Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒☐

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

As of ~~November~~May 3, ~~2022,~~2023, the registrant had ~~159,645,155~~159,761,126 Subordinate Voting Shares and ~~26,235,054~~26,226,386 Multiple Voting Shares (on an as converted basis) outstanding.

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of safe harbor provisions of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify these statements by forward-looking words such as “may”, “will”, “would”, “could”, “should”, “believes”, “estimates”, “projects”, “potential”, “expects”, “plans”, “intends”, “anticipates”, “targeted”, “continues”, “forecasts”, “designed”, “goal”, or the negative of those words or other similar or comparable words. Any statements contained in this Quarterly Report on Form 10-Q that are not statements of historical facts may be deemed to be forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition, results of operations and future growth prospects. The forward-looking statements contained herein are based on certain key expectations and assumptions, including, but not limited to, with respect to expectations and assumptions concerning receipt and/or maintenance of required licenses and third party consents and the success of our operations, are based on estimates prepared by us using data from publicly available governmental sources, as well as from market research and industry analysis, and on assumptions based on data and knowledge of this industry that we believe to be reasonable. These forward-looking statements are not guarantees of future performance or development and involve known and unknown risks, uncertainties and other factors that are in some cases beyond our control. As a result, any or all of our forward-looking statements in this Quarterly Report on Form 10-Q may turn out to be inaccurate. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under “Risk Factors” and discussed elsewhere in this Quarterly Report on Form 10-Q and in “Part I, Item 1A – Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future. You should, however, review the factors and risks we describe in the reports we will file from time to time with the SEC after the date of this Quarterly Report on Form 10-Q.


	September 30, 2022			December 31, 2021		March 31, 2023			December 31, 2022
ASSETS									(Audited)
Current assets:
Current Assets:
Cash and cash equivalents	$	114,468		$	230,085	$	188,128		$	212,266
Restricted cash		—			3,013		7,154			6,607
Accounts receivable, net		11,309			8,563		8,037			9,443
Inventories, net		301,239			209,943		297,556			297,815
Prepaid expenses and other current assets							70,724			63,627
Notes receivable - current portion		715			1,530		740			728
Prepaid expenses and other current assets		62,068			68,145
Assets associated with discontinued operations		2,838			3,615		1,850			2,466
Total current assets		492,637			524,894		574,189			592,952
Property and equipment, net		795,506			779,413		782,368			796,947
Right of use assets - operating, net		100,864			111,723		101,848			101,379
Right of use assets - finance, net		75,305			66,764		70,658			76,231
Intangible assets, net		1,027,058			1,081,240		967,398			1,012,646
Goodwill		791,495			765,358		791,495			791,495
Notes receivable, net		12,059			12,147		11,922			11,992
Other assets		21,531			17,640		15,829			14,716
Long-term assets associated with discontinued operations		4,503			52,167		690			690
TOTAL ASSETS	$	3,320,958		$	3,411,346	$	3,316,397		$	3,399,048
LIABILITIES
Current liabilities:
Current Liabilities:
Accounts payable and accrued liabilities		87,773			93,801	$	92,503		$	83,146
Income tax payable		4,681			28,084		35,650			49,024
Deferred revenue		6,385			7,168		5,115			9,568
Notes payable - current portion, net		4,823			10,052		9,813			12,453
Operating lease liabilities - current portion		10,779			10,020		10,365			10,448
Finance lease liabilities - current portion		8,719			6,185		8,041			8,727
Construction finance liabilities - current portion		1,137			991		1,256			1,189
Contingencies		25,590			13,017		25,491			34,666
Liabilities associated with discontinued operations		390			92		35			482
Total current liabilities		150,277			169,410		188,269			209,703
Long-term liabilities:
Notes payable		7,942			6,456
Notes payable, net							93,521			94,247
Private placement notes, net		540,301			462,929		543,037			541,664
Warrant liabilities		268			2,895		—			252
Operating lease liabilities		110,625			107,570		103,066			102,388
Finance lease liabilities		75,011			65,244		71,982			75,838
Construction finance liabilities		182,257			175,198		182,406			182,361
Deferred tax liabilities		220,206			241,882		216,241			224,137
Other long-term liabilities		8,616			8,400		37,241			26,183
Long-term liabilities associated with discontinued operations		14,575			23,989		14,567			14,571
TOTAL LIABILITIES		1,310,078			1,263,973		1,450,330			1,471,344
Commitments and contingencies (see Note 22)
Commitments and contingencies (see Note 20)
SHAREHOLDERS' EQUITY
Common stock, no par value; unlimited shares authorized. 185,880,209 issued and outstanding as of September 30, 2022 and 180,504,172 issued and outstanding as of December 31, 2021.		—			—
Common stock, no par value; unlimited shares authorized. 185,987,512 issued and outstanding as of March 31, 2023 and December 31, 2022, respectively.							—			—
Additional paid-in-capital		2,041,748			2,008,100		2,049,047			2,045,003
Accumulated (deficit) earnings		(31,299	)		137,721
Accumulated deficit							(177,967	)		(113,843	)
Non-controlling interest		431			1,552		(5,013	)		(3,456	)
TOTAL SHAREHOLDERS' EQUITY		2,010,880			2,147,373		1,866,067			1,927,704
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	3,320,958		$	3,411,346	$	3,316,397		$	3,399,048

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

Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income (Unaudited)


	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021			March 31, 2023			March 31, 2022
Revenues, net of discounts	$	300,793		$	224,092		$	937,612		$	633,037
Revenue, net of discounts													$	289,089		$	317,747
Cost of goods sold		132,760			70,147			405,278			199,345			139,151			137,291
Gross profit		168,033			153,945			532,334			433,692			149,938			180,456
Expenses:
Sales and marketing		75,915			51,724			224,026			142,858			62,312			72,838
General and administrative		37,646			28,223			104,840			55,874			39,383			33,547
Depreciation and amortization		30,190			7,728			88,645			19,829			30,371			28,436
Impairment and disposal of long-lived assets, net		52,035			(5	)		70,151			(5	)
Impairments and disposals of long-lived assets, net														31,015			16,461
Total expenses		195,786			87,670			487,662			218,556			163,081			151,282
(Loss) Income from operations		(27,753	)		66,275			44,672			215,136
Other income (expense):
Interest expense, net		(19,264	)		(6,145	)		(56,815	)		(20,693	)
(Loss) income from operations														(13,143	)		29,174
Other (expense) income:
Interest expense														(22,748	)		(17,877	)
Change in fair value of derivative liabilities - warrants		365			—			2,627			—			252			820
Impairment and disposal of non-operating assets, net		(2,604	)		—			(6,004	)		—
Other income (expense), net		448			89			3,016			385
Other income, net														4,918			885
Total other expense		(21,055	)		(6,056	)		(57,176	)		(20,308	)		(17,578	)		(16,172	)
(Loss) Income before provision for income taxes		(48,808	)		60,219			(12,504	)		194,828
(Loss) income before provision for income taxes														(30,721	)		13,002
Provision for income taxes		28,199			41,603			116,742			105,254			34,958			43,125
Net (loss) income from continuing operations and comprehensive (loss) income		(77,007	)		18,616			(129,246	)		89,574
Net loss from discontinued operations, net of tax benefit of $12,981, $ - , $14,439, and $-, respectively		(38,065	)		—			(42,329	)		—
Net (loss) income		(115,072	)		18,616			(171,575	)		89,574
Net loss from continuing operations and comprehensive loss														(65,679	)		(30,123	)
Net (income) loss from discontinued operations, net of tax benefit of $8 and $809, respectively														(48	)		2,359
Net loss														(65,631	)		(32,482	)
Less: Net loss and comprehensive loss attributable to non-controlling interest from continuing operations		(518	)		—			(2,555	)		—			(1,507	)		(507	)
Net (loss) income and comprehensive (loss) income attributable to common shareholders	$	(114,554	)	$	18,616		$	(169,020	)	$	89,574
Net loss and comprehensive loss attributable to common shareholders													$	(64,124	)	$	(31,975	)

Net (loss) income per share - Continuing operations:
Basic	$	(0.41	)	$	0.15		$	(0.68	)	$	0.73
Diluted	$	(0.41	)	$	0.14		$	(0.68	)	$	0.68
Net loss per share - Discontinued operations:
Net loss per share - Continuing operations:
Basic and diluted													$	(0.34	)	$	(0.16	)
Net income (loss) per share - Discontinued operations:
Basic and diluted	$	(0.20	)		—		$	(0.23	)		—		$	0.00		$	(0.01	)
Weighted average number of common shares used in computing net (loss) income per share:
Basic		188,597,094			128,146,298			187,549,359			122,983,729			188,899,309			187,054,916
Diluted		188,597,094			136,909,266			187,549,359			130,927,083			188,899,309			187,054,916

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

Condensed Consolidated Statements of Changes in Shareholders’ Equity (Unaudited)


	Super Voting Shares		Multiple Voting Shares			Subordinate Voting Shares			Total Common Shares			Additional Paid-in-Capital			Accumulated (Deficit) Earnings			Non-Controlling Interest			Total			Multiple Voting Shares			Subordinate Voting Shares			Total Common Shares			Additional Paid-in-Capital			Accumulated (Deficit) Earnings			Non-Controlling Interest			Total
Balance, January 1, 2022 (audited)		—		51,916,999			128,587,173			180,504,172			2,008,100			137,721			1,552			2,147,373			51,916,999			128,587,173			180,504,172		$	2,008,100		$	137,721		$	1,552		$	2,147,373
Share-based compensation		—		—			—			—			4,564			—			—			4,564			—			—			—			4,564			—			—			4,564
Exercise of stock options		—		—			45,775			45,775			108			—			—			108			—			45,775			45,775			108			—			—			108
Shares issued for cash - warrant exercise		—		—			1,648			1,648			22			—			—			22			—			1,648			1,648			22			—			—			22
Shares issued under share compensation plans		—		—			16,257			16,257			—			—			—			-			—			16,257			16,257			—			—			—			—
Tax withholding related to net share settlements of equity awards		—		—			(10,005	)		(10,005	)		(230	)		—			—			(230	)		—			(10,005	)		(10,005	)		(230	)		—			—			(230	)
Conversion of Multiple Voting to Subordinate Voting Shares		—		(2,699,100	)		2,699,100			—			—			—			—			—			(2,699,100	)		2,699,100			—			—			—			—			—
Shares issued for PurePenn, Pioneer, and Solevo earnouts		—		—			3,626,295			3,626,295			—			—			—			—			—			3,626,295			3,626,295			—			—			—			—
Distribution		—		—			—			—			—			—			(50	)		(50	)		—			—			—			—			—			(50	)		(50	)
Divestment of variable interest entity		—		—			—			—			—			—			(111	)		(111	)		—			—			—			—			—			(111	)		(111	)
Net loss and comprehensive loss		—		—			—			—			—			(31,975	)		(507	)		(32,482	)		—			—			—			—			(31,975	)		(507	)		(32,482	)
Balance, March 31, 2022		—		49,217,899			134,966,243			184,184,142			2,012,564			105,746			884			2,119,194			49,217,899			134,966,243			184,184,142		$	2,012,564		$	105,746		$	884		$	2,119,194
Share-based compensation		—		—			—			—			5,703			—			—			5,703
Exercise of Stock options		—		—			2,997			2,997			—			—			—			—
Shares issued for cash - warrant exercise		—		—			1,426,614			1,426,614			19,216			—			—			19,216
Subordinate Voting Shares issued under share compensation plans		—		—			24,444			24,444			—			—			—			—
Conversion of Multiple Voting to Subordinate Voting Shares		—		(13,091,800	)		13,091,800			—			—			—			—			—
Net loss and comprehensive loss		—		—			—			—			—			(22,491	)		(1,530	)		(24,021	)
Balance, June 30, 2022		—		36,126,099			149,512,098			185,638,197			2,037,483			83,255			(646	)		2,120,092
Share-based compensation		—		—			—			—			4,292			—			—			4,292
Exercise of stock options		—		—			5,655			5,655			48			—			—			48
Tax withholding related to net share settlements of equity awards		—		—			(399	)		(399	)		(75	)		—			—			(75	)
Conversion of Multiple Voting to Subordinate Voting Shares		—		(9,891,045	)		9,891,045			—			—			—			—			—
Release of escrow shares		—		—			236,756			236,756			—			—			—			—
Measurement period adjustment for Harvest Health and Recreation, Inc.		—		—			—			—			—			—			1,595			1,595
Net loss and comprehensive loss		—		—			—			—			—			(114,554	)		(518	)		(115,072	)
Balance, September 30, 2022		—		26,235,054			159,645,155			185,880,209			2,041,748			(31,299	)		431			2,010,880

~~Condensed Consolidated Statements of Changes in Shareholders’ Equity (Unaudited)~~ ~~(Continued)~~

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


	Nine Months Ended September 30, 2022			Nine Months Ended September 30, 2021			Three Months Ended March 31, 2023			Three Months Ended March 31, 2022
Cash flow from operating activities
Net (loss) income and comprehensive (loss) income		(171,575	)	$	89,574
Adjustments to reconcile net (loss) income and comprehensive (loss) income to net cash (used in) provided by operating activities:
Net loss and comprehensive loss							$	(65,631	)	$	(32,482	)
Adjustments to reconcile net loss and comprehensive loss to net cash provided by operating activities:
Depreciation and amortization		91,049			19,829			30,371			29,305
Depreciation included in cost of goods sold		39,119			14,396			13,551			10,692
Non-cash interest expense		4,009			2,313			1,494			1,232
Non-cash interest income		(394	)		—			(122	)		(163	)
Impairment and disposal of long-lived assets, net		70,151			(5	)		31,015			16,461
Impairment and disposal of non-operating assets, net		6,004			—
Amortization of operating lease right of use assets		8,443			3,216			2,634			2,892
Accretion of construction finance liabilities								389			293
Share-based compensation		14,559			2,217			2,401			4,564
Accretion of construction finance liabilities		1,044			1,097
Change in fair value of derivative liabilities - warrants		(2,627	)		—			(252	)		(820	)
Non-cash change in contingencies		16,609			—			(3,725	)		(1,248	)
Allowance for credit losses		2,362			—			(159	)		42
Deferred income tax expense		(34,855	)		(2,111	)		(7,896	)		—
Loss from disposal of discontinued operations		49,069			—
Changes in operating assets and liabilities:
Inventories		(87,173	)		(33,796	)		260			(21,957	)
Accounts receivable		(5,150	)		(8,179	)		1,565			(3,970	)
Prepaid expenses and other current assets		5,773			(9,412	)		(1,776	)		(8,094	)
Other assets		(4,397	)		(4,509	)		1,888			(16,216	)
Accounts payable and accrued liabilities		1,838			17,853			9,177			22,093
Income tax payable		(24,615	)		(12,745	)		(13,383	)		42,210
Other current liabilities								(5,448	)		2,057
Operating lease liabilities		(7,205	)		(1,906	)		(2,523	)		(2,106	)
Deferred revenue		(782	)		(3,096	)		(4,452	)		(654	)
Contingencies		(4,035	)		—
Other long-term liabilities		865			344			11,032			1,016
Net cash (used in) provided by operating activities		(31,914	)		75,080
Net cash provided by operating activities								410			45,147
Cash flow from investing activities
Purchases of property and equipment		(130,422	)		(190,907	)		(13,731	)		(48,118	)
Purchases of property and equipment related to construction finance liabilities		(13,247	)		(8,877	)		—			(7,334	)
Capitalized interest		(3,994	)		(4,355	)		(582	)		(1,487	)
Acquisitions, net of cash acquired		(27,781	)		(29,924	)		—			(27,500	)
Purchases of internal use software		(7,281	)		(3,587	)		(2,046	)		(2,214	)
Cash paid for license		(1,855	)		—			(3,500	)		—
Proceeds from sale of property and equipment		502			8			287			—
Proceeds from sale of variable interest entity		1,604			—			—			1,604
Proceeds from sale of held for sale assets		2,173			—			580			203
Proceeds received from notes receivable		1,298			—			180			1,018
Net cash used in investing activities		(179,003	)		(237,642	)		(18,812	)		(83,828	)
Cash flow from financing activities
Proceeds from private placement notes, net of discounts		75,635			—			—			76,420
Proceeds from notes payable		1,080			—
Proceeds from construction finance liabilities		7,047			8,877
Proceeds from warrant exercises		19,238			7,672
Proceeds from shares issued pursuant to private placement, net of issuance costs		-			217,896
Proceeds from stock option exercises		156			—
Proceeds from equity exercises								—			130
Payments on notes payable		(2,687	)		—			(3,442	)		(2,285	)
Payments on private placement notes		(1,874	)		—
Payments on finance lease obligations		(5,215	)		(4,024	)		(2,040	)		(1,421	)
Payments on construction finance liabilities		(891	)		—			(278	)		(297	)
Payments for debt issuance costs		(189	)		—			—			(19	)
Payments on notes payable - related party		-			(11	)
Payments for taxes related to net share settlement of equity awards		(305	)		(987	)		—			(230	)
Distributions		(50	)		—			(50	)		(50	)
Net cash provided by financing activities		91,945			229,423
Net cash (used in) provided by financing activities								(5,810	)		72,248
Net (decrease) increase in cash and cash equivalents		(118,972	)		66,861			(24,212	)		33,567
Cash, cash equivalents, and restricted cash, beginning of period		233,098			146,713			218,873			233,098
Cash and cash equivalents of discontinued operations, beginning of period		561			—			621			561
Less: cash and cash equivalents of discontinued operations, end of period		(219	)		—			—			(823	)
Cash, cash equivalents, and restricted cash, end of period		114,468		$	213,574		$	195,282		$	266,403

*The condensed consolidated statements of cash flows include continuing operations and discontinued operations for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022. ~~There were no~~

(1) Excludes $0.6 million attributable to discontinued ~~operations as of September 30, 2021.~~operations.

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

~~NOTE~~ ~~1. NATURE OF BUSINESS~~

Trulieve Cannabis Corp. together with its subsidiaries (“Trulieve", the “Company”) was incorporated in British Columbia, Canada. Trulieve is a vertically integrated cannabis company which, as of September 30, 2022, held licenses to operate in Florida, California, Connecticut, Pennsylvania, Massachusetts, West Virginia, Arizona, Colorado, Maryland, Nevada, Ohio, and Georgia, to cultivate, produce, and sell medicinal-use cannabis products, and with respect to Arizona, California, Colorado, Massachusetts, and Nevada, adult-use cannabis products.

In addition to the States listed above, the Company also conducts activities in other markets. In these markets, the Company has either applied for licenses, plans on applying for licenses, or partners with other entities, but does not currently directly own any cultivation, production, or retail licenses.

~~In July 2022, the Company discontinued operations in Nevada. While we have classified the operations as discontinued, we still hold a license to operate in the state as of September 30, 2022.~~

In July 2018, Trulieve, Inc. entered into a non-binding letter agreement with Schyan Exploration Inc. (“Schyan”) whereby Trulieve, Inc. and Schyan agreed to merge their respective businesses resulting in a reverse takeover of Schyan by Trulieve, Inc. and changed the business of Schyan from a mining issuer to a cannabis issuer (the “Schyan Transaction”). The Schyan Transaction was completed in August 2018 and Schyan changed its name to Trulieve Cannabis Corp.

The Company’s principal address is located in Quincy, Florida. The Company’s registered office is located in British Columbia. The Company's operations are substantially located in Florida and to a lesser extent Arizona and Pennsylvania.

The Company is listed on the Canadian Securities Exchange (the “CSE”) and began trading on September 25, 2018, under the ticker symbol “TRUL” and trades on the OTCQX market under the symbol “TCNNF”.

