Organigram Global Inc. (OGI) Earnings Call Transcript & Summary

Good afternoon, everyone, and welcome to the [ inaugural ] Organigram Global Investor Session. My name is Max Schwartz, and I'm the Director of Investor Relations of Organigram Global. And I'm thrilled to bring to you today's event. Along side [indiscernible]. I'm particularly excited because we've done Investor Days before, they only take place at our facilities, but not everyone can obviously make it out to a facility in London. Therefore, they're normal attended by institutional investors only. But today, we are here for the retail investors, people who invest personally, not professionally. But nonetheless, deserve to hear from the executives of the companies they invest in and have their questions answered from time to time. And this is particularly so for cannabis investors and therefore shares in cannabis company because of the holding shares in a cannabis company. It's likely that you've seen those shares [ lose ] value over time. And as a market close on April 8, an index of the 7 largest Canadian licensed producers was down about 61% over the last year. Unfortunately, that context is the reality for the investors in this space. And it's one of the reasons that was year-to-date to talk about Organigram and how the company has matured and grown over the last decade despite what's happening. We have an excellent agenda for you today with 3 key speakers from our senior leadership team, beginning with our CEO, Beena Goldenberg. Beena will take us on a tour of our 5 state-of-the-art facilities, she'll discuss some of our recent history, recent game-changing developments of the company and how those developments really contribute to our overarching goal of delighting consumers with fantastic products and meeting the needs of medical patients worldwide. Next, we'll hear from our CFO, Greg Guyatt, who will talk about how we're tracking on fundamentals, talk about our financial trajectory, where opportunities exist to improve our financial performance and what it will take to achieve sustainable profitability in the near to midterm, while balancing our growth objectives at the same time. And finally, we're going to hear from a crowd favorite because everybody likes to see behind the scenes of the Willy Wonka's Chocolate Factory of cannabis. We're going to hear from Borna Zlamalik, our Senior Vice President of R&D and innovation. Borna is going to take us on a tour of Organigram's innovation engine, how we're pushing the boundaries of cannabis science and scaling game-changing technology and turning bold ideas into market-winning products. After hearing from each speaker, we will, of course, have a live question. [Operator Instructions] Now I do have to read a legal disclaimer for any event like this. And here we go. Attendee should be aware that today's session will include estimates and other forward-looking information from which Organigram's actual results could differ. Please review the cautionary language in our most recent MD&A on various factors, assumptions and risks that could cause our actual results to differ. Further, references will be made to certain IFRS measures during this session, including adjusted EBITDA and adjusted gross margin. These measures do not have any standardized meaning under IFRS and are intended to provide additional information and as such, should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Our approach to calculating these measures may differ from other issuers, so these measures may not be directly comparable. Please see our most recent MD&A for more information about these measures. Attendee should be aware that Organigram relies on reputable third-party providers when making certain statements relating to market share data. Unless otherwise indicated, all references to market data are sourced from Hifyre in combination with data from [ wheat crawler ], provincial boards, retailers and our internal sales speakers. Well, thank you very much for bearing with me through that. And without further ado, I'd like to invite Beena Goldenberg, CEO of Organigram Global to the stage to kick off today's event.

Thank you, Max. Good afternoon, everyone, and thank you for joining us. So why are we doing this today? We really want to talk to our investors and those interested in this industry and show our appreciation for your ongoing support. We want to provide transparency on our operations and growth strategies. So investors feel like they can ask us questions about our business or the industry. And we want to showcase who we are as a company and reintroduce ourselves as Organigram Global, same mission, new look. We've matured a lot as a company, and it was time that our appearance reflected that. Today, I'm going to provide a company overview, a little bit of our history and look we are now and then where we're heading. But first, let's talk about our vision for the future of cannabis. Like Organigram, the cannabis industry is maturing, maybe slower than we'd like. But despite delayed regulatory progress, we remain optimistic. Cannabis is no longer fringe, it's mainstream, culturally rooted, medically accepted and economically vital. There's been significant infrastructure investments that have been made in this industry and public support suggests that politics and economics will eventually catch up. When that happens, especially changes like reduced excise taxes, Organigram is well positioned to benefit. This is a movement, a cannabis movement. And despite recent stock challenges, the opportunity is growing. For a company like our scale, experience and capital discipline, we believe the future is bright. So our 10-year mission is clear. It is a cannabis-friendly future, in which the industry mirrors today's alcohol landscape with broader retail access, greater marketing freedoms and the ability to speak openly with consumers. Excise duties are reasonable and operational barriers are significantly reduced. We'll have science backed evolution of the cannabis experience serving the modern consumer, who is less driven by only potency and price. We're not chasing trends. We're building the future of cannabis together with all of you. Our investors, cultivators, journalists, policymakers, medical and recreational consumers. This is a collective journey. Our key strategic pillars are around driving responsible growth, being consumer obsessed, which means focusing on quality, building brands and consumer-centric innovation and building for tomorrow with efficient operations in order to create shareholder values. Now our values form the foundation of our business, and they are our impact values, which stand for integrity, motivation, passion, and that's passion for the industry and the plant, accountability, curiosity and teamwork. This aren't just our values, they're how we'll build a sustainable cannabis future. Today, Organigram is a true cannabis OG, 12 years of responsible leadership. We're Canada's largest LP by market share and recreational net revenue. We're an operator of 5 advanced cultivation, manufacturing and logistics facilities across Canada. We're a leader in R&D, a true innovator. We're a global strategic investor and a leading export partner to a growing international customer base. Our success has led to major investments into organogram from British American Tobacco or BAT, fueling advancements in our innovation and international growth while enhancing our financial position. It took a long time to get to where we are now. So I'd like to briefly walk you through a bit of our history. The company was founded in 2013 as a leading medical cannabis provider. We started with a single facility among in Moncton, New Brunswick, which is now one of the largest indoor cannabis cultivation and production facilities in the world. When recreational cannabis became legal in Canada in 2018, we shifted our focus to recreational products and became recognized as one of the most forward thinking and innovative cannabis companies in Canada with multiple industry awards for innovation. We also located our head office in Toronto and in 2019 we listed on the TSX and the NASDAQ, under the ticker OGI. 2021 was a pivotal year as we acquired 2 companies and expanded both our geographical footprint and our product leadership. Edibles and Infusion Corporation in Winnipeg, Manitoba was a state-of-the-art, highly automated facility positioning us as a leader in edibles. And Laurentian Organics in Quebec established us as the #1 legal hash producer globally and added premium greenhouse grown flower from the Laurentian Mountains. Unlike many acquisitions in the industry at that time. This strengthens our market share instead of eroding it. In December 2024, we acquired Motif Labs, which propelled us to the #1 market position in Canada and filled product portfolio hole, which was on vapes. And now we have over 20% of the vape market in Canada. And Motif also strengthened our pre-roll business. This acquisition added 2 impressive Ontario-based facilities, a state-of-the-art extraction facility with industry-leading expertise [ THCA ] production, a Central Canada logistics hub and at least $10 million in identified annual cost savings still in the early stages of being realized. Organigram now has 5 facilities across Canada that cover every major consumer category that support our industry-leading R&D efforts and help us meet increasing demand both domestically and internationally. Our products are found across Canada in multiple international markets as we export flower to Australia, Germany and the U.K. and we're actively working to expand branded and 2.0 products into global markets. Organigram has made strategic investments in Canada, the U.S. and Europe to expand international footprint and to provide us with some unique competitive advantages. So we'll dive further into those strategic investments. But first, I want to on a tour of our 5 facilities. [Presentation]

