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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2024

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to

img169857820_0.jpg 

Commission file number 000-56132

GREEN THUMB INDUSTRIES INC.

(Exact name of registrant as specified in its charter)

British Columbia

98-1437430

(State or other jurisdiction of

incorporation or organization)

(I.R.S. employer

identification no.)

325 West Huron Street,

Suite 700 Chicago, Illinois

60654

(Address of principal executive offices)

(zip code)

Registrant’s telephone number, including area code - (312) 471-6720

Securities registered pursuant to Section 12(g) of the Act:

Subordinate Voting Shares

Multiple Voting Shares

Super Voting Shares

(Title of each Class)

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

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

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

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

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

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

As of May 1, 2024 there were 212,596,691 shares of the registrant’s Subordinate Voting Shares, 37,683 shares of the registrant’s Multiple Voting Shares and 206,690 shares of the registrant’s Super Voting Shares outstanding.

 

 


 

GREEN THUMB INDUSTRIES INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2024

TABLE OF CONTENTS

FINANCIAL

INFORMATION

Page

Part I

ITEM 1:

Unaudited Interim Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023

4

Unaudited Interim Condensed Consolidated Statements of Operations for the three months ended March 31, 2024 and 2023

5

Unaudited Interim Condensed Consolidated Statements of Changes in Shareholders’ Equity for the three months ended March 31, 2024 and 2023

6

Unaudited Interim Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023

7

Notes to Unaudited Interim Condensed Consolidated Financial Statements

9

ITEM 2:

Management’s Discussion and Analysis of Financial Condition and Results of Operations

27

ITEM 3:

Quantitative and Qualitative Disclosure About Market Risk

33

ITEM 4:

Controls and Procedures

33

 

OTHER

INFORMATION

ITEM 1:

Legal Proceedings

34

ITEM 1A:

Risk Factors

34

ITEM 2:

Unregistered Sales of Equity Securities and Use of Proceeds

34

ITEM 3:

Defaults Upon Senior Securities

34

ITEM 4:

Mine Safety Disclosures

35

ITEM 5:

Other Information

35

ITEM 6:

Exhibits

36

Signatures

37

 

 


 

Use of Names

In this Quarterly Report on Form 10-Q, unless the context otherwise requires, the terms “we,” “us,” “our,” “Company,” “Corporation” or “Green Thumb” refer to Green Thumb Industries Inc. together with its wholly-owned subsidiaries.

Currency

Unless otherwise indicated, all references to “$” or “US$” in this document refer to United States dollars, and all references to “C$” refer to Canadian dollars.

Disclosure Regarding Forward-Looking Statements

 

This Quarterly Report on Form 10-Q contains statements that we believe are, or may be considered to be, “forward-looking statements.” All statements other than statements of historical fact included in this document regarding the prospects of our industry or our prospects, plans, financial position or business strategy may constitute forward-looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking words such as “may,” “will,” “expect,” “intend,” “estimate,” “foresee,” “project,” “anticipate,” “believe,” “plan,” “forecast,” “continue” or “could” or the negative of these terms or variations of them or similar terms or expressions of similar meaning. Furthermore, forward-looking statements may be included in various filings that we make with the Securities and Exchange Commission (the “SEC”), and in press releases or oral statements made by or with the approval of one of our authorized executive officers. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot assure you that these expectations will prove to be correct. These forward-looking statements are subject to certain known and unknown risks and uncertainties, as well as assumptions that could cause actual results to differ materially from those reflected in these forward-looking statements. These known and unknown risks include, without limitation: cannabis remains illegal under U.S. federal law, and enforcement of cannabis laws could change; the Company may be subject to action by the U.S. federal government; state regulation of cannabis is uncertain; the Company may not be able to obtain or maintain necessary permits and authorizations; the Company may be subject to heightened scrutiny by Canadian regulatory authorities; the Company may face limitations on ownership of cannabis licenses; the Company may become subject to U.S. Food and Drug Administration or the U.S. Bureau of Alcohol, Tobacco Firearms and Explosives regulation; cannabis businesses are subject to applicable anti-money laundering laws and regulations and have restricted access to banking and other financial services; the Company may face difficulties acquiring additional financing; the Company lacks access to U.S. bankruptcy protections; the Company operates in a highly regulated sector and may not always succeed in complying fully with application regulatory requirements in all jurisdictions where the Company carries business; the Company faces intense competition; the Company faces competition from the illicit market as well as actual or purported Farm Bill compliant hemp products; ; the Company is dependent upon the popularity and consumer acceptance of its brand portfolio; the Company has limited trademark protection; cannabis businesses are subject to unfavorable tax treatment and may incur significant tax liability; the Company is subject to proceeds of crime statutes; the Company faces exposure to fraudulent or illegal activity; the Company faces risks due to industry immaturity or limited comparable, competitive or established industry best practices; the Company faces risks related to its products; the Company’s business is subject to the risks inherent in agricultural operations; the Company may adversely be impacted by rising or volatile energy costs and availability; the Company faces risks related to its information technology systems and potential cyber-attacks and security breaches; the Company relies on third-party software providers for numerous capabilities that it depends upon to operate, and a disruption of one or more systems could adversely affect the business; the Company relies on the expertise of the Company management team and other employees experienced in the cannabis industry, and the loss of key personnel could negatively affect the Company’s business, financial condition and results of operations; the Company faces an inherent risk of product liability or similar claims; the Company’s products may be subject to product recalls; the Company may face unfavorable publicity or consumer perception; the Company’s voting control is concentrated; the Company’s capital structure and voting control may cause unpredictability; sales of substantial amounts of Subordinate Voting Shares by our shareholders in the public market may have an adverse effect on the market price of our Subordinate Voting Shares and could affect the Company’s business and financial condition and the results of operations are included in the “Risk Factors” section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, and elsewhere in the Company’s filings with the SEC, which are available on the SEC’s website or at https://investors.gtigrows.com. Readers are cautioned not to place undue reliance on any forward-looking statements contained in this document, which reflect management’s opinions only as of the date hereof. Except as required by law, we undertake no obligation to revise or publicly release the results of any revision to any forward-looking statements. You are advised, however, to consult any additional disclosures we make in our reports to the SEC. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained in this document.

