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Ladies and gentlemen, thank you for standing by and welcome to the MedMen fourth quarter fiscal 2020 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, C. Shen Heider, CFO. Thank you. Please go ahead, sir.

Thank you. Good afternoon and welcome, everyone. Today, I am joined by our CEO, Tom Lynch, and COO, Tim Bossedy. On today's call, management will provide prepared remarks, and then we will open the call to your questions. Earlier today, we issued a press release announcing fourth quarter and fiscal year-end 2020 results. The press release along with our financial statements and MD&A are available on the company's website and filed in CDOT. Before we begin, I'd like to remind you that the comments on today's call will include forward-looking statements, which by their nature involve estimates, projections, goals, forecasts, and assumptions, and are subject to risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements and certain material factors or assumptions were applied in drawing a conclusion or making a forecast in such statements. Forward-looking statements relate to, among other things, the business and operations of MedMen, our plans for new stores and factories, our financial and operational expectations, and our expectations as to future sources of funding. These forward-looking statements speak only as of the date of the conference call and should not be relied upon as predictions of future events Additional information about the material factors and assumptions forming the basis of the forward-looking statements and risk factors are provided by the company's reports filed with the United States Securities and Exchange Commission and Canadian securities regulators, including the company's earnings press release, which was issued earlier today and is available under the company's profile on CDAR. During today's conference call, Medmin will refer to certain non-GAAP measures that do not have any standardized meaning prescribed by GAAP such as EBITDA, adjusted EBITDA, and corporate SG&A, which are defined in the earnings press release we issued earlier today. Reconciliations to GAAP measures are contained in the press release and RMDNA. Please note, all financial information is provided in U.S. dollars unless otherwise indicated. Now with that, I'd like to turn the call over to Tom.

