Prepared remarks
Good morning. My name is Sylvie and I will be your conference operator today. At this time, all participant lines are in a listen-only mode. After the speakers' remarks, there will be a question-and-answer session. You may begin your conference.
Thank you, Sylvie. Good morning, everyone. And welcome to High Tide, Inc.'s Quarterly Earnings Call. Please note that all earnings discussed on this call are presented on an unaudited basis. Joining me on the call today are Mr. Raj Grover, President and Chief Executive Officer; and Mr. Mayank Mahajan, Chief Financial Officer. On January 29, 2025, the company released audited financial and operational results for the fiscal year that ended October 31, 2024. Before we begin, please let me remind you that during the course of this conference call, High Tide's management may make statements, including with respect to management's expectations or estimates of future performance. All such statements, other than statements of historical facts, constitute forward-looking information or forward-looking statements within the meaning of the applicable securities laws and are based on assumptions, expectations, estimates, and projections as of the date hereof.
Specific forward-looking statements include, without limitation, all disclosures regarding future results of operations, economic conditions, and anticipated courses of action. For more information on the company's risks and uncertainties related to forward-looking statements, please refer to the company's press release dated January 29, 2025, or our latest annual information form and our latest management discussion and analysis, each filed with securities regulatory authorities. Although these forward-looking statements reflect management's current beliefs and the reasonable assumptions based on the currently available information as of the date hereof, we cannot be certain that the actual results will be consistent with the forward-looking statements in the future. There can be no assurance that the actual outcomes will not differ materially from these results. Accordingly, we caution you not to place undue reliance upon such forward-looking results.
For any reconciliation of non-IFRS measures measured and discussed, please consult our latest management discussion and analysis. It is now my pleasure to introduce Mr. Raj Grover, President and Chief Executive Officer of High Tide. Thank you. Mr. Grover, you may begin.
Thank you, Sylvie, and good morning, everyone. Welcome to High Tide, Inc.'s financial results conference call for the fiscal year that ended October 31, 2024. I'll begin with some high-level comments about the quarter and our strategy before Mayank and I dive deeper into the numbers. We filed a press release and financials yesterday, and I'm proud to report another record-breaking quarter for High Tide. Revenue for the year reached an all-time high of $522.3 million, up 7% compared to fiscal 2023. We also ended the year with a quarterly revenue record, generating $138.3 million in Q4, up 9% year-over-year. This was the fastest growth rate we achieved all year and represents an annualized run rate exceeding $550 million. I'm incredibly proud of the growth we are generating at High Tide, especially considering that nearly all of it was achieved organically and financed primarily through internal cash flow.
In 2024, we added 29 new stores, of which only one was acquired. This was more than double the number of stores we added in 2023 and at the high end of the target range of 20 to 30 stores that we communicated to investors at the beginning of the year. These stores were built using cash flow from our existing locations. I'm pleased to report that new store development is continuing at a similar pace in 2025 with plans to add another 20 to 30 locations this calendar year. I remain excited about the continued top-line growth we anticipate for 2025. With our strong Q4 results, we have now delivered positive free cash flow for six consecutive quarters, generating $22 million in fiscal 2024, an increase of 217% over fiscal 2023. This significant improvement in free cash flow was achieved even as we opened 29 new stores during the year. It's important to remember that new stores require upfront investments not only in CapEx but also in working capital and employee hiring and training before opening.
These new stores act as a short-term drag on consolidated results until they ramp up. Despite this, Q4 free cash flow was $5.9 million, up 4% year-over-year. For 2025, we expect to remain free cash flow positive while continuing to grow our business. Long-term investors know that we see the Cabana Club as a crown jewel and a major contributor to our significant outperformance versus peers. I'm proud to report that membership numbers have reached new highs in Canada with 1.72 million members, an impressive 11% sequential increase and 34% growth rate year-over-year. Of these, 73,000 are ELITE members, our paid membership tier, which is also up 28% sequentially. This trajectory gives me confidence that we'll reach our long-term target of 2 million members sooner than expected, especially considering we had fewer than 1 million members less than two years ago. Late last year, we made the bold decision to take our Cabana Club global across all our e-commerce businesses and early results are in line with expectations.
