Harvest Health & Recreation Inc. (TRUL) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to the Trulieve Cannabis Corporation's call to discuss the closing of the Harvest acquisition. My name is Andrea, and I will be your conference operator today. As a reminder, this conference call is being recorded. I would now like to introduce you to your host for today's conference, Ms. Lynn Ricci, Director of Investor Relations for Trulieve. You may begin.

Thanks, Andrea. Good morning, ladies and gentlemen, and thank you for joining us today to discuss the completion of our previously announced definitive arrangement agreement to acquire Harvest Health & Recreation. With me on the call today are Kim Rivers, Chief Executive Officer of Trulieve; Steve White, Chief Executive Officer of Harvest; and Alex D'Amico, Chief Financial Officer of Trulieve. Following our prepared remarks, we will open the call to questions. Before we get started, I would like to note that today's call is being recorded for the benefit of investors, individual shareholders, the media and other interested parties. Please remember statements made during this call that are not historical facts constitute forward-looking statements, and these statements are subject to risks, uncertainties and other factors that could cause our actual results to differ materially from our historical results or from our forecast, including the risks and uncertainties described in the company's filings with the Securities and Exchange Commission, including Item 1A Risk Factors of the company's annual report on Form 10-K for the year ended December 31, 2020. Although the company may voluntarily do so from time to time, it undertakes no commitment to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. A webcast of today's conference call will be available on our website later today. In addition, we have posted an accompanied PowerPoint deck on the Trulieve website. The webcast link and the slide deck can both be found on our Events and Presentations page. Now I'll turn the call over to our CEO, Kim Rivers.

