Trulieve Cannabis Corp.

Thanks, Julie. Good morning, ladies and gentlemen and thank you for joining us today to discuss financial results and corporate highlights for Trulieve Cannabis Corporation’s third quarter of 2019.

With me today are Kim Rivers, Chief Executive Officer and Mohan Srinivasan, Chief Financial Officer. Following our prepared remarks, we will open the call to questions.

Before we get started, I would like to note that today’s call is being recorded for the benefit of investors, individuals, shareholders, the media and other interested parties. Please remember that our discussions today may include forward-looking statements that involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those forward-looking statements.

Certain material factors and assumptions were considered and applied in making forward-looking statements. These risk factors are included in our MD&A for the quarter ended September 30, 2019 and in the earnings press release that we furnished in connection with today’s call.

Statements made on this call speak only as of today and we assume no obligation to update any of this forward-looking information. Also, our prepared remarks this morning reference non-IFRS financial measures in order to provide greater transparency regarding Trulieve.

Any non-IFRS financial measures presented should not be considered an alternative to financial measures required by IFRS or unlikely to be comparable to non-IFRS financial measures provided by other companies. Any non-IFRS financial measures referenced on this call are reconciled to the most directly comparable IFRS measures in the company’s MD&A for the quarter ended September 30, 2019 as well as in the table at the end of our earnings press release.

We believe that our profitability and performance is further demonstrated using these non-IFRS metrics. Please note that all dollar references are to U.S.

dollars. Last night, we reported results for the third quarter of 2019.

A copy of our news release, financial statements and MD&A maybe accessed to our Investor Relations section of our website trulieve.com and were also filed on SEDAR. In addition, a webcast of today’s conference call will be available on our website.

Now, I will turn the call over to our CEO, Kim Rivers.

Thanks, Lynn and good morning everyone. Thank you for joining us.

We are very pleased to share our earnings results and provide a business update to you all today. Following my prepared remarks, Mohan will discuss our third quarter financial results and then we will open the call to analysts’ questions.

Turning first to our quarterly results, Trulieve experienced another strong quarter both financially as well as operationally executing against our strategic plans and beating consensus estimates. Last night, we announced revenues of $70.7 million for the third quarter, which represents a sequential quarter-over-quarter increase of 22% and 150% increase over the same quarter last year.

We are happy to say that this is another record revenue producing quarter for Trulieve. As we have said before, we believe it is critical to build the company profitably.

Trulieve’s adjusted EBITDA in the third quarter was $36.9 million or 52% compared to $31.6 million or 55% in the second quarter. Our strong consistent EBITDA performance has set us apart and become an important differentiator for Trulieve and the cannabis industry.

Financial discipline is simply a part of who we are in the company. Throughout the first 9 months of the year, we are proactively built on our success here in Florida.

We have implemented infrastructure, increased supply chain efficiencies, maintain financial discipline and profitability and enhanced our leadership team to support our future growth. We have discussed our groundwork on previous calls to illustrate how we are building not only on our strong lead in the Florida market, but a solid foundation for national expansion.

As we walk through our Q3 activities and updates today, I believe you were going to be spend for the tools we have available and ready, including cash with financing and sustained positive cash flow, a strong retail brand, product expertise, strategic expansion initiatives and changes we have made to further increase our leadership and strength. I will start with our financial strength.

Through the third quarter of 2019, Trulieve remained profitable posting strong EBITDA and generating positive cash flow. In addition, Trulieve is one of the few cannabis companies to successfully complete a non-convertible public debt offering.

In October, Trulieve completed our second public debt deal delivering approximately $61 million in gross proceeds of the company. The notes in the warrants carry the same terms of those issued in the June 2019 public offerings which raised an aggregate principal of $70 million.

We were very pleased to have the investor demand that warranted reopening our previous debt offering and we believe the debt support speaks to the value of our strong financial record. In addition to the debt offering, in July, we announced that we sold property in Holyoke, Massachusetts, with favorable lease back and build-out plans in place.

And last month, we announced the second sale leaseback for cultivation property located in Quincy, Florida. This new $17 million deal offered similar terms in their Massachusetts transaction which are some of the most favorable in the industry with rent equal to 11% of the purchase price for the property.

