Good morning. My name is Tanya, and I will be your conference operator today. I would like to welcome everyone to Cronos Group's 2023 first quarter earnings conference call. Today's call is being recorded. At this time, I would like to turn the call over to Shayne Laidlaw Investor Relations. Please go ahead. Thank you, Tanya, and thank you for joining us today to review Cronos's 2023 first quarter financial and business performance. Today I am joined by our Chairman, President, and CEO, Mike Gorenstein, and our CFO, James Holm. Cronos issued a news release announcing our financial results this morning, which is filed on our EDGAR and SEDAR profiles. This information, as well as the prepared remarks, will also be posted on our website under Investor Relations. Before I turn the call over to Mike, let me remind you that we may make forward-looking statements and refer to non-GAAP financial measures during this call. These forward-looking statements are based on management's current expectations and assumptions that are subject to risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements. Factors that could cause actual results to differ materially from expectations are detailed in our earnings materials and our SEC filings that are available on our website, by which any forward-looking statements made during this call are qualified in their entirety. Information about non-GAAP financial measures, including reconciliations to U.S. GAAP, can also be found in the earnings materials that are available on our website. Lastly, we'll be making statements regarding market share information throughout this conference call, and unless otherwise stated, all market share data is provided by Hifyre. We will now make prepared remarks. Then we'll move into a question and answer session. With that, I'll pass it over to Cronos's Chairman, President, and CEO, Mike Gorenstein. Thank you, Shayne. Good morning, everyone. Building off our strategic realignment in 2022, our 2023 strategy is focused on launching innovative borderless products, improving the gross margin of our overall business, and driving costs out of the P&L as we move toward being cash flow positive in 2024. During our last earnings call, we announced an additional $10 million-$20 million in projected OpEx savings in 2023. I'm happy to report that we are tracking towards achieving the high end of this range. This follows our overachievement of savings in 2022 of approximately $29 million versus a target of $20 million-$25 million. James will go into more detail on the financial results during his remarks. I want to comment on the improved trajectory of our gross margin. 2022 was a transformative year for Cronos, which put us on better footing for the future. Given the quarter-to-quarter volatility of our gross margin performance, driven by the timing of certain activities associated with our intended changes at the Peace Naturals campus, we prefer to look at the year in totality. As a reminder, our gross margin for full year 2022 was 13%, but we ended the year in Q4 with a negative 1% gross margin. Turning to Q1, we posted a 12% gross margin on a consolidated basis. Now that we have solidified our decision to stay at the Peace Naturals campus and to reorganize our business to optimize our supply chain, we intend to build on this momentum to have a smoother gross margin that will improve from Q1 performance as the year progresses. We are also keenly focused on margin-accretive innovations to further diversify our product mix into higher-margin derivative products, such as our number one-ranking edibles. In Canada, during the first quarter, we continued to execute our plan to create a robust portfolio of borderless products, highlighted by several new launches across critical categories such as pre-rolls and vapes. Our Spinach brand is the only brand that holds a top 10 market share position in all categories it participates in, which are flower, pre-rolls, vapes, and edibles. Our award-winning Spinach gummies became the number one gummy in Canada in Q1. Spinach completed the quarter with a 15.3% market share in the edibles category, growing retail sales by 49% year-over-year versus category growth of 25%. When focusing on just gummies, Spinach had a 21.9% market share. We are thrilled that our gummies have become an integral part of so many adult consumers' lives and would like to thank them for showing brand loyalty and enthusiasm for our products. Winning in the Canadian edibles category against the top U.S. brands gives us additional confidence that this borderless product platform can win in any market. Despite our strong performance, the edibles category has been negatively impacted by chewable extracts, which are products that purport to take advantage of a regulatory loophole to sell at a higher potency per pack than compliant edibles. Health Canada has recently notified producers that these products are incorrectly classified as cannabis extracts and has announced steps to remove these products from market. For reference, 4 of the top 10 edibles are non-compliant edible extracts, and as a result, we anticipate a more robust back half performance for our edible portfolio. In the vape category, we achieved a 4.4% market share in the first quarter, up 230 basis points year-over-year, climbing to number seven. We will build on that momentum in 2023 with a continued