Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2021 | Aug. 06, 2021 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2021 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q2 | |
Document Transition Report | false | |
Entity File Number | 000-56224 | |
Entity Registrant Name | HARVEST HEALTH & RECREATION INC. | |
Entity Central Index Key | 0001760439 | |
Current Fiscal Year End Date | --12-31 | |
Entity Incorporation, State or Country Code | A1 | |
Entity Tax Identification Number | 84-3264202 | |
Entity Address, Address Line One | 1155 W. Rio Salado Parkway | |
Entity Address, Address Line Two | Suite 201 | |
Entity Address, City or Town | Tempe | |
Entity Address, State or Province | AZ | |
Entity Address, Postal Zip Code | 85281 | |
City Area Code | 480 | |
Local Phone Number | 494-2261 | |
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 | true | |
Entity Shell Company | false | |
Subordinate Voting | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 281,335,640 | |
Multiple Voting | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 1,363,385 | |
Super Voting | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 2,000,000 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 71,064 | $ 78,055 |
Restricted cash | 3,000 | 4,542 |
Accounts receivable, net of allowance of $222 and $824, respectively | 8,788 | 5,051 |
Notes receivable, current portion | 9,593 | 21,556 |
Related party notes receivable, current portion | 10,276 | 10,052 |
Inventory, net | 44,608 | 36,862 |
Other current assets | 8,125 | 5,280 |
Total current assets | 155,454 | 161,398 |
Notes receivable, net of current portion | 10,516 | 18,211 |
Property, plant and equipment, net | 179,182 | 176,827 |
Right-of-use assets for operating leases, net | 113,395 | 60,843 |
Related party right-of-use assets for operating leases, net | 5,541 | 5,621 |
Intangible assets, net | 272,083 | 272,118 |
Corporate investments | 40,924 | 19,091 |
Acquisition deposits | 50 | 50 |
Goodwill | 115,541 | 116,041 |
Assets held for sale | 3,689 | 6,585 |
Other assets | 19,672 | 19,850 |
TOTAL ASSETS | 916,047 | 856,635 |
Current liabilities: | ||
Accounts payable | 7,988 | 10,755 |
Other current liabilities | 30,434 | 28,896 |
Contingent consideration, current portion | 10,398 | 17,985 |
Income tax payable | 10,642 | 17,504 |
Operating lease liability, current portion | 1,910 | 2,906 |
Related party operating lease liability, current portion | 150 | 135 |
Notes payable, current portion | 134,394 | 20,910 |
Total current liabilities | 195,916 | 99,091 |
Notes payable, net of current portion | 144,248 | 244,066 |
Warrant liability | 3,438 | 20,908 |
Operating lease liability, net of current portion | 112,731 | 58,637 |
Related party operating lease liability, net of current portion | 5,518 | 5,595 |
Deferred tax liability | 53,082 | 53,082 |
Total liabilities associated with assets held for sale | 28 | 718 |
Other long-term liabilities | 11 | 63 |
TOTAL LIABILITIES | 514,972 | 482,160 |
Commitments and contingencies (Note 16) | ||
STOCKHOLDERS' EQUITY | ||
Capital stock | 736,901 | 667,248 |
Accumulated deficit | (336,234) | (293,607) |
Stockholders' equity attributed to Harvest Health & Recreation Inc. | 400,667 | 373,641 |
Non-controlling interest | 408 | 834 |
TOTAL STOCKHOLDERS' EQUITY | 401,075 | 374,475 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | 916,047 | 856,635 |
Subordinate Voting Shares | ||
STOCKHOLDERS' EQUITY | ||
Common stock, value | 0 | 0 |
Multiple Voting Shares | ||
STOCKHOLDERS' EQUITY | ||
Common stock, value | 0 | 0 |
Super Voting Shares | ||
STOCKHOLDERS' EQUITY | ||
Common stock, value | $ 0 | $ 0 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
Accounts Receivable, Allowance for Credit Loss, Current | $ 222 | $ 824 |
Subordinate Voting | ||
Common Stock, Shares Authorized | Unlimited | Unlimited |
Common Stock, Shares, Issued | 255,991,500 | 220,913,258 |
Common Stock, Shares, Outstanding | 255,991,500 | 220,913,258 |
Multiple Voting | ||
Common Stock, Shares Authorized | Unlimited | Unlimited |
Common Stock, Shares, Issued | 1,561,678 | 1,828,422 |
Common Stock, Shares, Outstanding | 1,561,678 | 1,828,422 |
Super Voting | ||
Common Stock, Shares Authorized | Unlimited | Unlimited |
Common Stock, Shares, Issued | 2,000,000 | 2,000,000 |
Common Stock, Shares, Outstanding | 2,000,000 | 2,000,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Income Statement [Abstract] | ||||
Revenue, net of discounts | $ 102,463 | $ 55,661 | $ 191,289 | $ 99,896 |
Cost of goods sold | (50,201) | (32,246) | (91,109) | (58,332) |
Gross profit | 52,262 | 23,415 | 100,180 | 41,564 |
Expenses | ||||
General and administrative | 33,126 | 26,940 | 59,202 | 53,172 |
General and administrative, related party operating lease expense | 201 | 200 | 401 | 387 |
Sales and marketing | 1,224 | 1,248 | 2,122 | 2,524 |
Share-based compensation | 3,741 | 3,276 | 8,603 | 17,080 |
Depreciation and amortization | 2,641 | 725 | 5,170 | 2,395 |
Total expenses | 40,933 | 32,389 | 75,498 | 75,558 |
Operating income (loss) | 11,329 | (8,974) | 24,682 | (33,994) |
Other (expense) income | ||||
Gain on sale of assets | (21) | (2,783) | 1,774 | (364) |
Other income | 269 | 1,205 | 1,773 | 10,255 |
Fair value of liability adjustment | (8,353) | (1,497) | (32,787) | 5,448 |
Fair value of contingent consideration | (4,500) | 0 | (4,500) | 0 |
Foreign currency gain (loss) | 17 | 30 | 29 | (108) |
Interest expense (includes related party interest income of less than $0.1 million for the three months ended June 30, 2021 and 2020 respectively and $0.2 million and and $0.1million for the six months ended June 30, 2021 and 2020 respectively) | (9,182) | (9,169) | (17,899) | (13,719) |
Contract asset impairment | 0 | (2,420) | 0 | (2,420) |
Loss before taxes and non-controlling interest | (10,441) | (23,608) | (26,928) | (34,902) |
Income taxes | (6,834) | (1,132) | (13,315) | (4,926) |
Net loss from continuing operations before non-controlling interest | (17,275) | (24,740) | (40,243) | (39,828) |
Net income (loss) from discontinued operations, net of tax | (1,954) | (905) | (1,954) | (1,289) |
Net loss before non-controlling interest | (19,229) | (25,645) | (42,197) | (41,117) |
Net income attributed to non-controlling interest | (276) | (1,929) | (430) | (1,841) |
Net loss attributed to Harvest Health & Recreation Inc. | $ (19,505) | $ (27,574) | $ (42,627) | $ (42,958) |
Net loss per share - basic and diluted | $ (0.04) | $ (0.07) | $ (0.10) | $ (0.12) |
Attributable to Harvest Health and Recreation Inc. | (0.05) | (0.08) | (0.10) | (0.13) |
Attributable to discontinued operations, net of tax | $ 0 | $ 0 | $ 0 | $ 0 |
Weighted-average shares outstanding - basic and diluted | 413,103,779 | 364,580,737 | 410,383,008 | 334,380,082 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Operations (Parenthetical) (Unaudited) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Income Statement [Abstract] | ||||
Related party interest income | $ 0.1 | $ 0.1 | $ 0.2 | $ 0.1 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
CASH FLOW FROM OPERATING ACTIVITIES | ||
Net loss | $ (42,197) | $ (41,117) |
Net loss from discontinued operations, net of tax | 1,954 | 1,289 |
Adjustments to reconcile net loss to net cash from operating activities | ||
Depreciation and amortization | 7,051 | 4,257 |
Amortization of right-of-use assets | 3,348 | 2,559 |
Amortization of debt issuance costs | 1,755 | 1,997 |
Amortization of debt discount | 754 | 2,585 |
Amortization of warrant expense | 1,867 | 2,236 |
Noncash gain on earnout | 0 | (13,897) |
Noncash gain on deconsolidation | 0 | (6,244) |
Noncash loss on derecognition of asset | 0 | 4,141 |
Gain on North Dakota divestment | (573) | 0 |
Gain on sale leaseback transaction | (1,058) | 0 |
Gain on legal settlements | (1,089) | 0 |
(Gain) loss on lease derecognition | (351) | 311 |
Change in fair value of financial liability | 32,787 | (5,448) |
Fair value of contingent consideration | 4,500 | 0 |
Gain on held for sale | 0 | (2,150) |
Change in deferred income tax | 0 | (945) |
Share-based compensation | 8,603 | 17,080 |
Noncash transaction expenses | 544 | 0 |
Provision for bad debts and credit losses | 115 | 2,420 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (3,854) | (3,205) |
Inventory | (8,271) | 1,733 |
Other assets | 2,384 | (1,557) |
Income taxes payable | (6,862) | 1,354 |
Accrued expenses and other liabilities | (6,894) | 12,738 |
Accounts payable | (2,515) | 3,535 |
Operating lease liabilities | (1,818) | (324) |
Prepaid expenses and other current assets | (2,393) | (3,827) |
NET CASH USED IN CONTINUING OPERATING ACTIVITIES | (12,213) | (20,479) |
NET CASH USED IN DISCONTINUED OPERATING ACTIVITIES | (1,954) | (740) |
NET CASH USED IN OPERATING ACTIVITIES | (14,167) | (21,219) |
CASH FLOW FROM INVESTING ACTIVITIES | ||
Acquisition of businesses, net of cash acquired | 0 | (14,397) |
Sale leaseback transaction | 22,280 | 0 |
Acquisitions/advances of intangibles | (2,022) | (1,180) |
Divestment of California entities | 0 | 2,358 |
Prepayment of acquisition consideration | (50) | 4,697 |
Purchases of property, plant and equipment | (27,199) | (16,993) |
Proceeds from divestments | 2,122 | 0 |
Issuance of notes receivable | (1,617) | (1,159) |
Payments received on notes receivable | 963 | 825 |
NET CASH USED IN INVESTING ACTIVITIES | (5,523) | (30,565) |
CASH FLOW FROM FINANCING ACTIVITIES | ||
Proceeds from issuance of equity | 0 | 58,999 |
Proceeds from exercise of warrants | 10,262 | 0 |
Proceeds from issuance of notes payable | 5,525 | 40,773 |
Repayment of notes payable | (4,603) | (6,538) |
Proceeds from stock option exercises | 664 | 0 |
Distributions from noncontrolling interests | (604) | |
Payment of finance lease liabilities | (87) | (24) |
Fees paid for debt financing activities | 0 | (1,894) |
NET CASH PROVIDED BY CONTINUING FINANCING ACTIVITIES | 11,157 | 91,316 |
NET CASH USED IN DISCONTINUED FINANCING ACTIVITIES | 0 | (549) |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 11,157 | 90,767 |
NET INCREASE/(DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | (8,533) | 38,983 |
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 78,055 | 22,685 |
RESTRICTED CASH, BEGINNING OF PERIOD | 4,542 | 8,000 |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD | 82,597 | 30,685 |
CASH AND CASH EQUIVALENTS, END OF PERIOD | 71,064 | 61,668 |
RESTRICTED CASH, END OF PERIOD | 3,000 | 8,000 |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD | 74,064 | 69,668 |
Supplemental disclosure with respect to cash flows | ||
Interest paid | 2,131 | 13,352 |
Taxes paid | $ 20,218 | $ 4,833 |
Supplemental disclosure of non-cash activities | ||
Shares issued for business acquisition | 0 | 59,627 |
Notes receivables issued upon North Dakota divestment | $ 850 | $ 0 |
Notes receivable (net book value) settlement in exchange for investment | 21,833 | |
Financing obtained in exchange for property, plant, and equipment | 5,996 | |
Right-of-use assets obtained in exchange of operating lease liabilities | $ 53,950 | $ 10,803 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Changes In Stockholders Equity (Unaudited) - USD ($) $ in Thousands | Total | Super Voting | Multiple Voting | Subordinate Voting | Capital Stock | Accumulated Deflicit | Stock holders equity attributable to Harvest | Non-controlling interest |
Balance at Dec. 31, 2019 | $ 250,886 | $ 481,182 | $ (233,977) | $ 247,205 | $ 3,681 | |||
Shares, Outstanding, Beginning Balance at Dec. 31, 2019 | 2,000,000 | 1,813,388 | 105,786,727 | |||||
Shares issued | 64,646 | 64,646 | 64,646 | |||||
Shares issued, shares | 455,432 | 1,286,513 | ||||||
Deconsolidation of Ohio entities | 1,388 | 1,388 | ||||||
Shares issued in connection with acquisitions | 59,785 | 59,785 | 59,785 | |||||
Shares issued in connection with acquisitions, shares | 307,169 | 283,550 | ||||||
Conversions to subordinate voting shares | (248,326) | 24,832,682 | ||||||
Equity method investment adjustment | (125) | (125) | ||||||
Discount on notes payable | 397 | 397 | 397 | |||||
Conversion feature on note payable | 628 | 628 | 628 | |||||
Share-based compensation | 17,080 | 17,080 | 17,080 | |||||
Net loss | (41,117) | (42,958) | (42,958) | 1,841 | ||||
Balance at Jun. 30, 2020 | 353,568 | 623,718 | (276,935) | 346,783 | 6,785 | |||
Shares, Outstanding, Ending Balance at Jun. 30, 2020 | 2,000,000 | 2,327,663 | 132,189,472 | |||||
Balance at Mar. 31, 2020 | 370,415 | 614,795 | (249,361) | 365,434 | 4,981 | |||
Shares, Outstanding, Beginning Balance at Mar. 31, 2020 | 2,000,000 | 2,501,993 | 109,770,577 | |||||
Shares issued | 5,647 | 5,647 | 5,647 | |||||
Shares issued, shares | 36,993 | 1,286,513 | ||||||
Conversions to subordinate voting shares | (211,323) | 21,132,382 | ||||||
Equity method investment adjustment | (125) | (125) | ||||||
Share-based compensation | 3,276 | 3,276 | 3,276 | |||||
Net loss | (25,645) | (27,574) | (27,574) | 1,929 | ||||
Balance at Jun. 30, 2020 | 353,568 | 623,718 | (276,935) | 346,783 | 6,785 | |||
Shares, Outstanding, Ending Balance at Jun. 30, 2020 | 2,000,000 | 2,327,663 | 132,189,472 | |||||
Balance at Dec. 31, 2020 | 374,475 | 667,248 | (293,607) | 373,641 | 834 | |||
Shares, Outstanding, Beginning Balance at Dec. 31, 2020 | 2,000,000 | 1,828,422 | 220,913,258 | |||||
Shares issued, shares | 16,762 | 19,245 | ||||||
Capital contribution | 612 | 382 | 382 | 230 | ||||
Shares returend and cancelled | (1,000) | (1,000) | (1,000) | |||||
Shares returend and cancelled, shares | 2,545 | |||||||
Warrants exercised for cash | 10,262 | 10,262 | 10,262 | |||||
Warrants exercised for cash, shares | 41,000 | 2,641,164 | ||||||
Reclassification of warrant liability related to warrants exercised for cash | 13,369 | 13,369 | 13,369 | |||||
Reclassification of Warrant Liability To Equity Upon Modification | 36,888 | 36,888 | 36,888 | |||||
Distributions | (604) | (604) | ||||||
Stock option exercised, value | 664 | 664 | 664 | |||||
Stock option exercised, share | 221,680 | |||||||
Acquistion of NCI | 485 | 485 | (485) | |||||
Divestiture of North Dakota assets | 3 | 3 | ||||||
Conversions to subordinate voting shares | (321,961) | 32,196,153 | ||||||
Share-based compensation | 8,603 | 8,603 | 8,603 | |||||
Net loss | (42,197) | (42,627) | (42,627) | 430 | ||||
Balance at Jun. 30, 2021 | 401,075 | 736,901 | (336,234) | 400,667 | 408 | |||
Shares, Outstanding, Ending Balance at Jun. 30, 2021 | 2,000,000 | 1,561,678 | 255,991,500 | |||||
Balance at Mar. 31, 2021 | 370,906 | 686,899 | (316,729) | 370,170 | 736 | |||
Shares, Outstanding, Beginning Balance at Mar. 31, 2021 | 2,000,000 | 1,636,065 | 245,336,531 | |||||
Shares issued, shares | 1,181 | 4,724 | ||||||
Warrants exercised for cash | 3,420 | 3,420 | 3,420 | |||||
Warrants exercised for cash, shares | 26,000 | 271,742 | ||||||
Reclassification of warrant liability related to warrants exercised for cash | 5,289 | 5,289 | 5,289 | |||||
Reclassification of Warrant Liability To Equity Upon Modification | 36,888 | 36,888 | 36,888 | |||||
Distributions | (604) | (604) | ||||||
Stock option exercised, value | 664 | 664 | 664 | |||||
Stock option exercised, share | 221,680 | |||||||
Conversions to subordinate voting shares | (101,568) | 10,156,823 | ||||||
Share-based compensation | 3,741 | 3,741 | 3,741 | |||||
Net loss | (19,229) | (19,505) | (19,505) | 276 | ||||
Balance at Jun. 30, 2021 | $ 401,075 | $ 736,901 | $ (336,234) | $ 400,667 | $ 408 | |||
Shares, Outstanding, Ending Balance at Jun. 30, 2021 | 2,000,000 | 1,561,678 | 255,991,500 |
Business description
Business description | 6 Months Ended |
Jun. 30, 2021 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Business Description | 1. B usiness Description Harvest Health & Recreation Inc., a British Columbia corporation (the “Company” or “Harvest”), is a vertically integrated cannabis company that operates from “seed to sale.” The Company holds licenses or provides services to cannabis dispensaries in Arizona, California, Florida, Maryland, Nevada, and Pennsylvania, with provisional licenses in Massachusetts. In addition, the Company owns CO 2 extraction, distillation, purification and manufacturing technology used to produce a line of cannabis topicals, vapes and gems featuring cannabinoids and a hemp-derived product line sold in Colorado. The Company also owns, manufactures and distributes a portfolio of cannabis consumer packaged goods brands, including ROLL ONE, MODERN FLOWER, EVOLAB, CHROMA, CO 2 LORS, ALCHEMY, AVENUE, LOVELI, and CBX SCIENCES, to third-party licensed retail cannabis stores across the United States as well as to select retail stores the Company owns or operates, in addition to providing support services and financing to a Utah-licensed medical cannabis cultivator (on July 14, 2021, the Company completed the divestiture of its Utah cultivation and processing operations). The Company operates in one segment, the cultivation, processing and sale of cannabis. The Company grows cannabis in outdoor, indoor, and greenhouse facilities for sale in its retail locations and for wholesale. In addition, the Company converts cannabis biomass into formulated oil using a variety of proprietary extraction techniques. The Company uses some of this oil to manufacture products such as vaporizer cartridges and edibles. Harvest sells cannabis, oil, and manufactured products in Harvest dispensaries and to third parties for resale. In addition, the Company collects licensing fees from third parties associated with operations at certain cultivation, manufacturing or retail facilities. Harvest conducts business through wholly-owned and majority-owned operating subsidiaries, operating agreements and other commercial arrangements established to conduct the different business areas of each business (each an “Operating Subsidiary” and together, “Operating Subsidiaries”). The Company’s principal operating locations and type of operation are listed below: State Nature of Operations Commencement Periods Arizona - 15 locations Retail Dispensary September 2013 - September 2020 California - 4 locations Retail Dispensary December 2018 - October 2019 Florida - 10 locations Retail Dispensary February 2019 - June 2021 Maryland - 3 locations Retail Dispensary September 2018 - December 2019 Pennsylvania - 10 locations Retail Dispensary September 2018 - May 2021 Arizona Greenhouse/Outdoor Grow/Processing Lab July 2015 - February 2020 Colorado - 1 location Processing October 2020 Florida Cultivation/Processing February 2019 - December 2019 Maryland Cultivation/Processing September 2017 - July 2019 Nevada Cultivation/Processing August 2020 Pennsylvania Cultivation/Processing March 2020 Utah (1) Indoor Grow October 2020 (1) On July 14, 2021, the Company divested the indoor grow location located in Ogden, Utah for an immaterial amount of cash. The Company is in various stages of expansion as it is growing its commercial footprint by focusing on acquiring and building additional retail, cultivation and processing locations for medical and adult use cannabis in its existing key markets. Each Operating Subsidiary either holds the active and/or pending cannabis licenses associated with its activities, or has a commercial arrangement with the operating locations, and/or owns the real estate and primary fixed assets used in the cannabis businesses. In certain states, cannabis licenses are typically divided into three categories: dispensary, cultivation, and processing. Dispensary licenses comprise the retail operations and allow a company to dispense cannabis to patients. Cultivation licenses allow a company to grow cannabis plants. Processing licenses allow for the processing of cannabis into other products (e.g., edibles, oil, etc.). Cultivation and processing licenses comprise the wholesale operations. In other states, cannabis licenses are defined as vertically integrated, which allows the license holder the right to engage in dispensary, cultivation and processing activities. The Company’s corporate headquarters is located at 1155 W. Rio Salado Parkway, Suite 201, Tempe, Arizona, 85281. The Company has one class of stock that is traded on the Canadian Stock Exchange (“CSE”) and on the OTCQX International tier of the OTC Markets in the U.S. (the “OTCQX”) under the symbols HARV and HRVSF, respectively. The stock price between the CSE and the OTCQX are identical after the U.S./Canadian currency exchange conversion. |
