Good afternoon, everyone, and thank you for participating in today's conference call to discuss Columbia Care's Financial Results for the Second Quarter Ended June 30, 2020. At this time, all participants are in a listen-only mode and a question-and-answer session will follow the formal presentation. This call is being recorded for replay purposes. A replay of the audio webcast will be available in the Investor sections on the Company's website approximately two hours after completion of the call and will be archived for 30 days. [Operator Instructions] I will now turn the call over to your host for today, Cristina De Tomasi, Investor Relations representative for Columbia Care. Thank you.

Thank you, Diego, and good afternoon, everyone, and thank you for joining Columbia Care's second quarter 2020 earnings conference call. With me today are Nicholas Vita, Chief Executive Officer; Lars Boesgaard, Chief Financial Officer; and David Hart, Chief Operating Officer. Earlier this afternoon, we issued a press release reporting our second quarter results, which we have also filed with the applicable Canadian securities regulatory authorities on SEDAR. A copy of this release is available in the Investors section of our corporate website at www.col-care.com. You can also access a replay of this call for up to 30 days. Please note that the remarks we make today regarding future expectations, plans and prospects for the Company constitute forward-looking statements within the meaning of applicable Canadian 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 Factors section of our annual information form dated March 31, 2020, and filed with the applicable Canadian securities regulatory authorities and can be also be found at sedar.com. We remind you that 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-IFRS financial measures such as combined revenue, adjusted EBITDA and gross profit margin excluding changes in fair value of biological assets. These measures do not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies. Columbia Care considers certain non-IFRS measures to be meaningful indicators of performance of its business in addition to, but not as a substitute, for our IFRS results. A reconciliation of such non-IFRS financial measures to their nearest comparable IFRS measure is included in our press release issued earlier today. All statements today are qualified in their entirely by the disclaimer set out in our earnings press release. Nick will begin his comments today with a high-level review of our accomplishments during the second quarter followed by Lars, who will provide an overview of our financial performance. Nick will then discuss our outlook and guidance for the fiscal 2020, after which the team will take questions. With that, I turn the call over to you Nick.

Thank you, Cristina, and good afternoon, everyone. 2020 is turning out to be quite crucible. Despite the global pandemic, social unrest, unprecedented capital markets volatility and macroeconomic headwinds, the likes of which I’ve never seen in my professional career, Columbia Care posted record results and showed material improvements across all key financial metrics during the second quarter, demonstrating our continued operational discipline and focus on creating shareholder value. We drove sequential topline growth each month this quarter, and the improvements we made throughout our organization underscore the sustainability of our gross margin and adjusted EBITDA improvements. I am extremely proud of our team's diligence and hard work to generate such strong results across our market portfolio. Strong pre-COVID trendlines for revenue, gross margin and adjusted EBITDA have resumed in all of our markets, even as some faced forced market and facility closures due to COVID-related political and regulatory decisions. In fact, taking a conservative approach, we estimate that the pandemic had an approximately $6.9 million impact on combined revenue and $2.8 million impact to combined gross profit and adjusted EBITDA in the second quarter. That vast majority of this impact was caused by policymakers in multiple markets temporarily suspending programs in which we operate. Despite these challenges, along with unprecedented market volatility and economic headwinds, our gross margin has improved even faster than we forecasted to the point where six of our markets were adjusted EBITDA positive in Q2 with four more now virtually breakeven and expected to turn positive in the third quarter. With this momentum in place, we've remained confident in our conviction to be adjusted EBITDA positive later this year and position ourselves as a national leader in the industry. The power of our diversified portfolio of adjusted EBITDA generating markets has never been more evident. Our organization performed excellent during the significant challenges of pandemic, and I want to thank everyone on the Columbia Care team for their resilience and dedication. During the quarter, we also deepened our geographic footprint. In June, we announced the opening of our first medical dispensary in New Jersey, making us one of only three operators licensed to sell in the state’s Southern region. This dispensary is located in Vineland and is supported by our 50,000 square foot cultivation and manufacturing facility, which produced its first harvest in July. Opening in New Jersey in March is a significant turning point and we are excited to bring our industry-leading services and exceptional team to a new market with New Jersey voters expected to pass the adult-use cannabis measure in November. Our ability to open two additional dispensaries combined with our expectation to increase our cultivation and manufacturing capacity will allow Columbia Care to be a market leader. In addition, we've continued to significantly expand our liquidity to further support growth and expansion. We completed the second tranche of our previously announced debt and hybrid-equity capital raise in the middle of June, raising over $54 million in total. This additional capital from institutions not previously in the cannabis space, further validates the Columbia Care business model and provides access to future liquidity for M&A transactions as we look to consolidate distressed assets and go deeper into our markets. Subsequent to the quarter, we've raised an additional $14 million of non-dilutive capital through second sale-leaseback transaction with Innovative Industrial Partners or IIP. This transaction entails a long triple-net lease agreement that includes the dispensary cultivation and manufacturing facilities in Vineland, New Jersey, that I just referenced. Coupled with our recent other financing initiatives, this incremental non-dilutive capital has bolstered our already strong balance sheet and de-risked our outlook and brings the total amount to minimally dilutive capital we've raised year-to-date to $73 million. Going forward, we will remain prudent stewards of the capital, while continue to allocate resources to our highest performing markets, where we can drive incremental profitability and improve our position as the leading nationwide operator. I will provide more detail on our business developments and market highlights later in the call. But first, I'll turn over the call – turn things over to Lars to provide more detail on our Q2 financial results. Lars?