push to include flavor-forward profile and rare cannabinoids in our vapes, driving innovation while leaning on our winning formulations that consumers love across the portfolio. We launched a new Mango Kiwi Haze CBC vape under the Spinach FEELZ brand with 32% THC and 5% CBC. Our CBC gummies performed well in the early innings of their launch in the Canadian market, and we're excited for consumers to try CBC in the vape format. We also introduced our Spinach FEELZ Blackberry Kush THC:CBN vape, which has helped contribute to our outsized 155% growth in retail sales in the category year-over-year in Q1 versus category growth of 22% for the same period. Pre-rolls are one of the fastest-growing categories in the cannabis market. The category increased 38% year-over-year during the first quarter, and infused pre-rolls accounted for approximately 24% of the dollar share in pre-rolls during the same period. Using our success in the edibles category as a blueprint for other formats, Cronos continues to elevate and differentiate the consumer experience by bringing a portfolio of infused pre-rolls to market, utilizing our best-in-class potent genetics, our flavor-forward and terpene-rich formulations, and sought-after rare cannabinoids. In Q1, we launched two new rare cannabinoid-focused pre-rolls, the Spinach FEELZ Mango Kiwi Haze THC CBC pre-roll, and Spinach FEELZ Blackberry Kush THC CBN pre-roll. Since revamping the portfolio last year, Spinach pre-rolls have gained market share, moving up to the 8th most popular brand in Q1, up from 16th in Q4. With the right-based pre-roll portfolio in place and the recent launches of four infused pre-roll offerings, three of which utilize rare cannabinoids, we aim to build off this momentum to drive continued market share gains in this critical category for us. We closed the first quarter by maintaining our number three market share in the flower category, equating to a 5.2% share of retail sales. Flower in the Canadian market continues to be heavily weighted to 28 gram bags, encompassing 9 of the top 10 SKUs. Despite this, we continue to defend market share across pack sizes, leading with our 3.5 gram GMO Cookies SKU and our 28 gram Wedding Cake. GrowCo's performance continued to be strong in Q1. GrowCo reported to us preliminary unaudited revenue of approximately $3.2 million to non-Cronos customers. Additionally, the credit facility that Cronos previously provided to GrowCo currently has $73.2 million outstanding, all in the principal repayment of $0.7 million by GrowCo in Q1. In addition, GrowCo made a $5.5 million interest payment in Q1. The strong financial performance of GrowCo yielding equity pickup, interest payments and loan payback to Cronos is a vital component of our overall financial picture. Turning to Israel, the growth of the medical cannabis industry slowed in Q1, driven by geopolitical factors and government appointment disruptions, which has led to multiple changes in the Health Ministry, causing a slowdown in patient permit authorizations and increased competitive activity. Following recent news from the Israeli Health Ministry, we have renewed optimism about the prospect of regulatory change impacting how medical patients can access cannabis. A government committee recommended that Israel transition to issuing prescriptions via public healthcare services from its current model, which issues personal patient licenses and is a more complex process. The new proposal would enable a more streamlined approach to obtaining a cannabis prescription, potentially increasing patient counts by multiples. As a reminder, the current number of medical patients in Israel is approximately 125,000, or just 1.3% of the population. This compares to certain mature medical markets, such as Florida in the U.S., where 3.7% of the population is approved to purchase medical cannabis. If Israel were to reach 3.7% of their population, that would equate to 346,000 patients, a near tripling of the current market size. This is a realistic scenario we think is possible over the next couple of years, especially given the change would result in a favorable regulatory environment, such as pharmacy distribution in a federally legal jurisdiction. We are confident in the long-term potential of our position in the Israeli market, as it's still one of the world's largest federally legal medical programs today. We have the top-performing brand in the market, Peace Naturals, and we continue to invest for growth in this market. In the U.S., we have nearly completed the transition away from the beauty category and are moving forward by returning Lord Jones to its roots as an adult use brand featuring high-quality cannabinoid products. We are assembling a portfolio of boundless products with strategic infrastructure and global partnerships, combined with an an industry-leading balance sheet, allowing us to execute effectively in any market. With that, I'd like to pass it on to James to take you through our financials. Thanks, Mike. Good morning, everyone. I will now review our first quarter 2023 results in relation to the prior year period. The company reported consolidated net revenue in the first quarter of $20.1 million, a 20% decrease from the prior year period. Constant currency consolidated net revenue decreased by 14% to $21.7 million. The revenue change was primarily driven by lower cannabis flower