Leases

9 Months Ended

Sep. 30, 2024

Leases

Leases

10. Leases

Components of lease expenses are listed below:

	September 30,		September 30,
	2024		2023
Finance lease cost
Amortization of ROU assets	$	410,013	$	557,817
Interest on lease liabilities		10,654,530		8,409,687
Operating lease costs		1,412,489		1,472,588
Total lease costs	$	12,477,032	$	10,440,092

Future minimum lease payments (principal and interest) on the leases are as follows:

	Operating Leases		Finance Leases
	September 30, 2024		September 30, 2024		Total
2024	$	560,981	$	3,416,902	$	3,977,883
2025		3,047,603		13,773,155		16,820,758
2026		2,727,346		14,183,661		16,911,007
2027		2,474,144		14,606,527		17,080,671
2028		2,254,049		15,042,128		17,296,177
Thereafter		7,824,515		218,572,918		226,397,433
Total minimum lease payments	$	18,888,638	$	279,595,291	$	298,483,929
Less discount to net present value		(4,111,939)		(185,628,604)		(189,740,543)
Less liabilities held for sale		(2,837,202)		(85,599,819)		(88,437,021)
Present value of lease liability	$	11,939,497	$	8,366,868	$	20,306,365

The Company has entered into various lease agreements for the use of buildings used in production and retail sales of cannabis products.

On February 22, 2024, the Company executed a lease for cannabis cultivation and manufacturing facilities. Per the terms of the lease the landlord agreed to provide the Company with $2,000,000 of tenant improvement allowances. Rent will not commence until January 1, 2025, at which time monthly base rent will be $82,500. Starting January 1, 2025, the Company has the option to purchase the property. The initial purchase price is $13,000,000 increasing by 3% at the start of each calendar year until the option expires on December 31, 2028. The lease expires on December 31, 2034.

On February 24, 2023, the Company signed the fourth amendment to the existing lease agreements for the cultivation and processing facilities in New York. The amendment provides for additional tenant improvements of $4,000,000 and increases base rent by $50,000 a month.  

Supplemental cash flow information related to leases:

	September 30,
	2024		2023
Cash paid for amounts included in the measurement of lease liabilities:
Lease principal payments - finance	$	162,405	$	1,414,698
Lease principal payments - operating		633,540		—
Non-cash additions to ROU assets		9,270,915		—
Amortization of operating leases		531,359		670,782

Other information about lease amounts recognized in the financial statements:

	September 30,
	2024		2023
Weighted-average remaining lease term (years) – operating leases	7.85		4.27
Weighted-average remaining lease term (years) – finance leases	16.34		17.14
Weighted-average discount rate – operating leases	8.16	%	15.00	%
Weighted-average discount rate – finance leases	16.20	%	15.31	%