4Front Ventures (FFNTF) 24 May 222022 Q1 Earnings call transcript

Good afternoon and welcome to the 4Front Ventures' First Quarter Financial Results Conference Call. Today's conference is being recorded. At this time, all lines have been placed on mute to prevent any background noise. After the prepared remarks, there will be a question-and-answer session. [Operator Instructions] I would now like to turn the call -- the conference over to your host, 4Front Ventures' Interim Chief Financial Officer and Chief Investment Officer, Mr. Thut. Andrew you. Thank

begin. You may

Karl operator and call and joined XFront you, Finance. President Gontmakher; everyone the Landgraf, Feltham; who is Wooten, welcome the first our earnings our President, Leo for CEO, I'm California by Ventures' COO, quarter Joe call Ray Operations; Thank of our to Chowscano; Jake of on of XXXX. EVP

our some the forward-looking in obligated number light the course today, today, that that undertake Harbor, as subject I statements I'm to may All disclosure These right. to remind results to be considered should management these that forward-looking of are any management the is begin materially revise not future. cause any may Risk on making note in be statements this outlook Factors of Any section a of based results from and during statements conference of are Please uncertainties and does filings current expectations. materials. call, also Before factors. outlined present everyone are Safe actual differ in obligation risks we of expectations any and forward-looking a to our

of quick that today. the me with a let very out So, you overview give call the of way,

available and conclude Q&A the rest any deck we follow-ups. to we start on I'll As has to a of Leo, and with some before update what's exciting the always, be quarter call more then detailed over been I'm on provide the going for highlight will session, achieved who a XXXX. to hand looking thesis of milestones quarter the review Then what busy strategy. for operational into first and then start to We'll year all we results, I'll review a will trends our our ahead the our color where with our very go during new on company. for the will

Michigan. simple large -- a high-quality, guided in at California, we're cornerstone of So production capabilities markets to State, we're thesis, Washington and and high-margin our the cornerstone is believe after large itself spades. and starting scale begin, by production XFront, the packaged Illinois, perfecting at in that replicated We Massachusetts, sweet value spot prove of is cannabis cannabis low-cost goods in to chain the consumer high-quality into

We in for ability have years the continues and are that to this large-scale as it in lived will produce navigate that low-cost sweet most the Washington spot to seven be skillsets mature. confident to industry advantageous and

are well we taking today, sales performing As here sit locations headwinds. pricing are and many in and market despite share believe our because are the board transactions net across retail expected up cases

dialed and producing Our production quality cost. in products cultivation at facilities and are low high

referred Our in to phase as early six Big delivered construction project months. a to as Madison be Illinois, ahead with planned Daddy first schedule of formerly is as

facility operating production blue California and swing is momentum in Our seemingly infinite in sky Commerce, full sales with strong opportunities.

move inflected business has expect strong we we Our growth build the through as year. to sequential and

drivers the our Illinois. term, So, of let a minute biggest two me for California on business the in intermediate growth and spend

online cost competent and truly to facility palpable of that investors touring than efficiency. months last continues year. production is for is in analysts Commerce, has state-of-the-art positioned foot asset the in a and the and consolidation square XXX,XXX our after Cali, momentum and very facility production that week late market be just two on ever spent to unique operation came streamlining activity six the in First is California days is seeing ripe of that subsequent ramp. disruptive we're I XFront The California last interest more us as

possibly is to be California Our a timing serendipitous. impeccable, for bit proven into entry

dogs -- portfolio -- where flower, others but success than set XFront high the uniquely in my the opportunity we was brutal that in the qualified me, lack be in operators. the of XFront state, with excuse we of been this to of stumbled. major winter which we as market much we're taxes, as pricing with to opportunity and solves incumbents. with guys, in and because this zero, with able commoditization entered that been doing anticipated. succeed low-cost maintaining set California thought California of our Washington, opportunity a of larger seeing The with this headwinds are while already Cali year market, seeing has we our the Given But by a We're aren't may enter problem always scaled healthy lack asset the -- retail production. lower have proven XX% in but absolutely revenue an leading the the pressure clobbered stores than faced award-winning oversupply happened. largely are pricing for an the has we going started base We're very market margins. grow incumbent has Because products have to