sales in the rest of world segment and a decline in the U.S. segment due to its strategic repositioning. Consolidated results were additionally impacted by the weakened Canadian dollar and Israeli shekel against the U.S. dollar during the current period. These results were partially offset by growth in cannabis extract sales in Canada. Consolidated gross profit in the fourth quarter was $2.4 million, equating to a 12% gross margin, representing a $4.5 million decline from the prior year period. The decline was primarily driven by a reduced gross profit in the rest of world segment due to lower cannabis flower sales in Israel, an adverse price mix shift in cannabis flower sales in Canada, increased returns, and a reduction in gross profit in the U.S. segment. These results were partially offset by higher cannabis extract sales in Canada with a higher margin profile than other product categories and lower cannabis biomass costs. As Mike mentioned, our results in 2022 were volatile quarter to quarter, driven by the realignment of our business, which makes the comparison on a gross margin line in Q1 difficult. With that in mind, looking at both the full year 2022, where we had positive 13% gross margin, and the sequential progression from Q4, which had a negative 1% gross margin, to Q1 2023, where we had a positive 12% gross margin, you can see encouraging signs of improvement and stability, and we intend to build off this momentum throughout 2023. Consolidated adjusted EBITDA in the first quarter was -$16.8 million, representing a $2.1 million improvement from the prior year. The improvement was primarily driven by a decline in general and administrative and research and development expenses. As Mike mentioned, we're tracking toward the high end of our previously announced $10 million-$20 million in operating expense savings in 2023. Turning to our reporting segments. In the rest of world segment, we reported net revenue in the first quarter of $19.5 million, a 14% decline from the prior year period. Constant currency net revenue in the rest of world segment decreased 7% to $21 million. Revenue change was primarily driven by a decline in cannabis flower sales in Israel due to increased competitive activity, the slowdown in patient permit authorizations, and political unrest. While sales in Canada were impacted by adverse price mix shift in the flower category, driving increased excise tax payments as a% of revenue and increased returns. These results were partially offset by growth in cannabis extracts in Canada, driven by edibles and vapes. Gross profit for the rest of world segment for the first quarter was $2.9 million, representing a $3.8 million decline from the prior year period. The decrease was primarily due to lower cannabis flower sales in Israel, adverse price mix shift in the Canadian flower category driven by the consumer transition to 28-gram bags from 3.5-gram bottles. These results were partially offset by higher cannabis extract sales in Canada, which carry a higher margin profile than other product categories and lower cannabis biomass costs. Adjusted EBITDA in the rest of world segment for the first quarter was negative $10 million, representing a $6.6 million decline from the prior year period. The decrease versus the prior year was primarily driven by a decline in gross profit. Turning to the U.S. segment, we reported net revenue in the first quarter of $650,000, a 72% decrease from the prior year period. The decline year-over-year was driven by a reduction in promotional spending and SKU rationalization due to the strategic realignment of our U.S. business. Gross profit for the U.S. segment for the first quarter was negative $550,000, representing a $760,000 decline from the prior year period. The decrease year-over-year was primarily due to lower sales volumes and increased inventory reserves. Adjusted EBITDA in the U.S. segment for the first quarter was negative $2.9 million, representing a $4.2 million improvement from the prior year period. The improvement versus the prior year was primarily driven by a decrease in sales and marketing and general and administrative expenses. Turning to the balance sheet. The company ended the quarter with approximately $836 million in cash and short-term investments. In addition to maximizing the return on our cash, we received an interest payment on our GrowCo senior secured loan of $5.5 million, which combined with regular quarterly principal payments of $0.7 million for total cash paid by GrowCo to Cronos of $6.2 million in Q1. Having the best balance sheet in the cannabis industry enables us to take calculated strategic bets while we remain steadfastly focused on reducing cash burn. Last year, we made significant strides to reduce spending and improve our cash burn rate. In February, we committed to an additional $10 million-$20 million in savings across OpEx categories in 2023. We are currently tracking towards the high end of that range. Moving to cash flow. Adjusting for the cash outflow of approximately $32.8 million in income taxes payable associated with the one-time Altria warrants relinquishment, free cash flow in Q1 2023 would have been negative $15.7 million, representing a 55% improvement year-over-year. We anticipate recouping most of the tax payment associated with the one-time Altria warrant relinquishment over the next three years. Lastly, we