Ladies and gentlemen, thank you for standing by, and welcome to the Verano Holdings Full Year 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you'll need to press star one on your telephone. If you require any further assistance, please press star zero. I'd now like to hand the conference over to Mr. Aaron Miles, Head of Investor Relations. Please go ahead.
Thank you for joining us today, and welcome to Verano's Full Year 2020 Earnings Conference Call, our first ever as a publicly traded company. With me today are George Archos, Chief Executive Officer and Co-founder, and Brian Ward, Chief Financial Officer. Earlier this morning, we issued our Full Year 2020 Earnings Press Release. This document has been filed with SEDAR and is available on our Investor Relations website at investors.verano.com. We have also filed on SEDAR the Annual Audited Financial Statements and Management's Discussion and Analysis, or MD&A, for the 12 months ended December 31, 2020, for each of Verano Holdings LLC, Alternative Medical Enterprises LLC, Plants of Ruskin LLC, and Majestic Minerals Inc. Please note, during today's call, we refer to Alternative Medical Enterprises, Plants of Ruskin, and their affiliated companies collectively as AltMed.
Before turning the call over to George, I want to highlight that certain statements made on today's call may contain forward-looking information within the meaning of applicable Canadian securities legislation, as well as within the meaning of the Safe Harbor Provisions of the United States Private Securities Litigation Reform Act of 1995. Such forward-looking statements may include estimates, projections, goals, forecasts, or assumptions which are based on current expectations and are not representative of historical facts or information. Such forward-looking statements represent the company's beliefs regarding future events, plans, or objectives which are inherently uncertain and are subject to a number of risks and uncertainties that may cause our actual results or performance to differ materially from such forward-looking statements, including economic conditions and changes in applicable regulations.
Additional information about the material factors and assumptions forming the basis for our forward-looking statements and risk factors can be found in our MD&A and in Verano's publicly available filings at www.sedar.com. Verano does not undertake any duty to publicly announce any revisions to any of its forward-looking statements or to update or supplement any information provided on today's call unless required by applicable law. In addition, during today's conference call, Verano will refer to non-IFRS financial measures such as EBITDA, adjusted EBITDA, and free cash flow, which do not have any standardized meaning prescribed by IFRS. We believe these non-IFRS financial measures assist management and investors in understanding and analyzing our business trends and performance. Please refer to our earnings press release and MD&A for the calculation of these measures and a reconciliation to the most directly comparable measures calculated and presented in accordance with IFRS.
These non-IFRS financial measures should not be considered superior to, as a substitute for, or as an alternative to, and should only be considered in conjunction with the IFRS financial measures presented in our financial statements. Please also note that all financial information on today's call is presented in U.S. dollars unless otherwise noted. Additionally, unless otherwise noted, the financial information is presented on an IFRS pro forma consolidated basis for each company unless otherwise stated, and all comparisons referenced on this call will be against results for the comparable period of 2019, also on a pro forma consolidated basis. Results of the company on a standalone basis are set out in the financial statements as filed. I'll now turn the call over to George. Please go ahead.
Thank you, Aaron. Good morning and welcome, everyone. Thank you for joining our first earnings call as a public company. Today, I will cover our key achievements to date and then discuss how we are positioning the company to deliver on growth strategy going forward. Then our CFO, Brian Ward, will review our Full Year 2020 Financial Results. And lastly, we'll open up the call to answer your questions. Before we get into the results, I want to take a step back to highlight what we have accomplished to be where we are today as a leading multi-state operator. We may be new to the public market, but we are certainly not new to the cannabis industry. We have maintained a first-mover advantage in many of the states in which we operate, as well as a leading market share.
From the onset, we've leveraged our positive cash flow to build one of the most robust and diverse footprints in the industry, focused on limited license, high-growth markets. We have taken a balanced approach, building our retail and wholesale businesses with a firm belief that we can be a market leader in both. We will continue to maximize our formidable retail footprint while developing and maintaining commensurate cultivation capacity in each of our markets. We are very pleased to now be a public company, which will continue to provide us with access to capital to execute on our growth plan, including organic opportunities within our retail and product portfolios, as well as the pursuit of strategic acquisitions with the goal of being a top-rated operator in all of our active states.
We began trading in February, and our activity since then highlights our ability to execute quickly and effectively in the M&A arena. We have been and will remain disciplined stewards of capital, seeking to add profitable, culturally aligned assets to our portfolio. Subsequent to going public and closing AltMed, we have announced or closed eight acquisitions that have added or will add on a pro forma basis 17 dispensaries, of which 14 are active and 3 planned, and approximately 20,000 sq ft of cultivation. We anticipate all of the announced deals to close by the end of Q2. It all began with the transformational AltMed transaction, which gave us an accelerated footprint in Florida and unlocked Arizona for us as well.
