Good afternoon, my name is Ina and I will be your conference operator today. At this time, I would like to welcome everyone to Schwazze's fourth quarter and full year 2023 conference call. Online participants, please mute to prevent any background noise. Following their prepared remarks, management will take questions submitted via the web link found on Schwazze's investor relations website and in the earnings press release. I would now like to hand the conference over to the company's External Head of Investor Relations, Sean Mansouri, with Elevate IR. Sir, please go ahead. Good afternoon and welcome to Schwazze's fourth quarter and full year 2023 earnings conference call. Joining me on the call are Forrest Hofmaster, Interim Chief Executive Officer and Chief Financial Officer, and Justin Dye, Chairman of the Board. The company will begin with prepared remarks, and then we will open the call for Q&A. I would like to remind you that management's prepared remarks and answers to your submitted questions may contain forward-looking statements, which are subject to risks and uncertainties. Examples of forward-looking statements include, among others, statements regarding federal and state legislation and regulation, Schwazze's future results of operations and financial position, and Schwazze's business strategy and plans and objectives for future operations. Such forward-looking statements may be preceded by the words plan, will, may, continue, anticipate, become, build, develop, expect, believe, poised, project, approximate, could, potential, or similar expressions as they relate to Schwazze. Investors are cautioned that all forward-looking statements involve risks and uncertainties that may cause actual events, results, performance, or achievements to differ from those anticipated by Schwazze at this time. Additional information concerning factors that could cause events, results, performance, or achievements to differ materially is available in Schwazze's earnings release made available before this call and available on Schwazze's investor relations website and in Schwazze's annual report on Form 10-K for the year ended December 31st, 2023, filed with the U.S. Securities and Exchange Commission on March 27th, 2024. In addition, other information is more fully described in Schwazze's public filings with the U.S. Securities and Exchange Commission, which can be reviewed at www.sec.gov or on sedar.com or on the company's investor relations website. Also, Schwazze may discuss non-GAAP financial measures during today's call. A reconciliation of the differences between the non-GAAP financial measures discussed during the call and with the most directly comparable GAAP measure can be found in Schwazze's earnings press release made available before this call and available on Schwazze's investor relations website. I would now like to turn the call over to the company's Chairman of the Board, Justin Dye, for opening remarks. Justin. Thank you, Sean. Good afternoon, everyone, and thank you for joining us to discuss our financial and operating results for the fourth quarter and full year 2023. As many of you are aware, cannabis operators across the country have been contending with increased competition and pricing pressure. Our markets were not immune to these challenges. In Colorado, there were roughly 690 active adult use licenses as of year-end, which is up from the prior year, competing in a market that declined approximately 15% year-over-year during the fourth quarter. While competition remains strong, I'm proud of our team, outperforming the Colorado market during the quarter with high single-digit sales growth compared to the prior year, demonstrating our ability to thrive in challenging retail environments. In New Mexico, the proliferation of new licenses has continued to outpace market growth. Although the illicit market in New Mexico has been pervasive, the state's regulatory body has increased their license enforcement in recent months, as well as upgraded the severity of illicit market sales from a misdemeanor to a felony charge. Their efforts have resulted in an increase in store closures, and we expect this trend to continue throughout 2024. We've always prided ourselves on being good stewards of capital while striving for operational excellence in our markets. This has been the driving force behind our solid Adjusted EBITDA margins and consistent cash flow generation. Our mindset remains unchanged as we continue to navigate the prolonged challenges in Colorado and New Mexico while improving our capabilities to become even more competitive. We are optimistic about federal reform in the near to medium term and are poised to benefit in the long term. In the meantime, we are committed to operating our business and driving profitable growth without the benefit of rescheduling or SAFER. Before I pass the call over to Forrest, I'd like to take a moment to acknowledge his appointment to interim CEO. I've worked with Forrest for the past six years from our time at New Seasons Market, where he successfully led the