anticipate that cash flow defined as the net change in cash and cash equivalents, excluding the impact of the purchase of proceeds of short-term investments for the remainder of fiscal year 2023, will decline by less than $25 million. The company also expects that cash flow will be positive in 2024. The improved cash flow trajectory will be driven by, among other items, net revenue of $100 million-$110 million for full year 2023, continued gross margin improvement, operating expense reduction efforts, and anticipated interest income of $30 million for the remainder of fiscal year 2023. With that, I'll turn it back to Mike. Thank you, James. We are winning in Canada and Israel due to all the hard work our employees do to bring best-in-class borderless products to market. Our Spinach brand is the only brand that holds a top 10 market share position in all categories it participates in, which are flower, pre-rolls, vapes, and edibles. We are confident that as regulations change, we will be among the best-positioned cannabis companies to capture additional market share in any market. Before getting any questions, I want to level set what is under the Cronos umbrella and where things stand today. We closed Q1 with $836 million in cash and equivalents and 0 debt. We generated $11.2 million in interest income with an anticipation to generate additional $30 million in interest income through the remainder of 2023. Our Spinach brand has the following market share ranks for Q1. Overall, Spinach is the number three cannabis brand and is number one in edibles, number three in flower, number eight in pre-rolls, and number seven in vapes. We have a leading medical brand, Peace Naturals, in Israel, which posted $5 million in net revenue in Q1. We have a 6.3% stake in PharmaCann, one of the largest private U.S. MSOs, currently on our books for $49 million. We have an approximate 10% stake in Vitura, a leading publicly traded Australian medical cannabis provider, worth approximately $13.8 million as of the end of Q1. We own 50% of the equity in Cronos GrowCo, which is profitable and paid a $6.2 million in principal and interest payments in Q1. We ended the quarter with a remaining balance of approximately $87 million on our combined loans to GrowCo and its partners. We own real estate and multiple licensed facilities free from any encumbrances. Last but certainly not least, we have an exclusive partnership with Altria on a global basis. At the close of the market yesterday, Cronos traded at a market cap of approximately $780 million in an enterprise value of approximately -$56 million. With that, I'll open the line for questions. Certainly. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please limit yourself to one question and a follow-up. Please stand by while we compile the Q&A roster. One moment for our first question. Our first question will come from John Zamparo of CIBC. Your line is open. Thank you. Good morning. I wanted to start on Israel and would like some additional color there, apologies if I missed it. I'm curious what it is you think that market needs to do to get back to growth? What is it you're seeing on competition? Historically, you've been somewhat protected versus your peers on the Israeli market because of your brand. I wonder exactly what needs to change to get you maybe more optimistic for the back half of the year in Israel? Sure. Thanks, John. You know, I think the biggest thing that we're seeing in Israel related to competition is it has to do with patient growth. You know, there's been some unrest politically, and that's really stalled a lot of the regulatory process. But there have been announcements, especially recently, on progress for regulations to actually change the way that the prescriptions are issued in which pharmacies are able to carry cannabis. This would essentially move from the kind of special process they have now, where you have to get, you know, all these different steps that are barriers for a patient entering the system, to opening it up to being treated like another controlled substance. You know, like we talked about in the prepared remarks, we could see that really increasing the patient count by multiples. If you think about, you know, look at Q1 last year, you know, we've seen that when there's a favorable regulatory change in Israel, you can see really rapid growth. Given the announcements, all indications are that that is something that can happen this year. We're looking at that, you know, over the next couple of months, you know, thinking more Q4, and I think that would really just open up the entire market and return to what we saw at the beginning of last year in terms of growth. Okay. Understood. My second question's on gross margins, in particular on rest of world. You saw a nice uptick in Q1 versus Q4. I wonder at what point, and maybe we're at the point now, will gross margin in rest of world somewhat stabilize? I assume there's some moving parts with the switch back to Stayner. Obviously, there's a decent amount of fixed costs in that line, you're not able to completely predict it. Are we at the point now where gross margin should somewhat stabilize, or is that likely a back half of the year development? Hey, John. Thanks for the question. You know, I guess to answer, I would say, yes, we're somewhat stable, but we do expect further improvements from