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 ~~June 30, 2023~~March 31, 2024

[ ] 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~~code)

33431

(Zip Code)

~~(Former~~

Not Applicable

(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 ~~August 7, 2023,~~May 3, 2024, the registrant had ~~196,631,598~~ 196,643,264 subordinate voting shares, no par value per share, no multiple voting shares, no par value per share, no super voting ~~shares,~~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 ~~June 30, 2023~~March 31, 2024


Part I	FINANCIAL INFORMATION		Page
Item 1	Financial Statements
		Condensed Consolidated Balance Sheets	1
		Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)	2
		Unaudited Condensed Consolidated Statements of Changes in Equity (Deficit)	3
		Unaudited Condensed Consolidated Statements of Cash Flows	4
		Notes to the Unaudited Condensed Consolidated Financial Statements	65
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations		2623
Item 3	Quantitative and Qualitative Disclosures About Market Risk		3429
Item 4	Controls and Procedures		3429

Part II	OTHER INFORMATION		3630
Item 1	Legal Proceedings		3630
Item 1A	Risk Factors		3630
Item 2	Unregistered Sale of Equity Securities and Use of Proceeds		3630
Item 3	Defaults Upon Senior Securities		3630
Item 4	Mine Safety Disclosures		3630
Item 5	Other Information		3730
Item 6	Exhibits		3731

Signature			3832

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This 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 report that address activities, events or developments that ~~Jushi~~the Company expects or 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,~~strategy; competitive strengths, goals, expansion and growth of ~~Jushi’s~~the Company’s business, operations and plans, including new revenue ~~streams,~~streams; the integration and benefits of recently acquired businesses or ~~assets,~~assets; roll out of new ~~operations,~~operations; the implementation by ~~Jushi~~the Company of certain product ~~lines,~~lines; the implementation of certain research and ~~development,~~development; the application for additional licenses and the grant of licenses that will be or have been applied ~~for,~~for; the expansion or construction of certain ~~facilities,~~facilities; the reduction in the number of our ~~employees,~~employees; the expansion into additional U.S. and international ~~markets,~~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~~the Company operates; expectations for other economic, business, regulatory and/or competitive factors related to ~~Jushi~~the Company or the cannabis industry generally; and other events or conditions that may occur in the future.

Readers are cautioned that forward‐looking information is not based on historical facts but instead is based on reasonable assumptions and estimates of the management of ~~Jushi~~the Company at the time they were provided or made and 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,~~the Company, as applicable, to be materially different from any future results, performance or achievements expressed or implied by such forward‐looking information. Such factors include, among others: 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; risks related to contracts with third party service providers; risks related to the enforceability of contracts; the limited operating history of ~~Jushi; Jushi’s~~the Company; the Company’s history of operating losses and negative operating cash flows; reliance on the expertise and judgment of senior management of ~~Jushi;~~the Company; risks inherent in an agricultural business; risks related to co‐investment with parties with different interests to ~~Jushi;~~the Company; risks related to proprietary intellectual property and potential infringement by third parties; risks relating to the Company’s ~~recent~~current amount of indebtedness; risks relating to the need to raise additional capital either through debt ~~financing and other financing activities including increased leverage and issuing additional~~or equity ~~securities;~~financing; risks relating to the management of growth; costs associated with ~~Jushi~~the Company being a publicly-traded company and a U.S. and Canadian filer; increasing competition in the industry; risks associated with 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; 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 enforcing judgments and effecting service outside of Canada; risks related to completed, pending or future acquisitions or dispositions, including potential future impairment of goodwill or intangibles 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, and Virginia; risks related to the anticipated openings of additional dispensaries or relocation of existing dispensaries; risks relating to the expansion and optimization of the ~~grower-processor in Pennsylvania, the vertically integrated~~cultivation and/or processing facilities in ~~Virginia~~Massachusetts, Nevada, Ohio, Pennsylvania and ~~Massachusetts and the facility in Nevada;~~Virginia; risks related to opening new facilities, which is subject to licensing approval; limited research and data relating to cannabis; risks related to challenges from governmental authorities ~~of positions the Company has taken~~ with respect to the Company’s 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~~the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission on April ~~18, 2023~~1, 2024 for more information.

Although ~~Jushi~~the Company 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 will prove to be accurate as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on the forward‐looking information contained in this report or other forward-looking statements made by ~~Jushi.~~the Company. Forward‐looking information is provided and made as of the date of this Quarterly Report on Form 10-Q and ~~Jushi~~the Company 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.

CONDENSED CONSOLIDATED BALANCE SHEETS

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

June 30, 2023 (unaudited)

December 31, 2022

March 31, 2024 (unaudited)

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

26,784

26,196

Restricted cash - current

3,128

—

Restricted cash - current

Accounts receivable, net

5,323

4,809

Inventory, net

40,780

35,089

Inventory, net

Prepaid expenses and other current assets

14,274

3,957

Total current assets

90,289

70,051

Total current assets

NON-CURRENT ASSETS:

Property, plant and equipment, net

169,825

177,755

Property, plant and equipment, net

Right-of-use assets - finance leases

65,245

114,021

Other intangible assets, net

98,471

100,082

Other intangible assets, net

Goodwill

38,239

Other assets

37,271

28,243

Goodwill

Other non-current assets

Restricted cash - non-current

2,150

950

Total non-current assets

411,201

459,290

Total non-current assets

Total assets

501,490

529,341

LIABILITIES AND EQUITY

LIABILITIES AND EQUITY (DEFICIT)

CURRENT LIABILITIES:

Accounts payable

21,608

21,313

Accounts payable

Accrued expenses and other current liabilities

49,857

46,329

Income tax payable

32,575

19,921

Debt, net - current portion (including related party principal amounts of $3,254 and $3,189 as of June 30, 2023 and December 31, 2022, respectively)

14,791

8,704

Income tax payable

Debt, net - current portion (including related party principal amounts of $3,225 and $3,298 as of March 31, 2024 and December 31, 2023, respectively)

Finance lease obligations - current

8,786

11,361

Finance lease obligations - current

Derivative liabilities - current

Total current liabilities

127,617

107,628

NON-CURRENT LIABILITIES:

Debt, net - non-current (including related party principal amounts of $18,526 and $17,491 as of June 30, 2023 and December 31, 2022, respectively)

198,641

180,558

NON-CURRENT LIABILITIES:

Debt, net - non-current (including related party principal amounts of $19,493 and $19,788 as of March 31, 2024 and December 31, 2023, respectively)

Finance lease obligations - non-current

52,699

102,375

Derivative liabilities

3,107

14,134

Income tax liabilities - non-current

60,492

57,200

Finance lease obligations - non-current

Derivative liabilities - non-current

Unrecognized tax benefits

Other liabilities - non-current

31,454

21,555

Total non-current liabilities

346,393

375,822

Total non-current liabilities

Total liabilities

474,010

483,450

COMMITMENTS AND CONTINGENCIES (Note 18)

EQUITY:

Common stock, no par value: authorized shares - unlimited; issued and outstanding shares - 196,633,371 and 196,686,372 Subordinate Voting Shares as of June 30, 2023 and December 31, 2022, respectively.

—

COMMITMENTS AND CONTINGENCIES (Note 18)

EQUITY (DEFICIT):

Common stock, no par value: authorized shares - unlimited; issued and outstanding shares - 196,634,931 and 196,631,598 Subordinate Voting Shares as of March 31, 2024 and December 31, 2023, respectively

Paid-in capital

500,085

492,020

Accumulated deficit

(471,218)

(444,742)

Total Jushi shareholders' equity

28,867

47,278

Accumulated deficit

Total Jushi shareholders' deficit

Non-controlling interests

(1,387)

Total equity

27,480

45,891

Total liabilities and equity

501,490

529,341

Non-controlling interests

Total deficit

Total liabilities and equity (deficit)

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

Table of Contents

JUSHI HOLDINGS INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)

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

Three Months Ended June 30, Six Months Ended June 30,
2023 2022 2023 2022
REVENUE, NET $ 66,425 $ 72,757 $ 136,298 $ 134,645
COST OF GOODS SOLD (35,871) (46,089) (75,803) (88,865)
GROSS PROFIT 30,554 26,668 60,495 45,780
OPERATING EXPENSES 27,154 38,745 59,606 76,458
INCOME (LOSS) FROM OPERATIONS 3,400 (12,077) 889 (30,678)
OTHER INCOME (EXPENSE):
Interest expense, net (9,790) (10,947) (18,310) (21,063)
Fair value gains on derivatives 1,090 42,572 9,120 56,881
Other, net (190) 228 519 (70)
Total other income (expense), net (8,890) 31,853 (8,671) 35,748
INCOME (LOSS) BEFORE INCOME TAX (5,490) 19,776 (7,782) 5,070
Income tax expense (8,546) (7,710) (18,694) (12,761)
NET INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) (14,036) 12,066 (26,476) (7,691)
Less: net loss attributable to non-controlling interests — — — —
NET INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO JUSHI SHAREHOLDERS $ (14,036) $ 12,066 $ (26,476) $ (7,691)
EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO JUSHI SHAREHOLDERS - BASIC $ (0.07) $ 0.06 $ (0.14) $ (0.04)
Weighted average shares outstanding - basic 194,756,391 190,870,572 194,405,562 187,147,856
EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO JUSHI SHAREHOLDERS - DILUTED $ (0.07) $ (0.15) $ (0.14) $ (0.31)
Weighted average shares outstanding - diluted 194,756,391 205,697,153 194,405,562 208,038,283


	Three Months Ended March 31,
	2024		2023
REVENUE, NET	$	65,459	$	69,873
COST OF GOODS SOLD	(33,129)		(39,932)
GROSS PROFIT	32,330		29,941

OPERATING EXPENSES	28,211		32,452

INCOME (LOSS) FROM OPERATIONS	4,119		(2,511)

OTHER INCOME (EXPENSE):
Interest expense, net	(9,544)		(8,520)
Fair value gain (loss) on derivatives	(5,100)		8,030
Other, net	1,917		709
Total other income (expense), net	(12,727)		219

LOSS BEFORE INCOME TAX	(8,608)		(2,292)
Income tax expense	(9,747)		(10,148)
NET LOSS AND COMPREHENSIVE LOSS	$	(18,355)	$	(12,440)



LOSS PER SHARE - BASIC	$	(0.09)	$	(0.06)
Weighted average shares outstanding - basic	195,131,642		194,050,835
LOSS PER SHARE - DILUTED	$	(0.09)	$	(0.06)
Weighted average shares outstanding - diluted	195,131,642		194,050,835

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

Table of Contents

JUSHI HOLDINGS INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (DEFICIT)

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

Six Months Ended June 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


	Three Months Ended March 31, 2024
		Paid-In Capital		Accumulated Deficit		Total Jushi Shareholders' Equity (Deficit)		Non-Controlling Interests		Total Equity (Deficit)
	Subordinate Voting Shares
Balances - January 1, 2024	196,631,598	$	503,612	$	(509,844)	$	(6,232)	$	(1,387)	$	(7,619)
Shares issued upon exercise of stock options	3,333	2		—		2		—		2
Share-based compensation (including related parties)	—	1,524		—		1,524		—		1,524
Issuance of warrants	—	863		—		863		—		863
Net loss	—	—		(18,355)		(18,355)		—		(18,355)
Balances - March 31, 2024	196,634,931	$	506,001	$	(528,199)	$	(22,198)	$	(1,387)	$	(23,585)

Six Months Ended June 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 — 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


	Three Months Ended March 31, 2023
		Paid-In Capital		Accumulated Deficit		Total Jushi Shareholders' Equity (Deficit)		Non-Controlling Interests		Total Equity (Deficit)
	Subordinate Voting Shares
Balances - January 1, 2023	196,686,372	$	492,020	$	(444,742)	$	47,278	$	(1,387)	$	45,891
Shares canceled upon forfeiture if 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

