Canopy Growth Corporation (CGC) Q3 2021 Earnings Report, Transcript and Summary

Good morning, and welcome to Canopy Rivers Financial Results Conference Call for the Quarter Ended December 31, 2021. I am joined this morning by Narbe Alexandrian, President and Chief Executive Officer; Eddie Lucarelli, Chief Financial Officer; and Matt Bundy, Chief Strategy Officer and General Counsel. Mr. Alexandrian and Mr. Lucarelli will make some formal remarks, following which, we'll conduct a question-and-answer session. [Operator Instructions] This call is being recorded on February 10, 2021. For your convenience, the press release, MD&A and condensed interim consolidated financial statements for the 3 and 9 months ended December 31, 2021, are available on the Investors section of Canopy Rivers website at www.canopyrivers.com as well as on SEDAR. Before we start, please note that remarks on this conference may contain forward-looking information within the meaning of applicable securities laws about Canopy Rivers and its investees' current and future plans, expectations, intentions, financial results, levels of activity, performance, goals or achievements or any other future events, trends or developments. To the extent any forward-looking information contained in the remarks constitute financial outlooks, this information may not be appropriate for any other purpose, and you should not place undue reliance on such financial outlooks. Forward-looking statements are made as of the date hereof based on information currently available to management and on estimates and assumptions made based on factors that management believes are appropriate and reasonable in the circumstances. However, there can be no assurance that such estimates and assumptions will prove to be correct. Many factors could cause actual results to differ materially from those expressed or implied by forward-looking statements. Financial outlooks are also based on assumptions and subject to various risks and the company's actual financial position and results of operation may differ materially from management's current expectations. As a result, Canopy Rivers cannot guarantee that any forward-looking statements will materialize, and you are cautioned not to place undue reliance on these forward-looking statements. Forward-looking information is made as of the date given. And except as may be required by law, Canopy Rivers undertakes no obligation to update or revise any forward-looking statement whether as a result of new information, future events or otherwise. For additional information on these assumptions and risks, please consult the cautionary statement regarding forward-looking information contained in the company's financial results press release dated Wednesday, February 10, 2021, and the risk factors in the MD&A and the company's annual information form dated June 2, 2020. Please note, Canopy Rivers reports in Canadian dollars. All dollar amounts expressed today, unless otherwise stated, are in Canadian currency. I would now like to turn the conference over to Narbe. Please go ahead. Narbé Alexandrian: Good morning, everyone. Thank you for joining us today and for your interest in Canopy Rivers. This morning, we reported our financial results for the quarter ended December 31, 2020. I would like to begin today's call by highlighting our recently announced transaction with Canopy Growth. Eddie will then walk through the financials before we conclude today's call, and I will end the call with in Corporate and portfolio updates from the previous quarter. Matt Mundy, Canopy Rivers' Chief Strategy Officer and General Counsel will also join us for today's question-and-answer period. I want to start by highlighting the transformational transaction we announced in December. This transaction, pending shareholder approval at next week's special meeting, represents the most significant milestone achieved by Canopy Rivers today. Under the terms of the transaction, we will sell our positions in TerrAscend, TerrAscend Canada, Vert Mirabel and Tweed Tree Lot to Canopy Growth. In exchange, we will receive $115 million in cash, 3.75 million common shares in Canopy Growth valued at $233.8 million as of yesterday's close and the cancellation of Canopy Growth's multiple and subordinate voting shares in Canopy Rivers, collapsing our dual share structure and buying back our shares on a highly accretive basis. We believe that this is tremendous news for our shareholders. As of signing, these returns represent a 5.6x return on our investments in TerrAscend, which we invested $25.5 million in; Tweed Tree Lot, which we invested $13.5 million in; and Vert Mirabel, which we invested $15 million in. A testament to our investment thesis in these companies. It is also important to note that these investments were among the most difficult in our portfolio to monetize. Our tariffs and investments, while growing rapidly over the past year, were uniquely structured with limited opportunities for liquidity. While momentum continues in the U.S. Federal legalization will take time to draft, pass and implement and given our limited opportunities for