We build on that momentum and continue to deepen our presence in Arizona with Territory, which will add three active dispensaries and a cultivation facility, as well as Emerald and Local Joint, each with one additional dispensary. Upon completion of these deals, our active retail footprint in Arizona will total six dispensaries, making us the third-largest retail operator in the state, plus two active cultivation facilities. We feel strongly that in order to secure a leading position at a national level, it is imperative that we deepen our presence in Pennsylvania. With that, we've been aggressive in the Keystone State, with three of the top-performing dispensaries in Philadelphia to be acquired through the TerraVida acquisition and three of the top-performing dispensaries in Pittsburgh to be acquired with the Healing Center acquisition.
Lastly, we acquired a permit to develop three additional dispensaries, bringing the total number of allowable dispensaries in Pennsylvania to 12, nine of which are already active. We expect to also solidify our position in Ohio following the acquisition of Mad River Remedies, a highly productive dispensary in Dayton. Pending the close of this transaction, anticipated by the end of the second quarter, we will operate five dispensaries, the maximum permitted in Ohio. In Illinois, we announced the acquisition of the Herbal Care Center in Chicago's Medical District, with a plus-one location set to open this month on historic Halsted Street in the city's West Loop. Each of our acquisitions is even more enticing through the addition of talented management with proven leadership qualities. We are very fortunate to keep aligned management with a deep understanding of their markets on board with us going forward.
Their collective experience will add tremendous value as we work to leverage the depth of our portfolio and uncover efficiencies across our footprint. In conjunction with our M&A activity, we've worked to enhance the company's balance sheet and liquidity through strategic capital markets activity. In addition to going public on the CSE, we completed a bought deal private placement of 3.5 million special warrants at a price of CAD 28.50 per special warrant for aggregate gross proceeds of just over CAD 100 million. Each special warrant will convert into a subordinate voting share of the company. This was an important step for Verano, supporting our recent M&A activity. We have also received approval to be quoted on the over-the-counter market, trading under the symbol VRNOF, a very important milestone for us as it gives U.S. investors direct access to invest in Verano.
With all of the activity that I just outlined and in combination with the foundational work that we've done since our inception in 2014, we've built a company that today employs over 2,000 people, has active operations in 11 states with the ability to operate in a total of 14, including nine of the most popular states in the U.S., has established a portfolio of four premium leading consumer brands, and following the close of pending acquisitions, the company will have 73 active retail locations and plans to add 15-20 additional locations by the end of 2021, resulting in one of the largest retail footprints in the industry, as well as 770,000 sq ft of cultivation and processing across eight states upon completion of ongoing expansion. Within our 14-state portfolio, we've identified the following seven states as core markets.
Let's begin with our home state of Illinois, a market that surpassed $1 billion in combined medical and recreational sales in 2020 and is projected to grow considerably over the next five years. More dispensaries are coming online across the state this year, providing incremental revenue growth potential for our wholesale business. In the first half of 2020, we consolidated financials from just one dispensary, adding a second location in July, a third in October, and four more in December. We've also expanded our cultivation capacity to meet rising demand. Moving on to Florida, the AltMed transaction gave us an accelerated top-four position in the state, as well as combining like-minded profitable operators.
In 2020, we expanded our cultivation and processing capacity in Florida to 220,000 sq ft, ensuring adequate supply across our active retail footprint, as well as planning distribution for several new locations that we expect to open this year. After adding 18 new retail locations in Florida in 2020, we ended the year with 29 operating dispensaries, representing 163% growth in our retail footprint year over year. Currently, we have 31 operational dispensaries in Florida and plan to open at least eight more stores by the end of 2021. We've also experienced an upward trend in patient count. More than 120,000 new medical patients visited MÜV dispensaries in 2020, or 260% growth year over year.
The AltMed transaction also provided our entry into Arizona with one active dispensary in Phoenix and a 30,000-sq-ft state-of-the-art cultivation facility that is currently undergoing expansion, adding 60,000 sq ft to the existing structure for a total of 90,000 sq ft upon completion. Subsequent to the AltMed deal, we've made a concerted effort to go deeper in Arizona, one of the most recent states to adopt adult use, which came online earlier this year. As I mentioned, we announced three additional acquisitions, which have added five active dispensaries to our retail footprint, giving us a top-three position in Arizona with six total dispensaries, all in high-profile locations. We will also add, pending the close of the Territory acquisition, a 20,000-sq-ft cultivation facility, bringing our total planned cultivation capacity in Arizona to 110,000 sq ft.
