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Pre-rolls are becoming increasingly popular in the cannabis industry as they provide consumers with a convenient and ready-to-use option. In addition to convenience, dispensaries also offer unique pre-roll experiences by increasing the potency and flavor of the product, giving users more options in their smoking experience.

Pre-roll sales make up a significant portion of product offerings that generate our royalty revenue, and our licensee partners plan on expanding this portion of its offering by introducing unique product types. We operate without license exposure as we do not deal with the “flower” and instead we contract the manufacturing and production of pre-rolls to dedicated suppliers who have the expertise, and appropriate licenses to produce and deliver high-quality products to dispensaries.

Another benefit of pre-rolls is their potential for continuous sales, unlike hardware products such as grinders or trays, which are typically only purchased once. If customers prefer a particular brand of pre-rolls, they are likely to continue buying them, making pre-rolls an attractive product for the company to focus on. The company plans to continue expanding the availability of its branded pre-rolls in states where they are currently active.

Additionally, we continue to monitor market research in an effort to identify new product trends, flavors and strains in our marketplace and, if appropriate, to adapt accordingly.

We currently have royalty-tied revenue resulting from pre-rolls sold in the following states: Arizona, Nevada, Michigan, California, Washington, and Oklahoma. Additional states are expected to come on board during the current year.