Thanks, Nick, and good afternoon, everyone. I'll now proceed to provide a summary of the key financial items for the second quarter. Please note that combined metrics referenced include our reported financials as well as the results from the four dispensaries operated by our partner in Ohio. Starting with revenue, combined revenue in the second quarter was $33 million, a year-over-year increase of 71% and a quarter-over-quarter increase of 14%. From a sequential perspective, the increase was primarily driven by solid growth in Pennsylvania and Ohio. However, this was partially offset by declines in Massachusetts and Illinois caused by the temporary closure of adult-use sales mandated by the State of Massachusetts or approximately two-thirds of the quarter, and by restrictions on adult-use sales in Illinois due to both state's respond to the COVID-19 pandemic. Excluding revenue of $4.6 million from our four dispensaries in Ohio, we reported total revenues in the second quarter of $28.4 million, which was an increase of 47% compared to last year and 8%, sequentially, and this was due entirely to organic growth of our business. Combined with Ohio dispensaries, our gross profit was $11.9 million with a gross margin of 36.1%, representing an 800 basis point and nearly 500 basis point improvement over the previous year and quarter, respectively. Our reported gross profit before fair value adjustments was $10.1 million, an increase of 26% and 87% on a quarter-over-quarter and year-over-year basis, respectively. From a year-over-year comparison, the improvement was primarily driven by the volume growth of our business, and to some degree offset by production costs at some of our facilities that are still ramping up production during this quarter. Reported operating expenses for the quarter was $29.6 million compared to $31.6 million last quarter and $39.3 million in the year-ago period. The decrease was primarily caused by a decrease in listing fees of $11.1 million and professional fees of $2.3 million, partially offset by an increase of $1.9 billion related to salary benefits and facilities expenses, a $1.8 million increase in depreciation and amortization expense as well as $0.9 million increase in share-based compensation expense. The combined adjusted EBITDA for the quarter, including the Ohio dispensaries was negative $4.7 million with the Ohio market once again continuing to deliver positive adjusted EBITDA in the second quarter of operations. Reported adjusted EBITDA for the second quarter was negative $5.5 million compared to negative $10 million in the first quarter of the year and negative $11.4 million in the prior year period. The sequential improvement to adjusted EBITDA was primarily driven by lower SG&A expense as well as higher gross profit. Capital expenditures for the quarter just ended were $7.5 million and we had $30.4 million CapEx for the first six months of 2020. For the first six months, the number includes approximately $7 million related to our properties in New Jersey, which we sold in the transaction, Nick just referenced, which closed in July. We are revising our estimate for full-year capital expenditures to be in the range of $45 million to $50 million, which includes approximately $12 million related to the completion of our cultivation and dispensary properties in New Jersey, which again was subsequently sold to IIP in our recent sale-leaseback transaction. As of June 30, 2020, our cash balance was $42.4 million compared to $47.5 million at December 31, 2019. This does not include $4.3 million in additional gross loan proceeds related to debt issuances subsequent to quarter end. This now concludes my prepared remarks, and I'll return the call back to Nick. Nick?

Thank you, Lars. As I mentioned before, we've sustained record momentum across our business with every market in which we operate generating stronger revenue than they did pre-COVID by the end of July. Over 86% of our dispensaries that have been open for at least 12 months have now achieved positive adjusted EBITDA. And as we continue to deepen operations across the country, we expect them to adopt this trajectory as well. Now running through our state level market highlights beginning with our top five markets as of July, Pennsylvania, Massachusetts, Ohio, Arizona, and Florida. We were generating strong growth across each one of these markets. Starting with Pennsylvania, our operations in the state continue to outperform with sequential growth every month throughout Q2, positive adjusted EBITDA, great store level economics in July sales that were doubled their pre-COVID levels. We've also driven material improvements in our medical patient base with approximately 60 new patients added everyday and an overall 15% increase in patients quarter-over-quarter. In Arizona, our medical dispensaries have continued to selling through our entire cultivation and manufacturing supply and our new product introductions have driven strong gross margin improvements. This market is adjusted EBITDA positive and also has a high potential for conversion to adult-use sales in 2021. Our strong operational foundation positions us well to accelerate momentum in the state. In Florida, continued product supply challenges impacted our results in the quarter. However, these headwinds were offset by a nearly 40% increase in sales in July due to the benefit of additional capacity for cultivation coming on line. Our expanded cannabis at our Lakeland’s cultivation facility is now also a full bloom capacity, which adds approximately $50 million in annualized dry weight equivalent, and we have recently completed our first harvest. Pending regulatory approval, we are progressing through our introductions of 40 new product SKUs this year with 11 of these products, including kief, shatter, and vaporization cartridges already approved. In terms of our locations, we continue to expect four additional dispensaries to open in the state in the second half of this year. Consistent with our remarks last quarter, COVID-related headwinds affected our performance in Massachusetts, where adult sales were suspended from March 24 through May 24. This suspension period in conjunction with social unrest in Boston contributed to the slowing of our robust pre-COVID month-over-month revenue trajectory. However, with adult-use sales now back in line, our May and June sales were up over 90% month-over-month and exceeded pre-COVID levels in July, and we are adjusted EBITDA positive in the state. In addition, we presented at City of Boston later this week to seek approval to be among the first dispensary operators to permit it to open in Boston. In Ohio, our operations continue to outperform. We were adjusted EBITDA positive, and our second quarter revenue increased 75% from the first quarter driven by the introduction of wholesale and the exceptional growth of our four dispensaries. Similar to Florida, we have benefited from additional cultivation capacity in the state. The capacity that came on line during the second quarter has fully maximized bloom capacity as of quarter end and it's positioned us for greater wholesale revenue base and improved retail margins. Further, we expect additional expansion to come on line in the second half of the year in our cultivation and manufacturing capacities. Our processing facility has also been approved for operation and it has extracted its first 1,000 grams of oil for the launch of our Columbia Care branded vaporization cartridges in Q3. Having greater amounts of internally sourced products has already more than doubled gross margin, and we expect this to drive our momentum and expand our offerings of differentiated and manufactured products and brands in the state. As for some of our other high performing markets, in Illinois, we were officially adjusted EBITDA positive and have returned to sequential growth through July, following some COVID-19 challenges to our operations and personnel continuity issues early in the second quarter. Our cultivation facilities are not only producing at full capacity, but producing flower with THC levels as high as 37%, one of the strongest potencies in the state. With strong momentum in our wholesale business and our monthly revenue now 30% higher than where it was pre-COVID, we expect to continue accelerating growth in our wholesale business, which began in June and is expected to produce over $350,000 in revenue each week starting this month. We also expect to open a new adult-use dispensary in Villa Park this quarter. In Delaware, we are driving continued incremental improvements in our patient base, adding approximately 100 new patients each week. We also expanded our offerings in the state by launching 11 new SKUs during the quarter and the patients who were using our newly launched home delivery service are driving larger average basket sizes than we had in our dispensaries. Quarter-over-quarter, our revenue has nearly doubled and we are expected to carry this momentum and remain on track to be adjusted EBITDA positive in Q3. In New York, we launched 17 new product SKUs, including flower and oil products which have improved our gross margin, and we expect to be adjusted EBITDA positive this quarter. Turning to our newest markets that we believe will be very high potential growth states. Our 62,000 square foot facility, our cultivation facility in Virginia has recently been growing operations. And we expect to open our first dispensary and commence wholesale sales in the state later this year. As additional cultivation and manufacturing capacity comes on line, we plan to expand our dispensary footprint with up to five additional locations and add home delivery to the market. We believe there is potential for Virginia to approve adult-use sales in 2021, and as one of the only five operators in the state, we are well positioned to materially benefit from that approval. The powerful momentum across our state markets positions us well for the second half of the year. We look forward to closing our acquisition of The Green Solution following the completion of final due diligence and regulatory approvals and adding Colorado to our robust market portfolio. Within this portfolio, we will continue to invest in our core markets that are poised for the greatest near-term growth and profitability. As Lars as discussed, we are reiterating our guidance for the year. As outlined in the press release this afternoon – issued this afternoon and we are expecting our – we are increasing our expectations for capital expenditures given the stronger than anticipated demand for our product in many of our markets. As we approach our inflection point of turning adjusted EBITDA positive later this year on a consolidated basis, we are focused on optimizing our proven operational strength and resiliency and remained dedicated to driving shareholder value. I am incredibly grateful for our team's continued hard work and our strong shareholder support. I'll turn it over back to the operator.

