Quarterly report pursuant to Section 13 or 15(d)

REVENUE

v3.22.2
REVENUE
 6 Months Ended
Jun. 30, 2022
Revenue from Contract with Customer [Abstract]  
REVENUE

(14) REVENUE

 

The Company’s main sources of revenue are comprised of the following:

 

● Product sales (retail and wholesale) – direct sales of cannabis and cannabis-infused products primarily by the Company’s retail dispensaries and wholesale operations in Massachusetts, Illinois and, as of the Kind Acquisition Date, Maryland. This revenue is recognized when products are delivered or at retail points-of-sale.

 

● Real estate rentals – rental income and additional rental fees generated from leasing of the Company’s state-of-the-art, regulatory compliant cannabis facilities to its cannabis-licensed clients. Rental income is generally a fixed amount per month that escalates over the respective lease terms, while additional rental fees are based on a percentage of tenant revenues that exceed specified amounts.

 

● Management fees – fees for providing the Company’s cannabis clients with comprehensive oversight of their cannabis cultivation, production and dispensary operations. These fees are based on a percentage of such clients’ revenue and are recognized after services have been performed.

 

● Supply procurement – resale of cultivation and production resources, supplies and equipment, acquired by the Company from top national vendors at discounted prices, to its clients and third parties within the cannabis industry. The Company recognizes this revenue after the delivery and acceptance of goods by the purchaser.

 

● Licensing fees – revenue from the sale of the Company’s branded products, including Betty’s Eddies and Kalm Fusion, and from the sublicensing or contracted brands, including Healer and Tikum Olam, to regulated dispensaries throughout the United States and Puerto Rico. This revenue is recognized when the products are delivered.

 

The Financial Accounting Standards Board Accounting Standards Codification 606, Revenue from Contract with Customers, as amended by subsequently issued Accounting Standards Updates, requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to in exchange for those goods or services. The recognition of revenue is determined by performing the following consecutive steps:

 

● Identify the contract(s) with a customer;
● Identify the performance obligations in the contract(s);
● Determine the transaction price;
● Allocate the transaction price to the performance obligations in the contract(s); and
● Recognize revenue as the performance obligation is satisfied.

 

Additionally, when another party is involved in providing goods or services to the Company’s clients, a determination is made as to who—the Company or the other party—is acting in the capacity as the principal in the sale transaction, and who is the agent arranging for goods or services to be provided by the other party.

 

The Company is typically considered the principal if it controls the specified good or service before such good or service is transferred to its client. The Company may also be deemed to be the principal even if it engages another party (an agent) to satisfy some of the performance obligations on its behalf, provided the Company (i) takes on certain responsibilities, obligations, and risks, (ii) possesses certain abilities and discretion, or (iii) other relevant indicators of the sale. If deemed an agent, the Company would not recognize revenue for the performance obligations it does not satisfy.

 

 

Revenue for the three and six months ended June 30, 2022 and 2021 was comprised of the following (in thousands):

 

    2022     2021     2022     2021  
    Three months ended     Six months ended  
    June 30,     June 30,     June 30,     June 30,  
    2022     2021     2022     2021  
                         
Product revenue:                        
Product sales - retail   $ 23,087     $ 20,552     $ 44,528     $ 35,776  
Product sales - wholesale     7,958       8,178       14,020       13,903  
Total product sales     31,045       28,730       58,548       49,679  
 Other revenue:                                
Real estate rentals     846       1,862       2,433       3,671  
Supply procurement     820       398       2,010       918  
Management fees     81       981       834       1,877  
Licensing fees     194       598       443       1,067  
Total other revenue     1,941       3,839       5,720       7,533  
Total revenue   $ 32,986     $ 32,569     $ 64,268     $ 57,212