E161 - A Post-Earnings Verano Deep-dive with George Archos and Aaron Miles

[00:00:00] Welcome to the High Rise podcast presented by Headset, the leading data and analytics company for the cannabis industry.

[00:00:09] Welcome back to the High Rise, a laid-back, data-back conversation where we talk all things cannabis from products to market analysis through the lens of data.

[00:00:17] My name is Sy Scott, CEO of Headset, and I am joined as always by Emily Paxia, managing director of Poseidon.

[00:00:25] Hi everyone, welcome to the High Rise.

[00:00:27] And today we've got a very special guest, or a couple of special guests with the Verano team.

[00:00:33] We've got George Arcos, CEO and Aaron Miles, CIO.

[00:00:39] Thanks for joining us guys.

[00:00:41] Thanks for having us.

[00:00:43] Yeah, so you guys are just off the earnings call.

[00:00:48] Was that yesterday all kind of happening?

[00:00:51] So we definitely want to talk about the quarter and then we want to talk, you know, big picture about, you know, what's going on with Verano.

[00:00:58] You know how you guys are seeing just the industry in general and all the dynamics that we are all dealing with in the space.

[00:01:06] But before we get into all that, let's just talk about Q1.

[00:01:10] You know, I think, you know, from our perspective at Headset, we see mixed performance in different markets, you know, some markets are growing, some markets are struggling.

[00:01:19] And you guys with such a sizable footprint definitely, you know, have exposure to that.

[00:01:26] So why don't we start with just kind of like where Verano is as far as a footprint, kind of your retail composition, your brands that you guys produce and your position in the overall industry

[00:01:39] and how that kind of fed into, you know, your performance at the start of the year here.

[00:01:44] Sure. I guess we can kick it off and Aaron, feel free to add in wherever you'd like.

[00:01:48] Well, first off, we're really celebrating our 10th year anniversary here.

[00:01:53] It's been 10 years since we've been plugging away in cannabis.

[00:01:55] So we have quite a bit of experience on the team, which is very helpful in navigating this space because it hasn't been an easy ride.

[00:02:05] And right now I feel like we're finally coming into our own.

[00:02:08] You know, we got a lot of federal news cut out our way and a lot of new states now big stage transitioning from medical to adult use on the horizon.

[00:02:17] We've transitioned over the last few years, some others and kind of exciting times for us.

[00:02:22] We, you know, we started off at our home state of Illinois 10 years ago, started operations in 2015 after we applied in 2014.

[00:02:31] And we always wanted to be one of the top dogs in the game.

[00:02:34] And I feel that's what we've accomplished.

[00:02:36] And along that ride, we've really picked up what I feel are some of the best people by far in the industry.

[00:02:42] And we've all learned together. We've all suffered together and celebrated a lot of big things.

[00:02:48] So it's great when you have an amazing team to be able to navigate really a new industry.

[00:02:53] And, you know, it's been tough, but it's also been fun.

[00:02:56] And that's where we're at today.

[00:02:58] You know, you talk about brands, you know, we really started off focusing on high quality products.

[00:03:04] So for Rhano was really the only thing we focused on kind of our reserve brands, everything's super premium, hand trimmed, high quality, great strains, live residence, live rosins, all the top tier items.

[00:03:19] And over the past few years as the company has grown, we've transitioned into more of the good, better best model.

[00:03:26] So we introduced the essence, which we also just rebranded this year.

[00:03:30] Still premium, but more on the in the mid tier and then savvy, which is a very premium low tier brand.

[00:03:38] And that's run tremendously well for us.

[00:03:41] And then the WAP, which in all of our different edibles, bits and all the different things that we've done in a vexia with our topicals.

[00:03:50] We have a very large queue count across our platform.

[00:03:55] And we deploy those the various views in different markets based on what, you know, the consumers telling us what they want.

[00:04:01] And it's worked out very well for us.

[00:04:03] And on the horizon this year, we talked quite a bit about this on the Q1 call, you know, we have Ohio coming up, which we feel will most likely be in the fall.

[00:04:13] Another big market, you know, big population.

[00:04:15] We have a good footprint there.

[00:04:17] We're prepared for the launch and I think PA will be right behind it.

[00:04:22] Things are gearing up there legislatively to hopefully have an adult youth launch, you know, next year.

[00:04:28] And the big one for us being Florida.

