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LEASES
 3 Months Ended
Mar. 31, 2024
Leases [Abstract]  
LEASES LEASES
The Company leases land, buildings, equipment, and other capital assets which it uses for corporate purposes and the production and sale of cannabis products with terms generally ranging from 1 to 20 years.
We determine if an arrangement is a lease at inception and begin recording lease activity at the commencement date, which is generally the date in which we take possession of or control the physical use of the asset. ROU assets and lease liabilities are recognized based on the present value of lease payments over the lease term, with lease expense recognized on a straight-line basis. Lease agreements may contain rent escalation clauses, rent holidays, or certain landlord incentives, including tenant improvement allowances. ROU assets include amounts for scheduled rent increases and are reduced by lease incentive amounts. Certain of our lease agreements include variable rent payments, consisting primarily of rental payments adjusted periodically for inflation and amounts paid to the lessor based on cost or consumption, such as maintenance and utilities. Variable rent lease components are not included in the lease liability. We typically exclude options to extend the lease in a lease term unless it is reasonably certain that we will exercise the option and when doing so is at our sole discretion. Our lease agreements generally do not contain any material residual value guarantees or material restrictive covenants. We may rent or sublease to third parties certain real property assets that we no longer use.
The components of lease assets and lease liabilities and their classification on the unaudited Condensed Consolidated Balance Sheets were as follows:
(in thousands)ClassificationMarch 31, 2024December 31, 2023
Lease assets
Operating leasesOperating lease right-of-use assets$132,905 $130,556 
Finance leasesProperty and equipment, net1,633 1,772 
Total lease assets$134,538 $132,328 
Lease liabilities
Current liabilities
Operating leasesOperating lease liabilities, current $4,166 $3,660 
Finance leasesCurrent portion of debt, net513 496 
Noncurrent liabilities
Operating leasesOperating lease liabilities, noncurrent262,699 261,087 
Finance leasesLong-term debt, net1,061 1,196 
Total lease liabilities$268,439 $266,439 
The components of lease costs and classification within the unaudited Condensed Consolidated Statements of Operations were as follows:
Three Months Ended
March 31,
(in thousands)20242023
Operating lease costs
Capitalized to inventory
$9,133 $8,227 
General and administrative expenses
873 340 
Total operating lease costs$10,006 $8,567 
Finance lease costs
Amortization of leased assets(1)
$139 $74 
Interest on lease liabilities55 36 
Total finance lease costs$194 $110 
(1)Included as a component of depreciation expense within “General and administrative expenses” on the accompanying unaudited Condensed Consolidated Statements of Operations.
At March 31, 2024 and December 31, 2023, $7,054 and $6,028, respectively, of lease costs remained capitalized in inventory.
The following table presents information on short-term and variable lease costs:
Three Months Ended
March 31,
(in thousands)20242023
Total short-term and variable lease costs$1,065 $1,135 
Sublease income generated during the three months ended March 31, 2024 and 2023 was immaterial.
The following table includes supplemental cash and non-cash information related to our leases:
Three Months Ended
March 31,
(in thousands)20242023
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases$10,028 $8,604 
Operating cash flows from finance leases55 36 
Financing cash flows from finance leases118 63 
ROU assets obtained in exchange for new lease obligations
Operating leases$2,569 $13,571 
Finance leases— 351 
The following table summarizes the weighted-average remaining lease term and discount rate:
March 31, 2024December 31, 2023
Weighted-average remaining term (years)
Operating leases14.014.3
Finance leases2.83.0
Weighted-average discount rate
Operating leases15.1 %15.1 %
Finance leases13.7 %13.7 %
The amounts of future undiscounted cash flows related to the lease payments over the lease terms and the reconciliation to the present value of the lease liabilities as recorded on our unaudited Condensed Consolidated Balance Sheet as of March 31, 2024 are as follows:
(in thousands)
Operating Lease Liabilities
Finance Lease Liabilities
Remainder of 2024
$30,673 $520 
202541,908 693 
202642,256 572 
202743,389 103 
202844,563 — 
Thereafter480,321 — 
Total lease payments683,110 1,888 
Less: imputed interest416,245 314 
Present value of lease liabilities$266,865 $1,574 
Sale Leaseback Transactions
The following table presents cash payments due under transactions that did not qualify for sale leaseback treatment. The cash payments are allocated between interest and liability reduction, as applicable. The “sold” assets remain within land, buildings, and leasehold improvements, as appropriate, for the duration of the lease and a financing liability equal to the amount of proceeds received is recorded within “Long-term debt, net” on the accompanying unaudited Condensed Consolidated Balance Sheets.
