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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________
FORM 10-Q
________________________________
(Mark One)

[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2023
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to
Commission file Number 000-56468

JUSHI HOLDINGS INC.
stfrtryh.jpg
(Exact name of registrant as specified in its charter)
________________________________________________________________________________________________         
    
British Columbia98-1547061
(State or other jurisdiction of incorporation or organization)(IRS Employer
Identification No.)
301 Yamato Road, Suite 3250
Boca Raton, FL
(Address of principal executive offices)
(561) 617-9100
Registrant’s telephone number, including area code
33431
(Zip Code)

   (Former name, former address and former fiscal year, if changed since last report.)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
N/A
N/A
N/A
         
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No □

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No □




Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer         ☐                         Accelerated filer         ☐
Non-accelerated filer                                  Smaller reporting company          
Emerging growth company     

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

As of May 8, 2023, the registrant had 196,633,371 subordinate voting shares, no par value per share, no multiple voting shares, no par value per share, no super voting shares, no par value per share, and no preferred shares, no par value per share, outstanding.




JUSHI HOLDINGS INC.
Table of Contents
For the quarterly period ended March 31, 2023
Page



CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (this “report) document may contain “forward-looking statements” and “forward‐looking information” within the meaning of applicable securities laws, including Canadian securities legislation and United States (“U.S.”) securities legislation (collectively, “forward-looking information”) which are based upon the Company’s current internal expectations, estimates, projections, assumptions and beliefs. All information, other than statements of historical facts, included in this report that address activities, events or developments that Jushi expects or anticipates will or may occur in the future constitutes forward‐looking information. Forward‐looking information is often identified by the words, “may”, “would”, “could”, “should”, “will”, “intend”, “plan”, “anticipate”, “believe”, “estimate”, “expect” or similar expressions and includes, among others, information regarding: future business strategy, competitive strengths, goals, expansion and growth of Jushi’s business, operations and plans, including new revenue streams, the integration and benefits of recently acquired businesses or assets, roll out of new operations, the implementation by Jushi of certain product lines, implementation of certain research and development, the application for additional licenses and the grant of licenses that will be or have been applied for, the expansion or construction of certain facilities, the reduction in the number of our employees, the expansion into additional U.S. and international markets, any potential future legalization of adult use and/or medical marijuana under U.S. federal law; expectations of market size and growth in the U.S. and the states in which Jushi operates; expectations for other economic, business, regulatory and/or competitive factors related to Jushi or the cannabis industry generally; and other events or conditions that may occur in the future.
Readers are cautioned that forward‐looking information is not based on historical facts but instead is based on reasonable assumptions and estimates of the management of Jushi at the time they were provided or made and such information involves known and unknown risks, uncertainties, including our ability to continue as a going concern, and other factors that may cause the actual results, level of activity, performance or achievements of Jushi, as applicable, to be materially different from any future results, performance or achievements expressed or implied by such forward‐looking information. Such factors include, among others: risks relating to U.S. regulatory landscape and enforcement related to cannabis, including political risks; risks relating to anti‐money laundering laws and regulation; other governmental and environmental regulation; public opinion and perception of the cannabis industry; risks related to the economy generally; risks relating to pandemics and forces of nature; risks related to contracts with third party service providers; risks related to the enforceability of contracts; the limited operating history of Jushi; Jushi’s history of operating losses and negative operating cash flows; reliance on the expertise and judgment of senior management of Jushi; risks inherent in an agricultural business; risks related to co‐investment with parties with different interests to Jushi; risks related to proprietary intellectual property and potential infringement by third parties; risks relating to the Company’s recent debt financing and other financing activities including increased leverage and issuing additional equity securities; risks relating to the management of growth; costs associated with Jushi being a publicly-traded company and a U.S. and Canadian filer; increasing competition in the industry; risks associated with cannabis products manufactured for human consumption including potential product recalls; reliance on key inputs, suppliers and skilled labor; reliance on manufacturers and contractors; risks of supply shortages or supply chain disruptions; cybersecurity risks; constraints on marketing products; fraudulent activity by employees, contractors and consultants; tax and insurance related risks; risk of litigation; conflicts of interest; risks relating to certain remedies being limited and the difficulty of enforcing judgments and effecting service outside of Canada; risks related to completed, pending or future acquisitions or dispositions, including potential future impairment of goodwill or intangibles acquired and/or post-closing disputes; sales of a significant amount of shares by existing shareholders; the limited market for securities of the Company; risks related to the continued performance of existing operations in California, Illinois, Massachusetts, Nevada, Ohio, Pennsylvania, and Virginia; risks related to the anticipated openings of additional dispensaries or relocation of existing dispensaries; risks relating to the expansion and optimization of the grower-processor in Pennsylvania, the vertically integrated facilities in Virginia and Massachusetts and the facility in Nevada; risks related to opening new facilities, which is subject to licensing approval; limited research and data relating to cannabis; and risks related to the Company’s critical accounting policies and estimates. Refer to Part I - Item 1A. Risk Factors in Jushi’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission on April 18, 2023 for more information.




Although Jushi has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such forward‐looking information will prove to be accurate as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on the forward‐looking information contained in this report or other forward-looking statements made by Jushi. Forward‐looking information is provided and made as of the date of this Quarterly Report on Form 10-Q and Jushi does not undertake any obligation to revise or update any forward‐looking information or statements other than as required by applicable law.
Unless the context requires otherwise, references in this report to “Jushi,” “Company,” “we,” “us” and “our” refer to Jushi Holdings Inc. and our subsidiaries.