 

 

3


 

Green Thumb Industries Inc.

Unaudited Interim Condensed Consolidated Balance Sheets

As of March 31, 2024 and December 31, 2023

(Amounts Expressed in United States Dollars)

 

 

 

 

March 31,

 

 

December 31,

 

 

 

2024

 

 

2023

 

 

 

 

 

 

(Audited)

 

 

 

(in thousands)

 

ASSETS

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash and Cash Equivalents

 

$

223,937

 

 

$

161,634

 

Accounts Receivable, Net

 

 

52,182

 

 

 

42,975

 

Inventories, Net

 

 

119,289

 

 

 

112,970

 

Prepaid Expenses

 

 

19,740

 

 

 

19,801

 

Other Current Assets

 

 

4,546

 

 

 

5,382

 

Total Current Assets

 

 

419,694

 

 

 

342,762

 

Property and Equipment, Net

 

 

689,006

 

 

 

687,106

 

Right of Use Assets, Net

 

 

241,006

 

 

 

238,369

 

Investments

 

 

60,847

 

 

 

64,361

 

Investments in Associates

 

 

24,406

 

 

 

24,942

 

Note Receivable

 

 

550

 

 

 

550

 

Intangible Assets, Net

 

 

526,007

 

 

 

538,678

 

Goodwill

 

 

589,691

 

 

 

589,691

 

Deferred Tax Assets

 

 

1,041

 

 

 

1,041

 

Deposits and Other Assets

 

 

2,571

 

 

 

2,557

 

TOTAL ASSETS

 

$

2,554,819

 

 

$

2,490,057

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

Accounts Payable

 

$

27,842

 

 

$

24,495

 

Accrued Liabilities

 

 

68,235

 

 

 

59,552

 

Compensation Payable

 

 

20,361

 

 

 

16,005

 

Current Portion of Notes Payable

 

 

3,036

 

 

 

2,996

 

Current Portion of Lease Liabilities

 

 

12,801

 

 

 

12,297

 

Income Tax Payable

 

 

42,779

 

 

 

10,705

 

Total Current Liabilities

 

 

175,054

 

 

 

126,050

 

Long-Term Liabilities:

 

 

 

 

 

 

Lease Liabilities, Net of Current Portion

 

 

253,224

 

 

 

249,464

 

Notes Payable, Net of Current Portion and Debt Discount

 

 

306,901

 

 

 

305,527

 

Contingent Consideration Payable

 

 

 

 

 

33,250

 

Deferred Income Taxes

 

 

72,510

 

 

 

72,510

 

TOTAL LIABILITIES

 

 

807,689

 

 

 

786,801

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

SHAREHOLDERS' EQUITY

 

 

 

 

 

 

Subordinate Voting Shares (Shares Authorized, Issued and Outstanding at March 31, 2024:
   
Unlimited, 211,671,221, and 211,671,221, respectively, at December 31, 2023:
   
Unlimited, 209,871,792, and 209,871,792, respectively)

 

 

 

 

 

 

Multiple Voting Shares (Shares Authorized, Issued and Outstanding at March 31, 2024:
   
Unlimited, 37,683 and 37,683, respectively, at December 31, 2023:
   
Unlimited, 38,531 and 38,531, respectively)

 

 

 

 

 

 

Super Voting Shares (Shares Authorized, Issued and Outstanding at March 31, 2024:
   
Unlimited, 206,690 and 206,690, respectively, at December 31, 2023:
   
Unlimited, 216,690 and 216,690, respectively)

 

 

 

 

 

 

Share Capital

 

 

1,727,584

 

 

 

1,703,852

 

Contributed (Deficit) Surplus

 

 

(2,816

)

 

 

7,871

 

Deferred Share Issuances

 

 

12,973

 

 

 

12,973

 

Accumulated Earnings (Deficit)

 

 

9,258

 

 

 

(21,818

)

Equity of Green Thumb Industries Inc.

