10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

☒ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended: December 31, 2023

OR

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

For the transition period from ______________ to ______________

Commission File Number: 000-56075

4Front Ventures Corp.

(Exact name of registrant as specified in its charter)

British Columbia	83-4168417
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

7010 E. Chauncey Lane, Suite 235

Phoenix, Arizona 85054

(Address of principal executive offices and zip code)

 

Registrant’s telephone number, including area code: (602) 633-3067

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

None.

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

Class A Subordinate Voting Shares, no par value

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

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 (Section 232.405 of this chapter) during the preceding 12 months (or 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

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

The aggregate market value of common stock held by non-affiliates of the registrant as of June 30, 2023 was approximately $88,955,560, based on the closing sale price reported for such date on the OTCQX. Common stock held by each executive officer, director and holder of more than 5% of the registrant’s common stock have been excluded based on the assumption that such persons may be deemed to be affiliates. These assumptions should not be deemed to constitute an admission that such persons are affiliates, or that there are not other persons who may be deemed to be affiliates, of the registrant.

As of April 10, 2024, there were 912,923,993 shares of the registrant’s Class A Subordinate Voting Shares outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

None.

4Front Ventures Corp.

FORM 10-K

For the Annual Period Ended December 31, 2023

TABLE OF CONTENTS

		Page
PART I.
Item 1.	Business	5
Item 1A.	Risk Factors	28
Item 1B.	Unresolved Staff Comments	28
Item 1C.	Cybersecurity	28
Item 2.	Properties	28
Item 3.	Legal Proceedings	29
Item 4.	Mine Safety Disclosures	30
PART II.
Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	31
Item 6.	[Reserved]	32
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	33
Item 7A.	Quantitative and Qualitative Disclosures About Risk	43
Item 8.	Financial Statements and Supplementary Data	43
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosures	43
Item 9A.	Controls and Procedures	43
Item 9B.	Other Information	45
Item 9C	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	45
PART III.
Item 10.	Directors, Executive Officers and Corporate Governance	46
Item 11.	Executive Compensation	51
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	54
Item 13.	Certain Relationships and Related Transactions, and Director Independence	59
Item 14.	Principal Accounting Fees and Services	59
PART IV.
Item 15.	Exhibits, Financial Statement Schedules	61
Item 16.	From 10-K Summary	61
	SIGNATURES	65

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Use of Market and Industry Data

This Annual Report on Form 10-K (this “annual report”) includes market and industry data that 4Front Ventures Corp. (together with its subsidiaries, “4Front,” the “Company,” “we,” “us,” or “our”) has obtained from third-party sources, including industry publications, as well as industry data prepared by our management on the basis of its knowledge of, and experience in, the industries in which we operate (including our management’s estimates and assumptions relating to such industries based on that knowledge). Management has developed its knowledge of such industries through its experience and participation in these industries. While our management believes the third-party sources referred to in this annual report are reliable, neither we nor our management have independently verified any of the data from such sources referred to in this Annual Report or ascertained the underlying economic assumptions relied upon by such sources. Furthermore, internally prepared and third-party market prospective information, in particular, are estimates only and there will usually be differences between the prospective and actual results, because events and circumstances frequently do not occur as expected, and those differences may be material. Also, references in this annual report to any publications, reports, surveys or articles prepared by third parties should not be construed as depicting the complete findings of the entire publication, report, survey or article. The information in any such publication, report, survey or article is not incorporated by reference in this annual report .

Trademarks, Trade Names and Service Marks

“4Front,” “4Front Ventures,” “Mission” and other trademarks or service marks of 4Front appearing in this annual report are the property of 4Front Ventures Corp. or its subsidiaries. The other trademarks, trade names and service marks appearing in this annual report are the property of their respective owners. Solely for convenience, the trademarks and trade names in this annual report are referred to without the ® and ™ symbols, but such references should not be construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto.

