Operator: Good afternoon and welcome to Green Thumb's Fourth Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the conclusion of formal remarks. During the question-and-answer session, we ask participants to limit to one question and one follow-up question. As a reminder, a live audio webcast of the call is available on the Investor Relations section of GTI’s website and will be archived for replay. I would like to remind everyone that today’s call is being recorded. I will now turn the call over to Jennifer Dooley, Chief Strategy Officer. Please go ahead.

Jennifer Dooley: Thanks Mike. Good afternoon and welcome to Green Thumb's fourth quarter 2019 earnings call. I'm here today with Founder and CEO, Ben Kovler; and Chief Financial Officer, Anthony Georgiadis. Today's discussion and responses to questions may include forward-looking statements which are subject to various risks and uncertainties that could cause our actual results to differ materially from these statements. These statements are based upon management's current expectations and speak only as of the date of this report. The company cautions readers and listeners that there may be events in the future that the company is not able to accurately predict or control and the information contained in the forward-looking statements is inherently uncertain, in subject to a number of risks that could cause actual results to differ materially from those contained in or implied by the forward-looking statements. The company cannot guarantee any future results, levels of activity, performance, or achievements. More information on these risks and uncertainties is provided in the company's reports filed with the United States Securities and Exchange Commission and Canadian Securities regulators, including the annual report on form 10 K, which will be filed on or before Monday, March 30th, 2020. These reports along with today's earnings press release can be found under the investor section of our website. GTI assumes no obligation to update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this call. Throughout the discussion, GTI will refer to non-GAAP financial measures including EBITDA and adjusted operating EBITDA. A reconciliation of non GAAP financial measures to the most directly comparable GAAP measures is included in our earnings press release and SEC and SEDAR filings. Please note all financial information is provided in U.S. dollars unless otherwise indicated. Thanks, everyone, and now here's Ben.

