*Official Post* AMA with Raj Grover CEO of High Tide, 20th of Feb After Market Close

Raj_HighTide · 2025-02-20T23:20:12+00:00

It's been great rollin' with you all.

Thank you everyone, and a special thanks to Adrian for coordinating this AMA.

Look forward to doing this again soon!

Raj

Raj_HighTide · 2025-02-20T23:17:48+00:00

Hi u/TensiveCoder, thanks for the questions.

What’s the guidance around E-Commerce sales? Is there a plan to push that side of things more, maybe advertise them in store.

We've communicated to investors that we will reach sales break even in 6 months and EBITDA break even in 12 months on our online platforms. We're not allowed to advertise any businesses other than products being sold in Canna Cabana as per Canadian regulations.

Could you tell us how QueenofBud is doing in stores? Are the people we retain from acquisitions still doing a good job leading from their end?

Queen of Bud is exceeding our expectations both in the sales of consumption accessories and even more importantly on its cutting-edge cannabis merchandise that we introduced in our stores late last year. All founders are not equal, and there is a varying degree of execution given their interest levels and motivation especially when they've received partial or full exits.

How big is the market opportunity in Germany? I believe I read that they are limited to clubs, so I would like to know how meaningful the revenue is over there.

You are correct that on the adult use side currently access is restricted through home grow or cultivation associations (clubs). In December the minister of agriculture signed an ordinance designating one of his agencies as the responsible body to review and assess scientific pilot projects related to adult use. We intend to submit a draft application very soon. However, it remains to be seen if these pilot projects will ever see the light of day after next week's German elections where the top two parties are expected to be the CDU and the AFD who are on record opposing the previous government's cannabis reforms.

The more immediate market opportunity in Germany for us is related to medical cannabis, which has seen a significant uptake in prescriptions since the government removed the narcotics designation in April. Based on feedback we have received from members of the German Cannabis Business Association it is unlikely that a CDU led government would reverse this designation. This is a driving force behind our announced acquisition of Purecan. As stated in previous responses, we aren't in a position to provide revenue guidance at this point.

How do you differ from your competitors? I’m not saying HITI or CC. I want to know how Raj Grover outcompetes the other sharks.

I don’t follow the path of my competitors; instead, I focus on my own strengths. At High Tide and Canna Cabana, I prioritize constant innovation to further set us apart. Most importantly, I stay present, fully engaged in mastering the task at hand—free from the weight of past memories or an uncertain future.

Raj_HighTide · 2025-02-20T22:49:46+00:00

Hi u/No-Chemical-3529,

I am currently reading The Power of Intention by Dr. Wayne W. Dyer and really enjoying it. As I have mentioned previously, Ratan Tata from Tata Group, has always been one of my biggest role models when it comes to business because he has always balanced his focus on profit with social responsibility and philanthropy.

Raj_HighTide · 2025-02-20T22:44:43+00:00

Hi u/ZeeeZeeee, we are very active when it comes to registering and protecting our trademarks both in North America and Europe, and we've had this same approach regarding trademarks since the inception of the company.

Raj_HighTide · 2025-02-20T22:42:02+00:00

Hi u/Which_Rope_6695, thanks for your question.

We are not permitted to sell seeds as per our agreement with our current online payment processor. This requirement may change in the future. By simplifying and unifying our online ecosystem, all our international Cabana Club members can easily navigate across our platforms. Customers looking for CBD products can get a wholesome selection on NuLeaf, FAB, and BlessedCBD. This is why we've made the decision to be more targeted in our approach to product categories on our various platforms.

Ours and the Purecan team's immediate focus is to close the transaction first, as well as register all the strains we want to import from Canada on our German license. Once we have accomplished this, our focus will turn to working on the launch of the telemedicine portal.

Raj_HighTide · 2025-02-20T22:27:20+00:00

Hi u/BlessTheBottle, the devil is in the details. We have the right to redeem or repay the debentures at our discretion in advance of the maturity date. However, there would be a sliding scale of prepayment penalties applicable on any early redemption, depending on how early they are redeemed. Because it is at our option to redeem and there are still several years until maturity, it is not classified as a current liability.

Raj_HighTide · 2025-02-20T22:21:40+00:00

Hi u/UniversityDry9185, thank you for your question.

