SHWZ - Earnings call transcript Q4 2023 | Medicine Man Technologies, Inc.

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Operator

Good afternoon. My name is Ina, and I will be your conference operator today. At this time, I would like to welcome everyone to Schwazze's Fourth Quarter and Full Year 2023 Conference Call. [Operator Instructions] I would now like to hand the conference over to the company's external Head of Investor Relations, Sean Mansouri with Elevate IR. Sir, please go ahead.

Sean Mansouri

to Call. Quarter welcome XXXX Full and Conference Earnings afternoon, Schwazze's and Fourth Year Good

on call Justin me with the and the Joining call the The prepared Chief Executive Interim Board. we Financial Officer remarks, Chief for and Officer; will will Q&A. and company Dye, then of are Chairman begin Forrest open Hoffmaster,

will, to Examples contain prepared to your answers strategy forward-looking operations. develop, would build, continue, to believe, forward-looking financial and which may they anticipate, among poised, regarding I statements, by statements expect, and potential and could, Schwazze. others, like uncertainties. Schwazze's project, to remind legislation as and federal remarks you results risks plan, objectives preceded are expressions and Such Schwazze's or may, include, statements and forward-looking subject questions relate for of similar future business operations become, of and that may be and position approximate, future management's statements submitted words plans regulation, the state

cautioned all Schwazze performance that results, involve cause statements differ may that forward-looking risks events, uncertainties achievements time. those this and anticipated actual at to from by or are Investors

materially XXXX, events, December XX, earnings call factors report ended Exchange Commission Form information could the Additional and Schwazze's to March in website on year in Schwazze's performance on available with XX-K XXXX. the XX, release annual and on available cause Securities that achievements or differ made concerning available this for is Schwazze's results, filed before and Investor Relations

sedar.com on which www.sec.gov U.S. website. Relations fully with can the Securities Commission, company's described Exchange other in or more Investor on Schwazze's the In at addition, be or reviewed filings information and is public

available today's can available the press financial and the website. Relations with and directly most Also, on measures in this reconciliation during non-GAAP measure the the Schwazze's be before call. Schwazze release of may comparable call made financial Schwazze's measures found discussed Investor earnings discuss A non-GAAP call between GAAP differences during

Board, would for to the remarks. to the call Dye Justin now of Chairman like opening over I turn the company's

Justin?

Justin Dye

afternoon, joining you, quarter results for you Good year for to Sean. our Thank and everyone, discuss thank operating the XXXX. fourth and financial and full us

you with country competition cannabis across and the many pricing increased operators of contending been pressure. have aware, are As

Our year-over-year challenges. were markets year, to were XXX immune year-end, is licenses that Colorado, up adult these during from there as quarter. fourth not used competing roughly market the In approximately in which XX% prior declined the the active of

XXXX. license state's quarter and growth regulatory outpace have in I'm demonstrating challenging market illicit sales While as to proliferation to of the our pervasive, the the compared continue outperforming mystimeter the we high has recent Mexico efforts single-digit market has New licenses in has Their from increased competition trend Mexico, And during the growth. continued severity in team, in throughout to strong, sales of prior to as Colorado New environments. increase In well months, remains although thrive this been with proud to enforcement new year, retail market their felony illicit an body charge. in a upgraded store market the of expect resulted ability closures a the our

cash solid our being excellence on has striving adjusted operational good our generation. force of markets. capital driving for stewards behind margins flow ourselves the EBITDA prided always while in been consistent We've This and

Colorado, to improving challenges competitive. Our more the Mexico navigate we even in capabilities New our prolonged continue as mindset remains unchanged while become

benefit business term poised without medium We the growth in safer. near and to about are or benefit the are meantime, the the profitable are and long to in committed In reform rescheduling our optimistic term. and we federal of driving operating

Forrest and of company appointment as to through objectives. the XX% growth most where for in over us he focused a to the one time moment worked place and proven we on this program optimization with X and Before led from market grocery a by past profitability implemented leader growth to see to I'm our like with enabled Forrest, right CEO. over I'd track and With execute company call EBITDA his the successfully years the the deep cost grow Seasons take which X Forrest that the to confident periods he have retail acknowledge at disruptive I to I've record our pass industry. retail New interim expertise, through CEO, Forrest's period years. in in

