IM Cannabis Corp.

Good morning, and welcome to I Am Cannabis' second quarter 2024 earnings conference call. Today's conference call is being recorded. At this time, I would like to turn the conference call over to Anna Taranko, Director of Investor and Public Relations. Anna?

Good morning, and thank you, Operator. Joining me for today's call are I Am Cannabis' Chief Executive Officer, Warren Schuster, and Chief Financial Officer, Yuri Bernberg. The earnings press release that accompanies this call is available on the investor relations section of our website at investors.iamcannabis.com. Today's call will include estimates and other forward-looking information and statements, including statements concerning future results of operations, economic conditions, and anticipated courses of action, and are based on assumptions, expectations, estimates, and projections as the date hereof. This information may involve known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially from those expressed or implied by such statements. Factors that could cause or contribute to such differences are described in detail in the company's most recent filings available on CedarPlus at www.cedarplus.ca and Edgar at www.sec.gov. Furthermore, certain non-IFRS measures will be referred to during this call and the term non-IFRS adjusted EBITDA loss will hereafter be referred to as adjusted EBITDA loss. Any estimates or forward-looking information or statements provided are accurate only as of the date of this call and the company undertakes no obligation to publicly update any forward-looking information or statements or supply new information regarding the circumstances after the date of this call. Please also note that all references on this call reflect currency and Canadian dollars. With that, it is my pleasure to turn the call over to Oren Schuster, CEO of I Am Cannabis. Oren, please go ahead.

Thank you, Anna. Good morning, everyone, and thank you for joining us today. As I had already mentioned during our last call, the entire cannabis industry is changing. It is literally being pulled out of the shadows. In the US, a proposal is on the table to reschedule cannabis on a federal level. Israel rescheduled cannabis to facilitate access to patients suffering from many new indications. But most importantly for us, Germany, the largest economy in the EU, legalized cannabis on April 1st, 2024. Since we are the sixth largest cannabis distributor in Germany, I would like to go into more detail on the impact the legalization had on the German cannabis industry. I don't think that many anticipated the tremendous impact the legalization would have, specifically the speed with which the legalization has affected the market. While there are many estimates of how the German market will develop, What I all agree on is that the German market is poised to deliver significant growth. As an example, Zaoniken & Associates is projecting a market with a run rate of about 2 billion USD by the end of 2025. According to BDSA estimates, the German cannabis industry is expected to reach approximately 1.5 billion USD in total sales in 2024 and is estimated to grow to about 3.7 billion USD by 2027. I would like to put this growth into perspective by taking you through the details of our internal sales in Germany over the last five months. In March, we sold 307,000 Canadian. In April, we sold 830,000 Canadian, an increase of 170% versus March. In May, we sold 1,120,000 Canadian, an increase of 35% versus April. In June, we sold 1,630,000 Canadian, an increase of 46% versus May. Overall, we sold 200% more in Q2 than we did in Q1 2024 before legalization. While the numbers are still small, they speak for themselves. Without a doubt, the results of the legalization have had a tremendous impact on our business in Germany. It is clear that we will be focusing our resources where we expect to see the biggest growth opportunities and the best return on investment. At this point in time, this is the German market. To ensure our accelerated growth in Germany continues in future quarters, we need to make sure that we are set up to deliver this growth. To achieve this, we have two clear targets. One, we need to have the right team in place, and two, keep our focus on building a consistent, stable supply chain. As a result, we are actively looking at our overall business to make sure that we are allocating the resources to support the German business. For example, our Israeli team is now working on building a new supply channel from Israel to Germany. At the same time, we are taking a good look at our Israeli business to see how we can maximize profitability. For our Israeli business, this translates into clear focus on the premium and ultra-premium markets, as well as active cost management to support sustainable profitability. Moving on to the operational side of our Israeli business, We strengthened our position in the premium segment by launching Flour, an Avant brand, with two strains. We launch and relaunch an additional 10 strains under the following premium and ultra-premium brands, Black Market, Pico, and IMC Craft. Our goal is to introduce our Israeli patients to a rotating portfolio of new and existing strains. As in the previous quarters, we are continuing to clean our slow-moving non-premium stock, clearing out all inventory for 0.8 million. We also have an additional accrual of approximately 1.1 million for slow-moving inventory, which is a conservative estimate. The impact of this can be clearly seen in our cost of sales, gross margin, and in the gross profit. or we will go into further detail when it takes you through the numbers. I would like also to give you a short update on where we are with the reverse merger with KadimaStem. On May 28, 2024, the company announced the termination of the preliminary term sheet signed on February 18, 2024 with KadimaStem. Due to recent changes in the cannabis market, specifically in Germany, where the company operates and other considerations not related to Kadima Stem, the company has decided to cancel the planned reverse merger and to remain an active public company with the current cannabis operations. Before turning the call over to our Chief Financial Officer Uri Birnberg, I would like to put Q2 2024 into perspective. Tier 2 2024 was a game changer for us with the legalization in Germany. I see tremendous potential for growth. We are actively looking at our entire business to make sure that we are allocating the necessary resources to the German market to support further accelerated growth. I will now hand the call over to Uri, who will review our second quarter 2024 financial results.