I hope you all enjoyed a closer look at the nuts and bolts behind our industry leadership in Canada. However, facilities alone don't mean anything without consumer trust. We build that trust with brands that deliver quality, consistency and exciting innovations. Organigram has a dozen brands that span multiple categories and price points to address the needs of an evolving cannabis consumer. And I would like to dive a little bit deeper into a few of them. We'll start with SHRED, our award-winning mainstream brand, which has $224 million in annual retail sales based on our trailing 12 months. SHRED leads in milled flower, pre-rolls and gummies. and in flavor forward products like our SHRED X Rip-Strip Hash. We introduced exclusive flower-derived THCV gummies and THCV flower under our SHRED brand. And SHRED is the stickiest brand in Canada as measured by repeat purchases. Next up, we have our BOXHOT brand, which was part of our Motif acquisition with over $150 million in annualized retail sales based on the trailing 12 months. BOXHOT is the leading vape brand in Canada. The BOXHOT portfolio also includes infused pre-rolls and distillate-based products. We expect further growth from BOXHOT as we introduce vapes into Quebec as regulations change in that province. Next up, we have our Edison brand, which is our premium innovation brand. We introduced Edison JOLTS in 2021, our award-winning and patented fast-acting lozenges. More recently, we launched Edison Sonics, powered by FAST, our patent-pending nanoemulsion technology, which allows us to make consumer claims on onset and cannabinoid availability supported by a clinical study. The FAST tech platform opens up innovation for all of our ingestible products. We plan to launch FAST and beverages. Borna will get into more details about this later. There are many other brands under the Organigram umbrella that together gives us our #1 market position in vapes, in pre-rolls, in Hash and a mill flower and our top 3 patients in every major category and our #1 positions in Western, Central and Eastern Canada. Now the topic of weather brands matter in cannabis has been widely debated. As someone with 30 years of brand building experience, I believe they matter and that they just take time to build. In a market full of similar products, trust becomes key. Over time, consumers will gravitate towards brands that consistently deliver what they want. In the early days in cannabis, brands came and went quickly. But now the market is maturing. Now the brands that remain are earning loyalty by delivering consistently with clear differentiation. We are differentiating in almost every way we can. We're constantly pushing the envelope with what we can do from a consumer-centric side and a science-backed approach. We differentiate around design, features, quality, format and technology. This is where we excel through our commitment to innovation, which drives our ability to differentiate products, which leads to consumer loyalty. A strong brand can build trust and loyalty, leading consumers to stick with their preferred brand to see value and things beyond just price and to attract new consumers as brand recognition increases. Particularly important, this is particularly important in a fragmented market that is going to rationalize. In this chart, we could see our SHRED brand is the stickiest brand in Canada and outperforms average repurchase rates by a wide margin. So 2 things to remember is that brands aren't built overnight. and that they retain their equity over time. So as the cannabis market continues to mature, long-lived brands will have outsized benefits, especially as the market rationalizes and consumers are funneled into a smaller set of brand choices over time. So now that you've got a bit of background on our core operations and brands, I'd like to get into the topic of strategic investments. We'll talk about investments into Organigram and how we use that capital as well as our own investment targets, which garner competitive advantages and increased market exposure. We've seen substantial strategic investment in the cannabis sector since 2017, major alcohol, tobacco and pharma companies like Constellation Brands, Altria, Jazz Pharma and [ Anheuser-Busch ], have collectively invested over $10 billion into cannabis companies. That helped propel market caps in the cannabis sectors to dizzying heights at the time. However, a few of these global investors have worked with their investees to create what we have since BAT's initial investment in 2021, which is a truly collaborative innovation platform and a springboard for international growth. In 2021, BAT made an initial investment into Organigram of $221 million. But it wasn't just a cash injection, we established the product development collaboration and a dedicated research area at our Moncton facility called the R&D Center of Excellence. I'll let Borna get into more details of our continued collaboration. But BAT support didn't stop in 2021. At the end of fiscal 2023, we announced $124.6 million follow-on investment from BAT. This time focused on international growth. As many of you know, we closed the final $41.5 million tranche of this investment at the end of February of this year. Roughly 2/3 of this follow-on investment or $83 million was earmarked for the creation of our Jupiter strategic investment pool, while the remaining $40 million was made available for general corporate purposes. The Jupiter pool is unique in a few ways. It's a dedicated fund for the U.S. and international strategic investment. Jupiter was set up to deepen the strategic relationship between Organigram and BAT. Jupiter investments are managed by Organigram and targets key strategic areas in cannabis globally anywhere outside of Canada. So after our first 2 Jupiter investments into U.S.-based Open Book Extracts and Germany Sanity Group, roughly $60 million remains available to deploy from the pool. So overall, BAT has invested $345 million into Organigram while working with us to strengthen our key areas of our business, such as enhancing our competitive advantages now and into the future through continued ability to commercialize the PDC's joint research and the expansion into new markets. We believe that as the industry matures and is regulated in key markets like the U.S., for example, more of these kind of investments from CPG giants and pharmaceutical companies will materialize, which we anticipate would provide a lift in trading volumes and market caps for the sector. Now when we think about making our own strategic investments, we always go beyond simple equity exposure and aim to gain some kind of competitive advantage, either in innovation or market access. First, I want to highlight one of our more recent and significant investments, our $21 million investment in German, cannabis leader, Sanity Group. Sanity represents our largest strategic investment to date and increases our exposure to the rapidly growing German market by bolstering our supply agreement with the company. Sanity currently holds approximately 7% market share in Germany and has distribution in over 2,000 pharmacies, a growing telemedicine platform, participation in recreational pilot projects in Switzerland and has submitted applications for recreational pilot projects in 6 German jurisdictions. The German medical market is rapidly expanding. Since Germany's Cannabis Act was introduced in April of 2024, most estimates pegged the market's growth to around fourfold. To put that into perspective, Germany has a population of 80 million people, an estimated 10% of the population consumes cannabis, but only 0.5% of the population are registered as medical cannabis patients. By comparison, other maturing medical markets like Australia and Israel, see 2% to 3% registration rates. This supports the case that there remains a very compelling growth opportunity in the German medical cannabis market alone. We also stand to further expand our supply to the German market through our agreement with Sanity Group upon receiving our EU GMP certification for our Moncton facility, which we expect in the coming months. All else remaining equal, as our international shipments increase, so do our margins since international exports are not subject to excise duties. That said, and let me make this clear, growing our margins through cost-cutting initiatives focused on efficiency will always be a priority. The next strategic investment that is worth highlighting is the USD 8 million that we invested in U.S.-based Phylos Bioscience. In a mature agriculture industry, growing genetically stable plants from seeds is industry standard. It's generally faster and more cost-effective than the clone-based methods commonly used in cannabis, and it's much more scalable in the long term. Our investment in the Phylos provided us with access to seed-based growing technology, which we are currently rolling out at our Moncton facility. As of last quarter, about 20% of our harvest, in Moncton, came from seeds. There are numerous potential benefits to seed-based technology, which I'll let Borna get into in more detail. But suffice it to say, this investment is very exciting as it positions us at the frontier of a seismic shift in cannabis cultivation. While seed-based technology is the next logical step in cannabis production, there will always be a place for clone-based production, particularly for rapid trial and error in cultivar development. However, we are proud to be one of the very select few companies in cannabis that are advancing meaningfully in this area. Our other relatively recent strategic investments include Green Tank Technologies, a Toronto-based firm that has developed new vaporization hardware designed to solve common consumer pain points in vapes, such as clogging and flavor degradation. This investment grants us exclusive use of Green Tank's new technology in Canada for an 18-month period upon launch. We also invested in Open Book Extracts, a U.S.-based company specializing in legal cannabinoid ingredient production. Both these 2 investments have the potential to support our growing business. Green Tank's Technology may enhance our newly acquired leadership position in the vape category, while Open Book Extracts may support our most recent growth initiative, our entry into beverages in the U.S. So let me talk about that. Last week, we announced the acquisition of Collective Project, which FAST tracks our entry into the beverage category. It leverages the strength of the Collective Arts brand in both Canada and U.S. We immediately gain a footprint in the U.S. and can start consolidating U.S. revenue. And we will be able to leverage our Canadian sales team in Canada to deliver distribution gains across the country. Collective project beverages are currently available in the U.S. in 10 states in Minnesota, Ohio, North and South Carolina, Florida, Texas, Indiana, Tennessee, Georgia and Kentucky. It's also available in key retailers, such as total wines and top 10 liquors. By the end of this year, we expect the products will also be distributed into Connecticut, New Jersey, Illinois and Alabama. In Canada, the products are currently available in Ontario, British Columbia, Saskatchewan, Newfoundland and Nova Scotia, with distribution in additional provinces and key retailers expected to follow in the coming months. So here's what our updated distribution map looks like after our Collective Project deal, including the additional states and provinces targeted over the next year. We've come a long way since 2013 and this is a massive difference to the first map I showed you. So what's next for Organigram. Well, we have a lot more work to do on the Motif acquisition integration. And we will ramp up Collective Project with anticipated revenue growth in both Canada and the U.S. We will expand further in Canada, we will increase some of our core SKUs that currently are in less than 50% distribution to get them into more retailers across the country. And we will look to extend our branded presence into Quebec through a vape introduction coming this fall. We will leverage our expected EU GMP certification to increase international volumes and margins. We will complete further international investments through Project Jupiter. And we'll increase capacity to fuel our growth. Right now, we have expansion initiatives in Moncton targeting 13,000 kilograms of additional flower over the next 18 months. Finally, we will reintroduce our brands abroad and expect to sell branded vapes into Australia by the end of this year. So what are we excited about? We'll start with that we expect that our Q2 consolidated financials with Motif will be our biggest quarter to date, and this is even before our key seasonality, which kicks off from 4/20 and runs right through Labor Day. We're excited for our full year fiscal year 2025, which will reflect over 9 months of Motif consolidation, realizing $5 million of Motif synergies, we'll have contributions from Collective Project and higher international sales. And finally, we're excited about the potential for industry reform, with new elections and a shift in leadership. We believe any shift will be favorable to Organigram because while the market has experienced growing pains, we've only made our business stronger. We're taking a strong advocacy approach to position ourselves for the future with strong government relations efforts and ongoing support of C3, our industry association. We expect to see excise stamping simplification. So what does this mean? We want to move to one national stamp instead of different provincial steps. In today's macro environment with increasing concerns about tariffs, there is a political focus on breaking down interprovincial barriers and there appears to be interest in removing this operational complexity which cost the industry over $100 million. We also look forward to potential regulation changes, such as the implementation of the previously proposed excise duty reform, down to 10% ad valorem, which would benefit our bottom line by tens of millions of dollars. If these changes take place, we would be significantly more profitable. And while I'm not as optimistic on this one, there is political interest in helping the cannabis sector to exploit a national cannabis export strategy and benefit from Canada's first mover advantage. We are still living in the early days of a developing sector with original regulations that have yet to change, but we believe they will. So to summarize where we are now, we are the largest cannabis company in Canada by market share with some of the leading brands and products across almost every product category with coast-to-coast distribution. We operate 5 advanced facilities located in one of the only federally legal cannabis markets in the world. We've already cut significant costs from our business and have a very clear road map to cutting further costs, through Motif synergies, increasing seed-based production and larger scale. We have a clear path to higher margin sales with our expected EU GMP certification and our global reputation as a trusted producer and manufacturer. We continue to be a top innovator in this space, supported by our product development collaboration with BAT. We are expanding globally, leveraging our Jupiter strategic investment pool, and we are establishing a presence in the U.S. through the hemp delta 9 beverage category. Organigram is proud to be Canada's leading pure-play cannabis company. Our sole focus is cannabis. It's not alcohol, it's not produce, its sole focus is cannabis. Our strategy is grounded in operational excellence, innovation and global ambition. We are committed to building a company that not only delivers shareholder value but help shape the future of this industry. We believe in cannabis, we believe in Canadian leadership, and we believe that with the right policies and players in place, this sector can become a growth engine for the Canadian economy. And on that note, I will wrap up. Thank you for continued support and now transfer you back to Max.

