Edited Transcript of ACRGau.CD earnings convention name or presentation 10-Mar-21 1:30pm GMT
This autumn 2020 Acreage Holdings Inc Earnings Name Mar 10, 2021 (Thomson StreetEvents) — Edited Transcript of Acreage Holdings Inc earnings convention name or presentation Wednesday, March 10, 2021 at 1:30:00pm GMT TEXT model of Transcript ================================================================================ Company Contributors ================================================================================ * Filippo Caldini Acreage Holdings, Inc. – CEO * Glen S. Leibowitz Acreage Holdings, Inc. – CFO * Steve Wayne West Acreage Holdings, Inc. – VP of IR ================================================================================ Convention Name Contributors ================================================================================ * Aaron Thomas Gray Alliance International Companions, Analysis Division – MD & Head of Client Analysis * Gerald John Pascarelli Cowen and Firm, LLC, Analysis Division – VP * Glenn George Mattson Ladenburg Thalmann & Co. Inc., Analysis Division – VP of Fairness Analysis * Matt Bottomley Canaccord Genuity Corp., Analysis Division – Analyst ================================================================================ Presentation ——————————————————————————– Operator  ——————————————————————————– Girls and gents, thanks for standing by, and welcome to the Acreage Holdings This autumn ’20 Earnings Convention Name. (Operator Directions) I might now like at hand the convention over to Mr. Steve West, Vice President of Investor Relations. Please go forward. ——————————————————————————– Steve Wayne West, Acreage Holdings, Inc. – VP of IR  ——————————————————————————– Good morning, everybody, and welcome to the Acreage Holdings fourth quarter convention name. Becoming a member of me at the moment are Peter Caldini, our Chief Government Officer; and Glen Leibowitz, our Chief Monetary Officer. This name is being recorded and shall be archived on our Investor Relations web site at traders.acreageholdings.com. At this time’s name comprises forward-looking statements topic to varied dangers, uncertainties and different components that would trigger precise outcomes to vary materially from these forward-looking statements. Any such info and statements ought to be taken together with cautionary statements in our press releases and danger issue discussions in our public filings discovered on SEDAR and EDGAR in addition to our investor web site. Any forward-looking statements mirror administration’s expectations as of at the moment’s date, and we assume no obligation to replace them aside from as could also be required by relevant securities legal guidelines. Now to your future scheduling functions, our first quarter 2021 earnings launch is tentatively scheduled to be issued after the market shut on Could 11, 2021, and subsequent analyst name shall be held the morning of Could 12, 2021. I’ll now flip the decision over to Peter. ——————————————————————————– Filippo Caldini, Acreage Holdings, Inc. – CEO  ——————————————————————————– Thanks, Steve, and good morning, everybody. Earlier than I start discussing the efficiency and alternatives at Acreage, I wish to take a second to introduce myself. I used to be excited to affix Acreage on the finish of final 12 months, and that pleasure has continued as I’ve gotten to know the group and its folks. Based mostly on every part I’ve seen thus far, I’m inspired about the place we’re as an organization and imagine we’re on the proper path for sustainable, worthwhile development and returning to a management place within the hashish business. My appointment to the CEO position at Acreage builds upon my previous experiences and successes. I’ve over 30 years of expertise constructing and restructuring multinational organizations world wide with a robust emphasis in client well being care and client packaged items. This expertise was gained in closely regulated industries whereas at Pfizer, Bayer and Wyeth. Earlier than coming to Acreage, I used to be the CEO of a cannabis-focused particular goal acquisition company, or SPAC. In that position, I explored many nationwide and worldwide hashish corporations with a view to creating acquisitions and implementing operational restructurings. These experiences will assist me to drive Acreage ahead in pursuit of its targets. I’m assured many of the items are in place for Acreage to succeed. Leveraging my vital expertise turning round massive organizations, we are going to proceed executing towards our strategic plan and start reporting optimistic adjusted EBITDA as promised. I might now prefer to briefly talk about a few of our fourth quarter highlights. The execution of our refocused plan continues to maneuver us towards profitability. Our monetary fundamentals through the fourth quarter continued to enhance, each sequentially and year-over-year, regardless of a really difficult macro setting introduced on by one of many worst international pandemics in historical past and the operational challenges and complexities that got here with working on this setting. Our reported income within the fourth quarter was $31.5 million and our adjusted EBITDA was a lack of $3.5 million, a 49% enchancment versus our third quarter and a transparent signal