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Operator: Good morning. My name is Sylvie, and I will be your conference operator today. At this time, all participant lines are in a listen only mode. After the speakers remarks there will be a question-and-answer session [Operator Instructions]. You may begin your conference.

Unidentified Company Representative: Thank you, Sylvie. Good morning, everyone. And welcome to High Tide, Inc.’s Quarterly Earnings Call. Please note that all earnings discussed on this call are presented on an unaudited basis. Joining me on the call today are Mr. Raj Grover, President and Chief Executive Officer; and Mr. Mayank Mahajan, Chief Financial Officer. On January 29, 2025, the company released audited financial and operational results for the fiscal year that ended October 31, 2024. Before we begin, please let me remind you that during the course of this conference call, High Tide’s management may make statements, including with respect to management’s expectations or estimates of future performance. All such statements other than statements of historical facts constitute forward-looking information or forward-looking statements within the meaning of the applicable securities laws and are based on assumptions, expectations, estimates and projections as of the date hereof.

Specific forward-looking statements include, without limitation, all disclosures regarding future results of operations, economic conditions and anticipated courses of action. For more information on the company’s risks and uncertainties related to forward-looking statements, please refer to the company’s press release dated January 29, 2025 or our latest annual information form and our latest management discussion and analysis each filed with securities regulatory authorities at sedar.ca or on EDGAR at www.sec.gov/edgar or on the company’s Web site at www.hightideinc.com and which are hereby incorporated by reference herein. Although these forward-looking statements reflect management’s current beliefs and the reasonable assumptions based on the currently available information to management as of the date hereof, we cannot be certain that the actual results will be consistent with the forward-looking statements in the future.

There can be no assurance that the actual outcomes will not differ materially from these results. Accordingly, we caution you not to place undue reliance upon such forward-looking results. For any reconciliation of non-IFRS measures measured and discussed, please consult our latest management discussion and our analysis filed on SEDAR+ and EDGAR. It is now my pleasure to introduce Mr. Raj Grover, President and Chief Executive Officer of High Tide. Thank you. Mr. Grover, you may begin.

Raj Grover: Thank you, Carter, and good morning, everyone. Welcome to High Tide, Inc.’s financial results conference call for the fiscal year that ended October 31, 2024. I’ll begin with some high level comments about the quarter and our strategy before Mayank and I dive deeper into the numbers. We filed a press release and financials yesterday and I’m proud to report another record breaking quarter for High Tide. Revenue for the year reached an all time high of $522.3 million, up 7% compared to fiscal 2023. We also ended the year with a quarterly revenue record, generating $138.3 million in Q4, up 9% year-over-year. This was the fastest growth rate we achieved all year and represents an annualized run rate exceeding $550 million.

I’m incredibly proud of the growth we are generating at High Tide, especially considering that nearly all of it was achieved organically and financed primarily through internal cash flow. In 2024, we added 29 new stores, of which only one was acquired. This was more than double the number of stores we added in 2023 and at the high end of the target range of 20 to 30 stores that we communicated to investors at the beginning of the year. These stores were built using cash flow from our existing locations. I’m pleased to report that new store development is continuing at a similar pace in 2025 with plans to add another 20 to 30 locations this calendar year. I remain excited about the continued top line growth we anticipate for 2025. With our strong Q4 results, we have now delivered positive free cash flow for six consecutive quarters, generating $22 million in fiscal 2024, an increase of 217% over fiscal 2023.

This significant improvement in free cash flow was achieved even as we opened 29 new stores during the year. It’s important to remember that new stores require upfront investments not only in CapEx but also in working capital and employee hiring and training before opening. These new stores act as a short term drag on consolidated results until they ramp up. Despite this, Q4 free cash flow was $5.9 million, up 4% year-over-year. For 2025, we expect to remain free cash flow positive while continuing to grow our business. Long term investors know that we see the Cabana Club as a crown jewel and a major contributor to our significant outperformance versus peers. I’m proud to report that membership numbers have reached new highs in Canada with 1.72 million members, an impressive 11% sequential increase and 34% growth rate year-over-year.

