Annual report pursuant to Section 13 and 15(d)

ACQUISITIONS (Tables)

v3.23.1
ACQUISITIONS (Tables)
 12 Months Ended
Dec. 31, 2022
Business Combination and Asset Acquisition [Abstract]  
Schedule of Business Acquisitions
The Company had the following acquisitions during the year ended December 31, 2022: (i) Apothecarium; and (ii) NuLeaf (each as defined below). The following table summarizes the preliminary purchase price allocations as of their respective acquisition dates:
NuLeaf Apothecarium Total
Assets Acquired:
Cash and cash equivalents $ 618  $ 25  $ 643 
Prepaids and other assets 278  32  310 
Accounts receivable, net 39  —  39 
Inventory 5,334  699  6,033 
Indemnification assets (1)
5,734  —  5,734 
Property, plant and equipment 11,880  498  12,378 
Right-of-use assets - finance lease 4,598  2,333  6,931 
Right-of-use assets - operating lease 1,067  —  1,067 
Intangible assets (2)
14,097  8,600  22,697 
Deposits 110  301  411 
Total assets acquired $ 43,755  $ 12,488  $ 56,243 
Liabilities Assumed:
Accounts payable and accrued liabilities $ 584  $ 497  $ 1,081 
Finance lease obligations 5,054  2,323  7,377 
Operating lease obligations 1,067  —  1,067 
Deferred tax liabilities 5,518  2,283  7,801 
Uncertain tax positions 5,734  —  5,734 
Total liabilities assumed $ 17,957  $ 5,103  $ 23,060 
Net assets acquired $ 25,798  $ 7,385  $ 33,183 
Goodwill (3)
24,474  7,834  32,308 
Total $ 50,272  $ 15,219  $ 65,491 
Consideration:
Consideration paid in cash, net of working capital adjustments $ 14,918  $ 6,703  $ 21,621 
Consideration payable in cash (customary hold back liability) 932  —  932 
Consideration paid in promissory notes (fair value) 12,860  6,922  19,782 
Consideration paid in shares 13,573  1,594  15,167 
Contingent consideration 7,989  —  7,989 
Fair value of consideration $ 50,272  $ 15,219  $ 65,491 
(1)As part of the NuLeaf acquisition agreement, the sellers contractually agreed to indemnify the Company for certain amounts that may become payable, including for taxes that relate to periods prior to the date of acquisition. Accordingly, the Company recorded indemnification assets and corresponding estimated accrued tax liabilities, at fair value, for a total of $5,734 as of the date of the acquisition. Subsequent changes in the amounts recognized for the indemnification assets may occur in relation to the provision for the corresponding tax liabilities, according to changes in the range of outcomes or the assumptions used to develop the estimates of the liabilities at the time of the acquisition
(2)Included licenses acquired of $10,400 and $8,600 for NuLeaf and Apothecarium, respectively, which have indefinite useful lives. The estimated fair values of the licenses were determined using the multi-period excess earnings method under the income approach based on projections extended to 2036.
(3)The goodwill recognized from the acquisitions is attributable to synergies expected from integrating the acquired businesses into the Company’s existing business. The goodwill acquired is not deductible for tax purposes.
