Operator: Ladies and gentlemen, thank you for standing by and welcome to the Vireo Health International Fourth Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Mr. Sam Gibbons with Investor Relations. Thank you. Please go ahead, Sam.

Sam Gibbons: Thank you, Adam and thanks to everyone for joining us. With me on today’s call is our Chief Executive Officer, Dr. Kyle Kingsley; and our Chief Financial Officer, John Heller. Today’s conference call is being webcast live from the Investor Relations section of our website and dial-in and webcast details for the call have also been provided on Slide 3 of today’s presentation, which is also available on our website.

Kyle Kingsley: Thanks Sam. Good morning everyone and thank you all for joining us for our fourth quarter and full-year 2020 results call. Please turn to Slide 4 where we provided a summary of highlights from the full-year. Full-year revenue of $49.2 million grew 64%, compared to 2019 and we experienced good organic growth across each of our operational markets in both the quarter and full-year periods. Excluding contributions from our former Pennsylvania subsidiaries, fourth quarter revenue grew 46% to $11.5 million, which was up roughly 9% sequentially, compared to quarter three. As many of you know, throughout fiscal year 2020, we were focused on executing our core market strategy with the objective of optimizing our portfolio vertically integrated assets to produce stronger and sustainable profitable growth. For early in 2020, our management team and board of directors made the decision to pause our development plans in states like Massachusetts and Nevada. We divested our businesses in Ohio and Pennsylvania, where we did not have strong enough retail footprint to be successful. And we decided to focus on our remaining vertically integrated markets in Arizona, Maryland, Minnesota, New Mexico, and New York, where we saw clear path to profitability. The results of these decisions have been steady improvements in our financial performance over the past several quarters as evidenced by continued strength in sales growth in greater consistency and margins as recent efforts to increase scale and operating efficiencies have been successful. We're proud of the fact that we've been able to guide our portfolio of assets closer to producing positive cash flow from operations, despite operating in mostly restricted medical markets. And now Vireo is in the enviable position in which a majority of our core markets appear likely to transition to adult used programs in the next 24 months. As many of you know, Arizona recently became the first of our markets to transition to recreational use. And we were thrilled to record Vireo’s adult use sales last month. I'll talk a little bit more about our operations in the state momentarily, but it's important for us to continue pointing out that our core markets of New York, Minnesota, and New Mexico may all pass meaningful cannabis legislative reforms this year.

John Heller: Thank you, Kyle. And thanks to everyone for joining us on today's call. Before I begin my review of the financial highlights, I'd like to remind everyone that this was the first quarter and fiscal year that we've presented our results in accordance with U.S. GAAP. This transition should be a welcome change for the investment community and make it easier to evaluate our performance as it eliminates the confusing presentation of biological asset adjustments under IFRS. It also represents the natural progression of our disclosure practices as we ultimately seek the upper list to a major U.S. exchange sometime in the future. The work related to this transition resulted in one-time professional fees of approximately $500,000 during the fourth quarter, which was in-line with the expectation we discussed on the third quarter call. The key variances between methodologies, primarily relate to the treatment of biological assets, inventory adjustments and sale leaseback transactions. As the operating leases on our retail dispensaries are now included within operating expenses rather than as interest expense under IFRS. The accounting methodology for the valuation of biological assets under IFRS also created some variances in tax amounts and deferred taxes given the treatment of inventory carried forward at fair value under IFRS versus at cost under GAAP. Now, please turn to Slide 6 where I'll begin with a review of highlights from the full-year and fourth quarter. Please keep in mind that all numbers stated refer to U.S. dollar amounts unless otherwise noted. For the full-year, total revenue, including our former Pennsylvania subsidiaries increased 64% to 49.2 million, compared to 2019. Excluding Pennsylvania, revenue was 42.2 million, an increase of 57%, as compared to last year. Fourth quarter GAAP revenue of 12.4 million increased 38% and was 46% to 11.5 million excluding Pennsylvania. On a sequential basis, excluding the former Pennsylvania subsidiaries revenue increased approximately 9% sequentially, compared to the third quarter. Retail revenue, excluding Pennsylvania in the fourth quarter was 9.1 million, an increase of 39.3% and reflected growth in each of our markets.

Operator: And your first question comes from line of Eric Des Lauriers with Craig-Hallum.

Eric Des Lauriers: Great. Thanks for taking my question, guys. Congrats on the strong organic growth and margin expansion and great to see you break into positive EBITDA. So, New York legalization certainly today for most of us on the call. So far rules regarding existing license holders and their ability to co-locate adult use sales, or sell wholesale into the adult use market, not yet clear. I’m wondering if you could share some color on what you're hearing from your New York team regarding retail and wholesale and the adult use market.

Kyle Kingsley: Yeah, good morning, Eric. Hesitant to, you know, kind of conjecture on where things stand there until I actually see the granular proposed language, but we're generally bullish on the outcome for, you know, the state of New York and existing operators, but I hate to put rumors out there. I have not seen the proposed final language or been able to analyze it in detail. So, sorry for being evasive there.