Good morning, everyone, and thank you for joining this call on short notice. We are thrilled to announce the completion of the Harvest transaction. This acquisition is the largest completed transaction in U.S. cannabis to date and marks a significant milestone in Trulieve's history. Through the collective efforts of the teams at both companies, we were able to close this record deal in less than 5 months, a monumental feat considering the complexity and the number of regulatory hurdles we were required to clear in order to satisfy closing conditions. This is transformational for Trulieve. The addition of Harvest solidifies our position as the largest and most profitable public multistate operator in the U.S. For the second quarter of 2021, our last reported quarter, pro forma combined company revenue of approximately $318 million and adjusted EBITDA of approximately $123 million was the strongest performance reported by any U.S. MSO. Trulieve now has 149 stores representing 37% more stores than our closest competitor with a diversified footprint in key markets. In order to support that footprint, Trulieve has over 3.1 million square feet of cultivation, representing over 1 million square feet more than our closest competitor and exceeding their cultivation footprint by almost 50%. This capacity solidifies our position as the leading operator with true scale. The Harvest acquisition advances the execution of our hub strategy as we are building scale and best in markets with attractive regulatory structures ahead of future catalysts, both at the state and federal levels. Prior to this transaction, Trulieve had established hubs in the Northeast and Southeast. These hubs benefit from the addition of Harvest assets, particularly the Northeast hub with significant additions of both retail and supply chain affiliated operations in Pennsylvania as well as vertical operations in Maryland, a new state for Trulieve. Our Southwest Hub becomes immediately contributive with the addition of Harvest's market-leading Arizona operations and established well-respected brands. Harvest is a pioneer in that state with a 10-year record of operational success, including being the first to market with the launch of recreational sales earlier this year. Continued development of brands and expansion of our distribution network is a critical element of our hub strategy. The addition of Harvest branded products and strategic partnerships that drive retail traffic and serve customer needs are an important component of this transaction. Over the coming quarters, we will integrate Harvest and Trulieve brands across the combined distribution network with attention paid to regulatory frameworks and regional market preferences. As we work to fully integrate across our footprint, we are continuing to invest in new and existing markets. The majority of capital expenditures in the near term will be earmarked to add depth and scale in the cornerstone states of each of our hubs: Florida, Arizona and Pennsylvania. In the Southeast, we have 105 dispensary locations and over 2 million square feet of cultivation. And Florida ongoing expansion activities are bolstered by the addition of Harvest cultivation, manufacturing and retail assets. Per state licensing requirements, the 14 existing Harvest dispensaries in Florida have temporarily closed as of today and will be reopened in very short order as Trulieve dispensaries. These locations will reopen in stages over the coming weeks with the goal to have all stores rebranded and reopened in October. Our legacy Harvest staff will work in nearby Trulieve locations in the interim, and the dispensaries will be restocked with the combined portfolio of Trulieve and Harvest products. Trulieve will also begin producing Harvest branded products such as Alchemy, Roll One and Co2lors that complement the existing Trulieve brand portfolio. These Harvest brands will be available at all of our Florida dispensaries. As the third most popular state with 130 million tourists pre-COVID, our home state of Florida will be the second largest market in the U.S. when recreational use becomes legal. This presents incredible upside potential we are uniquely poised to capture. In the Northeast, we continue to expand affiliated cultivation, manufacturing and retail operations to address the growing Pennsylvania market. Importantly, in Pennsylvania, regulators did not require any divestitures. We intend to maintain our position as a leading wholesaler in Pennsylvania, while increasing product supply to our affiliated retail locations. Pennsylvania is one of the fastest growing and attractive medical markets with future potential upside from adult use. In the Southwest, Harvest brings market-leading retail presence in Arizona with 16 operational dispensaries serving medical patients and adult use consumers supported by over 320,000 square feet of cultivation and manufacturing operations. This well-established medical market has expanded significantly since the launch of recreational sales in January. We will continue to invest in this market, adding retail, cultivation and manufacturing capacity. We intend to expand wholesale operations and increase supply through our own retail locations, allowing us to continue to maintain control over product quality and brand experience while also improving margins. Our strength in capital market, underpinned by our industry-leading profitability, affords us access to capital for growth and expansion evidenced by the announcement of our pending $350 million debt issuance, the largest debt financing to date of any public U.S. cannabis operator. This nondilutive financing represents industry-leading terms as it is a straight 8% deal without warrants or a discount. This attractive rate on an oversubscribed basis underscores Trulieve's solid financial profile. Additionally, concurrent with the closing of the acquisition, Harvest completed the divestiture of its Florida Medical marijuana license for cash consideration of $55 million. This influx of capital, paired with Trulieve's fortress balance sheet, means Trulieve has ample cash to retire high-cost service debt, fund expansion plans and act on future catalysts to accelerate growth across our regional hub. Beyond our defined CapEx initiatives, we will continue to evaluate and pursue new organic and inorganic growth opportunities. Our criteria for determining attractive markets and accretive M&A deals has not changed. We will pursue license opportunities and acquisition targets in markets with attractive structures, opportunity to build depth and achieve scale and potential for significant upside. Our continued focus on strategic foresight prudent capital allocation, skilled execution, financial discipline and continuous efforts to improve have served the company and stakeholders well. Speaking of having served the company well, I want to take a moment to recognize the tremendous efforts of the teams at both Harvest and Trulieve. As you can imagine, closing a transaction of this magnitude in under 5 months required a lot of cooperation and concerted effort from both teams. I am very proud of the way all employees came together to achieve this common goal. In the coming months, we will work together to fully integrate the companies. I'm excited to have Harvest Co-Founder and CEO, Steve White, remain on board at Trulieve. As one of the early pioneers in cannabis, Steve brings them vast wealth of institutional knowledge and experience to our organization. I'll now turn the call over to Steve to add his perspective, and I will return for closing remarks before opening the call for questions. Steve?

Thanks, Kim, and welcome, everyone. As most of you already know, Harvest was founded in 2011 and has one of the longest operating track records in the legal U.S. cannabis industry. Over the years, our team has achieved great success in entering new markets through organic license wins, building vertically integrated operations in multiple markets, and of course, most recently, managing the expansion of the medical market in Arizona to include adult use sales. I am proud of what we have accomplished over the past decade. On behalf of all Harvesters, we are delighted to be part of the Trulieve organization. With the addition of the Harvest team and assets, Trulieve is an even stronger industry-leading multistate operator. Our combined operational experience, coupled with depth and scale in key markets, provides a solid foundation for growth for many years to come. I'm very pleased with how smoothly this transaction has been handled, and it has been wonderful to see the combined efforts and cooperation from employees of both companies. I look forward to working together to continue to build out this world-class organization. Kim and the entire team at Trulieve have done a phenomenal job growing the business while maintaining profitability. The outlook for U.S. cannabis has never been brighter, and I can't wait to see the next chapter unfold. I'll now turn the call back to Kim.

