Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Mar. 15, 2023 | Jun. 30, 2022 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Dec. 31, 2022 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2022 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity File Number | 000-55450 | ||
Entity Registrant Name | MEDICINE MAN TECHNOLOGIES, INC. | ||
Entity Central Index Key | 0001622879 | ||
Entity Tax Identification Number | 46-5289499 | ||
Entity Incorporation, State or Country Code | NV | ||
Entity Address, Address Line One | 4880 Havana Street | ||
Entity Address, Address Line Two | Suite 201 | ||
Entity Address, City or Town | Denver | ||
Entity Address, State or Province | CO | ||
Entity Address, Postal Zip Code | 80239 | ||
City Area Code | (303) | ||
Local Phone Number | 371-0387 | ||
Title of 12(g) Security | Common Stock, $0.001 par value per share | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 50.8 | ||
Entity Common Stock, Shares Outstanding | 55,212,547 | ||
Auditor Firm ID | 5041 | ||
Auditor Name | BF Borgers CPA PC | ||
Auditor Location | Lakewood, CO |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Current assets | ||
Cash and cash equivalents | $ 38,949,253 | $ 106,400,216 |
Accounts receivable, net of allowance for doubtful accounts | 4,471,978 | 3,866,828 |
Inventory | 22,554,182 | 11,121,997 |
Note receivable - current, net | 11,944 | |
Note receivable - related party | ||
Marketable securities, net of unrealized loss of $39,270 and gain of $216,771, respectively | 454,283 | 493,553 |
Prepaid expenses and other current assets | 5,293,393 | 2,523,214 |
Total current assets | 71,735,033 | 124,405,808 |
Non-current assets | ||
Fixed assets, net accumulated depreciation of $4,899,977 and $1,988,973, respectively | 27,089,026 | 10,253,226 |
Investments | 2,000,000 | |
Goodwill | 94,605,301 | 43,316,267 |
Intangible assets, net accumulated amortization of $16,290,862 and $7,652,750, respectively | 107,726,718 | 97,582,330 |
Note receivable - noncurrent, net | 143,333 | |
Accounts receivable - litigation | 303,086 | |
Other noncurrent assets | 1,527,256 | 514,962 |
Operating lease right of use assets | 18,199,399 | 8,511,780 |
Total non-current assets | 251,147,700 | 160,624,984 |
Total assets | 322,882,733 | 285,030,792 |
Current liabilities | ||
Accounts payable | 7,848,613 | 2,548,885 |
Accounts payable - related party | 22,380 | 36,820 |
Accrued expenses | 10,314,958 | 5,592,222 |
Derivative liabilities | 16,508,253 | 34,923,013 |
Notes payable - related party | 134,498 | |
Lease liabilities - current | 3,139,289 | |
Current portion of long term debt | 2,250,000 | |
Income taxes payable | 7,297,815 | 2,027,741 |
Total current liabilities | 47,381,308 | 45,263,179 |
Long term debt, net of debt discount and issuance costs | 125,521,520 | 97,482,468 |
Lease liabilities | 17,314,464 | 8,715,480 |
Deferred income taxes, net | 502,070 | |
Total long-term liabilities | 143,338,054 | 106,197,948 |
Total liabilities | 190,719,362 | 151,461,127 |
Commitments and contingencies (Note 17) | ||
Stockholders' equity | ||
Preferred stock, $0.001 par value. 10,000,000 shares authorized; 86,994 shares issued as of December 31, 2022 and 86,994 shares issued as of December 31, 2021, 86,050 outstanding at December 31, 2022 and 82,594 outstanding at December 31, 2021. | 87 | 87 |
Common stock, $0.001 par value. 250,000,000 shares authorized; 56,352,545 shares issued and 55,212,547 shares outstanding at December 31, 2022 and 45,484,314 shares issued and 44,745,870 shares outstanding as of December 31, 2021. | 56,353 | 45,485 |
Additional paid-in capital | 180,381,641 | 162,815,097 |
Accumulated deficit | (46,241,583) | (27,773,968) |
Common stock held in treasury, at cost, 920,150 shares held as of December 31, 2022 and 517,044 shares held as of December 31, 2021 | (2,033,127) | (1,517,036) |
Total stockholders' equity | 132,163,371 | 133,569,665 |
Total liabilities and stockholders' equity | $ 322,882,733 | $ 285,030,792 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
CONSOLIDATED BALANCE SHEETS | ||
Marketable securities, unrealized gain (loss) | $ 39,270 | $ 216,771 |
Accumulated depreciation | 4,899,977 | 1,988,973 |
Accumulated amortization | $ 16,290,862 | $ 7,652,750 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, issued (in shares) | 86,994 | 86,994 |
Preferred stock, outstanding (in shares) | 86,050 | 82,594 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized (in shares) | 250,000,000 | 250,000,000 |
Common stock, issued (in shares) | 56,352,545 | 45,484,314 |
Common stock, outstanding (in shares) | 55,212,547 | 44,745,870 |
Common stock held in treasury (in shares) | 920,150 | 517,044 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) AND INCOME - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Operating revenues | ||
Total revenue | $ 159,379,219 | $ 108,420,239 |
Total cost of goods and services | 74,349,421 | 59,066,545 |
Gross profit | 85,029,798 | 49,353,694 |
Operating expenses | ||
Selling, general and administrative expenses | 29,398,324 | 16,616,306 |
Professional services | 6,722,554 | 5,346,934 |
Loss on impairment | 8,011,405 | 0 |
Salaries | 25,369,968 | 11,943,409 |
Stock based compensation | 2,672,713 | 5,037,879 |
Total operating expenses | 72,174,964 | 38,944,528 |
Income from operations | 12,854,834 | 10,409,166 |
Other income (expense) | ||
Interest expense, net | (30,139,645) | (7,014,279) |
Gain on forfeiture of contingent consideration | 0 | 0 |
Unrealized gain on derivative liabilities | 18,414,760 | 15,061,142 |
Other loss | 24,136 | 0 |
Loss on business disposition | (4,684,366) | 0 |
Gain on sale of assets | 0 | 242,494 |
Unrealized (loss) gain on investments | (39,270) | 216,771 |
Total other (expense) income | (16,424,385) | 8,506,128 |
Pre-tax net (loss) income | (3,569,551) | 18,915,294 |
Provision for income taxes | 14,898,064 | 4,396,164 |
Net (loss) income | (18,467,615) | 14,519,130 |
Less: Accumulated preferred stock dividends for the period | (7,802,809) | (7,346,153) |
Net income attributable to common stockholders | $ (26,270,424) | $ 7,172,977 |
Earnings (loss) per share attributable to common shareholders | ||
Basic (loss) earnings per share | $ (0.49) | $ 0.17 |
Diluted (loss) earnings per share | $ (0.49) | $ (0.06) |
Weighted average number of shares outstanding - basic | 53,637,003 | 43,339,092 |
Weighted average number of shares outstanding - diluted | 53,637,003 | 101,368,958 |
Comprehensive (loss) income | $ (26,270,424) | $ 7,172,977 |
Retail | ||
Operating revenues | ||
Total revenue | 141,254,893 | 73,761,010 |
Wholesale | ||
Operating revenues | ||
Total revenue | 17,819,938 | 34,434,091 |
Other | ||
Operating revenues | ||
Total revenue | $ 304,388 | $ 225,138 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY - USD ($) | Preferred Stock. | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Treasury Stock | Total |
Beginning balance, value at Dec. 31, 2020 | $ 20 | $ 42,602 | $ 85,357,835 | $ (42,293,098) | $ (1,332,500) | $ 41,774,859 |
Beginning balance, shares at Dec. 31, 2020 | 19,716 | 42,601,773 | 432,732 | |||
Net income (loss) | 14,519,130 | 14,519,130 | ||||
Issuance of stock as payment for acquisitions | $ 20 | $ 2,314 | 22,741,669 | 22,744,003 | ||
Issuance of stock as payment for acquisitions, shares | 20,240 | 2,313,994 | ||||
Return of common stock | $ (184,536) | (184,536) | ||||
Issuance of common stock as compensation to employees, officers and/or directors | $ 324 | 620,948 | 621,272 | |||
Issuance of common stock as compensation to employees, officers, and/or directors, shares | 323,530 | |||||
Issuance of preferred stock in connection with sales made under private or public offerings | $ 47 | 49,688,553 | 49,688,600 | |||
Issuance of stock in connection with sales made under private or public offerings, shares | 47,310 | |||||
Conversion of preferred stock to common stock | 272,000 | |||||
Conversion of preferred stock to common stock | $ 245 | 271,754 | 271,999 | |||
Conversion of preferred stock to common stock, shares | (272) | 245,017 | ||||
Return of common stock, shares | 84,312 | |||||
Stock based compensation expense related to common stock options | 4,134,338 | 4,134,338 | ||||
Ending balance, value at Dec. 31, 2021 | $ 87 | $ 45,485 | 162,815,097 | (27,773,968) | $ (1,517,036) | 133,569,665 |
Ending balance, shares at Dec. 31, 2021 | 86,994 | 45,484,314 | 517,044 | |||
Net income (loss) | (18,467,615) | (18,467,615) | ||||
Issuance of stock as payment for acquisitions | $ 9,742 | 15,728,113 | 15,737,855 | |||
Issuance of stock as payment for acquisitions, shares | 9,742,205 | |||||
Return of common stock, shares | 929,941 | |||||
Return of common stock | $ 930 | 1,026,358 | 1,027,288 | |||
Return of common stock | $ (516,091) | (516,091) | ||||
Return of common stock, shares | 403,106 | |||||
Stock based compensation expense related to common stock options | $ 196 | 812,073 | 812,269 | |||
Stock based compensation expense related to common stock options, shares | 196,085 | |||||
Ending balance, value at Dec. 31, 2022 | $ 87 | $ 56,353 | $ 180,381,641 | $ (46,241,583) | $ (2,033,127) | $ 132,163,371 |
Ending balance, shares at Dec. 31, 2022 | 86,994 | 56,352,545 | 920,150 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Cash flows from operating activities | ||
Net income (loss) for the period | $ (18,467,615) | $ 14,519,130 |
Adjustments to reconcile net loss to cash for operating activities | ||
Depreciation and amortization | 11,012,453 | 8,576,865 |
Non-cash interest expense | 4,118,391 | |
Impairment of goodwill | 8,011,405 | |
Non-cash lease expense | 975,561 | |
Deferred taxes | (2,712,010) | |
Loss on disposition of business units | 4,684,369 | |
Change in derivative liabilities | (18,414,760) | (15,061,142) |
Amortization of debt issuance costs | 1,686,049 | |
Amortization of debt discount | 7,484,613 | 458,885 |
Loss (gain) on investment, net | 39,270 | (216,771) |
Loss on sale of asset | (242,494) | |
Stock based compensation | 812,073 | 5,037,879 |
Changes in operating assets and liabilities (net of acquired amounts): | ||
Accounts receivable | 467,692 | 244,929 |
Inventory | 789,399 | (4,703,186) |
Prepaid expenses and other current assets | (2,631,612) | (1,909,014) |
Other assets | (1,009,794) | (457,083) |
Operating leases right of use assets and liabilities | 1,075,093 | 137,139 |
Accounts payable and other liabilities | 8,165,861 | 493,719 |
Deferred Revenue | (50,000) | |
Income taxes payable | 5,270,074 | 2,027,741 |
Net cash provided by operating activities | 11,356,512 | 8,397,712 |
Cash flows from investing activities: | ||
Collection of notes receivable | 181,911 | |
Cash consideration for acquisition of business, net of cash acquired | (62,371,226) | (75,678,000) |
Purchase of fixed assets | (14,813,145) | (5,638,085) |
Purchase of intangible assets | (29,580) | |
Investment in private entity | (2,000,000) | |
Net cash used in investing activities | (79,184,371) | (81,163,754) |
Cash flows from financing activities: | ||
Proceeds from issuance of debt | 132,517,383 | |
Repayment of notes payable | (134,498) | (4,865,502) |
Proceeds from issuance of common stock, net of issuance costs | 511,393 | 50,283,142 |
Net cash provided by financing activities | 376,895 | 177,935,023 |
Net (decrease) increase in cash and cash equivalents | (67,450,964) | 105,168,981 |
Cash and cash equivalents at beginning of period | 106,400,216 | 1,231,235 |
Cash and cash equivalents at end of period | 38,949,253 | 106,400,216 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 15,423,990 | 5,759,220 |
Cash paid for income taxes | 12,340,000 | 2,100,000 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Settling of note receivable for equipment | 131,389 | |
Issuance of debt for acquisition | 17,000,000 | |
Return of common stock | 555,010 | 184,536 |
Issuance of stock as payment for acquisitions | 15,777,373 | 22,744,003 |
Deferred tax liability from acquisition | (3,214,080) | |
Issuance of preferred stock in connection with private offerings | 49,688,553 | |
Conversion of preferred stock to common stock | $ 272,000 | |
Acquisitions: | ||
Tangible and Intangible assets acquired, net of cash | 34,402,043 | |
Liabilities assumed | (1,837,221) | |
Goodwill | $ 62,368,339 |
Organization and Nature of Oper
Organization and Nature of Operations | 12 Months Ended |
Dec. 31, 2022 | |
Organization and Nature of Operations | |
Organization and Nature of Operations | 1. Organization and Nature of Operations Business Description – Business Activity We were incorporated in Nevada on March 20, 2014. On May 1, 2014, the Company entered into an exclusive Technology License Agreement with Medicine Man Denver whereby Medicine Man Denver granted us a license to use all of their proprietary processes they have developed, implemented and practiced at their cannabis facilities relating to the commercial growth, cultivation, marketing and distribution of medical marijuana and recreational marijuana pursuant to relevant state laws and the right to use and to license such information, including trade secrets, skills and experience (present and future). The Company’s operations are organized into three different segments as follows: (i) Retail, consisting of retail locations for sale of cannabis products in Colorado and New Mexico, (ii) Wholesale, consisting of manufacturing, cultivation and sale of wholesale cannabis and non-cannabis products, and (iii) Other, consisting of all other income and expenses, including those related to certain in-store marketing and promotional activities and corporate operations. On April 20, 2020, the Company rebranded and conducts its business under the trade name, Schwazze. The corporate name of the Company continues to be Medicine Man Technologies, Inc. Effective April 21, 2020, the Company commenced trading under the OTC ticker symbol SHWZ. On March 23, 2022, the Company began trading on the NEO, a tier one Canadian Stock exchange based in Toronto, Ontario, under the ticker symbol SHWZ. |
Accounting Policies and Estimat
Accounting Policies and Estimates | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies and Estimates. | |
Accounting Policies and Estimates | 2. Accounting Policies and Estimates Basis of Presentation These accompanying financial statements have been prepared in accordance with GAAP and pursuant to the rules and regulations of the SEC for consolidated financial statements. All intercompany accounts and transactions are eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported therein. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may be based upon amounts that differ from these estimates. Reclassifications Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications had no impact on net earnings and financial position. In accordance with ASC 230 Statement of Cash Flows, Accounting for Business Combinations and Acquisitions The Company accounts for acquisitions in which it obtains control of one or more businesses as a business combination. The purchase price of the acquired businesses is allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. The excess of the purchase price over those fair values is recognized as goodwill. During the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments, in the period in which they are determined, to the assets acquired and liabilities assumed with the corresponding offset to goodwill. If the assets acquired are not a business, the Company accounts for the transaction or other event as an asset acquisition. Under both methods, the Company recognizes the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquired entity. In addition, for transactions that are business combinations, the Company evaluates the existence of goodwill or a gain from a bargain purchase. Fair Value Measurements Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability, in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy is based on three levels of inputs, of which the first two are considered observable and the last unobservable, as follows: Level 1 – Quoted prices in active markets for identical assets or liabilities. Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the measurement of the fair value of the assets or liabilities. The Company’s financial instruments consist of cash, accounts receivable, notes receivable, investments, tenant deposits, accounts payable, accrued liabilities, notes payable, derivative liability and warrant liability. The carrying values of these financial instruments approximate their fair value due to their short maturities. The carrying amount of the Company’s debt approximates fair value because the interest rates on these instruments approximate the interest rate on debt with similar terms available to us. The Company’s derivative liability was adjusted to fair market value at the end of each reporting period, using Level 3 inputs. The following is the Company’s assets and liabilities measured at fair value on a recurring and nonrecurring basis on December 31, 2022 and December 31, 2021, using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3): December 31, December 31, 2022 2021 Level 1 - Marketable Securities Available-for-Sale – Recurring — 493,553 Level 3 - Marketable Securities Available-for-Sale – Recurring 454,283 — Marketable Securities at Fair Value on a Recurring Basis Certain assets are measured at fair value on a recurring basis. The Level 1 position consists of an investment in equity securities of Canada House Wellness Group, Inc., a publicly traded company whose securities are actively quoted on the Toronto Stock Exchange. As of December 31, 2022, the equity investment in Canada House Wellness Group, Inc. was determined to be Level 3 as the entity has halted trading due to a merger and is scheduled to resume trading once the purchase is complete. The Company used the last trading price to record the value at market as the observable and active market price has been halted. Investments held at cost Investments without readily determinable fair value are measured at cost, less impairment. If the Company identifies an observable price change in an orderly transaction for an investment held at cost, it will measure the investment at fair value as of the date the observable transaction occurred. The Company shall reassess at each reporting period whether such investments should continue to be measured at cost, less impairment, or another method. Any resulting gain or loss from a change in measurement will be recorded in other income and expenses on the consolidated statement of comprehensive income. Investments held at cost are reported within investments on the consolidated balance sheets. The Company has less than a 20% investment in a private company and does not have significant influence over the underlying entity. The fair value of the investment does not have a determinable fair value. The Company has accounted for this investment under the cost method and therefore records the investment at historical cost. Any dividends received from this investment are recorded in the consolidated statements of comprehensive income. As of December 31, 2022 and 2021, the investment totaled $2,000,000 and $0, respectively. Fair Value of Financial Instruments The carrying amounts of cash and current assets and liabilities approximate fair value because of the short-term maturity of these items. These fair value estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect these estimates. Cash and Cash Equivalents Cash and cash equivalents are carried at cost or amortized cost and represent cash on hand, deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date. The Company had $38,949,253 and $106,400,216 classified as cash and cash equivalents as of December 31, 2022, and December 31, 2021, respectively. Accounts Receivable The Company extends unsecured credit to its customers in the ordinary course of business. These accounts receivable relate to the Company’s wholesale and other revenue segments. Accounts receivable are recorded when a milestone is reached at a point in time resulting in funds being due for delivered goods or services, and where payment is reasonably assured. Wholesale revenues are generally collected within 14 to 30 days after invoice is sent. The following table depicts the composition of our accounts receivable as of December 31, 2022, and December 31, 2021: December 31, December 31, 2022 2021 Accounts receivable - trade $ 4,564,918 $ 4,001,874 Accounts receivable - litigation, non-current — 303,086 Allowance for doubtful accounts (92,940) (135,046) $ 4,471,978 $ 4,169,914 The Company establishes an allowance for doubtful accounts based on management’s assessment of the collectability of trade receivables. A considerable amount of judgment is required in assessing the amount of the allowance. The Company makes judgments about the creditworthiness of each customer based on ongoing credit evaluations and monitors current economic trends that might impact the level of credit losses in the future. If the financial condition of the customers were to deteriorate, resulting in their inability to make payments, a specific allowance will be required. Inventory Inventories of purchased finished goods and packing materials are initially valued at cost and subsequently at the lower of cost and net realizable value. Cultivated inventories include direct and indirect costs of production, including costs of materials, labor and depreciation related to cultivation. Such costs are capitalized as incurred, and subsequently included within cost of goods sold within the consolidated statements of comprehensive income, at the time the products are sold. Net realizable value is determined as the estimated selling price in the ordinary course of business, less reasonable costs associated with the sale. Cost is determined using the weighted average cost basis. Products for resale and supplies and consumables are valued at lower of cost and net realizable value. In calculating final inventory values, management is required to compare the inventory cost to estimated net realizable value. The net realizable value of inventories represents the estimated selling price for inventories in the ordinary course of business, less all estimated costs of completion and costs necessary to make the sale. The determination of net realizable value requires significant judgment, including consideration of factors such as shrinkage, the aging of and future demand for inventory, expected future selling price the Company expects to realize by selling the inventory, and the contractual arrangements with customers. Reserves for excess and obsolete inventory are based upon quantities on hand, projected volumes from demand forecasts and net realizable value. The estimates are judgmental in nature and are made at a point in time, using available information, expected business plans, and expected market conditions. As a result, the actual amount received on sale could differ from the estimated value of inventory. Periodic reviews are performed on the inventory balance. The impact of changes in inventory reserves is reflected in cost of goods sold. Property and Equipment, net Purchases of property and equipment are recorded at cost, net of accumulated depreciation and impairment losses, if any. Improvements and replacements of property and equipment are capitalized. Maintenance and repairs that do not improve or extend the lives of property and equipment are charged to expense as incurred. When assets are sold or retired, its cost and related accumulated depreciation are removed from the accounts and any gain or loss is reported in the consolidated statement of operations. Depreciation is provided over the estimated economic useful lives of each class of assets and is computed using the straight-line method. The assets’ residual values, useful lives, and methods of depreciation are reviewed at each financial statement year-end and adjusted prospectively, if appropriate. Depreciation on property and equipment is recorded using the straight-line method over the following expected useful lives at the following annual rates: Land Indefinite Building 39 years Leasehold improvements Lesser of the lease term or estimated useful life Furniture and fixtures 3-5 years Vehicles, machinery and tools 3-5 years Software, servers and equipment 3 years Prepaid Expenses and Other Assets (Current and Non-Current) Prepaid expenses and other assets as of December 31, 2022 and December 31, 2021 were $6,820,649 and $3,038,176, respectively. As of December 31, 2022, this balance included $3,881,627 in prepaid expenses $1,527,256 in security deposits and $1,411,766 in prepaid inventory. As of December 31, 2021, other assets included $1,587,770 in prepaid expenses, $514,962 in security deposits and $935,444 in prepaid inventory. Prepaid expenses were primarily comprised of insurance premiums, membership dues, conferences and seminars, and other general and administrative costs. Goodwill and Intangible Assets Goodwill represents the future economic benefit arising from other assets acquired that could not be individually identified and separately recognized. The goodwill arising from the Company’s acquisitions is attributable to the value of the potential expanded market opportunity with new customers. Intangible assets have either an identifiable or indefinite useful life. Intangible assets with identifiable useful lives are amortized on a straight-line basis over their economic or legal life, whichever is shorter. The Company’s amortizable intangible assets consist of licensing agreements, product licenses and registrations, and intellectual property or trade secrets. Their estimated useful lives range from 3 to 15 years. Goodwill and indefinite-lived assets are not amortized but are subject