Medmen Entprs B Sub Vtg

Good day and thank you for standing by. Welcome to the MedMen first quarter fiscal 2022 earnings call. At this time, all participants are in a listen-only mode. After the presentation, there will be a question and answer session. To ask a question during that session, you will need to press star 1 on your telephone. Please be advised that today's call is being recorded. If you require any further assistance during the call, please press star zero. I would now like to hand the conference over to your speaker today, Mr. Reeves Fulcham, Chief Financial Officer.

Thank you. Good afternoon and welcome, everyone. Today, I am joined by our CEO, Tom Lynch, and Chief Revenue Officer, Tracy McCourt. 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 first quarter fiscal 2022 results for the period ending september 25th 2021 the press release along with our financial statements and mdna are available on the company's website and files on both edgar and sadar 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. Forward-looking statements relate to, among other things, the business and operations of MedMen, our plans for new stores, our financial, operational, and strategic expectations, and our expectations as to the future sources of funding. These forward-looking statements speak only as of the date of this 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 in the press release and in the company's reports filed with the United States Securities and Exchange Commission and Canadian securities regulators. 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, retail-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. 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 where we will provide another update on the company's turnaround progress including execution on our transition to growth and plans to drive future growth, as well as our financial performance for the first quarter of 2022. The past quarter, we were able to deliver solid year-over-year revenue growth despite a softening in the overall macro environment quarter-over-quarter. During the fiscal quarter, increased COVID cases associated with the Delta variant and a reduction in government assistance helped drive a sequential deceleration in cannabis sales across the majority of the states we operate in. I'm pleased to say that MedMen's results held up well in this environment. Based on data from Headset, we outperformed state-level market revenue data on a year-over-year basis in California, Nevada, and Arizona. And for the states where we have market data, Illinois was the only state where we lagged the market revenue trends. Let's review the highlights from Q1. Quarterly revenue for MedMen came in at $39.8 million, up 13.4% from a year ago. The sales increase was driven by frequency of transactions and greater traffic and was broad-based, with all states other than Illinois posting positive year-over-year sales growth. Sequentially, total revenue came down 5.1% below the previous quarter, reflecting some of the shifts in the macro environment I mentioned. We posted our fifth consecutive quarter of positive retail EBITDA, which came in at 6.7 million for the quarter, up 29.3% year over year. We did see a sequential softening from last quarter's 8.9 million of retail EBITDA. This was largely attributable to lower gross margins. The gross margin decline primarily reflects a more intense promotional environment during the quarter. which we believe was exacerbated by the sequential softening in the macro sales environment. On the expense side, corporate SG&A, excluding pre-opening costs, increased 42.6% year-over-year to 14.6 million. This was largely driven by a 3.9 million increase year-over-year in professional fees, primarily as a result of litigation costs associated with previous officers of the company. Excluding the impact of the higher litigation costs, the year-over-year increase in corporate SG&A would have been 4.6%. As a reminder, at its peak, the company's corporate SG&A was approximately $160 million annually, meaning even with some elevated legal expenses during this quarter, we have still taken out $100 million in annualized expenses. We made two other recent announcements I would also like to mention. The first is the promotion of Roz Litzy to the role of Chief Operating Officer. Roz brings 25 years of operational experience, focusing on business startup, scaling, and strategy. She has a deep understanding of the MedMen business, and her skills will be invaluable in our new phase of growth and momentum. I'd like to thank Tim Bossidy for the critical role he played in the implementation and acceleration of MedMen's turnaround plans. Tim is returning to Sierra Constellation Partners and has left MedMen well positioned to remain focused on profitability, expanding to new markets, and delivering the industry's premier retail experience. We also recently announced an agreement with Lidhouse Farms to manage cultivation and manufacturing at our facilities in Desert Hot Springs, California, and Sparks, Nevada. Lidhouse is one of the most highly awarded cultivators in California, and we're excited to partner with them. We're excited about our growth prospects ahead, with a number of new store openings planned in key markets. We recently opened stores in Orlando and Tallahassee, with more new stores to come in Florida. We plan to open two new stores in California over the next six months, along with two openings in Massachusetts and one in Illinois. As revenue from these new stores comes online, we expect continued progress on profitability metrics. As noted in our fiscal year-end call back in September, we have drastically improved our expense structure, generated momentum in quarterly sales from a year ago, and have now posted a positive retail adjusted EBITDA for five consecutive quarters. Looking ahead, we plan to accelerate our growth and push towards company-wide profitability in the coming quarters. As we leverage our national brand recognition to drive new store growth in Florida, California, Massachusetts, Arizona, and Illinois. We appreciate the patience and support from our stakeholders as we executed the key elements of our turnaround plan. We could not be more excited to execute on our growth plan and deliver the revenue and profitability numbers we believe this brand is capable of generating. With that, I will hand it over to Tracy McCourt, our Chief Revenue Officer for Marketing and Operations Highlights from the quarter.