With that, we are confident in our ability to continue to meet increasing demand as the market grows. We see significant growth potential in Arizona, and it will remain a near-term focus for further expansion. Another core focus for Verano is to deepen our presence in Pennsylvania, one of the largest and fastest-growing medical markets relative to active patient count, and one also signaling that it may be poised to transition to adult use. With that, we've pursued opportunities to go deeper in the market, and following the close of our pending acquisitions expected by the end of Q2, our retail footprint in Pennsylvania will stand at 12 dispensaries, nine active and three additional planned. New Jersey is another core market for us in light of adult use passage late last year.
While the market has yet to turn on recreational sales, we have been working diligently to maintain a first-mover advantage with the expansion of our 120,000 sq ft cultivation facility. We expect the expanded facility and the maximum permitted three dispensaries to be completely operational prior to the launch of adult use, which is anticipated later this year. Currently, we have two active dispensaries in Elizabeth and Neptune Township, with our planned third location in Florence Township. Overall, we will work to supply medical patients and recreational consumers once online, as we have done previously in other markets going through adult use transition. Moving on, Maryland is a legacy state for us and has long been a solid contributor to the top line. We have maximized our retail footprint, and our cultivation facility is currently undergoing expansion.
And finally, we've got Ohio, which recently developed into a core market on the heels of maximizing our retail footprint with five dispensaries, pending the close of the Mad River Remedies acquisition, plus an active cultivation facility that underwent expansion in 2020. We believe that Ohio will continue to evolve into a more substantial revenue driver for our business as the market matures. It currently has the seventh-largest population base in the U.S., just behind Illinois and Pennsylvania, and its medical program now counts over 176,000 registered patients. Other developing states in our portfolio include Nevada, where we have two Las Vegas dispensaries online with a third anticipated in Q3, and our cultivation facility is currently undergoing expansion. In Massachusetts, we have two active dispensaries and will look for opportunities to max out our adult use retail footprint by adding a third.
We are also building out a new cultivation facility that we anticipate being online by the end of the third quarter. Michigan and Arkansas, each with one active dispensary, have both been solid contributors for us. And lastly, while we haven't yet identified a definitive plan, we have the ability in West Virginia to build out operations after being awarded licenses for cultivation, processing, and seven dispensaries. Turning to the results from 2020, we have differentiated ourselves by executing a strategy of operational efficiency to drive strong margins and a profitable bottom line. The secret sauce is equal parts people, process, and product. We have dedicated financial and human capital into this strategy, and it's evident in our 2020 results. That said, I'm very pleased to announce top-line year-over-year growth of almost 200%, with revenue of $355 million.
Given the balanced approach to our portfolio, the split between retail and wholesale revenue was approximately 60% and 40%, respectively. On the retail front, new store openings and acquisitions led the way for extremely strong year-over-year growth in 2020 retail revenue. In addition to these synergies, we also generated tremendous organic growth, with same-store sales increasing approximately 80% during 2020. Of note, I'd like to highlight the organic expansion efforts executed on the retail side of our business during Q4. We brought 12 new dispensaries online across four states, with seven of those stores added in December alone. After the majority of our timelines were temporarily halted last year in response to the pandemic, we expect our organic retail expansion from the fourth quarter of 2020 and 2021 year to date to positively influence revenue growth over the next few quarters.
Throughout our retail network, we have implemented new standard operating procedures, which has led to increased throughput. The number of daily visits increased from approximately 1,800 to more than 5,000, with proven efficiency based on same-store daily transaction growth of 60%. We also experienced improved point-of-sale activity in 2020, as our customers spent, on average, around 14% more per basket compared to 2019. Again, given our balanced approach, we drove strong sales growth on the wholesale front, producing over 200% year-over-year revenue growth. We began increasing our wholesale capacity in 2020, which started to show results toward the end of the year and provide a foundation for us to gain market share in strategic states in 2021.
Our strong revenue growth, in combination with our focus on operational efficiency across all active markets, drove positive net income of $60 million exclusive of biological assets and $170 million adjusted EBITDA, or 48% of revenue, which is among the highest margins of any tier-one MSO. Before I turn this over to Brian, I want to again highlight how pleased I am with the progress we've made thus far and reiterate that we are well-positioned to capitalize on the operational momentum built in the back half of last year. At the start of 2020, we set out to strategically deepen our presence across our footprint and gain meaningful material market share. What we have accomplished to date, despite all the obstacles the industry faces, exemplifies our best-in-class ability to execute.