to annual impairment testing unless circumstances dictate more frequent assessments. The Company performs an annual impairment assessment for goodwill during the fourth quarter of each year and more frequently whenever events or changes in circumstances indicate that the fair value of the asset may be less than the carrying amount. Goodwill impairment testing is a two-step process performed at the reporting unit level. Step one compares the fair value of the reporting unit to its carrying amount. The fair value of the reporting unit is determined by considering both the income approach and market approaches. The fair values calculated under the income approach and market approaches are weighted based on circumstances surrounding the reporting unit. Under the income approach, the Company determines fair value based on estimated future cash flows of the reporting unit, which are discounted to the present value using discount factors that consider the timing and risk of cash flows. For the discount rate, the Company relies on the capital asset pricing model approach, which includes an assessment of the risk-free interest rate, the rate of return from publicly traded stocks, the Company’s risk relative to the overall market, the Company’s size and industry and other Company-specific risks. Other significant assumptions used in the income approach include the terminal values, growth rates, future capital expenditures and changes in future working capital requirements. The market approaches use key multiples from guideline businesses that are comparable and are traded on a public market. If the fair value of the reporting unit is greater than its carrying amount, there is no impairment. If the reporting unit’s carrying amount exceeds its fair value, then the second step must be completed to measure the amount of impairment, if any. Step two calculates the implied fair value of goodwill by deducting the fair value of all tangible and intangible net assets of the reporting unit from the fair value of the reporting unit as calculated in step one. In this step, the fair value of the reporting unit is allocated to all of the reporting unit’s assets and liabilities in a hypothetical purchase price allocation as if the reporting unit had been acquired on that date. If the carrying amount of goodwill exceeds the implied fair value of goodwill, an impairment loss is recognized in an amount equal to the excess. Determining the fair value of a reporting unit is judgmental in nature and requires the use of significant estimates and assumptions, including revenue growth rates, strategic plans, and future market conditions, among others. There can be no assurance that the Company’s estimates and assumptions made for purposes of the goodwill impairment testing will prove to be accurate predictions of the future. Changes in assumptions and estimates could cause the Company to perform an impairment test prior to scheduled annual impairment tests. Long-Lived Assets The Company evaluates the recoverability of its long-lived assets, including property, plant and equipment, and certain identifiable intangible assets, whenever events or changes in circumstances have indicated that an asset may not be recoverable. The long-lived asset is grouped with other assets at the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. If the sum of the projected undiscounted cash flows is less than the carrying value of the assets, the assets are written down to the estimated fair value. The Company performs impairments tests of long-lived assets on an annual basis or more frequently in certain circumstances. Factors which could trigger an impairment review include significant underperformance relative to historical or projected future operating results, significant changes in the manner of use of the assets or the strategy for the business, a significant decrease in the market value of the assets or significant negative industry or economic trends. The Company evaluated the recoverability of its long-lived assets as of December 31, 2022, and recorded an impairment charge of approximately $89,706 related to discontinued operations for cultivation facilities in New Mexico and Colorado, and therefore presented under loss on business disposition in the accompanying consolidated statement of comprehensive (loss) income. No such impairment existed as of December 31, 2021. Accounts Payable Accounts payable as of December 31, 2022 and 2021, were $7,910,511 and $2,585,705, respectively, and were comprised of trade payables for various purchases and services rendered during the ordinary course of business. Accrued Expenses and Other Liabilities Accrued expenses and other liabilities as of December 31, 2022, and December 31, 2021, were $10,314,958 and $5,592,222, respectively. As of December 31, 2022, this was comprised of accrued payroll of $1,511,245, accrued interest of $3,422,760, operating expenses of $4,746,455, and escrow payable of $634,498. As of December 31, 2021, accrued expenses and other liabilities comprised of accrued payroll of $301,312, accrued interest of $1,425,278, and operating expenses of $3,865,632. Derivative Liabilities The Company uses the fair-value method of accounting for derivative liabilities and such liabilities are remeasured at each reporting date with changes in fair value recorded in the period incurred. The fair value is estimated using a Monte Carlo simulation model. Revenue Recognition and Related Allowances The Company’s revenue recognition policy is significant because the amount and timing of revenue is a key component of our results of operations. Certain criteria are required to be met in order to recognize revenue. If these criteria are not met, then the associated revenue is deferred until the criteria are met. When consideration is received in advance of the delivery of goods or services, a contract liability is recorded. Revenue contracts are identified when accepted by customers and represent a single performance obligation to sell the Company’s products to a customer. The Company has three main revenue streams: retail, wholesale, and other. Retail and wholesale sales are recorded at the time that control of the products is transferred to customers. In evaluating the timing of the transfer of control of products to customers, the Company considers several indicators, including significant risks and rewards of products, its right to payment, and the legal title of the products. Based on the assessment of control indicators, sales are generally recognized when products are delivered to customers. Other revenue consists of other income and expenses, including related to, licensing and consulting services, facility design services, facility management services, the Company’s Three A Light™ publication, and corporate operations. During 2022, the Company discontinued its consulting entity and therefore has ceased operations related to consulting and the Company’s Three A Light™ publication. Revenue is recognized when the obligations to the client are fulfilled which is determined when milestones in the contract are achieved and target harvest yields are exceeded or earned upon the completion of the seminar. The Company also recognizes expense reimbursement from clients as revenue for expenses incurred during certain jobs. At some locations, the Company offers a loyalty reward program to its retail customers. A portion of the revenue generated in a sale to a customer participating in the program is allocated to the loyalty points earned. The amount allocated to the points earned is deferred until the loyalty points are redeemed or expire. As of December 31, 2022, and 2021, the loyalty liability totaled $1,590,346 and $1,485,224, respectively, and is included in accrued expenses the accompanying consolidated balance sheets. Costs of Goods and Services Sold Costs of goods and services sold are comprised of related expenses incurred while supporting the sales of the Company’s products and services. General and Administrative Expenses General and administrative expenses are comprised of all expenses not linked to the production or advertising of the Company’s services. Advertising and Marketing Costs Advertising and marketing costs are expensed as incurred and totaled $2,369,223 and $971,419 as of December 31, 2022 and December 31, 2021, respectively. Stock Based Compensation The Company accounts for share-based payments pursuant to ASC 718, Stock Compensation Stock compensation expense for stock options is recognized over the vesting period of the award or expensed immediately under ASC 718 and Emerging Issues Task Force 96-18 when stock or options are awarded for previous or current service without further recourse. Share-based expense paid through direct stock grants is expensed as occurred. Since the Common Stock is publicly traded, the value is determined based on the number of shares of Common Stock issued and the trading value of the Common Stock on the date of the transaction. The Company recognized $2,672,713 and $5,037,879 in expense for stock-based compensation from common stock options and common stock issued to employees, officers, and directors during December 31, 2022 and December 31, 2021, respectively. Income Taxes ASC 740, Income Taxes requires the use of the asset and liability method of accounting for income taxes. Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets are regularly assessed to determine the likelihood they will be recovered from future taxable income. A valuation allowance is established when we believe it is more likely than not that the future realization of all or some of a deferred tax asset will not be achieved. In evaluating our ability to recover deferred tax assets within the jurisdiction which they arise, we consider all available positive and negative evidence. Factors reviewed include the cumulative pre-tax book income for the past three years, scheduled reversals of deferred tax liabilities, our history of earnings and reliability of our forecasts, projections of pre-tax book income over the foreseeable future, and the impact of any feasible and prudent tax planning strategies. The Company assesses all material positions taken in any income tax return, including all significant uncertain positions, in all tax years that are still subject to assessment or challenge by relevant taxing authorities. Assessing an uncertain tax position begins with the initial determination of the position’s sustainability, and the tax benefit to be recognized is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. We recognize the impact of a tax position in our financial statements only if that position is more likely than not of being sustained upon examination by taxing authorities, based on the technical merits of the position. Tax authorities regularly examine our returns in the jurisdictions in which we do business, and we regularly assess the tax risk of our return filing positions. Due to the complexity of some of the uncertainties, the ultimate resolution may result in payments that are materially different from our current estimate of the tax liability. These differences, as well as any interest and penalties, will be reflected in the provision for income taxes in the period in which they are determined. As the Company operates in the cannabis industry, it is subject to the limits of the Internal Revenue Code (“IRC”) Section 280E under which the Company is only allowed to deduct expenses directly related to sales of product. This results in permanent differences between ordinary and necessary business expenses deemed non-allowable under IRC Section 280E. Right of Use Assets and Lease Liabilities In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) standard became effective for the Company beginning January 1, 2019. The Company adopted ASC 842 using the modified retrospective approach, by applying the new standard to all leases existing at the date of initial application. Results and disclosure requirements for reporting periods beginning after January 1, 2019 are presented under ASC 842. The Company elected the package of practical expedients permitted under the standard, which also allowed the Company to carry forward historical lease classifications. The Company also elected the practical expedient related to treating lease and non-lease components as a single lease component for all equipment leases as well as electing a policy exclusion permitting leases with an original lease term of less than one year to be excluded from the ROU assets and lease liabilities. Under ASC 842, the Company determines if an arrangement is a lease at inception. ROU assets and liabilities are recognized at commencement date based on the present value of remaining lease payments over the lease term. For this purpose, the Company considers only payments that are fixed and determinable at the time of commencement. As most of the Company’s leases do not provide an implicit rate, the Company estimated the incremental borrowing rate in determining the present value of lease payments. The ROU asset also includes any lease payments made prior to commencement and is recorded net of any lease incentives received. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. Operating leases are included in operating lease ROU assets and operating lease liabilities, current and non-current, on the Company’s consolidated balance sheets. |
Recently Adopted Accounting Pro
Recently Adopted Accounting Pronouncements | 12 Months Ended |
Dec. 31, 2022 | |
Recently Adopted Accounting Pronouncements | |
Recently Adopted Accounting Pronouncements | 3. Recently Adopted Accounting Pronouncements The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements. Pronouncements that are not applicable to the Company or where it has been determined do not have a significant impact on the financial statements have been excluded herein. In February 2020, the FASB issued ASU 2020-02, Financial Instruments-Credit Losses (Topic 326) and Leases (Topic 842) - Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No (ASU). 2016-02, Leases (Topic 842), On August 5, 2020, the FASB issued ASU No. 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) : Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, to improve financial reporting associated with accounting for convertible instruments and contracts in an entity’s own equity. The amendments in this ASU are effective for public business entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. The adoption of this standard did not have a material impact on the Company's consolidated financial statements. |
Notes Receivable
Notes Receivable | 12 Months Ended |
Dec. 31, 2022 | |
Notes Receivable | |
Notes Receivable | 4. Notes Receivable On March 12, 2021, the Company sold equipment to Colorado Cannabis Company. The consideration for the sale included a zero interest note receivable, issued to the Company with payments of $11,944 on the first of each month for 24 months. As of December 31, 2022 and 2021 the outstanding balance, including penalties for late payments, on the notes receivable from Colorado Cannabis Company totaled $11,944 and $143,333, respectively. |
Inventory
Inventory | 12 Months Ended |
Dec. 31, 2022 | |
Inventory | |
Inventory | 5 . The Company’s inventory consists of the following at December 31: 2022 2021 Raw Materials $ 2,325,482 $ 12,676 Work in Process 14,504,490 5,535,992 Finished Goods 5,724,210 5,573,329 Total Inventories $ 22,554,182 $ 11,121,997 As of December 31, 2022 and 2021, the company did not recognize any adjustment to net realizable value within its inventory. |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2022 | |
Property and Equipment. | |
Property and Equipment | 6. Property and Equipment Property and equipment are recorded at cost, net of accumulated depreciation and are comprised of the following: December 31, December 31, 2022 2021 Land $ 3,716,438 $ 35,000 Building 4,830,976 2,910,976 Leasehold improvements 4,100,165 853,599 Furniture and fixtures 655,698 300,798 Vehicles, machinery, and tools 3,796,695 2,152,129 Software, servers and equipment 4,132,621 2,550,154 Construction in process 10,756,410 3,439,543 Total Asset Cost $ 31,989,003 $ 12,242,199 Less: Accumulated depreciation (4,899,977) (1,988,973) Total property and equipment, net of depreciation $ 27,089,026 $ 10,253,226 Depreciation expense for the years ended December 31, 2022 and 2021 was $2,911,004 and $1,124,571, respectively. |
Business Combinations
Business Combinations | 12 Months Ended |
Dec. 31, 2022 | |
Business Combinations | |
Business Combinations | 7. Business Combinations On February 4, 2021, the Company acquired the assets of (i) Colorado Health Consultants LLC and (ii) Mountain View 44 th On July 21, 2021, the Company acquired the assets of Southern Colorado Growers under the applicable asset purchase agreement. The Company utilized purchase price accounting stating that net book value approximates fair market value of the assets acquired. The purchase price accounting resulted in $1,810,323 of goodwill. On December 3, 2021, the Company and all the Subsidiary Guarantors entered into the Note Purchase Agreement with 31 Note Investors, pursuant to which the Company agreed to issue and sell to the Note Investors 13% senior secured convertible notes due December 7, 2026 (the “Investor Notes”) in an aggregate principal amount of $95,000,000 for an aggregate purchase price of $93,100,000 (reflecting an original issue discount of $1,900,000, or 2%) in a private placement. On December 7, 2021, the Company consummated the private placement and issued and sold the Investor Notes pursuant to the Indenture entered into among the Company, Chicago Admin, LLC, as collateral agent (the “Indenture Collateral Agent”), Ankura Trust Company, LLC, as Indenture Trustee, and the Indenture. The Company received net proceeds of approximately $92 million at the closing, after deducting a commission to the placement agent and estimated offering expenses. The Investor Notes will mature five years after issuance unless earlier repurchased, redeemed, or converted. The Investor Notes bear interest at 13% per year paid quarterly commencing March 31, 2022 in cash for an amount equal to the amount payable on such date as if the Investor Notes were subject to an annual interest rate of 9%, with the remainder of the accrued interest payable as an increase to the principal amount of the Investor Notes. The proceeds from the Investor Notes are required to be used to fund previously identified acquisitions and other growth initiatives. On December 21, 2021, the Company acquired the assets of Smoking Gun under the applicable asset purchase agreement. The Company utilized purchase price accounting to value assets acquired, which values s uch assets at approximately fair market value. The purchase price accounting resulted in $640,001 of goodwill. On January 26, 2022, the Company acquired the assets of Drift, and Black Box Licensing, LLC, which operates dispensaries in Colorado, under the applicable asset purchase agreement. The Company utilized purchase price accounting to value assets acquired, which values such assets at approximately fair market value. The purchase price accounting resulted in $3,344,555 of goodwill and intangibles, however valuation has not been finalized. On February 8, 2022, the Company acquired its New Mexico business under the Nuevo Purchase Agreement with the Nuevo Purchasers, RGA, Elemental, the equity holders of RGA and Elemental and William N. Ford, in his capacity as Representative, as amended on February 9, 2022. The Nuevo Purchasers acquired substantially all the operating assets of RGA and all of the equity of Elemental and assumed specified liabilities of RGA and Elemental. Pursuant to existing laws and regulations in New Mexico, the cannabis licenses for certain facilities managed by RGA are held by the NFPs. At the closing, Nuevo Holding, LLC gained control over the NFPs by becoming the sole member of each of the NFPs and replacing the directors of the two NFPs with the Company’s Chief Executive Officer, Chief Financial Officer, General Counsel, and Corporate Secretary. The business acquired from RGA consists of serving as a branding, marketing and consulting company, licensing certain intellectual property related to the business of THC-based products to Elemental and the NFPs, providing consulting services to Elemental and the NFPs, and supporting Elemental and the NFPs to promote, support, and develop sales and distribution of products. Elemental is engaged in the business of creating and distributing cannabis-derived products to licensed cannabis producers. Elemental and the NFPs are in the business of cultivating, processing and dispensing marijuana in New Mexico, with 10 dispensaries, four cultivation facilities ( three operating and one under development) and one manufacturing facility. The dispensaries are located in Albuquerque, Santa Fe, Roswell, Las Cruces, Grants and Las Vegas, New Mexico. The cultivation and manufacturing facilities are located in Albuquerque, New Mexico and consists of approximately 70,000 square feet of cultivation and 6,000 square feet of manufacturing. On the same date, Nuevo Holding, LLC entered into two separate Call Option Agreements containing substantially identical terms with each of the NFPs. Each Call Option Agreement gives Nuevo Holding, LLC the right to acquire 100% of the equity or 100% of the assets of the applicable NFP for a purchase price of $100 if, in the future, the New Mexico legislature adopts legislation that permits a NFP to (i) convert to a for-profit corporation and maintain its cannabis license or (ii) sell its assets (including its cannabis license) to a for-profit corporation. The aggregate closing consideration for the acquisitions was approximately (i) $32.2 million in cash, , and (ii) $17.0 million in the form of an unsecured promissory note issued by Nuevo Holding, LLC to RGA, the principal amount of which is payable on February 8, 2025 with interest payable monthly at an annual interest rate of 5% . The Company utilized purchase price accounting to value assets acquired, which values such assets at approximately fair market value. The purchase price accounting resulted in $34,981,571 of goodwill and intangibles, however valuation has not been finalized. On February 9, 2022, the Company acquired MCG, which operates dispensaries located in Colorado pursuant to the terms of an Agreement and Plan of Merger, dated November 15, 2021, with Emerald Fields Merger Sub, LLC, a wholly-owned subsidiary of the Company, MCG, MCG’s owners and Donald Douglas Burkhalter and James Gulbrandsen in their capacity as the Member Representatives, as amended on February 9, 2022. The Company utilized purchase price accounting to value assets acquired, which values such assets at approximately fair market value. The purchase price accounting resulted in $16,810,479 of goodwill and $12,400,000 of intangibles. On February 15, 2022, the Company acquired substantially all of the operating assets of Brow related to its indoor cannabis cultivation operations located in Denver, Colorado (other than assets expressly excluded) and assumed certain liabilities for contracts acquired pursuant to the terms of the Asset Purchase Agreement, dated August 20, 2021, among Double Brow, Brow, and Brian Welsh, as the owner of Brow. The Company utilized purchase price accounting to value assets acquired, which values such assets at approximately fair market value. The purchase price accounting resulted in $1,792,000 of goodwill and $3,970,000 of intangibles. On May 31, 2022, the Company acquired substantially all of the operating assets of Urban Dispensary, which operates a dispensary and indoor cultivation in Colorado, pursuant to the terms of an Asset and Personal Goodwill Purchase Agreement, dated March 11, 2022, with Double Brow, Urban Dispensary, Productive Investments, LLC, and Patrick Johnson. Urban Dispensary operates an indoor cannabis cultivation facility and a single retail dispensary, each located in Denver, Colorado. The Company utilized purchase price accounting to value assets acquired, which values such assets at approximately fair market value. The purchase price accounting resulted in $2,849,868 of goodwill and intangibles, however valuation has not been finalized. On December 15, 2022, the Company acquired substantially all of the operating assets of two retail dispensaries of Lightshade pursuant to the terms of two separate Asset Purchase Agreements, dated September 9, 2022, by and among the Company, Double Brow, Lightshade, Thomas Alsburg, Steve Brooks, and John Fritzel, as amended. The Company acquired two retail dispensaries and the assets related thereto located in Denver, Colorado and Aurora, Colorado. The Company utilized purchase price accounting to value assets acquired, which values such assets at approximately fair market value. The purchase price accounting resulted in $2,589,866 of goodwill and intangibles, however valuation has not been finalized. Also on December 15, 2022, the Company acquired certain of the operating assets of a retail dispensary of Pikes Peak Industries LLC d/b/a Bud EZ (“Bud EZ”) pursuant to the terms of a License Purchase Agreement, dated August 31, 2022, by and among the Company, Double Brow, Bud EZ, and John Jackson. Bud EZ operates a medical retail dispensary in Colorado Springs, Colorado. The Company utilized purchase price accounting to value assets acquired, which values such assets at approximately fair market value. The Company has not yet finalized the purchase price accounting and therefore no goodwill has been recognized as of December 31, 2022. Acquisition related expenses incurred during the year ended years ended December 31, 2022 and 2021, totaled $6,822,000 and $2,779,000, respectively, and were recorded within selling, general and administrative expenses. These transactions were accounted for as a business combination in accordance with ASC 805, Business Combinations (“ASC 805”). In consideration of the sale and transfer of the acquired assets the Company paid as follows: Nuevo Holding LLC Emerald Fields Merger Sub, LLC Other Acquisitions Cash $ 32,202,123 $ 18,268,825 $ 12,044,553 Seller notes 17,000,000 — — Common stock — 11,600,000 4,137,855 Total purchase price $ 49,202,123 $ 29,868,825 $ 16,182,408 Description Nuevo Holding LLC Emerald Fields Merger Sub, LLC Other Acquisitions Assets acquired: Cash $ 2,860,706 $ 650,469 $ 23,100 Accounts receivable — 196,879 — Other assets — 156,000 605,112 Inventory 9,584,428 1,655,000 982,156 Fixed assets 2,137,002 2,687,000 25,966 Other long term assets 2,500 — — Intangible assets — 12,400,000 3,970,000 Goodwill 34,981,571 16,810,479 10,576,289 Total Assets acquired $ 49,566,207 $ 34,555,827 $ 16,182,623 Liabilities and Equity assumed: Accounts payable $ 295,043 $ 458,622 $ — Accrued liabilities 69,041 1,014,300 215 Deferred Tax Liability — 3,214,080 — Total Liabilities assumed 364,084 4,687,002 215 Estimated fair value of net assets acquired $ 49,202,123 $ 29,868,825 $ 16,182,408 |