Adding nearly $78 million cash from the public debt deal and the sale leaseback deal within the span of a few weeks bolsters our cash strength and well positions us to execute on strategic initiatives before year end. This additional capital along with cash flows provides the ability to invest for further growth and be agile during this challenging time in the cannabis industry when assets of capital is declining and valuation alignment is increasing.

Our strategic financial expansion is based on leveraging and replicating successes in Florida. Our market leading position in Florida continues to fuel our growth.

Trulieve has accomplished this dominant position by having the unique ability, expertise and drive to meet the ever increasing demand for cannabis in the state. A key to our success in Florida is the strength of our retail brand.

We are happy to report that the third quarter saw an additional 6 Florida stores open in communities such as Key West and Clearwater Beach. More recently, in October, we opened a store in Panama City Beach.

The stores that I am highlighting have a common thread. They are in some of Florida’s most tourists-centered areas.

We believe it is just a matter of time before approval of adult use in the state and we will be prepared for the new market with our strong brand and loyal customer base and can opportunistically target, which communities maybe beneficial candidates when Florida opens the door to recreational use. Given our dominant lead in operational dispensaries and subject to applicable regulatory approvals, our plan is to have 44 stores ready by year end.

Though we maintain our lead in operational dispensaries in Florida, a testament to the strength of our regional brand is the market share we enjoy over our competitors that try to match our pace of store openings. As of October 31, there were 187 dispensaries in Florida.

Trulieve operated 38 of those stores with our two closest competitors having 36 and 26 stores respectively. Our Florida market share however remains at over 50%.

In Connecticut, we are in the process of re-branding our dispensary, The Healing Corner to operate under the Trulieve name. The Healing Corner is 1 of 15 dispensaries currently open and operating in the state.

This recent addition continues to impress with a strong Q3 and growth within patients as well as revenues on track for the remainder of 2019. We continue to believe there is a high likelihood that adult use will soon become a reality in Connecticut.

We are ready to expand our operations with adjacent property for additional dispensary space to serve the increased Connecticut market. Massachusetts also provides us with branding opportunities both on the retail basis as well as the platform for our wholesale initiatives.

We are still on target for an early Q1 completion of Phase 1 of our cultivation facilities and opening our Northampton dispensary. Regulatory approvals in Massachusetts are challenging, but we are communicating and working closely with the regulatory bodies and hope they will move approvals along in a timely manner so we would open our doors and implement our plans for wholesale.

Massachusetts will support a robust wholesaling opportunity and we have already begun the groundwork for introduction of our brand into the market. As we prepare for the implementation of our wholesale strategy, we are more bullish than ever about the contribution the strategic growth arm will provide.

Over the past few months, we have been speaking with potential customers to understand their wants and needs, determining a winning consumer driven product assortment is actually forecasting demanding and using predictive analytics to ensure we are preparing for current state as well as future state. In the very near future, you could expect to see a scalable purposeful consumer-based wholesale plan that brings the profitable revenue stream to Trulieve while meeting the needs of our Massachusetts customer.

In addition to our dominant retail brand, a key to our success is our product expertise both in the cultivation of quality plants as well as the innovation of product offerings. We continue to build out our cultivation capacity focusing on incorporating efficiencies into our best-in-class agricultural practices.

Our Florida cultivation footprint, including indoor growth and greenhouses, is currently hovering at just under 1.7 million square feet. This is one of the largest U.S.

cultivation footprint and we are still expanding. I will note that having indoor cultivation is an important factor, particularly in Florida.

Flower, which is now approximately 50% of the products sold from our Florida store shelves, is only grown into our Trulieve. Our brand is important to us and we want to deliver the highest quality of flower possible.

The demand for flower in Florida has been extraordinary, but we demonstrated in recent weeks, we are seeing our supply catching up with the demand and look forward to bringing more flower and more strains to our patients as our new indoor growth continue to come online. We currently offer our Florida customers over 260 product choices, including smokable flower, concentrates, topicals, capsules, tinctures and vape cartridges.

We also anxiously await final regulations for the production and sale of edibles in Florida. We believe this will not only be another big growth area, but more importantly, a good alternative for our patients.

Additionally, as we have noted, we have partnered with Bhang, Binske, Loves Oven, Slang, Blue River and Sunshine Cannabis. Each of these companies are customer favorites with a unique value proposition and market penetration strategy.

