Cronos (CRON) 6 Aug 212021 Q3 Earnings call transcript

Good morning. My name is Phyllis, and I will be your conference operator today. I would like to welcome everyone to Cronos Group's 2021 Second Quarter Earnings Conference Call. Today's call is being recorded. At this time, I would like to turn the call over to Shayne Laidlaw, Investor Relations. ahead. go Please

CEO, and and EVP review Phyllis, business for us Mike President joining Today, Barbato; CFO, Thank Executive Legal our Group's information, thank which a these financial XXXX to announcing well Chairman, and our Regulatory by Xiuming Cronos am and are on and Schmidt; second prepared today also and our filed release remarks, I Affairs, This Jerry Investor Shum. our our you, be Gorenstein; joined you news Kurt Cronos of s. SEDAR quarter our the performance. financial as posted EDGAR this as website Group morning, profiles. Relation issued will results under on

like Form call you on this of in which during that the included cautionary and forward-looking and recent results the statements factors Company's assumptions regulatory call and report in I this reports materially by discussion during could include our will qualified that statements including including to risks actual described remind factors the forward-looking most annual are on result entirety. are release quarterly the Before call Company's risk filings, Form are earnings the their XX-Q, a I the turn based and conference made that uncertainties statements, cause XX-K any statements over from in as forward-looking that to to on those projected differ subject would to Kurt, in

non-GAAP business like Commission planning, the of certain non-GAAP the measures our accepted Exchange our performance, our furnished to and their as is press These non-GAAP Reconciliations forecasting, closest be comparable to are principles section not website, under generally SEC, of recognized may press respective allocating by In resources. and room financial financial of in accounting believe other note these measures to measures. management measures and call may are We this our locations. are the that by to the GAAP addition release measures evaluating I'd including that these thecronosgroup.com. measures non-GAAP reported from during this remote and used be to in we also measures which today call, discussed included referred U.S. Securities earnings not available issuers. conducting

As there advance technical in for crosstalk brief may during call. be understanding. such, We and delays, patience issues you or your this thank minor

answer Schmidt. We I'll now and Cronos remarks and we'll a will pass over then Group's prepared session. move that, Kurt CEO, make and to it to With question President

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weeks, and be achieved to cultured XXXX, previously with will introduced the as CBG the prior our announced. partnership be product for September in we enabled target by will the market, to productivity our CBG We first final Ginkgo, in using coming expect

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four work in flower shining ended XXXX, GMO SKU the is categories ranked cookies, for This first and Spinach a selling product into at concentrate top cultured shelf. Spinach and launches SKUs weeks The flower categories, across and the in and these a data. pay Spinach The are to Nuggetz dividends early CBG indications pineapple into consumer planned on Spinach multiple called spending Spinach to now exciting category. featuring for hard which have dispensaries brand all Along product format put Spinach DABZ OCF needs Canada. Spinach strong. new testament flower as Xst, XX-gram to true starfruit cross-functional build the dry number with brand address our new into extend the X.X new on seeing launched five is shelf presence is continues Canada. was according gummy efforts the one all to to across Spinach in our from August be also flavor, teams are formats, the The The brand weeks the brand called product, a SKU the we

available PEACE+s we many new relaunch direct-to-consumer tinctures the excited U.S. initial are brand of exciting now peaceplus.com, to horizon. the products more CBD on through are to market, portfolio CBD officially our Turning with channel. on PEACE+ the

consumers the point. the CB We mainstream CBD in other complements because price are products line [Indiscernable] by for mass-market us future PEACE+ provides re-launching and offering U.S., brand opportunity for brands PEACE+ of a us our distribution a nicely, giving an and producing at

looking offering. from all consumers reaching We to forward this and the additional are this to another innovations yet look to seeing brand, with forward of adult group come