We will continue to emphasize and improve upon delivering an elevated cannabis experience for medical patients and adult use consumers at both the retail level and through our premium product portfolio. At the same time, we're constantly working to identify efficiencies across our operations to continue driving margin expansion and maximize shareholder value. Now, I'm thrilled to introduce Brian Ward, our CFO, to discuss our financial results in more detail. Brian has an extensive financial background that includes experience at publicly traded companies and a Big Four accounting firm. He has been instrumental in building out our finance and accounting functions ahead of our public debut. With that, I'll pass it over to Brian.
Thank you, George. It's a pleasure to speak with you all today.
As one of the most profitable MSOs in the industry, I firmly believe in our strategy and feel confident we will deliver growth for many years to come as we expand our footprint and maximize our presence in the states where we see the greatest opportunities. I'll begin my remarks by reviewing the financial highlights from this last year and then discuss our balance sheet and capital agenda. Please note the financial information is reported on a pro forma consolidated basis for the AltMed acquisition completed on February 11, 2021, in all currencies in U.S. dollars unless otherwise noted. 2020 revenue was $355 million, up 196% year-over-year, driven mainly by growth in Illinois and Florida.
We saw a meaningful contribution from the additional wholesale capacity investments we made during 2020 in expansion across seven facilities, as well as strong growth in retail with same-store sales up 80% in combination with the impact of the contribution from 26 dispensaries opened or acquired throughout the course of the year. Of note, although a large portion of our revenue was generated from Illinois and Florida, which we believe to represent the greatest near-term opportunities for Verano, we're encouraged by the progress we're making in Arizona, Pennsylvania, New Jersey, Maryland, and Ohio heading into the remainder of 2021. On a Verano standalone basis, revenue in 2020 was $229 million compared to $66 million in 2019, an increase of 246%.
Gross profit for full year 2020 on an unadjusted basis, and excluding the impact of biological assets, was $224 million, or 63% of revenue, compared to $51 million, or 43% of revenue in 2019. The strong improvement was driven by a combination of sound expense management, in addition to the contribution of investments made in 2020, which brought additional supply online and retail growth. 2020 SG&A expense was $85 million, or 24% of revenue, compared to $56 million, or 46% of revenue in 2019. We firmly believe that we have industry-leading expense management, which is a testament to our operations teams and their ability to create efficiencies and streamline the business. As demonstrated by our results in 2020, we are efficiently scaling our business and generating operational leverage. Net income in 2020, including the impact of biological assets, was $245 million compared to $10 million in 2019.
Excluding the impact of biological assets, net income was $60 million in 2020. 2020 EBITDA, on an unadjusted basis, was $153 million, or 43% of revenue, compared to $7 million in 2019. After adjusting for one-time expenses related to other expenses, gain from investment and associates, and acquisition-related costs, adjusted EBITDA in 2020 was $170 million, or 48% of revenue, compared to $20 million in 2019. Adjusted EBITDA for standalone Verano in 2020 was $103 million. We are proud of the fact that we have been able to expand our business and make investments in infrastructure, which includes dispensary openings, expansion of our cultivation facilities, along with acquisitions, while maintaining an industry-leading margin. Turning to the balance sheet and cash flows, we ended the year with $31 million in cash and cash equivalents.
Please note this does not include the $100 million raised during our pre-public financing or the CAD 100 million, or roughly $80 million, bought deal private placement announced on February 26. We anticipate continuing to invest in our infrastructure in light of expected market growth. In 2020, our investment in capital expenditures totaled $98 million. Lastly, cash flow from operations in 2020 was $151 million, and free cash flow was $53 million. Before turning it back over to George, I'll just reiterate that we, as a leadership team, are very pleased with our results. Our efforts in 2020 and our continued focus on strategic capital allocation have set the stage for Verano to continue on the path of profitable growth. We have access to the most strategic markets, offering the highest returns on invested capital, and we are executing on our strategy.
Thank you for your time today. I'll now pass the call back to George for final remarks.
Thank you, Brian. I can't help but feel immense pride in the extended Verano family today, recognizing all that we accomplished in 2020, year to date, and 2021. Operational execution remains central to separating ourselves from the pack. We've built a solid foundation and believe that we'll continue to deliver added shareholder value for many years to come. Looking ahead, although we have started to see some upside from the larger initiatives we have undertaken, we expect that the bulk of positive impact from these initiatives will be realized later in 2021. Throughout the second and third quarters of this year, we anticipate that completion of additional organic expansion, in conjunction with our highly accretive acquisitions, will drive incremental revenue growth.