Table of Contents
PART I - FINANCIAL INFORMATION
1Item 1. Financial Statements
JUSHI HOLDINGS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands of U.S. dollars, except share amounts)
March 31, 2023 (unaudited)December 31, 2022
ASSETS
CURRENT ASSETS:
Cash and cash equivalents$18,474 $26,196 
Accounts receivable, net6,289 4,809 
Inventory, net37,471 35,089 
Prepaid expenses and other current assets2,859 3,957 
Total current assets$65,093 $70,051 
NON-CURRENT ASSETS:
Property, plant and equipment, net$175,087 $177,755 
Right-of-use assets - finance leases112,205 114,021 
Other intangible assets, net99,149 100,082 
Goodwill 38,239 38,239 
Other assets29,313 28,243 
Restricted cash950 950 
Total non-current assets $454,943 $459,290 
Total assets $520,036 $529,341 
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable$24,869 $21,313 
Accrued expenses and other current liabilities38,989 46,329 
Income tax payable29,409 19,921 
Debt, net - current portion (including related party principal amounts of $3,250 and $3,189 as of March 31, 2023 and December 31, 2022, respectively)
11,734 8,704 
Finance lease obligations - current10,293 11,361 
Total current liabilities$115,294 $107,628 
NON-CURRENT LIABILITIES:
Debt, net - non-current (including related party principal amounts of $18,241 and $17,491 as of March 31, 2023 and December 31, 2022, respectively)
$181,607 $180,558 
Finance lease obligations - non-current102,208 102,375 
Derivative liabilities6,104 14,134 
Income tax liabilities - non-current 59,096 57,200 
Other liabilities - non-current19,965 21,555 
Total non-current liabilities$368,980 $375,822 
Total liabilities$484,274 $483,450 
COMMITMENTS AND CONTINGENCIES (Note 16)
EQUITY:
Common stock, no par value; authorized shares - unlimited; issued and outstanding shares - 196,633,371 and 196,686,372 Subordinate Voting Shares as of March 31, 2023 and December 31, 2022, respectively
$ $ 
Paid-in capital494,331 492,020 
Accumulated deficit(457,182)(444,742)
Total Jushi shareholders' equity$37,149 $47,278 
Non-controlling interests(1,387)(1,387)
Total equity$35,762 $45,891 
Total liabilities and equity$520,036 $529,341 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
1

Table of Contents
JUSHI HOLDINGS INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(in thousands of U.S. dollars, except share and per share amounts)
Three Months Ended March 31,
20232022
REVENUE, NET$69,873 $61,888 
COST OF GOODS SOLD(39,932)(42,776)
GROSS PROFIT$29,941 $19,112 
OPERATING EXPENSES$32,452 $37,308 
LOSS FROM OPERATIONS$(2,511)$(18,196)
OTHER INCOME (EXPENSE):
Interest expense, net $(8,520)$(10,116)
Fair value gains on derivatives8,030 14,309 
Other, net709 (703)
Total other income, net$219 $3,490 
LOSS BEFORE INCOME TAX$(2,292)$(14,706)
Income tax expense(10,148)(5,051)
NET LOSS AND COMPREHENSIVE LOSS$(12,440)$(19,757)
Less: net loss attributable to non-controlling interests  
NET LOSS AND COMPREHENSIVE LOSS ATTRIBUTABLE TO JUSHI SHAREHOLDERS$(12,440)$(19,757)
LOSS PER SHARE ATTRIBUTABLE TO JUSHI SHAREHOLDERS - BASIC$(0.06)$(0.11)
Weighted average shares outstanding - basic194,050,835 183,226,027 
LOSS PER SHARE ATTRIBUTABLE TO JUSHI SHAREHOLDERS - DILUTED$(0.06)$(0.16)
Weighted average shares outstanding - diluted194,050,835 207,838,906 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2

Table of Contents
JUSHI HOLDINGS INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in thousands of U.S. dollars, except share amounts)
Three Months Ended March 31, 2023
Paid-In CapitalAccumulated DeficitTotal Jushi Shareholders' EquityNon-Controlling InterestsTotal Equity
Subordinate Voting Shares
Balances - January 1, 2023196,686,372 $492,020 $(444,742)$47,278 $(1,387)$45,891 
Shares canceled upon forfeiture of restricted stock, net of restricted stock grants(53,001)— — — — — 
Share-based compensation (including related parties)— 2,311 — 2,311 — 2,311 
Net loss— — (12,440)(12,440)— (12,440)
Balances - March 31, 2023196,633,371 $494,331 $(457,182)$37,149 $(1,387)$35,762 

