Thank you and good morning, everyone. Welcome to Verano's first quarter 2022 earnings conference call.

I'm joined today by George Archos, Chief Executive Officer and Founder; Brett Summerer, Chief Financial Officer; and Aaron Miles, Chief Investment Officer. During this call, we will discuss our business outlook and make forward-looking statements within the meaning of applicable security laws, which are based on management's current assumptions and expectations.

Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance and achievements of the business or developments in the company, industry to differ materially from those implied by such forward-looking statements. Actual events or results could differ considerably due to risks and uncertainties mentioned in our filings on EDGAR, including our financial statements and MD&A for the quarter ended March 31, 2022.

In addition, throughout today's discussion, Verano will refer to non-GAAP measures that do not have any standardized meaning prescribed by GAAP, such as EBITDA, adjusted EBITDA and free cash flow. Management believes non-GAAP results are useful to enhance the understanding of the company's ongoing performance, but are supplemental to and should not be considered in isolation from or as a substitute for GAAP financial measures.

These non-GAAP measures are defined in our earnings press release issues earlier today and available at investors.verano.com which also includes the reconciliation of these measures to the most comparable GAAP financial measures. Lastly, all currency is in U.S.

dollars unless otherwise noted. I will now turn the call over to George.

Please go ahead.

Thank you, Julianna, and thank you everyone for joining us today. This was another important quarter for Verano as we continue to work diligently to position the company ahead of anticipated growth.

I'm proud of the team as we were able to deliver first quarter adjusted EBITDA margins of 40% despite some industry-wide pressures. Today, I'll provide some updates on the business before passing it off to Aaron Miles, our Chief Investment Officer, to discuss some capital markets update, which will be followed by a detailed overview of our financials from Brett Summerer, our Chief Financial Officer.

I'd like to kick things off with an update on the progress we were making in New Jersey. We are off to an extremely strong start in the state with performance exceeding our early expectations.

This is highlighted by foot traffic during the first week of adult-use sales of more than 13x versus the prior week of medical only sales. We anticipate continued momentum in the coming months as New Jersey's adult-use program continues to develop, and with the anticipated approval of adult-use sales at our existing Neptune dispensary.

Zen Leaf Neptune is only two miles from New Jersey Shore and other popular landmarks such as the Asbury Park, Boardwalk. With a coming summer season, we anticipate this will be our strongest location in the state.

We also continue to have ample supply to meet demand in New Jersey and are currently wholesaling select products throughout the state. We expect an increased contribution from wholesaling towards the end of the year.

We will provide more visibility into the New Jersey market once our third location opens to recreational consumers and the market is further developed. Now on to some financial highlights.

As we guided to on our last call, the quarter came in at a mid-single-digit decline at $202 million in revenue. This was driven by seasonality effects with lighter sales in January and February, while we saw a pickup in March that we think will carry through 2Q.

The first quarter also grappled with a sweeping Omicron variant in addition to the industry-wide vape recall in Pennsylvania, which halted our vape sales for six weeks. And of course, inflation was a headwind during Q1 as we fought for wallet share alongside other industries.

Strikingly, cannabis is perhaps one of the few industries if not the only industry to experience pricing pressures alongside inflation. We do not believe this is a time to substantially lower prices and we'll be avoiding deflationary actions to the best of our abilities.

What I want to focus on today is our extremely strong positioning in markets that we foresee legalizing recreational use in the near future. These are areas in which we have prioritized our CapEx spend so that we are best prepared to meet increased demand.

As discussed, New Jersey is already performing well. And we are strongly positioned on the wholesale side with ample supply to meet demand.

We ramp up operations to full swing once adult-use sales were given the green light and we expect to expand our wholesale efforts in the state throughout the year. With expectations of our Neptune locations, we are a top performing location, given adjacency to the Jersey Shore.

We anticipate this opening alongside increased wholesaling in the second half to drive significant growth for the company. We also expect Connecticut to begin the adult-use sales towards the end of this year.