(in thousands)Remainder of 20242025202620272028ThereafterTotal
Cash payments due under financing liabilities$1,828 $2,525 $2,599 $2,676 $2,755 $6,722 $19,105 
LEASES LEASES
The Company leases land, buildings, equipment, and other capital assets which it uses for corporate purposes and the production and sale of cannabis products with terms generally ranging from 1 to 20 years.
We determine if an arrangement is a lease at inception and begin recording lease activity at the commencement date, which is generally the date in which we take possession of or control the physical use of the asset. ROU assets and lease liabilities are recognized based on the present value of lease payments over the lease term, with lease expense recognized on a straight-line basis. Lease agreements may contain rent escalation clauses, rent holidays, or certain landlord incentives, including tenant improvement allowances. ROU assets include amounts for scheduled rent increases and are reduced by lease incentive amounts. Certain of our lease agreements include variable rent payments, consisting primarily of rental payments adjusted periodically for inflation and amounts paid to the lessor based on cost or consumption, such as maintenance and utilities. Variable rent lease components are not included in the lease liability. We typically exclude options to extend the lease in a lease term unless it is reasonably certain that we will exercise the option and when doing so is at our sole discretion. Our lease agreements generally do not contain any material residual value guarantees or material restrictive covenants. We may rent or sublease to third parties certain real property assets that we no longer use.
The components of lease assets and lease liabilities and their classification on the unaudited Condensed Consolidated Balance Sheets were as follows:
(in thousands)ClassificationMarch 31, 2024December 31, 2023
Lease assets
Operating leasesOperating lease right-of-use assets$132,905 $130,556 
Finance leasesProperty and equipment, net1,633 1,772 
Total lease assets$134,538 $132,328 
Lease liabilities
Current liabilities
Operating leasesOperating lease liabilities, current $4,166 $3,660 
Finance leasesCurrent portion of debt, net513 496 
Noncurrent liabilities
Operating leasesOperating lease liabilities, noncurrent262,699 261,087 
Finance leasesLong-term debt, net1,061 1,196 
Total lease liabilities$268,439 $266,439 
The components of lease costs and classification within the unaudited Condensed Consolidated Statements of Operations were as follows:
Three Months Ended
March 31,
(in thousands)20242023
Operating lease costs
Capitalized to inventory
$9,133 $8,227 
General and administrative expenses
873 340 
Total operating lease costs$10,006 $8,567 
Finance lease costs
Amortization of leased assets(1)
$139 $74 
Interest on lease liabilities55 36 
Total finance lease costs$194 $110 
(1)Included as a component of depreciation expense within “General and administrative expenses” on the accompanying unaudited Condensed Consolidated Statements of Operations.
At March 31, 2024 and December 31, 2023, $7,054 and $6,028, respectively, of lease costs remained capitalized in inventory.
The following table presents information on short-term and variable lease costs:
Three Months Ended
March 31,
(in thousands)20242023
Total short-term and variable lease costs$1,065 $1,135 
Sublease income generated during the three months ended March 31, 2024 and 2023 was immaterial.
The following table includes supplemental cash and non-cash information related to our leases:
Three Months Ended
March 31,
(in thousands)20242023
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases$10,028 $8,604 
Operating cash flows from finance leases55 36 
Financing cash flows from finance leases118 63 
ROU assets obtained in exchange for new lease obligations
Operating leases$2,569 $13,571 
Finance leases— 351 
The following table summarizes the weighted-average remaining lease term and discount rate:
March 31, 2024December 31, 2023
Weighted-average remaining term (years)
Operating leases14.014.3
Finance leases2.83.0
Weighted-average discount rate
Operating leases15.1 %15.1 %
Finance leases13.7 %13.7 %
The amounts of future undiscounted cash flows related to the lease payments over the lease terms and the reconciliation to the present value of the lease liabilities as recorded on our unaudited Condensed Consolidated Balance Sheet as of March 31, 2024 are as follows:
(in thousands)
Operating Lease Liabilities
Finance Lease Liabilities
Remainder of 2024
$30,673 $520 
202541,908 693 
202642,256 572 
202743,389 103 
202844,563 — 
Thereafter480,321 — 
Total lease payments683,110 1,888 
Less: imputed interest416,245 314 
Present value of lease liabilities$266,865 $1,574 
Sale Leaseback Transactions
The following table presents cash payments due under transactions that did not qualify for sale leaseback treatment. The cash payments are allocated between interest and liability reduction, as applicable. The “sold” assets remain within land, buildings, and leasehold improvements, as appropriate, for the duration of the lease and a financing liability equal to the amount of proceeds received is recorded within “Long-term debt, net” on the accompanying unaudited Condensed Consolidated Balance Sheets.
(in thousands)Remainder of 20242025202620272028ThereafterTotal
Cash payments due under financing liabilities$1,828 $2,525 $2,599 $2,676 $2,755 $6,722 $19,105