Earnings Call: Q2 2021

Aug 25, 2021

Earnings release

Good morning. My name is Donna, and I will be your conference operator today. At this time, I would like to welcome everyone to Jushi Holdings' 2nd Quarter 2021 Earnings Conference Call. Today's call is being recorded. I will now turn the call over to Michael Perlman, Executive Vice of Investor Relations and Treasury. Thank you, sir. Please go ahead. Good morning. Thank you for joining us today for Jushi Holdings, Inc. 2nd quarter the 2021 Earnings Conference Call. Joining me on today's call are Jim Cacioppo, Chief Executive Officer, Chairman and Founder and Kimberly Baumbach, Chief Financial Officer. This morning, we issued a press release announcing our Q2 2021 financial results. To the conference call. The press release along with unaudited financial statements are available on our website under the Investor Relations section and are filed on SEDAR. To the operator. Before we begin, I'd like to remind listeners that certain matters discussed in today's presentation or answers that may be given to questions asked to the operator to discuss the financial statements within the meaning of Canadian and United States securities laws, which by their nature involve estimates, projections, plans, goals, forecasts and assumptions. Actual results to differ materially from those anticipated in these forward looking statements. The risk factors that may affect actual results to our financial results, are detailed in Zhu Xi's annual information form and other periodic filings and registration statements. These documents may be accessed via the SEDAR database. To the call. These forward looking statements speak only as of the date of this call and should not be relied upon as predictions of future events. With that, join. I'd now like to turn the call over to Jim Cacioppo, Chief Executive Officer, Chairman and Founder. Jim? Thank you, Michael, And thank you everyone for joining our call today. I would like to take a few minutes to review the significant progress we've made so far this year, to provide an update on our Q2 performance and review key developments within our operational footprint. I'll then turn it over to Kim to review our financials and then we'll open it up to questions. To start, let's review our Q2 of 2021 results. To the operator. As previously announced, I am pleased to report that our revenue increased 14.6 percent to $47,700,000 to the Q1 of 2021 and increased approximately 220% year over year. To our Q2 sequential revenue growth was driven by higher revenues at the company's Beyond Hello stores in Pennsylvania, Illinois, California and Virginia and increased operating activity at our Pennsylvania and Nevada growing processor facilities. To the call. In addition, we have continued to report sustained positive adjusted EBITDA in the Q2 of 2021. To the call. This was achieved as a result of continued revenue growth across the portfolio, supported by higher gross profit. To adjusted EBITDA was partially offset by an increase in staffing and expansion related expenses as we invested in our growth in advance of new store openings, to the opening of Ohio cultivation and manufacturing facilities and the build out of our Pennsylvania and Virginia growth processor assets. To the operator. I'd also like to highlight some of the operational achievements and progress we've made across utilization. To our shareholders. We continue to execute on our strategy to strategically expand our footprint, including opening our 19th 20th Beyond Hello retail stores, to our next question. Optimizing and expanding our cultivation assets of Pennsylvania and Virginia and entering new markets with our planned acquisition of Nature's Remedy of Massachusetts. To our conference call. In just a minute, we'll address each strategy in more detail in our state level operations update. To the operator. But first, I would like to note that I'm very proud that we have been able to establish a deep and talented management team, the call, which includes some key hires we have recently made. During the quarter, we welcomed Leo Garcia Berg as Chief Operations Officer. To our conference call. Leo will be responsible for driving growth strategies and efficiencies as well as coaching and developing team members across our grower process to our facilities. Liu has already hit the ground running and has begun to introduce what we call Dushi Production Systems or JPS, to our next call, which is based on lean manufacturing principles and has the objective of producing our products in the most efficient way and with the highest standards of quality. To our next question. Under the JPS routine, our teams will focus on eliminating waste, reducing variability of results and adding flexibility to our production systems to match our customers' needs. We are also very pleased to welcome Marina Hahn to our Board of to directors. Marina joins Jussi's Board as an experienced consumer products and marketing industry leader. She has a strong track record of building culturally relevant consumer brands and disruptive new product categories, as well as driving value creation across startups, turnarounds and Fortune 500 corporations. To subsequent to quarter end, we appointed Brendan Lynch as our Executive Vice President of Retail Operations. To. Brendan brings decades of retail experience to Jushi that he refined and developed while working with companies such as Anthropologie, Rudy's Barber Shop, TOMS, to David German and the Gap. He will be responsible for leading Jushi's retail strategies, including overseeing our retail footprint in core markets, to our next call, as well as introducing and expanding in house delivery services. Now let's take a closer look at our U. S. Operations state by state. To the conference call. Let's begin with Pennsylvania. During the Q2, we opened our 12th and 13th medical dispensaries in the Commonwealth of Pennsylvania. To the company. With the opening of these new locations, we have broadened access for more Pennsylvania patients as well as expanded the reach of our newly introduced suite of highly innovative our branded products, the bank, the lab, neuro plus and Seche. We expect to open our 14th Beyond Hello dispensary in Pennsylvania in just a few days and anticipate opening an additional 4 locations for a total of 18 dispensaries by year end. To At the retail level, we remain focused on strong in store staffing and inventory management to improve the patient experience. To We have also partnered with leading Groro Processors to offer more tailored product assortments, focused promotional activity to align our patients' purchasing patterns, to improved in store visual educational tool and have integrated additional technology solutions to streamline the purchasing process. To our next call. We have also implemented local grassroots programs, including sponsoring concerts, festivals and health oriented types of activities, where we look to deepen our relationships with local our community. The success of our in store efforts can be measured by patient reviews. We are and have been for some time one of the top rated cannabis dispensaries in Pennsylvania according to Google reviews. We have also made significant progress redesigning and implementing operational improvement at the approximately 89,000 square foot square and base growth processor facility. We plan to introduce new technologies, including Hydrocarbon Extraction in December 2021, which is expected to increase extraction productivity by 4 times to the next stage and produce a much higher quality product. The redesign and ongoing construction of the Pennsylvania Grove Processor facility to our shareholders, which has had the short term impact on revenue and profitability. To the operator. However, we are making these changes with a long term view and expect these enhancements to result in increased efficiencies and improve long term productivity to the next question as we scale up the facility's operations to meet the inevitable demand associated with an adult use market. To our conference call. When we announced the acquisition of the Pennsylvania Gro Processor last summer, we discussed an expansion to approximately 130,000 square feet. Since then, we have added many parcels of land to our footprint to the operator. And now we are close to being able to expand to over 300,000 square feet. With over 300 the 1,000 