here. We're continually optimizing our supply chain, as you highlighted, right? We are evaluating moving certain activities back to Stayner, and so some of those are in process. We would expect further improvements as we see some of those flow through COG. You know, potential margin pickup right throughout the remainder of the year. We're coming back to more of a normalized state versus a lot of the volatility you were seeing in the prior year. Okay. That's helpful. I'll pass it on. Thank you. One moment for our next question. Our next question will come from Andrew Carter of Stifel. Your line is open. Hey, thanks. Good morning. Just wanted to ask first off on the revenue guidance for the year, the $100-$110. I'm getting 19%-34% for the remainder of the year, which looks like its spot rates is 24%-39% constant currency. Could you give us the cadence of phasing? If I heard your answer to John's question right, you don't really expect an improvement in Israel until the fourth quarter. Just help me square all that. Thanks. Andrew, can you maybe reframe the question? Are you talking about when we're expecting the revenue for each period, for each quarter? A little bit. I mean, I'm just, to back up, $100 million-$110 million in revenue for the year, to start there, means the back nine has to grow 19%-34%. That means cost of currency, this is my math, just on spot, 24%-39%. I'm asking kind of what's the phasing of that revenue growth acceleration. Within that, what about If I heard John's question right, Israel doesn't improve till the fourth quarter? Got it. Okay. No, fair. Yeah, we're confident in the revenue guidance of $100 million-$110 million for the full year 2023, right? Driving some of that, you know, back half improvement you've highlighted. We've introduced a meaningful number of new innovations over the last 6 months, but we also have a strong pipeline of innovation launches planned for the remainder of the year to help fuel that additional growth. Right? We also have announced today that we're on track to achieve the top end of our OpEx savings targets, right, for $10 million-$20 million. All of that will work together to drive the overall cash flow improvement. We do expect kind of continued revenue improvements right throughout the duration of the year. Okay. Just to layer on that, I think, you know, when we're talking about Israel and that Q4, that's really for you to see a huge step change in what I think would be meteoric growth, you know, when we're talking about that, we're not relying in guidance on the regulatory change, but we do think it's something that's more likely than not and that we're very optimistic about. Yeah, it would be additional upside. Got it. Then the second, kind of to clarify number one, in 2024, I think you said positive free cash flow. Is that based on current interest rates? I guess going back to your kind of your comments at the end of the script, Mike, you talked about kind of the where the enterprise value is right now. Does that become a hindrance in terms of what you're trying to do here in overall, in terms of having an equity value that's at negative enterprise value, or is it just, hey, you have enough capital to allocate, you're gonna continue to allocate? Or do you feel some kind of impetus to get the shares moving to your direction, obviously helpful for M&A? Thanks. Sure. James, I'll let you go first on on the guidance, and then I can jump to the balance sheet and, you know, where we're positioned. Yeah, sorry. I apologize, Andrew. I'm having a little bit of issues on my line. If you could reframe or restate the guidance question. Yeah, just the cash flow guidance for next year, is that based on current interest rates and kind of your cash flow projections? Got it. No. Interest rates, we definitely are assuming, right, some stability there, right? There's a little bit of flexibility, let me put it that way. We're also assuming, you know, same, you know, qualifying. We're assuming no significant degradation, right, in general economic or regulatory environments, right? I'll say we've got some flexibility on all of those. We're very comfortable with the interest rates. The guidance we've given, you know, is reasonably conservative as well, right? I would say if there's material changes, right, obviously that could impact the guidance. Let me try one more time to be absolutely clear. The positive free cash flow in 2024, is that based on core operations, or does that include an assumption for interest income, kind of similar to how interest income's providing, I guess, $40 million of cash this year? I'll maybe dig in a little bit more, right? We're talking net cash flow, right? It does include interest income. We're saying this is a combination of improved COGS, improved OpEx savings, right, in that $10 million-$20 million range. We're tracking toward the high end, right? Improved top line that we're projecting throughout the year, which we highlighted with the guidance of $100 million-$110 million, right? Obviously the interest would be a significant component of that as well. Thanks. Yeah, to jump in on the second part of your question, Andrew. Look, I don't think that there's a hindrance. I think that, you know, we feel like we have a lot of flexibility. Also, I think it's important and it's time for us to make sure that we're self-sustaining. That's really the, you