Tracy McCourt Thank you, Tom, and thank you to everyone for joining us today. Today, I'm going to walk through our state-by-state performance, as well as what we have set in motion to drive future growth. We remain very excited about the future of MedMen, and we are particularly excited following the announcements during the quarter of the Tillray transaction and the Soroya lead pipe. The funds we raise will provide the fuel we need to execute on our growth plan, including new store openings and increased efforts in marketing and customer experience, delivery, e-commerce, and more. During the quarter, total retail revenue increased 17.6% year over year, with relatively broad-based trends across most of our key states. California revenue increased 18.8% year over year. Nevada revenue increased 16.6%. Florida revenue increased 40.7%. New York revenue increased 101.8%. Arizona revenue increased 130.1% year over year. and Illinois revenue declined 10.8% year-over-year, excluding Evanston, which was sold in August 2020. We are beginning to see a considerable shift in our customer behavior, with customers from our database increasing their visits to our site 27% quarter-over-quarter, and new users from that group increasing by 37.4%. We continue to see significant strength in engagement with our email campaign, as our customers begin to increase how they interact with us in the digital space. With limited opportunities in advertising for cannabis retailers, email continues to be the most responsive way in which to reach our customers, and we continue to see increases in engagement from our customers through this channel. Additionally, we have started to fortify the e-commerce team to enhance site content and shopability, and are in app development now. to meet and exceed the shift in behavior and increase both revenue and traffic into our doors. Looking ahead, we remain confident that we have the footprint and the balance sheet for growth. We're also starting to see momentum in our cultivation and manufacturing facilities. At our Arizona facility in Mesa, our wholesale revenue increased to $1.2 million, up from $1 million last quarter, and up significantly from half a million a year ago. The Mesa facility was also profitable on an EBITDA basis. Now turning to the state level. Our state-by-state walkthrough today will cover key drivers of revenue and EBITDA profitability during the first quarter, and also highlight topics we believe will fuel growth in future quarters. Starting in California, first quarter revenue came in at $24.6 million, up 18.8% versus a year ago. Sequentially, sales decelerated by 2.1% from last quarter's record revenue, which was actually an improved trend versus what state-level performance data from Headset showed for the industry. We did see a clear impact from increased COVID cases related to the rise of the Delta variant during the quarter. The stores that were most impacted were largely in higher tourist areas, such as Abbott Kinney and West Hollywood, which saw quarter-over-quarter revenue declines of 10% and 7% respectively, lagging the overall trends in the state. California stores outside of tourist locations saw sequential increases in revenue, including Kearney Mesa and Downtown LA. Key drivers in California during the quarter included continued performance in our email strategy with email sends to a California customer increasing by 30% and a 50% increase in engagement rate as we further customized our email content based on the customer's product interest. We also increased how many of these customers came online, increasing total email users 23.2% to our site and new users from this group also increased by 29.9%. Quarter over quarter, we saw loyalty revenue, dollar for dollar, increasing 4.3% in California, demonstrating that we were retaining our loyal customer base during this period. Loyalty revenue also increased up 15.2% relative to last year. We launched a loyalty card at the end of the quarter to customers in select test stores and the results are strong. For these customers, 43% of customers returned and made a second purchase and 37% returned and made five or more additional purchases. This is a lift of 20% from typical timing and return purchasing rates. We are now rolling this initiative out across all doors in California. We increased our out-of-home advertising during the quarter, launching more billboards in highly strategic locations, including an adjacency to our San Jose store. We have also locked in new key placement opportunities in San Diego and Los Angeles counties. In SMS marketing, we experienced the service cutoff after major carriers placed additional restrictions on cannabis operators, and we had to move to an alternate provider. We transitioned our SMS to a new provider and began sending out marketing messages on September 3rd. As a result, only 32,319 messages were sent through the fiscal quarter ending September 25th, 2021. In June 2021, we implemented a new strategy on our third-party listings, improving how our content and images are showcased to audiences. This strategy has driven an increase of 20.2% in engagement in California, and the strategy is now being rolled out to other markets. Turning to product in California, most categories were flourished sequentially with the exception of flour, where we saw a decline in