Good morning, ladies and gentlemen, and welcome to the Village Farms, Internationals Third Quarter 2021. The results conference call. This morning, Village Farms issued a news release reporting its financial results for the third quarter ended September 30, 2021. That news release along with the Company’s financial statements is available on the Company's website at villagefarms.com under the Investors heading. Please note that today's call is being broadcast live over the Internet and will be achieved for replay by both telephone and online beginning approximately 1 hour following the completion of the call. Details of how to access the replays are available in this morning's news release. Before we begin, let me remind you that forward-looking statements may be made today during or after the formal part of this conference call. Certain material assumptions were applied in providing these statements. Many of which are beyond our control. These statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those expressed or implied in forward-looking statements. A summary of these underlying assumptions, risks, and uncertainties is contained in the Company's various securities filings with the SEC and Canadian regulatories. Including its Form 10-K MD&A for the year ended December 31st, 2020 and Form 10-Q for the quarter ended September 30th, 2021. Which are available on EDGAR. These forward-looking statements are made as of today's date, except as required by applicable security laws. We undertake no obligation to publish the update or revise any such statements. I would now like to turn the call over to Michael DeGiglio, Chief Executive Officer of Village Farms International. Please go ahead, Mr. DeGiglio.

Thanks. Good morning, everyone. With me today is Chief Financial Officer of Village Farms, Steve Ruffini, and also joining us again this quarter, is President and CEO of Canadian cannabis business Pure Sunfarms, Mandesh Dosanjh who will also join us for the Q&A at the end of the call. Just wanted to say congratulations, Mandesh. Yesterday morning he had is third child, a son, and he did manage to take a half a day off back to work. Just wondering, so we're really proud of you with that commitment. And I will say that it's baby season here at Village. Just a number of folks that are pregnant maternity leave. My daughter had a son 2 weeks ago, so it's great to see as humans, I think the greatest of the greatest thing we do is produce offspring, so congratulations again, Mandesh. For today's call, I'll begin with an overview of highlights of the financial and operational highlights across the business. CBOE review the financial results, I'll return with some concluding thoughts about how the future Village Farms is rapidly coming into focus. And then we'll open the call for your questions. With that, the third quarter -- from my perspective as CEO, there are 4 key takeaways for me this quarter. Number 1, profitability, we generated consolidated earnings per share of $0.1 with 50% year-over-year growth in the consolidated adjusted EBITDA with positive contributions from each of the key businesses. The continued operational financial performance of Pure Sunfarms with the market-leading brand in the largest and most profitable market segment, dried flour, all of which to date has been generated organically and internally with our vertically integrated operation. Three, the significant additional opportunity in the U.S. provided by balanced sale of botanicals, and accretive acquisition, which is already raising…

Thanks Mike. Before I begin a reminder. Our third quarter 2021 results reflect the full consolidation of Pure Sunfarms business, was not wholly owned until November 2020, as we've been doing, we have provided segment reporting, historical 2020 and current 2021 for Q3. When looking at the Q3, 2020 standalone Pure Sunfarms financial results, please remember we could not consolidate Pure Sunfarms in our Statutory Q3 2020 financial statements. We include them in the press release for comparative purposes only, as we believe it is helpful context as we discuss current business trends throughout this call. Turning to results, consolidated sales for the third quarter were $72.4 million, compared to $43 million for the same period last year. The nearly $30 million increase was primarily the result of the consolidation of Pure Sunfarms in this year's results, as well as the partial quarter's contribution from Balance Health. We generated consolidated Net Income for the quarter of $700,000 or a penny per share which is essentially unchanged from the same period last year. Consolidated adjusted EBITDA grew 49% year-over-year to $6.8 million from $4.6 million, was -- this was primarily the result of a 270% year-on-year increase in adjusted EBITDA, from our cannabis operations, which was partially offset by the decrease in Fresh Produce adjusted EBITDA. Although positive, was down from the outsize number in Q3 last year when we were benefiting from a very favorable demand and pricing environment as a result of the U.S. lockdowns. Turning to business segment results, starting with Cannabis, which now reflect our combined Canadian Cannabis Operations, Pure Sunfarms, and our U.S. Cannabis Operations, Balanced Health Botanicals, which was acquired on August 16. Accordingly, our Q3 2021 results reflect only about half of a quarter's contribution from Balance Health, which was still accretive to our…