Ben Kovler: Good afternoon. And thank you for joining us our fourth quarter earnings conference call. Before covering our quarterly and full year 2019 results, I want to take a moment to address what the Green Thumb team is doing across the country as it relates to the coronavirus outbreak. Our first priority has been and will continue to be the health and safety of our team, our customers, and our supply chain. Our response team meets daily to closely monitor this evolving and unprecedented situation. We understand the severity of this world-changing event and remain focused on guiding our team and business through it as regulations change, in some cases, day-to-day. To-date, all of our stores and facilities have remained open as local governments have does have designated cannabis cultivation and retail essential businesses. As such, we continue to adjust to new regulations and new ways of operating to ensure continued access to cannabis products that our customers have come to rely on, in some cases, for serious medical conditions. In doing so, we are following CDC guidelines for increased sanitation, restricted non-essential visitation and travel, and controlled entry and access throughout our facilities to support safe social distancing. Additionally, we are working with our regulatory partners to expand services such as delivery and curbside pickup to ensure customers have continued safe access to products that provide relief, especially in these uncertain times. Despite the macro environment, we remain bullish on the medium and long-term prospects of the sector and our business. Our prudent capital allocation philosophy serves us well, especially in times such as these. We will continue to take care of our team, so they can take care of our customers. Our success squarely rests on the dedication of our fantastic team to deliver the results that we will share today. With that said, I'm pleased to report that 2019 truly demonstrated our consistent execution against our clear strategy to distribute brands at scale. We delivered $216 million in total revenue, beating our internal expectations and for those that remember, exceeding our initial IPO roadshow estimates. We hit our new store opening guidance by opening 20 new stores, more than doubling our retail fleet across the country. We closed our strategic acquisitions on time and triple the size of our team. And most importantly, we guided the business through an inflection in the back half of 2019 as we converted to positive adjusted operating EBITDA, we are now moving towards positive free cash flow in 2020, all while maintaining a strong balance sheet. This sets us up well for the future as we build on our solid foundation for sustainable growth. I am pleased to share that in February, GTI's registration with the SEC as a domestic issuer became effective. As a result, our financial reporting, including our year end financials, now complies with us Generally Accepted Accounting Principles or GAAP. Anthony will provide more color on this later, but we view our transition out of the foreign issuer status and into SEC compliance as an important step in providing investors with increased transparency and comfort. Now, to our results, fourth quarter revenue was $76 million, an increase of 11% quarter-over-quarter, while full year revenue increased 246% from the prior year to $216 million. This marks our fourth consecutive year of tripling our annual revenue. Growth was fueled largely by the expanded production and distribution of our brand portfolio, new store openings and increased foot traffic to our retail stores, especially in Illinois, Pennsylvania, Massachusetts, and Florida. Our brands are now distributed in eight markets, steadily expanding our strategy to distribute brands at scale. Finally, New Jersey retail opened during the quarter and we are proud to now be generating revenue in all 12 of our markets. From the start, we have rejected the concept of growth for growth's sake. Instead, we are highly focused on driving profitability and are pleased to report that we are making considerable progress on the bottom-line. Adjusted operating EBITDA for the quarter was over $14 million or about 19% of revenue. We are beginning to see scaling our business reflected in the continuous improvement in our operating margins. Looking back on 2019, we had growth across our entire business as we continue to execute our inter-open scale strategy. We entered three new markets, California, Colorado, and Connecticut, with the closings of several acquisitions. In addition, we want a cultivation and processing license in Ohio and three retail licenses in California. We opened 20 stores nationwide and ended the year with 39 locations delivering on our target guidance of 35 to 40 stores by year end. We scaled our business in many ways. We expanded our brand for production and distribution capabilities in Nevada by adding two cultivation facilities, three operating retail stores in Las Vegas, and we won additional retail licenses. We put significant capital to work to expand capacity and improve production standardization and automation across key markets. On the brand side, we broadened our portfolio to include the much loved Beboe brand, which marked our entry into the luxury CBD and beauty market, and Incredibles, one of the most established and trusted chocolate and gummy edible brands. In summary, we had a very busy year leading to solid performance. The fourth quarter was especially active across our business segments and really sets us up for 2020. On the consumer product side, we are executing our strategy to distribute brands at scale. The depth and breadth of our brand distribution will continue to expand into the year. Investments made during the fourth quarter of 2019 in new markets like New Jersey and Ohio are expected to begin operating later in 2020. This will expand the production and distribution of our flagship Rhythm brand into eight markets and bring total GTI brand portfolio distribution to 10 states across the country. We continue to put money to work towards the core production, packaging, and brand assets to ensure our brands have a competitive advantage into the future. We had our first harvest in Maryland in December, which allowed us to launch Rhythm flower there in the first quarter of this year. And with the financing from IIP, our major CapEx projects to drive production scale in Illinois and Pennsylvania began to bear fruit in the fourth quarter. Those will continue to be a major focus ahead. Our retail business delivered strong results for the quarter. Same-store sales again exceeded 50% for the quarter off a comp base of 14 stores opened for at least 12 months. Sequential quarter-over-quarter sales grew approximately 15% on a base of 19 stores. While we were intensely focused in the fourth quarter to position our retail business to win on day one of adult use in Illinois, we were also very active opening locations across the country. I'm very proud of our retail team that had an amazing accomplishment at the end of the fourth quarter. We opened six stores in five weeks across five states, including Pennsylvania, Florida, New Jersey, Connecticut, and Ohio. This is an example of real execution and we have an A team getting it done. During 2019, we open 20 stores, ending the year with 39 retail locations across the nation right on target. The adult use program in Illinois that kicked off January 1st has been nothing short of action packed. As the first company to open a medical dispensary in Illinois five years ago, this was obviously something we were very focused on and overall, it's been a success. The state has seen over $75 million in sales in the first two months. A viable credible, robust multibillion dollar industry is unfolding right in front of our eyes. As we speak here today, demand is still outpacing supply. It was all hands on deck for all operators, including the team at Green Thumb. Heading into January 1st, we reinforced our supply chain and streamlined logistics across our operations as we work to meet demand. We successfully had four open stores for adult use sales on day one and today we have six. All of this has allowed us to maintain consistent and continuous service for our customers and I am so proud of this team. The range of consumers who walk into our stores every day, different ages, different socioeconomic backgrounds, and everything in between, continues to give me great conviction that cannabis is being widely accepted as a legitimate means to improve the well-being of Americans. We believe the strong rollout of adult new sales in our home state demonstrates the tremendous opportunity ahead, as recreational programs emerge throughout the country. States such as Pennsylvania, New Jersey, New York, Connecticut, Ohio, and Maryland can look to Illinois as a model for recreational programs. These states have the opportunity for fulfilling a genuine need of their citizens for job creation and for tax revenue. And for states that may be looking for economic stimulus, they might consider cannabis more seriously this year. Thanks to our strategic plan, strategic plan, we have strong foothold in these markets and are well-positioned to capture the opportunities ahead. For all these reasons and more, we remain bullish on the industry and on our business. I want to point out that our lead program in Illinois can be a model for social equity in other states. Today, we have counseled over 200 social equity applicants since the program launched in August 2019. Licenses are scheduled to be ordered in May and at that point, our program will pivot to become a business incubator that will help licensed winners set up for success. It will be fun to share lessons learned and best practices with a new generation of business entrepreneurs in this incredible industry. Looking ahead to 2020, disciplined capital allocation and profitable growth will continue to guide our operating playbook in the new year through these unprecedented times. We are adjusting to an even more rapidly changing environment. The truth is it is not unlike how we've always operated constantly iterating and improving to best serve our customers. Lately, this has meant bringing curbside pickup to our stores in Illinois and launching expanded delivery infrastructure in Nevada as the states move to delivery only during this time. In fact, on Tuesday this week, Massachusetts eliminated adult use and is now limited sales to medical-only at least through April 7th. We remain very close to all these situations and adjust as necessary while at the same time looking ahead. We expect to make further progress on the scale chapter of our strategy to reinforce our operating foundations in our existing markets in both consumer products and retail. Given the environment, we are cautiously optimistic, but know that the future still has great uncertainty. In light of the environment at this time, we will not be providing full year 2020 or new store opening guidance. However, we have some visibility into Q1 and could say that we expect to see between 20 and 25% topline growth in the first quarter. Our mission to promote well-being through the power of cannabis and our strategy to distribute brands at scale are deeply aligned. We will keep building on the foundation laid in 2019 to continue to win in 2020. However, that looks as the world continues to evolve. With that, I'll turn the call over to Anthony to review our financial results for the fourth quarter and the year.

