Russell Stanley: Yes, I was asking on Florida given the store — you plans to add additional stores there this year given it’s a tourist destination I’m wondering if that there must be pockets of greenfield or underground areas that you can add stores to? And I’d love to hear you saying you could share love to hear your thoughts on geographically where the best opportunities are.
George Archos: Yes, great question. I mean we are looking at some markets that we were looking at when we were just concentrating on medical patients. So we’re evaluating those now. We also had quite a few stores under development for this year and next year. So we’re going to continue to build out those stores and look at these new markets and others. We don’t talk about exactly which markets we’re looking at but there is a change in focus when adult use comes online versus medical. And we’re looking at some different areas now.
Russell Stanley: Thanks. That’s helpful. And just moving to New Jersey, given the increase in store count, the benefit to wholesale more than offsetting retail, I’m wondering and at what point does the store count is you think there might be an oversaturation there will where the benefits are no longer with the costs. Just wondering how much room — how much runway there is for additional retail growth before you become increasingly concerned about the level of competition? Thanks.
George Archos: I mean for us we always anticipated New Jersey to be a large wholesale market. When we entered the market there we only repeat the allowable amount of stores was only three. So for us we’ve built out, our capabilities to be able to wholesale to the entire markets. As store count increases we will continue to increase our wholesale and we feel very good about it. We’re in a good position to continue to be a strong wholesale there, and we don’t know what the market is going to look like as a final store count. But we’re ready to continue to wholesale to every store throughout State.
Operator: Our next question comes from Frederico Gomes from ATB Capital Markets. Please go ahead. Your line is open.
Frederico Gomes: Thank you. Good morning and thanks for taking my questions. First on New Jersey and Illinois, obviously you’re shifting the mix there from retail to wholesale. Can you just remind us what’s the expected margin impact from that sales shipped?
George Archos: Good morning, Frederico. I’ll pass it off to Brett to answer your question.
Brett Summerer: Yes. So whatever we think about the transition from retail to wholesale, Illinois or New Jersey, but in particularly in New Jersey, for every dollar that we have on the retail side from a margin perspective, we essentially get $2 worth — I’m sorry, for every dollar in the wholesale side, we essentially get $2 worth in the retail side. So to the extent that it’s a 2:1 ratio, you can still be happy with the fact that total sales in the state are going down as long as the wholesale side is going up. And then what we are seeing is that the wholesale side is continuing to grow even while the retail side is declining. But right now, we’re still pretty happy with the mix of that pace.
Frederico Gomes: Thank you. And then my second question just on Ohio, it seems that adult-use sales could start maybe ahead of expectations maybe during the summer. So just curious how likely do you think that to happen and how prepared are you in the state in terms of your cultivation and manufacturing?
Brett Summerer: Good question. We’re prepared right now. We put everything in place. People are in place. We’re ready to start adult-use sales immediately. Although, we don’t feel it might happen in the summer, I think we’re more anticipating a fall of launch regardless, we’re ready to go.
Operator: Our next question comes from Matt Bottomley from Canaccord Genuity. Please go ahead. Your line is open.
Matt Bottomley: Hey, good morning, everyone. I just wanted to go back to the news from last week, understanding that rumors or even if the DA announcement becomes more firm, it’s nothing to do specifically with your operations or how you would change anything to do with your strategy. But just given the fact that there’s a lot of questions coming in on it without trying to crystal ball when things might happen. Can you give us any sort of overview of what your expectation of the process is? Is there something that would be filed through the DEA? Is it something through the Attorney General’s office just without, again, trying to crystal ball timing? Just what procedurally could be the next steps in your view if this process continues to go forward?
