QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||
(Address of Principal Executive Offices) | (Zip Code) |
Large accelerated filer | o | Accelerated filer | o |
x | Smaller reporting company | ||
Emerging growth company |
PART I | Financial Information. | |
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
PART II | Other Information. | |
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. | ||
ACREAGE HOLDINGS, INC. |
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION |
(in thousands) | March 31, 2020 | December 31, 2019 | |||||
(unaudited) | (audited) | ||||||
ASSETS | |||||||
Cash and cash equivalents | $ | $ | |||||
Restricted cash | |||||||
Inventory | |||||||
Notes receivable, current | |||||||
Other current assets | |||||||
Total current assets | |||||||
Long-term investments | |||||||
Notes receivable, non-current | |||||||
Capital assets, net | |||||||
Operating lease right-of-use assets | |||||||
Intangible assets, net | |||||||
Goodwill | |||||||
Other non-current assets | |||||||
Total non-current assets | |||||||
TOTAL ASSETS | $ | $ | |||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Accounts payable and accrued liabilities | $ | $ | |||||
Taxes payable | |||||||
Interest payable | |||||||
Operating lease liability, current | |||||||
Debt, current | |||||||
Other current liabilities | |||||||
Total current liabilities | |||||||
Debt, non-current | |||||||
Operating lease liability, non-current | |||||||
Deferred tax liability | |||||||
Other liabilities | |||||||
Total non-current liabilities | |||||||
TOTAL LIABILITIES | |||||||
Commitments and contingencies (Note 13) | |||||||
Common stock, no par value (Note 11) - unlimited authorized, 97,430 and 90,646 issued and outstanding, respectively | |||||||
Additional paid-in capital | |||||||
Treasury stock, 842 SVS held in treasury | ( | ) | ( | ) | |||
Accumulated deficit | ( | ) | ( | ) | |||
Total Acreage Shareholders' equity | |||||||
Non-controlling interests | |||||||
TOTAL EQUITY | |||||||
TOTAL LIABILITIES AND EQUITY | $ | $ |
ACREAGE HOLDINGS, INC. |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
Three Months Ended March 31, | ||||||||
(in thousands, except per share amounts) | 2020 | 2019 | ||||||
REVENUE | ||||||||
Retail revenue, net | $ | $ | ||||||
Wholesale revenue, net | ||||||||
Other revenue, net | ||||||||
Total revenues, net | ||||||||
Cost of goods sold, retail | ( | ) | ( | ) | ||||
Cost of goods sold, wholesale | ( | ) | ( | ) | ||||
Total cost of goods sold | ( | ) | ( | ) | ||||
Gross profit | ||||||||
OPERATING EXPENSES | ||||||||
General and administrative | ||||||||
Compensation expense | ||||||||
Equity-based compensation expense | ||||||||
Marketing | ||||||||
Loss on impairment | ||||||||
Loss on notes receivable | ||||||||
Depreciation and amortization | ||||||||
Total operating expenses | ||||||||
Net operating loss | $ | ( | ) | $ | ( | ) | ||
Income from investments, net | ||||||||
Interest income from loans receivable | ||||||||
Interest expense | ( | ) | ( | ) | ||||
Other (loss) income, net | ( | ) | ||||||
Total other income | ||||||||
Loss before income taxes | $ | ( | ) | $ | ( | ) | ||
Income tax benefit (expense) | ( | ) | ||||||
Net loss | $ | ( | ) | $ | ( | ) | ||
Less: net loss attributable to non-controlling interests | ( | ) | ( | ) | ||||
Net loss attributable to Acreage Holdings, Inc. | $ | ( | ) | $ | ( | ) | ||
Net loss per share attributable to Acreage Holdings, Inc. - basic and diluted: | $ | ( | ) | $ | ( | ) | ||
Weighted average shares outstanding - basic and diluted |
ACREAGE HOLDINGS, INC. |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY |
Attributable to shareholders of the parent | ||||||||||||||||||||||||||||||
(in thousands) | LLC Membership Units | Pubco Shares (as converted) | Share Capital | Treasury Stock | Accumulated Deficit | Shareholders’ Equity | Non-controlling Interests | Total Equity | ||||||||||||||||||||||
December 31, 2018 | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||
Issuances for business acquisitions/purchases of intangible assets | ||||||||||||||||||||||||||||||
NCI adjustments for changes in ownership | ( | ) | ||||||||||||||||||||||||||||
Other equity transactions | ||||||||||||||||||||||||||||||
Equity-based compensation expense and related issuances | ||||||||||||||||||||||||||||||
Net loss | — | — | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
March 31, 2019 | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||
December 31, 2019 | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||
Issuances for private placement | ||||||||||||||||||||||||||||||
NCI adjustments for changes in ownership | ( | ) | ( | ) | ||||||||||||||||||||||||||
Capital distributions, net | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||
Equity-based compensation expense and related issuances | ||||||||||||||||||||||||||||||
Net loss | — | — | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
March 31, 2020 | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ |
ACREAGE HOLDINGS, INC. |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
Three Months Ended March 31, | ||||||||
(in thousands) | 2020 | 2019 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net loss | $ | ( | ) | $ | ( | ) | ||
Adjustments for: | ||||||||
Depreciation and amortization | ||||||||
Equity-settled expenses, including compensation | ||||||||
Loss on impairment | ||||||||
Loss on notes receivable | 8,161 | — | ||||||
Non-cash interest expense | ||||||||
Non-cash operating lease expense | ||||||||
Deferred tax (benefit) expense | ( | ) | ||||||
Non-cash income from investments, net | ( | ) | ( | ) | ||||
Change, net of acquisitions in: | ||||||||
Inventory | ( | ) | ( | ) | ||||
Other assets | ( | ) | ( | ) | ||||
Interest receivable | ( | ) | ||||||
Accounts payable and accrued liabilities | ( | ) | ||||||
Taxes payable | ||||||||
Interest payable | ( | ) | ||||||
Other liabilities | ( | ) | ||||||
Net cash used in operating activities | $ | ( | ) | $ | ( | ) | ||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Purchases of capital assets | $ | ( | ) | $ | ( | ) | ||
Investments in notes receivable | ( | ) | ( | ) | ||||
Collection of notes receivable | ||||||||
Proceeds from sale of capital assets | ||||||||
Business acquisitions, net of cash acquired | ( | ) | ||||||
Purchases of intangible assets | ( | ) | ||||||
Deferred acquisition costs and deposits | ( | ) | ||||||
Distributions from investments | ||||||||
Proceeds from purchase of short-term investments | ||||||||
Net cash used in investing activities | $ | ( | ) | $ | ( | ) | ||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Proceeds from related party debt | ||||||||
Repayment of related party loan | ( | ) | ||||||
Proceeds from financing | ||||||||
Deferred financing costs paid | ( | ) | ||||||
Proceeds from issuance of private placement units, net | ||||||||
Collateral received from financing agreement | ||||||||
Settlement of taxes withheld | ( | ) | ||||||
Repayment of debt | ( | ) | ( | ) | ||||
Net cash provided by (used in) financing activities | $ | $ | ( | ) | ||||
Net increase (decrease) in cash, cash equivalents and restricted cash | $ | $ | ( | ) | ||||
Cash, cash equivalents and restricted cash - Beginning of period | ||||||||
Cash, cash equivalents and restricted cash - End of period | $ | $ |
ACREAGE HOLDINGS, INC. |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
Three Months Ended March 31, | ||||||||
(in thousands) | 2020 | 2019 | ||||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
Interest paid - non-lease | $ | $ | ||||||
Income taxes paid | ||||||||
OTHER NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||
Capital assets not yet paid for | $ | $ | ||||||
Issuance of Class D units for land | ||||||||
Exchange of intangible assets to notes receivable (Note 4) | ||||||||
Holdback of Maine HSCP notes receivable (Note 6) | ||||||||
Capital assets not yet received |
ACREAGE HOLDINGS, INC. |
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
(in thousands, except per share data) |
ACREAGE HOLDINGS, INC. |
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
(in thousands, except per share data) |
ACREAGE HOLDINGS, INC. |
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
(in thousands, except per share data) |
ACREAGE HOLDINGS, INC. |
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
(in thousands, except per share data) |
ACREAGE HOLDINGS, INC. |
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
(in thousands, except per share data) |
Purchase Price Allocation | Thames Valley (1) | NCC (2) | Total | |||||||||
Assets acquired: | ||||||||||||
Cash and cash equivalents | $ | $ | $ | |||||||||
Inventory | ||||||||||||
Other current assets | ||||||||||||
Capital assets, net | ||||||||||||
Goodwill | ||||||||||||
Intangible assets - cannabis licenses | ||||||||||||
Other non-current assets | ||||||||||||
Liabilities assumed: | ||||||||||||
Accounts payable and accrued liabilities | ( | ) | ( | ) | ( | ) | ||||||
Other current liabilities | — | (621 | ) | (621 | ) | |||||||
Deferred tax liability | ( | ) | ( | ) | ( | ) | ||||||
Other liabilities | ( | ) | ( | ) | ||||||||
Fair value of net assets acquired | $ | $ | $ | |||||||||
Consideration paid: | ||||||||||||
Cash | ||||||||||||
Deferred acquisition costs and deposits | ||||||||||||
Subordinate Voting Shares | ||||||||||||
Settlement of pre-existing relationship | ||||||||||||
Fair value of previously held interest | ||||||||||||
Total consideration | $ | $ | $ | |||||||||
Subordinate Voting Shares issued |
ACREAGE HOLDINGS, INC. |
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
(in thousands, except per share data) |
Intangibles | March 31, 2020 | December 31, 2019 | ||||||
Finite-lived intangible assets: | ||||||||
Management contracts | $ | $ | ||||||
Customer relationships | ||||||||
Developed technology | ||||||||
Accumulated amortization on finite-lived intangible assets: | ||||||||
Management contracts | ( | ) | ( | ) | ||||
Customer relationships | ( | ) | ||||||
Developed technology | ( | ) | ||||||
( | ) | ( | ) | |||||
Finite-lived intangible assets, net | ||||||||
Indefinite-lived intangible assets | ||||||||
Cannabis licenses | ||||||||
Total intangibles, net | $ | $ |
ACREAGE HOLDINGS, INC. |
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
(in thousands, except per share data) |
Amortization of Intangibles | 2020 | 2021 | 2022 | 2023 | 2024 | |||||||||||||||
Amortization expense | $ | $ | $ | $ | $ |
Goodwill | Total | |||
December 31, 2019 | $ | |||
Acquisitions | ||||
Impairment | ( | ) | ||
March 31, 2020 | $ |
ACREAGE HOLDINGS, INC. |
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
(in thousands, except per share data) |
Investments | March 31, 2020 | December 31, 2019 | ||||||
Investments held at FV-NI | ||||||||
Equity method investments | ||||||||
Total long-term investments | $ | $ |
Investment income | Three Months Ended March 31, | |||||||
2020 | 2019 | |||||||
Short-term investments | $ | $ | ||||||
Investments held at FV-NI | ||||||||
Equity method investments | ( | ) | ||||||
Income from investments, net | $ | $ |
March 31, 2020 | December 31, 2019 | |||||||
Notes receivable | $ | $ | ||||||
Interest receivable | ||||||||
Total notes receivable | $ | $ | ||||||
Less: Notes receivable, current | ||||||||
Notes receivable, non-current | $ | $ |
ACREAGE HOLDINGS, INC. |
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
(in thousands, except per share data) |
Lines of Credit | Balance as of | |||||||||||||
Counterparty | Maximum Obligation | Interest Rate | March 31, 2020 | December 31, 2019 | ||||||||||
Greenleaf (1) | $ | 3.25% - 4.75% | $ | $ | ||||||||||
CWG Botanicals, Inc. ("CWG") (2) | ||||||||||||||
Compassionate Care Foundation, Inc. (“CCF”) (3) | ||||||||||||||
Prime Alternative Treatment Center, Inc. ("PATC") (4) | ||||||||||||||
Patient Centric of Martha’s Vineyard, Ltd. (“PCMV”) (5) | ||||||||||||||
Health Circle, Inc. (6) | ||||||||||||||
Total | $ | $ | $ |
ACREAGE HOLDINGS, INC. |
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
(in thousands, except per share data) |
March 31, 2020 | December 31, 2019 | |||||||
Land | $ | $ | ||||||
Building | ||||||||
Right-of-use asset, finance leases | ||||||||
Construction in progress | ||||||||
Furniture, fixtures and equipment | ||||||||
Leasehold improvements | ||||||||
Capital assets, gross | $ | $ | ||||||
Less: accumulated depreciation | ( | ) | ( | ) | ||||
Capital assets, net | $ | $ |
ACREAGE HOLDINGS, INC. |
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
(in thousands, except per share data) |
Balance Sheet Information | Classification | March 31, 2020 | December 31, 2019 | |||||||
Right-of-use assets | ||||||||||
Operating | Operating lease right-of-use assets | $ | $ | |||||||
Finance | Capital assets, net | |||||||||
Total right-of-use assets | $ | $ | ||||||||
Lease liabilities | ||||||||||
Current | ||||||||||
Operating | Operating lease liability, current | $ | $ | |||||||
Financing | Debt, current | |||||||||
Non-current | ||||||||||
Operating | Operating lease liability, non-current | |||||||||
Financing | Debt, non-current | |||||||||
Total lease liabilities | $ | $ | ||||||||
Statement of Operations Information | Classification | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | |||||||
Short-term lease expense | General and administrative | $ | $ | |||||||
Operating lease expense | General and administrative | |||||||||
Finance lease expense: | ||||||||||
Amortization of right of use asset | Depreciation and amortization | |||||||||
Interest expense on lease liabilities | Interest expense | |||||||||
Sublease income | Other (loss) income, net | ( | ) | ( | ) | |||||
Net lease cost | $ | $ | ||||||||
Statement of Cash Flows Information | Classification | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | |||||||
Cash paid for operating leases | Net cash used in operating activities | |||||||||
Cash paid for finance leases - interest | Net cash used in operating activities |
ACREAGE HOLDINGS, INC. |
