Good morning, ladies and gentlemen. Welcome to Village Farm International's Third Quarter 2024 Financial Results Conference Call. This morning, Village Farms issued a news release reporting its financial results for the third quarter ended September 30th, 2024. That news release, along with the company's financial statements, are available on the company's website at villagefarms.com, under the investors heading. Please note that today's call is being broadcast live over the internet and will be archived for replay, both by telephone and via the internet, beginning approximately one hour following completion of the call. Details of how to access the replays are available in today's news release. Before we begin, let me remind you that, forward-looking statements may be made today during or after the formal part of this conference call. Certain material assumptions were applied in providing these statements, which are beyond our control. These statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those expressed or implied in forward-looking statements. A summary of these underlying assumptions, risks and uncertainties is contained in the company's various securities filings with the SEC and Canadian regulators, including its Form 10-K and MD&A for the year ended December 31, 2023, and 10-Q for the quarter ended September 30th, 2024, which will be available on EDGAR and SEDAR+. Those forward-looking statements are made as of today's date and, except as required by applicable securities laws, we undertake no obligation to publicly update or revise any such statements. I would now like to turn the call over to Michael DeGiglio, Chief Executive Officer of Village Farms International. Please go ahead, Mr. DeGiglio.

Thank you, Tonya, good morning and thank you for joining us today. With me are Steve Ruffini, Chief Financial Officer; Ann Gillin Lefever, Chief Operating Officer; and Patti Smith, Corporate Controller; and Sam Gibbons, Senior Vice President of Corporate Affairs. I have a little bit of a cold today, so I may do some coughing and I apologize for that. So let's get going. Our third quarter reflects strong outperformance from our Fresh Produce business, which we anticipated following the softer pricing we experienced in Q2, as well as continued solid growth and leading market share in Canadian cannabis as our teams continue to excel across all brands, form factors and geographies. Fresh Produce sales increased 20% to nearly $43 million, gross margin of 8% improved 400 basis points year-over-year and Fresh delivered positive adjusted EBITDA and net income of $2.3 million and 0.4%, respectively. Continued execution in these areas along with further expansion of our partner sales remain an important focus area to support the value of Fresh Produce business as we work towards achieving sustained profitability in this business. As a reminder, we believe Fresh has great value as a top North American produce marketer and it's a critical component in our ability to maintain optionality of a potential rollout of a permissible cannabis strategy in the U.S. either NASDAQ permitted or Texas based. Now turning to Canadian cannabis. Total net sales grew 29% year-over-year, all organically without acquisitions to roughly CAD 15 million. Branded resale sales grew 22% and we were once again profitable with positive adjusted EBITDA of CAD 6.5 million and cash flow from operations of CAD 6.1 million. We're also very excited about continued growth in international medical sales, which doubled year-over-year with continued increases in sales to our Germany, Australian and UK partners in Q3 and year-to-date. According to German cannabis outlet Flows, our strains currently ranked #1 and #3 cultivars in the German market through a supply agreement with one of our partners, which reflect continued strong reception to our strains with international customers. We continue to hold the #2 LP position in Canada and were the fastest-growing Canadian LP over the past year, experiencing revenue growth across all sales channels. We maintain #1 market share in Ontario and for the first time ever have achieved #1 market share in Quebec, giving Village Farms a #1 market share leadership position in Canada's two most populous provinces. We maintained the #1 market share in flower in Canada and then grew that market share by 2.7% during the third quarter. We also continue to hold the #2 position in pre-rolls nationally and improved our market share in pre-rolls by 2.3%, compared to last year. Over the last year, we've improved our market position in pre-rolls from #4 to #2. Super Toast, our mill flower brand continues its outstanding performance despite the mill category being very competitive with a well-entrenched leader. Super Toast currently sells in five provinces and remains the third fastest growing of all brands nationally. During the third quarter, we also began to realize sales from our recently announced BC trials program, our grower-led initiative designed to bring exclusive access to limited release strains. We also introduced three trial strains that are driving revenues in British Columbia now, and we are looking at expanding this small batch, limited-release strain initiative for other provinces in the coming quarters. And as we continue to adjust our product offerings to appeal to the many cannabis connoisseurs across Canada. Finally, we continue to innovate and flower with new strains that delight our consumers. We're pleased to announce that, we've introduced a new strain