square feet of total plant capacity, the initial 89,000 square foot facility will become the center of all operations to the next stage of the year. We will now begin the Q1 of 2019 with a much larger manufacturing and post harvest operation that will support the larger facility. To the call. As reported earlier this year, we commenced Phase 1 of the expansion of the Pennsylvania Groher Processor Facility. To the Q1 of 2020. Phase 1 of the expansion, which is expected to be completed by the Q1 of 2022, will add approximately 40,000 square feet, to bringing the total square footage to approximately 130,000 square feet and total Canopy to approximately 45,000 square feet. To our next question. We expect Phase 2 of our planned expansion to begin in the Q1 of 2022, which would add an additional to the building for a total of approximately 190,000 square feet. Phase 2 of the expansion would increase total Canopy to our Investor Relations website. From 45,000 Square Feet to Approximately 110,000 Square Feet and Increased Biomass Capacity from Approximately to £30,000 to Approximately £70,000 We expect Phase 2 of the expansion to be completed in the Q3 of to 2022. Moving on to Illinois, we are pleased to announce that Jushi's partner to Northern Cardinal Ventures LLC was awarded a conditional retail dispensary license in Illinois via the state's lottery process. The dispensary location is designated for the Peoria Bureau of Labor Statistics region in Illinois and will be beyond Hello's 5th location in the to the operator today. As of the Q2, we operate 4 high performing Beyond Hello retail stores. 2 of those stores are located in Assaget, adjacent to Downtown St. The Blue and Touring Bloomington Normal Metro Area. Revenue in Illinois for the Q2 of 2021 remained robust, to the conference call. Driven primarily by the successful procurement and promotion of in demand adult use and medical products, our Investor Relations, which has led to improved product availability, more tailored product offerings and an improved in store customer experience. To the next question. Also leading to an improved retail customer experience was the introduction of a new host role within each store that is focused on to our existing customers who are looking for a more curated shopping experience. The host is available to walk the customer through the menu, to show them product offer suggestions and roll them into our loyalty program, the Hello Club, if they choose to join. To our Q1 results. This has resulted in improved customer engagement and an increase in loyalty club members and provides a differential in store customer experience. To the replay of the company. Since the rebranding at the beginning of the year, the overall THC membership has doubled with the average to our store 77% more than a non member and spending to 16% more per visit in the second quarter. As we move into the second half of the year, our 2 Sanger locations to should benefit from increased traffic as nearby clubs and entertainment venues get back to 100% capacity, to our next call. While our 2 Bloomington Normal locations should see increased activity as local universities transition back to in person learning this fall. To Virginia. Moving on to Virginia. Let's begin by providing an update on our retail business. In December 2020, we the company. We began serving patients in store at our Beyond Hello Manassas dispensary. Since opening Beyond Hello Manassas, We are focused on driving improved patient experiences by identifying patient needs, reducing wait times and conducting more efficient pharmacist consultations. To our conference call. In the Q2, we introduced a pilot delivery program that serves Beyond Hello Manassas dispensary patients. To the operator. Since rolling out the program, we have seen a meaningful increase in demand for our delivery services. As a result, We expanded the number of days we offer delivery from 3 to 5 days and we will likely expand to 7 days a week as demand for delivery continues to grow. To our next call. We expect to open 1 additional BeyondHalo branded medical dispensary before year end with an additional 4 dispensaries to opening in 2022. The 5 new Virginia locations are expected to be freestanding buildings that range from 7,500 to 10,000 Square Feet, which is about twice the size of our Pennsylvania location. These new stores will be in prime locations, to be conveniently located near highways, have drive thru access and upwards near 50 plus parking spots. To the stores will also feature 15 to 20 or more point of sale stations and a separate delivery vault to our shareholders and shareholders. We are targeting opening to new dispensaries in high density locations like Sterling, Fairfax, Alexandria, Arlington and the Woodbridge area. To the conference call. I would now like to provide an update on our Virginia Squirrel Processor facility. To the company's call. In December 2020, we completed the initial 30,000 square foot build out of the 93,000 square foot vertically integrated facility join us today by Delitzo, LLC, our 100% owned pharmaceutical processor permit holder. To the conference call. In May 2021, we began Phase 2 of the expansion, which is expected to add to the company's approximately 63,000 square feet of cultivation, manufacturing and processing capacity to the next question and should be completed by the Q2 of 2022. At full capacity, the facility will produce approximately to £14,000 of biomass annually. We are also in the design phase of constructing a second to the next phase of the year. We expect Phase 1 of the second building to add approximately 100,000 square feet to the company's annual report and £50,000 of biomass for a total of approximately 190,000 square feet 64,000 to the next 2 years of biomass annually. We expect to be able to complete Phase 1 of the second building by late 2022 to the Q4 early 2023. Phase 2 would add another 65,000 square feet to the facility to 50,000 pounds of biomass production for a total of approximately 250,000 square feet and £115,000 of biomass. Subsequent to quarter end, we announced a series of upcoming launches of cannabis brands and products to the Commonwealth of Virginia, beginning with the debut of our vaporization brand, the LAB and our fused product brand, TAXOLOGY. To the Q1. While it is still early, we have seen meaningful increase in revenue gross profit after watching these two brands within our retail storefront. To our conference call. In September, pending Virginia Board of Pharmacy approval, we expect to launch our award winning flower brand, to the bank and our value flower brand, the Shea in Virginia. In order to understand the potential revenue impact of adding flower to to Florida, we can look to Florida as it offers a glimpse into the potential increase in revenue that Virginia may experience in the months following the launch. To With FLOWLR launching in Florida in Q1 2019, the patient count increased 21% in the Q1 and by 77% in the 1st year. To our Ohio operations. We expect to close on our acquisition of Franklin Bioscience Ohio, the SEC, a licensed medical cannabis processor in Ohio in the coming days. We have also recently launched a series of brands and products to the state to the Q1 of the year. We will begin with the debut of Sachet or Fine Flower line, which is currently available for purchase at partner dispensaries across the state. To the Q and A. We plan to follow the Sachet brand launch with the debut of Tasteology, a brand of premium real fruit cannabis infused gummies and tarts. To our conference call. At the 8,000 square foot processing facility that utilizes CO2 extraction, we plan to introduce our second the next phase of the year, which will allow us to begin production of our first live resin products to the Q1 of 2022, assuming we receive all necessary approvals. At scale, we project that the facility is the company's office, capable of processing over £10,000 of biomass annually. In July, we completed the acquisition to OHAI Grow LLC and Ohio Green Grow LLC, we're collectively OHAI Grow. To OHAI Grow holds a Level 2 cultivation license that allows for an initial 3,000 square feet of cultivation area. To OHAI Grow starts production this month and expects its first harvest by December 2021. OHAI Grow will operate the company's 2,200 square feet of canopy and expects to produce approximately 1500 pounds of biomass annually to