Glass House Brands Inc. Subordinate Voting Shares

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the Glasshouse Brands Third Quarter 2024 Investor Call. I would now like to turn the conference over to Mr. John Brebeck, Glasshouse Brands Vice President of Investor Relations. Please go ahead, sir.

Thank you, Operator. Welcome, everyone, to the Glasshouse Brands Third Quarter 2024 Conference Call for the period ending September 30th, 2024. I'd like to remind everyone that matters discussed during today's conference call could constitute forward-looking statements that are subject to the risks and uncertainties relating to Glasshouse Brand's future financial or business performance. Actual results could differ materially from those anticipated in these forward-looking statements. The risk factors that may affect results are detailed in Glass House Brand's periodic filings and registration statement. These documents may be accessed via the CDARplus database. I'd also like to remind everyone that this call is being recorded today, Wednesday, November 13th, 2024. And now I would like to introduce Mr. Kyle Kazan, co-founder, chairman, and chief executive officer of Glasshouse Brands. Kyle, over to you.

Thank you, John. Good afternoon, everyone, and thank you for joining us for today's call. Before discussing our results, I'll refer everyone to our third quarter 2024 press release, where you can review our results in more detail. During the third quarter, we delivered record-setting results highlighted by a 128% year-over-year increase in cannabis production, a record low quarterly cultivation cost of $103 per pound, and robust growth in retail and consumer packaged goods. All three business lines, wholesale biomass retail and wholesale CPG, achieved positive year-on-year and sequential revenue growth. We achieved record breaking results on more than 10 metrics in the third quarter, including consolidated revenue of $64 million, wholesale biomass revenue of $48 million, retail revenue of $11 million, CPG revenue of $4.8 million, the highest number for CPG since the end of our relationship with Herbal, consolidated gross profit of $33 million, wholesale biomass gross profit of $27 million, adjusted EBITDA of $20 million, operating cash flow of $13 million, cost per pound of $103, biomass production of over 232,000 pounds, and biomass sales of over 209,000 pounds. These strong quarterly results once again showcase our team's ability to consistently grow high quality cannabis at the lowest cost. In addition, our third quarter results demonstrate the continued effectiveness of our retail dispensary strategic pricing plan. I want to personally thank the entire Glasshouse family for their determined commitment to excellence in providing our customers with outstanding cannabis products at the best possible value. As we talked about on our last earnings call, the California cannabis market continues to experience pricing cycles. And given the newness of the legal industry with the overhang of federal illegality, sometimes the swings are extreme. While seasonality in California is predictable, the heights of the highs and depths of the lows are not. In the third quarter, the low pricing is what I described as destructive, meaning Nearly every company which cultivates in the Golden State will have going concern issues. As we have built the proverbial aircraft carrier, we thrive in both stormy and calm waters. These cycles give us the gift of adversity, which we've always embraced to get stronger in the most competitive legal cannabis market in the world. In fact, we are seizing on this opportunity to continue our expansion and have placed orders for materials for the retrofit of Greenhouse II. Pricing has been weaker than we expected during the second half of this year, falling below some of the lowest levels seen in 2022. Subsequently, the third quarter decrease in pricing was due to our sales team continuing to execute our sell-at-the-market pricing strategy. Thanks to our record low-cost production and consistent quality, we can do this in a way that few, if any others, can't. Mark will discuss this in more detail when providing our fourth quarter guidance. While we foresee lower prices to continue in the short term, longer term we expect glasshouse will benefit, as we have in the past, where we have emerged even stronger. Consolidation happens in all industries as they begin to mature, and the wild price swings are a major part of the path to consolidation. We are focused on taking advantage of this swing to expand market share, and as such, we are moving ahead aggressively with our expansion plans. We expect to spend $5 million in capex related to Phase 3 expansion in the fourth quarter of 2024. This retrofit will include the addition of blackout curtains, shade screens, new gutters, a misting system, CO2 systems, and grow pipes. We are particularly excited because unlike our other greenhouses, Greenhouse 2 has nearly 11,000 lights already installed. We expect to start generating revenue by the fourth quarter of 2025, with production estimated at 275,000 pounds of cannabis in its first full year. Besides the additional production volume, we also expect Greenhouse 2 to grow our highest quality flower and be the most consistent year-round thanks to the lights and other cultivation tools that will be part of the retrofit. The lights will also mean that its production should be less affected by the seasons, and would allow us to take advantage of cyclically higher prices in the front half of the year. Over the past