High Tide Inc. Q4 FY2025 Earnings Call - Brick-and-mortar Powerhouse Delivers Record Revenue and EBITDA, Remaxion Is Short‑Term Drag but Long‑Term Upside

Constantine, Conference Operator: Good morning, ladies and gentlemen. My name is Constantine. I’ll be the operator for today’s call. This call is scheduled to start in five minutes. Thank you very much for your patience. Please stay on the line. Again, my name is Constantine. I’ll be your operator for today. This call will start in five minutes. Please stay on the line. Thank you very much for your patience.

Good morning. My name is Constantine, and I will be your conference operator today. At this time, I would like to welcome everyone to High Tide Incorporated’s fourth fiscal quarter 2025 Audit and Financial and Operational Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question and answer session. Instructions will be provided at that time for you to queue up for the question and answer session. I will now turn the call over to your host.

Omar Khan, Chief Communications and Public Affairs Officer, High Tide Inc.: Thank you, operator. Good morning, everyone. My name is Omar Khan. I’m the Chief Communications and Public Affairs Officer for High Tide Inc. Welcome to High Tide’s quarterly earnings call. Joining me on the call today are Mr. Raj Grover, President and Chief Executive Officer, and Mr. Mayank Mahajan, Chief Financial Officer. On January 29, 2026, the company released financial and operational results for the fiscal year and quarter that ended October 31, 2025. Before we begin, please let me remind you that during the course of this conference call, High Tide’s management may make statements, including with respect to management’s expectations or estimates of future performance.

All such statements, other than statements of historical facts, constitute forward-looking information or forward-looking statements within the meaning of the applicable securities laws and are based on assumptions, expectations, estimates, and projections as of the date hereof. Specific forward-looking statements include, without limitation, all disclosures regarding future results of operations, economic conditions, and anticipated courses of action. For more information on the company’s risks and uncertainties related to forward-looking statements, please refer to the company’s press release dated January 29, 2026. Our latest annual information form and our latest management’s discussion and analysis, each filed with securities regulatory authorities at sedarplus.ca or on EDGAR at www.sec.gov/edgar, or on the company’s website, www.hightideinc.com, and which are hereby incorporated for reference herein.

Although these forward-looking statements reflect management’s current beliefs and reasonable assumptions based on the currently available information to management as of the date hereof, we cannot be certain that the actual results will be consistent with the forward-looking statements in the future. There can be no assurance that actual outcomes will not differ materially from these results. Accordingly, we caution you not to place undue reliance upon such forward-looking results. For any reconciliation of non-IFRS measures measured and discussed, please consult our latest management discussion and analysis filed on SEDAR+, or on SEDAR+ and EDGAR. It is now my pleasure to introduce Mr. Raj Grover, President and Chief Executive Officer of High Tide Inc. Thank you. Mr. Grover, you may begin.

Raj Grover, President and Chief Executive Officer, High Tide Inc.: Thank you, Omar, and good morning, everyone. Welcome to High Tide Inc.’s Financial Results conference call for the fourth fiscal quarter that ended October 31, 2025. I’ll begin with some high-level comments about the quarter and our strategy before Mayank dives deeper into the financials. Looking at the numbers, what a way to cap off fiscal 2025! Last night, we reported stellar Q4 results, featuring record revenue of CAD 164 million, an annual revenue run rate exceeding CAD 650 million, and record Adjusted EBITDA of CAD 12.4 million. Once again, our core brick-and-mortar segment led the way. Same-Store Sales growth of 5.5% helped drive 15% growth in the segment year-over-year, and increased gross margins led to a record Adjusted EBITDA margin of 9.4%.

Our brick-and-mortar adjusted EBITDA annual run rate now exceeds CAD 56 million. Regarding footprint expansion, we added another 27 stores during calendar 2025, all organically. Once again, we met the higher end of the target we established at the start of the year to add 20-30 locations. Our goal for calendar 2026 is to add another 20-30 new stores. Clearly, we are not afraid of organic growth. While newer stores are taking longer to mature due to increased competition, given the strength of our brand and our commitment to only high-quality locations, we believe organic growth provides excellent ROI for our shareholders. Our new store pipeline remains robust, with 15 Tier One locations currently under development, particularly in Ontario. But we are also in talks with operators of various sizes regarding M&A possibilities.

The other thing I would like to highlight is how, for our second straight year, our impressive organic growth of store build-outs was financed entirely by internally generated Free Cash Flow, which totaled CAD 12 million for the fiscal year, meeting our stated objective of remaining positive. Our retail KPIs remain truly impressive. Excluding stores open less than six months, which are still ramping up, our annualized revenue per sq ft in Q4 was CAD 1,775, once again above many leading blue-chip retailers. Much of this strength can be attributed to the strength of our Cabana Club loyalty program, which keeps expanding. We are now at 2.5 million members in Canada, up 45% year-over-year, growing at the fastest rate in four quarters. Recall that since our last conference call, we raised our long-term target to reach 3 million Cabana Club members nationwide.

Our Canadian ELITE member count now sits at 151,000, up 107% year-over-year. Once again, our pace of onboarding new members was the fastest since we launched the ELITE tier in November 2022. October 2025 was the end of our fiscal year, and it also marked the four-year anniversary of the launch of our innovative discount club model, and the results have been nothing short of phenomenal. We outperform our peers month in and month out, and this delta has been compounding during this time. Chaining our monthly same-store sales increases, we are up 151% during this four-year period. In contrast, total sales in the five provinces where we operate are up only 23%, and with the increase in the number of stores, the average operator is down 14%.