Thanks, Steve. Still concluding thoughts. Over the past several years of future Village Farms has really come to focus. We are vertically integrated plant-based consumer products Company. Our target is high growth, large market opportunities in North America and around the world with a specific focus on cannabinoids, both high and low THC and related health products. As such, it was the right time for us to unveil a new corporate branding that reflects a significant transformation of Village Farms just expanding its cannabis -- and cannabis born a half years ago. So today we are branded consumer products Company that is leveraging our deep institutional knowledge and extensive capabilities gained over three decades. We have unmatched CEA assets to build on our proud heritage in the produce business through significant new opportunities in cannabis, CBD, and related products. We are united by a new mantra, good for all. You can check out our new website, which is an expression of our unrelenting commitment to responsibility, resourcefulness, and integrity, as well as to continued leadership and innovation in sustainable agricultural practices, and the use of alternative renewable sources of energy. It's good for our customers, good for our consumers, good for our partners, and good for employees. And it's good for you, our shareholders. In closing, let me reiterate my overriding objective, not just as Village Farms CEO, but as its largest shareholder sustained creation of real value over the near medium and long term. Amidst what continues to be a flurry of changes in leadership, strategic direction, and business models and, repeated moving of the profitability goalposts, our Canadian cannabis operations have been able, with the benefit of decades of our operational experience and deep knowledge of the sector via the best leadership team in the industry, not just operationally, but in terms of consumer packaged goods know-how to focus on one single item. The execution of our plan. This quarter is further evidence of this execution. Our dominant brand leadership has been built organically and profitably. Our disciplined approach means that strategic investments either, acquisitions or capital expenditures, are poised to grow as part of Village Farms platform and contribute positively to returns from day 1. We do this by building on our heritage of 30-plus years, leading with sustainable business practices and preparing for multi-year growth opportunities across numerous cannabinoid categories ahead. This is the power of Village Farm's execution of our plan. Building the right platform, executing on profit and market share. And what -- that's what really matters. So thank you. And with that, we'll open up some calls, questions for our Analyst. Operator.

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session for the Analysts. Please limit the questions to 2. . You'll then hear a 3-tone prompt acknowledging your request and your questions will be pulled in the order that they are received. . One moment, please, for your first question. Your first question does come from Timmy Chen from BMO Capital Markets. Please go ahead.

Hi, thank you. Good morning, guys.

Good morning, Tammy.

Morning. First question from me is, I'm just curious on the unbranded sales this quarter. One , that availability of high potency flower to your own retail segments, but instead to the other LPs, aren't you enabling your competitors?

Well, that's a good question. We talk about that all the time, and there are a couple reasons as we gear up for Delta 2 from an operational perspective. We've always communicated that even with our experience when you're starting up, even with a change of crop, there's a lot of buildup in that operational efficiency you need. So we want to be able to continue to grow as quick as we can. We don't produce what we can't sell, no matter what the channel. And once we get that penetration out there and continue to gain market share throughout Canada, then the -- obviously the priority will be the retail market, as opposed to a non-branded market. So it's a balance because keep in mind while others are closing assets we're continuing to build and we want to make sure that that operational excellence continues. So we have to move the product wherever we can.

Okay. My second question is, can you talk a little bit more about how you are regarding this current Canadian market in the sense that there is this increasing fragmentation we're seeing. You called out, very aggressive pricing, especially in this quarter. So -- can you talk a bit about how you see this unfolding over, let's say the near-term, like do you think this sort of pricing environment by your competitors is going to continue to be the case?

Well, I'm going to turn it over to Mandesh for that answer because I might have a different point of view on how they operate from my brand vantage point, which is much closer to it on a quarterly basis. So Mandesh, first step.