In California, our Palm Springs location is what we refer to as our R&D dispensary. We use this location to test a wide range of demographics from the older affluent homeowners to the mix of tourists and visitors that flock to the area for festivals, vacations and weekend getaways.

This data allows for us to strategically plan additions to our Trulieve branded price offerings. As we think about how to leverage our strong foundation moving forward, we continue to remain committed to our current markets.

As I have mentioned today, the opportunities ahead in each of our current markets are strong and we intend to continually focus on executing and further solidifying our position as the market leader. This is mot true in our home state of Florida, where patient demand continues to grow and competitors are refocusing capital and efforts to other states, while slowing expansion in Florida.

As others pullback we believe now is the time to double down in this critical market. As other companies are reevaluating balance sheet, available access to capital, we are witnessing more companies with realistic valuations speaking M&A conversations.

The pipeline has become much more interesting and robust for us with inbound calls increasing weekly. To be clear, our criteria for M&A is rigorous and specific and I will reiterate that we will not grow for growth sake, but we will consider partnerships with companies that fit our profile of being established and executing in key dates, having solid management teams that are keen to be a part of a fast growing company exhibiting core customer-centric values and importantly, offering accretive deals for our line of sight to profitability with the combination of Trulieve.

We hope the opportunities that we evaluate to a high standard ensuring they meet Trulieve’s core values, which upon acquisition we believe will translate to greater success in future growth. So with cash on hand increasing strength in the market and a richer pipeline of acquisition targets, we are laser focused on continuing to capitalize on our current markets as well as the right M&D opportunities as I say often, stay tuned.

In addition to our current growth opportunities, we have also an organic growth team that has developed a license application strategy targeting key states as open license applications are available. This will allow Trulieve to grow organically in key markets where our brand and expertise will help us achieve rapid success.

As we look at the initiatives underway to successfully compete at a national level, we are continuing our focus on bench strength. We touched on this in the past and we made a number of important internal moves during the third quarter that prepare us for the remainder of 2019 as well as 2020 and beyond.

Some of that organizational work is behind the scenes such as the addition of the organic application team now in place and with refocusing personnel and other org chart changes, but a few are more visible. For instance, Tim Murray was recently elevated as Chief Sales Officer, leading the U.S.

retail store growth delivery and call centers. Also, Kyle Landrum was promoted as Chief Production Officer, overseeing our already vast and quickly expanding cultivation and production areas.

We believe these moves will not only drive revenue, but increase effectiveness within the organization and supports our internal strategic goals of financial strength, market dominance, customer centric focus and being the importer of choice. With that, let me turn the call over to Mohan to review the quarterly results before I add my closing remarks and open the call for Q&A.

Mohan?

Thank you, Kim and good morning everybody. Kim spent time outlining the tools we have at our disposal.

What we have established as a company and the financial discipline and operational efficiencies we have in place will allow us to maintain our revenue growth, strong profitability and continued expansion as the multi-state operator. I will now proceed with a review of the third quarter results ended September 30, 2019.

Trulieve exceeded our internal forecast achieving a record revenue of $70.7 million, which as Tim mentioned, represents a sequential quarter-over-quarter increase of 22% and a 150% increase over the same quarter last year. For the third quarter, we achieved the earnings per share of $0.55 exceeding estimates.

Our third quarter revenue increase continued to be driven by increased patient counts, demand for flower and successful new store openings. Let us look at the same-store sales as they are an important initiative for patient awareness of our brands and customer loyalty.

In Florida, we had a total of 35 stores operating at the end of this third quarter. For the 15 locations that we have opened in both Q3 2019 and Q3 2018 for the entire quarter, same-store sales increased by 43%.

The 26 stores that were opened for the entire quarters of Q3 and Q2 showed 11% increase quarter-over-quarter in sales. The revenue growth of these stores year-over-year is an important metric for us and an indicator for growing our business successfully and profitably.

I will now discuss gross profit. The third gross profit before net changes in the fair value of biological assets was $44 million or 62% which is relatively in line with $37.6 million or 65% of revenue in the second quarter.

I would like to remind you that under our financial policy, we expense grow costs whether it is in the biological assets or in the inventory. We should expect to see fluctuations from quarter-to-quarter as more cultivation facilities come online and as inventories grow and fluctuate to accommodate the accelerated pace of new store openings in the second half of the year.

