GOODWILL

12 Months Ended

Dec. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL

7. GOODWILL

The Company’s assets are aggregated into two reportable segments: Cultivation (Wholesale) and Retail. For the purposes of testing impairment of goodwill, the Company has identified 13 reporting units.

The changes in the carrying amount of goodwill, by reportable segment, for the years ended December 31, 2021 and 2022 were as follows:

	January 1, 2021		Impairment		Adjustments to purchase price allocation		Acquisitions		December 31, 2021
Cultivation	$	64	$	—	$	312	$	90,740	$	91,116
Retail	15,965		—		(30)		261,079		277,014
	$	16,029	$	—	$	282	$	351,819	$	368,130

	January 1, 2022		Impairment		Adjustments to purchase price allocation		Acquisitions		December 31, 2022
Cultivation	$	91,116	$	(5,367)	$	(2,745)	$	—	$	83,004
Retail	277,014		(107,664)		6,418		10,316		186,084
	$	368,130	$	(113,031)	$	3,673	$	10,316	$	269,088

During the years ended December 31, 2021 and 2020, the Company performed the Step Zero analysis for its goodwill impairment test. As a result of the Company's Step Zero analysis, no further quantitative impairment test was deemed necessary. No such impairment charges were recorded for the years ended December 31, 2021 or 2020.

During the year ended December 31, 2022, the Company recognized an impairment charge of (i) $46,537 associated with its Arizona retail reporting unit, (ii) $2,252 associated with its Arizona cultivation (wholesale) reporting unit, iii) $61,127 associated with its Pennsylvania retail reporting unit, and (iv) $3,115 associated with its Pennsylvania cultivation (wholesale) reporting unit, as the carrying values of the reporting units exceeded the estimated fair value by such amounts. As of December 31, 2022 the carrying value of goodwill for Arizona cultivation reporting unit is $41,801, and the goodwill for Arizona retail, Pennsylvania retail and Pennsylvania cultivation reporting units were fully impaired.

During the year ended December 31, 2022, the Company identified an error in its calculation of the technology intangible asset value related to the AltMed acquisition. A correction to the value of the technology intangible asset resulted in an out-of-period increase to the carrying value of goodwill equal to $3,801.

During the year ended December 31, 2022, the Company made prospective adjustments to the purchase price allocations associated with previously acquired entities that resulted in changes to goodwill. The Company obtained additional information about the facts and circumstances that existed at the time of the acquisition that resulted in changes in the provisional amounts recognized.

During the year ended December 31, 2022, the Company recorded measurement period adjustments in connection with the December 28, 2021 acquisition of Connecticut Pharmaceutical Solutions, Inc. The net impact led to a decrease of $2,745 to goodwill for changes to inventory, income taxes, deferred tax liabilities and accrued payables.

During the year ended December 31, 2022, the Company recorded a purchase price adjustment for the December 20, 2021 acquisition of Caring Nature, LLC. The purchase price adjustment was an increase to consideration transferred and was reflected as an increase of $56 to goodwill.

During the year ended December 31, 2022, the Company recorded measurement period adjustments in connection with the March 11, 2022 acquisition of 420 Capital Management, LLC ("Greengate"). The net impact led to an increase of $2,221 to goodwill. The Company obtained additional information about the facts and circumstances that existed at the time of the acquisition that resulted in changes in the provisional amounts recognized for cash and accounts payable.

During the year ended December 31, 2022, the Company recorded measurement period adjustments in connection with the September 7, 2022 acquisition of WSCC, Inc. (“Sierra Well”). The purchase price adjustment led to an increase of $340 to goodwill.