called Neon Lambo. I'm a Corvette guy myself, but to the market during the fourth quarter. Early reception to this strain has been excellent with our customers, and initial order rates give us solid optimism that, this strain can achieve similar success to our former launch of Fishguard, which became a top five selling strain across all of Canada. We also have some exciting new brand and product introductions planned in the vape and infused pre-roll categories, where we under-indexed for later, in this Q4 and Q1 of next year. And we're excited to be able to share more on these launches next quarter, but for now, they reflect continued stellar execution by our brand and product innovation teams to identify opportunities for us to profitably grow market share across the white space opportunities. Moving to the U.S. cannabis business. We're starting to see signs of stabilization and the team has begun to invest in growth initiatives. We're still exposed to challenges caused by the proliferation of unregulated hemp-derived products across the United States, but we're looking forward to more stable performance from this business in the future. Before I move on to discuss our international business, I want to provide some additional discussions of some of our out-of-stock cultivars, which impacted sales velocity during the third quarter. After a very strong first half of sales in the Canadian cannabis space during the third quarter, we experienced some out-of-stock inventory in several of our most popular SKUs, which impacted sales performance. We estimate this resulted in lower sales of approximately $2.5 million during the third quarter. Restocking of these SKUs began back in September improving our market share performance in the mill category after experiencing slight delays and declines during the first two months of the quarter. And we believe we'll be back to normalize in stock levels across the board by early first quarter of next year. During the second quarter, we made a strategic decision to move away from some lower profitability SKUs and raise prices on others, as we plan to be more selective, as we prioritize higher profitability sales over volume. We also chose to take advantage of strengthening pricing in the B2B market to sell non-branded spec inventory. Overall, Canadian gross margins of 26% were impacted by these non-branded spec sales. And if we executed those impacts, gross margin in the third quarter would have been 31%. The Canadian cannabis industry has significant overcapacity, which has resulted in unhealthy accumulation of inventory and created pressure on pricing in addition to the egregious excise tax that the Canadian industry pays. Our team remains very in tune with supply dynamics. With a growing international medicinal business to an increasing number of attractive markets like Germany, we are in a great position to be more selective with our allocation of high-quality flower across our various sales channels and customer relationships, sustaining our focus on driving more profitability from our sales. We've got a ton of opportunity internationally to make higher ROI capital allocation decisions, and given continued egregious challenges with the excise tax in Canada, we're not allocating additional capital from our balance sheet to increase capacity at our Delta 2 in greenhouse at this time. We're focusing our resources on higher ROI investment opportunities, which brings me to the recent update at our Leli Holland subsidiary in Netherlands. We put an updated investor presentation on our website yesterday, by the way, which contains some new information about the Netherlands market. We would encourage you to all take a review of that information. But as a reminder, our Leli Holland subsidiary has one of 10 licenses to supply recreational cannabis to coffee shops in the Netherlands. We announced last month that, we have completed construction of our indoor cultivation facility and dropped in the Netherlands, and I can confirm today that, we've begun cultivation in October and are on track to have our first sales during the first quarter of next year. We believe a great comparison for the Dutch market is a province of Quebec in Canada, where I mentioned earlier, we established the number one market share position during the third quarter. Some estimates based on comparable per capita consumption patterns with a Dutch population of 18 million indicate that, a full legal market could be somewhere between EUR 3 billion and EUR 3.5 billion revenue market opportunity annually, at maturity. We believe the quality of our operations at Leli puts us on a clear path to profitability and generating strong returns on this investment. As there is no excise tax in this regulatory jurisdiction and much more favorable product pricing, which will enable us to have stronger fundamental performance than we do in Canada by far. Over the next couple of quarters, our Tracking facility will be ramping up to full annualized capacity of approximately 2,000 kilos of dry flower. We anticipate pricing per gram of approximately EUR 6, which would put us on track to generate revenues of approximately EUR 12 million on an annualized basis. Over time, we have the potential to vertically integrate by acquiring coffee shops, which would help to improve margins and we look to add capacity as demand dictates. That concludes my summary of our third quarter highlights. I will now turn the call over to Steve to review the financials before I make some closing comments.