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

JUSHI HOLDINGS INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of U.S. dollars)

Six Months Ended
June 30,
2023 2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (26,476) $ (7,691)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 13,964 7,603
Share-based compensation 4,674 11,648
Fair value changes in derivatives (9,120) (56,881)
Non-cash interest expense, including amortization of debt issuance costs 2,913 10,402
Deferred income taxes and uncertain tax positions 2,897 (2,133)
Other non-cash items, net 3,386 (60)
Changes in operating assets and liabilities:
Accounts receivable (764) 442
Inventory (9,311) 7,533
Prepaid expenses and other current and non-current assets (123) (167)
Accounts payable, accrued expenses and other current liabilities 7,675 3,593
Net cash flows used in operating activities (10,285) (25,711)
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for acquisitions, net of cash acquired — (20,824)
Payments for property, plant and equipment (6,144) (40,917)
Proceeds from sale of property, plant and equipment 916 —
Net cash flows used in investing activities (5,228) (61,741)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of shares, net — 13,680
Proceeds from exercise of warrants and options — 751
Proceeds from acquisition facility — 25,000
Redemption of senior notes (including related party redemptions of $0 and $8 for the six months ended June 30, 2023 and 2022, respectively) — (258)
Payments of finance leases, net of tenant allowance of $0 and $10,065 for the
six months ended June 30, 2023 and 2022, respectively
(2,681) (6,555)
Proceeds from mortgage loans 21,900 —
Payments of loan financing costs (250) (793)
Repayments of mortgage loans (110) (150)
Proceeds from other financing activities 3,295 4,353
Payments of other financing activities (1,725) (14)
Net cash flows provided by financing activities 20,429 36,014
Effect of currency translation on cash and cash equivalents — (238)
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 4,916 (51,676)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD 27,146 95,487
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD $ 32,062 $ 43,811
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


	Three Months Ended March 31,
	2024		2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(18,355)	$	(12,440)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization, including amounts in cost of goods sold	6,836		7,335
Share-based compensation	1,524		2,311
Fair value changes in derivatives	5,100		(8,030)
Non-cash interest expense, including amortization of deferred financing costs	1,495		1,731
Deferred income taxes and uncertain tax positions	6,647		355
Gain on debt extinguishment	(399)		—


Other non-cash items, net	(159)		(166)
Changes in operating assets and liabilities:
Accounts receivable	410		(1,210)
Inventory	(3,611)		(4,480)
Prepaid expenses and other current and non-current assets	903		2,989

Accounts payable, accrued expenses and other current liabilities	6,102		8,033
Net cash flows provided by (used in) operating activities	6,493		(3,572)
CASH FLOWS FROM INVESTING ACTIVITIES:


Payments for property, plant and equipment	(1,077)		(4,542)
Proceeds from sale of property, plant and equipment	334		—
Net cash flows used in investing activities	(743)		(4,542)
CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from exercise of options	2		—
Payments on promissory notes	(2,750)		—

Payments on acquisition related credit facility	(2,438)		—
Payments of finance leases	(728)		(844)
Proceeds from mortgage loans	—		1,900

Payments of mortgage loans	(37)		(57)
Proceeds from other financing activities	46		—
Payments of other financing activities	(586)		(668)
Net cash flows (used in) provided by financing activities	(6,491)		331
Effect of currency translation on cash and cash equivalents	—		61
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	(741)		(7,722)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD	31,305		27,146
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD	$	30,564	$	19,424
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest (excluding capitalized interest)	$	7,781	$	6,951
Cash (received) paid for income taxes	$	(1,522)	$	305
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Capital expenditures	$	1,011	$	2,804
Right-of-use assets from finance lease liabilities	$	203	$	461
Issuance of second lien notes for settlement of accrued bonus	$	—	$	750
Issuance of second lien notes for debt exchange	$	4,750	$	—
Warrants issued for debt exchange	$	863	$	—

~~Table of Contents~~

~~JUSHI HOLDINGS INC.~~

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

~~(In thousands of U.S. dollars)~~

Six Months Ended
June 30,
2023 2022
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest (excluding capitalized interest) $ 14,787 $ 10,699
Cash paid for income taxes 3,145 8,542
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Capital expenditure and related accruals 2,360 7,453
Right-of-use assets obtained in exchange for new finance lease liabilities 659 4,701
Issuance of second lien notes for settlement of accrued bonus 750 —
Fair value of note obligations and warrant liabilities from acquisitions and acquisitions of non-controlling interests — 19,782
Fair value of shares issued for acquisitions and acquisitions of non-controlling interests — 15,167
Debt and shares issued for services received — 634

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

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)


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 in both medical and adult-use markets. As of ~~June 30, 2023,~~March 31, 2024, 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, Massachusetts, Nevada, Ohio, Pennsylvania and Virginia. The Company’s head office is located at 301 Yamato Road, Suite 3250, Boca Raton, Florida 33431, 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”, and trades on the United States Over the Counter Stock Market (“OTCQX”) under the symbol “JUSHF”.


2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Consolidation

The financial statements 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 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 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 condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, ~~2022,~~2023, which are included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2022,~~2023, filed with the SEC on April ~~18, 2023~~1, 2024 (the ~~“2022~~“2023 Form 10-K”), and was also filed on the System for Electronic Document Analysis and Retrieval (“SEDAR”) on April ~~18, 2023.~~1, 2024. Consolidated balance sheet information as of December 31, ~~2022~~2023 presented herein is derived from the Company’s audited consolidated financial statements for the year ended December 31, ~~2022.~~2023.

Going Concern and Liquidity

As reflected in the ~~2022~~2023 Form 10-K, the Company ~~incurred a loss from operations of $220,333, including non-cash impairment charges of $159,645, and~~ used net cash of ~~$21,416~~$3,318 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 $10,285 for operating activities for the six months ended June 30,~~ 2023, and as of that date, the Company’s current liabilities exceeded its current assets by ~~$37,328. Since inception, management has focused on building~~$80,825. Furthermore, as of March 31, 2024, the Company’s current liabilities exceeded its current assets by $81,294. Such current liabilities as of March 31, 2024, include aggregate contractual maturities of (i) $57,687 of the Acquisition Facility (as defined below) debt that is to be paid in cash within the next twelve months, absent a ~~diverse portfolio~~refinancing, (ii) $23,747 of ~~assets~~debt (including $2,247 of interest and $5,000 of milestone accruals) that are subject to indemnity claims in ~~attractive markets to vertically integrate its business. As such,~~favor of the Company ~~has incurred losses as it expanded its operations. Management has put~~and not currently expected to be paid in ~~place plans~~cash within the next twelve months and (iii) $3,225 debt related to ~~increase~~Jushi Europe SA (“Jushi Europe”), where the ~~profitability~~payments are subject to completion of the ~~business in fiscal year 2023~~liquidation of Jushi Europe. Refer to Note 9 - Debt and ~~beyond. In order to achieve profitable future operations, management has commercialized production from~~Note 18 - Commitments and Contingencies for more information. Absent a refinancing of the Acquisition Facility debt, the Company will not meet its recently expanded grower-processing facilities in 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 atobligations within the ~~Company’s retail and grower-processing facilities.~~next year. Management believes that with refinancing of the Acquisition Facility debt, the Company would meet its obligations.

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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)

As concluded in the ~~2022~~2023 Form 10-K, substantial doubt existed about the Company’s ability to continue as a going concern, and, as a result of the above, substantial doubt continues to exist within the next twelve months from the date these financial statements are issued. ~~Management~~The Company has a history of refinancing its debt and management intends to ~~fund~~refinance the ~~Company’s operations, capital expenditures and~~Acquisition Facility debt ~~service with existing cash and cash equivalents on hand, cash generated from operations, including anticipated refunds from~~before the ~~Internal Revenue Service (“IRS”) relating to employee retention credit claims, and, as needed, future financing (equity and/or debt) as well as the potential sales of non-core assets.~~maturity date. The ability to 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 assets if necessary.~~financing. There is no assurance that the Company will be successful in this or any of its endeavors ~~or become financially viable~~ and continue as a going concern.

The unaudited consolidated financial statements contained 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 business for the foreseeable future, and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or amounts and classification of liabilities that may result from the outcome of 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, ~~2022,~~2023, which is included in the ~~2022~~2023 Form 10-K. Except as disclosed below, there have been no material changes to the Company’s significant accounting policies.

Cash, Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows:


			June 30, 2023 (unaudited)		December 31, 2022
		March 31, 2024 (unaudited)					March 31, 2024 (unaudited)	December 31, 2023
Cash and cash equivalents	Cash and cash equivalents		$	26,784	$	26,196
Restricted cash - current (1)	Restricted cash - current (1)		3,128		—
Restricted cash - non-current (1)	Restricted cash - non-current (1)		2,150		950
Cash, cash equivalents and restricted cash	Cash, cash equivalents and restricted cash		$	32,062	$	27,146

(1)~~As of June 30, 2023, restricted~~Restricted cash ~~-current, and restricted cash - non-current, includes $3,128 and $1,200, respectively, relating~~primarily relates to the Manassas Mortgage. Subsequent to March 31, 2024, the lender released the entire $3,128 of current restricted cash to the Company. Consequently, such cash is now unrestricted. Refer to Note 9 - Debt and Note 21 - Subsequent Events 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 financing activities.

Recent Accounting Pronouncements

Adoption of New Accounting Standards ~~Issued But Not Yet Adopted~~

In June 2020, the 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 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

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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)~~

and interim periods beginning after December 15, 2023, although early adoption is permitted. ~~The Company is in~~There was no impact to the ~~process of evaluating the impact of this new guidance on its~~ consolidated financial ~~statements.~~statements upon adoption.

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

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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)

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~~There was no impact to the ~~process of evaluating the impact of this new guidance on its~~ consolidated financial ~~statements.~~statements upon adoption.

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~~There was no impact to the ~~process of evaluating the impact of this new guidance on its~~ consolidated financial ~~statements.~~statements upon adoption.

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. There was no impact to the consolidated financial statements upon adoption.

Accounting Standards Issued But Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires two primary enhancements of 1) disaggregated information on a reporting entity’s effective tax rate reconciliation, and 2) information on incomes taxes paid. For public business entities, the new requirement will be effective for annual periods beginning after December 15, 2024. The guidance will be applied on a prospective basis with the option to apply the standard retrospectively. Early adoption is permitted. The Company is ~~in the process of~~currently evaluating the ~~impact~~effect of adopting this ~~new guidance on its consolidated financial statements.~~ASU.


3. INVENTORY, NET

The components of inventory, net, are as follows:


		June 30, 2023 (unaudited)		December 31, 2022
Raw materials
	March 31, 2024 (unaudited)					March 31, 2024 (unaudited)	December 31, 2023
Cannabis plants	Cannabis plants	$	4,560	$	4,347
Harvested cannabis and packaging	Harvested cannabis and packaging	8,847		9,052
Total raw materials	Total raw materials	13,407		13,399
Work in process	Work in process	5,399		7,845
Finished goods	Finished goods	21,974		13,845
Total inventory, net	Total inventory, net	$	40,780	$	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:

June 30, 2023 (unaudited)

December 31, 2022

March 31, 2024 (unaudited)

Employee retention credit receivable

10,140

—

Prepaid expenses and deposits

3,523

3,409

Prepaid expenses and deposits

Assets held for sale

Other current assets

611

548

Total prepaid expenses and other current assets

14,274

3,957

Total prepaid expenses and other current assets

~~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 ~~three months~~year ended ~~June 30,~~December 31, 2023, the Company, with guidance from a third-party specialist, determined it was entitled to ~~ERC~~employee retention credit (“ERC”) claims of ~~$10,140~~$10,140 for previous business interruptions related to COVID and filed for such claims with the ~~IRS.~~Internal Revenue Service (“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~~sheets as of ~~June 30, 2023. Furthermore, on~~March 31, 2024 and December 31, 2023.

