Hello and welcome to The Cannabist Company first quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. I would now like to turn the call over to Asia Gilbert. You may begin. Thank you, operator. Good morning, and thank you for joining The Cannabist Company's first quarter 2024 earnings conference call. With me today is Chief Executive Officer David Hart, President Jesse Channon, Chief Financial Officer Derek Watson, and Senior Vice President of Capital Markets and Investor Relations Lee Ann Evans. Earlier this morning, we issued a press release reporting our first quarter 2024 results. A copy of this release is available on the investor section of our corporate website, where you will be able to access a replay of this call for up to 30 days. Certain remarks we make today regarding future expectations, plans, and prospects for the company constitute forward-looking statements within the meaning of applicable Canadian and U.S. securities laws. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, which we disclose in more detail in the risk factor section of our annual Form 10-K for the year ended December 31, 2023, which has been filed with applicable regulatory authorities. Any forward-looking statements represent our views as of today and should not be relied upon as representing our views as of any subsequent date. While we may update any such forward-looking statements in the future, we specifically disclaim any obligation to do so, except as otherwise required by applicable law. Also, please note that on today's call, we will refer to certain non-GAAP financial measures such as EBITDA and Adjusted EBITDA. These measures do not have any standardized meaning prescribed by GAAP and may not be comparable to similar measures presented by other companies. The Cannabist Company considers certain non-GAAP measures to be meaningful indicators of the performance of its business in addition to, but not as a substitute for, our GAAP results. A reconciliation of such non-GAAP financial measures to their nearest comparable GAAP measure is included in our press release issued earlier today. With that, I will turn the call over to David Hart to get us started. David? Thank you, Asia. Good morning, everyone, and thank you for joining us today. We're pleased to discuss the results of the first quarter and, more importantly, share how our team is driving this business forward in 2024 and beyond. As we outlined on our fourth quarter earnings call in mid-March, we've clearly defined our mission for 2024: to build a better company, not just a bigger company. To that end, we've established four key areas of focus. First is enhancing the customer journey for existing medical and adult use customers today, as well as for the new customers of tomorrow as cannabis transitions to adult use in more of our markets. Second is capturing supply chain efficiencies and sweating the retail, cultivation, and manufacturing assets that we've already invested in. We're actively working to leverage the underutilized capacity through wholesale growth and strategic partnerships with third-party brands. Third, we will capitalize on the next chapter of cannabis evolution as Adult Use adoption leads to increasing TAM and the creation of new market segments. Fourth, we will continue to improve our capital structure to ensure our ability to grow responsibly over time. I am pleased to report that we have made and continue to make meaningful progress on each of these initiatives, and we are doing so from the ground up. As I mentioned last quarter, Jesse and I have been actively meeting with our leadership across the retail, cultivation, and manufacturing parts of our business. Those who are on the front line of our operations across the company have the clearest line of sight to what we need to do and what needs to be improved. Some of their ideas are small, some are large, but collectively they are transformational. We are changing the structure of the organization to drive changes efficiently, and we are implementing the systems and software solutions to support greater transparency, connectivity, and generation of insights to help steer the business. We are also making concerted efforts to enhance company culture as we engage the team in this new chapter. As a result, the organization is aligned, empowered, and excited to build a better business, and momentum is building. As examples of our progress, let me highlight a few key developments we achieved in the first quarter, which we view as the green shoots indicative of early progress towards our goals. Regarding margins, we achieved a 500 basis point improvement in adjusted gross margin in Q1 compared to the fourth quarter of 2023 and improved Adjusted EBITDA by more than 250 basis points over Q4. These improvements were driven by asset utilization, improved margins at the retail level, and early wins with brand partnerships. On wholesale, we saw a substantive improvement in wholesale margins as well as a decrease in the overhang from underutilized facilities that we have previously referenced. We launched new strategic brand partnerships in the