Of these 73,000 are ELITE members, our paid membership tier, which is also up 28% sequentially. This trajectory gives me confidence that we’ll reach our long term target of 2 million members sooner than expected, especially considering we had fewer than 1 million members less than two years ago. Late last year, we made the bold decision to take our Cabana Club global across all our e-commerce businesses and early results are in line with expectations. We’ve already signed up 3.6 million members across the US and EU, bringing our global total to 5.32 million Cabana Club members. We’ve also started onboarding international ELITE members with sign-up now exceeding 3,000. We believe taking the Cabana Club global represents a tremendous opportunity for the future while unifying and simplifying all areas of our diversified ecosystem today.

With the momentum towards legalization in more countries, we’re uniquely positioned to extend the Cabana Club’s reach as these opportunities arise. Early adoption has been encouraging, and we are confident in our initial predictions that proactive margin reductions on consumption accessories and CBD will lead to revenue breakeven within six months of launch and adjusted EBITDA breakeven within 12 months. Furthermore, we’ve begun leveraging the Cabana Club infrastructure to disrupt adjacent industries, such as international snacks or in cannabis terms, Munchies. On the topic of leveraging our existing infrastructure internationally our recently announced definitive agreement to acquire a majority stake in Purecan, a profitable German medical cannabis importer and wholesaler is an excellent example.

After extensive efforts, we identified Purecan as the ideal entry point into the fast growing German medical cannabis market. This acquisition aligns with our objectives entering the market profitably adding unique value and doing so cost effectively without significant strain on our resources. Purecan is already profitable with impressive adjusted EBITDA margins of 29%, providing a platform to strengthen our core business and deepen relationships with Canadian licensed producers. This transaction is highly accretive. We are acquiring Purecan at a multiple of 3 times annualized adjusted EBITDA, significantly below our own trading multiple. Additionally, upon closing, our fully diluted share count will increase by less than 1%, and the cash outlay of EUR1.2 million is well within our means.

Given our conservative balance sheet management, with gross debt to trading adjusted EBITDA of less than 1, the additional EUR1.2 million in debt is easily manageable. I’m excited to close this acquisition in the coming days and demonstrate the growth potential by leveraging our connections and resources with Purecan’s existing network and infrastructure. Purecan already has the necessary licenses, certifications and facilities, meaning no significant CapEx is required. Furthermore, Purecan will come with no debt upon closing. The only additional investment will be for working capital, addressing timing delays between payments to Canadian licensed producers and revenue collection from pharmacies and wholesalers in Germany. This transaction is structured to ensure long term success for all stakeholders.

Over the next 18 months, both teams will focus on scaling the business. Beyond that, a five year call and put option structure will incentivize Purecan shareholders to drive adjusted EBITDA growth while we retain the right to acquire the remaining stake at an attractive multiple. Returning to Canada. Q4 was another strong quarter for our core cannabis retail operations. Same store sales rose 3% sequentially. And since launching our discount club model three years ago, we’ve achieved a cumulative 130% increase in same store sales. This contrasts with a 5% decline in revenue for the average operator during the same period. Our market share in the five provinces where we operate averaged 11% during fiscal Q4 based on revised data from Statistics Canada.

This was consistent sequentially and up from 10% in Q4 last year. Notably, this market share was achieved with just 5% of the store count in these provinces, highlighting the exceptional performance of our Canna Cabana brand. Our long term goal is to achieve a 15% market share across all our operating markets. I’ll now go over key highlights from the financials before passing it over to Mayank for a deeper dive. Revenue for Q4 was $138.3 million, an all time record, up 5% sequentially and 9% year-over-year. Our bricks-and-mortar segment led the way growing 12% year-over-year and outperforming our expectations. In October, our average store achieved an annual revenue run rate of $2.6 million, which is more than double the average peer revenue of $1.2 million in the provinces where we operate.

In Ontario, our largest market and the focus of our future expansion our outperformance was even more pronounced. Excluding newer stores that have been open for six months or less, which are still ramping up, the average Canna Cabana store was on an annual revenue run rate of $3.5 million in October. In contrast, the average of our peers in Ontario was just $1.1 million. Our same store sales increased 0.4% year-over-year in Q4. While this is below the levels we have historically achieved, it reflects the broader market slowdown. In fact, total industry sales, including the impact of new stores across the five provinces where we operate declined 1% year-over-year during our fiscal Q4. In contrast, sequentially, our same store sales grew by 3% during the quarter.