know, the importance of being cash flow positive for us. You know, that doesn't preclude us. If we see something that's accretive, you know, we will continue to be opportunistic. You know, of course, my preference will always be weighted towards anything that is, you know, is accretive to cash flow. Ultimately, we'll keep turning over, you know, every stone and looking for something that's valued accretive, and not just, you know, relying on interest income. I still think we have plenty of flexibility. Thanks. I'll pass it on. One moment for our next question. Our next question comes from Michael Freeman of Raymond James. Your line is open. Hey, good morning, Mike, James, Shane. Thanks for taking our questions. I wonder given interest payments are becoming or have become an increasingly important part of your Cronos' revenue picture. I wonder if you could just describe your strategy for investing cash and yielding returns from it. Sure. Thanks, Michael. We're constantly looking for how to maximize our return on our available cash. We work with, I'll say, large, stable, top-rated financial institutions, right. Especially in the current environment, right. Then obviously making sure we maximize the return on those. We're looking at vehicles that are typically 1 year or less, right. We implement a laddering strategy, 3, 6, 9, 12-month vehicle, again, with the intent that it's large, stable financial institutions with top rates of return there. All right. All right, great. That's helpful. As a second question, we've seen your rare and cultured cannabinoid portfolio proliferate through your product sets. I wonder, looking ahead a couple of years, what are some underpenetrated products or markets you can see rare cannabinoids playing an important role in? Sure. It's a great question. You know, I think, as you see consumer preferences shift, you know, from flower towards derivatives, I think you're also gonna see more awareness of what those derivative products are, and that's where rare start to come in. You know, I would keep pointing to pre-rolls. You've seen just the general rise in popularity of infused pre-rolls. You'll also notice a lot of our launches include infused pre-rolls. We still think that that is gonna be one of the biggest growth categories over the next few years, one of the best opportunities to differentiate. Similar to what you see in edibles, the further that you get from flower, the more we believe there's an opportunity to differentiate. You know, I think that's gonna be huge. We still have a lot of opportunity across the rest of our portfolio that's, you know, in the formats that are in market today, in terms of edibles, vapes, pre-rolls. Then looking out a few years, I think that there are some interesting things that we'll be able to do with concentrates, you know, which you haven't seen us launch to date, but we're, you know, we do think there's opportunity there. All right. That's great. If you could, if I can just throw in one more. On the given pre-rolls and infused pre-rolls specifically seem to be a area of focus for Cronos, I wonder how you've seen the price action in that market. We've been hearing some talk of price compression. I'm wondering how Cronos is able to how Cronos is going to manage that going forward. Yeah. You know, Look, I think pre-rolls is a very big category, and I think that you're gonna see real segmentation in, you know, how the products develop. I think that, you know, on one end of the spectrum, there is an opportunity to actually have pre-rolls that you can sell cheaper than flower. You know, you aren't gonna be as worried about, you know, making sure that the flower is well managed here because it's going and being processed into a pre-roll. You will have a segment that's more value oriented, that's more about automation. You know, I think on the other end of the spectrum, you get into something that's almost more cigar-like, that is much more premium, that, you know, I think will be at a significant premium to flower. I think it's really about innovation. It's about understanding, you know, exactly what consumer needs you're targeting. That's one of the reasons that, you know, I keep talking about why it's such a big opportunity there. I think you have to make sure that you know exactly where your product fits and have a very narrowly tailored product for that segment in order to win. Okay. Thank you very much. I'll jump back in the queue. One moment for our next question. Our next question will come from Nadine Sarwat of Bernstein. Your line is open. Hi. Morning, everybody. Two questions from me. Can you comment on what you're seeing in terms of pricing in Canada? Any signs of reaching bottom yet, or are those oversupply in the market still being the overriding factor? My second question, you know, you called out the strong market share position that Spinach has developed, especially within edibles. You know, if I look back a couple of years, a lot of people were saying that developing strong brands in cannabis could prove challenging on risks of it being a commoditized category. With the experience you've had in the sector, I'm curious to hear what factors would you say are behind the success of building a brand with strong market share in cannabis. Thank you. Sure. Thanks. You know, I think on the first, what we're seeing, and maybe one of the bigger factors in