in Q1. During our last call, we introduced Project Hyper, a multiyear project that upgrades our messaging capabilities by using AI to automate segmentation, decisioning, and execution to accelerate speed to market and real-time engagement. Project Hyper is well underway, and we expect to realize initial benefits through greater efficiency as soon as Q4 of this year. Investments in our retail network, production sites, and technology provide competitive advantages today while setting the stage for future growth in new and existing markets. While expanding access and investing in growth initiatives are critical to long-term success, we are growing our loyal customer base through engagement, high-quality products, and world-class service. Engagement through paid media, physician engagement, and local community efforts continues to attract new patients and customers to Trulieve.

Speaker #6: Project Hyper is well underway, and we expect to realize initial benefits through greater efficiency as soon as the fourth quarter of this year. Investments in our retail network, production sites, and technology provide competitive advantages today while setting the stage for future growth in new and existing markets.

Speaker #6: While expanding access and investing in growth initiatives are critical to long-term success, we are growing our loyal customer base through engagement, high-quality products, and world-class service.

Speaker #6: Engagement through paid media, physician engagement, and local community efforts continues to attract new patients and customers to TrueLeaf. Across our markets, we are allocating resources to reach new customers in digital and real-world environments.

Kim Rivers: Across our markets, we are allocating resources to reach new customers in digital and real-world environments. These efforts continue to gain momentum and drive store traffic as we make deeper connections in the markets we serve. Last year, we launched a mobile app in Florida, providing users with one centralized place for browsing, deals, reservation, and rewards. Since launch, over 150,000 customers downloaded the app, leading to 7 million user sessions. We plan to launch the app in Arizona later this year. In Q1, our rewards program surpassed 1 million members, reaching this major milestone just 2 years after initial launch. Rewards members continue to spend on average 2.4 times more than non-members, comprising 78% of Q1 transactions. We plan to introduce program tiers starting this month with Florida.

Speaker #6: These efforts continue to gain momentum and drive store traffic as we make deeper connections in the markets we serve. Last year, we launched a mobile app in Florida providing users with one centralized place for browsing, deals, reservation, and rewards.

Speaker #6: Since launch, over 150,000 customers downloaded the app, leading to 7 million user sessions. We plan to launch the app in Arizona later this year.

Speaker #6: In the first quarter, our rewards program surpassed 1 million members, reaching this major milestone just two years after initial launch. Rewards members continue to spend on average $2.4 times more than non-members, comprising 78% of first-quarter transactions.

Speaker #6: We plan to introduce program tiers starting this month with Florida. This program enhancement enables greater rewards for customers who spend more, including exclusive offers, products, and events.

Kim Rivers: This program enhancement enables greater rewards for customers who spend more, including exclusive offers, products, and events. Segmentation and personalized messaging based on purchase behavior, browsing activity, engagement history, and preferred communication channels enables more effective outreach and drives stronger results. We utilize segmentation today and are adding functionality based on more granular behavior-driven category preferences to yield higher conversion rates while improving marketing efficiency. Sending an appropriate message in the right channel at the right time to provide customers with information they care about reinforces customer satisfaction and retention. Q1 retention remains strong at 69% company-wide, with 78% retention in medical-only markets. Serving customers with high-quality branded products is an essential ingredient to lasting success. In Q1, we sold over 12 million branded product units. In-house brands Modern Flower and Roll One continue to resonate with customers, representing 45% of the branded products sold.

Speaker #6: Segmentation and personalized messaging based on purchase behavior browsing activity engagement history and preferred communication channels enables more effective outreach and drives stronger results. We utilize segmentation today and are adding functionality based on more granular behavior-driven category preferences to yield higher conversion rates while improving marketing efficiency.

Speaker #6: Sending an appropriate message in the right channel at the right time to provide customers with information they care about reinforces customer satisfaction and retention.

Speaker #6: First-quarter retention remains strong at 69% company-wide, with 78% retention in medical-only markets. Serving customers with high-quality, branded products is an essential ingredient to lasting success.

Speaker #6: In the first quarter, we sold over 12 million branded product units. In-house brands Modern Flower and Role One continue to resonate with customers, representing 45% of the branded products sold.

Speaker #6: Our Role One clutch all-in-one vape was recently launched in five new markets. The customer feedback for this compact discrete vape has been fantastic. And unit sales are gaining momentum.

Kim Rivers: Our Roll One Clutch all-in-one vape was recently launched in five new markets. The customer feedback for this compact, discreet vape has been fantastic, and unit sales are gaining momentum. In the flower category, we recently launched Legacy by Cultivar, premium quality craft flower. New original strains represent the culmination of years of work to select, refine, and nurture genetics from seed as part of our in-house breeding program. We will continue to identify white space in our branded product portfolio and the markets we serve as we develop and launch innovative new products. In summary, we are making demonstrable progress in all of our strategic priorities. As we approach mid-year, our team is dialed in and executing on our plan. With that, I'd like to turn the call over to our CFO, Jan Rees. Please go ahead.

