Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2021 | Nov. 09, 2021 | |
Entity Listings [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2021 | |
Document Transition Report | false | |
Entity File Number | 333-254800 | |
Entity Registrant Name | ASCEND WELLNESS HOLDINGS, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 83-0602006 | |
Entity Address, Address Line One | 1411 Broadway | |
Entity Address, Address Line Two | 16th Floor | |
Entity Address, City or Town | New York | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 10018 | |
City Area Code | 646 | |
Local Phone Number | 661-7600 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0001756390 | |
Current Fiscal Year End Date | --12-31 | |
Class A common stock | ||
Entity Listings [Line Items] | ||
Entity Common Stock, Shares Outstanding | 172,595,306 | |
Class B common stock | ||
Entity Listings [Line Items] | ||
Entity Common Stock, Shares Outstanding | 65,000 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Current assets | ||
Cash and cash equivalents | $ 204,510 | $ 56,547 |
Restricted cash | 0 | 1,550 |
Accounts receivable, net | 8,577 | 6,227 |
Inventory | 56,007 | 28,997 |
Notes receivable | 7,274 | 8,259 |
Other current assets | 23,298 | 32,598 |
Total current assets | 299,666 | 134,178 |
Property and equipment, net | 210,749 | 120,540 |
Operating lease right-of-use assets | 104,248 | 84,642 |
Intangible assets, net | 50,835 | 50,461 |
Goodwill | 30,316 | 22,798 |
Deferred tax assets, net | 1,309 | 2,395 |
Other noncurrent assets | 19,760 | 12,734 |
TOTAL ASSETS | 716,883 | 427,748 |
Current liabilities | ||
Accounts payable and accrued liabilities | 30,395 | 31,224 |
Current portion of debt, net | 25,073 | 59,330 |
Operating lease liabilities, current | 2,369 | 2,128 |
Income taxes payable | 42,057 | 18,275 |
Other current liabilities | 4,994 | 4,328 |
Total current liabilities | 104,888 | 115,285 |
Long-term debt, net | 230,498 | 152,277 |
Operating lease liabilities, noncurrent | 197,460 | 156,400 |
Total liabilities | 532,846 | 423,962 |
Commitments and contingencies (Note 15) | ||
Stockholders' Equity | ||
Membership units, no par value; none authorized, issued, and outstanding as of September 30, 2021; 106,082 issued and outstanding as of December 31, 2020 (Note 12) | 0 | 0 |
Preferred stock, $0.001 par value per share; 10,000 shares authorized, none issued and outstanding as of September 30, 2021; none authorized, issued, and outstanding as of December 31, 2020 (Note 12) | 0 | 0 |
Additional paid-in capital | 353,605 | 67,378 |
Accumulated deficit | (169,738) | (63,592) |
Total stockholders' equity | 184,037 | 3,786 |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | 716,883 | 427,748 |
Class A common stock | ||
Stockholders' Equity | ||
Class A and Class B common stock | 170 | 0 |
Class B common stock | ||
Stockholders' Equity | ||
Class A and Class B common stock | $ 0 | $ 0 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2021 | Dec. 31, 2020 |
Common units authorized (in shares) | 0 | |
Common units issued (in shares) | 0 | 106,082,000 |
Common units outstanding (in shares) | 0 | 106,082,000 |
Preferred stock, par value (in dollars per share) | $ 0.001 | |
Preferred stock, shares authorized (in shares) | 10,000,000 | 0 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Class A common stock | ||
Common stock, par value (in dollars per share) | $ 0.001 | |
Common stock, shares authorized (in shares) | 750,000,000 | 0 |
Common stock shares issued (in shares) | 170,945,000 | 0 |
Common stock, shares outstanding (in shares) | 170,945,000 | 0 |
Class B common stock | ||
Common stock, par value (in dollars per share) | $ 0.001 | |
Common stock, shares authorized (in shares) | 100,000 | 0 |
Common stock shares issued (in shares) | 65,000 | 0 |
Common stock, shares outstanding (in shares) | 65,000 | 0 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Income Statement [Abstract] | ||||
Revenue, net | $ 94,382 | $ 41,473 | $ 243,886 | $ 89,449 |
Cost of goods sold | (53,428) | (23,121) | (138,749) | (51,427) |
Gross profit | 40,954 | 18,352 | 105,137 | 38,022 |
Operating expenses | ||||
General and administrative expenses | 29,341 | 15,000 | 85,099 | 34,624 |
Settlement expense | 0 | 0 | 36,511 | 0 |
Total operating expenses | 29,341 | 15,000 | 121,610 | 34,624 |
Operating profit (loss) | 11,613 | 3,352 | (16,473) | 3,398 |
Other (expense) income | ||||
Interest expense | (12,376) | (2,627) | (56,601) | (8,030) |
Other, net | 44 | 3 | 206 | 6 |
Total other expense | (12,332) | (2,624) | (56,395) | (8,024) |
(Loss) income before income taxes | (719) | 728 | (72,868) | (4,626) |
Income tax expense | (12,307) | (5,643) | (33,278) | (11,712) |
Net loss | (13,026) | (4,915) | (106,146) | (16,338) |
Less: net income attributable to non-controlling interests | 0 | 501 | 0 | 1,598 |
Net loss attributable to Ascend Wellness Holdings, Inc. | $ (13,026) | $ (5,416) | $ (106,146) | $ (17,936) |
Net loss per share attributable to Class A and Class B stockholders of Ascend Wellness Holdings, Inc. — basic (in dollars per share) | $ (0.08) | $ (0.06) | $ (0.75) | $ (0.19) |
Net loss per share attributable to Class A and Class B stockholders of Ascend Wellness Holdings, Inc. — diluted (in dollars per share) | $ (0.08) | $ (0.06) | $ (0.75) | $ (0.19) |
Weighted-average common shares outstanding — basic (in shares) | 169,879 | 96,515 | 142,221 | 92,052 |
Weighted-average common shares outstanding —diluted (in shares) | 169,879 | 96,515 | 142,221 | 92,052 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY - USD ($) | Total | Common Units | Historical preferred units | Stockholders’ Equity | Historical LLC Units | Historical LLC UnitsCommon Units | Historical LLC UnitsHistorical preferred units | Class A and Class B Common Stock | Class A and Class B Common StockCommon Units | Class A and Class B Common StockHistorical preferred units | Additional Paid-In Capital | Additional Paid-In CapitalCommon Units | Additional Paid-In CapitalHistorical preferred units | Accumulated Deficit | Non- Controlling Interests |
Historical LLC units, beginning balance (in shares) at Dec. 31, 2019 | 89,821,000 | ||||||||||||||
Beginning balance at Dec. 31, 2019 | $ 34,840,000 | $ 33,794,000 | $ 71,947,000 | $ (38,153,000) | $ 1,046,000 | ||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Equity-based compensation expense | 185,000 | 185,000 | 185,000 | ||||||||||||
Issuance of warrants | 147,000 | 147,000 | 147,000 | ||||||||||||
Net income (loss) | (7,118,000) | (7,478,000) | (7,478,000) | 360,000 | |||||||||||
Historical LLC units, ending balance (in shares) at Mar. 31, 2020 | 89,821,000 | ||||||||||||||
Ending balance at Mar. 31, 2020 | 28,054,000 | 26,648,000 | 72,279,000 | (45,631,000) | 1,406,000 | ||||||||||
Historical LLC units, beginning balance (in shares) at Dec. 31, 2019 | 89,821,000 | ||||||||||||||
Beginning balance at Dec. 31, 2019 | 34,840,000 | 33,794,000 | 71,947,000 | (38,153,000) | 1,046,000 | ||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Net income (loss) | (16,338,000) | ||||||||||||||
Historical LLC units, ending balance (in shares) at Sep. 30, 2020 | 103,456,000 | ||||||||||||||
Ending balance at Sep. 30, 2020 | 10,873,000 | 10,873,000 | 66,962,000 | (56,089,000) | 0 | ||||||||||
Historical LLC units, beginning balance (in shares) at Mar. 31, 2020 | 89,821,000 | ||||||||||||||
Beginning balance at Mar. 31, 2020 | 28,054,000 | 26,648,000 | 72,279,000 | (45,631,000) | 1,406,000 | ||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Equity-based compensation expense | 85,000 | 85,000 | 85,000 | ||||||||||||
Issuance of warrants | 16,000 | 16,000 | 16,000 | ||||||||||||
Net income (loss) | (4,305,000) | (5,042,000) | (5,042,000) | 737,000 | |||||||||||
Historical LLC units, ending balance (in shares) at Jun. 30, 2020 | 89,821,000 | ||||||||||||||
Ending balance at Jun. 30, 2020 | 23,850,000 | 21,707,000 | 72,380,000 | (50,673,000) | 2,143,000 | ||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Units issued in acquisitions or asset purchases (in shares) | 10,000,000 | ||||||||||||||
Units issued in acquisitions or asset purchases | 2,800,000 | 2,800,000 | 2,800,000 | ||||||||||||
Purchase of non-controlling interests (in shares) | 3,635,000 | ||||||||||||||
Purchase of non-controlling interests | (10,973,000) | (8,329,000) | (8,329,000) | (2,644,000) | |||||||||||
Equity-based compensation expense | 71,000 | 71,000 | 71,000 | ||||||||||||
Issuance of warrants | 40,000 | 40,000 | 40,000 | ||||||||||||
Net income (loss) | (4,915,000) | (5,416,000) | (5,416,000) | 501,000 | |||||||||||
Historical LLC units, ending balance (in shares) at Sep. 30, 2020 | 103,456,000 | ||||||||||||||
Ending balance at Sep. 30, 2020 | $ 10,873,000 | 10,873,000 | 66,962,000 | (56,089,000) | 0 | ||||||||||
Historical LLC units, beginning balance (in shares) at Dec. 31, 2020 | 106,082,000 | 106,082,000 | |||||||||||||
Beginning balance (in shares) at Dec. 31, 2020 | 0 | ||||||||||||||
Beginning balance at Dec. 31, 2020 | $ 3,786,000 | 3,786,000 | $ 0 | 67,378,000 | (63,592,000) | 0 | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Vesting of equity-based payment awards (in shares) | 1,033,000 | ||||||||||||||
Equity-based compensation expense (in shares) | 50,000 | ||||||||||||||
Equity-based compensation expense | 2,487,000 | 2,487,000 | 2,487,000 | ||||||||||||
Reserve for equity issued in litigation settlement | 27,431,000 | 27,431,000 | 27,431,000 | ||||||||||||
Net income (loss) | (48,223,000) | (48,223,000) | (48,223,000) | ||||||||||||
Historical LLC units, ending balance (in shares) at Mar. 31, 2021 | 107,165,000 | ||||||||||||||
Ending balance (in shares) at Mar. 31, 2021 | 0 | ||||||||||||||
Ending balance at Mar. 31, 2021 | $ (14,519,000) | (14,519,000) | $ 0 | 97,296,000 | (111,815,000) | 0 | |||||||||
Historical LLC units, beginning balance (in shares) at Dec. 31, 2020 | 106,082,000 | 106,082,000 | |||||||||||||
Beginning balance (in shares) at Dec. 31, 2020 | 0 | ||||||||||||||
Beginning balance at Dec. 31, 2020 | $ 3,786,000 | 3,786,000 | $ 0 | 67,378,000 | (63,592,000) | 0 | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Issuance of warrants | 0 | ||||||||||||||
Net income (loss) | $ (106,146,000) | ||||||||||||||
Historical LLC units, ending balance (in shares) at Sep. 30, 2021 | 0 | 0 | |||||||||||||
Ending balance (in shares) at Sep. 30, 2021 | 171,010,000 | 171,010,000 | |||||||||||||
Ending balance at Sep. 30, 2021 | $ 184,037,000 | 184,037,000 | $ 170,000 | 353,605,000 | (169,738,000) | 0 | |||||||||
Historical LLC units, beginning balance (in shares) at Mar. 31, 2021 | 107,165,000 | ||||||||||||||
Beginning balance (in shares) at Mar. 31, 2021 | 0 | ||||||||||||||
Beginning balance at Mar. 31, 2021 | (14,519,000) | (14,519,000) | $ 0 | 97,296,000 | (111,815,000) | 0 | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Release of reserve for equity issued in litigation settlement | (27,431,000) | (27,431,000) | (27,431,000) | ||||||||||||
Equity issued in litigation settlement (in shares) | 5,025,000 | ||||||||||||||
Equity issued in litigation settlement | 27,431,000 | 27,431,000 | 27,431,000 | ||||||||||||
Conversion of historical common and preferred units (in shares) | (55,330,000) | (58,036,000) | 55,330,000 | 58,036,000 | |||||||||||
Conversion of historical common and preferred units | $ 0 | $ 0 | $ 55,000 | $ 58,000 | $ (55,000) | $ (58,000) | |||||||||
Issuance of common stock in public offerings, net of underwriting commissions and discounts and offering costs (in shares) | 11,500,000 | ||||||||||||||
Issuance of common stock in public offerings, net of underwriting commissions and discounts and offering expenses | 86,065,000 | 86,065,000 | $ 12,000 | 86,053,000 | |||||||||||
Conversion of convertible notes upon initial public offering (in shares) | 37,388,000 | ||||||||||||||
Conversion of convertible notes upon initial public offering | 137,755,000 | 137,755,000 | $ 37,000 | 137,718,000 | |||||||||||
Beneficial conversion feature associated with conversion of preferred units upon initial public offering (in shares) | 3,420,000 | ||||||||||||||
Beneficial conversion feature associated with conversion of preferred units upon initial public offering | 27,361,000 | 27,361,000 | $ 3,000 | 27,358,000 | |||||||||||
Vesting of equity-based payment awards (in shares) | 1,176,000 | 3,155,000 | |||||||||||||
Vesting of equity-based payment awards | 0 | $ 3,000 | (3,000) | ||||||||||||
Equity-based compensation expense | 1,711,000 | 1,711,000 | 1,711,000 | ||||||||||||
Repurchase of warrants | (4,156,000) | (4,156,000) | (4,156,000) | ||||||||||||
Net income (loss) | (44,897,000) | (44,897,000) | (44,897,000) | ||||||||||||
Historical LLC units, ending balance (in shares) at Jun. 30, 2021 | 0 | ||||||||||||||
Ending balance (in shares) at Jun. 30, 2021 | 168,829,000 | ||||||||||||||
Ending balance at Jun. 30, 2021 | 189,320,000 | 189,320,000 | $ 168,000 | 345,864,000 | (156,712,000) | 0 | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Issuance of common stock in public offerings, net of underwriting commissions and discounts and offering costs (in shares) | 1,986,000 | ||||||||||||||
Issuance of common stock in public offerings, net of underwriting commissions and discounts and offering expenses | 3,750,000 | 3,750,000 | $ 2,000 | 3,748,000 | |||||||||||
Vesting of equity-based payment awards (in shares) | 195,000 | ||||||||||||||
Vesting of equity-based payment awards | 0 | ||||||||||||||
Equity-based compensation expense | 3,993,000 | 3,993,000 | 3,993,000 | ||||||||||||
Net income (loss) | $ (13,026,000) | (13,026,000) | (13,026,000) | ||||||||||||
Historical LLC units, ending balance (in shares) at Sep. 30, 2021 | 0 | 0 | |||||||||||||
Ending balance (in shares) at Sep. 30, 2021 | 171,010,000 | 171,010,000 | |||||||||||||
Ending balance at Sep. 30, 2021 | $ 184,037,000 | $ 184,037,000 | $ 170,000 | $ 353,605,000 | $ (169,738,000) | $ 0 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Cash flows from operating activities | ||
Net income (loss) | $ (106,146) | $ (16,338) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 16,692 | 10,085 |
Amortization of operating lease assets | 1,034 | 660 |
Non-cash interest expense | 41,506 | 2,993 |
Equity-based compensation expense | 8,191 | 341 |
Equity issued in litigation settlement | 27,431 | 0 |
Deferred income taxes | (1,889) | (899) |
Loss on sale of assets | 649 | 286 |
Changes in operating assets and liabilities, net of effects of acquisitions | ||
Accounts receivable | (2,309) | (4,042) |
Inventory | (27,904) | (9,554) |
Other current assets | (6,099) | (2,281) |
Other noncurrent assets | (7,026) | (4,785) |
Accounts payable and accrued liabilities | 8,505 | 3,998 |
Other current liabilities | 612 | 2,711 |
Lease liabilities | 676 | 1,999 |
Income taxes payable | 23,783 | 9,158 |
Net cash used in operating activities | (22,294) | (5,668) |
Cash flows from investing activities | ||
Additions to capital assets | (70,918) | (18,065) |
Investments in notes receivable | (2,185) | (682) |
Collection of notes receivable | 245 | 0 |
Proceeds from sale of assets | 930 | 26,750 |
Acquisition of businesses, net of cash acquired | (13,630) | (23,327) |
Purchases of intangible assets | 0 | (127) |
Net cash used in investing activities | (85,558) | (15,451) |
Cash flows from financing activities | ||
Proceeds from issuance of common stock in public offerings, net of underwriting discounts and commissions and offering expenses | 86,065 | 0 |
Proceeds from issuance of debt | 259,500 | 49,262 |
Repayments of debt | (78,413) | (18,806) |
Repurchase of warrants | (4,156) | 0 |
Proceeds from finance leases | 0 | 3,750 |
Repayments under finance leases | 0 | (337) |
Debt issuance costs | (8,731) | (206) |
Net cash provided by financing activities | 254,265 | 33,663 |
Net increase in cash, cash equivalents, and restricted cash | 146,413 | 12,544 |
Cash, cash equivalents, and restricted cash at beginning of period | 58,097 | 12,805 |
Cash, cash equivalents, and restricted cash at end of period | 204,510 | 25,349 |
Supplemental Cash Flow Information | ||
Interest paid | 14,618 | 4,839 |
Income taxes paid | 11,400 | 2,398 |
Non-cash investing and financing activities | ||
Fixed asset purchases | 7,656 | 17,535 |
Conversion of preferred units into Class A common stock upon initial public offering | 70,660 | 0 |
Beneficial conversion feature associated with conversion of preferred units upon initial public offering | 27,361 | 0 |
Issuance of shares in business acquisitions | 0 | 2,319 |
Issuance of shares for intangible assets | 0 | 481 |
Issuance of shares in purchase of non-controlling interests | 0 | 1,018 |
Warrants issued with notes payable | 0 | 203 |
Conversion of convertible notes and accrued interest upon initial public offering | ||
Non-cash investing and financing activities | ||
Debt instrument converted to shares, amount | 137,755 | 0 |
Shares issued for share-settled debt | ||
Non-cash investing and financing activities | ||
Debt instrument converted to shares, amount | $ 3,750 | $ 0 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Parenthetical) $ in Thousands | 3 Months Ended |
Jun. 30, 2021USD ($) | |
Statement of Stockholders' Equity [Abstract] | |
Underwriting discounts | $ 5,935 |
THE COMPANY AND NATURE OF OPERA
THE COMPANY AND NATURE OF OPERATIONS | 9 Months Ended |
Sep. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
THE COMPANY AND NATURE OF OPERATIONS | THE COMPANY AND NATURE OF OPERATIONS Ascend Wellness Holdings, Inc., which operates through its subsidiaries (collectively referred to as “Ascend Wellness,” “AWH,” “we,” “us,” “our,” or the “Company”), is a multi-state operator in the United States cannabis industry. AWH owns, manages, and operates cannabis cultivation facilities and dispensaries in several states across the United States, including Illinois, Massachusetts, Michigan, New Jersey, and Ohio. AWH is headquartered in New York, New York. The Company was originally formed on May 15, 2018 as Ascend Group Partners, LLC, and changed its name to “Ascend Wellness Holdings, LLC” on September 10, 2018. On April 22, 2021, Ascend Wellness Holdings, LLC converted into a Delaware corporation and changed its name to “Ascend Wellness Holdings, Inc.” and effected a 2-for-1 reverse stock split (the “Reverse Split”), which is retrospectively presented for all periods in these financial statements. We refer to this conversion throughout this filing as the “Conversion.” As a result of the Conversion, the members of Ascend Wellness Holdings, LLC became holders of shares of stock of Ascend Wellness Holdings, Inc. Following the Conversion, the Company has authorized 750,000 shares of Class A common stock with a par value of $0.001 per share, 100 shares of Class B common stock with a par value of $0.001 per share and 10,000 shares of preferred stock with a par value of $0.001 per share. The rights of the holders of Class A common stock and Class B common stock are identical, except for voting and conversion rights. Each share of Class A common stock is entitled to one vote per share. Each share of Class B common stock is entitled to 1,000 votes per share and is convertible at any time into one share of Class A common stock at the option of the holder. See Note 12, “Stockholders’ Equity,” for additional details. Initial Public Offering On May 4, 2021, the Company completed an Initial Public Offering (“IPO”) of its Class A common stock, in which it issued and sold 10,000 shares of Class A common stock at a price of $8.00 per share. On May 7, 2021, the underwriters exercised their over-allotment option in full and we issued and sold an additional 1,500 shares of Class A common stock. We received total net proceeds of approximately $86,065 after deducting underwriting discounts and commissions and certain other direct offering expenses paid by us. In connection with the IPO, the historical common units, Series Seed Preferred Units, Series Seed+ Preferred Units, and Real Estate Preferred Units then-outstanding automatically converted into a total of 113,301 shares of Class A common stock and 65 historical common units were allocated as shares of Class B common stock. Additionally, 3,420 shares of Class A common stock were issued for a beneficial conversion feature associated with the conversion of certain historical preferred units and the Company’s convertible notes, plus accrued interest, converted into 37,388 shares of Class A common stock. See Note 12, “Equity,” for additional details. |
BASIS OF PRESENTATION AND SIGNI