quarter, substantially broadening our wholesale product offering and increasing the mix of finished goods. On balance sheet management, we completed a convertible debt offering in March in order to satisfy the remainder of our May 2024 maturity. We reduced the principal of our 2025 maturity through an exchange, and we continue to implement cost reduction initiatives at the corporate level. We also completed the exit of a non-core market with the closing of the asset sale in Utah, and we continue to evaluate any underperforming assets in our portfolio. As you can see, we are making meaningful progress across our organization. One of the biggest initiatives is the improvement in our wholesale operation, not only honing it in to run more efficiently but also to run it more profitably by shifting our mix towards finished goods and by partnering with select brands to augment our product offering. In just a few minutes, Jesse will provide more details on our wholesale and partnership efforts. Before that, however, I would like to address the recent reports regarding the potential decision by the DEA to recommend the rescheduling of cannabis to Schedule III from Schedule I. As is likely lost on no one listening to this call, we are witnessing a historic change in policy at the federal level. While the timeline remains uncertain, the rescheduling of cannabis has far-reaching impacts on our industry, undeniably for the positive. With the reclassification to Schedule III and the resulting end of 280E, the entire industry will benefit from a more normative cost structure, substantially lowering our cash tax costs, freeing up capital and cash flow for debt reduction and investment in growth. I have to say, we look forward to shedding the disproportionate tax burden. Derek will address the company's outlook related to 280E momentarily. At the state level, we continue to expect a number of our markets to flip to adult use, such as Ohio, Delaware, and Virginia. We are aggressively positioning ourselves for success in these markets. We also continue to expand in states that have more recently transitioned to adult use, such as New Jersey and Maryland, where we are growing both the wholesale business and our retail footprint. Let me summarize where we are and where we are going. First and foremost, we have a strengthened strategic focus. We are moving fast. We are prioritizing profitability, enhancing cash flow, reducing underutilized capacity, strengthening our balance sheet, and building a sustainable business. We will continue to capitalize on our strategic footprint with a specific focus on evaluating the potential of non-core and less profitable assets. We are leaning into the most profitable markets and those that have future optionality to drive growth. Supporting this effort is a key focus on improving operational efficiencies through better systems and processes, especially in retail and back-of-office functions. In turn, this will drive better financial health through cost reductions and effective capital allocation. Most importantly, we will continue to align our strategies with market demands, focusing on higher margin products and partnerships to drive sustainable shareholder value over the midterm. We look forward to continuously implementing operational improvements into entering 2024 in a materially improved position poised to compete more effectively. With that, I'll now turn the call over to Jesse to give you more color in some of the play-by-play. Jesse? Thanks, David. As mentioned, we are driving to build a better business by empowering our team across the enterprise to implement change, drive efficiencies, improve customer service, drive profitable growth, and partner with the best brands to fully leverage our capabilities in both retail and wholesale. I'd like to spend a few minutes zeroing in on some of our initiatives. First and foremost, our plan is to grow wholesale profitably. What we know to be true and what we have begun to successfully pursue is that we have embedded potential for substantial margin expansion. We are exercising new discipline in wholesale, deferring deals where the economics do not work in our favor. We turned away unprofitable business in Q1, which is evident in the 10 percentage point improvement in wholesale margins over the prior quarter. We are not going to pursue top line at the expense of the bottom line, and we have more margin to go after. We are substantially increasing the mix of finished goods in our wholesale inventory, using both first and third-party brands as finished goods command higher pricing than bulk flower sales. By partnering with strong brands that are in demand, we not only move the product, which we have grown, reducing some of our underutilized capacity, we also expand our margins. As you have seen over the past few months, we have announced partnerships with a number of successful brands. Our collaborations include partnering with Airo Brands in Virginia, West Virginia, Delaware, and Pennsylvania, partnering with Revelry Herb Co. in Massachusetts and New Jersey, with Pennsylvania, Maryland, New York, and Ohio rolling