We expect to remain a top-three MSO based on internal projections for 2021 revenue and EBITDA compared to FactSet consensus. And more importantly, we believe we will have one of the highest margins among the tier-one MSOs. With that, operator, you may now open it up for Q&A.
If you'd like to ask a question at this time, please press star and then the number one on your telephone keypad. If you'd like to withdraw your question, press the pound key. First question comes from Matthew Bottomley. Please go ahead.
Good morning, everyone. Congrats on the first reporting period here. And just had a couple of questions to start off here. So I guess one is just given how acquisitive you guys have been since coming to market, just wondering if we can put in context the size of the operations today on a forward basis.
I understand you're not providing 2021 guidance. But if you look at, I guess, the implied run rate coming out of the year pro forma for AltMed, it looks like you guys are about a $450 million run rate company. You've added 17 dispensaries, including different closing dates and different markets opening. Can you give any context of the size of the operations going forward and maybe overall growth as a percentage or some other metric to expect in the next upcoming year?
Good morning, Matt. Thank you for joining the call and great question. I'll defer to Brian.
Yeah, Matt. Great question. And thank you for your time today. As we look at the year, certainly we are still pending close on some of the acquisitions going through regulatory approvals. We have not given guidance for the full year, consistent with most of our large peers.
While we do believe that the acquisitions are highly accretive and are going to lend themselves to a terrific story for the year, at this point, we're not going to give guidance just in terms of where our run rate is, but I think everyone in the investment community hopefully will appreciate the acquisitions that we've announced so far. And I think to that point, I know George commented, we do believe, compared to internal projections, we will be a top-three MSO based on EBITDA and revenue, and that does take into account some of the acquisitions that we've announced thus far. Understood. And then just on the margin profile, so very, very healthy margins here. Clearly, Florida, I think, on the pro forma numbers represents about a third of the business on a trailing basis here for Q4.
Just wondering, over the longer term, where you think a steady-state margin is, as that market clearly is the highest margin geography that we've seen in the space right now. And as you open up in other markets, I'm sure there's going to be initial opening costs and things as you start ramping up in all the other geographies you've entered. So just wondering if you have any sort of goalposts of where sort of normalized margins are, given that you're a pretty solid premium right now to what we're seeing in the group. Yeah, for sure. So we expect our gross profit margin and EBITDA margins to sustain throughout the year. I think the level that we've put out there right now is hopefully normalized. Certainly, we have RTO costs to get through the transaction and glad to be on the CSE and publicly listed at this point.
In addition, you mentioned Florida. Florida is a tremendous market. We continue to invest heavily there, and we're really proud. We opened 12 new stores in the fourth quarter and continue to invest both on the cultivation and retail side, and so we do expect our margin profile to continue very strong throughout this year.
Great. And just last one for me, just on the balance sheet. So it looks like pro forma for all the raises subsequent to coming to market, it's somewhere north of $200 million in cash. You have seven, eight acquisitions here. All of them had a slight cash component. So can you just break down what kind of the net cash remaining is pro forma for your deals?
Maybe how much of that you need for CapEx and what might be kind of rainy day or just funds that could be used to continue to grow the business?
Yeah, of course. So I don't want to give too much of a preview into the first quarter. So we did have $100 million in pre-financing that came through the RTO. We also had $80 million from the private placement bought deal that we did. And so that $180 million is really kind of what we view as our war chest, in addition to the cash that you see on the balance sheet at 1231. Every deal that we go into, we try and find that right balance of cash and stock as different levers. And I think as we sit here today, we're pretty pleased with how the balance sheet looks.
One other thing I want to highlight, we don't have any sale-leasebacks in our portfolio. We own a good portion of our real estate, and we are significantly under-levered compared to our peers. So as we look at cost of capital, both on the debt and equity side, I think we're really excited about where we stand, especially on the balance sheet side.
Okay. That's all for me. Thanks, guys. Thank you, Matt.
Next question comes from Russell Stanley with Beacon Securities.
Good morning and congrats on the results. First question just around Arizona, Pennsylvania. You've been very active there, and there have been some other acquisitions announced in those markets over the last little while. Just wondering what the valuation environment is like in those states now and your level of confidence that you can find additional targets there.
Good morning, Russ. Yeah, that's a great question.
We like to purchase acquisitions in a certain range. All of these targets were highly accretive to the Verano portfolio. We weren't shy that we were going to be active in Arizona and Pennsylvania, both tremendous markets for us, and we're looking forward to additional activity in those markets. We like them both in the near term and long term, and we feel that the numbers we purchased those stores at were very accretive to our base, and we look forward to more there. I'll let Brian comment on some of the numbers, but go ahead, Brian.