We've already signed up 3.6 million members across the US and EU, bringing our global total to 5.32 million Cabana Club members. We've also started onboarding international ELITE members with sign-ups now exceeding 3,000. We believe taking the Cabana Club global represents a tremendous opportunity for the future while unifying and simplifying all areas of our diversified ecosystem today. With the momentum towards legalization in more countries, we're uniquely positioned to extend the Cabana Club's reach as these opportunities arise. Early adoption has been encouraging, and we are confident in our initial predictions that proactive margin reductions on consumption accessories and CBD will lead to revenue breakeven within six months of launch and adjusted EBITDA breakeven within 12 months. Furthermore, we've begun leveraging the Cabana Club infrastructure to disrupt adjacent industries, such as international snacks or in cannabis terms, Munchies.
On the topic of leveraging our existing infrastructure internationally, our recently announced definitive agreement to acquire a majority stake in Purecan, a profitable German medical cannabis importer and wholesaler is an excellent example. After extensive efforts, we identified Purecan as the ideal entry point into the fast-growing German medical cannabis market. This acquisition aligns with our objectives entering the market profitably, adding unique value and doing so cost-effectively without significant strain on our resources. Purecan is already profitable with impressive adjusted EBITDA margins of 29%, providing a platform to strengthen our core business and deepen relationships with Canadian licensed producers. This transaction is highly accretive. We are acquiring Purecan at a multiple of 3 times annualized adjusted EBITDA, significantly below our own trading multiple. Additionally, upon closing, our fully diluted share count will increase by less than 1%, and the cash outlay of EUR1.2 million is well within our means.
Given our conservative balance sheet management, with gross debt to trading adjusted EBITDA of less than 1, the additional EUR1.2 million in debt is easily manageable. I'm excited to close this acquisition in the coming days and demonstrate the growth potential by leveraging our connections and resources with Purecan's existing network and infrastructure. Purecan already has the necessary licenses, certifications, and facilities, meaning no significant CapEx is required. Furthermore, Purecan will come with no debt upon closing. The only additional investment will be for working capital, addressing timing delays between payments to Canadian licensed producers and revenue collection from pharmacies and wholesalers in Germany. This transaction is structured to ensure long-term success for all stakeholders. Over the next 18 months, both teams will focus on scaling the business. Beyond that, a five-year call and put option structure will incentivize Purecan shareholders to drive adjusted EBITDA growth while we retain the right to acquire the remaining stake at an attractive multiple.
Returning to Canada, Q4 was another strong quarter for our core cannabis retail operations. Same-store sales rose 3% sequentially. And since launching our discount club model three years ago, we've achieved a cumulative 130% increase in same-store sales. This contrasts with a 5% decline in revenue for the average operator during the same period. Our market share in the five provinces where we operate averaged 11% during fiscal Q4 based on revised data from Statistics Canada. This was consistent sequentially and up from 10% in Q4 last year. Notably, this market share was achieved with just 5% of the store count in these provinces, highlighting the exceptional performance of our Canna Cabana brand. Our long-term goal is to achieve a 15% market share across all our operating markets. I'll now go over key highlights from the financials before passing it over to Mayank for a deeper dive. Revenue for Q4 was $138.3 million, an all-time record, up 5% sequentially and 9% year-over-year.