NOTE 2.1. BASIS OF PRESENTATION

~~Principles of consolidation~~

The accompanying unaudited condensed consolidated financial statements ~~include the financial position and operations~~ of Trulieve Cannabis Corp., ("Trulieve" and, together with its ~~subsidiaries. The condensed consolidated financial statements were~~subsidiaries and variable interest entities, the "Company," "our," or "us") has been prepared in accordance with accounting principles generally accepted in the United States of America (“~~U.S.~~ GAAP”) for interim financial information and, therefore, do not include ~~the assets, liabilities, revenues,~~all financial information and ~~expenses of all wholly-owned subsidiaries and variable interest entities ("VIEs")~~footnotes required by GAAP for ~~which the Company has determined that it is the primary beneficiary. Outside shareholders' interests in subsidiaries are shown in the condensed consolidated~~complete financial ~~statements as non-controlling interests. Material intercompany balances and transactions are eliminated in consolidation.~~statements. In management's opinion, the condensed consolidated financial statements include all adjustments of a normal recurring nature necessary to fairly present the Company's financial position as of ~~September 30, 2022,~~March 31, 2023, and the results of its operations and cash flows for the periods ended ~~September 30, 2022~~March 31, 2023 and ~~September 30, 2021.~~2022. The results of the Company's operations for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 are not necessarily indicative of the results to be expected for the full ~~2022~~2023 fiscal year.

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements for Trulieve Cannabis Corp. and the notes thereto, included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the Securities and Exchange Commission ("SEC") on March 8, 2023 (the "2022 Form 10-K").

Discontinued Operations

In July 2022, the Company discontinued its Nevada operations. This action represents a strategic shift in ~~our~~the business and therefore, the related assets and liabilities associated with the Nevada operations are classified as ~~held for~~ discontinued operations ~~in our~~on the condensed consolidated balance ~~sheet~~sheets and the results of the Nevada operations have been presented as discontinued operations ~~in our~~within the condensed consolidated statements of operations and comprehensive (loss) income for all periods presented.

Unless specifically noted otherwise, footnote disclosures reflect the results of continuing operations only. The results of discontinued operations are presented in Note ~~18.~~16. Discontinued ~~Operations.~~

The financial data presented herein should be read in conjunction with the audited consolidated financial statements and accompanying notes as of and for the year ended December 31, 2021, as reported in the 2021 Annual Report on Form 10-K.Operations.

~~Basis of Measurement~~

These 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~~

The functional currency of the Company and its subsidiaries, as determined by management, is the United States (“U.S.”) dollar. These condensed consolidated financial statements are presented in U.S. dollars.

Reclassifications

Certain reclassifications have been made to the condensed consolidated financial statements of prior periods and of the of accompanying notes to conform to the current period presentation.

NOTE 3.2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company’s significant accounting policies are more fully described in Note 3. Summary of Significant Accounting Policies in the consolidated financial statements included in the Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021, filed with the Securities and Exchange Commission ("SEC") on March 30, 2022 (the "2021 Form 10-K").~~2022. There have been no material changes to the Company’s significant accounting policies.

~~Critical accounting estimates and judgments~~Fair Value of Financial Instruments

The ~~preparation~~Company applies the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels, and bases the categorization within the hierarchy upon the lowest level of ~~the condensed consolidated financial statements with U.S. GAAP requires management~~input that is available and significant to ~~make estimates and assumptions that affect~~ the amounts reported in the financial statements and accompanying notes. Significant estimates in the condensed consolidated financial statements, include, but are not limited to, accounting for acquisitions and business combinations; initial valuation and subsequent impairment testing of goodwill, other intangible assets, and long-lived assets; leases; fair value measurement:


Level 1 –	Observable inputs based on unadjusted quoted prices in active markets for identical assets or liabilities;
Level 2 –	Inputs other than quoted prices in active markets, which are observable for the asset or liability, either directly or indirectly; and
Level 3 –	Unobservable inputs for which there is little or no market data requiring the Company to develop its own assumptions.

The fair values of financial instruments ~~income taxes; inventory; share-based payment arrangements,~~by class are as follows as of March 31, 2023 and ~~commitment and contingencies. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis.~~December 31, 2022:


	March 31, 2023								December 31, 2022
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(in thousands)
Financial Assets:
Money market funds (1)	$	145,986	$	—	$	—	$	145,986	$	340	$	—	$	—	$	340
Financial Liabilities:
Interest rate swap (2)	$	—	$	3,396	$	—	$	3,396	$	—	$	2,536	$	—	$	2,536
Warrant liabilities (3)	$	—	$	—	$	—	$	—	$	—	$	252	$	—	$	252

~~Cash and Cash Equivalents~~

There have been no transfers between hierarchy levels during the periods ending March 31, 2023 or December 31, 2022.

~~The Company considers~~(1)

Money market funds are included within cash ~~deposits~~ and ~~all~~cash equivalents and restricted cash in the Company’s condensed consolidated balance sheets. As a short-term, highly liquid investments ~~with an original maturity~~readily convertible to known amounts of ~~three months or less to be~~ cash, ~~equivalents. Cash and cash equivalents include cash deposits in financial institutions plus cash held at retail locations. Cash held in~~the Company’s money market ~~investments are carried at market value which approximates fair value and cash held in financial institutions and held at retail locations,~~funds have carrying values that approximate fair value.

~~Restricted Cash~~

~~Restricted cash balances are those which meet the definition~~ The Company recorded interest income of ~~cash and cash equivalents but are not available for use by the Company. As of December 31, 2021, restricted cash was~~ $~~3.0~~0.7 million ~~which represented cash consideration set aside~~for the three months ended March 31, 2023 in relation to ~~amounts held for a pending legal dispute.~~ money market funds.

(2)

The ~~restriction on this cash was released in January 2022 as the litigation was settled in December 2021. There was~~ no ~~restricted cash as of September 30, 2022.~~

~~Held for sale~~

The Company classifies long-lived assets or disposal groups and related liabilities as held-for-sale when management having the appropriate authority, generally the Company's Board of Directors ("the Board") or certain Executive Officers, commits to a plan of sale, the disposal group is ready for immediate sale, an active program to locate a buyer has been initiated and the sale is probable and expected to be completed within one year. Once classified as held-for-sale, disposal groups are valued at the lower of their carrying amount or fair value ~~less estimated selling costs. Depreciation on these properties is discontinued at~~of the ~~time they are classified as held for sale, but operating revenues, operating expenses and~~ interest ~~expense continue to be recognized until the date of disposal.~~

~~As of September 30, 2022, the Company had $9.6~~ ~~million in assets held for sale which~~rate swap liability is recorded in ~~prepaids and~~ other ~~current assets in~~long-term liabilities on the condensed consolidated balance ~~sheets, and primarily consists of property and equipment, and leases and related liabilities. As of December 31, 2021,~~sheets. In November 2022 the Company ~~had $8.7~~ ~~million in net assets held~~entered into an interest rate swap contract ("VNB Swap") for ~~sale~~the purpose of hedging the variability of interest expense and interest payments on the Company's long-term variable debt. The VNB Swap is carried at fair value which is ~~recorded~~based on a valuation model that utilizes interest rate yield curves and credit spreads observable in ~~prepaid expenses and other current assets~~active markets as the significant inputs to the model. The Company considers credit risk associated with its own standing as well as the credit standing of any counterparties involved in the valuation of its financial instruments.

(3)

The total fair value and carrying value of the Company's liability warrants is recorded to warrant liabilities on the condensed consolidated balance ~~sheets,~~sheets.

The Company's non-recurring impairment tests, including those performed as of March 31, 2023, utilize significant level 3 unobservable inputs, including projections of future revenue and ~~primarily consisted of property and equipment, leases and related liabilities, and a note payable.~~operating income.

Deferred Revenue

During the three months ended ~~September 30, 2022,~~March 31, 2023, the Company ~~recorded an impairment of $2.5~~ ~~million related to a held for sale property~~terminated the loyalty program associated with dispensaries acquired through acquisition. The impairment was recorded in impairment and disposal of non-operating assets, net in the condensed consolidated statement of operations and comprehensive (loss) income. During the three months ended September 30, 2022, the Company reclassified approximately $~~2.3~~ ~~million of property and equipment to held for sale in the Southwest.~~

~~During the nine months ended September 30, 2022, the Company settled net assets of $3.3~~ ~~million, sold property held for sale for $2.0~~ ~~million in proceeds, sold land held for sale for $0.2~~ ~~million in proceeds, recorded an impairment of $2.5~~ ~~million, and recorded a loss on disposal of $2.6~~ ~~million, which is recorded in impairment and disposal of non-operating assets, net in the condensed consolidated statement of operations and comprehensive (loss) income.~~

~~Discontinued operations~~

The Company classifies a component of an entity that has been or is to be disposed of, either by sale, abandonment, or other means, as discontinued operations when it represents a strategic shift in the Company's operations. A component of an entity is identified as operations and cash flows that can be clearly distinguished, operationally and financially, from the rest of the entity.

~~Recently Issued Accounting Pronouncements~~

Recent accounting pronouncements, other than those below, issued by the Financial Accounting Standards Board ("FASB"), the AICPA ("American Institute of Certified Public Accountants") and the SEC did not or are not believed by management to have a material effect on the Company’s present or future financial statements.

~~In October 2021, the FASB issued ASU No. 2021-08,~~ ~~Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts~~ with ~~Customers~~ (“ASU 2021-08”), which requires an acquirer to recognize and measure contract assets and liabilities acquired in a business combination in accordance with Revenue from Contracts with Customers (“Topic 606”) rather than adjust them to fair value at the acquisition ~~date. The Company elected to early adopt this accounting standard~~of Harvest Health & Recreation, Inc. ("Harvest") in ~~the fourth quarter of 2021, with retrospective application to business combinations that occurred in~~ ~~fiscal year 2021. Results of operations for quarterly periods prior to September 30, 2021 remain unchanged as~~October 2021. As a result of the ~~adoption~~termination of ~~ASU No. 2021-08. The acquisitions of Harvest Health and Recreation Inc. and Purplemed Healing Center were accounted for in accordance with~~

~~ASU 2021-08, as will all future acquisitions. Refer to~~ ~~Note 4. Acquisitions~~ ~~for further information. The adoption of this standard did~~ no~~t have a material impact on~~ the ~~consolidated financial statements.~~

~~NOTE 4. ACQUISITIONS~~

~~(a) Greenhouse Wellness WV Dispensaries, LLC~~

~~On April 26, 2022,~~loyalty program at certain dispensaries, the Company ~~acquired~~ ~~100% of the membership interests of Greenhouse Wellness WV Dispensaries, LLC (“Greenhouse WV”) the holder of~~recorded a ~~West Virginia dispensary permit and a lease for a not yet operating dispensary location. The Company analyzed the acquisition under ASU 2017-01,~~ ~~Business Combinations (Topic 805): Clarifying the Definition of a Business~~, determining Greenhouse WV did not meet the definition of a business as Greenhouse WV did not have inputs, processes, and outputs in place that constituted a business under Topic 805. As a result, the transaction has been accounted for as an asset acquisition whereby all of the assets acquired and liabilities assumed are assigned a carrying amount based on relative fair values. Total consideration was $~~0.3~~ ~~million consisting of cash.~~

~~The following table summarizes the allocation of consideration exchanged for the estimated fair value of tangible and identifiable intangible assets acquired and liabilities assumed:~~

(in thousands)

Consideration:

   Cash

$
281

       Fair value of consideration exchanged

$
281

Recognized amounts of identifiable assets acquired and liabilities assumed:

   Right of use asset - operating

$
170

   Intangible asset

270

   Favorable lease interest

11

   Operating lease liabilities

(170
)
       Total net assets acquired

$
281

~~The acquired intangible assets includes a dispensary license which is treated as a definite-lived intangible asset amortized over a~~ ~~15-year~~ ~~useful life and a favorable lease interest which was fully amortized~~reduction in the ~~period of acquisition due to useful life and materiality considerations.~~

~~(b) CP4 Group, LLC~~

~~On February 14, 2022, the Company acquired a cultivation operation from CP4 Group, LLC, in Phoenix, Arizona ("Watkins"). Total consideration was $27.5~~ ~~million paid in cash. An additional $22.5~~ million was paid into escrow for four potential earnouts. The earnouts are based on the completion of certain milestones and contingent on the continued employment of the key employee shareholders ("Key Employees") of Watkins. As the earnouts are contingent on the continued employment of the Key Employees, the $~~22.5~~ million is compensation for post-combination services. The Company will accrue the compensation cost for each earnout as it becomes probable and estimable and over the most probable period of continued employment required for the specific earnouts.

~~The Company reviewed the potential earnouts concluding three are probable and estimable as of September 30, 2022, recording an~~ accrual of $~~12.6~~4.7 million in ~~contingencies in the condensed consolidated balance sheets. During the three months ended September 30, 2022 the Company recorded $5.3~~ ~~million~~revenue, net of ~~expense related to potential earnouts. During the nine months ended September 30, 2022, the Company expensed $12.6~~ ~~million related to potential earnouts. This is recorded in sales and marketing expenses~~discounts in the condensed consolidated statements of operations and comprehensive (loss) income. As of March 31, 2023 and December 31, 2022, the loyalty liability totaled $No4.7 ~~liability was recorded for~~million and $8.9 million, respectively, and is included in deferred revenue on the ~~fourth earnout as it was concluded to be reasonably possible but not probable~~condensed consolidated balance sheets. Included within deferred revenue as of ~~September 30, 2022. The earnouts~~March 31, 2023 and December 31, 2022 are ~~evaluated on a quarterly basis. The Company incurred~~customer credit balances of $~~0.2~~0.4 million and $0.6 million, respectively.

Impairment of ~~transaction costs related~~long-lived assets

The Company reviews long-lived assets, including property and equipment, definite life intangible assets, and right-of-use assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. During the three months ended March 31, 2023, the Company determined that certain long-lived assets, including intangible assets, in Massachusetts were impaired due to the ~~acquisition~~competitive environment in the Massachusetts cannabis industry.

The Company utilized a combination of ~~Watkins. These costs were expensed as incurred~~the market, income, and ~~included~~cost approach for its impairment testing, resulting in ~~general~~an impairment of $30.3 million, consisting of property and ~~administrative expenses~~equipment and intangible assets, recorded within impairment and disposal of long-lived assets, net in the condensed consolidated statements of operations and comprehensive (loss) ~~income for the quarter ended March 31, 2022.~~ No ~~additional transaction costs have been incurred.~~income.

Impairment of goodwill

The Company ~~analyzed~~operates as one operating segment and reporting unit and therefore, evaluates goodwill for impairment as one singular reporting unit annually during the ~~acquisition under ASU 2017-01,~~ ~~Business Combinations(Topic 805): Clarifying~~fourth quarter or more often when an event occurs, or circumstances indicate the ~~Definition of a Business, determining Watkins met~~carrying value may not be recoverable. During the definition of a business as Watkins is an existing cultivation facility with inputs, processes, and outputs in place that constitute a business under Topic 805. As a result, the acquisition of Watkins has been accounted for as a business combination. Goodwill represents the premiumthree months ending March 31, 2023, the Company ~~paid over~~continued to experience a sustained decline in its stock price resulting in the ~~fair~~total market value of its common stock outstanding ("market capitalization") being less than the carrying value of the ~~net identifiable tangible assets acquired. The primary reason for the acquisition was~~reporting unit. Management believes this decline in market value is due to ~~expand the Company's cultivation capacity in Arizona. The goodwill~~a variety of factors, including:

107

$~~24.5~~ ~~million arising from the acquisition primarily consists~~reduced number of ~~the economies~~custodians to service cannabis equity holdings, negative investor sentiment due to lack of ~~scale expected from a vertical cannabis market in Arizona.~~progress on federal reform, and more challenging macroeconomic conditions.

In light of the circumstances and indicators of potential impairment described above, management performed an interim quantitative goodwill impairment test as of March 31, 2023. Management first considered whether any impairment was present for the Company’s long-lived assets, concluding that no such impairments were present after conducting an undiscounted cash flow recoverability test, except for in the Massachusetts market as detailed above.

~~The following table summarizes the allocation of consideration exchanged for~~In comparing the estimated fair value of ~~tangible assets acquired and liabilities assumed:~~

(in thousands)

Consideration

  Cash

$
27,500

      Fair value of consideration exchanged

$
27,500

Recognized amounts of identifiable assets acquired and liabilities assumed:

  Inventories

$
2,266

  Property and equipment

692

  Right of use asset - operating

4,737

  Goodwill

24,542

  Operating lease liability

(4,737
)
     Total net assets acquired

$
27,500

~~(c) Purplemed Healing Center~~

~~On December 28, 2021,~~the reporting unit to its carrying value, the Company ~~acquired~~ ~~100% of certain assets of Purplemed Healing Center ("Purplemed") including~~utilized a weighted average valuation using the ~~Medical Marijuana Dispensary License issued by~~discounted cash flow model, or the ~~Arizona Department of Health Services ("ADHS")~~income approach, and the Marijuana Establishment License issued by the ADHS which collectively serve as the Purplemed license providing the ability to operate a marijuana retail sales dispensary as well as the assumption of the associated lease.market approach. The Company also acquired the right to operate an additional offsite cultivation business under the Arizona Adult Use Marijuana Act, and the option to purchase full ownership and management of Greenmed, Inc., the Greenmed license, and the Greenmed dispensary. As part of the transaction, the Company assumed the Purplemed loyalty program.

~~The Company analyzed the acquisition under ASU 2017-01,~~ ~~Business Combinations (Topic 805): Clarifying the Definition of a Business~~, determining Purplemed did not meet the definition of a business as Purplemed did not have inputs, processes, and outputs in place that constituted a business under Topic 805. As a result, the acquisition of Purplemed has been accounted for as an asset acquisition, whereby all of the assets acquired and liabilities assumed are assigned a carrying amount based on relative fair values. The total consideration was $~~15.0~~ ~~million consisting of cash. The acquisition provided for indemnity for pre-closing liabilities. Accordingly, the Company recognized an indemnification asset of $0.5~~ ~~million offset by associated liabilities based on the information that was available at the date of the acquisition, which is included in the net assets acquired.~~

~~The net assets were acquired for an aggregate purchase price of $15.0~~ ~~million.~~

(in thousands)

Consideration:

Cash

$
15,000

Transaction costs

12

Fair value of consideration exchanged

$
15,012

Recognized amounts of identifiable assets acquired and liabilities assumed:

Prepaid expenses and other current assets

$
531

Right of use asset - operating

271

Intangible asset

15,076

Other current liabilities

(531
)
Deferred revenue

(109
)
Operating lease liability

(226
)
Total net assets acquired

$
15,012

~~The acquired intangible asset includes a dispensary license which is treated as a definite-lived intangible asset amortized over a~~ ~~15-year~~ ~~useful life.~~

~~(d) Harvest Health & Recreation Inc.~~

~~On October 1, 2021, (the “Closing Date”), the Company acquired~~ ~~100% of the common shares of Harvest Health & Recreation, Inc. (“Harvest”) and its portion of VIEs in exchange for Subordinate Voting Shares of the Company (the “Harvest Transaction”).~~

Harvest was one of the largest multi-state vertically integrated operators in the cannabis industry in the United States operating from “seed to sale." Harvest operated facilities or provided services to cannabis dispensaries in Arizona, California, Colorado, Florida, Maryland, Nevada, and Pennsylvania, with two provisional licenses in Massachusetts. In addition, Harvest owned CO2 extraction, distillation, purification, and manufacturing technology used to produce a line of cannabis topicals, vapes, and gems featuring cannabinoids.