liquidity, we believe that this was the best time to exit our investment in TerrAscend to provide value for shareholders. Vert Mirabel also presented liquidity challenges, as it is controlled by Canopy Growth and has no exit event in its horizon. Lastly, we made the decision to sell our royalty interest in Tweed Tree Lot as well. Production has recently seized at this location, and the asset was not going to grow from its current value. We believe that monetizing these investments will help ensure that our assets and future outlook are adequately reflected in our share price, which we do not believe has been the case for much of the past 2 years. From a financial perspective, we firmly believe that this transaction provides significant value for Canopy Rivers and its shareholders. We believe that our bolstered cash position and our ownership of highly liquid candidate growth common shares provides the company with financial flexibility that may not have been available to us as the absence of this transaction. This leaves us with significant capital with which we can pursue potential material investments in or acquisitions of established operating businesses in the U.S. cannabis market, many of which continue to experience uncertain and constrained access to capital. This leads us to the strategic merits of the transaction, which we believe fundamentally reshape our position to shareholders. Previously, opportunities in the high-growth U.S. market have been unavailable to us for 2 reasons. The first was our relationship with Canopy Growth and the obligations we had pursuant to that relationship, which restricted our ability to invest and expand into the U.S. The second was that our involvement with certain U.S. companies would have been inconsistent with the policies of the Toronto Stock Exchange. As a result, as we pivot towards the U.S. in pursuit of our new strategic focus, we will be initiating the process to delist from the TSX and list on a stock exchange that does not prohibit us from making the investments or acquisitions that we believe are in the best interest of our shareholders. Today, we firmly believe that these opportunities are in the U.S. market. The U.S. market has been growing at a rapid pace since 2017. Since then, it has demonstrated a 22% year-over-year compounded annual growth rate. In 2020, the U.S. cannabis market eclipsed USD 15 billion. And with the total addressable market of approximately 222 million people, showing no signs of slowing down. ARCC Research estimates that the U.S. market will double over the next 4 years and reach USD 31.4 billion in 2024. This growth is driven by the accelerating regulatory momentum across a number of U.S. states. In November, constituents in 5 states voted to legalize recreational or medical marijuana, bringing the total number of adult use states to 15 and medical states to 36. The success of these initiatives appears to have motivated nearby space to accelerate their own legalization plans as well. Among several others, New York is among the states looking to legalize cannabis this year, and we expect that the number of legal states will include several newcomers when the calendar flips to 2022. The success of cannabis reform at the state level is also pushing the issue at the federal level as well. Just last week, 3 top democrats, including Senate majority leader, Chuck Schumer, announced their intentions to push forward major cannabis policy reform in 2021. While the timing of the passage of any major reform is uncertain, we expect that the bill will continue to uphold states' rights when it comes to legalization decisions while enabling cannabis companies to access critical services such as banking and capital markets as we would have been enabled to do under the SAFE Banking Act. We expect that our entry in the U.S. market will occur before federal legalization or any other major reform, opening the door for further value creation for our shareholders when these milestone events do happen. Before Eddie dives into our financials, I'd also like to emphasize that the transaction is accretive for minority shareholders, who drive a number of benefits associated with the elimination of our dual-class share structure. Shareholders will have a vote that is proportionate to the relative economic interest in the company, and our share price will be more attractive for purposes of raising capital or as an acquisition currency going forward. These benefits are underscored by the support received for the transaction from Jason Wild, Chairman of JW Asset Management, which, following the close of the transaction, will be Canopy Rivers' largest shareholder. As an active and successful investor in the U.S. cannabis market, Mr. Wild support for the transaction, and our strategy to invest in or acquire U.S.-based cannabis companies represents a significant vote of confidence on the merits of the transaction and the company's plans moving forward. I'd like to now hand it over to Eddie to discuss in more detail our financial results for the quarter. Following that, I will go over some of our portfolio highlights for the quarter. Eddie?