Thanks, Steve. We are excited to move forward as one combined company ready for the next phase of growth and delivering value to our shareholders. However, now that the transaction is closed, the real work begins. With integration efforts underway, both teams remain acutely focused on providing a best-in-class experience for patients and consumers. This is an exciting time for the company and for the industry. Trulieve was poised and ready for accelerated growth with our industry-leading scale, depth and core markets, strong product lines and brand opportunities and impressive financial profile. With the Harvest acquisition completed, we are uniquely equipped to define the future of cannabis. We are still in early innings for Trulieve and U.S. cannabis. And as I've said before, you may see nothing yet. Thank you all for joining us this morning. We will give guidance for the combined company for 2022 when we report our year-end results. In the interim, we look forward to providing an update on our progress during our third quarter results call in November. And as I always say, onward.

Thank you, Kim and Steve. Operator, we will now open the line for any questions.

We will now begin the question-and-answer session. [Operator Instructions] And our first question will come from Russell Stanley of Beacon Securities.

Congrats on a rapid, rapid close. I guess my first question around Florida, you obtained Harvest operating assets there. Can you just talk about your -- how you plan to integrate the cultivation of manufacturing assets, specifically, I guess, how you think about allocating production needs across your footprint now?

Yes, absolutely, Russ. So we are, of course, very much looking forward to being able to have additional cultivation capacity and production capabilities with adding the Harvest operations. And so we -- the team has been working together to outline optimal product mix as well as the allocation of products amongst our facilities. As a reminder, we also have recently opened up our new Tampa manufacturing facility and have shifted our edibles manufacturing into a significantly larger portion of that facility. So that kitchen has gone from 10,000 to 30,000 square feet. So we're continuing all the time to optimize and upgrade our capabilities across our footprint. And with Harvest and the on-boarding also of the Harvest brands, particularly Alchemy and Roll One across the footprint, that facility is going to be receiving some upgrades in terms of equipment, and we'll be firing on all cylinders here soon.

That's great. And maybe if I could sneak in one more. I'm sure there are a number of people behind me. But just on the debt financing. Do you have a thought at this point as to how much of Harvest debt you plan to pay down? Just trying to, I guess, understand how much dry powder that will be available for CapEx and other growth opportunities after you've refinanced would have debt you're looking at?

Russ, it's Alex. Yes, we're looking at just north of $240 million on initial pay-down Harvest debt.

Yes. And I think that importantly, just as a reminder, in terms of where our current cash position is as well, right? Both Harvest and Trulieve were in a, I'd say, enviable cash position pre debt refi and continue to be cash flow -- the combined organization will continue to be cash flow positive from operations. So we feel like we're in a really good spot as it relates to our foreseeable future goals in terms of expansion, again, in those key markets across the combined platform.

The next question comes from Matt McGinley of Needham and Co.

What lockups do you have in place for the Harvest shareholders that were insiders?

Matt, so we've just continued any lockup agreements that were in existence previously. So there are no, I'll call it, additional artificial lockups or requirements on a go-forward basis, but rather a continuation of where they were before.

And Kim, what was the rough terms on those? Like when would those unlock and how many shares were part of that lockup period?

Yes, Matt, this is Steve. Originally, the way that we had structured the lockup arrangements was that 10% of initial shares were unlocking every 6 months, starting at the initial RTO.

Okay. And one other one on Pennsylvania. In the slide deck, you defined the Pennsylvania assets as being an affiliated retail location and affiliated cultivation. What's the difference between an owned location and an affiliated retail location? And how many locations in Pennsylvania do you have the full economics, I guess, excluding any residual earn-outs that you may have had from the prior acquisitions. But I guess -- how much of the full economics do you have in those stores versus an affiliated or management contract you may have on some of those retail or cultivation facilities?