Yes. Thanks, Mike. And I appreciate the question, Tammy. The answer is a part about what's happening in the market and Mike alluded to it in the comments. We're seeing some really interesting pieces of our competitors in terms of dropping price to the point where they're not making any money. And we see this to the activity on the wholesale side of the business. The accretive margins, we see on selling product and to see LPs turn it around and sell it for a loss. I don't -- we don't think that's sustainable and we're already starting to see cracks in the foundation and the tide is turning. Most recently, we've seen products that were doing well in Ontario take price increases to the customer as high as 12% in the last few weeks. So I think you're starting to see the requirement for LPs to have to start to turn margins around and either take price increases or change their product strategy. And so I think we're kind of pleased with EMEA in our performance and the growth in our gross margins; is that, one, we're built for the long term. And two, if we want to start to invest in pricing, to try to come back to that win market share, we can. We haven't needed to do that to date, but we really like the leverage we can pull and the position that we're in. And then as we continue to see our growth improve roles and vape on the 2.0 side, competing more head-on, becoming now a top 5 in those customer segments. We have a lot of kind of tools at our disposal to start to kind of combat what's happening in the market, but make no mistake, I think what you're seeing today is not good for the long-term of the industry. And we believe that those practices will start to cease or cause people to go under. And it's the long-awaited consolidation that we've all been talking about. Mike, Steve, I'm not sure if there's anything else you want to add there on the market side, but those are my view points.

Yeah. That covers it. And also Tammy, on your first question. We are still -- distribution channels drew the provincial governments and I think to a degree they're still ramping up so we can't always get the penetration we want, but you can see we've had -- in the last year, we've had sequential increases up at north of 40% on retail and that variation is a lot of variation still, quarter-to-quarter. But clearly as we ramp up, our focus is 100% retail brand. It's just going to take time. Thanks.

Thank you.

Your next question comes from Aaron Grey from Alliance Global Partners. Please go ahead.

Hi. Good morning. Thanks for the questions and congrats you Mandesh and . First question from me, I'd just love to double back on what Tammy just asked. Some of your peers have been talking about the return to brick and mortar and offering opportunity for some of the LPs to -- bigger LPs to regain market share they've lost in recent months. Just from your perspective, are there any initiatives that you guys currently have in place as potentially get more brick and mortar shopping versus online, just so that you guys continue to outperform some of the other bigger LPs and continue to gain share going forward as people turn to in-store shopping? Thank you.

Mandesh, do you want to take that?

Absolutely, Mike. Good question, Aaron. I alluded to it in the past quarter about what the opportunity has -- is a head for Pure Sunfarms and we're executing on that, which is great brand presence, really good recognition with, but tenders and consumers and we're seeing that brand growth and that brand resonance. And last quarter I mentioned it, Steve, you even talked about on SG&A growing the team, continuing that presence on the ground in each of our markets, key markets. Continuing with our trade marketing activation on the digital front as well as in store, and really starting to continue to bring the brand to life at POs. Collaborative partnerships with our retail partners to ensure, bud tenders are engaged, know about all of our new skews, new launches. The release talked about 31 new skews that we launched in the quarter, continuing that aggressiveness in growth into Q4, and making sure the product education is really known with the bud tenders. And that we're seeing that pull-through. We've seen really good progresses towards that, in terms of sell-through, sell-in. We're pleased with the talent that we're attracting. And every time we go to market for roles across the country, the amount of people that want to join our organization because of the strength in our brand and the strength of our sales, people who are in the cannabis industry continue to want to come to work at Pure Sunfarms. So we're pleased with what -- everything we're doing on the build side, the team is executing really well. Really strong digital programs as well as trade programs and outreach to consumers to continue to build that awareness. And a lot of collaborative partnerships with our retailers and boards to bring that forth so people know about the great skews we're bringing to market and continuing the momentum on our sales.

Great, thanks for that color Mandesh. And then second question on me on international markets. It seems like a lot of opportunity are there for you. For you guys can execute second mover advantage similar to what you did for the Canadian 1.05 market, which as you get that final GMP certification, you talked about Israel being the big market. How can you help us to mainly quantify the opportunity there and how you're going to look to allocate flower between the Canadian market, between both the retail and wholesale opportunities, as well as international markets, especially if those offer potentially higher margin. Thank you.

Well, I think, first and foremost, is Canada. Our priority was always being maximum penetration in Canada across the whole country. But that was part of the region we brought on Delta 2. Remember Delta 2 should yield even higher than Delta 3. We have a lot of capacity coming onboard and outside of Canada. We've definitely year-marked export, both to Australia now and the EU as a priority if the margins are good. We know who's competing there, we know what the revenue numbers are and the margin growth. And it will be a key priority for us going forward next year.

Okay, great. Thank you very much.

The next question comes from Rahul Sarugaser, from Raymond James. Please go ahead.