Forrest, you. over to

Forrest Hoffmaster

with organization to as along to team the convey retailers to entire producers, I'd interim my teams Thanks, growers, exceptional me Schwazze. appreciation Directors like support up to passion, Justin. commitment acknowledge of and entrusting talent, also that of CEO. the begin, make Board you, for our To I'd the lead like

We you have alongside the working a proud and looking of, in lot months. to I'm to forward be coming

with Now solid margins XX% adjusted into EBITDA highly markets on flow. We cash operating and to XXXX the results. improved competitive growth delivered in

to expanding to continue We our XX% X footprint dispensaries our by than retail more our while store markets. sharpen across strategy XX

New solid cultivation focused maximizing continue operating during overall and how efficiencies cost evolve we to Internally, the manufacturing and driving have output the serve our while and foundation, ahead asset of and our the on Mexico competitors. markets we to our are we were well savings and utilization. of we'll Colorado pressured and stay patients year, Although facilities relentlessly built customers a

each Let's get starting Colorado. of into with markets, our

Early state of of our adult-use ended importance mentioned, licenses, experience nearly the outpaced key on a underscoring once basis. as and with in been signs elevating efforts -- year year-over-year positive we the again and sequential focus XXX the the market of store investments X active in quarter on our have our points Justin differentiation. As with

loyalty market experience share expect We driving to improvements customer our retail overall acquisition, the retention, continue in while increasing across state. and the

X, X in up quarter pound $XXX was also Colorado maintained as and $XXX broadly quarter which per an through with AMR around begun wholesale pound in Flower quarter see X. pricing We have price from more to stabilize has consistent average per levels

#X Farms, to selling has portfolio is which wholesale by of growth into the Our brand, largest X licensed more momentum, currently XXX% state. demonstrated than the accounts of in continued Colorado, pre-roll Lowell the pre-roll in in the XXXX our generate

pleased in are April Lowell's prepare growth for Mexico. our to New launch our we look with as forward expanding and distribution We

on Legal New year-over-year were Mexico. X. new XX% Moving the led pricing to state increased to The sales proliferation from aggressive of operators. and in quarter up licenses in competition other has strategies cannabis

was up more XX%, up opened than However, new to lower to store. revenue total Approximately XX. total of as were leading count stores store XXXX, XXX bringing stores XXX per over in December

be down, this beginning market will are ahead. we anticipate a slow challenging growth store new net While to

on we and focused while assortment strategy to remains broader team introduce to an a into asset traffic retail Our stores, where promotional pricing implementing and cost our elevated experience. them can increased optimization and utilization a balanced drive

implementing for greater In early while pricing pricing branded flower also CPG out a December, tiered results strategy with variety, products. positive. we and The early our rolled new have been

positioned New business brand to And our succeed term. and to in Our long over standards. we service sacrificing ensure competitively evaluate quality continue well the model priced pricing will Mexico we to without is are structure

of to to events, customer increase key our we the retention, in-store and only in strategy, is and on points differentiation These ourselves we by storytelling, success loyalty efforts drivers which to set from create focus unique New price the assortment, apart experience believe market. product enhancing to of further one knowledge aimed are Mexico competitors. to continue While aspect are

across wholesale a generated From year-over-year quarter growth we the in standpoint, XX% fourth states. both

XXX now XX% the We in XX which XXXX state. Wana, have made solid grew fan-favorite with in and our also of X progress doors in is the top Gummies brand, with accounts

stages early the grown XX% prior XX% New quarter total our quarter. the in of wholesale sales our business compared wholesale into the there to in Mexico market, still While X expansion in to have of

by We wholesale in are we are believe on the early encouraged positioned capitalize to well state. and opportunity the momentum the

license a issuance new began which store we Mexico, to in closures have year-end, trends in see stores to net to as New Subsequent decline in started increase. change

context, experienced as net adjusts. the the and the over state record on led state's market increase the is For last closures, February, in which the XX highest years to X store store new lowest the

expect for to the state we future. the operations look early entering suggest While period are Mexico, for believe New trends continued competitive our a shakeout as we which in well bode we pressure, these we should