In addition to merchandise sales, our Cabanalytics data and advertising platforms continue to expand. With our growing footprint, entry sales volumes and operational outperformance, interest in our retail ecosystem is growing. In Q4, the Cabanalytics business data and insights platform, advertising revenue and other revenue, including management fees, interest income and rental income totaled $10.9 million, up 48% year-over-year and 21% sequentially. Consolidated gross margins were 26% in Q4 2024, consistent with Q4 2023 but slightly below the 27% we reported in Q3. We’ve maintained our gross margins in stores, avoiding price increases that might encourage weaker players to remain in the market for renewal leases. Given the unstable nature of the cannabis retail market in Canada with another major retail player having recently filed for CCAA protection, we feel our prudent gross margin management and a keen focus on free cash flow generation continues to yield meaningful benefits for shareholders.

Looking forward, we anticipate lower gross margins in our e-commerce segment as part of our strategy to drive volumes through unbeatable prices as we roll out the Cabana Club globally. E-commerce accounted for only 5.6% of our consolidated revenue in Q4 and we expect our global Cabana Club launch to deliver meaningful benefits in the long term, mirroring the traction and volume increases we observed when implementing this model in our Canadian bricks-and-mortar business. Turning to expenses. Salaries and wages represented 12.4% of revenue in Q4, up from 11.6% in Q4 last year. This increase reflects the rapid pace of store growth over the past 12 months as we hire teams four to six weeks before the opening of new locations. Good people are hard to find, secure and train and we invest in ensuring they can provide Cabana level service from day one.

While new stores take time to ramp up, it’s encouraging to see salaries and wages as a percentage of revenue decline sequentially from 12.7% in Q3. General and administrative expenses continued to trend downward, representing 4.2% of revenue in Q4. While this was up from 3.7% in Q3, it compares favorably to 5.3% in Q4 last year. For the full fiscal year, general and administrative expenses declined from 5.5% in 2023 to 4.2% in 2024, demonstrating commitment to cost efficiency. Adjusted EBITDA was $8.2 million for the quarter, down 1% year-over-year and 14% sequentially. This decline reflects the higher pace of new store openings, which, as noted earlier, create a temporary drag on results as they ramp up. Excluding the impact of noncash impairment charges, which totaled $5 million in Q4, our income from operations was $2.1 million, marking a significant increase from $61,000 in Q4 2023.

In conclusion, Q4 was another strong quarter for High Tide and I’m excited about the opportunities fiscal 2025 holds. Over the past few years, we’ve established ourselves as a leader in canadian cannabis revenue. As we begin 2025, we are taking steps to position ourselves as a leader in the global cannabis market. This includes our international expansion of the Cabana Club and our announced acquisition of a majority stake in Purecan. Additionally, we remain vigilant about the opportunities that may arise with the new administration in the US. As I’ve always said, High Tide’s best days are ahead. Today, I’m proud to report that while our core Canadian bricks-and-mortar business continues to thrive, we’re also making strategic moves to enter and grow within the German cannabis market, including its fast growing medical segment.

With that, I’ll turn it over to Mayank for his comments and a deeper dive into the numbers.

Mayank Mahajan: Thank you, Raj. And hello, everyone. This was my first year end as part of the High Tide team, and what a fantastic year it was. We set records on revenue, adjusted EBITDA, store count and cash balances. Let’s take a deeper dive into the numbers. As Raj mentioned, revenue for the fiscal year was an all time record at $522.3 million, up 7% versus fiscal 2023. Our bricks-and-mortar segment, which drives the vast majority of our business performed even better, up 12%. We also ended the year at a record level at $138.3 million in Q4, up 9% year-over-year, representing the fastest pace of growth during the fiscal year. On a consolidated basis, our gross margins were 27% for the fiscal year and equal to 2023’s level.

In Q4, consolidated gross margins were 26% equal to Q4 2023’s level and 1% below 27% in Q3. Looking ahead, we expect lower gross margins in our e-commerce business as a result of taking our disruptive Cabana Club global, which we anticipate will be offset by our newly acquired medical cannabis unit Purecan once the transaction closes. I am very proud of the performance in our core bricks-and-mortar Canadian cannabis business, which is a tough market, we were able to post same store sales gains year-over-year in Q4 despite the fact that total industry sales, including the impact of new stores have declined year-over-year in each of the past eight months, which once again illustrates the superior brand strength Canna Cabana has in the market.