direct-to-consumer we strong and store so through the options of like Beauty complement Israeli Kristin their product, from build chains, our regional high-quality to doahappydance.com ulta.com, soon pack be in product anticipated online a attracting available market, consumers to can to in with is In and and The interest is weeks. number some brand, at CBD new are to to of with consumers the market Happy has grow, indications the and portfolio moisturizer. existing which and co-founded providing stores masstige far a nearing the consumers website, throughout and ingredients new is light they Ulta high the online to Continuing the brand's to additional now so position patients convenience coming received The with direct-to-consumer skincare U.S. brand. start product efforts. In PEACE+ our U.S. now test XXX,XXX. our base launched grading shipping available and Dance, have avocado usage Bell, lookalike it continues cannabis to registered oil, July, critical the occasions in We brand, products texture CBD. hopeful with moisturizer it's hyaluronic our to acid, actress a facial significant expand

PEACE NATURALS consumers Our resonate cannabis to well market. in this rapidly continues growing brands with medical

Israeli the cannabis perform gaining pre-rolls traction. continue of flower recent and well our products are market, Within to dry oils and introductions

to of people. and an of building hires, team to like commitment winning directors seasoned our moment our would which to addition I a our to now a Turning passionate discuss take professionals. highlights and to a board key few

operator leading shareholders Ashton. James, wellness, is the Officer During Kendrick Executive lifestyle key new in Co-Chief Co-Founder our performance, General voted a a member, Meeting, the Annual of and board Kendrick St. brands. and and of developer

month, pleased was a he the services, to member makes I Cronos Managing Carlos the Partners, our Finance reporting Perrella us VP accounting, and and a leads to Board founding as business firm. joined global and experience us comes XX Senior fit having Discovery, excellent as Director with entrepreneurial Director years his founding Weinberg I to acumen for for am our Kendrick's organization. accounting, St. Carlos Inc. Controller. and Before team. Kendrick Last James, an help forward financial of of shared the including of financial Directors, as mix serving Cortez Ashton the of look services an experience, Board. organization expertise welcome cost to Carlos him

managing listed Anthony over for actions. Products RPC, things, joining served the Malibu XX Discovery, spent he comes as Head years of Company, also and trust the Secretary. a efforts management, and with audit formed also with the and us consumer Audit. years having NYSE of least, Thomas at his a from and Company. create ourselves will controller as to years Vice Thomas Before new companies, the governance organization. responsible Corporation. This certainly the enforcement Anthony, forward new -- of X to We Anthony and newly Thomas leading corporate Federal team by Anthony added Internal Inc. world-class lead for recently, among of General them is top-tier across Marine evolution the control, Cronos. Carlos to Head Counsel President other as work not as Commission, to the Audit law Cronos are Last spent we where he X internal Avon we've and us other Kendrick, Cronos additions Cronos Boats. joined XX Regulatory time and profit. the Global role contribute to of risk Carlos, Thomas subset we month, our of the developing for as any controls most not to where a welcomed The cannabinoid as to position and talent Corporate of Trade Product, and look investigation but Cohn protection for experience Parisi

to and the the mentioned efforts we've as opportunities evaluating regulatory actively evolve. in market, been before, have U.S. As legalization continues we process cannabis

time. and more Company, we we and expertise brand our market. limited more PharmaCann six for opportunities footprint want a capitalize were operating the seat investment to Massachusetts. the federal is across PharmaCann, on New and leading is Illinois, high-value to in PharmaCann, Maryland, states, and sets and Ohio, under announce 's XX cannabis which have market there strategic U.S. a at dispensaries, integrated legalize As pleased into and momentum Verilife a well-positioned sure well-positioned states In legalization, at table, entry U.S. operating we in facilities make the geographic strong are foundation U.S. to licensed appropriate for clear includes Pennsylvania, a in vertically June the the six state. York, the demonstrated has cannabis, production

