Good afternoon and welcome to the 4Front Ventures' Third Quarter 2021 Earnings Conference Call. At this time, all lines have been placed on mute to prevent any background noise. After the prepared remarks, there will be a question-and-answer session. I would now like to turn the conference over to your host, 4Front Ventures' Interim Chief Financial Officer and Chief Investment Officer, Mr. Andrew Thut. Thank you. You may begin.

Thank you, operator and welcome everyone to 4Front Ventures' earnings call for the third quarter of 2021. I'm joined today on the call by our CEO, Leo Gontmakher; Interim President, Karl Chowscano; COO, Joe Feltham; and Jake Wooten, our EVP of Finance. Before I begin today, I'm obligated to remind everyone that during the course of this conference call, management may be making some forward-looking statements that are based on current expectations and are subject to a number of risks and uncertainties that may cause actual results to differ materially from expectations. These results are outlined in the Risk Factors section of our filings and our disclosure materials. Any forward-looking statements should be considered in light of these factors. Please also note a Safe Harbor, any outlook we present is as of today, management does not undertake any obligation to revise forward-looking statements. So, with that out of the way, let me give you a very quick overview of the call today. As always, I'm going to start with the review our thesis and strategy. Then I will provide some color on our third quarter results and an update of the progress we've made in the business over the last few months. I'll then hand the call over to Leo, who will go into a more detailed review of our operational trends, and I will highlight the milestones we achieved during the quarter before looking ahead to what's in store for 2022. We'll conclude with any question -- with a question-and-answer session, where the entire management team will be available for any follow-ups. So, it's becoming increasingly clear that the industry reforms on the federal level are all but inevitable. And as the pace of state legalization accelerates, I still believe that we are entering a golden age for our industry. Recent survey suggests over two-thirds of Americans are now in favor of cannabis legalization, making this a rare non-partisan issue during a time otherwise polarizing politics. There are now multiple avenues for reform that could be game-changers, like safe inclusion in the NDAA as well as recently introduced Republican proposals in the House, all of which we believe could ultimately help lead to broader institutional ownership, reduced cost of capital through financing from major commercial banks, and also access to major U.S. exchanges could stem from this. The business fundamentals of U.S. cannabis remains robust and we're witnessing the emergence of a massive secular growth industry. It's still very much in its nascent stages. At 4Front, we maintain that the sweet spot in the value chain of this industry lies in the low-cost high-quality production and distribution of cannabis consumer packaged goods. Over the past seven plus years, our facilities have established a dominant position in Washington State, with a full line of products distributed over 260 retail locations in any given month there. Our Washington is facilities the number one edibles manufacturer and the number two flower producer with overall number two market share in the state, outperforming over 600 license holders and one of the most competitive cannabis markets in the world. And we achieved this while maintaining very attractive margins and profitability. So, our investment thesis, as I always say, is simple. We're replicating these tried and true production capabilities from Washington into large nascent recreational markets in Illinois, Massachusetts, Michigan, and California. Today, all-in, we currently serve an addressable market of over 76 million people. As we deliver on this thesis, let's dive into our third quarter results and recent important developments with you today. First, and most important to our long-term growth prospects, we are pleased to now have the infrastructure in place to drive a robust 2022 and beyond. While most of you know we experienced some permitting delays that were out of our control with the launch of our Brookline, Massachusetts dispensary and Commerce, California production facility, those are now online and we have never felt better about the substantial growth trajectory in 2022. Despite a delayed ramp this year, our internal targets for 2022 and 2023 remain unchanged. The operational developments this quarter are proving transformative for our company and they have positioned us with positive upward momentum and reinforced foundationally as we move into year end. In Illinois, construction of Big Daddy, our new cultivation and production facility in Madison is now underway. Construction on the Phase 1 of the project, a 250,000 square foot building with 65,000 square feet of flowering canopy and approximately 70,000 square feet of manufacturing space broke ground in August and is anticipated to be completed in Q4 of 2022, beginning operations in Q1 of 2023. The full expansion of the facility once realized, will encompass 558,000 square feet to help meet demand amidst the dramatic increase in Illinois retail licenses and consumer demand turning online in 2022. Once complete, our Madison facility will produce over 20-plus in house brands and 1,800 products, which will be offered to Illinois customers at an accessible price point at our own mission dispensaries as well as partner dispensaries across the state. Big Daddy will also produce a variety of wholesale white label products including flower, concentrates, edibles, tinctures, gel caps, and other manufactured products for other multi-state operators, cannabis business and brands in Illinois. In California, our state-of-the-art 170,000 square foot manufacturing