Significant Accounting Policies
Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | 2. Significant Accounting Policies (a) Basis of Presentation The accompanying Unaudited Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, our condensed consolidated financial statements do not include all the information and footnotes required by GAAP for complete financial statements. Normal and recurring adjustments considered necessary for a fair statement of the results for the interim periods, in the opinion of the Company’s management, have been included. Operating results for the three months ended June 30, 2021, are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. The accompanying condensed consolidated financial statements and related footnote disclosures should be read in conjunction with the consolidated financial statements and notes thereto included in our 2020 Annual Report on Form 10-K filed with the SEC on March 30, 2021. The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results may differ from the estimates and assumptions used. (b) Basis of Measurement These Unaudited Condensed Consolidated Financial Statements have been prepared on the going concern basis, under the historical cost convention, except for certain financial instruments that are measured at fair value as described herein. (c) Functional Currency These Unaudited Condensed Consolidated Financial Statements are presented in United States dollars, which is also the functional currency of the Company and its affiliates. (d) Basis of Consolidation These Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q include the accounts of the Company, all wholly-owned and majority-owned subsidiaries in which the Company has a controlling voting interest and, when applicable, variable interest entities in which the Company has a controlling financial interest or is the primary beneficiary. Investments in affiliates where the Company does not exert a controlling financial interest are not consolidated. Subsidiaries over which the Company has a controlling financial interest are fully consolidated from the date control commences until the date control ceases. All of the consolidated entities were under common control during the entirety of the periods for which their respective results of operations were included in the consolidated statements (i.e., from the date of their acquisition). All intercompany accounts and transactions have been eliminated on consolidation. (e) Discontinued Operations The Company followed Accounting Standard Codification (“ASC”) 360, Property, Plant, an Equipment , and ASC 205-20, Discontinued Operations , to report assets held for sale and discontinued operations. The Company classifies assets and liabilities of a business or asset group as held for sale, and the results of its operations as income (loss) from discontinued operations, net, for all periods presented, when (i) we commit to a plan to divest a business or asset group, actively begin marketing it for sale, and when it is deemed probable of occurrence within the next twelve months, and (ii) when the business or asset group reflects a strategic shift that has, or will have, a major effect on the Company’s operations and its financial results. In measuring the assets and liabilities held for sale, the Company evaluates which businesses or asset groups are being marketed for sale. See Note 4 for additional information. (f) Revenue Recognition The Company accounts for customer contracts in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”), which includes the following five-step model: Identification of the contract, or contracts, with a customer. Identification of the performance obligations in the contract. Determination of the transaction price. Allocation of the transaction price to the performance obligations in the contract. Recognition of revenue when, or as, the Company satisfies a performance obligation. Through application of the standard, the Company recognizes revenue to depict the transfer of promised goods or services to the customer in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. Revenues consist primarily of wholesale and retail sales of cannabis, which are generally recognized at a point in time when control over the goods have been transferred to the customer and is recorded net of sales discounts. Payment is typically due upon transferring the goods to the customer or within a specified time period permitted under the Company’s credit policy. Sales discounts were no t material during the three and six months ended June 30, 2021 and 2020, respectively. The Company has agreements in place whereby third-parties provide services or license the right to operate certain aspects of cannabis facilities owned by the Company. Under the terms of these agreements, the service provider operates various aspects of the business including procurement, production, regulatory compliance, marketing and sales, subject to oversight by the Company. The Company pays the service provider a fee for its services or in the case of licenses, the licensee pays the Company a license fee. The Company recorded $ 0.3 million and $ 6.2 million on a gross basis for the three months ended June 30, 2021 and 2020 , respectively. The Company recorded $ 0.6 million and $ 12.6 million on a gross basis for the six months ended June 30, 2021 and 2020, respectively. The determination that the Company was the principal under these agreements was made in accordance with ASC 606-10-55-36 through 55-40 and consists of the following analysis. The Company analyzed the agreements first to determine what the specified good or service is that is being provided. Secondly, whether the Company is in control of the goods prior to the goods being transferred to the customer. The specified goods consist of various cannabis products sold at either a retail location or wholesale. In order to determine whether the Company had control of the specified goods prior to transfer to the customer, the terms of the agreements to provide the goods to the customers were evaluated. Pursuant to the terms of the agreements, the Company is at all times the owner of the products which are the cannabis and cannabis concentrates. Further, the service provider would not be able to sell the products to the customer without the use the of the Company’s license which permits it to sell cannabis under state law. The following represents disaggregated revenue information: (In thousands) Retail Wholesale Licensing and other Consolidated Revenue for the three months ended June 30, 2021 $ 85,177 $ 13,948 $ 3,338 $ 102,463 Revenue for the three months ended June 30, 2020 $ 42,250 $ 7,199 $ 6,212 $ 55,661 Revenue for the six months ended June 30, 2021 $ 162,825 $ 23,241 $ 5,223 $ 191,289 Revenue for the six months ended June 30, 2020 $ 72,262 $ 13,264 $ 14,370 $ 99,896 Our customer loyalty program enables participants to earn points for qualifying purchases that can be redeemed for discounts or product in the future. We allocate the transaction price between the goods delivered and the future goods that will be delivered, on a relative standalone selling price basis, and defer the revenues allocated to the points, less expected expirations, until such points are redeemed. The timing of loyalty point redemptions can vary significantly, and the loyalty points do not expire. As of June 30, 2021, the amount of revenue deferred related to the earned points, net of redemptions, is $ 2.3 million. The deferral is reflected as a current liability in our condensed consolidated balance sheets because it is expected to be earned within the next 12 months. |
Recently Issued Accounting Pron
Recently Issued Accounting Pronouncements | 6 Months Ended |
Jun. 30, 2021 | |
Recently Issued Accounting Pronouncements [Abstract] | |
Recently Issued Accounting Pronouncements | 3. Recently Adopted and Issued Accounting Pronouncements We adopted the following standard during the six months ended June 30, 2021, which did not have a material impact on our financial statements or financial statement disclosures: Date Issued Standard Effective Date December 2019 ASU 2019-12, Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes January 2021 The following standards were recently issued, and the Company is assessing the impact to the future consolidated financial statements: Date Issued Standard Effective Date May 2021 ASU 2021-04 Earnings Per Share (Topic 260), Debt— Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40) January 2021 August 2020 ASU No. 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 i n an Entity’s Own Equity January 2022 The Company reviewed all other recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a significant impact to the condensed consolidated financial statements. |
Discontinued Operations
Discontinued Operations | 6 Months Ended |
Jun. 30, 2021 | |
Disposal Group Not Discontinued Operation Income Statement Disclosures [Abstract] | |
Discontinued Operations | 4. Discontinued Operations During the six months ended June 30, 2020, following the completion of the merger with Interurban Capital Group, LLC (formerly Interurban Capital Group, Inc.) (“ICG”), the Company sold ICG to a wholly owned subsidiary of Hightimes Holding Corp. (“Hightimes”) following the spinoff of certain assets. At the time of disposition, ICG’s primary assets consisted of rights to acquire eight “Have A Heart”-branded cannabis dispensaries in California (the “California HAH Dispensaries”). In addition, the Company agreed to sell Hightimes the equity of two additional entities controlled by Harvest that are seeking cannabis dispensary licenses in California (the “Harvest Dispensaries”). As a result, assets and liabilities allocable to these operations were classified as held for sale. In addition, revenue and expenses, gains and losses relating to the discontinuation of the California HAH Dispensaries operations were eliminated from profit or loss from the Company’s continuing operations for all periods presented. The Company also entered into a plan to abandon certain product lines or lines of business to include CBD products or items of inventory, and the Company’s planned expansion in the state of Michigan. Any related assets and liabilities are classified as held for sale. In addition, the revenue, expenses, gains and losses related to the discontinuation of these activities were eliminated from profit or loss from the Company’s continuing operations for all periods presented. Discontinued operations are presented separately from continuing operations in the Unaudited Condensed Consolidated Statements of Operations and the Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2021 and June 30, 2020, respectively. The following table is the Unaudited Condensed Consolidated Statements of Operations reflecting discontinued operations for the three months and six months ended June 30, 2020: (In thousands) Three Months Ended June 30, 2020 Six Months Ended June 30, 2020 Revenue, net of discounts $ 3,996 $ 4,778 Cost of goods sold ( 2,054 ) ( 2,711 ) Gross profit 1,942 2,067 Expenses General and administrative 1,278 1,603 Sales and marketing 24 46 Depreciation and amortization 1,039 1,057 Total expenses 2,341 2,706 Operating income (loss) ( 399 ) ( 639 ) Other (expense) income Gain on sale of assets 2,574 2,574 Interest expense ( 711 ) ( 717 ) Loss before taxes and non-controlling interest 1,464 1,218 Income taxes ( 9 ) ( 147 ) Loss from continuing operations before non-controlling interest 1,455 1,071 Net loss from discontinued operations, net of tax 905 1,289 Net loss attributed to Harvest Health & Recreation Inc. $ 2,360 $ 2,360 Discontinued operations for the three and six months ended June 30, 2021 was $ 1.9 million due to the abandoned expansion in Michigan. The following table is a summary of the assets and liabilities of discontinued operations: (In thousands) June 30, 2021 December 31, 2020 ASSETS Inventory, net $ 344 $ 93 Other current assets - 33 Property, plant and equipment, net 3,110 1,747 Right-of-use asset, net 64 3,593 Intangibles assets, net 171 894 Other assets — 225 Assets from discontinued operations $ 3,689 $ 6,585 LIABILITIES Lease liability, net of current portion 28 718 Liabilities from discontinued operations $ 28 $ 718 |
Inventory
Inventory | 6 Months Ended |
Jun. 30, 2021 | |
Inventory Disclosure [Abstract] | |
Inventoy | 5. Inventory The Company’s inventory consisted of: (In thousands) June 30, December 31, Raw materials $ 17,384 $ 12,632 Work in progress 6,165 5,634 Finished goods 22,228 19,718 Total inventory 45,777 37,984 Reserve ( 1,169 ) ( 1,122 ) Total inventory, net $ 44,608 $ 36,862 |
Note Receivable
Note Receivable | 6 Months Ended |
Jun. 30, 2021 | |
Loans And Leases Receivable Disclosure [Abstract] | |
Notes Receivable | 6. Notes Receivable The Company’s notes receivable consisted of: (In thousands) June 30, December 31, Secured promissory notes dated November 2020 in the principal amount of $ 12.0 million with a maturity date of November 9, 2025 ; monthly payments of $ 0.1 million, inclusive of principal and interest. Balloon payment of $ 8.4 million due at maturity. Interest rate of 7.5 % per annum. $ 11,493 $ 12,000 Secured promissory notes dated February 2020 through June 2021 in the principal amount of $ 15.1 million with maturity dates from August 2021 to February 2022 ; principal is due at maturity. Interest rates of 6 - 8 % per annum, due at maturity. 15,088 13,471 Secured promissory notes, created from the CannaPharmacy acquisition, dated April and June of 2019 in the principal amount of $ 11.6 million with maturity dates in April and June of 2021 ; principal is due at maturity. Interest rate of 8 % per annum, due quarterly. — 456 Secured convertible promissory note, due from Falcon International Corp. (‘‘Falcon’’) and subsidiaries, dated June 7, 2019 in the principal amount of up to $ 40.4 million with maturity date of June 6, 2022 ; principal is due at maturity. Interest rate of 4 % per annum, due at maturity. (1) — 25,525 Unsecured convertible promissory notes, due from Falcon and its subsidiaries, dated October 2018 through February 2019 in the principal amount of $ 24.5 million with maturity dates of August to November 2019 ; principal is due at maturity. Interest rate of 8 % per annum, due at maturity. (1) — 24,499 Secured revolving notes dated December 2018 through January 2019 in the principal amount of up to $ 30.0 million with maturity dates of December 2019 to February 2020 ; principal is due at maturity. Interest rates of 8.25 - 8.5 % per annum with interest payments due monthly. (2) 3,581 3,581 Secured promissory notes dated February 2021 in the principal of up to $ 0.9 million with a maturity date of February 19, 2022 ; principal is due at maturity. Interest rate of 10.0 % per annum with interest payments due monthly. 850 — Gross notes receivable 31,012 79,532 Less: provision for impairment of notes receivable ( 627 ) ( 29,713 ) Total notes receivable, net of allowance 30,385 49,819 Less: current portion of notes receivable ( 19,869 ) ( 31,608 ) Notes receivable, long-term portion $ 10,516 $ 18,211 (1) These notes were settled as part of the Falcon Lawsuit settlement. $ 29.1 million of the provision for impairment of notes receivable related to these notes was written off in relation to this settlement. See Note 10 for additional information. (2) These notes are currently in default. The Company negotiated a settlement agreement with the debtor and, at this time, expects to receive the full principal balance during fiscal year 2021. The Company’s provision for expected credit losses as of June 30, 2021 includes $ 0.3 million related to these notes. Stated maturities of the notes receivable are as follows: (In thousands) Expected Principal Payments 2021 (6 months) $ 10,470 2022 9,918 2023 728 2024 784 2025 9,112 $ 31,012 |
Leases
Leases | 6 Months Ended |
Jun. 30, 2021 | |
Leases [Abstract] | |
Leases | 7. Leases The Company primarily leases space for corporate offices, retail, cultivation and manufacturing under non-cancellable operating leases with initial terms typically ranging from 1 to 28 years . The Company had one finance lease at June 30, 2021. On January 11, 2021, the Company purchased a cultivation property located in Reading, Pennsylvania. The property consists of approximately 1.36 acres of land and close to 46,800 square feet of combined office and cultivation space. The purchase price of the property was $ 5.2 million and was considered a finance lease prior to the building purchase. On January 20, 2021, the Company sold an industrial property totaling approximately 292,000 square feet for $ 23.8 million. Concurrent with the sale, Harvest entered into a triple net lease with Innovative Industrial Properties, Inc. (“IIP”) to lease back the property. The lease is for a term of 20 years with an extension option. At commencement, the Company was not reasonably certain to exercise the extension option. Harvest plans to continue to operate the property as a licensed cultivation and processing facility and expects to recover up to approximately $ 10.8 million in tenant improvements from IIP. The total proceeds for the transaction are expected to be approximately $ 34.6 million. The Company determined control of the assets transferred to IIP, the sale price represented the fair value of the underlying assets sold, and the Company does not have continuing involvement with the property sold other than a normal leaseback. The Company received net proceeds of $ 22.3 million from the sale, after deducting a security deposit of $ 1.2 million, other transactions costs of $ 0.3 million, and incurred a gain of $ 1.1 million. In June 2021, we amended our lease, increasing the tenant improvement allowance under the lease by $ 7.1 million to a total of approximately $ 17.9 million, which also resulted in a corresponding adjustment to the base rent for the lease at the property. The following table presents lease assets and liabilities within the Condensed Consolidated Balance Sheets: Lease and Classification June 30, 2021 December 31, 2020 Operating Leases: (In thousands) Right-of-use asset, net $ 118,935 $ 66,464 Lease liability, current portion $ 2,060 $ 3,041 Lease liability, net of current portion $ 118,249 $ 64,232 Finance Leases: Property, plant and equipment, net (1) $ 405 $ 5,523 Other current liabilities $ 92 $ 5,504 (1) Finance lease assets are recorded net of accumulated amortization of less than $ 0.1 million as of June 30, 2021 and December 31, 2020 , respectively. The Company recognized the following amounts within the Condensed Consolidated Statements of Operations: Three Months Ended June 30 Six Months Ended June 30 2021 2020 2021 2020 Operating lease expense $ 5,270 $ 5,553 $ 9,758 $ 8,352 Interest on lease liabilities $ 2 $ 384 $ 6 $ 387 Expenses related to short-term leases $ 19 $ 487 $ 228 $ 950 Expenses related to variable payments $ 498 $ 266 $ 688 $ 507 The Company’s sublease income is immaterial. Other information: Six Months Ended June 30, 2021 2020 Cash paid for amounts included in the measurement of lease liabilities: (In thousands) Operating cash flows from operating leases $ 7,831 $ 2,556 Operating cash flows from finance leases $ 6 $ 387 Financing cash flows from finance leases $ 87 $ 24 The Company’s lease terms and discount rates were as follows: Weighted average remaining term (in years): June 30, 2021 June 30, 2020 Operating 14.5 3.6 Finance 34.5 9.9 Weighted average discount rate: Operating 12.43 % 10.00 % Finance 10.00 % 10.03 % |
Divestitures
Divestitures | 6 Months Ended |
Jun. 30, 2021 | |