Three Months Ended March 31, 2022
Paid-In CapitalAccumulated DeficitTotal Jushi Shareholders' EquityNon-Controlling InterestsTotal Equity
Subordinate Voting Shares
Balances - January 1, 2022182,707,359 $424,788 $(242,418)$182,370 $(1,387)$180,983 
Private placement offerings3,717,392 13,680 — 13,680 — 13,680 
Shares issued for Apothecarium acquisition527,704 1,594 — 1,594 — 1,594 
Shares issued for restricted stock grants5,952 — — — — — 
Shares issued upon exercise of warrants2,676,303 9,693 — 9,693 — 9,693 
Shares issued upon exercise of stock options93,915 — — — — — 
Share-based compensation (including related parties)— 6,964 — 6,964 — 6,964 
Net loss— — (19,757)(19,757)— (19,757)
Balances - March 31, 2022189,728,625 $456,719 $(262,175)$194,544 $(1,387)$193,157 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of U.S. dollars)
Three Months Ended
March 31,
20232022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss$(12,440)$(19,757)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization7,335 3,248 
Share-based compensation2,311 6,964 
Fair value changes in derivatives(8,030)(14,309)
Non-cash interest expense, including amortization of debt issuance costs1,731 4,551 
Deferred income taxes and uncertain tax positions355 (1,125)
Other non-cash items, net(166)438 
Changes in operating assets and liabilities:
Accounts receivable(1,210)1,770 
Inventory(4,480)5,917 
Prepaid expenses and other current assets1,098 (316)
Accounts payable, accrued expenses and other current liabilities8,033 (2,379)
Other assets1,891 1,173 
Net cash flows used in operating activities$(3,572)$(13,825)
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for acquisitions, net of cash acquired$ $(6,592)
Payments for property, plant and equipment(4,542)(17,039)
Net cash flows used in investing activities$(4,542)$(23,631)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of shares, net$ $13,680 
Proceeds from exercise of warrants and options 541 
  Redemptions of senior notes (including related party redemptions of $0 and $8 for
  three months ended March 31, 2023 and 2022, respectively)
 (258)
 (Payments) receipts of finance leases, net of tenant allowance of $0 and $9,597 for
  three months ended March 31, 2023 and 2022, respectively)
(844)1,121 
Proceeds from other debt1,900 3,265 
Repayments of other debt(57)(130)
Other financing activities(668) 
Net cash flows provided by financing activities$331 $18,219 
Effect of currency translation on cash and cash equivalents61 (9)
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH$(7,722)$(19,246)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD27,146 95,487 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD$19,424 $76,241 
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JUSHI HOLDINGS INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of U.S. dollars)
Three Months Ended
March 31,
20232022
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest (excluding capitalized interest)$6,951 $5,580 
Cash paid for income taxes$305 $3,867 
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Capital expenditures$2,804 $24,939 
Right-of-use assets from finance lease liabilities$461 $ 
Issuance of second lien notes for settlement of accrued bonus$750 $ 
Fair value of note obligations and warrant liabilities from acquisitions and acquisitions of non-controlling interests$ $6,922 
Fair value of shares issued for acquisitions and acquisitions of non-controlling interests$ $1,594 
Assets acquired and liabilities assumed in acquisitions, net$ $15,133 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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JUSHI HOLDINGS INC.
Notes to the Unaudited Condensed Consolidated Financial Statements
(Amounts Expressed in Thousands of United States Dollars, Unless Otherwise Stated)
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 1. NATURE OF OPERATIONS
Jushi Holdings Inc. (the “Company” or “Jushi”) is incorporated under the British Columbia’s Business Corporations Act. The Company is a vertically integrated, multi-state cannabis operator engaged in retail, distribution, cultivation, and processing in both medical and adult-use markets. As of March 31, 2023, Jushi, through its subsidiaries, owns or manages cannabis operations and/or holds licenses in the adult-use and/or medicinal cannabis marketplace in California, Illinois, Massachusetts, Nevada, Ohio, Pennsylvania and Virginia. The Company’s head office is located at 301 Yamato Road, Suite 3250, Boca Raton, Florida 33431, United States of America, and its registered address is Suite 1700, Park Place, 666 Burrard Street, Vancouver, British Columbia V6C 2X8, Canada.
The Company is listed on the Canadian Securities Exchange (“CSE”) and trades its subordinate voting shares (“SVS”) under the ticker symbol “JUSH", and trades on the United States Over the Counter Stock Market (“OTCQX”) under the symbol JUSHF.
 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Consolidation
The financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information and in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and footnotes. Actual results could differ materially from those estimates.
In the opinion of management, the unaudited consolidated financial statements include all adjustments, of a normal recurring nature, that are necessary to present fairly the financial position, results of operations and cash flows of the Company for the periods, and at the dates, presented. The results for interim periods are not necessarily indicative of results that may be expected for any other interim period or for the full year.
These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2022, which are included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on April 18, 2023 (the “2022 Form 10-K”), and was also filed on the System for Electronic Document Analysis and Retrieval (“SEDAR”) on April 18, 2023. Consolidated balance sheet information as of December 31, 2022 presented herein is derived from the Company’s audited consolidated financial statements for the year ended December 31, 2022.
Going Concern and Liquidity
As reflected in the 2022 Form 10-K, the Company has incurred a loss from operations of $220,333, including non-cash impairment charges of $159,645, and used net cash of $21,416 for operating activities for the year ended December 31, 2022, and as of that date, the Company’s current liabilities exceeded its current assets by $37,577. Furthermore, the Company incurred additional loss from operations of $2,511 and used cash of $3,572 for operating activities for the three months ended March 31, 2023, and as of that date, the Company’s current liabilities exceeded its current assets by $50,201. Since inception, management has focused on building a diverse portfolio of assets in attractive markets to vertically integrate its business. As such, the Company has incurred losses as it continues to expand. Management has put in place plans to increase the profitability of the business in fiscal year 2023 and beyond. In order to achieve profitable future operations, management begun to commercialize production from its recently expanded grower-processing facilities in Pennsylvania and Virginia, as well as implemented a cost-savings and efficiency optimization plan which
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JUSHI HOLDINGS INC.
Notes to the Unaudited Condensed Consolidated Financial Statements
(Amounts Expressed in Thousands of United States Dollars, Unless Otherwise Stated)
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includes, among other things, reduction in labor and packaging costs as well as operating efficiencies at the Company’s retail and grower-processing facilities.
As a result of the above, substantial doubt exists about the Company’s ability to continue as a going concern within the next twelve months from the date these financial statements are issued. Management intends to fund the Company’s operations, capital expenditures and debt service with existing cash and cash equivalents on hand, cash generated from operations and, as needed, future financing (equity and/or debt) as well as the potential sales of non-core assets. The ability to continue as a going concern is dependent upon profitable future operations and positive cash flows from operations as well as future financing and/or sales of assets if necessary. There is no assurance that the Company will be successful in this or any of its endeavors or become financially viable and continue as a going concern.
The unaudited consolidated financial statements contained herein have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future, and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or amounts and classification of liabilities that may result from the outcome of this uncertainty.

