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Ryan Crandall

Thank you, Jon, and good morning everyone. As Jon said, we had another strong year at wholesale. Growing net revenues, 18% for the quarter and 29% for the year to nearly $63 million.
Driving that performance is our brands, which are continuing to capture more market share in nearly every market where we operate. For those that look for the moat surrounding a business, there's no question in my mind that our brand portfolio and the R&D that fuels it is the MariMed moat.
We all know this is an incredibly tough industry to compete in.
To win, you need insight to identify opportunity, innovation to drive differentiation, and unwavering standards to deliver quality.
I would put our capabilities in each of those areas against anyone in cannabis. The bottom line, our brands open doors, open them quickly and open them quickly in new and existing wholesale markets, and we're seeing it in the results across our core markets.
In 2024, our two primary focus areas across our brands were to increase brand awareness and brand distribution. On both fronts, I'm pleased to share we saw significant growth. From a brand awareness standpoint. According to Brightfield Group data, all five of our core brands increased their visibility across the markets we currently operate in.
This was achieved through our various marketing initiatives, including an outstanding job by our brand ambassador teams that reached over 50,000 consumers this year, an increase of 37% versus 2023.
And to ensure our consumers could find our products at dispensaries, our sales team executed with precision in 2024, adding 281 new retail outlets or 87% growth to a total of 605 storefronts ending the year.
Our products were more widely available than ever before across these markets, and we anticipate continuing to increase these wholesale distribution numbers in 2025. In Illinois, we continue to expand our distribution with sales again increasing sequentially by double digits.
I'm very pleased that we finished with our brands in 190 stores, or about 80% of the dispensaries in Illinois. We think there's an opportunity to double our sales there as we continue to expand our product portfolio. For example, nature's heritage flowers should hit shelves later this month.
In Missouri, we began selling our products at the very end of the year. We put a great team in place there, and we're following the same launch playbook in Missouri that's working so well for us in Massachusetts, Maryland, and Illinois.
I'm confident about our prospects to capture market share in that market. Together, these efforts delivered significant share growth, the ultimate measure of brand strength across all markets.
As an example, I'm exceptionally pleased that in Massachusetts, Betty Eddy's original market, Betty's has once again claimed the number one edible spot, joining our Maryland performance where we were already number one.
But that's not all. A strong and diverse portfolio has 3 significant brands in Betty's, Nature's Heritage, and in-house. All of which grew share in leading segments such as flour, vape, and gummies in all of our core markets.
And we have two brands that I would describe as big fish in a small pond with Vibations, beverage, and bubbies and baked goods. Both of these brands have an over 60 share in their respective segments in Maryland as an example.
At retail, Jon was right when he said 2024 was about improving the guests' experience in our stores in the face of growing competition and decreased spending in our country.
We're in the same boat as everyone else with cannabis prices falling and consumers having less disposable income. What others might see as a challenge we see as an opportunity to drive loyalty with our existing consumers and win new consumers over the long run.
We've got several initiatives to hit these challenges head on. For example, we're excited about the early results of a consumer focused pricing strategy that's based on providing best localized pricing for the most popular products in each store.
Combining this with strategies to encourage consumers to buy more units in each transaction, our early results are encouraging with respect to supporting AOB and margins. We're now rolling out the pricing program to all of our stores. We've also expanded the payment options available to our consumers to include pre-payment and other innovative solutions.
We've identified a number of ways to decrease transaction times, and we've also optimized our menus and the functionality on our websites to make the online shopping experience easier, faster, and more seamless. Lastly and perhaps most importantly, we measure all of these efforts through net promoter scores or NPS, which is the standard for measuring customer experience at retail. I'm pleased to report our customers are consistently rating us as excellent, with scores almost 20 points above the national average for retail NPS.
What this says is that our strategy and the dedication of our local teams is working, and I'm confident that we will continue to outperform the majority of our peer set in the markets we compete. That concludes my update, and I'll turn the call over to Mario.