six months, we've had many conversations with bankers about raising debt and equity capital, and we aim to raise approximately $25 million to fund our phase three expansion. Our focus is on equity issuance, which we previously disclosed, and Mark will discuss these plans in greater detail later in this call. As there is no immediate need for capital, we will strategically choose the timing. The discussions with providers of capital are ongoing as we look to further strengthen our balance sheet and lower our current cost of capital. Because we can pay existing obligations from our current operating cash flow and have no upcoming debt maturities for more than two years, we are taking our time in choosing the most advantageous pricing and timing. Next, I'd like to discuss the work being done by our retail and wholesale CPG teams, led by Chief Revenue Officer Hillel Tauch. Both teams have produced remarkable results this year, and I tip my cap to Lal and his team. In 2024, combined retail and CPG revenue exceeded guidance in every quarter, including the third quarter. Retail dispensary's strategic pricing plan once again helped our stores outperform the broader California market. While the overall market was down 6.4% versus last year per headset data, Our retail sales were up 11.5% year over year. This is a massive differential of more than 17 percentage points. I know of no other stores in California which bucked the market trends as much as we have. Our Allswell brand continues to drive growth and dispensary revenues in our retail stores as well as the broader market. It was a top three brand in unit sales for the second quarter in a row per headset data. This is an amazing achievement considering just 16 months ago, Allswell was the number 21 brand in the state per headset data. Clearly, our farm fresh quality, variety, and $9.99 out the door price is resonating with Californians as we are confident will when we have the ability to sell to consumers across the nation. Following the footsteps of Allswell flour, the Allswell vape we introduced in May has continued to surpass expectations in its initial launch, rising to the number three selling vape by units in our stores, up from number four last quarter. We are looking forward to tracking the growth of both of these products in the coming quarters. Our store saw a 32 percent increase in foot traffic in the third quarter versus the same period last year, and we are attracting a wide range of new customers to our stores. The performance of the strategic pricing plan is solidly meeting our expectations. The primary goal is to drive revenue growth through increased traffic and to keep our existing customers happy while winning the loyalty of a new, younger client base who will be with us for a long time to come. One of the brightest areas of our 2024 performance is the 9% year-on-year growth in CPG revenues and a significant expansion in CPG gross margin percentage we've seen through the first three quarters of this year. Wholesale CPG cumulative gross profit for the first three quarters of this year reached $3.34 million with a gross margin of 26% compared to 1.6 million and 13% during the same period last year. This doubling of gross margin percentage in a highly competitive market environment was enabled by our decision late last year to concentrate our efforts on our top brands, Glasshouse Farms, Plus Gummies, and Allswell. Another primary factor was cost-saving measures in our CPG supply chain and manufacturing processes. We brought the flour packaging operation in-house into our Lompoc facility, and this has significantly lowered processing costs. We've also reduced packaging skews and streamlined our product testing procedures. These adjustments have collectively enhanced operational efficiencies and lowered the overall cost structure, making the company's CPG products more competitive in the market. Lowering COGS is truly in our DNA. During the quarter, our Allswell brand marked a major milestone, surpassing $1 million in single-month wholesale revenues through both our CPG wholesale and retail channels. This powerful performance validates our decision over two years ago to launch Allswell. We believe that the best way to draw customers from the illicit market is to give them better pricing for fresh and tested products. Before I turn it over to Mark to review our financials, I'd like to talk about our plans for hemp. During our second quarter earnings call, we stated that we were exploring the potential for selling hemp-derived cannabis in markets outside of California. We are tantalized by the idea of selling Glasshouse and Allswell branded hemp-derived cannabis to consumers in other states. Since last quarter, we acquired our hemp license and have begun our initial testing as we now have our first hemp plants growing on site. Based on the current plans, we expect to decide during the second quarter of 2025 whether to move forward with production of hemp-derived cannabis. Note that our Phase 3 CAPEX spending requirements will remain the same whether or not we choose to pursue our hemp strategies. We are in dialogue with both potential partners on the commercial sale and distribution of hemp-derived cannabis, as well as with local authorities to stay up to date on new policies. We are watching regulatory developments at the federal level of interest. The 2018 Farm Bill expired on September 30th, and as of now, Congress has not passed a new one. The measures in the bill that allow the sale of cannabis-derived hemp have generally found support in the