Yeah, thanks, George, and great question. I mean, the markets are highly competitive right now. I think as you look at it qualitatively, one of our differentiators is a lot of the targets have been wanting to partner with Verano, and I think it's a differentiator for us outside of just the pure valuation.
Both Pennsylvania and Arizona are highly competitive. There's some tremendous assets in the great markets. So we've certainly come across a fair amount of competition. We do have some internal levers that we measure in terms of maybe a multiple of EBITDA or revenue. And ultimately, for us, we believe we're disciplined stewards of capital, and it comes down to that ROI. And I think all the deals we've announced so far are really win-win for everyone here. So we're excited about the deals we've announced, and we'll continue to be acquisitive and source in those markets and be competitive.
Yeah, the other thing I'd like to mention is the targets that we acquired all come with some of the best teams in those markets. So that's another big point for us is when we look at acquisitions, they fall into two buckets.
Are the founders staying on board, or are they releasing them? The acquisitions that we announced, we just gained some of the best teams within Arizona and Pennsylvania, which will help us in future acquisitions as well as operations.
That's great, caller. Thanks for that. I guess just my other question around the Ohio transaction, you've elevated that market to kind of core market status with that. I'm just wondering, given the other developing markets, which states within that part of the roster could you see as elevating the core market status perhaps this year?
Nevada has been a great market for us for years. We're about to open our third store here in Q3. We're expanding the cultivation there as well. We might look at additional targets within that state. It's a state we've been active in for many years. We know it very well.
We have a good wholesale business there, and that is another state that could become a core focus for us here in the near term.
Excellent. That's all from me. Thanks, and congrats again. Thanks, Russ. Have a great day. Thanks, Russ.
Next question comes from Kenric Tye with ATB Capital Markets.
Thank you. Good morning and congrats, George. Just very quickly, if I could, can we spend a little bit more time and backtrack a bit on Illinois? Obviously, a critical market for you. It's also one where we've all seen the impact of some of the license constraints and challenges through the first quarter. Not a lot of openings. First quarter seems to have been a big step up here in April.
Could you just sort of speak to how that Illinois market has evolved relative to your expectations, how comfortable you are with the new licenses being issued and sort of the clearing of that bottleneck as we look to 2021 in Illinois?
Good morning, Ken. And that's a great question. Obviously, our home state, very proud to be here. This is where we started our business. We're very excited for what's to come in Illinois. We think that last year was just the tip of the iceberg with COVID delays and new licensing, high tourism population, which didn't come into Illinois last year. We believe that we're going to see tremendous growth in 2021 and for many years ahead. We're looking forward to the new 75 social equity licenses coming on board, hopefully this year, pending regulatory approval, which will increase our wholesale business.
We think that we have a very strong position here. We have had that since day one, and we will continue to maintain a top-three position in Illinois for many years to come because we are ready for it. Thank you, George.
To that end, just a quick follow-up on that one. Just with respect to your cultivation footprint in the state, given that expected growth, how comfortable are you and what sort of a focus would Illinois perhaps be for further expansion, or do you think that where you're positioned now and expect to be positioned exiting 2021, that the footprint you have in Illinois can and will continue to support your growth?
We just completed a large-scale cultivation expansion, which we feel will set us up very well for 2021.
And if we see the market ramp ahead of what our expectations were, we'll continue to have cultivation. But for right now, that cultivation expansion is perfect for what we need in 2021 and most likely into the first half of 2022. Correct.
Thanks for the color. And then just one quick final one for me. Florida, obviously, been a hotbed of activity since the whole franchise over the last one, three, and six months. Can you speak to your level of confidence or comfort with your positioning there, your ability to move up the ranks perhaps in terms of share otherwise in there today versus at the time at which you contemplated the ultimate combination? Just trying to get an indication there with some sort of read-through from the competitive intensity we've seen in that market and the number of transactions we've seen go through that market.
Certainly, a focused market for a number of players this year and trying to get a read-through from that. Thank you.
That's another great question. So one of the reasons we picked the AltMed team was their tremendous operational background. They've done an excellent job in Florida being in the top three, top four. We just saw a nice jump in oil sales. We've been working with them very closely to create some efficiencies on that type of business and some new products. We just launched edibles, and we just underwent a large-scale cultivation expansion there as well, which is just completed. We filled those rooms. So we'll see where we stand at the end of the year. We're very confident in that market.
We're going to continue to expand both cultivation and on the retail front and make sure that we're ready for adult use when that comes online, which we feel could be in the next 24 months. So we like that market. We're going to continue to grow. We'll see how we move up in the ranks. That is compensatory with our cultivation expansion. And we hope to do very well there in the coming years.