we’re quickly approaching profitability. Trying deeper into our operational efficiency, our fourth quarter reported retail income was $25 million, a 58% enhance year-over-year. We ended 2020 with 29 operational dispensaries, together with our managed entities. Our company-owned same-store gross sales development through the fourth quarter was round 27%, marking the eighth consecutive quarter of double-digit development. The continued evolution and improvement of our key manufacturers helped drive our retail gross sales efficiency. Throughout the quarter, we launched a number of new CBD-derived merchandise underneath our Harmless model in Illinois, whereas our managed entity in Ohio continued their wonderful efficiency with the rollout of recent Botanist branded merchandise and kind components. And at last, in New York, we launched a number of new Botanist branded gel capsule merchandise. In our wholesale enterprise, we reported income of $6.5 million, which was a 32% enhance year-over-year. On a full 12 months foundation, our wholesale combine was roughly 25%, exceeding our full 12 months goal of at the very least 20%. Our future expectations for our wholesale enterprise stay excessive. We imagine there are vital development alternatives by elevated order dimension and velocity as we full our cultivation and processing growth initiatives in Illinois, New Jersey and our just lately accomplished growth in Pennsylvania. We count on this continued focus will result in incremental income development and margin growth by 2021 and past. I wish to now spotlight a few of our fourth quarter operational achievements. First, in Massachusetts, we opened our second dispensary in Shrewsbury, which was accredited for grownup use gross sales. On the identical day, our Worcester medical dispensary was accredited for grownup use gross sales, so we now have 2 adult-use dispensaries open and operational out of the utmost 3 allowable in Massachusetts. In Illinois, we continued working in the direction of completion of our cultivation and processing growth. As soon as accomplished, the ability will embody 80,000 sq. ft of cultivation and drying rooms and a beverage canning line for a cover developed THC beverage launch. Moreover, the ability will embrace state-of-the-art extraction capabilities for manufacturing of a large assortment of by-product merchandise and edibles to assist each our wholesale and retail gross sales efforts. We count on growth completion later this summer time. Importantly, in Illinois, we continued to scale and increase our Botanist and Tweed flower providing by our wholesale efforts and achieved 100% retail distribution within the state. This positions our wholesale enterprise in Illinois for vital development as soon as our cultivation and processing growth undertaking is accomplished. In New Jersey, we proceed to report robust income and EBITDA development, even whereas managing by COVID-related challenges. We count on this momentum to proceed as we solidify our place as a frontrunner in New Jersey. We count on to open our third dispensary in Williamstown through the second quarter. We must always full the growth of our Egg Harbor cultivation facility in early 2022. And importantly, we just lately gained our zoning enchantment and shall be making use of for building permits to finish the development of our Sewell cultivation facility and count on it to be absolutely operational in early 2022. This was an excellent win-win for Acreage and the residents of Montauk Township. This facility, as soon as up and operating, could have a optimistic financial affect within the space by elevated jobs and tax revenues. So throughout the subsequent 12 months, Acreage could have 3 operational dispensaries in New Jersey, the utmost allowable by present rules, 1 of which is on the enduring Atlantic Metropolis Boardwalk and roughly 190,000 sq. ft of cultivation and processing house in New Jersey. Lastly, I wish to contact on Ohio once more. Our companions proceed to steer the state by way of retail gross sales and reaching full vertical integration. The cultivation facility acquired its working certificates, and first seeds had been planted in December. The workforce is shortly working to extend its extraction capabilities to broaden its product choices throughout a broader spectrum underneath our very fashionable Botanist model. They proceed to shortly increase the Botanist branded choices with the addition of recent vape cartridges and gummy flavors. Because the seventh most populated state that we serve with a robust medical program and a management place out there, Ohio is a robust slot in our portfolio with vital development potential each brief and long run. We count on to finish our acquisition of Ohio and start consolidating their monetary outcomes earlier than the tip of 2021. Earlier than commenting on our technique, I’ll flip the decision over to Glen for his monetary discussions. However earlier than doing so, I wish to take this chance to thank him for his years of dedication at Acreage and acknowledge the numerous contributions he is made to Acreage’s success. Glen displays distinctive work ethic and professionalism, and he has been essential in getting me shortly up to the mark. He helped lead Acreage from an funding car with nearly