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LEASES

12 Months Ended

Dec. 31, 2024

NOTE 11. LEASES

The following table presents the components of lease costs for the years ended December 31:


	Location on the consolidated statements of operations	2024		2023		2022

		(in thousands)
Operating lease cost	Cost of goods sold, sales and marketing, general and administrative	$	23,346	$	20,291	$	20,428
Finance lease cost:
Amortization of right-of-use assets	Cost of goods sold, Depreciation and amortization	10,395		10,357		10,935
Interest on lease obligations	Interest expense	6,765		6,449		6,549

Variable lease cost	Cost of goods sold, sales and marketing, general and administrative	10,700		9,766		7,887
Short-term lease expense	Cost of goods sold, sales and marketing, general and administrative	83		406		751

Total lease cost (1)		$	51,289	$	47,269	$	46,550



(1) Total lease cost recorded in cost of goods sold on the consolidated statements of operations was $3.5 million, $3.2 million, and $4.0 million for the years ended December 31, 2024, 2023, and 2022, respectively.

The following table presents supplemental cash flow information related to operating and finance leases for the years ended December 31:


	2024		2023		2022

	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	19,684	$	19,283	$	21,092
Operating cash flows from finance leases	6,765		6,483		6,542
Financing cash flows from finance leases	7,300		7,213		7,042
Non-cash activity related to lease liabilities
Operating leases	$	35,664	$	14,016	$	19,920
Finance leases	16,906		1,021		25,909

The following table presents supplemental balance sheet information related to operating and finance leases as of December 31:


	2024		2023

Weighted average remaining lease term
Operating leases	8.0 years		7.0 years
Finance leases	7.0 years		7.2 years
Weighted average discount rate
Operating leases	10.7	%	8.3	%
Finance leases	9.6	%	9.0	%

Future minimum lease payments under the Company's non-cancellable leases as of December 31, 2024 are as follows:


	Operating Leases		Finance Leases		Total Leases

Year	(in thousands)
2025	$	24,674	$	16,119	$	40,793
2026	24,824		16,026		40,850
2027	24,419		15,429		39,848
2028	23,804		14,013		37,817
2029	21,331		12,719		34,050
Thereafter	78,307		33,133		111,440
Total undiscounted lease liabilities	197,359		107,439		304,798
Less: Interest	(67,743)		(30,225)		(97,968)
Total present value of minimum lease payments	129,616		77,214		206,830
Lease liabilities - current portion	(12,131)		(9,535)		(21,666)
Lease liabilities	$	117,485	$	67,679	$	185,164

The Company recorded a loss on disposal of right of use assets of $0.5 million, $5.7 million, and $17.8 million, for the years ended December 31, 2024, 2023 and 2022, respectively, resulting from the repositioning of assets, which were recorded in impairment and disposal of long-lived assets, net of (recoveries) on the consolidated statements of operations.

Lease Guarantees

In 2023, the Company terminated a retail lease resulting in the Company being relieved of its primary obligation under this lease. As a result of the lease termination, a new tenant executed a new lease for the same properties with the Company becoming secondarily liable. Nonperformance by the new tenant results in the Company becoming obligated to fulfill the lease conditions. If the new tenant defaults on the lease obligations the Company becomes responsible for payment. As of December 31, 2024, the Company's remaining guarantor term is for 5.0 years and the resulting maximum exposure includes $4.5 million of undiscounted future minimum lease payments plus potential additional payments to satisfy maintenance, taxes, and insurance requirements.

In 2023, the Company determined it was no longer the primary beneficiary of one of its variable interest entities resulting in the Company deconsolidating this variable interest entity in 2023, which included termination of the business relationship and deconsolidation of two retail leases. The Company became secondarily liable for the deconsolidated retail leases due to the Company being guarantor for these two cannabis dispensary leases. Under both leases, nonperformance by the tenant results in the Company becoming obligated to fulfill the lease conditions. As of December 31, 2024, the Company's remaining guarantor terms are for 6.0 years and 7.0 years and the resulting maximum exposure includes $2.1 million and $2.8 million, respectively, of undiscounted future minimum lease payments plus potential additional payments to satisfy maintenance, taxes, and insurance requirements.

In 2022, the Company terminated a cultivation lease resulting in the Company being relieved of its primary obligation under this lease. As a result of the lease termination, a new tenant executed a new lease for the same property with the Company becoming secondarily liable. If the new tenant defaults on the lease obligations the Company becomes responsible for payment. As of December 31, 2024, the Company's remaining guarantor term is for 9.0 years and the resulting maximum exposure includes $10.2 million of undiscounted future minimum lease payments plus potential additional payments to satisfy maintenance, taxes, and insurance requirements.

LEASES