In October, the average Canna Cabana store was on an annual revenue run rate of CAD 2.6 million, which was 2.2 times our peer average at CAD 1.2 million. In Ontario, the largest province and focus for future growth, our outperformance was even more pronounced. Excluding stores open less than six months, which are still ramping up, our average Ontario store was on a CAD 3 million annual run rate, which was 2.6 times our peers at CAD 1.1 million. This outperformance has led to increasing market share. For the fourth fiscal quarter of 2025, Canna Cabana had a 12% market share in the five provinces where we operate, up from 11% a year ago.

The world has changed so much since we held a 5% market share 4 years ago, and while our share has risen, our overall growth continues to outperform the market. For the 12 months ended October 31st, 2025, total industry sales in the 5 provinces where we operate were up 4% year-over-year. In contrast, total Canna Cabana sales were up 16% during this period. This underscores the strong degree to which customers see the value of our offering, and this outperformance is also being noticed by licensed producers, large and small. Media company Rebel & Thorn recently prepared a report highlighting retailer insights for the Canadian cannabis industry, which really showcases Canna Cabana’s strong positioning within it.

The report found that Canna Cabana leads the pack in consumer awareness, with 29% awareness across the country, number one nationally, and in almost every province where we operate. Similar to our financial and operational metrics, awareness among consumers of our brand has been climbing steadily for the past several years, while our main competitors, many of whom have went through CCAA proceedings and closed stores, have largely stagnated or declined on this metric. In terms of shopping frequency, the report found that 16% of all consumers nationally cited Canna Cabana as a store where they shop most often. Not only was this the highest level among our peers, we scored twice as high as the next closest brand. I’m even prouder at our outperformance when digging deeper into the data.

When isolating only daily users of cannabis, our bread-and-butter customer, 49% of them named Canna Cabana as the location they shop most often at. Again, this was by far the highest among our peers and about twice the level of our next closest competitor. This is a customer group that moves the market, and they choose Canna Cabana by a wide margin. Thanks to the strength of our model, the real estate we have carefully selected and secured, and the operational excellence of our team, we are competing with brands, in many cases, much better capitalized than us, and we are winning. The macro picture of the industry also continues to improve in terms of our positioning and relative ability to service customers. The retail shakeout we have expected for some time is finally happening, with struggling competitors fading away rather than renew leases.

For example, over the past 12 months, we’ve increased our Alberta store count by 10%, while at the same time, excluding us, the rest of the province has seen a 5% contraction in the number of stores. In Ontario, where our stores outperform peers by 2.6 times in terms of revenue, we have boosted our store count by 27% over the past 12 months, accounting for effectively all of the growth in the province, as the rest of the industry combined has remained flat. We have 218 stores open across the country today, more than any other cannabis retail brand, and we reiterate our goal of exceeding 350 locations. So there is no doubt that it is full steam ahead in our base Canadian brick-and-mortar business. Now I’d like to address our other operations.

Q4 marks the first quarter with some contribution from Remaxion following the acquisition of a majority stake in the company in September. We remain very excited regarding this transaction. You’ll recall that we spent a considerable amount of time declaring our intention to enter the fast-growing German medical cannabis market, meeting many players, evaluating the suitability of each, performing due diligence on what is a fluid situation in many respects, negotiating a deal that makes sense for our shareholders, and securing the required financial outlay. In typical High Tide fashion, we got it done. We acquired 51% of Remaxion, one of the largest, and in our opinion, the best medical cannabis importer and distributor in Germany, and we have a call option to acquire the remaining 49%.

In less than two months, Remaxion contributed almost $10 million of revenue to our results, an impressive feat considering the temporary dynamics. In particular, during our due diligence period in the summer, Remaxion began experiencing delays in product releases from Portugal, where many German distributors first sent biomass to be processed. As a result, revenue and gross margins were below the run rates Remaxion had previously generated. We expect this to continue for a few more months until the remaining biomass in Portugal, some of which is up to 10 months old, churns through the system. We definitely believe we are nearing the tail end of this legacy situation. While we view this as a short-term blip, we made note of this issue in our negotiations, as well as the possibility that the German government may enact a new law governing medical cannabis.

As a result, we incorporated various protections for High Tide shareholders, not the least of which is the acquisition multiple of just 3.6x, very accretive for our shareholders and truly remarkable for a company exhibiting as much growth as Remaxion. Our new partners truly appreciated that if High Tide owns 51% of the company, with all the benefits we can bring to the business, notably our relationships and experience in procurement, we can help meaningfully increase the value of the remaining 49% in the future. We also made sure to set the valuation multiple on the future EBITDA from now at 3.6x or 4x, depending on the timing and option is triggered. As a result, we have already baked in the future accretion for our shareholders regarding when the second half of Remaxion may be acquired.

I’m very pleased with how the integration of Remaxion has been going post-closing, and for our growth prospects moving together going forward. Much of the rationale for the transaction was that given our track record, having sold $2.1 billion of cannabis to date, we have a unique ability to leverage top-tier relationships with licensed producers of various sizes to procure the best quality cannabis on best-in-class terms. I can say that operationally, this is already bearing fruit. We recently hosted the Remaxion team to tour many licensed producer sites, and we have already signed agreements to acquire quality biomass from leading producers at prices meaningfully below what Remaxion was able to procure on their own.