Thank you, everyone, for joining us this afternoon. On the call today, we'll review our fiscal year of 2021. take a deep dive into the company's turnaround progress, including recent operational initiatives, and then discuss our financial performance for the fourth quarter with a preview into the first quarter of fiscal 2021. Before jumping into our performance for the quarter, we want to address the ongoing pandemic we're facing. We understand this has been a challenging time, and we hope everyone is staying safe and healthy. Our priority here at MedMen has been ensuring the safety of our employees, customers, and patients. We continue to follow CDC guidelines and provide a safe retail experience for all those in our stores, as well as a safe environment in our cultivation and production facilities and corporate offices. We are grateful to local and state regulators for allowing us to continue to serve our customers and patients. Now looking at our fiscal 2020 performance, I'm pleased to report that we delivered a record 157.1 million in revenue for fiscal 2020, a 31% increase from the previous year. The growth was driven by a 13% or 12.5 million sales increase in California and a 15 million increase in Illinois. For the fourth quarter, we generated 27.4 million in revenue, which was the first sequential decrease the company has seen, mainly as a result of COVID-19 and damage to our stores as a result of looting, and further employee safety precautions in early June. We'll discuss this in further detail in the financial portion of the call. Looking back at fiscal 2020, this is a transition year for the company across three main areas. First, redefining the company as a best-in-class retailer. Next, reevaluating the markets that have the potential to deliver the highest returns for us in the near term. And third, rebuilding our management team and board of directors with a focus on accountability transparency, and governance. While there is work to be done, we've executed on our turnaround plan and made significant progress on all three fronts during the past fiscal year. In terms of our business focus, we'd like to continue making it clear that we are a cannabis retailer. We believe we have the leading retail brand in the industry, as evidenced by our performance, not only in our legacy markets of California and Nevada, but also in new markets such as Illinois and Florida, where we've outperformed our internal estimates. During fiscal 2020, our loyalty program surpassed 350,000 members, and we recorded over 2 million transactions. Over the past six months, we've rebuilt our corporate infrastructure to better serve our retail stores. And despite the impact COVID-19 and other events had on revenue, we've significantly improved retail profitability while also enhancing our retail experience to better product assortment, customer service, and purchasing options, whether it be in-store, delivery, or curbside. Over the past six months, the company has accelerated its efforts to narrow its geographic footprint to focus on higher ROI markets, such as California, Nevada, Illinois, and Florida, through the termination of M&A deals and divestiture of certain non-core assets. We're taking a deeper look at each license and thoughtfully crafting a strategy on how best to drive value for the business. Tim will get into the specifics around how we view each market. We're excited about the revised growth strategy for the company and the stores that we are planning to open over the next 12 months, many of which are in marquee locations throughout the country. Looking at the third area, management and board of directors, I'm proud to say that we have put together a world-class group of individuals to lead the company through the turnaround and into the next chapter of growth. In terms of day-to-day management, we've brought in new retail-focused leaders and have empowered existing leaders who we've evaluated and believe will be key players in our continued execution of our corporate strategy. Improving company culture and making Midman a destination place to work are fundamentals to the business. That began with establishing core values focused on internal growth opportunities, ensuring that our employees are heard, and having a positive impact on the communities that we participate in. Shortly after I began my time at MedMen, it became apparent to me that we have some exceptional talent already in place. Unfortunately, many of those same people will help lead the company into the future. Over the past six months, we've also significantly enhanced our board of directors and have added the following board members. Mel Elias, the former CEO and president of Coffee Bean and Tea Leaf. Cameron Smith, an early stage investor in food and beverage. Mickey Kristoff, who has a background in policy and government at companies such as Salesforce, Uber, and Google, Errol Schweitzer, who was previously an executive at Whole Foods, and Al Harrington, who has built multiple companies within the cannabis industry. We believe our world-class board will not only add tremendous value to management in the formation of the company's strategy and ongoing basis, but will also be excellent spokespeople for the cannabis industry as a whole, and instrumental in helping lead MedMen's positive social impact in addition to its improved financial performance. Before jumping into the operations and finance portion of the call, I wanted to give a brief update on the turnaround plan that we laid the foundation for in our last earnings call. Tim Bossidy and I were brought on by the board in March of this year to guide the company through a turnaround plan. The goal was to achieve profitability while also continuing to build the MedMen brand and focus our resources on our key growth areas. The first step of the plan was to dig into our retail operational levers and evaluate revenue growth opportunities and cost-cutting initiatives to achieve after-tax pre-cash flow in our retail footprint. Despite the impact internal factors have on our operations this year, since taking over, we've been able to achieve two cash flow positive months, which are the first the company has achieved. The next priority area was rebuilding our corporate infrastructure with a focus on cost efficiency and communications among departments. At its peak, the company's corporate-related SG&A was approximately $160 million, which was significantly higher than its peers and came as a result of the company's trying to be too many things at once. Over the past 12 months, we've made sizable reductions in corporate spend with our corporate SG&A, approximately one-third of that prior number. which we feel is more reasonable based on the expected footprint over the next couple of years. Achieving meaningful retail profitability and reducing corporate spend are two large drivers of improving the company's cash flow profile. However, the third driver was eliminating the cash burn associated with cultivation and manufacturing operations in California and Nevada, which had contributed to approximately $23 million in cash burn from fiscal Q1 through fiscal Q3. We've reduced our spend here to under $4 million in Q4, and have made significant progress on the partnerships we announced we were pursuing with Treehouse REIT's full support in July. Lastly, a big priority for me was to strengthen our relationships with key capital partners. Over the past six months, our large equity and debt partners could not have been more constructive and supportive of our vision for the company and the turnaround plan. In addition to providing support the company capital, our lenders and key landlords came together and executed support agreements to defer $32 million in interest and rent over the next 12 months, while also modifying certain covenants for additional flexibility. Further evidence of the belief our capital partners have in the long-term value of the business. We are pleased with how much we've been able to execute in such a short amount of time. We also understand the urgency in which our shareholders and capital partners expect us to turn the company around. We take this responsibility very seriously and appreciate the patience while we methodically improve the health of the business. Given my years in restructuring, I know these turnarounds can take significant time to execute, and we're doing everything we can as a management team to accelerate that timeline in the face of a constantly evolving cannabis industry with tremendous growth prospects. The last thing I'll say is that we aren't just making the necessary changes to achieve profitability. We have more belief than ever in the strength of the MedMed brand and continue to view this company as a growth story. Some of our best stores around the country have still yet to open. I look forward to continuing to lead this company through the next chapter and will continue to share updates as they develop. With that, I'll hand it over to Tim Bossidy, our Chief Operating Officer, for operational highlights.