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with (i) United States generally accepted accounting principles (“U.S. GAAP”) for interim financial information, and (ii) the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of our management, our unaudited condensed consolidated financial statements and accompanying notes (the “Financial Statements”) include all normal recurring adjustments that are necessary for the fair statement of the interim periods presented. Interim results of operations are not necessarily indicative of results for the full year, or any other period. The Financial Statements should be read in conjunction with our audited consolidated financial statements (and notes thereto) for the year ended December 31, 2020 (the “Annual Financial Statements”) which are included in our Registration Statement on Form S-1, as amended, filed with the U.S. Securities and Exchange Commission on April 26, 2021. Except as noted below, there have been no material changes to the Company’s significant accounting policies and estimates during the nine months ended September 30, 2021. The Financial Statements include the accounts of Ascend Wellness Holdings, Inc. and its subsidiaries. Refer to Note 8, “Variable Interest Entities,” for additional information regarding certain entities that are not wholly-owned by the Company. We include the results of acquired businesses in the consolidated statements of operations from their respective acquisition dates. All intercompany accounts and transactions have been eliminated in consolidation. The preparation of condensed consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts. We base our estimates on historical experience, known or expected trends, independent valuations, and various other measurements that we believe to be reasonable under the circumstances. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. We round amounts in the Financial Statements to thousands, except per unit or per share amounts or as otherwise stated. We calculate all percentages, per-unit, and per-share data from the underlying whole-dollar amounts. Thus, certain amounts may not foot, crossfoot, or recalculate based on reported numbers due to rounding. Unless otherwise indicated, all references to years are to our fiscal year, which ends on December 31. Liquidity As reflected in the Financial Statements, the Company had an accumulated deficit as of September 30, 2021 and December 31, 2020, as well as a net loss for the three and nine months ended September 30, 2021 and 2020, and negative cash flows from operating activities during the nine months ended September 30, 2021 and 2020, which are indicators that raise substantial doubt of our ability to continue as a going concern. Management believes that substantial doubt of our ability to continue as a going concern for at least one year from the issuance of these Financial Statements has been alleviated due to: (i) cash on hand, including capital raised from the Company’s IPO in May 2021 and proceeds received under our new credit agreement in August 2021, and (ii) continued growth of sales and gross profit from our consolidated operations. Management plans to continue to access capital markets for additional funding through debt and/or equity financings to supplement future cash needs, as may be required. However, management cannot provide any assurances that the Company will be successful in accomplishing its business plans. If the Company is unable to raise additional capital whenever necessary, it may be forced to decelerate or curtail certain of its operations until such time as additional capital becomes available. Reclassifications Certain prior year amounts have been reclassified to conform with our current period presentation. These changes had no impact on our previously reported net loss. Variable Interest Entities In determining whether we are the primary beneficiary of a variable interest entity (“VIE”), we assess whether we have the power to direct matters that most significantly impact the activities of the VIE and the obligation to absorb losses or the right to receive the benefits from the VIE that could potentially be significant to the VIE. A VIE is a legal entity that does not have sufficient equity at risk to finance its activities without additional subordinated financial support or is structured that such equity investors lack the ability to make significant decisions relating to the entity’s operations through voting rights or do not substantively participate in the gains or losses of the entity. The primary beneficiary has both the power to direct the activities of the VIE that most significantly impact the entity’s economic performance and the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. We assess all variable interests in the entity and use our judgment when determining if we are the primary beneficiary. Other qualitative factors that are considered include decision-making responsibilities, the VIE capital structure, risk and rewards sharing, contractual agreements with the VIE, voting rights, and level of involvement of other parties. We assess the primary beneficiary determination for a VIE on an ongoing basis if there are any changes in the facts and circumstances related to a VIE. Where we determine we are the primary beneficiary of a VIE, we consolidate the accounts of that VIE. The equity owned by other stockholders is shown as non-controlling interests in the accompanying unaudited Condensed Consolidated Balance Sheets, Statements of Operations, and Statements of Changes in Stockholders’ Equity. The assets of the VIE can only be used to settle obligations of that entity, and any creditors of that entity generally have no recourse to the assets of other entities or the Company unless the Company separately agrees to be subject to such claims. Cash and Cash Equivalents and Restricted Cash The following table provides a reconciliation of cash, cash equivalents, and restricted cash to amounts shown in the unaudited Condensed Consolidated Statements of Cash Flows: (in thousands) September 30, 2021 December 31, 2020 Cash and cash equivalents $ 204,510 $ 56,547 Restricted cash — 1,550 Total cash, cash equivalents, and restricted cash $ 204,510 $ 58,097 As of September 30, 2021 and December 31, 2020, we did not hold significant cash equivalents. Fair Value of Financial Instruments During the nine months ended September 30, 2021 and 2020, we had no transfers of assets or liabilities between any of the hierarchy levels. In addition to assets and liabilities that are measured at fair value on a recurring basis, we are also required to measure certain assets at fair value on a non-recurring basis that are subject to fair value adjustments in specific circumstances. These assets can include: goodwill; intangible assets; property and equipment; and lease related right-of use assets. We estimate the fair value of these assets using primarily unobservable Level 3 inputs. Basic and Diluted Loss per Share The Company computes earnings (loss) per share (“EPS”) using the two-class method required for multiple classes of common stock. The rights, including the liquidation and dividend rights, of the Class A common stock and Class B common stock are substantially identical, except for voting and conversion rights. As the liquidation and dividend rights are identical, undistributed earnings are allocated on a proportionate basis to each class of common stock and the resulting basic and diluted net loss per share attributable to common stockholders are, therefore, the same for both Class A and Class B common stock on both an individual and combined basis. EPS and weighted-average shares outstanding for the three and nine months ended September 30, 2021 and 2020 have been computed on the basis of treating the historical common unit equivalents previously outstanding as shares of Class A common stock, as such historical units converted into shares of Class A common stock in the Conversion. Basic EPS is computed by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted EPS reflects potential dilution and is computed by dividing net loss by the weighted average number of common shares outstanding during the period increased by the number of additional common shares that would have been outstanding if all potential common shares had been issued and were dilutive. However, potentially dilutive securities are excluded from the computation of diluted EPS to the extent that their effect is anti-dilutive. Potential dilutive securities in the current year include incremental shares of common stock issuable upon the exercise of warrants, unvested restricted stock awards, and unvested restricted stock units. Potential dilutive securities in the prior year periods include incremental shares of common stock issuable upon the exercise of warrants, vested incentive units, and the conversion of convertible notes. As of September 30, 2021 and 2020, 10,827 and 30,545 shares of common stock equivalents, respectively, were excluded from the calculation of diluted EPS because their inclusion would have been anti-dilutive. Shares of restricted stock granted by us are considered to be legally issued and outstanding as of the date of grant, notwithstanding that the shares remain subject to the risk of forfeiture if the vesting conditions for such shares are not met, and are included in the number of shares of Class A common stock outstanding disclosed on the cover page of this Quarterly Report on Form 10-Q. Weighted-average common shares outstanding excludes time-based and performance-based unvested shares of restricted Class A common stock, as restricted shares are treated as issued and outstanding for financial statement presentation purposes only after such shares have vested and, therefore, have ceased to be subject to a risk of forfeiture. Recently Adopted Accounting Standards Income Taxes In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Income Taxes (Topic 740) – Simplifying the Accounting for Income Taxes , (“ASU 2019-12”) which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. ASU 2019-12 became effective for the Company beginning on January 1, 2021 and did not have a significant impact on our Financial Statements. Investments In January 2020, the FASB issued ASU 2020-01, Investments – Equity Securities (Topic 321), Investments – Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topic 321, Topic 323, and Topic 815. This ASU provides clarification of the interaction of rules for equity securities, the equity method of accounting, and forward contracts and purchase options on certain types of securities and became effective for the Company beginning on January 1, 2021. Adoption of this guidance did not have a material impact on our Financial Statements. Reference Rate Reform In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope , (“ASU 2021-01”), which clarifies certain optional expedients and exceptions in Topic 848 when accounting for derivative contracts and certain hedging relationships affected by changes in interest rates. ASU 2021-01 was effective upon issuance and the amendments within are applied either prospectively or retrospectively. ASU 2021-01 did not have a significant impact on our Financial Statements. Recently Issued Accounting Pronouncements The following standards have been recently issued by the FASB. Pronouncements that are not applicable to the Company or where it has been determined do not have a significant impact on us have been excluded herein. Financial Instruments In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , (“ASU 2016-13”). ASU 2016-13 replaces the existing guidance surrounding measurement and recognition of credit losses on financial assets measured at amortized cost, including trade receivables and investments in certain debt securities, by requiring recognition of an allowance for credit losses expected to be incurred over an asset’s life based on relevant information about past events, current conditions, and supportable forecasts impacting its ultimate collectability. This current expected credit losses (“CECL”) model will result in earlier recognition of credit losses than the current “as incurred” model, under which losses are recognized only upon the occurrence of an event that gives rise to the incurrence of a probable loss. ASU 2019-05, Financial Instruments – Credit Losses (Topic 326): Targeted Transition Relief , was issued in May 2019 to provide target transition relief allowing entities to make an irrevocable one-time election upon adoption of the new credit losses standard to measure financial assets previously measured at amortized cost (except held-to-maturity securities) using the fair value option. ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments – Credit Losses , was issued in November 2019 to clarify, improve, and amend certain aspects of ASU 2016-13, such as disclosures related to accrued interest receivables and the estimation of credit losses associated with financial assets secured by collateral. ASU 2020-03, Codification Improvements to Financial Instruments , was issued in March 2020 to improve and clarify various financial instruments topics, including the CECL standard issued in 2016. The ASU includes seven different issues that describe the areas of improvement and the related amendments to U.S. GAAP, intended to make the standards easier to understand and apply by eliminating inconsistencies and providing clarifications. Certain amendments contained within this update were effective upon issuance and had no material impact on our Financial Statements. The amendments related to ASU 2019-05 and ASU 2016-13 will be adopted in conjunction with ASU 2016-13. ASU 2016-13 and its related ASUs are effective for us beginning January 1, 2023. We are currently evaluating the impact of this guidance on our consolidated financial statements. Reference Rate Reform In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting , which provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. This new guidance can be adopted prospectively no later than December 1, 2022, with early adoption permitted, and is not expected to have a material impact on our consolidated financial statements. Debt In August 2020, the 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 the accounting for convertible instruments by reducing the number of accounting models available for convertible debt instruments. This guidance also eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments and requires the use of the if-converted method. This guidance will be effective for us January 1, 2022 on a full modified or modified retrospective basis, with early adoption permitted. We are currently evaluating the impact of this guidance on our consolidated financial statements. Modification or Exchanges of Freestanding Equity-Classified Written Call Options In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt – Modifications and Extinguishments (Subtopic 470-50), Compensation – Stock Compensation (Topic 718), and Derivatives and Hedging – Contracts in an Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting For Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options, |
REPORTABLE SEGMENTS AND REVENUE
REPORTABLE SEGMENTS AND REVENUE | 9 Months Ended |
Sep. 30, 2021 | |
Segment Reporting [Abstract] | |
REPORTABLE SEGMENTS AND REVENUE | REPORTABLE SEGMENTS AND REVENUE The Company operates under one operating segment, which is its only reportable segment: the production and sale of cannabis products. The Company prepares its segment reporting on the same basis that its Chief Operating Decision Maker manages the business and makes operating decisions. The Company’s measure of segment performance is net income and derives its revenue primarily from the sale of cannabis products. All of the Company’s operations are located in the United States. Disaggregation of Revenue The Company disaggregates its revenue from the direct sale of cannabis to customers as retail revenue and wholesale revenue. We have determined that disaggregating revenue into these categories best depicts how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. Three Months Ended Nine Months Ended (in thousands) 2021 2020 2021 2020 Retail revenue $ 63,517 $ 27,938 $ 167,076 $ 65,925 Wholesale revenue 41,526 17,449 111,341 35,349 105,043 45,387 278,417 101,274 Elimination of inter-company revenue (10,661) (3,914) (34,531) (11,825) Total revenue, net $ 94,382 $ 41,473 $ 243,886 $ 89,449 Sales discounts were not material during the three and nine months ended September 30, 2021 and 2020. The liability related to the loyalty program we offer dispensary customers at certain locations was $949 and $219 at September 30, 2021 or December 31, 2020, respectively, and is included in “Other current liabilities” on the accompanying unaudited condensed consolidated balance sheets. |
ACQUISITIONS
ACQUISITIONS | 9 Months Ended |
Sep. 30, 2021 | |
Business Combination and Asset Acquisition [Abstract] | |
ACQUISITIONS | ACQUISITIONS The Company has determined that the acquisitions discussed below are considered business combinations under ASC Topic 805, Business Combinations , (“ASC Topic 805”) and are accounted for by applying the acquisition method, whereby the assets acquired and the liabilities assumed are recorded at their fair values with any excess of the aggregate consideration over the fair values of the identifiable net assets allocated to goodwill. Operating results have been included in these Financial Statements from the date of the acquisition. The Company allocates the purchase price of each of its acquisitions to the assets acquired and liabilities assumed at fair value. The preliminary purchase price allocation for each acquisition reflects various preliminary fair value estimates and analyses, including certain tangible assets acquired and liabilities assumed, the valuation of intangible assets acquired, and goodwill, which are subject to change within the measurement period as preliminary valuations are finalized (generally one year from the acquisition date). Measurement period adjustments are recorded in the reporting period in which the estimates are finalized and adjustment amounts are determined. 2021 Acquisition Effective May 5, 2021, the Company completed the acquisition of the parent company of Hemma, LLC (“Hemma”), the owner of a medical cultivation site in Ohio, for total consideration of $10,381, subject to customary working capital adjustments. Acquisition-related costs incurred during the three and nine months ended September 30, 2021 were not material. Preliminary Purchase Price Allocation The Company allocated the purchase price of the Hemma acquisition as summarized in the table below. The purchase price allocation reflects various preliminary fair value estimates and analyses, including certain tangible assets acquired and liabilities assumed, the valuation of intangible assets acquired, and goodwill, which are subject to change within the measurement period as preliminary valuations are finalized. (in thousands) Assets acquired (liabilities assumed): Cash $ 44 Accounts receivable 41 Inventory 188 Property and equipment 153 Intangible assets (1) 6,928 Goodwill (2) 3,039 Accounts payable and accrued liabilities (12) Net assets acquired $ 10,381 Consideration transferred: Cash (3) $ 7,212 Settlement of note and working capital loan (4) 3,169 Total consideration $ 10,381 (1) The amortization period for the acquired intangible assets is 10 years. (2) Goodwill is largely attributable to the value we expect to obtain from long-term business growth and buyer-specific synergies. The Company is evaluating whether the goodwill is deductible for tax purposes under the limitations imposed under Internal Revenue Code (“IRC”) Section 280E. See Note 14, “Income Taxes,” for additional information. (3) Total cash consideration includes a $4,712 sellers’ note. See Note 11, “Debt,” for additional information. (4) Includes settlement of $2,500 due under a note receivable and settlement of $669 due under a working capital line of credit. 2020 Acquisitions Effective August 1, 2020, the Company acquired MOCA LLC (“MOCA”), a dispensary operator in the Chicago, Illinois area, which was consolidated as a VIE from the signing date until the final closing date in December 2020. Effective September 29, 2020, the Company’s subsidiary, Ascend New Jersey, acquired the assets and liabilities of Greenleaf Compassion Center (“GCC”), a vertically integrated operator in New Jersey with licenses for three retail locations and one cultivation and manufacturing facility. Additionally, effective December 15, 2020, the Company acquired Chicago Alternative Health Center, LLC and Chicago Alternative Health Center Holdings, LLC (together, “Midway”), a medical and adult use dispensary operator in the Chicago, Illinois area. Midway is consolidated as a VIE from the signing date through the final closing date, which is pending the state’s approval of the license transfer. During the nine months ended September 30, 2021, we recorded measurement period purchase accounting adjustments based on changes to certain estimates and assumptions and their related impact to goodwill. The MOCA license was revised from $10,661 to $9,755; the GCC license was revised from $11,845 to $11,501; the Midway license was revised from $15,108 to $14,684; and the Midway trade name was revised from $10 to $180. Additionally, during the three and nine months ended September 30, 2021, we recorded a measurement period adjustment to goodwill of $2,975 related to the MOCA acquisition for a deferred tax liability associated with the acquired intangible assets. The measurement period for the MOCA acquisition ended one year after the August 1, 2020 acquisition date. Financial and Pro Forma Information The following tables summarize the revenue and net income related to MOCA, GCC, Midway, and Hemma included in our consolidated results for the three and nine months ended September 30, 2021. Three Months Ended September 30, 2021 (in thousands) MOCA GCC Midway Hemma Revenue, net $ 11,371 $ 2,577 $ 6,948 $ 126 Net income (loss) 2,075 (252) 350 (204) Nine Months Ended September 30, 2021 (in thousands) MOCA GCC Midway Hemma Revenue, net $ 32,360 $ 7,634 $ 15,526 $ 126 Net income (loss) 3,969 (1,194) (556) (305) Our consolidated results for the three and nine months ended September 30, 2020 include $4,103 of revenue, net, and $314 of net income related to MOCA. The tables below summarize the unaudited pro forma combined revenue and net income (loss) of AWH, MOCA, GCC, and Midway for the three and nine months ended September 30, 2020 as if the respective acquisitions had occurred on January 1, 2019. The results for MOCA and GCC are through their respective acquisition dates, as the results for each were included in our consolidated financial statements after such dates. These results do not reflect the cost of integration activities or benefits from expected revenue enhancements and synergies. Accordingly, the unaudited pro forma information is not necessarily indicative of the results that would have been achieved if the acquisitions had been effective on January 1, 2019. Pro forma financial information is not presented for Hemma, as such results are immaterial to both the current and prior periods. Three Months Ended September 30, 2020 (in thousands) AWH MOCA GCC Midway Pro Forma Adjustments (1) Pro Forma Revenue, net $ 41,473 $ 1,577 $ 1,025 $ 3,199 $ — $ 47,274 Net income (loss) (4,915) 378 11 650 (3,001) (6,877) (1) These adjustments include estimated additional amortization expense of $736 on intangible assets acquired as part of the acquisitions as follows: $81 related to MOCA, $288 related to GCC, and $367 related to Midway. These adjustments also include additional estimated interest expense of $2,557 and an adjustment to exclude $292 of acquisition-related costs incurred during the three months ended September 30, 2020, which are included in “General and administrative expenses” in the accompanying unaudited Condensed Consolidated Statements of Operations. These adjustments are not tax-effected, as the related expenses are not deductible for tax purposes due to the limitations imposed on marijuana dispensaries under IRC Section 280E. Nine Months Ended September 30, 2020 (in thousands) AWH MOCA GCC Midway Pro Forma Adjustments (1) Pro Forma Revenue, net $ 89,449 $ 8,612 $ 3,036 $ 7,840 $ — $ 108,937 Net income (loss) (16,338) 2,398 526 1,556 (9,795) (21,653) (1) These adjustments include estimated additional amortization expense of $2,533 on intangible assets acquired as part of the acquisitions as follows: $569 related to MOCA, $863 related to GCC, and $1,101 related to Midway. These adjustments also include additional estimated interest expense of $7,625 and an adjustment to exclude $363 of acquisition-related costs incurred during the nine months ended September 30, 2020, which are included in “General and administrative expenses” in the accompanying unaudited Condensed Consolidated Statements of Operations. These adjustments are not tax-effected, as |
