TerrAscend Corp.

Good afternoon. I will be your conference operator today. At this time, I would like to welcome everyone to TerraSense Second Quarter 2025 Financial Results Conference Call. I will now turn the call over to Walter Pinto, Managing Director of KCSA, Strategic Communications for Introductions. Please go ahead.

Thank you, operator, and good afternoon. Welcome to the TerraSense Second Quarter 2025 Financial Results Conference Call. Joining us for today's call is Jason Wild, Executive Chairman, Ziad Ghanem, President and Chief Executive Officer, and Alyssa Campbell, Interim Chief Financial Officer. Our remarks today include forward-looking statements, including statements with respect to the company's outlook, including the company's expected financial results for the third quarter of 2025, and its estimates and assumptions relating thereto. The company's expectations regarding its growth prospects in new and existing markets, such as Ohio and New Jersey, its M&A strategy, anticipated timing and benefits regarding the sale of the company's assets in Michigan, and the expectations regarding regulatory reform and the potential benefits thereof. Each forward-looking statement discussed in today's call is subject to risk and uncertainties that could cause actual results to differ materially from those projected in such statements. Actual results and the timing of certain events may differ materially from the results or timing predicted or implied by such forward-looking statements and reported results should not be considered as an indication of future performance. Additional information regarding these factors appear under the heading Risk Factors in the Company's Form 10-K, filed with the Securities and Exchange Commission, and other filings that the company makes with the SEC from time to time, which are available at sec.gov, on CEDAR Plus, and on the company's website at tarasem.com. The forward-looking statements in this call speak as of today's date, and the company undertakes no obligation to update or revise any of these statements. Also during the call, the company may present both GAAP and non-GAAP financial measures. A reconciliation of non-GAAP to GAAP measures is included in today's earnings press release and our quarterly report on Form 10-Q for the quarter ended June 30, 2025, which you can find on the company's Investor Relations website or on the SEC and CEDAR Plus websites. I would now like to introduce Mr. Jason Wild. Please go ahead, Jason.