For comparison, if you were to account for capitalization of grow costs, our gross profit was 75% for Q3 compared to 77% in Q2. As cultivation forms part of cost of goods sold, I will now turn to cultivation.

There have been and will continue to be significant increases to our cultivation facilities as we continue our growth in Florida allowing us to keep pace with market demand. And I will remind you that during this quarter, we brought online the experimental greenhouses essentially more than doubling our square footage in August.

As we enter the third quarter, we had reportable cultivation capacity of 710,000 square feet of indoor cultivation and greenhouse facilities. We announced on our Q2 earnings call that the experimental greenhouses were coming online and we entered the third quarter with 1,660,408 square feet providing annual cultivation capacity, up 60,330 kilograms.

Currently, in the fourth quarter, we have 120,000 square feet of ongoing construction in Florida with 24,000 anticipated to be completed in the fourth quarter as well as the Massachusetts Phase 1 cultivation build out facility underway. We expect to end the quarter with 1,684,408 square feet in Florida and that the Phase 1 Massachusetts build-out will be completed in early Q1.

Now, turning to our expenses, I will first cover sales and marketing expenses. These costs have largely dispensary related costs and in the third quarter amounted to 14.7 million or 21% of revenue compared to 6.5 million or 23% of revenue for the same period last year and was 11.4 million or 20% of revenue for the prior quarter.

The increase in cost in this expense category was primarily due to cost related to 6 additional stores that were opened in the third quarter and cost related to preparing for new store openings for the fourth quarter of 2019. G&A for the quarter was $3.2 million or 5% of revenue compared to $1.5 million or 5% of revenue for the same period last year and was $3.4 million in the prior quarter.

The increase in G&A expenses from the same period last year also reflects growth in staff levels, talent mix and increased infrastructure costs related to operating as a public company. Overall, keeping a high degree of financial discipline with the expenses essentially aligned year-over-year leads us to profitability.

Operating income for the company was $89.5 million and net income was $60.3 million for the quarter taking into account the net changes in the fair value of biological assets required under IFRS accounting standards. We believe adjusted EBITDA, a non-IFRS measure, provides valuable insight into our profitability and performance.

Adjusted EBITDA excludes from net income as reported, interest, tax, depreciation, non-cash expenses, RTO expenses, other income, growing costs related to biological assets and unsold inventory and the non-cash effects of accounting for biological assets. We report adjusted EBITDA to help investors to assess the operating performance of our business.

Our adjusted EBITDA in the third quarter of 2019 was $36.9 million or 52% of revenue compared to an adjusted EBITDA of $31.6 million or 55% of revenue in the previous quarter. On a sequential quarter-to-quarter basis, the adjusted EBITDA increased by 17%.

Please note that the capitalization of grow costs fluctuates as new facilities are brought online as selling and marketing costs varies depending on new dispensary openings and inventory levels and as we enter new states like Massachusetts where the cost structure can vary, we believe our normalized adjusted EBITDA will be around 43%. Now, turning to taxes, as a percentage of gross profit, including the net changes in fair value of biological assets, our effective tax rate was 28% for this quarter.

As a reminder, we began explaining taxes in this manner starting in the second quarter of 2019 based on our belief that this is a better and more stable measure of calculating effective tax rate than as a percentage of income before taxes based on discussions with our tax advisors. Moving now to our balance sheet, as of the end of September 2019, our cash balance was $31 million or a decrease of $23 million from $54 million at the end of Q2.

This was primarily the result of additional capital expenditure of $21 million in the third quarter related to the expansion of our stores, cultivation and processing facilities. In addition, we met interest payments on all our debt and note obligations and our fixed charge coverage ratio is approximately 4.88.

Subsequent to Q3, we completed two financing activities, the debt deals and the sale and the leaseback of property in Quincy, Florida. These two transactions further strengthened our balance sheet by nearly $78 million.

And as of November 15, our cash balance is approximately $100 million. Finally, we are reaffirming our 2019 guidance of $220 million to $240 million for the year with the anticipated adjusted EBITDA of approximately $95 million to $105 million.

This is based on our current store footprint in Florida plus expected new store openings. The revenue guidance issued in May for Connecticut and does not contemplate revenue from Massachusetts.

We will continue to exercise financial discipline, while leveraging our scale. We are also recreating our outlook for 2020, which incorporates our expansion into Massachusetts as well as continued growth in Florida, Connecticut and California.