Morning, Mike, Steve, Mandesh. Congratulations on the great quarter and Mandesh, particular congratulations on your new arrival. Thanks for taking my question and I just wanted to go back again on the Canadian market and wholesale. As you referred to Mike, that there's a lot of irrational selling. I wanted to dig a little deeper on your strategy there because previously when this happened, you guys were able to sell into that market profitably and watch others essentially flounder. Is your strategy, of course, beyond what Mandesh talked about in terms of the active selling, in terms of being able to be defensive, are you able to continue guiding the same margins you were able to before in both your unbranded and branded? Are you waiting out your competitors, or are you looking to do something proactive as you defend your states while they are -- while they -- the irrational selling happens?

Well, I think I'll take a first stab at that and then give you Mandesh’s point of view. But look, there are a lot of drivers we want to be best, that's first and foremost, and market share is important, but profitability is important. We have to run the business as we see it in order to deliver on all these metrics. The market is being measured in many different ways today, not just in market share, but in profitability and growth on a quarter and annual basis. So we have to take that on the account coupled with the increasing capacity that's coming online over the next 12 months and make decisions that do the best, but ultimately as I said, our goal -- why would our goal not be to sell 100% of our product. We will never be 100 but let's just say 70% or 80% of our product retail at some point in time. I think any Company have environment a 100%. But keep in mind that all our non-branded are not necessarily to competitiveness. There are a lot of partnerships that we're trying to establish in Canada that have unique IP or a position, and building those relationships are good. And I'll let Mandesh provide some more color on that, which has managed.

Yes. Thanks Mike. I appreciate the comments of all and the well wishes. I think Mike nailed it there, is that there are strategic relationships on our non-branded side that we'll continue develop. And we've always said that there's going to be a portion that we sell into under that side of the business. To strengthen overall profitability margin structure and the ability to invest in our business or brands or offerings, or people. And so we'll continue to do that. And relating -- the heart of what your -- part of your question is, given some of these things happening in the industry, what are we going to do. But we always think about medium long-term success. There's no doubt some interesting things playing out. At the macro level, we love our results, profitability, and growth, love it. On the micro level, we see some interesting things happening at the provincial level. Does that mean we'll sharpen our pencil and jump in and wage some wars and battles? We're not going to say no to that, but it's going to be done with that very strategic outlook on where we think we need to be and how we're going to continue to win in the market in the long term. I think we will we will pivot around, we will sharpen the pencil on some pieces. We love our growth in tree roles and vapes to prior mentioned categories that we were under-indexed on for our size and our growth. We think we have huge opportunity to continue to expand and scale that. And again, Steve alluded to the growth we see in both those categories. And absolutely, I think the one thing that we've always been asked about is our ability to pivot and move with an ever evolving landscape, and I think we're the one producer in the space that have stuck true to our story and have showed that no matter what's happening in the market, we can continue to remain profitable and see growth regardless of the headwind. And I think strong footing, strong foundation, we're going to pivot as we need to. And yeah, as these things unfold, we'll have some interesting viewpoints and do some creative things in market to win over consumers and continue that growth story.

Okay. Thanks, Mandesh. So just a follow-up, moving to the international. Now recognizing of course, to move into Holland and the programs there, what we saw of course, with the lottery, a lot of density on experienced groups, securities, licensee, you're able to purchase one. We saw one of your competitors do so recently as well. Now of course, the piece of rollout of that will be dependent on how successful the pilot program is. And of course, electronics being one of ten. How do you forecast that -- the potential success of that given that they're likely going to be a lot of under experienced players with those licenses at the moment, even if some of them are acquired by your competitors? And then how do you see that playing out over the long term? And then it on the second question is, in terms of international, given that we've seen a strong margin in the U.S. do you expect that those margins to be durable and how do you expect to see that play out over time?