Yes. So as we stated in Pennsylvania, there, of course, are specific regulatory requirements that we, of course, are very cognizant of and want to make sure that we're always operating well within. As we've spoken related to the 6 stores that Trulieve had prior, 3 of those, which are the Solevo stores, are under earn-out until the end of this year. And those are in transition. And actually, the Solevo portfolio is being rebranded and relaunched here this weekend actually. So we're excited to relaunch those as Trulieve stores. In terms of the combined platform, again, what we can speak to is the fact that the regulators did not require any divestiture of assets. And so the ownership structures that were in a place pre-transaction closing will remain in place on a go-forward basis.

The next question comes from Andrew Partheniou of Stifel.

Congrats on the early close. Maybe just at a high level, as you have both already gone through each other's portfolio and had extensive discussions in closing this transaction. You touched on it already during the prepared remarks, but maybe perhaps to go into a little bit more color. Kim, what assets or brands or things that Harve has been doing that you think was exceptional that you are now going to be able to integrate into your platform and learn from?

Yes. Thanks, Andrew. So as I mentioned in the call or in the prepared remarks, we have been spending a lot of time understanding the connectivity of the Harvest brands to the consumers and are very excited to bring a number of their best-selling and best-performing products and brands into the Trulieve brand portfolio and to roll those out in a more scaled and meaningful way across the combined platform. So we're going to be working very diligently to bring those brands into retail locations, first and foremost, in our state of Florida, where we think the combined portfolio, both having Trulieve brands and legacy Harvest locations and vice versa, will have meaningful contribution to the upside in both financially and also from a customer experience perspective in Florida. In addition, I think that previously, as Steve and I have discussed and the teams have discussed at length, we have recognized the fact that there have been some constraints as it relates to manufacturing and production in certain markets. So having the ability to really amplify those brands and again, make them more meaningful contributors through branded retail as well as launching wholesale, in some cases, we think will be significant as well. And I don't think that it can be overlooked -- just the amazing success that Harvest had with being first to market in Arizona on the recreational conversion and the operational excellence that they demonstrated in Arizona in January by being first to market there. And I think that as we look across the combined platform and we see a number of states that are on the verge of the same type of conversion really being able to lean into those learnings as well as something that we're certainly excited about.

And maybe just continuing on that and obviously, Cognizant, you mentioned you only provide guidance -- 2022 guidance on year-end financials. Are you able to discuss perhaps the level of production expansions that you might be looking to do in those core states that you mentioned and the timeline for perhaps a first Harvest of those production expansions or any kind of color around that could be helpful.

Yes. I mean, as we said, Andrew, we'll be providing additional insights as it relates to CapEx as well as guidance at year-end. We're continuing -- both companies, I think, have been pretty transparent previously around expansion efforts, and those are all continuing. So we're certainly not slowing down anything that was underway will continue to be underway. As I mentioned, there will be some places that we're able to get low-hanging kind of fruit wins here. For example, additional equipment, adding additional flow-through in Florida is an example of that, right? Now keep in mind, that's going to be coupled with the fact that in Florida, as I mentioned, we are going to have to reopen all 14 of those locations, which we've got a very robust plan around, and we'll be communicating to customers today that reopen schedule. And we have a bridge plan to make sure that those folks continue to be taken care of within a Trulieve location. But -- so that's going to be coming back online. The Harvest -- Florida stores will be coming back online throughout the month of October. So there's going to be a number of moving pieces here through the end of the year, which is why we think it's best for us to really have and be able to give a clearer picture at the end of our Q4 -- on our Q4 call.

The next question comes from Vivien Azer of Cowen.

Congrats on closing the transaction. Given that the third quarter closed yesterday, and I know there's been a lot of chatter about the shape of the third quarter, I was wondering both Kim and Steve, if you could give us some perspective on just kind of intra-quarter evolution of consumer demand in your key respective markets.

Vivien, this is Steve. I can speak to Arizona, which has historically been seasonal. As people can imagine in Arizona, summers are typically a little softer than the winter time when you have more people in the marketplace. That's probably -- I would expect that to be amplified with the addition of adult use sales. But in Arizona, we are seeing trends that we expected to see and have seen for many years.