Based on these markets, current regulation and foreseeable store growth, we estimate 2020 revenues in the range of $380 million to $400 million generating $140 million to $160 million in adjusted EBITDA. This financial summary highlights the strength of our balance sheet, profitability and the financial and operational disciplines in place.

I will now hand it over to Kim for closing remarks. Kim?

Thanks, Mohan. In closing, we are pleased with our strong third quarter results, especially in the face of wider challenges in the Canada sector.

The disappointing results in recent quarters from large Canadian based cannabis companies have weighed on the wider industry in general. Their financial losses, write-downs and negative revenue trends are causing investors both institutional and retail to increasingly demand better results and shareholder value.

This is Turlieve’s opportunity. As capital allocated for cannabis increasingly begins to look for companies with proven fundamentals, Turlieve will stand above the pack.

I have talked a lot on this call about the foundation we have built and the tools we have ready as a company to be one of the top performing cannabis companies in North America. We are proud of the success we have achieved.

I believe the recently closed debt deal illustrates not only our market leading fundamentals, but also in enthusiasm for Trulieve as a company. With our demonstrated operational and financial strength, we are quickly solidifying our passion as a prominent MSO further widening the gap in the market from non-performers.

In addition, the ongoing work being done internally is establishing a strong corporate foundation not just in cannabis, but one that would be reputable in any industry. We are well-positioned moving forward and welcome attention to our story.

I look forward to providing further updates soon onward.

We would now like to take questions.

Hi, Kim and every body and congrats on a fantastic quarter.

Thanks, Rob.

Yes, I would ask about your capital allocation plans, obviously your guys were sitting in a pretty enviable position with the liquidity you have and just wondering if you could update us on your previously discussed plans to enter couple of new states perhaps this year and if you had any kind of shift in your strategy given some of your comments around the more attractive M&A pipeline now, are you looking more for existing operators versus kind of ground-up construction and any color you can provide around that will be great?

Thanks, Rob. So, we are of course, continuing conversations with respect to folks who meet the criteria as outlined in the call.

We are definitely interested in the accretive opportunities as they are presented. With the addition of our organic application team, we are going to use that as our pipeline for ground up potential and are very interested in partnering opportunities again with folks who meet our very specific and rigorous criteria.

It should be noted that in addition and hopefully this came through in the call that we are continuing to focus of course on expansion opportunities in our current markets as well.

Okay, great. I guess this maybe more for Mohan, but I just wanted to ask about the guidance obviously, I think you guys are always very conservative with your outlook, but wondering, just if there could be some potential upside to the 2020 outlook given the way in which your sales are trending now, it’s a rough estimate from us, but we could suggest something like 35% market share in 2020 for Florida and for us that would seem pretty conservative of course?

And then wondering if you will provide any maybe breakout of where you see the Massachusetts contribution landing there in the context of a little bit of the slower licensing process?

Yes, thanks, Rob. I mean, I think that at this point and you touched on it with respect to Massachusetts and until we have some additional color from the regulators there, we are not prepared to adjust current productive guidance for next year.

But certainly, as things progress, we will continue to update investors.

Okay. Alright, well last one for me for, I maybe get back in the queue is I really like your comments came around, how maybe some other players are pulling back in Florida to refocus capital allocation strategy, while you guys are hitting it on all cylinders there?

Can you update us a bit on maybe what’s the growth outlook for Florida in terms of where the I guess the process is for the wholesale market opening and kind of like your pipeline for store expansions given you are getting close to your 44 kind of number limit until though the cap comes off in April just some details around that will be great?

Sure. Thanks, Rob.

So, we have, so just to remind everyone, on Trulieve, we have 49 stores currently that we are able to open and then again also as a reminder that when every 100,000 active patients in Florida which we are getting relatively close to that next benchmark. We will get an additional 5 locations.

And so we continue to have a very robust and complete pipeline with respect to real estate opportunities in Florida. Wholesaling in Florida as you know is currently prohibited however and so that will take a legislative change and we are in session early this year and because it’s an election year in Florida.

So, we begin session in January and go through March. So that will take a legislative change for wholesaling to be allowed.

And then also as a reminder for folks, the cap is – on dispensary locations is currently set to sunset automatically in Florida lot, so any change to that would also require an affirmative legislative actions.