be the end additional expand Furthermore, -- play of in retail appears get extra what an Cali will expanding X,XXX by tax licensed that and with. lifted points products XXXX. to Cali, are about our market, XXXX active about to recent the of indicates to margin and we'll cultivation is XXX XX% get an end X,XXX if flower-based by the to or base, about research are locations, which currently expected there slowly healing tailwinds a retail Additional

quality discussions As incredibly vapes. a in extremely busy closed advancing we've first pre-rolls, we're pleased of to and number end, in strategically strategic To products, with been businesses. partners a that significant April, our as including California-mainstay, California management Island incredibly have of Island and Company. team, deal flowers with attracted high growing potential a

significantly to CEO, even operational COO, acquire and and facility brings our more here. and buttress and is both our simple Brandon integrate on the impact weeks, what experience with and has cheaper and at accretive doing able immediate Island profitable, to ability on in giving in of the the of to in side. market. growth the Island which exactly Founder California We're bench Equally them Landgraf; deep allows management we're Mills to production confidence strategy, us made us manufacturer matter brands local more acquisitions. particular, production Commerce an Our for team strengthened In the a crucial operations our our Ray and have sales our team additions as

the year, on excited The early expected of to of facility is Madison we of board schedule. XXXX. momentum X have Illinois, our are Island build online ahead Phase as state. team of We QX in construction the in this coming in construction In completion of remains

dispensaries continue have perfect that opening mark as will of years, As iterate engine be and the for the efficient aims yet to to production and we in child Madison significant milestone preached we scaled, XFront expand for of two poster -- expanding another Illinois, we only to With retail in wholesale addition for our room Illinois. as we in allowable out pen open growth presence. footprint our enormous out our well of our have

a of online, Illinois story. locations they Let the kind minute in to this million eyeballing growth engine Madison of run that QX me grow. foot achieving Illinois locations, and some revenue. ahead in $XXX full large checked. million X,XXX the and neighborhood can $XXX our scale of coming be with square I a MSOs million cultivation estimate the complement With of to of to underscore the rate we is are box doing retail first XX two for capacity In $XX between small retail Quickly at a take Illinois other

second capturing upside retail. adding box is capabilities The the and wholesale by our additional buttressing

million, tuned slight increase forma stay and of have So, from potential state. an a sales system-wide With numbers. we $XX.X now fourth the said, decrease there the that of sequential of quarter the the lot a was review quarter XXXX. pro in year unrealized me because XXXX let over same X% QX last

While has pricing the additional both growth more become retail potential naturally and online those Illinois states. expect we and to think to states strengthen we wholesale Mass comes in limited license underscored in competitive, as

of in represents to million, As is EBITDA incremental representing evolves. last Low-cost which of that from to come to matter cannabis positioning roost one will -- as adjusted we've $X adjusted an growth. stated the proactively XXXX years. continue home -- industry been fact we EBITDA XX% competition with for, lockstep margin in the to QX up quarter, was for grow XXXX, operations revenue expect life; that Q see and I XX%, and we will high-quality industry continue pricing a

leaving in quarter solid the is in leaving -- year balance is the or shape Our solid sheet shape.

$XX.X As of was balance of March of related million come and long-term XXth, acquisition party Mass. Cash million closing due debt, in we doesn't which cash with of had the our NECC XX. $X.X May down until sequentially

Washington very feel introducing So, We're about to best-in-class to SOPs capital, position, and the at to good additional into thesis We our strategy markets to execute our successfully and prove scale. valid. from on continues access ability new our product our brand's continue market

monthly of a Illinois, brings our and on expansion dozen We're active on point. lines of XXXX. strategy QX since to We to up a Massachusetts, additional now SKUs continue me shaping add alone. our into developing launching my very Which continued markets for We're a core California. basis, final executing and new

ever I've we're one of our the time, the entering most for into environments in M&A As saying, seen been some active we've industry.

