LOWLF - Earnings call transcript Q1 2022

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Operator

Greetings. Welcome to Lowell Farms Inc.

First Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. note conference please being And Instructions] that is this recorded. [Operator over now Mitoulas. turn will to the I conference Bill Thank you.

You may begin.

Bill Mitoulas

ending for Good afternoon Lowell first results discuss call conference XXXX. quarter the and welcome Farms to Inc. the march XXst, to financial

we Brian cause the this to of are remind filed uncertainties outlook results further are A later statement will quarter Factors statements Before and any that for differ to portion company's of in the well forward-looking company's questions results and course These in outlined current are light for Shure, actual Lowell factors. risks as listing insight go-forward does the Ainsworth, Board; as in Inc. Any based these during materially call, from Mark call that that forward-looking obligation make open not financial the our that you Chief management Officer, expectations. as Please statements we on the Executive conference Risk go any and This let may considered of this into subject note statements. detail should filed future. the and please our on of section to on be Farms strategy. call who SEDAR. provide the XX includes be begin, Form will may Q&A to me EDGAR also analyst call. undertake about to risks operations, of performance, forward-looking the Officer; These expectations today present Co-Founder forward-looking Chief is and in Chairman Allen, George any management revise of Financial statements

conclusion, Investor over please call advised may leave website our call please our page. this go recorded now on call and to of happen conference Relations hand George. you will the ahead. before who For be will be And I those archived that to its George,

George Allen

time. your grateful I'm afternoon. Good for

our a we was operating business, was cash burn sequential and The the Mark all of during right quarter quarter LFS our into last in. We into challenging decline. during Brian details, slowdown cash still wouldn't transition quarter. conditions. and month turned Nearly indicated came will lot the $X.X this it. than we healthy our but EBITDA we success decline and exited the our which in be will million revenues from get despite profitability more had positive and priority to continue quarter quarter, seasonal for despite to March our materially during burn decline jump the $X base we Despite mindful until Both greenhouse. quarter market a into from Lowell you top of We this from cash million came during LFS, burn consumed the quarter. customer be we outdoor the extremely

For our reasons us I've have financing. worst incremental are we referenced without retain that to independence we the behind is and we below, need cautiously resources the optimistic that

now. very couple is right really for us teaching our California little all liquidity important a leaves However, of room lessons error.

a we investor it's the big loyal base a towards trend of attention, brands, price average this Lowell the to cheat top operators at need summer, doing even smokes illustration as last be We is more. cannabis. a fell little the room held the the marginal the their This demonstrates At a was to the list commoditization lot during sheet There's a and consistently between cost. future why capital. for brand the a premium shows apart of an gap quarter, going Without is return as profit partner churn with on that brand products sell and the us Zippo them marginal brands paying brand willingness cannabis. out grew since the cost customer those get XX% of on pay with to more leave that the For per involves. is a flower prices to as where we premium. cannabis importance low potential backdrop against as of into is of

plans later summer, broader focused the Our product but keenly new -- on we clear are will bringing to become more a new smokes a bringing audience. this rolls

that product specifically something cannabis XX% intend offerings the who that at product we and use to least new America We Our consumes will for that once of today specifically suited sold day. in the XX% is address. there cannabis That's been them. total a be believe users CPG address this of consumer a cannabis designed hasn't to

our first we this will the about financial in a bridge two-thirds priorities. track realizing growing the improvement XX% than talk for Number quarter to we're our to rise currently, of between we the farmers first and XX% enjoyed the -- ourselves our into during we we one, self-sustainability. impacted on first flower which reductions than operational conditions. most operational that address quarter. sellable cuts The during higher our quarter about the not specifically to made given the Mark quarter selling about produce going the price bulk during three, I XX% at flower during for get the progress two, approximately benefit. see talk plan we Number more we're seasonal are quarter gradual prices our last quarter. full and are Number how seeing Brian's did in bulk Now, to importantly, want and flower

being this Additionally, the tailwind. in more year for half probable not, handicap relief than a tax we currently would cannabis significant prospect cultivation be the which as second of