We have always had millions of customers globally in our e-commerce segment. We recently completed the heavy lift of taking our disruptive Cabana Club global, further entrenching them into our increasingly global ecosystem with the aim of generating a stronger loyalty and higher sales. Keeping with the same structure as our incredibly successful system in Canada, our international customers now have the ability to become ELITE where we expect given a stronger spending depending on where they are located and annual ELITE membership cost $15, EUR15 or GBP15. We are encouraged that 3,000 people have already purchased ELITE membership internationally in just the first two months since launch and we expect this number to grow over time as the world continues to get out and customers see the value proposition we are offering.

From a purely financial point of view, ELITE membership fees provide high margin revenue and they are collected up hand for the year. Speaking of higher margins, our Queen of Bud acquisition is proving to be very fruitful and well timed for the shareholders. Queen of Bud products are selling very well better than our expectations and have frequently sold out in our stores. We look forward to adding new SKUs over the coming quarters and remind investors that our white label products typically carry higher margins than selling other products. I’m extremely proud of our cost controls. While revenue increased by $35.2 million during the fiscal year, excluding the impact of noncash impairment our total expenses actually decreased by $5.9 million.

In Q4, similarly, while revenue was up $11.2 million, we experienced year-over-year declines in general and administration expenses and depreciation and amortization expenses. Adjusted EBITDA margin was 6% in Q4. This was below 7.3% in Q3 2024 and 6.6% in Q4 2023. As Raj mentioned, there was an impact from the hightened number of new stores we opened during the year, which take longer to ramp up to maturity given the highly competitive Canadian cannabis landscape as well as the continued pressure we experienced in our online business. Free cash flow was $22 million in fiscal 2024, up 217% versus fiscal 2023. Free cash flow was $5.9 million in Q4, up 4% year-over-year and the second highest level during the six quarters since we began posting positive free cash flow.

We ended the fiscal year with a record level of cash at $47.3 million as at October 31, 2024. Note that we were in the process of restructuring our debt. Since the end of our fiscal year, we obtained $5 million of additional debt and paid down $13 million that was due on December 31, 2024. I am very proud of how we have improved our balance sheet over the past 12 months. Today, our total debt is $27 million. This is comprised of $12 million due to connectFirst which matures in September 2027 and our recently closed $15 million five year second position facility. Accordingly, we have no maturities due for almost three years. In contrast, a year ago, we were facing $14 million of debt coming due within one year. In closing, this was another stellar year for High Tide.

We added more than double the number of stores as we did in the prior year, while generating record revenue, free cash flow and adjusted EBITDA. In our core business of bricks-and-mortar cannabis, we continue to make gains and outperformance versus our peers continues to widen. Simultaneously, we are set for growth internationally by the moves we made during the past two months, namely the announcement — the announced acquisition of a majority stake in Purecan and taking our Cabana Club global. Meanwhile, our balance sheet is in very good shape with no maturities for almost three years and a total debt to trailing adjusted EBITDA ratio of less than 1, I’m very excited for what 2025 will bring for High Tide. With that, I will now turn the call over to the operator to open the line for the question-and-answer session.

Thank you.

Operator: [Operator Instructions] First, we will hear from Matt Bottomley at Canaccord Genuity.

Matt Bottomley: I just wanted to start on some of the market dynamics that you guys have seen. So obviously, the leadership on the market share front is very strong. But maybe just more directionally and some of this might be rounding or maybe if stats can revising numbers, but it looked like you had a percentage point or two more in Alberta and Ontario last quarter versus this quarter? Just looking at the two press releases at that time. I’m just curious if those dynamics have changed at all and if there was any headwinds in those two markets relative to what you’ve seen in the past?