hazy, on mentioned banking federal quarter's remain during briefly their while last inevitabilities apparent. I of safe meaningful side timing is As the and change call, on details

production ideal child us it's company, low-cost we're setting a perfecting -- continue the Our part out create open as opportunity doing only very proving enterprise, and to but consistently now a poster but right right company. to our value engine some to become Everything be our merger up by us goal efficiency. for larger partner and not thesis. our larger become we been the We're investment meantime, of the be scale to has building for is shareholder the to to important in

team, to for always looking ways value our stakeholders. As a maximize for management

our turn who on growth Leo dive our platform. into state explore our a I'll Gontmakher, with us color With our assets near plan. by call accretive provide new will means that, and larger the as CEO, We to continue a to deeper now mid-term little acquisitions additional of augment over and Leo? part via to

progress update within see for our model and in on industry. and strength business Andrew the Thanks the we on our the

that the reached drive in operational first discussed expected growth our we substantial milestones through and just momentum As well beyond. lasting to quarter, pretend XXXX several

facility and realize are California the in considerable we more to strategy, teams place humming, we ever now now in growth coming the the facilities, than With confident have year. that

So, let's with start California.

we and just a is California, golden brutal a largest in see and lows, tax world's the its much pricing to operators market operators municipalities in as needed cannabis unprofitable enact from industry growth. means to winter in and others meaningful begin it's move to capability struggled to trough. turmoil believe to only scale, to to consolidating waves accelerate Simply our inexperienced products clear hitting operators scaled rebound disrupt and Due begin We starting a can After manufacturing, from accretion that where holidays, in we from is facility Commerce the the inventory, happening. the as considerably have automation Our retailers November-December pricing all-time competitive death knell in significant opportunity market, cannot. we're to share put, now for that general we to the view without this make a California our what improvements derive advantages cost drive to do. we starting

million We $XXX lower processing filled. over have now gets only built gets production whose that a capacity, as low-cost disruptive with capacity asset of

in continues on and existing have just made XX% that are brands the early sales months the our across us direct lower strides and feed response the solid with low-cost April all pricing focus into to in force products competition. our flex we've market, the and production We four-pronged penetration than pricing fantastic The that to new truly six pricing. starting beast. introducing the on sales muscles about accounts affords strategy a California in we snowball. has was accounts. Start the to coming been eye-popping in Starting average SKUs, Xst, deeper After

one from wholesale our pricing in of $X number milligram Washington, that instance, the over margins gross still drives at XXX is For for selling XX%. a list a price XX-pack box, excess [ph], in

were leading goal being is going product. to the an it. price and for between of into for gummies leader come California milligram pricing in said comparable the market doing with market XXX we this $X outsize We the and $X we're wholesale comparison, in For

model pricing California. the As standard this set cannabis for to in starts go we the new market again, truly believe will

selectively state, with market, and Moving the low-cost on us brands turn who our to the acquisitions strong in to and to are for current the the scaled distress in perfect online coming time shelf brand California good profit. created storm consolidate production space with has incubation, struggling to a creatively begin

they than more We brands that this manufacture their have asset own. profitably unique acquired could cheaper can on and

onto folded platform, have margins absorbed our and leveraged. Island fixed costs is expand and As others and capacity are

and chance portfolio that average, acquisition already base to of each presents as rolling low-cost up cross-sell strategic California, to foreseeable retailers, facility It's in On with expected diversified in now products. a to Commerce Islands, we overlap. XXX continue which a in significant days XXX Additionally, is high-quality cross-sales XX-day growth XXX count months. believe for from integration in in open-ended similarly an early the our we're are March. pleased April future the and May, of our up we installed customer profitable the with accretive lends We execute to very acquisitions comes showing coming over itself

Interstate those forward Massachusetts brands we Washington and and California tend in across and country Commerce. existing day via Lastly, and to Illinois, look one introducing our of to markets travel well the

production. Third-party

with by we've our facilities market and source manufacturing. to look processing for brands interest improved third-party very retailers use As seen profitability from strong and the label asset-light, products going to private single

have a with vape lab, high capabilities. gel nick and pre-roll extraction retailers multiple We're brands exploring fill, co-packing, throughput fill, alike. We line, symbiotic tincture, partnerships for MIDI kitchen opportunities caps, currently flower

expect clients the label quarter. before private We first of the our of the onboard to end

distribution. Lastly, retail

in expect this a year. California retail to We presence have

of the we margins necessary marketplace. drives is our in in spot brands cannabis presence retail production, industry's that this believe integration only higher us direct at this the the for is more A point not goods allow and in would products finished over the While control sweet creation value that curve. maturation vertical our distribution industry

