UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, ~~2022~~2023

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission file Number 000-56468

JUSHI HOLDINGS INC.

(Exact name of registrant as specified in its charter)

________________________________________________________________________________________________

British Columbia

98-1547061

(State or other jurisdiction of incorporation or organization)

(IRS Employer
Identification No.)

301 Yamato Road, Suite 3250

Boca Raton, FL

(Address of principal executive offices)

(561) 617-9100

Registrant’s telephone number, including area code

33431

(Zip Code)

(Former name, former address and former fiscal year, if changed since last report.)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

N/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 ☒ No □

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No □

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐

Non-accelerated filer ☒ Smaller reporting company ☐

Emerging growth company ☒

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. □

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November ~~17,2022,~~7, 2023, the registrant had ~~195,776,372~~196,631,598 subordinate voting shares, no par value per share, no multiple voting shares, no par value per share, no super voting shares, no par value per share, and no preferred shares, no par value per share, outstanding.

JUSHI HOLDINGS INC.

Table of Contents

For the quarterly period ended September 30, ~~2022~~2023


Part I	FINANCIAL INFORMATION		Page
Item 1	Financial Statements
		~~Interim~~ Condensed Consolidated Balance Sheets	1
		Unaudited ~~Interim~~ Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)	2
		Unaudited ~~Interim~~ Condensed Consolidated Statements of Changes in Equity	3
		Unaudited ~~Interim~~ Condensed Consolidated Statements of Cash Flows	5
		Notes to the Unaudited ~~Interim~~ Condensed Consolidated Financial Statements	7
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations		3527
Item 3	Quantitative and Qualitative Disclosures About Market Risk		4636
Item 4	Controls and Procedures		4636

Part II	OTHER INFORMATION		4938
Item 1	Legal Proceedings		4938
Item 1A	Risk Factors		4938
Item 2	Unregistered Sale of Equity Securities and Use of Proceeds		5038
Item 3	Defaults Upon Senior Securities		5138
Item 4	Mine Safety Disclosures		5138
Item 5	Other Information		5139
Item 6	Exhibits		5139

~~Signatures~~Signature			5340

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This ~~document~~Quarterly Report on Form 10-Q (this “report”) may contain “forward-looking statements” and “forward‐looking information” within the meaning of applicable securities laws, including Canadian securities legislation and United States (“U.S.”) securities legislation (collectively, “forward-looking information”) which are based upon the Company’s current internal expectations, estimates, projections, assumptions and beliefs. All information, other than statements of historical facts, included in this ~~document~~report that address activities, events or developments that Jushi ~~expect~~expects or ~~anticipate~~anticipates will or may occur in the future constitutes forward‐looking information. Forward‐looking information is often identified by the words, “may”, “would”, “could”, “should”, “will”, “intend”, “plan”, “anticipate”, “believe”, “estimate”, “expect” or similar expressions and includes, among others, information regarding: future business strategy, competitive strengths, goals, expansion and growth of Jushi’s business, operations and plans, including new revenue streams, the ~~completion of contemplated acquisitions by Jushi of additional assets, the~~ integration and benefits of recently acquired businesses or assets, roll out of new operations, the implementation by Jushi of certain product lines, implementation of certain research and development, the application for additional licenses and the grant of licenses that will be or have been applied for, the expansion or construction of certain facilities, the reduction in the number of our employees, the expansion into additional U.S. and international markets, any potential future legalization of adult use and/or medical marijuana under U.S. federal law; expectations of market size and growth in the U.S. and the states in which Jushi operates; expectations for other economic, business, regulatory and/or competitive factors related to Jushi or the cannabis industry generally; and other events or conditions that may occur in the future.

Readers are cautioned that forward‐looking information ~~and statements are~~is not based on historical facts but instead ~~are~~is based on reasonable assumptions and estimates of the management of Jushi at the time they were provided or made and ~~involve~~such information involves known and unknown risks, uncertainties, including our ability to continue as a going concern, and other factors that may cause the actual results, level of activity, performance or achievements of Jushi, as applicable, to be materially different from any future results, performance or achievements expressed or implied by such forward‐looking ~~information and statements.~~information. Such factors include, among others: ~~risks relating to the ability to complete the pipeline transactions;~~ risks relating to U.S. regulatory landscape and enforcement related to cannabis, including political risks; risks relating to anti‐money laundering laws and regulation; other governmental and environmental regulation; public opinion and perception of the cannabis industry; risks related to the economy generally; risks related to inflation, the rising cost of capital, and stock market instability; risks relating to pandemics and forces of ~~nature including but not limited to the 2019 novel coronavirus (“COVID-19”);~~nature; risks related to contracts with third party service providers; risks related to the enforceability of contracts; the limited operating history of Jushi; Jushi’s history of operating losses and negative operating cash flows; reliance on the expertise and judgment of senior management of Jushi; risks inherent in an agricultural business; risks related to co‐investment with parties with different interests to Jushi; risks related to proprietary intellectual property and potential infringement by third parties; ~~the concentrated Founder voting control of the Jushi and the unpredictability caused by the anticipated capital structure;~~ risks relating to the Company’s recent debt financing and other financing activities including increased leverage and issuing additional equity securities; risks relating to the management of growth; costs associated with Jushi being a publicly-traded ~~company; the Company being~~company and a U.S. ~~filer in addition to a~~and Canadian filer; increasing competition in the industry; risks associated towith cannabis products manufactured for human consumption including potential product recalls; reliance on key inputs, suppliers and skilled labor; reliance on manufacturers and contractors; risks of supply shortages or supply chain disruptions; cybersecurity risks; ~~ability and~~ constraints on marketing products; fraudulent activity by employees, contractors and consultants; tax and insurance related risks; risk of litigation; conflicts of interest; risks relating to certain remedies being limited and the difficulty of ~~enforcement of~~enforcing judgments and ~~effect~~effecting service outside of Canada; risks related to ~~executed~~completed, pending or future acquisitions or dispositions, including potential future impairment of goodwill or intangibles ~~acquired;~~acquired and/or post-closing disputes; sales of a significant amount of shares by existing shareholders; the limited market for securities of the Company; risks related to the continued performance of existing operations in California, Illinois, Massachusetts, Nevada, Ohio, Pennsylvania, ~~Illinois, Nevada, Virginia, California, Ohio~~ and ~~Massachusetts;~~Virginia; risks related to the anticipated openings of additional dispensaries or relocation of existing dispensaries; ~~the~~ risks relating to the expansion and optimization of the grower-processor in Pennsylvania, the vertically integrated facilities in Virginia and Massachusetts and the facility in Nevada; ~~the~~ risks related to ~~the~~ opening ~~of a~~ new facilities, ~~including but not limited to in Ohio and Illinois,~~ which ~~are~~is subject to licensing approval; ~~as well as~~ limited research and data relating to cannabis; risks related to challenges from governmental authorities of positions the Company has taken with respect to tax credits; and risks related to the Company’s critical accounting policies and estimates. Refer to Part I - Item 1A. Risk Factors in Jushi’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission on April 18, 2023 for more information.

Although Jushi has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such forward‐looking information ~~and statements~~ will prove to be accurate as actual results and future events could differ materially from those anticipated in such ~~information and statements.~~information. Accordingly, readers should not place undue reliance on the forward‐looking information ~~and statements.~~contained in this report or other forward-looking statements made by Jushi. Forward‐looking information ~~and statements are~~is provided and made as of the date of this Quarterly Report on Form 10-Q and Jushi does not undertake any obligation to revise or update any forward‐looking information or statements other than as required by applicable law.

Unless the context requires otherwise, references in this report to “Jushi,” “Company,” “we,” “us” and “our” refer to Jushi Holdings Inc. and our subsidiaries.

Table of Contents

PART I - FINANCIAL INFORMATION

1Item 1. Financial Statements

JUSHI HOLDINGS INC.

~~INTERIM~~ CONDENSED CONSOLIDATED BALANCE SHEETS

(inIn thousands of U.S. dollars, except share amounts)


		September 30, 2022 (unaudited)		December 31, 2021			September 30, 2023 (unaudited)		December 31, 2022
ASSETS	ASSETS					ASSETS
CURRENT ASSETS:	CURRENT ASSETS:					CURRENT ASSETS:
Cash and cash equivalents	Cash and cash equivalents	$	31,063	$	94,962	Cash and cash equivalents	$	25,011	$	26,196
Restricted cash - current						Restricted cash - current	3,308		—
Accounts receivable, net	Accounts receivable, net	3,375		3,200		Accounts receivable, net	6,063		4,809
Inventories, net		42,075		43,319
Inventory, net						Inventory, net	37,699		35,089
Prepaid expenses and other current assets	Prepaid expenses and other current assets	4,355		12,875		Prepaid expenses and other current assets	16,178		3,957
Total current assets	Total current assets	$	80,868	$	154,356	Total current assets	88,259		70,051
NON-CURRENT ASSETS:	NON-CURRENT ASSETS:					NON-CURRENT ASSETS:
Property, plant and equipment, net	Property, plant and equipment, net	$	181,134	$	137,280	Property, plant and equipment, net	163,681		177,755
Right-of use assets - finance leases		114,528		94,008
Right-of-use assets - finance leases						Right-of-use assets - finance leases	64,492		114,021
Other intangible assets, net	Other intangible assets, net	178,223		192,466		Other intangible assets, net	97,621		100,082
Goodwill	Goodwill	81,562		45,828		Goodwill	38,239		38,239
Other non-current assets		28,146		27,586
Non-current restricted cash		950		525
Other assets						Other assets	34,231		28,243
Restricted cash - non-current						Restricted cash - non-current	2,150		950
Total non-current assets	Total non-current assets	$	584,543	$	497,693	Total non-current assets	400,414		459,290
Total assets	Total assets	$	665,411	$	652,049	Total assets	$	488,673	$	529,341

LIABILITIES AND EQUITY	LIABILITIES AND EQUITY					LIABILITIES AND EQUITY
CURRENT LIABILITIES:	CURRENT LIABILITIES:					CURRENT LIABILITIES:
Accounts payable	Accounts payable	$	18,062	$	10,539	Accounts payable	$	20,359	$	21,313
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	44,102		47,972		Accrued expenses and other current liabilities	47,407		46,329
Income tax payable	Income tax payable	15,808		6,614		Income tax payable	4,134		19,921
Debt, net - current portion (including related party principal amounts of $3,476 as of September 30, 2022 and $3,384 as of December 31, 2021)		137,967		6,181
Debt, net - current portion (including related party principal amounts of $3,162 and $3,189 as of September 30, 2023 and December 31, 2022, respectively)						Debt, net - current portion (including related party principal amounts of $3,162 and $3,189 as of September 30, 2023 and December 31, 2022, respectively)	35,620		8,704
Finance lease obligations - current	Finance lease obligations - current	12,735		12,620		Finance lease obligations - current	8,740		11,361
Total current liabilities	Total current liabilities	$	228,674	$	83,926	Total current liabilities	116,260		107,628
NON-CURRENT LIABILITIES:	NON-CURRENT LIABILITIES:					NON-CURRENT LIABILITIES:
Non-current debt, net (including related party principal amounts of $0 as of September 30, 2022 and $1,194 as of December 31, 2021)		$	61,932	$	122,971
Debt, net - non-current (including related party principal amounts of $18,283 and $17,491 as of September 30, 2023 and December 31, 2022, respectively)						Debt, net - non-current (including related party principal amounts of $18,283 and $17,491 as of September 30, 2023 and December 31, 2022, respectively)	176,471		180,558
Finance lease obligations - non-current	Finance lease obligations - non-current	98,089		88,297		Finance lease obligations - non-current	52,899		102,375
Operating lease liabilities - non-current		15,637		15,163
Derivative liabilities	Derivative liabilities	19,801		92,435		Derivative liabilities	10,567		14,134
Income tax liabilities - non-current		62,402		60,051
Contingent consideration liabilities - non-current		1,418		8,223
Unrecognized tax benefits						Unrecognized tax benefits	98,948		57,200
Other liabilities - non-current						Other liabilities - non-current	25,696		21,555
Total non-current liabilities	Total non-current liabilities	$	259,279	$	387,140	Total non-current liabilities	364,581		375,822
Total liabilities	Total liabilities	$	487,953	$	471,066	Total liabilities	480,841		483,450
COMMITMENTS AND CONTINGENCIES (Note 21)
COMMITMENTS AND CONTINGENCIES (Note 18)						COMMITMENTS AND CONTINGENCIES (Note 18)
EQUITY:	EQUITY:					EQUITY:
Common stock, no par value; authorized shares - unlimited; issued and outstanding shares - 195,769,605 and 182,707,359 Subordinate Voting Shares as of September 30, 2022 and December 31, 2021, respectively		$	—	$	—
Common stock, no par value: authorized shares - unlimited; issued and outstanding shares - 196,631,598 and 196,686,372 Subordinate Voting Shares as of September 30, 2023 and December 31, 2022, respectively.						Common stock, no par value: authorized shares - unlimited; issued and outstanding shares - 196,631,598 and 196,686,372 Subordinate Voting Shares as of September 30, 2023 and December 31, 2022, respectively.	—		—
Paid-in capital	Paid-in capital	483,650		424,788		Paid-in capital	501,059		492,020
Accumulated deficit	Accumulated deficit	(304,805)		(242,418)		Accumulated deficit	(491,840)		(444,742)
Total Jushi shareholders' equity	Total Jushi shareholders' equity	$	178,845	$	182,370	Total Jushi shareholders' equity	9,219		47,278
Non-controlling interests	Non-controlling interests	(1,387)		(1,387)		Non-controlling interests	(1,387)		(1,387)
Total equity	Total equity	$	177,458	$	180,983	Total equity	7,832		45,891
Total liabilities and equity	Total liabilities and equity	$	665,411	$	652,049	Total liabilities and equity	$	488,673	$	529,341

The accompanying notes are an integral part of these unaudited ~~interim~~ condensed consolidated financial statements.

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JUSHI HOLDINGS INC.

UNAUDITED ~~INTERIM~~ CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)

(inIn thousands of U.S. dollars, except share and per share amounts)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			2023		2022		2023		2022
REVENUE, NET	REVENUE, NET	$	72,817	$	53,981	$	207,462	$	143,400	REVENUE, NET	$	65,377	$	72,817	$	201,675	$	207,462
COST OF GOODS SOLD	COST OF GOODS SOLD	(45,075)		(30,657)		(133,940)		(79,717)		COST OF GOODS SOLD	(36,863)		(45,075)		(112,666)		(133,940)
GROSS PROFIT	GROSS PROFIT	$	27,742	$	23,324	$	73,522	$	63,683	GROSS PROFIT	28,514		27,742		89,009		73,522

OPERATING EXPENSES	OPERATING EXPENSES									OPERATING EXPENSES
Selling, general and administrative	Selling, general and administrative	$	40,590	$	25,147	$	117,048	$	73,415	Selling, general and administrative	25,688		40,590		85,294		117,048
Indefinite-lived asset impairment	Indefinite-lived asset impairment	37,600		—		37,600		—		Indefinite-lived asset impairment	—		37,600		—		37,600
Total operating expenses	Total operating expenses	$	78,190	$	25,147	$	154,648	$	73,415	Total operating expenses	25,688		78,190		85,294		154,648

LOSS FROM OPERATIONS		$	(50,448)	$	(1,823)	$	(81,126)	$	(9,732)
INCOME (LOSS) FROM OPERATIONS										INCOME (LOSS) FROM OPERATIONS	2,826		(50,448)		3,715		(81,126)

OTHER (EXPENSE) INCOME:
OTHER INCOME (EXPENSE):										OTHER INCOME (EXPENSE):
Interest expense, net	Interest expense, net	$	(13,111)	$	(7,442)	$	(34,174)	$	(21,145)	Interest expense, net	(9,345)		(13,111)		(27,655)		(34,174)
Fair value gains on derivatives		6,352		55,059		63,233		66,800
Fair value (loss) gain on derivatives										Fair value (loss) gain on derivatives	(7,460)		6,352		1,660		63,233
Other, net	Other, net	(291)		221		(361)		(3,643)		Other, net	1,368		(291)		1,887		(361)
Total other (expense) income, net		$	(7,050)	$	47,838	$	28,698	$	42,012
Total other income (expense), net										Total other income (expense), net	(15,437)		(7,050)		(24,108)		28,698

(LOSS) INCOME BEFORE INCOME TAX		$	(57,498)	$	46,015	$	(52,428)	$	32,280
Income tax benefit (expense)		2,802		(6,333)		(9,959)		(21,012)
NET (LOSS) INCOME AND COMPREHENSIVE (LOSS) INCOME		$	(54,696)	$	39,682	$	(62,387)	$	11,268
LOSS BEFORE INCOME TAX										LOSS BEFORE INCOME TAX	(12,611)		(57,498)		(20,393)		(52,428)
Income tax (expense) benefit										Income tax (expense) benefit	(8,011)		2,802		(26,705)		(9,959)
NET LOSS AND COMPREHENSIVE LOSS										NET LOSS AND COMPREHENSIVE LOSS	(20,622)		(54,696)		(47,098)		(62,387)
Less: net loss attributable to non-controlling interests	Less: net loss attributable to non-controlling interests	—		(62)		—		(427)		Less: net loss attributable to non-controlling interests	—		—		—		—
NET (LOSS) INCOME AND COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO JUSHI SHAREHOLDERS		$	(54,696)	$	39,744	$	(62,387)	$	11,695
(LOSS) EARNINGS PER SHARE ATTRIBUTABLE TO JUSHI SHAREHOLDERS - BASIC		$	(0.28)	$	0.23	$	(0.33)	$	0.07
NET LOSS AND COMPREHENSIVE LOSS ATTRIBUTABLE TO JUSHI SHAREHOLDERS										NET LOSS AND COMPREHENSIVE LOSS ATTRIBUTABLE TO JUSHI SHAREHOLDERS	$	(20,622)	$	(54,696)	$	(47,098)	$	(62,387)

LOSS PER SHARE ATTRIBUTABLE TO JUSHI SHAREHOLDERS - BASIC										LOSS PER SHARE ATTRIBUTABLE TO JUSHI SHAREHOLDERS - BASIC	$	(0.11)	$	(0.28)	$	(0.24)	$	(0.33)
Weighted average shares outstanding - basic	Weighted average shares outstanding - basic	192,880,468		168,801,193		189,119,282		163,345,527		Weighted average shares outstanding - basic	195,128,096		192,880,468		194,649,053		189,119,282
(LOSS) EARNINGS PER SHARE ATTRIBUTABLE TO JUSHI SHAREHOLDERS - DILUTED		$	(0.30)	$	(0.08)	$	(0.61)	$	(0.28)
LOSS PER SHARE ATTRIBUTABLE TO JUSHI SHAREHOLDERS - DILUTED										LOSS PER SHARE ATTRIBUTABLE TO JUSHI SHAREHOLDERS - DILUTED	$	(0.11)	$	(0.30)	$	(0.24)	$	(0.61)
Weighted average shares outstanding - diluted	Weighted average shares outstanding - diluted	203,169,931		199,281,152		205,695,590		195,942,078		Weighted average shares outstanding - diluted	195,128,096		203,169,931		194,649,053		205,695,590

The accompanying notes are an integral part of these unaudited ~~interim~~ condensed consolidated financial statements.

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JUSHI HOLDINGS INC.

UNAUDITED ~~INTERIM~~ CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(inIn thousands of U.S. dollars, except share amounts)

Number of Shares Paid-In Capital Accumulated Deficit Total Jushi Shareholders' Equity Non-Controlling Interests Total Equity
Super Voting Shares Multiple Voting Shares Subordinate Voting Shares
Balances - January 1, 2022 — — 182,707,359 $ 424,788 $ (242,418) $ 182,370 $ (1,387) $ 180,983
Private placement offerings — — 3,717,392 13,680 — 13,680 — 13,680
Shares issued for Apothecarium acquisition — — 527,704 1,594 — 1,594 — 1,594
Shares issued for restricted stock grants — — 5,952 — — — — —
Shares issued upon exercise of warrants — — 2,676,303 9,693 — 9,693 — 9,693
Shares issued upon exercise of stock options — — 93,915 — — — — —
Share-based compensation — — — 6,964 — 6,964 — 6,964
Net loss — — — — (19,757) (19,757) — (19,757)
Balances - March 31, 2022 — — 189,728,625 $ 456,719 $ (262,175) $ 194,544 $ (1,387) $ 193,157
Shares issued for NuLeaf acquisition — — 4,662,384 13,573 — 13,573 — 13,573
Shares issued for service received — — 101,082 294 — 294 — 294
Shares issued upon exercise of warrants — — 167,560 322 — 322 — 322
Shares issued upon exercise of stock options — — 1,294 — — — — —
Shares canceled upon forfeiture of non-vested restricted stock — — (7,813) — — — — —
Share-based compensation — — — 4,684 — 4,684 — 4,684
Net income — — — — 12,066 12,066 — 12,066
Balances - June 30, 2022 — — 194,653,132 $ 475,592 $ (250,109) $ 225,483 $ (1,387) $ 224,096
Shares issued for settlement of NuLeaf contingent consideration — — 888,880 1,529 — 1,529 — 1,529
Shares issued for service received — — 13,334 23 — 23 — 23
Shares issued for restricted stock grants — — 81,000 — — — — —
Shares issued upon exercise of warrants — — 332,738 564 — 564 — 564
Shares issued upon exercise of stock options — — 20,000 26 — 26 — 26
Shares canceled upon forfeiture of non-vested restricted stock — — (219,479) — — — — —
Collection of note receivable from employee shareholder — — — 450 — 450 — 450
Share-based compensation — — — 5,466 — 5,466 — 5,466
Net loss — — — — (54,696) (54,696) — $ (54,696)
Balances - September 30, 2022 — — 195,769,605 $ 483,650 $ (304,805) $ 178,845 $ (1,387) $ 177,458


	Nine Months Ended September 30, 2023
		Paid-In Capital		Accumulated Deficit		Total Jushi Shareholders' Equity		Non-Controlling Interests		Total Equity
	Subordinate Voting Shares
Balances - January 1, 2023	196,686,372	$	492,020	$	(444,742)	$	47,278	$	(1,387)	$	45,891
Shares canceled upon forfeiture of restricted stock, net of restricted stock grants	(53,001)	—		—		—		—		—
Share-based compensation (including related parties)	—	2,311		—		2,311		—		2,311
Net loss	—	—		(12,440)		(12,440)		—		(12,440)
Balances - March 31, 2023	196,633,371	494,331		(457,182)		37,149		(1,387)		35,762
Modification and reclassification of warrants	—	3,391		—		3,391		—		3,391
Share-based compensation (including related parties)	—	2,363		—		2,363		—		2,363
Net loss	—	—		(14,036)		(14,036)		—		(14,036)
Balances - June 30, 2023	196,633,371	500,085		(471,218)		28,867		(1,387)		27,480
Shares canceled upon forfeiture of restricted stock, net of restricted stock grants	(1,773)	—		—		—		—		—
Share-based compensation (including related parties)	—	1,056		—		1,056		—		1,056
Cashless exercise of options	—	(282)		—		(282)		—		(282)
Issuance of warrants	—	200		—		200		—		200
Net loss	—	—		(20,622)		(20,622)		—		(20,622)
Balances - September 30, 2023	196,631,598	$	501,059	$	(491,840)	$	9,219	$	(1,387)	$	7,832

~~The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.~~

Table of Contents

JUSHI HOLDINGS INC.

UNAUDITED ~~INTERIM~~ CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(inIn thousands of U.S. dollars, except share amounts)

Number of Shares Paid-In Capital Accumulated Deficit Total Jushi Shareholders' Equity Non-Controlling Interests Total Equity
Super Voting Shares Multiple Voting Shares Subordinate Voting Shares
Balances - January 1, 2021 149,000 4,000,000 132,396,064 $ 262,145 $ (262,669) $ (524) $ 2,947 $ 2,423
Public offerings — — 13,685,000 85,660 — 85,660 — 85,660
Purchase of non-controlling interests — — 500,000 1,562 — 1,562 (1,562) —
Shares issued for Grover Beach acquisition — — 49,348 368 — 368 — 368
Shares issued upon exercise of warrants — — 3,898,180 13,135 — 13,135 — 13,135
Shares issued upon exercise of stock options — — 15,000 30 — 30 — 30
Share-based compensation — — — 4,013 — 4,013 — 4,013
Net loss — — — — (30,876) (30,876) (175) (31,051)
Balances - March 31, 2021 149,000 4,000,000 150,543,592 $ 366,913 $ (293,545) $ 73,368 $ 1,210 $ 74,578
Shares issued for restricted stock grants — — 34,815 — — — — —
Shares issued upon exercise of warrants — — 1,476,869 3,144 — 3,144 — 3,144
Shares issued upon exercise of stock options — — 14,173 20 — 20 — 20
Share-based compensation — — — 2,733 — 2,733 — 2,733
Net income (loss) — — — — 2,826 2,826 (190) 2,636
Balances - June 30, 2021 149,000 4,000,000 152,069,449 $ 372,810 $ (290,719) $ 82,091 $ 1,020 $ 83,111
Conversion of Super Voting Shares and Multiple Voting Shares (149,000) (4,000,000) 18,900,000 — — — — —
Acquisition of Nature’s Remedy — — 8,700,000 35,670 — 35,670 — 35,670
Shares issued upon exercise of warrants — — 2,437,974 5,189 — 5,189 — 5,189
Shares issued upon exercise of stock options — — 96,851 62 — 62 — 62
Share-based compensation — — — 2,234 — 2,234 2,234
Net income (loss) — — — — 39,744 39,744 (62) 39,682
Balances - September 30, 2021 — — 182,204,274 $ 415,965 $ (250,975) $ 164,990 $ 958 $ 165,948


	Nine Months Ended September 30, 2022
		Paid-In Capital		Accumulated Deficit		Total Jushi Shareholders' Equity		Non-Controlling Interests		Total Equity
	Subordinate Voting Shares
Balances - January 1, 2022	182,707,359	$	424,788	$	(242,418)	$	182,370	$	(1,387)	$	180,983
Private placement offerings	3,717,392	13,680		—		13,680		—		13,680
Shares issued for Apothecarium acquisition	527,704	1,594		—		1,594		—		1,594
Shares issued for restricted stock grants	5,952	—		—		—		—		—
Shares issued upon exercise of warrants	2,676,303	9,693		—		9,693		—		9,693
Shares issued upon exercise of stock options	93,915	—		—		—		—		—
Share-based compensation (including related parties)	—	6,964		—		6,964		—		6,964
Net loss	—	—		(19,757)		(19,757)		—		(19,757)
Balances - March 31, 2022	189,728,625	456,719		(262,175)		194,544		(1,387)		193,157
Shares issued for NuLeaf acquisition	4,662,384	13,573		—		13,573		—		13,573
Shares issued for services received	101,082	294		—		294		—		294
Shares issued upon exercise of warrants	167,560	322		—		322		—		322
Shares issued upon exercise of stock options	1,294	—		—		—		—		—
Shares canceled upon forfeiture of non-vested restricted stock	(7,813)	—		—		—		—		—
Share-based compensation (including related parties)	—	4,684		—		4,684		—		4,684
Net income	—	—		12,066		12,066		—		12,066
Balances - June 30, 2022	194,653,132	475,592		(250,109)		225,483		(1,387)		224,096
Shares issued for settlement of NuLeaf contingent consideration	888,880	1,529		—		1,529		—		1,529
Shares issued for service received	13,334	23		—		23		—		23
Shares issued for restricted stock grants	81,000	—		—		—		—		—
Shares issued upon exercise of warrants	332,738	564		—		564		—		564
Shares issued upon exercise of stock options	20,000	26		—		26		—		26
Shares canceled upon forfeiture of non-vested restricted stock	(219,479)	—		—		—		—		—
Collection of note receivable from employee shareholder	—	450		—		450		—		450
Share-based compensation (including related parties)	—	5,466		—		5,466		—		5,466
Net loss	—	—		(54,696)		(54,696)		—		(54,696)
Balances - September 30, 2022	195,769,605	$	483,650	$	(304,805)	$	178,845	$	(1,387)	$	177,458

The accompanying notes are an integral part of these unaudited ~~interim~~ condensed consolidated financial statements.

~~Table of Contents~~

JUSHI HOLDINGS INC.