Thank you so much, Beena, for that in-depth overview of the company. One of my favorite parts of that is actually seeing the facilities. I've seen the facilities develop over time after we invested $29 million into them. And I think it really adds a lot of realness to the company. You've heard our story. You've heard us talk about all the wonderful things we're doing, but to see and see the scale it really makes it real. And I know that's something investors really want to see and that's something Beena really wanted to share with them. And I think it's important because it makes our story real. You can hear about all the great things we're doing, but to see it, to see the scale, to see the depth of our innovation and production really brings it to life. Now I'd like to invite to the stage our Chief Financial Officer, Greg Guyatt.

Thanks, Max. Good afternoon. Great to be with you here today. Many of you have heard my voice before on our earnings call, so it's really refreshing to be able to speak with you today directly. As Beena and Max mentioned, we are committed to more frequent engagement with this audience. Yes, we do read what's out there, tweets, Reddit, opinion pieces. Your feedback really helps us to understand how our story is landing. And that's why we're here, to give you a business update and respond directly, especially as Organigram enters this latest phase. So I joined Organigram just over a year ago, and the evolution since then has been truly remarkable. We've hit major milestones, thanks to our outstanding team, and that's helped us to solidify our position in the Canadian marketplace. Our momentum is real. We're focusing on translating it into 2 overarching objectives: one, sustainable cash flow, we have to be able to generate cash and support our business growth opportunities; and secondly, global leadership in cannabis. I want to start by highlighting some key trends from the past 2 fiscal years that really helped to illustrate our growth story. Our path has not been linear. So it's important to acknowledge some of the headwinds that we faced and the challenging industry in which we operate. Then I'll walk through how we've adapted and what that says about the strength of our fundamentals and where we're headed. So from Q1 to Q3 of fiscal 2023, which you can see on the left side of this chart, we experienced a decline in net revenue due to several key headwinds. First, we're all aware of the intense competition and oversupply in this industry, which we lived for a couple of years. The market faced severe price compression, especially in flower, due to oversupply and fragmentation. A lot of LPs lowered their prices to try to maintain market share, including us, and that really reduced our revenue and increased the impact of our excise duties. The duties are a fixed price per gram regardless of the price. As one of the largest flower producers, we felt this pressure more than most, with our excise tax going above 30% of our shipped sales. The next thing we experienced was something very common in the industry: inflated THC labeling by some of our competitors. Some companies were artificially boosting THC numbers on labels to attract customers. We chose not to follow suit, prioritizing consumer safety and integrity, even though this put us at a disadvantage in a THC-driven market. The next thing we had was the removal of Edison JOLTS. This was one of our fan favorites back when they were launched and was considered a very innovative product at the time. Unfortunately, they were removed from shelves in Q3 of fiscal 2023 due to what we believe was a misclassification by Health Canada. If you recall, Edison JOLTS were considered by us to be an ingestible extract. Unfortunately, the regulator determined that they were viewed as an edible, which meant that we could no longer sell it in the format that we had initially launched it with. And this was a big revenue contributor. So this was a huge challenge for us at the time. The next thing -- issue we had to deal with was a drop in international sales. Our sales dropped from $10.8 million in Q2 to $1.8 million in Q3. While Q2 was a record high, our international shipments were later disrupted by the conflict in Israel. This led us to diverse our international customer base, a move which ultimately is now paying off as we've diversified that customer base, and we're now seeing a large rebound in our international sales volumes. Despite these challenges, fiscal 2023 still outperformed fiscal 2022. Our net revenue was up by 11%. Adjusted EBITDA grew by 71%, and that's a very strong result considering the tough market that we are operating within. At Organigram, we take a balanced, disciplined approach to growth, one that's built for long-term sustainability even in down markets. This has translated into a strong balance sheet, cost discipline, combined with strategic targeted investments, a long-term strategy that can pivot when needed. And through all of this, we stayed focused on building our competitive advantages for long-term success. In fiscal 2023, we made significant targeted investments to boost efficiency, enter new categories and strengthen our long-term competitiveness. We invested in a number of key areas: cost reduction initiatives, automation in packaging and production, internal lab testing and remediation, and yield optimization in our garden. These improvements were aimed squarely at lowering our per unit costs and increasing operating efficiency, a major lever in improving margins on our path to profitability. Finally, category expansion. Pre-rolls, which are very important -- which is a very important market segment for us, and we made a large investment into automated equipment for tube-style pre-rolls, which is now another favorite among our consumers today. Our entry into this segment has been a major success and is a key driver of our revenue growth. Since Q3 of fiscal 2023, we've seen a steady upward trend in net revenue. Profitability is driven by gross margin, which we calculate as net revenue less our cost of goods sold. Our cost of goods sold includes direct input costs such as labor, water, electricity, et cetera. Ideally, as revenue grows, cost of goods sold should stay flat or rise more slowly than revenue, widening the gap and improving our gross margin rate as a percentage of sales. And I'm happy to say that's exactly the overall trajectory we're currently seeing. COGS have declined in dollar terms and should keep dropping as a proportion of net revenue, thanks to our scale, our operational efficiency and a more balanced domestic and international sales mix. Our $29 million CapEx program helped to drive this. And through that program, we identified $10 million in annual cost savings, mostly through lower COGS and improved efficiencies in the garden. This was a solid return on our investment. By the end of 2024, we had already achieved $9.1 million of those savings. And over the last 18 months, we've consistently grown revenue and reduced costs proportionately as a percentage of revenue. While some quarterly fluctuation is expected, the long-term trend is clear. We're scaling efficiently. Importantly, we've driven revenue growth without significant increases in SG&A. That's the gray line on the chart. That speaks to the strength of our brands and our strong relationships with provincial buyers and retailers. Our largest operating expense line is G&A, which is the light blue line. And as you can see, it's remained relatively stable over the last several quarters. A few exceptions to the stability in G&A were in Q3 of 2023 and Q2 of 2024, and that was tied to our investments in our new ERP system. This has been a fundamental change in the way we're able to manage our business and the information we're able to glean from our manufacturing operations. There's a long-term play for efficiency and scalability. We are currently in the final phase of our ERP upgrade, and we expect to complete that towards the end of this fiscal year. G&A costs started trending down in Q3 and Q4 of fiscal 2024 with a temporary spike in Q1 due to the Motif integration, which we expected. Going forward, G&A in dollars will rise with business growth, but as a percentage of revenue, we expect it will continue to decrease. Looking at the last 7 quarters, we see a clear trend line of increasing shipped sales, increasing net revenue, decreasing proportional costs as a percentage of net revenue, larger margins and higher gross margin rate, and we've seen the impact of Q1 seasonality with the dip in our first quarter, which we expect to see typically in most years. Increasing adjusted EBITDA, we expect, will be further bolstered by our increasing scale. We anticipate year-over-year adjusted EBITDA growth in fiscal 2025 versus fiscal 2024 with quarter-to-quarter fluctuations due to seasonality. The fact is people tend to buy more cannabis products in the back half of our fiscal year, i.e., the summer months, and Q3 and Q4 is where we expect to see our highest sales period. Our recent acquisition of Motif Labs adds significant financial momentum and will be even more apparent when we report our Q2 earnings in mid-May. Here's how it helps. Revenue expansion will drive margin improvement and adding an estimated $87 million to our annual revenue. By increasing our top line, we achieve economies of scale, that's through bulk purchasing and operational leverage, we'll get better fixed cost absorption by spreading our fixed costs across more units being produced and ultimately, a stronger market