MariMed Inc. (PNK:MRMD) Q4 2023 Earnings Call Transcript

MariMed Inc. (PNK:MRMD) Q4 2023 Earnings Call Transcript March 7, 2024

MariMed Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good morning. Good morning. My name is Lara and I’ll be your conference operator today. At this time, I would like to welcome everyone to the MariMed Inc. Fourth Quarter 2023 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. I will now turn the line over to Mr. Steve West, Vice President of Investor Relations, to begin the conference.

Steve West: Good morning everyone and welcome to MeriMed’s fourth quarter and full-year 2023 earnings call. Joining me today are Jon Levine, our Chief Executive Officer; and Tim Shaw, our Chief Operating Officer. This call will be archived on our Investor Relations website and contains forward-looking statements. Actual events or results may differ materially from these forward-looking statements and are subject to various risks and uncertainties. A discussion of some of these risks are contained in the risk factors section of our 10-K and our earnings release, which are available on our website. Any forward-looking statements reflect management’s expectations as of today, and we assume no obligation to update them unless required by law.

Additionally, we will refer to certain non-GAAP financial measures which are reconciled in our earnings release and our supplemental slides located in the Investors Section of our website. Finally, our first quarter 2024 earnings release is tentatively scheduled to be issued after the markets close on May 8 2024 and our Analyst Call is tentatively scheduled to be held on the morning of May 9 2024 at 8:00 a.m. I will now turn the call over to Jon.

Jon Levine: Thank you, Steve, and good morning, everyone. I’m pleased to report that MariMed had another strong year, which was the result of revenue growth in our core wholesale business in Maryland and Massachusetts, as well as our new dispensary ramping towards maturity. Even though we face significant regulatory and construction delays beyond our control, MariMed continues to perform better than the overall industry in terms of top line growth and financial strength. We reported double-digit revenue growth for the 6th consecutive year. We reported positive adjusted EBITDA for the 16th consecutive quarter and fourth consecutive full-year. And we generated positive operating cash flow for the fourth consecutive year. I am not aware of any other cannabis company that has a proven track record of [Technical Difficulty] positive results equal to ours.

Let me quickly highlight a few of our key achievements during the year. In Massachusetts, we acquired Ermont, a vertical operator in Quincy, and opened a new dispensary in Beverly. We commenced operations in our fifth state with the opening of a dispensary in Tiffin, Ohio. In July, we began adults [Technical Difficulty] in Maryland, leading to our Annapolis dispensary more than doubling its revenue and significant increase in our wholesale operation. In Illinois, we opened our fifth dispensary in Casey. More importantly, we became vertical with the opening of our new processing facility in Mount Vernon. And finally, we reintroduced Betty’s Eddies and launched our other brands into the market. We are looking for a full-year contribution from all of our new assets in 2024 and beyond.

Perhaps our most notable achievement in 2023 was securing what is arguably the most favorable financing package in the cannabis industry. We refinanced $59 million in debt at approximately 8% interest with a 10-year maturity. This deal saves us millions of dollars a year in interest expense, which will significantly increase our cash flow, and the transaction resulted in zero shared dilution to shareholders. No new equity was issued. Other cannabis companies made headlines recently with financing deals that looked as attractive as ours. However, when you consider the dilution baked into those transactions, the all-in cost of debt significantly exceeded what we achieved. While our biggest year with respect to opening new assets, the momentum has continued into 2024.

We command wholesale operations at scale in Illinois this past January. Our Betty’s Eddies, Bubby’s Bakes, and In-House Baked are now widely accessible throughout the state. Vibations just launched last week and the remainder of our brand including in-house gummies will be launched very soon. And today we announced the pending acquisition of our second dispensary in Maryland located in Prince George’s County. We also announced receipt of the certificate of occupancy for our permanent dispensary location in Casey, Illinois and hope to have it open and running in the next few weeks. That concludes our 2023 recap. With that, I will turn the call over to Tim for our operational update and outlook for 2024.

Tim Shaw: Thank you, Jon. Good morning, everyone. Let me start with a quick recap of our 2023 results and then jump into our 2024 operations plan. First, we reported retail sales of $95.5 million, which grew 3% versus 2022. Massachusetts and Maryland both experienced strong growth, which was offset by a decline in Illinois sales due to increased competition and lower average check. Illinois dispensary costs increased more than 55% in the past year, which has led to an overall decline in average sales per store of about 30%. Overall we are pleased with our growth of our retail business despite challenges in Illinois. Our big story of the year was wholesale. We reported revenue of $49 million, which increased 48% versus 2022. This growth was driven primarily by adult use in Maryland and organic growth in Massachusetts, which we expect to continue through 2024.