 

 

1,746,999

 

 

 

1,702,878

 

Noncontrolling interests

 

 

131

 

 

 

378

 

TOTAL SHAREHOLDERS' EQUITY

 

 

1,747,130

 

 

 

1,703,256

 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

 

$

2,554,819

 

 

$

2,490,057

 

 

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

4


 

Green Thumb Industries Inc.

Unaudited Interim Condensed Consolidated Statements of Operations

Three Months Ended March 31, 2024 and 2023

(Amounts Expressed in United States Dollars, Except Share Amounts)

 

 

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

 

 

 

(in thousands)

 

 

Revenues, Net of Discounts

$

 

275,806

 

$

 

248,536

 

 

Cost of Goods Sold, Net

 

 

(130,877

)

 

 

(123,815

)

 

Gross Profit

 

 

144,929

 

 

 

124,721

 

 

Expenses:

 

 

 

 

 

 

 

Selling, General, and Administrative

 

 

74,258

 

 

 

80,519

 

 

Total Expenses

 

 

74,258

 

 

 

80,519

 

 

Income From Operations

 

 

70,671

 

 

 

44,202

 

 

Other Income (Expense):

 

 

 

 

 

 

 

Other Income (Expense), Net

 

 

(1,763

)

 

 

924

 

 

Interest Income, Net

 

 

2,103

 

 

 

1,731

 

 

Interest Expense, Net

 

 

(7,514

)

 

 

(3,816

)

 

Total Other Expense

 

 

(7,174

)

 

 

(1,161

)

 

Income Before Provision for Income Taxes And Non-Controlling Interest

 

 

63,497

 

 

 

43,041

 

 

Provision For Income Taxes

 

 

32,149

 

 

 

33,636

 

 

Net Income Before Non-Controlling Interest

 

 

31,348

 

 

 

9,405

 

 

Net Income Attributable to Non-Controlling Interest

 

 

272

 

 

 

266

 

 

Net Income Attributable To Green Thumb Industries Inc.

$

 

31,076

 

$

 

9,139

 

 

Net Income Per Share - Basic

$

 

0.13

 

$

 

0.04

 

 

Net Income Per Share - Diluted

$

 

0.13

 

$

 

0.04

 

 

Weighted Average Number of Shares Outstanding - Basic

 

 

236,759,731

 

 

 

237,398,253

 

 

Weighted average Number of Shares Outstanding - Diluted

 

 

240,561,864

 

 

 

237,686,092

 

 

 

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

5


 

Green Thumb Industries Inc.

Unaudited Interim Condensed Consolidated Statements of Changes in Shareholders’ Equity

Three Months Ended March 31, 2024 and 2023

(Amounts Expressed in United States Dollars)

 

 

 

 

Share
Capital

 

 

Contributed
Surplus (Deficit)

 

 

Deferred Share
Issuance

 

 

Accumulated
Earnings (Deficit)

 

 

Non-Controlling
Interest

 

 

Total

 

 

 

(in thousands)

 

Balance, January 1, 2023

$

 

1,663,557

 

$

 

23,233

 

$

 

36,211

 

$

 

(58,085

)

$

 

516

 

$

 

1,665,432

 

Distribution of deferred shares

 

 

19,106

 

 

 

 

 

 

(19,106

)

 

 

 

 

 

 

 

 

 

Exercise of options, RSUs and warrants

 

 

1,008

 

 

 

(513

)

 

 

 

 

 

 

 

 

 

 

 

495

 

Stock-based compensation

 

 

 

 

 

6,239

 

 

 

 

 

 

 

 

 

 

 

 

6,239

 

Distributions to limited liability company unit holders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(425

)

 

 

(425

)

Net income

 

 

 

 

 

 

 

 

 

 

 

9,139

 

 

 

266

 

 

 

9,405

 

Balance, March 31, 2023

$

 

1,683,671

 

$

 

28,959

 

$

 

17,105

 

$

 

(48,946

)

$

 

357

 

$

 

1,681,146

 

Balance, January 1, 2024

$

 

1,703,852

 

$

 

7,871

 

$

 

12,973

 

$

 

(21,818

)

$

 

378

 

$

 

1,703,256

 

Distribution of contingent consideration

 

 

17,259

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

17,259

 

Exercise of options and RSUs

 

 

5,632

 

 

 

(2,324

)

 

 

 

 

 

 

 

 

 

 

 

3,308

 

Options exercised through net share settlement

 

 

841

 

 

 

(1,295

)

 

 

 

 

 

 

 

 

 

 

 

(454

)

Stock-based compensation

 

 

 

 

 

6,490

 

 

 

 

 

 

 

 

 

 

 

 

6,490

 

Distributions to limited liability company unit holders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(519

)

 

 

(519

)

Repurchase of Subordinate Voting Shares

 

 

 

 

 

(13,558

)

 

 

 

 

 

 

 

 

 

 

 

(13,558

)

Net income

 

 

 

 

 

 

 

 

 

 

 

31,076

 

 

 

272

 

 

 

31,348

 

Balance, March 31, 2024

$

 

1,727,584

 

$

 

(2,816

)

$

 

12,973

 

$

 

9,258

 

$

 

131

 

$

 

1,747,130

 

 

 

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

6


 

Green Thumb Industries Inc.