position. As the #1 company in Canada by market share, this will lead to more listings, better pricing power and overall long-term profitability. Our cost synergies are currently on track, and in fact, they're currently exceeding our expectations. At the close of the deal, we identified $10 million in annual cost synergies, of which the first $5 million is expected to be realized in the back half of fiscal 2025. Now it's looking like we'll exceed that target as the integration progresses. These synergies are coming from the consolidation of logistics and warehousing through the acquisition of the London facility, which is a central Canada hub for key markets. We have shared procurement and supplier relationships and optimization of manufacturing and distribution operations. Owning more of our supply chain by in-housing hydrocarbon extraction and becoming one of the top THCA producers in the country, a key ingredient in infused pre-rolls. Historically, we had to purchase THCA from third parties. Now we're able to produce it ourselves and therefore, significantly reduce the cost, which will have a nice margin benefit for us going forward. While we focus on driving margins, we continue to demonstrate strong year-over-year revenue growth. Another key lever in improving revenue and margins is the expansion of international sales. Here's why. Exported cannabis is not subject to Canadian excise duties, which significantly improves margins. As we scale exports, particularly to Germany and other EU GMP markets, our blended margin profile will continue to improve. We will also begin to see the impact of our Collective Project acquisition as we begin consolidating U.S. revenue and also get the contribution from Collective Project in Canada. We have often said Organigram is one of the most disciplined and fiscally responsible cannabis companies in Canada, and our balance sheet supports this. We have not undertaken any unnecessary expansion. And from our view, we have avoided the mistakes of overbuilding and over-leveraging, which negatively impacted many of our peers starting in 2018. Unlike many companies in the space, we don't need to raise money to deleverage, and we are using our capital strategically. We have continued to invest in strategic CapEx projects during the quarter, including our capacity enhancement upgrade projects in the garden, the Motif integration and investments in working capital to support our upcoming busy Q3 and Q4. We have taken a measured approach, which has preserved our balance sheet strength. It's reduced the risk to our business. It's allowed us to attract and deploy strategic capital in what's a very dry capital market for raising money, and it's enabled us to build a reputation as one of the most respected LPs in North America, led by seasoned cannabis and CPG executives. As of the close of the final BAT tranche at the end of February and the recent Collective Project acquisition, Organigram had over $100 million in pro forma cash, including our restricted cash and short-term investments. One of the most common questions we get is whether international expansion is our only growth lever. The answer is no, but it is a key strategic priority as the timing of rationalization in Canada has proven to be very unpredictable. Slower domestic growth is expected as the market has matured, and we expect to continue taking share and growing at a faster pace than the market, especially as other players exit. We expect to grow through a balanced mix of domestic innovation while the market continues to rationalize, we'll get margin expansion through cost control and scale, increased international volumes, and strong execution in our core categories. We're not just betting on new markets. We are fortifying the fundamentals of our business in Canada and beyond Canada. We recognize that many investors often view net income or net loss as a primary indicator of success or failure in any given reporting period and rightly so for the most part. After all, net loss seems very straightforward and intuitive, especially compared to terms like adjusted EBITDA. For us, it's a little bit more complicated because our net loss includes a number of other adjustments such as fair value gains or losses on our financial instruments as well as unrealized gains or losses on the various investments that we have. In Q1 of fiscal 2025, we reported a $23 million net loss, but the actual cash burn was closer to $8 million, and that includes $4.5 million in onetime costs from the Motif deal. That means that from a strictly operational point of view, our cash burn was closer to $4 million, which paints a different picture than a net loss of $23 million. To get a clearer picture of performance, we focus on metrics that strip out noise and noncash distortions and financial instrument valuation adjustments, such as adjusted gross margin, adjusted EBITDA, cash flow from operations. And encouragingly, all 3 of these are on a general upward trajectory. It's also worth zooming out to look at seasonal trends. As I've mentioned before, cannabis is a category where we typically see stronger sales in the second half of our fiscal year. So Q1 often looks soft compared to Q4, even if we're continuing to grow year-over-year. This year, Q1 of fiscal 2025 was actually a pretty good quarter compared to the same period last year. But in comparison to Q4 of fiscal 2024, it didn't look as strong because of that seasonality. We expect that to continue this year, and Q3 and Q4 this year will be our strongest periods for the year. Looking ahead, we are confident in our position. We believe we have the runway we need to continue our progress towards consistent, sustainable profitability. We've already demonstrated periods of positive cash flow from operations, a measure of the actual cash generated from our core business, which adjusts net income for noncash and working capital changes. In fiscal 2024, we delivered $3.9 million in cash flow from operations, and we will exceed that number in fiscal 2025. Here's why. Revenue is growing, and we've entered new markets and new segments. Our margins are expected to continue to improve in fiscal 2025 and beyond, particularly in the back half of this year, thanks to the synergies from the Motif transaction. As previously mentioned, the improvements and increase in our seed-based cultivation efficiencies, our international shipments and overall economies of scale as the business has continued to grow over the course of the last year. Our cost base allows us to grow without bloating our SG&A line. Recurring cost savings are being realized and will compound over time. Capital investments were front-end loaded, so future CapEx will be more targeted and more efficient. For this fiscal year, we expect $8 million to $10 million of sustaining or improvement CapEx and up to $16 million for capacity enhancements over the next 18 months. Also, we are close to completing the final phase of our ERP implementation, which I mentioned previously, including the integration of Motif, which will shift from major investments in ERP into more maintenance mode, and we'll continue to see the cost savings resulting from that in future periods. Our focus remains on generating real sustainable value through cash flow, efficiency and profitable growth. That's how we define progress, and we're well on our way. To summarize, we've made disciplined investments in automation, efficiency and R&D. We've scaled revenue organically and through Motif, and synergies are ahead of schedule. And we've turned the corner on profitability and expect to start delivering more reliable EBITDA and cash flow from operations in the ensuing quarters. We've avoided major sector missteps and have come out stronger, and we have a clear line of sight to sustainable growth. But many investors are still asking, why is the stock price down so much? Well, I can't predict where the stock price is going on a day-to-day basis. But beyond the current macro geopolitical environment we have today, we're also negatively impacted by sector-wide issues, in particular, regulatory uncertainty, particularly in the U.S., which is an important value driver in our industry. We've stayed focused on what we can control, building a sustainable, profitable business, creating brands and products that consumers love and growing with discipline and keeping our shareholders in mind. That said, we don't believe our current market cap reflects the true value of our business, which is now trading below even our tangible assets like our facilities and our cash. That's a tough reality of being a pioneer in a new industry. And as a public company, our stakeholders share in that risk, but we share your goal, realizing value and generating long-term returns. Here's what we are confident in. Many cannabis companies in North America probably won't be here in 5 to 10 years. Organigram Global is positioned to stand the test of time. One final point. In fiscal 2024, we paid a whopping $87 million in excise duties. That's 35% of our shipped sales. A shift to a 10% ad valorem excise duty on flower could be transformational, not just for us, but for our industry as a whole. Imagine the growth potential for both the Canadian sector and Organigram under a fairer, more business-friendly regime. We are hopeful that a new government will review this policy to support Canadian businesses and protect our position in the global cannabis movement. Thank you very much. We look forward to hearing your questions. And with that, I'll turn it back over to Max.