by driven our driven wallet out CPG in product an state profitability and will activity, specifically launches. impending longer improved utilization increase be of term within increased our of share California, Now increased LFS, by

at to bulk the growth has is since and dead. product this shrunk cannabis to working believe labeled market of the has launch nature growth turn the California and we terms it today. illicit from confident belies there California, The cultivation summer. inside factor get the flower we and growing leanest correction part operating of into to that, in been easy in around building appear expectations from Mark? legal Moreover, firmly the taxes consumers don't the been This Now, in on launches time while better impossible growth highly the among data that is Retail the prices since so dispensaries reacted do environments margin the our and than have we're be within stand because should going Lowell speculative to way I'm of over case into in prices in shops. that to I only hasn't last of industry. the shift be illicit XX% the that new business naught, shared think It's impact, significant. expectations. the last a potential the back falling But California business. and but much anticipated market. With our state which this get flower years the two are the for supports Sales was a this relief to of brand and into I of but here market dispensaries. did know even But to at in of latent work conjecture. fallen could drive Mark. taxes more are We're to more the shift to this Ultimately, to work brand all ultimately, occurred year lot excise our outside weight it consumers was in there's best and consumer overall We've believe a pantheon quickly as we on to our goods. the for believe I

Mark Ainsworth

and Thank afternoon, George good you, everyone.

Weed profile product. which bulk forward holding on on under in skews. change costs our many LFS material been focused That We change of our source transition resulted on meant which brands, that greatly in XX% flower helped using COGS business margin This could that inputs raising unit House organization quarter, pricing flower. the or brands. whole greenhouse began reduction our was Weed for not has an the as to be our reducing and House sold approximate volume This Weed in sold the House

impact January quality which but the Our we adversely transition our a was source greenhouse relatively a tier impacted by unique a and But minor. between reduced small million $X.X which RIF team believe of our We their and Lowell cultivars. executed in temporary powered payroll gap end exclusively approximately this is sales cause still did quarter, brands representing by material the from flower and at year. top availability, the our product [ph]

driver cost spending Distribution the drive and non-essential and slashed the million team expenses resource is during $X annual The to also least in eliminated efficiencies. at company. operational quarter a hyper-focused are on huge automation spend. planning We for

our headcount route In optimization implemented addition and size. to reduction, increased order we minimum

QX Weed our infused sales in while our which XX.X% result, the below half our us brands back but the sales traction. of California and into continues through as CPG pre-roll of details, attribute percentage of grew I'll the to House fell XX.X% expense Brian distribution a X.X% category, another first gain some entrance sales. market decline to own infused flower product in XX% As to discuss a fell the CPG quarter of trends. CPG will from walk towards QX, the growth the jarred and XX%, quarter-over-quarter continued quarter-over-quarter to We

the that despite use Lowell in increase lab increase. period, concentrates the Vape pre-rolls clients we X% Low limited vape have to succession popular that been The dispensary a a to serve are sales recently excited Wrap have early increase. Services greater price was XX.X% to edibles this passed has The hugely flowers from also extremely allow itself version our last decrease volume. product and attributed CPG sales a extremely a increased ability We QX. package also for and is and the will volume volume of growing paid farm drop have Low scale saw popular for The Our year coming seen slipped seen product Cautiously demand and as is X.X% in the while Hash out Farm high our biomass Wrap. loss still of XX.X%. launched in This but Smoke, XX.X% on product. partners anticipate more a strong. that Hash

a we series of have Beyond to that working part the been better excited are for release years. we products on of two QX,

legacy. but low to details, is connected share soon will the We deeply it

quarter X,XXX in the from pounds volume during in sales, fell first bulk QX. to pounds X,XXX our QX Turning to bulk

price. volume is However, to through of as output greenhouse the this XX% a in be offset decline seasonal to inventory our well as increase by was quarter. in attributed The stockpiled

we relatively price that point see alluded George the This see to. our increase from when performance we we sales increased low the combined to levels. seeing the is market a harvest QX in are bulk greenhouse our strong lowest with expect the given from quarter, the growing output for climate seasonally

Now, let's other and licensing discuss markets. brand

it out-of-state XX% sales could appear Lastly, the market in Licensing volume that giftability sales the requires Massachusetts slid think we down was during the QX This brand of quarter. approximately given Both holiday more to during the attention. in some product. the would surge and were prominent attributed the clients revenues nature be the decline quarter.