Speaker #6: In the flower category, we recently launched Legacy by Cultivar, premium quality craft flower. New original strains represent the culmination of years of work to select, refine, and nurture genetics from seed as part of our in-house breeding program.

Speaker #6: We will continue to identify white space in our branded product portfolio in the markets we serve, as we develop and launch innovative new products.

Speaker #6: In summary, we are making demonstrable progress in all of our strategic priorities, as we approach mid-year, our team is dialed in and executing on our plan.

Speaker #6: With that, I'd like to turn the call over to our CFO, Jan Reese. Please go ahead.

Speaker #3: Good morning, and thank you, Kim. First-quarter revenue was $287 million in line with guidance. New store openings, adult use momentum in Ohio, and wholesale growth were offset by ongoing pricing pressure and software consumer wallet trends.

Jan Reese: Good morning. Thank you, Kim. Q1 revenue was $287 million, in line with guidance. New store openings, adult use momentum in Ohio, and wholesale growth were offset by ongoing pricing pressure and softer consumer wallet trends. Q1 gross profit totaled $170 million or 59% margin. Gross margin strength reflects economies of scale, operational efficiencies across our platform, and disciplined promotional management. We expect quarterly gross margin to vary based on product and market mix, inventory sell-through, promotional activity, and idle capacity costs. Q1 SG&A was $105 million or 37% of revenue compared to 40% last year, driven by reduced operating expenses and lower campaign support. Adjusted SG&A at 31% of revenue was comparable to last year. Q1 net income was $2 million or $0.01 earnings per share.

Speaker #3: First-quarter gross profit totaled $170 million, or 59% margin. Gross margin strength reflects economies of scales, platform, and disciplined promotional management. We expect quarterly gross margin to vary based on product and market mix, inventory sale through promotional activity, and idle capacity costs.

Speaker #3: First-quarter SG&A was $105 million, or 37% of revenue, compared to 40% last year. Driven by reduced operating expenses and lower campaign support, adjusted SG&A at 31% of revenue was comparable to last year.

Speaker #3: First-quarter net income was $2 million, or 1 cent earnings per share. Excluding non-recurring items, first-quarter net income would have been $20 million, or 10 cents per share.

Jan Reese: Excluding non-recurring items, Q1 net income would have been $20 million or $0.10 per share. Q1 Adjusted EBITDA was $100 million, representing a 35% margin and reflecting expense leverage across our core operations. Turning now to our tax strategy. As a reminder, we filed amended returns challenging the applicability of Section 280E to our business, and our balance sheet includes an uncertain tax position covering 2019 to the present. The UTP includes 280E tax liability, refunds received from the IRS totaling more than $114 million and accrued interest. As Kim alluded to earlier, the Q1 income tax expense applies the normal tax rate. It does not include 280E tax liabilities for Q1.

Speaker #3: First-quarter adjusted EBITDA was $100 million, representing a 35% margin and reflecting expense leverage across our core operations. Turning now to our tax strategy. As a reminder, we filed a mandatory return challenging the applicability of Section 280(e) to our business, and our balance sheet includes an uncertain tax position covering $2,019 to the present.

Speaker #3: The UTP includes 280(e) tax liability, refunds received from the IRS totaling more than $114 million, and accrued interest. As Kim alluded to earlier, the first quarter income tax expense implies the normal tax rate.

Speaker #3: It does not include 280(e) tax liabilities for the first quarter. The increase in our uncertain tax position includes $15 million in interest on the UTP and $11 million of overpayments used to cover ordinary taxes.

Jan Reese: The increase in our uncertain tax position includes $15 million in interest on the UTP and $11 million of overpayments used to cover ordinary taxes. We remain confident in our position and our ability to address outstanding UTP. Moving on to the balance sheet and cash flow. We ended the quarter with $353 million in cash and $290 million in debt. The Q1 operating cash flow was $56 million, capital expenditure was $13 million, and free cash flow totaled $42 million. Turning to our outlook. We expect Q2 revenue to increase by low single-digit % sequentially. Gross margin is expected to fluctuate quarter-to-quarter, but remain broadly in line with our recent performance.

Speaker #3: We remain confident in our position and our ability to address outstanding UTP. Moving on to the balance sheet and cash flow, we ended the quarter with $353 million in cash and $290 million in debt.

Speaker #3: The first-quarter operating cash flow was $56 million, capital expenditure was $13 million, and free cash flow totaled $42 million. Turning to our outlook, we expect second-quarter revenue to increase by low single-digit percentage sequentially.

Speaker #3: Gross margin is expected to fluctuate quarter to quarter but remain broadly in line with our recent performance. Consumer trends will influence retail results and margin.