As of December 31, 2023, the ~~statement~~ Company determined that one of ~~cash flow~~its grower processor facilities located in Nevada, with total carrying value of $1,647, 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 ~~six months ended June 30, 2023, both~~consolidated balance sheets. The sale of the ~~deferred income and related receivable are shown as non-cash items, and~~grower processor facility is expected to be completed by the ~~impact~~end of ~~these two nets to zero.~~2024.


5. PROPERTY, PLANT AND EQUIPMENT

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

June 30, 2023 (unaudited)

December 31, 2022

March 31, 2024 (unaudited)

Buildings and building components

91,775

80,697

Land

14,301

14,085

Land

Leasehold improvements

45,104

43,472

Machinery and equipment

29,595

27,615

Machinery and equipment

Furniture, fixtures and office equipment (including computer)

20,441

16,126

Construction-in-process

852

20,086

Construction-in-process

Property, plant and equipment, gross

202,068

202,081

Less: Accumulated depreciation

(32,243)

(24,326)

Less: Accumulated depreciation

Property, plant and equipment, net

169,825

177,755

Property, plant and equipment, net

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

~~PPE depreciation~~Depreciation was ~~$4,483~~$4,909 and ~~$3,753~~$4,812 for the three months ended ~~June 30,~~March 31, 2024 and 2023, ~~and 2022, respectively, and $9,295 and $6,300 for the six months ended June 30, 2023 and 2022,~~ respectively. Interest expense capitalized to PPE ~~totaled $222 and $1,303~~ was not material for the three months ended ~~June 30, 2023~~March 31, 2024 and ~~2022, respectively, and $410 and $2,047 for the six months ended June 30,~~ 2023 ~~and 2022, respectively.~~

As of December 31, 2023, the Company reclassified $1,647 from Property, plant and equipment, net to assets held for sale. Refer to Note 4 - Prepaid Expenses and Other Current Assets for additional information.

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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)


6. ACQUISITIONS

Nature’s Remedy

In connection with the Company’s acquisition 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 payment of 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 has not opened~~a competitor opening~~ a competing dispensary within ~~a certain~~the stated radius of the Company’s dispensary in Tyngsborough, Massachusetts. Consequently, atbeginning in March 2023, the Company began recording a liability for the Monthly Milestone Accrual. As of ~~June 30, 2023, $2,500~~March 31, 2024, $5,000 of Monthly Milestone Accrual was classified as acquisition-related milestone accrual in other current liabilities. As of December 31, 2023, the aggregate contingent consideration liability was $4,984, of which $4,167 of Monthly Milestone Accrual was classified as acquisition-related milestone accrual in other current liabilities ~~while~~and the remaining ~~liability of $2,394~~ $817 was included inas 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~~“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 of March 31, 2023.

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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)~~


7. OTHER NON-CURRENT ASSETS

The components of other non-current assets are as follows:

June 30, 2023 (unaudited)

December 31, 2022

Operating lease assets (1)

24,427

16,244

March 31, 2024 (unaudited)

Operating lease assets

Indemnification assets

9,011

8,198

Indemnification assets

Net deferred tax assets

Deposits and escrows - properties

1,665

1,637

Equity investment (2)

977

Net deferred tax assets

594

—

Deposits and escrows - properties

Deposits - equipment

530

484

Deposits - equipment

Equity investment (1)

Other

703

Total other non-current assets

37,271

28,243

Total other non-current assets

(1)In June 2023, the Company performed a reassessment of its previously classified real estate finance leases, resulting in some leases being reclassified from finance to operating. 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 the Company does not have the right to vote or participate in the management of PVLLC and therefore the investment is measured at its fair value. Refer to Note 19 - Financial Instruments for more information relating to the fair value of this equity investment as of ~~June 30, 2023~~.


~~8. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES~~

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

June 30, 2023 (unaudited) December 31, 2022
Deferred income - ERC (1)
$ 10,140 $ —
Goods received not invoiced 7,534 11,620
Operating lease obligations 4,910 2,652
Accrued employee related expenses and liabilities 4,347 6,030
Accrued capital expenditures 3,058 5,603
Contingent consideration liabilities (2)
2,394 3,398
Accrued interest 3,419 2,388
Accrued sales and excise taxes 3,490 1,931
Deferred revenue (loyalty program) 1,495 1,870
Accrued professional and management fees 898 1,481
Other accrued expenses and current liabilities 8,172 9,356
Total $ 49,857 $ 46,329

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

~~(2)Refer to~~ ~~Note 6 - Acquisitions for more information~~March 31, 2024.

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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)


8. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

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


	March 31, 2024 (unaudited)		December 31, 2023
Deferred income - ERC (1)	$	10,140	$	10,140
Goods received not invoiced	5,268		5,019
Accrued employee related expenses and liabilities	5,260		4,175
Acquisition-related milestone accrual (2)	5,000		4,167
Operating lease obligations	4,707		4,693
Accrued interest	4,480		4,106
Accrued sales and excise taxes	2,866		2,388
Deferred revenue (loyalty program)	1,441		1,407
Accrued professional and management fees	698		986

Accrued capital expenditures	100		702
Contingent consideration liabilities (2)	—		817
Other accrued expenses and current liabilities	3,190		5,470
Total accrued expenses and other current liabilities	$	43,150	$	44,070

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

(2)Refer to Note 6 - Acquisitions for more information.


9. DEBT

The components of the Company’s debt are as follows:


		Effective Interest Rate	Maturity Date	June 30, 2023		December 31, 2022
	Effective Interest Rate							Effective Interest Rate	Maturity Date	March 31, 2024 (unaudited)	December 31, 2023
Principal amounts:	Principal amounts:
Second Lien Notes
Second Lien Notes
Second Lien Notes	Second Lien Notes	15%	December 2026	$	74,330	$	73,182
Acquisition Facility	Acquisition Facility	15%	December 2024	65,000		65,000
Acquisition-related promissory notes payable	Acquisition-related promissory notes payable	8% - 23%	August 2024 - April 2027	35,716		35,716
Mortgage loans	Mortgage loans	6% - 9%	January 2027 - April 2028	29,552		7,770
Total debt subject to scheduled repayments	Total debt subject to scheduled repayments			204,598		181,668
Promissory notes payable to Sammartino (1)	Promissory notes payable to Sammartino (1)	11%	September 2024 - September 2026	21,500		21,500
Jushi Europe debt (2)	Jushi Europe debt (2)	n/a	March 2022	3,254		3,190
Total debt	Total debt			229,352		206,358
Less: debt issuance costs and original issue discounts	Less: debt issuance costs and original issue discounts			(15,920)		(17,096)
Total debt, net	Total debt, net			$	213,432	$	189,262
Debt, net - current portion	Debt, net - current portion			$	14,791	$	8,704
Debt, net - non-current portion	Debt, net - non-current portion			$	198,641	$	180,558

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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)

(1)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 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,~~On January 24, 2024, the Company ~~one~~entered into two Note Exchange Agreements with holders of ~~its wholly subsidiaries (JGMT, LLC)~~approximately $9,850 of the Company’s unsecured debt (the “Existing Notes”). Upon closing of the transactions contemplated in the Note Exchange Agreements (the “Debt Exchange”) on February 6, 2024, the holders of the Existing Notes delivered the Existing Notes to the Company for cancellation, and the ~~Company’s Chief Executive Officer~~Company: (1) issued to certain direct and ~~Chairman~~beneficial holders of the ~~Board~~Existing Notes an aggregate of Directors (“CEO”) entered into an amendment to his existing employment agreement (the “Amendment”) pursuant to which the CEO agreed to receive the $750 annual cash bonus that 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$4,750 principal amount of ~~12% second lien notes (“~~Second Lien ~~Notes”) due December 7, 2026, which was~~Notes; (2) issued ~~on March 15, 2023,~~to certain direct and ~~(iii)~~beneficial holders of the Existing Notes fully-detached warrants to purchase ~~up to approximately $375 worth~~an aggregate of 1,800,000 of the Company’s SVS, ~~(“Warrants”),~~ with such Warrants to be priced and issued as soon as practicable in accordance with US and Canadian securities laws. The Warrants, when issued, will have an exercise price per subordinate voting share equal to the greater of: (a) a twenty-five percent (25%) premium to the volume-weighted average price per share of the Company’s subordinate voting shares on the Canadian Securities Exchange (converted into U.S. Dollars at an exchange rate determined by the Company in good faith) over the trailing ten (10) trading day period prior to the date the Warrants are issued, and (b) the fair market value of the Company’s subordinate voting shares on the Canadian Securities Exchange (converted into U.S. Dollars at an exchange rate determined by the Company in good faith) on the date the Warrants are issued. As of June 30, 2023, the fair value of the Warrants to be priced and issued was estimated to be $148, which was recorded as additional debt discount to the Second Lien Notes with a corresponding offset to Accrued expenses and other current liabilities. The current estimated fair value of the Warrants will be adjusted when the Warrants are priced and issued.

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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)~~

In June 2023, the Company amended its Second Lien Notes to modify the Change of Control provisions and make other changes. The consideration paid by the Company for the amendment was a repricing of the related outstanding warrants ~~to purchase SVS of the Company from~~each warrant having an exercise price of ~~$2.086 per warrant to~~ $1.00 per ~~warrant.~~ ~~In addition~~SVS and an expiration of December 7, 2026; and (3) paid to the ~~repricing~~direct holders of the ~~warrants, the respective warrant agreements were amended~~Existing Notes an aggregate of $2,750 in cash. Refer to Note 12 - Equity for more information.

The Debt Exchange was accounted for as a debt extinguishment, and resulted in the Company recording a ~~change in accounting classification~~non-cash gain on debt extinguishment of $399, which represents the difference between the reacquisition price of the ~~respective warrants from liability to equity.~~ ~~The estimated value~~Existing Notes and the net carrying amount of the ~~consideration of $1,341~~Existing Notes prior to redemption. This amount was ~~determined based on the incremental change~~recorded in other income (expenses), net in the ~~fair value~~consolidated statements of ~~the warrants before~~operation and after repricing. The consideration was recorded as additional debt discount to the Second Lien Notes with a corresponding offset to Paid-in capital. Refer to Note 11 - Derivative Liabilities for more information.comprehensive income (loss).

Mortgage ~~loans~~Loans

Arlington Mortgage

In December 2021, the Company 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 Company had drawn down $5,000, and 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”), 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 ~~June 30, 2023~~March 31, 2024 was ~~10.25%~~10.5%.

Manassas Mortgage

In April 2023, the Company entered into a $20,000 mortgage loan agreement (the “Manassas Mortgage”), which is principally secured by the Company’s cultivation and manufacturing facility located in Manassas, Virginia. The Manassas Mortgage bears interest of ~~8.625%~~8.875% per annum as of ~~June 30, 2023,~~March 31, 2024, payable monthly, and will mature in April 2028. The interest rate is variable and determined based on the 30-day average secured overnight financing rate plus 3.55%, with a floor rate of not less than 8.25%.

~~Financial covenants~~

~~Acquisition Facility~~

The Senior Secured Credit Facility (the “Acquisition Facility”) contains certain financial and other covenants with which the Company is required to comply. On May 10, 2023, the Company was non-compliant with an affirmative covenant relating to a minimum cash deposit requirement in a specified bank account. The Company received a waiver for this instance on May 11, 2023. As of ~~June 30, 2023, the 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 Company is required to comply. As of June 30, 2023, the Company was in compliance with all financial covenants contained in each of the mortgage loan agreements.

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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)

Financial Covenants

Acquisition Facility

The senior secured credit facility from Roxbury, LP, a portfolio company of SunStream Bancorp Inc., which is a joint venture sponsored by Sundial Growers Inc. (the “Acquisition Facility”), contains certain financial and other covenants with which the Company is required to comply, including covenants related to (i) minimum unrestricted cash and cash equivalents balance and (ii) minimum quarterly revenue. As of March 31, 2024, the Company was in compliance with all financial covenants contained in the Acquisition Facility.