Well, I'll answer the first part of the question and turn it over to Mandesh for the second part. But on the first part, as far as Holland goes, I think what the Dutch Government is most helpful for us, that the surviving -- of the 10, they have enough capacity of the surviving members, maybe all 10 maybe just 6. Because what they are really concerned with since it is an exclusive experiment for 79 coffee shops, is that there's enough capacity to provide the product to make commerce with those current 79 coffee shops that now buy from the illicit trade. Your point that some of them do not have experiences of concern. But that may be an opportunity for us as well. We're looking at this as a first step in. There is a lot of writing at stake for the Dutch government to be successful here, and we may have other opportunities that present itself. We're going to do our part to make sure that it's successful, because I think this will be a stepping stone for many other countries in Europe to come. We're focused on a rec side. We believe the strong play for the current medicinal market in Europe can be satisfied effectively, efficiently, and with the best quality product and right price out of Pure Sunfarms, we totally look for years at investing in the EU from the goods. We don't see it as a viable use of our capital when we can export. This is different on the Rex side is where we want to be because this is a built-in consumer that we just got to change the landscape like we have done in Canada and leverage up the current model we have there. And we have long deep ties in the Netherlands as well. So we're very excited about that. As for the export side on margins and so on, Mandesh, do you want to comment?

Yeah. Rahul, can you just clarify the last part of your question? I want to make sure I clearly understand your question on the margin.

Sure, one was what -- how do you see margins playing out in that Dutch market? Also we see relatively large margins out of Balanced Health in U.S. so I wanted to ask about durability of those said margins that you're seeing coming out of the U.S. going forward.

You mean the -- Mike can take that. I think Mike and Steve, you should take the U.S. margin questions on -- and potentially on the Dutch side as well before I take the --

And we see the margins very strong in the Netherlands because the Dutch government is controlling price degradation. They don't want to open up that market to current non-users, and they are very cognizant of that. So I think there will be very strong price controls that keep that margin very high initially, at least during this experiment portion of the test. I'm not going to elaborate, but we've done a lot of homework on that. We feel very solid. That's why one of the reasons we're making the investment is we believe we can get a return on our investment within the experiment, the 4-year experiment period. So that's a pretty -- actually less than the 4 years, so that should tell a story about how strong the margins are in pricing.

Great, thanks very much, will get back in queue.

Thanks.

Your next question comes from Doug Cooper from Beacon Securities. Please go ahead.

Good morning, guys. A couple of things. First of all, on the retail side, can you give us an indication maybe how many doors you expanded in the quarter? And did you have -- with aggressive pricing; did you have any degradation of your pricing in the quarter?

Mandesh?

Yes. So no real degradation in the pricing, Doug. I think it's been commented that our overall pricing remains really strong and there was no major adjustments to price. Obviously, we're tweaking as we see fit. On the door side, Doug, I don't have that stat for you, but as retail doors continue to open up across the country, we continue to see our selling, the teams are tracking that. Obviously, selling into the boards, it's a different relationship thing going direct. And my level on tracking to know the doors policies and I don't have that data for you. But the team is seeing and knocking on doors as new stores open, continuing to work with our key accounts and making sure our product offerings are continuing to roll out across the province.

Just moving to the whole document -

Yes, Doug can I just add to that too. 1 thing I couldn't take away on that is, the last couple of years, what was really important was reporting revenues per se, and cost of production. And we've all stopped giving out cost of production out of competitive advantage. But in the margins that we communicated, a 44% blended. To get to a blended margin of 44%, you can interpolate what the retail margin may have been to get there. That's a little telling, to answer your question.

Moving to the wholesale side. And can you give us an indication maybe have how many different LPs you sold to in the quarter and how much was -- I'm assuming when you talked strategic relationships, maybe this means private label. Can you give us an idea of how much private label business you did in the quarter?

I think there's pretty confidential, Doug, we'll have to talk to you offline on that.

Okay. Okay. Finally Quebec.

You can ask another question if you want.

Any update on Quebec and when you might get into Quebec? And I'll leave it there.

Operator?

Mike, do you want to take the Quebec question?

We couldn't hear it.

Oh, just wanted to know what the updated time you might be to move in to Quebec. Or plans.

With respect to Que -- we're still -- we're still working on it. Just leave it at that.

Okay. Thank you. Thanks, guys.

Your next question comes from Andrew Partheniou from Stifel. Please go ahead.

Hi, good morning. And I want to echo my congrats, both on the professional and the personal side. As my perennial question on Quebec has already been asked, maybe switch over to your branding. You guys have done things a little bit differently on many different aspects versus a lot of the larger LPs is one of them is putting the full force behind one brand, Pure Sunfarms. But now, just wondering how your thinking is around that one brand. If you're thinking about potentially another brand, as you guys work on R&D with hang dried or any other activities that might warrant a separation and potentially something new that could enter the market that's your own. And what that could do to price and maybe market share as well. Thanks.