Mario Pinho

Thank you, Ryan, and good morning everyone. Last night we reported fourth quarter revenues of $39 million which increased slightly from $38.9 million year on year and down 4% sequentially. Our sequential decline was driven by a decrease in our retail revenue, primarily in Illinois, partially offset by higher wholesale revenues in all markets. On a full year basis, we reported revenues of $158 million, up from $148.6 million in 2023, an increase of 6%. This increase was delivered by our expanding wholesale business, which grew 29% overall and grew in all markets in which we operate. This revenue increase was offset by a decline in our retail revenue, primarily in Illinois.
As Ryan mentioned, our growth in wholesale was driven by increased demand for our products from third party retailers, improved pricing strategies, and expanded distribution channels. Our Q4 wholesale revenue was $16.2 million holding steady compared to the previous quarter and up 18% year on year. On a full year basis, wholesale revenue was $62.9 million increasing by 29% from last year.
Our Q4 retail revenue was $22.2 million down 5% from the previous quarter, and down 7.1% year on year. On a full year basis, retail revenue was $91.5 million down from the last year by 4%. These declines were driven by pricing pressures and softer. Consumer demand, competition from new dispensaries openings, especially in Illinois, where we saw declines at all dispensaries except our new KC location. We expect this trend to continue in 2025 as more competition enters the market. Consumers continue to spend less, and prices for flour and products continue to drop.
Despite these headwinds, we remain focused on driving growth through strategic pricing, targeted marketing, and optimizing our dispensary operations to enhance our customers' experience.
Our new dispensaries in Casey, Illinois, and Upper Marlboro, Maryland continue to outperform expectations.
Demonstrating the strength of our retail model in high demand areas. Additionally, we are expanding our product offerings and loyalty programs to attract and retain customers. While the market remains dynamic, we are confident in our ability to adapt and position our retail business for long term success.
We reported non-gap adjusted gross margin of 43.3%, which increased from 42.6% on a sequential basis and down year on year compared to last year's fourth quarter gross margin of 45.6%. The sequential increase was due to cost savings we saw from our efficiency initiatives, both at our retail and cultivation centers, while the year over year decrease was due to price compression in our retail and wholesale revenue.
The year over year decline was primarily driven by our reliance on third party flour to meet demand in Illinois and Massachusetts for our in-house brand while we continued our build out to meet demand in those markets respectively. Additionally, increased labor, packaging, and regulatory compliance costs adversely impacted our overall cost structure.
In addition, we have seen a shift in our revenue mix from retail to wholesale. Wholesale revenues were 40% compared to 33% in 2023. We expect wholesale revenues to make up even more of our overall revenues in 2025 as we expand our brands into more doors and partnerships.
SG&A expenses were $56.4 million in 2024, or 35.7% of revenue versus $48.3 million or 32.5% of revenues in the prior year. The increase in expenses was attributable to higher headcount and related compensation costs as we ramped up our facilities in Illinois and add a new a new dispensary in Maryland.
On a quarterly basis, SG&A expenses with 13.1 million or 33.6% of revenue versus $14.2 million or 36.5% of revenues in the comparative quarter. The decrease in absolute dollars and as a percentage of revenues was driven by savings we started to see in cost management initiatives implemented last quarter, including headcount optimization, operational efficiencies, and minimal expansion costs.