The Company had the following acquisitions during the year ended December 31, 2021: (i) Nature’s Remedy; (ii) OSD; (iii) OhiGrow; and (iv) Grover Beach (each as defined below). The following table summarizes the purchase price allocations as of their respective acquisition dates:
Business Combinations Asset Acquisitions
Nature’s Remedy OSD OhiGrow Grover Beach Total
Assets Acquired:
Cash and cash equivalents $ 3,195  $ 259  $ —  $ —  $ 3,454 
Prepaids 325  53  —  —  378 
Accounts receivable, net 263  —  —  —  263 
Inventory 15,882  184  —  —  16,066 
Indemnification assets (1)
1,322  1,411  —  —  2,733 
Property, plant and equipment 19,470  —  3,165  269  22,904 
Right-of-use assets - finance leases 27,305  —  —  2,050  29,355 
Right-of-use assets - operating leases 1,337  1,859  —  —  3,196 
Intangible assets - license (2)(4)
56,000  2,160  1,817  3,654  63,631 
Intangible assets - tradenames (2)
4,400  —  —  —  4,400 
Intangible assets - customer database (2)
2,100  —  —  —  2,100 
Deposits 20  6  —  19  45 
  Total assets acquired (4)
$ 131,619  $ 5,932  $ 4,982  $ 5,992  $ 148,525 
Liabilities Assumed:
Accounts payable and accrued liabilities $ 7,004  $ 190  $ —  $ —  $ 7,194 
Finance lease obligations 27,052  —  —  2,032  29,084 
Operating lease obligations 1,267  1,859  —  —  3,126 
Deferred tax liabilities (4)
21,462  648  —  —  22,110 
Uncertain tax positions 1,322  1,411  —  —  2,733 
Total liabilities assumed (4)
$ 58,107  $ 4,108  $ —  $ 2,032  $ 64,247 
Net assets acquired (3)(4)
$ 73,512  $ 1,824  $ 4,982  $ 3,960  $ 84,278 
Goodwill (3)(4)
26,086  2,432  —  —  28,518 
Total $ 99,598  $ 4,256  $ 4,982  $ 3,960  $ 112,796 
Consideration:
Consideration paid in cash, as adjusted for working capital adjustments $ 40,360  $ 1,827  $ 4,949  $ 3,592  $ 50,728 
Consideration paid in promissory notes (fair value) 15,345  2,429  —  —  17,774 
Consideration paid in shares 35,670  —  —  368  36,038 
Contingent consideration 8,223  —  —  —  8,223 
Capitalized costs —  —  33  —  33 
  Fair value of consideration $ 99,598  $ 4,256  $ 4,982  $ 3,960  $ 112,796 
(1)     As part of the OSD and Nature’s Remedy acquisition agreements, the sellers contractually agreed to indemnify the Company for certain amounts that may become payable, including for taxes that relate to periods prior to the date of acquisition. Accordingly, the Company recorded indemnification assets and corresponding estimated accrued tax liabilities, at fair value, for a total of $2,733 as of the dates of the acquisitions. Additional subsequent changes in the amounts recognized for the indemnification assets may occur in relation to the provision for the corresponding tax liabilities, according to changes in the range of outcomes or the assumptions used to develop the estimates of the liabilities at the time of the acquisition.
(2)     The licenses acquired have indefinite useful lives. The customer relationships have a useful life of 15 years and the tradenames have a useful life of 5 years.
(3)    The goodwill recognized from the acquisitions is attributable to synergies expected from integrating the acquired businesses into the Company’s existing business. The goodwill acquired is not deductible for tax purposes.
(4) The amounts for the Nature’s Remedy and Total columns reflect the revised amounts in connection with the correction of errors disclosed under the heading “Previously Issued Financial Statement Reclassification” in Note 2 - Basis of Presentation and Summary of Significant Accounting Policies. Specifically, intangible assets - license increased by $10,000, goodwill decreased by $7,092, and deferred tax liabilities increased by $2,908.
The following table summarizes the purchase price allocations for the acquisitions completed during the year ended December 31, 2020, as of their respective acquisition dates:

Business Combinations Asset Acquisitions
PAMS PADS BHILH Agape GSG Santa Barbara Total
Assets Acquired:
Cash and cash equivalents $ 118  $ 971  $ 13  $ —  $ —  $ 1,102 
Prepaid expenses and other current assets 214  5  84  10  —  313 
Accounts receivable 407  —  —  —  —  407 
Inventory 4,251  192  100  —  —  4,543 
Property, plant and equipment 579  1,075  465  —  —  2,119 
Right of use assets - finance leases 15,017  234  466  —  —  15,717 
Right of use assets - operating leases —  310  877  —  —  1,187 
Intangible assets - license(s) (1)
