Pablo Zuanic

Pablo Zuanic questioned why Cronos prioritized the acquisition in the Netherlands (CanAdelaar) over expanding in Germany, asked about Cronos Group's stance on downstream opportunities, and inquired about lessons learned from the past PharmaCann option in the U.S. and their relevance to future U.S. opportunities.

Answer

Chairman, President, and CEO Mike Gorenstein cited Germany's regulatory uncertainty and complex distributor models, explaining the Netherlands acquisition offered direct entry into a closed, established adult-use market with significant brand leverage. He stated Cronos takes a long-term view on acquisitions, preferring to be a customer if a business is temporary or subject to regulatory changes. Mike Gorenstein explained the PharmaCann option was a disciplined hedge, with the key lesson being not to move ahead of regulations, suggesting it's better to build strength outside the U.S. until direct ownership is federally permissible.

Pablo Zuanic of Zuanic & Associates questioned why the Netherlands, through the CanAdelaar acquisition, was prioritized over Germany for European expansion, especially given the ongoing consolidation and availability of distributors in the German market. Pablo Zuanic then asked about Cronos's perspective on downstream opportunities, such as clinics or online pharmacies, in markets like Australia, Germany, and the UK, and whether the company prefers to be involved in such assets. Finally, Pablo Zuanic inquired about the lessons learned from Cronos's past option to acquire a stake in PharmaCann in the U.S., and how those lessons inform the company's thinking about future U.S. opportunities amidst potential rescheduling.

Answer

Chairman, President, and CEO Mike Gorenstein explained that Germany still faces regulatory uncertainty and offers many distribution options, but acquiring distributors with competitor brands presents business model challenges. The Netherlands, being a closed market requiring acquisition to enter, offered a unique opportunity for direct entry into a 50-year adult-use market, providing significant brand leverage. Mike Gorenstein stated that Cronos takes a long-term view on acquisitions. He prefers to be a customer rather than an owner if the business is temporary or subject to regulatory changes, but would consider ownership if there's a clear, long-term payback. He referenced early Canadian market experience where owning the funnel wasn't always advantageous if regulations shifted. Mike Gorenstein noted the PharmaCann option was a disciplined hedge during the STATES Act craze. The key lesson was not to move ahead of regulations, as creative structures often don't work to advantage, especially in the U.S. He believes it's better to build the portfolio outside the U.S. until direct ownership and operation are federally possible.

Pablo Zuanic questioned Organigram's route-to-market strategy in Europe, specifically whether the company plans to go direct, utilize Sanity Group, or other distributors in new markets. He also inquired about the U.S. market strategy, including potential M&A, navigating regulatory uncertainty, and protecting the Nasdaq listing given current federal limitations.

Answer

CEO James Yamanaka and CFO Greg Guyatt explained that the European route-to-market would be a mix, depending on regulations and market specifics, including direct sales to Germany and the U.K., and discussions with Sanity Group for other markets. For the U.S., James Yamanaka clarified that the Nasdaq listing restricts full investment due to federal illegality, and the U.S. market is currently immaterial to Organigram's growth. Greg Guyatt added that the company is not heavily investing in the U.S. due to regulatory uncertainty, focusing on supporting existing business while waiting for clarity.

Pablo Zuanic inquired about Organigram's route-to-market strategy in Europe, specifically whether the company plans to go direct, utilize Sanity Group (in which Organigram and BAT have investments), or other distributors as it expands into new markets. He also asked about Organigram's strategy for accelerating M&A in the U.S. market while preserving its Nasdaq listing, given the anticipated rapid consolidation.

Answer

CEO James Yamanaka and CFO Greg Guyatt explained that the European route-to-market would be a mix of direct sales and partnerships, depending on market regulations and cost-effectiveness, noting direct shipments to Germany (via Sanity) and the U.K. For the U.S. market, James highlighted that the Nasdaq listing restricts full investment due to federal illegality, and the U.S. is currently an immaterial part of Organigram's revenue. Greg added that due to regulatory uncertainty, Organigram is not heavily investing in the U.S. and is prioritizing other international markets for growth.

Pablo Zuanic asked for commentary on market dynamics in Germany since April 2024 and questioned the source of import growth. He also inquired about the Jupiter investment pool, specifically regarding risks from U.S. hemp regulations to the OBX investment and whether Organigram would consider investing in U.S. MSOs.

Answer

CEO Beena Goldenberg confirmed that their German partner, Sanity Group, has seen business double since April 1, attributing the lag in Canadian LP export data to long cultivation cycles creating a supply bottleneck. Regarding U.S. investments, she explained they are monitoring hemp regulations closely with OBX and are seeking strategic, non-passive investments that leverage Organigram's IP, while remaining compliant with exchange listing rules.

Pablo Zuanic asked about the proposed reduction in the cap for veterans from CAD 8 to CAD 6 per gram in the domestic medical business, potentially effective April 1st. He questioned if there was any room for this proposal to be delayed or scratched. He followed up by asking if the veteran segment constitutes approximately two-thirds of the total domestic medical cannabis market.