Thank you, Tom. As an introduction, I joined the company when Tom did back in March as Chief Operating Officer. I've spent a number of years in retail turnarounds, and prior to joining MedMen, had immersed myself in cannabis turnarounds. What attracted me to the company was exactly what Tom mentioned on a previous call together. I've admired the strength of and broad recognition of the MedMen brand and the retail platform on which it was built. However, it was clear that there were roadblocks preventing the company from realizing its full potential as a retailer and significant changes needed to occur to unlock value for shareholders. Nothing here is too dissimilar from other turnarounds where I've been a part of successful outcomes. But the key difference as to why this is the most exciting turnaround I've been a part of is we are starting with the platform of a unique brand and sitting in a strong position ahead of significant macro tailwinds. And despite external challenges, we remain on plan with our execution and will continue to drive towards and be held accountable for a successful transition to profitability. As Tom mentioned, the ultimate goal here is to drive retail profitability. The company has premier real estate, particularly in key markets such as California, where we have some of the highest revenue stores in the state. Yet we believe historically MedMen had left a lot on the table when it came to driving revenue in a cost-effective manner and when it came to prioritization of repeat customers. Some of these areas for improvement were highlighted further once we saw the impact COVID-19 had on our business. The company had historically benefited from a significant tourist presence in places like Los Angeles and Las Vegas. Again, an indicator of national brand strength, but with tourism traffic declining since March, we had to rethink how to best increase store traffic with a shifting customer base and at the same time drive conversion and larger transaction sizes. With respect to retail revenue, there are a number of initiatives we have put into place over the past several months to boost traffic. Historically, MedVent had shied away from third-party listing services that represent a jumping-off point for millions of cannabis consumers and patients. We are far down the road of fully integrating a number of these services into our POS systems, and we have had success testing these platforms in a number of our stores to boost awareness amongst these massive bases. We expect to see increased awareness, not only on our locations and delivery and pickup options, but also our differentiated assortment. To that point, while MedMen has always prided itself on high quality product duration, we felt that our product assortment, particularly with respect to flour, was below average relative to our peers, which had a negative impact on our traffic and conversion. Over the past few months, we partnered with a number of leading high-end brands, particularly in California, which resulted in August being the strongest flower sales in the history of the company. In addition, we've also made significant changes to how we think about marketing to our customers. As a company, we've historically invested a considerable amount of time and resources on building the MedMen brand. And while this served the company well at the time, there was not enough focus on true customer connection. Over the past several months, we have been extremely disciplined on allocation of budget to marketing. While we redefined our assortment, and learned about our changed customer base. Now, we can grow our budget in an extremely targeted manner. We are relaunching our BUDS loyalty program, which has close to 400,000 members, and we will provide loyalty members with personalized shopping recommendations, priority product access, and the ability to donate points to charities. In addition, we are launching a robust SMS program in California next week to give customers real-time access to exclusives and to reach customers more effectively. In October, we launched a digital media campaign in California with Florida soon to follow. In Florida, we made a shift towards hyper-localized marketing with a focus on physician marketing to increase our patient counts. And as mentioned before, we are deepening our relationship with third-party listing sites. While we have not returned to pre-COVID revenue levels, we have seen a significant ramp up over the past few months, particularly in California. Our conversion is up and our average basket is up. we will just need to continue to drive traffic. As a management team, we are highly confident in our ability to continue scaling Revco. Prior to COVID, revenue was growing sequentially each quarter since the company went public, and it is our firm belief that as the economic environment improves and the pandemic is better managed and controlled, our improved assortment, improved customer experience, and marketing initiatives will drive continued revenue growth during fiscal 2021. Turning to our main retail cost drivers, I'll discuss three key initiatives that we've been focused on since March. Besides in product costs, payroll continues to be our single biggest four-wall expense. We've implemented a dynamic staffing model, which has enabled us to significantly reduce payroll spend across the board while still maintaining customer experience during peak hours. Historically, payroll was running at around 20% as a percentage of retail revenue. Over the past couple months, we've been hovering around 15%. which translates to monthly payroll savings of approximately $1.5 million, or $18 million on an annualized basis. As revenue normalizes and grows, we believe we will improve operating leverage and see payroll continue to decrease as a percentage of retail revenue. In addition to payroll