INVENTORY
INVENTORY | 9 Months Ended |
Sep. 30, 2021 | |
Inventory Disclosure [Abstract] | |
INVENTORY | INVENTORY The components of inventory are as follows: (in thousands) September 30, 2021 December 31, 2020 Materials and supplies $ 7,806 $ 7,756 Work in process 27,180 13,615 Finished goods 21,021 7,626 Total $ 56,007 $ 28,997 |
NOTES RECEIVABLE
NOTES RECEIVABLE | 9 Months Ended |
Sep. 30, 2021 | |
Receivables [Abstract] | |
NOTES RECEIVABLE | NOTES RECEIVABLE On February 25, 2021, the Company entered into a working capital advance agreement with MedMen NY, Inc. (“MMNY”), an unrelated third party, in conjunction with an Investment Agreement (as defined in Note 15, “Commitments and Contingencies”). The working capital advance agreement allows for initial maximum borrowings of up to $10,000, which may be increased to $17,500, and was issued to provide MMNY with additional funding for operations in conjunction with the Investment Agreement. Borrowings do not bear interest, but may be subject to a financing fee. The outstanding balance, which totaled $2,172 as of September 30, 2021, is due and payable at the earlier of the initial closing of the Investment Agreement or, if the Investment Agreement is terminated, three As discussed in Note 4, “Acquisitions,” the Company settled a total of $3,169 due under the Hemma note receivable and working capital loan agreement as part of consideration upon the closing of the acquisition. Additionally, a total of $4,375 is outstanding at September 30, 2021 related to a promissory note issued to the owner of a property the Company is leasing, of which $155 and $4,220 is included in “Other current assets” and “Other noncurrent assets,” respectively, on the unaudited Condensed Consolidated Balance Sheet. At December 31, 2020, $4,473 was outstanding, of which $151 and $4,322 is included in “Other current assets” and “Other noncurrent assets,” respectively, on the unaudited Condensed Consolidated Balance Sheet. The Company has not identified any collectability concerns as of September 30, 2021 for the amounts due under notes receivable. No impairment losses on notes receivable were recognized during the nine months ended September 30, 2021 or 2020. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 9 Months Ended |
Sep. 30, 2021 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | PROPERTY AND EQUIPMENT Property and equipment and related depreciation consist of the following: (in thousands) September 30, 2021 December 31, 2020 Leasehold improvements $ 91,409 $ 33,931 Construction in progress 50,541 25,139 Furniture, fixtures, and equipment 42,930 28,554 Buildings 41,949 38,561 Land 1,002 894 Property and equipment, gross 227,831 127,079 Less: accumulated depreciation 17,082 6,539 Property and equipment, net $ 210,749 $ 120,540 Total depreciation expense was $4,100 and $1,324 during the three months ended September 30, 2021 and 2020, respectively, and $10,560 and $3,361 during the nine months ended September 30, 2021 and 2020, respectively. Total depreciation expense capitalized to inventory was $2,851 and $1,106 during the three months ended September 30, 2021 and 2020, respectively, and $7,185 and $2,948 during the nine months ended September 30, 2021 and 2020, respectively. At September 30, 2021 and December 31, 2020, $2,226 and $602, respectively, of depreciation expense remained capitalized as part of inventory. During the three and nine months ended September 30, 2021, we recognized a loss of $664 related to the sale of a property, which is included in “General and administrative expenses” on the unaudited Condensed Consolidated Statement of Operations and wrote-off $17 of accumulated depreciation. |
VARIABLE INTEREST ENTITIES
VARIABLE INTEREST ENTITIES | 9 Months Ended |
Sep. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
VARIABLE INTEREST ENTITIES | VARIABLE INTEREST ENTITIES The following tables present the summarized financial information about the Company’s consolidated VIEs which are included in the unaudited Condensed Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020 and unaudited Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2021 and 2020. These entities were determined to be VIEs since the Company possesses the power to direct the significant activities of the VIEs and has the obligation to absorb losses or the right to receive benefits from the VIE. September 30, 2021 December 31, 2020 (in thousands) Ascend Illinois Ascend Illinois Ascend Michigan Current assets $ 104,290 $ 54,787 $ 11,355 Other noncurrent assets 174,480 151,449 58,516 Current liabilities 77,154 62,508 5,553 Noncurrent liabilities 124,813 134,792 37,809 Equity (deficit) attributable to AWH 29,330 9,322 (23,822) Three Months Ended Three Months Ended (in thousands) Ascend Illinois Ascend Illinois Ascend Michigan (2) Revenue, net $ 75,470 $ 34,788 $ 3,022 Net income attributable to non-controlling interests (1) — 501 — Net income (loss) attributable to AWH 9,167 6,177 (4,945) Net income (loss) $ 9,167 $ 6,678 $ (4,945) Nine Months Ended Nine Months Ended (in thousands) Ascend Illinois Ascend Illinois Ascend Michigan (2) Revenue, net $ 198,291 $ 77,757 $ 6,260 Net income attributable to non-controlling interests (1) — 1,598 — Net income (loss) attributable to AWH 25,590 10,564 (13,038) Net income (loss) $ 25,590 $ 12,162 $ (13,038) (1) Effective July 30, 2020, the Company purchased the non-controlling interests of Ascend Illinois; therefore, there are no non-controlling interests as of and for the three and nine months ended September 30, 2021. (2) In December 2020, the sole member of FPAW Michigan 2, Inc. (“Ascend Michigan”) assigned his interests to AWH, thereby making AWH the majority member, retaining 99.9% of the membership interests in Ascend Michigan. Following this assignment, Ascend Michigan is no longer considered a VIE. |
INTANGIBLE ASSETS AND GOODWILL
INTANGIBLE ASSETS AND GOODWILL | 9 Months Ended |
Sep. 30, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS AND GOODWILL | INTANGIBLE ASSETS AND GOODWILL Intangible Assets (in thousands) September 30, 2021 December 31, 2020 Finite-lived intangible assets Licenses and permits (1) $ 45,142 $ 39,888 In-place leases 19,963 19,963 Trade names (1) 380 210 65,485 60,061 Accumulated amortization: Licenses and permits (4,260) (1,080) In-place leases (10,010) (8,362) Trade names (380) (158) (14,650) (9,600) Total intangible assets, net $ 50,835 $ 50,461 (1) During the nine months ended September 30, 2021, we recorded measurement period purchase accounting adjustments related to our 2020 acquisitions based on changes to certain estimates and assumptions and their related impact to goodwill. Additionally, during the three months ended September 30, 2021 we recorded a license of $6,928 related to the Hemma acquisition. See Note 4, “Acquisitions,” for additional information. Amortization expense was $1,678 and $2,084 during the three months ended September 30, 2021 and 2020, respectively, and $5,050 and $5,830 during the nine months ended September 30, 2021 and 2020, respectively. Total amortization expense capitalized to inventory was $407 and $3 during three months ended September 30, 2021 and 2020, respectively, and $1,016 and $24 during the nine months ended September 30, 2021 and 2020, respectively. At September 30, 2021 and December 31, 2020, $446 and $564, respectively, of amortization expense remained capitalized as part of inventory. No impairment indicators were noted during the nine months ended September 30, 2021 or 2020 and, as such, w e did not record any impairment charges during either period. Goodwill (in thousands) Balance, December 31, 2020 $ 22,798 Acquisitions 3,039 Adjustments to purchase price allocation (1) 4,479 Balance, September 30, 2021 $ 30,316 |
LEASES
LEASES | 9 Months Ended |
Sep. 30, 2021 | |
Leases [Abstract] | |
LEASES | LEASES The Company leases land, buildings, equipment, and other capital assets which it plans to use for corporate purposes and the production and sale of cannabis products. We determine if an arrangement is a lease at inception and begin recording lease activity at the commencement date, which is generally the date in which we take possession of or control the physical use of the asset. Right-of-use (“ROU”) assets and lease liabilities are recognized based on the present value of lease payments over the lease term with lease expense recognized on a straight-line basis. We use our incremental borrowing rate to determine the present value of future lease payments unless the implicit rate is readily determinable. Our incremental borrowing rate is the rate of interest we would have to pay to borrow on a collateralized basis over a similar term at an amount equal to the lease payments in a similar economic environment. This incremental borrowing rate is applied to the minimum lease payments within each lease agreement to determine the amounts of our ROU assets and lease liabilities. Our lease terms range from 1 to 20 years. Some leases include one or more options to renew, with renewal terms that can extend the lease terms. We typically exclude options to extend the lease in a lease term unless it is reasonably certain that we will exercise the option and when doing so is at our sole discretion. The depreciable lives of assets and leasehold improvements are limited by the expected lease term unless there is a transfer of title or purchase option reasonably certain of exercise. Typically, if we decide to cancel or terminate a lease before the end of its term, we would owe the lessor the remaining lease payments under the term of such lease. Our lease agreements generally do not contain any material residual value guarantees or material restrictive covenants. We may rent or sublease to third parties certain real property assets that we no longer use. Lease agreements may contain rent escalation clauses, rent holidays, or certain landlord incentives, including tenant improvement allowances. ROU assets include amounts for scheduled rent increases and are reduced by lease incentive amounts. Certain of our lease agreements include variable rent payments, consisting primarily of rental payments adjusted periodically for inflation and amounts paid to the lessor based on cost or consumption, such as maintenance and utilities. Variable rent lease components are not included in the lease liability. The components of lease assets and lease liabilities and their classification on our unaudited Condensed Consolidated Balance Sheets were as follows: (in thousands) Classification September 30, 2021 December 31, 2020 Lease assets Operating leases Operating lease right-of-use assets $ 104,248 $ 84,642 Lease liabilities Current liabilities Operating leases Operating lease liabilities, current $ 2,369 $ 2,128 Noncurrent liabilities Operating leases Operating lease liabilities, noncurrent 197,460 156,400 Total lease liabilities $ 199,829 $ 158,528 The components of lease costs and classification within the unaudited Condensed Consolidated Statements of Operations were as follows: Three Months Ended Nine Months Ended (in thousands) 2021 2020 2021 2020 Operating lease costs Capitalized to inventory $ 5,040 $ 3,472 $ 14,154 $ 8,025 General and administrative expenses 1,316 1,324 3,906 3,151 Total operating lease costs $ 6,356 $ 4,796 $ 18,060 $ 11,176 At September 30, 2021 and December 31, 2020, $3,878 and $4,913, respectively, of lease costs remained capitalized in inventory. We recognized a gain of $15 during the three and nine months ended September 30, 2021 related to the termination of one of our leases, which is included in “General and administrative expenses” on the unaudited Condensed Consolidated Statement of Operations. The following table presents information on short-term and variable lease costs: Three Months Ended Nine Months Ended (in thousands) 2021 2020 2021 2020 Total short-term and variable lease costs $ 839 $ 784 $ 1,665 $ 1,968 Sublease income generated during the three and nine months ended September 30, 2021 and 2020 was immaterial. The following table includes supplemental cash and non-cash information related to our leases: Nine Months Ended September 30, (in thousands) 2021 2020 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 16,310 $ 8,672 Lease assets obtained in exchange for new operating lease liabilities $ 41,498 $ 88,690 The weighted-average remaining lease term for our operating leases is 16.0 years and 17.3 years at September 30, 2021 and December 31, 2020, respectively, and the weighted-average discount rate is 12.7% and 13.1% at September 30, 2021 and December 31, 2020, respectively. The amounts of future undiscounted cash flows related to the lease payments over the lease terms and the reconciliation to the present value of the lease liabilities as recorded on our unaudited Condensed Consolidated Balance Sheet as of September 30, 2021 are as follows: (in thousands) Operating Lease Liabilities Remainder of 2021 $ 6,138 2022 26,171 2023 26,981 2024 27,752 2025 28,556 Thereafter 376,406 Total lease payments 492,004 Less: imputed interest 292,175 Present value of lease liabilities $ 199,829 As of September 30, 2021, we entered into operating lease arrangements which are effective for future periods. The total amount of ROU lease assets and lease liabilities related to these arrangements is approximately $500. Lease Amendment Effective September 15, 2021, we amended the lease of our Barry, Illinois cultivation facility to increase the tenant improvement allowance to $52,000 and to increase the rent amounts. We accounted for the amendment as a lease modification and remeasured the ROU asset and liability as of the amendment date, which resulted in an additional ROU asset of $2,750, an additional tenant improvement allowance of $20,000, and an additional lease liability of $22,750. Sale Leaseback Transactions The following table presents cash payments due under transactions that did not qualify for sale-leaseback treatment. The cash payments are allocated between interest and liability reduction, as applicable. The “sold” assets remain within land, buildings, and leasehold improvements, as appropriate, for the duration of the lease and a financing liability equal to the amount of proceeds received is recorded within “Long-term debt, net” on the accompanying unaudited Condensed Consolidated Balance Sheets. (in thousands) Remainder of 2021 2022 2023 2024 2025 Thereafter Total Cash payments due under financing liabilities $ 514 $ 2,082 $ 2,143 $ 2,206 $ 2,271 $ 9,149 $ 18,365 |
DEBT
DEBT | 9 Months Ended |
Sep. 30, 2021 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT (in thousands) September 30, 2021 December 31, 2020 2021 Credit Facility (1) $ 210,000 $ — Sellers’ Notes (2) 37,039 45,782 Finance liabilities 17,129 17,129 Capital Construction Loan (3) — 11,624 AWH Convertible Promissory Notes (4) — 75,484 July 2019 Notes (3) — 10,000 Ann Arbor Note (3) — 5,250 October 2020 Credit Facility (3) — 25,260 NJ Term Loan (3) — 20,000 NJ Real Estate Loan (3) — 4,500 Total debt $ 264,168 $ 215,029 Current portion of debt $ 25,120 $ 60,357 Less: unamortized deferred financing costs 47 1,027 Current portion of debt, net $ 25,073 $ 59,330 Long-term debt $ 239,048 $ 154,672 Less: unamortized deferred financing costs 8,550 2,395 Long-term debt, net $ 230,498 $ 152,277 (1) On August 27, 2021, the Company entered into a credit agreement with a group of lenders (the “2021 Credit Agreement”) that provides for a term loan of $210,000 (the “2021 Credit Facility”), which was borrowed in full. The 2021 Credit Facility matures on August 27, 2025 and does not require scheduled principal amortization payments. Borrowings under the 2021 Credit Facility bear interest at a rate of 9.5% per annum, payable quarterly and, as to any portion of the term loan that is prepaid, on the date of prepayment. We incurred total financing costs of $8,731, that are being amortized to interest expense over the term of 2021 Credit Facility using the straight-line method which approximates the interest rate method. Mandatory prepayments are required from the proceeds of (i) indebtedness that is not permitted by the 2021 Credit Agreement, and (ii) asset sales and casualty events, subject to customary reinvestment rights. The Company may prepay the 2021 Credit Facility at any time, subject to (a) a customary make-whole payment if paid prior to February 27, 2023, (b) a prepayment premium equal to 4.75% of the principal amount prepaid if paid after February 27, 2023 but prior February 27, 2024, and (c) a prepayment premium of 2.375% if paid after February 27, 2024 but prior to February 27, 2025. No prepayment premium is required for prepayment on or after February 27, 2025. Once repaid, amounts borrowed under the 2021 Credit Facility may not be re-borrowed. The 2021 Credit Agreement permits the company to request an extension of the maturity date for 364 days, in the lenders’ discretion, and to increase the 2021 Credit Facility up to $275,000 if the then-existing lenders (or other lenders) agree to provide such additional term loans. The Company is required to comply with two financial covenants under the 2021 Credit Agreement, commencing with the quarter ending December 31, 2021. The Company may not permit its liquidity (defined as unrestricted cash and cash equivalents pledged under the 2021 Credit Facility plus any future revolving credit availability) to be below $20,000 as of the last day of any fiscal quarter. Additionally, the Company may not permit the ratio of Consolidated EBITDA (as defined in the 2021 Credit Agreement) to consolidated cash interest expense for any period of four consecutive fiscal quarters to be less than 2.00:1.00 for the period ending December 31, 2021, less than 2.25:1.00 for the period ending March 31, 2022, and less than 2.50:1.00 for the period ending June 30, 2022 and thereafter. The Company has a customary equity cure right for each of these financial covenants. The 2021 Credit Agreement requires the Company to make certain representations and warranties and to comply with customary covenants, including restrictions on the payment of dividends, repurchase of stock, incurrence of indebtedness, dispositions, and acquisitions. The 2021 Credit Agreement also contains customary events of default including: non-payment of principal or interest; violations of covenants; bankruptcy; change of control; cross defaults to other debt; and material judgments. The 2021 Credit Facility is guaranteed by all of the Company’s subsidiaries and is secured by substantially all of the assets of the Company and its subsidiaries. (2) Sellers’ Notes consist of amounts owed for acquisitions or other purchases. A total of $11,174 was paid to the former owners of MOCA in January 2021, which amount is included in “Current portion of debt, net” on the unaudited Condensed Consolidated Balance Sheet at December 31, 2020. A total of $25,200 remains due to the former owners of Midway, of which $17,200 is included in “Current portion of debt, net” on the unaudited Condensed Consolidated Balance Sheet at September 30, 2021 and December 31, 2020 and $8,000 is included in “Long-term debt, net” on the unaudited Condensed Consolidated Balance Sheet at September 30, 2021 and December 31, 2020. Additionally, at September 30, 2021, $7,127 remains due under the purchase of a non-controlling interest, of which $3,208 and $3,919 is included in “Current portion of debt, net” and “Long-term debt, net” respectively on the unaudited Condensed Consolidated Balance Sheet. At December 31, 2020, $3,140 and $6,268 is included in “Current portion of debt, net” and “Long-term debt, net” respectively. As discussed in Note 4, “Acquisitions,” the Company issued a $4,712 sellers’ note in connection with the Hemma acquisition. The note accrues interest at a rate of 12% per annum. The outstanding principal plus accrued interest is due on December 5, 2021, but may be prepaid without premium or penalty. (3) Borrowings under the 2021 Credit Facility were used to prepay total principal of $75,624 that was outstanding under the Capital Construction Loan, July 2019 Notes, Ann Arbor Note, October 2020 Credit Facility, NJ Term Loan, and NJ Real Estate Loan, which prepayments were considered debt extinguishments. We recognized a total net loss on extinguishment of $6,637, which is recorded within “Interest expense” on the unaudited Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2021. The net loss on extinguishment includes prepayment penalties on certain loans, make-whole interest payments on certain loans, the write-off of the remaining unamortized deferred financing costs on certain loans, and a gain on settlement of $290 related to forgiveness of principal and interest under the Ann Arbor Note. The net loss on extinguishment also includes a true-up of $2,656 related to the additional maturity payment due under the October 2020 Credit Facility. The lenders elected to receive the $3,750 additional maturity payment in equity and received 1,986 shares in accordance with the settlement terms of the original agreement. (4) On April 22, 2021 the convertible note purchase agreement entered in June 2019 (the “2019 Convertible Note Purchase Agreement”) was amended (the “Amended Notes Consent”) to clarify the conversion rate of the underlying convertible promissory notes (the “AWH Convertible Promissory Notes”). Prior to the Amended Notes Consent, the conversion feature in connection with a going public transaction specified that the holders would receive a number of shares of Class A common stock equal to the outstanding principal and accrued and unpaid interest under the notes divided by a price per share equal to the lesser of (a)(i) a 20% discount to the price per share of Class A common stock offered pursuant to an offering in the event such offering occurs on or before 12 months from the closing date; (ii) a 25% discount to the price per share of Class A common stock offered pursuant to an offering in the event such offering occurs after 12 months from the closing date, but before the maturity date; and (b) the price per security, which equals the price per share resulting from a pre-money valuation of the company of $295,900, which was determined by the Company to be $2.96. The Amended Notes Consent was solely made to clarify the conversion price in connection with a going public transaction. The 2019 Convertible Note Purchase Agreement includes provisions to the effect that the notes may be amended with the written consent of the holders of a majority of the outstanding principal amount of all such notes, and which such consent was obtained, and any amendment so approved is binding on all holders of the notes. Refer to Note 15, “Commitments and Contingencies,” for information regarding a stockholder dispute related to this agreement. In