LEASES

9 Months Ended

Sep. 30, 2025

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 one 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)	Classification	September 30, 2025		December 31, 2024
Lease assets
Operating leases	Operating lease right-of-use assets	$	122,259	$	139,067
Finance leases	Property and equipment, net	30,873		3,210
Total lease assets		$	153,132	$	142,277
Lease liabilities
Current liabilities
Operating leases	Operating lease liabilities, current	$	4,813	$	5,469
Finance leases	Current portion of debt, net	2,601		1,189
Noncurrent liabilities
Operating leases	Operating lease liabilities, noncurrent	243,253		267,221
Finance leases	Long-term debt, net	35,748		2,021
Total lease liabilities		$	286,415	$	275,900

The components of lease costs and classification within the unaudited Condensed Consolidated Statements of Operations were as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2025		2024		2025		2024
Operating lease costs
Capitalized to inventory	$	9,192	$	9,349	$	27,489	$	27,459
General and administrative expenses	255		980		4,757		3,117
Total operating lease costs	$	9,447	$	10,329	$	32,246	$	30,576
Finance lease costs
Amortization of leased assets(1)	$	990	$	139	$	2,097	$	417
Interest on lease liabilities	1,088		48		1,783		154
Total finance lease costs	$	2,078	$	187	$	3,880	$	571

(1)Included as a component of depreciation expense within “General and administrative expenses” on the accompanying unaudited Condensed Consolidated Statements of Operations.

At September 30, 2025 and December 31, 2024, $5,929 and $6,886, respectively, of lease costs remained capitalized in inventory.

The following table presents information on short-term and variable lease costs:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2025		2024		2025		2024
Total short-term and variable lease costs	$	1,057	$	1,195	$	3,071	$	3,162

Sublease income generated during the three and nine months ended September 30, 2025 and 2024 was immaterial.

The following table includes supplemental cash and non-cash information related to our leases:

	Nine Months Ended September 30,
(in thousands)	2025		2024
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows for operating leases	$	30,964	$	30,898
Operating cash flows for finance leases	1,783		154
Financing cash flows for finance leases	1,395		366
ROU assets obtained in exchange for new lease obligations
Operating leases	$	1,479	$	9,560
Finance leases	12,560		—

During the nine months ended September 30, 2025, certain leases were amended that resulted in modification treatment. Based on the modified terms, operating leases with a total of $16,770 of ROU assets and $23,421 of lease liabilities were reclassified as finance leases, with a total of $17,320 of ROU assets and $23,974 of lease liabilities.

The following table summarizes the weighted-average remaining lease term and discount rate:

	September 30, 2025		December 31, 2024
Weighted-average remaining term (years)
Operating leases	12.9		13.3
Finance leases	9.5		2.8
Weighted-average discount rate
Operating leases	15.2	%	15.1	%
Finance leases	14.2	%	10.5	%

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 September 30, 2025 are as follows:

(in thousands)	Operating Lease Liabilities		Finance Lease Liabilities
Remainder of 2025	$	9,892	$	1,930
2026	39,995		7,640
2027	41,051		7,106
2028	42,146		7,019
2029	42,935		7,103
Thereafter	420,966		41,801
Total lease payments	596,985		72,599
Less: imputed interest	348,919		34,250
Present value of lease liabilities	$	248,066	$	38,349

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 2025		2026		2027		2028		2029		Thereafter		Total
Cash payments due under financing liabilities	$	641	$	2,592	$	2,665	$	2,741	$	2,497	$	8,108	$	19,244

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 one 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)	Classification	September 30, 2025		December 31, 2024
Lease assets
Operating leases	Operating lease right-of-use assets	$	122,259	$	139,067
Finance leases	Property and equipment, net	30,873		3,210
Total lease assets		$	153,132	$	142,277
Lease liabilities
Current liabilities
Operating leases	Operating lease liabilities, current	$	4,813	$	5,469
Finance leases	Current portion of debt, net	2,601		1,189
Noncurrent liabilities
Operating leases	Operating lease liabilities, noncurrent	243,253		267,221
Finance leases	Long-term debt, net	35,748		2,021
Total lease liabilities		$	286,415	$	275,900

The components of lease costs and classification within the unaudited Condensed Consolidated Statements of Operations were as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2025		2024		2025		2024
Operating lease costs
Capitalized to inventory	$	9,192	$	9,349	$	27,489	$	27,459
General and administrative expenses	255		980		4,757		3,117
Total operating lease costs	$	9,447	$	10,329	$	32,246	$	30,576
Finance lease costs
Amortization of leased assets(1)	$	990	$	139	$	2,097	$	417
Interest on lease liabilities	1,088		48		1,783		154
Total finance lease costs	$	2,078	$	187	$	3,880	$	571

(1)Included as a component of depreciation expense within “General and administrative expenses” on the accompanying unaudited Condensed Consolidated Statements of Operations.

At September 30, 2025 and December 31, 2024, $5,929 and $6,886, respectively, of lease costs remained capitalized in inventory.

The following table presents information on short-term and variable lease costs:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2025		2024		2025		2024
Total short-term and variable lease costs	$	1,057	$	1,195	$	3,071	$	3,162

Sublease income generated during the three and nine months ended September 30, 2025 and 2024 was immaterial.

The following table includes supplemental cash and non-cash information related to our leases:

	Nine Months Ended September 30,
(in thousands)	2025		2024
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows for operating leases	$	30,964	$	30,898
Operating cash flows for finance leases	1,783		154
Financing cash flows for finance leases	1,395		366
ROU assets obtained in exchange for new lease obligations
Operating leases	$	1,479	$	9,560
Finance leases	12,560		—

During the nine months ended September 30, 2025, certain leases were amended that resulted in modification treatment. Based on the modified terms, operating leases with a total of $16,770 of ROU assets and $23,421 of lease liabilities were reclassified as finance leases, with a total of $17,320 of ROU assets and $23,974 of lease liabilities.

The following table summarizes the weighted-average remaining lease term and discount rate:

	September 30, 2025		December 31, 2024
Weighted-average remaining term (years)
Operating leases	12.9		13.3
Finance leases	9.5		2.8
Weighted-average discount rate
Operating leases	15.2	%	15.1	%
Finance leases	14.2	%	10.5	%

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 September 30, 2025 are as follows:

(in thousands)	Operating Lease Liabilities		Finance Lease Liabilities
Remainder of 2025	$	9,892	$	1,930
2026	39,995		7,640
2027	41,051		7,106
2028	42,146		7,019
2029	42,935		7,103
Thereafter	420,966		41,801
Total lease payments	596,985		72,599
Less: imputed interest	348,919		34,250
Present value of lease liabilities	$	248,066	$	38,349

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 2025		2026		2027		2028		2029		Thereafter		Total
Cash payments due under financing liabilities	$	641	$	2,592	$	2,665	$	2,741	$	2,497	$	8,108	$	19,244