out over the next few months. We're introducing Flower by Edie Parker in six markets: Arizona, California, Colorado, Delaware, Florida, and Virginia, and launching a new line of edibles in Illinois, Massachusetts, New Jersey, and New York. We continue to expand our partnerships launched in the fourth quarter of 2023 with both Old Pal and ButACake. These third-party partnerships are generating positive indicators for our wholesale and retail segments. The substantial mix shift towards finished goods, along with these powerful brands, is creating strong demand from our wholesale partners. Not only are we seeing a shift in mix towards finished goods, we're also seeing new wholesale customers. The partnerships are proving to be an incrementally positive tool in the toolkit for our wholesale teams in the markets where they've launched, and they're driving some incremental foot traffic for retail. We're still in the very early innings, but the green shoots we are seeing today are a leading indicator of what we expect to see in the remaining three quarters of this year as we expand our wholesale strategy, improve retail experience, continue to reduce underutilized capacity, and bring these powerful brands to new markets. With that, I'll turn the call over to Derek to discuss our financials. Thank you, Jesse, and good morning, everyone. I'll provide a summary of the key financial results for the first quarter, discuss trends in our market, and comment on our continuing initiatives to strengthen the company. For the first quarter, we achieved $122.6 million in revenue, down 4.5% sequentially, and a somewhat expected seasonal decrease over the fourth quarter of 2023. As David and Jesse have mentioned, this was achieved with a more disciplined approach to margin improvement in both our wholesale and retail businesses. We continued to see a decrease in retail average basket size, but to a lesser extent than the prior quarter. Wholesale revenue decreased slightly in dollar terms to $15.4 million, representing 12.5% of total revenue in the quarter. However, consistent with our focus on margin improvement, wholesale margins increased 10 percentage points over Q4, and we also saw our retail margins increase two percentage points. This led to adjusted gross profit in the first quarter of $48 million, up nearly 10% over the prior quarter and flat year-over-year. Adjusted gross margin of 39% in Q1 represents a five percentage point improvement over the fourth quarter when we implemented a deliberate inventory reduction strategy, as we highlighted at that time. In the first quarter, we recorded an adjustment of $5.4 million to revalue inventory specifically in the New York market that continues to be negatively impacted by the uncontrolled illicit market. We continue to experience an overhang from unabsorbed overhead in underutilized production facilities, as we've previously discussed, and in the first quarter, that overhang declined to a four point two percentage point impact on gross margin. The improvement in utilization was spread across multiple markets as our initiative stake hold, with the largest contributors being in Ohio, Colorado, and New Jersey. We're encouraged by the improvement in gross margin achieved through price discipline, beneficial changes in product mix, and increased utilization, and see this as an early indicator of solid progress. Adjusted EBITDA in Q1 was $15.3 million, an increase of 22% sequentially, with adjusted EBITDA margin improving to 12.5% compared to 9.7% in the fourth quarter. Cash from operations was -$6.2 million, in part due to the timing of certain interest and other cash payments due in the first quarter, and a $5 million build in gross inventory as we prepared for the launch of our new first- and third-party products. CapEx in the quarter was a little under $1 million, and we expect a continuation of CapEx at these lower levels, averaging around $2 million-$3 million per quarter over the medium term, and primarily supporting new store openings and enhancements to our manufacturing capabilities. No new stores were opened in Q1, and we have 85 active retail locations as of today, having completed the sale of our Utah assets in the quarter. We still have four new retail locations in development, one in Maryland, one in New Jersey, and two in Virginia, in order to reach our maximum license caps in each of these states, and are also preparing for the opening of additional stores in Ohio as that market transitions to adult use. We ended the first quarter with $45 million in cash, boosted by $25.8 million private placements for convertible notes due March 2027, and which generated net cash proceeds of $14.8 million. The primary use of cash proceeds will be to settle the remaining $13.2 million of 13% notes maturing on May 14, 2024. Pursuant to this transaction and the debt to equity transaction announced in January, we also reduced our 2025 convertible note maturity by $15 million in the quarter. The principal remaining on these 6% notes is now $59.5 million, with up to another $15 million potentially converting by the end of June, subject to share