Jan Reese: Consumer trends will influence retail results and margin. For full year 2026, we anticipate operating cash flow of at least $250 million and capital expenditure up to $85 million. Pending regulatory approvals, we may accelerate investment in Texas. We may update our outlook as regulatory and market catalysts evolve. With that, I turn the call back over to Kim.

Speaker #3: For full year 2026, we anticipate operating cash flow of at least $250 million and capital expenditure up to $85 million. Pending regulatory approvals, we may accelerate investment in taxes.

Speaker #3: We may update our outlook as regulatory and market catalysts evolve. With that, I turn the call back over to Kim.

Speaker #1: Thanks, Jan. Marijuana rescheduling is the first major policy shift in US history. Rescheduling accomplishes several historic goals. First, it acknowledges the medical value of cannabis.

Kim Rivers: Thanks, Jan. Marijuana rescheduling is the first major policy shift in US history. Rescheduling accomplishes several historic goals. First, it acknowledges the medical value of cannabis. Reducing the stigma on cannabis frees patients to more readily access needed medicine. Second, it removes barriers to research. Enabling critical research provides information and tools for physicians to effectively treat patients. Finally, it eliminates the punitive tax burden of 280E. Removing the tax burden reduces financial pressure on state legal operators, opening up pathways for new investments and greater conversion into a regulated marketplace. We applaud the Trump administration for delivering on its promise to address common sense cannabis reform, an issue that the vast majority of Americans agree is long overdue. We believe that rescheduling is the first major domino to fall, paving the way for broader reform efforts.

Speaker #1: Reducing the stigma on cannabis frees patients to more readily access needed medicine. Second, it removes barriers to research. Enabling critical research provides information and tools for physicians to effectively treat patients.

Speaker #1: Finally, it eliminates the punitive tax burden of 280(e). Removing the tax burden reduces financial pressure on state legal operators, opening up pathways for new investments and greater conversion into our regulated marketplace.

Speaker #1: We applaud the Trump administration for delivering on its promise to address common-sense cannabis reform, an issue that the vast majority of Americans agree is long overdue.

Speaker #1: We believe that rescheduling is the first major dominoes to fall, paving the way for broader reform efforts. While federal policy advances, state adoption and expansion of cannabis programs continues every year.

Kim Rivers: While federal policy advances, state adoption and expansion of cannabis programs continues every year. Consumers benefit from greater choice and access to the products they rely on. Over the past decade, Trulieve has been on the forefront of change, opening new markets and providing millions of customers with access to safe, tested products in a normalized retail environment. This year, we are especially focused on expanding access in Georgia and Texas. Bolstered by our cash position, scaled platform, and laser focus on serving customers, we are ready to maximize the opportunities ahead. Trulieve grows 1 customer at a time, setting the bar for today and the decades to come. Thank you for joining us, and as I always say, Onward.

Speaker #1: Consumers benefit from greater choice and access to the products they rely on. Over the past decade, Trulieve has been on the forefront of change, opening new markets and providing millions of customers with access to safe, tested products in a normalized retail environment.

Speaker #1: This year, we are especially focused on expanding access in Georgia and Texas. Bolstered by our cash position, scaled platform, and laser focus on serving customers, we are ready to maximize the opportunities ahead.

Speaker #1: Trulieve grows one customer at a time, setting the bar for today and the decades to come. Thank you for joining us, and as I always say, onward.

Speaker #2: At this time, Kim Rivers and Jan Reese will be available to answer any questions. Operator, please open up the call for questions.

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

Speaker #4: Thank you. We will now begin the question-and-answer session. To ask a question, you may press star then 1 on your touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys.

Operator 3: Thank you. We will now begin the question-and-answer session. The first question today comes from Luke Hannan with Canaccord Genuity. Please go ahead.

Operator: Thank you. We will now begin the question-and-answer session. The first question today comes from Luke Hannan with Canaccord Genuity. Please go ahead.

Speaker #4: If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster.

Speaker #4: The first question today comes from Lou Cannon with Cannacord Genuity. Please go ahead.

Speaker #5: Thanks. Good morning, everyone. Kim, I wanted to go back to in your prepared remarks. You talked about how you're actively exploring options when it comes to uplifting.

Luke Hannan: Thanks. Good morning, everyone. Kim, I wanted to go back to in your prepared remarks, you talked about how you're actively exploring options when it comes to up-listing. I'm just curious to know what specific milestones are you looking for here, and then potentially what's your base case for when you might expect that an up-listing could occur?

Speaker #5: I'm just curious to know, what specific milestones are you looking for here? And then potentially, what's your base case for when you might expect that an uplifting could occur?

Speaker #6: Yeah, good morning, Luke. What I would tell you is that, as we said in the prepared remarks, we're actively pursuing all opportunities at the moment.