Thank you so much, Greg, and you're truly no longer just a voice on our earnings call after this.

Thank you.

And I'd also like to say that it's really interesting to hear Greg's perspective because when you zoom out and you look at our trajectory, it really supports the story that Beena is saying as well. And part of that story is, of course, innovation. So last, but certainly not least today, I'd now like to invite to the stage Borna Zlamalik, our Senior Vice President of Research and Development and Innovation. Take it away.

Thank you so much. Thank you, Max. Excited to be here today to talk about innovation and how innovation thinking and design thinking is transforming Organigram and the cannabis industry. At Organigram, we define innovation in 2 ways. There's capital I innovation: bold, transformational thinking rooted in ideation, cutting-edge science, ingenuity as a business enabler. This is how we build innovation into our DNA, how we operate and deliver value. Then there's lower case innovation. These are the award-winning awesome products, smart, convenient, cool features, products that genuinely delight consumers and solve key pain points. Most growth companies focus only on their next product, another flavor, strain, aroma. We think bigger, how innovation powers our entire enterprise. Blending both forms gives us a sustainable competitive advantage. The 4 pillars of innovation are proprietary seed-to-brand product development platform; seeds, a new frontier in cannabis cultivation; monetizing innovation, this is our award-winning innovation and product platforms; and finally, innovation underpinned by science, which is the BAT product development collaboration that Beena spoke about. These 4 pillars work in unison to deliver disruptive innovation to current cannabis consumers, a runway for future consumers as cannabis goes mainstream. So let's dive in with our proprietary seed-to-brand product development platform. Since 2021, we've been building a vertically integrated seed-to-brand development platform that consolidates our innovation capabilities from genetics all the way to finished goods. Here's what it includes. We start with plant science in our biotech lab that feeds our robust and broad genetics portfolio. We have scaled high-throughput extraction to extract those cannabinoids. Then we have rigorous cannabinoid safety validation, bioavailability research to ensure the highest safety standards. This then moves through to foods and sensory science to develop and test the product experience. And then finally, new product development where the innovation comes to life. We design, manage and control innovation across the entire supply chain, which is vital in a regulated market that behaves like CPG. We work on 200-plus active projects per year, resulting in a new product launch almost every 3 days, on average, 140-plus launches annually across Canada. Cannabis is a unique space. It has the speed and churn of consumer packaged goods, but with the manufacturing tolerances of pharma and the regulatory burden of tobacco. Innovation in this environment is difficult, but the way we have structured our innovation platform allows us to meet the demands of the market. We're launching flower, pre-rolls, vapes, concentrates, hash on the traditional cannabis side; and gummies, lozenges and most recently, beverages on the ready-to-consume side. This will change over time as consumers slowly set on certain categories and the category begins maturing. But for now, we need to be able to compete across that range to be able to grow and scale. Let's shift to our second pillar, which we consider the new frontier in cannabis cultivation. Seed-based production is just beginning to scale, and Organigram is leading the charge in the seismic shift in agriculture. Seeds aren't just about producing high-quality, high-potency flower, they're also about profitability. This is one of the biggest opportunities in cannabis. Why seeds? Every single vegetable you see in a grocery store comes from seeds. You don't grow tomatoes from a clone. You simply couldn't scale it. Cannabis cultivation began with clones out of necessity to replicate strong landrace genetics, increase potency, get the right aromas, get that hype cultivar out there into the market. But to scale, the industry must evolve and the evolution requires stabilized seed genetics. Currently, almost 20% of our Moncton garden has already been converted to seed-based production, which will shift over time as business needs dictate. We're actively validating more than 40 seed varietals, specifically auto-flower seeds, and we're matching the breadth, aroma and potency of our traditional clonal varieties, but in seed formats. We're also working with our partner, Phylos, to scale ultra-high potency cultivars rich in minor cannabinoids like THCV, CBG, CBC. And this not only allows differentiation and ability to develop products against a variety of mood states, but also highly efficient extraction of these cannabinoids for extremely valuable extracts. The core benefits of seed-based cultivation, firstly, faster maturity, increased turns. The seed grow rooms are now cycling 7.2x per year, up from 5.5 cycles. This is because there is no pre-veg. There is no prop. There is much less labor required to actually maintain those plants. We've achieved over 50% labor reduction. This leads to lower cost per gram and stronger margin economics. In addition, seedlings provide healthier and more vigorous plants. They're growing from original genetic material, not cuttings. After just 3 weeks, as you see in this image, they outgrow clones significantly. They are more resilient to disease, specifically like powdery mildew, and this derisks our cultivation operations. They also provide a predictable, uniform grow. The varietals we've scaled are genetically identical, enabling consistency in cultivation and care. This shift not only improves margins and efficiency, it also enables us to launch truly global brands. Take our cultivar, Limelight, for example. It's been a workhorse in the garden for close to a decade, one of the longest-running cannabis cultivars in Canada. By converting Limelight into a stable F1 hybrid seed, we'll be able to grow the exact same product in Germany, in Australia, obviously, in Moncton, New Brunswick with consistency, same specs, same aroma, same potency regardless of location. This is what I call capital I innovation. Consumers don't care that we can turn and grow rooms 7 times per year instead of 5, but investors do because it improves unit economics, scalability and profitability over time. At Organigram, we are monetizing innovation, and this is our third pillar of the day. I like to call it weaponizing innovation. This is at the heart of our product development philosophy. It's about building product platforms that can produce multiple products to support various business lines and amplify margin performance. Let me give you a few examples. SHRED, everybody knows SHRED. SHRED was our first major platform success in 2021. It wasn't just a new product, it was a new cannabis proposition and a new cannabis experience. It was based on an aroma positioning, not strain names or THC percentages. We pioneered a consumer-friendly approach that emphasized flavor, not cultivar. It was more approachable and less intimidating for newer users. We created a proprietary blend recipe that combines specific flavor types and exact ratio for our different SHRED blends. This allows flavor consistency and operational efficiency. Because we're not dependent on single cultivars, we can utilize all of the cultivars that are in the garden in specific proportions. Our blends deliver the same flavor profile batch after batch year after year, something rarely seen in cannabis. In fact, Tropic Thunder has been in the market since 2021, that's almost 5 years, with the exact same consistent flavor, consistent aroma and a cult-like SHRED following. This is what builds brand trust and loyalty. Today, SHRED drives over $250 million in revenue, spanning categories from milk flower to vapes to edibles, a true platform brand. Another standard innovation is our hash rip strips. We took a millennial-old product, hash, and revolutionized how it's consumed. Within 12 months, it doubled the Canadian hash market and earned us our second Innovation of the Year award in 2023. This was innovation rooted in deep consumer insight and platform thinking. To the consumer, this was an innovative, portionable, discrete, convenient reimagining of hash. But behind the scenes, we developed a proprietary production method, affectionately known as the [ HashBot3000 ]. This is a high-precision cutting and scoring robot, allowing us to produce rip strips efficiently and at scale. It increased throughput for all of our hash SKUs actually. It improved our margins across the board by allowing us to produce close to 5x more hash using the same equipment platform that was designed both for innovation, but also for the entire hash and concentrate portfolio. This is an example where design thinking was not just consumer-facing, but also deeply integrated into manufacturing efficiency. And yes, it's patent protected, ensuring we preserve our advantage. Since 2021, we've transformed our portfolio from close to 95% flower in 2021 to nearly a 50-50 split today between traditional flower and ready-to-consume products like vapes, gummies and lozenges. This diversification couldn't have happened without our platform approach to innovation. I like to think of cannabis as the dairy industry. Raw milk gets turned into milk, chocolate milk, cream, cheese, both craft cheese, processed cheese, yogurt, but there's also the molecules left behind, the proteins and the casings that make it into whey, into brine, acids, et cetera. Cannabis is very similar, and this is what we've tried to create in our business. This is for the good of the consumer, but also for the investor. We take our high-quality flower, which is obviously sold as flower and pre-rolls, IPRs, as flower on its own. We then take the trim and lower-grade material, which we turn into vapes, edibles, beverages via our extraction processes. But we don't stop there. After the secondary and tertiary extraction methods, there's still waste biomass that's left over. What does the future look like? We see a world where the rest of our biomass gets converted into paper jars in partnership with Canadian pulp and paper manufacturers. This would allow 100% biomass monetization, all powered by innovation. This is what monetizing innovation is all about. The cannabis category is complex, fast-moving, very volatile right now. We face shifting consumer behaviors, aggressive pricing pressures. But by focusing on innovation platforms, not just single executions, we don't just survive, we thrive. Finally, I wanted to shift to our last pillar of innovation, which is innovation underpinned by science, the BAT product development collaboration. In 2021, we launched a product development collaboration in partnership with British American Tobacco with a clear mandate to discover and validate next-generation cannabis technologies with a particular focus on noncombustible, ready-to-consume products. From an innovation standpoint, the investment allowed us to create and expand our internal R&D capabilities with state-of-the-art equipment and processes, greatly increasing our ability to launch. We developed the world's first cannabis sensory lab, which is now powered by an employee pool of close to 200 trained expert panelists, allowing us to assess flower, gummies, vapes, beverages in real time. The biotech lab we created contributes cell biology, tissue culture, genomics, molecular biology capabilities, which are currently driving efforts in powdery mildew and markers of interest discovery, that will power Organigram's breeding and phenotyping needs. On the extraction side, the state-of-the-art extraction R&D lab allows us to create methods and optimize everything from CO2, hydrocarbon ethanol extraction, all the way to solventless as well as isolation. We conduct deep cannabinoid scientific and consumer duty of care research. And our research extends much further beyond just development. We are deeply invested in consumer safety, scientific validation and effect-based product development. The first success coming out of the product development collaboration is our nanoemulsion technology. And this is truly a breakthrough platform that's going to feed a number of products. Currently, we're rolling it out in gummies and soon, it's going to be leveraged in beverages. This isn't just hype. It's backed by what we understand to be the most robust study ever conducted on a recreational cannabis product. Effectively, we take the cannabinoid molecule and then we break it apart using microfluidizers into 1 billion little pieces, allowing for easy and efficient transports through the liver. The nanoemulsion, which was validated via a 19-day in-clinic study, resulted in an absolutely incredible performance. Here, we see the gummy curve in blue, 50% faster onset, a reliable 20-minute activation time. The onset curve matches the experience of alcohol beverages in an edible. The beverage data shows it's even faster in beverages with a faster offset time -- onset time as well, nearly double the availability, meaning more cannabinoids absorbed. It solves 2 of the most consistent consumer complaints: when will this hit, why do I need to take so much. These are all things that make consumers nervous and that are currently a barrier to adoption. We plan to expand this platform into additional cannabinoid formats, varying effects and duration profiles and future form factor innovation. If you're trying to create a beverage where the only other competitor is alcohol, it better have a similar onset and performance profile to gain consumer adoption. It will certainly be a differentiator for our Collective Project brands. I want to take a moment now to talk about safety and industry leadership. We've also used our PDC, our center of excellence, to enhance our toxicology protocols, which were already leading in the industry. We have enhanced our product stability research. We have also used our scale and size and our strong partnerships with the industry to set supplier standards, especially for terpenes and extracts, where the 2 biggest terpene suppliers in North America follow the same toxicological standards as we do. We are setting the industry benchmark for safety, and our partners are beginning to adopt and champion them as well. We are officially competing at a global CPG level, and this is all powered by our innovation efforts. These efforts demonstrate our commitment to long-term category development, global competitiveness, science-led consumer product innovation. We're not here to make trendy products -- well, we are -- but we're building an infrastructure and credibility to compete on the same level as multinational CPG companies. The future of cannabis is not just about high-octane experiences. The evolving consumer covers a range of ages and needs. The cannabis consumer of tomorrow is health and wellness-conscious, purpose-driven, seeking functional effects and not just recreational highs. And don't get me wrong, we're all seeking recreational highs as well. Looking to integrate cannabinoids into daily rituals is a big part of our mission. We're already seeing signs of this shift, and Organigram is equipped to meet that demand via our innovation platform. After our last in-person Investor Day in Moncton, an analyst wrote about Organigram, that we are innovating to win and winning in innovation. And I couldn't agree more. Our design thinking and our innovation approach is not just about powering product, it's about shifting our business and shifting the category as a whole towards that future consumer. Thank you very much.