company through one of the most disruptive periods in the retail grocery industry. With Forrest as CEO, he implemented a focused growth and cost optimization program, which enabled the company to grow EBITDA by over 30% in two years. I'm confident that with Forrest's proven track record and deep retail expertise, we have the right leader in place to see us through this period and execute on our growth and profitability objectives. Forrest, over to you. Thanks, Justin. To begin, I'd like to convey my appreciation to you, along with the entire board of directors, for entrusting me to lead the organization as Interim CEO. I'd also like to acknowledge the talent, passion, and commitment of our exceptional growers, producers, retailers, and support teams that make up Team Schwazze. We have a lot to be proud of, and I'm looking forward to working alongside you in the coming months. Now onto the results. We delivered solid growth in 2023 in two highly competitive markets with 31% Adjusted EBITDA margins and improved operating cash flow. We continued to sharpen our retail strategy while expanding our store footprint by more than 50% to 63 dispensaries across our two markets. Although the Colorado and New Mexico markets were pressured during the year, we have built a solid foundation and will continue to evolve how we serve our patients and customers to stay well ahead of our competitors. Internally, we are relentlessly focused on maximizing operating efficiencies and the output of our manufacturing and cultivation facilities while driving overall cost savings and asset utilization. Let's get into each of our markets, starting with Colorado. As Justin mentioned, the state ended the year with nearly 690 active adult use licenses, underscoring the importance of our investments in and focus on elevating our store experience with key points of differentiation. Early signs of our efforts have been positive as we once again outpaced the market in quarter four on a sequential and year-over-year basis. We expect to continue driving improvements in customer acquisition, retention, loyalty, and the overall retail experience while increasing our market share across the state. We have also begun to see wholesale pricing more broadly stabilize through Colorado as flower AMR has maintained an average price around $750 per pound in quarter four, which was consistent with quarter three levels and up from $703 per pound in quarter two. Our wholesale portfolio has continued to generate momentum, demonstrated by the more than 250% growth in 2023 of our licensed pre-roll brand, Lowell Farms, which is currently the number one pre-roll in Colorado, selling into six of the largest accounts in the state. We are pleased with Lowell's growth and look forward to expanding our distribution as we prepare for our April launch in New Mexico. Moving on to New Mexico. The proliferation of new licenses has led to increased competition and aggressive pricing strategies from other operators. Legal cannabis sales in the state were up 18% year-over-year in quarter four. However, total store count was up over 50%, leading to lower revenue per store. Approximately 225 new stores were opened in 2023, bringing total stores up to more than 675 as of December 31st. While net new store growth is beginning to slow down, we anticipate this will be a challenging market ahead. Our team remains focused on cost optimization and asset utilization while implementing a balanced pricing and promotional strategy to drive increased traffic into our stores, where we can introduce them to a broader assortment and an elevated retail experience. In early December, we rolled out new flower pricing with greater variety while also implementing a tiered pricing strategy for our CPG and branded products. The early results have been positive. Our business model is well positioned to succeed in New Mexico over the long term, and we will continue to evaluate our pricing structure to ensure we are competitively priced without sacrificing brand quality and service standards. While price is only one aspect of our strategy, we continue to focus on the in-store experience by enhancing assortment, storytelling, events, and product knowledge to create unique points of differentiation to set ourselves apart from competitors. These efforts are further aimed to increase customer loyalty and retention, which we believe are key drivers to success in the New Mexico market. From a wholesale standpoint, we generated 18% year-over-year growth in the fourth quarter across both states. We have also made solid progress with our fan-favorite gummies brand, Wana, which grew 48% in 2023 and is now in 130 doors with eight of the top 10 accounts in the state. While still in the early stages of our expansion into the New Mexico market, wholesale sales there in quarter four have grown to 28% of our total wholesale business compared to 22% in the prior quarter. We are encouraged by the early momentum and believe we are well positioned to capitalize on the wholesale opportunity in the state. Subsequent to