Thank you, Narbe, and thank you again to everyone who has dialed into the call this morning. As a quick reminder, there are explanatory materials posted on our website at www.canopyrivers.com that provide a more detailed explanation on how to interpret our financial statements, given that we do not report financial metrics that are typical of Canadian LPs or U.S. MSOs. Before I dive into our financial results for the quarter, I would like to briefly comment on the impact of the Canopy Growth transaction on the financial results released today. Several of our assets, including all of the assets that are being sold or transferred to Canopy Growth in connection with the transaction, are remeasured at fair value each reporting period. While the Canopy Growth transaction was announced during the quarter, the full financial impact of the transaction will not be reflected in our operating results and financial position until the transaction closes, which we anticipate occurring in the coming weeks. The fair value estimate that we are reporting for the period ended December 31 were determined using valuation methodologies that are consistent with IFRS and that we have used in prior reporting periods, and are based upon inputs and assumptions that reflect current circumstances as of the date of the financial statements. As a result, the fair value estimates reported as at December 31 may be different than the actual values ascribed to the individual assets pursuant to the plan of arrangement with Canopy Growth. We expect that the full impact of the Canopy Growth transaction on the company's financial position and future outlook will be reflected in our financial results for the period ending March 31, 2021. Turning to our results for the quarter. I will begin with our operating results. Net operating loss before consideration of equity method investees and fair value changes was $0.4 million for the quarter compared to income of $1.2 million for the same period last year. Operating income before consideration of equity method investees and fair value changes was $3 million for the quarter compared to income of $5 million for the same period last year. This includes the company's royalty, interest and lease income, net of provisions for expected credit losses. On a gross basis, this income was primarily generated from the company's royalty interest in Agripharm, Radicle and Tweed Tree Lot, secured debenture investment in Greenhouse Juice and term loan investment in tariffs in Canada, and it was offset by a provision for expected credit losses on interest and royalty receivables of $2.9 million, primarily relating to the company's royalty receivable from Agripharm. Operating expenses were $3.4 million for the quarter compared to $3.9 million for the same period last year. Excluding share-based compensation, operating expenses were $3.3 million and included $1 million for employee compensation, marketing and business development and other administrative activities, $0.4 million for professional fees relating to general legal, audit, tax, accounting and other regulatory compliance advisory fees and $1.8 million in fees directly attributable to the Canopy Growth transaction. Our share of loss from equity method investees was $0.7 million for the quarter compared to a share of loss of $1.3 million for the same period last year. As a reminder, pursuant to an election available under the relevant accounting standard, we pick up our share of profit or loss 1 quarter in arrears, meaning that the financial results of our equity method investees that we report for the quarter ended December 31 relates to their financial results for the quarter ended September 30, adjusted for any significant events that occurred up to our reporting date. The recognition of our share of loss in PharmHouse has historically represented a material component of this line item. But given that the carrying value of our investment in PharmHouse common shares was reduced to nil last reporting period, no further loss has been recognized. The net change in fair value of financial losses at fair value through profit or loss was an increase of $4.8 million for the quarter compared with a decrease of $1.9 million for the same period last year. There are several financial instruments in our portfolio that are classified as financial assets at fair value through profit or loss. The increase in this quarter was primarily driven by the positive changes in the estimated fair values of our investments in the TerrAscend warrants and Vert Mirabel deferred shares, partially offset by the negative changes in the estimated fair values of our investments in the Agripharm and Tweed Tree Lot royalty interest and civilized convertible debenture as well as the disposition of our call auction in Canapar for nominal consideration. A detailed breakdown of the fair value changes in these instruments is included in Note 9 to our condensed interim consolidated financial statements, and descriptions of the related valuation methodologies and key inputs and assumptions