Quarterly report [Sections 13 or 15(d)]

DEBT

v3.25.1
DEBT
 3 Months Ended
Mar. 31, 2025
Debt Disclosure [Abstract]  
DEBT
 8. DEBT
The components of the Company’s debt are as follows:
Effective Interest Rate Maturity Date March 31, 2025 (unaudited) December 31, 2024
Principal amounts:
Second Lien Notes 15% December 2026 $ 85,334  $ 80,131 
Term Loans
 26%
September 2026 (1)
48,500  48,500 
Acquisition-related promissory notes payable
8% - 12%
October 2025 - April 2027
 28,512  22,289 
Mortgage loans
6% - 10%
January 2027 - April 2028
 28,903  29,054 
Total debt subject to scheduled repayments 191,249  179,974 
Promissory notes payable to Sammartino (2)
10%
September 2024 - September 2026
 21,500  21,500 
Total debt 212,749  201,474 
Less: debt issuance costs and original issue discounts (15,849) (15,267)
Total debt, net $ 196,900  $ 186,207 
Debt, net - current portion $ 3,848  $ 2,758 
Debt, net - non-current portion $ 193,052  $ 183,449 
(1)Matures the earlier of (a) January 31, 2027 and (b) the date that is 91 days prior to the final maturity of the Second Lien Notes. The Second Lien Notes are set to mature December 2026.
(2)This amount is related to the promissory notes issued to Sammartino in connection with the acquisition of Nature's Remedy in September 2021. The Company currently has no obligation to pay the principal and interest. See further discussion of the Sammartino Matter in Note 16 - Commitments and Contingencies for more information.
Second Lien Notes
In February 2025, the Company issued US$3,719 principal amount of 12% second lien notes due 2026 (“Second Lien Notes”) and C$2,000 principal amount of Second Lien Notes. The issuances of the Second Lien Notes were also accompanied by 8,010,626 five-year detached warrants to purchase the Company’s subordinate voting shares, no par value per share, in a private placement at a strike price of US$0.48 per subordinate voting share.
An entity affiliated with James Cacioppo, the Company’s Chief Executive Officer, purchased US$3,719 principal amount of Second Lien Notes for a purchase price of US$3,347, and received 5,810,938 warrants. Denis Arsenault, a significant equity holder of the Company, purchased C$2,000 of Second Lien Notes for a purchase price of C$1,800, and received 2,199,688 warrants.

Term Loans
In July 2024, a syndicate of lenders provided $48,500 in secured term loans (“Term Loans”) to the Company. The Term Loans were issued with a 2% original issue discount, bear interest at a rate of 12.25% per annum and mature the earlier of (a) January 31, 2027 and (b) the date that is 91 days prior to the final maturity of the Second Lien Notes. Beginning August 1, 2025, the Company will commence quarterly principal payments of $1,213 on the first business day of each calendar quarter with a final payment of $42,438 at maturity date, plus a 4% exit premium on such amounts.
Acquisition-related promissory notes payable
Statewide
In February 2025, in connection with an Asset Purchase Agreement with Statewide Property Holdings Ohio, LLC (“Statewide”), the Company issued a promissory note in an aggregate total principal amount of $2,161 with a stated interest rate of 9% per annum and which matures on or before the one-year anniversary of the third closing date (for the license and inventory assets in the Warren, Ohio dispensary). The promissory note provides for full principal and interest payments on the maturity date.
RJK
In February 2025, in connection with an Asset Purchase Agreement with RJK Holdings of Ohio, LLC (“RJK”), the Company issued a promissory note in an aggregate total principal amount of $4,063 with a stated interest rate of 9% per annum and which matures on or before the one-year anniversary of the third closing date (for the license and inventory assets at the Mansfield, Ohio dispensary). The promissory note provides for full principal and interest payments on the maturity date.
Mortgage Loans
Arlington Mortgage
In December 2021, the Company entered into a $6,900 mortgage loan agreement (the “Arlington Mortgage”), which is principally secured by the Company’s retail property in Arlington, Virginia. The Arlington Mortgage bears a fixed interest rate of 5.875% per annum, payable monthly, and will mature in January 2027.
Dickson City Mortgage
In July 2022, the Company entered into a $2,800 mortgage loan agreement (the “Dickson City Mortgage”), which is principally secured by the Company’s retail property in Dickson City, Pennsylvania. The Dickson City Mortgage matures in July 2027 and bears interest at a variable rate equal to prime rate plus 2%. The interest rate as of March 31, 2025 was 9.5%.
Manassas Mortgage
In April 2023, the Company entered into a $20,000 mortgage loan agreement (the “Manassas Mortgage”), which is principally secured by the Company’s cultivation and manufacturing facility located in Manassas, Virginia. The Manassas Mortgage is payable monthly and will mature in April 2028. The interest rate is variable and determined based on the 30-day average secured overnight financing rate plus 3.55%, with a floor rate of not less than 8.25%. The interest rate as of March 31, 2025 was 8.25%.
Financial Covenants
Term Loans
The Term Loans include a financial covenant that requires the Company to maintain a minimum unrestricted cash balance as of the last day of each calendar month during the term of the Term Loans, with an initial minimum cash balance of $8,000, subject to certain “step-ups” for succeeding periods. As of March 31, 2025, the Company was in compliance with this financial covenant.
Mortgage loans
The Company’s three mortgage loan agreements contain certain financial and other covenants with which the Company is required to comply. As of March 31, 2025, the Company was in compliance with all financial covenants contained in each of the mortgage loan agreements.
Annual Maturities
As of March 31, 2025, aggregate future scheduled repayments of the Company’s debt were as follows:
Remainder of the year 2026 2027 2028 Total
Second Lien Notes $ —  $ 85,334  $ —  $ —  $ 85,334 
Acquisition-related promissory notes payable 175  6,223  22,114  —  28,512 
Mortgage loans 506  690  9,389  18,318  28,903 
Term Loans
 2,425  46,075  —  —  48,500 
Total debt subject to scheduled repayments $ 3,106  $ 138,322  $ 31,503  $ 18,318  $ 191,249 
The above table excludes the maturities of the Company’s promissory notes payable to Sammartino, as the repayment of these notes, if any, would arise in the context of a non-appealable final judgment by a court. Refer to Note 16 - Commitments and Contingencies for more information. Specifically, the promissory notes that were payable to Sammartino are as follows: $16,500 in 2024 and $5,000 in 2026. However, these balances are classified as long-term debt since the Company does not expect to repay these amounts within the next 12 months.
Interest Expense
Interest expense, net is comprised of the following:
Three Months Ended March 31,
2025 2024
Interest expense
Interest and accretion - Second Lien Notes $ 3,103  $ 2,748 
Interest and accretion - Term Loans
 3,190  — 
Interest and accretion - Finance lease liabilities 2,475  2,668 
Interest and accretion - Promissory notes
 814  1,374 
Interest and accretion - Acquisition Facility —  2,152 
Interest and accretion - Mortgage loans and other financing activities 602  706 
Capitalized interest (62) — 
Total interest expense 10,122  9,648 
Interest income (122) (104)
Total interest expense, net $ 10,000  $ 9,544