facility in Commerce, is now officially open and operational. The facility was completed on time and on budget, but as discussed on our last quarterly call, we experienced a delayed in the issuance of our Certificate of Occupancy due to multiple rounds of comments by the Los Angeles Fire Department. The Department has recently seen multiple legal and illegal extraction explosions over the years, including a blast last year that injured 11 firefighters. So, their extreme caution with a facility the size and scale of ours is understandable. While we experienced longer delays and anticipated during this local regulatory approval process, the facility is up and running in earnest and producing nine of our 20 brands for sale and distribution to licensed dispensaries in California via our partnership with Navis. Navis is the leading distributor of cannabis products in the state covering 100% of all licensed retailers and Navis has also leased 20,000 square feet of -- in our facility, which enables our retail products to seamlessly integrate into their inventory at the point of production, allowing for highly efficient distribution. In Massachusetts, perhaps most excitingly, last month, we announced the acquisition of New England Cannabis or NECC, a transaction that will significantly bolster our wholesale presence in the Massachusetts market. The acquisition, once closed, would be immediately accretive to our EBITDA and would solidify a scaled position in this core market, enabling broader market penetration of our diverse range of low-cost high-quality products and brands. Subject to regulatory approvals and customary closing position -- conditions, the acquisition of NECC is expected to close late fourth quarter of this year or early 2022 pending final CCC sign off. We're excited to bring this new opportunity over the finish line and to integrate NECC's operation with our growing Massachusetts model. So, with that, let me review the Q3 numbers. Q3 2021 system-wide pro forma sales were $33.1 million, an increase of 48% over the same quarter last year and effectively flat with a decrease of 4% sequentially from second quarter of 2021. With only five weeks of Brookline in the quarter and no revenue in California due to the permitting delay, the sequential growth in the quarter was muted. We expect Q4 to be aided by holidays, more wholesale revenue, and stronger margins. And with California now online and NECC ready to close, we expect strong growth to resume as we leave the year and enter in 2022. Q3 2021 adjusted EBITDA grew 103% to $7.5 million, up from $3.7 million in Q3 of 2020, representing an adjusted EBITDA margin of 23% as compared to an adjusted EBITDA margin of 22% in Q2 2021. Unfortunately, due to the delays in the local review process in Commerce, we didn't see meaningfully quarter -- we didn't see the meaningful quarterly step up adjusted EBITDA that we had hoped, as our targets were predicated on being fully operational in California. We were pleased that we were able to hold EBITDA last through the increased sales of our internally produced products, which are driving system-wide margin improvements as designed. With the obstacles facing our California opening now behind us, we expect adjusted EBITDA to meaningfully grow as our facilities begin to sharpen efficiencies and kick into high gear and we remain on track for step function adjusted EBITDA growth as we exit this year and into an active 2022. Our balance sheet leaving Q3 was in solid shape. As of September 30, we had $8.5 million of cash on hand and $47.5 million of related party long-term debt, which does not come due until May of 2024. Excluding $2.8 million in preopening cash expenses in Commerce, including material investments and working capital, cash flow from operations was once again positive as we continue to focus on operating expense reduction. And despite the industry's rocky performance in the capital markets and headlines around the lack of progress on banking reforms this year, we've never felt better about our position -- our market position and ability to execute on our strategy. So, our thesis continues to prove valid. We are successfully introducing the brand's products and best-in-class SOPs from Washington into new markets at scale. We're executing on our strategy of continued -- execute on our strategy of continued expansion into core markets of Massachusetts and Illinois and now California. The pre-commercial activity we're seeing in California, combined with our ongoing proposed acquisition in Massachusetts has us very bullish as we head into 2022, which brings me to my final point. I also believe that we are on the cusp of one of the most active M&A environments we've seen in our industry, as I briefly mentioned during last quarter's call, while details on safe banking and timing of meaningful change at the federal level remain hazy, they're near an inevitability is apparent. We reiterate that U.S. cannabis is a state-led story that continues to deliver and M&A activity in the industry looks like it will continue to heat up as companies buy to position themselves properly. Our goal has consistently to be -- our goal has been consistently to -- I'm sorry, our goal has consistently been to become a larger company, precisely to realize the benefits of our significant operating efficiencies performing at scale for which they were designed. As a management team, always looking for ways to maximize value for our stakeholders, we continue to explore new means to augment our growth via accretive acquisitions or as part of a larger platform. We are pleased with how the operational developments made during Q3 in our largest markets have positioned us with significant forward momentum as we wrap-up Q4 and prepare for what looks to be a very robust 2022. With that, I'll now turn the call over to Leo Gontmakher, our CEO who will dive a little deeper into our assets by state and provide additional color on our near and mid-term plans. Leo?