PharmaCann market operations and team through PharmaCann's for confident We leader, for have that manufacturing. criteria property we we in look investment; strategic what With because and potential. in strategic found to checks, are to are of consistency best-in-class we an excited intellectual its future, a work in our shared potential. product and with in manufacturing and about cannabis operations multiple all our elevating the In infrastructure, and our platforms, product unique science quality PharmaCann investment best-in-class commitment states, high-growth branding development opportunity

legal market to adult Wyden, strategy property, simultaneously the and by that brought harmed by shareholder those positioning improves war drugs. on that lives. regulators must of which and to best-in-class through existing remains commitment the the share delivering act forward swiftly encourage and responsibly and Cannabis Act on vision individuals serious our federal law. encouraged provides our Administration the consumers strategic consumption, thoughtful restored intellectual U.S. to some growth spoken products cultured to value the Opportunity investments by organic focused and the by is and brands a distributed assembling a Schumer, justice also deploy pass disruptive long-term believe that legislation of industry limit to in leaders invest U.S. IP and in harm and support achieved through U.S. We brands developed portfolio cannabis Our while the cannabinoid our well-regulated U.S. measure by responsible be in opportunities cannabinoid policymakers create that notably, illicit We people's anticipated for approaches communities in-house. market, products for Most Growth and utilizing framework earlier, Senators Booker We're also and about capabilities. the Congress for as into firmly and curtailing

XX Bob Executive teams our In the Jerry Chief Bob results growth the with served continue a Jerry financial Senior cybersecurity. Lauren, has want Cronos. responsibility for including his joining Outfitters and served and finance, our new a contributions Company and at increasing XXXX of role. tremendously He together we He appointment be he over on and CFO reputation CFO at I working brands. Monday experience a our with to Madore implementation me to reporting Bob to consumer information of to building me as note, prior to him a he on new feet got seeing SAP Canada Please at next to his as instrumental On role he business and with and execute forward our results. of and a outstanding last at and addition variety as to years an global the American and in driving will Company over our best. also personal two U.S. the Financial to high-performing -- wish announce strategy, a join thank number both accelerate achieving as the I helped operational as out officially Officer. for and Cronos. the working well-known system my our roles Barbato. at succeed Eagle welcoming XXXX. years. that, is in tenure him in Bob [Indiscernable] functions, developing in of we Ralph look I and Cronos, with capabilities today, focus and all of partnership on appreciate his wet I've I in enjoyed played DurinJerry's procurement

few say on getting Jerry his before turn Quarter I'll call to to the results. words Second XXXX a into over announcement, the Financial Now

development million and primarily work by was million write-downs XXXX, $XX and million capture by sales Consolidated to reductions the the in from which of the rest we team, in the to segment. of XXXX. increase second the and increase World was our an for on Rest in segment, $XX.X in of leadership market, taken Quarter Canadian various organization, $XX.X in Kurt, the that The year increase versus representing industry been the loss an losses losses of good of in million, was market. explained, Second Israeli increase the increased and The product cannabis everyone. ahead. previously and It a primarily for a reported Thanks, in in accomplished Quarter a million, million the $XX.X $X.X inventory the in Revenue primarily now net global cannabinoids I XX% to quarter U.S. adult sales XXXX. marketing price of continued Rest use Canada period. IP $XX.X year-over-year cannabis morning, as support second of totaled brand revenue a in XXXX, EBITDA across $XX.X prior associated medical in losses consolidated increase XXXX opportunities and an year-over-year impact in quarter in Adjusted development, of the loss loss products Second Second Quarter teams losses the strategic was driven Second driven from increase growth in proud the of the as Quarter The by over product the gross development have by the the growth world the cannabis in of increase well-positioned Quarter of Company due move use prior lead developing gross in outstanding Company driven in financial of several XXXX R&D the has spend The increase driven as all the will half segment. is versus well an with adult Bob's a last the the new costs year segment, results. on of in Second with was million, of XXXX World significant to of discussion second spending in Quarter XXXX Cronos the of years. I'm Second start-up increase XXXX. with and under the and know I privilege in