Answer

CEO Luc Mongeau stated that Canopy Growth does not support the reduction due to its potential impact on veteran care and has channeled efforts to authorities, but without success so far. He affirmed that the company is taking actions to maintain the integrity of care, service, and margins through increased efficiencies and cost savings. CFO Tom Stewart added that this presents a headwind they are addressing proactively. Luc Mongeau clarified that while veterans are a significant portion, the medical market also includes a large group of insured and non-insured patients, noting the medical market is between CAD 300-400 million, and emphasized Canopy's 15% growth in Q3 and the combined leadership position with MTL.

Pablo Zuanic asked about the proposed budget reduction of the veteran reimbursement cap from CAD 8 to CAD 6 per gram for the domestic medical business, inquiring about its current status and the likelihood of it being delayed or withdrawn. He also asked for clarification on whether the veteran segment constitutes approximately two-thirds of the total Canadian medical cannabis market.

Answer

CFO Tom Stewart and CEO Luc Mongeau addressed the veteran cap. Mongeau stated that Canopy does not support the reduction due to its potential impact on veteran care and has channeled efforts to work with authorities for delay or minimization. He emphasized actions taken to maintain care integrity and margins, including additional cost savings. Tom Stewart added that it presents a headwind they are addressing. Regarding market size, Tom Stewart clarified the adult use market is close to CAD 5 billion, and the medical market is CAD 300-400 million, with veterans being a good portion but not two-thirds of the total medical market. Mongeau highlighted Canopy's leadership in the growing medical market and expected synergies with MTL.

Pablo Zuanic from Zuanic & Associates asked for a two-to-three-year outlook on which European markets beyond Germany and Poland are most promising. He also sought confirmation on whether products sold in Europe are sourced internally or from third-party vendors.

Answer

CEO Luc Mongeau responded that the immediate priority is establishing the right infrastructure and team to win in Germany and Poland. He mentioned a new Managing Director for Europe will develop a broader long-term strategy. Mongeau confirmed that the bulk of products sold in Europe are grown at Canopy's Canadian facilities.

Inquired about plans for investing in the supply chain to fix inconsistencies, especially for international markets, and also asked for an outlook on the Canadian medical market and market share potential.

Answer

CEO Luc Mongeau explained that supply chain issues were organizational, not due to a lack of assets. A new centralized structure will improve allocation without needing new investment. CFO Judy Hong added that while the Canadian medical market is declining, Canopy grew 16% and is gaining share by focusing on high-value patients and superior customer experience, a model they are applying internationally.

Asked about Constellation Brands' current level of involvement with Canopy and the strength of Canopy's distribution capabilities in Europe.

Answer

Judy Hong clarified that Constellation Brands is now a passive shareholder and the relationship is not operational. Regarding Europe, she stated their distribution is strong, leveraging both Canadian supply and local partners, and that the main historical constraint has been supply consistency, which has now improved.

Pablo Zuanic asked about Constellation Brands' current involvement in Canopy's strategy and board, and also inquired about the strength of Canopy's go-to-market capabilities in Europe, particularly whether past cost cuts had impacted its distribution network.

Answer

CFO Judy Hong clarified that Constellation Brands is now a passive shareholder with an exchangeable share ownership, limiting their role to that of an investor with less operational exchange. Regarding Europe, she stated that the primary constraint has been supply, not distribution, and that improved flower quality and consistency from Canada are now benefiting the international business. She confirmed they use a network of distribution partners in key markets.

Pablo Zuanic with Zuanic and Associates LLC inquired about Ispire's ownership percentage in the IKE Tech joint venture, the funding strategy for its expansion, potential for dilution, and whether Ispire aims for full control. He also asked if the FDA's potential legalization of flavored nicotine would lead to multiple age-gating technologies or a single approved standard. Furthermore, Mr. Zuanic sought clarification on claims that age-gating technology has been mandated in certain countries in Europe, the Middle East, or Asia, asking for specific examples and whether Ispire's technology is already in use there. Finally, he asked for general context on an upcoming significant deal announcement, comparing its potential impact to the Charlie's partnership.

Answer

Michael Wang (CEO, Ispire Technology Inc.) explained that the IKE Tech joint venture, formed 21 months ago, is focused on developing age-gating technology, with Ispire providing financial funding for day-to-day operations. He anticipates strong investor interest and a need for additional working capital to scale globally, especially given the FDA's embrace of age-gating as a solution for the flavored market. Mr. Wang stated that while other age-gating solutions exist, Ispire's technology is 'least frictionless' and offers key advantages like blockchain-based token transmission (protecting personal data), faster initial verification (around one minute), and a simpler user process compared to competitors. He clarified that no country has yet implemented mandated age-gating, but Ispire is actively working with regulators in two Southeast Asian countries, one Middle Eastern country, and the UK to push for such mandates, driven by consumer safety, youth protection, and tax revenue objectives. He expressed hope for launches in these countries potentially ahead of the U.S. Regarding the upcoming deal, Mr. Wang described it as having 'a much greater strategic and financial impact' than the Charlie's partnership.

Pablo Zuanic from Zuanic & Associates LLC first asked about Ispire's ownership percentage in the IKE Tech joint venture and the funding strategy for its expansion, including potential dilution or full control. He then inquired if, upon FDA legalization of flavored nicotine with age-gating, there would be multiple approved technologies or a single standard. Mr. Zuanic also sought clarification on a previous statement regarding certain countries in Europe, the Middle East, or Asia mandating age-gating technology, asking for specific countries and whether Ispire's technology is already in use or if these are future plans. Lastly, he asked for general context on an upcoming deal announcement, specifically if it would be similar in scale to the Charlie's partnership or larger.