Our bricks-and-mortar segment led the way, growing 12% year-over-year and outperforming our expectations. In October, our average store achieved an annual revenue run rate of $2.6 million, which is more than double the average peer revenue of $1.2 million in the provinces where we operate. In Ontario, our largest market and the focus of our future expansion, our outperformance was even more pronounced. Excluding newer stores that have been open for six months or less, which are still ramping up, the average Canna Cabana store was on an annual revenue run rate of $3.5 million in October. In contrast, the average of our peers in Ontario was just $1.1 million. Our same-store sales increased 0.4% year-over-year in Q4. While this is below the levels we have historically achieved, it reflects the broader market slowdown. In fact, total industry sales, including the impact of new stores across the five provinces where we operate, declined 1% year-over-year during our fiscal Q4.
In contrast, sequentially, our same-store sales grew by 3% during the quarter. In addition to merchandise sales, our Cabanalytics data and advertising platforms continue to expand. With our growing footprint, entry sales volumes, and operational outperformance, interest in our retail ecosystem is growing. In Q4, the Cabanalytics business data and insights platform, advertising revenue, and other revenue, including management fees, interest income, and rental income totaled $10.9 million, up 48% year-over-year and 21% sequentially. Consolidated gross margins were 26% in Q4 2024, consistent with Q4 2023 but slightly below the 27% we reported in Q3. We've maintained our gross margins in stores, avoiding price increases that might encourage weaker players to remain in the market for renewal leases. Given the unstable nature of the cannabis retail market in Canada, with another major retail player having recently filed for creditor protection, we feel our prudent gross margin management and a keen focus on free cash flow generation continues to yield meaningful benefits for shareholders.
Looking forward, we anticipate lower gross margins in our e-commerce segment as part of our strategy to drive volumes through unbeatable prices as we roll out the Cabana Club globally. E-commerce accounted for only 5.6% of our consolidated revenue in Q4, and we expect our global Cabana Club launch to deliver meaningful benefits in the long term, mirroring the traction and volume increases we observed when implementing this model in our Canadian bricks-and-mortar business. Turning to expenses. Salaries and wages represented 12.4% of revenue in Q4, up from 11.6% in Q4 last year. This increase reflects the rapid pace of store growth over the past 12 months, as we hire teams four to six weeks before the opening of new locations. Good people are hard to find, secure, and train, and we invest in ensuring they can provide Cabana-level service from day one. While new stores take time to ramp up, it's encouraging to see salaries and wages as a percentage of revenue decline sequentially from 12.7% in Q3.
General and administrative expenses continued to trend downward, representing 4.2% of revenue in Q4. While this was up from 3.7% in Q3, it compares favorably to 5.3% in Q4 last year. For the full fiscal year, general and administrative expenses declined from 5.5% in 2023 to 4.2% in 2024, demonstrating commitment to cost efficiency. Adjusted EBITDA was $8.2 million for the quarter, down 1% year-over-year and 14% sequentially. This decline reflects the higher pace of new store openings, which, as noted earlier, create a temporary drag on results as they ramp up. Excluding the impact of non-cash impairment charges, which totaled $5 million in Q4, our income from operations was $2.1 million, marking a significant increase from $61,000 in Q4 2023. In conclusion, Q4 was another strong quarter for High Tide, and I'm excited about the opportunities fiscal 2025 holds. Over the past few years, we've established ourselves as a leader in Canadian cannabis revenue.
As we begin 2025, we are taking steps to position ourselves as a leader in the global cannabis market. This includes our international expansion of the Cabana Club and our announced acquisition of a majority stake in Purecan. Additionally, we remain vigilant about the opportunities that may arise with the new administration in the US. As I've always said, High Tide's best days are ahead. Today, I'm proud to report that while our core Canadian bricks-and-mortar business continues to thrive, we're also making strategic moves to enter and grow within the German cannabis market, including its fast-growing medical segment. With that, I'll turn it over to Mayank for his comments and a deeper dive into the numbers.