strategic year prior period. year-over-year world rest adult-use reported of revenue we the from driven segments, XX% million, Turning of primarily XXXX in net in in the by product Revenue continued cannabis of by medical write-downs, prior segment of quarter as second quarter the EBITDA of associated XXXX, in cannabis quarter with world cannabis $XX.X increase Adjusted well growth of was new the of costs the was $XX.X the a reporting segment, on to as products in increase XXXX. start-up loss our half increase from second the a Rest by inventory $XX.X an the in and increase loss for the reductions various from a the adult-use in Gross losses loss increase Canada rest million, primarily impact Canada the market for year was million Israeli losses versus driven an in was price costs. in and taken second in million, losses segment market. development. in XXXX. losses of XXXX increase increase Second Quarter the The for Quarter representing flower an in World increase sales R&D of The gross of in of Second in primarily the the second $XX growth was million driven XXXX $XX.X in

million Second XXXX by an driven be Group by were in development. reported is losses there of continues liabilities Turning significant of related Second reported the income roughly U.S. the to net was value in liabilities. in Second flat $X.X the more financial Second Company the derivative Quarter change and of in to from gain and both to brand Cronos reported detail to which Quarter primarily segment, profit revenue movement financial XXXX, net increase U.S. Group associated stock price. $XX.X in Quarter fair value investment, $X.X The in the related value representing of recorded for primarily the year a volatility, $XXX.X these the loss to segment Quarter was of Altria's an sales versus the of Cronos period. the adjustments driven due change earnings EBITDA may a the XX-Q. XXXX. the described Adjusted primarily which prior increase increase to In in derivative of of prior-year of the in losses Overall, we $X,X of million, Cronos the in the in million expect gross to million, quarterly million, related non-cash period, costs with fair marketing the increase fair

XXXX. roughly ended the million short-term first in $XXX Company billion from the the the is down X.X with cash which Turning balance quarter sheet, investment, approximately to of quarter and

XXXX, cash As reminder, be to remarks stake an it deployed portion closing in decrease quarter for drove across we second as cash committed strategic with that, focus remarks, for a which the encouraged his approximately ways our are during remain capital work with prepared Kurt acquire million, before the significant Kurt the Capital With turn manner teams Q&A. equivalents. doing a the a million to and I'll of globally. discussed strategic a only quarter spending XX.X to option in over in global and in expenditures PharmaCann sequential XXX were of during that our I priorities. We priorities. disciplined the to align our for by deploying $X.X continue

CBD Despite we the high Canada, investors, success to under cannabis Jerry. the with along resilience. that open a be our insights show you, confident by to all novel the are and Israel, our for existing With continue balance Company, backdrop, [Indiscernable] this let's ongoing questions. continues we we the Against our U.S., bring and markets, Thank our market in to products brands the best-in-class to we posed compete. any do ready well-positioned quality With our line strategic challenges are infrastructure, pandemic, in leverage market to sheet, Germany. industry and

one question please that you ask instructions]. We limit and yourself one to follow-up. [Operator

first with Andrew Carter Your Stifel. question the comes of from line

have you this right on line? us in Are help innovation position you to gross this be wanted ask, be I what on wanted can to we profitable a points? going about you. the the thank Is can -accretive? be horse gross see continues margin a Hey, that stronger cost Anything signs a here, performance I beating and ask or underwhelming. in margin you margin line? see where maybe morning. start your I third-party dead I'm kind guess just Good price to the of to -- Thanks. asking to should it do to

what we drive concert preferences write plans, inventory Andrew. product the $XX continue Thanks, think innovation, in that consumer that's the think The to gape way with quarter. quarter competitive definitely and to we -downs our of we I in and evaluate this the margins really million it, hampered had about

in we're revenue and definitely year. As the the products obviously Kurt be prepared innovations and category, GMO and in shoots in fermented talked cannabinoid terms in Ginkgo launching SOURZ remarks, later of the flower in our to about edibles, seeing we're cookies the that with green our going

a question, I particular. strong gears bit. Second a switching and in very has Ontario little by we've headset the mean, seen data Spinach in performance validated Alberta

