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President and CIO Robyn Tannenbaum explained that the BDC structure allows investment in successful cannabis operators who do not own real estate, significantly expanding their target market. CEO Daniel Neville quantified this, stating about two-thirds of opportunities are non-real estate backed. Neville also noted that rescheduling would attract capital, support asset valuations, aid in the recovery of troubled loans, and foster a healthier lending environment for the industry.

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President and CIO Robyn Tannenbaum reiterated that the company would not provide guidance on the timing of originations due to market conditions but will announce deals as they close. Chief Executive Officer Daniel Neville added that while yields on new deals have ticked up slightly, the primary focus is on lending to higher-quality, proven operators, so yields should be generally consistent with deals done in the recent past.

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CEO Darren Lampert explained that the Viagro acquisition provides key relationships with big-box retailers and product crossover potential, viewing it as a long-term growth driver for 2026. CFO Greg Sanders addressed tariffs, noting a ~$500k impact in Q2 and outlining mitigation strategies including sourcing diversification, leveraging scale with suppliers, and optimizing supply chain logistics to protect margins.

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Darren Lampert, Executive, highlighted international expansion and partnerships with third-party distributors as key growth channels for proprietary brands like Drip and Charcoir. He credited their success in converting cultivators to a talented commercial team that runs extensive trials to prove product efficacy. On tariffs, Lampert noted the impact was more pronounced in the MMI segment and that the company is mitigating costs through vendor negotiations, manufacturing shifts, and improved distribution logistics.

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CFO Greg Sanders stated that gross margins are expected to see an immediate lift in Q1 and ramp throughout 2025, targeting 29-31% for the full year. Executive Darren Lampert added that the store restructuring to 31 locations is largely complete, and the new B2B portal is actively transitioning commercial customers, reducing the need for overlapping stores.

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CEO Darren Lampert detailed that GrowGen's value proposition for large commercial clients includes its robust distribution network, credit offerings, sophisticated accounting systems, and a talented commercial team that provides on-site support. Regarding proprietary brands, Lampert stated that growth is a combination of new product launches and the continued expansion of existing lines like Charcoir and Drip Hydro. He expressed confidence in achieving the 35% sales mix target in 2025 and potentially reaching the 40% range in subsequent years.

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CEO Beena Goldenberg stated that while the EU GMP certification timing is controlled by regulators, they remain confident in achieving it. The certification will improve margins by removing a middleman and expedite product flow. Regarding the U.S., she explained that rescheduling to Schedule III would not change federal illegality or their inability to conduct plant-touching business. Therefore, Organigram's short-term M&A focus remains on legal international markets, while continuing to leverage non-plant-touching U.S. investments in beverages and genetics.

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CEO Beena Goldenberg explained that while international sales are attractive, maintaining domestic leadership is crucial for long-term stability as international markets may see price compression. She noted that capacity is being increased by 14,000 kg through LED upgrades and a new warehouse to meet demand from both channels. CFO Greg Guyatt added that of the newly projected $15 million in annual synergies from Motif, about $1.5 million of the targeted $5 million for the current year has been realized, primarily in COGS. He stated that future EBITDA margin growth will be driven by achieving a 40% gross margin target by H2 2026 and leveraging a stable SG&A base against rising revenues.

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CEO Beena Goldenberg stated that the EU GMP audit is pending a scheduling confirmation from German regulators for the fall, with certification anticipated in early calendar 2025. She confirmed that higher-margin international sales would be prioritized. CFO Greg Guyatt added that while they are pleased with the current 36% adjusted gross margin, they expect to maintain that level in the near term, with further expansion potential as the international business scales up next year.

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CEO Michael Degiglio explained the Delta 2 expansion is a low-cost ($7M USD) conversion of an existing asset, not a new build, providing flexibility to match supply with demand. He noted the company is currently leaving about $50 million in revenue on the table due to capacity constraints. COO Ann Gillin Lefever added that Q2 international growth was driven by strong demand in Germany and the UK, along with onboarding new customers. For the second half, she indicated they are prepared for continued growth but are not providing specific guidance, acknowledging that other producers are also adding capacity.