Eric Des Lauriers: No worries. Figured I’d try my best here. Okay. So switching to Arizona and Maryland, great to see the continued organic expansion in those markets, can you give us any color on your early wholesale operations in those states, and then as it relates to Arizona, any color on the early adult use sales?

Kyle Kingsley: Yeah, very encouraged. I mean, obviously, we're kind of step functioning here and doing, you know, doubling down with additional expansion beyond what we just completed in those two markets. So, you hit it on the head, these are very substantial wholesale opportunities. We generally have not been able to keep no flower in stock in the Maryland end of things on the wholesale side. Very excited about our capacity there. We actually have the biomass cloned and are ready to fill that entire facility here in the coming weeks. So, very excited about Maryland. We anticipate that's going to remain a very strong wholesale market here for the foreseeable future. As we mentioned, we also opened our first dispensary there in Frederick. On the Arizona side, just a high level, you know, kind of the 25% to 30% increase in sales on the retail side is that's ballpark of what we've been experiencing here. And there continues to be very strong wholesale demand for our flower there. And as you know, we have a very substantial facility in the form of shade houses. Currently, there's a 9 acre shade house infrastructure built there, and we're doubling down and doing that, again, with some augmented flower processing capacity there. You know, it's a very strong flower wholesale market still in Arizona. And hope you don’t have any more granular questions Eric.

Eric Des Lauriers: That was great color. It sounds like, you know, strong demand for your products in both markets here and obviously, doubling down in Arizona continued expansion in Maryland. So, it's great. Just looking for that sort of early indications on how wholesale is going, so great to hear that that demand is strong. Last for me, as it relates to Minnesota, again, a bit more of a regulatory crystal ball question, but with flower, kind of moving along in the legislature in your home state, just wondering if you have any expectations for potential timing, assuming this would be a 2022 thing, if it – in fact gets over the finish line, but just would love to hear, kind of the latest update from what you might be hearing?

Kyle Kingsley: Yeah, my best guess would be that this would slide into 2022 on the implementation side of things. As you know, we're operating at a fraction of our capacity on the cultivation side in Minnesota. We've really been laser focused on flower for quite some time now. And, you know, genetic diversity, high potency, high quality strains, you know, augmented microbiological standards and testing over time. So, we're really leaning into this. We're hopeful that flower becomes part of the medical program there, and we really anticipate we’ll be ready once we get across the finish line, like you said.

Eric Des Lauriers: Great. Well, it sounds like, you know, lots of lots of exciting things on the legislative front and good to see you guys continuing your profitability increases and continuing expansion here. So, looking forward to what's to come. Thanks, guys.

Kyle Kingsley: Thank you, Eric.

Operator: And your next question comes from the line of Graeme Kreindler with Eight Capital.

Unidentified Analyst: Hi, guys, good morning. This is calling and filling in for Graeme this morning. Just another one on New York, how much capital is the company looking to invest in New York over the next 12 months or so? And given the New York Medical market’s small size and the strong illicit market , what does Vireo think will be the key differentiating factor to being successful on a fully legal environment? Thanks.

Kyle Kingsley: Yeah. Hard to speak to the exact size of investment until we see, kind of the more granular character of the law that comes out. If there are canopy limits, obviously, that's going to potentially change size of investment, number of dispensaries that are allowed are – that's also quite important. So, hard to gas there. Generally speaking, you know, we are looking at some infrastructure investment I anticipate on the production side. And we would like to work with a real estate partner on such an investment. I do anticipate a fairly prolonged implementation timeline. So, the investment is likely, it's just a matter of what kind of scale is allowed under the law that passes.

Unidentified Analyst: Okay, great. Thanks for that color. And just a follow up on Arizona, can you discuss how you're managing supply and the current ramp up of the adult use market and does Vireo expect to be that wholesaler at some point? And if so, when does it expect to grow to be able to support that? Thanks.

Kyle Kingsley: Yeah. We are quite wholesale focused now actually. You know, with these very substantial outdoor grows that leads to a pretty significant amount of inventory. And so, we did make the choice to, you know not be terribly aggressive in quarter four on wholesaling in Arizona. And so we do have a pretty hefty amount of inventory at this time. And you know, really just looking to keep our own retail supply. That's our primary goal. But we are seeing very strong wholesale demand. And we're going to have the supply to really back that up with the sequential expansions, particularly in the flower realm. There is very good demand for the Elephant Head flower, which is, you know, this clean, naturally produced outdoor flower produced the model area there at our Elephant Head farm facility.

Unidentified Analyst: Okay, great. Appreciate that detail. And if I could sneak one more in, just given an increase in recent acquisition multiples out there, is the company looking at any opportunistic non-core divestiture on the horizon? Thanks.

Kyle Kingsley: Yeah, I think we're out of the business of – not a priority to divest ourselves of non-core assets. On the flip side, we're not going to overpay, even within our core markets for acquisitions. So, yeah, we're – we feel very good about our balance sheet, no intent to additional assets at this time.