Summary of Significant Accounting Policies
The Company’s significant accounting policies are described in Note 2 in the audited consolidated financial statements and notes thereto for the year ended December 31, 2022, which is included in the 2022 Form 10-K. Except as disclosed below, there have been no material changes to the Company’s significant accounting policies.
Cash and Cash Equivalents and Restricted Cash
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows:
March 31, 2023 (unaudited)December 31, 2022
Cash and cash equivalents
$18,474 $26,196 
Restricted cash
950 950 
Cash, cash equivalents and restricted cash$19,424 $27,146 
Emerging Growth Company
As an emerging growth company (“EGC”), the Jumpstart Our Business Startups Act (“JOBS Act”) allows the Company to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are applicable to private companies. The Company has elected to use this extended transition period under the JOBS Act until such time the Company is no longer considered to be an EGC. The adoption dates discussed in Recent Accounting Pronouncements reflect this election.
Recent Accounting Pronouncements
Accounting Standards Issued But Not Yet Adopted
In June 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-06 Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. This ASU also removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and simplifies the diluted earnings per share calculation in certain areas. The amendments in this ASU are effective for annual
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JUSHI HOLDINGS INC.
Notes to the Unaudited Condensed Consolidated Financial Statements
(Amounts Expressed in Thousands of United States Dollars, Unless Otherwise Stated)
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and interim periods beginning after December 15, 2023, although early adoption is permitted. The Company is in the process of evaluating the impact of this new guidance on its consolidated financial statements.
In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The FASB issued guidance requires that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. At the acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts. To achieve this, an acquirer may assess how the acquiree applied Topic 606 to determine what to record for the acquired revenue contracts. Generally, this should result in an acquirer recognizing and measuring the acquired contract assets and contract liabilities consistent with how they were recognized and measured in the acquiree’s financial statements (if the acquiree prepared financial statements in accordance with generally accepted accounting principles). The amendments in this ASU are effective for annual and interim periods beginning after December 15, 2023, although early adoption is permitted. The Company is in the process of evaluating the impact of this new guidance on its consolidated financial statements.
In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. The FASB issued guidance clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The amendments also clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. The amendments in this ASU are effective for annual and interim periods beginning after December 15, 2023, although early adoption is permitted. The Company is in the process of evaluating the impact of this new guidance on its consolidated financial statements.
In March 2023, the FASB issued ASU 2023-01, Leases (Topic 842): Common Control Arrangements. The FASB issued guidance clarifies the accounting for leasehold improvements associated with common control leases, by requiring that leasehold improvements associated with common control leases be amortized by the lessee over the useful life of the leasehold improvements to the common control group (regardless of the lease term) as long as the lessee controls the use of the underlying asset through a lease. Additionally, leasehold improvements associated with common control leases should be accounted for as a transfer between entities under common control through an adjustment to equity if, and when, the lessee no longer controls the use of the underlying asset. The amendments in this ASU are effective for annual and interim periods beginning after December 15, 2023. The Company is in the process of evaluating the impact of this new guidance on its consolidated financial statements.
 3. INVENTORY
The components of inventory, net, are as follows:
March 31, 2023 (unaudited)December 31, 2022
Cannabis plants$4,618 $4,347 
Harvested cannabis and packaging10,862 9,052 
Total raw materials$15,480 $13,399 
Work in process7,495 7,845 
Finished goods14,496 13,845 
Total inventory, net$37,471 $35,089 