The strategy is working, and it should become evident in our future results as the legacy biomass clears and this new lower-cost product begins to cycle through the system. Regarding the situation in Portugal, one of the first things we started doing even before the transaction closed, was to diversify our list of potential processing partners so that we are no longer as vulnerable regarding our supply chain. The encouraging news is that biomass has begun trickling out at a faster pace in recent months. In particular, we were encouraged by shipments in December, which resulted in our second-best month in terms of tonnage sold.

While we still have a meaningful amount of product stuck in Portugal, given our expectation that the speed of future shipments will accelerate, the fact that we have diversified our potential processing partners and our ability to earn higher gross margins, given our relationships with licensed producers, we expect Remaxion to be a large contributor to our financial profile in the quarters in the second half of the fiscal year. Further, while we are working on getting Remaxion running at full speed, we know that our European ambitions are not just limited to Germany. For example, the United Kingdom’s medical cannabis market has been growing at an exponential pace, and we expect to make sales in that market in the second half of this year. Let’s turn to the United States.

Like most of the cannabis industry, we were very excited by U.S. President Donald Trump’s executive order on December eighteenth, advancing the rescheduling of cannabis. We’ve received inbounds from multiple large U.S. operators offering to explore the full range of how we can work together. While we caution that it is still early in our process, we are encouraged with what we see so far and for the prospects of being a meaningful player in the U.S. much sooner than we would have predicted a few months ago. One area regarding President Trump’s announcements, where we were among a handful of companies to potentially benefit, was regarding the language surrounding CBD. We are anticipating the launch of a pilot program under Medicare, where seniors would be eligible to get coverage for purchase for up to $500 of CBD products a year.

If enacted, this has the potential to be a game changer for our two existing U.S. CBD brands, NuLeaf Naturals and FAB CBD. You’ll recall that on our last quarterly update, we had disclosed our intention to explore a meaningful change in our U.S. e-commerce business, such as a joint venture, outright sale, et cetera. We are in talks with various parties regarding possible transactions. However, given this encouraging development and potential it can offer, we are slow-playing entering into any such agreements until we get more information as to how things may actually play out in terms of new regulations and the ability to revitalize our e-commerce segment ourselves. In conclusion, I’m very happy with our Q4 results and fiscal 2025 as a whole.

We added 27 stores while the rest of the landscape was shrinking, set revenue records now to exceed a CAD 650 million run rate, set another Adjusted EBITDA record, and still generated meaningful Free Cash Flow. None of this could have been done without our amazing team that works hard day in, day out to make this all happen. I’d like to share a tidbit that many investors may not be familiar with, which I believe really illustrates the strength of our team and the can-do attitude we all have as High Tiders. In October, there was a government employee strike in British Columbia, which crippled the ability of cannabis stores to get product to serve customers across the province. The result was devastating for retail sales, with total industry sales down 55% in BC versus September, even after benefiting from an extra day.

In contrast, our team was able to work the supply chain, leverage our long-standing relationships, and find ways to keep product on the shelf. As a result, our BC stores were down only 5% sequentially in October. While this specific example of outperformance was an isolated incident, it helps showcase our superior team’s ability to navigate crisis and outperform, and I’m sure our customers appreciated it, which should lead to increasing loyalty in the quarters ahead. With that, I’ll turn it over to Mayank for his comments and a deeper dive into the numbers.

Mayank Mahajan, Chief Financial Officer, High Tide Inc.: Thank you, Raj, and hello, everyone. Q4 was another great quarter for High Tide in meeting our objectives and executing on our future growth strategy. Let’s take a deeper dive into the numbers. Revenue for Q4 was an all-time high of CAD 164 million, up 19% year-over-year and 10% sequentially. Our brick-and-mortar segment led the way, up 15% year-over-year, driven by our strong same-store sales of 5.5% and the addition of more stores. In addition to the merchandise sales, our Cabanalytics platforms continue to set new highs. Cabanalytics’ business data and insight platform, advertising revenue, and other revenue, including management fees, interest income, and rental income, totaled CAD 13.1 million in Q4, up 20% year-over-year and up 9% sequentially.

Consolidated gross margins were 26% in Q4, consistent with Q4 last year and just below 27% sequentially. Most importantly, we were able to post sequential gains in our core brick-and-mortar segment for the fourth straight quarter. Turning to expenses, salary and wages represented 11.5% of revenue in Q4, versus 12.4% a year ago and 12.2% sequentially, marking our lowest level in 9 quarters. This was due to the leverage seen in store growth, as incremental new stores don’t require more head office overhead, as well as the addition of Remaxion. General and administrative expenses represented 4.3% of revenue in Q4, consistent with 4.2% a year ago and 4.4% sequentially. Adjusted EBITDA was CAD 12.4 million for the quarter.