Kim Rivers: Yeah. Good morning, Luke. What I would tell you is that, as we said in the prepared remarks, we're actively pursuing all opportunities at the moment, and we are not at this time prepared to go into additional detail. I would say, stay tuned and, you know, I would say Trulieve is. I think we have a track record of pushing hard and moving as fast as possible.

Speaker #6: We are not, at this time, prepared to go into additional details. But I would say stay tuned, and I would say Trulieve is—I think we have a track record of pushing hard and moving as fast as possible.

Speaker #5: Great. And then secondly, something else that you called out was that you're actively evaluating acquisition opportunities. I'm curious to know, when it comes to overall deal flow now that the news on rescheduling has landed, and presumably other operators in the industry are more interested in transacting, have you seen deal flow pick up and then are the multiples that you're seeing deals occur at, is it more or less in line with expectations?

Luke Hannan: Great. Secondly, something else that you called out was that you're actively evaluating acquisition opportunities. I'm curious to know when it comes to overall deal flow now that the news on rescheduling has landed and presumably, other operators in the industry are more interested in transacting. Have you seen deal flow pick up? Are the multiples that you're seeing deals occur at, is it more or less in line with expectations?

Speaker #6: So we certainly are seeing deal flow pick up. For sure. And valuations remain all over the place. So it's very dependent obviously on sophistication level, size, position of the company, private versus public, etc.

Kim Rivers: We certainly are seeing deal flow pick up, for sure, and valuations remain all over the place. It's very dependent, obviously on sophistication level, size, you know, position of the company, private versus public, et cetera. Variability has not necessarily shifted, but I would say deal flow certainly has increased.

Speaker #6: So, variability has not necessarily shifted, but I would say deal flow certainly has increased.

Speaker #5: Got it. Great quarter. Thank you very much.

Luke Hannan: Got it. Great quarter. Thank you very much.

Speaker #6: Thanks.

Kim Rivers: Thanks.

Speaker #4: The next question comes from Aaron Gray with Alliance Global Partners. You may go ahead.

Operator 3: The next question comes from Aaron Grey with Alliance Global Partners. You may go ahead.

Operator: The next question comes from Aaron Grey with Alliance Global Partners. You may go ahead.

Speaker #7: Hi, thank you very much for the questions today. One thing I want to talk about is wholesale. It's been a nice couple of quarters for you guys, positive momentum.

Aaron Grey: All right. Thank you very much for the questions today. You know, one thing I wanna talk about is wholesale. You know, it's been a nice couple quarters for you guys, positive momentum. While you've under-indexed relative to some others in terms of the wholesale segment, you know, can you speak to some of the opportunities you're seeing there and how we should expect it to trend in the near to medium term?

Speaker #7: While you've under-indexed relative to some others, in terms of the wholesale segment, can you speak to some of the opportunities you're seeing there and how we should expect it to trend in the near to medium term?

Speaker #6: Sure. Very, very proud of our wholesale team and our performance. And wholesale for us is certainly part of our strategic mix but I would say secondary right behind our primary strategy of branded products through branded retail.

Kim Rivers: Sure. You know, very proud of our wholesale team and our performance. You know, wholesale for us is certainly part of our strategic mix, but I would say secondary right behind our primary strategy of branded products through branded retail. That being said, after establishing a presence in a market, such as, for example, Pennsylvania, Arizona, Ohio, where we have great penetration of our internal brands in our stores, we, you know, more recently have embraced the opportunity to take that brand affinity and expand it out into the wholesale channel in a more robust way. We're seeing fantastic results, particularly around our core brands such as Modern Flower and Roll One.

Speaker #6: That being said, after establishing a presence in a market such as, for example, Pennsylvania, Arizona, Ohio, where we have great penetration of our internal brands in our stores, we more recently have embraced the opportunity to take that brand affinity and expand it out into the wholesale channel in a more robust way.

Speaker #6: And we're seeing fantastic results, particularly around our core brands such as Modern Flower and Role One. And we mentioned on the call as an example of that, the Role One clutch has been a huge seller for us across both, again, internal branded retail and also on the wholesale channel.

Kim Rivers: You know, we mentioned on the call as an example of that, you know, the Roll One Clutch has been a huge seller for us, across both, again, internal branded retail and also on the wholesale channel. We see it certainly as a bit of a growth opportunity for us, Aaron, and are, I think, you know, continuing to add doors and increase penetration, shelf penetration, of existing doors, quarter-over-quarter.

Speaker #6: So we see it certainly as a bit of a growth opportunity for us, Aaron. And our I think continuing to add doors and increase penetration shelf penetration of existing doors quarter over quarter.

Speaker #5: Okay, great. Thanks for the color. Second question for me, just in terms of the potential hemp ban coming to fruition in November, how do you think about potential positive impacts for the domestic market as well as specifically for Florida?

