Curaleaf Holdings (TSX:CURA) Q3 2026 Earnings Call

0:00 Good afternoon, and welcome to the CuraLeaf Holdings, Inc., third quarter, 2026 conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Camilo Lyon, Chief Investment Officer. Please go ahead.

0:33 Good afternoon, everyone, and welcome to Curaleaf Holdings' third quarter 2026 conference call. Today, I'm joined by Chairman and Chief Executive Officer Boris Jordan, President Rahul Pinto, and Chief Financial Officer Ed Kremer. Before we begin, I'd like to remind everyone that the comments on today's call will include forward-looking statements within the meaning of Canadian and United States securities laws, which by their nature involve estimates, projections, plans, goals, forecasts and assumptions, including the successful integration of acquisitions and are subject to risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements on certain material factors or assumptions that were applied in drawing the conclusion or making a forecast in such statements.

1:22 These forward-looking statements speak only as of the date of this conference call and should not be relied upon as predictions of future events. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by applicable law. Additional information about the material factors and assumptions forming the basis of the forward-looking statements and risk factors can be found in the company's filings and press releases on CDAR and EDGAR. During today's conference call, in order to provide greater transparency regarding Curalease operating performance, we will refer to certain non-GAAP financial measures and non-GAAP financial ratios that involve adjustments to GAAP results. Such non-GAAP measures and ratios do not have a standardized meaning under US GAAP. Any non-GAAP financial measures presented should not be considered to be an alternative to financial measures required by US GAAP, should not be considered measures of cure-lease liquidity, and are unlikely to be comparable to non-GAAP financial measures provided by other companies.

2:26 Any non-GAAP financial measures referenced on this call are reconciled to the most directly comparable US GAAP financial measure under the heading Reconciliation of Non-GAAP Financial Measures in our earnings press release issued today and are available on our investor relations website at ir.cureleaf.com. With that, I'll turn the call over to Chairman and CEO, Boris Jordan.

2:47 Boris? Thank you, Camilo. Good afternoon, everyone, and thank you for joining us to discuss our third quarter results. We're building a global leader in cannabis, and our third quarter results are further proof that our strategy is delivering. Disciplined execution across the business is driving profitable growth, strengthening our competitive position, and advancing our built-for-growth plan. We are raising cultivation yields, elevating product quality, scaling our brand portfolio, and leveraging our global distribution platform, all while maintaining rigorous cost discipline and keeping the customer at the center of everything we do. These initiatives are producing tangible results, enhancing the earnings power of our business, and positioning Curaleaf to capture the significant opportunities ahead.

3:32 We have made substantial progress and believe we are still in the early stages of realizing the full potential of our global platform. Turning to the quarter, against a backdrop of increasing pressure on the consumer, cannabis demand remained resilient and our business delivered strong broad-based growth. Record third quarter revenue increased 11% year-over-year to $353 million, with our domestic and international segments growing 8% and 28% respectively. adjusted gross margin was 49% and adjusted EBITDA reached 78 million, representing a 22% margin, inclusive of 120 basis point drag from international. We ended the quarter with 105 million in cash, providing a solid foundation to support our strategic priorities.

4:21 Our domestic business delivered its third consecutive quarter of year-over-year growth, demonstrating that our initiatives are gaining traction and customers are responding to improvements across the business. Our cultivation performance continues to be a significant driver of that progress. We are achieving higher yields across our network, with some markets surpassing 120 grams per foot, while materially improving potency, terpene profiles, and an overall flower quality. We are increasingly translating those gains across our product portfolio, strengthening our brands, and creating greater flexibility around pricing, promotions, and mix. The result is a stronger consumer proposition and a more productive economic model for our business. While price compression remains prevalent across most markets, we are seeing some encouraging signs of stabilization.

5:12 Price compression in our retail dispensaries is moderating in several markets, largely due to actions we have taken with Massachusetts and Illinois now showing two consecutive quarters of increases. Improving supply-demand dynamics coupled with the anticipated hemp shutdown in December could provide additional support to the pricing environment. At the same time, we remain mindful of pressure on the consumer from higher energy costs and rising interest rates. That domestic operating momentum also extends to Curaleaf International, which delivered another quarter of exceptional growth with revenue reaching 59 million, up 14% sequentially. Our two largest markets, the UK and Germany, led the performance supported by continued growth in Poland. The breadth of this performance reinforces our confidence in the scale and long-term potential of our international platform.