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
(in thousands, except per share data) |
Maturity of lease liabilities | Operating Leases | Finance Leases | ||||||
2020 | $ | $ | ||||||
2021 | ||||||||
2022 | ||||||||
2023 | ||||||||
2024 | ||||||||
Thereafter | ||||||||
Total lease payments | $ | $ | ||||||
Less: imputed interest | ||||||||
Present value of lease liabilities | $ | $ | ||||||
Weighted average remaining lease term (years) | ||||||||
Weighted average discount rate |
March 31, 2020 | December 31, 2019 | |||||||
Retail inventory | $ | $ | ||||||
Wholesale inventory | ||||||||
Cultivation inventory | ||||||||
Supplies & other | ||||||||
Total | $ | $ |
Debt balances | March 31, 2020 | December 31, 2019 | |||||
NCCRE loan | $ | $ | |||||
Seller’s notes | |||||||
Related party debt | |||||||
Financing liability | |||||||
Finance lease liabilities | |||||||
SAF loan | |||||||
SAF loan collateral (related party) | |||||||
Total debt | $ | $ | |||||
Less: current portion of debt | |||||||
Total long-term debt | $ | $ |
ACREAGE HOLDINGS, INC. |
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
(in thousands, except per share data) |
Interest Expense | Three Months Ended March 31, | |||||||
2020 | 2019 | |||||||
NCCRE loan | ||||||||
Seller’s notes | ||||||||
Interest expense on financing liability | ||||||||
Interest expense on finance lease liability | ||||||||
Interest expense on SAF loan | ||||||||
Interest expense on SAF loan collateral (related party) | ||||||||
Total interest expense | $ | $ |
ACREAGE HOLDINGS, INC. |
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
(in thousands, except per share data) |
Shareholders’ Equity | Subordinate Voting Shares | Subordinate Voting Shares Held in Treasury | Proportionate Voting Shares (as converted) | Multiple Voting Shares | Total Shares Outstanding | ||||||||||
December 31, 2019 | ( | ) | |||||||||||||
Issuances | |||||||||||||||
NCI conversions | |||||||||||||||
PVS conversions | ( | ) | |||||||||||||
March 31, 2020 | ( | ) |
Shareholders’ Equity | Subordinate Voting Shares | Subordinate Voting Shares Held in Treasury | Proportionate Voting Shares (as converted) | Multiple Voting Shares | Total Shares Outstanding | ||||||||||
December 31, 2018 | ( | ) | |||||||||||||
Issuances | |||||||||||||||
NCI conversions | |||||||||||||||
PVS conversions | ( | ) | |||||||||||||
March 31, 2019 | ( | ) |
Warrants | Three Months Ended March 31, | |||||
2020 | 2019 | |||||
Beginning balance | ||||||
Granted | ||||||
Expired | ||||||
Ending balance |
ACREAGE HOLDINGS, INC. |
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
(in thousands, except per share data) |
HSCP net asset reconciliation | March 31, 2020 | December 31, 2019 | |||||
Current assets | $ | $ | |||||
Non-current assets | |||||||
Current liabilities | ( | ) | ( | ) | |||
Non-current liabilities | ( | ) | ( | ) | |||
Other NCI balances | ( | ) | ( | ) | |||
Accumulated equity-settled expenses | ( | ) | ( | ) | |||
Net assets | $ | $ | |||||
HSCP/USCo2 ownership % of HSCP | % | % | |||||
Net assets allocated to USCo2/HSCP | $ | $ | |||||
Net assets attributable to other NCIs | |||||||
Total NCI | $ | $ | |||||
Three Months Ended March 31, | |||||||
HSCP Summarized Statement of Operations | 2020 | 2019 | |||||
Net loss allocable to HSCP/USCo2 | $ | ( | ) | $ | ( | ) | |
HSCP/USCo2 weighted average ownership % of HSCP | % | % | |||||
Net loss allocated to HSCP/USCo2 | $ | ( | ) | $ | ( | ) | |
Net loss allocated to other NCIs | ( | ) | ( | ) | |||
Net loss attributable to NCIs | $ | ( | ) | $ | ( | ) |
Three Months Ended March 31, | ||||||
Convertible Units | 2020 | 2019 | ||||
Beginning balance | ||||||
Issuance of NCI units | ||||||
Vested LLC C-1s canceled | ( | ) | ( | ) | ||
LLC C-1s vested | ||||||
NCI units settled in cash | ( | ) | ||||
NCI units converted to Pubco | ( | ) | ||||
Ending balance |
ACREAGE HOLDINGS, INC. |
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
(in thousands, except per share data) |
Equity-based compensation expense | Three Months Ended March 31, | |||||||
2020 | 2019 | |||||||
Equity-based compensation - Plan | $ | $ | ||||||
Equity-based compensation - other | ||||||||
Total equity-based compensation expense | $ | $ |
Three Months Ended March 31, 2020 | |||||||
Restricted Share Units (Fair value information expressed in whole dollars) | RSUs | Weighted Average Grant Date Fair Value | |||||
Unvested, beginning of period | $ | ||||||
Granted (1) | |||||||
Forfeited | ( | ) | |||||
Vested | ( | ) | |||||
Unvested, end of period | $ |
ACREAGE HOLDINGS, INC. |
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
(in thousands, except per share data) |
Three Months Ended March 31, 2020 | |||||||
Stock Options (Exercise price expressed in whole dollars) | Options | Weighted Average Exercise Price | |||||
Options outstanding, beginning of period | $ | ||||||
Granted | |||||||
Forfeited | ( | ) | |||||
Exercised | |||||||
Options outstanding, end of period | $ | ||||||
Options exercisable, end of period | $ |
Three Months Ended March 31, 2020 | |||||||
Profits Interests (Fair value information expressed in whole dollars) | Number of Units | Weighted Average Grant Date Fair Value | |||||
Unvested, beginning of period | $ | ||||||
Class C-1 units granted | |||||||
Class C-1 units canceled | |||||||
Class C-1 vested | ( | ) | |||||
Unvested, end of period | $ |
ACREAGE HOLDINGS, INC. |
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
(in thousands, except per share data) |
ACREAGE HOLDINGS, INC. |
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
(in thousands, except per share data) |
ACREAGE HOLDINGS, INC. |
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
(in thousands, except per share data) |
ACREAGE HOLDINGS, INC. |
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
(in thousands, except per share data) |
Three months ended | |||||||
March 31, 2020 | March 31, 2019 | ||||||
Net loss attributable to common shareholders of the Company | $ | ( | ) | $ | ( | ) | |
Weighted average shares outstanding - basic | |||||||
Effect of dilutive securities | |||||||
Weighted average shares - diluted | |||||||
Net loss per share attributable to common shareholders of the Company - basic | $ | ( | ) | $ | ( | ) | |
Net loss per share attributable to common shareholders of the Company - diluted | $ | ( | ) | $ | ( | ) |
ACREAGE HOLDINGS, INC. |
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
(in thousands, except per share data) |
ACREAGE HOLDINGS, INC. |
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
(in thousands, except per share data) |
• | the future implications to the business, financial results and performance of the Company arising, directly or indirectly, from COVID-19; |
• | the ability of Acreage and Canopy Growth to receive, in a timely manner and on satisfactory terms, the necessary regulatory, court and shareholders approvals relating to the proposed new arrangement (the “New Arrangement”); |
• | the ability of the parties to satisfy, in a timely manner, the other conditions to the completion of the New Arrangement; |
• | other expectations and assumptions concerning the transactions contemplated in the New Arrangement; |
• | the anticipated benefits of the New Arrangement; |
• | the occurrence or waiver of the Triggering Event (as described in Note 13), the ability of Acreage to meets its performance targets and financial thresholds agreed upon with Canopy Growth as part of the New Arrangement, including those that are conditions to closing the New Arrangement; |
• | the likelihood of the Triggering Event being satisfied or waived by the outside date; in the event the New Arrangement is not adopted, the likelihood of completing the current plan of arrangement on the current terms; |
• | in the event that the New Agreement is adopted, the likelihood of Canopy Growth completing the acquisition of the Fixed Shares and/or Floating Shares; |
• | risks related to the ability to financing Acreage’s business and fund its obligations; |
• | other expectations and assumptions concerning the transactions contemplated between Canopy Growth and Acreage; |
• | the available funds of Acreage and the anticipated use of such funds; |
• | the availability of financing opportunities for Acreage and the risks associated with the completion thereof; |
• | regulatory and licensing risks; |
• | changes in general economic, business and political conditions, including changes in the financial and stock markets; |
• | risks related to infectious diseases, including the impacts of the novel coronavirus; |
• | legal and regulatory risks inherent in the cannabis industry; |
• | risks associated with economic conditions, dependence on management and currency risk; |
• | risks relating to U.S. regulatory landscape and enforcement related to cannabis, including political risks; |
• | risks relating to anti-money laundering laws and regulation; |
• | other governmental and environmental regulation; |
• | public opinion and perception of the cannabis industry; |
• | risks related to contracts with third-party service providers; |
• | risks related to the enforceability of contracts and lack of access to U.S. bankruptcy protections; |
• | reliance on the expertise and judgment of senior management of Acreage; |
• | risks related to proprietary intellectual property and potential infringement by third parties; |
• | the concentrated voting control of Acreage’s founder and the unpredictability caused by Acreage’s capital structure; |
• | risks relating to the management of growth; |
• | increasing competition in the industry; |
• | risks inherent in an agricultural business; |
• | risks relating to energy costs; |
• | risks associated to cannabis products manufactured for human consumption including potential product recalls; |
• | reliance on key inputs, suppliers and skilled labor; |
• | cybersecurity risks; |
• | ability and constraints on marketing products; |
• | fraudulent activity by employees, contractors and consultants; |
• | tax and insurance related risks; |
• | risks related to the economy generally; |
• | risk of litigation; |
• | conflicts of interest; |
• | risks relating to certain remedies being limited and the difficulty of enforcement judgments and effecting service outside of Canada; |
• | risks related to future acquisitions or dispositions; |
• | sales by existing shareholders; and |
• | limited research and data relating to cannabis. |
• | Overview—This section provides a general description of the Company’s businesses, as well as developments that occurred during the three months ended March 31, 2020 and 2019 that the Company believes are important in understanding its results of operations and financial condition or to disclose known trends. |
• | Results of Operations—This section provides an analysis of the Company’s results of operations for the three months ended March 31, 2020 and 2019. This analysis is presented on a consolidated basis. In addition, a brief description is provided of significant transactions and events that impact the comparability of the results being analyzed. |
• | Liquidity and Capital Resources—This section provides an analysis of the Company’s cash flows for the three months ended March 31, 2020 and 2019, as well as a discussion on the Company’s outstanding debt and commitments that existed as of March 31, 2020. Included in the discussion of outstanding debt is a discussion of the amount of financial capacity available to fund the Company’s future commitments and obligations, as well as a discussion of other financing arrangements. |
• | We began adult-use sales at our dispensary in Illinois; the significantly increased sales have exceeded internal expectations. Received zoning approval to open dispensary in Chicago. |
• | We opened The Botanist dispensary in Spring Hill, Florida during March. This medical cannabis dispensary is the Company’s first in the state. |
• | The Company closed a refinancing, transaction and conversion related to Northeast Patients Group, operating as Wellness Connection of Maine (“WCM”), a medical cannabis business in Maine, resulting in ownership of WCM by three Maine residents, as required by Maine law. In connection with the transaction, WCM converted from a non-profit corporation to a for-profit corporation. |
• | We raised $48,887, net of issuance costs, as part of a series of financing transactions that were announced on February 7, 2020. |
Summary Results of Operations | Better/(Worse) | ||||||||||||||
in thousands, except per share amounts | Three Months Ended March 31, | 2020 vs. 2019 | |||||||||||||
2020 | 2019 | $ | % | ||||||||||||
Revenues, net | $ | 24,225 | $ | 12,897 | $ | 11,328 | 88 | % | |||||||
Operating loss | (251,282 | ) | (32,013 | ) | (219,269 | ) | (685 | )% | |||||||
Net loss attributable to Acreage | (171,954 | ) | (23,377 | ) | (148,577 | ) | (636 | )% | |||||||
Basic and diluted loss per share attributable to Acreage | $ | (1.85 | ) | $ | (0.29 | ) | $ | (1.56 | ) | (538 | )% |
Gross profit | Better/(Worse) | ||||||||||||||
in thousands | Three Months Ended March 31, | 2020 vs. 2019 | |||||||||||||
2020 | 2019 | $ | % | ||||||||||||
Retail revenue, net | $ | 17,573 | $ | 9,909 | $ | 7,664 | 77 | % | |||||||
Wholesale revenue, net | 6,548 | 2,815 | 3,733 | 133 | % | ||||||||||
Other revenue, net | 104 | 173 | (69 | ) | (40 | )% | |||||||||
Total revenues, net | $ | 24,225 | $ | 12,897 | $ | 11,328 | 88 | % | |||||||
Cost of goods sold, retail | (10,889 | ) | (5,881 | ) | (5,008 | ) | (85 | )% | |||||||
Cost of goods sold, wholesale | (3,382 | ) | (1,696 | ) | (1,686 | ) | (99 | )% | |||||||
Total cost of goods sold | $ | (14,271 | ) | $ | (7,577 | ) | $ | (6,694 | ) | (88 | )% | ||||
Gross profit | $ | 9,954 | $ | 5,320 | $ | 4,634 | 87 | % | |||||||
Gross margin | 41 | % | 41 | % | — | % |
Revenue by region | Better/(Worse) | ||||||||||||||
in thousands | Three Months Ended March 31, | 2020 vs. 2019 | |||||||||||||
2020 | 2019 | $ | % | ||||||||||||
New England | $ | 11,323 | $ | 7,084 | $ | 4,239 | 60 | % | |||||||