Thank you. Ladies and gentlemen, at this time, we will conduct our question-and-answer session. [Operator Instructions] Our first question comes from Matt Bottomley with Canaccord Genuity. Please state your question.

Yes. Good afternoon, everyone. Congrats on again reaching new highs for the quarter. Just wanted to circle back on some of these COVID adjustments that you mentioned in the press release in your prepared remarks, so is it fair to say because subsequent to period end and even close to period end, you're reaching new highs again in your growth that sort of a normalized revenue base might be closer to $40 million going into Q3 just by adding back that $6.9 million. And then again, on the adjusted EBITDA, it seems like if things are back to normal levels and if not higher that EBITDA profitability could be as soon as next quarter, not trying to tease guidance out of you, but just wanted to see if that's a reasonable potential expectation?

Let me turn it over to Lars and have him comment on the COVID adjustments specifically, and I'll follow-up with a couple of additional insights.

Hi, Matt. It's Lars here. Yes, I'll be happy too. Look, I think Matt, I think we took a reasonably conservative approach and trying to determine and sort of a what if analysis, and I think what we're trying to explain in the press release is we looked at the four weeks leading up to the various closures prompted by COVID. And we saw if we extrapolated that average across the affected markets that would indicate approximately $7 million impact to the topline. So we think it's a reasonable analysis. The interpretation of that to your own point, I think in terms of guidance, it does not change really our guidance per se for Q3 and Q4 for that matter.

And the one thing I would say is that I think the importance of the data is twofold, and we’ve received a lot of questions from investors asking us, what does this all mean? What is COVID actually mean for your business? And in the absence of knowing what has happened in July and what has happened in the first part of August, I think it's safe to say that the reason why we felt comfortable and we thought it was important to share that information is that the facility closures which really represented the sort of the adjustments we're talking about were arbitrary, right. It was the governor in a state decided that adult-use would be shutdown for period of time. That had nothing to do with the underlying fundamentals of the market or our ability to provide supply or our ability to sort of execute. It was just that one day and pick your day of the week, we couldn't sell to certain people. And so that was a really sort of unusual dynamic we'd never seen before. And frankly, it's hard to predict. But I think that it's safe to say based on what we've seen in July, the run rates and to Lars' point, the expectations we have for full-year performance are very much intact. And more importantly, there was no disruption either in the quality of the underlying fundamentals of the business or the quality of the underlying fundamentals of the sector. So I would say that the reason why we tried to sort of present it the way we did is that, obviously we're beginning to see improved gross margins, which are really having a big impact on our, let’s call, our operating margin. We've also seen some improvements in operating line items, sort of let's call it, cost line items below the gross margin line. And all of those are translating into what we had expected, which is a conversion to a consolidated positive EBITDA platform in the second half of this year. Our incentive is to always over-perform, under promise and over deliver. But I guess that – we think that the numbers sort of speak for themselves in that. We were happy with the way the gross margin performed. We think there is considerable expansion opportunities, improvement opportunities at both the operating margin and gross margin level. And as we've always said, we may not be the fastest company, but slow and steady wins the race.

Great. Appreciate that color. That's helpful. Just pivoting maybe to Colorado, so you guys don’t provide the pro forma numbers for the quarter, but you did reiterate your full-year guidance and that implies $20 billion revenue coming out of Colorado each quarter. So can you provide any color on how that market did in the three month period for Q2? And if you can, the TGS more specifically, but understand if you can't and maybe just the market dynamics that have been happening there?

So we can provide some very high level comments, and I will also turn it over to David to share some thoughts. Colorado, like every other market saw some difficulties in the first part of the quarter. And obviously a large portion of that market continues to be driven by visitors, right. It's a $1.8 billion market with six – roughly, 7 million full-time residents. They have 40 million visitors a year. TGS happens to have a very diversified portfolio, so that they can benefit from, let's call it, the permanent resident base as well as the vacationers. And what we saw is that in the first half of the quarter, they had their challenges just like everybody else. But the second half was exceptionally strong. And I think it was driven by a number of factors, but they are hyper focused on their market and their business. And we've had the privilege of working closely with them to make sure that they know what we're doing. We know what they're doing. So well, I don't feel comfortable providing too much granularity. I think that they've done a good job, navigating some very complicated moments. So let me turn it over to Dave and see what else he can add.

