Jushi Holdings Inc. (JUSHF) Earnings Call Transcript & Summary

Good afternoon, and thank you for joining us for today's edition of Pot to Public. I'm thrilled to be joined today by Trent Woloveck, Chief Commercial Director of Jushi; and Paul Sykes, CFO of SpringBig. Before we get started, I wanted to remind viewers that have not already submitted questions that you may do so during the company presentations by using the Q&A button located at the bottom left-hand corner of your screen. I will review and compile those questions for discussion at the end of the event. Note that questions submitted after the presentations are completed, will not be considered. In terms of our agenda for today, each of our speakers will have an opportunity to present, after which, we will host a joint Q&A session. Before we begin, I'd like to remind listeners that certain matters discussed in today's event or answers that may be given to questions asked could constitute forward-looking statements. Any such forward-looking information is based on certain assumptions and are subject to risks and uncertainties that could cause actual results to differ materially from historical results. These risk factors are detailed in Jushi and SpringBig's continuous disclosure filings that can be accessed either on the U.S. Securities and Exchange Commission website at sec.gov or at sedar.com. Forward-looking information provided during this event speaks only as of the date of this event and is based on the plans, beliefs, estimates, projections, expectations, opinions and assumptions of the management team as of today's date. There can be no assurance that the forward-looking information provided is accurate and you should place no undue reliance on forward-looking information. Jushi and SpringBig undertake no obligation to update such forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by law. Now with that out of the way, I'm thrilled to introduce Mr. Paul Sykes, Chief Financial Officer at SpringBig. Please go ahead, Paul.