~~Total consideration was $1.4~~ ~~billion consisting of Trulieve Subordinate Voting Shares (“Trulieve Shares”) with a fair value of $1.37~~ ~~billion, stock options, equity classified warrants, restricted stock units and other outstanding equity instruments with a fair value of $18.4~~ ~~million, and warrant liabilities convertible into equity with a fair value of $3.1~~ ~~million at the time of the Harvest Transaction. The Company incurred $13.0~~ ~~million in transaction costs related to the acquisition of Harvest as of December 31, 2021.~~ No ~~additional transaction costs have been incurred.~~

The acquisition was accounted for as a business combination in accordance with Accounting Standards Codification (ASC) 805, Business Combinations. Goodwill represents the premium the Company paid over the fair value of the net identifiable tangible and intangible assets acquired. The primary reason for the acquisition was to expand the Company’s retail and cultivation footprint and gain access to new markets. The goodwill of $~~663.7~~ million arising from the acquisition primarily consisted of the synergies and economies of scale expected from combining the operations of Trulieve and Harvest including growing the Company's customer base, acquiring assembled workforces, and expanding its presence in new and existing markets. These benefits were not recognized separately from goodwill because they do not meet the recognition criteria for identifiable intangible assets.

~~The following table summarizes the allocation of consideration exchanged for the estimated fair value of tangible and identifiable intangible assets acquired and liabilities assumed:~~

(in thousands)

Consideration:

  Trulieve Subordinated Voting Shares

$
1,369,024

  Fair value of other equity instruments

18,394

  Fair value of warrants classified as liabilities

3,103

  Fair value of consideration exchanged

$
1,390,521

Recognized amounts of identifiable assets acquired and liabilities assumed:

  Cash and cash equivalents

$
85,318

  Restricted cash

3,072

  Accounts receivable

3,645

  Inventories

92,537

  Prepaid expenses and other current assets

100,129

  Notes receivable

9,805

  Property and equipment

191,801

  Right of use assets - operating

73,476

  Intangible assets:

      Dispensary license

946,000

      Trademarks

27,430

      Customer relationships

3,500

  Other assets

5,289

  Accounts payable and accrued liabilities

(58,887
)
  Income tax payable

(24,863
)
  Deferred revenue

(4,523
)
  Operating lease liabilities

(76,558
)
  Contingencies

(26,599
)
  Notes payable

(285,238
)
  Construction finance liabilities

(79,683
)
  Other long-term liabilities

(1,085
)
  Deferred tax liabilities

(253,986
)

$
730,580

  Non-controlling interest

$
(3,734
)
  Goodwill

663,675

        Total net assets acquired

$
1,390,521

~~The acquired intangible assets include dispensary licenses which are treated as definite-lived intangible assets amortized over a~~ ~~15-year~~ ~~useful life, tradenames amortized over a~~ ~~one-~~to ~~five-year~~ ~~useful life, and customer relationships amortized over a~~ ~~one-year~~ ~~period.~~

~~On acquisition date there was consideration in the form of~~ ~~1,266,641~~ ~~stock options (as converted) that had been issued before the acquisition date to employees and non-employees of Harvest. The pre-combination fair value of these awards was $6.2~~ ~~million. There was consideration in the form of~~ ~~1,011,095~~ ~~warrants (1,009,416~~ ~~equity classified Subordinate Voting Share warrants and~~ ~~1,679~~ liability classified Multiple Voting Share warrants, as converted) that had been issued before the acquisition date to employees and non-employees of Harvest. The pre-combination fair value of these awards was $~~7.7~~ ~~million with $4.6~~ ~~million representing the equity classified warrants and $3.1~~ million representing the liability classified warrants. There was consideration in the form of restricted stock units that had been issued before the acquisition date to non-employees of Harvest which vested for services performed pre-combination, representing ~~18,297~~ ~~Subordinate Voting Share, with a pre-combination fair value of $0.5~~ ~~million. There~~

~~was additional consideration in the form of other outstanding equity instruments issued before the acquisition date to non-employees which had a pre-combination fair value of $7.1~~ ~~million.~~

~~As part of the acquisition, Harvest entered into a sale agreement to sell their Florida cannabis license for $55.0~~ ~~million where Trulieve was legally prohibited from holding this license and the sale occurred simultaneously with the Harvest Transaction. Therefore, a $55.0~~ ~~million receivable for the sale proceeds was acquired. The funds were received subsequent to the closing of the Harvest Transaction on October 1, 2021.~~

During the third quarter of 2022, the Company finalized the accounting for non-controlling interests, on the acquired entities, which resulted in a measurement period adjustment increasing non-controlling interests and goodwill by $~~1.6~~ ~~million.~~

~~Supplemental pro forma information (unaudited~~)

The unaudited pro forma information for the periods set forth below gives effect to the acquisition of Harvest Health & Recreation Inc. and Keystone Shops, as if the acquisitions had occurred on January 1, 2021. This pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved had the transactions been consummated as of that time nor does it purport to be indicative of future financial operating results.

~~Proforma net revenues for the three-and-nine months ending September 30, 2021 are $315.9~~ ~~million and $926.9~~ ~~million, respectively. Proforma net income and comprehensive income attributable to common shareholders for the three-and-nine months ending September 30, 2021 are $9.6~~ ~~million and $24.9~~ ~~million, respectively.~~

~~Unaudited pro forma net income reflects the elimination of sales between the companies, and adjustments for alignment of significant differences in accounting principles and elections.~~

~~(e) Keystone Shops~~

~~On July 8, 2021, the Company acquired~~ ~~100~~% of the membership interests of Anna Holdings, LLC, the sole member of Chamounix Ventures, LLC which holds a permit to operate dispensaries under Keystone Shops (“Keystone Shops”) with locations in Philadelphia, Devon, and King of Prussia, Pennsylvania. Total consideration was $~~55.6~~ ~~million consisting of $20.3~~ ~~million in cash, inclusive of net working capital adjustments, and~~ ~~1,009,336~~ ~~in Trulieve Shares with a fair value of $35.4~~ ~~million. The agreement provides for an additional $5.0~~ ~~million in consideration which is contingent on the enactment, adoption or approval of laws allowing for adult-use cannabis in Pennsylvania.~~ No liability was recorded for this contingent consideration, as it was not estimated to be probable at the time of acquisition nor as of September 30, 2022. The acquisition was accounted for as a business combination in accordance with ASC 805~~, Business Combinations. Goodwill arose because the consideration paid for the business acquisition reflected the benefit of expected revenue growth and future market development.~~

~~The following table summarizes the allocation of consideration exchanged for the estimated fair value of tangible and identifiable intangible assets acquired and liabilities assumed:~~

(in thousands)

Consideration:

Cash

$
20,251

Shares issued upon acquisition

35,385

Fair value of consideration exchanged

$
55,636

Recognized amounts of identifiable assets acquired and liabilities assumed:

Cash

$
500

Inventories

1,766

Prepaid expenses and other current assets

240

Property and equipment

1,144

Right of use asset - finance

1,340

Intangible assets

    Dispensary license

27,000

    Tradename

100

Favorable leasehold interests, net

86

Goodwill

39,703

Other assets

40

Accounts payable and accrued liabilities

(878
)
Income tax payable

(2,892
)
Operating lease liabilities

(1,340
)
Other long-term liabilities

(2,179
)
Deferred tax liability

(8,994
)
     Total net assets acquired

$
55,636

~~The acquired intangible assets include a dispensary license which is treated as a definite-lived intangible asset amortized over a~~ 15~~-year useful life, as well as tradename and net favorable leasehold interests which were fully amortized in the period of acquisition due to useful life and materiality considerations.~~

~~(f) Nature’s Remedy of Massachusetts, Inc.~~

On June 30, 2021, the Company completed an asset purchase agreement whereby Trulieve acquired a licensed, but not yet operating, adult-use dispensary location from Nature’s Remedy of Massachusetts, Inc. (“Nature’s Remedy”). The Company analyzed the acquisition under ASU 2017-01, ~~Business Combinations (Topic 805): Clarifying the Definition of a Business~~, determining Nature’s Remedy did not meet the definition of a business as Nature’s Remedy did not have inputs, processes, and outputs in place that constituted a business under Topic 805. As a result, the acquisition of Nature’s Remedy has been accounted for as an asset acquisition, whereby all of the assets acquired and liabilities assumed are assigned a carrying amount based on relative fair values. Total consideration was $~~16.2~~ ~~million consisting of $7.0~~ ~~million in cash and~~ ~~237,881~~ ~~in Trulieve Shares, with a fair value of $9.1~~ ~~million, and less than $0.1~~ ~~million in transaction costs.~~

~~The following table summarizes the allocation of consideration exchanged for the estimated fair value of tangible and identifiable intangible assets acquired and liabilities assumed:~~

(in thousands)

Consideration:

Cash

$
7,000

Shares issued upon acquisition

9,139

Transaction costs

23

Fair value of consideration exchanged

$
16,162

Recognized amounts of identifiable assets acquired and liabilities assumed:

Prepaid expenses and other current assets

$
12

Property and equipment

1,006

Right of use asset - finance

799

Intangible assets

15,274

Accounts payable and accrued liabilities

(335
)
Finance lease liability

(594
)
Total net assets acquired

$
16,162

~~The acquired intangible asset is represented by the adult-use license and is treated as a definite-lived intangible asset amortized over a~~ ~~15-year~~ ~~useful life.~~

~~(g) Patient Centric of Martha's Vineyard~~

On July 2, 2021, the Company acquired certain assets of Patient Centric of Martha’s Vineyard (“PCMV”) including the rights to a Provisional Marijuana Retailers License from the Massachusetts Cannabis Control Commission, the right to exercise an option held by PCMV to lease real property in Framingham, Massachusetts for use as a marijuana retailer, and necessary municipal entitlements to operate as a marijuana retailer at the property. Total consideration was ~~258,383~~ ~~in Trulieve Shares, of which~~ ~~10,879~~ ~~are subject to a holdback for~~ ~~six months~~ ~~as security for any indemnity claims by the Company under the asset purchase agreement. The fair value of the equity exchanged was $10.0~~ ~~million. The Company analyzed the acquisition under ASU 2017-01,~~ ~~Business Combinations (Topic 805): Clarifying the Definition of a Business~~, determining PCMV did not meet the definition of a business as PCMV did not have inputs, processes, and outputs in place that constituted a business under Topic 805. As a result, the acquisition of PCMV has been accounted for as an asset acquisition, whereby all of the assets acquired and liabilities assumed are assigned a carrying amount based on relative fair values.

~~The following table summarizes the allocation of consideration exchanged for the estimated fair value of tangible and identifiable intangible assets acquired and liabilities assumed:~~

(in thousands)

Consideration:

Shares issued upon acquisition

$
10,012

Transaction costs

18

Fair value of consideration exchanged

$
10,030

Recognized amounts of identifiable assets acquired and liabilities assumed:

Right of use asset - finance

$
1,756

Intangible asset

10,594

Finance lease liabilities

(2,320
)
Total net assets acquired

$
10,030

~~The acquired intangible asset is represented by the adult-use license and is treated as a definite-lived intangible asset amortized over a~~ 15~~-year useful life.~~

~~(h) Solevo Wellness West Virginia, LLC~~

~~On June 8, 2021, the Company acquired~~ ~~100% of the membership interests of Solevo Wellness West Virginia, LLC (“Solevo WV”) which holds three West Virginia dispensary licenses. The Company analyzed the acquisition under ASU 2017-01,~~ ~~Business Combinations (Topic 805): Clarifying the Definition of a Business,~~ ~~determining Solevo WV did not meet the definition of a business as substantially all~~determination of the fair value of the ~~gross assets acquired are concentrated~~reporting unit requires us to make significant estimates and assumptions. Due to the inherent uncertainty involved in making these estimates, actual future results could differ. Changes in assumptions regarding future results or other underlying assumptions could have a ~~single identifiable asset. Therefore, the transaction has been accounted for as an asset acquisition. Total consideration was $0.8~~ ~~million consisting of $0.2~~ ~~million in cash,~~ ~~11,658~~ ~~in Trulieve Shares with a fair value of $0.4~~ ~~million, $0.1~~ ~~million in debt forgiveness and less than $0.1~~ ~~million in transaction costs. The consideration of $0.8~~ ~~million was allocated to acquired assets of $0.8~~ ~~million, which are treated as definite-lived intangible assets amortized over a~~ ~~15-year~~ ~~useful life.~~

~~(i) Mountaineer Holding, LLC~~

~~On May 6, 2021, the Company acquired~~ ~~100~~% of the membership interests of Mountaineer Holding LLC (“Mountaineer”) which holds a cultivation permit and two dispensary permits in West Virginia. The Company analyzed the acquisition under ASU 2017-01, ~~Business Combinations (Topic 805): Clarifying the Definition of a Business,~~ ~~determining Mountaineer did not meet the definition of a business as substantially all of~~significant impact on the fair value of the reporting unit.

The discounted cash flow model reflects our estimates of future cash flows and other factors including estimates of future operating performance, including future revenue, long-term growth rates, gross ~~assets acquired are concentrated~~margins, capital expenditures, discount rates and the probability of achieving the estimated cash flows, among others.

In addition to the income approach, the Company also employs the market approach in ~~a single identifiable asset. Therefore,~~its goodwill impairment testing. Under the ~~transaction has been accounted for~~market approach, the Company estimates the fair value based upon multiples of comparable public companies. Significant estimates in the market approach include identifying similar companies with comparable business factors such as ~~an asset acquisition. Total consideration was $5.5~~ ~~million, consisting of $3.0~~ ~~million~~size, growth, profitability, risk and return on investment, as well as assessing comparable market multiples in ~~cash and~~ ~~60,342~~ ~~in Trulieve Shares with a~~estimating the fair value of $the reporting unit.~~2.5~~

The results of the Company’s interim test for impairment as of March 31, 2023 concluded that the estimated fair value of the reporting unit exceeded the carrying value, resulting in no impairment. ~~million. The consideration of $5.5~~ ~~million has been allocated to the $5.5~~ ~~million of acquired assets which are treated as definite-lived intangible assets and amortized over a~~ ~~15-year~~ ~~useful life.~~

~~NOTE 8. PROPERTY & EQUIPMENT~~

~~As of September 30, 2022 and December 31, 2021, Property and equipment, net consisted of the following:~~

September 30, 2022

December 31, 2021

(in thousands)

Land

$
32,786

$
32,904

Buildings and improvements

560,950

434,762

Furniture and equipment

246,644

140,221

Vehicles

839

959

Total

841,219

608,846

Less: accumulated depreciation

(113,831
)

(63,602
)
Total property and equipment

727,388

545,244

Construction in progress

68,118

234,169

Total property and equipment, net

$
795,506

$
779,413

~~Depreciation expense for the three and nine months ended September 30, 2022 totaled $20.2~~ ~~million and $55.8~~ ~~million, respectively. Depreciation expense for the three and nine months ended September 30, 2021 totaled $8.1~~ ~~million and $21.0~~15.5 million, respectively.

~~Capitalized interest for the three and nine months ended September 30, 2022 totaled $1.3~~ ~~million and $4.0~~ ~~million, respectively. Capitalized interest for the three and nine months ended September 30, 2021 totaled $2.2~~ ~~million and $4.4~~ ~~million, respectively.~~

During the three ~~and nine~~ months ended ~~September 30, 2022,~~March 31, 2023, the Company recorded an impairment on property and equipment related to the Massachusetts market of $~~0.3~~ ~~and $0.6~~3.0 million, ~~respectively,~~ which is ~~mainly the result of repositioning of assets. The impairment of $0.3~~ ~~million was~~ recorded to impairment and disposal of long-lived assets, net ~~with the impairment of $0.6~~ ~~million consisting of $0.3~~ ~~million recorded to impairment and disposal of long-lived assets, net and $0.3~~ ~~million recorded to impairment and disposal of non-operating assets, net in~~within the condensed consolidated statements of operations and comprehensive (loss) income.

During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022, the Company recorded ~~a loss on disposal of property and equipment~~an impairment of $~~46.2~~0.3 million, ~~and $54.2~~ ~~million, respectively, primarily related to~~which is mainly the result of repositioning of assets, ~~located in our southeast region. The loss on disposal of $46.2~~ ~~million consists of $46.1~~ ~~million~~which is recorded to impairment and disposal of long-lived assets, net ~~and $0.1~~ ~~million recorded to impairment and disposal of non-operating assets, net with the loss of $54.2~~ ~~million consisting of $53.4~~ ~~million recorded to impairment and disposal of long-lived assets, net and $0.8~~ ~~million recorded to impairment and disposal of non-operating assets, net in~~within the condensed consolidated statements of operations and comprehensive (loss) income.

During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023, the Company recorded a nominal loss on disposal of property and equipment, which is recorded to impairment and disposal of long-lived assets, net within the condensed consolidated statements of operations and comprehensive (loss) income. During the three months ended March 31, 2022, the Company recorded a loss of $3.0 million, primarily related to assets located in our Southeast region, which is recorded to impairment and disposal of long-lived assets, net within the condensed consolidated statements of operations and comprehensive (loss) income.

During the three months ended March 31, 2023 and 2022, the Company recorded a gain on sale of property and equipment, net of $~~0.1~~0.3 million and $~~0.2~~zero ~~million, respectively. The gain on sale, net of $0.1~~ ~~million consists of a $0.2~~ ~~million gain~~, respectively, which is recorded to impairment and disposal of long-lived assets, net ~~and a $0.1~~ ~~million loss on sale of property and equipment recorded to impairment and disposal of non-operating assets, net in~~within the condensed consolidated statements of operations and comprehensive (loss) income.

~~The Company extended the maturity date of our $6.1~~ ~~million notes originally maturing in~~ ~~October 2022~~ to ~~December 2022~~ ~~in order to complete refinancing. The Company is still in the process of refinancing the notes with the lender and the new notes are expected~~

~~to have a~~ ~~5-year~~ ~~term and bear interest at an annual rate of the 5 Year FHLB +~~ ~~3.75%, with a floor of~~ 6~~%. The refinancing is expected to close on or before~~ ~~November 30, 2022~~.

NOTE ~~11.~~10. PRIVATE PLACEMENT NOTES

~~2024~~June and November Notes

In 2019, the Company completed two private placement arrangements (the “June Notes” and the “November Notes”), each comprised of 5-year senior secured promissory notes with a face value of $70.0 million and $60.0 million, respectively. ~~Both notes accrue interest at an annual rate of~~ ~~9.75~~%,~~payable semi-annually, in equal installments, in arrears, on June 18 and December 18 of each year~~. The purchasers of the June Notes received warrants to purchase 1,470,000 Subordinate Voting Shares at a price of $13.47 ("June Warrants") and the purchasers of the November Notes received warrants to purchase 1,560,000 Subordinate Voting Shares at a price of $980 per Unit, with each unit consisting of one Note issued in Denominations of $1,000 and 26 warrants ("November Warrants"), which can be exercised for approximately three years after ~~closing.~~closing (collectively the "Public Warrants"). The ~~unexercised warrants~~remaining outstanding Public Warrants expired in June 2022.