Good evening, everyone, and thank you for joining us. In the second quarter, after an extensive evaluation, we made the decision to exit the Michigan market. Michigan has been an extremely difficult market, and we determined that our resources can be better utilized in our other geographies. Exiting the Michigan market will enhance our financial profile as demonstrated in the strong financial results from continuing operations that we reported for the quarter. Our process to sell all of our Michigan assets is ongoing with plans to use the net proceeds to pay down debt. We expect our exit from Michigan to be substantially completed in the second half of 2025. Second quarter revenue from continuing operations totaled $65 million, a slight decrease year over year, while gross margins improved 150 basis points year over year to 51.1%. G&A expenses for the second quarter were $21 million and 32.3% of revenue down from $22.6 million and 33.7% of revenue in the same quarter last year. All of this contributed to generating adjusted EBITDA from continuing operations of $16 million for the second quarter and adjusted EBITDA margin of 24.6%. We generated positive cash flow from continuing operations of $7.3 million for the second quarter and positive free cash flow of $5 million. This now marks our 12th consecutive quarter of positive cash flow from continuing operations and 8th consecutive quarter of positive free cash flow. Solid performance in the Northeast markets of New Jersey, Maryland, and Pennsylvania were the key drivers of these results. In New Jersey, we maintained our market leadership position according to BBSA. In Maryland, we are on a $75 million revenue run rate with gross profit margins in the high 50s. And in PA, our retail and wholesale revenue grew sequentially as we head towards potential adult use in the state. On the M&A front, we announced a definitive agreement in early May to acquire UnionShield Dispensary in New Jersey, a well-situated dispensary with limited competition within a 10-mile radius, which will bring our total dispensaries in the state to four. UnionShield currently generates over $11 million in annualized revenue and will be immediately accretive to EBITDA and cash flow. We plan to vertically integrate UnionChill after closing, which is expected to further enhance margins, provide our full array of state-leading products and brands to local customers, and enhance our leading market share position in the state. We are evaluating additional opportunities in New Jersey and have a robust pipeline, which we continue to work through in a disciplined manner. As we said today, we anticipate that by the end of 2025, we will sign multiple additional transactions in the state. In May, we closed on the ratio cannabis acquisition, our first dispensary in Ohio, a recently converted, still nascent adult-use state. Our goal in Ohio is to assemble a leading retail footprint by acquiring high-quality stores at the right price, just as we did in Maryland. This will allow us to leverage our existing infrastructure in SG&A to drive higher profitability. Subsequent to the end of the quarter, we completed a $79 million non-dilutive upsizing to our senior secured syndicated term loan with focused growth. Sixty-eight million of the proceeds were used to retire existing debt across other lenders, and the remainder is designated for future growth initiatives. This financing extends the maturity of all of our senior secured debt until late 2028. It also provides us access to an additional uncommitted term loan of up to $35 million for strategic M&A. This transaction reflects focused growth confidence in Terrasend's vision and strategy, and I'd like to thank our team for their continued support. On the topic of regulatory reform, we are closely monitoring developments at both the federal and state levels. The federal regulatory environment seems to be showing some positive movement, but as we have mentioned many times, we have operated and will continue to operate our business independent of reform. In Pennsylvania, we continue to see support for the possible passage of an adult use bill. When adult use implementation does happen, we will be prepared to meet the increase in demand by bringing additional capacity online at our 150,000 square foot facility. Our Pennsylvania canopy space is larger than the canopy at all of our other facilities combined. Regarding our share repurchase program for up to $10 million. During the quarter, we had 34 trading days in our open trading window. During this period, we repurchased 535,000 shares at a weighted average price of 29 cents USD per share. We will continue executing on this buyback program while balancing this with other capital allocation priorities, including growth capex investments, as well as further M&A. And lastly, before I turn it over to Ziad, as previously announced, Keith Stauffer, our former CFO, recently left the company to pursue a career opportunity outside of the cannabis industry. Upon Keith's departure, Alyssa Campbell, our Senior Vice President, Corporate Finance and Accounting, assumed the title of Interim Chief Financial Officer, reporting to ZEAD. We have initiated a comprehensive search for a permanent CFO and will provide an update in due course. On behalf of the Board and the entire Terrasun team, I want to thank Keith for his leadership and many contributions to support Terrasun's growth over the past five years. He played a pivotal role in strengthening our financial foundation and reporting, driving strategic growth and navigating the complexities of the cannabis industry. He assembled a highly experienced team and implemented industry-leading financial and operating controls to support our future growth. We wish him continued success in his next chapter. I also want to congratulate Alyssa on her new role. Alyssa brings over 20 years of financial experience to Terrascent. She has been a key member of our team for several years and has been instrumental in shaping our financial strategy. Alyssa worked closely with Keith and was integral in building the company's financial infrastructure, including completion of a company-wide implementation of what is believed to be the industry's only fully integrated seed-to-sale ERP system. She has led many areas of financial management at the company, including accounting, reporting, tax, treasury, FP&A, and operations. Her deep knowledge of our operations, supported by a strong team, will ensure continuity as we move forward. With that, I'll now turn the call over to Ziad to provide an update across our key markets. Zi?