Our education, increase licensing awareness to other track, support, through trade is states. through out-of-state through volume revenue path on increasing dual bringing and

We have markets shortly. we of announcing that a pipeline should new be

a greenhouse. own our substantial fruit, quality We of was taking quiet delays. and nature XX% But right QX. our outdoor pounds, frustrated working outdoor seasonally QX. type processing grow from our the of is in partners In decline farmers. hard LFS to business in experienced by saw as also XXX,XXX flower. That at volume due clients, seasonal capacity QX of but to been low-hanging relatively wet came it known business, the initial we have the pick we're But the which right who

which to greenhouse. During intakes own XX,XXX QX of our majority, pounds, our came the from fell wet

we less dividends. LFS greenhouse client seeing and We are of shifting seasonal base toward already growers the are

QX far that wet taken we pounds have today. so over XXX,XXX I to already Brian. turn it With During

Brian Shure

afternoon, Thank you, everyone. Mark and good

of GAAP in on I will basis. begin, a please non-GAAP my portion be Before U.S. note XXXX results QX reporting and that a commentary our are we

a to unless in indicated. for non-GAAP release U.S. that please of results results. reconciliation to We unaudited. dollars refer So, these are figures earnings would also report all GAAP full today's note I otherwise

year-over-year. the with revenue quarterly today. filed sequentially up reported We XX% XX% $XX.X down and and million, QX Our report XX-Q CSC on Form was of SEC

growth million expected, CPG from year. of revenue As revenue revenue from QX. revenue, increase declined by to million, at revenue. and by respectively. million high low declines was the seasonally a pre-roll due in a packaged Farm full of year $X.X in XX%, primarily declined expected end quarter these XX% in in was in increases CPG flower February revenue, Licensing levels flower was sequentially X.X last QX a acquired Driving revenue bulk Services of revenue which branded $X.X and Lowell sequential last sequentially the and increase Offsetting reflecting

sequentially, bottomed anticipate in While QX stable bulk product quarter XX% next and flower in revenue pricing flower pricing average in pricing bulk to declined have slightly the compared increased December, quarters. modest bulk to seems several and increases we to the

price yields we December sales. from the modest growth to reflects daylight compared as The primary volume from LFS, to spring activity harvest spring CPG expected during it is are the increases fall. pre-rolls outdoor sales compared harvest seasonal forward improved The anticipating as packaged to flower. bulk cultivation minimal the expected in harvest and QX, increase outdoor look CPG, first lows. primarily bulk we quarter. harvest expand in increases As from improves small hours yields Note, LFS is in increase and and the in expected the pricing outdoor impact growth reflects

due of owned in margin efficiency a bulk Turning $X.X Gross efficiency related The brand QX. quarter reductions to year-over-year in The low was brand to over in fourth the and improvement of manufacturing the the value due impact to margin sales, charges from reductions sales, LFS, and price in as and increases was was compared improvement reported result improvements gross the net profit and realizable XX% realized as margin. in negative margin primarily improvements. last in XX% higher negative year margin increase year-over-year. cost sequentially first and quarter cost primarily XX% an to inventory million

to earlier, from were But we sales to continue for in sales market for expenses quarters. see increases market year last to XXXX begun XX% flower of expect compression the $X the million, modest quarter, or first bulk as December see have We and compared in the last quarter to of or compared $X.X Operating next reflecting sales QX price $X.X in price prior reductions realized to an compared million the of year, when or two noted of cost $X.X reductions levels. million year, million, net XX% which last loss $X.X and the XX% the deficiencies. an million reflecting loss first first a million loss million sequentially sales, operating loss of operating loss to increased of quarter in $X.X quarter sequentially, the impact current favorable The $XX net the to the $X.X million, to cost in operating was quarter. $X.X from quarter a year. first and was of Net for compares million compared the loss in year-over-year,