Thank you. Thank you, Rob, and pleasure to be featured on the first of these Mattio Pot to Public service. Over the next 15 to 20 minutes, I want to try and give you a brief overview of SpringBig and the central role that we play as a technology business in the cannabis industry. We're the leading provider of a SaaS-based automated marketing solutions and loyalty program to cannabis retailers and brands throughout the United States and Canada. In the first few years of SpringBig's existence, we served small businesses across multiple sectors before starting to focus exclusively on the expansive cannabis sector in 2016. Today, we have more than 1,300 clients across more than 2,400 retail locations throughout the United States and Canada. We provide our platform to the full range of client size from single location retailers to working with most of the larger MSOs in the industry. We distribute nearly 2 billion messages to consumers on behalf of our clients each year and have a database in excess of 50 million consumers. And through our platform, there is in excess of $7 billion of GMV running through the platform each year. Based in Boca Raton, Florida, we have offices in Seattle and Toronto and have approximately 160 employees. As a private company, we were ranked in the top 100 in the prestigious Inc. 5000 in both of the last 2 years, in 2020 and in 2021. We recently completed our IPO process and since June 15 have been listed on the NASDAQ Global Exchange with the ticker SB. Since we're a technology business, serving the cannabis industry and not a plant-touching business, we're eligible to be listed on a U.S. exchange. Like most good technology businesses, our existence is to solve problems and challenges faced by our clients. And the challenges that we look to address can really fall into 2 categories: engagement and data and analytic. Retailers and brands in the cannabis space face challenges in reaching customers, the consumer. There's intense competition, promotion-driven sales cultures and a lack of available communication channels due to the legislation that evolves around our industry. Traditional advertising channels restrict cannabis advertising, they hinder the ability of both brands and retailers to effectively market their products. And SpringBig looks to help out our clients in some of these engagement challenges. The other aspect is data and analytics. Given the relative infancy of the industry, there's a lack of data for brands to reach an established relationship with consumers. Retailers lack the analytics and infrastructure to make actionable decisions, to make effective marketing decisions and there's a lack of market intelligence and data solutions. Good marketing is ultimately driven by good data and analytics and good engagement. And these are the challenges that we look to help our retail and brand clients address through our platform. So what exactly does the SpringBig platform provide. You can see on this slide here, there's a range of offerings; customer retention, customer acquisition, increasing customer spend and increasing foot traffic. These are all the benefits that we're looking to drive all our clients through the platform. At the heart of the platform is a rewards and loyalty program. And we combine that with marketing automation, SMS, MMS, text messaging, e-mails, direct push notifications into applications. And this is all offered in a way in which the retailer and the brand can communicate directly with the end consumer. We offer extensive reporting and analytics and customer feedback survey system, surveys after a customer has gone into a store. So the benefit of the platform is that we're enhancing customer retention and in an increasingly competitive marketplace, retaining loyal, repeat customers is obviously critical to our retailers. We're increasing the amount that those customers spend by having highly targeted and focused marketing campaigns. And at the end of the day, the retailer is increasing their database of consumers, increasing the foot traffic, increasing the frequency with which the consumers come into the retail store and increasing the customer spend, leading to greater revenue for our clients. I'll just touch briefly on the market landscape. Most people listening to this call, I'm sure, are very familiar with the cannabis market space. But an important point to note is we as a technology company can operate across the entire country, whether it's a medicinal state or an adult use state, we can operate across the entire country. Obviously we're in a fast-growing end market and we've got the expansion of the recent legislation in the Northeast with New York, New Jersey and Connecticut. Technology offerings are still in a relatively early stage evolution in the cannabis space when you look at some of the sectors. So all of these factors point to some real tailwinds in our expansion. And we believe that as the industry evolves, the cost of the raw product will decrease, and the market will become more and more competitive, and that is going to put a real premium on being able to enact effective marketing programs. Marketing spend will actively increase over time. If you look at some comparable industries, regulated industries, alcoholic beverages, for example, then typically between 10% and 15% of revenue is spent on marketing activity, and that will probably evolve over time in the cannabis space. So we see a real strong tailwind in just the general economics in the industry. And we believe SpringBig is very well placed to serve our clients and benefit from those tailwinds moving forward. One of the really unique things that we've managed to do is link the 3 different aspects in the chain. We've managed to link retailers, brands and the consumer. One of the challenges that brands have in the industry is likely to have, but probably even more being able to directly communicate with the consumer and to be able to promote the value of the brand. So we've created this really powerful network effect, a virtuous circle, if you like, supply wheel, however you want to describe it, across the industry where we have our brand clients and our retail clients effectively working together through the SpringBig platform. And the way that works is that if a brand wants to promote its particular products, it can -- it can work with a cooperative marketing solution with the retailer. So think of it in terms of sponsored content in the retailers' messages, the brands will provide that content, collaborate work with the retailer to deliver that sponsored content to the retailer and to the consumer in conjunction most typically with a promotion that the retailer and the brand are working on at the particular time. And where this real network effect comes into play is obviously the more the retailers that we have on the platform, the more attractive that is to the brands because the brands can get better coverage. The more brands we have on the platform, that's more attractive to the retailers because there's more content that they can include in their messages. So that's what we're really seeing now working in practice that we see retailers and brands, both collaborating using the SpringBig platform and connecting increasingly with consumers. As I said earlier, we're sending out approximately 2 billion messages on an annual basis to enhance the messaging and communication of the retailers. We're also playing a pivotal central role in the overall technology ecosystem in the industry. We integrate with most of the point of sale partners in the industry. We're integrated with 18 different point-of-sale providers. We integrate with e-commerce providers in Weedmaps, Dutchie, Jane, Dispense and we integrate with some of the data analytics businesses. And