start. To the next question. Ohio Gro has the right to apply for regulatory approval necessary to expand the cultivation area, ultimately up to the maximum of 9,000 square feet, to the company, which is expected to produce approximately £10,000 of biomass per year. To the company. These two acquisitions solidify our presence in Ohio and moves Jushi one step closer to full vertical integration within the state. To our conference call. In April 2021, the state's Florida Pharmacy approved the licensing of 73 new dispensaries totaling 130 across the state. The increase in number of dispensaries in Ohio is expected to result in more favorable pricing to the operator for potential acquisition as many of our peers are already at or near the max capacity of 5 dispensaries. To the operator. We are currently evaluating several retail opportunities, including submitting applications and look forward to providing you with an update on our progress in subsequent quarters. To the West Coast and review our California retail operations. During the Q2, we closed on our Palm Springs acquisition to and now operate 2 stores in California, 1 in Santa Barbara and 1 in Palm Springs. We expect to open a 3rd California store in Grover Beach during the 4th the Q1 of 2021 and have moved forward in the merit based application process for a store our Retail and Ancillary Delivery Permit Culver City, California. As a reminder, the Culver City dispensary will be a bespoke ground up build with the expectations for it to open in mid-twenty 22. In Santa Barbara, from an operational perspective, we remain focused on product selection, to the company, which we anticipate completing before year end. Turning to Nevada. In April, our subsidiary completed the the previously announced acquisition of 100 percent of the equity of FVS Nevada. FVS Nevada holds a license to operate cultivation, production and distribution facilities in North Las Vegas. SBS Nevada operates in 1 of 2 company owned 7,500 square foot adjacent the facility and has upgraded the facility with the state of the art indoor double stack cultivation that yields approximately 2,800 pounds of biomass per year. To better serve the Nevada market, we plan to connect the 2 facilities to create a single production space to the operator for a total of approximately 16,600 Square Feet. The expansion is expected to more than double cultivation capacity to approximately £5,500 per year. The expansion is expected to be completed by the Q4 of 2022. To the next question. SBS Nevada has partnered with 3rd party extractors to produce a suite of high quality date products and concentrates to our website under our award winning brand, The Lab, and offer pre packaged flower infused blunts under our award winning brand, The Bank. We have also introduced new products, including edibles under the brand Pathology and Fine Flower and Pre Rolls under the brand Vishay. To the call. Finally, let's review our planned Massachusetts acquisition. In April 2021, to the operator. We entered into a definitive binding agreement to acquire Nature's Remedy of Massachusetts, a vertically integrated single base operator for a total consideration of up to $110,000,000 Nature's Remedy currently operates 2 retail dispensary in Millbury to Kingsborough and a 50,000 Square Foot Cultivation and Production Facility in Lakeville, Massachusetts. To the Lakeville facility's flower canopy encompasses approximately 90,000 square feet, which Nature's Remedy expects to expand to approximately 31,000 Square Feet During the Second Half of twenty twenty one. In addition to the planned acquisition, to the next question. Nature's Remedy is also evaluating further expansion opportunities in the existing Lakeville Industrial Complex as well as on the 10 the company's largest land owned by Nature's Remedy in Crafton, Massachusetts. The Lakesville facility could potentially accommodate an additional 18000 to 20 1,000 to the next 2 years. We are now ready to open the call for questions. Thank you, Steve. Thank you, Steve. Thank you, Steve. Thank you, Steve. Thank you, Steve. Thank you, Steve. Thank you, Steve. Thank you, Steve. Thank you, Steve. Thank you, Steve. Thank you, Steve. Thank you, Steve. Thank you, Steve. To the next question. The 10 acres of land at Grafton could accommodate a 35000 to 40000 square foot facility to the next stage with approximately 18,000 square feet of flower canopy. To our conference in Massachusetts marks the 7th state where we will operate cannabis assets and the 3rd state to the next conference call, where we will have full vertical integration. I'm pleased to report the acquisition of Nature's Remedy to the company's financial results. Although our stock price has declined since the announcement, the company. We expect the acquisition to be as robust as when we announced the deal. We plan to provide more specifics when we close the transaction. To the operator. I would now like to ask Kim to review our financial results for the Q2 before we discuss our 20 our Q1 outlook. Kim? Thanks, Jim, and good morning, everyone. Before starting, as a reminder, the results we'll be going over today can be found in our financial statements and MD and A and our U. S. Dollars. Revenue in Q2 2021 increased the Q1 of 2019. We are now ready to begin the Q1 of 2019. We are now ready to begin the Q1 of 2019. To the call. The increase in revenue was driven primarily by solid revenue growth at the company's Beyond Hello stores in Pennsylvania, Illinois, California and Virginia and increased operating activity at our grower processor facilities in Pennsylvania and Nevada. To our conference call. Gross profit in 2nd quarter increased 9.2 percent to $21,900,000 compared to $20,100,000 in Q1 2021. To the call. The increase in gross profit was a result of higher revenue, partially offset by a decrease in net overall margin due to promotional activity within the quarter. To our next call. 2nd quarter net income was $4,800,000 or 0 point 0 $3 per basic share with net loss per diluted share of $0.09 to the conference call. The $31,600,000 improvement in net income in the Q2 was primarily driven by the gain on the fair value derivative liabilities of $21,100,000 The net loss of $0.09 per diluted share in the 2nd quarter was due to the dilutive effect of the derivative warrants as to the company's financial results. The fair value gain on the derivative warrants is removed from basic earnings to calculate diluted loss, to the Q2 of 2021 with $4,600,000 compared to adjusted EBITDA of $4,500,000 in Q1 2021 as updated for current period presentation. To the call. The increase in adjusted EBITDA was driven by higher revenues and gross profit. As a reminder, we have defined adjusted EBITDA, a non IFRS measure, to our Q and A. As EBITDA before, fair value changes included inventories sold and biological assets, share based compensation expense, fair value changes in derivatives, gainloss on debt and warrant modifications, gainloss on investments and financial assets, to acquisition and deal costs, severance costs, start up costs and gainloss on legal settlements. More information regarding the company's use of non IFRS financial measures can be found in the company's management discussion and analysis for the 3 6 months ended June 30, 2021. To the balance sheet. As of June 30, we had $126,800,000 of cash and short term investments with total current assets of $164,300,000 and current liabilities of $60,200,000 to the call. Net working capital at the end of the quarter was $104,100,000 Our reported cash balance does not include the proceeds we expect to receive pursuant to the approximately $14,000,000 interim arbitration award. The company We've incurred approximately $32,800,000 in capital expenditures during the quarter $41,500,000 year to date. To the operator. We expect to incur an additional $65,000,000 to $85,000,000 in capital expenditures for the remainder of the year, subject to market conditions and regulatory changes, to our Pennsylvania Grocer Processor sale leaseback facility. To the call. As of June 30, the company had $85,100,000 principal amount of total debt excluding leases and property, plant and equipment financing obligations. To the operator. We are in discussions with several potential financing partners to secure funding for retail locations in Virginia as well as our Manassas facility, to the Q2, which we purchased for $22,000,000 