Washington, stable remain Moving the prices with XXXX. wholesale rebounded have from lows been in which onto

a outdoor product us seen causing having consistent Our the in pause on have performance, facilities very price. despite more market, to taking

the of serve, in While continue Massachusetts. we of the is for products our Onto team. reception to testament focus a growth we hold the the don't outsized and state market Washington, anticipate to which

of been bolstered the had operations by Massachusetts Our and in opportunities significantly in January. acquisition NECC

Massachusetts, In processing contributed designs has to the production best simply and our addition of in space to is come ever and tripling the and we've facilities doubling our one canopy asset cultivation across in improvements Massachusetts, bodes competitive efficiently, but premium flower brand is been well not more for what market new the platform. a only in facility which already state. has This producing across our

will which are XFront the market we number Massachusetts towards be expected think precisely long-term reduced in might what the we transitory While headwinds to are retail be pricing, of locations as increase, is the for. at trend positioned

to meaningful the wholesale needs through everything sell our in summer, facility be and our Illinois of as new and we which we over XX further retail our menus we in-house revenue optimizing processes for Madison very and of but market Massachusetts the to able QX ahead number retail in of mix products we represented forward we both with year. and portfolio we XXXX. as footprint to increased highest we've and In of brands see capacity XX% house push to and to of high of growing After that ramping two broad the brands products add as allows percentages also Our of and suite one retail solid Illinois, our state. the believe Massachusetts, out plan XX% could its up in and XXXX XX%, XXXX limit be potentially, think construction the and locations be brands and us to the meet beyond, of continue XXXX the efficiently move sell-throughs our schedule, Illinois. QX house during our generating brands increased grow. only able we're in we high not as to as performance match to revenue in-house -- in our In brands as Plus, hit around sell-through look that cultivation

guidance, hand, current EBITDA high-quality growth confident capabilities our this of in at market consumer always and around industry for core only demands also packaged revenue really reiterate opportunities for we million drive our future. as sweet million as to sustained To said We're and cannabis As we've is our EBITDA. now and assets production is now that from in not we enter. the thesis, low-cost creation in distribution $XXX the revenue With value opportunity believe in spot every our capture of $XXX significant the current the out-sized and adjusted company this goods. have address to but ever in footprint we share of out place, the built market ability and

our come and We of progress are years can't for very to share to cannabis wait thinking and landscape three to steps be well-positioned ahead piece a you. major with We're always the continued XXXX to that, XFront the into lines will With I'm to beyond. Q&A. open well over continue the convinced the for model that operator I'll turn build and to value our stakeholders for now call we

will Ladies first come begin Gilmer from ahead. you. a session. Your with Haywood. Neal gentlemen, and Thank Please now will Instructions] question-and-answer go question [Operator we

Hey good afternoon.

Hey your apologize. Neal. Thanks Victoria for on joining us Day, I

worries. No worries. No

you the first -- that's not You're that company guys scheduled is right? next Monday, holiday because

tell Memorial I'll give Day off. you you a I'll what,

Yes, all, thanks the sort with Maybe for growth. that I'll of Thanks Perfect. start along. the questions. pass comment about sequential strong your just

of perspective a few respect And your to a some might that coming the near-term of because on new I California. there think out of with from Massachusetts, remarks, least, assume just a touched more with is your that timeframe views I your little get You've comments on challenge markets. the most of stores those that? your in different I'm Illinois, online, prepared coming growth little the in what's there's to that in but wondering bit growth, going bit perspective. at can if

from this into year sort main near-term supported maybe other markets? and see as growth into revenue of driver those of sort still the you year late next So, some of California by of

see first first one, improvements we Yes, there. well, growth first incremental one the and on why let's take