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COO Ann Gillin Lefever stated the impairment did not affect revenue because the product was deemed not high-quality enough to sell. CFO Steve Ruffini added it was a strategic decision to write down the inventory rather than sell it for minimal cash flow. CEO Mike DeGiglio noted the successful launch of the Super Toast vape validated this quality-first approach. Regarding capacity, Orville Bovenschen, President of Canadian Cannabis, explained that Canada remains the company's foundation and domestic demand for high-quality flower will always be met, even as they pursue strong international demand.

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CEO Mike DeGiglio explained that the pause on the Delta 2 expansion is a prudent capital allocation decision, driven by the 'egregious' Canadian excise tax and the desire to focus on higher ROI opportunities in Europe. He emphasized that capacity can be added quickly when market conditions in Canada improve. COO Ann Gillin Lefever clarified that the Q3 out-of-stock situation was an internal issue caused by higher-than-anticipated demand, not a problem with provincial buyers, and expects inventory levels to normalize by Q1 2025.

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Interim CFO Tom Stewart explained that Canopy Growth is focused on improving gross margins, with a target of low to mid-thirties by the end of the fiscal year. He attributed recent improvements to expanded production capacity, reduced temporary labor costs for key products, and prioritizing supply to the most profitable markets, noting these actions are a continuation of previously initiated efforts.

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CFO Judy Hong stated that the European business grew over 70% in Q3, driven by Poland and Germany. She affirmed the company's asset-light strategy, which leverages its Canadian GMP-certified facility and third-party European suppliers, is adequate for capturing growth. CEO Luc Mongeau added that he sees strong fundamentals in the global medical market and is currently reviewing the company's strategy and resource allocation.

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CFO Judy Hong detailed the closing timelines, noting Jetty is complete, Wana is expected by the end of summer, and the Acreage acquisition is anticipated by spring 2025, pending state-by-state regulatory approvals. Hong stated that audited financials for Canopy USA would likely be disclosed after the Acreage acquisition is finalized. CEO David Klein added that regulatory approvals are the main gating item and that investors can look to other MSOs for comparable EBITDA margins, noting public company cost synergies will be realized once Acreage is integrated.

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Executive Chairman Alan Gold explained that the IQHQ investment provides an accretive, current income stream while the company works through the lengthy process of repositioning its defaulted cannabis assets. President & CEO Paul Smithers stated that regarding PharmaCann, the company is aggressively pursuing eviction to recover the properties and is not focused on PharmaCann's separate debt issues, as an amicable resolution on back rent appears unlikely.

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Executive Chairman Alan Gold explained the IQHQ investment provides immediate, high-yield income while the company works through its cannabis portfolio challenges, noting it was a strategic opportunity they had been evaluating for some time. President & CEO Paul Smithers stated that regarding PharmaCann, the company is aggressively pursuing eviction to recover the properties and is not focused on PharmaCann's separate debt issues, as an amicable resolution on back rent seems unlikely.

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Executive Chairman Alan Gold explained the investment provides current income and diversification, giving the company time to work through its cannabis portfolio issues. Regarding PharmaCann, President and CEO Paul Smithers stated that IIPR is aggressively pursuing eviction to recover the properties and is focused on re-leasing them, rather than on PharmaCann's separate corporate debt issues.

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President and CEO Paul Smithers stated that transitioning a fully operational facility is the goal, which is more structured in a receivership but can also be achieved during an eviction through tenant cooperation. Executive Chairman Alan Gold noted that while they are evaluating many opportunities, any investment must be accretive, and they hope to announce new investments within 3-6 months, both in cannabis and other unique situations.

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Executive Chairman Alan Gold explained that each tenant situation is unique and being handled directly, but he could not disclose specifics due to confidentiality agreements. Chief Investment Officer Ben Regin added that tenant health is linked to the overall industry's health. Regarding the pipeline, Mr. Regin stated that the company continues to be opportunistic and disciplined, leveraging its $235 million in liquidity to capitalize on the best available opportunities.