Goodwill Accounting
Goodwill Accounting | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill Accounting | |
Goodwill Accounting | 8. Goodwill Accounting The Company accounts for acquisitions in which it obtains control of one or more businesses as a business combination. The purchase price of the acquired businesses is allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. The excess of the purchase price over those fair values is recognized as goodwill. During the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments, in the period in which they are determined, to the assets acquired and liabilities assumed with the corresponding offset to goodwill. If the assets acquired are not a business, the Company accounts for the transaction or other event as an asset acquisition. Under both methods, the Company recognizes the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquired entity. In addition, for transactions that are business combinations, the Company evaluates the existence of goodwill or a gain from a bargain purchase. As of December 31, 2022 the balance of goodwill, by segment, consisted of the following: Retail Wholesale Other Total Balance as of January 1, 2022 $ 26,349,025 $ 13,964,016 $ 3,003,226 $ 43,316,267 Goodwill acquired during 2022 25,594,768 1,792,000 34,981,571 62,368,339 Measurement-period adjustment to prior year acquisition 640,001 — — 640,001 Goodwill Impairment during 2022 — (8,716,080) (3,003,226) (11,719,306) Balance as of December 31, 2022 $ 52,583,794 7,039,936 $ 34,981,571 $ 94,605,301 The Company performed its annual fair value assessment as of December 31, 2022 on its subsidiaries with material goodwill on their respective balance sheets and recognized a goodwill impairment charge of $ 11,719,306, of which $3,708,226 is presented under loss from business disposition in the accompanying consolidated statements of comprehensive income as it was related to ceased operations during 2022. No such impairment existed as of December 31, 2021. Impairment is recorded when the carrying values of the reporting units exceed the estimated fair value of such amounts. As of December 31, 2022, the acquisition valuations resulting in goodwill that may have fallen under the Retail segment had not been finalized and therefore were allocated to Other until final valuation is completed. The goodwill, which is not expected to be deductible for income tax purposes, consists largely of the synergies, assembled workforce and economies of scale expected from combining the operations of the acquired entities with the Company. As of December 31, 2021 the balances of goodwill, by segment, consisted of the following: Retail Wholesale Other Total Balance as of January 1, 2021 $ 38,594,810 $ 11,448,693 $ 3,003,226 $ 53,046,729 Goodwill acquired during 2021 15,166,316 2,515,323 — 17,681,639 Measurement-period adjustment to prior year acquisition (27,412,101) — — (27,412,101) Goodwill Impairment during 2021 — — — — Balance as of December 31, 2021 $ 26,349,025 $ 13,964,016 $ 3,003,226 $ 43,316,267 |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2022 | |
Intangible Assets | |
Intangible Assets | 9. Intangible Assets Intangible assets are recorded at cost less accumulated amortization and impairment losses, if any. Intangible assets acquired in a business combination are measured at fair value at the acquisition date. Amortization of definite life intangibles is provided on a straight-line basis over their estimated useful lives. The estimated useful lives, residual values, and amortization methods are reviewed at each year end, and any changes in estimates are accounted for prospectively. As of December 31, 2022 and 2021 were comprised of the following: December 31, 2022 December 31, 2021 Gross Gross Carrying Accumulated Carrying Accumulated Amount Amortization Amount Amortization License Agreements $ 111,491,280 $ (12,154,237) $ 94,230,280 $ (5,496,902) Tradename 6,021,500 (1,862,242) 4,560,000 (845,667) Customer Relationships 5,150,000 (1,474,405) 5,150,000 (933,690) Non-compete 1,265,000 (765,556) 1,205,000 (348,056) Product License and Registration 57,300 (21,783) 57,300 (17,963) Trade Secret 32,500 (12,639) 32,500 (10,472) Total $ 124,017,580 $ (16,290,862) $ 105,235,080 $ (7,652,750) Amortization expense for years ended December 31, 2022 and 2021 was $8,638,112 and $7,452,294, respectively. The Company performed its annual impairment assessment and recognized an impairment on intangible assets of $875,400 for the year ended December 31, 2022, associated with intangibles for a reporting unit that has ceased operations and is presented under loss on business disposition in the accompanying consolidated statements of comprehensive income. No such impairment charges were recorded for the year ended December 31, 2021. The following table presents the Company’s future projected annual amortization expense as of December 31, 2022: 2023 $ 9,842,054 2024 9,520,667 2025 9,412,888 2026 8,638,056 2027 8,330,329 Thereafter 61,982,724 Total $ 107,726,718 |
Derivative Liabilities
Derivative Liabilities | 12 Months Ended |
Dec. 31, 2022 | |
Derivative Liabilities | |
Derivative Liabilities | 10 . Employee Common Stock During the year ended December 31, 2019, the Company entered into employment agreements with certain key officers that contained contingent consideration provisions based upon the achievement of certain market condition milestones. The Company determined that each of these vesting conditions represented derivative instruments. On January 8, 2019, the Company granted the right to receive 500,000 shares of restricted Common Stock to an officer, which was set to vest when the Company’s stock price appreciated to $8.00 per share with defined minimum average daily trading volume thresholds. This right expired on January 8, 2022. On April 23, 2019, the Company granted the right to receive 1,000,000 shares of restricted Common Stock to an officer, which was set to vest when the Company’s stock price appreciated to $8.00 per share with defined minimum average daily trading volume thresholds. On February 25, 2020, the officer resigned from his remaining positions with the Company and forfeited his right to the contingent consideration. As a result, the Company recorded a gain of $1,462,636 as a component of other income (expense), net on its financial statements for the fiscal year ended December 31, 2020. On June 11, 2019, the Company granted the right to receive 1,000,000 shares of restricted Common Stock to an officer, which was set to vest when the Company’s stock price appreciated to $8.00 per share with defined minimum average daily trading volume thresholds. This right expired January 8, 2022. The Company accounts for derivative instruments in accordance with the GAAP accounting guidance under ASC 815 Derivatives and Hedging Activities The fair value of these derivative liabilities was $0 as of December 31, 2022 and December 31, 2021, respectively as the these rights expired on January 8, 2022. Investor Note The Company issued Investor Notes in an aggregate principal amount of $95,000,000 on December 7, 2021. A reconciliation of the beginning and ending balances of the derivative liabilities for the periods ended December 31, 2022 were as follows: Balance as of January 1, 2022 $ 34,923,013 Gain on derivative liability (18,414,760) Balance as of December 31, 2022 $ 16,508,253 The Company accounts for derivative instruments in accordance with the GAAP accounting guidance under ASC 815 Derivatives and Hedging Activities in 2021, the Company recorded a derivative liability and debt discount of $48,936,674 in relation to the derivative liability portion of the Investor Notes. The fair value of these derivative liabilities is $16,508,253 and $34,923,013 as of December 31, 2022 and December 31, 2021, respectively. The change in the fair value of derivative liabilities is $18,414,760 and $14,013,661 for the year ended December 31, 2022 and December 31, 2021, respectively. The Company recorded $7,484,613 and $458,885 in amortization related to the debt discount for the year ended December 31, 2022 and 2021, respectively. |
Debt
Debt | 12 Months Ended |
Dec. 31, 2022 | |
Debt | |
Debt | 11. Debt Term Loan Under the terms of the loan, the Company must comply with certain restrictions. These include customary events of default and various financial covenants including, maintaining (i) a consolidated fixed charge coverage ratio of at least 1.3 at the end of each fiscal quarter beginning in the first quarter of 2022, and (ii) a minimum of $3,000,000 in a deposit account in which the lender has a security interest. As of December 31, 2022, the Company was in compliance with the requirements described above. Seller Notes st Investor Notes – The Investor Notes were issued pursuant to an Indenture, dated December 7, 2021, among the Company, the Subsidiary Guarantors, Ankura Trust Company, LLC, as trustee, and Chicago Atlantic Admin, LLC, as collateral agent for the Investor Note holders. The Investor Notes will mature five years after issuance unless earlier repurchased, redeemed, or converted. The Investor Notes bear interest at 13% per year paid quarterly commencing March 31, 2022 in cash for an amount equal to the amount payable on such date as if the Investor Notes were subject to an annual interest rate of 9%, with the remainder of the accrued interest payable as an increase to the principal amount of the Investor Notes. The proceeds from the Investor Notes are required to be used to fund previously identified acquisitions and other growth initiatives. The principal is due December 7, 2026. Nuevo Note Payable As part of the acquisition under the Nuevo Purchase Agreement, the company entered into a deferred payment arrangement with the sellers requiring the Company to make payments on an aggregate amount of $17,000,000 . The deferred payment arrangement incurs 5% interest per year, payable on the first of each month. The principal is due February 7, 2025. The following tables sets forth our indebtedness as of December 31, 2022 and 2021, respectively, and future obligations: December 31, December 31, 2022 2021 Term loan dated February 26, 2021, in the original amount of $10,000,000. An additional $5,000,000 was added to the loan agreement on July 28, 2021. Interest of 15% per annum, due quarterly. Principal payments begin June 1, 2023. $ 15,000,000 $ 15,000,000 Seller notes dated December 17, 2020 in the original amount of $44,250,000. Interest of 12% per annum, due monthly. Principal payments begin December 17, 2025. 44,250,000 44,250,000 Investor note dated December 3, 2021, in the original amount of $95,000,000. Interest of 13% per annum, 9% payable in cash and 4% accreting to the principal amount. 99,118,391 95,000,000 Seller note dated February 7, 2022 in the original amount of $17,000,000. Interest of 5% per annum, due monthly. Principal balance is due February 7, 2025. 17,000,000 — Less: unamortized debt issuance costs (6,603,695) (8,289,743) Less: unamortized debt discount (40,993,176) (48,477,789) Total long term debt 127,771,520 97,482,468 Less: current portion of long term debt (2,250,000) — Long term debt and unamortized debt issuance costs $ 125,521,520 $ 97,482,468 Unamortized Principal Debt Issuance Unamortized Total Long Payments Costs Debt Discount Term Debt 2023 2,250,000 1,686,049 8,523,493 (7,959,542) 2024 3,000,000 1,686,049 9,734,935 (8,420,984) 2025 40,651,759 1,686,049 11,057,799 27,907,911 2026 129,466,632 1,545,548 11,676,949 116,244,135 2027 — — — — Total $ 175,368,391 $ 6,603,695 $ 40,993,176 $ 127,771,520 |
Leases
Leases | 12 Months Ended |
Dec. 31, 2022 | |
Leases | |
Leases | 12. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. Leases with a term greater than one year are recognized on the balance sheet at the time of lease commencement or modification of an ROU operating lease asset and a lease liability, initially measured at the present value of the lease payments. Lease costs are recognized in the income statement over the lease term on a straight-line basis. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. The Company’s leases consist of real estate leases for office, retail, cultivation, and manufacturing facilities. The Company elected to combine the lease and related non-lease components for its operating leases. The Company’s operating leases include options to extend or terminate the lease, which are not included in the determination of the ROU asset or lease liability unless reasonably certain to be exercised. The Company’s operating leases have remaining lease terms of less than two years. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. As the Company’s leases do not provide an implicit rate, we used an incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. The discount rate used in the computations ranged between 6% and 12%. Balance Sheet Classification of Operating Lease Assets and Liabilities Balance Sheet Line December 31, 2022 Asset Operating lease right of use assets Noncurrent assets $ 18,199,399 Liabilities Lease liabilities Current Liabilities $ 3,139,289 Lease liabilities Noncurrent liabilities 17,314,464 Maturities of Lease Liabilities Maturities of lease liabilities as of December 31, 2022 are as follows: 2022 fiscal year $ 33,595,944 Less: Interest 13,298,212 Present value of lease liabilities $ 20,297,732 The following table presents the Company’s future minimum lease obligation under ASC 842 as of December 31, 2022: 2023 fiscal year $ 5,873,512 2024 fiscal year 5,032,891 2025 fiscal year 4,692,760 2026 fiscal year 4,204,171 2027 fiscal year 2,923,785 Thereafter 10,868,825 Total $ 33,595,944 |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2022 | |
Stockholders' Equity | |
Stockholders' Equity | 13. Stockholders’ Equity The Company is authorized to issue two classes of stock, Common Stock and Series A Cumulative Convertible Preferred Stock, par value $0.001 per share (“Preferred Stock”). Preferred Stock The number of shares of Preferred Stock authorized is 10,000,000, par value $0.001 per share. The Preferred Stock may be divided into such number or series as the Board may determine. The Board is authorized to determine and alter the rights, preferences, privileges and restrictions granted and imposed upon any wholly unissued series of preferred stock, and to fix the number and designation of shares of any series of preferred stock. The Board, within limits and restrictions stated in any resolution of the Board, originally fixing the number of shares constituting any series may increase or decrease, but not below the number of such series then outstanding, the shares of any subsequent series. The Company had 86,994 shares of Preferred Stock issued and 944 in escrow as of December 31, 2022 and 86,994 shares of Preferred Stock issued and 4,428 in escrow as of December 31, 2021. Among other terms, each share of Preferred Stock (i) earns an annual dividend of 8% on the “preference amount,” which initially is equal to the $1,000 per-share purchase price and subject to increase, by having such dividends automatically accrete to, and increase, the outstanding preference amount; (ii) is entitled to a liquidation preference under certain circumstances, (iii) is convertible into shares of Common Stock by dividing the preference amount by $1.20 per share under certain circumstances, and (iv) is subject to a redemption right or obligation under certain circumstances. Accumulated and declared preferred dividends were $7,802,809 and $7,346,153 as of December 31, 2022 and December 31, 2021, respectively. Common Stock The Company is authorized to issue 250,000,000 shares of Common Stock at a par value of $0.001. The Company had 56,352,545 shares of Common Stock issued, and 55,212,547 shares of Common Stock outstanding, 920,150 of treasury stock and 219,848 shares of Common Stock in escrow as of December 31, 2022and 45,484,314 shares of Common Stock issued, 44,745,870 shares of Common Stock outstanding, 517,044 of treasury stock and 221,400 shares of Common Stock in escrow as of December 31, 2021. Common Stock Issued as Compensation to Employees, Officers, and Directors For the year ended December 31, 2021, the Company issued 323,530 shares of Common Stock valued at $621,272 to employees, officers, and directors as compensation. For the year ended December 31, 2022, the Company issued 717,546 shares of Common Stock valued at $1,027,288 to employees, officers, and directors as compensation. Common and Preferred Stock Issued as Payment for Acquisitions On February 3, 2021, the Company issued 2,319 shares of Preferred Stock valued at $2,318,998, of which 349 shares of Preferred Stock valued at $314,100 were placed in escrow, for acquisition of the Star Buds assets. On March 3, 2021, the Company issued 17,921 shares of Preferred Stock valued at $17,920,982, of which 2,690 shares of Preferred Stock valued at $2,421,000 were placed in escrow, for the acquisition of Star Buds assets. On July 21, 2021, the Company issued 2,213,994 shares of Common Stock valued at $5,377,786 of which 221,400 shares valued at $537,779 were placed in escrow for the acquisition of Southern Colorado Growers. In December 2022, the Company released 205,384 shares of escrow valued at $499,083 and cancelled 16,016 shares valued at $38,919 for satisfaction of indemnity claims pursuant to the asset purchase agreement with Southern Colorado Growers. On December 21, 2021, the Company issued 100,000 shares of Common Stock valued at $197,000 for the acquisition of Smoking Gun Apothecary. During 2022, the Company issued 1,146,099 shares of Common Stock valued at $1,948,620 for the acquisition of Drift. Between February and May 2022, the Company issued 7,145,724 shares of Common Stock valued at $11,592,854 for the acquisition of MCG. On May 31, 2022, the Company issued 1,670,230 shares of Common Stock valued at $1,900,000 for the acquisition of Urban Dispensary, of which 219,848 shares valued at $288,000 were held back as collateral for satisfaction of potential indemnity claims pursuant to the underlying purchase agreement. Warrants The Company accounts for Common Stock purchase warrants in accordance with ASC 480, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock, Distinguishing Liabilities from Equity During the year ended December 31, 2020, the Company issued 187,500 Common Stock purchase warrants to an accredited investor with an exercise price of $3.50 per share with an expiration date of three years from the date of issuance. The Company estimated the fair value of these warrants at date of grant using the Black-Scholes option pricing model using the following inputs: (i) stock price on the date of grant of $3.50 , (ii) the contractual term of the warrant of three years , (iii) a risk-free interest rate ranging between 0.21% - 0.38% and (iv) an expected volatility of the price of the underlying Common Stock ranging between 173.07% - 187.52% . For the year ended December 31, 2021, the Company issued warrants to purchase an aggregate of 5,531,249 shares of Common Stock as purchase consideration for the acquisition of certain Star Buds assets. These warrants have an exercise price of $1.20 per share and expiration dates five years from the date of issuance. In addition, the Company issued a warrant to purchase an aggregate of 1,500,000 shares of Common Stock to SHWZ Altmore, LLC in connection with entering into the Loan Agreement. This warrant has an exercise price of $2.50 per share and expires five years from the date of issuance. The Company estimated the fair value of these warrants at date of grant using the Black-Scholes option pricing model using the following inputs: (i) stock price on the date of grant of $1.20 or $2.50, respectively, (ii) the contractual term of the warrant of five years, (iii) a risk-free interest rate ranging between 0.21% - 1.84% and (iv) an expected volatility of the price of the underlying Common Stock ranging between 157.60% - 194.56%. The following table reflects the change in Common Stock purchase warrants: Equity Classified Warrants Weighted Average Exercise Price Weighted Average Remaining Contractual Life Balance as of December 31, 2021 17,218,750 $ 2.96 1.65 Warrants exercised — — — Warrants forfeited/expired (10,000,000) — — Warrants issued — — — Balance as of December 31, 2022 7,218,750 $ 1.76 2.99 Conversion of Preferred Stock to Common Stock On December 20, 2021, a holder of Preferred Stock converted 272 shares of Preferred Stock into 245,017 of Common Stock. |
Earnings per share (Basic and D
Earnings per share (Basic and Dilutive) | 12 Months Ended |
Dec. 31, 2022 | |
Earnings per share (Basic and Dilutive) | |
Earnings per share (Basic and Dilutive) | 14. Earnings per share (Basic and Dilutive) The Company computes net income (loss) per share in accordance with ASC 260, Earnings per Share The following is a reconciliation of the numerator and denominator used in the basic and diluted EPS calculations for the years ended December 31, 2022 and 2021. For the Year Ended December 31, 2022 2021 Numerator: Net income (loss) $ (18,467,615) $ 14,519,130 Less: Accumulated preferred stock dividends for the period (7,802,809) (7,346,153) Net income (loss) attributable to common stockholders $ (26,270,424) $ 7,172,977 Denominator: Weighted-average shares of common stock 53,637,003 43,339,092 Basic earnings per share $ (0.49) $ 0.17 Numerator: Net income (loss) attributable to common stockholders – Basic (26,270,424) 7,172,977 Add: Investor note accrued interest — 789,028 Add: Investor note amortized debt discount — 458,885 Less: Gain on derivative liability related to investor note — (14,013,661) Net income (loss) attributable to common stockholders – dilutive $ (26,270,424) $ (5,592,771) Denominator: Weighted-average shares of common stock 53,637,003 43,339,092 Dilutive effect of investor notes — 51,748,797 Dilutive effect of warrants — 2,581,250 Dilutive effect of options — 3,699,819 Diluted weighted-average shares of common stock 53,637,003 101,368,958 Diluted earnings per share $ (0.49) $ (0.06) Basic net loss per share attributable to common stockholders is computed by dividing reported net loss attributable to common stockholders by the weighted average number of common shares outstanding for the reported period. Note that for purposes of basic loss per share calculation, shares of Preferred Stock are excluded from the calculation as of December 31, 2021, as the inclusion of the common share equivalents would be anti-dilutive. As the Company incurred a net loss in 2022, shares of Common Stock issuable pursuant to the equity awards were excluded from the computation of diluted net loss per share in the accompanying consolidated statement of operations, as their effect is anti-dilutive. |
Tax Provision
Tax Provision | 12 Months Ended |
Dec. 31, 2022 | |
Tax Provision | |