On the brand and marketing front, we had several big wins including the amazing growth of our new in-house suite of value products, which is now our second largest brand behind Nature’s Heritage. This significant demand for quality products at affordable prices led to an almost cult-like following for our in-house brand in Massachusetts and Maryland. Illinois is off to a strong start as well. During the year, our brand won three national awards in High Times Cannabis Cup Competition. Vibations took first place in the edibles beverage category, while Bubby’s baked brownie bites took second place in the edibles chocolate and non-gummy category. And the Nature’s Heritage Sherb Cake Live Resin took second place in the concentrate solvents category.

In Maryland specifically, Betty’s Eddie’s won favorite edible and the Nature’s Heritage was named favorite RSO at the end of 2024. We could not be more pleased with the continued success of our amazing brands at both the local and national level. For 2024, our operations focus will be on ramping up our new assets in Ohio, Massachusetts, and Illinois. We will also focus on completing construction of our new cultivation facility in Illinois, our processing kitchen in Missouri, and the cultivation expansion in Maryland. Our 2024 sales, marketing, and product development plans focus on delivering a full slate of new products that consumers want. Brands are the future of cannabis, and I am confident that we have the best brands with the best brand builders in the industry.

We will continue driving visibility of our existing brands with increased media reach through targeted digital advertising, strong promotional partnerships, and other proven strategies. In the first-half of 2024, our brand and marketing campaigns include the following. For Betty’s, we recently launched our Betty’s Bubbly Fruit Chew as part of the 10th anniversary celebration of Betty’s Eddies. Just this week, we followed that up with our biggest product launch of the year, Betty’s Ake Away PM. This will combine the best of our two top selling skews, Bedtime Betty’s and Ake Away Eddies, for pain and sleep management. In May, we will bring back our Beast Time Betty’s limited time offering. For Bubby’s Baked Goods, we plan to launch a new banana bread, which is easily the best-tasting banana bread I’ve ever had.

For Vibations, we just launched several new flavors, formulated with new technology to provide a quicker onset. If you haven’t tried Vibations, wait until you try our new Pina Colada flavored drink mix, it’s amazing. And we have huge plans for my baby, Nature’s Heritage, which includes a robust lineup of new product launches and marketing campaigns. We just launched double fresh duos that couples an eighth of two different flower streams into a single quarter ounce jar without sacrificing any of the aromas or quality. We will also enter the fast growing mini pre-roll category with Tiny Timbers, a travel pack that contains six-eighth gram pre-rolls, each of which are meant to be smoked in a single sitting. Finally, I’m thrilled to announce our mega-exclusive sponsorship with Concert Giant Livenation.

Starting this month, Nature’s Heritage will be the exclusive cannabis brand for the MGM Grand Music Club located next to Fenway Park in Boston. MGM Grand is Live Nation’s top music club in the world. We have a comprehensive marketing plan that will include on-site brand visibility, ads on Livenation’s ticketing site, and tickets for promotional purposes. It’s a landmark sponsorship for Livenation, MariMed, and the cannabis industry as a whole. I could not be more excited about the opportunity to partner with our leading flower brand with such a culture forward platform. We have many more products, brands, and marketing campaigns planned for the rest of the year, which I will update you on the coming months. The buzz and excitement within our sales and marketing team is truly lighting up the office.

We’re kicking off this year on a big high. That concludes my operational review. I will now turn the call over to Steve for our financial review.

Steve West: Thank you, Tim. I would like to start with a brief overview of our full-year 2023 financial results, then conclude with our 2024 financial targets. Our full-year 2023 revenue was approximately $149 million, which was the midpoint of our full-year guidance range of $148 million to $150 million and was up 11% year-over-year. Our revenue growth was driven by strength in both our wholesale and retail channels. Our full-year 2023 non-GAAP adjusted gross margin was 45.4%, also above our full-year guidance of 45%. Our gross margin declined approximately 300 basis points versus 2022, due to losing 100% margin [Technical Difficulty] fees with a consolidation of Kind Therapeutics, higher input costs, and pricing pressure. Our full-year 2023 adjusted EBITDA was $25 million, which was slightly below our full-year guidance range of $27 million to $32 million and a decline versus our 2022 adjusted EBITDA of $32 million.

