Thank you, operator. Good morning, everyone, and welcome to High Tide Inc.'

s quarterly earnings call. Joining me on the call today are Mr.

Raj Grover, President and Chief Executive Officer, and Mr. Mayank Mahajan, Chief Financial Officer.

On September 14th, 2026, the company released financial and operational results for the fiscal quarter that ended July 31st, 2026. 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 meanings of the applicable securities laws, and are based on assumptions, expectations, and 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 September 14th, 2026, our latest annual information form, and our latest management's discussion and analysis, each filed with securities regulatory authorities at sedarplus.ca or on EDGAR at www.sec.gov/edgar or on the company's website at www.hightideinc.com, and which are hereby incorporated by reference herein. Although these forward-looking statements reflect management's current beliefs and 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 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's discussion and 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.

Thank you, Carter, and good morning, everyone. Welcome to High Tide Inc.'

s financial results conference call for the third fiscal quarter that ended July 31st, 2026, which I'm extremely proud to say was the best quarter in our company's history. In fact, our financial performance was so strong, we felt it necessary to release guidance 1 business day after the quarter ended, with even the low end of our initial forecast exceeding even the most aggressive analyst estimates.

Yesterday, we released our full results, which were closer to the high end of the guidance ranges we provided and included many other new positive highlights. Investors can see from these results that not only are we growing our top line, but this growth is now clearly showing up in our bottom line.

Specifically, compared to Q2, our gross profit dollars grew 2.5 times faster than our operating expenses. As a result, 60% of the increase in gross margin flowed down to operating income, which was up 43% sequentially and 133% year-over-year.

The operating income we generated in Q3 of $8.7 million was more than we generated during the first 2 quarters of the fiscal year combined. Talk about positive momentum.

This growth continued all the way to the bottom of the income statement. We generated record net income of $12.7 million this quarter.

Even excluding the fair value change in derivative liability, which helped us this quarter, adjusted net income was $2.2 million, up 186% sequentially and 157% year-over-year. More and more is showing up in the bottom line, which is what we want to see and what we have been promising our investors.

This progress didn't just happen because we pulled a switch in Q3. It is the result of what we've been doing for years.

It is the result of the hard work we have been putting in quarter after quarter and year after year. I'll point to 3 things specifically.

First, owning the customer. With 2.73 million loyal members of Cabana Club across the country, we are up over 11 times from when we launched the discount club model in October 2021.

Second, growing revenue. From $8 million of sales per our first annual report in 2018 to an annual run rate of approximately $800 million today.

Third, finding ways to increase the profitability of our sales and having very tight cost controls, as evidenced by us setting an all-time low this quarter in both trailing G&A as a percentage of revenue and trailing salaries and wages as a percentage of revenue. We are a product of our environment regarding the competitive dynamics within the Canadian cannabis market.

All we can do is try to be proactive and make bold yet calculated moves to try to stay ahead of the curve. Others can struggle to play copycat and try to catch up from behind, but our amazing team is always plotting our next big move and exploiting our competitive advantages in new ways.

Particularly after our Q3 results, I believe that investors can see where the ship is heading. Similarly, we can't always control what the capital markets are doing.

All we can do is run our operations tightly and make sure we are disciplined in terms of capital deployment to maximize value for our shareholders. Again, I think the data shows that we are succeeding.

Even adjusting for the portion of Remexian that we don't currently own, our revenue grew 2.5 times faster than our share count over the past year, and adjusted EBITDA grew 3.9 times faster. While I don't think we are getting much credit for the improvement in per share metrics in the marketplace, I believe it's just a matter of time, especially if our net income continues to ramp as I expect it will.

Trading at an EV to EBITDA multiple of 5.4 times the EBITDA we just reported annualized, we see the current setup as more of an opportunity than a risk. We've always been prudent in managing our affairs and operations to insulate us from being reliant on our share price for survival.

That is why we are still here while so many of our peers have disappeared over the years. We have demonstrated for a few years now that we can increase our store count and grow our business organically, including investing in working capital, all from our internally generated free cash flow and not rely on external equity injections.

This was apparent again this quarter. Driven by $7 million of free cash flow in Q3, which was our second highest level in 9 quarters, our cash balance increased by $10.6 million during the quarter.

Similarly, we have managed our balance sheet extremely carefully. We have no meaningful debt maturities for 3 years, and we still have $25 million available to be drawn on our revolver with Bank of Montreal.