Thank you. Congrats and good luck. I'll leave it there. Thank you. Have a great day.
Next question comes from Andrew Semple with Echelon Capital Markets.
Hi, and good morning. And congrats on the results team. First question here. I just wanted to ask on M&A. The recent pace has been very impressive. Just wondering how you're feeling about the M&A pipeline as it stands today.
Does that pipeline need to be replenished, or do you feel like you still have identified targets that you can proceed ahead with?
Good morning, Andrew. Another great question. We came out with a very focused M&A strategy. We are still on the same strategy, and we have some other things that we'd like to accomplish during this year. We feel that the assets that we purchased were best in class with best-in-class teams in their respective markets. We're extremely happy with what we've done. And I think you can probably see some more coming from us in the next few months. Again, we only do a deal that's highly accretive. It comes with a great operational team. It's a profitable operation viewed as best in class in that state. That's what we've done with these past eight acquisitions. And I think you'll see more from us.
And we're looking forward to it. We started with AltMed, and we'll see where it ends at the end of the year. But you will see positive results coming from us with these acquisitions. And more importantly, we're adding to our operational bandwidth, which is something that isn't talked about much, but it's very important in this industry. Operational bandwidth and being able to not only acquire these assets, but really make them the most productive assets in the state is highly important to us. And that's the reason we've done so well and the reason we're profitable. And they're all culturally aligned, and we're looking forward to working with these teams. Integration processes have begun on most of these assets, and everything's going extremely well.
Great. Great color on that. If I could also go back to your earlier comments on the business being relatively under-levered.
You own all your key assets and very little debt on the balance sheet as of today. I just want to get your thoughts on target capital structure going forward. What level of debt do you think is appropriate for your business? And can you comment on whether those conversations surrounding debt capital have already started, or are you waiting for the cost of debt to come lower still before you engage there?
Another great question. I'll comment before I pass off to Brian. These are conversations that we have on a weekly basis. Obviously, we like being under-levered. There's a reason we haven't done sale-leasebacks. It maintains our profitability, our long-term viability. But we do look at options on a weekly basis. We have seen debt-level interest rates come down. It is something we might act upon, and we're looking at all of our options.
From there, I'll pass off to Brian. This is more of his department.
Yeah, thanks, Andrew. Certainly, we look at the cost of debt, cost of equity on a regular basis. We're really proud that we did a very tight raise to go through our RTO, and what that's enabled us to do is continue to look at the markets. I think we're seeing downward pressure on debt rates. Certainly, for us, we're relatively new to the capital markets, and so we're always evaluating constantly. It depends on our M&A pipeline, but one thing I want to reiterate: we do generate free cash flow, and we've been putting that money to work ever since this company was started, and that's going to continue to be a core value for us, so I think we continue to look at our leverage ratio.
We look at the M&A pipeline, our CapEx, and certainly have ongoing discussions on both that and equity in the market. So we're constantly evaluating and continuing to find that right balance. I think we're just really pleased where we sit today to have all of these options to evaluate at our disposal.
That's great. Appreciate the color there, and another quick one, if I may. Just with the number of recent stores that have been acquired, just wondering if you could provide a high-level overview of your branding strategy when you make acquisitions. Do you plan to convert these dispensaries to your own store banners, or do you think that the existing stores have brands that resonate with consumers, and you would leave those as is?
I t's a good question, so branding is not of immediate concern.
There's a reason these assets are best in class within their respective states. So it is something that we think about, and it might be something that happens down the line. But right out of the gate, it's more important for us to integrate these assets, work with the teams, continue to build their businesses with what they've done. And it might be something that might happen in the future. But in the near term, we'll leave these assets where they are. Again, integrate with the teams, continue to build, and go from there.
That's all for me. Thanks for taking my questions. Appreciate it. Thank you. Have a great day. Thanks, Andrew.
Next question comes from Neil Gilmer with Haywood Securities.
Yeah, good morning and congrats on the quarter. Maybe I guess I'll just sort of follow up on some of your comments with respect to your M&A.
Try to pick your brain on your philosophy going forward. You've obviously focused most recently in Pennsylvania and Arizona. When you look at the landscape across the U.S., is your focus really on trying to get more deeper into the core markets that you identified, or going into the second half of the year, should we be looking for you guys to sort of branch out and perhaps enter into some new markets? Sort of your philosophy as you take a look at those M&A opportunities.
