Goodness Growth Holdings, Inc. (GDNSF) announced robust first-quarter 2024 financial results, with a notable 45% increase in total revenue excluding discontinued operations.
The company, during its earnings call, also discussed ongoing litigation with Verano, expressing confidence in their position and the consistency of their damages calculation with the arrangement agreement's terms.
Goodness Growth is preparing for the launch of adult-use cannabis sales in Minnesota slated for 2025 and has introduced new beverage brands in the state.
Additionally, the company has received a temporary extension on their credit facility loan and anticipates a longer-term extension in the coming quarter.
Key Takeaways
- Goodness Growth Holdings reported a 45% increase in total revenue for Q1 2024, excluding discontinued operations.
- The company is engaged in litigation with Verano, confident in their position and the calculated damages.
- Goodness Growth is executing their CREAM and FIRE strategy, focusing on key performance indicators without significant capital expenditures.
- New beverage brands have been launched in Minnesota, with plans to distribute them through traditional food and beverage channels.
- A temporary extension on the credit facility loan has been secured, with a long-term extension expected in Q2 2024.
- The company is optimizing manufacturing and cultivation operations to improve margins and throughput.
- Adult-use sales in Minnesota are anticipated to begin in March 2025.
Company Outlook
- Goodness Growth is focusing on executing their CREAM and FIRE strategy.
- Adult-use sales in Minnesota are expected to launch in March 2025.
- The company is optimizing manufacturing and cultivation operations to increase throughput.
Bearish Highlights
- The company is involved in litigation with Verano over the wrongful termination of their arrangement agreement.
Bullish Highlights
- Goodness Growth has seen significant revenue growth in Maryland, with retail revenue up 191% and wholesale revenue up 114% year over year.
- The company has been awarded best of weep for its HiColor gummy brand and two Green Goods dispensaries in Maryland.
Misses
- There are no specific "misses" mentioned in the context provided.
Q&A Highlights
- The company is prepared for a trial in the litigation case with Verano and optimistic about the evidence and facts presented.
- The underlying math related to the case with Verano is publicly available, and the company will follow up with the questioner on this matter.
In summary, Goodness Growth Holdings is navigating through a period of litigation while simultaneously showing strong financial growth and preparing strategically for future market expansions.
The company's focus on product innovation, particularly in the THC beverage market, and operational optimization positions it to capitalize on the upcoming adult-use market in Minnesota.
Despite the legal challenges, Goodness Growth's management has expressed a clear vision for the company's path forward, centered around improving margins, increasing product offerings, and expanding market reach.
InvestingPro Insights
Goodness Growth Holdings, Inc. (GDNSF) has been making headlines with its strong Q1 2024 performance and strategic positioning for future growth. To add further context to the financial narrative, InvestingPro offers some key metrics and insights that may be of interest to investors:
InvestingPro Data shows that Goodness Growth has a market capitalization of $76.01 million, indicating its size within the sector. Despite a challenging environment, the company has managed to achieve an impressive revenue growth of 18.1% over the last twelve months as of Q1 2024, with an even higher quarterly growth rate of 26.94%. These figures underscore the company's ability to increase sales and potentially capture more market share. Moreover, with a gross profit margin of 50.04%, Goodness Growth demonstrates its capacity to retain a significant portion of its revenue as gross profit, which is crucial for funding operations and future expansions.
Investors should note the company's significant return over the last week, with a 12.98% price total return, which aligns with the bullish sentiment expressed in the company's financial results announcement. Additionally, the company's share price is trading near its 52-week high, at 91.53% of the peak, reflecting investor confidence and market optimism surrounding its operational strategies and market prospects.
One of the InvestingPro Tips that stand out is the company's operation with a significant debt burden, which is an important consideration for investors assessing the financial health and risk profile of Goodness Growth. It's also worth noting that the company's short-term obligations exceed its liquid assets, which could present liquidity challenges in the near term.
For investors seeking a more comprehensive analysis, InvestingPro provides additional tips on Goodness Growth Holdings, Inc., which can be accessed at https://www.investing.com/pro/GDNSF. With these insights, investors can better understand the company's financial position and performance trends. Interested parties can also take advantage of a special offer using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, gaining access to a total of 11 InvestingPro Tips for Goodness Growth Holdings, Inc.