Thank you, Jason, and hello, everyone. Let me walk you through our performance in each of our key markets this quarter, beginning with New Jersey. In the second quarter of 2025, we maintained a leadership position in the state, according to BDSA. Retail revenue was up slightly quarter over quarter, According to Lit Alerts, an independent market measurement source, all three of our apothecarium retail locations in New Jersey ranked in the top 15 in terms of total units sold during the second quarter out of more than 220 dispensaries now open across the state. Our Phillipsburg store was number three in the state in unit sales and number two in revenue. While wholesale revenue declined quarter over quarter, our core metrics remain solid. Penetration rate and average order size remain stable while we continue to hold a leadership position in the market and are selling to an increasing number of stores across the state. The quality and consumer appeal of our brands is driving this leading market position with TerraSend ranking amongst the top three producers in the flour, vapes, and edibles categories. Kind Tree is driving positive quarter-over-quarter growth in flour, vape and pre-rolls, as well as Valhalla and edibles. As Jason mentioned, in early May, we signed a definitive agreement to acquire Union Chill, an $11 million revenue run rate dispensary in New Jersey, which upon closing will bring our total number of dispensaries in the state to four. We plan to vertically integrate this location into our operations in order to efficiently capture the full synergies of this opportunity. Longer term, we intend to acquire up to six additional dispensaries, extending our retail footprint to the maximum amount of 10 in the state. This retail expansion would further increase our leadership in New Jersey, give us additional scale, and lead to improved margins and profitability as we vertically integrate each new store. Expansion of our cultivation and manufacturing capabilities at our Boonton facility is now complete. The expansion is providing us with additional flower capacity and the ability to offer a broader product portfolio as well as enabling us to supply additional stores as they are acquired. Turning to Maryland, Our success story in this state continues. As a reminder, we entered the Maryland market in 2021 through the acquisition of a small cultivation facility with negligible revenue, and then acquired four dispensaries during the first half of 2023. Now that we are two years into being vertically integrated in the state, we are pleased with the results that we have achieved. During the second quarter of 2025, Retail revenue increased quarter over quarter, while wholesale revenue remained steady. Total revenue in Maryland increased sequentially across both channels for the sixth consecutive quarter to an annual run rate of $75 million. Our verticality and increased efficiencies have allowed us to extend our gross profit margin from 25% in 2023 to the high 50s in the second quarter of 2025. Remember, we have made all of this progress in Maryland despite having just entered the market upon adult-use conversion only two years ago. To meet the consumer demand and expected growth, we completed CAPEX project to expand cultivation capacity by an additional 50% at our Maryland facility. We completed the first harvest in June and expect this additional capacity to further fuel growth and market share gains. In Pennsylvania, total revenue grew 6.9% quarter over quarter. Wholesale revenue grew 13.2% quarter over quarter, and retail revenue was up 5.3% sequentially, driven by the strong performance of our kind tree brand, as well as concentrates and edibles. We have a fully built out large scale cultivation and manufacturing facility in Pennsylvania with no need for additional investment. As the prospect of an adult use launch becomes greater, we have plans in place to bring on available capacity and will be ready for the increased demand resulting from adult use. In Michigan, as Jason mentioned earlier, after an extensive evaluation, we have made the decision to exit the market. Exiting Michigan will unlock value for Terrasan and enable us to focus on our core northeastern U.S. markets, including our recent entry into Ohio. Speaking of Ohio, during the second quarter, we closed on our acquisition of Ratio Cannabis, a well-situated and profitable dispensary, which contributed a little less than two months of revenue in the quarter. We are fully integrating the dispensary into our existing operations. To date, the financial performance of this business has exceeded our expectations. Our goal in Ohio is to assemble a leading retail footprint by acquiring high-quality stores at the right price, just as we did in Maryland. This will allow us to leverage our existing infrastructure and SG&A to drive higher profitability. In summary, Terrascent continued to make strong progress during the second quarter. Our business remained solid due to strong business fundamentals, a targeted M&A strategy, our recently completed financing resulting in no material debt maturing for the next several years, consistent positive operating and free cash flow quarter after quarter, and best-in-class sponsorship. Given this, I'm confident in our future. I would now like to turn the call over to Alyssa. to provide a financial update.