So I in a know one question guess we volatile supply I chain Canada. it's have,

the keeping and With up us retailers able provinces, are the strength, reorder are reorders Could with and Thanks. you your expectations, to from coming that? are you? out it provinces the to help the get with

SOURZ right. really You're well. is doing

believe, confidence The We high as the get bringing top rare have trying and X first us led brand. X, and we early as market Again, in and cannabinoid early will this the success the of we edibles XX. with but first the some quality feel that to handle weren't themselves, gummies, that this with in we we this spent been results very demand. be CBG under confident the product, in speak thing good, for the can far to SKs has we has our to right, launch top X time

I'll is commensurate is real after seeing that. volatility, But the I is, pass are just real the more same supply see it of is, strength, the chain? the from we like on the question really Thanks. my reorders, or supply chain, question my you get

excellent. the days, is certainly feedback the trade but Well, Yeah. clearly from

be the product. strong the should marketing as we on educate a bring the and in we're So into what these doing that the more that indication that to sure programs there them of the reorder experience, and consumers category 's

the We that's product's good get product's So we the good bullish for a really very because sign And repeat. pretty feedback feel delivering. that delivering.

I'll on. Thanks. pass

Mike. it's He,

I as Just lifted. restrictions COVID add that, improved the in certainly to have to think have been things Canada

supply intense challenges about So a you've in lockdown realated were more to provinces the the chain that versus Canada heard the U.S.. the lot of

Your comes from Sarugaser question with Raymond Rahul of the James. next line

questions for and big Bob. a so Jerry, to morning, Thanks also our much welcome Mike. Good Kurt, taking

before partnership of So itself this be it's Ginkgo this own finished in particularly Cronos CBG is included in that it's been public that Cronos?remeditions? news gummies highlighting upcoming end have given terrific cultured the year, will the listing. to

So or cannabinoids, you in my evolving how potentially first Canadian Ginkgo-Cronos this is molecules even development products U.S. and portfolio expect question when the Partnership and included a do shelves? fungible additional cultured to the of towards Cronos to is, broadened hit be

strategy. on shifted we the our one cannabinoids, the launch CBG focus and in up last talked you're our progressing the with about, -- We Again, coming. that call, rare we're first seeing coming

we time. as we So to we track that products go these good we're -- feel we're very on deliver over --

CBD nothing So again, launch we've see the of reordered first common in the on We to And our way we're we versus have plan. the the for us beating milestone and rarest THC. timelines focus bullish. really

you're going these products to coming going You're next to months, see this coming online. XX-XX see over the

Ginkgo strength and spending instrumental We're of that really add partnership you've venture and the agreement been want innovation you this the I don't Mike, know we're since confident. to again, so the off. process. it's joint the and anything on And if in

right. thanks. I Yeah, think Sure. And that's

on rare making it we're CBG, be SOURZ, include great well. but you'll formats. then the 'll And we're consumer the to ones. also the and see with rare similar Ginkgo how other specific cannabinoids, and into the some of that spread specifically see CBG You'll with launching to off insights when formats as spread cannabinoids other depending added start seeing we're starting cultured continue other formats us you progress to to

couple the over be just that of quarters. will sequenced and months So next

to I Great. certainly will forward that. look

enable you been now share So U.S. adoption to the the great may it's the U.S., PEACE+ be should the C-Store to anymore with partnership re-launched. Altria we able moving across color the particularly have how looking in on that at Would and to hear that channel ramp? how penetration,

announce time, believe and strategy. will a with And something in on again, pricing launching, the convenience our working are expand, one. X on to SKUs PEACE+ tincture nice that future we C-stores got we've We really it's website, tiered distant to a to and we this that starting we're of DXC stores, not at hope addition component that we're

now As there far could require on certainly is of far But Altria, that things soon point we you value-added that Altria, some know, before, that as side. edible FDA as we of have, there's on that as getting side, advantage the about the immediately. as the take as leverage as would can talked clarity we've regulatory

thanks again, I'll pass Great, on.