Full transcript - Vireo Health PK (GDNSF) Q1 2024:
Operator: Thank you for standing by, and welcome to the Goodness Growth Holdings first-quarter 2024 results call. [Operator Instructions]. I would now like to turn the call over to Sam Gibbons, Investor Relations. Please go ahead.
Sam Gibbons: Thanks, Michelle, and thanks, everyone, for joining us. With me on today's call are our CEO and Interim CFO, Josh Rosen; and our President, Amber Shimpa. Today's conference call is being webcast live from the Investor Relations section of our website. Dial-in and webcast details for the call have also been provided in today's earnings release, which is also available on our website. Before we get started, we'd like to remind everyone that today's conference call may contain forward-looking statements within the meaning of US and Canadian securities laws. These statements are based on management's current expectations and involve risks and uncertainties that could differ materially from actual events and those described in such forward-looking statements. For more information on forward-looking statements, please refer to cautionary note regarding forward-looking statements in today's earnings release. Now, I'll hand the call over to Josh.
Josh Rosen: All right. Thanks, Sam, and thanks, everyone, for joining us this afternoon. Before we get into the prepared remarks, I thought I'd add a quick commentary on the prospects of rescheduling. I won't say much as it's a well-covered topic. We believe it's difficult to handicap how long the process might take, but agree with others that it has a very high likelihood that we get rescheduled soon. Although, our version of soon, I wouldn't be surprised to see it stretch into 2025. I have learned that I'm not particularly skilled at handicapping these things. Overall, it's worth the reminder that this news is a meaningful step in the right direction. And despite timing uncertainty, this was the natural next step. In other words, while the timing is uncertain, I don't think this could have been better news at this juncture. I'll begin today's prepared remarks on slide 3 of today's presentation, which should be available in the Quarterly Results and Events and Presentations section of our Investor Relations website. Let's start with the elephant in the room regarding our news release last week about our application filing for a Summary Determination in our litigation against Verano and the magnitude of the damages that the expert calculated in supplement to our legal filing. I told the team to expect that outsiders would start by thinking the magnitude of damages is inconsistent with the circumstances. But then I'm a big believer that the math is the math. I'd remind folks that our arrangement agreement was structured as an all-stock transaction for over $400 million, and one could fairly assume that Verano was expected a compelling return when they entered the transaction. The stock prices themselves and our market capitalization are actually irrelevant to the analysis. It's a damage of to our company, not directly to our shareholders. As is often the case in these circumstances, I believe this kind of cash flows become the most robust choice for such value determinations. As I believe was well laid out in our filing, we believe Verano was calculated with our decision to wrongfully terminate our agreement and by claiming our breach. By claiming our breach, they avoided entering any substantive settlement conversations. I believe that they did this knowing we had become acutely financially vulnerable through December 2022 with obvious debt maturities on the horizon, not unlike today. I'm a bit surprised they didn't really approach us when we were most vulnerable. But I think that perhaps speaks of their lack of familiarity with just how liable companies are when they dodge definitive merger documents. Or potentially, it relates to how comfortable they are that time is on their side. Throwing a bowl of spaghetti against the wall, claiming that we breached, would be somewhat laughable if it didn't have such harsh consequences for the stakeholders of Goodness Growth. And now, I believe we're on a solid independent path. It's not an easy path, but we can see this case through and I have a lot of comfort with facts. I recently agreed to commit a drop in interim from my CEO title because I'm excited about our team and our path, and I'd like to see this through. And that could include needing a full trial. I hope it doesn't. I think that would be a shame for both parties, but there's no love lost for what Verano did to us. And I'm now much more confident that we are positioned