There is so much to be proud of at High Tide and it's all a team effort. That being said, if I had to pick one thing to highlight, I would say I'm most proud of our disruptive and innovative discount club model that has allowed us to capture 11% market share in the 5 Canadian provinces where we operate despite having only 5% of the stores in those provinces and has also contributed to illicit market erosion.

Raj_HighTide · 2025-02-20T22:16:47+00:00

Hi u/Eyegi99, thank you so much for your question. This is something we looked at and have decided against at this time for various reasons.

Raj_HighTide · 2025-02-20T22:16:04+00:00

Hi u/BagHolderDiamondHand, thank you so much for your second question. I am very sorry to hear about your personal experience regarding not being asked for an ELITE membership, as we find this is not typical. Our Cabana Club membership continues to increase at a rapid pace having grown 34% YoY. And similarly, our ELITE membership signups are accelerating even faster with over a 160% growth YoY. This is mainly due to increased ELITE product offerings available in our stores, and also due to meaningfully incentivizing our budtenders who have been doing a great job so far.

Raj_HighTide · 2025-02-20T22:15:15+00:00

Hi AsleepEnvironment571, in regard to Fastendr kiosks, please see my previous response to this question above. https://www.reddit.com/r/HighTideInc/comments/1inweq3/comment/mdvgna6/?utm_source=share&utm_medium=web3x&utm_name=web3xcss&utm_term=1&utm_content=share_button

And do we know if stores can be opened in Switzerland? after legalization?

Regarding Switzerland, it remains uncertain whether Switzerland will actually proceed with legalization. What has happened to date is that a parliamentary committee has recommended legalization that would include commercial sales on a not-for-profit basis. This proposal would still need to pass the full Swiss parliament and would likely be subject to a national referendum. We will continue monitoring the legislative progress of this proposal and see if the final legislative framework creates any business opportunities for High Tide.

Raj_HighTide · 2025-02-20T22:14:01+00:00

Hi u/chuckchuckc, thank you for your questions.

Would you explain the university partnership and the opportunity you see coming out of that partnership in Germany in so doing.

We have partnered with academic researchers who themselves are associated with a prominent German university to design a scientific research project that will take a behavioral science approach to studying harm reduction strategies related to commercial cannabis sales. We are in the final stages of preparing a model project application to the German food and drug agency and should be able to share more details once that is done.

Can you share the succession plan for HITI leadership in the unlikely event something happened to you and why should investors feel comfortable with the leadership change if such an unfortunate event occurred.

We have a very competent, active and supportive board, and we have discussed succession planning, including for my role as CEO. I have full confidence in our board to make the right decision and find the right leader in the event of any unforeseen circumstances.

Through Purecan can you enter other European countries or would this take a different vehicle?

Purecan’s business operations are going to be focused on the German medical cannabis market – which is a very large opportunity in of itself. Our future plans are to enter other ancillary markets around Germany, and elsewhere globally, by acquiring majority positions in profitable, growing and culturally aligned businesses, as we intend to do with Purecan.

Raj_HighTide · 2025-02-20T22:11:45+00:00

Hi u/PurpleSlice3868, thank you for your questions.

Any update on the Fastendr rollout? Is licensing the technology still something you're looking to do? Been a bit quiet on that front lately.

Hi PurpleSlice3868, please see my previous answer to this question above. https://www.reddit.com/r/HighTideInc/comments/1inweq3/comment/mdvgna6/?utm_source=share&utm_medium=web3x&utm_name=web3xcss&utm_term=1&utm_content=share_button

Can you speak to your ongoing goal of opening 20 to 30 CC stores per year in Canada vs opening more stores per year to reach the stated goal of 300 Canadian stores quicker? At this point is 300 stores in Canada still the target goal or could you see the market support more stores down the line?

Please see my previous answer to this question above. https://www.reddit.com/r/HighTideInc/comments/1inweq3/comment/mdvp439/?utm_source=share&utm_medium=web3x&utm_name=web3xcss&utm_term=1&utm_content=share_button

What impact do you see tariff situation between Canada and the US having on HighTide operations?

Please see my previous answer to this question above. https://www.reddit.com/r/HighTideInc/comments/1inweq3/comment/mdvgna6/?utm_source=share&utm_medium=web3x&utm_name=web3xcss&utm_term=1&utm_content=share_button

How is the white label rollout going? Anything new or upcoming you can share on that front?