Aaron Grey: Okay, great. Thanks for the color. Second question for me, just in terms of the potential hemp ban, you know, coming to fruition in November. You know, how do you think about potential positive impacts for the domestic market as well as specifically for Florida? I know Florida is just a medical market today, but do you feel like there could be a big benefit there and potential things that you could do to set up there? Thank you.

Speaker #5: I know Florida is just a medical market today, but do you feel like there could be a big benefit there and potential things that you could do to set up there?

Speaker #5: Thank you.

Speaker #6: Sure. We certainly see the opportunity of conversion from broadly unregulated market and converted into a more regulated marketplace. We believe that that opportunity is significant in both Florida and Texas, actually.

Kim Rivers: Sure. We certainly see an opportunity of conversion from that broadly unregulated market and converted into a more regulated marketplace. We believe that that opportunity is significant in both Florida and Texas, actually, I think is another market that obviously we'll be entering and could the timing pair nicely with the expansion of retail locations and the program in Texas alongside potential ban being more fully implemented. As you mentioned, the market size for hemp in Florida, in particular in Texas, is very large. Even if you were to take a fraction of those customers and convert them into the regulated medical programs, it could be meaningful for sure.

Speaker #6: I think is another market that obviously will be entering and could the timing pair nicely with the expansion of a retail locations and the program in Texas alongside potential ban being more fully implemented.

Speaker #6: As you mentioned, the market size for hemp in Florida in particular and Texas is very large. And so even if you were to take a fraction of those customers and convert them into the regulated medical programs, it could be meaningful for sure.

Kim Rivers: In terms of advanced work, we continue to focus on education. We mentioned in our prepared remarks, launching activities where we are meeting customers where they are, both digitally and physically. We refer to that as our ground game, and we have ramped that in a meaningful way in Florida, specifically being on the ground and in front of folks, having conversations at different events and in different venues where folks may be interested in learning about the regulated program. That is laying track for, you know, for conversion opportunities ahead of, again, what could be a meaningful shift within the Florida landscape.

Speaker #6: In terms of advanced work, we continue to focus on education, we mentioned in our prepared remarks launching activities where we're meeting customers where they are both digitally and game.

Speaker #6: And we have ramped that in a meaningful way in Florida specifically being on the ground and in front of folks, having conversations at different events and in different venues where folks may be interested in learning about the regulated program.

Speaker #6: And so that is laying track for conversion opportunities ahead of, again, what could be a meaningful shift within the Florida landscape.

Speaker #5: Okay, great. Thanks for the detail there. I'll go ahead and jump back in the queue.

Aaron Grey: Okay, great. Thanks for the detail there. I'll go and jump back in the queue.

Speaker #6: Yep.

Kim Rivers: Yep.

Speaker #4: The next question comes from Bill Kirk with Roth Capital Partners. Please go ahead.

Operator 3: The next question comes from Bill Kirk with ROTH Capital Partners. Please go ahead.

Operator: The next question comes from Bill Kirk with ROTH Capital Partners. Please go ahead.

Speaker #7: Good morning, everybody. Kim, first, thank you for your advocacy and your efforts to advance the industry. Where I wanted to start is on the retrospective relief.

Bill Kirk: Good morning, everybody. Kim, first, thank you for your advocacy and your efforts to advance the industry. Where I wanted to start is on the retrospective relief. In particular, how far back do you think that could capture? When do you think we'd get the guidance on that from Treasury and IRS? I'm asking it in the context of how important that decision will be for determining how you make investments or how it could even impact the M&A that you may be considering.

Speaker #7: In particular, how far back do you think that could capture? And when do you think we'd get the guidance on that from Treasury and IRS?

Speaker #7: And I'm asking it in the context of how important that decision will be for determining how you make investments or how it could even impact the M&A that you may be considering.

Speaker #6: Sure. So I think that the administration was very coordinated in the announcements that happened around rescheduling the fact that Treasury immediately issued that press release with some general color, I think, was indicative of the expectation for them that's been set for them to move quickly.

Kim Rivers: Sure. You know, I think that the administration was, you know, very coordinated in the announcements that happened around rescheduling. The fact that Treasury immediately issued that press release with some general color, I think was, you know, indicative of the expectation for them that's been set for them to move quickly. I think it's certainly helpful that in the order from the Attorney General, there was specific language around retroactivity.

Speaker #6: I think it certainly helpful that in the order from the Attorney General there was specific language around retroactivity. But I would tell you so that's all the indication that I have that I would expect this to be something that is front and center for Treasury and that we should be getting certainly additional guidance as it relates to the allocation metrics for the allocation process that they alluded to in the press release for this year, in future years.

Kim Rivers: You know, I would tell you, that's all the indication that I have, that I would expect this to be something that is front and center for Treasury and that we should be, you know, getting certainly additional guidance as it relates to the allocation metrics for the allocation process that they alluded to in the press release for this year and future years. As far as retroactivity, I would hope that that is a fast follow. You know, for us, we look at this as a when, not an if at this point, with very clear brackets around previous years and previous years' exposure.