6:05 In the UK, continued growth in active patients and Curaleaf Clinic drove solid results, while our wholesale business also performed well, particularly across flour and pastilles. Together, these results strengthened our number one market position and demonstrated the advantages of the vertically integrated platform we have built. In Germany, demand remains healthy. but irrational pricing by certain Canadian competitors is accelerating price compression and could temper our fourth quarter growth. Alongside other operators, we are working with regulators to address violations of greenwashing laws by bad actors. The UK offers a relevant precedent. Its regulator acted quickly to rein in similar practices, and that market is showing healthy growth. We expect enforcement action in Germany, although the timing remains uncertain. Despite these transitory pressures, our Hwala and Curaleaf branded strains are outperforming and contributing to the segment's growth, demonstrating our team's continued execution.

7:07 Robust orders from our Q medical inhalation device are also helping offset pricing pressure in flour. Our brand's product quality and distribution capabilities continue to differentiate Curaleaf in one of Europe's most important cannabis markets. Beyond our established markets, we continue to expand Our reach and position purely for the next wave of international growth. In Spain, following our first two cannabis preparation registrations in July, we received our third registration in October, giving us what's needed to bring a broad portfolio of products to patients. While the government has taken longer than anticipated to establishing the purchasing infrastructure for hospitals, indicative demand for our products is strong and we expect to begin fulfilling sales this month in France.

7:54 Several years of investment and preparation have culminated in a distribution partnership with a prominent pharmaceutical company. This positions Curaleaf well for the expected launch of the market in 2027. Importantly, the program is expected to include insurance reimbursement, which we believe can support sustained patient adoption as the market develops. In Turkey, the rulemaking process is underway with the regulatory framework expected to take shape in early 2027. that should position us to begin product manufacturing by the second half of the year. In Australia, QMID was the first cannabis-specific inhalation device to receive regulatory registration approval by the Therapeutic Goods Administration, marking another first for the team. The following day, New Zealand also made the device available to its patients.

8:44 We continue to see growing demand for QMID across our international markets and believe there's meaningful opportunity to expand its presence further. We are also expanding institutional access to Curaleaf shares and strengthening our position in the capital markets. In September, Curaleaf was added to the FTSE Russell All Cap Canada Index, our second major index inclusion following our addition to the S&P TSX last year. These milestones are increasing our visibility among institutional investors and broadening our potential shareholder base. Leading institutional investors, including BlackRock and Vanguard, have established positions in Curaleaf complementing our significant founder-led investor base and increasing the stability of our equity capital structure.

9:29 JPMorgan has also become a custodian of our shares complementing coverage across the four largest global custodial banks and removing important barriers to institutional ownership. Additional index inclusions could broaden participation further. Finally, we remain confident in a long-term regulatory outlook and believe federal cannabis rescheduling represents one of the most significant catalysts for Curaleaf and the broader industry. The administrative law judge concluded the rescheduling hearings in July, and after a procedural delay, the final briefs in the ALJ process are due this week. We expect the administrative law judge to make his rescheduling recommendations shortly thereafter. While the process has taken longer than anticipated, historical precedents suggest the pace has moved quickly. Most importantly, our conviction in the merits of rescheduling and the magnitude of the opportunity remains unchanged.

10:22 Beyond rescheduling itself, we anticipate greater clarity from Treasury regarding the tax treatment of adult-use cannabis. The financial implications for Curaleaf could be substantial with the potential to strengthen our balance sheet and expand our capacity to invest in growth. Last week, the DA began issuing registrations to medical cannabis operators in certain states. I am pleased to report that we have begun receiving registrations for our medical dispensaries. This marks an important milestone for Cureleaf and a meaningful step towards a healthier federally regulated cannabis marketplace. We thank Attorney General Todd Blanch for his continued commitment to advancing the rescheduling process. With our scale market leadership and improving operating fundamentals, we believe Cureleaf is exceptionally well positioned to capitalize on a more favorable federal regulatory environment.