Divestitures [Abstract] | |
Divestitures | 8. Divestitures In February 2020, the Company divested of non-operating retail and cultivation entities, primarily consisting of two entities that hold cannabis licenses and various real estate and equipment. In accordance with ASC 810-10-40, Derecognition , control ceased, and the Company deconsolidated its interest in the entities. A related party to the Company holds an interest of 49 % which it recognized as an equity method investment due to the related party’s significant influence. The carrying value of the assets was derecognized along with the corresponding recognition of the fair value of the equity method investment resulting in a gain of $ 3.2 million. In conjunction with the assets being deconsolidated, the Company issued a $ 12.0 million note receivable to the entities in exchange for the real property and other plant and equipment deconsolidated at the time. This resulted in an additional $ 8.7 million gain. |
Intangible Assets and Goodwill
Intangible Assets and Goodwill | 6 Months Ended |
Jun. 30, 2021 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Intangible Assets and Goodwill | 9. Intangible Assets and Goodwill Intangible assets, including goodwill, as of December 31, 2020 and June 30, 2021 consisted of the following: Gross carrying amount (in thousands) Weighted average useful lives (years) December 31, Additions Dispositions/ June 30, Definite life intangible assets: Patient relationships 2.0 $ 820 $ — $ — $ 820 Technology 9.9 18,058 — — 18,058 Software 5.0 241 320 ( 145 ) 416 Other 3.0 410 730 ( 241 ) 899 Indefinite life intangible assets: Licenses and permits 253,866 519 ( 151 ) 254,234 Internally developed 1,113 694 ( 643 ) 1,164 Trade names 2,400 — — 2,400 Total intangible assets 276,908 2,263 ( 1,180 ) 277,991 Goodwill 116,041 — ( 500 ) 115,541 Total gross carrying amount $ 392,949 $ 2,263 $ ( 1,680 ) $ 393,532 Accumulated amortization (in thousands) December 31, Amortization Dispositions/ June 30, Definite life intangible assets: Patient relationships $ 820 $ — $ — $ 820 Technology 3,913 945 — 4,858 Software 57 19 ( 30 ) 46 Other — 184 — 184 Total accumulated amortization 4,790 1,148 ( 30 ) 5,908 Total intangible assets, net and goodwill $ 388,159 $ 1,115 $ ( 1,650 ) $ 387,624 Intangible assets with definite lives are amortized over their estimated useful lives. The Company recorded amortization expense of $ 0.7 million and $ 0.5 million included in depreciation and amortization, in the Condensed Consolidated Statements of Operation, for the three months ended June 30, 2021 and 2020, respectively. The Company recorded amortization expense of $ 1.1 million and $ 1.0 million included in depreciation and amortization, in the Condensed Consolidated Statements of Operations, for the six months ended June 30, 2021 and 2020, respectively. Amortization periods for assets with definite lives are based on management’s estimates at the date of acquisition. Based solely on the amortizable intangible assets recorded at June 30, 2021, estimated amortization expense for the remainder of fiscal 2020 through fiscal 2025 and thereafter is as follows: (In thousands) Estimated 2021 (6 months) $ 1,523 2022 2,108 2023 2,008 2024 1,787 2025 1,770 Thereafter 5,089 Total amortization expense $ 14,285 Actual amortization expense to be reported in future periods could differ from these estimates as a result of new intangible asset acquisitions, changes in useful lives, impairment charges or other relevant factors or changes. |
Corporate investments
Corporate investments | 6 Months Ended |
Jun. 30, 2021 | |
Investments Debt And Equity Securities [Abstract] | |
Corporate Investments | 10. Corporate Investments The carrying values of the Company’s investments are as follows: (In thousands) June 30, December 31, Investment in Hightimes $ 19,091 $ 19,091 Investment in Falcon 21,833 — Corporate investments $ 40,924 $ 19,091 The Company is not able to readily determine the fair value of either of the Company’s equity investments listed in the table above. The investments are therefore accounted for under the measurement alternative whereby the investments are held at cost and adjusted for impairments and observable price changes, if any. On March 13, 2021, the Company settled a lawsuit with Falcon International, Inc. (‘‘Falcon’’) whereby the Company received 10 % equity ownership in Falcon and each share received came with a 10-year warrant to acquire two common shares of Falcon at an exercise price of $ 1.91 per warrant. In exchange, the Company settled the $ 50.0 million of notes receivable, including accrued interest receivable, due from Falcon. Based on the net book value of the notes receivable settled, the Company estimated the fair value of the equity and warrants received to be $ 21.8 million at settlement. On June 22, 2020, the Company sold a wholly owned subsidiary to a subsidiary of Hightimes following the spinoff of certain assets. Consideration received by the Company included 600,000 of Series A Preferred Stock. The Series A Preferred Stock has a stated or liquidation value of $ 100 per share. The Company may convert all or a portion of the Series A Preferred Stock into shares of Hightimes Class A voting Common Stock at a conversion price per share of $ 11 , subject to adjustment to $ 1 per share, based on the 11-for-one forward stock split of the Hightimes Common Stock to be consummated upon completion of Hightimes’ Regulation A+ initial public offering; provided, that in no event shall the number of shares of Hightimes Common Stock issuable upon full conversion of the Series A Preferred Stock, exceed 19 % of the issued and outstanding shares of Hightimes Common Stock, after giving effect to such optional conversion. Based on the assets transferred, the Company estimated the fair value of the shares of Series A Preferred Stock received to be $ 19.1 million when the sale closed. No impairments or observable price changes were identified during the six months ended June 30, 2021. |
Other Current Liabilities
Other Current Liabilities | 6 Months Ended |
Jun. 30, 2021 | |
Other Liabilities Disclosure [Abstract] | |
Other Current Liabilities | 11. Other Current Liabilities The Company’s other current liabilities consisted of: (In thousands) June 30, December 31, Accrued inventory purchases $ 7,671 $ 7,886 Accrued expenses 7,724 5,607 Accrued payroll and benefits 5,146 4,353 Accrued capital expenditures 2,906 3,133 Finance lease liabilities (1) 92 5,504 Deferred revenue 2,285 — Other 4,610 2,413 Total other current liabilities $ 30,434 $ 28,896 (1) See Note 7 for additional information. |
Notes Payable
Notes Payable | 6 Months Ended |
Jun. 30, 2021 | |
Debt Disclosure [Abstract] | |
Notes payable | 12. Notes Payable The Company’s notes payable consisted of: (In thousands) June 30, December 31, Secured promissory note dated March 2020, in the principal amount of $ 10.0 million with a maturity of March 2022 . Monthly interest payments of 9 % per annum. Principal balance due at maturity. (1) $ 10,000 $ 10,000 Unsecured promissory note dated February 2020, in the principal amount of $ 6.7 million with a maturity of February 2023 . Monthly interest payments at 4 % per annum. Annual payments of $ 2.2 million, inclusive of interest at 4 %, due beginning February 2021 with remaining principal due at maturity. 4,699 6,650 Secured promissory notes dated December 2019, in the principal amount of $ 93.4 million with a maturity of December 2022 . Semi-annual interest payments at 15 % per annum. Principal balance due at maturity. (2) 93,390 93,390 Secured promissory notes dated December 2019, in the principal amount of $ 42.4 million with a maturity of December 2022 . Semi-annual interest payments at 9.25 % per annum. Principal balance due at maturity. (3) 42,404 42,404 Secured convertible promissory note dated December 2019, in the principal amount of $ 10.0 million with a maturity of December 2021 . Semi-annual interest payments at 9 % per annum. Principal balance due at maturity. (4) 10,000 10,000 Secured convertible promissory note dated April 2021, in the principal amount of $ 5.0 million with a maturity of April 2023 . Semi-annual interest payments at 9 % per annum. Principal balance due at maturity. 5,000 — Secured promissory notes dated October 2019, in the principal amount of $ 6.5 million with a maturity of October 2021 . Monthly interest payments at 8.95 % per annum. Principal balance due at maturity. 6,500 6,500 Secured promissory notes dated September and October 2019, in the principal amount of $ 2.6 million with maturities of October 2024 . Monthly interest payments at 5.5 % and 8.75 % per annum. Principal balance due at maturity. (5) 2,456 2,505 Secured promissory note dated June 2019, in the principal amount of $ 4.0 million with a maturity of June 2024 . Interest at LIBOR plus 2.5 % per annum, payable monthly. Principal balance due based on 25-year amortization schedule with balloon payment at maturity. (6) 3,916 4,000 Unsecured convertible debentures dated May 2019, in the principal amount of $ 100.0 million with a maturity of May 2022 . Semi-annual interest payments at 7 % per annum. Principal balance due at maturity. (7) 100,000 100,000 Other unsecured promissory notes 3,661 4,039 Other secured promissory notes 8,026 1,275 Total notes payable 290,052 280,763 Less: unamortized debt discounts and issuance costs ( 11,410 ) ( 15,787 ) Net amount 278,642 264,976 Less: current portion of notes payable ( 134,394 ) ( 20,910 ) Notes payable, net of current portion $ 144,248 $ 244,066 (1) Carrying value includes debt discount of $ 0.7 million. (2) Carrying value includes debt issuance costs of $ 2.3 million. (3) Carrying value includes debt issuance costs of $ 1.2 million and warrants of $ 3.1 million. (4) Carrying value includes debt discount of $ 0.2 million. (5) Carrying value includes debt issuance costs of $ 0.1 million. (6) Carrying value includes debt issuance costs of less than $ 0.1 million. (7) Carrying value includes debt issuance costs of $ 1.4 million and warrants of $ 2.4 million. Stated maturities of debt obligations and expected interest payments are as follows: (In thousands) Expected Principal Payments Expected Interest Payments 2021 (6 months) $ 19,360 $ 14,470 2022 254,324 21,864 2023 10,229 660 2024 5,611 270 2025 and thereafter 528 334 $ 290,052 $ 37,598 |
Share-based compensation
Share-based compensation | 6 Months Ended |
Jun. 30, 2021 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Share-based compensation | 13. Share-based Compensation Stock options During 2018, the Compensation Committee of the Company’s Board of Directors approved a share-based compensation plan. The purpose of the plan is to promote the interests of the Company and its stockholders by aiding the Company in attracting and retaining employees, officers, consultants, advisors and non-employee directors capable of assuring the future success of the Company. The stock options granted are non-qualified and generally vest in 25 % increments over a four-year period and expire 10 years from the grant date. The following table summarizes stock option activity during the period : Number of Weighted- Aggregate Balance as of December 31, 2020 14,380,875 5.02 Forfeited/Cancelled ( 2,574,070 ) 6.53 Exercised ( 221,680 ) 2.52 Granted 675,500 3.85 Balance as of June 30, 2021 12,260,625 $ 4.69 $ 10,174,894 The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the Company’s closing stock price on June 30, 2021, and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their in-the-money options on June 30, 2021. This amount will change in future periods based on the fair market value of the Company’s stock and the number of options outstanding. The total intrinsic value of stock options exercised during the six months ended June 30, 2021 was $ 0.4 million. Cash received from stock option exercises was $ 0.7 million during the six months ended June 30, 2021. The following table summarizes the Subordinate Voting Shares stock options that remain outstanding as of June 30, 2021: Security Issuable Expiration Date Number of Stock Options Exercise Price Stock Options Exercisable Subordinate Voting Shares November 2028 - February 2031 12,260,625 $ 1.09 - $ 8.75 4,866,313 The following table summarizes the Subordinate Voting Shares stock options that remain outstanding as of December 31, 2020: Security Issuable Expiration Date Number of Stock Options Exercise Price Stock Options Exercisable Subordinate Voting Shares November 2028 - December 2030 14,380,875 $ 1.09 - $ 8.75 2,326,000 During the three months ended June 30, 2021 and 2020 , the Company recorded $ 3.7 million and $ 3.3 million of share-based compensation expense for stock options granted and vested during the period, respectively. During the six months ended June 30, 2021 and 2020, the Company recorded $ 8.5 million and $ 17.1 million of share-based compensation expense for stock options granted and vested during the period, respectively. The fair value of the stock options granted was determined using the Black-Scholes option-pricing model with the following weighted-average assumptions at the time of grant: 2021 2020 Risk-Free Annual Interest Rate 1.09 % - 2.25 % 2.00 % - 2.25 % Expected Annual Dividend Yield 0 % 0 % Expected Stock Price Volatility 99 % - 197 % 83 % - 99 % Expected Life of Stock Options 6.25 Years 6.25 Years Volatility was estimated by using the average historical volatility of comparable companies from a representative peer group of publicly traded cannabis companies. The expected life represents the period of time that the options issued are expected to be outstanding. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of issuance, using rates with a term approximately equal to the expected life of the options. During the three months ended June 30, 2021 and 2020 , the weighted-average fair value of stock options granted was $ 2.74 and $ 2.16 per option, respectively. During the six months ended June 30, 2021 and 2020, the weighted-average fair value of stock options granted was $ 3.16 and $ 2.16 per option, respectively. As of June 30, 2021 and 2020, stock options outstanding had a weighted-average remaining contractual life of 8.2 and 8.9 years, respectively. At June 30, 2021, the total unrecognized compensation cost related to the non-vested awards granted and expected to vest was $ 14.1 million. This cost is expected to be recognized over a weighted-average period of 2.0 years. Restricted stock units On December 31, 2020, the Company granted 208,348 restricted stock units. These restricted stock units vest in 2021. On April 6, 2020, the Company granted 98,765 restricted stock units. These restricted stock units vest throughout 2020 and 2021. The following table summarizes the status of the restricted stock units: Number of Weighted- Balance as of December 31, 2020 241,273 $ 2.01 Vested ( 136,952 ) 1.83 Balance as of June 30, 2021 104,321 $ 2.24 During the six months ended June 30, 2021, the Company recorded $ 0.1 million of share-based compensation expense for restricted stock units granted and vested during the period, respectively. No share-based compensation expense for restricted stock was recorded during the three months ended June 30, 2020 . |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2021 | |
Stockholders Equity Note [Abstract] | |
Stockholders' Equity | 14. Stockholders’ Equity Description of the company’s securities The Company is authorized to issue an unlimited number of Subordinate Voting Shares (“SVS” or “Subordinate Voting Shares”), Multiple Voting Shares (“MVS” or “Multiple Voting Shares”) and Super Voting Shares, all with no par value. Each Multiple Voting Share converts into 100 Subordinate Voting Shares and each Super Voting Share converts into one Subordinate Voting Share. Holders of SVS are entitled to one vote in respect of each SVS held at stockholder meetings of the Company. Holders of MVS are entitled to 100 votes in respect of each MVS held at stockholder meetings of the Company. Holders of Super Voting Shares are entitled to 200 votes in respect of each Super Voting Share held at stockholder meetings of the Company. Warrants During the six months ended June 30, 2021 , the Company issued 307,856 stock warrants to purchase the Company’s SVS. These warrants were issued upon exercise of compensation warrants held by underwriters of the bought deal completed by the Company on October 28, 2020 . The company did no t record any share-based compensation expense for stock warrants outstanding during the period. Prior to June 30, 2021, all of the Company’s outstanding stock warrants qualified for liability classification in accordance with ASC 815, Derivatives and Hedging . On June 30, 2021, the Company amended the terms of the 17,154,416 SVS warrants issued and outstanding to reflect the exercise price of such warrants in U.S. dollars. Following the conversion of the exercise price to U.S. dollars, the warrants were reclassified as equity. The Company recognized a $ 0.9 million change in fair value of the warrant liability upon modification and reclassified $ 36.9 million of the warrant liability to equity. One holder remains that did not convert, and the Company will continue to treat the warrant activity associated with that holder as liability classification. A summary of the status of the stock warrants outstanding, on an as-converted basis for SVS, is as follows: Number of Weighted- Balance as of December 31, 2020 24,407,114 $ 4.11 Issued 307,856 $ 2.40 Exercised ( 6,125,454 ) $ 1.52 Balance as of June 30, 2021 18,589,516 $ 4.79 The following table summarizes the stock warrants that remain outstanding as of June 30, 2021: Security Issuable Expiration Date Number of Stock Warrants Exercise Price Stock Warrants Exercisable Subordinate Voting Shares May 2022 - Dec 2025 17,154,516 $ 2.46 - $ 14.66 17,154,516 Multiple Voting Shares April 1 , 2023 14,350 106.17 14,350 The following table summarizes the stock warrants that remain outstanding as of December 31, 2020: Security Issuable Expiration Date Number of Stock Warrants Exercise Price Stock Warrants Exercisable Subordinate Voting Shares May 2022 - April 2023 18,872,114 $ 2.40 - $ 14.27 18,872,114 Multiple Voting Shares April 2021 - April 2023 55,350 103.36 55,350 The fair value of the stock warrants granted was determined using the Black-Scholes option-pricing model with the following weighted-average assumptions at the time of issuance: 2021 2020 Risk-Free Annual Interest Rate 0.11 % - 0.16 % 2.15 % Expected Annual Dividend Yield 0 % 0 % Expected Stock Price Volatility 95 % 70 % - 99 % Expected Term 2.2 - 2.3 Years 1.0 - 5.0 years Expected volatility was estimated by using the Company’s historical share price volatility for a period similar to the expected life of the warrants. The expected term represents the period of time that the stock warrants issued are expected to be outstanding. The risk-free interest rate, using the expected life of the warrants, is based on the U.S. Treasury yield curve in effect at the time of issuance. During the three months ended June 30, 2021, there were no stock warrants granted. During the six months ended June 30, 2021, the fair value of the stock warrants granted was $ 2.35 and $ 1.50 per warrant, respectively. As of June 30, 2021 and 2020, stock warrants outstanding have a weighted-average remaining contractual life of 0.8 and 2.2 years, respectively. Warrants exercised for cash During the three months ended June 30, 2021, the Company issued 26,000 MVS and 271,742 SVS as a result of warrant exercises and received cash proceeds of approximately $ 3.4 million. During the six months ended June 30, 2021 , the Company issued 41,000 MVS and 2,641,164 SVS as a result of warrant exercises (including 615,710 SVS issued in relation to compensation warrants exercised) and received cash proceeds of approximately $ 10.3 million. Shares held in escrow As of June 30, 2021 , the Company has 2,000,000 SVS held in escrow to be released on the achievement of certain milestones. The conditions for release were not met as of June 30, 2021. The shares are non-employee compensation for raising equity. The following presents the total outstanding SVS if converted as of June 30, 2021: Share Class Number of Conversion Total Super Voting Shares 2,000,000 1 2,000,000 Multiple Voting Shares 1,561,678 100 156,167,800 Subordinate Voting Shares 255,991,500 1 255,991,500 Total 414,159,300 |
