All real estate leases are recorded on the balance sheet. Equipment and other non-real estate leases with an initial term of twelve months or less are not recorded on the balance sheet. Balances related to operating leases are included in Right of Use (“ROU”) assets and noncurrent lease liabilities on the consolidated balance sheet. Lease agreements for some locations provide for rent escalations and renewal options. Many leases include one or more options to renew the lease at the end of the initial term. The Company considered renewals in its ROU assets and operating lease liabilities. Certain real estate leases require payment for taxes, insurance and maintenance which are considered non-lease components. The Company accounts for real estate leases and the related fixed non-lease components together as a single component.

The Company determines if an arrangement is a lease at inception. The Company must consider whether the contract conveys the right to control the use of an identified asset. Certain arrangements require significant judgment to determine if an asset is specified in the contract and if the Company directs how and for what purpose the asset is used during the term of the contract.

Operating lease expense for the three and six months ended June 30, 2021 and 2020 is $2,400 and $821 respectively and for the six months ended is June 30, 2021 and 2020 is $4,868 and $2,375 respectively.

	Classification - Consolidated Interim Balance Sheets	June 30, 2021		December 31, 2020
Assets
Operating lease assets	Operating lease assets	$	60,701	$	62,466
Liabilities
Current
Operating	Current portion of operating lease liabilities		1,127		1,909
Non Current
Operating	Operating lease liabilities		51,849		51,545
Total lease liabilities		$	52,976	$	53,454

Maturities of lease liabilities for third-party operating leases as of June 30, 2021 were as follows:

	Third-Party Maturities of Lease Liability
2021	$	4,384
2022		8,982
2023		9,183
2024		9,390
2025		9,551
Thereafter		127,913
Total minimum lease payments	$	169,403

The Company has right-of-use assets and lease liabilities for leased real estate for dispensaries, cultivation facilities and office space. The incremental borrowing rate for the Company on January 1, 2020 through June 30, 2021 was between 10.25% and 17%.

The Company leases a building in Elma, Washington that is subleased by the Company to a third party. This sublease is classified as a finance lease with a lease receivable balance of $10,696 as of June 30, 2021. This lease generated $1,361 of the $5,559 in real estate income for the six months ending June 30, 2021.

The Company owned buildings in Olympia, Washington that were leased to a third party. This lease was classified as a finance lease. On December 17, 2020, the Company sold the Olympia building and other assets as part of a sale and leaseback transaction and this lease was cancelled. The Company applied ASC 842 to a new sublease to the same third party and classified the new sublease as an operating lease. The lease receivable was sold to the purchaser of the assets as part of the sale and leaseback transaction. This lease generated $4,198 of the $5,559 in real estate income for the six months ending June 2021.

	June 30, 2021			December 31, 2020
Balance, beginning of the year	$	11,045		$	33,500
Acquisitions		—			—
Sale of assets in sale leaseback		—			(22,508	)
Interest		1,361			11,019
Lease payments received		(1,710	)		(10,966	)
Balance, end of the period	$	10,696		$	11,045
Less current portion		(3,540	)		(3,450	)
Long term lease receivables	$	7,156		$	7,595

Future minimum lease payments receivable (principal and interest) on the leases is as follows:

	As of June 30, 2021
2021	$	1,740
2022		3,630
2023		1,575
2024		—
2025		—
Thereafter		—
Total minimum lease payments	$	6,945
Effect of discounting		(1,384	)
Present value of minimum lease payments		5,561
Present value of residual of leased property		5,135
Total lease receivable	$	10,696
Current portion lease receivable		(3,540	)
Long term lease receivable	$	7,156