Thanks, Mike. Starting with our consolidated results. Total sales grew 20% year-over-year to $83.4 million with strong top-line growth in both Canadian cannabis and fresh produce. Net loss narrowed to CAD 800,000 or CAD 0.01 per share from a CAD 1.3 million loss last year, notably with positive net income contributions from both Canadian cannabis and Fresh Produce. Consolidated adjusted EBITDA was positive CAD 5.3 million, up 65% from CAD 3.2 million for Q3 last year, again with positive contributions from both Canadian cannabis and fresh produce. I will now turn to the business segments individually starting with fresh produce. As expected, we saw a return to more normalized tomato pricing during the quarter. Q3 sales increased 20% year-over-year to $42.8 million. Growth was driven by higher volumes from both our own production and that of our partners. You can see the continuing positive impact of our success around yield expansion and cost efficiencies in our gross margin for the quarter, which was up 133%, compared to that of third quarter last year. I will note that, here the volumes from our own facilities for Q3 were up 25%, compared to the same period last year. Adjusted EBITDA tripled to CAD 2.3 million compared to CAD 800,000 last year. Canadian cannabis delivered another strong quarter of total net sales, up 27% year-over-year, driven by increases in retail branded sales, non-branded sales and international sales. Together, these drove another quarter of positive adjusted EBITDA of CAD 6.5 million and operating cash flow of CAD 6.1 million. Retail branded sales grew 20% to CAD 37.2 million. It was also another strong quarter for non-branded sales, as we continue to be opportunistic with more favorable pricing, which is much improved from last year. Non-branded sales were up 68% versus Q3 last year to CAD 10.1 million. As Mike mentioned, we also saw continued momentum in our international medicinal sales, which were up 111% from Q3 last year. Canadian cannabis gross margin for Q3 was 26% in line with Q2 and down from 35% in Q3 last year, due to the increased non-branded spec sales Mike mentioned earlier, which are lower margin. Excluding the non-branded spec sales, gross margin for Q3 improved to 31%, which was up from Q2's 28%, returning us to our target range of 30% to 40%. SG&A expense as a percentage of sales for Q3 improved to 22%, down from last year's 26%. Q3 adjusted EBITDA for Canadian cannabis of CAD 6.5 million was up 5% from Q3 last year. Before leaving Canadian cannabis, I will once again highlight the impact of the egregious excise tax we pay on retail branded sales. Total excise tax paid in Q3 was CAD 24 million, which brings our year-to-date total to CAD 78 million. As I have noted before, this is the largest single expenditure within our cannabis business and factors heavily into our capital allocation strategy decisions. Turning to our U.S. Cannabis business. Q3 sales were CAD 3.9 million with a gross margin of 63%. Our Q3 sales were impacted by additional states moving to restricting intoxicating hemp-based products, as our responsible GMP produced natural hemp products are caught up in several states attempts to deal with the proliferation of unregulated hemp-based products, most notably synthetic products. We continue to progress on multiple initiatives to reinvigorate sales, while we manage the cost side of the equation. The team has stabilized the business against these headwinds and has now turned to growth initiatives, which include new SKUs with innovative formulas and flavor profiles. Q3 adjusted EBITDA was negative CAD 159,000 and net loss was negative CAD 192,000, both were improvements over Q2. Finally, we are pleased with net income of CAD 300,000 from Village Farms Clean Energy during the third quarter. This project began operations at the Delta RNG facility in April, and royalty payments are now being received from our energy partner to provide a healthy stream of incremental profits for the company going forward. Turning to consolidated cash flows and the balance sheet. We generated cash flows from operations of CAD 4.1 million our second consecutive quarter of positive operating cash flow. We ended Q3 with cash of CAD 28.7 million and working capital of CAD 65.4 million. Total term debt at the end of Q3 was CAD 43 million split equally between fresh produce debt due May 2027 and cannabis debt, which matures starting in February 2026. We have longstanding, multi-decade relationships with our lenders and are confident we will extend our cannabis term facilities in the coming months. We believe we are our lenders' top performing cannabis facility. Last quarter, we amended and extended the agreement of our CAD 10 million revolving line for Fresh Produce, which has a current balance of CAD 4 million to a May 2027 maturity date. We also have in place a Canadian CAD 15 million cannabis line of credit, which is currently not drawn on. We remain comfortable with our net debt level of CAD 18.7 million. And I will now turn the call back over to Mike.