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Co-CEO Peter Sack explained that the pipeline growth from $462 million to nearly $650 million was driven by increased M&A activity, operational reorganizations, ESOP transactions, and debt refinancings. Regarding prepayments, Sack noted that while they are difficult to predict, the large prepayments in early Q3 were likely an anomaly for the year but occurred at an opportune time given the strong pipeline of new opportunities.

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Executive Peter Sack explained that the pipeline is primarily driven by CapEx and that deployments are expected to accelerate in Q2 and Q3. Regarding pricing, Sack stated that the firm has always underwritten with the expectation of price compression as markets mature, and as a lender, they have the flexibility to reduce exposure to states with increasing pricing pressure, a key factor in their risk and leverage analysis.

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Managing Partner Peter Sack detailed that recent originations have been driven by idiosyncratic growth projects and M&A opportunities, supported by their large, relationship-focused originations team. On the topic of debt maturities, Sack expressed that the 'maturity wall' is often described in overly catastrophic terms. He believes the market will work through these maturities in the normal course and that Chicago Atlantic aims to be a lender of choice in those refinancing transactions.

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CFO Curtiss Bruce explained the second-half outlook, noting that Q3 revenue will be impacted by lapping prior-year promotional events and a diaper distribution loss, with growth expected to re-accelerate in Q4. He detailed that a gross tariff impact of $8 million is now included in the full-year guide. CEO Carla Vernón added that the new diaper launch is supported by a full-surround marketing campaign across digital, streaming, and traditional media, influencer partnerships, and new packaging designed to highlight key benefits like leak protection and softness.

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CEO Carla Vernon and CFO Dave Loretta explained that Q1 revenue included a 5-percentage-point pull-forward in shipments, primarily to Amazon, as part of their tariff mitigation strategy. They expect this to reverse in Q2, and combined with a tough comparison to a large retailer event in the prior year, this leads to a first-half growth rate in line with the annual outlook. Carla Vernon added that the company will continue to invest strongly in marketing to support the new diaper launch and expanded distribution, funded by SG&A efficiencies.

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CFO David Loretta explained that Q1 2025 growth is expected to be higher than the full-year average due to a soft comparable period in Q1 2024, with more challenging comps in the back half of the year. CEO Carla Vernon added that significant distribution opportunities remain, not just in new channels like dollar and club, but also by increasing product depth and assortment within existing key retail partners like Walmart.

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CFO David Loretta explained that approximately 3-4 percentage points of the 15% revenue growth were attributable to shipments for retail events, with the balance from strong underlying consumption. Loretta affirmed the company's confidence and flexibility in using marketing and trade spend to drive brand trial and awareness, citing the 23 basis point increase in household penetration as evidence of success, a strategy they plan to continue.

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CEO Graham Purdy explained that margins for the heritage Stoker's brands are healthy and expanding. For Modern Oral, he stated they are bullish on the long-term margin profile but anticipate some lumpiness due to investments. Regarding H2 guidance, Purdy said the range reflects uncertainty around the new ALP retail launch. He reiterated the plan to double the sales force by 2026 to compete effectively in what he called a "trench warfare" environment.

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CEO Graham Purdy responded that heritage Stoker's brand margins remain healthy and are expanding. For modern oral pouches, he noted the company is bullish on the long-term margin profile despite expected lumpiness from investments. Regarding the second half, Purdy attributed the guidance range to the newness of the ALP retail launch but expressed confidence in the plan to double the sales force by 2026 to drive distribution in what he called a 'trench warfare' environment.

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CEO Graham Purdy explained that margins for the heritage Stoker's brands remain healthy and are expanding. For Modern Oral, he noted the current margin profile is strong but cautioned about potential lumpiness due to significant brand investments, while remaining bullish long-term. Regarding H2 guidance, Purdy attributed the range to uncertainties around the new ALP brick-and-mortar launch and D2C growth dynamics. He confirmed the sales force expansion is ahead of schedule to double by 2026, which will drive increased distribution.