the from John Your Zamparo CIBC. with next question comes line of

prices morning. there that well. picture It or what's promotions, retailers, whether so the that, but meaningfully, Good certainly, found start are causing get that, there, there the Spinach side? when be most any shift or marketing, cultivation a or wanted of move more of seem I'd share are pricing other helped the that with investments fairly other part do the right large to the something strategic been stagnant? has cause to with level brand relating more capturing to then you share And brand you've it's it's I market Thanks. like to does expenditure, brands or on on and to interaction of as you like made? can sense that's think a of

Yeah.

that carriers. just is fantastic about launching that, which Innovation clear a that's think of doing talked it like is it's some a I of plant, product science genetics driver we're and certainly confectioner exceptionally flower which a like trading there, product product, And SOURZ, that and fantastic, is propriety parts a a really behind our of but a new is Mondelez, combination rate well. the things. that launch which combination we've of

round a about the is the part a portfolio. so as and big in innovation XX and to this. coming the of it. extending you certain there, play part going play We areas So will out talked gram brand a Nuggets of

The brands that power rather is believe the really Spinach worked XX X resonates we've great the doing have all brand we're on second that. with of a brand brand part focused brand, focus, positioning, very got than I'd something. are it's on hard kind Spinach consumers, We

I includes third are a think think And our execution the point of in marketing. is blocking probably really those lot strength. I it's and elements, some three of which the that, tackling that

pipeline cultured already that for on along, being we're go. is be the alluded the carrier staging in Mike could Going as go on we where continue future, it cannabinoids, will to that worked and innovation possibly to the and us, that

our rather seeing brand and bottled Coca-Cola brands. We're have on think really strategy off. So off, going that different XX I'd and is this that pay I we focus X feel power pay we're water brand, that than to

color the great. brands And incremental you investments is other How landscape in or second I the in question retail? you moment? versus and appreciate about the do characterize targeting that That's operators the at M&A the attractiveness of of cultivation would U.S. Are the PharmaCann think nature? then exploring investment. my you how on

jump kick off, in and then in I'll adventure. us Mike I'll he's because let leading really been this

First great think we a of one. PharmaCann all, is

want look checked criteria PharmaCann boxes for part we at, of would what We the all really set a us. have we to and of, be

organically fantastic So they're this and through from strategy, limited-license to it's a in M&A. strategy Massachusetts. think states capacity We've a talked have Illinois before have grow operator. about they to We best-in-class they IAE

pretty We been important. we've looked but brands very what boxes, breadth, those also all is items beachhead at criteria checks consistent really finished. we're it geographic, not but saying is So

realms this it, of your bit? something little should to you, at that I tell look on be may complementary to a focus strategy. we to a weigh of possibility the set out on the not probably different we else will in it that overall But has Mike, party. it's So you brings

John. thanks, And Sure.

is the landscape I M&A think certainly attractive.

the is around change are that aligns the a how commerce partnership way things that in what things once Schumer and be may is and really looking bill benefits there 's, that we're federally was with and at them. amplified potential think, from could being legal, things the of potential -- interstate of a focused on by by language targets One I really lot the

the to would within brands brands similar We be you over the shifts are brands and be that's understand build that value certainly think out. ultimately balance where important. could a So structures. going how long-term shifts I between they medium-term where get say value We them those there's long-term. and that

well but at, very looked a that We fit in very, and we attractive of have that the still U.S. will lot excited for there's think we're structures we've very us other opportunities

helpful. much. very that's Okay, you Thank

of Your Cowen. next from question comes Vivian Azer with the line

Hi, good morning.