The way we see it, we have no issues regarding fueling our operations or addressing debt that would have to require raising equity near these levels. We have built something truly special and totally unique at High Tide, a global leader in cannabis.

In Canada, we have the preeminent model and brand with 232 stores and revenue on an annual run rate of approximately $650 million. In Germany, our volumes are still ramping, and we continue to set new records a year into our transaction.

Two engines of growth, both running with power, making High Tide the undisputed leader in the 2 largest federally regulated cannabis markets on Earth. While we are continuing to eye other markets and evaluate partners, we are prioritizing discipline in our approach.

We won't feel compelled to make a deal just to say we did or to meet a date on a calendar. There are multiple conversations currently ongoing with players of different sizes, but we won't pull the trigger until we are sure that it's the right opportunity at the right time and right price for our shareholders.

Having already demonstrated how our procurement prowess can directly drive market leadership in a short amount of time in Germany, we are seeing prudent operators recognize the value and wisdom in wanting to partner with High Tide rather than compete with us. With 118 stores we are still planning to add in Canada and Germany scaling so impressively, we have a lot of future growth lined up based on what we already have in hand, we don't feel the itch to rush into the next transaction too quickly.

While we are evaluating opportunities and are engaged in negotiations and market due diligence every day, the strength of our current business positions us well. We aren't desperate to make a risky move and just hope it works.

As highlighted in our press release, Q3 was a milestone quarter with almost every key consolidated metric hitting a new all-time high. Specifically, revenue of $199 million was an all-time high and up 33% year-over-year, representing the fastest growth rate in 13 quarters.

Each of our bricks-and-mortar and medical cannabis distribution segments posted new records. Gross profit was a record $52.7 million, up 32% year-over-year.

Each of our bricks-and-mortar and medical cannabis distribution segments posted new records. Adjusted EBITDA of $16.2 million was an all-time high and up 52% year-over-year.

Each of our bricks-and-mortar and medical cannabis distribution segments posted new records, while our consolidated adjusted EBITDA margin of 8.2% marked the highest level in 12 quarters. Income from operations was a record $8.7 million and up 133% year-over-year.

Each of our bricks-and-mortar and medical cannabis distribution segments posted new records. Cash flow from operations before changes in non-cash working capital was a record $11.9 million and up 44% year-over-year.

I'll now give an overview of our 2 segments, following which Mayank will dive deeper into the financials. In Canada, Canna Cabana continues to lead the way, fueled by the continued expansion of our loyalty program, the Cabana Club.

We are now at 2.73 million Cabana Club members across Canada, up 27% year-over-year. We continue to move forward towards our long-term goal of 3 million members in Canada.

ELITE also continued to post gains, up 62% over the past year and now exceeding 186,000 members that pay us $35 a year to shop in our stores. They say imitation is the highest form of flattery, and we are definitely seeing that in the Canadian cannabis landscape.

Competitors are seemingly panicking and increasingly starting to copy pieces of our model, which has created tighter conditions in many areas. We are the originators of the discount club model that continues to take market share, and we have scale.

Accordingly, we believe we will come out of this period even stronger. With the disruptions in the market, smaller operators are likely to suffer and possibly be wiped out.

At the same time, even without illicit operators, the number of stores in key markets such as Ontario and Alberta have increased by 5% over the past 12 months, reversing the trends of flattening or retrenching that we were seeing a year or so ago. Meanwhile, consumers are being tighter with their wallets given macroeconomic uncertainty and creeping inflation.

Putting all this together, it isn't easy times out there, which we have seen translate to negative same-store sales among our public and private peers. While we see a few more months of touch-and-go conditions ahead, we were pleased to see our same-store sales be consistent with the prior year for the full quarter, and that June and July each posted gains.

The key is we are not losing any customers. On a same-store basis, our transaction count was up 1.1%, which is being offset by slightly thinner baskets as well as some price compression at the wholesale level.

Customers are continuing to see us as their go-to destination for cannabis. Again, we are a product of our environment, and all we can do is aim to outperform the market, and our longer-term trend of outperformance is clear.

Chaining our monthly same-store sales increases since October 2021, Canna Cabana was up 171% to June 2026. In contrast, as the increase in total sales in the 5 provinces where we operate has not kept pace with the increase in the number of stores, the average operator has experienced a 1% sales decline during this period.