Sure. Thanks Nick. The only other thing I would add is that the market has in Colorado rebounded nicely over the last several months – a couple of months. And I think the TGS team has held the line. It's not taking market share over the same time period. So we continue to be enthusiastic and excited about bringing the TGS team and company into the Columbia Care umbrella. And so what we thought about at the beginning of the year and even at the end of last year, continues to play out in Colorado from our perspective.

Okay. Thanks. I'll pass it on. Thanks guys.

Our next question comes from Scott Fortune with ROTH Capital Partners. Please state your question.

Good afternoon. Congrats on the quarter. Real quick, can you provide a little more color on the CapEx? Now you're pulling forward additional focus on some CapEx. Are you looking at to deploy that? And is that the legislative environment you're seeing is picking up is changing more positively to expand a little bit on the CapEx side?

A couple of thoughts, I'll pick on a couple of markets, and I'm actually going to ask David and Lars to comment as well because I think that this was – this is one of those moments where free cash flow is a huge, huge driver of our planning process. But as you know, we over-raised. And so we over-raised to give ourselves the flexibility to lean into certain markets. In the markets that we chose are choosing to lean into are those markets that are converting to adult-use. The lesson that we learned in Massachusetts, the lesson that we learned in Illinois, both of which have been incredibly successful experiences for us is that if we have the appropriate infrastructure in place, we can come out very strong and have a extremely strong footprint in both the wholesale and the retail market. New Jersey is no exception. New York will be no exception, right. Every other state that we're in will basically play out in the same way in our opinion. And so when we think about the cultivation capacity we have available today, and we look at the ways to create real profit and real cash flow to build shareholder value, it really comes from two different sources. Number one, it's going to be through investing and go basically a mile deep in the markets where we already have purpose-built infrastructure. So New Jersey is a prime example. We know that that – we believe that market is going to convert in the first quarter and we want to be a market leader there, Period, End of Story. I would say the same thing for every other market that is converting and we have nine markets that could convert from medical to adult-use. So if you think about the average trend line that changes almost overnight when that conversion takes place, you have a 3x to 5x increase in topline almost within a 24 hour period. And so being positioned well for that rebase, for us is one of the things that's going to really drive value over the next 24 months from a shareholder perspective. And so let me – with that as kind of the high level, let me turn it over to David and just ask him to comment on the couple of other markets.

Yes, sure. I would reiterate what Nick had just mentioned, I'd also include states like New York where we think adult-use is obviously a very big opportunity and we want to continue to have our market share and be prepared for that conversion. We also are looking at some of our markets that are either scaled or in the process of scaling and bringing in automation throughout the manufacturing supply chain to make sure that we can find ways to improve gross margin between now and mid next year. So we want to continuously find ways to find those opportunities. We obviously have the opportunity both in New Jersey and Virginia to expand the number of dispensaries from regulatory perspective. So we're looking at those. And we also want to be fully prepared for Virginia as a market leader with respect to, number one, we're vertically integrated, obviously, in say Virginia, but we want to be the number one player there. So being prepared for what we think will be a very strong market in 2021 and entering 2022, we want to make sure we have the opportunity to prepare for that.

Okay. That's great. And then real quick, can you follow-up with Florida market. It's been a large cost center for you overall, but step us through now that you have the capacity turning on and you haven't really given potential guidance for positive adjusted EBITDA, but can you step us through your expectations in Florida market in the second half here and looking out to 2021?

Sure. Nick, maybe I'll just – I'll answer personally. You are correct. We've invested a significant time, money and energy into the Florida market. It's obviously one of the fastest growing medical markets in the country. We are now at full bloom in both our indoor and our modified [indiscernible] locations in the state of Florida. We have received a number of regulatory approvals for new products both expansion of canopy and new product approvals. That process was dramatically slow during COVID for the obvious reasons. I think many of the things within the regulator were deprioritized to make sure they address COVID. So we had a number of things pending with the regulator, which we've now for the most part have received and are now scaling up. Not only taking the down full harvest, but we're now in full-scale production as well. So there are several markets, Florida is one of them where we are adding staff on a weekly basis to scale up knowing the biomass is now available for us to process. So wasn't that easy to hire people during the COVID period in the last couple of months. It is getting a bit easier now. So we are bringing new team members in, in several markets, including Florida. We knew that we needed to have a more diversified product portfolio, which we now think we have both for flower, flower derivatives and concentrates. And so we are starting to work more hand in hand with our marketing team with Jesse's leadership to start really engaging in the Florida market so that people are aware of, number one, our locations throughout the state of Florida, what we have on the shelf in terms of the new products. And at the end of the day, we did have a number of dispensaries that were relatively newly opened, heading ready to COVID. So we're still in the brand building time period right now down in Florida. So our expectations, the energy, the focus from everybody within the corporate team and the shared services groups is working in Florida to make sure that we deliver on our – on what our own internal expectations are with respect to the commercialization opportunity in Florida. But I'll hand it over to Nick to answer as well.

Yes. I mean, I think the short answer is we expect Florida to be a driver of both revenue and profitability. I think the real sort of rate limiting factor was making sure we had enough products to push through our dispensary infrastructure. And I think the most bullish sign that we can show you all is the fact that we're opening up four more dispensaries because we have an adequate product to just basically populate the shelves. Our four walls analysis, when you look at mature markets, they are incredibly attractive, right. The profitability at the dispensary level is significant and we have an outstanding team in Florida. So I think that we're – we always try to be cautious, being one of the only MSOs with actual guidance out there, we don't want to sort of overplay our hand, but we think that there is an enormous opportunity with the quality of the products and the quality of the service and the quality of the sort of the experience that we bring to Florida for us to really begin to move the needle in 2H. Lars, do you have anything to add?