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CEO Graham Purdy explained that the ALP brand's go-to-market strategy is distinct, focusing on an online model connected to its TCM affiliation, while the company concentrates on brick-and-mortar distribution for the FRE brand. Regarding margins, executive Andrew Flynn confirmed that the pouch margin profile is within the range previously communicated by the company.

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CEO Graham Purdy clarified that the ultimate goal is to leverage multiple brands across all channels to capture the widest possible consumer base. For the Zig-Zag segment, Purdy reiterated a mid-single-digit growth outlook for 2025, supported by sales team investments. He attributed the recent margin pressure to a product mix shift into lower-margin categories, a trend he expects to continue but be moderated by leveraging fixed costs.

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CEO Zach George and CFO Alberto Paredero-Quiros explained that international margins are currently accretive but subject to volatility in the emerging European market. George attributed the liquor segment's growth to specific banner management, particularly the success of Wine and Beyond, which challenges the narrative of secular decline in alcohol consumption. Paredero-Quiros confirmed international sales margins are higher than the Canadian average.

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CFO Carl Merton stated that the EBITDA growth will be driven by the international business, improvements in Canada and beverage, and cost savings from Project 420, with Q4 remaining the strongest seasonal quarter. CEO Irwin Simon added that achieving scale is a major factor. Regarding Germany, Chief Strategy Officer Denise Faltischek acknowledged price compression but noted Tilray is prepared through significant cost reductions and a robust supply chain.

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Chairman and CEO Irwin Simon explained that the company prioritizes overall profitability, driven by higher margins and no excise tax in international medical markets, over maintaining Canadian market share at any cost. For hemp-derived beverages, he highlighted the goal of building a multi-million dollar business by leveraging existing distribution, educating consumers, and implementing regional marketing and sponsorships.

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Chairman and CEO Irwin Simon explained that the first quarter is seasonally the lowest and that results were impacted by the timing of new product rollouts and cost-saving integrations. He noted that the Molson Coors acquisition impact is not yet reflected. Simon clarified that the new hemp-derived beverages will be distributed primarily through brick-and-mortar retail via the company's existing beer distribution network in 19 states.

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Chairman and CEO Irwin Simon characterized the Farm Bill's two-year delay as "good news," stating he anticipates no immediate regulatory changes. He emphasized the significant opportunity, citing strong demand from distributors and retailers and millions in sales already achieved in the quarter.

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Chairman and CEO Boris Jordan stated that Curaleaf does not anticipate changes to Germany's medical cannabis program, viewing a potential slowdown in adult-use as a positive. He acknowledged rising competition but noted that Curaleaf's margins in Europe are expanding due to its premium product offerings and operational scale, a trend expected to continue in 2025.

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CEO Matt Darin detailed the hemp launch, highlighting direct-to-consumer shipping to 25 states, a DoorDash partnership expanding to 13 states, and forthcoming brick-and-mortar distribution deals. Executive Chairman Boris Jordan clarified that the recent hemp and international integration costs were largely one-time startup expenses and that he expects gross margins to continue improving from the 50% level seen at the end of Q2.

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Executive Chairman Boris Jordan responded that initial progress has surpassed expectations, with telemedicine platforms adding more patients in April than in their entire history. He noted that while Curaleaf's revenue growth is strong, the market is still in its early stages. Key bottlenecks include training doctors and scaling pharmacy packaging capabilities, but he confirmed the early signs are very positive.

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CEO John Moore stated the immediate focus is on leveraging the newly unified national product portfolio to increase penetration with existing customers. Regarding pricing, Moore acknowledged record coffee market volatility but noted that sourcing changes and SKU rationalization have made the company more nimble. CFO Vance Fisher added that proactive pricing actions earlier in the fiscal year have positioned them well to manage market conditions, though they reserve the right to make future adjustments if necessary.

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CEO Michael Roper explained that gross margins are currently in line with the bulk commodity trading industry and are expected to improve as the higher-margin Canadian specialty crop business (e.g., lentils, pulses) expands. Regarding the Indonesian farm, Roper noted it provides geographic diversification and access to different, more specialized niche crops, which is part of the company's vertical integration strategy, a point echoed by executive Kevin Mohan. CFO Jennifer Black addressed the SG&A increase, stating it was driven by necessary investments in personnel and infrastructure to support expansion into new geographies, which precedes revenue growth. She expects this trend to continue as the company grows.