Anthony Georgiadis: Thanks Ben and hello everyone. I echo Ben's comments on the pandemic. We couldn’t be more proud of our dedicated team and how they've handled themselves in the current environment. We've all been through hell these past few weeks and our team keeps trucking on. Before touching our financials, let's talk about our transition to U.S. GAAP. This past summer, we learned the majority of our voting securities were held by U.S. residents. As a result, we no longer qualify for foreign private issuer status, requiring us to register with the SEC as a U.S. domestic issuer. I'm happy to report that just last month, our registration as a domestic issuer became effective. Starting with Q4 and full year 2019, our financials now conform to U.S. GAAP standards. While learning IFRS was a fun exercise, we love them to change to GAAP as it sets up well for our business and our shareholders. As part of this transition, certain adjustments were made that rolled through our Q4 and 2019 financials, some of which we'll touch on later. Q4 revenue approximated $76 million, representing an 11% increase over Q3. For the year, we generated $216 million in revenue, more than triple our 2018 total of $63 million. 3x annual topline growth managed to keep things interesting here at Green Thumb. While our M&A activity supplemented some of our growth, the majority of it was driven the old fashioned way. We made more and we sold more. By year end we had successfully generated revenue from all 12 of our markets. Our net retail wholesale revenue split during the quarter ended at 69 x 31, respectively. This is up from 64 x 36 in Q3, and was primarily impacted by short-term capacity constraints in wholesale and strong retail revenue growth via same-store sales and new store openings. When we calculate this ratio, we net out intercompany revenue against our consumer products business, which understates its true size. In Q4, intercompany revenue approximated 19% of total revenue. Our consumer products revenue grew 10% over Q3, largely driven by strong performance in Illinois and Pennsylvania. Throughout Q4, our wholesale CapEx projects in Illinois, Massachusetts, Pennsylvania, New Jersey, and Ohio progressed nicely. As of today, Phase 1 of our Illinois expansion and our Massachusetts expansion are now completed, and our Illinois Phase 2, New Jersey, Pennsylvania, and Ohio projects remain on track. On the retail side, Q4 revenue increased 20% over Q3, largely driven by same-store sales exceeding 50% as well as the six new stores we opened in Florida, New Jersey, Ohio, Pennsylvania, and Connecticut. We ended the year with 39, locations consistent with our stated guidance of having 35 to 40 open stores by year end. Gross profit for the quarter was $40.6 million or 54% of revenue. Well, direct comparisons to previous periods are difficult due the IFRS to GAAP transition, we estimate that our fourth quarter gross margin under IFRS would have been 150 basis points greater. The biggest impact to gross profit is the inclusion of lease expense and cost of goods sold. We continue to be encouraged by the progress we've made on this line item of our P&L in our ability to recognize meaningful operating leverage on the consumer product side of our business as we scale. SG&A expense for the quarter was $45.6 million or 60% of revenue. There's a lot of noise in this number as D&A and non-cash stock based comp approximated $17.7 million, with 39% of reported SG&A. Both of these items have significant Q4 true-ups associated with our IFRS to GAAP conversion. On a normalized basis, if you strip out these two non-cash expenses, our SG&A grew by approximately $3 million quarter-over-quarter or 10%. As we look ahead to 2020, we believe that we can continue to experience significant operating leverage via revenue growing at a faster clip than our cash base SG&A. In addition to SG&A, the company also incurred $4.1 million in total other expenses for the quarter and $22.5 million for the year. As a reminder, these expenses include the mark-to-market of our strategic investment portfolio, as well as interest and other expenses associated with the debt raise completed last May. Our investment portfolio, which totaled $24 million at year continues to provide synergistic value to our core business Turning to profitability, our adjusted operating EBITDA for the quarter and year was $14.4 million and $28.3 million respectively. Building a sustainable cash flow positive enterprise was a key goal of ours for 2019. The prudent expense management we exhibited, along with a cost conscious culture we've built over the last several years, has put the company in a unique position within the industry. On the liquidity front, we ended the year with approximately $47 million in cash and $91 million in long-term debt. Both during the subsequent to quarter-end, we completed three sale leaseback transactions with IIP, allowing us to leverage our fixed asset base to double down on key wholesale market expansions in Pennsylvania and Illinois. As a capital markets severely tightened in mid-2019, we revisited our capital allocation strategy and develop relationships with non-dilutive capital partners such as IIP. Looking ahead to 2020, we continue to take a close look at all capital projects knowing that all schedule projects are fully funded. You take great comfort in knowing that our business is on track to self-fund its future growth. In summary, we feel very good about our Q4 and full year results. We went into the year with a stated goal of building out our infrastructure, moving all markets along our enter open scale operational curve. We achieved that goal as we are now operational and have generated revenue in all 12 of our licensed markets. In addition, we are well-positioned to the number of key state markets that should drive meaningful revenue and cash flow for the business over the coming year. Looking ahead, I anticipate us continuing to execute against our playbook, recognizing that focus drives excellence, all the while navigating the unknown environment with a focus on safety, compliance and prudent capital behavior. Now, more than ever, the star of the team is the team. With that, I'll turn the call back over to Ben.

Ben Kovler: Thanks Anthony. I want to thank our team for all their hard work for closing out 2019 on a strong note and kicking off 2020 with the successful launch of the Illinois adult use market, new store openings, and more sale and leaseback financings. While we were actively executing on our strategy, we remain vigilant on the worldwide pandemic that has profoundly impacted all of us. We understand there's a lot of uncertainty ahead. But we believe our continued store accessibility, strong business model and balance sheet will be the source of strength upon which our shareholders and customers can rely. Our ability to show kindness and goodwill to each other and our communities has never been more important. Here at GTI, as a team and as individuals, we will uphold our commitment to promote health and wellness in our communities and to support one another. We believe our products and services are helping people in this difficult situation. We remain hopeful that recovery is on the horizon and we will be stronger on the other side. And to all the doctors, nurses, scientists, health organizations, and first responders, working diligently to treat patients and find cures, thank you. And finally, to our Green Thumb team on the frontlines, thank you for all you do. Stay healthy and safe everyone. And with that, I'll turn the call over to the operator for questions.

Operator: [Operator Instructions] Your first question comes from Robert Fagan from Stifel GMP.

Robert Fagan: Hey guys. Thanks for taking my questions and congrats on a great quarter here.

Ben Kovler: Thanks Robert.

Robert Fagan: Yes. So, I would want to just see if you guys comment a bit on the recent trends in the Illinois rec market. Are we seeing any acceleration or deceleration in March versus a trend for the first two months? And in terms of the supply situation, knowing that it's constrained currently, how long do you think that you expect that to last?

Ben Kovler: Sure. So, with adult youth launch in January and a strong January where the market really went up two and a half times from a $25 million December to roughly $65 million January and February. I think we've seen stronger demand in March, I think you'll see continued growth. Let's think about what's happened a little bit in January, there's been a lot of fear, there's been a lot of uncertainty. Are the stores going to be open or not? And so we've seen the surge. We've seen strong demand. To the second part of your question on when will supply meet demand? We go back to the same math we said before, we think the market in medical and tight inventory market was a $25 million mark is on a monthly basis of total retail sales. We think that goes up at least 10 times to be a $2 billion to $3 billion market just from Illinois, and that's before out of state which receives a significant percentage. So, we see that ramping, like I said, two and a half, that's not 10. So, we got to see that continue to march and I think supply will come online in lumpy forms, but slow and steady throughout. And I think that'll start to show up as menus, get increased depth and more product offerings and things like that.

Operator: Your next question comes from Eric Des Lauriers from Craig Hallum Capital.