This was truly impressive, growing 51% year-over-year and up 17% sequentially. The star of the show here was, once again, our core brick-and-mortar segment, highlighting our strong cost controls, the 0.7% sequential increase in gross margin, followed by all the way down to a 0.7% sequential increase in adjusted EBITDA margin. Our adjusted EBITDA margins hit a new record of 9.4% this quarter, and we posted a record adjusted EBITDA for this segment of CAD 14.1 million. There were two non-cash items I would like to address, which impacted our Q4 result. The first was relating to our e-commerce business. As you know, this segment has experienced struggles in recent quarter.

As a result, our annual impairment testing, we determined that an impairment of CAD 23.6 million was required, relating to goodwill and other intangible assets allocated to this segment. While we are not happy with this impairment, the silver lining is that all intangibles and goodwill relating to the e-commerce segment have been written off. Further, as Raj outlined, we are cautiously optimistic regarding the prospect for a rebound in this segment’s performance in the future, particularly on the CBD side, given the proposed regulatory changes in the United States. Additionally, there was a CAD 23.5 million loss on change in the fair value of derivative liability in the quarter. This was as a result of two items, both of which, while positive in nature, resulted in paper losses on our financials for IFRS purposes.

First, our share price rose 44% during the fourth fiscal quarter, which resulted in a charge relating to the value of the warrant we have outstanding. Second, and significantly more meaningful in terms of the financial impact, we reforecasted the outlook ahead for Remaxion, which we believe has improved since the closing of the acquisition, given the traction we are already seeing in potential synergies, including leveraging High Tide’s relationships, and ability to source product at lower cost than Remaxion could have independently. Given the improved projections for Remaxion EBITDA, the corresponding put option liability their shareholders have for the remaining 49% was deemed to be worth more, resulting in a known cash fair value change of derivative liability charge on our P&L. Adjusting for these known cash charges, net income was positive CAD 1.4 million or positive CAD 0.02 per fully diluted share.

While the above two items have to be reported for IFRS accounting purposes, in our view, the flows of physical cash tell a more accurate picture of how the underlying business is performing. High Tide generated CAD 1.3 million of Free Cash Flow in Q4. While this was below the CAD 5.9 million in Q4 last year and CAD 7.7 million last quarter, this was mostly due to this quarter requiring a Working Capital investment of CAD 2.3 million, while the other periods benefited by Working Capital being a source of cash of CAD 3.55 million and CAD 2.4 million, respectively. We have cautioned that Working Capital can vary in any given quarter and that investors need to focus on this metric on a longer period.

To that end, when looking at the fiscal year, we generated CAD 12 million of Free Cash Flow, meeting our goal to be positive for the year and then some. We continue to have a strong balance sheet. As of today, at the High Tide level, total debt stands at CAD 65.5 million. We had CAD 47.9 million in cash and cash equivalents at the end of the quarter, and we are well positioned with no upcoming maturities for over 2 years. In closing, Q4 was another great quarter for High Tide. We continue to excel and lead our peers in our core businesses. We are growing while they are shrinking, and our customers are becoming more and more aware of us and choosing us as their go-to banner.

We are generating Free Cash Flow, which is fueling the expansion of our store network, and I’m very excited for the contribution Remaxion will bring in the quarters ahead. Thanks to our amazing team, without whom none of this would be possible. With that, I will now turn the call over to the operator to open the line for the question and answer session. Thank you.

Constantine, Conference Operator: Thank you. Ladies and gentlemen, we will begin the question and answer session. If you have a question, please press star followed by 1 on your touchtone phone. You will hear a prompt that your hand has been raised. If you would like to withdraw your question from the polling process, please press star, then 2. If you are using a speakerphone, please make sure to lift your handset before pressing any keys. Your first question comes from the line of Neil Gilmer from Haywood Securities. Please go ahead.

Neil Gilmer, Analyst, Haywood Securities: Yep, thanks very much. I appreciate the questions. Congrats on a good quarter. Raj, I guess I just wanted to dive a little bit deeper into your comments with respect to Germany, and the inventory that you’re trying to work through. It sounds like it sees another couple of months, so I guess we’ll see a bit of an impact in Q1 when you report that. And, you know, through Q1, did you sort of have to continue to sell this at the margin that we saw for the first couple of months that you had the Remaxion under your control?

Mayank Mahajan, Chief Financial Officer, High Tide Inc.: Yeah. Good morning, Neil. Thank you very much for your question. So look, the Portugal issue definitely impacted our Q4 results, and while things are getting better, it’ll have some impact on Q1 as well. Despite that, we still had record adjusted EBITDA. You know, compared to the normal cycle of business revenue and gross margins, we know that that, you know, we’re gonna have to plan for this, and we have done that. We had close to 16-17 tons sitting in Portugal, Neil, when we first acquired the business.

Raj Grover, President and Chief Executive Officer, High Tide Inc.: ...We’re down to about half of that or a little bit less than half of that, and things are picking up pace. Like we said, December was the second highest month in tonnage after June. June was 2.9 tons. December was 2.6 tons. And, you know, we’ve had to sell this biomass, which is like 3-4 weeks away from expiry. That is how it’s getting released from Portugal, where export permits are being issued. But Infarmed, the authority there, is only releasing a biomass that is closer to expiry. So once we’re behind this particular issue of existing inventory in Portugal, I see green pastures ahead. I’m ultra excited about this business. You know, this may continue. We’re already procuring biomass here, 30%-40% less than what Remaxion was doing.