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CFO Dany Vaiman explained that a $700,000 inventory impairment affected Q2 margins, but he anticipates consolidated gross margins to be in the mid-30s going forward. CEO Clifford Starke identified two key growth areas: the U.S. cannabis-infused beverage market and an e-commerce driven strategy in Germany.

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CEO Clifford Starke responded that the immediate opportunity in Germany is on the medical side, where simplified prescription processes have led to supply shortages for popular strains. He emphasized the company is positioning for the eventual commercial recreational market ('Phase 2'). Regarding the U.S. hemp beverage market, Starke called it an 'unbelievable category' with huge growth potential and stated Flora is 'extremely well positioned' to be a leader by focusing on quality and accurate dosing, drawing parallels to its early success in the gummy market.

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Executive James Dennedy explained the guidance reflects a revenue mix shift, with high-margin loan income growth expected to more than compensate for declining depository fees. Executive Sundie Seefried confirmed the M&A pipeline is active, with ongoing discussions to acquire loan portfolios from banks exiting the cannabis industry.

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Executive Allan Marshall explained that the re-commerce slowdown was a strategic decision to prioritize capital for higher-margin brand investments, leading them to pass on re-commerce deals that didn't meet their stricter margin profile. He noted the brand growth was led by health and beauty, with significant reinvestment boosting sales, and stated that while all channels are being pursued, the focus remains on high-margin direct-to-consumer sales.

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Executive Allan Marshall clarified that the decline in re-commerce revenue was a calculated decision to prioritize capital for higher-margin brand investments, rather than a lack of opportunities. He stated the company chose not to pursue re-commerce deals that didn't meet their margin targets, leading to an overall gross margin improvement to 38%. Regarding brands, Marshall noted growth is being pursued across all channels, with a primary focus on high-margin direct-to-consumer sales, highlighting a 30-40% sales increase for VitaMedica on Amazon following recent ad spend.

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Executive Allan Marshall clarified that the decline in re-commerce revenue was a deliberate strategic choice to allocate capital towards higher-margin brand products, rather than a lack of opportunities. He explained that the company prioritized deals with a better margin profile, which contributed to the overall gross margin improvement to 38%. Marshall confirmed that brand growth was led by health and beauty and that the company is reinvesting across all channels, with a primary focus on high-margin direct-to-consumer sales.

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Executive Allan Marshall explained the strategy of investing heavily upfront in customer acquisition for brands like VitaMedica and Tytan Tiles to build long-term recurring revenue, even at the cost of short-term profitability. Marshall expressed confidence that margins would rebound to their target range of 5-8% due to significant cost-cutting measures, such as warehouse consolidation. He noted that new Disney products are planned for the first half of 2024. Regarding the balance sheet, Marshall stated the company is comfortable with its liquidity, actively managing its credit line and having flexible terms on its seller notes. Finally, he confirmed the Bloomios assets are a net positive, used for low-cost production, with their long-term strategy still under evaluation.

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CEO Allan Marshall explained that Q2 revenue was stronger than anticipated, partly due to pulling some sales forward, and that significant seasonality is not expected in the coming year. He clarified that the Cygnet and E-Core businesses will collaborate to enhance liquidation margins. CFO Andrew Norstrud attributed the gross margin decline primarily to the business mix shift following the acquisitions of E-Core and Cygnet, which have structurally lower margins than Upexi's high-margin (70-80%) branded products.

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CEO Charles Bachtell stated that pressure from verticalization is expected to continue and has not fully normalized. He credited Michigan's success to high-quality, differentiated products that 'speak for themselves'. Chief Transformation Officer Greg Butler added that Florida's performance is driven by strategic store openings and innovative products, and they compete in the promotional environment through superior products and cost efficiencies rather than expecting promotions to slow down.