In preparation, we are in the process of internal cultivation expansion. We already hold very strong market share positioning in the state, thanks to the members of the CT Pharma team, which have proven themselves excellent operators and partners.

We expect to build off a strong foundation once we welcome adult-use customers. Additionally, Pennsylvania is poised for legalization.

We are seeing promising progress in the state and believe in adult-use framework could be put forth in the near-term. We are investing in cultivation ahead of any legalization with the first phase of our second cultivation site planned to 75,000 square feet of cultivation and manufacturing space, which would put us at a total of over 135,000 square feet of production.

Our Verano strains are now growing in the Keystone State and we expect to begin wholesaling our namesake brand in the third quarter. We are also hearing positive things out of Maryland and now believe we could see an adult-use program as soon as next year.

We don't talk about Maryland often enough, but it is a strong and steady state within our portfolio. Our market share has been increasing year-to-date, so news of adult-use program in the state come at a good time.

And in our pending acquisition of Goodness Growth, our partners there are in the process of expanding their New York and Minnesota facilities. In New York, they are building out the interior of a 320,000 square foot indoor facility, which we built out to Verano level specs and quality.

And in Minnesota, their team is building out a new indoor facility, which we build out in phases alongside market growth. We also continue to build up our second Florida facility.

Phase 1 of this expansion is completed at 40,000 square feet. We have plants in the ground, and at first harvest, we will be prepared to serve as new locations brought online to support our medical patients.

We believe Florida has a potential to pass adult-use legislation in the next two years, so we will build a facility out in phases as we gain visibility into program structure. Lastly, in Illinois, as you may recall, we took proactive measures to enhance capabilities ahead of the additional 185 dispensaries that will ultimately come online.

We are reaping benefits of efforts we've made in our flower market share increase throughout Q1. Positioning is of the utmost importance for us.

So we are prioritizing CapEx for our dollar spent. We see tremendous value in reinvesting into the business, and this is a critical time as we prepare for these aforementioned growth markets, and position ourselves ahead of anticipated increased demand.

Now I'll turn it over to Aaron, our Chief Investment Officer, who will speak to the actions we are taking to benefit our capital market positioning.

Thanks, George. I'd like to take a few moments to touch on our capital markets initiatives, especially given the persistent pressure across the industry.

Unfortunately, given the extreme limitations for many institutions to enter the space, we feel that we do not yet trade on fundamentals and instead generally trade on volatile retail sentiment surrounding federal legislation. There are, however, actions we are taking to position Verano to be in a place to take advantage of U.S capital market opportunities as they develop.

This includes taking steps to be prepared for a potential uplisting to U.S exchange. We remain actively engaged with both of the major exchanges in the U.S., and given my prior experience at the NYSC, I'm able to leverage relationships from both to continue the dialogue.

We're also having proactive discussions with Blue Chip Asset Managers. And while many might may not be able to invest just yet, we are taking time to educate these groups on the U.S cannabis industry and Verano.

While there are no guarantees, we will continue to devote as much time and effort necessary to ensure that these participants will be fully educated on the Verano story as soon as the federal regulatory landscape permits potential investments. Safe banking is also critical to this discussion.

Verano recently joined ATACH, or the American Trade Association of Cannabis and Hemp, to help advance efforts to get a form of legislation passed. Verano joined with the goal of leveraging key experiences and relationships in the capital markets, including my own, for the advancement of our industry.

Lastly, as George touched on earlier, we have a multitude of high ROI CapEx projects in the pipeline. While we have discussed the option of share buybacks internally, we believe there is still enormous value in investing into the Verano footprint.

Once these numerous CapEx projects near completion, nothing is off the table. We want to drive value in returns for our investors and are always evaluating ways to do so, which ranges from further areas of investment, including M&A and CapEx to share buybacks.

I want to end by acknowledging that we're not naive to the level that what we're trading at. But we can't run the business based on non-fundamental dislocations in the equity market.

We're building the company for long-term growth and success, while building the relationships now that will benefit us in the future. And now I'll turn it over to Brett.