Thank you, Steve. In closing, just to summarize, we are very pleased with our third quarter results, our improved performance in Fresh business and continued solid execution with our cannabis strategy. We are building strong momentum in our international business, which should help us continue to improve overall profitability and ability to generate positive cash flow. Our flower is increasingly being sought out by international partners and consumers, based on the reputation and success of our leading brands and cultivars in Canada. We are very excited about the commencement of sales from our Leli Holland subsidiary in the Netherlands during the first quarter of next year, and we will continue to explore additional high ROI opportunities to expand our international business into new jurisdictions, as policymakers in Europe continue to embrace the many benefits of the regulated cannabis industry. I'd like to close on a recent news that, Village Farms was the only cannabis producer to be selected as a witness for the DEA's upcoming hearing regarding the proposed rescheduling of cannabis in the United States. As a U.S. company with one of the leading global cannabis franchises, including our top-ranked U.S. cannabinoid brand, CBDistillery and some of the most attractive greenhouse assets in the United States, it was incumbent on us to submit an application to advocate for what we believe is one of the most important movements in health and wellness in our lifetime. Our inclusion in the hearing is a testament to the depth and breadth of our expertise and experience in the cannabis industry broadly, as well as right here in the United States, including our deep involvement in Colorado. We realize it has been a challenging last couple of days for cannabis following election results, with much of the sector trading at all-time lows. We have not rushed into the U.S. market for these very reasons, and we'll continue to be patient as we evaluate our opportunities to enter the market at a time that makes sense for our business and shareholders. That said, though, I am however very upbeat on the new administration towards the legalization of cannabis in one form or another. Nearly after zero impact towards cannabis legalization in the last four years, I really truly believe we have good blue skies ahead. We are also in a great position as one of the only profitable operators in Canada, with a lot of compelling profitable growth opportunities in front of us, and we are proud of the opportunity to represent the industry as a credible voice with regulators. That being operating for almost four decades in controlled environmental agriculture, we look forward to the opportunity to share our diverse knowledge and unique perspective at this hearing, which is expected to be during the first quarter of 2025. And now, operator, we're ready for any questions.

Thank you. Our first question will come from Aaron Grey from Alliance Global Partners. Your line is open.

Hi, good morning. Thanks for the questions. And, I know stakeholders across the industry are wishing you luck in this rescheduling hearing, so appreciate the efforts made there. So first question for me, just in terms of the decision to not expand the Delta 2 facility at this time. As we think about planned allocation of product going forward, in the prepared remarks, you spoke a lot to focus on profitability. So, as you're building out your international presence, not just in the Netherlands, which has its own facility, but more broadly speaking, how do we think about allocation in Canada versus international? And then, within Canada, you mentioned moving away from the lower profitable SKUs. So I imagine that kind of goes in line with the thought of not expanding those two facilities. So just a broad overview and how you're thinking about allocation of product with that? Thank you.

We've adopted a strategy focused on examining our margins and reducing lower-priced SKUs. We plan to either raise prices to make them stick or allocate our flower to higher-margin markets, particularly as international markets are expanding. We have a strong outlook for Europe, where there is a clear and practical approach to legalization, representing a significant market potential. We're likely one of the few operators active in both the medicinal and recreational sectors in Holland. Regarding Canada, we're quite disappointed that there haven't been any updates on legislation since legalization occurred seven years ago. As noted previously, the excise tax is extraordinarily high. This year alone, we will pay over $100 million just in top-line tax, excluding property tax, payroll tax, a $4 million licensing fee for having a license, and income tax. It's quite excessive. Until there is movement in Canada, we will be more cautious about how we allocate our flower. We are very optimistic about investing in Europe right now, so we want to be careful with any capital expenditures in Canada. However, it's important to remember that we have the largest footprint in Canada, so we are not considering building new facilities. Instead, we can convert additional space quickly when the timing is appropriate. Our facility in BC is capable of serving 40% of the entire Canadian market. Therefore, converting that space won't take long when the right moment arises, but for now, we believe it's best to stay the course and not overextend ourselves, as we are committing substantial resources to Europe, and we will assess our situation on a quarterly basis.