Mid-Atlantic | 7,086 | 3,093 | 3,993 | 129 | % | ||||||||||
Midwest | 2,943 | 596 | 2,347 | 394 | % | ||||||||||
West | 2,803 | 2,124 | 679 | 32 | % | ||||||||||
Total revenues, net | $ | 24,225 | $ | 12,897 | $ | 11,328 | 88 | % |
Operating expenses | Better/(Worse) | ||||||||||||||
in thousands | Three Months Ended March 31, | 2020 vs. 2019 | |||||||||||||
2020 | 2019 | $ | % | ||||||||||||
General and administrative | $ | 13,032 | $ | 10,158 | $ | (2,874 | ) | (28 | )% | ||||||
Compensation expense | 14,477 | 6,489 | (7,988 | ) | (123 | )% | |||||||||
Equity-based compensation expense | 34,737 | 18,977 | (15,760 | ) | (83 | )% | |||||||||
Marketing | 987 | 801 | (186 | ) | (23 | )% | |||||||||
Loss on impairment | 187,775 | — | (187,775 | ) | n/m | ||||||||||
Loss on notes receivable | 8,161 | — | (8,161 | ) | n/m | ||||||||||
Depreciation and amortization | 2,067 | 908 | (1,159 | ) | (128 | )% | |||||||||
Total operating expenses | $ | 261,236 | $ | 37,333 | $ | (223,903 | ) | (600 | )% | ||||||
n/m - Not Meaningful |
Other income | Better/(Worse) | ||||||||||||||
in thousands | Three Months Ended March 31, | 2020 vs. 2019 | |||||||||||||
2020 | 2019 | $ | % | ||||||||||||
Income from investments, net | $ | 234 | $ | 2,727 | $ | (2,493 | ) | (91 | )% | ||||||
Interest income from loans receivable | 1,647 | 730 | 917 | 126 | % | ||||||||||
Interest expense | (1,226 | ) | (118 | ) | (1,108 | ) | (939 | )% | |||||||
Other (loss) income, net | (174 | ) | 92 | (266 | ) | n/m | |||||||||
Total other income | $ | 481 | $ | 3,431 | $ | (2,950 | ) | (86 | )% | ||||||
n/m - Not Meaningful |
Net loss | Better/(Worse) | ||||||||||||||
in thousands | Three Months Ended March 31, | 2020 vs. 2019 | |||||||||||||
2020 | 2019 | $ | % | ||||||||||||
Net loss | $ | (222,229 | ) | $ | (30,804 | ) | $ | (191,425 | ) | (621 | )% | ||||
Less: net loss attributable to non-controlling interests | (50,275 | ) | (7,427 | ) | (42,848 | ) | (577 | )% | |||||||
Net loss attributable to Acreage Holdings, Inc. | $ | (171,954 | ) | $ | (23,377 | ) | $ | (148,577 | ) | (636 | )% | ||||
Cash flows | Better/(Worse) | ||||||||||||||
in thousands | Three Months Ended March 31, | 2020 vs. 2019 | |||||||||||||
2020 | 2019 | $ | % | ||||||||||||
Net cash used in operating activities | $ | (25,401 | ) | $ | (13,630 | ) | $ | (11,771 | ) | (86 | )% | ||||
Net cash used in investing activities | (19,319 | ) | (16,719 | ) | (2,600 | ) | (16 | )% | |||||||
Net cash provided by (used in) financing activities | 54,159 | (10,411 | ) | 64,570 | n/m | ||||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | $ | 9,439 | $ | (40,760 | ) | $ | 50,199 | n/m | |||||||
n/m - Not Meaningful |
Debt balances | March 31, 2020 | ||
NCCRE loan | $ | 487 | |
Seller’s notes | 2,744 | ||
Financing liability | 19,052 | ||
Finance lease liabilities | 6,006 | ||
SAF loan | 19,438 | ||
SAF loan collateral (related party) | 22,254 | ||
Total debt | $ | 69,981 | |
Less: current portion of debt | 22,514 | ||
Total long-term debt | $ | 47,467 |
(i) | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company’s assets; |
(ii) | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that the Company’s receipts and expenditures are being made only in accordance with authorizations of the Company’s management and directors; and |
(iii) | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements. |
Incorporated by Reference | ||||||||||||||||
Exhibit No. | Description of Document | Schedule Form | File Number | Exhibit | Filing Date | Filed or Furnished Herewith | ||||||||||
10.1 | ||||||||||||||||
10.2 | ||||||||||||||||
10.3 | ||||||||||||||||
10.4 | ||||||||||||||||
10.5 | ||||||||||||||||
10.6 | ||||||||||||||||
31.1 | X | |||||||||||||||
31.2 | X | |||||||||||||||
32.1 | X | |||||||||||||||
101 | Attached as Exhibit 101 to this report are the following documents formatted in iXBRL (Extensible Business Reporting Language): (i) Unaudited Condensed Consolidated Statements of Financial Position as of March 31, 2020 and December 31, 2019, (ii) Unaudited Condensed Consolidated Statements of Operations for the quarters ended March 31, 2020 and March 31, 2019, (iii) Unaudited Condensed Consolidated Statements of Cash Flows for the quarters ended March 31, 2020 and March 31, 2019, and (iv) Notes to Unaudited Condensed Consolidated Financial Statements for the quarter ended March 31, 2020. | X | ||||||||||||||
Acreage Holdings, Inc. | |||
(Registrant) | |||
By: | /s/ Glen Leibowitz | ||
Glen Leibowitz | |||
Chief Financial Officer |
/s/ William C. Van Faasen |
William C. Van Faasen |
Interim Chief Executive Officer |
/s/ Glen S. Leibowitz |
Glen S. Leibowitz |
Chief Financial Officer |
Statements of Financial Position Paranthetical - $ / shares shares in Thousands, $ / shares in Thousands |
Dec. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Treasury Stock, Common, Shares | 842 | 842 |
Common Stock, No Par Value | $ 0 | $ 0 |
Statements of Cash Flows Supplemental Disclosures - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||
Interest paid - non-lease | $ 2,000 | $ 354,000 |
Income taxes paid | 525,000 | 273,000 |
OTHER NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Capital assets not yet paid for | 4,377,000 | 380,000 |
Issuance of Class D units for land | 0 | 264,000 |
Convertible Debt | 18,800,000 | 0 |
Liabilities of Business Transferred under Contractual Arrangement, Current | 917,000 | 0 |
Capital assets not yet received | $ 0 | $ 380,000 |
Nature of Operations |
3 Months Ended |
---|---|
Mar. 31, 2020 | |
Nature of Operations [Abstract] | |
Nature of Operations [Text Block] | NATURE OF OPERATIONS Acreage Holdings, Inc. (the “Company”, “Pubco” or “Acreage”) was originally incorporated under the Business Corporations Act (Ontario) on July 12, 1989 as Applied Inventions Management Inc. On August 29, 2014, the Company changed its name to Applied Inventions Management Corp. The Company continued into British Columbia and changed its name to Acreage Holdings, Inc. on November 9, 2018. The Company’s Subordinate Voting Shares are listed on the Canadian Securities Exchange under the symbol “ACRG.U”, quoted on the OTCQX under the symbol “ACRGF” and traded on the Frankfurt Stock Exchange under the symbol “0VZ”. The Company owns, operates and has contractual relationships with cannabis cultivation facilities, dispensaries and other cannabis-related companies across the United States (“U.S.”). High Street Capital Partners, LLC, a Delaware limited liability company doing business as Acreage Holdings (“HSCP”), was formed on April 29, 2014. The Company became the indirect parent of HSCP on November 14, 2018 in connection with a reverse takeover (“RTO”) transaction described below. The Company’s corporate office and principal place of business is located at 366 Madison Avenue, 11th Floor, New York, New York in the U.S. The Company’s registered and records office address is Suite 2800, Park Place, 666 Burrard Street, Vancouver, British Columbia in Canada. The RTO transaction On September 21, 2018, the Company, HSCP, HSCP Merger Corp. (a wholly-owned subsidiary of the Company), Acreage Finco B.C. Ltd. (a special purpose corporation) (“Finco”), Acreage Holdings America, Inc. (“USCo”) and Acreage Holdings WC, Inc. (“USCo2”) entered into a combination agreement (the “Agreement”) whereby the parties agreed to combine their respective businesses, which would result in the RTO of Pubco by the security holders of HSCP, which was deemed to be the accounting acquiror. On November 14, 2018, the parties to the Agreement completed the RTO. The RTO transaction is described in detail in Note 1 to the Consolidated Financial Statements of the Company in the Company’s Annual Report on Form 10-K, filed with the SEC on May 29, 2020. Canopy Growth Corporation transaction On June 27, 2019, the Company and Canopy Growth Corporation (“Canopy Growth” or “CGC”) completed the transactions contemplated by the arrangement agreement dated April 18, 2019, as amended May 15, 2019, between Canopy Growth and Acreage. Canopy Growth was granted an option to acquire all outstanding shares of the Company, with a requirement to do so upon the occurrence of the occurrence of changes in U.S. federal law to permit the general cultivation, distribution, and possession of marijuana (the “Arrangement”). On June 24, 2020, Canopy Growth and the Company entered into an agreement to amend the terms of the Arrangement. Please refer to Note 13 for further discussion. COVID-19 In December 2019, a novel strain of coronavirus (“COVID-19”) emerged in Wuhan, China. Since then, it has spread to several other countries and infections have been reported around the world. On March 11, 2020, the World Health Organization declared the outbreak of COVID-19 a global pandemic. In response to the outbreak, governmental authorities in the United States, Canada and internationally have introduced various recommendations and measures to try to limit the pandemic, including travel restrictions, border closures, non-essential business closures, quarantines, self-isolations, shelters-in-place and social distancing. The COVID-19 outbreak and the response of governmental authorities to try to limit it are having a significant impact on the private sector and individuals, including unprecedented business, employment and economic disruptions. The continued spread of COVID-19 in the United States, Canada and globally could have an adverse impact on our business, operations and financial results, including through disruptions in our cultivation and processing activities, supply chains and sales channels, as well as a deterioration of general economic conditions including a possible national or global recession. Shelter-in-place orders and social distancing practices designed to limit the spread of COVID-19 may affect our retail business. Due to the speed with which the COVID-19 situation is developing and the uncertainty of its magnitude, outcome and duration, it is not possible to estimate its impact on our business, operations or financial results; however, the impact could be material. |
Significant Accounting Policies |
3 Months Ended |
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Mar. 31, 2020 | |
Significant Accounting Policies [Abstract] | |
Significant Accounting Policies [Text Block] | SIGNIFICANT ACCOUNTING POLICIES Basis of presentation and going concern The Unaudited Condensed Consolidated Financial Statements of Acreage have been prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, all adjustments consisting only of normal recurring adjustments necessary for a fair presentation have been reflected in these Unaudited Condensed Consolidated Financial Statements. Operating results for the interim periods presented are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2020. As reflected in the financial statements, the Company had an accumulated deficit as of March 31, 2020, as well as a net loss and net cash used in operating activities for the reporting period then ended. These factors raise substantial doubt about the Company’s ability to continue as a going concern for at least one year from the issuance of these financial statements. However, management believes that substantial doubt about the Company’s ability to meet our obligations for the next twelve months from the date these financial statements were issued has been alleviated due to, but not limited to, (i) capital raised between January and June 2020, (ii) access to future capital commitments (see Note 13), (iii) continued sales growth from our consolidated operations, (iv) latitude as to the timing and amount of certain operating expenses as well as capital expenditures, (v) restructuring plans that have already been put in place to improve the Company’s profitability and (vi) the Standby Equity Distribution Agreement described in Note 17 of the Unaudited Condensed Consolidated Financial Statements. If the Company is unable to raise additional capital whenever necessary, it may be forced to decelerate or curtail its footprint buildout or other operational activities until such time as additional capital becomes available. Such limitation of the Company’s activities would allow it to slow its rate of spending and extend its use of cash until additional capital is raised. However, management cannot provide any assurances that we will be successful in accomplishing any of our plans. Management also cannot provide any assurance as to unforeseen circumstances that could occur at any time within the next twelve months or thereafter which could increase our need to raise additional capital on an immediate basis. Use of estimates The preparation of the Company’s Unaudited Condensed Consolidated Financial Statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the amounts that are reported in the Unaudited Condensed Consolidated Financial Statements and accompanying disclosures. Although these estimates are based on management’s best knowledge of current events and actions that the Company may undertake in the future, actual results may differ from those estimates. Significant estimates inherent in the preparation of the accompanying Unaudited Condensed Consolidated Financial Statements include the fair value of assets acquired and liabilities assumed in business combinations, assumptions relating to equity-based compensation expense, estimated useful lives for property, plant and equipment and intangible assets, the valuation allowance against deferred tax assets and the assessment of potential impairment charges on goodwill, intangible assets and investments in equity and notes receivable. These interim Unaudited Condensed Consolidated Financial Statements and notes thereto should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019 as filed with the Securities and Exchange Commission on May 29, 2020 (the “2019 Form 10-K”). Emerging growth company We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies. Functional and presentation currency The Unaudited Condensed Consolidated Financial Statements and the accompanying notes are expressed in