Thanks, Aaron. Today, I will review financial highlights from the first quarter of 2022.

As a reminder, all financials are now reported in U.S GAAP. First quarter 2022 revenue was $202 million, up 67% compared to the first quarter of 2021 and down 4% sequentially.

As George mentioned, we experienced softness due to seasonality in [technical difficulty] Illinois and Pennsylvania were the largest drivers versus the prior quarter. Gross profit for the first quarter of 2022 was $100 million or 49% of revenue compared to $54 million or 45% of revenue for the same period of last year.

SG&A expenses inclusive of depreciation and amortization were $80 million for the 2022 first quarter, or 40% of revenue. However, we typically exclude depreciation and amortization and earnouts, which would be 27% versus 25% on the same basis in the prior quarter.

Sequentially, SG&A expenses increased 2% primarily due to costs associated with our conversion from IFRS to U.S GAAP and M&A deal costs. We had a net loss for the quarter of $7 million versus a loss of $2 million in Q1 of '21.

Adjusted EBITDA was $80 million or 40% of revenue for the first quarter and $60 million or 50% of revenue in the same period of last year. Turning to the balance sheet and cash flows, we ended the quarter with $140 million of cash and cash equivalents.

Cash flow from operations for the first quarter was $53 million and free cash flow was $6 million. CapEx spend for the quarter was $47 million on track for the full year of $185 million to $250 million, we projected earlier this year.

As both George and Aaron discussed, we have no shortage of attractive projects. The main areas for current investment are Pennsylvania, Illinois, Connecticut and Florida cultivation expansion projects.

Now we have numerous CapEx projects slated for the year, we also expect to remain selectively acquisitive as we look to round out our portfolio and attractive markets. Ultimately, I am extremely confident that our strong financial standing will continue to allow for further reinvestment into the company and support future growth.

When thinking about our debt capacity, it's worth noting that we are under levered versus our peers on a debt to EBITDA basis. If we were to be in line with our peer set, our debt could be substantially higher than it is today.

With that, I'll pass it back to George for some closing remarks.

Thank you, Brett. To close, this was another foundational quarter for Verano, and as I discussed, we have many reasons to be extremely excited about what the remainder of 2022 will bring.

Looking ahead, we're expecting a slow progress of margins throughout the year, likely with some volatility, but still expect for the full year to end with 40% plus margins. We expect solid growth in the second quarter, and we anticipate giving more formal guidance by the second quarter call, once we get more clarity into New Jersey and other moving pieces.

Operator, please open it up for Q&A.

Thank you. Good morning, everyone.

I wanted to touch on New Jersey, George and Brett. Clearly, this has been a market that has been a drag on EBITDA margins for you given the delay in adult-use sales.

You've got two stores open now, you're talking about the third coming online in the summer. And obviously, you've had a really strong early start to sales and the success you've seen in the market has been very, very noticeable.

So the question is, could you help us understand how would you think about this market becoming EBITDA accretive, given the drag that it's been thus far pre adult-use sales? How do we think about when this market can actually be an accretive market to the overall enterprise?

Good morning, Camilo. George here.

So the market is -- I mean, it was accretive for us before obviously, it's more accretive now. There's quite a bit of vertical integration within our two stores and with the third, that'll be great for us.

We're also starting the wholesale. So, we're seeing the benefit of 120,000 foot facility finally coming to the full use, right?

It's full of plants now, and we expect the market to continue to expand. So I think you'll see a little bit of a margin pickup in Q2.

We're getting, call a half the quarter and that'll continue into Q3 when that – hopefully, that third store will be opened by then and probably get stronger throughout the end of the year as we continue wholesale pick up. So I think it'd be a gradual increase from Q2 on.

Great. That's perfect.

And then, shifting to Illinois, you talked about progressive market share gains after the reset in that market. Maybe if you could just shed some more color on that.

And are you beginning the second quarter -- did you begin the second quarter from the perspective of really operating at full capacity and full speed? And then if you could just give any sort of insights, George, there's been some news over the last day or two that the legislation and the judge overseeing the social equity litigation could actually remove the roadblocks and issue those licenses as early as later this week.