year-end, we began to see a change in license issuance trends in New Mexico, in which net new stores have started to decline as store closures increase. For context, in February, the state experienced 31 store closures, which is the highest on the state's record and led to the lowest net new store increase over the last two years as the market adjusts. While we expect continued competitive pressure, we believe these early trends suggest we are entering a shakeout period for New Mexico, which should bode well for our operations in the state as we look to the future. In both Colorado and New Mexico, we increased wholesale penetration by over three times in 2023 to more than 27% total door penetration in both states. We have also been focused on refining our wholesale product offerings as we aim to provide the best assortment of high-quality products with exceptional customer service. In the second quarter, we will be expanding our catalog with the Lowell Farms launch in New Mexico and our own pre-roll brand, Everyday Weed, in Colorado. We look forward to providing this expanding catalog of fan-favorite products to the patients and customers across Colorado and New Mexico in the coming months. Turning to our cultivation and manufacturing operations. Our cultivation and manufacturing leaders have continued to generate improvements in all phases of our indoor and outdoor grows, as well as our manufacturing environments. With our acquisition in New Mexico, we revamped our outdoor grow, closed our 301 grow, and realigned demand and production to improve fulfillment and our overall inventory position. As we mentioned on the last call, we implemented a new ERP system across our cultivation and manufacturing facilities, which led to an inventory adjustment in quarter four. Although this impacted gross margin for the quarter, we now have better visibility and control over our inventory levels and expect to uncover additional supply chain efficiencies and cost savings opportunities in the future. We expect to complete the ERP implementation in our cultivation facilities this year. Let's quickly touch on our quarter four financial results. Total revenue in quarter four increased by 8% to $43.3 million, driven primarily by the growth from new stores and increased wholesale revenue. Gross profit for the quarter was $7 million, or 16% of total revenue. As I mentioned previously, the margin decrease was the result of one-time non-cash inventory adjustments of approximately $13.1 million, comprised of $3.1 million of product consolidation, obsolescence, and shrinkage expenses, $4.3 million of net realizable value adjustments, and $5.8 million of fair value adjustments on acquired inventory in New Mexico in 2023. Adjusted gross profit, which excludes the non-cash inventory adjustments, was $20.2 million, or 47% of revenue in the fourth quarter of 2023. Operating expenses for the fourth quarter of 2023 were $23.3 million compared to $24.2 million in the prior year, with a decrease primarily due to a lower impairment charge in the fourth quarter of 2023. This was partially offset by an increase in four-wall SG&A expenses associated with 22 additional stores in Colorado and New Mexico that are still maturing. As a percentage of revenue, operating expense was 54% compared to 60% in the year-ago quarter. Loss from operations in quarter four 2023 was $16.2 million compared to $2.5 million last year, again primarily driven by the non-cash inventory adjustments. Adjusted EBITDA was $11 million, or 25% of revenue compared to $13.3 million, or 33% of revenue last year, with a decrease primarily driven by the higher operating expenses associated with the 22 additional stores that are still maturing. We generated another period of positive operating cash flow of $3.5 million during the fourth quarter, which led to $12.2 million of operating cash flow for the full year. As of December 31st, 2023, cash and cash equivalents were $19.2 million. Total debt stood at $156.8 million as of December 31st, 2023. Looking ahead, we plan to maintain our prudent approach to capital allocation while enhancing the customer experience, improving loyalty penetration, and optimizing the efficiency and output of our assets. We will also continuously evaluate our pricing structure in New Mexico to ensure we are well positioned in the market. We expect to realize the benefits of these initiatives in the back half of the year. Our team has a demonstrated track record of executing in competitive markets like Colorado and believe New Mexico will be no different in the long run. That concludes our prepared remarks. I'd like to pass it back to Sean, who will open the call for Q&A. Thank you, Justin and Forrest, and thank you, everyone, for participating in the conference call. We will now begin the Q&A session. As we gather the Q4 live questions, we'd first like to address questions that have come in via email over the past couple of weeks, as well as questions that have even come in over the past hour via email and via the webcast. So to kick things off, you mentioned