in cash earlier in the Q2. In addition, we are also considering further options in the debt facility to fund the to the next portion of acquisitions. Lastly, on August 9, the company announced that all issued and outstanding to the company's Supervoting shares and multiple voting shares of Jushi were converted into subordinate voting shares of Jushi in accordance with the terms of the Supervoting shares and multiple voting shares. To the conference call. The outstanding warrants to acquire super voting shares and multiple voting shares were also converted into warrants to acquire subordinate voting shares without any amendment to the other terms. Following these conversions, there are no super voting shares or multiple voting shares or warrants issued in outstanding. To the company. As of August 20, 2021, the company had 172,400,000 subordinate voting shares. To the conference call. I would like to turn the call back over to Jim to discuss our outlook. Thank you, Kim. Looking ahead to the remainder to the Q4 of the year, we expect to open an additional 7 Beyond Hello dispensaries, add 2 additional dispensaries and the Goral Process our facility in Massachusetts through the acquisition of Nature's Remedy of Massachusetts and continue to build out our Pennsylvania and Virginia Grill Processor facilities, to our conference call, which will fuel our business as we head into 2022. Assuming our Massachusetts to the Q3. We are revising our full year 2021 revenue guidance range to the company's call from $205,000,000 to $255,000,000 to $220,000,000 to $230,000,000 and our 2021 adjusted EBITDA guidance range from approximately to $40,000,000 to $50,000,000 to $32,000,000 to $37,000,000 to the call. The reduction of adjusted EBITDA guidance relates to: 1, the Virginia market developing slower than we initially forecast, to our Q1, mostly due to flower launching in September versus our assumption in July, our to the company's exhibit to a largest store format in Virginia and the timing and regulations associated with the adult use program in Virginia, to the next question, which resulted in new store openings being delayed. 2, reducing the flower room capacity at the existing 89,000 Square the Pennsylvania Roll Processor Facility to accommodate post harvest expansion related to expanding to a much larger the facility that initially anticipated at acquisition in the summer of 2020. And 3, to growth in corporate overhead that reflects the opportunity and challenges of the very significant growth that is associated to the next question and answer session with the upcoming adult use market in Virginia and Pennsylvania, to our Q1, both of which may happen by 2023. Originally, we believed our guidance would have more of a buffer to the next question, including the need for capital for the larger than expected Grohl Processor expansion in Pennsylvania and Virginia as we anticipate an increase in demand resulting from future adult use markets in these two states. To our next question. We believe the most accretive investments we can make today are capital investments in our existing licenses. To our next question. However, we see a very robust M and A pipeline and expect to continue to pursue accretive acquisitions, to our shareholders, including acquiring assets that will allow us to strengthen our positions in existing markets and help us to move closer to our goal of being vertically integrated in all states we operate in. To the next question. We will also selectively enter new limited license states that offer the best risk reward for our shareholders to our Investor Relations team. We are very pleased with our results and our results are to the company's financial results. And these acquisitions also must be immediately value accretive based on our to our Investor Relations website. I'm very pleased with how 2021 developed for Jushi and our setup for what should be industry leading organic revenue and EBITDA growth rates for several years to come. To the call. Lastly, I'm excited to provide full year 2022 guidance. For the full year of 2022, We expect revenues to be between $375,000,000 to $425,000,000 and adjusted EBITDA to be between $110,000,000 to $130,000,000 on an IFRS basis. To our conference call. We have built out a robust, rapidly growing footprint in some of the most exciting markets in our industry and are well positioned to execute on our growth strategy to continue to drive long term shareholder value. To the operator. Thank you again for your time. Operator, please open the call for questions. To the operator. To to the operator for questions. Before rejoining the queue for any additional questions that you may have. Our first question is coming from Russell Stanley of Beacon Securities. Please go ahead. Good morning and thank you for taking my question. Maybe Maybe the first question just around the introduction of 2022 revenue and EBITDA guidance. I think when you originally introduced your 2021 guidance, to the conference call. You provided a bit of a breakdown around how you expect the individual state contributions to contribute. To I'm wondering maybe not exact numbers, but if you can provide, I guess, a bit of similar help around 2022 and how you expect that to look. To Hi, Russell. So thanks for the question. So in terms of the detail in 2020 that to We provided last year in October. I know that we did that guidance in October 1. Last year, we the growth rates were just so tremendous and to We just felt we needed to give people sort of a base of where the company was going market by market. This year, you sort of have to our base we're doing almost $200,000,000 of revenues annualized in the Q2. So we feel like There's enough information out there now and people are feel free to call Michael Pullman, but we don't want to issue guidance that level of detail. Some of our competitors to Don't even issue any guidance and we feel like one of them more disclosive of the large $1,000,000,000 plus companies. So this is our policy and I think last to He was the exception because of the ramp up was so severe. So you can talk to Michael. He can provide try to provide you with more color on different things. To the call. Got it. I appreciate that. And just my second question around the CapEx outlook for H to the next question. To understand part of that is to be covered by the sale leaseback that you made $30,000,000 available back in April. I guess just wondering what you think your net out of pocket CapEx would be in H2 and if you have preliminary thoughts on 2022 at this point? Thanks. To Yes. In terms of CapEx for the rest of the year, the Pennsylvania facility was not fully drawn before we increased it. So we think potentially $35,000,000 to $40,000,000 could get drawn against that, dollars 35,000,000 $40,000,000 And we have to many, many offers on our Virginia real estate. I will point this out. We bought the real estate, the underlying real estate for $22,000,000 to We had about $15,000,000 of CapEx already in that facility when we purchased it and we're putting more in. So if you look at the loan to value of that, It could be quite high. So we haven't done the Virginia financing yet, not because it's not available, but because we've been to the call. Well, we have a robust balance sheet to start and rates are coming down. The credit markets are quite robust. We have to multiple, almost a half dozen sale leaseback proposals with very high loan to value ratios, with a very competitive interest to J. Rice:] And we have term loans from institutions And we have some banks interested or have had some banks interested. So it's a process of us really getting the best long term financing in place to You're keeping in mind the fact that with federal legalization maybe on horizon in the next 12 months, your cost of credit come way down. To So we're really trying to do that as we should to get the best cost of capital for shareholders in Virginia. So when you look at that, most of that capital to the next question. Is in the core processors and almost all of that will be financed at this point, because we already have the equity capital in both to Pennsylvania and Virginia because we've already put that capital out in both places. So most of that will be financed. The The only part that will not be financed over time will be the stores. Got it. Thanks for the color. I'll get back in the queue. To the operator. Thank