11:10 We made meaningful progress against our bill for growth priorities this quarter with solid growth across both our domestic and international business. I want to thank everyone across Curaleaf for their continued dedication and commitment. We remain focused on translating our progress into sustainable growth, robust margins, and long-term value for our shareholders. With that, I'll turn the call over to our President, Rahul Pinto, to discuss our domestic business in greater detail. Rahul?

11:37 Rahul Pinto Thank you, Boris. Our domestic business sustained its momentum, growing 8% year over year. Retail growth accelerated to 6.4%, with secular domestic growth led by Florida, Ohio, Maine, and Pennsylvania. Branded wholesale growth of 15% was also reassuring, given the more difficult comparison to the prior year, and was led by New York, Ohio, and New Jersey. Our continued success is driven by the key pillars of our built for growth strategy, namely customer centricity, executional and operational excellence, and brand building and product innovation, supported by a strong efficiency mindset, the specifics of which I will now discuss.

12:24 Beginning with customer centricity, the introduction of over 13 novel genetics developed through our R&D team and external partnerships is setting new benchmarks for quality across key metrics, including potency, terpenes, and bud structure. This has driven higher customer satisfaction scores and a 10% year-over-year increase in retail transactions, helping to offset pricing pressure on units per transaction and average order value. Additionally, this summer, nearly 5,000 people attended our Select Better Challenge and Anthem Sunset Showdown events across the country, where consumers compared products in blind tests.

13:09 Our brands came out on top in every instance. SelectBrick2 was preferred 90% of the time over a leading competitor, and 70% of smokers preferred Anthem Bold, our leading pre-roll proposition. These events are helping to recruit new wholesale accounts and retail customers to our brand portfolio in key categories. Turning to executional and operational excellence, our whole-fame team established a dedicated national trade activation team with a clear mandate. Win the menu, win the recommendation, and win the store. In retail, we launch leader on duty across every store in our fleet, ensuring every shopper receives a consistent, high-quality experience each time she or he visits. Together, these initiatives are strengthening our execution at the point of sale and building a stronger foundation for continued growth of our brand portfolio.

14:09 Brand building and product innovation are central to our current and future growth, and our brands continue to outperform. Anthem, our lead pre-roll brand, grew 185% year over year as we advanced our in-house terpene infusion technology to drive further differentiation in this all-important category. We also launched six new Anthem Bold Limited Edition flavors. Find a quality-at-value brand with a strong margin profile through 30% year-over-year and is now the number one flower brand in New York. In July, we introduced the Select Live collection nationally, featuring live resin terpenes and melted diamonds in our Brick II hardware.

14:54 And according to Hoodie Analytics, Select maintained its number one vape market share position across our markets. Overall, our brand portfolio holds a top market share position in nearly every market in which we operate, reinforcing the strength of our brands and our ability to drive sustained growth. To maximize these pillars, we're applying an efficiency mindset to every initiative we undertake, and it is showing up in our SG&A. In the second quarter, We made adjustments to our store labor model to better align with demand trends, and those changes began benefiting the third quarter with no impact to service levels. We also standardized our back of the house processes, which generated incremental savings. In our August call, we outlined a plan to reduce expenses by 20 million in the second half of this year.

15:50 And our third quarter results reflect solid progress towards that goal. Thank you for joining us today. Earlier this year, we formed an AI committee to assess and implement AI-driven strategies across the organization with clarity and thoughtful intention. We have deployed AI tools across all facets of the business and see broad application across pricing and merchandising, IT, legal, finance, and operations.

16:44 We see AI as a significant opportunity to improve productivity, enhancing decision-making, and drive great operating efficiency. We are moving deliberately to capture those benefits and believe we're still in the early stages of realizing its potential. With that, I turn the call over to our CFO, Ed Kremer, to discuss our financial results. Ed?