Raj Grover: So first of all, let me confirm with you that we’ve not seen any change in dynamics — retail dynamics in Alberta or Ontario in particular than what we’ve been talking about. Example, illicit market resurgence, the regular competitive pressures we face in this business but nothing’s changed. The only reason the 12% was revised down to 11% is the revised data from Statistics Canada. So we can only go with the data that we have at the time and we’re publishing these quarters. But to give you some comfort and give some comfort to our listeners, we are actually up from 10% last year to 11% this quarter year-over-year and 12% — down to 11% was simply a revision from Statistics Canada. And these things always happen, they publish new numbers time to time and we take the most recent numbers and then we publish those in our results.

Matt Bottomley: So maybe just moving on, it’s first time early chat on sort of the Germany deal since it was announced. So just curious on your level of potential investment into that market, not getting too granular because I know there’s a lot of unknowns but just what’s happening, particularly in Germany on a regulatory front. This comes up on some of the other LPs earnings calls as well and there’s been takes, I guess, with respect to expectations there. But clearly, it’s a lot more relevant now than it was several years ago. So just wondering what calendar 2025 might bring in terms of your level of investment and what you’re hoping to see in terms of growth levers?

Raj Grover: So there’s no significant CapEx required for the German investment, the majority stake that we’ve taken into Purecan. We were very methodical about how we went about it. We never want to put any strain on our existing financial resources. And I am extremely excited about this acquisition because we’ve truly made this — we’re going to make this into one plus one equals to 11, not even three because I believe High Tide is the most perfectly positioned company to take advantage of the medical cannabis market in Germany or to get a significant amount of market share in the medical cannabis market in Germany. So again, no significant CapEx requirements because we already have the warehouse and logistics infrastructure setup.

This business is already profitable with 29% EBITDA margins. The only major expense that we are going to incur upfront is going to be working capital requirements. So I can tell you, Matt, very confidently and very positively that I’ve had overwhelming response in my conversations with licensed producers. I think I’ve had over 20 now in the last week, it’s three to four a day that we are talking to. And I can tell you almost all of them, I can’t tell you even one that is not excited about getting started on this business venture with us. We are getting offered to distribute Canadian brands exclusively as well as nonexclusively on top of all of the momentum that is going into Germany. So working capital requirements are going to be there. Our intention is to move thousands of kilos of cannabis eventually and it’s just the timing of payments between Canadian license producers and then our revenue collection from pharmacies and wholesalers in Germany.

Working capital will be a good one, it will have an impact on our free cash flow but it’s not going to be overnight but that is the only investment we need going into this business. We don’t need to build new facilities or anything like that.

Operator: Next question will be from Frederico Gomes at ATB Capital Markets.

Frederico Gomes: I guess the first question, Raj, I know that you mentioned the pricing in the market and how maybe you’re not ready to take price in the market yet as the market consolidates. But is that something that we could see happening later in 2025? I mean what needs to happen here for you to be more comfortable on the pricing side of things here in Canada?

Raj Grover: So look, Canadian market is a very unique one. It’s the most competitive landscape in cannabis in the universe, I’d like to think. So pricing pressures have been there. But as you know, more recently, True North, which was a major player in Ontario with 48 stores just entered into creditor protection. And I think you and I and everybody else we talk about this every quarter and we remind our investors that we’re going to hold the line of gross margins because it’s frustrating many of our competitors. And they don’t have the same strong business model that we do and we know they’re hanging by the thread and many of them are leading the race and unfortunately entering into creditor protection. But at this time when we have record revenues we are up 5% sequentially, 9% year-over-year, these are big numbers.

We have really good amounts of free cash flow, $22 million trailing free cash flow, $5.9 million in Q4 alone. I don’t think we need to do anything out of the ordinary to stop this momentum and give a helping hand to our competitors that are leaving the race. So that is the only reason we’re holding the line on gross margins. It is a tough market. As you can see, our same store sales, although leading the industry by a country mile, we are up 130% over the last three years when the average operator in the country has declined 5%, they’re still only up 0.4% year-over-year. So it’s not like we can increase margin by 2%, 3% overnight and then still expect our same-store sales to go up. So it’s a fine balance spread. But what’s happening is more and more competitors are leaving the race, big chains are struggling, middle size chains are struggling, independents are struggling.

So as more competitors get out of the race, there’s not going to be a lot of competitors remaining to be waging a price war with us. And at that point, we have a tremendous opportunity to increase gross margins in our core Canadian cannabis business.

