UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Amendment No. 1)
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported):
(Exact Name of Registrant as specified in its charter)
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
| (Address of principal executive offices) | (Zip Code) |
(
(Registrant’s telephone number, including area code)
Not Applicable
(Registrant’s name or former address, if change since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act: None.
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act.
Explanatory Note
On November 14, 2022, Columbia Care Inc. (the “Company”) filed a Current Report on Form 8-K (the “Initial Form 8-K”). The Initial Form 8-K included a press release announcing financial results for the quarter ended September 30, 2022 (the “Earnings Release”) and provided an investor presentation to accompany the press release (the “Investor Presentation”), furnished as Exhibits 99.1 and 99.2, respectively, to the Initial Form 8-K. On the same day, the Company also hosted a conference call to discuss financial and operating results for the third quarter (the “Earnings Call”) and filed the Company’s Form 10-Q for the quarter ended September 30, 2022 (the “Form 10-Q”).
The Company is furnishing this Amended Report on Form 8-K (this “Form 8-K/A”) to correct an isolated typographical error with respect to the Q3 2022 retail and wholesale revenue growth percentages (the “Figures”), which are 2.3% and 3.3%, respectively, that were included in the Earnings Release and were referenced in the Investor Presentation and on the Earnings Call. The Figures were correctly reported as 2.3% and 3.3% in the Form 10-Q. Although the Figures are not material, the Company is, through this Form 8-K/A, updating its Earnings Release and Investor Presentation in order to include the correct Figures (the “Revised Earnings Release” and the “Revised Investor Presentation”). This typographical correction only relates to the Earnings Release and the Investor Presentation for the third quarter of 2022, and no prior quarters are implicated or impacted. For purposes of clarity, there are no changes to total revenue, the total revenue growth rate or any figures contained in the Form 10-Q. This Form 8-K/A, including the exhibits attached hereto, amends, restates and supersedes in its entirety the Initial Form 8-K, including the exhibits attached thereto.
| Item 2.02. | Results of Operations and Financial Condition. |
On November 18, the Company issued the Revised Earnings Release and the Revised Investor Presentation. A copy of the Revised Earnings Release is attached hereto as Exhibit 99.1 and incorporated herein by reference. A copy of the Revised Investor Presentation is attached hereto as Exhibit 99.2 and incorporated herein by reference. This Form 8-K/A is not intended to, nor does it, reflect events occurring after the filing of the Initial Form 8-K, and the Earnings Release and Investor Presentation are not being modified or updated in any way other than to reflect the changes described above.
The information furnished under this Item 2.02 and in the accompanying Exhibits 99.1 and 99.2 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference in such filing.
| Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits
| Exhibit No. |
Description | |
| 99.1 | Press Release, dated November 14, 2022 (Revised November 18, 2022) | |
| 99.2 | Investor Presentation, dated November 14, 2022 (Revised November 18, 2022) | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). | |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| COLUMBIA CARE INC. | ||
| By: | /s/ Derek Watson | |
| Name: | Derek Watson | |
| Title: | Chief Financial Officer | |
Date: November 18, 2022
Exhibit 99.1
Columbia Care Reports Third Quarter 2022 Results
Quarterly Revenue of $133 Million, an Increase of 2.4% QoQ
Gross Profit of $52 Million, an Increase of 2.5% QoQ
Adjusted Gross Margin1 of 43%, an increase of 33bps QoQ
Adjusted EBITDA1 of $21 Million, an Increase of 74.5% QoQ,
and Adjusted EBITDA Margin1 of 16%, an Increase of 653bps QoQ
NEW YORK, N.Y., November 14, 2022 – Columbia Care Inc. (NEO: CCHW) (CSE: CCHW) (OTCQX: CCHWF) (FSE: 3LP) (“Columbia Care” or the “Company”) today reported financial and operating results for the third quarter ended September 30, 2022. All financial information presented in this release is in U.S. GAAP, unaudited and in thousands of U.S. dollars, unless otherwise noted, and comparisons to prior quarter and prior year are made on an as-converted basis under U.S. GAAP, unless otherwise noted.
“Our third quarter results are a testament to the embedded growth in our strategic footprint and the operational excellence we have developed over time. We achieved solid sequential topline growth and standout profitability improvements in another challenging quarter, with revenue increasing 2.4% sequentially to $133 million in the quarter. Adjusted EBITDA improved 74% over Q2 to $21 million, with sixteen of our seventeen markets generating positive EBITDA in the quarter. We continue to drive revenue and EBITDA growth in our emerging markets such as New Jersey, Virginia, and West Virginia, two of which are now among our top five markets by revenue and EBITDA. Based on the operational changes we’ve made, we’ve seen stabilization in our most mature markets – California and Colorado – materialize,” said Nicholas Vita, CEO of Columbia Care.
Vita continued, “We have made strategic operational decisions to prioritize quality production and efficiency, and redoubled efforts to manage costs as we face persistent macroeconomic headwinds that directly and materially impact the consumer wallet. Although we continue to anticipate a more challenging operating environment over the next 12-18 months, we are encouraged by the ongoing resilience we’ve seen throughout our markets and by the enthusiasm of the cannabis community. Furthermore, the difficult decisions we made 12-18 months ago are beginning to pay dividends as the efficiencies in cultivation and manufacturing positively impact our wholesale ramp while continued rationalization of SG&A amplifies the EBITDA improvements. The diversity of our footprint, including meaningful operations in the markets that are transitioning to adult use, is key to our growth. As we near the end of 2022, we are excited about the journey ahead where, together with Cresco Labs, we will create the leading company in cannabis.”