then I dive of hoping U.S. bit and to the could hoping Dance. a CBD. on your perspective current specifically a the most I was on sizing we from was little get market assessment in On Happy

recovery could uplift trends, seeing get If an Thanks. all you consumers whether and at comment or stores? into you're as on and a vaccinated go any intra-quarter back

CBD going say Jerry I'd not I'll we're everything so we we but one, of see Yeah. the starting bricks-and-mortars [Indiscernable] how lately Delta know management, strict break and back, portfolio, know, down do you going looking that. as on we're recovery, We're doing price that and trying kick seem like to to brand, a were see are we're mix. faster make because had review then to our We marketing things, results the to out. have review see lot reviewing speaking, not up. we'll Mike on this get and now a into the to that to hopeful we we overall, see by but let comment. we how but strategic it offering, have mix encouraging, looks that the -- pace, taking we product, with U.S. one's two We've full coming brands. this were certainly, the and the sure some includes We can thing, performance ends a have off and don't I'm need happy everything not got that be to growth been see we're We good generally COVID swing the we marketing price that at results complete aggressive more I yet, we've what that, happy the in advertising but don't markets you that testing, trying impact, COVID We better get the we're resonates hopes the but of of happy, get to results the with back we'll but markets. want. investment we to we have very with it's of has this product get the related gap, of that because again, especially don't certainly if so Quarter there, to the related security we is of issue, it right, some right with changes, but well to trajectory DC again, an some believe new some a some to and consumers brand Apple's we COVID and elements capability, that had but

that perfect. Okay, you Thank for your very and in for much candour particular.

my you at U.S. follow-up please, question, trademark opportunities Just you. comment all IP sticking Can around with exchanges, or on any around the PharmaCann. or Thank sharing?

him, Yes. this weigh with have I'll me. in on lawyer because good in Mike it's the room the he's also let to

bunch happen, ensuring anything do can't do for I is that and we of Mike passive mean the comes, to to environment. if add anything the under managed to you but of in the a things, legalization. this made, we that of But guise looking have just don't a of and and thinking to are know way federal this, have opportunity restriction the sensible lack doesn't about of prior all we to types you legalization because legalization things but guys federal be there's the happens regulatory what want of at We tremendous that federal if can commit are at those we investment look those us certainly announcement if once that I that?

far us see Sure. Vivien, out. as brands as this very for that's pushing as we something strategic certainly

we up getting that own I of at option. we focused was can sort setting that advantage that on think agreements, our in the distribution way really trigger

our is wouldn't swaps done that to use any a a whatever affect brands, and that monitoring in to that sure partnership leverage So CSA, is about too trademark strong it making do anything in can though. we speak feel going the with out, we continue there's imminent we're view that and that but brands our to early get to we way

you. Thank Understood.

question of Chen line BMO next Capital with Your the Tamy from comes Markets.

morning, everyone. Thanks. Good

where initial vape of you about maybe on next-gen market Canadian would first-gen, the be First vape proprietary that of this your I [Indiscernable] question is about launch in products you'd recall in category. be talked products on sort working but the X category. years ago,

category just get the if respect work how an update with I to see on wanted that's innovation So vape to I the particular. for could going in

thanks that Kurt, is for question. This

base to and to working We on the segment actual now. in are or anything about not-too-distant future, going talk I want the working are don't see innovation, the on something it but on right we you're but dates

you unique I different strong To a and shelf of product, uptake a but in to cultured communicate it brands are from Okay. Thanks. the a marketing product? and Got particular, bit space, CBG Canada, in general respect there perspective the going it. attention tender educated stores on differentiation, in that that confidence format crowded year, you're I can to are CBG because product I product shelves. you is; a going what and to in is talk going launches going getting could is staff there's doing the be this then my consumers, on on the to under very making the wondering how to and position in so SOURZ positioning? is to of ensure the this presume, that, and work lot it do to you recognize it's degree with for market, have products sure get that product if And follow-up back was on Canada later what the a and they first