~~During the three and nine months ended September 30, 2022, accretion expense for~~The fair value of the June Notes at inception was determined to be $~~0.5~~63.9 million ~~and $~~using an effective interest rate of ~~1.4~~13.32 ~~million, respectively. During~~%, which the ~~three and nine months ended September 30, 2021, accretion expense for~~Company estimates would have been the coupon rate required to issue the notes had the financing not included the June ~~Notes was $0.4~~ ~~million and $1.2~~ ~~million, respectively.~~

~~During the three and nine months ended September 30, 2022, accretion expense for~~Warrants. The fair value of the November Notes at inception was determined to be $~~0.4~~54.5 million ~~and $~~using an effective interest rate of ~~1.2~~13.43 ~~million, respectively. During~~%, which the ~~three and nine months ended September 30, 2021, accretion expense for~~Company estimates would have been the coupon rate required to issue the notes had the financing not included the November ~~Notes was $~~Warrants.~~0.4~~ ~~million and $1.1~~ ~~million, respectively.~~

2026 Notes

~~On January 28, 2022, the Company closed on a second tranche private placement of~~ 8~~% Senior Secured Notes (the "2026 Notes - Tranche Two") for aggregate gross proceeds of $76.9~~ ~~million and net proceeds of $75.6~~ ~~million. The Company intends to use the net proceeds for capital expenditures and other general corporate purposes.~~ On October 6, 2021, the Company closed its private placement of 8% Senior Secured Notes (the "2026 Notes - Tranche One") for aggregate gross proceeds of $350.0 million and net proceeds of $342.6 million. The Company used a portion of the net proceeds to ~~redeem~~repay certain outstanding acquired indebtedness ~~of Harvest~~ and ~~intends to use~~used the remaining net proceeds for capital expenditures and other general corporate purposes. ~~These~~On January 28, 2022, the Company closed on a second tranche private placement of 8% Senior Secured Notes (the "2026 Notes - Tranche Two") for aggregate gross proceeds of $76.9 million and net proceeds of $75.6 million. The Company used the net proceeds for capital expenditures and other general corporate purposes. The notes ~~are collectively referred to as the "2026 Notes".~~

~~The 2026 Notes mature on~~ ~~October 6, 2026, and~~ may be redeemed in whole or in part, at the Company's option, at any time, on or after October 6, 2023, at the applicable redemption price. These notes are collectively referred to as the "2026 Notes".

As of March 31, 2023 and December 31, 2022,private placementnotes payable consisted of the following:


	March 31, 2023			December 31, 2022			Stated Interest Rate	Effective Interest Rate	Maturity Date
	(in thousands)
2026 Notes - Tranche One	$	350,000		$	350,000		8.00%	8.52%	10/6/2026
2026 Notes - Tranche Two		75,000			75,000		8.00%	8.43%	10/6/2026
June Notes		70,000			70,000		9.75%	13.32%	6/11/2024
November Notes		60,000			60,000		9.75%	13.43%	6/11/2024
Total private placement notes		555,000			555,000
Less: Unamortized debt discount and issuance costs		(11,963	)		(13,336	)
Private placement notes, net	$	543,037		$	541,664

The ~~2026 Notes bear interest at~~ private placement notes contain customary restrictive covenants pertaining to our management and operations, including, among other things, limitations on the amount of debt that may be incurred and the ability to pledge assets, as well as financial covenant requirements, that the Company comply with certain indebtedness to consolidated EBITDA (as defined) requirements and a fixed charge ratio coverage, measured from time to time when certain conditions are met.8

~~% per annum,~~

~~payable semi-annually in equal installments until the maturity date, unless earlier redeemed or repurchased~~. During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, ~~accretion~~the Company incurred interest expense ~~for the 2026 Notes - Tranche Two was less than~~of $~~0.1~~12.9 million and $~~0.2~~12.3 million, ~~respectively. During the nine months ended September 30, 2022, the Company repaid $1.9~~ ~~million in principal on the 2026 Notes - Tranche Two. During the three and nine months ended September 30, 2022 the Company incurred $0.3~~ ~~million and $1.0~~ ~~million in accretion expense,~~ respectively, ~~on the 2026 Notes - Tranche One.~~

~~Accretion expense on the private placement notes~~which is included ~~as a component of other income (expense), net~~within interest expense in the condensed consolidated statements of operations and comprehensive (loss) income ~~as interest expense.~~related to the private placement notes. This includes accretion expense on the private placement notes of $1.4 million and $1.2 million, respectively, for the three months ended March 31, 2023 and 2022.

Stated maturities of the principal portion of private placement notes ~~net~~ outstanding as of ~~September 30, 2022,~~March 31, 2023, are as follows:


	(in thousands)
Remaining 2022		—
2023		—
Year				(in thousands)
Nine months ending December 31, 2023				$	—
2024		130,000			130,000
2025		—			—
2026		425,000			425,000
2027					—
Thereafter		—			—
Total private placement notes		555,000		$	555,000
Less: Unamortized debt discount & issuance costs		(14,699	)
Private placement notes, net	$	540,301

NOTE ~~12.~~11. LEASES

The Company leases real estate used for dispensaries, cultivation and production ~~plants,~~facilities, and corporate offices. Lease terms for real estate generally range from five to ten years. Most leases include options to renew for varying terms at the Company’s sole discretion. Other leased assets include passenger vehicles, trucks, and equipment. Lease terms for these assets generally range from three to five years. Lease right-of-use assets and liabilities are recognized based on the present value of future minimum lease payments over the lease term at commencement date.

Leases with an initial term of 12 months or less are not recorded on the balance sheet. Lease agreements for some locations provide for rent escalations and renewal options. Certain real estate leases require payment for taxes, insurance and maintenance which are considered non-lease components. The Company accounts for real estate leases and the related fixed non-lease components together as a single component.

The Company recorded a loss on disposal of right of use assets of $~~6.1~~zero ~~million~~ and $~~16.6~~10.5 million for ~~the three-and nine-months ending September 30,~~three months ended March 31, 2023 and 2022, respectively, ~~which~~the latter is the result of repositioning ofaway from margin dilutive assets, ~~in the southeast. This loss was~~which is recorded into impairment and disposal of long-lived assets, net inwithin the condensed consolidated statements of operations and comprehensive (loss) income.

~~During the three months and nine months ended September 30, 2022, the Company recorded a net gain on lease terminations of $0.3~~ ~~million and $0.3~~ ~~million, respectively. For both the three months and nine months ended September 30, 2022, the gain on lease terminations, net of $0.3~~ ~~million consists of a $0.1~~ ~~million loss on lease terminations recorded to impairment and disposal of long-lived assets, net and a $0.4~~ ~~million net gain on lease terminations recorded to impairment and disposal of non-operating assets, net in the condensed consolidated statements of operations and comprehensive (loss) income.~~

~~During the three months ended September 30, 2022, the Company exited Nevada and recorded a loss on disposal of operating right of use assets of $14.0~~ ~~million, which is recorded in loss on discontinued operations in the condensed consolidated statements of operations and comprehensive (loss) income. See~~ ~~Note 18. Discontinued Operations~~ ~~for further details.~~

2414

The following table provides the components of lease cost recognized inwithin the condensed consolidated statements of operations and comprehensive (loss) ~~income:~~

Three Months Ended
September 30,

For the Nine Months Ended September 30,

Statement of operations and comprehensive (loss) income location

2022

2021

2022

2021

(in thousands)

Operating lease cost
Cost of goods sold, sales and marketing, general and administrative

$
5,506

$
2,483

$
16,708

$
5,751

Finance lease cost:

Amortization of lease assets
Cost of goods sold, sales and marketing, general and administrative

3,116

1,990

8,345

5,357

Interest on lease liabilities
Interest expense

1,830

1,177

5,083

2,914

Finance lease cost

4,946

3,167

13,428

8,271

Variable lease cost
Cost of goods sold, sales and marketing, general and administrative

1,836

2,529

5,656

3,139

Short term lease expense
Cost of goods sold, sales and marketing, general and administrative

201

—

456

—

Total lease cost

$
12,489

$
8,179

$
36,248

$
17,161

~~Short term lease expense~~income for the three ~~and nine~~ months ended ~~September 30, 2021 was nominal.~~ March 31, 2023 and 2022:


		Three Months Ended March 31,
	Statement of operations and comprehensive (loss) income location	2023		2022
		(in thousands)
Operating lease cost	Cost of goods sold, sales and marketing, general and administrative	$	4,913	$	5,602
Finance lease cost:
Amortization of lease assets	Cost of goods sold, sales and marketing, general and administrative		2,955		2,515
Interest on lease liabilities	Interest expense		1,741		1,579
Finance lease cost			4,696		4,094
Variable lease cost	Cost of goods sold, sales and marketing, general and administrative		2,300		1,928
Short term lease expense	Cost of goods sold, sales and marketing, general and administrative		203		99
Total lease cost		$	12,112	$	11,723

During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, the Company earned $~~0.2~~0.4 million and $~~0.4~~0.1 million of sublease income, ~~respectively. During the three and nine months ended September 30, 2021, the Company earned a nominal amount of sublease income. Sublease income~~respectively, which is recorded in other income, ~~(expense),~~ net onwithin the condensed consolidated statements of operations and comprehensive (loss) income.

September 30, 2022

December 31, 2021

(in thousands)

Weighted average discount rate:

        Operating leases

9.55
%

9.69
%
        Finance leases

8.62
%

8.68
%
Weighted average remaining lease term (in years):

        Operating leases

9.62

10.09

        Finance leases

8.20

8.16

NOTE ~~14. SHARE CAPITAL~~

~~The authorized share capital of the Company is comprised of the following:~~

~~(i)~~ ~~Unlimited~~ ~~number of Subordinate Voting Shares~~

Holders of the Subordinate Voting Shares are entitled to notice of and to attend any meeting of the shareholders of the Company, except a meeting of which only holders of another particular class or series of shares of the Company shall have the right to vote. ~~At each such meeting holders of Subordinate Voting Shares shall be entitled to~~ ~~one~~ ~~vote in respect of each Subordinate Voting Share held.~~ ~~Holders of Subordinate Voting Shares are entitled to receive as and when declared by the directors, dividends in cash or property of the Company.~~ No dividend will be declared or paid on the Subordinate Voting Shares unless the Company simultaneously declares or pays, as applicable, equivalent dividends (on an as-converted to Subordinate Voting Share basis) on the Multiple Voting Shares and Super Voting Shares.13. EQUITY

~~(ii)~~ ~~Unlimited~~ ~~number of Multiple Voting Shares~~

Holders of Multiple Voting shares are entitled to notice of and to attend any meetings of the shareholders of the Company, except a meeting of which only holders of another particular class or series of shares of the Company have the right to vote. ~~At each such meeting, holders of Multiple Voting Shares are entitled to~~ ~~one~~ ~~vote in respect of each Subordinate Voting Share into which such Multiple Voting Share could ultimately then be converted (initially,~~ ~~100~~ ~~votes per Multiple Voting Share). The initial “Conversation Ratio” for Multiple Voting Shares is~~ ~~100 Subordinate Voting Shares for each Multiple Voting Share~~, subject to adjustment in certain events. Holders of Multiple Voting Shares have the right to receive dividends, out of any cash or other assets legally available, pari passu (on an as-converted basis, assuming conversion of all Multiple Voting Shares into Subordinate Voting Shares at the Conversion Ratio) as to dividends and any declaration or payment of any dividend on the Subordinate Voting Shares.

No dividend may be declared or paid on the Multiple Voting Shares unless the Company simultaneously declares or pays, as applicable, equivalent dividends (on an as-converted to Subordinate Voting Share basis) on the Subordinate Voting Shares and Super Voting Shares.

~~(iii)~~ ~~Unlimited~~ ~~number of Super Voting Shares~~

Holders of Super Voting Shares are entitled to notice of and to attend at any meeting of the shareholders of the Company, except a meeting of which only holders of another particular class or series of shares of the Company shall have the right to vote. ~~At each such meeting, holders of Super Voting Shares are be entitled to~~ ~~two~~ ~~votes in respect of each Subordinate Voting Share into which such Super Voting Share could ultimately then be converted (initially,~~ ~~200~~ ~~votes per Super Voting Share).~~ Holders of Super Voting Shares have the right to receive dividends, out of any cash or other assets legally available therefore, pari passu (on an as converted to Subordinated Voting Share basis) as to dividends and any declaration or payment of any dividend on the Subordinate Voting Shares. No dividend is to be declared or paid on the Super Voting Shares unless the Company simultaneously declares or pays, as applicable, equivalent dividends (on an as-converted to Subordinate Voting Share basis) on the Subordinate Voting Shares and

~~Multiple Voting Shares. The initial “Conversion Ratio” for the Super Voting Shares is~~ ~~one Multiple Voting Share for each Super Voting Share, subject to adjustment in certain events.~~

Warrants

Liability ~~warrants~~Warrants

Number
of
Warrants

Weighted average exercise price
($CAD)

Weighted average
remaining contractual
life (Years)

Outstanding and exercisable as of January 1, 2022

1,679

$
1,125

1.31

Granted

—

—

—

Exercised

—

—

—

Outstanding and exercisable as of September 30, 2022

1,679

$
1,125

0.56

In October 2021 the Company acquired 1,679 warrants in connection with the acquisition of Harvest Health and Recreation, Inc. ("Harvest Liability Warrants"). ~~See~~ ~~Note 4. Acquisitions~~ ~~for further details.~~ Each acquired warrant is exercisable into one Multiple Voting Share. Changes in fair value are recognized as a component of other (expense) income ~~(expense), net in~~within the condensed consolidated statements of operations and comprehensive (loss) income as change in fair value of derivative liabilities - warrants.


	Number of warrants		Weighted average exercise price ($CAD)		Weighted average remaining contractual life (Yrs)
Outstanding and exercisable as of January 1, 2023		1,679	$	1,125		0.31
Granted		—		—		—
Exercised		—		—		—
Outstanding and exercisable as of March 31, 2023		1,679	$	1,125		0.06

The fair value of the Harvest Liability Warrants is determined using the Black-Scholes options pricing model. ~~The Harvest Liability Warrants are classified within level two of the fair value hierarchy. There have been~~ no ~~transfers between hierarchy levels during the three or nine months ended September 30, 2022.~~ The following table summarizes the significant assumptions used in determining the fair value of the warrant liability:


	September 30, 2022	December 31, 2021	March 31, 2023		December 31, 2022
Stock price	$11.73	$32.91
Exercise price ($CAD)	$11.25	$11.25
Stock price ($C)			$7.48		$10.26
Exchange rate	$0.729	$0.789		0.739		0.738
Remaining life	0.56	1.31		0.06		0.31
Annualized volatility	53.38%	49.57%	26.84%		104.07%
Discount rate	3.92%	0.56%	4.74%		4.42%
Exercise price ($C)			$11.25		$11.25

Equity ~~warrants~~Warrants

In connection with the Harvest Health and Recreation, Inc. acquisition in October 2021, the Company acquired certain equity classified warrants ("~~Acquired Equity Warrants"~~equity warrants"). The ~~Acquired Equity Warrants~~warrants range in exercise price from $23.76 to $145.24 and expire at various dates from June 2022 through December 2025 ~~and~~. The warrants are exercisable into one Subordinate Voting Share. As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, there were ~~599,605~~9,496 ~~and~~ ~~1,009,419~~acquired equity warrants outstanding, ~~with a weighted average remaining life of~~ ~~0.33~~ ~~years and~~ ~~0.79~~ ~~years,~~ respectively. Each ~~Acquired Equity Warrant~~acquired equity warrant is exercisable into one Subordinate Voting Share. ~~During the nine months ended September 30, 2022,~~ ~~409,811~~ ~~warrants expired with a weighted average exercise price of~~ ~~145.24~~.

As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 there were zero ~~and~~ ~~2,460,367~~ Public Warrants ~~outstanding, respectively.~~outstanding. See Note ~~11.~~10. Private Placement Notes for further details on warrants issued in connection with private placement debt in 2019.

~~NOTE 15. SHARE-BASED COMPENSATION~~

~~Equity Incentive Plans~~Share Based Compensation

~~The Company’s 2021 Omnibus Incentive Plan (the “2021 Plan”) was adopted in June 2021 at the 2021 annual meeting of shareholders. The 2021 Plan reserves~~ ~~4,000,000~~ Subordinate Voting Shares for issuance thereunder and replaced the Schyan Exploration Inc. Stock Option Plan (the “Prior Plan”). Awards previously granted under the Prior Plan, including equity awards

~~granted in the first quarter of 2021 for performance in 2020, remain subject to the terms of the Prior Plan.~~ No further grants of awards shall be made under the Prior Plan. The Prior Plan is administered by the Board of Directors of the Company and the 2021 Plan is administered by the Compensation Committee of the Board of Directors. The 2021 Plan provides for the grant of Incentive Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares, Performance Share Units, and Other Awards.

Options

On January 4, 2022 and February 24, 2022, under the 2021 Plan, the Board awarded options to purchase shares to board members, directors, officers, and key employees of the Company. The options granted vest immediately for board members and all other options granted vest over a ~~two-to~~ ~~three-year~~ ~~period.~~

The Company did

~~On October 26, 2021, under~~not issue any options during the ~~2021 Plan, the Board awarded options to purchase shares to select employees and certain Board members of the Company. The options generally vest over a~~three months ended March 31, 2023. ~~two-to~~ ~~three-year~~ ~~period.~~

~~On October 1, 2021, the Company acquired Harvest which included consideration in the form of~~ ~~1,266,641~~ ~~stock options (as converted) that had been issued before the acquisition date to employees and non-employees of Harvest. The post-combination options vest over a~~ ~~one-to~~ ~~three-year~~ ~~period.~~

~~On September 29, 2021, under the 2021 Plan, the Board awarded options to purchase shares to officers and other select employees of the Company. The September 29, 2021, options vest over a~~ ~~three-year~~ ~~period.~~

~~On January 4, 2021, under the Prior Plan, the Board awarded options to purchase shares to directors, officers, and key employees of the Company. The January 4, 2021, options generally vest over a~~ ~~two-to~~ ~~three-year~~ ~~period.~~

In determining the amount of share-based compensation related to options issued during the ~~periods ending September 30,~~three months ended March 31, 2022, ~~and 2021,~~ the Company used the Black-Scholes pricing model to establish the fair value of the options granted with the following assumptions:

Nine Months Ended September 30, 2022
Nine Months Ended September 30, 2021
Fair value at grant date
$8.39-$11.01
$10.58-$11.20
Stock price at grant date
$21.48-$25.41
$26.88-$33.42
Exercise price at grant date
$21.48-$25.41
$26.88-$33.42
Expected life in years
3.50 - 4.46
3.00 - 3.50
Expected volatility
51.81% - 52.87%
49.88% - 53.75%
Expected annual rate of dividends
0%
0%
Risk free annual interest rate
1.20% - 1.79%
0.16% - 0.79%


	Three Months Ended March 31, 2022
Fair value at grant date	$8.39-$11.01
Stock price at grant date	$21.48-$25.41
Exercise price at grant date	$21.48-$25.41
Expected life in years	3.50 - 4.46
Expected volatility	51.81% - 52.87%
Expected annual rate of dividends	0%
Risk free annual interest rate	1.20% - 1.79%

The expected volatility was estimated by using the historical volatility of the Company. In cases where there is insufficient trading history, the expected volatility is estimated using the historical volatility of other companies that the Company considers comparable that have trading and volatility history prior to the Company becoming public. The expected life in years represents the period of time that options granted are expected to be outstanding and is computed using the simplified method. The risk-free rate was based on the United States bond yield rate at the time of grant of the award. Expected annual rate of dividends is based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future.