Third Quarter 2022 U.S. GAAP Financial Highlights (in $ thousands, excl. margin items):
| Q3 2022 | Q2 2022 | Q3 2021[3] | % QoQ | % YoY | ||||||||||||||||
| Revenue |
$ | 132,733 | $ | 129,571 | $ | 132,322 | 2.4 | % | 0.3 | % | ||||||||||
| Gross Profit |
$ | 52,135 | $ | 50,848 | $ | 61,367 | 2.5 | % | -15.0 | % | ||||||||||
| Adj. Gross Profit[1,2] |
$ | 56,895 | $ | 55,118 | $ | 62,797 | 3.2 | % | -9.4 | % | ||||||||||
| Adj. Gross Margin[1,2] |
42.86 | % | 42.54 | % | 47.46 | % | 33 | bps | -459 | bps | ||||||||||
| EBITDA[1] |
$ | 4,419 | $ | (3,996 | ) | $ | (33,236 | ) | N/A | N/A | ||||||||||
| Adj. EBITDA[1] |
$ | 20,993 | $ | 12,029 | $ | 24,777 | 74.5 | % | -15.3 | % | ||||||||||
| [1] | See “Non-GAAP Financial Measures” in this press release for more information regarding the Company’s use of non-GAAP financial measures. |
| [2] | Excludes $4.8 million in Q3 2022 relating to a one-time write-off in Colorado to reduce outdoor capacity, $4.3 million in Q2 2022 related to inventory revaluation adjustments and $1.4 million in Q3 2021 related to the mark-up of inventory acquired in acquisitions. |
| [3] | Figures for Q3 2021 are Combined, including dispensary and manufacturing operations in Ohio, Non-GAAP. Gross Profit is as reported in Q3 2021. |
Top 5 Markets by Revenue in Q3[4]: California, Colorado, New Jersey, Ohio, Virginia
Top 5 Markets by Adjusted EBITDA in Q3[4]: Colorado, New Jersey, Ohio, Pennsylvania, Virginia
| [4] | Markets are listed alphabetically |
Operational Highlights for Third Quarter 2022
Enhancing and implementing scale with continued retail and wholesale growth:
| • | Retail revenue increased modestly, 2.3% over Q2 2022, while wholesale revenue increased 3.3% sequentially – meaningful contributor to EBITDA |
| • | New Jersey retail locations expanded to full adult use hours in June 2022, market revenue increased more than 75% sequentially, with growth in wholesale of nearly five times the prior quarter, driven by the ramping scale in the new Vineland facility |
| • | No additional retail locations opened in Q3. Subsequent to quarter end, opened Carytown, Virginia Cannabist location, the Company’s fifth retail location in Virginia, bringing total dispensaries to 85 |
| • | Additional dispensaries in development include 7 in Virginia, 1 in West Virginia, and 1 in New Jersey |
| • | Sixteen of seventeen markets produced positive EBITDA in the third quarter |
Proven cultivation expertise and execution:
| • | In Q3, completed first harvest out of the second cultivation facility in Vineland, New Jersey, which added approximately 270,000 square feet of cultivation and production capacity to the New Jersey footprint, as well as post-harvest automation equipment to support retail and wholesale growth |
| • | Cultivation efficiency and standardization across markets continued to improve, with focus on optimizing production planning, genetics selection, environmental controls, and plant management leading to improved potency and productivity; flower production costs declined approximately 5% sequentially across the national portfolio |
| • | In Ohio, the Mt. Orab cultivation facility expansion contributed to sequential improvement in Gross Margin |
| • | In Virginia, the expansion of Portsmouth facility led to a 4X increase in harvested plants; there is additional capacity to expand the current garden as demand increases in market |
Sustained momentum on branding initiatives at retail and product levels:
| • | Owned brands made up over 60% of all flower sales at Columbia Care locations in Q3 |
| • | In Q3, launched a new loyalty program and mobile application, Stash Cash, in 14 markets |
| • | In August, launched the first pre-rolls in the New York market, marking Seed & Strain’s 14th market |
| • | Triple Seven, an award-winning premium brand, launched in Pennsylvania in August, bringing the footprint to ten markets |
| • | In October, launched Hedy, a new cannabis-infused edibles brand in six markets and a variety of form factors and flavors; Hedy is now available in Arizona, Colorado, Delaware, Massachusetts, Missouri and Virginia |
| • | With the opening of Carytown, Virginia Cannabist in October, there are now 32 Cannabist locations in the U.S. |
Update on Cresco Transaction & Milestones Achieved
| • | Cleared federal Hart Scott Rodino antitrust review in May |
| • | Received overwhelming approval from our shareholders, with over 98% of the votes cast in July in favor of the transaction |
| • | Final order granted by the Supreme Court of British Columbia in July |
| • | Announced execution of agreement relating to first asset divestiture on November 4, with Illinois, Massachusetts, and New York assets being sold to Sean “Diddy” Combs, via Combs Enterprises |
| • | The remainder of the asset divestiture process is continuing to move forward with additional announcement expected soon |
| • | Closing of Cresco transaction anticipated to be around the end of the first quarter of 2023 |
2022 Outlook
Columbia Care expects sequential topline performance to be flat to low-single digit growth in the fourth quarter. In addition, the Company expects an Adjusted EBITDA margin in the mid-to-high teens in the fourth quarter.
At this time, Columbia Care’s 2022 outlook does not assume any additional changes in the regulatory environment in markets where Columbia Care currently operates. This also excludes potential future market changes where a conversion from medical only to adult use is under consideration by a governor and/or legislature. The outlook does not assume any asset sales prior to Q1 2023. See “Caution Concerning Forward-Looking Statements” below for further discussion. This new revised outlook replaces all prior outlook and guidance provided by the Company.
Conference Call and Webcast Details
The Company will host a conference call on Monday, November 14, 2022 at 4:30 p.m. ET to discuss financial and operating results for the third quarter.
To access the live conference call via telephone, participants must pre-register at https://register.vevent.com/register/BIc703b752599546a7a28197c8bf33e7ad. After registering, instructions will be shared on how to join the call for those who wish to dial in. A live audio webcast of the call will also be available in the Investor Relations section of the Company’s website at https://investors.columbia.care/ or at https://edge.media-server.com/mmc/p/j9ac4cjf.
A replay of the audio webcast will be available in the Investor Relations section of the Company’s website approximately 2 hours after completion of the call and will be archived for 30 days.
About Columbia Care
Columbia Care is one of the largest and most experienced cultivators, manufacturers and providers of cannabis products and related services, with licenses in 18 U.S. jurisdictions. Columbia Care operates 132 facilities including 99 dispensaries and 33 cultivation and manufacturing facilities, including those under development. Columbia Care is one of the original multi-state providers of medical cannabis in the U.S. and now delivers industry-leading products and services to both the medical and adult-use markets. In 2021, the company launched Cannabist, its retail brand, creating a national dispensary network that leverages proprietary technology platforms. The company offers products spanning flower, edibles, oils and tablets, and manufactures popular brands including Seed & Strain, Triple Seven, gLeaf, Classix, Press, Amber, Hedy and Platinum Label CBD. For more information on Columbia Care, please visit www.columbia.care.
Non-GAAP Financial Measures
In this press release, Columbia Care refers to certain non-GAAP financial measures, including EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Gross Profit and Adjusted Gross Margin. These measures do not have any standardized meaning in accordance with U.S. GAAP and may not be comparable to similar measures presented by other companies. Columbia Care considers certain non-GAAP measures to be meaningful indicators of the performance of its business. These measures are not recognized measures under GAAP, do not have a standardized meaning prescribed by GAAP and may not be comparable to (and may be calculated differently by) other companies that present similar measures. Accordingly, these measures should not be considered in isolation from nor as a substitute for our financial information reported under GAAP. These non-GAAP measures are used to provide investors with supplemental measures of our operating performance and thus highlight trends in our business that may not otherwise be apparent when relying solely on GAAP measures. These supplemental non-GAAP financial measures should not be considered superior to, as a substitute for, or as an alternative to, and should be considered in conjunction with, the GAAP financial measures presented. We also recognize that securities analysts, investors and other interested parties frequently use non-GAAP measures in the evaluation of companies within our industry.
With respect to non-GAAP financial measures, the Company defines EBITDA as net income (loss) before (i) depreciation and amortization; (ii) income taxes; and (iii) interest expense and debt amortization. Adjusted EBITDA is defined as EBITDA before (i) share-based compensation expense; (ii) adjustments for acquisition and other non-core costs; (iii) fair value changes on derivative liabilities; (iv) fair value mark-up for acquired inventory; and (v) other one-time of non-recurring items. Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by Revenue. Adjusted Gross Profit is defined as gross profit before the fair mark-up for acquired inventory. Adjusted Gross Margin is defined as gross margin before the fair mark-up for acquired inventory.
The Company views these non-GAAP financial measures as a means to facilitate management’s financial and operational decision-making, including evaluation of the Company’s historical operating results and comparison to competitors’ operating results. These non-GAAP financial measures reflect an additional way of viewing aspects of the Company’s operations that, when viewed with GAAP results and the reconciliations to the corresponding GAAP financial measure may provide a more complete understanding of factors and trends affecting the Company’s business. The determination of the amounts that are excluded from these non-GAAP financial measures are a matter of management judgment and depend upon, among other factors, the nature of the underlying expense or income amounts. Because non-GAAP financial measures exclude the effect of items that will increase or decrease the Company’s reported results of operations, management strongly encourages investors to review the Company’s consolidated financial statements and publicly filed reports in their entirety.
Reconciliations of non-GAAP financial measures to their nearest comparable GAAP measures are included in this press release and a further discussion of some of these items will be contained in our quarterly report on Form 10-Q.
