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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2022March 31, 2024
OR
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 000-56342

VERANO HOLDINGS CORP.

(Exact name of registrant as specified in its charter)
British Columbia, Canada98-1583243
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
415 North Dearborn
224 W Hill Street, 4th Floor,Suite 400,
 Chicago, Illinois
6065460610
(Address of Principal Executive Offices)(Zip Code)

Registrant's telephone number, including area code: (312) 265 0730265-0730
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changes since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
N/AN/AN/A
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes ox No xo
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” andfiler,” “smaller reporting company”company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated fileroxAccelerated filero
Non-accelerated filerxoSmaller reporting companyo
Emerging growth companyxo


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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. xo
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
TheAs of May 6, 2024, the registrant had outstanding 318,946,319 Subordinate Voting Shares344,163,149 Class A subordinate voting shares and 136,726 Proportionate Voting Shares for a total of 332,618,962 Subordinate Voting Shares on an as converted basis as of August 14, 2022.no Class B proportionate voting shares outstanding.

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Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q (this “Form 10-Q”) contains “forward-looking information” and “forward-looking statements” within the meaning of United States securities laws (together, “forward-looking statements”). All statements, other than statements of historical fact, made by the Company or its affiliates that address activities, events or developments that the Company or its affiliates expect or anticipate will or may occur in the future are forward-looking statements, including, but not limited to, statements preceded by, followed by or that include words such as “may,” “will,” “would,” “could,” “should,” “believes,” “assumes,” “estimates,” “projects,” “potential,” “expects,” “plans,” “intends,” “anticipates,” “targeted,” “continues,” “forecasts,” “designed,” “goal,” “progress,” or the negative of those words or other similar or comparable words.
The forward-looking statements contained herein are based on certain key expectations and assumptions, including, but not limited to, expectations and assumptions concerning:
our ability to obtain, maintain and renew licenses and other regulatory approvals in all states and localities of our operations and planned operations on a timely basis;
government regulations, including future U.S. state and federal legislative and regulatory developments involving medical and adult-use cannabis and the timing thereof;
our outlook on our expansion and growth of business and operations;
our ability to achieve our goals, business plans and strategy;
our ability to access capital and obtain necessary financing to pursue our growth and business plans;
our operational results and other financial and business conditions and prospects;
the timing and completion of acquisitions and other commercial transactions;
the integration and operation of acquired businesses;
the timing and amount of capital expenditures;
the availability of facilities, equipment, skilled labor and services needed for cannabis operations;
demand, developments and trends in the medical and adult-use cannabis industry;
competition in the cannabis industry in the markets in which we operate or plan to operate;
the medical benefits, viability, safety, efficacy, and dosing of cannabis;
the size of the medical cannabis market and the adult-use cannabis market in each state; and
conditions in general economic and financial markets.
Forward-looking statements may relate to future financial conditions, results of operations, plans, strategies, objectives, performance or business developments. These statements speak only as at the date they are made and are based on information currently available and on the then-current expectations of the party making the statement and assumptions concerning future events, which are subject to a number of known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from that which was expressed or implied by such forward-looking statements, including, but not limited to, risks and uncertainties related to:
the illegality of cannabis under federal law, the U.S. federal regulatory landscape and enforcement related to medical or adult-use cannabis, including political risks, civil asset forfeiture and regulation by additional regulatory authorities;
regulatory and political changes to U.S. federal, state and local laws related to medical or adult-use cannabis, including political risks and regulation by additional regulatory authorities;
our limited operating history;
the impacts of economic uncertainty stemming from disruptions in U.S. and global markets, inflation, rising interest rates, and changes in consumer and business confidence;
our outstanding indebtedness and potential future indebtedness;
any potential changes in our liquidity due to potential for instability in market and economic conditions and adverse developments to financial institutions;
reliance on key management;
market acceptance of existing and new products and potential returns or recalls of our products;
customer acceptance of our brand portfolio;
the accuracy of our forecasted demand for our products;
the potential for fraudulent activity by employees, contractors and consultants;
our exposure to growth-related operational and execution risks;
potential negative findings in our clinical research with respect to our products;
our ongoing litigation matter with Goodness Growth Holdings, Inc;
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potential product liability claims;
our exposure to natural phenomena and resulting potential uninsured or under insured losses;
our structure and our resulting reliance on the performance of our subsidiaries and affiliates;
our expansion-by-acquisition strategy;
our ability to acquire businesses and cannabis licenses in desired markets and the integration and operation of acquired businesses;
the typically limited operations of businesses we acquire;
the unconventional due diligence process in the cannabis industry;
our ability to acquire and lease properties suitable for the cultivation, production and sale of cannabis;
potential limited representations and warranties of businesses we may acquire;
our acquisition of businesses in developing cannabis markets;
our lack of portfolio diversification;
our use of joint ventures, strategic partnerships and alliances;
our contractual relationships with our consolidated variable interest entities;
existing competition and new market entrants;
the introduction of synthetic alternatives to cannabis products by pharmaceutical and other companies;
the immaturity of the cannabis industry and limited comparable, competitive and established industry best practices;
the availability of and our reliance on third-party suppliers, service providers, contractors and manufacturers;
wholesale and retail price fluctuations;
public opinion and perception of the cannabis industry;
the availability of raw or other materials;
rising or volatile energy costs;
agricultural and environmental risks and the impacts of environmental regulations on the cannabis industry and environmental protections;
physical security risks, such as theft;
potential scrutiny from Canadian authorities;
disparate state-by-state regulatory landscapes and licensing regimes for medical and adult-use cannabis;
the difficulties cannabis businesses face accessing and maintaining banking or financial services due to federal regulations;
the cost and difficulty of complying with various regulatory schemes;
the impact of state social equity legislation as it relates to the cannabis industry;
the risk of high bonding and insurance costs;
environmental regulations;
effects of changes in laws and policies governing employees and by union organizing activity;
potential divestment of licenses if required by regulatory authorities;
our dependency on the banking industry;
required public disclosure and governmental filings containing personal information of our officers, investors and other stakeholders;
potential findings by regulatory authorities that one of shareholders is unsuitable;
the risk that our directors, officers, employees or investors are barred from entering the U.S.;
the ability to, and constraints on, promoting and marketing cannabis products;
potential U.S. Food and Drug Administration governance of the cannabis industry;
the potential limitations on our ability to enforce our contracts or any liens granted to us;
the potential lack of access to federal bankruptcy protections in the U.S.;
reliance on information technology systems, the potential disclosure of personal information of patients and customers and cybersecurity risks;
our reliance on third-party software providers;
cost related to preserving our brand identity;
our ability to protect our intellectual property due to limited intellectual property protection available for cannabis products and the potential infringement by third parties;
potential infringement or misappropriation claims;
the risk of receiving no return on our securities;
our elimination of monetary liability and indemnification rights against our directors, officers and employees under British Columbia law;
our dual class capital structure with Class A subordinate voting shares and Class B proportionate voting shares;
the time and resources necessary to comply with corporate governance practices and securities rules and regulations in the U.S. and Canada;
our management’s ability to maintain effective internal controls;
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our remediation plan and ability to remediate the material weaknesses in our internal controls over financial reporting;
potential dilution if we issue additional Subordinate Voting Shares or Proportionate Voting Shares;
market perception of sales of a substantial amount of Subordinate Voting Shares;
transfer restrictions on our Subordinate Voting Shares;
price volatility of our Subordinate Voting Shares;
our shareholders’ limited participation in our affairs;
our expectation to not declare or pay out dividends;
the concentration of our voting control;
the taxation of cannabis companies in the U.S., including the impact of Section 280E of the Internal Revenue Code of 1986, as amended; and
other risks described in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the U.S. Securities and Exchange Commission on March 15, 2024, as more particularly described under the heading “Item 1A. Risk Factors” therein.
Although we believe that the expectations and assumptions on which forward-looking statements are based are reasonable at the time made, undue reliance should not be placed on the forward-looking statements, because no assurance can be given that they will prove to be correct. Forward-looking statements address future events and conditions, and thus involve inherent risks and uncertainties. Readers are cautioned that the above list of cautionary statements is not exhaustive.
The cannabis industry involves risks and uncertainties that are subject to change based on various factors. Certain forward-looking statements contained herein concerning the cannabis industry and our general expectations concerning the cannabis industry are based on estimates prepared by us using data from publicly available governmental sources as well as from market research and industry analysis and on assumptions based on data and knowledge of the cannabis industry. Such data is inherently imprecise.
Consequently, all forward-looking statements made in this Form 10-Q and our other documents are qualified by such cautionary statements and there can be no assurance that the anticipated results or developments will actually be realized or, even if realized, that they will have the expected consequences to or effects on us. We do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, other than as required under applicable securities legislation.
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PART I - FINANCIAL INFORMATION
ITEM 1. UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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VERANO HOLDINGS CORP.
Condensed Consolidated Balance Sheets
($ in Thousands)
June 30,
2022
December 31,
2021
(Unaudited)(As Restated)
March 31,
2024
March 31,
2024
December 31,
2023
ASSETSASSETS
Current Assets:Current Assets:
Current Assets:
Current Assets:
Cash and Cash Equivalents
Cash and Cash Equivalents
Cash and Cash EquivalentsCash and Cash Equivalents$92,833 $99,118 
Accounts Receivable, netAccounts Receivable, net13,253 17,410 
Notes Receivable— 285 
Held for Sale Assets
InventoryInventory154,050 140,703 
Prepaid Expenses and Other Current AssetsPrepaid Expenses and Other Current Assets27,820 19,528 
Total Current AssetsTotal Current Assets287,956 277,044 
Total Current Assets
Total Current Assets
Property, Plant and Equipment, net
Property, Plant and Equipment, net
Property, Plant and Equipment, netProperty, Plant and Equipment, net515,698 452,232 
Right of Use Assets, netRight of Use Assets, net71,472 61,346 
Intangible Assets, netIntangible Assets, net1,343,371 1,379,913 
GoodwillGoodwill376,637 368,130 
Investment in Associates7,252 7,491 
Deposits and Other AssetsDeposits and Other Assets2,584 2,499 
TOTAL ASSETSTOTAL ASSETS$2,604,970 $2,548,655 
TOTAL ASSETS
TOTAL ASSETS
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES AND SHAREHOLDERS’ EQUITYLIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIESLIABILITIES
LIABILITIES
LIABILITIES
Current Liabilities:Current Liabilities:
Current Liabilities:
Current Liabilities:
Accounts Payable
Accounts Payable
Accounts PayableAccounts Payable$60,832 $45,172 
Accrued LiabilitiesAccrued Liabilities30,773 42,149 
Income Tax PayableIncome Tax Payable161,430 154,512 
Current Portion of Lease LiabilitiesCurrent Portion of Lease Liabilities7,961 6,563 
Current Portion of Notes Payable258,880 13,771 
Current Portion of Debt
Acquisition Consideration PayableAcquisition Consideration Payable66,901 208,349 
Total Current LiabilitiesTotal Current Liabilities586,777 470,516 
Total Current Liabilities
Total Current Liabilities
Long-Term Liabilities:Long-Term Liabilities:
Deferred Revenue271 1,183 
Notes Payable, net of Current Portion143,749 276,154 
Long-Term Liabilities:
Long-Term Liabilities:
Debt, net of Current Portion
Debt, net of Current Portion
Debt, net of Current Portion
Lease Liabilities, net of Current PortionLease Liabilities, net of Current Portion66,122 56,812 
Deferred Income TaxesDeferred Income Taxes259,326 262,184 
Other Long-Term Liabilities
Total Long-Term Liabilities
Total Long-Term Liabilities
Total Long-Term LiabilitiesTotal Long-Term Liabilities469,468 596,333 
TOTAL LIABILITIESTOTAL LIABILITIES$1,056,245 $1,066,849 
TOTAL LIABILITIES
TOTAL LIABILITIES
SHAREHOLDERS’ EQUITYSHAREHOLDERS’ EQUITY1,548,725 1,480,530 
NON-CONTROLLING INTEREST— 1,276 
SHAREHOLDERS’ EQUITY
SHAREHOLDERS’ EQUITY
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITYTOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY$2,604,970 $2,548,655 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.Unaudited Interim Condensed Consolidated Financial Statements.
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VERANO HOLDINGS CORP.
Unaudited Interim Condensed Consolidated Statements of Operations
($ in Thousands except shareshares and per share amounts)
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Revenues, net of Discounts$223,662 $199,066 $425,897 $319,961 
Cost of Goods Sold, net125,547 129,856 229,165 196,461 
Gross Profit98,115 69,210 196,732 123,500 
Selling, General, and Administrative Expenses100,263 70,013 189,824 112,679 
Income (Loss) from Investments in Associates(144)645 1,860 1,448 
Income (Loss) from Operations(2,292)(158)8,768 12,269 
Other Income (Expense):
Loss on Disposal of Property, Plant and Equipment(203)(429)(1,192)(429)
Gain (Loss) on Deconsolidation(73)— 9,485 — 
Gain (Loss) on Previously Held Equity Interest(171)— 13,928 — 
Interest Expense, net(11,624)(5,434)(22,295)(7,201)
Other Income (Expense), net15,619 (131)18,153 (997)
Total Other Income (Expense)3,548 (5,994)18,079 (8,627)
Net Income (Loss) Before Provision for Income Taxes and
Non-Controlling Interest
1,256 (6,152)26,847 3,642 
Provision For Income Taxes(11,103)(23,438)(36,617)(39,852)
Net Loss Before Non-Controlling Interest(9,847)(29,590)(9,770)(36,210)
Net Income Attributable to Non-Controlling Interest— 98 291 1,364 
Net Loss Attributable to Verano Holdings Corp.$(9,847)$(29,688)$(10,061)$(37,574)
Net Loss per share – basic(0.03)(0.10)(0.03)(0.14)
Net Loss per share – diluted(0.03)(0.10)(0.03)(0.14)
Basic – weighted average shares outstanding328,519,193 300,715,671 327,402,503 265,842,657 
Diluted – weighted average shares outstanding328,519,193 300,715,671 327,402,503 265,842,657 
For the Three Months Ended March 31,
20242023
Revenues, net of Discounts$221,306 $227,060 
Cost of Goods Sold, net108,346 117,875 
Gross Profit112,960 109,185 
Selling, General, and Administrative Expenses90,289 75,243 
Loss from Investments in Associates— (160)
Income from Operations22,671 33,782 
Other Income (Expense):
Gain (Loss) on Disposal of Property, Plant and Equipment(143)67 
Loss on Debt Extinguishment— (663)
Interest Expense, net(15,114)(15,906)
Other Income (Expense), net(759)1,803 
Total Other Income (Expense), net(16,016)(14,699)
Income Before Provision for Income Taxes and
Non-Controlling Interest
6,655 19,083 
Provision For Income Taxes(11,477)(28,320)
Net Loss Before Non-Controlling Interest(4,822)(9,237)
Net Income Attributable to Non-Controlling Interest— — 
Net Loss Attributable to Verano Holdings Corp. & Subsidiaries$(4,822)$(9,237)
Net Loss per share – basic & diluted(0.01)(0.03)
Basic & Diluted – weighted average shares outstanding344,083,000 341,478,860 
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.Unaudited Interim Condensed Consolidated Financial Statements.
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VERANO HOLDINGS CORP.
Unaudited Interim Condensed Consolidated Statements of Changes in Shareholders’Shareholders' Equity
($ in Thousands)
LLC
Membership
Units
SVS Shares
(as converted)
Share
Capital
Accumulated
Earnings (Deficit)
Non-Controlling
Interest
Total
Balance as of April 1, 2021
(As Restated)
— 293,199,219 $1,030,163 $1,361 $7,403 $1,038,927 
Share-based compensation— — 14,483 — — 14,483 
Issuance of shares in conjunction with acquisitions— 10,410,187 207,136 — — 207,136 
Issuance of warrants— 3,510,000 — — — — 
Contingent consideration & other adjustments to purchase accounting— 103,775 2,085 — — 2,085 
Net income (loss)— — — (29,688)98 (29,590)
Balance as of June 30, 2021— 307,223,181 $1,253,867 $(28,327)$7,501 $1,233,041 

Subordinate Voting Shares
(as converted)
Share
Capital
Accumulated Other Comprehensive Income (Loss)Accumulated
Earnings (Deficit)    
Non-Controlling
Interest
Total
Balance as of January 1, 2023339,983,374 $1,665,957 $(8)$(324,399)$— $1,341,550 
Share-based compensation117,948 506 — — — 506 
Issuance of shares to relieve liability obligations, net603,396 3,653 — — — 3,653 
Foreign Currency Translation Adjustment— — (1)— — (1)
Contingent consideration & other adjustments to purchase accounting1,625,546 — — — — — 
Net Loss— — — (9,237)— (9,237)
Balance as of March 31, 2023342,330,264 $1,670,116 $(9)$(333,636)$— $1,336,471 

LLC
Membership
Units
SVS Shares
(as converted)
Share
Capital
Accumulated
Earnings (Deficit)
Non-Controlling
Interest
Total
Balance as of April 1, 2022
(As Restated)
— 327,868,398 $1,578,232 $(55,449)$— $1,522,783 
Share-based compensation— 26,570 12,523 — — 12,523 
Issuance of shares in conjunction with acquisitions— 808,258 5,540 — — 5,540 
Noncontrolling interest adjustment for change in ownership— — — — — — 
Contingent consideration & other adjustments to purchase accounting— 2,115,438 17,726 — — 17,726 
Net income (loss)— — — (9,847)— (9,847)
Balance as of June 30, 2022— 330,818,664 $1,614,021 $(65,296)$— $1,548,725 
Subordinate Voting Shares
(as converted)
Share
Capital
Accumulated Other Comprehensive Income (Loss)Accumulated
Earnings (Deficit)
Non-Controlling
Interest
Total
Balance as of January 1, 2024344,074,096 $1,681,840 $(13)$(441,747)$— $1,240,080 
Share-based compensation57,872 3,643 — — — 3,643 
Issuance of shares to relieve liability obligations, net— — — — — — 
Foreign Currency Translation Adjustment— — 15 — — 15 
Contingent consideration & other adjustments to purchase accounting31,181 — — — — — 
Net Loss— — — (4,822)— (4,822)
Balance as of March 31, 2024344,163,149 $1,685,483 $$(446,569)$— $1,238,916 
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.Unaudited Interim Condensed Consolidated Financial Statements.
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VERANO HOLDINGS CORP.
Unaudited Interim Condensed Consolidated Statements of Changes in Shareholders’ Equity (Continued)
($ in Thousands)
LLC
Membership Units
SVS Shares
(as converted)
Share
Capital
Accumulated
Earnings (Deficit)    
Non-Controlling
Interest
Total
Balance as of January 1, 2021279,900,000 — $137,914 $9,247 $6,237 $153,398 
RTO-related issuances, net— — 652,217 — — 652,217 
Issuance of Pubco shares in redemption of membership units(279,900,000)279,900,000 — — — — 
Reverse takeover (“RTO Financing”), net— 10,100,000 95,420 — — 95,420 
Distributions to minority members— — — — (100)(100)
Share-based compensation— — 21,097 — — 21,097 
Issuance of shares in conjunction with acquisitions— 13,609,406 270,034 — — 270,034 
Warrants issued and exercised— 3,510,000 75,100 — — 75,100 
Contingent consideration & other adjustments to purchase accounting— 103,775 2,085 — — 2,085 
Net income (loss)— — — (37,574)1,364 (36,210)
Balance as of June 30, 2021— 307,223,181 $1,253,867 $(28,327)$7,501 $1,233,041 


LLC
Membership
Units
SVS Shares
(as converted)
Share
Capital
Accumulated
Earnings (Deficit)
Non-Controlling
Interest
Total
Balance as of January 1, 2022
(As Restated)
— 324,312,662 $1,535,765 $(55,235)$1,276 $1,481,806 
Share-based compensation— 797,907 24,265 — — 24,265 
Issuance of shares in conjunction with acquisitions— 2,211,325 18,760 — — 18,760 
Non-controlling interest adjustment for change in ownership— — — — (1,567)(1,567)
Contingent consideration & other adjustments to purchase accounting— 3,496,770 35,231 — — 35,231 
Net income (loss)— — — (10,061)291 (9,770)
Balance as of June 30, 2022— 330,818,664 $1,614,021 $(65,296)$— $1,548,725 
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
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VERANO HOLDINGS CORP.
Unaudited Interim Condensed Consolidated Statements of Cash Flows
($ in Thousands)
Six Months Ended June 30,
20222021
CASH FLOW FROM OPERATING ACTIVITIES
Net loss attributable to Verano Holdings Corp. and Subsidiaries$(10,061)$(37,574)
Net income attributable to non-controlling interest291 1,364 
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization69,911 36,057 
Non-cash interest expense1,016 2,907 
Non-cash interest income— (17)
Non-cash inventory step-up expense on acquisitions6,707 52,189 
Loss on disposal of property, plant and equipment1,192 429 
Gain on deconsolidation(9,485)— 
Gain on disposal of investments in associates(13,928)— 
Bad debt expense— 68 
Amortization of debt issuance costs3,160 517 
Unrealized gain on marketable securities2,148 — 
Loss (income) from underlying investees(310)(7,319)
Stock earnout from acquisitions— 2,084 
Loss (income) on share issuance(4,650)1,236 
Decrease in fair value of contingent consideration(9,102)— 
Stock based compensation24,405 18,333 
Changes in operating assets and liabilities:  
Accounts receivable4,157 (900)
Inventory(19,927)(23,023)
Prepaid expenses and other current assets(6,333)138 
Deposits and other assets4,384 2,935 
Accounts payable14,686 (9,242)
Accrued liabilities(9,880)(10,668)
Lease liabilities(6,468)(2,383)
Income tax payable5,508 31,536 
Deferred taxes(2,857)(531)
Deferred revenue(913)(1,305)
Other, net(3)14 
NET CASH PROVIDED BY OPERATING ACTIVITIES43,648 56,845 
CASH FLOW FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment(86,851)(61,785)
Proceeds from disposal of assets1,841 778 
Distributions to minority members— (100)
Purchases of intangible assets— (8,378)
Acquisition of business, net of cash acquired(94,042)(102,138)
Proceeds from sale of deconsolidation and investment in associates19,576 — 
Purchase of interest in investment in associates— (3,350)
Dividend received from investments in associates— 10,275 
Proceeds from note receivable— 4,215 
Other, net— 41 
NET CASH USED IN INVESTING ACTIVITIES(159,476)(160,442)