California quarter over quarter. This was largely driven by significantly less promotional activity versus the prior quarter, which included meaningful promotions during 420. Looking ahead in California, we are on track to open our two stores in San Francisco over the next several months and are working closely with the city on both our Union Street location and our Sutter Street location, both of which we anticipate opening by the first quarter of calendar 2022. We are continuing to conduct competitive analysis at the door level in an effort to better understand and improve our current pricing structure relative to peers. With the use of third-party competitive data, we can see where we are priced higher than our competitors in key SKUs. Preliminary results are showing that level setting our pricing to be more in line with the market can significantly increase engagement from our customers, with some tests showing 100% plus engagement increase through our email campaigns. With increasingly aggressive competitive promotions, we are continuing to look at promotional cadence at the door level to increase customer acquisition and ensure the retention of our customer base. In Nevada, revenue came in at $4 million, up 16.6% versus a year ago. On a sequential basis, sales slowed 14% versus last quarter, which was in line with the industry, according to state-level performance data from Headset. Key drivers in Nevada during the quarter included further increases in our advertising with additional taxi toppers and digital billboards on the strip, promoting the Best Dealers in Town campaign. We also launched full taxi wraps at the end of the quarter. Although traffic in the Vegas market declined in Q1, we believe this is largely due to reduced travel associated with increased COVID cases as a result of the Delta variant. In recent weeks, we are starting to see increased traffic from our marketing effort, and as tourism begins to ramp back up and major events, such as MJBiz and EDC are back in action. We increased email communications by 44% in the quarter and saw a 60% increase in engagement in Nevada. We increased total email users from Nevada by 11.6% to our site and new users increased by 18.8%. Loyalty revenue increased 7.1% from the previous quarter as we implemented more local specials to our native customers in the area. This is also an increase of 38% to last year. The flower category saw higher stock out in higher testing THC during Q1 Nevada, creating some missed revenue opportunities. As a result, we have negotiated with vendors to clear out non-performing SKUs and are now back on track with our inventory levels and THC testing coming through our Nevada doors from top selling brands in the area. Going forward in Nevada, we plan to begin testing pricing, particularly in the flower category. Competitive analysis shows aggressive discounting in this particular category in the Vegas market, and we are working to optimize our pricing strategy. So Living Without It is still on track to go live with our Paradise location later this month. We are looking to capitalize on increased events coming up in Las Vegas. Some of our initiatives include... further increases to our out-of-home advertising, adding more static and digital billboards in prime locations, taxi wraps, and toppers during these key events, beginning a shuttle service offering for major events into our stores to capitalize on traffic peaks around these events, and creating more brand-sponsored events in our doors to drive traffic and revenue. In Arizona, we continue to be excited about the performance since going REC, with a 130% revenue increase year-over-year for revenue of $2.5 million during the quarter, Sequentially, Arizona revenue increased 0.4% versus the prior quarter. Key drivers in Arizona during the quarter included a continued focus on driving traffic to retail after this spring's transition to adult use. We have again locked in platinum placements on Leafly and Weedmaps after seeing increases in traffic up 20%. Email traffic to our site also increased from Arizona email users by 17.7%, and new users increased by 21.7%. We increased email sends here by 47% and engagement increased by 43%. Arizona also kept up the momentum with revenue from our loyalty customers, increasing quarter-over-quarter by 10.7% and up 105% versus last year. looking ahead in arizona we plan to increase our brand awareness through out-of-home placement such as billboards in major thoroughfares and increasing digital spend to drive highly targeted traffic into our door expand our loyalty program base through program points incentives and product exclusives to our members in illinois we saw a 10.8 decline in revenue year over year with a modest sequential decline in revenue quarter over quarter to 4.3 million from 4.4 million We attribute the sales decline primarily to increased competition as 22 new dispensaries have opened in the Chicagoland area since January of 2020, more than doubling from a base of 17 previously. When we launched a grand reopening event in store this quarter, we saw an increase in revenue of 20% without any subsequent fall-off and are planning more events to further engage our customers in the community. We're also testing new promotions and pricing strategies to ensure that we can remain competitive in the