Caution Concerning Forward-Looking Statements
This press release contains certain statements that constitute forward-looking information or forward looking statements within the meaning of applicable securities laws and reflect the Company’s current expectations regarding future events. Statements concerning Columbia Care’s objectives, goals, strategies, priorities, intentions, plans, beliefs, expectations and estimates, and the business, operations, financial performance and condition of the Company are forward-looking statements. The words “believe”, “expect”, “anticipate”, “estimate”, “intend”, “may”, “will”, “would”, “could”, “should”, “continue”, “plan”, “goal”, “objective”, and similar expressions and the negative of such expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Forward looking statements in this press release include, among others, statements related to: the timing for closing of the Cresco transaction and the related divestiture transactions, expectations related to growth and financial numbers including EBITDA, benefits of the Cresco transaction, ongoing business expectations, and timing for signing divestiture agreements.
The Company has made assumptions with regard to its ability to execute on initiatives, which although considered reasonable by the Company, may prove to be incorrect and are subject to known and unknown risks and uncertainties that may cause actual results, performance or achievements of the Company to be materially different from those expressed or implied by any forward-looking information. Forward-looking information involves numerous assumptions, including assumptions on the satisfaction of the conditions precedent to the closing of the Cresco transaction; the receipt of any necessary regulatory approvals in connection with the Cresco transaction; the impact of the Cresco transaction on the Company’s current and future operations, financial condition and prospects; the value of the Cresco shares; the costs of the Cresco transaction and potential payment of a termination fee in connection with the Cresco transaction; the ability to successfully integrate with the operations of Cresco and realize the expected benefits of the Cresco transaction; the ability to sign and close divestiture transactions related to the Cresco transaction; access to public and private capital for buyers of assets being divested in relation to the Cresco transaction; the fact that marijuana remains illegal under federal law; the application of anti-money laundering laws and regulations to the Company; legal, regulatory or political change to the cannabis industry; access to the services of banks; access to public and private capital for the Company or for Cresco; unfavorable publicity or consumer perception of the cannabis industry; expansion into the adult-
use markets; the impact of laws, regulations and guidelines; the impact of Section 280E of the Internal Revenue Code; the impact of state laws pertaining to the cannabis industry; the Company’s reliance on key inputs, suppliers and skilled labor; the difficulty of forecasting the Company’s sales; constraints on marketing products; potential cyber-attacks and security breaches; net operating loss and other tax attribute limitations; the impact of changes in tax laws; the volatility of the market price of the Common Shares; reliance on management; litigation; future results and financial projections; the impact of global financial conditions and disease outbreaks; projected revenue and expected gross margins, capital allocation, EBITDA break even targets and other financial results; growth of the Company’s operations via expansion; expectations for the potential benefits of any transactions including the acquisition of Green Leaf Medical and Medicine Man; statements relating to the business and future activities of, and developments related to, the Company after the date of this press release, including such things as future business strategy, competitive strengths, goals, expansion and growth of the Company’s business, operations and plans; expectations that planned transactions (including the Cresco transaction) will be completed as previously announced; expectations regarding cultivation and manufacturing capacity; expectations regarding receipt of regulatory approvals; expectations that licenses applied for will be obtained; potential future legalization of adult-use and/or medical cannabis under U.S. federal law; expectations of market size and growth in the U.S. and the states in which the Company operates; expectations for other economic, business, regulatory and/or competitive factors related to the Company or the cannabis industry generally; and other events or conditions that may occur in the future.
Forward-looking statements may relate to future financial conditions, results of operations, plans, objectives, performance or business developments. These statements speak only as at the date they are made and are based on information currently available and on the then current expectations. Holders of securities of the Company are cautioned that forward-looking statements are not based on historical facts but instead are based on reasonable assumptions and estimates of management of the Company at the time they were provided or made and involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, as applicable, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Securityholders should review the risk factors discussed under “Risk Factors” in Columbia Care’s Form 10 dated May 9, 2022, filed with the applicable securities regulatory authorities and described from time to time in documents filed by the Company with Canadian and U.S. securities regulatory authorities.
The purpose of forward-looking statements is to provide the reader with a description of management’s expectations, and such forward-looking statements may not be appropriate for any other purpose. In particular, but without limiting the foregoing, disclosure in this press release as well as statements regarding the Company’s objectives, plans and goals, including future operating results and economic performance may make reference to or involve forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. A number of factors could cause actual events, performance or results to differ materially from what is projected in the forward-looking statements. No undue reliance should be placed on forward-looking statements contained in this press release. Such forward-looking statements are made as of the date of this press release. Columbia Care undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. The Company’s forward-looking statements are expressly qualified in their entirety by this cautionary statement.
Certain information in this press release, including the section entitled “2022 Outlook” may be considered as “financial outlook” within the meaning of applicable securities legislation including the revenue and Adjusted EBITDA margin guidance. The purpose of this financial outlook is to provide readers with disclosure regarding Columbia Care’s reasonable expectations as to the anticipated results of its proposed business activities for the periods indicated. Readers are cautioned that the financial outlook may not be appropriate for other purposes.
Investor Contact
Lee Ann Evans
SVP, Capital Markets
ir@col-care.com
Media Contact
Lindsay Wilson
VP, Communications
+1.978.662.2038
media@col-care.com
TABLE 1 - CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in US $ thousands, except share and per share figures, unaudited)
| Three Months Ended | ||||||||||||||||
| September 30, 2022 | June 30, 2022 | March 31, 2022 | September 30, 2021 | |||||||||||||
| Revenue |
$ | 132,733 | $ | 129,571 | $ | 123,087 | $ | 132,322 | ||||||||
| Cost of sales |
(80,462 | ) | (78,723 | ) | (66,460 | ) | (69,525 | ) | ||||||||
| Cost of sales related to business combination fair value adjustments to inventory |
(136 | ) | — | — | (1,430 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Gross profit |
52,135 | 50,848 | 56,627 | 61,367 | ||||||||||||
| Selling, general and administrative expenses |
(70,845 | ) | (72,956 | ) | (71,292 | ) | (61,745 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Loss from operations |
(18,710 | ) | (22,108 | ) | (14,665 | ) | (378 | ) | ||||||||
| Other income (expense), net |
(13,018 | ) | (13,445 | ) | (12,609 | ) | (56,991 | ) | ||||||||
| Income tax benefit (expense) |
(6,575 | ) | (18,702 | ) | (632 | ) | 12,999 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net loss |
(38,303 | ) | (54,255 | ) | (27,906 | ) | (44,370 | ) | ||||||||
| Net loss attributable to non-controlling interests |
(2,872 | ) | (427 | ) | (1,270 | ) | (1,474 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net loss attributable to Columbia Care shareholders |