Other Pertinent Information

As of April 10, 2024, the Company has two classes of stock: (i) Class A Subordinate Voting Shares (“SVS”), and (ii) Class C Multiple Voting Shares (“MVS”), both with no par value. The Company is authorized to issue an unlimited number of SVS and an unlimited number of MVS. Holders of SVS are entitled to one vote in respect of each SVS. Holders of MVS are entitled to 800 votes in respect of each MVS and have certain conversion rights as further described in Note 12 of the Company’s audited consolidated financial statements appearing elsewhere in this annual report.

As of April 10, 2024, 912,923,993 SVS and 1,276,208 MVS were issued and outstanding.

Dollar amounts in this annual report are denominated in United States dollars unless otherwise indicated. References to $ are to the lawful currency of the United States and references to C$ are to the lawful currency of Canada.

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Forward-Looking Statements

This annual report contains forward-looking statements within the meaning of the United States and Canadian securities laws, which statements involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. All statements that do not relate strictly to historical or factual matters included in this annual report, including those regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “may,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. These forward-looking statements are based on management’s current beliefs, based on currently available information, as to the outcome and timing of future events. Forward-looking statements contained in this report include, but are not limited to, statements about:

•the performance of our business and operations;

•our product offerings;

•the competitive conditions of the cannabis industry;

•our competitive and business strategies;

•the sufficiency of capital including our ability to obtain capital to develop our business;

•our operations in the United States, the characterization and consequences of those operations under United States federal law and applicable state law, and the framework for the enforcement of applicable laws in the United States;

•implications of the war in Ukraine;

•the impact of macroeconomic trends, such as the rate of unemployment, interest rates, the rate of inflation and the availability of credit;

•statements relating to the business and future activities of, and developments related to, us, including such things as future business strategy, competitive strengths, goals, expansion and growth of our business, operations and plans;

•expectations that licenses applied for will be obtained, and that the Company will be able to maintain all of the licenses that it currently holds;

•expectations regarding future cash flows from operations;

•potential future legalization of adult-use and/or medical cannabis under U.S. state and federal law;

•expectations of market size and growth in the U.S. and the states in which we operate;

•expectations for other economic, business, financial market, political, regulatory and/or competitive factors related to us or the cannabis industry generally; and

•other events or conditions that may occur in the future.

We caution you that the foregoing list may not contain all of the forward-looking statements made in this report.

You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this report primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described elsewhere in this report. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this report. We cannot assure you that the results, events and circumstances reflected in the forward-looking statements made in this report will be achieved or occur, and actual results, events or circumstances could differ materially from those described in such forward-looking statements.

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PART I

Item 1. Business.

4Front Ventures Corp. (“4Front” or the “Company”) is a vertically integrated, multi-state cannabis operator and retailer, with a market advantage in mass-produced, low-cost, quality branded cannabis products. The Company manufactures and distributes a portfolio of over 25 cannabis brands including Mission, the Hunt, Marmas, Crystal Clear, Legends, and Island. The Company distributes its products through third party retail outlets, as well as the Company’s chain of branded dispensaries. From plant genetics to automated manufacturing, to the cannabis retail experience – 4Front’s team applies expertise across the entire cannabis value chain.

Overview

The Company exists pursuant to the provisions of the British Columbia Corporations Act. On July 31, 2019, 4Front Holdings LLC (“Holdings”) completed a Reverse Takeover Transaction (“RTO”) with Cannex Capital Holdings, Inc. (“Cannex”) whereby Holdings acquired Cannex and the shareholders of Holdings became the controlling shareholders of the Company. Following the RTO, the Company’s SVS are listed on the Canadian Securities Exchange (“CSE”) under the ticker “FFNT” and are quoted on the OTCQX under the ticker “FFNTF”.