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CEO Charles Bachtell explained that the deal's financial viability hinges on proceeds from divestitures to achieve a healthy combined debt leverage ratio. CFO Dennis Olis clarified that Q1 margins were impacted by state revenue mix, not inventory charges, with a 270 basis point drag from a sales decline in high-margin Illinois. He anticipates margin improvement from cost-saving actions in California and Arizona to be reflected in future quarters.

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CEO Charles Bachtell explained that significant actions on SG&A and gross margin are being taken to not only maintain but also increase margins, supported by the larger-scale moves in California and Arizona. CFO Dennis Olis added that the full benefits of these actions will materialize in Q3, with new stores in Florida and Pennsylvania also contributing to growth. He projected EBITDA margins to be in the low 20% range for the second half of the year. Regarding Illinois, Bachtell noted a significant wholesale opportunity from new stores, which will eventually outweigh the initial competitive pressure on their existing retail locations. Chief Transformation Officer Greg Butler expressed confidence in their product velocity and loyalty programs to retain high-value customers.

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Interim CEO Tim Conder responded that significant cost-saving measures were implemented in Q2, with the focus now on profitable revenue growth and further operational refinement in the plant-touching business. Regarding expansion, Conder highlighted TILT's core competencies in hardware, cultivation, and manufacturing, explaining that new state entries will be strategically evaluated based on market size and maturity to support brand partners, with vertical integration being a key consideration.

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CEO Gary Santo explained that gross margin was impacted by selling off lower-value bulk and aging inventory from the initial harvests of their garden reboot. CFO Dana Arvidson added that while bulk prices were compressed, brand partner product pricing remained resilient. For the Jupiter business, Gary Santo noted a shift to smaller, more frequent orders and expects growth from new product innovation and winning back customers. Dana Arvidson stated that achieving positive EBITDA in 2023 will involve a combination of revenue growth, stable margins, and significant operational efficiency improvements, which Gary Santo specified would come from automating production lines.

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CEO Craig Snyder detailed a multi-pronged approach to profitability, emphasizing that significant expense reductions will accelerate in Q3 and Q4. He explained that the new asset-light model will boost gross margins, while the entry into the nicotine market is expected to drive sales in the latter half of Q3. Snyder also confirmed that the initiative to partner with MSOs has accelerated, as dispensaries increasingly focus on retail metrics to offset declining cannabis prices, positioning Greenlane as a key partner.

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Executive Craig Snyder detailed a multi-faceted approach to profitability. Snyder explained that significant expense reductions in facilities, labor, and G&A are set to accelerate in Q3 and Q4. On the revenue side, he noted the asset-light strategy will moderate top-line revenue but increase gross margins, with Q3 being the first full quarter of implementation. He also expressed optimism for a sales lift from new nicotine products in late Q3. Regarding MSOs, Snyder confirmed that engagement has intensified as these operators focus more on retail metrics like revenue per square foot, a trend Greenlane is positioned to support with its broad product array.

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CEO Craig Snyder provided specific quarterly gross margin targets for 2023, aiming for 34.3% by Q4. He stated that growth would be driven by new products across four key brands: Groove, Eyce, DaVinci, and Higher Standards. Snyder also detailed an integrated distribution strategy targeting all customer sizes, noting that large MSOs are increasingly focused on ancillary product sales, which benefits Greenlane.

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CEO Oren Shuster responded that the excess supply in Israel comes from both local growers and imports, noting that the market is already seeing some players exit. He emphasized that IMC's premium segment remains insulated from price pressure. Regarding profitability, he stated that the full impact of recent restructuring and cost savings will be realized in Q3, but declined to provide a forecast due to the current competitive and unstable market environment, with significant market growth not expected until 2024.

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CEO Oren Shuster acknowledged the Israeli market is competitive with flat patient growth. However, he emphasized that IM Cannabis's premium segment remains strong, which drove higher gross margins in Q1. Shuster believes the company's premium strategy is correct and that opportunities may arise from competitors' struggles, even if the overall market doesn't grow without regulatory changes.