(35,431 | ) | (53,828 | ) | (26,636 | ) | (42,896 | ) | ||||||||
| Weighted average common shares outstanding - basic and diluted |
399,227,935 | 394,023,144 | 376,397,260 | 325,416,684 | ||||||||||||
| Earnings per common share attributable to Columbia Care shareholders - basic and diluted |
$ | (0.09 | ) | $ | (0.14 | ) | $ | (0.07 | ) | $ | (0.13 | ) | ||||
TABLE 2 - RECONCILIATION OF US GAAP TO NON-GAAP MEASURES
(in US $ thousands, unaudited)
| Three Months Ended | ||||||||||||||||
| September 30, 2022 | June 30, 2022 | March 31, 2022 | September 30, 2021 | |||||||||||||
| Net loss |
$ | (38,303 | ) | $ | (54,255 | ) | $ | (27,906 | ) | $ | (44,370 | ) | ||||
| Income tax expense |
6,575 | 18,702 | 632 | (12,999 | ) | |||||||||||
| Depreciation and amortization |
21,808 | 20,058 | 21,210 | 16,076 | ||||||||||||
| Net interest and debt amortization |
14,339 | 11,499 | 12,670 | 8,057 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| EBITDA (Non-GAAP) |
$ | 4,419 | $ | (3,996 | ) | $ | 6,606 | $ | (33,236 | ) | ||||||
| Share-based compensation |
$ | 6,597 | $ | 7,678 | $ | 6,374 | $ | 4,695 | ||||||||
| Adjustments for acquisition and other non-core costs |
10,084 | 14,727 | 3,169 | 56,735 | ||||||||||||
| Fair value changes on derivative liabilities |
(243 | ) | (6,380 | ) | 683 | (4,847 | ) | |||||||||
| Fair value mark-up for acquired inventory |
136 | — | 1,430 | |||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Adjusted EBITDA (Non-GAAP) |
$ | 20,993 | $ | 12,029 | $ | 16,832 | $ | 24,777 | ||||||||
TABLE 3 - CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(in US $ thousands, unaudited)
| Three Months Ended | ||||||||||||||||
| September 30, 2022 | June 30, 2022 | March 31, 2022 | September 30, 2021 | |||||||||||||
| Net cash provided by (used in) operating activities |
$ | (16,770 | ) | $ | (71,961 | ) | $ | (27,822 | ) | $ | 16,148 | |||||
| Net cash (used in) investment activities |
$ | (14,276 | ) | (28,127 | ) | (29,555 | ) | $ | (51,028 | ) | ||||||
| Net cash provided by (used in) financing activities |
$ | (371 | ) | 13,454 | 144,253 | $ | (6,965 | ) | ||||||||
TABLE 4 - CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (SELECT ITEMS)
(in US $ thousands, unaudited)
| Three Months Ended | ||||||||||||||||
| September 30, 2022 | June 30, 2022 | March 31, 2022 | September 30, 2021 | |||||||||||||
| Cash |
$ | 50,023 | $ | 81,440 | $ | 168,424 | $ | 116,931 | ||||||||
| Total current assets |
208,515 | 256,110 | 323,883 | 255,940 | ||||||||||||
| Property and equipment, net |
370,820 | 373,877 | 355,968 | 258,730 | ||||||||||||
| Right of use assets |
259,655 | 254,849 | 250,413 | 237,624 | ||||||||||||
| Total assets |
1,371,578 | 1,420,465 | 1,482,443 | 1,381,120 | ||||||||||||
| Total current liabilities |
178,015 | 138,499 | 222,835 | 279,476 | ||||||||||||
| Total liabilities |
870,701 | 892,496 | 952,743 | 819,475 | ||||||||||||
| Total equity |
500,877 | 527,969 | 529,700 | 561,645 | ||||||||||||
Exhibit 99.2 THIRD QUARTER 2022 INVESTOR PRESENTATION NEO:CCHW | CSE:CCHW | OTCQX:CCHWF | FSE:3LP November 2022
2 DISCLAIMER AND FORWARD-LOOKING STATEMENTS Disclaimer Columbia Care Inc. (the “Company” or “Columbia Care”) derives a substantial portion of its revenues from the cannabis industry in certain U.S. states, which industry is illegal under U.S. federal Law. Columbia Care is directly involved in both the adult-use and medical cannabis industry in the states of Arizona, California, Colorado, Illinois, Massachusetts and New Jersey, and in the medical cannabis industry in the states of Delaware, Florida, Maryland, Missouri, New York, Ohio, Pennsylvania, the District of Columbia, Utah, Virginia, and West Virginia, which states have regulated such industries. The cultivation, processing, sale and use of cannabis are illegal under federal law pursuant to the U.S. Controlled Substance Act of 1970 (the “CSA”). Under the CSA, the policies and regulations of the United States Federal Government and its agencies are that cannabis has no medical benefit and a range of activities, including cultivation and the personal use of cannabis, are prohibited. The Supremacy Clause of the United States Constitution establishes that the United States Constitution and federal laws made pursuant to it are paramount and in case of conflict between federal and state law, the federal law shall apply. Until 2018, the federal government provided guidance to federal law enforcement agencies and banking institutions through a series of United States Department of Justice (“DOJ”) memoranda. The most recent such memorandum was drafted by former Deputy Attorney General James Cole in 2013 (the “Cole Memo”). On January 4, 2018, former U.S. Attorney General Jeff Sessions issued a memorandum to U.S. district attorneys that rescinded previous guidance from the U.S. Department of Justice specific to cannabis enforcement in the United States, including the Cole Memo (as defined herein). The former Attorneys General who succeeded former Attorney General Sessions following his resignation did not provide a clear policy directive for the United States as it pertains to state-legal marijuana-related activities. President Joseph R. Biden was sworn in as the 46th President of the U.S. on January 20, 2021. President Biden nominated Merrick Garland to serve as Attorney General in his administration, and he was confirmed on March 10, 2021. It is not yet known whether the Department of Justice under President Biden and Attorney General Garland will re-adopt the Cole Memorandum or announce a substantive marijuana enforcement policy. Attorney General Garland stated at a confirmation hearing before the United States Senate that “It does not seem to me a useful use of limited resources that we have, to be pursuing prosecutions in states that have legalized and that are regulating the use of marijuana, either medically or otherwise. I don’t think that’s a useful use.” Attorney General Garland reiterated this view at a Senate Appropriations subcommittee hearing on April 26, 2022. Nonetheless, there is no guarantee that state laws legalizing and regulating the sale and use of marijuana will not be repealed or overturned, or that local governmental authorities will not limit the applicability of state laws within their respective jurisdictions. Unless and until the United States Congress amends the CSA with respect to marijuana (and as to the timing or scope of any such potential amendments there can be no assurance), there is a risk that federal authorities may enforce current U.S. federal law. Currently, in the absence of uniform federal guidance, as had been established by the Cole memorandum, enforcement priorities are determined by respective United States Attorneys. Columbia Care makes no medical or treatment claims about our products, implied or otherwise, and each patient should consult their treating physician, explore all options, and discuss their personal health to determine whether he or she may be a potential candidate for medical marijuana or other cannabis-derived products. Our products have not been evaluated by the Food and Drug Administration (“FDA”). In addition, our products have not been approved by the FDA to diagnose, treat, cure, or prevent any disease. In addition, we have not conducted clinical trials for the use of our products. Any references to quality, consistency, efficacy and safety of our products are not intended to imply that such claims have been verified in clinical trials. Non-GAAP Financial Measures In this presentation, Columbia Care may refer to certain non-GAAP financial measures, including, without limitation, EBITDA, Adjusted EBITDA and Adjusted Gross Margin. These measures do not have any standardized meaning in accordance with U.S. GAAP and may not be comparable to similar measures presented by other companies. Columbia Care considers certain non-GAAP measures to be meaningful indicators of the performance of its business. A reconciliation of such non-GAAP financial measures to their nearest comparable GAAP measure is included in this presentation and a further discussion of some of these items is contained in the Company’s Form 10-Q for the three months ended September 30, 2022. Cautionary Note Regarding Securities Laws This presentation does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the securities of Columbia Care, in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. Risk Factors For a detailed description of risk factors associated with Columbia Care, refer to the “Risk Factors” section in Columbia Care’s Form 10-K for the year ended December 31, 2021, and in Columbia Care’s Form 10 dated May 9, 2022, which are available on EDGAR at www.sec.gov and SEDAR at www.sedar.com.