this all means that we're generating a huge database of actionable data. We have very, very specific individual purchase data on the database. And that specific purchasing habit activity data is critical in allowing our retail clients to become more and more focused on who they're sending their messages to, who they're communicating to. And that means that the return on investment from the marketing activities undertaken through the SpringBig platform is incredibly high. It's high return on investment because the marketing is incredibly well focused. It's focused on connecting with people when they're most likely to visit the retailer, and it's connecting with them when they're promoting the sort of products that the consumer is most likely to be interested in. And then you combine that with our loyalty program, which, of course, is enabling the retailer to increase the frequency with which the consumer visits the store and making loyalty points available and offering rewards and et cetera, et cetera. In terms of the actual product offering, a few snapshots here of what the product looks like from a consumer perspective. And if I had longer, I'd show you a few more. It's all -- it's either through a web-enabled dashboard or it's a mobile app. It's all largely sourced through the iPhones and mobile phones now with the rewards, wallet, feedback, surveys. We're fully compliant on enrollment. So all customers that are engaging in these programs have all gone through the process of actively enrolling and opting in. And then as I said earlier, on the retail side, we have in-depth analytics around each individual campaign, customer acquisition, new customers that the retailer is acquiring through the platform and clear feedback. So the return on investment from the marketing campaigns are very, very clearly evident and quantifiable. And then I've talked about how we enable brands to access the customers directly, the end consumer, through cooperating with the retailers and the brands then get the specific details of how many additional sales they go through this promotion and quickly calculate, again, return on investment and the attractiveness of the platform. We see substantial opportunities for organic growth moving forward. Actually we're in a nice position where there's a lot of future growth from within our existing retailers and brands, our existing clients as they continue to penetrate both the existing markets and new markets as legislation evolves and changes over time. We also see a lot of incremental growth when a market moves from being medicinal to recreational use. For example, in the State of Illinois, when Illinois moved from medicinal to recreational, we saw almost a doubling of our revenue year-on-year from the year before to the year after and a similar trend in Arizona when that state went through. And we're constantly -- an additional fuel of our growth is we're constantly adding features and functionality. We have a software engineering team of about 18 people who are constantly evolving the platform. It's a complex, sophisticated platform, which has AI analytics embedded in it, which is, again, driving what is a critical feature, which at the end of the day, is targeted marketed, focused and targeted marketed to ensure that the return on investment for the client is at a very high level. One of the reasons that we decided to go down the path we've gone down have been listed on the NASDAQ is so that we can also pursue an active M&A growth strategy. We operate today in a cannabis technology ecosystem that is very fragmented. There's a lot of relatively small businesses that have evolved specifically to play roles within the cannabis industry. And we see that there over time will be a consolidation in technology across the industry, and we want to be and will be one of the key consolidators in that consolidation across cannabis technology. So over time, you can expect to see us expanding the range of offerings, the range of marketing technology-related offerings and expanding those into some more data analytics, helping our clients acquire additional new customers, and in time, potentially -- particularly as legislation changes, the fintech payments and e-commerce space. From a financial perspective, we've got a very attractive organic financial profile. So it's certainly not reliant on M&A in the near term. We're a SaaS-based business. We've got recurring revenues. About 70% of our annual revenue is subscription-based annual contract. We've got strong growth. I've talked about some of the drivers of growth. We grew by 58% last year in 2021. And we've got a very good growth trajectory moving forward. We've got high gross profit margins, in excess of 70%. And over time, as the company continues to scale, we see additional enhancements in those margins. And we've got excellent retention of our client, retention and growth of our clients. And the way that we measure that is through net retention; that is the amount by which our existing business is growing, excluding the impact of any new clients and that growth was 110% in 2021. We've also got very high operating leverage. The costs in the business are primarily people, and that is relatively fixed compared to the revenue growth. So over time, we will see very strong EBITDA margins evolving in this business. And like most good high-quality software technology businesses with a SaaS revenue base, we see our EBITDA margins evolve into 25% to 30% range in time. As I mentioned earlier, we recently completed our IPO process. That was through the merger with a SPAC on the NASDAQ. And we're pleased in the current market conditions, particularly that we've completed that process with sufficient cash on our balance sheet to fund the business to and well beyond cash flow breakeven. We're not quite cash flow breakeven yet. But within the next 6 to 9 months, we expect to be at that cash flow breakeven. And it's nice to know that we've got all the funding we need, particularly, say, in the current market conditions to fund the business well beyond that breakeven point. And then I touched on our M&A strategy going forward. And that was one of the real drivers for going public was so that we have the public equity and the availability to additional capital to move forward and execute on that M&A strategy in the future. So just to close on a few highlights from our first quarter results where we grew revenue year-on-year in Q1 by 22%. Within that, our subscription revenue [indiscernible] is the majority and a really valuable part of the business, grew by 43% year-on-year. Now we improved our gross margin by 200 basis points to 71%. And we saw a 50% plus increase in both the year-on-year growth in our retail client count and the number of enrolled consumers. So the dynamics in the business are all really, really strong. And I think particularly the fact that we grew consumers, the end user of the product by 56% year-on-year shows that not only is the business growing, but there's a lot of strong consumer engagement in utilizing the platform. And that talks to having a good outlook in the future of continuing to see clients retain and increase their use of the SpringBig platform. So with that, I'll wrap up and then hand back to Rob, but a few key highlights from an investment perspective. I'd say we're a category-leading customer loyalty and marketing automation platform. It's a SaaS business model. So it's very sticky in nature and its high growth. We've got multiple channels to grow organically through geographic expansion and through product expansion with existing clients, and we're looking to be a consolidator in what is a highly fragmented cannabis technology ecosystem. So I appreciate your time, and I'll hand back to Rob.