Excluding British Columbia, where we have been at the regulatory cap of 8 stores for years, our market share within the other 4 provinces where we operate was 14% during May and June, which was up versus 13% a year ago. Looking ahead, we see a 15% market share as a milestone, not a ceiling.

Excluding stores opened less than 6 months, which are still ramping up, our annualized revenue per square foot in Q3 was $1,721, once again above many leading blue-chip retailers. In June, the average Canna Cabana store was on an annual revenue run rate of $2.6 million of product sales, which was 1.8 times our peer average at $1.4 million.

In Ontario, the largest province and our focus for future growth, our outperformance was even more pronounced. Excluding stores opened less than 6 months, which are still ramping up, our average Ontario store was on a $2.8 million annual run rate, which was 2.4 times our peers at $1.2 million.

For the 12 months ended June 2026, total industry sales in the 5 provinces where we operate were up 3% year-over-year. In contrast, total Canna Cabana sales were up 10% during this period.

With 14 already completed, we believe we can achieve our goal of adding 20 Cabanas during this calendar year and reiterate our long-term target to reach 350 locations across the country. This growth, combined with Remexian's current trajectory, makes us more confident than ever that we will breach the $1 billion revenue mark in the not-too-distant future.

Speaking of Remexian, let's turn to Germany, where we demonstrated significant strength and growth in Q3. Remexian sold 10.2 tonnes of medical cannabis in this quarter, up 35% sequentially and 165% higher than the pace Remexian was on when the transaction closed a year ago.

Remexian's financial metrics also posted impressive growth, driven by the increased volumes. Revenue of $38.2 million was up 21% sequentially, but with cost controls and operating leverage, adjusted EBITDA grew almost twice as fast, up 38% sequentially to $4.4 million, representing a record 12% adjusted EBITDA margin.

Looking at the broader German market, we see incredible appetite for medical cannabis and Canadian medical cannabis products in particular. According to data from Statistics Canada, the value of medical cannabis exported from Canada to Germany reached a record level of $49.4 million in July.

Looking at the 3-month average, we are now at a $517 million annual run rate, up 62% versus a year ago. For us, this shows that we have even more room to continue ramping volumes up to a higher absolute tonnage level, given our superb team on the ground in Germany and unparalleled ability to procure cannabis at best-in-class terms, given our scale and free agent status.

However, with the market growing so quickly, it may be challenging to ramp our market share as fast as we had previously thought. On that front, I know that BfArM significantly restated industry imports for the March quarter, which translated to Remexian having a market share of 10.5%.

While Remexian has experienced impressive growth since March, it will be interesting to see where the industry was for the 3 months ended June and where our market share shapes out. In conclusion, Q3 was once again the best quarter in our company's history, with new all-time records set across the board.

With $25 million of dry powder available for growth from our revolver with Bank of Montreal, we have the resources to keep growing without relying on external equity. I am so grateful to each and every one of our team members globally.

They are working hand in hand, hustling and executing every day, and I'm so proud of all the efforts, energy, and dedication that they bring to High Tide quarter after quarter. Without our superb team, we would have not come this far, and I'm confident that they will take us to even newer heights in the years ahead.

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

Thank you, Raj, and hello, everyone. In Q3, High Tide set multiple new financial records again, across essentially all key metrics.

Let's take a deeper dive into the numbers. Revenue for Q3 was once again a new all-time high at $198.8 million, up 33% year-over-year, the fastest pace of growth in 13 quarters, and up 11% sequentially.

This was the fifth consecutive quarter marking a new all-time high in revenue. While our medical cannabis distribution segment posted a 21% sequential increase, our brick-and-mortar segment also grew a very impressive 9% sequentially.

Consolidated gross margins were 27% in Q3, which was consistent with the prior year and sequentially. Our 2 operating segments posted gross margins which were fairly similar.

Our bricks-and-mortar segment held steady at 27%, while our medical cannabis distribution segment generated 26%. Once again, we held the line on expenses in Q3, showing the power of operating leverage by allowing the extra revenue to flow down to the bottom line.

Salaries and wages represented 11.4% of revenue in Q3, marking meaningful improvements versus 12.2% a year ago and 11.9% sequentially. In fact, this was the lowest level in 12 quarters.

It was the exact same thing regarding general and administrative expenses this quarter. G&A represented just 3.9% of revenue, marking the lowest level in 8 quarters.