3 DISCLAIMER AND FORWARD-LOOKING STATEMENTS Caution Concerning Forward-Looking Statements This presentation contains certain statements that constitute forward-looking information within the meaning of applicable securities laws (“forward-looking statements”). Statements concerning Columbia Care’s objectives, goals, strategies, priorities, intentions, plans, beliefs, expectations and estimates, and the business, operations, financial performance and condition of Columbia Care are forward-looking statements. The words “believe”, “expect”, “anticipate”, “estimate”, “intend”, “may”, “will”, “would”, “could”, “should”, “continue”, “plan”, “goal”, “objective”, and similar expressions and the negative of such expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Certain material factors and assumptions were applied in providing these forward-looking statements. Forward-looking information involves numerous assumptions, including assumptions on the satisfaction of the conditions precedent to the closing of the Cresco transaction; the receipt of any necessary regulatory approvals in connection with Cresco transaction; the impact of the Cresco transaction on the Company’s current and future operations, financial condition and prospects; the value of the Cresco shares; the costs of the Cresco transaction and potential payment of a termination fee in connection with the Cresco transaction; the ability to successfully integrate with the operations of Cresco and realize the expected benefits of the Cresco transaction; the ability to sign and close divestiture transactions related to the Cresco transaction; access to public and private capital for buyers of assets being divested in relation to the Cresco transaction; the fact that marijuana remains illegal under federal law; the application of anti-money laundering laws and regulations to the Company; legal, regulatory or political change to the cannabis industry; access to the services of banks; access to public and private capita for the Company or Crescol; unfavorable publicity or consumer perception of the cannabis industry; expansion into the adult-use markets; the impact of laws, regulations and guidelines; the impact of Section 280E of the Internal Revenue Code; the impact of state laws pertaining to the cannabis industry; the Company’s reliance on key inputs, suppliers and skilled labor; the difficulty of forecasting the Company’s sales; constraints on marketing products; potential cyber-attacks and security breaches; net operating loss and other tax attribute limitations; the impact of changes in tax laws; the volatility of the market price of the Common Shares; reliance on management; litigation; future results and financial projections; and the impact of global financial conditions and disease outbreaks; as well as those risk factors discussed under “Risk Factors” in Columbia Care’s Form 10 dated May 9, 2022, filed with the applicable securities regulatory authorities and described from time to time in other documents filed by the Company with Canadian and U.S. securities regulatory authorities. The purpose of forward-looking statements is to provide the reader with a description of management's expectations, and such forward-looking statements may not be appropriate for any other purpose. In particular, but without limiting the foregoing, disclosure in this presentation as well as statements regarding the Company's objectives, plans and goals, including future operating results and economic performance may make reference to or involve forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. A number of factors could cause actual events, performance or results to differ materially from what is projected in the forward-looking statements. No undue reliance should be placed on forward-looking statements contained in this presentation. Such forward-looking statements are made as of the date of this presentation. Columbia Care undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. The Company's forward-looking statements are expressly qualified in their entirety by this cautionary statement. This presentation contains future-oriented financial information and financial outlook information (collectively, FOFI ) about Columbia Care’s revenue, gross margins and adjusted EBITDA, all of which are subject to the same assumptions, risk factors, limitations, and qualifications as set forth in the above paragraph. FOFI contained in this document was approved by management as of the date of this document and was provided for the purpose of providing further information about Columbia Care’s future business operations. Columbia Care disclaims any intention or obligation to update or revise any FOFI contained in this document, whether because of new information, future events or otherwise, unless required pursuant to applicable law. Readers are cautioned that the FOFI contained in this document should not be used for purposes other than for which it is disclosed herein.
4 4 COMPANY OVERVIEW Building Scale, Improving Efficiency and Growing Profitability Across Strategic National Platform 33 17 $35B+ 99 (1) US Cultivation & Jurisdictions in 2026 TAM in Licensed US Retail Locations (1) (2) Manufacturing Facilities US US States 2% +2M 150+ $133M QoQ Topline Revenue Sqft Cultivation & Acres Outdoor Q3 2022 Revenue (3) (3) Growth Production Capacity Cultivation Capacity Increased footprint and profitability since reported results of Q3 2019, which included: 43% $57M▪ 67 facilities (retail & cultivation) in 15 jurisdictions (4) Q3 2022 Adj. Gross Q3 2022 Adj. Gross Profit ▪ ~550,000sqft cultivation & production capacity (4) Margin (5) ▪ $22.1M in Revenue, $5.3M in Gross Profit and 24% Gross Margin 1) Pro forma facilities either open or under development; includes facilities where Columbia Care provides consultative services pursuant to the terms of a management services arrangement 2) Estimated Sales figures from BDSA Market Forecast as of September 2022, broker research, company estimates 3) Total capacity under existing licenses - additional development may be required to achieve 4) Non-GAAP figure. See “Non-GAAP Financial Measures” on previous slides. 5) Excluding changes in fair value of biological assets and inventory sold, under IFRS. See Q3 2019 Results.
5 5 VERTICAL INTEGRATION ON NATIONAL SCALE PENNSYLVANIA NEW YORK MASSACHUSETTS 1 3 2 8 1 3 Vertically Integrated UTAH COLORADO OHIO from Coast to Coast 1 5 26 1 5 NEW JERSEY 2 3 Wholesale Distribution in 16 Markets DELAWARE 2 3 MARYLAND 33 Cultivation and MISSOURI ILLINOIS WEST VIRGINIA 2 4 Manufacturing 1 1 1 2 1 5 Facilities WASHINGTON DC 2 1 CALIFORNIA ARIZONA FLORIDA 2 6 2 2 4 14 99 Retail Locations* VIRGINIA (85 Active / 14 In Development) 12 2 Locations in development in 2022: VA - 7, WV - 1, NY - 4, NJ - 1, MD - 1 In Development Operational Wholesale Cultivation and Manufacturing Retail Locations * Open or under development; includes facilities where Columbia Care provides consultative services pursuant to the terms of a management services arrangement; as of November 14, 2022
6 6 ONE OF THE MOST STRATEGICALLY POSITIONED MSOs (1) Addressable market is >52% of the U.S. population with significant upside potential (2) Columbia Care U.S. Footprint Columbia Care Addressable Market Pursuit Activity Adult Use Anticipated Medical Only State Population (M) Est 2022 Sales (US$M) Est 2026 Sales (US$M) Status Licenses Adult Use & Medical Pursuit Activity California 41.3 Both Unlimited $ 4,546.9 $ 5,449.5 Florida 22.2 $ 2,383.2 $ 4,635.0 Medical Limited Colorado 6.3 $ 1,806.1 $ 1,851.2 Both Unlimited Illinois 12.7 Both Limited $ 1,985.4 $ 2,572.4 Massachusetts 7.0 $ 1,828.6 $ 1,848.7 Both Limited Pennsylvania 12.9 Medical Limited $ 1,142.8 $ 1,784.1 $35B+ Arizona 7.3 $ 1,272.1 $ 1,394.9 Both Limited Projected 2026 TAM in Licensed US (2) New Jersey 9.1 $ 697.0 $ 3,000.0 Both Limited (2) States Maryland 6.2 Limited $ 584.0 $ 1,246.9 Both* Ohio 11.7 $ 539.4 $ 1,200.2 Medical Limited (3) Missouri 6.2 $ 367.7 $ 1,287.6 Both* Limited (2) New York 20.1 Both* Limited $ 512.6 $ 5,000.0 Conversion to Medical and Adult-Use Offers Significant Upside Utah 3.3 $ 181.2 $ 427.1 Medical Limited ▪ Columbia Care has experienced 3x-4x top-line revenue growth in states that (2) Virginia 8.7 Both* Limited $ 78.5 $ 3,000.0 have already converted from medical-only to medical and adult-use Washington DC 0.7 $ 64.2 $ 175.2 Medical Limited ▪ Adult-use sales launched in New Jersey in April 2022 and are expected in Delaware 1 $ 42.3 $ 132.9 Medical Limited New York in 2023 and Virginia in 2024; Maryland and Missouri passed adult- use legislation on November 8, 2022, with timelines pending West Virginia 1.8 $ 16.6 $ 46.0 Medical Limited ▪ Columbia Care’s expansive footprint is well positioned for the anticipated *Adult-use sales pending TOTAL 178.5 $ 18,048.6 $ 35,051.7 conversion of additional markets *Legislation passed, enactment regulations and timeline pending 1) US Census Bureau, Company estimates, Gallup poll, as of Nov 2020 2) Estimated Sales figures from BDSA Market Forecast as of September 2022, broker research, company estimates 3) Consultative services provided pursuant to terms of a management services arrangement
7 Q3 2022 BUSINESS HIGHLIGHTS Improving efficiencies and scaling across strategic national portfolio Revenue growth driven by emerging markets of New Jersey and Virginia; strong 1 wholesale performance (+3% sequentially) Adj. EBITDA +75% QoQ; 16 out of 17 markets were EBITDA positive during the quarter; 12 out of 17 markets were free cash flow positive during the 2 quarter Performance Improvement in cultivation efficiency with focus Highlights on potency and productivity; >80 g/sqft achieved in several markets in Q3; average THC 3 trending upwards since October 2021 Generated Revenue of $133 Launched Hedy, a new cannabis-infused edibles million, 43% Adj. Gross Margin brand, in six markets; Seed & Strain launched in (1) 4 and Adjusted EBITDA of $21 th New York, its 14 market in the U.S. million Continued strength of retail share of internal brand sales; Columbia Care flower brands over 60% of 5 sales in own dispensaries 1) Adjusted EBITDA and Adjusted Gross Margin are non-GAAP figures.