Awesome. Thanks very much, Paul. Before I hand the line over to Trent, just a quick reminder that if you would like to submit a question or you have not submitted one previously, please feel free to do so during the presentations using the Q&A button at the bottom. Otherwise I'll refer to the questions that we received earlier. And with that, I'm handing it over to Trent. Go ahead.

Thanks, Rob, and good afternoon, everybody, and thank you to the Mattio team for including Jushi and myself in this really new exciting platform to continue to share our story and educate folks around cannabis and around Jushi. So with that, I'll jump into my presentation here. Okay. So we'll start on Page 3. I always like to level set everybody with our kind of current macro situation with the cannabis industry. So I'll start with the chart on the left, which is the projected U.S. cannabis market size. As you can see, right now, with 2021, we ended the year around $25 billion. That includes medical and adult-use cannabis with the growth estimated in 2025 from Cowen to get to about $42 billion. This includes markets flipping from medical to adult use and then the continued market compression or pricing compression that's happening in the market to alleviate and eat into the illicit market. And so with that growth, you'd see a 17% CAGR year-over-year to get to that $42 billion, which is still a very exciting return and obviously growth perspective for the industry as a whole. Coupling that with the U.S. market size in 2021 also helps level set, I think, kind of just what the true opportunity and value is with U.S. publicly traded MSOs currently. So like I had mentioned on the previous chart, the legal U.S. cannabis market was $25 billion in 2021. The market in total for 2021 was $65 billion. So that's legal and illicit sales. And so therefore that's the real kind of revenue opportunity within the industry as you're seeing pricing compression happen is that $40 billion gap is part of the pie. The regulated market will be starting to eat into as we get like-for-like from a pricing perspective. So I think a lot of people are very bearish on price compression in markets. We view that in the total opposite way. It's a positive for us as the regulated industry to continue to eat more and more revenue and grow the market that is coming into the regulated cannabis space. The other kind of comparison that we like to look at are like industries and what that total market opportunity looks like. So the U.S. alcoholic drink market is roughly $250 billion. And then also the U.S. prescription drug market is roughly $360 billion. And so with that, we always like to look at and try to understand what the full market opportunity is. Numbers are anywhere from $70 billion to $100 billion once there is a mature cannabis opportunity and normalization within the U.S. And so we feel very confident and comfortable with looking at that number, comping against, again, the pharmaceutical industry as well as the drink industry, alcoholic industry. It's not too much of a reach to understand how cannabis, I think, will impact those 2 markets quite significantly, where those companies are able to invest, they've already done so from those legacy industries and us positioned here in the U.S. from a cannabis industry is really exciting to be able to jump in and build and garner those returns with a real product that is very tangible. The next slide here, you'll see the MSO industry growth in valuation. You'll see a very large disconnect with what the total MSO market valuation is with our growth rates that are expected to happen, again, over the next, let's call them 5 to 10 years. And so when you compare that growth with where our valuation is from an EBITDA perspective, looking at 123 different industries, the MSO growth in total, not just Jushi, but the industry in total is one of the highest with the value in the bottom 30%. And so what that tells you is there's a lot of arbitrage opportunities, obviously, with the lack of federal banking and the not be able to uplist into U.S. stock markets. Therein lies the opportunity for why we're having a large growth projection, but also low EBITDA, it's very compressed. And so with that being said, in the recent market opportunities now is a great value play for the public MSOs. Jumping more into Jushi and what sets us apart. We're highly concentrated in limited license states with very favorable regulatory developments and then a best-in-class M&A track record that really sets us apart from other industry players. For Jushi specifically, our industry-leading organic revenue and adjusted EBITDA margin growth. I'll get into that a little bit later and to all of these points a little bit later, but super important to keep in mind where Jushi is one of the better, if not the best, growth stories from that perspective. Again, we're highly concentrated in markets with favorable regulatory developments, meaning we're in markets that I'll again get to later in states like Pennsylvania and Virginia, Ohio, that are having a maturity from a medical market perspective, but then very favorable legislation and regulatory frameworks being put into place for a transition of adult use. Very highly accretive, acquisition opportunities in our existing markets. We've gone on and bolted on Massachusetts and Nevada and then have a very strong foothold in other high-value markets like Ohio, and then we have our stores in Illinois being able to be vertically integrated and/or get to the license cap in each one of those markets is super exciting for us. Our best-in-class M&A track record really speaks for itself. We'll get into more detail there later and talk through that. We have an extremely solid liquidity position, both from a cash on balance sheet perspective, but also through a line of credit for opportunities that may present themselves in M&A. That is something that the founders and the executive