Village Farms International, Inc. (NASDAQ:VFF) Q4 2022 Earnings Call Transcript

Michael DeGiglio: Yes. And I would just one other thing. I mean we’re — as you know, we’re in Quebec now when we made this decision for Delta 2, we took into account that we would be operating in Quebec. And as you know, we have a production facility there. But we want to make sure that we have insurance that we always have enough capacity to meet the demand, too.

Andrew Partheniou: If I can just ask one more follow-up on this question here. Understanding that you still have the other half of Delta 2, what would you like to see before you decide to turn on the other half of Delta 2?

Stephen Ruffini: Andrew, this is Steve. We would like to see a change in the excise tax regime. The — we’re paying the government, if you look at the difference between our gross and our net that’s excise tax on our same results. We’re paying them with more money than we’re paying all our Pure Sunfarms employees, plus, plus, plus. It’s — as others have written on social media and in the press, the excise tax regime as its current working is a moneymaker for the government, and it’s very difficult on an ROI basis based on current interest rates. If you look at our net cash return at the Canadian cannabis business, which you can do the math, and it just wouldn’t pencil on the current excise tax we’d love to but not with the current excise tax regime in place.

Michael DeGiglio: Yes. And I would add that we — most of the capital costs needed to put the second half of Delta 2, we’ve already spent that money. So it wouldn’t be a huge burden for us to put that in production. So we’re not really looking at a return on invested capital since we already have it. And it was worthwhile doing it all once. You don’t want to remobilize and it’s cheaper to order all the equipment you need for the conversion. So we can do that. International ramping up could be if international triples, that could be a catalyst for us because as we’ve said, there’s no excise tax and the margins are much higher. But for the situation in Canada, it’s just hard to justify.

Operator: And this will end the Q&A session for the call. I would now like to turn the conference back to Michael DeGiglio for closing remarks.

Michael DeGiglio: I just want to thank everyone for your participation today, and we feel very confident for 2023 and the direction we’re going. So thanks for participating today and look forward to chatting with everyone in May. Thank you, Chris.

Operator: Welcome. This will conclude today’s conference call. Thank you all for participating. You may now disconnect, and have a pleasant day. Thank you.