Tax Provision | 15. Tax Provision As the Company operates in the cannabis industry, it is subject to the limitations of IRC Section 280E under which the Company is only allowed to deduct expenses directly related to sales of product. This results in permanent differences between ordinary and necessary business expenses deemed non-allowable under IRC Section 280E. Therefore, the effective tax rate can be highly variable and may not necessarily correlate with pre-tax income or loss. The following table sets forth the components of income tax (benefit) expense for the years ended December 31, 2022 and 2021: December 31, December 31, 2022 2021 Current: Federal $ 17,127,037 $ 4,284,163 State 483,037 112,001 Total current tax expense (benefit) $ 17,610,074 $ 4,396,164 December 31, December 31, 2022 2021 Deferred: Federal $ (611,750) $ — State (2,100,260) — Total deferred tax expense $ (2,712,010) $ — The following table sets forth a reconciliation of income tax expense (benefit) at the federal statutory rate to recorded income tax expense (benefit) for the years ended December 31, 2022 and 2021: December 31, December 31, 2022 2021 Income (loss) before income taxes $ (3,569,552) $ 5,360,518 Statutory tax rate 21% 21% Expense (benefit) based on statutory rates (749,606) 1,125,709 State income taxes (949,986) 293,358 Expenses disallowed under IRC Section 280E 16,308,522 5,610,279 Stock-based compensation 177,912 578,692 Remeasurement on derivative liability (3,867,100) - Other permanent differences 244,130 28,918 Change in valuation allowance (2,062,697) (5,170,426) Change in state rate (176,568) (181,521) Return to provision 4,890,722 416,125 Deferred tax true-up 1,082,735 1,695,030 Total income tax expense $ 14,898,064 $ 4,396,164 The following tables set forth the components of deferred income taxes as of December 31, 2022 and 2021: December 31, December 31, 2022 2021 Deferred tax assets: Net operating loss carryforwards $ — $ 64,858 Interest expense carryforwards 1,129,939 84,325 Goodwill and intangible assets 2,359,197 — Lease liabilities 1,705,867 861,683 Share based compensation accruals 598,861 2,518,158 Loyalty points 412,218 363,171 Fixed assets 367,776 — Capitalized transaction costs 217,320 662,861 Bad debt allowance 36,742 94,620 Accrued expenses 8,537 9,099 Gross deferred tax assets 6,836,457 4,658,775 Valuation allowance — (2,062,697) Net deferred tax assets 6,836,457 2,596,078 Deferred tax liabilities: Fixed assets — 63,301 Goodwill and intangible assets 5,594,714 1,568,542 Operating leases 1,595,394 850,793 Unrealized gains 117,750 55,576 Cash-to-accrual 30,669 57,866 Net deferred tax liabilities 7,338,527 2,596,078 Total net deferred tax assets $ (502,070) $ — Federal and State tax laws impose significant restrictions on the utilization of tax attribute carryforwards in the event of a change in ownership of the Company, as defined by IRC Section 382. The Company does not expect any Section 382 annual limitations to significantly impact future utilization of its gross state interest expense carryforwards. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. At December 31, 2022, the Company released its valuation allowance, resulting in an income tax benefit of $2,062,697. As of December 31, 2022, the Company believes it is more likely than not that its deferred tax assets will be realized as the Company has additional sources of income, primarily related to acquired deferred tax liabilities with known reversal periods, that will result in future taxable income in excess of its deferred tax assets. As a result, the Company has no valuation allowance recorded against its deferred tax assets as of December 31, 2022. As of December 31, 2022 and 2021, the Company had no unrecognized tax benefits. The Company does not anticipate any significant unrecognized tax benefits to arise within the next twelve months. The Company did not recognize any significant interest expense or penalties on income tax assessments during 2022 or 2021 and there was no interest or penalties related to income tax assessments accrued as of December 31, 2022 or 2021. The Company files income tax returns in the United States, Colorado, and New Mexico. The federal, Colorado, and New Mexico statutes of limitations all remain open for the 2019 tax year to present. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2022 | |
Related Party Transactions. | |
Related Party Transactions | 16. Related Party Transactions Transactions Involving Former Directors, Executive Officers or Their Affiliated Entities The Company’s former Chief Executive Officer, Andy Williams, maintains an ownership interest in MedPharm Holdings LLC (“MedPharm”). Effective February 25, 2020 he was no longer an officer of the Company and therefore no longer a related party. During the year ended December 31, 2019, the Company made loans to MedPharm totaling $767,695 evidenced by promissory notes with original maturity dates ranging from September 21, 2019 through January 19, 2020 and all bearing interest at 8% per annum. On August 1, 2020, the Company entered into a Settlement Agreement and Mutual Release (the “Settlement Agreement”) with MedPharm pursuant to which (i) the parties agreed that the outstanding amount owed by MedPharm to the Company was $767,695 of principal and $47,161 in accrued and unpaid interest, (ii) MedPharm paid the Company $100,000 in cash, and (iii) Andrew Williams returned 175,000 shares of Common Stock to the Company, as partial repayment of the outstanding balance at a value of $1.90 per share. These shares are held in treasury. The remaining outstanding principal and interest of $181,911 due and payable by MedPharm under the Settlement Agreement was to be paid out in bi-weekly installments of product by scheduled deliveries through June 30, 2021. This amount was paid off on April 19, 2021. During the year ended December 31, 2020, the Company recorded sales to Baseball 18, LLC (“Baseball”) totaling $14,605, to Farm Boy, LLC (“Farm Boy”) totaling $16,125, to Emerald Fields LLC (“Emerald Fields”) totaling $16,605, and to Los Sueños Farms (“Los Sueños”) totaling $52,244. As of December 31, 2020 the Company had net accounts payable balances with Baseball of $31,250, and with Farm Boy of $93,944. One of the Company’s former Chief Operating Officers and directors, Robert DeGabrielle, owns the Colorado retail marijuana cultivation licenses for Farm Boy, Baseball, Emerald Fields, and Los Sueños. Effective June 19, 2020 he was no longer an officer of the Company and therefore no longer a related party. As such, he is not included as a related party with respect to sales and accounts receivable from Baseball, Farm Boy, Emerald Fields, or Los Sueños during the period ended December 31, 2022 and December 31, 2021. Transactions with Justin Dye and Entities Affiliated with Mr. Dye The Company has participated in several transaction involving Dye Capital, Dye Capital Cann Holdings, LLC (“Dye Cann I”) and Dye Cann II. Justin Dye, the Company’s Chief Executive Officer, one of its directors, and the largest beneficial owner of Common Stock and Preferred Stock, controls Dye Capital and Dye Capital controls Dye Cann I and Dye Cann II. Dye Cann I is the largest holder of the Company’s outstanding common stock. Dye Cann II is a significant holder of our Preferred Stock. Mr. Dye has sole voting and dispositive power over the securities held by Dye Capital, Dye Cann I, and Dye Cann II. The Company entered into a Securities Purchase Agreement with Dye Cann I on June 5, 2019, (as amended, the “Dye Cann I SPA”) pursuant to which the Company agreed to sell to Dye Cann I up to between 8,187,500 and 10,687,500 shares of Common Stock in several tranches at $2.00 per share and warrants to purchase 100% of the number of shares of common stock sold at a purchase price of $3.50 per share. At the initial closing on June 5, 2019, the Company sold to Dye Cann I 1,500,000 shares of common stock and warrants to purchase 1,500,000 shares of common stock for gross proceeds of $3,000,000, and the Company has consummated subsequent closings for an aggregate of 9,287,500 shares of common stock and warrants to purchase 9,287,500 shares of common stock for aggregate gross proceeds of $18,575,000 to the Company. The Company and Dye Cann I entered into a first amendment to the Dye Cann I SPA on July 15, 2019, a second amendment to the Dye Cann I SPA on May 20, 2020, and a Consent, Waiver and Amendment on December 16, 2020. At the time of the initial closing under the Dye Cann I SPA, Justin Dye became a director and the Company’s Chief Executive Officer. The Company granted Dye Cann I certain demand and piggyback registration rights with respect to the shares of common stock sold under the Dye Cann I SPA and issuable upon exercise of the warrants sold under the Dye Cann I SPA. The Company also granted Dye Cann I the right to designate one or more individuals for election or appointment to the Company’s board of directors (the “Board”) and Board observer rights. Further, under the Dye Cann I SPA, until June 5, 2022, if the Company desires to pursue debt or equity financing, the Company must first give Dye Cann I an opportunity to provide a proposal to the Company with the terms upon which Dye Cann I would be willing to provide or secure such financing. If the Company does not accept Dye Cann I’s proposal, the Company may pursue such debt or equity financing from other sources but Dye Cann I has a right to participate in such financing to the extent required to enable Dye Cann I to maintain the percentage of Common Stock (on a fully-diluted basis) that it then owns, in the case of equity securities, or, in the case of debt, a pro rata portion of such debt based on the percentage of Common Stock (on a fully-diluted basis) that it then owns. The Company entered into a Securities Purchase Agreement (as amended, the “Dye Cann II SPA”) with Dye Cann II on November 16, 2020 pursuant to which the Company agreed to sell to Dye Cann II shares of Preferred Stock in one or more tranches at a price of $1,000 per share. The terms of the Dye Cann II SPA are disclosed in the Company’s Current Report on Form 8-K filed on December 23, 2020. The Company and Dye Cann II entered into an amendment to the Dye Cann II SPA on December 16, 2020, a second amendment to the Dye Cann II SPA on February 3, 2021, and a third amendment to the Dye Cann II SPA on March 30, 2021. The Company issued and sold to Dye Cann II 7,700 shares of Preferred Stock on December 16, 2020, 1,450 shares of Preferred Stock on December 18, 2020, 1,300 shares of Series Preferred Stock on December 22, 2020, 3,100 shares of Preferred Stock on February 3, 2021, 3,800 shares of Preferred Stock on March 2, 2021 and 4,000 shares of Preferred Stock on March 30, 2021. As a result, the Company issued and sold an aggregate of 21,350 shares of Preferred Stock to Dye Cann II for aggregate gross proceeds of $21,350,000. The Company granted Dye Cann II certain demand and piggyback registration rights with respect to the shares of common stock issuable upon conversion of the Preferred Stock under the Dye Cann II SPA. Further, the Company granted Dye Can II the right to designate one or more individuals for election or appointment to the Board and Board observer rights. On December 16, 2020, the Company entered into a Secured Convertible Note Purchase Agreement with Dye Capital and issued and sold to Dye Capital a Convertible Note and Security Agreement in the principal amount of $5,000,000. On February 26, 2021, Dye Capital elected to convert the $5,000,000 principal amount and the $60,250 of accrued but unpaid interest under the Convertible Promissory Note and Security Agreement under its terms and Dye Capital and the Company entered into a Conversion Notice and Agreement pursuant to which the Company issued 5,060 shares of Preferred Stock to Dye Capital and also paid Dye Capital $230.97 in cash in lieu of issuing any fractional shares of Preferred Stock upon conversion. For the year ended December 31, 2021, the Company recorded expenses of $214,908 owed to Tella Digital. As of December 31, 2022, the Company recorded expenses of $382,622 owed to Tella. Tella Digital provides on-premise digital experience solutions for our retail dispensary locations. Mr. Dye is an indirect part owner and serves as Chairman of Tella Digital. Transactions with Entities Affiliated with Nirup Krishnamurthy For the year ended December 31, 2021, the Company recorded expenses of $214,908 owed to Tella Digital. As of December 31, 2022, the Company recorded expenses of $382,622 owed to Tella. Tella Digital provides on-premise digital experience solutions for our retail dispensary locations. Mr. Krishnamurthy, the Company’s President and one of its directors, is an indirect partial owner of Tella Digital. Transactions with Jeffrey Cozad and Entities Affiliated with Mr. Cozad On February 26, 2021, the Company entered into a Securities Purchase Agreement (the “CRW SPA”) with CRW Cann Holdings, LLC (“CRW”) pursuant to which the Company issued and sold 25,350 shares of Preferred Stock to CRW at a price of $1,000 per share for aggregate gross proceeds of $25,350,000. The transaction made CRW a beneficial owner of more than 5% of Common Stock. The Company granted CRW certain demand and piggyback registration rights with respect to the shares of Common Stock issuable upon conversion of the Preferred Stock under the CRW SPA. On the same date, the Company entered into a letter agreement with CRW, granting CRW the right to designate one individual for election or appointment to the Board and Board observer rights. Under the letter agreement, for as long as CRW has the right to designate a Board member, if the Company, directly or indirectly, plans to issue, sell or grant any securities or options to purchase any of its securities, CRW has a right to purchase its pro rata portion of such securities, based on the number of shares of Preferred Stock beneficially held by CRW on the applicable date on an as-converted to Common Stock basis divided by the total number of shares of Common Stock outstanding on such date on an as-converted, fully- diluted basis (taking into account all outstanding securities of the Company regardless of whether the holders of such securities have the right to convert or exercise such securities for Common Stock at the time of determination). Further, under the letter agreement, the Company paid CRW Capital, LLC, the sole manager of CRW and a holder of a carried interest in CRW, a monitoring fee equal to $150,000 in monthly installments of $12,500. The Company paid CRW a monitoring fee of $125,000 during 2021 and $25,000 in monitoring fees during 2022. On March 14, 2021, the Board appointed Jeffrey A. Cozad as a director to fill a vacancy on the Board. Mr. Cozad is a manager and owns 50% of CRW Capital, LLC, and he shares voting and disposition power over the shares of Preferred Stock held by CRW. Mr. Cozad and his family members indirectly own membership interests in CRW. On December 7, 2021, the Company entered into a Securities Purchase Agreement with Cozad Investments, L.P. pursuant to which the Company issued an Investor Note in the aggregate principal amount of $250,000 to Cozad Investments, L.P. for $245,000 in cash. The Investor Note bears interest at 13% per year payable quarterly commencing March 31, 2022 in cash for an amount equal to the amount payable on such date as if the Investor Note was subject to an annual interest rate of 9% with the remainder of the accrued interest payable as an increase to the principal amount of the Note. Mr. Cozad is a manager of CRW, majority owner of Cozad Investments, L.P., and a member of the Board. On May 4, 2022, and June 14, 2022, the Company issued 40,463 shares of Common Stock and 22,728 shares of Common Stock, respectively, to Mr. Cozad as compensation for service on the Board. These shares were valued at $70,001 and $35,001 for May and June 2022, respectively. Transactions with Marc Rubin and Entities Affiliated with Mr. Rubin On February 26, 2021, the Company entered into the CRW SPA with CRW, of which Marc Rubin is a beneficial owner. Pursuant to the CRW SPA, the Company issued and sold 25,350 shares of Series A Preferred Stock to CRW at a price of $1,000 per share for aggregate gross proceeds of $25,350,000. The transaction made CRW a beneficial owner of more than 5% of the Company’s common stock. The Company granted CRW certain demand and piggyback registration rights with respect to the shares of common stock issuable upon conversion of the Series A Preferred Stock under the CRW SPA. Effective February 4, 2022, the Company registered the resale of the shares of common stock issuable upon conversion of the Series A Preferred Stock on a Form S-3. Also on February 26, 2021, the Company entered into a letter agreement with CRW, granting CRW the right to designate one individual for election or appointment to the Board and Board observer rights. Under the letter agreement, for as long as CRW has the right to designate a Board member, if the Company, directly or indirectly, plans to issue, sell or grant any securities or options to purchase any of its securities, CRW has a right to purchase its pro rata portion of such securities, based on the number of shares of Series A Preferred Stock beneficially held by CRW on the applicable date on an as-converted-to-common-stock basis divided by the total number of shares of common stock outstanding on such date on an as-converted, fully-diluted basis (taking into account all outstanding securities of the Company regardless of whether the holders of such securities have the right to convert or exercise such securities for common stock at the time of determination). Further, under the letter agreement, the Company paid CRW Capital, LLC, the sole manager of CRW and a holder of a carried interest in CRW, a monitoring fee equal to $125,000 in 2021 and total monitoring fees of $25,000 in 2022. Mr. Rubin is a manager and 50% owner of CRW Capital, LLC, and he shares voting and disposition power over the shares of Series A Preferred Stock held by CRW. In October 2022, the Board appointed Mr. Rubin as a director to fill a vacancy on the Board. On December 7, 2021, the Company entered into a Securities Purchase Agreement with The Rubin Revocable Trust U/A/D 05/09/2011 (the “Rubin Revocable Trust”) pursuant to which the Company issued an Investor Note in the aggregate principal amount of $100,000 to the Rubin Revocable Trust for $98,000 in cash. The Investor Note bears interest at 13% per year payable quarterly commencing March 31, 2022 in cash for the amount equal to the amount payable on such date as if the Investor Note was subject to an annual interest rate of 9% with the remainder of the accrued interest payable as an increase to the principal amount of the Note. Mr. Rubin is the majority owner of the Rubin Revocable Trust. Transactions with Jeffrey Garwood On December 7, 2021, the Company entered into a Securities Purchase Agreement with Jeff Garwood pursuant to which the Company issued an Investor Note in the aggregate principal amount of $300,000 to Mr. Garwood for $294,000 in cash. The Investor Note bears interest at 13% per year paid quarterly commencing March 31, 2022 in cash for an amount equal to the amount payable on such date as if the Note was subject to an annual interest rate of 9% with the remainder of the accrued interest payable as an increase to the principal amount of the Note. Mr. Garwood is a member of the Board. On May 4, 2022, and June 14, 2022, the Company issued 40,463 shares of Common Stock and 22,728 shares of Common Stock, respectively, to Mr. Garwood as compensation for service on the Board. These shares were valued at $70,001 and $35,001 for May and June 2022, respectively. Transactions with Pratap Mukharji On December 7, 2021, the Company entered into a Securities Purchase Agreement with Pratap Mukharji pursuant to which the Company issued an Investor Note in the aggregate principal amount of $200,000 to Mr. Mukharji for $196,000 in cash. The Investor Note bears interest at 13% per year paid quarterly commencing March 31, 2022 in cash for an amount equal to the amount payable on such date as if the Note was subject to an annual interest rate of 9% with the remainder of the accrued interest payable as an increase to the principal amount of the Note. Mr. Mukharji is a member of the Board. On May 4, 2022, and June 14, 2022, the Company issued 40,463 shares of Common Stock and 22,728 shares of Common Stock, respectively, to Mr. Mukharji as compensation for service on the Board. These shares were valued at $70,001 and $35,001 for May and June 2022, respectively. Transactions with Paul Montalbano On May 4, 2022, and June 14, 2022, the Company issued 40,463 shares of Common Stock and 22,728 shares of Common Stock, respectively, to Mr. Montalbano as compensation for service on the Board. These shares were valued at $70,001 and $35,001 for May and June 2022, respectively. Transactions with Jonathan Berger On May 4, 2022, and June 14, 2022, the Company issued 40,463 shares of Common Stock and 22,728 shares of Common Stock, respectively, to Mr. Berger as compensation for service on the Board. These shares were valued at $70,001 and $35,001 for May and June 2022, respectively. On June 24, 2022, the Company issued 19,085 shares of Common Stock to Mr. Berger as compensation for service as the Chair of the Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee of the Board. These shares were valued at $25,001 for June 2022. On September 22, 2022, the Company issued 102,355 shares of Common Stock to Mr. Berger as compensation for service as Lead Independent Director of the Board. These shares were valued at $100,000 for September 2022. Transactions with Star Buds Parties The Company has participated in several transactions involving entities owned or affiliated with one or more of its directors or 5% or greater beneficial owners that are affiliated with Star Buds and/or the Star Buds Acquisitions. These individuals include: (i) Brian Ruden, a former director of the Company as of October 2022 and a beneficial owner of 10% or more of the Company’s voting stock, (ii) Salim Wahdan, a director of the Company as of December 31, 2022, and (iii) Naser Joudeh and Shadhaa Ramadan, jointly as the beneficial owner of 10% or more of the Company’s voting stock (the “Joudeh Owners” and together with Brian Ruden and Salim Wahdan, the “Star Buds Affiliates”). Each of Brian Ruden, Salim Wahdan, and the Joudeh Owners had an ownership stake in the Star Buds companies acquired by the Company between December 2021 and May 2022. Between December 17, 2020 and March 2, 2021, the Company’s wholly-owned subsidiary SBUD, LLC acquired the Star Buds assets. The aggregate purchase price for the Star Buds assets was $118,000,000, paid as follows: (i) $44,250,000 in cash at the applicable closings, (ii) $44,250,000 in deferred cash, also referred to in this report as “seller note(s),” (iii) 29,506 shares of Preferred Stock, of which 25,078 shares were issued at the applicable closings and 4,428 shares were held back by the Company as collateral for potential indemnification obligations pursuant to the applicable purchase agreements. In addition, the Company issued warrants to purchase an aggregate of 5,531,250 shares of Common Stock to the sellers. Each party’s interest in the seller notes is as follows: (i) Brian Ruden: 31%, (ii) Salim Wahdan: 3.5%, and (iii) the Joudeh Owners: 28%. The Company issued warrants to purchase an aggregate of (i) 1,715,936 shares of Common Stock to Mr. Ruden, (ii) 193,929 shares of Common Stock to Mr. Wahdan, and (iii) 1,522,457 shares of Common Stock to the Joudeh Owners. As of December 31, 2021, the Company (i) owed an aggregate principal amount of $44,250,000 under the seller notes, (ii) paid an aggregate of $4,780,887 in interest on the seller notes, and (iii) held 4,428 shares of Preferred Stock in escrow as collateral for potential indemnification obligations pursuant to the applicable purchase agreements. As of December 31, 2022, the Company (i) owed an aggregate principal amount of $44,250,000 under the seller notes, (ii) paid an aggregate of $5,310,000 in interest on the seller notes, and (iii) held 944 shares of Preferred Stock in escrow as collateral for potential indemnification obligations pursuant to the applicable purchase agreements. In connection with acquiring the Star Buds assets, the Company also assumed and acquired a number of leases for which one of more of the Star Buds Affiliates serve as landlord or maintain an ownership interest in the landlord entity. The Company has entered into a lease with each of 428 S. McCulloch LLC, Colorado Real Estate Holdings LLC, 5844 Ventures LLC, 5238 W 44 th th th On December 17, 2020, SBUD LLC entered into a Trademark License Agreement with Star Brands LLC under which Star Brands LLC licenses certain trademarks to SBUD LLC effective as of the closing of the acquisitions of all of the Star Buds assets. SBUD LLC has no payment obligation under this agreement. Mr. Ruden and Mr. Joudeh are a part-owners of Star Brands LLC. In connection with the Star Buds Acquisitions, the Company granted Mr. Ruden and Naser Joudeh the right to designate two or three individuals for election or appointment to the Board, depending on the size of the Board at a given time. On May 4, 2022, and June 14, 2022, the Company issued 20,232 shares of Common Stock and 22,728 shares of Common Stock, valued at $35,001 and $35,001 , respectively, to Mr. Ruden as compensation for service on the Board. On June 14, 2022 and June 24, 2022, the Company issued 14,584 shares of Common Stock and 15,586 shares of Common Stock, respectively, to Mr. Wahdan as compensation for service on the Board. These shares were valued at $42,887 for June 2022. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies | |
Commitments and Contingencies | 17. Definitive Agreement to Acquire the Colorado-Based Brow 2, LLC On August 20, 2021, the Company entered into the Brow Purchase Agreement, and the Company acquired substantially all of the operating assets of Brow 2 LLC on February 15, 2022. The aggregate consideration was $6.7 million, of which Double Brow paid $6.2 million at closing and held back $500,000 as collateral for potential claims for indemnification under the Brow Purchase Agreement. Definitive Agreement to Acquire the Colorado-Based MCG, LLC On November 15, 2021, the Company entered into the MCG Merger Agreement, and the Company acquired MCG on February 9, 2022. The aggregate closing consideration for the merger was $29 million, consisting of: (i) $16,008,000 in cash; (ii) 6,547,239 shares of Common Stock issued to the members of MCG at a price of $1.63 per share; and (iii) an aggregate of $2,320,000 was held back as collateral for potential claims for indemnification under the MCG Merger Agreement as follows: (y) $1,392,000 in cash and (z) 569,325 shares of Common Stock. The escrowed portion of the purchase price will be released 50% on February 9, 2023 (with such amount being paid from the escrowed cash first) and 50% on August 9, 2023. MCG operates two retail marijuana dispensaries located in Manitou Springs, Colorado and Glendale, Colorado. Definitive Agreement to Acquire the New Mexico-Based Reynold Greenleaf & Associates, LLC On November 29, 2021, the Company entered into the Nuevo Purchase Agreement, and the Company acquired the R. Greenleaf business on February 8, 2022. The aggregate closing consideration for the acquisitions was approximately (i) $32.2 million in cash, which included a $4.5 million cash earnout based on EBITDA of the acquired businesses for the calendar year 2021, and (ii) $17.0 million in the form of an unsecured promissory note issued by Nuevo Holding, LLC to RGA, the principal amount of which is payable on February 8, 2025 with interest payable monthly at an annual interest rate of 5%. Definitive Agreement to Acquire Colorado-Based Urban Health & Wellness, Inc. On March 11, 2022, the Company entered into the Urban Dispensary Purchase Agreement, and the Company acquired substantially all of the operating assets and personal goodwill of Urban Dispensary on May 31, 2022. The aggregate consideration was approximately (i) $1.3 million in cash and (ii) $1.9 million in the form of Common Stock, of which $288,000 of the stock consideration was held back by the Company as collateral for potential claims for indemnification under the Urban Dispensary Purchase Agreement. Definitive Agreement to Acquire Colorado-Based Lightshade Labs, LLC On September 9, 2022, the Company entered into the Lightshade Purchase Agreements, and the Company acquired the operating assets related to the two Lightshade dispensaries pursuant to the Lightshade Purchase Agreements on December 15, 2022. The aggregate consideration paid was approximately $2.75 million, of which $300,000 has been deposited into escrow as collateral for potential claims for indemnification under the Lightshade Purchase Agreements. |