We million and first million expect gross negative income sales million will compared EBITDA we realize operating adjusted $X.X operating improved year. the and and to was Adjusted higher in in quarter of full efficiencies QX $X.X of negative that optimistic EBITDA the EBITDA negative for adjusted from $X.X sequentially margin remain year-over-year.

of going We out quarter EBIT XXXX. the to da half adjusted in second positive generating of meaningfully growing and second continue anticipate the

sheet, the balance million of $X.X of the million Mark? expenditures $X.X was compared incurred and compared Capital quarter end the in had Lowell Services the back the turn quarter, to call in at at infrastructure. fourth the were third quarter. to With the $XX.X working including million the Mark. that, of to first the beginning I'll Farm in of company investments end capital quarter, at million cash Turning $X.X to the $XX million

Mark Ainsworth

Thanks Brian.

Let's for turn it questions. over to the operator

Operator

this question session. At the comes [Operator conducting with you. of Bobby Instructions] Burleson question. time, question-and-answer Canaccord. line Thank from your proceed be Please first we'll with a Our

Bobby Burleson

the questions. thanks All for taking right,

any of is what that the sense user about one for what for be a you talking of first that to might with just kind Curious CPG? category introductions I contribute, the would if mix part to of generally So, that targeting have population. CPG benefit margin starts the you product doing as you're guess, the heavier be higher you're it in relative

Mark Ainsworth

out so be way, pried Yes, you Bobby, everything hey, how -- the doing? by are

Bobby Burleson

Great.

Mark Ainsworth

doing we're right. all question. All right, Good Thanks.

the that at margin manufacturing Most out, we between sort XX%. flower XX% and put So, based expertise, out costs to of some cost -- sort a everything to of in bunch most tends say seek require XX%. a of sit of higher that we products put of of Anything tried we around try I of there's our sort our manufacturing whole amortize sold, goods across contribution margins. to and fixed base. we obviously, that that for would contribution of

So, in our so. across general, over which higher a what And we our facility we in going production costs fixed volumes gives time. us infrastructure margin that's amortize appreciation just have

makes So, that give What value on holding to we to proposition that have and us allow XX% still XX% the we margin -- tell cost that the I sense. products we I contribution come while you engineered believe least. would just that will very at to consumer is think

so of sort appreciation, our launching towards margin -- water in and really And I more wouldn't compromising -- infrastructure fact, base in think improve. the fixed that base we're doing overall you're a of gross and trend by manufacturing our launching don't products over by advertising is that's seeing I matter in the all margins

Bobby Burleson

then incentivize Okay, in have higher little in little a bit brand investing other Farms, with do of Does Lowell the moving these seems be great. how on what with a to maybe a licensing need marketing? that touch the require of more you're it value. you Or states? lot doing I'm brand bit to shelves the business, partners? And you do curious,

Mark Ainsworth

down. it break let's So,

from Because royalties saw in showed licensing sell-through XX%, Massachusetts. I of think decline is and we during of we in actual all, skewed. little experienced we came all the a volumes, what what really quarter, decline of bit of in and a terms first of sequential that revenue almost terms

issues in getting challenges we've the Massachusetts, our product had the out think door. partners I some and with some potency

in low we've down was was and about with licensing growing little Illinois down been that's bit of but with pains volumes single-digits I've struggled the a we've it in everything some consistent seen terms Massachusetts. market. So,

Massachusetts, far we a the answer question, held bit we need bottom So, I'm tail to do Illinois, of our the of what job can got to that in partnerships, happened them is almost showing partners really But the it spend a had, little happened success with we've outlay. lot product in and front and listen, investor And getting and better expense, your pretty end investor time at capital sure about. no a of what so return the there, get these quarter. all to all much consumer no frankly, in I always come has all marketing the from share more with the our of we've

dispensaries I as I just as that opportunity, we're about just It's of about there So, California. spend we in in think time weeks questions I partnership we're really them team always marketing because has well our smoking has yoking dollar the move And you with that, expanding right. see our largely think there we we're dispensaries the Illinois a and And lot fundamentally order spend is we're Mass, the demonstrating driving as and that next where some to think going that are haven't announced return yet. a over a of couple the sort we Zippo on out spent to opportunity the for us that I think I and return that to into potential But strength much of as brand that sense make dollars seeing there. in first asking of I in play that position some will suspect same are. lot