19,189  4,182  8,500  7,881  5,328  45,080 
Intangible assets - patient/customer database (1)
425  —  —  —  —  425 
Deposits 540  15  —  —  —  555 
Total assets $ 40,740  $ 6,984  $ 10,505  $ 7,891  $ 5,328  $ 71,448 
Liabilities Assumed:
Accounts payable, accrued expenses and other current liabilities $ 335  $ 156  $ 585  $ —  $ —  $ 1,076 
Note payable —  —  —  90  —  90 
Finance lease obligations 17,013  230  465  —  —  17,708 
Operating lease obligations —  310  877  —  —  1,187 
Deferred tax liabilities 1,410  —  —  —  —  1,410 
Total liabilities $ 18,758  $ 696  $ 1,927  $ 90  $ —  $ 21,471 
Net assets acquired $ 21,982  $ 6,288  $ 8,578  $ 7,801  $ 5,328  $ 49,977 
Non-controlling interests —  —  (4,661) (1,560) —  (6,221)
Business Combinations Asset Acquisitions
PAMS PADS BHILH Agape GSG Santa Barbara Total
Total net assets acquired net of non-controlling interest $ 21,982  $ 6,288  $ 3,917  $ 6,241  $ 5,328  $ 43,756 
Consideration:
Consideration paid in cash, as adjusted for working capital adjustments (2)
$ 15,054  $ 5,671  $ 2,692  $ 3,050  $ 4,900  $ 31,367 
Capitalized acquisition costs —  —  —  191  428  619 
Fair value of PADS purchase option —  1,992  —  —  —  1,992 
Consideration paid in 10% senior notes (3)
—  —  —  1,476  —  1,476 
Consideration paid in warrants (3)
—  —  —  524  —  524 
Consideration paid in promissory notes (net of discount) 2,658  —  —  —  —  2,658 
Assumption of Beacon Notes and accrued interest —  —  9,555  —  —  9,555 
Net effect of other related transactions —  —  (15,740) —  —  (15,740)
Consideration paid in shares —  —  —  1,000  —  1,000 
Fair value of consideration $ 17,712  $ 7,663  $ (3,493) $ 6,241  $ 5,328  $ 33,451 
Goodwill (4)
$ —  $ 1,375  $ —  $ —  $ —  $ 1,375 
Bargain purchase on business combination (5)
4,270  —  7,410  —  —  11,680 
Total $ 21,982  $ 6,288  $ 3,917  $ 6,241  $ 5,328  $ 43,756 
(1)    The licenses acquired have indefinite useful lives. The patient/customer related intangible assets have estimated useful lives of 0.25 - 5 years.
(2)    Cash paid for acquisitions includes $2,320 that was paid during prior years and was previously included in deferred acquisition costs as of December 31, 2019.
(3)    The consideration for the Agape acquisition included 10% senior notes amounting to $2,000 principal, and related warrants to purchase 633,433 Subordinate Voting Shares with a $1.25 strike price; and 769,231 Subordinate Voting Shares at a closing date market price of $1.30 per share. Refer to “Senior Notes” in Note 12 - Debt and to Note 14 - Derivative Liabilities for additional details on the 10% senior secured notes and warrants.
(4)    The goodwill recognized from the acquisitions is attributable to synergies expected from integrating the acquired businesses into the Company’s existing business. The goodwill acquired is not deductible for tax purposes.
(5)    The bargain purchase gain for BHILH was reduced by asset disposal and other charges of $1,531 to arrive at the total net gain on business combination. The net gains on business combinations are included in other income (expense), net in the consolidated statements of operations and comprehensive income (loss). The asset disposal and other adjustments, were comprised of net write-offs/impairments of $1,681 reflecting the excess of the carrying amounts over the estimated fair values of intangible assets returned to TGS (included as other consideration in the TGS Transaction), offset by other adjustments of $150.
Schedule of Asset Acquisitions The Company had the following acquisitions during the year ended December 31, 2021: (i) Nature’s Remedy; (ii) OSD; (iii) OhiGrow; and (iv) Grover Beach (each as defined below). The following table summarizes the purchase price allocations as of their respective acquisition dates:
Business Combinations Asset Acquisitions
Nature’s Remedy OSD OhiGrow Grover Beach Total
Assets Acquired:
Cash and cash equivalents $ 3,195  $ 259  $ —  $ —  $ 3,454 
Prepaids 325  53  —  —  378 
Accounts receivable, net 263  —  —  —  263 
Inventory 15,882  184  —  —  16,066 
Indemnification assets (1)
1,322  1,411  —  —  2,733 
Property, plant and equipment 19,470  —  3,165  269  22,904 
Right-of-use assets - finance leases 27,305  —  —  2,050  29,355 
Right-of-use assets - operating leases 1,337  1,859  —  —  3,196 
Intangible assets - license (2)(4)
56,000  2,160  1,817  3,654  63,631 
Intangible assets - tradenames (2)