U.S. dollars. Financial metrics are presented in thousands. Other metrics, such as shares outstanding, are presented in thousands unless otherwise noted. Basis of consolidation Our Unaudited Condensed Consolidated Financial Statements include the accounts of Acreage, its subsidiaries and variable interest entities (“VIEs”) where we are considered the primary beneficiary, if any, after elimination of intercompany accounts and transactions. Investments in entities in which the Company has significant influence, but less than a controlling financial interest, are accounted for using the equity method. Our proportionate share of net income or loss of the entity is recorded in Income (loss) from investments, net in the Consolidated Statements of Operations. The unaudited and audited consolidated financial statements are referred to as the “Financial Statements” herein. The unaudited condensed consolidated statements of operations are referred to as the “Statements of Operations” herein. The unaudited and audited condensed consolidated statements of financial position are referred to as the “Statements of Financial Position” herein. The unaudited condensed consolidated statements of cash flows are referred to as the “Statements of Cash Flows” herein. Restricted cash Restricted cash represents funds contractually held for specific purposes and, as such, not available for general corporate purposes. Cash and restricted cash, as presented on the Statements of Cash Flows, consists of $13,944 and $22,095 as of March 31, 2020, respectively, and $26,505 and $95 as of December 31, 2019. Impairment of long-lived assets Goodwill and indefinite-lived intangible assets are not subject to amortization and are tested for impairment annually or more frequently if events or changes in circumstances indicate that they might be impaired. Goodwill and indefinite-lived intangible assets are tested at the individual business level. The Company may first assess qualitative factors and, if it determines it is more likely than not that the fair value is less than the carrying value, then proceed to a quantitative test if necessary. Finite-lived intangible assets and other long-lived assets are tested for impairment based on undiscounted cash flows when events or changes in circumstances indicate that the carrying amount may not be recoverable. Accounting for warrants The Company determines the accounting classification of warrants it issues, as either liability or equity classified, by first assessing whether the warrants meet liability classification in accordance with ASC 480-10, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity, then in accordance with ASC 815-40, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock. Under ASC 480, warrants are considered liability classified if the warrants are mandatorily redeemable, obligate the Company to settle the warrants or the underlying shares by paying cash or other assets, or warrants that must or may require settlement by issuing a variable number of shares. If warrants do not meet the liability classification under ASC 480-10, the Company assesses the requirements under ASC 815-40, which states that contracts that require or may require the issuer to settle the contract for cash are liabilities recorded at fair value, irrespective of the likelihood of the transaction occurring that triggers the net cash settlement feature. If the warrants do not require liability classification under ASC 815-40, and in order to conclude equity classification, the Company also assesses whether the warrants are indexed to its common stock and whether the warrants are classified as equity under ASC 815-40 or other applicable GAAP. After all relevant assessments, the Company concludes whether the warrants are classified as liability or equity. Liability classified warrants require fair value accounting at issuance and subsequent to initial issuance with all changes in fair value after the issuance date recorded in the statements of operations. Equity classified warrants only require fair value accounting at issuance with no changes recognized subsequent to the issuance date. Net loss per share Net loss per share represents the net loss attributable to shareholders divided by the weighted average number of shares outstanding during the period on an as converted basis. Basic and diluted loss per share are the same as of March 31, 2020 and 2019 as the issuance of shares upon conversion, exercise or vesting of outstanding units would be anti-dilutive in each period. There were 46,962 and 37,588 anti-dilutive shares outstanding as of March 31, 2020 and 2019, respectively. Refer to Note 16 for further details. Accounting Pronouncements Recently Adopted As of December 2019, the Company early adopted ASU 2017-04 - Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). The objective of ASU 2017-04 is to simplify how an entity is required to test goodwill for impairment. Under previous GAAP, entities were required to test goodwill for impairment using a two-step approach. Under the amendments in ASU 2017-04, an entity performs its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. The adoption of ASU 2017-04 did not have an effect on the Company’s Financial Statements. Accounting Pronouncements Not Yet Adopted In June 2016, the FASB issued ASU 2016-13 - Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which was subsequently revised by ASU 2018-19. The ASU introduces a new model for assessing impairment on most financial assets. Entities will be required to use a forward-looking expected loss model, which will replace the current incurred loss model, which will result in earlier recognition of allowance for losses. The ASU will be effective for the Company’s first interim period of fiscal 2023, and the Company is currently evaluating the impact of the new standard. |
Acquisitions |
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Acquisitions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combination Disclosure [Text Block] | ACQUISITIONS During the three months ended March 31, 2020, the Company did not complete any business combinations. During the three months ended March 31, 2019, the Company completed the following business combinations, and has allocated each purchase price as follows:
The operating results of the above acquisitions were not material to the periods presented. (1) On January 29, 2019, the Company acquired 100% of Thames Valley Apothecary, LLC (“Thames Valley”), a dispensary license holder in Connecticut. (2) On March 4, 2019, the Company acquired the remaining 70% ownership interest in NCC LLC (“NCC”), a dispensary license holder in Illinois. The market price used in valuing SVS issued was $18.70. As a result of this acquisition, the previously held interest in NCC was re-measured, resulting in a gain of $999, which was recorded in Income from investments, net in the Statements of Operations during the three months ended March 31, 2019. Deferred acquisition costs and deposits The Company makes advance payments to certain acquisition targets for which the transfer is pending certain regulatory approvals prior to the acquisition date. As of March 31, 2020 and December 31, 2019, the Company had no deferred acquisition costs outstanding. |
Intangible Assets and Goodwill |
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Intangibles and Goodwill [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Text Block] | INTANGIBLE ASSETS AND GOODWILL Intangible assets The following table details our intangible asset balances by major asset classes:
The average useful life of finite-lived intangible assets ranges from six to nine years. Impairment of intangible assets In December 2019, a novel strain of coronavirus emerged in Wuhan, China, which since then, has spread worldwide. As a result of the recent global economic impact and uncertainty due to the COVID-19 pandemic, the Company concluded a triggering event had occurred as of March 31, 2020, and accordingly, performed interim impairment testing. The Company performed a quantitative analysis and concluded certain of the indefinite-lived cannabis licenses had a fair value below the carrying value as of March 31, 2020. During the three months ended March 31, 2020 and 2019, the Company recognized impairment charges of $92,798 and nil, respectively, with respect to its indefinite-lived intangible assets at Acreage Florida, Inc., Form Factory Holdings, LLC and Kanna, Inc. The charge is recognized in Loss on impairment on the Statements of Operations. The Company evaluated the recoverability of the related finite-lived intangible assets to be held and used by comparing the carrying amount of the assets to the future net undiscounted cash flows expected to be generated by the assets, or comparable market sales data to determine if the carrying value is recoverable. During the three months ended March 31, 2020 and 2019, the Company recognized impairment charges of $8,324 and nil, respectively, with respect to its finite-lived intangible assets at Form Factory and CWG Botanicals, Inc. The charge is recognized in Loss on impairment on the Statements of Operations. These impairments resulted in the recognition of a tax provision benefit and an associated reversal of deferred tax liabilities of $31,316 for the three months ended March 31, 2020. During the second quarter of fiscal 2020, the Company determined certain indefinite-lived intangible assets met the held-for-sale criteria which includes: management commits to a plan to sell; the asset is available for immediate sale; an active program to locate a buyer exists; the sale of the asset is probable and expected to be completed within one year; the asset is being actively marketed for sale; and it is unlikely that significant changes to the plan will be made. The Company has identified these assets relating to cannabis licenses within the Company’s national footprint and has evaluated the assets as part of interim impairment testing as noted above. The Company is in the process of evaluating whether this meets the criteria for discontinued operations. WCM Refinancing On March 6, 2020, the Company closed on a refinancing, transaction and conversion related to Northeast Patients Group, operating as Wellness Connection of Maine (“WCM”), a medical cannabis business in Maine, resulting in ownership of WCM by three individuals. In connection with the transaction, WCM converted from a non-profit corporation to a for-profit corporation. Refer to Note 6 for further details. Concurrently, a portion of the management contract was converted into a promissory note of $18,800 in Notes receivable, non-current on the Statements of Financial Position in exchange for the previously held management contract. An impairment was determined as the differential between the net carrying value of the previously held management contract and the promissory note received in exchange. This resulted in an impairment loss to finite-lived intangible assets of $9,395 in Loss on impairment on the Statements of Operations. Amortization expense recorded during the three months ended March 31, 2020 and 2019 was $1,165 and $661, respectively. Expected annual amortization expense for existing intangible assets subject to amortization at March 31, 2020 is as follows for each of the next five fiscal years:
Goodwill The following table details the changes in the carrying amount of goodwill:
Also as a result of the recent global economic impact and uncertainty due to the COVID-19 pandemic, the Company concluded a triggering event had occurred as of March 31, 2020, and accordingly, performed interim impairment testing. During the three months ended March 31, 2020 and 2019, the Company recognized impairment charges of $65,304 and nil, respectively, with respect to its goodwill related to Form Factory. The Company applied the DCF approach to determine the fair value of Form Factory. The charge is recognized in Loss on impairment on the Statements of Operations. |
Investments |
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Investment Holdings, Schedule of Investments [Text Block] | INVESTMENTS The carrying values of the Company’s investments in the Statements of Financial Position as of March 31, 2020 and December 31, 2019 are as follows:
Income from investments, net in the Statements of Operations during the three months ended March 31, 2020 and 2019 is as follows:
Short-term investments The Company from time to time invests in U.S. Treasury bills which are classified as held-to-maturity and measured at amortized cost. These range in original maturity from three to six months, and bear interest ranging from 2.2% - 2.4%. During the three months ended March 31, 2019, short-term investments in U.S. Treasury bills in the amount of $74,768 matured. Investments held at FV-NI The Company has investments in equity of several companies that do not result in significant influence or control. These investments are carried at fair value, with gains and losses recognized in the Statements of Operations. Equity method investments |
Capital Assets, net |
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Property, Plant and Equipment Disclosure [Text Block] | CAPITAL ASSETS, net Net property and equipment consisted of:
Depreciation of capital assets for the three months ended March 31, 2020 and 2019 include $902 and $247 of depreciation expense, and $600 and $410, that was capitalized to inventory, respectively. |
Leases |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases of Lessee Disclosure [Text Block] | LEASES The Company leases land, buildings, equipment and other capital assets which it plans to use for corporate purposes and the production and sale of cannabis products. Leases with an initial term of 12 months or less are not recorded on the Statements of Financial Position and are expensed in the Statements of Operations on the straight-line basis over the lease term. The Company does not have any material variable lease payments, and accounts for non-lease components separately from leases.