Any insights into that would be very interesting?

So on the licenses, we're hearing that could happen very viable and obviously, that's what we're hoping for. The market share pickup will be significantly easier with 185 new stores opening versus trying to get all that back within the current environment.

It's not easy to just take that shelf space back after it's gone. I mean, that's just a reality of it.

So, yes, we are going to pick up some market share, but it's a very slow move up with the current environment. If these new 185 stores get released this week, or within the next few weeks, and they start opening at the end of the year, great for us.

Right opportunity to get new market share, new markets that will have new stores and that's really what we're anticipating and hope [Technical Difficulty] it’s not a matter of if, it's just a matter of when and it sounds like everything we're hearing that is going to happen in pretty short order. So fingers crossed.

And then just as you stand with the reset that you did on your cultivation, irrespective of the licenses just where you are with the kind of the resetting of your existing facilities and the product that's coming out of those facilities?

Yes, we saw some favorable pickup on the gross margin side. But again, that's going to -- facilities back to where it used to be legacy product, everything is fantastic from that front.

But again, gaining that market share back is going to be a slow ride up. I don't want to say that it's the flip of a light switch.

There's a lot of work to be done to get that market share back and it's obviously significantly easier when you have 185 new shelves versus trying to get it from the current one-time, right? I mean, that's just -- that's the way we look at it.

But we're ready for it. Product is there, which for us is the most important piece.

Customer feedback is phenomenal and everyone is excited for the reset. So that's -- that was step one.

And now step two is slowly getting the market share back.

Great. And if I can just throw one more in there.

You talked in the last quarter about a value brand rollout, any sort of thoughts you can share around the timing of that rollout and what markets might see that first? And if you're actually seeing consumer demand for a lower price product?

We do. I mean, the lower price product demand has always been there.

It's just something that we haven't played in. So we anticipate rolling it out in Illinois first, over the next few months.

That'll be the first priority where we have enough supply to be able to do it. And then slowly we'll roll it out for the markets where it makes sense.

But for right now Illinois is the first target for the value brand.

Great. I'll turn it over.

Thanks a lot, George.

Thanks, Camilo. Have a great day.

Great. Thank you.

On the liquidity outlook, Verano had about $140 million in cash exiting the quarter. How much in cash outflow do you expect to have in the second quarter related to the deferred consideration CapEx and cash tax payments?

Well, I will say that we manage that depending on other demands that we have from a capital perspective expansion, M&A, all that stuff. So it always moves around at us.

But you should expect Q2 to be a little bit lower than Q1 in that regard. Most of our payouts were weighted towards the first half of the year and within the first half towards Q1.

So it will be probably in the $34 million range, but less than Q1.

And that's for deferred consideration CapEx and cash tax payments all together, or that's just cash tax payments?

That's just deferred payments.

Okay. Okay.

And on the adjusted EBITDA, the way you bucket all the add back in EBITDA doesn't really give us a good sense of what's actually in that number. I think you added back about $10 million or so related to M&A you are announcing, there's probably another I think $4 million or so related to the inventory step ups.

But I guess can you help us understand what's actually in that $17 million bucket in your adjusted EBITDA?

Yes. So it's -- the $17 million specifically is the gain that we had on the equity for one of the transactions that we did.

We didn't feel that was an appropriate number to include in our results. So we excluded it.

The rest of this stuff is kind of to the point that you already made, right? It's the earnouts.

It's the inventory step up and it's the amount of money that we had for the flip to U.S GAAP from IFRS and also related to M&A deals like the fees that we paid to lawyers and that sort of thing.

Okay. Thank you.

Good morning, and thanks for the question. Just getting back on New Jersey real quick, you had a real tough time rolling out new products add to the shelves after the approvals had started.

Where are you as far as offering full products at? And are you still limited on the product availability for New Jersey?

Just kind of a little color on that.

Hey, good morning, Russ (sic) [Scott]. So we have been adding SKUs.

