The Cannabist Co Hldg

Greetings and welcome to ColumbiaCare Q2 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Leanne Evans, Vice President, Investor Relations. Please go ahead.

Thanks, Hector. Good morning, and thank you for joining ColumbiaCare's second quarter 2021 earnings conference call. With me today are Nicholas Vita, our Chief Executive Officer, Lars Bosgaard, our Chief Financial Officer, and David Hart, our Chief Operating Officer. Earlier this morning, we issued a press release reporting our second quarter results, which we also filed with the applicable Canadian Securities Regulator authorities on CDERC. A copy of this release is available on the Investors section of our corporate website, where you'll be able to access a replay of this call for up to 30 days. Please note that the remarks we make today regarding future expectations, plans, and prospects for the company constitute forward-looking statements within the meaning of applicable Canadian securities laws. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, which we disclose in more detail in the Risk Factors section of our Annual Information Form dated March 31, 2021, as found with applicable regulatory authorities and posts on CDER. We remind you that any forward-looking statements represent our views as of today and should not be relied upon as representing our views as of any subsequent date. While we may update any such forward-looking statements in the future, we specifically disclaim any obligation to do so except as otherwise required by applicable law. Also, please note that on today's call, we refer to certain non-IFRS financial measures such as adjusted EBITDA and gross profit margin, excluding changes in fair value of biological assets. These measures do not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies. Columbia Care considers certain non-IFRS measures to be meaningful, indicators of the performance of its business in addition to, but not as a substitute for, our IFRS results. Reconciliation of such non-IFRS financial measures to their nearest comparable IFRS measures is included in our press release issued earlier today. With that, I will turn the call over to Nick to get us started. Nick?

Thank you, Lee. Good morning, everyone. I'm extremely pleased to share the results of our second quarter with you. as well as discuss key operational accomplishments and review our expectations for the back half of the year as we continue to build scale, enhance profitability, and develop brand equity across our national portfolio. For the second quarter, we once again achieved a new record, reporting approximately $110 million in combined revenue, up 232% year-over-year and 19% sequentially. Notably, both the year-over-year and sequential increases were higher than growth rates than what we achieved in Q1. So we are growing at an accelerating pace, and that's driven by the close of the Greenleaf Medical or G-Leaf acquisition. And although the acquisition closed towards the end of the quarter, we saw initial contribution driven by revenue and margin synergies created by the overlapping CC and GC facilities in PA, Maryland, Virginia, and Ohio. We had standout results in markets such as Arizona, Florida, and Illinois, and strong organic growth across the national portfolio. Out of the 15 markets that are currently operational, 12 generated positive EBITDA and 11 markets generated positive cash flow from operations in Q2, excluding contribution from GLEAF. This performance drove total adjusted EBITDA for the quarter up to $16.4 million, an increase of over $21 million year-over-year and 58% sequentially. Combined adjusted gross margin for the quarter was over 43%, a 266 basis point improvement sequentially. and more than 700 basis points higher than the second quarter last year. The sustained positive trend line in gross margin in Q2 is attributable to broad improvements across our markets, but with particular emphasis on the following. Positive results in Florida, where new cultivation had its first harvest in June, newer markets that are ramping up, such as New Jersey, Utah, and Virginia, as well as the early close of GLEAF with operations in Maryland, Ohio, Pennsylvania, and Virginia. We also saw record cultivation yields in seven markets, a testament to the harmonization of cultivation procedures and ongoing efforts to optimize efficiency throughout our cultivation portfolio. Including in-development facilities, we now have more than 2 million square feet of cultivation and production capacity. With the addition of our Utah cannabis location and four incremental G-Leaf dispensaries in the second quarter, we now have 73 active dispensaries across the national portfolio and a pro forma count of 99 dispensaries, including those in development. Just this week on Tuesday, August 10th, we were excited to commence adult use sales at our downtown Boston location. Of our 73 active dispensaries, 36 are now adult use dispensaries. We continue to make progress on our initiative to grow wholesale revenue contribution in Q2, which now represents 15% of revenue, up 200 basis points sequentially. As we have previously explained, we expect our newly acquired assets in Pennsylvania, Maryland, and Virginia to be significant drivers of wholesale in the second half of the year, on top of the strong wholesale presence in markets like California, Colorado, Illinois, and Ohio, with expanding wholesale capacity coming online in New York, New Jersey, and Massachusetts. As David will discuss in more detail, we continue to advance our investments in the markets that are poised for growth, especially those transitioning to adult use, such as New Jersey, New York, and Virginia. In Q2, we launched our new storefront, Cannabis, which is now open in five locations, Springfield, Utah, Tempe, Arizona, San Diego, California, Villa Park, Illinois, and Lowell, Massachusetts. We expect to convert additional locations in the near term, including all 14 of our Florida locations. We will open new cannabis branded dispensaries in New Jersey, Missouri, and Virginia later this year. In addition to building our nationwide retail brand, we are continuously innovating on the product and service side of the business. In the second quarter, we launched nearly 140 new SKUs across 11 markets and saw great responses for the brands in new markets. For example, Massachusetts now has distribution of all of our national brands, including Seed & Strain, 777, Amber, press and plant sugar edibles i'm pleased to report that these brands are being met with significant demand that is driving an increase in average basket size in addition to strong operating execution in our core business we are also progressing on both the m&a front and in greenfield operations as i mentioned a few months ago the g leaf acquisition closed in june a few moments ago the green leaf acquisition closed in june and the integration is progressing smoothly In June, we also signed an agreement to acquire Medicine Man, a widely acclaimed vertically integrated operator with four dispensaries in the Denver metro area. In July, we completed the acquisition of four Canisend dispensaries in Ohio. Early in Q2, we announced the acquisition of what will be the largest cultivation site in the entire East Coast, located on Long Island in New York. We have since received preliminary approval to begin cultivation operations and are still targeting an initial harvest for the New York Medical Program by the end of this year. Last month, we launched cultivation operations in West Virginia, where we have five dispensaries under development. These significant strategic investments will enable us to scale up, improve efficiency, and solidify our market-leading position in key markets to drive shareholder value. Turning now to the back half of the year, we see continuing and accelerated momentum as we focus on execution of our priorities. As noted in today's press release, our outlook for the year is unchanged, with revenue expected to be between $500 and $530 million. To achieve those results, we will need to continue our solid execution as we battle some headwinds, which we will discuss in more detail in a moment. That said, the opportunities are tremendous. There are a number of commercial and operational initiatives we are leveraging, including our retail brand and product rollouts, dispensary openings, improved cultivation yields, and continued progress on integration efforts with an addressable market that keeps on expanding as the U.S. cannabis landscape evolves. We are executing against our strategic initiatives and remain confident in the momentum we are carrying into the back half of 2021 and onward into 2022. With that, let me turn the call over to Lars to give a more detailed recap of Q2 and our outlook for the remaining of the year. Lars?