No, nothing additional for me.

Okay. Thanks for the color. I'll jump back in the queue.

Our next question comes from Patrick Sullivan with Eight Capital. Please state your question.

Hi, and thanks for taking my question. I just want to ask about the Columbia Care credit card. If you can tell us how many markets that's currently rolled out in? And if there is any notable trends related to the card used during COVID that we're seeing, and if any of those behaviors has held in?

So I'll provide a little bit of an overview and then hand it over to David. From sort of a thematic perspective, the CNC card, which has gone through a complete rebranding – branding process and will be actually launched we believe with another, at least, one more large operator in the United States in the third quarter. That has been a significant driver of value for us. And I say that because people have not wanted to use cash. It enhances our ability to sort of leverage the Virtual.Care portal that we have for virtual shopping for home delivery. Every aspect of our business is facilitated by offering this capability. We really haven't seen a shift in the quality of the people of the risk profile. People pay their bills. They pay them in a timely way, and they're happy to have access to it. So from a just a thematic perspective, it's been great. And I think that it's been really important to see how the card and how the consumer behaves in this environment because very rarely do you get to see something like this before you go through the national launch. And so let me – with that, let me turn it over to David and he can provide some additional stats.

Yes. So we still plan to bid to have the card in every one of our markets by the end of the year. There are a couple of states where we're going through the regulatory approval process to get that done. As Nick mentioned, we've gone through an internal rebranding for that. It was clear as we talked with potential third-party operators that having a independently branded platform makes more sense. Furthermore, we've now optimized the actual commercialization process for the card in dispensary, the four walls, which we've been working on for the last probably 2.5 months to make sure we understand how this can be positioned with customers and patients to be optimized and to work with dispensary staff to make it an efficient platform for them to engage with, with respect to how they communicate and interact with patients and consumers. We've continued to make sure that the technology platform scales as volume has continued to come into the platform. And so I think we've done a lot of work behind the scenes to prepare this for potentially a bigger opportunity within the industry, but to reiterate what Nick said, it's been a very helpful asset for us during COVID where people did not want to use cash. And it actually helps with curbside, express window pickup options and home delivery for the obvious reason. So continue to view it as a strategic asset for us, and hopefully through the rebrand and launch with the non-Columbia Care dispensaries between now and the end of the year, we're excited to see the technology become hopefully a mainstay within the industry.

Okay. Great. Thanks. And then I guess to ask a more state level question. So you mentioned you're selling through all of your own product in Arizona through your dispensaries, is that one of the markets that you're looking to expand capacity in preparation for adult-use?

The answer is, yes. We have a very good footprint there. I think what's unique about Arizona for us is that we've conducted due diligence on almost every asset that's been for sale in that market. And what we've found is that, our strategy has always been predicated on revenue per square foot and making sure we have efficiency at the store level, not necessarily having a lot of stores. And we've had a hard time finding operations that match the level of profitability and performance that our team has been able to match with our existing portfolio. And that's both on the manufacturing side and in the dispensing side. And so we're certainly interested in expanding in Arizona. We're very happy with the place we have. I would say all the markets that are transitioning from medical to adult-use, Arizona is probably the most – the least restrictive medical market, meaning it's the one that feels most like an adult-use market. And I think the fact that Arizona is right next to California means that it basically has a lot of lead through across the California border. So it's hyper competitive. And so the type of transition opportunity that you see in an Arizona, in our opinion will be significantly less than in a place like New York, where you have basically a pilot program that's $40 million, but you have an illicit market that's somewhere in the neighborhood of $3 billion to $4 billion in the five boroughs of Manhattan alone. And you have got a 20 million person should have permanent residency based along with a quarter of a billion people who are visiting New York State every year. So when we think about that sort of the big opportunities, it's still on the East Coast, but we think Arizona is going to be a great market.

Okay. Great. Thanks. If I can sneak in one last one. So you mentioned six markets with positive adjusted EBITDA, I counted five in the press release. I was wondering if you guys could let me know the last one.

Sure. Let me look at the press release. I thought it was six. But Lars, which ones are we missing?

We did have in the second quarter, I think we mentioned Massachusetts, Arizona, Illinois, Pennsylvania, Ohio, and we actually had – we just snuck over on Delaware as well.

Okay. Great. Thank you.

Thank you. Our next question comes from Andrew Semple with Echelon Wealth Partners. Please state your question.

Hi, everyone. Congrats on the quarter.

Thank you.

Just wanted to get your – just wanted to focus on Virginia for a moment here. In your comments about commencing operations in half 2020, could you give us kind of a little bit of a sense on what you're seeing in that market? Do you think the second half of 2020 is a little bit early to see meaningful wholesale revenues with somewhat of a lack of dispensaries open there? Do you think it's more of a 2021 story? And longer out, do you think this could potentially be a top five market in your portfolio? Just a little bit more commentary on Virginia would be…

So Virginia for us is really interesting because it is a – it's a Southern state that has a progressive legislature and governor. And so they – actually, it has bipartisan, the medical marijuana program has bipartisan support, so where Republicans and Democrats both support it. There are certain regulatory changes that have been made in the past several months that have completely changed the dynamic. And I think that that's one of the leading indicators you typically look for when you're trying to kind of position yourself for very, very high levels of growth and profitability. I would say this, Virginia is probably some – it's about unlimited 8.9 million, 9 million people and Illinois about 11 million people, something like that. So let's say it's roughly the size of Illinois, but there are five operators. The idea that you could see flower sort of incorporated into the medical program is a realistic opportunity. And we've all seen what happened in Florida when they decided to incorporate flower into the medical program. And so I think that you have – for us it's a 2021 opportunity. 2020 is going to be just fine, right. It's important now. This is what's so great about having a diversified portfolio. We can make investments like this and still hit our mark and be consolidated EBITDA positive, but continue to expand into new markets so that we have that line of sight on long-term growth. So that's not to say it won't hit our revenue line in 2020, it will and we will do everything we can to get as close to EBITDA positive as possible. But I think some of that depends on how quickly we can open up our new stores and how quickly we can ramp our cultivation. And as we've learned in the past, any market where you have regulatory – the potential for regulatory delays, it probably not good markets to try to make expectations sort of half-half, so when we think about sort of what's driving our 2020, it's really kind of the existing portfolio for 2021 when we provide guidance for that, Virginia will be a real competitor as well as places like New Jersey.