Thank you, Raj. And hello, everyone. This was my first year-end as part of the High Tide team, and what a fantastic year it was. We set records on revenue, adjusted EBITDA, store count, and cash balances. Let's take a deeper dive into the numbers. As Raj mentioned, revenue for the fiscal year was an all-time record at $522.3 million, up 7% versus fiscal 2023. Our bricks-and-mortar segment, which drives the vast majority of our business, performed even better, up 12%. We also ended the year at a record level at $138.3 million in Q4, up 9% year-over-year, representing the fastest pace of growth during the fiscal year. On a consolidated basis, our gross margins were 27% for the fiscal year and equal to 2023's level. In Q4, consolidated gross margins were 26%, equal to Q4 2023's level and 1% below 27% in Q3. Looking ahead, we expect lower gross margins in our e-commerce business as a result of taking our disruptive Cabana Club global, which we anticipate will be offset by our newly acquired medical cannabis unit, Purecan, once the transaction closes.
I am very proud of the performance in our core bricks-and-mortar Canadian cannabis business, which is a tough market; we were able to post same-store sales gains year-over-year in Q4 despite the fact that total industry sales, including the impact of new stores, have declined year-over-year in each of the past eight months, which once again illustrates the superior brand strength Canna Cabana has in the market. We have always had millions of customers globally in our e-commerce segment. We recently completed the heavy lift of taking our disruptive Cabana Club global, further entrenching them into our increasingly global ecosystem with the aim of generating stronger loyalty and higher sales. Keeping with the same structure as our incredibly successful system in Canada, our international customers now have the ability to become ELITE, where we expect given a stronger spending depending on where they are located and annual ELITE membership costs $15, EUR15, or GBP15.
We are encouraged that 3,000 people have already purchased ELITE memberships internationally in just the first two months since launch and we expect this number to grow over time as the world continues to get out and customers see the value proposition we are offering. From a purely financial point of view, ELITE membership fees provide high-margin revenue and they are collected upfront for the year. Speaking of higher margins, our Queen of Bud acquisition is proving to be very fruitful and well-timed for the shareholders. Queen of Bud products are selling very well, better than our expectations, and have frequently sold out in our stores. We look forward to adding new SKUs over the coming quarters and remind investors that our white-label products typically carry higher margins than selling other products. I'm extremely proud of our cost controls. While revenue increased by $35.2 million during the fiscal year, excluding the impact of non-cash impairment, our total expenses actually decreased by $5.9 million.
In Q4, similarly, while revenue was up $11.2 million, we experienced year-over-year declines in general and administration expenses and depreciation and amortization expenses. Adjusted EBITDA margin was 6% in Q4. This was below 7.3% in Q3 2024 and 6.6% in Q4 2023. As Raj mentioned, there was an impact from the heightened number of new stores we opened during the year, which take longer to ramp up to maturity given the highly competitive Canadian cannabis landscape, as well as the continued pressure we experienced in our online business. Free cash flow was $22 million in fiscal 2024, up 217% versus fiscal 2023. Free cash flow was $5.9 million in Q4, up 4% year-over-year and the second highest level during the six quarters since we began posting positive free cash flow. We ended the fiscal year with a record level of cash at $47.3 million as of October 31, 2024. Note that we were in the process of restructuring our debt.
Since the end of our fiscal year, we obtained $5 million of additional debt and paid down $13 million that was due on December 31, 2024. I am very proud of how we have improved our balance sheet over the past 12 months. Today, our total debt is $27 million. This is comprised of $12 million due to connectFirst, which matures in September 2027, and our recently closed $15 million five-year second position facility. Accordingly, we have no maturities due for almost three years. In contrast, a year ago, we were facing $14 million of debt coming due within one year. In closing, this was another stellar year for High Tide. We added more than double the number of stores as we did in the prior year, while generating record revenue, free cash flow, and adjusted EBITDA. In our core business of bricks-and-mortar cannabis, we continue to make gains and outperformance versus our peers continues to widen.