Mortgage loans

The Company’s three mortgage loan agreements contain certain financial and other covenants with which the Company is required to comply. As of March 31, 2024, the Company was in compliance with all financial covenants contained in each of the mortgage loan agreements.

Annual Maturities

As of ~~June 30, 2023,~~March 31, 2024, aggregate future scheduled repayments of the Company’s debt are as follows:


		Remainder of the year		2024		2025		2026		2027		Thereafter		Total
		Remainder of the year
		Remainder of the year
		Remainder of the year														2025	2026	2027	2028	Total
Second Lien Notes	Second Lien Notes	$	—	$	—	$	—	$	74,330	$	—	$	—	$	74,330
Acquisition Facility	Acquisition Facility	4,875		60,125		—		—		—		—		65,000
Acquisition-related promissory notes payable	Acquisition-related promissory notes payable	3,448		5,885		1,970		1,971		22,442		—		35,716
Mortgage loans	Mortgage loans	101		485		658		669		9,399		18,240		29,552
Total debt subject to scheduled repayments	Total debt subject to scheduled repayments	$	8,424	$	66,495	$	2,628	$	76,970	$	31,841	$	18,240	$	204,598

The above table excludes the 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 $3,225 was March 2022.

Interest Expense

Interest expense, net is comprised of the following:


		Three Months Ended June 30,				Six Months Ended June 30,
		2023		2022		2023		2022
	Three Months Ended March 31,										Three Months Ended March 31,
	2024									2024		2023
Interest expense	Interest expense
Interest and accretion - 10% Senior Notes		$	—	$	5,838	$	—	$	11,236
Interest and accretion - Second Lien Notes
Interest and accretion - Second Lien Notes
Interest and accretion - Second Lien Notes	Interest and accretion - Second Lien Notes	2,584		—		4,928		—
Interest and accretion - Finance lease liabilities	Interest and accretion - Finance lease liabilities	2,598		3,013		4,947		5,914
Interest and accretion - Promissory notes	Interest and accretion - Promissory notes	1,542		1,347		3,078		2,084
Interest and accretion - Acquisition Facility	Interest and accretion - Acquisition Facility	2,671		1,854		4,967		3,294
Interest and accretion - Mortgage loans and other financing activities	Interest and accretion - Mortgage loans and other financing activities	625		221		810		620
Capitalized interest	Capitalized interest	(222)		(1,303)		(410)		(2,047)
Total interest expense	Total interest expense	9,798		10,970		18,320		21,101
Interest income	Interest income	(8)		(23)		(10)		(38)
Total interest expense, net	Total interest expense, net	$	9,790	$	10,947	$	18,310	$	21,063

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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)


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. In June 2023, the Company performed a reassessment of its previously classified real estate finance leases due to changing demographics and business environment. This reassessment 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 reassessment, the classification of some leases were changed from finance to operating. Additionally, the impact of the reassessment was an aggregate decrease in finance lease obligations and related right-of-use (“ROU”) assets of $45,768 and $42,349, respectively, and an aggregate increase in operating lease obligations and related ROU assets of $8,691 and $5,271, respectively. In connection with the change from finance to operating lease, the Company’s

c~~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)~~

~~depreciation and interest expense related to ROU assets will be lower after the change, and the rent expense will be higher.~~ontract. The expiry dates of the leases, including reasonably certain estimated renewal periods, are between ~~2023~~2024 and 2043. The Company reassesses the likelihood of exercising a~~nd 2043.~~ renewal option period if there is a significant event or change in circumstances within its control. 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 June 30,				Six Months Ended June 30,
		2023		2022		2023		2022
	Three Months Ended March 31,										Three Months Ended March 31,
	2024									2024		2023
Finance lease cost:	Finance lease cost:
Amortization of lease assets
Amortization of lease assets
Amortization of lease assets	Amortization of lease assets	$	1,469	$	1,261	$	3,059	$	2,403
Interest on lease liabilities	Interest on lease liabilities	2,598		3,013		4,947		5,914
Total finance lease cost	Total finance lease cost	4,067		4,274		8,006		8,317
Operating lease cost	Operating lease cost	915		914		1,648		1,800
Variable lease cost	Variable lease cost	20		89		86		182
Total lease cost	Total lease cost	$	5,002	$	5,277	$	9,740	$	10,299

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


		June 30, 2023				December 31, 2022
		(unaudited)
		Finance Leases		Operating Leases		Finance Leases		Operating Leases
	March 31, 2024													March 31, 2024			December 31, 2023
	(unaudited)
		Finance Leases
		Finance Leases
		Finance Leases											Operating Leases		Finance Leases			Operating Leases
Weighted average discount rate	Weighted average discount rate	16.07	%	13.09	%	11.23	%	11.51	%	Weighted average discount rate	16.08	%	15.15	%	16.09	%		15.09	%
Weighted average remaining lease term (in years)	Weighted average remaining lease term (in years)	17.0		12.7		22.7		14.1		Weighted average remaining lease term (in years)	16.4		8.6		16.6			8.7

The maturities of the contractual undiscounted lease liabilities as of ~~June 30, 2023~~March 31, 2024 are as follows:

Finance Leases Operating Leases
Remainder of year $ 4,491 $ 2,427
2024 10,653 5,667
2025 10,517 5,581
2026 10,409 5,319
2027 9,950 5,161
Thereafter 158,127 43,157
Total lease payments 204,147 67,312
Less: Imputed interest (142,662) (36,946)
Total present value of minimum lease payments $ 61,485 $ 30,366
Lease liabilities - current portion $ 8,786 $ 4,910
Lease liabilities - non-current $ 52,699 $ 25,456


	Finance Leases		Operating Leases
Remainder of year	$	7,319	$	3,734
2025	10,820		5,772
2026	10,494		5,536
2027	10,002		5,243
2028	10,166		4,842
Thereafter	147,970		19,670
Total lease payments	196,771		44,797
Less: Imputed interest	(135,367)		(20,658)
Total present value of minimum lease payments	$	61,404	$	24,139
Lease liabilities - current portion	$	9,121	$	4,707
Lease liabilities - non-current	$	52,283	$	19,432

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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)


11. DERIVATIVE LIABILITIES

The following table summarizes the change in the Company’s derivative liabilities for the ~~six~~three months ended ~~June 30, 2023~~March 31, 2024.


	Total Derivative Liabilities (1)
Balance as of January 1, ~~2023~~2024	$	~~14,134~~2,638
Fair value changes	~~(9,120)~~5,100
~~Reclassification to equity~~	~~(2,050)~~
~~Down-round changes~~	~~143~~
Balance as of ~~June 30, 2023~~March 31, 2024	$	~~3,107~~7,738

(1)Refer to Note 12 - Equity for the change in number of warrants during the ~~six~~three months ended ~~June 30, 2023.~~March 31, 2024.

The Company’s derivative liabilities are primarily comprised of derivative warrants (“Derivative Warrants”). These are warrants to purchase SVS of the Company and were previously issued in connection with the Company’s ~~Second Lien Notes and its~~ 10% senior secured notes (the “Senior Notes”). 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 $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 warrant 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 previously extinguished.

notes. The Derivative Warrants may be net share settled. As of ~~June 30,~~March 31, 2024 and December 31, 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.

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 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 OTCQX closing price of the Derivative Warrants issue date as of ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022.~~2023.

~~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)~~

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


		June 30, 2023 (unaudited)	December 31, 2022
	March 31, 2024 (unaudited)					March 31, 2024 (unaudited)		December 31, 2023
Stock price	Stock price	$0.48	$0.76	Stock price	$0.73		$0.46
Risk-free annual interest rate	Risk-free annual interest rate	4.24% - 5.15%	3.99% - 4.11%	Risk-free annual interest rate	4.45% - 5.21%		4.01% - 4.79%
Range of estimated possible exercise price	Range of estimated possible exercise price	$1.00 - $2.086	$1.25 - $2.086	Range of estimated possible exercise price	$1.00 - $2.086		$1.00 - $2.086
Weighted average volatility	Weighted average volatility	84%	79%	Weighted average volatility	124%		101%
Remaining life	Remaining life	1.48 years - 3.44 years	1.98 years - 3.96 years	Remaining life	0.70 - 2.70 years		1.00 - 2.90 years
Forfeiture rate	Forfeiture rate	0%	0%	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.~~volatility. 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 June 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 $ 0.48 $ 724 $ (658) $ 0.76 $ 2,529 $ (2,396)
Volatility 84 % 736 (706) 79 % 2,070 (2,121)

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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)


	As of March 31, 2024							As of December 31, 2023
	(unaudited)
	Input			Effect of 10% Increase		Effect of 10% Decrease		Input			Effect of 10% Increase		Effect of 10% Decrease
Stock price	$	0.73		$	1,540	$	(1,440)	$	0.46		$	637	$	(574)
Volatility	124		%	1,190		(1,202)		101		%	680		(643)


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 ~~June 30, 2023,~~March 31, 2024, the Company had ~~196,633,371~~196,634,931 SVS issued and outstanding and no Multiple Voting Shares, Super Voting Shares or Preferred Shares issued and outstanding.

~~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)~~

Warrants

Each warrant entitles the holder to purchase one SVS. Certain warrants may be net share settled. The following table summarizes the status of warrants and related transactions:

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 300,000 — 300,000 $ 0.48
Cancelled/forfeited/expired (100,000) — (100,000) $ 1.47
Reclassification 17,512,280 (17,512,280) — $ —
Balance as of June 30, 2023 48,385,915 37,862,922 86,248,837 $ 1.16
Exercisable as of June 30, 2023 45,985,915 37,862,922 83,848,837 $ 1.14


	Non-Derivative (Equity) Warrants (1)	Derivative Liabilities Warrants	Total Number of Warrants	Weighted - Average Exercise Price
Balance as of January 1, 2024	49,068,636	37,862,922	86,931,558	$	1.12
Granted	2,050,000	—	2,050,000	$	0.97



Balance as of March 31, 2024	51,118,636	37,862,922	88,981,558	$	1.12
Exercisable as of March 31, 2024	49,083,636	37,862,922	86,946,558	$	1.12

(1)In ~~June 2023, 5,890,000~~February 2024, there were 1,800,000 warrants ~~were repriced from $1.25 to $1.00. Additionally, 17,512,280 warrants were reclassified from derivative liability warrants to non-derivative (equity) warrants and repriced from $2.086 to $1.00.~~issued in connection with the Debt Exchange. Refer to Note 119 - ~~Derivative Liabilities~~Debt for ~~additional~~more information.

The grant date fair value of the non-derivative warrants issued was determined using the Black-Scholes option-pricing model. The following assumptions were used for the calculation at date of issuance:


Weighted average stock price			$0.93
Weighted average expected stock price volatility			76.5%
Expected annual dividend yield			0%
Weighted average expected life of warrants			3.1 years
Weighted average risk-free annual interest rate			4.1%
Weighted average grant date fair value			$0.48

Share-based ~~payment award plans~~Payment Award Plans

Plan summary and description

Under the Company’s 2019 Equity Incentive Plan, as amended, (the “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, and the maximum number of incentive awards

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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)

available for issuance under the 2019 Plan, including additional awards available for certain new hires, was ~~3,575,590~~4,829,392 as of ~~June 30, 2023.~~March 31, 2024.