Great. Appreciate that. Turning over to Massachusetts. In that market, potentially a market where we've seen significant pent-up demand for the adult-use sales program. From what you're seeing on the ground, do you think there's any risk that there could be a potential curtailment and demand over the next couple of months? Or do you think this is our new run rate?

So whether or not this is the new run rate, I think it's hard to say. I'd love David's thoughts on this. But what I can tell you that sort of interesting about Massachusetts is that, we're taking a number of steps to improve not only the products we manufacture and the products we make available to consumers, but also the different pricing architectures and access points. The meeting we have in Boston this week is critical, right. Because we become one of the first operators for dispensary in the City of Boston, you all know how meaningful Greenfield and Lowell have been in terms of creating profitability and revenue. Imagine the impact Boston could have. And so we're very grateful for the opportunity to present to the City of Boston and to convey our gratitude to the CCC and to show what we've done from a diversity and inclusion perspective throughout the State of Massachusetts. But of course, successful in that process, which we hope we will be. That's a really meaningful change to the Massachusetts opportunity because Boston is without – I mean, it's the biggest city in New England, and it's materially larger than sort of the surrounding populations in places like Lowell. And I think at this point based on the existing – based on the kind of the current slate of applicants, we will be the only operator in the sort of downtown crossing, downtown area, which is obviously a very high density population area. So David, I don't know what your thoughts are?

Yes. The only thing I would add there is that we continue to learn from Massachusetts. It was our first adult-use market as a company. We've done things like prepared for second shift to increase throughput in manufacturing. We're adding automation in Massachusetts. We're adding some canopy in Massachusetts. We're extending hours in our dispensaries to match demand. We're driving more efficiency to lower transaction volumes. So that on a daily basis, we can increase the number of patients and customers we can see. We took the time during COVID when we did have reduced volume to work out how we could start to bring more of our Columbia Care, Patriot Care products into the adult-use side of our menu. So look for our menu over the next six months to go through, some pretty dramatic change and bring things that we've developed in other markets into the Massachusetts market. We've got a great local leadership team there. They're passionate, dedicated to growing that business, have great relationships with patients and the customers. And so from my perspective, I continue to see upside even though we do know that competition is coming. We see competition in all of our markets. Massachusetts is no different. And we're just excited about the opportunity to continue to bring new products to that market, expand hours, increase throughput and continue to find opportunities to grow that business.

Thanks for the insight into those markets. I'll turn the call over now. Thanks.

Our next question comes from Jason Zandberg with PI Financial. Please state your question.

Thanks for taking my question. I wanted to know – you mentioned in the press release that the TGS acquisition will be completed after the regulatory approvals and so forth. I recognized it must be tremendously frustrating to sort of predict when these things close. But I wondered if you could give any more color in terms of is this a couple of weeks, is this a couple months like should we including our model and closing during the Q3 quarter ending September? Or how should we think about the timeline here?

So it's a very fair question. And candidly, the reason why we're vague is because we thought we had everything dialed in, bleeding to the midyear close, and we clearly didn't, and COVID has thrown a lot of things off from a timing perspective. What I can tell you is that we are – depending on who you ask on my team, it's either – it's a few days, a few weeks or a few months away, and that's – and everyone has their own perspective because we've got operations, finance, legal, regulatory. I like to believe that we've been doing everything we can to prepare for the approval process, so that we can basically complete the transaction as soon as we have permission, but it has not been a sort of – there's not been a simple process to get through some of the regulatory hurdles. And so I would love to provide more guidance. I think that is it a third quarter issue? Do I hope so? Absolutely. Am I willing at this point to sort of say, I'm going to sort of put my career on it because if I say something on this call and it doesn't turn out to be true, my Board will fire me and there's just not necessarily no two ways about it. So I'm little reluctant to say something that I can't absolutely stand behind, but it's not because of a lack of interest, it's not because of a lack of opportunities. It's really just because we want to make sure we don't have any foot faults and pushing too hard with the final steps in the process.

Yes. Okay. Fair answer. I understand it. A lot of this is outside of your control, so it's hard to make an estimation of someone else's timeline. Okay, another question. Just I wonder if you could update in terms of the number of dispensaries that were opening sort of system-wide at the end of the quarter, and where you expect those numbers to be at the end of Q3 and Q4, if that's possible?

So I believe we had 36 open at the end of the quarter, and we expect to open up one in Illinois, perhaps one in New Jersey – perhaps two in Florida, perhaps one in New Jersey, perhaps one in – one definitely in Illinois. What about Virginia?

Virginia, it might be Q3 as probably into Q4.

Yes. I think let's start with that roster. But just for the sake of everyone on the phone, the trajectory for our growth and it’s really being driven by same-stores. So anything incremental is something that we hope to be able to leverage. And remember, the balance we're trying to strike now is that our number one goal is to hit profitability and to drive that EBITDA positive number. So we may begin to slow down some of the introductions of new facilities because we want to make sure there's enough of an EBITDA cushion, so as we open up a new – ramp up new operating teams, it doesn't detract from the overall story and the progress that we've made.

Okay. That's good. And just one last question, if I could. You mentioned the expectations to be EBITDA positive by Q4. I'm just wondering whether, I look – personally look more at the operating cash flow at my models. Just wondering whether you – and if don't have the numbers handy I understand, but would you expect to be operating cash flow positive by Q4 as well?

