Marimed Inc

Good morning, my name is Constantine and I will be your conference operator today. At this time, I would like to welcome everyone into the Merrimet Incorporated's first quarter 2025 financial results conference call. All links 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 tar then the number one on your telephone keypad it. If you would like to re-draw your question, Please press start and then the number two. Thank you. I will now turn the line over to Mr. Kevin Campagna to begin the conference.

Hello and good morning to you all. I'm Kevin Campagna, Head of Wholesale Sales at Merrimet. I've been with Merrimet for close to four years and joined the team after 20 years in beer and alcohol and various leadership roles. I'm very proud of the team that we've built and the success we've achieved in continually growing market share for all of our brands. I am honored to kick off today's first quarter earnings for 2025. Joining the call today are John Levine, our chief executive officer, Mario Pino, our chief financial officer, and Ryan Crandall, our chief commercial officer. This call will be archived on our investor relations website and contains forward-looking statements. Actual events or results may differ materially from these forward-looking statements and are subject to various risks and uncertainties. A discussion of some of these risks is in the risk factor section of our 10K available on our website. Any forward-looking statements reflect management's expectations of today, and we assume no obligation to update them unless required by law. Additionally, we will refer to certain non-GAAP financial measures which are reconciled in our earnings release. I will now turn the call over to John for his first quarter overview.

Thank you, Kevin. for the hard work you and your team are doing to help us become a leading cannabis CPG company. And good morning, everyone. Thank you for joining us today. Last night, we reported our Q1 results. Our revenue for the quarter was essentially flat versus the same period last year, despite a dynamic environment. I continue to believe everything we're doing today To build a brand powerhouse will ultimately deliver the enhanced shareholder value our investors demand and deserve. Our brands continue to capture more share across the markets we serve, and we sold them into 70 new storefronts in the quarter. As a result, our wholesale revenue grew year over year sequentially and as a percentage of our overall business. Wholesale now accounts for 44% of our revenue mix, up from 42% sequentially. That's been our strategy, and we expect to see the percentage continue to climb as we further leverage our brands as a primary growth engine for the company. Executing that plan to increase wholesale sales is resulting in short-term impact on our financial performance that I wanted to discuss. We've always said that the ultimate winners in cannabis will be the companies with the most trusted and best-selling brands. I'm very proud that we're well on the way towards that goal. We're confident that ultimately our strategy will pay off with similar gross margins of 45% plus, like traditional CPG companies such as P&G or Coca-Cola deliver. To get there, we need two things to happen. First, we need greater scale, both at wholesale and selectively at retail. That's our focus right now, and I'll share what we're doing in a minute to keep expanding our brand distribution. Second, we need legislative reform that will enable significant operating efficiencies for companies like ours that will come with interstate commerce, e-commerce, and other benefits. In advance of these catalysts, our margins are likely to lag behind other MSOs for the simple reason that they have a much larger retail footprint. The way we see it, though, the pendulum is going to swing in the other direction. With our strong wholesale performance, we were able to partially offset a soft quarter at our retail stores. Pricing pressures across all markets, new competition in Illinois, and the general economic uncertainty all contributed. We're mitigating the impact through a series of pricing, marketing, cost reduction strategies to encourage more transactions, drive customer loyalty, and support margin expansion. Ryan will provide more detail in his remarks. We're confident these initiatives will pay off over the long term when consumers' confidence returns. An area where we couldn't be prouder is how we're doing in supporting the people and the communities we serve. Our in-house brands' Help on the Homefront program is a great example. Through the program, We raise visibility about the challenges our nation's veterans face in dealing with their housing costs. The issue has never been as important as right now, given the state of the economy. We're thrilled to award thousands of dollars to worthy veterans to help defray the cost of their home expenses. And we're looking to build on the program later this year. Speaking of the economy, let me spend a minute on tariffs and their impact on our business. For the short term, we shouldn't see any significant impact. Beyond that, we're monitoring tariffs like everyone else and assessing in real time how to approach the rest of the year. For example, we're looking at alternative suppliers for certain inputs and hardware. That's the discipline approach that has been the cornerstone of how we've always operated the business. It's what has allowed us to grow Meramed while maintaining a strong balance sheet. It's that same approach and our strong balance sheet that enable us to implement two key strategic initiatives that will fuel long-term growth and profitability. The first is what I call expand the brand, which involves continuing to make our brands accessible to as many people as we can in both existing markets and new markets. It starts with investing in innovation to create additional new products that meet the needs of today's increasingly sophisticated cannabis consumer. Brian is going to share details of a product we're launching in the next few weeks, and we're very excited about it. Creating the product is half the battle. The other half is selling it. Our brands are already top sellers, but there's significant opportunity to seize additional share. We believe that more effectively aligned sales marketing operations will help us make it happen. Brian's recent all-well-deserved promotion to Chief Commercial Officer is a key to that effort. As far as new markets are concerned, we continue to be in M&A discussion with a number of operators to acquire assets that would enable us to immediately and profitably distribute our brands in new, high-growth states. We're making meaningful progress and I'm hopeful we'll have something more definitive to share in the months to come. The goal of any acquisition is to integrate the operation as seamlessly as we have with First State Compassion in Delaware. We completed that transaction on March 1st. Our teams have been working together as we get ready for adult use sales which we expect to commence this year. We're also looking to enter new markets through licensing opportunities. We have been negotiating with potential partners in several states where we're confident our brands can capture significant market share. The second initiative we're focused on to fuel our long-term growth and profitability involves identifying new sources of revenue. We can't just keep waiting for the federal government to help our industry anymore. We know reform will happen eventually, but eventually is not a growth strategy. So we are taking charge. Our team is assessing our best options to enter the hemp space. With our strong brand recognition and performance, consumers throughout the country tell us they like to buy our products in their states. So we believe entering the hemp space will help us generate new revenue while staying focused on our strategy of expanding our brand distribution into new storefronts. The key for us will be to make it happen without taking the eye off the ball of our core business. I will now turn the call over to Ryan for his update.