Unaudited Interim Condensed Consolidated Statements of Cash Flows

Three Months Ended March 31, 2024 and 2023

(Amounts Expressed in United States Dollars)

 

 

 

 

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

 

 

(in thousands)

 

CASH FLOW FROM OPERATING ACTIVITIES

 

 

 

 

 

 

Net income attributable to Green Thumb Industries Inc.

 

$

31,076

 

 

$

9,139

 

Net income attributable to non-controlling interest

 

 

272

 

 

 

266

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

27,775

 

 

 

23,501

 

Amortization of operating lease assets

 

 

12,251

 

 

 

12,222

 

Loss on disposal of property and equipment

 

 

472

 

 

 

154

 

Loss on equity method investments

 

 

328

 

 

 

318

 

Stock-based compensation

 

 

6,490

 

 

 

6,239

 

(Increase) decrease in fair value of investments

 

 

(722

)

 

 

351

 

Gain on settlement of contingent consideration

 

 

(15,991

)

 

 

 

Increase in fair value of contingent consideration

 

 

 

 

 

731

 

Increase (decrease) in fair value of warrants

 

 

2,107

 

 

 

(1,642

)

Amortization of debt discount

 

 

2,097

 

 

 

2,365

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable, net

 

 

(9,206

)

 

 

(12

)

Inventories, net

 

 

(6,320

)

 

 

(5,394

)

Prepaid expenses and other current assets

 

 

897

 

 

 

(592

)

Deposits and other assets

 

 

(14

)

 

 

(155

)

Accounts payable

 

 

3,347

 

 

 

(1,517

)

Accrued liabilities

 

 

7,713

 

 

 

5,645

 

Operating lease liabilities

 

 

(10,623

)

 

 

(10,618

)

Income tax receivable and payable, net

 

 

32,074

 

 

 

33,710

 

NET CASH PROVIDED BY OPERATING ACTIVITIES

 

 

84,023

 

 

 

74,711

 

CASH FLOW FROM INVESTING ACTIVITIES

 

 

 

 

 

 

Purchases of property and equipment

 

 

(14,711

)

 

 

(65,009

)

Proceeds from disposal of property and equipment

 

 

 

 

 

319

 

Investments in securities and associates

 

 

(293

)

 

 

(2,500

)

Proceeds from equity investments and notes receivable

 

 

4,736

 

 

 

300

 

NET CASH USED IN INVESTING ACTIVITIES

 

 

(10,268

)

 

 

(66,890

)

CASH FLOW FROM FINANCING ACTIVITIES

 

 

 

 

 

 

Distributions to limited liability company unit holders

 

 

(519

)

 

 

(425

)

Repurchase of Subordinate Voting Shares

 

 

(13,558

)

 

 

 

Proceeds from exercise of options and warrants

 

 

3,308

 

 

 

495

 

Principal repayment of notes payable

 

 

(683

)

 

 

(206

)

NET CASH USED IN FINANCING ACTIVITIES

 

 

(11,452

)

 

 

(136

)

CASH AND CASH EQUIVALENTS:

 

 

 

 

 

 

NET INCREASE IN CASH AND CASH EQUIVALENTS

 

 

62,303

 

 

 

7,685

 

CASH AND CASH EQUIVALENTS BEGINNING OF PERIOD

 

 

161,634

 

 

 

177,682

 

CASH AND CASH EQUIVALENTS END OF PERIOD

 

$

223,937

 

 

$

185,367

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7


 

 

Green Thumb Industries Inc.

Unaudited Interim Condensed Consolidated Statements of Cash Flows

Three Months Ended March 31, 2024 and 2023

(Amounts Expressed in United States Dollars)

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

 

 

(in thousands)

 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

 

 

 

 

 

 

Interest paid

 

$

5,405

 

 

$

4,964

 

NONCASH INVESTING AND FINANCING ACTIVITIES

 

 

 

 

 

 

Accrued capital expenditures

 

$

2,764

 

 

$

9,138

 

Noncash increase in right of use asset

 

$

(4,397

)

 

$

(5,558

)

Noncash increase in lease liability

 

$

4,397

 

 

$

5,558

 

Issuance of shares associated with contingent consideration

 

$

17,259

 

 

$

 

Deferred share distributions

 

$

 

 

$

(19,106

)

 

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

8


Green Thumb Industries Inc.