no income to a publicly traded operated firm with practically $180 million in annual revenues, together with our managed entities. Glen, thanks for all of your exhausting work and management. And I do know that I converse for the whole Acreage household once I want you the perfect in your future endeavors. I’ll now flip the decision over to Glen. ——————————————————————————– Glen S. Leibowitz, Acreage Holdings, Inc. – CFO  ——————————————————————————– Thanks, Peter, and I actually admire these sort phrases. Good morning, everybody. Final evening, we reported fourth quarter 2020 outcomes. Our reported income was $31.5 million, which elevated 50% versus the fourth quarter of 2019 and an acceleration versus our third quarter 2020 income development of 42%. This development was primarily pushed by our Midwest and Mid-Atlantic areas, which exhibited robust general efficiency. Our company-owned dispensary same-store gross sales had development of roughly 27%, and the energy of our ramping wholesale enterprise additionally contributed to our outcomes. Gross revenue through the fourth quarter was $14.5 million, which was a rise of 86% in comparison with the fourth quarter of 2019 and was pushed primarily by our income development and optimization initiatives related to our refocused plan. Gross margin through the fourth quarter was 46.1%, which was a 900 foundation level enchancment in comparison with the fourth quarter of 2019 and a 360 foundation level enchancment in comparison with the third quarter of 2020. I am happy to notice this reported gross margin of 46.1% was the best in our historical past and a key indicator that our refocused technique is working. EBITDA through the fourth quarter of 2020 was a lack of $36.7 million, which was a major enchancment versus our EBITDA lack of $64.7 million within the fourth quarter of 2019. Our adjusted EBITDA through the fourth quarter was a lack of $3.5 million, which is a major enchancment versus the fourth quarter of 2019 and versus the third quarter of 2020. I might now like to debate our managed entity outcomes. Throughout the fourth quarter, our managed entities generated $15.7 million in web gross sales, which elevated 41% versus the fourth quarter of 2019, pushed primarily by same-store gross sales development of about 71% and partially offset by transferring New Jersey from a managed entity to our consolidated outcomes. On a geographic foundation, Ohio was as soon as once more the largest contributor to income development. Our managed entities’ fourth quarter EBITDA of $6 million was up 141% in comparison with the fourth quarter of 2019 and up 27% sequentially versus the third quarter of 2020. This year-over-year EBITDA development was pushed primarily by the Midwest and the New England area. Shifting to the steadiness sheet. We ended the 12 months with roughly $55 million in money and restricted money available. Our money place and the general energy of our steadiness sheet proceed to be a precedence for the group. We’ve got taken a number of steps just lately to enhance our monetary place. First, in October, we retired $18 million of short-term strategic bridge financing that was secured in June of 2020. Second, in November, we borrowed $28 million by a senior secured time period mortgage. Third, throughout December, we secured a building financing mortgage with a principal quantity of roughly $12 million that shall be used to finish the growth of our cultivation and processing facility in Illinois. And at last, through the first quarter of this 12 months, we introduced a definitive settlement for the sale of our Florida operation and a dispensary and cultivation facility in Oregon, which provides appreciable capital to our growth initiatives and considerably reduces our money burn. Just lately, as hashish asset values elevated and our fundamentals improved, we’re intently monitoring the capital markets for alternatives to doubtlessly additional recapitalize our steadiness sheet and decrease our value of capital. Moreover, we proceed our discussions to divest our remaining held-for-sale property in California, Michigan and Oregon. That concludes my ready remarks. And I might prefer to thank the entire analysts and the shareholders to your assist and friendship now we have developed over the previous few years. It has been my pleasure, and I stay up for seeing you once more sooner or later. I’ll now flip the decision again over to Peter for his strategic dialogue and shutting feedback. ——————————————————————————– Filippo Caldini, Acreage Holdings, Inc. – CEO  ——————————————————————————– Thanks, Glen. As we beforehand introduced, Glen will proceed in his position till the tip of March and help with the transition to Steve Goertz. Steve’s intensive expertise as a public firm CFO, experience in advanced transactions and the current expertise within the hashish business make him the perfect particular person to steer Acreage’s finance and accounting capabilities into the long run. Trying ahead, we imagine excellent news for Acreage and our business is on the horizon. 