RELATED PARTY TRANSACTIONS |
12 Months Ended |
|---|---|
Dec. 31, 2024 | |
| Related Party Transactions [Abstract] | |
| RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS The Company’s corporate offices are leased from an entity in which the Company’s President and Chief Executive Officer (the "CEO") has an investment interest. This lease expires in October 2028 and contains a five-year extension option. Expenses under this lease in the years ended December 31, 2024 and 2023 were approximately $233,000 and $272,000, respectively.
The Company procures nutrients, lab equipment, cultivation supplies, furniture and tools from an entity owned by the family of the Company’s Chief Operating Officer (the "COO"). Purchases from this entity totaled $4.6 million and $6.5 million in the years ended December 31, 2024 and 2023, respectively.
The Company pays royalties on the revenue generated from its Betty’s Eddies product line to an entity owned by the COO and the Company's Chief Revenue Officer (the "CRO") under a royalty agreement. Under this agreement, the royalty on all sales of Betty’s Eddies products is 3.0% if sold directly by the Company and between 1.3% and 2.5% if licensed by the Company for sale by third parties. Future developed products (i.e., ice cream) have a royalty rate of 0.5% if sold directly by the Company and between 0.125% and 0.135% if licensed by the Company for sale by third parties. The aggregate royalties earned by the entity for the years ended December 31, 2024 and 2023 approximated $634,000 and $722,000, respectively.
During the years ended December 31, 2024 and 2023, one of the Company’s majority-owned subsidiaries paid distributions of approximately $5,000 and $11,000, respectively, to the CEO, who owns a minority equity interest in such subsidiary.
At December 31, 2024, the Company had an outstanding accounts payable balance of approximately $251,000 in connection with fixed assets purchased from a third-party company in which the CEO has a controlling interest.
On June 10, 2024 (the "Membership Unit Purchase Date"), the CEO and COO purchased 5% and 15%, respectively, of the membership units of Mari Holdings Metropolis, LLC, one of the Company's majority-owned subsidiaries These membership units were purchased from the previous minority interest-holder, and accordingly, the percentage of the noncontrolling interests in this this majority-owned subsidiary remains unchanged. During the year ended December 31, 2024, this majority-owned subsidiary made distribution payments of approximately $6,750 and $20,250 to the CEO and COO, respectively.
Prior to December 31, 2023, FSCC, the cannabis-licensed client in Delaware that the Company manages, paid fees to BKR Management Inc., a company partially owned by the CEO, related to the initial formation, licensing and establishment of FSCC's cannabis operations. The aggregate fees paid by FSCC were approximately $192,000 for the year ended December 31, 2023. Payment of these fees terminated effective as of December 31, 2023.
At December 31, 2024, the Company’s mortgages with Bank of New England and DSB were personally guaranteed by the CEO. Additionally, the CEO provided a limited guaranty to the CA Lenders under the CA Credit Agreement through its repayment in November 2023. The CEO had also guaranteed the South Porte Bank Mortgage prior to its repayment in May 2023.
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