The opportunity is endless, especially when adjacent markets to Germany are opening up. So you’re absolutely right. Q1, we’re gonna feel similar pressures. It’ll trickle into a couple more months into Q2, but then I think we have super green pastures ahead from Q3 onwards. In fact, end of Q2 or even mid-Q2, things could get very interesting. We’ve already sourced about 5-6 tons ourselves since we purchased Remaxion, but none of that biomass actually makes it to Germany until the first week of March. And the reasoning behind this is that we have to qualify every single one of our LPs with the processors, and that process takes 2-3 months. And the supply chain, when it’s first initially set up, it does take 3-4 months to just set it up.

But what we’ve done, Neil, to avoid this issue, you know, Remaxion was very dependent on Portugal. They were working with various processors in Portugal, I believe five, but all of them faced the music when this slowdown happened because of a couple bad actors. So what we’ve done is we’ve opened up our supply chain through Malta. The first shipment should hit end of February or beginning of March. We’ve opened up our supply routes to Czech Republic or Czechia. We’ve already received a couple of shipments from Czechia, that we were able to reroute from Portugal, and now we’ve also opened up things in Germany directly, which will be opened up in March. So we’ve got three additional supply chain routes open. This just makes me more bullish on the business.

You know, we paid 3.64x for this business, and Portugal was one big reason we were able to negotiate such a low multiple for this business. The growth that this business is demonstrating is exponential, and for us to get it at that multiple is highly, highly attractive and accretive for our shareholders, and this is an extremely short-term blip. I remain very bullish on this business. So we’re talking about, you know, end of Q1, beginning of Q2, things should start looking a lot better.

Neil Gilmer, Analyst, Haywood Securities: Thanks, Raj. I appreciate that color. That’s helpful. I guess the other question from me, you know, comes back to the brick-and-mortar business here in Canada. Obviously, what helped you achieve that record EBITDA was that continued expanding gross margins in that business to, I think, 27.5%, from 26.7%, I think the level was in Q3. How should we think about that? Like, you know, do you have more room for that? Is that- that’s I guess, it’s partly driven by some of the white label sales, I assume carries a little bit higher margin, but just so wondering how we should be thinking about the fluctuations in that margin? Not like on a quarter-to-quarter basis.

I understand that goes up and down, but just sort of on a year-to-year basis.

Raj Grover, President and Chief Executive Officer, High Tide Inc.: Yeah, absolutely, Neil. Look, we’ve had four consecutive quarters of margin increases in our core brick-and-mortar segment, which generates 92% of our revenue. Four straight quarters of margin increases, and it’s absolutely being driven by elite sales, it’s being driven by same-store sales growth, it’s being driven by our white label portfolio and just the strength of our brand overall in Canada. I mean, I was so impressed, that we grew, you know, our same-store sales grew 5.5 again, and our brick-and-mortar revenue is up 15% year-over-year. I mean, this is mature state in Canada we’re talking about.

We’re talking about, you know, 7, 7.5 years after legalization, and we are, we can still grow our brick-and-mortar revenue in one of the most competitive cannabis markets in the world at 15% a year-over-year, and that’s 92% of our business. I will take this any day. So we remain very bullish. The more time we are in the market, the more stores we plant. Our brand is so potent and so powerful that I can literally place it, provided we have the best location, which we never sacrifice on. I can literally place it in the middle of competition and the juice flow starts flowing back to us. So I don’t think that changes at all.

Neil, we hit 9.4% as brick-and-mortar Adjusted EBITDA margin, which was a new record for us. And our brick-and-mortar is on an annual run rate of EBITDA of CAD 56 million now. So, you know, exponential opportunity still lies ahead because we can get to 350 stores, minimum. I think we will exceed that number. We continue to raise this bar. We said we’re gonna have 250 stores, then we raised it to 300 stores. Now we’re at 350 stores. I feel that we can just keep going because our business is so strong.

We can literally replicate this model in the rest of the cannabis world as well when the opportunity comes, because we’ve rehearsed and we’ve practiced this model really well, and there’s nothing like this that exists anywhere else, Neil. One main thing that’s driving all of this success is our Cabana Club. Cabana Club reached 2.5 million members in Canada, up 45% year-over-year, and the fastest pace of growth in four quarters. Same with Elite. Elite membership reached 151,000 in Canada, up 107% year-over-year, and it’s the fastest pace of onboarding since inception. So you know, we keep talking about this every single quarter, and this is going to continue. I don’t think, you know, we’re going to be stopped in this regard.

Our club is exploding. To grow 45% year-over-year after 7 years of legalization is very, very heartening.

Neil Gilmer, Analyst, Haywood Securities: Yeah, that’s great. Thanks for that, Raj. I’ll pass the line.

Constantine, Conference Operator: Your next question comes from the line of Federico Gomez from ATB Capital Markets. Please go ahead.

Federico Gomez, Analyst, ATB Capital Markets: Hi, morning. For the question, congrats on the great quarter here. Raj, you made a comment about new stores. You know, you continue to open them, but they take a little bit longer now to mature because of increased competition. At the same time, you know, you’re posting excellent same-store sales growth consistently. So can you just help us square those two comments in terms of, you know, the stores taking longer to mature, at the same time, you know, your existing store base continues to grow very healthily?