The following represents the Company’s future minimum payments required under existing leases with initial terms of one year or more as of March 31, 2020:
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Inventory Disclosure [Text Block] | INVENTORY
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Debt Disclosure [Text Block] | DEBT The Company’s debt balances consist of the following:
The interest expense related to the Company’s debt during the three months ended March 31, 2020 and 2019 consists of the following:
NCC Real Estate, LLC (“NCCRE”) loan NCCRE, which is owned by the Company’s consolidated subsidiary HSC Solutions, LLC, entered into a $550 secured loan with a financial institution for the purchase of a building in Rolling Meadows, Illinois in December 2016. The building is leased to NCC. The promissory note payable carries a fixed interest rate of 3.7% and is due in December 2021. Seller’s notes The Company issued Seller’s notes payable in connection with several transactions, bearing interest at rates ranging from 3.5% to 10%. Related party debt During the year ended December 31, 2019, the Company’s CEO made a non-interest bearing loan of $15,000 to Acreage. In January 2020, he made an additional loan of $5,000 to Acreage. These amounts were subsequently repaid in March 2020. Financing liability In connection with the Company’s failed sale-leaseback transaction (refer to Note 14), a financing liability was recognized equal to the cash proceeds received. The Company will recognize the cash payments made on the lease as interest expense, and the principal will be derecognized upon expiration of the lease. SAF loan and collateral On March 11, 2020, the Company borrowed $21,000 from an institutional lender pursuant to a credit facility. The credit facility permits the Company to borrow up to $100,000, which may be drawn down by the Company in four tranches, maturing two years from the date of the first draw down. The Company will pay an annual interest rate of 3.55% on the first advance of debt for a term of two years. The borrowed amounts under the credit facility are fully collateralized by $22,000 of restricted cash, which was borrowed pursuant to the loan transaction described below. Any additional draws must be fully cash collateralized as well. Also on March 11, 2020, the Company closed $22,000 in borrowings pursuant to a loan transaction with IP Investment Company, LLC (the “Lender”). The maturity date is 366 days from the closing date of the loan transaction. The Company will pay monthly interest on the collateral in the form of 41 SVS through the maturity date. The Lender may put any unsold interest shares to the Company upon maturity at a price of $4.50 per share. Kevin Murphy, the Company’s Chief Executive Officer, loaned $21,000 of the $22,000 borrowed by the Company to the Lender. The loan is secured by the non-U.S. intellectual property assets, a cannabis state license and 12,000 SVS shares of the Company. The Company has determined such interest on collateral to be a mandatorily redeemable financial instrument that is recorded as a liability in accordance with ASC 480 - Distinguishing liabilities from equity (“ASC 480”). The liability is calculated based upon the share interest multiplied by the maturity price of $4.50 per share. The liability amounted to $128 as of March 31, 2020 and was recorded in Debt, current within the Statements of Financial Position. |
Shareholders' Equity and Non-Controlling Interests |
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Shareholders' Equity and Non-Controlling Interests [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity Note Disclosure [Text Block] | SHAREHOLDERS’ EQUITY AND NON-CONTROLLING INTERESTS The table below details the change in Pubco shares outstanding by class for the three months ended March 31, 2020:
The table below details the change in Pubco shares outstanding by class for the three months ended March 31, 2019:
Warrants A summary of the warrants activity outstanding is as follows:
On February 10, 2020, the Company raised $27,887, net of issuance costs, from a private placement of 6,085 warrants priced at $4.93 per unit. The warrants were automatically exercised on March 2, 2020 for no additional consideration, and each unit sold consists of one SVS voting share and one purchase warrant with an exercise price of $5.80 and a five-year expiration. The Company evaluated the warrants for liability or equity classification in accordance with ASC 480 and determined that equity treatment was appropriate as the warrants only require settlement through the issuance of the Company’s SVS which are not redeemable, and do not represent an obligation to issue a variable number of shares. Accordingly, the warrants were classified as equity and are not subject to remeasurement at each balance sheet date. The exercise price of all other warrants outstanding as of March 31, 2020 is $25 per share. The weighted-average remaining contractual life of the warrants outstanding is approximately 4 years. There was no aggregate intrinsic value for warrants outstanding as of March 31, 2020. Non-controlling interests - convertible units The Company has NCIs in consolidated subsidiaries USCo2 and HSCP. The non-voting shares of USCo2 and HSCP units make up substantially all of the NCI balance as of March 31, 2020 and are convertible for either one Subordinate Voting Share of Pubco or cash, as determined by the Company. Summarized financial information of HSCP is presented below. USCo2 does not have discrete financial information separate from HSCP.
As of March 31, 2020, USCo2’s non-voting shares owned approximately 0.61% of HSCP units. USCo2’s capital structure is comprised of voting shares (approximately 69%), all of which are held by the Company, and of non-voting shares (approximately 31%) held by certain former HSCP members. Certain executive employees and profits interests holders own approximately 19.56% of HSCP units. The remaining 79.83% interest in HSCP is held by USCo and represents the members’ equity attributable to shareholders of the parent. During the three months ended March 31, 2020 and 2019, the Company had several transactions with HSCP and USCo2 that changed its ownership interest in the subsidiaries but did not result in loss of control. These transactions included business acquisitions and intangible purchases where equity was issued as consideration (see Notes 3 and 4) and the redemption of HSCP and USCo2 convertible units for Pubco shares (as shown in the table below), and resulted in a $6,564 and $(3,640) allocation from NCI to shareholders' equity for the three months ended March 31, 2020 and 2019, respectively. A reconciliation of the beginning and ending amounts of convertible units is as follows:
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Share-based Payment Arrangement [Text Block] | EQUITY-BASED COMPENSATION EXPENSE Equity-based compensation expense recognized in the Statements of Operations for the periods presented is as follows:
Equity-based compensation - Plan (Acreage Holdings, Inc. Omnibus Incentive Plan) In connection with the RTO transaction, the Company’s Board of Directors adopted an Omnibus Incentive Plan, as amended May 7, 2019 and June 19, 2019 (the “Plan”), which permits the issuance of stock options, stock appreciation rights, stock awards, share units, performance shares, performance units and other stock-based awards up to an amount equal to 15% of the issued and outstanding Subordinate Voting Shares of the Company. Restricted Share Units (“RSUs”)
RSUs of the Company generally vest over a period of two years. The fair value for RSUs is based on the Company’s share price on the date of the grant. The Company recorded $13,414 as compensation expense during the three months ended March 31, 2020. The fair value of RSUs vested during the three months ended March 31, 2020 was $3,503. The total weighted average remaining contractual life and aggregate intrinsic value of unvested RSUs at March 31, 2020 was approximately 2 years and $21,247, respectively. Unrecognized compensation expense related to these awards at March 31, 2020 was $77,083 and is expected to be recognized over a weighted average period of approximately 2 years. There were 744 and 4 vested RSUs that are pending delivery or deferred as of March 31, 2020 and 2019, respectively. On February 20, 2020, the Company issued 1,505 RSUs to certain executives with a weighted-average grant fair value of $5.11 per share. 148 of the 1,505 RSUs vested immediately. Certain shares are subject to restriction thus a discount for lack of marketability was applied that correlates to the period of time. On March 13, 2020, the Company issued 630 RSUs to employees of the Company. All of these units vested immediately, with a fair market value of $2.15, which was the closing price of the Company’s subordinate voting shares on March 13, 2020. The entire amount is pending delivery as of March 31, 2020. (1) Equity-based compensation - Plan (CGC Awards) Included in the RSUs granted during the three months ended March 31, 2020 are “CGC Awards” issued in connection with the RSUs which were granted in July 2019: On June 27, 2019, pursuant to the Arrangement Agreement (as defined in Note 13), 4,909 RSUs were awarded in total to five executive employees under the Plan. These awards vest as follows: 25% in June 2020, 25% in June 2021 and 50% three months following the Acquisition (as defined in Note 13). The Company recorded $2,762 as compensation expense during the three March 31, 2020 in connection with these awards. A discount for lack of marketability was applied that correlates to the period of time certain of these shares are subject to restriction. On July 31, 2019, the Company issued 1,778 RSUs to employees with unvested RSUs and stock options ("make-whole awards") as at the date of the Option Premium payment (as defined in Note 13). The RSUs were issued to provide additional incentive for employees that were not eligible to receive the full Option Premium and were subject to the same vesting terms as the unvested options and RSUs held as of the grant date. The Company recorded $2,049 as compensation expense during the three months ended March 31, 2020 in connection with these awards. Stock options
Stock options of the Company generally vest over a period of three years and have an expiration period of 10 years. The weighted average contractual life remaining for options outstanding and exercisable as of March 31, 2020 was approximately 9 years. The Company recorded $5,876 as compensation expense during the three months ended March 31, 2020, in connection with these awards. As of March 31, 2020, unamortized expense related to stock options totaled $41,088 and is expected to be recognized over a weighted-average period of approximately 2 years. There was no aggregate intrinsic value for options outstanding or exercisable as of March 31, 2020. Equity-based compensation - other HSCP C-1 Profits Interests Units (“Profits Interests”) These membership units qualify as profits interests for U.S. federal income tax purposes and were accounted for in accordance with ASC 718, Compensation - Stock Compensation. HSCP amortizes awards over service period and until awards are fully vested. The following table summarizes the status of unvested Profits Interests for the three months ended March 31, 2020:
The Company recorded $70 as compensation expense in connection with these awards during the three months ended March 31, 2020. The fair value of Profits Interests vested during the three months ended March 31, 2020 was $1,239. As of March 31, 2020, all Profits Interests were fully vested. Restricted Shares (“RSs”) In connection with the Company’s acquisition of Form Factory during 2019, 1,369 restricted shares with a grant date fair value of $20.45 were issued to former employees of Form Factory subject to future service conditions, which fully vest 24 months from the acquisition date. The fair value for RSs is based on the Company’s share price on the date of the grant. The Company recorded compensation expense of $15,377 during the three months ended March 31, 2020 in connection with these awards. During the three months ended March 31, 2020, certain employees separated from the Company, resulting in 1,128 RSs accelerating vesting and $14,888 incurred in expenses. The total weighted average remaining contractual life and aggregate intrinsic value of RSs at March 31, 2020 was approximately 1 year and $559, respectively. As of March 31, 2020, unamortized expense related to RSs totaled $1,991 and is expected to be recognized over a weighted average period of approximately 1 year. There was no comparable RS activity during the three months ended March 31, 2019. |
Commitments and Contingencies |
3 Months Ended |
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Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies Disclosure [Text Block] | COMMITMENTS and CONTINGENCIES Commitments The Company provides revolving lines of credit to several of its portfolio companies. Refer to Note 6 for further information. Definitive agreements On April 17, 2019, the Company entered into a definitive agreement to acquire Deep Roots Medical, LLC (“Deep Roots”), a vertically integrated license holder in Nevada, for consideration of 4,762 HSCP units (valued at approximately $11,048 based on the March 31, 2020 closing price of $2.32 per share) and $20,000 in cash. The Company announced the termination of the agreement by Deep Roots on April 3, 2020 following March 31, 2020, the end date for consummating the transaction. During the year ended December 31, 2018, the Company entered into a definitive agreement to acquire all ownership interests in GCCC Management, LLC, a management company overseeing the operations of Greenleaf Compassionate Care Center, Inc., a non-profit cultivation and processing facility in Rhode Island, for cash consideration of $10,000. The agreement terminated in April 2020. Canopy Growth On June 19, 2019, the shareholders of the Company and of Canopy Growth separately approved the proposed arrangement involving the two companies (the “Existing Arrangement”), and on June 21, 2019, the Supreme Court of British Columbia granted a final order approving the Existing Arrangement. Effective June 27, 2019, the articles of the Company were amended pursuant to a plan of arrangement to provide that, upon a change in federal laws in the United States to permit the general cultivation, distribution and possession of marijuana (as defined in the relevant legislation) or to remove the regulation of such activities from the federal laws of the United States (the “Triggering Event”), subject to the satisfaction of the conditions set out in the arrangement agreement entered into between Acreage and Canopy Growth on April 18, 2019, as amended on May 15, 2019 (the “Arrangement Agreement”), Canopy Growth will acquire all of the issued and outstanding shares in the capital of the Company (each, an “Acreage Share”). Under the terms of the Arrangement Agreement, holders of Acreage Shares and certain securities convertible or exchangeable into Class A subordinate voting shares of Acreage (the “Subordinate Voting Shares”) as of the close of business on June 26, 2019, received approximately $2.63, being their pro rata portion (on an as converted to Subordinate Voting Share basis) of $300,000 (the “Option Premium”) paid by Canopy Growth. Upon the occurrence of the Triggering Event and subject to the satisfaction or waiver of the conditions to closing set out in the Arrangement Agreement, Canopy Growth will acquire (the “Acquisition”) each of the Subordinate Voting Shares of Acreage (following the automatic conversion of the Class B proportionate voting shares and Class C multiple voting shares of Acreage into Subordinate Voting Shares) for the payment of 0.5818 of a common share of Canopy Growth (each whole common share, a “Canopy Growth Share”) per Subordinate Voting Share (subject to adjustment in accordance with the terms of the Arrangement Agreement) (the “Exchange Ratio”). HSCP unit holders will be required to convert their units within three years following the closing of the Acquisition as will holders of non-voting shares of USCo2. Pursuant to the terms of the Arrangement Agreement, the Company is permitted to issue up to an additional 58,000 Subordinate Voting Shares (of which approximately 39,000 remain available for issuance as of March 31, 2020) without any adjustment being required to the Exchange Ratio. The Exchange Ratio is subject to adjustment in the circumstances set out in the Arrangement Agreement. Proposed Amendment to Canopy Growth Arrangement On June 24, 2020, Acreage and Canopy Growth entered into a proposal agreement (the “Proposal Agreement”) which sets out, among other things, the terms and conditions upon which the parties are proposing to amend the Arrangement Agreement (the “Amended Arrangement Agreement”) and amend and restate the existing plan of arrangement (the “Amended Plan of Arrangement”). The effectiveness of the Amended Arrangement Agreement and the implementation of the Amended Plan of Arrangement