UNAUDITED ~~INTERIM~~ CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(inIn thousands of U.S. dollars)


		Nine Months Ended September 30,					Nine Months Ended September 30,
		2022		2021			2023		2022
CASH FLOWS FROM OPERATING ACTIVITIES:	CASH FLOWS FROM OPERATING ACTIVITIES:					CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income		$	(62,387)	$	11,268
Net loss						Net loss	$	(47,098)	$	(62,387)
Adjustments to reconcile net loss to net cash used in operating activities:	Adjustments to reconcile net loss to net cash used in operating activities:					Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization, including amounts in cost of goods sold		15,663		5,285
Depreciation and amortization						Depreciation and amortization	19,780		15,663
Share-based compensation	Share-based compensation	17,114		8,981		Share-based compensation	5,730		17,114
Fair value changes in derivatives	Fair value changes in derivatives	(63,233)		(66,800)		Fair value changes in derivatives	(1,660)		(63,233)
Non-cash interest expense, including amortization of deferred financing costs		15,599		11,593
Deferred income taxes		(13,155)		(6,571)
Loss on debt modification/extinguishment/redemption		—		3,815
Non-cash interest expense, including amortization of debt issuance costs						Non-cash interest expense, including amortization of debt issuance costs	4,603		15,599
Deferred income taxes and uncertain tax positions						Deferred income taxes and uncertain tax positions	19,831		(13,155)

Indefinite-lived asset impairment	Indefinite-lived asset impairment	37,600		—		Indefinite-lived asset impairment	—		37,600

Other non-cash items, net	Other non-cash items, net	1,890		(1,535)		Other non-cash items, net	2,910		1,890
Changes in operating assets and liabilities, net of acquisitions:
Changes in operating assets and liabilities:						Changes in operating assets and liabilities:
Accounts receivable	Accounts receivable	(69)		(812)		Accounts receivable	(1,511)		(69)
Inventory	Inventory	8,843		(16,202)		Inventory	(8,080)		8,843
Prepaid expenses and other current assets		1,657		(435)
Other assets		966		601
Prepaid expenses and other current and non-current assets						Prepaid expenses and other current and non-current assets	564		2,623

Accounts payable, accrued expenses and other current liabilities	Accounts payable, accrued expenses and other current liabilities	13,313		27,032		Accounts payable, accrued expenses and other current liabilities	(2,896)		13,313
Net cash flows used in operating activities	Net cash flows used in operating activities	$	(26,199)	$	(23,780)	Net cash flows used in operating activities	(7,827)		(26,199)
CASH FLOWS FROM INVESTING ACTIVITIES:	CASH FLOWS FROM INVESTING ACTIVITIES:					CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for acquisitions, net of cash acquired	Payments for acquisitions, net of cash acquired	$	(20,892)	$	(47,308)	Payments for acquisitions, net of cash acquired	—		(20,892)
Payments for settlement of contingent consideration liability	Payments for settlement of contingent consideration liability	(3,000)		—		Payments for settlement of contingent consideration liability	—		(3,000)
Payments for property, plant and equipment	Payments for property, plant and equipment	(49,230)		(55,285)		Payments for property, plant and equipment	(8,385)		(49,230)
Proceeds from investments and financial asset		—		3,252
Proceeds from sale of property, plant and equipment						Proceeds from sale of property, plant and equipment	2,321		—
Net cash flows used in investing activities	Net cash flows used in investing activities	$	(73,122)	$	(99,341)	Net cash flows used in investing activities	(6,064)		(73,122)
CASH FLOWS FROM FINANCING ACTIVITIES:	CASH FLOWS FROM FINANCING ACTIVITIES:					CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of shares, net	Proceeds from issuance of shares, net	$	13,680	$	85,660	Proceeds from issuance of shares, net	—		13,680
Proceeds from exercise of warrants and options						Proceeds from exercise of warrants and options	—		1,248
Collection of note receivable from employee shareholder						Collection of note receivable from employee shareholder	—		450
Proceeds from acquisition facility						Proceeds from acquisition facility	—		25,000
Redemption of senior notes (including related party redemptions of $0 and $8 for the nine months ended September 30, 2023 and 2022, respectively)						Redemption of senior notes (including related party redemptions of $0 and $8 for the nine months ended September 30, 2023 and 2022, respectively)	—		(258)
Payments on acquisition related credit facility, net						Payments on acquisition related credit facility, net	(2,438)		—
Payments of finance leases, net of tenant allowance of $0 and $10,065 for the nine months ended September 30, 2023 and 2022, respectively						Payments of finance leases, net of tenant allowance of $0 and $10,065 for the nine months ended September 30, 2023 and 2022, respectively	(2,761)		(7,948)
Proceeds from mortgage loans						Proceeds from mortgage loans	21,900		—

Proceeds from exercise of warrants and options		1,248		16,438

Collection of note receivable from employee shareholder		450		—
Proceeds from acquisition facility, net of financing costs of $793		24,207		—
Redemptions of senior notes (including related party redemptions of $8 and $3,072 for nine months ended September 30, 2022 and 2021, respectively)		(258)		(8,134)
Payments of acquisition promissory notes		—		(1,689)
(Payments of) proceeds from finance leases, net of tenant allowance of $10,065 and $15,146 for the nine months ended September 30, 2022 and 2021, respectively		(7,948)		(3,343)
Proceeds from other debt		5,233		3,160
Repayments of other debt		(532)		(298)

Payments of loan financing costs						Payments of loan financing costs	(250)		(793)
Repayments of mortgage loans						Repayments of mortgage loans	(160)		(189)
Proceeds from other financing activities						Proceeds from other financing activities	3,295		5,233
Payments of other financing activities						Payments of other financing activities	(2,372)		(343)
Net cash flows provided by financing activities	Net cash flows provided by financing activities	$	36,080	$	91,794	Net cash flows provided by financing activities	17,214		36,080
Effect of currency translation on cash and cash equivalents	Effect of currency translation on cash and cash equivalents	(233)		42		Effect of currency translation on cash and cash equivalents	—		(233)
NET CHANGE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH		$	(63,474)	$	(31,285)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD		95,487		85,857
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD		$	32,013	$	54,572
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH						NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	3,323		(63,474)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD						CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD	27,146		95,487
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD						CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD	$	30,469	$	32,013

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.						The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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JUSHI HOLDINGS INC.

UNAUDITED ~~INTERIM~~ CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(inIn thousands of U.S. dollars)


		Nine Months Ended September 30,					Nine Months Ended September 30,
		2022		2021			2023		2022
SUPPLEMENTAL CASH FLOW INFORMATION:	SUPPLEMENTAL CASH FLOW INFORMATION:					SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest (excluding capitalized interest)	Cash paid for interest (excluding capitalized interest)	$	19,793	$	10,445	Cash paid for interest (excluding capitalized interest)	$	22,159	$	19,793
Cash paid for income taxes	Cash paid for income taxes	$	11,205	$	6,082	Cash paid for income taxes	3,145		11,205
NON-CASH INVESTING AND FINANCING ACTIVITIES:	NON-CASH INVESTING AND FINANCING ACTIVITIES:					NON-CASH INVESTING AND FINANCING ACTIVITIES:
Capital expenditures		$	11,173	$	4,640
Right of use assets from finance lease liabilities (excluding from acquisitions), net of tenant allowance receivable of $0 and $6,701 for the nine months ended September 30, 2022 and 2021, respectively		$	2,960	$	46,142
Debt and equity issued for services received		$	702	$	—
Capital expenditure and related accruals						Capital expenditure and related accruals	1,920		11,173
Right-of-use assets obtained in exchange for new finance lease liabilities						Right-of-use assets obtained in exchange for new finance lease liabilities	1,001		2,960

Issuance of second lien notes for settlement of accrued bonus						Issuance of second lien notes for settlement of accrued bonus	750		—
Fair value of note obligations from acquisitions and acquisitions of non-controlling interests						Fair value of note obligations from acquisitions and acquisitions of non-controlling interests	—		19,782
Fair value of shares issued for acquisitions and acquisitions of non-controlling interests						Fair value of shares issued for acquisitions and acquisitions of non-controlling interests	—		15,167
Debt and shares issued for services received						Debt and shares issued for services received	—		702

The accompanying notes are an integral part of these unaudited ~~interim~~ condensed consolidated financial statements.

Table of Contents


JUSHI HOLDINGS INC. Notes to the Unaudited ~~Interim~~ Condensed Consolidated Financial Statements (Amounts Expressed in Thousands of ~~United States Dollars, Unless Otherwise Stated)~~U.S. dollars, Except Share and Per Share Amounts)


1. NATURE OF OPERATIONS

Jushi Holdings Inc. (the “Company” or “Jushi”) is incorporated under the British Columbia’s Business Corporations Act. The Company is a vertically integrated, multi-state cannabis operator engaged in retail, distribution, cultivation, and processing ~~operations~~ in both medical and adult-use markets. As of September 30, ~~2022,~~2023, Jushi, through its subsidiaries, owns or manages cannabis operations and/or holds licenses in the adult-use and/or medicinal cannabis marketplace in California, Illinois, ~~Pennsylvania, Virginia,~~ Massachusetts, Nevada, ~~California~~Ohio, Pennsylvania and ~~Ohio.~~Virginia. The Company’s head office is located at 301 Yamato Road, Suite 3250, Boca Raton, Florida 33431, ~~U.S.A.,~~United States of America, and its registered address is Suite 1700, Park Place, 666 Burrard Street, Vancouver, British Columbia V6C 2X8, Canada.

The Company is listed on the Canadian Securities Exchange (“CSE”) and trades its subordinate voting shares (“SVS”) under the ticker symbol ~~“JUSH"~~“JUSH”, and trades on the United States Over the Counter Stock Market (“OTCQX”) under the symbol ~~JUSHF.~~ ~~The~~ Company’s Registration Statement on Form S-1, initially filed with the U.S. Securities and Exchange Commission (“SEC”) on July 22, 2022, as amended on August 8, 2022, was declared effective by the SEC on August 12, 2022 (the “S-1”)“JUSHF”.


2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Consolidation

The ~~accompanying unaudited interim condensed consolidated~~ financial statements ~~present the consolidated financial position and operations of Jushi Holdings Inc. and its subsidiaries and entities over which the Company has control,~~have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information and in accordance with the rules and regulations of the ~~SEC.~~U.S. Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and footnotes. Actual results could differ materially from those estimates.

In the opinion of management, the unaudited ~~interim condensed~~ consolidated financial statements include all adjustments, of a normal recurring nature, that are necessary to present fairly the financial position, results of operations and cash flows of the Company for the periods, and at the dates, presented. The results for interim periods are not necessarily indicative of results that may be expected for any other interim period or for the full year.

These unaudited ~~interim~~ condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, ~~2021,~~2022, which are included in the Company’s ~~S-1,~~Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on April 18, 2023 (the “2022 Form 10-K”), and was also filed on the System for Electronic Document Analysis and Retrieval (“SEDAR”) on ~~November 21, 2022.~~April 18, 2023. Consolidated balance sheet information as of December 31, ~~2021~~2022 presented herein is derived from the Company’s audited consolidated financial statements for the year ended December 31, ~~2021.~~2022.

These unaudited interim condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern. GAAP requires an entity to look forward 12 months from the date the financial statements are issued, (the “look-forward” period) when assessing whether the going concern assumption can be used. The going concern assumption contemplates the realization of assetsGoing Concern and ~~satisfaction of liabilities in the normal course of business.~~Liquidity

As reflected in ~~these unaudited interim condensed consolidated financial statements,~~the 2022 Form 10-K, the Company ~~has~~ incurred ~~losses~~a loss from operations of $220,333, including non-cash impairment charges of $159,645, and used net cash of $21,416 for operating activities for the year ended December 31, 2022, and as of that date, the Company’s current liabilities exceeded its current assets by $37,577. Furthermore, the Company used cash of $7,827 for operating activities for the nine months ended September 30, ~~2022,~~2023, and ~~has an accumulated deficit of $304,805~~ as of that date, the Company’s current liabilities exceeded its current assets by $28,001. Such current liabilities as of September 30, ~~2022. As discussed~~2023 include aggregate contractual maturities of $19,662 of debt that is subject to indemnity claims in favor of the Company and not currently expected to be paid in cash within the next twelve months. Refer to Note 109 - Debt for more information. Since inception, management has focused on building a diverse portfolio of assets in attractive markets to vertically integrate its business. As such, the ~~Company’s 10% senior notes (the “Senior Notes”), which~~Company has incurred losses as it expanded its operations. Management has put in place plans to increase the profitability of ~~September 30, 2022 had an aggregate principal amount outstanding of $74,935, mature on January 15,~~the business in fiscal year 2023 and ~~the Acquisition Facility, which as of September 30, 2022 had an outstanding balance of $65,000 (refer~~beyond. In order to ~~Note 10 - Debt), required the Company to maintain certain covenants which the Company may not have been~~achieve profitable future operations, management has commercialized production from its recently expanded grower-processing facilities in ~~compliance with if the~~

Table of Contents


JUSHI HOLDINGS INC. Notes to the Unaudited ~~Interim~~ Condensed Consolidated Financial Statements (Amounts Expressed in Thousands of ~~United States Dollars, Unless Otherwise Stated)~~U.S. dollars, Except Share and Per Share Amounts)

~~Swiss courts accepted Jushi Europe’s petition for bankruptcy (refer to Note 16 - Non-Controlling Interests). Prior to~~Pennsylvania and Virginia, as well as implemented a cost-savings and efficiency optimization plan which includes, among other things, reduction in labor and packaging costs as well as operating efficiencies at the amendment with the lender of the Acquisition Facility, the Company was also projected to violate certain financial covenants. In April 2022, the Company entered into an amendment with the lender of the Acquisition Facility, which included a waiver related to Jushi Europe’s bankruptcyCompany’s retail and ~~a change to the terms of the Total Leverage Ratio, as defined~~grower-processing facilities.

As concluded in the Acquisition Facility agreement, and deferred the commencement date of leverage testing under the Acquisition Facility to the quarter ending March 31, 2023. Additionally, the overall slowdown in the cannabis industry during 2022 has resulted in lower forecasted earnings for the Company during the look-forward period. The look-forward period also contemplates favorable regulatory changes in certain states in which the Company operates. The Company is at risk of not meeting its forecasted earnings and as a result may not be in compliance with certain financial covenants under the Acquisition Facility, as amended, during the look-forward period. As a result, the Company has classified the outstanding balance of $65,000 under the Acquisition Facility as of September 30, 2022 as a current liability. These conditions raise Form 10-K, substantial doubt ~~regarding~~existed about the Company’s ability to continue as a going concern, ~~during~~and, as a result of the ~~look-forward period.~~

~~The Company is pursuing strategies~~above, substantial doubt continues to ~~obtain~~exist within the ~~required additional funding primarily~~next twelve months from the date these financial statements are issued. Management intends to fund the ~~Senior Notes~~Company’s operations, capital expenditures and debt service with existing cash and cash equivalents on hand, cash generated from operations, including anticipated refunds from the Internal Revenue Service (“IRS”) relating to employee retention credit claims, and, as needed, future ~~operations. These strategies may include, but are not limited to: (i) ongoing efforts with various lenders~~financing (equity and/or debt) as well as the potential sales of non-core assets. The ability to refinance the Senior Notes (refer to Note 23 - Subsequent Events for updates on the refinancing); (ii) renegotiating the financial covenants contained in the Acquisition Facility, including the removalcontinue as a going concern is dependent upon profitable future operations and positive cash flows from operations as well as future financing and/or sales of ~~the Total Leverage Ratio requirement; (iii) deferral of certain expenditures, including capital projects, and reallocation of funds for debt repayment,~~assets if the need arises; and (iv) obtaining alternative sources of financing, including debt financing through secured borrowings and equity financing through a base shelf prospectus, which allows the Company to offer up to C$500,000 in securities in Canada through the end of 2023. However, there can benecessary. There is no assurance that the Company will be ~~able to refinance the Senior Notes, renegotiate the financial covenants under the Acquisition Facility,~~successful in this or any of its endeavors or become financially viable and continue as ~~amended, generate positive results from operations, or obtain additional liquidity when needed or under acceptable terms, if at all.~~a going concern.

~~Correction of Errors in Previously Issued Financial Statements~~

In November 2022, the Company identified an error in the appraised value of the business licenses acquired in connection with the acquisition of Nature’s Remedy in September 2021, which was used in the purchase price allocation (Refer to Note 7 - Acquisitions~~for additional information).~~ The ~~appraised value of the business licenses was determined with the assistance of a third-party valuation firm, which used an~~ ~~incorrect input in the valuation model~~. The impact of the error was a $10,000 understatement of indefinite-lived intangible assets - license, a $7,092 overstatement of goodwill, and a $2,908 understatement of income tax liabilities – non-current on the Company’s auditedunaudited consolidated financial statements ascontained herein have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of ~~and~~business for the ~~year ended December 31, 2021, unaudited interim condensed consolidated financial statements as~~foreseeable future, and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or amounts and ~~for~~classification of liabilities that may result from the ~~three months ended March 31, 2022, and unaudited interim condensed consolidated financial statements as~~outcome of ~~and for the three and six months ended June 30, 2022.~~

~~The Company revised its condensed consolidated balance sheet as of December 31, 2021, March 31, 2022 and June 30, 2022 as summarized in the table below:~~

~~Table of Contents~~


~~JUSHI HOLDINGS INC.~~ ~~Notes to the Unaudited Interim Condensed Consolidated Financial Statements~~ ~~(Amounts Expressed in Thousands of United States Dollars, Unless Otherwise Stated)~~

December 31, 2021 March 31, 2022 (unaudited) June 30, 2022 (unaudited)
As Previously Reported As Revised As Previously Reported As Revised As Previously Reported As Revised
Other intangible assets, net $ 182,466 $ 192,466 $ 189,931 $ 199,931 $ 206,742 $ 216,742
Goodwill $ 52,920 $ 45,828 $ 61,392 $ 54,300 $ 88,654 $ 81,562
Total non-current assets $ 494,785 $ 497,693 $ 534,011 $ 536,919 $ 610,586 $ 613,494
Total assets $ 649,141 $ 652,049 $ 656,644 $ 659,552 $ 707,858 $ 710,766
Income tax liabilities - non-current $ 57,143 $ 60,051 $ 58,372 $ 61,280 $ 68,193 $ 71,101
Total non-current liabilities $ 384,232 $ 387,140 $ 315,148 $ 318,056 $ 327,186 $ 330,094
Total liabilities $ 468,158 $ 471,066 $ 463,487 $ 466,395 $ 483,762 $ 486,670
Total liabilities and equity $ 649,141 $ 652,049 $ 656,644 $ 659,552 $ 707,858 $ 710,766
this uncertainty.

Summary of Significant Accounting Policies

The Company’s significant accounting policies are described in Note 2 in the audited consolidated financial statements and notes thereto for the year ended December 31, ~~2021,~~2022, which is included in the ~~Company’s S-1, and was also filed on SEDAR. There~~2022 Form 10-K. Except as disclosed below, there have been no material changes to the Company’s significant accounting policies.

~~COVID-19~~

~~During~~Cash, Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the ~~three and~~ ~~nine months ended September 30, 2022~~,consolidated balance sheets that sum to the Company’s financial condition and results of operations were not materially impacted by COVID-19. The extent to which the COVID-19 pandemic impacts the Company’s future results will depend on future developments, which are highly uncertain and cannot be predicted with certainty, including possible future outbreaks of new strainstotal of the ~~virus~~same such amounts shown in the consolidated statements of cash flows:


	September 30, 2023 (unaudited)		December 31, 2022
Cash and cash equivalents	$	25,011	$	26,196
Restricted cash - current (1)	3,308		—
Restricted cash - non-current (1)	2,150		950
Cash, cash equivalents and restricted cash	$	30,469	$	27,146

(1)Restricted cash primarily relates to the Manassas Mortgage. Refer to Note 9 - Debt for more information.

Reclassification of Prior Year Presentation

Certain prior year amounts in the consolidated statements of cash flows have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported amounts of operating, investing and ~~governmental and consumer responses to such future developments.~~financing activities.

~~Emerging Growth Company~~

As an emerging growth company (“EGC”), the Jumpstart Our Business Startups Act (“JOBS Act”) allows the Company to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are applicable to private companies. The Company has elected to use this extended transition period under the JOBS Act until such time the Company is no longer considered to be an EGC. The adoption dates discussed below reflect this election.

Recent Accounting Pronouncements

~~Adoption of New Accounting Standards~~

~~In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-04,~~ ~~Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (ASU 2017-04)~~. The FASB issued guidance eliminates the performance of Step 2 from the goodwill impairment test. In performing its annual or interim impairment testing, an entity will instead compare the fair value of the reporting unit with its carrying amount and recognize any impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. Additionally, an entity should consider income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss. The amendments in this ASU are effective for the Company for fiscal years beginning after December 15, 2022 with early adoption permitted, as amended by ASU 2019-10, ~~Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842)~~ ~~and ASU 2021-03,~~ ~~Intangibles—Goodwill and Other (Topic 350)~~.

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~~JUSHI HOLDINGS INC.~~ ~~Notes to the Unaudited Interim Condensed Consolidated Financial Statements~~ ~~(Amounts Expressed in Thousands of United States Dollars, Unless Otherwise Stated)~~

~~The Company early adopted ASU 2017-04 in 2022. See Note 8 - Goodwill and Other Intangible Assets for additional information.~~

~~In May 2021, the FASB issued ASU 2021-04,~~ Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. The FASB issued guidance to clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. The amendments in this ASU are effective for annual and interim periods beginning after December 15, 2021. The adoption of the standard did not have a material impact on the Company’s consolidated financial statements.

Accounting Standards Issued But Not Yet Adopted

In June 2020, the ~~FASB~~Financial Accounting Standards Board (“FASB”) issued ASU 2020-06 Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies accounting for

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JUSHI HOLDINGS INC. Notes to the Unaudited Condensed Consolidated Financial Statements (Amounts Expressed in Thousands of U.S. dollars, Except Share and Per Share Amounts)

convertible instruments by removing major separation models required under current GAAP. This ASU also removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and simplifies the diluted earnings per share calculation in certain areas. The amendments in this ASU are effective for annual and interim periods beginning after December 15, 2023, although early adoption is permitted. The Company is in the process of evaluating the impact of this new guidance on its consolidated financial statements.

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The FASB issued guidance requires that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. At the acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts. To achieve this, an acquirer may assess how the acquiree applied Topic 606 to determine what to record for the acquired revenue contracts. Generally, this should result in an acquirer recognizing and measuring the acquired contract assets and contract liabilities consistent with how they were recognized and measured in the acquiree’s financial statements (if the acquiree prepared financial statements in accordance with generally accepted accounting principles). The amendments in this ASU are effective for annual and interim periods beginning after December 15, 2023, although early adoption is permitted. The Company is in the process of evaluating the impact of this new guidance on its consolidated financial statements.

In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. The FASB issued guidance clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The amendments also clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. The amendments in this ASU are effective for annual and interim periods beginning after December 15, 2023, although early adoption is permitted. The Company is in the process of evaluating the impact of this new guidance on its consolidated financial statements.

In March 2023, the FASB issued ASU 2023-01, Leases (Topic 842): Common Control Arrangements. The FASB issued guidance clarifies the accounting for leasehold improvements associated with common control leases, by requiring that leasehold improvements associated with common control leases be amortized by the lessee over the useful life of the leasehold improvements to the common control group (regardless of the lease term) as long as the lessee controls the use of the underlying asset through a lease. Additionally, leasehold improvements associated with common control leases should be accounted for as a transfer between entities under common control through an adjustment to equity if, and when, the lessee no longer controls the use of the underlying asset. The amendments in this ASU are effective for annual and interim periods beginning after December 15, 2023. The Company is in the process of evaluating the impact of this new guidance on its consolidated financial statements.


3. INVENTORY, NET

The components of inventory, net, are as follows:


	September 30, 2023 (unaudited)		December 31, 2022
Raw materials
Cannabis plants	$	3,482	$	4,347
Harvested cannabis and packaging	10,573		9,052
Total raw materials	14,055		13,399
Work in process	7,895		7,845
Finished goods	15,749		13,845
Total inventory, net	$	37,699	$	35,089

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JUSHI HOLDINGS INC. Notes to the Unaudited Condensed Consolidated Financial Statements (Amounts Expressed in Thousands of U.S. dollars, Except Share and Per Share Amounts)


4. PREPAID EXPENSES AND OTHER CURRENT ASSETS

The components of prepaid expenses and other current assets are as follows:


	September 30, 2023 (unaudited)		December 31, 2022
Employee retention credit receivable	$	10,140	$	—
Prepaid expenses and deposits	2,631		3,409
Assets held for sale	2,496		—
Other current assets	911		548
Total prepaid expenses and other current assets	$	16,178	$	3,957

Employee retention credit (“ERC”) receivable: The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), passed in March 2020 and subsequently amended in 2021, allowed eligible employers to take credits on certain amounts of qualified wages if the Company experienced either a full or partial suspension of operations due to COVID related government orders. During the nine months ended September 30, 2023, the Company, with guidance from a third-party specialist, determined it was entitled to ERC claims of $10,140 for previous business interruptions related to COVID and filed for such claims with the IRS. The ERC claims, which will be recognized in the statements of operations and comprehensive income (loss) when the Company receives the refunds of such claims from the IRS, were recorded as deferred income in Accrued expenses and other current liabilities, with an offsetting receivable amount in Prepaid expenses and other current assets within the consolidated balance sheet as of September 30, 2023.

As of September 30, 2023, the Company determined that one of its grower processor facilities located in Nevada, and land located in Massachusetts with total carrying value of $2,496, met the criteria to be classified as assets held for sale, and therefore were reclassified from Property, plant and equipment, net to Assets held for sale, which is included in Prepaid expenses and other current assets in the consolidated balance sheet. In October 2023, the Company sold the land in Massachusetts for net proceeds of $1,191. The sale of the grower processor facility is expected to be completed within one year of the balance sheet date.


5. PROPERTY, PLANT AND EQUIPMENT

The components of property, plant and equipment (“PPE”) are as follows:


	September 30, 2023 (unaudited)		December 31, 2022
Buildings and building components	$	88,636	$	80,697
Land	12,956		14,085
Leasehold improvements	46,858		43,472
Machinery and equipment	27,844		27,615
Furniture, fixtures and office equipment (including computer)	20,825		16,126
Construction-in-process	1,064		20,086
Property, plant and equipment, gross	198,183		202,081
Less: Accumulated depreciation	(34,502)		(24,326)
Property, plant and equipment, net	$	163,681	$	177,755

Construction-in-process represents assets under construction for manufacturing and retail build-outs not yet ready for use.

Depreciation was $3,815 and $4,790 for the three months ended September 30, 2023 and 2022, respectively, and $13,110 and $11,090 for the nine months ended September 30, 2023 and 2022, respectively. Interest expense capitalized to PPE

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JUSHI HOLDINGS INC. Notes to the Unaudited ~~Interim~~ Condensed Consolidated Financial Statements (Amounts Expressed in Thousands of ~~United States Dollars, Unless Otherwise Stated)~~U.S. dollars, Except Share and Per Share Amounts)


~~3. REVENUE~~

~~The Company has~~totaled $54 and $124 for the three ~~revenue streams: (i) cannabis retail, (ii) cannabis wholesale~~months ended September 30, 2023 and ~~(iii) other. The Company’s retail revenues are comprised of cannabis operations~~2022, respectively, and $464 and $2,171 for ~~medical~~the nine months ended September 30, 2023 and adult-use dispensaries. The Company’s wholesale revenues are comprised of cannabis cultivation, processing, production and distribution of cannabis for medical and adult-use. The Company’s other operations primarily include the Company’s hemp/cannabidiol (“CBD”) retail operations. Any intercompany revenue and any costs between entities are eliminated to arrive at consolidated totals.

~~The following table summarizes the Company’s revenue from external customers, disaggregated by revenue stream:~~

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Retail cannabis $ 67,038 $ 50,681 $ 192,268 $ 135,155
Wholesale cannabis 5,769 3,185 15,085 7,934
Other 10 115 109 311
Total revenue, net $ 72,817 $ 53,981 $ 207,462 $ 143,400

2022, respectively.


~~4. INVENTORIES~~

~~The components~~As of ~~inventories,~~September 30, 2023, the Company reclassified $2,496 from Property, plant and equipment, net ~~are as follows:~~

September 30, 2022 (unaudited) December 31, 2021
Cannabis plants $ 3,240 $ 6,347
Harvested cannabis and packaging 11,948 5,180
Total raw materials $ 15,188 $ 11,527
Work in process 9,468 8,756
Finished goods 17,419 23,036
Total inventories, net $ 42,075 $ 43,319
to Assets held for sale. Refer to Note 4 - Prepaid Expenses and Other Current Assets for additional information.


~~5. PREPAID EXPENSES AND OTHER CURRENT ASSETS~~6. ACQUISITIONS

Nature’s Remedy

In connection with the Company’s acquisition (the “Merger”) of Nature’s Remedy of Massachusetts, Inc. and certain of its affiliates (collectively, “Nature’s Remedy”), in September 2021 the Company agreed to issue up to an additional $5,000 in Company SVS to Sammartino Investments LLC (“Sammartino”) upon the occurrence or non-occurrence of certain events after the closing date. The ~~components~~payment of ~~prepaid expenses~~the contingent consideration depends on whether or not a competitor (as defined in the definitive acquisition documents) opens a competing dispensary within a certain radius of the Company’s dispensary in Tyngsborough, Massachusetts during the period beginning on the 12-month anniversary of the closing date and ending on the 30-month anniversary of the closing date (the “Milestone Period”). On each monthly anniversary of the closing date during the Milestone Period (beginning on the 13-month anniversary of the closing date), Sammartino shall accrue $278 worth of Company SVS (a “Monthly Milestone Accrual”). On the 18-month, 24-month and 30-month anniversary of the closing date (and provided a competitor has not opened a competing dispensary within a certain radius of the Company’s dispensary in Tyngsborough, Massachusetts), Sammartino is entitled to be issued Company SVS in an amount equal to $1,667 divided by a volume weighted average reference share price. As of December 31, 2022, the aggregate contingent consideration liability was $4,793, of which $3,398 was included as a short-term contingent consideration liability and $1,395 was included in long-term contingent consideration liability.

In March 2023, the 18-month anniversary of the closing date occurred without a competitor opening a competing dispensary within a certain radius of the Company’s dispensary in Tyngsborough, Massachusetts. Consequently, at September 30, 2023, $3,333 of Monthly Milestone Accrual was classified as other current ~~assets are~~liabilities while the remaining liability of $1,617 was included in short-term contingent consideration liability.

As discussed in greater detail in Note 18 - Commitments and Contingencies, on February 28, 2023, the Company informed Sammartino that Sammartino had breached several provisions of the Merger and Membership Interest Purchase Agreement between the Company, Sammartino and certain other parties thereto (as amended, the “MIPA”) and pursuant to the terms of the MIPA the Company had elected to offset these damages against (among other things) all present and future Monthly Milestone Accruals (the “Sammartino Matter”).

