Annual report [Section 13 and 15(d), not S-K Item 405]

LEASES

v3.25.0.1
LEASES
 12 Months Ended
Dec. 31, 2024
Leases [Abstract]  
LEASES
 11. 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. Due to changing demographics and business environment, the Company performed a reassessment of its previously classified real estate finance leases in June 2023 and certain real estate operating leases in September 2023. These reassessments resulted in the removal of certain option renewal periods contained in the leases as the Company is no longer reasonably certain to exercise these option renewal periods. As a result of the June 2023 reassessment, the classification of some leases were changed from finance to operating, resulting in an aggregate decrease in finance lease obligations and related right-of-use (“ROU”) assets of $45,768 and $42,349, respectively, and an aggregate net increase in operating lease obligations and related ROU assets of $8,691 and $5,271, respectively. The impact of the September 2023 reassessment was an aggregate net decrease in operating lease obligations and related ROU assets of $6,084 and $6,084, respectively.
In connection with the change from finance to operating lease, the Company’s depreciation and interest expense related to ROU assets will be lower after the change and rent expense will be higher. The expiry dates of the leases, including reasonably certain estimated renewal periods, are between 2025 and 2043. 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 for the periods presented.
Year Ended December 31,
2024 2023
Finance lease cost:
   Amortization of lease assets $ 4,758  $ 5,358 
   Interest on lease liabilities 10,045  9,784 
 Total finance lease cost 14,803  15,142 
Operating lease cost 5,112  4,819 
Variable lease cost 86  155 
Total lease cost $ 20,001  $ 20,116 
All extension options that are reasonably certain to be exercised have been included in the measurement of lease obligations. The Company reassesses the likelihood of extension option exercise if there is a significant event or change in circumstances within its control.
Other information related to operating and finance leases as of the balance sheet dates presented are as follows:
As of December 31, 2024
As of December 31, 2023
Finance Leases Operating Leases Finance Leases Operating Leases
Weighted average discount rate 16.17  % 15.28  % 16.09  % 15.09  %
Weighted average remaining lease term (in years) 15.6 8.0 16.6 8.7
Cash paid for amounts included in the measurement of lease liabilities
 $ 11,054 $ 5,780 $ 11,060 $ 5,168
The maturities of the contractual undiscounted lease liabilities as of December 31, 2024 are as follows:
Finance Leases Operating Leases
2025 $ 10,542  $ 5,401 
2026 11,130  5,684 
2027 10,637  5,260 
2028 10,728  4,586 
2029 10,440  3,755 
Thereafter 137,548  15,711 
Total undiscounted lease liabilities 191,025  40,397 
Interest on lease liabilities (128,690) (17,808)
Total present value of minimum lease payments $ 62,335  $ 22,589 
Lease liabilities - current portion $ 9,593  $ 4,966 
Lease liabilities - non-current $ 52,742  $ 17,623 
LEASES
 11. 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. Due to changing demographics and business environment, the Company performed a reassessment of its previously classified real estate finance leases in June 2023 and certain real estate operating leases in September 2023. These reassessments resulted in the removal of certain option renewal periods contained in the leases as the Company is no longer reasonably certain to exercise these option renewal periods. As a result of the June 2023 reassessment, the classification of some leases were changed from finance to operating, resulting in an aggregate decrease in finance lease obligations and related right-of-use (“ROU”) assets of $45,768 and $42,349, respectively, and an aggregate net increase in operating lease obligations and related ROU assets of $8,691 and $5,271, respectively. The impact of the September 2023 reassessment was an aggregate net decrease in operating lease obligations and related ROU assets of $6,084 and $6,084, respectively.
In connection with the change from finance to operating lease, the Company’s depreciation and interest expense related to ROU assets will be lower after the change and rent expense will be higher. The expiry dates of the leases, including reasonably certain estimated renewal periods, are between 2025 and 2043. 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 for the periods presented.
Year Ended December 31,
2024 2023
Finance lease cost:
   Amortization of lease assets $ 4,758  $ 5,358 
   Interest on lease liabilities 10,045  9,784 
 Total finance lease cost 14,803  15,142 
Operating lease cost 5,112  4,819 
Variable lease cost 86  155 
Total lease cost $ 20,001  $ 20,116 
All extension options that are reasonably certain to be exercised have been included in the measurement of lease obligations. The Company reassesses the likelihood of extension option exercise if there is a significant event or change in circumstances within its control.
Other information related to operating and finance leases as of the balance sheet dates presented are as follows:
As of December 31, 2024
As of December 31, 2023
Finance Leases Operating Leases Finance Leases Operating Leases
Weighted average discount rate 16.17  % 15.28  % 16.09  % 15.09  %
Weighted average remaining lease term (in years) 15.6 8.0 16.6 8.7
Cash paid for amounts included in the measurement of lease liabilities
 $ 11,054 $ 5,780 $ 11,060 $ 5,168
The maturities of the contractual undiscounted lease liabilities as of December 31, 2024 are as follows:
Finance Leases Operating Leases
2025 $ 10,542  $ 5,401 
2026 11,130  5,684 
2027 10,637  5,260 
2028 10,728  4,586 
2029 10,440  3,755 
Thereafter 137,548  15,711 
Total undiscounted lease liabilities 191,025  40,397 
Interest on lease liabilities (128,690) (17,808)
Total present value of minimum lease payments $ 62,335  $ 22,589 
Lease liabilities - current portion $ 9,593  $ 4,966 
Lease liabilities - non-current $ 52,742  $ 17,623