The Company recorded share-based compensation for stock options as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,		Three Months Ended March 31,
Statement of operations and comprehensive (loss) income location	2022		2021		2022		2021		2023		2022
	(in thousands)								(in thousands)
Cost of goods sold		90		74		138		223	$	16	$	126
General and administrative		1,756		527		6,179		1,597		744		1,741
Sales and marketing		77		131		350		397		20		290
Total Share based compensation expense	$	1,923	$	732	$	6,667	$	2,217
Total share-based compensation expense									$	780	$	2,157

The ~~following is a summary~~number and weighted-average exercise prices and remaining contractual life of ~~stock option activity:~~options as of March 31, 2023 and 2022, were as follows:


	Number of options			Weighted average exercise price		Weighted average remaining contractual life (Years)		Aggregate intrinsic value		Number of options			Weighted average exercise price		Weighted average remaining contractual life (Yrs.)		Aggregate intrinsic value
Outstanding, January 1, 2022		2,973,895		$	27.61		6.26	$	—
Outstanding, January 1, 2023											3,177,815		$	25.96		5.41	$	—
Granted		864,051			21.56						—			—
Exercised		(120,512	)		11.29						—			—
Forfeited		(427,764	)		33.50						(50,581	)		27.28
Outstanding, September 30, 2022		3,289,670		$	25.85		5.72	$	—
Exercisable, September 30, 2022		1,834,808		$	24.66		4.22	$	—
Outstanding, March 31, 2023											3,127,234		$	25.94		5.10	$	—
Exercisable, March 31, 2023											2,374,971		$	26.21		4.01	$	—

Number of options

Weighted average exercise price

Weighted average remaining contractual life (yrs)

Aggregate intrinsic value

Outstanding, January 1, 2021

1,129,779

$
11.72

4.01

$
19.90

Granted

877,504

29.32

Exercised

(36,787
)

11.52

Forfeited

—

—

Outstanding, September 30, 2021

1,970,496

$
19.56

4.52

$
8.43

Exercisable, September 30, 2021

517,672

$
11.71

3.34

$
15.20


	Number of options			Weighted average exercise price		Weighted average remaining contractual life (Yrs.)		Aggregate intrinsic value
Outstanding, January 1, 2022		2,973,895		$	27.61		6.26	$	—
Granted		864,051			21.56
Exercised		(88,278	)		11.32
Forfeited		(121,127	)		55.93
Outstanding, March 31, 2022		3,628,541		$	25.62		6.23	$	—
Exercisable, March 31, 2022		1,569,874		$	18.21		3.70	$	2.84

As of ~~September 30, 2022,~~March 31, 2023, there was approximately $~~6.5~~3.3 million of unrecognized compensation cost related to ~~nonvested~~unvested stock option arrangements which is expected to be recognized over a weighted average service period of ~~0.80~~0.70 years.

Restricted Stock Units

Restricted stock units ("RSUs") represent a right to receive a single Subordinate Voting Share that is both non-transferable and forfeitable unless and until certain conditions are satisfied. RSUs generally vest ratably over a ~~two-to-three-year~~ ~~period subject to continued employment through each anniversary. The fair value of RSUs is determined on the grant date and is amortized over the vesting period on a straight-line basis.~~

On January 4, February 24, and March 31, 2022, the Board awarded RSUs to board members, directors, officers, and key employees of the Company. The RSUs vest immediately for board members and all other RSUs granted vest over a ~~two-year~~ ~~period.~~

~~On September 15, 2021, the Board awarded RSUs to~~ ~~two~~ ~~officers of the Company as replacement awards for cancelled warrants, which vest immediately. The previously held~~ ~~3,572,514~~ ~~warrants were cancelled on September 15, 2021 with the new RSUs granted~~

~~on September 15, 2021 as a replacement of the previously held warrants. The~~ ~~two~~ ~~officers were awarded a total premium of $3.1~~ ~~million, allocated between the~~ ~~two~~ ~~officers, to incentivize the cancellation and replacement, which was recorded to general and administrative expenses in the consolidated statements of operations and comprehensive (loss) income.~~

~~On September 29, 2021, under the 2021 Plan, the Board awarded RSUs to officers and other select employees of the Company, which vest over a~~ ~~two-~~to ~~three-year~~ ~~period.~~

The following is a summary of RSU ~~activity:~~activity for the three months ended March 31, 2023 and 2022, respectively:


	Number of restricted stock units			Weighted average grant price		Number of restricted stock units			Weighted average grant price
Unvested balance as of January 1, 2022		332,428		$	26.86
Unvested balance as of January 1, 2023							720,707		$	22.36
Granted		821,800			21.51		—
Vested		(45,625	)		22.85		—
Forfeited		(206,914	)		23.32		(28,402	)		23.20
Unvested balance as of September 30, 2022		901,689		$	23.00
Unvested balance as of March 31, 2023							692,305		$	22.21


	Number of restricted stock units			Weighted average grant price
Unvested balance as of January 1, 2022		332,428		$	26.86
Granted		821,800			21.51
Vested		(24,444	)		21.48
Forfeited		(51,460	)		26.00
Unvested balance as of March 31, 2022		1,078,324		$	22.94

The Company recorded share-based compensation for RSUs as follows:


					Three Months Ended March 31,		Three Months Ended March 31,
Statement of operations and comprehensive (loss) income location	Three Months Ended September 30, 2022		Nine Months Ended September 30, 2022		2023		2022
	(in thousands)				(in thousands)
Cost of goods sold		302		761	$	220	$	201
General and administrative		2,011		6,463		1,319		1,894
Sales and marketing		56		668		82		312
Total Share based compensation expense	$	2,369	$	7,892
Total share-based compensation expense					$	1,621	$	2,407

~~There was~~ no ~~share-based compensation expense related to RSUs during the three or nine months ended September 30, 2021.~~

As of ~~September 30, 2022,~~March 31, 2023, there was approximately $~~12.5~~7.2 million of total unrecognized compensation cost related to ~~nonvested~~unvested restricted stock units, which is expected to be recognized over a weighted-average service period of ~~0.95~~ 0.74years.

~~Warrants~~

~~During the year ended December 31, 2018, the Company issued~~ ~~8,784,872~~ ~~warrants to certain employees and directors of the Company for past services provided. The warrants had~~ no ~~vesting conditions and are exercisable at any time for~~ ~~three years~~ ~~after the issuance, subject to certain lock-up provisions:~~ ~~(i) the warrants may not be exercised for~~ ~~18 months~~ following the Issue Date; (ii) 50% of the warrants may be exercised between months 19-24 following the Issue Date; and (iii) the remaining 50% of the warrants may be exercised at any time thereafter until expiration. ~~The warrants are exchangeable into Subordinate Voting Shares.~~

3219

~~The following table summarizes the activity related to warrants issued and outstanding to certain employees and directors of the Company for the nine-month period ending September 30, 2021. There were~~ no ~~outstanding warrants as of September 30, 2022 and December 31, 2021.~~

Number of warrants

Weighted average exercise price ($CAD)

Weighted average remaining contractual life (Years)

Outstanding, January 1, 2021

6,061,561

6.00

0.72

Granted

—

—

—

Exercised

(2,075,990
)

6.00

—

Exchanged in cashless exercise

(413,057
)

Cancelled

(3,572,514
)

—

—

Outstanding, September 30, 2021

—

—

—

NOTE ~~16.~~14. EARNINGS PER SHARE

The following is a reconciliation for the calculation of basic and diluted earnings per ~~share for the three and nine months ended September 30, 2022 and 2021:~~share:

Three Months Ended September 30,

Nine Months Ended September 30,

2022

2021

2022

2021

Numerator

(in thousands, except share and per share amounts)

Net (loss) income from continuing operation

$
(77,007
)

$
18,616

$
(129,246
)

$
89,574

Less: Net loss and comprehensive loss attributable to non-controlling interest

(518
)

—

(2,555
)

—

Net (loss) income from continuing operations available to common shareholders of Trulieve Cannabis Corp.

(76,489
)

18,616

(126,691
)

89,574

Net loss from discontinued operations

(38,065
)

—

(42,329
)

—

Net (loss) income and comprehensive (loss) income attributable to common shareholders of Trulieve Cannabis Corp.

$
(114,554
)

$
18,616

$
(169,020
)

$
89,574

Denominator

Weighted average number of common shares outstanding

188,597,094

128,146,298

187,549,359

122,983,729

Dilutive effect of securities

—

8,762,968

—

7,943,354

Diluted weighted average number of common shares outstanding

188,597,094

136,909,266

187,549,359

130,927,083

Loss per Share - Continuing operations

Basic (loss) earnings per share

$
(0.41
)

$
0.15

$
(0.68
)

$
0.73

Diluted (loss) earnings per share

$
(0.41
)

$
0.14

$
(0.68
)

$
0.68

Loss per Share - Discontinued operations

Basic and diluted loss per share

$
(0.20
)

$
—

$
(0.23
)

$
—


	Three Months Ended March 31,
	2023			2022
Numerator	(in thousands, except share and per share amounts)
Net loss from continuing operations	$	(65,679	)	$	(30,123	)
Less: Net loss and comprehensive loss attributable to non-controlling interest		(1,507	)		(507	)
Net loss from continuing operations available to common shareholders of Trulieve Cannabis Corp.		(64,172	)		(29,616	)
Net income (loss) from discontinued operations		48			(2,359	)
Net loss and comprehensive loss attributable to common shareholders of Trulieve Cannabis Corp.	$	(64,124	)	$	(31,975	)
Denominator
Weighted average number of common shares outstanding		188,899,309			187,054,916
Dilutive effect of securities		—			—
Diluted weighted average number of common shares outstanding		188,899,309			187,054,916
Loss per Share - Continuing operations
Basic and diluted loss per share	$	(0.34	)	$	(0.16	)
Income (loss) per Share - Discontinued operations
Basic and diluted loss per share	$	0.00		$	(0.01	)

~~For the three months ended September 30, 2022 and 2021, the Company~~Shares which have been excluded ~~4,958,851~~ ~~and~~ ~~877,508~~ ~~of potentially dilutive instruments for the dilutive calculation~~from diluted per share amounts because their effect would have been anti-dilutive are as ~~the Company is in a net loss position, respectively. For the nine months ended September 30, 2022 and 2021, the Company excluded~~ ~~6,053,611~~ ~~and~~ ~~292,503~~ ~~of potentially dilutive instruments from the dilutive calculation as the Company is in a net loss position, respectively.~~follows:


	March 31,
	2023		2022
Stock options		3,127,234		3,628,541
Restricted share units		692,305		1,078,324
Warrants		177,391		3,636,029

As of ~~September 30, 2022,~~March 31, 2023, there are approximately ~~185.9~~186.0 million issued and outstanding shares which excludes approximately 2.9 million fully vested RSUs which are not contractually issuable until 2024.

NOTE ~~18.~~16. DISCONTINUED OPERATIONS

In July 2022, the Company approved the exit of the Nevada operations. This represents a strategic shift in the Company's operations and therefore is classified as discontinued operations as of ~~September 30, 2022.~~March 31, 2023. Immaterial wind-down activities are expected to continue in the near term. ~~The Nevada operations were acquired on October 1, 2021, and therefore, there are no discontinued operations for the comparable prior year periods.~~

~~As of September 30, 2022, the~~The assets and liabilities associated with discontinued operations consisted of the ~~following:~~following as March 31, 2023 and December 31, 2022:


	September 30, 2022		December 31, 2021		March 31, 2023		December 31, 2022
	(in thousands)				(in thousands)
Assets associated with discontinued operations
Deferred tax asset	$	3,750	$	—
Income tax receivable		1,734		474	$	1,716	$	1,708
Other assets		690		672		690		690
Inventories, net		403		2,245
Accounts receivable, net		333		291
Cash		219		561		—		621
Prepaids and other current assets		149		44		134		137
Property and equipment, net		63		503
Intangible assets, net		—		36,742
Right of use assets - operating, net		—		14,250
Total assets associated with discontinued operations	$	7,341	$	55,782	$	2,540	$	3,156

Liabilities associated with discontinued operations
Operating lease liabilities	$	14,552	$	14,380	$	14,569	$	14,560
Accounts payable and accrued liabilities		413		272		33		493
Deferred tax liabilities		—		9,429
Total liabilities associated with discontinued operations	$	14,965	$	24,081	$	14,602	$	15,053

The following table summarizes the Company's ~~loss~~income (loss) from discontinued operations for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022. The gain and loss resulting from the forgiveness of intercompany payables has been eliminated in consolidation.

Three Months Ended September 30, 2022

Nine Months Ended September 30, 2022

(in thousands)

Revenues, net of discounts
$
591

$
2,403

Cost of goods sold

1,887

7,696

   Gross margin

(1,296
)

(5,293
)
Expenses:

Operating expenses

711

2,492

Impairment and disposal of long-lived assets, net

49,069

49,069

          Total Expenses

49,780

51,561

   Loss from operations

(51,076
)

(56,854
)
Other income:

Other income, net

30

86

Total other income

30

86

  Loss before provision for income taxes

(51,046
)

(56,768
)
Income tax benefit

12,981

14,439

   Net loss from discontinued operations
$
(38,065
)

$
(42,329
)


	Three Months Ended March 31,
	2023			2022
	(in thousands)
Revenues, net of discounts	$	—		$	601
Cost of goods sold		—			2,907
Gross margin		—			(2,306	)
Expenses:
Operating (income) expenses		(19	)		892
Total Expenses		(19	)		892
Income (loss) from operations		19			(3,198	)
Other income:
Other income, net		21			30
Total other income		21			30
Income (loss) before provision for income taxes		40			(3,168	)
Income tax benefit		8			809
Net income (loss) from discontinued operations	$	48		$	(2,359	)

The condensed consolidated statements of cash flows include continuing operations and discontinued operations. There were no discontinued operations as of September 30, 2021. Accordingly, the condensed consolidated statements of cash flows include the results of continuing and discontinued operations for the nine months ended September 30, 2022.

The following table summarizes the depreciation of long-lived assets, amortization of long-lived assets, ~~loss on impairment of long-lived assets,~~ and capital expenditures of discontinued operations for the ~~nine~~three months ended ~~September 30,~~March 31, 2022. There was nominal activity for three months ended March 31, 2023.


	Nine Months Ended September 30, 2022		Three Months Ended March 31,
	(in thousands)		2022
Depreciation	$	27	$	9
Amortization	$	2,377	$	860
Loss on impairment of long-lived assets	$	49,069
Purchases of property plant and equipment	$	259	$	226

NOTE ~~19.~~17. Variable Interest Entities

The Company ~~through its acquisition of Harvest and through the acquired Harvest subsidiaries~~ has entered into operating agreements with various entities related to the purchase and operation of cannabis dispensary, cultivation, and production licenses, in several ~~states.~~states in which it determined to be variable interest entities. The Company ~~determined these entities to be VIEs due to the financial relationship and as the Company is the primary beneficiary as of September 30, 2022, and December 31, 2021. The Company~~ holds ~~varying~~ ownership interests in these entities ~~and in certain cases may not~~ranging from none to 95% either directly ~~hold ownership in the entities but holds~~or through a ~~significant interest through an agent.~~proxy as of March 31, 2023. The Company's VIEs are not material to the consolidated financial position or operations as of ~~September 30,~~March 31, 2023 and December 31, 2022 or for the three ~~or nine-month period~~months ended ~~September 30, 2022, or as of December~~March 31, ~~2021. The Company did not have any VIEs prior to the acquisition of Harvest in October 2021.~~2023 and 2022.

The Company ~~has~~ determined certain of these entities to be ~~VIEs and that~~variable interest entities in which it is the primary beneficiary. The Company consolidates these entities due to the other holder’s equity investment being insufficient to finance its activities without additional subordinated financial support and the Company meeting the power and economics criteria. In particular, the Company controls the management decisions and activities most significant to certain VIEs, has provided a significant portion of the subordinated financial support provided to date, and holds membership interests exposing the Company to the risk of reward and/or loss. The Company allocates income and cash flows of the VIEs based on the outstanding ownership percentage in accordance with the underlying operating agreements, as

amended. The Company has consolidated all identified ~~VIEs~~variable interest entities for which the Company is the primary beneficiary in the accompanying condensed consolidated financial statements.

The following table presents the summarized assets and liabilities of the Company’s VIEs in which the Company does not hold a majority interest as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021.~~2022. The assets and liabilities in the table below include third-party assets and liabilities of ~~the Company's~~our VIEs only and exclude intercompany balances that eliminate in consolidation as included ~~in the~~on our condensed consolidated balance sheets.


	September 30, 2022		December 31, 2021		March 31, 2023		December 31, 2022
	(in thousands)				(in thousands)
Current assets:
Cash and cash equivalents	$	3,264	$	1,241
Cash					$	4,916	$	3,974
Accounts receivable, net		494		905		507		597
Inventories, net		6,428		2,451		7,330		6,922
Prepaids and other current assets		35		313		2,349		314
Total current assets		10,221		4,910		15,102		11,807
Property and equipment, net		6,938		8,335		10,386		9,916
Right of use asset - operating, net						1,702		1,760
Right of use asset - finance, net						2,333		2,371
Intangible assets, net		16,416		17,735		15,830		16,123
Other assets		79		544		79		79
Total assets	$	33,654	$	31,524	$	45,432	$	42,056
Current liabilities:
Accounts payable and accrued liabilities	$	1,570	$	828	$	4,190	$	2,992
Notes payable - current portion		—		1,170
Income tax payable		2,323		522		2,363		2,216
Deferred revenue						29		6
Operating lease liability - current portion						109		105
Finance lease liability - current portion						134		129
Total current liabilities		3,893		2,520		6,825		5,448
Notes payable		1,080		1,061		1,139		1,200
Operating lease liability						1,676		1,705
Finance lease liability						2,191		2,226
Deferred tax liabilities		4,131		4,479		3,993		4,228
Other long-term liabilities		618		—		526		625
Total liabilities	$	9,722	$	8,060	$	16,350	$	15,432

During the three months ended March 31, 2023, the Company paid $0.4 million in cash and $1.7 million in subordinate voting shares, earned but not yet issued, based on the completion of certain milestones required as part of the acquisition of one of the Company's consolidated variable interest entities. The Company previously paid $0.8 million in cash for certain milestones. As of March 31, 2023, the Company has $2.9 million in prepaid acquisition costs included in prepaids and other current assets in the condensed consolidated balance sheets. The agreement contains additional future milestones expected to be met in the near-term for additional cash and shares to be issued in accordance with the terms of the purchase agreement.

In the first quarter of 2022, the Company divested of its minority ownership interest in one of its VIEs and received cash of $1.6 million and recorded an insignificant loss on the divestment which is recorded in impairment and disposal of ~~non-operating assets,~~long-lived, net in the condensed consolidated ~~statement~~statements of operations and comprehensive (loss) income for the ~~nine~~three months ended ~~September 30,~~March 31, 2022. ~~As of September 30, 2022,~~The Company no longer consolidates the ~~Company~~VIE since it is no longer considered the primary ~~beneficiary of this VIE and the VIE is no longer consolidated in the Company's condensed consolidated financial statements.~~beneficiary.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This "Management's Discussion and Analysis of Financial Condition and Results of Operations" of Trulieve Cannabis Corp., together with its subsidiaries ("Trulieve," "the Company," "we," or "our") should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and the related notes included elsewhere within this Quarterly Report on Form 10-Q and the Audited Consolidated Financial Statements and the related Notes thereto and "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" contained in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021~~2022 (the "Form 10-K"). There have been no material changes as of ~~September 30, 2022~~March 31, 2023 to the application of our critical accounting policies as described in Item 7 of the Form 10-K.