Purchase Price Allocations for 2022 Business Combinations

The purchase price accounting in connection with the acquisitions of “The Apothecarium” in Las Vegas, Nevada (“Apothecarium”) and NuLeaf Inc., NuLeaf CLV Inc. and their subsidiaries (collectively, “NuLeaf”) in March 2022 and April 2022, respectively, has been finalized as ~~follows:~~

September 30, 2022 (unaudited) December 31, 2021
Prepaid expenses and deposits $ 3,720 $ 3,837
Landlord receivables for reimbursement of certain expenditures — 7,357
Other current assets 635 1,681
Total prepaid expenses and other current assets $ 4,355 $ 12,875
of March 31, 2023.

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JUSHI HOLDINGS INC. Notes to the Unaudited ~~Interim~~ Condensed Consolidated Financial Statements (Amounts Expressed in Thousands of ~~United States Dollars, Unless Otherwise Stated)~~U.S. dollars, Except Share and Per Share Amounts)


~~6. PROPERTY, PLANT AND EQUIPMENT~~7. OTHER NON-CURRENT ASSETS

The components of ~~property, plant and equipment (PPE)~~other non-current assets are as follows:

September 30, 2022 (unaudited) December 31, 2021
Buildings and building components $ 75,883 $ 49,697
Land 14,167 12,380
Leasehold improvements 39,049 24,042
Machinery and equipment 21,492 12,656
Computer equipment 3,025 2,221
Furniture and fixtures 14,965 8,000
Construction-in-process 30,919 35,625
Total property, plant and equipment - gross $ 199,500 $ 144,621
Less: Accumulated depreciation (18,366) (7,341)
Total property, plant and equipment - net $ 181,134 $ 137,280


	September 30, 2023 (unaudited)		December 31, 2022
Operating lease assets (1)	$	18,725	$	16,244
Indemnification assets	9,727		8,198
Deposits and escrows - properties	1,694		1,637
Equity investment (2)	977		977
Net deferred tax assets	2,592		—
Deposits - equipment	452		484
Other	64		703
Total other non-current assets	$	34,231	$	28,243

~~Construction-in-process represents assets under construction for manufacturing and retail build-outs not yet ready for use.~~

~~Total depreciation, including depreciation from assets held under finance leases (which are reflected separately in~~(1)During the ~~consolidated balance sheets), was $6,321 and $2,409 for the three months ended September 30, 2022 and 2021, respectively, and $15,025 and $5,313 for the~~ nine months ended September 30, ~~2022~~2023, the Company performed a reassessment of its real estate leases. Refer to Note 10 - Leases for more information.

(2)The Company owns a 23.08% ownership interest in PV Culver City, LLC (“PVLLC”). The Company does not have significant influence over, and ~~2021, respectively.~~

~~Interest expense capitalized~~the Company does not have the right to ~~PPE totaled $124~~vote or participate in the management of PVLLC and ~~$222~~therefore the investment is measured at its fair value. Refer to Note 19 - Financial Instruments for more information relating to the ~~three months ended~~ fair value of this equity investment as of September 30, ~~2022~~2023.


8. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

The components of accrued expenses and ~~2021, respectively,~~other current liabilities are as follows:


	September 30, 2023 (unaudited)		December 31, 2022
Deferred income - ERC (1)	$	10,140	$	—
Goods received not invoiced	5,073		11,620
Operating lease obligations	4,916		2,652
Accrued employee related expenses and liabilities	5,448		6,030
Accrued capital expenditures	1,653		5,603
Contingent consideration liabilities (2)	1,617		3,398
Accrued interest	3,788		2,388
Accrued sales and excise taxes	4,191		1,931
Deferred revenue (loyalty program)	1,417		1,870
Accrued professional and management fees	1,117		1,481
Other accrued expenses and current liabilities	8,047		9,356
Total	$	47,407	$	46,329

(1)Refer to Note 4 - Prepaid Expenses and Other Current Assets for more information.

(2)~~$2,171 and $461~~Refer to Note 6 - Acquisitions for ~~the nine months ended September 30, 2022 and 2021, respectively.~~more information.

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JUSHI HOLDINGS INC. Notes to the Unaudited ~~Interim~~ Condensed Consolidated Financial Statements (Amounts Expressed in Thousands of ~~United States Dollars, Unless Otherwise Stated)~~U.S. dollars, Except Share and Per Share Amounts)


~~7. ACQUISITIONS~~9. DEBT

~~2022 Business Combinations~~The components of the Company’s debt are as follows:

The Company had the following acquisitions during the nine months ended September 30, 2022: (i) Apothecarium; and (ii) NuLeaf (each as defined below). The following table summarizes the preliminary purchase price allocatio~~ns as of their respective acquisition dates:~~

NuLeaf Apothecarium Total
Assets Acquired:
Cash and cash equivalents $ 618 $ 25 $ 643
Prepaids and other assets 273 32 305
Accounts receivable, net 39 — 39
Inventory 5,791 699 6,490
Indemnification assets (1)
4,145 — 4,145
Property, plant and equipment 5,513 498 6,011
Right-of-use assets - finance lease 4,598 2,553 7,151
Right-of-use assets - operating lease 1,067 — 1,067
Intangible assets (2)
17,440 8,200 25,640
Deposits 110 301 411
Total assets acquired $ 39,594 $ 12,308 $ 51,902
Liabilities Assumed:
Accounts payable and accrued liabilities $ 604 $ 502 $ 1,106
Finance lease obligations 4,598 2,544 7,142
Operating lease obligations 1,067 — 1,067
Deferred tax liabilities 10,247 2,601 12,848
Total liabilities assumed $ 16,516 $ 5,647 $ 22,163
Net assets acquired $ 23,078 $ 6,661 $ 29,739
Goodwill (3)
27,262 8,472 35,734
Total $ 50,340 $ 15,133 $ 65,473
Consideration:
Consideration paid in cash, as adjusted for working capital adjustments $ 14,918 $ 6,617 $ 21,535
Consideration payable in cash (customary hold back liability) 1,000 — 1,000
Consideration paid in promissory notes (fair value) (4)
12,860 6,922 19,782
Consideration paid in shares 13,573 1,594 15,167
Contingent consideration 7,989 — 7,989
Fair value of consideration $ 50,340 $ 15,133 $ 65,473


	Effective Interest Rate	Maturity Date	September 30, 2023		December 31, 2022
Principal amounts:
Second Lien Notes	15%	December 2026	$	73,991	$	73,182
Acquisition Facility	15%	December 2024	62,563		65,000
Acquisition-related promissory notes payable	8% - 23%	August 2024 - April 2027	35,716		35,716
Mortgage loans	6% - 9%	January 2027 - April 2028	29,505		7,770
Total debt subject to scheduled repayments			201,775		181,668
Promissory notes payable to Sammartino (1)	11%	September 2024 - September 2026	21,500		21,500
Jushi Europe debt (2)	n/a	March 2022	3,162		3,190
Total debt			226,437		206,358
Less: debt issuance costs and original issue discounts			(14,346)		(17,096)
Total debt, net			$	212,091	$	189,262
Debt, net - current portion			$	35,620	$	8,704
Debt, net - non-current portion			$	176,471	$	180,558

(1)~~As part~~This amount is related to the promissory notes issued to Sammartino in connection with the acquisition of Nature's Remedy in September 2021. Any repayment of principal and interest are currently on hold until the resolution of the ~~NuLeaf acquisition~~Sammartino Matter. Refer to Note 18 - Commitments and Contingencies for more information.

(2)On February 16, 2022, Jushi Europe SA, a company organized under the laws of Switzerland (“Jushi Europe”), filed a notice of over-indebtedness with the Swiss courts. Then, the Swiss courts declared Jushi Europe’s bankruptcy on May 19, 2022. As a result, Jushi Europe updated its corporate name to Jushi Europe SA in liquidation, which is still on-going. This debt balance will be adjusted, including the extinguishment of any outstanding debt, upon the final liquidation of Jushi Europe. Refer to Note 17 - Related Party Transactions for more information.

Second Lien Notes

In March 2023, the Company, one of its wholly subsidiaries (JGMT, LLC) and the Company’s Chief Executive Officer and Chairman of the Board of Directors (“CEO”) entered into an amendment to his existing employment agreement (the “Amendment”) pursuant to which the ~~sellers contractually~~CEO agreed to ~~indemnify~~receive the ~~Company for certain amounts~~$750 annual cash bonus that ~~may become payable, including for taxes~~would otherwise have been paid to him in the following alternative form: (i) a lump sum cash payment in the amount of $250, which was paid on March 15, 2023, (ii) $750 aggregate principal amount of 12% second lien notes (“Second Lien Notes”) due December 7, 2026, which was issued on March 15, 2023, and (iii) fully-detached warrants to purchase up to approximately $375 worth of the Company’s SVS (“Warrants”), which was settled on September 1, 2023 resulting in the issuance of Warrants to purchase 551,471 SVS at an exercise price of $0.68 per share. The fair value of the Warrants that ~~relate to periods prior~~were issued was $200, which was recorded as additional debt discount to the ~~date of acquisition. Accordingly, the Company recorded indemnification assets and~~ Second Lien Notes, with a corresponding estimated accrued tax liabilities, at fair value, for a total of $4,145 as of the date of the acquisition. Subsequent changes in the amounts recognized for the indemnification assets may occur in relationoffset to ~~the provision for the corresponding tax liabilities, according to changes in the range of outcomes or the assumptions used to develop the estimates of the liabilities at the time of the acquisition~~ Paid-in capital within equity.

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JUSHI HOLDINGS INC. Notes to the Unaudited ~~Interim~~ Condensed Consolidated Financial Statements (Amounts Expressed in Thousands of ~~United States Dollars, Unless Otherwise Stated)~~U.S. dollars, Except Share and Per Share Amounts)

~~(2)Included licenses acquired~~In June 2023, the Company amended its Second Lien Notes to modify the Change of ~~$14,700~~Control provisions and ~~$8,200~~make other changes. The consideration paid by the Company for ~~NuLeaf and Apothecarium, respectively, which have indefinite useful lives. The estimated fair values~~the amendment was a repricing of the ~~licenses were determined using the multi-period excess earnings method under the income approach based on projections extended~~related outstanding warrants to ~~2036.~~

~~(3)~~The goodwill recognized from the acquisitions is attributable to synergies expected from integrating the acquired businesses into the Company’s existing business. The goodwill acquired is not deductible for tax purposes.

~~(4)Refer to “Acquisition-Related Promissory Notes” in Note 10 - Debt for details on the seller notes.~~

~~NuLeaf~~

~~In April 2022,~~purchase SVS of the Company ~~closed on the acquisition~~from an exercise price of ~~100% of NuLeaf Inc., NuLeaf CLV Inc. and their subsidiaries (collectively, “NuLeaf”). The Company paid upfront consideration comprised of $14,918 in cash, subject~~$2.086 per warrant to ~~working capital adjustments, 4,662,384 SVS (with an acquisition date fair value of $2.91~~$1.00 per ~~SVS), and an unsecured five-year note with a face value of~~warrant. ~~$15,750. Additionally, cash consideration of $1,000 was subjected to customary holdbacks at closing. The Company was required to pay an additional $10,000 ($3,000 in cash, $3,000 as an~~In addition to the ~~five-year note~~repricing of the warrants, the respective warrant agreements were amended and resulted in a change in accounting classification of the ~~balance in shares) contingent~~respective warrants from liability to equity. The estimated value of the consideration of $1,341 was determined based on the ~~opening of a third retail dispensary. In June 2022, the Company opened the third retail dispensary, and~~incremental change in July 2022, the Company paid $3,000 in cash, amended the five-year note for an additional face value of $3,000 (discounted value of $2,657), and issued 888,880 SVS (aggregate value of $1,529) with a to settle the contingent consideration liability.

~~Apothecarium~~

In March 2022, the Company closed on the acquisition of 100% of the equity interest of an entity operating an adult-use and medical retail dispensary under the name, “The Apothecarium” in Las Vegas, Nevada (“Apothecarium”), for upfront consideration comprised of $6,617 in cash, net of working capital adjustments, 527,704 SVS (with a grant date fair value of $3.02 each), and an unsecured five-year note with a face value of $9,853. Refer to Note 10 - Debt for details on the seller notes. The Apothecarium acquisition, together with the prior acquisition of Franklin Bioscience NV, LLC, a holder of medical and adult-use cannabis cultivation, processing, and distribution licenses, enabled the Company to become vertically integrated in Nevada, as well as provide significant branding exposure for Jushi’s high-quality product lines.

~~Preliminary Purchase Price Allocations for 2022 Business Combinations~~

The consideration has been allocated to the estimated fair values of the assets acquired and liabilities assumed at the dates of the acquisitions and remain preliminary as of September 30, 2022. These estimated fair values involve significant judgement and estimates. The primary area of judgement involves the valuation of the business licenses acquired, which requires management to estimate value based on future cash flows from these assets. The primary areas of the preliminary purchase price allocations that are not yet finalized relate to: licenses acquired, inventories, property, plant and equipment, leases, contingent consideration, promissory notes, deferred tax liabilities, 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.~~

~~Business Combinations - Acquisition~~warrants before and ~~Deal Costs~~

~~For the three and~~ ~~nine months ended September 30, 2022~~, acquisition and deal costs relating to Apothecarium and NuLeaf totaled $0 and $1,184, respectively, and are included within operating expenses in the consolidated statements of operations and comprehensive income (loss).after repricing. The ~~remaining acquisition and deal costs included in operating expenses were incurred either for acquisitions not completed or not expected to be completed.~~

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~~JUSHI HOLDINGS INC.~~ ~~Notes to the Unaudited Interim Condensed Consolidated Financial Statements~~ ~~(Amounts Expressed in Thousands of United States Dollars, Unless Otherwise Stated)~~

~~2021 Business Combinations and Asset Acquisitions~~

~~The Company had the following acquisitions during the year ended December 31, 2021: (i) Nature’s Remedy; (ii) OSD; (iii) OhiGrow; and (iv) Grover Beach (each~~consideration was recorded as ~~defined below). The following table summarizes the purchase price allocations as of their respective acquisition dates:~~

Business Combinations Asset Acquisitions
Nature’s Remedy OSD OhiGrow Grover Beach Total
Assets Acquired:
Cash and cash equivalents $ 3,195 $ 259 $ — $ — $ 3,454
Prepaids 325 53 — — 378
Accounts receivable, net 263 — — — 263
Inventory 15,882 184 — — 16,066
Indemnification assets (1)
1,322 1,411 — — 2,733
Property, plant and equipment 19,470 — 3,165 269 22,904
Right-of-use assets - finance leases 27,305 — — 2,050 29,355
Right-of-use assets - operating leases 1,337 1,859 — — 3,196
Intangible assets - license (2)(4)
56,000 2,160 1,817 3,654 63,631
Intangible assets - tradenames (2)
4,400 — — — 4,400
Intangible assets - customer database (2)
2,100 — — — 2,100
Deposits 20 6 — 19 45
Total assets acquired (3)(4)
$ 131,619 $ 5,932 $ 4,982 $ 5,992 $ 148,525
Liabilities Assumed:
Accounts payable and accrued liabilities $ 7,004 $ 1,601 $ — $ — $ 8,605
Finance lease obligations 27,052 — — 2,032 29,084
Operating lease obligations 1,267 1,859 — — 3,126
Deferred tax liabilities (4)
22,784 648 — — 23,432
Total liabilities assumed (3)(4)
$ 58,107 $ 4,108 $ — $ 2,032 $ 64,247
Net assets acquired (3)(4)
$ 73,512 $ 1,824 $ 4,982 $ 3,960 $ 84,278
Goodwill (3)(4)
26,086 2,432 — — 28,518
Total $ 99,598 $ 4,256 $ 4,982 $ 3,960 $ 112,796
Consideration:
Consideration paid in cash, as adjusted for working capital adjustments $ 40,360 $ 1,827 $ 4,949 $ 3,592 $ 50,728
Consideration paid in promissory notes (fair value) (3)
15,345 2,429 — — 17,774
Consideration paid in shares 35,670 — — 368 36,038
Contingent consideration 8,223 — — — 8,223
Capitalized costs — — 33 — 33
Fair value of consideration (3)
$ 99,598 $ 4,256 $ 4,982 $ 3,960 $ 112,796

~~(1)~~ As part of the OSD and Nature’s Remedy acquisition agreements, the sellers contractually agreed to indemnify the Company for certain amounts that may become payable, including for taxes that relate to periods prioradditional debt discount to the ~~date of acquisition. Accordingly, the Company recorded indemnification assets and~~Second Lien Notes with a corresponding ~~estimated accrued tax liabilities, at fair value,~~offset to Paid-in capital. Refer to Note 11 - Derivative Liabilities for a total of $2,733 as of the dates of the acquisitions. Additional subsequent changes in the amounts recognized for the indemnification assets may occur in relation to the provision for the corresponding tax liabilities, according to changes in the range of outcomes or the assumptions used to develop the estimates of the liabilities at the time of the acquisition.more information.

~~Table of Contents~~Mortgage loans


~~JUSHI HOLDINGS INC.~~ ~~Notes to the Unaudited Interim Condensed Consolidated Financial Statements~~ ~~(Amounts Expressed in Thousands of United States Dollars, Unless Otherwise Stated)~~

Arlington Mortgage

~~(2)~~ ~~The licenses acquired have indefinite useful lives. The customer relationships have a useful life of 15 years and the tradenames have a~~ ~~useful life of 5 years.~~

~~(3)~~ These amounts include certain measurement period adjustments made during the fourth quarter of 2021, and the adjustments were as follows: (i) a decrease in total assets acquired of $12,020; (ii) a decrease in total liabilities assumed of $5,248, (iii) a decrease in total net assets acquired of $6,772, (iv) an increase in goodwill of $6,405, and (v) a decrease in fair value of consideration of $367.

~~(4)~~ The amounts for the Nature’s Remedy and Total columns reflect the revised amounts in connection with the correction of errors disclosed in Correction of Errors in Previously Issued Financial Statements in Note 2 - Basis of Presentation and Summary of Significant Accounting Policies. Specifically, intangible assets - license increased by $10,000, goodwill decreased by $7,092, and deferred tax liabilities increased by $2,908.

~~2021 Business Combinations~~

~~Nature’s Remedy~~

~~On September 10,~~In December 2021, the Company ~~acquired 100%~~entered into a $6,900 mortgage loan agreement (the “Arlington Mortgage”), which is principally secured by the Company’s retail property in Arlington, Virginia. The Arlington Mortgage bears a fixed interest rate of 5.875% per annum, payable monthly, and will mature in January 2027. As of December 31, 2022, the ~~equity of Nature’s Remedy of Massachusetts, Inc.~~Company had drawn down $5,000, and ~~certain of its affiliates (collectively, “Nature’s Remedy”~~the remaining $1,900 was drawn down in January 2023.

Dickson City Mortgage

In July 2022, the Company entered into a $2,800 mortgage loan agreement (the “Dickson City Mortgage”), ~~for upfront consideration comprised~~which is principally secured by the Company’s retail property in Dickson City, Pennsylvania. The Dickson City Mortgage matures in July 2027 and bears interest at a variable rate equal to prime rate plus 2%. The interest rate as of ~~cash, net of working capital adjustments, 8,700,000 SVS (with~~September 30, 2023 was 10.50%.

Manassas Mortgage

In April 2023, the Company entered into a ~~grant date fair value of $4.10 each)~~$20,000 mortgage loan agreement (the “Manassas Mortgage”), ~~an $11,500 unsecured three-year note and a $5,000 unsecured five-year note.~~

~~Nature’s Remedy~~which is ~~a vertically integrated single state operator in Massachusetts and currently operates two retail dispensaries, in Millbury, Massachusetts and Tyngsborough, Massachusetts, and a 50,000 sq. ft.~~principally secured by the Company’s cultivation and ~~production~~manufacturing facility located in ~~Lakeville, Massachusetts.~~Manassas, Virginia. The ~~goodwill~~Manassas Mortgage bears interest of 8.875% per annum as of September 30, 2023, payable monthly, and will mature in April 2028. The interest rate is ~~not tax deductible.~~

~~The Company also agreed to issue a $5,000 increase to the principal balance of the three-year note~~variable and up to an additional $5,000 in Company SVS upon the occurrence or non-occurrence of certain events after the closing date. The payment of the contingent consideration depends on whether or not a competitor opens a competing dispensary within a certain radius of the Company’s dispensary in the Town of Tyngsborough, Massachusetts during the first 12 months following the acquisition (The “First Milestone Period”) or during the 18 months following the end of the First Milestone Period. As of the date of acquisition, the Company recognized a contingent consideration liability of $8,223, a Level 3 measurement amount, which wasdetermined based on the ~~weighted-average probability~~30-day average secured overnight financing rate plus 3.55%, with a floor rate of the potential outcomes. The estimated range of such additional consideration is between $0 and $10,800 (which also includes the interest on the additional principal for the three-year note). Contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred for the business combination. Contingent consideration that is classified as a liability is remeasured at subsequent reporting dates with the corresponding gain or loss being recognized in Other, net in the consolidated statements of operations and comprehensive income (loss)not less than 8.25%.

Financial covenants

Acquisition Facility

~~In September 2022,~~The Senior Secured Credit Facility (the “Acquisition Facility”) contains certain financial and other covenants with which the ~~First Milestone Period~~Company is required to comply. On May 10, 2023, the Company was ~~achieved, and therefore the~~ ~~three-year note was amended~~non-compliant with an affirmative covenant relating to a minimum cash deposit requirement in a specified bank account. The Company received a waiver for ~~an additional face value of $5,000 (discounted value of $4,708) to partially settle the contingent consideration liability.~~this instance on May 11, 2023. As of September 30, ~~2022,~~2023, the ~~remaining contingent consideration liability of $4,671 relates~~Company was in compliance with its financial covenants related to (i) minimum unrestricted cash and cash equivalents balance requirement and (ii) minimum quarterly revenue requirement.

Mortgage loans

The Company’s three mortgage loan agreements contain certain financial and other covenants with which the ~~18 months following the end of the First Milestone Period. The~~ Company ~~utilized the cash flows associated with the weighted-average probability of the potential outcomes~~is required to ~~determine the potential cash outflows that are short-term vs. long-term.~~comply. As ~~a result, as~~ of September 30, ~~2022,~~2023, the Company ~~classified $3,253 as a short-term contingent consideration liability and $1,418 as a long-term contingent consideration liability.~~

~~OSD~~

~~On April 30, 2021, the Company acquired 100%~~was in compliance with all financial covenants contained in each of the equity of Organic Solutions of the Desert, LLC (“OSD”), an operating dispensary located in Palm Springs, California, for consideration comprised of cash, as adjusted for working capital adjustments, and $3,100 principal amount of promissory notes. Refer to “Promissory Notes Payable” in ~~Note 10 - Debt~~ ~~for details on the seller notes. The goodwill is not tax deductible.~~mortgage loan agreements.

~~Table of Contents~~


~~JUSHI HOLDINGS INC.~~ ~~Notes to the Unaudited Interim Condensed Consolidated Financial Statements~~ ~~(Amounts Expressed in Thousands of United States Dollars, Unless Otherwise Stated)~~

~~2021 Asset Acquisitions~~

The Company determined that the OhiGrow and Grover Beach (each as defined below) acquisitions described below did not qualify as business combinations because, for OhiGrow, the assets acquired did not constitute a business, and for Grover Beach, under the concentration test, substantially all of the fair value of the acquisition is concentrated in a single identifiable asset – the license.

~~OhiGrow~~

In July 2021, the Company acquired OhiGrow, LLC, a licensed cultivator in Ohio, and Ohio Green Grow LLC (collectively, “OhiGrow”), inclusive of an approximately 10,000 sq. ft. facility and 1.35 acres of land for $4,949 in cash.

~~Grover Beach~~

On March 4, 2021, the Company closed on the acquisition of approximately 78% of the equity of a retail license holder located in Grover Beach, California (“Grover Beach”) for $3,592 in cash, as adjusted for working capital adjustments, and 49,348 SVS at a fair value of $7.46 per share, with the rights to acquire the remaining equity for one dollar in the future. On September 9, 2022, the Company exercised its rights to acquire the remaining 22%.

~~Business Combinations Acquisition Results and Unaudited Supplemental Pro Forma Financial Information~~

The following table summarizes consolidated pro forma revenue and consolidated pro forma net income (loss) as if the business combinations had occurred at the beginning of the year prior to their actual acquisition for the periods presented:

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Revenue $ 72,817 $ 73,595 $ 217,126 $ 207,538
Net income (loss) $ (53,982) $ 41,085 $ (57,386) $ 7,973

These unaudited pro forma financial results do not purport to be indicative of the actual results that would have been achieved by the combined companies for the years indicated, or of the results that may be achieved by the combined companies in the future. These amounts have been calculated using actual results and adding pre-acquisition results, after adjusting for: acquisition costs, additional depreciation and amortization from acquired property, plant and equipment and intangible assets, as well as adjustments for incremental interest expense relating to consideration paid, and changes to conform to the Company’s accounting policies.

The results of the 2022 and 2021 acquisitions are included in the Company’s results since their respective acquisition dates. For the three and nine months ended September 30, 2022, in the aggregate, the 2022 acquisitions contributed revenues of $9,478 and $19,042, respectively, and net loss of $1,018 and $1,829, respectively, to the Company’s consolidated results. For the three and nine months ended September 30, 2021, in the aggregate, the 2021 acquisitions contributed revenues of $3,127 and $3,619, respectively, and net loss of $400 and $459, respectively, to the Company’s consolidated results.

1714

Table of Contents


JUSHI HOLDINGS INC. Notes to the Unaudited ~~Interim~~ Condensed Consolidated Financial Statements (Amounts Expressed in Thousands of ~~United States Dollars, Unless Otherwise Stated)~~U.S. dollars, Except Share and Per Share Amounts)


~~8. GOODWILL AND OTHER INTANGIBLE ASSETS~~

Annual Maturities

Carrying amount as of Goodwill Other intangible assets
Cost
Balance at December 31, 2021 (1)
$ 45,828 $ 197,502
Additions from acquisitions 35,734 25,640
Impairment — (37,600)
Balance at September 30, 2022 $ 81,562 $ 185,542
Accumulated amortization
January 1, 2022 $ — $ (5,036)
Amortization — (2,283)
Balance at September 30, 2022 $ — $ (7,319)
Net book value
Balance at December 31, 2021 (1)
$ 45,828 $ 192,466
Balance at September 30, 2022 $ 81,562 $ 178,223

~~(1)For additional information, see~~ ~~Correction~~As of ~~Errors in Previously Issued Financial Statements in~~ ~~Note 2 - Basis of Presentation and Summary of Significant Accounting Policies.~~

~~Indefinite-lived asset impairment~~

In September 2022, the Company determined that the lower than expected operating results of its Massachusetts operations primarily driven by significant price compression in the state was an indicator of impairment. The Company utilized a combination of the income approach (discounted cash flow method) and market approach (a combination of the guideline transactions method and guideline company method) for its impairment test, and as a result, recorded a business licenses impairment charge of $37,600 and determined goodwill was not impaired. The key inputs and assumptions used in the fair valuation of Massachusetts include: (i) a five-year cash flow forecast, which is based on the Company’s actual operating results and its forecast; (ii) a perpetual growth rate of 3%; and (iii) an estimated weighted average cost of capital of 19.5% in relation to goodwill, and an estimated discount rate of 20.5% in relation to business licenses.

~~Table of Contents~~


~~JUSHI HOLDINGS INC.~~ ~~Notes to the Unaudited Interim Condensed Consolidated Financial Statements~~ ~~(Amounts Expressed in Thousands of United States Dollars, Unless Otherwise Stated)~~


~~9. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES~~

~~The components of accrued expenses and other current liabilities are as follows:~~

September 30, 2022 (unaudited) December 31, 2021
Accrued capital expenditures $ 13,381 $ 17,599
Goods received not invoiced 6,887 8,007
Accrued employee related expenses and liabilities 6,728 6,062
Accrued professional and management fees 1,034 5,139
Accrued sales and excise taxes 1,562 2,535
Accrued interest 2,363 1,181
Deferred revenue (loyalty program) 1,873 1,427
Operating lease obligations - current portion 2,661 2,745
Contingent consideration liabilities - current portion(1)
3,253 —
Other accrued expenses and current liabilities 4,360 3,277
Total $ 44,102 $ 47,972

~~(1)Refer to Note 7 - Acquisitions.~~


~~10. DEBT~~

~~The components~~30, 2023, aggregate future scheduled repayments of the Company’s debt are as follows:

Effective Interest Rate Maturity Date September 30, 2022 December 31, 2021
Principal amounts:
Senior Notes 38% January 2023 $ 74,935 $ 75,193
Acquisition Facility 14% October 2026 65,000 40,000
Acquisition-related promissory notes payable 8% - 23% November 2022 - April 2027 59,628 25,767
Other debt (1)
7% - 12% March 2022 - July 2050 16,639 11,728
Total debt - principal amounts $ 216,202 $ 152,688
Less: debt issuance costs and original issue discounts (16,303) (23,536)
Total debt - carrying amounts $ 199,899 $ 129,152
Debt - current portion $ 137,967 $ 6,181
Debt - non-current portion $ 61,932 $ 122,971


	Remainder of the year		2024		2025		2026		2027		Thereafter		Total
Second Lien Notes	$	—	$	—	$	—	$	73,991	$	—	$	—	$	73,991
Acquisition Facility	2,438		60,125		—		—		—		—		62,563
Acquisition-related promissory notes payable	3,448		5,885		1,970		1,971		22,442		—		35,716
Mortgage loans	54		485		658		669		9,399		18,240		29,505
Total debt subject to scheduled repayments	$	5,940	$	66,495	$	2,628	$	76,631	$	31,841	$	18,240	$	201,775

~~(1)~~ ~~Includes Jushi Europe debt. Refer to Note 16 - Non-Controlling Interests.~~

~~Table of Contents~~


~~JUSHI HOLDINGS INC.~~ ~~Notes to~~The above table excludes the ~~Unaudited Interim Condensed Consolidated Financial Statements~~ ~~(Amounts Expressed in Thousands of United States Dollars, Unless Otherwise Stated)~~

~~As of September 30, 2022, aggregate future~~ contractual maturities of the Company’s (i) promissory notes payable to Sammartino and (ii) Jushi Europe debt, as the repayments of these two debts are contingent on the resolution of the Sammartino Matter and completion of the liquidation of Jushi Europe, respectively. Refer to Note 18 - Commitments and Contingencies and Note 17 - Related Party Transactions for more information. Specifically, the contractual maturities of (i) the promissory notes payable to Sammartino are as follows: $16,500 in 2024 and $5,000 in 2026 and (ii) Jushi Europe debt of $3,162 was March 2022.