conjunction with the Company’s IPO on May 4, 2021, the total principal outstanding under the AWH Convertible Promissory Notes, plus accrued interest thereon, automatically converted into 28,478 shares of Class A common stock based on a conversion price of $2.96 per share in accordance with the terms of the Amended Notes Consent. Per the terms of the notes, any AWH Convertible Promissory Notes outstanding for less than twelve months received a full twelve months of interest at conversion. $1,000 of these notes were with related party entities that are managed by one of the founders of the Company. In addition to the activity described above, in January 2021 the Company entered into a convertible note purchase agreement under which the Company issued $49,500 notes (the “2021 AWH Convertible Promissory Notes”). Each note bears interest at 8% for the first twelve months, 10% for months thirteen through fifteen, and 13% thereafter through maturity. Interest is paid-in-kind and added to the outstanding balance of the note, to be paid at maturity or upon conversion. Prior to the Conversion, the 2021 AWH Convertible Promissory Notes were convertible into common units of the Company on occurrence of certain events, such as a change of control or an initial public offering. Pursuant to the terms of the notes, upon the occurrence of an initial public offering, each note, including interest thereon less applicable withholding taxes, automatically converts into equity securities issued in connection with such initial public offering, with the number of securities issued on the basis of a price equal to the lesser of: (a)(i) a 20% discount to the issue price if an initial public offering occurs on or before 12 months from each note issuance; (ii) a 25% discount to the issue price if an initial public offering occurs after 12 months of each note issuance, but before maturity; and (b) the conversion price then in effect based on a defined pre-money valuation of the Company. In conjunction with the Company’s IPO on May 4, 2021, the total principal outstanding under the 2021 AWH Convertible Promissory Notes, plus accrued interest thereon, automatically converted into 8,910 shares of Class A common stock based on a conversion price of $6.00 per share in accordance with the terms of the agreement. Per the terms of the notes, the 2021 AWH Convertible Promissory Notes received a full twelve months of interest at conversion. Debt Maturities During the nine months ended September 30, 2021, we repaid: $76,124 of principal under our term notes; $11,174 of sellers’ notes related to the MOCA acquisition; and $2,289 of sellers’ notes related to the former owners of HCI. At September 30, 2021, the following cash payments are required under our debt arrangements: (in thousands) Remainder of 2021 2022 2023 2024 2025 Total Term note maturities $ — $ — $ — $ — $ 210,000 $ 210,000 Sellers’ notes (1) 22,766 11,143 3,143 — — 37,052 (1) Certain cash payments include an interest accretion component. Interest Expense Interest expense during 2021 and 2020 consisted of the following: Three Months Ended Nine Months Ended (in thousands) 2021 2020 2021 2020 Cash interest $ 4,623 $ 936 $ 11,948 $ 4,004 Accretion 610 1,330 9,148 2,993 Loss on extinguishment of debt (1) 6,637 — 6,637 — Non-cash interest related to beneficial conversion feature (2) — — 27,361 — Interest on financing liability (3) 506 361 1,507 1,033 Total $ 12,376 $ 2,627 $ 56,601 $ 8,030 (1) Includes $1,656 of pre-payment fees and additional cash interest payments and $4,981 of non-cash components, including the write-off of unamortized deferred financing costs. (2) See Note 12, “Stockholders’ Equity,” for additional details. (3) Interest on financing liability related to failed sale leasebacks. See Note 10, “Leases,” for additional details. |
STOCKHOLDERS_ EQUITY
STOCKHOLDERS’ EQUITY | 9 Months Ended |
Sep. 30, 2021 | |
Equity [Abstract] | |
STOCKHOLDERS’ EQUITY | STOCKHOLDERS’ EQUITY Following the Conversion, the Company has authorized 750,000 shares of Class A common stock with a par value of $0.001 per share, 100 shares of Class B common stock with a par value of $0.001 per share, and 10,000 shares of preferred stock with a par value of $0.001 per share. Each share of Class A common stock is entitled to one vote per share and holders of Class B common stock are entitled to 1,000 votes per share. Holders of Class A common stock and Class B common stock will vote together as a single class on all matters (including the election of directors) submitted to a vote of stockholders, unless otherwise required by law or our certificate of incorporation. Each share of Class B common stock is convertible at any time into one share of Class A common stock at the option of the holder. In addition, each share of Class B common stock will automatically convert into one share of Class A common stock on the final conversion date (May 4, 2026). Each share of Class B common stock will convert automatically into one share of Class A common stock upon any transfer, whether or not for value, except for certain transfers described in our certificate of incorporation, including, without limitation, transfers for tax and estate planning purposes, so long as the transferring holder of Class B common stock continues to hold exclusive voting and dispositive power with respect to the shares transferred. Once converted into a share of Class A common stock, a converted share of Class B common stock will not be reissued, and following the conversion of all outstanding shares of Class B common stock, no further shares of Class B common stock will be issued. Subject to preferences that may apply to any shares of preferred stock outstanding at the time and any contractual limitations, such as our credit agreements, the holders of our common stock will be entitled to receive dividends out of funds then legally available, if any, if our board of directors (the “Board”), in its discretion, determines to issue dividends and then only at the times and in the amounts that our Board may determine. If a dividend is paid in the form of a Class A common stock or Class B common stock, then holders of Class A common stock shall receive Class A common stock and holders of Class B common stock shall receive Class B common stock. In the event of a liquidation, dissolution, or winding up, holders of Class A common stock and Class B common stock will be entitled to share ratably in the net assets legally available for distribution to stockholders after the payment of all our debts and other liabilities and the satisfaction of any liquidation preference granted to the holders of any then-outstanding shares of preferred stock. In the event of any change of control transaction in respect of the Company, shares of our Class A common stock and Class B common stock shall be treated equally, ratably, and identically, on a per share basis, with respect to any consideration into which such shares are converted or any consideration paid or otherwise distributed to stockholders of the Company, unless different treatment of the shares of each class is approved by the affirmative vote of the holders of a majority of the outstanding shares of Class A common stock and Class B common stock, each voting separately as a class. The following table summarizes the total shares of Class A common stock and Class B common stock outstanding as of September 30, 2021: (in thousands) September 30, 2021 Shares of Class A common stock 170,945 Shares of Class B common stock 65 Total 171,010 Immediately prior to the Conversion, the Company was authorized to issue Common Units, Preferred Units, and Restricted Common Units (see Note 13, “Equity-Based Compensation Expense”), all with no par value. Preferred Units collectively included Series Seed Preferred Units, Series Seed+ Preferred Units, and Real Estate Preferred Units, unless otherwise specified. These share classes are included within “Additional Paid-In Capital” in the unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity on an as-converted to historical common units basis. The following table summarizes the historical units outstanding as of December 31, 2020: (in thousands) December 31, 2020 Common Units 48,047 Real Estate Preferred Units 22,801 Series Seed Preferred Units 14,252 Series Seed+ Preferred Units 20,982 Total 106,082 In conjunction with the Conversion, each historical common unit then-outstanding converted into one share of Class A common stock, except 65 units that were allocated to shares of Class B common stock. In conjunction with the IPO, each Real Estate Preferred Unit converted into Class A common stock at a rate of one plus 1.5x, divided by the IPO price of $8.00 per share, for a total of 26,221 shares of Class A common stock. The additional 3,420 shares issued per the conversion feature was considered a contingent beneficial conversion feature and was recognized when the conversion event occurred and the contingency was resolved, for a total non-cash interest charge of $27,361. Each Series Seed Preferred Unit and Series Seed+ Preferred Unit converted into shares of Class A common stock on a one-for-one basis. As discussed in Note 11, “Debt,” the AWH Promissory Notes, plus accrued interest, converted into 28,478 shares of Class A common stock and the 2021 AWH Convertible Promissory Notes, plus accrued interest, converted into 8,910 shares of Class A common stock. In August 2021, the Company issued 1,986 shares of Class A common stock in conjunction with the prepayment of the October 2020 Credit Facility. Per the terms of the original credit agreement, an additional maturity payment was due to the lenders at maturity, as further discussed in Note 11, “Debt,” that the lenders elected to receive in shares. The share total was calculated in accordance with the settlement terms of the original agreement and is accounted for as share-settled debt. The share issuance is included within “Issuance of common stock” on the unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity for the nine months ended September 30, 2021. Warrants In conjunction with the Conversion, the holders of warrants to acquire 3,531 common units at an exercise price of $4.00 received warrants to acquire an equal number of shares of Class A common stock. On April 14, 2021, the Company entered into a warrant cancellation agreement with One Tower Atlantic, LLC, the holder of warrants to acquire 1,094 common units of AWH at an exercise price of $3.20 per unit (the “$3.20 Warrants”). Upon the completion of the IPO, the $3.20 Warrants were cancelled in exchange for a payment of $4,156 (or $7.00 per share calculated in accordance with the cashless exercise provisions of the warrant agreement) that was paid in May 2021 and is reflected within “Additional paid-in capital” on the unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity. As of September 30, 2021, warrants to acquire a total of 3,531 shares of Class A common stock at an exercise price of $4.00 per share were outstanding. No warrants were issued during the nine months ended September 30, 2021. The warrants had an estimated total fair value of $237 at issuance, which was calculated using a Black-Scholes model. The fair value per warrant at issuance ranged from $0.02 to $0.10 and significant assumptions used in the calculation model included volatility ranging from 69.2% to 108.4% and risk-free rates ranging from 0.17% to 2.17%. The weighted-average remaining contractual life of the warrants outstanding as of September 30, 2021 is 2.3 years and the outstanding warrants had an intrinsic value of $19,245 at that date. |
EQUITY-BASED COMPENSATION EXPEN
EQUITY-BASED COMPENSATION EXPENSE | 9 Months Ended |
Sep. 30, 2021 | |
Share-based Payment Arrangement [Abstract] | |
EQUITY-BASED COMPENSATION EXPENSE | EQUITY-BASED COMPENSATION EXPENSE The Company adopted an incentive plan in November 2020 (the “2020 Plan”) which authorized the issuance of incentive common unit options and restricted common units (collectively, “Awards”). The maximum number of Awards to be issued under the 2020 Plan is 10,031 and any Awards that expire or are forfeited may be re-issued. A total of 9,994 Awards were issued under the plan as of September 30, 2021. The Awards generally vest over two In conjunction with the Conversion, the holders of the restricted common units issued under the 2020 Plan received one restricted share of Class A common stock (a “Restricted Common Share”) for each restricted common unit held immediately prior to the Conversion. Unless otherwise specified, the Awards may not be exercised for six months following the IPO. The following table summarizes the restricted common shares activity during the nine months ended September 30, 2021: Restricted Common Shares Unvested, December 31, 2020 7,280 Granted 50 Vested (5,510) Forfeited (124) Unvested, September 30, 2021 1,696 The Company recognized $266 and $4,464 as compensation expense in connection with the restricted common shares during the three and nine months ended September 30, 2021, respectively. This expense is included in “General and administrative expenses” on the unaudited Condensed Consolidated Statements of Operations and includes additional compensation charges of approximately $733 recognized with the closing of the IPO related to restricted common shares that became fully vested at that time due to acceleration clauses. During the three and nine months ended September 30, 2020, the Company recognized $71 and $341, respectively, as compensation expense in connection with the Company’s previous incentive units that were outstanding at that time. As of September 30, 2021, total unrecognized compensation cost related to the restricted common shares was $349, which is expected to be recognized over the weighted-average remaining vesting period of 0.5 years. In July 2021, the Company adopted a new stock incentive plan (the “2021 Plan”), pursuant to which 17,000 shares of Class A common stock are reserved for issuance thereunder, subject to certain adjustments and other terms. Following the adoption of the 2021 Plan, no additional awards are expected to be issued under the 2020 Plan. The 2021 Plan authorized the issuance of options, stock appreciation rights, restricted stock, and restricted stock units, and other stock-based awards (collectively the “2021 Plan Awards”). Any 2021 Plan Awards that expire or are forfeited may be re-issued. The estimated fair value of the 2021 Plan Awards at issuance is recognized as compensation expense over the related vesting, exercise, or service periods, as applicable. As of September 30, 2021, there were 11,351 shares of Class A common stock available for grant for future equity-based compensation awards under the 2021 Plan. Stock Options Stock option grants provide for an exercise price as determined at issuance, but not less than the closing market value of the Company’s Class A common stock on the date of grant, except in certain circumstances. The term and exercise provisions of each option are determined at issuance and the term is not to exceed 10 years. The exercise price for any options that are considered incentive stock options shall not be less than the closing market value of the Company’s Class A common stock on the date of grant; however, if granted to a participant who owns stock possessing more than 10% of the total combined voting power of all classes of the Company’s stock, the exercise price shall not be less than 110% of the closing market value on the date of grant. We determine the fair value of stock options on the grant date using an option pricing model. As of the date of this filing, no stock option grants have been awarded. Stock Appreciation Rights Stock appreciation rights (“SAR Awards”) provide the holder a right to receive upon exercise the excess of (i) the fair market value of one share of common stock on the date of exercise over (ii) the grant price of the SAR Awards as specified, which price shall not be less than the closing market value of one share of common stock on the date of grant, except in certain circumstances. The grant price, term, methods of exercise, dates of exercise, methods of settlement, and any other terms and conditions of any SAR Awards are determined at issuance. We determine the fair value of SAR Awards on the grant date using an option pricing model. As of the date of this filing, no SAR Awards have been granted. Restricted Stock Awards and Restricted Stock Units Restricted Stock Awards (“RSAs”) represent fully issued shares of common stock that may not be sold or otherwise transferred for a period of time and are subject to forfeiture in certain circumstances. The fair value of RSAs is based on the closing price of the common stock on the grant date. Restricted Stock Units (“RSUs”) entitle the grantee to receive shares of our common stock (or a cash payment equal to the market value of a share) as the units vest. The vesting period, generally a period of two RSAs and RSUs may be credited with dividends or dividend equivalents, which entitle the grantee to receive payments (in cash, shares, other securities, other awards, or other property, as determined by the Company) equivalent to the amount of cash dividends paid by the Company, as applicable. Any dividend and dividend equivalents may be accrued but not paid to the grantee until all conditions or restrictions on the related RSAs or RSUs have been satisfied, waived, or lapsed. No RSAs have been granted under the 2021 Plan as of September 30, 2021. The following table summarizes the RSU activity during the nine months ended September 30, 2021: Number of Shares (in thousands) Weighted-Average Grant Date Fair Value per Share Unvested, December 31, 2020 — $ — Granted 5,662 10.88 Vested (49) 11.00 Forfeited (13) 11.00 Unvested, September 30, 2021 5,600 $ 10.88 Gross compensation expense related to the RSUs was $3,727 during the three and nine months ended September 30, 2021. Of this total, $1,406 was capitalized to inventory and $1,057 remains capitalized as of September 30, 2021. We recognized $2,321 within “General and administrative expenses” and $349 within “Cost of goods sold” on the unaudited Condensed Consolidated Statements of Operations. As of September 30, 2021, total unrecognized compensation cost related to the RSUs was $57,748, which is expected to be recognized over the weighted-average remaining vesting period of 2.0 years. Employee Stock Purchase Plan In July 2021, the Company also adopted an employee stock purchase plan (the “2021 ESPP”), pursuant to which 4,000 shares of Class A common stock are reserved for issuance thereunder, subject to certain adjustments and other terms. As of the date of this filing, no shares have been issued under the 2021 ESPP. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2021 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES Three Months Ended Nine Months Ended ($ in thousands) 2021 2020 2021 2020 (Loss) income before income taxes $ (719) $ 728 $ (72,868) $ (4,626) Income tax expense 12,307 5,643 33,278 11,712 Effective tax rate (1,711.7) % 775.1 % (45.7) % (253.2) % Gross profit $ 40,954 $ 18,352 $ 105,137 $ 38,022 Effective tax rate on gross profit 30.1 % 30.7 % 31.7 % 30.8 % The Company’s quarterly tax provision is calculated under the discrete method which treats the interim period as if it were the annual period and determines the income tax expense or benefit on that basis. The discrete method is applied when application of the estimated annual effective tax rate is impractical because it is not possible to reliably estimate the annual effective tax rate. The Company believes, at this time, the use of this discrete method is more appropriate than the annual effective tax rate method due to the high degree of uncertainty in estimating annual pre-tax income due to the early growth stage of the business. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Commitments The Company does not have significant future annual commitments, other than related to leases and debt, which are disclosed in Notes 10 and 11, respectively. During the three months ended September 30, 2021, we entered into agreements to purchase two properties to further expand our cultivation facility in New Jersey and one additional retail property in Illinois for a combined total purchase price of $14,000, subject to closing adjustments. One of the New Jersey properties, with a purchase price of $2,500, closed on November 4, 2021. The closing of the other two properties is expected during the fourth quarter of 2021, but each is dependent on certain conditions, including inspection. Legal and Other Matters 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 compliance with applicable local and state regulations as of September 30, 2021, cannabis regulations continue to evolve and are subject to differing interpretations, and accordingly, the Company may be subject to regulatory fines, penalties, or restrictions in the future. State laws that permit and regulate the production, distribution, and use of cannabis for adult use or medical purposes are in direct conflict with the Controlled Substances Act (21 U.S.C. § 811) (the “CSA”), which makes cannabis use and possession federally illegal. Although certain states and territories of the U.S. authorize medical and/or adult use cannabis production and distribution by licensed or registered entities, under U.S. federal law, the possession, use, cultivation, and transfer of cannabis and any related drug paraphernalia is illegal and any such acts are criminal acts under federal law under the CSA. Although the Company’s activities are believed to be compliant with applicable state and local laws, strict compliance with state and local laws with respect to cannabis may neither absolve the Company of liability under U.S. federal law, nor may it provide a defense to any federal proceeding which may be brought against the Company. The Company may be, from time to time, subject to various administrative, regulatory, and other legal proceedings arising in the ordinary course of business. Contingent liabilities associated with legal proceedings are recorded when a liability is probable and the contingent liability can be estimated. We do not accrue for contingent losses that, in our judgment, are considered to be reasonably possible but not probable. At September 30, 2021 there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on our consolidated results of operations, other than as disclosed below. Legal Settlement In December 2020, TVP, LLC, TVP Grand Rapids, LLC and, TVP Alma, LLC (collectively, the “TVP Parties”) filed a claim alleging breach of contract against FPAW Michigan, LLC (“FPAW”), a VIE of the Company through FPAW Michigan 2, Inc., and AWH related to a purchase agreement for the Company’s potential acquisition of certain locations in Michigan. The TVP Parties asked the court to grant specific performance of the contracts between the Company and the TVP Parties, which, if granted, would have resulted in AWH issuing approximately 4,770 common units as originally agreed in September 2019 and paying approximately $16,500 in cash to the TVP parties in exchange for the entities holding the properties subject to the agreements. AWH and FPAW filed an answer to the complaint on January 28, 2021 and believed there existed valid defenses to the demand for specific performance due to lack of suitability of three of the six properties subject to the original transaction agreements. On April 14, 2021, FPAW and AWH entered into a settlement agreement with TVP Parties (the “Settlement Agreement”). The Settlement Agreement provides for, among other items, the dismissal of all claims brought by the TVP Parties against FPAW and AWH upon performance of each parties’ obligations under the Settlement Agreement. Pursuant to the Settlement Agreement, FPAW and AWH were required to deliver a cash payment of $9,000 to TVP, LLC on the date of the Settlement Agreement, with an additional cash payment of $5,480 due on or before January 1, 2022, or approximately $2,000 less than would have otherwise been payable under the agreements. In addition, on April 14, 2021, upon the execution of the Settlement Agreement, AWH issued 4,770 common units of AWH with a fair value of $26,041 to an escrow account, to be held in the name of the escrow agent (the “Escrow Units”). Also as part of the Settlement Agreement and in order to avoid further potential litigation, AWH issued 255 common units of AWH with a fair value of $1,390 to a party to one of the September 2019 agreements that was not a party to the litigation matter. Upon the receipt of the initial cash payment of $9,000 and the issuance of the Escrow Units, the TVP Parties filed a stipulated order dismissing all lawsuits, with prejudice and without costs, against FPAW and AWH. The Escrow Units are issued and outstanding and will remain in the escrow account until such time as the TVP Parties exercise an option to hold the Escrow Units directly (the “Put Option”). Upon their exercise of the Put Option, the Escrow Units shall be released to the TVP Parties and the TVP Parties shall transfer to FPAW the equity interests of the entities that hold the three real estate properties in Grand Rapids, which are the three remaining properties that remain suitable for the original business purposes. The Put Option is required to be exercised by the TVP Parties within three years of the date of the Settlement Agreement. Of the total settlement liability, $5,480 is included within “Accounts payable and accrued expenses” on the accompanying unaudited Condensed Consolidated Balance Sheet as of September 30, 2021 and the fair value of the share issuance of $27,431 is reflected within “Reserve for equity issued in litigation settlement” and “Equity issued in litigation settlement” on the unaudited Condensed Consolidated Statement of Changes in Stockholders’ Equity. The fair value of the three properties to be acquired per the settlement of $5,400 is recorded within “Other noncurrent assets” as of September 30, 2021, and will remain until the time such property titles transfer to the Company. The settlement charge of $36,511 is reflected within “Settlement expense” on the unaudited Condensed Consolidated Statements of Operations. The settlement charge is not expected to be deductible for tax purposes. Stockholder Dispute On May 28, 2021, Senvest Management, LLC, Hadron Capital (Cayman) LTD., and Measure8 Venture Partners, LLC (collectively, the “Claimants”), as former holders of the AWH Convertible Promissory Notes issued and sold by the Company pursuant to the 2019 Convertible Note Purchase Agreement, filed an arbitration demand, which was subsequently amended on July 28, 2021 (the “Arbitration Demand”), against the Company and its Chief Executive Officer, Abner Kurtin, before the American Arbitration Association. In their Arbitration Demand, the Claimants take issue with the Amended Notes Consent, which was approved by holders of approximately 66% of the principal amount of the AWH Convertible Promissory Notes, in excess of the simple majority required to amend the AWH Convertible Promissory Notes. The Amended Notes Consent set the conversion price of the AWH Convertible Promissory Notes at $2.96 per share. The Claimants allege that the Amended Notes Consent was obtained improperly and is void, and seek damages in excess of $20,000. The Company disputes the Claimants’ allegations and believes the Amended Notes Consent was properly obtained in accordance with the terms of the AWH Convertible Promissory Notes and 2019 Convertible Note Purchase Agreement and the Amended Notes are binding on all holders of the AWH Convertible Promissory Notes. The Company intends to vigorously defend against what it views as meritless claims. Investments On February 25, 2021, we entered into a definitive investment agreement (the “Investment Agreement”) with MedMen Enterprises Inc. (“MedMen”), under which we will, subject to regulatory approval, complete an investment (the “Investment”) of approximately $73,000 in MMNY, a licensed medical cannabis operator in New York. In connection with the investment, and subject to regulatory approval, MMNY will engage our services pursuant to a management agreement (the “Management Agreement”) under which we will advise on MMNY’s operations pending regulatory approval of the Investment transaction. Under the terms of the Investment, at closing, MMNY will assume approximately $73,000 of MedMen’s existing secured debt, AWH will invest $35,000 in cash in MMNY, and AWH New York, LLC will issue a senior secured promissory note in favor of MMNY’s senior secured lender in the principal amount of $28,000, guaranteed by AWH, which cash investment and note will be used to reduce the amounts owed to MMNY’s senior secured lender. Following its investment, AWH will hold a controlling interest in MMNY equal to approximately 86.7% of the equity in MMNY, and be provided with an option to acquire MedMen’s remaining interest in MMNY in the future. AWH must also make an additional investment of $10,000 in exchange for additional equity in MMNY, which investment will also be used to repay MMNY’s senior secured lender if adult-use cannabis sales commence in MMNY’s dispensaries. The transactions contemplated by the Investment Agreement are subject to customary closing conditions, including approval from the New York State Department of Health and other applicable regulatory bodies. Other Transactions On August 20, 2021, we entered into a definitive agreement to acquire Ohio Cannabis Clinic LLC (“OCC”), a medical dispensary license holder in Ohio, for a total purchase price of approximately $16,200, subject to customary working capital and closing adjustments. The purchase price consists of a cash payment of approximately $12,400 and shares of Class A common stock with a value of approximately $3,800 at a price per share equal to the volume weighted average price per share of the Class A common stock as reported on the CSE for the ten consecutive trading days ending on the date immediately preceding the closing date. The transaction is subject to customary closing conditions, including approval from the applicable regulatory bodies. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2021 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS AWH had a management services agreement (“MSA”) with AGP Partners, LLC (“AGP”) under which AGP provided management services to AWH in connection with the monitoring and oversight of AWH’s financial and business functions. The founder of AGP is the Chief Executive Officer and one of the founders of AWH. Pursuant to the MSA, AWH paid AGP a quarterly fee of $100. Pursuant to the terms of the agreement, the MSA was terminated following the Company’s IPO in May 2021. Upon termination, AGP was entitled to receive a $2,000 payout that was contingent upon the beneficial owners of AGP who serve as officers of the Company entering into lock-up agreements that extend for 360 days following the Company’s IPO. Pursuant to the MSA, each such lock-up agreement contains a provision whereby AWH’s Board may waive, in whole or in part, such extended lock-up thereto if AWH’s Board determines, in its sole discretion and in accordance with AWH’s governing documents and applicable law, that such waiver will not have an adverse effect on AWH and its equity holders, business, financial condition, and prospects. We recognized expenses related to the MSA of $2,124 during the nine months ended September 30, 2021, and $100 and $300 during the three and nine months ended September 30, 2020, respectively, that are included in “General and administrative expenses” on the unaudited Condensed Consolidated Statements of Operations. A total of $100 of these fees are included in “Accounts payable and other accrued expenses” on the unaudited Condensed Consolidated Balance Sheets as of December 31, 2020. The final payment was made in July 2021. As discussed in Note 11, “Debt,” certain of the previously outstanding AWH Convertible Promissory Notes were with related party entities that are managed by one of the founders of the Company. |
SUPPLEMENTAL INFORMATION
SUPPLEMENTAL INFORMATION | 9 Months Ended |
Sep. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
SUPPLEMENTAL INFORMATION | SUPPLEMENTAL INFORMATION The following table presents supplemental information regarding our other current assets: (in thousands) September 30, 2021 December 31, 2020 Tenant improvement allowance $ 9,182 $ 24,349 Deposits and other receivables 5,041 4,021 Prepaid expenses 3,872 2,311 Construction deposits 2,551 712 Other 2,652 1,205 Total $ 23,298 $ 32,598 The following table presents supplemental information regarding our accounts payable and accrued liabilities: (in thousands) September 30, 2021 December 31, 2020 Accounts payable $ 10,885 $ 7,363 Fixed asset purchases 7,656 11,572 Litigation settlement 5,480 — Accrued payroll and related expenses 3,324 2,762 Accrued interest 416 7,723 Other 2,634 1,804 Total $ 30,395 $ 31,224 The following table presents supplemental information regarding our general and administrative expenses: Three Months Ended Nine Months Ended (in thousands) 2021 2020 2021 2020 Compensation $ 13,434 $ 4,520 $ 37,140 $ 9,794 Rent and utilities 6,443 4,166 16,089 9,599 Professional services 3,158 2,693 12,945 5,599 Depreciation and amortization 2,520 2,299 7,409 6,219 Insurance 1,127 389 3,165 958 Marketing 783 511 2,188 1,136 Loss on sale of assets 649 — 649 286 Other 1,227 422 5,514 1,033 Total $ 29,341 $ 15,000 $ 85,099 $ 34,624 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2021 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS Management has evaluated subsequent events to determine if events or transactions occurring through the filing date of this Quarterly Report on Form 10-Q require adjustment to or disclosure in the Company’s Financial Statements. There were no events that require adjustment to or disclosure in the Financial Statements, except as disclosed. Acquisition On October 1, 2021, the Company closed on the previously disclosed acquisition of BCCO, LLC (“BCCO”), a medical dispensary license holder in Ohio for a purchase price of $3,740, subject to customary working capital and closing adjustments. The Company settled $1,750 due under a note receivable at closing. A total of $1,799 due under the previous working capital loan was considered additional consideration at closing. |
BASIS OF PRESENTATION AND SIG_2
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with (i) United States generally accepted accounting principles (“U.S. GAAP”) for interim financial information, and (ii) the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of our management, our unaudited condensed consolidated financial statements and accompanying notes (the “Financial Statements”) include all normal recurring adjustments that are necessary for the fair statement of the interim periods presented. Interim results of operations are not necessarily indicative of results for the full year, or any other period. The Financial Statements should be read in conjunction with our audited consolidated financial statements (and notes thereto) for the year ended December 31, 2020 (the “Annual Financial Statements”) which are included in our Registration Statement on Form S-1, as amended, filed with the U.S. Securities and Exchange Commission on April 26, 2021. Except as noted below, there have been no material changes to the Company’s significant accounting policies and estimates during the nine months ended September 30, 2021. |
Principles of Consolidation | The Financial Statements include the accounts of Ascend Wellness Holdings, Inc. and its subsidiaries. Refer to Note 8, “Variable Interest Entities,” for additional information regarding certain entities that are not wholly-owned by the Company. We include the results of acquired businesses in the consolidated statements of operations from their respective acquisition dates. All intercompany accounts and transactions have been eliminated in consolidation. |
Use of Estimates | The preparation of condensed consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts. We base our estimates on historical experience, known or expected trends, independent valuations, and various other measurements that we believe to be reasonable under the circumstances. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. |
Reclassifications | Reclassifications Certain prior year amounts have been reclassified to conform with our current period presentation. These changes had no impact on our previously reported net loss. |
Variable Interest Entities | Variable Interest Entities In determining whether we are the primary beneficiary of a variable interest entity (“VIE”), we assess whether we have the power to direct matters that most significantly impact the activities of the VIE and the obligation to absorb losses or the right to receive the benefits from the VIE that could potentially be significant to the VIE. A VIE is a legal entity that does not have sufficient equity at risk to finance its activities without additional subordinated financial support or is structured that such equity investors lack the ability to make significant decisions relating to the entity’s operations through voting rights or do not substantively participate in the gains or losses of the entity. The primary beneficiary has both the power to direct the activities of the VIE that most significantly impact the entity’s economic performance and the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. We assess all variable interests in the entity and use our judgment when determining if we are the primary beneficiary. Other qualitative factors that are considered include decision-making responsibilities, the VIE capital structure, risk and rewards sharing, contractual |
Fair Value of Financial Instruments | Fair Value of Financial Instruments During the nine months ended September 30, 2021 and 2020, we had no transfers of assets or liabilities between any of the hierarchy levels. |
Basic and Diluted Loss per Share | Basic and Diluted Loss per Share The Company computes earnings (loss) per share (“EPS”) using the two-class method required for multiple classes of common stock. The rights, including the liquidation and dividend rights, of the Class A common stock and Class B common stock are substantially identical, except for voting and conversion rights. As the liquidation and dividend rights are identical, undistributed earnings are allocated on a proportionate basis to each class of common stock and the resulting basic and diluted net loss per share attributable to common stockholders are, therefore, the same for both Class A and Class B common stock on both an individual and combined basis. EPS and weighted-average shares outstanding for the three and nine months ended September 30, 2021 and 2020 have been computed on the basis of treating the historical common unit equivalents previously outstanding as shares of Class A common stock, as such historical units converted into shares of Class A common stock in the Conversion. Basic EPS is computed by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted EPS reflects potential dilution and is computed by dividing net loss by the weighted average number of common shares outstanding during the period increased by the number of additional common shares that would have been outstanding if all potential common shares had been issued and were dilutive. However, potentially dilutive securities are excluded from the computation of diluted EPS to the extent that their effect is anti-dilutive. Potential dilutive securities in the current year include incremental shares of common stock issuable upon the exercise of warrants, unvested restricted stock awards, and unvested restricted stock units. Potential dilutive securities in the prior year periods include incremental shares of common stock issuable upon the exercise of warrants, vested incentive units, and the conversion of convertible notes. As of September 30, 2021 and 2020, 10,827 and 30,545 shares of common stock equivalents, respectively, were excluded from the calculation of diluted EPS because their inclusion would have been anti-dilutive. |
Recently Adopted and Recently Issued Accounting Standards | Recently Adopted Accounting Standards Income Taxes In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Income Taxes (Topic 740) – Simplifying the Accounting for Income Taxes , (“ASU 2019-12”) which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. ASU 2019-12 became effective for the Company beginning on January 1, 2021 and did not have a significant impact on our Financial Statements. Investments In January 2020, the FASB issued ASU 2020-01, Investments – Equity Securities (Topic 321), Investments – Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topic 321, Topic 323, and Topic 815. This ASU provides clarification of the interaction of rules for equity securities, the equity method of accounting, and forward contracts and purchase options on certain types of securities and became effective for the Company beginning on January 1, 2021. Adoption of this guidance did not have a material impact on our Financial Statements. Reference Rate Reform In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope , (“ASU 2021-01”), which clarifies certain optional expedients and exceptions in Topic 848 when accounting for derivative contracts and certain hedging relationships affected by changes in interest rates. ASU 2021-01 was effective upon issuance and the amendments within are applied either prospectively or retrospectively. ASU 2021-01 did not have a significant impact on our Financial Statements. Recently Issued Accounting Pronouncements The following standards have been recently issued by the FASB. Pronouncements that are not applicable to the Company or where it has been determined do not have a significant impact on us have been excluded herein. Financial Instruments In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , (“ASU 2016-13”). ASU 2016-13 replaces the existing guidance surrounding measurement and recognition of credit losses on financial assets measured at amortized cost, including trade receivables and investments in certain debt securities, by requiring recognition of an allowance for credit losses expected to be incurred over an asset’s life based on relevant information about past events, current conditions, and supportable forecasts impacting its ultimate collectability. This current expected credit losses (“CECL”) model will result in earlier recognition of credit losses than the current “as incurred” model, under which losses are recognized only upon the occurrence of an event that gives rise to the incurrence of a probable loss. ASU 2019-05, Financial Instruments – Credit Losses (Topic 326): Targeted Transition Relief , was issued in May 2019 to provide target transition relief allowing entities to make an irrevocable one-time election upon adoption of the new credit losses standard to measure financial assets previously measured at amortized cost (except held-to-maturity securities) using the fair value option. ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments – Credit Losses , was issued in November 2019 to clarify, improve, and amend certain aspects of ASU 2016-13, such as disclosures related to accrued interest receivables and the estimation of credit losses associated with financial assets secured by collateral. ASU 2020-03, Codification Improvements to Financial Instruments , was issued in March 2020 to improve and clarify various financial instruments topics, including the CECL standard issued in 2016. The ASU includes seven different issues that describe the areas of improvement and the related amendments to U.S. GAAP, intended to make the standards easier to understand and apply by eliminating inconsistencies and providing clarifications. Certain amendments contained within this update were effective upon issuance and had no material impact on our Financial Statements. The amendments related to ASU 2019-05 and ASU 2016-13 will be adopted in conjunction with ASU 2016-13. ASU 2016-13 and its related ASUs are effective for us beginning January 1, 2023. We are currently evaluating the impact of this guidance on our consolidated financial statements. Reference Rate Reform In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting , which provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. This new guidance can be adopted prospectively no later than December 1, 2022, with early adoption permitted, and is not expected to have a material impact on our consolidated financial statements. Debt In August 2020, the 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 the accounting for convertible instruments by reducing the number of accounting models available for convertible debt instruments. This guidance also eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments and requires the use of the if-converted method. This guidance will be effective for us January 1, 2022 on a full modified or modified retrospective basis, with early adoption permitted. We are currently evaluating the impact of this guidance on our consolidated financial statements. Modification or Exchanges of Freestanding Equity-Classified Written Call Options In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt – Modifications and Extinguishments (Subtopic 470-50), Compensation – Stock Compensation (Topic 718), and Derivatives and Hedging – Contracts in an Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting For Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options, |