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JUSHI HOLDINGS INC.
Notes to the Unaudited Condensed Consolidated Financial Statements
(Amounts Expressed in Thousands of United States Dollars, Unless Otherwise Stated)
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 4. PROPERTY, PLANT AND EQUIPMENT
Property, Plant and Equipment
The components of property, plant and equipment (“PPE”) are as follows:
March 31, 2023 (unaudited)December 31, 2022
Buildings and building components$91,892 $80,697 
Land14,087 14,085 
Leasehold improvements44,893 43,472 
Machinery and equipment27,615 27,615 
Furniture, fixtures and office equipment (including computer)17,496 16,126 
Construction-in-process8,242 20,086 
Total property, plant and equipment - gross$204,225 $202,081 
Less: Accumulated depreciation(29,138)(24,326)
Total property, plant and equipment - net$175,087 $177,755 
Construction-in-process represents assets under construction for manufacturing and retail build-outs not yet ready for use.
PP&E depreciation was $4,812 and $2,550 for the three months ended March 31, 2023 and 2022, respectively. Interest expense capitalized to PPE totaled $188 and $744 for the three months ended March 31, 2023 and 2022, respectively.
 5. ACQUISITIONS
Nature’s Remedy
In connection with the Company’s acquisition of Nature’s Remedy of Massachusetts, Inc. and certain of its affiliates (collectively, “Nature’s Remedy”) in September 2021, the Company agreed to issue up to an additional $5,000 in Company SVS to Sammartino Investments LLC (“Sammartino”) upon the occurrence or non-occurrence of certain events after the closing date. The payment of the contingent consideration depends on whether or not a competitor (as defined in the definitive acquisition documents) opens a competing dispensary within a certain radius of the Company’s dispensary in Tyngsborough, Massachusetts during the period beginning on the 12-month anniversary of the closing date and ending on the 30-month anniversary of the closing date (the “Milestone Period”). On each monthly anniversary of the closing date during the Milestone Period (beginning on the 13-month anniversary of the closing date), Sammartino shall accrue $278 worth of Company SVS (a “Monthly Milestone Accrual”). On the 18-month, 24-month and 30-month anniversary of the closing date (and provided a competitor has not opened a competing dispensary within a certain radius of the Company’s dispensary in Tyngsborough, Massachusetts), Sammartino is entitled to be issued Company SVS in an amount equal to $1,667 divided by a volume weighted average reference share price. As of December 31, 2022, the aggregate contingent consideration liability was $4,793, of which $3,398 was included as a short-term contingent consideration liability and $1,395 was included in long-term contingent consideration liability.
In March 2023, the 18-month anniversary of the closing date occurred without a competitor opening a competing dispensary within a certain radius of the Company’s dispensary in Tyngsborough, Massachusetts. Consequently, at March 31, 2023, $1,667 of Monthly Milestone Accrual was classified as other current liabilities while the remaining liability of $3,109 was included in short-term contingent consideration liability.
As discussed in greater detail in Note 16 - Commitments and Contingencies, on February 28, 2023, the Company informed Sammartino that Sammartino had breached several provisions of the Merger and Membership Interest Purchase Agreement between the Company, Sammartino and certain other parties thereto (as amended, the “MIPA”) and pursuant
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JUSHI HOLDINGS INC.
Notes to the Unaudited Condensed Consolidated Financial Statements
(Amounts Expressed in Thousands of United States Dollars, Unless Otherwise Stated)
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to the terms of the MIPA the Company had elected to offset these damages against (among other things) all present and future Monthly Milestone Accruals.

Purchase Price Allocations for 2022 Business Combinations
The purchase price accounting in connection with the acquisitions of “The Apothecarium” in Las Vegas, Nevada (“Apothecarium”) and NuLeaf Inc., NuLeaf CLV Inc. and their subsidiaries (collectively, “NuLeaf”) in March 2022 and April 2022, respectively, has been finalized as of March 31, 2023. There were no material measurement period adjustments during the three months ended March 31, 2023.
Business Combinations Acquisition Results and Unaudited Supplemental Pro Forma Financial Information
The following table summarizes consolidated pro forma revenue and consolidated pro forma net income (loss) as if the business combinations had occurred on January 1, 2022:
Three Months Ended March 31, 2022
Revenue, net$71,160 
Net loss$(22,138)
These unaudited pro forma financial results do not purport to be indicative of the actual results that would have been achieved by the combined companies for the period indicated, or of the results that may be achieved by the combined companies in the future. These amounts have been calculated using actual results and adding pre-acquisition results, after adjusting for: acquisition costs, additional depreciation and amortization from acquired property, plant and equipment and intangible assets, as well as adjustments for incremental interest expense relating to consideration paid, and changes to conform to the Company’s accounting policies.
The results of the 2022 acquisitions were included in the Company’s results since their respective acquisition dates. For the three months ended March 31, 2022, the Apothecarium acquisition contributed revenues of $556 and net income of $55, to the Company’s consolidated results.