Well, only a connoisseur can drum up that question so I'll turn that over to Mandesh.

Yes. Thanks Mike, and appreciate the comments, Andrew. Sure. Absolutely. Being on restarted, being a branded house for efficiency and making sure we could build brand recognition loyalty across the consumer landscape and instill confidence, and I think we've done that. We've done that very, extremely well. And you're absolutely right. This is the year that coming up that we're exploring; we're actively building and looking at brand extensions, as well as new entry points and brands to start to look at how sub-brands approach. It will all be done obviously very cost-consciously. And Mike alluded to it in his earlier comments, the expansion of hang dry. And so our continued investment in our production, operations basically translates to improve product quality. It's always at the heart of everything; Pure Sunfarms does and will continue to do. So as we continue to make those investments, and we actually think they'll improve our costs and quality. Continuing to do them very streamlined and thinking about the long-term will open up opportunities for us, Andrew and we are actively looking at customer segmentation. We believe there's an opportunity for us to continue our reach into stores, working with bud tenders and winning over consumers. And through brand extensions and new brands, it's absolutely something I think the customers should start to expect from Pure Sunfarms, actively exploring it. We believe the time is right for it. Our product expansion our strain offerings, our overall quality will continue to be a big focus for what you see in 2022. That will absolutely lead to the potential for new brands as well as brand partnerships that we're being approachless and we continue to look to expand that and win over shelf space in the stores.

To the extent that you're comfortable talking about it, you mentioned brand partnerships. Is there a certain type of customer in term -- or partner that will be more favorable to you than others? Just to the extent that you're comfortable discussing, of course.

I think I can take this one, Mike. On the brand partnerships, absolutely, Andrew, I mean, the spot market and what we sell B2B, some of those are -- most of those are strategic, obviously some of them are tactical and opportunistic. And what you're talking about is whether its contract growing, contract manufacturing, working with brands that want to work with Pure Sunfarms. And so for us it comes down to who -- we're just not going to work with anybody. We get approached daily, weekly, monthly for brands in Canada, brands outside of Canada, the want us to white-label and contract go for them. And it's a long process, Andrew. We want to make sure the value system, the way these partners are looking at the market and thinking about long-term success is aligned with Pure Sunfarms. We're not going to invest the time and energy just to bring something to market to only see it fail. And so for us, it's about making sure we understand whoever we're working with and what their outlook is, and making sure we have in the aligned vision. And so we're obviously talking to various companies and making sure we see that. Obviously, if an organization or brand has really good resonance with consumers it's always strong and attractive for us to work with them, to continue to build that landscape both ways as we bring any new entrants to market, we want to make sure that they're going to have the right resonance with the consumer. But also as we know that we will be the LP of record and we'll get tagged along with that. And that also inspires great consumer confidence. So it's about finding the right partner with the right vision, the right belief, the right understanding of the cannabis landscape. We believe there are brands and products out there that meet that potential. And we're excited to see what happens in 2022 and how that unfolds. Hopefully that answers your question and gives you enough color about how we think about it. And we'll hope to see what 2022 holds. And I'm excited to see how that plays out.

Yeah, that's fantastic, Color. Thanks again, I will get back in the queue.

The next question comes from - the next question comes from Eric Des Lauriers, from Craig-Hallum Group. Please go ahead.

Great. Thanks for taking my questions and offer my congrats as well. Both professionally and personally here. I'll be quick here. First -- first question I may just missed it but do you guys have an expected timing for when you might receive the GMP certification out and inspection is done?

Yeah. We're thinking probably towards the mid late first-quarter, just due to delays. And so that's kind of feeling in the First Quarter. And if successful, which we are confident we will be, we hope to start getting very aggressive in the Second Quarter of next year.

Great. I appreciate that. Then , looking in at the Pure Sunfarm's operations, and the impressive share gains that you guys continue to make here, do you talk about some of the cultivation improvements that you guys have seen since you started those operations? Whether that's in , potency, yields, efficiencies, just anything you guys can point to. I'm just wondering if this more of the same blocking and tackling and the market are moving towards? You guys, are using some bonafide by call patient improvements as well? Thanks.