This year-over-year decline in adjusted EBITDA was due primarily to our gross margin decline, investments and operating capabilities, increased labor associated with the new asset openings, and losses incurred ramping up the new facilities. Turning to the balance sheet and cash flow, we ended 2023 with $14.6 million of cash and equivalents, which increased 50% versus our 2022 year-end cash balance of $9.7 million. Our working capital remained strong at $20.6 million and increased 17% versus our working capital at the end of 2022. Cash flow from operations [Technical Difficulty] 2023 was $7.9 million and we spent $20.1 million in CapEx. That concludes our 2023 financial review. Before discussing our ‘24 financial targets, I want to note that they are based solely on organic growth within our existing core business.

With this in mind, our 2024 financial targets are as follows: revenue growth of 5% to 7%, driven by our wholesale business, partially offset by a decline in retail. We expect retail growth in Massachusetts, Maryland, and Ohio to be offset by declines in Illinois, which are being impacted by increased competition and continued declines in average check. According to public data, Illinois’s average sales per store in December declined by 32% as the number of dispensaries grew 57%. This increase in retail dispensaries will continue to negatively impact average unit economics as we have seen in other states that significantly increase store counts. We are targeting non-GAAP adjusted EBITDA growth of 0% to 2% as we continue to experience higher costs associated with building and ramping up new assets.

For example, in 2023, we spent $1.1 million in startup expenses bringing new assets online. Additionally, our EBITDA loss to operate these new assets was $2.6 million. More recently, our three newest assets to come online had EBITDA loss of nearly $1 million in the fourth quarter of 2023. We view this as a short-term drag and we are confident both revenue and EBITDA will increase as these assets mature. Finally, we are targeting CapEx of approximately $10 million for the current construction projects, which is the remaining CapEx we originally projected for 2023 that was not spent due to the regulatory and construction delays. That concludes our financial review and outlook. I will now turn the call back over to Jon for his concluding remarks.

Jon Levine: Thank you, Steve. I’m very pleased with MariMed’s performance, and we continue to significantly outpace our peers with respect to top line revenue growth. And I sit here today confident we will continue this trend in 2024, despite the continued industry challenges we all face. We remain focused on executing our strategic plan. That said, we never sit idle waiting for good things to happen. We continually review our plan and focus on initiatives that have potential to generate increased shareholder value. We are extremely confident the course we have charted is on point. MariMed still has one of the most conservative balance sheets in the industry. We have access to arguably the lowest cost capital in the industry.

Our new assets are ramping and generating more revenue every quarter. Continue to report significantly stronger growth in our core state of Maryland and Massachusetts and that just speaks to our [Technical Difficulty] growth, which brings me to our financial outlook. We have long prided ourselves on giving conservative financial targets and 2023 was no different. We built in conservatism with our asset opening timeline. However, we could not anticipate the magnitude of delays we experience in securing basic construction materials such as electrical boxes and stainless steel fasteners. There were delays of time for regulators in certain states to complete their approval process. We have discussed providing financial targets with our largest institutional investors and industry analysts.

We have received amazing support from both groups, and I’d like to thank everyone who provided us valuable insight and advice. After significant consideration, we decided to provide forward-looking targets based on organic growth within our existing businesses with essentially no incremental growth projects such as adult use sales in our Tiffin, Ohio or Quincy, Massachusetts dispensaries. Make no mistake, these incremental growth opportunities are crucial to our strategic growth plan, but we are not presently including them in our 2024 targets. If these or any revenue generating projects are completed, we will update our targets accordingly. We believe this will help us to better focus our discussions on important business development. We have significant levers that could generate an additional 5% to 7% growth on top of our revenue target, and an additional 8% to 10% in EBITDA.

These include the opening of a new processing kitchen in Missouri, the approval of adult use licensing in Quincy dispensary, the commencement of adult use sales in Ohio, our second dispensary in Maryland, new brands or product lines, and other mergers and acquisitions or new licenses that we could win. We have set the table for continued revenue growth and profitability just as we said we would. I am extremely bullish on the future of MariMed to maintain our growth profile for the foreseeable future. We have the capability to grow and we have access to low-cost capital for the right merger or acquisition opportunities. With that, I would like to thank our growing family of employees for their hard work and dedication to help MariMed achieve our mission to improve the lives of people every day.

Operator, you may open the line for questions.