37 states have authorized, medical or adult-use hashish packages, and extra states are contemplating legalization reforms as we converse. On the federal stage, there are very optimistic indicators from Capitol Hill with respect to hashish reform. Latest elections outcomes have been very optimistic for the business and have positively impacted hashish asset values, each in the private and non-private markets. For instance, look no additional than the just lately introduced hashish offers in Florida, together with the sale of our personal noncore Florida operations. The 37 states with authorized hashish packages represents roughly 72% of the whole U.S. inhabitants. I imagine these legislative developments speed up the timing of closing the settlement between Acreage and Cover Progress. Though I can’t predict the timing of the set off occasion, I’m assured the accelerated momentum at each the state and federal ranges will result in federal reform measures obligatory for the set off occasion to happen. Since becoming a member of Acreage in December, a big portion of my time has been dedicated to understanding, refining and executing on our refocused technique. This technique will proceed to evolve because of the altering enterprise and regulatory setting. My #1 precedence is delivering optimistic EBITDA and, in the end, free money circulation to shareholders. To this finish, there are a number of drivers I’m targeted on guaranteeing Acreage achieves sustainable, long-term worthwhile development as shortly as attainable. First, we should proceed strengthening our steadiness sheet. Our capability to execute our technique has been aided by enhancements to our monetary place. We continued bolstering our steadiness sheet by securing long-term decrease rate of interest financing and paying down our short-term excessive curiosity debt. Moreover, we eradicated unfavourable earnings and administration burden by divesting our noncore Florida operation for an combination buy worth of $60 million. Strengthening our steadiness sheet continues to be a precedence, which shall be considerably enabled as soon as we start reporting optimistic EBITDA. Second, we should stay targeted on our 9 core markets and their operational fundamentals. We’ve got a robust enterprise within the very engaging markets of New Jersey, New York and Pennsylvania in addition to our managed entity in Ohio. Acreage has the proper to win in these markets. And with the pending adult-use laws, we’re effectively positioned to drive vital development in each relative and absolute phrases versus our friends for the foreseeable future. We absolutely count on to increase our presence in our 9 core markets, primarily by new dispensary openings and cultivation growth initiatives. . The give attention to our 9 core markets features a dedication to the wholesale channel. We’ve got established a stable operational core in Pennsylvania, Massachusetts and Illinois. We’re working exhausting to speed up our cultivation growth initiatives in Illinois and New Jersey, and we’re additionally exploring alternatives to increase our cultivation facility in New York in preparation for adult-use laws. Presently, our product demand is considerably outpacing our provide, and completion of those growth initiatives ought to enable us to shut the hole and speed up our income development and enhance our margins. Third, we’ll implement a renewed give attention to native and new retailer advertising. Whereas Acreage has traditionally demonstrated a robust capability to provide wonderful merchandise that buyers and sufferers need, with the rise within the variety of aggressive dispensaries, we are going to have to be extra profitable at promotions to allow greater sell-through. Happily, one in all my priorities and successes at corporations like Unilever, Bayer and Pfizer was creating and implementing actions designed to stimulate gross sales development by rising client demand on the level of sale. We’re transferring shortly to implement a cultural and operational shift to speed up gross sales at retail. Fourth, we are going to search for extra methods to leverage our mental property association with Cover. Via this association, we’re leveraging Cover’s data in aggressively constructing out the mandatory capabilities to fabricate, bundle and distribute THC-infused drinks. We plan to launch our THC-infused drinks in California this summer time and Illinois later within the 12 months. I’m very excited in regards to the impending beverage launch and the long-term advantages that it’s anticipated to convey. Fifth, whereas THC will all the time be our main enterprise and core competency, I imagine there is a chance to generate incremental revenues with engaging margins in CBD whereas on the identical time constructing out our core model fairness. We’ll doubtless undertake an asset-light strategy on this business, which we imagine will generate favorable returns on our funding, whereas enhancing the patron consciousness and fairness of the Botanist model. Lastly, we are going to guarantee our group has an applicable company footprint and price construction to responsibly drive the corporate ahead. In truth, we just lately took steps to scale back our company value base by extra headcount reductions to drive operational effectivity. Our enhancing operational and monetary fundamentals proceed to validate our refocused technique, as illustrated in our earnings launch final evening. Given the optimistic momentum and enhancing developments in our