are presented in Note 14. Our results this quarter continued to be impacted by the recent developments at PharmHouse, including the CCAA proceedings and the restructuring. Last quarter, we introduced the PharmHouse recoverability assessment, whereby we estimated the net proceeds that would be realized in a notional liquidation of PharmHouse's assets under a scenario where the PharmHouse Greenhouse facility is no longer used for Canada's operations and then assess how those notional net proceeds would be distributed to various stakeholders based upon the priority of their respective claims on PharmHouse's assets. We performed this analysis to estimate the recoverable amounts of our various investments in PharmHouse and the liability, if any, related to our financial guarantee of PharmHouse's $90 million syndicated credit facility. You will recall that the outcome of this analysis last quarter resulted in a full impairment of our common equity investment in PharmHouse, a full provision for expected credit losses on the outstanding loan balances and the related interest receivable and a $25 million provision for credit losses on the liability associated with the company's guarantee of the PharmHouse credit facility. We refreshed the PharmHouse recoverability assessment as at December 31 based on new information received during the quarter relating to the estimated recoverable value of PharmHouse's assets in a notional liquidation scenario. Based on this updated assessment, we recognized additional charges this quarter of $13.7 million relating to PharmHouse, including a full provision for expected credit losses on the advances made during the quarter pursuant to the DIP financing of $6.2 million and a $7.5 million increase to the provision for credit losses on the liability associated with the company's guarantee of the PharmHouse credit facility, which brings the total estimated liability to $32.5 million. As we've mentioned before, the PharmHouse recoverability assessment and related charges, which I've just described, are based upon a number of significant assumptions and estimates regarding the recoverable amount of PharmHouse's assets under an orderly liquidation scenario where the Greenhouse facility is no longer used for cannabis operations, and the actual outcome of such a scenario may be materially different than that reflected in this analysis. Income tax recovery for the quarter was $11.4 million compared to income tax expense of $0.9 million for the same period last year. Income tax recovery for the quarter was driven mainly by the ability of the company to utilize certain deferred income tax assets to partially offset deferred income tax liabilities generated on financial assets carried at fair value through other comprehensive income, namely the deferred tax liability accrued on the TerrAscend exchangeable shares. It is important to note that the tax-related values reported at December 31 are not representative of the full tax liability we expect to recognize in connection with the closing of the Canopy Growth transaction. After consideration of operating income, operating expenses, equity method investees, fair value changes, other PharmHouse-related charges and income taxes, Canopy Rivers reported net income of $1.4 million for the quarter. Below the net income line, we capture the impact of net changes in fair value of financial assets at fair value through other comprehensive income, which is presented net of tax. On a net of tax basis, the net change in fair value was an increase of $80.8 million for the quarter compared to a decrease of $37.2 million for the same period last year. The net increase this quarter was primarily attributable to the positive change in fair value of our investment in tariffs and exchangeable shares of $105 million, which was driven mainly by a significant increase in TerrAscend's share price during the quarter and a lower estimate of the liquidity discount used in the exchangeable share valuation due to positive cannabis regulatory reform momentum in the U.S. Partially offsetting this material increase was a decrease in the estimated fair value of the company's investment in Vert Mirabel common shares of $9.5 million, driven primarily by lower expectations and the long-term wholesale cannabis pricing in Canada. A detailed breakdown of the fair value changes in these instruments is included in Note 10 to our condensed interim consolidated financial statements, and descriptions of the related valuation methodologies and key inputs and assumptions are presented in Note 14. Overall, comprehensive income for the quarter was $82.2 million compared to a comprehensive loss of $39.9 million for the same period last year. Total assets as at December 31 amounted to $339.3 million. The significant components of total assets included cash of $38 million, interest and royalty receivable net of provision for expected credit losses of $4.3 million, investments in equity method investees with a carrying value of $6.4 million, investments in financial assets at fair value