Okay, thanks. Appreciate that color and commentary there. Second question for me. Just within the Canadian market, some of the impact you mentioned on the added stocks on some popular SKUs. So just more color you could offer in terms of was there some impact that was specifically due to the provincial buyers there or was it more so just your need in getting the right products inventoried? I know you mentioned you expect it back to normal levels in 1Q '25. So just some additional color in terms of the drivers and the impact there, because I know sometimes it can be internal and sometimes it can be just structural issues with the provincial buying boards as well. Thanks.

Sure. I'm going to let Ann respond to you, Aaron.

Hi. Good morning, Aaron. Great question. The answer is, it's entirely on us. So it's all internal. It had a lot to do with higher demand that we experienced and expected. As you know, you can't just speed grow a plant. So you got to catch up growing to the demand. And so, that's why we're projecting improvement by Q1.

All right. Thank you.

One moment for our next question. Our next question comes from the line of Eric Des Lauriers from Craig Hallum Capital Group. Your line is open.

Great. Thank you for taking my questions and congrats on the strong results this quarter. First question, maybe piggyback a bit on one of Aaron's questions. Can you just elaborate on your overall pricing plans? I mean, should we think of this as mostly being a sort of mix shift from perhaps non-branded spec in Canada to then just shifting that towards international, where you get sort of higher average pricing, or are there plans to increase pricing across the board or in certain categories? Just wondering if you can elaborate a bit more on the pricing plans. Thanks.

I'm going to let Ann give you color on that. But, I would say, all of the above. It's just a continuous process of looking how the market is changing in Canada. We think we're the number one player in Canada. I totally do. When you look at not just our #2 market share, #1 in a lot of the categories, almost three years in flower and being cash flow positive and EBITDA positive the entire time, because the business is only a business, if you're making money. And so, we love our position in Canada, but we want to obviously drive higher profitability. Specific to Canada though, Ann, you want to answer that?

Yes. So Eric, there are a couple of important points. The retail market pricing is no longer decreasing as it did in previous years, leading to a stabilization of the average price per gram at retail across Canada. However, we don’t see an opportunity for a general price increase. Our team remains focused on exploring pricing opportunities at the SKU and brand levels to make informed proposals. Additionally, pricing increases can benefit not just us, but also the retailers, as the provincial boards are supportive of pricing adjustments when justified. If we analyze it correctly and make the right proposals, we view it as an opportunity, especially since we have already taken actions in 2024.

All right. That's very helpful. And then, next question from me, just regarding the indoor grow in Holland, obviously this is early days you guys just planted last month. But, can you just kind of talk about your confidence in the overall cost structure of that operation? And, I guess just overall sort of operational differences between indoor versus obviously your greenhouse expertise. Just wondering sort of how you're thinking about that and how confident you are that you can produce at a nice profitability level? Thank you.

Sure. I mean, we do have an indoor facility as you know in Canada, 55,000 square foot. Look, indoors easier as far as than greenhouse. I'll just tell you straight out because everything's more or less in your control. Of course, it has a higher price to it. You have to be very selective. The design we create, I mean, we've been designing cultivation facilities for near four decades. So the team we have is excellent. We don't overdo it. And we think we built just a fantastic facility. We have plenty of megawatts there. We put the most advanced lighting and we're very bullish on it, because remember, at EUR 6, that's equivalent to almost CAD 9, CAD 10 with no tax, even if the cost is 15% more, the selling price is 8x more. So we're very bullish on it. In fact, we're very proud that we've gone to totally a seed base here, first time for the company to growing. We're growing from seed. This way, we just keep it sterile and excited about the future there.

Awesome. Thank you for the color.

Thank you, Eric.

One moment for our next question. Our next question comes from the line of Michael Regan from Excelsior Equities. Your line is open.

Hi. Thank you for the question and congratulations on a successful quarter. Following up on Eric's comments about the comparative costs of the Holland facility versus the Canadian facility, I'm noting that the pricing is significantly higher at 8 times, with no excise tax, and costs that are only 15% more than in Canada. Shouldn't the margin be much higher than what we're currently observing in Canada, or is there another factor I might be overlooking in relation to the 13% EBITDA margins?

The cost will be more than 15% higher than our greenhouse costs. It is indoor.

Got it. Okay. So, is there any reason it wouldn't be at least the Canadian cannabis margin adding back the economic numbers?

It will be well in excess of the Canadian and more the margins will be more in line with our U.S. margins.

Which are?

60%.