financials, mixed with our current divestiture of Florida, plus some extra company spending reductions, we count on to report optimistic adjusted EBITDA within the first half of this fiscal 12 months. In closing, I wish to summarize what I imagine are an important themes from at the moment’s name. Our monetary and operational fundamentals proceed to enhance, and we are going to obtain optimistic EBITDA in brief order. We’ve got strengthened our steadiness sheet and our monetary place by our targeted technique centered round our 9 core states. Lastly, now we have an amazing alternative to additional leverage our relationship with Cover Progress, using their huge expertise with each in branding and new product improvement. There’s nonetheless a lot work to do, however Acreage is happy and prepared for the problem. We’ve got an amazing workforce of devoted and passionate workers dedicated to creating Acreage a hit. I wish to thank all our wonderful workers who work so exhausting day by day throughout these very difficult occasions. With that, I’ll now have the operator open the road for questions. ================================================================================ Questions and Solutions ——————————————————————————– Operator  ——————————————————————————– (Operator Directions) First query comes from Aaron Gray with Alliance International. ——————————————————————————– Aaron Thomas Gray, Alliance International Companions, Analysis Division – MD & Head of Client Analysis  ——————————————————————————– Peter, congrats for taking the helm as CEO. And Glen, I might additionally like to supply my finest in your future endeavors. I am positive we’ll come throughout one another. So first query for me, Peter. So I do know it is nonetheless early days for you, however would like to type of hear your ideas. You type of provided a number of the issues in your technique. As you type of seemed to try the group within the first couple of months, simply something you’ve got seen by way of enhancements that you simply see are low-hanging fruit for the corporate? Do you assume it might be improved type of close to time period as you look to hit that concentrate on of profitability within the first half of 2021? After which how you consider that versus the long-term aspirations as you take a look at the completely different elements of the enterprise between type of your core states after which CBD and in any other case. ——————————————————————————– Filippo Caldini, Acreage Holdings, Inc. – CEO  ——————————————————————————– Sure. Thanks, Aaron, for the query. I feel the very first thing once you take a look at the enterprise, now we have a really engaging footprint with our core 9 states. And once you speak about states like New Jersey, New York, Pennsylvania, Ohio, and these are very engaging markets which have vital development potential. And as I discussed within the ready remarks, these are markets the place now we have the proper to win. And a great a part of our focus is basically going to verify we speed up development in these states. And also you’re seeing that with a number of the capital initiatives that I highlighted. We’ll be increasing our cultivation footprint in New Jersey. We count on to have about 190,000 sq. ft of cultivation accessible early in 2022. We are also opening up our third dispensary in New Jersey within the second quarter this 12 months. So — and in addition in Illinois, now we have the cultivation growth as effectively. So it is actually about — within the early days, it is actually about focusing our assets, our organizational capabilities round these core markets. We have made the robust choices previously to type of refocus and divest sure states. Because it pertains to the group, it is talked about in my ready remarks that we took some actions from a company standpoint, and that is actually to drive operational effectivity. We checked out sure roles at a company stage in addition to at a neighborhood stage, outlined all of the duties and whether or not they’re higher suited to be at a company that is extra strategic in nature, or higher suited to be on the native stage, which is far more tactical and primarily based on execution. So from doing that, we’re capable of eradicate some roles and put us in a greater place to execute at a neighborhood stage and actually capitalize on the alternatives now we have in our core markets. ——————————————————————————– Aaron Thomas Gray, Alliance International Companions, Analysis Division – MD & Head of Client Analysis  ——————————————————————————– Okay. Nice. After which second query. I do know you talked about the way you type of shored up your geographic footprint and targeted on these core states. And as we take a look at the present operational setting being state by state, throughout the close to time period, I might love to listen to your ideas by way of the way you’re organising for the potential change in that. You talked about potential modifications on the federal stage. And would like to get your view by way of how quickly you assume that is likely to be and the way you are organising the enterprise round not solely arrange for at the moment’s market, but in addition potential modifications to the place it might possibly not even be state by state within the subsequent couple of