Three Months Ended March 31,
20242023
CASH FLOW FROM OPERATING ACTIVITIES
Net income (loss) attributable to Verano Holdings Corp. and Subsidiaries$(4,822)$(9,237)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization35,552 35,056 
Right of use assets amortization2,934 2,609 
Non-cash interest expense112 593 
(Gain) Loss on disposal of property, plant and equipment143 (67)
Loss on debt extinguishment— 663 
Unrealized (gain) loss on marketable securities(693)256 
Decrease in fair value of contingent consideration— (3,466)
Stock based compensation3,928 544 
Other, net1,778 1,193 
Changes in operating assets and liabilities:  
Accounts receivable(3,232)(1,670)
Inventory(9,998)10,885 
Accounts payable(4,031)(11,316)
Income tax payable9,597 (5,018)
Other assets, net10,065 1,023 
Other liabilities, net(10,292)(5,186)
NET CASH PROVIDED BY OPERATING ACTIVITIES31,041 16,862 
CASH FLOW FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment(9,699)(8,555)
Proceeds from disposal of assets— 1,830 
NET CASH USED IN INVESTING ACTIVITIES(9,699)(6,725)
CASH FLOW FROM FINANCING ACTIVITIES
Acquisition of business, net of cash acquired$(32)$(500)
Proceeds from issuance of debt— 23,710 
Principal repayments of debt(2,150)(22,759)
Debt issuance costs paid— (309)
Other financing activities(136)— 
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES(2,318)142 
NET INCREASE IN CASH AND CASH EQUIVALENTS$19,024 $10,279 
Effects of exchange rate fluctuations on cash and cash equivalents$15 $(1)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD$174,760 $84,851 
CASH AND CASH EQUIVALENTS, END OF PERIOD$193,799 $95,129 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid, net$15,002 $15,313 
Issuance of shares to relieve liability obligations, net— 3,653 
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
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VERANO HOLDINGS CORP.
Unaudited Interim Condensed Consolidated Statements of Cash Flows (Continued)
($ in Thousands)
Six Months Ended June 30,
20222021
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from issuance of notes payable120,774 100,000 
Principal repayments of notes payable(8,245)(8,527)
Debt issuance costs paid(2,986)(5,132)
Proceeds received from RTO Financing, net— 75,420 
Cash received in warrant private placement— 75,100 
NET CASH PROVIDED BY FINANCING ACTIVITIES109,543 236,861 
NET INCREASE (DECREASE) IN CASH(6,285)133,264 
CASH, BEGINNING OF PERIOD99,118 16,402 
CASH, END OF PERIOD$92,833 $149,666 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid$10,608 $1,761 
NONCASH INVESTING AND FINANCING ACTIVITIES
Accrued capital expenditures$3,296 $3,627 
Issuance of shares under business combinations$53,950 $896,795 
Acquisitions
Tangible and intangible assets acquired, net of cash$17,533 $1,127,009 
Liabilities assumed(4,362)(249,094)
Acquisition consideration payable72,364 (1,038,668)
Goodwill8,507 262,891 
$94,042 $102,138 
Unaudited Interim Condensed Consolidated Financial Statements.
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
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VERANO HOLDINGS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
($ in Thousands except shares and per share amounts)

1.OVERVIEW AND BASIS OF PRESENTATION

(a)Description of Business
ReferencesUnless otherwise stated or the context requires otherwise, references herein to “the Company,the “Company, or “Verano,” are intended to“we,” “us,” and “our” mean Verano Holdings Corp. and its direct and indirect subsidiaries, licensees, and controlled and managed entities.
The Company is a vertically integrated cannabis operator that focuses on limited-licensed markets in the United States.States (“U.S.”). As a vertically integrated provider,operator, the Company owns, operates, manages, controls, and/or has licensing, consulting or other commercial agreements with cultivation, processing, and retail licenseeslicenses across 1413 state markets (Arizona, Arkansas, California, Connecticut, Florida, Illinois, Maryland, Massachusetts, Michigan, Nevada, New Jersey, Ohio, Pennsylvania, and West Virginia).
In addition to the states listed above, theThe Company also conducts pre-licensing activities in several other markets. In these markets, the Company has either applied for licenses, or plans on applying for licenses, but does not currently own or manage any cultivation, processing, or retail licenses.
On February 11, 2021, the Company resulted from a reverse takeover transaction as further described in Note 3. Thereafter, theThe Company’s Class A Subordinate Voting Sharessubordinate voting shares, no par value (the “Subordinate Voting Shares) wereShares”) are listed on the Canadian Securities Exchange (the “CSE”Cboe Canada ("Cboe") under the ticker symbol “VRNO” and subsequently began to beare quoted in the United States on the OTCQX marketplace operated by the OTC Market Group, under the ticker symbol “VRNOF”.
The Company’s corporate headquarters is located at 415 North Dearborn St.,224 W Hill Street, Suite 400, Chicago, Illinois 60654.60610.
(b)Basis of Presentation
The accompanying unaudited interim condensed consolidated financial statementsUnaudited Interim Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and in accordance with the rules and regulations of the U.S. Securities &and Exchange Commission (“SEC”). Accordingly, certain information and disclosures required by GAAP for annual financial statements have been omitted. In the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation have been included. Unless otherwise indicated, all references to “$” or “US$” in this documentForm 10-Q refer to United States dollars, and all references to “C$” refer to Canadian dollars. These unaudited interim condensed consolidated financial statementsUnaudited Interim Condensed Consolidated Financial Statements should be read in conjunction with the Company's audited consolidated financial statements and notes thereto as of and for the year ended December 31, 20212023 (the "2021"2023 Annual Audited Financials"), included in the Company’s registration statementAnnual Report on Form 10 initially10-K filed with the SEC on April 26, 2022, and amended on June 17, 2022 (as mayMarch 15, 2024 (the "Form 10-K"). Certain prior year amounts have been reclassified to conform to the current year's presentation, which the Company does not consider to be further amended, the "2021 Form 10").material. The accompanying condensed consolidated financial statementsUnaudited Interim Condensed Consolidated Financial Statements include the accounts of Verano Holdings Corp. and its direct and indirect subsidiaries as well as the accounts of any entities over which the Company has a controlling financial interest in accordance with Accounting Standards Codification ("ASC") 810 Consolidation. The preparation of the Company’s condensed consolidated financial statementsUnaudited Interim Condensed Consolidated Financial Statements requires management to make estimates and assumptions that impact the reported amounts of assets, liabilities, revenue and expenses and the disclosure of assets and liabilities in the Company’s condensed consolidatedsuch financial statements and in the accompanying notes. Actual results may differ materially from these estimates. The results of operations for the three and six months ended June 30, 2022March 31, 2024 are not necessarily indicative of the results to be expected for the 2024 full year or any future interim or annual periods. The accompanying condensed consolidated balance sheet as of December 31, 20212023 has been derived from the audited consolidated balance sheet as of December 31, 20212023 contained in the 20212023 Annual Audited Financials included in the Form 10.


10-K.
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VERANO HOLDINGS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
($ in Thousands except shares and per share amounts)

1.OVERVIEW AND BASIS OF PRESENTATION (Continued)
(c)Restatement of Previously Issued Consolidated Financial Statements

The notes included herein should be read in conjunction with the Company’s restated audited consolidated financial statements included in the Company’s 2021 Form 10 filed with the SEC on August 19, 2022. The Company restated each of the quarterly and year-to-date periods ended March 31, 2022, December 31, 2021, and March 31, 2021; collectively referred to as the "Restatement". Amounts as of or for the period ended December 31, 2021 depicted in these interim unaudited condensed consolidated financial statements as "As Restated" include the impact of the restatement included in the 2021 Form 10. See the December 31, 2021 consolidated financial statements included in the 2021 Form 10 for details of the restatement adjustments. As a result of the error related to stock-based compensation, the Company increased Inventory by $3,069 as of and for the year ended December 31, 2021. As a result of such understated stock-based compensation expense, the Company’s tax expense was overstated with corresponding adjustments to Income Tax Payable of $662 and a decrease of Deferred Income Taxes of ($800) as of and for the year ended December 31, 2021. As a result of the error related to stock-based compensation as of and for the quarter ended March 31, 2022, the Company increased Inventory by $3,898, Cost of Goods Sold, net by $1,052, and Salaries and Benefits expense by $9,572. As a result of the error related to stock-based compensation as of and for the quarter ended March 31, 2021, the Company increased Salaries and Benefits expense by $5,692. As a result of overstatement of tax expense due to a clerical error, the Company’s tax expense was overstated by $20,274 with corresponding adjustments to Income Tax Payable of ($23,071) and an increase to Deferred Income Taxes of $2,659 as of and for the year quarter ended March 31, 2022. There was no net cash impact to the audited consolidated financial statements for the year ended December 31, 2021 and no net cash impact to the unaudited interim condensed consolidated financial statements for the three months ended March 31, 2022 and 2021, for these restatement items. The Company’s accounting for distributions from a consolidated entity was corrected in the Restated Financials to reduce Investment in Associates and Non-controlling Interest Equity by ($1,675) for the year ended December 31, 2021, and ($100) for the quarter ended March 31, 2021. Also, the Investment in Associates was corrected to account for distributions in excess of investment resulting in an increase of Equity Income of $1,537 and $1,638 at, December 31, 2021 and March 31, 2022, respectively, with a reduction in Disposition of Investments of $3,176 at March 31, 20222. Additionally, The Company determined that it had information after March 31, 2022 but before the March 31, 2022 financials were publicly filed regarding the CT Pharma and THC acquisition earnouts. The Company recognized a $4,760 reduction in the expected earnouts which was recorded in the first quarter March 31, 2022 to reflect the subsequent information indicating a lower liability.
(d)Basis of Consolidation
The condensed consolidated financial statementsUnaudited Interim Condensed Consolidated Financial Statements have been prepared in accordance with GAAP and include the accounts of the Company and its subsidiaries, as well as the accounts of any entities over which the Company has a controlling financial interest in accordance with ASC 810 Consolidation. All transactions and balances between these entities have been eliminated upon consolidation.
(d)Significant Accounting Policies
There have been no changes to the Company’s significant accounting policies as described in Note 2 - Significant Accounting Policiesto the 20212023 Annual Audited Financials included in the 2021 Form 10.10-K.
(e)Earnings (Loss) per Share
Basic earnings (loss) per share is calculated using the treasury stock method, by dividing the net earnings (losses) attributable to shareholders by the weighted average number of shares (including the Company's Class B Proportionate Voting Sharesproportionate voting shares, no par value (the "Proportionate Voting Shares") on an as converted to Subordinate Voting Shares basis of 100 Subordinate Voting Shares to one Proportionate Voting Share) outstanding during each of the yearsperiods presented. Contingently issuable shares (including shares held in escrow) are not considered outstanding shares and consequently are not included in the earnings (loss) per share calculations. Diluted income per share is calculated by adjusting the weighted average number of shares outstanding to assume conversion of all dilutive potential shares.
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VERANO HOLDINGS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
($ in Thousands except shares and per share amounts)
1.OVERVIEW AND BASIS OF PRESENTATION(Continued)
To determine diluted income per share, it is assumedthe Company assumes that any proceeds from the exercise of dilutive share options would be used to repurchase shares at the average market price during the period. The diluted income per share calculation excludes any potential conversion of share options and convertible debt, if any, that would increase earnings per share or decrease loss per share. No potentially dilutive share equivalents were included in the computation of diluted loss per share for the three and six months ended June 30, 2022March 31, 2024 and 20212023 because their impact would have been anti-dilutive.
(f)Recently Issued Accounting Standards
In November 2023, the Financial Accounting Standards Board issued Accounting Standards Update 2023-07 - ASC 280 Segment Reporting - Improvements to Reportable Segment Disclosures ("ASC 280"), which extends the existing requirements for annual disclosures to quarterly periods, and requires that both annual and quarterly disclosures present segment expenses using line items consistent with information regularly provided to the chief operating decision maker. ASU 280 is effective for annual periods beginning after December 15, 2023 and quarterly periods beginning after December 15, 2024. The Company reviews recently issued accounting standards ondoes not expect implementation of the new disclosure guidance to have a quarterly basis and has determined there are no standards yetmaterial impact to be adopted which are relevant to the Company’s business for disclosure.
(g)Coronavirus Pandemic
In June 2020, the World Health Organization categorized coronavirus disease 2019 (together with its variants, “COVID-19”) as a pandemic. COVID-19 continues to spread throughout the U.S. and other countries across the world, and the duration and severity of its effects are currently unknown. The Company continues to implement and evaluate actions to strengthen its financial position and support the continuity of its business and operations.
The Company’s unaudited interim condensed consolidated financial statements presented herein reflect estimates and assumptions made by management that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited interim condensed consolidated financial statements and reported amounts of revenue and expenses during the periods presented. Such estimates and assumptions affect, among other things, the Company’s goodwill; long-lived assets and intangible assets; operating lease right of use assets and operating lease liabilities; valuation of deferred income taxes; the allowance for doubtful accounts; assessment of the Company’s lease and non-lease contract expenses; and measurement of compensation cost for bonus and other compensation plans. While the Company’s revenue, gross profit and operating income were not impacted during the three and six months ended June 30, 2022, the uncertain nature of the spread of COVID-19 and the uncertainty of the impact of nationwide vaccine programs may impact the Company’s business operations for reasons including the potential quarantine of the Company’s employees or of its supply chain partners’ employees.
2.statements.REVERSE TAKEOVER TRANSACTION (“RTO”)
On December 14, 2020, Verano Holdings, LLC, a Delaware limited liability company, Majesta Minerals, Inc., an Alberta corporation (the “Public Corporation”), 1276268 B.C. Ltd., a British Columbia corporation (“Verano FinCo”), 1277233 B.C. Ltd, a British Columbia corporation, and 1278655 B.C. Ltd., a British Columbia corporation (“Majesta SubCo”), entered into an arrangement agreement (as amended January 26, 2021, the “Definitive Agreement”), pursuant to which the Company resulted from the reverse takeover transaction contemplated thereby (the “RTO”).
In accordance with the plan of arrangement forming part of the Definitive Agreement (the “Plan of Arrangement”), the Public Corporation changed its name to “Verano Holdings Corp.” and completed a consolidation of its common shares on the basis of 100,000 issued and outstanding common shares on a post-consolidation basis.
In accordance with the terms of the Plan of Arrangement, 10,000,000 subscription receipts (the “Subscription Receipts”) were issued on January 21, 2021, at a price per Subscription Receipt of $101, for aggregate gross proceeds of $100,000 (the “RTO Financing”). In the RTO Financing, the Company issued a total of 10,000,000 Subordinate Voting Shares to the purchasers of the Subscription Receipts and 578,354 Subordinate Voting Shares and $4,580 in transactions costs to the offering agents as a broker fee, for a net RTO Financing amount of $95,420.

1 Such amounts not in Thousands
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VERANO HOLDINGS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
($ in Thousands except shares and per share amounts)

2.REVERSE TAKEOVER TRANSACTION (“RTO”) (Continued)INVENTORY
The Public Corporation reorganized capital by altering its notice of articles and articles to (i) attach special rights and restrictions to its common shares, (ii) change the identifying name of its common shares to “Class A Subordinate Voting Shares” and (iii) create a new class of shares identified as "Class B Proportionate Voting Shares". Pursuant to the Plan of Arrangement, thereafter Verano FinCo amalgamated with Majesta SubCo. Majesta SubCo was then liquidated, and the net proceeds of the RTO Financing transferred to the Company, as the resulting corporation in the RTO.
The members of Verano Holdings, LLC, and owners of certain of its subsidiaries, through a series of transactions, exchanged their ownership interests in Verano Holdings LLC and such subsidiaries for 96,892,040 Subordinate Voting Shares and 1,172,382 Proportionate Voting Shares. In connection with the Company’s acquisitions
(described in Note 8) of Alternative Medical Enterprises, LLC, Plants of Ruskin GPS, LLC, and RVC 360, LLC (collectively, the “AME Parties”), that occurred concurrently with the RTO, the members of the AME Parties, through a series of transactions, exchanged their membership interests in the AME Parties for 18,092,987 Subordinate Voting Shares and 470,984 Proportionate Voting Shares, plus cash consideration, as further described in Note 8(a). In addition, upon the consummation of the acquisition the members of the AME Parties received cash consideration of $20,000 which was funded with proceeds from the RTO Financing and were entitled to receive an additional $15,000 in cash installments.
In accordance with ASC 805, Business Combinations, the substance of the transaction is a reverse takeover of a nonoperating company. The transaction does not constitute a business combination because Majesta SubCo does not meet the definition of a business under the standard. As a result, the transaction is accounted for as a capital transaction with Verano Holdings, LLC being identified as the acquirer and the equity consideration being measured at fair value. The resulting consolidated statement of financial position is presented as a continuance of Verano Holdings, LLC and comparative figures presented in the consolidated financial statements prior to the RTO are those of Verano Holdings, LLC.
ASC 505-50, Equity-Based Payments to Non-Employees, applies to transactions where an entity grants equity instruments and cannot identify specifically some or all of the goods or services received in return. Because the Company issued shares with a value in excess of the assets received, the difference is recognized in RTO-related issuance cost through equity. The amount assigned to the transaction cost of $198 is the difference between the fair value of the consideration and the net identifiable assets of Majesta SubCo acquired by the Company.

3.INVENTORY
The Company’s inventory consists of the following at June 30, 2022as of March 31, 2024 and December 31, 2021:2023:
June 30,
2022
December 31,
2021
March 31,
2024
March 31,
2024
December 31,
2023
(As Restated)
Raw MaterialsRaw Materials$8,369 $5,767 
Raw Materials
Raw Materials
Work in ProcessWork in Process109,219 96,367 
Packaging and Miscellaneous
Finished GoodsFinished Goods36,462 38,569 
Total Inventories$154,050 $140,703 
Total Inventory
Total Inventory
Total Inventory


During the year ended December 31, 2023, the Company classified Packaging and Miscellaneous as a component of Prepaid Expenses and Other Current Assets on the Consolidated Balance Sheets as of December 31, 2023. Packaging and Miscellaneous has been reclassified to Inventory in the Unaudited Interim Condensed Consolidated Balance Sheets as of March 31, 2024, to better reflect the character of the underlying assets. Prior periods have been reclassified to conform to the current period presentation.
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VERANO HOLDINGS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
($ in Thousands except shares and per share amounts)

4.3.PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment and related accumulated depreciation consists of the following as of June 30, 2022March 31, 2024 and December 31, 2021:2023:
June 30,
2022
December 31,
2021
March 31,
2024
March 31,
2024
December 31,
2023
LandLand$29,878 $29,399 
Buildings and ImprovementsBuildings and Improvements170,842 126,020 
Furniture and FixturesFurniture and Fixtures15,900 13,259 
Computer Equipment and SoftwareComputer Equipment and Software19,074 14,078 
Leasehold ImprovementsLeasehold Improvements188,038 182,514 
Tools and EquipmentTools and Equipment79,768 65,774 
VehiclesVehicles4,716 3,229 
Assets Under Construction (1)
Assets Under Construction (1)
73,311 64,107 
Total Property, Plant and Equipment581,527 498,380 
Total Property, Plant and Equipment, Gross
Total Property, Plant and Equipment, Gross
Total Property, Plant and Equipment, Gross
Less: Accumulated DepreciationLess: Accumulated Depreciation(65,829)(46,148)
Property, Plant and Equipment, Net$515,698 $452,232 
Total Property, Plant and Equipment, Net
Total Property, Plant and Equipment, Net
Total Property, Plant and Equipment, Net
(1)Assets under construction represent construction in progress related to facilities not yet completed or otherwise not placed in service.
For the three months ended June 30, 2022March 31, 2024 and June 30, 2021,March 31, 2023, depreciation expense included in costs of goods sold totaled $7,311$8,724 and $5,923,$8,524, respectively. For the three months ended June 30, 2022March 31, 2024 and June 30, 2021,March 31, 2023, depreciation expense included in selling, general, and administrative expense totaled $3,178$4,041 and $1,942, respectively. For the six months ended June 30, 2022 and June 30, 2021, depreciation expense included in costs of goods sold totaled $14,368 and $8,805, respectively. For the six months ended June 30, 2022 and June 30, 2021, depreciation expense included in selling, general, and administrative expense totaled $5,719 and $3,134,$3,667, respectively.
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VERANO HOLDINGS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
($ in Thousands except shares and per share amounts)
5.
4.INTANGIBLE ASSETS AND GOODWILL
Intangible assets are recorded at cost less accumulated amortization and impairment losses, if any. Intangible assets acquired in a business combination are measured at fair value atas of the acquisition date. Amortization of definite life intangiblesintangible assets is provided on a straight-line basis over their estimated useful lives. The estimated useful lives, residual values, and amortization methods for intangible assets are reviewed by the Company at each year end, and any changes in estimates are accounted for prospectively.
As of March 31, 2024, intangible assets consisted of the following:
LicensesTradenamesTechnologyTotal
Cost
Balance as of January 1, 2024$1,269,326 $54,166 $6,431 $1,329,923 
Balance as of March 31, 2024$1,269,326 $54,166 $6,431 $1,329,923 
Accumulated Amortization
Balance as of January 1, 2024225,751 15,001 3,025 243,777 
Amortization21,173 1,355 259 22,787 
Balance as of March 31, 2024$246,924 $16,356 $3,284 $266,564 
Net Book Value
Balance as of January 1, 20241,043,575 39,165 3,406 1,086,146 
Balance as of March 31, 2024$1,022,402 $37,810 $3,147 $1,063,359 
The following table outlines the estimated annual amortization expense related to intangible assets as of March 31, 2024:
Year Ending December 31,Estimated Amortization
2024 (Remaining)$68,361 
202591,149 
202690,434 
202790,360 
202890,342 
Thereafter632,713 
Total$1,063,359 
The changes in the carrying amount of goodwill, by reportable segment, for the three months ended March 31, 2024 were as follows:
January 1, 2024ImpairmentAdjustments to purchase price allocationAcquisitionsMarch 31, 2024
Cultivation$49,318 $— $— $— $49,318 
Retail181,973 — — — 181,973 
Total$231,291 $— $— $— $231,291 
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VERANO HOLDINGS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
($ in Thousands except shares and per share amounts)

5.INTANGIBLE ASSETS AND GOODWILL (Continued)
As of June 30, 2022, intangible assets consisted of the following:
LicensesTradenamesTechnologyTotal
Cost
Balance as of January 1, 2022$1,386,131 $54,166 $11,603 $1,451,900 
Purchases— — — — 
Additions from business combination13,281 — — 13,281 
Adjustments to purchase price allocation— — — — 
Disposals— — — — 
Balance as of June 30, 2022$1,399,412 $54,166 $11,603 $1,465,181 
Accumulated Amortization
Balance as of January 1, 202266,703 4,158 1,126 71,987 
Amortization46,499 2,710 614 49,823 
Balance as of June 30, 2022$113,202 $6,868 $1,740 $121,810 
Net Book Value
Balance as of January 1, 20221,319,428 50,008 10,477 1,379,913 
Balance as of June 30, 2022$1,286,210 $47,298 $9,863 $1,343,371 
Amortization periods of assets with finite lives are based on management’s estimates at the date of acquisition.
The following table outlines the estimated annual amortization expense related to intangible assets as of June 30, 2022:
Year Ending December 31:Estimated Amortization
2022 (Remaining)$49,975 
202399,948 
202499,948 
202599,948 
202699,221 
Thereafter894,331 
$1,343,371 
The changes in the carrying amount of goodwill, by reportable segment, for the six months ended June 30, 2022 were as follows:
January 1, 2022ImpairmentAdjustments to purchase price allocationAcquisitionsJune 30, 2022
Cultivation$91,116 $— $1,050 $— $92,166 
Retail277,014 — 912 6,545 284,471 
Total$368,130 $— $1,962 $6,545 $376,637 
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VERANO HOLDINGS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
($ in Thousands except shares and per share amounts)
5.INTANGIBLE ASSETS AND GOODWILL (Continued)
As of June 30, 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 an increase of $1,050 to goodwill. The Company obtained additional information about the facts and circumstances that existed at the time of the acquisition date that led to changes in provisional amounts recognized in the initial opening financials for inventory, income taxes and accrued payables.
As of June 30, 2022, the Company recorded a purchase price adjustment in connection with the December 20, 2021 acquisition of Caring Nature, LLC. The net impact led to an increase of $56 to goodwill and acquisition price payable.
As of June 30, 2022, the Company recorded measurement period adjustments in connection with the March 11, 2022 acquisition of 420 Capital Management, LLC. The net impact led to an increase of $856 to goodwill. The Company obtained additional information about the facts and circumstances that existed at the time of the acquisition date that led to changes in provisional amounts recognized in the initial opening financials for cash and accounts payable.
6.EARNINGS (LOSSES) PER SHARE
The Company presents basic earnings (losses) per share. Basic earnings (losses) per share is calculated by dividing the earnings (loss) attributable to shareholders by the weighted average number of Subordinate Voting Shares (on(with outstanding Proportionate Voting Shares, if any, accounted for on an as converted to Subordinate Voting Shares basis) outstanding during the periods presented. Diluted earnings (losses) per share is computed based on the weighted average number of Subordinate Voting Shares (with outstanding Proportionate Voting Shares, if any, accounted for on an as converted to Subordinate Voting Shares basis) outstanding, to the extent dilutive.
The computations of net earnings (loss) per share on a basic and diluted basis, including reconciliations of the numerators and denominators, for the three months ended March 31, 2024 and March 31, 2023 were as follows:
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
For the Three Months Ended March 31,For the Three Months Ended March 31,
202420242023
NumeratorNumerator
Net Loss attributable to Verano Holdings Corp.
Net Loss attributable to Verano Holdings Corp.
Net Loss attributable to Verano Holdings Corp.Net Loss attributable to Verano Holdings Corp.$(9,847)$(29,688)$(10,061)$(37,574)
DenominatorDenominator
Denominator
Denominator
BasicBasic
Pre-RTO weighted-average shares outstanding158,203,932 
Post-RTO weighted-average shares outstanding300,715,671 297,365,427 
Basic
Basic
Weighted-average shares outstanding – basic
Weighted-average shares outstanding – basic
Weighted-average shares outstanding – basicWeighted-average shares outstanding – basic328,519,193 300,715,671 327,402,503 265,842,657 
DilutedDiluted
Pre-RTO weighted-average shares outstanding158,203,932 
Post-RTO weighted-average shares outstanding300,715,671 297,365,427 
Diluted
Diluted
Weighted-average shares outstanding – diluted
Weighted-average shares outstanding – diluted
Weighted-average shares outstanding – dilutedWeighted-average shares outstanding – diluted328,519,193 300,715,671 327,402,503 265,842,657 
Basic earnings per share$(0.03)$(0.10)$(0.03)$(0.14)
Diluted earnings per share$(0.03)$(0.10)$(0.03)$(0.14)
Net Loss per share - basic & diluted
Net Loss per share - basic & diluted
Net Loss per share - basic & diluted
Potentially dilutive securities of approximately 4,580,744 and 365,774 for the three months ended March 31, 2024 and March 31, 2023, respectively, were not included in the computation of diluted earnings per share because their effect would have been anti-dilutive.
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VERANO HOLDINGS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
($ in Thousands except shares and per share amounts)