Segment Information
Segment Information | 12 Months Ended |
Dec. 31, 2022 | |
Segment Information | |
Segment Information | 18. Segment Information The Company has three identifiable segments: (i) retail, (ii) wholesale and (iii) other. The retail segments represent our dispensaries which sell merchandise directly to customers via retail locations and e-commerce portals in Colorado and New Mexico. The wholesale segment represents our manufacturing, cultivation, and wholesale business which sells merchandise to customers via e-commerce portals, a retail location, and a manufacturing facility. The other segment derives its revenue from licensing and consulting agreements with cannabis related entities, in addition to fees from seminars and expense reimbursements included in other revenue on the Company’s financial statements. As of December 31, 2022, the Company ceased operations related to its consulting services. The following information represents segment activity for the periods ended December 31, 2022: Retail Wholesale Other Total External revenues $ 141,254,893 $ 17,819,938 $ 304,388 $ 159,379,219 Depreciation and intangible assets amortization 8,402,857 2,190,072 956,187 11,549,116 Segment pre tax profit 54,266,802 (12,664,774) (45,171,579) (3,569,551) Segment assets 193,068,447 70,400,502 59,413,784 322,882,733 Goodwill assigned to the Retail, Wholesale and Other segments as of December 31, 2022 totaled $52,583,794, $7,039,936, $34,981,571, respectively. As of December 31, 2022, the acquisition valuations resulting in goodwill that may have fallen under the Retail segment had not been finalized and therefore were allocated to Other until final valuation is completed. The following information represents segment activity for the periods ended December 31, 2021: Retail Wholesale Other Total External Revenues $ 73,761,010 $ 34,434,091 $ 225,138 $ 108,420,239 Cost of goods and services (34,969,178) (23,817,145) (280,222) (59,066,545) Gross profit 38,754,476 10,654,302 (55,084) 49,353,694 Intangible assets amortization 6,876,325 575,384 585 7,452,294 Depreciation 163,217 323,862 637,492 1,124,571 Segment profit 22,568,259 8,906,535 (16,955,664) 14,519,130 Segment assets 129,715,949 48,218,292 107,096,552 285,030,793 Goodwill assigned to the Retail, Wholesale and Other segments as of December 31, 2021 totaled $26,349,025, $13,964,016, $3,003,226, respectively. Segment assets from Other are mainly related to cash from the Investor Notes. |
Subsequent events
Subsequent events | 12 Months Ended |
Dec. 31, 2022 | |
Subsequent events | |
Subsequent events | 19. Subsequent events In accordance with FASB ASC 855-10, Subsequent Events, the Company has analyzed its operations subsequent to December 31, 2022 to the date these consolidated financial statements were issued, and has determined that it does not have any material subsequent events to disclose in these consolidated financial statements, except as follows: On January 25, 2023, the Company entered into an Asset Purchase Agreement (the “Smokey’s Purchase Agreement”) with Smoke Holdco, LLC, a wholly-owned subsidiary of the Company (the “Smokey’s Purchaser”), Cannabis Care Wellness Centers, LLC d/b/a Smokey’s (“Cannabis Care”), Green Medicals Wellness Center #5, LLC d/b/a Smokey’s (“Green Medicals” and together with Cannabis Care, “Smokey’s”), Thomas Jerome Wilczynski, as Representative, and the owners of Smokey’s, Jeremy Ryan Lewchuk, T&B Holdings LLC, and Thomas Jerome Wilczynski, pursuant to which the Smokey’s Purchaser will purchase two retail and medical marijuana stores located in Fort Collins, Colorado and Garden City, Colorado, on the terms and subject to the conditions set forth in the Smokey’s Purchase Agreement (collectively, the “Smokey’s Acquisition”). The aggregate consideration for the Smokey’s Acquisition will be up to $7.5 million, payable in cash and shares of common stock. At the closing, the Company will pay the purchase price (i) in cash in the amount of $3.75 million and (ii) in shares of the Company’s common stock in the amount of $3,150,000 divided by the price per share of the Company’s common stock as of market close on the first trading day immediately before the closing. At the closing, the Company will use a portion of the purchase price to pay off certain indebtedness and transaction expenses of Smokey’s and then pay the balance to Smokey’s. The Company will hold back from issuance additional shares of the Company’s common stock in the amount of $600,000 divided by the price per share of the Company’s common stock as of market close on the first trading day immediately before the closing and $150,000 of the cash portion of the purchase price as collateral for potential claims for indemnification from Smokey’s under the Smokey’s Purchase Agreement. Any portion of the holdback consideration not used to satisfy indemnification claims will be issued or released (as applicable) to the owners of Smokey’s on the 18-month anniversary of the closing date of the Smokey’s Acquisition in accordance with the Smokey’s Purchase Agreement. The cash holdback is also subject to post-closing reduction if any of the actual marijuana inventory or cash at closing is less than certain targets stated in the Smokey’s Purchase Agreement. The Smokey’s Purchase Agreement contains customary representations and warranties, covenants and indemnification provisions for a transaction of this nature, including, without limitation, covenants regarding the operation of Smokey’s’ business before the closing of the Smokey’s Acquisition, and confidentiality, non-compete and non-solicitation undertakings by Smokey’s and the owners of Smokey’s. The Smokey’s Purchase Agreement also contains certain termination rights for each of the Smokey’s Purchaser (on its own behalf and on behalf of the Company) and Smokey’s (on its own behalf and on behalf of the owners), subject to the conditions set forth in the Smokey’s Purchase Agreement, including, without limitation, if the closing has not occurred within 120 days of submission of the state regulatory application required pursuant to the Smokey’s Purchase Agreement. The closing of the Smokey’s Acquisition is subject to closing conditions customary for a transaction of this nature, including, without limitation, obtaining licensing approval from the Colorado Marijuana Enforcement Division and local regulatory authorities. The issuances of the shares of the Company’s common stock at the closing of the Smokey’s Acquisition and the holdback release date will be exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 4(a)(2) of the Securities Act. The Company will issue such shares in a privately negotiated transaction. The owners of Smokey’s are sophisticated and represented in writing that they are accredited investors and will acquire the securities for their own accounts for investment purposes. Further, the Smokey’s Purchase Agreement states that the shares in question have not been registered under the Securities Act and cannot be sold or otherwise transferred without registration or an exemption therefrom. A legend will be placed on any certificates representing such shares referencing the restricted nature of the shares. |
Accounting Policies and Estim_2
Accounting Policies and Estimates (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies and Estimates. | |
Basis of Presentation | Basis of Presentation These accompanying financial statements have been prepared in accordance with GAAP and pursuant to the rules and regulations of the SEC for consolidated financial statements. All intercompany accounts and transactions are eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported therein. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may be based upon amounts that differ from these estimates. |
Reclassifications | Reclassifications Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications had no impact on net earnings and financial position. In accordance with ASC 230 Statement of Cash Flows, |
Accounting for Business Combinations and Acquisitions | Accounting for Business Combinations and Acquisitions The Company accounts for acquisitions in which it obtains control of one or more businesses as a business combination. The purchase price of the acquired businesses is allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. The excess of the purchase price over those fair values is recognized as goodwill. During the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments, in the period in which they are determined, to the assets acquired and liabilities assumed with the corresponding offset to goodwill. If the assets acquired are not a business, the Company accounts for the transaction or other event as an asset acquisition. Under both methods, the Company recognizes the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquired entity. In addition, for transactions that are business combinations, the Company evaluates the existence of goodwill or a gain from a bargain purchase. |
Fair Value Measurements | Fair Value Measurements Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability, in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy is based on three levels of inputs, of which the first two are considered observable and the last unobservable, as follows: Level 1 – Quoted prices in active markets for identical assets or liabilities. Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the measurement of the fair value of the assets or liabilities. The Company’s financial instruments consist of cash, accounts receivable, notes receivable, investments, tenant deposits, accounts payable, accrued liabilities, notes payable, derivative liability and warrant liability. The carrying values of these financial instruments approximate their fair value due to their short maturities. The carrying amount of the Company’s debt approximates fair value because the interest rates on these instruments approximate the interest rate on debt with similar terms available to us. The Company’s derivative liability was adjusted to fair market value at the end of each reporting period, using Level 3 inputs. The following is the Company’s assets and liabilities measured at fair value on a recurring and nonrecurring basis on December 31, 2022 and December 31, 2021, using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3): December 31, December 31, 2022 2021 Level 1 - Marketable Securities Available-for-Sale – Recurring — 493,553 Level 3 - Marketable Securities Available-for-Sale – Recurring 454,283 — |
Marketable Securities at Fair Value on a Recurring Basis | Marketable Securities at Fair Value on a Recurring Basis Certain assets are measured at fair value on a recurring basis. The Level 1 position consists of an investment in equity securities of Canada House Wellness Group, Inc., a publicly traded company whose securities are actively quoted on the Toronto Stock Exchange. As of December 31, 2022, the equity investment in Canada House Wellness Group, Inc. was determined to be Level 3 as the entity has halted trading due to a merger and is scheduled to resume trading once the purchase is complete. The Company used the last trading price to record the value at market as the observable and active market price has been halted. |
Investments held at cost | Investments held at cost Investments without readily determinable fair value are measured at cost, less impairment. If the Company identifies an observable price change in an orderly transaction for an investment held at cost, it will measure the investment at fair value as of the date the observable transaction occurred. The Company shall reassess at each reporting period whether such investments should continue to be measured at cost, less impairment, or another method. Any resulting gain or loss from a change in measurement will be recorded in other income and expenses on the consolidated statement of comprehensive income. Investments held at cost are reported within investments on the consolidated balance sheets. The Company has less than a 20% investment in a private company and does not have significant influence over the underlying entity. The fair value of the investment does not have a determinable fair value. The Company has accounted for this investment under the cost method and therefore records the investment at historical cost. Any dividends received from this investment are recorded in the consolidated statements of comprehensive income. As of December 31, 2022 and 2021, the investment totaled $2,000,000 and $0, respectively. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying amounts of cash and current assets and liabilities approximate fair value because of the short-term maturity of these items. These fair value estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect these estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents are carried at cost or amortized cost and represent cash on hand, deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date. The Company had $38,949,253 and $106,400,216 classified as cash and cash equivalents as of December 31, 2022, and December 31, 2021, respectively. |
Accounts Receivable | Accounts Receivable The Company extends unsecured credit to its customers in the ordinary course of business. These accounts receivable relate to the Company’s wholesale and other revenue segments. Accounts receivable are recorded when a milestone is reached at a point in time resulting in funds being due for delivered goods or services, and where payment is reasonably assured. Wholesale revenues are generally collected within 14 to 30 days after invoice is sent. The following table depicts the composition of our accounts receivable as of December 31, 2022, and December 31, 2021: December 31, December 31, 2022 2021 Accounts receivable - trade $ 4,564,918 $ 4,001,874 Accounts receivable - litigation, non-current — 303,086 Allowance for doubtful accounts (92,940) (135,046) $ 4,471,978 $ 4,169,914 The Company establishes an allowance for doubtful accounts based on management’s assessment of the collectability of trade receivables. A considerable amount of judgment is required in assessing the amount of the allowance. The Company makes judgments about the creditworthiness of each customer based on ongoing credit evaluations and monitors current economic trends that might impact the level of credit losses in the future. If the financial condition of the customers were to deteriorate, resulting in their inability to make payments, a specific allowance will be required. |
Inventory | Inventory Inventories of purchased finished goods and packing materials are initially valued at cost and subsequently at the lower of cost and net realizable value. Cultivated inventories include direct and indirect costs of production, including costs of materials, labor and depreciation related to cultivation. Such costs are capitalized as incurred, and subsequently included within cost of goods sold within the consolidated statements of comprehensive income, at the time the products are sold. Net realizable value is determined as the estimated selling price in the ordinary course of business, less reasonable costs associated with the sale. Cost is determined using the weighted average cost basis. Products for resale and supplies and consumables are valued at lower of cost and net realizable value. In calculating final inventory values, management is required to compare the inventory cost to estimated net realizable value. The net realizable value of inventories represents the estimated selling price for inventories in the ordinary course of business, less all estimated costs of completion and costs necessary to make the sale. The determination of net realizable value requires significant judgment, including consideration of factors such as shrinkage, the aging of and future demand for inventory, expected future selling price the Company expects to realize by selling the inventory, and the contractual arrangements with customers. Reserves for excess and obsolete inventory are based upon quantities on hand, projected volumes from demand forecasts and net realizable value. The estimates are judgmental in nature and are made at a point in time, using available information, expected business plans, and expected market conditions. As a result, the actual amount received on sale could differ from the estimated value of inventory. Periodic reviews are performed on the inventory balance. The impact of changes in inventory reserves is reflected in cost of goods sold. |
Property and Equipment, net | Property and Equipment, net Purchases of property and equipment are recorded at cost, net of accumulated depreciation and impairment losses, if any. Improvements and replacements of property and equipment are capitalized. Maintenance and repairs that do not improve or extend the lives of property and equipment are charged to expense as incurred. When assets are sold or retired, its cost and related accumulated depreciation are removed from the accounts and any gain or loss is reported in the consolidated statement of operations. Depreciation is provided over the estimated economic useful lives of each class of assets and is computed using the straight-line method. The assets’ residual values, useful lives, and methods of depreciation are reviewed at each financial statement year-end and adjusted prospectively, if appropriate. Depreciation on property and equipment is recorded using the straight-line method over the following expected useful lives at the following annual rates: Land Indefinite Building 39 years Leasehold improvements Lesser of the lease term or estimated useful life Furniture and fixtures 3-5 years Vehicles, machinery and tools 3-5 years Software, servers and equipment 3 years |
Prepaid Expenses and Other Assets (Current and Non-Current) | Prepaid Expenses and Other Assets (Current and Non-Current) Prepaid expenses and other assets as of December 31, 2022 and December 31, 2021 were $6,820,649 and $3,038,176, respectively. As of December 31, 2022, this balance included $3,881,627 in prepaid expenses $1,527,256 in security deposits and $1,411,766 in prepaid inventory. As of December 31, 2021, other assets included $1,587,770 in prepaid expenses, $514,962 in security deposits and $935,444 in prepaid inventory. Prepaid expenses were primarily comprised of insurance premiums, membership dues, conferences and seminars, and other general and administrative costs. |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill represents the future economic benefit arising from other assets acquired that could not be individually identified and separately recognized. The goodwill arising from the Company’s acquisitions is attributable to the value of the potential expanded market opportunity with new customers. Intangible assets have either an identifiable or indefinite useful life. Intangible assets with identifiable useful lives are amortized on a straight-line basis over their economic or legal life, whichever is shorter. The Company’s amortizable intangible assets consist of licensing agreements, product licenses and registrations, and intellectual property or trade secrets. Their estimated useful lives range from 3 to 15 years. Goodwill and indefinite-lived assets are not amortized but are subject to annual impairment testing unless circumstances dictate more frequent assessments. The Company performs an annual impairment assessment for goodwill during the fourth quarter of each year and more frequently whenever events or changes in circumstances indicate that the fair value of the asset may be less than the carrying amount. Goodwill impairment testing is a two-step process performed at the reporting unit level. Step one compares the fair value of the reporting unit to its carrying amount. The fair value of the reporting unit is determined by considering both the income approach and market approaches. The fair values calculated under the income approach and market approaches are weighted based on circumstances surrounding the reporting unit. Under the income approach, the Company determines fair value based on estimated future cash flows of the reporting unit, which are discounted to the present value using discount factors that consider the timing and risk of cash flows. For the discount rate, the Company relies on the capital asset pricing model approach, which includes an assessment of the risk-free interest rate, the rate of return from publicly traded stocks, the Company’s risk relative to the overall market, the Company’s size and industry and other Company-specific risks. Other significant assumptions used in the income approach include the terminal values, growth rates, future capital expenditures and changes in future working capital requirements. The market approaches use key multiples from guideline businesses that are comparable and are traded on a public market. If the fair value of the reporting unit is greater than its carrying amount, there is no impairment. If the reporting unit’s carrying amount exceeds its fair value, then the second step must be completed to measure the amount of impairment, if any. Step two calculates the implied fair value of goodwill by deducting the fair value of all tangible and intangible net assets of the reporting unit from the fair value of the reporting unit as calculated in step one. In this step, the fair value of the reporting unit is allocated to all of the reporting unit’s assets and liabilities in a hypothetical purchase price allocation as if the reporting unit had been acquired on that date. If the carrying amount of goodwill exceeds the implied fair value of goodwill, an impairment loss is recognized in an amount equal to the excess. Determining the fair value of a reporting unit is judgmental in nature and requires the use of significant estimates and assumptions, including revenue growth rates, strategic plans, and future market conditions, among others. There can be no assurance that the Company’s estimates and assumptions made for purposes of the goodwill impairment testing will prove to be accurate predictions of the future. Changes in assumptions and estimates could cause the Company to perform an impairment test prior to scheduled annual impairment tests. |
Long-Lived Assets | Long-Lived Assets The Company evaluates the recoverability of its long-lived assets, including property, plant and equipment, and certain identifiable intangible assets, whenever events or changes in circumstances have indicated that an asset may not be recoverable. The long-lived asset is grouped with other assets at the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. If the sum of the projected undiscounted cash flows is less than the carrying value of the assets, the assets are written down to the estimated fair value. The Company performs impairments tests of long-lived assets on an annual basis or more frequently in certain circumstances. Factors which could trigger an impairment review include significant underperformance relative to historical or projected future operating results, significant changes in the manner of use of the assets or the strategy for the business, a significant decrease in the market value of the assets or significant negative industry or economic trends. The Company evaluated the recoverability of its long-lived assets as of December 31, 2022, and recorded an impairment charge of approximately $89,706 related to discontinued operations for cultivation facilities in New Mexico and Colorado, and therefore presented under loss on business disposition in the accompanying consolidated statement of comprehensive (loss) income. No such impairment existed as of December 31, 2021. |
Accounts Payable | Accounts Payable Accounts payable as of December 31, 2022 and 2021, were $7,910,511 and $2,585,705, respectively, and were comprised of trade payables for various purchases and services rendered during the ordinary course of business. |
Accrued Expenses and Other Liabilities | Accrued Expenses and Other Liabilities Accrued expenses and other liabilities as of December 31, 2022, and December 31, 2021, were $10,314,958 and $5,592,222, respectively. As of December 31, 2022, this was comprised of accrued payroll of $1,511,245, accrued interest of $3,422,760, operating expenses of $4,746,455, and escrow payable of $634,498. As of December 31, 2021, accrued expenses and other liabilities comprised of accrued payroll of $301,312, accrued interest of $1,425,278, and operating expenses of $3,865,632. |