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CEO Oren Shuster stated that the company is moving toward profitability even with its current revenue figures. He emphasized that the primary driver is cost optimization and realizing synergies, particularly from the recent restructuring after exiting the Canadian market, which eliminated duplicated management roles. Shuster confirmed these measures are sufficient to achieve profitability without relying on further revenue growth.

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CEO Kim Rivers responded that Florida's patient growth remains steady and the market is not yet saturated, citing legislative changes like telemedicine for renewals. She noted significant investment hurdles for new competitors. Regarding the loyalty program, she explained its launch is dependent on a revamped website set to go live in Q3. The new points-based loyalty program will then begin a phased rollout in Q4.

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CEO Kim Rivers announced that a new, more personalized loyalty platform will launch in the second half of the year. The launch was paused to better define customer journey profiles, allowing the new program to be more intuitive and focused. She confirmed that new marketing platforms will be leveraged to promote the program's launch, describing the initiative as a potential 'game changer' for combining data insights to speak more directly to the consumer base.

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CEO Kim Rivers reported that company-wide, traffic increased by 5% while basket size was pressured by 3%, resulting in 2% retail growth. She affirmed that strategic store openings in Florida are still warranted. Regarding the new facility, Rivers explained that they are continuously monitoring production metrics to balance the ramp-up of the new, more efficient facility with the wind-down of legacy sites, with the goal of reaching a stable state by the end of 2023.

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President Anthony Georgiadis explained that a consumer trend of trading down has driven strength in the value-oriented &Shine brand portfolio. He identified eastern markets like Pennsylvania, New Jersey, and Maryland as areas of strength, while markets with intense competition and price compression, such as Nevada and Massachusetts, remain challenging.

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President Anthony Georgiadis stated that the level of verticality was similar to Q4 but that opportunities for optimization remain on a market-by-market basis. He emphasized the focus on building strong CPG brands, like Show Dogs, that can succeed on any retail shelf, indicating a continued push for third-party distribution.

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CEO Ben Kovler expressed satisfaction with the company's current brand positioning but noted room for improvement. He highlighted RYTHM as a leading premium brand and &Shine and Good Green as key value offerings. Kovler emphasized that the company uses proprietary consumer data to inform its packaging and pricing decisions and believes there is further upside for its brands across all categories.

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CFO Anthony Georgiadis acknowledged this is a key dynamic, noting that the current environment of high taxes and expensive capital makes it much harder for new entrants. He stated that as oversupply pressures margins and cash, a shakeout is possible, and Green Thumb is watching carefully from its strong position.

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CEO Raymond Chang defended the TTK model in limited-license states, stating that Massachusetts wholesale prices of around $2,200 per pound still support the $600 fee. Regarding M&A, Chang argued that smaller ancillary players need to join a comprehensive platform like Agrify to gain access to MSOs. He emphasized that Agrify's extensive customer database, covering nearly all licensed cultivators, provides a powerful platform for cross-selling and penetrating the market with new, unique technologies.

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Executive Raymond Chang explained that Agrify's success is tied to its customers' success, emphasizing the overall ROI from higher yields and lower production costs ($300s/lb vs. industry $400-$500/lb). He noted that new TTK programs are selectively rolled out in high-priced markets, while legacy projects in mature markets have lower fees. Regarding the rapid deployment pack, Chang confirmed it has dramatically increased interest from MSOs by removing retrofitting barriers, and several new agreements are expected soon.

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CEO Raymond Chang explained that the flat guidance was due to slight seasonality in the extraction business and a 1-2 quarter delay in VFU shipments to Illinois caused by licensing lawsuits. Regarding the extraction business, Chang stated that Agrify is close to signing its first extraction-focused Total Turn-Key (TTK) deal and expects to recognize recurring revenue from this division within 2022, similar to the cultivation side which will begin generating recurring revenue in Q3 2022.

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CFO Brett Summerer attributed the Q4 margin pressure to seasonal holiday discounting and one-time SG&A costs, including acquisition expenses and year-end bonuses. CEO George Archos explained that while they initially scaled back wholesale in New Jersey to prioritize their own stores and medical patients, they have ample supply and plan to ramp up wholesale distribution within weeks to ensure Verano brands are available throughout the state.

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