Bobby Burleson

transition mix take and of customers get where on last get with are a to Okay, great. that greenhouse? how outdoor then long think how one sense in to you greenhouse there far right you it'll just can of the and the your of is kind is process, along like, you And to LFS

Mark Ainsworth

I listen. huge a April, Yes, in Next mean, There's catalyst coming right.

says annual are the the where And in compliant, drying with county to this compliant, compliance a thing your April, the facilities space, letter code to terms very we they're code most you in transition get the compliant. compliant, and license. not to for code California facility there, we, you not built license code in of for from everybody a code of And this biggest to most to was have So from temporary they're your be they're capacity compliance. in And difficult drying has because California have them an this for -- next largely, of is the comply right. challenging, need most the space, place for is rules which sprinkler rules in California and

operators claims us That probably facilitator by at next that's in of to X on lot square in to right? good feet this, their feel square we're a actor our sort a use so a million And square feet. pretty the non-compliant for in was cultivation, this just need they and like of or X.X license to of just need got of the around state million abandon year, processing that's either footage April million aspect investment position, third-party capital one processing. a That's X I capacity Xst make greenhouse we've and to of a LFS, the business. And these vicinity.

business is us. towards the coming So,

We -- mixed clients. have added light clients

that got don't the it up So far, number this number. added say And light pipeline takes high new handful absolute mixed our our we've quarter, a it's want not fill facility, of to them. a first to a I of we've client but

Bobby Burleson

Thank you. Okay, great.

Operator

you. Thank

comes of Jason from Our your next Please question. Corp. Zandberg proceed line PI with with question Financial the

Jason Zandberg

base Hi, thanks questions. my just taking for to costs. your touch on I OpEx wanted

which quarter, $X quarter, going applaud QX and decline, $X I million dramatic last a seen million. we've you to in So, this million $X.X from then

have all You I savings I heard been cost the that what not embedded yet. mentioned the all believe

of to on runway sort So, know, modeling costs? what a for should sort expect see operating wanting sort a of to of expectation process from we

George Allen

takes, between guidance, make for why in took some -- that, want let want the giving you and that that next a But factors costs there's specifically think operating walk to in we sort $X.XX cost last because to to you me million have action quarter, and quarter. somewhere careful we we sure I some a $X.X I take puts don't to through. So, chance be net I of know I there's of savings get that offsetting from million

we offline why So, and forecast? you take build don't help the your question

Jason Zandberg

no problem. Okay,

just your position. cash turn Let's over to

Again, quarter. -- $XX in working So, million you've now dramatically I'm right you got glad million roughly burned this $X down capital.

get cash terms of the thinking to how CapEx how with of outlook wanted your you your $X sort burn the about forward. position, general terms thoughts in moving your Just just of million, you just you're in your and Are comfortable operating that on your cash?

George Allen

a general Well, in sort just about bit little how Brian, we're then I'll you talk don’t about And that's our liquidity. of thoughts if thinking on forecasting, and why okay. weigh cash

So, market broader with cannabis. bear cannabis the paying a economy. on we're now into running we're force economic It's been to winds what's straight going and XX-month obviously, gale in for attention

So, we And basically are step a that have, is is get, same of now, the about we'd turn in right challenge we the think -- for resources proud I really paramount. -- don't showed we we are look And shepherding take there's, get the The as think, direction. for priority that do and there's us these the to sort there's, are cash we we're enormous to but to think management through self-sustainability where would room have is we hard through get within I'm do cash next world think if And us. certainly generally us this an resources have and I resources quarter. way to I -- there's the do as obviously I we the to the it's corner. it cash. not business a for for say quarter, because now error, we only everyone and cash capital need running for have we our organization the markets biggest that can the

want and Brian, So, our error. but principle are give the for resources margin tremendous with I they that expectation, can get we a have, there bought on from to in still as comment? we we there's the, with not you say, have conviction a XXX% think,

Brian Shure

I'll $X our the Yes, was burn in just also that in million cash on mention right QX plan.