[00:04:30] We have 75 stores there as of today.

[00:04:33] We have a ballot initiative coming up in November.

[00:04:37] We feel very good about it.

[00:04:39] We've joined our industry peers in the smart and safe campaign to be able to push that across the finish line.

[00:04:45] And we're going to do everything we can to spread the positivity of cannabis to every Floridian in the state as well as all the tourists that come in and value our value the product of cannabis and the medicinal benefits of it.

[00:04:57] So a lot of things, a lot of good things coming up.

[00:05:02] Yeah. Yeah, no, that's great.

[00:05:05] 10 years.

[00:05:06] That's a that's a long time.

[00:05:09] Yeah, it must.

[00:05:10] I know I've been in it for a little while as well.

[00:05:13] And it's amazing how much has changed in 10 years and at the same time, how much some remains the same, particularly at the federal level.

[00:05:23] But hopefully we'll be changing soon.

[00:05:25] It's I want to add here too.

[00:05:27] You know, when you think about what George was talking about the evolution of the business and you know your background and data, you know, early on, I mean, Georgia laugh at this but you know they were just kind of throwing spaghetti against the wall say we're going to grow this stream or we're going to, you know, you know, grow this level of product.

[00:05:42] And now we're actually able to consume data and you're actually able to make decisions based off of data. Right. And so when you think about our hundred and 40, you know, dispensary footprint in all the states that we're in like we're consuming all this data now and that's really evolving our

[00:05:58] portfolio and that's why you're seeing, as George mentioned like the guap and the bits and how you're, you know, adapting your product lines. It's not just taking a guess at what the consumer is going to want because cannabis was like first of all I had to be accepted and then you know people are getting

[00:06:13] their preference and their tastes and you know it's easy to look at California and how sophisticated of a market that is where people are like smelling, you know, the buds and they're looking at the terpene profiles to people trying to understand what cannabis is all about and so I think we've really been

[00:06:27] consuming a lot of data and build our expertise internally and it's really showing up in how we're evolving and adapting the business.

[00:06:36] It's so cool to hear. You know, we started headsets, it'll be nine years ago this July and that was coming off of leafly and that was, you know, somewhat of our thesis is like operators are going to be getting sophisticated and start to look at data and

[00:06:55] it's great because it's still, I would say it's still tricky out there to get people on that page and the fact that you guys have embraced it and the scale of data that you guys have access to across all these markets, across all these consumers, across the different brands and different categories.

[00:07:11] It is a powerful tool, right, that can be given to leverage. So it's great to hear that you guys are really leaning into that stuff and I'm sure that is reflected in a lot of the recent, you know, great performance that you guys are having.

[00:07:26] Yeah, and I wanted to kind of dive in on that because that's actually really perfect for where we're heading is, you know, Q1 sequentially quarter over quarter is usually a little bit of a slower quarter for the industry which again like the data that we have to look at

[00:07:43] and that we now understand a bit about seasonality in our businesses and then of course there's a ramp into 420 and then what happens over the summer and also all of the holidays that we track through the year like going into Memorial Day, 4th of July, like the little peaks and valleys throughout the year which is so fun to watch

[00:08:01] but I was curious how you're thinking about things and kudos to you guys for, you know, ramping the wholesale business. I know on the call you guys talked about retail competitive pressures as more doors are opening in Illinois and New Jersey.

[00:08:15] We know in Florida there's pretty interesting pressure on pricing across retail in the market and product pricing but I was curious how you guys think about getting consumers to come back so consumer loyalty

[00:08:30] as well as upselling potential once they're in the door and basket size increasing and I know it was in this quarter right that you guys announced the launch of the Cabbage Club, right?

[00:08:41] So I have a lot of questions in there but just curious to think about how you approach retail and customer loyalty through that.

[00:08:49] Well customer comes first. You know my background is hospitality so you know the minute someone enters our door we want to make sure they feel like they're walking to a very comfortable atmosphere so lighting, music, the way they're greeted, the menu displays, everything, the way they walk through the approach a consumer and actually get to that purchase is very important to us.

[00:09:10] Loyalty programs are something that we've had in place throughout the country for quite some time and they vary a little bit. We play with different things. Obviously again this is a new industry so we're trying to see what the wants and needs are the consumer

[00:09:24] so we've done things with points and go towards product or discounts or vacations. We've done all kinds of different things.

