Goodness Growth Hldgs Inc

Good afternoon. My name is Emma and I will be your conference operator today. At this time, I would like to welcome everyone to the Goodness Growth Holdings second quarter 2023 results call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, Press the star 1. Thank you. Sam Gibbons, Investor Relations. You may begin your conference.

Thank you, Emma, and thanks to everyone for joining us. With me on today's call are Interim Chief Executive Officer Josh Rosen, our Chief Financial Officer John Heller, and our President Amber Schimpa. Today's conference call is being webcast live from the Investor Relations section of our website. Dial-in and webcast details for the call have also been provided in today's earnings release, which is also available on our website. Before we get started, we'd like to remind everyone that today's conference call may contain forward-looking statements within the meaning of US and Canadian securities laws. These statements are based on management's current expectations and involve risks and uncertainties that could differ materially from actual events and those described in such forward-looking statements. For more information on forward-looking statements, please refer to cautionary note regarding forward-looking statements in today's earnings release. Now I'll hand the call over to Josh. All right.

Thanks, Sam. And thanks, everyone, for joining us this afternoon. I'll begin today with some discussion of the progress we're making executing our strategy for the year. Then Amber will run through some business updates and key performance indicators before we pass the call to John for review of the financials. Please turn to slide three of today's presentation, which is available in the quarterly results and events and presentation sections of our investor relations website. We first highlighted our cream and fire operating strategy for this year during our year-end conference call in March. And with our second quarter results, we felt it would be helpful to provide a mid-year progress report on how the components of this strategy are tending. As we've discussed, 2023 is an important year of transformation for the company. We're focused on simplifying our business, improving the efficiency of our operations to drive cash flow and support longer-term profit growths, and managing our balance sheet to give us additional flexibility as we maneuver through some exceptionally challenging circumstances that were created by Verano's wrongful termination of our arrangement agreement in October of last year. Our cream and fire priorities boil down to, one, making decisions that drive cash flow generation and profit growth with an eye on winning at the local level as our markets get more competitive, and two, growing and selling fire cannabis products because we firmly believe that we need to have passion for the quality and value that we're providing customers in order to thrive longer term. These must become core tenants of our organization in order for us to be successful, and we've been pleased with the pace of progress we're making in transforming the company in line with this vision for our future. In the first quarter, we began to restructure the organization by reducing costs and enabling our various state markets to act more independently. This decentralized approach to the leadership of our various state markets was designed to improve the speed and quality of decision-making on the ground at our facilities. And after two quarters, we can see this is helping us drive stronger operating and financial performance. We've also infused the organization with more passion for producing and selling fire cannabis products through some collaborations with external third parties who have helped us rate size our product assortment and pricing, prioritize the efficiency of production and the quality of our manufactured goods, and improve the quality of our flour. Our partnership with Drone Rogue has been especially helpful, and Amber will provide some additional discussion of this relationship momentarily. Finally, we have made progress to simplify our business through the divestiture of our New Mexico operations, which we deemed immaterial from a disclosure standpoint, but was completed during the second quarter. Additionally, in this afternoon's earnings release, we shared that we are now under an LOI to divest our New York business. Last quarter, we disclosed that we had entered a formalized sale process for New York, which required some accounting adjustments to assets and liabilities, which John will detail in the discussion again today. These accounting changes reflect that much of the value assigned to our business relates to our currently under construction Bluebird facility, which we leased from Innovative Industrial Properties as a result of a sale leaseback transaction. We're optimistic we'll have definitive documents within the next 30 days, at which point we could begin the license transfer application process. It's important to note that Verano's wrongful termination of our merger agreement last October left us in a particularly tough spot in New York, most notably with respect to our large construction project that was to provide indoor flower to the market. This project was midstream at the time. We operated in good faith within the scope of our definitive agreements, which gave Verano consent rights for this significant project, and in practical form, enabled them to provide meaningful input to adjusting the scope, approach, and financing of this project. Upon the wrongful termination, we were left with a more expensive project with additional contractor engagements and what ended up being a closed window for incremental financing from our landlords. When combined with a fairly limited medical market and patient base that burns cash and our inability to fund the anticipated adult use activation fees, divesting New York became our only viable option. Without getting into the specifics, given this transaction is not yet beyond the LOI stage, I do want to provide that we don't expect to receive material proceeds from this transaction, with the majority of any proceeds going to our Senior Secured Lender. this is not a direct boost to our cash position it's an incredibly important milestone for controlling our own destiny and our march toward producing meaningful cash flow and wearing my industry hat it's also exciting to see a new independent operator as a counterpart is ready to capitalize on the opportunities this industry presents with a strong product-led vision and aligned capital should this progress as we hope and we get it across the finish line which is not a given in the cannabis space i believe our new york teammates should be in good hands, and in many respects, it appears our counterparty's timing couldn't be better with the likely activation of adult use sales later this year. We can't say much else on this for now, but we are looking forward to sharing details regarding our future profitability expectations once we are more calibrated to the timing and this process is complete. Collectively, we believe that these updates and information shared on slides three and four demonstrate that we are gaining meaningful traction executing our plan for the year. especially given the recent dawn of adult use sales in Maryland on July 1st. We also have the legalization of cannabis in Minnesota coming, with adult use sales expected to commence in the first quarter of 2025 to look forward to. While these positive developments are encouraging signs of progress, we are still working to generate meaningful cash flow and improve our credit profile. There's a growing sense of optimism within our organization, supported by the execution on the ground in our Minnesota and Maryland operations, which point to a bright, independent future as we work through the final stages of restructuring our business. As we discussed on last quarter's conference call, we gained additional financial flexibility to execute our plan for the year by amending our credit facility and closing on a convertible loan, which provides us with incremental monthly support while we remain in ongoing litigation with Verano. Make no mistake, though, we were put in an extremely compromising position by Verano. Our share prices suffered tremendously, and we've been forced to fund our go-forward effort as an independent organization with dilutive and expensive capital. We are seeking substantial damages from Verano as a result of their wrongful termination, and we're optimistic we will have more to share on this process shortly. As I stated in the past, I view our claim against Murano as a very important strategic asset, and it's one of the reasons I was willing to step into this role. That concludes my prepared remarks, and I'll now pass the call over to Amber for some additional business updates and a review of our second quarter performance indicators.