We added mints. We added tinctures, botanicals.

We have new flower strains. So every week we're adding new things, so the menu is becoming pretty full and we're excited about that.

We're actually just going through inventory right before this call and we continue to add supply at the cultivation facility, which will not only add more supply into our stores, but will give us the ability to wholesale more throughout the states. The state approved quite a few things the week of the launch, so it just takes time to ramp up and add all the concentrates, et cetera.

But those are all coming out and very exciting for the market, right? And I think variety for the consumers there is key to basket size and sell-through of all the products at the facility.

Okay. And then one follow-up for me, kind of looking at the key markets where we've seen price deflation and promotions due to competition there.

Can you provide a little color in the second quarter here how you're seeing pricing? Is there some sort of stabilization and kind of what are you seeing from a traffic versus average basket size in the states of Florida, Pennsylvania?

We know Massachusetts has come off big time and Illinois, those key states kind of just shape up the consumer and kind of the trends you're seeing in second quarter would be great.

Yes, great question and we answered this one all the time. So for us, our pricing is pretty stabilized at the premier side of the market.

The only difference for us is we've introduced a mid-tier line and we're looking forward to introducing a [indiscernible] line. So that stabilization for Verano is there.

We're just attacking different tiers in the pricing category. As far as packet size, basket size, we've seen about a 2% decline overall throughout the country and that is what it is, right?

You look at the macro environment, what's going on and make sense. So adding these different price points now for us is an opportunity and we are looking forward to seeing the results.

Appreciate the color. I'll jump back in the queue.

Thanks.

Good morning, and thank you for taking my question. First around Florida.

George, you indicated some optimism around adult-use there. Just wondering, what kind of path you expect that to take?

I assume you mean something of voter driven? Or do you have hopes on -- you'll see some sort of legislative action there?

That was adult-use in which state? I didn't catch that.

Florida.

Florida, I think that's going to be more of a 2024 voter referendum issue. I mean, it would make sense for it to be approve the legislation, I just don't know if that's going to happen, right?

I don't know we are going to make that push. I don't think they want all those voters going to the polls.

And usually that's more Democratic voters, and it's a Republican state for the most part. But we'll see if we can push that across the finish line next year.

But we're more anticipating a 2024 vote. So that's what we're looking at for Florida.

And staying on Florida, I guess the city of Miami is now expected to finally or has been kind of cracked open, I guess, for dispensaries. Just wondering how much of an opportunity that is from a retail buildup perspective and what you might be doing on that front?

So I mean, we do have some stores we're looking at in that area. We're adding some to the portfolio.

Historically, it's not a great medical market in the Miami area. I think it's more of an adult-use opportunity.

So as we get closer to 2024, we'll look at different sites and locations there and make sure that we have enough access for the consumers. But it's not something that we've been focusing on the [indiscernible].

Okay. And just one more, if I could.

Just on the cash from operations $53 million, another strong quarter there. Just wondering if you can break down, I guess how much are working capital [indiscernible] benefited from the quarter?

Actually, our working capital is up as we increase our inventories relative to building up for [indiscernible]. So it was actually a drag from working capital perspective.

How much? It's great.

How much of a drag was it?

Sorry.

How much of a drag was it?

Mid double digits -- not mid double-digit, mid-teens.

Okay. That's great.

Thank you very much. I'll get back in the queue.

Thank you.

Hi, there. Good morning.

Congrats on the first quarter results. First question here is just on New Jersey.

Just want to get your sense on when you would anticipate seeing new first stores opening that aren't affiliated with the existing alternative treatment centers in the state. I'm not trying to pin you down there on an exact timeline.

But what I'm trying to get at is to get a sense of when wholesale opportunities in the state might expand with new stores opening.

Hey, good morning, Andrew. Good question.

I think if they held on to the [indiscernible] we could see stores opening probably around 8 months from now, and then continue throughout the next 18 months. That's probably the earliest timeframe.