price considerations. Our actions to reduce overhead included a corporate reduction in the first quarter, and we continue to assess opportunities to reduce overhead costs to more appropriately match the scale and scope of our operations. We'll continue to target initiatives to improve cash flow, further delever the balance sheet, and reduce interest expense. This may include further divesting of non-core or underperforming assets in the portfolio, all of which are under review, as we've mentioned. Lastly, a comment on 280E and the related tax impact. Although the timing of federal rescheduling remains uncertain, we previously stated that if 280E were to no longer apply, our current annual tax liability would decrease by around $30 million. Separately, we're in the process of pursuing potential tax return amendments and refund claims associated with 280E related to prior tax years and will provide further updates when they're available. Again, I would like to underscore key financial priorities. They remain driving improvements in gross margin, EBITDA, and operating cash flow while proactively managing our balance sheet. In the medium term, we continue to pursue Adjusted EBITDA margins above 20% during 2025. As we've noted, we do not expect the path to be linear. The team remains focused on executing against these goals, and we're encouraged by the green shoots we've described during Q1. With that, let me turn the call back to David Hart for final comments. David? Thank you, Derek. Before we take questions, I want to reiterate that we are making material changes to our business so that we end this year in a much better position competitively and financially. We will see more progress in the coming quarters, which we're encouraged by the green shoots in Q1, which are continuing to grow in Q2. I look forward to taking your questions. Operator, please open the line. Thank you. Ladies and gentlemen, as a reminder to ask the question, please press star one one on your telephone and then wait to hear your name announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Scott Fortune with Roth Capital Partners. Your line is open. Yeah, good morning, and thank you for the questions. Just wanted to dig in and provide a little more color, if you can, on kind of the around the underutilization here. You've made great progress from that standpoint, but just kind of want to get a sense of where you're at overall from your utilization standpoint. And then a follow-on would be to unpack kind of the improved gross margins because of that, but we can follow on after that. But just focus a little bit on the utilization efforts you made and where you can continue to move forward with that. Yep, Scott, good morning. This is Derek. We outlined in the prepared remarks that the overhang from underutilized assets on gross margin is now down to 4.2%. That's down from around 5% that we highlighted in previous quarters. We are, as we've said, sweating the assets a little bit more. We're increasing utilization in a number of locations. We've called out a few markets, New Jersey, as that's growing, and the wholesale market there is strong. Ohio is where I'm preparing for adult use. We're continuing to reduce that overhang. As time goes on, it's not going to go down to zero. There's always going to be some inefficiency in the supply chain, but there's beneficial improvements as we're increasing volume. Your second comment on the growth. Yeah, follow-up kind of on the growth margins, that real significant improvement. Congratulations, Derek, of 500 basis points. But just want to get a sense for you mentioned a little bit coming from asset utilization, but improves four-wall retail margins there and kind of brand partnerships. If you can unpack that a little bit and just kind of figure out, let us know how much is coming from each of those initiatives, that'd be helpful. Yep, so I'll stop and then hand over to Jesse here. The mix between retail and wholesale, we don't separately identify the margins on each, but we did call out the wholesale margins had increased by 10 percentage points quarter-over-quarter, retail margins had improved two percentage points quarter-over-quarter. You may recall in Q4, we were selling a lot of inventory to clear out inventory levels, so there were lower margins at that point. But we are on a path to building margins, having discounting discipline in retail, selling more finished goods in wholesale, which are at higher margins, as well as sweating those assets and reducing utilization that we covered in the first part. Jesse, anything you'd like to add? I think, look, I think Derek covered it well. I would say in wholesale, it really comes down to two things, and that is discipline with regards to the transactions that we're willing to take place in, and then obviously the significant shift in mix into finished goods, both in the first and third-party brands, which is a fundamental change in the business, which is part of the reason why we're going to continue to see the build there throughout the year, but the immediate actions with regards to margin. On the retail side, I