you. Our next question is coming from Bobby Burleson of Canaccord Genuity. Please go ahead. To the call. Hey guys, thanks for taking my questions. So I guess the first one is just back to the revised 2021 guidance. It sounded like to the operator. You had, like you said, some buffer originally in there that you thought would be made up for with acquisitions to the conference call that you ended up not pursuing. Curious, in 2022, whether or not you've done something similar to the next question. In terms of providing yourselves a buffer that might come from acquisitions and kind of what that how big that buffer is, so we get some sense of to What the organic is versus the inorganic? Great. Thanks, Bobby. Good question. To Yes, we do have buffers in there. First of all, going back to 2021, I'm actually quite proud of our performance relative to what we the guided number. We guided October 1, 2020. So it's almost a year ago. And we've just come in a touch lower on EBITDA, to Mostly for things under our control that we changed what we did and we're kind of towards the middle of the range in revenue. And so I'm quite proud of what we did. To And so, Jushi's policy is to be conservative and lead our projections. We never have withdrawn projections. To We've never had these huge changes in projections, which caused a lot of volatility to shareholders. And so, yes, so there's buffers for acquisitions. To We also we were somewhat conservative on Virginia because it's a new market. So we have some to to our guidance. Great. And then I know that it's hard to really predict this, but based on to the cities that you guys are focused on in that to part of Northern Virginia and what you've seen with stores and other high performing markets. To the operator. What's your sense of kind of how those stores might perform in terms of like do you expect to higher than average kind of store performance in terms of annual revenue in that market. Do you think they'll get there in 2022? To Or is this something that really like we won't kind of get to that run rate into 'twenty three, like maybe comparing to what you're doing in Illinois and some other to really strong markets that you're performing well in. Yes. So in Illinois, we have 2 stores in the Sage area. To the operator. And before the second store was open, we had a medical store, which was underinvested in, not a lot the Q1 of 2019. We'll take our next question from the line of Jamie. Thank you. Thank you. Thank you. Thank you. Thank you. Our next question comes from the line of Jamie. Your line is open. Thank you. Thank you. Thank you. Thank you. Our next question comes from the line of to low 30,000,000 annualized in sales. And then we opened 2nd store and we purposely cannibalized that store and got customers to go to the 2nd store, to So there was less wait. And so those stores are doing mid-20s each. They're about the same. To And by the way, we think they could do more once the clubs open up close to the newer St. J. Store, which we call booth 3. So I think that's a good example of adult use high to Performing Store. I've seen stores that are very well positioned with limited competition in markets that were just opened up doing as much to $50,000,000 So I think these stores can do very, very well. I'm not projecting anything on to a store by store basis, but I think that gives you sort of the high end, which we've experienced to I think a store that was doing way more than it should have because of the 5,000 square feet or 4,000 square feet to And Linda number of POS is set up wrong. The whole thing, we inherited that in an acquisition. So when you look at that to Versus what we're doing at Virginia, I don't see why we wouldn't be at the high end of that range. Okay, great. And I guess the 2021 guidance is predicated on the Massachusetts to Transaction closing and is there how would you handicap that transaction? Is it pretty much just to Going through red tape, are there any kind of real obstacles there? No. We're at the tail end of to the approval processes and for when you get the last approval. We have HSR, Hovsgot Rodino, expired. We've gotten the cannabis control commission, which is the 2 biggies. And then, it's just a matter of getting through the local stuff and then there's some waiting to periods. And then once you say, oh, let's go, there's about a 10 day period for you to actually close it with the lawyers to And our internal people wire money and get all the paperwork finalized. So it's just I think we're going through that very tail end process at the moment to With minimal risk on the regulatory side. Great. Thank you. To the operator. Thank you. Our next question is coming from Kenric Tyghe of ATB Capital Markets. Please go ahead. To the call. Thank you and good morning. Jim, I'd like to just focus in a little more on Pennsylvania. We've seen both yourself and one of your major wholesale focused competitors in the state to In the midst of an expansion taking down rooms or more rooms than were expected, can you sort of speak to to supply demand balance and dynamics in the Pennsylvania market today. Perhaps how much more disruptive to your taking down of those rooms proved in quarter. And then I'll circle back with the follow-up just understanding the Pennsylvania Promotional Market in the context of that supply demand balance. Yes. Thanks for the question, Kendra. Good question. To So, yes, so basically, we inherited this facility through an acquisition, and then we went in there. Originally, we had planned 130,000 square foot is what we announced that to go back to the announcement. We bought some parcels of land to around it, so we were able to do another expansion to 190,000 square feet. So when you do that, the whole flow of the facility changes. To One expansion is on the east side of the building, the other expansion is the west side of the building. So the middle of the building becomes the hub, where people enter, to Employees enter, so that's where you have your lockers and all those types of things. And then that's where manufacturing is and that's where to the post harvest trimming, bucking and all that other stuff that happened. So it was just a matter of taking down rooms to expand manufacturing and post harvest activities, so we could to scale those to what could be a 300,000 square foot facility. And so I'm getting the flow to be the most efficient flow, so we could be a low cost provider for years to come. So that's what happened. I don't think it's major. I think it's minor change. Again, we just were undrawn EBITDA to Lalande, some of that was because we ramped up G and A because we see adult use coming in January. So there's multiple reasons. I don't want to overplay that to call. And so that's why we did that. And in the process, we've also refurbished the grow rooms, Some of the grow rooms that which are coming back online a couple are coming back online in the 3rd and 4th quarters. So we're seeing benefits that were through the, I would say, nadir, the low point of that. To That we're through the, I would say, nadir, the low point of that, for sure. And so I think it's a great long term decision. To And naturally, when we closed the acquisition, we didn't have architects in there. We didn't have this huge to Expansion sort of papered out. So it's natural that something like that may happen and it's relatively minor relative to to what we're doing in terms of the expansion. So in terms of the demand in the market and supply demand, a lot of supply has come on in Pennsylvania, to the Q2. But demand keeps picking up, stores are opening up. There's quite a few more stores opening up. So for instance, Jushi has been sort of on average for the market. I think to We caught up. We may be above average this year because we've gotten really good at it. And we reduced the time in opening stores quite dramatically from what we used to do last year, and we're actually by the way typically on budget or below budget to this year. And so you're seeing stores open up and the GPs open up in very large amounts, to Right. And stores come online in smaller amounts, right, because the stores are much smaller than the GP. So I think you're going to see some balance to the Q1 of next year as more stores open. And people are rushing to open their stores to get set for adult use in Pennsylvania And just because there's no value in a license into great market, a