Good morning, Neil. Another great question. We've been pretty vocal about our M&A strategy. Arizona and PA were key targets for us, as well as some other tuck-ins and Ohio, a couple of other states that we'd like to add some additional tuck-ins as well. We will continue to expand within our 14-state footprint.
We believe that that's where the greatest ROI is for our shareholders. That doesn't mean that we won't look outside of that footprint. If a deal comes across our desk that's, again, highly accretive, it makes sense for our portfolio, we will look at it, and we will transact, again, if that deal fits our portfolio and our team. But first, we have to stick to our strategy, and that is not done yet. So you'll continue to see us be active in some of these key markets. After that activity, we'll look outside of that footprint, but we need to execute on our strategy, which is in front of us today, make sure that we're building the most efficient assets within every state. We're a top-three operator, and that is our core focus currently.
Great. Thanks for that.
And then maybe just my one follow-up would be. I'm going to miss your prepared remarks, so maybe not disclosing it, but have you put out there what your expected sort of CapEx is for 2021? So some of the organic expansions that you're doing in the dispensary openings?
Yeah, good question. I'll let Brian answer that one.
Y eah, Neil. So in 2020, we had $98 million in CapEx. I think what you're going to see is the first half of the year kind of continues on part of that pace. In the back half of the year, we're constantly evaluating based on market equilibrium, where we need investments for new doors and cultivation expansion. So it's kind of a wait and see, at least on the back half of the year. We're really proud.
We've got a lot of expansion going on the cultivation side, and a lot of that is wrapping up here in the near term, in addition to opening a number of new doors. So I think CapEx will continue current trajectory for a couple more months. And then the back half of the year, we'll be kind of a wait and see as we evaluate strategic alternatives or other expansion in key markets. We like to be good stewards of capital, and we build what we need and build what the market can sustain and take a phased approach. So that's kind of where we stand today, and I think we're all pretty pleased with our footprint and our CapEx and continued investment into our business. Yeah. And on that note, we're aggressive where we need to be, and we're stable in other markets that don't require additional expansion.
Okay. Thanks very much. Appreciate it, guys. Absolutely. Thank you.
Last question comes from Eric Des Lauriers with Craig-Hallum Capital Group. Please go ahead.
All right. Great. Congrats on the strong results, guys. I was wondering if you could talk a bit more about wholesale versus retail and just sort of help the investor community understand how you think of the trade-off between sort of maximizing distribution, you're getting your product in as many third-party dispensaries as possible, versus sort of maximizing margins and selling more of your own product through your own retail location. Just sort of any color on how you think of that trade-off would be helpful. Thank you.
Good morning. That was a great question. So when we started our journey in cannabis, we were focused on cultivation and processing. That we viewed that as the most difficult component of this business.
Seven years later, where we sit today, we feel that we are very good at what we do on the cultivation and processing side. A few years ago, we made the educated decision to start really focusing on retail to have a more balanced approach to this business, which we feel for the long term is necessary. So wholesale, still a focus of ours. Also retail, hospitality background. So we always viewed retail as being the easier component of the business. But we're very active in building out our SKUs. We want to make sure that we're on every shelf where it makes sense in every market that we're operating in. So wholesale component of our business is still very strong, but we're building out a balanced approach.
We feel that we're hedging our bet by adding retail, not only being vertically integrated in our markets, but where applicable, we will continue to deploy a very strong wholesale strategy. And that's where we see our near-term and long-term focus.
Okay. Great. That's definitely helpful. And then I suppose sort of on the M&A front, but beyond thinking just sort of geographically, as we think about that wholesale strategy and as you guys look at your product and brand portfolios, are there any brands or product formats, maybe partnerships that you guys are looking at to sort of bolster that wholesale portfolio?
Anything we should be expecting there on the M&A or investment side from you guys, or should we just sort of think of M&A as sort of continuing to go deeper in the markets that you guys are already in and sort of continuing to drive that impressive profitability number? Thanks.
Great question. I mean, our core focus is always to build our brands. Not to say that purchasing a brand in the future, it might be an option that comes our way. It might make sense. But right now, the four brands that we've built, we will continue to deploy those brands in every market where it makes sense. And we will put our marketing efforts and all of our efforts into those brands. Again, everything's on the table. Something might come across our desk in the next few years where it might make sense to purchase a brand.
But today, we have four very strong, recognized brands that we can deploy in all of our markets, and our focus will be within those brands.
Great. Appreciate the color. And congrats again on the strong results.
Oh, thank you. Have a wonderful day.
And at this time, I will turn the call over to Mr. George Archos.
Thank you, Operator. And thank you, everyone, for joining us today. We look forward to speaking again on a Q1 call.
And this concludes today's conference call. You may now disconnect.