team take extremely serious and have done an excellent job in managing through volatile markets, both in the past, but in present as well. We have a phenomenal industry-leading online platform that we've developed with other partners like SpringBig, I Heart Jane, but also do a lot of in-house technology build to add on to those platforms. And so being able to leverage that to drive sales in retail and consumer patient interaction at the retail level is super important for us. And then lastly, but honestly, most importantly, we've done and executed an early focus on our ESG principles, and we'll continue to set that at the forefront for both cultivation, manufacturing, but at the retail level as well, get into more detail on that later. So the first and foremost, the piece that gets us really excited here at Jushi is our industry-leading revenue and adjusted EBITDA margin growth. And so you'll see the chart on the left from a revenue perspective, really strong growth from Q1 of '21 to Q1 of '22, a 50% increase on the revenue platform. Obviously a lot of organic growth there, but also being able to continue to expand and grow our retail footprint in very high-valued markets in Pennsylvania and so on and so forth. And so we're excited to continue to see that organic growth, both in markets like Massachusetts and Nevada, but as well as growth from a market like Virginia that's rolling into a continued expansion of a medical program. And so you'll continue to see that moving forward. And then our chart on the right is an annual revenue and adjusted EBITDA outlook. And so, again, really exciting growth '20 versus '22 and then looking forward into a run rate off of Q4 of '22 this year, strong growth from a revenue perspective, $340 million to $380 million of revenue with $60 million to $80 million of adjusted EBITDA, so about that 17% to 21% piece. We'll continue to see that expand as the business continues to mature. So with Jushi, what we've been doing over the last 12 months is being able to build up and put ourselves in a position from a supply perspective in markets that we feel extremely confident in that will be transitioning from adult use, excuse me, from medical to adult use. That is Pennsylvania and Virginia. And so large CapEx dollars and investments, building out our grower and processor facility, ensuring that we have the biomass necessary to continue to support our medical patients in that state, but also be ready for and be able to support the consumer that wants to come into our stores and other stores as the adult-use transition happens. That's really where we're excited and going to continue to see that growth occur for us through the back half of this year and into 2023. As I mentioned, we're really excited about the highly concentrated positions in markets with this favorable regulatory development. I've alluded to Pennsylvania and Virginia as well as Ohio, just to get into a little bit more detail on each one of those states. For Pennsylvania, there are roughly 550,000 plus patients, meaning that it's a very mature medical market. That's roughly on 13 million people in the population of Pennsylvania, a very high percentage of adoption. And so, again, a strong medical market. But with adult use coming, what we feel like is in 2023, you usually see a double to a triple from that medical market to the mature market. There were vertically integrated. We currently have 18 operational medical dispensaries and an 81,000 square foot facility, which will be expanding to 123,000 square feet here very soon with additional expansion potential in that market. What that allows us to do is not only fully be able to supply our retail stores, but then go out into the wholesale market. There in Pennsylvania, we really did a great job of executing on our more high-level strategy and what we feel like is really kind of the winning play, which was treat the distribution channel through retail and then back into upstream supply chain. And so continuing to work through and build that market. Virginia, very early medical program. We've had some big wins as of July 1. The removal of the Board of Pharmacy having to do a registration card for patients. And so we've seen really exciting growth from there on that market. There we're required to be vertical. Currently we have 2 operational dispensaries in the process of opening, another 2 here within the next couple of months with the expectation of getting the final 2 open before the end of the year and then the last one, early Q1. And currently we have a 93,000 square foot facility, had an additional 7 flower rooms, just turned on recently, rounding up our upstairs construction with large expansion in the back allowed. And then in Ohio, again, a rather early medical program, there's kind of multiple paths running there in Ohio for that transition to adult use. There we're vertically integrated. We were awarded a provisional medical retail license that we're currently building out, just started construction on actually yesterday. We have an operational 8,000 square foot processing facility and a 10,000 square foot cultivation facility, both with expansion potential opportunities. Then our highly accretive kind of acquisition opportunities in existing markets. Illinois, where we have 4 extremely high-performing operational dispensaries. We were also fortunate enough to be awarded a conditional dispensary license there. And so in order for us to kind of reach the cap there, we have the opportunity for M&A on an additional 5 dispensaries as well as a grower-processor. In Massachusetts, where we did acquisition of Nature's Remedy, we're currently vertically integrated there, have 2 operational stores, ones co-located with medical and then a grower-processor. We're able there to expand to one additional adult-use dispensary and then roughly 67,000 square feet of additional Canopy. The cap is 100,000 square feet there. In Nevada, with our