Our U.S. margins are in 60%, 70% range. So just to be clear, I mean, we haven't published a lot of the information. So apologize if we're being a little conservative here. Don't want to let everything out. But, Mike, you know the industry, you can do the math on it, compare it to Canada. Keep in mind that, overall costs are higher in Holland, but that's a reflection of again the price and in our model EUR 6, but there are products that sell up to EUR 50 in the Netherlands. I've seen it there. So it's early days, we'll see where it goes, but we're extremely bullish.

Got it. Okay. Following up in Canada, regarding the non-branded sales, are those more opportunistic because the pricing is favorable and you have inventory to sell, or is there any relationship building or recurring selling as some of those larger operators transition to the asset-light model?

The sales that you're seeing in this quarter and pretty much year-to-date have been opportunistic related to the opportunity that we're seeing in the pricing. B2B pricing has strengthened significantly over the year.

And remember, Mike, there's no excise tax on B2B or international unlike branded sales in Canada. At that level of insanity, you have to take that into account at times.

Thank you. One moment for our next question. Our next question comes from the line of Doug Cooper from Beacon Securities. Your line is open.

Hi. Good morning. Terrific work on the quarter. Just a quick one, Mike. So you're #1 in Quebec, #1 in Ontario, the two top most populous provinces in the country. So how are you not #1 across the country? So you must, I guess, Alberta and BC are the only other ones. So where are you ranking there and how is the trend in those provinces?

We want to give others a chance to catch up with us, so we do care about the overall industry. However, British Columbia is a unique market for us since it's our home territory, and we have improved our position to #4 in BC. In Alberta, we are currently ranked #6, which is a slight decline. Overall, we're working to enhance our performance in those provinces. We are ranked #2 across Canada, but we recognize there's always some fluctuation. After being in the market for seven years, I truly believe that Village Farms will remain among the top three cannabis companies in Canada on a long-term and sustainable basis. Our ranking may vary from one to two, or three, based on innovation and consumer insight working together. We feel confident in our position. We have expanded internationally because we have largely achieved our goals in Canada. We aspire to be #1 overall and to build a brand and company that people love. We are secure in our Canadian position, which is why we are now exploring international opportunities, not just for export from Canada, but also through investments like we have in the Netherlands for future growth.

I want to get into Netherlands in a second, but just in the Canadian market generally, it looks like the last reported numbers I saw were in August, which looked pretty good, quite frankly. I think CAD 465 million for the country, up from CAD 453 million in July. What are you seeing in the marketplace? Are you seeing sort of pickup in sales growth not just in market share, but actually the entire market?

Hi, Doug. Good morning. The sales growth of the overall market is slowing a bit on a Q-over-Q basis. We are experiencing some of that, a little slower than we budgeted, but it is slower. And I think it's going to be prudent for us and others in terms of the demand profile in the Canadian market next year to be thinking about it landing somewhere around the mid-single-digits in growth.

Doug, just give us some color on that. One thing I do want to say about the Canadian government is, they have now issued a release that they're going to spend north of $30 million against the illicit trade in Ontario. That's a really positive thing for once to go after that illicit trade, because the illicit trade both at the dispensary level as well as the LP level is a concern. And if that starts to get cleaned up, I think that will have an impact on growth going forward. It just depends how much the Canadian government of the billions that they receive in excise bags they want to plow back in, in all honesty. The other thing is, we've always taken the approach of crawl, walk, run. As you know, we've said that, we wanted to be #1 in flower. We've maintained, as I said, three years running. We wanted to be #1 in pre-roll. We've come from #4 about a year ago to #2. As I mentioned in my comments, we've been under indexing in vape. We put a lot into our vape program and we're very, very excited about launches coming up in the fourth and first quarter. And we don't just sit on our laurels. We want to be #1 in those categories. So stand by and we'll see how things look in the first quarter.

Okay. And just moving on to the Netherlands and 12,000 kg is the initial capacity. I think you said it's CAD 6 a gram average, CAD 12 million rev potential. When how long will it take to 'sell it out?' Like, obviously, that's not a huge amount of product for the Netherlands potential. When do you think you might be in a position to add capacity?