the price compression isn't solely about supply, but it actually has to do with excise taxes and how they're being paid. What, you know, a trend you've noticed is that a really big portion of the LPs in Canada are actually not paying the excise taxes. I think given their, you know, their capital positions, they're really leveraging that cost avoidance to really further compress prices. I do think one of the things that is needed and that I expect will happen will be, you know, some enforcement on how excise taxes are collected. you know, generally, excise tax reform, I think, is something that's very important and very needed for the industry. We still see, especially on flower, there is compression. you know, on the second part of your question, you know, building a brand, I think it's understanding that it is a product-based focus, that you need to have a different product. We have, in cannabis, consumers that are very, very pro-focused on what are the features the actual product has. It's less about telling a story. It's, you know, at this stage in the industry, it's less about, you know, trying to bring people into a lifestyle and community, given the regulations, you know, that we have in brand building and marketing. For us, you know, the key things there, certainly the effect really, really matters. You know, what's the combination of cannabinoid? I think one of the reasons you see we have strength in edibles, it has to do with that. You know, I think that what we can do, giving different experiences, leading with either CBN or with CBC or CBG as part of that, you know, cocktail, if you will, you know, is a big differentiator, but also flavor. Flavor is extremely important. You know, I think that initial experience, you want it to be something that is enjoyable for consumers. You know, I think most of the brands are really just focused on cost. You know, like any other product, flavor matters, experience matters. Got it. Thank you very much. Yeah. One moment for our next question. Our next question will come from Matt Bottomley of Canaccord. Matt, your line's open. Good morning, everyone. Thanks for the color so far. Maybe just continuing on, Mike, the comments you're just giving on some of the characteristics there. If you take a maybe a further step back and just look at the overall Canadian landscape. It still seems like, you know, it's hard to say, but maybe only 60% of the overall market opportunity if, you know, legalized has been converted over to legal channels. Markets like Ontario and others already have a saturation of retail stores. It just seems like a lot of the regulatory challenges of what you guys are able to do are keeping, you know, some potential future customers, you know, continuing to purchase through illicit channels. Is there anything outside of regulatory changes that you think will get the overall market TAM in Canada, which seems to be, you know, stuck in the $4 billion-$5 billion range for some time now? Look, I think there is. I think that when you think about those regulatory challenges, a lot of those are really holding consumers back on pricing and on value. I think on the more premium side, there are things that you can continue doing. You've seen what we're able to do with sours and with the edibles platform. I think if you're able to come out with a consistent product, something that's higher end, something that has a transparent supply chain, there are consumers that are willing to pay a premium over the illicit market that will come in. I think that's a still a big opportunity. There is a different view. As far as the sort of highest volume consumer, you know, which is probably a bigger part of TAM, you can see what the regulatory change will do. You know, I talked a bit about the chewable extracts doing the marks, and I think what that kind of shows is if you can provide something that's higher potency that, you know, a larger pack size, that's more similar to purchasing habits that a legacy, you know, consumer from a legacy market has, consumers will shift really quickly into the market. You know, I think that making sure that you can combine that when you have a better product and you have something that's, you know, transparent and deemed to be a much safer alternative, that's really important for that conversion. I think, you know, that continues to progress. I think that continuing to make sure that as an industry, you know, and as a company specifically, we're improving our supply chain and we're able to be, you know, more competitive, that is gonna help. You know, I think those are the two main things that will drive it is innovation on the premium end, you know, and potentially with pre-rolls being able to drive more value, and then it'll be the big regulatory change. Okay. Got it. Thanks. Just another question for me is just on your level of interest in some of these U.S. federal headlines. I know SAFE Banking, which is reintroduced and, you know, there's been, you know, dozens and dozens of head fakes in the past. I think, you know, people are looking at it cautiously. You know, how important are those types of headlines to you in decisions to potentially deploy some of your capital? Or do you think it'll have to be something, a more meaningful reform, maybe like what Joe Biden's, you know, White House is trying to do with descheduling altogether? You know, I