Notes to Unaudited Interim Condensed Consolidated Financial Statements

(Amounts Expressed in United States Dollars, Except Where Stated Otherwise)

1. Overview and Basis of Presentation

 

 

(a) Description of Business

Green Thumb Industries Inc. (“Green Thumb,” the “Company,” “we” or “us”), a national cannabis consumer packaged goods company and retailer, promotes well-being through the power of cannabis while being committed to community and sustainable, profitable growth. Green Thumb owns, manufactures, and distributes a portfolio of cannabis consumer packaged goods brands including &Shine, Beboe, Dogwalkers, Doctor Solomon’s, Good Green, incredibles, and RYTHM, to third-party retail stores across the United States as well as to Green Thumb owned retail locations. The Company also owns and operates retail cannabis stores that include a national chain named RISE, which sell our products and third-party products. As of March 31, 2024, Green Thumb has revenue in fourteen markets (California, Connecticut, Florida, Illinois, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, New York, Ohio, Pennsylvania, Rhode Island and Virginia), employs approximately 4,500 people and serves millions of patients and customers annually.

The Company’s registered office is located at 250 Howe Street, 20th Floor, Vancouver, British Columbia, V6C 3R8. The Company’s U.S. headquarters are at 325 W. Huron St., Suite 700, Chicago, IL 60654.

 

(b) Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements include the accounts of Green Thumb and have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and in accordance with the rules and regulations of the U.S. Securities & Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and, accordingly, certain information, footnotes and disclosures normally included in the annual financial statements, prepared in accordance with GAAP, have been condensed or omitted in accordance with SEC rules and regulations. The financial data presented herein should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Form 10-K”). In the opinion of management, the financial data presented includes all adjustments necessary to present fairly the financial position, results of operations and cash flows for the interim periods presented. Certain previously reported amounts have been reclassified between line items to conform to the current period presentation. Results of interim periods should not be considered indicative of the results for the full year. These unaudited interim condensed consolidated financial statements include estimates and assumptions of management that affect the amounts reported in the unaudited condensed consolidated financial statements. Actual results could differ from these estimates.

 

(c) Significant Accounting Policies

There have been no changes to the Company’s significant accounting policies as described in Note 2 to the Company's Consolidated Financial Statements included in the 2023 Form 10-K.

 

(d) Earnings per Share

Basic earnings per share is calculated using the treasury stock method, by dividing the net earnings attributable to shareholders by the weighted average number of common shares outstanding during each of the periods presented. Contingently issuable shares (including shares held in escrow) are not considered outstanding common shares and consequently are not included in the earnings per share calculation. Diluted earnings per share is calculated using the treasury stock method by adjusting the weighted average number of common shares outstanding to assume conversion of all dilutive potential common shares. The Company has three categories of potentially dilutive common share equivalents: restricted stock units, stock options and warrants. As of March 31, 2024, the Company had 9,416,251 options, 3,564,633 restricted stock units and 3,734,555 warrants outstanding. As of March 31, 2023, the Company had 9,600,384 options, 1,094,979 restricted stock units and 3,734,555 warrants outstanding.

 

9


Green Thumb Industries Inc.

Notes to Unaudited Interim Condensed Consolidated Financial Statements

(Amounts Expressed in United States Dollars, Except Where Stated Otherwise)

1. Overview and Basis of Presentation (Continued)

 

(d) Earnings per Share (Continued)

In order to determine diluted earnings per share, it is assumed that any proceeds from the vesting of dilutive unvested restricted stock units, or exercise of unvested stock options and warrants would be used to repurchase common shares at the average market price during the period. Under the treasury stock method, the diluted earnings per share calculation excludes any potential conversion of stock options and convertible debt that would increase earnings per share or decrease loss per share. For the three months ended March 31, 2024, the computation of diluted earnings per share included 1,940,169 options, 1,740,592 restricted stock units, and 121,372 warrants. For the three months ended March 31, 2023, the computation of diluted earnings per share included 207,430 options, 80,409 restricted stock units. There were no dilutive warrants during the three months ended March 31, 2023. For the three months ended March 31, 2024 and 2023, the weighted average number of anti-dilutive stock options excluded from the computation of diluted earnings per share were 577,304 and 2,909,924, respectively.

 

(e) Recently Issued Accounting Standards

(i)
In November 2023, the FASB issued Accounting Standards Update (ASU”) No. 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures, to provide enhanced segment disclosures. The standard will require disclosures about significant segment expense categories and amounts for each reportable segment, for all periods presented. Additionally, the standard requires public entities to disclose the title and position of the Chief Operating Decision Maker (CODM”) in the consolidated financial statements. These enhanced disclosures are required for all entities on an interim and annual basis, effective for fiscal years beginning after December 15, 2023, and interim periods within annual periods beginning after December 15, 2024. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements
(ii)
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which is intended to provide enhancements to annual income tax disclosures. The standard will require more detailed information in the rate reconciliation table and for income taxes paid, among other enhancements. The standard is effective for years beginning after December 15, 2024 and early adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

The Company reviews recently issued accounting standards on a quarterly basis and has determined there are no standards yet to be adopted which are relevant to the business for disclosure.

 

10


Green Thumb Industries Inc.