This discussion contains forward-looking statements and involves numerous risks and uncertainties, including but not limited to those described in the “Risk Factors” section of this Quarterly Report on Form 10-Q and in “Part I, Item 1A. Risk Factors” in our ~~2021~~2022 Form 10-K. Actual results may differ materially from those contained in any forward-looking statements. You should read “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” contained herein and in our ~~2021~~2022 Form 10-K. See “Special Note Regarding Forward-Looking Statements and Projections” in “Part II. Other Information” of this report. You should consider our forward-looking statements in light of the risks discussed in “Item 1A. Risk Factors” in “Part II. Other Information” of this report and our unaudited condensed consolidated financial statements, related notes and other financial information appearing elsewhere in this report, the Form 10-K and our other filings with the Securities and Exchange Commission (the “SEC”).

WeTrulieve Cannabis Corp. is a reporting issuer in the United States and Canada. The Company’s Subordinate Voting Shares (as hereinafter defined) are listed for trading on the Canadian Securities Exchange (“CSE”) under the symbol “TRUL” and are also traded in the United States on the OTCQX Best Market (“OTCQX”) under the symbol “TCNNF”.

Trulieve is a vertically integrated cannabis company and multi-state operator which currently ~~holds licenses to operate~~operates in ~~twelve~~eleven states. Headquartered in Quincy, Florida, we are the market leader for quality medical cannabis products and services in Florida and we have market leading retail operations in Arizona, Pennsylvania, and ~~Pennsylvania.~~West Virginia. By providing innovative, high-quality products across our brand portfolio, we aim to be the brand of choice for medical and adult-use customers in all of the markets that we serve. We operate in highly regulated markets that require expertise in cultivation, manufacturing, retail, and logistics. We have developed proficiencies in each of these functions and are committed to expanding access to high quality cannabis products and delivering exceptional customer experiences.

All of the states in which we operate have ~~adopted legislation~~developed programs to permit the use of cannabis products for medicinal purposes to treat specific conditions and diseases, which we refer to as medical cannabis. Recreational marijuana, or adult-use cannabis, is legal marijuana sold in licensed dispensaries to adults ages 21 and older. Thus far, of the states in which we operate, ~~only~~ Arizona, California, Colorado, Connecticut, Maryland, and Massachusetts ~~and Nevada~~ have ~~adopted legislation~~enacted laws permitting the commercialization of adult-use cannabis products. ~~The Company discontinued~~Trulieve operates its ~~operations~~business through its directly and indirectly owned subsidiaries that hold licenses and have entered managed service agreements in ~~Nevada during~~ the third quarter of 2022. As previously disclosed, on October 1, 2021, we completed our previously announced acquisition of Harvest Health & Recreation Inc. (“Harvest”) and, as a result of the acquisition, our operations have expanded significantly effective as of such date. As of September 30, 2022, we operated 176 dispensaries, with 120 dispensariesstates in Florida, 19 affiliated dispensaries in Pennsylvania, 19 dispensaries in Arizona, three dispensaries in California, three dispensaries in Maryland, three dispensaries in Massachusetts, eight dispensaries in West Virginia and one dispensary in Connecticut, and we operated cultivation and processing facilities in Arizona, Colorado, Florida, Georgia, Maryland, Massachusetts, Pennsylvania, and West Virginia.which they operate.

As of March 31, 2023, we employed over ~~8,000~~5,900 people, and we are committed to providing patients and adult use consumers, which we refer to herein as “customers,” a consistent and welcoming retail experience across Trulieve branded stores and affiliated retail locations. As of September 30, 2022, the majority of our revenue was generated from the sale of cannabis products in the State of Florida and to a lesser extent Arizona and the Commonwealth of Pennsylvania. To date, our operations in our California, Connecticut, Colorado, Georgia, Maryland, Massachusetts, Nevada, and West Virginia, have not been material to our business.

Our business and operations center around the Trulieve brand philosophy of “Customers First” which permeates our culture beginning with ~~high- quality~~high-quality and efficient cultivation and manufacturing ~~practices,~~practices. We focus on the consumer experience at Trulieve branded and affiliated retail locations, at our in-house call center and ~~where available~~in our Florida market at customer residences through a robust home delivery program. Our investments in vertically integrated operations in several of our markets afford us ownership of the entire supply chain, which mitigates third-party risks and allows us to completely control product quality and brand experience. We believe that this ~~contributes~~is contributive to high customer retention and brand loyalty. We successfully operate our core business functions of cultivation, production, and distribution at scale, and are skilled at rapidly increasing capacity without ~~any~~ interruption to existing operations.

Trulieve has identified five regional geographic hubs in the U.S. and has established cannabis operations in three of the five hubs: Southeast, Northeast, and Southwest. In each of our three regional hubs we have market leading positions in cornerstone states and additional operations and assets in other state markets. Our hubs are managed by national and regional management teams supported by our corporate headquarters in Florida.

Our ~~southeast~~Southeast hub operations are anchored by our cornerstone market of Florida. Trulieve was the first licensed operator in the medical market in Florida with initial sales in 2016. Publicly available reports filed with the Florida Office of Medical Marijuana Use show Trulieve has the most dispensing locations and the greatest dispensing volume across product categories out of all licensed medical marijuana businesses in the state as of ~~December~~March 31, ~~2021 and September 30, 2022.~~2023. Trulieve cultivates and produces all of its products in-house and distributes those products to customers in Trulieve branded stores (dispensaries) throughout Florida, as well as via home delivery.

~~As of September 30, 2022, Trulieve operated cultivation and processing facilities across eight sites and 120 retail dispensaries throughout the state.~~ In accordance with Florida law, Trulieve grows all of its cannabis in secure enclosed indoor facilities and greenhouse structures. In furtherance of our customer-first focus, we have developed a suite of Trulieve branded products, including flower, edibles, vaporizer cartridges, concentrates, topicals, capsules, tinctures, dissolvable powders, and nasal sprays. This wide variety of products gives customers the ability to select ~~the product~~product(s) that consistently ~~delivers~~deliver the desired effect and in their preferred method of delivery. These products are delivered to customers statewide in Trulieve-branded retail stores and by home delivery.

In Georgia, Trulieve GA holds one of two Class 1 Production Licenses in the state and is permitted to cultivate cannabis for the manufacture and sale of low tetrahydrocannabinol, or THC oil. The Class 1 Production License allows for production facilities and five retail location with the potential to increase the retail locations as the registered patient count increases. Our cultivation and processing facility is active, producing cannabis oil via hydrocarbon extraction. Dispensaries have been constructed and are ready to serve the patients of Georgia. On April 28, 2023, the Company opened the first locations in Georgia, opening a store in Macon and Marietta.

Our ~~northeast~~Northeast hub operations are anchored by our cornerstone market of Pennsylvania.

We conduct cultivation, processing, and retail operations through direct and indirect subsidiaries with permits for retail operations and grower/processor operations in Pennsylvania. These subsidiaries operate cultivation and processing facilities in Carmichael, McKeesport, ~~Reading,~~ and ~~Carmichael,~~Reading, Pennsylvania to support our affiliated network of retail dispensaries and wholesale distribution network across the state.

We operate three medical dispensaries ~~in Maryland~~ and conduct wholesale sales supported by cultivation and processing in Hancock, Maryland. ~~As of September 30, 2022, we~~

We operate three retail dispensaries in Massachusetts, serving medical patients and adult use customers in Northampton and adult use customers in ~~Worcester~~Framingham and ~~Framingham.~~Worcester. Our retail operations are supported by cultivation and manufacturing operations in Holyoke. We commenced wholesale sales in September 2021. Trulieve was the first to offer sales of clones supporting home grow for residents in the Massachusetts market in August 2021.

We operate a medical cannabis dispensary located in Bristol, Connecticut. ~~Under Connecticut’s~~In February 2023 we obtained a hybrid license and began adult-use cannabis ~~legislation, which was enacted July 1, 2021, Trulieve can seek regulatory approval to expand~~ sales ~~at this dispensary to include adult use sales.~~in the state.

We operate ~~eight~~ten medical dispensaries in West Virginia, supported by cultivation and processing operations in Huntington, West Virginia. ~~As of September 30, 2022, Trulieve has been awarded and has acquired permits to operate up to a total of ten dispensaries in West Virginia.~~

Our ~~southwest~~Southwest hub operations are anchored by our cornerstone market of Arizona. In Arizona, Trulieve holds a market-leading retail position with 19twenty dispensaries, ~~and six cultivation and/or processing sites as of September 30, 2022,~~ offering medical and adult use customers a wide range of branded and third-party products, including brand partner ~~products.~~products, in addition to sales in the wholesale channel. We also serve medical and adult use customers in California. Trulieve conducts wholesale operations in ~~Arizona and~~ Colorado, serving the medical and adult use ~~markets in each state.~~markets.

The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant estimates in our condensed consolidated financial statements, include, but are not limited to, accounting for acquisitions and business combinations;

initial valuation and subsequent impairment testing of goodwill, other intangible assets and long-lived assets; leases; fair value of financial instruments, income taxes; inventory; share-based payment arrangements, and commitment and contingencies. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis.

We derive our revenue from cannabis products which we manufacture, sell, and distribute to our customers by home delivery and in our ~~dispensaries, as well as sales of cannabis products to wholesale customers in select markets.~~dispensaries.

Gross profit includes revenue less the costs directly attributable to product sales and includes amounts paid to produce finished goods, such as flower, and concentrates, as well as packaging and other supplies, fees for services and processing, allocated overhead which includes allocations of rent, administrative salaries, utilities, and related costs. Cannabis costs are affected by various state regulations that limit the sourcing and procurement of cannabis product, which may create fluctuations in margins over comparative periods as the regulatory environment changes.

Sales and marketing expenses ~~consist~~ primarily ofrelate to personnel and other costs related to ~~the dispensaries as well as~~dispensaries. Other expenses consist of marketing expenses related to marketing programs for our products. As we continue to expand and open additional dispensaries, we expect our sales and marketing expenses to continue to ~~increase.~~increase over the long-term.

General and administrative expenses represent costs incurred at our corporate offices, primarily related to personnel costs, including salaries, ~~share-based compensation,~~ incentive compensation, benefits, and other professional service costs, including legal and accounting. We expect to continue to invest considerably in this area to support our expansion plans and to support the increasing complexity of the cannabis business. Furthermore, we expect to continue to incur acquisition, transaction, and integration costs related to our expansion plans, and we anticipate a significant increase in accounting, and legal and professional fees associated with becoming compliant with the Sarbanes-Oxley Act and other public company corporate expenses.

Depreciation expense is calculated on a straight-line basis using the estimated useful life of each asset. Estimated useful life is determined by asset class and is reviewed on an annual basis and revised if necessary. Amortization expense is ~~recognized~~amortized using the straight-line method over the estimated useful life of the intangible assets. Useful lives for intangible assets are determined by type of asset with the initial determination of useful life ~~derived at~~determined during the ~~time~~valuation of the ~~asset is placed in service.~~business combination. On an annual basis, the useful lives of each intangible class of assets are evaluated for appropriateness and adjusted if appropriate.

Other income (expense), net consist primarily of interest expense, interest income, ~~loss on disposal~~and the impact of ~~non-operational assets, and~~ the revaluation of ~~derivative liabilities.~~the liability classified warrants and our interest rate swap.

Provision for income taxes is calculated using the asset and liability method. Deferred income tax assets and liabilities are determined based on enacted tax rates and laws for the years in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

As we operate in the cannabis industry, we are subject to the limits of IRC Section 280E under which we are only allowed to deduct expenses directly related to ~~the~~ cost of ~~products and the cost of producing products.~~goods sold.

~~Revenue~~This section of this Form 10-Q generally describes and compares our results of continuing operations for the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~increased by 34% or $76.7 million~~except as ~~compared~~noted. Refer toNote 16. Discontinued Operations to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for additional financial information related to our discontinued operations.

Revenue, net for the three months ended ~~September 30, 2021. Revenue~~March 31, 2023 was $289.1 million, a decrease of $28.7 million or 9% from $317.7 million for the ~~nine~~three months ended ~~September 30, 2022 increased by 48% or $304.6 million as compared to the nine months ended September 30, 2021.~~March 31, 2022. The ~~increase~~decrease in revenue is ~~the result of an increase in organic growth~~due to a $15.0 million decrease in retail ~~sales due to an increase~~revenues and a $13.7 million decrease in ~~products available for purchase~~wholesale revenues. The Company experienced increased competition and overall patient count, increased retail locations, as well as expansion of the wholesale business. During the period the Company made acquisitions such as Harvest and Keystone Shops, expanded business into new states such as Massachusetts and West Virginia, and opened additional dispensariespromotional activity in ~~existing markets such as Florida, all of which contributed to the increase in revenue.~~

certain markets, including Florida, Pennsylvania and Massachusetts. The Company operated 184 dispensaries and 165 dispensaries as of March 31, 2023 and March 31, 2022, respectively, opening three new dispensaries during the first quarter of 2023.

Cost of goods sold for the three months ended ~~September 30, 2022 increased by 89%~~March 31, 2023 was $139.2 million, an increase of $1.9 million or ~~$62.6~~1% from $137.3 million ~~as compared to~~for the three months ended ~~September 30, 2021.~~March 31, 2022. Cost of goods sold for the nine months ended September 30, 2022 increased by 103% or $205.9 million as compared to the nine months ended September 30, 2021. Cost of goods sold increased due to expansion of the business and increased revenue. Cost of goods sold as a percentage of ~~revenue increased~~revenues, net was 48.1% in the ~~three and nine months ended September 30, 2022 as~~current quarter compared to 43.2% in the ~~three and nine months ended September 30, 2021. This~~prior year period. The increase was primarily due to increased depreciation related to capital expenditures to support business growth, new production facilities in existing markets where economies of scale are anticipated in the future, and expansion into new markets which are not fully vertical, resulting in the sale of third-party products, and therefore yield lower margin than our vertical markets.

Gross profit for the three months ended ~~September 30, 2022 increased by 9%~~March 31, 2023 was $149.9 million, a decrease of $30.5 million or ~~$14.1~~17% from $180.5 million ~~as compared to~~for the three months ended ~~September 30, 2021. Gross profit for the nine months ended September 30, 2022 increased by 23% or $98.6 million as compared to the nine months ended September 30, 2021.~~March 31, 2022. Gross profit as a percentage of revenue, decreased due to increased wholesale business, which is generally lower margin than retail sales, increased depreciation related to capital expenditures to support business growth, new production facilities in where economies of scale are anticipatednet was 51.9% in the ~~future, and expansion into new markets which are not fully vertical, resulting~~current quarter compared to 56.8% in the ~~sale of third-party products,~~prior year period driven by increased promotional activity in certain retail markets, a product mix shift to value brands and ~~therefore yield lower margin than our vertical markets.~~initiatives to reduce inventory levels.

Sales and marketing expense for the three months ended ~~September 30, 2022 increased by 47%~~March 31, 2023 was $62.3 million, a decrease of $10.5 million or ~~$24.2~~14% from $72.8 million ~~as compared to~~for the three months ended ~~September 30, 2021.~~March 31, 2022. Sales and marketing expense ~~for~~as a percentage of revenues, net was 21.6% in the ~~nine months ended September 30, 2022 increased by 57% or $81.2 million as~~current quarter compared to 22.9% in the ~~nine months ended September 30, 2021.~~prior year period. The ~~increase~~decrease in ~~sales and marketing~~ expense iswas largely attributable to lower headcount in the ~~result of a higher headcount for the year,~~Company’s dispensaries as we ~~continue~~refined staffing levels to ~~add additional dispensaries in efforts to maintain~~more closely align with consumer traffic and further drive higher growth in sales and market share as well as expanding into new markets. This increased headcount resulted in higher personnel costs, which is the primary driver for the increase year over year.consumption levels. Another factor in the ~~increase~~decrease in sales and marketing expenses is ~~$5.3 million and $12.6~~$2.1 million related to the accrual of earn-outs related to the Watkins acquisition for the three ~~and nine~~ months ended ~~September 30, 2022, respectively.~~March 31, 2022.

General and administrative expense for the three months ended ~~September 30, 2022 increased by 33%~~March 31, 2023 was $39.4 million, an increase of $5.8 million or ~~$9.4~~17% from $33.5 million ~~as compared to~~for the three months ended ~~September 30, 2021. General and administrative expenses for the nine months ended September 30, 2022 increased by 88% or $49.0 million as compared to the nine months ended September 30, 2021.~~March 31, 2022. The increase in general and administrative expense is ~~the result of entering new markets, ramping our infrastructure~~primarily due to ~~support growth initiatives, continued acquisitions resulting in additional transaction and integration costs and increased go-forward compliance costs, as well as $10.0~~a $10.5 million ~~contributed~~contribution to the Smart and Safe Florida campaign during the ~~third~~first quarter of ~~2022.~~2023, partially offset by lower stock-based compensation expense and transaction and integration costs as compared to the prior period.

Depreciation and amortization expense for the three months ended ~~September 30, 2022 increased by 291%~~March 31, 2023 was $30.4 million, an increase of $1.9 million or ~~$22.5~~7% from $28.4 million ~~as compared to~~for the three months ended ~~September 30, 2021. Depreciation and amortization expense for the nine months ended September 30, 2022 increased by 347% or $68.8 million as compared to the nine months ended September 30, 2021.~~March 31, 2022. The overall increase in depreciation and amortization expense was due to acquired facilities and ~~intangible assets and~~ investment in infrastructure for additional dispensaries and cultivation facilities.

Impairment and disposal of long-lived assets, net for the three months ended ~~September 30, 2022 increased by $52.0~~March 31, 2023 was $31.0 million, ~~as compared to a nominal amount~~an increase of $14.6 million or 88% from $16.5 million for the three months ended ~~September 30, 2021. Impairment and disposal of long-lived assets, net for~~March 31, 2022. During the ~~nine~~three months ended ~~September 30, 2022 increased by $70.2~~March 31, 2023, the Company recorded an impairment of $30.3 million ~~as compared to a nominal amount for the nine months ended September 30, 2021. The increase~~ in the ~~current periods is~~Massachusetts market, which primarily consisted of intangible assets. The impairment expense incurred in the prior year was primarily due to exited facilities and the repositioning of assets, primarily in our southeast hub.

~~Total other~~Other expense, net for the three months ended ~~September 30, 2022 increased by 248%~~March 31, 2023 was $17.6 million, an increase of $1.4 million or ~~$15.0~~9% from $16.2 million ~~as compared to the~~for three months ended ~~September 30, 2021. Total other expense, net for the nine months ended September 30, 2022 increased by 182% or $36.9 million as compared to the nine months ended September 30, 2021.~~March 31, 2022. The increase ~~in both periods~~ is primarily the result of ana $4.9 million increase in interest expense related to additional finance leases and private placement notes to support the long-term business growth, partially offset by gains related to non-operating assets and ~~loss~~interest income on ~~disposal of non-operational assets.~~money market funds.

The provision for income taxes for the three months ended ~~September 30, 2022, decreased by 32%~~March 31, 2023 was $35.0 million, a decrease of $8.2 million or ~~$13.4~~19% from $43.1 million ~~as compared to~~for the three months ended ~~September 30, 2021. Income~~March 31, 2022. For the three months ended March 31, 2023, the decrease in income tax expense ~~for the nine months ended September 30, 2022, increased by 11% or $11.5 million as compared~~is primarily due to the ~~nine months ended September 30, 2021.~~decrease in gross profit. Under IRC Section 280E, cannabis companies are only allowed to deduct expenses that are directly related to production of the products. The Company's quarterly tax provision is subject to change resulting from several factors, including regulations and administrative practices, principles, and interpretations related to tax. During the third quarter of the 2022, the Company adopted a more favorable tax position with respect to intercompany management fees based on an IRS position taken in audit of a similar businesses. This reduced tax expense in the quarter as compared to prior periods. For the nine-month period the increase in income tax expense is primarily due to the increase in gross profit as a result of increased revenue, partially offset by the more favorable tax position on intercompany management fees.