4,400  —  —  —  4,400 
Intangible assets - customer database (2)
2,100  —  —  —  2,100 
Deposits 20  6  —  19  45 
  Total assets acquired (4)
$ 131,619  $ 5,932  $ 4,982  $ 5,992  $ 148,525 
Liabilities Assumed:
Accounts payable and accrued liabilities $ 7,004  $ 190  $ —  $ —  $ 7,194 
Finance lease obligations 27,052  —  —  2,032  29,084 
Operating lease obligations 1,267  1,859  —  —  3,126 
Deferred tax liabilities (4)
21,462  648  —  —  22,110 
Uncertain tax positions 1,322  1,411  —  —  2,733 
Total liabilities assumed (4)
$ 58,107  $ 4,108  $ —  $ 2,032  $ 64,247 
Net assets acquired (3)(4)
$ 73,512  $ 1,824  $ 4,982  $ 3,960  $ 84,278 
Goodwill (3)(4)
26,086  2,432  —  —  28,518 
Total $ 99,598  $ 4,256  $ 4,982  $ 3,960  $ 112,796 
Consideration:
Consideration paid in cash, as adjusted for working capital adjustments $ 40,360  $ 1,827  $ 4,949  $ 3,592  $ 50,728 
Consideration paid in promissory notes (fair value) 15,345  2,429  —  —  17,774 
Consideration paid in shares 35,670  —  —  368  36,038 
Contingent consideration 8,223  —  —  —  8,223 
Capitalized costs —  —  33  —  33 
  Fair value of consideration $ 99,598  $ 4,256  $ 4,982  $ 3,960  $ 112,796 
(1)     As part of the OSD and Nature’s Remedy acquisition agreements, the sellers contractually agreed to indemnify the Company for certain amounts that may become payable, including for taxes that relate to periods prior to the date of acquisition. Accordingly, the Company recorded indemnification assets and corresponding estimated accrued tax liabilities, at fair value, for a total of $2,733 as of the dates of the acquisitions. Additional subsequent changes in the amounts recognized for the indemnification assets may occur in relation to the provision for the corresponding tax liabilities, according to changes in the range of outcomes or the assumptions used to develop the estimates of the liabilities at the time of the acquisition.
(2)     The licenses acquired have indefinite useful lives. The customer relationships have a useful life of 15 years and the tradenames have a useful life of 5 years.
(3)    The goodwill recognized from the acquisitions is attributable to synergies expected from integrating the acquired businesses into the Company’s existing business. The goodwill acquired is not deductible for tax purposes.
(4) The amounts for the Nature’s Remedy and Total columns reflect the revised amounts in connection with the correction of errors disclosed under the heading “Previously Issued Financial Statement Reclassification” in Note 2 - Basis of Presentation and Summary of Significant Accounting Policies. Specifically, intangible assets - license increased by $10,000, goodwill decreased by $7,092, and deferred tax liabilities increased by $2,908.
The following table summarizes the purchase price allocations for the acquisitions completed during the year ended December 31, 2020, as of their respective acquisition dates:

Business Combinations Asset Acquisitions
PAMS PADS BHILH Agape GSG Santa Barbara Total
Assets Acquired:
Cash and cash equivalents $ 118  $ 971  $ 13  $ —  $ —  $ 1,102 
Prepaid expenses and other current assets 214  5  84  10  —  313 
Accounts receivable 407  —  —  —  —  407 
Inventory 4,251  192  100  —  —  4,543 
Property, plant and equipment 579  1,075  465  —  —  2,119 
Right of use assets - finance leases 15,017  234  466  —  —  15,717 
Right of use assets - operating leases —  310  877  —  —  1,187 
Intangible assets - license(s) (1)
19,189  4,182  8,500  7,881  5,328  45,080 
Intangible assets - patient/customer database (1)
425  —  —  —  —  425 
Deposits 540  15  —  —  —  555 
Total assets $ 40,740  $ 6,984  $ 10,505  $ 7,891  $ 5,328  $ 71,448 
Liabilities Assumed:
Accounts payable, accrued expenses and other current liabilities $ 335  $ 156  $ 585  $ —  $ —  $ 1,076 
Note payable —  —  —  90  —  90 
Finance lease obligations 17,013  230  465  —  —  17,708 
Operating lease obligations —  310  877  —  —  1,187 
Deferred tax liabilities 1,410  —  —  —  —  1,410 
Total liabilities $ 18,758  $ 696  $ 1,927  $ 90  $ —  $ 21,471 
Net assets acquired $ 21,982  $ 6,288  $ 8,578  $ 7,801  $ 5,328  $ 49,977 
Non-controlling interests —  —  (4,661) (1,560) —  (6,221)
Business Combinations Asset Acquisitions
PAMS PADS BHILH Agape GSG Santa Barbara Total
Total net assets acquired net of non-controlling interest $ 21,982  $ 6,288  $ 3,917  $ 6,241  $ 5,328  $ 43,756 