[00:09:32] Cabbage Club is just very unique because it's something that really hasn't been done here in the US. That's a paid membership program and it offers exclusive benefits to those members so we've only launched it in two states.

[00:09:44] It's going very well. It's going beyond our internal expectations. It's also something that we're going to be toying with here over the next few years.

[00:09:51] We think that the top few percent of our consumers tend to spend the majority of the dollars in our stores so really catering to that consumer base is what Cabbage Club is all about and being able to offer them a very unique experience.

[00:10:05] So it's been going really well and we anticipate that to launch it throughout the rest of the country over the coming year or two and we have high hopes for Cabbage Club.

[00:10:15] Yeah. I used to do a lot of work with American Express and a lot of that is dialoguing about why people pay to have a credit card and what are the benefits and rewards associated with that.

[00:10:27] It kind of came to my mind when I saw the news about the Cabbage Club but for the listeners would you guys mind talking about how the Cabbage Club is set up and kind of what some of if you're able to what some of the benefits are to those who choose to join?

[00:10:41] So it's really set up. It's a multi tier program. The dollars give you different benefits but really at the end of the day it's going to offer them exclusive items that the regular consumer can't get.

[00:10:52] And there's regulatory issues there and then we have to go through. That's why I went into launch in a couple markets but the point is to give them something that you can't get as a normal consumer walking through the door

[00:11:03] and that's going to increase as time goes on. So we plan on growing special strains, giving unique products, flights, etc.

[00:11:11] We're not going to get too much into it here but the point is to give them a unique experience and that's what Cabbage Club will be.

[00:11:17] That is cool. I like that. I like the idea of providing something unique instead of well we all know that discounting is not a very sticky form of attracting consumers.

[00:11:31] It's a great way to get people in as an entry point but it's not a great way to hold on to people.

[00:11:36] So I like the idea of creating more value for participating and being loyal so that's interesting.

[00:11:43] Yeah, this will be more about the air of exclusivity versus just straight discounting right?

[00:11:47] I mean anybody can discount. This is about getting some exclusive access to different things that we'll be creating for them and that's really what this program will be tailored to.

[00:11:57] Yeah and we see in the data, you know the champions, the loyal customers are the ones that I think the same thing you're seeing right are driving a significant amount of revenue for a lot of operators.

[00:12:11] We classify them as can't lose when they don't come back in.

[00:12:16] So really capturing that audience with some unique aspects that others can't get, that is a really powerful way to do it.

[00:12:28] And I haven't really seen that out there yet.

[00:12:30] You know we've seen in different business models, you know we've seen like the for pricing I've seen outlet models, you know as you guys have as well seen that out there.

[00:12:40] This is totally different and I think that's pretty cool.

[00:12:44] Have you guys, it sounds like good traction, couple markets has a feedback so far been been pretty good?

[00:12:51] It's been good. Yeah, it's been good.

[00:12:53] It's good enough to where we think we'll be launching it in other states soon.

[00:12:56] So we want to build it up, you know how this goes, you do one good deed and it spreads to a couple people, you do something bad it spreads so much more.

[00:13:04] So we want to make sure that this thing gets off the ground in a very positive way.

[00:13:08] So the error positivity is in the error when we launch to other places.

[00:13:13] And we have work to do in every state before launches right in order to be able to create exclusive products we have to be ready in the CPG side to be able to do that.

[00:13:21] So it takes a little bit of time to be able to launch everywhere.

[00:13:24] And to those products are they going to be exclusive through your retail channel?

[00:13:29] I'm given the growth of your wholesale business, you know what you guys talked about like in New Jersey and Illinois or you thinking about finding ways to expand that where some of these more exclusive products are available in the broader market or is this going to be, you know, you must come into a

[00:13:44] Verano store to be able to access these types of products.

[00:13:50] I mean, other than any regulatory issues we may face where we have to pivot in one market or another.

[00:13:55] The goal here is to bring people into the Verano branded stores for these exclusive products for the cabbage club members.

[00:14:02] Yeah, that makes sense.

[00:14:06] Great.

[00:14:07] So let's talk a little bit about wholesale growth and you mentioned all those brands and expansion and looking at your data.

[00:14:13] You call out like New Jersey and Illinois, I believe in earnings there for wholesale business growth.