We haven't provided that guidance yet. So if I could provide some context to the response, we as a management team and the Board looking at the management team's performance, focus on that metric. So for what it's worth, we're looking at exactly the same calculations that you were. We just haven't provided that to the Street because obviously, one of the things that always affects our cash flow from operations is the working capital we need when we begin to build inventory, and we open up new markets and we opened up new facilities. And that's the sort of thing where I think that we feel pretty good about the second half trajectory of that phenomenon. But most of the directional requirements that we've been sort of privy to from the investing committee has been focused on EBITDA. But I will tell you that we are hyper focused on cash flow from operations as well. And so if you could imagine us being EBITDA positive, the number one priority after that is to make sure that we are cash flow positive as well. And by the way, that is the number one criteria we look at when we look at M&A.

Perfect. Well, thanks for the color.

Thank you.

Thank you. Our next question comes from Glenn Mattson with Ladenburg Thalmann. Please state your question.

Hi, thanks for taking the question. Most of the topics have been iterating, but just so curious on – Nick you talked about – for New Jersey, at least you kind of talked about, I think a lot of people on this call expect that it would convert to the adult rack on the November vote, but you kind of hinted that you thought it'd be up and running by Q1. Can you just give us – is that kind of what you meant to say? And then just give us some color as to why you think it could turn around so quickly given that there has to be legislation written and the normal tie-ups that happen there?

Well, it's funny. I was surprised to the upside in the State of Illinois when they went through their process. And the thing that Illinois has that, New Jersey has is sort of a pre-approved agreement between the governor and the legislature. And so both sides are supportive of moving through and creating legislation. And an enormous amount of discussions have been had already in Trenton both from the Governor's team and from different leadership teams in both the assembly or the House and the Senate. And so I think the first quarter is a reasonable expectation to see the implementation of a program. I think these things always slip. But suffice it to say the opportunity is so significant in New Jersey. And we have – it's in our front yard. There is no – I mean, large lives in New Jersey, right. We should be one of if not the leading player in the State of New Jersey. So when we think about the states where we have, where we call it home base, like this is, this is, this is where we are. And so I think what's great about the State of New Jersey program today is that we are already maxed out in our capacity. We already know that we need more cultivation and manufacturing capacity. We already know we need more dispensing capacity because the demand is there. And our products are very good and our service is very good. So the team has already telegraphed back to us that they need more because they can deliver more. So that's the type of environment where we – first and foremost, we don't want to leave anything on the table and we are right now. So we just hit the time to invest it now, and secondarily, the time to prepare for the flood of adult-uses before it actually passes. So we can actually walk into that market and just be one of the leading players bar none.

Lastly, and also in New Jersey, can you give us a sense for where the other two stores are located? You can share that yet? I can't quite recall.

We have not shared it yet. Bu we have – we found the first location. We think it's great. We're actually very, very excited about it. And the second location, we haven't disclosed, but we've got a line of sight on the place right now. And again, that appears to be a very high quality location.

Okay. Thanks for the time.

Our next question comes from Russell Stanley with Beacon Securities. Please state your question.

Hi guys. Thanks for taking my question. First just around M&A, you mentioned cash flow being a number one criteria there. I'm just wondering if – what you're seeing on that front in terms of valuations we've in seen public company evaluations, obviously Quinte. Is any of that filtering down as a private market at this point? Are you seeing prices start to reflate if you will?

We haven't. I think the management teams have been sobered by the past several quarters of market volatility, especially the sophisticated managers. And I think that rather than focusing on price, they're really trying to focus on value. So there's a higher premium placed on cash. And then there's also a higher premium placed on what kind of stocks that they would receive. And so if we walked in with an overvalued stock in a business that won't run well or wasn't run as well as Columbia Care. I think we would probably be looking at a little bit more sort of pricing inflation, but that hasn't really been the case. We found people who understand what it as we do? Why we do it? They've kicked our tires. We've kicked theirs. They're happy with the business, the fundamentals from an operating perspective. And they've made the decision, when we've had conversations that this is the stock they want. And so our ability to add a little bit of cash into transactions helps, but for the most part, I think that there has been a – you always have people with unbelievably outrageous expectations. Those are the assets they either get sold to people who don't know how to run them or they don't get sold at all. We're more interested in finding people who understand that if the opportunity isn't to take a dollar off the table today is to create real value long-term.

That's great. Thanks for commenting on that one. Just one last question for me, just on Illinois in the wholesale business there. I'm just wondering if you could share, I guess how many dispensaries you're selling into in that market. And I guess how you position yourself in that market given that there are a few larger competitors that are focused on wholesale as well?

Sure. Nick, I'll take this one. So we just started, as Nick mentioned over the last month or so selling into the wholesale market, really high quality flower and flower derivative products. As you just mentioned, the demand is overwhelming for flower and flower derivatives. And so we've not had any challenges thus far finding partners to work with. We've been operating a dispensary without our own production for a number of years. We've developed really great relationships in the State of Illinois. We also given our relationships in other markets where we've developed wholesale relationships. We brought those over to Illinois. So at this point in time, it's not a matter of developing the relationships from my perspective. It's about getting the biomass, taking it down and actually converting it into finished goods and getting it out the door. We are selling, and I've introduced the flower products and flower derivatives into our existing dispensary, and they become tough sellers, which is great. Certainly helps on the margin side. But with respect to selling into third-party operators is not been an issue thus far. We've got great relationships.

Excellent. That's great. Thanks for the color.

Yes. The one thing, it helps to have THC levels of 37% with your flower, right. I mean our third-party testing products. It's a different class of product. So I think that's obviously a nice advantage.

Understood. Thank you for that.

Our next question comes from Vivien Azer with Cowen. Please state your question.

Hi. This is Gerald Pascarelli on for Vivien. Thanks very much for taking the questions. So I guess I'll start on New York. Just looking at the pressure on, obviously, a notable increase in deliveries, I'm just trying to reconcile that with the month-over-month growth in that table that you laid out. I guess, ask in another way, do you believe that the revenue generation within New York is being impacted by a bunch of consumers leaving the city? Or are there other competitive forces that play? Any color you can provide on that market will be helpful. Thanks.