Net loss from continuing operations and comprehensive loss ~~attributable to common shareholders~~ for the three months ended ~~September 30, 2022~~March 31, 2023 was ~~$114.6~~$65.7 million, ~~a decrease~~an increase of ~~$133.2~~$35.6 million or 118% from ~~net income of $18.6~~$30.1 million for the three months ended September 30, 2021. Net loss and comprehensive loss attributable to common shareholders for the nine months ended September 30, 2022 was $169.0 million, a decrease of $258.6 million from net income of $89.6 million for the nine months ended September 30, 2021.March 31, 2022. The ~~decrease~~increase was driven primarily by lower gross margin ~~increased~~and impairment expense, partially offset by lower sales and marketing and ~~general and administrative costs related~~decreased tax expense.

Net income from discontinued operations, net of tax benefit for the three months ended March 31, 2023 increased $2.4 million or 102% from a net loss of $2.4 million for the three months ended March 31, 2022. Net losses relate to the ~~expanded organization, losses on disposal of long-lived assets, increased other expense, increased tax expense, and loss from~~Company’s operations in Nevada that were discontinued ~~operations.~~in 2022.

Since our inception, we have funded our operations and capital spending through cash flows from product sales, third-party debt, proceeds from the sale of our capital stock and loans from affiliates and entities controlled by our ~~affiliates, third-party debt, and proceeds from the sale of our capital stock.~~ affiliates. We are generating cash from sales and are deploying our capital reserves to acquire and develop assets capable of producing additional revenues and earnings over both the immediate and ~~long~~near term to support our business growth and expansion.Our current principal sources of liquidity are our cash and cash equivalents provided by our operations and debt and equity offerings. Cash and cash equivalents consist primarily of cash on deposit with banks and money market funds. ~~Cash and cash equivalents were $114.5 million as of September 30, 2022.~~

~~We believe our existing cash balances will be sufficient to meet our anticipated cash requirements from the report issuance date through at least the next twelve months.~~

Our primary uses of cash are for working capital requirements, capital expenditures, ~~and~~ debt service ~~payments.~~payments, income tax payments, and acquisitions. Additionally, from time to time, we may use capital for ~~acquisitions and~~ other investing and financing activities. Working capital is used principally for our personnel ~~and~~as well as costs related to the growth, manufacture and production of our products. Our capital expenditures consist primarily of additional facilities and dispensaries, and improvements into existing facilities. Our debt service payments consist primarily of interest payments. Income tax payments are mainly represented by federal income tax payments due to IRC Section 280E.

~~To the extent additional funds are necessary~~Cash and cash equivalents were $188.1 million as of March 31, 2023. We believe our existing cash balances will be sufficient to meet our ~~long-term liquidity needs as we continue to execute our business strategy, we anticipate that they~~anticipated cash requirements from the date of this Quarterly Report on Form 10-Q through at least the next 12 months. Any additional future requirements will be ~~obtained~~funded through ~~incurrence of additional indebtedness, additional equity financings or a combination of these potential~~the following sources of ~~funds. There can be no assurance that we will be able~~capital:

The condensed consolidated statements of cash flows include continuing operations and discontinued operations for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022. ~~There were no discontinued operations as of September 30, 2021.~~

The ~~following~~ table below highlights our cash flows for the periods indicated.

Net cash ~~used in~~provided by operating activities was ~~$31.9~~$0.4 million for the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, a decrease of ~~$107.0~~$44.7 million as compared to ~~$75.1~~$45.1 million net cash provided by operating activities during the ~~nine~~three months ended ~~September 30, 2021.~~March 31, 2022. This is primarily due to ~~the current net loss versus the prior year net income, increases in net working capital requirements, mainly inventory, and~~ income tax payments ~~made~~of $46.3 million that were deferred from the fourth quarter of 2022 due to Hurricane Ian and paid in the ~~second and third~~first quarter of ~~2022.~~2023. Cash flows from operating activities were also impacted by lower results in the three months ended March 31, 2023, offset by favorable changes in working capital (excluding tax payments).

Net cash used in investing activities was ~~$179.0~~$18.8 million for the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, a decrease of ~~$58.6~~$65.0 million, compared to the ~~$237.6~~$83.8 million net cash used in investing activities for the ~~nine~~three months ended ~~September 30, 2021.~~March 31, 2022. The primary use of cash in both periods was the purchase of property and equipment, with the prior period having significantly more purchases of property and equipment. Additionally, the prior period included the cash payment of $27.5 million related to the acquisition of the Watkins Cultivation Operation.

Net cash ~~provided by~~used in financing activities was ~~$91.9~~$5.8 million for the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, a decrease of ~~$137.5~~$78.1 million, compared to the ~~$229.4~~$72.2 million net cash provided by financing activities for the ~~nine~~three months ended ~~September 30, 2021.~~March 31, 2022. The decrease was primarily due to proceeds ~~from shares issued pursuant to private placement in 2021 with the decrease partially offset by the net proceeds~~of $76.4 million from private placement notes which closed in the first quarter of 2022.

~~Private Placement Note Liabilities - “June Warrants” and “November Warrants”~~

On June 18, 2019, we completed an offering using our Canadian prospectus of 70,000 units (the “June Units”), comprised of an aggregate principal amount of US$70.0 million of 9.75% senior secured notes maturing in 2024 (the “June Notes”) and an aggregate amount of 1,470,000 subordinate voting share warrants (each individual warrant being a “June Warrant”) at a price of US$980 per June Unit for gross proceeds of US$68.6 million. Each June Unit was comprised of one June Note issued in denominations of $1,000 and 21 June Warrants.

On November 7, 2019, we completed an offering using our Canadian prospectus of 60,000 units (the “November Units”), comprised of an aggregate principal amount of US$60.0 million of 9.75% senior secured notes maturing in 2024 (the “November Notes”) and an aggregate amount of 1,560,000 subordinate voting share warrants (each individual warrant being a “November Warrant”) at a price of US$980 per November Unit for gross proceeds of US$61.1 million. Each November Unit was comprised of one November Note issued in denominations of $1,000 and 26 November Warrants.

On October 6, 2021, the Company closed its private placement of 8% Senior Secured Notes (the "2026 Notes - Tranche One") for aggregate gross proceeds of $350.0 million and net proceeds of $342.6 million. On January 28, 2022, the Company closed on a second tranche private placement of 8% Senior Secured Notes (the "2026 Notes - Tranche Two") for aggregate gross proceeds of $76.9 million and net proceeds of $75.6 million. These notes are collectively referred to as the "2026 Notes".

The 2026 Notes bear interest at a rate of 8% per annum, payable semi-annually in equal installments until the maturity date, unless earlier redeemed or repurchased. The 2026 Notes mature on October 6, 2026 and may be redeemed in whole or in part, at any time from time to time, on or after October 6, 2023 at the applicable redemption price set forth in the trust indenture dated as of June 18, 2019 (the “Base Indenture”), as supplemented by a supplemental trust indenture dated as of October 6, 2021 (the “Supplemental Indenture” and, the Base Indenture as supplemented by the Supplemental Indenture, the “Indenture”), by and between the Company and Odyssey Trust Company, as trustee. The Company used a portion of the net proceeds to redeem certain outstanding indebtedness of Harvest and for capital expenditures and other general corporate purposes. The Indenture governing the Notes contains covenants that, among other things, limit the ability of the Company and its restricted subsidiaries to, among other things, declare or pay dividends or make certain other payments; purchase, redeem or otherwise acquire or retire for value any equity interests or otherwise make any restricted payments; conduct certain asset sales or consolidate, merge or transfer all or substantially all of the assets of the Company and its subsidiaries on a consolidated basis; make certain restricted investments, incur certain indebtedness or grant certain liens, or enter into certain affiliate transactions. These covenants are subject to a number of other limitations and exceptions as set forth in the Indenture.

As of ~~September 30,~~March 31, 2023 and December 31, 2022, ~~the entirety~~100% of our condensed consolidated balance sheet is exposed to U.S. cannabis-related activities. We believe our operations are in material compliance with all applicable state and local laws, regulations, and licensing requirements in the states in which we operate. However, cannabis remains illegal under U.S. federal law. Substantially all our revenue is derived from U.S. cannabis operations. For information about risks related to U.S. cannabis operations, please refer to the “Risk Factors” section of this Quarterly Report on Form 10-Q and "Part I, Item 1A - Risk Factors" in our ~~2021~~2022 Form 10-K.

As of ~~September 30, 2022,~~March 31, 2023, we had the following contractual obligations to make future payments, representing contracts and other commitments that are known and committed:

For additional information on our commitments for financing arrangements, future lease payments, lease guarantees, and other obligations, see Note 9. Notes Payable, Note 10. Private Placement Notes, Note 11. Leases, Note 12. Construction Finance Liabilities, and Note 20. Commitments and Contingencies.

As of the date of this filing, we do not have any off-balance-sheet arrangements that have, or are reasonably likely to have, a current or future effect on the results of operations or financial condition of, including, and without limitation, such considerations as liquidity and capital resources.

Our management uses a financial measure that is not in accordance with generally accepted accounting principles in the U.S., or GAAP, in addition to financial measures in accordance with GAAP to evaluate our operating results. This non-GAAP financial measure should be considered supplemental to, and not a substitute for, our reported financial results prepared in accordance with

GAAP. Adjusted EBITDA is a financial measure that is not defined under GAAP. Our management uses this non-GAAP financial measure and believes it enhances an investor’s understanding of our financial and operating performance from period to period because it excludes certain material non-cash items and certain other adjustments management believes are not reflective of our ongoing operations and performance. Adjusted EBITDA excludes from net income as reported interest, provision for income taxes, and depreciation and amortization to arrive at EBITDA. This is then adjusted for items that do not represent the operations of the core business such as integration and transition costs, acquisition and transaction costs, inventory step-up for fair value adjustments in purchase accounting, ~~integration and transition costs, acquisition and transaction costs,~~ other non-recurring costs such as contributions to specific initiative campaigns (such as Smart and Safe Florida), expenses related to the COVID-19 pandemic, impairments and disposals of long-lived assets, the results of entities consolidated as variable interest entities ("VIEs") but not legally controlled and operated by the Company, discontinued operations, and other income and expense items. Integration and transition costs include those costs related to integration of acquired entities and to transition major systems or processes. Acquisition and transaction costs relate to specific transactions such as acquisitions whether contemplated or completed and regulatory filings and costs related to equity and debt issuances. Other non-recurring costs includes miscellaneous items which are not expected to reoccur frequently such as inventory adjustments related to specific issues and unusual litigation. Adjusted EBITDA for the ~~period~~three months ended ~~September 30, 2021,~~March 31, 2022, has been adjusted to reflect this current ~~definition. Additionally, certain reclassifications have been made to Adjusted EBITDA for prior periods~~definition and to conform towith the current period presentation.

Trulieve reports Adjusted EBITDA to help investors assess the operating performance of the Company’s business. The financial ~~measure~~measures noted above ~~is a metric~~are metrics that ~~has~~have been adjusted from the GAAP net income measure in an effort to provide readers with a normalized metric in making comparisons more meaningful across the cannabis industry, as well as to remove non-recurring, irregular and one-time items that may otherwise distort the GAAP net income measure.

As noted above, our Adjusted EBITDA is not prepared in accordance with GAAP, and should not be considered in isolation of, or as an alternative to, measures prepared in accordance with GAAP. There are a number of limitations related to the use of Adjusted EBITDA rather than net income, which is the most directly comparable financial measure calculated and presented in accordance with GAAP. Because of these limitations, we consider, and you should consider, Adjusted EBITDA together with other operating and financial performance measures presented in accordance with GAAP. A reconciliation of Adjusted EBITDA from net income, the most directly comparable financial measure calculated in accordance with GAAP, has been included herein immediately following our discussion of “Adjusted EBITDA”.

Adjusted EBITDA for the three months ended ~~September 30, 2022 increased by 1% as compared to~~March 31, 2023 was $78.2 million, a decrease of $27.3 million or 26%, from $105.4 million for the three months ended ~~September 30, 2021. Adjusted EBITDA for the nine months ended September 30, 2022 increased by 11% or $31.8 million as compared to the nine months ended September 30, 2021.~~March 31, 2022. The following table presents a reconciliation of GAAP net income to non-GAAP Adjusted EBITDA, for each of the periods presented:


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2022			2021			2022			2021			2023			2022
	(in thousands)						(in thousands)						(in thousands)
Net (loss) income and comprehensive (loss) income attributable to common shareholders	$	(114,554	)	$	18,616		$	(169,020	)	$	89,574
Add impact of:
Net loss and comprehensive loss attributable to common shareholders													$	(64,124	)	$	(31,975	)
Add (deduct) impact of:
Interest expense		19,264			6,145			56,815			20,693			22,748			17,877
Provision for income taxes		28,199			41,603			116,742			105,254			34,958			43,125
Depreciation and amortization		30,190			7,728			88,645			19,829			30,371			28,436
Depreciation included in cost of goods sold		14,610			5,709			39,092			14,396			13,551			10,683
EBITDA		(22,291	)		79,801			132,274			249,746			37,504			68,146
Impairment and disposal of long-lived assets, net		52,035			—			70,151			—			31,015			16,461
Legislative campaign contributions														10,512			—
Integration and transition costs														1,938			5,274
Share-based compensation and related premiums														2,401			4,564
Other income, net														(4,918	)		(885	)
Change in fair value of derivative liabilities - warrants														(252	)		(820	)
Discontinued operations		38,065			—			42,329			—			(48	)		2,359
Acquisition and transaction costs		6,961			11,114			17,227			14,335			—			3,297
Integration and transition costs		6,719			838			17,122			2,725
Other non-recurring costs		1,869			235			11,557			1,622			—			6,189
Share-based compensation and related premiums		4,292			4,922			14,559			6,407
Legislative campaign contributions		10,000			—			10,000			—
Impairment and disposal of non-operating assets, net		2,604			—			6,004			—
Inventory step up, fair value		—			710			1,048			3,238			—			400
COVID related expenses		199			503			796			6,014			—			431
Other income (expense), net		(448	)		(89	)		(3,016	)		(385	)
Change in fair value of derivative liabilities - warrants		(365	)		—			(2,627	)		—
Results of entities not legally controlled		(876	)		—			(1,942	)		—			—			23
Total adjustments		121,055			18,233			183,208			33,956			40,648			37,293
Adjusted EBITDA	$	98,764		$	98,034		$	315,482		$	283,702		$	78,152		$	105,439

There have been no material changes to our market risk disclosures as set forth in Part II Item 7A of our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

We maintain disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the specified time periods and accumulated and communicated to our management, including our principal executive officer and principal accounting officer, as appropriate to allow timely decisions regarding disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as ours are designed to do, and management necessarily was required to apply its judgment in evaluating the risk related to controls and procedures.

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

Management of the Company, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of ~~September 30, 2022.~~March 31, 2023. Our Chief Executive Officer and Chief Financial Officer have concluded that, due to the material weaknesses identified in the prior period which are currently in the process of being remediated, as of March 31, 2023, we did not maintain effective disclosure controls and procedures ~~due to a material weakness in our internal control over financial reporting, as further described below.~~

We concluded that a certain material weakness in our internal control over financial reporting is still present as of September 30, 2022. The material weaknesses present is that the primary user access controls and program change management controls over information technology systems were not effectively designed or implemented to ensure appropriate authorization and segregation of duties.

Although a material misstatement was not identified in the Company’s financial statements, it was determined that there was a reasonable possibility that a material misstatement in the Company’s financial statements would not have been prevented or detected on a timely basis.

~~We are in the process of implementing actions to improve our internal control over financial reporting toward the remediation~~because of the ~~control deficiencies resulting in this~~ material ~~weakness. As of September 30, 2022, the Company has completed the following remediation efforts.~~

While significant progress has been made to remedy the material weakness specific to information technology systems, we find the material weakness will not be considered remediated until these remediation efforts have been fully implemented and we have concluded the controls are operating effectively.

~~We previously identified and disclosed a material weakness~~weaknesses in internal control as described in Item 9A. Controls and Procedures in the ~~2021~~2022 Annual Report on Form 10-K, filed with the SEC on March ~~30, 2022. This~~8, 2023.

Notwithstanding the material ~~weakness was due~~weaknesses described in the 2022 Annual Report on Form 10-K, we have concluded that the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with U.S. GAAP.

We consolidated variable interest entities as of March 31, 2023 and December 31, 2022, because we determined we were the primary beneficiary. We have elected to exclude our variable interest entities from the ~~control environment component~~scope of our evaluation of internal control ~~where we did not maintain a sufficient complement~~over financial reporting as of ~~personnel~~March 31, 2023 and December 31, 2022. The financial position of our variable interest entities represented an insignificant amount of our total assets, net revenues, and results of operations for the period ended March 31, 2023 and December 31, 2022, respectively.

We previously identified and disclosed material weaknesses in internal control as described in Item 9A. Controls and Procedures in the 2022 Annual Report on Form 10-K, filed with the ~~appropriate level~~SEC on March 8, 2023. The material weaknesses were due to a lack of ~~knowledge, experience,~~sufficient controls around information technology, inventory valuation, and ~~training in certain areas important~~variable interest entities.

Management is committed to ~~financial reporting.~~maintaining a strong internal control environment. In response to ~~this~~the identified material ~~weakness,~~weaknesses in the overall control environment, management, with the oversight of the Audit Committee of the Board of Directors, ~~has successfully completed~~the Company is taking a number of remediation ~~plan addressing~~actions and are continuing our actions. Remediation efforts include but are not limited to the ~~previously disclosed material weakness.~~following:

~~As a result of~~Beginning in fiscal year 2022, the ~~actions implemented above,~~Company consolidated the identified variable interest entity that was previously not consolidated. The consolidated financial statements for prior periods were not and will not be modified in ~~combination with the results of~~future Annual Reports as such errors are immaterial to those periods.

While progress has been made to enhance our ~~testing over the design and operating effectiveness of the newly designed and implemented controls, our management has concluded the previously identified material weakness~~internal control over financial reporting, ~~has been remediated~~we are still in the process of building and enhancing our processes, procedures, and controls. Additional time is required to complete the remediation of the material weaknesses and the assessment to ensure the sustainability of these remediation actions. We believe the above actions as well as those being implemented currently, when complete, will be effective in the remediation of ~~September 30, 2022.~~the material weaknesses described above.

Other than the remediation measures discussed above, there have been no changes in internal controls over financial reporting during the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, that has materially affected, or is reasonably likely to materially affect, the

Company’s internal control over financial reporting. Management believes these actions will help remediate internal control deficiencies related to the Company’s financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act).