XXXX In New increased penetration over in wholesale Xx XX% by we than more total states. both to Mexico, Colorado and both in penetration door

on our product products with been refining we provide offerings the wholesale focused have to of also assortment as service. aim exceptional We high-quality best customer

Mexico New coming forward the to expanding and Mexico Colorado. Colorado patients brand and providing quarter, the products in In Weed our the fan-favorite and of our Lowell Farms this we pre-roll own Every catalog New months. the expanding in look second catalog to across We in launch Day will customers with be

Turning manufacturing cultivation to and operations. our

we as continued acquisition indoor and improvements have outdoor of our to and With manufacturing our leaders XXX our closed fulfillment our and realigned environments. to as grows, manufacturing Our cultivation grow, New demand inventory production phases outdoor overall revamped all improve well and in position. Mexico, grow our generate our in

new mentioned which to across our call, a we As manufacturing last ERP X. in led implemented adjustment and system we inventory facilities, the cultivation on an quarter

and efficiencies and and Although this our impacted supply inventory quarter, expect future. control chain we for in have over better cost opportunities now uncover the levels visibility gross to margin additional the savings

complete to this year. our cultivation implementation facilities expect in the We ERP

growth Total revenue. to increased revenue $XX.X driven touch revenue. on X financial by of quickly the $X XX% and profit or Let's million, X% was from new the million quarter stores X results. for primarily our wholesale increased Gross quarter in by quarter total

of profit, of was on million and noncash XXXX. million which of value the product adjustments of onetime the XX% $X.X fair $XX.X adjustments of million As decrease previously, comprised or XXXX. Adjusted expenses, I revenue the consolidation, inventory and gross million, New mentioned value was noncash Mexico in realizable in million inventory net of in the of excludes acquired fourth adjustments, inventory $X.X margin quarter obsolescence $X.X adjustments of $XX.X shrinkage approximately result

due offset to an was for of associated year, in XXXX in primarily compared the quarter SG&A in lower XX charge Colorado impairment with were in partially are XXXX. prior a New increase the with additional fourth expenses and fourth $XX.X that expenses million This the maturing. decrease $XX.X still quarter Operating stores of million four-wall to by the Mexico

expense year the percentage to quarter. of compared a XX% XX% in operating was ago revenue, As

driven primarily EBITDA by XX% Loss X, adjustments. to expenses additional revenue the from noncash the $X.X was decrease XXXX operations $XX.X $XX XX year, the compared maturing. with inventory Again, to of of still higher stores XX% Adjusted with revenue year. primarily that associated $XX.X million by million was the million in last driven are or compared last million or quarter operating

of operating cash of to million the of the quarter, fourth operating year. $XX.X another generated led million flow $X.X during flow We period cash for positive which full

$XXX.X at XX, stood cash As of XXXX, were $XX.X and million. debt as XX, of equivalents million December December cash Total XXXX.

ahead, of customer and prudent Looking plan allocation our and to to enhancing our approach capital optimizing maintain loyalty the assets. penetration while we improving output the experience, efficiency

ensure evaluate are structure in continuously New also we in our will We Mexico the pricing well market. to positioned

to initiatives these the expect in benefits year. half realize We of the the of back

and has be a track markets run. record like in demonstrated different long in competitive executing of the Our Mexico no New team will Colorado believe

That Q&A. call for to concludes our remarks. to it will prepared Sean, pass back the like who I'd open

Sean Mansouri

Thank you, and thank for everyone, and in you, conference participating the Justin Forrest, call.

now will session. Q&A the We begin

and we'd via couple we that come e-mail via the questions the weeks in of questions the over webcast. past past questions, as live come e-mail even that first gather As well in tjhe address like have as have hour QX to via over

mentioned you off, things Schwazze other led competition of pricing increased has licenses the to strategies competition? kick from taken What to aggressive proliferation stand against actions out operators. has the and new So to

