LOYALTY OBLIGATIONS

9 Months Ended

Sep. 30, 2022

Revenue from Contract with Customer [Abstract]


15.LOYALTY OBLIGATIONS

The Company has customer loyalty programs where retail customers accumulate points for each dollar of spending, net of tax. These points are recorded as a contract liability until customers redeem their points for discounts on cannabis and vape products as part of an in-store sales transaction. In addition, the Company records a performance obligation as a reduction of revenue based on the estimated probability of point obligation incurred.

As of December 31, 2021, the loyalty program had a calculated standalone selling price that ranged between $0.05 and $0.08 per loyalty point. Upon redemption, the loyalty program obligation is relieved, and the offset is recorded as revenue. The Company estimates that 25% of points will not be redeemed (breakage) and expects the remaining outstanding loyalty points will be redeemed within one year. As of December 31, 2021, there were 111,475,4591 points outstanding, with an approximate value of $2,620 which is included in accrued liabilities.

The Company modified the loyalty program in 2022. The new loyalty program has a calculated standalone selling price that ranges between $0.02 and $0.06 per loyalty point. Upon redemption, the loyalty program obligation is relieved, and the offset is recorded as revenue. The Company estimates that 25% of points will not be redeemed (breakage) prior to their 6 month expiration dates. As of September 30, 2022, there were 58,025,8091 points outstanding with an approximate value of $2,321 which is included in accrued liabilities. In addition, the Company assumed approximately $675 in loyalty obligations through the Sierra Well acquisition on their existing loyalty program, which is also included in accrued liabilities.


1 Such amount not in Thousands