market. During the quarter, we increased our email communications up 35% and also saw an increase in engagement rates of 35%. We increased total email users by 49.1% to our site and new users increased by 79.6%. Although we do not have a loyalty program in the Illinois market yet, we are currently launching an alternate hand carry card to help drive repeat business in the store. We increased total email users by 49.1% to our site and new users increased by 79.6%. We have again locked in platinum placements on Leafly after continuing to see success with online order volume. In Q1, our store fulfilled more Leafly orders than any other store and more than three times as many orders as the second best store. In future quarters in Illinois, we plan to open our new location in Morton Grove in spring 2022. We're also looking at more out-of-home opportunities like billboards and print ads to be showcased in both the Morton Grove and Oak Park areas. and also continuing to increase our third-party marketing within state guidelines to drive awareness and acquisition. In New York, revenue came in at $4.3 million, an increase of 102% to last year. Sequentially, revenue slowed by 4.9% versus last quarter. Key growth drivers in the New York market included strong results from our email efforts as we increased communications by 72% and engagement rates by 70%. We increased total email users by 39.1% to our site, and new users increased by 52.6%. We're also excited for the recent approval to sell flour in our four New York doors, which have already shown strong results, and which we expect to continue to have a positive impact to sales volumes in the state. While we still work towards regulatory approval in New York with the Ascend investment, as we have said previously, we continue to operate like owners. In Massachusetts, we continue to drive towards our new store opening, so we are increasingly confident we will be a differentiated retailer based on assortment and customer service. We have been diligently working with the state to get our Fenway location open as quickly as possible. Construction is done and inspections are ongoing, and right now we are targeting a December opening, of course subject to state approval. We locked in two prime placement billboards when there are only 11 approved in the Boston area at this time, one on the freeway of the I-90 and one coming out of Logan Airport. We have also already secured desirable placements with Leasley and Leadnap in advance of the grand opening of our Fenway location. We still aim to open our Newton location in spring 2022, subject to city and state approvals. In Florida, revenue came at $3.1 million, a 40.7% increase year over year. Sequentially, sales softened by 22% relative to the last quarter. The competitive environment remains intense in Florida, with very aggressive promotional activity in the market. We are confident that we have made great strides in the quality and breadth of our assortment, are now delivering more competitive pricing in the state, and will be offering new services, including delivery, and we believe these factors will be key drivers of our success in Florida. Key drivers of results in Florida include a continued expansion of our reserve and high THC product lines as we improve the quality of our cultivation. When comparing our harvest yields for this quarter to the same quarter last year, we are up 34%. Potency is also improving. We are now also consistently producing reserve status flower. We increased email communication by 81% and improved engagement by 51%. Total email users decreased by 3.9% to our site, although new users increased by 4.59%. For future quarters, we plan to continue the expansion of our assortment, adding in at least another 30 to 40 SKUs early next year. Experiment with new pricing strategies to compete better in price with our highly promotional peers while delivering higher quality and THC percentages. incentivize customers with increased loyalty points promotions to increase revenue and retention from our core customer base. In addition to Orlando, which opened at the end of Q1, and Tallahassee, which opened mid-October, we will continue to open new doors in the state in future quarters. We are very excited to have launched delivery on October 29th, starting initially in South Beach and now including West Palm Beach, St. Pete, and Coral Shores. We've also hired a marketing associate in the state who will be developing direct relationships with physicians in key markets and throughout Florida and will also be helping us to engage more closely with the community through events and charitable support. We're also looking to add SMS messaging for ease of communication and awareness to our Florida patients. Wrapping up, I want to reinforce the opportunity we have ahead now that our balance sheet has been level set and we can begin investing back into awareness and revenue-driving opportunities, including a better online experience, an app for ease of ordering, and a premium delivery service across multiple states. Improving productivity within our existing footprint in combination with our planned new store opening and leveraging the power of our brand. We believe we are well positioned to deliver improving sales and profits as we execute against our growth plan. With that, I hand it over to Reece.