optimization, we are also undergoing a number of other enhancements to our stores to better utilize the tech improvements within the industry. These initiatives include, but are not limited to, POS improvements, session-based reporting, reduction in banking and payment processing fees, a revamped procurement process with a restructure to new vendor contracts with better margins, continued efficiency gains in delivery staffing, and decreasing our security spend. In aggregate, our efforts to improve four-wall economics have enabled us to achieve positive after-tax retail cash flow for several months, which we will discuss in more detail. Creating a new playbook for our retail footprint will serve as the foundation for how we grow the business over the next several years. Concurrent to these efforts, we've also been taking a hard look at each geographic market in which we operate and have built a plan to achieve our growth and profitability goals. I'd like to spend some time providing an update of progress in each market, starting with our recreational markets. As an update for California, we currently have 11 operational stores across the state with a number of new stores and store expansions on the come. Over the next 12 months, We plan to enhance our Northern California portfolio with two new stores in San Francisco, a new store in Emeryville, which is nearly complete, and a revamp of our San Jose location. In Southern California, we have plans to open a store in Pasadena and expand our LAX location, which is currently our best performing store in the state. In addition to operationalizing our existing licenses, we continue to monitor new cities and counties that are rolling out recreational programs. As a reminder, over two-thirds of California is still not open to recreational cannabis. We believe California will continue to be one of the top two largest drivers of revenue for the company going forward as we expand our brand in cities throughout the state. Moving over to Nevada, we continue to operate three stores. Prior to the impact of COVID-19, Paradise is one of our highest revenue stores, and we remain excited about the prospects of our entire Vegas footprint, especially as tourism starts to pick back up in the market. As we look ahead, We will continue to evaluate new store opportunities in the broader Las Vegas market, given the grand synergies between the Southern California and Vegas markets, and given our work in addressing some of the wholesale supply issues we had previously faced in the state. In Illinois, we had two operating stores at the end of the fiscal year, Oak Park and Edison, with the potential to add additional locations through those licenses. Oak Park is our best performing store in the MedMen portfolio for both revenue and profitability in our fiscal fourth quarter. which speaks to how well our brand and retail experience can extend in a recreational market and other parts of the country. Our final recreational market is Massachusetts. We've made significant progress here on the licensing front. In August, we announced that the Massachusetts Cannabis Control Commission voted in favor of granting us a provisional adult use license for our proposed flagship retail location near Fenway Park. A final license for this location is subject to meeting various conditions prior to opening which is expected to occur in 2021. Today, we also announced being granted a provisional adult use license for our Newton location. Similarly, a final license for this location is subject to meeting various conditions prior to opening, which we also expect to occur in 2021. We believe our Massachusetts stores can be some of the highest volume locations in the state. Moving on to our medical markets, we are especially excited about Florida, which we believe can grow to be the second largest We've gone through a few different iterations of our footprint in Florida, having built out over 10 locations across the state. However, due to historical issues in our use of cultivation and manufacturing facility, we did not have the adequate supply to fill each location. We made the decision to temporarily close down a handful of locations and currently have four operating stores, all of which have performed extremely well over the past six months, as they have had a better and more consistent supply for patients. We are proud to say our shrink-to-grow plan is working, as the current team at Eustis is doing a fantastic job improving plant yield and quality, which is driving positive outcomes at our open stores. We have plans to expand our canopy at Eustis, and as our supply continues to ramp, we have an additional eight stores slated to open over the next 12 months, including our South Beach, Miami location. The Eustis team has embraced that in the vertically integrated Florida market, to be a best-in-class retail experience for our patients, we need to be a best-in-class cultivator. Execution here has been excellent, and from March to now, our yields have more than doubled. In our other medical market, New York, we continue to operate four store locations, including our Fifth Avenue location, as well as our cultivation and manufacturing operation in Utica. As a result of us securing vendor partnerships with a few of the larger players in the state, we've been able to perform relatively well through COVID, recently hitting all-time highs on revenue and transactions. The last update I will provide is on our cultivation and manufacturing strategy moving forward. We announced in July, as Tom mentioned, we had landlord support to pursue partnerships in DHS and Mustang. We are ahead of where we thought we would be on this initiative, and we are close to finalizing agreements that will both improve MedMen's cash flow and be additive to our assortment. Thank you, and I turn it over to Zeeshan.