George Archos: Good morning, Matt. I’m going to pass off to Darren. He’s done a deeper dive there than we have. So Darren?
z: Yes. Thanks, George, and thanks for the question, Matt. Look, the next step at this point, as has been widely reported that we’re waiting for OMB, the Office Management Budget to complete their analysis. After that, the DEA is able to propose rules with a nose and common time line. And so at this point, all indications are that the sort of guidepost for next steps would be that OMB determination. I think there’s been a fair amount of reporting as to the overall process and the time line, as you said. We feel very, very good about the status. We understand that this is not a quick process. Believe it or not, as frustrating as it’s been. This — the way this has gone has been at breakneck speed as compared to the way the wheels of government turn.
So that would be the next indication. We are — we would love to see a memo similar to the coal memo from the DOJ as part of this process that may or may not come. It’s not required in order for this to flow through. But look, at the end of the day, as you said, the impact to our business, I think, other than taxes, is pretty minimal other than the momentum, the fact that the conversation is happening at the highest levels of government, and we’re looking forward to watching this develop.
Matt Bottomley: Great. I appreciate that. And then just next for me, more of a housekeeping item, but just to make sure I understood some of the prepared remarks. So you have a CapEx range of $25 million to $50 million, but there’s a lot of commentary on Florida expansion, which I know some of it has undergone as well as preparations in Ohio. So I understand you’re not going to adjust that number live. But can you just give us some context of where that range could be considering there are some moving parts to it?
George Archos: I think we’ll give you a better idea of that number in the next quarterly call. We’re still evaluating all of our opportunities, and we’ll have a better idea here in the future.
Matt Bottomley: Okay. Fair enough. Thanks, guys.
Operator: Our next question comes from Andrew Semple from Echelon Capital Markets. Please go ahead. Your line is open.
Andrew Semple: Good morning. Thanks for taking my questions here balance sheet questions here. First off, I just want to start off with inventory. It looks like that moved a bit higher in the first quarter. I think the earlier commentary from Q4, if I’m remembering correctly, was that inventory liquidation, the bulk of that had happened in Q4, but there might be some lingering amounts of that in Q1. So just want to clarify whether you continue to see, yeah, inventory liquidations in a specific market. And whether that had any headwind or impact to margins within this quarter as it did in previous quarters?
Brett Summerer: So thanks Andrew. So two questions to answer, so the first question you have the inventory movement. So we had prepaid packaging. Just it was just an accounting movement, but the way we had accounted for packaging in the past was we would prepay for it and then amortize it overtime. However, as part of our transition in our improvement in terms of systems and tracking with our ERP, we’ve moved prepaid packaging out of a prepaid and into an inventory account. So it’s more a handle now as true inventory as opposed to doing this amortization that we did before. So it’s literally left pocket-right-pocket. The balance sheet doesn’t change. This moves the line item from a prepaid into an inventory. And then on the second question which is related to liquidations.
There was a little bit of a benefit to inventory. This quarter was about $5 million sorry $4 million, but it was not due to anything planned or specific. It was just another overall movement that we have of inventory in a quarter. I don’t think $4 million is much of a big deal frankly in that regard. We don’t have anything new or exciting in that space. There’s, no specific plans to cut or add et cetera. We’re just adding and subtracting as the markets move around
Andrew Semple: Got it. That’s helpful. And then a follow-up question would just be on the debt and your ability to continue to prepay that. How much more can you prepay? And would that unlock additional real estate collateral, if you were to prepay additional amounts?
Brett Summerer: As we have optionality of being off another $50 million, the prepayment penalty has been paid with this first $50 million payment. And there’s a large chunk of our real estate that’s being released with that first payment. So it puts us in a very good position to be able to refinance it real estate in the future.
Andrew Semple: Got it. Great. Thanks for taking my questions. I’ll get back into queue.
Operator: Our next question comes from Mike Reagan from Excelsior Equities. Please go ahead. Your line is open.
Mike Reagan: Hey. Thanks a lot. A couple quick questions on the Cabbage Prepaid Program, I guess is there any insights in terms of and you’ve only launched about a month ago and not in just a few markets, but I guess, anyway insight into how that’s going? Sort of what you’re seeing with it? How many people have signed up et cetera?