[00:14:20] Are those two markets that you're seeing like some unique dynamics in that are driving some of that growth?

[00:14:26] Are there are the areas that you guys mindfully invested in, you know, those two markets, you know, given your footprint is in so many states, you know, where do you see wholesale growing in what markets and maybe why in those markets?

[00:14:41] So those are two definitely focuses for us right now or Illinois, New Jersey and the wholesale side because we're adding there's a pretty rapid expansion of retail stores in those states and we are capped.

[00:14:52] So for us, we always had the mindset of being strong wholesalers in those markets and that's what we're doing right now.

[00:14:58] So we're pushing there's only so much you can do with your retail.

[00:15:01] At some point you have to focus on wholesale and you know, we started off in this business in that manner and that fashion.

[00:15:08] So we're gearing up wholesale business in those markets and then we have a couple targets outside of those as well that will be focusing on in the coming quarters to continue to build our business.

[00:15:18] Yeah, good to put some numbers around that.

[00:15:20] I mean, if you look at what we did in New Jersey, you know, Q4, you know, going from Q4 to Q1, I mean, Emily already talked about Q1 being kind of seasonally slower, which is, is, you know, absolutely true.

[00:15:32] And, you know, when we did in New Jersey was an increased wholesale by 14%.

[00:15:37] And so, you know, retail was down in Q4 and I think there's a little bit of concern but like we kind of anticipated that right like we had three of 19 dispensaries when adult use first turned on and we knew that the dynamic of the market just wasn't going to stay that way.

[00:15:50] So that's why we put a lot of time and effort into really building out that cultivation facility and you know it also takes time to build out relationships.

[00:15:58] So, you know, throughout Q1 we talked about 50 new wholesale accounts that opened up.

[00:16:03] And so for New Jersey it was up 14%.

[00:16:06] And Illinois was flat at around 11 million but if you think about that you're coming off that strong Q4 into Q1.

[00:16:12] So, you know, a long ways to go and we're going to continue to build those relationships but you can see, you know, this is really where a balanced approach between retail and wholesale really starts to pay off and and George set that vision really early on.

[00:16:25] How has it been opening those doors?

[00:16:27] You mentioned building relationships.

[00:16:29] Have you are other retailers pretty open to bringing in new products, new form factors, you know, new brands?

[00:16:39] Is it a bit more challenging?

[00:16:41] Are we finding situations in some markets where they have their assortment, they're pretty happy with their assortment and it's more challenging to kind of open up those doors.

[00:16:52] And then once you're in those doors like how are you working with those retailers kind of collaboratively particularly like if you may be somewhat competitive if you have any retail footprint in some of these markets.

[00:17:09] What is kind of the state of opening these doors and kind of the processes everyone just opened to trying new things.

[00:17:16] I mean with the innovation I would imagine people are eager to bring you know, new products to the store shelves but I could also see where they're pretty happy with their assortment might be more challenging.

[00:17:25] Yeah there's a few different factors.

[00:17:27] I mean so for Illinois and New Jersey right now most of the stores that are opening are not vertically integrated.

[00:17:35] So the shelf space is fairly open, right?

[00:17:37] And we're pretty well established CPG operators in both those markets.

[00:17:41] So as long as you're putting in the time and effort to talk with the team, train them on our products, get them, you know try different things it's, I'm not going to say it's easy but they're much more receptive to it because we've been around for so long in both of those markets and we have, we're very established there.

[00:18:00] So it's really about you know getting boots on the ground to get out there, talk to the employees, train them on our products, get them in front of them, making sure the consumers seeing our products on the store shelves, making sure we're doing the right thing to be able to get everything out there and that's really what it's about.

[00:18:18] Now some other states might be more difficult.

[00:18:20] You know some more you know obviously Florida is one example you can't do anything wholesale side there right?

[00:18:26] But there's some other states where most of the people are you know most of the retail stores are tied to some type of vertical integration with CPG.

[00:18:34] There can be a little bit more difficult right?

[00:18:37] But again if you have unique innovative products and the consumer demands them then it's, you create another reason for them to have to put them on your shelf right?

[00:18:47] So we always have to stay on the cutting edge of creating products that have demand.

[00:18:53] Yeah it's so interesting how these markets are also different like Florida where it's all about vertical and getting doors open and driving through those pipes.