Thank you, Tim. Before we jump into the financials, let's discuss our transition from IFRS to US GAAP. As of June 28, 2020, the company no longer met the qualification as a foreign private issuer as a result of more than 50% of the company's outstanding voting shares being held by residents of the US. We are now considered a US domestic issuer under the rules of the SEC. As such, our audited financial statements for fiscal 2020 were prepared in accordance with US GAAP. In addition, we filed an initial form 1012G with the SEC on August 24th, 2020, which included our audited fiscal 2019 financials under GAAP. We filed an amendment number one to the form 10 on October 7th, 2020, and this week we'll file a second amendment, which includes our fiscal 2020 financials and MD&A. As of October 23rd, 2020, our registration as domestic issuer will become effective. We are excited about the change to U.S. GAAP and believe this will also be welcomed by our shareholders. Let's now jump into the financials. Consistent with prior quarters, all the figures on today's call are in U.S. dollars. In addition, I'll refer to our top line performance in terms of system-wide revenue, as we believe that is the best representation of our economic progress. You can find further information on these financial measures in our MD&A for the fourth quarter and full year fiscal 2020. System-wide revenue for fiscal fourth quarter 2020 was $27.4 million, down 24% from $35.9 million in the same period last year. We'll get into the specific impact of COVID and rioting in Southern California had on our revenue when we discuss our retail financials. Gross profit for the quarter was $11 million, which represents a margin of 40% compared to $16.1 million, or a margin of 45% in the prior year period. For the full year, gross profit was $58.1 million, which represents a margin of 37% compared to $55.9 million, or a margin of 47% in the prior year period. It's important to note that under GAAP, there were significant differences in how we were calculating gross profit given the change in treatment of biological assets. Operating expenses for the quarter totaled $56 million, an 18% decrease from $68.6 million in the prior year period. and 2% increase from the previous quarter. Within operating expenses, general and administrative expenses, which totaled $39.9 million, declined by 19% from the same period last year and 13% from the previous quarter. The reduction in G&A expenses were primarily driven by a significant reduction in corporate-related expenses, including payroll. We estimate that our fourth quarter cash-based SG&A totaled approximately $40.5 million. a 24% decrease from the same period last year, and 10% decrease in the third quarter. It's important to note that there were substantial changes to overall SG&A accounting under US GAAP compared to IFRS, particularly related to the treatment of leases, which makes the comparison to previous quarters difficult. Turning over to profitability, overall adjusted EBITDA loss for the quarter was $23.9 million compared to $37.7 million in the same period last year. and $26.1 million in the previous quarter. Several initiatives which we undertook as a company towards the end of fiscal 2020 are not yet reflected in their entirety in our adjusted EBITDA numbers. For example, our cultivation and manufacturing operation, which we estimate contributes to over 20% of our adjusted EBITDA loss, will be significantly improved through our cultivation partnerships in California and Nevada. Let's now take a deeper look at our retail business. Retail revenue excluding Arizona for the fourth quarter totaled $27.4 million, down 25% year-over-year and down 40% sequentially, which was primarily driven by reduced store traffic and temporary store closures resulting from COVID-19 and riot-related damage to our stores in California. With respect to COVID-19, California and Nevada saw tourism come to a halt soon after the pandemic began to pick up steam on the West Coast. Several of our stores, including stores like LAX and Abbot Kinney in California and Paradise in Las Vegas, drive a substantial amount of revenue from tourist traffic. As a result, traffic in certain stores were down over 50% early in our fiscal fourth quarter. While our stores in California remained open despite reduced traffic, we closed down our Nevada retail footprint for eight weeks due to a state-level mandate beginning at the end of March through mid-May. In California, while we kept our stores open, given our status as an essential retailer, with the exception of Seaside, we had to significantly modify our retail operations based on CDC guidelines and local ordinances to limit in-store traffic. As an example, our stores, if we're used to servicing hundreds of customers per day, had to limit in-store occupancy to 10 people for much of the quarter, which created long lines and temporarily reduced our conversion rates. We were able to offset some of the impact by quickly rolling out curbside pickups and improving our delivery efficiency thanks to our technology team. Aside from COVID-19, which we believe impacted retail as a whole in most markets within the U.S., we were also forced to close certain stores in California because of the looting that took place in early June. Several of our top-performing stores in California were shut down for close to three weeks because of the damage, including Venice Beach, downtown L.A., and Beverly Hills. All of our California stores were closed for at least a week. Overall, we conservatively estimate close to 3.5 million in lost revenue due to the damages over the three weeks. Despite the hit that we took from a top-line perspective as a result of COVID-19 and the looting, we made significant progress, as Tim mentioned, with respect to optimizing our four-wall operation by putting in place new systems for payroll, supplies, and payment processing. As a result of these cost initiatives and our ability to maintain our gross margin with vendors, we were able to achieve positive adjusted EBITDA at our retail footprint, despite the macro factors that impacted our sales in the fourth quarter. With Q1 fiscal 2021 complete as of the date of this call, we'd also like to report our preliminary Q1 retail revenue, which totaled $37.4 million, representing a 37% increase from the previous quarter on a comparable basis. We continue to see revenue increase, and while the pandemic has impacted us, we firmly believe in our ability to return to the revenue levels we were seeing earlier in the calendar year. In addition to revenue, we are seeing the various operational initiatives translate into cash flow as well. In July, we were able to hit approximately cash flow breakeven with adjusted EBITDA across all stores at over 13% and adjusted EBITDA in California surpassing 15%. We expect even better results in August and September. As a result of our ability to transform our retail operations, we are expecting to achieve company-wide breakeven adjusted EBITDA within our fiscal 2021, which we now have a clear line of sight into with a narrowing down of our business focus. Moving on to the balance sheet, we ended the year with 10 million in cash and cash equivalents. There were a number of capital raising transactions we announced subsequent to the quarter end, including 10 million in proceeds through the sale of a retail license and a $20 million financing through a combination of expanding existing credit facilities and securing additional convertible proceeds. We continue to work hand-in-hand with our large equity holders and lenders to capitalize the business permanently through free cash flow positives. A quick note on our cap table as well. Given our multi-class structure, as of last Friday, we had approximately 448.2 million subordinate voting shares and an additional 197.3 million redeemable shares, which are convertible into subordinate voting shares on a one-to-one basis. As of next month, there will no longer be legacy shares that are locked up, which also eliminates the go-forward overhang. To wrap up the prepared remarks, I, along with the rest of the team, am very optimistic and excited about the fiscal 2021. We've gone through a lot as a company over the past 12 months, and while there is still more work to do, with the revamped management team, a renewed focus on our retail business, and additional capital, we are well-positioned to reach profitability this year. and return to growth as a leader in Canvas retail within the U.S. We will now open up the call to your questions. Operator?