Raj Grover, President and Chief Executive Officer, High Tide Inc.: Good morning, Fred. Thank you so much for your question. So look, you know, seven years into legalization, of course, stores are taking longer to ramp up because things are competitive in Canada, right? We’ve got to first find an area where we don’t operate currently, then we gotta find the best location in that area, because you can almost count on it, that there’s going to be other competitors around it. If you go back to 2021, we were ramping up, you know, twice as fast as we are ramping up right now. But one thing you can be rest assured that we are going to ramp up to our average run rates, and the weaker operators with the weaker locations are all going to start phasing out.

And we’re starting to see this now, Fred, you and I have talked about it for years, that, you know, when is the impact really going to be felt? It’s, it’s being felt now. Alberta is experiencing negative store growth outside of us. We grew 10% in a year, while the overall province experienced negative growth. We were all of the growth in Ontario, Canada’s largest province, where the rest of the industry remained flat. So, you know, even though all of this is happening, because our model is so strong, our same-store sales just keep on chugging along. A lot of our customers refer us by word of mouth to their friends, their family, because, you know, they’re seeing tremendous value, and it’s just not available anywhere else in Canada.

If anyone tried to replicate our model, which many have tried and failed, you know, we’re so far ahead now, and we’re so far dominating now, I don’t think anyone will be able to catch up with us. I am genuinely surprised that, you know, same store sales in Q3, 7.7%, 5.5% right now in Q4. You know, if it was a bit more timid than this, I wouldn’t mind it, but this is just excellent. So I think this will continue, Fred. I don’t see signs of it stopping right now.

Federico Gomez, Analyst, ATB Capital Markets: Thank you. Appreciate that. And then, just to follow up on that, in terms of, do you see competitors exiting, struggling? How is the M&A environment looking like at this point? Do you see any chance of, you know, maybe executing on a large scale, you know, transaction of stores in Canada anytime soon?

Raj Grover, President and Chief Executive Officer, High Tide Inc.: Yes, absolutely. So what’s happening here is that the smaller players, Fred, you know, the independents with the one-off stores or a couple of stores, are definitely facing the music, and they’re phasing out of the market and not renewing their leases. But remember, these were bad quality locations to begin with. These were street front stores, you know, not strategic at all, in the middle of the action with 10 other operators. Those locations just don’t work. So we have to just stay on the sidelines and let that all play out, and let people get out. On the other hand, you know, I think this year would be very special for High Tide.

You know, I don’t want to put the cart ahead of the horse, but we are speaking with, you know, with blocks of 40, 50, and maybe even larger. So we can like, you know, we’re still committing to 20-30 stores organic growth, but I think you can count on some M&A this year. I think multiple groups have realized that High Tide is here to stay, and Canna Cabana is here to stay and win, and they want to join the High Tide family. And, you know, not just we are approaching the outside world in a more aggressive way to just, you know, take the market, take the bull by horns and just, you know, wrap this up relatively quickly.

We’re getting a lot of inbound action, too, as well now, you know, that just want to join the Canna Cabana, High Tide family. So I think we’ll be able to share some exciting news during this year. We are working on a lot, so stay tuned on that.

Federico Gomez, Analyst, ATB Capital Markets: Thank you. Appreciate that.

Constantine, Conference Operator: The next question comes from the line of Bill Kirk from ROTH Capital Partners. Please go ahead.

Bill Kirk, Analyst, ROTH Capital Partners: Hey, everybody. So to try to market their brands, you know, LPs talk about how they need to work with budtenders, your budtenders, to help them. So can you remind us, Raj, what your budtender education and training programs look like? And how can you capitalize on the assets that they are, especially as the LPs want to get in front of them to try to help their brands? Hopefully, you guys got that. Did I get cut off?

Raj Grover, President and Chief Executive Officer, High Tide Inc.: Oh, I’m sorry, Bill. Do you hear me now? Good morning, Bill.

Bill Kirk, Analyst, ROTH Capital Partners: I do, yeah.

Raj Grover, President and Chief Executive Officer, High Tide Inc.: Do you hear me?

Bill Kirk, Analyst, ROTH Capital Partners: I do. Yes, I hear you, Raj.

Raj Grover, President and Chief Executive Officer, High Tide Inc.: Okay. Okay, perfect. So good morning, Bill. I was just saying that it was great chatting with you at ICR, and here our conversation continues. So Bill, what we do is we put a lot of emphasis into budtender engagement. One of the most important things, although we are a discount retailer and, you know, people sometimes, you know, think about discount and they think that discount retail cannot give a quality experience. The Cabana level experience is opposite of that. We are all of it. We’re beautiful stores, we’re open, refreshing layout, retail focused, and our budtenders are very engaged with our customers. So we give them a robust level of training, not only in the physical stores, where we hire them up to one month in advance, than when they actually start their position.

We put them in multiple stores just to get them exposure to customers and learn about sales in real time, then, you know, just to train them for 2-3 days in their new location. We do that, and we have a Cabana learning portal online that they must all pass and continue to pass every quarter. So, you know, we put a lot of emphasis into training because we wanna wow our customers, our loyal club members, not just by exciting products and the lowest prices guaranteed, but really provide them that Cabana-level service and for what they’re really looking forward to and how we can make their day better. So all of that is already happening. You’re right, many LPs do try to approach our budtenders and try to position their products.

But you know, we are centralized in terms of how we do our product assortment. It’s not based on, you know, what one store manager wants. You know, people can get influenced by licensed producers, so we don’t allow that to happen. We’re very centralized in our ordering, and typically, this is not an issue that comes up in our organization at all.