The Company has two primary operating segments: THC Cannabis and CBD Wellness. With regard to its THC Cannabis segment, as of December 31, 2023, the Company operated five cannabis dispensaries in Massachusetts and Illinois under the “MISSION” brand name, three cultivation and production facilities in Massachusetts, and one cultivation and production facility in Illinois. The Company produces the majority of the products that are sold at its Massachusetts and Illinois MISSION dispensaries.

The Company’s CBD Wellness segment is focused upon its ownership and operation of its wholly owned subsidiary, Pure Ratios Holdings, Inc. (“Pure Ratios”), a CBD-focused wellness company, that sells non-THC products throughout the United States.

While marijuana is legal under the laws of several U.S. states (with varying restrictions), the United States Federal Controlled Substances Act classifies all “marijuana” as a Schedule I drug, whether for medical or recreational use. Under U.S. federal law, a Schedule I drug or substance has a high potential for abuse, no accepted medical use in the United States, and a lack of safety data for the use of the drug under medical supervision.

Recent Developments

Asset Acquisition of Euphoria, LLC

On March 27, 2023, the Company entered into a Membership Interest Purchase Agreement to acquire 100% of the issued and outstanding equity interests in Euphoria, LLC, which holds a conditional adult use dispensary license in the state of Illinois. The transfer of the license is subject to regulatory approval. Please see Note 7 of the consolidated financial statements for a full description of the transaction.

Asset Acquisition of Westside Visionaries, LLC

On November 17, 2023, the Company entered into a Membership Interest Purchase Agreement to acquire 100% of the issued and outstanding equity interests in Westside Visionaries, LLC ("Westside") for a total purchase price of $2.4 million to be paid in cash, a promissory note, and Class A Subordinate Voting Shares. In addition, Westside has issued a $2.0 million secured promissory note to fund the permitted expansion for the dispensary build-out with a maturity date of the earlier of the second anniversary of closing (license approval) or the third anniversary of the date on which the note was executed. Westside holds a conditional adult use dispensary license in the state of Illinois

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which shall convert to a state license upon regulatory approval. The transfer of the license is subject to regulatory approval.

Discontinued THC Operations in California

During the fiscal quarter ended September 30, 2023, the Company ceased its THC cannabis cultivation and production operations in the state of California (together, the "California operations"). Each of the Company’s California subsidiaries filed an intent to wind up and dissolve with the Secretary of State of California in January 2024. The Company's abandonment of its California operations represented a strategic shift, and thus all assets and liabilities related to the operations within the state of California were classified as discontinued operations. Revenue and expenses, gains and losses relating to the discontinuation of its California operations were eliminated from the Company's profit and loss from continuing operations, and are shown as a single line item in the consolidated statements of operations for all periods presented.

Closure of Michigan Location

On May 19, 2023, the Company entered into an Asset Purchase Agreement to sell its retail dispensary located in Ann Arbor, Michigan, which was subsequently amended in January 2024. On November 8, 2023, the Company shuttered operations at the dispensary. The transaction is subject to close upon regulatory approval which is expected in the first half of 2024.

Construction of the Matteson Facility

On July 7, 2023, the Company amended its lease agreement for the cultivation and production facility in Matteson, Illinois (the "Matteson Facility"), to apply its security deposit mainly to the monthly base rent for the four month period ended November 30, 2023; to defer payment of the $2.2 million increase in security deposit, to be funded as draws on the tenant improvement allowance through November 30, 2023; and to make pro-rata payments of such deferred payments equal to 1/12 of the aggregate amount, concurrently with monthly base rent installments, for the twelve month period commencing January 1, 2024.

On December 6, 2023, the Company amended its lease agreement for the Matteson Facility, making an encroachment agreement and the dumpster enclosure agreement part of its lease.

On January 1, 2024, the Company amended its lease agreement for the Matteson Facility to reduce the rent for the property through October 2024, applying the security deposit to be made to certain reimbursements owed to the landlord, and extending the term of the lease for the facility and the other properties leased by the Company from Innovative Industrial Properties through December 31, 2044.