This metric was 4.4% a year ago and 4% sequentially. Adjusted EBITDA was $16.2 million for the quarter.

This was up a very impressive 52% year-over-year and 17% sequentially. While the addition of Remexian obviously helped, I note that our core brick-and-mortar segment also grew adjusted EBITDA 11% year-over-year.

At 8.2%, our consolidated adjusted EBITDA margin was at a 12-quarter high. We are demonstrating a rare ability to increase profitability while growing the company at such speed.

High Tide generated $7 million of free cash flow in Q3. While this was the highest level in 4 quarters, I believe it is even more impressive when you look at the components.

Specifically, our cash flow from operations before changes in non-cash working capital. I believe that is the best single indicator of the ability of our operations to regularly generate cash, and at $11.9 million in Q3, it has never been higher.

We invested $1.8 million in working capital in the quarter, which represented only 9% of the sequential increase in revenue. Again, while we may have to continue investing in working capital going forward, we see it as a small price to pay for the growth we are experiencing, and we are well-positioned to be able to finance it ourselves.

Over the past 12 months, we generated $12.8 million of free cash flow. Net income was a record $12.7 million in Q3.

Even excluding the benefit of non-cash derivative changes, we generated adjusted net income of $2.2 million, up 186% sequentially and 157% year-over-year. We believe this will continue to be positive going forward.

We continue to have a strong balance sheet. As of today, at the High Tide level, total debt stands at $60 million and have not yet drawn on our $25 million Bank of Montreal debt facility, which provides a great resource to fuel more growth ahead.

In closing, Q3 was a breakout quarter for High Tide, with records across the board. Every month that goes by, we continue to cement our leadership in the 2 largest federally regulated cannabis markets on Earth and increasingly translate that into profits for our shareholders.

Thanks to our amazing team, without whom none of this would be possible. With that, I will now turn the call over to the operator to open the line for the question-and-answer session.

Thank you.

Thanks very much. Congrats on a good quarter here.

Raj, I wonder if we could start and chat on Germany a little bit. Obviously, it was a great quarter for the Q3 numbers.

If we go back to last year, Q4 was when you closed the transaction, but it was also impacted by the import quota in Germany. I'm wondering what your thoughts are as far as potential impacts that we may have going forward.

In last year, then it sort of carried forward once they increased the quota, then it cleared through some inventory at some lower margin rates. Just wondering what you're sort of seeing as we get into sort of a similar time frame where we had those impacts last year.

Good morning, Neal. Thank you so much for your question.

Look, the German market is absolutely on fire, and the demand for Canadian cannabis is tremendous there. Canadian medical cannabis exports to Germany, Neal, are now approaching almost a $600 million run rate, and July was up 150% year-over-year.

Our results are obviously clearly showing that Remexian is participating in that growth, and I'm really looking forward to seeing what our June quarter market share looks like when that industry data comes out. Again, very, very bullish on Germany.

We actually believe that Remexian will now reach a higher steady-state volume level than we were originally expecting on tonnage, and that is what the financial opportunity for us is, right? With the overall market expanding so quickly, I think we can gain share.

It may take a little bit longer given how much the market has grown, but I think we can gain further share in the German market. On your question on the import quotas, that happens practically every single year.

It happened last year as well. Everyone faced the music for about 4 to 6 weeks, and then we got the approvals for additional quota.

It's actually anticipated to go down the same way this year, but we're not concerned. Sales are looking really strong, very much in line with what we did in Q2, Q3.

I wasn't quite honestly expecting that we'll be here so quickly, 11 months or 12 months after the transaction closes. Things are looking great.

Import quota can become a short-term issue, but it's definitely not a long-term issue.

Yeah. No, the market looks like it's doing quite well over there.

On the gross margin over on the medical cannabis distribution, sort of consistent between Q2 and Q3, is this sort of like the normalized level that you sort of expected aside from any disruptions going forward?

Look, the gross margins has also surprised me on how quickly we've been able to ramp up. Like I've been saying it from the very beginning, Neal, that we have something very special in our hand here in Canada, right?

Outside of the governments, being the largest federally legal buyer here in Canada, we're procuring biomass at unbelievably attractive price points. Despite the price compression that's taking on in Germany and has been happening for quite some time, it's not touching us.

We're actually raising our gross margin profiles. Q2, as was 27%, which jumped from 12%, 13% a quarter before in Q1.

Now we're at 26%. I think we can maintain this margin trajectory or be very much in the high or mid-20s going forward.