solid license doesn't create any cash flow for our company. So we think all that's happening, to call. And we think the best example for what probably happens in Pennsylvania is Illinois. To And what you saw in Illinois is, as you got closer more closer to adult use, the big role processors, the wealth finance folks, to Built up grow processors in anticipation of adult use and then you had to The worst point was of pricing was in the year before adult use, It was in the 1st 6 months of that year, because that's when the most these things were coming on. In the last 6 months of the year, you tended to see people hold back inventory for adult use, Because you have this 3x demand when it goes to adult use. So I think the low point pricing will be the first to 6 months of next year. It won't be that bad, but who knows, we'll see. And I don't think it will be it's more like maybe 10% to But that's a rough guess and that's not like something we're the world's expert on, supply demand. In the second half of the year, we anticipate to adult use by January 1, twenty twenty three. And second half of the year, you will see people sort of holding back some inventory for the expected pop that you'll get in the Q1 of 2023. That's very clear. Thanks, Jim. Just one Second question for me here. On Virginia, is the delay in sort of flower through the September from July, to Is that medicine that need to be taken and you think potentially net positive for the evolution of the market and the market being able to actually support to what is expected demand and it's a case of taking the medicine now yields dividends for the market and the existing players down the line while everybody to get their houses better in order than they were. Or how should we frame up and think about that the flower delay in Virginia and the readiness of the market to In Virginia, in that context. Yes. I would look at the flower delay, honestly, as a bump in the road, like to a very small bump in the road. You don't have to go to the tire store to get a realignment of your tires if you hit the bump. This is a very small thing. To To sort of nail when regulators are going to do something within a 3 month time frame, I'm actually pretty proud of getting to Within 3 months, I mean the people who are I know people projecting New Jersey beginning of last beginning of this year and middle of this year and 6, 9 months to And some folks who don't have the facilities up and going in New Jersey are going to be 12, 15 months different from what they were saying. So to I actually think we're pretty close. I'm pretty proud of that. And Flower coming into a market in to the market. I cannot stress how important that is for patient counts going up and for to the growth in the market. You saw it in Florida. Patient counts went up, revenues went up quite dramatically in the 1st 9 months. We saw it in Pennsylvania. We have better statistics in Florida, so we actually talked about that in the prepared remarks. But in Pennsylvania, you Saw the same thing and it's 50 typically flowers 50% of the market, 5.0. To And if you're not offering flower in a medical program or then the a lot of people are going to stay in the illicit markets. To That's the bottom line. Great. Thanks, I'll get that. Thank you. Our next question is coming from Brian Cady of Canaccord Genuity. Please go ahead. Hi, Jim. I just wanted to sort of circle back to those numbers you mentioned, to the output in Pennsylvania £70,000 and Virginia 115,000 pounds If I remember in Illinois, to Retail prices was something like $10,000 a pound. So those are pretty big revenue numbers. Can you give us a little more detail on to how that will impact EBITDA going forward? Yes. Thanks, Brian. Yes, good question. To So, yes, I think we tried to be going back to what Russell we tried to provide information so everybody could run their models for the out years, including 2023. We're very positive on 2022 and very confident we're going to hit to our projections that we put out, the guidance. I would note that our EBITDA is increasing in 20 to 2022 from 2021 at a multiple of 4.2x, about midpoint to midpoint, more or less, to 4.2 times. So that's a huge multiple increase in 2022. Super proud of the inflection there. And then in 2023, What we've shown the market is you can do the math there. You can take the 70,000 115,000. To I would look at Illinois as a stock analyst. I used to do that in my early days. I would look at that. And if you do that math, to You'll see that our EBIT because the profitability goes way up for a vertical business, because just I mean, I think most people on this call know this, but to When you're selling to your own retail, right, so let's say we're targeting about 30%, 35 to our own retail from our processors. That's we think that's very achievable. There might be upside to that. To That doesn't count as a sale. That just brings down your cost of goods sold to And all that margins captured in retail. So your margins go way up. And I think our multiple in 2023, to The increase of EBITDA from 2023 excuse me, the increase in EBITDA in 2023 to the conference call. We'll be lower than 'twenty what would happen between 'twenty one and 'twenty two, but it won't be that much lower. It will be a huge uptick, to assuming Virginia and Pennsylvania both go adult use on January by January 1, 20 to 23, which is our base case assumption in our out years. Great. That's very useful. Thanks. To. Thank you. Our next question is coming from Jason Zandberg of PI Financial. Please go ahead. To the operator. Thanks for taking my questions. Just wanted to quickly talk about to California. I know you only have a limited presence there in Santa Barbara and Palm Springs, but just wanted to get your take in terms of to how those stores are performing, either on an absolute basis or relative to your expectations. To the operator. Great. Thanks for the question on California. So California is a market we spend a lot of time in to And relative to time spent, we've done very little. So I would note from shareholder perspective, there's a tendency to For investors or corporate leaders to spend all this time, if they spend so much time, let's just do the deals. It's just all this sunk cost. So we spent years in California. And I think we've gotten real dividends out of it in terms of our branding. If you look at Tasteology, our edibles, to They're on California Quality. And of course, we looked at what's happening in California because they really have some of the best products in the country. To And if you look at people who across the country in the world who buy illicit products, they prefer California stuff and they're very notable. So I think we've gotten dividends on understanding that market. I think technology is probably the biggest example of that. But to our next question. In terms of our view of the market, we've really gone slow to And we've gone slow because the market is somewhat mature and we feel like people the price expectations to for sellers has been too high because the growth is limited. And of course, I laid out the juicy growth for the market to 2020. In 2022, and I gave you some ways to analyze it for 2023, these are industry leading growth rates to On EBITDA and revenue, this is organic growth. This is an acquisition led growth. So I have to give up that used super high growth for fairly to Sure, acquisition. So I have to get something for that. So the answer for you on California is, we've gone slow. The stores were the most COVID affected of all of our stores and continue to be. You see what's going on in the states are doing a recall. And early it's very early. We don't have a lot of data because we just the Santa Barbara store, Palm Springs we're doing it was a great location. It is a great location, but it's a horrible store. We only paid $1,500,000 upfront for it and we have some seller notes that go on forever. So if you discount those back, we didn't pay much for it and we're doing a complete redo of it. To So we're still in a beta stage of understanding California. Early reviews, it's a somewhat competitive market and prices are too high. So we're going to go slow in California, But we have a few deals in the pipeline with some great prospects and great sellers and we think they're going to fit right in and we have 2 more stores opening up. So if we have 4 by the Q2 of next year and we do a couple