Operator: Good day and thank you for standing by. Welcome to the Vireo Health International First Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers presentation there will be a question and answer session. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Sam Gibbons with Investor Relations. Please go ahead, Sam.

Sam Gibbons: Thank you, Megan 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.

Kyle Kingsley: Thanks, Sam. Good morning, everyone and thank you all for joining us on our quarter one call. I will begin on Slide 4 today’s presentation, where we provided a summary of highlights from the quarter. First quarter results reflect a continuation of the trends we observed in quarter four, the double-digit sequential revenue growth, excluding our former Pennsylvania subsidiaries and stable gross margin, as we increased scale and driven greater efficiency in our operations. Full revenue of $13.2 million, grew 9% compared to quarter one last year, driven by continued organic growth across each of our markets, excluding contributions from our former Pennsylvania subsidiaries. First quarter revenue grew 30% and 14% sequentially compared to quarter four. We are very pleased with continued improvement we are experiencing in our home market of Minnesota, patient enrollment trends remained strong in the state, and we believe we are gaining market share with the rollout for new Green Goods retail dispensaries at the end of last year. We currently have the 13 total retail stores that are currently operational in the state. In Arizona, we experienced strong growth in retail and wholesale revenue as expected given to start with Bellevue sales quarter one, and we expect to continue supporting increased flower demand in the state with our recently completed nine acre expansion at Elephant Head farm in Matto. Wholesale in Maryland declined on a year-over-year basis as well, as on a sequential basis as a result of the move from our former cultivation and processing facility in Hurlock to our new 110,000 square foot facility in Massey, due to the need to utilize cultivation capacity, to generate biomass for the new facility versus flour and manufactured products for wholesale.

John Heller: Thank you, Kyle. And thanks to everyone for joining us on today’s call. Please turn to Slide 6, where I will begin with a review of highlights from the quarter and keep in mind that all numbers stated referred to U.S. dollar amounts unless otherwise noted. Total revenue including our former Pennsylvania subsidiaries increased 9% to 13.2 million compared to Q1 of 2020. Excluding contributions from Pennsylvania revenue increased 30% as compared to Q1 of last year and 14% sequentially compared to Q4. Retail revenue excluding Pennsylvania in the first quarter was 10.4 million an increase of 34% compared to Q1 of last year, with growth in each of our markets. Wholesale revenue excluding Pennsylvania increased by 17%, driven by strong girls in Arizona, where we expect to continue benefiting from increased demand of flower now that the state has transitioned to adult use sales. As Kyle mentioned, our wholesale business in Maryland was impacted during the quarter by the timing of the move from our former cultivation facility in Hurlock to the new 110,000 square foot facility in Massey. But our increased scale in this market will help us drive stronger revenue growth and profitability during the second half of this year. Gross profit in the first quarter was 5.6 million or 42.6% of revenue as compared to gross profit of 3.3 million, or 27% of revenue in Q1 last year. The improvement in gross margin has been the result of operational efficiency gains in several markets and operating leverage through higher sales volumes. Total operating expenses in the first quarter were 10.7 million and increase in 900,000 or roughly 10% as compared to 9.8 million in the first quarter of last year. The increase in expenses was attributable to an increase in SG&A expenses of 1.1 million more than half of which is attributable to the ramp up of G& to support future growth and expanding markets, specifically Arizona and Maryland, where we have been expanding cultivation and manufacturing operations, as well as the addition of four new retail stores recently opened in Minnesota. On a gap basis, SG&A expenses, eight million increased 18%. We won last year and reflected 61% of sales compared to 57% of sales. Last year, as Kyle mentioned in his prepared remarks, we do anticipate seeing improvements in SG&A as a percentage of revenue as sales continue to lamp across our footprint through the remainder of the year.

Operator: Your first question is from Eric Des Lauriers with Craig-Hallum. Your line is open.

Eric Des Lauriers: Great. Thanks taking my questions guys. I was wondering if you could give us a sense of the ramp in Maryland. So obviously some, some moving parts there as you guys, transition to a new facility and they got that up and running. I appreciate your comments that it is now fully operational, but could you give us a sense of maybe how you plan on bringing that in line, whether it is through phases or whatnot and how we might expect that to impact revenue share.

Kyle Kingsley: Thanks Eric. Good morning. Yes, our approach really is sort of we wanted to bring the, the massive facility to capacity as quickly as possible. And so that requires a little bit of patience instead of selling the flour or finishing any of our biomass at the previous, the Hurlock facility where we had about a 12th of the cultivation capacity, we had to be patient, we had to pause wholesale flower sales, really build biomass so that we could rapidly fill the Matthew facility which is now nearly full, if not completely full.

Eric Des Lauriers: Yes. Great. And then I guess just to clarify there, you mean, essentially dedicate some of the space in the existing facility that could be used for flowering canopy and essentially use that more for seedlings and phones and whatnot to start the that new 75,000 square feet facility barrier currently.

Kyle Kingsley: Exactly, we are still feeding to have the incremental 75,000 square feet completed by the end of quarter three. And it does make sense to preemptively use some of your space to grow up biomass, predominantly in the form of larger plants that you can then clone out into this space. At the expense of a little bit of your wholesale in the short-term, so, our mission really is to get this thing full as quickly as possible, not just 110,000 square feet, but that incremental 75 also.