Eric Des Lauriers: All right, great. Thanks for taking my question, guys and I'll offer my congrats to you as well on a great quarter. I was wondering if I could kind of touch on your wholesale strategy, especially in robust markets like Illinois and Pennsylvania, can you talk some about the competitive dynamics you're seeing. We've seen some media articles out discussing the increasing use of slot seeds in the industry, as well as essentially shelf swapping with MSO peers. Can you talk about what you guys are seeing out there and how that might be evolving?

Ben Kovler: Sure, happy to. In supply constricted markets, we're seeing a lot of hand to mouth. We're products especially on the flower side, given the yields and things be tight on the shelves. We're not seeing any arrangements among multistate operators to your question there. And frankly, we have not seen a lot of irrational pricing where with tight demand, you think pricing could skyrocket. We've seen pricing firmness on the margins. Some are taking price, but we see stability on price as we manage through this.

Eric Des Lauriers: Okay, great. And then just one follow-up from me. I know you guys don't like to guide and I respect the fact that you guys are withdrawing the retail store account guidance this year, but I just wanted to touch on free cash flow and one of your prepared comments, Ben, obviously, with your relationship with IIP that significantly helps to lower CapEx on your end, wondering if you guys feel comfortable stating when you might get the free cash flow positive and if that could possibly be in 2020. And that's it for me. Thanks guys.

Anthony Georgiadis: Sure, this is Anthony here. Obviously, we've got a great relationship with IIP. They effectively helped us finance all wholesale projects that we were currently undergoing during 2020. As it relates to the cash flow positive nature of the business, look, we've seen a lot of momentum on this starting in the middle of last year. And you carry that momentum into 2020. So, I think as we look ahead, we anticipate the business to continue to perform extremely well. And obviously, one of the things that we're doing in our suite is making sure that we're closely watching all our backs to ensure that we did solid operating leverage so that the business is in a unique spot relative to its ability to generate cash flow. Now, obviously, the events that have taken place over the last few weeks, create a lot of unknowns for us. That's something we're navigating very closely. But, you know, we had a lot of we had a lot of solid momentum heading into this year and that's continued since January.

Operator: Your next question comes from Vivien Azer from Cowen.

Vivien Azer: Hi, thank you. And congrats again on a good quarter -- I’ll reiterate that for sure. Question on gross margin, it seems like over the course of 2019, ex-biological assets, you guys are now comfortably in a cadence where you can put a five handle on that impressive gross margin expansion in the quarter. So Anthony, anything to call out there in terms of mistakes in terms of gross margin? And then as a follow-up to that, I know you guys are not in position to give guidance nor should you. But what would it take for your gross margin to fall sub 50 given the run rate right you're on? Thanks.

Anthony Georgiadis: It’s a great question Vivien. And yes, we've seen nice momentum in the gross margin line. Because just reminder, retail gross margin is pretty consistent. So, where the business gets strong operating leverage is really on the on the consumer products side of the business. We have continued to effectively grow into the facilities that we built, and now we're currently expanding them. And so looking ahead to 2020, assuming nothing changes, we anticipate there could be additional upside within that gross margin line depending on the wholesale revenue split, as well as how quickly you can grow the consumer product side of our business. But you're absolutely right, we have seen it metameric. Our goal is obviously to not look back and let that thing below 50 points. And in the event that it would, there's be probably a few things that would really have to happen. One, we probably have to see a material change in our retail gross margins. And then on top of that, perhaps with some of the large expansions that we're doing, where we're effectively ramping up the fixed costs pretty dramatically, particularly in Pennsylvania and Illinois, we'd have to see a relative drop in revenue to not cover that fixed cost expansion. So as of now we're not seeing it but again, you know, the future is a bit unknown, given the recent events and something we're watching very closely.

Vivien Azer: Perfect. Thank you.

Ben Kovler: Thanks Vivien.

Operator: Your next question comes from Pablo Zuanic from Cantor Fitzgerald.

Pablo Zuanic: Thank you and good afternoon everyone. Just to remind us about the cadence and timing of your expansion and magnitude in Illinois and Pennsylvania interest capacity, when does it gain and the magnitude in those two states? Thanks.

Anthony Georgiadis: Sure. This is Anthony here. So, let's talk about Pennsylvania. We're in the middle of a doubling effectively of our capacity in that state. My guess before this coronavirus hit, we are on track for that expansion to be completed in the early part of Q3. We'll have to see how corona plays a role in that timing as it relates to Illinois. We've already completed Phase 1 of our Illinois Extension. We have effectively three more scheduled phases that that really kind of start rolling off in early Q3. So, we expect to see the increasing capacity, run through our P&L at some point in the third quarter and then continue to kind of ramp in there. The other phases are finished.

Pablo Zuanic: Thank you. And then just a quick follow-up. I mean, obviously, you're writing for 20%, 25% sequential growth in the first quarter 11% in the fourth, that acceleration, as you said, Illinois doing five times bigger market. But any other states that are aiding that acceleration or it is mostly just about Illinois, improving the sequential growth in the first quarter? Thanks.

Anthony Georgiadis: Sure. We're now generating revenue in 12 of our markets, but there are a number of other states that are performing quite nicely. We're obviously very bullish on New Jersey, Nevada, we think there is a lot of upside, and then, we have the other markets including Ohio, Connecticut, Maryland, Florida, that that continue to see nice growth has been made some markets. And so while Illinois and Pennsylvania where we've kind of made the capital -- the big capital bets, we continue to see nice growth across really all the markets that we operate in.

Pablo Zuanic: Okay. Thank you.

Operator: And your next question comes from Michael Lavery from Piper Sandler.

Michael Lavery: Thank you. Good afternoon. Can you touch on some of your capital allocation priorities, and if they've changed at all, and maybe specifically thinking, withdrawing or not having any guidance makes sense, but is that because you've already changed plans or just recognizing on certainty around that, and then just as a follow up also, on the one cue color, can you give a little sense of how that may look between wholesale and retail? Is it would be the right to think retail will continue to have a much better momentum?

Ben Kovler: Thanks Michael. This is Ben. I would say to the to the second part of your question on the first quarter, we see momentum on both sides of the business. We can obviously turn the dial as the steady progression of increased wholesale comes online.