Answer

CEO Michael Wang explained that Ispire provides financial funding for the IKE Tech joint venture's day-to-day operations, which was formed 21 months ago, and anticipates strong investor interest and a need for additional working capital to scale globally as key developments materialize. He noted that while other age-gating solutions exist, Ispire's is 'least frictionless,' offering faster verification and enhanced privacy through blockchain technology by transmitting only tokens, unlike competitors who transmit private consumer information. Mr. Wang clarified that no country has yet implemented age-gating mandates, but Ispire is actively working with regulators in Southeast Asia, the Middle East, and the UK to push for mandation, driven by consumer safety, youth protection, and tax revenue objectives. He indicated that the upcoming deal announcement would have a 'much greater strategic and financial impact' than the Charlie's partnership.

Pablo Zuanic with Zuanic & Associates LLC inquired about the key milestones and realistic approval timeline for Ispire Technology Inc.'s age gating technology in the U.S., its potential for faster adoption in international markets like the EU, and the intellectual property protections in place for this innovative solution. He also asked for clarification on the significant $22 million receivables provision in Q4 and sought a deeper understanding of the strategic pivot away from the U.S. cannabis market despite its substantial demand for vape products.

Answer

Co-CEO Michael Wang explained that the FDA accepted the component PMPA for the age gating technology within an unprecedented four weeks, indicating an expedited review, though the exact timeline for a deficiency letter or approval is unknown. He noted that two international countries might approve the technology faster than the U.S. and emphasized Ispire's strong IP protection, particularly for blockchain-based communication and data processing. Regarding the receivables provision, Mr. Wang clarified it was a cumulative effect across many customers over two years, not tied to a single large account. He further detailed the cannabis pivot, attributing it to persistent cash flow challenges faced by customers due to the lack of federal legalization and banking services, despite the market's size, stating the company would reconsider investment if rescheduling occurs.

Pablo Zuanic with Zuanic & Associates inquired about the key milestones and realistic timeline for FDA approval of Ispire Technology's age gating technology, its potential for faster international adoption, and the intellectual property protecting this innovation. He also asked for clarification on the $22 million receivables provision in Q4 and the strategic rationale behind pivoting away from the U.S. cannabis market despite its size.

Answer

Co-CEO Michael Wang detailed the unprecedented four-week FDA acceptance of the component PMTA for age gating, noting the next step is a deficiency letter with an uncertain timeline, but two international markets might move faster. He emphasized the strong IP protection, including patents in key regions, particularly for blockchain-based communication and data processing. Regarding the $22 million receivables provision, Mr. Wang clarified it was a cumulative effect across many customers, not a single large account. For the cannabis pivot, Mr. Wang explained it was driven by persistent cash flow challenges in the federally illegal U.S. cannabis market, which negatively impacted Ispire's accounts receivable, and the company will reconsider its position upon federal legalization and improved financial services access.

Pablo Zuanic inquired about the key milestones and realistic timetable for FDA approval of Ispire's age gating technology, its potential for faster international adoption, and the intellectual property protections in place. He also asked for clarification on the $22 million receivables provision in Q4 and the strategic rationale behind pivoting away from the U.S. cannabis market.

Answer

CEO Michael Wang stated that the FDA accepted the component PMPA application in an unprecedented four weeks, expecting an expedited review, with the next step typically being a deficiency letter. He noted that two unnamed countries outside the U.S. are embracing the technology even faster. Mr. Wang confirmed strong IP defensibility with patents filed in key regions, particularly for blockchain-based communication and data processing. Regarding the receivables, he clarified the $22 million provision was a cumulative effect across many customers, not a single large account. For the cannabis pivot, Mr. Wang explained it was driven by cash flow challenges in the federally unregulated U.S. market, impacting Ispire's accounts receivable, despite the industry's revenue potential.

Pablo Zuanic of Zuanic & Associates LLC asked about U.S. customer reactions to Ispire's new cannabis hardware innovations and the company's market penetration. He also questioned the impact of potential tariffs on Chinese goods and whether the Malaysian facility provides a significant competitive advantage.

Answer

Executive Michael Wang detailed new products like the VOLT platform and Sprout device, which are gaining traction by offering MSOs innovative and safer options. Regarding tariffs, Wang confirmed that uncertainty impacted U.S. cannabis revenue but the company has successfully renegotiated most customer contracts to an FOB factory price model, shifting tariff risk. He asserted that the Malaysian facility provides a distinct competitive advantage, as it is subject to lower tariffs than competitors' manufacturing locations in Indonesia or Vietnam.

Pablo Zuanic asked for more details on the uniqueness and market timeline for Ispire's age-gating technology, the potential sales contribution from its four-flavor PMTA application if approved, and general innovation trends in nicotine delivery.

Answer

Executive Michael Wang described the age-gating technology as a unique, non-hackable, blockchain-based solution that is frictionless for consumers, noting it received an unprecedentedly fast meeting acceptance from the FDA. He hopes for a U.S. launch by the end of calendar 2025. Wang stated that this technology is key to unlocking the multi-billion dollar market for flavored vapes in the U.S. CFO James McCormick added that the technology has global applications, especially in Europe, and could launch there sooner. McCormick also highlighted the emergence of nicotine pouches as a major trend the company is pursuing.

