Jesse Redmond

Asked about plans for vape product diversification (input oils, form factors) and the company's view on international market opportunities for premium products.

Answer

The company is focused on premium vape offerings like live resin/rosin and is exploring new form factors but is unlikely to enter the distillate market. They see a significant and growing international demand for premium flower and plan to enter that market in 2025.

Jesse Redmond of Water Tower Research LLC asked if Rubicon plans to diversify its vape portfolio with different input oils like distillate or new form factors like all-in-ones. He also inquired about the potential for international expansion, particularly for premium products.

Answer

CEO Margaret Brodie explained that while new form factors are being explored, the company is unlikely to enter the lower-margin distillate market, as its customers prefer premium experiences like live resin. She then confirmed a significant opportunity exists internationally, citing an 'avalanche of inbound demand' from markets like Australia, the UK, and Germany. She stated that Rubicon expects to enter the international market in 2025 to capitalize on this demand.

Jesse Redmond from Water Tower Research asked about the implications of the Florida cannabis vote, potential M&A opportunities given the company's balance sheet, and the future trajectory of SG&A expenses.

Answer

Executive William Toler stated that the Florida vote was a setback but has limited direct impact due to the company's small footprint in the state, with federal rescheduling being a more significant catalyst. Regarding M&A, Toler explained that while dialogues are ongoing, the company is preserving cash and being prudent, though it may see volume from smaller players outsourcing manufacturing. Executive B. John Lindeman added that there is still some room for further SG&A reductions in 2025, although it is becoming more challenging.

Asked about the impact of the Florida vote not passing, potential M&A opportunities given the company's financial strength, and the outlook for further SG&A reductions in 2025.

Answer

The executive stated the Florida vote was a setback but has minimal direct impact on Hydrofarm, with federal rescheduling being more significant. On M&A, they are exploring prudent options, including potential manufacturing outsourcing from smaller players. Further SG&A cuts are possible in 2025, though opportunities are becoming smaller.

Jesse Redmond of Water Tower Research questioned the criteria MariMed uses for market entry, particularly concerning price compression, and asked about the key lessons learned from recent operational and preopening delays.

Answer

CEO Jon Levine explained that the company targets limited-license states transitioning to adult-use, like Ohio, aiming for full vertical integration. He also mentioned looking at markets like Missouri, New York, and Texas. Regarding lessons learned from delays, Levine noted a strategic shift toward acquiring already operating businesses with existing cash flow to avoid the lengthy approval processes associated with building from scratch.

Jesse Redmond asked about the company's process for genetic selection, specifically how they balance market trends for new strains against the need for high-yield genetics to maintain low costs. He also inquired about current consumer preferences in cannabis flower.

Answer

President Graham Farrar described a multi-faceted approach involving a dedicated genetics team, data analysis from their FP&A team, and direct market feedback from their vertically integrated retail and brand businesses. He noted that while 'purple candy' dessert strains are currently dominant, they continue to cultivate classic strains in anticipation of cyclical trend shifts.

Jesse Redmond from Water Tower Research inquired if Glass House's retail stores in limited-license areas are insulated from the competitive pressures seen elsewhere and asked for an outlook on wholesale pricing through the fall, considering reduced canopy and seasonal harvests.

Answer

Co-Founder, Chairman and CEO Kyle Kazan acknowledged that stores in limited-license areas like Santa Barbara face less competition than those in saturated markets like Santa Ana, and noted the new Isla Vista and Santa Ynez stores had a slower start than expected but remain promising. Co-Founder and President Graham Farrar predicted that the typical fall price drop from outdoor harvests would be muted this year due to significant and lasting reductions in licensed cultivation capacity. CFO Mark Vendetti added that license renewal outcomes in May and June would be a key determinant for pricing in the second half of the year.