7.NOTES RECEIVABLE
As of December 31, 2021, notes receivable consisted of 2 secured promissory notes.
The first note was a secured promissory note, dated August 13, 2020, with a third party in the original principal amount of $180. The note accrued interest at 8% per annum and had an original maturity date of February 13, 2021, which was subsequently extended at the discretion of the Company. As of December 31, 2021, the Company has received principal payments of $56 and the note had an outstanding principal of $124 plus accrued interest of $7. During the quarter ended March 31, 2022, the Company settled the outstanding note receivable balance as part of the Greengate transaction. 
The second note was a secured promissory note, dated March 24, 2021, with a third party in the original principal amount of $147. The note accrued interest at 8% per annum and had an original maturity date of September 24, 2021, which was subsequently extended to March 24, 2022. During the quarter ended March 31, 2022, the Company settled the outstanding note receivable balance as part of the Greengate transaction.
As of June 30, 2022, the Company had 0 outstanding notes receivable.
8.TRANSACTIONS
(a)Merger Agreement
On November 6, 2020, Verano Holdings LLC entered into an agreement and plan of merger with the AME Parties, pursuant to which the Company, as the assignee of all of Verano Holdings LLC’s rights and obligations thereunder, would acquire the AME Parties and their subsidiaries and ownership and control interests (the “AME Group”) via a series of merger transactions (the “AME Mergers”). The AME Mergers were contingent upon, and closed contemporaneously with the RTO, resulting in the creation of the Company as a Canadian publicly-traded parent company of Verano Holdings LLC, the AME Parties and their respective subsidiaries.
The RTO and AME Mergers closed on February 11, 2021 and resulted in the AME Parties becoming wholly-owned subsidiaries of the Company. The members of the AME Parties, through the RTO and AME Mergers, exchanged their membership interests in the AME Parties for 18,092,988 Subordinate Voting Shares and 470,984 Proportionate Voting Shares valued at approximately $651,914, plus cash consideration of $35,000. The shares issued were assigned a value of $10 per share with the Proportionate Voting Shares valued on an as converted to Subordinate Voting Share basis. The share price is equivalent to the arm’s-length RTO Financing transaction of the Subscription Receipts of $10 per share. The share consideration and cash consideration of $20,000 was paid at the closing of the AME Mergers, $10,000 of cash consideration was paid on August 11, 2021, and the remaining $5,000 balance was paid in the first quarter of 2022. As of June 30, 2022, the total consideration had been paid in full.
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VERANO HOLDINGS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
($ in Thousands except shares and per share amounts)

8.6.TRANSACTIONS(Continued)
The Company accounted for the transaction as a business combination in accordance with ASC 805, Business Combinations. The following table summarizes the provisional accounting estimates of the merger transaction:
AltMed
Florida
AltMed ArizonaTotal
Cash$5,446 $507 $5,953 
Accounts receivable, net60 498 558 
Inventory83,205 5,827 89,032 
Prepaids and other current assets833 1,989 2,822 
Property, plant and equipment, net73,386 9,751 83,137 
Right-of-use asset, net9,651 — 9,651 
Other assets1,001 — 1,001 
Accounts payable and accrued liabilities(8,935)(2,576)(11,511)
Notes payable(3,579)(3,343)(6,922)
Deferred taxes(123,720)(37,290)(161,010)
Lease liabilities(9,651)— (9,651)
Total identifiable net assets (liabilities)27,697 (24,637)3,060 
Intangible assets498,938 184,588 683,526 
Net assets$526,635 $159,951 $686,586 
The Company identified intangible assets related to the acquired cannabis license, tradenames and intellectual property for the patented encapsulation formulation used in the MÜV™ branded transdermal patches, gels, tinctures and capsules. The Company engaged an independent valuation expert that uses appropriate valuation techniques, generally based on the forecast of the present value of expected future net cash flows, to determine the intangible assets appropriate fair value. The Company determined the fair value of intangible assets as outlined below:
AltMed FloridaAltMed ArizonaTotal
License$319,928 $130,670 $450,598 
Tradename36,278 8,980 45,258 
Intellectual Property and Technology10,603 885 11,488 
Total intangible assets366,809 140,535 507,344 
Goodwill (residual purchase price)8,409 6,763 15,172 
Goodwill (deferred taxes) (a)123,720 37,290 161,010 
Total goodwill$132,129 $44,053 $176,182 
(a) Goodwill recognized related to deferred taxes associated with assets acquired that have no tax basis.

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VERANO HOLDINGS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
($ in Thousands except shares and per share amounts)
8.TRANSACTIONS (Continued)
Selected line items from the Company’s unaudited condensed interim consolidated statements of operations for the six months ended June 30, 2021, adjusted as if the acquisition of AltMed, deemed to be the only acquisition with material operations in the period, had occurred on January 1, 2021, are presented below:
Consolidated ResultsAltMed Pre-acquisitionPro-forma Results
Revenues, net of discounts$319,961 $22,402 $342,363 
Net income (loss)(37,574)10,933 (26,641)
(b)Business Combinations
The Company has determined that the acquisitions described below are business combinations under ASC Topic 805, Business Combinations. Acquisitions that are determined to be the acquisition of a business are accounted for by applying the acquisition method, whereby the assets acquired, and the liabilities assumed are recorded at their fair values at the date of acquisition with any excess of the aggregate consideration over the fair values of the identifiable net assets allocated to goodwill. Operating results for the companies acquired have been included in these unaudited interim condensed consolidated financial statementsUnaudited Interim Condensed Consolidated Financial Statements from the date of the acquisition. Any goodwill recognized is attributed based on reporting units. Refer to the end of section (b) of this Note for the revenue and net income (loss) since the acquisition date included in the unaudited interim condensed consolidated statement of operations and pro forma revenue and earnings.
The purchase price allocations for the acquisitions reflect various fair value estimates and analyses which are subject to change within the measurement period, which is the one yearone-year period subsequent to the acquisition date. The primary areas of the purchase price allocation that are subject to change relate to the fair value of certain tangible assets, the value of intangible assets acquired, and residual goodwill. The Company expects to continue to obtain information to assist in determining the fair value of the net assets acquired at the acquisition date during the measurement period.
Measurement period adjustments that the Company determined to be material will be applied prospectively in the Company’s future consolidated financial statements, and depending on the nature of the adjustments, other periods subsequent to the period of acquisition could be affected.
2022 Business Combinations
420 Capital Management, LLCWSCC, Inc.
On April 5,July 6, 2021, Verano entered into ana merger agreement to purchaseacquire 100% of the equity interests of 420 Capital Management, LLCWSCC, Inc (“Greengate”Sierra Well”). Greengate isSierra Well held cannabis licenses that allow it to cultivate, produce and sell medical and recreational cannabis products in the license holder and operatorstate of the Lombard and Roger’s ParkNevada, including sales through its retail dispensaries located in Illinois.Carson City and Reno. The transaction received state regulatory approval in February 2022 and subsequently closed on September 7, 2022.
During the quarter ended March 11, 2022. Total consideration includes31, 2024, the Company paid cash of $7,448, forgiveness of other receivables of $2,894, and equity consideration of 1,403,067$32 and issued 31,181 Subordinate Voting Shares valued at $13,221 based onto the fair valueformer shareholders of the Subordinate Voting Shares as traded on the CSE on the dateSierra Well, which had been held back to secure indemnification obligations of the transaction, all of which was paid at the closing of the transaction.such shareholders. As of June 30, 2022, totalMarch 31, 2024, all consideration hadrelated to the acquisition has been paid in full.paid.
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VERANO HOLDINGS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
($ in Thousands except shares and per share amounts)

8.7.TRANSACTIONS (Continued)DEBT
The following table summarizes the provisional accounting estimatesAs of March 31, 2024 and December 31, 2023 debt consisted of the acquisitions that occurred duringfollowing:
March 31,
2024
December 31, 2023
Credit Facility$347,900 $348,950 
Secured Promissory Notes1,567 1,582 
Mortgage Loans110,257 111,221 
Vehicle and Equipment Loans961 1,081 
Unamortized Debt Issuance Costs(15,999)(17,192)
Total Debt$444,686 $445,642 
Less: Current Portion of Debt53,412 52,005 
Total Long-Term Debt, net$391,274 $393,637 
Credit Facility
On October 27, 2022, Verano and certain of its subsidiaries and affiliates from time-to-time party thereto (collectively, the six months ended June 30, 2022:
Greengate
Cash and cash equivalents$2,315 
Inventory1,021 
Prepaid & other current Assets324 
Deposits and Other non-current assets45 
Property, plant and equipment, net1,673 
Right-of-use asset, Net1,836 
Accounts payable and accrued liabilities(1,569)
Other liabilities(72)
Lease liabilities(1,836)
Total identifiable net assets (liabilities)3,737 
Total Intangible assets19,826 
“Borrowers”), entered into a Credit Agreement (the “2022 Credit Agreement”) with Chicago Atlantic Admin, LLC, as administrative agent for the lenders, and the lenders from time-to-time party thereto, pursuant to which the lenders advanced the Borrowers a $350,000 senior secured term loan, all of which was used to repay the principal indebtedness outstanding under the Company's previous senior secured term loan credit facility. In connection with such repayment, such previous credit facility was terminated and is no longer in force or effect.
The consolidated statements2022 Credit Agreement provides the Borrowers with the right, subject to conditions, to request an additional incremental term loan in the aggregate principal amount of operations includes net revenueup to $100,000; provided that the lenders elect to fund such incremental term loan. Beginning in October 2023, the loan requires scheduled amortization payments of $5,091$350 per month and net incomethe remaining principal balance is due in full on October 30, 2026.
The 2022 Credit Agreement also provides the Borrowers with the right to (a) incur up to $120,000 of $59 relatedadditional indebtedness from third-party lenders secured by real estate excluded as collateral under the 2022 Credit Agreement, (b) incur additional mortgage financing from third-party lenders secured by real estate acquired after the closing date, and (c) upon the SAFE Banking Act or similar legislation making banking services available to U.S. cannabis companies being passed by the United States Congress, incur up to $50,000 pursuant to a revolving credit facility from third-party lenders that is pari passu or subordinated to the acquired operations2022 Credit Agreement obligations, each of Greengate for the six months ended June 30, 2022.which are subject to customary conditions.
The Company engaged an independent valuation expert that uses appropriate valuation techniques, generally based onobligations under the forecast of the present value of expected future net cash flows, to determine the intangible assets appropriate fair value. The Company recognized an intangible asset for the cannabis license acquired at a fair value of $13,281. The residual purchase price of $6,545 was recognized as goodwill.
The unaudited pro forma information set forth below gives effect to the Greengate acquisition as if it had occurred on January 1, 2021. These unaudited pro forma results2022 Credit Agreement are presented for informational purposes only and are not necessarily indicative of the results of operations that would have been achieved had the transaction been consummated as of that time nor does it purport to be indicative of future financial operation results.
Pro forma net revenues for the six months ended June 30, 2022 and 2021 are $428,709 and $324,739, respectively. Pro forma net loss for the six months ended June 30, 2022 and 2021 are ($9,574) and ($36,692).
2021 Business Combinations
Glass City Alternatives, LLC
On September 20, 2020, the Company entered into an agreement to acquiresecured by substantially all of the ownership interest of Glass City Alternatives, LLC which operates a dispensary located in Ohio. The transaction closed on January 7, 2021. The total cash consideration was $2,700 plus a post-closing $329 purchase price adjustment. The Company issued $500 in Subordinate Voting Shares based on the fair valueassets of the Subordinate Voting Shares as traded on the CSE on the dateBorrowers, excluding vehicles, specified parcels of issuance. As of June 30, 2022, the total consideration had been paid in full.real estate and other customary exclusions.
The Company engaged2022 Credit Agreement provides for a floating annual interest rate equal to the prime rate then in effect plus 6.50%, which rate may be increased by 3.00% upon an independent valuation expertevent of default that uses appropriate valuation techniques, generally based on forecastis not a material event of the present valuedefault or 6.00% upon a material event of expected future net cash flows, to determine the intangible assets appropriate fair value. The Company recognized an intangible asset for the cannabis license acquired at a fair value of $2,497. The residual purchase price of $224 was recognized as goodwill.default.
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VERANO HOLDINGS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
($ in Thousands except shares and per share amounts)

8.7.TRANSACTIONSDEBT (Continued)
Perpetual Healthcare Inc.
On February 25, 2021,At any time, the Company entered into an agreementmay voluntarily prepay up to purchase control of Perpetual Healthcare Inc. (“Emerald”). Emerald is a non-profit entity that operates a marijuana dispensary in Arizona.. The Company, through a management service agreement (“MSA”) and control$100,000 of the board of directors, obtained control of Emerald’s dispensary operations and license. The transaction became effective on March 10, 2021, and the Company consolidated Emerald through the Voting Interest Model (“VOE”) in accordance with ASC 810, Consolidations. On April 27, 2022, Emerald was convertedprincipal balance, subject to a for-profit entity, wholly-owned byone-time $1,000 prepayment premium upon the Company,first prepayment, and may prepay the MSA was terminated in connection with the closing of the transaction. Emerald is consolidated asremaining outstanding principal balance for a fully owned entity as of June 30, 2022.

Total consideration included cash consideration of $11,250 plus a post-closing $326 purchase price adjustment and, 541,994 Subordinate Voting Shares valuedprepayment premium at approximately $10,002varying rates based on the fair valuetiming of any subsequent prepayments. The Borrowers may not voluntarily prepay more than $100,000 of the Subordinate Voting Shares as traded onprincipal balance without prepaying the CSE on the dateentire outstanding principal balance of the transaction. loan.
The remaining obligation was settled in May 2021 through2022 Credit Agreement includes customary representations and warranties and customary events of default, including, without limitation, payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to material indebtedness, and events of bankruptcy and insolvency.
The 2022 Credit Agreement also includes customary negative covenants limiting the issuanceBorrowers’ ability to incur additional indebtedness and grant liens that are not otherwise permitted, and the ability to enter into or consummate acquisitions or dispositions that are not otherwise permitted, among others. Additionally, the 2022 Credit Agreement requires the Borrowers to meet certain financial tests regarding minimum cash balances, minimum levels of 350,644 Subordinate Voting Shares valued at approximately $6,992 based on the fair value of the Subordinate Voting Shares as traded on the CSE on the date of the share issuance. The share issuance resulted in a $817 loss includedAdjusted EBITDA (as defined in the other income (loss) line of the unaudited interim condensed consolidated statement of operations. 2022 Credit Agreement) and a minimum fixed charge coverage ratio.
As of June 30, 2022, the total consideration had been paid in full.
The Company engaged an independent valuation expert that uses appropriate valuation techniques, generally based on forecast of the present value of expected future net cash flows, to determine the intangible assets appropriate fair value. The Company recognized an intangible asset for the cannabis license acquired at a fair value of $25,284. The residual purchase price of $1,555 was recognized as goodwill. The Company also recognized $6,548 to goodwill related to the deferred tax liability associated with the cannabis license.
The Herbal Care Center Inc.
On February 24, 2021,March 31, 2024, the Company entered into an equity purchase agreement to acquire all equity interestwas in EINJO, L.P. and SPSLE, Corp. to become the sole owner of The Herbal Care Center, Inc. (“The Herbal Care Center”), which holds licenses for 2 dispensaries in Illinois. The Company, through an MSA, obtained control of The Herbal Care Center’s operations and marijuana license. The transaction became effective on March 17, 2021, and the Company consolidated The Herbal Care Center through the Variable Interest Model (“VIE”) in accordancecompliance with ASC 810, Consolidations. On May 11, 2022, the Company consummated the acquisition of The Herbal Care Center and terminated the MSA in connection therewith. As of June 30, 2022, The Herbal Care Center is consolidated as a fully owned entity.

Total consideration included cash consideration of $18,750, plus a $2,107 purchase price adjustment, of which $10,000 was paid upon entering into the MSA. The total consideration also included 90,464 Subordinate Voting Shares and 9,625 Proportionate Voting Shares valued at approximately $22,778 based on the fair value of the Subordinate Voting Shares and Proportionate Voting Shares, on an as converted to Subordinate Voting Shares basis, as traded on the CSE on the date of the transaction. As of June 30, 2022, the total consideration had been paid in full.
The Company engaged an independent valuation expert that uses appropriate valuation techniques, generally based on forecast of the present value of expected future net cash flows, to determine the intangible assets appropriate fair value. The Company recognized an intangible asset for the cannabis license acquired at a fair value of $39,062. The residual purchase price of $328 was recognized as goodwill. The Company also recognized $11,914 to goodwill related to the deferred tax liability associated with the cannabis license.such covenants.
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VERANO HOLDINGS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
($ in Thousands except shares and per share amounts)

8.TRANSACTIONS (Continued)SHARE CAPITAL
Patient Alternative Relief Center, Inc.
On March 22, 2021, the Company entered into an agreement with Flower Launch LLC, to acquire the rights to manage Patient Alternative Relief Center, Inc. (“Local Joint”). Local Joint is a non-profit entity that operates a retail dispensary in Arizona. The Company, through a MSA and control of the board of directors, obtained control of Local Joint’s operations and its license. The transaction became effective on March 30, 2021, and the Company consolidated Local Joint through the VOE in accordance with ASC 810, Consolidations. On April 27, 2022, Local Joint was converted to a for-profit entity, wholly-owned by the Company, and the MSA was terminated in connection therewith. Local Joint is consolidated as a fully owned entity as of June 30, 2022.

Total consideration included cash consideration of $13,500, with $10,000 paid on the closing date and $3,500 paid in July 2021, plus 179,767 Subordinate Voting Shares valued at approximately $3,031 based on the fair value of the Subordinate Voting Shares as traded on the CSE on the date of the transaction. As of June 30, 2022, the total consideration had been paid in full.
The Company engaged an independent valuation expert that uses appropriate valuation techniques, generally based on forecast of the present value of expected future net cash flows, to determine the intangible assets appropriate fair value. The Company recognized an intangible asset for the cannabis license acquired at a fair value of $15,819. The residual purchase price of $276 was recognized as goodwill.
BISHCO LLC
On February 23, 2021, the Company entered into a merger agreement to acquire BISHCO LLC, which holds the rights to manage 3 non-profit entities in Arizona through MSAs. The non-profit entities, AZGM3, Inc., Vending Logistics, LLC, and The Medicine Room, LLC, each hold an Arizona marijuana license. The agreement provided that executives of the Company were appointed as the sole members of the boards of directors that govern each non-profit entity. Through the acquisition of BISHCO LLC and its MSAs, as well as the Company’s appointment to the boards of directors of the non-profit entities, the Company obtained control of the non-profit entities’ operations and their respective licenses. The transaction became effective on April 8, 2021, and the Company consolidated the non-profit entities through the VOE in accordance with ASC 810, Consolidations. On April 26 and 27, 2022, the 3 non profit entities were converted to for-profit entities, wholly-owned by the Company, and the MSAs were terminated in connection therewith. The former non-profit entities are consolidated as fully owned entities as of June 30, 2022.