This Quarterly Report on Form 10-Q contains forward-looking statements. In some cases, you can identify these statements by forward-looking words such as “may”, “will”, “would”, “could”, “should”, “believes”, “estimates”, “projects”, “potential”, “expects”, “plans”, “intends”, “anticipates”, “targeted”, “continues”, “forecasts”, “designed”, “goal”, or the negative of those words or other similar or comparable words. Any statements contained in this Quarterly Report on Form 10-Q that are not statements of historical facts may be deemed to be forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition, results of operations and future growth prospects. The forward-looking statements contained herein are based on certain key expectations and assumptions, including, but not limited to, with respect to expectations and assumptions concerning receipt and/or maintenance of required licenses and third party consents and the success of our operations, are based on estimates prepared by us using data from publicly available governmental sources, as well as from market research and industry analysis, and on assumptions based on data and knowledge of this industry that we believe to be reasonable. These forward-looking statements are not guarantees of future performance or development and involve known and unknown risks, uncertainties and other factors that are in some cases beyond our control. As a result, any or all of our forward-looking statements in this Quarterly Report on Form 10-Q may turn out to be inaccurate. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under “Risk Factors” and discussed elsewhere in this Quarterly Report on Form 10-Q and in “Part I, Item 1A – Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future. You should, however, review the factors and risks we describe in the reports we will file from time to time with the SEC after the date of this Quarterly Report on Form 10-Q. These factors and risks include, among other things, the following:

There are no actual or to our knowledge contemplated legal proceedings material to us or to which any of our or any of our subsidiaries’ property is the subject matter.

There have been no penalties or sanctions imposed against the Company by a court or regulatory authority, and the Company has not entered into any material settlement agreements before any court relating to provincial or territorial securities legislation or with any securities regulatory authority, in the three years prior to the date of this filing.

Investing in our Subordinate Voting Shares involves a high degree of risk. Our Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 filed with the SEC on March ~~30, 2022~~8, 2023 includes a detailed discussion of our risk factors under the heading “Part I, Item 1A—Risk Factors.” You should consider carefully the risk factors discussed in our Annual Report on Form 10-K for the year ended December 31, ~~2021 and our Quarterly Report on Form 10-Q for the quarter ended June 30,~~ 2022 and all other information contained in or incorporated by reference in this Quarterly Report on Form 10-Q before making an investment decision. If any of the risks discussed in the Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 actually occur, they may materially harm our business, financial condition, operating results, cash flows or growth prospects. As a result, the market price of our Subordinate Voting Shares could decline, and you could lose all or part of your investment. Additional risks and uncertainties that are not yet identified or that we think are immaterial may also materially harm our business, financial condition, operating results, cash flows or growth prospects and could result in a complete loss of your investment. Other than the following, there have been no material changes from such risk factors during the period ended March 31, 2023.

We maintain cash deposits in excess of federally insured limits. Adverse developments affecting financial institutions, including bank failures, could adversely affect our liquidity and financial performance.

We maintain domestic cash deposits in Federal Deposit Insurance Corporation (“FDIC”) insured banks that exceed the FDIC insurance limits. Bank failures, events involving limited liquidity, defaults, non-performance, or other adverse developments that affect financial institutions, or concerns or rumors about such events, may lead to liquidity constraints. There can be no assurance that our deposits in excess of the FDIC or other comparable insurance limits will be backstopped by the United States government, or that any bank or financial institution with which we do business will be able to obtain needed liquidity from other banks, government institutions, or by acquisition in the event of a failure or liquidity crisis.

For example, on March 10, 2023, Silicon Valley Bank was closed by the California Department of Financial Protection and Innovation, which appointed the FDIC as receiver. Similarly, on March 12, 2023, Signature Bank and Silvergate Capital Corp. were each swept into receivership. Although we do not have any accounts at or business relationships with these banks, we may be negatively impacted by other disruptions to the United States banking system caused by these or similar developments. The failure of a bank, or other adverse conditions in the financial or credit markets impacting financial institutions at which we maintain balances, could adversely impact our liquidity and financial performance.

In addition, as further described in our Annual Report on Form 10-K for the year ended December 31, 2022, most banks and other financial institutions have not been willing to provide banking services to cannabis-related businesses. As such, the Company may have increased difficulty accessing the services of banks amid the adverse developments affecting the financial services industry, which may make it difficult to operate its business. In such an event, the Company’s operations and financial condition could be adversely impacted.

In connection with the regularly scheduled review of executive compensation effective as of January 1, 2023, an annual salary increase in the amount of 5.0% was approved for each Alex D’Amico and Eric Powers. In addition, effective as of January 1, 2023, the restructuring of the incentive compensation structure was approved for Kim Rivers and Alex D’Amico.

This disclosure is provided in this Part II, Item 5 in lieu of disclosure under Item 5.02(e) of Form 8-K.

55∔ Certain identified information has been excluded from the exhibit pursuant to Item 601(a)(6) and/or Item 601(b)(10)(iv) of Regulation S-K.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


British Columbia	84-2231905
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

6749 Ben Bostic Road Quincy, FL	32351
(Address of principal executive offices)	(Zip Code)


		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022	1
	Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income for the ~~three~~Three Months Ended March 31, 2023 and ~~nine months ended September 30,~~ 2022 ~~and 2021~~	2
	Condensed Consolidated Statements of Changes in Shareholders’ Equity for the ~~three~~Three Months Ended March 31, 2023 and ~~nine months ended September 30,~~ 2022 ~~and 2021~~	3
	Condensed Consolidated Statements of Cash Flows for the ~~nine months ended September 30,~~Three Months Ended March 31, 2023 and 2022 ~~and 2021~~	54
	Notes to Condensed Consolidated Financial Statements	76
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4025
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5033
Item 4.	Controls and Procedures	5033

PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	5437
Item 1A.	Risk Factors	5437
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5437
Item 3.	Defaults Upon Senior Securities	5437
Item 4.	Controls and Procedures	5437
Item 5.	Other Information	5437
Item 6.	Exhibits	5538
	Signatures	5639


	Nine Months Ended September 30, 2022		Nine Months Ended September 30, 2021			Three Months Ended March 31, 2023		Three Months Ended March 31, 2022
Supplemental disclosure of cash flow information
Cash paid during the period for
Interest	$	42,339	$	22,653		$	9,618	$	6,949
Income taxes, net of refunds	$	161,717	$	120,365		$	46,775	$	46
Other noncash investing and financing activities
ASC 842 lease additions - operating and finance leases	$	28,352	$	43,748		$	4,544	$	10,852
Purchases of property and equipment in accounts payable and accrued liabilities	$	7,266	$	16,148		$	2,197	$	10,985
Measurement period adjustment for Harvest Health and Recreation, Inc.	$	1,595	$	—
Value of shares issued for acquisitions	$	—	$	57,452
Value of shares reserved for PurePenn,LLC and Solevo Wellness acquisitions	$	—	$	(2,800	)
Value of shares earned for purchase of variable interest entity						$	1,643	$	—


	September 30, 2022			December 31, 2021
	(in thousands)
Promissory note acquired from Harvest maturing in November 2025. Secured by certain assets.	$	8,379		$	8,827
Convertible note receivable dated November 2021 maturing in November 2024.		4,490			4,124
Promissory notes acquired from Harvest maturing in February 2022. Secured by certain assets.		—			850
Notes receivable		12,869			13,801
Less: discount on notes receivable		(95	)		(124	)
Total notes receivable, net of discounts		12,774			13,677
Less: current portion of notes receivable		(715	)		(1,530	)
Notes receivable	$	12,059		$	12,147


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Three Months Ended March 31, 2023			Three Months Ended March 31, 2022
Beginning of period:
Cash and cash equivalents	$	212,266	(1)	$	230,085	(2)
Restricted cash		6,607			3,013
Cash, cash equivalents and restricted cash	$	218,873		$	233,098

End of period:
Cash and cash equivalents	$	188,128		$	266,403	(3)
Restricted cash		7,154			—
Cash, cash equivalents and restricted cash	$	195,282		$	266,403


(in thousands)
Consideration:
Cash	$	281
Fair value of consideration exchanged	$	281
Recognized amounts of identifiable assets acquired and liabilities assumed:
Right of use asset - operating	$	170
Intangible asset		270
Favorable lease interest		11
Operating lease liabilities		(170	)
Total net assets acquired	$	281


(in thousands)
Consideration
Cash	$	27,500
Fair value of consideration exchanged	$	27,500
Recognized amounts of identifiable assets acquired and liabilities assumed:
Inventories	$	2,266
Property and equipment		692
Right of use asset - operating		4,737
Goodwill		24,542
Operating lease liability		(4,737	)
Total net assets acquired	$	27,500



(in thousands)
Consideration:
Trulieve Subordinated Voting Shares	$	1,369,024
Fair value of other equity instruments		18,394
Fair value of warrants classified as liabilities		3,103
Fair value of consideration exchanged	$	1,390,521
Recognized amounts of identifiable assets acquired and liabilities assumed:
Cash and cash equivalents	$	85,318
Restricted cash		3,072
Accounts receivable		3,645
Inventories		92,537
Prepaid expenses and other current assets		100,129
Notes receivable		9,805
Property and equipment		191,801
Right of use assets - operating		73,476
Intangible assets:
Dispensary license		946,000
Trademarks		27,430
Customer relationships		3,500
Other assets		5,289
Accounts payable and accrued liabilities		(58,887	)
Income tax payable		(24,863	)
Deferred revenue		(4,523	)
Operating lease liabilities		(76,558	)
Contingencies		(26,599	)
Notes payable		(285,238	)
Construction finance liabilities		(79,683	)
Other long-term liabilities		(1,085	)
Deferred tax liabilities		(253,986	)
	$	730,580
Non-controlling interest	$	(3,734	)
Goodwill		663,675
Total net assets acquired	$	1,390,521


(in thousands)
Consideration:
Shares issued upon acquisition	$	10,012
Transaction costs		18
Fair value of consideration exchanged	$	10,030
Recognized amounts of identifiable assets acquired and liabilities assumed:
Right of use asset - finance	$	1,756
Intangible asset		10,594
Finance lease liabilities		(2,320	)
Total net assets acquired	$	10,030


	March 31, 2023			December 31, 2022			Stated Interest Rate			Maturity Date
	(in thousands)
Promissory note acquired in October 2021 (1)	$	8,025		$	8,205			7.50	%	11/9/2025
Promissory note dated November 15, 2021 (2)		4,714			4,602			9.75	%	11/14/2024
Notes receivable		12,739			12,807
Less: discount on notes receivable		(77	)		(87	)
Total notes receivable, net of discount		12,662			12,720
Less: current portion of notes receivable		(740	)		(728	)
Notes receivable, net	$	11,922		$	11,992


Year	Expected principal payments
	(in thousands)
Nine months ending December 31, 2023	$	548
2024		5,498
2025		6,693
2026		—
2027		—
Thereafter		—
Total		12,739
Less: discount on notes receivable		(77	)
Total	$	12,662


	March 31, 2023						December 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Net Book Value		Gross Carrying Amount		Accumulated Amortization		Net Book Value
	(in thousands)						(in thousands)
Licenses	$	1,044,660	$	106,772	$	937,888	$	1,076,173	$	93,567	$	982,606
Trademarks		27,430		13,826		13,604		27,430		12,530		14,900
Internal use software		18,573		3,986		14,587		16,586		3,086		13,500
Tradenames		4,862		3,777		1,085		4,862		3,506		1,356
Customer relationships		3,536		3,302		234		3,536		3,252		284
Total	$	1,099,061	$	131,663	$	967,398	$	1,128,587	$	115,941	$	1,012,646


	March 31, 2023		December 31, 2022
	(in thousands)
Raw material
Cannabis plants	$	22,457	$	22,243
Packaging and supplies		53,516		52,046
Total raw material		75,973		74,289
Work in process		165,868		174,533
Finished goods-unmedicated		6,445		7,563
Finished goods-medicated		49,270		41,430
Total inventories	$	297,556	$	297,815


	September 30, 2022		December 31, 2021
	(in thousands)
Raw material
Cannabis plants	$	24,484	$	30,454
Packaging and supplies		51,269		39,892
Total raw material		75,753		70,346
Work in process		165,150		93,592
Finished goods-unmedicated		6,722		4,824
Finished goods-medicated		53,614		41,181
Total inventories	$	301,239	$	209,943


Year	Estimated Amortization
	(in thousands)
Nine Months Ending December 31, 2023	$	60,465
2024		79,003
2025		76,000
2026		73,603
2027		71,102
Thereafter		607,225
	$	967,398


	(in thousands)
Held for sale assets as of December 31, 2022	$	14,521
Assets moved to held for sale		5,402
Non-cash settlement		(350	)
Impairments (1)		(440	)
Assets sold (2)		(1,000	)
Held for sale assets as of March 31, 2023	$	18,133

Held for sale liabilities as of December 31, 2022		—
Liabilities moved to held for sale		(1,428	)
Held for sale liabilities as of March 31, 2023	$	(1,428	)


	As of September 30, 2022
	(in thousands)
As of December 31, 2021	$	765,358
Acquisition of Watkins		24,542
Measurement period purchase price allocation adjustment of Harvest Health & Recreation, Inc. See Note 4.		1,595
As of September 30, 2022	$	791,495


		Three Months Ended September 30,				For the Nine Months Ended September 30,
	Statement of operations and comprehensive (loss) income location	2022		2021		2022		2021
		(in thousands)
Operating lease cost	Cost of goods sold, sales and marketing, general and administrative	$	5,506	$	2,483	$	16,708	$	5,751
Finance lease cost:
Amortization of lease assets	Cost of goods sold, sales and marketing, general and administrative		3,116		1,990		8,345		5,357
Interest on lease liabilities	Interest expense		1,830		1,177		5,083		2,914
Finance lease cost			4,946		3,167		13,428		8,271
Variable lease cost	Cost of goods sold, sales and marketing, general and administrative		1,836		2,529		5,656		3,139
Short term lease expense	Cost of goods sold, sales and marketing, general and administrative		201		—		456		—
Total lease cost		$	12,489	$	8,179	$	36,248	$	17,161


	March 31, 2023			December 31, 2022
Weighted average discount rate:
Operating leases		9.43	%		9.28	%
Finance leases		8.86	%		8.65	%
Weighted average remaining lease term (in years):
Operating leases		8.3			8.3
Finance leases		8.0			7.8


	(in thousands)
Remaining 2022	$	5,810
2023		23,406
Year				(in thousands)
Nine months ending December 31, 2023				$	16,441
2024		23,736			22,498
2025		24,175			23,140
2026		24,593			23,801
2027					24,480
Thereafter		428,520			409,063
Total future payments		530,240			519,423
Less: Interest		(346,846	)		(335,761	)
Total present value of minimum payments		183,394			183,662
Construction finance liabilities - current portion		(1,137	)		(1,256	)
Construction finance liabilities	$	182,257		$	182,406


	Nine Months Ended September 30, 2022	Nine Months Ended September 30, 2021
Fair value at grant date	$8.39-$11.01	$10.58-$11.20
Stock price at grant date	$21.48-$25.41	$26.88-$33.42
Exercise price at grant date	$21.48-$25.41	$26.88-$33.42
Expected life in years	3.50 - 4.46	3.00 - 3.50
Expected volatility	51.81% - 52.87%	49.88% - 53.75%
Expected annual rate of dividends	0%	0%
Risk free annual interest rate	1.20% - 1.79%	0.16% - 0.79%


	Number of warrants			Weighted average exercise price ($CAD)		Weighted average remaining contractual life (Years)
Outstanding, January 1, 2021		6,061,561			6.00		0.72
Granted		—			—		—
Exercised		(2,075,990	)		6.00		—
Exchanged in cashless exercise		(413,057	)
Cancelled		(3,572,514	)		—		—
Outstanding, September 30, 2021		—			—		—


	As of September 30, 2022		As of December 31, 2021
	Operating		Operating		Finance		As of March 31, 2023		As of December 31, 2022
	(in thousands)						(in thousands)
Right-of-use assets, net	$	847	$	2,082	$	2,009	$	783	$	820
Lease liabilities:
Lease liabilities - current portion	$	109	$	418	$	215	$	117	$	113
Lease liabilities		781		1,862		2,127		710		751
Total related parties lease liabilities	$	890	$	2,280	$	2,342	$	827	$	864


State	Number of Dispensaries		Number of Cultivation and Processing Facilities
Florida		125		6
Arizona		20		4
Pennsylvania		19		3
West Virginia		10		1
Maryland		3		1
Massachusetts		3		1
California		3		—
Connecticut		1		—
Colorado		—		1
Georgia		—		1
Total		184		18


	Three Months Ended					Nine Months Ended
	September 30,				Change	September 30,				Change
	2022		2021		%	2022		2021		%
	(in thousands)					(in thousands)
Revenues, net of discounts	$	300,793	$	224,092	34%	$	937,612	$	633,037	48%


	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021		Change	2022			2021		Change
	(in thousands)						(in thousands)
Net (loss) income from continuing operations	$	(77,007	)	$	18,616	-514%	$	(129,246	)	$	89,574	-244%
Net (loss) income from discontinued operations, net of taxes		(38,065	)		—	100%		(42,329	)		—	100%
Net (loss) income	$	(115,072	)	$	18,616	-718%	$	(171,575	)	$	89,574	-292%
Less: Net loss and comprehensive loss attributable to non-controlling interest from continuing operations		(518	)		—	100%		(2,555	)		—	100%
Net (loss) income and comprehensive (loss) income attributable to common shareholders	$	(114,554	)	$	18,616	-715%	$	(169,020	)	$	89,574	-289%


	<1 Year		1 to 3 Years		3 to 5 Years		>5 Years		Total		<1 Year		1 to 3 Years		3 to 5 Years		>5 Years		Total
	(in thousands)										(in thousands)
Accounts payable and accrued liabilities	$	87,773	$	—	$	—	$	—	$	87,773
Notes payable	$	4,823	$	695	$	8	$	7,239	$	12,765	$	9,737	$	7,307	$	71,797	$	16,249	$	105,090
Private placement notes	$	—	$	130,000	$	425,000	$	—	$	555,000	$	—	$	130,000	$	425,000	$	—	$	555,000
Operating lease liabilities	$	21,434	$	41,287	$	39,417	$	79,479	$	181,617	$	22,263	$	44,315	$	42,800	$	92,125	$	201,503
Finance lease liabilities	$	15,447	$	29,446	$	25,588	$	48,456	$	118,937	$	14,704	$	28,851	$	25,871	$	43,855	$	113,281
Construction finance liabilities	$	23,331	$	47,725	$	49,382	$	409,802	$	530,240	$	22,029	$	45,962	$	48,623	$	402,809	$	519,423
Lease Settlements											$	1,646	$	1,284	$	847	$	2,540	$	6,317
Total(1)	$	152,808	$	249,153	$	539,395	$	544,976	$	1,486,332	$	70,379	$	257,719	$	614,938	$	557,578	$	1,500,614


	Three Months Ended March 31,				Change Increase / (Decrease)
	2023		2022		$			%
	(in thousands)
Adjusted EBITDA	$	78,152	$	105,439	$	(27,287	)	(26)%


Exhibit Number		Description


10.1 ‡,*		Executive Employment Agreement, dated January 3, 2023, by and between Trulieve Cannabis Corp. and Joy Malivuk
10.2 ∔,*		First Amendment to Loan Agreement, dated as of May 9, 2023 and effective as of December 21, 2022
10.3 *		Second Amendment to Loan Agreement, dated as of May 9, 2023
31.1 *		Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 *		Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 *		Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS		Inline XBRL Instance Document
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)


	TRULIEVE CANNABIS CORP.

Date: ~~November 9, 2022~~May 10, 2023	By:	/s/ Kim Rivers
		Kim Rivers
		Chief Executive Officer
		(Principal Executive Officer)

Date: ~~November 9, 2022~~May 10, 2023	By:	/s/ Alex D’Amico
		Alex D’Amico
		Chief Financial Officer
		(Principal Financial Officer)

Date: ~~November 9, 2022~~May 10, 2023	By:	/s/ ~~Rebecca Young~~Joy Malivuk
		~~Rebecca Young~~Joy Malivuk Chief Accounting Officer
		(Principal Accounting Officer)

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company