to benefit significantly from this litigation. I believe they took a calculated risk, and it's our job to protect ourselves from, ultimately, what I believe was predatory behavior, whether intentional or not. While living with our compromised balance sheet, we've seen our peers invest significantly to prepare for the adult-use activations in Minnesota and New York. Okay. One last note on the litigation. We're taking a operator approach to this litigation, just like we do our operations. Our leadership team, in particular, me; Kyle Kingsley; and our outside counsel, Nicole Stanton, are actively stewarding this process and making sure we utilize our resources wisely. We believe this situation warrants the prudent use of our capital and human resources, just like when we analyze our capital and bandwidth allocations more broadly. All right. Having addressed that subject, let's move on to our first-quarter and recent business highlights on slide 4. Our first-quarter results reflect the continuation of the trends we observed during the fourth quarter with continued improvements in operating and financial performance, driven by the commencement of adult-use sales in Maryland as well as strong execution of operational improvements under our premium FIRE strategy. As a reminder, the strategy name refers to the famous phrase, cash rules everything around me and our focus on producing FIRE cannabis products that delight our customers with quality and value. Last year, we embraced the scrappy operator mentality under this strategy, and we made swift moves to decentralize and infuse our organization with mature market talent with our primary goals of improving our operations and quality of products. Since then, we've developed a much stronger capability to move inventory or quickly and convert product into cash flow, which is particularly exciting as we await the launch for adult-use sales in Minnesota in early 2025. I'm also excited because we still have a lot of room for improvement. Total revenue, excluding discontinued operations in New York, increased 45% year over year to $21.1 million. And we remain pleased with the recent consistency of our margin performance, as both gross profit margin and operating margins improved as compared to the first quarter of last year. We're continuing to add mature market talent across our operating footprint in Maryland and Minnesota. And we were proud to highlight several of these recent key personnel hires in last week's CREAM and FIRE news press release. As Amber will discuss momentarily, we're very excited about the launch of adult-use sales in Minnesota next year. And this past 4/20 holiday, we were pleased to launch two new brands of beverage products in Minnesota. Given Minnesota's unique regulatory framework for hemp-derived THC products, we view our beverages launch as a very low-risk, capital-light opportunity to send some of our adult-use leaning brands in the market before the launch of adult-use sales. We also see opportunities for these brands to expand into additional geographic markets in the future. As we discussed last quarter, we are working toward definitive documentation and regulatory approval in our pending transaction to divest our New York assets and operations to Ace Venture Enterprises. Given some preliminary regulatory diligence, we believe New York's strong desire to have a minority-led RO can support an efficient time line, and we are optimistic that the transaction will close before June 30. While we were disappointed that Toronto's wrongful termination of our merger forced us into divesting our native business, we've entered into a collaboration agreement with Ace for management and compliance in return for a 15% profit share in New York moving forward. Finally, as we disclosed in last week's CREAM and FIRE news release update, we received a temporary extension of the maturity date on our credit facility loan until June 14 of this year. And we expect to reach an agreement with our senior secured lender to secure a longer-term extension here in the second quarter. Please turn to slide 5 of today's presentation, where we've summarized our strategic objectives for 2024. These objectives mostly reflect continued execution of the key tenants we outline of our CREAM and FIRE strategy last year. But our focus in 2024 is as much about preparing for 2025 as it is on continued improvements supporting our current operations. Fortunately, these goals largely support one another. That concludes my prepared remarks, and I'll now pass the call over to Amber for some additional highlights from the quarter and a review of our key performance indicators.