If they didn't hold on to their stores, it's difficult. New Jersey is not easy to find a location, go through zoning get open.

So it could take longer, but I would anticipate a few of those licenses they hold on to the location. So I think like Q1 next year, you'll see some store partly open.

Right. And then my next question, just want to go back to the gross margins, which improved quarter-over-quarter.

And just really want to hone in on what were the big drivers behind that. That sounds like Illinois and the approved cultivation facility there was a step in the right direction.

Besides that and across other markets, did you allocate more product internally? Or did you fare better in the face of some of the pricing competition that we've seen many of your peers discuss?

What really drove that marketing improvement?

Sure. So margins are largely flat, but they were up slightly on an operational basis, which is to say excluding our depreciation, our step up.

And with the two drivers behind that are the Illinois improvements that we talked about. And also in the market, we've been able to dial back discounts relative to some -- where they had been historically.

So I think both of those things helped us get a lift on that -- on our gross margin this quarter.

Great. Thanks for taking my questions.

Thank you.

Yes. Good morning, everyone.

Just want to go back to the cash flow profile. So, one of the limited numbers of MSOs that has free cash flow from operations, but just looking at that $6 million contribution this quarter, just going back to some of your comments on cash outflows, I think you touched a little bit on the -- on some of the deferred compensation about $30 million, $40 million on the acquisitions.

Can you just talk a little bit more on the tax specifically? Because obviously, every MSO has a pretty large tax payable for Q1.

And I'm just curious of the $200 million or so on the balance sheet. How much of that is cash?

What's the timing? Just kind of get a refresh on that, please?

Sure. So I think we certainly answered this question a lot, but happy to answer it again.

The total deferred taxes on our balance sheet represents -- we target about a year and right now I think we're about a year and a half. So if you think about the total amount that we have out there, it's essentially debt at a very low cost.

It makes sense for our shareholders to have that as opposed to market based debt. So we keep to -- we keep managing that intelligently to make sure that we're providing the right cost of funding.

That being said, again, we do have an internal target of about a year. Right now we're a little over that.

We actually have made recent payments here in Q2. So you'll see that fall in Q2.

Got it. Appreciate that.

And just on the M&A side, you look -- you mentioned you are going to be sort of selectively acquisitive going forward. Is there any meaningful states that you think are needed in your portfolio?

Or are these more sort of tack on like you've done in the past and markets like Pennsylvania and other ones that have good regulatory programs?

Listen, we look at every market, there's nothing that we necessarily need, we're very happy with the footprint that we have. That being said, there are tuck in opportunities for us in a few states that we already operate in, and we're vertical in.

And there's some new states that could be attracted, if the price point makes sense. And if the operations fit the Verano culture.

So we look at everything, we don't transact on everything, but we're not afraid to if something makes sense for us.

Okay, thank you.

Thanks, Matt. Have a great day.

Thank you and good morning. George, just on New Jersey, and I'd like to pivot to PA quickly.

But on New Jersey's first line sales of $24 million, we've all seen the announcements on six additional stores coming online soon, just in line with potential planned openings from some of the other major operators. Those new stores obviously provide some short-term oxygen to the market.

But how confident are you in your abilities sort of on an absolute and relative basis to capitalize on that near-term store expansion? And also just more broadly on any insight you provide on the pace of the ramp or the acceleration that those new stores give to New Jersey in the short-term outside of anything else later in the year on additional openings?

Good morning, Kenric. So another good question.

That mean, the market needs more stores, plain and simple, right? I mean, the velocity of the market has been great.

But we're going to see further growth with additional capabilities to serve the consumers, right? There's only so long people want to wait in line and people want to travel far distances to get their product.

So the more stores that open, it takes away from the black market and provides an opportunity for us licensees. We plan on wholesaling to all the stores in the state when they open.

We're also excited to get our third store open as well in the Shore. So again, what we talked about earlier, yes, the markets been great so far, but there's a lot of room for growth and expansion.

So this is just another step in that direction that viewed as a positive one.

Thank you, George. And just on Pennsylvania, and you did call out the weakness in Illinois and PA.