the proliferation of new licenses has led to increased competition and aggressive pricing strategies from other operators. What actions has Schwazze taken to stand out against the competition? Yeah, thanks, Sean. In New Mexico, it's still a young market. As we mentioned on the call, sales have increased 18% year-over-year in quarter four, but store count was up over 50%. That's led to about 20% lower revenue on a per-store basis to levels that we believe cannot be sustained as they're roughly about 50% of the Colorado market. We're seeing closures trend upwards in recent months and starting to see net growth rates decline. All of that is encouraging for us. Pricing is competitive. Flower still remains slightly above the Colorado market, but most of the rest of the categories are in line with Colorado. It's just one point of our strategy, and we're carefully balancing the retail pricing and promotional strategy to drive traffic and also increasing our flower and CPG assortment for greater choice. Beyond pricing, we're focusing on the in-store experience. That's where we are in terms of we're just retailers at heart, and that's the team that we have in place down there in New Mexico as well as Colorado. And so we're focusing just on the key retail points of differentiation, but budtender education, like I mentioned on the call, focused on storytelling, product knowledge, customer education, all our items or areas that we believe will help us stand apart in the New Mexico market. And lastly, we're evaluating new methods to grow our customer loyalty program. We're seeing growth in penetration there, growth in our basket, growth in new loyalty signups. We believe that's a critical factor in driving traffic into the door. So those are some of the key areas that we're focused on now. Perfect. Could one of you provide an update on both the retail and wholesale markets in Colorado? Yeah. Thanks, Sean. I'll take that one. In terms of the retail market, Colorado sales were down approximately 15% on a year-over-year basis compared to our growth of almost 8%. Population in the state remained flat year over year with overall store count down 3%, driven really by a reduction in medical dispensaries and also offset by low single-digit growth in their recreational stores. Sales volume was down about 15% year-over-year in Q4, and we're seeing sequential improvement. And we're in a developed market and certainly going through some growing pains as demand and supply kind of normalize. But we're built really to withstand this, and I love the opportunity for us to compete in a tough, challenging market, and I think things are certainly going to improve. From a wholesale perspective, cultivation licenses count in Colorado have come down roughly 22%, which is a sizable move, from approximately 1,200 licenses at the end of 2022 to over 920 as of Q4 2023, which is below pre-COVID license counts. We're starting to see pricing stabilization, as Forrest mentioned, in the state with flower AMR remaining around 750 in Q4 and plant counts back to 2018-19 levels. So we're certainly starting to see stabilization, and we believe there's improvement around the corner, but we're going to continue to execute, we believe, in the short term in a tough market. To summarize, we believe it's going to be leveling out with steady flower AMR and believe shows stability regardless of how we really think about retail pricing pressure. We feel good about where we're headed from a wholesale perspective standpoint. Looking ahead, we believe we can maintain solid retail margins, utilize the wholesale penetration growth to protect our CPG margins, and we'll benefit from modest increase in wholesale pricing as supply settles down. This could be a shakeout year for Colorado. Our lightweight capital model, strong retail capabilities, we believe position us very well to continue to grow a share of wallet from our customers. We're going to continue to focus on retail execution and optimizing customer acquisition with loyalty and retention and unlocking liquidity through our current asset base. That's great color. Thanks, Justin. What's your perspective on future M&A? Is the team evaluating new targets? Yeah, I'll take that one. Over the last year, we've increased the retail footprint by more than 50%. So we've gone from 41 to 63 stores, largely through acquisition. Our team is focused on optimizing that store count with a number of optimization and lean initiatives to support the expanded asset base over the two states. We believe there will be material cost savings and synergy opportunities remaining in New Mexico, where our focus is building out the retail assortment within the stores along with optimizing manufacturing and our cultivation assets. So there's more work to do, but we feel like there's lots of opportunity there. Internally, we're looking at unlocking liquidity and capital optimization with the right retail spaces in the right locations. So we believe there's going to be a shakeout. Clearly, in Colorado, we think we're going to be well positioned to