8 REVENUE AND GROSS MARGIN EXPANSION From Q3 2020 to Q3 2022, Columbia Care has averaged ~13% sequential revenue growth and increased Adj. Gross Margin by ~400 basis points $160.0 60% 49% $140.0 50% 46% 43% 45% 43% $120.0 43% 42% 40% 40% $133 39% $100.0 $130 $139 $132 Q3 2022 Adj. $123 Gross Profit of $80.0 30% $110 $57M $60.0 $82 $93 Q3 2022 Adj. 20% Gross Margin of $40.0 $54 43% 10% $20.0 $0.0 0% Q3 2020Q4 2020Q1 2021Q2 2021Q3 2021Q4 2021Q1 2022Q2 2022Q3 2022 Note: For the first six months of 2021, revenue includes Ohio dispensary operations prior to close of the CannAscend transaction
9 PROFITABILITY TRENDS BY MARKET Profitability metrics throughout national portfolio Top 5 Markets by Revenue Top 5 Markets by Adj. Gross Margin Top 5 Markets by Adj. EBITDA Top 5 Markets by Adj. EBITDA Margin Q3 2022 Q3 2022 Q3 2022 Q3 2022 Colorado Delaware Delaware California 55% 57% 61% 34% Massachusetts New Jersey New Jersey Colorado Of Total Revenue for Average Q3 2022 Adj. Of Total Adj. EBITDA Average Q3 2022 Adj. Ohio New Jersey Ohio New Jersey Q3 2022 Gross Margin for Q3 2022 EBITDA Margin Virginia Pennsylvania Virginia Ohio Virginia West Virginia West Virginia Virginia Note: Markets listed alphabetically Average Adj. Gross Margin* by Length of Market Operations Margin Improvement Highlights 73% 70% 68% ✓ Utah, Missouri, Virginia, West Virginia – newest markets open <15 Months are ramping, with Virginia and West Virginia already top 5 markets by Adj. GM 57% 54% 53%✓ New Jersey – adult-use ramping, 1 retail location under development and Vineland II 51% 48% cultivation site operationalized, adding additional cultivation square footage to the portfolio 49% 46% 45% 45% 43% 43% 45% 41% 40% 41%✓ Florida – continued scale & yield improvements, combined with discounting discipline 37% drove sequential improvement in basket size 35% ✓ California – cultivation upgrades to increase yield, efficiency and quality of product in light of wholesale market softness and pricing pressure are nearly complete ✓ Colorado – cultivation improvements to increase yields, quality and utilization of manufacturing capacity; introduction of in-house brands subsequent to quarter end ✓ Pennsylvania – additional cultivation capacity and bringing in-house brands into market to improve margin and generate additional wholesale opportunities Overall 24+ Months 15-24 Months <15 Months Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 * Excludes changes in fair value of biological assets and inventory sold for all periods presented, as well as $4.8 million in Q3 2022 relating to a one-time write-off in Colorado to reduce outdoor capacity, $4.3 million in Q2 2022 related to inventory revaluation adjustments, and $1.4 million in Q3 2021 & Q2 2021 and $0.1 million in Q1 2021 related to the mark-up of inventory acquired in acquisitions.
10 GROWTH TRAJECTORY & 2022 CATALYSTS 46% 140,000 50 45% 43% 43% 45 120,000 38% 40 117,506 27% 100,000 35 77,445 30 80,000 25 CapEx spend on purpose-built 60,000 20 Initial CAPEX investments continue to 42,885 infrastructure generates returns as 15 generate returns as infrastructure 40,000 29,511 29,155 markets come online and assets 10 comes online in operational markets, 11,851 20,000 begin to generate revenue. 5 driving increasing gross margin. CAPEX needs declining as assets are 0 0 FY 2019 FY 2020 FY 2021 Q1 2022 Q2 2022 Q3 2022 operational. $Th % CAPEX Adj. Gross Margin* % * Excludes changes in fair value of biological assets and inventory sold for all periods presented, as well as $4.8 million in Q3 2022 relating to a one-time write-off in Colorado to reduce outdoor capacity, $4.3 million in Q2 2022 related to inventory revaluation adjustments, and $1.4 million in Q3 2021 & Q2 2021 and $0.1 million in Q1 2021 related to the mark-up of inventory acquired in acquisitions. Multiple Catalysts Propelling Growth in 2022 Ramping cultivation & Canopy expansion and 7 Expanded product offerings Tripling canopy capacity in production capacity in ~1M additional retail locations to with focus on CO2 and edibles Vineland & adding 1 retail sqft greenhouse in New York open in growing Virginia & operational improvements location in New Jersey as to be low-cost flower producer medical program, in advance will continue to drive growth adult use ramps in 2022 and wholesale supplier of adult use transition and profitability in Florida Launched the state’s largest Increased product offerings Expanding branded product Ramping in newly opened and expanded cultivation in wholesale operation and distribution and Cannabist markets of Missouri, Utah & Ohio (4x canopy expansion) & opened 4 retail locations, with retail network, expanding West Virginia, will contribute 1 additional in development in Pennsylvania (adding ~170k product distribution in to margin expansion in 2022 West Virginia sqft total capacity) wholesale channels Steele, CO
11 11 PRIORITY GROWTH MARKETS Columbia Care in New York Columbia Care in New Jersey Columbia Care in Virginia $5B+ $3B+ $3B+ (1) (1) (1) Projected TAM Projected TAM Projected TAM 8 Retail Locations (4 Active, 4 In development) 12 Retail Locations (5 Active, 7 In Development) ~148k sqft Existing Cultivation & Production in ~147,765k sqft Existing Cultivation & Production 3 Retail Locations (2 Active, 1 In Development) Rochester and Phase 1 of Long Island greenhouse Capacity ~320k sqft Existing Cultivation & Production Capacity in ~650k sqft Additional Cultivation & Production Capacity Vineland, NJ ~30k sqft Additional Cultivation & Production Capacity in Riverhead, NY; First Harvest Completed in Dec 2021 MARKET UPDATES MARKET UPDATES MARKET UPDATES • On March 31, 2021 Legislation (S.854-A/A.1248-A) was signed, • New regulations in effect July 1, 2022 removed the state registration • Adult-use began at two Cannabist locations in April 2022, on the first legalizing adult-use cannabis and expanding medical marijuana; adult card process. Patients are able to bring written certifications directly day of New Jersey adult use sales in the state use expected in 2023 and regulator communicated the intent for to dispensary, which has facilitated a growth in patient registrations to • Columbia Care is among the existing medical operators able to medical companies to wholesale to initial social equity retailers more than 45,000 operate up to 3 co-located retail locations, 2 cultivation facilities • Access to the medical cannabis program has expanded; whole • Adult-use sales awaiting final legislation with an official start date. providing up to 150k sqft of cultivation canopy cannabis flower entered market in October 2021 Legalizing possession and personal cultivation without providing for • Columbia Care recently expanded canopy with second cultivation legal commerce is increasing pressure on lawmakers to work across • Columbia Care is among existing Registered Organizations that will facility in Vineland and will open 1 additional retail location the aisle to put forth a plan for a retail market be able to operate up to 8 retail locations (5 medical + 3 co-located medical/adult-use) and remain vertically integrated• Flower introduced to the medical market in September 2021 1) Estimated Sales figures from BDSA Market Forecast as of September 2022, broker research, Company estimates