Yes, I may take that only because the secret source, so to speak, I think we've tried to be vocal with why we -- our strengths. And I think it's a clearly cumulative. It's not just one item. As often said, the cards were dealt with in Canada very restrictive on our cultivation side, the use of really know tools. So just being much more proactive in decisions, great growing team, it's a combination of strains working together, techniques and processes. So really probably not going to say one or two specifically, but that's what we do. What we do good. Not patting ourselves on the back. It's just the duration of time to get here. So I hope that answers the question for Rahul.

Thanks, guys.

Your last question comes from Scott Fortunes from ROTH Capital Partners. Please go ahead.

Thanks for the questions and congrats again. Real quick, the factors are keys to bring on the second half of Delta 2 here production. Do you need Quebec or the international supply agreements to churn on from that edge? How are you looking at the second half of production for Delta 2 here?

We're confident. We -- as I said, we want to complete our geographical presence, but in Canada, we continue our penetration into those retail markets. And we were delayed with the EUGMP certification due to travel restrictions, which is now complete. The market is growing there. The market in Australia, for example, which is not a requirement for EUGMP certification is doubled the market last year than this year, so we feel very confident. And just keep in mind that the way we structured Delta 2, like Delta 3, is just roughly 16 grow rooms, 8 were -- are in full production this month. So even if we turn on half of the second -- half and each month, get our pulse of the export market, how we're doing, and domestic market. It's not like we have to turn on the whole half in one go. So that's the flexibility we have. Last year in 2020, we kind of curtailed Delta 3 in the summer a little bit just to give us a breath and we can apply the same thing. So we're very confident, Scott, by year-end next year we'll be in full production. And we're probably estimating close to 200,000 kilos once we're fully ramped up from the two facilities,

Thanks on that color. And it really shifted focus here on the CBD Balance Health side and the digital expansion into Canada and EU, and timing potentially there. And then opportunity leveraging Texas assets or kind of using your retail relationships to expand into brick-and-mortar for them, I know there's a lot online with great margins. But how do you look at those opportunities going into 2022 for PureCel. here.

Yeah. Well, 2022, 2023, I mean, that's a 24 month period if we took the 2 years. So really, we had looked at one of many entry points into the U.S. and while becoming one of those was obviously buying a top brand, a cannabinoid Company. In this case, Balanced Health Botanicals. We watch our competitors probably in our opinion, just spent a lot to get there and the timing wasn't right and timing is everything. So we think the entry point was right. We think evaluation was right for both companies and the location in Colorado also gives us a foothold to our high THC business that we're going to go forward with. And we just feel that even though the have a first-mover advantage and the consolidation -- plus a consolidation goes on the U.S. market, we already see ourselves of having the optionality in the U.S. with only nearly 6 million square feet in Texas. Even though the U.S. has a tremendously large potential for cannabis, there will be plenty of opportunities going forward, and we think even apart legalization, there'll be a lot of money thrown in there, a lot of bad investments right off, not unlike what we saw in Canada last 4 years. Our strategy will focus on the opportunities going forward, and BHP will play a significant role in that. Their online platform, assuming that cannabis will be sold online, is second to none and so, one of a couple entry points for the U.S. We're being patient, watching legislation very carefully and then applying our strategically sound acquisition methodology going forward. We're excited about it and we're very happy about the BHP acquisition to start with. Of course, clarity, whether the FDA gets clarity from Congress on CBD, we feel that's going to come maybe even part of a cannabis regulatory change. At that point, we'll be game on, on the bricks-and-mortar side. We're prepared for them.

Got it. Thanks for the color there, Mike.

Yeah. And I think I just want to say I mean, when we looked at Village Farms today, I think a lot of investors are still seeing us from one lens. And BHP on its own competes with some of the largest brands in solely in the pure CBD market, both publicly and private companies. And they are just as good as anyone out there in my opinion and those top-tier companies. And they'll start proving themselves more and more both as part of the Village Farms family and on a standalone basis as well.

Thanks.

Operator, that's it. That's it.

There are no further questions at this time. You may please proceed.

Well, thanks, everyone. Appreciate their participating in third quarter and we look forward to reporting our year-end and fourth quarter results at the next conference call on very early March. Thank you all.

Ladies and gentlemen, this concludes your conference call for today. We thank you very much for participating and ask that you please disconnect your lines.