Remainder of the year 2023 2024 2025 2026 Thereafter Total
Senior Notes $ — $ 74,935 $ — $ — $ — $ �� $ 74,935
Acquisition Facility — — 4,875 6,500 53,625 — 65,000
Acquisition-related promissory notes payable (1)
2,411 3,449 22,385 1,970 6,971 22,442 59,628
Other debt 3,831 588 116 125 132 11,847 16,639
Total $ 6,242 $ 78,972 $ 27,376 $ 8,595 $ 60,728 $ 34,289 $ 216,202

~~(1) The Promissory Note that matures in 2022 is a mandatorily convertible note, and the Company issued 910,000 SVS on November 21, 2022 to settle the outstanding balance.~~Interest Expense

Interest expense, net is comprised of the following:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Interest and accretion - Senior Notes		$	6,779	$	4,673	$	18,015	$	14,244
Interest - Finance lease liabilities		2,754		2,516		8,668		6,203
Interest expense										Interest expense
Interest and accretion - 10% Senior Notes										Interest and accretion - 10% Senior Notes	$	—	$	6,779	$	—	$	18,015
Interest and accretion - Second Lien Notes										Interest and accretion - Second Lien Notes	2,640		—		7,568		—
Interest and accretion - Finance lease liabilities										Interest and accretion - Finance lease liabilities	2,335		2,754		7,282		8,668
Interest and accretion - Promissory notes	Interest and accretion - Promissory notes	1,709		418		3,794		1,033		Interest and accretion - Promissory notes	1,547		1,709		4,625		3,794
Interest and accretion - Acquisition Facility	Interest and accretion - Acquisition Facility	1,918		—		5,212		—		Interest and accretion - Acquisition Facility	2,298		1,918		7,265		5,212
Interest and accretion - Other debt		266		117		885		370
Interest and accretion - Mortgage loans and other financing activities										Interest and accretion - Mortgage loans and other financing activities	612		266		1,422		885
Capitalized interest	Capitalized interest	(124)		(222)		(2,171)		(461)		Capitalized interest	(54)		(124)		(464)		(2,171)
Total interest expense	Total interest expense	$	13,302	$	7,502	$	34,403	$	21,389	Total interest expense	9,378		13,302		27,698		34,403
Interest income	Interest income	(191)		(60)		(229)		(244)		Interest income	(33)		(191)		(43)		(229)
Total interest expense, net	Total interest expense, net	$	13,111	$	7,442	$	34,174	$	21,145	Total interest expense, net	$	9,345	$	13,111	$	27,655	$	34,174

~~Other Debt~~

~~PAMS Sale-leaseback Transactions~~

During 2021, the Company acquired land and buildings that are adjacent to the Company’s Pennsylvania Medical Solutions, LLC (“PAMS”) cultivation facility in order to expand the facility. In February 2022, the Company then closed on the sale of such land and buildings for $3,265 to the landlord of the Company’s cultivation facility. Also, in February 2022, the Company entered into a sale-leaseback agreement with the landlord. The Company concluded that control, including the significant risks and rewards of ownership, did not transfer to the buyer-lessor at the inception of the sale-leaseback transaction. Accordingly, the transaction did not meet the accounting criteria for a successful sale-leaseback transaction and therefore represents a financing obligation with a lease term ending in April 2048. As a result, the Company recognized a liability of $3,265, which will be amortized as a reduction of rental expense over the term of the failed lease using an incremental borrowing rate of 11.6%.

~~Dickson Facility~~

In July 2022, the Company entered into a $2,800 credit facility with a bank to fund the construction of a dispensary in Dickson City, Pennsylvania. As of September 30, 2022, the Company had drawn down $1,050, and during October 2022, the Company drew down the remaining balance of $1,750. This credit facility, which matures on July 18, 2027, bear interest at a variable rate equal to prime rate plus 2%. The interest rate as of September 30, 2022 was 7.5%.

~~Table of Contents~~


~~JUSHI HOLDINGS INC.~~ ~~Notes to the Unaudited Interim Condensed Consolidated Financial Statements~~ ~~(Amounts Expressed in Thousands of United States Dollars, Unless Otherwise Stated)~~

~~Unsecured Promissory Notes~~

~~Apothecarium~~

In March 2022, in connection with the Apothecarium acquisition, the Company issued to the seller two unsecured promissory notes with a total principal amount of $9,853, with no stated interest and both maturing in March 2027. The promissory notes provide for a principal payment of $3,448 on the 21st month anniversary, followed by 39 equal monthly payments for the remaining balance.

~~NuLeaf~~

In April 2022, in connection with the NuLeaf acquisition, the Company issued to the seller unsecured promissory notes with an aggregate total principal amount of $15,750 with a stated interest rate of 8% and maturity date in April 2027. The promissory notes provide for a full principal payment on the maturity date. Additionally, in July 2022, the Company amended the five-year note for an additional principal amount of $3,000 to settle the contingent consideration associated with the acquisition. There were no changes to the interest rate and maturity date of the five-year note at such time.

~~Nature’s Remedy~~

~~In September 2022, the Company amended the three-year note for an additional principal amount of $5,000 in settlement of a contingent consideration liability for the First Milestone Period in~~ ~~connection with the September 2021 acquisition of Nature’s Remedy. Refer to Note 7 - Acquisitions for more information.~~

~~Amendments to the Acquisition Facility~~

In April 2022, the Company entered into an amendment to the Acquisition Facility pursuant to which: (i) the commencement of leverage testing was pushed back by four quarters (now beginning March 31, 2023 as reflected in the table below), (ii) certain leverage ratios were revised; and (iii) the Company may proceed with a reorganization pursuant to a petition for bankruptcy in Switzerland with respect to Jushi Europe without potentially defaulting under the Acquisition Facility. Refer to Note 16 - Non-Controlling Interests for additional information on Jushi Europe.

~~Total Leverage Ratio, calculated as the ratio of Total Funded Indebtedness to EBITDAR (all such terms are defined in the Acquisition Facility agreement) not to exceed the correlative ratio below:~~


~~Applicable Ratio~~			~~Fiscal Quarter Ending~~
~~6.00 to 1.00~~			~~March 31, 2023~~
~~5.00 to 1.00~~			~~June 30, 2023~~
~~4.00 to 1.00~~			~~September 30 and December 31, 2023~~
~~3.50 to 1.00~~			~~March 31, 2024 and all fiscal quarters ending thereafter~~

~~Additionally, in April 2022, the Company drew down $25,000 from the Acquisition Facility to fund the cash portions of the NuLeaf and Apothecarium acquisitions.~~

As part of the refinancing of the Senior Notes, the Company is currently renegotiating the terms of the financial covenants under the Acquisition Facility, including the removal of the Total Leverage Ratio requirement. The Company expects to complete the renegotiations by the end of 2022.

~~Table of Contents~~


~~JUSHI HOLDINGS INC.~~ ~~Notes to the Unaudited Interim Condensed Consolidated Financial Statements~~ ~~(Amounts Expressed in Thousands of United States Dollars, Unless Otherwise Stated)~~


~~11. LEASE OBLIGATIONS~~10. LEASES

The Company leases certain business facilities for corporate, retail and cultivation operations from third parties under lease agreements that specify minimum rentals. In addition, the Company leases certain equipment for use in cultivation and extraction activities. The Company determines whether a contract is or contains a lease at the inception of the contract. Due to changing demographics and business environment, the Company performed a reassessment of its previously classified real estate finance leases in June 2023 and certain real estate operating leases in September 2023. These reassessments resulted in the removal of certain option renewal periods contained in the leases as the Company is no longer reasonably certain to exercise these option renewal periods. As a result of the June 2023 reassessment, the classification of some leases were changed from finance to operating, resulting in an aggregate decrease in finance lease obligations and related right-of-use (“ROU”) assets of $45,768 and $42,349, respectively, and an aggregate net increase in

Table of Contents


JUSHI HOLDINGS INC. Notes to the Unaudited Condensed Consolidated Financial Statements (Amounts Expressed in Thousands of U.S. dollars, Except Share and Per Share Amounts)

operating lease obligations and related ROU assets of $8,691 and $5,271, respectively. The impact of the September 2023 reassessment was an aggregate net decrease in operating lease obligations and related ROU assets of $6,084 and $6,084, respectively.

In connection with the change from finance to operating lease, the Company’s depreciation and interest expense related to ROU assets will be lower after the change and rent expense will be higher. The expiry dates of the leases, including reasonably certain estimated renewal periods, are between ~~2023 and 2052.~~2024 and 2043. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The following table provides the components of lease cost recognized in the consolidated statements of operations and comprehensive income (loss) for the periods presented.

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Operating lease cost $ 898 $ 783 $ 2,698 $ 1,739
Finance lease cost:
Amortization of lease assets 1,532 999 3,935 2,075
Interest on lease liabilities 2,754 2,516 8,668 6,203
Total finance lease cost $ 4,286 $ 3,515 $ 12,603 $ 8,278
Variable lease cost $ 99 $ 89 $ 281 $ 247
Total lease cost $ 5,283 $ 4,387 $ 15,582 $ 10,264


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Finance lease cost:
Amortization of lease assets	$	1,149	$	1,532	$	4,208	$	3,935
Interest on lease liabilities	2,335		2,754		7,282		8,668
Total finance lease cost	3,484		4,286		11,490		12,603
Operating lease cost	1,764		898		3,412		2,698
Variable lease cost	33		99		119		281
Total lease cost	$	5,281	$	5,283	$	15,021	$	15,582

Other information related to operating and finance leases as of the balance sheet dates presented are as follows:


		September 30, 2022				December 31, 2021					September 30, 2023				December 31, 2022
		(unaudited)									(unaudited)
		Finance Leases		Operating Leases		Finance Leases		Operating Leases			Finance Leases		Operating Leases		Finance Leases		Operating Leases
Weighted average discount rate	Weighted average discount rate	11.23	%	11.70	%	11.75	%	11.50	%	Weighted average discount rate	16.07	%	14.84	%	11.23	%	11.51	%
Weighted average remaining lease term (in years)	Weighted average remaining lease term (in years)	22.7		14.1		22.6		14.6		Weighted average remaining lease term (in years)	16.8		8.7		22.7		14.1

The maturities of the contractual undiscounted lease liabilities as of September 30, ~~2022~~2023 are as follows:


		Finance Leases		Operating Leases			Finance Leases		Operating Leases
Remainder of the year		$	2,564	$	597
2023		13,454		3,194
Remainder of year						Remainder of year	$	1,903	$	1,017
2024	2024	12,037		2,938		2024	10,738		5,970
2025	2025	12,377		2,741		2025	10,602		5,848
2026	2026	12,466		2,517		2026	10,494		5,315
2027						2027	10,002		4,986
Thereafter	Thereafter	289,487		29,080		Thereafter	158,136		23,471
		$	342,385	$	41,067
Interest on lease liabilities		(231,561)		(22,769)
Total lease payments						Total lease payments	201,875		46,607
Less: Imputed interest						Less: Imputed interest	(140,236)		(21,703)
Total present value of minimum lease payments	Total present value of minimum lease payments	$	110,824	$	18,298	Total present value of minimum lease payments	$	61,639	$	24,904
Lease liabilities - current portion	Lease liabilities - current portion	$	12,735	$	2,661	Lease liabilities - current portion	$	8,740	$	4,916
Lease liabilities - non-current	Lease liabilities - non-current	$	98,089	$	15,637	Lease liabilities - non-current	$	52,899	$	19,988

2216

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JUSHI HOLDINGS INC. Notes to the Unaudited ~~Interim~~ Condensed Consolidated Financial Statements (Amounts Expressed in Thousands of ~~United States Dollars, Unless Otherwise Stated)~~U.S. dollars, Except Share and Per Share Amounts)


~~12.~~11. DERIVATIVE LIABILITIES

The ~~continuities of~~following table summarizes the change in the Company’s derivative liabilities ~~are as follows:~~for the nine months ended September 30, 2023.

Total Derivative Liabilities (1)~~(3)~~

~~Carrying amounts~~Balance as of January 1, ~~2022~~2023

~~92,435~~14,134

Fair value changes~~(2)~~

~~(63,233)~~(1,660)

~~Derivative Warrants exercises~~Reclassification to equity

~~(9,401)~~(2,050)

~~Carrying amounts~~Down-round changes

143

Balance as of September 30, ~~2022~~2023

~~19,801~~10,567

(1)Refer to Note 1312 - Equity for the ~~continuity of the~~change in number of ~~these~~ warrants ~~outstanding.~~during the nine months ended September 30, 2023.

~~(2)Included in other income (expense), net in the consolidated statements of operations and comprehensive income (loss).~~

~~(3)Includes mandatory prepayment option on the Senior Notes, which had a fair value of $218 as of September 30, 2022.~~

The Company’s derivative liabilities are primarily comprised of derivative ~~warrants.~~warrants (“Derivative Warrants”). These are warrants to purchase SVS of the Company ~~which~~and were previously issued in connection with the ~~Senior~~Company’s Second Lien Notes and its 10% senior secured notes (the ~~“Derivative Warrants”~~“Senior Notes”)~~, and have an expiration date of December 23, 2024 and an~~. As discussed in Note 9 - Debt, in June 2023, the Company amended the warrant agreements, previously issued with the Second Lien Notes, to decrease the warrant exercise price of ~~US$1.25. There~~$2.086 per warrant to $1.00 per warrant for 17,512,280 warrants as well as certain other sections of the warrant agreement, which resulted in a change in accounting classification of the respective warrants from liability to equity. As a result of the change in classification of the warrants, the Company recorded a decrease in derivative liability of $2,050, with a corresponding increase in paid-in capital. The aforementioned repricing triggered certain down-round provisions on some of the outstanding warrants previously issued with the Senior Notes. Accordingly, the Company changed the warrant exercise price of $1.25 per warrant to $1.00 per warrant for 5,890,922 warrants and recorded the incremental change of $143 in the fair value of such warrants before and after repricing as additional derivative liabilities with a corresponding offset to Other income (expense) since the Senior Notes were ~~36,496,355 and 40,124,355 Derivative Warrants outstanding as of September 30, 2022 and December 31, 2021, respectively.~~ previously extinguished.

The Derivative Warrants may be net share settled. As of September 30, 2023, there were 37,862,922 Derivative Warrants outstanding, which consisted of (i) 29,972,000 warrants with exercise price of $1.25 per warrant and expiration date in December 2024, (ii) 5,890,922 warrants with exercise price of $1.00 per warrant and expiration date of December 2024, and (iii) 2,000,000 warrants with an exercise price of $2.086 per warrant and expiration date in December 2026. As of December 31, 2022, there were 55,375,202 Derivative Warrants outstanding, which consisted of (i) 35,862,922 warrants with exercise price of $1.25 per warrant and expiration date in December 2024, and (ii) 19,512,280 warrants with an exercise price of $2.086 per warrant and expiration date in December 2026.

~~These warrants~~Derivative Warrants are considered derivative financial liabilities measured at fair value with all gains or losses recognized in profit or loss as the settlement amount for the ~~warrants~~Derivative Warrants may be adjusted during certain periods for variables that are not inputs to standard pricing models for forward or option equity contracts, i.e., the “fixed for fixed” criteria under ASC 815-40. The estimated fair value of the Derivative Warrants is measured at the end of each reporting period and an adjustment is reflected in fair value changes in derivatives in the consolidated statements of operations and comprehensive income (loss). These are Level 3 recurring fair value measurements. The estimated fair value of the Derivative Warrants was determined using the Black-Scholes model with stock price based on the ~~CSE~~OTCQX closing price ~~translated into U.S. dollar~~of the Derivative Warrants issue date as of September 30, ~~2022,~~2023 and ~~Monte Carlo simulation model with stock price based on the OTCQX Best Market closing price as of~~ December 31, ~~2021.~~ 2022.

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JUSHI HOLDINGS INC. Notes to the Unaudited Condensed Consolidated Financial Statements (Amounts Expressed in Thousands of U.S. dollars, Except Share and Per Share Amounts)

The assumptions used in the fair value calculations as of the balance sheet dates presented include the following:


		September 30, 2022 (unaudited)	December 31, 2021		September 30, 2023 (unaudited)	December 31, 2022
Stock price	Stock price	$1.23	$3.25	Stock price	$0.84	$0.76
Risk-free annual interest rate	Risk-free annual interest rate	4.23%	0.97%	Risk-free annual interest rate	4.78% - 5.36%	3.99% - 4.11%
Range of estimated possible exercise price	Range of estimated possible exercise price	$1.25	$0.04 - $1.25	Range of estimated possible exercise price	$1.00 - $2.086	$1.25 - $2.086
Volatility		72%	73%
Weighted average volatility				Weighted average volatility	98%	79%
Remaining life	Remaining life	2.23 years	3 years	Remaining life	1.23 years - 3.19 years	1.98 years - 3.96 years
Forfeiture rate		0%	0%
Expected annual dividend yield	Expected annual dividend yield	0%	0%	Expected annual dividend yield	0%	0%

Volatility was estimated by using a weighting of the Company’s historical volatility and the average historical volatility of comparable companies from a representative peer group of publicly traded cannabis companies. The risk-free interest rate for the expected life of the Derivative Warrants was based on the yield available on government benchmark bonds with an approximate equivalent remaining term. The expected life is based on the contractual term. If any of the assumptions used in the calculation were to increase or decrease, this could result in a material or significant increase or decrease in the estimated fair value of the derivative liability. For example, the following table illustrates an increase or decrease in certain significant assumptions as of the balance sheet dates:


	As of September 30, 2023							As of December 31, 2022
	(unaudited)
	Input			Effect of 10% Increase		Effect of 10% Decrease		Input			Effect of 10% Increase		Effect of 10% Decrease
Stock price	$	0.84		$	1,984	$	(1,873)	$	0.76		$	2,529	$	(2,396)
Volatility	98		%	1,341		(1,371)		79		%	2,070		(2,121)


12. EQUITY

Authorized, Issued and Outstanding

The authorized share capital of the Company consists of an unlimited number of SVS, Multiple Voting Shares, Super Voting Shares, and Preferred Shares. As of September 30, 2023, the Company had 196,631,598 SVS issued and outstanding and no Multiple Voting Shares, Super Voting Shares or Preferred Shares issued and outstanding.

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JUSHI HOLDINGS INC. Notes to the Unaudited ~~Interim~~ Condensed Consolidated Financial Statements (Amounts Expressed in Thousands of ~~United States Dollars, Unless Otherwise Stated)~~U.S. dollars, Except Share and Per Share Amounts)

As of September 30, 2022 As of December 31, 2021
(unaudited)
Input Effect of 10% Increase Effect of 10% Decrease Input Effect of 10% Increase Effect of 10% Decrease
Stock price $ 1.23 $ 3,281 $ (3,144) $ 3.25 $ 12,781 $ (10,834)
Volatility 72 % $ 1,547 $ (1,591) 73 % $ 4,473 $ (3,210)


~~13. EQUITY~~

~~Authorized, Issued and Outstanding~~

The authorized share capital of the Company consists of an unlimited number of Preferred Shares, SVS, Multiple Voting Shares, and Super Voting Shares. As of September 30, 2022, the Company had 195,769,605 SVS issued and outstanding and no Preferred Shares, Multiple Voting Shares, or Super Voting Shares issued and outstanding. On August 9, 2021, all of the 149,000 previously issued and outstanding Super Voting Shares and all of the 4,000,000 previously outstanding Multiple Voting Shares were converted into SVS in accordance with their terms as described in Jushi Holdings Inc.’s Articles of Incorporation. All previously outstanding warrants to acquire Super Voting Shares and Multiple Voting Shares were also converted into warrants to acquire SVS, without any other amendment to the terms of such warrants.

~~Private Placements~~

In January 2022, the Company closed non-brokered private placement offerings for an aggregate 3,717,392 SVS at a price of $3.68 per share to an existing investor group for aggregate gross proceeds to the Company of $13,680.

~~Restricted Stock and Stock Options~~

~~Refer to Note 14 - Share-Based Compensation and Other Benefits for details of restricted stock awards and stock option grants.~~

~~Other Equity~~

~~Refer to Note 10 - Debt for details of a convertible promissory note classified as equity.~~

Warrants

Each warrant entitles the holder to purchase one SVS. ~~The following table summarizes all warrants outstanding as of September 30, 2022:~~

Expiration Date Exercise Price
($) Number of Warrants
2023 1.47 - 1.50 337,500
2024 1.25 35,862,922
2025 1.25 - 3.00 2,168,508
2026 4.18 300,000
2027 1.93 300,000
2029 0.50 - 2.00 26,367,627
Total warrants 65,336,557

~~As of September 30, 2022, warrants issued and outstanding have a weighted-average remaining contractual life of 4.0 years, and unrecognized share-based compensation expense of $892.~~ Certain warrants may be net share settled.

~~Table of Contents~~


~~JUSHI HOLDINGS INC.~~ ~~Notes to the Unaudited Interim Condensed Consolidated Financial Statements~~ ~~(Amounts Expressed in Thousands of United States Dollars, Unless Otherwise Stated)~~

The following table summarizes the status of warrants and related transactions:

Non-Derivative Warrants
Derivative Warrants (2)
Total Number of Warrants Weighted - Average Exercise Price
Balance as of January 1, 2022 29,156,048 40,124,355 69,280,403 $ 1.19
Granted 400,000 — 400,000 $ 2.20
Exercised (1)
(715,846) (3,628,000) (4,343,846) $ 1.26
Balance as of September 30, 2022 28,840,202 36,496,355 65,336,557 $ 1.19
Exercisable as of September 30, 2022 26,940,202 36,496,355 63,436,557 $ 1.15


	Non-Derivative (Equity) Warrants	Derivative Liabilities Warrants (1)	Total Number of Warrants	Weighted - Average Exercise Price
Balance as of January 1, 2023	30,673,635	55,375,202	86,048,837	$	1.40
Granted	851,471	—	851,471	$	0.61

Cancelled/forfeited/expired	(337,500)	—	(337,500)	$	1.49
Reclassification	17,512,280	(17,512,280)	—	$	—
Balance as of September 30, 2023	48,699,886	37,862,922	86,562,808	$	1.16
Exercisable as of September 30, 2023	46,524,886	37,862,922	84,387,808	$	1.14

(1)~~The weighted average share price as of the dates of exercise was $3.51. The Company issued 3,176,601 SVS and received~~ ~~$1,179~~ ~~in cash proceeds during the~~ ~~nine months ended September 30, 2022~~ ~~for~~In June 2023, 5,890,000 warrants ~~exercised.~~

~~(2)Derivative~~were repriced from $1.25 to $1.00. Additionally, 17,512,280 warrants ~~which~~ were ~~issued to the Senior Notes holders and which have an exercise price of $1.25. These warrants represent a~~reclassified from derivative liability warrants to non-derivative (equity) warrants and ~~are therefore not classified as equity in the statement of financial position.~~repriced from $2.086 to $1.00. Refer to Note 1211 - Derivative ~~Liabilities.~~Liabilities for additional information.


~~14. SHARE-BASED COMPENSATION AND OTHER BENEFITS~~

Share-based payment award plans

~~The components of share-based compensation expense are as follows:~~Plan summary and description

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Stock options $ 4,569 $ 1,093 $ 14,369 $ 2,791
Restricted stock 347 1,015 1,625 5,258
Warrants 550 126 1,120 932
Total share-based compensation expense $ 5,466 $ 2,234 $ 17,114 $ 8,981

~~Equity Incentive Plan~~

Under the Company’s 2019 Equity Incentive Plan, as amended, (the ~~“Plan”~~“2019 Plan”), non-transferable options to purchase SVS and restricted SVS of the Company may be issued to directors, officers, employees, or consultants of the Company. The 2019 Plan authorizes the issuance of up to 15% (plus an additional 2% inducements for hiring employees and senior management) of the number of outstanding shares of common stock (of all classes) of the Company (the “Share Reserve”). Incentive stock options are limited to the Share Reserve, ~~as of June 6, 2019. As of September 30, 2022,~~and the maximum number of incentive awards available for issuance under the 2019 Plan, including additional awards available for certain new hires, was ~~3.8 million.~~5,051,423 as of September 30, 2023.

~~(a)~~Stock Options

The stock options issued by the Company are options to purchase SVS of the Company. All stock options issued have been issued to directors and employees ~~of certain subsidiaries of the Company~~ under the Company’s 2019 Plan. Such options generally expire in ten years from the date of grant and generally vest ratably over three years from the grant date. The options generally may be net share settled. The following table summarizes the status of stock options and related transactions:


	Number of Stock Options	Weighted-Average Per Share Exercise Price
Issued and Outstanding as of January 1, 2023	30,752,259	$	2.58
Granted	4,112,000	$	0.51

Cancelled/forfeited/expired	(6,490,171)	$	2.60
Issued and Outstanding as of September 30, 2023	28,374,088	$	2.27
Exercisable as of September 30, 2023	17,364,078	$	2.49

2519

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JUSHI HOLDINGS INC. Notes to the Unaudited ~~Interim~~ Condensed Consolidated Financial Statements (Amounts Expressed in Thousands of ~~United States Dollars, Unless Otherwise Stated)~~

~~The following table summarizes the status of stock options and related transactions:~~

Number of Stock Options Weighted-Average Per Share Exercise Price
Issued and Outstanding as of January 1, 2022 20,429,120 $ 3.20
Granted (1)
10,311,000 $ 2.01
Exercised (2)
(274,998) $ 1.66
Forfeited/expired/cancelled (2,037,002) $ 4.58
Issued and Outstanding as of September 30, 2022 28,428,120 $ 2.68
Exercisable as of September 30, 2022 11,863,260 $ 2.44

~~(1)The weighted-average per share grant date fair value was $1.44.~~

~~(2)The weighted-average share price at the date of exercise was $3.84.~~

~~The following table summarizes the issued and outstanding stock options as of September 30, 2022:~~

Expiration Year Stock Options Outstanding Exercise Price Stock Options Exercisable
2022 50,000 $1.35 - $2.00 50,000
2028 685,000 $1.00 - $1.35 685,000
2029 6,849,668 $1.26 - $2.75 6,689,665
2030 792,500 $0.91 - $3.98 426,660
2031 9,809,952 $3.70 - $6.53 2,837,941
2032 10,241,000 $1.60 - $4.20 1,173,994
28,428,120 11,863,260

~~As of September 30, 2022, stock options outstanding have a weighted-average remaining contractual life of 8.61 years, and unrecognized share-based compensation expense of $20,399.~~

In determining the amount of share-based compensation expense related to stock options issued, the Company used the Black-Scholes option-pricing model to establish the measurement date fair value of stock options granted during the period. The following assumptions were applied at the time of grant:

Nine Months Ended September 30,
2022 2021
Risk-free annual interest rate 0.45% - 3.24% 0.45% - 1.25%
Expected annual dividend yield 0% 0%
Volatility 72.3% - 78.5% 74.0% - 78.5%
Expected life of stock options 5.0 - 7.5 years 5 - 7.48 years
Forfeiture rate 0% 0%

Volatility was estimated by using a weighting of the Company’s historical volatility and the average historical volatility of comparable companies from a representative peer group of publicly traded cannabis companies. The expected life in years represents the period of time that stock options issued are expected to be outstanding, using the simplified method. The simplified method represents the Company’s best estimate of the expected term of the options, given the Company’s limited history available. The risk-free rate is based on U.S. Treasury bills with a remaining term equal to the expected life of the options. The Company does not anticipate paying dividends in the foreseeable future, and as a result, the expected annual dividend yield is expected to be 0%.

~~Table of Contents~~


~~JUSHI HOLDINGS INC.~~ ~~Notes to the Unaudited Interim Condensed Consolidated Financial Statements~~ ~~(Amounts Expressed in Thousands of United States Dollars, Unless Otherwise Stated)~~U.S. dollars, Except Share and Per Share Amounts)

~~(b)~~The fair value of the stock options granted was determined using the Black-Scholes option-pricing model. The following assumptions were used for the calculation at date of grant:


	Nine Months Ended September 30,
	2023	2022
Weighted average stock price	$0.51	$2.02
Weighted average expected stock price volatility	76.9%	73.1%
Expected annual dividend yield	0%	0%
Weighted average expected life	6.0 years	5.8 years
Weighted average risk-free annual interest rate	3.6%	2.6%
Weighted average grant date fair value	$0.34	$1.45

Restricted Stock ~~Grants~~

The Company grants restricted SVS to independent directors, management, former owners of acquired businesses or assets, and to consultants and other employees. The restricted SVS are included in the issued and outstanding ~~SVS.~~SVS, and the fair value of the restricted stock granted was estimated based on the SVS price at grant date. The following table summarizes the status of restricted stock and related transactions:


			Number of Restricted Subordinate Voting Shares




Unvested restricted stock as of January 1, ~~2022~~2023			~~2,859,151~~1,156,319
~~Granted~~ ~~(1)~~			~~86,952~~
~~Cancelled~~Cancelled/forfeited			~~(7,813)~~(54,774)
Vested and Released			~~(1,701,221)~~(1,099,684)
Unvested restricted stock as of September 30, ~~2022~~2023			~~1,237,069~~1,861

~~(1)~~ ~~The weighted-average per share grant date fair value was $2.05~~

Generally, restricted stock awards will vest either one-third on each anniversary of service from the vesting start date or will be fully vested on the completion of one year of full service from the vesting start date, depending on the award.