Okay, great. Thanks again.

Thanks, Rob.

Thanks, Rob.

Good morning and congrats on an excellent quarter.

Thanks, Russ.

First question I guess with respect to actually the 2019 guidance even the upper end of that revenue range suggest a comparatively modest quarter in Q4, just want to get your thinking on that, are you just being conservative or are there any headwinds that you see coming up?

Yes, thanks Russ. We do try of course to base our model.

It is as we have discussed a very specific ground-up model that we have built based on patient count increases, physician increases and so forth in Florida. And we haven’t seen any fundamental changes to the model.

And so we have signalled previously that we will be keeping guidance until and unless those things change in terms of our underlying assumptions. So we did want to go ahead and keep it the same.

The other thing that I will mention is that we did see some significant increases earlier in 2019 due to flower coming online and so there was kind of a singular shift with respect to patient growth in demand whether or not that actually continues on a quarter-over-quarter basis or instead with more of a stair-step. I think it’s still also to be determined.

Thanks for that color. I think I might know the answer of the next question, but I wanted to ask about the inventory level, I think days in inventory climbed a fair bit in the quarter sequentially and should we look at that as just tied to – is that just the impact of the greenhouses coming online or is there something else beyond that?

No, that’s exactly right.

And just moving on to Massachusetts, wondering I believe one of these cities where yoou have a provisional licenses, Cambridge and just wondering what your game plan is there I guess given the city’s decision in September around new dispensaries?

Yes, no, appreciate that. I mean in Massachusetts as we have signalled, we are moving forward with our first dispensary and that’s important so that we can launch our retail, but also our wholesale strategy in Massachusetts.

We are very much and have been actively considering additional locations given the strict restriction on number of locations of retail facilities in Massachusetts. So those are certainly up for additional locations and/or relocating current locations.

Thanks. And just one last question from me and I will get back into queue.

And it’s I guess a bit of an industry-wide question, but in looking at the OMMU report and looking at the number of physicians that are qualified, I guess the growth in that number of physicians that can recommend cannabis is continuing to grow, but I guess perhaps at a slightly more modest pace than some of the other market metrics. So I am just wondering what you can do or what you are doing or what you can do on that front to help drive more patients or pardon me more physician activity on that front?

Sure. So we are very active into the 10 communities.

We've got groups around the state and employees around the state who network all the physician conferences or meeting with doctors all of the time and educating really our platform is around educating physicians on the benefits of medical cannabis incorporating medical cannabis into their existing practices and then of course supporting positions to decide that and they would like to make medical cannabis a primary area of their practice and so, that is an area focus for us and we also see I will say over time more and more positions gaining efficiencies and within their practices and so being able to see additional patients as they move to renewals and for a portion of their patients as well as of course continuing to onboard new patients so we are certainly active in the physician space.

Thanks a lot. That’s great color.

That’s all for me. Thank you and congrats again.

Alright. Thanks so much.

Thanks, Scott.

Yes hi, good morning everyone. I also like to echo congrats on the great quarter.

So I just want to talk about flower pricing for a minute have you guys seen any changes I think last time we spoke pricing was sort of in the range of $9 to $10 per gram and I think you had one competitor in the market it looks like by the OMMU data. That competitor is still there being little bit more disruptive on the pricing can you just talk about any dynamics or trends that you have seen with in the quarter?

Sure. So, no pricing has remained has remained the same with respect to flower we did introduce recently a new product category in flower with our TruFlower Minis, which is our smaller-sized bud, which is which we are pricing at $27.08 so that is our product that we released that has been received very, very well by the market and I will tell you that other competitors and in particular the one that you are mentioning has actually increased some price categories of their followers so should be interesting to see how that plays all over the next quarter.

Okay, that’s helpful and when you think about your supply of flower for the quarter were you still in a bit of a shortage position and I'm assuming that's part and parcel why you're looking to increase your cultivation capacity but would it be fair to say that had you had more supply internally you would have been able to sell more flower.

That’s a fair assumption.

Okay. And then in terms of just the consumption trends obviously there has been a lot of news in the market regarding vaping did you guys see a switch at all from vaping to flower during the quarter or and I get flowers relatively early in Florida but just any discussion along the trend that you have seen there?