Thanks Andrew for the update on our business progress and on the strength we see in our model and within the industry. As just discussed, in the third quarter, we reached several substantial operational milestones that have generated lasting momentum expected to drive our growth well through 2022 and beyond. While we experienced minor delays during the California approval process before opening our Commerce facility, we are more confident than ever that we now have the tools, facilities, and teams in place to realize considerable growth in the coming year. During Q3, we made meaningful progress in the development in three of our core markets of California, Illinois, and Massachusetts, where we achieved major operational milestones towards bringing our scaled production capabilities into those markets. Beginning with Massachusetts, we're happy to report continued success and profitability as we reach our one year anniversary of adult use sales in the state. In August, we opened our third Massachusetts dispensary in Brookline, serving the wider Boston University in Boston Metro area. Since its opening, Mission Brookline has seen strong positive reception from the local community and like our other locations in Massachusetts, they've seen a steady incline in customer traffic post-opening. Following steady Q3 growth in the state, at the beginning of October, we were thrilled to announce our proposed acquisition of Holliston, Massachusetts-based New England Cannabis. The acquisition of NECC in its fully operational 55,000 square foot cultivation and manufacturing facility will more than double our total flowering canopy in Massachusetts, and significantly expands our strategic position in this attractive market by enabling broader market penetration of our diverse range of low-cost high-quality products and brands. Our transaction to acquire NECC is expected to close in the December-January timeframe, pending final approval from the CCC. As we continue to bring our efficient cultivation and production methodologies and our products in Massachusetts, NECC will allow us to strengthen our competitive position in the state with the capacity to support a meaningful wholesale business. This transaction with more than double 4Front's total flowering canopy in Massachusetts to over 30,000 square feet, with further expansion potential for up to an additional 10,000 square feet of canopy and will approximately triple 4Front's kitchen, processing, and distribution space. The mechanics are now firmly in place for a continued operational efficiency at scale. Illinois continues on schedule and in third quarter, saw the closing of Phase 1 of the build out of the highly anticipated cultivation and production facility we like to call it Big Daddy and up to 558,000 square foot cultivation and production facility located in Madison. In August, we broke ground for the construction of the first phase, a 250,000 square foot building with 65,000 square feet of flowering canopy and approximately 70,000 square feet of manufacturing space. The sheer size of this next-generation facility will allow us to meet the state's growing consumer demands and will help broaden the reach of our innovative low-cost cultivation and manufacturing methodologies and suite of brands of products, all while creating jobs and new streams of tax revenue for Madison, Cook County in the State of Illinois. Now that construction has officially begun Phase 1 of our project to create the largest cannabis cultivation and manufacturing facility in one of the country's fastest growing cannabis markets is anticipated to be completed in the fourth quarter of 2022 beginning operations in Q1 of 2023, offering 4Front's in-house brands and products to the growing retail and wholesale markets in the state. We have tremendous confidence that Big Daddy will be at another significant and continued validation of our thesis. The 4Front team and I could not be more excited to be bringing our scale to low-cost cultivation and manufacturing into Illinois and going head-to-head with some of the largest MSOs in this competitive market. Washington remains relatively stable with wholesale prices having rebounded from their lows in 2018. Our facilities have seen very consistent performance despite having more outdoor product in the market, causing us to pause on taking price. While we don't anticipate outsized growth in the Washington market, we continue to hold serve which is a testament to the market reception for our product and the focus of our team. Last, but not least, California. In October, we commenced operations at our Commerce facility, one of the largest, most automated cannabis manufacturing facilities in the world. The state-of-the-art 170,000 square foot facility, which is located just outside Los Angeles in Southern California, is now open and fully operational currently manufacturing nine of 4Front's 20 brands and 164 different SKUs. The delays that we experienced during the local regulatory approval process did not translate to idle time as we were able to further calibrate equipment and focus on building relationships with various large retail groups ahead of our launch. Our Commerce team has been working around the clock as it ramps up the production of a wide range of products, including infused pre-rolls, gummies, hard candies, fruit juice, caramels, mints, soft gel capsules, vapes, tinctures, and other manufactured infused products. We believe that today no other