Share-based compensation cost

The components of share-based compensation expense are as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Stock options	$	712	$	4,569	$	4,170	$	14,369
Restricted stock	—		347		293		1,625
Warrants	344		550		1,267		1,120
Total share-based compensation expense	$	1,056	$	5,466	$	5,730	$	17,114

As of of September 30, ~~2022,~~2023 ~~unvested restricted stock awards have a weighted-average remaining vesting period~~, the Company had $6,268 of ~~0.56 years, and~~ unrecognized share-based compensation ~~expense~~cost related to unvested stock options, restricted stock and warrants, which is expected to be recognized as share-based compensation cost over a weighted average period of ~~$734.~~1.9 years.

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JUSHI HOLDINGS INC. Notes to the Unaudited Condensed Consolidated Financial Statements (Amounts Expressed in Thousands of U.S. dollars, Except Share and Per Share Amounts)


13. EARNINGS (LOSS) PER SHARE

The reconciliations of the net loss and the weighted average number of shares used in the computations of basic and diluted loss per share attributable to Jushi shareholders are as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Numerator:
Net loss and comprehensive loss attributable to Jushi shareholders	$	(20,622)	$	(54,696)	$	(47,098)	$	(62,387)
Dilutive effect of net income from derivative warrants liability	—		(6,396)		—		(63,277)
Less undistributed net income for participating securities	—		455		—		532
Net loss and comprehensive loss attributable to Jushi shareholders - diluted	$	(20,622)	$	(60,637)	$	(47,098)	$	(125,132)

Denominator:
Weighted-average shares of common stock - basic	195,128,096		192,880,468		194,649,053		189,119,282
Dilutive effect of derivative warrants	—		10,289,463		—		16,576,308
Weighted-average shares of common stock - diluted	195,128,096		203,169,931		194,649,053		205,695,590

Loss per common share attributable to Jushi shareholders:
Basic	$	(0.11)	$	(0.28)	$	(0.24)	$	(0.33)
Diluted	$	(0.11)	$	(0.30)	$	(0.24)	$	(0.61)

The following table summarizes weighted average instruments that may, in the future, have a dilutive effect on loss per share, but were excluded from consideration in the computation of diluted net loss per share for the three and nine months ended September 30, 2023 and 2022, because the impact of including them would have been anti-dilutive:


	Three Months Ended September 30,		Nine Months Ended September 30,
	2023	2022	2023	2022
Stock options	29,664,683	26,072,710	29,185,375	22,435,919
Warrants (derivative liabilities and equity)	86,241,092	29,405,890	86,110,330	29,442,149
Unvested restricted stock awards	4,177	1,148,935	496,567	1,785,619
Convertible promissory notes	—	910,000	—	910,000
	115,909,952	57,537,535	115,792,272	54,573,687

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JUSHI HOLDINGS INC. Notes to the Unaudited Condensed Consolidated Financial Statements (Amounts Expressed in Thousands of U.S. dollars, Except Share and Per Share Amounts)


14. REVENUE

The Company has three revenue streams: (i) retail, (ii) wholesale and (iii) other. The Company’s retail revenues are comprised of cannabis sales from its dispensaries. The Company’s wholesale revenues are comprised of cannabis sales to its wholesale customers for resale through their dispensaries. The Company’s other operations primarily include the Company’s hemp/cannabidiol (“CBD”) retail operations which were discontinued in 2022. Any intercompany revenue and costs are eliminated to arrive at consolidated totals.

The following table summarizes the Company’s revenue from external customers, disaggregated by revenue stream:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Retail	$	58,535	$	67,038	$	180,461	$	192,268
Wholesale	6,842		5,769		21,214		15,085
Other	—		10		—		109
Total revenue, net	$	65,377	$	72,817	$	201,675	$	207,462


15. OPERATING EXPENSES

The major components of operating expenses are as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Salaries, wages and employee related expenses	$	13,251	$	18,985	$	43,839	$	54,915
Share-based compensation expense	1,056		5,466		5,730		17,114
Rent and related expenses	3,387		3,351		8,784		9,844
Depreciation and amortization expense	2,962		3,658		7,202		8,779
Professional fees and legal expenses	1,420		2,520		6,066		8,028

Other expenses (1)	3,612		6,610		13,673		18,368
Indefinite-lived asset impairment	—		37,600		—		37,600
Total operating expenses	$	25,688	$	78,190	$	85,294	$	154,648

(1) Other expenses are primarily comprised of marketing and selling expenses, insurance costs, administrative and application fees, software and technology costs, travel, entertainment and conferences and other.

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JUSHI HOLDINGS INC. Notes to the Unaudited Condensed Consolidated Financial Statements (Amounts Expressed in Thousands of U.S. dollars, Except Share and Per Share Amounts)


16. INCOME TAXES

The following table summarizes the Company’s income tax ~~(benefit)~~ expense and effective tax rates for the three and nine months ended September 30, ~~2022~~2023 and ~~2021:~~2022:

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
(Loss) Income Before Income Taxes $ (57,498) $ 46,015 $ (52,428) $ 32,280
Income Tax Benefit (Expense) $ 2,802 $ (6,333) $ (9,959) $ (21,012)
Effective Income Tax Rate 4.9 % (13.8) % (19.0) % (65.1) %


	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Loss before income tax	$	(12,611)		$	(57,498)		$	(20,393)		$	(52,428)
Income tax expense (benefit)	$	8,011		$	(2,802)		$	26,705		$	9,959
Effective income tax rate	63.5		%	4.9		%	131.0		%	19.0		%

The Company has computed its provision for income taxes based on the actual effective rate for the ~~quarter~~nine months ended September 30, 2023 and 2022 as the Company believes this is the best estimate for the annual effective tax rate. Therefore, the Company’s effective income tax rates for the three and nine months ended September 30, 2023 and 2022 are not indicative of the effective income tax rate for each respective fiscal year of 2023 and 2022. The Company’s effective income tax rate is significantly higher than the statutory income tax rates due in part to (i) disallowed expenses under U.S. Internal Revenue Code of 1986, as amended (“IRC”), Section 280E, (ii) change in liability for unrecognized tax benefits, (iii) fair value change of derivatives, (iv) interest and penalties accrual for tax liabilities, and (v) state income taxes.

Due to its cannabis operations, the Company is subject to the limitation of ~~U.S. Internal Revenue Code of 1986, as amended ("IRC")~~IRC Section 280E (“280E”) under which the Company is only allowed to deduct "costs of goods sold". This results in permanent differences between ordinary and necessary business expenses deemed non-allowable under ~~IRC Section~~ 280E. Therefore, the effective tax rate can be highly variable and may not necessarily correlate with pre-tax income which provides for effective tax rates that are well in excess of statutory tax rates. In connection with the preparation and filing of the fiscal 2022 federal income tax return, the Company changed its previous application of 280E to exclude certain parts of its business. However, since the Company’s new tax position on 280E may be challenged by the IRS, the Company elected to treat the deductibility of these related expenses as an uncertain tax position. As of September 30, 2023, the balances in income tax payable and unrecognized tax benefits on the consolidated balance sheets include the impact of the new tax position on 280E, which decreased current liabilities with a corresponding increase in non-current liabilities. There was no material impact to the consolidated statements of operations and comprehensive income (loss).

The Company’s tax returns for the year 2021 and prior benefited from not applying ~~IRC Section~~ 280E to certain entities of the consolidated group either due to the entity not yet starting operations or because the entity had a separate trade or business that was not medical or recreational cannabis operations. The Company determined that it is not more likely than not these tax positions would be sustained under examination.

As a result of the above, the Company has ~~an uncertain~~a liability for unrecognized tax ~~liability~~benefits of ~~$48,781~~$98,948 and ~~$41,990~~$57,200 as of September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively, inclusive of interest and ~~penalties, which is included in income~~penalties. Additionally, there are unrecognized deferred tax ~~liabilities - non-current in~~benefits of $3,442 and $3,412 as of September 30, 2023 and December 31, 2022, respectively. The Company does not expect the ~~consolidated balance sheets.~~unrecognized tax benefits will materially increase or decrease within the next 12 months.

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JUSHI HOLDINGS INC. Notes to the Unaudited ~~Interim~~ Condensed Consolidated Financial Statements (Amounts Expressed in Thousands of ~~United States Dollars, Unless Otherwise Stated)~~U.S. dollars, Except Share and Per Share Amounts)


~~16. NON-CONTROLLING INTERESTS~~17. RELATED PARTY TRANSACTIONS

~~Jushi Europe~~The Company had the following related party transactions:

~~The Company’s non-controlling interests are comprised primarily of~~


	Three Months Ended September 30,				Nine Months Ended September 30,				As of
	2023		2022		2023		2022		September 30, 2023 (unaudited)		December 31, 2022
Nature of transaction	Related Party Expense				Related Party Expense				Related Party Payable
10% Senior Notes - interest expense and principal amount	$	—	$	(9)	$	—	$	(26)	$	—	$	—
12% Second Lien Notes - interest expense and principal amount (1)	$	(538)	$	—	$	(1,622)	$	—	$	(18,283)	$	(17,491)
Other debt (2)	$	—	$	—	$	—	$	—	$	(3,162)	$	(3,189)

(1)For the ~~non-controlling~~periods ended September 30, 2023 and December 31, 2022, the Second Lien Notes payable and the related interest inexpense includes amounts related to a director as well as a significant investor.

(2)Other debt relates to Jushi Europe. In March 2020, the Company finalized its agreement to expand internationally through the establishment of Jushi Europe. Jushi Europe planned to build out its European business through a combination of strategic acquisitions, partnerships, and license applications, focused on supplying the highest-quality medical cannabis products to patients throughout Europe. During the first quarter of 2020, the Company received $2,000 in cash from the 49% investor partner. The Company owns 51% of Jushi Europe and is exposed, or has rights, to variable returns from Jushi Europe and has the power to govern the financial and operating policies of Jushi Europe through voting control so as to obtain economic benefits, and therefore the Company has consolidated Jushi Europe from the date of acquisition.

During the fourth quarter of 2020, Jushi Europe entered into a credit agreement with a relative of the Jushi Europe non-controlling partner and received €500 (approximately $614) principal amount. In January 2021, Jushi Europe received €1,000 (approximately $1,214 as of December 31, 2021) principal amount pursuant to a credit agreement with an individual. These credit agreements accrue interest at 5% per annum, payable annually in arrears, and mature on November 11, 2024. The outstanding balance may be prepaid at any time prior to maturity without penalty and may be offset with receivables from the lender. Subsequent to December 31, 2021, it was determined that Jushi Europe was insolvent. The insolvency created an event of default under the unsecured credit agreements of Jushi Europe and the notes became immediately due and payable.

In April 2021, Jushi Europe entered into an unsecured bridge loan with the Company (51% owner) and an investment partner for a total of €1,800 (~$2,141) principal amount, of which €900 (~$1,070) was contributed by the Company and is eliminated in consolidation. In September 2021, the parties amended the loan agreement and an additional €1,200 (~$1,390) in funding was provided for Jushi Europe, of which 51% was contributed by the Company and is eliminated in consolidation. The bridge loans, as amended, currently accrue interest at 0.5% per annum, which is the foreign marginal lending facility rate plus 25 basis points. All payments including interest are due on maturity, which is 180 days post amendment. These loans have not yet been repaid and are delinquent.

On February 16, 2022, Jushi Europe filed a notice of over-indebtedness with the Swiss courts. ~~Accordingly, the Company determined that the assets of Jushi Europe were impaired and recognized an impairment loss of $4,561 for the year ended December 31, 2021.~~ Then, the Swiss courts declared Jushi Europe’s bankruptcy on May 19, 2022. As a result, Jushi Europe updated its corporate name to Jushi Europe SA in liquidation, which is still on-going.

~~Purchases of Non-Controlling Interests~~

~~Agape~~

On January 25, 2021, the Company acquired the remaining 20% of the equity interests of Agape from the non-controlling shareholders for 500,000 SVS for total estimated fair value of $3,425, based on a market price of $6.85 per share on the date of close. As a result of the transaction, the Company recorded a decrease to non-controlling interests of approximately $1,562. The difference between the fair value of the consideration paid and the amount by which the non-controlling interest is adjusted was recognized in paid-in capital. The Company now owns 100% of the issued and outstanding shares of Agape.

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~~JUSHI HOLDINGS INC.~~ ~~Notes to the Unaudited Interim Condensed Consolidated Financial Statements~~ ~~(Amounts Expressed in Thousands of United States Dollars, Unless Otherwise Stated)~~


~~17. EARNINGS (LOSS) PER SHARE~~

The reconciliations of the net income (loss) and the weighted average number of shares used in the computations of basic and diluted Earnings (loss) per share attributable to Jushi shareholders are as follows:

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Numerator:
Net (loss) income and comprehensive (loss) income attributable to Jushi shareholders $ (54,696) $ 39,744 $ (62,387) $ 11,695
Less undistributed net income (loss) for participating securities 455 (422) 532 (120)
Net (loss) income and comprehensive (loss) income - basic (54,241) 39,322 (61,855) 11,575
Dilutive effect of net income from derivative warrants liability (6,396) (55,021) (63,277) (66,125)
Net loss and comprehensive loss attributable to Jushi shareholders - diluted $ (60,637) $ (15,699) $ (125,132) $ (54,550)
Denominator:
Weighted-average shares of common stock - basic 192,880,468 168,801,193 189,119,282 163,345,527
Dilutive effect of derivative warrants 10,289,463 30,479,959 16,576,308 32,596,551
Weighted-average shares of common stock - diluted 203,169,931 199,281,152 205,695,590 195,942,078
Net (loss) income per common share attributable to Jushi:
Basic $ (0.28) $ 0.23 $ (0.33) $ 0.07
Diluted $ (0.30) $ (0.08) $ (0.61) $ (0.28)

On August 9, 2021, all the 149,000 previously issued and outstanding Super Voting Shares and all the 4,000,000 previously outstanding Multiple Voting Shares were converted into SVS in accordance with their terms as described in Jushi Holdings Inc.’s Articles of Incorporation. Refer to Note 13 - Equity. The number of basic and diluted weighted-average shares outstanding for 2021 assumes the conversion of the Multi Voting Share and Super Voting Shares into SVS as of the beginning of the year. Other than voting rights, the Multi Voting Shares and Super Voting Shares had the same rights as the SVS and therefore all these shares are treated as the same class of common stock for purposes of the earnings (loss) per share calculations.

The Company’s issued and outstanding number of common stock (SVS) includes (1) unnvested restricted stock awards in which the participants have forfeitable rights to dividend or any other distributions declared during the restricted period and (2) shares issued to employees for which a corresponding non-recourse promissory note receivable with the employee is outstanding until the notes are repaid (which are considered to be participating securities). Holders of restricted stock awards are not obligated to participate in losses until the shares are vested. As of September 30, 2022 and 2021, the number of participating securities were 1,500,000 and 2,116,677, respectively.

Basic and diluted earnings (loss) per share attributable to Jushi shareholders are presented in conformity with the two-class method required for participating securities. The two-class method determines earnings (loss) per share for each class of common stock and participating securities according to dividends or any other distributions declared during the restricted period and their respective participation rights in undistributed earnings.

Basic weighted-average shares of common stock for each of the periods presented exclude the weighted average shares of unvested restricted stock awards and participating securities. Basic earnings (loss) per share attributable to Jushi shareholders is computed by dividing the net income (loss) and comprehensive income (loss) – basic by the basic weighted-average shares of common stock. Diluted earnings (loss) per share attributable to Jushi stockholders are computed by dividing the net income (loss) and comprehensive income (loss) – diluted by the diluted weighted-average

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~~JUSHI HOLDINGS INC.~~ ~~Notes to the Unaudited Interim Condensed Consolidated Financial Statements~~ ~~(Amounts Expressed in Thousands of United States Dollars, Unless Otherwise Stated)~~

~~shares of common stock, which includes all potentially dilutive common stock equivalents, such as stock options, warrants, and convertible promissory notes.~~

The following table summarizes equity instruments that may, in the future, have a dilutive effect on earnings (loss) per share, but were excluded from consideration in the computation of diluted net loss per share for the three and nine months ended September 30, 2022 and 2021, because the impact of including them would have been anti-dilutive:

September 30,
2022 2021
Stock options 28,428,120 10,921,452
Warrants 28,840,202 28,995,403
Unvested restricted stock awards 1,237,069 3,666,511
Convertible promissory notes 910,000 910,000
59,415,391 44,493,366


18. ~~OPERATING EXPENSES~~

~~The major components of operating expenses are as follows:~~

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Salaries, wages and employee related expenses $ 18,985 $ 13,241 $ 54,915 $ 37,642
Share-based compensation expense 5,466 2,234 17,114 8,981
Depreciation and amortization expense 3,658 1,654 8,779 3,903
Other expenses (1)
12,481 8,018 36,240 22,889
Indefinite-lived asset impairment 37,600 — 37,600 —
Total operating expenses $ 78,190 $ 25,147 $ 154,648 $ 73,415

~~(1)~~ Other expenses are primarily comprised of rent and related expenses, professional fees and legal expenses, marketing and selling expenses, insurance costs, administrative and application fee, software and technology costs, travel, entertainment and conferences and other.


~~19. OTHER INCOME (EXPENSE)~~

~~The components of other expense, net are as follows:~~

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Gains on investments and financial assets $ — $ 31 $ — $ 1,222
Losses on debt redemptions/extinguishments/modifications — — — (3,815)
Gains (losses) on legal settlements 200 22 224 (1,386)
Other (491) 168 (585) 336
Other income (expense), net $ (291) $ 221 $ (361) $ (3,643)

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~~JUSHI HOLDINGS INC.~~ ~~Notes to the Unaudited Interim Condensed Consolidated Financial Statements~~ ~~(Amounts Expressed in Thousands of United States Dollars, Unless Otherwise Stated)~~


~~20. RELATED PARTY TRANSACTIONS~~

~~The Company had the following related party transactions:~~

Three Months Ended September 30, Nine Months Ended September 30, As of
(unaudited)
2022 2021 2022 2021 September 30, 2022 (unaudited) December 31, 2021
Nature of transaction Related Party
Income (Expense) Related Party
Income (Expense) Related Party
Prepaid/Receivable (Payable)
Management services agreements (1)
$ — $ (10) $ — $ (30) $ — $ —
Senior Notes - interest expense and principal amount (2)
$ (9) $ (50) $ (26) $ (150) $ (342) $ (1,194)
Other debt (3)
$ — $ — $ — $ — $ (3,134) $ (3,384)
Loans to senior key management - interest charged and principal plus accrued interest outstanding (4)
$ — $ 30 $ — $ 91 $ — $ —

~~(1)~~Includes fees paid to entities controlled by the Company’s Chief Executive Officer, James Cacioppo, for shared costs of administrative services, the provision of financial and research-related advice, and sourcing and assisting in mergers, acquisitions and capital transactions. These amounts are included in operating expenses within the condensed consolidated statements of operations and comprehensive income (loss). Excludes expense from previously issued warrants, which is included in stock-based compensation expense. ~~For the nine months ended September 30, 2022 and 2021, total expense for previously issued warrants was $10 and $52, respectively.~~

~~(2)~~For the nine months ended September 30, 2022, interest expense includes amounts related to certain senior key management, directors and other employees as well as a significant investor. Interest expense for nine months ended September 30, 2022 and 2021 cannot be reliably determined as the majority of the Senior Notes are publicly traded. Principal amounts outstanding as of September 30, 2022 and December 31, 2021 are also estimates for this reason.

~~(3)Refer to Note 16 - Non-Controlling Interests for details of other loans from related parties.~~

~~(4)~~In January 2021, an executive received a loan from the Company of $174 for withholding tax requirements for RSAs issued to the executive, which was repaid in full via payroll deductions. In April 2019, the Company entered into promissory notes with certain executives for the purchase of restricted stock, pursuant to which those executives borrowed an aggregate of $1,813 at a rate of 2.89% per annum, compounded annually. As these loans were non-recourse loans under the accounting guidance they were not reflected in the consolidated balance sheet or table above. As of December 31, 2021, all these balances plus accrued interest have been settled. The balances including accrued interest were settled as part of the executive’s regular pay and bonus, severance or via shares repurchased by the Company. During the year ended December 31, 2021, the Company received 471,757 shares from key management personnel in full settlement of principal amount $2,007 outstanding promissory notes and related interest.


~~21.~~ COMMITMENTS AND CONTINGENCIES

Contingencies

Although the possession, cultivation and distribution of cannabis for medical and recreational use is permitted in certain states, cannabis is classified as a Schedule-I controlled substance under the U.S. Controlled Substances Act and its use remains a violation of federal law. The Company’s operations are subject to a variety of local and state regulations. Failure to comply with one or more of those regulations could result in fines, restrictions on its operations, or losses of permits that could result in the Company ceasing operations. While management believes that the Company is in material compliance with applicable local and state regulations as of September 30, ~~2022,~~2023, marijuana regulations continue to evolve and are subject to differing interpretations. As a result, the Company could be subject to regulatory fines, penalties or restrictions at any time. Since federal law criminalizing the use of cannabis preempts state laws that legalize its use, strict

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~~JUSHI HOLDINGS INC.~~ ~~Notes to the Unaudited Interim Condensed Consolidated Financial Statements~~ ~~(Amounts Expressed in Thousands of United States Dollars, Unless Otherwise Stated)~~

enforcement of federal law regarding cannabis would likely result in the Company’s inability to proceed with the Company’s business plans. In addition, the Company’s assets, including real property, cash and cash equivalents, equipment, inventory and other goods, could be subject to asset forfeiture because cannabis is still federally illegal.

Refer to Note 1516 - Income Taxes for certain tax-related ~~contingencies and to Note 7 - Acquisitions for acquisition-related contingent consideration liability.~~contingencies.

Claims and Litigation

~~Any proceeding that may be brought against the Company could have a material adverse effect on the Company’s business plans, financial condition and results of operations.~~ From time to time, the Company may be involved in litigation relating to claims arising out of operations in the normal course of business. As of September 30, ~~2022,~~2023, except as set forth below, there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the Company’s financial results. There are also no proceedings in which any of the Company’s directors, officers or affiliates is an adverse party or has a material interest adverse to the Company’s interest.

~~Refer~~MJ Market matter

On March 31, 2023, MJ’s Market, Inc. (“MJ’s”) filed a complaint in federal district court in Massachusetts adverse to ~~Note 16 - Non-Controlling Interests~~Jushi Holdings Inc. and certain of its subsidiaries, including Jushi MA, Inc., Jushi Inc. and Nature’s Remedy of Massachusetts (collectively “Jushi”), as well as the former owners and affiliates of Nature’s Remedy of Massachusetts (“Complaint”). The Complaint centrally claims that the structure of the Nature’s Remedy of Massachusetts transaction

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JUSHI HOLDINGS INC. Notes to the Unaudited Condensed Consolidated Financial Statements (Amounts Expressed in Thousands of U.S. dollars, Except Share and Per Share Amounts)

providing for increased purchase price consideration if there is no competing dispensary within 2,500 foot radius by certain time periods, and the ~~information regarding~~Company’s filing with the ~~bankruptcy~~Massachusetts Superior Court an appeal of the Town of Tyngsborough’s decision to approve MJ’s facility in contradiction of its own zoning bylaws are violations of the Sherman Antitrust Act, Massachusetts Antitrust Act, and Massachusetts Consumer Protection Act, as well as interference with contractual relations and abuse of process. MJ is seeking legal and equitable remedies including compensatory and other damages. The Company disputes such allegations, believes it has substantial defenses and is vigorously defending against the Complaint.

Sammartino Matter

On February 28, 2023, the Company informed Sammartino, the former owner of Nature’s Remedy and certain of its affiliates, that Sammartino had breached several provisions of the MIPA and/or fraudulently induced the Company to enter into, and not terminate, the MIPA. As a consequence of these breaches and the fraudulent inducement, the Company informed Sammartino that the Company had incurred significant damages, and pursuant to the terms of the MIPA the Company had elected to offset these damages against certain promissory notes and shares the Company was to pay and issue, respectively, to Sammartino, and that Sammartino would be required to pay the remainder in cash. On March 13, 2023, Sammartino responded to the Company by alleging various procedural deficiencies with the Company’s claim and provided the Company with a notice that the Company was in default of the MIPA for failing to issue certain shares of the Company to Sammartino. On March 21, 2023, Sammartino sent a second notice that the Company was in default of the promissory notes for failing to pay interest pursuant to their specified schedule. On March 23, 2023, the Company sent a second letter to Sammartino disputing each procedural deficiency claimed by Sammartino and disputing that the Company is in default of the MIPA or the promissory notes and that it properly followed the terms of the various agreements in electing to set off the damages.

Pacific Collective matter

On October 24, 2022, Pacific Collective, LLC (“Pacific Collective”) filed a complaint in state court in California against Jushi ~~Europe.~~subsidiaries TGS CC Ventures, LLC (“TGS”), and Jushi Inc. Pacific Collective alleges that the Jushi subsidiaries breached a commercial property lease and lease guaranty and that Pacific Collective is entitled to recover in excess of $20,000 in damages. TGS believes it lawfully rescinded the lease based on Pacific Collective’s failure to purchase the property that was the subject of the lease and to construct and deliver the building contemplated by the lease, and is of the position that no damages are owed to Pacific Collective.

Commitments

In addition to the contractual obligations outlined in Note 109 - Debt and Note 1110 - ~~Lease Obligations,~~Leases, the Company has the following commitments as of September 30, ~~2022:~~2023 related to property and construction.

Property and Construction Commitments

In connection with various license applications, the Company may enter into conditional leases or other property commitments which will be executed if the Company is successful in obtaining the applicable license and/or resolving other contingencies related to the license or application.

In addition, the Company expects to incur capital expenditures for leasehold improvements and construction of buildouts of certain locations, including for properties for which the lease is conditional on obtaining the applicable related license or for which other contingencies exist. If the Company were to be unsuccessful in obtaining a particular license or certain other conditions are not met, the previously capitalized improvements and buildouts relating to that license may need to be expensed in future periods in the statements of operations and comprehensive income (loss).


~~22. FINANCIAL INSTRUMENTS~~

The Company applies fair value accounting for all financial assets and liabilities that are recognized or disclosed at fair value in the 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:

~~(i) Level 1 – Observable inputs such as unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;~~

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JUSHI HOLDINGS INC. Notes to the Unaudited ~~Interim~~ Condensed Consolidated Financial Statements (Amounts Expressed in Thousands of ~~United States Dollars, Unless Otherwise Stated)~~U.S. dollars, Except Share and Per Share Amounts)

(ii) Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by the observable market data for substantially the full term of the assets or liabilities;

~~(iii) Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.~~


19. FINANCIAL INSTRUMENTS

The following table sets forth the Company’s financial assets and liabilities, subject to fair value measurements on a recurring basis, by level within the fair value ~~hierarchy as of September 30, 2022:~~hierarchy:

Level 1 Level 2 Level 3 Total
Financial assets:
Equity investment $ — $ — $ 1,500 $ 1,500
$ — $ — $ 1,500 $ 1,500
Financial liabilities:
Derivative liabilities (1)
$ — $ — $ 19,801 $ 19,801
Contingent consideration liabilities (2)
— — 4,671 4,671
$ — $ — $ 24,472 $ 24,472


	September 30, 2023 (unaudited)		December 31, 2022
Financial assets: (1)
Equity investment	$	977	$	977
Total financial assets	$	977	$	977

Financial liabilities: (1)
Derivative liabilities (2)	$	10,567	$	14,134
Contingent consideration liabilities (3)	1,617		4,793
Total financial liabilities	$	12,184	$	18,927

(1)The ~~following table sets forth the Company’s~~Company has no financial assets ~~and~~or liabilities ~~subject to fair value measurements on a recurring basis by level~~in Level 1 or 2 within the fair value hierarchy as of September 30, 2023 and December 31, ~~2021:~~2022, and there were no transfers between hierarchy levels during the nine months ended September 30, 2023 or year ended December 31, 2022.

Level 1 Level 2 Level 3 Total
Financial assets:
Equity investment $ — $ — $ 1,500 $ 1,500
$ — $ — $ 1,500 $ 1,500
Financial liabilities:
Derivative liabilities (1)
$ — $ — $ 92,435 $ 92,435
Contingent consideration liabilities (2)
— — 8,223 8,223
$ — $ — $ 100,658 $ 100,658

~~(1)~~ (2)Refer to Note 1211 - Derivative ~~Liabilities~~Liabilities.

~~(2)~~ (3)Refer to Note 76 - ~~Acquisitions~~Acquisitions.

The carrying amounts of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and certain accrued expenses, and certain other assets and liabilities held at amortized cost, approximate their fair values due to the short-term nature of these instruments. The equity investment approximates its fair value at September 30, ~~2022~~2023 and December 31, ~~2021.~~2022. The ~~carrying amounts~~fair value of the ~~promissory notes approximate~~Company’s debt approximates their fair values as ~~the~~of September 30, 2023 and December 31, 2022 as their effective interest rates are consistent with market rates. ~~The fair value of the Senior Notes as of September 30, 2022 and December 31, 2021 approximated the principal amount.~~

~~There were no transfers between hierarchy levels during the~~ ~~nine months ended September 30, 2022~~.