think we continue to see increased discipline with regards to discounting. I think there's also some steps that have been taken and more to come with regards to centralization and execution with regards to vendor relationships and best practices in buying across the enterprise. Again, these are all efforts that continue to have opportunities to expand the impact, but we're obviously excited by what we're seeing in the first quarter. Great. I appreciate the detail. And then one last follow-up for me, just a little focus on Ohio here, providing a little color there in the market. Obviously, the timing could be coming up here mid-summer for sales there. But just kind of a comparable analog state there that you would expect Ohio to kind of mimic, is this more like a Maryland? There's very less medical patients in Ohio to start, but the potential, obviously, anywhere from 2.5x-4x bump up in sales. Just kind of a little more color on your positioning in Ohio and how you see that market kind of converting and rolling out here for you. Scott, this is David. I would say those numbers seem reasonable. When we're looking at the markets that have converted that we've participated in, Maryland sticks out as one that might be a good example. It's clear, and we've heard from investors, we've heard from analysts, we need to get Ohio, right? So we're laser-focused on being prepared for day one adult use. So it is a top priority for us as an organization heading into as soon as we've got clarity on the definitive timeline. But we are building and preparing in anticipation of adult use. We're very excited about it. Thanks. I will jump back in the queue. Thank you. As a reminder, ladies and gentlemen, that's star one one to ask the question. Please stand by for our next question. Our next question comes from the line of Aaron Grey with Alliance Global Partners. Your line is open. Hi, good morning. Thank you for the questions and knocking through on some of the profitability in the quarter. I just wanted to double back on Ohio, so appreciate the comment in terms of how you expect it to look in terms of overall market. Can you talk more about how you're positioned right now, specifically given your inventory? There's obviously uncertainty. Maybe it starts in a month, maybe it starts in the fall. So how flexible are you in terms of your current positioning to make sure you're well inventoried to capitalize on the initial demand and higher ASPs that come with the start of an adult use market? Thanks. Yeah, morning, Aaron. This is Derek. I'll cover that initially. So you're right. There's always uncertainty over the timing of an Adult Use switch and the balance between building inventory to be ready for that. We did have underutilized assets in Ohio, so we were not fully utilized in the cultivation, but we've got a lot of space there. We've got room to grow, and we've been building inventory. Our gross inventory did go up in the quarter in anticipation of that Adult Use coming on. So with an improvement in Ohio, there's still some clarity needed in the regulations on exactly which products that would be able to use. But we've got good cultivation manufacturing assets there. And again, I've been building inventory in anticipation of that flip sometime. It could be as early as mid-June, could be later. We'll be ready both for the retail growth and also to sell into the wholesale market. Okay, great. Appreciate that color. So any question for me just in terms on the wholesale? Sounds like you've done some rationalizing in terms of channels or retailers you're selling into there. But there's still work to be done, it sounded like, from what I heard from you, Jesse. Can you help us to maybe quantify how much more there's to go in terms of that rationalization, that net $15 million? It looks about in line with what you're doing quarterly for the prior year. So it sounds like the new wins you've had had more than offset what you've kind of shed off. So where do you stand kind of on the go-forward? How much more do you have to go in terms of rationalization of unprofitable channels versus opportunities for additional growth? Thank you. Yeah, hey, Aaron. It's a great question. From a rationalization point of view, I think we took a lot of steps very quickly to make sure that that business is essentially sort of reset in what the complexion of it looks like as we go forward. There's obviously still room for improvement, but I think we made some pretty big strides. I think the green shoots and the things that we're most excited about with regards to wholesale is not only the fundamental shift into the finished goods, the branded product, both first and third-party, which are obviously highly profitable compared to some of the prior executions that we had done and built that business on, but also the expansion of the customer base. We've seen a significant expansion with regards to not only the net number of new customers, but also the percentage of revenue from new customers versus legacy and large relationships that we historically had in that business. That's an incredibly impactful change in the