Forrest Hoffmaster

on it's XX%. the In young have still Mexico, quarter but Thanks, we increased count in call, New X, mentioned market. up And over a store XX% Sean. sales was year-over-year as

roughly So revenue as XX% per be in We're months we seeing Colorado closures that's XX% growth a levels rates led and market. decline. basis cannot of on to about recent net upwards the believe that to starting to trend about lower store sustained see

drive of rest in balancing that competitive. point also Flowers is the encouraging traffic. greater CPG just of strategy, slightly categories for one So And for assortment line we're is remains but above choice. Pricing most market, flower of all Colorado retail the increasing our still It's promotional and the the pricing and to are and Colorado. with us. our strategy of carefully

place on focusing That's experience. just of team where and in heart, are New the terms as we down -- we're well as the pricing, that at Beyond Colorado. that's in retailers have there in we we're in-store Mexico

items product so are on of the areas all storytelling, And focusing us market. mentioned on retail knowledge, New we're education, just focused call, like believe tender differentiation. Mexico key on will the points education, the apart that customer our help I But in stand we

growth evaluating factor growth program. we're new We a there, sign-ups. believe driving We're grow and traffic loyalty in our new customer door. that's the And into basket, seeing penetration methods loyalty growth to in our in lastly, critical

are those areas some So focused key we're on that of the now.

Sean Mansouri

Perfect. markets in on you update provide the Colorado? and both And an of could one wholesale retail

Justin Dye

Thanks, take that Yes. one. Sean. I'll

basis pains as withstand In we're and as a X%. the low to terms down the Sales also Population, volume in Forrest around supply But to year-over-year of stabilization, state over of flower, for were of starting this, in of We're plant in counts a XXXX, love QX. and developed growth things X%, the come as 'XX down growth single-digit is and count really through cultivation and end move count year-over-year XX% and built certainly mentioned, Colorado going in on normalize. store roughly our sequential approximately flat the remaining XXX down with was in X,XXX licenses wholesale at compete reduction we're stores. going a a about market the and license licenses XXX by challenging certainly compared and AMR year-over-year kind back to 'XX I I Colorado are retail market, overall And from offset counts. of almost which with demand dispensaries, 'XX, perspective, XX%, in in medical is sizable see a recreational improve. From we're to really which below the growing state by approximately pricing sales XX% have down tough market, seeing opportunity some us in levels. to remained QX to a pre-COVID driven improvement, to QX think

execute, stabilization going around believe, believe short certainly we're in there's to we corner, market. a but So starting improvement to to and we're see term we in the the continue tough

going We feel steady and standpoint. of about it's regardless believe about we perspective be stability to believe we're from with wholesale leveling out think pressure. summarize, headed a really and we To show pricing flower AMR how good retail where

year maintain our very margins, believe modest through share loyalty growth supply CPG and could down. wholesale retail from a believe, in This capital retention, Colorado. be model, to we ahead, to to wallet unlocking we We're wholesale retail focus benefit continue to the we current protect pricing customer well retail and shake utilize for solid going penetration grow strong our settles increase capabilities, Looking can and us position we'll as our continue And on lightweight of asset margins, base. from out liquidity optimizing to our customers. execution with acquisition a and

Sean Mansouri

perspective And team color. the targets? Is evaluating new what's great your That's future on M&A?

Justin Dye

Yes, I'll take one. that

retail XX%. the the than Over by year, last more increased we've footprint

So we've gone to XX from largely through XX stores acquisition.

believe X is New within optimization material and in focused our number lean cost manufacturing opportunities Mexico, is on the states. retail savings and building base of cultivation expanded the team asset our We over stores, and a synergy count where to assets. Our remaining optimizing with will focus there out with optimizing, assortment the initiatives support along the store be that

but So work there's like there. of right optimization . Internally, locations. to capital, more the liquidity we're in lots and spaces unlocking feel with right retail we there's looking the opportunity at do,

We We'll of that Colorado our in attractive and goals pick and very Colorado. to that think struggle of well values going New companies monitor Mexico. going assets worse there's fit clearly to smaller really be take to leave positioned continue game advantage the and to we're believe market. our be shakeout, plan up in we to capitalized a So going as at deep

where play the there's we're business. we'll opportunity offense an while optimizing So

Sean Mansouri

is from this the lowering flower to Can on webcast. input expand while initiatives the quality And and in place you one Great. improve yields costs?