Frederico Gomes: Second question on your international e-commerce platform. Now that you launched the Cabana Club internationally, I’m just curious how do you see the hemp derived THC market in the US? I know that many other companies have invested in that market recently. It seems like it’s grown rapidly. So have you — do you have any plans in regards to that market?

Raj Grover: So we have a few SKUs selling hemp derived CBD — hemp derived THC states where legal, which are again covered by the 2018 federal farm bill, both New Leaf and Fab have these SKUs but it’s producing an immaterial amount of revenue, because it’s not been our focus, Fred, simply because it’s just so much enforcement and changes in terms of what’s legal, what’s not legal today between the different states. So we’re taking this slow because it changes by the day sometimes and we’re investing a lot into this to make sure that we are above board on these products. Our revenue is tiny today but we will definitely see how it develops. Like we’ve got immediate opportunities in our core business segments as well as Purecan that we just acquired the majority stake in Germany, and this core business opportunities that we can produce much higher revenues at higher gross margins relatively quickly.

So hemp-derived THC market is not at the forefront of what we’re looking at but it’s absolutely something that we’re keeping an eye on, and time and resources are limited. So as soon as we have some more resources, we are going to dedicate it to this place but the revenue remains tiny today but we’ll see how it develops.

Operator: Next question will be from Bill Kirk of ROTH Capital.

Bill Kirk: On Germany, how will you decide what brands or what products to offer into the country? You said you have a lot of calls, a lot of conversations. But how are you going to weigh maybe price point considerations versus quality or reliability when determining what is best?

Raj Grover: So again, while we’re doing our homework on what’s moving fast and what’s not in the German market, what we are discovering that absolutely everything that’s making its way into Germany is getting consumed. I’ve been talking about this on a few recent interviews that I’ve done on this German opportunity. The German market has grown — since April 2024 alone, the German medical market is up 250%. In Q3 of 2024, I think Germany moved 20 tons of cannabis, right? This is up from eight tons of cannabis the year prior. So you could see the growth and momentum there. And we have the opportunity to bring some of the best brands in Canada from the largest LPs, medium sized LPs, craft LPs, micro growers. We’ve got the branded approach there.

We’ve got our own white label products such as Queen of Bud SKUs that we will be introducing in Germany. And then we are also going to be introducing running SKUs on the availability of the SKUs that are present in the market. The goal here is to build the biggest medical cannabis menu in Germany and become the preeminent distributor in the landscape, which does not exist today. There’s a lot of small players, very tiny players but there’s nobody of size and scale. And we feel with our procurement expertise of having derived over $1.5 billion in cannabis sales from our ecosystem and doing over $500 million of brick-and-mortar cannabis sales here in Canada we feel that we are fully positioned in terms of taking that market by storm. I’m having excellent conversations with our LP partners here in Canada and everyone is excited to get on board.

It’s going to take us a month or two to get going but I can tell you this is an exponential opportunity for us. And it includes the largest Canadian brands, it includes our own white label products and it also includes medium grade cannabis, high grade cannabis and in some cases, even lower good cannabis.

Bill Kirk: I can clearly hear the enthusiasm there. What is the appetite for other countries? When you look around the world, do you see anything else out there like Germany or should we expect more of this type of stuff?

Raj Grover: Yes, absolutely, Bill. We’re going to — Germany is going to be our doorstep or our gateway into other countries in Europe and then eventually Australia. Australia is importing — now that eyes and ears are on the medical side as well, what we’re learning is exciting things are happening everywhere. So Australia is importing as much cannabis as almost what Germany is importing right now. UK is really coming up and I believe it up to like 15 tons. Czech Republic has just announced that they’re not going to restrict their doctors, specialized doctors only to prescribe medical cannabis and they’re going to open it up to all MDs, which I think will exponentially increase that market size as well. It will still be only a ton or so.

We’re already at 80 tons in Germany. So that’s the biggest opportunity. Poland is also growing medically. So Germany is the first step, Bill, but you can be rest assured that we are definitely looking at other markets as well. But walk before we run, let’s get our feet wet and then I think we’ll have a very good opportunity in these other markets as well.

Operator: [Operator Instructions] Next is Andrew Semple at Ventum Financial.