On February 5, 2024, the Company completed construction of the Matteson Facility, with operations expected to commence in the second quarter of fiscal 2024. The state-of-the-art Matteson Facility, now one of the largest cultivation and manufacturing centers in Illinois, spans approximately 250,000 square feet of production space, and includes the use of innovative and energy efficient technologies such DLC-certified LED lighting, HVAC systems utilizing cutting edge compressor wall technology, and fully automated irrigation and fertigation systems.

Extension of Secured Debt

On July 31, 2023, the Company entered into a definitive agreement with the Company’s secured lender, LI Lending, LLC (“LI”), a related party, to extend the maturity date to May 1, 2026, reduce the interest rate to 12.0% per annum beginning May 1, 2024, and expand the amount of third-party financings allowed under the December 17, 2020 Amended and Restated Loan and Security Agreement (“Loan”) between 4Front and LI.

The Company agreed to pay an extension fee of $0.5 million payable in cash on May 1, 2024. In addition, the Company issued warrants to purchase a variable number of subordinate voting shares to LI wherein each warrant

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shall be exercisable into one (1) Subordinate Voting Share of the Company at an exercise price of $0.17 through May 1, 2026. Because 4Front obtained permitted secured debt senior to the Loan in excess of $8.0 million (up to the $10.0 million maximum) as described below, 100% of the warrants became exercisable by cashless exercise.

On January 29, 2024, the Company agreed with LI to convert $23.0 million of the Company’s secured debt to Class A Subordinate Voting Shares at market price and issued LI a warrant for 36,702,127 shares of Class A Subordinate Voting Shares at a price of $0.11, as well as a restricted stock unit agreement providing that, in the event of a financing by the Company at less than C$0.125 per share of Class A Subordinate Voting Shares, LI shall be entitled to receive the number of shares necessary to restore it to 18.43% of the voting interests of the Company.

Debt Amendments

On September 28, 2023, the Company amended the unsecured promissory note dated September 20, 2019 wherein the interest rate was reduced to 11% per annum through March 15, 2024, and the maturity date was extended to November 30, 2024. By March 15, 2024, the parties intend to agree to an interest rate on the promissory note through maturity. The Company shall make monthly payments of $25,000 through December 2023 and monthly interest payments thereafter.

On October 2, 2023, the Company amended the unsecured convertible promissory note with Healthy Pharms Inc., wherein the interest rate was amended to 12.0% per annum and the maturity date was extended to December 18, 2024. Beginning January 15, 2024, the Company shall make monthly cash payments of $50,000 through the maturity date. In November 2023, the Company issued 10,359,372 Class A Subordinate Voting Shares to the note holder at an exercise price of C$0.26 per share to settle $1,992,187 of the promissory note.

On October 6, 2023, the Company amended the October 2021 Convertible Note wherein payment of interest shall be deferred and become due and payable upon the earlier of the maturity date, a change of control, or event of default under the existing agreement terms. In addition, the outstanding balance, including any deferred interest payments, shall accrue interest at a rate of 10.0% per annum through maturity. The conversion price was amended to $0.23 per share.

On October 10, 2023, the Company amended the Promissory Note Purchase Agreement with HI 4Front, LLC and Navy Capital Green Fund, LP, wherein the maturity date was extended to January 1, 2024. As consideration for the amendment, the Company paid an extension fee of C$65,000 in the form of 1,283,425 share purchase warrants, wherein each warrant is exercisable into one (1) Subordinate Voting Share at an exercise price of US$0.20 and expire on October 17, 2027.