Forrest Hoffmaster

Yes, I can Sean. it, take

cultivated acquisition Everest and cultivation our to the for assortment facility. allowed added Mexico in with items. So a us internally Both New a we improve midyear, overall manufacturing

higher-margin that team. just a and a growth. really efficiencies on expanded best and cost growing continuous improvement got while More by the buying cultivation strains, us importantly, New and the yields leverage right just give yields And practices, improving into retail creating of advantage we've tiers competitive Mexico also sharing strong overall focused having there

we do training, call, to the focus last in facilities. lead on We in continuing, think this -- are standardized mentioned all I I SOPs

the the in to out matters. through out more visibility rolling system ERP give continue that level. seen competitive efficiencies the well, ERP gross well and manufacturing to evaluate beyond of invested through system. operations are We it year of getting gross a hit grows, just rolled We've cost And well. We've Colorado. as distribution, we've that already improved manufacturing just in stages and we'll will us lot as automation And where we're to our at going already Colorado the this all in in to as costs come

continue. we'll We to XXX we're asset consolidate to high and grow a there utilization. our manufacturing just closing continuing this and ensure -- and growth So year, did rationalizing grow, up the end

those believe, us So give -- all continue, efforts competitive advantage. will we a

Sean Mansouri

one Great. in And came via e-mail. this

sheet MSOs? have you're million. liability about Regarding taken increased $XX by how you appears share viewing recent tax your your approach to the position and XXXE balance the other Can more

Justin Dye

roughly were Yes, which is taken one would a a to I'll of views take I lag most the X- the this conservative XXXX. in Sean, X-quarter tax where what industry in consider in We've from perspective, one. we maintaining payments,

kind X extended in conservative quarters. evolving X believe still there of extended of most good With industry going multistate the the to regarding the here. We're news some news we've we we've other on be operators, safer, to that versus more taken We've line. side the is in to rescheduling -- that but lag

more have at approach these other there. of looked and XX quarters have their tax kept lot or a out So competitors

more is a for bit that to more it's be it's regards of see good as and for with start -- little you industry. to see good us become maybe moving a little which think the us So XXXE, we towards good optimistic I to going kind

Sean Mansouri

New you wholesale Great. in could color on expansion more one plans And of provide Mexico?

Forrest Hoffmaster

Sean. Yes, Yes.

expanded on states. helps about is First really which progress from is development first Mexico product about largely wholesale launches they New We're see increase product the offerings, that road and overall in particular, and just with the year-over-year clear doing we in pre-roll vape bulk spring of out map plus and -- seen for a -- new Mexico us even unit XX% hard both approach wholesale the total work the strong New categories think coming the our actually Mexico, we'll be Excited quarter-over-quarter. there. to penetration in overall. took is a grow In team growth, current will there. comparisons rationalizing in -- excited We've see all, focus we'll catalog, XX% We've contributor the pricing with heavy and promotional really, already in in strong summer. a year. an XX% distillate. what And coming seeing or heavier Identified New

which exciting mentioned category terms category. as pre-roll on into the in gummy the item already what At will a other April Wana in and New year introductions in Colorado, of of happy an then kick we're in state, doing that new in introducing of that position sequence off Colorado. top which the market the I shouldn't with #X there really for Farms, into about We're brand Mexico level, Lowell we're taking pre-roll the

markets in Mexico segment and especially overall to wholesale both in So coming we're year. the excited about

Sean Mansouri

Okay.

share approaching information some previously the Just front have on comments? rescheduling left of Do banking? are regulatory of safer outside couple of How you or you to other a stated additional our here. possibility