Thank you, Tracy. First, let me note that we are considered a U.S. domestic issuer under the rules of the SEC. And as such, our financial statements were prepared in accordance with U.S. generally accepted accounting principles or GAAP. Also, consistent with prior quarters, all the figures on today's call are in U.S. dollars. In addition, I'll refer to certain non-GAAP measures we believe to be relevant economic indicators. You can find further information on these financial measures in our press release. Overall, we continue to make solid progress year over year by most financial and operational metrics. First, let me address our company-wide retail results, which includes the New York operations, which are currently classified for GAAP purposes as discontinued operations. First quarter, company-wide transactions were up 20% over prior year and increased broadly across all states, except for Illinois, which was slightly lower than a year ago. Company-wide retail revenue for the fiscal first quarter was $42.8 million, up 17.6% from $36.4 million a year ago. We did experience some sequential softening of trends relative to last quarter, with our stores in tourist markets seeing the largest impact of higher COVID-19 cases associated with the Delta variant during the quarter. Overall, MedMen company-wide retail was 5.2% below the prior quarter. Company-wide retail gross margin for the first quarter was $22.3 million or 52% of revenue, an increase of $2.7 million or 13.8% from the prior year. growth margin rate declined 180 basis points from the prior year, primarily related to increased promotional activity during the quarter. The increased promotional activity reflects our response to higher discounting in the market as a whole, which we believe was intensified given decelerating industry sales during the quarter. To further address and mitigate the impact of competitive promotional environments, our product and merchandising team is well into an initiative to assess product quality and selection on an individual store and local market basis in order to optimize both our SKU portfolio and precious shelf space for both top line and gross margin lift. Company-wide retail Operating expenses for the quarter declined as a percent of revenue from the prior year totaling $14.1 million, or 32.9% of first quarter revenue compared to prior year operating expenses of $13.4 million, or 36.7% of revenue. Company-wide retail adjusted EBITDA for the quarter was $7.7 million, or or 18% of revenue, which was $1.9 million, or 31.9% higher than the prior year's EBITDA. Sequentially, retail adjusted EBITDA declined by 25.5% relative to the last quarter, primarily as a result of increased promotional pressures. Retail adjusted EBITDA, including distribution expenses for the first quarter, was $7.2 million, or 16.9% of revenue, which is $2.2 million, or 43.4% higher than the prior year. As Tom mentioned earlier, this was our fifth quarter in a row of positive cash flow after tax across our retail footprint. Now let's take a deeper look at our continuing operations as reported in our earnings release today. On a high-level basis, the presentation of our first fiscal quarter 2022 financial results differ from the prior year 10-Q filed as we have reclassified Arizona as continuing operations from discontinued operations And we have classified the New York operations as discontinued operations from continuing operations. Revenue from continuing operations for the first quarter totaled $39.8 million, up $4.7 million, or 13.4% from the prior year. First quarter New York revenue totaled $4.3 million, resulting in total company revenue of $44.1 million. Continuing operations gross margin for the first quarter totaled $17.5 million, or 43.9% of revenue, which is a three percentage point decrease from the year-ago period. The decrease was attributable to higher promotions during the quarter, along with an inventory write-down of approximately $860,000 related to our cultivation and production facilities. First quarter, continuing operations selling general and administrative expenses totaled $37.2 million, which is $6.8 million, or 22.2% higher than the year-ago period. Corporate SG&A, excluding pre-opening costs for the first quarter, was $14.6 million, which was $4.4 million, or 42.6% higher than the prior year, and $2.5 million, or 20.6% higher than the prior quarter. The increase was largely driven by a $3.9 million increase year over year in professional fees as a result of litigation costs associated with previous officers of the company. Weighted average shares outstanding for the quarter were $942,696,052. driving a per share loss from continuing operations of 5 cents, consistent with the prior year's net per share loss of 5 cents. Turning to our balance sheet, as of September 25th, 2021, the company had total assets of $531.9 million, including cash and cash equivalents of $78.2 million. MedMen was able to raise net cash from investing and financing activities in the first quarter, totaling approximately $89.6 million. As previously announced on August 17, 2021, a special purpose vehicle majority owned by Tilray acquired a majority of the outstanding senior secured convertible notes from Gotham Green Partners and other funds Under the terms of the transaction, Tilray and other strategic investors in the special purpose vehicle acquired an aggregate principal amount of approximately $165.8 million of the notes and the associated warrants issued in connection with the convertible note facility, representing 75% of the outstanding notes and 65% of the outstanding warrants issued under the GGP facility. Prior to the sale of the notes, the company amended and restated the GGP facility to extend the maturity date to August 17, 2028, eliminate any cash interest obligations, and instead provide for payment in kind interest, and eliminate certain restrictive covenants. In addition to restructuring the senior secured convertible notes, we also announced on August 17th the closing of a $100 million pipe with a group of investors led by Cerullia Private Equity. This investment resolves the critical turnaround requirement of stabilized liquidity. which in conjunction with the restructuring of the senior secured convertible notes properly positions the company for growth to profitability i would like to provide an update on our cap table as well given the existence of redeemable securities at our subsidiaries as of november 5th we had approximately 1 billion 198 million 179,933 subordinate voting shares, and an additional 91,158,323 redeemable shares at MMCAN USA, which are redeemable for subordinate voting shares on a one-to-one basis. Ultimately, our goal every day is to contribute to and drive value creation at MedMen, While our financial results for the first quarter of fiscal 2022 were impacted by the external environment, along with pressure from legal expenses, we continue to make significant strides to position the company structurally for long-term scalable growth in existing and new markets. Overall, I remain very encouraged by the improved operating results year over year, stabilized liquidity, and restructured balance sheet resulting from the Cerulea and Tilray transactions. The entire MedMen team remains focused on executing our growth plan, increasing our cultivation capacity, and aggressively expanding our store footprint in key markets. In conclusion, let me again recognize and show my appreciation to all of the MedMen team members on the retail floor. cultivation and distribution facilities, and back office, who continue to strive diligently toward our goal to be the best cannabis experience available to the public now and in the future as cannabis use is further normalized. MedMen will continue to provide a welcoming, safe, and educational environment and highest quality cannabis to both novice and experienced consumers. We will now open the call to your questions. Operator?