courts, and we don't expect major changes when the new Farm Bill is passed. In summary, I'm very proud of our entire Glasshouse brand's family as they succeeded in hitting or beating almost every controllable metric. Market cycles come and go, and when others shrink, we grow as we continue to expand our market share. This is all possible because of the unwavering eye on cost we've had since day one. Where others see challenges, we see opportunities. That's why when things turn, we'll be stronger than ever, ready for our aircraft carrier to enjoy some calm seas of higher pricing. We are in the right place with the right assets and the right team to grow the world's best canvas for the best price anywhere. Every day as we get closer to federal legalization, we sit prepared to scale in a way that no one else can, with the goal of making Glasshouse brands available in every legal market worldwide. I want to thank all of you who have supported us as shareholders, Our entire team is excited about the future and are focused on enhancing the value of your ownership. With that, I will turn the call over to our CFO, Mark Vendetti. Thanks, Kyle, and good afternoon, everyone. As a reminder, the results I'm sharing will be filed today. They can be found in our financial statements and MD&A, which are reported in U.S. dollars and prepared according to U.S. GAAPs. Briefly recapping our third quarter financial highlights, as Kyle mentioned earlier, net revenue for the third quarter of 2024 was $64 million, slightly under our guidance of $65 million to $67 million. This was still a record quarter for us, representing revenue growth of 32% year over year and a sequential increase of 18%. This growth was driven by broad-based strength. All three of our business segments produced record high quarterly performance, showing positive sequential and year-on-year growth. This was a quarter when our growth engine was hitting on all cylinders. Third quarter consolidated gross profit was $33.4 million, a single quarter record high compared to $26 million for the year-ago period and $28.7 million in Q2 2024. Gross margin was in line with guidance at 52% and compares to 54% in the third quarter of 2023 and 53% in the second quarter of 2024. An increase in revenue mix from our highest margin businesses, wholesale biomass and retail, and a seven percentage point increase in CPG wholesale gross margin were positive contributing factors. Gross profit dollars for the third quarter rose 29% year over year and 17% versus the previous quarter. General and administrative expenses were $14.4 million in Q3 2024, down 5% from $15.2 million last year and down 17% from $17.4 million last quarter. The decrease versus Q2 2024 was mainly due to a reduction in the bonus accrual during the quarter caused by the decrease in our projections for adjusted EBITDA and operating cash flow for the 2024 fiscal year. Sales and marketing expenses were 0.62 million dollars up slightly from 0.56 million dollars during the same period last year and down from the 0.68 million dollars in Q2. Professional fees were $0.9 million in Q3 compared to $1.9 million in Q2 2024 and $1.7 million in Q3 2023. The $1 million decrease versus Q2 2024 was primarily due to reduced legal expenditures following the dismissal of the Catalyst lawsuit against Glasshouse and the withdrawal of our defamation suit against Catalyst. Depreciation and amortization in Q3 2024 were $3.7 million, consistent with both Q2 and the same period last year. Adjusted EBITDA was a single quarter record high, $20.4 million in Q3, above the high end of our guidance of $18 million to $20 million, and considerably higher than the $12.4 million seen in Q2. This was driven by top line growth and healthy gross margin performance across all three of our business lines, as well as a reduction in general and administrative expenses and professional fees versus Q2 2024. Operating cash flow was a record $13.2 million, but below guidance of $18 million to $20 million and compared to $9.1 million in the year-ago period at $8.9 million in the second quarter of 2024. The majority of the miss compared to guidance is related to an increase in working capital relative to our expectations. Now, turning to the balance sheet. We started the quarter with $25.9 million in cash and restricted cash and ended Q3 with $35.1 million slightly lower than our guidance of $38 million to $40 million. This was mainly due to the factors discussed earlier in the operating cash flow discussion. In addition, we spent $1.4 million in capex in Q3, which was mostly maintenance capex at our SoCal farm. The company also paid $1.9 million in preferred stock payments and $1.9 million in principal on the White Hawk loan. diving a bit deeper into specific business segments. The core wholesale biomass business achieved a record high, 47.8 million in revenue during the quarter, accounting for 75% of total revenue. This was up 41% year over year and up 22% sequentially. The 232,300 pounds of biomass produced in Q3 was 128% year-on-year increase and 55% higher than last quarter, far outstripping guidance of 185,000 to 195,000 pounds as Greenhouse 5 production continues to exceed our estimates. Production cost per pound was $103 per pound, well below guidance of $120 per pound for the second half of the year. Of all the metrics we watched, this is one of our most important and where we believe the long-term focus should be. We were pleased with these results and a clear demonstration of the efficiency of our growing team. This kind of result in only the second full