Net Loss Per Share
Net Loss Per Share | 6 Months Ended |
Jun. 30, 2021 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share | 15. Net Loss Per Share Calculation of net loss per common share attributable to Harvest Health & Recreation Inc. is as follows: Three Months Ended June 30, Six Months Ended June 30, (In thousands, except share and per share data) 2021 2020 2021 2020 Net loss attributable to Harvest Health & Recreation Inc. $ ( 19,505 ) $ ( 27,574 ) $ ( 42,627 ) $ ( 42,958 ) Net loss attributable to discontinued operations, net of tax $ ( 1,954 ) $ ( 905 ) $ ( 1,954 ) $ ( 1,289 ) Basic weighted-average number of shares outstanding 413,103,779 364,580,737 410,383,008 334,380,082 Net loss per share attributable to Harvest Health & Recreation Inc. - basic and diluted $ ( 0.05 ) $ ( 0.08 ) $ ( 0.10 ) $ ( 0.13 ) Net loss per share attributable to discontinued operations, net of tax $ — $ — $ — $ — As the Company is in a loss position for both the three and six months ended June 30, 2021 and 2020, the inclusion of shares issuable upon exercise of stock options, vesting of restricted stock, exercise of warrants, and conversion of debt in the calculation of diluted earnings per share would be anti-dilutive and, accordingly, were excluded from the diluted loss per share calculation. The weighted-average number of shares outstanding assumes the conversion of all MVS and Super Voting Shares to SVS. The following table summarizes the potential SVS that were excluded as they were anti-dilutive: June 30, 2021 2020 Stock options and restricted stock units 12,364,946 16,011,125 Warrants (1) 19,345,162 14,685,996 Convertible debt 13,823,603 32,041,357 45,533,711 62,738,478 (1) Includes the outstanding compensation warrants issued for underwriting services in the October 2020 bought financing. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2021 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 16. Commitments and Contingencies Regulatory environment The Company’s operations are subject to a variety of local and state regulation. Failure to comply with one or more of those regulations could result in fines, restrictions on its operations, or losses of permits or licenses that could result in the Company ceasing operations. While management of the Company believes that the Company is in compliance with applicable local and state regulation as of June 30, 2021, cannabis regulations continue to evolve and are subject to differing interpretations. As a result, the Company may be subject to regulatory fines, penalties, or restrictions in the future. Contingencies Claims & legal proceedings From time to time, the Company may be involved in legal proceedings, including litigation or regulatory proceedings relating to claims arising out of operations in the normal course of business. In accordance with the current accounting standards for loss contingencies under ASC Topic 450, we establish reserves for litigation-related matters that arise from the ordinary course of our business activities when it is probable that a loss associated with a claim or proceeding has been incurred and the amount of the loss can be reasonably estimated. Litigation claims and proceedings of all types are subject to many uncertain factors that generally cannot be predicted with assurance. By their nature, the amount of the contingency and the timing of a contingent event and any resulting accounting recognition are subject to our judgment of such events and our estimates of the amounts. Below we provide a description of potentially material legal proceedings and claims. Falcon International, Inc. On January 6, 2020, the Company terminated the Agreement and Plan of Merger and Reorganization entered into among the Company, Harvest California Acquisition Corp., Falcon International Corp. and its shareholders dated February 14, 2019, as amended (the “Falcon Merger Agreement”). The Falcon Merger Agreement was terminated as a result of defaults by Falcon and its shareholders incapable of being cured, and other improper conduct of Falcon and its principal officers and directors, James Kunevicius and Edlin Kim. On January 6, 2020, the Company also filed suit in the U.S. District Court for the District of Arizona (Case No. 2:20-cv-00035-DLR) (the “Falcon Lawsuit”), which identified the grounds for termination and sought a court order compelling Falcon and its shareholders to arbitrate the Company’s claims. On February 7, 2020, an Amended Complaint was filed as a matter of course, providing greater specificity after certain defendants filed a motion to dismiss. On February 26, 2020, Falcon, its subsidiaries, and its founders all stipulated to the relief sought by the Amended Complaint, to refer the matter to binding, private arbitration before the American Arbitration Association (“AAA”). On March 6, 2020, the U.S. District Court for the District of Arizona ordered the parties to the stipulation to binding, private arbitration of the matter before the AAA. The remedies the Company seeks in the AAA arbitration include rescission and/or termination of the Falcon Merger Agreement, all agreements entered into in connection with the Falcon Merger Agreement and the “Control Person Transaction” discussed below, an award of restitutionary damages from Falcon and its shareholders including repayment of funds advanced pursuant to promissory notes issued by Falcon and its subsidiaries in connection with the Falcon Merger Agreement, appointment of a receiver for Falcon and an award of attorneys’ fees, arbitration forum fees and costs. Remedies sought by the Company in arbitration also include rescission and/or termination remedies concerning the “Control Person Transaction” referenced in that certain Membership Interest Purchase Agreement entered into among James Kunevicius and Edlin Kim (collectively, the “Selling Owners”), Elemental Concepts, LLC and Compass Point, LLC (the “Sellers”) and Harvest of California, LLC (a wholly owned subsidiary of the “Company”) dated June 7, 2019 (the “MIPA”). Pursuant to the terms of the MIPA, the Company purchased 100 % of the membership interests in two entities that hold commercial cannabis licenses in California (the “Purchased Interests”) for a purchase price of $ 4.1 million (the “Purchase Price”). These remedies include seeking an order which would effectively require the equivalent of the Selling Owners and the Sellers being required to repurchase from the Company all of the Purchased Interests for an amount equal to the Purchase Price as provided for in the MIPA. On July 2, 2020, Falcon and two of its shareholders filed a counterclaim against the Company in the AAA arbitration proceeding. The counterclaim alleges that the Company breached the Falcon Merger Agreement, breached an implied covenant of good faith and fair dealing and intentionally interfered with Falcon’s prospective business relations and seeks monetary damages of $ 50.0 million pursuant to the Falcon Merger Agreement. On March 13, 2021, the parties entered into a binding settlement agreement, resulting in a final dismissal of all litigation and arbitration between them arising out of the 2019 merger agreement. In accordance with the settlement terms, Harvest owns a 10 % equity interest in Falcon. Each share comes with a 10-year warrant entitling Harvest to purchase two (2) common shares of Falcon at an exercise price of $ 1.91 , subject to customary anti-dilution adjustments in the event of stock splits, stock dividends and similar corporate events. See Note 10 for additional information. AGRiMED Industries of PA, LLC The Company appealed the Commonwealth of Pennsylvania Department of Health (“PDOH”), June 2019 denial of the renewal of a grower/processor permit issued to AGRiMED Industries of PA, LLC (“AGRiMED”) which the Company acquired through a Membership Interest Purchase Agreement on May 20, 2019. On August 28, 2019, AGRiMED filed a timely Notice of Appeal with the PDOH Docket No. 19-068 GP on the grounds that, among other things, the PDOH is equitably estopped and abused its discretion in refusing to renew AGRiMED’s permit, given AGRiMED’s recent change in ownership, the PDOH’s awareness of that change, and the limited scope of AGRiMED’s operations at the time of the non-renewal, of which the PDOH was similarly aware. Further, AGRiMED asserted that the PDOH had failed to provide AGRiMED with an opportunity to respond to or otherwise cure or correct any alleged violations identified by the PDOH. On May 6, 2021 the PDOH entered into a settlement agreement regarding the AGRiMED permit which allows for the conditional renewal of the permit and its operation by the Company as early as August 15, 2021. The AGRiMED permit is still subject to litigation from a third-party seeking revocation of the permit. The possible revocation is related to an administrative challenge filed by Bay LLC, which was the next highest scoring applicant when AGRiMED was awarded a permit. Bay LLC’s objection to the award of the AGRiMED permit is due to the fact that one of AGRiMED’s principals (pre-Harvest’s MIPA to operate the permit) failed to disclose a criminal conviction on the AGRiMED application. On November 9, 2020, the PDOH Deputy Secretary ruled that the AGRiMED permit should not be revoked based upon an equitable estoppel theory. On December 3, 2020 Bay LLC filed a Petition for Review of the November 9, 2020 PDOH determination in the Pennsylvania Commonwealth Court. Briefing of that appeal was completed in May 2021 and the Company is awaiting a ruling. Rainbow lease and real estate litigation On June 4, 2020, Rainbow HAH Council Bluffs LLC, Rainbow HAH Santa Cruz LLC, Rainbow HAH Coalinga LLC, Rainbow HAH LLC and Rainbow Realty Group LLC (collectively, the “Plaintiffs”) filed a complaint in the Supreme Court of the State of New York, County of Nassau (Index No.: 605323/2020) against the Company and certain of its subsidiaries and certain of its current officers and directors, including Scott Atkison (the “Harvest Defendants”), ICG and certain of its subsidiaries, Hightimes Holding Corp. and one of its subsidiaries, Ryan Kunkel (“Kunkel”) and James Dennedy (“Dennedy”). Mr. Atkison is a former shareholder and director of ICG and is a party to the Agreement and Plan of Merger and Reorganization, dated March 13, 2020, between a wholly-owned subsidiary of the Company and ICG (the “ICG Merger Agreement”) and as result thereof, he, along with other former ICG shareholders including Daniel Reiner, a shareholder of the Company and the beneficial owner of greater than 5 % of our equity securities, may have indemnification obligations to the Company. On September 24, 2020, the Plaintiffs filed an amended complaint (the “Amended Rainbow Complaint”). The Amended Rainbow Complaint alleges, among other things, that the Plaintiffs were fraudulently induced by Kunkel and Dennedy and aided and abetted by the Harvest Defendants into paying $ 3.5 million to purchase three cannabis dispensaries that were leased by Have a Heart branded dispensaries in Council Bluffs, Iowa, Coalinga, California and Santa Cruz, California (the “Gerra Properties”). The properties were sold to the Plaintiffs by Gerra Capital Management which was owned and controlled by certain former ICG directors and shareholders which included Kunkel and Dennedy. The Amended Rainbow Complaint alleges breach of lease, breach of guaranty, breach of the implied covenant of good faith and fair dealing, fraud in the inducement, conspiracy to commit fraud, aiding and abetting fraud, violations of debtor creditor law and piercing the corporate veil (the “Rainbow Litigation”). In December 2020, the case transferred to the Commercial Division of the Supreme Court of the State of New York, County of New York (Index No.: 452625/2020). On July 15, 2021, the Company, Harvest Enterprises, Inc., Harvest HAH WA, Inc., Steven M. White, M. Scott Atkison and Daniel T. Reiner (collectively, the “Defendants”), and the Plaintiffs entered into a Confidential Settlement Agreement and Release, pursuant to which, inter alia, the Company issued 150,000 SVS to the Plaintiffs in consideration for the final release (with prejudice) of all claims pending against the Defendants in the Commercial Division of the Supreme Court of the State of New York, County of New York (Index No.: 452625/2020). TGS National Franchise, LLC arbitration In the Matter of Arbitration between TGS National Franchise, LLC v. San Felasco Nurseries, Inc. (“SFN”) as assignee of Florida Compassionate Growers LLC (Case No: 01-18-0003-9481) (the “SFN Arbitration”). With the TGS Appeal decided, the SFN Arbitration re-commenced in August 2020. On November 9, 2020, the panel in the SFN Arbitration (the “AAA Panel”) denied SFN’s motion to dismiss, which had argued that the arbitration was precluded by the earlier TGS Lawsuits. On March 29, 2021, the AAA Panel denied SFN’s request to file a pre-hearing motion to dismiss the SFN Arbitration for failure to state recoverable damages. The final hearing in the SFN Arbitration was held the week of May 3, 2021. Post-hearing briefing was completed on June 29, 2021. 10.6 million based on the supposed “present value” of “unpaid future royalties” in respect of these claims. The AAA Panel awarded an additional $ 3.7 million in pre-award interest on these damages, and post-award interest at a rate of 12 % per annum. Litigation Arising Out of Proposed Transaction with Trulieve Cannabis Corp. On May 10, 2021, the Company entered into an arrangement agreement (the “Arrangement Agreement”) with Trulieve Cannabis Corp. (“Trulieve”), pursuant to which Trulieve agreed, subject to the terms and conditions thereof, to acquire all of the issued and outstanding subordinate voting shares of the Company, multiple voting shares of the Company, and super voting shares of the Company. On July 13, 2021, the Company issued its Definitive Proxy Statement (the “Proxy”) soliciting stockholder approval of the proposed transaction. Since the issuance of the Proxy, a number of purported stockholders of the Company have sent demand letters to the Company’s Board of Directors and/or commenced litigation challenging the accuracy and/or completeness of the disclosures in the Proxy. To date, the following five lawsuits have been filed, bearing the following captions: Oppen v. Harvest Health et al. , C.A. No. 21-02048 (D. Col.) Stout v. Harvest Health et al. , C.A. No. 21-06398 (S.D.N.Y.) Jenkins v. Harvest Health et al. , C.A. No. 21-02045 (D. Col.) Coffman v. Harvest Health et al. , C.A. No. 21-02026 (D. Col.) Wean v. Harvest Health et al. , C.A. No. 21-06435 (S.D.N.Y.) Finger v Harvest Health et al. , C.A. No. 21-02086 (D. Col.) Each lawsuit asserts claims under Sections 14(a) and 20(a) of the Securities Exchange Act of 1934 and alleges that the Proxy omits and/or misrepresents material information concerning: (i) the Company’s and Trulieve’s financial projections; (ii) the financial analyses performed by the Company’s financial advisors, Moelis & Company LLC and Haywood Securities Inc. (“Haywood”), in connection with their fairness opinions; (iii) information regarding the nature of Haywood’s arrangement; and (iv) the sales process leading up to the proposed transaction. The Company vehemently denies these allegations, and intends to vigorously defend against these lawsuits. At this point, the Company is unable to state whether an outcome unfavorable to the Company is either probable or remote, or to estimate the range of possible loss in the event of an unfavorable outcome. The Company previously recorded a liability in the amount of $ 3.0 million during year ended December 31, 2020 and increased its liability by an additional $ 4.5 million during the three months ended June 30, 2021. Litigation assessment The Company has evaluated its claims and the foregoing matters to assess the likelihood of any unfavorable outcome and to estimate, if possible, the amount of potential loss as it relates to the litigation discussed above. Based on this assessment and estimate, which includes an understanding of the Company’s intention to vigorously prosecute its claims, the Company believes that any defenses of any of the counterparties lack merit, and the likelihood of any recoveries by any of the counterparties against the Company appears remote. This assessment and estimate is based on the information available to management as of the date of these financial statements and involves a significant amount of management judgment, including the inherent difficulty associated with assessing litigation matters in their early stages. As a result, the actual outcome or loss may differ materially from those envisioned by the current assessment and estimate. Our failure to successfully prosecute or settle these claims could have a material adverse effect on our financial condition, revenue and profitability and could cause the market value of our subordinate voting shares to decline. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 17. Income Taxes The Company accounts for income taxes in accordance with the provisions of ASC 740, Income Taxes (“ASC 740”), on a tax jurisdictional basis. The Company files a consolidated as well as several standalone company U.S. income tax returns and, at the federal level, its gross profits or income and losses are taxed at 21 %. The Company’s effective tax rate varies from the U.S. Federal statutory rate due to permanent non-deductible IRS Section 280e differences, pass-through entities, and non-controlling interests. The Company recorded income tax expense of $ 6.8 million and $ 1.1 million for the three months ended June 30, 2021 and 2020, and $ 13.3 million and $ 4.9 million for the six months ended June 30, 2021 and 2020, respectively. The net deferred income tax liability was $ 53.1 million as of both June 30, 2021 and December 31, 2020 and consists primarily of future tax impacts of the book and tax differences in fixed asset depreciation and intangibles acquired through purchase accounting. During the three and six month ended June 30, 2021 and 2020, respectively, the Company recognized an immaterial amount of interest and penalties. The Company has not established valuation allowances against any U.S. Federal or state deferred tax assets. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2021 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 18. Related Party Transactions Related party notes receivable (In thousands) June 30, December 31, Secured promissory notes dated February 2020 (1) $ 6,695 $ 6,471 Secured revolving notes dated December 2018 through January 2019 (2) 3,581 3,581 Total due from related party (current portion notes receivable) $ 10,276 $ 10,052 (1) Secured promissory note dated February 2020, and amended February 2021, in the aggregate principal amount of $ 6.7 million with maturity date February 2022 ; principal is due at maturity. Interest rate of 6 % per annum, due at maturity. The secured note of $ 6.7 million is due from Harvest of Ohio LLC, an Ohio limited liability company owned 49% by Steve White, the Chief Executive Officer of the Company, and an entity in which the Company has an investment interest. The Company accounts for the investment interest under the equity method. During the six months ended June 30, 2021 and 2020, interest income was $ 0.2 million and $ 0.1 million, respectively. During the three months ended June 30, 2021 and 2020, interest income was $ 0.1 million and less than $ 0.1 million, respectively. (2) Secured revolving notes dated December 2018 through January 2019 in the aggregate principal amount of $ 3.6 million which are due from AINA We Would LLC, the borrower, of which Harvest owns a 25% interest. The notes mature between December 2019 and February 2020 and the principal is due at maturity. The secured revolving notes which mature between December 2019 and February 2020 are currently in default. The Company negotiated a settlement agreement with the debtor and, at this time, expects to receive the full principal balance. The secured revolving notes have interest rates of 8.25 - 8.5 % per annum with interest payments due monthly. AINA We Would LLC can draw up to $ 30.0 million, with each advance subject to the approval of AINA We Would LLC and the Company in their sole discretion. No interest income was recorded during the three or six months ended June 30, 2021 and $ 0.1 million of interest income was recorded during both the three and six months ended June 30, 2020. Related party leases Included in the Condensed Consolidated Balance Sheets are the following amounts recorded for leases with related parties: (In thousands) June 30, December 31, Right-of-use assets for operating leases, net $ 5,541 $ 5,621 Operating lease liability, current portion ( 150 ) ( 135 ) Operating lease liability, net of current portion ( 5,518 ) ( 5,595 ) AZRE2, LLC owns a building located at 300 East Cherry Street, Cottonwood, Arizona 86326, which it leases to Harvest to use as a cultivation facility. The lease commenced on August 1, 2019 for a 15 year term and rent payments were approximately $ 0.3 million for the six months ended June 30, 2021 and 2020 respectively. Rent payments were $ 0.2 million for the three months ended June 30, 2021 and 2020, respectively. The Company incurred rent expense of $ 0.3 million for the six months ended June 30, 2021 and 2020, respectively and $ 0.2 million in relation to this lease for the three months ended June 30, 2021 and 2020, respectively. Jason Vedadi, the former Chairman of the Board of Harvest, is the sole owner of AZRE2, LLC. $ 1.4 million is due to Karma Capital, LLC, an entity wholly owned by Mr. Vedadi, to pay back the loan given to purchase the Cottonwood property. Karma Capital, LLC owns a building located at 2726-2734 E. Grant Road Tucson, Arizona 85716, which it leases to Harvest to use as a dispensary. The lease commenced on July 1, 2017 for a 15 year term and rent payments were less than $ 0.1 million for the six and three months ended June 30, 2021 and 2020 , respectively. The Company incurred rent expense of less than $ 0.1 million in relation to this lease for six and three months ended June 30, 2021 and 2020, respectively. Mr. Vedadi, the former Chairman of the Board of Harvest, is the sole owner of Karma Capital, LLC. Earbuds, LLC owns a building located at 4370 Tonawanda Trail Beaver Creek, Ohio 45430, which it leases to Harvest to use as a dispensary. The lease commenced on April 1, 2020 for a 15 year term and rent payments were less than $ 0.1 million for the six and three months ended June 30, 2021 and 2020, respectively. There was also an additional fee paid of approximately $ 0.1 million provided to the landlord for previous costs incurred to purchase the building in 2020. The Company incurred rent expense of less than $ 0.1 million in relation to this lease for the six months and three months ended June 30, 2021 and 2020, respectively. Each of Mr. Vedadi, the former Chairman of the Board of Harvest, Joseph Sai, Harvest’s Chief of Staff and Howard Hintz, Harvest’s former Director of Contracts, are partners of Earbuds, LLC. Each of the three partners of Earbuds, LLC are entitled to an equal distribution share of the accrued rental income. $ 0.4 million is due to SMRE LLC (an entity owned by Mr. Sai), Things Change LLC (an entity owned by Mr. Hintz) and TJV-168 LLC (an entity owned by Mr. Vedadi) to pay back the loan given to purchase the Beaver Creek, OH property. Each partner loaned $0.1 to Earbuds, LLC to acquire the property. On February 9, 2021, we cancelled 2,545 Multiple Voting Shares held by Jason Vedadi in exchange for extinguishing our right of first refusal under the Separation Agreement (as more fully described and qualified by reference to Exhibit 10.1 of this Quarterly Report on Form 10-Q, Amendment to Separation Agreement and General Release, by and between Jason Vedadi and Harvest Health & Recreation Inc., dated February 9, 2021). The number of Multiple Voting Shares is equal to an aggregate market value of $ 1,000,185 divided by the closing sales price of the Subordinate Voting Shares on February 5, 2021, which was $ 3.93 . The Multiple Voting Shares were convertible to Subordinate Voting Shares on a 1 :100 basis . This transaction with Mr. Vedadi is a transaction agreed with an “insider” and is considered to be a “related party transaction.” |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | 19. Subsequent Events |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation | (a) Basis of Presentation The accompanying Unaudited Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, our condensed consolidated financial statements do not include all the information and footnotes required by GAAP for complete financial statements. Normal and recurring adjustments considered necessary for a fair statement of the results for the interim periods, in the opinion of the Company’s management, have been included. Operating results for the three months ended June 30, 2021, are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. The accompanying condensed consolidated financial statements and related footnote disclosures should be read in conjunction with the consolidated financial statements and notes thereto included in our 2020 Annual Report on Form 10-K filed with the SEC on March 30, 2021. The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results may differ from the estimates and assumptions used. |
Basis of Measurement | (b) Basis of Measurement These Unaudited Condensed Consolidated Financial Statements have been prepared on the going concern basis, under the historical cost convention, except for certain financial instruments that are measured at fair value as described herein. |
Functional Currency | (c) Functional Currency These Unaudited Condensed Consolidated Financial Statements are presented in United States dollars, which is also the functional currency of the Company and its affiliates. |
Basis of Consolidation | (d) Basis of Consolidation These Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q include the accounts of the Company, all wholly-owned and majority-owned subsidiaries in which the Company has a controlling voting interest and, when applicable, variable interest entities in which the Company has a controlling financial interest or is the primary beneficiary. Investments in affiliates where the Company does not exert a controlling financial interest are not consolidated. Subsidiaries over which the Company has a controlling financial interest are fully consolidated from the date control commences until the date control ceases. All of the consolidated entities were under common control during the entirety of the periods for which their respective results of operations were included in the consolidated statements (i.e., from the date of their acquisition). All intercompany accounts and transactions have been eliminated on consolidation. |
Discontinued Operations | (e) Discontinued Operations The Company followed Accounting Standard Codification (“ASC”) 360, Property, Plant, an Equipment , and ASC 205-20, Discontinued Operations , to report assets held for sale and discontinued operations. The Company classifies assets and liabilities of a business or asset group as held for sale, and the results of its operations as income (loss) from discontinued operations, net, for all periods presented, when (i) we commit to a plan to divest a business or asset group, actively begin marketing it for sale, and when it is deemed probable of occurrence within the next twelve months, and (ii) when the business or asset group reflects a strategic shift that has, or will have, a major effect on the Company’s operations and its financial results. In measuring the assets and liabilities held for sale, the Company evaluates which businesses or asset groups are being marketed for sale. See Note 4 for additional information. |
Revenue Recognition | (f) Revenue Recognition The Company accounts for customer contracts in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”), which includes the following five-step model: Identification of the contract, or contracts, with a customer. Identification of the performance obligations in the contract. Determination of the transaction price. Allocation of the transaction price to the performance obligations in the contract. Recognition of revenue when, or as, the Company satisfies a performance obligation. Through application of the standard, the Company recognizes revenue to depict the transfer of promised goods or services to the customer in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. Revenues consist primarily of wholesale and retail sales of cannabis, which are generally recognized at a point in time when control over the goods have been transferred to the customer and is recorded net of sales discounts. Payment is typically due upon transferring the goods to the customer or within a specified time period permitted under the Company’s credit policy. Sales discounts were no t material during the three and six months ended June 30, 2021 and 2020, respectively. The Company has agreements in place whereby third-parties provide services or license the right to operate certain aspects of cannabis facilities owned by the Company. Under the terms of these agreements, the service provider operates various aspects of the business including procurement, production, regulatory compliance, marketing and sales, subject to oversight by the Company. The Company pays the service provider a fee for its services or in the case of licenses, the licensee pays the Company a license fee. The Company recorded $ 0.3 million and $ 6.2 million on a gross basis for the three months ended June 30, 2021 and 2020 , respectively. The Company recorded $ 0.6 million and $ 12.6 million on a gross basis for the six months ended June 30, 2021 and 2020, respectively. The determination that the Company was the principal under these agreements was made in accordance with ASC 606-10-55-36 through 55-40 and consists of the following analysis. The Company analyzed the agreements first to determine what the specified good or service is that is being provided. Secondly, whether the Company is in control of the goods prior to the goods being transferred to the customer. The specified goods consist of various cannabis products sold at either a retail location or wholesale. In order to determine whether the Company had control of the specified goods prior to transfer to the customer, the terms of the agreements to provide the goods to the customers were evaluated. Pursuant to the terms of the agreements, the Company is at all times the owner of the products which are the cannabis and cannabis concentrates. Further, the service provider would not be able to sell the products to the customer without the use the of the Company’s license which permits it to sell cannabis under state law. The following represents disaggregated revenue information: (In thousands) Retail Wholesale Licensing and other Consolidated Revenue for the three months ended June 30, 2021 $ 85,177 $ 13,948 $ 3,338 $ 102,463 Revenue for the three months ended June 30, 2020 $ 42,250 $ 7,199 $ 6,212 $ 55,661 Revenue for the six months ended June 30, 2021 $ 162,825 $ 23,241 $ 5,223 $ 191,289 Revenue for the six months ended June 30, 2020 $ 72,262 $ 13,264 $ 14,370 $ 99,896 Our customer loyalty program enables participants to earn points for qualifying purchases that can be redeemed for discounts or product in the future. We allocate the transaction price between the goods delivered and the future goods that will be delivered, on a relative standalone selling price basis, and defer the revenues allocated to the points, less expected expirations, until such points are redeemed. The timing of loyalty point redemptions can vary significantly, and the loyalty points do not expire. As of June 30, 2021, the amount of revenue deferred related to the earned points, net of redemptions, is $ 2.3 million. The deferral is reflected as a current liability in our condensed consolidated balance sheets because it is expected to be earned within the next 12 months. |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
Summary of Disaggregation of Revenue | The following represents disaggregated revenue information: (In thousands) Retail Wholesale Licensing and other Consolidated Revenue for the three months ended June 30, 2021 $ 85,177 $ 13,948 $ 3,338 $ 102,463 Revenue for the three months ended June 30, 2020 $ 42,250 $ 7,199 $ 6,212 $ 55,661 Revenue for the six months ended June 30, 2021 $ 162,825 $ 23,241 $ 5,223 $ 191,289 Revenue for the six months ended June 30, 2020 $ 72,262 $ 13,264 $ 14,370 $ 99,896 |
Recently Issued Accounting Pr_2
Recently Issued Accounting Pronouncements (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Recently Issued Accounting Pronouncements [Abstract] | |
Schedule of Recently Issued Accounting Pronouncements | We adopted the following standard during the six months ended June 30, 2021, which did not have a material impact on our financial statements or financial statement disclosures: Date Issued Standard Effective Date December 2019 ASU 2019-12, Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes January 2021 The following standards were recently issued, and the Company is assessing the impact to the future consolidated financial statements: Date Issued Standard Effective Date May 2021 ASU 2021-04 Earnings Per Share (Topic 260), Debt— Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40) January 2021 August 2020 ASU No. 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 i n an Entity’s Own Equity January 2022 |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Disposal Group Not Discontinued Operation Income Statement Disclosures [Abstract] | |
Schedule of Statement of Operations, Assets and liabilities of Discontinued Operations | The following table is the Unaudited Condensed Consolidated Statements of Operations reflecting discontinued operations for the three months and six months ended June 30, 2020: (In thousands) Three Months Ended June 30, 2020 Six Months Ended June 30, 2020 Revenue, net of discounts $ 3,996 $ 4,778 Cost of goods sold ( 2,054 ) ( 2,711 ) Gross profit 1,942 2,067 Expenses General and administrative 1,278 1,603 Sales and marketing 24 46 Depreciation and amortization 1,039 1,057 Total expenses 2,341 2,706 Operating income (loss) ( 399 ) ( 639 ) Other (expense) income Gain on sale of assets 2,574 2,574 Interest expense ( 711 ) ( 717 ) Loss before taxes and non-controlling interest 1,464 1,218 Income taxes ( 9 ) ( 147 ) Loss from continuing operations before non-controlling interest 1,455 1,071 Net loss from discontinued operations, net of tax 905 1,289 Net loss attributed to Harvest Health & Recreation Inc. $ 2,360 $ 2,360 The following table is a summary of the assets and liabilities of discontinued operations: (In thousands) June 30, 2021 December 31, 2020 ASSETS Inventory, net $ 344 $ 93 Other current assets - 33 Property, plant and equipment, net 3,110 1,747 Right-of-use asset, net 64 3,593 Intangibles assets, net 171 894 Other assets — 225 Assets from discontinued operations $ 3,689 $ 6,585 LIABILITIES Lease liability, net of current portion 28 718 Liabilities from discontinued operations $ 28 $ 718 |
Inventory (Tables)
Inventory (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | The Company’s inventory consisted of: (In thousands) June 30, December 31, Raw materials $ 17,384 $ 12,632 Work in progress 6,165 5,634 Finished goods 22,228 19,718 Total inventory 45,777 37,984 Reserve ( 1,169 ) ( 1,122 ) Total inventory, net $ 44,608 $ 36,862 |
Notes Receivable (Tables)
Notes Receivable (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Loans And Leases Receivable Disclosure [Abstract] | |
Schedule of Receivables with Imputed Interest | The Company’s notes receivable consisted of: (In thousands) June 30, December 31, Secured promissory notes dated November 2020 in the principal amount of $ 12.0 million with a maturity date of November 9, 2025 ; monthly payments of $ 0.1 million, inclusive of principal and interest. Balloon payment of $ 8.4 million due at maturity. Interest rate of 7.5 % per annum. $ 11,493 $ 12,000 Secured promissory notes dated February 2020 through June 2021 in the principal amount of $ 15.1 million with maturity dates from August 2021 to February 2022 ; principal is due at maturity. Interest rates of 6 - 8 % per annum, due at maturity. 15,088 13,471 Secured promissory notes, created from the CannaPharmacy acquisition, dated April and June of 2019 in the principal amount of $ 11.6 million with maturity dates in April and June of 2021 ; principal is due at maturity. Interest rate of 8 % per annum, due quarterly. — 456 Secured convertible promissory note, due from Falcon International Corp. (‘‘Falcon’’) and subsidiaries, dated June 7, 2019 in the principal amount of up to $ 40.4 million with maturity date of June 6, 2022 ; principal is due at maturity. Interest rate of 4 % per annum, due at maturity. (1) — 25,525 Unsecured convertible promissory notes, due from Falcon and its subsidiaries, dated October 2018 through February 2019 in the principal amount of $ 24.5 million with maturity dates of August to November 2019 ; principal is due at maturity. Interest rate of 8 % per annum, due at maturity. (1) — 24,499 Secured revolving notes dated December 2018 through January 2019 in the principal amount of up to $ 30.0 million with maturity dates of December 2019 to February 2020 ; principal is due at maturity. Interest rates of 8.25 - 8.5 % per annum with interest payments due monthly. (2) 3,581 3,581 Secured promissory notes dated February 2021 in the principal of up to $ 0.9 million with a maturity date of February 19, 2022 ; principal is due at maturity. Interest rate of 10.0 % per annum with interest payments due monthly. 850 — Gross notes receivable 31,012 79,532 Less: provision for impairment of notes receivable ( 627 ) ( 29,713 ) Total notes receivable, net of allowance 30,385 49,819 Less: current portion of notes receivable ( 19,869 ) ( 31,608 ) Notes receivable, long-term portion $ 10,516 $ 18,211 (1) These notes were settled as part of the Falcon Lawsuit settlement. $ 29.1 million of the provision for impairment of notes receivable related to these notes was written off in relation to this settlement. See Note 10 for additional information. (2) These notes are currently in default. The Company negotiated a settlement agreement with the debtor and, at this time, expects to receive the full principal balance during fiscal year 2021. The Company’s provision for expected credit losses as of June 30, 2021 includes $ 0.3 million related to these notes. |
Notes Receivable Maturities Analysis | Stated maturities of the notes receivable are as follows: (In thousands) Expected Principal Payments 2021 (6 months) $ 10,470 2022 9,918 2023 728 2024 784 2025 9,112 $ 31,012 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Leases [Abstract] | |
Summary of Supplemental Balance Sheet Information Related to Leases | The following table presents lease assets and liabilities within the Condensed Consolidated Balance Sheets: Lease and Classification June 30, 2021 December 31, 2020 Operating Leases: (In thousands) Right-of-use asset, net $ 118,935 $ 66,464 Lease liability, current portion $ 2,060 $ 3,041 Lease liability, net of current portion $ 118,249 $ 64,232 Finance Leases: Property, plant and equipment, net (1) $ 405 $ 5,523 Other current liabilities $ 92 $ 5,504 (1) Finance lease assets are recorded net of accumulated amortization of less than $ 0.1 million as of June 30, 2021 and December 31, 2020 , respectively. |