Pablo Zuanic asked for Aurora Cannabis's opinion on whether the announced U.S. rescheduling (Schedule I to Schedule III) would allow the company to enter the U.S. market, specifically if it implies federal legalization of medical cannabis. He also inquired about Aurora's supply chain, asking for the proportion of owned vs. third-party products, details on current facilities, and criteria for future cultivation acquisitions.

Answer

Miguel Martin, Executive Chairman and CEO, stated that while the U.S. rescheduling is a positive step consistent with a medical-first approach, it does not currently allow a NASDAQ-traded Canadian company to directly enter the U.S. market. Regarding supply chain, Mr. Martin clarified that the vast majority (closer to 100%) of international products are self-produced, emphasizing the importance of GMP certification. He highlighted Aurora Coast as a key genetic facility supporting both indoor (primary) and greenhouse growing, noting Canada's advantage for high-quality GMP flower exports.

Pablo Zuanic asked for Aurora Cannabis's opinion on whether the announced U.S. rescheduling would enable the company to enter the U.S. market or if it signifies federal legalization of medical cannabis. He also requested detailed information on Aurora's supply chain, including the percentage of products grown in-house versus sourced from third parties, a reminder of current facility capabilities, lessons learned from Aurora Sky, and criteria for potential cultivation capacity acquisitions (e.g., indoor vs. greenhouse, craft growers, geographic focus).

Answer

Miguel Martin, Executive Chairman and CEO, stated that while U.S. rescheduling is a step in the right direction, it's early days, and the current proposal (Schedule I to Schedule III) does not allow Canadian NASDAQ-listed companies to directly enter the market. He emphasized the medical-first message of the announcement, aligning with Aurora's expertise. Regarding supply chain, Mr. Martin indicated that the vast majority (closer to 100% than 50%) of international products are produced, distributed, and sold in-house, highlighting the importance of GMP certification. He noted that Aurora's genetics work for both indoor (primary method) and greenhouse cultivation, and Canada remains a prime location for high-quality GMP flower production and export.

Pablo Zuanic from Zuanic & Associates asked about Aurora's supply chain strategy, specifically the mix of in-house versus third-party supply, and inquired about the potential for downstream vertical integration in key international markets.

Answer

CEO Miguel Martin stated that Aurora's supply chain is founded on its high-yield, GMP-certified facilities in Canada and Germany, which are supplemented by a flexible third-party network. On vertical integration, Martin explained that while the company operates a clinic in Australia, its primary strategy is to build strong trade programs and partnerships with third-party clinics and distributors, a model that has proven successful given the high demand for Aurora's premium products.

Pablo Zuanic of Zuanic & Associates inquired about the underlying market trends in Germany following recent descheduling and the specific strengths of Aurora's franchise that create barriers to entry and support its market share.

Answer

CEO Miguel Martin stated that while it's premature to project 2-3x growth, a 30% annualized growth rate is healthy, driven by easier patient access and distribution without price compression. He highlighted Aurora's competitive advantages, including patient stickiness to specific products, stringent regulatory and testing protocols that favor experienced operators, established in-market distribution infrastructure, and being one of only three companies with in-country manufacturing.

The analyst asked about Aurora's potential need for acquisitions in Germany compared to its strategy in Australia, and followed up on Australia regarding local production needs, import risks, and barriers to entry.

Answer

The executive contrasted the strategies, explaining that in Germany, Aurora invested heavily in on-the-ground infrastructure early on due to confidence in the market's regulatory path. In Australia, they initially partnered. Regarding Australia, he stated there are no current plans for local production as the import of TGA-certified products from Canada is efficient and secure. The primary barrier to entry is the TGA's rigorous, 8-12 month product registration and testing process, which advantages established, precise companies like Aurora and protects margins.

On behalf of Pablo Zuanic, Rahul from Zuanic & Associates asked for an update on asset sales for problem loans, the accounting distinction for loans at fair vs. carrying value, the company's debt leverage targets, second-half loan maturities, and general sentiment in the mortgage REIT sector.

Answer

CEO Daniel Neville reported that for a key problem loan, two assets are under LOI pending court approval. CFO Brandon Hetzel clarified the fair value accounting is a legacy GAAP election. President and CIO Robyn Tannenbaum stated the leverage target is 1.0-1.2x with no plans to issue equity. Neville confirmed one H2 2025 maturity will not be refinanced by AFCG. Tannenbaum added that mortgage REITs have traded better and would benefit from lower interest rates.

Pablo Zuanic asked for an explanation of the sequential decline in Q1 interest income, the outlook for distributable earnings covering the dividend, and requested updates on the status, timing, and potential proceeds from problem loans involving private companies A, K, and G (Justice Grown).

Answer

Chief Financial Officer Brandon Hetzel attributed the interest income decline to lower income from private company G and the absence of TRS dividends seen in Q4. Chief Executive Officer Daniel Neville stated that due to market volatility, the company will be opportunistic with originations rather than targeting a specific volume. President and CIO Robyn Tannenbaum added that the board reviews the dividend annually and will make a declaration on its normal cadence. Regarding problem loans, management stated they could not comment on timing or proceeds for companies A and K as the process is managed by a receiver. Gabe Katz (executive) declined to comment on the pending litigation with Justice Grown beyond what is disclosed in the 10-Q.