 6. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
The components of accrued expenses and other current liabilities are as follows:
March 31, 2023 (unaudited)December 31, 2022
Goods received not invoiced$7,318 $11,620 
Accrued employee related expenses and liabilities5,671 6,030 
Accrued capital expenditures5,113 5,603 
Contingent consideration liabilities (1)
3,109 3,398 
Operating lease obligations2,887 2,652 
Accrued interest 2,417 2,388 
Accrued sales and excise taxes1,740 1,931 
Deferred revenue (loyalty program)1,600 1,870 
Accrued professional and management fees1,342 1,481 
Other accrued expenses and current liabilities7,792 9,356 
Total$38,989 $46,329 
(1)Refer to Note 5 - Acquisitions for more information.
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JUSHI HOLDINGS INC.
Notes to the Unaudited Condensed Consolidated Financial Statements
(Amounts Expressed in Thousands of United States Dollars, Unless Otherwise Stated)
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 7. DEBT
The components of the Company’s debt are as follows:
Effective Interest RateMaturity DateMarch 31, 2023December 31, 2022
Principal amounts:
Second Lien Notes15%December 2026$73,933 $73,182 
Acquisition Facility15%December 202465,000 65,000 
Acquisition-related promissory notes payable
8% - 18%
August 2024 - April 2027
57,216 57,216 
Other Debt (1)
7% - 9%
March 2022 - July 2027
12,860 10,960 
Total debt - principal amounts$209,009 $206,358 
Less: debt issuance costs and original issue discounts(15,668)(17,096)
Total debt - carrying amounts$193,341 $189,262 
Debt - current portion$11,734 $8,704 
Debt - non-current portion$181,607 $180,558 
(1) Includes Jushi Europe debt. Refer to Note 15 - Related Party Transactions for more information.
Second Lien Notes
In March 2023, the Company and one of its wholly subsidiary, JGMT, LLC, and the Company’s Chief Executive Officer and Chairman of the Board of Directors (“CEO”) entered into an amendment to the existing employment agreement (the "Amendment") pursuant to which the CEO agreed to receive the $750 annual cash bonus that would otherwise have been paid to him in the following alternative form: (i) a lump sum cash payment in the amount of $250, which was paid on March 15, 2023, (ii) $750 aggregate principal amount of 12% second lien notes (“Second Lien Notes”) due December 7, 2026, which was issued on March 15, 2023, and (iii) fully-detached warrants to purchase up to approximately $375 worth of the Company’s SVS (“Warrants”), with such Warrants to be priced and issued as soon as practicable in accordance with US and Canadian securities laws. The Warrants, when issued, will have an exercise price per subordinate voting share equal to the greater of: (a) a twenty-five percent (25%) premium to the volume-weighted average price per share of the Company’s subordinate voting shares on the Canadian Securities Exchange (converted into U.S. Dollars at an exchange rate determined by the Company in good faith) over the trailing ten (10) trading day period prior to the date the Warrants are issued, and (b) the fair market value of the Company’s subordinate voting shares on the Canadian Securities Exchange (converted into U.S. Dollars at an exchange rate determined by the Company in good faith) on the date the Warrants are issued.
Other Debt
Arlington Facility
In November 2021, the Company closed on the purchase of a property in Arlington, Virginia, for $7,000. On December 28, 2021, the Company entered into a $6,900 credit facility (the “Arlington Facility”) with a bank to refinance the purchase. As of December 31, 2022, the Company had drawn down $5,000, and the remaining $1,900 was drawn down in January 2023. The Arlington Facility bears a fixed interest rate of 5.875% per annum payable monthly and will mature on January 1, 2027.
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JUSHI HOLDINGS INC.
Notes to the Unaudited Condensed Consolidated Financial Statements
(Amounts Expressed in Thousands of United States Dollars, Unless Otherwise Stated)
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Financial covenants
Acquisition Facility
The Senior Secured Credit Facility (the “Acquisition Facility”) contains certain financial and other covenants with which the Company is required to comply. As of March 31, 2023, the Company was in compliance with its financial covenants related to minimum (i) unrestricted cash and cash equivalents balance requirement and (ii) minimum quarterly revenue requirement.
Other Debt
The Arlington Facility and the $2,800 credit facility the Company entered into in July 2022 with a bank to fund the construction of a dispensary in Dickson City, Pennsylvania (the “Dickson Facility”) contain certain financial and other covenants with which the Company is required to comply. As of March 31, 2023, the Company was in compliance with all financial covenants contained in these two facilities.
Annual Maturities
As of March 31, 2023, aggregate future contractual maturities of the Company’s debt are as follows:
Remainder of the year2024202520262027Total
Second Lien Notes$ $ $ $73,933 $ $73,933 
Acquisition Facility4,875 60,125    65,000 
Acquisition-related promissory notes payable3,448 22,385 1,970 6,971 22,442 57,216 
Other debt (1)
3,407 165 178 189 8,921 12,860 
Total$11,730 $82,675 $2,148 $81,093 $31,363 $209,009 
(1)The other debt amounts due for the remainder of the year include the Jushi Europe debt, which became due in 2022 and is not expected to be settled and/or repaid until the completion of the liquidation of Jushi Europe. Refer to Note 15 - Related Party Transactions for additional information.