Total consideration included $18,699 of cash paid upon closing, plus a $1,036 purchase price adjustment, 997,453 Subordinate Voting Shares and 29,924 Proportionate Voting Shares valued at approximately $78,916 based on the fair value of the Subordinate Voting Shares and Proportionate Voting Shares, on an as converted to Subordinate Voting Shares basis, as traded on the CSE on the date of the transaction. An additional $12,750 was paid in cash in April 2022 and the remaining $12,750 is payable in Subordinate Voting Shares or cash at the election of the recipient, due on March 31, 2023. As of June 30, 2022, the present value of unpaid deferred consideration of $10,972 is included in the acquisition price payable balance on the Company’s consolidated balance sheets.
The Company engaged an independent valuation expert that uses appropriate valuation techniques, generally based on forecast of the present value of expected future net cash flows, to determine the intangible assets appropriate fair value. The Company recognized an intangible asset for the cannabis license acquired at a fair value of $87,963. The residual purchase price of $14,559 was recognized as goodwill. The Company also recognized $23,598 to goodwill related to the deferred tax liability
TerraVida Holistic Center, LLC
On February 24, 2021, the Company entered into an agreement to acquire TerraVida Holistic Centers, LLC, which holds the rights to 3 active dispensaries in Pennsylvania. The transaction closed on May 11, 2021. Total
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VERANO HOLDINGS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
($ in Thousands except shares and per share amounts)
8.TRANSACTIONS (Continued)
consideration included cash consideration of $64,316, plus a $1,993 purchase price adjustment, of which $18,809 was paid at closing and the remaining $47,500 was paid over the first six months after closing. The transaction also included consideration of 1,506,750 Subordinate Voting Shares and 15,067 Proportionate Voting Shares valued at approximately $59,732 based on the fair value of the Subordinate Voting Shares and Proportionate Voting Shares, on an as converted to Subordinate Voting Shares basis, as traded on the CSE on the date of the transaction. As of June 30, 2022, the total consideration had been paid in full.
The Company engaged an independent valuation expert that uses appropriate valuation techniques, generally based on forecast of the present value of expected future net cash flows, to determine the intangible assets appropriate fair value. The Company recognized an intangible asset for the cannabis license acquired at a fair value of $112,418. The residual purchase price of $3,635 was recognized as goodwill.
The Healing Center, LLC
On March 29, 2021, the Company entered into an agreement to acquire 3 active dispensaries in Pennsylvania by purchasing all the issued and outstanding equity interests of The Healing Center, LLC (“The Healing Center”). The transaction closed on May 14, 2021. At the time the transaction closed, The Healing Center leased the real estate where the dispensaries are located from 3 separate real estate entities (collectively referred to as “THC Real Estate”).
On September 3, 2021, the Company acquired the equity interests of THC Real Estate in cash transactions for an aggregate purchase price of $12,225, which was paid in full at closing. The acquisitions were accounted for as a single business combination in accordance with ASC 805, Business Combinations.
Total consideration for The Healing Center included cash consideration of $56,892, plus a $2,355 purchase price adjustment, of which $31,463 was paid upon closing and an additional $27,784 was paid 60 days after the closing. In addition, the total consideration included 454,302 Subordinate Voting Shares and 25,744 Proportionate Voting Shares valued at approximately $61,108 based on the fair value of the Subordinate Voting Shares and Proportionate Voting Shares, on an as converted to Subordinate Voting Shares basis, as traded on the CSE on the date of the transaction, and $18,925 of contingent consideration that was to be settled through an even allocation of shares and cash. The Company recognized a $4,603 gain on the decrease in contingent consideration, which was included in the other income (loss) line of the consolidated operations for the period ended December 31, 2021. The Company paid $7,116 in the first quarter of 2022. The Company recognized gains of $1,061 and $2,595 on the decrease in contingent consideration in the first and second quarters of 2022 respectively, which are included in the other income (loss) line of the unaudited interim condensed consolidated statement of operations for the period June 30, 2022. As of June 30, 2022, The Healing Center’s present value of unpaid deferred consideration of $3,551, which is payable in Subordinate Voting Shares, is included in the acquisition price payable balance on the Company’s consolidated balance sheets.
The Company engaged an independent valuation expert that uses appropriate valuation techniques, generally based on forecast of the present value of expected future net cash flows, to determine the intangible assets appropriate fair value. The Company recognized an intangible asset for the cannabis license acquired at a fair value of $108,850. The residual purchase price of $24,954 was recognized as goodwill.
The Company funded the acquisition of the THC Real Estate through a credit facility with Chicago Atlantic Credit Company (together with its affiliated entities, “Chicago Atlantic”) for $12,650. Total consideration was paid directly to the sellers in the amount of $12,225. The Company received $20 in cash proceeds and incurred $405 in issuance costs and debt discounts on the Chicago Atlantic credit facility, which was paid net of proceeds upon closing. The Company amortizes debt issuance costs through interest expense over the life of the Chicago Atlantic credit agreement.
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VERANO HOLDINGS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
($ in Thousands except shares and per share amounts)
8.TRANSACTIONS (Continued)
Mad River Remedies, LLC
On April 1, 2021, the Company entered into an agreement to acquire all of the outstanding equity interests in Mad River Remedies, LLC, which operates a dispensary in Ohio. The transaction closed on July 8, 2021. The consideration included cash consideration of $12,984, subject to a purchase price adjustment of $29, and 488,861 Subordinate Voting Shares value at approximately $7,814 based on the fair value of the Subordinate Voting Shares and Proportionate Voting Shares, on an as converted to Subordinate Voting Shares basis, as traded on the CSE on the date of the transaction. As of June 30, 2022, the total consideration had been paid in full.
The Company engaged an independent valuation expert that uses appropriate valuation techniques, generally based on forecast of the present value of expected future net cash flows, to determine the intangible assets appropriate fair value. The Company recognized an intangible asset for the cannabis license acquired at a fair value of $18,720. The residual purchase price of $498 was recognized as goodwill.
Agri-Kind, LLC & Agronomed Holdings Inc
On April 21, 2021, the Company entered into an agreement to acquire all of the issued and outstanding equity interests in Agri-Kind, LLC (“Agri-Kind”), an operator of a cultivation and production facility of medical marijuana located in Pennsylvania, and Agronomed Holdings Inc., the owner of the cultivation and processing facility operated by Agri-Kind. The transaction closed on July 12, 2021. The total consideration included cash consideration of $78,848, plus a $678 purchase price adjustment, of which $43,713 was paid at closing and the remaining $35,813 was paid three months after closing. In addition, the total consideration included the issuance of 3,208,035 Subordinate Voting Shares valued at approximately $50,994 based on the fair value of the Subordinate Voting Shares as traded on the CSE on the date of the transaction, and contingent consideration of $33,971.

The Company paid $31,500 of contingent consideration during the first quarter of 2022. The remaining contingent consideration is for the issuances of additional Subordinate Voting Shares for six month and 12 month stock price protection that were assigned an aggregate initial fair value of $2,483 using Monte Carlo simulation models. The fair value of the contingent consideration is remeasured on a quarterly basis with any changes in the fair value being recognized in the other income (loss) line of the consolidated statement of operations. During the first quarter of 2022, the Company issued an additional 82,731 Subordinate Voting Shares valued at approximately $952 based on the fair value of the Subordinate Voting Shares as traded on the CSE on the date of the transaction to satisfy the six month contingency. The Company recognized a $988 and $2,147 loss for the changes in the fair value of contingent consideration for the three and six months ended June 30, 2022, respectively. As of June 30, 2022, the present value of unpaid deferred consideration of $3,311 is included in the acquisition price payable balance on the Company’s consolidated balance sheets.
The Company engaged an independent valuation expert that uses appropriate valuation techniques, generally based on forecast of the present value of expected future net cash flows, to determine the intangible assets appropriate fair value. The Company recognized an intangible asset for the cannabis license acquired at a fair value of $134,563. The residual purchase price of $3,115 was recognized as goodwill.
Agronomed Biologics, LLC
On April 21, 2021, the Company entered into an agreement to acquire all the issued and outstanding equity interests in Agronomed Biologics, LLC (“Agronomed”), which holds a clinical registrant license that allows for cultivation, production, and operation of 6 dispensaries in Pennsylvania. As a clinical registrant, Agronomed has partnered with the Drexel University College of Medicine to conduct medical marijuana research. The transaction closed on July 12, 2021. Total consideration included cash consideration of $10,473 paid upon closing and an additional $42,493 of contingent consideration to be paid in cash or shares at the election of the seller. In addition, the consideration included 3,240,436 Subordinate Voting Shares valued at approximately $51,509 based upon the fair value of the Subordinate Voting Shares as traded on the CSE on the date of the transaction.
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VERANO HOLDINGS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
($ in Thousands except shares and per share amounts)
8.TRANSACTIONS (Continued)
During the first quarter of 2022, the Company paid $3,000 in cash and issued 1,215,035 Subordinate Voting Shares valued at approximately $15,592 based upon the fair value of the Subordinate Voting Shares as traded on the CSE on the date of the transaction. The share issuance resulted in a $3,592 loss recognized in the other income (loss) line of the unaudited consolidated statement of operations.

As of June 30, 2022, the present value of unpaid deferred consideration of $28,344 is included in the acquisition price payable balance on the Company’s consolidated balance sheets. The majority of the remaining consideration is related to earnouts. A portion of the remaining contingent consideration is for the issuances of additional Subordinate Voting Shares for six month and 12 month share price protection that was assigned an initial fair value of $2,508 using Monte Carlo simulation models. The fair value of the contingent consideration is remeasured on a quarterly basis with any changes in the fair value being recorded in the other income (loss) line of the consolidated statement of operations. During the first quarter of 2022, the Company issued an additional 83,566 Subordinate Voting Shares valued at approximately $962 based on the fair value of the Subordinate Voting Shares as traded on the CSE on the date of the transaction to satisfy the six month contingency. The Company recognized a $998 and $2,168 loss for the changes in the fair value of contingent consideration for the three and six months ended June 30, 2022, respectively
The Company engaged an independent valuation expert that uses appropriate valuation techniques, generally based on forecast of the present value of expected future net cash flows, to determine the intangible assets appropriate fair value. The Company recognized an intangible asset for the cannabis license acquired at a fair value of $96,684. The residual purchase price of $2,625 was recognized as goodwill. The Company also recognized $29,913 to goodwill related to the deferred tax liability.
Willow Brook Wellness, LLC
On September 13, 2021, the Company entered into a definitive agreement to acquire all the issued and outstanding equity interests in Willow Brook Wellness, LLC, which operates a dispensary in Connecticut. The transaction closed on October 25, 2021. Total consideration included cash of $14,913, subject to a purchase price adjustment of $14, and 727,934 Subordinate Voting Shares valued at approximately $8,163 based upon the fair value of the Subordinate Voting Shares as traded on the CSE on the date of the transaction. As of June 30, 2022, the present value of unpaid deferred consideration of $7,280 is included in the acquisition price payable balance on the Company’s consolidated balance sheets and will be settled through a cash payment due in October 2022.
The Company engaged an independent valuation expert that uses appropriate valuation techniques, generally based on forecast of the present value of expected future net cash flows, to determine the intangible assets appropriate fair value. The Company recognized an intangible asset for the cannabis license acquired at a fair value of $21,267. The residual purchase price of $438 was recognized as goodwill.
Caring Nature, LLC
On November 10, 2021, the Company entered into an agreement to acquire all the issued and outstanding equity interests in Caring Nature LLC, which operates a dispensary in Connecticut. The transaction closed on December 20, 2021. The total consideration included cash of $12,331, subject to a purchase price adjustment and, $12,000 payable in Subordinate Voting Shares payable over 12 months. Additionally, the purchase agreement included $2,000 of contingent consideration to be paid in Subordinate Voting Shares. During the second quarter of 2022, the Company recognized a purchase price adjustment of $56, which was paid in May 2022. The adjustment was reflected in goodwill of the Consolidated Statement of Operations. In June of 2022, the Company issued 808,258 Subordinate Voting Shares, reducing the acquisition price payable by $6,000. The Subordinate Voting Shares were recorded at $5,540 based on the fair value of the Subordinate Voting Shares as traded on the CSE on the date of issuance. The Company recognized a $460 gain on the share issuance, which is included in the other income (loss) line of the unaudited interim condensed consolidated statement of operations for the period ended June 30, 2022. As
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VERANO HOLDINGS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
($ in Thousands except shares and per share amounts)
8.TRANSACTIONS (Continued)
of June 30, 2022, the present value of unpaid deferred consideration of $7,985 is included in the acquisition price payable balance on the Company’s consolidated balance sheets.
The Company engaged an independent valuation expert that uses appropriate valuation techniques, generally based on forecast of the present value of expected future net cash flows, to determine the intangible assets appropriate fair value. The Company recognized an intangible asset for the cannabis license acquired at a fair value of $24,994. The residual purchase price of $761 was recognized as goodwill. The Company also recognized $7,123 to goodwill related to the deferred tax liability.
Connecticut Pharmaceutical Solutions, Inc.
On November 10, 2021, the Company entered into an agreement to acquire all the issued and outstanding equity interests in Connecticut Pharmaceutical Solutions, Inc., which holds a medical marijuana producer license in Connecticut. The transaction closed on December 28, 2021. Total consideration includes cash of $6,402 and 8,145,142 Subordinate Voting Shares valued at approximately $98,538 based upon the fair value of the Subordinate Voting Shares as traded on the CSE on the date of the transaction.
Additionally, at close there were 73,130 deferred Subordinate Voting Shares held back, subject to purchase price adjustments, and 1,128,441 deferred Subordinate Voting Shares held back that are to be issued in December 2022, collectively valued at approximately $14,483 based on the fair value of the Subordinate Voting Shares as traded on the CSE on the date of the transaction. As of June 30, 2022 it is anticipated that the Company will issue 989,747 Subordinate Voting Shares in December 2022, subject to other indemnity claim adjustments. The merger agreement also includes consideration of $19,622 to be paid in 1,625,546 deferred Subordinate Voting Shares payable upon the first sale of adult-use cannabis in the state of Connecticut. Both payments met equity classification at closing in accordance with ASC 815.
Contingent consideration related to 2021 financial performance metrics was settled in June 2022 through the issuance of 2,115,438 Subordinate Voting Shares valued at approximately $17,683 based upon the fair value of the Subordinate Voting Shares as traded on the CSE on the date of the transaction. The Company recognized a $7,023 gain on the share issuance, which is included in the other income (loss) line of the unaudited interim condensed consolidated statement of operations for the period ended June 30, 2022. As of June 30, 2022, the total consideration had been paid in full.
The Company engaged an independent valuation expert that uses appropriate valuation techniques, generally based on forecast of the present value of expected future net cash flows, to determine the intangible assets appropriate fair value. The Company recognized an intangible asset for the cannabis license and trade name acquired at a fair value of $116,063 and $8,829, respectively. The residual purchase price of $3,510 was recognized to goodwill. The Company also recognized $40,062 as goodwill related to the deferred tax liability.
The following tables summarize the revenue and net income (loss) since the acquisition date included in the Consolidated Statement of Operations for the period ending June 30, 2021, for the AME Merger and the other acquisitions that closed during the first six months of 2021:
Six Months Ended June 30, 2021
Verano HoldingsAME MergerOther AcquisitionsTotal
Revenues, net$186,106 $89,400 $44,455 $319,961 
Net loss(25,733)(9,570)(2,271)(37,574)
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VERANO HOLDINGS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
($ in Thousands except shares and per share amounts)
8.TRANSACTIONS (Continued)
Three Months Ended June 30, 2021
Verano HoldingsAME MergerOther AcquisitionsTotal
Revenues, net$99,294 $57,277 $42,495 $199,066 
Net loss(23,619)(4,180)(1,889)(29,688)

The following table summarizes the unaudited pro forma information of the combined results of operations of the AME Merger and other acquisition transactions that closed during the first six months of 2021 and 2022 as if they occurred as of January 1, 2021. These unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of the results of operations that would have been achieved had the transaction been consummated as of that time nor does it purport to be indicative of future financial operation results.
Six Months Ended June 30, 2021
Verano HoldingsAME MergerOther AcquisitionsTotal
 Pro forma revenues, net$186,106 $111,802 $133,091 $430,999 
 Pro forma net income (loss)(25,733)1,362 19,785 (4,586)
 Pro forma adjustments
 (a) intangible amortization— 14,899 6,712 21,611 
 (b) intangible amortization— 45,797 6,392 52,189 
 Total pro forma adjustments— 60,696 13,104 73,800 
 Total pro forma net income (loss)$(25,733)$62,058 $32,889 $69,214 
Three Months Ended June 30, 2021
Verano HoldingsAME MergerOther AcquisitionsTotal
Pro forma revenues, net$99,294 $57,277 $60,001 $216,572 
Pro forma net income (loss)(23,619)(4,180)2,477 (25,322)
Pro forma adjustments
(a) intangible amortization— 8,939 6,224 15,163 
(b) intangible amortization— 27,952 6,392 34,344 
Total pro forma adjustments— 36,891 12,616 49,507 
Total pro forma net income (loss)$(23,619)$32,711 $15,093 $24,185 






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VERANO HOLDINGS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
($ in Thousands except shares and per share amounts)
8.TRANSACTIONS (Continued)
(c)Asset Acquisitions

2022 Asset Acquisitions
Real Estate

During the six months ended June 30, 2022, Verano entered into 2 real estate acquisitions in Pennsylvania and Illinois for $4,264 and $4,055, respectively. The acquisitions are accounted for as asset acquisitions in accordance with ASC 805, Business Combinations. The consideration was paid in full at closing.

2021 Asset Acquisitions
NSE Holdings, LLC
On February 24, 2021, a subsidiary of the Company entered into an agreement pursuant to which it acquired all the equity interests of NSE Holdings, LLC (“NSE”), which holds 1 dispensary permit in Pennsylvania that gives NSE the ability to open 3 dispensaries. The transaction closed on March 9, 2021. The Company paid cash consideration of $7,350 upon closing and issued 666,587 Subordinate Voting Shares and 6,665 Proportionate Voting Shares valued at approximately $25,160 based upon the fair value of the Subordinate Voting Shares, on an as converted to Subordinate Voting Shares basis, as traded on the CSE on the date of the transaction. Consideration also includes contingent consideration of $22,514, which fluctuates based upon financial performance metrics of NSE Holdings. The Company recognized gains of $8,337 and $10,906 on the decrease in contingent consideration, which was included in the other income (loss) line of the consolidated operations for the periods ended December 31, 2021 and June 30, 2022 respectively.

The Company analyzed the transaction and accounted for the transaction as an asset acquisition in accordance with ASC 805, Business Combinations. The Company capitalized licenses in the amount of $55,016. As of June 30, 2022, the present value of unpaid deferred consideration is 3,441 and is included in the acquisition price payable balance on the Company’s consolidated balance sheets. The unpaid consideration relates to earnouts that are expected to be settled in share issuances of Subordinate Voting Shares.
Ohio Grown Therapies, LLC
On June 30, 2021, the Company exercised and closed on its option to acquire an Ohio dispensary license from Ohio Grown Therapies, LLC, which was granted pursuant to an option purchase agreement entered into on January 14, 2019. The exercise and closing had no impact on operations as the Company already exerted control over the dispensary through a consulting agreement entered into in 2019. The Company capitalized the license in the amount of $760 to the intangible license value included on the Company’s consolidated balance sheets. As of June 30, 2022, the total consideration had been paid in full.
Real Estate
During the fourth quarter of the year ended December 31, 2021, the Company entered into real estate acquisitions in Maryland, Pennsylvania, Nevada and New Jersey for a total of $22,588. The Company funded 2 of the acquisitions through 2 promissory notes for $10,225 in the aggregate. The acquisitions were accounted for as asset acquisitions in accordance with ASC 805, Business Combinations. The consideration was paid in full at closing.
(d)Dispositions
Canna Cuzzos, LLC

Canna Cuzzos, LLC (“Canna Cuzzos”) is a medical marijuana licensee for a retail dispensary in Waldorf, Maryland. In 2017, a subsidiary of the Company entered into a management services agreement with Canna Cuzzos and has
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VERANO HOLDINGS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
($ in Thousands except shares and per share amounts)
8.TRANSACTIONS (Continued)
been providing operating and other services for Canna Cuzzos’ dispensary. In 2018, Verano LLC acquired options to purchase all the ownership interests of a Maryland limited liability company (the “LLC”), which held a 40% ownership interest in the sole owner of Canna Cuzzos, resulting in such options being exercisable for an indirect 40% ownership interest in Canna Cuzzos. On January 31, 2022, all of the ownership interests of the sole owner of Canna Cuzzos were sold to a non-related third party for a cash purchase price of $5,000, subject to adjustment based on working capital levels and outstanding liabilities. Upon consummation of the sale, the management services agreement with Canna Cuzzos was terminated. Prior to the sale being consummated, Verano LLC consented to the sale, amended the options to receive an assignment of the LLC’s sale proceeds thereunder and agreed to provide the LLC administrative services in connection with the transaction. Prior to the sale of its parent company, Canna Cuzzos was consolidated with the Company through the Variable Interest Model (“VIE”) in accordance with ASC 810, Consolidations. The assignment of the LLC’s sale proceeds resulted in a gain to the Company of $1,701 for the six months ended June 30, 2022 and is classified as a component of Other Income (Expense) in the Consolidated Statement of Operations.
ILDISP, LLC
On March 30, 2016, Verano entered into a joint venture agreement with GTI-Clinic Illinois Holdings, LLC (“GTI”) to acquire 50% of ILDISP, LLC (“ILDISP”). NH Medicinal Dispensaries, LLC, a wholly owned subsidiary of ILDISP, is the holder of 2 marijuana licenses which allows it to operate 2 retail dispensaries in Illinois: The Clinic Effingham dispensary (“TCE”) and the Charleston dispensary. The Company had an agreement in place with its joint venture partner to allocate the operational management of Charleston to Verano and TCE to the joint venture partner. As such, the Company had a controlling interest in Charleston and consolidated the entity through the Variable Interest Model (“VIE”) in accordance with ASC 810, Consolidations. TCE was treated as an equity method investment in accordance with ASC 323, Investments.
(d)Dispositions (Continued)
ILDISP, LLC (Continued)

On March 1, 2022, the Company sold its 50% ownership interest in ILDISP to the joint venture partner for $22,393 subject to certain adjustments. The sale resulted in gains of $7,857 attributable to Charleston and $14,099 attributable to TCE for the three months ended March 31, 2022 which are classified as components of other income (expense) in the consolidated statement of operations. During the second quarter of 2022, the Company recognized working capital adjustments of $(73) and $(171) for Charleston and TCE respectively. The adjustments were reflected in other income (expense) in the consolidated statement of operations, resulting in year-to-date gains of $7,784 attributable to Charleston and $13,928 attributable to TCE for the six months ended June 30, 2022.
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VERANO HOLDINGS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
($ in Thousands except shares and per share amounts)
9. DEBT

As of June 30, 2022, and December 31, 2021 notes payable consisted of the following:
June 30,
2022
December 31, 2021
Credit Facility$350,000 $250,000 
Secured Promissory Notes1,668 6,663 
Mortgage Loans56,122 38,856 
Vehicle and Equipment Loans2,209 1,951 
Unamortized Debt Issuance Costs(7,370)(7,545)
Total Notes Payable$402,629 $289,925 
Less: Current Portion of Notes Payable258,880 13,771 
Total Long-Term Debt, net$143,749 $276,154 
Credit Facility
On July 2, 2020, the Company and certain subsidiaries and affiliates (collectively, the “Credit Parties”) entered into a Credit Agreement with Chicago Atlantic GIC Advisers, LLC (“Chicago Atlantic”) as administrative and collateral agent for an initial term loan commitment of $20,000 funded by various investors and an incremental loan not to exceed $10,000. Such loan bears interest at 15.25% per annum and had an original maturity date of June 30, 2022. The Company incurred $1,068 of debt issuance costs, which were paid net of loan proceeds and are amortized over the life of the debt instrument.

On May 10, 2021, the Credit Agreement was amended and restated (the “Amended and Restated Credit Agreement”), and the Company borrowed an additional $100,000 of term loans at an annual interest rate of 9.75%, which increased the Company’s total term loans outstanding under the Amended and Restated Credit Agreement to $130,000. The $100,000 senior secured term loans mature on May 30, 2023, and in accordance with ASC 470, Debt, is accounted for as a new credit facility. In addition, the Amended and Restated Credit Agreement extended the maturity date of the original $30,000 existing term loan from June 30, 2022 to May 30, 2023, which qualified as a debt modification pursuant to ASC 470, Debt. The original credit facility under the Credit Agreement had $644 of unamortized debt issuance costs at the time the Amended and Restated Credit Agreement was entered into and is now amortized through May 30, 2023. The Company incurred $5,132 in issuance costs and debt discounts on the Amended and Restated Credit Agreement, which were paid net of proceeds in May 2021 and are amortized over the life of the debt instrument.

On October 20, 2021, the Credit Parties entered into a third amendment to further amend the Amended and Restated Credit Agreement, pursuant to which an additional $120,000 was funded to the Company resulting in $250,000 of total term loan commitments funded and outstanding under the Amended and Restated Credit Agreement, as amended. The $120,000 term loan bears interest of 8.50% per annum and matures on April 28, 2023. In addition, the amendment included an option for the Company to request an incremental $100,000 loan in the future with 8.50% interest per annum, subject to certain restrictions and limitations. The liquidity financial covenant was modified to require that the Company maintain no less than an average of $20,000 in liquidity during any fiscal quarter and no less than $25,000 as of the last day of each fiscal quarter. In accordance with ASC 470, Debt, the $120,000 loan is
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VERANO HOLDINGS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
($ in Thousands except shares and per share amounts)
9.DEBT (Continued)
accounted for as a new credit facility. The Company incurred debt issuance costs of $3,679, which were paid net of proceeds in October 2021 and are amortized over the life of the debt instrument.