Thanks, Ziad. Good afternoon, everyone. I'm pleased to participate in my first TerraSend earnings call as interim CFO and appreciate the opportunity to serve in this capacity while we conduct our search for the company's next permanent financial leader. Let me briefly share my background. I bring 20 years of experience in finance, beginning with a focus on public company controllership. and expanding over time to encompass all aspects of finance with a strong operational foundation across various roles. I entered the cannabis industry seven years ago and joined Terrasyn in 2020. During my tenure, I've led financial initiatives across the organization while also taking on operational and M&A roles. Throughout this journey, I worked closely with Keith Stauffer, as we've transformed our finance function in the operational infrastructure, including becoming an SEC filer, uplifting to the TSX exchange, the conversion to US GAAP, and the implementation of our SOX program. It has been truly rewarding to be a part of this transformation. I believe strongly in our vision, the core markets in which we operate, our growth opportunity, and most of all, our entire team. Now I'll take you through our financial results for the second quarter of 2025. The results that I'll be going over today have already been filed with both CDAR Plus and with the SEC, and all results that I will reference today are stated in U.S. dollars. Given the recent announcement of our decision to exit the Michigan market, all financials discussed today reflect results from continuing operations, unless otherwise noted. Net revenue for the second quarter of 2025 was $65 million, compared to $67.2 million for the second quarter of 2024, representing a slight decrease year over year and in line with the expectations communicated on the last quarter's earnings conference call. Retail revenue increased 1% year over year. The increase in retail revenue was driven by a partial quarter of sales, from the recent ratio acquisition in Ohio, which was offset by price compression in the New Jersey market. Wholesale revenue declined 10.8% year-over-year. Wholesale growth in Maryland was offset by a decline in New Jersey, while Pennsylvania remained steady. Growth profit margin for the second quarter of 2025 was 51.1%. as compared to 49.6% for the second quarter of 2024, driven by continued strong performance in both New Jersey and Maryland. G&A expenses for the second quarter of 2025 were $21 million and 32.3% of revenue, compared to $22.6 million and 33%. of revenue in the second quarter of 2024. Gap net loss from continuing operations for the second quarter of 2025 was $6.4 million, compared to a net loss of $6.3 million in the second quarter of 2024. Adjusted EBITDA from continuing operations was $16 million for the second quarter of 2025, or 24.6% of revenue. compared to adjusted EBITDA from continuing operations for the second quarter of 2024 of $17.3 million, or 25.7% of revenue. Turning to the balance sheet and cash flow. Cash and cash equivalents were $26.7 million as of June 30th, 2025. Net cash provided by continuing operations in the second quarter of 2025 was $7.3 million, compared to $17 million, which included an $8.4 million tax refund in the second quarter of 2024. This represents our 12th consecutive quarter of positive cash flow from continuing operations. CapEx spending was $2.3 million in the second quarter, mainly related to the expansions of our Maryland and New Jersey facilities. The 50% expansion of cultivation in Maryland was completed in April, and the first harvest was completed in June. Also, the expanded edibles production and greenhouse expansions in New Jersey were both completed in the second quarter of 2025. Free cash flow was $5 million in the second quarter of 2025, compared to $15 million in the second quarter of 2024, representing our eighth consecutive quarter of positive free cash flow. During the quarter, we distributed $1.3 million to our New Jersey minority partners and paid down half a million dollars of debt. Subsequent to quarter end, we closed on an upside senior secured syndicated term loan of $79 million, $68 million of which was used to retire existing indebtedness across other lenders with the remainder designated for future growth initiatives. As part of this transaction, an additional uncommitted term loan facility in an aggregate principal amount of up to $35 million will be available for future M&A. This financing extends all our senior secured debt maturities until late 2028. It also provides us further financial flexibility to execute on our growth strategy, including organic growth initiatives as well as strategic M&A. Now I'll provide an update on our share repurchase program. In August of last year, we announced our first-ever share repurchase program for up to $10 million, demonstrating our confidence in Terrasyn's future and our commitment to enhancing shareholder value. During the second quarter, we repurchased 535,000 of our common shares. We will continue executing on the share repurchase program while balancing this and other capital allocation priorities. Looking ahead to Q3, we anticipate revenue to be flat to up low single digits sequentially, gross profit margin to be slightly higher sequentially, and further G&A expense reduction quarter over quarter as we continue to realize the savings from our ongoing initiative. In closing, our second quarter results mark another period of solid revenue and gross profit margin performance, with adjusted EBITDA margins among the best in the industry for our size. In addition, we have now delivered our 12th consecutive quarter of positive cash flow from continuing operations and our 8th consecutive quarter of positive free cash flow. We look forward to sharing our continued progress on the business during our next quarterly call. This concludes our prepared remarks. I'd now like to turn it over to the operator for questions.