Interest Expense
Interest expense, net is comprised of the following:
Three Months Ended March 31,
20232022
Interest expense
Interest and accretion - 10% Senior Notes
$ $5,398 
Interest and accretion - Second Lien Notes2,344  
Interest and accretion - Finance lease liabilities2,349 2,901 
Interest and accretion - Promissory notes1,536 737 
Interest and accretion - Acquisition Facility2,296 1,360 
Interest and accretion - Other debt185 479 
Capitalized interest(188)(744)
Total interest expense$8,522 $10,131 
Interest income(2)(15)
Total interest expense, net$8,520 $10,116 

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JUSHI HOLDINGS INC.
Notes to the Unaudited Condensed Consolidated Financial Statements
(Amounts Expressed in Thousands of United States Dollars, Unless Otherwise Stated)
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 8. LEASES
The Company leases certain business facilities for corporate, retail and cultivation operations from third parties under lease agreements that specify minimum rentals. In addition, the Company leases certain equipment for use in cultivation and extraction activities. The Company determines whether a contract is or contains a lease at the inception of the contract. The expiry dates of the leases, including reasonably certain estimated renewal periods, are between 2023 and 2052. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.
The following table provides the components of lease cost recognized in the consolidated statements of operations and comprehensive income (loss) for the periods presented.
Three Months Ended March 31,
20232022
Finance lease cost:
   Amortization of lease assets$1,590 $1,143 
   Interest on lease liabilities2,349 2,901 
Total finance lease cost$3,939 $4,044 
Operating lease cost733 886 
Variable lease cost66 93 
Total lease cost$4,738 $5,023 
Operating lease assets were $15,225 and $16,244 as of March 31, 2023 and December 31, 2022, respectively, which are included in other non-current assets in the consolidated balance sheets. Other information related to operating and finance leases as of the balance sheet dates presented are as follows:
March 31, 2023December 31, 2022
(unaudited)
Finance LeasesOperating LeasesFinance LeasesOperating Leases
Weighted average discount rate11.50 %11.38 %11.23 %11.51 %
Weighted average remaining lease term (in years)20.913.122.714.1
The maturities of the contractual undiscounted lease liabilities as of March 31, 2023 are as follows:
Finance LeasesOperating Leases
Remainder of year$9,575 $1,943 
202413,285 2,913 
202513,213 2,734 
202613,207 2,499 
202712,851 2,371 
Thereafter272,442 26,583 
$334,573 $39,043 
Less: Imputed interest(222,072)(20,567)
Total present value of minimum lease payments$112,501 $18,476 
Lease liabilities - current portion$10,293 $2,887 
Lease liabilities - non-current$102,208 $15,589 
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JUSHI HOLDINGS INC.
Notes to the Unaudited Condensed Consolidated Financial Statements
(Amounts Expressed in Thousands of United States Dollars, Unless Otherwise Stated)
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 9. DERIVATIVE LIABILITIES
The following table summarizes the change in the Company’s derivative liabilities for the three months ended March 31, 2023.
Total Derivative Liabilities (1)
Carrying amounts as of January 1, 2023$14,134 
Fair value changes(8,030)
Carrying amounts as of March 31, 2023$6,104 
(1)Refer to Note 10 - Equity for the change in number of warrants during the three months ended March 31, 2023.
The Company’s derivative liabilities are primarily comprised of derivative warrants (“Derivative Warrants”). These are warrants to purchase SVS of the Company which were issued in connection with: (i) the 10% senior secured notes (the “Senior Notes”), and have an expiration date of December 23, 2024 and an exercise price of $1.25; and (ii) the Second Lien Notes and the Acquisition Facility second amendment, and have an expiration date of December 7, 2026 and an exercise price of $2.086. The Derivative Warrants may be net share settled. As of March 31, 2023 and December 31, 2022, there were 55,375,202 Derivative Warrants outstanding.
These Derivative Warrants were considered derivative financial liabilities measured at fair value with all gains or losses recognized in profit or loss as the settlement amount for the Derivative Warrants may be adjusted during certain periods for variables that are not inputs to standard pricing models for forward or option equity contracts, i.e., the “fixed for fixed” criteria under ASC 815-40. The estimated fair value of the Derivative Warrants is measured at the end of each reporting period and an adjustment is reflected in fair value changes in derivatives in the consolidated statements of operations and comprehensive income (loss). These are Level 3 recurring fair value measurements. The estimated fair value of the Derivative Warrants was determined using the Black-Scholes model with stock price based on the OTCQX closing price of the Derivative Warrants issue date as of March 31, 2023 and December 31, 2022. The assumptions used in the fair value calculations as of the balance sheet dates presented include the following:
March 31, 2023 (unaudited)December 31, 2022
Stock price$0.52$0.76
Risk-free annual interest rate
3.63% - 4.22%
3.99% - 4.11%
Range of estimated possible exercise price
$1.25 - $2.086
$1.25 - $2.086
Volatility79%79%
Remaining life
1.73 years - 3.69 years
1.98 years - 3.96 years
Forfeiture rate0%0%
Expected annual dividend yield0%0%
Volatility was estimated by using a weighting of the Company’s historical volatility and the average historical volatility of comparable companies from a representative peer group of publicly traded cannabis companies. The risk-free interest rate for the expected life of the Derivative Warrants was based on the yield available on government benchmark bonds with an approximate equivalent remaining term. The expected life is based on the contractual term. If any of the assumptions used in the calculation were to increase or decrease, this could result in a material or significant increase or decrease in the estimated fair value of the derivative liability. For example, the following table illustrates an increase or decrease in certain significant assumptions as of the balance sheet dates:
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JUSHI HOLDINGS INC.
Notes to the Unaudited Condensed Consolidated Financial Statements
(Amounts Expressed in Thousands of United States Dollars, Unless Otherwise Stated)
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As of March 31, 2023As of December 31, 2022
(unaudited)
InputEffect of 10% IncreaseEffect of 10% DecreaseInputEffect of 10% IncreaseEffect of 10% Decrease
Stock price$0.52$1,407 $(1,051)$0.76$2,529 $(2,396)
Volatility79 %$1,511 $(1,220)79 %$2,070 $(2,121)
 10. EQUITY
Authorized, Issued and Outstanding
The authorized share capital of the Company consists of an unlimited number of SVS, Multiple Voting Shares, Super Voting Shares, and Preferred Shares. As of March 31, 2023, the Company had 196,633,371 SVS issued and outstanding and no Multiple Voting Shares, Super Voting Shares or Preferred Shares issued and outstanding.
Warrants
Each warrant entitles the holder to purchase one SVS. Certain warrants may be net share settled. The following table summarizes the status of warrants and related transactions:
Non-Derivative (Equity) Warrants
Derivative Liabilities Warrants (1)
Total Number of WarrantsWeighted - Average Exercise Price
Balance as of January 1, 2023
30,673,63555,375,20286,048,837$1.40 
Cancelled(100,000) (100,000)$1.47 
Balance as of March 31, 2023
30,573,63555,375,20285,948,837$1.40 
Exercisable as of March 31, 2023
28,348,63555,375,20283,723,837$1.38 
(1) Refer to Note 9 - Derivative Liabilities for additional information.
Share-based payment award plans
Plan summary and description
Under the Company’s 2019 Equity Incentive Plan, as amended, (the “2019 Plan”), non-transferable options to purchase SVS and restricted SVS of the Company may be issued to directors, officers, employees, or consultants of the Company. The 2019 Plan authorizes the issuance of up to 15% (plus an additional 2% inducements for hiring employees and senior management) of the number of outstanding shares of common stock (of all classes) of the Company (the “Share Reserve”). Incentive stock options are limited to the Share Reserve, and the maximum number of incentive awards available for issuance under the 2019 Plan, including additional awards available for certain new hires, was 4,031,555 as of March 31, 2023.