17:11 Turning to our financial results, third quarter revenue was $353 million, an 11% increase year over year and a 4% increase sequentially. Growth was broad-based, with particularly strong contributions from Curaleaf International, Florida, and Ohio, partially offset by declines in Nevada and Arizona. Within our domestic segment, retail grew 6% year-over-year, and wholesale grew 14%. International revenue grew 28% year-over-year, driven primarily by the UK, Germany, and Poland. Total retail revenue was $243 million, An increase of 8% compared to the third quarter of 2025. Total wholesale revenue increased 21% year-over-year to $106 million, representing 30% of total revenue, driven by robust contributions from Cureleaf International, New York, and Ohio.

18:05 Third quarter gross profit was $170 million, and adjusted gross profit was $172 million, resulting in a 49% adjusted gross margin, a decrease of 190 basis points compared to the prior year period. The decline was primarily driven by higher facilities expenses related to utilities, materials, and maintenance, and softer wholesale margins partially offset by gains in retail margins, higher cultivation yields, and disciplined labor expense management in our facilities. Our domestic adjusted gross margin was 50%, a decrease of 170 basis points year over year. A key driver of the decline was operational disruption at our New Jersey cultivation facility which required us to temporarily supplement inventory with lower margin third-party flour. These issues have now been fully resolved.

18:53 Wholesale price compression was also a significant factor, most pronounced in New York, New Jersey, and Illinois. Despite continued market pricing pressure, retail margins increased slightly year over year as better buying practices and stronger assortment improved third-party margins. Our pricing work is also delivering positive results with further opportunity to leverage it over time. International adjusted gross margin was 42%, unchanged sequentially and down 160 basis points year over year, driven by price compression in Germany and foreign currency translation, partially offset by stronger capacity utilization and an improved mix of value to premium. SG&A expenses were $117 million in the third quarter, an increase of $9 million from the year-ago period. Core SG&A was $109 million, an increase of $6 million, primarily reflecting higher salaries and benefits related to new store openings and the international expansion. Importantly, Core SG&A was 31% of revenue, 140 basis point improvement compared to the prior year.

19:58 The cost savings initiatives we began implementing last quarter drove this operating leverage, and we expect that benefit to continue into the fourth quarter. Third quarter adjusted EBITDA was $78 million, An increase of 8% compared to last year, with an adjusted EBITDA margin of 22%. Third quarter net loss from continuing operations was $37 million, or 14 cents per share, a $17 million improvement compared to a net loss of $54 million, or 24 cents per share, in the year-ago period, mainly attributable to the change in 280E tax treatment for medical sales. Under our share buyback program, we repurchased a total of 105,440 shares during the third quarter at an average price of $9.48 for a total value of $1 million.

20:46 Turning to our balance sheet and cash flow.

20:48 We ended the quarter with cash and cash equivalents of $105 million. Inventory increased 5% compared to the third quarter of last year, well below the 11% increase in sales over the same period, reflecting the commercial team's work to bring down inventory levels. Domestic inventory was flat year over year, while international inventory increased 53%, Thank you for joining us. Cash flow was impacted by timing related to our interest payments on our recently refinanced notes falling in Q3 and working capital build to support domestic international wholesale growth. As these timing differences level out, combined with our strong operational performance, we expect operating cash flow to increase significantly in the fourth quarter and reach our target of approximately $150 million for the year.

22:03 Turning to our outlook. We have many initiatives in place to drive our business forward, along with industry tailwinds such as the closing of the hemp loophole. At the same time, we are increasingly aware of the macro pressures facing our consumer, namely persistently high energy prices and rising interest rates, which were most visible in the consumer confidence data that has trended lower in recent months. Taking these factors into account, along with transitory headwinds from German price compression and the seasonally promotional period we are entering, We expect fourth quarter revenue to increase 1 to 2% sequentially, implying approximately $358 million at the midpoint. And with that, I'll turn the call over back to the operator to open the line for questions.

22:48 Thank you. We will now begin the question and answer session. To ask a question, you may press star, then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. In the interest of time, please limit yourself to one question and one follow-up. We will now pause momentarily to assemble the roster. The first question will come from Frederico Gomez with ATB Coremark. Please go ahead.