Yes. And then just following on to speak about kind of the additional markets in Pennsylvania and in Florida. And certainly, in Pennsylvania, I think that folks have been talking a little bit about price normalization, which I think is happening. It's affecting certain segments more than others. I think I've said publicly that -- and that was very much expected from at least through our lens, and we have fared well, we think, on a relative basis, as our products, particularly on the wholesale side, have focused in on more premium lines, and we've been bringing premium flower to market as well. That being said, that market has needed to adjust to get in line with the rest of the country as it relates to pricing as a whole. And -- but again, the market is very robust there with obviously a very high patient count, and we remain very bullish on Pennsylvania as we think about that platform ahead of potential adult use coming online. In Florida, demand continues to be strong with under or about 2,500 and 3,000 patients coming on into the program every single week. Certainly, we saw excessive demand during COVID in Florida, not unlike some other markets. But I think it was fairly exacerbated in Florida on a relative basis. And so we have gone from -- also with the walk back of telemedicine in Florida back to traditional in-person visits, patient visits were up to 7,000. As an example, folks per week last year and now we're about 2,500 to 3,000. So we're back in line to where we were pre-COVID is what I would say, still growing off of previous highs, but certainly at a more measured and reasonable rate. There's been a lot of conversation around promotional activity in Florida. I think folks have been complaining a little bit about harvest -- recent discounting. I think everybody now knows why. In terms of -- we would rather -- Harvest wanted to sell that product as opposed to having a large write-down since we have to close the store locations. So Q3 was certainly transitional for both Harvest and Trulieve as we worked on behind the scenes the positioning for this transaction. Trulieve also has been repositioning, as I mentioned, our production capacity with opening the Tampa facility, launching hydrocarbons, transitioning out of traditional concentrate manufacturing with ethanol into hydrocarbon manufacturing. So there's been a lot of balls in the air this quarter, but we think it absolutely strategically sets us up and positions us well for the future. And I think that that's where our focus has been certainly in the quarter.

The next question will come from Camilo Lyon of BTIG.

And I'll let my congratulations as well on the quick close. Kim, the combined entity will now have, I think, 105 stores in Florida. That's well over 2.5x as your next competitor. Does this change your philosophy on pace of open in your home market?

Yes. So Camilo, I think we've always been pretty straightforward in terms of our pace of growth in Florida specifically is based on fundamental bottoms-up modeling and targeted and pegged to patient growth, along with a number of other metrics, including, of course, customer demand, flow-through and physician activity, et cetera. So the team is certainly evaluating all of that in light of, of course, adding in the Harvest portfolio of stores. Certainly, the addition of that platform will offset, right, some stores in certain areas that we may have had planned or may have had on the board at Trulieve's locations moving forward. So we're going to continue to evaluate just the way that we have throughout the year to determine whether or not it makes sense on a fundamental basis to continue to move to the speed that we have moved. I again want to emphasize that the Florida market isn't slowing down. So what if those demand statistics prove or continue to basically say that we do need to continue to open stores, that's what we're going to do. But we'll be evaluating that on a more specific basis. Again, after we get these stores on-boarded in October, have a chance to evaluate those, run the analysis. And again, we'll be able to give you guys more color on that, specifically for 2022 at Q4.

Great. And then maybe if I could just follow up to that. Is there any high-level color that you can provide with respect to the store differentials between Harvest and Trulieve in Florida? In other words, any sort of differences that you noticed from either traffic counts or wallet expenditures, anything basket sizes that are worthy of discussion? Any differences there to call out?

So again, I think we'll be able to give you a lot more detail in the future. And what we do see is that we definitely see an opportunity with the Harvest locations to increase product availability and product selection throughout and product depth throughout the segments, which we believe will lead to increased productivity in those stores. So we think there's great opportunity ahead again to combine our brand portfolios and pull the best of the best products across lines to have a superior customer experience, quite frankly, not only in the Harvest stores, but also in the Trulieve stores as well.

The next question comes from Kenric Tyghe of ATB Capital Markets.

Kim, I wonder if you could speak to how this changes either the perception or your actual value proposition and brand awareness in the Pennsylvania market. We can all look at sort of your footprint yesterday versus today. But perhaps if you could sort of speak to some of the subtleties and nuance around that in terms of your effective positioning and the like in Pennsylvania and then perhaps take the following in -- to follow up immediately, which is -- how does this change your positioning in flower or the ability to sort of high grade your offering in Pennsylvania?