through profit loss with a carrying value of $82.8 million and investments in financial assets at fair value through other comprehensive income with a carrying value of $201.5 million. Total liabilities as at December 31 amounted to $36.8 million, primarily relating to the estimated financial liability associated with the company's guarantee of the PharmHouse credit facility of $32.5 million. Moving on to cash flows. Cash used in operating activities was $1 million for the quarter compared to $3.5 million for the same period last year. Cash provided by investing activities was $0.9 million compared to cash used in investing activities of $30.4 million for the same period last year. Cash flows from investing activities was positive for the quarter due to the receipt of a $7 million cash payment on the disposition of the company's common share investment in Canapar, which was offset by advances made to PharmHouse during the quarter of $6.2 million pursuant to the DIP financing. Finally, cash provided by financing activities was $0.1 million and primarily related to proceeds received from the exercise of stock options. Before I conclude, I would like to briefly echo Narbe's comments about the Canopy Growth transaction. By redeeming shares on a discount to net asset value and successfully monetizing assets that carry significant liquidity restrictions at attractive valuations, the financial benefits of this transaction are quite clear. Not only does this transaction unlock substantial value for our shareholders it also optimally positions the company to deploy capital at scale in the world's largest cannabis market south of the border. With an estimated pro forma liquidity position of more than $300 million in net cash and liquid securities based on current prices, we are extremely excited for this upcoming strategic pivot and the enviable position that we will begin. I will now turn it back over to Narbe to conclude today's call. Narbé Alexandrian: Thanks, Eddie. I will now go over some corporate and portfolio updates for the quarter before beginning the Q&A period. I'd like to start by providing an update on PharmHouse. While we are excited about our future prospects in the U.S. market, we remain committed to resolving the situation with respect to PharmHouse in a matter that maximizes value preservation for our shareholders. As previously disclosed, the Sale and Investment Solicitation Process to identify interest in, and opportunities for, a sale of, or investment in, all or part of PharmHouse remains underway. Phase 1 of the SISP closed on November 30, 2020, and a number of parties were selected to continue into Phase 2. Binding offers for Phase 2 are due on or about February 16, 2021, and we expect to update the public on the results soon thereafter. Day-to-day operations at PharmHouse have continued throughout its restructuring, and we believe that PharmHouse has taken significant steps towards -- forward in its operations over the next -- over the past few months. PharmHouse continues to source new opportunities in the Canadian cannabis sector and ramp up its cannabis growing operations. As Eddie outlined earlier, we continue to support PharmHouse with debtor-in-possession financing. During the quarter, the maximum amount available to PharmHouse through this arrangement was increased by $2.5 million to $9.7 million, and the maturity date was extended from December 29, 2020, to February 28, 2021. The court-ordered stay of proceedings with respect to PharmHouse was also extended to February 28, 2021. Subsequent to the quarter, on February 10, 2021, we received a statement of claim filed by the PharmHouse majority shareholder concerning certain disputes relating to PharmHouse. The claim is substantially similar to a claim previously filed in September 2020, which was subsequently discontinued. The claim makes a number of allegations against Canopy Rivers, Canopy Growth, TerrAscend and TerrAscend Canada. As of the previously filed statement of claim, we view the claim as it relates to our actions to be completely without merit and intend to vigorously defend our position at appropriate time and in appropriate forum. Finally, we continue to work collaboratively with the syndicate of lenders with respect to PharmHouse's credit facility. No payments to principle have occurred, and the current and outstanding balance remains at $90 million, with interest repayable monthly. Again, we expect to provide an update on PharmHouse shortly following the receipt of Phase 2 bids later this month. Towards the end of the quarter, we sold our 49% interest in Italy-based Canapar to RAMM Pharma Corp. for consideration of up to $9 million, including a cash payment of $7 million and a contingent consideration of $2 million. While we recognize that this return is less than the capital that Canopy Rivers invested in Canapar over the past 3 years, this divestment represents an important reallocation of capital as we pivot to focus on the U.S. market. While we remain confident in our initial thesis on Canapar, we were also