23:30 Hi, good evening. Thanks for taking my questions. Congrats on the great quarter here. I want to start by asking about your bid for Aurora. Obviously, today we saw the bid coming from Organigram. Can you talk about the bid price difference between you and OGI, and how are you thinking about your bid going forward?

23:52 Thank you, Fred. Well, firstly, I'd like to say that obviously we just received the press release from Aurora. We haven't gotten the circular yet or the full details of the bid. I think they have to file that within 10 days, so it's very difficult to assess the exact terms. They didn't put any of the governance issues. They didn't put in any of the The breakup fees or other aspects, their financing is contingent and other things. So we need to see the details before we can properly respond. But at the moment, their bid on the close of today is just under 10% better than Curaleaf's bid at this point in time. So that's what we can say at this point in time. We are going to review the details of this transaction. The one thing I can say, though, is that Curaleaf is going to improve our bid substantially.

24:47 We will have to get due diligence in Aurora. So we are going to, as we get the details of their bid, when we do respond, that's going to be an absolute condition of ours. because it's very difficult to go up to these sort of price levels or any higher than these price levels without getting some level of due diligence. And we think it would be negligent of them not to give Curaleaf due diligence given their fiduciary responsibilities. So that's really where we are right now. Their bid isn't much stronger than ours. It's about a 10% difference. So it's something that can be easily outbid, but we can't do it without actually getting some access to due diligence. That's going to be one of the conditions that we're going to have as we move forward in this process between now and December 4th, which is the tender date for shares.

25:40 Great. Thank you for that. And I want to ask about Germany. You mentioned some irrational pricing by some Canadian bettors there. Can you talk about first the magnitude of the price compression you're seeing in Germany because of that behavior? And then second, about the enforcement on greenwashing, how are those conversations going with the authorities there? And is that a broad-based, I guess, effort by compliant operators to get that solved? Thank you.

26:14 So it's a very good question, and it's a serious issue. To give you an idea, prices have fallen from like $3 a gram to $0.90 a gram in one quarter, which is severe, as you can see. It's why we have indicated that we're going to be very careful in terms of sales in that environment because of the effects on margin. Luckily for Cureleaf, we have a very large platform internationally, and so we've got other markets. But we are going to be very judicious and careful in what we do in the German market during these next several months as we work through this thing. We think it's transitory. We think it may be tied to some Canadian year ends and things like that of dumping product. We don't have all the information, but October was probably the worst month we've ever seen since the start of the German market.

27:09 The good news is that the patient growth is robust and very strong. It's just that the market has been flooded with illegal product. We are in close coordination, cooperation with regulatory authorities. As a matter of fact, we helped in putting together a lot of background information on all the players that are violating this, as well as how they're doing it, where they're doing it, because we just think it's an unfair practice. That has all been submitted in great detail to the German regulators, and we know that they are looking at the files now. We went through a similar situation in the UK. The UK has clamped down on EU GMP, and we're seeing a recovery in margins and the market. We had a very healthy third quarter and a healthy October in the UK. But Germany is definitely going through growing pains right now in terms of very strong patient growth, which is healthy.

28:05 The underlying fundamentals are healthy, but there's a tremendous amount of product dumping from 35 cents a gram to 95 cents a gram, which is really, really – with euros, sorry, 35 euros to 95 euros a gram. So that's down from $3 a gram literally a quarter ago. So there's definitely issues there. We're trying to get on top of them, and we hope to get more clarity on it, but we are working directly with the regulator on this issue. Again, if you'd like to ask a question, please press star and then one. The next question will come from Aaron Gray with Alliance Global Partners. Please go ahead.

28:49 Hi, David. Congrats on the quarter, and thank you for the questions here. I just want to continue on the international part here. Through the lens, obviously, as you continue to evaluate potentially putting another bid for Aurora, just a bigger picture, given the pricing pressure that you just alluded to, how much more important do you think it is to Thank you. We obviously as a company have

29:30 are not only depending on the Aurora transaction. It's a nice to have. But we have obviously done a lot of work on supply chain at the interim period. And we always knew that we might or might get Aurora or might not get Aurora. Edward, very price sensitive. And as I said, I think one of the reasons we are not prepared to go further without due diligence in the company is for the reasons that I outlined with Germany and some of these compression issues. In the meantime, we have met with numerous suppliers of product in the last three months. I have personally met with many of them myself. We are negotiating contracts. As you know, we have a good contract with Canara. We are putting other contracts in place to make sure that we can deal with this.