Simultaneously, we are set for growth internationally by the moves we made during the past two months, namely the announced acquisition of a majority stake in Purecan and taking our Cabana Club global. Meanwhile, our balance sheet is in very good shape with no maturities for almost three years and a total debt to trailing adjusted EBITDA ratio of less than 1. I am very excited for what 2025 will bring for High Tide. With that, I will now turn the call over to the operator to open the line for the question-and-answer session. Thank you.
Questions and answers
First, we will hear from Matt Bottomley at Canaccord Genuity.
I just wanted to start on some of the market dynamics that you guys have seen. So obviously, the leadership on the market share front is very strong. But maybe just more directionally, and some of this might be rounding, or maybe if stats can revise numbers, but it looked like you had a percentage point or two more in Alberta and Ontario last quarter versus this quarter? Just looking at the two press releases at that time. I'm just curious if those dynamics have changed at all and if there was any headwinds in those two markets relative to what you've seen in the past?
First of all, I can confirm that we have not observed any changes in retail dynamics in Alberta or Ontario compared to what we have previously discussed. This includes factors such as the resurgence of the illicit market and the ongoing competitive pressures we face in this business. The only reason for the decrease from 12% to 11% is based on updated data from Statistics Canada. We rely on the data available at the time we report our quarterly results. To provide reassurance, we have actually increased from 10% last year to 11% this quarter on a year-over-year basis, and the adjustment from 12% to 11% was solely a revision from Statistics Canada. Changes like these occur regularly; they release new figures periodically, and we incorporate the latest data into our results.
So maybe just moving on, it's first time early chat on sort of the Germany deal since it was announced. So just curious on your level of potential investment into that market, not getting too granular because I know there's a lot of unknowns; but just what's happening, particularly in Germany on a regulatory front. This comes up on some of the other LPs' earnings calls as well and there's been takes, I guess, with respect to expectations there. But clearly, it's a lot more relevant now than it was several years ago. So just wondering what calendar 2025 might bring in terms of your level of investment and what you're hoping to see in terms of growth levers?
There is no significant capital expenditure needed for our investment in the German market through our majority stake in Purecan. We approached this investment very carefully, ensuring that we do not strain our existing financial resources. I am truly excited about this acquisition because I believe that High Tide is exceptionally well-positioned to seize opportunities in the German medical cannabis market. We anticipate significant market share growth in this segment. Since we already have the warehouse and logistics infrastructure in place, there are no major capital expenditure requirements. The business is already profitable, boasting 29% EBITDA margins. The primary expense we will incur initially will be working capital requirements. I can confidently say that I have received an overwhelmingly positive response from my discussions with licensed producers, having engaged with over 20 in the last week alone—roughly three to four each day.
Almost all of these producers are eager to partner with us. We are being offered opportunities to distribute Canadian brands, both exclusively and non-exclusively, tapping into the momentum building in Germany. While there will be working capital needs, our goal is to eventually manage the movement of thousands of kilos of cannabis. The timing of payments between Canadian licensed producers and our revenue collection from pharmacies and wholesalers in Germany will impact our free cash flow, but this will not happen overnight. This working capital is the only investment required as we move forward; we do not need to construct new facilities or anything of that nature.
Next question will be from Frederico Gomes at ATB Capital Markets.
I guess the first question, Raj, I know that you mentioned the pricing in the market and how maybe you're not ready to take price in the market yet as the market consolidates. But is that something that we could see happening later in 2025? I mean, what needs to happen here for you to be more comfortable on the pricing side of things here in Canada?
The Canadian market is very unique and highly competitive in the cannabis sector. There have been pricing pressures, but recently, True North, a significant player in Ontario with 48 stores, entered creditor protection. We remind our investors each quarter that we are committed to maintaining our gross margins, which has been a challenge for many competitors who lack our strong business model. Many of them are struggling, and some are even entering creditor protection. Currently, we are experiencing record revenues, with a 5% increase sequentially and a 9% increase year-over-year, reflecting significant growth. We also have substantial free cash flow, with $22 million trailing and $5.9 million in just Q4. We believe we don’t need to take extraordinary measures to maintain our momentum or assist competitors who are falling behind. This is why we are focused on maintaining our gross margins.