Derivative Liabilities | Derivative Liabilities The Company uses the fair-value method of accounting for derivative liabilities and such liabilities are remeasured at each reporting date with changes in fair value recorded in the period incurred. The fair value is estimated using a Monte Carlo simulation model. |
Revenue Recognition and Related Allowances | Revenue Recognition and Related Allowances The Company’s revenue recognition policy is significant because the amount and timing of revenue is a key component of our results of operations. Certain criteria are required to be met in order to recognize revenue. If these criteria are not met, then the associated revenue is deferred until the criteria are met. When consideration is received in advance of the delivery of goods or services, a contract liability is recorded. Revenue contracts are identified when accepted by customers and represent a single performance obligation to sell the Company’s products to a customer. The Company has three main revenue streams: retail, wholesale, and other. Retail and wholesale sales are recorded at the time that control of the products is transferred to customers. In evaluating the timing of the transfer of control of products to customers, the Company considers several indicators, including significant risks and rewards of products, its right to payment, and the legal title of the products. Based on the assessment of control indicators, sales are generally recognized when products are delivered to customers. Other revenue consists of other income and expenses, including related to, licensing and consulting services, facility design services, facility management services, the Company’s Three A Light™ publication, and corporate operations. During 2022, the Company discontinued its consulting entity and therefore has ceased operations related to consulting and the Company’s Three A Light™ publication. Revenue is recognized when the obligations to the client are fulfilled which is determined when milestones in the contract are achieved and target harvest yields are exceeded or earned upon the completion of the seminar. The Company also recognizes expense reimbursement from clients as revenue for expenses incurred during certain jobs. At some locations, the Company offers a loyalty reward program to its retail customers. A portion of the revenue generated in a sale to a customer participating in the program is allocated to the loyalty points earned. The amount allocated to the points earned is deferred until the loyalty points are redeemed or expire. As of December 31, 2022, and 2021, the loyalty liability totaled $1,590,346 and $1,485,224, respectively, and is included in accrued expenses the accompanying consolidated balance sheets. |
Costs of Goods and Services Sold | Costs of Goods and Services Sold Costs of goods and services sold are comprised of related expenses incurred while supporting the sales of the Company’s products and services. |
General and Administrative Expenses | General and Administrative Expenses General and administrative expenses are comprised of all expenses not linked to the production or advertising of the Company’s services. |
Advertising and Marketing Costs | Advertising and Marketing Costs Advertising and marketing costs are expensed as incurred and totaled $2,369,223 and $971,419 as of December 31, 2022 and December 31, 2021, respectively. |
Stock Based Compensation | Stock Based Compensation The Company accounts for share-based payments pursuant to ASC 718, Stock Compensation Stock compensation expense for stock options is recognized over the vesting period of the award or expensed immediately under ASC 718 and Emerging Issues Task Force 96-18 when stock or options are awarded for previous or current service without further recourse. Share-based expense paid through direct stock grants is expensed as occurred. Since the Common Stock is publicly traded, the value is determined based on the number of shares of Common Stock issued and the trading value of the Common Stock on the date of the transaction. The Company recognized $2,672,713 and $5,037,879 in expense for stock-based compensation from common stock options and common stock issued to employees, officers, and directors during December 31, 2022 and December 31, 2021, respectively. |
Income Taxes | Income Taxes ASC 740, Income Taxes requires the use of the asset and liability method of accounting for income taxes. Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets are regularly assessed to determine the likelihood they will be recovered from future taxable income. A valuation allowance is established when we believe it is more likely than not that the future realization of all or some of a deferred tax asset will not be achieved. In evaluating our ability to recover deferred tax assets within the jurisdiction which they arise, we consider all available positive and negative evidence. Factors reviewed include the cumulative pre-tax book income for the past three years, scheduled reversals of deferred tax liabilities, our history of earnings and reliability of our forecasts, projections of pre-tax book income over the foreseeable future, and the impact of any feasible and prudent tax planning strategies. The Company assesses all material positions taken in any income tax return, including all significant uncertain positions, in all tax years that are still subject to assessment or challenge by relevant taxing authorities. Assessing an uncertain tax position begins with the initial determination of the position’s sustainability, and the tax benefit to be recognized is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. We recognize the impact of a tax position in our financial statements only if that position is more likely than not of being sustained upon examination by taxing authorities, based on the technical merits of the position. Tax authorities regularly examine our returns in the jurisdictions in which we do business, and we regularly assess the tax risk of our return filing positions. Due to the complexity of some of the uncertainties, the ultimate resolution may result in payments that are materially different from our current estimate of the tax liability. These differences, as well as any interest and penalties, will be reflected in the provision for income taxes in the period in which they are determined. As the Company operates in the cannabis industry, it is subject to the limits of the Internal Revenue Code (“IRC”) Section 280E under which the Company is only allowed to deduct expenses directly related to sales of product. This results in permanent differences between ordinary and necessary business expenses deemed non-allowable under IRC Section 280E. |
Right of Use Assets and Lease Liabilities | Right of Use Assets and Lease Liabilities In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) standard became effective for the Company beginning January 1, 2019. The Company adopted ASC 842 using the modified retrospective approach, by applying the new standard to all leases existing at the date of initial application. Results and disclosure requirements for reporting periods beginning after January 1, 2019 are presented under ASC 842. The Company elected the package of practical expedients permitted under the standard, which also allowed the Company to carry forward historical lease classifications. The Company also elected the practical expedient related to treating lease and non-lease components as a single lease component for all equipment leases as well as electing a policy exclusion permitting leases with an original lease term of less than one year to be excluded from the ROU assets and lease liabilities. Under ASC 842, the Company determines if an arrangement is a lease at inception. ROU assets and liabilities are recognized at commencement date based on the present value of remaining lease payments over the lease term. For this purpose, the Company considers only payments that are fixed and determinable at the time of commencement. As most of the Company’s leases do not provide an implicit rate, the Company estimated the incremental borrowing rate in determining the present value of lease payments. The ROU asset also includes any lease payments made prior to commencement and is recorded net of any lease incentives received. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. Operating leases are included in operating lease ROU assets and operating lease liabilities, current and non-current, on the Company’s consolidated balance sheets. |
Accounting Policies and Estim_3
Accounting Policies and Estimates (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies and Estimates. | |
Schedule of fair value measurement | December 31, December 31, 2022 2021 Level 1 - Marketable Securities Available-for-Sale – Recurring — 493,553 Level 3 - Marketable Securities Available-for-Sale – Recurring 454,283 — |
Schedule of accounts receivable | December 31, December 31, 2022 2021 Accounts receivable - trade $ 4,564,918 $ 4,001,874 Accounts receivable - litigation, non-current — 303,086 Allowance for doubtful accounts (92,940) (135,046) $ 4,471,978 $ 4,169,914 |
Summary of expected useful lives | Land Indefinite Building 39 years Leasehold improvements Lesser of the lease term or estimated useful life Furniture and fixtures 3-5 years Vehicles, machinery and tools 3-5 years Software, servers and equipment 3 years |
Inventory (Tables)
Inventory (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Inventory | |
Schedule of Inventory | 2022 2021 Raw Materials $ 2,325,482 $ 12,676 Work in Process 14,504,490 5,535,992 Finished Goods 5,724,210 5,573,329 Total Inventories $ 22,554,182 $ 11,121,997 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Property and Equipment. | |
Schedule of property and equipment | December 31, December 31, 2022 2021 Land $ 3,716,438 $ 35,000 Building 4,830,976 2,910,976 Leasehold improvements 4,100,165 853,599 Furniture and fixtures 655,698 300,798 Vehicles, machinery, and tools 3,796,695 2,152,129 Software, servers and equipment 4,132,621 2,550,154 Construction in process 10,756,410 3,439,543 Total Asset Cost $ 31,989,003 $ 12,242,199 Less: Accumulated depreciation (4,899,977) (1,988,973) Total property and equipment, net of depreciation $ 27,089,026 $ 10,253,226 |
Business Combinations (Tables)
Business Combinations (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Business Combinations | |
Schedule of aggregate purchase price | Nuevo Holding LLC Emerald Fields Merger Sub, LLC Other Acquisitions Cash $ 32,202,123 $ 18,268,825 $ 12,044,553 Seller notes 17,000,000 — — Common stock — 11,600,000 4,137,855 Total purchase price $ 49,202,123 $ 29,868,825 $ 16,182,408 |
Allocation of purchase price | Nuevo Holding LLC Emerald Fields Merger Sub, LLC Other Acquisitions Cash $ 32,202,123 $ 18,268,825 $ 12,044,553 Seller notes 17,000,000 — — Common stock — 11,600,000 4,137,855 Total purchase price $ 49,202,123 $ 29,868,825 $ 16,182,408 Description Nuevo Holding LLC Emerald Fields Merger Sub, LLC Other Acquisitions Assets acquired: Cash $ 2,860,706 $ 650,469 $ 23,100 Accounts receivable — 196,879 — Other assets — 156,000 605,112 Inventory 9,584,428 1,655,000 982,156 Fixed assets 2,137,002 2,687,000 25,966 Other long term assets 2,500 — — Intangible assets — 12,400,000 3,970,000 Goodwill 34,981,571 16,810,479 10,576,289 Total Assets acquired $ 49,566,207 $ 34,555,827 $ 16,182,623 Liabilities and Equity assumed: Accounts payable $ 295,043 $ 458,622 $ — Accrued liabilities 69,041 1,014,300 215 Deferred Tax Liability — 3,214,080 — Total Liabilities assumed 364,084 4,687,002 215 Estimated fair value of net assets acquired $ 49,202,123 $ 29,868,825 $ 16,182,408 |
Goodwill Accounting (Tables)
Goodwill Accounting (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill Accounting | |
Schedule of goodwill | Retail Wholesale Other Total Balance as of January 1, 2022 $ 26,349,025 $ 13,964,016 $ 3,003,226 $ 43,316,267 Goodwill acquired during 2022 25,594,768 1,792,000 34,981,571 62,368,339 Measurement-period adjustment to prior year acquisition 640,001 — — 640,001 Goodwill Impairment during 2022 — (8,716,080) (3,003,226) (11,719,306) Balance as of December 31, 2022 $ 52,583,794 7,039,936 $ 34,981,571 $ 94,605,301 Retail Wholesale Other Total Balance as of January 1, 2021 $ 38,594,810 $ 11,448,693 $ 3,003,226 $ 53,046,729 Goodwill acquired during 2021 15,166,316 2,515,323 — 17,681,639 Measurement-period adjustment to prior year acquisition (27,412,101) — — (27,412,101) Goodwill Impairment during 2021 — — — — Balance as of December 31, 2021 $ 26,349,025 $ 13,964,016 $ 3,003,226 $ 43,316,267 |
Intangible Asset (Tables)
Intangible Asset (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Intangible Assets | |
Schedule of intangible assets | December 31, 2022 December 31, 2021 Gross Gross Carrying Accumulated Carrying Accumulated Amount Amortization Amount Amortization License Agreements $ 111,491,280 $ (12,154,237) $ 94,230,280 $ (5,496,902) Tradename 6,021,500 (1,862,242) 4,560,000 (845,667) Customer Relationships 5,150,000 (1,474,405) 5,150,000 (933,690) Non-compete 1,265,000 (765,556) 1,205,000 (348,056) Product License and Registration 57,300 (21,783) 57,300 (17,963) Trade Secret 32,500 (12,639) 32,500 (10,472) Total $ 124,017,580 $ (16,290,862) $ 105,235,080 $ (7,652,750) |
Schedule of future projected annual amortization expense | 2023 $ 9,842,054 2024 9,520,667 2025 9,412,888 2026 8,638,056 2027 8,330,329 Thereafter 61,982,724 Total $ 107,726,718 |
Derivative Liabilities (Tables)
Derivative Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Derivative Liabilities | |
Schedule of reconciliation of the beginning and ending balances of the derivative liabilities | Balance as of January 1, 2022 $ 34,923,013 Gain on derivative liability (18,414,760) Balance as of December 31, 2022 $ 16,508,253 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Debt | |
Schedule of debt | December 31, December 31, 2022 2021 Term loan dated February 26, 2021, in the original amount of $10,000,000. An additional $5,000,000 was added to the loan agreement on July 28, 2021. Interest of 15% per annum, due quarterly. Principal payments begin June 1, 2023. $ 15,000,000 $ 15,000,000 Seller notes dated December 17, 2020 in the original amount of $44,250,000. Interest of 12% per annum, due monthly. Principal payments begin December 17, 2025. 44,250,000 44,250,000 Investor note dated December 3, 2021, in the original amount of $95,000,000. Interest of 13% per annum, 9% payable in cash and 4% accreting to the principal amount. 99,118,391 95,000,000 Seller note dated February 7, 2022 in the original amount of $17,000,000. Interest of 5% per annum, due monthly. Principal balance is due February 7, 2025. 17,000,000 — Less: unamortized debt issuance costs (6,603,695) (8,289,743) Less: unamortized debt discount (40,993,176) (48,477,789) Total long term debt 127,771,520 97,482,468 Less: current portion of long term debt (2,250,000) — Long term debt and unamortized debt issuance costs $ 125,521,520 $ 97,482,468 |
Schedule of Maturities of Long-term Debt | Unamortized Principal Debt Issuance Unamortized Total Long Payments Costs Debt Discount Term Debt 2023 2,250,000 1,686,049 8,523,493 (7,959,542) 2024 3,000,000 1,686,049 9,734,935 (8,420,984) 2025 40,651,759 1,686,049 11,057,799 27,907,911 2026 129,466,632 1,545,548 11,676,949 116,244,135 2027 — — — — Total $ 175,368,391 $ 6,603,695 $ 40,993,176 $ 127,771,520 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Leases | |
Schedule of balance sheet classification of operating lease assets and liabilities | Balance Sheet Line December 31, 2022 Asset Operating lease right of use assets Noncurrent assets $ 18,199,399 Liabilities Lease liabilities Current Liabilities $ 3,139,289 Lease liabilities Noncurrent liabilities 17,314,464 |
Schedule of maturities of lease liabilities | 2022 fiscal year $ 33,595,944 Less: Interest 13,298,212 Present value of lease liabilities $ 20,297,732 |
Schedule of future minimum lease obligation under ASC 842 | 2023 fiscal year $ 5,873,512 2024 fiscal year 5,032,891 2025 fiscal year 4,692,760 2026 fiscal year 4,204,171 2027 fiscal year 2,923,785 Thereafter 10,868,825 Total $ 33,595,944 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Stockholders' Equity | |
Schedule of warrant activity | Equity Classified Warrants Weighted Average Exercise Price Weighted Average Remaining Contractual Life Balance as of December 31, 2021 17,218,750 $ 2.96 1.65 Warrants exercised — — — Warrants forfeited/expired (10,000,000) — — Warrants issued — — — Balance as of December 31, 2022 7,218,750 $ 1.76 2.99 |
Earnings per share (Basic and_2
Earnings per share (Basic and Dilutive) (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Earnings per share (Basic and Dilutive) | |
Schedule of reconciliation of the numerator and denominator used in the basic and diluted EPS calculations | For the Year Ended December 31, 2022 2021 Numerator: Net income (loss) $ (18,467,615) $ 14,519,130 Less: Accumulated preferred stock dividends for the period (7,802,809) (7,346,153) Net income (loss) attributable to common stockholders $ (26,270,424) $ 7,172,977 Denominator: Weighted-average shares of common stock 53,637,003 43,339,092 Basic earnings per share $ (0.49) $ 0.17 Numerator: Net income (loss) attributable to common stockholders – Basic (26,270,424) 7,172,977 Add: Investor note accrued interest — 789,028 Add: Investor note amortized debt discount — 458,885 Less: Gain on derivative liability related to investor note — (14,013,661) Net income (loss) attributable to common stockholders – dilutive $ (26,270,424) $ (5,592,771) Denominator: Weighted-average shares of common stock 53,637,003 43,339,092 Dilutive effect of investor notes — 51,748,797 Dilutive effect of warrants — 2,581,250 Dilutive effect of options — 3,699,819 Diluted weighted-average shares of common stock 53,637,003 101,368,958 Diluted earnings per share $ (0.49) $ (0.06) |
Tax Provision (Tables)
Tax Provision (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Tax Provision | |
Schedule of components of income tax (benefit) expense | December 31, December 31, 2022 2021 Current: Federal $ 17,127,037 $ 4,284,163 State 483,037 112,001 Total current tax expense (benefit) $ 17,610,074 $ 4,396,164 December 31, December 31, 2022 2021 Deferred: Federal $ (611,750) $ — State (2,100,260) — Total deferred tax expense $ (2,712,010) $ — |
Schedule of reconciliation of income tax expense (benefit) at the federal statutory rate to recorded income tax expense (benefit) | December 31, December 31, 2022 2021 Income (loss) before income taxes $ (3,569,552) $ 5,360,518 Statutory tax rate 21% 21% Expense (benefit) based on statutory rates (749,606) 1,125,709 State income taxes (949,986) 293,358 Expenses disallowed under IRC Section 280E 16,308,522 5,610,279 Stock-based compensation 177,912 578,692 Remeasurement on derivative liability (3,867,100) - Other permanent differences 244,130 28,918 Change in valuation allowance (2,062,697) (5,170,426) Change in state rate (176,568) (181,521) Return to provision 4,890,722 416,125 Deferred tax true-up 1,082,735 1,695,030 Total income tax expense $ 14,898,064 $ 4,396,164 |
Schedule of components of deferred income taxes | December 31, December 31, 2022 2021 Deferred tax assets: Net operating loss carryforwards $ — $ 64,858 Interest expense carryforwards 1,129,939 84,325 Goodwill and intangible assets 2,359,197 — Lease liabilities 1,705,867 861,683 Share based compensation accruals 598,861 2,518,158 Loyalty points 412,218 363,171 Fixed assets 367,776 — Capitalized transaction costs 217,320 662,861 Bad debt allowance 36,742 94,620 Accrued expenses 8,537 9,099 Gross deferred tax assets 6,836,457 4,658,775 Valuation allowance — (2,062,697) Net deferred tax assets 6,836,457 2,596,078 Deferred tax liabilities: Fixed assets — 63,301 Goodwill and intangible assets 5,594,714 1,568,542 Operating leases 1,595,394 850,793 Unrealized gains 117,750 55,576 Cash-to-accrual 30,669 57,866 Net deferred tax liabilities 7,338,527 2,596,078 Total net deferred tax assets $ (502,070) $ — |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Segment Information | |
Schedule of information represents segment activity | Retail Wholesale Other Total External revenues $ 141,254,893 $ 17,819,938 $ 304,388 $ 159,379,219 Depreciation and intangible assets amortization 8,402,857 2,190,072 956,187 11,549,116 Segment pre tax profit 54,266,802 (12,664,774) (45,171,579) (3,569,551) Segment assets 193,068,447 70,400,502 59,413,784 322,882,733 Retail Wholesale Other Total External Revenues $ 73,761,010 $ 34,434,091 $ 225,138 $ 108,420,239 Cost of goods and services (34,969,178) (23,817,145) (280,222) (59,066,545) Gross profit 38,754,476 10,654,302 (55,084) 49,353,694 Intangible assets amortization 6,876,325 575,384 585 7,452,294 Depreciation 163,217 323,862 637,492 1,124,571 Segment profit 22,568,259 8,906,535 (16,955,664) 14,519,130 Segment assets 129,715,949 48,218,292 107,096,552 285,030,793 |
Organization and Nature of Op_2
Organization and Nature of Operations (Details) - segment | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Accounting Policies and Estimates. | ||
Number of segments | 3 | 3 |
Accounting Policies and Estim_4
Accounting Policies and Estimates - Assets and Liabilities Measured at Fair Value (Details) - Fair Value, Recurring - Marketable Securities - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Fair value assets | $ 493,553 | |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Fair value assets | $ 454,283 |
Accounting Policies and Estim_5
Accounting Policies and Estimates - Receivables (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Accounts, Notes, Loans and Financing Receivable | ||
Allowance for doubtful accounts | $ (92,940) | $ (135,046) |
Total | 4,471,978 | 4,169,914 |
Trade Accounts Receivable | ||
Accounts, Notes, Loans and Financing Receivable | ||
Accounts receivable | 4,564,918 | 4,001,874 |
Accounts Receivable Litigation | ||
Accounts, Notes, Loans and Financing Receivable | ||
Accounts receivable | $ 0 | $ 303,086 |
Accounting Policies and Estim_6
Accounting Policies and Estimates - Property and Equipment Expected Useful Lives (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Land | |
Property, Plant and Equipment | |
Estimated useful life | Indefinite |
Building | |
Property, Plant and Equipment | |
Estimated useful life | 39 years |
Leasehold Improvements | |
Property, Plant and Equipment | |
Estimated useful life | Lesser of the lease term or estimated useful life |
Furniture and Fixtures | Minimum | |
Property, Plant and Equipment | |
Estimated useful life | 3 years |
Furniture and Fixtures | Maximum | |
Property, Plant and Equipment | |
Estimated useful life | 5 years |
Vehicles, machinery, and tools | Minimum | |
Property, Plant and Equipment | |
Estimated useful life | 3 years |
Vehicles, machinery, and tools | Maximum | |
Property, Plant and Equipment | |
Estimated useful life | 5 years |
Software, servers and equipment | |
Property, Plant and Equipment | |
Estimated useful life | 3 years |
Accounting Policies and Estim_7
Accounting Policies and Estimates (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Property, Plant and Equipment | ||
Prepaid expenses and other assets | $ 6,820,649 | $ 3,038,176 |
Prepaid expenses | 3,881,627 | 1,587,770 |
Security deposits | 1,527,256 | 514,962 |
Prepaid Inventory | 1,411,766 | 935,444 |
Accounts payable | 7,910,511 | 2,585,705 |
Accrued expenses and other liabilities | 10,314,958 | 5,592,222 |
Loyalty liability | 1,590,346 | 1,485,224 |
Advertising and marketing expense | 2,369,223 | 971,419 |
Stock based compensation | 2,672,713 | 5,037,879 |
Cash and cash equivalents | 38,949,253 | 106,400,216 |
Investment totaled | $ 2,000,000 | 0 |
Minimum | ||
Property, Plant and Equipment | ||
Intangible assets useful lives (in years) | 3 years | |
Minimum | Wholesale | ||
Property, Plant and Equipment | ||
Revenue collection term | 14 days | |
Maximum | ||
Property, Plant and Equipment | ||
Intangible assets useful lives (in years) | 15 years | |
Percentage of Investment Held | 20% | |
Maximum | Wholesale | ||
Property, Plant and Equipment | ||
Revenue collection term | 30 days | |
Accrued Payroll | ||
Property, Plant and Equipment | ||
Accrued expenses and other liabilities | $ 1,511,245 | 301,312 |
Accrued Interest | ||
Property, Plant and Equipment | ||
Accrued expenses and other liabilities | 3,422,760 | 1,425,278 |
Operating Expenses. | ||
Property, Plant and Equipment | ||
Accrued expenses and other liabilities | 4,746,455 | $ 3,865,632 |
Escrow Payable | ||
Property, Plant and Equipment | ||
Accrued expenses and other liabilities | $ 634,498 |
Accounting Policies and Estim_8
Accounting Policies and Estimates - Long-Lived Assets (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Long-Lived Assets | ||
Impairment, Long-Lived Asset, Held-for-Use, Statement of Income or Comprehensive Income [Extensible Enumeration] | Gain (Loss) on Disposition of Business | Gain (Loss) on Disposition of Business |
Discontinued operations, held-for-sale or disposed of by sale | Facilities in New Mexico And Colorado | ||
Long-Lived Assets | ||
Long-lived assets impairment charges | $ 89,706 | $ 0 |
Notes Receivable (Details)
Notes Receivable (Details) - USD ($) | Mar. 12, 2021 | Dec. 31, 2022 | Dec. 31, 2021 |
Accounts, Notes, Loans and Financing Receivable | |||
Notes receivable | $ 11,944 | ||
Colorado Cannabis | |||
Accounts, Notes, Loans and Financing Receivable | |||
Notes receivable | $ 11,944 | $ 143,333 | |
Notes receivable interest rate | 0% | ||