Michael Lavery: Okay, thanks. And on the capital allocation so yeah, so the capital allocation priorities and how to explain. So, our capital allocation priorities have we've been pretty clear on the wholesale production side remain Illinois and Pennsylvania, heavily financed through the sale leaseback, I would say below those top two priorities as New Jersey and Massachusetts for us although there continue to be opportunities. As Anthony mentioned his prepared remarks, it's nice to have the wholesale fully funded on the production side we're capacity because we spent a lot of last year building the foundation opening 41 store. So, this year, the stores that are in the pipeline that are already constructed, that are built, are already funded, or we have the rest of the capital on the balance sheet, incremental stores and come from operating cash. To the point a little while ago about when there's the free cash flow kick in, you start to see the inflection points work their way down the income statement from revenue to EBITDA to adjusted operating EBITDA, to net income to free cash flow. And so we're in the driver seat to figure out what of that we want to spend or not. So, we have the plan, obviously pretty firm for the near-term. And can adjust for the back half of the year based on what we see. Clearly every day is an adjustment here. So, we're watching this thing day-today seeing what's happening in the markets, being very careful. But we believe in the size of the markets to put the big CapEx in to the wholesale production.

Michael Lavery: That's very helpful. Thank you.

Ben Kovler: Sure.

Operator: Your next question comes from Matt Bottomley from Canaccord Genuity.

Matt Bottomley: Good evening, thanks for taking the questions and I hope everyone's doing well. First question I have is just on how you sort of -- your outlook, maybe for 2020 with respect to what is a very turbulent macro environment here outside of even the cannabis sector, and how you sort of look at a lot of operators in March of this year are really showing all-time highs on certainly week over week basis with respect to a surge in demand as a lot of these cannabis platform cannabis stores remain essential services, but as distribution potentially becomes, , more difficult, potentially a lot of states are going to go to delivery only. I'm just curious what your viewpoint is on where this market might go in the next couple of months here as hard as the questions that might be and what some of the contingencies you guys have in order to continue delivery to a large patients on the medical side?

Ben Kovler: Sure, Matt, thank you. So, we're planning 2020, we had a pretty detailed plan coming in. So, we have the ability to be flexible on some of it. But like I said, it's day-to-day as everybody adjust to a very changing environment. We're all dealing with something we've never dealt with before and so we're analyzing it we're thinking about how to not make a major mistake, we're thinking survival, we're watching the cash. And we're in this for the long-term. So, we can throttle with that sort of in mind. I would say we remain on plan, though, we have some marginal capital expense that we can adjust, like I mentioned, some of the hiring plans, some of the other things in the business that are within our control, to keep things okay. And it's a nice position to be in to have the business funded and have cash on the balance sheet and have a business performing and if things change, we can adjust. I would say for March, we've seen to strength, we've seen the adjustments. We're obviously adding to the fleet of delivery. We're building delivery infrastructure. It's been an IT priority for a while it elevates to the top of the list. As we build that out, it's been, I think, 96 hours or something since it's been off, and we have plenty of cars being approved every day as the team converts. And we adjust and so we get nimble and we think about which workforce is where and how can we optimize. But what doesn't change is the consumers need or demand on this product. And again, particularly in these times of uncertainty, we've seen increased demand. So, we see our part in fulfilling that demand. I think over time to your question of how is it going to look, you tell me apocalypse or not and where's the world going and I can tell you on cannabis, but it's going to be in demand and there's wallet share there. But if nobody ever has a job and nobody ever leaves their house, things are going to change. We don't think it's that way. We're optimistic by nature and we're planning to weather the storm come out on the other side of it, particularly geography by geography as we adjust.

Matt Bottomley: Appreciate that. Very helpful. And then maybe what my second question is just more on sort of management's philosophy here. And in these very turbulent times, you know, you guys have probably been the best example of a company that's been conservative and prudent in their capital allocation. So, given where valuations are, and my understanding is in the private sector, they've come down just as much. Is this an opportunistic time for a company like GTI? Or is it just so uncertain right now where the focus is on just sort of buckling up and executing in the state and markets you already are, versus looking for, you know, where potentially there could be some creative opportunities given where things are lying right now.

Anthony Georgiadis: We're analyzing that every day. We're looking where's the best use of shareholder capital to generate the best returns. And I can tell you, it's turns especially with our portfolio is and where the world is that the best use of the incremental dollar for us within the business. We're analyzing lots of things, very hesitant effectively in the M&A environment to inherit somebody else's problem. We've spent many years putting this business into a position to be free cash flow positive, to be in a position to play offense and/or weather the storm. And we're seeing that right now. So, we love allocating capital into our business. We're looking at everything that's going out there -- on out there in the space, particularly California, that just remains very dynamic all the time. But you don't have to swing at every pitch. And so we like our position right now. I see the incremental dollars, especially our cash being best use in our business, as it creates the future business, you know, t plus one at a very low multiple of EBITDA and so all day long, we want to invest capital like that.

Matt Bottomley: Thanks guys.

Matt Bottomley: Thank you.

Operator: Your next question comes from Aaron Grey from Alliance Global Partners.

Aaron Grey: Hi thanks. Congrats on the quarter. Just one question for me most have been answered. Just want to circle back to the wholesale and retail mix and how we look at that kind of going forward even past the first quarter. So, that certainly sounds like demand within your own stores, certainly able to kind of eat up a lot of the supply that you have. But as we move forward, you have these expansion in markets like Pennsylvania, Illinois. At what point do you start to see that wholesale shift from mix are to come back up because you're also going to be opening up more stores both in Pennsylvania, also Illinois and other markets. So, what point does that expansion kind of outpaced the retail store openings into that mix start to ship back and hold? Thank you.