take advantage of that as smaller, less well-capitalized companies struggle and leave the market. We'll continue to monitor, and our goal is to pick up assets at attractive values that fit really our game plan of going very deep in Colorado and New Mexico. So we'll play offense where there's an opportunity while we're optimizing the business. Great. This is Juan from the webcast. Can you expand on the initiatives in place to improve flower yields and quality while lowering input costs? Yeah, I can take it, Sean. So with the Everest acquisition midyear, we added a cultivation and a manufacturing facility. Both allowed us to improve our overall assortment in New Mexico for internally cultivated items. More importantly, we've got a really strong New Mexico cultivation team, and they're just focused on continuous improvement and sharing the best practices, growing the right strains, improving overall yields, and also yields in the higher margin tiers that give us a competitive retail advantage while creating cost efficiencies and buying leverage just by having the expanded grows. We are continuing, I think I mentioned this in the last call, to focus on 5S, lean training, standardized SOPs in all facilities. We are rolling out the ERP system in Colorado. We've already rolled that out to manufacturing and distribution, and we're going to hit the grows this year as well just to give us more visibility through the system. We've invested in automation where it matters, and we'll just continue to evaluate cost efficiencies at all stages of the grows and manufacturing as well. A lot of that will come through ERP, as we've already seen improve operations in Colorado grows, getting our costs well beyond competitive levels. We'll continue. We did end up closing a grow this year, the 301 grow, and we're continuing to consolidate manufacturing and rationalizing our grows there just to ensure high asset utilization. All those efforts will continue, and we believe give us a competitive advantage. Great. This one came in via email. Regarding your balance sheet, the tax liability appears to have increased $25 million. Can you share more about your position and how you're viewing the recent 280E approach taken by other MSOs? Yeah, Sean, I'll take this one. We've taken what I would consider one of the most conservative views in the industry from a tax perspective, maintaining roughly a two - three quarter lag in payments, which is where we were in 2022. With the evolving news in the industry regarding rescheduling, SAFER, we believe there is going to be some good news here. We've extended that lag more in line. We're still on the conservative side versus most of the other multi-state operators, but we've taken we kind of extended that to five-six quarters. So a lot of these other competitors have looked at their tax approach and have kept 10 quarters or more out there. So you see us kind of moving a little bit more towards that as we start to see maybe become a little more optimistic with regards to 280E, which I think is good. It's good for us, and it's going to be good for the industry. Great. Could one of you provide more color on wholesale expansion plans in New Mexico? Yeah, Sean. Yeah, first of all, year-over-year comparisons on total wholesale is largely pricing and bulk distillate. We're seeing strong growth, 24% unit increase overall. In New Mexico, in particular, really excited about what the wholesale team is doing there, excited about the hard work and progress there. The first approach that they took is just rationalizing the overall catalog, which actually helps us in both states, identified a clear product development roadmap, and expanded our current offerings. Plus, we'll see new product launches coming out in the pre-roll and vape categories in spring and summer. We've already seen penetration grow in New Mexico from 22%-28% quarter-over-quarter, and with an even heavier promotional focus, we'll see or we think New Mexico will be a strong contributor for the coming year. At a brand level, I mentioned Lowell Farms, which we're really happy about in terms of the pre-roll category in Colorado, taking the number one pre-roll position in Colorado. We're introducing that into the New Mexico market in April, and then that will kick off a sequence of other new item introductions into the state, which should make for an exciting year on top of what we're already doing there with the Wana in the gummy category. So we're excited about wholesale segment overall in both markets and especially New Mexico in the coming year. Okay. And just a couple left here. How are you approaching the possibility of rescheduling or SAFER banking? Do you have other additional information to share on the regulatory front outside of some of our previously stated comments? Yeah, carefully. No, we are optimistic with regards to several things that are happening, and we remain fairly close to this with various lobbying organizations. Our head of government relations, Dan Pabon, has got his finger on the pulse here. We're certainly watching what