acquisition of Apothecarium Dispensary as well as NuLeaf, we're vertically integrated. We have 4 dispensaries, a grower-processor facility, one cultivation and one processing facility there. In Nevada, there's no cap for the number of dispensaries that we're able to own nor in Canopy, and so we'll continue to look at M&A opportunities there. And then finally, in Ohio, as I alluded to earlier, we're vertically integrated. We're building a store out in Cincinnati. And for us to get to the cap there, we'll be able to add additional 4 dispensaries. And so really being able to bolt on in each one of those core markets is going to continue to be a strategy where we continue to execute. The M&A class, best-in-class track record. I'll just hit a few kind of key points here. I think we did an excellent job identifying Pennsylvania as an early market that was going to lend itself to a large patient consumption, but also adoption. And so there, we were able to build a full vertically integrated business for roughly $117 million. We've seen other companies buy a set of 3 retail licenses for upwards of $100 million. And so extremely proud of what we were able to accomplish there on the M&A front. Virginia was another M&A transaction, which we acquired the license for $33 million, another comp for a license that is in a Western part of the state versus the greater D.C. part of the state, was for $83 million plus some additional earnout. And so I think we continue to create value with that license with the medical program continuing to expand every year for the last 3 years and then adult use sales commencing on 1/1/'24 and really excited about being in a position to put an adult use commercialization program in place, legislation and regulations for that market to continue to grow and thrive. In Illinois, 4 retail licenses that are producing roughly $70 million to $90 million of revenue. We were able to acquire those license for roughly $12.5 million in January of 2020, and we've continued to learn and expand in those markets in Southern Illinois, really position us well, having a lot of learnings for what that medical to adult use market flip looks like. And then finally, in Massachusetts, the acquisition of Nature's Remedy roughly for $80 million in September of 2021, where we've seen comps upward of $158 million with an earnout. So really being able to create and drive synergy and value for shareholders within Jushi because, keep in mind, we're in a unique position at Jushi, where the executive team and founders committed real equity, capital and cash. And so driving what is best for shareholder return is something that's near and dear to our heart, but also everybody that becomes part of the Jushi family. A solid liquidity position. So obviously with where the markets are currently at, this is an extremely important slide. And so that cash balance of $76 million with the acquisition facility as well as a base shelf prospectus of upwards of CAD 500 million is, again, put us into a position to build on those kind of core markets and opportunity and then $156 million of debt, which includes leasing of our properties, so on and so forth, which we've done a great job of keeping majority of it on our balance sheet, but really through acquisition, the sale and leaseback opportunities have continued to present themselves with expansion. So again, in a market where there's a lot of turmoil devaluation, we are in a great position to continue to grow and not have to dilute. Industry-leading online platform, again, a big differentiator for us from a retail perspective, being able to ensure the patients and the customers know and understand really what is in our stores at a given time, being able to drive that quick turn through our stores, but also have that education in the comfort of their home. Currently our sales online are roughly 68% of our total sales through our retail channel, which is a great testament to how seamlessly we've worked with a SpringBig and I Heart Jane and built out that technology online. In traditional retail, our online conversion rate is astronomical, hiring in retail folks to the team such as Brendon Lynch, a 1% to 2% conversion rate online is kind of industry standards. We're 10x that, quite frankly, at 19%. And then our average cart size online is $107, which I think is -- tends to be a little bit higher than what you see in retail stores when people walk in, but also just versus the industry as a whole. And then lastly, and something we're extremely proud in and taking a leadership position within the industry is really around ESG, so environmental, social and governance. So from an environmental perspective, sustainability, both at retail, but also on the grower-processor side, Culver City with our retail store, looking at reusable materials, cultivation, solar power, so on and so forth. And then I think the big piece also is around our packaging, a lot of waste there. And so being able to drive proper use there in organic packaging materials, ocean and plastic conservation material, so on and so forth is super exciting. On the social aspect, myself as an executive lead of the DE&I team that we're doing, there is something that we take, again, very seriously maintaining that leadership in a diverse workforce and then actively working with states to create legislation to put social equity ownership in the best position to be successful as they come into the cannabis space. And then finally, governance is super important. 2 of our 5 board members are diverse from an ethnicity perspective as well as a gender perspective. We have a single class voting structure and then a compliance hotline because we run a compliance business. We just so happen to sell weed as well. And so that's kind of our mantra here at Jushi and something that is imperative for us to continue to succeed. So with that, I'll turn it back over to Rob, and we'll go from there. Thank you, everybody.