$10 Million Senior Secured Credit Facility

On October 13, 2023, the Company entered into a senior secured credit facility with ALT Debt II, LP for an aggregate principal of up to $10.0 million (the "Credit Facility"). A term loan in the amount of $6.0 million was drawn on the closing date and a second tranche of $4.0 million is available to be drawn through July 13, 2024 (together the “Term Loans”). The Term Loans accrue interest, paid monthly in arrears, at a rate equal to the greater of (a) the sum of the prime rate and 7.0% and (b) 15.5% per annum. The Term Loans initially matured on December 1, 2023, and included extension terms under certain circumstances to no further than September 30, 2026. For each term loan, the Company shall pay an origination fee equal to 7.0% of the principal amount of the term loan upon issuance. In addition, the Company shall pay a commitment fee on the undrawn second tranche, which shall accrue at a rate per annum of 2.0% through the earlier of July 13, 2024 and the date on which the maximum facility amount is drawn. The Company may prepay the term loans, in whole or in part, at any time subject to the prepayment fee based on the date of the prepayment. Further, the Company shall pay an exit fee of $1.4 million upon the earlier of the maturity date or the date on which the obligations are paid in full. The funds are committed to building out the Company’s retail operations in Illinois in connection with the launch of the Matteson Facility. Refer to Note 11 of the financial statements for further information.

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In connection with the Credit Facility, on November 13, 2023, the Company entered into a restricted stock unit ("RSU") agreement with ALT Debt II, LP to issue a total of 15,900,000 RSU's, wherein each RSU is exercisable into one (1) Class A Subordinate Voting Share upon the earliest of certain specified conditions, at an issue price of C$0.31 per RSU. If at the time of the distribution event the number of SVS underlying the RSUs is less than 2.12% of the fully diluted SVS of the Company (calculated in accordance with the terms of the RSU Agreement), an additional number of RSUs will be issuable to ALT Debt II, LP by the Company with respect to the deficiency, each issuable at the closing market price on the Canadian Securities Exchange on the trading day prior to issuance.

Equipment Sale

On November 17, 2023, the Company entered into an agreement with a third party to purchase a significant piece of equipment for a purchase price of $1.4 million. $0.95 million of the purchase price was paid in cash with the remaining $0.5 million contemplated in a promissory note. This equipment was classified as assets related to discontinued operations as of December 31, 2023.

Management Changes

Effective March 14, 2023, the Board of Directors appointed Kristopher Krane as an interim member of the Board. Mr. Krane has continued to serve as a strategic advisor to the Company since stepping down as 4Front Co-Founder and President of Mission Dispensaries after more than a decade with the business.

Effective May 16, 2023, Amit Patel resigned as a director and the Chair of the Audit Committee of the Company.

Effective July 31, 2023, Keith Adams resigned as Chief Financial Officer of the Company. Effective August 4, 2023, Nicole Frederick was named Interim Chief Financial Officer.Effective November 30, 2023, Nicole Frederick resigned as Chief Financial Officer of the Company. Effective December 1, 2023, Peter Kampian was appointed as Chief Financial Officer. A description of Mr. Kampian's business experience and executive compensation is included in "Item 10. Directors, Executive Officers and Corporate Governance" and "Item 11. Executive Compensation" in this Form 10-K.

Effective January 8, 2024, Leonid Gontmakher resigned as Chief Executive Officer. Mr. Gontmakher will remain on the board of directors of the Company as a director and will continue to serve as a consultant to the Company.

Effective January 8, 2024, Andrew Thut was appointed as Chief Executive Officer. Mr. Thut resigned as Chief Investment Officer at that time.

Business

As of December 31, 2023, the Company had two business segments:

•THC Cannabis – Encompassing the cultivation, production, manufacturing, and distribution of THC cannabis products to owned dispensaries and third-party retailers, providing ancillary services for the support of wholesale operations, and retail sales direct to end consumers

•CBD Wellness – Pure Ratios encompasses the production and sale of CBD products to third-party customers via a national direct-to-consumer e-commerce platform

THC Cannabis - Retail

As part of its THC Cannabis segment, the Company owns and operates three dispensaries in Massachusetts, and two dispensaries in Illinois. The Company leases the real estate of all three Massachusetts dispensaries and the Calument City, Illinois dispensary. The Company owns the real estate at its South Shore, Illinois dispensary. The Company has entered into two conditional management service agreements to manage the operations of the Euphoria, LLC

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and Westside Visionaries, LLC dispensaries, both of which are still under construction until the dispensaries receive final licenses.