12 12 EXPANSIVE RETAIL OPERATIONS (1) Active Retail Locations by Quarter 85 90 84 84 79 75 80 73 69 67 70 59 60 50 40 35 34 30 25 18 20 16 13 10 0 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 Q2-22 Q3-22 Retail Highlights • Dispensary revenue per square foot • Cannabist Carytown, VA opened in +13% QoQ for stores open >12 months October 2022 • Retail share of Columbia Care-house • 14 additional retail locations in brand sales were 48% of sales for Q3 development in 2022 - VA: 7, WV: 1, NY: 2022 4, NJ: 1 and MD: 1 1) Active implies first sale made Note: Acquisition of Medicine Man closed November 1, 2021; Dispensary count as of November 14, 2022, including Carytown, VA
13 13 LOW-COST CULTIVATION, EFFICIENT & SCALABLE PRODUCTION 33 facilities with +2 million sq. ft of cultivation and manufacturing capacity Jurisdiction Facility Count Total Size (sqft) Status Arizona 2 34,800 Operational California 2 81,600 Operational Colorado 6 185,253 Operational 20,000 Operational Delaware 2 37,524 Under development Florida 4 105,373 Operational Illinois 1 32,802 Operational Maryland 2 59,040 Operational Massachusetts 1 38,890 Operational (1) Missouri 1 12,630 Operational New Jersey 2 320,724 Operational 148,346 Operational New York 2 (2) 650,000 Under development Ohio 2 117,722 Operational 230,500 Operational Pennsylvania 1 43,500 Under development Virginia 2 147,765 Operational Washington DC 2 16,591 Operational West Virginia 1 39,293 Operational Total 33 2,321,903 1) Consultative services provided pursuant to the terms of a management services arrangement 2) Phase I of Riverhead, NY greenhouse facility is operational; first harvest was completed in December 2021
14 14 FINANCIAL HIGHLIGHTS (in US$ thousands) FY 2021A Q4 2021A Q1 2022A Q2 2022A Q3 2022A 2022 Outlook P&L / Cash Flow Revenue 460,080 139,276 123,087 129,571 132,733 Topline: Adj. EBITDA 57,852 20,592 16,832 12,029 20,993 Flat to low single-digit growth Interest Expense 30,014 11,314 11,244 11,484 12,974 EBITDA Margin: Capital Expenditure 117,506 45,183 29,511 29,162 11,851 Mid-to-high teens Balance Sheet Cash 82,198 82,198 168,424 81,440 50,023 PP&E 339,692 339,692 355,968 373,877 370,820 Total Assets 1,376,512 1,376,512 1,482,443 1,420,465 1,371,578 Total Liabilities 825,689 825,689 952,743 892,496 870,701 Shareholder's Equity 550,823 550,823 529,700 527,969 500,877 Note: Results are reported in US GAAP
15 15 THIRD QUARTER 2022 STATE HIGHLIGHTS Top 5 Markets by Revenue: California, Colorado, New Jersey, Ohio, Virginia Top 5 Markets by Adjusted EBITDA: Colorado, New Jersey, Ohio, Pennsylvania, Virginia Market Commentary • Q3 2022 saw the highest revenue, Gross Margin and EBITDA in California YTD despite significant competitive pricing pressure for manufactured California goods, bulk & packed flower due to market saturation and economic climate • Continuing to produce high-quality product with exceptional yield and potency results. Some strains testing over 36% THC and 38% TAC • Overall legal cannabis sales in CO are down YoY, but anticipated stabilization is materializing, with QoQ increase in revenue and FCF Colorado• Ramping manufacturing production to account for store needs due to success of newly launched products (Amber Cartridges, Hedy Gummies, Distillate Cartridges) • Minor impact to operations from Hurricane Ian at the end of the quarter, primarily due to temporary power loss and closure at retail locations Florida • Increased garden potency and yield in Q3 • Adult-use proportion of revenue continues to increase due to maturity of market and promotion of adult-use program in the state Illinois • Lab conversion and kitchen buildout completed in Q3, launched cured resin and Hedy edibles in Q3 • Increased competition due to increasing number of dispensaries in the state Massachusetts• Gross Margin and EBITDA continue to trend upward due to strong P&L management, strategic buying, selling and wholesale/retail pricing • Strong automation and process throughout the manufacturing facility; launched many new SKUs in 2022 • Strong QoQ revenue growth of over 75%, wholesale increased nearly 5x with first harvest out of second cultivation facility in Vineland New Jersey• Launched multiple new SKUs and product line extensions: Press ODT’s, Press 2.0, Hedy Edibles, Amber, Tyson 2.0 and Dablicators • Working with multiple new license winners to optimize wholesale opportunity
16 16 THIRD QUARTER 2022 STATE HIGHLIGHTS Top 5 Markets by Revenue: California, Colorado, New Jersey, Ohio, Virginia Top 5 Markets by Adjusted EBITDA: Colorado, New Jersey, Ohio, Pennsylvania, Virginia Market Commentary • Revenue and Gross Margin relatively flat; QoQ improvement in profitability • Seed & Strain vapes and flower introduced to the market in August 2022 New York • Ramping up Riverhead cultivation operations; upward trend of yield and potency in gardens • Gross Margin improved sequentially due to increased output/efficiencies in Mt. Orab, optimized product allocation • Completion of Mt. Orab in Q2 allowed introduction of 10 new cultivars and 2 new brands (Tyson & Classix) Ohio • Useable/finished flower production increased 112% post expansion, enabling wholesale opportunity with new dispensaries expected in 2023 • QoQ improvement in Gross and EBITDA Margins, despite challenging topline environment due to overall market softness, additional competition Pennsylvania and pricing pressures • Launched Classix in July 2022 and Triple 7 in August 2022 • Continued QoQ revenue growth; Carytown dispensary opened in late October 2022, additional locations in development for Q4 • Regulation change on 7/1/22 simplified patient registration process; 4,700+ new patients seen at our locations since the regulation took effect Virginia • Completed Portsmouth facility expansion at the end of Q2, allowing harvest to increase 4x in Q3 • Automated flower packaging is established and has significantly increased throughput of flower production • Increase in revenue QoQ driven by wholesale revenue from supporting new dispensaries with product to open their facilities West Virginia• Brand portfolio expanded in Q3, now including Seed & Strain, Triple 7 and Classix, allowing for new SKUs in Q3 • Fifth dispensary in the state is in development for 2023
17 Tempe, AZ