QX us for $X million $X and has million. plan between Our burning

to is reduction QX. one of a has plan that too, the again, trend is The a So, building rest I'll from which say, continues the thing cash. year

So, mentioned. these kind just of of here. We sort to support tightness what through see George getting this, we the

cash do, you'll still said, to tight, enough through. have be will Although get we George as

George Allen

is worth But it's pay some of sort so of of number I $X the million highlighting burning capital that. is Yes, $X also that we're in operating operational, and in just bottom million Brian, Jason -- QX for that QX. to doesn't suggests says That end Brian like that million think that $X and QX, cash $X behind of liability there's working flat to creation, range are is what's suggesting from is million reality the some liabilities. trends million $X downs and the

Jason Zandberg

of then a my question last clarification. And just -- it. great. so That's is more Got okay,

that. You'd said

quarter, I was third wanted to production all XXX,XXX was own greenhouse? flower. of that So far party in does pounds already clarify, that that include or received you've your just in red biomass,

George Allen

remember ball definitely what is it includes the no, No, -- do you in that number? what Mark, the

Mark Ainsworth

want Our percent? farmers third-party. got like, you do we've yes, a as XX% it's what Yes, --

Jason Zandberg

so or for QX the That's for That's coming far? XXX.

Mark Ainsworth

that's the in That’s XXX, right now.

Jason Zandberg

very Okay, great. Thanks much.

Operator

comes next from And Cooper Beacon with Doug your question proceed you. with question. Thank Securities. our Please

Doug Cooper

Good afternoon, get envelope an the trying I gentlemen. operating back And guess great Brian, of I'm a bounce or back leverage. just the George idea quarter. to

You maybe didn't benefit you from of some cost you full indicated the the savings. get earlier,

mix? economic from around your is your seem to in the revenue the mix million depending is level based product So, quarter that $XX.X on million, an $XX would on anyway, it this ballpark breakeven perspective in revenue figures, again,

George Allen

number to number. mean, I it's is it's suspicion closer come think to want Yes, you that do And Brian, in I -- $XX but my $XX.X million to than $XX $XX.X million, million in? the million

running that last just I have of--? you this night. Brian, top were know think, we do on I

Brian Shure

million. Yes, depends all It's to alluded that's on It mix kind you $XX.X of closer as right. to.

Doug Cooper

Yes.

margin -- on driven So, the got are EBITDA they're is product -- forward margin business then and margins the this I CPG give and $XX XX we that the grow look if to matter is half quarter think for then reminders gross points. kind take or then quarter and can you of and contribution are to LFL, where into LFS just by of across margin rate CPG if contribution primarily successful, what is with expected the new expect? back you run million the the second or

George Allen

on bilateral is and XX about know, out just Yes, when CPG, you code. you that points flower businesses to you of margin, transaction you the use running LFS when sort that zip strip in out when think between you and strip to that the XX when we LFS, of way assume, manufacturing,

Doug Cooper

you again, if then gross revenue if that you CPG? what sort driven do to And $XX million kind quarter, of Okay. get primarily of up anticipate sorry, by you margin

George Allen

what you say answer -- you for would how Doug? question -- Brian would that what

Brian Shure

high maybe we be Yes, sort in of, to the would XX%. mid XX%s, approaching

Doug Cooper

Yes, of a lot of said. a would on mix. that, But with most the Brian and fueling it's the with lot of what based based I growth, CPG -- yes, agree

position you the kind increase you're should of that I'm assuming material second to gross If -- the business, actually the you're, range, be dropping about of obviously. sort XX grows somewhat in some half you're thinking to margin you in off which that XX% I you guess of alluded in to XX% EBITDA, support But two.