The Company’s dispensaries are branded under the “MISSION” retail brand. The dispensaries sell products which are either: (1) purchased from licensed cannabis producers in the state in which they operate, if allowed under state law and regulation; or, (2) transferred from the Company’s owned production operations within the relevant state market as in the case of markets where “vertical integration” is allowed (i.e. jurisdictions in which the Company can and does own both retail and production cannabis assets such as Illinois or Massachusetts). Product availability varies depending on conditions in the Company’s key retail markets, and the performance of the Company’s own production assets. Interstate commerce of cannabis is illegal under state and federal law, and therefore the Company currently cannot transfer inventory between key markets.

The Company is focused on expanding its own production assets in order to provide better product availability for the retail segments, especially focusing on increasing supply of high-quality dried cannabis flower including markets where such product is in relatively short supply, such as Illinois and Massachusetts.

Generally, the Company sells cannabis packaged goods in accordance with applicable state law and regulation through retail dispensaries (i.e. in store). The Company has also expanded its services in certain markets to accommodate online ordering, curbside pickup, and delivery where such activities are permitted by applicable state law and regulation.

The Company operates age-gated online platforms (https://4frontventures.com/ and https://missiondispensaries.com/) for patients and customers of its dispensaries (the “Online Platform”). The content of such websites is not deemed to be incorporated by reference in this report or filed with the SEC. Prior to launching the Online Platform, the Company’s compliance team and internal and external counsel undertook a review of the applicable federal and state privacy, advertising and cannabis laws and launched the Online Platform in a manner intended to ensure compliance with such laws. The Online Platform allows patients and customers to understand the cannabis products that the Company offers, and view real-time pricing and product availability at the Company’s dispensaries, and as a repository of miscellaneous corporate and investor information. The Online Platform does not provide any education, information or any other functionalities with respect to any third-party dispensaries.

No purchase or sale transactions occur on the Online Platform. A patient or customer may reserve products using the Online Platform, but the patient or customer must be physically present at one of the Company’s dispensaries to consummate the purchase and sale of products. This requirement allows the Company and dispensary staff to ensure that the Company’s standard operating procedures (including its compliance program(s)) are applied to all patients and customers in connection with the purchase and sale of products.

In jurisdictions where medical cannabis is legal, once a patient arrives at the applicable dispensary, dispensary staff must verify the patient’s identity and accreditation (such as a state-issued medical cannabis card), and confirm the patient’s allotment to ensure the user is not exceeding the state’s allotment limits. Once the foregoing is verified, the patient must pay for the product(s) to complete the purchase. If the customer does not have valid identification and accreditation, the customer will not be able to purchase medical cannabis at the applicable Company dispensary, irrespective of any reservation(s) made on the Online Platform.

In jurisdictions where recreational cannabis is legal, once a customer arrives at the applicable dispensary, dispensary staff must verify that the customer is at least 21 years of age by verifying the customer’s government-issued identification. Once the identification is verified, the customer must pay for the product(s) to complete the transaction. If the customer does not have valid identification, the customer will not be able to purchase recreational cannabis at the applicable Company dispensary, irrespective of any reservation(s) made on the Online Platform.

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THC Cannabis - Cultivation & Production

As part of its THC Cannabis segment, the Company operates three facilities in Massachusetts and one facility in Illinois. The Company leases all of these facilities. The Company produces dried cannabis flower and trim, extracted cannabis products such as wax and distillate, and cannabis infused edible products in its production facilities.