quarter of production at Greenhouse 5 is impressive and a great indication that we are on a path to our long-term target of growing quality cannabis consistently for under $100 a pound. The average selling price was $229 per pound compared to guidance of 280 to $285 per pound and to $336 per pound in Q3 2023. Flower mix sold during the quarter was in the mid 30% range consistent with last quarter and lower than the 40 to 45% range we saw last year. Regarding market dynamics, our analysis indicates several factors are involved, many of which we believe are part of the pricing cycle Kyle discussed that will likely reverse over time. Harvest data from the California Department of Cannabis Control shows that there was a meaningful year-on-year increase in biomass production in Q2 2024. Some of the growers who kept their licenses may not have fully planted their farms in 2023, and the resulting rebound in prices may have prompted licensed growers to plant more this year than last. Anecdotal comments in the press indicate that the 2024 crop has been strong in the Pacific Northwest and parts of California. Buyers have been affected by the dropping prices and are placing smaller, more frequent orders in an attempt not to get caught holding high inventories in a falling price environment. Meanwhile, demand has remained strong and our sales team has added several new customers, which bodes well for our ability to continue selling our increased volumes of production. As Kyle mentioned above, we think that many cultivators will find it difficult to continue maintaining their labor force, replanting, and upkeep on their facilities at these prices. The previous cycle that started in 2021 contained a drop of over 65% from peak pricing in the first half of 2021 to drop pricing in the second half of 2021, and included a period of 18 months of low pricing before the market rebounded in early 2023. In light of this, we are taking a more cautious approach to pricing for the next few quarters. We sold more than 209,000 pounds of biomass in Q3, a single quarter record high and up 108% from last year, and 52% compared to Q2. We reported record wholesale biomass gross profit of $27.1 million, topping last quarter's $22.6 million. It represented an increase of 34% compared to last year, and 20% sequentially. Wholesale gross margin was 57%. compared to 58% in Q2 and 60% in Q3 2022. Despite the drop in prices, wholesale gross margin proved to be resilient thanks to the cost efficiency of our cultivation team. Retail and CPG revenue combined increased 8% sequentially and 11% year on year to 16 million, better than guidance of low single digit percent growth versus Q2 2024. This reflects the continued success of our retail strategic pricing initiative and consumer demand for our brand. This is also the third straight quarter that retail and CPG revenue have outperformed our guidance, despite the current highly promotional and price-driven retail landscape. Price compression continues to be a significant factor, and competition for shelf space amongst brands in the retail and branded CPG space remains sharp as many retailers and brands continue to face cash flow and liquidity issues. We expect this situation will continue to deteriorate during the balance of the year. Third quarter retail revenue was $11.2 million compared to $10.9 million in the previous quarter and $10.1 million in Q3 2023. Notably, our most recent store opening occurred in Q2 2023. So the year-on-year sequential growth is on a same-store basis. Retail gross margin was 44% Q3, down three percentage points from 47% Q2. This is consistent with expectations as the strategic pricing plan we implemented earlier this year will result in downward pressure on our retail dispensary margins. As we stated previously, we expect this trend to continue for at least the remainder of the year. During Q3, we recognized $6.3 million of non-cash impairment expense related to the carrying value of several of our NHC store licenses. Although we continue to win at retail, our current profitability projections, which are based on the strategic pricing initiative, and the difficult California retail market are below those made at the time of the acquisition approximately two years ago. This decrease in profitability required the impairment. TPG revenue was 4.8 million, up 20% sequentially, and 11% year over year. TPG gross profit was $1.4 million, while gross margin was 29%, which is a post-herbal high, and seven percentage points higher than the second quarter gross margin. One final point regarding the third quarter. After careful analysis, it is our position that we do not owe taxes for the application of Section 280E. We have filed our 2023 federal income taxes accordingly. The decision was made after consulting with external tax and legal counsel. This change will result in about $6 million of cash savings in Q4 2024. We will also calculate 2024 federal income taxes using this position and are in the process of analyzing prior year federal tax returns to determine the size of potential 288 tax refunds owed to Glass House for the tax years 2022 and earlier. Now, I'll provide fourth quarter 2024 guidance for key operating metrics as well as our outlook for the remainder of the year. The guidance does not contain any impact from potential greenhouse to expansion. We expect Q4 revenue of 47 million to 49 million, an increase of 19% year over year at the midpoint of guidance. We anticipate Q4 biomass production of 160,000 pounds to 165,000 pounds. representing a year-on-year increase of 