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Executive Chairman Paul Pittman detailed that the sold assets were primarily located in the Southeastern U.S., the Delta region, and Nebraska, which increases the portfolio's concentration in high-quality Illinois farmland. Pittman described the current farming environment as challenging but stable, with farmer margins being thin but positive. Consequently, he revised 2025 rent growth expectations down from a potential 5-10% to a range of flat to at best 5% up.

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Executive Michael Wang stated that in Q4, both cannabis and e-cigarette gross margins exceeded 20%, with cannabis over 25%, and he expects both to approach the high 20s by the end of fiscal 2025. He confirmed the ODM partnership reached its 3 million unit/month capacity in September. Wang also detailed a pivot to prioritize e-cigarette production in Malaysia due to high demand. He projected the company would reach GAAP breakeven by the end of March 2025. CFO James McCormick addressed the rise in accounts receivable, attributing it to expansion in the cash-strapped U.S. cannabis market and outlining a strategy to focus on larger MSOs to improve receivable quality.

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CEO Chenlong Tan explained that while new platforms like TikTok and Temu show promising initial results, Amazon remains the dominant sales channel. He noted healthy growth in SuperSuite and a focus on using technology to simplify partner onboarding. Regarding the Vietnam expansion, he stated it will lower the cost of goods and improve profitability. CFO Kevin Dean Vassily added that ordering patterns from their largest partner are normalizing after a significant rebound in the prior quarter. He clarified that financial benefits from the Vietnam manufacturing shift will accrue in future quarters and that supply chain optimization is an ongoing effort.

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President and CEO Harkirat Grover confirmed the company will continue its organic growth strategy into 2025, aiming for the high end of its 20-30 store guidance for 2024. He stated they are holding the line on gross margins to pressure competitors. Grover detailed a long-term goal for white-label products to reach 20-25% of sales, highlighting upcoming Queen of Bud launches. He also confirmed the events JV will be a key channel for promoting in-house brands.

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President and CEO Raj Grover attributed the record ELITE membership growth (to 44,000) to strong customer value, with ELITE-specific inventory holding at 12% as overall SKU selection expanded. Regarding private label, Grover expressed excitement for the new Alberta opportunity, supported by the Queen of Bud acquisition, but cautioned a disciplined rollout is necessary due to market price volatility and long product lead times.

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The B2B growth was primarily driven by the successful CBN gummy launch and new distribution. Walmart sales are meeting early expectations, creating optimism for future expansion, but are not yet material enough to impact gross margins. Margins are expected to remain in the low- to mid-50s until in-house gummy production is online. A workforce reduction occurred in July as part of a surgical cost-cutting effort to rightsize the business without losing key support, with efficiencies found in warehouse operations.

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CFO Erika Lind clarified that the quarter-over-quarter B2B growth was 'definitely driven by the excellent CBN launch' and new distribution, not the new Walmart sales, which are not yet material enough to impact gross margins. She reiterated margin guidance in the low- to mid-50s, with improvements expected from in-house gummy production. Lind also confirmed a 'surgical' workforce reduction in July was part of broader cost-cutting measures to right-size the business while retaining key personnel and leveraging operational efficiencies to support growth initiatives.

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The Q4 D2C growth included seasonality, but confidence is high due to foundational improvements like the new CRM and upcoming Shopify platform. The MLB partnership extension flattens costs and allows for deeper activation throughout the season. The brand refresh aims to create a common look and feel across all product lines (CBD Medic, Clinic, ReCreate) to leverage the main Charlotte's Web brand equity, and the company sees the medical channel as a significant growth opportunity.

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Executive Chairman Boris Jordan confirmed that Curaleaf is in discussions for a second round of funding for the legalization campaign. He detailed a phased CapEx strategy, with investments scaling up if the November vote is positive to be ready for a potential May/June 2025 launch. He noted the investment is hedged, as expanded capacity would also benefit the existing medical market.

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Executive Chairman Boris Jordan detailed a multi-pronged strategy, including close partnerships with major telemedicine platforms to market products directly to patients. He outlined a tiered brand approach, with 'Four 20' positioned as the premium brand and 'Curaleaf' branded products launching for the mid-tier. He emphasized that their large in-country infrastructure is focused on aggressive, early promotion to build brand loyalty.

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CEO Bradley Nattrass responded that while there is positive uptake and planning conversations in Florida, large equipment orders have not yet materialized. Regarding guidance, he confirmed that three previously delayed projects are now recognizing revenue and that the company remains cautiously optimistic, aiming to under-promise and over-deliver, supported by a strong backlog and reduced SG&A.

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As of Dec 31, 70% of the backlog was from the CEA sector. In the commercial sector, they are expanding from CPG into healthcare and secondary education. Commercial projects have shorter completion times than large CEA cultivation facilities. They see strength in post-secondary education, healthcare, laboratories, and retail. The cannabis growth story remains state-led, with key states being NJ, NY, OH, PA, and especially FL. Discussions are ongoing, but builds are contingent on catalysts like rescheduling (freeing up capital by removing 280E) and SAFER Banking, as operator capital is currently constrained.