30:15 But the situation in Germany is, we believe, again, is temporary. And we do believe that that will get fixed going forward. We do think the German regulator will step in to fix this problem. And if they do, then we anticipate that the EU GMP certifications are very important. Now, I want to stipulate one thing. CureLeaf has EU GMP certifications already in three markets. It's not the EU GMP certification that's the most important thing. It's the supply chain that's the most important thing and at the right price. That's what we need. Again, we have our EU GMP certifications. If we need to add capacity to our existing, we can. It takes about a year. So we have other alternatives in terms of the market.

31:03 But if we can get assets at the right price, we're happy to do that.

31:09 Okay, great. That's helpful color there, Boris. A second question for me. I know we talked about it last call in terms of the opportunity with intoxicating hemp. You know, just now as we're about, you know, five weeks or so away from, you know, that coming into place, you know, how do you think about, you know, marketing to consumers to ensure that the legal cannabis market, you know, captures that demand? How does that differ from adult use markets versus medical markets? You know, give me see how important it can be to kind of get that first consumer in the launch of adult use market. Are you seeing somewhat of a similar opportunity for new consumers from intoxicating hemp?

31:42 We are. And as a matter of fact, it's an interesting question. We just went through a management presentation today, full preparation for those markets where not only is the federal change happening, which is obviously across the country, but also local change. Markets like Ohio and Illinois, which is, I think, their prohibition on hemp is coming into play here over the next week. So we have full marketing plans. I'm not going to go into the details because that's our internal issues, but we have full marketing plans and some very interesting ones on how to move those consumers into our stores and into our products. The next question will come from Bill Kirk with Roth Capital Partners.

32:27 Please go ahead.

32:28 Hey, good evening, everybody. Thank you for the question. Ed, I appreciate you giving the 4Q guidance on sequential revenue. And I guess my question is, with some of the pressures that you cited being kind of pricing related, I was hoping you could give us a little context on the expectation for EBITDA or margin for the forward period or period.

32:51 Thanks, Bill. Happy to. Look, given what our guidance has been, I think it would be prudent for us to think about somewhere in the range of 48 to 49 gross margins in our EBITDA to be roughly flat with Q3. Yet, we're just taking a conservative approach here, given that the transitory issues Boris mentioned, and we hope that those will improve, and if such, we will hope to exceed that. Our SG&A synergies are continuing to go forward, and we believe we can offset some of that margin compression to a certain extent with the SG&A savings.

33:23 And I just want to add to the fact that it's really German-related. Our U.S. business is strong. We're continuing to receive margins at 50 or better percent. Our U.S. EBITDA margins are strong as well. We have, you know, Germany has become a very significant part of our business, and what happened in October was Thank you. That's what I was looking for there.

34:09 I wanted to ask about Florida, and I want to ask because you added a couple stores in the quarter. I think you added a couple stores after the quarter. So what are you seeing in the state that's getting you excited to add more stores? And how do the new licenses that were awarded or the winners of those new licenses, how do you think that could impact the marketplace in Florida should they get up and running?

34:34 So one of the interesting aspects of Florida is that you have to be vertical in Florida. So the investment is not unsubstantial. And you're talking about hundreds of millions of dollars, if not more, to get to a platform the size of, for instance, Curaleaf. We intend to end the year at around 89, 90 stores in Florida. We started the year, I think, at 65. So we've had a considerable increase in stores in Florida this year. We see very, very strong results. I'm going to be honest. Our results, our same-store comps are up in Florida year over year, and we are opening new stores, and the new store openings have had very, very strong startup returns. So we, at the moment, we don't see anything holding us back from continuing our store openings.