years, but in addition have extra of a broader footprint possibly over time and possibly that is one thing that you simply do when you shore up these core states, however I might like to get your opinion as to that as there have been a few of your friends on the market that type of continued to increase over the previous 18 months or so. ——————————————————————————– Filippo Caldini, Acreage Holdings, Inc. – CEO  ——————————————————————————– Sure. So Aaron, our main focus is to actually, as you mentioned, to shore up our presence in our core markets. And I feel lots of that, in an effort to achieve success, it’s a must to be most likely somewhat extra decentralized than centralized. On the identical time, we’re — because it pertains to our company capabilities, we’re completely different ways in which we will make the most of these roles to drive methods and synergies throughout the completely different states. However it’s critically essential in a decentralized mannequin that exists, I imply, each state may be very completely different from a regulatory setting, that you simply do have the native capabilities and ensuring that you simply’re profitable at a neighborhood stage. Actually, in the end, when the time comes when there’s federal permissibility and also you’re working on mainly on a nationwide footprint, the transition shouldn’t be that troublesome. And I feel, as we get to that time and we get near that time, we’ll be able to implement that. Because it pertains to the timing, I feel we have seen, like all people within the business, very optimistic momentum from the legislated footprint, whether or not that is at a state stage and a federal stage. It is fairly troublesome, as you possibly can think about, to foretell when that is in the end going to occur, whether or not there’s laws someday later this 12 months or into subsequent 12 months. We’re not able to foretell the political setting and what occurs from that standpoint. However regardless, Acreage, I feel, is very well positioned with these core 9 states to benefit from any sort of laws change, each at a state stage in addition to at a federal stage. After which lastly, round M&A. Our focus, I feel now we have lots of alternatives to strengthen our place in our core markets, and that is going to be the precedence. It is to not say that we would not take a look at strategic M&A alternatives, and we are going to try this primarily to type of improve a few of our capabilities in our core markets, I feel that might be the precedence. However sooner or later, if there’s a good strategic bolt-on that we might check out, we will surely discover it. ——————————————————————————– Operator  ——————————————————————————– Subsequent query comes from Matt Bottomley with Canaccord Genuity. ——————————————————————————– Matt Bottomley, Canaccord Genuity Corp., Analysis Division – Analyst  ——————————————————————————– Simply questioning in the event you can present somewhat extra coloration on what the market dynamics had been in your portfolio in This autumn over Q3 somewhat bit extra. Certainly one of your friends that reported was noting some COVID headwinds and a few climate patterns that brought about some points during the last 4 to five months right here, simply on getting extra folks as much as shops and a number of the logistical concerns with that. So is that one thing you skilled as effectively? Or are you able to present any commentary on what you noticed in This autumn versus Q3? ——————————————————————————– Glen S. Leibowitz, Acreage Holdings, Inc. – CFO  ——————————————————————————– Peter, would you like me to take that one? ——————————————————————————– Filippo Caldini, Acreage Holdings, Inc. – CEO  ——————————————————————————– Sure, Glen. Thanks. ——————————————————————————– Glen S. Leibowitz, Acreage Holdings, Inc. – CFO  ——————————————————————————– Sure. Thanks for the query, Matt. Sure, in most of our markets, we’re undoubtedly seeing optimistic outcomes, however there are some anomalies, whether or not it is COVID-related or weather-related. We did have a slower This autumn associated to our Oregon property. They’re in places that are extra tailor-made in the direction of evening spots. And with the COVID affect on foot site visitors there, that is what we’re seeing. In case you strip out Oregon, we might have had significantly better store-on-store same-store gross sales development, would have been about 30% versus the 26% that we reported. Moreover, from Q3 to This autumn, we made some strategic choices because it pertains to our wholesale alternatives in Massachusetts, and that was a results of opening these 2 adult-use shops in Massachusetts, so we had been holding again product for anticipation of these retail gross sales actions. So once you — these are the true drivers of what the modifications had been from Q3 to This autumn. ——————————————————————————– Matt Bottomley, Canaccord Genuity Corp., Analysis Division – Analyst  ——————————————————————————– Good. And do you may have some other coloration on form of in-store dynamics, so for shoppers that had been coming into shops or continued clients, simply given the second wave of COVID? We noticed initially there was a little bit of a spike in demand and a few doubtlessly pantry loading. However was that dynamic seen within the