First of all, we'll be fully ramped up in the second quarter because as we don't plant the entire flower rooms, it's continuous improvement processes. So we've already planted the first two flower rooms and then in a couple of three weeks, we'll plant the third and then it'll be continuous improvement. And all of it will be on a continuous harvesting starting in the second quarter. I think we won't have inventory there honestly more than two weeks. I think it's going to go very quick. So I don't want to comment further, at this point, but the statistics we threw out there and what the overall market potential is, I think it's pretty great.

What was the cost to build? Just remind us what the cost to build that facility was.

I'm kind of putting that out there, because we're just not revealing that to our competitors.

Okay. I guess from the metrics there and we sort of the ballpark metrics you put around, just even at 2,000 kg the profitability or cash flow put out, be it seems like at least 20% of the Canadian cash flow you're getting currently. Is that a fair assumption?

Yes. I think so. I don't want to elaborate on that. But come on over and take a look.

One moment for next question. Our next question comes from the line of Pablo Zuanic from Zuanic & Associates. Your line is open.

Thank you. Mike, just following up a little bit on the international discussion in terms of capital allocation. So you said in the past that part of your B2B sales are getting re-exported by others and your direct international sales have grown and doubled, I believe, based on the numbers you reported. And you hinted that, you could be looking at M&A. And what I mean by that, so far your model has been very much shipped to the dock and let the local partner handle everything else. Are there opportunities for you to take more control of the route to market? I believe in the case of Australia, you own 9% of the company there. Could you take more ownership of that company there? I mean, is there room for you to take more control of that market and make investments of those nature in Germany, Australia and even the UK? Thank you.

Absolutely. We want to be patient and prudent and be very clear where it's going. When we look at some of the incredible amount of money that's been spent in the international markets, especially the EU by others, many Canadian companies in the last five, six years, it kind of blows our mind, both on the cultivation side and distribution side. So we've learned a lot from watching what folks have done. We see a great opportunity that had to be vertically integrated and control that. Look, the hardest thing is to have consistently high-quality flower at the right price and we that's what we have. That's a pillar of excellence in our company. And if you don't have that, but you try to do acquisitions without that foundation, I think that's a risky road. We have that and we're very proud of that. So built on that foundation, the other opportunities to build on that are there. And we talked to a lot of folks, we're seeing how it's going, I think both. So the M&A is wide open, not just on the medicinal side and the path, the conduit to the consumer, but also on the international side when it comes to rec as well. One of the things in the Netherlands, no restriction, but really love the Netherlands, just pragmatic professional approach by the government, the regulators. They're pro-business all the way, no restriction on the M&A or being vertically integrated. Absolutely, yes. I think we feel good that we didn't answer the U.S. market to this point, and really focus. Remember, we want to be a winning company in the U.S. When we answer it, we will go all out. But, this is a great expansion for us from Canada now to Europe. So that's a long answer to your question, but the answer is, yes.

Yes. Quick follow-up and maybe quick answers. But just remind us, in terms of those markets where you can ship from Canada, is your facility EU GMP or not yet? I should know, but can you remind us of that?

Yes, we have EU GMP certification, and we recently renewed our license, which we are very proud of. To my knowledge, we're the only greenhouse company with EU GMP certification, which is the highest standard in Germany. With this renewed and extended license, we are among the few in this category. As more countries expand their medicinal markets, we intend to be actively involved. Regarding your earlier question about B2B sales, we are quite selective and prefer to avoid B2B sales that would compete with us at the branded level in Canada. However, we are open to collaborating with some international partners. The rationale behind this approach is our desire to support the success of other companies in the international market, which in turn will encourage more countries to open up, benefiting everyone in the industry.

And then, just a quick question in the case of the Netherlands. Do we know when the coffee shops in the pilot towns will be forced to buy only from the licensed producers, because right now they can still buy from both? But do we know is there a date and will that be enforced?

I think the date will be based on when all 10 license holders are at full capacity. That's the key. That's really the key. It's changing all the time. Orville, as you know, our Orville from Pure Sunfarms is overseeing lately and it's a lot of moving parts. I think the last I heard was probably was, by year end, there'll be eight in producing, cultivating eight to nine. So it's getting pretty close.