Thank you so much, Borna. Personally, I'm seeking recreational highs and functional effects, but that's just me. Anyway, that was great. I'm so glad everyone stuck with us for this long. We're going to take a quick reset for our Q&A session. And as a reminder, you can scan the QR code on the screen to submit a question at any time or visit slido.com and enter the code, OGinvestors. So bear with us one moment. All right. Thank you, everyone, once again for joining us today, and thank you for your patience as we work through some of the technical difficulties at the beginning of our presentation. We'd now like to kick off our live Q&A. And in addition, I'd also like to welcome to the stage, Paolo De Luca, the Chief Strategy Officer at Organigram.

So without further ado, let's get into our first question. And I think this one, I will give to Greg. Greg, investors want to know why we haven't announced a share buyback to support our stock.

A great question. So share buybacks can be a great tool for more mature companies, and it's a way to potentially increase shareholder value. For us, we're a company that's in growth mode. And we've always looked at what's the best way to allocate our capital. We're investing in R&D. We're investing in product development, sales and marketing. And our view right now, that's what we need to do to support our growth. And maybe down the road, as a more mature company, we could think about share buybacks. But right now, the investments in our products and our growth is more important.

Great. Makes total sense. We'll move on here to a question about beverages. I think, Paolo, maybe you can speak to this. How much growth potential do beverages have for Organigram in Canada and the U.S.?

Yes. So right now, beverages in Canada is a relatively small part of the overall mix. It's about 2% of, call it, the Canadian market, which is just under $6 billion. But we think that's limited right now only because of the format that it's sold. Essentially, it's in cannabis dispensaries, which are not necessarily friendly to a lot of kind of new consumers. If you look at the U.S., where cannabis beverages are now being sold in more traditional retail outlets like liquor stores or convenience stores, the market is a lot bigger even on a per capita basis. In the U.S., by way of example, the market is already expected to surpass $1 billion in sales this year, and Euromonitor has it going to about $4 billion. And so we think that in Canada, that will also match in time as the regulations relax and allow for beverages, which we think is actually the best category to first exit that kind of limited dispensary model in Canada. So we think it's a very big market and growing. Another data point in the U.S. I'll give is Top Ten Liquors, which is a liquor chain -- a liquor retailer in Minnesota, has allocated, I think, something like 10% of its footprint or even less to hemp-derived beverages. And it's already surpassing vodka sales, bourbon sales, craft beer sales. So it's a category that will bring in new consumers. The soccer mom is the kind of prototypical consumer that's entering the category there. So I think it's a great category, and we're very excited about its growth.