Andrew Semple: First question would just be on the 2025 outlook for opening 20 to 30 new stores. Raj, if you wouldn’t mind maybe clarifying how you’re thinking of that as a mix of organic versus M&A, would M&A be incremental to that target or is that embedded within that 20 to 30 store target?

Raj Grover: Andrew, thank you so much for your question. So yes, the target is exactly the same. It took us every day of the year to get to those 29 locations that we built organically. Organic store build-outs are not easy, Andrew, from procuring the perfect location to getting building permits and development permits and contracting these stores out and getting them up and running in time and then ramping them up to maturity. All of this takes a long time but organic growth is the best type of growth we can provide to our shareholders. Typically, a store cost us $260,000 to build plus about $100,000 and $150,000 of working capital requirements per store versus even when we’re acquiring stores at extremely attractive multiples, first of all, there’s just not too many good ones out there.

Our average store is doing $2.6 million versus our competitor average is only $1.1 million or $1.2 million. We’re more than double that average. So when we go look at these stores, you look at a block of stores, three of them are redundant to where our stores are or like they’re 500 meters away, you can act on those portfolios. And then you look at the one-offs and it’s a reasonable store, maybe doing $1.5 million, $2 million, which is not the best opportunity for us. And sometimes those sellers are looking for 5, 6 times EBITDA, which makes absolutely no sense this market. So we’re disciplined. We’ve proven this model work with some M&A and a lot of organic growth. M&A is always — we are always looking for deals, Andrew, but they’re not easy to come by at the moment, especially with the mature levels, we’re hitting at 191 stores currently across the country.

So we will build 20 to 30 stores organically that’s our organic target. Anything we do with M&A is going to be on top of it.

Andrew Semple: And then maybe just switching gears to the shape of the Canadian market and what we’ve been seeing this year. 2024 was clearly a year of slower growth nationwide, pricing pressures, competitive pressures, illicit market pressures as you’ve all highlighted, Raj. Though in recent months, we’re starting to see growth pick up. The statistics Canada data for November was quite strong. So just maybe want to check and see if you’ve seen any recovery in cannabis demand towards the end of the year subsequent to quarter end and what your thoughts are for 2025 in terms of overall market growth here in Canada?

Raj Grover: So Andrew, we’ve definitely seen some growth. But when we were reporting Q3, I’m sure you remember year-over-year cannabis sales were down 8% or 10%, which was a massive drop and then it started recovering again and the numbers got revised. And I can tell you at the end of the year, we ended up with the bang. Brick-and-mortar revenue is up 12% and we ended the year with a bang, and that was all because the sales picked up. And our model is very, very strong, which again outperformed the market. Sequentially, our same store sales, Andrew, we were up 3% which is a number I’m very happy with when you know the overall sales were down 1% at that time or that Q4 period. So sales have picked up but at the same time we are definitely feeling the pressures from the illicit market.

And I’m sure you heard recently that Toronto is not going to be sending their bylaw officers into cannabis stores but we are — and this is going to again pose a major hurdle and encourage people to open illicit stores but we are encouraged with Toronto police reiterating their commitment to enforcement. As I mentioned this before that Ontario has recently announced funding of $31 million over the three years, which will begin soon. So some of these things balance and offset each other but I cannot tell you that it’s an exciting growth trajectory and it’s easy growth. It’s not easy. There were just too many players that opened up shop one by one surely enough, they’re leaving the race. As you know, True North just happened, 48 stores. I have now filed for creditor protection.

A lot of independents, Andrew, meeting the same fate. So it’s a tough battle. And just a few quarters ago we were talking about Fire & Flower gone and Kiaro gone and Trees, Tokyo Smoke, ShinyBud, like the list goes on. So it’s not an easy market out there. But our Q4 was strong. Our brick-and-mortar business, which is our core business, thankfully, was very strong. We’re not in a position to raise margins right now but we’re positioning ourselves to continue to remain as a leader in the Canadian cannabis market.

Operator: Thank you. And at this time, sir, it appears we have no further questions. Please proceed.

Raj Grover: Thank you, operator. And thank you to everyone for your interest and continued support for High Tide. We’re very proud of what we’ve achieved this quarter and remain excited about the road ahead. With that, I will ask the operator to close the line. Have a great day, everyone.

Operator: Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we ask that you please disconnect your lines.