operator has been able to achieve this kind of manufacturing scale and the response we're seeing in the market has already been tremendous. With our suite of in-house brands on its way to market, custom-built automated machinery, advanced machine and automation technologies, expert commissioning, signature low-cost production, and large scale manufacturing capabilities, we're confident our Commerce facility will emerge as one of the premier multi-product manufacturers of high-quality low-cost cannabis products in the country. We secured a meaningful distribution partnership with Navis, a fully licensed cannabis distributor and wholesale platform with one of the largest portfolios of cannabis brands in the world, supplying 100% of California's dispensaries and delivery services. We believe our partnership with Navis will continue to be a key factor in helping us smoothly enter the world's largest cannabis market. So far, we've been very pleased with the performance we're seeing at this facility. We're also incredibly excited about the opportunities we see on the horizon. We believe Commerce will be a formidable growth driver for our company, particularly as more operators look to bring their brands to California. In fact, currently, we're in ongoing conversations with numerous potential partners to fully leverage the scale of our Commerce operations and look forward to sharing more good news with you on that in the near future. Let me just briefly recap a few Commerce highlights with you in just the last 90 days. We started producing nine of 4Front's 20 brands and 164 different SKUs on November 1st. We've manufactured 36 10-pack edibles and produce 17,000 vapes during the first few weeks of production. To give you a rough idea, that's equivalent to about two weeks of Washington's production, the market leader and derivative cannabis products in that state. We've distributed samples and estimate our samples will have hit more than 150 stores by the end of this month, 500 by the end of December, and 700 by the end of January. Furthermore, we think it's critical for you to understand why we're so confident in our ability to be a dominant player in one of the toughest most competitive markets in the country. It's no secret that entering California hasn't always been easy for everyone. That's why before we entered the marketplace, we did our homework, years of homework, we built relationships. We've had a team on the ground for years. Our decade working in cannabis has also enabled us to learn valuable lessons, which we believe will not only be applicable in California, but -- our growth trajectory. As many of you who have been following us know, our managed facilities are the number one edible producer in Washington, another incredibly competitive market. We achieve that market position through research, data, service, and consistency. Our approach to research and data has really helped us bring our customers and clients great products at attractive prices. Not only have we been studying the ins and outs of the California marketplace, but we also bring an unprecedent level of expertise in scaled low-cost manufacturing in highly competitive states. In short, this is not our first rodeo. We've done this before. We know how to win in a highly competitive wholesale market and we believe we will prove this again in California. As for annual guidance, we provided a range of system-wide performer revenue at $170 million to $180 million and adjusted EBITDA of $40 million to $50 million, which we knew would be backend loaded with the importance of California coming online. With the delays in California pushing in the late October, it's become increasingly clear that our timeline has shifted by a quarter. More importantly, our expectations for revenue and EBITDA targets for 2022 remain unchanged. We've consistently stated that the advantages to our low cost scalable operations are most apparent when applied over a large platform and we remain maniacally focused on demonstrating the value of that model at scale, following the completion of the latest initiatives. Our team's diverse skillset, combined with our compelling asset base in key strategic markets, has given us significant momentum coming in at the end of 2021 and I'm more confident than ever that we're positioned for robust scale growth in 2022. Before we open up for Q&A, I'll close my prepared remarks with a reminder of what we're playing for. We believe we have at least $650 million revenue opportunity and a $250 million adjusted EBITDA opportunity in the licensed market to which we already operate and we're taking our scalable efficiencies even further with these latest developments. To reiterate our thesis, we believe that the sweet spot for outsized value creation in this industry is around the low-cost high-quality production and distribution of cannabis consumer packaged goods. With our core footprint and capabilities now in place, we've really built out this company to not only address current opportunities at hand, but also the market demands of the future. We are now as confident as ever in our ability to drive sustained growth and capture significant share of every market we enter. We're very well-positioned to be a major piece of the cannabis landscape for years to come and we can't wait to share our continued progress if you following the successful end to this year. With that, I'll now turn the call over to the operator to open the lines for Q&A.