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 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 3,827,500 $ 0.51
Cancelled/forfeited/expired (4,384,005) $ 2.76
Issued and Outstanding as of June 30, 2023 30,195,754 $ 2.29
Exercisable as of June 30, 2023 17,131,076 $ 2.51


	Number of Stock Options	Weighted-Average Per Share Exercise Price
Issued and Outstanding as of January 1, 2024	27,653,184	$	1.40
Granted	1,220,000	$	0.70
Exercised	(3,333)	$	0.60
Cancelled/forfeited/expired	(273,166)	$	1.77
Issued and Outstanding as of March 31, 2024	28,596,685	$	1.36
Exercisable as of March 31, 2024	15,966,391	$	1.75

~~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)~~

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:


		Six Months Ended June 30,
		2023	2022
	Three Months Ended March 31,							Three Months Ended March 31,
	2024					2024			2023
Weighted average stock price	Weighted average stock price	$0.51	$2.78	Weighted average stock price	$0.70		$0.60
Weighted average expected stock price volatility	Weighted average expected stock price volatility	76.9%	74.5%	Weighted average expected stock price volatility	77.1%		77.4%
Expected annual dividend yield	Expected annual dividend yield	0%	0%	Expected annual dividend yield	0%		0%
Weighted average expected life	Weighted average expected life	6.0 years	6.2 years	Weighted average expected life	5.1 years		6.2 years
Weighted average risk-free annual interest rate	Weighted average risk-free annual interest rate	3.6%	2.8%	Weighted average risk-free annual interest rate	4.3%		3.7%
Weighted average grant date fair value	Weighted average grant date fair value	$0.34	$1.40	Weighted average grant date fair value	$0.46		$0.42

Restricted Stock

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, 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, ~~2023~~2024			~~1,156,319~~1,861

~~Cancelled/forfeited~~			~~(53,001)~~
~~Vested and Released~~			~~(1,097,823)~~
Unvested restricted stock as of ~~June 30, 2023~~March 31, 2024			~~5,495~~1,861

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.

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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)

Share-based ~~compensation cost~~Compensation Cost

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


		Three Months Ended June 30,				Six Months Ended June 30,
		2023		2022		2023		2022
	Three Months Ended March 31,										Three Months Ended March 31,
	2024									2024		2023
Stock options	Stock options	$	1,862	$	3,955	$	3,458	$	9,799
Restricted stock	Restricted stock	93		446		293		1,279
Warrants	Warrants	408		283		923		570
Total share-based compensation expense	Total share-based compensation expense	$	2,363	$	4,684	$	4,674	$	11,648

As of ~~June 30, 2023~~March 31, 2024, the Company had ~~$9,480~~$4,311 of unrecognized share-based compensation 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 ~~1.7~~1.5 years.


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 are as follows:


	Three Months Ended March 31,
	2024		2023
Numerator:
Net loss and comprehensive loss	$	(18,355)	$	(12,440)


Net loss and comprehensive loss - diluted	$	(18,355)	$	(12,440)

Denominator:
Weighted-average shares of common stock - basic	195,131,642		194,050,835

Weighted-average shares of common stock - diluted	195,131,642		194,050,835

Loss per common share:
Basic	$	(0.09)	$	(0.06)
Diluted	$	(0.09)	$	(0.06)

The following table summarizes weighted average 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 months ended March 31, 2024 and 2023, because the impact of including them would have been anti-dilutive:


	Three Months Ended March 31,
	2024	2023
Stock options	27,653,611	28,615,308
Warrants (derivative liabilities and equity)	88,052,437	85,989,948
Unvested restricted stock awards	1,861	1,120,815
	115,707,909	115,726,071

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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~~14. REVENUE

The ~~reconciliations~~Company has two revenue streams: (i) retail and (ii) wholesale. The Company’s retail revenues are comprised of ~~the net income (loss)~~cannabis sales from its dispensaries. The Company’s wholesale revenues are comprised of cannabis sales to its wholesale customers for resale through their dispensaries. Any intercompany revenue and ~~the weighted average number of shares used in the computations of basic and diluted earnings (loss) per share attributable~~costs are eliminated to ~~Jushi shareholders are as follows:~~

Three Months Ended June 30, Six Months Ended June 30,
2023 2022 2023 2022
Numerator:
Net income (loss) and comprehensive income (loss) attributable to Jushi shareholders $ (14,036) $ 12,066 $ (26,476) $ (7,691)
Dilutive effect of net income from derivative warrants liability — (42,572) — (56,881)
Less undistributed net income (loss) for participating securities — (197) — 140
Net income (loss) and comprehensive income (loss) attributable to Jushi shareholders - diluted $ (14,036) $ (30,703) $ (26,476) $ (64,432)
Denominator:
Weighted-average shares of common stock - basic 194,756,391 190,870,572 194,405,562 187,147,856
Dilutive effect of derivative warrants — 14,826,581 — 20,890,427
Weighted-average shares of common stock - diluted 194,756,391 205,697,153 194,405,562 208,038,283
Earnings (loss) per common share attributable to Jushi shareholders:
Basic $ (0.07) $ 0.06 $ (0.14) $ (0.04)
Diluted $ (0.07) $ (0.15) $ (0.14) $ (0.31)
arrive at consolidated totals.

The following table summarizes ~~weighted average instruments that may, in~~ the ~~future, have a dilutive effect on earnings (loss) per share, but were excluded~~Company’s revenue from ~~consideration in~~external customers, disaggregated by revenue stream:


	Three Months Ended March 31,
	2024		2023
Retail	$	57,369	$	62,311
Wholesale	8,090		7,562

Total revenue, net	$	65,459	$	69,873


15. OPERATING EXPENSES

The major components of operating expenses are as follows:


	Three Months Ended March 31,
	2024		2023
Salaries, wages and employee related expenses	$	14,147	$	16,804
Depreciation and amortization expense	3,278		2,663
Rent and related expenses	2,914		2,893
Professional fees and legal expenses	2,575		2,325
Share-based compensation expense	1,524		2,311

Other expenses (1)	3,773		5,456

Total operating expenses	$	28,211	$	32,452

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


16. INCOME TAXES

The following table summarizes the ~~computation of diluted net~~Company’s income ~~(loss) per share~~tax expense and effective tax rates for the three ~~and six~~ months ended ~~June 30, 2023~~March 31, 2024 and ~~2022, because the impact of including them would have been anti-dilutive:~~2023:

Three Months Ended June 30, Six Months Ended June 30,
2023 2022 2023 2022
Stock options 29,248,553 20,604,848 28,941,749 20,654,797
Warrants (derivative liabilities and equity) 86,097,189 29,448,567 86,043,865 29,420,800
Unvested restricted stock awards 376,980 1,657,307 746,843 2,631,487
Convertible promissory notes — 910,000 — 910,000
115,722,722 52,620,722 115,732,457 53,617,084


	Three Months Ended March 31,
	2024			2023
Loss before income tax	$	(8,608)		$	(2,292)
Income tax expense	$	9,747		$	10,148
Effective income tax rate	113.2		%	442.8		%

2018

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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 June 30, Six Months Ended June 30,
2023 2022 2023 2022
Retail $ 59,615 $ 67,276 $ 121,926 $ 125,230
Wholesale 6,810 5,467 14,372 9,316
Other — 14 — 99
Total revenue, net $ 66,425 $ 72,757 $ 136,298 $ 134,645


~~15. OPERATING EXPENSES~~

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

Three Months Ended June 30, Six Months Ended June 30,
2023 2022 2023 2022
Salaries, wages and employee related expenses $ 13,784 $ 18,593 $ 30,588 $ 35,930
Share-based compensation expense 2,363 4,684 4,674 11,648
Rent and related expenses 2,504 3,404 5,397 6,493
Depreciation and amortization expense 1,577 2,865 4,240 5,121
Professional fees and legal expenses 2,321 2,803 4,646 5,509
Other expenses (1)
4,605 6,396 10,061 11,757
Total operating expenses $ 27,154 $ 38,745 $ 59,606 $ 76,458

~~(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 expense and effective tax rates for the three and six months ended June 30, 2023 and 2022:~~

Three Months Ended June 30, Six Months Ended June 30,
2023 2022 2023 2022
Income (loss) before income tax $ (5,490) $ 19,776 $ (7,782) $ 5,070
Income tax expense $ 8,546 $ 7,710 $ 18,694 $ 12,761
Effective income tax rate (155.7) % 39.0 % (240.2) % 251.7 %

The Company has computed its provision for income taxes based on the actual effective rate for the ~~six~~three months ended ~~June 30,~~March 31, 2024 and 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 six~~ months ended ~~June 30,~~March 31, 2024 and 2023 ~~and 2022~~ are not indicative of the effective income tax rate for each respective fiscal year of ~~2023~~2024 and ~~2022.~~2023. 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 ~~uncertain~~liability for unrecognized tax ~~positions,~~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 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 March 31, 2024 and December 31, 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 ~~$60,491~~$109,204 and ~~$57,200~~$100,343 as of ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively, inclusive of interest and ~~penalties, which is included in income tax liabilities - non-current in the consolidated balance sheets.~~penalties. Additionally, there are unrecognized deferred tax benefits of ~~$3,414~~$17,353 and ~~$3,412~~$17,303 as of ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively. The Company ~~does not expect~~anticipates that it is reasonably possible that its new tax position on 280E may require changes to the balance of unrecognized tax benefits ~~will materially increase or decrease~~ within the next 12 months. However, an estimate of such changes cannot reasonably be made.

The amount of interest and penalties related to outstanding income tax liabilities recorded by the Company during the three and six months ended June 30, 2023 was $644 and $1,533, respectively. The amount of interest and penalties related to outstanding income tax liabilities recorded by the Company during the three and six months ended June 30, 2022 was not material. Additionally, the Company’s income tax payable of $32,575 and $19,921 as of June 30, 2023 and December 31, 2022, respectively, included deferral of certain 2023 and 2022 estimated income tax payments.

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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)~~


17. RELATED PARTY TRANSACTIONS

The Company had the following related party transactions:


	Three Months Ended March 31,																Three Months Ended March 31,				As of
	2024															2024		2023		March 31, 2024 (unaudited)		December 31, 2023
Nature of transaction														Nature of transaction	Related Party Expense				Related Party Payable
		Three Months Ended June 30,				Six Months Ended June 30,				As of
		2023		2022		2023		2022		June 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		$	—	$	(8)	$	—	$	(17)	$	—	$	—
12% Second Lien Notes - interest expense and principal amount (1)
12% Second Lien Notes - interest expense and principal amount (1)
12% Second Lien Notes - interest expense and principal amount (1)	12% Second Lien Notes - interest expense and principal amount (1)	$	(563)	$	—	$	(1,084)	$	—	$	(18,526)	$	(17,491)
Other debt (2)	Other debt (2)	$	—	$	—	$	—	$	—	$	(3,254)	$	(3,189)

(1)For the periods ended ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, the Second Lien Notes payable and the related interest expense includes amounts related to ~~a director~~the Company’s Chief Executive Officer, as well as a significant investor.

(2)Other debt relates to Jushi Europe. On February 16, 2022, 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.

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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)


18. 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 ~~June 30, 2023,~~March 31, 2024, 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 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 16 - Income Taxes for certain tax-related contingencies.

Claims and Litigation

From time to time, the Company may be involved in litigation relating to claims arising out of operations in the normal course of business. As of ~~June 30, 2023,~~March 31, 2024, 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.

MJ Market matter

On March 31, 2023, MJ’s Market, Inc. (“MJ’s”)~~, Inc.~~ filed a complaint in federal district court in Massachusetts adverse to Jushi Holdings Inc. and ~~the following~~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”). The Complaint centrally claims that the structure of the Nature’s Remedy of Massachusetts transaction providing for increased purchase price consideration if there is no competing dispensary within 2,500 foot radius by

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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)~~

certain time periods, and the Company’s filing with the 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 ~~vehemently denies~~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

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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)

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 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. The Referee assigned to the matter delivered a Statement of Decision on March 7, 2024 ruling in favor of TGS and Jushi.

Commitments

In addition to the contractual obligations outlined in Note 9 - Debt and Note 10 - Leases, the Company has the following commitments as of ~~June 30, 2023~~March 31, 2024 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).