Ben Kovler: Yes, it's a good question. So, you know, we kind of got hit by a perfect storm in the fourth quarter on this front. Our plan for 2020. As we penciled it out we show effectively a split that look closer to 6040 overall, retail wholesale. And that's Matt. I think we'll certainly see kind of that shift start in the first quarter. And it really all comes down to our wholesale capacity. Because that's, that's a big stair step in terms of its revenue growth. And so with the, with the phase one expansion that took place, as well as some of the other wholesale work that we did, that we should start to see that, that kind of break down that ratio evolve closer to the 60/40 that I just mentioned. Now, the one thing that's unique is that with our stores, we've got to keep the shelves filled. So, if third-parties out, there aren't fulfilling demand for us, and we have to supply that demand ourselves. And so that's an area where effectively, we don't have as much control because we obviously have to keep products on the shelf at our stores. And so that's one thing that could that could impact that that ratio on a go forward basis. But with our -- with the wholesale capacity expansions that we have in place, as well as you know, what we're seeing from our seat. We think the wholesale revenue split, like I said, will normalize closer to the to the 60/40 that we kind of projected for the year.

Aaron Grey: Okay, great. Thanks.

Operator: Your next question comes from Graeme Kreindler from Eight Capital.

Graeme Kreindler: Hi, good afternoon. Thanks for taking my question. I wanted to ask specifically about the Nevada market and the operations there as of late given that's a tourist heavy market, and, the markets move to delivery only and, you know, a shutdown of a lot of the attractions and events there. I was wondering what the what the trends look like sort of into the recent weeks here on that market, as well as the expectations or what the historical customer mix was between visitors to the state versus people local. Thank you.

Ben Kovler: Sure. Great question. I'll start by answering the end of your question in terms of -- in terms of breakdown. Tourists versus local, our business was heavily, heavily focused towards local business, just look at our stores, and the breakdown, which is something obviously, we studied pretty dramatically, the five open shores that we have in this state, I'll tell you that no one really knows what's going to happen within that market over the next four to six weeks, as you know, effectively, an economy that that's, that's based on tourism, as those dollars effectively dry up, they have to see and watch it closely. And right now, you know, with the unique dynamic of delivery where you have certainly not enough cars delivering product on the market, it's hard to get real visibility into the size of that market and how that's going to shake out. But our business historically has been overwhelmingly local and so we were closely monitoring and watching this to see how overall sales would be impacted.

Graeme Kreindler: Okay. Thank you for that color. And then as a follow-up question, just without having the full financials in front. Just wanted to get in more of an appreciation for what the actual cash spend on CapEx is going to look like. I know there's a lot of uncertainty in the environment, but maybe we could talk about sort of capital plans, is that level supposed to going to look pretty sustained relative to how it was in the past couple quarters or do the sale leaseback transactions really alleviate a lot of the cash spend in the beginning of the year, or does that kick in sort of later in the year? Thanks.

Anthony Georgiadis: Sure. On the capital plan, obviously, with the dollars that we've taken down from IoT, those projects are going on, as it relates to the to the retail spend, as well as some of the other kind of maintenance CapEx that we have within that business. That's something we're closely monitoring and looking at, particularly as these next four to six weeks kind of unfolded to see, to really kind of shape that discussion internally as far as what dollars we're going to spend and when and how. I'll tell you that heading into this, we had this penciled out pretty, pretty closely. And so as things started to unfold with corona, we certainly sharpen the pencil, but it's something you would enjoy this year with a maniacal focus on cash and making sure that we didn't have to tap the capital markets to execute our 2020 plan. And so the impact that we would have is really on the business and then how much of that impact is going to have on the cash flow generation of the business that we had planned to use on CapEx that will be self-funded? So, that's really where we would actually see the impact and something is again, -- in the coming weeks, we'll have more visibility on.

Graeme Kreindler: Understood. Thank you very much for the color.

Operator: Your next question comes from Andrew Semple from Echelon Wealth Partners.

Andrew Semple: Hi guys, congrats on another great quarter.

Ben Kovler: Thanks Andrew.

Andrew Semple: Yes, first one for me. We've heard a lot of commentary in the marketplace about the supply and demand side and how those have been impacted by the coronavirus. Just want to pick your brain a little bit on the regulatory side of the equation, what that looks like for the balance of 2020? So, you've seen potential impact on security and regulatory approval, open new stores to get products to market. Any stage in particular that you think the timelines have been pushed out? I'm particularly thinking of Nevada, Massachusetts adult use dispensaries but additional color would be appreciated.

Ben Kovler: Sure. So, this has Ben. I think if we step back a minute and you look at cannabis, we've quickly gone from illegal to essential and in the time of maximum panic and maximum uncertainty that we've never seen, cannabis has been deemed across the country as an essential service, both on the medical side and mostly, on the adult use side across the country. So, I think the biggest thing on the regulatory side is in the very active conversation as especially as we think about some of these markets, say all the markets east of the Mississippi that are effectively tightly regulated, limited supply, limited operators that have active conversations with regulators, people worried about safety, compliance, right? Nobody's trying to take advantage of the system, everybody trying to get patients to feel better, but do it in a respectful, honest way. So, it's been amazing to watch whether it's Connecticut, or Ohio, or Illinois, or Maryland, or Florida, as everybody adjusts and issues guidance, like we talked about from curbside to delivery and things like that. We've seen Massachusetts eliminate adult use such primarily these from what we hear from inside and from outside about preventing interstate travel. So, people come in and say from New York, and Massachusetts, so we know the out of state bid there is quite strong. So, I think that's a prudent decision, especially in this environment, and as we've seen Nevada ramp up the delivery business, we see short-term pickup, but again, like take what Anthony said, the net demand is no different from the consumer, especially with the local demand questions how much money in people's pockets or which wallet share gets cut first, remains to be seen. We have confidence in cannabis in our wallet share. So, I think it remains fluid around the country and what's going on. But we're very active in these conversations, and are proud to continue to serve the customers.

Andrew Semple: Great, thanks for that. Just one follow-up here. I know it's extremely early stages, but you are investing a lot in developing this delivery infrastructure and curbside pickup capabilities. Have you received any indication from any of the regulators you deal with as to whether these practices would be permitted to continue, once they stay at home, home orders are ultimately?