Pablo Zuanic of Zuanic and Associates inquired about the broader BDC sector sentiment, regulatory changes, the evolution of the company's deal pipeline since its transition from Silver Spike BDC, and the impact of cannabis rescheduling news on borrower behavior.

Answer

CEO Peter Sack explained that Chicago Atlantic's niche strategy insulates it from general market volatility. He noted it's too early to speculate on regulatory changes but highlighted that the deal pipeline has expanded into non-cannabis sectors and now includes new opportunities from cannabis company restructurings and ESOP transactions. Sack, along with President Dino Colonna, stated that rescheduling news has actually spurred capital demand rather than causing a pause, as operators are optimistic but also wary of past 'head fakes'.

Pablo Zuanic of Zuanic & Associates requested an update on the New York Social Equity Fund program, commentary on the broader cannabis financing landscape amid upcoming debt maturities, and clarification on how the entire Chicago Atlantic platform, including its BDC, creates strategic advantages.

Answer

Co-CEO Peter Sack confirmed a strong relationship with New York's Social Equity Fund, highlighting 23 operating dispensaries and confidence in the market's long-term development. He stated that Chicago Atlantic focuses on smaller private operators, a segment less affected by the bond market dynamics facing larger public companies. Sack also emphasized that the broader platform with multiple funding sources provides flexibility and a more competitive edge, ultimately leading to a higher quality, more diversified pipeline for the REIT.

Pablo Zuanic of Zuanic & Associates questioned the sharp decline in new fundings in Q1, asking if it signaled increased caution. He also requested the amount of unfunded commitments, whether the Loan #9 restructuring sets a precedent, and clarification on how the loan pipeline is allocated across Chicago Atlantic's various investment vehicles.

Answer

Executive Peter Sack attributed the slow Q1 to both company selectivity and broader operator caution amid market uncertainty, while still aiming for meaningful growth for the year. Executive Phillip Silverman stated unfunded commitments were $19.8 million. Sack added that the Loan #9 restructuring demonstrates their ability to execute in downside scenarios and that pipeline allocation across funds is determined late in the process based on each vehicle's specific requirements.

Pablo Zuanic asked for Chicago Atlantic's perspective on cannabis operators' aggressive tax stances (280E), whether borrowers are in better or worse shape amid industry pressures, plans for deploying current liquidity, and for an update on the New York market.

Answer

Managing Partner Peter Sack explained that the company treats unpaid tax liabilities as a form of debt, which is factored into their underwriting and controlled via covenants. He noted that while the overall industry faces challenges, Chicago Atlantic focuses on finding strong individual operators. Sack confirmed the company aims to be fully deployed while maintaining a liquidity buffer and expressed strong encouragement about the progress being made in the New York cannabis market, citing store openings and crackdowns on illicit operators.

Pablo Zuanic of Zuanic & Associates asked for the specific international sales figure, SNDL's long-term market share aspirations in Canada, an update on the timeline for consolidating U.S. assets like Parallel and Skymint, and the current extent of SNDL's operational control over those assets.

Answer

CFO Alberto Paredero-Quiros provided the international sales figure of $3.8 million. CEO Zach George stated that the company is focused on profitable growth rather than solely market share, anticipating an oligopolistic Canadian market. He explained that consolidation of U.S. assets is pending delayed court rulings and that SNDL currently has no operational control over any U.S. plant-touching assets to maintain its NASDAQ listing.

Pablo Zuanic of Zuanic & Associates asked how U.S. cannabis rescheduling would directly benefit Tilray and questioned how much of the beverage segment's recent decline was self-inflicted versus due to broader industry challenges.

Answer

CEO & Chairman Irwin Simon explained that rescheduling would allow U.S. market entry with medical products, attract institutional investment, and create acquisition opportunities. On beverages, he conceded some issues were 'self-inflicted,' including integration challenges and timing mistakes, but also noted the overall craft beer market is down. He emphasized Tilray's focus is on being a broader 'beverage business' with opportunities in energy drinks, Delta-9, and non-alcoholic products.

Pablo Zuanic questioned the drivers of the strong growth in Tilray's German extracts business, asking if it was due to market growth or share gains. He also inquired about the company's involvement in clinical studies and its strategic view on other European markets like France and the Netherlands.

Answer

Chief Strategy Officer Denise Faltischek attributed the growth to both market expansion and share gains, driven by increased doctor education and improved reimbursement processes. She confirmed involvement in clinical studies and identified the U.K. and Italy as key growth markets, while noting they are monitoring France and see the Dutch pilot program as having limited commercial opportunity for now. Chairman and CEO Irwin Simon affirmed the company's commitment to investing in research.

Pablo Zuanic of Swann Associates asked for an update on Tilray's strategy for U.S. plant-touching assets in light of competitor moves. He also requested details on Tilray's competitive advantages and asset strengths in the German cannabis market.

Answer

CEO Irwin Simon stated that Tilray is prepared to enter the U.S. market either organically, by leveraging its extensive operational experience from Canada and Europe, or through a strategic acquisition, supported by its strong balance sheet. Chief Strategy Officer Denise Faltischek detailed Tilray's German advantages, including a highly flexible supply chain (Germany, Portugal, Canada), an experienced commercial team with strong local relationships, and a trusted reputation as a market pioneer.