disappointed that cannabis legalization has continued at a slower-than-expected rate across the European Union. With the Canopy Growth transaction on the horizon, we believe that this is the best time for us to narrow our geographic focus and recalibrate our capital deployment and exposure to better align with our new strategic direction. Moving on to the cultivation portion of our portfolio. Agripharm, under its exclusive license to distribute SLANG-branded products in Canada, shipped the first line of O.penVAPE products to British Columbia in October, followed by Ontario in December. Agripharm also distributed SLANG's Firefly Mini products for sale in Ontario. In this consumer products section of our portfolio, Dynaleo received its sales license from Health Canada, enabling it to supply and sell cannabis edibles to provincial, territorial and private wholesalers across Canada. Subsequent to the quarter, Dynaleo announced the launch of its Sunshower and DYNATHRIVE CBD Gummy Brands. These products are already available in stores and online in British Columbia, and Dynaleo expects to expand their availability to Alberta and Ontario in the near future. High Beauty entered into a co-development and commercial partnership with Lygos, a vertically integrated provider of safe and sustainable specialty products to develop the high and buy line. We hope that this partnership supports High Beauty in continuing to expand the breadth of products it can provide in this highly competitive beauty segment. After signing 8 new contracts in January, High Beauty's products are now available in 42 retailers, totaling over 2,300 stores in Canada, the U.S. Europe, the UAE and Asia. Greenhouse Juice grew the availability of its products during the quarter, distributing them to IGA and Fresh St. Market locations in the Vancouver area, while also expanding its home delivery service. The company also launched its B2B business, shipping bulk fresh-frozen juices to consumers in the same or similar product categories. In the technology part of our portfolio, Headset launched its Headset Insights tool in Saskatchewan. Insights is also available in Alberta, British Columbia, Ontario as well as a growing number of U.S. markets. We hope that Headset, which we believe is a market leader for cannabis retail data, will continue to benefit from the wave of legalization initiatives across the U.S. Finally, YSS announced strong third quarter results reporting a 24% revenue increase quarter-over-quarter. YSS also announced the opening of several new stores during the quarter, bringing its total to 19 in Alberta and Saskatchewan. Then subsequent to the quarter, YSS entered into an agreement with Alcanna to combine the 2 companies' cannabis retail businesses to form Nova Cannabis Incorporated, of which the majority of Nova-branded stores will target the value-conscious consumer. This segment continues to be an underserved part of the market that is estimated to account for approximately 70% of the total recreational market in Canada. Following the close of the transaction, the new company will have an expanded shareholder base providing further liquidity options to us as we narrow our focus to material investments in or acquisitions of U.S.-based companies. I'd like to end today's call by reiterating management's excitement for the transform transformative transaction with Canopy Growth. This deal enables us to access new investment opportunities, particularly in the U.S. that were previously unavailable to us. It also unlocks significant value for Canopy Rivers by enabling us to monetize our investments in TerrAscend, Vert Mirabel and Tweed Tree Lot. The consideration we are receiving for these investments provides us with liquidity through both cash and common shares in Canopy Growth. And finally, eliminating our dual-class share structure serves 2 purposes. First, it makes our shares more attractive for raising capital as an acquisition currency; and second, it is beneficial to minority shareholders who will have a voting interest proportionate to their economic interest. We are incredibly excited to chart the next phase of the company as we explore acquisition and investment opportunities in the U.S. market. Following the close of this transaction, we will be well capitalized to invest in the U.S. and believe that having reviewed hundreds of deals for companies south of the border, our domain expertise and understanding of what it takes to succeed in the cannabis industry will separate Canopy Rivers from its peers. Assuming shareholder approval and closing of our Canopy Growth transaction, any updates from us moving forward will come under our new brand, RIV Capital. And we look forward to communicating more news in the near future as it relates to our investment strategy in the world's largest cannabis economy. That concludes our formal remarks. Eddie, Matt and I will now be pleased to answer your questions. Operator, please begin the question period.

[Operator Instructions] Your first question comes from John Zamparo from CIBC.

