6. LEASES

The Company leases certain real estate for its retail store locations under long-term lease agreements. For leases effective on or after January 1, 2019, the Company determines if an arrangement is a lease at inception and recognizes operating lease assets and lease liabilities at commencement date based on the present value of lease payments over the lease term. The present value of the Company’s lease payments may include: (1) rental payments adjusted for inflation or market rates, and (2) lease terms with options to renew the lease when it is reasonably certain the Company will exercise such an option. The exercise of lease renewal options is generally at the Company’s discretion. Payments based on a change in an index or market rates are not considered in the determination of lease payments for purposes of measuring the related lease liability. The Company discounts lease payments using its incremental borrowing rate based on information available as of the measurement date. Subsequent to the recognition of its operating lease assets and lease liabilities, the Company recognizes lease expense related to its operating leases on a straight-line basis over the lease term.

None of the Company’s lease agreements contain contingent rental payments, material residual value guarantees or material restrictive covenants. The depreciable life of related leasehold improvements is based on the shorter of the useful life or the lease term. The Company has no finance leases, no sublease agreements, and no lease agreements in which it is named as a lessor.

The Company performs interim reviews of its long-lived assets for impairment when evidence exists that the carrying value of an asset group, including a lease asset, may not be recoverable. Excluding the January 1, 2019 impairment charge to retained earnings upon the adoption of Topic 842, the Company recognized an impairment expense of less than $0.01 million associated with operating lease assets during 2019.

Additional information regarding the Company’s operating leases is as follows:

Leases	Balance Sheet Classification	December 31, 2019
Assets:
Non-current	Operating lease assets	$	13,897,422

Liabilities:
Current	Operating lease liabilities	$	3,822,748
Non-current	Operating lease liabilities, noncurrent		10,654,631
Total lease liabilities		$	14,477,379

Lease Cost	Income Statement Classification	December 31, 2019
Operating lease cost	Operating expenses	$	4,151,220
Variable lease cost (1)	Operating expenses		895,373
Total lease cost		$	5,046,593

(1) Variable lease cost includes payment for certain real estate taxes, insurance, common area maintenance, and other charges related to lease agreements, which are not included in the measurement of the operating lease liabilities.

Maturity of Lease Liabilities	December 31, 2019
2020	$	3,891,153
2021		3,282,122
2022		2,411,124
2023		1,722,991
2024		1,309,459
Thereafter		3,697,717
Total lease payments (2)	$	16,314,566
Less: Interest		(1,837,187	)
Present value of lease liabilities	$	14,477,379

(2) Operating lease payments exclude $0.3 million of legally binding minimum lease payments for leases signed, but not yet commenced as of December 31, 2019.

At December 31, 2019, the weighted average remaining lease term for our operating leases was 6.0 years, and the weighted average discount rate used to measure our operating leases was 4.1%.

Other Information	December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used in operating leases	$	4,078,695

Operating lease assets obtained in exchange for lease obligations		18,076,962

Prior Disclosures under ASC 840

The Company incurred rent expenses of $5.0 million and $4.6 million related to its operating leases during the years ended December 31, 2018 and 2017, respectively. Future minimum lease payments under noncancelable operating leases as of December 31, 2018 were as follows:

	December 31, 2018
2019	$	4,417,806
2020		3,750,324
2021		3,042,779
2022		2,102,463
2023		1,289,874
Thereafter		2,139,218
Total minimum lease payments	$	16,742,464