happens in Florida with the ballot initiative. We're hopeful that in a very large populous state, one that is viewed as red, that Adult Use going on the ballot is a real positive. Because of the size of the state, we think that bodes well for really the national cannabis market. So we're watching that closely, and we're going to know something here, I think, in the next 24 hours. We're optimistic about Rescheduling. Everything that we are hearing, it creates optimism in the near term to midterm around doing that. Obviously, that has profound impact on the industry in terms of cash flow generation and the ability to deduct SG&A. So we think that's a very big deal. The SAFER side, I would say, we're sort of more moderate on. Certainly, there's a lot going on there, but it also has to go through Congress, where the SAFER or where the rescheduling really is going through the DEA, and it'll be up for comment period, which we think is a relatively short period of time. We should know something here in the next few months, we believe. So we're pretty optimistic. We think this could be really good for us and good for the cannabis industry. It's been coming for some time, and so we're pretty optimistic. That's great. Last one on the said Q&A. Can you speak to the health of the balance sheet, particularly operating cash flow and your debt schedule? Are you looking at refinancing opportunities? Yeah, I'll take it. Justin just mentioned the news that we're monitoring just that news as well as the state of the capital markets and certainly welcoming any news on the federal regulatory front. We've got our first set of material debt hurdles in quarter one, 2025, and so it is part of our ongoing conversation just where we are in overall operating cash flow and what our expectations are for the next four quarters. We did end the year with $19 million in cash and $12 million in cash flows from operations. It's part of our daily conversation, so that's in front of us. And so yeah, we expect to continue to be free cash flow positive after meeting capital and interest obligations regardless of the outcome in D.C. But yeah, this is a conversation that we're definitely having here in 2024. Thanks, Forrest. Ina, this concludes the inbound Q&A. If you want to turn it over to live Q&A. Thank you. Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the one on your telephone keypad. You will hear a three-tone prompt acknowledging your request. Questions will be taken in the order received. Should you wish to cancel your request, please press star followed by the two. If you're using a speakerphone, please leave the handset before pressing any keys. Once again, that is star and one to ask a question. And your first question comes from the line of Joe Gomes from Noble Capital. Please go ahead. Good evening, and thanks for taking my questions. Hi, Joe. So Justin and Forrest, I want to start it off with, how do you kind of see either a CEO or CFO search going, and how long, Forrest, do you think you can do both very important jobs? So just trying to get a little update on that. Yeah, let me, Joe, good to have you on the call. With regards to the interim piece, we're not going to put any formal statements out of how long that may or may not last. We've got our business to take care of here. We're going to continue to focus in New Mexico and Colorado and continue to work on becoming a really great retailer, which we have. We've accomplished a lot. We have a long way to go. And then also on the wholesale side. So I have, fortunately, worked with Forrest and seen him operate in a very complicated environment in a much larger business than this, and he had profound impact on the business. So the board of directors, speaking for everyone, have a lot of confidence in Forrest moving forward. Regarding CFO duties as well as some of the financial needs of the business, we feel very comfortable that we can manage that in this period of time here, and we're going to be in good shape and not really miss a beat here. But Forrest will be busy. Yeah. Yeah, Joe. Yeah, I mean, this is, I wouldn't say this is a business-as-usual year. I would say we are actively getting after the retail-facing environment in both New Mexico and Colorado. Interim or not, regardless of the title, we've come together as a leadership team and an organization and set clear priorities and narrow focus for the coming year. We're in the field. I'm surrounded by a very strong board, if you've seen the lineup on our website, and also surrounded by a very strong finance, accounting, legal team, and really feel like we've got all the support we need right now during this interim phase to keep moving, if not taking very positive steps to get ahead. I've got standard. Yeah. Good. Going to need it. So on the inventory charges, do you think that those are now in the past, or could there potentially be some more still coming? Yeah, it's a good question. Yeah, those charges, I think it was $5.7 million of that was purchase price related to the Everest acquisition, just getting that value to