Operator: Thank you. [Operator Instructions] We have our first question coming from the line of Pablo Zuanic from Zuanic & Associates. Please go ahead.

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Q&A Session

Pablo Zuanic: Thank you. Good morning, everyone. Congratulations on the growth in 2023. I mean, 48% growth in wholesale, that’s quite impressive in this space. Look, if you can, the question would be if you can unpack the guidance for sales growth in wholesale, right? You said 5% to 7% in total retail down, so I calculated a wholesale that means roughly mean teens, high-teens, which again, it’s a very robust number. But if you can unpack that in terms of what I would call the supply side of things, like remind us percentage-wise what would be the capacity increase in Illinois, if we count processing and cultivation? Well, you had nothing there, right? So that’s a big lift. The Maryland expansion, if you can remind us, quantify that in terms of how much more processing do we have on average, ‘24 versus ‘23, same thing with cultivation.

And also, there’s an expansion in Massachusetts. If you can just unpack a bit more the wholesale and confirm whether I’m right, in my estimate that guidance will imply wholesale mid-teens, high-teens, and then I have a follow-up. Thank you.

Jon Levine: Pablo, good morning. Great to hear from you again, and thank you for joining the call this morning. Those were very good questions. The increased projections of the additional 5% to 7% growth is really about bringing on our additional cultivation in Illinois and the retail store in Illinois, plus the expansion of the Maryland facility, which will be coming open. So I mean in Illinois we were hopeful last year to have that open in November and it was delayed to the last week of December. So we’re looking at a whole year of the processing center running, plus we’ll be bringing on the full flower sometime in mid-year of this year. So that growth from those two parts of operation and wholesale will be the biggest of the gains in that additional.

But then in addition, we have the Maryland cultivation, again, that won’t open until the mid-year point in first harvest sometime late in 2024 coming, sorry, 2024, and that will more than double our growing capacity there, which will help us be able to generate more flower in that state, which we’d be very excited if we could speed that up again with construction delays of materials that delayed us already into 2024 when we were supposed to be done in 2023. And those construction delays and then on top of getting the final approvals from states and getting those licenses up and running. Those types of delays are very important to growing the business. So that 5% to 7% growth for this year, just of existing transactions, are going to be a lot of those pieces coming on board, but more the fact is that we have the existing business in Maryland that’s still growing before we have additional growth.

And as you said, Massachusetts, we’ve expanded our grow, so that we can meet the increased demand and we are still pushing out of our kitchen as much product as possible and we’re continuing to see upward mobility. We’ll also have increased growth still in our retail stores that came on in 2023. So those growth opportunities will be part of that 5% to 7%, but then we have the — over the 5% to 7%, all the things that are still to come.

Pablo Zuanic: Yes, and that’s the follow on then in terms of what’s to come. I don’t know if you can rank in terms of probability what happens first, and I don’t know if that’s possible, but I’m thinking the Missouri kitchen, the New Marrion store you’ve really acquired, so that I suppose closes soon. Any line of sight on the Quincy store going rec is that, you know, I know it’s hard to predict with Massachusetts and then of course the Tiffin store benefiting from rec. But I’m just trying to, I know it’s not on the guidance, but if you can try to quantify what do you think would happen first and then talk about probabilities if it’s possible. But again, thank you.

Jon Levine: Yes, Pablo, that’s part of the reason that in our guidance we didn’t put in these other projects is trying to figure which one is going to come first. As you said, Massachusetts regulatory is always the biggest question mark. But the good news is that I do feel that we have these great opportunities to see the New Maryland license, Quincy, coming on hopefully in the first-half of the year, I could see Missouri sometime. I really can’t give a date, that’s the reason that we had put it out of the projections, because the Missouri licenses have taken years to just get a change of address. It took us over 12-months to get our request for a change of address for our Missouri location, which is why the delay caused us to have to pull that from these projections.

And still watching what’s going on in Ohio when that’s going to go to adult use. Those are all great questions and instead of putting them in until we have better ideas we can increase our forecast as we go versus having to come back and decrease it as we had to do this past year, because of construction delays in processing and growth. Retail is usually more of a delay of the local governments getting us the final licenses or systems. So we’re hopeful to be able to announce something as we are going just they can’t put a timeline on it.

Pablo Zuanic: No, I understand. That makes a lot of sense, of course. Again, congratulations. [Indiscernible], the last one, if I can. In terms of acquisitions, of course, there is room to add more stores in Ohio for you via M&A and the same thing in Maryland. What’s the priority? I mean, one could say Maryland is already wrecked and probably going to become more competitive. Ohio is about to go wrecked. So from an A point of view, all else equal, Ohio should be a bigger priority than Maryland in terms of M&A, but maybe am I missing something or not thinking about it the right way?