Notes to Unaudited Interim Condensed Consolidated Financial Statements

(Amounts Expressed in United States Dollars, Except Where Stated Otherwise)

2. INVENTORIES

 

 

The Company’s inventories include the following at March 31, 2024 and December 31, 2023:

 

 

March 31, 2024

 

December 31, 2023

 

 

(in thousands)

Raw Material

$

1,885

$

1,547

Packaging and Miscellaneous

 

10,775

 

10,661

Work in Process

 

49,864

 

47,029

Finished Goods

 

62,667

 

57,631

Reserve for Obsolete Inventory

 

(5,902)

 

(3,898)

Total Inventories, Net

$

119,289

$

112,970

 

3. PROPERTY AND EQUIPMENT

 

 

At March 31, 2024 and December 31, 2023, property and equipment consisted of the following:

 

 

 

March 31, 2024

 

December 31, 2023

 

 

(in thousands)

Buildings and Improvements

$

354,097

$

353,912

Equipment, Computers and Furniture

 

174,081

 

171,522

Leasehold Improvements

 

205,076

 

200,232

Land Improvements

 

1,046

 

1,046

Capitalized Interest

 

31,262

 

30,817

Total Property and Equipment

 

765,562

 

757,529

Less: Accumulated Depreciation

 

(142,187)

 

(127,290)

Property and Equipment, net

 

623,375

 

630,239

Land

 

33,725

 

33,725

Assets Under Construction

 

31,906

 

23,142

Property and Equipment, net

$

689,006

$

687,106

 

Assets under construction represent construction in progress related to both cultivation and retail stores not yet completed or otherwise not ready for use.

Depreciation expense for the three months ended March 31, 2024 totaled $15,104 thousand, of which $9,793 thousand, is included in cost of goods sold. Depreciation expense for the three months ended March 31, 2023 totaled $10,891 thousand, of which $7,356 thousand, is included in cost of goods sold.

 

 

11


Green Thumb Industries Inc.

Notes to Unaudited Interim Condensed Consolidated Financial Statements

(Amounts Expressed in United States Dollars, Except Where Stated Otherwise)

4. INTANGIBLE ASSETS AND GOODWILL

 

 

(a) Intangible Assets

Intangible assets are recorded at cost less accumulated amortization and impairment losses. 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.

At March 31, 2024 and December 31, 2023, intangible assets consisted of the following:

 

 

 

March 31, 2024

 

 

December 31, 2023

 

 

 

Gross Carrying Amount

 

 

Accumulated Amortization

 

 

Net Book Value

 

 

Gross Carrying Amount

 

 

Accumulated Amortization

 

 

Net Book Value

 

 

 

(in thousands)

 

 

(in thousands)

 

Licenses and Permits

$

 

660,716

 

$

 

168,789

 

$

 

491,927

 

$

 

660,716

 

$

 

157,764

 

$

 

502,952

 

Trademarks

 

 

41,511

 

 

 

14,070

 

 

 

27,441

 

 

 

41,511

 

 

 

13,378

 

 

 

28,133

 

Customer Relationships

 

 

24,438

 

 

 

17,799

 

 

 

6,639

 

 

 

24,438

 

 

 

16,927

 

 

 

7,511

 

Non-Competition Agreements

 

 

2,565

 

 

 

2,565

 

 

 

 

 

 

2,565

 

 

 

2,483

 

 

 

82

 

Total Intangible Assets

$

 

729,230

 

$

 

203,223

 

$

 

526,007

 

$

 

729,230

 

$

 

190,552

 

$

 

538,678

 

The Company recorded amortization expense for the three months ended March 31, 2024 and 2023 of $12,671 thousand and $12,610 thousand, respectively. As of March 31, 2024 and December 31, 2023, intangible assets are carried net of accumulated impairment losses of $31,131 thousand as of each period then ended.

The following table outlines the estimated annual amortization expense related to intangible assets as of March 31, 2024:

 

 

Estimated
Amortization

Year Ending December 31,

 

(in thousands)

2024

$

37,721

2025

 

50,294

2026

 

47,332

2027

 

46,803

2028

 

46,803

2029 and Thereafter

 

297,054

 

$

526,007

As of March 31, 2024, the weighted average amortization period remaining for intangible assets was 11.14 years.

(b) Goodwill

At March 31, 2024 and December 31, 2023 the balances of goodwill, by segment, consisted of the following:

 

 

 

March 31, 2024

 

December 31, 2023

 

 

(in thousands)

Retail

$

273,802

$

273,802

Consumer Packaged Goods

 

315,889

 

315,889

Total

$

589,691

$

589,691

 

Goodwill is recognized net of accumulated impairment losses of $57,372 thousand as of March 31, 2024 and December 31, 2023, respectively. During the three months ended March 31, 2024 and 2023, there were no goodwill impairment charges recognized by the Company in the unaudited interim condensed consolidated statements of operations.

 

 

 

12


Green Thumb Industries Inc.

Notes to Unaudited Interim Condensed Consolidated Financial Statements

(Amounts Expressed in United States Dollars, Except Where Stated Otherwise)

5. INVESTMENTS

 

 

As of March 31, 2024 and December 31, 2023, the Company held various equity interests in cannabis-related companies as well as investments in note(s) receivable instruments that had a combined fair value of $60,847 thousand and $64,361 thousand, respectively. The Company measures its investments that do not have readily determinable fair value at cost minus impairment, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. The Company performs an assessment on a quarterly basis to determine whether triggering events for impairment exist and to identify any observable price changes.