is subject to the conditions set out in the Proposal Agreement, including, among others, approval by (i) the Supreme Court of British Columbia at a hearing upon the procedural and substantive fairness of the terms and conditions of the Amended Plan of Arrangement (“Court Approval”); and (ii) the shareholders of Acreage as required by applicable corporate and securities laws. Upon receipt of Acreage shareholder approval, Court Approval and the satisfaction of all other conditions set out in the Proposal Agreement, including the advance of $50,000 to a subsidiary of Acreage pursuant to a loan, Acreage and Canopy Growth will enter into the Amended Arrangement Agreement. The effectiveness of the Amended Arrangement Agreement and the implementation of the Amended Plan of Arrangement is also subject to additional conditions as set forth in the Proposal Agreement. Each of Acreage and Canopy Growth has made certain representations and warranties and agreed to certain covenants in the Proposal Agreement, including covenants regarding the conduct of their respective businesses prior to the Amendment Time (as defined below) that are in addition to the covenants contained in the Arrangement Agreement. In particular, the Proposal Agreement sets forth, among other things, (i) certain financial reporting obligations of Acreage from the execution of the Proposal Agreement until the earlier of the termination of the Proposal Agreement or the implementation of the Amended Plan of Arrangement (the “Interim Period”); (ii) certain restrictions on Acreage’s ability to issue any securities or incur any debt obligations during the Interim Period; (iii) a business plan for Acreage for each fiscal year ended December 31, 2020 through to December 31, 2029, and a requirement for Acreage to conduct its business in accordance with such business plan; and (iv) limitations on any public communication made by Acreage during the Interim Period. The Proposal Agreement contains certain termination rights, including (i) in favor of both Acreage and Canopy Growth, in the event that the Acreage shareholder approval is not obtained at the special meeting of Acreage shareholders, or (ii) in favor of Canopy Growth in the event that the Acreage board of directors determines, in accordance with the Proposal Agreement to make a Change in Recommendation (as defined in the Proposal Agreement). The Proposal Agreement further provides that, upon termination of the Proposal Agreement following a Change in Recommendation, Acreage will be required to pay an expense reimbursement to Canopy Growth in the amount of $3,000; provided however, that Acreage will not be required to make this payment if the Change in Recommendation was the result of a Purchaser Material Adverse Effect (as defined in the Arrangement Agreement). Upon satisfaction or waiver of the conditions set out in the Proposal Agreement, the Amending Agreement and the Amended Plan of Arrangement will be effective at 12:01 a.m. (Vancouver time) or such other time as the parties may mutually agree (the “Amendment Time”) on the date that the Amended Plan of Arrangement becomes effective. Pursuant to the Amended Plan of Arrangement, at the Amendment Time, Canopy Growth will make a cash payment of $37,500 to the Acreage shareholders and certain holders of securities convertible or exchangeable into shares of Acreage and Acreage will complete a capital reorganization (the “Capital Reorganization”) whereby (i) each Existing SVS will be exchanged for 70.0% of a Class E subordinate voting share (each whole share, a “Fixed Share”) and 30.0% of a Class D subordinate voting share (each whole share, a “Floating Share”); (ii) each Existing PVS will be exchanged for 28 Fixed Shares and 12 Floating Shares; and (iii) each Existing MVS will be exchanged for 70.0% of a new multiple voting share (each whole share, a “Fixed Multiple Share”) and 30.0% of a Floating Share. No fractional Fixed Shares, Fixed Multiple Shares or Floating Shares will be issued pursuant to the Capital Reorganization. Each Fixed Multiple Voting Share will be entitled to 4,300 votes at all meetings of Acreage shareholders with each Fixed Share and each Floating Share will be entitled to one vote per share at such meetings. Pursuant to the Amended Plan of Arrangement, upon the occurrence or waiver (at the discretion of Canopy Growth) of the Triggering Event (the “Triggering Event Date”), Canopy Growth will, subject to the satisfaction or waiver of certain closing conditions set out in the Arrangement Agreement (i) acquire all of the issued and outstanding Fixed Shares (following the mandatory conversion of the Fixed Multiple Shares into Fixed Shares) on the basis of 30.48% of a Canopy Growth Share for each Fixed Share held at the time of the acquisition of the Fixed Shares, subject to adjustment in accordance with the terms of the Amended Plan of Arrangement (the “Canopy Call Option”); and (ii) have the right (but not the obligation) (the “Floating Call Option”), exercisable for a period of 30 days following the Triggering Event Date to acquire all of the issued and outstanding Floating Shares at a price to be determined based upon the fair market value of the Floating Shares relative to the Canopy Growth Shares on the Triggering Event Date, subject to (a) a minimum price of $6.41; and (b) adjustment in accordance with the terms of the Amended Plan of Arrangement, to be payable, at the option of Canopy Growth, in cash or Canopy Growth Shares. The closing of the acquisition of the Floating Shares pursuant to the Floating Call Option, if exercised, will take place concurrently with the closing of the acquisition of the Fixed Shares pursuant to the Canopy Call Option, if exercised. No fractional Canopy Growth Shares will be issued pursuant to the Amended Plan of Arrangement. The Canopy Call Option and the Floating Call Option will expire 10 years from the Amendment Time. Surety bonds The Company has indemnification obligations with respect to surety bonds primarily used as security against non-performance in the amount of $5,000 as of March 31, 2020, for which no liabilities are recorded on the Statements of Financial Position. The Company is subject to other capital commitments and similar obligations. As of March 31, 2020 and 2019, such amounts were not material. Contingencies As of March 31, 2020, the Company has consulting fees payable in SVS which are contingent upon successful acquisition of certain state cannabis licenses. The Company had maximum obligations of $8,750 and 400 SVS, and no reserve for the contingencies has been recorded as of March 31, 2020. The Company’s operations are subject to a variety of local and state regulations. Failure to comply with one or more of those regulations could result in fines, restrictions on its operations, or losses of permits that could result in the Company ceasing operations. While management of the Company believes that the Company is in compliance with applicable local and state regulations as of March 31, 2020, cannabis regulations continue to evolve and are subject to differing interpretations. As a result, the Company may be subject to regulatory fines, penalties, or restrictions in the future. The Company may be, from time to time, subject to various administrative, regulatory and other legal proceedings arising in the ordinary course of business. Contingent liabilities associated with legal proceedings are recorded when a liability is probable, and the contingent liability can be reasonably estimated. New York outstanding litigation On November 2, 2018, EPMMNY LLC (“EPMMNY”) filed a complaint in the Supreme Court of the State of New York, County of New York, asserting claims against 16 defendants, including NYCANNA, Impire State Holdings LLC, NY Medicinal Research & Caring, LLC (each, a wholly-owned subsidiary of High Street) and High Street. The Index Number for the action is 655480/2018. EPMMNY alleges that it was wrongfully deprived of a minority equity interest and management role in NYCANNA by its former partner, New Amsterdam Distributors, LLC, which attempted to directly or indirectly sell or transfer EPMMNY’s alleged interest in NYCANNA to other entities in 2016 and 2017, including Impire, NYMRC and High Street. EPMMNY alleges that it is entitled to the value of its alleged minority interest in NYCANNA or minority ownership in NYCANNA. EPMMNY also alleges that certain defendants misused its alleged intellectual property and/or services, improperly solicited its employees, and aided and abetted or participated in the transfer of equity and/or business opportunities from EPMMNY. High Street intends to vigorously defend this action, which the Company firmly believes is without merit. EPMMNY alleges that it was improperly deprived of its equity stake in NYCANNA before NYCANNA was acquired by High Street. High Street is also entitled to full indemnity from the claims asserted against it by EPMMNY pursuant to the purchase agreement pertaining to its acquisition of NYCANNA and personal guarantee by the largest shareholders of the seller. The defendants filed a motion to dismiss on April 1, 2019. The motion was fully briefed and submitted to the Court on July 18, 2019, and oral argument was heard on September 6, 2019. The motion remains pending before the Court. |
Related Party Transactions |
3 Months Ended |
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Mar. 31, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions Disclosure [Text Block] | RELATED PARTY TRANSACTIONS Transactions with related parties are entered into in the normal course of business and are measured at the amount established and agreed to by the parties. Related party notes receivable Acreage has certain outstanding notes receivable with related parties. Refer to Note 6 for further information. GreenAcreage The Company has an investment carried at FV-NI in GreenAcreage. The Company also has an equity method investment in the management company of GreenAcreage resulting from the CEO’s board involvement. Related party debt In December 2019, the Company’s CEO loaned $15,000 to the Company. In January 2020, he made an additional loan of $5,000 to Acreage. These amounts were subsequently repaid in March 2020. Credit agreement collateral |
Reportable Segments |
3 Months Ended |
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Mar. 31, 2020 | |
Reportable Segments [Abstract] | |
Segment Reporting Disclosure [Text Block] | REPORTABLE SEGMENTS The Company prepares its segment reporting on the same basis that its Chief Operating Decision Maker manages the business and makes operating decisions. The Company operates under one operating segment, which is its only reportable segment: the production and sale of cannabis products. The Company’s measure of segment performance is net income, and derives its revenue primarily from the sale of cannabis products, as well as related management or consulting services which were not material in all periods presented. All of the Company’s operations are located in the United States.
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Subsequent Events |
3 Months Ended |
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Mar. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | SUBSEQUENT EVENTS Terminated Transactions On April 3, 2020, the Company announced the termination of the securities purchase agreement among Greenleaf Compassionate Care Center, Inc., GCCC Management, LLC (“GCCCM”), the equity holders of GCCCM and high Street Capital Partners, LLC relating to the proposed acquisition of a dispensary in Rhode Island. Additionally, the merger agreement entered into with Deep Roots Medical LLC was terminated. Sale of Acreage North Dakota On May 8, 2020, the Company sold all equity interests in Acreage North Dakota, LLC, a medical cannabis dispensary holder and operator, for $1,000. Standby Equity Distribution Definitive Agreement Effective May 29, 2020, the Company reached a definitive agreement with an institutional lender for $50,000 of financing commitments under a Standby Equity Distribution Agreement. The investor commits to purchase up to $50,000 of subordinate voting shares of the Company at a purchase price of 95% of the market price over the course of 24 months from the effective date. Convertible Note Effective May 29, 2020, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with YA II PN, Ltd. (the “Investor”), pursuant to which the Company sold and issued $11,000 in principal amount under a secured convertible debenture, with gross proceeds to the Company of $10,000 before transaction fees (the “Convertible Debenture”). The Convertible Debenture will bear interest at 15% per annum and is secured by the Company’s medical cannabis dispensaries in Connecticut. The Convertible Debenture is convertible by the holder in whole or in part after September 30, 2020. Prior to September 30, 2020, the holder may convert only $550 of principal amount. The Convertible Debenture is convertible into Class A Subordinate Voting Shares of the Company at a conversion price of $1.68 per share, subject to the conversion limitations described above. The Company has the right to redeem up to 95% of the principal amount on or prior to September 29, 2020 without penalty. In connection with the Securities Purchase Agreement, the Company executed a registration rights agreement (the “Registration Rights Agreement”) pursuant to which it is required to file a registration statement (the “Registration Statement”) with the Securities and Exchange Commission (the “SEC”) for the resale of certain of the shares of the Company. Pursuant to the Registration Rights Agreement, the Company is required to meet certain obligations with respect to, among other things, the timeliness of the filing and effectiveness of the Registration Statement. The Company is obligated to file the Registration Statement no later than 30 days following May 29, 2020 and to use its best efforts have it declared effective by the SEC no later than 90 days after filing. Acreage filed the Registration Statement on June 22, 2020. Secured Bridge Loan Agreement On June 16, 2020, the Company entered into a short-term definitive funding agreement with an institutional investor for gross proceeds of $15,000 (less transaction costs of approximately $943). The secured note has a maturity date of four months and bears an interest rate of 60% per annum. It is secured by, among other items, the Company’s cannabis operations in Illinois, New Jersey and Florida, as well as the Company’s U.S. intellectual property. In the event of default, the Company is obligated to pay the lender an additional fee of $6,000. The Company may pre-pay the secured note without penalty or premium at any time following the 90th day after closing. Acquisition of New Jersey Medical Operations On June 26, 2020, the Company announced the closing of the transactions contemplated by the previously announced Reorganization Agreement, dated November 15, 2019, among the Company, Compassionate Care Foundation, Inc. (“CCF”), a New Jersey vertically integrated medical cannabis nonprofit corporation, and certain affiliates thereof, pursuant to which Acreage CCF New Jersey, LLC, a subsidiary of HSCP, acquired 100% of the operations of CCF. In accordance with the terms of the Reorganization Agreement, Acreage assumed all debts, liabilities and obligations of CCF, including fees, costs and expenses to be incurred by CCF in connection with the dissolution and wind-up of CCF and paid to the former trustees of CCF an aggregate total of $10,000 at closing. Proposed Amendment to Arrangement with Canopy Growth Corporation |
Quarterly Financial Data (unaudited) |
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Quarterly Financial Information [Text Block] | Basic earnings per share are computed by dividing net loss attributable to common shareholders of the Company by the weighted average number of outstanding for the period. Diluted earnings per share are calculated based on the weighted number of outstanding common shares plus the dilutive effect of stock options and warrants, as if they were exercised, and restricted stock units and profits interests, as if they vested and NCI convertible units, as if they converted. Basic and diluted loss per share is as follows:
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Significant Accounting Policies (Policies) |
3 Months Ended |
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Mar. 31, 2020 | |
Significant Accounting Policies [Abstract] | |
Description of New Accounting Pronouncements Not yet Adopted [Text Block] | In June 2016, the FASB issued ASU 2016-13 - Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which was subsequently revised by ASU 2018-19. The ASU introduces a new model for assessing impairment on most financial assets. Entities will be required to use a forward-looking expected loss model, which will replace the current incurred loss model, which will result in earlier recognition of allowance for losses. The ASU will be effective for the Company’s first interim period of fiscal 2023, and the Company is currently evaluating the impact of the new standard.
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Substantial Doubt about Going Concern [Text Block] | Basis of presentation and going concern The Unaudited Condensed Consolidated Financial Statements of Acreage have been prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, all adjustments consisting only of normal recurring adjustments necessary for a fair presentation have been reflected in these Unaudited Condensed Consolidated Financial Statements. Operating results for the interim periods presented are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2020. As reflected in the financial statements, the Company had an accumulated deficit as of March 31, 2020, as well as a net loss and net cash used in operating activities for the reporting period then ended. These factors raise substantial doubt about the Company’s ability to continue as a going concern for at least one year from the issuance of these financial statements. However, management believes that substantial doubt about the Company’s ability to meet our obligations for the next twelve months from the date these financial statements were issued has been alleviated due to, but not limited to, (i) capital raised between January and June 2020, (ii) access to future capital commitments (see Note 13), (iii) continued sales growth from our consolidated operations, (iv) latitude as to the timing and amount of certain operating expenses as well as capital expenditures, (v) restructuring plans that have already been put in place to improve the Company’s profitability and (vi) the Standby Equity Distribution Agreement described in Note 17 of the Unaudited Condensed Consolidated Financial Statements. If the Company is unable to raise additional capital whenever necessary, it may be forced to decelerate or curtail its footprint buildout or other operational activities until such time as additional capital becomes available. Such limitation of the Company’s activities would allow it to slow its rate of spending and extend its use of cash until additional capital is raised. However, management cannot provide any assurances that we will be successful in accomplishing any of our plans. Management also cannot provide any assurance as to unforeseen circumstances that could occur at any time within the next twelve months or thereafter which could increase our need to raise additional capital on an immediate basis. |
Use of estimates | Use of estimates The preparation of the Company’s Unaudited Condensed Consolidated Financial Statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the amounts that are reported in the Unaudited Condensed Consolidated Financial Statements and accompanying disclosures. Although these estimates are based on management’s best knowledge of current events and actions that the Company may undertake in the future, actual results may differ from those estimates. Significant estimates inherent in the preparation of the accompanying Unaudited Condensed Consolidated Financial Statements include the fair value of assets acquired and liabilities assumed in business combinations, assumptions relating to equity-based compensation expense, estimated useful lives for property, plant and equipment and intangible assets, the valuation allowance against deferred tax assets and the assessment of potential impairment charges on goodwill, intangible assets and investments in equity and notes receivable. |
Emerging Growth Company [Policy Text Block] | Emerging growth company We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies.
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Functional and presentation currency | Functional and presentation currency The Unaudited Condensed Consolidated Financial Statements and the accompanying notes are expressed in U.S. dollars. Financial metrics are presented in thousands. Other metrics, such as shares outstanding, are presented in thousands unless otherwise noted.
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Basis of consolidation | Basis of consolidation Our Unaudited Condensed Consolidated Financial Statements include the accounts of Acreage, its subsidiaries and variable interest entities (“VIEs”) where we are considered the primary beneficiary, if any, after elimination of intercompany accounts and transactions. Investments in entities in which the Company has significant influence, but less than a controlling financial interest, are accounted for using the equity method. Our proportionate share of net income or loss of the entity is recorded in Income (loss) from investments, net in the Consolidated Statements of Operations. |
Earnings Per Share, Policy [Policy Text Block] | oss per share |
Acquisitions (Tables) |
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Acquisitions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 PPA [Table Text Block] |
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Intangible Assets and Goodwill (Tables) |
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Intangibles and Goodwill [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets [Table Text Block] |
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Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block] |
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Schedule of Goodwill [Table Text Block] |
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Investments (Tables) |
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Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment Holdings, Schedule of Investments [Table Text Block] |
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Investment Income [Table Text Block] |
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Notes Receivable (Tables) |
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Notes Receivable [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block] |
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Schedule of Line of Credit Facilities [Table Text Block] |
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Capital Assets, net (Tables) |
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Property, Plant and Equipment [Table Text Block] |
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Leases (Tables) |
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Finance Lease, Liability, Maturity [Table Text Block] |
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Lease, Cost [Table Text Block] |
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Inventory (Tables) |
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Schedule of Inventory, Current [Table Text Block] |
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Debt (Tables) |
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Schedule of Debt [Table Text Block] |
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Interest Income and Interest Expense Disclosure [Table Text Block] |
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Shareholders' Equity and Non-Controlling Interests (Tables) |
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Mar. 31, 2020 |
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Schedule of Stock by Class [Table Text Block] |
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Schedule of Stockholders' Equity Note, Warrants or Rights [Table Text Block] |
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Noncontrolling Interest, Period Increase (Decrease) [Table Text Block] |
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Schedule of Conversions of Stock [Table Text Block] |
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Equity-Based Compensation (Tables) |
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Mar. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Disclosure of Share-based Compensation Arrangements by Share-based Payment Award [Table Text Block] |
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Share-based Payment Arrangement, Restricted Stock and Restricted Stock Unit, Activity [Table Text Block] |
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Share-based Payment Arrangement, Option, Activity [Table Text Block] |
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Share-based payment arrangements, LLC profits interests [Table Text Block] |
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Nature of Operations (Details) - $ / shares |
Mar. 02, 2020 |
Feb. 10, 2020 |
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Nature of Operations [Abstract] | ||
Strike price per broker warrant | $ 5.80 | $ 4.93 |
Significant Accounting Policies (Details) - shares shares in Thousands |
3 Months Ended | |
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Mar. 31, 2020 |
Mar. 31, 2019 |
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Property, Plant and Equipment [Line Items] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 46,962 | 37,588 |
Acquisitions 2018 Pro forma (Details) - USD ($) $ in Thousands |
3 Months Ended | |
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Mar. 31, 2020 |
Mar. 31, 2019 |
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Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | ||
Total revenues, net | $ 24,225 | $ 12,897 |
Gross Profit | 9,954 | 5,320 |
Operating Income (Loss) | (251,282) | (32,013) |
Net loss | $ (222,229) | $ (30,804) |
Acquisitions Deferred Acquisition Costs and Deposits (Details) - USD ($) $ in Thousands |
3 Months Ended | |
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Mar. 31, 2020 |
Mar. 31, 2019 |
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Schedule of Deferred Acquisition Costs and Deposits [Line Items] | ||
Deferred acquisition costs and deposits | $ 0 | $ 300 |
Intangible Assets and Goodwill Narrative (Details) - USD ($) |
3 Months Ended | ||||
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Mar. 31, 2020 |
Mar. 31, 2019 |
Mar. 11, 2020 |
Mar. 06, 2020 |
Feb. 10, 2020 |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||
Impairment of Intangible Assets, Indefinite-lived (Excluding Goodwill) | $ 92,798,000 | $ 0 | |||
Impairment of Intangible Assets, Finite-lived | 8,324,000 | 0 | |||
Acquired Indefinite-lived Intangible Assets [Line Items] | |||||
Goodwill, Impairment Loss | 65,304,000 | 0 | |||
Business Combination, Step Acquisition, Equity Interest in Acquiree, Fair Value | 830,000 | ||||
Intangible Purchase, Notes receivable acquired | 539,000 | ||||
Income Tax Expense (Benefit), Continuing Operations, Adjustment of Deferred Tax (Asset) Liability | 31,316 | ||||
Convertible Debt | 18,800,000 | 0 | $ 22,000 | $ 18,800,000 | $ 27,887 |
Tangible Asset Impairment Charges | 11,586,000 | ||||
Other Asset Impairment Charges | 9,395,000 | ||||
Amortization of Intangible Assets | $ 1,165,000 | $ 661,000 |
Intangible Assets and Goodwill Future Amortization Table (Details) $ in Thousands |
Mar. 31, 2020
USD ($)
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Goodwill and Intangible Assets Disclosure [Abstract] | |
Finite-Lived Intangible Assets, Amortization Expense, Next Twelve Months | $ 1,623 |
Finite-Lived Intangible Assets, Amortization Expense, Year Two | 2,164 |
Finite-Lived Intangible Assets, Amortization Expense, Year Three | 2,164 |
Finite-Lived Intangible Assets, Amortization Expense, Year Four | 2,164 |
Finite-Lived Intangible Assets, Amortization Expense, Year Five | $ 2,164 |
Intangible Assets and Goodwill Goodwill Table (Details) - USD ($) $ in Thousands |
3 Months Ended | |
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Mar. 31, 2020 |
Dec. 31, 2019 |
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Goodwill [Line Items] | ||
Goodwill | $ 28,867 | $ 105,757 |
Goodwill, Period Increase (Decrease) | 0 | |
Goodwill, Purchase Accounting Adjustments | $ (76,890) |
Investments Investment Holdings Table (Details) - USD ($) |
Mar. 31, 2020 |
Mar. 11, 2020 |
Dec. 31, 2019 |
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Investment Holdings [Line Items] | |||
Equity Securities, FV-NI | $ 4,607,000 | $ 5,700 | $ 4,376,000 |
Equity Method Investments | 118,000 | 123,000 | |
Long-term investments | $ 4,725,000 | $ 4,499,000 |
Investments Investment Income Table (Details) - USD ($) $ in Thousands |
3 Months Ended | |
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Mar. 31, 2020 |
Mar. 31, 2019 |
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Net Investment Income [Line Items] | ||
Income from investments, net | $ 234 | $ 2,727 |
Short-term Debt [Member] | ||
Net Investment Income [Line Items] | ||
Income from investments, net | 0 | 500 |
Equity securities, FV-NI [Member] | ||
Net Investment Income [Line Items] | ||
Income from investments, net | 240 | 1,203 |
Equity Method Investments [Member] | ||
Net Investment Income [Line Items] | ||
Income from investments, net | $ (6) | $ 1,024 |
Investments Investments Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | |
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Mar. 31, 2020 |
Mar. 31, 2019 |
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Investments [Abstract] | ||
Treasury bill interest rate range, minimum | 2.20% | |
Treasury bill interest rate range, maximum | 2.40% | |
Proceeds from purchase of short-term investments | $ 0 | $ 74,768 |
Notes Receivable Notes Receivable Table (Details) - USD ($) $ in Thousands |
Mar. 31, 2020 |
Dec. 31, 2019 |
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Notes Receivable [Abstract] | ||