[00:19:01] But yet New Jersey as you pointed out has a cap which is kind of like now going through what Massachusetts went through with their cap and then more independent doors opening and how wholesale became so so important to become very very good at.

[00:19:16] And I'm just it's so interesting how we have all these different aspects of our businesses in cannabis.

[00:19:22] It's not just opening stores.

[00:19:24] It's not just growing cannabis.

[00:19:25] It's like 17 lines of business but always thinking about and and different in every single market with all of these little regulatory nuances.

[00:19:35] And I'm always thinking about how the operating companies like you can develop efficiencies as you have to pursue all of these aspects of the vertical and wholesale being pretty complex when you think about it.

[00:19:49] There's always a lot going on right which makes which makes us, you know, a unique opportunity because if you can navigate all these difficult environments, you can be successful as we are.

[00:20:00] But anyone coming in now to try and get ahead it's it's tough.

[00:20:06] It's really tough.

[00:20:08] I know I like what do you hear too from the groups you guys work with on like the bridge platform. I mean, is it are you hearing similar sentiments around this or.

[00:20:18] Yeah, yeah, definitely.

[00:20:21] I think you know a lot a lot has kind of changed over the last couple years with with organizations looking at, you know, more efficiencies.

[00:20:30] And I think it can be hard for retailers that don't have, you know, the same resources to do like efficient ordering with all the different, you know, skews that they have so yeah they are using things like bridge with their vendors to kind of lean on the vendors a bit

[00:20:48] more to propose, you know, orders because it gives the vendors visibility into the end of the doors.

[00:20:54] And we are seeing, you know, a lot of adoption of that and I think that's, you know, coming from the growth of wholesale from organizations, you know, Bruno that are seeing growth there.

[00:21:04] And it's also coming from like just maturity in the industry, as things kind of sort of stabilized depending on market, you know, every every every market as you guys were just saying is very different.

[00:21:18] You know, like New York is seeing a lot of stores opening right and a lot of growth in that market markets like California you're seeing a lot of price pressure and contraction in that market right and both markets are adopting stuff like this for different reasons.

[00:21:34] But I think it is.

[00:21:36] Yeah, proving pretty valuable for things like wholesale and just kind of that that visibility.

[00:21:44] I actually had one more question.

[00:21:46] Guys on Florida one thing I hadn't gotten clarity on just because as you know I've been working with Darren very closely on the commerce clause challenge, which thank you guys for being such vocal supporters and a plaintiff in that case.

[00:22:00] It's so great to work with with you on this but on Florida with an adult use law does that change how does that change the vertical to wholesaling relationship within and within the market.

[00:22:13] So that'll have to happen legislatively out of the gate that won't do anything. Yeah, that'll be after.

[00:22:18] Okay, what is do you guys have a point of view on that or is just are you just focused on step one let's get this thing.

[00:22:25] 100% focus on step one.

[00:22:28] Yeah, yeah I want to get some I want to provide some support there if we can too so I'll be reaching out to that organization you guys donated to down there and are participating in I think it's really important so much appreciated will take all that we can get.

[00:22:44] Yeah.

[00:22:46] Oh yeah so sorry side continue on.

[00:22:48] No I was going to kind of lead that into like the new markets you mentioned at the top of the podcast here George that Ohio is on your radar, as is Florida but to Ohio.

[00:23:00] I believe you have five dispensary locations right now and 20,000 square feet or so cultivation the state. Do you.

[00:23:11] How does that look for you guys post.

[00:23:15] What do you think September this year when doors open.

[00:23:19] We think most likely September and it looks like we'll be able to add a retail store. So that's kind of what we're planning on and we'll see how it pans out.

[00:23:28] Yeah, yeah we've seen in markets where it's flipped you know anywhere two to three X in sales is that kind of what you guys are expecting as well.

[00:23:39] Yeah, the two and a half to three X and sales has kind of been par for the course so expecting similar in Ohio.

[00:23:45] Yeah, are you doing wholesale there as well at this point.

[00:23:49] Yeah, we're doing wholesale as well as vertical and thrown stores.

[00:23:53] I would imagine you're gearing up for that thinking about the demand for wholesale, because not only are your stores going to see significant demand but all the other dispensaries there that convert to adult use will as well so probably a lot of wholesale demand I would I would expect.

[00:24:10] We also we recently underwent a little bit of expansion on our canopy side as well as on the processing side so we're.