fair value, moving that out of Goodwill and getting it off the books because we already sold to that product. So that's a big chunk of it. The rest of it, ERP related and just bringing our flower to market and true cost. We haven't finished the ERP rollouts in New Mexico, and so as you probably know, with that typically comes some kind of book-to-physical valuation differences. We haven't identified those in New Mexico. I will say, from the exercise that we went through in quarter four with the ERP implementation, both manufacturing and in cultivation, we've really just shored up our practices organization-wide, and all of that was accounted in that inventory adjustment in quarter four. We don't expect 2024 adjustments right now, Joe. Just knowing what I know about my history anyway with ERP rollouts, some adjustments do happen. Again, nothing in my current field of vision. Okay. And you guys have done a great job with the Lowell Farms rollout. I was wondering, are there any other particular name brand type Lowell Farms type products that you would like to add to the retail locations maybe here in the near future? Yes. Yes, there are. How about I update you in quarter one as we get a little bit closer? But yeah, we are actively looking at, I mean, we really appreciate the relationship with Lowell and with Wana. We see opportunity there. We have a couple on the brand development and the launchpad. I want to get a little bit closer to our next earnings release to make those announcements. Okay, great. One last one for me, if I may. We haven't really talked about the biosciences unit here lately, and I just wondered if you could give us an update on their progress and when we might see something coming out of there? Maybe I can start, Forrest. With regards to biosciences, it was very much an applied kind of R&D product development unit, which allowed us to kind of work with vendors as well as develop some new potential products where we've taken some of those learnings and incorporated them into the business. So that was really how we started that, and we've got a dynamic team there that's still with the business, and we're going to continue to look at innovation. I'll let Forrest kind of wrap up his thoughts on that. I think that's it. I think right now, we're mainly focused on quality, QA, in cultivation. And so that's where we have our team there purposed and focused. Okay, great. Thanks for taking the questions. I appreciate it. Thank you, Joe. Thank you. Your next question comes from the line of Andrew Semple from Echelon. Please go ahead. Good evening. Thanks for taking my questions here. First one would just be on the state of Colorado. You called out wholesale pricing beginning to firm, which is great to see the retail pricing continuing to face some pressure. Just wondering if that would seem to imply the potential for retail margins to potentially face some pressure in 2024 as your input costs kind of stabilize, but the end pricing may continue to deteriorate. Would you expect to see a little bit of margin pressure on retail in 2024 if this dynamic continues, or are there other factors at play that might upset that? Yeah, I'm happy to jump in on that. We've been studying the market pretty closely and been following the trend since 2014. What we're seeing, Andrew, just on the other side of the COVID contraction, if you will, in terms of overall stores and sales per store, we're seeing some resettling in terms of the supply side. We still have supply glut. We are seeing plant counts come down. We are seeing stabilization on the wholesale pricing side. The way I'm looking at that right now is our retail pricing situation was completely different pre-COVID and certainly during COVID. We feel like the retail pressure on the top side will stay in place. So to your point, I think as the glut runs through probably early summer, we should start to see more margin pressure in the market. And so we'll see how that, I think Justin mentioned, shake out in Colorado. I do believe that to be true, and I think that's going to be a big influencer on the market in the second half of the year. Got it. That's helpful. Remaining on Colorado, great to hear the progress with Lowell that you've had in the state and potentially more brands to come. What degree of spare capacity do you have in Colorado to take advantage of the potential wholesale opportunities if wholesale conditions continue to firm up? Yeah, I think we just went through our demand planning process for the year, and we're adequately prepared to meet the capacity that we or the demand that we have from the wholesale segment. Got it. And then finally, if I may, just a quick update on what your 2024 CapEx spending plan would be. What are some of the major investments you're looking to make across the organization, and what might the total budget be for the year if you're able to share? Yeah, I would say probably a little bit lower than what we saw last year given the current roadmap in new stores so far. Most of that investment's going to be inside the current store