Pablo Zuanic of Zuanic & Associates questioned if the DTC-heavy nature of the Delta-9 beverage market negates Tilray's distribution advantage and asked about the company's strategy for establishing a U.S. presence compared to peers.

Answer

An executive responded that the larger opportunity for Delta-9 is in brick-and-mortar retail, not DTC. CEO Irwin Simon stated his U.S. strategy is to remain prepared for medical legalization, leveraging existing infrastructure, rather than making speculative investments now. He noted the current focus is on the tangible Delta-9 opportunity and growing the beverage and wellness businesses.

Pablo Zuanic of Zuanic & Associates asked for a broad view on the premium cannabis segment amid consumer pressures and whether price deflation was a headwind to revenue growth. He also requested clarification on biomass sourcing, future expansion capabilities at the Hope and Delta facilities, and the company's strategy for its vape product portfolio beyond live resin.

Answer

CEO Margaret Brodie and CFO Glenn Ibbott addressed the premium segment, stating that pricing has stabilized and even increased since Q4 2024, and they have not experienced deflationary pressure due to strong brand pull for their genetics. Brodie clarified that the 2,000 kilos of purchased biomass is incremental and intended for premium flower. Regarding expansion, she noted that Hope's capacity can be optimized and that further growth is on the table. On vapes, Brodie confirmed the focus remains on FSE resin and all-in-one formats, with no plans to enter the distillate market in the next 18 months.

Pablo Zuanic inquired about the valuation methodology for the Vanguard transaction, the rationale for retaining certain produce assets, the percentage of revenue being spun off, the exclusivity of the Dutch coffee shop supply chain, and the potential for co-manufacturing GMP-compliant hemp products.

Answer

CEO Mike DeGiglio explained the deal was structured as an $80 million transaction ($40M cash, $40M equity) and was driven by the need to maintain cannabis optionality while securing strong operating partners. He also confirmed that as of April, Dutch coffee shops in the pilot must buy from legal producers. CFO Steve Ruffini acknowledged that co-manufacturing hemp products is an opportunity the company has considered.

Pablo Zuanic of Zuanic & Associates inquired about the competitive landscape in the Netherlands, asking if all 10 licensed producers are operational and how rules are being enforced for coffee shops. He also asked about the company's route-to-market strategy for its broader international expansion.

Answer

CEO Mike DeGiglio clarified that only 7 of the 10 licensed producers in the Netherlands are currently in production. He and Orville Bovenschen, President of Canadian Cannabis, noted a firm government deadline of April 7 for coffee shops to source 100% of their products from these legal suppliers. Regarding the international route-to-market strategy, Mike DeGiglio declined to share specific details for competitive reasons but emphasized that medicinal exports are a central focus for 2025.

Pablo Zuanic asked about capital allocation for international M&A to gain more control over the route-to-market, the EU GMP status of their Canadian facility, the timeline for Dutch coffee shops to exclusively source from licensed producers, and the company's strategy for the U.S. hemp-derived products market.

Answer

CEO Mike DeGiglio confirmed they are open to international M&A to become more vertically integrated but will remain patient and prudent, building on their core strength of high-quality flower production. He affirmed their Canadian facility is EU GMP certified. Regarding the Netherlands, he stated the transition to an exclusive supply model depends on when all 10 licensees are at full capacity. On hemp, he said VFF continues to invest in new products but will be cautious with major investments until a clear U.S. federal regulatory framework is established.

Pablo Zuanic of Zuanic & Associates asked for clarification on several modeling and strategic points, including the status of the C3 property's unfunded commitment, the go-forward rent collection from Rev Clinics and its AFFO impact, and the rent status for Calypso. Zuanic also asked for a bigger-picture view on how NewLake differentiates from peers facing defaults, the outlook for sale-leaseback demand, and potential international expansion opportunities.

Answer

Executive Anthony Coniglio advised pausing the modeling of the C3 tenant improvement allowance, as the tenant is reevaluating the project, but confirmed rent is being paid on the existing property. He stated Rev Clinics is expected to pay 50% rent through Q2, with CFO Lisa Meyer quantifying the impact at about $0.015 of AFFO per share. Coniglio expressed confidence in Calypso's rent payments pending its restructuring. To differentiate from peers, he highlighted NewLake's 84% AFFO payout ratio and disciplined underwriting. He noted that while near-term CapEx is slow, long-term sale-leaseback opportunities exist with operator balance sheets and new state legalizations. Finally, he confirmed NewLake is evaluating international opportunities in Europe to support its tenants.

Pablo Zuanic of Zuanic & Associates asked for clarification on several modeling and strategic points, including the status of the $11 million unfunded commitment for the C3 tenant, the go-forward rent collection from Rev Clinics and its AFFO impact, and the rent payment outlook for Calypso pending its restructuring. He also inquired about how NewLake differentiates itself from competitors facing tenant defaults, the demand outlook for sale-leasebacks amid industry caution, and the potential for international expansion.