can and don't in? you why Joe fill start Jake, maybe, So,

kind Massachusetts or supported to be to as Joe, happy lean by the I terms from support or we over we California square in and market, well you the I'll think as of I the NECC our that and California wholesale you're Ray the see revenue entrance, burgeoning of Joe kind on Ray, spot well discuss either growth Leo heavily facility. the Massachusetts incremental story. support landscape, the if want to coming or California think, or Leo really as Illinois would But footage in with or added detail, Yes, as two, quarter the on that Neal, great. incremental further of next

can I on it to Sure, pass and touch start and off it Leo.

touching So, is the just hit really in from we're in acquisition Jake end high-quality we products the excited have Joe some and this it's it, really market. on that on Massachusetts We think about. some with of best Illinois, competitive of NECC January, Massachusetts

that's month growing every Massachusetts. So, in been

We practices launches for facilities. our also full taking and summer. story Similar quality of Illinois. suite best we're from of is product of have this all that of applying some those NECC a improving, in

retail flower helping improved edibles new SKUs is absolutely be on and both And for resin focusing the we've some of live and So, markets been resin quality get in those really well. out live those getting wholesale markets. products in and as us. That'll

to Cali. sales new seen Leo gets that exciting Cali can those in speak then of products other the our all some things of up build So, ramp And too. he'd

good a brands have that we inception we and on We're get working what's just organic to the Joe. figuring thanks, include space, think sales we've time that that growth More in penetrate QX, down opportunities in saw sales our up two on has a in product those a you starting carry, caught out months, who's our reorders the since five lot closer lot the over of really about finally we're into have shelf and finally, they seeing come really been from California. them headed up months very picking extremely the some all seeing been growth. overall, with the growth of about to natural for retailers quarters partners expanded, making with growing. private chains our Product of or been one combined orders and doesn't, the and now to last of the to to makes eight of for really vendors few good and are brands Naturally last six, combined said very, of QX I we space excited part are good industry us retailers with label products hand of our phenomenal. XX feel of about ours, brands, were the the are out larger where California. where historically, Yes, January at initially feel and about sell-through, will vendors going better seeing the we're going been really, And amount feedback what's just and we've difficult be their starting last like organic seeing for whose cut of sells feeling and some in

Thanks Great. Good. everyone for that.

be that So, the question, I some looks expecting second line Andrew, commented I to that revenues bit the gross to little a There's slightly dip OpEx through guess margins obviously margins pressure of quarter. EBITDA expand margin going in in and synergies? sales QX, you lower or grow, cannabis about my gross a like for continue in guess is pricing as to

a of going to is of of also there be some is But mix EBITDA margin that little bit expansion? driving a gross margins? growing leverage So, that's some there operating

Jake let one. take I'll that

Yes, margin the that drive absolutely. operating on is There improvement leverage will some EBITDA side.

labs, introduced NECC to much out think that we've coming mentioned topline a is the Massachusetts. didn't from previously play it's as products online, our is point approximately some products We thing carry. improvement to bottom-line I introduction, went an a as wholesale in XX%, we up of we into the from of it developed XFront sell-through XXs other as

of that a to wouldn't that and in benefit amortization, do are cost we're our selling company indirect pushing depreciation, with we costs, obviously, more to have own [ph], and products, any can of to, of Ordinarily, so. goods, indirect we So, as goods line. costs respect, more we've a uptick the but margin got it's some think through sold our in cost attribute XXX-E I

deeper a topline in that kind But sales Neal item margin continue EBITDA come and So, of spoke dig there's bit I'm our noise particular of in to true as in offline. the think Andrew that line statement that through. expect little increase we I to happy to rings as

for great. line. the I'll pass that. Thanks Okay,

Thanks Neal.

Instructions] next coming question [Operator go Collin Eight Your will with be Ty ahead. from Please Capital.