more acquisitions and then we have a pipeline with 3 or 4 earlier stage, We could get to 10 stores and at that point I'll have more data for you about what we think. It's pretty limited right now. Okay. Fair enough. To Illinois. Just in terms of your retail inventory levels, to the Q2. I know the supply has been tight in that state. Just wanted to get your thoughts and or to what that retail inventory looks like in Q2 and then coming out of Q2 into Q3, if that's possible. To the operator. Yes. Supply, I don't think it's tight anymore in Illinois. We're not finding it difficult to keep to our vault is full. We have the highest amount of inventory. We measure that. We are aware of what we have. To So we actually haven't had a ton of issues for inventory as a company even going back to last year to Because we have good relationships, we pay well, we have this great retail franchise in Pennsylvania. So a lot of those grow to Ourselves in Pennsylvania. So we never really had a problem. Once we managed it correctly last year in the sort of to April, May timeframe, we really got more focused. And I would say that to You're seeing prices come down a bit from the Groro Processors. I would say that's a and the volumes a lot more stores are coming on. So So I think that's not I would say that's not the highest growth portfolio we have in our portfolio. But we're doing really, really well, kind of to Cash Cow for us and growing at a decent pace. That's good to hear. Thanks for your answers. To. Thank you. Our next question is coming from Graeme Kreindler of 8 Capital. Please go ahead. To the call. Hi, good morning and thank you for taking my questions here. I just wanted to follow-up with respect to the guidance, the revised guidance in fiscal to 2022. When looking at the implied EBITDA margin into fiscal 2022 from 2021, the margin is expected to double. And I know, to Jim, you outlined a number of the different expansion initiatives across the various states. With a lot of those projects looking to be completed or phase of those the projects looking to be completed middle of the year towards the end of the year. I'm just wondering what that scaling impact will have for the overall EBITDA margin and particularly to thinking about the gross margin here. Just wondering if you could provide some color on the moving parts and why you're confident in the fact that the margin is going to increase substantially in you. Thank you very much. Yes. Thank you, Graham. So I would say we announced the delay in those projects to 3 months. I think it's coming in at 2 months, because we were conservative. We don't like to get the bad news out fully and all at once. To That was not in our control. That was supply chain stuff, but mostly the AC, to dehumidifiers, all those types of equipment. We've since we were able to mitigate that delay by switching vendors and stuff like that. So we think those to the plant. Those plants are coming on earlier than we had suspected. And I think we're going to I think they'll be finished to Q and A. Early in the year or late this year in Virginia, I think, and we'll be able to plant them and go through that cycle. So they're coming on to the Q2 of 2019. In the first half of the year, and I think you could start to see some of that in early Q2 as flower room sales. To So we think it's well timed for adult use. If you remember what I said about the 1st 6 to the next 6 months of next year being the lower point in prices and then last 6 months being where medical prices go back up because people are holding on to the Investor Day. I think we're well timed for that. So we're very confident in our EBITDA margins. And I point out that if you remember what I said earlier, to You don't we plan to sell at the low end between 30% to 35%, which may be our target. We may work it up over time to our own system. Those sales don't count as sales. It's just so you're actually selling you're actually putting that product into your stores to your cost, which is somewhat 100 of dollars of pounds and you're selling it for 1,000 of dollars of pounds. So your gross margins go way up and your EBITDA margins go way up when you do that. And so that's why our margins are lower to This year, then if you look at the vertically integrated players, because we have retail margins, about 90% of our revenue this year is retail. To Next year, we're getting vertical margins in Pennsylvania and Virginia and our 3rd state is Illinois, which we don't have to on roll processor in, but that would be the only state. But having said that, those are the highest retail margins in the businesses in Illinois, to Because prices are still very high. So having said that, we think our assumptions for next year are conservative. We stand by that. To the conference call. Okay, understood. Thank you for that color. And just as a quick follow-up there, with respect to the amount of owned products and brands that are sold through to or I guess I should say vertically integrated products sold through injushi's network as of today. Can you give any indication of where that stands just to get an idea of to the bridge towards that 30% to 35% mark. Thank you. Yes. So I'll talk about Pennsylvania because Virginia, to We're just getting approvals. You have to go through this regulatory approval process to get your products on the shelves. So we've gotten some on the shelves. They sold out. So Virginia is too early to to the Q1 of 2019. So I would say that in the first half of the year, our sell through compared to our competitors is quite low to Because we have very high retail sales versus what we had in Growe Processor. And the Growe Processor side, there was demand. We're in about 100 stores or so in Pennsylvania, to And the demand for our product was good. So we wanted to get the product in other people's markets. We also used it as a bargaining chip, give them our product, to get more of their product to keep our shelves full because there was some in Pennsylvania this year in the 1st part of the year probably had more problems getting the right product on the shelves for the customers, to the patients than Illinois did. So we were wheeling and dealing and did a great job. The team did a fantastic to the great job of our commercial team. And so now, our focus is changing and we're at about 25% right now, but that's a 3rd quarter thing as opposed to the first half. Okay. Thank you very much for that. That's it for me. Yes. To our next question. Thank you. Our next question is coming from Pablo Zuaneck of Cantor Fitzgerald. Please go ahead. To. Good morning. Luke, just one question on my side. Can you in the case of Virginia, I know we talk about medical flower, but can you talk about to Conditions are being allowed, the complexity of getting a medical card, the process to get a prescription, how often do you have to renew it? And just if you can to and I'll remind you also where you are with patient counts in Virginia. I mean, we're all, of course, looking forward to I will be introduced and totally agree that will boost the market. But I'm just trying to understand in terms of the whole chain, How complex is Virginia and how that may impact the ramp up in sales? Thanks. Yes. Thank you, Pablo. So we're at about to 30,000 patients, which is not too bad and it's actually quite good. Recently, we released to give you a sense of how this works, to We released gummies are very popular there. We released our own gummies, which in our market to the next question. And the patients are happy with the inventory because quite frankly there's only 3 players producing. 