Consideration:
Consideration paid in cash, as adjusted for working capital adjustments (2)
$ 15,054  $ 5,671  $ 2,692  $ 3,050  $ 4,900  $ 31,367 
Capitalized acquisition costs —  —  —  191  428  619 
Fair value of PADS purchase option —  1,992  —  —  —  1,992 
Consideration paid in 10% senior notes (3)
—  —  —  1,476  —  1,476 
Consideration paid in warrants (3)
—  —  —  524  —  524 
Consideration paid in promissory notes (net of discount) 2,658  —  —  —  —  2,658 
Assumption of Beacon Notes and accrued interest —  —  9,555  —  —  9,555 
Net effect of other related transactions —  —  (15,740) —  —  (15,740)
Consideration paid in shares —  —  —  1,000  —  1,000 
Fair value of consideration $ 17,712  $ 7,663  $ (3,493) $ 6,241  $ 5,328  $ 33,451 
Goodwill (4)
$ —  $ 1,375  $ —  $ —  $ —  $ 1,375 
Bargain purchase on business combination (5)
4,270  —  7,410  —  —  11,680 
Total $ 21,982  $ 6,288  $ 3,917  $ 6,241  $ 5,328  $ 43,756 
(1)    The licenses acquired have indefinite useful lives. The patient/customer related intangible assets have estimated useful lives of 0.25 - 5 years.
(2)    Cash paid for acquisitions includes $2,320 that was paid during prior years and was previously included in deferred acquisition costs as of December 31, 2019.
(3)    The consideration for the Agape acquisition included 10% senior notes amounting to $2,000 principal, and related warrants to purchase 633,433 Subordinate Voting Shares with a $1.25 strike price; and 769,231 Subordinate Voting Shares at a closing date market price of $1.30 per share. Refer to “Senior Notes” in Note 12 - Debt and to Note 14 - Derivative Liabilities for additional details on the 10% senior secured notes and warrants.
(4)    The goodwill recognized from the acquisitions is attributable to synergies expected from integrating the acquired businesses into the Company’s existing business. The goodwill acquired is not deductible for tax purposes.
(5)    The bargain purchase gain for BHILH was reduced by asset disposal and other charges of $1,531 to arrive at the total net gain on business combination. The net gains on business combinations are included in other income (expense), net in the consolidated statements of operations and comprehensive income (loss). The asset disposal and other adjustments, were comprised of net write-offs/impairments of $1,681 reflecting the excess of the carrying amounts over the estimated fair values of intangible assets returned to TGS (included as other consideration in the TGS Transaction), offset by other adjustments of $150.
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed
The net effect of other related transactions from the TGS Transaction, as reflected in the purchase price allocation table above, was comprised of the following:
Redemption Liability cancelled $ 8,440 
5,000,000 Subordinate Voting Shares of Jushi Holdings, Inc. and warrants with an exercise price of $2.00 to purchase 2,500,000 Subordinate Voting Shares of Jushi Holdings, Inc. returned to Jushi
 7,075 
416,060 common shares of OGI
 1,092 
Payment to Jushi for the OGI options that were liquidated 478 
TGS National fair value of intangibles, net of other items returned and derecognized (1)(2)
(918)
TGS National cash given up (427)
Net effect of other related transactions $ 15,740 
(1)    The difference of $1,748, net of other adjustments of $217, between the carrying amount of the disposed intangibles of $2,666 (refer to Note 8 - Goodwill and Other Intangible Assets) and the fair value above of $918 was a total of $1,531 and is included in net gains on business combinations in the consolidated statements of operations and comprehensive income (loss).
(2)    No goodwill associated with TGS National was written off as a result of this transaction in 2020, since the Company had previously recognized an impairment loss of $8,990 in 2018 related to the total goodwill associated with the original acquisition of TGS National.
Business Acquisition, Pro Forma Information
The following table summarizes unaudited consolidated pro forma revenue and unaudited consolidated pro forma net income (loss) as if the business combinations had occurred at the beginning of the year prior to their actual acquisition for the periods presented:
Year Ended December 31,
2022 2021 2020
Revenue $ 293,947  $ 284,026  $ 149,539 
Net (loss) income $ (197,743) $ 20,681  $ (228,501)