As a reminder, to ask a question, you will need to press star 1 on your telephone keypad. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. And your first question comes from the line of Bill Papanescu from Canaccord Genuity. Please go ahead.

Hi, thanks for taking my call. Apologies if this was answered earlier in the earnings call. I disconnected a bit late, but obviously we're seeing a lot of discussion of price compression from some of the leading operators in the state of Florida. I was wondering whether you can provide some outlook into the next quarter and whether this has impacted the growth strategy in the Florida market. Any color that you can provide there is greatly appreciated.

Sure, Bill. This is Tom. Thank you for the question. And spot on. So, you know, we've spoken about the growth strategy in the Florida. We love Florida. We love the market. But we are going to be deliberate in how we expand into the state. So we have aggressive goals there. We just opened another store in October in Tallahassee. But with the price compression that's going on down there, we're going to be more deliberate. We're going to watch and see how this settles out because the promotions aren't necessarily tactical, SKU-based the way that we could talk about in California. They're more 40% off of a box, right? And it seems that the largest players in the state are doing that in order to simply retain market share. Perhaps it was an investment strategy to gain market share. It doesn't appear that that's happening. It seems that they're flat. So while the biggest players in the state choose to You know, have that battle. We're going to continue to operate, focus on unit economics in the state and be more deliberate. We have not changed our view on Florida long term, but we are going to be we're going to be very disciplined in how we how we expand there right now.

Great, thank you. And if I can squeeze in another question. Obviously, the company's really focused on promoting products through your emailing marketing campaigns. I get them myself, and I've seen the promotions you guys have run. I was wondering if you could provide any metrics, maybe I missed this, in terms of how this is translating into new customers in some of your key markets.

It sure is. I'll turn that over to Tracy. That is a narrative that you should expect to hear from us whenever we speak going forward. Our focus here is on unit economics, the productivity of every one of our boxes, and all the contributing factors to that. So when we start talking about other channels that are ultimately their tools frankly for us to drive traffic conversion be educational um you should expect to hear this narrative because we are data people here and we have put a stake in the ground saying that this is the premier retail cannabis experience in north america and it is and it's going to continue to improve so we measure everything what you're receiving from us is not um And it's well thought out, and we look at the results as they come in, and they help us build our assortment and our promotional cadence and all of that. So, Tracy, if you want to jump in and give some of the metrics, as we did, though we did offer some of that in the earlier text.

Hi, Bill. Yes, thank you. That's a great question. So we're actually really excited by our new customer acquisition, specifically on the email side of it. What we're seeing today is about 40%. of the engagement and the activity comes from newly acquired or acquisition people who've never purchased this before. And we are also seeing that more of them are coming to the site, which is really interesting, even more as a percentage than our core customers. So I would say that we're excited about what we're seeing with our prospects or acquisitions today. And in addition, It's really a key initiative for us in our stores to continue to capture customer information through our loyalty program or just through our POS system so that we can continue to market to those people.

Great. That's all I have. I really appreciate the color.

Great.

Sure thing. Thanks for the question.

And once again, if you would like to ask a question, please press star 1 on your telephone keypad. I'm seeing no further questions at this time. And this concludes today's conference call. Thank you all for your participation. You may now disconnect. Have a great day.