35:27 The biggest issue I would say is finding good locations, right? Because the state is starting to get a bit saturated with the amount of stores that are opening up. And so location is very important for us. So I do think that the store openings going forward will slow down. We are going to open up more stores next year, but I do think not at the same, you know, 30 stores or almost whatever it is that we opened up this year. But I do think that we're continuing the pace as long as we can find the right locations in the right areas in Florida to do it. But we're seeing strong, robust growth. In terms of competition, again, you have to understand, obviously, retail stores, if they open up across the road from you, that is competition. It does hurt. But the problem is they won't have product because there's no wholesale market. And to build a proper grow, a grow that can supply products, You know, the assortment that you need in the store, it really handicaps any new entrants into the market because they can't have the right assortment and merchandising in their stores in order to be able to make it one-stop shop for their customers.

36:27 Whereas companies like Curaleaf and others that have been in the market for a while and they've built that infrastructure can do that. The next question will come from Bob Oswanage with Oswanage and Associates. Please go ahead.

36:42 Thank you and good afternoon, everyone. Boris, I think you mentioned that you're already receiving some federal registrations from the DEA in some of your medical states. Is that just for the dispensaries or also for cultivation? But the bigger picture question is, are you getting any guidance or color from the DEA whether they're going to allow you to export from those medical operations that are now federally legal for your registration? Thanks.

37:11 Well, we are receiving across the board registrations in all of our various locations. They're coming in every single day, so that's why we haven't press released it yet. We want to see as they come in, but we've received probably more than 80 of them now already, so they're substantially starting to flow in on a daily basis. We have not even addressed the issue, to be honest, Pablo, with the authorities on that issue. I think the DEA is not anywhere near making that decision. at this point in time. Now, I don't exclude, I don't discount that someone might sue the DEA in order to get those rights because we should be granted those rights. But at this point in time, we're letting the DEA get through the basic work of getting the industry up and going in the U.S.

38:00 before we start putting pressure on export. The other issue is that Let's be honest, with the growth of our U.S. business, we don't have an extensive amount of U.S. capacity that we could even export at this point in time. It would take substantial new dollars, and most of the dollars that we are investing in local CapEx right now is to make sure that we can supply our growth in the domestic market next year. As we said, we're growing at 7%, 8% every quarter over last year. That's very strong, robust growth for the U.S. right now, and so we're using most of our capacity for that.

38:35 Thank you. And just to go back to the Aurora offer, you know, not to push back on the idea of Aurora, but in my opinion, there was a lot of overlap on the distribution side, route to market, right? You have 420 Pharma in Germany, and you have a good distribution in several markets already. The need was more really on the supply chain side, right, as you said. So why not have just started on a company where you didn't have the overlap on RTM and just go for, you know, those that have that supply? And that's the first part of the question. The second one, even though the deflation... Go on, sorry, Boris. Go ahead.

39:10 Yeah, Pablo, so you need to get into a little bit more depth on the European market. As you will, you'll know that the distribution is also tied to locations, and it's tied to products made in those locations. And Aurora has... Thank you for joining us. From a cultivation perspective, we're also looking at it from a product and registration. These registrations, for example, in Poland, take sometimes up to two years to get per strain of flour. And so we were looking at this every aspect. As I said in last quarter's call, we spent six months analyzing all the companies in Canada. And although we felt that there are several that would fit, this one fit the best because it had the most accretive benefits.

40:09 to Curaleaf. And we still think so. We think there's virtually no benefits in the deal between OGI and Aurora, even though they say there are. If you look at the details and you analyze it, the whole deal is not accreted. As a matter of fact, it's dilutive. It's massively dilutive. If I was a shareholder in OGI, I'd be very, very upset at this point in time. So it's a dilutive transaction. It doesn't have the same synergies that the curaleaf transaction has or the upside. But it's, you know, management has made a decision to go that way, in our opinion, to save jobs. We, if they, you know, our position is very clear. If they give us a due diligence, we think that we can beat it and beat it substantially. But we need due diligence. We're very, we are very This concludes our question and answer session.

41:07 I would like to turn the conference back over to Camilo Lyon for any closing remarks.

41:13 Thanks, everyone, for joining. We will connect in early February for our fourth quarter earnings call. Take care. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.