It is a challenging market, but our same-store sales are leading the industry, having risen 130% over the past three years, while the average operator has declined by 5% and is up only 0.4% year-over-year. Thus, increasing margins by just a few percentage points overnight isn't feasible without affecting our same-store sales. As more competitors exit the market, larger chains, mid-sized chains, and independents are all facing difficulties. With fewer competitors, there will be less price competition, allowing us a significant opportunity to enhance our gross margins in our core Canadian cannabis business.
Second question on your international e-commerce platform. Now that you launched the Cabana Club internationally, I'm curious about your perspective on the hemp-derived THC market in the US. Many other companies have made investments in that market recently, and it seems to have grown rapidly. Do you have any plans regarding that market?
So we have a few SKUs selling hemp-derived THC in states where legal, which are again covered by the 2018 federal farm bill, both New Leaf and Fab have these SKUs but it's producing an immaterial amount of revenue because it's not been our focus, Fred, simply because it's just so much enforcement and changes in terms of what's legal, what's not legal today between the different states. So we're taking this slow because it changes by the day sometimes and we're investing a lot into this to make sure that we are above board on these products. Our revenue is tiny today but we will definitely see how it develops. Like we've got immediate opportunities in our core business segments as well as Purecan that we just acquired the majority stake in Germany, and this core business opportunities that we can produce much higher revenues at higher gross margins relatively quickly. So the hemp-derived THC market is not at the forefront of what we're looking at but it's absolutely something that we're keeping an eye on, and time and resources are limited. So as soon as we have some more resources, we are going to dedicate it to this place but the revenue remains tiny today but we'll see how it develops.
Next question will be from Bill Kirk of ROTH Capital.
On Germany, how will you decide what brands or what products to offer into the country? You said you have a lot of calls, a lot of conversations. But how are you going to weigh maybe price point considerations versus quality or reliability when determining what is best?
So while we are researching the dynamics of the German market, we have noticed that everything entering Germany is being consumed. I have discussed this opportunity in several recent interviews. Since April 2024, the German medical market has grown by 250%. In the third quarter of 2024, Germany saw the movement of 20 tons of cannabis, up from eight tons the previous year, showcasing significant growth and momentum. We have the chance to introduce some of the best brands from Canada, including those from the largest, medium-sized, and craft LPs, as well as micro growers. Our plan includes a branded approach and our own white-label products, such as Queen of Bud SKUs, which we will launch in Germany. We will also introduce SKUs based on availability in the market. Our aim is to create the largest medical cannabis menu in Germany and become the leading distributor in a market currently lacking major players.
While there are many small operators, none have substantial size and scale. Given our extensive experience with over $1.5 billion in cannabis sales and more than $500 million in brick-and-mortar sales in Canada, we believe we are well-positioned to capture this market effectively. My discussions with our LP partners in Canada have been very positive, and everyone is eager to participate. Although it will take us a month or two to establish ourselves, I can assure you this represents a massive opportunity for us. This will involve the largest Canadian brands, our white-label products, as well as medium-grade and high-grade cannabis, and in some instances, even lower-grade cannabis.
I can clearly hear the enthusiasm there. What is the appetite for other countries? When you look around the world, do you see anything else out there like Germany or should we expect more of this type of stuff?
Yes, Bill, certainly. Germany will serve as our entry point into other European countries and eventually Australia. We're seeing that Australia is importing nearly as much cannabis as Germany is currently. The UK is also on the rise, reportedly reaching around 15 tons. Recently, the Czech Republic announced that they will allow all MDs, not just specialized doctors, to prescribe medical cannabis, which I believe will significantly expand that market. While it might still be on a smaller scale, Germany is already at 80 tons, representing our largest opportunity. Poland is also making strides in the medical sector. So, while Germany is our initial focus, rest assured, we are certainly exploring other markets as well. We plan to take our time, gain experience, and then I believe we will have excellent opportunities in these additional markets.