I'd just like to add just a point on this, which is we saw last year in Alberta, they started to allow certain cannabis products to be outside of the dispensaries, outside of the retailers, at events. And we've also been discussing with the Cannabis New Brunswick, and they're talking about potentially getting -- looking forward to on-premise options with cannabis beverages. So we really think we're on the cusp of changes in regulations over the next few years that should explode the market in Canada, which is why we're pretty excited both what's happening in the U.S. and the potential for what will happen in Canada.

We're well placed there actually because with the nanoemulsion that we've developed, which gives us a similar kind of onset curve as alcohol, I think that's going to be a game changer, right? Because what the consumer needs is really the reassurance and the knowledge of what their experience is going to be like. And the technology that we're developing is kind of matching that, right? So providing a familiar ritual.

Right. Because the common question I get now is why has beverages been so slow to take off in Canada? Is it a product issue? It sounds like it might be a mix of regulatory and product.

Well, early days, the products weren't very good. And really, the technology has come a long way and the products are a lot better. And the nanoemulsion technology really helps deliver the cannabinoid in a way that the products just taste great. You should try some of our Collective Project offerings.

Great. I'll switch gears here for a minute. This is a common question I get to the [email protected] e-mail address. And Beena, I'll give this one to you. When is management going to begin investing in their own company if the share price is so cheap?

It's a good question. The reality is we have pretty strict governance in the company. And we have access to nonpublic material information. And because of that, we are often in blackout. As a matter of fact, I asked our legal team, when was the last open window that management could actually invest in our stock, and it was back in September. So we're blacked out as we move into quarterly reporting, and we're blacked out when we're doing acquisitions because we obviously know what's coming and what we're working on. And as you've seen, we did the Motif acquisition. We just did the Collective Project acquisition. It makes for limited amount of opportunities for management to buy stock on the open market. That being said, we do have a significant amount of our compensation that's tied to our stock performance. And that makes sure that we're aligned with our shareholders to make sure that it's as important to us, the performance of the company.

Right. And speaking of our M&A strategy, we often issue shares when we purchase other companies. Investors are also interested in hearing a little bit about potential future dilution. So perhaps, Greg, this is something you can speak to.

Yes. I mean, look, we're always evaluating our capital structure. The last financing we did was at $3.23. That's just about a year ago now. So we thought that was a good value to issue shares at. But in terms of plans, we don't have immediate plans to issue more shares today. But if the new project comes up or M&A deals, there could be shares issued upon something like that. So we're always evaluating the capital structure, and we're thinking about our shareholders in terms of what's going to be the best value-creation opportunities for everybody.

Paolo, do you have something to add?

Yes. Just to add to that, the last 2 acquisitions that we made, the majority of the consideration was actually cash, not shares, and that cash was raised at higher levels, as Greg alluded to. So we're very cognizant of using shares or cash in the right circumstance. So the cash that was used in those deals was raised at above $3 a share. So we're very careful not to issue too many shares.

Right. I want to switch gears here for a second again and come back to innovation. This investor would like to know, what's the next frontier of cannabis innovation? And are there any more categories that we can enter and bring disruptive innovation to? I think, Borna, that one is to you.

Sure. That's a great question. On the flower side, obviously, we're in a very unique position. We're about to hit our 4,000th commercial harvest, and we're sitting on close to 300 million data points about how our plants grow. And so we're really shifting gears in that direction on optimal yield, bud structure, flavor, aroma. But that's not really kind of in the innovation territory of the category. Much of our scientific efforts are really focusing on ready-to-consume products, beverages, gummies. We feel very bullish on effect, so onset, longer effect predictable offset. I don't think those are big opportunities that are going to bring a lot of new consumers to the category. I wouldn't say much about is there other categories we should be in. I think we're in more than enough categories. I think we really need to focus on how to make the consumer experience better and more predictable. I think that's what's going to bring in those people who are still kind of waiting on the sidelines and want to really participate in the category.

And on that note, another investor would like to know, how do you see cannabis potentially being used 5 to 10 years from now? What changes do you see in consumer behavior on the recreational side or the medical side?

That's a great question. We're hoping for a category that can be -- cannabis can be a part of like daily rituals, like alcohol, like other categories as well. And so in 5 to 10 years -- we're already seeing now the younger generations of adults in their 20s, 48% of them abstain from alcohol, 45% of them actively participate in cannabis. Our older generations, our seniors, are rediscovering hash experiences, as an example, after 50 years of not participating in the category. So in 5 to 10 years, I see a world where people are going to be actively participating, solving certain mood motivations that they're looking for, looking at wellness and health as a solution as well.

Great. Thank you for that. Another topic that comes up quite a bit with investors in the old inbox is Sanity Group. We've obviously made a $21 million investment into Sanity Group and the German market. And some investors would like to know what is happening in Germany with regard to the new government. Maybe Paolo, you can touch on that again.

Yes. So we're well connected through Sanity Group with government relations and the insight on what may be happening there. So far, no changes are really planned. Certainly, nothing from a material perspective that would limit the growth curve that we're expecting to see in Germany. That market last year was, call it, EUR 450 million, or the best estimate. I suspect it's already surpassing a run rate of $1 billion based on what I've seen in Sanity sales and their market share over there. Further, Sanity is actually in the lead position for pilot projects on the adult-use recreational side. They have operations in -- I think 5 or 6 different pilot projects in major urban centers, including Berlin, Frankfurt, Hannover, and I think the other one is Bremen, if I got my memory here. So nothing suggests that the growth is abating in Germany. We expect that market has a potential of at least EUR 3 billion. That's not even with the rec component to it. And really what's limiting the market growth there right now is the availability of flower. So you see a lot of Canadian companies are now starting to shift their production into exports. And Germany can also source flower from other international markets as well. But very excited about Germany. I think the growth, there's still quite a bit of growth to unlock.

Right. Obviously, a lot of German cannabis users. A question that's just come through is, do you guys even smoke weed?

I'm high right now. No, I'm kidding. I think most of us do consume the odd gummy from time to time.

Yes. I'm a big believer in the beverages. So I have to say that's where my head's at.

Well, I'm Head of R&D & Innovation. So obviously, I take it in almost all the categories, but I've completely removed alcohol from my diet because of that.

And beverages, edibles and sometimes, smoke.

Got it. Well, it's good to know. I guess people would like to know what our experience is of actually using the product. I want to switch gears here for a second, talk a little bit about the politics and the regulations around cannabis. And this investor would like to know, why do we, and I guess it's the Canadian government they're referring to, keep selling out our Canadian cannabis companies with unfair taxes when they produce a lot of tax revenue and slowly give away their competitive advantages on the international stage? Are we speaking with government officials about this? Perhaps, Beena, you can speak to that.

Sure. We're talking to government all the time. And right now, as I said earlier, the macroeconomic situation right now is that the government is listening to anything that is homegrown that could support the Canadian economy. When you think about the GDP, cannabis contributed $7.4 billion to Canada's GDP in 2024. When you compare that to the brewery industry, they contributed $2.6 billion. Or you compare that to the wine industry, it's $1.2 billion. Or logging, it's $3.3 billion. So cannabis contributed $7.4 billion in 2024. When we reference these numbers with politicians, be it federal or provincial, they're amazed by that number, and they think there's a great opportunity to leverage this. In a world where we want to export product, we want to leverage Canada's first-mover advantage because we've got a legal framework that we could export to different countries. And they're open to conversations now that they weren't open to 6 months ago because, obviously, the whole tariff situation has made -- how do we drive other revenue, export revenue. And it's really interesting. We've had a lot of meetings, and there's an appetite for it right now.

Thanks. I want to switch gears again and come back to a more financial-related question, Greg. One of the things you discussed in your presentation was net income and how there are certain noncash impacts there. And this investor would like to know, should we really not be focused on net income? Isn't this the most important profitability metric?

So look, net income is obviously important. But it's important to understand what the components are. And the reason we use adjusted EBITDA is to be able to compare our performance with those of our peers because it's the most sort of standardized metric in the industry. When you're looking at our net income, it includes a lot of valuation adjustments. So all of our investments get fair value through the P&L, and that's unrealized gains or losses. So that creates volatility. But also we have financial instruments. For example, BAT has top-up rights to be able to increase their investment in the company. Those top-up rights have a value as a financial instrument. So we have to value that every period, which creates a lot of noise in the P&L, which is noncash. And that's really the reason we focus on adjusted EBITDA.

