Quarterly report [Sections 13 or 15(d)]

LEASES

v3.25.1
LEASES
3 Months Ended
Mar. 31, 2025
Leases [Abstract]  
LEASES LEASES
Arrangements that are determined to be leases with a term greater than one year are accounted for by the recognition of right-of-use assets that represent the Company’s right to use an underlying asset for the lease term, and lease liabilities that represent the Company’s obligation to make lease payments arising from the lease. Non-lease components within lease agreements are accounted for separately.

Right-of-use assets and obligations are recognized at the commencement date based on the present value of lease payments over the lease term, utilizing the Company’s incremental borrowing rate. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

At March 31, 2025, the Company was the lessee under nine operating leases and thirty-four finance leases. These leases contain rent holidays and customary escalations of lease payments for the type of facilities being leased. The Company's operating leases include its corporate headquarters, dispensaries and cannabis production and processing facilities. Prior to the FSC Acquisition Date, the Company subleased three of these leased facilities to FSC and recognized rental income from these arrangements. The Company recognizes rent expense on a straight-line basis over the expected lease term, including cancelable option periods which the Company fully expects to exercise. Certain leases require the payment of property taxes, insurance and/or maintenance costs in addition to the rent payments. The Company leases machinery and office equipment under finance leases that expire from January 2026 through July 2031, with such terms being a major part of the economic useful life of the leased property.
The components of lease expense for the three months ended March 31, 2025 and 2024 were as follows (in thousands):

Three months ended
March 31,
2025
March 31,
2024
Operating lease expense $ 533  $ 517 
Finance lease expenses:
Amortization of right of use assets $ 318  $ 196 
Interest on lease liabilities 95  82 
Total finance lease expense $ 413  $ 278 
The weighted average remaining lease terms and weighted average discount rates for the Company's operating leases and finance leases at March 31, 2025 and December 31, 2024 were as follows:
March 31,
2025
December 31,
2024
Weighted average remaining lease term (years):
  Operating leases 9.10 9.26
  Finance leases 2.58 2.78
Weighted average discount rate:
  Operating leases 11.2  % 11.1  %
  Finance leases 9.5  % 9.6  %

Future minimum lease payments as of March 31, 2025 under all non-cancelable leases having an initial or remaining term of more than one year were (in thousands):
Operating
leases
Finance
leases
Remainder of 2025 $ 1,585  $ 1,503 
2026 1,915  1,626 
2027 1,813  573 
2028 1,757  318 
2029 1,595  142 
Thereafter 7,795  28 
Total lease payments 16,460  4,190 
Less: imputed interest (7,110) (286)
$ 9,350  $ 3,904 
LEASES LEASES
Arrangements that are determined to be leases with a term greater than one year are accounted for by the recognition of right-of-use assets that represent the Company’s right to use an underlying asset for the lease term, and lease liabilities that represent the Company’s obligation to make lease payments arising from the lease. Non-lease components within lease agreements are accounted for separately.

Right-of-use assets and obligations are recognized at the commencement date based on the present value of lease payments over the lease term, utilizing the Company’s incremental borrowing rate. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

At March 31, 2025, the Company was the lessee under nine operating leases and thirty-four finance leases. These leases contain rent holidays and customary escalations of lease payments for the type of facilities being leased. The Company's operating leases include its corporate headquarters, dispensaries and cannabis production and processing facilities. Prior to the FSC Acquisition Date, the Company subleased three of these leased facilities to FSC and recognized rental income from these arrangements. The Company recognizes rent expense on a straight-line basis over the expected lease term, including cancelable option periods which the Company fully expects to exercise. Certain leases require the payment of property taxes, insurance and/or maintenance costs in addition to the rent payments. The Company leases machinery and office equipment under finance leases that expire from January 2026 through July 2031, with such terms being a major part of the economic useful life of the leased property.
The components of lease expense for the three months ended March 31, 2025 and 2024 were as follows (in thousands):

Three months ended
March 31,
2025
March 31,
2024
Operating lease expense $ 533  $ 517 
Finance lease expenses:
Amortization of right of use assets $ 318  $ 196 
Interest on lease liabilities 95  82 
Total finance lease expense $ 413  $ 278 
The weighted average remaining lease terms and weighted average discount rates for the Company's operating leases and finance leases at March 31, 2025 and December 31, 2024 were as follows:
March 31,
2025
December 31,
2024
Weighted average remaining lease term (years):
  Operating leases 9.10 9.26
  Finance leases 2.58 2.78
Weighted average discount rate:
  Operating leases 11.2  % 11.1  %
  Finance leases 9.5  % 9.6  %

Future minimum lease payments as of March 31, 2025 under all non-cancelable leases having an initial or remaining term of more than one year were (in thousands):
Operating
leases
Finance
leases
Remainder of 2025 $ 1,585  $ 1,503 
2026 1,915  1,626 
2027 1,813  573 
2028 1,757  318 
2029 1,595  142 
Thereafter 7,795  28 
Total lease payments 16,460  4,190 
Less: imputed interest (7,110) (286)
$ 9,350  $ 3,904