We expect these initiative to deliver more savings in 2025 and expand our EBITDA . We reported that just at EBITDA $5.9 million for the fourth quarter of 2024 compared to $5.2 million in the same quarter last year and 4.7 million on a sequential basis. The year over year increase was primarily driven by lower labor and operating costs and release of bad debt reserves offset by lower gross margins.
Sequentially adjusted if improved due to a reduction in DNA expenses just mentioned and lower marketing costs as we implemented operational efficiencies and leveraged our brand ambassadors to reach our customers locally. These savings were partially offset by continued investment in growth initiatives I just mentioned earlier and the impact of lower gross margins.
For the full year, we reported adjusted of $19.6 million a decrease of $5 million or 20% from the prior year. This decline was largely attributable to margin compression, which flowed directly to the bottom line, along with increased operating expenses and strategic initiatives aimed at positioning the company for long-term growth.
Now turning to the balance sheet in cash flow, we ended the quarter with $7.3 million in cash and cash equivalents, down from $9.8 million at the end of the third quarter and down from 14.6 million at the end of 2023. The decrease in cash year over year was due to the capital projects mentioned earlier. Our working capital was $4.8 million, which decreased from $12.1 million in the third quarter of 2024. This decrease was primarily attributable to an increase in our federal income tax payable due to the application of Section 280E of the Internal Revenue Code. Rerecorded for GAAP purposes. MariMed's current federal income tax payable balance is now $21.9 million. Like our peers, the company does not believe that it owes taxes applicable to the application of this section and intends to file a tax returns on that basis.
For the year we generated $6.8 million in cash flow from operations, a 14% decrease versus a $7.9 million in 2023. This decline is due to inventory increases and an increase in other assets.
Looking to 2025, we plan to make capital expenditures of $5 million. The majority of this amount is earmarked for facility improvements and process automation at our cultivation and processing centers. Currently we have no plans to add to our dispensary footprint. Our immediate focus will be on integrating the Delaware operations, which includes two new dispensaries to us.
Lastly, a final word on the strength of our balance sheet. We ended the year with $78.9 million in debt consisting primarily of mortgages. We have no significant maturities in the next two years, providing us with financial flexibility to execute on our growth strategy.
I am pleased to report that we successfully met a revised revenue and adjusted EBITDA's 2024 financial target. Revenue growth of 6%, which aligned with our revised guidance a range of 6% to 8%. Adjusted EBITDA declined by 20%, landing at the high end of our expected range, and CapEx totaled approximately $12 million, which was $1 million higher than guidance.
Before I turn it back to Jon, I want to discuss the change in our approach to providing forward guidance. As we continue to navigate a dynamic and evolving industry landscape, we have made the strategic decision to discontinue providing formal financial guidance. This decision reflects the ongoing regulatory shifts, market volatility, and broader macroeconomic factors that can create short-term variability in our results, growth. Supporting profitability over time.
That said, we remain committed to transparency and will continue to provide meaningful insights into our performance, key operational drivers, and strategic initiatives. Our focus remains on executing on our growth strategy, optimizing margins, and. Maintaining financial discipline to drive long term shareholder value. We appreciate the continued support of our investors and look forward to keeping you updated on our progress each quarter. I will now turn the call over to Jon for his concluding remarks.