Eric Des Lauriers: Yes. I think that is also seems like the right strategy here. Okay. I appreciate that color there. And then I guess switching to Arizona’s, I know that you guys are just kind of going off of this the fall harvest here right now. Good to see that you guys did see a nice little pick-up in wholesale revenues in Arizona. Could you just give us some insight into what you see on the ground there in Arizona? How have your flower sales sort of fair versus expectations, whether that is demand wise or pricing wise, just any sort of additional color on that wholesale operation down in Arizona would be great. Thanks.

Kyle Kingsley: Yes. Pricing hasn’t moved dramatically. There has been general strength in the pricing there on the wholesale side. We are doing, predominantly auto flower crops this spring and as many people on the call will know, generally spring is sort of a bit of a pause if you are doing outdoor and who composed grows. You rely on these Autobar plants, which definitely are our lower yield. Our excitement in Arizona really focuses on what they call crop Tobar down there, where you have these massive outdoor crops with photosensitive genetics, standard genetics, coming to bear after growing through the summer. So, very excited about that, we are still working hard on this incremental facility in Arizona and 40,000 square feet of production space there. So, yes, pretty much in-line with expectations as far as the pricing goes. Yes, there is a bit of a pause as far as the size of biomass production, because you are using auto flower in the spring in Arizona.

Eric Des Lauriers: Yes. Okay. This last one for me here on Minnesota. So I think most, most, I guess you guys actually touched on it that this Legalization Bill is basically dead on arrival in the Senate. But certainly hopes are so alive for medical flour here. So, you said that you have any insight to share. Could you just kind of give us your sense of how you view the chances or opportunity for medical flower in Minnesota? Thanks.

Kyle Kingsley: Yes. We have very strong support from the Republican-led Senate and the democratic college for the addition of flour to the medical program. We anticipate that based on kind of the current status that this will be part of the Bill. That the pretty substantial piece of legislation. We think that that may be pushed into special session as far as actual passage. But we are very optimistic that flower will be added to the medical program. Implementation that yes, would be we would go through kind of an expedited rulemaking process. And our hope would be that in early 2022, we move ahead with flower in Minnesota in the medical program. We have been focused on flower production in Minnesota in the form of augmented yield quality potency and microbiological testing for the last 12-months. So, we really feel good that that will be ready. As we are at about half capacity or less in Minnesota right now on the cultivation side. So, we do have some excess capacity to take care of there. But I do have interest, philosophically, in a flower specific facility of scale here in Minnesota; we do own 20 adjacent acres to the existing facility. And that really is, as you can imagine them a massive opportunity, second only to adult use in New York as far as the magnitude of opportunity for our enterprise.

Eric Des Lauriers: I appreciate the color. Thanks.

Kyle Kingsley: Thank you.

Operator: Your next question is from Matt Bottomley with Canaccord Genuity. Your line is open.

Matt Bottomley: Thanks. Good morning, guys. I just wanted to have a high level question here on the key markets by your existing revenue of New York and Minnesota. If you just ignore, the potential legalization next year, and then your comments on the flower needed photos and kind of look at where the markets are today. What are the growth profiles looks like over the next number of quarters here, particularly in Minnesota, where you have effectively doubles your dispensary count as of the last quarter or so. And so is that something that will bring on a proportionate number of new customers or is there more dynamics and how these patients the speed of which these patients are registering that that might hamper down the expectation of Minnesota doubling on its own just given the increased retail?

Kyle Kingsley: Yes, great question Matt. So interestingly, I anticipate Maryland is going to kind of usurped the top spot there, even passing Minnesota New York by the end of the year, just because of the biomass that we are bringing to bear and the manufacturing apparatus, and kind of the strength of wholesale pricing there. So, Maryland is going to surprise people through the end of the year, I believe. In Minnesota, we have continued to see sort of 250 to 300 new patients enter the program on a weekly basis. That has not changed dramatically since we opened additional dispensaries, but we do seem to be taking more of those new patients from a market share standpoint. So, I like to kind of make decisions based on data, we have not seen an upward inflection of new patients entering the program since last April, where we went from about 150 to 250 to 300 per week. And that persists. It is nearly completely linear growth. Our intent is to really augment general awareness in Minnesota. It is hard to do radio hard to do television that you are kind of limited to some digital and your potential kind of billboard type marketing. And then obviously, our forte is really direct marketing to health care providers. So, in Minnesota, the way that we are going to improve things beyond just our dispensaries is we need to kind of do a general awareness campaign to get more of the state aware of the fact that there is a cannabis program. Just there is an interesting data point as far as kind of per capita spending in places like Minnesota and New York versus more mature markets. John, are you able to chime in on?