Jon Levine: No, Pablo, you’re absolutely right. I mean, Maryland is not an important piece, because of the timeframe that you have to wait to get a license. Ohio and Missouri are two areas, but Ohio would I definitely would say would be one of our first ones to become fully vertical. Within the State of Ohio is as quick as possible or getting more dispensary besides the one we’ll get with the adult license coming on. So yes, we’ll be paying attention to Ohio and Missouri, then Maryland, and we’re still looking to expand into other new states that are having applications, we did apply in the State of Texas and New York. We’re going to probably put in some other applications as other states come online. But Ohio right now is my focus trying to get a grow and a processing and some additional retail, so that we can be fully vertical in the State of Ohio when they go adult use.

Pablo Zuanic: Got it. Thank you very much.

Operator: Our next question comes from the line of Jesse Redmond from Water Tower Research. Please go ahead.

Jesse Redmond: Good morning, Jon. Good morning Steve. How are you guys?

Jon Levine : Very good. Nice to hear from you.

Jesse Redmond: Jon, I was wondering if you could talk a little bit more about the decision on the guidance. I sense that last year was a bit frustrating, because there’s some elements outside of your control and ultimately that led to being delayed and not being able to meet the initial expectations that you can set. So it seems like you found a good way to be able to still offer some guidance, maybe a more conservative approach, still offer some transparency, but maybe doesn’t make you as much as dependent on the regulators to meet those deadlines. Is that kind of where your head was? I was just curious to get some more perspective on these guidance numbers?

Jon Levine: Jesse, thank you very much again for joining the call. And yes, I’d love to give you some more guidance explanation. Yes, the frustrations, I mean, I’ve been in the real estate construction business for well over 25-years and I have never seen anything like this when you’re trying to build out a cultivation or processing center, trying to get items such as an electrical panel. I mean, who would have ever thought an electrical panel would take you six months to get. But it’s amazing that those types of construction delays have started to exist, not just in the cannabis world, but I do know from my real estate ventures that I have seen that elsewhere. So, what we have looked at is what caused the adjustments in 2023.

And it was a lot of the delays from not just regulatory, but from the construction materials building up the cultivation and processing centers. You know, being delayed in Illinois for well over six months from what we originally projected and in Maryland being delayed that we thought we would [Technical Difficulty] open and running. But those delays definitely caused us to take a look and say, hey, you know what, we need to do it even though we’re conservative, we need to be even more conservative and pull out things that we know could be still delayed. So looking at regulatory and construction delays, both in the manufacturing and in the retail, we decided to only report, which shows that the continued growth of our operation from the expansion that we’ve already completed in 2023 and what we’re going to complete in early 2024 will project our growth increase every year that we’ve had.

We may not be projecting double-digit so far for this year, but I feel that with the other licenses that we will out as we get regulatory approval, will help take us to that double-digit increase year-over-year for continued years. So, I hope that helps better explain what we were trying to do.

Jesse Redmond: Yes, that’s great. Thank you. And just a follow-up question. So, seeing in Massachusetts data, it looked like flower prices dropped again significantly last year. I think what I saw was down about 40%, that being offset by a strong increase in unit volumes. Just curious to get more perspective on what you’re seeing in terms of wholesale pricing in Massachusetts and also on the retail competition side?

Tim Shaw: Sure, Jesse. This is — I can take this one, too.

Jon Levine: Oh, go ahead, Tim.

Tim Shaw: How’s it going, Jesse? Yes, you’ve seen correct. It seems like we’ve hit the floor in Massachusetts, and that’s where Nature’s Heritage has continued to stay above the fray, keeping the high premium pricing. And we brought the in-house flower in. And in-house has become more of a popular brand that is catching up as our second most popular brand in the state and beyond. So because of in-house, we’re able to get the volume out there and capture those revenues and continue to keep Nature’s Heritage as a high premium brand and hold a higher value. And we hope to see that this is where the flower, it looks to be stable, getting more and more stable as sales continue to plateau.

Jesse Redmond: Any new perspective, Tim, on the retail side?