I am not concerned about where gross margin will land in the future. I'm actually very, very happy where it's sitting right now.

Great. Last one for me.

In your prepared remarks, I sort of took away the impression that expanding into the UK or other international markets, maybe pricing is becoming a bit of an issue. You talked about making sure you're doing the right thing for shareholders, which obviously is the best thing.

What are you sort of seeing there in that landscape as far as potential acquisitions or entry into some of the other international markets?

Absolutely. Look, UK is a very exciting one.

UK is a smaller market than Germany, but it's growing significantly faster. I've been meeting operators of absolutely all sizes across the supply chain to build a thorough understanding of the market.

We've been doing it for almost 5, 6 months now. We're evaluating different ways and what gives us confidence that we'll be able to identify the best opportunity for our shareholders.

Neal, you can clearly see how much growth we have ahead in Canada. We can still build about 118 stores in Canada alone that gets us to our 350-store mark.

We have absolutely no pressure to do a deal. With so much runway in Canada and Germany, we don't want to rush into the UK or any other market at any cost.

We'll take our time, but I can tell you can also happen at any time, stay tuned. We're being patient because we're busy.

We've got a ton of growth ahead of us.

That's great. Appreciate your colour there, Raj.

I'll pass the line.

Hey, good afternoon, everybody. My first question is a little bit more hypothetical.

I guess with Curaleaf looking to buy Aurora with a goal to maybe use Aurora's supply to help meet their international demand, how do you think a potential tie-up between those 2 would impact the German marketplace and/or impact your vision of using Canadian supply to feed your international operations?

Good morning, Bill. Thank you so much for your question.

Look, it's a little sensitive, and for that reason, I don't want to take any sides at all given the obvious sensitivities here, right? That said, should that transaction proceed, I would view it as effectively 1 competitor leaving the marketplace, right?

Aurora is no joke. They're a serious competitor in the medical field, and I think if they leave, it would be good for Remexian.

Again, as we don't have any grow facilities, we are much better positioned, I believe, than anybody else as free agents to work with all LPs regarding exporting as we don't compete with them at all. Things are looking pretty good from that element, and if Aurora gets out of the race, I am not the one complaining.

Got it. Then if I can switch to Canada, June and July were a return to positive same-store sales, but it seems like there's a little bit more stress, or at least potential stress, on consumers right now.

Maybe what are you seeing in terms of consumer habits recently, and how does August look for same-store sales in Canada?

Absolutely. Look, the Canadian market is definitely going through some ups and downs right now.

You can see the news every single day just like I can, what is happening with the trade war. It's not getting easier, it's getting tougher.

We've got absolute data to examine that none of our customers are leaving us. This is why we put the transaction numbers along with the same-store sales numbers.

We were actually up 1.1% on the transactions, Bill, and that is continued in August and that has actually continued quarter-to-date. The landscape is very much where it was in Q2, Q3, right?

It's not changed much. What we're seeing is we're getting more and more transactions coming in, which means our customers are not leaving us, which is the best news.

If we can keep our customers, as soon as they have more money in their pockets, I know they're going to spend more, but they're definitely building thinner baskets, Bill, right? They are going for ounce bags instead of going for 3.5 g.

They're buying slightly less per visit, but this is purely resembling the inflationary pressures we're feeling and the job stress that's very real in the Canadian market. Once again, I'd like to emphasize, Bill, that our transactions are actually up in August and our transactions are actually up quarter-to-date, which means we're taking more and more share of this legal cannabis market in Canada.

Thank you, Raj. That's perfect.

I'll pass it along.

Thanks. Good morning.

Thanks for taking my questions. Congrats on the great quarter here.

Just going back to Germany, Raj, very strong growth there in terms of volumes. Are there any capacity constraints in terms of your ability to keep growing at that same pace and distribute product in Germany?

Good morning, Fred. Thank you so much for your question.

Look, I think we have lots and lots of room. We're not exhausted yet.

Remexian is absolutely firing on all cylinders. As you can see, every single quarter since the acquisition, the tonnage has moved up exponentially.

We've gone up from even 7.6 tonnes in Q2 to 10.2 tonnes in Q3, again far exceeding our expectations. It's not stopping.

We're in a really good place right now. We're in the middle of Q4, and nothing has changed in that regard in terms of the healthy profile that we're seeing there.