BASIS OF PRESENTATION AND SIG_3
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Cash and Cash Equivalents | The following table provides a reconciliation of cash, cash equivalents, and restricted cash to amounts shown in the unaudited Condensed Consolidated Statements of Cash Flows: (in thousands) September 30, 2021 December 31, 2020 Cash and cash equivalents $ 204,510 $ 56,547 Restricted cash — 1,550 Total cash, cash equivalents, and restricted cash $ 204,510 $ 58,097 |
Schedule of Restricted Cash | The following table provides a reconciliation of cash, cash equivalents, and restricted cash to amounts shown in the unaudited Condensed Consolidated Statements of Cash Flows: (in thousands) September 30, 2021 December 31, 2020 Cash and cash equivalents $ 204,510 $ 56,547 Restricted cash — 1,550 Total cash, cash equivalents, and restricted cash $ 204,510 $ 58,097 |
REPORTABLE SEGMENTS AND REVEN_2
REPORTABLE SEGMENTS AND REVENUE (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Segment Reporting [Abstract] | |
Disaggregation of Revenue | The Company disaggregates its revenue from the direct sale of cannabis to customers as retail revenue and wholesale revenue. We have determined that disaggregating revenue into these categories best depicts how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. Three Months Ended Nine Months Ended (in thousands) 2021 2020 2021 2020 Retail revenue $ 63,517 $ 27,938 $ 167,076 $ 65,925 Wholesale revenue 41,526 17,449 111,341 35,349 105,043 45,387 278,417 101,274 Elimination of inter-company revenue (10,661) (3,914) (34,531) (11,825) Total revenue, net $ 94,382 $ 41,473 $ 243,886 $ 89,449 |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of Recognized Identified Assets Acquired | The Company allocated the purchase price of the Hemma acquisition as summarized in the table below. The purchase price allocation reflects various preliminary fair value estimates and analyses, including certain tangible assets acquired and liabilities assumed, the valuation of intangible assets acquired, and goodwill, which are subject to change within the measurement period as preliminary valuations are finalized. (in thousands) Assets acquired (liabilities assumed): Cash $ 44 Accounts receivable 41 Inventory 188 Property and equipment 153 Intangible assets (1) 6,928 Goodwill (2) 3,039 Accounts payable and accrued liabilities (12) Net assets acquired $ 10,381 Consideration transferred: Cash (3) $ 7,212 Settlement of note and working capital loan (4) 3,169 Total consideration $ 10,381 (1) The amortization period for the acquired intangible assets is 10 years. (2) Goodwill is largely attributable to the value we expect to obtain from long-term business growth and buyer-specific synergies. The Company is evaluating whether the goodwill is deductible for tax purposes under the limitations imposed under Internal Revenue Code (“IRC”) Section 280E. See Note 14, “Income Taxes,” for additional information. (3) Total cash consideration includes a $4,712 sellers’ note. See Note 11, “Debt,” for additional information. (4) Includes settlement of $2,500 due under a note receivable and settlement of $669 due under a working capital line of credit. |
Business Acquisition, Pro Forma Information | The following tables summarize the revenue and net income related to MOCA, GCC, Midway, and Hemma included in our consolidated results for the three and nine months ended September 30, 2021. Three Months Ended September 30, 2021 (in thousands) MOCA GCC Midway Hemma Revenue, net $ 11,371 $ 2,577 $ 6,948 $ 126 Net income (loss) 2,075 (252) 350 (204) Nine Months Ended September 30, 2021 (in thousands) MOCA GCC Midway Hemma Revenue, net $ 32,360 $ 7,634 $ 15,526 $ 126 Net income (loss) 3,969 (1,194) (556) (305) The tables below summarize the unaudited pro forma combined revenue and net income (loss) of AWH, MOCA, GCC, and Midway for the three and nine months ended September 30, 2020 as if the respective acquisitions had occurred on January 1, 2019. The results for MOCA and GCC are through their respective acquisition dates, as the results for each were included in our consolidated financial statements after such dates. These results do not reflect the cost of integration activities or benefits from expected revenue enhancements and synergies. Accordingly, the unaudited pro forma information is not necessarily indicative of the results that would have been achieved if the acquisitions had been effective on January 1, 2019. Pro forma financial information is not presented for Hemma, as such results are immaterial to both the current and prior periods. Three Months Ended September 30, 2020 (in thousands) AWH MOCA GCC Midway Pro Forma Adjustments (1) Pro Forma Revenue, net $ 41,473 $ 1,577 $ 1,025 $ 3,199 $ — $ 47,274 Net income (loss) (4,915) 378 11 650 (3,001) (6,877) (1) These adjustments include estimated additional amortization expense of $736 on intangible assets acquired as part of the acquisitions as follows: $81 related to MOCA, $288 related to GCC, and $367 related to Midway. These adjustments also include additional estimated interest expense of $2,557 and an adjustment to exclude $292 of acquisition-related costs incurred during the three months ended September 30, 2020, which are included in “General and administrative expenses” in the accompanying unaudited Condensed Consolidated Statements of Operations. These adjustments are not tax-effected, as the related expenses are not deductible for tax purposes due to the limitations imposed on marijuana dispensaries under IRC Section 280E. Nine Months Ended September 30, 2020 (in thousands) AWH MOCA GCC Midway Pro Forma Adjustments (1) Pro Forma Revenue, net $ 89,449 $ 8,612 $ 3,036 $ 7,840 $ — $ 108,937 Net income (loss) (16,338) 2,398 526 1,556 (9,795) (21,653) (1) These adjustments include estimated additional amortization expense of $2,533 on intangible assets acquired as part of the acquisitions as follows: $569 related to MOCA, $863 related to GCC, and $1,101 related to Midway. These adjustments also include additional estimated interest expense of $7,625 and an adjustment to exclude $363 of acquisition-related costs incurred during the nine months ended September 30, 2020, which are included in “General and administrative expenses” in the accompanying unaudited Condensed Consolidated Statements of Operations. These adjustments are not tax-effected, as |
INVENTORY (Tables)
INVENTORY (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory, Current | The components of inventory are as follows: (in thousands) September 30, 2021 December 31, 2020 Materials and supplies $ 7,806 $ 7,756 Work in process 27,180 13,615 Finished goods 21,021 7,626 Total $ 56,007 $ 28,997 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment and related depreciation consist of the following: (in thousands) September 30, 2021 December 31, 2020 Leasehold improvements $ 91,409 $ 33,931 Construction in progress 50,541 25,139 Furniture, fixtures, and equipment 42,930 28,554 Buildings 41,949 38,561 Land 1,002 894 Property and equipment, gross 227,831 127,079 Less: accumulated depreciation 17,082 6,539 Property and equipment, net $ 210,749 $ 120,540 |
VARIABLE INTEREST ENTITIES (Tab
VARIABLE INTEREST ENTITIES (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Variable Interest Entities | The following tables present the summarized financial information about the Company’s consolidated VIEs which are included in the unaudited Condensed Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020 and unaudited Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2021 and 2020. These entities were determined to be VIEs since the Company possesses the power to direct the significant activities of the VIEs and has the obligation to absorb losses or the right to receive benefits from the VIE. September 30, 2021 December 31, 2020 (in thousands) Ascend Illinois Ascend Illinois Ascend Michigan Current assets $ 104,290 $ 54,787 $ 11,355 Other noncurrent assets 174,480 151,449 58,516 Current liabilities 77,154 62,508 5,553 Noncurrent liabilities 124,813 134,792 37,809 Equity (deficit) attributable to AWH 29,330 9,322 (23,822) Three Months Ended Three Months Ended (in thousands) Ascend Illinois Ascend Illinois Ascend Michigan (2) Revenue, net $ 75,470 $ 34,788 $ 3,022 Net income attributable to non-controlling interests (1) — 501 — Net income (loss) attributable to AWH 9,167 6,177 (4,945) Net income (loss) $ 9,167 $ 6,678 $ (4,945) Nine Months Ended Nine Months Ended (in thousands) Ascend Illinois Ascend Illinois Ascend Michigan (2) Revenue, net $ 198,291 $ 77,757 $ 6,260 Net income attributable to non-controlling interests (1) — 1,598 — Net income (loss) attributable to AWH 25,590 10,564 (13,038) Net income (loss) $ 25,590 $ 12,162 $ (13,038) (1) Effective July 30, 2020, the Company purchased the non-controlling interests of Ascend Illinois; therefore, there are no non-controlling interests as of and for the three and nine months ended September 30, 2021. (2) In December 2020, the sole member of FPAW Michigan 2, Inc. (“Ascend Michigan”) assigned his interests to AWH, thereby making AWH the majority member, retaining 99.9% of the membership interests in Ascend Michigan. Following this assignment, Ascend Michigan is no longer considered a VIE. |
INTANGIBLE ASSETS AND GOODWILL
INTANGIBLE ASSETS AND GOODWILL (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Finite-Lived Intangible Assets | Intangible Assets (in thousands) September 30, 2021 December 31, 2020 Finite-lived intangible assets Licenses and permits (1) $ 45,142 $ 39,888 In-place leases 19,963 19,963 Trade names (1) 380 210 65,485 60,061 Accumulated amortization: Licenses and permits (4,260) (1,080) In-place leases (10,010) (8,362) Trade names (380) (158) (14,650) (9,600) Total intangible assets, net $ 50,835 $ 50,461 |
Schedule of Goodwill | Goodwill (in thousands) Balance, December 31, 2020 $ 22,798 Acquisitions 3,039 Adjustments to purchase price allocation (1) 4,479 Balance, September 30, 2021 $ 30,316 |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Leases [Abstract] | |
Components of Lease Assets and Lease Liabilities | The components of lease assets and lease liabilities and their classification on our unaudited Condensed Consolidated Balance Sheets were as follows: (in thousands) Classification September 30, 2021 December 31, 2020 Lease assets Operating leases Operating lease right-of-use assets $ 104,248 $ 84,642 Lease liabilities Current liabilities Operating leases Operating lease liabilities, current $ 2,369 $ 2,128 Noncurrent liabilities Operating leases Operating lease liabilities, noncurrent 197,460 156,400 Total lease liabilities $ 199,829 $ 158,528 |
Lease Cost | The components of lease costs and classification within the unaudited Condensed Consolidated Statements of Operations were as follows: Three Months Ended Nine Months Ended (in thousands) 2021 2020 2021 2020 Operating lease costs Capitalized to inventory $ 5,040 $ 3,472 $ 14,154 $ 8,025 General and administrative expenses 1,316 1,324 3,906 3,151 Total operating lease costs $ 6,356 $ 4,796 $ 18,060 $ 11,176 The following table presents information on short-term and variable lease costs: Three Months Ended Nine Months Ended (in thousands) 2021 2020 2021 2020 Total short-term and variable lease costs $ 839 $ 784 $ 1,665 $ 1,968 |
Supplemental Cash and Non-Cash Information for Leases | The following table includes supplemental cash and non-cash information related to our leases: Nine Months Ended September 30, (in thousands) 2021 2020 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 16,310 $ 8,672 Lease assets obtained in exchange for new operating lease liabilities $ 41,498 $ 88,690 |
Operating Lease, Liability Maturity Schedule | The amounts of future undiscounted cash flows related to the lease payments over the lease terms and the reconciliation to the present value of the lease liabilities as recorded on our unaudited Condensed Consolidated Balance Sheet as of September 30, 2021 are as follows: (in thousands) Operating Lease Liabilities Remainder of 2021 $ 6,138 2022 26,171 2023 26,981 2024 27,752 2025 28,556 Thereafter 376,406 Total lease payments 492,004 Less: imputed interest 292,175 Present value of lease liabilities $ 199,829 |
Financing Liability, Maturity Schedule | The following table presents cash payments due under transactions that did not qualify for sale-leaseback treatment. The cash payments are allocated between interest and liability reduction, as applicable. The “sold” assets remain within land, buildings, and leasehold improvements, as appropriate, for the duration of the lease and a financing liability equal to the amount of proceeds received is recorded within “Long-term debt, net” on the accompanying unaudited Condensed Consolidated Balance Sheets. (in thousands) Remainder of 2021 2022 2023 2024 2025 Thereafter Total Cash payments due under financing liabilities $ 514 $ 2,082 $ 2,143 $ 2,206 $ 2,271 $ 9,149 $ 18,365 |
DEBT (Tables)
DEBT (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of Debt Instruments | (in thousands) September 30, 2021 December 31, 2020 2021 Credit Facility (1) $ 210,000 $ — Sellers’ Notes (2) 37,039 45,782 Finance liabilities 17,129 17,129 Capital Construction Loan (3) — 11,624 AWH Convertible Promissory Notes (4) — 75,484 July 2019 Notes (3) — 10,000 Ann Arbor Note (3) — 5,250 October 2020 Credit Facility (3) — 25,260 NJ Term Loan (3) — 20,000 NJ Real Estate Loan (3) — 4,500 Total debt $ 264,168 $ 215,029 Current portion of debt $ 25,120 $ 60,357 Less: unamortized deferred financing costs 47 1,027 Current portion of debt, net $ 25,073 $ 59,330 Long-term debt $ 239,048 $ 154,672 Less: unamortized deferred financing costs 8,550 2,395 Long-term debt, net $ 230,498 $ 152,277 (1) On August 27, 2021, the Company entered into a credit agreement with a group of lenders (the “2021 Credit Agreement”) that provides for a term loan of $210,000 (the “2021 Credit Facility”), which was borrowed in full. The 2021 Credit Facility matures on August 27, 2025 and does not require scheduled principal amortization payments. Borrowings under the 2021 Credit Facility bear interest at a rate of 9.5% per annum, payable quarterly and, as to any portion of the term loan that is prepaid, on the date of prepayment. We incurred total financing costs of $8,731, that are being amortized to interest expense over the term of 2021 Credit Facility using the straight-line method which approximates the interest rate method. Mandatory prepayments are required from the proceeds of (i) indebtedness that is not permitted by the 2021 Credit Agreement, and (ii) asset sales and casualty events, subject to customary reinvestment rights. The Company may prepay the 2021 Credit Facility at any time, subject to (a) a customary make-whole payment if paid prior to February 27, 2023, (b) a prepayment premium equal to 4.75% of the principal amount prepaid if paid after February 27, 2023 but prior February 27, 2024, and (c) a prepayment premium of 2.375% if paid after February 27, 2024 but prior to February 27, 2025. No prepayment premium is required for prepayment on or after February 27, 2025. Once repaid, amounts borrowed under the 2021 Credit Facility may not be re-borrowed. The 2021 Credit Agreement permits the company to request an extension of the maturity date for 364 days, in the lenders’ discretion, and to increase the 2021 Credit Facility up to $275,000 if the then-existing lenders (or other lenders) agree to provide such additional term loans. The Company is required to comply with two financial covenants under the 2021 Credit Agreement, commencing with the quarter ending December 31, 2021. The Company may not permit its liquidity (defined as unrestricted cash and cash equivalents pledged under the 2021 Credit Facility plus any future revolving credit availability) to be below $20,000 as of the last day of any fiscal quarter. Additionally, the Company may not permit the ratio of Consolidated EBITDA (as defined in the 2021 Credit Agreement) to consolidated cash interest expense for any period of four consecutive fiscal quarters to be less than 2.00:1.00 for the period ending December 31, 2021, less than 2.25:1.00 for the period ending March 31, 2022, and less than 2.50:1.00 for the period ending June 30, 2022 and thereafter. The Company has a customary equity cure right for each of these financial covenants. The 2021 Credit Agreement requires the Company to make certain representations and warranties and to comply with customary covenants, including restrictions on the payment of dividends, repurchase of stock, incurrence of indebtedness, dispositions, and acquisitions. The 2021 Credit Agreement also contains customary events of default including: non-payment of principal or interest; violations of covenants; bankruptcy; change of control; cross defaults to other debt; and material judgments. The 2021 Credit Facility is guaranteed by all of the Company’s subsidiaries and is secured by substantially all of the assets of the Company and its subsidiaries. (2) Sellers’ Notes consist of amounts owed for acquisitions or other purchases. A total of $11,174 was paid to the former owners of MOCA in January 2021, which amount is included in “Current portion of debt, net” on the unaudited Condensed Consolidated Balance Sheet at December 31, 2020. A total of $25,200 remains due to the former owners of Midway, of which $17,200 is included in “Current portion of debt, net” on the unaudited Condensed Consolidated Balance Sheet at September 30, 2021 and December 31, 2020 and $8,000 is included in “Long-term debt, net” on the unaudited Condensed Consolidated Balance Sheet at September 30, 2021 and December 31, 2020. Additionally, at September 30, 2021, $7,127 remains due under the purchase of a non-controlling interest, of which $3,208 and $3,919 is included in “Current portion of debt, net” and “Long-term debt, net” respectively on the unaudited Condensed Consolidated Balance Sheet. At December 31, 2020, $3,140 and $6,268 is included in “Current portion of debt, net” and “Long-term debt, net” respectively. As discussed in Note 4, “Acquisitions,” the Company issued a $4,712 sellers’ note in connection with the Hemma acquisition. The note accrues interest at a rate of 12% per annum. The outstanding principal plus accrued interest is due on December 5, 2021, but may be prepaid without premium or penalty. (3) Borrowings under the 2021 Credit Facility were used to prepay total principal of $75,624 that was outstanding under the Capital Construction Loan, July 2019 Notes, Ann Arbor Note, October 2020 Credit Facility, NJ Term Loan, and NJ Real Estate Loan, which prepayments were considered debt extinguishments. We recognized a total net loss on extinguishment of $6,637, which is recorded within “Interest expense” on the unaudited Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2021. The net loss on extinguishment includes prepayment penalties on certain loans, make-whole interest payments on certain loans, the write-off of the remaining unamortized deferred financing costs on certain loans, and a gain on settlement of $290 related to forgiveness of principal and interest under the Ann Arbor Note. The net loss on extinguishment also includes a true-up of $2,656 related to the additional maturity payment due under the October 2020 Credit Facility. The lenders elected to receive the $3,750 additional maturity payment in equity and received 1,986 shares in accordance with the settlement terms of the original agreement. |
Schedule of Maturities of Debt | At September 30, 2021, the following cash payments are required under our debt arrangements: (in thousands) Remainder of 2021 2022 2023 2024 2025 Total Term note maturities $ — $ — $ — $ — $ 210,000 $ 210,000 Sellers’ notes (1) 22,766 11,143 3,143 — — 37,052 (1) Certain cash payments include an interest accretion component. |
Schedule of Interest Expense | Interest expense during 2021 and 2020 consisted of the following: Three Months Ended Nine Months Ended (in thousands) 2021 2020 2021 2020 Cash interest $ 4,623 $ 936 $ 11,948 $ 4,004 Accretion 610 1,330 9,148 2,993 Loss on extinguishment of debt (1) 6,637 — 6,637 — Non-cash interest related to beneficial conversion feature (2) — — 27,361 — Interest on financing liability (3) 506 361 1,507 1,033 Total $ 12,376 $ 2,627 $ 56,601 $ 8,030 (1) Includes $1,656 of pre-payment fees and additional cash interest payments and $4,981 of non-cash components, including the write-off of unamortized deferred financing costs. (2) See Note 12, “Stockholders’ Equity,” for additional details. (3) Interest on financing liability related to failed sale leasebacks. See Note 10, “Leases,” for additional details. |
STOCKHOLDERS_ EQUITY (Tables)
STOCKHOLDERS’ EQUITY (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Equity [Abstract] | |
Schedule of Common Stock Outstanding | The following table summarizes the total shares of Class A common stock and Class B common stock outstanding as of September 30, 2021: (in thousands) September 30, 2021 Shares of Class A common stock 170,945 Shares of Class B common stock 65 Total 171,010 |
Schedule of Member Units | The following table summarizes the historical units outstanding as of December 31, 2020: (in thousands) December 31, 2020 Common Units 48,047 Real Estate Preferred Units 22,801 Series Seed Preferred Units 14,252 Series Seed+ Preferred Units 20,982 Total 106,082 |
EQUITY-BASED COMPENSATION EXP_2
EQUITY-BASED COMPENSATION EXPENSE (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Unvested Restricted Stock Units Roll Forward | The following table summarizes the restricted common shares activity during the nine months ended September 30, 2021: Restricted Common Shares Unvested, December 31, 2020 7,280 Granted 50 Vested (5,510) Forfeited (124) Unvested, September 30, 2021 1,696 Number of Shares (in thousands) Weighted-Average Grant Date Fair Value per Share Unvested, December 31, 2020 — $ — Granted 5,662 10.88 Vested (49) 11.00 Forfeited (13) 11.00 Unvested, September 30, 2021 5,600 $ 10.88 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Income Tax Disclosure [Abstract] | |
Schedule of Effective Income Tax Rate Reconciliation | Three Months Ended Nine Months Ended ($ in thousands) 2021 2020 2021 2020 (Loss) income before income taxes $ (719) $ 728 $ (72,868) $ (4,626) Income tax expense 12,307 5,643 33,278 11,712 Effective tax rate (1,711.7) % 775.1 % (45.7) % (253.2) % Gross profit $ 40,954 $ 18,352 $ 105,137 $ 38,022 Effective tax rate on gross profit 30.1 % 30.7 % 31.7 % 30.8 % |
SUPPLEMENTAL INFORMATION (Table