Unidentified Analyst: Okay, great. Appreciate that. Thanks for taking my questions today and congrats on the quarter and the year.

Kyle Kingsley: Thank you.

Operator: And your next question comes from the line of Matt Bottomley with Canaccord Genuity.

Matt Bottomley: Good morning, everyone. Just wanted to ask a little more on the new and what the dynamics are in the overall uptake there? So, you know, granted there isn't a 2021 outlook provided, can we hear any color on what's to be expected by the four new stores that opened in the back half of the year? Is it linear? Should we expect your Minnesota contribution to double on the back of that? Is there cannibalization of sales between some of these locations, just wondering on what the dynamics are in your home state and how patient nutrition is ?

Kyle Kingsley: Yeah, great question. So, you know, we did have, just globally in Minnesota we, on average, we saw about 150 patients entering the market on a weekly basis, through about April of last year, at which point we had a pretty significant upward inflection to north of 250 patients a week. And so that's been – that's generally been persisting. Since we've opened our additional dispensaries, we haven't really appreciated a significant change in that ongoing strong linear growth in patient numbers. We've seen a combination with the new openings of cannibalization of our own business, but also our sole competitor. We've seen their patients come our way. Really, the location of the dispensaries is really a primary determinant for where patients go. And they generally go to their closest dispensary, independent of who it is. And with dispensaries we've seen, you know a general increase in our market share, as far as new patients coming into the program. So, encourage, it’s a little bit early to tell as you know, kind of all of our dispensaries came online end of last year, but I'm encouraged by the growth. We've been surprised by some and underwhelmed with another one or two. But I think they're all going to kind of normalize. We do have a medical team that focuses on really educating referring providers in the vicinity of our dispensaries. And so, we're laser focused on augmenting there. Just very excited and blown away by the quality of kind of the Green Goods stores, they're really something special, and we anticipate to continue to bite into market share in Minnesota. As far as attrition, too early for us to tell, if that's going to shift at all anticipate attrition is going to continue to be an issue in the state until we see the additional flower, at which point we're going to have this whole big tranche of lower priced products that's really going to be fundamentally transformative to the Minnesota market, which is generally expensive for folks right now. Some estimates are that there's an $800 million illicit flower market in the state of Minnesota, and many of those folks are using cannabis for medical reasons. And so we're excited at the potential flower in Minnesota. We think it's great policy, and we think it'll transform the program here for our patients.

Matt Bottomley: Great, appreciate that commentary. Thanks guys.

Kyle Kingsley: Thanks Matt.

Operator: And your next question comes from line of Paul Piotrowski with M Partners.

Paul Piotrowski: Hey, good morning, guys. Congrats on the positive adjusted EBITDA. I just had a question on the Green Ivy facility, is that being earmarked for New York or are there other potential plans with the capital?

Kyle Kingsley: There's a lot of different paths. You know, some of that capital will be used for sequential expansion in Arizona and Maryland, as we outlined. You can imagine, given the regulatory tailwinds in Minnesota and New York and New Mexico, that there may be additional paths for capital there. One place that I'm interested in kind of expanding our footprint is on the retail side. We do have those opportunities in New Mexico and potentially New York. So, a lot of different paths with capital generally speaking, we're interested in continuing to augment cultivation, production scale, and our best-in-class retail footprint, and we're looking for amazing retail locations. And so that's where a lot of capital will go over time. We're going to be very prudent and measured in where we direct this. You know there's a ton of analysis that goes into each capital deployment. We have nearly infinite places that we can put capital, but the low hanging fruit there is pretty compelling. And that's the core markets that I just held on there.

Paul Piotrowski: Okay. And then just one more on Nevada. So, you guys closed those licenses, you know recently, is there a plan to invest in that state or you guys – or is that sort of lower on the priority list?

Kyle Kingsley: Yeah, that's a little bit lower on the priority list. We've developed a taste for vertical integration. And we just did in – early intermediate term, we think that makes a ton of sense. We do have a 5,000 square foot production facility there in Caliente that's built on 14 acres. We could probably do 10 acres to 12 acres of cultivation on top of that, and it's a great microclimate for extremely affordable, kind of low cost mid-quality bio mass production there. So, it's lower, but it is a very cost effective potential opportunity. Just always a little bit nervous about being an isolated wholesaler without that vertical integration outlet on the retail side.

Paul Piotrowski: Okay. Understood. Yeah, thanks a lot, guys. Congrats again on the quarter.

Kyle Kingsley: Thanks, Paul.

Operator: And there are no further questions at this time. And I'll now turn it back to Kyle.

Kyle Kingsley: Okay. Thanks to everybody for joining us this morning. We appreciate your continued support and look forward to speaking with you all again on our first quarter call in May. Thank you.

Operator: And this concludes today's conference call. Thank you for your participation. You may now disconnect.