Amber Shimpa: Thank you, Josh, and thanks, everyone, for joining us. I'm going to start on slide 6 of today's presentation, where we've provided an update on our core market key performance indicators during the first quarter. Please note that this quarter, we've removed New York from our core market key performance indicators, given our pending transaction with Ace. As you can see, the trajectory of total flower yields and percentage of A flower over the course of last year continues to improve. And on a consolidated basis, same-store sales increased approximately 36% during the first quarter, driven almost exclusively by continued strong growth in Maryland. As we discussed on last quarter's call, growth in Minnesota's medical market has slowed after experiencing very strong growth last year, catalyzed by the introduction of flower products in 2022. This is an expected slowdown as the market anticipates the introduction of adult use in 2025. As Josh mentioned, preparing for the launch of adult use in Minnesota is a critical focal point for our team this year. While we have driven improvements in working capital across all our markets in recent quarters, we do anticipate building inventory in Minnesota throughout the course of this year as we prepare for the launch of adult use sales, which may negatively impact inventory turns in Minnesota during the remainder of this year. Moving on to some additional state market update on slide 7. In Minnesota, while we expect the slower medical market to persist until adult use launches, we're taking advantage of this time to invest in enhancing our productivity and preparing our team for 2025. We've begun a review of our various retail locations throughout the state to identify low-CapEx opportunities, either relocate or retrofit some of our stores to support a successful launch of adult use. And we plan to share some additional details regarding some other key initiatives that we have in process later this year. Today, however, we are excited to announce our recent launch of two new beverage brands in Minnesota on this past 4/20 holiday. In a very short timeframe, Minnesota has established a robust market for low-dose, hemp-derived THC product consumption both on site in many bars, restaurants, and breweries; as well as at retail points of sale throughout the state. We've had a front-row seat to this evolution and believe beverages represent an important sales channel that will drive deeper adoption of cannabis consumption with new consumers as the industry continues to mature. And as an anecdote, I've seen firsthand how friends and family who have never been interested in consuming cannabis in traditional form factors such as flower had become curious about the beverages and find themselves enjoying them as an accessible and familiar consumption form. Beverages certainly have been destigmatized in cannabis in the state with those new to the experience. Our launch of beverages represents the culmination of many months of work to establish a position in this growing sales channel within Minnesota, with potential for expansion for these brands to other product categories and markets across the US. This is a capital-light, low-risk entry point for us into the low-dose, hemp-derived THC beverage market and provides an attractive marketing opportunity for us to seed our brands ahead of the adult-use launch in Minnesota in 2025. Our initial SKU lineup includes a zero-calorie, lightly flavored sparkling hot water with 3 milligrams of THC under the Boundary Waters (NYSE:WAT) brand and two flavor-forward sodas with 10 milligrams of THC, one of which is also caffeinated, under our Hi AF brand, which, as I discussed last quarter, has been a very successful brand for us in the early days of Maryland's adult-use market, amplifying products with amazing flavors. These beverage products are manufactured by third parties that already have experience manufacturing hemp-derived THC products. And we currently sell these products in our dispensaries and plan to wholesale them to non-cannabis retail outlets throughout Minnesota. We provided some marketing materials for these product launches on the next two slides. Now moving onto our other state market update. In New York, as Josh discussed, we are working toward the divestiture of these assets and operations, but are excited to support A for the potential launch of wholesale products under our profit sharing agreement once we receive regulatory approval of our license. We believe this should occur during the second quarter. In Maryland, our revenue growth has continued to outperform the market average since the launch of adult-use sales. We're very proud to recently be awarded best of weep for our HiColor gummy brand as well as our two Green Goods dispensaries in Frederick and Dundalk, which are amazing accolades for our incredible end-market teams. Early numbers in adult-use markets can be noisy, but we appear to be capturing incremental market share in Maryland, which can be seen in comparing a relative growth both sequentially and year over year in the state-published numbers. According to the state's disclosures, total market sales in Maryland were up about 131% year over year In Q1. Our retail revenue was up 191%, and wholesale was up 114%, representing total growth of 160% year over year. On a sequential basis, the Maryland market was down about 1%, and we were up about 5%. Before we conclude today's call, we provided our customary financial detail slides for the first quarter for reference throughout the remainder of today's presentation. Slides 10 and 11 provide summaries of our core market revenue performance and key financial metrics for the first quarter. For a complete review of state-by-state revenue performance, including non-core markets and discontinued operations, please refer to our Form 10-Q, which will be filed with the SEC later today. Slides 12 through 15 contain summaries of our balance sheet, debt outstanding, share capitalization, and EBITDA reconciliation. Please also noted this quarter EBITDA performance include the $1.3 million gain on the Grown Rogue warrants that were issued as part of our collaboration agreement last year. These warrants are mark to market at each period end, which may cause variability in our EBITDA performance in quarters where Grown Rogue's share price fluctuates meaningfully. Finally, as a reminder, last quarter, we discussed that we have adjusted our positions to reflect our go-forward expectation to be filing as a normal taxpayer and our reasonable belief supported by a third-party legal opinion that Section 280E does not apply to solely interest state cannabis-related business activities. We expect to file for tax refunds with the IRS for tax years 2020 through 2022 during the second quarter. And the state of our balance sheet is accounted for an income tax receivable of $12.1 million as well as an uncertain tax position liability of $26.1 million as a result of this change. We believe this is a reasonable, practical approach to take, but there is no guarantee that the IRS will not challenge this position. Before handing the call back to Josh for closing comments, I'd like to thank the entire Vireo team for their continued focus and drive on our CREAM and FIRE initiatives. I'm especially proud of our finance and accounting team for our earliest reporting yet. So congrats to our new Vice President of Finance, Joe Duxbury and Brandon Van Asten. Cheers also to Brendan Sweeney on his promotion to EVP of operations and Aaron Garrido to vice president and chief of staff. And finally, I'd like to share my appreciation to Josh for his renewed commitment to Vireo by dropping the interim in his title and continuing to work with our team on driving better performance and outcomes for all of our stakeholders. It's been an honor and a lot of fun partnering with him this far, and we are looking forward to what's next for Vireo. And I'll now hand the call back to Josh for some closing comments.