18 CANNABIST EXPANSION Columbia Care’s new retail storefront experience is centered on making shopping simple and approachable for the vast range of experience levels as cannabis use is normalized and legalized across the U.S., with knowledgeable staff and technology-enhanced interaction. 32 Cannabist Locations Open to Date • Tempe, AZ• Deptford, NJ• Brooklyn, NY • San Diego, CA• Hermann, MO• St. Albans, WV • Villa Park, IL• All 14 FL locations• Morgantown, WV • Lowell, MA• Virginia Beach, VA• Chicago, IL • Springville, UT• Williamstown, WV• Vineland, NJ • Boston, MA• Beckley, WV• Portsmouth, VA • Carytown, VA Near-term Pipeline 1 West Virginia location Early Insights - Cannabist Rebrand Impact (1) Villa Park, IL Case Study • +15% increase in revenue • +19% increase in number of transactions • Top 3 all-time highest weekly sales occurred since rebrand 1) Comparison of first 7 full weeks of operation as Cannabist to prior 7 weeks of operation prior to rebrand
19 BUILDING NATIONAL BRAND AND PRODUCT PORTFOLIO Growing our proprietary brand footprint through expanded market penetration and wholesale reach In-house brands accounted for over 60% of all flower sold at Columbia Care owned dispensaries in Q3. Owned brands also made up 50% of sales Wholesale SKU distribution expanded to 16 markets in 2021 Columbia Care house brands are currently available in 16 markets, expected to reach all operational markets by Q4 2022 Columbia Care currently has 55 different product categories across its house brands
20 20 AWARD-WINNING PRODUCTS & SERVICES High Times Cannabis Cup Illinois 2021 st • Hybrid Flower 1 Place: Triple 7, Rainbow Runtz nd • Indica Flower 2 Place: Seed & Strain, Velvet Glove nd • Pre-Roll 2 Place: Seed & Strain, Cherry Chem rd • Sativa Flower 3 Place: Triple 7, Tropical Runtz High Times Cannabis Cup California 2022 nd • Sativa Flower 2 Place: Triple 7, Super Boof rd • Indica Flower 3 Place: Triple 7, Pancakes #7 High Times Cannabis Cup Illinois 2022 rd • Pre-Roll 3 Place: Triple 7, Tropical Runtz Clio Cannabis Awards 2021 • Clio Cannabis Bronze Award: Forage, Digital/Mobile E-Commerce Category WEEDCon 2021 Harvest Cup • Best Flower - Hybrid: Triple 7, Peanut Butter Breath MarCom 2021 • Gold Award: Forage, Mobile Buying Experience Category MarCom 2021 • Platinum Award: Cannabist, Branding Refresh Category • Gold Award: Forage, Mobile Buying Experience Category MarCom 2022 • Platinum Award: Cannabist, Branding Refresh Category • Gold Award: Hedy, Marketing/Promotion Category • Platinum Award: Classix, Design (Print) Category
21 ROOTED IN LAND & HARVESTED BY HAND Upscale yet accessible, Seed & Strain is the most widely distributed brand across the entire portfolio Seed & Strain demonstrated a 26% QoQ increase across all categories. In Q3 2022, Seed & Strain entered New York, bringing its total state footprint to 14 markets By year-end 2022, Seed & Strain will be available in 15 markets
22 Our Cannabis is at the uppermost end of the quality spectrum, and our strains are unwavering in consistency. We’ve gone above and beyond the highest industry standards to cultivate the best strains that deliver every time. Our ultra-premium brand has national penetration and is now available in 10 markets with 3 additional planned in Q4 2022 Triple Seven has won multiple awards in the Illinois High Times Cannabis st rd Cup, including 1 Place Hybrid Flower and 3 Place Sativa Flower, and the nd California High Times Cannabis Cup, including 2 place Sativa Flower and rd 3 Place Indica Flower
23 AMPLIFY TODAY Classix is our every day, timeless lifestyle brand that celebrates incredible cannabis moments shared with friends Classix is now available in 14 markets, with additional states expected in 2022. Classix successfully launched in 5 markets (AZ, MA, IL, DE, & NJ), and represented the single largest launch week for a brand in Columbia Care history totaling 12% of all sales on day 1, and 14% of all sales after the first week*. The launch of Classix also marked industry's widest multi- state flower brand launch in a single day. In Q3 2022, Classix launched the disposable vape and generated 13% revenue growth QoQ. *Note: For markets in which the product is available
24 HEDY SLIDE Whichever path you choose, it’s always an exhilarating one. With HEDY the sky's the limit. Infused with Azuca fast-acting TiME INFUSION™, allowing high- quality cannabinoids to take effect in a groundbreaking, consistent, and predictable two to fifteen minutes In Q3 2022, Hedy launched across six markets (AZ, CO, DE, MA, MO, VA), and is currently available in the following form-factors: gummies, chocolate drops, chocolate bar and effects-based gummies We anticipate the launch of additional markets and form factors in 2022 Footer
25 TYSON IS BACK. Tyson 2.0 is an extraordinary balance of premium and affordable, full-spectrum cannabis flower, concentrates, and consumables available at retailers nationwide. Tyson 2.0 launched with Columbia Care as its exclusive national cultivation and manufacturing partner Tyson 2.0 currently offers 3.5g flower, a 0.5g pre-roll and 28g flower and is sold through both our wholesale and retail channels Tyson 2.0 launched in December 2021 and is currently available in 10 Columbia Care markets: AZ, CA, CO, DE, DC, MD, PA, IL, MA and OH. We expect to introduce Tyson 2.0 to additional markets in 2022
26 Formulations crafted by connoisseurs Vibes crafted by you AMBER is now available in nine markets (AZ, CA, CO, DC, DE, IL, MA, NJ, WV), and in Q3 revenue grew 94% QoQ California launched AMBER Diamonds and Live Sauce, two elevated concentrates that will situate AMBER as a sophisticated concentrates brand Our customers have nominated AMBER for San Diego’s Best Concentrate Product and Best Overall Concentrate Brand 2022
27 A RETAIL PLATFORM BUILT FOR CONTINUOUS INNOVATION How do you want to feel today? Technology and efficiency innovation will continue to heighten the in-store and at-home shopping experience at Cannabist and create an all-encompassing ecosystem from home to dispensary and online Forage is our award-winning online cannabis discovery tool that matches strain and product recommendations to how you want to feel. We are the first cannabis company to bring a technology solution like this to the market that offers a truly unique consumer experience Since the launch of Forage in June 2021, we have seen increased adoption on mobile and in the way the product is being leveraged in stores. We are continuing to explore opportunities around branded advertising and engaging content Footnote
28 Stash Cash app offers a streamlined shopping experience to build and track loyalty rewards, shop from anywhere and discover new products. Stash Cash has features that allow Earn rewards for enjoying cannabis. The Stash Cash app is a platform for users to set their favorite dispensary and It doesn’t get any simpler than that. customers to build loyalty rewards, shop shop, earn and redeem points for Build your stash, save your cash from anywhere and discover new purchases made, discover new products products using Forage, connect via social media CANNABIS REWARDED and much more Footer
Footer