On March 1, 2022, the Credit Parties entered into a fourth amendment to the Amended and Restated Credit Agreement. The fourth amendment provided an additional $100,000 of term loans with a maturity date of August 28, 2023 and an annual interest rate of 8.50%, resulting in an aggregate of $350,000 in term loans outstanding under the credit facility. As of June 30, 2022, the Amended and Restated Credit Agreement, as amended, contains financial covenants requiring the Company to maintain on a consolidated basis (i) a minimum liquidity balance to average no less than $20,000 during each fiscal quarter and at least $25,000 as of the last day of such quarter; (ii) a minimum consolidated EBITDA for each fiscal quarter of no less than $20,000; and (iii) a fixed charge coverage ratio of no less than 1.5:1.0 measured at the end of each fiscal quarter. As of June 30, 2022, the Company is in compliance with such financial covenants.

Mortgage

On June 29, 2022, the Company entered into an agreement with BCB Community Bank to borrow a principal amount of $18,000 associated with a mortgage on a building in Branchburg, NJ. The mortgage bears an interest rate of 4% and matures in July 2047.
Other
As of December 31, 2021 the Company issued promissory notes to accredited investors in the original principal amount of $3,670 with simple annual interest of 10% per annum. The notes matured in June 2022 and are an accumulation of 7 notes to finance construction of cultivation facilities in Florida and Arizona. There is one related party that accounts for $150 of the outstanding principal amount as of December 31, 2021. As of June 30, 2022, these promissory notes were repaid in full.

10. SHARE CAPITAL

Subordinate Voting Shares and Proportionate Voting Shares are classified as equity. Incremental costs directly attributable to the issuance of shares are recognized as a deduction from equity. The proceeds from the exercise of stock options or warrants together with amounts previously recorded in reserves over the vesting periods are recorded as share capital. Income tax relating to transaction costs of an equity transaction is accounted for in accordance with ASC 740, Income Taxes.
(a)Issued and Outstanding
As of June 30, 2022,March 31, 2024, the Company had 313,746,238 Subordinate Voting Shares and 170,724 Proportionate Voting Shares issued and outstanding. Converting the Proportionate Voting Shares to Subordinate Voting Shares on the basis of 100 Subordinate Voting Shares for one Proportionate Voting Shares, results in a total of 330,818,664344,163,149 Subordinate Voting Shares issued and outstanding as of such date.and no Proportionate Voting Shares outstanding. The Company has the following 2two classes of share capital, with each class having no par value:
(i)Subordinate Voting Shares
The holders of the Subordinate Voting Shares are entitled to receive dividends issued by the Company and 1one vote per share at shareholder meetings of the Company. All Subordinate Voting Shares are ranked equally regarding the Company’s residual assets. The Company is authorized to issue an unlimited number of Subordinate Voting Shares.
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VERANO HOLDINGS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
($ in Thousands except shares and per share amounts)
10. SHARE CAPITAL (Continued)
(ii)Proportionate Voting Shares
Each Proportionate Voting Share is convertible into 100 Subordinate Voting Shares. The holders of the Proportionate Voting Share are entitled to receive dividends issued by the Company on an as converted to Subordinate Voting Share basis and 100 votes per share at shareholder meetings of the Company. The Proportionate Voting Shares are ranked equally on an as converted to Subordinate Voting Share basis regarding the Company's residual assets. The Company is authorized to issue an unlimited number of Proportionate Voting Shares.
During the six months ended June 30, 2022, the shareholders of the Company converted Proportionate Voting Shares to Subordinate Voting Shares for an impact of conversion of 140,311 Proportionate Voting Shares into 14,031,070 Subordinate Voting Shares.
(b)Stock-Based Compensation
In February 2021, the Company established the Verano Holdings Corp. operates equity-settledStock and Incentive Plan (the “Plan”), which provides for stock-based remuneration plans for its eligible directors, officers, employees, consultants, and advisors. The maximum number of restricted stock units ("RSUs"), options and other stock based awards that may be issued under the Plan cannot exceed 10% of the Company’s then issued and outstanding share capital, determined on an as converted to Subordinate Voting Shares basis. All goods and services received in exchange for the grant of any stock-based payments are measured at their fair value unless the fair value cannot be estimated reliably. If the Company cannot reliably estimate reliably the fair value of the goods and services received, the Company measures their value indirectly by reference to the fair value of the equity instruments granted. The Company measures the fair value of the services by reference to the fair value of the equity instruments granted. Equity-settled stock-based payments under stock-based payment plans are ultimately recognized as an expense in profit or loss with a corresponding credit to equity.
In February 2021, the Company established the Verano Holdings Corp. Stock and Incentive Plan (the “Plan”). The maximum number of restricted stock units ("RSUs") and options that may be issued under the Plan shall not exceed 10% of the Company’s then issued and outstanding Subordinate Voting Shares on an as converted to Subordinate Voting Shares basis.
The Company recognizes compensation expense on a straight-line basis over the requisite service period of the award. Estimates are subsequently revised if there is any indication that the number of shares expected to vest differs from the previous estimate. Any cumulative adjustment prior to vesting is recognized in the current period with no adjustment to prior periods for expense previously recognized.
Option and RSU grants generally vest in installments over six12 to 30 months to three years, and options typically have a life of ten years.
Options
Option activity is summarized as follows:
Number of SharesWeighted Avg. Exercise Price
C$
Weighted Average Remaining Contractual Life
Balance as of December 31, 202156,07830.60 9.16
Vested18,79830.60 
Exercisable at June 30, 202224,16730.60 8.67
As of June 30, 2022 and December 31, 2021, there were no in-the-money options.
The Company used the Black-Scholes option pricing model to estimate the fair value of the options granted. NaN options were granted, expired, or forfeited during the six months ended June 30, 2022.
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VERANO HOLDINGS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
($ in Thousands except shares and per share amounts)
10. SHARE CAPITAL (Continued)
Restricted Stock Units (“RSUs”)
The following table summarizes the number of unvested RSU awards as of June 30, 2022 and December 31, 2021 and the changes during the six months ended June 30, 2022:
Number of SharesWeighted Avg. Grant Date Fair Value
C$
Unvested Shares at December 31, 20212,413,88730.49 
Granted2,748,44010.57 
Forfeited97523.97 
Vested1,189,05530.65 
Unvested Shares at June 30, 20223,972,29716.66 
The following table summarizes the weighted average grant date fair value of RSUs granted and total fair value of RSUs vested for the six months ended June 30, 2022 and 2021:
Six Months Ended June 30,
20222021
Weighted average grant date fair value (per share) of RSUs granted (C$)16.66 30.60 
Intrinsic value of RSUs vested, using market price at vest date (C$) (in thousands)
15.41 — 
The stock-based compensation expense for the three and six months ended June 30, 2022 and 2021 was as follows:
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Stock Options Expense$62 $115 $125 $168 
Restricted Stock Units13,430 12,465 24,280 18,165 
Total Stock Based Compensation Expense$13,492 $12,580 $24,405 $18,333 
11.INCOME TAXES
The following table summarizes the Company’s income tax expense and effective tax rates for the three and six months ended June 30, 2022 and 2021:
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Income before Income Taxes$1,256 $(6,152)$26,847 $3,642 
Income Tax Expense(11,103)(23,438)(36,617)(39,852)
Effective Tax Rate662.9 %381.0 %112.3 %1093.8 %
The effective tax rates for the three and six months ended June 30, 2022 and 2021 were based on the Company’s forecasted annualized effective tax rates and were adjusted for discrete items that occurred within the periods presented.
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VERANO HOLDINGS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
($ in Thousands except shares and per share amounts)

11.8.INCOME TAXESSHARE CAPITAL (Continued)
Options
The Company had 37,711 fully vested and exercisable options, entitling the holder thereof to one Subordinate Voting Share per each option upon exercise, with a weighted average exercise price of C$30.11 and a weighted average remaining contractual life of 6.86 years as of March 31, 2024.
1,245 fully vested options, entitling the holder thereof to one Subordinate Voting Share per each option upon exercise, were cancelled during the three months ended March 31, 2024 due to termination of employment. No options were granted or forfeited during the three months ended March 31, 2024. As of March 31, 2024 and December 31, 2023, there were no in-the-money options.
RSUs
The following table summarizes the number of unvested RSU awards as of March 31, 2024 and December 31, 2023 and the changes during the three months ended March 31, 2024:
Number of SharesWeighted Avg. Grant Date Fair Value
C$
Unvested RSUs at December 31, 20238,812,5374.72 
Granted77,5758.00 
Forfeited173,1004.52 
Vested58,21411.83 
Unvested RSUs at March 31, 20248,658,7984.72 
The stock-based compensation expense for the three months ended March 31, 2024 and 2023 were as follows:
Three Months Ended March 31,
20242023
Stock Options$— $76 
Restricted Stock Units3,928 468 
Total Stock Based Compensation Expense$3,928 $544 
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VERANO HOLDINGS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
($ in Thousands except shares and per share amounts)

9.INCOME TAXES
The following table summarizes the Company’s income tax expense and effective tax rates for the three months ended March 31, 2024 and 2023:
For the Three Months Ended March 31,
20242023
Income before Income Taxes$6,655 $19,083 
Income Tax Expense(11,477)(28,320)
Effective Tax Rate172 %148 %
The effective tax rates for the three months ended March 31, 2024 and 2023 were based on the Company’s forecasted annualized effective tax rates and were adjusted for discrete items that occurred within the periods presented. Net discrete tax items of $(236) and $4,847 were recorded during the three months ended March 31, 2024 and 2023, respectively. Discrete items recorded during the three months ended March 31, 2024 and 2023 primarily relate to penalties and interest on unpaid tax liabilities, impacts of prior period return to provision adjustments, remeasurement of deferred taxes for state tax rate changes, and book remeasurement adjustments not recognized for tax purposes.
Due to its cannabis operations, the Company is subject to the limitations of the U.S. Internal Revenue Code of 1986, as amended (“IRC”(the “Code”) Section 280E, under which the Company is only allowed to deduct expenses directly related to sales of product. This results in permanent differences between ordinary and necessary business expenses deemed non-allowable under IRC Section 280E.280E of the Code. Therefore, the effective tax rate can be highly variable and may not necessarily correlate with pre-tax income and provides forthe Company's effective tax rates that are well in excess of statutory tax rates.
DuringTaxes paid during the three months ended June 30, 2022March 31, 2024 and 2021 the Company paid $37,3232023 were $9,585 and $16,325,$36,394, respectively.
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VERANO HOLDINGS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
($ in Thousands except shares and per share amounts)
12.
10.LEASES
The Company has operating leases for some of its retail dispensaries and processing and cultivationproduction facilities located throughout the U.S,U.S., as well as for its corporate office spaceoffices located in Chicago, Illinois. Operating lease right-of-use assets and operating lease liabilities are recognized based on the present value of future minimum lease payments over the lease term at commencement date.
Leases with an initial term of 12 months or less are not recorded on the Company's balance sheet. Certain leases require payments for taxes, insurance, and maintenance, and are considered non-lease components. The Company accounts for non-lease components separately.
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.
The Company leases certain business facilities from third parties under non-cancellable operating lease agreements that contain minimum rental provisionprovisions that expire through 2037. CertainSome leases also contain renewal provisionprovisions and provide for rent abatement and escalating payments.
During the three months ended June 30, 2022March 31, 2024 and 2021,2023, the Company recorded approximately $3,734$4,999 and $2,536$4,313 in operating lease expense, respectively, of which $173$114 and $216 was included in cost of goods sold for the same periods, respectively. During the six months ended June 30, 2022 and 2021, the Company recorded approximately $7,120 and $3,908 in operating lease expense, of which $320 and $432$206 was included in cost of goods sold for the same periods, respectively.
Other information related to operating leases as of June 30, 2022and for the periods ended March 31, 2024 and December 31, 20212023, were as follows:
June 30, 2022December 31, 2021
Weighted average remaining lease term (years)8.268.52
March 31, 2024March 31, 2024December 31, 2023
Weighted average remaining lease term - yearsWeighted average remaining lease term - years8.098.19
Weighted average discount rateWeighted average discount rate8.03 %8.11 %Weighted average discount rate9.62 %9.52 %
Maturities of lease liabilities for operating leases as of March 31, 2024 were as follows:
Year Ending December 31,Maturities of Lease Liability
2024 (Remaining)$13,680 
202518,099 
202617,096 
202716,435 
202815,876 
Thereafter61,412 
Total Lease Payments142,598 
Less: Imputed Interest(46,341)
Present Value of Lease Liability$96,257 
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VERANO HOLDINGS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
($ in Thousands except shares and per share amounts)

12.11.LEASES (Continued)CONTINGENCIES AND OTHER
Maturities of lease liabilities for operating leases as of June 30, 2022 were as follows:
Year Ending December 31,
Remainder 2022$6,851 $11,457 
202313,244 11,024 
202412,519 10,348 
202511,590 9,717 
202610,722 8,818 
2027 and Thereafter47,894 38,177 
Total Lease Payments102,820 89,541 
Less: Interest(28,737)(26,166)
Present Value of Lease Liability$74,083 $63,375 
13.CONTINGENCIES
(a)Claims and Litigation
From time to time, the Company may be involved in litigation relating to claims arising out of operations in the normal course of business. At June 30, 2022As of March 31, 2024, other than as set forth below, there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of the Company’s consolidated operations. There are also no proceedings in which the Company is a party and any of the Company’s directors, officers or affiliates is an adverse party or has a material interest adverse to the Company’s interest.
On January 31, 2022, the Company entered into an Arrangement Agreement (the "GGH Arrangement Agreement") with Goodness Growth Holdings, Inc. ("GGH"), pursuant to which it agreed to acquire all of the issued and outstanding equity interests of GGH in exchange for equity interests in the Company, subject to the conditions set forth in the GGH Arrangement Agreement. On October 13, 2022, the Company provided written notice to GGH of GGH’s breach of the GGH Arrangement Agreement and exercised the Company’s termination rights under the GGH Arrangement Agreement. On October 21, 2022, GGH filed suit against the Company in the Supreme Court of British Columbia alleging that the Company breached (i) the GGH Arrangement Agreement through, among other things, the purported wrongful repudiation of the GGH Arrangement Agreement, (ii) the duty of good faith, and (iii) the duty of honest performance in contract. In addition, on November 14, 2022, the Company filed a counterclaim asserting that GGH owes it a termination fee in the amount of $14,875, or alternatively, the reimbursement of out-of-pocket fees and expenses of up to $3,000 as a result of our termination of the GGH Arrangement Agreement, which was based upon our belief that GGH breached covenants and representations in the GGH Arrangement Agreement and the occurrence of other termination events. GGH filed a response to such counterclaim on December 7, 2022, in which GGH denied it was obligated to pay any termination fee or transaction expenses. As of March 31, 2024, both the Company and GGH are engaged in ongoing discovery efforts. Please see Note 17 - Subsequent Events for an update on this matter. The Company can provide no guarantees or assurances that it will prevail or settle this lawsuit or its counterclaim on favorable terms, if at all, and an adverse outcome could have a material adverse effect on its business, results of operations and financial condition.
(b)Contingencies
During the first quarter of 2023, the Company discovered a potential liability related to a previous acquisition that was deemed to be both probable and estimable. Per ASC 450 Contingencies, when both of these criteria are present, a contingent liability should be recorded. Based on this, the Company recorded a corresponding charge in Other Income, net of $1,893 for the three months ended March 31, 2023.
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VERANO HOLDINGS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
($ in Thousands except shares and per share amounts)

11.CONTINGENCIES AND OTHER (Continued)
(c)Illegality of Cannabis at the U.S. Federal Level
Verano operates within states where cannabis use, medical or adult-useadult use or both, has been approved by state and local regulatory bodies. Notwithstanding the permissive regulatory environment of medical, and in some cases also adult-use marijuanaadult use cannabis at the state level, under U.S. federal law cannabis (other than hemp) is a Schedule I controlled substance under the Controlled Substances Act (21 U.S.C. § 811) (the “Controlled Substances Act”) which means it is viewed by the U.S. federal government as a drug that has a high potential for abuse and no therapeutic value. Therefore, even in states or territories that have legalized cannabis to some extent, the cultivation, processing, distribution, possession and sale of cannabis violates the Controlled Substances Act. Moreover, individuals and entities may violate U.S. federal law if they aid and abet another in violating the Controlled Substances Act or conspire with another to violate the law. Violating the Controlled Substances Act is also a predicate for other crimes, including money laundering laws and the Racketeer Influenced and Corrupt Organizations Act. Violations of any U.S. federal laws and regulations could result in significant fines, penalties, administrative sanctions, convictions or settlements arising from civil proceedings conducted by either the federal government or private citizens, or criminal charges, including, but not limited to, disgorgement of profits, cessation of business activities, civil forfeiture or divestiture.
Strict compliance with state and local laws with respect to cannabis may neither absolve the Company of liability under U.S. federal law, nor may it provide a defense to any federal proceeding which may be brought against the Company or any of its subsidiaries.Company. This could have a material adverse effect on the Company, including its reputation and ability to conduct business, its cannabis licenses in the U.S., the listing and trading of its securities on stock exchanges and platforms, its financial position, operating results, profitability, liquidity and the market price of its publicly traded shares. In addition, it is difficult for the Company to estimate the time or resources that would be needed for the investigation of any such matters or its final resolution because, in part, the time and resources that may be needed are dependent on the nature and extent of any information requested by the applicable authorities involved, and such time and resources could be substantial.
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VERANO HOLDINGS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
($ in Thousands except shares and per share amounts)
13.CONTINGENCIES (Continued)
There can be no assurance that the comprehensive U.S. federal legislation that would de-schedule and de-criminalize cannabis will be passed in the near future or at all. If such legislation is passed, there is no guarantee that it will include provisions that preserve the current state-based cannabis programs under which the Company operates or that such legislation will otherwise be favorable to the Company and its business.
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VERANO HOLDINGS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
($ in Thousands except shares and per share amounts)
14.
12.SEGMENTS
The Company conducts and manages its business through 2two reportable segments, representing the major lines of its cannabis business: Cultivation (Wholesale)cultivation (wholesale) and Retail.retail. The Cultivation (Wholesale)cultivation (wholesale) segment consists of the cultivation, production and sale of cannabis products to retail stores. The Retailretail segment consists of the retailing of cannabis to patients and consumers. Summarized financial information for these segments is as follows:
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Revenue, net of discounts
Cultivation (Wholesale)$67,673 $59,312 $120,681 $108,473 
Retail185,308 156,873 349,642 236,068 
Intersegment Eliminations(29,319)(17,119)(44,426)(24,580)
Total Revenue, net of discounts223,662 199,066 425,897 319,961 
Depreciation and Amortization
Cultivation (Wholesale)19,089 13,963 38,814 22,282 
Retail16,388 10,311 31,097 13,775 
Total Depreciation and Amortization35,477 24,274 69,911 36,057 
Income taxes
Cultivation (Wholesale)1,265 8,080 12,502 11,776 
Retail9,838 15,358 24,115 28,076 
Total Income Taxes11,103 23,438 36,617 39,852 
Goodwill assigned to the Cultivation (Wholesale) segment as of June 30, 2022 and December 31, 2021 was $92,166 and $91,116, respectively. Goodwill assigned to the Retail segment as of June 30, 2022 and December 31, 2021 was $284,471 and $277,014, respectively.
For the Three Months Ended March 31,
20242023
Revenue, net of Discounts
Cultivation (Wholesale)$85,906 $80,267 
Retail168,588 184,242 
Intersegment Eliminations(33,188)(37,449)
Total Revenue, net of Discounts221,306 227,060 
Gross Profit
Cultivation (Wholesale)24,186 10,824 
Retail88,774 98,361 
Total Gross Profit112,960 109,185 
Depreciation and Amortization
Cultivation (Wholesale)19,088 18,522 
Retail16,464 16,534 
Total Depreciation and Amortization35,552 35,056 
Income taxes
Cultivation (Wholesale)5,907 10,257 
Retail5,570 18,063 
Total Income Taxes11,477 28,320 
The Company’s assets are aggregated into 2 reportable segments (Retail and Cultivation). For the purposesfollowing table reconciles gross profit to consolidated income before provision for income taxes.

For the Three Months Ended March 31,
20242023
Gross Profit112,960 109,185 
Selling, General, and Administrative Expenses(90,289)(75,243)
Loss from Investments in Associates— (160)
Total Other Income (Expense), net(16,016)(14,699)
Income Before Provision for Income Taxes6,655 19,083 
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Table of testing goodwill, the Company has identified 12 reporting units. The Company determined its reporting units by first reviewing the operating segments based on the geographic areas in which the Company conducts business (or each market). The markets were then further divided into reporting units based on the market operations (retail and cultivation) which were primarily determined based on the licenses each market holds. All revenues are derived from customers domiciled in the United States and all assets are located in the United States.
Contents
VERANO HOLDINGS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
($ in Thousands except shares and per share amounts)
15.
13.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 contractcontractual liability until customers redeem their points for discounts on cannabis and vapeeligible 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.

The Company modified the loyalty program in 2022. The modified loyalty program has a calculated standalone selling price that ranges between $0.03
1 and $0.061 per loyalty point. Upon redemption, the loyalty program obligation is relieved, and the offset is recorded as revenue. The Company estimates that 20% of points will not be redeemed (breakage) prior to their six-month expiration dates. The Company continues to evaluate breakage and redemption values to determine the standalone selling price.
As of December 31, 2023, there were approximately 110,000,0001 points outstanding with an approximate value of $5,781. As of March 31, 2024, there were approximately 114,000,0001 points outstanding with an approximate value of $6,015. Such balances are included in accrued liabilities on the Company's Condensed Consolidated Balance Sheets.
1 Such amount not in Thousands
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VERANO HOLDINGS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
($ in Thousands except shares and per share amounts)

15.LOYALTY OBLIGATIONS (Continued)
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 as points expire after 6 months. As of June 30, 2022, there were 16,214,7861 points outstanding with an approximate value of $2,044 which is included in accrued liabilities.

16.14.CONSOLIDATION
In accordance with ASC 810, the Company consolidates through the variable interest model and the voting interestentity ("VIE") model. The following table presents the summarized financial information about the Company’s consolidated VIEs, and VOEs, which are included in the consolidated balance sheetsCompany's Condensed Consolidated Balance Sheets as of June 30, 2022March 31, 2024 and December 31, 2021.2023.
Consolidated VIEConsolidated VOEConsolidated VIEConsolidated VOE
June 30, 2022December 31, 2021
(As Restated)
March 31, 2024March 31, 2024December 31, 2023
Current AssetsCurrent Assets$43,362 $— $43,045 $20,464 
Due To/(From)(68,307)— (25,723)14,228 
Non-Current AssetsNon-Current Assets96,342 — 207,908 226,108 
Current LiabilitiesCurrent Liabilities14,359 — 32,934 22,659 
Non-Current LiabilitiesNon-Current Liabilities11,134 — 45,873 45,603 
Non-Controlling Interest— — 1,276 — 
Equity attributable to Verano Holdings, Corp.45,904 — 145,147 192,538 
Equity attributable to Verano Holdings Corp.
Consolidated Variable Interest Entities
Consolidated VIEs occur when (a) the Company closes an acquisition while the state is in-processhas not finalized the transfer of transferring the cannabis license.license or (b) the Company owns an equity interest in a joint venture, which it exercises control over.
Consolidation occurs on the effective date of the purchase agreement, or in the case of joint venture VIEs, on the effective date of a limited liability company agreement governing the applicable joint venture, and an MSA. The MSA grants the management company, Verano, the ability to make business operating decisions, manage and staff employees, determine product mix, and the authority to direct allocation of cash. The MSA or the limited liability company agreement also allows Verano to limit distributions of the entity at Verano’s discretion.
Certain VIE’s may require financing to build-out a dispensary. These financing requirements are typically met within three months of purchase and were less than $3 million in all periods presented. Certain statestates may limit the distribution or transfer of cash until license transfer.