Josh Rosen: Thanks, Amber, and thanks, everyone, for participating on today's call. In summary, we've entered 2024 with a lot to be excited about. There's a strong sense of optimism emerging across our organization, supported by the execution on the ground with our Minnesota and Maryland operations, which points to a bright future for our company. There's still a lot of work in front of us to ensure our long-term success, but our teams remain focused on executing the key tenets of our CREAM and FIRE strategy. One last anecdote to share on the Verano litigation, which, as a former equity analyst myself, I think is fairly telling. We haven't received outreach from any of the Canadian analysts that cover Verano. It doesn't seem to me that people understand how definitive documents are supposed to work, nor the burden of proof typically required for material adverse events or breach when parties are working in good faith to close the transaction. And to echo Amber, our finance team, whose leadership is nicknamed C3FO, did a great job of managing our reporting cadence, among other things. I'm glad we gave them the opportunity to flex this quarter and be among the earliest of our peers to report earnings. To conclude the prepared remarks, I simply want to note how much I'm enjoying the Vireo team's energy and support to build a great cannabis company that puts the customer first. We have such a good mix of long-time Vireo teammates that have taken on added responsibility and new mature market talent that quickly jump in with added insight and energy to move us forward. We relish being an underdog, and I'm a big believer that cannabis remains a highly mature industry with a wide open landscape to be among the big long-term winners as measured by returns, not pure size. With that, I think we're ready for Q&A.
Operator: [Operator Instructions]. Your first question comes from the line of Eric Des Lauriers of Craig-Hallum Capital Group.
Eric Des Lauriers: Great. Thank you for taking my questions. My first one here is just on the Verano lawsuit. Obviously, a very significant potential settlement amount here. Understood that you are quite limited on what you can share here. But just specifically on timing -- and again, I realize this is out of your control. But do you have any broad expectation of timing range, whether this is weeks or months, or just anything that you might be able to share with the investment community on expected timing?
Josh Rosen: I like the idea of weeks. So the simple answer is we've really taken care of what is within our control, and it is difficult to speculate. I mean, as noted in the filing last week, it's synonymous to a filing, effectively, for summary trial in the US or analogous to that. And ultimately, it's hard to handicap whether that itself is successful or not or whether we'd have to take this to full trial. From our vantage point, some of this is going to depend on the integration of the court system in terms of how any delay tactics are handled on our counterparties. The -- I think we're in an environment that just leaves it pretty difficult to predict an ultimate timing. I would expect, based on normal course, that there's -- from this point forward, that the news cadence gets a little bit more frequent than it's been since, obviously, going back to late 2022. I think we're going to be dealing with a months' timelines rather than year timelines. But it is difficult to be specific here with any precision.