think that SAFE Banking is really probably. The biggest thing there has to do with just getting progress. You know, I think it's important and it's a sort of a bellwether for sentiment capital markets-wise. As far as what it means big picture, I think it's just showing that we have some type of regulatory catalyst in the U.S. You know, if you think of the big things you need, right? One of the biggest would be 280E reform, right? What you can do as far as getting capital markets, getting some of the larger banks involved, all that would be solved with the, you know, appropriate rescheduling. I think it's an underappreciated and the most significant piece of regulatory, you know, news that we have in the pipeline. That's really what I look towards. I think it's something that's, you know, that's moving. SAFE Banking, you know, I know everyone's focused on it. I'm not gonna make a prediction on whether or not it happens, but I think as currently drafted, it's really more just incremental progress. Okay. Thanks for all that. One moment for our next question. Our next question will come from Victor Ma of TD Cowen. Your line is open, Victor. Hi. Good morning. Victor Ma on for Vivien Azer. Thank you for the questions. First, based on Hifyre data, ex-Quebec, there were some sequential share losses in vapes and edibles. Can you offer any more color on what is driving these trends? Also comment on the defensibility in Spinach's product differentiation. Thank you. Sure. Sorry, I missed the last part of the question. Just comment on the defensibility in Spinach's product differentiation. Sure. Look, I think, I think the biggest thing that we've seen here has to do with chewable extracts. We were, I think, doing very well in defending and, you know, winning against it. Once this announcement was made by Health Canada that essentially, anyone with chewable extracts, I believe it's 4 out of the top 10 SKUs right now, would not be able to sell at the end of May. I think you did see a fair amount of pantry loading, you know, that might continue for a few more weeks. Given that there has been, you know, demand that sort of ramped up for a few weeks, I would expect though, that not only we'll be able to gain that share back in the back half of the year as that inventory is depleted, but also, you know, anything that we might have given up, I think there's more opportunity to gain just with that shift. Looking, you know, longer term as far as defensibility, and I think of it more offensively is, you know, I really do hope that the government takes this opportunity to look and see the world didn't fall apart with, you know, higher potency edibles. It's something that is certainly in demand with consumers. We will be very ready, if there is any change there to be able to put a compliant offering on, you know, the same quality that we have out today. I think, you know, absent regulatory shifts, and we always do take the approach of, you know, making sure our innovation, you know, budget goes into things that are long term, making sure we do things the right way. We do believe that is a big moat, that product differentiation will be there. I think we've been relatively consistent in, you know, defending on the product side and being able to take share. I think it's a temporary blip, and ultimately, you know, the circumstances around the true black extract blip is more bullish for us than, you know, than otherwise. Great. Can you just add some color on the share losses for vapes? I think share was down sequentially as well in that category. Yeah. I think, you know, vapes is probably a little bit more nuanced. It has to do with the, you know, the size of the actual vape cart and potency, which are updates that we made. You know, when you make those updates, you can see relatively small fluctuations, and that has to do a bit with, you know, what the ordering patterns are like and especially when you are doing changeovers. I don't think that there is any trend that I'm concerned about there. I think you'll see that pick back up. Great. Thank you. Just on my second question. On Israel, can you comment on the increased competitive activity over the quarter? Are you seeing more discounting or promo, and how enduring do you think are these competitive activities? Thank you. Sure. Yeah. I think there's been more discounting. There's consolidation similar to, you know, what we've seen in Canada with some of the market participants. You've seen, and you're starting to see more consolidation. You'll see more companies exiting the market. I think that there's a lot less investment capital in Israel than there was in Canada. You're seeing, you know, more companies in Canada look to try to enter Israel. Ultimately this is something that I think we're, you know, we're used to. It's something that I think we can, you know, certainly defend against. I do think the biggest relief and the biggest opportunity is related to a regulatory change. You know, like we've seen in Canada, as there's exits, I think there's opportunity and we've been able to, you know, with our flower products and other innovations, you know, separate and, you know, and take share. It's something we'll continue focusing on in Israel. Great. Thank you for the color. I'll jump back in the queue. This concludes today's conference call. Thank you for participating. You may now disconnect.