Speaker #6: And then as far as retroactivity, I would hope that that is a fast follow. For us, we look at this as a when, not an if, at this point.

Speaker #6: With very clear brackets around previous years and previous years' exposure and as many folks know and just as a reminder, have had a position as it relates to 280E for quite some time now and received refunds from the IRS and I believe are in a very good position to have a resolution as it relates to those outstanding years.

Kim Rivers: As many folks know, and just as a reminder, have had a position as it relates to 280E for quite some time now and, you know, received refunds from the IRS and I believe are in a very good position to have a resolution as it relates to those outstanding years again, here in the near term. I don't have any specific dates. I can just say that it again, appears that there's a concerted effort to have a, you know, a broad resolution to the taxes issue.

Speaker #6: Again, here in the near term. I don't have any specific dates I can just say that it, again, appears that there's a concerted effort to have a broad resolution to the taxes issue.

Speaker #5: Thank you. And as a follow-up, in the final order, the Attorney General talks about the possibility of exports. So I guess how would you rank your excitement for that potential?

Bill Kirk: Thank you. As a follow-up, in the final order, you know, the Attorney General talks about the possibility of exports. I guess, how would you rank your excitement for that potential? And what would it take for you to ramp up supply at a, I would assume, Jefferson County if you decided that was an opportunity worth pursuing?

Speaker #5: And what would it take for you to ramp up supply at a, I would assume, Jefferson County if you decided that was an opportunity worth pursuing?

Speaker #6: Yeah. So our legal counsel as it relates to the export, the import-export portion of the treaty, that is a requirement under the treaty pathway, if you will.

Kim Rivers: Yeah. You know, our legal counsel, as it relates to the import-export portion of the treaty, that is a requirement under the treaty pathway, if you will. I'm not sure yet, and I think we're awaiting additional guidance and clarity from the DEA as it relates to that being any sort of an automatic green light for international export. I think there's a little bit of conversation that needs to be had there, given the tension between the fact that the program was set up specifically in reference to and incorporating the state structures. Obviously, there's no state structure that would allow for any exportation. I think there's some additional, there's certainly some additional, you know, kind of regulatory work to be done there.

Speaker #6: I'm not sure yet. And I think we're awaiting additional guidance and clarity from the DEA. As it relates to that being any sort of an automatic green light for international export, and I think there's a little bit of conversation that needs to be had there given the tension between the fact that the program was set up specifically in reference to and incorporating the state structures and obviously there's no state structure that would allow for any exportation.

Speaker #6: So I think there's some additional there's certainly some additional kind of regulatory work to be done there. Not to say that it's not an exciting prospect.

Kim Rivers: Not to say that it's not an exciting, you know, prospect. You know, with respect to international opportunity for Trulieve, we are very focused, as we said in our prepared remarks, on expanding and expansion within the US. We believe that there's incredible opportunity in front of us. You know, Texas is a very large market, which we believe can be, you know, the size or potentially even bigger than the Florida market. Georgia, you know, I think we're very encouraged with conversations with the regulators there and the focus on being able to turn back on the independent pharmacy model. In Georgia, there were 140 something pharmacies who were registered prior to the DEA turning that program off.

Speaker #6: With respect to international opportunity, for true leave, we are very focused, as we said in our prepared remarks, on expanding and expansion within the US.

Speaker #6: We believe that there's incredible opportunity in front of us. Texas is a very large market, which we believe can be the size or potentially even bigger than the Florida market.

Speaker #6: Georgia I think we're very encouraged with conversations with the regulators there. And the focus on being able to turn back on the independent pharmacy model in Georgia, there were 140-something pharmacies who were registered prior to the DEA turning that program off.

Speaker #6: And so I do think that there is a very real and near-term pathway for expansion in Georgia as well. So with respect to supply, we can well, first of all, JEFCO is fully utilized.

Kim Rivers: I do think that there is a very real and near-term pathway for expansion in Georgia as well. You know, with respect to supply, Well, first of all, JeffCo is fully utilized. That is the facility that supplies our primary operations in Florida. We do have other capacity that we could certainly bring online if there was a meaningful opportunity. Again, right now, I think first there would need to be some significant regulatory clarity. Also, again, I would need to be convinced that the opportunities here within the US are, you know, are less attractive than perhaps international, and I'm not there yet.

Speaker #6: That is the facility that supplies our primary operations in Florida. We do have other capacity that we could certainly bring online if there was a meaningful opportunity.

Speaker #6: But again, right now, I think first there would need to be some significant regulatory clarity and also, again, I would need to be convinced that the opportunities here within the US are less attractive than perhaps international, and I'm not there yet.