Notes receivable periodic payment | $ 11,944 | ||
Notes receivable repayment term | 24 months |
Inventory (Details)
Inventory (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Inventory | ||
Raw Materials | $ 2,325,482 | $ 12,676 |
Work in Process | 14,504,490 | 5,535,992 |
Finished Goods | 5,724,210 | 5,573,329 |
Total Inventories | $ 22,554,182 | $ 11,121,997 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Property, Plant and Equipment | ||
Total Asset Cost | $ 31,989,003 | $ 12,242,199 |
Less: Accumulated depreciation | (4,899,977) | (1,988,973) |
Total property and equipment, net of depreciation | 27,089,026 | 10,253,226 |
Furniture and Fixtures | ||
Property, Plant and Equipment | ||
Total Asset Cost | 655,698 | 300,798 |
Leasehold Improvements | ||
Property, Plant and Equipment | ||
Total Asset Cost | 4,100,165 | 853,599 |
Vehicles Machinery And Tools | ||
Property, Plant and Equipment | ||
Total Asset Cost | 3,796,695 | 2,152,129 |
Land | ||
Property, Plant and Equipment | ||
Total Asset Cost | 3,716,438 | 35,000 |
Software Servers And Equipment | ||
Property, Plant and Equipment | ||
Total Asset Cost | 4,132,621 | 2,550,154 |
Building | ||
Property, Plant and Equipment | ||
Total Asset Cost | 4,830,976 | 2,910,976 |
Construction in Progress | ||
Property, Plant and Equipment | ||
Total Asset Cost | $ 10,756,410 | $ 3,439,543 |
Property and Equipment - Deprec
Property and Equipment - Depreciation Expense (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Property and Equipment. | ||
Depreciation | $ 2,911,004 | $ 1,124,571 |
Business Combinations - Narrati
Business Combinations - Narrative (Details) | 12 Months Ended | ||||||||||||||
Dec. 15, 2022 USD ($) item | Sep. 09, 2022 item | May 31, 2022 USD ($) | Feb. 08, 2022 USD ($) ft² facility director item | Dec. 07, 2021 USD ($) | Dec. 03, 2021 USD ($) item | Mar. 02, 2021 USD ($) facility item | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Feb. 15, 2022 USD ($) | Feb. 09, 2022 USD ($) | Jan. 26, 2022 USD ($) | Dec. 21, 2021 USD ($) | Jul. 21, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Business Acquisition [Line Items] | |||||||||||||||
Goodwill | $ 94,605,301 | $ 43,316,267 | $ 53,046,729 | ||||||||||||
Intangible assets | 107,726,718 | 97,582,330 | |||||||||||||
Cash | 62,371,226 | 75,678,000 | |||||||||||||
Original issue discount | 40,993,176 | 48,477,789 | |||||||||||||
Lightshade Labs Llc | |||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||
Number of Retail Dispensaries Acquired | item | 2 | ||||||||||||||
Investor Note | |||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||
Number of Accredited Investors | item | 31 | ||||||||||||||
Principal amount | $ 95,000,000 | ||||||||||||||
Interest rate | 2% | ||||||||||||||
Net proceeds | $ 92,000,000 | ||||||||||||||
Long-term Debt, Term | 5 years | ||||||||||||||
Percentage of investor note | 13% | 13% | |||||||||||||
Interest payable in cash (as percentage) | 9% | 9% | |||||||||||||
Maturity date | Dec. 07, 2026 | ||||||||||||||
Purchase price | $ 93,100,000 | ||||||||||||||
Original issue discount | $ 1,900,000 | ||||||||||||||
Nuevo Holding LLC | |||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||
Number of call option agreement entered | item | 2 | ||||||||||||||
Call option agreement, option to acquire equity or assets percentage | 100% | ||||||||||||||
Purchase price of call option | $ 100 | ||||||||||||||
Elemental Kitchen and Laboratories, LLC | |||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||
Number of dispensaries held | facility | 10 | ||||||||||||||
Number of cultivation facilities held | facility | 4 | ||||||||||||||
Number of cultivation facilities operating | facility | 3 | ||||||||||||||
Number of cultivation facilities under development | facility | 1 | ||||||||||||||
Number of manufacturing facilities held | facility | 1 | ||||||||||||||
Area of cultivation facilities held | ft² | 70,000 | ||||||||||||||
Area of manufacturing facilities held | ft² | 6,000 | ||||||||||||||
Drift | |||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||
Goodwill and intangibles | $ 3,344,555 | ||||||||||||||
Reynold Greenleaf & Associates, LLC. | |||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||
Cash | $ 32,200,000 | ||||||||||||||
Payments required potential earn out | $ 4,500,000 | ||||||||||||||
Reynold Greenleaf & Associates, LLC. | Nuevo Holding LLC | |||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||
Number of Not For Profit Entities Acquired | director | 2 | ||||||||||||||
Notes payable | $ 17,000,000 | ||||||||||||||
Percentage of investor note | 5% | ||||||||||||||
RGA | |||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||
Goodwill and intangibles | $ 34,981,571 | ||||||||||||||
MCG | |||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||
Goodwill | $ 16,810,479 | ||||||||||||||
Intangible assets | $ 12,400,000 | ||||||||||||||
Brow | |||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||
Goodwill | $ 1,792,000 | ||||||||||||||
Intangible assets | $ 3,970,000 | ||||||||||||||
Urban Dispensary Member | |||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||
Goodwill and intangibles | $ 2,849,868 | ||||||||||||||
Business Combination, Consideration Transferred | $ 1,300,000 | ||||||||||||||
Star Buds | |||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||
Goodwill | $ 27,054,025 | ||||||||||||||
Cash | $ 44,250,000 | ||||||||||||||
Number of cultivation facilities acquired | facility | 1 | ||||||||||||||
Business Combination, Consideration Transferred | $ 118,000,000 | ||||||||||||||
Principal amount | 44,250,000 | 44,250,000 | |||||||||||||
Number of dispensaries acquired | item | 13 | ||||||||||||||
Southern Colorado Growers | |||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||
Goodwill | $ 1,810,323 | ||||||||||||||
Smoking Gun | |||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||
Goodwill | $ 640,001 | ||||||||||||||
Lightshade Labs Llc | |||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||
Goodwill and intangibles | $ 2,589,866 | ||||||||||||||
Number of Retail Dispensaries Acquired | item | 2 | ||||||||||||||
Business Combination, Consideration Transferred | $ 2,750,000 | ||||||||||||||
Number of dispensaries acquired | item | 2 | ||||||||||||||
Pikes Peak Industries LLC | |||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||
Goodwill | 0 | ||||||||||||||
Acquisition-related expenses | $ 6,822,000 | $ 2,779,000 |
Business Combinations (Details)
Business Combinations (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Business Acquisition [Line Items] | ||
Payments to acquire businesses | $ 62,371,226 | $ 75,678,000 |
Nuevo Holding LLC | ||
Business Acquisition [Line Items] | ||
Payments to acquire businesses | 32,202,123 | |
Seller notes | 17,000,000 | |
Total purchase price | 49,202,123 | |
Emerald Fields Merger Sub LLC | ||
Business Acquisition [Line Items] | ||
Payments to acquire businesses | 18,268,825 | |
Common stock | 11,600,000 | |
Total purchase price | 29,868,825 | |
Other acquisitions | ||
Business Acquisition [Line Items] | ||
Payments to acquire businesses | 12,044,553 | |
Common stock | 4,137,855 | |
Total purchase price | $ 16,182,408 |
Business Combinations - Allocat
Business Combinations - Allocation of Purchase Price (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Business Acquisition [Line Items] | |||
Goodwill | $ 94,605,301 | $ 43,316,267 | $ 53,046,729 |
Nuevo Holding LLC | |||
Business Acquisition [Line Items] | |||
Cash | 2,860,706 | ||
Inventory | 9,584,428 | ||
Fixed assets | 2,137,002 | ||
Other long term assets | 2,500 | ||
Goodwill | 34,981,571 | ||
Total assets acquired | 49,566,207 | ||
Accounts payable | 295,043 | ||
Accrued liabilities | 69,041 | ||
Total liabilities assumed | 364,084 | ||
Estimated fair value of net assets acquired | 49,202,123 | ||
Emerald Fields Merger Sub, LLC | |||
Business Acquisition [Line Items] | |||
Cash | 650,469 | ||
Accounts receivable | 196,879 | ||
Other assets | 156,000 | ||
Inventory | 1,655,000 | ||
Fixed assets | 2,687,000 | ||
Intangible assets | 12,400,000 | ||
Goodwill | 16,810,479 | ||
Total assets acquired | 34,555,827 | ||
Accounts payable | 458,622 | ||
Accrued liabilities | 1,014,300 | ||
Deferred Tax Liability | 3,214,080 | ||
Total liabilities assumed | 4,687,002 | ||
Estimated fair value of net assets acquired | 29,868,825 | ||
Other Acquisitions | |||
Business Acquisition [Line Items] | |||
Cash | 23,100 | ||
Other assets | 605,112 | ||
Inventory | 982,156 | ||
Fixed assets | 25,966 | ||
Intangible assets | 3,970,000 | ||
Goodwill | 10,576,289 | ||
Total assets acquired | 16,182,623 | ||
Accrued liabilities | 215 | ||
Total liabilities assumed | 215 | ||
Estimated fair value of net assets acquired | $ 16,182,408 |
Goodwill Accounting - Narrative
Goodwill Accounting - Narrative (Details) | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Goodwill [Line Items] | |
Goodwill impairment charges | $ 11,719,306 |
Other expense | |
Goodwill [Line Items] | |
Goodwill impairment charges | $ 3,708,226 |
Goodwill Accounting - Segment (
Goodwill Accounting - Segment (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Goodwill [Roll Forward] | ||
Beginning balance of goodwill | $ 43,316,267 | $ 53,046,729 |
Goodwill acquired | 62,368,339 | 17,681,639 |
Measurement-period adjustment to prior year acquisition | 640,001 | (27,412,101) |
Goodwill impairment | (11,719,306) | |
Ending balance of goodwill | 94,605,301 | 43,316,267 |
Retail | ||
Goodwill [Roll Forward] | ||
Beginning balance of goodwill | 26,349,025 | 38,594,810 |
Goodwill acquired | 25,594,768 | 15,166,316 |
Measurement-period adjustment to prior year acquisition | 640,001 | (27,412,101) |
Ending balance of goodwill | 52,583,794 | 26,349,025 |
Wholesale | ||
Goodwill [Roll Forward] | ||
Beginning balance of goodwill | 13,964,016 | 11,448,693 |
Goodwill acquired | 1,792,000 | 2,515,323 |
Goodwill impairment | (8,716,080) | |
Ending balance of goodwill | 7,039,936 | 13,964,016 |
Other | ||
Goodwill [Roll Forward] | ||
Beginning balance of goodwill | 3,003,226 | 3,003,226 |
Goodwill acquired | 34,981,571 | |
Goodwill impairment | (3,003,226) | |
Ending balance of goodwill | $ 34,981,571 | $ 3,003,226 |
Intangible Asset (Details)
Intangible Asset (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Intangible Asset. | ||
Amortization expense | $ 8,638,112 | $ 7,452,294 |
Impairment of intangible assets | $ 875,400 | $ 0 |
Impairment Of Intangible Asset Finite Lived Statement Of Income Or Comprehensive Income Extensible Enumeration Not Disclosed Flag | true | true |
Intangible Asset - Intangible A
Intangible Asset - Intangible Assets (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 124,017,580 | $ 105,235,080 |
Accumulated Amortization | (16,290,862) | (7,652,750) |
License agreement | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 111,491,280 | 94,230,280 |
Accumulated Amortization | (12,154,237) | (5,496,902) |
Tradename | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 6,021,500 | 4,560,000 |
Accumulated Amortization | (1,862,242) | (845,667) |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 5,150,000 | 5,150,000 |
Accumulated Amortization | (1,474,405) | (933,690) |
Non-compete | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 1,265,000 | 1,205,000 |
Accumulated Amortization | (765,556) | (348,056) |
Product license and registration | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 57,300 | 57,300 |
Accumulated Amortization | (21,783) | (17,963) |
Trade secret - intellectual property | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 32,500 | 32,500 |
Accumulated Amortization | $ (12,639) | $ (10,472) |
Intangible Asset - Future Proje
Intangible Asset - Future Projected Annual Amortization Expense (Details) | Dec. 31, 2022 USD ($) |
Intangible Asset. | |
2023 | $ 9,842,054 |
2024 | 9,520,667 |
2025 | 9,412,888 |
2026 | 8,638,056 |
2027 | 8,330,329 |
Thereafter | 61,982,724 |
Total | $ 107,726,718 |
Derivative Liability (Details)
Derivative Liability (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Derivative Liabilities | ||
Derivative liability, beginning | $ 34,923,013 | |
Gain on derivative liability | $ (18,414,760) | $ (14,013,661) |
Fair Value, Net Derivative Asset (Liability), Recurring Basis, Still Held, Unrealized Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration] | Unrealized gain on derivative liabilities | |
Derivative liability, ending | $ 16,508,253 | $ 34,923,013 |
Derivative Liability - Narrativ
Derivative Liability - Narrative (Details) | 12 Months Ended | ||||||
Jun. 11, 2019 $ / shares shares | Apr. 23, 2019 $ / shares shares | Jan. 08, 2019 $ / shares shares | Dec. 31, 2022 USD ($) Y $ / shares | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | Dec. 07, 2021 USD ($) | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||||
Fair value of derivative liabilities | $ 0 | $ 0 | |||||
Original issue discount | 40,993,176 | 48,477,789 | |||||
Amortization of debt discount | 7,484,613 | 458,885 | |||||
Gain on forfeiture of contingent consideration | 0 | 0 | |||||
Change in fair value of derivative liabilities | $ 18,414,760 | 14,013,661 | |||||
Stock price | Minimum | |||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||||
Derivative liability, measurement input | $ / shares | 1.32 | ||||||
Stock price | Maximum | |||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||||
Derivative liability, measurement input | $ / shares | 3.75 | ||||||
Contractual term | Minimum | |||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||||
Derivative liability, measurement input | Y | 2.25 | ||||||
Contractual term | Maximum | |||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||||
Derivative liability, measurement input | Y | 3 | ||||||
Risk-free interest rate | |||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||||
Derivative liability, measurement input | 0.0428 | ||||||
Expected volatility | |||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||||
Derivative liability, measurement input | 145 | ||||||
Derivative liability. | |||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||||
Fair value of derivative liabilities | $ 16,508,253 | $ 34,923,013 | |||||
Original issue discount | $ 48,936,674 | ||||||
Investor Notes | |||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||||
Face amount | $ 95,000,000 | ||||||
Officer | Restricted stock | |||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||||
Restricted stock granted, shares | shares | 1,000,000 | 1,000,000 | 500,000 | ||||
Share price (in dollars per share) | $ / shares | $ 8 | $ 8 | $ 8 | ||||
Officer | Restricted stock | Director Resignation | |||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||||
Gain on forfeiture of contingent consideration | $ 1,462,636 |
Debt (Details)
Debt (Details) | 12 Months Ended | |||||||
Dec. 07, 2021 USD ($) | Dec. 03, 2021 USD ($) item | Jul. 21, 2021 USD ($) | Feb. 26, 2021 USD ($) | Dec. 17, 2020 USD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Jul. 28, 2021 USD ($) | |
Short-term Debt [Line Items] | ||||||||
Debt discount related to derivative liability portion | $ 40,993,176 | $ 48,477,789 | ||||||
Star Buds | ||||||||
Short-term Debt [Line Items] | ||||||||
Principal amount | 44,250,000 | $ 44,250,000 | ||||||
Term Loan | ||||||||
Short-term Debt [Line Items] | ||||||||
Proceeds from loans | $ 10,000,000 | |||||||
Interest rate | 15% | |||||||
Principal payment | $ 750,000 | |||||||
Maturity date | Feb. 26, 2025 | |||||||
Consolidated fixed charge coverage ratio | 1.3 | |||||||
Cash deposit in account in which the lender has a security interest | $ 3,000,000 | |||||||
Interest rate (as percentage) | 15% | 12% | ||||||
Principal amount | $ 10,000,000 | $ 5,000,000 | ||||||
Interest payable in cash | Jun. 01, 2023 | |||||||
Seller Notes | Star Buds | ||||||||
Short-term Debt [Line Items] | ||||||||
Interest rate (as percentage) | 12% | |||||||
Principal amount | $ 44,250,000 | |||||||
Interest payable in cash | Dec. 17, 2025 | |||||||
Seller Notes | Star Buds | Debt Instrument, Redemption, Period One | ||||||||
Short-term Debt [Line Items] | ||||||||
Principal payment | 13,901,759 | |||||||
Seller Notes | Star Buds | Debt Instrument, Redemption, Period Two | ||||||||
Short-term Debt [Line Items] | ||||||||
Principal payment | 3,474,519 | |||||||
Seller Notes | Star Buds | Debt Instrument, Redemption, Period Three | ||||||||
Short-term Debt [Line Items] | ||||||||
Principal payment | $ 26,873,722 | |||||||
Investor Note | ||||||||
Short-term Debt [Line Items] | ||||||||
Maturity date | Dec. 07, 2026 | |||||||
Interest rate (as percentage) | 13% | 13% | ||||||
Interest payable in cash (as percentage) | 9% | 9% | ||||||
Principal amount | $ 95,000,000 | |||||||
Purchase price | 93,100,000 | |||||||
Debt discount related to derivative liability portion | $ 1,900,000 | |||||||
Interest rate | 2% | |||||||
Proceeds from issuance of private placement | $ 92,000,000 | |||||||
Long-term Debt, Term | 5 years | |||||||
Number of accredited investors | item | 31 | |||||||
Nuevo Purchase Agreement | Nuevo Note Payable | ||||||||
Short-term Debt [Line Items] | ||||||||
Interest rate (as percentage) | 5% | |||||||
Aggregate amount | $ 17,000,000 | |||||||
Loan Agreement | Term Loan | Southern Colorado Growers | ||||||||
Short-term Debt [Line Items] | ||||||||
Proceeds from loans | $ 5,000,000 |
Debt - Indebtedness (Details)
Debt - Indebtedness (Details) - USD ($) | Feb. 07, 2022 | Dec. 07, 2021 | Dec. 03, 2021 | Feb. 26, 2021 | Dec. 17, 2020 | Dec. 31, 2022 | Dec. 31, 2021 | Jul. 28, 2021 |
Debt Instrument [Line Items] | ||||||||
Unamortized debt issuance costs | $ (6,603,695) | $ (8,289,743) | ||||||
Unamortized debt discount | (40,993,176) | (48,477,789) | ||||||
Total long term debt | 127,771,520 | 97,482,468 | ||||||
Long term debt and unamortized debt issuance costs | 125,521,520 | 97,482,468 | ||||||
Less: current portion of long term debt | (2,250,000) | |||||||
Star Buds | ||||||||
Debt Instrument [Line Items] | ||||||||
Principal amount | 44,250,000 | 44,250,000 | ||||||
Term Loan | ||||||||
Debt Instrument [Line Items] | ||||||||
Outstanding debt amount | 15,000,000 | 15,000,000 | ||||||
Principal amount | $ 10,000,000 | $ 5,000,000 | ||||||
Interest rate (as percentage) | 15% | 12% | ||||||
Interest payable in cash | Jun. 01, 2023 | |||||||
Seller Notes | ||||||||
Debt Instrument [Line Items] | ||||||||
Outstanding debt amount | 44,250,000 | 44,250,000 | ||||||
Seller Notes | Star Buds | ||||||||
Debt Instrument [Line Items] | ||||||||
Principal amount | $ 44,250,000 | |||||||
Interest rate (as percentage) | 12% | |||||||
Interest payable in cash | Dec. 17, 2025 | |||||||
Investor Note | ||||||||
Debt Instrument [Line Items] | ||||||||
Outstanding debt amount | 99,118,391 | $ 95,000,000 | ||||||
Unamortized debt discount | $ (1,900,000) | |||||||
Principal amount | $ 95,000,000 | |||||||
Interest rate (as percentage) | 13% | 13% | ||||||
Interest payable in cash (as percentage) | 9% | 9% | ||||||
Accreting interest rate to principal amount (as percentage) | 4 | |||||||
Seller Note 2022 | ||||||||
Debt Instrument [Line Items] | ||||||||
Outstanding debt amount | $ 17,000,000 | |||||||
Seller Note 2022 | Nuevo Holding LLC | ||||||||
Debt Instrument [Line Items] | ||||||||
Principal amount | $ 17,000,000 | |||||||
Interest rate (as percentage) | 5% | |||||||
Interest payable in cash | Feb. 07, 2025 |
Debt - Maturities of Long-term
Debt - Maturities of Long-term Debt (Details) | Dec. 31, 2022 USD ($) |
Principal Payments | |
2024 | $ 2,250,000 |
2025 | 3,000,000 |
2026 | 40,651,759 |
2027 | 129,466,632 |
Total | 175,368,391 |
Unamortized Debt Issuance Costs | |
2024 | 1,686,049 |
2025 | 1,686,049 |
2026 | 1,686,049 |
2027 | 1,545,548 |
Total | 6,603,695 |
Unamortized Debt Discount | |
2024 | 8,523,493 |
2025 | 9,734,935 |
2026 | 11,057,799 |
2027 | 11,676,949 |
Total | 40,993,176 |
Total Long Term Debt | |
2024 | (7,959,542) |
2025 | (8,420,984) |
2026 | 27,907,911 |
2027 | 116,244,135 |
Total | $ 127,771,520 |
Leases (Details)
Leases (Details) | Dec. 31, 2022 |
Minimum | |
Weighted average lease discount rate | 6% |
Maximum | |
Lessee, Operating Lease, Remaining Lease Term | 2 years |
Weighted average lease discount rate | 12% |
Leases - Balance Sheet Classifi
Leases - Balance Sheet Classification (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Leases | ||
Operating lease right of use assets | $ 18,199,399 | $ 8,511,780 |
Lease liabilities | 3,139,289 | |
Lease liabilities | $ 17,314,464 | $ 8,715,480 |
Leases - Maturities of Lease Li
Leases - Maturities of Lease Liabilities (Details) | Dec. 31, 2022 USD ($) |
Leases | |
2022 fiscal year | $ 33,595,944 |
Less: Interest | 13,298,212 |
Present value of lease liabilities | $ 20,297,732 |
Leases - Future Minimum Lease O
Leases - Future Minimum Lease Obligation (Details) | Dec. 31, 2022 USD ($) |
Leases | |
2023 fiscal year | $ 5,873,512 |
2024 fiscal year | 5,032,891 |
2025 fiscal year | 4,692,760 |
2026 fiscal year | 4,204,171 |
2027 fiscal year | 2,923,785 |
Thereafter | 10,868,825 |
Total | $ 33,595,944 |
Stockholders' Equity - Preferre
Stockholders' Equity - Preferred Stock (Details) | 12 Months Ended | |
Dec. 31, 2022 USD ($) item $ / shares shares | Dec. 31, 2021 USD ($) $ / shares shares | |
Stockholders' Equity | ||
Number of classes of stock | item | 2 | |
Preferred stock, authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock par value | $ / shares | $ 0.001 | $ 0.001 |
Preferred stock, outstanding (in shares) | 86,050 | 82,594 |
Preferred stock, issued (in shares) | 86,994 | 86,994 |
Escrow shares | 944 | 4,428 |
Preferred stock, dividend rate | 8% | |
Preferred stock dividend rate, per share amount | $ / shares | $ 1,000 | |
Preferred stock, conversion price | $ / shares | $ 1.20 | |
Accumulated preferred dividends | $ | $ 7,802,809 | $ 7,346,153 |
Stockholders' Equity - Common S
Stockholders' Equity - Common Stock (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Stockholders' Equity | ||
Common stock, authorized (in shares) | 250,000,000 | 250,000,000 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, issued (in shares) | 56,352,545 | 45,484,314 |
Common stock, outstanding (in shares) | 55,212,547 | 44,745,870 |
Treasury stock, common shares | 920,150 | 517,044 |
Common stock held in escrow | 219,848 | 221,400 |
Stockholders' Equity - Common_2
Stockholders' Equity - Common Stock Issued as Compensation to Employees, Officers, and Directors (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Class of Stock [Line Items] | ||
Stock issued for compensation, value | $ 621,272 | |
Employees, Officers, and Directors | ||
Class of Stock [Line Items] | ||
Stock issued for compensation, shares | 717,546 | 323,530 |
Stock issued for compensation, value | $ 1,027,288 | $ 621,272 |
Stockholders' Equity - Common_3
Stockholders' Equity - Common Stock and Preferred Stock Issued as Payments for Acquisitions (Details) - USD ($) | 1 Months Ended | 4 Months Ended | 12 Months Ended | ||||||
May 31, 2022 | Dec. 21, 2021 | Jul. 21, 2021 | Mar. 03, 2021 | Feb. 03, 2021 | Dec. 31, 2022 | May 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Class of Stock [Line Items] | |||||||||
Shares issued for acquisition, value | $ 15,737,855 | $ 22,744,003 | |||||||
Star Buds | Preferred Stock. | |||||||||
Class of Stock [Line Items] | |||||||||
Issuance of stock as payment for acquisitions (in shares) | 17,921 | 2,319 | |||||||
Shares issued for acquisition, value | $ 17,920,982 | $ 2,318,998 | |||||||
Stock issued for acquisition placed in escrow, share | 2,690 | 349 | |||||||
Stock issued for acquisition placed in escrow, value | $ 2,421,000 | $ 314,100 | |||||||
Southern Colorado Growers | |||||||||
Class of Stock [Line Items] | |||||||||
Issuance of stock as payment for acquisitions (in shares) | 2,213,994 | ||||||||
Shares issued for acquisition, value | $ 5,377,786 | ||||||||
Stock issued for acquisition placed in escrow, share | 221,400 | ||||||||
Stock issued for acquisition placed in escrow, value | $ 537,779 | ||||||||
Stock released from escrow (in shares) | 205,384 | ||||||||
Stock released from escrow | $ 499,083 | ||||||||
Stock cancelled from escrow (in shares) | 16,016 | ||||||||
Stock cancelled from escrow | $ 38,919 | ||||||||
Smoking Gun Apothecary | |||||||||
Class of Stock [Line Items] | |||||||||
Issuance of stock as payment for acquisitions (in shares) | 100,000 | ||||||||
Shares issued for acquisition, value | $ 197,000 | ||||||||
Drift | |||||||||
Class of Stock [Line Items] | |||||||||
Issuance of stock as payment for acquisitions (in shares) | 1,146,099 | ||||||||
Shares issued for acquisition, value | $ 1,948,620 | ||||||||
MCG | |||||||||
Class of Stock [Line Items] | |||||||||
Issuance of stock as payment for acquisitions (in shares) | 7,145,724 | ||||||||
Shares issued for acquisition, value | $ 11,592,854 | ||||||||
Urban Dispensary Member | |||||||||
Class of Stock [Line Items] | |||||||||
Issuance of stock as payment for acquisitions (in shares) | 1,670,230 | ||||||||
Shares issued for acquisition, value | $ 1,900,000 | ||||||||
Stock issued for acquisition placed in escrow, share | 219,848 | ||||||||
Stock issued for acquisition placed in escrow, value | $ 288,000 |
Stockholders' Equity - Warrants
Stockholders' Equity - Warrants (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Mar. 02, 2021 | |
Star Buds | |||
Class of Stock [Line Items] | |||
Warrant to purchase shares (in shares) | 5,531,250 | ||
Warrants | Minimum | |||
Class of Stock [Line Items] | |||
Stock price | $ 1.20 | ||
Risk-free interest rate | 0.21% | ||
Expected volatility rate | 157.60% | ||
Warrants | Maximum | |||
Class of Stock [Line Items] | |||
Stock price | $ 2.50 | ||
Warrant contractual term | 5 years | ||
Risk-free interest rate | 1.84% | ||