Thank you. We will now take our first question from Graeme of Eight Capital. Your line is open, please go ahead.

Hi, good afternoon and thanks for taking my questions. Wanted to start-off just by confirming on the 2021 guidance? Understanding the puts and takes in the business for the back half of the year, but is that being revised to a certain level or is that being withdrawn at this time? Thank you.

Yes, I mean, we're just trying to be very realistic Graeme. We -- when we reaffirmed our guidance in -- on the last conference call, we were expecting California to turn on pretty shortly thereafter. And the more that we sort of drifted into -- the October timeframe, the less realistic it was to coming in close. Now, as we look at Q4 right now, we're expecting return to pretty robust sequential growth Q4 over Q3. We are still seeing the ramp in California come on and we have some uncertainty about when we close NECC and we're still in the budgeting process, but we're very, very confident in our internal goals for what the outlook looks like for 2022. All of our business lines and all of the assets we -- that need to be in place for us to have a very robust 2022 and meet our internal goals are in place. We've never had that before. We feel very confident in our ability to operate. So, we are seeing returned to strength here in the Q4 with California coming back online, we see opportunities for additional wholesale in the quarter and strength in the market would come into the holidays. And we're excited to leave the year -- we're excited to leave the year leaving on a really strong note and take that momentum into 2022.

Okay. Thanks for that. Then just on just on the California side of things, then you mentioned how there's production that's in line with the same levels as Washington, then based on that and the output that you're seeing, is it fair -- how do the wholesale prices compare one state to another when we think about the revenue potential coming out of California? Is it fair to expect that they've had the same level of output when it comes to the revenue side of things? Or how should we be thinking about that?

I'll turn that over to Leo, and maybe with an assist from Joe as well.

Sure, hey, Graeme, appreciate the question. So, I guess, on the first part, I'd say that, no, our production over the first two weeks is in line with what we produce in Washington. That being said, these are the first two weeks of us ever running this equipment and we're very confident that every week as we keep going, that production will ramp up. And eventually, we can get to 10x what we do in Washington. Prices across the board are similar in some categories and are higher in other categories. I think California has shown itself to be a competitively priced wholesale market, but it hasn't hit the sort of prices that Washington has yet, across the board. I'm not sure when it's going to go there, but what we built out, allows us to be prepared for any kind of price compression as we move along. I think the potential for revenue in California is at least 5x to 8x what the potential is in Washington, with the ability to produce much more than that.

Okay. Thank you. And then finally, we're hearing a lot of discussion about wholesale market's softness in a market like Pennsylvania as more capacity has come online. I'm wondering if that provides any read-throughs into Massachusetts, you're about to significantly increase your presence in the wholesale market there and there's been very robust prices in Massachusetts. But just wondering what you're seeing from incremental capacity coming on wholesale pricing, what the outlook looks there? Thank you.

Again, I will turn this over to Leo or maybe Joe, you want to start and Leo fills in?

Sure, I'm happy to start this one. Right now, what we're seeing Graeme in Q3 and Q4 is that the number of retail stores coming online, still seems to be outstripping the capacity of core products. We're still getting, kind of, the same amount of inbound inquiries and asked for more product than we're able to supply that market. We are seeing pricing change on the retail side, though. And so that's a -- we're expecting our wholesale pricing to come down. We think happy day. This is what we're built for. Haven't seen it yet, but we're starting to see it on the retail side, so it's only a matter of time. Probably pretty soon.

And I would just reiterate that we're built for this. This is how our company operates. This is what our thesis is as wholesale competition ramps up. That doesn't scare us and we're very confident in our ability to get our product out.

Okay, I understood. Thank you for that.

Thank you. We'll now move on to our next question from Colin of Haywood securities. Your line is open, please go ahead.

Hey, Colin how you doing?