Jon Levine

Thank you, Mario. Before turning the call over to the operator, I just want to reiterate how excited we are for 2025. We have a number of catalysts to fuel our revenue and even to growth. We already own one of the strongest brand portfolios in the industry.
Which, as Ryan said, is our mode. I'd like to personally thank our shareholders for all their support, and I'd like to thank our MariMed employees for their dedication to improve the lives of our patients and customers every day. Operator, you may open the line for questions.

Question and Answer Session

Operator

(Operator Instructions)
Andrew Semple, Ventum Financial.

Andrew Semple

Hi there. Good morning. Thanks for taking my question. Glad to see the momentum in the wholesale segment for yet another quarter. The trend behind that business remains, excellent, and the continued traction of your branded products and markets.
However, the retail segments, as you've noted, is under some pressure, despite some new store openings in Q3 and the launch of Ohio all use sales. In the prepared remarks they taught that you mentioned that you're expecting to increase sales and drive growth in brand and product distribution in 2025.
I didn't know if that necessarily included at the retail level. So, the question being, do you expect to grow retail sales in 2025, without opening any new stores, or should we expect the existing trends in that segment to continue?

Jon Levine

Andrew, I do thank you for the question. I do think that we are doing everything within our power to change that trajectory, but I think overall the retail environment is going to continue the trend, and we'll do everything we can to buck that trend through the pricing strategies that we have through trying to internalize more of our own products and improve our margin. But ultimately, we're laser focused at retail on improving the guest experience. And making sure that the customers that visit us come back to us and that we're engaged in programs to bring as many new customers into the store as possible.

Andrew Semple

Great, that's helpful. And then maybe turning to Delaware, I'm just looking for some additional color on that market, and, your announcements on the, on March 3 of receiving approval to take ownership of that asset. First, was there any consideration paid when you took ownership of the Delaware operations? And then second, in your opinion, how well prepared is that business for the launch of adult use sales, which is expected later this year?

Ryan Crandall

Morning, Andrew. Thank you for joining us, Jon. Great question. We are very excited today about the Delaware finally being rolled up into MariMed. As everybody knows that was our very first start in the industry under MariMed. And we're very happy that that's finally rolled in and that we get to record their earnings and expenses on our books. It's going to be very creative to our reporting. In the next 20-25 numbers with increases in all.
This is an opportunity that we're going to help grow the company and their business as they become adult use. As for the cost, it's all the -- as we filed in our earnings report, it's all part of the omnibus where we've put money in in the past to build out and support Delaware over the years, and that was the cost that we had to pay for the consolidation.

Andrew Semple

Great, understood. And one more if I may, it sounds like you're off to a good start in the Missouri market, given the brain traction you mentioned in your prepared remarks. I'm just wondering if you have maybe internally, a revenue target for that state, whether it's this year or long term that you'd like to achieve, where you know that you found success in that market, what, what's kind of the key performance metrics you're hoping to achieve in that state, given the start that you've had.

Mario Pinho

Hi Andrew. It's Mario here. Thanks for the question.
As we noted in our prepared remarks, we're not providing guidance. As that asset kind of went live at the end of last year. We definitely see significant revenue coming out of there into 25, primarily on the wholesale side, and we'll keep you abreast of kind of the performance in that market as we report in our future quarters.

Andrew Semple

Great, thanks for taking my questions. I'll get back to you.

Operator

Pablo Zuanic, Zuanic & Associates.

Pablo Zuanic

Thank you. Good morning, everyone. Look, just, Jon, maybe a bigger picture question in terms of how you plan to expand in 2025. You talked about M&A, is that in the current environment, is that easier or more difficult when you're thinking of New Jersey, New York, Pennsylvania? Are you buying pretty much? Assets or ongoing companies, how do you think about that? And related to that, how do you think about licensing some of your brands like Betty's Eddie's? Would you rather keep control of your brands and own the assets in those days? Just trying to understand that side of the growth plan.

Jon Levine

Thanks. Morning, Pablo, and thank you for the question. Yes, this is Jon. Yeah, the expansion in 2025, as I said, we're looking to expand to become fully vertical, but additional states that we're looking at being New York and New Jersey, and a little bit in Pennsylvania because of the ability to go adult use there. We're also looking at trying to license our products into additional states in terms of New York and New Jersey and PA, we're looking at opportunities of either expanding. The licensing or a partnership of our brands or trying to find an asset where they're already in operation where we can go in and expand the business with our know-how and management to bring our brands into a new state and get the expansion through the addition of a cash flowing business versus buying paper licenses and building from the ground up. So we're concentrating on quick turn revenue versus the build out and wait.

Pablo Zuanic

Right. And on the same, line of question, in terms of stores, like, for example, in Maryland, is there an opportunity to add more stores? What about Ohio or given the difficulties in retail, that's something I'm going to shy away from.

Jon Levine

I appreciate the question. In Maryland, there's a moratorium of, I believe it's 4 more years that we have to wait before we can add additional stores. So in Maryland, we're at our 2 stores presently. In the state of Ohio to answer you, we want a second license with the transfer to adults. We found a location that fell through, but we're looking for a new location that we hope to find in the next few months and TRY to get that open in 2025, but it could. Be beyond that. Other than that, we're really only looking at retail if there's an opportunity to expand us into fully vertical, but unless there's accretive position for additional retail that would bring us dollars in a state that we're not in.

