Intangible Assets and Goodwill

6 Months Ended

Jun. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Note 6: INTANGIBLE ASSETS AND GOODWILL

Intangible Assets

Intangible assets are recorded at cost less accumulated amortization and impairment losses. Intangible assets acquired in a business combination are measured at fair value at the acquisition date. Amortization of definite life intangibles is recognized on a straight-line basis over their estimated useful lives. The estimated useful lives, residual values, and amortization methods are reviewed at each year end, and any changes in estimates are accounted for prospectively.

Intangible assets and related amortization are summarized in the table below:


	Licenses		Customer Relationships			Non-Competition Agreements			Know-How			Tradenames and Trademarks			Total
Balance, December 31, 2020	$	20,146	$	1,668		$	43		$	6,933		$	—		$	28,790
Amortization expense		—		(580	)		(43	)		(1,921	)		—			(2,544	)

Balance, December 31, 2021	$	20,146	$	1,088		$	—		$	5,012		$	—		$	26,246
NECC merger and 29 Everett acquisition (Note 7)		18,000		—			—			—			—			18,000
Island merger (Note 7)		8,700		—			—			—			2,600			11,300
Amortization expense		—		(290	)					(970	)		(47	)		(1,307	)

Balance, June 30, 2022	$	46,846	$	798		$	—		$	4,042		$	2,553		$	54,239

Goodwill


Balance, December 31, 2020	$	23,155

Balance, December 31, 2021	$	23,155
NECC merger and 29 Everett acquisition (Note 7)		12,547
Island merger (Note 7)		6,335

Balance, June 30, 2022	$	42,037

Impairment of Intangible Assets and Goodwill

On an annual basis, the Company assesses the Company’s reporting units (“RUs”) for indicators of impairment or when facts or circumstances suggest that it is more likely than not that the carrying amount may exceed fair value. For the purpose of impairment testing, goodwill is allocated to the Company’s RUs to which it relates.

Goodwill was not tested for impairment during the six months ended June 30, 2022.

Six Months Ended June 30, 2022

On January 28, 2022, the Company entered into the NECC Merger Agreements with NECC and 29 Everett for total consideration of $45,200. As part of the purchase price allocation of the acquisition and merger, the Company recognized $18,000 of acquired licenses and $12,547 of goodwill based on the consideration transferred and fair value of

net

assets acquired.

On April 25, 2022, the Company entered into the Island Merger Agreement with Island for total consideration of $16,977. As part of the purchase price allocation of the acquisition and merger, the Company recognized $8,700 of acquired licenses, $2,600 of trade names and trademarks and $6,335 of goodwill based on the consideration transferred and fair value of

net

assets acquired.

For further details on the acquisitions and purchase price allocations, see Note 7.

Year Ended December 31, 2021

In 2021, management assessed indicators of impairment and concluded the below for the respective RUs:

Retail, Production and Ancillary Cannabis Reporting Units

Management did not identify any significant negative triggering events that would suggest it is more likely than not that impairment exists. Therefore, further analysis was not required for these RUs.

Pure Ratios RU

As of June 30, 2022 and December 31, 2021, the accumulated impairment is $13,400, which is due to goodwill impairment of the entire outstanding balance of goodwill on the Pure Ratios segment for the year ended December 31, 2020. As a result, the segment does not have a balance of goodwill or intangible assets remaining as of December 31, 2021.