The Company has entered into financing arrangements with certain VIEs to provide funding for potential capital expenditures including, but not limited to, the construction of dispensaries and other facilities.


1 Such amounts not in Thousands
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VERANO HOLDINGS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
($ in Thousands except shares and per share amounts)
16.CONSOLIDATION (Continued)
VeranoThe Company applies ASC 810-10-15 to determine control of the legal entity. TheWith respect to VIEs acquired via acquisition, the purchase agreement limitsagreements limit the sellers involvement in future operations, and their risks of loss. With respect to joint venture VIEs, the limited liability company agreements limit the partners’ involvement in future operations and control over financial decisions, including distributions. In addition, Verano enters into an MSA with the legal entity that grants the Company strategic decision-making ability of the business operations.
The Company is involved in all qualitative and quantitative aspects of the entity,each consolidated VIE, such as but not limited to, software choices, procurement, staffing and payroll, advertising, and use of cash flow. TheWith respect to VIEs acquired via acquisition, the Company absorbs all risk of loss and receives expected future returns based on the purchase agreement and MSA, resulting in Verano being the primary beneficiary.
Non-controlling interests (“NCI”) represent equity interestsVerano does not fully own all entities consolidated under ASC 810 and records a non-controlling interest for such non-owned portion in the Unaudited Interim Condensed Consolidated Financial Statements. The income of less-than-wholly owned by outside parties. NCI may be initially measured at the NCI’s proportionate share of the recognized amounts of the acquiree’s identifiable net assets. The share of net assets attributable to NCI are presented as a component of equity. Their share of net income or loss and comprehensive income or loss is recognized directly in equity. Total comprehensive income or loss of subsidiariesentities is attributed to non-controlling interest and Verano based on the shareholderscontractual arrangements between the other interest holders and Verano, or, in the absence of contractual arrangements, on a pro rata basis based on relative ownership percentage. As an exception to the aforementioned attribution method, during periods in which a less-than-wholly owned entity records an accumulated deficit, the net losses of the Company andless-than-wholly owned subsidiary are, generally, attributed entirely to the NCI, even if this results in the NCI having a deficit balance.Verano.
Variable Interest Entries Consolidated under Voting Interest Entities Model
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Consolidated VOEs occur when the Company acquires a cannabis license held by a non-profit entity. Pursuant to the Arizona Medical Marijuana Act passed in 2012, cannabis companies in Arizona were initially required to operate under a non-profit structure.

Upon purchase, the Company establishes a MSA with the non-profit to grant Verano the ability to make business operating decisions, manage and staff employees, determine product mix, and the authority to direct allocation
Table of cash. In addition, the purchase agreement grants the Company the right to appoint the officers and boards of directors of the non-profits and the Company has appointed certain of the Company’s named officers to the boards of the non-profits.
In accordance with ASC 810-10-15, the Company determines consolidation is appropriate when the Company has majority of control of the legal entity and the ability to make business operating decisions. The Company does not have required financing associated with VOEs and abides by state regulations regarding cash restrictions. For the year ended December 31, 2021, the Company’s VOEs are limited to the state of Arizona. As of June 30, 2022, the Company no longer has VOEs.
Contents
VERANO HOLDINGS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
($ in Thousands except shares and per share amounts)
17.
15.FAIR VALUE MEASUREMENTS
The Company applies fair value accounting for all financial assets and liabilities that are recognized or disclosed at fair value in the financial statementsConsolidated Financial Statements on a recurring basis. Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities that are required to be recorded at fair value, the Company considers all related factors of the asset by market participants in which the Company would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as inherent risk, transfer restrictions, and credit-risk.
The Company applies the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels, and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:
Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities;
Level 2 – Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly; and
Level 3 – Inputs for the asset or liability that are not based on observable market data.
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VERANO HOLDINGS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
($ in Thousands except shares and per share amounts)
17.FAIR VALUE MEASUREMENTS (Continued)
Financial Instruments
The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, notes payable,debt, and acquisition consideration payable.
For the Company’s long-term notes payabledebt (which consistprimarily consists of a credit facility and mortgage loans), for which there were no quoted market prices of active trading markets, it was not practicable to estimate the fair value of these financial instruments. The carrying amount of notes payable at June 30, 2022debt as of March 31, 2024 and December 31, 20212023 was $402,629$444,686 and $289,925,$445,642, which included $258,880$53,412 and $13,771,$52,005, respectively, of short-term debt due within one year.
Financial instruments recorded at fair value are classified using a fair value hierarchy that reflects the significance of the inputs to fair value measurements. The fair value of the Company’s financial instruments associated with each of the three levels of the hierarchy are:
As of June 30, 2022
Level 1Level 2Level 3Total
As of March 31, 2024As of March 31, 2024
Level 1Level 1Level 2Level 3Total
Cash and Cash EquivalentsCash and Cash Equivalents$92,833 $— $— $92,833 
InvestmentsInvestments3,842 — — 3,842 
Acquisition Consideration PayableAcquisition Consideration Payable— — (66,901)(66,901)
TotalTotal$96,675 $— $(66,901)$29,774 
As of December 31, 2021
Level 1Level 2Level 3Total
As of December 31, 2023As of December 31, 2023
Level 1Level 1Level 2Level 3Total
Cash and Cash EquivalentsCash and Cash Equivalents$99,118 $— $— $99,118 
Investments
Acquisition Consideration PayableAcquisition Consideration Payable— — (208,349)(208,349)
TotalTotal$99,118 $— $(208,349)$(109,231)
During the six months ended June 30, 2022,As of March 31, 2024, the Company remeasured its consideration arrangements associated with its 2021 acquisitions of Agri-Kind, LLC, and Agronomed Biologics, using Monte Carlo simulation models. The remeasurement resulted in a net loss of ($2,329) which was driven by a change in management’s estimates and projections of the acquired entities' ability to achieve performance targets along with the change in fair value of the shares to be issued.
The amount was recorded, net, within other income/(expense) on the unaudited interim condensed consolidated statement of operations. Significant assumptions used in the Company’s June 30, 2022, remeasurement include the price of the Subordinate Voting Shares asheld publicly traded on the CSE as of June 30, 2022.
Additionally, during the six months ended June 30, 2022, the Company sold its 50% ownership interest in ILDISP, LLC and as part of the disposition, the Company received shares of a publicly traded entity. As of June 30, 2022, the fair value of the investment was $3,842,$2,988 which is included in other assets in the accompanying condensed consolidated balance sheetsCondensed Consolidated Balance Sheet, and is as a Level 1 financial instrument.
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18.SUBSEQUENT EVENTS
Acquisition - Pharmacann Virginia LLC
On July 7, 2022, the Company entered into an agreement to acquire all of the issued and outstanding equity interests in PharmaCann Virginia LLC, a Virginia limited liability company, and certain real property. The total consideration is $5,000,000, which is payable in cash. Closing of the acquisition is subject to certain conditions, contingencies, and approvals, including regulatory approval.
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VERANO HOLDINGS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
($ in Thousands except shares and per share amounts)

18.16.SUBSEQUENT EVENTS (Continued)RELATED PARTY TRANSACTIONS
2022 Credit Agreement
George Archos, the Chairman, Chief Executive Officer and Founder of the Company, participated in the 2022 Credit Agreement as a lender funding $1,000 of the $350,000 principal amount. Mr. Archos is excluded from certain approval rights of the lenders and any penalties and fees due to Mr. Archos under the 2022 Credit Agreement are immaterial to the Company.
Two Pointo

Mortgage LoanIn October 2022, the Company entered into a conditional management and services agreements with each of Americana Dream, LLC and Green Therapy, LLC, operators of dispensaries in Illinois pursuant to social equity licenses issued by Illinois regulatory authorities (together, the “LLCs”), and in 2023 the Company received an aggregate of $10 for services rendered under the agreements. The Company sold products to the LLCs and two associated entities on a wholesale basis in the aggregate amounts of $424, net of discounts, in the first quarter of 2023 and $854, net of discounts, for the first quarter of 2024. Two Pointo, LLC (“Two Point”) has contractual rights to purchase ownership interests in the LLCs and associated entities, subject to submitting a request for and receiving applicable Illinois regulatory approvals and other conditions. The existing owners of the LLCs and associated entities will maintain ownership interests together with Two Point. In 2023, Darren Weiss, the Company’s President, received in connection with application support services rendered to an LLC in 2019, (i) a 2.73% profit interest in Two Point subject to Two Point’s purchase of ownership interests in the LLCs, and (ii) a profit interest in Two Point of 0.30%, and David Spreckman, the Company’s Chief Marketing Officer, received a profit interest in Two Point of 0.30% for services. All profit interests issued to Messrs. Weiss and Spreckman were voluntarily forfeited in 2024 as if they were never granted. Maria Fragias, an immediate family member of George Archos, the Company’s Chief Executive Officer, is the beneficiary of a trust that holds a 7.92% ownership interest and a 3.95% profit interest in Two Point. None of the trust or such persons has received any distributions, payments, or proceeds from Two Point. As of March 31, 2024, and December 31, 2023, the amounts due from the LLCs and two associated entities were $783 and $443, respectively.

Leases

The Company leases real property for a retail dispensary in Aurora, Illinois from 740 Rte. 59, LLC (“740”). Pursuant to the lease agreement, the Company made payments totaling $46 in the first quarter of 2023 and $46 during the first quarter of 2024, which payments consist of base rent, real estate taxes and customary tenant charges. George Archos, the Company’s Chief Executive Officer, holds an indirect 50% ownership interest in 740. Pursuant to the lease agreement, the initial term expires on June 30, 2030.

The Company leases real property for a retail dispensary in Lombard, Illinois from 783 Butterfield LLC (“783”). Pursuant to the lease agreement, the Company made payments to 783 totaling $90 in the first quarter of 2023 and $91 during the first quarter of 2024, which payments consist of base rent, real estate taxes and customary tenant charges. George Archos, the Company’s Chief Executive Officer, holds a 50% indirect ownership interest in 783. Pursuant to the lease agreement, the initial term expires on January 11, 2031.
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VERANO HOLDINGS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
($ in Thousands except shares and per share amounts)

17.SUBSEQUENT EVENTS
On April 30, 2024, the Company made a voluntary prepayment of the outstanding principal and interest under the 2022 Credit Facility in the amount of $50,000 plus a $1,000 prepayment premium. In connection with such voluntary prepayment, liens over certain collateral pledged by the Company were released and certain subsidiaries of the Company were released as “Credit Parties” under the 2022 Credit Facility.

On July 11, 2022,May 2, 2024, GGH filed an application with the Supreme Court of British Columbia seeking an order granting summary trial in the ongoing litigation between the Company repaidand GGH regarding the GGH Arrangement Agreement. In the application, GGH stated it is seeking $860,900 in full all outstanding indebtedness related to the loan with 100 Mile Fund, LLC. The Company assumed the loan on July 11, 2021 with a principal amount of $13,000 as part of the acquisition of Agronomed Holdings, Inc.damages, plus costs and interest.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This management discussion and analysis (this “MD&A”) of the financial condition and results of operations of Veranothe Company is for the three and six months ended June 30, 2022March 31, 2024 and June 30, 2021.March 31, 2023. It is supplemental to, and should be read in conjunction with, the Company’s unaudited interim condensed consolidated financial statementsUnaudited Interim Condensed Consolidated Financial Statements and the accompanying notes for the three months ended March 31, 2022.2024 and with the Company’s audited consolidated financial statementsAudited Consolidated Financial Statements and the accompanying notes for the years ended December 31, 2023, 2022 and 2021 2020 and 2019.included in the Form 10-K. The financial statements referenced in this MD&A are prepared in accordance with GAAP. Financial information presented in this MD&A is presented in United States dollars (“$” or “US$”) and expressed in thousands, unless otherwise indicated. This MD&A contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those projected, forecasted, or expected in these forward-looking statements as a result of various factors, including, but not limited to, those discussed in the 2021 Form 10.10-K. See “Cautionary Statement Regarding Forward-Looking Statements” above and “Risk Factors” in Part I, Item 1A. "Risk Factors" in the 2021 Form 10.10-K. The Company's management believes the assumptions underlying the Company’s financial statements and accompanying notes are reasonable. However, the Company’s financial statements and accompanying notes may not be an indication of the Company's financial condition and results of operations in the future.
OVERVIEW OF THE COMPANY

Verano, is a leading vertically-integrated multi-state cannabis operator in the United States as one of the top five publicly tradedU.S. cannabis industry’s leading companies based on historical revenue, geographical scope and brand performance, is a vertically integrated, multi-state operators inoperator embracing a mission of saying Yes to plant progress and the United States by reported annual revenue for the year ended December 31, 2021.bold exploration of cannabis. An operator of licensed cannabis cultivation, processing, wholesale distribution and retail facilities, our goal is the ongoing development of communal wellness by providing responsible access to regulated medical and adult-use cannabis products to discerning high-end customers. As of June 30, 2022May 6, 2024, through our subsidiaries and affiliates we operate businesses in 13 US states, including 101139 retail dispensaries and 13 cultivation facilities, processing and manufacturing14 production facilities with over 1,000,000 square feet of cultivation.cultivation capacity. We produce a suitewide variety of premium, artisanalhigh quality cannabis products sold under our portfolio of consumer brands, including Encore™, Avexia™, MÜV™, Savvy™, BITS™ and Verano™. We also design, build and operate branded dispensaryretail environments including Zen Leaf™ and MÜV™ dispensaries that deliver a cannabis shopping experience in both medical and adult-use markets, including through Cabbage Club, an annual membership program offering exclusive benefits for cannabis consumers.
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Notwithstanding the permissive regulatory environment of medical, and in some cases, recreational marijuana,also adult-use (i.e., recreational) cannabis, at the state level, it remains illegal under USU.S. federal law to cultivate, manufacture, distribute, sell or possess marijuanacannabis in the US.U.S. Because federal law prohibits transporting any federally restricted substance across state lines, cannabis cannot be transported across state lines. As a result of current federal law prohibitions, the USU.S. cannabis industry is conducted on a state-by-state basis. To date, in the U.S., 37 38 states plus the District of Columbia and the USU.S. territories of Puerto Rico, Guam, the Commonwealth of Northern Marina Islands, and the USU.S. Virgin Islands have authorized comprehensive medical marijuanacannabis programs, 1924 states plus the District of Columbia and the USU.S. territories of Guam, and the Commonwealth of Northern Mariana Islands, and the U.S. Virgin Islands have authorized comprehensive programs for medical and adult-use (i.e., recreational) marijuana,cannabis, and 11 states allow the use of low THC,tetrahydrocannabinol and high CBDcannabidiol products for specified medical uses. Verano operates within states where cannabis use, medical or both medical and adult-use, has been approved by state and local regulatory bodies. Strict compliance with state and local laws with respect to cannabis may neither absolve the Company of liability under USU.S. federal law, nor may it provide a defense to any federal proceeding which may be brought against the Company.Company or any of its subsidiaries.
Our strategy is to vertically integrate as a single cohesive company in multiple states through the consolidation of seed-to-sale cultivating, manufacturing, distributing, and dispensing premiumcannabis brands and products at scale. Our cultivation, processing and wholesale distribution of cannabis consumer packaged goods are designed to guarantee shelf-space insupport our national retail dispensary chain, as well aschains, and to develop and foster long termlong-term wholesale supply relationships with third-party retail operators though sales arrangements.dispensary operators. Our modelstrategy includes geographic diversity by establishing a footprint that enablesto enable us to adapt to changes in both industry and market conditions seamlessly and profitably. Allconditions.
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Table of the Company’s business, operating results and financial condition relate to US cannabis-related activities.
As part of the RTO described in “FN 2 - Reverse Takeover Transaction ("RTO")” in February 2021, the Company resulted from a reverse takeover transaction, and at such time Verano Holdings LLC and AltMed became subsidiaries of the Company with the other members of the AME Group and Plants of Ruskin becoming subsidiaries of AltMed. Prior to the RTO, Verano Holdings LLC, AltMed and its subsidiaries (collectively, “AME”) and Plants of Ruskin were not consolidated and were not combined.Contents
SELECTED RESULTS OF OPERATIONS
The following presents selected financial data derived from the (i) unaudited interim condensed consolidated financial statementsUnaudited Interim Condensed Consolidated Financial Statements for the three and six months ended June 30, 2022March 31, 2024 and 20212023 and (ii) condensed consolidated balance sheetthe Condensed Consolidated Balance Sheets as of
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June 30, 2021 March 31, 2024 and December 31, 2021 have been derived from,2023, and should be read in conjunction with the unaudited interim condensed consolidated financial statementsUnaudited Interim Condensed Consolidated Financial Statements and accompanying notes presented in Item 1 of this Report.Form 10-Q. The selected unaudited interim condensed consolidatedUnaudited Interim Condensed Consolidated financial information below may not be indicative of the Company's future performance.

Three Months Ended June 30, 2022,March 31, 2024, as Compared to Three Months Ended June 30, 2021March 31, 2023
For the Three Months Ended
June 30,
For the Three Months Ended March 31,For the Three Months Ended March 31,
($ in thousands)($ in thousands)20222021$ Change($ in thousands)20242023$ Change
Revenue, net of discounts$223,662 $199,066 $24,596 
Revenues, net of discounts
Gross ProfitGross Profit98,115 69,210 28,905 
Net Loss attributable to Verano Holdings Corp.(9,847)(29,688)19,841 
Net Loss Attributable to Verano Holdings Corp. & Subsidiaries
Net Loss per share – basic & dilutedNet Loss per share – basic & diluted(0.03)(0.10)0.07 
Revenue,Revenues, net of discounts
RevenueRevenues, net of discounts, for the three months ended June 30, 2022March 31, 2024 was $223,662, an increase$221,306, a decrease of $24,596$(5,754) or 12.4%(2.5)%, compared to revenue of $199,066$227,060 for the three months ended June 30, 2021.March 31, 2023. Key performance drivers for retail revenue for the quarter were primarily driven by market expansion into New Jerseythe Maryland adult-use market which began permitting adult-use sales during July 2023, and new Zen Leaf™ store openings in the three months ended June 30, 2022.Connecticut market during the third and fourth quarters of 2023. During the three months ended June 30, 2022,March 31, 2024, the Company opened seventwo new stores, one in Florida Pennsylvania, and West Virginia. one in Pennsylvania. Additionally, consistent with other multi-state cannabis operators, the Company has seen increased competition and promotional activity in select retail markets, specifically in New Jersey and Illinois. Retail revenue for the three months ended June 30, 2022March 31, 2024 was approximately 73.2%66.2% of total revenue compared to 72.6%69.7% of total revenue for the three months ended June 30, 2021.March 31, 2023, in each case, excluding intersegment eliminations. Key performance drivers for cultivation (wholesale) revenues were significant cultivation expansion intoincreased third-party wholesale sales in the New Jersey market and increased adult-use third-party wholesale sales in the Maryland market, both, of which attributed to increased production output and sales of cannabis flower and cannabis related products, including intercompany sales. Continued expansion inwhen compared to the Pennsylvania market also further increased revenue.three months ended March 31, 2023. Cultivation (wholesale) revenue for the three months ended June 30, 2022March 31, 2024 was 26.8%33.8% of total revenue compared to 27.4%30.3% of total revenue for the three months ended June 30, 2021.March 31, 2023, in each case, excluding intersegment eliminations.
Gross Profit
Gross profit for the three months ended June 30, 2022March 31, 2024 was $98,115,$112,960, representing a gross margin on the sale of cannabis, cannabis extractions, edibles and related accessories of 43.9%51.0%. This is compared to gross profit for the three months ended June 30, 2021March 31, 2023 of $69,210,$109,185, which represented a 34.8%48.1% gross margin on the sale of cannabis, cannabis extractions, edibles and related accessories. The increase in gross profit is primarily due to top-line growth catalyzed by strong overall market growth, specifically in New Jersey dueduring the three months ended March 31, 2024 compared to the approvalthree months ended March 31, 2023, was attributable to higher third-party wholesale sales of adult-use sales.Verano products, which was partially offset by increased competition and continued pricing pressure in the retail markets.
Net Loss
Net Loss attributable to the Company for the three months ended June 30, 2022March 31, 2024 was $(9,847)$(4,822), an increasea decrease of $19,841,$4,415, compared to a net loss of $(29,688)$(9,237) for the three months ended June 30, 2021.March 31, 2023. The variancedecrease in net loss was mainlylargely driven by an increase in other income partially offset by aoverall decrease in the provision for income tax expense.
Three Months Ended June 30,2022-2021
($ in thousands)20222021$ Change
Cost of Goods Sold, net$125,547 $129,856 $(4,309)
Selling, General, and Administrative Expenses100,263 70,013 30,250 
Other Income (Expense)3,548 (5,994)9,542 
Provision for Income Taxes(11,103)(23,438)12,335 
taxes for the three months ended March 31, 2024 compared to the three months ended March 31, 2023.
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For the Three Months Ended March 31,
($ in thousands)20242023$ Change
Cost of Goods Sold, net$108,346 $117,875 $(9,529)
Selling, General, and Administrative Expenses90,289 75,243 15,046 
Other Income (Expense)(16,016)(14,699)(1,317)
Provision for Income Taxes(11,477)(28,320)16,843 
Cost of Goods Sold, net
Cost of goods sold, net includes the costs directly attributable to cultivating and processing cannabis and for retail purchases of finished goods, such as flower, edibles, and concentrates. Cost of goods sold, net for the three months ended June 30, 2022,March 31, 2024 was $125,547,$108,346, a decrease of $(4,309)$(9,529) or (3.3)(8.1)%, fromas compared to the three months ended June 30, 2021.March 31, 2023. The variancedecrease was primarily driven by production costsdecreased top-line revenue within the retail markets due to pricing pressure in select markets, partially offset by increased wholesale sales of Verano products to third-parties in select markets, specifically in the New Jersey and Florida, as well as recognized inventory write-off of $13,100 related to unmet quality control standards.adult-use market.
Selling, General, and Administrative Expenses
Total selling,Selling, general and administrative expenses ("SG&A") for the three months ended June 30, 2022,March 31, 2024 were $100,263,$90,289, an increase of $30,250$15,046 or 43.2%20.0%, compared to total selling, general and administrativeSG&A expenses of $70,013$75,243 for the three months ended June 30, 2021. Total selling, general and administrativeMarch 31, 2023. SG&A expenses as a percentage of revenue was 44.8%40.8% and 35.2%33.1% for the three months ended June 30, 2022,March 31, 2024, and 2021,March 31, 2023, respectively. The increase was primarily due to a $12,176$6,405 increase in salaries and benefits, due to increased headcounts related to new store openings, and a $10,885$7,711 increase in general and administrative expenses primarily driven largely by increased operating costs related to new dispensariesenhancements in Floridaprocesses and Pennsylvania.
The Company expects to continue to invest organically and in new markets to support expansion plans and adapttechnology, during the three months ended March 31, 2024 compared to the increasing complexity ofthree months ended March 31, 2023. Additionally, SG&A expenses for the cannabis business. Furthermore,three months ended March 31, 2023 included lower stock based compensation expense compared to the Company expects to continue to incur acquisitionthree months ended March 31, 2024, driven by a prior period expense acceleration benefit during the three months ended March 31, 2023 and transaction costs related to expansion.lower award grants during the three months ended March 31, 2023.
Total Other Income (Expense)
Total otherOther income (expense) for the three months ended June 30, 2022,March 31, 2024, was $3,548, an increase$(16,016), a decrease of $9,542$1,317 as compared to the three months ended June 30, 2021.March 31, 2023. The increase in other income (expense) increase was primarily driven by andue to less earn out accrual adjustmentactivity during the three months ended June 30, 2022, of $10,900 relatedMarch 31, 2024 when compared to an acquisition of a license in Pennsylvania.the three months ended March 31, 2023.
Provision for Income Taxes
Income tax expense is recognized based on the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at year-end. Income tax expense for the three months ended June 30, 2022,March 31, 2024, was $11,103,$(11,477), a decrease of $12,335$16,843 or (52.6)(59.5)% asprimarily due to impacts of prior period return to provision adjustments and a decrease in pre-tax earnings when compared to the three months ended June 30, 2021.