Thank you.

Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number one on your touchstone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the number two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from the line of Frederico Gomez of ATV Capital Markets. Your line is now open.

Hi, good evening. Congrats on the great quarter here. Thanks for taking my questions. I want to ask two questions about Michigan. First, can you provide any color broadly in terms of how much could be the proceeds from those sales?

Yeah, hey Fred, Ziad here. We're in the middle of negotiation. We have multiple bids, multiple parties that are interested. We expect when we are done at the end of the year with Michigan that we'll have a net proceed, but we're not sharing what the size of it yet just because of the negotiation and everything that is happening. We have a clear view on some of the proceeds on some assets and others we have multiple options on. So we're still negotiating. So I'll hold back on some numbers. We can't share anything at this point.

Perfect. And I guess the second question on Michigan is just if you could talk about why now? Why did you decide to exit the state now? could help us understand that. I know that it's maybe one of the most challenging markets in the West, but maybe why is it that you think that maybe the market is not going to turn around soon? And also, if you could comment on some of the lessons that you learned from that space. Thanks.

Sure. Fred, look, why now is We entered Michigan, and we had a clear strategy, clear view made back then based on the fact that when we entered Michigan, an unlimited market where we came in, gross margin was in the low 20. Our phase one was to improve gross margin to the 40s and then build scale on that gross margin and then really generate cash. We came in, we accomplished the first thing, and we did get gross margin up. But what we learned and what we faced are a few things in Michigan that were insurmountable. The price collapse that was driven by the illicit market, the supply versus demand, the illicit market, the synthetic hemp. We looked at so many opportunities in there to create scale, and we quickly learned that that it was not for the benefits of our shareholders. So, look, we decided that deploying our capital and our focus on the remaining of our business was the right thing to do, and that's why we made that decision today. What have we learned from Michigan? You know, we learned in Michigan that any time you cannot regulate the market. And when you hear the regulators say and telling the legislators that if you don't give me the power to regulate it, we're not going to be able to have a successful market. So it goes back to the challenges we have in this industry, the illicit market, the synthetic hemp, the unlevel playing field, those are all things that are out of our control that will continue to be true anytime that when they're not happening, you're not going to be able to have successful business.

Thank you. Appreciate that. Thank you.

Your next question comes from the line of Andrew Semple from Ventoon Financial. Your line is now open.

Thank you, and good evening. Congrats on the solid Q2 results here from the continuing operations. I'll stay on the topic of Michigan just because I think with the announcements that you'd be divesting from Michigan, the company also announced some cost reductions, some headcount reductions associated with that divestiture. I just want to be clear, is that already reflected in the Q2 financials because Michigan has been moved to discontinued operations? Or do you think there's going to be some cost cutting in the continued operations that will be seen in subsequent quarters as a result of this announcement? Could you clarify that for me, please?

Sure. Andrew Ziad here. Yes, it is reflected in the discontinued operation. And the way you should think of our APEX going forward with continued operation is we will maintain it around 30% of our revenue or slightly below. And that's something that we can see we're confident of. And we're proud of for a company our size just because our size is smaller. So being that 29% to 30% is what I plan and the team is determined to stay going forward.