Stock Options
The stock options issued by the Company are options to purchase SVS of the Company. All stock options issued have been issued to directors and employees under the Company’s 2019 Plan. Such options generally expire in ten years from the date of grant and generally vest ratably over three years from the grant date. The options generally may be net share settled. The following table summarizes the status of stock options and related transactions:
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JUSHI HOLDINGS INC.
Notes to the Unaudited Condensed Consolidated Financial Statements
(Amounts Expressed in Thousands of United States Dollars, Unless Otherwise Stated)
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Number of Stock OptionsWeighted-Average Per Share Exercise Price
Issued and Outstanding as of January 1, 202330,752,259 $2.58 
Granted1,027,500 $0.60 
Forfeited/expired(3,181,340)$2.62 
Issued and Outstanding as of March 31, 202328,598,419 $2.50 
Exercisable as of March 31, 202314,247,252 $2.37 

The fair value of the stock options granted was determined using the Black-Scholes option-pricing model. The following assumptions were used for the calculation at date of grant:
Three Months Ended March 31,
20232022
Weighted average stock price$0.60$4.20
Weighted average expected stock price volatility77.4%72.8%
Expected annual dividend yield0%0%
Weighted average expected life6.2 years6.1 years
Weighted average risk-free annual interest rate3.7%1.9%
Weighted average grant date fair value$0.42$2.51

Restricted Stock

The Company grants restricted SVS to independent directors, management, former owners of acquired businesses or assets, and to consultants and other employees. The restricted SVS are included in the issued and outstanding SVS, and the fair value of the restricted stock granted was estimated based on the SVS price at grant date. The following table summarizes the status of restricted stock and related transactions:
Number of Restricted Subordinate Voting Shares
Unvested restricted stock as of January 1, 20231,156,319
Cancelled(53,001)
Vested and Released(5,952)
Unvested restricted stock as of March 31, 20231,097,366
Generally, restricted stock awards will vest either one-third on each anniversary of service from the vesting start date or will be fully vested on the completion of one year of full service from the vesting start date, depending on the award.
Share-based compensation cost

The components of share-based compensation expense are as follows:
Three Months Ended March 31,
20232022
Stock options$1,596 $5,845 
Restricted stock200 832 
Warrants515 287 
Total share-based compensation expense$2,311 $6,964 
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JUSHI HOLDINGS INC.
Notes to the Unaudited Condensed Consolidated Financial Statements
(Amounts Expressed in Thousands of United States Dollars, Unless Otherwise Stated)
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As of March 31, 2023, the Company had $12,167 of unrecognized share-based compensation cost related to unvested stock options, restricted stock and warrants, which is expected to be recognized as share-based compensation cost over a weighted average period of 1.5 years.
 11. EARNINGS (LOSS) PER SHARE
The reconciliations of the net income (loss) and the weighted average number of shares used in the computations of basic and diluted earnings (loss) per share attributable to Jushi shareholders are as follows:
Three Months Ended March 31,
20232022
Numerator:
Net loss and comprehensive loss attributable to Jushi shareholders$(12,440)$(19,757)
Dilutive effect of net income from derivative warrants liability (14,309)
Net loss and comprehensive loss attributable to Jushi shareholders - diluted$(12,440)$(34,066)
Denominator:
Weighted-average shares of common stock - basic194,050,835 183,226,027 
Dilutive effect of derivative warrants 24,612,879 
Weighted-average shares of common stock - diluted194,050,835 207,838,906 
Net loss per common share attributable to Jushi:
Basic$(0.06)$(0.11)
Diluted$(0.06)$(0.16)
The following table summarizes weighted average instruments that may, in the future, have a dilutive effect on earnings (loss) per share, but were excluded from consideration in the computation of diluted net loss per share for the three months ended March 31, 2023 and 2022, because the impact of including them would have been anti-dilutive:
March 31,
20232022
Stock options28,615,308 20,615,601 
Warrants (derivative liabilities and equity)85,989,948 29,472,725 
Unvested restricted stock awards1,120,815 2,636,282 
Convertible promissory notes  910,000 
115,726,071 53,634,608 
 12. REVENUE
The Company has three revenue streams: (i) retail, (ii) wholesale and (ii) other. The Company’s retail revenues are comprised of cannabis operations for medical and adult-use dispensaries. The Company’s wholesale revenues are comprised of cannabis cultivation, processing, production and distribution of cannabis for medical and adult-use. The Company’s other operations primarily include the Company’s hemp/cannabidiol (“CBD”) retail operations. Any intercompany revenue and any costs between entities are eliminated to arrive at consolidated totals.
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JUSHI HOLDINGS INC.
Notes to the Unaudited Condensed Consolidated Financial Statements
(Amounts Expressed in Thousands of United States Dollars, Unless Otherwise Stated)
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The following table summarizes the Company’s revenue from external customers, disaggregated by revenue stream:
Three Months Ended March 31,
20232022
Retail$62,311 $57,955 
Wholesale7,562 3,848 
Other 85 
Total revenue, net$69,873 $61,888 
 13. OPERATING EXPENSES
The major components of operating expenses are as follows:
Three Months Ended March 31,
20232022
Salaries, wages and employee related expenses$16,804 $17,336 
Share-based compensation expense2,311 6,964 
Rent and related expenses2,893 3,089 
Depreciation and amortization expense2,663 2,256 
Professional fees and legal expenses2,325 2,706 
Other expenses (1)
5,456