Eric Des Lauriers: No, that's very helpful color. I appreciate you doing your best to answer that question for me. My next topic here is on the hemp-derived drinks. It seems like a great way to build brand awareness ahead of adult use, as you laid out here. I'm wondering if you could provide a bit more color on how the relationship with this beverage manufacturer is structured. I'm not looking to quantify anything. But who takes the inventory risk? Will you be recording revenue? Is this more of a licensing agreement? I'm just wondering if you can provide just a bit more color on how this relationship is structured.
Josh Rosen: Yeah. I think first, one of the benefits of being in Minnesota as these programs have been building is there's now a really active ecosystem that really allowed us to step into this without heavy investment. And so with that, it's much more analogous to a more traditional business model, where it's our revenue, it's our brand, and it is our development. And we just have a co-packing relationship on the production time. So yes, we will be recognizing revenue. There's an ecosystem in Minnesota that makes it relatively easy to stay on beverages at this point. With that, it also means there's a lot of competition in Minnesota. And so for us, this was as much a, call it, a marketing and culture-building exercise to start -- not exercise, wrong term, but activity as it is expecting to be wildly successful with beverages on our own. Our team has really engaged with the form factor. It's a pervasive element of Minnesota, liquor stores and foodservice establishments, at this point. And so it's been exciting from that vantage point. And as Amber referenced, it allows us to see some brands that aren't relevant in the medical category that we participate in on that side of the house. So it's still early, and it's not something that we've put, I'd call it, a lot of resources into nor have meaningful financial expectations that I want to articulate. But it's a great project and lean projects for the team to lean into.
Eric Des Lauriers: Yeah, absolutely. I would agree with that assessment as well. And just running with that a bit, I know that there's not much material financial impact expected from this in the near term, which certainly makes sense to me. But just wondering how you're thinking about the potential for distribution beyond just your dispensaries. It sounds like you launched them on 4/20 in your dispensaries here. And obviously, you've highlighted the various channels of traditional food and beverage, where these products are available. Do you have any -- is there any road map to share on either expected channels or timing or overall, I guess, market share distribution within this stage? Just wondering how aggressively you're looking to pursue this channel.
Josh Rosen: Yeah. Again, I mean, I tie back to how I started the last, which is there's a vibrant ecosystem in Minnesota, and it's beginning to extend outward. And so the simple answer is not substantial expectation that's as to how quickly you can grow, but very much taking that scrappy operator ethos and applying it here. And so yes to navigating distribution partners within the state. Yes to potentially navigating distribution partners beyond the state over time. Those limitations are not in place here. And so it's all on the table, but we're really organically building this with a lot of excitement about the end market. We've -- I'm a long-time skeptic of THC beverages broadly to the dispensary channel. And this is a very different animal, as it runs its course through liquor stores and it extended in the state of Minnesota, but also elsewhere throughout the country at this juncture. And so we're seeing, yeah, I think a lot of destigmatization and new entrants into the cannabis marketplace in general that are brought in by beverages. So it's pretty exciting from that vantage point, but albeit -- it's a different business than what we run today.
Eric Des Lauriers: Yeah, absolutely. No, that all makes sense to me. I appreciate that color. And last topic from me here, just on the CREAM and FIRE strategy. It's great to see the continued progress here. It's been really impressive over the past year plus for you guys. I'm wondering -- and this is a difficult question to answer, so apologies ahead of time here. But wondering -- how much room you have for continued progress on some of these CREAM and FIRE KPIs without major CapEx improvement? I'm just wondering how much room you have to run. And obviously, we're dealing with a handful of KPIs here. So again, a bit of a difficult question to answer. But I'm essentially just wondering how much room you have for continued improvement without major CapEx, as discussed. And then obviously, factoring in these potential substantial legal proceeds, I'm just wondering how that may change or how your overall CapEx plans could change for your preparation for adult-use sales in Minnesota? Thanks.