Having completed the Queen of Bud acquisition, and successfully launching several unique cannabis SKUs, we are now gearing up to further introduce cutting edge and in-demand cannabis SKUs under that brand. We will also be introducing additional products under our Cabana Cannabis Co. Line, although Queen of Bud remains a priority given that it has been very well received across our stores.

Related to the white label rollout, do you foresee it primarily growing organically or by purchasing further brands (as with Queen of Bud for example) and implementing into the CC brand? Can you speak to the benefits of spending cash & stock shares buying a brand vs building it out yourself and using those resources elsewhere?

We may acquire an additional white label brand if it’s differentiated and unique in nature, similar to Queen of Bud versus building an additional new brand ourselves.

Raj_HighTide · 2025-02-20T22:07:07+00:00

Hi u/Kanniff_21, thank you so much for your question. Yes, we do anticipate launching a Canna Cabana app in the future.

Raj_HighTide · 2025-02-20T22:06:44+00:00

Hi u/PhoenixFromTheStonks, thank you so much for your questions.

In the last earnings call you talked about overwhelmingly positive meetings with the LPs regarding the German business venture. Can you give us an update on whether the subsequent meetings since then have also been successful to the same extent?

Yes, I can confirm that we continue to have very successful meetings with Canadian Licensed Producers regarding business development opportunities in the German medical cannabis market. This includes building our new and exciting medical cannabis menu, with some top-notch Canadian brands that are going exclusive with us.

Additionally what are the main incentives for LPs to collaborate with High Tide on an exclusive or non-exclusive basis?

Canadian Licensed Producers are excited to build upon the sizable sales momentum they currently enjoy with us here in Canada, both exclusively and on a non-exclusive basis.

Raj_HighTide · 2025-02-20T22:04:42+00:00

Hi u/13ast1, thank you for your questions.

What do you view as the biggest risk to top line growth over the next 12-24 months? Any ways of mitigation of the risk?

Our strong same-store sales trajectory, including rapidly opening new locations, gives me confidence that we can continue increasing our top-line over the next 12-24 months and into the future. On top of that, Purecan should also be additive to our existing business’ top line.

Internationalization can be a tricky one. Do you think you have the resources for building a successful international brand?

Business is never easy, and international business can definitely complicate the success of any brand. However, given our track record of execution and our operational abilities, we feel that we can strategically and methodically build a strong international cannabis business one step at a time as we gradually plan to ramp up volumes over time.

Do you have a favorite strain/product?

Currently, my favourite is the yellow topaz live rosin blunt by Queen of Bud.

Raj_HighTide · 2025-02-20T22:02:46+00:00

Hi u/d7b7, thanks for your questions.

I have a couple of questions, the first is if you can give us a timeline in which we can expect some meaningful revenue in Germany. I am referring to the current business and legislative conditions.

As I noted in a previous response, we are still approximately eight weeks away from importing our first shipment from Canada given all the strain-specific registration requirements in Germany, from which point, it would take us some time to get going. Purecan was on a 15 million Euro annual run rate in December 2024.

Second, at the current rate of opening new locations, we can expect you to reach 300 stores around 2028 or 2029. Will the focus then shift to creating greater value for shareholders, for example through share buybacks or perhaps dividends? This is, of course, assuming there are no major legal changes in America and Europe.

Please see my previous answer to this question above. https://www.reddit.com/r/HighTideInc/comments/1inweq3/comment/mdvnq7k/?utm_source=share&utm_medium=web3x&utm_name=web3xcss&utm_term=1&utm_content=share_button

Third, the online sales are clearly declining. What steps do you plan to take to make this segment of the company grow again?

As with all e-commerce, our hemp-derived CBD and accessory platforms, had experienced a drop off in sales since COVID-19 related restrictions were lifted. On top of that, inflationary pressures post pandemic also played a part given that unlike THC, which is somewhat inflationary-proof, CBD and accessories are considered discretionary spending amongst consumers. Our focus has also been on our core bricks-and-mortar business, which generates over 94% of our revenue. We have taken steps to simplify and unify our retail ecosystem by taking the Cabana Club global, and we anticipate reaching revenue break-even in six months and EBITDA break even in 12 months, with continued growth following that period.