Answer

Executive Anthony Coniglio advised pausing the modeling of the C3 tenant improvement allowance due to project cost reevaluation. He confirmed Rev Clinics is expected to pay 50% rent through Q2 and that the company is actively marketing the property. For Calypso, the plan is for a return to full, timely rent payments, subject to regulatory approval. Coniglio differentiated NewLake by highlighting its conservative 84% AFFO payout ratio, disciplined underwriting focused on property-level cash flow, and minimal defaults. He noted a long-term sale-leaseback opportunity exists with billions in real estate on operator balance sheets and future state legalizations, and confirmed NewLake is evaluating international opportunities in Europe. Executive Lisa Meyer quantified the Rev Clinics rent reduction as impacting AFFO by approximately $0.015 per share.

Pablo Zuanic of Zuanic & Associates asked about the potential spillover from competitor tenant issues, re-tenanting options for the Calypso and Revolutionary Clinics properties, the strategy behind having both a share buyback and an ATM program, and whether the company's cautious industry outlook implies slower growth.

Answer

CEO Anthony Coniglio addressed the questions, stating NewLake has not seen spillover from competitor issues due to its strong underwriting and focus on property-level cash flow. He explained that while properties could be re-tenanted outside of cannabis, the focus remains on finding new cannabis operators, especially for the Calypso facility in the promising Pennsylvania market. Coniglio described the buyback and ATM programs as tools for shareholder-focused flexibility, allowing the company to repurchase shares at low prices and raise capital accretively at high prices. He confirmed a prudent and cautious approach to growth, prioritizing quality deals over volume amidst industry uncertainty regarding federal reform and capital access.

Pablo Zuanic of Zuanic & Associates inquired about the operational and risk implications for NewLake following the failure of Florida's Amendment 3, sought clarification on the company's M&A strategy, and questioned the size of the addressable market for sale-leasebacks given potential asset constraints for companies needing to refinance.

Answer

Executive Anthony Coniglio addressed the questions, stating that Florida remains a strong medical market where operators were cautious about overbuilding, mitigating risk. He clarified that M&A comments referred to facilitating operator deals via sale-leasebacks, though NewLake remains open to strategic mergers. Coniglio asserted a significant addressable market still exists, as operators hold billions in real estate that can be monetized through sale-leasebacks, which offer better advance rates than traditional credit facilities for refinancing purposes.

Inquired about innovation, including new hemp and "Microdose" products, brand licensing strategy in states like New York, an update on the second Maryland store, and the potential upside from Delaware's upcoming adult-use market.

Answer

The company is evaluating hemp products but has no specifics yet. The "Microdose" product launched in MA dispensaries and is a functional mushroom pill. They are open to licensing to the right partners. The second Maryland store is performing well. They are preparing for Delaware's adult-use launch in 60-120 days by building relationships with all potential retail partners.

Pablo Zuanic from Zuanic & Associates inquired about the company's innovation pipeline, including the types and distribution channels for new hemp products and the 'Microdose' functional mushroom brand. He also asked about the strategy for licensing brands in new markets like New York and requested an update on the second Maryland store and the potential upside from Delaware's adult-use market.

Answer

CEO Jon Levine explained that while they are exploring various hemp product lines like beverages, final decisions have not been made. Chief Commercial Officer Ryan Crandall detailed that the new 'Microdose' brand, featuring functional mushrooms in a vegan pill, will be distributed widely through dispensaries in all their states, with non-dispensary distribution being part of the broader hemp strategy under evaluation. Levine confirmed they are in licensing discussions for New York and other states, seeking partners who can adhere to their standards. He also noted the second Maryland store is growing monthly and that they are well-positioned for Delaware's adult-use launch, which could happen in 60-120 days.

Inquired about the company's M&A strategy for 2025, including the types of assets targeted and the approach to brand licensing versus ownership. Also asked about store expansion opportunities in Maryland and Ohio, and sought clarification on operational progress in Illinois and Missouri, and the competitive landscape in Delaware.

Answer

The M&A strategy focuses on acquiring operational, cash-flowing businesses in new states like New York, New Jersey, and Pennsylvania, rather than building from scratch. Store expansion is limited by a moratorium in Maryland and an ongoing location search in Ohio. In Missouri, the company is selling all its non-flower branded products with good traction. In Delaware, MariMed is the largest of four operators and is fully built out to meet capacity for the upcoming adult-use market.

Pablo Zuanic of Zuanic & Associates asked about MariMed's strategy for expanding its Betty's brand, the valuation methodology for the brand, the company's stance on the 280E tax provision, and the rationale for its proactive M&A approach.

Answer

CEO Jon Levine explained that brand expansion involves both licensing in new states and acquiring assets to introduce their full portfolio. For valuation, he pointed to comps like the Wana Brands acquisition, suggesting Betty's alone could be worth over $200 million. Levine noted the company has been aggressive with its 280E tax position and that its repeal would add millions in cash flow. He added that M&A is attractive now due to more realistic asset valuations and MariMed's strong balance sheet.

Asked for clarification on the 2024 guidance components, the opening timeline for the second Maryland store, the growth potential for their edibles brands, the reasons for success in the tough Massachusetts market, and the timeline for entering the Missouri market.

Answer

Executives clarified that while the Illinois flower project is delayed to 2025, other projects like the second Maryland store (opening soon) and Quincy adult-use sales are new or ahead of schedule, keeping them confident in their guidance. They believe their edibles brands have significant room for market share growth and attribute their success in Massachusetts to a strong team and product portfolio. Entry into the Missouri market is imminent, pending final approvals.