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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)~~


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:

June 30, 2023 (unaudited)

December 31, 2022

March 31, 2024 (unaudited)

Financial assets: (1)

Equity investment

977

Equity investment

Total financial assets

977

Financial liabilities: (1)

Derivative liabilities (2)

3,107

14,134

Contingent consideration liabilities (3)

2,394

4,793

Contingent consideration liabilities (3)

Total financial liabilities

5,501

18,927

Total financial liabilities

(1)The Company has no financial assets or liabilities in Level 1 or 2 within the fair value hierarchy as of ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, and there were no transfers between hierarchy levels during the ~~six~~three months ended ~~June 30, 2023~~March 31, 2024 or year ended December 31, ~~2022.~~2023.

(2)Refer to Note 11 - Derivative Liabilities.

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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)

(3)Refer to Note 6 - 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 ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022.~~2023. The ~~fair value~~carrying amounts of the ~~Company’s debt approximates~~promissory notes approximate their fair values as ~~of June 30, 2023 and December 31, 2022 as their~~the effective interest rates are consistent with market rates. The carrying amount of the Second Lien Notes approximates their fair values as of March 31, 2024 and December 31, 2023, respectively.


20. SEGMENT INFORMATION

The Company operates a vertically integrated cannabis business in one reportable segment for the cultivation, manufacturing, distribution and sale of cannabis in the U.S. All of the Company’s revenues were generated within the U.S., and substantially all long-lived assets are located within the U.S. The accounting policies for the Company’s reportable segment are the same as those described in the summary of significant accounting policies. The chief operating decision maker is the Chief Executive Officer. The chief operating decision maker assesses performance and decides how to allocate resources based on operating results that are reported on the income statement as consolidated net income/(loss). The measure of segment assets is reported on the balance sheet as total consolidated assets. Refer to Note 15 - Operating Expenses for significant expenses for the reportable segment.


21. SUBSEQUENT EVENTS

In connection with the Manassas Mortgage, the Company satisfied certain criteria required for the release of an aggregate of $3,128 of restricted cash in April 2024. Consequently, on April 22, 2024, the lender released $3,128 of restricted cash to the Company.

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~~ITEM~~Item 2. ~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~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 six~~ months ended ~~June 30, 2023~~March 31, 2024 (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 condensed consolidated financial statements and notes thereto for the three ~~and six~~ months ended ~~June 30, 2023~~March 31, 2024 (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 notes thereto for the year ended December 31, ~~2022,~~2023, which are included in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2022,~~2023, filed with the U.S. Securities and Exchange Commission (“SEC”) on April ~~18, 2023~~1, 2024 (the ~~“2022~~“2023 Form 10-K”) and was also filed on the System for Electronic Document Analysis and Retrieval (“SEDAR”). All amounts are expressed in U.S.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.~~jurisdictions and capitalizing on such assets through strategic deployment in our day-to-day operations. 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 Ohio and 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

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

~~Employee Retention Credit~~

Recent Developments

~~The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), passed~~(Amounts expressed in ~~March 2020 and subsequently amended in 2021, allowed eligible employers to take credits~~thousands of U.S. dollars, except share amounts)

On April 16, 2024, we filed a registration statement on Form S-3 that was declared effective by the SEC on ~~certain amounts~~April 30, 2024 (the “S-3”). The S-3 permits us to offer and sell up to an aggregate amount of ~~qualified wages if~~$250,000 of any combination of subordinate voting shares, preferred shares, warrants, units, and/or rights. We may also offer securities as may be issuable upon conversion, redemption, repurchase, exchange or exercise of any securities registered under the ~~Company experienced either a full or partial suspension~~S-3, including any applicable antidilution provisions. In addition, the S-3 registered an aggregate of 44,660,966 subordinate voting shares for resale by James Cacioppo, our CEO.

On April 15, 2024, we announced the appointment of Todd West as the Company’s Chief Operating Officer effective April 12, 2024. Mr. West will oversee the Company’s grower-processor and retail operations ~~due to COVID related government orders. During the three months ended~~ ~~June 30, 2023, we, with guidance from a third-party specialist, determined that we were entitled to employee retention credit (“ERC”) claims~~ ~~of $10,140 for previous business interruptions related to COVID and filed for such claims with the~~ ~~Internal Revenue Service (“IRS”)~~. ~~The ERC claims, which will be recognized in the statements of operations and comprehensive income (loss) when we receive 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~~well as of security.

June 30, 2023. The claims are pending review by the IRS and there can be no assurance that the IRS will approve all or a portion of our claim to the ERC. Failure by the IRS to approve all or a portion of our claim to the ERC would result in us not receiving funds for the portion of the

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ERC claim that was denied, and would require a corresponding amount of the recorded 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 claw back any amounts the IRS determines were incorrectly disbursed.

Results of Operations

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

Three Months Ended June 30, Six Months Ended June 30,
2023 2022 % Change 2023 2022 % Change
REVENUE, NET $ 66,425 $ 72,757 (9) % $ 136,298 $ 134,645 1 %
COST OF GOODS SOLD (35,871) (46,089) (22) % (75,803) (88,865) (15) %
GROSS PROFIT 30,554 26,668 15 % 60,495 45,780 32 %
OPERATING EXPENSES 27,154 38,745 (30) % 59,606 76,458 (22) %
INCOME (LOSS) FROM OPERATIONS 3,400 (12,077) 128 % 889 (30,678) 103 %
OTHER INCOME (EXPENSE):
Interest expense, net (9,790) (10,947) (11) % (18,310) (21,063) (13) %
Fair value gains on derivatives 1,090 42,572 (97) % 9,120 56,881 (84) %
Other, net (190) 228 (183) % 519 (70) (841) %
Total other income (expense), net (8,890) 31,853 (128) % (8,671) 35,748 (124) %
INCOME (LOSS) BEFORE INCOME TAX (5,490) 19,776 (128) % (7,782) 5,070 (253) %
Income tax expense (8,546) (7,710) 11 % (18,694) (12,761) 46 %
NET INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) (14,036) 12,066 (216) % (26,476) (7,691) 244 %
Less: net loss attributable to non-controlling interests — — — % — — — %
NET INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO JUSHI SHAREHOLDERS $ (14,036) $ 12,066 (216) % $ (26,476) $ (7,691) 244 %
EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO JUSHI SHAREHOLDERS - BASIC $ (0.07) $ 0.06 (217) % $ (0.14) $ (0.04) 250 %
Weighted average shares outstanding - basic 194,756,391 190,870,572 2 % 194,405,562 187,147,856 4 %
EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO JUSHI SHAREHOLDERS - DILUTED $ (0.07) $ (0.15) (53) % $ (0.14) $ (0.31) (55) %
Weighted average shares outstanding - diluted 194,756,391 205,697,153 (5) % 194,405,562 208,038,283 (7) %


	Three Months Ended March 31,
	2024		2023		$ Change		% Change

REVENUE, NET	$	65,459	$	69,873	$	(4,414)	(6)	%
COST OF GOODS SOLD	(33,129)		(39,932)		6,803		(17)	%
GROSS PROFIT	32,330		29,941		2,389		8	%

OPERATING EXPENSES	28,211		32,452		(4,241)		(13)	%




INCOME (LOSS) FROM OPERATIONS	4,119		(2,511)		6,630		264	%

OTHER INCOME (EXPENSE):
Interest expense, net	(9,544)		(8,520)		(1,024)		12	%
Fair value (loss) gain on derivatives	(5,100)		8,030		(13,130)		(164)	%
Other, net	1,917		709		1,208		170	%
Total other income (expense), net	(12,727)		219		(12,946)		(5911)	%

LOSS BEFORE INCOME TAX	(8,608)		(2,292)		(6,316)		276	%
Income tax expense	(9,747)		(10,148)		401		(4)	%
NET LOSS AND COMPREHENSIVE LOSS	(18,355)		(12,440)		(5,915)		48	%



LOSS PER SHARE - BASIC	$	(0.09)	$	(0.06)	$	(0.03)	50	%
Weighted average shares outstanding - basic	195,131,642		194,050,835		1,080,807		1	%
LOSS PER SHARE - DILUTED	$	(0.09)	$	(0.06)	$	(0.03)	50	%
Weighted average shares outstanding - diluted	195,131,642		194,050,835		1,080,807		1	%

2724

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Three Months Ended ~~June 30, 2023~~March 31, 2024 Compared with the Three Months Ended ~~June 30, 2022~~March 31, 2023

(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 June 30,
		2023		2022		$ Change		% Change
	Three Months Ended March 31,
		2024
		2024
		2024												2023				$ Change					% Change
Retail	Retail	$	59,615	$	67,276	$	(7,661)	(11)	%	Retail	$	57,369	$	$	62,311	$		$	(4,942)		(8)			(8)	%
Wholesale	Wholesale	6,810		5,467		1,343		25	%	Wholesale	8,090		7,562		7,562		528			528		7			7	%
Other		—		14		(14)		(100)	%
Total revenue, net	Total revenue, net	$	66,425	$	72,757	$	(6,332)	(9)	%	Total revenue, net	$	65,459	$	$	69,873	$		$	(4,414)		(6)			(6)	%

Revenue, net, was ~~$66,425~~$65,459 compared to ~~$72,757,~~$69,873, a decrease of ~~$6,332~~$4,414 or 9%6%. Retail revenue decreased ~~$7,661~~$4,942 primarily due to ~~the closure of three underperforming stores, as well as~~ declines in revenue in: (i) Illinois, due to the impact of the state of Missouri moving to recreational use, and (ii) Nevada and Pennsylvania, due to market price compression and increased competition. The decrease ~~in retail revenue~~ was partially offset by increased sales in Virginia due in part to the opening of one new ~~dispensary openings from build outs and acquisitions.~~ store in August 2023. T~~The~~he Company ended the quarter with ~~thirty-four~~thirty-five operating dispensaries in seven states, as compared to ~~thirty-three~~thirty-seven in ~~six~~seven states at the end of ~~June 30, 2022.~~March 31, 2023.

Wholesale revenue increased ~~$1,343~~ $528 primarily due to ~~increased~~continued advancements at our cultivation and processing ~~activities at~~facilities that has enabled us to diversify our ~~grower processor facilities in Massachusetts~~product offerings, as well as increasing our competitiveness on quality, cost and ~~Virginia.~~distribution.

Gross Profit

Gross profit was ~~$30,554~~$32,330 compared to ~~$26,668,~~$29,941, an increase of ~~$3,886~~$2,389 or ~~15%~~8%. Gross profit margin increased to ~~46%~~49% compared to ~~37%~~43%. The improvement in gross profit and gross profit margin was driven by operating efficiencies at our grower processor facilities ~~in Massachusetts~~ and ~~Virginia,~~cost optimization initiatives, such as ~~well as sell through~~changes to our packaging. The benefit of ~~our branded products which have higher margins,~~these improvements was partially offset by ~~market price compression and increased competition~~declines in retail revenue in Illinois ~~Nevada~~ and ~~Pennsylvania.~~Pennsylvania driven by competition both inside of such states and, with respect to Illinois, in neighboring Missouri.