Awesome. Thanks very much, Trent. Now at this time we're going to start off the Q&A session.

I'll start off with you, Trent. First question. You touched on how Jushi is known as a consolidator in the cannabis industry. Can you talk a bit about your plans for the remainder of the year and how the team has adapted to your strategy in the current market environment?

Yes, sure. So M&A is kind of core to our DNA within Jushi. It's really what we were kind of founded on and based on and how we've built the business. Obviously with macro current conditions within the market, but then also the kind of decline in cannabis equities as well. A tight market is something that makes us extremely excited from an M&A perspective. I alluded to earlier in the presentation around our strength from a cash value on our balance sheet of $75-plus million as well as an acquisition pipeline of $100 million. And so being able to go on to a market in an opportune time with assets that are going to be properly valued is something that makes us exciting. Our PAMS acquisition, which is our grower-processor in Pennsylvania, kind of market was at a bottom. We had an opportunity, and we went out and took advantage of that opportunity and garnered probably one of the best deals in the cannabis space. So we're going to continue to be very -- take advantage and be advantageous of the current market conditions from an M&A perspective.

So Paul, next question is going to go to you, and in a similar vein. You mentioned during your presentation that a portion of the rationale by going public was to accelerate your strategy to consolidate cannabis technology ecosystem. Can you talk about how you're going to execute that? And what are some areas of initial focus?

Yes. Thanks, Rob. Yes, we -- one of the important reasons for going public was so that we've got the strength of balance sheet. And as I mentioned earlier, we've got the cash on the balance sheet to extend the business into a cash positive position. But also we now have access to arguably the deepest pocket of capital in the world through the NASDAQ Exchange. What we also wanted was to ensure that we've got the public currency. We're operating in a very fragmented ecosystem, a lot of relatively small technology businesses. And we see using our equity as an important component in doing M&A activity going forward. Because when we give people equity, that keeps them aligned with shareholder interest and our interest in growing the business rather than just taking cash and exiting. And that's going to be important as we bring new talent, new entrepreneurs into the SpringBig group as we expand our product offering through M&A activity. In terms of areas of initial focus, as I mentioned in the earlier presentation, there's a real lack of data analytics in the industry. The data that allow us at really focused effective marketing. And I think we see opportunities at both M&A and organic. So the data initiative can really overlap across both areas of our growth in terms of developing and potentially acquiring data analytics companies to enhance the offerings that we have to our clients. Other areas, clearly, many, many businesses, technology-focused businesses are looking at opportunities in payments whenever the legislative framework and environment changes. I think we've got a fairly unique position from a payment perspective in that we will be able to allow our consumers to combine the use of loyalty points and cash credit payments. And so that could be an area that will, again, overlap between organic and M&A growth and then an area of e-commerce and we're both partnering with existing partners, but also exploring what we may wish to do on that axis as well. So focusing on expanding the marketing tech offerings to our clients, staying within our framework, but expanding what we can offer so that they can leverage more out of the SpringBig platform.

All right. Thanks, Paul. Trent, next one goes to you. We've seen competition heat up in some of the more mature U.S. cannabis markets sort of across the country. What is Jushi doing now to differentiate itself from its other larger competitors?

Yes. I think for us, having that user experience and driving the patient and/or customer through that kind of proper retail experience and giving them options from an omnichannel perspective is super important. Being able to come into the store, be educated around a product on a sales floor is great. But what we're seeing is that continued education of that patient and/or consumer. And so providing them the express pickup, providing them the drive-through where applicable, delivery where applicable, online ordering, so on and so forth, I think, is something that's going to continue to drive consumers into a store. I think pricing is a big piece of that as well, being able to drive down costs on our cultivation, manufacturing side, to be able to have the right price point in that store is also something that's super imperative moving forward. I mentioned in my presentation, that $40 billion gap of dollars that's being spent in the illicit market versus the regulated market. And so being able to educate folks on proper product standardization, public safety is all great and well. But at the end of the day, we're going to have to be price competitive with that illicit market, which we will do as we continue to scale as an industry and as Jushi. And so I think that's something that the next 2 years in cannabis is going to be super imperative to continue to drive and understand that aspect come out of the Colorado market from 2009. And when we flipped to adult use in 2014, we had a major problem where 40%, 50%, 60% of the cannabis being purchased there was still the illicit market, and we've done a great job there in that state from a regulatory perspective, a legislative perspective, but also just from an operational perspective, getting there to eradicate the illicit market. And so I think that is going to be the next imperative piece as we look at operations and experience moving forward 12, 24 months in cannabis.