The following table summarizes the changes in the Company’s investments during the three months ended March 31, 2024 and year ending December 31, 2023:

 

 

 

March 31, 2024

 

December 31, 2023

 

 

(in thousands)

Beginning

$

64,361

$

74,169

Additions

 

500

 

8,200

Disposals

 

(4,736)

 

(498)

Fair value adjustment

 

722

 

(17,460)

Transfers and other

 

 

(50)

Ending

$

60,847

$

64,361

 

The following table summarizes the change in fair value associated with the Company's equity investments and notes receivable instruments recorded during the three months ended March 31, 2024 and 2023.

 

 

Three Months Ended March 31,

 

 

2024

 

2023

 

 

(in thousands)

Equity Investments

$

638

$

(479)

Notes Receivable Instruments

 

 

Accrued Interest on Notes Receivable Instruments

 

84

 

128

Net fair value (losses) gains

$

722

$

(351)

 

(a) Equity Investments

 

As of March 31, 2024 and December 31, 2023, the Company held equity investments in publicly traded entities which have readily determinable fair values, which are classified as Level 1 investments, of $2,499 thousand and $2,001 thousand, respectively. During the three months ended March 31, 2024 and 2023, the Company recorded gains (losses) on the change in fair value of such investments of $638 thousand and $(479) thousand, respectively, within other income (expense) on the unaudited interim condensed consolidated statement of operations. During the three months ended March 31, 2024, the Company received proceeds from the sale of such investments of $140 thousand. There were no such sales of these investments during the three months ended March 31, 2023. These investments are classified as trading securities on the Company's unaudited interim condensed consolidated balance sheets.

As of March 31, 2024 and December 31, 2023, the Company held equity investments in privately held entities that did not have readily determinable fair values, which are classified as Level 3 investments, of $25,953 thousand as of each period end, respectively. For the three months ended March 31, 2024 and 2023, there were no gains or losses on the change in fair value of such investments. There were no sales of these investments during these periods. These investments are classified as trading securities on the Company's unaudited interim condensed consolidated balance sheets.

See Note 13 - Fair Value Measurements for additional details.

 

Unrealized gains (losses) recognized on equity investments held during the three months ended March 31, 2024 and 2023 were $572 thousand and $(477) thousand, respectively.

 

13


Green Thumb Industries Inc.

Notes to Unaudited Interim Condensed Consolidated Financial Statements

(Amounts Expressed in United States Dollars, Except Where Stated Otherwise)

5. INVESTMENTS (Continued)

 

 

 

(b) Notes Receivable Instruments

 

During the three months ended March 31, 2024 and year ended December 31, 2023, the Company made multiple investments in various note receivable instruments, including note receivable instruments with conversion features.

 

As of March 31, 2024 and December 31, 2023, the Company held note receivable instruments, which were classified as a Level 1 investment as they represent public debt of a publicly traded entity, and had a fair value of $22,214 thousand as of each period end, respectively. There were no gains or losses recognized on these investments during the three months ended March 31, 2024 and 2023, respectively. The notes receivable had a stated interest rate of 13% and a maturity date of April 29, 2025. The notes did not contain any conversion features and are currently classified as trading securities on the Company's unaudited interim condensed consolidated balance sheets.

 

As of March 31, 2024 and December 31, 2023, the Company held note receivable instruments, which were classified as Level 3 investments as they represent loans provided to privately held entities that do not have readily determinable fair values. The note receivable instruments had a combined fair value of $10,181 thousand and $14,193 thousand, respectively, with stated interest ranging between 2.7% - 10% and terms between twelve months to five years. There were no gains or losses recognized on these investments during the three months ended March 31, 2024 and 2023, respectively. The combined fair value amounts include the initial investment cost and combined contractual accrued interest of $84 thousand and $128 thousand for the three months ended March 31, 2024 and 2023, respectively. These notes are classified as trading securities on the Company's unaudited interim condensed consolidated balance sheets.

 

On January 9, 2024, one of the Company's privately held note receivable instruments matured. As a result, the Company received the principal amount of $4,000 thousand along with the accrued interest of $605 thousand on such date.

See Note 13 - Fair Value Measurements for additional details.

 

14


Green Thumb Industries Inc.

Notes to Unaudited Interim Condensed Consolidated Financial Statements

(Amounts Expressed in United States Dollars, Except Where Stated Otherwise)

6. LEASES

 

 

 

(a) Operating Leases

The Company has operating leases for its retail stores, processing and cultivation facilities and corporate office spaces. Operating lease right-of-use assets and operating lease liabilities are recognized based on the present value of future minimum lease payments over the lease term at commencement date.

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

The Company determines if an arrangement is a lease at inception. The Company must consider whether the contract conveys the right to control the use of an identified asset. Certain arrangements require significant judgment to determine if an asset is specified in the contract and if the Company directs how and for what purpose the asset is used during the term of the contract. For the three months ended March 31, 2024 and 2023, the Company recorded operating lease expense of $12,251 thousand and $12,222 thousand, respectively.