we believed background. concept. don't the to Wilderness, and sub-brand view way We a we consumers. product a Buffalo, Good to Freedom we've Blue innovation, teams. concept, full believe of product, the a Well, the we a billion-dollar communicate have on done, a to we have called a view And spent working of this to we to Basics And we this developers, line. had Yes. team interesting, something lot research question. Buffalo how business concept. as we the that's Blue my think had the And from we marketing had developers, under a single-brand Protection, do really it, Buffalo, we built Spinach Life as that's there. had on but business sub-brand with a And we Blue this we

obviously each these rare one we're of X have So cannabinoids, takes rolling so can't get to make at that to time, all out, once. you we

on with the that's this we're about that's thinking this at creating this is product, this is positioned to as whole not think road look against a that, are a confident brand thing. thing We're and lifestyle, a is what and consumers, the we We we about. way product, consumers, this really concept, not resonating

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And X.X great as start vehicles this. a for business. are the are Mike for Edibles again to us, other grow products great but said, going we're

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Great. Thank you.

the question Heather comes line Balsky of next from Bank with Your of America.

around just gross of think need do shift thanks for that the margins. the Hi, questions other what margins? you to maybe to to of beginning my at gross the needs what taking scale, get mix curious, What it's I'm one you going happen, back to back question. Q&A positive

U.S. the I that Yes. Thanks in growth. really for segment, driving think the revenue question, about it's Heather,

was in that and the will Quarter, revenue segment. that improve I increased little revenue down with margin this bit Our a think

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color. Thanks for the

Your with of next the Bill question comes from Kirk line MKM.

it pace urgently more back go so seems innovation, what strategic on for bit innovation? rather philosophically. to focus more use a led seems morning, It good what tackle want dramatically, to recreational to shift philosophically like has but I Hey, the everybody. to has accelerated you the

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that sometimes And longer. takes

what We is of at edibles have I we do. trying the side, consumer side the anything out a door, to think from the we're classic looked example. build but thrown product could from

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ideas, [Indiscernable] We take they technologies, want bigger some we tend are doing longer. to

move of marketing, On the Once built. you blocks teams in you go a the other side, hand, to start product that the building place, once you get get and could faster. was the fundamental system start place between to you research in and lot development the

and to point think the I the So got people right machinery this where done. we've get now at we're

us But -- and a branded we a new and delights that is platforms great unique. and is player that branded become to the the bringing consumers are player for believe progress key that we believe again,

us about. to what as that's And will really so innovation, And that's critical Company. think that I on a not lose focus we we're

development, Bill, a urgency back think bit bit having supply Thanks, Canada, it Yes, -- in you're on just we that think we how quite opening launch 's and seeing we now up as a product developed Kurt. And I with mindful it's place. is what chain we've time. products about of good a being very it's not them in with quite retail now of the work have but

Kurt. Thank you, Thank you, Mike.

of comes the Your line with Howard Penney Hedgeye. from next question

much so Thanks. enter in that the if wondering could question, that's to Thank distribution expand the important agreement look you U.S.? I signed, particular, commercialization as was PharmaCann and on you you you investment, for why and the the

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line next from Your Penney Howard comes of question Hedgeye. with the

could question; I important to if the and signed, U.S.? distribution you you you much the PharmaCann so why that wondering particular, you on as that's and for Thanks. enter Thank expand look agreement investment, in the commercialization the was

for and off, it in. partnership, can is then it kick us; we this I'll haul; things, for a the for for build in are trying that distribution, Mike so access of access not a We're jump investment to bunch eventually includes Yeah. and an and our long brands technologies. our

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value two core have, of Again, think drivers a that's things the I great Thanks. right. We here—one of see they business.

shapes it's how restricted the things we up on progress environment but basis, markets. really so an investment key and the just investment that And regulatory how in depending important do we on other the these is, like purely

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Thank you.

no conclude further time, Ladies thank questions. this this and At for does conference you We call. gentlemen, there participating. are today's

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