That's great. Thanks, Trent. Paul, just to be clear, we've got one more question for you and then a joint question for both of you to answer. So Paul, on the market side, where does SpringBig primarily operate across the country? And what are your sort of core markets where people leverage the technology? And why do you think that is? And then do you see an opportunity to leverage the platform for use in other regulatory -- sorry, regulated industries, sort of outside of cannabis?

Thanks, Rob. I'll keep it a fairly brief answer because I know we're coming up against time. We operate across all the markets, all markets whether they're recreational or medicinal. And we have still that because, obviously, we're a technology-based business. So we see our revenues or at least our customer activity will reflect the activities across the market generally without any particular overly-concentrated areas or geographies. We do as well as the United States, we also cover Canada extensively, and we acquired a small business in Canada at the start of 2021, and we've seen some really nice growth north of the border. In terms of the regulated industry opportunities, yes, absolutely. I mean, SpringBig started its days not focusing on cannabis. There have been a number of actually non-regulated industry, small businesses, we then decided in '16 to focus exclusively on cannabis. And I think what we've learned now over the last 5 or 6 years, can be exported very effectively potentially into other regulated industries where there's a need to communicate with clients and on a selective basis and also effective loyalty programs. Now the alcoholic beverage industry, for an example, is one that has lots of state-by-state regulations very similar to cannabis, obviously more evolved in terms of legislation and stuff, but that's an area that could be worth looking out in the near future.

Great. Thank you. A final sort of joint question for you guys to consider here is what do you view as the biggest opportunities for growth in the near term, both specific to your own businesses and for the cannabis sector itself?

Go ahead, Paul.

Well, at the end of the day, we're both operating and I think we both feel good about it, that we're both operating in arguably the fastest-growing end consumer market in the United States. I mean with numbers that people throw around vary, but it's at least 20% a year growth. We may, because of the economic conditions at the moment, see a little bit of slowdown. But I think looking long term and through cycles, it's unquestionable that we've got a great end market that -- and with legislative change as a tailwind. And I'm sure that Trent and I would be the ones trying to guess the timing of legislative change. But I think everybody feels that that is going to be a tailwind over time. So I think the cannabis sector overall is just a huge opportunity. And I think both our businesses are really well positioned to benefit from that organic growth. And then I'd add to that and more SpringBig specific, there's obviously the world beyond North America. And just as legislation and the cannabis space is evolving here, it is also in Continental Europe, in Central America, Mexico, for example. And so over time there's probably plenty of international geographies as well as the growth in the United States.

Yes. And I'll concur with Paul on just the exciting opportunity and the tailwind that we have as a cannabis industry as a whole. We have a product that a lot of people want to consume. Regulation, legislation hasn't happened as fast as I think a lot of people thought or expected. And so that is a tailwind. A lot of positive momentum coming out of D.C. around cannabis here before the midterm elections. It's all great and well. We know it's happening. Timing-wise we're not sure exactly when, but it will. We're now at 35-plus states for medical, 16-plus space for adult use. And so I don't want to disregard the importance of federal normalization from a banking perspective, an uplisting perspective, an expungement perspective and just getting it right. It's a very complex issue. And so things are going to have to happen in a step-up perspective. And I think people at the federal level have finally understood that. I think more importantly, to the businesses, whether that's a support company like SpringBig or an MSO like Jushi is at the state level legislation. These states, when they transition from medical to adult use, it's a massive lift for all of our businesses. And quite frankly, it is not anything earth-shattering, but in cannabis rising tide lifts all boats. That is 100% for sure on regulated businesses. And so being able to have a commercial cannabis adult-use program in place just drives a lot of economic developments within those states. And I think Republicans and Democrats are starting to see and understand that as well. And so at the state level, you're seeing large swaths of support on both sides of the aisle. And so you're going to continue to see that transition and just more people come in and want to be educated around the consumption of cannabis. And I think that's something that's exciting. We're not creating the next Facebook or the next thing. It's a tangible thing, and we just have to go fill the gap from an operational perspective on regulated cannabis.

So I want to thank you guys both for participating today and really appreciate you presenting and to our audience for tuning in. Just a reminder that we will actually post a replay of this on the Mattie Investor Relation's website before the end of the day in case you missed anything or want to go back on it. And otherwise, looking forward to hosting another one of these events in August and hope you guys have a great summer.

Thank you, Rob.

Great. Thanks, Rob.

Thanks very much.