Good evening guys. Good, good. Just filling in for Neal Gilmer tonight. Thanks for taking my questions. Just maybe want to Joe in a little bit deeper on California and maybe some of the impact on margins there. Because it's manufacturing and production of more finished goods, is there a little bit more stability in that line than more pure raw biomass? Just looking at your gross margins, the last three quarters have been on an adjusted gross margin basis pretty stable at 55%. Just wondering how much of impact California could have that on the long-term run rate of the gross margins there?

Leo maybe you jump in on the pricing in California, what we're seeing and follow-up with Jake on kind of the long-term impact.

Yes, sure. So, I guess, to start, I would say that overall, in general, the margins are always better for finished manufactured goods. And as we predicted, there is a large oversupply of biomass and finished oil in California. So, our input costs have dramatically come down from what we initially modeled six months ago. Feeling very good that even with further compression from where it is right now, we can sustain fantastic margin 50% and above range.

Yes, I'll just reiterate what Leo said. Our original forecasts had the -- basically margins in line with the rest of the business and what we did not expect is our input costs to so dramatically decrease relative to previous expectations. So, that gives us a lot of comfort as we look into what our pricing environment looks like and what our flexibility is with respect to the wholesale pricing of our goods to still meet our original margin expectations, given this decrease in input cost.

Okay. Thanks. That's helpful. And maybe just one more for me on just surrounding OpEx. Based on what's reported that comes in around $3.2 million, but taking a look at the adjusted EBITDA, I'm calculating a little back of the envelope around $11.2 million, $11.5 million normalize kind of going wait for OpEx, that's not getting back. So, just any color around that if that's kind of the right level to be building off of going forward?

That one?

Yes, I think -- yes, provided that you're speaking OpEx inclusive of what we refer to as four-wall operating expenses. So, all the selling and marketing that would be for existing operating assets as well as corporate G&A and business development expenses that fall more in the G&A line, then I think you're in the neighborhood, yes. But if we're just talking 4Front corporate G&A, it's about half of that to 40%.

Okay. Okay, that's helpful. Yes, I think that answers all my questions and I'll be looking forward to seeing the results of Commerce show up in the coming quarters.

Yes, we're looking forward to getting folks out there.

Okay, thank you guys. That's all for me.

Thank you. We'll move on to our next question from Shaw of . Your line is open, please go ahead.

Hey there.

Hi, good afternoon or evening, depending on where you're at.

How are you doing?

Thanks for taking my questions. So, on the first one, you had a commentary in your prepared remarks about M&A in the U.S. cannabis space. So, I was just wondering what your views were in terms of the best ROI for your investment dollars in terms of investing further into your own -- into your infrastructure in the states that you're already present within? Or would it be into entering new states through some sort of acquisition? And if I could follow-on to that. In those new states, if you're looking at those, how would you bifurcate which markets are the most attractive to you? And what qualities or characteristics are you looking for in a market if you're going to enter there?

I'll turn this over to Karl Chowscano. Karl, you want to grab that one?

Sure. It was a pretty loaded question. Can we ask the first question again?

Sure. So, the first part was just where do you see the best ROI really for your investment dollars in terms of investing further into your own state footprints that are active today or into entering new markets?

Yes, it is an incredibly active time with lots of opportunities in front of us and I think the thing that's got us where we are is -- and I hate to use this term again, but I'm going to use it is that maniacal focus on operations or better put performance. So, yes, I mean, the best ROI for us, of course, is building our team and being able to exploit the assets and the opportunities that we have in front of us. Of course, having more retail footprint in Illinois would be a nice add-on and we're already as you can see investing further in the State of Massachusetts. With respect to California, I think it's very important for us to focus on getting our Commerce facility up and running to make sure that we have good penetration in terms of all the retail partners that we are already having discussions with. And also to explore to the extent strategically optimal for us, white label type arrangements. We do see a dearth of the ability to manufacture efficiently product in California. Are we looking retail in California? We really want to see what happens in terms of our facility, our production facility and the relationships and how they work. It's a bit of a double-edged sword and we have to be careful in that regard. Would we be interested in going vertical in terms of our supply of biomass? Well, it's starting cheap right now, but it's always good to have control. So, that would be something that we'd always be -- we will always be interested in as a good control source of our own fuel. Otherwise, in terms of M&A activity, generally, this is what we do. We have focused on -- we haven't changed our thesis, right? We have to be good operators, we build our engines, and we built it pretty significantly over the last year. We believe that we have a great engine that requires fuel. Therefore, to the extent that our team and our operating capabilities and our engine can attract or be part of a greater platform in terms of greater assets that meet our thesis of being a significant wholesaler and whatever market that we are in, of course, we're interested. So, anything that enables us to take our thesis and apply it to strategic markets with the appropriate platform is of interest to us. I don't think at this point, I could really identify what all those states are, I'd be happy to take it offline and our entire team could probably address that better. But we are -- we're focusing on what we do. We think we built the engine and we think the engine's attractive and we will let the M&A chips kind of fall where they fall.