I wanted to start with a comment you made earlier on, Narbe, about U.S. businesses lacking cessation access to capital. It does seem like there's increased competition for these U.S. assets, whether it's in the form of stacks or otherwise. So I guess, first, would you agree with that assessment? Is that what you've seen? And then second, in your M&A discussions lately, what can you say about quantity of assets available, quality of assets and valuations you're seeing in the private space? Narbé Alexandrian: Yes. Great question. When we're looking at the U.S. market, it is a big market with a number of states that have legalized for medical and adult-use marijuana. And we do see that there are a number of parties out there that are private in nature that don't have the same access to the public markets as some of the larger public players do for grabbing headlines with large raises. And through discussions with many of them over the past 6 months, it seems like there's a need for capital, there's a need for growth, there's a need to compete against some of those larger players and set their own foothold in a proper state or multiple states. So there's a lot of opportunity out there as well. We also noticed your second question that on the private side, the multiples that we're seeing based of the valuations to the revenues or even some of the projected EBITDA that some of these companies have are on the lower end or even much lower than what we see in the public market today. So there is a bit of a multiple arbitrage opportunity of looking at private businesses, acquiring them, taking them public and seeing that lift in terms of valuation from that strategy alone.

And John, one thing maybe I could just add on the supply of capital point you mentioned. I think it's important to -- just like with any other supply and demand scenario, the demand is going to be influenced by the quality of the capital that's available. And so when you compare a situation that we anticipate to be in against some of the other opportunities for capital deployment out there like it's back, the non-dilutive nature of what an acquisition by our company could offer, we think, puts us in a lead position just with respect to the demand for that capital as well.

Got it. That's helpful. I just like to get a better sense of what the game plan is once you get this Canopy Growth transaction closed and you do switch exchanges. Is there a preference at this stage on making just one acquisition and essentially undergoing kind of a reverse takeover? Or are you looking to make multiple investments? Narbé Alexandrian: Yes. It's a great question, John. At this point, we're looking at a number of options, looking at both of those options in particular, looking at either making a platform investment or making a 1 to 3 smaller investments that we can then put together and inform some sort of a larger single-state operator or a multi-state operator. But we're still working through the details there, and we expect to announce and invest in our acquisition approximately 6 months following the close of this transaction.

Okay. Got it. And I don't suppose you're going to share specific details on this, and that's fine. But are there particular segments of the industry, you are looking at? It sounds like, like you said, single-state operators, MSOs. Is there 1 vertical that you like, in particular, whether it's retail or distribution or processing? Is it certain states with certain attributes you want? Or are you kind of agnostic at this point and just looking at what might provide the best return? Narbé Alexandrian: I think what attracts just looking at the U.S. market are those -- are areas of the U.S. where you're seeing a tremendous amount of growth that is to come in the future. And these typically relate to those limited license states, typically on the eastern side of the U.S. where there's not -- there's no new licenses coming out, whoever has license has the first-mover advantage. They can vertically integrate and take more of the market share of that state. The state is big enough from a population and penetration perspective in order to become a multibillion-dollar industry in that state alone. And the legislation and some of the regulations behind it are favorable to cannabis companies going forward. That's kind of our view at this standpoint, and we've looked at all 36 states that are medically legal to shortlist that into a smaller number of states that we're digging deeper on at this point. And again, we're not disclosing any details regarding what that strategy is, but we expect to announce that investment or acquisition within 6 months of the closing of the Canopy Growth transaction.

Okay. That's helpful. And one more for me. Are you in any active discussions to try to monetize any of the remaining portfolio investments? Narbé Alexandrian: Yes. I mean, we continue to pursue exit opportunities when we believe that they're in the best interest of our shareholders. So there are some disruptions on some names. There are -- but other names we intend to hold on to until a more natural form of exit through M&A or go public take form.

[Operator Instructions] Okay. So there are no further questions. With that being said, ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.