Hey, guys.

guess Ty. I apology too an

No problem quarters. almost at given Andrew. retail, problem. of Day from price Andrew, No sales were the environment of comment sequential is wholesale. growth in wanted coming on Look, we're to that anyways. the your weakness seeing you compression just over that as follow-up I decline I We guess, despite the the kind read in sequential most

of and the Just some quarter retail between maybe what and were the wholesale? takes in puts

Joe, that do want one? you to take

Absolutely. Yes. Sure.

the actually quarter-to-quarter into blew we out comparison Ty, kind year-end year, going inventory in we So, both some were of, excess last markets.

the kind It's quality definitely selling wholesale market, us. coming we're of and So, and stronger store come the the and resin is Massachusetts our summer of offset is that which bulk kind QX expecting average the down. at more tickets of our to coming in down definitely seeing retail end flower we're at Yes, that higher of we're Massachusetts pricing products. just business, by some in being eliminate of in also for time-to-time Illinois live then down pricing to if have year, have normally you been QX. isolate that but happens and growing over And kind growth really, that, that and both both

where down really it on focus you like then Jake but live resin-based pricing also distillate-based was the some but leading and incremental that's bottom-line, with bring offset on to. So, growth, if it's topline like there, speaking products, it's helping sell-through the products, you to

positioned follow-up, color. now the great consumer that's marketing a Okay, lot ways now. value-conscious universe among are throughout to consumer my consumers? How products on right of maybe a approach -- belt tweak portfolio the obviously, right think there's the address the any there product seeing pressure tightening for or year maybe this do could is across the impacts just And SKU for more we're your you assortment consumer? you then of And and period

the of market. our the is compelling I'm to really a piece sort that hit that on turbulent entering one over my time to for Well, story going -- in think that really is Joe, of we're turn script, the I I to which but California a in things

in seeing melt So, what is we is a we incremental. sales and time the our a were we of didn't in bit. a coming pretty so We're -- feel have growth base little that all California like troughy in market

So, California, good with -- and momentum in that. we're feeling about awesome with

terms to to over turn it of tweaks I'll products, Joe, Ray, In making guys. you

it and we've then kick behind and I'll other these genius absolutely, and markets. this the Sure, over off it in was for pass been the to model Leo of kind because Ray, Washington waiting what

year and on brand and retire two So, a XX a bring to first, we new one SKUs. new have brands and try we brands launch in market each quarter

strategy that we makes like sense which standpoint is to just from and point think do we the the price products, us what the that margin helps SKUs offset to is it until economy point our new point out up new on on we so And product and allow what a bring retire brands call we mix. then to a get and product where the don't cut price of premium

-- So, need the the markets built -- for But these what without it if me average kind has the premium way and cutting right, Leo or a it Washington when and and and way products we're that's keep sledding, and introduce Washington of tough tickets at you new which Leo economy model, the the I'm and retire really Spock call to economy I I at excited is us it's in. you better on in top doing. speaking about eventually of keep But up ban, as even the kind coming want are you products, about look proud launching chiming products your going. be viewed that's eventually, and new what you where up way, economy that ended premium, though of our that trend of the and -- crazy kind team game the are of and

what historically always for different hit how the to to we kind that brands on to flexibility any of Yes, where sweet this we've able retire really produce. to product we us, a whole the volume absolutely. survive kind and and what and play a price being being having the data The to market what out I out market that crashing. and in of lot pricing success price add any is what tells us XX spot able production, the we echo given of in Closely those a we points and of listening bunch way thrive for find to we Washington, decisions at had needs between at the what is of says, thesis brands Joe gives company. way coming us and that make time our brands with it's given markets the is low-cost which allows build looking

Thanks the color for for That's guys. Great. me. it

Thank you.