Pablo Zuanic of Zuanic & Associates asked for a detailed breakdown of the 2024 guidance, seeking to clarify which new assets were included versus excluded. He also questioned the market share growth potential for MariMed's edibles brands, the reasons for their success in Massachusetts, and the operational timeline for Missouri.

Answer

CEO Jon Levine clarified that the Hagerstown facility was included in the original guidance, while the Quincy adult-use launch and the second Maryland store were not. He noted a delay in Illinois flower cultivation to Q1 2025. Chief Revenue Officer Ryan Crandall stated that the company believes its edibles brands have a much higher ceiling for market share and that success in Massachusetts is driven by a combination of strong brands, product innovation, and an effective sales team. Jon Levine concluded that Missouri operations should commence in the next quarter, pending final approvals.

Pablo Zuanic asked a two-part question regarding the sequential decline in international wholesale revenue and how potential lenders might view the company's tax debt during its upcoming refinancing.

Answer

Chairman and CEO Boris Jordan attributed the international wholesale decline purely to foreign exchange effects. Regarding debt, CFO Ed Kremer noted current liabilities would be lower in Q1, while Boris Jordan added that they are continuing to pay down acquisition debt and are seeing 'very, very strong demand' from investors for the planned refinancing in the second half of the year.

Pablo Zuanic posed a 'crystal ball' question regarding the potential timing of federal cannabis rescheduling and a hypothetical political scenario where the Farm Bill could unite Democrats and Republicans on cannabis and hemp policy.

Answer

Executive Chairman Boris Jordan speculated that any pre-election rescheduling announcement would likely occur in late September or October for maximum political impact. He then pivoted to stress the strategic importance of the hemp market, particularly for beverages, and advocated for the regulated cannabis and hemp industries to collaborate on a unified regulatory framework based on cannabinoids, which could be addressed when the Farm Bill is taken up next year.

Pablo Zuanic asked for an estimate of the addressable market size for hemp-derived products and questioned Curaleaf's strategy for Florida expansion, asking if they are waiting for the adult-use ballot to pass before adding capacity.

Answer

Executive Chairman Boris Jordan estimated the hemp market is comparable in size to the regulated cannabis market. CEO Matt Darin addressed the Florida question, stating that the company is already expanding cultivation and retail on a modular basis to meet current medical demand. This approach allows them to proceed with necessary investments while retaining the flexibility to scale back if the ballot measure does not pass.

Pablo Zuanic of Zuanic & Associates asked for details on state-level wholesale performance and assumptions for new store openings in Illinois. He also inquired about federal reform, specifically the likelihood of adding U.S. exchange safe harbor language to the SAFE Act and the potential regulatory framework following a medical cannabis rescheduling.

Answer

Chief Transformation Officer Greg Butler cited wholesale declines in California and Pennsylvania, offset by strength in Michigan and Massachusetts, and noted they don't expect a material increase in Illinois store openings. CEO Charles Bachtell commented that any additions to the SAFE Act depend on whether they help or hinder its passage. He also expressed that rescheduling risks are exaggerated, as states will be highly engaged in shaping any new federal framework.

Pablo Zuanic of Zuanic & Associates questioned the performance of the Jupiter hardware business, asking about the sales impact from supply chain issues and the competitive landscape. He also explored the strategy for leveraging Jupiter to expand with brand partners into both existing and new markets, and inquired about the growth potential of the retail kiosk model.

Answer

Interim CEO Tim Conder addressed the Jupiter hardware business, stating that while competition has impacted market share, the focus is on improving price competitiveness and accelerating innovation. He declined to quantify the supply chain impact. Conder highlighted the significant opportunity to bring West Coast brand partners to Eastern markets and endorsed the kiosk retail model as a viable distribution channel for growth.

Pablo Zuanic questioned why the Israeli prescription reform would be a major catalyst, contrasting it with Germany where doctor freedom to prescribe hasn't spurred the market. He also asked about the pharmacy opening schedule and the rationale for canceling the M&A deal with Better in Australia.

Answer

CEO & Director Alexander Rabinovitch distinguished the Israeli market by its advanced clinical practice guidelines (the 'green book'), which protect doctors and establish cannabis as a first-line treatment for some indications, unlike in Germany. He stated that the company's pharmacy expansion to over 26 locations is proceeding independently of the reform. Regarding the Australian deal with Better, Rabinovitch explained that the company is now in litigation and could not comment in detail, other than to say the deal did not mature as expected.

Pablo Zuanic of Cantor Fitzgerald sought detailed clarification on the Florida adult-use ballot initiative process. He asked about the signature threshold for Supreme Court review, the legal issues with a previous attempt, the finality of the court's review deadline, and whether the 60% approval threshold was statewide or by county.

Answer

CEO Kim Rivers provided a detailed breakdown, confirming the lower signature threshold for Supreme Court review has been met. She explained a prior initiative failed on 'single subject' grounds and for not noting federal illegality, issues addressed in the current language. She affirmed that if the court does not opine by the April deadline, the language is deemed approved with no further legislative or gubernatorial review. Finally, she clarified the 60% approval is for the statewide vote, while signature collection is distributed proportionally by county.