Summary of Supplemental Statement of Operations Related to Leases | The Company recognized the following amounts within the Condensed Consolidated Statements of Operations: Three Months Ended June 30 Six Months Ended June 30 2021 2020 2021 2020 Operating lease expense $ 5,270 $ 5,553 $ 9,758 $ 8,352 Interest on lease liabilities $ 2 $ 384 $ 6 $ 387 Expenses related to short-term leases $ 19 $ 487 $ 228 $ 950 Expenses related to variable payments $ 498 $ 266 $ 688 $ 507 The Company’s sublease income is immaterial. |
Schedule of Cash Flow Information Related to Leases | Other information: Six Months Ended June 30, 2021 2020 Cash paid for amounts included in the measurement of lease liabilities: (In thousands) Operating cash flows from operating leases $ 7,831 $ 2,556 Operating cash flows from finance leases $ 6 $ 387 Financing cash flows from finance leases $ 87 $ 24 |
Schedule of Lease Terms and Discount Rate | The Company’s lease terms and discount rates were as follows: Weighted average remaining term (in years): June 30, 2021 June 30, 2020 Operating 14.5 3.6 Finance 34.5 9.9 Weighted average discount rate: Operating 12.43 % 10.00 % Finance 10.00 % 10.03 % |
Intangible Assets and Goodwill
Intangible Assets and Goodwill (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets and Goodwill | Intangible assets, including goodwill, as of December 31, 2020 and June 30, 2021 consisted of the following: Gross carrying amount (in thousands) Weighted average useful lives (years) December 31, Additions Dispositions/ June 30, Definite life intangible assets: Patient relationships 2.0 $ 820 $ — $ — $ 820 Technology 9.9 18,058 — — 18,058 Software 5.0 241 320 ( 145 ) 416 Other 3.0 410 730 ( 241 ) 899 Indefinite life intangible assets: Licenses and permits 253,866 519 ( 151 ) 254,234 Internally developed 1,113 694 ( 643 ) 1,164 Trade names 2,400 — — 2,400 Total intangible assets 276,908 2,263 ( 1,180 ) 277,991 Goodwill 116,041 — ( 500 ) 115,541 Total gross carrying amount $ 392,949 $ 2,263 $ ( 1,680 ) $ 393,532 Accumulated amortization (in thousands) December 31, Amortization Dispositions/ June 30, Definite life intangible assets: Patient relationships $ 820 $ — $ — $ 820 Technology 3,913 945 — 4,858 Software 57 19 ( 30 ) 46 Other — 184 — 184 Total accumulated amortization 4,790 1,148 ( 30 ) 5,908 Total intangible assets, net and goodwill $ 388,159 $ 1,115 $ ( 1,650 ) $ 387,624 |
Schedule of Estimated Amortization Expense | Based solely on the amortizable intangible assets recorded at June 30, 2021, estimated amortization expense for the remainder of fiscal 2020 through fiscal 2025 and thereafter is as follows: (In thousands) Estimated 2021 (6 months) $ 1,523 2022 2,108 2023 2,008 2024 1,787 2025 1,770 Thereafter 5,089 Total amortization expense $ 14,285 |
Corporate investments (Tables)
Corporate investments (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Investments Debt And Equity Securities [Abstract] | |
Summary of Carrying Values of Investments | The carrying values of the Company’s investments are as follows: (In thousands) June 30, December 31, Investment in Hightimes $ 19,091 $ 19,091 Investment in Falcon 21,833 — Corporate investments $ 40,924 $ 19,091 |
Other Current Liabilities (Tabl
Other Current Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Other Liabilities Disclosure [Abstract] | |
Summary of Other Current Liabilities | The Company’s other current liabilities consisted of: (In thousands) June 30, December 31, Accrued inventory purchases $ 7,671 $ 7,886 Accrued expenses 7,724 5,607 Accrued payroll and benefits 5,146 4,353 Accrued capital expenditures 2,906 3,133 Finance lease liabilities (1) 92 5,504 Deferred revenue 2,285 — Other 4,610 2,413 Total other current liabilities $ 30,434 $ 28,896 (1) See Note 7 for additional information. |
Notes Payable (Tables)
Notes Payable (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of Notes Payable | The Company’s notes payable consisted of: (In thousands) June 30, December 31, Secured promissory note dated March 2020, in the principal amount of $ 10.0 million with a maturity of March 2022 . Monthly interest payments of 9 % per annum. Principal balance due at maturity. (1) $ 10,000 $ 10,000 Unsecured promissory note dated February 2020, in the principal amount of $ 6.7 million with a maturity of February 2023 . Monthly interest payments at 4 % per annum. Annual payments of $ 2.2 million, inclusive of interest at 4 %, due beginning February 2021 with remaining principal due at maturity. 4,699 6,650 Secured promissory notes dated December 2019, in the principal amount of $ 93.4 million with a maturity of December 2022 . Semi-annual interest payments at 15 % per annum. Principal balance due at maturity. (2) 93,390 93,390 Secured promissory notes dated December 2019, in the principal amount of $ 42.4 million with a maturity of December 2022 . Semi-annual interest payments at 9.25 % per annum. Principal balance due at maturity. (3) 42,404 42,404 Secured convertible promissory note dated December 2019, in the principal amount of $ 10.0 million with a maturity of December 2021 . Semi-annual interest payments at 9 % per annum. Principal balance due at maturity. (4) 10,000 10,000 Secured convertible promissory note dated April 2021, in the principal amount of $ 5.0 million with a maturity of April 2023 . Semi-annual interest payments at 9 % per annum. Principal balance due at maturity. 5,000 — Secured promissory notes dated October 2019, in the principal amount of $ 6.5 million with a maturity of October 2021 . Monthly interest payments at 8.95 % per annum. Principal balance due at maturity. 6,500 6,500 Secured promissory notes dated September and October 2019, in the principal amount of $ 2.6 million with maturities of October 2024 . Monthly interest payments at 5.5 % and 8.75 % per annum. Principal balance due at maturity. (5) 2,456 2,505 Secured promissory note dated June 2019, in the principal amount of $ 4.0 million with a maturity of June 2024 . Interest at LIBOR plus 2.5 % per annum, payable monthly. Principal balance due based on 25-year amortization schedule with balloon payment at maturity. (6) 3,916 4,000 Unsecured convertible debentures dated May 2019, in the principal amount of $ 100.0 million with a maturity of May 2022 . Semi-annual interest payments at 7 % per annum. Principal balance due at maturity. (7) 100,000 100,000 Other unsecured promissory notes 3,661 4,039 Other secured promissory notes 8,026 1,275 Total notes payable 290,052 280,763 Less: unamortized debt discounts and issuance costs ( 11,410 ) ( 15,787 ) Net amount 278,642 264,976 Less: current portion of notes payable ( 134,394 ) ( 20,910 ) Notes payable, net of current portion $ 144,248 $ 244,066 (1) Carrying value includes debt discount of $ 0.7 million. (2) Carrying value includes debt issuance costs of $ 2.3 million. (3) Carrying value includes debt issuance costs of $ 1.2 million and warrants of $ 3.1 million. (4) Carrying value includes debt discount of $ 0.2 million. (5) Carrying value includes debt issuance costs of $ 0.1 million. (6) Carrying value includes debt issuance costs of less than $ 0.1 million. (7) Carrying value includes debt issuance costs of $ 1.4 million and warrants of $ 2.4 million. |
Schedule of Stated Maturities of Debt Obligations and Expected Interest Payments | Stated maturities of debt obligations and expected interest payments are as follows: (In thousands) Expected Principal Payments Expected Interest Payments 2021 (6 months) $ 19,360 $ 14,470 2022 254,324 21,864 2023 10,229 660 2024 5,611 270 2025 and thereafter 528 334 $ 290,052 $ 37,598 |
Share-based compensation (Table
Share-based compensation (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Summary of Stock Options Activity | : Number of Weighted- Aggregate Balance as of December 31, 2020 14,380,875 5.02 Forfeited/Cancelled ( 2,574,070 ) 6.53 Exercised ( 221,680 ) 2.52 Granted 675,500 3.85 Balance as of June 30, 2021 12,260,625 $ 4.69 $ 10,174,894 |
Summary of Stock Option, Exercise Price Range | The following table summarizes the Subordinate Voting Shares stock options that remain outstanding as of June 30, 2021: Security Issuable Expiration Date Number of Stock Options Exercise Price Stock Options Exercisable Subordinate Voting Shares November 2028 - February 2031 12,260,625 $ 1.09 - $ 8.75 4,866,313 The following table summarizes the Subordinate Voting Shares stock options that remain outstanding as of December 31, 2020: Security Issuable Expiration Date Number of Stock Options Exercise Price Stock Options Exercisable Subordinate Voting Shares November 2028 - December 2030 14,380,875 $ 1.09 - $ 8.75 2,326,000 |
Summary of Restricted Stock Units Activity | These restricted stock units vest throughout 2020 and 2021. The following table summarizes the status of the restricted stock units: Number of Weighted- Balance as of December 31, 2020 241,273 $ 2.01 Vested ( 136,952 ) 1.83 Balance as of June 30, 2021 104,321 $ 2.24 |
Stock Options [Member] | |
Summary of Assumptions Applied to Establish Fair Value of Option Granted using Black Scholes Option Pricing Model | The fair value of the stock options granted was determined using the Black-Scholes option-pricing model with the following weighted-average assumptions at the time of grant: 2021 2020 Risk-Free Annual Interest Rate 1.09 % - 2.25 % 2.00 % - 2.25 % Expected Annual Dividend Yield 0 % 0 % Expected Stock Price Volatility 99 % - 197 % 83 % - 99 % Expected Life of Stock Options 6.25 Years 6.25 Years |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Summary of Status of Stock Warrants Outstanding | A summary of the status of the stock warrants outstanding, on an as-converted basis for SVS, is as follows: Number of Weighted- Balance as of December 31, 2020 24,407,114 $ 4.11 Issued 307,856 $ 2.40 Exercised ( 6,125,454 ) $ 1.52 Balance as of June 30, 2021 18,589,516 $ 4.79 The following table summarizes the stock warrants that remain outstanding as of June 30, 2021: Security Issuable Expiration Date Number of Stock Warrants Exercise Price Stock Warrants Exercisable Subordinate Voting Shares May 2022 - Dec 2025 17,154,516 $ 2.46 - $ 14.66 17,154,516 Multiple Voting Shares April 1 , 2023 14,350 106.17 14,350 The following table summarizes the stock warrants that remain outstanding as of December 31, 2020: Security Issuable Expiration Date Number of Stock Warrants Exercise Price Stock Warrants Exercisable Subordinate Voting Shares May 2022 - April 2023 18,872,114 $ 2.40 - $ 14.27 18,872,114 Multiple Voting Shares April 2021 - April 2023 55,350 103.36 55,350 |
Summary of Subordinated Voting Share | The following presents the total outstanding SVS if converted as of June 30, 2021: Share Class Number of Conversion Total Super Voting Shares 2,000,000 1 2,000,000 Multiple Voting Shares 1,561,678 100 156,167,800 Subordinate Voting Shares 255,991,500 1 255,991,500 Total 414,159,300 |
Warrants | |
Summary of Assumptions Applied to Establish Fair Value of Option Granted using Black Scholes Option Pricing Model | The fair value of the stock warrants granted was determined using the Black-Scholes option-pricing model with the following weighted-average assumptions at the time of issuance: 2021 2020 Risk-Free Annual Interest Rate 0.11 % - 0.16 % 2.15 % Expected Annual Dividend Yield 0 % 0 % Expected Stock Price Volatility 95 % 70 % - 99 % Expected Term 2.2 - 2.3 Years 1.0 - 5.0 years |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Earnings Per Share [Abstract] | |
Summary of Calculation of Net Loss per Common Share Attributable | Calculation of net loss per common share attributable to Harvest Health & Recreation Inc. is as follows: Three Months Ended June 30, Six Months Ended June 30, (In thousands, except share and per share data) 2021 2020 2021 2020 Net loss attributable to Harvest Health & Recreation Inc. $ ( 19,505 ) $ ( 27,574 ) $ ( 42,627 ) $ ( 42,958 ) Net loss attributable to discontinued operations, net of tax $ ( 1,954 ) $ ( 905 ) $ ( 1,954 ) $ ( 1,289 ) Basic weighted-average number of shares outstanding 413,103,779 364,580,737 410,383,008 334,380,082 Net loss per share attributable to Harvest Health & Recreation Inc. - basic and diluted $ ( 0.05 ) $ ( 0.08 ) $ ( 0.10 ) $ ( 0.13 ) Net loss per share attributable to discontinued operations, net of tax $ — $ — $ — $ — |
Summary of Potentially Dilutive Shares Excluded from Computation of Net Loss Per Share | The following table summarizes the potential SVS that were excluded as they were anti-dilutive: June 30, 2021 2020 Stock options and restricted stock units 12,364,946 16,011,125 Warrants (1) 19,345,162 14,685,996 Convertible debt 13,823,603 32,041,357 45,533,711 62,738,478 (1) Includes the outstanding compensation warrants issued for underwriting services in the October 2020 bought financing. |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Notes Receivable | Related party notes receivable (In thousands) June 30, December 31, Secured promissory notes dated February 2020 (1) $ 6,695 $ 6,471 Secured revolving notes dated December 2018 through January 2019 (2) 3,581 3,581 Total due from related party (current portion notes receivable) $ 10,276 $ 10,052 (1) Secured promissory note dated February 2020, and amended February 2021, in the aggregate principal amount of $ 6.7 million with maturity date February 2022 ; principal is due at maturity. Interest rate of 6 % per annum, due at maturity. The secured note of $ 6.7 million is due from Harvest of Ohio LLC, an Ohio limited liability company owned 49% by Steve White, the Chief Executive Officer of the Company, and an entity in which the Company has an investment interest. The Company accounts for the investment interest under the equity method. During the six months ended June 30, 2021 and 2020, interest income was $ 0.2 million and $ 0.1 million, respectively. During the three months ended June 30, 2021 and 2020, interest income was $ 0.1 million and less than $ 0.1 million, respectively. (2) Secured revolving notes dated December 2018 through January 2019 in the aggregate principal amount of $ 3.6 million which are due from AINA We Would LLC, the borrower, of which Harvest owns a 25% interest. The notes mature between December 2019 and February 2020 and the principal is due at maturity. The secured revolving notes which mature between December 2019 and February 2020 are currently in default. The Company negotiated a settlement agreement with the debtor and, at this time, expects to receive the full principal balance. The secured revolving notes have interest rates of 8.25 - 8.5 % per annum with interest payments due monthly. AINA We Would LLC can draw up to $ 30.0 million, with each advance subject to the approval of AINA We Would LLC and the Company in their sole discretion. No interest income was recorded during the three or six months ended June 30, 2021 and $ 0.1 million of interest income was recorded during both the three and six months ended June 30, 2020. |
Summary of Related Party Leases | Included in the Condensed Consolidated Balance Sheets are the following amounts recorded for leases with related parties: (In thousands) June 30, December 31, Right-of-use assets for operating leases, net $ 5,541 $ 5,621 Operating lease liability, current portion ( 150 ) ( 135 ) Operating lease liability, net of current portion ( 5,518 ) ( 5,595 ) |
Business Description - Addition
Business Description - Additional Information (Details) | 6 Months Ended |
Jun. 30, 2021Segment | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Number of segments | 1 |
Significant Accounting Polici_4
Significant Accounting Policies - Additional Information (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Accounting Policies [Abstract] | |||||
Sales Discounts | $ 0 | $ 0 | $ 0 | $ 0 | |
Proceeds From Services And Licenses | 300,000 | $ 6,200,000 | 600,000 | $ 12,600,000 | |
Deferred Revenue Net of Redemptions | $ 2,285,000 | $ 2,285,000 | $ 0 |
Significant Accounting Polici_5
Significant Accounting Policies - Summary of Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Revenue | $ 102,463 | $ 55,661 | $ 191,289 | $ 99,896 |
Retail | ||||
Revenue | 85,177 | 42,250 | 162,825 | 72,262 |
Wholesale | ||||
Revenue | 13,948 | 7,199 | 23,241 | 13,264 |
Licensing and Other | ||||
Revenue | $ 3,338 | $ 6,212 | $ 5,223 | $ 14,370 |
Recently Issued Accounting Pr_3
Recently Issued Accounting Pronouncements - Schedule of Recently Issued Accounting Pronouncements (Details) | 6 Months Ended |
Jun. 30, 2021 | |
Accounting Standards Update 2020-06 | |
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |
Date Issued | August 2020 |
Standard | ASU No. 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 i |
Effective Date | January 2022 |
Accounting Standards Update 2019-12 | |
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |
Date Issued | December 2019 |
Standard | ASU 2019-12, Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes |
Effective Date | January 2021 |
Accounting Standards Update 2021-04 | |
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |
Date Issued | May 2021 |
Standard | ASU 2021-04 Earnings Per Share (Topic 260), Debt— Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40) |
Effective Date | January 2021 |
Discontinued Operations - Summa
Discontinued Operations - Summary of Unaudited Condensed Consolidated Statements of Operations of Discontinued Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Other (expense) income | ||||
Loss from continuing operations before non-controlling interest | $ (1,954) | $ (905) | $ (1,954) | $ (1,289) |
Net loss | (19,229) | (25,645) | (42,197) | (41,117) |
Net loss attributed to Harvest Health & Recreation Inc. | $ (19,505) | (27,574) | $ (42,627) | (42,958) |
ICG | ||||
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items] | ||||
Revenue, net of discounts | 3,996 | 4,778 | ||
Cost of goods sold | (2,054) | (2,711) | ||
Gross profit | 1,942 | 2,067 | ||
General and administrative | 1,278 | 1,603 | ||
Sales and marketing | 24 | 46 | ||
Depreciation and amortization | 1,039 | 1,057 | ||
Total expenses | 2,341 | 2,706 | ||
Operating income (loss) | (399) | (639) | ||
Other (expense) income | ||||
Gain on sale of assets | 2,574 | 2,574 | ||
Interest expense | (711) | (717) | ||
Loss before taxes and non-controlling interest | 1,464 | 1,218 | ||
Income taxes | (9) | (147) | ||
Loss from continuing operations before non-controlling interest | 1,455 | 1,071 | ||
Net loss | 905 | 1,289 | ||
Net loss attributed to Harvest Health & Recreation Inc. | $ 2,360 | $ 2,360 |
Discontinued Operations - Addit
Discontinued Operations - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended |
Jun. 30, 2021 | Jun. 30, 2021 | |
Michigan | ||
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items] | ||
Discontinued operations due to the abandoned expansion | $ 1.9 | $ 1.9 |
Discontinued Operations - Sum_2
Discontinued Operations - Summary of the Assets and Liabilities of Discontinued Operations (Details) - ICG - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
ASSETS | ||
Inventory, net | $ 344 | $ 93 |
Other current assets | 0 | 33 |
Property, plant and equipment, net | 3,110 | 1,747 |
Right-of-use asset, net | 64 | 3,593 |
Intangibles assets, net | 171 | 894 |
Other assets | 0 | 225 |
Assets from discontinued operations | 3,689 | 6,585 |
LIABILITIES | ||
Lease liability, net of current portion | 28 | 718 |
Liabilities from discontinued operations | $ 28 | $ 718 |
Inventory - Schedule of Invento
Inventory - Schedule of Inventory (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 17,384 | $ 12,632 |
Work in progress | 6,165 | 5,634 |
Finished goods | 22,228 | 19,718 |
Total inventory | 45,777 | 37,984 |
Reserve | (1,169) | (1,122) |
Total inventory, net | $ 44,608 | $ 36,862 |
Notes Receivables - Schedule of
Notes Receivables - Schedule of Notes Receivables (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Accounts Notes And Loans Receivable [Line Items] | ||