Carroll next Stansberry Your Research. Please from is Tom question with ahead. coming go

Hey, how Tom, are you? Welcome.

that’s opportunity last thanks. bringing we now are detailed the by guys questions yes, for but bringing story the really unique the But there's I keep more just of XX up so of tough new out theme well, it. just relatively as that that for been here, you right Hey, ones. another others Thanks to appreciate M&A driven the right? number to There's environment up a months. my I'm are question. six time, a there

how million cash, elsewhere, footprint company your focused other good current just share bit you robust in opportunity? about talk in are for So, you is the this, markets into you got a particular new looking maybe states how example, bit $X maybe your in and markets? or your this approaching using million to this M&A little of looking So, pipeline are could last more into over $XX expand to like secondly, up debt, gone finance looks counts you've then And planning year. a

So, a bit me maybe you. more? unpack that for Thank

Sure.

in it's the targets it's the the And really, and So, on secondly, I question first are think on M&A California. very in Illinois. of near-term targets, foremost, sort then

a behemoth production that us price. built low-cost hyperbole So, first sort it's don't like and -- we it's built of beat can on this feel talk California, we sometimes I anyone about but think on I I to have it, have engine,

we good piece of terrific good store there as any I've can't but large, products, last they that -- make the that here, money I got got revenues, because they've out by just people, market, but figured so and where bases, go are haven't brands haven't into terrific Gosh, figured low-cost production. are brands, And California penetrated, out we

can we stuff, bat, have make say production, to can the platform, we these it And able you'll being cross-sell them look, opportunities. throw off can their all then coming even advantage and our California more accretively have shut into currency, So, we buy right onto then accretive. you our down with the

it to want about thoughtful be we opportunity we're and going some retail also seeing own and So, sort as it's we look at sun, Cali. to not we've M&A be of and about willy-nilly were be in of every and the under we're it really had go because acquisitions much kind so to to California, going brand in But we brand in buy Cali.

a the there. additional that for that's just add brand some and sell-through get steady our so base place And out in product can capture retail margin and products awareness extra our we where really

So, and as barks, suite doing grow. small and $XX in Illinois a at we're space between bigger million the $XXX we've remarks some got cultivation. XX with dispensaries, Cali, and I got and that -- that prepared and full was dog MSOs we then the scaled said, in in And we, that's said are Illinois, the rating Illinois, run in my two -- I they've have in production of on a about million as look we and dispensaries of

getting that some Illinois engine piece first on cultivation board. having is that other the in MSOs have the kind bigger the scale production of of So, to

that is comes your adding six leads people are online months. in organically and in that retail, operators to for second And Illinois, the piece then sure part next the retail good we've availability got making in out and M&A is be probably of so, there. capital through we the question this industry will So, last which that the both is

to are a letter to number a and partner at the currently table finance any we us from with it. of So, able being come financing to looking opportunities help

long obviously capital a seeing And so are but a pretty the are markets we're are equity eager lot sources that closed been -- time, have there's for of that of plenty that last of Because ton proven us. we're see of with the and work growth only in revenue operators. people we to a trajectory, of front growth us. year million had in $XXX and And

not especially, confident. really, and really to capital we're that, targeted, it's our super-accretive is access something is So, being when that capital is comfortable that projects, something

and of, Thank cultivation you talking you're low-cost you unit thinking just the That's provider. your any to kind for or as that. per Do listening per guys you great. like about I'm follow-up cost about keep share all-in guys chat, pound metrics a I'm use? that you on, are you And whatever

Yes, at Leo, a do that? want crack you

Washington, Illinois? Illinois. and better that's you Joe, flower. for been is in Washington just want for speak for about of Massachusetts a and fill I'll Joe in raw, $XXX I blanks fill indoor We production, we've pre-testing, Sure. there pure and let out indoor for dried, this pound production. do in the Historically, is the at one numbers believe Massachusetts to

Yes, higher just it's states. it as can quartile states Illinois much sub-$X have think Washington. definitely Massachusetts, probably we in the high cost a higher think top that’s we in top But for we're speaking, comparatively -- sure, could mean, both in as which, be those and structure. XX% the somewhere than I

right. All Appreciate very your time. Hey, Great. thanks much.

it. Appreciate you I'll talk to tomorrow.

questions no at this are time. There further

now proceed. may You

a momentum of awful very and activity Have excited joining long you our lot -- it of our wasn't for updated in as XFront thank Well, lot since there's look lot keep right. as on updating and conference All everyone the company forward to an we in are a but we going It's night. a at we have good August. through and have -- year move call, last us. to you you,

Thanks everyone.

Ladies and you that disconnect gentlemen, participating please lines. this concludes thank your ask conference your for you today. call for and We