Expected volatility rate | 194.56% | ||
Warrants | Accredited Investor | |||
Class of Stock [Line Items] | |||
Warrant to purchase shares (in shares) | 1,500,000 | 187,500 | |
Purchase price (in dollars per share) | $ 2.50 | $ 3.50 | |
Warrant term | 5 years | 3 years | |
Stock price | $ 3.50 | ||
Warrant contractual term | 3 years | ||
Risk-free interest rate | 0.21% | ||
Warrants | Accredited Investor | Minimum | |||
Class of Stock [Line Items] | |||
Risk-free interest rate | 0.38% | ||
Expected volatility rate | 173.07% | ||
Warrants | Accredited Investor | Maximum | |||
Class of Stock [Line Items] | |||
Expected volatility rate | 187.52% | ||
Warrants | SBUD LLC | |||
Class of Stock [Line Items] | |||
Warrant to purchase shares (in shares) | 5,531,249 | ||
Purchase price (in dollars per share) | $ 1.20 | ||
Warrant term | 5 years |
Stockholders' Equity - Warrant
Stockholders' Equity - Warrant Activity (Details) - Warrants - $ / shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Offsetting Assets [Line Items] | ||
Warrants outstanding, beginning balance | 17,218,750 | |
Warrants forfeited | (10,000,000) | |
Warrants outstanding, ending balance | 7,218,750 | 17,218,750 |
Weighted Average Exercise Price | $ 1.76 | $ 2.96 |
Weighted Average Remaining Contractual Life | 2 years 11 months 26 days | 1 year 7 months 24 days |
Stockholders' Equity - Conversi
Stockholders' Equity - Conversion of Preferred Stock to Common Stock (Details) | Dec. 20, 2021 shares |
Stockholders' Equity | |
Conversion of preferred stock | 272 |
Conversion of shares | 245,017 |
Earnings per share (Basic and_3
Earnings per share (Basic and Dilutive) (Details) | 12 Months Ended |
Dec. 31, 2022 shares | |
Stock options | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Potential dilutive shares | 1,187,124 |
Stock purchase warrants | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Potential dilutive shares | 7,218,750 |
Preferred Stock | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Potential dilutive shares | 86,994 |
Earnings per share (Basic and_4
Earnings per share (Basic and Dilutive) - Reconciliation of Numerator and Denominator used in Basic and Diluted EPS Calculations (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Numerator: | ||
Net income (loss) | $ (18,467,615) | $ 14,519,130 |
Less: Accumulated preferred stock dividends for the period | (7,802,809) | (7,346,153) |
Net income (loss) attributable to common stockholders | $ (26,270,424) | $ 7,172,977 |
Denominator: | ||
Weighted-average shares of common stock | 53,637,003 | 43,339,092 |
Basic earnings per share | $ (0.49) | $ 0.17 |
Add: Investor note accrued interest | $ 789,028 | |
Add: Investor note amortized debt discount | $ 7,484,613 | 458,885 |
Less: Gain on derivative liability related to investor note | (18,414,760) | (14,013,661) |
Net income (loss) attributable to common stockholders - dilutive | $ (26,270,424) | $ (5,592,771) |
Dilutive effect of investor notes | 51,748,797 | |
Dilutive effect of warrants | 2,581,250 | |
Dilutive effect of options | 3,699,819 | |
Dilutive weighted-average shares of common stock | 53,637,003 | 101,368,958 |
Dilutive earnings per share | $ (0.49) | $ (0.06) |
Tax Provision - Components of I
Tax Provision - Components of Income Tax (Benefit) Expense (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Current: | ||
Federal | $ 17,127,037 | $ 4,284,163 |
State | 483,037 | 112,001 |
Total current tax expense (benefit) | 17,610,074 | $ 4,396,164 |
Deferred: | ||
Federal | (611,750) | |
State | (2,100,260) | |
Total deferred tax expense | $ (2,712,010) |
Tax Provision - Reconciliation
Tax Provision - Reconciliation of Income Tax Expense (Benefit) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Tax Provision | ||
Income (loss) before income taxes | $ (3,569,552) | $ 5,360,518 |
Statutory tax rate | 21% | 21% |
Expense (benefit) based on statutory rates | $ (749,606) | $ 1,125,709 |
State income taxes | (949,986) | 293,358 |
Expenses disallowed under IRC Section 280E | 16,308,522 | 5,610,279 |
Stock-based compensation | 177,912 | 578,692 |
Remeasurement on derivative liability | (3,867,100) | |
Other permanent differences | 244,130 | 28,918 |
Change in valuation allowance | (2,062,697) | (5,170,426) |
Change in state rate | (176,568) | (181,521) |
Return To Provision | 4,890,722 | 416,125 |
Deferred tax true-up | 1,082,735 | 1,695,030 |
Total income tax expense | $ 14,898,064 | $ 4,396,164 |
Tax Provision - Components of D
Tax Provision - Components of Deferred Income Taxes (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred tax assets: | ||
Net operating loss carryforwards | $ 64,858 | |
Interest expense carryforwards | $ 1,129,939 | 84,325 |
Goodwill and intangible assets | 2,359,197 | |
Lease liabilities | 1,705,867 | 861,683 |
Share based compensation accruals | 598,861 | 2,518,158 |
Loyalty points | 412,218 | 363,171 |
Fixed assets | 367,776 | |
Capitalized transaction costs | 217,320 | 662,861 |
Bad debt allowance | 36,742 | 94,620 |
Accrued expenses | 8,537 | 9,099 |
Gross deferred tax assets | 6,836,457 | 4,658,775 |
Valuation allowance | (2,062,697) | |
Net deferred tax assets | 6,836,457 | 2,596,078 |
Deferred tax liabilities: | ||
Fixed assets | 63,301 | |
Goodwill and intangible assets | 5,594,714 | 1,568,542 |
Operating leases | 1,595,394 | 850,793 |
Unrealized gains | 117,750 | 55,576 |
Cash-to-accrual | 30,669 | 57,866 |
Net deferred tax liabilities | 7,338,527 | 2,596,078 |
Total net deferred tax assets | $ 0 | |
Total net deferred tax assets | $ (502,070) |
Tax Provision (Details)
Tax Provision (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Tax Provision | ||
Unrecognized tax benefits | $ 0 | $ 0 |
Interest expense or penalties | 0 | 0 |
Change in valuation allowance | $ (2,062,697) | $ (5,170,426) |
Related Party Transactions (Det
Related Party Transactions (Details) | 1 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||||||||||||||||||
Sep. 22, 2022 USD ($) shares | Jun. 24, 2022 USD ($) shares | Jun. 14, 2022 USD ($) shares | May 22, 2022 | May 04, 2022 USD ($) shares | Dec. 07, 2021 USD ($) | Mar. 30, 2021 USD ($) shares | Mar. 02, 2021 USD ($) item shares | Feb. 26, 2021 USD ($) $ / shares shares | Feb. 03, 2021 USD ($) shares | Dec. 22, 2020 shares | Dec. 18, 2020 USD ($) shares | Dec. 17, 2020 USD ($) | Dec. 16, 2020 USD ($) shares | Aug. 01, 2020 USD ($) $ / shares shares | Jun. 05, 2019 USD ($) $ / shares shares | Oct. 31, 2022 | Jun. 30, 2022 USD ($) | Dec. 31, 2021 USD ($) | Jun. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) shares | Dec. 31, 2021 USD ($) shares | Dec. 31, 2020 USD ($) | Mar. 14, 2021 | Nov. 16, 2020 $ / shares | Dec. 31, 2019 USD ($) | |
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Number of shares issued, Value | $ 49,688,600 | ||||||||||||||||||||||||||
Cash paid at closing | $ 62,371,226 | 75,678,000 | |||||||||||||||||||||||||
Star Buds | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Initial lease term (in years) | 3 years | ||||||||||||||||||||||||||
Stock issued for acquisition placed in escrow, value | shares | 5,531,250 | ||||||||||||||||||||||||||
Principal amount | $ 44,250,000 | 44,250,000 | 44,250,000 | ||||||||||||||||||||||||
Aggregate consideration | $ 118,000,000 | ||||||||||||||||||||||||||
Cash paid at closing | 44,250,000 | ||||||||||||||||||||||||||
Deferred cash | $ 44,250,000 | ||||||||||||||||||||||||||
Interest paid | $ 5,310,000 | $ 4,780,887 | |||||||||||||||||||||||||
Equity interest held in escrow (in shares) | shares | 944 | 4,428 | |||||||||||||||||||||||||
Star Buds | Minimum | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Threshold percent of beneficial ownership to be held | 5% | ||||||||||||||||||||||||||
SBUD LLC | Star Buds | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Rent payment | $ 571,752 | $ 449,297 | |||||||||||||||||||||||||
Number of option for lease renewal | item | 2 | ||||||||||||||||||||||||||
Lease renewal term (in years) | 3 years | ||||||||||||||||||||||||||
SBUD LLC | Star Buds | Four Two Eight S. Mcculloch LLC | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Monthly rent payment | $ 5,000 | ||||||||||||||||||||||||||
SBUD LLC | Star Buds | Five Eight Four Four Ventures LLC | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Rent payment | $ 180,000 | ||||||||||||||||||||||||||
SBUD LLC | Star Buds | Colorado Real Estate Holdings Llc | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Monthly rent payment | $ 6,779 | ||||||||||||||||||||||||||
Rent payment | $ 244,044 | ||||||||||||||||||||||||||
SBUD LLC | Star Buds | One Four Six Five Five Arapahoe L L C | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Monthly rent payment | $ 12,367 | ||||||||||||||||||||||||||
Rent payment | 445,212 | ||||||||||||||||||||||||||
SBUD LLC | Star Buds | Montview Real Estate LLC | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Monthly rent payment | 6,250 | ||||||||||||||||||||||||||
Rent payment | $ 225,000 | ||||||||||||||||||||||||||
SBUD LLC | Star Buds | Brighton Blvd LLC | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Monthly rent payment | $ 7,250 | ||||||||||||||||||||||||||
Rent payment | $ 261,000 | ||||||||||||||||||||||||||
C R W Capital LLC | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Ownership interest (as percentage) | 50% | ||||||||||||||||||||||||||
Common Stock | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Issuance of stock as payment for acquisitions (in shares) | shares | 9,742,205 | 2,313,994 | |||||||||||||||||||||||||
Common Stock | C R W Capital LLC | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Ownership interest (as percentage) | 5% | ||||||||||||||||||||||||||
Common Stock | C R W Capital LLC | Minimum | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Ownership interest (as percentage) | 5% | ||||||||||||||||||||||||||
Preferred Stock. | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Stock issued new, shares | shares | 47,310 | ||||||||||||||||||||||||||
Number of shares issued, Value | $ 47 | ||||||||||||||||||||||||||
Issuance of stock as payment for acquisitions (in shares) | shares | 20,240 | ||||||||||||||||||||||||||
Preferred Stock. | Star Buds | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Shares consideration issued | shares | 29,506 | ||||||||||||||||||||||||||
Issuance of stock as payment for acquisitions (in shares) | shares | 25,078 | ||||||||||||||||||||||||||
Equity interest held in escrow (in shares) | shares | 4,428 | ||||||||||||||||||||||||||
Securities Purchase Agreement | Dye Cann Ii Spa | Series A Preferred Stock | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Stock issued new, shares | shares | 4,000 | 3,800 | 3,100 | 1,300 | 1,450 | 7,700 | |||||||||||||||||||||
Securities Purchase Agreement | Investor Notes | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Interest payable in cash (as percentage) | 9% | ||||||||||||||||||||||||||
Percentage of investor note | 13% | ||||||||||||||||||||||||||
Securities Purchase Agreement | Preferred Stock. | Dye Cann Ii Spa | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Stock issued new, shares | shares | 21,350 | ||||||||||||||||||||||||||
Proceeds from sale of equity | $ 21,350,000 | ||||||||||||||||||||||||||
Convertible Promissory Note And Security Agreement | Dye Capital | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Debt converted, amount converted | $ 5,000,000 | ||||||||||||||||||||||||||
Debt interest amount converted | $ 60,250 | ||||||||||||||||||||||||||
Shares issued on conversion of debt (in shares) | shares | 5,060 | ||||||||||||||||||||||||||
Principal amount | $ 5,000,000 | ||||||||||||||||||||||||||
Dye Capital And Company LLC | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Cash paid on conversion of debt | $ 230.97 | ||||||||||||||||||||||||||
Med Pharm Holdings | Andrew Williams | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Shares returned for payment of note receivable | shares | 175,000 | ||||||||||||||||||||||||||
Med Pharm Holdings | Promissory Note Member | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Outstanding debt amount | $ 767,695 | $ 767,695 | |||||||||||||||||||||||||
Accrued and unpaid interest | 47,161 | ||||||||||||||||||||||||||
Note receivable balance | $ 100,000 | $ 181,911 | |||||||||||||||||||||||||
Percentage of investor note | 8% | ||||||||||||||||||||||||||
Med Pharm Holdings | Promissory Note Member | Andrew Williams | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Shares returned price (in dollars per share) | $ / shares | $ 1.90 | ||||||||||||||||||||||||||
Baseball 18 | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Revenue from related parties | $ 14,605 | ||||||||||||||||||||||||||
Accounts payable from related party | 31,250 | ||||||||||||||||||||||||||
Farm Boy | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Revenue from related parties | 16,125 | ||||||||||||||||||||||||||
Accounts payable from related party | 93,944 | ||||||||||||||||||||||||||
Emerald Fields | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Revenue from related parties | 16,605 | ||||||||||||||||||||||||||
Los Suenos | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Revenue from related parties | $ 52,244 | ||||||||||||||||||||||||||
Dye Cann I | Securities Purchase Agreement | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Warrants to purchase | shares | 9,287,500 | 1,500,000 | |||||||||||||||||||||||||
Proceeds from sale of equity | $ 18,575,000 | ||||||||||||||||||||||||||
Dye Cann I | Securities Purchase Agreement | Common Stock | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Stock issued new, shares | shares | 9,287,500 | 1,500,000 | |||||||||||||||||||||||||
Dye Cann I | Common Stock | Securities Purchase Agreement | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Proceeds from sale of equity | $ 3,000,000 | ||||||||||||||||||||||||||
Dye Cann I | Securities Purchase Agreement | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Percentage of warrants to purchase common stock | 100% | ||||||||||||||||||||||||||
Purchase price (in dollars per share) | $ / shares | $ 3.50 | ||||||||||||||||||||||||||
Dye Cann I | Securities Purchase Agreement | Common Stock | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Share price (in dollars per share) | $ / shares | $ 2 | ||||||||||||||||||||||||||
Dye Cann I | Securities Purchase Agreement | Common Stock | Minimum | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Stock issued new, shares | shares | 8,187,500 | ||||||||||||||||||||||||||
Dye Cann I | Securities Purchase Agreement | Common Stock | Maximum | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Stock issued new, shares | shares | 10,687,500 | ||||||||||||||||||||||||||
Dye Cann I | Securities Purchase Agreement | Preferred Stock. | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Share price (in dollars per share) | $ / shares | $ 1,000 | ||||||||||||||||||||||||||
Tella Digital | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Costs and expenses to related party | $ 382,622 | $ 214,908 | |||||||||||||||||||||||||
Brian Ruden | Star Buds | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Percentage of investor note | 31% | ||||||||||||||||||||||||||
Stock issued for acquisition placed in escrow, value | shares | 1,715,936 | ||||||||||||||||||||||||||
Brian Ruden | Star Buds | Minimum | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Percent of beneficial ownership held by related party | 10% | ||||||||||||||||||||||||||
Brian Ruden | C R W Capital LLC | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Ownership interest (as percentage) | 50% | ||||||||||||||||||||||||||
Brian Ruden | Common Stock | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Stock issued new, shares | shares | 22,728 | 20,232 | |||||||||||||||||||||||||
Number of shares issued, Value | $ 35,001 | $ 35,001 | |||||||||||||||||||||||||
Jeff Garwood | Securities Purchase Agreement | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Note receivable balance | $ 294,000 | ||||||||||||||||||||||||||
Interest payable in cash (as percentage) | 9% | ||||||||||||||||||||||||||
Principal amount | $ 300,000 | ||||||||||||||||||||||||||
Interest rate | 13% | ||||||||||||||||||||||||||
Pratap Mukharji | Common Stock | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Stock issued new, shares | shares | 22,728 | 40,463 | |||||||||||||||||||||||||
Number of shares issued, Value | $ 35,001 | $ 70,001 | |||||||||||||||||||||||||
Pratap Mukharji | Securities Purchase Agreement | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Note receivable balance | $ 196,000 | ||||||||||||||||||||||||||
Interest payable in cash (as percentage) | 9% | ||||||||||||||||||||||||||
Principal amount | $ 200,000 | ||||||||||||||||||||||||||
Interest rate | 13% | ||||||||||||||||||||||||||
C R W Cann Holdings LLC | Series A Preferred Stock | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Share price (in dollars per share) | $ / shares | $ 1,000 | ||||||||||||||||||||||||||
C R W Cann Holdings LLC | Preferred Stock. | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Share price (in dollars per share) | $ / shares | $ 1,000 | ||||||||||||||||||||||||||
C R W Cann Holdings LLC | Preferred Stock. | Securities Purchase Agreement | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Stock issued new, shares | shares | 25,350 | ||||||||||||||||||||||||||
Proceeds from sale of equity | $ 25,350,000 | ||||||||||||||||||||||||||
C R W Cann Holdings LLC | Securities Purchase Agreement | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Monitoring fee | 150,000 | ||||||||||||||||||||||||||
Monitoring fee per month | $ 12,500 | 125,000 | |||||||||||||||||||||||||
Monitoring fee | $ 25,000 | $ 125,000 | |||||||||||||||||||||||||
C R W Cann Holdings LLC | Securities Purchase Agreement | Preferred Stock. | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Stock issued new, shares | shares | 25,350 | ||||||||||||||||||||||||||
Proceeds from sale of equity | $ 25,350,000 | ||||||||||||||||||||||||||
Rubin Revocable Trust | Securities Purchase Agreement | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Note receivable balance | $ 98,000 | ||||||||||||||||||||||||||
Interest payable in cash (as percentage) | 9% | ||||||||||||||||||||||||||
Percentage of investor note | 13% | ||||||||||||||||||||||||||
Principal amount | $ 100,000 | ||||||||||||||||||||||||||
Cozad Investments, L.P. | Securities Purchase Agreement | Investor Notes | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Note receivable balance | 245,000 | ||||||||||||||||||||||||||
Principal amount | $ 250,000 | ||||||||||||||||||||||||||
Mr Cozad | Common Stock | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Stock issued new, shares | shares | 22,728 | 40,463 | |||||||||||||||||||||||||
Number of shares issued, Value | $ 35,001 | $ 70,001 | |||||||||||||||||||||||||
Mr Cozad | Common Stock | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Stock issued new, shares | shares | 22,728 | 40,463 | |||||||||||||||||||||||||
Number of shares issued, Value | $ 35,001 | $ 70,001 | |||||||||||||||||||||||||
Mr. Montalbano [Member] | Common Stock | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Stock issued new, shares | shares | 22,728 | 40,463 | |||||||||||||||||||||||||
Number of shares issued, Value | $ 35,001 | $ 70,001 | |||||||||||||||||||||||||
Jonathan Berger | Common Stock | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Stock issued new, shares | shares | 102,355 | 19,085 | 22,728 | 40,463 | |||||||||||||||||||||||
Number of shares issued, Value | $ 100,000 | $ 25,001 | $ 35,001 | $ 70,001 | |||||||||||||||||||||||
Salim Wahdan | Star Buds | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Percentage of investor note | 3.50% | ||||||||||||||||||||||||||
Stock issued for acquisition placed in escrow, value | shares | 193,929 | ||||||||||||||||||||||||||
Salim Wahdan | Common Stock | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Stock issued new, shares | shares | 15,586 | 14,584 | |||||||||||||||||||||||||
Number of shares issued, Value | $ 42,887 | ||||||||||||||||||||||||||
Joudeh Owners [Member] | Star Buds | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Percentage of investor note | 28% | ||||||||||||||||||||||||||
Stock issued for acquisition placed in escrow, value | shares | 1,522,457 | ||||||||||||||||||||||||||
Joudeh Owners [Member] | Star Buds | Minimum | |||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||
Percent of beneficial ownership held by related party | 10% | 10% |
Commitments and Contingencies (
Commitments and Contingencies (Details) | 12 Months Ended | |||||||
Dec. 15, 2022 USD ($) | Sep. 09, 2022 item | May 31, 2022 USD ($) shares | Feb. 15, 2022 USD ($) | Feb. 09, 2022 USD ($) item $ / shares shares | Feb. 08, 2022 USD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Restructuring Cost and Reserve [Line Items] | ||||||||
Cash paid at closing | $ 62,371,226 | $ 75,678,000 | ||||||
MCG, LLC | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Aggregate consideration | $ 29,000,000 | |||||||
Cash paid at closing | $ 16,008,000 | |||||||
Shares consideration issued | shares | 6,547,239 | |||||||
Shares issued price | $ / shares | $ 1.63 | |||||||
Held back as collateral | $ 2,320,000 | |||||||
Escrow held consideration cash | $ 1,392,000 | |||||||
Escrow held shares issuable | shares | 569,325 | |||||||
Number of operating facilities for marijuana production | item | 2 | |||||||
MCG, LLC | Release on February 9, 2023 | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Escrow held amount release percentage | 50% | |||||||
MCG, LLC | Release on August 9, 2023 | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Escrow held amount release percentage | 50% | |||||||
Reynold Greenleaf And Associates, LLC | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Cash paid at closing | $ 32,200,000 | |||||||
Earn-out payments | 4,500,000 | |||||||
Reynold Greenleaf And Associates, LLC | Unsecured Promissory Notes | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Unsecured promissory note issued on acquisition | $ 17,000,000 | |||||||
Interest rate (as percentage) | 5% | |||||||
Brow 2, LLC | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Aggregate consideration | $ 6,700,000 | |||||||
Cash paid at closing | 6,200,000 | |||||||
Held back as collateral | $ 500,000 | |||||||
Urban Dispensary Member | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Aggregate consideration | $ 1,300,000 | |||||||
Shares consideration issued | shares | 1,900,000 | |||||||
Held back as collateral | $ 288,000 | |||||||
Lightshade Labs Llc | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Aggregate consideration | $ 2,750,000 | |||||||
Escrow held consideration cash | $ 300,000 | |||||||
Number of dispensaries acquired | item | 2 |
Segment Information (Details)
Segment Information (Details) | 12 Months Ended | ||
Dec. 31, 2022 USD ($) segment | Dec. 31, 2021 USD ($) segment | Dec. 31, 2020 USD ($) | |
Segment Information | |||
Number of identifiable segments | segment | 3 | 3 | |
External revenues | $ 159,379,219 | $ 108,420,239 | |
Depreciation | 2,911,004 | 1,124,571 | |
Segment pre tax profit | (3,569,551) | 18,915,294 | |
Segment profit | (18,467,615) | 14,519,130 | |
Goodwill | 94,605,301 | 43,316,267 | $ 53,046,729 |
Retail | |||
Segment Information | |||
Goodwill | 52,583,794 | 26,349,025 | 38,594,810 |
Wholesale | |||
Segment Information | |||
Goodwill | 7,039,936 | 13,964,016 | 11,448,693 |
Other | |||
Segment Information | |||
Goodwill | 34,981,571 | 3,003,226 | $ 3,003,226 |
Segments | |||
Segment Information | |||
External revenues | 159,379,219 | 108,420,239 | |
Depreciation and intangible assets amortization | 11,549,116 | ||
Cost of goods and services | (59,066,545) | ||
Gross profit | 49,353,694 | ||
Intangible assets amortization | 7,452,294 | ||
Depreciation | 1,124,571 | ||
Segment pre tax profit | (3,569,551) | ||
Segment profit | 14,519,130 | ||
Segment assets | 322,882,733 | 285,030,793 | |
Segments | Retail | |||
Segment Information | |||
External revenues | 141,254,893 | 73,761,010 | |
Depreciation and intangible assets amortization | 8,402,857 | ||
Cost of goods and services | (34,969,178) | ||
Gross profit | 38,754,476 | ||
Intangible assets amortization | 6,876,325 | ||
Depreciation | 163,217 | ||
Segment pre tax profit | 54,266,802 | ||
Segment profit | 22,568,259 | ||
Segment assets | 193,068,447 | 129,715,949 | |
Segments | Wholesale | |||
Segment Information | |||
External revenues | 17,819,938 | 34,434,091 | |
Depreciation and intangible assets amortization | 2,190,072 | ||
Cost of goods and services | (23,817,145) | ||
Gross profit | 10,654,302 | ||
Intangible assets amortization | 575,384 | ||
Depreciation | 323,862 | ||
Segment pre tax profit | (12,664,774) | ||
Segment profit | 8,906,535 | ||
Segment assets | 70,400,502 | 48,218,292 | |
Segments | Other | |||
Segment Information | |||
External revenues | 304,388 | 225,138 | |
Depreciation and intangible assets amortization | 956,187 | ||
Cost of goods and services | (280,222) | ||
Gross profit | (55,084) | ||
Intangible assets amortization | 585 | ||
Depreciation | 637,492 | ||
Segment pre tax profit | (45,171,579) | ||
Segment profit | (16,955,664) | ||
Segment assets | $ 59,413,784 | $ 107,096,552 |
Subsequent events (Details)
Subsequent events (Details) - Subsequent Event - Smoke Holdco, LLC | Jan. 25, 2023 USD ($) item |
Subsequent events | |
Number of retail and medical marijuana stores acquired | item | 2 |
Aggregate consideration | $ 7,500,000 |
Consideration paid in cash | 3,750,000 |
Equity consideration transferred | 3,150,000 |
Equity additional consideration transferred | 600,000 |
Deposit of purchase price | $ 150,000 |