Speaker #5: Thank you again. I'll pass it along.

Bill Kirk: Thank you again. I'll pass it along.

Speaker #6: All right. Thank you.

Kim Rivers: All right. Thank you.

Speaker #4: Next question comes from Russell Stanley with Beacon Securities. Please go ahead.

Operator 3: Next question comes from Russell Stanley with Beacon Securities. Please go ahead.

Operator: Next question comes from Russell Stanley with Beacon Securities. Please go ahead.

Speaker #7: Good morning and thanks for the question. Maybe following up on Georgia and the potential to restart that pharmacy model, can you elaborate, I guess, on what the next steps are?

Russell Stanley: Good morning, and thanks for the question. Maybe following up on Georgia and the potential to restart that pharmacy model, can you elaborate, I guess, on what the next steps are? Do you need a specific DEA approvals? Or what other milestones do you need in order to restart that?

Speaker #7: Do you need a specific DEA approvals? What are the milestones do you need in order to restart that?

Speaker #6: Sure. So our understanding is that the GMCC is an active conversation with the DEA. So that they can get comfortable that they can advise these independent pharmacies that they have the green light to go ahead and begin selling.

Kim Rivers: Sure. Our understanding is that the GMCC is in active conversation with the DEA so that they can get comfortable, that they can advise these independent pharmacies that they have the green light to go ahead and begin selling. We have let the GMCC know that we have our, you know, our dispensary, DEA registration. Actually, yesterday, the DEA opened the portal to begin registering manufacturing, the manufacturing registrations, which cover. It's kind of a universal registration under the DEA that will cover cultivation, processing, distribution. Unfortunately, yesterday there was some trouble on the site, expect that to get worked out in short order.

Speaker #6: We have let the GMCC know that we have our dispensary DEA registrations. Actually, yesterday, the DEA opened the portal to begin registering manufacturing. The manufacturing registrations which cover it's kind of a universal registration under the DEA.

Speaker #6: So that will cover cultivation, processing, distribution. Unfortunately, yesterday, there was some trouble. There was some trouble on the site. But expect that to get worked out in short order.

Speaker #6: And so once we have those DEA license numbers, we plan to then contact the GMCC again, let them know that we're ready to go, and that it's then becomes a DEA to DEA prospect.

Kim Rivers: Once we have the DEA license numbers, we plan to then contact the GMCC again, let them know that we're ready to go, and then it then becomes a DEA to DEA prospect. We're also encouraging those independent pharmacies to also register as a dispensary, right, under the specific marijuana portal with the DEA. I think once those steps are complete, Russ, we're in good shape to restart that aspect of the program.

Speaker #6: We're also encouraging those independent pharmacies to also register as a dispensary, right, under the specific marijuana portal with the DEA. And I think once those steps are complete for us, we're in good shape to restart that aspect of the program.

Speaker #7: That's great. That's really exciting. Maybe just my second question just around price compression. We've heard varying degrees of optimism from some of your peers.

Russell Stanley: That's great. That's really exciting. Maybe just my second question, just around price compression. We've heard varying degrees of optimism from some of your peers, and I'm wondering what you're seeing in that regard in your core markets. Are you seeing any deceleration at this point, and your thoughts on that environment? Thank you.

Speaker #7: And I'm wondering what you're seeing in that regard in your core markets. Are you seeing any deceleration at this point? And your thoughts on that environment?

Speaker #7: Thank you.

Speaker #6: Sure. So what I would tell you is that we are starting to see stabilization in basket. After I'd say fairly volatile year in 2025, post-election, last year, there was just a lot of variability as it relates to consumer behavior.

Kim Rivers: Sure. You know, what I would tell you is that we are starting to see stabilization in basket, you know, after I'd say a fairly volatile year in 2025, post-election. Last year, there was just a lot of variability as it relates to consumer behavior. You know, in the quarter, typical for the quarter, we saw, you know, traffic kind of relatively flat on a year-over-year basis, a little bit down on a sequential basis, which is normal. I think importantly, you know, the basket from Q4 to Q1 has stabilized. It was down a bit year-over-year.

Speaker #6: In the quarter, typical for the quarter, we saw traffic kind of relatively flat on a year-over-year basis, a little bit down on a sequential basis which is normal.

Speaker #6: But I think importantly, the basket from Q4 to Q1 is has stabilized. It was down a bit year-over-year. But again, that stability that we've seen kind of also coming into Q2 is a good sign that we're not seeing again that broad volatility that we saw throughout 2025.

Kim Rivers: Again, that stability that we've seen kind of also coming into Q2 is a good sign, that we're not seeing, again, that broad, volatility that we saw, throughout 2025. You know, I think again, Q1, in line with seasonal trends, we were a little soft in January and February, which is normal, and then rebounded into, the back half of the quarter. In March, you know, exited with traffic back, to Q4 levels. I think, you know, again, things are in the process. It appears to be normalizing. Of course, you know, we still are in a bit of a wait and see. We need a couple of, you know, consecutive quarters before we kind of call it.