I understand. Looking at the hemp situation, your business, CBD Distillery, has recently become involved in hemp derivatives, which wasn't the case two or three years ago. There have been changes at the state level that have affected this, but we are noticing more companies, like Tilray with their hemp drinks, Curaleaf, and Wana with edibles and other products, becoming proactive and aggressive in the hemp-infused market. While we are uncertain about future regulations and the details of the farm bill, I'm optimistic as Republicans have taken control of the Senate. We believe that hemp derivatives are here to stay. Is this a good opportunity for you to become more active in this area? I’m not sure if that means making investments, launching new products, or if you already have a comprehensive range with CBDistillery. Thank you.

We continue to invest in our business. Recently, we acquired a high-end gummy machine that produces exceptional gummies, and we are dedicated to investing in new products and technology. However, I want to emphasize that we've always made careful decisions at Village Farms, taking into account the legal and regulatory landscape. One mistake I take responsibility for is assuming that once hemp was legalized, it would be properly regulated by the FDA or any other government department. Unfortunately, we have not seen any regulation in nearly five years, resulting in a chaotic situation similar to buying poorly regulated products at gas stations. This lack of regulation cannot continue; the government needs to step in. We are committed to producing high-quality products and competing against those who might not adhere to safety standards. We need the U.S. government or an agency like the FDA to regulate the hemp market, which they have stated they will not do until Congress compels them and provides funding. I understand the complexities involved, but regulation is essential. We plan to be prudent and pragmatic in our investments, especially hoping that this administration will take steps to regulate the hemp industry. We remain optimistic about the health and wellness potential in this sector. It’s important to note that we are the only cannabis company listed among the 25 by the DEA, while other reputable companies also focus on health and wellness. This is a promising product category, and we believe the government needs to catch up with the developments in this market. We are feeling positive about our prospects.

Got it. Thank you.

Thank you. One moment for our next question. Our next question comes from the line of Brenna Cunnington from ATB Capital Markets. Your line is open.

Hi. This is Brenna on for Frederico and congrats on the results this quarter. Just regarding the gross margin decline in the Canadian cannabis segment, it seems like it was largely driven by the stock-outs that you spoke to earlier. But just trying to clarify, has this been resolved, or will there be a trickle effect on this drag into the current quarter?

I'm sorry. I didn't catch the beginning of your question, Brenna. Could you just repeat the first part?

So just regarding the gross margin decline in the Canadian Cannabis segment, it was largely driven by the stock-outs, but just trying to figure out if it'll...

Got it. Actually the gross margin decline is more because of the mix of B2B in the quarter. Our gross margin on our branded products where we had stock-outs actually went up sequentially. So we're back in the 30% to 40% range that we previously guided for this quarter.

Okay. Got you. And then just a second question regarding the recent election results. Given that those will be participating in the hearing in the New Year, just kind of curious what your thoughts are regarding the potential process and outcome of rescheduling, not that you have a crystal ball or anything, but just generally speaking.

That's like a fool's errand, but I'll turn it back to Mike.

Yes. I mean, I've probably been more very conservative on it over the last four years, but I'm feeling much more bullish. I just think that, the majority of Americans are supporting cannabis again as a health and wellness. I can't say this is personal. It's not about spending hundreds of millions of dollars by LPs to try to promote legalization of cannabis for profit. Of course, companies have to be profitable. This is a movement for health and wellness. This is giving Americans a choice beyond opioids for SAGE-4 cancer patients and other wellness issues. That's what the movement is about. That's what we want to try to get, communicate very clearly. I think the Senate plays a huge role in this, not just the President. As I said, I support this administration coming in only for the fact that, they have demonstrated, as I said earlier, decriminalization of hemp in 2017. That's a check-in the box. There's been no checks in the box in the last four years. So I'm going on the past. And I think with new blood in the Senate, especially at the leadership level, this is going to afford us the opportunity to go into Washington and educate and communicate. I'm really bullish on Robert Kennedy, hopefully running the FDA, because special interest has played a big role with big pharma, big food as we all know. It's time for change. It's time for a change, not just on the cannabis side, but also on food side. I'm bullish, and I haven't been that much in the past. So we're excited, and we're very honored to be representing the industry.

Awesome. That was good commentary. Thank you very much.

Thanks, Matt.

I will now turn the call back over to Michael for any closing remarks.

Thanks, everyone, for participating today. We're excited about 2025. A lot of things are coming together, both in the industry and for our company. We look forward to reporting year-end fourth quarter. Thanks for your participation today. Operator, thank you.

Thank you for participating in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.