Anthony Georgiadis: Well, to be really candid, it's been hard enough talking about what we want to do now versus what they think they might do ahead. I think regulators are operating with the safety first, I want to make sure we don't make a major error. So, I think common sense would say if the program goes with delivery and it goes smoothly, and there's no major complaints, not a lot of noise and no problems, they might be inclined to keep it. That said, regulators, state regulators, municipalities don't often operate with common sense. So, we remain vigilant, but TBD. But obviously the world is adjusting and so technology is a major partner to the consumer and how they access the product. And whether that's delivery, curbside, drive-thru, you name it, we see that continuing to evolve

Andrew Semple: Pretty good commentary. Thank you.

Anthony Georgiadis: Sure.

Operator: Your next question comes from Scott Fortune from Roth Capital Partners.

Scott Fortune: Thank you for taking up here and congrats on a good quarter. Everything asked a couple questions. First is fear in staff employees situation, phishing states that stay at home, how that's coming about and the our state regulators allowing you to hire pretty quickly from that standpoint or is that a risk here?

Anthony Georgiadis: So, clearly the health and safety of the team remains the top priority. So, in a state like Illinois, where their stay at home essential employees, we've armed our team with, whether it's badges or tags for cars, or proper communication channels for essential employees to get to work. And as we rotate staff, whether that split shifts, things like that. I would say from a priority standpoint, with regulators, the first step was essential services. The second step is going to be like you mentioned accelerated badging. Often the badging process and time to have somebody hired in the space takes a painfully long time. I think people are potentially going to use some common sense we've seen different approaches in different states in order to hire. And especially if you think of the pool of talent, from industries like hospitality, or restaurant food service, there's a lot to able bodies who want to be employed. And the biggest relief we can bring to our team on the frontlines is more troops effectively. So, we continue to work that channel and continue to remain open and subject to the right health and safety guidelines.

Scott Fortune: Thanks. And then real quick, can you provide any color -- there's been a lot of demand pent-up coming on Board ahead of these regulations, any color on products moving flower vape versus more edibles from that standpoint?

Ben Kovler: I mean, to put it crudely, I would say everything is moving. I think given where the demand has gone, it's too hard to see the difference within the basket. Especially if you think of respiratory risk, given COVID, you might say, there'll be less of that. Just hard to tell given how strong the demand is, whereas with vape last year, we did see, share go down in vape.

Scott Fortune: Okay. Thanks. That's it for me.

Ben Kovler: Sure.

Operator: Your next question comes from Glenn Mattson from Ladenburg Thalmann.

Glenn Mattson: Hi, thanks for taking the question. Good quarter as well. Most things have been asked obviously and I don't mean to beat this over the head, but just on Illinois and the -- as it relates to and how it compares to Massachusetts. So, obviously, as you mentioned, Ben at the Massachusetts ban was partly related to or maybe wholly related to Canada Tourism. Is that kind of something that the powers that be in Illinois are thinking about? Can you maybe just kind of help us think about the pros and cons what they're weighing as far as whether or not to keep adult rec open or to shut it down temporarily, just so we can kind of think about what to look for as these developments unfold? Thanks.

Ben Kovler: Sure, I think they're using a common sense of an approach as possible. There's enough stores open in the states that are able to serve the market currently. And we see that continuing when there's not a New York City nearby here, but I think everybody's watching it. We've seen the medical market go to curbside, which has alleviated some of that crowd. We've seen hours, elderly or what we call young at heart, special designated times and other kinds of accommodations.

Glenn Mattson: Okay, great. That's it for me. Thanks.

Ben Kovler: Sure.

Operator: Your next question comes from Alan Brochstein from New Cannabis Ventures.

Alan Brochstein: Hey, first of all, how refreshing to hear actually meet consensus. Great execution last year. Congratulations.

Ben Kovler: Thanks Alan.

Alan Brochstein: Yeah, my question is really a philosophical one. We're not trying to pick any guys you and your other large survivors have done a fantastic job of accessing debt markets during the first I believe, as well as near-term CapEx with sale leaseback, that's all great, but [Indiscernible] in the capital markets person you understand -- all you have balance sheets now that are a little riskier. And I'm just wondering how you go about thinking about fixing your balance sheets over the long-term, might be divested of certain markets if the capital markets remain challenging or how you think about equity?

Ben Kovler: This is Ben, thanks Alan. I would say that in general, the way we're thinking about the capital markets is if they closed and went out of business, we'd be fine to continue to operate the business for the foreseeable future. The business should produce enough cash that we can throttle what that growth CapEx looks like. And if we turn off the growth CapEx and didn't open more, the business would produce free cash. So, you can certainly build equity with retained earnings over time. It's not as fast as other ways, but we're very comfortable with that. So, we view ourselves in a strong position. We like where the business is with enough -- with really the production capex funded and a demand curve that we're willing to kind of double down on. Short-term blip or not, we believe these markets are going to be multiples the size as they are now as we put these dollars in they're going to generate multiples of themselves shortly and then over time. So, I think that's how we look at that. You want to comment?

Anthony Georgiadis: Yes, the -- hey Alan, the only thing I would add is that you're probably looking at kind of the liability side and people found sheets and then effectively how lever they are. When we went out to market on the on the debt raise, we didn't take down the full amount that we could have because we wanted to get a better sense for how the business performed. And so we started with call it a little over $100 million and here we are in the fourth quarter, we've got adjusted operating of plus or minus $14 million , just under 16 million effectively run rate. And now we're in March, and obviously, we've got two months in the early part of the year that that we least have visibility to. So, we're quite confident with the total debt that we have on our balance sheet and our ability to service it all of our covenants and then some. And I would just say that we've continued to take a measured approach to the liability side of the balance sheet, we didn't take it lightly when we added debt to our balance sheet back in 2019. And we don't take it lightly when we're making big capital decisions within the business and so we're okay slowing down the business if we need to, if it's the prudent thing to do for the shareholders. I think we've proven that and I think we'll continue to prove that.

Alan Brochstein: Okay, great. My follow-up question is just regarding -- and I noticed it's extremely difficult environments are forecast, both on the retail side and other factors. But just curious if this is going to be a prolonged environment where we're struggling with shutdowns and things like that in states. But I'm just wondering on the production side, whether it's a GTI out in the industry where there's a lot more capital shortages, and people may not be able to keep the doors open. Just wondering where you think you guys are in terms of being able to meet your own demand. It sounds like you're prepared to ship that we [Indiscernible].

