The Company through its acquisition of Harvest and through the acquired Harvest subsidiaries has entered into operating agreements with various entities related to the purchase and operation of cannabis dispensary, cultivation, and production licenses, in several states. The Company determined these entities to be VIEs due to the financial relationship and as the Company is the primary beneficiary as of June 30, 2022, and December 31, 2021. The Company holds varying ownership interests in these entities and in certain cases may not directly hold ownership in the entities but holds a significant interest through an agent. The Company's VIEs are not material to the consolidated financial position or operations as of June 30, 2022, or for the three or six month period ended June 30, 2022, or as of December 31, 2021. The Company did not have any VIEs prior to the acquisition of Harvest in October 2021.

The Company has determined these entities to be VIEs and that it is the primary beneficiary. The Company consolidates these entities due to the other holder’s equity investment being insufficient to finance its activities without additional subordinated financial support and the Company meeting the power and economics criteria. In particular, the Company controls the management decisions and activities most significant to certain VIEs, has provided a significant portion of the subordinated financial support provided to date, and holds membership interests exposing the Company to the risk of reward and/or loss. The Company allocates income and cash flows of the VIEs based on the outstanding ownership percentage in accordance with the underlying operating agreements, as amended. The Company has consolidated all identified VIEs for which the Company is the primary beneficiary in the accompanying condensed consolidated financial statements.

The following table presents the summarized assets and liabilities of the Company’s VIEs in which the Company does not hold a majority interest as of June 30, 2022 and December 31, 2021. The assets and liabilities in the table below include third-party assets

and liabilities of the Company's VIEs only and exclude intercompany balances that eliminate in consolidation as included in the condensed consolidated balance sheets.


	June 30, 2022		December 31, 2021
	(in thousands)
Current assets:
Cash	$	2,692	$	1,241
Accounts receivable, net		424		905
Inventories, net		4,134		2,451
Prepaids and other current assets		68		313
Total current assets		7,318		4,910
Property and equipment, net		6,644		8,335
Intangible assets, net		16,828		17,735
Other assets		57		544
Total assets	$	30,847	$	31,524
Current liabilities:
Accounts payable and accrued liabilities	$	1,386	$	828
Notes payable - current portion		—		1,170
Income tax payable		1,782		522
Total current liabilities		3,168		2,520
Notes payable		1,080		1,061
Deferred tax liabilities		4,245		4,479
Other long-term liabilities		619		—
Total liabilities	$	9,112	$	8,060

In the first quarter of 2022, the Company divested of its minority ownership interest in one of its VIEs and received cash of $1.6 million and recorded an insignificant loss on the divestment which is recorded in loss on disposal of non-operating assets in the condensed consolidated statement of operations and comprehensive (loss) income for the six months ended June 30, 2022. As of June 30, 2022, the Company is no longer the primary beneficiary of this VIE and the VIE is no longer consolidated in the Company's condensed consolidated financial statements.