Yes, absolutely. So I think that the New York has definitely been affected by COVID, New York State, and New York City. The real hindrance for market adoption in New York is not COVID, it's the program. And I think that the regulators are aware of that. I think the governor is aware of that. I like to use Florida as a sort of a – as a predicate. Florida was basically a languishing program until they introduced flower. And the reason for that is flower is the least expensive form factor, is the one most people are familiar with. It provides a degree of familiarity that this sort of preexisting consumers are aware of and know-how to sort of consume. And so I suspect and I believe that New York, you've seen a shift in a more – a higher degree of confidence in people moving those dollars out of the point of sale, which is great because for us, we don't want lines. We want efficient point of sale transactions. But we do want to maintain market share, which we have. In fact, we've increased our market share throughout the quarter. But at the same times, the program itself has to evolve with the marketplace. And so we obviously were waiting for the team in Albany to either legislate and agree on an adult-use pathway or determine what the best ways to increase and expand the medical program. But the fact is New York State has financial issues and this is arguably one of the most practical solutions to solving a major gap in the New York financial conundrum. And that's for the city and for the state. And so we sit and we stand at the ready, and we think that New York will move quickly because they have to. And I think that ironically, we were actually very close to having an adult-use approval before COVID hit. But if you recall, the assembly actually, everyone kind of dissolved right before the budgeting process was approved. And so it was very hard to manage through that process. So sometimes you get lucky. Sometimes you don't. I think in this case, we were lucky because we've been able to really enhance operations and get some really important increases in expansion for the regulatory medical program. But what we need is we need – we need flower. We need a couple of other form factors that are probably closer to adult-use than to medical, that are used by health and wellness consumers to be approved. And then we probably need some form of conversion to an adult-use program. But New York State and New York City are two of the largest cannabis markets in the world. So we've remained very, very excited about that.

Thanks Nick. That's super helpful color. Just one more for me. I guess I'll pivot to the federal level. And this is hypothetical, obviously, but if we assume that the Dems do take the Senate as well as the White House, and then you start to see increasing momentum around the STATES Act or the MORE Act. I was curious if you have a preferred outcome on either federal regulatory catalyst, STATES versus MORE, I’d be curious to get your thoughts? Thanks.

Well, look, I think the STATES Act is slightly more developed than the MORE Act. And I have tried to sort of prognosticate on political outcomes before and been absolutely wrong. And so what I've learned to do is, we've tried to sort of [indiscernible] ourselves, so that [has we tails] – heads, we win, tails, we win. And I actually do think that this is one of those unique moment in times where, when you talk to the Republicans or we talk to the White House about the sort of the headlines that the Democrats are trying to somehow support cannabis through a stimulus package. It's really just a headline. No one has a problem with cannabis, right. Cannabis is in too many markets, red state, blue state, red city, blue city, it doesn't matter. It's everywhere at this point. And so I think the difference is that this is an issue that people don't care about. So they're not really willing to fight for it in other way. There's some people who deeply, deeply feel strongly about it. But for the most part, if you go on Capitol Hill, it's sort of a – it's another issue that people think is interesting, but it's not necessarily a make or break. Now what's great is that we actually think that the closer the Presidential race is, the more likely the Republicans are to push for a STATES Act inclusion in one of the stimulus packages. And so that's the sort of thing where we actually think that we win, no matter what, right? So if the Democrats take over, we win and everything gets legalized to basically as quickly as humanly possible. If the Republicans stay in power, we still win because they – the Republican party is smart enough to know that this is an issue that can either push people to the polls or keep them home. And so we think that this is just a tool in the tool in the political toolkit on both sides of the party. But in either case, I think we come out strongly ahead.

Good. Thanks very much for the color, Nick. I'll hop back into the queue.

Thank you. Our next question comes from Aaron Gray with AGP. Please state your question.

Hi, good evening, and thanks for the question. It's been a pretty robust call. So just one from me on the Virginia market specifically. Great to see you guys are getting set up there for statewide delivery, but just when I think about that market, and you actually understand that it's more regional and you guys can have your [indiscernible] locations. But if that's going to be region specific, is it going to be economically attractive to deliver to the whole state, or how are you thinking about that? Or maybe just some more color on that specific state and how you're looking at it would be great? Thanks.

Well, let me start-off with some very high level comments and turn it over to David for some operational insight. We always sort of begin – we sort of aim small, in a small. And so for us, Virginia is an incredibly big opportunity, but it's a 2021 opportunity. So we're not going to try to sort of push out and overextend ourselves in an unprofitable way. I think we've learned at this point the way to build the business, so that we can actually have cash flow or finance the expansion. And in this case, we have a little bit of time to fund that expansion. So we're actually very excited about sort of incorporating the home delivery capability and the credit card capability into our dispensary and into our manufacturing and cultivation capacity. But I think that the longer-term plans are to sort of do it in a very judicious way based on what we’ve learned in the marketplace because what we don't want to do is to have sort of a capability that doesn't generate cash flow and that is dormant to a certain extent. But let me turn that over to David.

Yes. I would just echo what Nick just stated. We would start at the regional level where we're licensed with the number of new dispensary options that we can develop. And from a delivery perspective, we have been doing delivery for awhile. We do understand the economic model. We do understand route optimization. We do understand schedule delivery subscription-based versus delivering within the hour on a Friday night. So I think we understand how we can scale into home delivery over time in an economical way. So ideally you can build the distribution and the routes over time to gather more market share across the state, but we would be thoughtful and scale in it as appropriate to make sure it makes economic sense.

All right. Great. Thanks for the color.

Thank you, ladies and gentlemen, that's all the time we have for questions. I'll now turn it back to management for closing remarks. Thank you.

Great. Well, thank you, operator. I'd like to thank everybody that attended the call today, and we look forward to speaking with all of you and our investors and analysts when we report our third quarter results in November. On behalf of the entire Columbia Care team, thank you very much for your time and consideration. We really appreciate your support. Take care.

Thank you. This concludes today's conference. All parties may disconnect. Have a good day.