Right. And while we're talking about financial-related questions, I often get this, and I think there's a bit of confusion around what is a shelf offering and what is an equity raise. So I know we've announced in the past, for example, a $500 million shelf offering. I think it expires in early 2026. But can you provide a little clarity for investors on what that actually means for the company?

Sure. Well, our shelf expires in October of this year, so in fiscal 2026. And it's a great question because a shelf offering is not actually an offering itself. It's a prospectus that allows us to issue shares or debt or other instruments on relatively short notice for when the need arises. So if we're working on a special project, if there's an M&A deal, something of that nature, and we need to issue shares, a shelf allows us to file what's called a prospectus supplement with which we would then be able to undertake whatever that offering is. So having a shelf really is about flexibility. If we go and do another shelf at some point, when this one expires, it doesn't mean we're going to go out and raise a bunch of money and dilute our shareholders. It really means that we're preparing for the flexibility for whatever event may come up, and it may be nothing. But if an exciting project comes up that's accretive, then the shelf allows us to act quickly.

Right. And speaking of investing and financing and raising capital, why haven't other big companies really come to the table when it comes to strategically investing in cannabis over the last few years? Aren't valuations low enough? This investor would like to say we need some good news in the sector. So maybe, Paolo, you can touch on that.

Yes. The first thing I want to mention is that we've actually had 2 investments from our strategic partners. So they not only invested in us in 2021, but they also followed on -- and this is a British American Tobacco. They also followed on with an investment that was staged over 3 tranches, but that was announced in the fall of 2023. So there has been -- there have been instances where strategics have doubled down or put more money in, which to me is a sign of confidence. I think the answer to the question though head-on is, when Biden got elected in 2020 and took office in January of 2021, there was, what we call in the industry, the Biden bump. The valuations in the sector skyrocketed. There was anticipation that legalization in the U.S. would happen at a much faster pace. And unfortunately, the promise hasn't been fulfilled. Aside from really making a recommendation to reschedule cannabis from Schedule I to Schedule III, which still hasn't happened, and there's not real clarity as to when that's going to happen, there hasn't been much progress on the file there. And the U.S. being the world's largest market and really a force of influence around the world, I think that disappointment is really what's causing some of the strategic -- potential strategic investors from making that acquisition. But I will say that valuations in the cannabis space are very low. We have a lot of companies that are either already EBITDA and cash flow positive or on the cusp of being so. And I think really, what's affecting the industry right now is obviously the overall negative downdraft from the macro events happening on with tariffs and everything else in the stock market.

And what do you think the domino effect could be? Should regulations in the U.S. solidify in the near to midterm? How does that really change the landscape for strategic investors, companies like us, U.S. companies?

Well, first of all, it allows companies to list on U.S. exchanges, which is obviously a big part of it. It allows banking to happen in the background. It allows regulations to be set by the FDA and so forth. It legitimizes the industry in a way that is currently absent. So it's really the start of a very long domino and would be very welcome. I think we've seen that even any kind of rumor of a change in U.S. legalization can drive stock prices up by 10%, 20%, 30% in a day. So a full legalization, God forbid, Trump on the golf course whisper something about cannabis legalization, we would expect there to be probably another uptick in cannabis prices, yes.

I want to bring it back to Canada for a second. The Canadian market has been fragmented. We've experienced price compression. So Beena, I'd like to ask you, are cannabis prices in Canada finally stabilizing? Are we through the worst of price compression? And how do rising prices impact your fundamentals and the competitive landscape for the company?

Well, sure. First of all, you go back 3 years ago and everybody talked about the cannabis mountain, the inventory that was out there, and there was a lack of retail stores at one point to get the product through. It was an industry that came out of prohibition and nobody knew how to forecast it. No one knew how quickly, how much volume to produce. A lot of product was produced early days that wasn't really great quality. We've gone through a lot of change. The industry has matured. The supply-and-demand curve has really changed. We no longer are sitting on a mountain of cannabis. We're actually in a situation where there's a shortage of supply as more and more markets all over the world are moving to medical -- approving medical access. Canada is starting to export a lot of product. We talked about the product we're selling to Germany, to Australia, to the U.K., the fact that we're looking at getting our EU GMP certification. That will help us even drive more volume. Other of our competitors and peers are out there selling product as well. And so there's actually been a bump-up of flower prices. We've taken pricing on some of our flower SKUs. And that's because as supply has dissipate from the market, obviously, you have to take prices up. And so that's -- on the flower supply, we've kind of gotten past the curve. Not all of the cannabis categories are the same. We are still seeing a little bit of price compression in the gummy category. But again, how you compete with that is you bring in innovation. You bring in our FAST technology that separates us and differentiates us from the general THC gummy out there so that you have the opportunity to get some pricing. So this is a market, I think we're getting into the maturity side of it. As I talked about earlier, that will help drive prices up.

You mentioned innovation there, and I think it's an interesting point to bring up that we are seeing a bit of a trend of consumers shifting away from certain sort of sin recreational products into cannabis as well. But there is concern of the risks of cannabis. So perhaps, Borna, can you maybe speak to the risks of smoking cannabis and how we're addressing that?

Yes, absolutely. I mean that's a great question. Smoking and combusting anything at a high frequency comes with certain adverse effects, and this is all very well-known. I think the more important question is what are we doing to ensure that we have the utmost care for safety for our consumers. I firmly believe that the category, with all of the standards that we're putting in place, with the way that Organigram is actually leading in terms of toxicological standards, long-term thinking about harm and harm reduction, I think that's the way to view the category. So I would say we've got a long way to go, but I think the category, especially Organigram, is taking the right steps to ensure that there's long-term safety for consumers.

Great. Thanks for that. I want to ask a more technical question related to our Q1 earnings. You spoke a bit about how our CapEx is front loaded. This investor would like to know, can you talk a little bit through the anticipated phasing of our CapEx spend over the next fiscal year?

Sure. So I previously mentioned that for the fiscal year, our basic CapEx for regular process improvement and automation is between CAD 8 million and CAD 10 million. We have been spending on that so far this year, and we'll continue to do so over the course of the rest of the year. So I'd say that's relatively even through the rest of this year. The larger project, which we talked about, of up to $16 million for productivity improvements, that's really 2 projects, one of which is underway today. And so approximately half of that we expect to spend this year, and the second half is over the next 18 months. So I'd say into the second or third quarter of next year is when that's going to get completed.

And just to build on that, and back to my comments just earlier, part of the reason for the projects is because we want to add more capacity, more flower capacity to meet the demand, especially demand in international markets. So these 2 projects that Greg is talking about are all about getting us the extra 13,000 kilos that I talked about earlier about getting that capacity into our mix.

Great. Thanks for that. So we're getting a little bit long in the tooth in terms of timing. We had a bit of a delay starting tonight. I want to be conscious of everyone else's time. So I have one more question in the queue and this -- someone is obviously quite sharp watching this presentation, but they've noticed that we're all wearing Canadian flag pins. So Beena, maybe you can touch on why we're doing that.

As I ended my comments earlier, listen, we believe in cannabis, but we really believe in Canadian leadership, as the market leader. We believe there's work to do in government relations and advocacy for this industry. We think the time is now to capitalize on the political environment and really become a leader, a global leader, in this sector and leverage this. And so we're proud to be a Canadian. Our roots are in Canada. We're proud to have created this leadership position in Canada, but we want to take it to the world. We do have global ambitions. And that's why we rebranded Organigram Global.

I think that is a fantastic note to end on. So I'd like to thank, first and foremost, our shareholders for their support and for attending today's event. I'd also like to thank all of the amazingly talented people at [ Caramel Labs ] for helping us produce this event and as well thank everyone at Organigram, including our wonderful senior leadership team, for making time for this event tonight and speaking to our investors. I'd like to remind everyone that if they'd like to follow the company, hear more about our updates, we are pretty active on social media, predominantly X and LinkedIn. You can also e-mail me questions directly related to the company at [email protected]. So with that, I will conclude our inaugural Organigram Global investor event, and I wish you all a very good evening. Thank you very much, and thank you.

Thank you.