[00:24:18] We are ready and willing and able to hit that market for their use so we're excited about it now Ohio is a big state and should be a very good uptick to our business.

[00:24:29] Massive state and well positioned geographically do you guys those brands that you mentioned at the top.

[00:24:37] Do you cover those brands at every in every market or does it depend on the region that I'm in if I'm a if I'm a shopper in Ohio will I be able to get things like essence and the other portfolio brands that you have.

[00:24:50] Yes, but by the time adult use launches in Ohio.

[00:24:53] Some regulations have to change because not every product is allowed right now.

[00:24:57] We're hoping to have every product in it in our mix in Ohio by the time adult use launches.

[00:25:04] Is it pre roll.

[00:25:06] Pre roll is out.

[00:25:07] And there's a couple other things there that we haven't launched yet so.

[00:25:11] Is that another market where we have lashing is not coming sir would.

[00:25:16] We have.

[00:25:19] No comment no comment.

[00:25:21] Nothing like a delicious lashing.

[00:25:25] Yes, man what fun we have.

[00:25:30] I actually yeah I had a kind of side you have any more questions on that because I wanted to talk about yeah.

[00:25:36] You know one of the things I like to think about is you know we've all been very we've been kind of in this mode of fiscal prudence which is really good it's really good to be very you know focused on making sure we get through this time when capital hasn't really been flowing towards cannabis for a while but now we've got some kind of

[00:25:56] catalytic events on the horizon that seem like they're building momentum including obviously schedule three.

[00:26:02] If if capital should start moving again.

[00:26:06] How do you think about products are in terms of leaning in on new product development form factors types of products branding.

[00:26:15] Is that something that would be in in that moment when we start to have more capital available to us as an industry is that an area that you think about or how do you think about that.

[00:26:26] We were well capitalized so we were always.

[00:26:29] Yeah I mean we're always R&D and creating new products and launching new things.

[00:26:34] I think the.

[00:26:36] The marketing environment is going to change.

[00:26:39] I think you'll see some people step up that will want to they'll want to be behind some cannabis products that are probably sitting on sidelines today.

[00:26:46] So we'll see what that looks like but as far as innovation and R&D.

[00:26:51] I mean we'll depending how it plays out with in the future with interstate versus being able to cross state lines.

[00:27:00] We'll you know there'll be some more innovation there.

[00:27:03] We'll have to scale up but we're there's nothing that's stopping us today from continuing R&D and multiple fronts on the from the plants all the way to the processing side.

[00:27:13] There's all kinds of different things that we're that we plan on doing in the future.

[00:27:17] And do you imagine that most of your brand portfolio will continue to be kind of incubated within or do you have an eye on acquiring brands at any point.

[00:27:27] And this can be just more of a broader philosophical discussion so you're not kind of running a foul of any you know.

[00:27:34] Yeah I mean up to up till now we've really created everything internally and focus on buying any brands because most brands are stuck within a state.

[00:27:44] So they don't have a lot of drawing power.

[00:27:47] So until that changes we won't really look at most likely won't look at buying any brands now that could change when the barriers drop and people continue to build themselves up.

[00:27:59] Then that's definitely a possibility but for right now we're going to focus on the brands that we've created.

[00:28:04] And then similarly just especially with your background you know I feel like our industry has had fits and starts around approaching a hospitality aspect to our business.

[00:28:16] Whether it's about participating in the music festival side of things or having lounges.

[00:28:22] How do you view that aspect of the business for Verano on a go forward basis just again kind of thinking philosophically.

[00:28:31] We still need to overcome the regulatory hurdles in order for the music festivals to some of those outdoor events to really work.

[00:28:37] Those are very interesting though.

[00:28:39] There you have a big consumer base one time shot deal to be able to put a pop up that very interesting those types of events as far as the lounges.

[00:28:50] Very difficult to make economics work you really have to tie them to another experience right and there has to be.

[00:28:58] You know you have to be able to have a restaurant attached to it really at the end of the day in order for it to make sense.

[00:29:03] Right now to have a big space you're paying rent on build out etc just for consumers to go in and smoke a joint then you have the issue of them having to get home etc it doesn't.

[00:29:13] It's there's a reason we haven't really played in that arena.

[00:29:17] We're not ready to build restaurants around lounges yet yeah maybe that's a future thing right.