As a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, press the pound or hash key. Please stand by while we compile the Q&A roster. Your first question comes from Matt Bodley from Canaccord Genuity. Please go ahead.

Afternoon, everyone. Thanks for taking the questions here. I just wanted to start off maybe talking about capital allocation in the near term here, just given that it is pretty tight. It looks like you have about $30 million of cash currently. You mentioned a lot of different initiatives, opening up retail in some prime place in Massachusetts, potentially four more stores in 2021 in Florida. And just given the current state of the balance sheet, I'm just curious on, you know, what the capital plan is going forward. Obviously, I know you'll be opportunistic where possible, but it just seems like, you know, just, you know, keeping the operations going as is is somewhat of a challenge. And, you know, I'm factoring in some of the positive things that you guys have mentioned on this call in your prepared remarks subsequent to period end, but it just seems like it's getting tighter and tighter as these quarters go on, and any sort of comfort or color on what the near-term plan could be to actually execute on some of these other growth initiatives, just given the current state of the balance sheet right now?

Yeah, Matt, this is Tom. Thanks for the question. Good question. You should take as an indication the fact that we're even mentioning our growth strategy and getting specific about some of the markets that we've identified and that we're actually working on really is a statement about how we feel about the trajectory of the business. Our story essentially now is, you know, God willing, with all this going on, you know, in the macro space, it's simply a traffic story. We feel like the fundamentals of the business within the four walls of the store, which were not there, are there now. Our conversion is outstanding. Our basket size is increasing. All of the key metrics that I would look at as a traditional retail operator are there, and they're lining up, and they continue to improve. So our story is a traffic story. One of the things that we mentioned briefly in this that folks should take note of is that for very obvious reasons that I hope everyone would understand, our marketing spend over the period that we just discussed really has gone down next to nothing, right? The idea for my seat, the seat that I occupy, of spending significant marketing dollars into an operation that was not necessarily operating at best in class, right, and potentially disappointing consumers is not something I was going to do. So we've pulled back significantly on that so that we could fix, get the house in order, and now we're ready to deploy again and start speaking to the consumers and driving that traffic. We're going to need some help. We still have municipal and state restrictions that we're going to, you know, we obviously are going to abide in federal that we're going to abide by, but we're starting to see that term. And that's really simply all that we need. When we talk about these growth plans, our assumption is in the very short term, everything that we've described to you is self-funded, right? So there may be a discussion, there may be a short-term need that may be needed to address, but long-term, We're talking about a healthy company that self-funds these initiatives, and that's what our goals are. Tim, anything you want to add to that?