Got it. That's helpful. And then maybe if you could comment on your own M&A pipeline. I mean, we're seeing some distressed operations and portfolios and pieces of assets come to market. Any more recent updates on what you're seeing out there in terms of the M&A landscape? And then maybe just to tack on to that, it'd be helpful to know if there's any conditions or terms before you can draw on the $35 million M&A debt facility, that would be helpful as well.

Sure. Hi, this is Jason. So certainly, I think we've seen recently at least one company being put into receivership. We think that there's probably more in the coming months that'll go into receivership as well. We're certainly on the speed dial of a lot of these bankers that are helping to put together some options for these assets, and we're looking at them. We've also, I think, been pretty good about keeping our powder dry over the last year or so. I mean, we've done a couple of small private transactions, but we've kept our powder dry relative to doing some larger things because we felt like some of this stuff was going to trade at much lower prices. We think we're getting there. Our open map gives us a major advantage, we think, versus a lot of our other competitors that might be looking at some of these deals. We can take a bigger piece of the map of some of these multi-state operators versus a lot of our competitors. And we also have the backing of our lender, Focus Growth. In terms of your question about are there any requirements relative to that additional $35 million, it is... We just have to get it approved by them, but there's no hard and fast requirements relevant to that. And the POCUS Growth team, really, they've been very encouraging of us to go out and get some more deals and to scale up this company. As you can see by today's margins that we reported today, we feel like they rank up there even with our competitors that are a lot larger, but we're really excited to see what happens once we can bring in substantial additional revenue, we think that we can really have best-in-class margins amongst not just similar-sized companies, but any size company in the space.

That's great. Very helpful. And I look forward to seeing what comes your way the next few quarters. I'll hop back into queue. Thank you. Thanks, Andrew.

Thank you. Again, if you'd like to ask a question, please press star followed by the number one on your touchstone phone. Your next question comes from the line of Pablo Zwanik from Zwanik Associates. Your line is now open.

Good afternoon, everyone. This is Rahul on for Pablo. We have two questions. First, in terms of the recent First Circuit Court appeals decision, can you remind us about the next steps and timetable regarding an eventual decision by the Supreme Court?

Sure. I have to be careful here because a lot of that is confidential and we don't want to necessarily tip the public to our strategy, but you should assume that we are going to file cert in the coming months to be heard at the Supreme Court.

Got it. Thank you. And the second question is, with the quick rise in the number of stores in New Jersey, can you talk about the impact on your leading stores? And can you give a sense of how much contraction you have seen in revenue per store in each of these states? Sure. So, yeah, do you want to take that?

Yeah, I'd love to. Look, we have seen sequential retail stores across all our states, including New Jersey. Look, the way we look at New Jersey or in retail in general, we win – did I say gross?

You just said sequential.

Yes, sequential growth in all our retail, including New Jersey. Thanks, Jason and Alyssa. Yeah, that's good. So the way we win in retail, we win store by store. And we really get a chance to and the team watch the behavior of the consumer and what's happening in the trade area for each store. whether there's a new competitor that's opening, whether the basket size average, whether it's the food traffic, whether the increase is happening in premium versus value. And really, we deploy specific targeted strategy in each store or in each state, not just across the board, a blanket discount strategy. So I'm very happy with the retail performance. Initially, when retail stores jumped from the 17 stores to the 100, 150 stores in New Jersey, many of those stores were close to our trade area and we saw some impact. But since then, The new stores are opening outside the 20-mile radius, if you will, of trade, and we haven't seen that impact. And we have, for the last few quarters, have not only seen actualizing our same store stale, but also improvement, like we saw sequentially between Q1 and Q2.

Got it. Thank you.

Thank you.

Thank you. Your next question comes from the line of Sunny Randhawa from Seaport Global. Your line is now open.