George Allen

alluded to the OpEx. -- about is think little fire, a question markets. team of out talked we I my a and bit as or sales you fuel of gas Doug's will -- to our lot my you that begging there's We is as probably going for tell with Doug, in leverage, marketing -- to

position, to resources or reinvest to way not amount So, imagine, we you brand by -- when because to have as to we're of right now own that otherwise our doing or we're deciding get as the are, not a building we position I think in fair the growth whether probably want going can could. and we we shepherd much

Doug Cooper

California, you the midst you XXX guess question, as Do mean, sort go a producers, wayside? market your by lot I California while? these Canadian by for to my on tight? I Are the serious, to last capitulation is we've for share mean, probably there's market, the general, a at said, of some companies I finally too a you look at the the Canada. of of And we're talked producers take many take think let's in market instance. go And just of are just start in look that a we in that year if brands, where, of the about throes and the this capitals position consolidation in you

George Allen

in say think that return is arithmetic. just I usually would on I to that of precursor I general, to sheer just, don't mean, access to capital. a mean, is California is I a And immune that. lack positive it's capital like Well,

it, the how amounts you So, snapback you take know, for flower, about flower, capital think that's of was the it for California. going which in the to a most sort to for see part really, if to investors, of long the on return our price

So, how know. to long take going is for that back? it to come don't I

interested time as which whether issue in illicit or this like person is cannabis challenge every they seen there last California Unlikely. It's with don't Does California. I now in growth, is basically much now we've XX% year, California want has or gone that X% in and a combination as both. smoking cannabis last market there's you precisely be possible not alluded But mean not or know was demand an California to general to was think a in year-over-year. I we probably smoking? smoking of to, problem as the have a right whether that

amount -- whether to when not take California uptrend the products. long-term to visitors, with people I people I perceived themselves, million are commerce do address there. right would from consumers market and really taking policy is that into we've getting legal more California I a and California, single product also traveled driven is a getting exporting risks that say of summer, issue. risks to than California around be is that, the occurs, think are is long-term of generally combination there people are more market. regardless tax travel the likely seen fair or the the illicit And when there policy homes, more we've what a California, this interstate tax to is trying for whatever going that think like state XX every comfortable do the are, -- are I they think our of right for gets they to enforcement.

like opinion, in an as of ecosystem. has I So, a -- my think as that sort California

long-term be which better over. take gotten to in as it's the and producer for, balance think I the the of country, fighting and less trends and larger going cannabis of I rest Less is it. see as markets share California

a general, of we our micro seen holders in that vicinity just from growers, in in what's that of stepped think I capitulation have California, know standpoint, away XX from licenses. pricing terms we license have happening

And enormous in see. price on I'm California in in any that come that outdoor we're it's We seeing very new most the but ourselves. attrition, we'll for down of they're really that not be have know, that of what out in entrants November, us until But to bit seeing, think price. indoor that like down California. was have in fair price have in and like folks decline definitely that flip on also by squatting the come sure severe we so indoor mix indoor the inventory I that because which side, know a And know of to cultivation, is we December. way then are top basically net growers sitting right community you mix, there's we of a declines. hit growers a And a been was activity overbuilt amount far on get really real year-over-year clears inventory it makes some price how may an difficult indoor appears won't there. out, October, sort momentum have so of California And But who definitely amount

the Like have important the there premium happened. consumers of we can willing storm falling consumers one. are that when think diatribe sorry willing tell From we believe here. But have brands, I brands our that the time only standpoint, long what for show and that I are to if ever into commodity pay was to even that is pay, the a product. price get to

to of leveraging more And do so we that. opinion my that, in in need

certainly I why story the the think it. reason so and focused building we're brands that's on behind

Doug Cooper

it. George. Thanks Appreciate

George Allen

you, Thank Doug.

Operator

the this will back question-and-answer I to Mark any Thank of over closing turn session we the for now reached and time, you. At call remarks. end the have

Mark Ainsworth

forward an and Thank We the look update you earnings you taking our call for our again joining to the for get next call. on talking to on time with business.

Operator

This concludes today's conference.

You may disconnect your you lines have your and at great Thank this participation for a day. time.

Lowell Farms (LOWLF) 11 May 222022 Q1 Earnings call transcript