Thanks, Tom. I think the one important piece to add to that is especially when we talk about how exciting the opportunities are in front of us in Florida are, is our plans to add Canopy to our use dislocation are, in the scheme of things, a relatively small amount of CapEx, and we have eight stores that are already built out or substantially complete within our Florida footprint. So as we grow our canopy and as the uses team continues to execute and do a fantastic job down there, a big portion of our growth pipeline can actually be turned back on with little to no additional capex spend. And then also a reminder is that we've got another store substantially finished with our Emeryville location. We do feel good about our ability to continue to drive that growth pipeline without spending a lot of additional CapEx dollars.

Great. Understood. And then just one follow-up for me. So you had about $10 million come in subsequent to period and on a retail disposition. What's the climate right now in the market for potential bids on some of your assets, given sector valuations on the whole have been pretty healthy since July? And I know there's a lot of excitement over potential catalysts in the upcoming election, rather. So is there more interest? Is there more activity, more conversations on some of these assets? I know it's been quiet in certain states, and maybe other states like Arizona have been more attractive recently. with ballot initiatives there. So, you know, just your overall portfolio of maybe capital you'll be able to extract out of some of these non-core things and if that's materially different in your prospecting versus, you know, when we spoke last time when you reported your last quarter.

Yeah, there's no question. I'm at Tom again. There's no question that our portfolio is attractive and that we feel, you know, we feel the steady stream of calls weekly on a number of assets. But honestly, we've identified and we've articulated what the key, the core assets are for us in the go-forward strategy. And while we listen to inbound calls, we are not actively in the market really across the piece. We'll be opportunistic, as always, and I will always say that. We will. But, yeah, the environment has definitely strengthened, and the interest is high. And Tim or Zeeshan, anything you'd like to add to that?

Yeah, the only thing I would add to that, Tom, is, you know, if you look at private valuation, they've held pretty steady, even in light of what's on the public market. We're seeing a shift toward focus in highly profitable markets. So if you have a license or an asset that's producing cash, that'll trade out a premium over footprints that maybe go multi-state. So to answer your question directly, you know, we have not seen the same drop-off in private sales that we have kind of in the broader market.

Right. Okay, thanks, everyone. Thanks, Bob.

Your next question comes from Vivian Acer from Calum. Please go ahead.

Hi, thanks for the question. So, I appreciate the transparency in terms of the more recent quarterly revenues. That's helpful. Can you unpack that a little bit in terms of the key drivers of sequential growth? Thanks.

Tim, why don't you lead with that, and I'll jump in.

Yeah, absolutely. So we mentioned the growth pipeline that we feel especially strongly about and some of the opportunities there. But as far as from a same-store sales standpoint, one of the things that I mentioned earlier and we believe is going to be a really key initiative for us is one prior, in MedMen past, the decision was made not to partner with a lot of these third-party listing services, and that is a jumping-off point for millions of customers. In our initial testing, while we're being obviously very disciplined about our marketing budget, we've seen extraordinary initial return on advertising spend with some of these initial partnerships. So as we fine-tune that and partner with these listing services on a long-term basis, We do expect to drive substantial traffic and awareness through those. And the other big piece of this, I would say, is you can keep an eye out for within the next two weeks here, we'll be launching our SMS marketing, which is something, again, historically, the company had shied away from. But with what we've seen and what we've looked into, a lot of our customers and patients, especially in California, prefer to be communicated with via SMS versus through email. And so even though we have the broad reach through our substantial email listserv and fantastic engagement through that, we think there's another level to open up here through SMS marketing. So with those to sort of open up the top of the funnel, I think in the combination of the fact that we have seen conversion get better, we have seen ADS get better, we really feel that the pieces are starting to come together here, both from a future growth pipeline standpoint, but also from just the ability to drive same-store sales.

That's helpful. And just one follow-up for me. You know, last quarter you guys offered some color around, and I believe it was a California-specific metric, around roughly $15 million in run rate delivery revenues. What does that look like for Fiscal 1Q, if you can offer that, please?

Yeah, go ahead. One second.

Yeah, in terms of delivery revenue, the way we think about that is kind of combined with curbside now, kind of since COVID hit. And we've stayed pretty consistent with where we were before. There's a few markets where we had to kind of shut down operations that related to delivery because of COVID early on, which are now back up. So on an adjusted basis, we're kind of where we were before. And to Tim's point, some of these initiatives that we're rolling out over the next couple weeks are going to have a direct impact on delivery sales as well.