Next is Andrew Semple at Ventum Financial.
First question would just be on the 2025 outlook for opening 20 to 30 new stores. Raj, if you wouldn't mind maybe clarifying how you're thinking of that as a mix of organic versus M&A. Would M&A be incremental to that target or is that embedded within that 20 to 30 store target?
Thank you for your question, Andrew. The target remains unchanged. It took us the entire year to establish those 29 locations that we built organically. Constructing stores organically is quite challenging, from finding the right location to obtaining building and development permits, contracting the stores, and getting them operational and mature. This entire process takes significant time, but organic growth is the most beneficial for our shareholders. Typically, constructing a store costs us around $260,000, along with an additional $100,000 to $150,000 in working capital per store, compared to acquiring stores, even at attractive multiples. The challenge is that there aren't many good acquisition opportunities available. Our average store generates $2.6 million in revenue, while our competitors average around $1.1 million to $1.2 million, which is more than double. When assessing potential acquisitions, often three stores are either redundant or too close to our existing ones, and individual stores might only be generating $1.5 million to $2 million, which isn't ideal for us.
Moreover, sellers sometimes expect 5 to 6 times EBITDA, which isn't feasible in this market. We are disciplined in our approach, having validated our model through a combination of M&A and significant organic growth. While we are always on the lookout for acquisition opportunities, they are hard to find right now, especially given our current total of 191 stores nationwide. Our goal is to build 20 to 30 stores organically, and any M&A activity would be in addition to that target.
And then maybe just switching gears to the shape of the Canadian market and what we've been seeing this year. 2024 was clearly a year of slower growth nationwide, pricing pressures, competitive pressures, illicit market pressures as you've all highlighted, Raj. Though in recent months, we're starting to see growth pick up. The Statistics Canada data for November was quite strong. So just maybe want to check and see if you've seen any recovery in cannabis demand towards the end of the year subsequent to quarter end and what your thoughts are for 2025 in terms of overall market growth here in Canada?
So Andrew, we've definitely seen some growth. When we reported Q3, year-over-year cannabis sales were down 8% or 10%, which was a significant drop, but then they began to recover, and the numbers were revised. By the end of the year, we had a strong finish. Brick-and-mortar revenue increased by 12%, and that improvement was driven by rising sales. Our model is very robust and has outperformed the market. Sequentially, our same-store sales were up 3%, which I am very pleased with, considering overall sales were down 1% during that Q4 period. While sales have picked up, we are still feeling pressures from the illicit market. Recently, it was announced that Toronto will not be sending bylaw officers into cannabis stores, which will likely create challenges and encourage the opening of illicit stores, but we are encouraged by the Toronto police reaffirming their commitment to enforcement. Ontario has announced funding of $31 million over the next three years, which will start soon.
These factors both balance and offset each other, but I can tell you that the growth trajectory is exciting, though not easy. The market has seen too many players entering, and many are now exiting, such as True North, which had 48 stores file for creditor protection, along with many independents facing the same outcome. It's a tough market. Just a few quarters ago, we discussed the exits of companies like Fire & Flower, Kiaro, Trees, Tokyo Smoke, and ShinyBud; the list continues. Despite these challenges, our Q4 performance was strong. Our brick-and-mortar business, which is our core focus, performed very well. Currently, we are not in a position to raise margins, but we are working to maintain our status as a leader in the Canadian cannabis market.
Thank you. And at this time, sir, it appears we have no further questions. Please proceed.
Thank you, operator. And thank you to everyone for your interest and continued support for High Tide. We're very proud of what we've achieved this quarter and remain excited about the road ahead. With that, I will ask the operator to close the line. Have a great day, everyone.
Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we ask that you please disconnect your lines.