57% at the midpoint of guidance. This guidance, when added to actual results through the third quarter, implies full-year 2024 production of about 605,000 pounds, which is 25,000 pounds higher than the midpoint of our prior guidance. We project that the average selling price for wholesale biomass will be in the range of $195 to $200 per pound. Flower pricing has been weaker than expected since the second half of Q2 and has fallen below the lowest level seen in 2022 and 2023. We think the current level of flower pricing is at an economically unsustainable level for many growers, and we expect to see a round of consolidation in the next 12 to 18 months, similar to what we saw in the previous cycle. Q4 24 cost of production is projected at $125 per pound, compared to $121 per pound in Q4 2023. Our prior guidance for cost of production was $120 per pound for the second half of 2024. Based off Q3 results and Q4 guidance, our new second half guidance is approximately $112 per pound, a reduction of $8 per pound versus our previous guidance. We project that combined Q4 retail and CPG revenue will remain flat versus Q3 as we continue to expect the highly promotional and price-driven retail landscape. We expect consolidated gross margin percent to be in the high 30s versus 52% in the third quarter and 45% in the same period last year. This is mainly due to the lower ASP in our wholesale biomass segment. We projected adjusted EBITDA will be $3 million to $5 million versus $3.8 million in the fourth quarter last year, and that operating cash flow will be break-even to negative $1 million versus positive $1.4 million last year. This will result in an expected cash balance of about $28 million at year-end, excluding Phase III expansion CapEx, or $23 million, including Phase III. This guidance does not include the $11.5 million employer retention tax credit payments we expect to begin receiving later this year and in 2025. CapEx is projected to be approximately $6 million, with $5 million to be spent on Phase III expansions and the remainder on maintenance CapEx. We will also make $1.9 million in dividend payments and $1.9 million in debt amortization payments. Before I turn it back to Kyle, I'd like to shed more light on our funding plans. We announced today that we have entered into an equity distribution agreement with ATB Securities and Canaccord Genuity that will allow us to raise up to $25 million through open market sales of common equity via an at-the-market distribution program, also known as an ATM program. Primary uses of net proceeds from the ATM program will be Phase III expansion, and or general corporate purposes. The launch of this program is subject to the approval of CBOE Canada, the delivery of customary closing deliverables, and the filing of a prospective supplement to the company's base shelf prospectus dated May 16, 2024, all of which we expect to complete soon. As Kyle mentioned above, and as our Q3 ending cash balance of $35 million indicates, We do not have an immediate need for additional cash. This will allow us to use the ATM program with discretion pending market conditions. For more detail on our ATM program, I encourage investors to read our Q3 press release, which was issued prior to our call. With that, I will turn it back over to Kyle. Thank you, Mark. I have a few final remarks before we begin the question and answer session. As a company, Glasshouse is committed to supporting cannabis reform, including helping to secure the release of people who are wasting away in federal prison for nonviolent marijuana offenses. We continue to seek progress on cannabis reform, both at the state level and federal level. There was good news in some recent state elections to legalize adult recreational use of cannabis. In Nebraska, voters approved two measures to legalize medical cannabis by a more than two-thirds margin. However, a legal challenge has been made in regards to whether there were enough legal signatures required to get the measure on the ballot. While there is a chance that the result could be voided, a super majority of Nebraskans want the plant legalized. In Florida, even though Amendment 3 did not meet the very high bar of 60% required to amend the state constitution, it was still a clear step forward for cannabis legalization. garnering almost 56% approval, which is the highest approval rating in an official ballot for the legalization of recreational cannabis in a southern state to date. 56% to 44% in conservative red Florida is a testament to how mainstream the desire for freedom for adults to be able to legally consume cannabis has become. In addition to a strong showing in the polls, Amendment 3 also enjoyed President-elect Trump's support. It is hard to imagine that President-elect Trump would support the right of Floridians to legalize cannabis, but not convey those same rights to the citizens of the other 49 states. I want to personally commend Kim Rivers, the chairwoman and CEO of Trulieve, who courageously decided to invest her reported $140 million to move freedom and legalization forward. Regarding the recent presidential election, our team was confident going into the balloting that no matter which candidate won, cannabis reform at the federal level was set to improve. With President Trump's election victory and his upcoming return to the White House, we're hopeful he will act on his campaign statements in support of federal cannabis reform. In September, he said that he supported federal legalization to remove restrictions on banking services for state legal marijuana