Goodness Growth Holdings, Inc. (PNK:GDNSF) Q2 2023 Earnings Call Transcript

Chris Yetter: You said yourself that cash is tight and you had to do some capital raises that you wouldn’t have wanted to do if the deal hadn’t broken apart. How do you think about whether it’s worth it to spend this money or the upside on the spending or the risk of winning versus losing litigation?

Josh Rosen: It’s probably not prudent to get into the sausage making of the litigation, similar to Eric’s question. But the core of our case here is relatively straightforward. If I were in Verano’s shoes, I’d feel compelled to protect myself by articulating the purported legal reasons for terminating the agreement. This is likely the economically rational thing for them to do, right? That said, most folks that I’ve asked about this and the specific situation suggest the same reasons for their termination as we believe with confidence, and these reasons also are probably relatively economically rational on their side. But it’s our strong belief that these reasons are not allowable reasons to terminate the merger. And so I highlighted during the prepared remarks that this litigation is the key asset of the company, mostly because of how I personally think about financial damages.

For those that don’t want my background or don’t recall my background, I was an investment analyst for the first decade plus of my career. And this includes spending significant time studying and working alongside some valuation gurus, including Michael Mauboussin at Credit Suisse. Looking at this situation as an example, one can get to some large numbers quickly by simply calculating the NPV of the corporate overhead savings alone. And that’s not getting into the nuance and how vulnerable we were left in New York after acting in good faith to prepare for the combined efforts. It’s just our general inability to get financing at terms close to what Verano achieves. These are real harms and while the math can get complex, the underlying factors are really fairly straightforward and supportable.

I understand it’s difficult for investors to give us credit, given the overall uncertainty of the time line and what’s by definition an uncertain outcome. But we see this as a highly important internal priority to maximize the probability in the magnitude of the successful outcome that we’re after.

Chris Yetter: Thanks for that, and thank you for your time. I’m really encouraged with the last few conference calls of a different tone than the ones nine months ago, and that partnership with Grown Rogue looks pretty auspicious.

Josh Rosen: Appreciate it, Chris. We are working hard.

Operator: [Operator Instructions] There are no further questions at this time. And this concludes today’s conference call. Thank you for attending. You may now disconnect.