Josh Rosen: Yeah, you started with the premise with, it's going to be a challenging question. So I immediately think that I need to hand this one over to Amber. But before I do that, I think, stepping back to the -- you had a comment there about the legal process that we're through. And I will tell you, from a planning standpoint, we don't plan anything from the legal side. We're managing it in a scrappy fashion from a spending standpoint, but we could see that taking a very unpredictable amount of time. And so it's not -- we're not calibrated to that relative to how we're planning our CapEx, for instance. I think broadly speaking -- and I'll open it up to Amber if she has anything else to add. I think it is just a nuanced question. Where I still see the most room for the infrastructure we have today is on the manufacturing side, a little -- even more so than the flower side. I think we've got a lot of room for throughput improvements, particularly as we look to [indiscernible] in Minnesota for adult use, where those productivity enhancement is one of the things that we saw worked really well in their own productivity enhancements. increased capacity at a time when the market's supply-constrained. And so we are not -- we've been putting effort into it. But if you think about how the Minnesota market works in a relatively, I'll call it, somewhat constrained medical environment, we can produce more than we can tell today with what we have. And so as we look at optimizing those dynamics ahead of adult use, I think there's room. Not to say there's not more room on flower as well, but I just -- it's one of the places that we immediately put a lot of focus. And I think there's additional room there, which would translate really well to -- there's really meaningful incremental margins attached to being more productive. Amber, any color that you want to add to that?
Amber Shimpa: Yeah. Thanks, Josh. So in addition to incremental improvements we've been making in cultivation over the last year-plus in our year of CREAM and FIRE, we still have a bit to do there. We have seasonality in our growth in Minnesota and Maryland, in particular, always looking to get better. And we have been there. I think we've got a bit of room there. As Josh mentioned, a nod towards, though, on the manufacturing side continuing to optimize, whether it's leaning into optimizing our people resourcing or through CapEx improvements in equipment. Minnesota is a market that's been highly medical. There aren't concentrates available in the state today. So there are improvements in optimization we want to do on the manufacturing side of the business, which will not only increase throughput, but also bring new products to market if and when available.
Eric Des Lauriers: Very helpful. Appreciate you taking my questions. Thanks.
Operator: Your next question comes from the line of Howard Penney of Hedgeye.
Howard Penney: Hi. Thanks very much for the question. Two questions, if you don't mind. First, the thoughts on the rollout of adult use in Minnesota and the timing of that. And then second, I assume if the Canadian analysts haven't reached out to you, then representatives of Verano haven't reached out for settlement talks either. Thank you.
Josh Rosen: Yeah, I mean, fair comment at this juncture. Very, very early on the second point of that. The first piece -- at this point, that we have nothing incremental. Sessions -- legislative session's still ongoing in Minnesota. And so at this juncture, we're still anticipating a -- we refer to it as a March 2025 launch and have no indication otherwise.
Operator: Your next question comes from the line of Mike Regan of Excelsior.
Mike Regan: Hey, everyone. Thanks for asking -- letting me ask a question, although Eric asked pretty much all my questions exactly. Quickly, it sounded like in the comments that the -- with Verano, it could go to trial. But it may not be -- at least in your ideal mind, I guess, how do you see this potentially playing out, either you go to trial or potentially there's a settlement with Verano?
Josh Rosen: I mean, ultimately -- I mean, I think for those -- and I've been around this industry for a while. For those that know me, I'm wired to find win-win solutions. This is not one of those situations that I'm cheerleading for a win-win solution. But ultimately, yeah, we would engage in conversations at the right time. But I think that at this juncture, we're expecting that we've got to take this to trial. We're hopeful -- we're hoping that it happened in some reform. We think the evidence, the facts that we put forward largely speak for themselves. They entirely speak for themselves. And so we're, I call it, optimistic on that front, but by no means expecting that. And if we have to take it to full trial, we'll take it to a full trial. We established an ability to be independent at this point. And well, there's been some pain in that process. We believe we've got things headed in the right direction. So hard to anticipate exactly how it plays out. But yeah, I mean, always open minded. There's a price for everything.
Mike Regan: That makes sense. I guess just in terms of, I guess, that underlying math. I found some of the documents on the Canadian website. I haven't been able to find the underlying math. Is that something that is going to become publicly available at any point? Or am I just not looking in the right places?
Josh Rosen: It is publicly available. Let us follow up with you on that.
Operator: [Operator Instructions]. There are no further questions from the line at this time. Ladies and gentlemen, that does conclude today's call. Thank you for joining. You may now disconnect.
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