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~~JUSHI HOLDINGS INC.~~ ~~Notes to the Unaudited Interim Condensed Consolidated Financial Statements~~ ~~(Amounts Expressed in Thousands of United States Dollars, Unless Otherwise Stated)~~


~~23.~~20. SUBSEQUENT EVENTS

~~Phishing attack~~

~~In late September 2022, the Company was subject to a cybersecurity attack, which the Company believes was a phishing attack, that resulted in the transfer of approximately $500.~~ ~~In October 2022, the Company was able to recall the transfer and recover substantially all of the amount.~~

~~Proposed Debt Financing~~

As of November 17, 2022, the Company entered into subscription agreements totaling approximately $68,000 (including $17,753 with related parties) with new investors and existing Senior Notes holders (approximately 40%) for the issuance of 12% second lien notes (“Second Lien Notes”) and four-year warrants (“Four-Year Warrants”)Amendment to purchase the Company’s subordinate voting shares in a private offering (the “Offering”). Pursuant to the terms of the Offering the Company may issue additional Second Lien Notes on the same terms, subject to market conditions and investor interest. The Second Lien Notes will mature four years from the date of issuance, will bear interest of 12% per annum, payable in cash quarterly, and will be guaranteed by certain of the Company’s direct and indirect domestic subsidiaries and secured by second priority liens on certain assets of the Company and certain of the Company’s direct and indirect domestic subsidiaries. In connection with the Offering, the purchasers of the Second Lien Notes will also receive Four-Year Warrants at 50% coverage with an exercise price to be determined at closing. The Company expects the closing of the Offering to occur in late November 2022 or early December 2022. The Company intends to use the net cash proceeds from the Offering to redeem its outstanding Senior Notes due January 2023 and, to the extent there are remaining proceeds, for general corporate purposes, including but not limited to working capital, capital expenditures and potential acquisitions. The subscription agreements and the closing of the transactions are subject to certain conditions, including the approval of Roxbury, LP, as agent for the lenders under the Company’s existing Acquisition Facility ~~and there can be no assurance that the proposed Offering of the Second Lien Notes and Four-Year Warrants will be completed or that the terms of the Offering will not be modified.~~

The Second Lien Notes and related guarantees and Four-Year Warrants will be offered and sold in a private placement only to U.S. Accredited Investors and/or Qualified Institutional Buyers in reliance on the registration exemption provided by Rule 506(b) of Regulation D under the U.S. Securities Act (“Act”) and/or Section 4(a)(2) of the Act and similar registration exemptions under applicable state securities or “blue sky” laws, and outside the United States to non-U.S. persons pursuant to Regulation S under the Act.

Neither the Second Lien Notes and the related guarantees nor the Four-Year Warrants have been, or will be, registered under the Act or the securities laws of any other jurisdiction, and unless so registered, may not be offered or sold in the United States, except pursuant to an applicable exemption from such registration requirements and will be subject to a statutory hold period lasting four months and one day following the closing date pursuant to applicable Canadian securities laws.

On November 10, 2023, the Company amended certain provisions of the Acquisition Facility with Roxbury, LP (the “Acquisition Facility Amendments”). The Acquisition Facility Amendments (i) reduced the minimum cash balance maintenance requirements in the Acquisition Facility from a fixed dollar amount to 10% of the outstanding term loans amount, which will have the effect of decreasing such minimum cash balance requirement as additional scheduled amortization repayments are made on such term loans, and (ii) made certain technical and conforming changes to account for the Company’s Loan Agreement with FVCBank with respect to its Manassas, VA facility. Having completed most of the improvements to the Company’s Manassas, VA facility, the Acquisition Facility Amendments also set forth certain limits on the Company’s use of balance sheet cash to fund future improvements to the Manassas, VA facility.

The foregoing description of the Acquisition Facility Amendments do not purport to be complete and is subject to, and qualified in its entirety by reference to the full text of the amendments to the Acquisition Facility, a copy of which is filed as Exhibit 4.1 to this report.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management’s Discussion and Analysis (“MD&A”) covers the consolidated financial statements of Jushi Holdings Inc. and its controlled subsidiaries as of and for the three and nine months ended September 30, ~~2022~~2023 (the “Financial Statements”). Unless the context indicates or requires otherwise, the terms “Jushi”, “the Company”, “we”, “us” and “our” refers to Jushi Holdings Inc. and its controlled entities. This MD&A should be read in conjunction with the unaudited ~~interim~~ condensed consolidated financial statements and notes thereto for the three and nine months ended September 30, ~~2022~~2023 (the “Quarterly Financial Statements”). The Quarterly Financial Statements have been prepared by management and are in accordance with generally accepted accounting principles in the United States (“GAAP”) and should be read in conjunction with the audited consolidated financial statements and ~~the accompanying~~ notes thereto for the ~~years~~year ended December 31, ~~2021 and 2020 (the “Annual Financial Statements”),~~2022, which are included in ~~Jushi Holdings Inc.’s Registration Statement~~our Annual Report on Form ~~S-1, as amended~~10-K for the fiscal year ended December 31, 2022, filed with the U.S. Securities and ~~declared effective by the SEC~~Exchange Commission (“SEC”) on ~~August 12, 2022 (“S-1”~~April 18, 2023 (the “2022 Form 10-K”), and was also filed on the System for Electronic Document Analysis and Retrieval (“SEDAR”) ~~on November 21, 2022.~~. All amounts are expressed in U.S. dollars unless otherwise noted.

Company Overview

We are a vertically integrated, multi-state cannabis operator engaged in retail, distribution, cultivation, and processing operations in both medical and adult-use markets. We are focused on building a diverse portfolio of cannabis assets through opportunistic investments and pursuing application opportunities in attractive limited license jurisdictions. We have targeted assets in highly populated, limited license medical markets on a trajectory toward adult-use legalization, including Pennsylvania and Ohio, markets that are in the process of transitioning to adult-use, namely Virginia, and limited license, fast-growing, large adult-use markets, such as Illinois, Nevada and Massachusetts, and certain municipalities of California.

Factors Affecting our Performance and Related Trends

~~COVID-19~~

At the onset of the COVID-19 pandemic, we implemented new procedures at all operating locations to better protect the health and safety of our employees, medical patients, and customers across our network of dispensaries. Depending on the location, some of the initiatives include, but are not limited to: reducing the number of point-of-sale registers, restricting the number of people permitted in-store, restricting general store hours to permit access to those most susceptible to infection, and offering curbside pick-up. We have also directed a significant amount of traffic to our recently launched online informational tool and reservation platform, ~~www.beyond-hello.com~~, which enables a medical patient or customer to view real-time pricing and product availability, and reserve products for convenient in-store pick-up at Beyond Hello™ locations across Pennsylvania, Illinois, California, and Virginia.

To date, our financial condition and results of operations have not been materially impacted by COVID-19. The extent to which the COVID-19 pandemic impacts our future results will depend on future developments, which are highly uncertain and cannot be predicted with certainty, including possible future outbreaks of new strains of the virus and governmental and consumer responses to such future developments.

Competition and Pricing Pressure

The cannabis industry is subject to significant competition and pricing pressures, which is often market specific and can be caused by an oversupply of cannabis in the market, and may be transitory from period to period. We may experience significant competitive pricing pressures as well as competitive products and ~~services~~service providers in the markets in which we operate. Several significant competitors may offer products and/or services with prices that may match or are lower than ours. We believe that the products and services we offer are generally competitive with those offered by other cannabis companies. It is possible that one or more of our competitors could develop a significant research advantage over us that allows them to provide superior products or pricing, which could put us at a competitive disadvantage. Continued pricing pressure due to competition, increased cannabis supply or shifts in customer preferences could adversely impact

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our customer base or pricing structure, resulting in a material impact on our results of operations, or asset impairments in future periods. ~~For further discussion~~

Employee Retention Credit

The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), passed in March 2020 and subsequently amended in 2021, allowed eligible employers to take credits on certain amounts of qualified wages if the ~~impact~~Company experienced either a full or partial suspension of ~~an asset impairment during~~operations due to COVID related government orders. During the ~~three and~~ nine months ended September 30, ~~2022, refer~~2023, we, with guidance from a third-party specialist, determined that we were entitled to ~~Note 8 - Goodwill~~employee retention credit (“ERC”) claims of $10.1 million for previous business interruptions related to COVID and ~~Other Intangible Assets~~filed for such claims with the Internal Revenue Service (“IRS”). The ERC claims, which will be recognized in the statements of ~~our Quarterly Financial Statements.~~

~~Recent Developments~~

~~(Amounts expressed~~operations and comprehensive income (loss) when we receive the refunds of such claims from the IRS, were recorded as deferred income in ~~thousands~~Accrued expenses and other current liabilities, with an offsetting receivable amount in Prepaid expenses and other current assets within the consolidated balance sheet as of ~~U.S. dollars)~~

~~Proposed Debt Financing~~

AsSeptember 30, 2023. The claims are pending review by the IRS, which in September 2023 instituted a moratorium on new claims until the end of ~~November 17, 2022, we entered into subscription agreements totaling approximately $68,000 (including $17,753 with related parties) with new investors~~2023 and publicly announced an enhanced compliance review of existing ~~Senior Notes holders (approximately 40%) for the issuance of 12% second lien notes (“Second Lien Notes”) and four-year warrants (“Four-Year Warrants”) to purchase~~claims, such as the Company’s, ~~subordinate voting shares in a private offering (the “Offering”). Pursuant to~~submitted before the terms of the Offering, we may issue additional Second Lien Notes on the same terms, subject to market conditions and investor interest. The Second Lien Notes will mature four years from the date of issuance, will bear interest of 12% per annum, payable in cash quarterly, and will be guaranteed by certain of our direct and indirect domestic subsidiaries and secured by second priority liens on certain of our assets and certain assets of our direct and indirect domestic subsidiaries. In connection with the Offering, the purchasers of the Second Lien Notes will also receive Four-Year Warrants at 50% coverage with an exercise price to be determined at closing. We expect the closing of the Offering to occur in late November 2022 or early December 2022. We intend to use the net cash proceeds from the Offering to redeem the outstanding Senior Notes and, to the extent there are remaining proceeds, for general corporate purposes, including but not limited to working capital, capital expenditures and potential acquisitions. The subscription agreements and the closing of the transactions are subject to certain conditions, including the approval of Roxbury, LP, as agent for the lenders under the Company’s existing Acquisition Facility,moratorium, and there can be no assurance that the ~~proposed Offering of the Second Lien Notes and Four-Year Warrants~~IRS will ~~be completed~~approve all or ~~that the terms of the Offering will not be modified.~~

~~Opened Relocated Scranton Dispensary in Pennsylvania~~

On November 8, 2022, we relocated our Scranton Westside medical marijuana dispensary in Pennsylvania to Dickson City through our subsidiary, Pennsylvania Dispensary Solutions. The newly opened dispensary offers a prime location featuring a new lighter, brighter color palette and mill work with a focus on display cases that highlight our curated selection of medical marijuana products and accessories. The dispensary is located at 832 Scranton Carbondale Highway and operates under the retail brand Beyond Hello™.

~~Debuted ReformulatedLine of Cannabis Infused FruitChews~~

~~On October 27, 2022, we announced the debut~~portion of our ~~newly formulated vegan and gluten-free Tasteology Fruit Chews in Massachusetts. Tasteology Fruit Chews are made from real fruit purées, and use pectin rather than gelatin~~claim to ~~deliver a consumption experience with more experience-focused terpenes. In addition, we updated~~ the ~~brand’s packaging with sustainable pouches rather than~~ERC. Failure by the more commonly used tins, which use less waste and preserve freshness better. Initially, we will exclusively carry Tasteology Fruit Chews at Nature’s Remedy dispensaries in Tyngsborough and Millbury, Massachusetts as well asIRS to ~~our partner dispensaries across the Commonwealth in the coming months. The new product line is also expected to launch in Virginia, Ohio and Nevada in Q1 2023.~~

~~Strengthened Board and Senior Leadership~~

On October 4, 2022, we appointed Bill Wafford to our Board of Directors. In addition to his appointment as an Independent Director, Mr. Wafford will serve as Chair of the Audit Committee. Additionally, we announced on that same date that Tobi Lebowitz, formerly Executive Vice President and Co-Head of Legal Affairs, was promoted to Chief Legal Officer and Corporate Secretary.

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~~Debuted Line of Artisan Cannabis Infused Chocolates~~

~~On September 7, 2022, we announced the debut in Massachusetts~~approve all or a portion of our ~~first product line into~~claim to the ~~cannabis infused chocolates market, Tasteology Chocolates. Tasteology Chocolates~~ERC would result in us not receiving funds for the portion of the ERC claim that was denied, and would require a corresponding amount of the recorded $10.1 million credit to be reversed in a future period. Additionally, the IRS may audit recipients of the ERC after disbursing funds and has a right to clawback any amounts the IRS determines were incorrectly disbursed.

Recent Developments

On November 10, 2023, the Company amended certain provisions of the Acquisition Facility with Roxbury, LP (the “Acquisition Facility Amendments”). The Acquisition Facility Amendments (i) reduced the minimum cash balance maintenance requirements in the Acquisition Facility from a fixed dollar amount to 10% of the outstanding term loans amount, which will have the effect of decreasing such minimum cash balance requirement as additional scheduled amortization repayments are ~~currently available~~made on such term loans, and (ii) made certain technical and conforming changes to account for the Company’s Loan Agreement with FVCBank with respect to its Manassas, VA facility. Having completed most of the improvements to the Company’s Manassas, VA facility, the Acquisition Facility Amendments also set forth certain limits on the Company’s use of balance sheet cash to fund future improvements to the Manassas, VA facility.

The foregoing description of the Acquisition Facility Amendments do not purport to be complete and is subject to, and qualified in ~~three flavors: Milk Chocolate, Dark Chocolate and Strawberry Blonde Chocolate. These 18-piece bars,~~its entirety by reference to the full text of the amendments to the Acquisition Facility, a copy of which ~~are easily separable for accurate dosing, contain 5mg~~is filed as Exhibit 4.1 to this report.

Table of THC per piece for a total of 90mg of THC per bar. Tasteology Chocolates are available at Nature’s Remedy dispensaries in Tyngsborough and Millbury, Massachusetts, as well as our partner dispensaries across Massachusetts. The new line is also expected to launch in Virginia in Q1 2023.Contents

Results of Operations

(Amounts expressed in thousands of U.S. dollars, except share and per share amounts)

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 % Change 2022 2021 % Change
REVENUE, NET $ 72,817 $ 53,981 35 % $ 207,462�� $ 143,400 45 %
COST OF GOODS SOLD (45,075) (30,657) 47 % (133,940) (79,717) 68 %
GROSS PROFIT $ 27,742 $ 23,324 19 % $ 73,522 $ 63,683 15 %
OPERATING EXPENSES
Selling, general and administrative $ 40,590 $ 25,147 61 % $ 117,048 $ 73,415 59 %
Indefinite-lived asset impairment 37,600 — N/A 37,600 — N/A
Total operating expenses $ 78,190 $ 25,147 211 % $ 154,648 $ 73,415 111 %
LOSS FROM OPERATIONS $ (50,448) $ (1,823) 2667 % $ (81,126) $ (9,732) 734 %
OTHER (EXPENSE) INCOME :
Interest expense, net $ (13,111) $ (7,442) 76 % $ (34,174) $ (21,145) 62 %
Fair value gains (losses) on derivative warrants 6,352 55,059 (88) % 63,233 66,800 (5) %
Other, net (291) 221 (232) % (361) (3,643) (90) %
Total other (expense) income, net $ (7,050) $ 47,838 (115) % $ 28,698 $ 42,012 (32) %
(LOSS) INCOME BEFORE INCOME TAX $ (57,498) $ 46,015 (225) % $ (52,428) $ 32,280 (262) %
Income tax benefit (expense) 2,802 (6,333) (144) % (9,959) (21,012) (53) %
NET (LOSS) INCOME AND COMPREHENSIVE (LOSS) INCOME $ (54,696) $ 39,682 (238) % $ (62,387) $ 11,268 (654) %
Less: net loss attributable to non-controlling interests — (62) (100) % — (427) (100) %
NET (LOSS) INCOME AND COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO JUSHI SHAREHOLDERS $ (54,696) $ 39,744 (238) % $ (62,387) $ 11,695 (633) %
(LOSS) EARNINGS PER SHARE ATTRIBUTABLE TO JUSHI SHAREHOLDERS - BASIC $ (0.28) $ 0.23 (222) % $ (0.33) $ 0.07 (571) %
Weighted average shares outstanding - basic 192,880,468 168,801,193 14 % 189,119,282 163,345,527 16 %
(LOSS) EARNINGS PER SHARE ATTRIBUTABLE TO JUSHI SHAREHOLDERS - DILUTED (0.30) (0.08) 275 % (0.61) (0.28) 118 %
Weighted average shares outstanding - diluted 203,169,931 199,281,152 2 % 205,695,590 195,942,078 5 %


	Three Months Ended September 30,						Nine Months Ended September 30,
	2023		2022		% Change		2023		2022		% Change

REVENUE, NET	$	65,377	$	72,817	(10)	%	$	201,675	$	207,462	(3)	%
COST OF GOODS SOLD	(36,863)		(45,075)		(18)	%	(112,666)		(133,940)		(16)	%
GROSS PROFIT	28,514		27,742		3	%	89,009		73,522		21	%

OPERATING EXPENSES
Selling, general and administrative	25,688		40,590		(37)	%	85,294		117,048		(27)	%
Indefinite-lived asset impairment	—		37,600		NM		—		37,600		NM
Total operating expenses	25,688		78,190		(67)	%	85,294		154,648		(45)	%

INCOME (LOSS) FROM OPERATIONS	2,826		(50,448)		106	%	3,715		(81,126)		105	%

OTHER INCOME (EXPENSE):
Interest expense, net	(9,345)		(13,111)		(29)	%	(27,655)		(34,174)		(19)	%
Fair value (loss) gain on derivatives	(7,460)		6,352		(217)	%	1,660		63,233		(97)	%
Other, net	1,368		(291)		(570)	%	1,887		(361)		(623)	%
Total other income (expense), net	(15,437)		(7,050)		119	%	(24,108)		28,698		(184)	%

LOSS BEFORE INCOME TAX	(12,611)		(57,498)		(78)	%	(20,393)		(52,428)		(61)	%
Income tax (expense) benefit	(8,011)		2,802		(386)	%	(26,705)		(9,959)		168	%
NET LOSS AND COMPREHENSIVE LOSS	(20,622)		(54,696)		(62)	%	(47,098)		(62,387)		(25)	%
Less: net loss attributable to non-controlling interests	—		—		—	%	—		—		—	%
NET LOSS AND COMPREHENSIVE LOSS ATTRIBUTABLE TO JUSHI SHAREHOLDERS	$	(20,622)	$	(54,696)	(62)	%	$	(47,098)	$	(62,387)	(25)	%

LOSS PER SHARE ATTRIBUTABLE TO JUSHI SHAREHOLDERS - BASIC	$	(0.11)	$	(0.28)	(61)	%	$	(0.24)	$	(0.33)	(27)	%
Weighted average shares outstanding - basic	195,128,096		192,880,468		1	%	194,649,053		189,119,282		3	%
LOSS PER SHARE ATTRIBUTABLE TO JUSHI SHAREHOLDERS - DILUTED	$	(0.11)	$	(0.30)	(63)	%	$	(0.24)	$	(0.61)	(61)	%
Weighted average shares outstanding - diluted	195,128,096		203,169,931		(4)	%	194,649,053		205,695,590		(5)	%

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Three Months Ended September 30, 2023 Compared with the Three Months Ended September 30, 2022 ~~and 2021~~

(Amounts expressed in thousands of U.S. dollars, unless otherwise stated)

Revenue, Net

The following table presents revenue by type for the periods indicated:


		Three Months Ended September 30,					Three Months Ended September 30,
		2022		2021			2023		2022		$ Change		% Change
Retail cannabis		$	67,038	$	50,681
Wholesale cannabis		5,769		3,185
Retail						Retail	$	58,535	$	67,038	$	(8,503)	(13)	%
Wholesale						Wholesale	6,842		5,769		1,073		19	%
Other	Other	10		115		Other	—		10		(10)		(100)	%
Total revenue, net	Total revenue, net	$	72,817	$	53,981	Total revenue, net	$	65,377	$	72,817	$	(7,440)	(10)	%

Revenue, net, ~~for the three months ended September 30, 2022 totaled $72,817, as~~was $65,377 compared to ~~$53,981 for~~$72,817, a decrease of $7,440 or 10%. Retail revenue decreased $8,503 primarily due to the closure of three ~~months ended September 30, 2021, an increase~~underperforming stores, as well as declines in revenue in: (i) Illinois, due to the impact of ~~$18,836 or 35%.~~the state of Missouri moving to recreational use, and (ii) Nevada and Pennsylvania, due to market price compression and increased competition. The ~~increase~~decrease in retail revenue ~~is due primarily to our expansion of cannabis operations~~was partially offset by new dispensary openings from build outs and ~~acquisitions~~prior acquisitions. The Company ended the quarter with thirty-four operating dispensaries in seven states, as compared to thirty-five in six states at the end of Nature’s Remedy in Massachusetts, which occurred in September 2021, and Apothecarium and NuLeaf in Nevada, which occurred in March and April 2022, respectively, and new Beyond Hello™ store openings in Pennsylvania and Virginia. Retail revenue for the three months ended September 30, ~~2022 was derived from~~ 2022.~~thirty-five c~~annabis dispensaries located in Pennsylvania (eighteen), Illinois (four), Massachusetts (two), Virginia (four), Nevada (four) and California (three), whereas, for the three months ended September 30, 2021, Retail

Wholesale revenue ~~was derived from twenty-four cannabis dispensaries located in Pennsylvania (fifteen), Illinois (four), California (two), Massachusetts (two) and Virginia (one).~~

~~The increase in wholesale revenue is~~increased $1,073 primarily ~~attributable~~due to ~~increases in~~continued advancements at our cultivation and ~~manufacturing activity~~processing facilities that has enabled us to diversify our product offerings, as well as increase our competitiveness on quality, cost and distribution.

Gross Profit

Gross profit was $28,514 compared to $27,742, an increase of $772 or 3%. Gross profit margin increased to 44% compared to 38%. The improvement in gross profit and gross profit margin was driven by operating efficiencies at our grower processor ~~facilities: (i)~~facilities in Massachusetts, Pennsylvaniaand ~~Nevada due to the acquisitions~~Virginia, as well as increased sell through of ~~Nature’s Remedy and NuLeaf; and (ii) in Virginia due to the commencement of operations at the Dalitso facility in the third quarter of 2021.~~

~~Cost of Goods Sold and Gross Profit~~

Cost of goods sold totaled $45,075 for the three months ended September 30, 2022, as compared to $30,657 for the three months ended September 30, 2021, an increase of $14,418 or 47%. The increase in costs of goods sold is primarily attributable to the increase in the quantity ofour branded products ~~sold.~~

Gross profit totaled $27,742 for the three months ended September 30, 2022, as compared to $23,324 for three months ended September 30, 2021, an increase of $4,418 or 19%. As a percentage of revenue, gross profit for the three months ended September 30, 2022 and 2021, was 38% and 43%, respectively. Gross margin decreased primarily due to infrastructure and headcount investments in our wholesale business that continue towhich have ~~a transitional impact as we scale up, slower than expected growth in our wholesale operations as other operators dedicate more shelf space to their own brands resulting in pricing~~higher margins, partially offset by market price compression and increased ~~promotional activity of Jushi branded products~~competition in Illinois, Nevada and Pennsylvania.

Operating Expenses

Operating expenses ~~for the three months ended September 30, 2022~~ were ~~$78,190, as~~$25,688 compared to ~~$25,147 for three months ended September 30, 2021, an increase~~$78,190, a decrease of ~~$53,043~~$52,502 or ~~211%~~67%.

~~Table of Contents~~

The following table presents information of our operating expenses for the periods indicated:


		Three Months Ended September 30,								Three Months Ended September 30,
		2022		2021		$ Change		% Change		2023		2022		$ Change		% Change
Salaries, wages and employee related expenses	Salaries, wages and employee related expenses	18,985		13,241		5,744		43%	Salaries, wages and employee related expenses	$	13,251	$	18,985	$	(5,734)	(30)	%
Share-based compensation expense	Share-based compensation expense	5,466		2,234		3,232		145%	Share-based compensation expense	1,056		5,466		(4,410)		(81)	%
Rent and related expenses									Rent and related expenses	3,387		3,351		36		1	%
Depreciation and amortization expense	Depreciation and amortization expense	3,658		1,654		2,004		121%	Depreciation and amortization expense	2,962		3,658		(696)		(19)	%

Professional fees and legal expenses									Professional fees and legal expenses	1,420		2,520		(1,100)		(44)	%
Other expenses (1)	Other expenses (1)	12,481		8,018		4,463		56%	Other expenses (1)	3,612		6,610		(2,998)		(45)	%

Indefinite-lived asset impairment		37,600		$	—	$	37,600	N/A
Indefinite-lived asst impairment									Indefinite-lived asst impairment	—		37,600		(37,600)		NM
Total operating expenses	Total operating expenses	$	78,190	$	25,147	$	53,043	211%	Total operating expenses	$	25,688	$	78,190	$	(52,502)	(67)	%

(1) Other expenses are primarily comprised of ~~rent and related expenses, professional fees and legal expenses,~~ marketing and selling expenses, insurance costs, administrative and application ~~fee,~~fees, software and technology costs, travel, entertainment and conferences and other.

~~The increase in operating~~Table of Contents

Salaries, wages, and employee-related expenses isdecreased due to ~~impairment of indefinite-lived assets, and increase~~a decrease in the number of employees as we work to right size ~~and scope~~the organization, as well as due to changes to our staffing models at our retail stores. Lower share-based compensation expense reflects lower value of ~~our general and administrative functions to support our expanded operations resulting from organic growth and acquisitions.~~share-based compensation granted as well as forfeitures of unvested equity awards. The impairment of indefinite-lived assets was related to business licenses associated with our Massachusetts operations. Refer to Note 8 - Goodwill and Other Intangible Assets of our Quarterly Financial Statements for more information on the impairment. The increases inthree months ended September 30, 2022 includes general and administrative expenses related ~~to: salaries, wages and employee related expenses as a result of the increase in the number of employees to support our ongoing growth and resulting from recent acquisitions;~~ ~~share-based compensation expense primarily due to recent stock options granted to new employees and management; professional fees and legal expenses, primarily due~~ to our transition to GAAP reporting and costs associated with our registration with the ~~SEC;~~SEC, which is included in professional fees and ~~depreciation and amortization expense and rent and~~legal expenses, as well as non-cash impairment charge related ~~expenses due~~ to the ~~additions of property, plant and equipment and finance lease right-of-use assets from acquisitions and investment in infrastructure as we continue to scale.~~business licenses associated with our Massachusetts operations.

Other Income (Expense) ~~Income~~

Interest Expense, Net

Interest expense, net was ~~$13,111 for the three months ended September 30, 2022 as~~$9,345 compared to ~~$7,442 for the three months ended September 30, 2021, an increase~~$13,111, a decrease of ~~$5,669,~~$3,766, or ~~76%.The increase~~29%. The decrease in interest expense, net is due primarily to ~~an increase~~lower amortization of debt discount driven by the redemption of the 10% senior notes (“Senior Notes”) in ~~interest-bearing borrowings including finance leases~~December 2022, partially offset by higher interest rates associated with the December 2022 modification of the Acquisition Facility, and ~~acquisition-related financing.~~the issuance of the 12% second lien notes (“Second Lien Notes”).

Fair Value ~~Gains~~(loss) gain on Derivatives

Fair value ~~gains~~loss on derivatives was ~~$6,352 for the three months ended September 30, 2022, as~~$7,460, compared to ~~$55,059 for~~a gain of $6,352. Fair value (loss) gain on derivatives include the ~~three months ended September 30, 2021.~~fair value changes relating to the derivative warrants. The derivative warrants are required to be remeasured at fair value at each reporting period. The fair value ~~gains on~~changes in derivatives ~~for the three months ended September 30, 2022 and 2021~~ were primarily attributable to the movement in our stock price during the corresponding period.

Other, Net

Other, net was anincome of $1,368, compared to expense of $291, ~~for~~a change of $1,659. The change from expense to income was due primarily to the ~~three months ended September 30, 2022, as compared~~recording of additional indemnification asset of $716 related to acquisitions made in prior years, with an equal and offsetting amount recorded in income tax expense, $443 of ~~$221 for the three months ended September 30, 2021, an increase~~foreign exchange translation gain due primarily to certain Second Lien Notes denominated in ~~expense of $512 or 232%.~~Canadian dollars, and other miscellaneous income.

Income Tax Benefit (Expense)

Total income tax ~~benefit~~expense was ~~$2,802 for the three months ended September 30, 2022, as~~$8,011 compared to ~~an expense~~a benefit of ~~$6,333 for the three months ended September 30, 2021,~~ ~~a decrease in expense of $9,135, or 144%.~~$2,802. The change ~~in income tax expense~~ is primarily due ~~a reduction in taxable~~to increased gross profit and higher tax interest and tax penalties in 2023, whereas there was a benefit in 2022 due to a business license impairment charge associated with our Massachusetts operations.