Six Months Ended June 30, 2022, as compared to Six Months Ended June 30, 2021

For the Six Months Ended
June 30,
($ in thousands)20222021$ Change
Revenue, net of discounts$425,897 $319,961 $105,936 
Gross Profit196,732 123,500 73,232 
Net Loss attributable to Verano Holdings Corp.(10,061)(37,574)27,513 
Net Loss per share – basic & diluted(0.03)(0.14)0.11 

Revenue, net of discounts

Revenue for the six months ended June 30, 2022 was $425,897 an increase of $105,936 or 33.1%, compared to revenue of $319,961 for the six months ended June 30, 2021. Key performance drivers for retail revenue were largely attributable to an increased dispensary count from new store openings in Arizona, Connecticut, Florida, Illinois New Jersey, West Virginia, and Pennsylvania markets. Market expansion into New Jersey, which began adult-use sales, further increased retail revenue. Retail revenue for the six months ended June 30, 2022 was approximately 74.3% of total revenue compared to 68.5% of total revenue for the six months ended June 30, 2021. Key performance drivers for cultivation (wholesale) revenues were primarily driven by acquisition activities, in particular, the acquisition of Connecticut Pharmaceutical Solutions, Inc. and significant cultivation expansion into the Arizona, Connecticut, Florida, New Jersey and Pennsylvania markets. In addition, production output and sales of flower expanded in the Illinois, Maryland, New Jersey, Pennsylvania and Ohio markets, which further increased revenue. Cultivation expansion into the New Jersey adult-use market attributed to increased productionMarch 31, 2023.
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output and sales of cannabis flower and cannabis related products, including intercompany sales. Cultivation (wholesale) revenue for the six months ended June 30, 2022 was 25.7% of total revenue compared to 31.5% of total revenue for the six months ended June 30, 2021.
Gross Profit

Gross profit for the six months ended June 30, 2022 was $196,732 representing a gross margin on the sale of cannabis, cannabis extractions, edibles and related accessories of 46.2%. This is compared to gross profit for the six months ended June 30, 2021 of $123,500, which represented a 38.6% gross margin on the sale of cannabis, cannabis extractions, edibles and related accessories. The increase in gross profit is primarily due to continued top-line growth catalyzed by strong market growth in Illinois and expansion into the Connecticut, Florida, New Jersey, and Pennsylvania markets for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021.
Net Loss

Net Loss attributable to the Company for the six months ended June 30, 2022 was $(10,061), an increase of $27,513, compared to a net loss of $(37,574) for the six months ended June 30, 2021. The variance in net loss was driven by an increase in other income partially offset by a decrease in income tax expense.

Six Months Ended June 30,2022-2021
($ in thousands)20222021$ Change
Cost of goods sold, net$229,165 $196,461 $32,704 
Selling, General, and Administrative Expense189,824 112,679 77,145 
Other Income (Expense)18,079 (8,627)26,706 
Provision for Income Taxes(36,617)(39,852)3,235 

Cost of Goods Sold, net

Cost of goods sold includes the costs directly attributable to cultivating and processing cannabis and for retail purchases of finished goods, such as flower, edibles, and concentrates. Cost of goods sold for the six months ended June 30, 2022, was $229,165 an increase of $32,704 or 16.6%, from the six months ended June 30, 2021. The increase was primarily driven by overall higher volumes of production for cannabis and cannabis related products coupled with a lower comparative impact related to the inventory step-up from acquisitions. Additionally, for the six months ended June 30, 2022 compared to the six months ended June 30, 2021, cost of goods sold increased as a result of the acquisitions of the AltMed cultivation facilities in Arizona and Florida, the Territory cultivation facility in Arizona, the Agri-Kind cultivation facility in Pennsylvania and continued expansion at existing facilities.
Selling, General, and Administrative Expenses

Total selling, general and administrative expenses for the six months ended June 30, 2022 were $189,824, an increase of $77,145, or 68.5%, compared to total selling, general and administrative expenses of $112,679 for the six months ended June 30, 2021. Total selling, general and administrative expenses as a percentage of revenue was 44.6% and 35.2% for the six months ended June 30, 2022 and 2021, respectively. The increase was primarily due to a $35,356 increase in salaries and
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benefits and a $21,275 increase in general and administrative expenses driven by overall footprint expansion in established markets including increases in employee headcount and fixed assets in Florida and Pennsylvania.
For the six months ended June 30, 2022, the Company expects to continue to invest organically and in new markets to support expansion plans and adapt to the increasing complexity of the cannabis business. Furthermore, the Company expects to continue to incur acquisition and transaction costs related to expansion.
Total Other Income (Expense)

Total other income (expense) for the six months ended June 30, 2022, was $18,079, an increase of $26,706 as compared to the six months ended June 30, 2021. The increase in other income (expense) was primarily due to a gain on the disposal of three dispensaries of $17,104 and an earn out accrual adjustment during the three months ended June 30, 2022, of $10,900 related to an acquisition of a license in Pennsylvania. This is partially offset by an increase in interest costs as a result of new debt issuance costs related to the Credit Facility with Chicago Atlantic.
Provision for Income Taxes

Income tax expense is recognized based on the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at year-end. Income tax expense for the six months ended June 30, 2022 was $(36,617), a decrease of $3,235, or (8.1)% as compared to the six months ended June 30, 2021.

Results of Operations by Segment
The Company has two reportable segments: (i) Cultivation (Wholesale)cultivation (wholesale) and (ii) Retail.retail. Due to the vertically integrated nature of its business, the Company reviews its revenue at the cultivation (wholesale) and retail levels while reviewing its operating results on a consolidated basis.
The following tables summarize revenues, net of sales discounts, by segment for the three and six months ended June 30, 2022March 31, 2024 and 2021:2023:
Three Months Ended June 30,
($ in thousands)20222021% Change
Revenues, net of discounts
Cultivation (Wholesale)$67,673 $59,312 14.1 %
Retail$185,308 $156,873 18.1 %
Intersegment Eliminations$(29,319)$(17,119)71.3 %
Total Revenues, net of discounts$223,662 $199,066 12.4 %

For the Three Months Ended March 31,
($ in thousands)20242023% Change
Revenues, net of Discounts
Cultivation (Wholesale)$85,906 $80,267 7.0 %
Retail168,588 184,242 (8.5)%
Intersegment Eliminations(33,188)(37,449)(11.4)%
Total Revenues, net of Discounts$221,306 $227,060 (2.5)%
Revenues, net of discounts, for the cultivation (wholesale) segment were $67,673$85,906 for the three months ended June 30, 2022,March 31, 2024, an increase of $8,361$5,639 or 14.1% excluding intersegment eliminations,7.0%, compared to the three months ended June 30, 2021.March 31, 2023, in each case, excluding intersegment eliminations. The increase in cultivation (wholesale) revenues, net of discounts, was primarily driven by cultivation expansion intoincreased third-party wholesale sales in the New Jersey market coupled with increased adult-use market and continued cultivation expansionthird-party wholesale sales in the established Pennsylvania market.Maryland market, both, of which attributed to increased production output of cannabis flower and cannabis related products.
Revenues, net of discounts for the retail segment were $185,308$168,588 for the three months ended June 30, 2022, an increaseMarch 31, 2024, a decrease of $28,435$(15,654) or 18.1%(8.5)%, excluding intersegment eliminations, compared to the three months ended June 30, 2021.March 31, 2023, in each case, excluding intersegment eliminations. The increasedecrease in retail revenues, net of discounts, was primarily driven by the Company’s expansion intoincreased competition and promotional activity in select retail markets, specifically in New Jersey and increased Florida operations, which are treated exclusively as retail income dueIllinois. Additionally, continued pricing pressure contributed to the vertical nature of the Florida business. The increase was also driven by additional retail store openingsdecrease in Pennsylvania and West Virginia.
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Six Months Ended June 30,
($ in thousands)20222021% Change
Revenues, net of discounts
Cultivation (Wholesale)$120,681 $108,473 11.3 %
Retail$349,642 $236,068 48.1 %
Intersegment Eliminations$(44,426)$(24,580)80.7 %
Total Revenues, net of discounts$425,897 $319,961 33.1 %

Revenues, net of discounts for the cultivation (wholesale) segment were $120,681 for the six months ended June 30, 2022, an increase of $12,208 or 11.3% excluding intersegment eliminations, compared to the six months ended June 30, 2021. The increase in cultivation (wholesale) revenues, net of discounts, was primarily driven by market expansion in Pennsylvania and New Jersey, and increases in revenues in established markets such as Arizona, Florida, and Connecticut.
Revenues, net of discounts forwhen comparing the retail segment were $349,642 for the sixthree months ended June 30, 2022, an increase of $113,574 or 48.1%, excluding intersegment eliminations, comparedMarch 31, 2024 to the sixthree months ended June 30, 2021. The increase in retail revenues, net of discounts, was primarily driven by the Company’s New Jersey and Florida operations. Florida sales are treated exclusively as retail income due to the vertical nature of the Florida business. The increase was also driven by additional retail store openings in Florida, Pennsylvania, West Virginia, New Jersey and Connecticut.March 31, 2023.
Drivers of Operational Performance
Revenue
The Company derives its revenue from both its cultivation (wholesale) business in which it cultivates, produces and sells cannabis products to third-party retail customers, and its retail business, in which it directly sells cannabis products to retail patients and consumers. For the three months ended June 30, 2022,March 31, 2024, approximately 26.8%33.8% of the Company’s revenue was generated from the cultivation (wholesale) business, excluding intersegment eliminations, and approximately 73.2%66.2% from the retail business.business, excluding intersegment eliminations. For the three months ended June 30, 2021,March 31, 2023, approximately 27.4%30.3% of revenue was generated from the cultivation (wholesale) business and approximately 72.6%69.7% from the retail business.
Gross Profit

Gross profit is revenue less cost of goods sold.sold, net. Cost of goods sold, net includes the costs directly attributable to product sales and includes amounts paid for finished goods, such as flower, edibles, and concentrates, as well as packaging and other supplies, fees for services and processing, rent, utilities, and related costs. Cannabis costs are affected by various state regulations that limits the sourcing and procurement of cannabis product,products, which may create fluctuations in gross profit over comparative periods as the regulatory environment changes. Gross profit margin measures the Company’s gross profit as a percentage of revenue. Furthermore, during the six months ended June 30, 2022, the Company recorded an increase to cost of goods sold, net, of $6,707 that was attributable to acquired inventory that was stepped-up to fair value, and subsequently recognized through cost of goods sold. Additionally, the Company recognized an inventory write-off, included in cost of goods sold, of $13,100 related to unmet quality control standards during the six months ended June 30, 2022.
The Company’s expansion strategy and revenue growth have taken priority and will continue to do so for the foreseeable future as it expands its footprint, inby exploring new markets through acquisitionand opening or acquiring new dispensary locations, and scales production within current markets. In the core markets in which the Company is already operational it does not expect price compression in the near-term. However,and, as the state markets mature, the Company anticipates that there will be pressure on margins in the cultivation (wholesale) and retail channels. The Company’s current production capacity has not been fully realized and it is expected that price compression at the cultivation (wholesale) level, will be more than offset by increased production volume.operational optimization. As a result, the Company expects overall consolidated gross profit margins to gradually increase in the future.
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Total Expenses
Total expenses, other than the cost of goods sold, consist of selling costs to support customer relationships and to deliver product to the Company’s retail stores. It also includes a significant investment in the corporate infrastructure required to support ongoing business.
Selling costs generally correlate to revenue. As a percentage of sales, selling costs are expected to increase slightly in currently operational markets (Arizona, Arkansas, California, Connecticut, Florida, Illinois, Maryland, Massachusetts, Michigan, Nevada, New Jersey, Ohio, Pennsylvania, and West Virginia) as facility and market expansion occurs. The
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increase is expected to be driven primarily by the growth of the Company’s retail and cultivation (wholesale) channels and the ramp up from pre-revenue to sustainable market share.new retail openings.
Selling, general, and administrative (“SG&A”) expenses also include costs incurred at the Company’s corporate offices, primarily related to back officeback-office personnel costs, including salaries, incentive compensation, benefits, stock-based compensation and other professional service costs. Going forward, SG&A expenses are expected to continue in line with the Company’s expansion plans. Furthermore, the Company expects to continue to incur acquisition and transaction costs related to these expansion plans and anticipates an increase in stock compensation expenses related to recruiting and hiring talent, along with legal and professional fees associated with being a publicly-traded company.public-reporting company and publicly traded in Canada and a public-reporting company in the U.S.
Provision for Income Taxes
The Company is subject to income taxes in the jurisdictions in which it operates and, consequently, income tax expense is a function of the allocation of taxable income by jurisdiction and the various activities that impact the timing of taxable events. As the Company operates in the cannabis industry, it is subject to the limits of Section 280E of the Internal Revenue Code of 1986, as amended (the "Code") under which the Company is only allowed to deduct expenses directly related to the sale of products. This results in permanent differences between ordinary and necessary business expenses deemed non-allowable under Section 280E of the Code and a higher effective tax rate than most industries.
During the second quarter of 2023, Connecticut, Illinois, and New Jersey enacted tax legislation to exempt, or decouple, from Section 280E of the Code, all of which became retroactively effective as of January 1, 2023. The Company has significant operations in these states and is now permitted to deduct ordinary and necessary cannabis business expenses in these states.
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LIQUIDITY, FINANCING ACTIVITIES AND CAPITAL RESOURCES
As of June 30, 2022March 31, 2024 and December 31, 2021,2023, the Company had total current liabilities of $586,777$414,975 and $470,516,$412,188, respectively. As of June 30, 2022March 31, 2024 and December 31, 2021,2023, the Company had cash and cash equivalents of $92,833$193,799 and $99,118,$174,760, respectively, to meet its current obligations. The Company had a working capital deficit of $(298,821)$3,804 as of June 30, 2022, a decreaseMarch 31, 2024, an increase of working capital of $(105,349)$21,796 as compared to December 31, 2021.2023. This decreaseincrease in working capital was primarily driven by $250,000increased cash flow from operations of $31,041 during the Amended and Restated Credit Facility coming due within the next 12three months a $13,465 net increase in inventories related to new store openings, a $245,109 increase to the current portion of notes payable for debt maturing in the next 12 months related to the Credit Facility with Chicago Atlantic, which is offset by $95,982 of cash payments related to acquisition consideration payable.ended March 31, 2024.
The Company is an early-stage growth company, generating cash from revenues and deploying its capital reserves to acquire and develop assets capable of producing additional revenues and earnings over both the immediate and long term. Capital reserves areis primarily being utilized for capital expenditures, facility improvements, strategic investment opportunities, product development and marketing, as well as customer, supplier, and investor and industry relations.
While our revenue, gross profit and operating income were not materially impacted by COVID-19 and we maintained the consistency of our operations during the first six months of 2022, the uncertain nature of the spread of COVID-19 may impact our business operations for reasons including the potential quarantine of our employees or those of our supply chain partners. Our ability to continue to operate without any significant negative operational impact from the COVID-19 pandemic will in part depend on our ability to protect our employees, customers and supply chain partners. The Company takes a cautious approach in allocating its capital to maximize its returns while ensuring appropriate liquidity. GivenWhile inflation and higher interest rates have not yet materially impacted the Company’s business, results of operations or financial statements, given current inflation and the uncertainty of the future economic environment, the Company has taken additional measures in monitoring and deploying its capital to minimize the negative impact on its operations and expansion plans.
Liquidity Requirements
Our short-term liquidity requirements consist primarily of funds necessary to pay for our ongoing acquisitions, to repay borrowings, maintain our operations and other general business needs. We believe that internally generated funds and other sources of liquidity discussed below will be sufficient to meet working capital needs, capital expenditures, and other business requirements for at least the next 12 months. We believe we will meet known or reasonably likely future cash requirements through the combination of cash generated from operating activities, available cash balances and available borrowings. If these sources of liquidity need to be augmented, additional cash requirements would likely be financed through the issuance of equity securities or additional borrowingsborrowings; however, there can be no assurances that we will be able to obtain additional equity financing or debt financing on acceptable terms in the future.
Our long-term liquidity requirements consist primarily of completing additional acquisitions, scheduled debt payments, future payments of income tax payables, maintaining and expanding our operations and other general business needs. We expect to meet our long-term liquidity requirements through various sources of capital, which may include future debt or equity issuances, net cash provided by operations and other secured and unsecured borrowings. We believe that the foregoing sources of capital will provide sufficient funds for our operations, anticipated expansion and scheduled debt payments for the long-term. Our ability to fund
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our operating needs will depend on our future ability to continue to generate positive cash flow from operations and our ability to obtain debt or equity financing on acceptable terms.
Credit Facility

Verano Holdings Corp. and certain of its subsidiaries are credit parties as co-borrowers and joint guarantors under the Amended and Restated Credit Agreement, as amended (the "Amended and Restated Credit Agreement"). A total of $350,000 in fully funded term loan commitments is currently outstanding under the Credit Agreement, with an option to request, one time, an additional aggregate amount not exceeding $175,000,000, subject to the satisfaction of the conditions precedent set forth in the Credit Agreement.
On July 2, 2020, the Company and certain subsidiaries and affiliates (collectively, the “Credit Parties”) entered into a Credit Agreement with Chicago Atlantic GIC Advisers, LLC (“Chicago Atlantic”) as administrative and collateral agent for an initial term loan commitment of $20,000 funded by various investors and an incremental loan not to exceed $10,000. Such loan bears interest at 15.25% per annum and had an original maturity date of June 30, 2022. The Company incurred $1,068 of debt issuance costs, which were paid net of loan proceeds and are amortized over the life of the debt instrument.

On May 10, 2021, the Credit Agreement was amended and restated (the “Amended and Restated Credit Agreement”), and the Company borrowed an additional $100,000 of term loans at an annual interest rate of 9.75%, which increased the Company’s total term loans outstanding under the Amended and Restated Credit Agreement to $130,000. The $100,000 senior secured term loans mature on May 30, 2023, and in accordance with ASC 470, Debt, is accounted for as a new credit facility. In addition, the Amended and Restated Credit Agreement extended the maturity date of the original $30,000 existing term loan from June 30, 2022 to May 30, 2023, which qualified as a debt modification pursuant to ASC 470, Debt. The original credit facility under the Credit Agreement had $644 of unamortized debt issuance costs at the time the Amended and Restated Credit Agreement was entered into and is now amortized through May 30, 2023. The Company incurred $5,132 in issuance costs and debt discounts on the Amended and Restated Credit Agreement, which were paid net of proceeds in May 2021 and are amortized over the life of the debt instrument.

On October 20, 2021, the Credit Parties entered into a third amendment to further amend the Amended and Restated Credit Agreement, pursuant to which an additional $120,000 was funded to the Company resulting in $250,000 of total term loan commitments funded and outstanding under the Amended and Restated Credit Agreement, as amended. The $120,000 term loan bears interest of 8.50% per annum and matures on April 28, 2023. In addition, the amendment included an option for the Company to request an incremental $100,000 loan in the future with 8.50% interest per annum, subject to certain restrictions and limitations. The liquidity financial covenant was modified to require that the Company maintain no less than an average of $20,000 in liquidity during any fiscal quarter and no less than $25,000 as of the last day of each fiscal quarter. In accordance with ASC 470, Debt, the $120,000 loan is accounted for as a new credit facility. The Company incurred debt issuance costs of $3,679, which were paid net of proceeds in October 2021 and are amortized over the life of the debt instrument.

On March 1, 2022, the Credit Parties entered into a fourth amendment to the Amended and Restated Credit Agreement. The fourth amendment provided an additional $100,000 of term loans with a maturity date of August 28, 2023 and an annual interest rate of 8.50%, resulting in an aggregate of $350,000 in term loans outstanding under the credit facility.

The Amended and Restated Credit Agreement provides for, among other things, (i) the term loans being secured by a first priority lien on specified assets of Verano Holdings Corp. and its subsidiaries that are parties to the Amended and Restated Credit Agreement, including ownership interests in credit parties, cash, accounts receivable, inventory, equipment, licenses and designated real estate, (ii) the original $30,000 loan bearing interest at a rate of 15.25% per annum, the incremental $100,000 loan funded in May 2021 bearing interest at a rate of 9.75% per annum and the remaining $220,000 in term loans bearing interest at a rate of 8.50% per annum; (iii) no principal amortization with $120,000 plus applicable interest being due in full on the stated maturity date of April 28, 2023, $130,000 plus applicable interest being due in full on the stated maturity date of May 30, 2023 and the balance of the remaining $100,000 being due in full on the stated maturity date of August 31, 2023; (iv) prepayment fees generally of 1% of any principal amount being prepaid during a specified period after funding; (v) restrictive covenants which apply to the operations of Verano Holdings Corp. and its subsidiaries that are parties to the Amended and Restated Credit Agreement, including limitations on their ability to incur additional debt, grant liens on assets,
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advanceCredit Facility
In October 2022, Verano and certain of its subsidiaries and affiliates, as the Borrowers, entered into the 2022 Credit Agreement with the lenders party thereto, pursuant to which the lenders advanced the Borrowers a $350,000 senior secured term loan, and which also provides the Borrowers with the right, subject to conditions, to request an additional incremental term loan of up to $100,000; provided that the lenders elect to fund such incremental term loan. At funding, all the proceeds of the loans made under the 2022 Credit Agreement were used to repay the amounts owing under the Company's previous senior secured term loan credit facility. In connection with such repayment, such previous credit facility was terminated and is no longer in force or contribute fundseffect.
The 2022 Credit Agreement allows the Borrowers to non-credit parties(i) incur up to $120,000 of additional indebtedness from third-party lenders secured by real estate excluded as collateral under the 2022 Credit Agreement, (ii) incur additional mortgage financing from third-party lenders secured by real estate acquired after the initial funding of the 2022 Credit Agreement, and (iii) upon the SAFE Banking Act or similar legislation making banking services available to U.S. cannabis companies being passed by the United States Congress, incur up to $50,000 under a revolving credit facility from third-party lenders that is pari passu or subordinated to the 2022 Credit Agreement obligations, all of which are subject to customary conditions.
The obligations under the 2022 Credit Agreement are secured by substantially all of the assets of the Borrowers, excluding vehicles, specified parcels of real estate and other customary exclusions. The 2022 Credit Agreement provides for a floating annual interest rate equal to the prime rate then in effect plus 6.50%, which rate may be increased by 3.00% upon an event of default that is not a material event of default or 6.00% upon a material event of default as provided in the 2022 Credit Agreement. The initially funded $350,000 loan requires scheduled amortization payments of $350 per month beginning in October 2023 with the remaining principal balance due in full on October 30, 2026.
At any time, the Credit Agreement Borrowers may voluntarily prepay up to $100,000 of the principal balance, subject to a one-time $1,000 prepayment premium upon the first prepayment, and may prepay the remaining outstanding principal balance for a prepayment premium at varying rates based on the timing of any subsequent prepayments. The Borrowers may not voluntarily prepay more than $100,000 of the principal balance without prepaying the entire outstanding principal balance of the loan.
The 2022 Credit Agreement includes customary representations, warranties and covenants and customary events of default, including payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to material indebtedness, and events of bankruptcy and insolvency.
The 2022 Credit Agreement also includes customary negative covenants limiting the Credit Agreement Borrowers’ ability to incur additional indebtedness and grant liens, and the ability to enter into acquisitions;definitive documents or consummate acquisitions or dispositions that are not otherwise permitted thereunder, among others. Additionally, the 2022 Credit Agreement requires the Credit Agreement Borrowers to meet financial tests regarding minimum cash balances, minimum levels of Adjusted EBITDA (as defined in the 2022 Credit Agreement) and (vi) financial covenants requiring the Company to maintain on a consolidated basis:
minimum liquidity averaging at least $20,000 during any fiscal quarter and at least $25,000 as of the last day of each fiscal quarter;
minimum consolidated EBITDA for any fiscal quarter of at least $20,000; and
a fixed charge coverage ratio of no less than 1.5:1.0 measured at the end of each fiscal quarter.ratio.
As of June 30, 2022,March 31, 2024, the Company was in compliance with such financial covenants.
Mortgage Loans
On May 14, 2021,George Archos, the Chairman and Chief Executive Officer of the Company, acquired The Healing Center, which operates three dispensaries on three separate leased real estate parcelsparticipated in the greater Pittsburgh area2022 Credit Agreement as a lender funding $1,000 of the $350,000 principal amount. Mr. Archos is excluded from certain approval rights of the lenders and on September 3, 2021, Verano acquired these three parcels fromany penalties and fees due to Mr. Archos under the owners. 2022 Credit Agreement are immaterial to the Company.
Tax Liabilities
The Company funded the real estate acquisitions through a credit facility with Chicago Atlantichas U.S. income tax payable liabilities. These income tax payable liabilities will require payment from our liquidity sources, and we believe we have sufficient liquidity for $12,650both short-term and interest of 9.75% per annum that matures in September 2023. Total consideration was paid directly to the sellers in the amount of $12,225. The Company received $20 in cash proceeds and incurred $405 in issuance costs and debt discounts on the credit facility, which was paid net of proceeds upon closing.
On July 17, 2021, the Company assumed a loan with 100 Mile Fund, LLC for a principal amount of $13,000 as part of the acquisition of Agronomed Holdings, Inc. The loan bore interest onlylong-term payments of 13% per annum due monthlyour income tax payable liabilities and matures on July 11, 2022. The note is secured by first-priority blanket liens on the property, assets, and ownership interests of Agri-Kind and Agronomed Holdings Inc.