Thanks for taking my question. Congrats on the quarter. Just, I guess, expanding a little bit on New Jersey, where do you think you guys stand right now in terms of just pricing compression, just normalization of that market? Is it still a couple quarters away, or do you think we're getting close to... you know, normalization to where we can actually start seeing sequential growth in that market.

Yeah, look, let's look at the numbers, Sonny. When New Jersey turned adult use, the average price per pound at retail was around $8,000, right? Today, we're in the mid $4,000 or so, $4,700, $4,800 average price. per pound at retail. So we have seen major pricing pressure. Now, I think we're close. And I think what you described, are we close to where that pressure will start subsiding? I think so. Why do I say this? It's a supply and demand. The last two or three months, the state has shown growth overall as a market. But at the same time, we haven't seen any rapid growth in supply when it comes to cultivations. We've seen some new brands come in. Brands have to prove themselves. They come in. Some of them will stay. Some of them will fail. But we are not seeing any major cultivation addition that's happening in the state. So when you have the volume in the state going up, the supply and demand stay balanced, that should reflect into stabilization of the price, and I think we're seeing this.

Yeah, the only thing I would add, and it's – I certainly don't have any concrete facts or numbers around this, but we've certainly seen over the last several months that there has been a major renewed effort or a major effort towards closing down illicit grows around the country. That could, if we, if the government sort of stays the course on that front, that could help, you know, not just in New Jersey, but in New but in lots of states around the country. We're obviously not only competing with the regulated market and our licensed competitors in the regulated market, but we're competing with the illicit market as well. And it seems like under this administration, there seems to be finally some enforcement against that.

That's great.

Maryland. Maryland, obviously, very strong market for you. It's been structurally, I guess, challenged just with the rollout of the social equity program and the strict cap or the restriction on five-year moratorium in terms of reselling. I think there's been movement on the social equity program and I think the state's looking to add 1,000 licenses over the next couple of years. Can you just give us an update on where that social equity program stands and how you see that affecting your business in Maryland?

I don't have the exact details to share, Sonny, on timing or when do we expect to see some of those being added. We'll continue to stay close. We'll learn all the facts as they become clearer by the But, you know, I think we've seen it in New Jersey, right? The way things are going to work, licenses are going to be given in the thousands. Some municipalities will buy in, some will not. It will take some capital and it will take some efforts for those who are going to open to open. And what I will expect to see is similar to what we've seen in New Jersey today. around 100 to 110 stores that will open per year. And if they open close to your stores, then you'll see impact on your retail. But if you have a good, strong wholesale game from a quality perspective, from a brand equity or brand acknowledgement, from a ground game from a team that has done well in wholesale and that has grown wholesale the way we grew it in Maryland over the last two years, then the pressure that you will see in retail will benefit from it in wholesale. In Maryland, we have a large facility. We have a brand-new facility that is really putting out some of the best quality flour, and that will serve us well with all those non-vertical players that will come online. So in summary, I would say it would be similar to other markets like New Jersey.

Yeah, but the one thing that popped up, I agree with all of that, but on top of that, as Zia has pointed out to me many times in the past, when a program first starts up, and we've certainly experienced this in New Jersey, when a program first starts and you're one of the stores that are open for day one and a customer comes in and gets over sort of the stigma of going into a store and what ends up happening, what we experienced in New Jersey, is that even when stores open up down the block, there's still a high degree of stickiness to our stores because that's where they, because they still have a stigma. They got over it to go to the first store. They don't necessarily want to go to a second store. And if we're doing our job well, they want to come back to our store because they're getting good value there and being treated well. So I think that could be the same situation in Maryland. The stores that open later, They certainly impact overall sales, but there is a major stickiness and a major advantage to being in the market first.

That's a great point. Great. I'll jump back. Thank you. Thanks, Sonny.

Thank you. There are no further questions at this time. Turning over back to Jason for closing remarks.

Thank you everybody for joining us here today. We will see you again in November when we report Q3 earnings.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.