John Heller: Sure. I mean, just generally speaking, if you look at the per capita spend in markets that have transitioned from medical to adult use, for instance, Colorado, Illinois, Massachusetts, places like that and you look at the per capita spend before they went to when they, before they transitioned from adult to adult use, you see some pretty staggering increases in the monthly per capita. And Minnesota and New York currently have per capita spending $100, all right. $0.60 - and when you look at where at Colorado and under that kind of per month basis, you look at where our Colorado is over 30 Massachusetts, over 15 Illinois, only about a year and a half in, it was already close to $12 per capita. So the run rate there for the opportunity there is pretty powerful.

Kyle Kingsley: So may I to answer your question directly, I other than some direct marketing campaigns, your reasonable assumption that linear growth will continue in Minnesota, you tell flower is added in early 2022. And the other big question is what does that do to the market here? And I don’t have to take, nobody knows, but we are prepared for a very dramatic expansion of the program at that point.

Matt Bottomley: Great. Very helpful comments. And then just lastly for me, just looking next year into New York State and the expected implementation of adult use, I got a lot of questions about, obviously who the players are there and there is only 10. So that is pretty beneficial, I think to yourself and those others that are in the market. But in terms of trying to goalposts positioning in that market and specific, - looking at the ability to expand capacity quicker. We know that over the long-term, having the most infrastructure, we have done those lessons in Canada, and that doesn’t necessarily mean that you are going to be the winner over the, over the long-term. But given that it is like a hundred or $150 million market today, you have to go up to 5 billion in the next two, three, four, five years, whatever that timeframe is, what are the key success factors in your view and how much of that is capital efficiently and then quicker, I guess, than some of your peers.

Kyle Kingsley: Yes, fairly simple approach. You need to scale on the manufacturing and cultivation side to this, to the maximum extent allowed full transparency. It is likely there will be some canopy limited in New York. And our goal is to be built up to that canopy limit, whatever it is ideally by the time adult use goes live, you want to have sealed manufacturing, so full on steel, CPG type manufacturing apparatus that after you ready to go on your day one. And then the last thing is we are going from four to eight. Dispensary’s, we have been working for multiple quarters on opportunities on the retail side, lot of resources, a lot of time going into augmenting that. So you need to be maximally scale cultivation and processing as early as possible in the process. And you need to have the best in class retail space that is available, a lot of competition for those spaces, but we feel like we have been doing a great job being ahead of the curve there. We really see New York as opportunities, one, two, and three for the empty right now. And that is where the lion’s share of our resources are going, kind of across the spectrum of the province.

Matt Bottomley: Okay, thanks again, guys. Thank you.

Kyle Kingsley: Thank you.

Operator: Your next question is from Graeme Kreindler with Eight Capital. Your line is open.

Graeme Kreindler: Good morning, guys. And thanks for taking my questions. I just had a up question regarding Arizona. Kyle, appreciate the comments at the top of the call regarding the expansion going on there. Just curious as you went through the Q1 period and heading into Q2 here coinciding with the release of stimulus checks and 2020. How is the inventory situation right now in Arizona, given the onset of wreck, how have you been able to manage that? And if you could give some color regarding, I guess the continuance of uptake from customers post that peak period and that would be appreciated. Thank you very much.

Kyle Kingsley: Yes, Graham. Things really, frankly, flying off the shelves there. I don’t want to have any granular comments on inventory, other than the spring harvest is going to be diminished as this kind of auto flower crop, and we anticipate a very substantial what a biomass in the October timeline with the harvest of nine or 18 acres of the shade house, coupled with the existing greenhouse apparatus that we have there. And we are excited about those incremental 30,000 square foot flower processing capability at Elephant Head farms. So, yes, it is a very robust adult use market and we are seeing inventory fly off the shelves in the dispensary there.

Graeme Kreindler: Thank you. Appreciate that. Then, as a follow-up with respect to New Mexico, what is the internal expectations about potential timing of the onset of that market. And given the dynamics there, I think New Mexico is a market that isn’t as popularized in terms of where investors are across the various state level markets. What do you think is going to be the key for success in that market is it going to be leading with the retail, is it really about ramping up supply to meet the onset of demand. How do you see Vireo position that as really leading with retail there? Thank you very much.

Kyle Kingsley: It is really leading the retail. So as you know, there is plant count limited still, in New Mexico. We want to stay ahead of that and have capacity in place to larger plant cultivation if we need to aspire to dispensaries. But, we are interested in ideally north of 12 dispensary, by the end of 2022, would you have interest in the Texans coming across the border and do a mature adult use program there in New Mexico, simply quiet best-in-class retail. We think the Green Goods concept is distinctly better than many of the other dispensaries in the state from a professionalism standpoint. And we are going to supply those with a broad array of flour, and this is a humble opportunity compared to the likes of in New York and Maryland and Minnesota. But, we are excited about as a cost-effective place operates, and there are kind of barriers to entry there with plant counts and a lot of others.

Graeme Kreindler: I appreciate it. Thank you very much.

Kyle Kingsley: Thanks, Graham.

Operator: There are no further questions at this time. I would turn the call back to presenters for closing remarks.

Kyle Kingsley: Great. Thanks again for joining us this morning. We look forward to speaking with you all again, over the coming months at our Investor Day event, as well as upcoming conferences this summer. Have a great day.

Operator: This concludes today’s conference call. You may now disconnect.