Tim Shaw: On the retail side, there’s — it doesn’t seem to be as much of a rush of as many stores opening. So it’s hard to tell what’s going to happen. I think our stores are doing well. We’re still seeing an increase as we have two additional stores in the state. So I think we’re in a good position. We’ve continued to have great marketing programs, loyalty programs, to continue to keep the traffic coming to our stores. So we’re pretty bullish and excited that we’ll be able to turn Quincy into adult use, hopefully, by the end of this year. And we’ll see a retail increase in our Massachusetts program.

Jon Levine: Jesse, I’d like to just add on that. In Massachusetts, a lot of the competition that’s on the bordering states have been feeling the pressure more than the locations that we have our three retail stores. And I think that’s part of the reason that we’re seeing increases still. And there’s still the bad news that’s in Massachusetts about several dispensaries struggling is because of where they’re located. I’d just like to add that in. Thank you.

Jesse Redmond: That’s helpful, guys. Thank you.

Operator: Our next question comes from the line of Andrew Semple from Echelon Capital Markets. Please go ahead.

Andrew Semple: Thank you. Good morning. First question, just on Q4 EBITDA that came in below the guidance issued in November. Despite margins and revenues printing in line. It does appear that operating costs were the main culprit for that, run much faster than anticipated. I calculate the recurring cash-based operating expenses are close to $6 million per quarter, or about $23 million annualized year-over-year, Q4 to Q4. You know, clearly that’s pretty material given the market cap of $100 million. We’ve seen many of the other U.S. Cannabis peers implement cost cutting programs in 2023. Is MariMed considering something similar for 2024 and if so is that embedded in the 2024 outlook?

Jon Levine: Good morning Andrew, thank you for joining the call and very good question. The Q4 costs had increases that were really associated with a lot of the startup delays in our facilities. You know, having to maintain our building our brands and sending people in to make sure that we have that high quality and consistency and training staff to be able to produce. Those delays of getting regulatory approval to open, whether it’s construction or regulatory, those delays did cost us almost a $1.5 million, as Steve said in his section, about the startup cost and that that $1.5 million has to be expensed, because there’s no revenue there and they’re not having any production of inventory. So those really get caught up. And we did bring on additional staffing and other expenses that appear for that growth that was delayed.

So those costs will be made up in 2024. We’re having to make a lot of cutbacks, we’re able to maintain the levels without having to add additional staffing that we had already added to get to the level. We will add some expenses into the Illinois as it starts to ramp up, but we’ll still have a good growth projection based upon revenue, not based upon just wanting to hire people or give higher increases.

Andrew Semple: Got it, that’s helpful. I would like to relate those comments, though, to the guidance. You know, if you think you could hold operating costs flat here, we would tend to expect that potential for some EBITDA margin increases. When I look to the 2024 guidance, you’re pointing to revenues up 5% to 7%, adjusted EBITDA 0% to 2% higher. That would imply EBITDA margins contracting year-over-year. So I’m just wondering, you know, whether maybe some of that margin expansion is back halfway to the end of the year or how you’re thinking or whether you’re just being, again, as you said, potentially conservative with the outlook?

Jon Levine: We’re definitely being extra conservative with our outlook, but it’s also the ramp-up cost and the start that it takes to get into new markets where we haven’t been or that we’re going back into. Those startup costs and the ramp up costs have a cost of loss that you have to carry for a portion of time that does hurt the EBITDA on the long-term for one year, but that we make up and that they grow. So in the later part of 2024, we’ll see improvements in EBITDA versus how we probably start.

Andrew Semple: Got it. Okay, That’s helpful. And then just finally, if you could clarify some of the items that are in the 2024 guidance. I just want to confirm that Illinois, Massachusetts, and Maryland new cultivation space is within the guidance, as would be the adult use store in Quincy? Are all those items in the 2024 outlook?

Jon Levine: No, as I said in my in my earlier comments, the Quincy adult use is not in the guidance. What is in the guidance is the Illinois processing center, bringing on the flower in 2024, the expansion of doubling the growth space in Maryland coming on in the second-half of 2024. All the things that are not included are the Quincy adult use, the additional license that we just announced in Maryland for the retail store, the Missouri kitchen, Ohio adult use and getting another dispensary in Ohio with the adult use. So all those things are not in any of our forecasts for this year, but that they were in the upside of the additional money’s that would take us over the double-digit revenue increases and EBITDA increases.

Andrew Semple: Got it. That’s helpful. Thanks for taking my questions.

Jon Levine: Thank you.

Operator: Thank you. There are no further questions at this time. Ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect.