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Acquisitions, Divestitures and Assets Held for Sale
 9 Months Ended
Sep. 30, 2020
Business Combinations, Discontinued Operations And Disposal Groups [Abstract]  
Acquisitions, Divestitures And Assets Held for Sale ACQUISITIONS, DIVESTITURES AND ASSETS HELD FOR SALE
Acquisitions

During the nine months ended September 30, 2020, the Company completed the following business combination below. The preliminary purchase price allocation is as follows:
Purchase Price AllocationCCF (1)
Assets acquired:
Cash and cash equivalents$17 
Inventory1,969 
Other current assets3,164 
Capital assets, net4,173 
Operating lease ROU assets4,455 
Goodwill5,247 
Intangible assets - cannabis licenses10,000 
Other non-current assets10 
Liabilities assumed:
Accounts payable and accrued liabilities(228)
Taxes payable(17)
Other current liabilities(4,248)
Operating lease liability(4,455)
Fair value of net assets acquired$20,087 
Consideration paid:
Cash$10,000 
Settlement of pre-existing relationship10,087 
Total consideration$20,087 

(1) On June 26, 2020, a subsidiary of the Company acquired 100% of Compassionate Care Foundation, Inc. (“CCF”), a New Jersey vertically integrated medical cannabis nonprofit corporation.

The settlement of pre-existing relationship included in the transaction price includes a $7,952 line of credit as well as interest receivable of $2,135 which were both previously recorded in Notes receivable, non-current in the Statements of Financial Position. The carrying value of these amounts approximated their fair value.
During the nine months ended September 30, 2019, the Company completed the following business combinations, and has allocated each purchase price as follows:
Purchase Price AllocationThames Valley
(1)		NCC
(2)		Form Factory
(3)		Total
Assets acquired:
Cash and cash equivalents$106 $696 $4,276 $5,078 
Inventory39 170 520 729 
Other current assets1 36 1,136 1,173 
Capital assets, net— 539 3,988 4,527 
Operating lease ROU assets— — 10,477 10,477 
Goodwill3,594 4,196 66,199 73,989 
Intangible assets - cannabis licenses14,850 2,500 39,469 56,819 
Intangible assets - customer relationships— — 4,600 4,600 
Intangible assets - developed technology— — 3,100 3,100 
Other non-current assets— 25 406 431 
Liabilities assumed:
Accounts payable and accrued liabilities(121)(24)(1,572)(1,717)
Other current liabilities— (621)(74)(695)
Debt— — (494)(494)
Operating lease liability— — (10,477)(10,477)
Deferred tax liability(3,397)(465)(14,515)(18,377)
Other liabilities— (175)(23)(198)
Fair value of net assets acquired$15,072 $6,877 $107,016 $128,965 
Consideration paid:
Cash15,072 — 3,711 18,783 
Deferred acquisition costs and deposits— 100 — 100 
Subordinate Voting Shares— 3,948 95,266 99,214 
Settlement of pre-existing relationship— 830 8,039 8,869 
Fair value of previously held interest— 1,999 — 1,999 
Total consideration$15,072 $6,877 $107,016 $128,965 
Subordinate Voting Shares issued— 211 4,770 4,981 
The operating results of the above acquisitions were not material to the periods presented.
(1) On January 29, 2019, a subsidiary of the Company acquired 100% of Thames Valley Apothecary, LLC (“Thames Valley”), a dispensary license holder in Connecticut.
(2) On March 4, 2019, a subsidiary of 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 nine months ended September 30, 2019.
The settlement of pre-existing relationship included in the transaction price includes a $550 promissory note receivable as well as an amount receivable of $280 which was previously recorded in Other current assets in the Statements of Financial Position. The carrying value of these amounts approximated their fair value.
(3) On April 16, 2019, a subsidiary of the Company acquired 100% of Form Factory Holdings, LLC (“Form Factory”), a manufacturer and distributor of cannabis-based edibles and beverages. The useful life of the developed technology was determined to be 19 years, and the useful life of the customer relationships was determined to be 5 years.
The market price used in valuing unrestricted SVS issued was $20.45 per share. Certain SVS are subject to clawback should certain indemnity conditions arise and as such, a discount for lack of marketability was applied that correlates to the period of time these shares are subject to restriction.

The Company also recorded an expense of $2,139 in the Statements of Operations for the nine months ended September 30, 2019 in connection with the acquisition of Form Factory that represents stock compensation fully vested on the acquisition date. 86 SVS valued at $1,753 were issued and recorded in Other equity transactions on the Statements of Shareholders’ Equity, with the remainder settled in cash.

The settlement of pre-existing relationship included in the transaction price included a $7,924 promissory note receivable and $115 of interest receivable. The carrying value of these amounts approximated their fair value.

Deferred acquisition costs and deposits

The Company’s subsidiaries make advance payments to certain acquisition targets for which the transfer is pending certain regulatory approvals prior to the acquisition date.
As of September 30, 2020 and December 31, 2019, the Company’s subsidiaries had no deferred acquisition costs outstanding.

Divestitures

On May 8, 2020, a subsidiary of the Company sold all equity interests in Acreage North Dakota, LLC, a medical cannabis dispensary holder and operator, for $1,000. This resulted in a gain on sale of $217 recorded in Other loss, net on the Statements of Operations for the nine months ended September 30, 2020.

Assets Held for Sale

On June 30, 2020, the Company determined certain businesses and assets met the held-for-sale criteria. The Company has identified the following businesses as their separate disposal groups: Acreage Florida, Inc., Kanna, Inc., Maryland Medicinal Research & Caring, LLC (“MMRC”) and certain Oregon entities comprising 22nd & Burn, Inc., The Firestation 23, Inc. and East 11th Incorporated, collectively (“Cannabliss”). As further disposal groups, the Company has identified certain assets owned in HSCP Oregon, LLC (comprising Medford, Powell and Springfield) and Michigan as held-for-sale.

In accordance to ASC 205-20-45 - Discontinued Operations, a disposal of a component of an entity shall be reported in discontinued operations if the divestiture represents a strategic shift that will have a major effect on the entity’s operations and financial results. Management determined that the expected divestitures will not represent a strategic shift that will have a major effect on the Company’s operations and financial results and thus will not report the expected divestitures of these assets as discontinued operations.

Upon classification of the disposal groups as held for sale, the Company tested each disposal group for impairment and recognized charges of $2,893 and $11,003 within Write down of assets held-for-sale on the Statements of Operations for the three and nine months ended September 30, 2020 to write the disposal groups down to its fair value less costs to sell. Additionally, all assets and liabilities determined within these disposal groups were transferred into Assets held-for-sale and Liabilities related to assets held-for-sale on the Statements of Financial Position, respectively as of September 30, 2020 from each of their previous respective financial statement captions. Refer to table below for further details.

The preliminary fair values of the major classes of assets and liabilities of the businesses and assets classified as held-for-sale on our Statements of Financial Position are presented below and are subject to change based on developments during the sales process.
September 30, 2020
Acreage Florida, Inc.Kanna, Inc.
MMRC(1)
MichiganOR - CannablissOR - MedfordOR - PowellOR - SpringfieldTotal
Inventory$653 $— $— $— $347 $696 $140 $96 $1,932 
Notes receivable, current— — — — — 32 — — 32 
Other current assets174 — 30 — 1 — — — 205 
Total current assets classified as held-for-sale827 — 30 — 348 728 140 96 2,169 
Capital assets, net4,999 1,156 286 7,469 67 2,252 7 16 16,252 
Operating lease right-of-use assets10,305 944 362 — 645 321 164 319 13,060 
Intangible assets, net26,190 970 801 — — — — — 27,961 
Goodwill— — — — 2,192 — — — 2,192 
Total assets classified as held for sale$42,321 $3,070 $1,479 $7,469 $3,252 $3,301 $311 $431 $61,634 
Accounts payable and accrued liabilities$(317)$(240)$(7)$— $(190)$— $— $— $(754)
Taxes payable— 1 — — (292)— — — (291)
Operating lease liability, current(489)(241)(31)— (157)(128)(116)(39)(1,201)
Other current liabilities(187)— — — 4 — — — (183)
Total current liabilities classified as held-for-sale(993)(480)(38)— (635)(128)(116)(39)(2,429)
Debt, non-current(3,799)— — — — — — — (3,799)
Operating lease liability, non-current(14,229)(676)(331)— (456)(313)(54)(280)(16,339)
Deferred tax liabilities— — — — 4 — — — 4 
Total liabilities classified as held-for-sale$(19,021)$(1,156)$(369)$— $(1,087)$(441)$(170)$(319)$(22,563)

(1) On August 11, 2020, a subsidiary of the Company entered into a transaction of sale for MMRC for $1,500 with a buyer. The Company’s applicable subsidiary, when permitted by state law, will transfer all of the issued and outstanding membership interests of MMRC to the buyer. In the interim, and subject to regulatory approval, the buyer and MMRC will enter into a management services agreement for the management and operation of MMRC until such time as the Company can transfer the equity of MMRC to the buyer.