Quarterly report pursuant to Section 13 or 15(d)

DEBT

v3.24.3
DEBT
 9 Months Ended
Sep. 30, 2024
Debt Disclosure [Abstract]  
DEBT
 8. DEBT
The components of the Company’s debt are as follows:
Effective Interest Rate Maturity Date September 30, 2024 (unaudited) December 31, 2023
Principal amounts:
Second Lien Notes 15% December 2026 $ 81,253  $ 75,497 
Term Loans
 26%
September 2026 (2)
48,500  — 
Acquisition Facility n/a n/a —  60,125 
Acquisition-related promissory notes payable
8% - 12%
April 2027
 22,114  35,716 
Mortgage loans
6% - 11%
January 2027 - April 2028
 29,192  29,456 
Total debt subject to scheduled repayments 181,059  200,794 
Promissory notes payable to Sammartino (1)
10%
September 2024 - September 2026
 21,500  21,500 
Jushi Europe debt
n/a
n/a
 —  3,298 
Total debt 202,559  225,592 
Less: debt issuance costs and original issue discounts (17,068) (13,037)
Total debt, net $ 185,491  $ 212,555 
Debt, net - current portion $ 1,781  $ 86,514 
Debt, net - non-current portion $ 183,710  $ 126,041 
(1)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.
(2)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.
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 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.
Additionally, the Company issued 19,400,000 five-year warrants to purchase SVS of the Company (the “Warrants”) at a strike price of $1.00 per SVS. The Warrants were issued by the Company in connection with, but were detached from, the Term Loans. Refer to Note 9 - Derivative Liabilities for additional information.
An entity affiliated with James Cacioppo, the Company’s Chief Executive Officer, Chairman and Founder, is a Term Loan lender in the principal amount of $9,000, and received 3,600,000 Warrants. Denis Arsenault, a Founder and significant equity holder of the Company, participated as a Term Loan lender in the principal amount of $7,000, and received 2,800,000 Warrants.
Acquisition Facility
The Company’s senior secured credit facility from Roxbury, LP, (the “Acquisition Facility”) was repaid in full in July 2024 with the net proceeds from the Term Loans in the principal amount of $47,530 and the remaining amount from cash on hand, resulting in a loss on extinguishment of $900, which was recorded in other income (expense), net in the consolidated statements of operations and comprehensive income (loss) during the three and nine months ended September 30, 2024.

Promissory Note
In July 2024, the Company extinguished one of its acquisition-related promissory notes which had a principal balance of $3,750 and a maturity date of August 11, 2024. The promissory note was redeemed at 96% of the principal amount and 50% of accrued and unpaid interest, resulting in a gain on extinguishment of $140, which is recorded in other income (expense), net in the consolidated statements of operations and comprehensive income (loss) during the three and nine months ended September 30, 2024.
Jushi Europe
On February 16, 2022, Jushi Europe filed a notice of over-indebtedness with the Swiss courts, and on May 19, 2022, the Swiss courts declared Jushi Europe’s bankruptcy. As a result, the Company lost control of Jushi Europe’s assets and liabilities since they are subject to oversight by the Geneva, Switzerland bankruptcy office. During the second quarter of 2024, Jushi Europe was deconsolidated and its respective assets and liabilities were derecognized from the Company’s consolidated financial statements, as the Company determined that it no longer has any obligation in relation to this subsidiary. Upon deconsolidation, the Company has no retained interest in Jushi Europe. As a result of these actions, the Company recognized a gain of $1,896 in other income (expense), net in its consolidated statements of operations and comprehensive income (loss).

Second Lien Notes
On January 24, 2024, the Company entered into two Note Exchange Agreements (the “Note Exchange Agreements”) with holders of approximately $9,850 of the Company’s unsecured debt (the “Existing Notes”). Upon closing of the transactions contemplated in the Note Exchange Agreements (the “Debt Exchange”) on February 6, 2024, the holders of the Existing Notes delivered the Existing Notes to the Company for cancellation, and the Company: (1) issued to certain direct and beneficial holders of the Existing Notes an aggregate of $4,750 principal amount of Second Lien Notes; (2) issued to certain direct and beneficial holders of the Existing Notes fully-detached warrants to purchase an aggregate of 1,800,000 of the Company’s SVS, with each warrant having an exercise price of $1.00 per SVS and an expiration of December 7, 2026; and (3) paid to the direct holders of the Existing Notes an aggregate of $2,750 in cash. Refer to Note 10 - Equity for more information.
The Debt Exchange was accounted for as a debt extinguishment, and resulted in the Company recording a non-cash gain on debt extinguishment of $399, which represents the difference between the reacquisition price of the Existing Notes and the net carrying amount of the Existing Notes prior to redemption. This amount was recorded in other income (expense), net in the consolidated statements of operations and comprehensive income (loss) during the first quarter of 2024.

In September 2024, the Company, JMGT, LLC, and the Company’s CEO entered into an amendment to his existing employment agreement (the “Fourth Amendment”) pursuant to which the CEO received the $950 annual cash bonus for the year 2024 in the following alternative form: (i) a lump sum cash payment of $238, which was paid in October 2024, (ii) $1,382 aggregate principal amount of Second Lien Notes due December 7, 2026 (the “Second Lien Notes”), which was issued in September 2024, and (iii) stock options granted under the 2019 Plan, expiring five years from the date of grant to purchase up to 1,062,732 of the Company’s SVS at an exercise price of $0.65.
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 September 30, 2024 was 10.5%.
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 September 30, 2024 was 8.891%.
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 September 30, 2024, 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 September 30, 2024, the Company was in compliance with all financial covenants contained in each of the mortgage loan agreements.
Annual Maturities
As of September 30, 2024, aggregate future scheduled repayments of the Company’s debt were as follows:
Remainder of the year 2025 2026 2027 2028 Total
Second Lien Notes $ —  $ —  $ 81,253  $ —  $ —  $ 81,253 
Acquisition-related promissory notes payable —  —  —  22,114  —  22,114 
Mortgage loans 160  647  658  9,440  18,287  29,192 
Term Loans
 —  2,425  46,075  —  —  48,500 
Total debt subject to scheduled repayments $ 160  $ 3,072  $ 127,986  $ 31,554  $ 18,287  $ 181,059 
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 were classified as long-term debt as of September 30, 2024 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 September 30, Nine Months Ended September 30,
2024 2023 2024 2023
Interest expense
Interest and accretion - Second Lien Notes $ 2,838  $ 2,640  $ 8,513  $ 7,568 
Interest and accretion - Term Loans
 1,832  —  1,832  — 
Interest and accretion - Finance lease liabilities 2,478  2,335  7,550  7,282 
Interest and accretion - Promissory notes
 1,043  1,547  3,699  4,625 
Interest and accretion - Acquisition Facility 658  2,298  4,845  7,265 
Interest and accretion - Mortgage loans and other financing activities 661  612  2,037  1,422 
Capitalized interest —  (54) —  (464)
Total interest expense 9,510  9,378  28,476  27,698 
Interest income (128) (33) (479) (43)
Total interest expense, net $ 9,382  $ 9,345  $ 27,997  $ 27,655