 

Other information related to operating leases as of March 31, 2024 and December 31, 2023 were as follows:

 

 

 

March 31, 2024

 

December 31, 2023

Weighted average remaining lease term (years)

 

11.49

 

11.75

Weighted average discount rate

 

12.36%

 

12.40%

 

Maturities of lease liabilities for operating leases as of March 31, 2024 were as follows:

 

 

 

Maturities of Lease Liability

Year Ending December 31,

 

Third-Party

 

Related Party

 

Total

 

 

(in thousands)

Remainder of 2024

$

33,526

$

293

$

33,819

2025

 

43,270

 

343

 

43,613

2026

 

42,537

 

350

 

42,887

2027

 

42,981

 

357

 

43,338

2028

 

42,461

 

364

 

42,825

2029 and Thereafter

 

323,328

 

1,364

 

324,692

Total Lease Payments

 

528,103

 

3,071

 

531,174

Less: Interest

 

(264,003)

 

(1,146)

 

(265,149)

Present Value of Lease Liability

$

264,100

$

1,925

$

266,025

 

(b) Related Party Operating Leases

The Company has leasing arrangements that are related party transactions, including for certain facilities in Maryland, Massachusetts and Nevada. Wendy Berger, a director of the Company, is a principal of WBS Equities, LLC, which is the Manager of Mosaic Real Estate, LLC, which owned the facilities leased by the Company. Additionally, Mosaic Real Estate, LLC is owned in part by Ms. Berger (through the Wendy Berger 1998 Revocable Trust), Benjamin Kovler, the Chairman and a Chief Executive Officer of the Company (through KP Capital, LLC), and Anthony Georgiadis, the President and a director of the Company (through Three One Four Holdings, LLC). The terms of these leases range from 7 years to 15 years. The Company recorded lease expense of $139 thousand for each of the three months ended March 31, 2024 and 2023, associated with these leasing arrangements.

15


Green Thumb Industries Inc.

Notes to Unaudited Interim Condensed Consolidated Financial Statements

(Amounts Expressed in United States Dollars, Except Where Stated Otherwise)

7. NOTES PAYABLE

 

At March 31, 2024 and December 31, 2023, notes payable consisted of the following:

 

 

March 31, 2024

 

December 31, 2023

 

 

(in thousands)

Charitable Contributions1

$

302

$

351

Private placement debt dated April 30, 20212

 

223,746

 

221,680

Mortgage notes3

 

85,889

 

86,492

Total notes payable

 

309,937

 

308,523

Less: current portion of notes payable

 

(3,036)

 

(2,996)

Notes payable, net of current portion

$

306,901

$

305,527

 

1 In connection with acquisitions completed in 2017 and 2019, the Company committed to provide charitable contributions of $50 thousand per quarter through October 2024 and $250 thousand per year through May 2024, respectively. The net present value of these contributions has been recorded as a liability with interest rates ranging between 2.17% - 7.00%.

 

2 The April 30, 2021 private placement debt, as amended on October 21, 2021 (the “April 30, 2021 Notes”), were issued in an aggregate amount of $249,934 thousand with an interest rate of 7%, maturing on April 30, 2025. The outstanding principal balance of the April 30, 2021 Notes was $224,435 thousand as of March 31, 2024 and December 31, 2023, respectively, and was recorded net of debt discount, the carrying value of which was $689 thousand and $2,755 thousand as of March 31, 2024 and December 31, 2023, respectively.

 

3 The Company has issued various mortgage notes at an aggregate value of $88,785 thousand in connection with various operating properties as of March 31, 2024 and December 31, 2023. The mortgage notes were issued at a discount, the carrying value of which was $693 thousand and $725 thousand, and are presented net of principal payments of $2,203 thousand and $1,568 thousand as of March 31, 2024 and December 31, 2023, respectively. These mortgage notes mature between August 20, 2025 and June 5, 2035 with interest rates ranging between 5.00% and 7.77%.

 

 

 

16


Green Thumb Industries Inc.

Notes to Unaudited Interim Condensed Consolidated Financial Statements

(Amounts Expressed in United States Dollars, Except Where Stated Otherwise)

8. WARRANTS

 

 

 

As part of the terms of the Company’s issuance of the April 30, 2021 Notes, as well as other financing arrangements, the Company issued warrants, which allow the holders to purchase Subordinate Voting Shares at an exercise price determined at the time of issuance.

The following table summarizes the number of warrants outstanding as of March 31, 2024 and December 31, 2023:

 

 

Liability Classified

 

Equity Classified

 

 

Number of Shares

 

 

Weighted Average Exercise Price (C$)

 

Weighted Average Remaining Contractual Life

 

Number of Shares

 

 

Weighted Average Exercise Price (USD)

 

Weighted Average
Remaining Contractual Life

 

Balance as of December 31, 2023

 

1,997,208

 

C$

 

18.03

 

 

0.50

 

 

1,737,347

 

$

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