base in terms of some of the branding areas that I'd like to see around our storytelling and just internal case improvements, things like that. So I would say lower than what we've seen in terms of run rate. That's helpful. Appreciate you taking my questions, and I'll get back into queue. Thank you. Yeah. Thank you, Andrew. Thank you. Your next question comes from the line of Pablo Zuanic from Zuanic & Associates. Please go ahead. Thank you. Good afternoon, everyone. Justin, maybe a first question about the structure of the Colorado market. When we hear about the illicit market in California or New York or even New Mexico, it seems that Colorado has never faced that problem as much as other states. And if you can just give maybe lessons or what has it been different about that market? Or maybe I'm wrong, and the illicit trade is as much a problem as it is in other states in Colorado. Thanks. Yeah. Hi, Pablo. Nice to have you on the call. Colorado, we believe really got this right in the regulations, and they really partnered with the legislature, with the governor, with the mayor of Denver, and a lot of the other geographies, and enforcement has been very robust. So they certainly got it right up front. I think it's a much more disciplined market on the gray and black market. Certainly, you still have that. But in general, it's much more stable that way. And you've had tax dollars really flowing into enforcement in other cases. So we would love to have that same type of regulatory format, and we're working on that as we're lobbying and working with New Mexico, who's a little younger in development. But I think it's fundamentally different than. I think you mentioned California. I would say the state has been very good proactively enforcing the rules and having really solid rules around that. Thank you. And then just moving on to trying to understand how quickly is the retail market in Colorado consolidating. Just a reminder, I mean, are you still the largest retail chain, or if you compare with PharmaCann? Just to have a sense of how quickly is the industry consolidating and your size relative to peers, and if I miss someone else there in that list. And related to that, and I think you do give these numbers, just a reminder about your revenue per store in Colorado and New Mexico compared to a state average based on your latest numbers. Thanks. Yeah. Colorado market share, Pablo. We are continuing to trend upwards in terms of just our share, I think, in quarter four grew to 7.8% above market. So seeing continued growth there on a sales base and store count as well. When you look at the dollars of the revenue per store, I'm looking at state revenue per store of $112, and we're well above that. Right. Thank you. And the very last question. So in terms of the wholesale initiatives and the new licensing of brands like Lowell, is that a bit of a pivot in your strategy because you've talked about being asset light, about focusing on the retail side of things, but here you are apparently expanding wholesaling. So if you can explain that, or is your focus still mostly retail? I would say we are a retail-forward organization with a growing wholesale segment that is asset light, primarily focused on third-party licensing partnerships and the expansion of those in both states, which gives us a good lead item into each one of the doors that we can then share our current catalog with. So more of the investment there is just salesforce and promotions. Understood. Thank you. Thank you, Pablo. Thank you. That ends our Q&A. I will now hand the call back to Justin for closing remarks. Yeah. Thank you, operator. I'd like to thank all of our participants for listening on the fourth quarter and full year 2023 earnings call. I also would like to extend my gratitude to our teammates, our customers, and, of course, our shareholders for their continued support and dedication to Schwazze. We've built a really solid foundation across both of our markets. We are prepared to win in the near term and the long term and continue to develop competitive advantages and capabilities. And we're really built for difficult markets. And certainly, we've had that in Colorado, and we think this is going to be a shake-up year that we're positioned well for. And certainly, proliferation of license count in New Mexico really put a damper on the business last year. However, we're seeing less of those openings, and we're seeing a lot more closings. So we're going to continue to be a tough operator. We're going to continue to invest in our stores, our wholesale business, and we really want to continue to work for our customers, and we're going to do that. And I think we're positioned well to do that. And I think the regulatory backdrop may, in fact, give us a little bit of tailwind even while we're participating in these couple of markets. So I think it's bright going forward, and I just want to thank everybody for supporting us. And go, Schwazze. Thanks. Thank you. That concludes our conference for today. Thank you for participating. You may disconnect.