But can you just speak to Pennsylvania, how much of that was the broader market weakness? How much of that was -- I’m sorry, the broader market weakness on the vape recall?

How much of that may or may not have been other factors impacting the Pennsylvania performance? Any insight on Pennsylvania would be appreciated.

The vape ban was significant, right. 6 weeks of no vape sales was hurt quite a few operators there and hurt the market.

Obviously, Pennsylvania was not an outlier as far as weakness in January and February. The market was -- it was weaker there.

So it's come back a little bit in March and hopefully continues to ramp throughout the year. We have some additional store openings as well, that we're very excited about in the Philadelphia region and some of the Pittsburgh regions.

So that'll provide some additional growth for us throughout the year. And we're looking forward to launching our Verano products, right.

I mean, we've been -- we had to sell-through everything that former facility had, it wasn't of the quality that we like to be able to sell Verano. So we're very much excited for that in Q3.

And we think Pennsylvania is still one of the best markets in the country. And we think adult-use is on horizon there.

So we're preparing and anticipating that over the next 12 to 18 months, and that's really what we're focused on.

Great. Thanks, George.

I will pass the line.

Thank you.

Yes, thanks very much. Many of the questions been answered, but maybe just an update on the Goodness Growth divestitures.

Is that going to be towards the closing that you're expecting at the end of this year? Is that still going to happen throughout the year as you sort of complete the RFP [ph] process?

The goal would be to have a -- more of a -- almost a simultaneous closing. So they'll push those towards the end of the year.

Obviously, we have to work with the regulators to make sure that we follow their guidelines, but it would be more towards the end of the year.

Yes, okay. And then just maybe a small one.

About 10 days ago, you announced the launch of mobile applications across a number of the different states you're in. Just wondering whether how the initial uptake has been and adoption of that has been?

We've been pleasantly surprised. When you have a loyal following, it shows when you do things like that, and we have quite a few signups and it gives us an opportunity to reach our customers on an easier basis.

So we're excited about the opportunity there. And it's kind of a -- it was a good launch.

The signups were tremendous. The app is good, but it's only going to get better.

There's a lot of things that we need to improve upon there. But we're looking forward to expanding on that side of the tech front.

Great. Okay.

Thanks very much.

Thank you.

Great. Thank you.

So getting back to New Jersey sales, can you just talk a bit about how your store has performed versus the $2 million average AUV [ph] that the industry saw in the first month. And then are you seeing any issues with inventory at your peers that maybe have less cultivation capacity, then you guys have an update?

I'm sorry, I didn't catch the first part of that question.

Can you just talk about how your stores performed versus sort of the industry average volume? That's at a $2 million level?

And then any issues you are seeing with inventory in the state?

Is this in New Jersey, we didn't catch your state, you are just talking about.

New Jersey, in New Jersey.

So we don't comment on specific sales on the stores. Obviously, they're doing tremendously well.

We would rather wait for the program to play out a little bit, get our third store open, see some new store openings before we comment on specific sales. That being said, we have great operations in the cultivation front, ample supply across all categories.

So you're seeing our menu increase week over week, basket size increasing due to expanded variety in the menu side. And I think Jersey is going to be a very strong market for us for years to come.

Got it. That's helpful.

We'll stay tuned there. And then I guess just in terms of 2Q, I don't know if you've commented on sort of how sales are trending quarter-to-date, if you could just quantify that?

And then you call those that 2% decline in basket. Are you expecting that decline to accelerate going forward?

How are you thinking about the amount that as inflation really starts to pick up here?

Yes, so from a Q2 perspective, we will provide some guidance here in the upcoming future. All I can say right now is that you should expect Q2 to be up above Q1, which I think that we've talked about before.

So I don't think we're sharing anything new there. But we'll provide something more specific in the near future.

And in terms of basket size, I would think that the trend is the trend that it's pretty consistent, and I would think that that would follow for a while.

Got it. Thank you.

Thank you everyone for joining today and look forward to talking soon.