On June 29, 2022, the Company entered into an agreement with BCB Community Bank to borrow a principal amount of $18,000 associated with a mortgage on a building in Branchburg, NJ. The mortgage bears an interest rate of 4% and matures in July 2047.

Funding Needs and Sources

Historically, we have relied on a combination of cash flows provided by operations, draw-downs under the Amended and Restated Credit Agreement and the incurrence of additional debt and/or the refinancing of our existing debt to fund our obligations. The Company continues to identify and evaluate further actions to improve its liquidity. These include, but are not limited to, increased reductions in capital expenditures, operating expenses and administrative costs and additional debt. Additionally, we will continue to pursue opportunities to raise additional capital to fund obligations associated with future debt maturities and/or extend the maturity dates associated with our existing debt. Such opportunities to raise additional capital may include incurring or issuing new debt or extending the maturity date of existing debt.

During the next 12 months, approximately $250,000 of our debt related to the Amended and Restated Credit Agreement will become due. Refer to Note 9. Debt addition to our unaudited interim consolidated financial statements for further information.

As discussed in Note 9. Debt, a total of $350,000 in fully funded term loan commitments are currently outstanding under the Amended and Restated Credit Agreement, with an option to request, one time, an additional aggregate amount not exceeding $175,000, subject to the satisfaction of the conditions precedent set forth in the Credit Agreement. Additionally, the Company has entered into an engagement agreement with certain parties, including Chicago Atlantic, to refinance the debt for an additional term of up to three years. The refinancing will be dependent on, among other things, overall market conditions.

Based on our assumptions and estimates and our financial condition, we believe that the liquidity resulting from the actions mentioned above will be sufficient to fund our liquidity requirements over at least the next 12 months. However, there is no assurance that our assumptions and estimates are accurate due to possible unknown variables and, as such, there is inherent uncertainty in our ability to predict future liquidity requirements.

obligations.
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Sources and Uses of Cash
Cash Provided by (Used in) Operating Activities, Investing and Financing Activities
Net cash provided by (used in) operating, investing, and financing activities for the sixthree months ended June 30, 2022March 31, 2024 and 20212023 were as follows:
Six Months Ended June 30,
20222021$ Change
For the Three Months Ended March 31,For the Three Months Ended March 31,
202420242023$ Change
Net Cash Provided by Operating ActivitiesNet Cash Provided by Operating Activities$43,648 $56,845 (13,197)
Net Cash Used in Investing ActivitiesNet Cash Used in Investing Activities(159,476)(160,442)966 
Net Cash Provided by Financing Activities109,543 236,861 (127,318)
Net Cash Provided by (Used In) Financing Activities
Cash flows from Operating Activities. During the sixthree months ended June 30, 2022March 31, 2024 and 2021,2023, the Company had net cash inflows of $43,648$31,041 and $56,845,$16,862, respectively. The $(13,197) change$14,179 increase was mainly driven by an increasea decrease in non-cash stock based compensation expense forincome taxes coupled with the sixtax payments made during the three months ended June 30, 2022.March 31, 2024.

Cash Flows from Investing Activities. During the sixthree months ended June 30, 2022March 31, 2024 and 2021,2023, the Company had net cash outflows of $(159,476)$(9,699) and $(160,442)$(6,725), respectively. The $966 change was primarily due to increased capital expenditures offset by$2,974 increase in net cash received on the Canna Cuzzos, LLC and ILDSIP, LLC dispositionsoutflows during the sixthree months ended June 30, 2022.March 31, 2024 compared to the three months ended March 31, 2023 is partially driven by purchases of property, plant and equipment of $(9,699) during the three months ended March 31, 2024, compared to purchases of property, plant and equipment of $(8,555) during the three months ended March 31, 2023. Additionally, proceeds from the disposal of property, plant and equipment of $1,830 during the three months ended March 31, 2023 attributed to the increase in net cash outflows when compared to March 31, 2024.

Cash Flows from Financing Activities. During the sixthree months ended June 30, 2022March 31, 2024 and 2021,2023, the Company had net cash outflows of $(2,318) and net cash inflows of $109,543 and $236,861,$142, respectively. The $(127,318) change$(2,460) decrease was primarily due to RTO relateddriven by proceeds duringfrom the six months ended June 30, 2021,issuance of debt of $23,710, partially offset by principal repayments of debt of $(22,759) during the proceeds from the debt upsize of $100,000 with Chicago Atlantic and the proceeds from the Branchburg mortgage loan in New Jersey, of $18,000, both of which occurred during for the sixthree months ended June 30, 2022.March 31, 2023, For the three months ended March 31, 2024 principal repayments of debt totaled $(2,150).
Off-Balance Sheet Arrangements
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Table of the date of this filing, the Company does not have any off-balance-sheet arrangements that have, or are reasonably likely to have, a current or future effect on the results of operations or financial condition of the Company, including, and without limitation, such considerations as liquidity and capital resources.Contents
Changes in or Adoption of Accounting Practices
Refer to the discussion of recently adopted/issued accounting pronouncements under Part I, Item 1, Notes to Unaudited Interim Condensed Consolidated Financial Statements, Note 1—1 - Overview and Basis of Presentation.
Critical Accounting Policies and Significant Judgements and Estimates
There were no material changes to our critical accounting policies and estimates from the information provided in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in the 2021 Form 10.

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report contains “forward-looking information” and “forward-looking statements” within the meaning of United States securities laws (together, “forward-looking statements”). All statements, other than statements of historical fact, made by the Company or its affiliates that address activities, events or developments that the Company or its affiliates expect or anticipate will or may occur in the future are forward-looking statements, including, but not limited to, statements preceded by, followed by or that include words such as “may,” “will,” “would,” “could,” “should,” “believes,” “assumes,” “estimates,” “projects,” “potential,” “expects,” “plans,” “intends,” “anticipates,” “targeted,” “continues,” “forecasts,” “designed,” “goal,” or the negative of those words or other similar or comparable words.

The forward-looking statements contained herein are based on certain key expectations and assumptions, including, but not limited to, expectations and assumptions concerning:

the ability of the Company and its affiliates to obtain, maintain and renew regulatory approvals in all states and localities of its operations and planned operations on a timely basis;
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government regulations, including future legislative and regulatory developments involving medical and adult-use cannabis and the timing thereof;

the Company’s outlook on its expansion and growth of business and operations;

the Company’s ability to achieve its goals, business plans and strategy;

the ability of the Company to access capital and obtain necessary financing to pursue its growth and business plans;

operational results and other financial and business conditions and prospects of the Company;

the timing and completion of acquisitions and other commercial transactions;

the integration and operation of acquired businesses;

the timing and amount of capital expenditures;

the availability of equipment, skilled labor and services needed for cannabis operations;

demand, developments and trends in the medical and adult-use cannabis industry;

competition in the cannabis industry in the markets in which the Company operates or plans to operate;

the medical benefits, viability, safety, efficacy, and dosing of cannabis;

the size of the medical cannabis market and the adult-use cannabis market in each state;

conditions in general economic and financial markets; and

the impacts of the coronavirus (COVID-19) pandemic and future steps to be taken in response to COVID-19.

Forward-looking statements may relate to future financial conditions, results of operations, plans, objectives, performance or business developments. These statements speak only as at the date they are made and are based on information currently available and on the then current expectations of the party making the statement and assumptions concerning future events, which are subject to a number of known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from that which was expressed or implied by such forward-looking statements, including, but not limited to, risks and uncertainties related to:

the impacts of economic uncertainty stemming from inflation, rising interest rates, supply shortages, changes in consumer and business confidence, political unrest and conflicts and disruptions in U.S. and global markets;

the impacts of COVID-19 on the Company, the U.S. and global markets;

the Company’s limited operating history;

the Company is an SEC reporting company in addition to a public reporting company in Canada;

heightened scrutiny from Canadian government authorities;

the Company’s outstanding indebtedness and potential future indebtedness;

reliance on management and the potential for fraudulent activity by employees, contractors and consultants;

uninsured or under insured losses;

potential product liability and recalls;

the Company’s reliance on the performance of its subsidiaries and affiliates;
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the Company’s expansion-by-acquisition strategy;

the unconventional due diligence process in the medical and adult-use cannabis industry;

the integration and operation of acquired businesses;

the Company’s lack of portfolio diversification;

existing competition and new market entrants;

the introduction of synthetic alternatives by pharmaceutical and other companies;

the immaturity of the cannabis industry and limited comparable, competitive and established industry best practices;

the availability of third-party suppliers, contractors and manufacturers, and availability of raw or other materials;

wholesale and retail price fluctuations;

public opinion and perception of the cannabis industry;

agricultural and environmental risks and the impacts of regulations on the agriculture industries and environmental protections;

the U.S. federal regulatory landscape and enforcement related to medical or adult-use cannabis, including political risks, civil asset forfeiture and regulation by additional regulatory authorities;

the difficulties cannabis businesses face accessing and maintaining banking or financial services due to federal regulations;

regulatory and political changes to U.S. state and local laws related to medical or adult-use cannabis, including political risks and regulation by additional regulatory authorities;

disparate state-by-state regulatory landscapes and licensing regimes for medical and adult-use cannabis;

the requirements to abide by anti-money laundering laws and regulations;

required public disclosure and governmental filings containing personal information of the Company’s officers, investors and other stakeholders;

the ability to, and constraints on, promoting and marketing cannabis products;

the potential limitations on the Company’s ability to enforce its contracts or any liens granted to it;

the ability to access capital markets and the availability of financing opportunities;

the lack of access to federal bankruptcy protections in the United States;

limited intellectual property protection available for cannabis products and the potential infringement by third parties;

reliance on information technology systems, the potential disclosure of personal information of patients and customers and cybersecurity risks;

the Company’s elimination of monetary liability and indemnification rights against its directors, officers and employees under British Columbia law;

the Company’s dual class capital structure with Subordinate Voting Shares and Proportionate Voting Shares;

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the Company’s shareholders’ limited participation in the Company’s affairs;

the Company’s expectation to not declare or pay out dividends;

the taxation of cannabis companies in the U.S.; and

other risks described in the 2021 Form 10, as more particularly described under the heading “Item 1A.Risk Factors” therein.

Although the Company believes that the expectations and assumptions on which forward-looking statements are based are reasonable at the time made, undue reliance should not be placed on the forward-looking statements, because no assurance can be given that they will prove to be correct. Forward-looking statements address future events and conditions, and thus involve inherent risks and uncertainties.

The cannabis industry involves risks and uncertainties that are subject to change based on various factors. The forward-looking statements contained herein concerning the cannabis industry and the general expectations of the Company concerning the cannabis industry are based on estimates prepared by the Company using data from publicly available governmental sources as well as from market research and industry analysis and on assumptions based on data and knowledge of the cannabis industry. Such data is inherently imprecise.

Consequently, all forward-looking statements made in this Quarterly Report and other documents of the Company are qualified by such cautionary statements and there can be no assurance that the anticipated results or developments will actually be realized or, even if realized, that they will have the expected consequences to or effects on the Company. The Company does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, other than as required under applicable securities legislation.10-K.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes to our market risk disclosures as set forth in Part II, Item 7A of our 2021the Form 10.10-K.
ITEM 4. CONTROLS AND PROCEDURES
Transition Period to Comply with Management’s Assessment of Internal Controls over Financial Reporting
In accordance with the SEC’s requirements for Emerging Growth Companies, the Company is not required to include a report of management’s assessment regarding internal controls over financial reporting, and the Company's independent public accounting firm is not required to provide an attestation report on the effectiveness of our internal controls over financial reporting.

On the Effective Date of our 2021 Form 10 and continuing during a transition period provided by the SEC for newly public reporting companies in Section 404 of SOX, the Company will be exempted from the requirement that it include management’s report on its assessment of the Company’s internal controls over financial reporting until its second Annual Report on Form 10-K is filed with the SEC.

Evaluation of Disclosure Controls and Procedures

Our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) are designed to ensure that information we are required to be discloseddisclose in reports that we file or submit under the Securities Exchange Act of 1934, as amended (the "Exchange Act") is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure.
As required by Rule 13a-15(b) and Rule 15d-15(b) under the Exchange Act, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer (who is our principal executive officer) and Chief Financial Officer evaluated, as(who is our principal financial officer), of June 30, 2022, the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Exchange Act Rule 13a-15(e) and Rule 15d-15(e).of March 31, 2024, the end of the period covered by this Form 10-Q. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this Form 10-Q, our disclosure controls and procedures were not effective to provide reasonable assurance that information required to be disclosed by us in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the rules and forms of the Exchange Act and is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures due to certain accounting errors that required the restatement of previously issued financial statements.

We have created new positions and will need to hire additional accounting, finance and other personnel in connection with our efforts to comply with the requirements of being a US public reporting company, including complying with Section 404(a) of SOX regarding internal control over financial reporting. The US labor market is competitive, and the professionals
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and other personnel we desire to hire will be sought after by other public companies. We may not be able to attract, hire and retain a sufficient number of qualified management, accounting and other personnel to enable us to implement and maintain sufficient internal control over financial reporting and comply with other public company requirements. We have identified material weaknesses in connection with the restatement of previously issued financial statements for the quarter ended March 31, 2021, the fiscal year ended December 31, 2021, and the quarter ended March 31, 2022 (see Explanatory Note - Restatement Background for more information on the 2021 Form 10), which have not been remediated. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatementidentified as of a company's annual or interim financial statements will not be prevented or detectedDecember 31, 2023 and corrected on a timely basis. The material weaknesses we identified pertain to our internal control environmentas described in Item 9A. Controls and information and communication with respect to the accounting treatment and calculation of stock-based compensation, the calculation of tax expense, acquisition earnouts, and the accounting treatment of consolidated entity distributions.

Any deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses may require prospective or retrospective changes to our consolidated financial statements, or identify other areas for further attention or improvement. If we fail to remediate these material weaknesses or experience additional material weaknessesProcedures in the future or fail to otherwise maintain effective financial reporting systems and processes, we may be unable to accurately and timely report our financial results or comply with the requirements of being a public company. The processes and systems we have developed to date may not be adequate, and we cannot assure that the measures we have taken, and are continuing to implement, will be sufficient to avoid potential future material weaknesses. Moreover, we cannot be certain that we will not in the future have additional material weaknesses in our internal control over financial reporting, or that we will successfully remediate any that we find.

As described above, management has developed a plan to remediate the effectiveness of our disclosure controls and procedures, including designing and implementing improved processes and internal controls with the intent of ensuring proper application of relevant accounting guidance. In 2022, the Company has been taking steps to enhance the control environment, including the hiring of additional accounting personnel, organizational restructuring of the accounting function, revising processes for the accounting of acquired businesses, and management will continue to improve and evaluate these controls over the remainder of the year.

Form 10-K. We believe, however, that a controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls systems are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud or error, if any, within a company have been detected.

Changes in Internal Control over Financial Reporting

In 2022, the Company’s management, under the supervision of the Company’s Chief Executive OfficerWe previously identified and Chief Financial Officer, has been taking steps to assess, design and implement changes to itsdisclosed material weaknesses in internal control over financial reporting (as definedas described in Item 9A. Controls and Procedures in the Exchange Act) focusing on the control environment, risk assessment, control activities, information and communication, and monitoring. The steps taken include creating additional positions within accounting and implementing enhanced policies and procedures. During the quarter ended June 30, 2022 and subsequent to June 30, 2022, the Company filled the position of corporate controller and positionsForm 10-K. These material weaknesses are currently in the internal controls function. The Company intendsprocess of being remediated, as of March 31, 2024. Other than the previously identified and believes thatdisclosed plans to remediate the steps it is taking will improve the effectiveness of itsmaterial weaknesses in internal control over financial reporting as described in Item 9A. Controls and to date such stepsProcedures in the Form 10-K, there have not been any changes in our internal control over financial reporting during the quarter ended March 31, 2024, that have materially affected, or are reasonably likely to materially affect, the Company’sour internal control over financial reporting. Management, under the direction and supervision of the Company’s Chief Executive Officer and Chief Financial Officer, will continue to implement, improve and evaluate these internal controls over the remainder of the year.

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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS

From time to time, the Company may be subject to legal proceedings, claims, investigations and government inquiries in the ordinary course of business. The Company has received, and may in the future continue to receive, claims from third parties. Neither

Please see the Company nor any of its subsidiaries is a partyNotes to any legal proceedings whichthe Unaudited Interim Condensed Consolidated Financial Statements, Note 11 – Contingencies and Other – Claims and Litigation, individually or in the aggregate, would be expected to have a material effect on its business, financial condition, results of operations, or financial statements, taken as a whole, if determined adversely to the Company.which is incorporated herein by reference.
ITEM 1A. RISK FACTORS.
Part I, Item 1A. “Risk Factors” in our 2021 Form 10 for the year ended December 31, 2021 filed on August 19, 2022,10-K includes a discussion of our risk factors. The information presented below supplements, and should be read in conjunction with, the risk factors and information disclosed in our 2021 Form 10. Except as presented below, thereThere have been no material changes from the risk factors described in our 2021the Form 10.10-K. We may disclose changes to such risk factors or disclose additional risk factors from time to time in our future SEC filings.

We may not be able to refinance or renew our indebtedness, which may have a material adverse effect on our financial condition.

We may not be able to renew or refinance our indebtedness, including indebtedness under the Amended and Restated Credit Agreement, on substantially similar terms, or at all. Our ability to access short-term and long-term lending and capital markets to obtain, and the availability of acceptable terms and conditions of, financing are impacted by many factors, including: (i) our credit ratings; (ii) the liquidity and volatility of the overall lending and capital markets; and (iii) the current state of the economy, including the cannabis industry. There can be no assurances that we will be able to access the lending and capital markets to refinance our indebtedness. We may have to pay additional fees and expenses that we might not have to pay under normal circumstances, and we may have to agree to terms that could increase the cost of our debt structure. If we are unable to renew or refinance our indebtedness on terms that are not materially less favorable than the terms currently available to us or obtain alternative or additional financing arrangements, we may not be able to timely repay certain of our indebtedness, which may result in a default under our indebtedness. Failure to refinance or renew any material indebtedness would have a material adverse effect on our financial condition.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Recent Sales of Unregistered Securities
Subordinate Voting Shares

On June 7, 2022,March 19, 2024, pursuant to a merger agreement, the Company issued 2,115,43831,181 Subordinate Voting Shares to the previous shareholders of WSCC, Inc, which were held back to secure indemnity obligations in connection with the Company's acquisition of Connecticut Pharmaceutical Solutions Holdings, LLC.

On June 22, 2022, the Company issued 808,258WSCC, Inc. All of such Subordinate Voting Shares were issued in connection withreliance upon the acquisitionexemptions from registration afforded by Section 4(a)(2) and Rule 506(b) promulgated under the Securities Act of Caring Nature, LLC.
Proportionate Voting Shares
On April 8, 2022,1933, because (i) the Company converted 29 Proportionate Voting Shares into 2,900 Subordinate Voting Shares.
On May 6, 2022,issuance were not made by general solicitation or advertising and (ii) the Company converted 434 Proportionate Voting Shares into 43,400 Subordinate Voting Shares.
On May 20, 2022,issuances were made only to “accredited investors” (as such term is defined in Rule 501(a) of Regulation D under the Company converted 321 Proportionate Voting Shares into 32,100 Subordinate Voting Shares.
On May 31, 2022, the Company converted 2,171 Proportionate Voting Shares into 217,100 Subordinate Voting Shares.
On June 8, 2022, the Company converted 241 Proportionate Voting Shares into 24,100 Subordinate Voting Shares.
On June 15, 2022, the Company converted 36,641 Proportionate Voting Shares into 3,664,100 Subordinate Voting Shares.
On June 23, 2022, the Company converted 17,358 Proportionate Voting Shares into 1,735,800 Subordinate Voting Shares.
On June 27, 2022, the Company converted 423 Proportionate Voting Shares into 42,300 Subordinate Voting Shares.Securities Act of 1933).
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
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ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
ITEM 5. OTHER INFORMATION
None.Rule 10b5-1 Trading Plans

On March 28, 2024, Destiny Thompson, the Company’s Chief People Officer, terminated a prearranged share trading plan, which was intended to satisfy the affirmative defenses of Rule 10b5-1(c) under the Exchange Act and the Company’s policies regarding insider transactions. On October 9, 2023, Cristina Nuñez, a director of the Company, terminated a prearranged share trading plan, which was intended to satisfy the affirmative defenses of Rule 10b5-1(c) under the Exchange Act and the Company’s policies regarding insider transactions.
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ITEM 6. EXHIBITS
Exhibit
Number
Description of Exhibit
3.1*
3.2*
10.1*
10.2*
31.1**
31.2**
32.1***
32.2***
101101.INSInline XBRL Instance Document
101.SCHInline XBRL Taxonomy Extension Schema Document
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document
101.LABInline XBRL Taxonomy Extension Label Linkbase Document
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document
104Cover Page Interactive Data File (formatted as(embedded within the Inline XBRL and contained in Exhibit 101)Document)
*    Previously filed.
**    Filed herewith
***     Furnished herewith
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: August 19, 2022May 8, 2024
VERANO HOLDINGS CORP.
By:/s/ George Archos
Name:George Archos
Title:Chief Executive Officer

By:/s/ Brett Summerer
Name:Brett Summerer
Title:Chief Financial Officer
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