businesses as well as the rescheduling of cannabis under the Federal Controlled Substances Act. President Trump also signaled he would support states having the right to legalize recreational cannabis use. Now, with the presidential election behind us, we expect him to honor these statements and by doing so, help cannabis reform move forward at an accelerated rate. Aside from his comments, while made on the campaign trail, there are legitimate reasons to believe President Trump will follow through. He surrounded himself with some cannabis supporters who helped him win back the White House. Elon Musk was heavily involved in his campaign and is a cannabis enthusiast, having famously smoked live on the Joe Rogan podcast. Mr. Rogan, who hosted President Trump a week before the election, believes marijuana should be legalized and has openly opposed the war on drugs. Robert F. Kennedy Jr., who seems likely to get a senior health policy-related role in the new administration, tweeted during the 2024 election, quote, legalizing marijuana won't just get people out of jail and back to work. It can actually help solve America's drug addiction problems, end quote. Finally, Congressman Thomas Massey of Kentucky, rumored to be in line for a senior position in the Department of Agriculture, voted for SAFE several times. It's pro-limited government and pro-hemp. President Trump in his first term pardoned Weldon Angelos, along with some other individuals. for nonviolent cannabis convictions. As President Biden will be thinking of his legacy, along with whether to pardon his own son, it is our hope that he considers the parents and families of the approximate 3,000 federal prisoners jailed for nonviolent cannabis offenses. We join Weldon and Mission Green in calling for the President to pardon people and not turkeys this Thanksgiving. We challenge President Trump in his second term to right the wrongs of the war on drugs. On November 1st, the DEA Chief Administrative Law Judge John Mulroney issued a preliminary order delaying the formal hearing on rescheduling, finding fault to DEA's list of witnesses. He further ordered that by 2 p.m. on November 12th, disadvantaged parties need to provide additional information showing that they are sufficiently adversely affected or aggrieved by the proposed scheduling to qualify as an interested person. The ALJ ordered that the preliminary hearing proceedings will go ahead as scheduled on December 2nd, but no testimony or evidence will be allowed. Instead, the disadvantaged parties must come prepared with their January to February 2025 availability for the formal hearing on the merits of their claims. Given the bureaucratic intrigues that exist within our nation's capital, it is difficult to parse what this means. However, we believe that any progress is better than no progress. Armentano, Deputy Director for NORML, noted that while the administrative process is cumbersome, the burden now falls on the opponents to argue against rescheduling, a task that may prove impossible based on the fact that Schedule III does not increase accessibility. He asserted common sense and evidence will ultimately trump ideology. We agree with him and hope the bureaucrats in Washington will take note of a recent normal poll that found more than 60% of Canadians approve of the legalization of cannabis nearly six years after the 2018 decision to make it legal. I would also strongly urge the President, legislators, and civil servants in Washington to take note of the fact that 92% of the public comments during the DEA comment period supported rescheduling and 70% supported removing cannabis from the Controlled Substance Act completely Let's face it, most people today see cannabis as another product, like alcohol, that should be legally available to adult users, and more importantly, as a better plant-based medicine than pharmaceuticals. Lastly, before we take your questions, I'd like to share my thoughts on our first-ever Analyst and Institutional Investor Day, which was held on September 12th at our SoCal farm. It was an interactive day of informative sessions capped off by two of our facilities that focused on the quality and efficiency we've built into our cultivation process in terms of hardware and SOPs. We were joined by longtime shareholders, those who became shareholders more recently, and a who's who of top cannabis industry analysts from the sales side brokering community. The feedback we've received following the event has been overwhelmingly positive and I'd like to offer a hearty thank you to all who joined and to the Glasshouse family who made the event such a resounding success. Additionally, we leaned on our vertical integration and held our inaugural bud tender sesh for many of our dispensary teammates at the SoCal Farm on the two days preceding Analyst Day. As we've experienced with our investor events, there is a huge before and after effect for all who visit the heartbeat of our company, the SoCal Farm. Our bud tenders felt the farm-to-store experience and were energized and imbued with a heightened sense of mission following the visits. They enjoyed the opportunity to view the farm scale and to see the systems and tools that drive both its amazing quality and cost advantage. I'd like to thank our SoCal Farmily, a.k.a. the cultivation team, plus the retail team led by Jen Berry and the marketing team led by Josh Karchmer for making Bud Tender Sesh such a special event which brought our Glasshouse Brands family together. With that, I'll hand the call back to the operator for questions. Operator?