Justin Dye

No. carefully. Yes,

national lobbying we certainly with things optimistic that size of got our what the really is that the of this use and on cannabis as to think a fairly pulse state, hopeful ballot that We're Head with to the And happens his market. has with watching initiative. Government Pabon and going on bodes are adult very that well that various viewed organizations is the in are large the regards close Dan We're were Relations, we real ballot because several popular for the one finger positive. We happening, red here. in state Florida a

the and generation industry So that everything of XX around think, here, we're And impact closely, in we're watching on cash optimism that it optimistic to deduct profound next that rescheduling, to SG&A. the hours. We're the I terms in creates midterm we near term the hearing going has are and about ability flow doing in obviously, to know something that.

safer So we're side, there's through but we has there, to think say that's go sort I on Certainly, more a it of a Congress. very also big lot deal. the would going on. moderate And

period in rescheduling where comment So for safer going know the through think relatively short period, and DEA, we up months, we we is should really it'll the a is believe. or few and something the the which time, next be here of

been think for So we're some time. and be for cannabis optimistic. We could pretty for us the good really good coming It's this industry.

And so we're pretty optimistic.

Sean Mansouri

you That's the great. And health on speak Q&A. the Are debt flow at balance looking last the of operating opportunities? schedule? Can and seed you refinancing to sheet, one your cash particularly

Forrest Hoffmaster

take I'll it. Yes,

'XX. that Justin news of well that just our the quarter any set welcoming markets federal just as got as regulatory capital hurdles material monitoring state X debt the and first front. certainly on in news the mentioned We've of the news we're

flows we it operations. $XX part are the is what and where X the just ongoing from for in We so our conversation flow It's daily with quarters. million part million conversation. And operating $XX our are next of in year our did of cash cash end cash expectations and overall in

that's of us. So front in

in we yes, regardless XXXX. be positive free interest the flow of having this at that after we're But conversation EC. capital outcome definitely is so And and to a meeting continue obligations, here expect cash to

Sean Mansouri

Forrest. Thanks,

you Q&A. inbound over the to turn to it Thank Q&A, live you. concludes this want Now if

Operator

Noble Joe Capital. from of [Operator first your question Gomes And comes Instructions] the line from

Joseph Gomes

long a it Forrest, important So how start with can either Forrest you CEO both? jobs. do I of Very going? see or How a search do think Justin, off kind to want CFO you

update little to that. on a get So just trying

Justin Dye

Yes.

here. you interim statements business regards focus we're piece, the formal Let put have the any we our call. to take we've going long -- a that to really not on have work to great becoming may on We're continue which Joe, care to continue got New Colorado lot. We've and not accomplished to out Mexico how a in to may last. retailer, going to and or of me, With of good

We have a lot on side. way then go. to And also the wholesale

I had So seen and in than environment with much very larger profound worked he and on the this fortunately have him impact and Forrest a operate business complicated a business.

but comfortable So the that really and to Board of business, we this a of in regarding period will some of as can Directors manage we're feel here, in speaking for everyone, Forrest financial shape, on had of busy. a Forrest -- beat But as here. going very forward. miss moving be lot well the that be duties needs of good we this time confidence And not in CFO the

Forrest Hoffmaster

Yes. Yes.

Irmina, Colorado a yes, during now and we actively focus and it's for is keep and and to would I positive is the this ahead. accounting on steps I coming not title, retail very -- and need the a clear organization So the -- finance leadership the feel an in say We're after strong usual year. narrow regardless field. face a a moving legal and Mexico if surrounded surrounded I priorities on we of this by -- -- strong also really New the are phase both got get business this to like the getting interim a by very wouldn't and as team taking board have we've in in team if right together you've mean come year, say I'm website environment, all support our -- seen very I lineup

Joseph Gomes

do the past? still in charges, more could you On the coming? are those that some inventory be now Or potentially there think

Forrest Hoffmaster

that that Yes, $X.X Everest getting moving it's that the it charges, purchase through price off to On to was just a acquisition related of already sold out million value because it good and those fair we books getting goodwill the question. think product. I value,

it. related The big our cost. a of market ERP it, rest bringing flower chunk just and So that's of true to and

