Miguel Martin: Yes. Well, thanks for the question, Pablo. I would say it’s not just online pharmacies. And so, what we’re seeing is a growth in the overall prescriber base. Now right now in Germany, it is a bit challenging because of the classification of cannabis as a narcotic for a traditional physician or clinician to prescribe cannabis. But that is starting to expand. And one of the things that’s been lost in all of the noise about what’s happening with the German rec business has been stated position of the German government to reduce bureaucracy and to open up the medical cannabis business. Right now in Germany, it’s about 0.1% of the adult population is in the cannabis system where I say in Canada, it’s 1%. So we are seeing some expansion outside of the online pharmacies.
And you mentioned the point about their catalog and how many brands are in there. A couple of things on that. First and foremost, one of the great challenges in the German market is the incredible rigor that they have with the testing to have products be acceptable in the market. It has to be in roughly around 10% of the state of potency in their lab. So product quality and availability that meets that spec is one of the key competitive drivers in Germany as opposed to say the distribution system that you’re referencing. The second thing in Germany what we’re seeing is an interest in more premium quality and higher potency medications. And so therefore, we’ve introduced two proven cultivars from Canada into Germany and the early read is that, they’re well received.
The last thing is, we saw a lot of investment as people were getting excited about a possible rec solution and now without being a bit off, we’re going to see consolidation. And so, unlike the rec business in Canada with the top 10 LPs only do 30% of the business. The top five LPs in the medical business in Germany might do two-thirds of the overall business. So there are efficiencies there for the LPs that can navigate that high bar and that can consistently connect with patients. And that will be a benefit both in the online system as well as the brick and mortar. And lastly, we do think that with the progression of some of the regs, traditional brick and mortar through a pharmacy is going to be much more the prevailing application as opposed to today’s execution that’s somewhat skewed.
Operator: Our next question comes from the line of Vivien Azer with TD Cowen. Please proceed with your question.
Robin Holby: Good morning. This is Robin Holby on for Vivien Azer. And thank you for taking the question. Given the pivot away from the Nordic facility, can you dimensionalize any near term gross margin headwind you might expect from moving supply for Europe back to Canada? And you mentioned this should increase gross margins over time. Could you explain what gives you conviction in the ability to increase gross margins above the 60% gross margin target over time? Thank you.
Miguel Martin: Sure. Thanks for the question. So one of the challenges with that facility, there are probably three primary challenges. The first is the regulations on what would be traditional remediation of pathogens, whether that’s powdery mildew or other things in that facility made it a bit difficult to achieve the same yield in production that we get out of Canada. So that’s one. Secondly, the size of that greenhouse facility did not really lend itself to the same sort of production efficiencies that we get out of our traditional indoor facilities that we have in Canada. And third, because there is no difference in terms of the ability to ship that product into that market when you’re able to utilize the scale and the sophistication and to be honest, the experience that we have with the Canadian facility into that European market, it’s a benefit.