And the only thing I would add to that is, We put a lot of focus and effort in making sure that margin for us was there and efficiency for us was there for curbside pickup and for delivery. We've put a lot of those pieces in place. So the awareness piece of this is now the next step here to make sure that we're driving people to that platform now that it's ready for the traffic to come.

Got it, and I know I said that was my last one, but just to clarify so that we're all on the same page on what we just heard, you were perhaps a little bit more judicious. I don't want to say slower, but, you know, there was perhaps the need for more incremental analysis around how to deploy that strategy because it seems like a lot of your peers were able to pivot pretty quickly.

Yeah, so exactly. So from a technological standpoint, we were able to make that transition very seamlessly. But from a efficiency standpoint, we didn't think we would be able to drive a lot of scale there without seeing significant margin dilution. And now where we are, and I think you've seen that reflected with some of the commentary around the industry, but I think where we are now is we feel that we're able to provide a very positive customer experience without the same margin impact that you might be seeing elsewhere.

helpful. Thank you.

As a reminder, to ask a question, press star one. The next question comes from Scott Fortune from Roth Capital Partners. Please go ahead. Good afternoon, and thanks for taking the question.

Kind of a little follow-up on that. Let's focus on Nevada market, kind of what it'll take to To get back to break even, could you just provide a little more color without the tourism there, kind of the foot traffic, where you're at, kind of from a pre-COVID standpoint to now and expected going forward here?

Go ahead, Tim.

So over the last few months, as tourist traffic has rebounded in those markets, we've seen a nice recovery. So we'll be able to update everyone as that continues to progress. But I mean, obviously from the impact of first the regulatory impact back earlier this spring, and then tourism traffic off upwards of 60% to 70% in those markets, We definitely felt the impact, but I think we're seeing a nice rebound in those markets this fall.

Okay, and then kind of the same in California, you guys have mentioned that you're going to start driving more traffic to get there, but it sounds like a lot of the stores in Southern California, they're all open here now, but have a lot of room to get back to similar foot traffic levels you were at pre-COVID from that standpoint.

Yes. Go ahead, Tim. Go ahead.

Yeah, absolutely. I mean, what we look at really here is that from where traffic was prior to COVID, we were achieving those numbers with what we feel was an assortment that we're not nearly as happy with now. And connection with the customer around our BUDS program and targeted offerings, again, that are not at the levels as to where we think we are now and where we'll be rolling forward with. And so from us, we look at the pieces that we put in place and then the ability to drive some more traffic through to our stores. The things that we've seen, for example, August being the highest month for flower sales in the company's history, that as the assortment gets better, it's really just an issue of continuing to drive traffic to our stores in a normalizing environment where we should see a nice pickup.

got it and just one last question for me in kind of florida i know you've kind of been waiting to build out adequate supply there um and you're only operating four stores right now and you can operate what kind of step us through the timeline for that and kind of really wrapping that up as your supply comes on board from for the other stores through the rest of this year and going into 2021 i guess yeah absolutely so the way we're looking at it now is

eight stores that are substantially complete that will be able to turn on over the next 12 months as we ramp our supply at Eustis.

So you see a gradual ramping or adding those stores as supply comes on board over the next 12 months, basically?

Exactly, exactly. And that's really the key underpinning of the strength to grow here is we had had our supply chain far too stretched to the number of stores that were open. And so it wasn't a positive customer or a patient experience at those stores. You'd come in and the shelves would be fairly bare. And so we're not gonna repeat any of those mistakes. The plan is as we have enough supply come on to be able to turn on a store to where it's at the level that our patients deserve, that's when that store gets opened. So it'll be gradual. It won't be everything turning on at once because as soon as we continue to have the supply to fill those stores, that's when those stores get turned on.

Okay, thanks for the color. Absolutely. There are no further questions at this time. I will turn the call back over to the presenters.

Well, we certainly appreciate everyone taking the time to listen to our presentation. We are, as you can tell from the report, We remain very optimistic even within the pandemic and the challenges facing us all on a macro level. But in terms of the restructuring and the process and where we are versus where we thought we'd be, I would argue that we are ahead of where we thought we'd be based on my experience in restructuring companies like this. So, again, we remain tremendously optimistic. We think that this is a very, very interesting and challenging and exciting growth story going forward, and we look forward to communicating with you every step of the way. So again, thanks for your attention, and we look forward to speaking with you again soon.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.