Yes. So I mean, I think that I don't know from a strategic perspective if it really is a large shift and that we were already focused on producing both fantastic products to offer through our branded retail locations as well as, of course, having a robust wholesale platform and portfolio in Pennsylvania. I think that we'll certainly be continuing to bring additional capacity through our production lines so that we can have -- we will have obviously an expanded opportunity to have branded products through retail. And certainly, that will be -- and we'll have the opportunity to do that in a more scaled way, which is exciting when we think about both the stickiness of brands in the hands of consumers as well as our ability to continue to focus in on and again win the wholesale customer as well. And so think it just really takes what we had started doing in Pennsylvania and really creates even a greater opportunity or amplified opportunities to do more of it in a more meaningful way. Flower, we believe specifically, let me be clear, high-end craft grade flower in Pennsylvania will continue to be a cornerstone strategy for us as the cult of our collection has successfully launched in that market and is being very well received. And we think having the opportunity to strategically position our retail portfolio to offer specific offerings to customers in those stores is exciting. But again, not forgetting about, of course, the wholesale platform that we've built as well. So really, Pennsylvania is going to be an exciting market for us on a combined basis.

That's great. And then just speaking of potentially exciting or progressively more interesting markets. How much of a focus is Maryland and sort of moving forward the combined company's position in Maryland given potential adult-use legalization discussions around Maryland looking to sort of exit 2022 into 2023, or just in terms of your rank order priorities, would that still fall a little further down the list. How should we think about Maryland and Maryland's kind of rank ordering in your priorities over the next year?

Yes. Maryland is absolutely -- and you heard me mention it on the call, it's absolutely in the mix. As we think about priorities, particularly in the Northeast, we were very excited to have solutions in Maryland as a combined company to maintain the assets there. And to your point, with the view of Maryland going rec, we do think that there are opportunities to again increase, particularly on the production manufacturing side in Maryland ahead of that change coming so that we can participate in a more meaningful way once the -- once that market switches over to an adult-use market.

The next question comes from Aaron Grey of Alliance Global Partners.

And my congratulations on the quick close. Just one question for me. So you've got some nice debt capital the other day at a nice rate, going to have some leftover dry powder even after refinancing some of the Harvest debt. I'm curious to the acquisition strategy, specifically more for the West Coast and after you have that hub over there in Arizona, the markets you're in there right now aren't really limited license, California and Colorado. So Curious to your thoughts on those 2 markets. Steve, I know you've done a couple of transactions in California previously over at Harvest. Trulieve, we have one store. So really curious in terms of your outlook in terms of some of the nonlimited license states as you potentially have some more acquisitions down the line?

You bet. Aaron, this is Steve. The -- when you think about the process of capital allocation, one of the things that has always been true at Trulieve and has been true of Harvest in recent history is looking at ordering the opportunities. And it's simply true that limited license states present better return opportunities than those without limited licenses. That's -- when you listen to Kim's comments about the particular states in which the bulk of the capital expenditures are going to be made, those are states with one limited licenses; and two, the ability to build scale and depth. So specifically, you don't even see limitations on either end, whether it be production or retail. The markets you referenced don't fit that criteria. That being said, there are tremendous opportunities and big reasons why you want to have your fingers in California and Colorado. We do see a lot of trends that emerge from those states and seeing those trends early is really important when taking some of the learnings there and applying them to the limited license states.

[Operator Instructions] And our next question will come from Eric Des Lauriers of Craig-Hallum Capital.

Lot of my congrats as well. I was wondering, first, if we could just talk about any associated integration costs, whether there's some inventory markups we should be aware of or increased OpEx. Any comments or color you can provide there, whether it's on a dollar basis, margin basis or just timing would be great.

Eric, it's Alex. Yes, over the next couple of quarters, we'll be working on, particularly across operations, on integrating. So we expect increases in whole dollars on the OpEx side, of course. But we don't expect major fluctuations as a percentage of revenue going forward. And keep in mind, we will be tracking all integration costs with our adjusted EBITDA metric as well.

Okay. And then just one more from me. So good color on sort of the integration plan from a brand perspective in Florida. It sounds like outside of Florida, at least from a product perspective, you'll be kind of mixing the portfolio there. From a retail perspective, could you help us understand the overall strategy going forward here? Is there going to be a complete rebrand of all Harvest stores to Trulieve? Or could you just help us understand your retail brand strategy moving forward, please?