second wave? Or had been there completely different takeaways? ——————————————————————————– Glen S. Leibowitz, Acreage Holdings, Inc. – CFO  ——————————————————————————– Because it pertains to the remainder of the platform, we’re seeing development — same-store gross sales development. So we’re not seeing vital pantry loading. We’re simply seeing general development within the enterprise, which is pure because the shops stay open for prolonged — longer intervals of time. We simply — we continued to see extra site visitors and extra sale — retail gross sales within the shops. So I feel the well being of the retail is there. We’re not seeing — we did not see in This autumn any pantry loading or anomalies. It was form of steady-state development as we anticipated. ——————————————————————————– Matt Bottomley, Canaccord Genuity Corp., Analysis Division – Analyst  ——————————————————————————– Bought it. And simply final one for me. Any feedback on the Illinois market, particularly? Certainly one of clearly the extra wholesome markets within the U.S., however we have form of seen some indications of doubtless stock ranges beginning to enhance there. So do you may have any market takeaways from what you guys skilled in This autumn? ——————————————————————————– Glen S. Leibowitz, Acreage Holdings, Inc. – CFO  ——————————————————————————– Peter, do you wish to take the Illinois market? Or would you like me to? ——————————————————————————– Filippo Caldini, Acreage Holdings, Inc. – CEO  ——————————————————————————– Sure. Pay attention, I feel one of many issues that we noticed actually in that market, and I feel Glen talked about that, was the COVID affect. I imply, it is actually, for us, with the West Loop and the placement, it is an excellent location basin the place that enterprise district is. However sadly, with the COVID points and lots of the shutdown, I feel we had been severely impacted. And also you additionally noticed various shops that, once in a while, due to a number of the workers and the COVID affect, a number of the places needed to shut down for a number of days. So I feel, due to that, it type of created a listing construct within the state. I feel, like lots of gamers, we’re battling by that. And I feel I give the workforce lots of same day loans by way of how they handle it, ensuring now we have merchandise accessible for our sufferers and our shoppers. However that, to me, was one of many large drivers for that slowdown in Illinois and, in the end, which goes to lead to elevated stock out there. ——————————————————————————– Matt Bottomley, Canaccord Genuity Corp., Analysis Division – Analyst  ——————————————————————————– Good. A lot appreciated. And good luck, Glen, with the subsequent steps. ——————————————————————————– Glen S. Leibowitz, Acreage Holdings, Inc. – CFO  ——————————————————————————– Thanks, Matt. ——————————————————————————– Operator  ——————————————————————————– Subsequent query comes from Vivien Azer with Cowen. ——————————————————————————– Gerald John Pascarelli, Cowen and Firm, LLC, Analysis Division – VP  ——————————————————————————– That is Gerald Pascarelli on for Vivien. So your 4Q efficiency, margins had been clearly robust, however your wholesale margin was very robust, up about 700 foundation factors sequentially. So any coloration you possibly can present simply by way of the motive force, particularly because it pertains to your wholesale margins? After which possibly some coloration on the sustainability of these margins within the context of what you are seeing within the wholesale pricing setting can be useful. ——————————————————————————– Glen S. Leibowitz, Acreage Holdings, Inc. – CFO  ——————————————————————————– Certain. And simply, Gerald, thanks for the query. And simply to make clear, we do not give forward-looking monetary steering, however I can provide you a bit extra coloration and context on form of how we take a look at our margins and the wholesale marketplace for us. So our expectation is that we’ll be within the mid-50s, 50% vary on gross margin. That is been our driving north star of how we’re aligning our enterprise technique. Our gross margin in This autumn was 46%, which was our highest gross margin within the historical past of the corporate. What you are seeing is the expansion in our wholesale enterprise coming from a few places. We do have productiveness out of our Illinois cultivation facility. We did make a few small growth tweaks to our Pennsylvania location cultivation facility. In order you see, we’re enhancing our wholesale capabilities together with Massachusetts as effectively. So the place now we have these wholesale capabilities, we have been reinforcing and strengthening these talents, and that is what you are seeing come by within the margin enhance. ——————————————————————————– Gerald John Pascarelli, Cowen and Firm, LLC, Analysis Division – VP  ——————————————————————————– Bought it. That is tremendous useful. I will hop again into the queue. Glen, good luck to you in your future endeavors. ——————————————————————————– Glen S. Leibowitz, Acreage Holdings, Inc. – CFO  ——————————————————————————– Thanks, Gerald. ——————————————————————————– Operator  ——————————————————————————– (Operator Directions) Subsequent query comes from Glenn Mattson with Ladenburg. ——————————————————————————– Glenn