[00:29:23] I think about that it's like you know enough about it to know that it if you can't do it right it can get Harry real quick.

[00:29:31] Yeah you have to be laser focused on I still do it and I love it.

[00:29:35] Yeah always have passion for me but to do it in this space you know that's a whole different team of people you have to bring into.

[00:29:43] To really crush that yeah I have it's like I have respect for the ocean because I know it could destroy me I've respect for.

[00:29:50] I'm not going to open my idea of a perfect bar in San Francisco because I don't think it exists here but.

[00:30:00] I've got enough stress in my life anyway okay.

[00:30:05] So like festivals and hospitality great ways to drive awareness how are you guys bringing new consumers in the door right now you know and in all the markets you're in and like is.

[00:30:19] Is that going to change if we do see you know schedule three or some loosening you know at the federal level and do you have any thoughts on like where those those marketing dollars might go like in a perfect world like how would you people people in today versus maybe what you're doing today unless.

[00:30:35] What you're doing today is the perfect world for you guys.

[00:30:38] It's definitely not the perfect world I mean it just again every single market is different right some places we could put a billboard sometimes we can't.

[00:30:47] We can almost never can do any type of text marketing social media we have to be very careful what we put up taking down so no we were not living in a perfect world today for marketing.

[00:30:57] So I will you know does it mean it changes instantaneously upon a reschedule probably not but I think companies that control media content will become.

[00:31:08] More willing to be able to talk to us and see what we're doing that's what I anticipate and hopefully we'll be able to do more on that front right because right now it's.

[00:31:16] Ridiculous what we can and can't do right I mean Twitter opened up that helped we use that quite a bit.

[00:31:22] Yeah but it's you know the avenues are far and few between.

[00:31:27] Yeah yeah no I figured it wasn't it wasn't the perfect world quite yet but.

[00:31:34] Yeah I think when you when you mentioned you know brands with a regional footprint and not a national footprint and.

[00:31:40] I think even in regions it's it's hard for brands to build up an audience because most of the exposures in the retail environment for the consumer you know they're not seeing.

[00:31:52] The same kind of marketing you might see for products that you'd find at a grocery store you know for example so yeah I'm eager to see you know.

[00:32:00] That is one of the changes and I'm with you it probably won't happen overnight but.

[00:32:05] I have to believe that people will see the opportunity in this space and knowing that there's less restriction at the federal level open up to organizations like yours and maybe we can start to see some of these brands.

[00:32:17] Thank you guys have a head start because your your large footprint right so you're getting exposure across a lot of regions.

[00:32:24] But to continue that you know through marketing in more mainstream channels I think we'll just accelerate a lot of that stuff beyond that I mean I'm sure operationally you know.

[00:32:36] You know tax situations things like that what are you guys most excited about with a potential rescheduling in your organization.

[00:32:45] I mean the tax is obviously a big driver to be treated like a normal business would be amazing.

[00:32:53] And I think with that component we'll get some more banking relationships coming through our door which would also be great to be able to get you know finally get real credit cards.

[00:33:03] Not to have not to have to deal with hundreds of bank accounts for all these different businesses be able to consolidate all those.

[00:33:10] Get better interest rates on all the capital that we're sitting on I mean there's just so many positive benefits.

[00:33:15] That it'll make our business more efficient and I think it also increase our business right I mean with normal credit cards you should be able to see our basket size increase just a bit.

[00:33:24] And that in and of itself is a big gain.

[00:33:27] So this there's a lot of there's a lot of things and I think the time has finally come or we're finally going to see something after all these years you know why not why not on our 10th year be a nice gift.

[00:33:38] Yeah wouldn't it feel the same way.

[00:33:42] Yeah.

[00:33:44] So I know you guys just wrapped your earnings and and I'm sure it feels good to be done but now you're on to Q2 so what's what's ahead if we talk you know this time next quarter what what should people be excited to hear hear about coming from Varano.

[00:34:01] I think we'll have a better idea of the date of the Ohio launch.

[00:34:04] I mean it might even possibly be in June so that's you know very good for us very good for almost everyone right now in the public space from I think everyone's pretty much in Ohio for the most part.

[00:34:14] So it's a nice catalyst.

[00:34:16] I think we'll probably have some better polling numbers.

[00:34:19] Although I don't know if we'll be disclosed at that time on Florida.