Gross notes receivable | $ 31,012 | $ 79,532 |
Less: provision for impairment of notes receivable | (627) | (29,713) |
Total notes receivable, net of allowance | 30,385 | 49,819 |
Less: current portion of notes receivable | (19,869) | (31,608) |
Notes receivable, long-term portion | 10,516 | 18,211 |
Secured Promissory Note November 2020 | ||
Accounts Notes And Loans Receivable [Line Items] | ||
Gross notes receivable | 11,493 | 12,000 |
Secured Promissory Note February 2020 | ||
Accounts Notes And Loans Receivable [Line Items] | ||
Gross notes receivable | 15,088 | 13,471 |
Secured Promissory Note April and June 2019 | ||
Accounts Notes And Loans Receivable [Line Items] | ||
Gross notes receivable | 456 | |
Secured Promissory Note June 7, 2019 | ||
Accounts Notes And Loans Receivable [Line Items] | ||
Gross notes receivable | 25,525 | |
Unsecured Convertible Promissory Notes October 2018 through February 2019 | ||
Accounts Notes And Loans Receivable [Line Items] | ||
Gross notes receivable | 24,499 | |
Secured Revolving Note December 2018 Through January 2019 | ||
Accounts Notes And Loans Receivable [Line Items] | ||
Gross notes receivable | 3,581 | $ 3,581 |
Secured Promissory Notes Dated February 2021 | ||
Accounts Notes And Loans Receivable [Line Items] | ||
Gross notes receivable | $ 850 |
Notes Receivables - Schedule _2
Notes Receivables - Schedule of Notes Receivables (Parenthetical) (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2021USD ($) | |
Secured Promissory Note November 2020 | |
Accounts Notes And Loans Receivable [Line Items] | |
Notes receivable principle amount | $ 12 |
Notes receivable maturity date | November 9, 2025 |
Notes receivable monthly payment | $ 0.1 |
Notes receivable on maturity | $ 8.4 |
Notes receivable rate of interest | 7.50% |
Secured Promissory Note February 2020 | |
Accounts Notes And Loans Receivable [Line Items] | |
Notes receivable principle amount | $ 15.1 |
Notes receivable maturity date | August 2021 to February 2022 |
Secured Promissory Note February 2020 | Minimum | |
Accounts Notes And Loans Receivable [Line Items] | |
Notes receivable rate of interest | 6.00% |
Secured Promissory Note February 2020 | Maximum | |
Accounts Notes And Loans Receivable [Line Items] | |
Notes receivable rate of interest | 8.00% |
Secured Promissory Note April and June 2019 | |
Accounts Notes And Loans Receivable [Line Items] | |
Notes receivable principle amount | $ 11.6 |
Notes receivable maturity date | April and June of 2021 |
Notes receivable rate of interest | 8.00% |
Secured Promissory Note June 7, 2019 | |
Accounts Notes And Loans Receivable [Line Items] | |
Notes receivable principle amount | $ 40.4 |
Notes receivable maturity date | June 6, 2022 |
Notes receivable rate of interest | 4.00% |
Unsecured Convertible Promissory Notes October 2018 through February 2019 | |
Accounts Notes And Loans Receivable [Line Items] | |
Notes receivable principle amount | $ 24.5 |
Notes receivable maturity date | August to November 2019 |
Notes receivable rate of interest | 8.00% |
Secured Revolving Note December 2018 Through January 2019 | |
Accounts Notes And Loans Receivable [Line Items] | |
Notes receivable principle amount | $ 30 |
Notes receivable maturity date | December 2019 to February 2020 |
Secured Revolving Note December 2018 Through January 2019 | Minimum | |
Accounts Notes And Loans Receivable [Line Items] | |
Notes receivable rate of interest | 8.25% |
Secured Revolving Note December 2018 Through January 2019 | Maximum | |
Accounts Notes And Loans Receivable [Line Items] | |
Notes receivable rate of interest | 8.50% |
Secured Promissory Notes Dated February 2021 | |
Accounts Notes And Loans Receivable [Line Items] | |
Notes receivable principle amount | $ 0.9 |
Notes receivable maturity date | February 19, 2022 |
Notes receivable rate of interest | 10.00% |
Notes Receivables - Schedule _3
Notes Receivables - Schedule of Notes Receivables 1 (Parenthetical) (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2021USD ($) | |
Receivables [Abstract] | |
Loan and Lease Losses, Write-offs | $ 29.1 |
Receivable, Allowance for Credit Loss | $ 0.3 |
Notes Receivable - Stated Matur
Notes Receivable - Stated Maturities of Notes Receivable (Details) $ in Thousands | Jun. 30, 2021USD ($) |
Accounts Notes And Loans Receivable [Line Items] | |
2021 (6 months) | $ 19,360 |
2022 | 254,324 |
2023 | 10,229 |
2024 | 5,611 |
2025 and thereafter | 528 |
Total | 290,052 |
Notes Receivable | |
Accounts Notes And Loans Receivable [Line Items] | |
2021 (6 months) | 10,470 |
2022 | 9,918 |
2023 | 728 |
2024 | 784 |
2025 and thereafter | 9,112 |
Total | $ 31,012 |
Leases - Additional Information
Leases - Additional Information (Details) $ in Thousands | Jan. 20, 2021USD ($) | Jan. 11, 2021USD ($)aft² | Jun. 30, 2021USD ($)ft² | Jun. 30, 2020USD ($) |
Lessee Lease Description [Line Items] | ||||
Payments To Acquire Property Plant And Equipment | $ 5,200 | $ 27,199 | $ 16,993 | |
Area of industrial property sold | ft² | 292,000 | |||
Proceeds from sale of industrial property | $ 23,800 | |||
Lease term | 20 years | |||
Tenant improvements | $ 10,800 | |||
Proceeds for the transaction | $ 34,600 | |||
Proceeds from sale of leaseback property | 22,300 | 22,280 | 0 | |
Sale leaseback transaction, security deposit | 1,200 | |||
Other transaction cost | 300 | |||
Gain on sale leaseback transaction | $ 1,100 | $ 1,058 | $ 0 | |
Finance lease remaining term | 34 years 6 months | 9 years 10 months 24 days | ||
Land and Building | ||||
Lessee Lease Description [Line Items] | ||||
Area of land | a | 1.36 | |||
Area of combined office and warehouse space | ft² | 46,800 | |||
Minimum | ||||
Lessee Lease Description [Line Items] | ||||
Lease term | 1 year | |||
Maximum | ||||
Lessee Lease Description [Line Items] | ||||
Lease term | 28 years | |||
Lease Amendment | ||||
Lessee Lease Description [Line Items] | ||||
Tenant improvements | $ 17,900 | |||
Increasing tenant improvement allowance | $ 7,100 |
Leases - Summary of Supplementa
Leases - Summary of Supplemental Balance Sheet Information Related to Leases (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 | |
Operating Leases: | |||
Right-of-use asset, net | $ 118,935 | $ 66,464 | |
Lease liability, current portion | 2,060 | 3,041 | |
Lease liability, net of current portion | 118,249 | 64,232 | |
Property, plant and equipment, net | [1] | 405 | 5,523 |
Other current liabilities | $ 92 | $ 5,504 | |
[1] | Finance lease assets are recorded net of accumulated amortization of less than $ 0.1 million as of June 30, 2021 and December 31, 2020 , respectively. |
Leases - Summary of Supplemen_2
Leases - Summary of Supplemental Balance Sheet Information Related to Leases - (Paranthetical) (Details) - USD ($) $ in Millions | Jun. 30, 2021 | Dec. 31, 2020 |
Maximum | ||
Lessee Lease Description [Line Items] | ||
Finance lease assets, net of accumulated amortization | $ 0.1 | $ 0.1 |
Leases - Summary of Supplemen_3
Leases - Summary of Supplemental Statement of Operations Related to Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Leases [Abstract] | ||||
Operating lease expense | $ 5,270 | $ 5,553 | $ 9,758 | $ 8,352 |
Interest on lease liabilities | 2 | 384 | 6 | 387 |
Expenses related to short-term leases | 19 | 487 | 228 | 950 |
Expenses related to variable payments | $ 498 | $ 266 | $ 688 | $ 507 |
Leases - Schedule of Cash Flow
Leases - Schedule of Cash Flow Information Related to Leases (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Leases [Abstract] | ||
Operating cash flows from operating leases | $ 7,831 | $ 2,556 |
Operating cash flows from finance lease | 6 | 387 |
Financing cash flows from finance leases | $ 87 | $ 24 |
Leases - Schedule of Lease Term
Leases - Schedule of Lease Terms and Discount Rate (Details) | Jun. 30, 2021 | Jun. 30, 2020 |
Weighted average remaining term (in years): | ||
Operating | 14 years 6 months | 3 years 7 months 6 days |
Finance | 34 years 6 months | 9 years 10 months 24 days |
Weighted average discount rate: | ||
Operating | 12.43% | 10.00% |
Finance | 10.00% | 10.03% |
Divestitures - Additional Infor
Divestitures - Additional Information (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | |
Feb. 29, 2020 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Divestitures [Abstract] | ||||
Equity method investment ownership, percentage | 49.00% | |||
Equity method investment, realized gain on disposal | $ 3,200 | $ (125) | $ (125) | |
Issuance of note receivables at deconsolidation | $ 12,000 | |||
Gain on deconsolidation | $ 8,700 |
Intangible Assets and Goodwil_2
Intangible Assets and Goodwill - Schedule of Intangible Assets and Goodwill (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Indefinite Lived Intangible Assets By Major Class [Line Items] | |||||
Intangible assets gross carrying amount | $ 14,285 | $ 14,285 | |||
Goodwill | 115,541 | 115,541 | $ 116,041 | ||
Total gross carrying amount | 393,532 | 393,532 | 392,949 | ||
Total Accumulated amortization | 5,908 | 5,908 | 4,790 | ||
Amortization expense | 700 | $ 500 | 1,148 | $ 1,000 | |
Dispositions/ Adjustments Accumulated amortization | (30) | ||||
Total intangible assets, net and goodwill | 387,624 | 387,624 | 388,159 | ||
Additions | 1,115 | ||||
Intangible assets dispositions/ adjustments, net | (1,650) | ||||
Intangible assets balance | 277,991 | 277,991 | 276,908 | ||
Additions | 2,263 | ||||
Dispositions/ Adjustments | (500) | (500) | |||
Dispositions/ Adjustments | (1,680) | (1,680) | |||
Dispositions/ Adjustments | (1,180) | ||||
Licensing Agreements | |||||
Indefinite Lived Intangible Assets By Major Class [Line Items] | |||||
Intangible assets balance | 254,234 | 254,234 | 253,866 | ||
Additions | 519 | ||||
Dispositions/ Adjustments | (151) | ||||
Internally Developed | |||||
Indefinite Lived Intangible Assets By Major Class [Line Items] | |||||
Intangible assets balance | 1,164 | 1,164 | 1,113 | ||
Additions | 694 | ||||
Dispositions/ Adjustments | (643) | ||||
Trade Names | |||||
Indefinite Lived Intangible Assets By Major Class [Line Items] | |||||
Intangible assets balance | 2,400 | $ 2,400 | 2,400 | ||
Patient Relationships | |||||
Indefinite Lived Intangible Assets By Major Class [Line Items] | |||||
Definite life intangible assets weighted average useful lives | 2 years | ||||
Intangible assets gross carrying amount | 820 | $ 820 | 820 | ||
Total Accumulated amortization | 820 | $ 820 | 820 | ||
Technology-Based Intangible Assets | |||||
Indefinite Lived Intangible Assets By Major Class [Line Items] | |||||
Definite life intangible assets weighted average useful lives | 9 years 10 months 24 days | ||||
Intangible assets gross carrying amount | 18,058 | $ 18,058 | 18,058 | ||
Total Accumulated amortization | 4,858 | 4,858 | 3,913 | ||
Amortization expense | $ 945 | ||||
Computer Software, Intangible Asset | |||||
Indefinite Lived Intangible Assets By Major Class [Line Items] | |||||
Definite life intangible assets weighted average useful lives | 5 years | ||||
Intangible assets gross carrying amount | 416 | $ 416 | 241 | ||
Additions intangible assets gross carrying amount | 320 | ||||
Dispositions/ Adjustments intangible assets gross carrying amount | (145) | ||||
Total Accumulated amortization | 46 | 46 | 57 | ||
Amortization expense | 19 | ||||
Dispositions/ Adjustments Accumulated amortization | $ (30) | ||||
Other Intangible Assets | |||||
Indefinite Lived Intangible Assets By Major Class [Line Items] | |||||
Definite life intangible assets weighted average useful lives | 3 years | ||||
Intangible assets gross carrying amount | 899 | $ 899 | $ 410 | ||
Additions intangible assets gross carrying amount | 730 | ||||
Dispositions/ Adjustments intangible assets gross carrying amount | (241) | ||||
Total Accumulated amortization | $ 184 | 184 | |||
Amortization expense | $ 184 |
Intangible Assets and Goodwil_3
Intangible Assets and Goodwill - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Goodwill And Intangible Assets Disclosure [Abstract] | ||||
Amortization expense | $ 700 | $ 500 | $ 1,148 | $ 1,000 |
Intangible Assets and Goodwil_4
Intangible Assets and Goodwill - Schedule of Finite Lived Intangible Assets Estimated Amortization Expense (Details) $ in Thousands | Jun. 30, 2021USD ($) |
Goodwill And Intangible Assets Disclosure [Abstract] | |
2021 (6 months) | $ 1,523 |
2022 | 2,108 |
2023 | 2,008 |
2024 | 1,787 |
2025 | 1,770 |
Thereafter | 5,089 |
Total amortization expense | $ 14,285 |
Corporate Investments - Summary
Corporate Investments - Summary of Carrying Values of Investments (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Marketable Securities [Line Items] | ||
Investments | $ 40,924 | $ 19,091 |
Hightimes Holdings Corp. | ||
Marketable Securities [Line Items] | ||
Investments | 19,091 | $ 19,091 |
Falcon International, Inc. | ||
Marketable Securities [Line Items] | ||
Investments | $ 21,833 |
Corporate investments - Additio
Corporate investments - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands | Mar. 13, 2021 | Jun. 22, 2020 | Jun. 30, 2021 | Dec. 31, 2020 | Feb. 29, 2020 |
Marketable Securities [Line Items] | |||||
Equity method investment ownership, percentage | 49.00% | ||||
Related party notes receivable, current portion | $ 10,276 | $ 10,052 | |||
Asset Impairment Charges | $ 0 | ||||
Falcon International, Inc. | |||||
Marketable Securities [Line Items] | |||||
Equity method investment ownership, percentage | 10.00% | ||||
Warrants Term | 10 years | ||||
Warrant, Exercise Price | $ 1.91 | ||||
Related party notes receivable, current portion | $ 50,000 | ||||
Fair value of the equity and warrants received | $ 21,800 | ||||
Series A Preferred Stock [Member] | Hightimes Holdings Corp. | |||||
Marketable Securities [Line Items] | |||||
Preferred stock | 600,000 | ||||
Liquidation value | $ 100 | ||||
Conversion price | 11 | ||||
Conversion price adjustment | $ 1 | ||||
Preferred stock shares issued and outstanding exceeds | 19.00% | ||||
Preferred Stock, Value, Issued | $ 19,100 |
Other Current Liabilities - Sum
Other Current Liabilities - Summary of Other Current Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Other Liabilities Disclosure [Abstract] | ||
Accrued inventory purchases | $ 7,671 | $ 7,886 |
Accrued expenses | 7,724 | 5,607 |
Accrued payroll and benefits | 5,146 | 4,353 |
Accrued capital expenditures | 2,906 | 3,133 |
Finance lease liabilities | 92 | 5,504 |
Deferred revenue | 2,285 | 0 |
Other | 4,610 | 2,413 |
Total other current liabilities | $ 30,434 | $ 28,896 |
Notes Payable - Schedule of Not
Notes Payable - Schedule of Notes Payable (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Debt Instrument [Line Items] | ||
Total notes payable | $ 290,052 | $ 280,763 |
Less: unamortized debt discounts and issuance costs | (11,410) | (15,787) |
Net amount | 278,642 | 264,976 |
Less: current portion of notes payable | (134,394) | (20,910) |
Notes payable, net of current portion | 144,248 | 244,066 |
Secured Promissory Note March 2020 | ||
Debt Instrument [Line Items] | ||
Total notes payable | 10,000 | 10,000 |
Unsecured Promissory Note February 2020 | ||
Debt Instrument [Line Items] | ||
Total notes payable | 4,699 | 6,650 |
Secured Promissory Note One December 2019 | ||
Debt Instrument [Line Items] | ||
Total notes payable | 93,390 | 93,390 |
Secured Promissory Note Two December 2019 | ||
Debt Instrument [Line Items] | ||
Total notes payable | 42,404 | 42,404 |
Secured Convertible Promissory Note One December 2019 | ||
Debt Instrument [Line Items] | ||
Total notes payable | 10,000 | 10,000 |
Secured Convertible Promissory Note April 2021 | ||
Debt Instrument [Line Items] | ||
Total notes payable | 5,000 | 0 |
Secured Promissory Note October 2019 | ||
Debt Instrument [Line Items] | ||
Total notes payable | 6,500 | 6,500 |
Secured Promissory Note September and October 2019 | ||
Debt Instrument [Line Items] | ||
Total notes payable | 2,456 | 2,505 |
Secured Promissory Note June 2019 | ||
Debt Instrument [Line Items] | ||
Total notes payable | 3,916 | 4,000 |
Unsecured Convertible Debenture May 2019 | ||
Debt Instrument [Line Items] | ||
Total notes payable | 100,000 | 100,000 |
Other Unsecured Promissory Notes | ||
Debt Instrument [Line Items] | ||
Total notes payable | 3,661 | 4,039 |
Other Secured Promissory Notes | ||
Debt Instrument [Line Items] | ||
Total notes payable | $ 8,026 | $ 1,275 |
Notes Payable - Schedule of N_2
Notes Payable - Schedule of Notes Payable (Details) (Parenthetical) | 6 Months Ended |
Jun. 30, 2021USD ($) | |
Debt Instrument [Line Items] | |
Debt Instrument, Interest Rate, Stated Percentage | 4.00% |
Secured Promissory Note March 2020 | |
Debt Instrument [Line Items] | |
Debt Instrument, Face Amount | $ 10,000,000 |
Debt Instrument, Maturity Date | 2022-03 |
Debt Instrument, Interest Rate, Stated Percentage | 9.00% |
Debt Instrument, Unamortized Discount | $ 700,000 |
Secured Promissory Note One December 2019 | |
Debt Instrument [Line Items] | |
Debt Instrument, Face Amount | $ 93,400,000 |
Debt Instrument, Maturity Date | 2022-12 |
Debt Instrument, Interest Rate, Stated Percentage | 15.00% |
Unamortized Debt Issuance Expense | $ 2,300,000 |
Unsecured Promissory Note February 2020 | |
Debt Instrument [Line Items] | |
Debt Instrument, Face Amount | $ 6,700,000 |
Debt Instrument, Maturity Date | 2023-02 |
Debt Instrument, Interest Rate, Stated Percentage | 4.00% |
Debt Instrument, Annual Principal Payment | $ 2,200,000 |
Warrant liability | 3,100,000 |
Secured Promissory Note Two December 2019 | |
Debt Instrument [Line Items] | |
Debt Instrument, Face Amount | $ 42,400,000 |
Debt Instrument, Maturity Date | 2022-12 |
Debt Instrument, Interest Rate, Stated Percentage | 9.25% |
Unamortized Debt Issuance Expense | $ 1,200,000 |
Secured Convertible Promissory Note One December 2019 | |
Debt Instrument [Line Items] | |
Debt Instrument, Face Amount | $ 10,000,000 |
Debt Instrument, Maturity Date | 2021-12 |
Debt Instrument, Interest Rate, Stated Percentage | 9.00% |
Debt Instrument, Unamortized Discount | $ 200,000 |
Secured Convertible Promissory Note April 2021 | |
Debt Instrument [Line Items] | |
Debt Instrument, Face Amount | $ 5,000,000 |
Debt Instrument, Maturity Date | 2023-04 |
Debt Instrument, Interest Rate, Stated Percentage | 9.00% |
Secured Promissory Note October 2019 | |
Debt Instrument [Line Items] | |
Debt Instrument, Face Amount | $ 6,500,000 |
Debt Instrument, Maturity Date | 2021-10 |
Debt Instrument, Interest Rate, Stated Percentage | 8.95% |
Secured Promissory Note September and October 2019 | |
Debt Instrument [Line Items] | |
Debt Instrument, Face Amount | $ 2,600,000 |
Debt Instrument, Maturity Date | 2024-10 |
Unamortized Debt Issuance Expense | $ 100,000 |
Secured Promissory Note September and October 2019 | Minimum | |
Debt Instrument [Line Items] | |
Debt Instrument, Interest Rate, Stated Percentage | 5.50% |
Secured Promissory Note September and October 2019 | Maximum | |
Debt Instrument [Line Items] | |
Debt Instrument, Interest Rate, Stated Percentage | 8.75% |
Secured Promissory Note June 2019 | |
Debt Instrument [Line Items] | |
Debt Instrument, Face Amount | $ 4,000,000 |
Debt Instrument, Maturity Date | 2024-06 |
Debt Instrument, Interest Rate, Stated Percentage | 2.50% |
Unamortized Debt Issuance Expense | $ 100,000 |
Unsecured Convertible Debenture May 2019 | |
Debt Instrument [Line Items] | |
Debt Instrument, Face Amount | $ 100,000 |
Debt Instrument, Maturity Date | 2022-05 |
Debt Instrument, Interest Rate, Stated Percentage | 7.00% |
Unamortized Debt Issuance Expense | $ 1,400,000 |
Warrant liability | $ 2,400,000 |
Notes Payable - Schedule of Sta
Notes Payable - Schedule of Stated Maturities of Debt Obligations and Expected Interest Payments (Details) $ in Thousands | Jun. 30, 2021USD ($) |
Expected principal payments | |
2021 (6 months) | $ 19,360 |
2022 | 254,324 |
2023 | 10,229 |
2024 | 5,611 |
2025 and thereafter | 528 |
Total | 290,052 |
Expected interest payments | |
2021 (6 months) | 14,470 |
2022 | 21,864 |
2023 | 660 |