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President & CEO David Goubert addressed inventory, stating the current level is about 85% of quarterly sales, with a goal to get halfway to the best-in-class benchmark of 50-60% by year-end. CFO Brad Asher added that while operating cash flow will have quarterly swings due to timing of payments like taxes, the company expects to be positive for the full year. On SG&A, Asher reiterated the target to exit 2023 with an adjusted SG&A rate of around 30%, down from 34% in Q2, driven by cost-saving actions taken in July which will offset expected gross margin pressure.

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President & CEO David Goubert noted that the internalization rate outside of Florida improved from 47% to 51% sequentially, with a goal to increase it by another 10%. He also mentioned that rationalizing the brand portfolio from 12 to 4 brands will support this growth. CFO Brad Asher added that internalization, along with price optimization and yield improvements, are key margin drivers. Regarding CapEx, Goubert confirmed the $30 million target for 2023, with the majority allocated to new stores in Florida and Ohio, the New Jersey store expansion, and preparing cultivation for future needs.

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CEO David Goubert outlined a comprehensive retail strategy focused on four key areas: talent development, operational excellence, client engagement (both in-store and digitally), and local marketing activation. He explained that these initiatives, combined with a clearly defined 'good, better, best' brand architecture, will enable Ayr to cater to different customer segments, build long-term loyalty, and ultimately increase customer lifetime value.

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CFO Dennis Olis reported that inventory was reduced to just over $120 million in Q2 from a historical level of ~$150 million, with expectations for it to shrink further. He affirmed the company expects to be free cash flow positive for the second half and full year. Olis attributed cost savings to focusing on margin-accretive businesses and reducing corporate expenses, with continued benefits expected in H2.

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CEO Charles Bachtell clarified that the full margin benefits from the California and Arizona rationalizations, estimated at a 150 basis point improvement, will materialize in the second half of 2023. CFO Dennis Olis detailed that Q1 CapEx of $21 million was primarily for new stores, including eight in Florida, and the New York facility buildout. He noted a significant slowdown in store openings is expected for the rest of the year.

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CEO Charles Bachtell described the California strategy as a 'shrink to grow' approach, emphasizing a 2023 focus on the 'core' business. He explained they are reallocating resources from the complex California market to other areas of the footprint that can generate better margins, profitability, and cash flow. CFO Dennis Olis stated that 2023 CapEx is projected to be in the $40-$45 million range, approximately half of the $83 million spent in 2022. The spending will primarily fund new stores in Florida and Pennsylvania and the completion of the New York facility.

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President Graham Farrar attributed the cost reduction to continuous operational improvements and efficiency gains at the SoCal farm, stating they are on track to reach $120 per pound in the second half of the year. He confirmed that learnings from Greenhouse 6 will make the Greenhouse 5 retrofit more efficient. Co-Founder, Chairman and CEO Kyle Kazan explained that for distribution, they are currently utilizing their co-packer and are actively evaluating all options, including partnerships with other distributors.

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Co-Founder and President Graham Farrar addressed the questions, stating that the retail market's fundamental problems are over-regulation, high taxes, and insufficient dispensary density. He described Glass House's retail footprint as strategic for data analytics and ensuring shelf space, with future growth focused on limited-license markets. Farrar attributed strong wholesale demand to the company's high-quality, low-cost production, which has become more critical as competing cultivation licenses exit the market. He also confirmed that for the immediate future, the company plans to continue using outside distributors rather than building its own network.

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CEO Oren Shuster explained that the Israeli market is experiencing slowed growth and price compression, which he expects to continue for several quarters, though the premium segment remains strong. He noted that while upcoming regulatory changes are significant, their full effect on patient growth won't be felt until 2024. Regarding Germany, Shuster detailed the strategy of offering B2B services through their EU-GMP facility to four new clients, creating a new revenue stream. He added that potential German legal reforms could substantially expand the market by easing access through pharmacies.

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CEO Oren Shuster explained that Israel's premium segment is somewhat protected from price compression because the local black market is more expensive. He asserted that IMCC, having pioneered the segment, remains a leader despite competition. For Germany, Shuster noted strong growth in the self-payer medical market, which he views as a proxy for recreational demand. He anticipates a gradual legalization process and believes the established medical market will continue to be a key channel for premium products.

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CEO Kim Rivers acknowledged price compression in Florida but highlighted that the company is leaning into its scale to drive significant volume growth, which is a strategic advantage for working through inventory. For other states, she noted strong performance in Pennsylvania with 50% sell-through of branded products, incredible volume growth in Maryland post-recreational launch, and plans to launch new brands in Arizona in the second half of the year.

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CEO Kim Rivers noted that the fastest-growing product segment is 'value,' which naturally leads to higher transaction and unit volumes as the company introduces new form factors in that category to meet consumer demand. Regarding Twitter, she reported that the initial launch was very encouraging, so much so that the campaign has already been expanded to other markets. She indicated that more detailed results would be shared on the next call.

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President Anthony Georgiadis highlighted a focus on operating efficiencies at the facility and store level. Founder and CEO Ben Kovler expanded on this, emphasizing that the company's strength lies in managing the entire cash flow statement, including taxes, interest, and CapEx, which positions the business as a "cash producing machine" capable of funding its own growth.

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