Sean Mansouri: Thanks, Nirup. And last one for this prepared Q&A, what needs to happen to get the industry back into a growth phase?
Nirup Krishnamurthy: I’ll let Justin handle that one.
Justin Dye: Yes. That’s a great question. It’s — I think it’s a fairly virtuous cycle and reasonably — and I think it’s fairly straightforward in terms of what’s going to happen. I mean if you look at where cannabis is today, let’s just look at how it’s valued today. If you look at sort of the median enterprise value on 2023 to 2024 multiples, they’re anywhere from 4x to 7x. If you look at the S&P 500 and you take out energy, they’re in the mid-teens in terms of valuation. So this sector has probably 2x to 3x upside in terms of multiple growth once we start getting capital in, and I’ll cover that here in a second. And then, if you look at the growth, the sector is growing, projected to grow at 15%, 16% for the next several years, where if you look at the rest of the economy, it’s projected to grow at 4%, 5%.
So you have massive growth. We’re going to generate another $20 billion, $25 billion over the next couple of years in this business. So I am as bullish on this sector as I’ve ever been. And you know what? We just haven’t gotten the key pieces in place yet, but they’re coming. So what needs to happen? One is we need federal common sense reform, which we will get, I believe. I think we’re going to get rescheduling. I think that is likely to happen mid next year. There’s no guarantee, but if you look at all how people are incented and why that would happen, it certainly looks like that would. That will then probably trigger more state reforms like we just saw in Ohio, where through a ballot initiative, they just approved recreational cannabis in the heartland of the U.S., which is a key driver for the rest of the U.S., which I think is a very, very big deal.
That’s going to drive more capital, and more capital coming into the system both from a debt and equity perspective is going to lower the cost of capital for cannabis companies that are looking to borrow or raise equity, which is then going to drive higher stock prices, which is then going to allow larger players to have a stock currency to do more M&A, which will drive synergies and drive more operational efficiencies. So it’s sort of this virtuous cycle where you’re going to see — you are going to continue to see this thing grow. And I think we’re — frankly, we’re at the bottom of the cycle. And I think over the next couple years we’re going to see things improve. And if you look at how the larger players over the last really 6 to 12 months have started really converting operations — cash flow from operations, really talks about the quality of the EBITDA and some of the larger players make the headlines, which then eventually will trickle down to very profitable smaller regional players such as ourselves.
So I’m bullish on it. I think we have to be patient. The real story for Schwazze is to continue to execute operationally at retail, wholesale, and driving our supply chain and continue to grow a really profitable business. And our shareholders, we’re going to take a long-term view on this and build a really great company, which is what we set out to do. And I think the markets will reward us. We just need to have some patience.
Sean Mansouri: Appreciate that, Justin. That’s a wrap from my side with the questions that have come in via e-mail. Operator, would you like to open it up for live Q&A, please?
Operator: Thank you. Ladies and gentlemen, we will now conduct the question-and-answer session. [Operator Instructions]. There are no questions at this time.
Operator: Ladies and gentlemen, this concludes today’s conference call. Thank you for joining. You may now disconnect.