George Mattson, Ladenburg Thalmann & Co. Inc., Analysis Division – VP of Fairness Analysis  ——————————————————————————– Curious in regards to the — is there any replace or any modifications to the type of timing and schedule for when the assorted managed entities will roll into the dad or mum firm and simply type of how to consider that? ——————————————————————————– Filippo Caldini, Acreage Holdings, Inc. – CEO  ——————————————————————————– Sure. So let me kick this off. And Glen, present any extra. We — one of many — I feel the perfect property or strongest property now we have inside our portfolio is Ohio. And we’re a market chief in that state. It is a very engaging state. And we’re doing an exceptionally good job by way of managing the enterprise there. And we’re going by the method of finishing that transaction and consolidating. We do count on that to occur in 2021, most likely within the again half of 2021 is what our present estimate is round that. Glen, some other add-ons to that from the opposite states? ——————————————————————————– Glen S. Leibowitz, Acreage Holdings, Inc. – CFO  ——————————————————————————– Sure. And simply to make clear, what Peter was saying is we’re all the time topic to regulatory approval. In order that’s why we won’t give particular timing on transition of a number of the property, Glenn. So the expectation is sooner or later on this 12 months by regulatory approval these shall be — the Ohio property shall be consolidated. The one replace is in Maine. We did obtain an adult-use license in 1 retailer in Maine, so that’s now consolidated. There may be nonetheless an ongoing matter with the state on the medical license, however there is not any outlined time line or alternative for the medical use in Maine at this level. However as quickly as there may be definitive time line, we will actually inform everybody on that timing. And New Hampshire doesn’t have a pathway to consolidation. And people are the three managed states, Ohio, the Maine and New Hampshire. ——————————————————————————– Glenn George Mattson, Ladenburg Thalmann & Co. Inc., Analysis Division – VP of Fairness Analysis  ——————————————————————————– Nice. Two extra. One on the Florida sale, and I assume, Oregon as effectively. Are you able to speak about what sort of expense discount we must always take into consideration on an working expense stage for not having to hold these property? ——————————————————————————– Glen S. Leibowitz, Acreage Holdings, Inc. – CFO  ——————————————————————————– Usually, we do not get into particulars on particular person states. Typically, Oregon, we had closed a number of the operations because of productiveness on the cultivation stage. And Florida, once more, we do not give particular indicators on efficiency for the precise state stage. ——————————————————————————– Glenn George Mattson, Ladenburg Thalmann & Co. Inc., Analysis Division – VP of Fairness Analysis  ——————————————————————————– Okay. Certain. And simply ideas on, clearly, New Jersey, New York are of great affect to you guys. So might you give an replace on once you’re anticipating grownup rec gross sales to start in New Jersey? I feel most individuals assume it is type of like 4Q, however simply get you guys’ tackle it. After which the way you assume the method goes in New York? And what your confidence stage is that they will get it achieved type of like this time round as they’ve tried a number of occasions previously? ——————————————————————————– Filippo Caldini, Acreage Holdings, Inc. – CEO  ——————————————————————————– Sure. So I feel New Jersey might be somewhat little bit of a extra clear path than actually New York. The Governor Murphy signed the invoice just lately, so I feel we’re on our manner. We additionally imagine that realistically for grownup use in New Jersey can be round This autumn, doubtlessly slip into Q1. It actually relies upon by way of the Hashish Regulatory Fee by way of ensuring that they get the rules on the market. As I discussed earlier than, we’re very effectively ready and effectively positioned when that state does convert to grownup use. We’ll have our third dispensary up and operating in Q2 after which additionally round lots of the cultivation initiatives we count on to be accomplished the start of 2022. Because it pertains to New York, I imply, I feel that is somewhat bit murkier image. I feel there’s lots of discussions happening between the Governor’s workplace and the legislature. I feel it is also made somewhat bit tougher contemplating the present scenario for the governor. However I feel our present pondering, and that is actually topic to lots of change, might be realistically early 2023, doubtlessly within the again half of 2022. However I feel there’s lots now we have to know, and I feel lots goes to evolve within the coming months. ——————————————————————————– Glenn George Mattson, Ladenburg Thalmann & Co. Inc., Analysis Division – VP of Fairness Analysis  ——————————————————————————– Nice. And Glen, good luck going ahead. ——————————————————————————– Glen S. Leibowitz, Acreage Holdings, Inc. – CFO  ——————————————————————————– Thanks, Glenn. ——————————————————————————– Operator  ——————————————————————————– And this does conclude the convention name for at the moment. It’s possible you’ll now disconnect.