Financing Receivable, Not Past Due | $ 99,105 | $ 75,851 |
Interest Receivable | 4,731 | 5,774 |
Notes receivable, including accrued interest | 103,836 | 81,625 |
Notes receivable, current | 2,123 | 2,146 |
Notes receivable, non-current | $ 101,713 | $ 79,479 |
Capital Assets, net (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
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Mar. 31, 2020 |
Mar. 31, 2019 |
Dec. 31, 2019 |
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Property, Plant and Equipment [Line Items] | |||
Depreciation | $ 902 | $ 247 | |
Land | 11,611 | $ 9,839 | |
Buildings and Improvements, Gross | 37,516 | 34,522 | |
Finance Lease, Right-of-Use Asset | 5,980 | 5,954 | |
Construction in Progress, Gross | 17,125 | 17,288 | |
Furniture and Fixtures, Gross | 27,897 | 21,019 | |
Leasehold Improvements, Gross | 23,240 | 22,682 | |
Property, Plant and Equipment, Gross | 123,369 | 111,304 | |
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment | (6,676) | (5,257) | |
Capital assets, net | 116,693 | $ 106,047 | |
Depreciation capitalized to inventory | (600) | (410) | |
Sale Leaseback Transaction, Net Proceeds, Financing Activities | $ 21,000 | $ 0 |
Leases (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
Dec. 31, 2019 |
|
Leases [Abstract] | |||
Operating lease right-of-use assets | $ 55,411 | $ 51,950 | $ 51,950 |
Finance Lease, Right-of-Use Asset | 5,980 | 5,954 | |
Finance Lease, Right-of-Use Asset | 5,764 | 5,832 | |
Total right-of-use assets | 61,175 | 57,782 | |
Operating lease liability, current | 3,253 | 2,759 | 2,759 |
Finance Lease, Liability, Current | 74 | 49 | |
Operating lease liability, non-current | 51,016 | 47,522 | $ 47,522 |
Finance Lease, Liability, Noncurrent | 5,932 | 6,083 | |
Total lease liabilities | 60,275 | 56,413 | |
Short-term Lease, Cost | 317 | 298 | |
Operating Lease, Expense | 2,020 | 956 | |
Finance Lease, Right-of-Use Asset, Amortization | 95 | 2 | |
Finance Lease, Interest Expense | 215 | 12 | |
Sublease Income | (16) | (43) | |
Lease, Cost | 2,314 | 927 | |
Operating Lease, Payments | 1,493 | 522 | |
Finance Lease, Interest Payment on Liability | $ 196 | $ 12 |
Inventory (Details) - USD ($) $ in Thousands |
Mar. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Inventory [Line Items] | ||
Retail Related Inventory | $ 2,103 | $ 1,784 |
Wholesale inventory | 13,816 | 11,993 |
Cultivation inventory | 3,235 | 3,021 |
Supplies and other inventory | 1,903 | 1,285 |
Inventory | $ 21,057 | $ 18,083 |
Debt Schedule of Debt Table (Details) - USD ($) |
Mar. 31, 2020 |
Mar. 11, 2020 |
Mar. 06, 2020 |
Jan. 01, 2020 |
Dec. 31, 2019 |
Dec. 31, 2016 |
---|---|---|---|---|---|---|
Debt Instrument, Redemption [Line Items] | ||||||
Loans Payable | $ 487,000 | $ 492,000 | $ 550,000 | |||
Notes Payable | 2,744,000 | 2,810,000 | ||||
Related Party Debt | 0 | $ 21,000 | $ 5,000 | 15,000,000 | ||
Sale Leaseback Transaction, Amount Due under Financing Arrangement | 19,052,000 | 19,052,000 | ||||
Finance Lease, Liability | 6,006,000 | 6,132,000 | ||||
Collateralized Financings | 19,438,000 | 0 | ||||
Debt Instrument, Collateral Amount | 22,254,000 | 0 | ||||
Debt, Long-term and Short-term, Combined Amount | 69,981,000 | 43,486,000 | ||||
Debt, current | 22,514,000 | 21,000 | $ 1,900 | 15,300,000 | ||
Debt, non-current | $ 47,467,000 | $ 100,000 | $ 28,186,000 |
Debt Interest Income and Interest Expense Disclosure (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Debt Instrument [Line Items] | ||
Financing Interest Expense | $ 591 | $ 0 |
Finance Lease, Interest Expense | 215 | 12 |
Interest Expense, Borrowings | 89 | 0 |
Interest Expense, Long-term Debt | 254 | 0 |
Interest expense | 1,226 | 118 |
NCCRE Loan [Member] | ||
Debt Instrument [Line Items] | ||
Interest Expense, Debt | 5 | 5 |
Seller's notes [Member] | ||
Debt Instrument [Line Items] | ||
Interest Expense, Debt | $ 72 | $ 101 |
Shareholders' Equity and Non-Controlling Interests Narrative (Details) - shares |
3 Months Ended | ||||||
---|---|---|---|---|---|---|---|
Mar. 11, 2020 |
Feb. 10, 2020 |
Mar. 31, 2020 |
Mar. 31, 2019 |
Jun. 24, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Class of Stock [Line Items] | |||||||
Business Acquisition, Percentage of Voting Interests Acquired | 430000.00% | ||||||
Class of Warrant or Right, Outstanding | 6,085,000 | 8,125,000 | 2,259,000 | 2,040,000 | 2,259,000 | ||
RTO-related issuances, net, shares | 41 | 1 | 1 | ||||
Common Class C [Member] | |||||||
Class of Stock [Line Items] | |||||||
Redemption of membership units at RTO, shares | 0 | 0 |
Shareholders' Equity and Non-Controlling Interests Class of Warrant or Right (Details) - shares |
3 Months Ended | ||||
---|---|---|---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
Feb. 10, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Class of Warrant or Right [Line Items] | |||||
Class of Warrant or Right, Outstanding | 8,125,000 | 2,259,000 | 6,085,000 | 2,040,000 | 2,259,000 |
Stock and warrants issued during period, shares | 0 | ||||
Warrants and Rights, expired | 0 | 0 |
Shareholders' Equity and Non-Controlling Interests Warrants narrative (Details) |
3 Months Ended |
---|---|
Mar. 31, 2020
$ / shares
| |
Shares table narrative [Abstract] | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term | 30 days |
Share-based Payment Arrangement, Option, Exercise Price Range, Outstanding, Weighted Average Remaining Contractual Term | 10 years |
Option Indexed to Issuer's Equity, Strike Price | $ 25 |
Warrant contractual weighted average life remaining | 4 years |
Shareholders' Equity and Non-Controlling Interests Noncontrolling Interest, Balance Sheet Allocation (Details) - USD ($) $ in Thousands |
Mar. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Subsidiary-specific information [Line Items] | ||
Assets, Current | $ 68,122 | $ 55,335 |
Assets, Noncurrent | 465,607 | 636,342 |
Liabilities, Current | 67,767 | 57,153 |
Liabilities, Noncurrent | 130,791 | 139,730 |
Non-controlling interests | 45,058 | 88,787 |
HSCP LLC [Member] | ||
Subsidiary-specific information [Line Items] | ||
Assets, Current | 68,038 | 55,296 |
Assets, Noncurrent | 452,280 | 584,812 |
Liabilities, Current | 59,525 | 46,434 |
Liabilities, Noncurrent | 91,035 | 75,219 |
Other Noncontrolling Interests | (491) | (1,041) |
Accumulated equity-settled expenses | (148,310) | (111,934) |
Net Assets | $ 220,957 | $ 405,480 |
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners | 20.17% | 21.64% |
HSCP and USCo2 noncontrolling interests | $ 44,567 | $ 87,746 |
Other Noncontrolling Interests | $ 491 | $ 1,041 |
Shareholders' Equity and Non-Controlling Interests Noncontrolling Interest, P&L Allocation (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Subsidiary-specific information [Line Items] | ||
Net loss | $ (222,229) | $ (30,804) |
Less: net loss attributable to non-controlling interests | (50,275) | (7,427) |
HSCP LLC [Member] | ||
Subsidiary-specific information [Line Items] | ||
Net loss | $ (235,203) | $ (28,958) |
Weighted average ownership percentage of convertible noncontrolling interests | 21.15% | 25.63% |
HSCP net loss allocated to convertible NCI | $ (49,745) | $ (7,422) |
HSCP net loss allocated to non-convertible NCI | $ (530) | $ (5) |
Shareholders' Equity and Non-Controlling Interests NCI Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Class of Stock [Line Items] | ||
USCo2 Ownership of HSCP | 0.61% | |
USCo2 Voting Shares held by Pubco | 69.00% | |
USCo2 non-voting shares | 31.00% | |
HSCP ownership by LLC members | 19.56% | |
HSCP owned by Pubco | 79.83% | |
NCI adjustments for changes in ownership, value | $ 0 | $ 0 |
Noncontrolling Interest [Member] | ||
Class of Stock [Line Items] | ||
NCI adjustments for changes in ownership, value | $ 6,564 | $ (3,640) |
Shareholders' Equity and Non-Controlling Interests Schedule of Conversions by Stock (Details) - shares shares in Thousands |
3 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
Jan. 01, 2019 |
Dec. 31, 2018 |
|
Shareholders' Equity and Non-Controlling Interests [Abstract] | ||||
Convertible NCI units outstanding | 24,612 | 27,397 | 25,035 | 27,340 |
Issuance of NCI units | 0 | 198 | ||
Canceled NCI units | (1,310) | (123) | ||
Profits interests vested to NCI units | 1,000 | 625 | ||
NCI units settled in cash | 0 | (643) | ||
NCI units converted to Pubco shares | (113) | 0 |
Equity-Based Compensation Expense by Plan (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Equity-based compensation expense | $ 34,737 | $ 18,977 |
Share-based Compensation Arrangement by Share-based Payment Award, Percentage of Outstanding Stock Maximum | 15.00% | |
ACRG Omnibus Incentive Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Equity-based compensation expense | $ 19,290 | 18,881 |
Other equity awards [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Equity-based compensation expense | $ 15,447 | $ 96 |
Commitments and Contingencies (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Dec. 31, 2018 |
|
Business Acquisition [Line Items] | ||
Option premium, Per share | $ 2.63 | |
Option premium, Value | $ 300,000 | |
Share conversion, Per unit | 0.5818 | |
Shares authorized, Canopy Growth Transaction | 58,000,000 | |
Shares authorized, Canopy Growth Transaction, Remaining available | 39,000,000 | |
Indemnification Obligation, Surety bonds | $ 5,000 | |
Consulting fees contingent on services performed, Equity value | $ 8,750 | |
Consulting fees contingent on services performed, Shares | 400,000 | |
Deep Roots - Pending [Member] | ||
Business Acquisition [Line Items] | ||
HSCP common units to be issued | 4,762,000 | |
Common units, Value, To be issued | $ 11,048 | |
Share Price | $ 2.32 | |
Cash payable upon closing | 20,000 | |
GCCC - Pending [Member] | ||
Business Acquisition [Line Items] | ||
Cash payable upon closing | $ 10,000 |
Related Party Transactions (Details) - USD ($) |
3 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Jun. 24, 2020 |
Mar. 13, 2020 |
Mar. 11, 2020 |
Feb. 20, 2020 |
Feb. 10, 2020 |
Mar. 31, 2020 |
Mar. 06, 2020 |
Jan. 01, 2020 |
Dec. 31, 2019 |
Mar. 31, 2019 |
|
Related Party Transaction [Line Items] | ||||||||||
Convertible Debt | $ 22,000 | $ 27,887 | $ 18,800,000 | $ 18,800,000 | $ 0 | |||||
RTO expense settled in shares | 41 | 1 | 1 | |||||||
SVS secured for loan | 12,000 | |||||||||
Related Party Debt | $ 21,000 | $ 0 | $ 5,000 | $ 15,000,000 | ||||||
Restricted Stock Units (RSUs) [Member] | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | $ 6.41 | $ 2.15 | $ 4.50 | $ 5.11 | $ 3.68 |
Income Taxes Income Tax Provision (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Income Taxes [Abstract] | ||
Income Tax Expense (Benefit) | $ (28,572) | $ 2,222 |
Income Taxes Rate Reconciliation (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Rate Reconciliation [Abstract] | ||
Income Tax Expense (Benefit) | $ (28,572) | $ 2,222 |
Reportable Segments (Details) |
3 Months Ended |
---|---|
Mar. 31, 2020 | |
Reportable Segments [Abstract] | |
Number of Reportable Segments | 1 |
Subsequent Events (Details) - USD ($) |
Jun. 16, 2020 |
May 29, 2020 |
May 28, 2020 |
May 08, 2020 |
Mar. 31, 2020 |
Mar. 11, 2020 |
Mar. 06, 2020 |
Feb. 10, 2020 |
Mar. 31, 2019 |
---|---|---|---|---|---|---|---|---|---|
Subsequent Event [Line Items] | |||||||||
Convertible Debt | $ 18,800,000 | $ 22,000 | $ 18,800,000 | $ 27,887 | $ 0 | ||||
Subsequent Event | |||||||||
Subsequent Event [Line Items] | |||||||||
Proceeds from sale of investment | $ 1,000 | ||||||||
Convertible Debt | $ 11,000 | $ 50,000 | |||||||
SVS issued for consulting, value | $ 50,000 | ||||||||
Debt Instrument, Redemption Price, Percentage | 95.00% | 95.00% | |||||||
Proceeds from Issuance of Debt | $ 15,000 | $ 10,000 | |||||||
Debt Instrument, Interest Rate, Stated Percentage | 60.00% | 15.00% | |||||||
Debt Related Commitment Fees and Debt Issuance Costs | $ 943 | ||||||||
Debt Instrument, Convertible, Conversion Price | $ 1.68 | ||||||||
Debt Instrument, Debt Default, Description of Violation or Event of Default | $ 6,000 | ||||||||
Debt Conversion, Name [Domain] | Subsequent Event | |||||||||
Subsequent Event [Line Items] | |||||||||
Convertible Debt | $ 550 |
Quarterly Financial Data (unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Quarterly Financial Data (unaudited) [Abstract] | ||
Total revenues, net | $ 24,225 | $ 12,897 |
Gross Profit | 9,954 | 5,320 |
Net loss | (222,229) | (30,804) |
Net Income (Loss) Attributable to Parent | $ (171,954) | $ (23,377) |
Net loss per share attributable to Acreage Holdings, Inc. - basic and diluted: | $ (1.85) | $ (0.29) |
Label | Element | Value |
---|---|---|
Class D Share - Canopy Reorganization | acrg_ClassDShareCanopyReorganization | 12 |
Percent of Class D Share - Canopy Reorganization | acrg_PercentofClassDShareCanopyReorganization | 0.300 |
Fixed Shares Percent - Canopy Reorganization | acrg_FixedSharesPercentCanopyReorganization | $ 0.3048 |
Plan of Reorganization, Amount of Prepetition Obligations to be Settled in Cash | us-gaap_PlanOfReorganizationAmountOfPrepetitionObligationsSettledOrToBeSettledInCashAtEffectiveDate | $ 37,500 |
Class E Share - Canopy Reorganization | acrg_ClassEShareCanopyReorganization | 28 |
Percent of Class E Share - Canopy Reorganization | acrg_PercentofClassEShareCanopyReorganization | 0.700 |
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