ERP We rollouts haven't the Mexico. finished New in

you probably that as of comes book-to-physical some differences. typically kind so valuation And with know,

we we've Mexico. and X. just haven't and in in say shored in through those up implementation, that that in quarter the with really ERP New identified all exercise was manufacturing our of the that went We I quarter adjustment both cultivation, inventory from X practices will in accounted organization-wide

So expect what is ERP XXXX vision. know my nothing we field -- anyway I current But about some adjustment in rollouts do history of knowing just don't my adjustments happen. with again,

Joseph Gomes

Farms products with you was near And Okay. guys here brand name Lowell any rollout. locations, there Farms maybe a the I done other are you type wondering great to particular have the like job add retail the Lowell type future? that would to in

Forrest Hoffmaster

really actively appreciate and relationship there. see you get Yes. -- mean I looking And update the I in as are are. quarter opportunity about with Lowell bit Yes, we there X how we we Wana. a little closer. We at yes, But

couple get announcements. next and closer the earnings We development release to have the I those brand want on our a little to a bit make pad. launch to

Joseph Gomes

me, Okay. I Great. And one last may. if one for

just if update, wonder of there. you progress their an about We we I coming And here when really and talked could us give might unit haven't something lately. Biosciences out the see

Justin Dye

as Well, maybe business. was allowed I and the start, as which Forrest. well much we've it Biosciences, vendors where regards applied products product new can unit, some with work kind into learnings R&D develop taken those With them us development of potential incorporate to to very of kind some an of

let we've started going wrap there And that, business. And still that. was of dynamic up and team innovation. got at kind a Forrest his So we we're to the with that's how really look that on thoughts I'll continue to

Forrest Hoffmaster

it. I that's think

quality, right -- we're I think now, mainly we're QA on and focused cultivation.

we team there our so focused. have where And and purposed that's

Operator

Andrew question And line your from comes from Echelon. the next Semple of

Unknown Analyst

state Colorado. just the would one be of one first on just First be -- would

which called You great beginning pressure. out to is to pricing to pricing retail firm, continuing see some the wholesale face

a at Just but of face wondering may some that costs the see to potential as on this pressure margins if offset retail that factors that? bit would continue your there little for XXXX Or to seem to the expect you Would stabilized, margin XXXX input dynamic in are kind in other retail imply might potentially continues? deteriorate. play if to pressure of pricing

Forrest Hoffmaster

other -- XXXX. sales just can I been terms studying I'm trend still of pretty store. jump to in following Yes, in the of resettling We've happy seeing, glut. some COVID on terms contraction, overall you and if side. the the of side in seeing And supply we're and Andrew, the on market closely supply that. will, stores since We We're what have the been per

seeing plant come counts We down. are

We was the will side. during retail And looking top wholesale will side on place. are I'm like -- pre-COVID stay the the seeing different completely our stabilization that in the pressure certainly feel pricing keep We is and right now on situation pricing COVID. retail way at

And we the as little summer, so -- I runs start glut start to the through point, probably see market. your should think more in we to a margin should to early pressure see

going the so I a And to the year. big shake think of that's I market believe see I we'll be true. that And how think in the in that influencer to do half -- Justin on Colorado, out be mentioned second

Unknown Analyst

more in advantage you continue to potentially hear wholesale degree opportunities come. Got to do you that take potential capacity Colorado firm Colorado, wholesale helpful. of the on What great the brands and progress in up? if have to it. That's Lowell spare with the Remaining conditions to have of States

Forrest Hoffmaster

Yes.

year, demand went meet the from planning we or and adequately the we're that have just we segment. process we prepared -- the think I the that demand for wholesale through to capacity our

Unknown Analyst

be? CapEx the And may, what it. able the make be are total if to update the spending the would of What a And organization? quick then across to investments for might you're finally, year Got what on XXXX some you're looking major your [ ] just I budget plan share.