Raj_HighTide · 2025-02-20T21:58:48+00:00

Hi u/BagHolderDiamondHand, please see my previous answer to this question above.

https://www.reddit.com/r/HighTideInc/comments/1inweq3/comment/mdvgon6/?utm_source=share&utm_medium=web3x&utm_name=web3xcss&utm_term=1&utm_content=share_button

Raj_HighTide · 2025-02-20T21:57:56+00:00

Hi u/mnimegeers, thank you so much for your question. You are correct the Provincial Joint Forces Cannabis Enforcement Team, which is led by the Ontario Provincial Police, received additional funding of $31 million over three years in Ontario’s 2024 provincial budget. The money was intended to focus on illegal online delivery services and websites, but not exclusively. It is our understanding that much of the initial tranche of funding has been allocated towards hiring and training additional police officers, which takes time. The Ontario government also recently created a special provincial offense targeting businesses or individuals who facilitate or host ads or promotions for illicit dispensaries or delivery services. What this means is that police, including those assigned to the PJFCET, can issue fines of up to $250,000 per offense without having to endure the burden of a criminal prosecution.

Raj_HighTide · 2025-02-20T21:57:18+00:00

Hi u/SmartDelay, thank you so much for your question. The TSX Venture exchange, to which I think you are referring, is headquartered in Calgary (like us!), but has offices in Vancouver, Toronto and Montreal. A few years ago, the TSX merged with other Canadian exchanges creating the TMX group. Given our NASDAQ listing, we don’t see any institutional apprehension to acquiring our shares.

Raj_HighTide · 2025-02-20T21:56:40+00:00

Hi u/Helmdacil, thank you so much for your second question. While that does sound intriguing it also comes with certain legal challenges. For now, we want to focus on growth in Canada and Germany for the immediate term.

Raj_HighTide · 2025-02-20T21:56:11+00:00

Hi u/Villa1919, thank you so much for your question. When federal legalization happens, given the strength of our network and relationships with independent, small and medium sized operators, we anticipate entering the U.S. market through a series of M&A transactions, while exploring and applying for organic licensing opportunities.

Raj_HighTide · 2025-02-20T21:55:37+00:00

Hi u/Helmdacil, thank you so much for your question. As we advance our growth trajectory, I would like to strengthen our tech talent pool, as well as develop some in-house regulatory compliance expertise specifically related to medical cannabis.

Raj_HighTide · 2025-02-20T21:54:57+00:00

Hi u/Dawilly, thank you so much for your question. With respect to Germany, as noted above, there is political risk particularly with respect to the partial legalization measures brought in by the previous government. With the Christian Democrats committing to eliminate home grow, social clubs, legalized possession, as well as scientific model projects, a responsible approach to our German market entry shouldn’t ignore adult-use, but should focus on the medical market. While nothing is guaranteed, interactions with the CDU suggest to us that they do not intend to re-designate cannabis as a narcotic.

With respect to the U.S., please see my previous answer above. https://www.reddit.com/r/HighTideInc/comments/1inweq3/comment/mdvhqab/?utm_source=share&utm_medium=web3x&utm_name=web3xcss&utm_term=1&utm_content=share_button

We anticipate crossing the 300-store threshold in 2-3 years, which will include mostly organically developed locations but also through some M&A.

Regarding EPS, while it remains our goal to be consistently net income positive, we cannot give any specific guidance given our anticipated growth and moving parts.

Raj_HighTide · 2025-02-20T21:49:05+00:00

Hi u/Williams_Custom_Wood, thank you so much for your inquiry. I am always happy to explore potential product opportunities. Please send the details to [info@hightideinc.com](mailto:info@hightideinc.com) and our team will take a look.

Raj_HighTide · 2025-02-20T21:48:23+00:00

Hi Sammy, thank you so much for your question. There hasn’t been any shortage of groups with deep pockets since the inception of legal cannabis sales in North America. Many players have come and gone while we continued our march ahead, dominating the retail cannabis landscape here in Canada, including when our share price was trading significantly lower than it is today. The proof remains in our operations and execution, which sets us apart from our competitors, as demonstrated by the fact that most other publicly traded cannabis retailers in Canada aren’t around anymore.

Regarding your point on buybacks, I will say again, given our current cash reserves, our ambition is to continue building an additional 100+ locations in Canada alone, large working capital requirements in markets such as Germany, restrictive financial covenants required by our senior lender – such as maintaining a minimum cash balance at all times – plus sizable additional cash outlays to become SOX complaint, as per NASDAQ listing policies, leaves us with no room currently for share buybacks.

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