Operating Expenses

Operating expenses were ~~$27,154~~$28,211 compared to ~~$38,745,~~$32,452, a decrease of ~~$11,591~~$4,241 or ~~30%~~13%. The following table presents information of our operating expenses for the periods indicated:


		Three Months Ended June 30,
		2023		2022		$ Change		% Change
	Three Months Ended March 31,
		2024
		2024
		2024												2023				$ Change					% Change
Salaries, wages and employee related expenses	Salaries, wages and employee related expenses	$	13,784	$	18,593	$	(4,809)	(26)	%	Salaries, wages and employee related expenses	$	14,147	$	$	16,804	$		$	(2,657)		(16)			(16)		%
Depreciation and amortization expense										Depreciation and amortization expense	3,278			2,663				615					23		%
Rent and related expenses										Rent and related expenses	2,914			2,893				21					1		%
Professional fees and legal expenses										Professional fees and legal expenses	2,575			2,325				250					11		%
Share-based compensation expense	Share-based compensation expense	2,363		4,684		(2,321)		(50)	%	Share-based compensation expense	1,524		2,311		2,311		(787)			(787)		(34)				(34)	%
Rent and related expenses		2,504		3,404		(900)		(26)	%
Depreciation and amortization expense		1,577		2,865		(1,288)		(45)	%
Professional fees and legal expenses		2,321		2,803		(482)		(17)	%
Other expenses (1)	Other expenses (1)	4,605		6,396		(1,791)		(28)	%	Other expenses (1)	3,773		5,456		5,456		(1,683)			(1,683)		(31)				(31)	%

Total operating expenses	Total operating expenses	$	27,154	$	38,745	$	(11,591)	(30)	%
Total operating expenses
Total operating expenses											$	28,211		$	32,452			$	(4,241)				(13)		%

(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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Salaries, wages, and employee-related expenses decreased due to ~~a decrease~~the benefits from both the staffing model changes in ~~the number of employees as we work to right size~~our retail stores and right-sizing the organization ~~as well as due to changes to our staffing models at our retail stores. Lower~~that occurred in 2023. Lower share-based compensation expense reflects lower value of share-based compensation ~~granted as well as forfeitures of unvested equity~~

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awards. The three months ended June 30, 2022 includes general and administrative expenses related to our transition to GAAP reporting and costs associated with our registration with the SEC, which is included in professional fees and legal expenses.

Other Income (Expense)

Interest Expense, Net

Interest expense, net was ~~$9,790~~$9,544 compared to ~~$10,947, a decrease~~$8,520, an increase of ~~$1,157,~~$1,024, or ~~11%~~12%. The ~~decrease~~increase in interest expense, net is due to our higher overall debt balance, primarily due to ~~lower amortization of debt discount driven by~~ the ~~redemption~~addition of the ~~10% senior notes (“Senior Notes”)~~Manassas Mortgage in ~~December 2022, partially offset by higher interest rates associated with~~April 2023, the ~~December 2022 modification~~final draw on the Arlington Mortgage in January 2023, as well as the increase in the Second Lien Notes compared to March 31, 2023 due to issuance of Second Lien Notes during 2023 to settle accrued bonus, as well as issuance of Second Lien Notes in the Debt Exchange which occurred in February 2024. Interest related to the Acquisition Facility and ~~the issuance of the 12% second lien~~promissory notes ~~(“Second Lien Notes”).~~has declined as we continue to make principal payments.

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

Fair value ~~gains~~loss on derivatives ~~were $1,090~~was $5,100, compared to ~~$42,572.~~a gain of $8,030. Fair value ~~gains~~gain (loss) on derivatives include the 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 changes in derivatives were primarily attributable to the movement in our stock price during the corresponding period.

Other, Net

Other, net was an ~~expenses~~income of ~~$190,~~$1,917, compared to ~~an income of $228,~~$709, a change of ~~$418, which~~$1,208. The increase in income was due primarily to$575 higher foreign exchange translation ~~losses on~~adjustment mainly relating to certain Second Lien Notes denominated in Canadian ~~dollars.~~dollars, $399 gain on debt extinguishment and $400 reversal of legal claim accruals no longer required, partially offset by $440 lower indemnification asset relating to acquisitions made in prior years.

Income Tax Expense

Due to our cannabis operations, we are subject to the limitation of U.S. Internal Revenue Code of 1986, as amended (“IRC”) Section 280E under which we are 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. Total income tax expense was ~~$8,546~~$9,747 compared to ~~$7,710, an increase~~$10,148 in the prior year, a decrease of ~~$836,~~$401 or ~~11%~~4%. The ~~increase~~decrease in income tax expense is primarily due to ~~increased~~a reduction in taxable gross ~~profit, as well as the recording of additional uncertain tax positions and higher tax interest and tax penalties in 2023.~~

~~Six Months Ended June 30, 2023 Compared with the Six Months Ended June 30, 2022~~

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

~~Revenue, Net~~

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

Six Months Ended June 30,
2023 2022 $ Change % Change
Retail $ 121,926 $ 125,230 $ (3,304) (3) %
Wholesale 14,372 9,316 5,056 54 %
Other
— 99 (99) (100) %
Total revenue, net $ 136,298 $ 134,645 $ 1,653 1 %

~~Revenue, net, was $136,298 compared to $134,645, an increase of $1,653, or 1%.~~ ~~Retail revenue decreased $3,304 due primarily to~~ ~~the closure of three underperforming stores, as well as~~ declines in revenue in: (i) Illinois, due to the impact of the state of Missouri moving to recreational use, and (ii) Pennsylvania due to increased competition. The decrease in retail revenue was partially offset by new dispensary openings from build outs and acquisitions. We acquired Apothecarium and

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~~NuLeaf in Nevada during March 2022 and April 2022, respectively, and opened new Beyond Hello™ dispensaries in Ohio, Pennsylvania and Virginia in 2022.~~

Wholesale revenue increased $5,056 primarily due to increased cultivation and processing activities at our grower processor facilities in Massachusetts, Nevada and Virginia. The increase in Nevada is from the acquisition of NuLeaf.

~~Gross Profit~~

Gross profit was $60,495 compared to $45,780, an increase of $14,715, or 32%. Gross profit margin increased to 44% compared to 34%. 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 were $59,606 compared to $76,458, a decrease of $16,852, or 22%. The following table presents information of our operating expenses for the periods indicated:~~

Six Months Ended June 30,
2023 2022 $ Change % Change
Salaries, wages and employee related expenses $ 30,588 $ 35,930 $ (5,342) (15) %
Share-based compensation expense 4,674 11,648 (6,974) (60) %
Rent and related expenses 5,397 6,493 (1,096) (17) %
Depreciation and amortization expense 4,240 5,121 (881) (17) %
Professional fees and legal expenses 4,646 5,509 (863) (16) %
Other expenses (1)
10,061 11,757 (1,696) (14) %
Total operating expenses $ 59,606 $ 76,458 $ (16,852) (22) %

Salaries, wages, and employee-related expenses decreased due to a decrease in the number of employees as we work to right size the organization, as well as due to the changes to our staffing models at our retail stores. Lower share-based compensation expense reflects lower value of share-based compensation granted as well as forfeitures of unvested equity awards. The six months ended June 30, 2022 includes general and administrative expenses related to our transition to GAAP reporting and costs associated with our registration with the SEC, which is included in professional fees and legal expenses.

~~Other Income (Expense)~~

~~Interest Expense, Net~~

Interest expense, net, was $18,310 compared to $21,063, a decrease of $2,753, or 13%. The decrease is due primarily to lower amortization of debt discount driven by the redemption of the Senior Notes in December 2022, partially offset by higher overall debt balance due in part to funding of our recent acquisitions, as well as higher interest rates associated with the December 2022 modification of the Acquisition Facility, and the issuance of the Second Lien Notes.

~~Fair Value Gains on Derivatives~~

Fair value gains on derivatives were $9,120 compared to $56,881. Fair value gains on derivatives include the fair value changes relating to the derivative warrants. The derivative warrants are required to be remeasured at fair value at each

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~~reporting period. The fair value changes in derivatives were primarily attributable to the movement in our stock price during the corresponding period.~~

~~Other, Net~~

Other, net was an income of $519 compared to an expense of $70, a change of $589. The change from an expense to an income was due primarily to the recording of additional indemnification asset of $814 related to acquisitions made in prior years, with an equal and offsetting amount recorded in income tax expense, partially offset by foreign exchange translation losses on certain Second Lien Notes denominated in Canadian dollars.

~~Income Tax Expense~~

Due to our cannabis operations, we are subject to the limitation of IRC Section 280E under which we are 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. Total income tax expense was $18,694 compared to $12,761, an increase of $5,933, or 46%. The increase in income tax expense is primarily due to increased gross profit, the recording of additional uncertain tax positions and higher tax interest and tax penalties in 2023.profit.

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 and Adjusted 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 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 EBITDA 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; (ii) inventory-related adjustments; (iii) fair value

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changes in derivatives; (iv) other (income)/expense items; (v) transaction costs; (vi) asset impairment; (vii) gain/loss on debt extinguishment; and (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.

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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)

Three Months Ended June 30, Six Months Ended June 30,
2023 2022 2023 2022
NET INCOME (LOSS) (1)
$ (14,036) $ 12,066 $ (26,476) $ (7,691)
Income tax expense 8,546 7,710 18,694 12,761
Interest expense, net 9,790 10,947 18,310 21,063
Depreciation and amortization (2)
6,629 4,355 13,964 7,603
EBITDA (Non-GAAP) 10,929 35,078 24,492 33,736
Non-cash share-based compensation 2,363 4,684 4,674 11,648
Inventory-related adjustments (3)
— 436 251 4,178
Fair value changes in derivatives (1,090) (42,572) (9,120) (56,881)
Other (income) expense, net (4)
418 (980) (93) (405)
Start-up costs (5)
— 991 — 3,706
Transaction costs (6)
— 2,885 19 3,665
Adjusted EBITDA (Non-GAAP) $ 12,620 $ 522 $ 20,223 $ (353)

Adjusted EBITDA was $13,349 compared to $7,603, an increase of 5,746 or 76%. The increase in EBITDA was primarily due to operating efficiencies at our grower processor facilities, lower payroll cost due to a decrease in the number of employees as a result of right sizing the organization, as well as changes to our staffing model at retail stores.

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


	Three Months Ended March 31,
	2024		2023
NET LOSS	$	(18,355)	$	(12,440)
Income tax expense	9,747		10,148
Interest expense, net	9,544		8,520
Depreciation and amortization (1)	6,836		7,335
EBITDA (Non-GAAP)	7,772		13,563
Non-cash share-based compensation	1,524		2,311
Inventory charge adjustments (2)	—		251
Fair value changes in derivatives	5,100		(8,030)

Other (income) expense, net (3)	(648)		(511)
Gain on debt extinguishment	(399)		—

Transaction costs	—		19
Adjusted EBITDA (Non-GAAP)	$	13,349	$	7,603


(1)			~~Net 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)~~(2)			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)~~(3)			Includes: (i) remeasurement of contingent consideration related to acquisitions; (ii) losses (gains) on legal settlements; and (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.~~

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Liquidity and Capital Resources

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

Sources and Uses of Cash

We had cash, cash equivalents and restricted cash of ~~$32,062~~$30,564 as of ~~June 30, 2023.~~March 31, 2024.

The major components of our statements of cash flows for the ~~six~~three months ended ~~June 30,~~March 31, 2024 and 2023, ~~and 2022,~~ are as follows:

Six Months Ended June 30,
2023 2022 $ Change % Change
Net cash flows used in operating activities $ (10,285) $ (25,711) $ 15,426 60 %
Net cash flows used in investing activities (5,228) (61,741) 56,513 92 %
Net cash flows provided by financing activities 20,429 36,014 (15,585) (43) %
Effect of currency translation on cash — (238) 238 (100) %
Net change in cash, cash equivalents and restricted cash $ 4,916 $ (51,676) $ 56,592 (110) %

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	Three Months Ended March 31,
	2024		2023		$ Change		% Change
Net cash flows provided by (used in) operating activities	$	6,493	$	(3,572)	$	10,065	282	%
Net cash flows used in investing activities	(743)		(4,542)		3,799		84	%
Net cash flows (used in) provided by financing activities	(6,491)		331		(6,822)		(2061)	%
Effect of currency translation on cash	—		61		(61)		100	%
Net change in cash, cash equivalents and restricted cash	$	(741)	$	(7,722)	$	6,981	90	%

Operating activities. Cash ~~used in~~provided by operations was ~~$10,285,~~$6,493, as compared to ~~$25,711. The decrease in~~ cash used in operations ~~was due to an increase in cash operating results, net~~ of ~~non-cash~~ $3,572~~adjustments to reconcile net loss,~~ ~~partially offset by cash used for operating assets and liabilities in 2023 as opposed~~. The change to cash provided by operating activities in the current year compared to cash used in operating activities in the prior year was primarily due to income from operations in the current year as compared to an operating loss in the prior year, higher non-cash adjustments, which was partially offset by a decrease in cash provided by operating assets and liabilities in the ~~prior~~current year.