Really, nothing material and so we are seeing flowers I mentioned in my comments that its approximately 50% of our product mix so and really with vaping I would say that there was a week that we were off in the vape category by about 4% to 5% but it came back on the straight away so we really did not see any material or a long term impact from the vaping issue.

Okay, and then just sort of switching gears for a second in terms of the home delivery or the Click & Collect or Call & Collect business. Can you talk about the penetration and what you have seen within that side of the market?

Yes, absolutely. So delivery actually it is very interesting and we watch this very closely and delivery is actually reduced over a kind of time and so we are at about 6% with respect to delivery currently and I think that the reason for that is that we have a couple of things one and we have really active delivery areas that’s where we target for a store.

So we put a store in those areas, number one. Two, we increase and we have actually added quick style in store pickup in those and the technology around that is that if you place an order you will actually receive a text message when your order is ready and then you are typically in and out of our store in approximately 10 minutes so that’s very different than a delivery where you have to actually wait on our drivers to get there and you have to sign for the delivery so our thesis says that it is actually more convenient from a time management perspective to actually stop by the store and do a quick pickup supposed to waiting for delivery and interesting and of course we're all sort of thinking through the Amazon model and what that may look like one day and big difference here is that you are having the sign for that package as a poster us being able to leave it on a doorstep So we're going to -- one of our initiatives for 2020 is we are going to actually start and doing some activities to drive delivery which we haven’t done to date.

So it will be interesting to see how that number shift over with those activities that we have planned.

Okay, that makes sense. And just last one for me, just related to that, do you see any difference in terms of the basket size between whether it is delivery whether it’s the call in and collect versus the in store customer?

I would say that the walk-in in store customer versus delivery does tend to be a big higher and I think rational explanation for that is that we are charging a delivery fees So the folks that – also I think the folks in – was coupled with what I perceive, at least was a little bit more of an inconvenience I think the folks that are ordering for delivery are doing in a more consolidated basis and so they are ordering less often but they are having it’s a bigger ticker when they do order versus an in store pickup order.

Yes, make sense. Thank you very much.

Yes, thank you.

Thank you.

Yes, good morning and once again congrats on the quarter. A number of my questions have been already asked but I just did want to follow-up on one of your comments came in the prepared remarks just on edibles and whether you have any sort of update on when those are going to be available in the Florida market?

Neal I have held out how hope that we would hopefully see them in 2019 any and every chance that we got to talk to the regulators about edibles and remind them that it is statutorily required from them to write rules we do so I unfortunately don’t have any additional color other then there has been a bit of a start and stop to the process I felt that we were making some decent progress and then vape news had sort of took everyone a little bit off track I do believe that we are likely first see testing regulations in Florida come out and then likely behind that because there will be an embedded piece on edibles testing within testing regulations and then right behind that we should see edibles I would say that if we don’t see it before session I would expect that law makers may be applying a little bit of pressure so if it is not during session that’s hopefully early next year of course we stand ready. Our edibles kitchen is fully built out.

We are doing non-infuse sample batches now of all of products. Of course, we have got our partners lined up on packaging that’s the work we are really seeing on now.

So we are anxiously awaiting those products to be available to the Florida market.

Okay, thanks. Appreciate that update.

And maybe just on that what you refer to as R&D facility in California, so I guess you have been able to collect a fair amount of data probably to this point, where do you think that from here as far as the data at your current gathering or does that give you a little bit more confidence as far as what is your visibility and what you are hoping to do in the California market, maybe just a couple of comments around, please?

Yes, sure. So I mean California has been very interesting in that.

We have been unable to begin to make some decisions in that store based on feedback that we have gotten and data that we have collected as lot of folks know and understand the typical dispensary in California is very saturated generally with brands and choices and so forth. And really, we are trying to exercise a hypothesis that while choice is important, the human behavior would also appreciate a curated selection as opposed to just 40 and everything.

And so we are now using the data that we have collected to actually curate down that product mix as well as we will be building out the other side of that store location into a Trulieve branded location and we are playing a little bit about – a little bit with retail experience in that again blend of rec and medical patient format. So it’s informing us on a number of fronts.

I would say, right now the thing that we are most focused on is that curated product selection and a combined rec and medical we will call it legacy market.

Okay, thanks very much.

Thanks, Neal.

Thank you.

Thank you for joining us today. We look forward to updating you on our progress again next quarter.

Have a good day.