~~Table of Contents~~

~~Net (Loss) Income~~

~~Net loss for the three months ended~~ ~~September 30, 2022~~ ~~was $54,696, compared to a net income of $39,682 for the three months ended~~ ~~September 30, 2021. The change from net income to net loss was driven primarily by~~ ~~an indefinite-lived asset i~~mpairment associated with our Massachusetts operations, higher operating expenses due to the increase in the size and scope of our general and administrative functions to support our expanded operations resulting from organic growth and acquisitions, lower fair value gain on derivatives, and ~~higher interest expense due to increased borrowings,~~ ~~partially offset by an increase in gross profit and decrease in income tax expenses.~~

Nine Months Ended September 30, 2023 Compared with the Nine Months Ended September 30, 2022 ~~and 2021~~

(Amounts expressed in thousands of U.S. dollars, unless otherwise stated)

Revenue, Net

The following table presents revenue by type for the periods indicated:


		Nine Months Ended September 30,					Nine Months Ended September 30,
		2022		2021			2023		2022		$ Change		% Change
Retail cannabis		$	192,268	$	135,155
Wholesale cannabis		15,085		7,934
Retail						Retail	$	180,461	$	192,268	$	(11,807)	(6)	%
Wholesale						Wholesale	21,214		15,085		6,129		41	%
Other	Other	109		311		Other	—		109		(109)		(100)	%
Total revenue, net	Total revenue, net	$	207,462	$	143,400	Total revenue, net	$	201,675	$	207,462	$	(5,787)	(3)	%

Revenue, net, ~~for the nine months ended September 30, 2022 totaled $207,462, as~~was $201,675 compared to ~~$143,400 for the nine months ended September 30, 2022, an increase~~$207,462, a decrease of ~~$64,062,~~$5,787, or ~~45%~~3%. ~~The increase in retail~~Retail revenue isdecreased $11,807 due primarily to ~~our expansion~~the closure of ~~cannabis operations from build outs and acquisitions of Nature’s Remedy~~three underperforming stores, as well as declines in Massachusetts, which occurred in September 2021, and of Apothecarium and NuLeaf in Nevada, which occurred in March and April 2022, respectively, and new Beyond Hello™ store openings in Pennsylvania and Virginia. Retail revenue ~~for the nine months ended September 30, 2022 was derived from~~ ~~thirty-five~~ ~~cannabis dispensaries located in Pennsylvania (eighteen),~~in: (i) Illinois, (four), Massachusetts (two), Virginia (four) Nevada (four), and California (three), whereas, for the nine months ended September 30, 2021, Retail revenue was derived from twenty-four cannabis dispensaries located in Pennsylvania (fifteen), Illinois (four), California (two), Virginia (one) and Massachusetts (two).

~~The increase in wholesale revenue is primarily attributable to increases in cultivation and manufacturing activity at our grower processor facilities: (i) in Massachusetts~~ due to the ~~acquisition~~impact of ~~Nature’s Remedy~~the state of Missouri moving to recreational use, and (ii) ~~in Virginia~~Pennsylvania due to ~~the commencement of operations at the Dalitso facility~~increased competition. The decrease in ~~the third quarter of 2021.~~

~~Cost of Goods Sold and Gross Profit~~

~~Cost of goods sold totaled $133,940 for the nine months ended September 30, 2022, as compared to $79,717for the nine months ended September 30, 2021, an increase of $54,223, or 68%. The increase in costs of goods sold is primarily attributable to the increase in the quantity of products sold.~~

Gross profit totaled $73,522 for the nine months ended September 30, 2022, as compared to $63,683 for nine months ended September 30, 2021, an increase of $9,839, or 15%. As a percentage of revenue, gross profit for the nine months ended September 30, 2022 and 2021, was 35% and 44%, respectively. Gross margin decreased primarily due to: (1) infrastructure and headcount investments in our wholesale business that continue to have a transitional impact as we scale; (2) slower than expected growth in our wholesale operations as other operators dedicate more shelf space to their own brands resulting in pricing compression; and (3) the sell through of inventory acquired in the Nature's Remedy, Apothecarium and NuLeaf acquisitions, which had a fair value step-up. Gross margins were also impacted by the increased promotional activity at retail ~~operations in Illinois, Massachusetts and Pennsylvania.~~

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revenue was partially offset by new dispensary openings from build outs. We opened new Beyond Hello™ dispensaries in Pennsylvania and Virginia in 2022, and in Ohio in 2023.

Wholesale revenue increased $6,129 primarily due to continued advancements at our cultivation and processing facilities that has enabled us to diversify our product offerings, as well as increase our competitiveness on quality, cost and distribution.

Gross Profit

Gross profit was $89,009 compared to $73,522, an increase of $15,487, or 21%. Gross profit margin increased to 44% compared to 35%. The improvement in gross profit and gross profit margin was driven by operating efficiencies at our grower processor facilities in Massachusetts, Nevada and Virginia, which was partially offset by declines in revenue in Illinois and Pennsylvania driven by market price compression. Additionally, gross profit and gross profit margin for the prior year were negatively impacted by the sell through of inventory acquired in the acquisitions of Nature’s Remedy, which was acquired in September 2021, and Apothecarium, which had a fair value step up.

Operating Expenses

Operating expenses ~~for the nine months ended September 30, 2022~~ were ~~$154,648, as~~$85,294 compared to ~~$73,415 for the nine months ended September 30, 2021, an increase~~$154,648, a decrease of ~~$81,233,~~$69,354, or ~~111%~~45%. The following table presents information of our operating expenses for the periods indicated:


		Nine Months Ended September 30,									Nine Months Ended September 30,
		2022		2021		$ Change		% Change			2023		2022		$ Change		% Change
Salaries, wages and employee related expenses	Salaries, wages and employee related expenses	54,915		37,642		17,273		46	%	Salaries, wages and employee related expenses	$	43,839	$	54,915	$	(11,076)	(20)	%
Stock-based compensation expense		17,114		8,981		8,133		91	%
Share-based compensation expense										Share-based compensation expense	5,730		17,114		(11,384)		(67)	%
Rent and related expenses										Rent and related expenses	8,784		9,844		(1,060)		(11)	%
Depreciation and amortization expense	Depreciation and amortization expense	8,779		3,903		4,876		125	%	Depreciation and amortization expense	7,202		8,779		(1,577)		(18)	%

Professional fees and legal expenses										Professional fees and legal expenses	6,066		8,028		(1,962)		(24)	%
Other expenses (1)	Other expenses (1)	36,240		22,889		13,351		58	%	Other expenses (1)	13,673		18,368		(4,695)		(26)	%

Indefinite-lived asset impairment	Indefinite-lived asset impairment	37,600		—		37,600		N/A		Indefinite-lived asset impairment	—		37,600		(37,600)		NM
Total operating expenses	Total operating expenses	$	154,648	$	73,415	$	81,233	111	%	Total operating expenses	$	85,294	$	154,648	$	(69,354)	(45)	%

~~The increase in total operating~~

Salaries, wages, and employee-related expenses isdecreased due to impairment of indefinite-lived assets, and increase in the size and scope of our general and administrative functions to support our expanded operations resulting from organic growth and acquisitions. The impairment of indefinite-lived assets was related to business licenses of our Massachusetts operations. Refer to Note 8 - Goodwill and Other Intangible Assets of our Quarterly Financial Statements for more information on the impairment. The general and administrative increases related to: salaries, wages, and employee related expenses as a ~~result of the increase~~decrease in the number of employees as we work to ~~support~~right size the organization, as well as due to the changes to our ~~ongoing growth and resulting from recent acquisitions;~~staffing models at our retail stores. Lower share-based compensation expense ~~primarily due to recent stock options~~reflects lower value of share-based compensation granted ~~to new employees~~as well as forfeitures of unvested equity awards. The nine months ended September 30, 2022 includes general and ~~management; professional fees and legal~~administrative expenses ~~primarily due~~related to our transition to GAAP reporting and costs associated with our registration with the SEC, which ~~was completed~~is included in ~~August 2022;~~professional fees and ~~depreciation and amortization expense and rent and~~legal expenses, as well as non-cash impairment charge related ~~expenses due~~ to the ~~additions of property, plant and equipment and finance lease right-of-use assets from acquisitions and investment in infrastructure as we continue to scale.~~business licenses associated with our Massachusetts operations.

Other Income (Expense)

Interest Expense, Net

Interest expense, net, was ~~$34,174 for the nine months ended September 30, 2022, as~~$27,655 compared to ~~$21,145 for the nine months ended September 30, 2021, an increase~~$34,174, a decrease of ~~$13,029,~~$6,519, or ~~62%~~19%. The ~~increase in interest expense, net~~decrease is due primarily to ~~an increase~~lower amortization of debt discount driven by the redemption of the Senior Notes in ~~interest-bearing borrowings including finance leases~~December 2022, partially offset by higher overall debt balance due in part to funding of the acquisitions we made in 2022, as well as higher interest rates associated with the December 2022 modification of the Acquisition Facility, and ~~acquisition-related financing.~~the issuance of the Second Lien Notes.

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Fair Value ~~Gains~~(loss) gain on Derivatives

Fair value ~~gains~~gain on derivatives was ~~$63,233 for the nine months ended September 30, 2022, as~~$1,660 compared to ~~$66,800 for the nine months ended September 30, 2021.~~$63,233. Fair value ~~gains~~(loss) gain on derivatives include the fair value changes relating to the derivative ~~warrants liability.~~warrants. The derivative warrants are required to be remeasured at fair value at each reporting period. The fair value changes in derivatives ~~for the nine months ended September 30, 2022 and 2021~~ were primarily attributable to the movement in our stock price during the corresponding period.

Other, Net

Other, net was anincome of $1,887 compared to expense of $361, ~~for~~a change of $2,248. The change from expense to income was due primarily to the ~~nine months ended September 30, 2022, as compared to $3,643 for the nine months ended September 30, 2021, a decrease~~recording of ~~approximately $3,282, or 90%. Other, net for the nine months ended September 30, 2021 primarily~~additional indemnification asset of $1,530 related to ~~losses on redemptions of 10% senior notes (the “Senior Notes”) of $3,815, losses~~

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~~on legal settlements of $1,386, partially offset by gains on investments~~acquisitions made in prior years, with an equal and ~~investment~~offsetting amount recorded in income ~~from mutual funds of $1,222,~~tax expense, and other miscellaneous ~~income of $336 .~~income.

Income Tax ~~Benefit (Expense)~~Expense

Total income tax expense was ~~$9,959 for the nine months ended September 30, 2022, as~~$26,705 compared to ~~$21,012 for the nine months ended September 30, 2021, a decrease of $11,053, or 53%.~~$9,959. The ~~decrease~~change in income tax expense is primarily due to ~~a reduction in taxable~~increased gross profit, higher tax interest and tax penalties in 2023, whereas 2022 was primarily due to a business license impairment charge associated with our Massachusetts operations.

~~Net (Loss) Income~~

Net loss for the nine months ended September 30, 2022 was $62,387 compared to a net income of $11,268 for the nine months ended September 30, 2021. The change from net income to net loss was driven primarily by an indefinite-lived ~~asset impairment associated with our Massachusetts operations,~~ ~~higher operating expenses due to the increase in the size and scope of our general and administrative functions to support our expanded operations resulting from organic growth and acquisitions,~~ ~~lower fair value gain on derivatives,~~ ~~and higher interest expense due to increased borrowings, partially offset by an increase in gross profit and a decrease in income tax expense.~~

Non-GAAP Measures and Reconciliation

In addition to providing financial measurements based on GAAP, we provide additional financial metrics that are not prepared in accordance with GAAP. We use non-GAAP financial measures, in addition to GAAP financial measures, to understand and compare operating results across accounting periods, for financial and operational decision making, for planning and forecasting purposes and to evaluate our financial performance. These non-GAAP financial measures are EBITDA ~~Adjusted EBITDA~~ and Adjusted ~~Gross Profit~~EBITDA (each as defined below). We believe that these non-GAAP financial measures reflect our ongoing business by excluding the effects of expenses that are not reflective of our operating business performance and ~~allows~~allow for meaningful comparisons and analysis of trends in our business. These non-GAAP financial measures also facilitate comparing financial results across accounting periods and to those of peer companies. As there are no standardized methods of calculating these non-GAAP measures, our methods may differ from those used by others, and accordingly, the use of these measures may not be directly comparable to similar measures used by others, thus limiting their usefulness. Accordingly, these non-GAAP measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.

EBITDA and Adjusted EBITDA

EBITDA and Adjusted ~~Gross Profit~~

EBITDA ~~Adjusted EBITDA and Adjusted Gross Profit~~ are financial measures that are not defined under GAAP. We define EBITDA as net income (loss), or “earnings”, before interest, income taxes, depreciation and amortization. We define Adjusted EBITDA as EBITDA before: (i) non-cash share-based compensation ~~expense and other one-time charges;~~expense; (ii) inventory-related adjustments; (iii) fair value changes in derivatives; (iv) other (income)/expense items; (v) transaction costs; (vi) asset impairment; (vii) loss on debt extinguishment; and ~~(vi)~~(viii) start-up costs. These financial measures are metrics that have been adjusted from the GAAP net income (loss) measure in an effort to provide readers with a normalized metric in making comparisons more meaningful across the cannabis industry, as well as to remove non-recurring, irregular and one-time items that may otherwise distort the GAAP net income measure. Other companies in our industry may calculate this measure differently, limiting their usefulness as comparative measures. ~~We define Adjusted Gross Profit as gross profit, as reported, adjusted to exclude certain inventory-related adjustments and start-up costs (within cost of goods sold).~~

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Reconciliation of EBITDA and Adjusted EBITDA (Non- GAAP Measures)

The table below reconciles net income (loss) to EBITDA and Adjusted EBITDA for the periods indicated.

(Amounts expressed in thousands of U.S. ~~dollars)~~dollars)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			2023		2022		2023		2022
NET (LOSS) INCOME (1)		$	(54,696)	$	39,682	$	(62,387)	$	11,268
Income tax (benefit) expense		(2,802)		6,333		9,959		21,012
NET LOSS (1)										NET LOSS (1)	$	(20,622)	$	(54,696)	$	(47,098)	$	(62,387)
Income tax expense (benefit)										Income tax expense (benefit)	8,011		(2,802)		26,705		9,959
Interest expense, net	Interest expense, net	13,111		7,442		34,174		21,145		Interest expense, net	9,345		13,111		27,655		34,174
Depreciation and amortization (2)	Depreciation and amortization (2)	6,618		2,228		15,663		5,285		Depreciation and amortization (2)	5,816		6,618		19,780		15,663
EBITDA (Non-GAAP)	EBITDA (Non-GAAP)	$	(37,769)	$	55,685	$	(2,591)	$	58,710	EBITDA (Non-GAAP)	2,550		(37,769)		27,042		(2,591)
Non-cash share-based compensation	Non-cash share-based compensation	5,466		2,234		17,114		8,981		Non-cash share-based compensation	1,056		5,466		5,730		17,114
Inventory-related adjustments (3)	Inventory-related adjustments (3)	(1,197)		865		2,282		865		Inventory-related adjustments (3)	—		(1,197)		251		2,282
Fair value changes in derivatives	Fair value changes in derivatives	(6,352)		(55,059)		(63,233)		(66,800)		Fair value changes in derivatives	7,460		(6,352)		(1,660)		(63,233)
Indefinite-lived asset impairment	Indefinite-lived asset impairment	37,600		—		37,600		—		Indefinite-lived asset impairment	—		37,600		—		37,600
Other (income) expense, net (4)	Other (income) expense, net (4)	1,575		(121)		1,170		5,788		Other (income) expense, net (4)	(1,356)		1,575		(1,449)		1,170
Start-up costs ~~(7)~~(5)	Start-up costs ~~(7)~~(5)	118		2,238		3,824		4,729		Start-up costs ~~(7)~~(5)	—		118		—		3,824
Transaction costs ~~(7)~~(6)	Transaction costs ~~(7)~~(6)	1,212		325		4,877		1,434		Transaction costs ~~(7)~~(6)	—		1,212		19		4,877
Adjusted EBITDA (Non-GAAP)	Adjusted EBITDA (Non-GAAP)	$	653	$	6,167	$	1,043	$	13,707	Adjusted EBITDA (Non-GAAP)	$	9,710	$	653	$	29,933	$	1,043


(1)			Net ~~(loss) income~~loss includes amounts attributable to non-controlling interests.
(2)			Includes amounts that are included in cost of goods sold and in operating expenses.
(3)			Includes: (i) inventory step-up on business combinations; (ii) inventory recall reserves; and (iii) reserves for discontinued products. The inventory step-up on business combinations ~~relate~~relates to the fair value write-up on inventory acquired on the business acquisition date and then sold subsequent to the acquisition date. The inventory recall reserves relate to the estimated impact of the Pennsylvania Department of Health recall and ban of vape products containing certain cannabis concentrates. The ban was lifted in June 2022.
(4)			Includes: (i) remeasurement of contingent consideration related to acquisitions; (ii) losses (gains) on ~~investments and financial assets; (iii) losses (gains) on~~ legal settlements; and ~~(iv)~~(iii) severance costs.
(5)			Expansion and start-up costs incurred in order to prepare a location for its intended use. Start-up costs are expensed as incurred and are not indicative of ongoing operations of each new location.
(6)			Transaction costs include: (i) registration statement costs such as professional fees and other costs relating to our SEC registration; and (ii) acquisition and deal costs.
~~(7)~~			During the second quarter of 2021, we revised our methodology for calculating Adjusted EBITDA to also adjust for the effects of acquisition and deal costs, severance costs and start-up costs. We revised our methodology for calculating Adjusted EBITDA because we believe that the fluctuations caused in our operating results from these items are not reflective of our core performance, and that the revised methodology provides management and investors more useful information to evaluate the operations of our business. The prior period data for these items has been added to conform to current period presentation.

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~~Reconciliation Adjusted Gross Profit (Non- GAAP Measures)~~

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Gross profit $ 27,742 $ 23,324 $ 73,522 $ 63,683
Inventory-related adjustments(1)
(1,197) 865 2,282 865
Start-up costs (within COGS)(2)
— 439 2,664 1,511
Adjusted gross profit $ 26,545 $ 24,628 $ 78,468 $ 66,059


~~(1)~~			Includes: (i) inventory step-up on business combinations; (ii) inventory recall reserves; and (iii) reserves for discontinued products. The inventory step-up on business combinations relate to the fair value write-up on inventory acquired on the business acquisition date and then sold subsequent to the acquisition date. The inventory recall reserves relate to the potential impact of the Pennsylvania Department of Health recall and ban of vape products containing certain cannabis concentrates. The ban was lifted in June 2022.
~~(2)~~			~~Expansion and start-up costs incurred in order to prepare a location for its intended use. Start-up costs are expensed as incurred and are not indicative of ongoing operations of each new location.~~

Liquidity and Capital Resources

(Amounts expressed in thousands of U.S. dollars, unless otherwise stated)

Sources and Uses of Cash

We had cash, ~~and~~ cash equivalents and restricted cash of ~~$31,063~~$30,469 as of September 30, ~~2022.~~ ~~The Company paid $8,313 and $49,230 in capital expenditures during the three and~~ ~~nine months ended September 30, 2022,~~ respectively. For the balance of the year, we expect capital expenditures to be in the range of $5,000 to $15,000, prior to any potential tenant improvement reimbursements, for a total of $55,000 to $65,000 for the full year 2022, subject to market conditions and regulatory changes. As of September 30, 2022, we had total current a~~ssets of $80,868, and total current liabilities of $228,674 . We therefore had net working capital deficit of $147,806.~~2023.

The major components of our statements of cash flows for the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, are as follows:


		Nine Months Ended September 30,					Nine Months Ended September 30,
		2022		2021			2023		2022		$ Change		% Change
Net cash flows used in operating activities	Net cash flows used in operating activities	$	(26,199)	$	(23,780)	Net cash flows used in operating activities	$	(7,827)	$	(26,199)	$	18,372	70	%
Net cash flows used in investing activities	Net cash flows used in investing activities	(73,122)		(99,341)		Net cash flows used in investing activities	(6,064)		(73,122)		67,058		92	%
Net cash flows provided by financing activities	Net cash flows provided by financing activities	36,080		91,794		Net cash flows provided by financing activities	17,214		36,080		(18,866)		(52)	%
Effect of currency translation on cash	Effect of currency translation on cash	(233)		42		Effect of currency translation on cash	—		(233)		233		100	%
Net change in cash and cash equivalents		$	(63,474)	$	(31,285)
Net change in cash, cash equivalents and restricted cash						Net change in cash, cash equivalents and restricted cash	$	3,323	$	(63,474)	$	66,797	105	%

Operating activities. Cash used in operations ~~during the nine months ended September 30, 2022~~ was ~~$26,199,~~$7,827, as compared to ~~$23,780 for the nine months ended September 30, 2021.~~$26,199. The ~~increase~~decrease in cash used in operations ~~for the nine months ended September 30, 2022 is~~was due ~~primarily~~ to ~~an increase~~a reduction in the ~~size and scope~~net loss, net of ~~our general and administrative functions to support our expected continued growth,~~ non-cash adjustments, partially offset by ~~improved management of working capital.~~cash used for operating assets and liabilities in 2023 as opposed to cash provided by operating assets and liabilities in the prior year.

Investing activities. Net cash used in investing activities ~~totaled $73,122~~was $6,064 compared to $73,122. The current year includes $8,385 for the nine months ended September 30, 2022, as compared to $99,341 for the nine months ended September 30, 2021. The net cash used in investing activities for the nine months ended September 30, 2022 was comprised of: $49,230 for the purchasespayments of property, plant and equipment for use in our ~~operations; $20,892~~operations partially offset by $2,321 in ~~payments~~proceeds from sale of property, plant and equipment. The prior year includes $49,230 for the ~~acquisitions~~payments of property, plant and equipment for use in our operations, $20,892 paid for the acquisition of Apothecariumand NuLeaf, net of cash ~~acquired;~~acquired, and $3,000 payment of contingent consideration liability for NuLeaf. The net cash used in investing activities for the nine months ended September 30, 2021 was comprised of: $55,285 for the purchases of property, plant and equipment for use in our operations; $47,308 in payments for the acquisitions of Nature’s Remedy, OhiGrow, Grover Beach and OSD, net of cash acquired; partially offset by $3,252 in proceeds from sales of investments.

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Financing activities. ~~Financing activities have historically represented the principal source of our cash flow.~~ Net cash provided by financing activities ~~totaled $36,080 for the nine months ended September 30, 2022, as~~was $17,214 compared to ~~$91,794 for the nine months ende~~$36,080~~d September 30, 2021.~~. The ~~net cash provided by~~current year includes (i) $21,900 in proceeds from mortgage-related debt and (ii) $3,295 in proceeds from other financing activities, ~~for~~partially offset by: (i) $2,761 in net finance lease obligation payments, (ii) $2,438 payments related to the ~~nine months ended September 30, 2022 was comprised of: $24,207~~Acquisition Facility debt, (iii) $2,372 in ~~net~~payments of other financing activities, (iv) $250 in payments of loan financing costs, and (v) $160 in payments of mortgage-related debt. The prior year includes (i) $25,000 in proceeds from the Acquisition Facility to fund the acquisition of NuLeaf and ~~Apothecarium;~~Apothecarium, (ii) $13,680 in proceeds from private placement equity offerings in January and February ~~2022;~~2022, (iii) $5,233 in proceeds from other financing activities, (iv) $1,248 in proceeds from the exercise of warrants and stock ~~options; $4,701 in proceeds from other debt, net of payments;~~options, and (v) $450 in proceeds from the collection of a note receivable from an employee ~~shareholder;~~shareholder, partially offset ~~by:~~by (i) $7,948 in net finance lease obligation payments, (ii) $793 in payments of loan financing costs, (iii) $258 in principal redemption repayments onof the Senior ~~Notes;~~Notes, (iv) $189 in payments of mortgage-related debt, and ~~$7,948~~ (v) $343 in ~~net finance lease ob~~payments of other financing activities.~~ligation payments.~~

Liquidity

~~The~~As reflected in our 2022 Form 10-K, we incurred a loss from operations of $220,333, including non-cash impairment charges of $159,645, and used net cash ~~provided~~of $21,416 for operating activities for the year ended December 31, 2022, and as of that date, our current liabilities exceeded our current assets by ~~financing~~$37,577. Furthermore, we have used cash of $7,827 for operating activities for the nine months ended September 30, ~~2021 was comprised of: $85,660 in proceeds from public equity offerings, net~~2023, and as of ~~issuance costs, in January and February 202~~1; $16,438 in proceeds from the exercise of warrants and stock options; $2,862 in proceeds from other debt; partially offset by: $8,134 in principal redemption repayments on the Senior Notes; $3,343 in net payments of finance lease obligations; and $1,689 in payments on acquisition-related promissory notes payable.

~~Liquidity~~

~~The Quarterly Financial Statements have been prepared assuming we will continue as a going concern. GAAP requires an entity to look forward 12 months from the~~that date, ~~the financial statements are issued, (the “look-forward” period) when assessing whether the going concern assumption can be used. The going concern assumption contemplates the realization of~~our current liabilities exceeded our current assets ~~and satisfaction of~~by $28,001. Such current liabilities ~~in the normal course of business.~~

~~As reflected in our Quarterly Financial Statements, we have incurred losses from operations for the nine months ended September 30, 2022, have an accumulated deficit of $304,805~~ as of September 30, ~~2022,~~2023 include aggregate contractual maturities of $19,662 of debt that is subject to indemnity claims in favor of the Company and ~~have~~not currently expected to be paid in cash ~~and cash equivalents of $31,063~~ ~~as of~~ ~~September 30, 2022~~. ~~As discussed in~~within the next twelve months. Refer to Note 109 - Debt of our Quarterly Financial Statements contained in Part I. Item 1 of this report for more information. Since inception, we have focused on building a diverse portfolio of assets in attractive markets to vertically integrate our business. As such, we incurred losses as we expanded our operations. We have put in place plans to increase the ~~Senior Notes, which as~~profitability of ~~September 30, 2022 had an aggregate principal amount outstanding of $74,935, mature on January 15,~~the business in fiscal year 2023 and ~~the Acquisition Facility,~~beyond. In order to achieve profitable future operations, we have commercialized production from our recently expanded grower-processing facilities in Pennsylvania

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and Virginia, as well as implemented a cost-savings and efficiency optimization plan which includes, among other things, reduction in labor and packaging costs as ~~of September 30, 2022 had an outstanding balance of $65,000 (refer to Note 10 - Debt of~~well as operating efficiencies at our Quarterly Financial Statements) required us to maintain certain covenants which we may not have been in compliance with if the Swiss courts accepted Jushi Europe’s petition for bankruptcy. Prior to the amendment with the lender of the Acquisition Facility, we were also projected to violate certain financial covenants. In April 2022, we entered into an amendment with the lender of the Acquisition Facility, which included a waiver related to Jushi Europe’s bankruptcyretail and ~~a change to the terms of the Total Leverage Ratio, as defined~~grower-processing facilities.

As concluded in the Acquisition Facility agreement, and deferred the commencement date of leverage testing under the Acquisition Facility to the quarter ending March 31, 2023. Additionally, the overall slowdown in the cannabis industry during 2022 has resulted in lower forecasted earnings for us during the look-forward period. The look-forward period also contemplates favorable regulatory changes in certain states in which we operate. We are at risk of not meeting our forecasted earnings and as a result may not be in compliance with certain financial covenants under the Acquisition Facility, as amended, during the look-forward period. As a result, we have classified the outstanding balance of $65,000 under the Acquisition Facility as of September 30, 2022 as a current liability. These conditions raiseForm 10-K, substantial doubt ~~regarding~~existed about our ability to continue as a going concern, ~~during~~and, as a result of the ~~look-forward period.~~

above, substantial doubt continues to exist within the next twelve months from the date these financial statements are issued. We ~~are pursuing strategies to obtain the required additional funding primarily~~intend to fund our operations, capital expenditures and debt service with existing cash and cash equivalents on hand, cash generated from operations, including anticipated refunds from the ~~Senior Notes~~IRS relating to employee retention credit claims, and, as needed, future ~~operations. These strategies may include, but are not limited to: (i) ongoing efforts with various lenders~~financing (equity and/or debt) as well as the potential sales of non-core assets. The ability to ~~refinance the Senior Notes (refer to Note 23 - Subsequent Events~~continue as a going concern is dependent upon profitable future operations and positive cash flows from operations as well as future financing and/or sales of our Quarterly Financial Statements for updates on the refinancing); (ii) renegotiating the financial covenants contained in the Acquisition Facility, including the removal of the Total Leverage Ratio requirement; (iii) deferral of certain expenditures, including capital projects, and reallocation of funds for debt repayment,assets if the need arises; and (iv) obtaining alternative sources of financing, including debt financing through secured borrowings and equity financing through a base shelf prospectus, which allows us to offer up to C$500,000 in securities in Canada through the end of 2023. However, there can benecessary. There is no assurance that we will be successful in this or any of our endeavors or become financially viable and continue as a going concern.

The Quarterly Financial Statements contained herein have been prepared on a going concern basis which assumes we will be able to ~~refinance~~realize our assets and discharge our liabilities in the ~~Senior Notes, renegotiate~~normal course of business for the ~~financial covenants under~~foreseeable future, and do not include any adjustments to reflect the ~~Acquisition Facility, as amended, generate positive results~~possible future effects on the recoverability and classification of assets or amounts and classification of liabilities that may result from ~~operations, or obtain additional liquidity when needed or under acceptable terms, if at all.~~ the outcome of this uncertainty.

