Eric Des Lauriers: That’s helpful. Appreciate that color. Last one for me here. Just wondering if you can talk about the impact that implementing dry hanging has had on your overall various different brands? And then I guess, specifically on cost as well. I mean, I was surprised to see Canadian cannabis, normalized gross margins, expand to 40% in the quarter. I would have thought that dry hang would have perhaps had a negative impact on cost there. But, could you just kind of talk a bit more about the overall implementation of the dry hang now? Or we could perhaps going to see more of that inventory in ’23 and we’ll see that drag there, or are you just seeing strong sell through with that, sort of differentiated product here? Thanks.
Michael DeGiglio: Yes, Mandesh, do you want to answer that?
Mandesh Dosanjh: Yes. So yes, the hang dried process, we rolled out in totality across the entire operation, spring, summer, last year. So at this point, I mean, all of our inventory that’s been hitting the market over the last least quarter or two has been hang dried. And we have seen, obviously significant consumer feedback, we’ve kind of did it in a very humble, low approach way, and not really kind of publicizing it until it’s fully there. And then really let the consumers in behind the scenes, through our digital channels, social media, kind of just letting people get sneak peeks and consumers and bud tenders and store owners across the country have been Wow, and seeing that across our entire portfolio from Fraser Valley, Weed Co., and Pure Sunfarms as well as Soar.
It’s been remarkable, especially as we put in different strain offerings, and just really improve that overall bag appeal. And we’re definitely seeing that market. And we’re grateful for that. On the cost side. Yes, I mean, I think that was one of the reasons why we did this initiative, and it took us a little bit to figure it out. But we kind of, at some level where cost neutral. It was really about total cost of ownership. When you’re running a facility like we are, there’s a lot of different pieces prior to hang drying, which we were doing on shag drying, where we’re drying on trays. So a lot of cleaning, there’s a lot of kind of moving parts that you have to maintain. So when you go to hang dry, yes, you’re spending more labor and time to get the plant kind of set up that way.
But we really implemented a process carefully, where we actually were neutral and even in some areas improved our labor efficiencies. And that’s the other part of our natures, we’re always going to be looking at ways to improve our cost structure and margin profile. So I think you’re seeing a bit of both you’re seeing kind of the move to hang dry, not causing us to increase costs. And then our continuing ongoing commitment and experiencing control environmental agriculture and operations, just driving further efficiency in the operations to make sure our margins continue to be strong and one of the best if not the best in the industry.
Eric Des Lauriers: That’s great to hear. Great execution. And thanks again for taking my questions.
Operator: Our next question will come from Pablo Zuanic of Cantor Fitzgerald. Your line is open.
Pablo Zuanic: Look, the first question regarding the announcement by the OCS about adjusting their margin structure. Are you seeing any impact in the market? Is that leading to better margins for you, lower prices to the consumer, better margins for the retailer? Any comment you can share there? And then the second question, can you remind us in terms of your plans in British Columbia to convert more of your automated greenhouses to cannabis? I mean I hear more companies going asset light. You have more demand on the wholesale side and then you continue to gain share on the branded retail side. So just an update on that, please. Thanks.
Michael DeGiglio: Okay. I’ll answer the second one, Pablo, and then hand it over to Mandesh for the first one. So I mean, we’re not going to — we have the — our third greenhouse, which is directly adjacent to our other two that are in cannabis’, that footprint is bigger than our two cannabis greenhouses combined. So we’re all about retail, building our brands in retail and export. So we wouldn’t make a capital investment to convert that greenhouse for B2B. It’s just not where we want to be long term. It would have to be where we felt we were going to gain market share. We reported — if we converted that greenhouse, we would have enough capacity for 35% of the domestic market in Canada. And with imports ramping up, it is something we can do.
And by the way, in that facility, which is broken down into two parts, we can actually do one which we couldn’t do years ago based on the legislation for Canada early on where you have to be a single crop. So that’s where that change would happen if it did. Mandesh?
