Medicine Man Tech Inc

Good afternoon. My name is Ina and I will be your conference operator today. At this time, I would like to welcome everyone to Swash first quarter 2024 conference call. Onlines have been placed on mute to prevent any background noise. Following their prepared remarks, management will take questions submitted via the web link found on Swash investor relations website and in the earnings press release. I would now like to hand the conference over to the company's external head of investor relations, Sean Mansourie with Elevate IR. Thank you. Please go ahead.

Thank you. Good afternoon and welcome to Schwoz's first quarter 2024 earnings conference call. Joining me on the call are Forrest Hoffmaster, interim CEO and CFO, and Justin Dai, chairman of the board. The company will begin with prepared remarks and then we will open the call for Q&A. I would like to remind you that management's prepared remarks and answers to your submitted questions may contain forward-looking statements, which are subject to risks and uncertainties. Examples of forward-looking statements include statements regarding legislation and regulation, CHOAS's future results and financial position, and CHOAS's business strategy and plans for future operations. Such forward-looking statements may be preceded by the words plan, will, may, continue, anticipate, become, develop, expect, believe, project, could, or similar expressions as they relate to Schwoz. Investors are cautioned that all forward-looking statements involve risks and uncertainties that may cause actual events, results, performance, or achievements to differ from those anticipated by Schwoz at this time. Additional information concerning factors that could cause events, results, performance, or achievements to differ materially is available in Schwoz's earnings release, made available before this call, and available on Schwoz's investor relations website and in Schwoz's annual report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission on March 27, 2024. In addition, other information is more fully described in Schwoz's public filings with the U.S. Securities and Exchange Commission, which can be reviewed at www.sec.gov or on cdar.com or on the company's investor relations website. Also, Schwoz may discuss non-GAAP financial measures during today's call. A reconciliation of the differences between the non-GAAP financial measures discussed during the call and with the most directly comparable gap measure can be found in Schwoz's earnings press release made available before this call and available on Schwoz's investor relations website. I would now like to turn the call over to the company's chairman of the board, Justin Dye, for opening remarks. Justin.

Thank you, Sean. Good afternoon everyone and thank you for joining us to discuss our financial and operating results for the first quarter of 2024. As we review the overall U.S. cannabis market, Schwoz competes in two of the most competitive markets in the cannabis sector. The needs and preferences of our customers continue to evolve and these changes are accelerating. As we assess the environment, We believe that we have a unique opportunity and window of time to take a stronger leadership position by differentiating our business over the next several quarters. Therefore, we're prioritizing investments in the customer experience through strategic discounting, optimizing product assortment and promotions, investing in training and development of our people, and simplifying operations to build new capabilities and competitive advantages for the future. These initiatives take time and we've always maintained a belief that leading the business for the long term is a proper way to create value for our most appreciated loyal stakeholders. I'm very optimistic about our future and confident these investments will translate into Schwoz becoming an even stronger company and competitor in the future. we continue to build one of the most sophisticated operators in our sector. As we monitor real-time progress in Colorado, our focus on the needs of our customers is paying off. Our store teams continue to provide a wide assortment of high-quality products and attractive values for our shoppers. We pride ourselves on providing fast, friendly, and knowledgeable service. These strong fundamentals have enabled our Starbuds, Emerald Fields, and standing akimbo stores to outperform the market. I believe our success against the challenging backdrop in Colorado demonstrates the effectiveness of our operating playbook to perform in the most competitive markets in cannabis. In New Mexico, new license proliferation continued to significantly outpace state cannabis sales in the first quarter. The state's regulatory body has taken actions to further their commitment to license enforcement as they now have 14 inspectors conducting compliance checks at an accelerated rate. In Q1, we saw 72 store closures and a 33% sequential decrease in net new store openings. Furthermore, in April, the state's dispensary count decreased month over month for the first time since adult use was legalized in 2022. We believe this trend will continue and eventually flip net new stores from positive to negative, which will be a tailwind for our business as bad actors get taken out of the market and we have a more regulated environment to compete in. Before handing it over to Forrest, I'd like to quickly touch on the recent news regarding rescheduling. We're pleased with the proposal by the DEA to reclassify cannabis from Schedule 1 to Schedule 3. supporting the initial recommendation from the HHS in August of last year. This news not only benefits Schwoz, but the entire cannabis industry as it marks a significant step towards the removal of the owner's 280E tax burden while opening the door for subsequent overdue legislation. We will closely monitor next steps on the proposed ruling. And in the meantime, we'll continue to operate our business with heightened liquidity disciplines and a focus on profitability as we weight the outcome. Forrest, over to you.