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Off-Balance Sheet Arrangements and Contractual Obligations

As of September 30, ~~2022,~~2023, we do not have any off‐balance sheet arrangements that have, or are reasonably likely to have, a material current or future effect on the financial performance or financial condition of the Company. For our contractual obligations, refer to Note 109 - Debt, Note 1110 - ~~Lease Obligations,~~Leases and Note 2118 - Commitments and Contingencies of our Quarterly Financial ~~Statements.~~Statements contained in Part I. Item 1 of this report.

~~Cybersecurity Attack - Phishing Incident~~

~~(Amounts expressed in thousands of U.S. dollars, unless otherwise stated)~~

Our data and information technology systems are subject to threats from malicious software codes and viruses, phishing, ransomware, business email compromise attacks, or other cyber-attacks. Cybersecurity vulnerability was previously identified as a material weakness, see Item 4. Controls and Procedures for additional information. In late September 2022, we were subject to a cybersecurity attack, which we believe was a phishing attack, that resulted in the transfer of approximately $500. In October 2022, we were able to recall the transfer and recover substantially all of the amount. Although we were able to recover the amount, the number and complexity of these threats continue to increase over time and they may occur in the future. See – Part II, Item 1A. Risk Factors, “We have in the past and may in the future experience threats and breaches to our data and information technology systems, including malicious software codes, viruses, phishing, ransomware and other cyber-attacks, that disrupt our information systems or operations, or result in the dissemination of sensitive personal or confidential information or unauthorized financial access, theft or crimes, which could result in increased costs, economic losses, exposure to significant liability, reputational harm, loss of business, and other serious negative consequences.”

Item 3. Quantitative and Qualitative Disclosures About Market Risk

~~Our operations within~~There have been no material changes to the ~~United States are exposed to market~~ risks disclosed in ~~the ordinary course~~Item 7A of our ~~business, including the effects of interest rate changes and inflation. Information relating to quantitative and qualitative disclosures about these market risks is described below.~~

~~Interest Rate Risk~~

Except for a $2,800 credit facility with a bank to fund the construction of our dispensary in Dickson City, Pennsylvania, our debt bear interest at a fixed rate. An immediate 10% increase or decrease in interest rates would not have a material effect on our financial position, results of operations or cash flows.

~~Inflation~~

We and our customers may have also been negatively impacted by the recent rise of inflation that may increase the cost of our operations and may have an adverse effect on demand for our products, which could adversely affect our financial performance.2022 Form 10-K.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management carried out an evaluation under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based upon such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of ~~the end of the period covered by this Quarterly Report on Form 10-Q,~~September 30, 2023, our disclosure controls and procedures were not effective, ~~as of September 30, 2022 as a result~~due to the existence of the material weaknesses in our internal control over financial reporting as described below.

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Previously Identified Material Weaknesses in Internal Control over Financial Reporting

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

AsWe previously identified and disclosed ~~under the heading “Risk Factors” in the Company’s Registration Statement on Form S-1, initially filed with the Securities and Exchange Commission (“SEC”) on July 22, 2022,~~deficiencies as amended on August 8, 2022, and declared effective by the SEC on August 12, 2022, and was also filed on SEDAR on November 21, 2022, management identified the following material weaknesses in our internal control over financial reporting: (i) insufficientfollows:

•Insufficient accounting resources, inadequate level of precision in the performance of review and monitoring controls, including management review controls, or ineffective communication, as it relates to: ~~(a)~~ financial reporting, accounting, due to the restatement of the statement of cash flows; ~~and (b)~~ accounting and valuation for complex financial instruments (debt and equity), earnings per share, cash and financial close process relating to cash reconciliation, inventory, property plant and equipment (“PPE”), accruals, ~~and accounting for~~leases, revenue, impairment and business ~~combinations; and (ii) insufficient~~combinations.

•Insufficient information technology general controls, as it relates toto: lack of user access controls, change management, passwords, access controls reviews, backup and cybersecurity ~~vulnerability.~~losses and vulnerabilities.

~~On June 24, 2022,~~

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•Internal controls over financial reporting, and accounting for PPE and related accounts payable and accruals due to insufficient accounting resources and inadequate level of precision in the ~~Company filed amended condensed consolidated financial statements for~~performance of review controls. Specifically, the three months ended March 31, 2022, which were prepared in accordance with International Financial Reporting Standards, with the applicable Canadian securities regulatory authorities to correct its diluted earnings per share calculation for the three months ended March 31, 2022. As a result, management identified a material weakness related to the preparation and review of the Company’s diluted earnings per share, specifically as it relates to the treatment of the dilutive effect of the Company’s outstanding liability-classified warrants.

~~In addition, as reported by the Company on its Current Report~~ on Form 8-K filed with the SEC on August 29, 2022, the Company reported errors in its previously issued unaudited interim condensed consolidated financial statements prepared in accordance with generally accepted accounting ~~principles in the U.S. as of and~~ for the three months ended March 31, 2022, which were included in the Company’s Registration Statement on Amendment No. 1 to Form S-1 filed with the SEC on August 8, 2022, and such financial statements should not be relied upon. The errors were related to the understatement of certain non-current assets and associated accruals in the Company’s previously issued unaudited condensed balance sheet as of March 31, 2022, and the understatement of net cash flows used in operating activities, the overstatement of net cash flows used in investing activities, and the understatement of net cash flows provided by financing activities in its unaudited interim condensed consolidated statement of cash flows for the three months ended March 31, 2022. The Company filed a Current Report on Form 8-K with the SEC on September 12, 2022 to furnish the restated condensed consolidated financial statements for the three months ended March 31, 2022, which was filed with the applicable Canadian securities regulatory authorities on September 9, 2022 ~~and may be accessed on SEDAR.~~ ~~As previously disclosed and in light of the errors described above, material weaknesses existed in the Company’s internal control over the statement of cash flows, and~~ PPE, ~~including right of use assets - finance~~ leases and related accounts payable and ~~accruals. Specific to PPE, including right of use assets - finance leases, and the related accounts payable and~~ accruals ~~the Company does not maintain sufficient controls to ensure sufficient~~is associated with insufficient cut-off procedures to ensure ~~purchased assets and services~~all posted and/or unposted invoices are captured in the ~~proper period.~~period the services were rendered.

Subsequent to the August 29, 2022 filing of the Company’s unaudited interim condensed consolidated financial statements for the three and six months ended June 30, 2022 with the applicable Canadian securities regulatory authorities in accordance with applicable Canadian securities laws, management identified errors impacting the statement of cash flows and cost of goods sold. Such unaudited interim condensed consolidated financial statements were not previously reviewed by the Company’s auditors. These errors were corrected in the unaudited interim condensed consolidated financial statements as of and for the period ended June 30, 2022, which was filed on Form 10-Q on September 26, 2022 and may also be accessed on SEDAR. As previously disclosed and in light of these errors, material weaknesses existed in the Company’s internal control over the statement of cash flows and inadequate review controls over inventory. •Additionally, management determined that the Company also ~~has~~have material weaknesses in its ~~(i) financial close process relating to cash reconciliation resulting from identified unadjusted differences as of June 30, 2022, (ii)~~ accounts payable process relating to vendor setup and maintenance resulting from the Company’s ~~preliminary~~ finding of phishing attacks during 2022.

•Lack of projected financial covenant calculations and related impact on financial statement presentation.

We have concluded that each of these deficiencies constitutes a ~~phishing attack~~material weakness in ~~late September 2022, and (iii) lack of management review controls.~~

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our internal control over financial reporting.

Remediation Plan and Status of Material Weaknesses

In response to the identified material weaknesses described above, the Company’s management, with the oversight of the Audit Committee, has developed a remediation plan, including designing and implementing improved processes and internal controls, upgrading talent and utilizing consultants in the accounting organization. During the quarter ended September 30, 2023 and year ended December 31, 2022, the Company took the following steps to improve its internal control over financial reporting:

•Performed a risk assessment of key business processes across financial reporting areas to identify and implement enhanced policies and procedures related to internal controls with a focus on the precision and performance of review controls;

•Improved the staffing of the Accounting Department through senior level hires who collectively bring a combined 50+ years of GAAP accounting experience, including in Fortune 500 companies and global accounting firms, and hiring additional accounting managers and staff;

•Enhanced review controls through use of checklists, accounting position papers, defined thresholds for further investigation or reassignment of tasks to more experienced team members in the following areas: statement of cash flows, earnings per share, accounting and valuation of complex financial instruments, property, plant and equipment, impairment assessment, business combinations and cash reconciliations;

•Implemented detective controls for proper cut-off of accruals;

•Assessing third party service providers which can consult in an effort to revise and enhance the Company’s Information Technology General Controls and Cyber Security Program; and

•Developing enhanced policies, procedures and accompanying training on vendor setup, maintenance and validation.

While ~~the Company has~~we made good progress, due to the ~~Company is still in the process~~nature of ~~fully implementing its remediation plan. Additional time is required to complete~~ the remediation process, controls must operate effectively for a sufficient period of time for a definitive conclusion, validated through testing, that the deficiencies have been fully remediated and, as such, management cannot be certain that the measures it has undertaken have fully remediated the material weaknesses that it has identified at this time. Management will continue to monitor the design and effectiveness of these controls to ensure the sustainability of the ~~recently implemented remediation~~remediated actions.

Changes in Internal Control over Financial Reporting

Other than the Company’s ongoing remediation efforts discussed above, there was no change in our internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

For a description of our legal proceedings, refer to Claims and Litigation in Note 2118 - Commitments and Contingencies in the Notes to the Unaudited ~~Interim~~ Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q.

Item 1A. Risk Factors

~~(Amounts expressed in thousands of U.S. dollars, unless otherwise stated)~~

The Company is subject to numerous risks and uncertainties, any of which could have a significant or material adverse effect on our business, financial condition, liquidity or consolidated financial statements. You should carefully consider the risk factors disclosed under the heading “Risk Factors”, which are included in the ~~Company’s Registration Statement~~2022 Form 10-K, which was also filed on Form S-1, initially filed with the Securities and Exchange Commission (“SEC”) on July 22, 2022, as amended and declared effective by the SEC on August 12, 2022 and may be accessed on the System for Electronic Document Analysis and Retrieval, (including that the impact of the COVID-19 pandemic may also exacerbate the risks discussed therein), herein and other reports we have filed with the SEC.SEDAR. The risks described ~~herein~~therein and ~~therein~~herein are not the only ones we face. ~~This information should be considered carefully together with the other information contained in this Quarterly Report on Form 10-Q and the other reports and materials the Company files with the SEC.~~ Other than set forth herein, there have been no material changes from the risk factors previously ~~disclosed:~~disclosed.

We ~~have~~may not be successful in defending our tax filing positions, which could adversely impact our financial condition and results of operations.

If our tax positions, including with respect to employee retention credit (“ERC”) claims available under the ~~past~~Coronavirus Aid, Relief and Economic Security (CARES) Act, were to be challenged by federal, state, local or foreign tax jurisdictions, we may not be wholly successful in defending our tax filing positions. We record reserves for unrecognized tax benefits based on our assessment of the ~~future experience threats~~probability of successfully sustaining tax filing positions. Our management exercises significant judgment when assessing the probability of successfully sustaining our tax filing positions, and ~~breaches~~in determining whether a contingent tax liability should be recorded and, if so, estimating the amount. If our tax filing positions are successfully challenged, payments could be required that are in excess of reserved amounts, or we may be required to reduce the carrying amount of our net deferred tax asset or current ERC receivable, either of which could be significant to our ~~data~~financial condition and ~~information technology systems, including malicious software codes, viruses, phishing, ransomware~~results of operations.

Challenging U.S. and ~~other cyber-attacks,~~global economic conditions may negatively impact our business, financial condition and results of operations.

Disruptions and volatility in U.S. and global financial markets, inflation, recession and declining consumer and business confidence could lead to decreased levels of consumer spending and higher costs. Our operations could be affected should a recession occur or rising inflation, the unemployment level or rising interest rates reach levels that ~~disrupt~~influence consumer trends and spending and, consequently, impact the Company’s sales volume, pricing, cost of goods and profitability. These macroeconomic developments could negatively impact our ~~information systems or operations, or~~business, which depends on the general economic environment and levels of consumer spending. As a result, in the dissemination of sensitive personal or confidential information or unauthorized financial access, theft or crimes, which could result in increased costs, economic losses, exposure to significant liability, reputational harm, loss of business, and other serious negative consequences.

~~Our data and information technology systems are subject to a growing number of threats from computer programmers, hackers, and other adversaries that~~we may not be able to ~~penetrate~~maintain our ~~network security and misappropriate our confidential information~~existing customers or ~~that of third parties, create system disruptions,~~attract new customers, or ~~cause damage, security issues, or shutdowns. They also~~we may be ~~able~~forced to ~~develop and deploy viruses, worms, ransomware and other malicious software programs that attack~~increase or reduce the price of our systems or otherwise exploit security vulnerabilities. Because the techniques used to circumvent, gain access to, or sabotage security systems, can be highly sophisticated and change frequently, they oftenproducts. We are ~~not recognized until launched against a target, and may originate from less regulated and remote areas around the world. We may be~~ unable to ~~anticipate these techniques~~predict the likelihood of the occurrence, duration, or implement adequate preventive measures, resulting in potential data loss and damage to our systems. Our systems are also subject to compromise from internal threats such as improper action by employees, including phishing attacks or malicious insiders, or by vendors, counterparties, and other third parties with otherwise legitimate access to our systems. Our policies, employee training (including phishing prevention training), procedures, and technical safeguards may not prevent all improper access to our network or proprietary or confidential information by employees, vendors, counterparties,severity of a recession or other third parties. Our facilities may also be vulnerable to security incidents or security attacks, acts of vandalism or theft, misplaced or lost data, human errors, or other similar events that could negatively affect our systems, and our and our customers’ data. Additionally, our vendors and any third-party service providers we use who process information on our behalf may cause security breaches for which we are responsible or suffer losses.

~~For instance, on September 23, 2022, we became aware that we were subject to what we believe was a phishing attack that resulted~~disruptions in the ~~transfer of approximately $500. Although we were able to recall the transfer~~U.S. credit and ~~recover substantially all of the amount in October 2022, such losses in the future~~financial markets and adverse U.S. and global economic conditions. Any general or market-specific economic downturn could have a material adverse effect on our business, ~~operations, cash flows~~financial condition and ~~financial condition.~~

~~Any compromise or perceived compromise~~results of the security of our systems or the systems of one or more of our vendors or service providers could damage our reputation and brand, cause the termination of relationships with our partners and customers, result in disruption or interruption to our business operations, and subject us to significant liability and expense, which would harm our business, operating results, and financial condition.

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We have identified material weaknesses in our internal control over financial reporting which, if not corrected, could affect the reliability of our consolidated financial statements and have other adverse consequences.

A material weakness is a deficiency or combination of deficiencies in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the financial statements would not be prevented or detected on a timely basis.

In connection with the audit of our financial statements as of and for the years ended December 31, 2021 and 2020 and in the process of preparing our financial statements as of and for the three months ended March 31, 2022, the following material weaknesses in our internal control over financial reporting were identified: (i) insufficient accounting resources, inadequate level of precision in the performance of review controls, or ineffective communication as it relates to: financial reporting, due to the restatement of statement of cash flows; accounting and valuation for complex financial instruments, inventory, property plant and equipment (“PPE”), including rights of use assets - finance leases, accruals and accounting for impairment and business combinations; (ii) insufficient information technology general controls, as it relates to user access controls, change management, passwords, access controls reviews, backup and cybersecurity vulnerability.

Subsequently, management identified additional material weaknesses related to (i) the preparation and review of the Company’s diluted earnings per share, specifically as it relates to the treatment of the dilutive effect of the Company’s outstanding liability-classified warrants; (ii) financial close process relating to cash reconciliation resulting from identified unadjusted differences as of June 30, 2022; (iii) accounts payable process relating to vendor setup and maintenance resulting from the Company’s preliminary finding of a phishing attack in late September 2022; and (iv) lack of management review controls. See - Part I, Item 4. Controls and Procedures, located elsewhere in this Quarterly Report on Form 10-Q.

Our management, with the oversight of the Audit Committee, is in the process of developing a remediation plan. The material weaknesses will be considered remediated when our management designs and implements effective controls that operate for a sufficient period of time and management has concluded, through testing, that these controls are effective. Our management will monitor the effectiveness of its remediation plans and will make changes management determines to be appropriate.

If not remediated, these material weaknesses could result in material misstatements to our annual or interim consolidated financial statements that might not be prevented or detected on a timely basis, or in delayed filing of required periodic reports, which may adversely affect investor confidence in us and, as a result, our share price.operations.

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Item 2. Unregistered Sale of Equity Securities and Use of Proceeds

~~Recent Sales of Unregistered Securities~~

In July 2022, we issued 888,880 Subordinate Voting Shares to settle the contingent consideration liability relating to the acquisition of NuLeaf. The issuance of such shares was not registered under the Securities Act of 1933, as amended (the “Securities Act”), in reliance on the exemption for registration provided by Section 4(a)(2) of the Securities Act.

~~Use of Proceeds~~

In connection with our S-1 and as set forth in the section captioned “Use of Proceeds”, we did not receive any of the proceeds from the sale of the Subordinate Voting Shares by the selling shareholders.None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable.

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Item 5. Other Information

Insider trading arrangements

~~None.~~

During the three months ended September 30, 2023, none of the Company’s directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934) adopted, terminated or modified a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K).

51Amendment to Acquisition Facility

~~Table~~On November 10, 2023, the Company amended certain provisions of ~~Contents~~the Acquisition Facility with Roxbury, LP (the “Acquisition Facility Amendments”). The Acquisition Facility Amendments (i) reduced the minimum cash balance maintenance requirements in the Acquisition Facility from a fixed dollar amount to 10% of the outstanding term loans amount, which will have the effect of decreasing such minimum cash balance requirement as additional scheduled amortization repayments are made on such term loans, and (ii) made certain technical and conforming changes to account for the Company’s Loan Agreement with FVCBank with respect to its Manassas, VA facility. Having completed most of the improvements to the Company’s Manassas, VA facility, the Acquisition Facility Amendments also set forth certain limits on the Company’s use of balance sheet cash to fund future improvements to the Manassas, VA facility.

Item 6. Exhibits


4.1			Third Amendment to Credit Agreement dated November 10 ,2023, by and among Jushi Holdings Inc., the other loan parties signatory thereto and Roxbury, LP
31.1			Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d — 14(a)
31.2			Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d — 14(a)
32.1			Certification of Chief Executive Officer under Section 906 of the Sarbanes-Oxley Act of 2002
32.2			Certification of Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002
101.INS			Inline XBRL Instance Document
101.SCH			Inline XBRL Taxonomy Extension Schema Document
101.CAL			Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF			Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB			Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE			Inline XBRL Taxonomy Extension Presentation Linkbase Document
104			Cover Page Interactive Data File (embedded with Inline XBRL File)

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~~Signatures~~Signature

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.


	JUSHI HOLDINGS INC.

~~Date: November 21, 2022~~	~~By:~~	~~/s/ James Cacioppo~~
		~~James Cacioppo~~
		Chief Executive Officer and Chairman of the Board of Directors (principal executive officer)

Date: November ~~21, 2022~~14, 2023	By:	/s/ ~~Louis Jonathan Barack~~Michelle Mosier
		~~Louis Jonathan Barack~~Michelle Mosier
		~~President~~Chief Financial Officer and ~~Interim~~ Chief ~~Financial~~Accounting Officer (principal financial and accounting officer)

5340


	Number of Shares			Paid-In Capital		Accumulated Deficit		Total Jushi Shareholders' Equity		Non-Controlling Interests		Total Equity
	Super Voting Shares	Multiple Voting Shares	Subordinate Voting Shares
Balances - January 1, 2022	—	—	182,707,359	$	424,788	$	(242,418)	$	182,370	$	(1,387)	$	180,983
Private placement offerings	—	—	3,717,392	13,680		—		13,680		—		13,680
Shares issued for Apothecarium acquisition	—	—	527,704	1,594		—		1,594		—		1,594
Shares issued for restricted stock grants	—	—	5,952	—		—		—		—		—
Shares issued upon exercise of warrants	—	—	2,676,303	9,693		—		9,693		—		9,693
Shares issued upon exercise of stock options	—	—	93,915	—		—		—		—		—
Share-based compensation	—	—	—	6,964		—		6,964		—		6,964
Net loss	—	—	—	—		(19,757)		(19,757)		—		(19,757)
Balances - March 31, 2022	—	—	189,728,625	$	456,719	$	(262,175)	$	194,544	$	(1,387)	$	193,157
Shares issued for NuLeaf acquisition	—	—	4,662,384	13,573		—		13,573		—		13,573
Shares issued for service received	—	—	101,082	294		—		294		—		294
Shares issued upon exercise of warrants	—	—	167,560	322		—		322		—		322
Shares issued upon exercise of stock options	—	—	1,294	—		—		—		—		—
Shares canceled upon forfeiture of non-vested restricted stock	—	—	(7,813)	—		—		—		—		—
Share-based compensation	—	—	—	4,684		—		4,684		—		4,684
Net income	—	—	—	—		12,066		12,066		—		12,066
Balances - June 30, 2022	—	—	194,653,132	$	475,592	$	(250,109)	$	225,483	$	(1,387)	$	224,096
Shares issued for settlement of NuLeaf contingent consideration	—	—	888,880	1,529		—		1,529		—		1,529
Shares issued for service received	—	—	13,334	23		—		23		—		23
Shares issued for restricted stock grants	—	—	81,000	—		—		—		—		—
Shares issued upon exercise of warrants	—	—	332,738	564		—		564		—		564
Shares issued upon exercise of stock options	—	—	20,000	26		—		26		—		26
Shares canceled upon forfeiture of non-vested restricted stock	—	—	(219,479)	—		—		—		—		—
Collection of note receivable from employee shareholder	—	—	—	450		—		450		—		450
Share-based compensation	—	—	—	5,466		—		5,466		—		5,466
Net loss	—	—	—	—		(54,696)		(54,696)		—		$	(54,696)
Balances - September 30, 2022	—	—	195,769,605	$	483,650	$	(304,805)	$	178,845	$	(1,387)	$	177,458


	December 31, 2021				March 31, 2022 (unaudited)				June 30, 2022 (unaudited)
	As Previously Reported		As Revised		As Previously Reported		As Revised		As Previously Reported		As Revised
Other intangible assets, net	$	182,466	$	192,466	$	189,931	$	199,931	$	206,742	$	216,742
Goodwill	$	52,920	$	45,828	$	61,392	$	54,300	$	88,654	$	81,562
Total non-current assets	$	494,785	$	497,693	$	534,011	$	536,919	$	610,586	$	613,494
Total assets	$	649,141	$	652,049	$	656,644	$	659,552	$	707,858	$	710,766
Income tax liabilities - non-current	$	57,143	$	60,051	$	58,372	$	61,280	$	68,193	$	71,101
Total non-current liabilities	$	384,232	$	387,140	$	315,148	$	318,056	$	327,186	$	330,094
Total liabilities	$	468,158	$	471,066	$	463,487	$	466,395	$	483,762	$	486,670
Total liabilities and equity	$	649,141	$	652,049	$	656,644	$	659,552	$	707,858	$	710,766




		NuLeaf		Apothecarium		Total
Assets Acquired:
	Cash and cash equivalents	$	618	$	25	$	643
	Prepaids and other assets	273		32		305
	Accounts receivable, net	39		—		39

	Inventory	5,791		699		6,490
	Indemnification assets (1)	4,145		—		4,145
	Property, plant and equipment	5,513		498		6,011
	Right-of-use assets - finance lease	4,598		2,553		7,151
	Right-of-use assets - operating lease	1,067		—		1,067
	Intangible assets (2)	17,440		8,200		25,640
	Deposits	110		301		411
	Total assets acquired	$	39,594	$	12,308	$	51,902

Liabilities Assumed:
	Accounts payable and accrued liabilities	$	604	$	502	$	1,106
	Finance lease obligations	4,598		2,544		7,142
	Operating lease obligations	1,067		—		1,067
	Deferred tax liabilities	10,247		2,601		12,848
	Total liabilities assumed	$	16,516	$	5,647	$	22,163

	Net assets acquired	$	23,078	$	6,661	$	29,739


	Goodwill (3)	27,262		8,472		35,734
	Total	$	50,340	$	15,133	$	65,473

Consideration:
	Consideration paid in cash, as adjusted for working capital adjustments	$	14,918	$	6,617	$	21,535
	Consideration payable in cash (customary hold back liability)	1,000		—		1,000
	Consideration paid in promissory notes (fair value) (4)	12,860		6,922		19,782
	Consideration paid in shares	13,573		1,594		15,167


	Contingent consideration	7,989		—		7,989
	Fair value of consideration	$	50,340	$	15,133	$	65,473


	Business Combinations				Asset Acquisitions
	Nature’s Remedy		OSD		OhiGrow		Grover Beach		Total
Assets Acquired:
Cash and cash equivalents	$	3,195	$	259	$	—	$	—	$	3,454
Prepaids	325		53		—		—		378
Accounts receivable, net	263		—		—		—		263
Inventory	15,882		184		—		—		16,066
Indemnification assets (1)	1,322		1,411		—		—		2,733
Property, plant and equipment	19,470		—		3,165		269		22,904
Right-of-use assets - finance leases	27,305		—		—		2,050		29,355
Right-of-use assets - operating leases	1,337		1,859		—		—		3,196
Intangible assets - license (2)(4)	56,000		2,160		1,817		3,654		63,631
Intangible assets - tradenames (2)	4,400		—		—		—		4,400
Intangible assets - customer database (2)	2,100		—		—		—		2,100
Deposits	20		6		—		19		45
Total assets acquired (3)(4)	$	131,619	$	5,932	$	4,982	$	5,992	$	148,525

Liabilities Assumed:
Accounts payable and accrued liabilities	$	7,004	$	1,601	$	—	$	—	$	8,605
Finance lease obligations	27,052		—		—		2,032		29,084
Operating lease obligations	1,267		1,859		—		—		3,126
Deferred tax liabilities (4)	22,784		648		—		—		23,432
Total liabilities assumed (3)(4)	$	58,107	$	4,108	$	—	$	2,032	$	64,247

Net assets acquired (3)(4)	$	73,512	$	1,824	$	4,982	$	3,960	$	84,278
Goodwill (3)(4)	26,086		2,432		—		—		28,518
Total	$	99,598	$	4,256	$	4,982	$	3,960	$	112,796
Consideration:
Consideration paid in cash, as adjusted for working capital adjustments	$	40,360	$	1,827	$	4,949	$	3,592	$	50,728
Consideration paid in promissory notes (fair value) (3)	15,345		2,429		—		—		17,774
Consideration paid in shares	35,670		—		—		368		36,038
Contingent consideration	8,223		—		—		—		8,223
Capitalized costs	—		—		33		—		33
Fair value of consideration (3)	$	99,598	$	4,256	$	4,982	$	3,960	$	112,796


Carrying amount as of	Goodwill		Other intangible assets
Cost
Balance at December 31, 2021 (1)	$	45,828	$	197,502
Additions from acquisitions	35,734		25,640
Impairment	—		(37,600)
Balance at September 30, 2022	$	81,562	$	185,542

Accumulated amortization
January 1, 2022	$	—	$	(5,036)
Amortization	—		(2,283)
Balance at September 30, 2022	$	—	$	(7,319)

Net book value
Balance at December 31, 2021 (1)	$	45,828	$	192,466
Balance at September 30, 2022	$	81,562	$	178,223


	As of September 30, 2022							As of December 31, 2021
	(unaudited)
	Input			Effect of 10% Increase		Effect of 10% Decrease		Input			Effect of 10% Increase		Effect of 10% Decrease
Stock price	$	1.23		$	3,281	$	(3,144)	$	3.25		$	12,781	$	(10,834)
Volatility	72		%	$	1,547	$	(1,591)	73		%	$	4,473	$	(3,210)


Expiration Date	Exercise Price ($)	Number of Warrants
2023	1.47 - 1.50	337,500
2024	1.25	35,862,922
2025	1.25 - 3.00	2,168,508
2026	4.18	300,000
2027	1.93	300,000
2029	0.50 - 2.00	26,367,627
Total warrants		65,336,557


	Non-Derivative Warrants	Derivative Warrants (2)	Total Number of Warrants	Weighted - Average Exercise Price






Balance as of January 1, 2022	29,156,048	40,124,355	69,280,403	$	1.19
Granted	400,000	—	400,000	$	2.20
Exercised (1)	(715,846)	(3,628,000)	(4,343,846)	$	1.26



Balance as of September 30, 2022	28,840,202	36,496,355	65,336,557	$	1.19
Exercisable as of September 30, 2022	26,940,202	36,496,355	63,436,557	$	1.15


Expiration Year	Stock Options Outstanding	Exercise Price	Stock Options Exercisable
2022	50,000	$1.35 - $2.00	50,000
2028	685,000	$1.00 - $1.35	685,000
2029	6,849,668	$1.26 - $2.75	6,689,665
2030	792,500	$0.91 - $3.98	426,660
2031	9,809,952	$3.70 - $6.53	2,837,941
2032	10,241,000	$1.60 - $4.20	1,173,994
	28,428,120		11,863,260


	September 30,
	2022	2021
Stock options	28,428,120	10,921,452
Warrants	28,840,202	28,995,403
Unvested restricted stock awards	1,237,069	3,666,511
Convertible promissory notes	910,000	910,000
	59,415,391	44,493,366


	Level 1		Level 2		Level 3		Total
Financial assets:
Equity investment	$	—	$	—	$	1,500	$	1,500
	$	—	$	—	$	1,500	$	1,500
Financial liabilities:
Derivative liabilities (1)	$	—	$	—	$	19,801	$	19,801
Contingent consideration liabilities (2)	—		—		4,671		4,671
	$	—	$	—	$	24,472	$	24,472