Sure. So we believe very much in having a uniform branded retail portfolio. However, we also are sensitive to the legacy brand equity that has built up over -- has been built over time. So in Florida, we really -- that was an easy choice the regulators made it for us. So that's -- those stores are going to be immediately rebranded and reopened as Trulieve stores. Then we'll be going market by market and rebranding over time within, again, of course, the specific parameters of the regulatory requirements. In Arizona, which I know is a hot topic, there right now, the Harvest owned stores are not all branded Harvest. There were -- there is a portion of the portfolio that was acquired through acquisition that has different names. And so we are going to move first to rebrand that portion of the portfolio as Trulieve, and familiarize the market with the Trulieve brand, with the Trulieve name, and then over time, transition those legacy Harvest branded stores into the Trulieve portfolio. We've got some experience in doing this. Connecticut is a prime example. That store, we actually co-branded for a period of time and then walked over. It actually was over a year to a Trulieve branded location because of the strong brand equities that the previous name had in that market. Similarly, I just mentioned Solevo with rebranding this weekend to Trulieve. And so we want to be again first and foremost, have the customer or the patient in mind and how that -- and making sure the transition is well communicated and resonates with that customer base prior to making the switch wherever possible. But ultimately, as we look forward, we anticipate that there will be a singular branded retail experience across the U.S.

The next question comes from Derek Dley of Canaccord Genuity.

And I'll echo my congrats on the closing of the transaction ahead of expectations here. I just wanted to follow up on that last question. Kim, you guys have had a lot of success with your loyalty program in Florida, and your comment here just on having a uniform retail presence. Can you just talk about what your plans are with the loyalty program? And if there's a plan to just spread that across the harvest stores as well?

Yes, absolutely, Derek. And so we are really excited to again have a singular, again, retail experience, which, of course, would include the loyalty program over time. So first and foremost, we'll need to get through the integration process as it relates to our systems so that we can accurately, of course, make sure that we're tracking and capturing and awarding loyalty point in a combined way that is consistent across the platform. So the focus first will be on the system, and then we'll be rolling out. And again, that also has to do with messaging and making sure everyone is very aware of the newly launched loyalty platform. We actually are underway currently in revamping and actually leveling up the loyalty platform experience across Trulieve now. So the timing should work out perfectly and that the entire platform will be upgraded at one time. In Florida, I think it's important to note that customer communication is going out today to make sure folks know that any loyalty points that they have at Harvest will be coming over immediately into the Trulieve system on a one-for-one basis. We think it's important for folks to know that they're not losing any loyalty points and that they'll continue to earn points on an ongoing basis on a go-forward basis with Trulieve. So work to be done on the loyalty side, but I'm very excited for that -- again revamped kind of unveiling that will come hopefully soon as we can get the systems aligned across the combined platform.

Okay. No, that's helpful. And then this is just more of a general question. But many of the retailers across a whole sort of swath in industries that we speak to have kind of spoken to labor shortages that they've been experiencing recently. Are you guys seeing any of that? Or how have you been able to handle that, the challenging labor market?

Yes. So I mean, I think we spoke on Q2 around just the impacts that we were seeing across the company on a truly standalone basis. That has continued to some extent into Q3. We're actually starting to come out of that now. We are seeing -- and I think, right, I mean, just when you think about it at a high level, schools reopening, folks actually -- kids actually going back to school this fall and certainly I think was helpful in getting folks comfortable going back to work to a certain extent. It remains a little bit choppy depending on the market, but we are starting to see a bit of a leveling out on the labor front. Steve, I don't know if you have any comments in terms of what you guys are doing recently.

Yes. Generally speaking, the -- there is still a lot of desire for people to get into the cannabis industry. So resumes are still flowing to cannabis companies that do post opportunities. And while we do see a labor shortage, we do not have a shortage of candidates for open positions across the country.

This concludes our question-and-answer session. I would like to turn the conference back over to Lynn Ricci for any closing remarks.

Thank you for joining us today, everyone. Have a great day.

The conference has now concluded. Thank you for attending today's presentation, and you may now disconnect.