[00:34:22] PA I think will be more in the fall when we start really ramping that up but maybe some more news on PA.

[00:34:29] So those are probably the big three and then rescheduling.

[00:34:32] I mean that's Aaron's department and he could pick the date for you.

[00:34:35] He can definitely put a stamp of approval on an exact date.

[00:34:38] You guys all be excited about it.

[00:34:40] Perfect.

[00:34:41] Thanks we're all waiting here.

[00:34:43] This isn't my audio cuts out but.

[00:34:47] But no I would say this I mean I think the big thing that we look forward to is continuing to position the company ahead of what opportunities are going to present themselves right like we made the move to Sevo Canada.

[00:34:57] You know it's not an in my Se move but Sebo you know in the US I think is very misunderstood because it's more you know derivatives.

[00:35:06] It's not necessarily tried to corporate listings business but the platform that we move to is really strong and it also gives a senior exchange status like we're ready to move into the US.

[00:35:17] You know if and when that time comes.

[00:35:20] And then just you know the inside stuff that not a lot of people see it's like the corporate, you know beefing up that we did like we went through our first SOC started at the end of 2023 we have our S3 file that I mean you look at what you need to do to be prepared for US capital markets and we've done it.

[00:35:35] And so that's what we look forward to and when George mentioned about you know just being a normal business.

[00:35:40] You know it's you know you get told no nine out of 10 times and to be able to kind of reverse that.

[00:35:46] It may be appealing for us but you know listen you know but you know we're also really clear like we've always been neutral that you know slightly positive I mean we've never gotten too far over our skis and you know we don't run the business.

[00:35:59] Based off of any assumptions or dislocations in the market but yeah it makes us smile to think about what a rescheduling world looks like but for now it's business as usual.

[00:36:09] Yeah, and I don't think we should you know let the wind go out of our sales that the DEA has has agreed that we are not a schedule one narcotics I mean we could just start there and be really excited by that because that's a sea change a generational.

[00:36:23] It's just funny could you see how pessimistic I mean again you know people get beaten down but it's like you know you got you know New Jersey the Connecticut to Maryland Ohio to Florida all potentially flipping to adult use with PA on the horizon you have states decoupling 280E and you have the you know that you know hopefully safer

[00:36:41] banking or some kind of Garland memo or something that's going to come out as well which will really give us the bank provisions we need but every step is a positive step lately and so it's really easy to just focus on the one item that everyone's waiting for is the schedule go through but in reality as an industry.

[00:36:59] People are printing strong numbers I mean kudos to GTI and truly as well they put up some strong reports as as did we.

[00:37:05] And you're seeing the industry really develop with both hands tied behind its back so if you're sitting back looking in you're going oh my gosh what what does industry do, if it was just able to operate like a normal business inclusion in the capital markets we're not asking for anything special or just asking to be treated like everyone else.

[00:37:22] One of our one of our tech company founders was like the last week was just like I just want like normal company problems.

[00:37:30] But I was thinking about this when I was listening to the you know Warren Buffett this weekend on Saturday morning and someone said what would you do if you had one more day with Charlie Munger and he got into this whole thing he said the best times I had with him or when we were solving when we had real problems in the business and it's finding partners who you want to dig your way.

[00:37:51] Out of the foxhole with that that's really what where you find the treasure and things and I was like, I feel like this whole industry those who are left and thriving.

[00:38:00] We're all the kind of people who found people we could fight our way out of a hole dig our way out I should say but yeah.

[00:38:08] Yeah and I think George said that at the top of the podcast has a great team over there so yeah it's it's a testament.

[00:38:14] Great team.

[00:38:15] Yeah, thank you both for joining us it's always so insightful to kind of hear you know from from operators that are you know on the front lines here you know week over week Emily and I are looking at the numbers in the market and covering that but you know we're not directly interfacing with all those consumers like you guys are so really great to get that perspective.

[00:38:36] Really exciting time ahead I think with with what you guys have on the horizon with Ohio, Florida, Pennsylvania and of course you know the inevitable schedule three.

[00:38:46] So yeah thanks again and congrats on everything so far and look forward to catching up again with you guys soon.

[00:38:55] Thank you both for your time appreciate it have a great day.

[00:38:58] Thanks for listening to the high rise podcast presented by headset for more information on headset visit headset.io.