SUPPLEMENTAL INFORMATION (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Other Current Assets | The following table presents supplemental information regarding our other current assets: (in thousands) September 30, 2021 December 31, 2020 Tenant improvement allowance $ 9,182 $ 24,349 Deposits and other receivables 5,041 4,021 Prepaid expenses 3,872 2,311 Construction deposits 2,551 712 Other 2,652 1,205 Total $ 23,298 $ 32,598 |
Schedule of Accounts Payable and Accrued Liabilities | The following table presents supplemental information regarding our accounts payable and accrued liabilities: (in thousands) September 30, 2021 December 31, 2020 Accounts payable $ 10,885 $ 7,363 Fixed asset purchases 7,656 11,572 Litigation settlement 5,480 — Accrued payroll and related expenses 3,324 2,762 Accrued interest 416 7,723 Other 2,634 1,804 Total $ 30,395 $ 31,224 |
Schedule of General and Administrative Expenses | The following table presents supplemental information regarding our general and administrative expenses: Three Months Ended Nine Months Ended (in thousands) 2021 2020 2021 2020 Compensation $ 13,434 $ 4,520 $ 37,140 $ 9,794 Rent and utilities 6,443 4,166 16,089 9,599 Professional services 3,158 2,693 12,945 5,599 Depreciation and amortization 2,520 2,299 7,409 6,219 Insurance 1,127 389 3,165 958 Marketing 783 511 2,188 1,136 Loss on sale of assets 649 — 649 286 Other 1,227 422 5,514 1,033 Total $ 29,341 $ 15,000 $ 85,099 $ 34,624 |
THE COMPANY AND NATURE OF OPE_2
THE COMPANY AND NATURE OF OPERATIONS (Details) $ / shares in Units, $ in Thousands | May 07, 2021shares | May 04, 2021USD ($)$ / sharesshares | Apr. 22, 2021vote | Sep. 30, 2021vote$ / sharesshares | Dec. 31, 2020shares |
Subsidiary, Sale of Stock [Line Items] | |||||
Stock split, conversion ratio | 2 | ||||
Preferred stock, shares authorized (in shares) | 10,000,000 | 0 | |||
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.001 | ||||
Class A common stock | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Common stock, shares authorized (in shares) | 750,000,000 | 0 | |||
Common stock, par value (in dollars per share) | $ / shares | $ 0.001 | ||||
Number of votes per common share | vote | 1 | 1 | |||
Shares issued upon conversion of preferred units (in shares) | 113,301,000 | ||||
Shares issued upon conversion of convertible notes (in shares) | 37,388,000 | ||||
Class A common stock | Real Estate Preferred Units, Beneficial Conversion Feature | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Shares issued in conversion (in shares) | 3,420,000 | ||||
Class B common stock | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Common stock, shares authorized (in shares) | 100,000 | 0 | |||
Common stock, par value (in dollars per share) | $ / shares | $ 0.001 | ||||
Number of votes per common share | vote | 1,000 | ||||
Shares issued upon conversion of preferred units (in shares) | 65,000 | ||||
IPO | Class A common stock | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Shares issued and sold (in shares) | 10,000,000 | ||||
Shares issued and sold, price per share (in dollars per share) | $ / shares | $ 8 | ||||
Shares issued and sold, net proceeds | $ | $ 86,065 | ||||
Over-Allotment Option | Class A common stock | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Shares issued and sold (in shares) | 1,500,000 |
BASIS OF PRESENTATION AND SIG_4
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) shares in Thousands, $ in Thousands | 9 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Cash and cash equivalents | $ 204,510 | $ 56,547 | ||
Restricted cash | 0 | 1,550 | ||
Total cash, cash equivalents, and restricted cash | $ 204,510 | $ 25,349 | $ 58,097 | $ 12,805 |
Anti-dilutive units excluded from the calculation of earnings per share (in shares) | 10,827 | 30,545 |
REPORTABLE SEGMENTS AND REVEN_3
REPORTABLE SEGMENTS AND REVENUE (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2021USD ($)segment | Sep. 30, 2020USD ($) | Dec. 31, 2020USD ($) | |
Segment Reporting [Abstract] | |||||
Number of operating segments | segment | 1 | ||||
Number of reportable segments | segment | 1 | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Revenue, net | $ 94,382 | $ 41,473 | $ 243,886 | $ 89,449 | |
Customer loyalty program liability | 949 | 949 | $ 219 | ||
Operating Segments | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Revenue, net | 105,043 | 45,387 | 278,417 | 101,274 | |
Operating Segments | Retail revenue | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Revenue, net | 63,517 | 27,938 | 167,076 | 65,925 | |
Operating Segments | Wholesale revenue | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Revenue, net | 41,526 | 17,449 | 111,341 | 35,349 | |
Intersegment Eliminations | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Revenue, net | $ (10,661) | $ (3,914) | $ (34,531) | $ (11,825) |
ACQUISITIONS - Narrative (Detai
ACQUISITIONS - Narrative (Details) - USD ($) $ in Thousands | May 05, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 |
Hemma | ||||||
Business Acquisition [Line Items] | ||||||
Consideration transferred | $ 10,381 | |||||
Intangible assets | $ 6,928 | |||||
Revenue, net | $ 126 | $ 126 | ||||
Net income (loss) | (204) | (305) | ||||
MOCA | ||||||
Business Acquisition [Line Items] | ||||||
Adjustment to goodwill | 2,975 | 2,975 | ||||
Revenue, net | 11,371 | $ 4,103 | 32,360 | $ 4,103 | ||
Net income (loss) | 2,075 | $ 314 | 3,969 | $ 314 | ||
MOCA | Licenses and permits | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets | 9,755 | 9,755 | $ 10,661 | |||
GCC | ||||||
Business Acquisition [Line Items] | ||||||
Revenue, net | 2,577 | 7,634 | ||||
Net income (loss) | (252) | (1,194) | ||||
GCC | Licenses and permits | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets | 11,501 | 11,501 | 11,845 | |||
Midway | ||||||
Business Acquisition [Line Items] | ||||||
Revenue, net | 6,948 | 15,526 | ||||
Net income (loss) | 350 | (556) | ||||
Midway | Licenses and permits | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets | 14,684 | 14,684 | 15,108 | |||
Midway | Trade names | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets | $ 180 | $ 180 | $ 10 |
ACQUISITIONS - Schedule of Net
ACQUISITIONS - Schedule of Net Assets Acquired (Details) - USD ($) $ in Thousands | May 05, 2021 | Sep. 30, 2021 | Dec. 31, 2020 |
Assets acquired (liabilities assumed): | |||
Goodwill | $ 30,316 | $ 22,798 | |
Hemma | |||
Assets acquired (liabilities assumed): | |||
Cash | $ 44 | ||
Accounts receivable | 41 | ||
Inventory | 188 | ||
Property and equipment | 153 | ||
Intangible assets | 6,928 | ||
Goodwill | 3,039 | ||
Accounts payable and accrued liabilities | (12) | ||
Net assets acquired | 10,381 | ||
Consideration transferred: | |||
Cash | 7,212 | ||
Settlement of note and working capital loan | 3,169 | ||
Total consideration | $ 10,381 | ||
Acquired assets, amortization period | 10 years | ||
Hemma | Notes Receivable | |||
Consideration transferred: | |||
Settlement of note and working capital loan | $ 2,500 | ||
Hemma | Working Capital Loan | |||
Consideration transferred: | |||
Settlement of note and working capital loan | 669 | ||
Hemma | Sellers' Notes | |||
Consideration transferred: | |||
Sellers' note | $ 4,712 |
ACQUISITIONS - Schedule of Reve
ACQUISITIONS - Schedule of Revenue and Income from Acquired Businesses (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
MOCA | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue, net | $ 11,371 | $ 4,103 | $ 32,360 | $ 4,103 |
Net income (loss) | 2,075 | $ 314 | 3,969 | $ 314 |
GCC | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue, net | 2,577 | 7,634 | ||
Net income (loss) | (252) | (1,194) | ||
Midway | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue, net | 6,948 | 15,526 | ||
Net income (loss) | 350 | (556) | ||
Hemma | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue, net | 126 | 126 | ||
Net income (loss) | $ (204) | $ (305) |
ACQUISITIONS - Pro Forma Inform
ACQUISITIONS - Pro Forma Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Business Acquisition [Line Items] | ||||||||
Revenue, net | $ 94,382 | $ 41,473 | $ 243,886 | $ 89,449 | ||||
Net income (loss) | $ (13,026) | $ (44,897) | $ (48,223) | (4,915) | $ (4,305) | $ (7,118) | $ (106,146) | (16,338) |
Revenue, pro forma adjustments | 0 | 0 | ||||||
Net income (loss) pro forma adjustments | (3,001) | (9,795) | ||||||
Pro forma revenue | 47,274 | 108,937 | ||||||
Pro forma net income (loss) | (6,877) | (21,653) | ||||||
Pro forma adjustment, additional intangible asset amortization expense | 736 | 2,533 | ||||||
Pro forma adjustment, additional interest expense for sellers' notes | 2,557 | 7,625 | ||||||
Acquisition-related costs | 292 | 363 | ||||||
MOCA | ||||||||
Business Acquisition [Line Items] | ||||||||
Revenue, net | 1,577 | 8,612 | ||||||
Net income (loss) | 378 | 2,398 | ||||||
Pro forma adjustment, additional intangible asset amortization expense | 81 | 569 | ||||||
GCC | ||||||||
Business Acquisition [Line Items] | ||||||||
Revenue, net | 1,025 | 3,036 | ||||||
Net income (loss) | 11 | 526 | ||||||
Pro forma adjustment, additional intangible asset amortization expense | 288 | 863 | ||||||
Midway | ||||||||
Business Acquisition [Line Items] | ||||||||
Revenue, net | 3,199 | 7,840 | ||||||
Net income (loss) | 650 | 1,556 | ||||||
Pro forma adjustment, additional intangible asset amortization expense | $ 367 | $ 1,101 |
INVENTORY (Details)
INVENTORY (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Inventory Disclosure [Abstract] | |||||
Materials and supplies | $ 7,806 | $ 7,806 | $ 7,756 | ||
Work in process | 27,180 | 27,180 | 13,615 | ||
Finished goods | 21,021 | 21,021 | 7,626 | ||
Total | 56,007 | 56,007 | 28,997 | ||
Compensation costs capitalized during the period | 10,860 | $ 3,903 | 25,381 | $ 10,502 | |
Capitalized compensation costs included in inventory | $ 8,607 | $ 8,607 | $ 5,909 |
NOTES RECEIVABLE (Details)
NOTES RECEIVABLE (Details) - USD ($) | May 05, 2021 | Feb. 25, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Impairment of notes receivable | $ 0 | $ 0 | |||
Hemma | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Settlement of note and working capital loan | $ 3,169,000 | ||||
MedMen NY, Inc. | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Working capital line of credit, maximum borrowing amount | $ 10,000,000 | ||||
Working capital line of credit, maximum borrowing amount if amended | $ 17,500,000 | ||||
Period due following investment agreement termination | 3 days | ||||
Working Capital Loan | Hemma | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Settlement of note and working capital loan | $ 669,000 | ||||
Working Capital Loan | MedMen NY, Inc. | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Notes and working capital receivables | 2,172,000 | ||||
Promissory Notes Receivable | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Promissory note receivable | 4,375,000 | $ 4,473,000 | |||
Promissory note receivable, current | 155,000 | 151,000 | |||
Promissory note receivable, noncurrent | $ 4,220,000 | $ 4,322,000 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | $ 227,831 | $ 227,831 | $ 127,079 | ||
Less: accumulated depreciation | 17,082 | 17,082 | 6,539 | ||
Property and equipment, net | 210,749 | 210,749 | 120,540 | ||
Depreciation | 4,100 | $ 1,324 | 10,560 | $ 3,361 | |
Depreciation capitalized during the period | 2,851 | $ 1,106 | 7,185 | $ 2,948 | |
Inventory, depreciation costs | 2,226 | 2,226 | 602 | ||
Loss on sale of property | 664 | 664 | |||
Accumulated depreciation written off | 17 | 17 | |||
Leasehold improvements | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 91,409 | 91,409 | 33,931 | ||
Construction in progress | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 50,541 | 50,541 | 25,139 | ||
Furniture, fixtures, and equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 42,930 | 42,930 | 28,554 | ||
Buildings | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 41,949 | 41,949 | 38,561 | ||
Land | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | $ 1,002 | $ 1,002 | $ 894 |
VARIABLE INTEREST ENTITIES (Det
VARIABLE INTEREST ENTITIES (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||||
Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Variable Interest Entity [Line Items] | |||||||||
Current assets | $ 299,666 | $ 299,666 | $ 134,178 | ||||||
Other noncurrent assets | 19,760 | 19,760 | 12,734 | ||||||
Current liabilities | 104,888 | 104,888 | 115,285 | ||||||
Equity (deficit) attributable to AWH | 184,037 | 184,037 | $ 3,786 | ||||||
Revenue, net | 94,382 | $ 41,473 | 243,886 | $ 89,449 | |||||
Net income attributable to non-controlling interests | 0 | 501 | 0 | 1,598 | |||||
Net income (loss) attributable to AWH | (13,026) | (5,416) | (106,146) | (17,936) | |||||
Net income (loss) | (13,026) | $ (44,897) | $ (48,223) | (4,915) | $ (4,305) | $ (7,118) | (106,146) | (16,338) | |
Ascend Michigan | |||||||||
Variable Interest Entity [Line Items] | |||||||||
Ownership interest percentage | 99.90% | ||||||||
Variable Interest Entity, Primary Beneficiary | Ascend Michigan | |||||||||
Variable Interest Entity [Line Items] | |||||||||
Equity (deficit) attributable to AWH | $ (23,822) | ||||||||
Variable Interest Entity, Primary Beneficiary | Ascend Illinois | |||||||||
Variable Interest Entity [Line Items] | |||||||||
Current assets | 104,290 | 104,290 | 54,787 | ||||||
Other noncurrent assets | 174,480 | 174,480 | 151,449 | ||||||
Current liabilities | 77,154 | 77,154 | 62,508 | ||||||
Noncurrent liabilities | 124,813 | 124,813 | 134,792 | ||||||
Equity (deficit) attributable to AWH | 29,330 | 29,330 | 9,322 | ||||||
Revenue, net | 75,470 | 34,788 | 198,291 | 77,757 | |||||
Net income attributable to non-controlling interests | 0 | 501 | 0 | 1,598 | |||||
Net income (loss) attributable to AWH | 9,167 | 6,177 | 25,590 | 10,564 | |||||
Net income (loss) | $ 9,167 | 6,678 | $ 25,590 | 12,162 | |||||
Variable Interest Entity, Primary Beneficiary | Ascend Michigan | |||||||||
Variable Interest Entity [Line Items] | |||||||||
Current assets | 11,355 | ||||||||
Other noncurrent assets | 58,516 | ||||||||
Current liabilities | 5,553 | ||||||||
Noncurrent liabilities | $ 37,809 | ||||||||
Revenue, net | 3,022 | 6,260 | |||||||
Net income attributable to non-controlling interests | 0 | 0 | |||||||
Net income (loss) attributable to AWH | (4,945) | (13,038) | |||||||
Net income (loss) | $ (4,945) | $ (13,038) |
INTANGIBLE ASSETS AND GOODWIL_2
INTANGIBLE ASSETS AND GOODWILL - Intangible Assets (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Finite-lived intangible assets | $ 65,485,000 | $ 65,485,000 | $ 60,061,000 | ||
Accumulated amortization | (14,650,000) | (14,650,000) | (9,600,000) | ||
Total intangible assets, net | 50,835,000 | 50,835,000 | 50,461,000 | ||
Amortization expense | 1,678,000 | $ 2,084,000 | 5,050,000 | $ 5,830,000 | |
Amortization expense capitalized to inventory during the period | 407,000 | $ 3,000 | 1,016,000 | 24,000 | |
Inventory, capitalized amortization | 446,000 | 446,000 | 564,000 | ||
Intangible asset impairment | 0 | $ 0 | |||
Licenses and permits | |||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Finite-lived intangible assets | 45,142,000 | 45,142,000 | 39,888,000 | ||
Accumulated amortization | (4,260,000) | (4,260,000) | (1,080,000) | ||
Licenses and permits | Hemma | |||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Finite-lived intangible assets | 6,928,000 | 6,928,000 | |||
In-place leases | |||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Finite-lived intangible assets | 19,963,000 | 19,963,000 | 19,963,000 | ||
Accumulated amortization | (10,010,000) | (10,010,000) | (8,362,000) | ||
Trade names | |||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Finite-lived intangible assets | 380,000 | 380,000 | 210,000 | ||
Accumulated amortization | $ (380,000) | $ (380,000) | $ (158,000) |
INTANGIBLE ASSETS AND GOODWIL_3
INTANGIBLE ASSETS AND GOODWILL - Goodwill (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2021USD ($) | |
Goodwill [Roll Forward] | |
Balance, December 31, 2020 | $ 22,798 |
Acquisitions | 3,039 |
Adjustments to purchase price allocation(1) | 4,479 |
Balance, September 30, 2021 | $ 30,316 |
LEASES - Narrative (Details)
LEASES - Narrative (Details) - USD ($) $ in Thousands | Sep. 15, 2021 | Sep. 30, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | Jun. 29, 2021 | Dec. 31, 2020 |
Lessee, Lease, Description [Line Items] | ||||||
Capitalized lease costs | $ 3,878 | $ 3,878 | $ 4,913 | |||
Gain termination of lease | $ 15 | $ 15 | ||||
Weighted average remaining lease term | 16 years | 16 years | 17 years 3 months 18 days | |||
Weighted average discount rate | 12.70% | 12.70% | 13.10% | |||
Operating lease not yet commenced, right-of-use asset | $ 500 | $ 500 | ||||
Operating lease not yet commenced, liability | $ 500 | 500 | ||||
Lease assets obtained in exchange for new operating lease liabilities | 41,498 | $ 88,690 | ||||
Increase in lease liability | $ 676 | $ 1,999 | ||||
Commercial property sale agreement price | $ 350 | |||||
Barry, IL | ||||||
Lessee, Lease, Description [Line Items] | ||||||
Tenant imprvement allowance | $ 52,000 | |||||
Lease assets obtained in exchange for new operating lease liabilities | 2,750 | |||||
Increase in tenant improvement allowance | 20,000 | |||||
Increase in lease liability | $ 22,750 | |||||
Minimum | ||||||
Lessee, Lease, Description [Line Items] | ||||||
Operating lease term | 1 year | 1 year | ||||
Maximum | ||||||
Lessee, Lease, Description [Line Items] | ||||||
Operating lease term | 20 years | 20 years |
LEASES - Supplemental Balance S
LEASES - Supplemental Balance Sheet Information (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Lease assets | ||
Operating lease right-of-use assets | $ 104,248 | $ 84,642 |
Lease liabilities | ||
Operating lease liabilities, current | 2,369 | 2,128 |
Operating lease liabilities, noncurrent | 197,460 | 156,400 |
Total lease liabilities | $ 199,829 | $ 158,528 |
LEASES - Lease Cost (Details)
LEASES - Lease Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Lessee, Lease, Description [Line Items] | ||||
Operating lease costs | $ 6,356 | $ 4,796 | $ 18,060 | $ 11,176 |
General and administrative expenses | ||||
Lessee, Lease, Description [Line Items] | ||||
Operating lease costs | 1,316 | 1,324 | 3,906 | 3,151 |
Capitalized to inventory | ||||
Lessee, Lease, Description [Line Items] | ||||
Operating lease costs | $ 5,040 | $ 3,472 | $ 14,154 | $ 8,025 |
LEASES - Short-term and Variabl
LEASES - Short-term and Variable Lease Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Leases [Abstract] | ||||
Total short-term and variable lease costs | $ 839 | $ 784 | $ 1,665 | $ 1,968 |
LEASES - Supplemental Cash Flow
LEASES - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Leases [Abstract] | ||
Operating cash flows from operating leases | $ 16,310 | $ 8,672 |
Increase in right-of-use asset | $ 41,498 | $ 88,690 |
LEASES - Lease Liability Maturi
LEASES - Lease Liability Maturity (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Leases [Abstract] | ||
Remainder of 2021 | $ 6,138 | |
2022 | 26,171 | |
2023 | 26,981 | |
2024 | 27,752 | |
2025 | 28,556 | |
Thereafter | 376,406 | |
Total lease payments | 492,004 | |
Less: imputed interest | 292,175 | |
Present value of lease liabilities | $ 199,829 | $ 158,528 |
LEASES - Financing Liability Ma
LEASES - Financing Liability Maturity (Details) $ in Thousands | Sep. 30, 2021USD ($) |
Leases [Abstract] | |
Remainder of 2021 | $ 514 |
2022 | 2,082 |
2023 | 2,143 |
2024 | 2,206 |
2025 | 2,271 |
Thereafter | 9,149 |
Total | $ 18,365 |
DEBT - Components of Debt (Deta
DEBT - Components of Debt (Details) $ / shares in Units, shares in Thousands | Aug. 27, 2021USD ($)quartercovenant | May 04, 2021$ / sharesshares | Apr. 22, 2021USD ($)$ / shares | Jan. 31, 2021USD ($) | Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2021USD ($)shares | Sep. 30, 2020USD ($) | May 05, 2021USD ($) | Dec. 31, 2020USD ($) |
Debt Instrument [Line Items] | ||||||||||
Total debt | $ 264,168,000 | $ 264,168,000 | $ 215,029,000 | |||||||
Current portion of debt | 25,120,000 | 25,120,000 | 60,357,000 | |||||||
Less: unamortized deferred financing costs | 47,000 | 47,000 | 1,027,000 | |||||||
Current portion of debt, net | 25,073,000 | 25,073,000 | 59,330,000 | |||||||
Long-term debt | 239,048,000 | 239,048,000 | 154,672,000 | |||||||
Less: unamortized deferred financing costs | 8,550,000 | 8,550,000 | 2,395,000 | |||||||
Long-term debt, net | 230,498,000 | 230,498,000 | 152,277,000 | |||||||
Repayments of debt | 78,413,000 | $ 18,806,000 | ||||||||
Loss on extinguishment of debt | (6,637,000) | $ 0 | (6,637,000) | $ 0 | ||||||
Class A common stock | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Shares issued upon conversion of convertible notes (in shares) | shares | 37,388 | |||||||||
2021 Credit Facility | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Total debt | 210,000,000 | 210,000,000 | 0 | |||||||
Debt instrument, amount | $ 210,000,000 | |||||||||
Interest rate | 9.50% | |||||||||
Deferred finance costs gross | $ 8,731,000 | |||||||||
Extension term | 364 days | |||||||||
Maximum borrowing capacity if amended | $ 275,000,000 | |||||||||
Number of financial covenants | covenant | 2 | |||||||||
Covenant, minimum liquidity at fiscal quarter end | $ 20,000,000 | |||||||||
Number of consecutive quarters used for covenant measurement | quarter | 4 | |||||||||
2021 Credit Facility | Debt Instrument, Covenant, Period One | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Covenant, maximum EBITDA to cash interest expense ratio | 2 | |||||||||
2021 Credit Facility | Debt Instrument, Covenant, Period Two | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Covenant, maximum EBITDA to cash interest expense ratio | 2.25 | |||||||||
2021 Credit Facility | Debt Instrument, Covenant, Period Three | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Covenant, maximum EBITDA to cash interest expense ratio | 2.50 | |||||||||
2021 Credit Facility | Debt Instrument, Redemption, Period One | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Prepayment penalty, percent | 4750.00% | |||||||||
2021 Credit Facility | Debt Instrument, Redemption, Period Two | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Prepayment penalty, percent | 2375.00% | |||||||||
2021 Credit Facility | Debt Instrument, Redemption, Period Three | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Prepayment penalty, percent | 0.00% | |||||||||
Sellers' Notes | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Total debt | 37,039,000 | 37,039,000 | 45,782,000 | |||||||
Long-term debt, net | 37,052,000 | 37,052,000 | ||||||||
Sellers' Notes | MOCA | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Repayments of debt | $ 11,174,000 | |||||||||
Sellers' Notes | Midway | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Total debt | 25,200,000 | 25,200,000 | 25,200,000 | |||||||
Current portion of debt, net | 17,200,000 | 17,200,000 | 17,200,000 | |||||||