2024 | 270 |
2025 and thereafter | 334 |
Total | $ 37,598 |
Share-Based Compensation - Addi
Share-Based Compensation - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands | Dec. 31, 2020 | Apr. 06, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | ||||||
Award vesting rights, percentage | 25.00% | |||||
Expiration period | 10 years | |||||
Vesting period | 4 years | |||||
Total intrinsic value of stock options exercised | $ 400 | |||||
Cash received from stock options exercises | 664 | $ 0 | ||||
Share based compensation expense for grants | $ 3,700 | $ 3,300 | 8,500 | 17,100 | ||
Share based compensation expense for vested | 3,700 | $ 3,300 | 8,500 | $ 17,100 | ||
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount | $ 14,100 | $ 14,100 | ||||
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition | 2 years | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value | $ 2.74 | $ 2.16 | $ 3.16 | $ 2.16 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term | 8 years 2 months 12 days | 8 years 10 months 24 days | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Granted | 208,348 | 98,765 | ||||
Compensation expense | $ 0 | $ 100 |
Share-Based Compensation - Summ
Share-Based Compensation - Summary of Stock Options Activity (Details) $ / shares in Units, $ in Thousands | 6 Months Ended |
Jun. 30, 2021USD ($)$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |
Number of stock options, Beginning balance | 14,380,875 |
Number of stock options, Ending balance | 12,260,625 |
Stock Options [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |
Number of stock options, Beginning balance | 14,380,875 |
Number of stock options, Forfeited/Cancelled | (2,574,070) |
Number of stock options, Exercised | (221,680) |
Number of stock options, Granted | 675,500 |
Number of stock options, Ending balance | 12,260,625 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract] | |
Weighted average exercise price, Beginning balance | $ / shares | $ 5.02 |
Weighted average exercise price, forfeited/cancelled | $ / shares | 6.53 |
Weighted average exercise price, Exercised | $ / shares | 2.52 |
Weighted average exercise price, Granted | $ / shares | 3.85 |
Weighted average exercise price, Ending balance | $ / shares | $ 4.69 |
Share Based Compensation Arrangement By Share Based Payment Award Options Intrinsic Value [Abstract] | |
Aggregate Intrinsic Value, Ending Balance | $ | $ 10,174,894 |
Share-Based Compensation - Su_2
Share-Based Compensation - Summary of Stock Option, Exercise Price Range (Details) - $ / shares | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Expiration Date | November 2028 - February 2031 | November 2028 - December 2030 |
Number of stock warrants | 12,260,625 | 14,380,875 |
Stock warrants exercisable | 4,866,313 | 2,326,000 |
Minimum | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Exercise Price | $ 1.09 | $ 1.09 |
Maximum | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Exercise Price | $ 8.75 | $ 8.75 |
Share-Based Compensation - Su_3
Share-Based Compensation - Summary of Assumptions Applied to Establish Fair Value of Option Granted Using Black Scholer Option Pricing Model (Details) - Stock Options [Member] | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Expected Annual Dividend Yield | 0.00% | 0.00% |
Expected Life of Stock Options | 6 years 3 months | 6 years 3 months |
Minimum | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Risk-Free Annual Interest Rate | 1.09% | 2.00% |
Expected Stock Price Volatility | 99.00% | 83.00% |
Maximum | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Risk-Free Annual Interest Rate | 2.25% | 2.25% |
Expected Stock Price Volatility | 197.00% | 99.00% |
Share-Based Compensation - Su_4
Share-Based Compensation - Summary of Restricted Stock Units Activity (Details) - Restricted Stock Units | 6 Months Ended |
Jun. 30, 2021$ / sharesshares | |
Restricted Stock Units Roll Forward | |
Balance as of December 31, 2020 | shares | 241,273 |
Number of Restricted Stock Units, Vested | shares | (136,952) |
Balance as of June 30, 2021 | shares | 104,321 |
Grant Fair Value Roll Forward | |
Weighted- Average Grant Price, Beginning Balance | $ / shares | $ 2.01 |
Weighted Average Grant Price, Vested | $ / shares | 1.83 |
Weighted- Average Grant Price, Ending Balance | $ / shares | $ 2.24 |
Stockholders' Equity - Addition
Stockholders' Equity - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2021 | Mar. 31, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Description of the company's securities | The Company is authorized to issue an unlimited number of Subordinate Voting Shares (“SVS” or “Subordinate Voting Shares”), Multiple Voting Shares (“MVS” or “Multiple Voting Shares”) and Super Voting Shares, all with no par value. Each Multiple Voting Share converts into 100 Subordinate Voting Shares and each Super Voting Share converts into one Subordinate Voting Share. Holders of SVS are entitled to one vote in respect of each SVS held at stockholder meetings of the Company. Holders of MVS are entitled to 100 votes in respect of each MVS held at stockholder meetings of the Company. Holders of Super Voting Shares are entitled to 200 votes in respect of each Super Voting Share held at stockholder meetings of the Company. | ||||
Stock warrants issued to purchase | 307,856 | 307,856 | |||
Compensation warrants held by underwriters completion deal, Date | Oct. 28, 2020 | Oct. 28, 2020 | |||
Share based compensation expense | $ 0 | $ 100 | |||
Stock warrants granted | 0 | ||||
Weighted-average remaining contractual life | 9 months 18 days | 2 years 2 months 12 days | |||
Reclassification of warrant liability to equity upon modification | $ 36,888 | $ 36,888 | |||
Proceeds from exercise of warrants | $ 3,400 | 10,300 | |||
Warrants | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Share based compensation expense | $ 0 | ||||
Fair value of stock warrants granted, per warrant | $ 2.35 | $ 1.50 | |||
Multiple Voting Shares | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Warrants issued during period | 26,000 | 41,000 | |||
Subordinate Voting Shares | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Warrants issued during period | 271,742 | 2,641,164 | |||
Warrants issued and outstanding | 17,154,416 | ||||
Reclassification of warrant liability to equity upon modification | $ 36,900 | ||||
Change in fair value of warrant liability | $ 900 | ||||
Issued in relation to compensation warrants exercised | 615,710 | 615,710 | |||
Shares held in escrow | 2,000,000 | 2,000,000 |
Stockholders' Equity - Schedule
Stockholders' Equity - Schedule of Status of Stock Warrants Outstanding (Details) | 6 Months Ended |
Jun. 30, 2021$ / sharesshares | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Number of stock options, Beginning balance | 14,380,875 |
Number of stock options, Ending balance | 12,260,625 |
Warrants | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Number of stock options, Beginning balance | 24,407,114 |
Number of stock options, Granted | 307,856 |
Number of stock options, Exercised | (6,125,454) |
Number of stock options, Ending balance | 18,589,516 |
Weighted average exercise price, Beginning balance | $ / shares | $ 4.11 |
Weighted average exercise price, Granted | $ / shares | 2.40 |
Weighted average exercise price, Exercised | $ / shares | 1.52 |
Weighted average exercise price, Ending balance | $ / shares | $ 4.79 |
Stockholders' Equity - Summary
Stockholders' Equity - Summary of Stock Warrants Remains Outstanding (Details) - $ / shares | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Number of stock warrants | 12,260,625 | 14,380,875 |
Stock warrants exercisable | 4,866,313 | 2,326,000 |
Warrants | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Number of stock warrants | 18,589,516 | 24,407,114 |
Exercise price | $ 4.79 | $ 4.11 |
Subordinate Voting Shares | Warrants | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Number of stock warrants | 17,154,516 | 18,872,114 |
Stock warrants exercisable | 17,154,516 | 18,872,114 |
Subordinate Voting Shares | Warrants | Minimum | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Security Issuable, Expiration date | 2022-05 | 2022-05 |
Exercise price | $ 2.46 | $ 2.40 |
Subordinate Voting Shares | Warrants | Maximum | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Security Issuable, Expiration date | 2025-12 | 2023-04 |
Exercise price | $ 14.66 | $ 14.27 |
Multiple Voting Shares | Warrants | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Number of stock warrants | 14,350 | 55,350 |
Exercise price | $ 106.17 | $ 103.36 |
Stock warrants exercisable | 14,350 | 55,350 |
Multiple Voting Shares | Warrants | Minimum | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Security Issuable, Expiration date | 2001-04 | 2021-04 |
Multiple Voting Shares | Warrants | Maximum | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Security Issuable, Expiration date | 2023-04 |
Stockholders' Equity - Summar_2
Stockholders' Equity - Summary of Weighted-Average Assumptions used Black-Scholes Option Pricing Model to Determine Fair Value (Details) - Stock Warrants | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Risk-Free Annual Interest Rate | 2.15% | |
Risk-Free Annual Interest Rate, Minimum | 0.11% | |
Risk-Free Annual Interest Rate, Maximum | 0.16% | |
Expected Annual Dividend Yield | 0.00% | 0.00% |
Expected Stock Price Volatility | 95.00% | |
Expected Stock Price Volatility, Minimum | 70.00% | |
Expected Stock Price Volatility, Maximum | 99.00% | |
Minimum | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Expected Life of Stock Options | 2 years 2 months 12 days | 1 year |
Maximum | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Expected Life of Stock Options | 2 years 3 months 18 days | 5 years |
Stockholders' Equity - Summar_3
Stockholders' Equity - Summary of Subordinated Voting Share (Details) | 6 Months Ended |
Jun. 30, 2021shares | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Total Subordinated Voting Shares if Converted | 414,159,300 |
Super Voting Shares | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Number of Shares | 2,000,000 |
Share class, Conversion Factor | 1 |
Total Subordinated Voting Shares if Converted | 2,000,000 |
Multiple Voting Shares | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Number of Shares | 1,561,678 |
Share class, Conversion Factor | 100 |
Total Subordinated Voting Shares if Converted | 156,167,800 |
Subordinate Voting Shares | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Number of Shares | 255,991,500 |
Share class, Conversion Factor | 1 |
Total Subordinated Voting Shares if Converted | 255,991,500 |
Net Loss Per Share - Summary of
Net Loss Per Share - Summary of Calculation of Net Loss per Common Share Attributable (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Earnings Per Share [Abstract] | ||||
Net loss attributable to Harvest Health & Recreation Inc. | $ (19,505) | $ (27,574) | $ (42,627) | $ (42,958) |
Net loss attributable to discontinued operations, net of tax | $ (1,954) | $ (905) | $ (1,954) | $ (1,289) |
Basic weighted-average number of shares outstanding | 413,103,779 | 364,580,737 | 410,383,008 | 334,380,082 |
Net loss per share attributable to Harvest Health & Recreation Inc. - basic and diluted | $ (0.05) | $ (0.08) | $ (0.10) | $ (0.13) |
Net loss per share attributable to discontinued operations, net of tax | $ 0 | $ 0 | $ 0 | $ 0 |
Net Loss Per Share - Summary _2
Net Loss Per Share - Summary of Potentially Dilutive Shares Excluded from Computation of Net Loss Per Share (Details) - shares | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | ||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | |||
Antidilutive securities excluded from computation of earnings per share | 45,533,711 | 62,738,478 | |
Stock Options and Restricted Stock Units | |||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | |||
Antidilutive securities excluded from computation of earnings per share | 12,364,946 | 16,011,125 | |
Warrants | |||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | |||
Antidilutive securities excluded from computation of earnings per share | [1] | 19,345,162 | 14,685,996 |
Convertible Debt | |||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | |||
Antidilutive securities excluded from computation of earnings per share | 13,823,603 | 32,041,357 | |
[1] | Includes the outstanding compensation warrants issued for underwriting services in the October 2020 bought financing. |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions | Sep. 24, 2020 | Jul. 02, 2020 | Jun. 30, 2021 | Jun. 30, 2021 | Dec. 31, 2020 | Mar. 13, 2021 | Jun. 04, 2020 | Feb. 29, 2020 |
Restructuring Cost And Reserve [Line Items] | ||||||||
Equity method investment ownership, percentage | 49.00% | |||||||
AGRiMED Industries of PA, LLC | ||||||||
Restructuring Cost And Reserve [Line Items] | ||||||||
Litigation Settlement, Expense | $ 3.5 | |||||||
AGRiMED Industries of PA, LLC | Harvest Health & Recreation Inc. | ||||||||
Restructuring Cost And Reserve [Line Items] | ||||||||
Equity method investment ownership, percentage | 5.00% | |||||||
TGS National Franchise, LLC | ||||||||
Restructuring Cost And Reserve [Line Items] | ||||||||
Litigation Settlement, Expense | $ 3.7 | |||||||
Awarded claim, value | $ 10.6 | |||||||
Interest rate, accrued damages for product | 12.00% | 12.00% | ||||||
Trulieve Cannabis Corp. | ||||||||
Restructuring Cost And Reserve [Line Items] | ||||||||
Litigation liability | $ 3 | |||||||
Increased in additional litigation liability | $ 4.5 | |||||||
Membership Interest Purchase Agreement | Membership | Falcon International, Inc. | ||||||||
Restructuring Cost And Reserve [Line Items] | ||||||||
Percantage of membership interests purchased purchased | 100.00% | 100.00% | ||||||
Purchase price of membership interests | $ 4.1 | |||||||
2019 Merger Agreement | Falcon International, Inc. | ||||||||
Restructuring Cost And Reserve [Line Items] | ||||||||
Monetary damages sought value | $ 50 | |||||||
Warrants Term | 10 years | |||||||
Number of common stock purchased | 2 | |||||||
Common stock exercise price | $ 1.91 | |||||||
Loss contingency, settlement sgreement, term | On March 13, 2021, the parties entered into a binding settlement agreement, resulting in a final dismissal of all litigation and arbitration between them arising out of the 2019 merger agreement. In accordance with the settlement terms, Harvest owns a 10% equity interest in Falcon. Each share comes with a 10-year warrant entitling Harvest to purchase two (2) common shares of Falcon at an exercise price of $1.91, subject to customary anti-dilution adjustments in the event of stock splits, stock dividends and similar corporate events. See Note 10 for additional information. | |||||||
2019 Merger Agreement | Falcon International, Inc. | Harvest Health & Recreation Inc. | ||||||||
Restructuring Cost And Reserve [Line Items] | ||||||||
Equity method investment ownership, percentage | 10.00% | 10.00% |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |||||
Income tax expense | $ 6,834 | $ 1,132 | $ 13,315 | $ 4,926 | |
Deferred tax liability | $ 53,082 | $ 53,082 | $ 53,082 | ||
U.S. federal statutory income tax rate | 21.00% |
Related Party Transactions - Sc
Related Party Transactions - Schedule of Related Party Notes Receivable (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Related Party Transaction [Line Items] | ||
Notes Receivable Related Parties Current, Total | $ 10,276 | $ 10,052 |
Secured | ||
Related Party Transaction [Line Items] | ||
Secured promissory notes dated February 2020 | 6,695 | 6,471 |
Revolving Credit Facility | ||
Related Party Transaction [Line Items] | ||
Secured revolving notes dated December 2018 through January 2019 | $ 3,581 | $ 3,581 |
Related Party Transactions - _2
Related Party Transactions - Schedule of Related Party Notes Receivable (Parenthetical) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Related Party Transaction [Line Items] | ||||
Debt Instrument, Interest Rate, Stated Percentage | 4.00% | 4.00% | ||
Related party interest income | $ 100 | $ 100 | $ 200 | $ 100 |
AINA We Would LLC | ||||
Related Party Transaction [Line Items] | ||||
Principal drawn amount | 30,000 | |||
Secured | ||||
Related Party Transaction [Line Items] | ||||
Promissory Note Principal Amount | $ 6,700 | |||
Debt Instrument, Interest Rate | 6.00% | |||
Promissory note expiration or due date month and year | 2022-02 | |||
Secured | Harvest of Ohio LLC | ||||
Related Party Transaction [Line Items] | ||||
Related party interest income | $ 100 | $ 100 | $ 200 | $ 100 |
Revolving Credit Facility | ||||
Related Party Transaction [Line Items] | ||||
Promissory Note Principal Amount | $ 3,600 | |||
Revolving Credit Facility | Minimum | ||||
Related Party Transaction [Line Items] | ||||
Promissory note expiration or due date month and year | 2019-12 | |||
Debt Instrument, Interest Rate, Stated Percentage | 8.25% | 8.25% | ||
Revolving Credit Facility | Maximum | ||||
Related Party Transaction [Line Items] | ||||
Promissory note expiration or due date month and year | 2020-02 | |||
Debt Instrument, Interest Rate, Stated Percentage | 8.50% | 8.50% | ||
Revolving Credit Facility | AINA We Would LLC | ||||
Related Party Transaction [Line Items] | ||||
Related party interest income | $ 0 | $ 0 |
Related Party - Summary of Rela
Related Party - Summary of Related Party Leases (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Related Party Transactions [Abstract] | ||
Right-of-use assets for operating leases, net | $ 5,541 | $ 5,621 |
Operating lease liability, current portion | 150 | 135 |
Operating lease liability, net of current portion | $ 5,518 | $ 5,595 |
Related party - Additional Info
Related party - Additional Information (Details) | Feb. 09, 2021shares | Jan. 11, 2021USD ($) | Jun. 30, 2021USD ($) | Mar. 31, 2021 | Jun. 30, 2020USD ($) | Jun. 30, 2021USD ($)shares | Jun. 30, 2020USD ($) | Feb. 05, 2021USD ($)$ / shares |
Related Party Transaction [Line Items] | ||||||||
Money lend to acquire property | $ 5,200,000 | $ 27,199,000 | $ 16,993,000 | |||||
Conversion basis, description | The Multiple Voting Shares were convertible to Subordinate Voting Shares on a 1:100 basis | |||||||
AZRE2, LLC | ||||||||
Related Party Transaction [Line Items] | ||||||||
Lessee operating lease term | 15 years | 15 years | ||||||
Rent payments | $ 200,000 | $ 200,000 | $ 300,000 | |||||
Rent expense | $ 200,000 | 200,000 | 300,000 | 300,000 | ||||
Money lend to acquire property | $ 1,400,000 | |||||||
Karma Capital, LLC | ||||||||
Related Party Transaction [Line Items] | ||||||||
Lessee operating lease term | 15 years | 15 years | ||||||
Rent payments | $ 100,000 | 100,000 | $ 100,000 | 100,000 | ||||
Rent expense | $ 100,000 | 100,000 | $ 100,000 | 100,000 | ||||
Earbuds, LLC | ||||||||
Related Party Transaction [Line Items] | ||||||||
Lessee operating lease term | 15 years | 15 years | ||||||
Rent payments | $ 100,000 | 100,000 | $ 100,000 | 100,000 | ||||
Rent expense | $ 100,000 | $ 100,000 | 100,000 | $ 100,000 | ||||
Accrued rental income | $ 400,000 | |||||||
Multiple Voting [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Closing sales price | $ / shares | $ 3.93 | |||||||
Shares cancelled | shares | 2,545 | (2,545) | ||||||
Aggregate amount of shares | $ 1,000,185 | |||||||
Subordinate Voting [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Conversion ratio | 0.01 |
Subsequent Events - Additional
Subsequent Events - Additional Information (Details) - Subsequent Event - USD ($) $ in Millions | Jul. 21, 2021 | Jul. 15, 2021 |
Suns Mass II LLC | ||
Subsequent Event [Line Items] | ||
Purchase price of membership interests | $ 1 | |
Percentage of membership interests | 100.00% | |
Definitive Arrangement Agreement | ||
Subsequent Event [Line Items] | ||
Assumption of Line of Credit | $ 1 | |
Subordinate Voting Shares | Confidential Settlement Agreement | ||
Subsequent Event [Line Items] | ||
Common Stock, Shares, Issued | 150,000 |