Bill Kirk, Analyst, ROTH Capital Partners: Awesome. And I wanted to follow up on Remaxion. You know, you gave us those highlights of improvements in December. What are you seeing in January? So December was better. Have you seen more of that, you know, continuing in January?

Raj Grover, President and Chief Executive Officer, High Tide Inc.: Yeah. So look, I have the numbers for January. We’re slightly lower than December, but we’re much higher than September, October, and November, right? So things have definitely turned. We know it’s going in the right direction now. However, we do have some remaining biomass in Portugal, and this biomass is being sold in its single-digit gross margins. Imagine selling cannabis after 10 months and still being able to sell it over cost. That’s how amazing a distribution network Remaxion has and what they’ve built. So we are very bullish. If I could get them 4 tons of cannabis, guess what? They’re selling 4 tons of cannabis. And we’re very sure that we can get cannabis gross margin profile, medical cannabis distribution profile, north of 23%-24%.

I think it’ll be in the high mid-20s in the second half of the year when we get all this fresh biomass. We’ve already purchased close to 5 tons here in Canada, and I am very excited about the prices that we are procuring them at. Remaxion has not seen such pricing, and this is just the beginning. Every producer wants to work with us. We actually also have some partners from UK. We reached out to all of them, and now we are in regular contact with them, and what we’re hearing is they, they can’t believe the prices that we are offering them, and we’re going to start selling into the UK as well. It won’t happen immediately. Again, there’s supply chain qualifications that we need, which takes 2-3 months to set it all up.

But we are very sure that we can do it even before the second half of this fiscal year, maybe even in Q2, make our first sale in the UK market. And once again, what we have in our hands in Canada is attractive for people in Poland, you know, for groups in the UK or Germany. France and Spain are going to open up, and we wanna be that preeminent distributor in Europe. So getting past the noise of Q1, remember, this multiple was already baked in. We paid just 3.64 times for this business. It was worth a lot more, but we paid that because of this Portugal slowdown, so we gotta get through it. And also the looming German law change, and we disclosed all of this to our investors, you know, prior to buying the business.

You don’t buy a business for 2, 3, 4, 6 months. You buy a business for the long term, and I cannot tell you how bullish I am on the prospects of Remaxion long term.

Bill Kirk, Analyst, ROTH Capital Partners: That’s perfect. Thank you, guys. Good luck.

Constantine, Conference Operator: Your next question comes from the line of Michael Kim from Zacks Small Cap Research. Please go ahead.

Michael Kim, Analyst, Zacks Small Cap Research: Hi, everyone. Good morning or good afternoon, and thanks for taking my questions. So first, just assuming rescheduling ultimately goes through here in the U.S., just curious if you could sort of flesh out how some of these potential strategic partnerships or licensing agreements sort of how they might look like. And then related to that, you know, would you expect the competitive backdrop to shift as maybe more, you know, non-cannabis pharmaceutical companies or consumer firms potentially look to invest or partner with U.S. players? Thanks.

Raj Grover, President and Chief Executive Officer, High Tide Inc.: Good morning, Michael. Thank you so much for your question. So look, yes, we are seeing a lot of inbound interest from U.S. operators who are recognizing our leadership positioning here in Canada, and exploring ways to partner up with us in the U.S., you know, given the apparent regulatory shift. We think rescheduling news could be out next month, so we’re getting pretty close to it. And look, we’re evaluating all options across the spectrum on how we can work together from licensing agreements to full-blown mergers. Although it’s still early days and, you know, we’re proceeding with caution, things are looking fantastic here in Canada, and we’re looking forward to getting our German operation running full speed. So we’ve got a great thing going.

As much as we want to be a meaningful player in the U.S., we don’t wanna rush, so we will take our time to evaluate potential structures and partners while keeping an eye on how regulations develop. And you know, make sure that we select the most optimal move at the right time for our shareholders, just like I believe we did in Germany. The other factor regarding rescheduling, which I think has flown under the radar in terms of market appreciation, is the potential degree to which the proposed changes to CBD can be a game changer for NuLeaf and Fab. And then I think the second part of the question was, do I see outside players outside of cannabis entering due to rescheduling? I don’t at the moment. I don’t.

I think cannabis industry is going to be able to capitalize on this momentum. I don’t think we face a very significant risk from outside operators. But hey, look, operators like ourselves, the Canadian operators could be getting interested into the U.S. market. Some German operators could be getting interested. So the market will expand, but I think it’ll remain amongst industry insiders.

Michael Kim, Analyst, Zacks Small Cap Research: Got it. That makes a lot of sense. Maybe just to follow up on sort of the M&A discussion, just maybe curious to get your, your take on, you know, potential tax and banking reform here in the U.S., how that might shift the competitive environment, and then how that might impact valuations from a-

... from a potential transaction multiple perspective? Thanks.

Raj Grover, President and Chief Executive Officer, High Tide Inc.: Sure. So, you know, at the moment, we are focused on M&A in Canada and not in the US. And, you know, even given that rescheduling is at the doorstep, you could see the multiples at where US MSOs are trading at. It’s all quite miserable, to be honest, Michael. So, you know, M&A can’t, it can’t really pick up steam when multiples are that depressed, for large US operators. Thankfully, we’re busy in Canada. We’re still playing here. But you know, like I said, multiple US operators have reached out, some of them very, very large. And they’re very interested in seeing what we can do together.