Long-term debt, net | 8,000,000 | 8,000,000 | 8,000,000 | |||||||
Sellers' Notes | Noncontrolling Interest Acquired | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Current portion of debt, net | 3,208,000 | 3,208,000 | 3,140,000 | |||||||
Long-term debt, net | 3,919,000 | 3,919,000 | 6,268,000 | |||||||
Long-term debt, net | 7,127,000 | 7,127,000 | ||||||||
Sellers' Notes | Hemma | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Interest rate | 12.00% | |||||||||
Sellers' note | $ 4,712,000 | |||||||||
Finance liabilities | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Total debt | 17,129,000 | 17,129,000 | 17,129,000 | |||||||
Capital Construction Loan | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Total debt | 0 | 0 | 11,624,000 | |||||||
AWH Convertible Promissory Notes | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Total debt | 0 | 0 | 75,484,000 | |||||||
Shares issued upon conversion of convertible notes (in shares) | shares | 28,478 | |||||||||
Convertible debt, discount if offering occurs within 12 months of closing date | 20.00% | |||||||||
Convertible debt, discount if offering occurs after 12 months of closing date | 25.00% | |||||||||
Company valuation | $ 295,900,000 | |||||||||
Company valuation per share (in dollars per share) | $ / shares | $ 2.96 | |||||||||
Convertible promissory notes, period outstanding under which twelve months interest is due at conversion | 12 months | |||||||||
AWH Convertible Promissory Notes | Affiliated Entity | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Total debt | $ 1,000,000 | |||||||||
July 2019 Notes | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Total debt | 0 | 0 | 10,000,000 | |||||||
Ann Arbor Note | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Total debt | 0 | 0 | 5,250,000 | |||||||
Loss on extinguishment of debt | 290,000 | |||||||||
October 2020 Credit Facility | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Total debt | 0 | 0 | 25,260,000 | |||||||
Extinguishment of debt net of tax | 2,656,000 | |||||||||
NJ Term Loan | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Total debt | 0 | 0 | 20,000,000 | |||||||
NJ Real Estate Loan | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Total debt | $ 0 | 0 | $ 4,500,000 | |||||||
Extinguished Debt | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Repayments of debt | 75,624,000 | |||||||||
2020 Credit Agreement | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument converted to shares, amount | $ 3,750,000 | |||||||||
Shares issued upon conversion of convertible notes (in shares) | shares | 1,986 | |||||||||
2019 AWH Convertible Notes | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Conversion price (in dollars per share) | $ / shares | $ 2.96 | |||||||||
2019 AWH Convertible Notes | Class A common stock | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Conversion price (in dollars per share) | $ / shares | $ 2.96 |
DEBT - Narrative (Details)
DEBT - Narrative (Details) - USD ($) $ / shares in Units, shares in Thousands | May 04, 2021 | Jan. 31, 2021 | Sep. 30, 2021 | Sep. 30, 2020 |
Debt Instrument [Line Items] | ||||
Repayments of debt | $ 78,413,000 | $ 18,806,000 | ||
Class A common stock | ||||
Debt Instrument [Line Items] | ||||
Shares issued upon conversion of convertible notes (in shares) | 37,388 | |||
2021 AWH Convertible Promissory Notes | ||||
Debt Instrument [Line Items] | ||||
Notes issued | $ 49,500,000 | |||
Convertible debt, discount if IPO occurs within 12 months of note issuance | 20.00% | |||
Convertible debt, discount if IPO occurs after 12 months of debt issuance but before debt maturity | 25.00% | |||
Convertible promissory notes, period outstanding under which twelve months interest is due at conversion | 12 months | |||
2021 AWH Convertible Promissory Notes | Class A common stock | ||||
Debt Instrument [Line Items] | ||||
Shares issued upon conversion of convertible notes (in shares) | 8,910 | |||
Conversion price (in dollars per share) | $ 6 | |||
2021 AWH Convertible Promissory Notes | Interest Rate Period One | ||||
Debt Instrument [Line Items] | ||||
Interest rate | 8.00% | |||
2021 AWH Convertible Promissory Notes | Interest Rate Period Two | ||||
Debt Instrument [Line Items] | ||||
Interest rate | 10.00% | |||
2021 AWH Convertible Promissory Notes | Interest Rate Period Three | ||||
Debt Instrument [Line Items] | ||||
Interest rate | 13.00% | |||
Term Notes | ||||
Debt Instrument [Line Items] | ||||
Repayments of debt | 76,124,000 | |||
Sellers Note MOCA | ||||
Debt Instrument [Line Items] | ||||
Repayments of debt | 11,174,000 | |||
HCI sellers' note | ||||
Debt Instrument [Line Items] | ||||
Repayments of debt | $ 2,289,000 |
DEBT - Maturities of Debt (Deta
DEBT - Maturities of Debt (Details) $ in Thousands | Sep. 30, 2021USD ($) |
Term notes | |
Debt Instrument [Line Items] | |
Remainder of 2021 | $ 0 |
2022 | 0 |
2023 | 0 |
2024 | 0 |
2025 | 210,000 |
Long-term debt, net | 210,000 |
Sellers' notes | |
Debt Instrument [Line Items] | |
Remainder of 2021 | 22,766 |
2022 | 11,143 |
2023 | 3,143 |
2024 | 0 |
2025 | 0 |
Long-term debt, net | $ 37,052 |
DEBT - Interest Expense (Detail
DEBT - Interest Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Debt Disclosure [Abstract] | ||||
Cash interest | $ 4,623 | $ 936 | $ 11,948 | $ 4,004 |
Accretion | 610 | 1,330 | 9,148 | 2,993 |
Loss on extinguishment of debt | 6,637 | 0 | 6,637 | 0 |
Non-cash interest related to beneficial conversion feature | 0 | 0 | 27,361 | 0 |
Interest on financing liability | 506 | 361 | 1,507 | 1,033 |
Total | 12,376 | $ 2,627 | 56,601 | $ 8,030 |
Loss on extinguishment of debt, prepayment fees and additional cash interest payments | 1,656 | 1,656 | ||
Loss on extinguishment of debt, write-off of unamortized deferred financing costs | $ 4,981 | $ 4,981 |
STOCKHOLDERS_ EQUITY - Narrativ
STOCKHOLDERS’ EQUITY - Narrative (Details) | May 04, 2021USD ($)$ / sharesshares | Aug. 31, 2021shares | Sep. 30, 2020USD ($) | Jun. 30, 2020USD ($) | Mar. 31, 2020USD ($) | Sep. 30, 2021USD ($)vote$ / sharesshares | Sep. 30, 2020USD ($) | Apr. 22, 2021vote | Apr. 14, 2021$ / sharesshares | Dec. 31, 2020shares |
Class of Stock [Line Items] | ||||||||||
Preferred stock, shares authorized (in shares) | 10,000,000 | 0 | ||||||||
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.001 | |||||||||
Common unit, par value (in dollars per share) | $ / shares | 0 | |||||||||
Preferred unit, par value (in dollars per share) | $ / shares | 0 | |||||||||
Restricted common unit, par value (in dollars per share) | $ / shares | $ 0 | |||||||||
Stock issued during period, shares, new issues (in shares) | 1,986,000 | |||||||||
Payments for repurchase of warrants | $ | $ 4,156,000 | $ 0 | ||||||||
Issuance of warrants | $ | $ 40,000 | $ 16,000 | $ 147,000 | $ 0 | ||||||
Weighted average warrant term | 2 years 3 months 18 days | |||||||||
Intrinsic value of warrants | $ | $ 19,245,000 | |||||||||
Warrants with $4.00 exercise price | ||||||||||
Class of Stock [Line Items] | ||||||||||
Number of warrants (in shares) | 3,531,000 | |||||||||
Exercise price of warrants (in dollars per share) | $ / shares | $ 4 | |||||||||
Grant date fair value of warrants | $ | $ 237,000 | |||||||||
Warrants with $3.20 exercise price | ||||||||||
Class of Stock [Line Items] | ||||||||||
Number of warrants (in shares) | 1,094,000 | |||||||||
Exercise price of warrants (in dollars per share) | $ / shares | $ 3.20 | |||||||||
Payments for repurchase of warrants | $ | $ 4,156,000 | |||||||||
Payments for repurchase of warrants, per warrant price (in dollars per share) | $ / shares | $ 7 | |||||||||
Minimum | Warrants with $4.00 exercise price | ||||||||||
Class of Stock [Line Items] | ||||||||||
Grant date fair value per warrant (in dollars per share) | $ / shares | $ 0.02 | |||||||||
Volatility rate | 69.20% | |||||||||
Risk free interest rate | 0.17% | |||||||||
Maximum | Warrants with $4.00 exercise price | ||||||||||
Class of Stock [Line Items] | ||||||||||
Grant date fair value per warrant (in dollars per share) | $ / shares | $ 0.10 | |||||||||
Volatility rate | 108.40% | |||||||||
Risk free interest rate | 2.17% | |||||||||
Class A common stock | ||||||||||
Class of Stock [Line Items] | ||||||||||
Common stock, shares authorized (in shares) | 750,000,000 | 0 | ||||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.001 | |||||||||
Number of votes per common share | vote | 1 | 1 | ||||||||
Common stock, shares outstanding (in shares) | 170,945,000 | 0 | ||||||||
Class A common stock | 2019 AWH Convertible Notes | ||||||||||
Class of Stock [Line Items] | ||||||||||
Common stock, shares outstanding (in shares) | 28,478,000 | |||||||||
Class A common stock | 2021 AWH Convertible Promissory Notes | ||||||||||
Class of Stock [Line Items] | ||||||||||
Common stock, shares outstanding (in shares) | 8,910,000 | |||||||||
Class A common stock | Common Units Converted | ||||||||||
Class of Stock [Line Items] | ||||||||||
Member units, conversion ratio | 1 | |||||||||
Class A common stock | Real Estate Preferred Units Converted | ||||||||||
Class of Stock [Line Items] | ||||||||||
Member units, conversion ratio | 1 | |||||||||
Conversion ratio multiplier | 1.5 | |||||||||
Shares issued in conversion (in shares) | 26,221,000 | |||||||||
Class A common stock | Real Estate Preferred Units, Beneficial Conversion Feature | ||||||||||
Class of Stock [Line Items] | ||||||||||
Shares issued in conversion (in shares) | 3,420,000 | |||||||||
Stock conversion, beneficial conversion feature charge | $ | $ 27,361,000 | |||||||||
Class A common stock | Series Seed+ Preferred Units Converted | ||||||||||
Class of Stock [Line Items] | ||||||||||
Member units, conversion ratio | 1 | |||||||||
Class A common stock | IPO | ||||||||||
Class of Stock [Line Items] | ||||||||||
Share price (in dollars per share) | $ / shares | $ 8 | |||||||||
Class B common stock | ||||||||||
Class of Stock [Line Items] | ||||||||||
Common stock, shares authorized (in shares) | 100,000 | 0 | ||||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.001 | |||||||||
Number of votes per common share | vote | 1,000 | |||||||||
Stock conversion ratio | 1 | |||||||||
Common stock, shares outstanding (in shares) | 65,000 | 0 | ||||||||
Class B common stock | Common Units Converted | ||||||||||
Class of Stock [Line Items] | ||||||||||
Common stock, shares outstanding (in shares) | 65,000 |
STOCKHOLDERS_ EQUITY - Schedule
STOCKHOLDERS’ EQUITY - Schedule of Shares Outstanding (Details) shares in Thousands | Sep. 30, 2021shares |
Class of Stock [Line Items] | |
Common stock shares outstanding (in shares) | 171,010 |
Class A common stock | |
Class of Stock [Line Items] | |
Common stock shares outstanding (in shares) | 170,945 |
Class B common stock | |
Class of Stock [Line Items] | |
Common stock shares outstanding (in shares) | 65 |
STOCKHOLDERS_ EQUITY - Schedu_2
STOCKHOLDERS’ EQUITY - Schedule of Units Outstanding (Details) - shares | Sep. 30, 2021 | Dec. 31, 2020 |
Class of Stock [Line Items] | ||
Common units outstanding (in shares) | 0 | 106,082,000 |
Common Units | ||
Class of Stock [Line Items] | ||
Common units outstanding (in shares) | 48,047,000 | |
Real Estate Preferred Units | ||
Class of Stock [Line Items] | ||
Common units outstanding (in shares) | 22,801,000 | |
Series Seed Preferred Units | ||
Class of Stock [Line Items] | ||
Common units outstanding (in shares) | 14,252,000 | |
Series Seed+ Preferred Units | ||
Class of Stock [Line Items] | ||
Common units outstanding (in shares) | 20,982,000 |
EQUITY-BASED COMPENSATION EXP_3
EQUITY-BASED COMPENSATION EXPENSE - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Jul. 31, 2021 | Nov. 30, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Equity-based compensation expense, cost not yet recognized, period for recognition | 6 months | |||||
Ownership percentage to trigger increased exercise price requirement | 10.00% | 10.00% | ||||
Exercise price as a percentage of grant date closing stock price for individuals who own over 10% of voting power | 110.00% | 110.00% | ||||
Compensation costs capitalized during the period | $ 10,860 | $ 3,903 | $ 25,381 | $ 10,502 | ||
Restricted Stock | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Equity-based compensation expense | 266 | 4,464 | ||||
Equity-based compensation, accelerated vesting expense | 733 | |||||
Equity-based compensation expense, cost not yet recognized | $ 349 | $ 349 | ||||
Previous Incentive Units | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Equity-based compensation expense | $ 71 | $ 341 | ||||
Options | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Awards issued to date (in shares) | 0 | 0 | ||||
Options | Maximum | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Award term | 10 years | |||||
Stock Appreciation Rights (SARs) | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Awards issued to date (in shares) | 0 | 0 | ||||
Restricted Stock Units (RSUs) | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Equity-based compensation expense | $ 3,727 | $ 3,727 | ||||
Equity-based compensation expense, cost not yet recognized | 57,748 | $ 57,748 | ||||
Equity-based compensation expense, cost not yet recognized, period for recognition | 2 years | |||||
Compensation costs capitalized during the period | 1,406 | $ 1,406 | ||||
Inventory, equity-based compensation cost | 1,057 | 1,057 | ||||
Restricted Stock Units (RSUs) | General and administrative expenses | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Equity-based compensation expense | 2,321 | 2,321 | ||||
Restricted Stock Units (RSUs) | Cost of goods sold | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Equity-based compensation expense | $ 349 | $ 349 | ||||
Restricted Stock Units (RSUs) | Minimum | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Award vesting period | 2 years | |||||
Restricted Stock Units (RSUs) | Maximum | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Award vesting period | 4 years | |||||
Restricted Stock Awards | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Awards issued to date (in shares) | 0 | 0 | ||||
Employee Stock Purchase Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Shares of stock reserved for issuance under equity incentive plan (in shares) | 4,000,000 | |||||
2020 Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Maximum number of awards to be issued (in shares) | 10,031,000 | |||||
Awards issued to date (in shares) | 9,994,000 | 9,994,000 | ||||
Restricted award exercise period following IPO | 6 months | |||||
2020 Plan | Minimum | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Award vesting period | 2 years | |||||
2020 Plan | Maximum | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Award vesting period | 3 years | |||||
2021 Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Shares of stock reserved for issuance under equity incentive plan (in shares) | 11,351,000 | 11,351,000 | 17,000,000 |
EQUITY-BASED COMPENSATION EXP_4
EQUITY-BASED COMPENSATION EXPENSE - Equity Award Activity (Details) shares in Thousands | 9 Months Ended |
Sep. 30, 2021$ / sharesshares | |
Restricted Stock | |
Number of Shares (in thousands) | |
Beginning balance (in shares) | 7,280 |
Granted (in shares) | 50 |
Vested (in shares) | (5,510) |
Forfeited (in shares) | (124) |
Ending balance (in shares) | 1,696 |
Restricted Stock Units (RSUs) | |
Number of Shares (in thousands) | |
Beginning balance (in shares) | 0 |
Granted (in shares) | 5,662 |
Vested (in shares) | (49) |
Forfeited (in shares) | (13) |
Ending balance (in shares) | 5,600 |
Weighted-Average Grant Date Fair Value per Share | |
Beginning balance (in dollars per share) | $ / shares | $ 0 |
Granted (in dollars per share) | $ / shares | 10.88 |
Vested (in dollars per share) | $ / shares | 11 |
Forfeited (in dollars per share) | $ / shares | 11 |
Ending balance (in dollars per share) | $ / shares | $ 10.88 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | ||||
(Loss) income before income taxes | $ (719) | $ 728 | $ (72,868) | $ (4,626) |
Income tax expense | $ 12,307 | $ 5,643 | $ 33,278 | $ 11,712 |
Effective tax rate | (1711.70%) | 775.10% | (45.70%) | (253.20%) |
Gross profit | $ 40,954 | $ 18,352 | $ 105,137 | $ 38,022 |
Effective tax rate on gross profit | 30.10% | 30.70% | 31.70% | 30.80% |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Commitments (Details) - New Jersey And Illinois Properties $ in Thousands | Nov. 04, 2021USD ($)property | Sep. 30, 2021USD ($)property |
Loss Contingencies [Line Items] | ||
Asset acquisition, price of acquisition, expected | $ | $ 14,000 | |
Subsequent Event | ||
Loss Contingencies [Line Items] | ||
Asset acquisition, number of assets to be acquired | 2 | |
New Jersey | ||
Loss Contingencies [Line Items] | ||
Asset acquisition, number of assets to be acquired | 2 | |
New Jersey | Subsequent Event | ||
Loss Contingencies [Line Items] | ||
Asset acquisition, number of assets acquired | 1 | |
Purchase price | $ | $ 2,500 | |
Illinios | ||
Loss Contingencies [Line Items] | ||
Asset acquisition, number of assets to be acquired | 1 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES - Legal Settlement (Details) shares in Thousands, $ in Thousands | Apr. 14, 2021USD ($)propertyshares | Jan. 28, 2021property | Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) | Dec. 31, 2020USD ($)shares |
Loss Contingencies [Line Items] | |||||||
Settlement expense | $ 0 | $ 0 | $ 36,511 | $ 0 | |||
TVP Parties Matter | |||||||
Loss Contingencies [Line Items] | |||||||
Potential common units awarded (in shares) | shares | 4,770 | ||||||
Estimate of possible loss | $ 16,500 | ||||||
Number of properties to be acquired alleged not to be sustainable | property | 3 | ||||||
Number of properties to be acquired | property | 3 | 6 | |||||
Settlement amount | $ 9,000 | ||||||
Settlement amount, additional cash payment | 5,480 | ||||||
Amount not payable under agreements | $ 2,000 | ||||||
Common units awarded (in shares) | shares | 4,770 | ||||||
Common units awarded, value | $ 26,041 | ||||||
Number of properties that remain suitable for original business purpose | property | 3 | ||||||
Put option, term | 3 years | ||||||
Properties to be acquired | $ 5,400 | ||||||
Settlement expense | 36,511 | ||||||
TVP Parties Matter | Accounts payable and accrued expenses | |||||||
Loss Contingencies [Line Items] | |||||||
Settlement liability | 5,480 | 5,480 | |||||
TVP Parties Matter | Stockholders’ Equity | |||||||
Loss Contingencies [Line Items] | |||||||
Settlement liability | $ 27,431 | $ 27,431 | |||||
TVP Parties Matter | Those not a party to litigation matter | |||||||
Loss Contingencies [Line Items] | |||||||
Common units awarded (in shares) | shares | 255 | ||||||
Common units awarded, value | $ 1,390 |
COMMITMENTS AND CONTINGENCIES_3
COMMITMENTS AND CONTINGENCIES - Shareholder Dispute (Details) - USD ($) $ / shares in Units, $ in Thousands | May 28, 2021 | Apr. 22, 2021 |
Shareholder Litigation Matter | ||
Loss Contingencies [Line Items] | ||
Loss contingency, damages sought, value (in excess of) | $ 20,000 | |
2019 AWH Convertible Notes | ||
Loss Contingencies [Line Items] | ||
Percentage of convertible noteholders that approved amendment of terms | 66.00% | |
Conversion price (in dollars per share) | $ 2.96 |
COMMITMENTS AND CONTINGENCIES_4
COMMITMENTS AND CONTINGENCIES - Investments (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Feb. 25, 2021 | Dec. 31, 2020 |
Other Commitments [Line Items] | |||
Total debt | $ 264,168 | $ 215,029 | |
MedMen NY, Inc. | |||
Other Commitments [Line Items] | |||
Ownership interest percentage | 86.70% | ||
Assumed debt | MedMen NY, Inc. | |||
Other Commitments [Line Items] | |||
Commitment | $ 73,000 | ||
MedMen NY, Inc. | |||
Other Commitments [Line Items] | |||
Commitment | 73,000 | ||
MedMen NY, Inc. | MedMen NY Promissory Note | |||
Other Commitments [Line Items] | |||
Total debt | 28,000 | ||
MedMen NY, Inc. | Cash investment | |||
Other Commitments [Line Items] | |||
Commitment | 35,000 | ||
MedMen NY, Inc. | Additional investment amount | |||
Other Commitments [Line Items] | |||
Commitment | $ 10,000 |
COMMITMENTS AND CONTINGENCIES_5
COMMITMENTS AND CONTINGENCIES - Other Transactions (Details) - Ohio Cannabis Clinic, LLC $ in Thousands | Aug. 20, 2021USD ($) |
Other Commitments [Line Items] | |
Consideration transferred | $ 16,200 |
Cash payments to acquire business | 12,400 |
Fair value of common stock transferred | $ 3,800 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | May 04, 2021 | Dec. 31, 2020 | |
Related Party Transaction [Line Items] | ||||||
General and administrative expenses | $ 29,341 | $ 15,000 | $ 121,610 | $ 34,624 | ||
Accounts payable and accrued liabilities | $ 30,395 | 30,395 | $ 31,224 | |||
Affiliated Entity | ||||||
Related Party Transaction [Line Items] | ||||||
Quarterly management fee | $ 100 | |||||
Management agreement termination fee | $ 2,000 | |||||
Change of control, lock-up agreement term | 360 days | |||||
General and administrative expenses | $ 100 | $ 2,124 | $ 300 | |||
Accounts payable and accrued liabilities | $ 100 |
SUPPLEMENTAL INFORMATION - Othe
SUPPLEMENTAL INFORMATION - Other Current Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Tenant improvement allowance | $ 9,182 | $ 24,349 |
Deposits and other receivables | 5,041 | 4,021 |
Prepaid expenses | 3,872 | 2,311 |
Construction deposits | 2,551 | 712 |
Other | 2,652 | 1,205 |
Total | $ 23,298 | $ 32,598 |
SUPPLEMENTAL INFORMATION - Acco
SUPPLEMENTAL INFORMATION - Accounts Payable and Accrued Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accounts payable | $ 10,885 | $ 7,363 |
Fixed asset purchases | 7,656 | 11,572 |
Litigation settlement | 5,480 | 0 |
Accrued payroll and related expenses | 3,324 | 2,762 |
Accrued interest | 416 | 7,723 |
Other | 2,634 | 1,804 |
Total | $ 30,395 | $ 31,224 |
SUPPLEMENTAL INFORMATION - Gene
SUPPLEMENTAL INFORMATION - General and Administrative Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Compensation | $ 13,434 | $ 4,520 | $ 37,140 | $ 9,794 |
Rent and utilities | 6,443 | 4,166 | 16,089 | 9,599 |
Professional services | 3,158 | 2,693 | 12,945 | 5,599 |
Depreciation and amortization | 2,520 | 2,299 | 7,409 | 6,219 |
Insurance | 1,127 | 389 | 3,165 | 958 |
Marketing | 783 | 511 | 2,188 | 1,136 |
Loss on sale of assets | 649 | 0 | 649 | 286 |
Other | 1,227 | 422 | 5,514 | 1,033 |
Total | $ 29,341 | $ 15,000 | $ 85,099 | $ 34,624 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - BCCO, LLC - Subsequent Event $ in Thousands | Oct. 01, 2021USD ($) |
Consideration transferred | $ 3,740 |
Note Receivable Settlement Consideration | |
Settlement of note and working capital loan | 1,750 |
Working Capital Loan Settlement Consideration | |
Settlement of note and working capital loan | $ 1,799 |