1 of them got acquired by a large player who's completely redoing their plants. So their inventory disappeared to Because they basically shut it down it seems to us, and they're completely redoing their grower processor. Of course, they're very focused on adult use. To the next question. And then so there's 2 of us producing, so inventory has been quite short. And our gummies, when we put them on the shelf, sold out 2 weeks, to Similarly, it was a vague. So as we get products onto the market, it stimulates demand. The ticket goes up by the existing patients, more patients come in. To So there's a good base of patients who feel like there's not enough product for them. So I think the market is more inventory constrained to than anything else at the moment. So flower, yes, will be a very good product and we have good inventories of everything. We just need to be able in our to Great. We've just been able to get the regulatory approval and get them on the shelf, which we think is coming, very, very shortly in a matter of days or weeks. To But you never know with the regulators, right? You just don't know. In terms of what you're talking about, in terms of patient access to the cards, to In terms of qualified conditions, Virginia, I would say, is a very good state. It's that's not an issue. To The issue with Virginia has been, it's been a manual process. They've recently opened up online registration. To looking at potential third parties to open up online and streamline the process for registration, because it's taken about 4 or 5 weeks currently for each individual to get their card. Okay. So yes, Michael corrected me. I thought we had got there already. So it's a slow process, but to We are working through improvements. We got about a lot of improvements done in the medical cleanup bill in the Q2 and some of this stuff just needs to get through a regulator who is a pharmaceutical regulator. To So, yes, I think that continues to be something we're working on and it will improve. But to They're aware of the issue. Politicians are aware of the issue. There's a lot of pressure on the regulator to get patients their cards. To John, and one last one. I realize the Nature of Remedy deal has not closed yet, but what are you hearing in Massachusetts about delivery? Because it's not allowed at the moment to for the retailers, right? And I think there's going to be social equity licenses being issued. Some retailers would partner, I guess, with these operators. To What are you hearing in that regard and what are your plans for delivery in Massachusetts? Thanks. To As you said, there's some of the social equity. It's not something that we spend a lot of Hi, Mon, to be quite frank with you because it's such a minimal part of the market. Once we're in the market, we'll begin our sort of government to education and get a part of the effort, the industry effort to help the laws improve. I know that it required 2 people on the car to And that makes it quite a lot less economic. Delivery already is more expensive. If you have 2 people in the car, that makes it a lot more expensive. To So I think we're going to be hopefully a leader in the industry on delivery because of our Virginia experience. We're going to learn to Virginia. We're going to take it to California. We're to We're going to learn in California, we're going to take it to other markets. So we're going slow in delivery because we don't want to to In these beta stages and markets, you don't make a lot of money and you're kind of learning more than anything else. And when it gets to the next question. We'll have the skills in markets where you actually can deliver in a cost efficient way. And Virginia, obviously, to the next question. We have the fruits of right to serve the patient population from 6 stores, so delivery is going to be key. In our projections, we assume we'll generate 30% of our revenues or so from delivery. In Massachusetts, it's just not something that is going to be profitable to We haven't spent a lot of time on that, to be quite frank. Got it. Thank you. Thank you. Our next question comes from Glenn Mattson of Ladenburg Thalmann. Please go ahead. To Hi. Yes, just one quick one for me too. It's been an extensive call, so thanks for all the information. To the call. Just part of the guidance for the back half has always been kind of a return to more normal conditions in the Illinois facilities in Sao Jorge and Bloomington Normal and you guys didn't stick by that today. But to the next question. A lot of it, like you said, is college campuses and a big nightlife scene. Can you just maybe give us some confidence in that None of that has gotten derailed by the Delta variant and just from your guys view on the ground in that very local most very local markets. To the call. Yes. I mean, I would say, it's not like we really ramped up Virginia in our model. So it's more of an upside for us, I think, to So to start with, but I'm less concerned about in person learning because you're not seeing that to the next question. With vaccination rates and Illinois has pretty good vaccination compliance and rules relative to where to In Florida, the Q4 for us, the 3rd or Q4 for us is really based upon opening stores in PA. We have super confidence to our ability to get it done on the construction side. There could be some regulatory delays, but we haven't seen a lot of that. We've only had one instance of that this year. We've opened up a lot of stores in Pennsylvania. To And then I guess, I think the area you're probably more, you asked like the Sanger Nightclubs, I would think that's more risk, to those opening up further due to the Delta variant. And so we'll have to see the Delta variant. It's going to do what it's going to do, and we're not the world's expert. To I would note that, the delta variant hit in the United Kingdom earlier than the U. S. And hit in China earlier than the U. S. In both to the Q2. It has sort of the curves have come way, way down. So there's a lot of expectations for the delta variant to recede in September. I'm not obviously an expert in that. I just look at what's out there. But we're not being aggressive in Illinois, so I'm not too worried about that. To Just quick, a little bit more on the partner lottery process. Just can you give us a reminder of like either how the economics work there or just exactly the relationship between you and the partner in Illinois? So that's a pretty detailed question. I think you're best to Michael will give you a call to talk about that. We've got over here. But it's a great win for us. To We have a great partner. And so we anticipate this being a store that is going to the ownership and stuff. Everything is going to progress over time and very favorable for Jushi and we're very happy about the win. To And by the way, I would point out, I think the more significant part of that, given one dispensary, fantastic to And we have some good economics there. We tend not to get bad deals with Jushi. But that will put us at 5 dispensary. To We're getting calls like all the time from sellers. So for us to go from 5 to 10, it ain't going to be like to It's so hard, it's so expensive anymore. I would point out that if you look at the top companies GTI, Verano, Cresco, Cura, they can't buy anymore. To There's very few of us that combine. There's a lot more dispensary sellers than buyers. So we feel really good about growth there. I would point out that's not in our numbers for 2022. So when we talk about M and A upside, there is a key area right there. And by the way, we expect to Craft Grow. We have an application in for Craft Grow, which we expect them to do at the end of the year to let us know who the winners are. There has been delays there, but we'll see. You never depend on regulators for timing. But we to And similarly, we'll be able to acquire we could acquire 3 of those. They may change the capacities of the craft grows, so you can grow more to That it's initially done. I mean, I think there's an expectation in the market for that. So, we anticipate being vertically integrated, to Whether we do a big deal or we do accumulation of these smaller deals, the accumulation of smaller deals could be at much better value, but the growing processor obviously wouldn't to It will be nearly as large if we did it that way. So, I anticipate being vertically integrated in Illinois, to having the license in place at some point next year and then building it out and all that kind of stuff, which by the way will be great. We have some of the highest performing stores. To keep in mind that 30% to 35% coming from our own facilities, that's going to boost our margins. To So really exciting developments in Illinois for Chusi. Great. Thanks for the color. Thanks, Glenn. To thank you. At this time, I would like to turn the floor back over to Mr. Perlman for closing comments. Thank you for participating on today's conference this call. We look forward to keeping you updated on the advancement of our business on our next call. Have a great day. To the conference call. Ladies and gentlemen, thank you for your participation and interest in Jushi Holdings. You may disconnect your lines at this time or log off the webcast and have a wonderful day.