Speaker #6: So I think, again, Q1 in line with seasonal trends, we were a little soft in January and February which is normal. And then rebounded into the back half of the quarter and in March exited with traffic back to Q4 levels.

Speaker #6: So I think, again, things are in the process. It appears to be normalizing. But of course, we still are in a bit of a wait-and-see we need a couple of consecutive quarters before we kind of call it.

Speaker #6: But we are starting to see early signs of stabilization.

Kim Rivers: We are starting to see early signs of stabilization.

Speaker #7: That's great. Thanks for the color. Congrats on the quarter. I'll get back in the queue.

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

Speaker #6: Thanks.

Kim Rivers: Thanks.

Speaker #4: Again, if you have a question, please press star then one. The next question comes from Brenna Cunnington with ATB Capital Markets. Please go ahead.

Operator 3: Again, if you have a question, please press star then one. The next question comes from Brenna Cunnington with ATB Capital Markets. Please go ahead.

Operator: Again, if you have a question, please press star then one. The next question comes from Brenna Cunnington with ATB Capital Markets. Please go ahead.

Speaker #8: Hi all. Thanks for taking our questions and congrats on the quarter. So just continuing on with the medical cannabis rescheduling theme, and the DEA registration, do you think that there's a path for potentially shifting medical cannabis products between DEA-registered entities in different states?

Brenna Cunnington: Hi, all. Thanks for taking our questions, and congrats on the quarter. Just continuing on with the medical cannabis rescheduling theme, and the DEA registration, do you think that there's a path for potentially shipping medical cannabis products between DEA-registered entities in different states?

Speaker #6: Yeah. I would tell you that I think that it's that's a little it's a little early to tell. As it relates to that, I mean, again, I think that the path that was created, I do think that I think that that's the words that are being used by the administration as well as it relates to this new Schedule III pathway for state-licensed operators.

Kim Rivers: Yeah, I would tell you that I think that it's a little early to tell, as it relates to that. I mean, again, I think that the, you know, the path that was created, I do think that it's I think that that's the words that are being used by the administration as well as it relates to this new Schedule III pathway for state-licensed operators, again, folds in the state-specific requirements under the state programs. I think that likely there would need to be changes to those state programs prior to allowing any type of, you know, state-by-state activity, which is of course not allowed currently under any of those state programs. That would be my current read.

Speaker #6: Again, folds in the state-specific requirements under the state programs. And so I think that likely there would need to be changes to those state programs prior to allowing any type of state-by-state activity which is, of course, not allowed currently under any of those state programs.

Speaker #6: That would be my current read. Again, certainly, would look forward to additional commentary and guidance from the DEA as things evolve here.

Kim Rivers: Again, you know, certainly would look forward to additional commentary and guidance from the DEA as things evolve here.

Speaker #4: Okay. Understood. And then just looking at the balance sheets, so considering the significant amount of free cash flow that you're generating and now with 280 being gone for the medical side which is by far the majority of your business, does that potentially increase your appetite for share buybacks?

Brenna Cunnington: Okay. Understood. Just looking at the balance sheet, considering the significant amounts of free cash flow that you're generating, and now with 280E being gone from the medical side, which is by far the majority of your business, does that potentially increase your appetite for share buybacks?

Speaker #6: Yeah. I mean, I think that we are absolutely in an evaluation period at this point in time, I would say, right? There are a lot of moving parts as we indicated and a lot of different initiatives that we're reviewing.

Kim Rivers: I mean, I think that we are absolutely in an evaluation period at this point in time, I would say, right? There are a lot of moving parts, as we indicated, and a lot of different initiatives that we're reviewing, including, you know, potential M&A and then, obviously excited about exploring opportunities to get on, you know, a US exchange. I think that, you know, for us, again, we wanna make sure that we have a clear picture of the landscape. But it's something that the board is, you know, continues to evaluate.

Speaker #6: Including potential M&A and then obviously excited about exploring opportunities to get on a US exchange. So I think that for us, again, we want to make sure that we have a clear picture of the landscape.

Speaker #6: But it's something that the board is continues to evaluate.

Speaker #4: Perfect. Thank you for the color. I'll jump back in the queue.

Brenna Cunnington: All right. Thank you for the color. I'll jump back in the queue.

Speaker #6: Great.

Kim Rivers: Great.

Speaker #4: This concludes our question and answer session. I would like to turn the call back to Christine Hersey for closing remarks.

Operator 3: This concludes our question-and-answer session. I would like to turn the call back to Christine Hersey for closing remarks.

Operator: This concludes our question-and-answer session. I would like to turn the call back to Christine Hersey for closing remarks.

Speaker #6: 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.

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

Operator 3: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.