Forrest Hoffmaster

areas probably bit the say map be far. would of to the terms I and store we Yes, internal new year around inside like road see than just the some lower that. a saw current improvements, is storytelling last investment Most that to things our of in of what I'd current case base, little branding given that stores like going in so

run rate. of we've than say what seen would I So in terms lower

Operator

question Pablo next from comes line and the from your Zunic And Associate. of Zunic

Unknown Analyst

can hear about maybe of has or as if Mexico, maybe the the in is been the we as Colorado? lessons has Colorado never market? structure is York maybe that and states market. seems it I'm Or listed as And California in question, other market why you other about give a New faced wrong Justin, problem the much that New states. as a When Colorado or or trade different it in about much even problem just it illicit first the

Justin Dye

governor, this call. Pablo, the regulations, right and been Denver to the with of and with other the has on legislature, in partnered enforcement robust. believe, Colorado, nice very and got really lot with you the really have geographies they we the the a of Mayor

So they certainly up got it right front.

cases. you disciplined in enforcement and And the But that think been much more way. on into other general, gray in more black you've market it's tax a still I dollars flowing market. it's into that. really had Certainly, have -- stable much flowing

But that fundamentally we're have working working development. we're to that it's love And on little think in and would same lobbying different. a we I Mexico, with New format. type as who's of younger So regulatory

that. I very really think the you state California. around has solid the been rules enforcing mentioned having and say proactively I rules would good,

Unknown Analyst

else And then a with have retail or I quickly the in if to still on chain quickly largest Just compare retail sense missed trying I if your of to your Colorado average And numbers. just I just the and revenue Mexico peers? are consolidating? on to to how about you do list? state these to numbers, the is in based moving cannabis? give compared you in New relative you latest how store a per and that, the industry is understand market related to remind Colorado size reminder, and you Just there And pharma to think your consolidating mean, someone

Forrest Hoffmaster

we I trend market Yes. of Pablo, to market. quarter share, in grew above Colorado just our think in terms X X.X% upwards to continuing share, are

at look and So looking seeing base store that. above When revenue and the count we're continued dollars growth per at as of store the per of there on revenue XXX, well sales state you I'm a store, well.

Unknown Analyst

the very And question. Right. last

But asset-light terms things. there apparently of because talked wholesale the being strategy pivot of that retail in of about focusing you've the a Lowell, new in licensing are wholesaling. about So of a is like your here, the side on and initiatives bit you brands expanding

focus explain mostly still retail. that, is if the what you So can

Forrest Hoffmaster

current forward third-party we light, into with. we that item say can on would one and is partnerships in good retail then the growing the are a wholesale of share asset that licensing each I both doors focused our a us with a organization segment those primarily catalog of expansion which lead states, gives

the more force there just investment is and sales promotions. So of

Operator

our remarks. call now That the Justin Q&A. will for I back ends to hand closing

Justin Dye

thank I'd of teammates, gratitude markets. for to participants of support my to their to foundation operator. customers extend fourth the across a and, all built shareholders our dedication our full 'XX on and earnings solid Thank quarter continued call. We've listening would our our Also really for to Yes. course, like of I year you, and our both like Schwazze.

continue long and we we're be New We going are develop Colorado, positioned shake that to to had on in term count year. is And the really win and business And built we've in markets. put were term prepared capabilities. certainly, difficult in a for. last damper Mexico that for the think proliferation near the and a advantages really certainly, and And here up to of license well this competitive

those less we're more of seeing and we're a However, lot seeing openings, closings.

while And I a give tailwind business our to may, in even be going these stores, backdrop us that. going for do want regulatory think of So we're a well we're bit to little to continue we wholesale fact, do And operator. really in of markets. work in continue We're think I we're continue positioned to our we're couple that. going customers, to and to our invest the tough to to and participating

I I it's just go going want bright forward. And Thanks. everybody us and So supporting think to thank Schwazze. for

Operator

our today. for for you participating. concludes Thank That you. conference Thank

all may disconnect. You

Medicine Man (SHWZ) 27 Mar 242023 Q4 Earnings call transcript