Investing activities. Net cash used in investing activities was ~~$5,228~~$743 compared to ~~$61,741.~~$4,542. The current year includes ~~$6,144~~$1,077 for the payments of property, plant and equipment for use in our operations partially offset by ~~$916~~$334 in proceeds from sale of property, plant and equipment. The prior year includes ~~$40,917~~$4,542 for the payments of property, plant and equipment for use in our ~~operations, and $20,824 paid for the acquisition of Apothecarium and NuLeaf, net of cash acquired.~~operations.

Financing activities. Net cash used in financing activities was $6,491 compared to net cash provided by financing activities ~~was $20,429 compared to $36,014~~of $331. The current year includes ~~(i) $21,900~~ (i) $2,750 in ~~proceeds from mortgage-related~~payments on promissory notes in the Note Exchange, (ii) $2,438 payments related to the Acquisition Facility debt, ~~and (ii) $3,295 in proceeds from other financing activities, partially offset by: (i) $2,681~~(iii) $728 in net finance lease obligation payments, ~~(ii) $1,725~~(iv) $586 in payments of other financing activities, ~~(iii) $250 in payments of loan financing costs,~~ and ~~(iv) $110~~(v) $37 in payments of mortgage-related ~~debt.~~debt, partially offset by (i) $46 of proceeds from other financing activities and (ii) $2 of proceeds from exercise of options. The prior year includes (i) $25,000 in net proceeds from the Acquisition Facility to fund the acquisition of NuLeaf and Apothecarium, (ii) $13,680 proceeds from private placement equity offerings in January and February 2022, (iii) $4,353$1,900 in proceeds from ~~other financing activities, and (iv) $751 in proceeds from the exercise of warrants and stock options,~~mortgage loans, partially offset by (i) ~~$6,555~~$844 in net finance lease obligation payments, (ii) ~~$793 in payments of loan financing costs, (iii) $258 in principal redemption repayments of the Senior Notes, (iv) $150 in payments of mortgage-related~~ ~~debt, and (v) $14~~$668 in payments of other financing ~~activities.~~activities and (iii) $57 in payments of mortgage-related debt.

Liquidity

As reflected in our ~~2022~~2023 Form 10-K, we ~~incurred a loss from operations of $220,333, including non-cash impairment charges of $159,645, and~~ used net cash of ~~$21,416~~$3,318 for operating activities for the year ended December 31, ~~2022,~~2023, and as of that date, our current liabilities exceeded our current assets by ~~$37,577.~~$80,825. Furthermore, ~~we have used cash~~as of ~~$10,285 for operating activities for the six months ended June 30, 2023, and as of that date,~~March 31, 2024, our current liabilities exceeded our current assets by ~~$37,328.~~$81,294. Such current liabilities as of March 31, 2024 ~~Since inception, we have focused on building a diverse portfolio~~include aggregate contractual maturities 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 profitability~~(i) $57,687 of the ~~business~~Acquisition Facility debt that is to be paid in ~~fiscal year 2023~~cash within the next twelve months, absent a refinancing, (ii) $23,747 of debt (including $2,247 of interest and ~~beyond. In order~~$5,000 of milestone accruals) that are subject to ~~achieve profitable future operations,~~indemnity claims in favor of the Company and not currently expected to be paid in cash within the next twelve months and (iii) $3,225 debt related to Jushi Europe, where the payments are subject to completion of the liquidation of Jushi Europe. Refer to Note 9 - Debt and Note 18 - Commitments and Contingencies of our Quarterly Financial Statements contained in Part I. Item 1 of this report for more information. Absent a refinancing of the Acquisition Facility debt, we ~~have commercialized production from~~will not meet our ~~recently expanded grower-processing facilities in Pennsylvania and Virginia, as well as implemented~~obligations within the next year. We believe that with a ~~cost-savings and efficiency optimization plan which includes, among other things, reduction in labor and packaging costs as well as operating efficiencies at~~refinancing of the Acquisition Facility debt, we will be able to meet our ~~retail and grower-processing facilities.~~obligations.

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As concluded in the ~~2022~~2023 Form 10-K, substantial doubt existed about our ability to continue as a going concern, and, as a result of the above, substantial doubt continues to exist within the next twelve months from the date these financial statements are issued. We ~~intend~~have a history of refinancing our debt and management intends to ~~fund our operations, capital expenditures and~~refinance the Acquisition Facility debt ~~service with existing cash and cash equivalents on hand, cash generated from operations, including anticipated refunds from~~before the ~~IRS relating to employee retention credit claims, and, as needed, future financing (equity and/or debt) as well as the potential sales of non-core assets.~~maturity date. The ability to 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 assets if necessary.~~financing. 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~~Quarterly Financial Statements contained herein have been prepared on a going concern basis which assumes we will be able to realize our assets and discharge our liabilities in the normal course of business for the foreseeable future, and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or amounts and classification of liabilities that may result from the outcome of this uncertainty.

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Off-Balance Sheet Arrangements and Contractual Obligations

As of ~~June 30, 2023,~~March 31, 2024, 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.~~arrangements. For our contractual obligations, refer to Note 9 - Debt, Note 10 - Leases and Note 18 - Commitments and Contingencies of our Quarterly Financial Statements contained in Part I. Item 1 of this report.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes to the risks disclosed in Item 7A of our ~~2022~~2023 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 ~~June 30, 2023,~~March 31, 2024, our disclosure controls and procedures were ~~not effective, due to the existence of the material weaknesses in our internal control over financial reporting as described below.~~

~~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.

~~We previously identified and disclosed deficiencies as follows:~~

•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: financial reporting, accounting, due to the restatement of the statement of cash flows; 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, leases, revenue, impairment and business combinations.

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

•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 performance of review controls. Specifically, the material weakness related to accounting for PPE, leases and related accounts payable and

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~~accruals is associated with insufficient cut-off procedures to ensure all posted and/or unposted invoices are captured in the period the services were rendered.~~

•Additionally, management determined that the Company also have material weaknesses in its accounts payable process relating to vendor setup and maintenance resulting from the Company’s 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 material weakness in 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 June 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 made good progress, the Company is still in the process of fully implementing its remediation plan. Additional time is required to complete the remediation of the material weaknesses to ensure the sustainability of the recently implemented remediation actions.effective.

Changes in Internal Control over Financial Reporting

~~Other than the Company’s ongoing remediation efforts discussed above, there was~~There has been 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 18 - Commitments and Contingencies in the Notes to the Unaudited Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q.

Item 1A. Risk Factors

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 ~~2022~~2023 Form 10-K, which was also filed on SEDAR. The risks described therein and herein are not the only ones we face. Other than set forth herein, there have been no material changes from the risk factors previously disclosed.

~~We 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 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 probability of successfully sustaining tax filing positions. Our management exercises significant judgment when assessing the probability of successfully sustaining our tax filing positions, and 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 financial condition and results of operations.

~~Challenging U.S. and 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 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 business, which depends on the general economic environment and levels of consumer spending. As a result, we may not be able to maintain our existing customers or attract new customers, or we may be forced to increase or reduce the price of our products. We are unable to predict the likelihood of the occurrence, duration, or severity of a recession or other disruptions in the U.S. credit and 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, financial condition and results of operations.

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

~~None.~~(Amounts expressed in thousands of U.S. dollars, except share and per share amount)

On January 24, 2024, the Company entered into two Note Exchange Agreements with holders of approximately $9,850 of the Company’s unsecured debt (the “Existing Notes”). Upon closing of the transactions contemplated in the Note Exchange Agreements (the “Debt Exchange”) on February 6, 2024, the holders of the Existing Notes delivered the Existing Notes to the Company for cancellation, and the Company: (1) issued to certain direct and beneficial holders of the Existing Notes an aggregate of $4,750 principal amount of Second Lien Notes; (2) issued to certain direct and beneficial holders of the Existing Notes fully-detached warrants to purchase an aggregate of 1,800,000 of the Company’s SVS, with each warrant having an exercise price of $1.00 per SVS and an expiration of December 7, 2026; and (3) paid to the direct holders of the Existing Notes an aggregate of $2,750 in cash. The warrants issued in connection with the Debt Exchange were issued in a private placement in reliance upon an exemption from registration pursuant to Section 4(a)(2) of the Securities Act.

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

During the three months ended ~~June 30, 2023,~~March 31, 2024, 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).

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Item 6. Exhibits


~~4.1~~**			~~First Amendment to Trust Indenture, dated June 22, 2023, by and between Jushi Holdings Inc. and Odyssey Trust Company~~
~~4.2~~**			~~First Amendment to Common Stock Purchase Warrants, dated June 23, 2023, by and between Jushi Holdings Inc.and Acquiom Agency Services, LLC~~
~~10.1~~*			~~Loan Agreement, dated April 6, 2023, by and between FVCbank, Dalitso LLC, JREHVA, LLC, Jushi VA, LLC and Jushi Holdings Inc.~~
~~10.~~2#			~~Promotion Letter dated June 1, 2023 - Nichole Upshaw~~
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)


#			~~Management contract or compensatory plan or arrangement.~~
*			~~Incorporated by reference to our Form 10-K filed April 18, 2023~~
**			~~Incorporated by reference to our Form 8-K filed June 30, 2023~~

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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: ~~August 11, 2023~~May 9, 2024	By:	/s/ Michelle Mosier
		Michelle Mosier
		Chief Financial Officer and Chief Accounting Officer (principal financial and accounting officer)

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	Six Months Ended June 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


	Six Months Ended June 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	—	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


	Six Months Ended June 30,
	2023		2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(26,476)	$	(7,691)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	13,964		7,603
Share-based compensation	4,674		11,648
Fair value changes in derivatives	(9,120)		(56,881)
Non-cash interest expense, including amortization of debt issuance costs	2,913		10,402
Deferred income taxes and uncertain tax positions	2,897		(2,133)



Other non-cash items, net	3,386		(60)
Changes in operating assets and liabilities:
Accounts receivable	(764)		442
Inventory	(9,311)		7,533
Prepaid expenses and other current and non-current assets	(123)		(167)

Accounts payable, accrued expenses and other current liabilities	7,675		3,593
Net cash flows used in operating activities	(10,285)		(25,711)
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for acquisitions, net of cash acquired	—		(20,824)

Payments for property, plant and equipment	(6,144)		(40,917)
Proceeds from sale of property, plant and equipment	916		—
Net cash flows used in investing activities	(5,228)		(61,741)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of shares, net	—		13,680

Proceeds from exercise of warrants and options	—		751


Proceeds from acquisition facility	—		25,000
Redemption of senior notes (including related party redemptions of $0 and $8 for the six months ended June 30, 2023 and 2022, respectively)	—		(258)

Payments of finance leases, net of tenant allowance of $0 and $10,065 for the six months ended June 30, 2023 and 2022, respectively	(2,681)		(6,555)
Proceeds from mortgage loans	21,900		—

Payments of loan financing costs	(250)		(793)
Repayments of mortgage loans	(110)		(150)
Proceeds from other financing activities	3,295		4,353

Payments of other financing activities	(1,725)		(14)
Net cash flows provided by financing activities	20,429		36,014
Effect of currency translation on cash and cash equivalents	—		(238)
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	4,916		(51,676)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD	27,146		95,487
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD	$	32,062	$	43,811

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


	As of June 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	$	0.48		$	724	$	(658)	$	0.76		$	2,529	$	(2,396)
Volatility	84		%	736		(706)		79		%	2,070		(2,121)


	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	300,000	—	300,000	$	0.48

Cancelled/forfeited/expired	(100,000)	—	(100,000)	$	1.47
Reclassification	17,512,280	(17,512,280)	—	$	—
Balance as of June 30, 2023	48,385,915	37,862,922	86,248,837	$	1.16
Exercisable as of June 30, 2023	45,985,915	37,862,922	83,848,837	$	1.14