wholesale program and one that I think, as we continue to execute and continue to expand on, is what will ultimately provide some of the best results moving forward. So we know what good looks like. There's a lot of partners in our industry and ecosystem that do an excellent job at this. So it's not like it's an unidentified sort of bogey that we're going after here. So I think that's an advantage for the team. They understand what good execution looks like. We've provided them with sort of the frameworks and the lenses to look at these deals through and have put the systems in place to ensure that we're executing consistently. So now it's all about sticking to that game plan moving forward and continuing to expand the base of customers that we're selling into. Okay, great. Appreciate the color, then. I'll jump back in the queue. Thank you. Please stand by for our next question. Our next question comes from the line of Frederico Gomes with ATB Capital Markets. Your line is open. Hi there. This is Brenna on for Fred. Congrats on the results this quarter. I'm just curious, since you have such a broad national presence, just wondering what you're seeing on the consumer behavior side across the footprint and specifically if the average basket decline in the quarter was more from seasonality following the holidays or if it was a product mix with consumers trading down. Yeah, so I'll start on the average basket size and then turn over to Jesse for a broader comment. So we did see a blended average decrease in our basket size in Q1, but it was down only slightly and down less than it was in the previous quarter. So there's certainly been some recovery. I'd say we've seen supply exit the market in certain of our markets, which is helpful. That reduces the pressure on pricing. But there's a strong consumer out there. The number of transactions continues to build. So overall, we're still optimistic about the outlook, and particularly those markets that we're prepared for with the adult-use switch, which we're positioned for in a number of states. But maybe, Jesse, you can provide some broader comments there. No, thanks, Derek. I think you hit on it. We have a broad footprint that covers a pretty wide spectrum of markets, from sort of very early medical markets where obviously we see high basket sizes all the way to incredibly mature adult use and recreational markets like a Colorado or a California from a retail environment where we typically see higher frequency of transaction, lower basket size. I think we're encouraged by what we're seeing in those markets where we continue to fight to take market share, have discounting discipline. I think all of those things lend to an offset of some of those compressions that historically we may have seen, especially seasonality-wise in the basket size. So I think we're encouraged by what we see in a number of those markets. More to come and more work to do. But when you're operating across this broad, like I said, of a spectrum, that blend can sort of be not a data fallacy, but we have to look at it at an individual market level. Awesome. Thank you for that. And then just looking at New York, we'd love to get some additional color on the dynamics of that market and also some additional commentary on Virginia. Sure. This is David. On New York, I don't think there's much change quarter-over-quarter for us. We continue to lean into and develop a wholesale business for the adult use side. We've not opted to convert our Brooklyn dispensary to adult use at this time. So for us, the balance of the year is going to be focused on the wholesale opportunity. I think we're reading what everybody else is reading about the incremental enforcement that's taking place, which I think is constructive, but that will take time. On Virginia, again, I think probably no change quarter-over-quarter. We love the market. It's still an underdeveloped medical program, so I think there's still a lot of opportunity for incremental TAM prior to adult use, which I think everybody's looking towards early 2026. But at this time, it's a great market for us. We're excited to open two more doors and continue to grow the patient base there. The only additional color I would add on Virginia is we've spoken to this before, and I do think it's a point worth reiterating. That is still a young medical program that is significantly underindexed as a percentage of population versus other more mature medical markets that we and others operate in. So if we look at something like a Florida or a Pennsylvania, which is at probably 5% and 4%, respectively, Virginia, at best guess, is probably somewhere around 1.25%, maybe a little bit higher. So there's significant room for organic growth in that patient base that we continue to serve as we look forward to, obviously, what will be an incredibly transformative adult use and recreational moment for that state. Awesome. Thank you for that. I'll jump back in the queue. Thank you. Thank you. Ladies and gentlemen, I'm showing no further questions. That concludes today's conference call. Thank you for your participation. You may now disconnect.