Aaron Grey: So, first one for me, I just want to dive a little bit deeper into California. Thanks for some of the remarks that you’ve had, Darren. So, we’ve seen a number of active cultivators kind of come down meaningfully as they opted not to renew over the past six months or so, down about 1,200 about or so, just wanted to ask if you had any insight in terms of the outlook on that. It looks like there are a lot more renewals coming up in the next six months. So, you talked about some stabilization of pricing in the state. Do you think there could still be some more trimming of the number of active cultivation licenses? Do you think that has stabilized as people are seeing some more stabilization within the pricing? Thank you.
Darren Lampert: Again, it’s a very difficult question, Aaron. I think a lot of it has to do with financing, and really the state of some of the balance sheets of some of these California growers. I think, we all know that California is the epicenter of cannabis and always will be. And I think, it’s that delicate balance between the legal and illegal markets that you’re seeing right now. But with companies taking a very hard look at their operations right now, their balance sheets and their income statements, some of the larger companies that aren’t making money in California have made that decision right now that they’d rather look a couple years down the road opposed to just standing right now, just difficult margins and a difficult sales environment in California.
We are seeing some of our California stores outperforming right now. Our downtown LA store has been growing. Our Santa Rosa store right now is starting to grow again also. We have seen — when you look at California, much more trouble in the outdoor markets in California. So something that we’re keeping a very close eye on going into the spring this year, and we’ll make some decisions after we see some of our stores that are very, very second and third quarter oriented.
Aaron Grey: And then second question for me is just on private label, in case I missed it. Could you give me target you might have for this year in terms of private label and then how that might impact you guys reaching the higher, low end of the mid- to high-20s gross margin guidance?
Darren Lampert: As we said earlier, our private label penetration in our stores online was up from 6% to 12% of sales this year. And we believe that will continue into 2023. One of the interesting parts, we launched Drip Hydro in the summer of 2022, so you’ll have a full year of growth on Drip Hydro, which is, we believe one of the fastest growing, if not the fastest growing nutrient line in the country right now. So, we have extremely high hopes for that. We are also doing line extensions on Drip and Power Si. So, you’ll see some new products coming out of these brands that we’re very excited about. And the same thing with Char Coir. The biggest issue we had with Char Coir, a couple of years ago was really pricing coming in from indie on freight and we’re seeing freight pricing come down probably 70% in the last year.
So, Char Coir, which we believe is the premium brand in the market right now on the coco side, is becoming much more competitive on pricing. And we’re starting to see a tremendous ramp in our Char Coir brand right now. And we are coming out with new products continually right now. And we just brought in extremely talented individual on the R&D side and that’s going to help our private label penetration in €˜23 in the future. So, again, we do expect a nice bump, the number we’re not sure right now, but we will keep you posted on a quarter-over-quarter basis.