Pablo Zuanic

And so thank you. And look, just one last one trying to unpack it. I know there's no guidance, but trying to unpack the labors you have, as you said, flour in Illinois only started now in the in the first quarter, I believe in March.
Missouri processing products. I don't know if it started sales yet or not, if you can remind us of that. And is it just edibles or are you selling vape or other products? And are you consolidating that or is that MSA revenue? And and related to the same question in the case of Delaware, just remind us so we can model, right? You talked about if it's ranked $250 million market I think you said how many operators are there, how big is your operation compared to other peers if you can talk about that. That's it.
Thank you.

Ryan Crandall

Thank you, Pablo. This is Ryan. I can I can talk to the Missouri opportunity that we're currently partaking in. So in Missouri, we're making our branded products outside of flour today, so everything edible, vape, gummy, tablet related, so Betty's Eddie's is there, in-house is there, Buby's Baked, and vibrations.
So all of our edible brands are in Missouri and starting to have some real good traction in that market, and we're gaining stores literally every day. Jon, do you want to take the second half? Yeah.

Jon Levine

I'll take the Delaware question for you, Pablo. In Delaware, there's presently in the medical piece there are four competitors. We've all applied and I've heard that all four of us are converting into the adult use.
We are the largest operator in the state of Delaware. And we're going to continue that. They're adding in additional licenses, but they haven't given out all the licenses yet, so we don't know how many there's going to be, but we are already built out in our growth capacity to the state limit. So we are the only grower in the state that already is up and running at full capacity when the state says go to be able to operate in the state.

Pablo Zuanic

That's great. Thank you very much.

Operator

Joe Gomes, NOBLE Capital.

Joe Gomes

Good morning. Thanks for taking my call, questions.
Can you hear me?
Yeah Oh, okay, sorry about that. I just wonder if you might give us some more color on on Maryland wholesale and how do you characterize the current market dynamics, in that market, and how are the Merriman brands performing there relative to other, core states.

Ryan Crandall

Thank you, Jill. This is Ryan. Appreciate the question. Yeah, Maryland, the Maryland market is is a great market for us. We've got an incredibly strong sales team and marketing team down there. We've got great distribution of our brands. We have market leading positions in the edible category. And multiple kind of categories with edibles with baked goods and with vibrations being drink.
So I, we feel very good about our position in that market and our ability to continue to grow, we are in a position where we are selling to almost every store in the market and continuing to increase what we're selling month over month in that market. So we feel very good about our capacity there as well as our opportunity to continue to capitalize on it.

Joe Gomes

Okay, great. And I'm the 280-E, there's been a lot of discussion here lately, so I'm talking about, I'm not going to, are going to keep 280-E and extend it, and the whole rescheduling is all up in the air again. Jon, I just want to get your kind of viewpoint where we stand today and kind of where you see that, roadmap going here, at least in the near term in '25.

Mario Pinho

It's Mario here. Thanks for the question. As at this point, the IRS has taken a position that the application of 280 still applies just to cost of sales, right? So we've been very conservative and not from a GAAP perspective not taking the kind of position that a lot of our peers have taken and recorded a a a reserve for that that tax benefit. It's it's a wait and see attitude.
Obviously, we are looking at our options and we will be filing our tax returns with the considering additional costs that we can take. We think we have a case and that meets the threshold of more likely than not, and I think it's just a matter of time at this point, and I think we're not alone. It's kind of an industry kind of view on this.

Joe Gomes

Okay, great. Thanks for taking my questions. Appreciate it.

Operator

Thank you. There's no further questions at this time. Please continue.

Jon Levine

MariMed, we'd like to thank everybody for joining the call today. Have a good day.

Operator

This concludes today's conference call. Thank you for attending.