I can tell you that I'm waiting very excitedly for the numbers to come out in June, for the June quarter, to see where our market share stands, because we believe we're taking so much market share in Germany and we're doing some great business there. It's absolutely continuing.

I think we continue our march towards that 15%, 20% market share in the long term in Germany, which is exponential for any operator.

Thank you. Then second question, just going back to Canada, you mentioned some of the headwinds impacting the market, and same-store sales growth was flat this quarter.

You mentioned that you saw an increasing number of stores in Alberta and Ontario year-over-year. Do you think that that's going to continue?

We're going to keep seeing number of stores growing in those two markets, or do you think that the market could go back to I guess a contraction in terms of number of stores given the current headwinds?

I think the latter. I think the market could go back to contraction again.

Again, you can't control the new participants that are going to come into the race that are probably not so attuned to the public markets in cannabis and everything else that's going on, so that happens from time to time. We continue to grow.

Some other chains are also growing, so that continues to increase store count. I think, even the way I'm looking at the market, if this trend continues, I'm more in the market for acquisitions than organic growth, although organic growth has been the beacon at High Tide.

That's how we're leading the country. That's the best type of growth we can provide to our shareholders, returning the best type of value.

I think in the quarters ahead, you could start seeing some declines again. I was a little bit surprised actually to see that the overall store count has gone up 5% in the last 12 months.

Thank you very much.

Thanks. Good afternoon, everyone.

I wanted to start with Remexian, and specifically, since you guys have acquired it, you've been pretty active in factoring the receivables that look like it's attributable to Remexian. I just wanted to check and see, I guess first of all, what's the rationale for this?

Then secondly, is this something the previous owners did? Do you expect to continue at this same pace going forward?

Thanks.

Hi, Luke. Thanks for your question.

Yes, I absolutely see our factoring relationships continue in Germany. We're getting a bit of this special treatment factoring.

When we hear the word factoring in North America, we start thinking 17% to 20% interest rates. That's absolutely not the case in Germany.

We're getting factoring done for sub-9% and it's working out really, really well. The receiving parties, which are the pharmacies in Germany, are really creditworthy and there's absolutely no issue at all, we believe that we can actually continue to increase that factoring spend or continuing to dabble into it, because we're actually very uniquely positioned in that regard.

That's because of the former relationships of Remexian and its sister company prior to us getting this transaction done. We are absolutely taking advantage of it, and we are not seeing it slow down, and we're not having any issues at all regarding creditworthiness of the operators that are buying cannabis from us.

Got it. Thanks.

Then for my follow-up here, if we switch over to the Canadian business, it's pretty impressive that despite everything that's going on in the Canadian market, you guys still are able to deliver operating leverage. If we look at the individual line items, obviously, this quarter, salaries, wages, and benefits was where you found the most leverage.

I'm curious to know, I guess this is a two-part question. First is, do we expect that to continue going forward, where most of the operating leverage that you're going to be generating is on salaries, wages, and benefits?

Then secondly, what exactly is it that's driving that? I'm trying to think of each incremental store that you add, it's mostly just going to be the in-store labor component of that, and then that's going to be supported by, we'll say, the other support staff or district managers, that sort of thing.

Is that the reason why you're able to get leverage, or is there something else that you guys are doing there? Thanks.

There's a lot there, Luke, and I won't share all of my secret sauce, but I will tell you this, that this was the lowest trailing G&A and lowest trailing salaries and wages line we've ever reported, right? This is music to my ears, and this is not the work that we've just done in Q3 or Q2.

This is an accumulation of our strategy right since the beginning. We run a very tight show at High Tide.

We count every dollar at High Tide, whether that's G&A spend or salaries and wages line. Again, we built a massive scale here in Canada.

We have 232 stores now, and you're absolutely right, we don't need that many more district managers and we don't need that many more regional managers, and it's mainly the labor that's running the stores. We're also finding a lot more other efficiencies, which we've always been on top of, and when you combine all of these initiatives, you can see, again, trailing G&A lowest ever, trailing salaries and wages lowest ever.

I won't say that it continues to eternity, but I think we're going to keep our show pretty tight as we've always done, Luke.

Got it. Thanks so much.

Good afternoon, Raj, and again, echo the congrats on the quarter. I just wanted to hit on your free cash flow.

Obviously, very strong despite the working capital usage for Remexian. I guess I just wanted to get a sense of how should we be thinking about your normalized consolidated cash conversion?