Ben Kovler: Yes, are we able to meet the demand? When the CapEx and the production numbers are funded, we think the market -- like I said, in Illinois, there's more demand than supply out there and as we looked at the total capital going into the space, it's not fully funded. So, it's a very advantageous position to be allocating capital into that space. I'm not sure if he meant if the world falls off, and there's no demand there, or how we plan for an undersupplied markets across the country. But we're prepared for both. We find ourselves fortunate in the position we're in heading into this environment.

Alan Brochstein: Sorry, I wasn't clear, but I was just asking, it seems like some of your competitors may have some supply issues due the capital markets as well as you and others may have some challenges just getting people into the facilities in certain states. I'll just -- worst case scenario textbook. I'm just wondering of your own demand, you mentioned earlier that you might have to supply all of it in Pennsylvania and Illinois. You can you supply all of it? That's my question.

Anthony Georgiadis: We hope the business and industry remains where all the participants lean on each other and function cooperatively, which is what's happening. We're filling shelves and everybody else is filling shelves. We hope that not everybody doesn't fall down. There'll be some, but I think there's enough supply coming on these markets, that it's not sole-sourced. So, we feel confident in what's going on. The supply side will limit some of the growth as a supply side will determine the growth rate in Illinois for this year and for the foreseeable future. Essentially the same thing in PA, same thing in New Jersey, and will wash up.

Ben Kovler: Yes, the only other thing I would add Alan n is one of the things that gives us great comfort and making some of the big wholesale bets that we have is having the retail on the back end, such that you know, any event that we needed to we could we could effectively turn the business and fill more of our shelf space it's absolutely necessary.

Alan Brochstein: Got it, okay. Thanks, guys. Appreciate guys.

Ben Kovler: Thank you.

Operator: Your next question comes from Russell Stanley from Beacon Securities.

Russell Stanley: Good afternoon. Thanks for taking my question. Just I want to ask on New Jersey, how the -- how your first dispensary is performing at this point and what your plans are in terms of timelines for your second and third?

Anthony Georgiadis: Great question Russ. So, we're very bullish on the New Jersey market. We have one store opened in Patterson, its right on the edge of Patterson in Bergen County. It's performing above expectations. You see a lot of demand in that state. We are working furiously to site our second and third location. Now, I will tell you that the local jurisdictions have gotten a little bit -- I don't want to say squirrely, but they're hesitant given a referendum that's place in New Jersey at the end of this year. I think they understand it if we knock on their door, that we have to have the adult use conversation and some of those folks are just not ready to do that until they actually get a sense for how their local jurisdictions will shake out in terms of, for against adult use. But I'll tell you that we're in the northern region of New Jersey, we think it's the most attractive region for a variety of reasons. And there are a lot of great places that we could put stores that we think will be flagships effectively for the business. In terms of timing, I think it's preliminary to say, obviously, corona has put -- has added a speed bump into the equation. And -- but in any event, it's a top priority for the business is something new and then very focused on and hopefully, on our next call, we've got more of an update on that one. But we'll see.

Russell Stanley: That's great color. Thanks, Anthony. Just on Illinois I guess a similar question your timelines on your eighth through 10th locations. And if I could sneak one in there just on Naperville given the results of the referendum when you think you might be able to turn that store over to adult use given the steps that are required.

Ben Kovler: Thanks Russ. Yes, and to just set the stage, we had five medical stores which we can convert or add adult use to each one of those five as well as open up five other ones. And so since adult use has come of the additional licenses from the 55 Medical is 55 additional adult users only two have open. Both have been ours on the adult side. And so we're the only ones that have the sole adult use stores open. Three more coming. I think we have good visibility on one of them in a suburb of Chicago called Niles that we expect to open in second and third quarter of this year. Again, caveated on what's happening with COVID and where the world heads. And the other one is behind, so we can be prudent again, we can control the dial here in terms of capital spend, and go fast or not. We love our portfolio here with seven open stores. To your last point, yes, Naperville, which became kind of the poster child for opt out in Illinois, put it on the ballot, as was the arrangement after they opted out and it passed and it passed somewhat overwhelmingly, with strong support. And so now that'll go to City Council for various local jurisdictions and zoning. And we're right there. So, we're confident. I think 2020 is reasonable, but don't like to over promise.

Russell Stanley: Understood. That's great color. Thank you.

Ben Kovler: Sure. Thank you, Russ.

Operator: Your next question comes from Robert Fagan from Stifel GMP.

Robert Fagan: Thanks guys for taking a follow-up. Had a little technology issue when I first got on the line. But Anthony, I'd like to revisit something you said about the gross margin under IFRS, you've been what a bit about 150 bps higher? Would -- have that translated to a stronger EBITDA as well or as the least treatment just switching from cost of goods sold to SG&A and in that sense, yeah, just wondering if there could have been maybe some depreciation as well, that's buried in the cost line that would have been excluded from EBITDA otherwise?

Anthony Georgiadis: Yes, so great question, Robert. You're correct, our gross margin under IFRS would have been greater and so would our EBITDA well. So, effectively, the biggest difference, at least for us, is that lease expense now runs back through the P&L. So, historically, it didn't -- then obviously there was there was a change in both GAAP and an IFRS as it relates to treatment, and now going back to GAAP, we have a nice expense running through the cost of goods sold and then also SG&A. And so you're absolutely right, we would assume that would have dropped to the bottom-line and we would have had greater adjusted operating EBITDA than can be posted.

Robert Fagan: Okay, good, but obviously use the new convention going forward, but interesting nonetheless. Thanks, guys.

Ben Kovler: Sure.

Operator: And there are no additional questions. At this time, I will turn the call back over to the presenters.

Ben Kovler: Sure. Thanks everybody for dialing in. We wish everybody health and safety as you stay at home and we get through all this together. We will talk to you again in May as we review our first quarter. Thanks everybody.

Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.