And, you know, when Canna Cabana turns on its M&A engine in the U.S., I think we’ll be able to roll up and consolidate more players than the U.S. operators that are just have regular retail platforms. Because we offer something very different, and we offer something very attractive, and it’s not gone unnoticed with even some of the very large players in the U.S. So, given that, the tax reform we are going to experience, capital should definitely flow back a little bit more into the U.S. market. It’s been very dismal. We don’t have any capital constraints here in Canada. We’ve been able to raise capital at attractive terms, but the U.S. players have been having problems with that. So I don’t think M&A activity will pick up very aggressively, but you never know.

After rescheduling, the industry should be on the right footing and move forward in the right light.

Michael Kim, Analyst, Zacks Small Cap Research: Got it. That’s very helpful. Appreciate, you taking the questions. Thanks.

Constantine, Conference Operator: Ladies and gentlemen, as a reminder, if you would like to ask a question, please press star, then the number one on your touchtone phone. If you’re using a speakerphone, please make sure to lift your handset before pressing any keys. The next question comes from the line of Eric Xu from Canaccord Genuity. Please go ahead.

Eric Xu, Analyst, Canaccord Genuity: Thank you very much for taking my questions. This is Eric, on for Luke Hannan. I just have, like, a very quick two, I guess two questions. First one is on Germany. I noticed you’ve opened a new Canna Cabana store in Germany, and just wanted to ask about what’s your strategy there? It’s currently selling accessories, I believe, and what’s the early performance there? If there’s any more new stores planned. That’s the, that’s the first one. Thanks.

Raj Grover, President and Chief Executive Officer, High Tide Inc.: Good morning, Eric. Thank you so much for your question. So Germany, you know, we just planted our flag with the first Canna Cabana store. We had some certain permitting issues which are getting course-corrected, and the store should be live again in one week or so, or about two weeks. But remember, that store is only selling accessories. The stores... The sales are going to be very minimal in that regard. That was more symbolic. That was us more getting native with the market, and it was also secured because we’ve applied for these pilot projects, where we could secure retail licenses. But the chances of those pilot projects going through are very slim, so I wouldn’t want to get anybody’s hopes up. So the numbers we expect to yield out of these stores are very minimal in nature.

Our real focus in Germany remains Remaxion, but because the Canna Cabana brand is starting to get native in Germany, I think that’ll lead to an added advantage going forward when we are able to start building retail stores in Germany, which will always remain the forefront of our strategy. Remember, we are cannabis retailers first. The medical cannabis distribution is very, very exciting, and I think we’re going to be fantastic players with a significant market share in that business. But the Canna Cabana concept is so unique that we just wanted to enter a market like Germany, plant our flag there, and just wait for the right time and the right opportunity to come, so we’re already positioned in that market.

Eric Xu, Analyst, Canaccord Genuity: Makes sense. Thank you very much. It’s definitely nice to have the optionality. And my second question is related to the Cabana Club membership program and the ELITE program. You know, since they have been growing at historical speeds, has there been any changes to your marketing strategy or the unit economics on the two membership programs? And maybe if there’s any metrics that you can share with us, penetration, average order value, frequency, et cetera. Thank you very much.

Raj Grover, President and Chief Executive Officer, High Tide Inc.: Yeah. So look, Eric, I’m so pleased. I was just talking to Neil about this, that, you know, our Cabana Club is absolutely exploding. We’ve hit 2.5 million members in Canada, up 45% year-over-year, and this was not the pace that, you know, we were, our team was expecting. If this grows at 20% a year, that’s a wow number. We’re talking about, you know, 50, almost 50% growth year-over-year. So, I don’t think that slows down. I did in my prepared remarks, I did talk about how potent our brand is, how daily users of cannabis are choosing us, 49% of them, how we are so dominant nationally. We’re the most recognized brand. We have 29% recognition nationally, which is twice as much higher than our next closest competitor.

So, you know, you can see the delta there. And then our program is so unique to our elite membership, where the loyalty loop is getting even more stickier. We have 151,000 elite members in Canada now, which also continues to grow at the fastest pace of onboarding since inception. It’s up 107% year-over-year. An elite member tends to come shop more often with us. Their baskets are much larger. Think about this, you know, when you’re an Amazon member and you’re paying, you know, your Prime membership fees, or you’re paying for Costco membership fees, you’re buying at Amazon, and you’re automatically going to Costco and purchasing your stuff. This is exactly what is starting to happen at Canna Cabana.

The loyalty in our ecosystem has become so strong, it’s actually the driver of all of it. Of course, combined with our very, very good locations that we never sacrifice on. I think this trend will continue. It’s showing us no signs of slowing down. It’s actually exceeding all our expectations.

Eric Xu, Analyst, Canaccord Genuity: That’s great. Thank you very much. I will pass the line.

Constantine, Conference Operator: Ladies and gentlemen, there are no further questions at this time. So I’ll go and like to turn the call back over to Mr. Raj Grover for closing comments. Sir, please go ahead.

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

Constantine, Conference Operator: Ladies and gentlemen, this concludes today’s conference call. Thank you very much for your participation. You may now disconnect.