Then given your new credit capacity and your stronger earnings base, how are you ranking the use of that incremental cash amongst your various initiatives, whether it be organic store openings or acquisitions, debt reduction, etc.? I'll

take the second part of the question first, and then I'll pass it over to Mayank on the first part. Look, we've got a lot of uses for cash.

Mainly, Derek, you know that we build all of our stores organically with our own internally generated cash flows. Trailing cash flows are over $12 million.

This quarter alone, we reported $7 million. Even if we build 30 stores a year, that's eating up around, if we build 30 stores a year, that's eating up around $9 million, $10 million in cash flow.

Remexian is absolutely exploding, we also need to fund that growth. That is where mainly our cash components are going right now, and I'm very happy with that allocation.

Regarding the first part of your question, I'll pass it over to Mayank.

Thanks, Raj. Derek, on your first question, how we are seeing the outlook of the free cash flow, as Raj mentioned before, cash flow can change significantly, up and down, considering the business we are in.

We are very opportunistic, as and we are very disciplined at the same time, too. We will keep running our show tight, we will keep delivering the great numbers, and as the opportunity grow, we will capture that opportunity.

That's helpful colour. Then just maybe one last one on Remexian.

Obviously, you still see a path of margin expansion, just maybe remind us, and particularly I guess as the Canadian sourcing increases and the platform scales, can you just maybe remind us about what you're thinking in terms of the longer-term margin opportunity, and what proportion of the volume is now sourced from Canada?

Absolutely, Derek. There's still plenty of room there.

We are nowhere near finished leveraging our Canadian LP relationships to bring high-quality cannabis to Germany on best-in-class terms. I've been saying this since we purchased Remexian and even before that.

With medical volumes rising rapidly in Germany, we're consistently onboarding new producers to meet that demand. Gross margins were 27% in Q2, 26% this quarter, fairly consistent.

Even though price compression is inevitable, our unique procurement capabilities that we have here in Canada are going to provide and partially offset that. I think we'll settle in the mid to high-20s over the long term, Derek, and I couldn't be more happier with that because for distribution business, if we are talking about mid to high-20s, we're looking pretty good with the way our tonnage continues to go up.

Absolutely. Thanks, guys.

Anything. Thanks for taking my questions, gentlemen, and congrats on the quarter.

I was wondering about same-store sales and the positive growth there in June and July, if you could talk about what was driving the inflection. Could you talk about what's kind of behind those numbers in terms of customer traffic, basket, assortment, ELITE penetration, what's behind that positive uptick?

Good morning, and thanks for your question, Matt. It's all of the above.

It's absolutely all of the above, but most importantly, it's our dominant discount club model that we launched in October of 2021. Today, our brand is the talk of the town.

Our brand numbers are so strong, they're twice as much stronger than our next competitor. One of the competitors in public markets, our main competitor reported a very large negative same-store sales number.

That is absolutely not the case with us. Again, we're not just fighting the battle on price.

We have a loyalty moat. We have multiple moats that are part of our business now.

We have 2.73 million members of the Cabana Club. We have 186,000 ELITE members that pay us $35 a year to shop in our stores.

Once they become paid members, they become even more loyal. Our loyalty loop is extremely strong.

That's what I'd put first. We don't sacrifice on location quality, Matt.

We're always ahead on locations. We talk about location, location, location all the time.

I keep saying whether it's food or clothing or cannabis, that equation does not change, let's not get it wrong. I think when you put all of this together with increasing amount of other elements like white-label initiatives that we're bringing in, we're able to maintain a much decent same-store sales trajectory than anybody else in the country.

Excellent. Then just as a follow-up to that, could you talk about when customers convert to ELITE, what data you're seeing in terms of measurable differences in their shopping behavior in terms of increasing their spend, the frequency, anything that you can share in terms of how the customer dynamics change when someone goes from the free to the paid ELITE status on your membership?

Absolutely. Look, because they're more loyal, they made a commitment to the program and they're part of our ecosystem, we see them definitely building higher baskets, and they also shop more often with us.

If you combine those two elements, you've got more sales and more juice coming out of them.

Excellent. That's all I had.

Thanks so much.

Thank you, operator, and thank you to everyone for your interest and continued support for High Tide. We are so proud of this record-breaking quarter, and we remain very excited for High Tide's global prospects ahead.

With that, I will ask the operator to close the line. Have a great day, everyone.