Thank you. Thank you for the call today. I'll just switch it up from a second question then. And just touching on California, so congratulations on getting that up and running this quarter. I know that was a pretty large project. So, my question is just on distribution. So, appreciating that you have the partnership with Navis and kind of, the detail that you provided in your prepared remarks regarding getting samples out to about 150 stores to-date, just I was wondering if you could help us level set how much penetration your SKUs have in terms of a number of retail stores out there in California as we sit here today?

Leo, do you want to dress that one?

Sure. So, we're just starting our sales right now. We know the process in California or in most markets, in general, is to get samples out there in people's hands and get them into the buyers' hands and start taking orders. Again, we just got samples approved at the end of this previous week, so they're going out. No penetration to-date as far as product on the shelf, but very excited about the conversations we've had, the feedback we've gotten, and definitely expecting orders to start letting in here starting next week.

Thank you. That's it for my question. Have a good evening.

Thank you.

Thank you. We'll now take our next question from Howard of . Your line is open, please go ahead.

Hey, thank you very much for the question. I was wondering if it would be possible for you to compare and contrast your experience in Washington to what you're seeing in California in terms of the pressure on the pricing in the market or just the market in general? I'm not sure how to ask the question in the sense of how long did it last or peak-to-trough decline in price. Some perspective around what's happening in California for what you saw in Washington? And I guess you sort of did answer the second part of the question as in doesn't that play into your strengths in your facility in California? Thanks.

Sure, absolutely. So, we're seeing a very similar trajectory in California as we saw in Washington, which is a very exciting ramp-up and beginning where there's a shortage of product, then a lot of people getting licensed, more material coming online, and we're seeing kind of the first shakeout of what the market will look like. I think there's still a lot of brands that are around today that won't be around six months from now, or six months from now, there'll be 500 new people that enter, which is kind of been the pattern already in California and exactly what the pattern was in Washington. Prices are starting to drop, cultivation starting to shake out. We feel extremely good about the similarities between the two markets knowing that we've learned a lot over the last six or seven years in Washington, and we built out California from day one ready to take on what we assumed was going to happen. So, our ability to react and to be even more on top of it can be where Washington is set out for us. And part of what we do best is going to market, listening to market and then making quick adjustments to make sure we're always current and trends of what's happening, and being a market leader in price.

In the response to a question -- a previous question, you sort of alluded to that you thought crushed pricing in California with wholesale pricing would continue to come down. Any chance you want to take a shot at how much you think it could come down?

I think there's going to be waves, it's going to keep going down until the retailers working -- in some categories and I think edibles are basically at their low, you're not going to see much more of a compression for kind of the $5, $6 price range that you're seeing. You'll have some room in vapes and there's a lot of room in tinctures and capsules for them to come down and can still be well above what the pricing is in Washington. But I think eventually big players like us, working together with an industry with retailers, we find a sweet spot for price versus volume. And then if that sweet spot has been breached, prices go back up as the market shakes out. If there's more volume to be done, then you try a lower price and keep pushing it. I think it's just a matter of getting the market more fully baked, getting more retail open and then taking a look at the data and pushing.

Appreciate the line of questions. Thank you.

Thank you.

Thank you. There are no further questions at this time. I'd like to turn the conference back to you for any additional or closing remarks. Thank you.

We're extremely excited about the forward momentum we've built here and prepare us for the road ahead. I'd like to thank you all for joining the call today and look forward to filling you in on our continued progress on our next call. Have a great day.

Ladies and gentlemen, this concludes today's call. Thank you for your participation. Stay safe. You may now disconnect.