The production segment utilizes certain raw materials to produce cannabis flowers and other extracted products. To produce and dry cannabis flower, the Company utilizes growing medium, nutrients, water, electrical power, soil adjuvants, and certain beneficial pests as part of its integrated pest management efforts. There are many sources for such products (except for water and power, which are provided by the local utility), and prices are reflective of commodity pricing worldwide. Some of these raw material inputs are sourced internationally, so changes in import laws or duties are a potential risk. The prices of power and water are generally stable and set through processes that involve governmental approvals over any increases, but the prices of growing medium, nutrients, etc. are all at least somewhat exposed to underlying commodity price volatility.

For extract products, an additional input is butane or propane for use as a solvent. These gases are largely a commodity, with their pricing being reflective of worldwide conditions, and they are supplied to the Company’s operations by local suppliers of industrial gases and materials in the relevant jurisdictions. Prices for such inputs may be volatile, as with any other commodity.

The Company employs certain state registered and unregistered trademarks in association with its cannabis goods, including the dried cannabis flower brands “Island”, “Legends” and “The Hunt,” the edibles brands “Chewee’s”, “Hi-Burst,” “Marmas” and “KOKO Gemz,” and the extracts brands “Evergreen Cannabis”, “Dabl” and “Crystal Clear”.

CBD Wellness

The Company’s CBD Wellness segment is focused upon its ownership and operation of its wholly owned subsidiary, Pure Ratios. Pure Ratios is a cannabidiol (“CBD”) products company that sells a variety of CBD products, both directly to consumer, business to business, and through third party fulfillment vendors. The products include CBD patches, salves, roll-ons, and tablets containing CBD with apoptogenic mushroom ingredients. Pure Ratios produces certain base ingredients, such as the CBD plus proprietary ingredient mixtures which are then injected into the finished patches by contract manufacturers. The Company also sells its Pure Ratios branded products through its CBD e-commerce platform www.pureratios.com. The content of such websites is not deemed to be incorporated by reference in this report or filed with the SEC.

The Pure Ratios segment utilizes certain raw materials to produce its CBD source materials, as do its contract manufacturers. These products include CBD source material, and certain herbs and other ayurvedic ingredients which are part of Pure Ratios’ formulations. These raw materials are generally commodities and their prices are reflective of worldwide commodity prices and volatility.

Pure Ratios utilizes reservoir patch technology, trade secrets and other intangible know-how in the creation and formulation of the proprietary blend of herbs and other ingredients which are combined with CBD in its products.

Pure Ratios creates certain of its CBD source materials through its proprietary processes and techniques, but creation and assembly of finished goods (e.g. salves, patches, etc.) is contracted to third party contract manufacturers. Additionally, Pure Ratios contracts with an internet sales organization which advertises Pure Ratios products, and then fulfills those products as well. Pure Ratios is therefore economically dependent on such third party manufacturers, and the third party advertising/fulfillment company.

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Beginning in 2020, the market experienced a significant decrease in pricing across CBD products as additional suppliers entered the market. However, if federal and state policies change in favor of the industry, and if the FDA begins to test and regulate the quality of related consumer products, the downward trend in pricing could reverse. Please see the “Description of the U.S. Legal Cannabis Industry” section for further information on the regulatory landscape in which the Company operates.

Corporate Structure

4Front Ventures Corp. is a corporation existing under the provisions of the Business Corporations Act (British Columbia). The Company currently owns or manages licensed cannabis facilities in state-licensed markets in the United States. On July 31, 2019, 4Front Holdings LLC (“Holdings”) and Cannex Capital Holdings Inc. (“Cannex”) completed a business combination which resulted in the business of each of Holdings and Cannex becoming the business of the Company (the “Business Combination”).

The following is an organizational chart that represents the current intercorporate relationships among the Company and its subsidiaries.

We are and intend to be, directly or indirectly through certain of our subsidiaries and proposed acquisition targets, engaged in the cultivation, processing, sale and distribution of cannabis in the cannabis marketplaces in Illinois, and Massachusetts, and engaged in leasing cannabis cultivation and production facilities and the supply of packaging in Washington. Although we believe that all of our business activities are compliant with applicable U.S. state and local law, strict compliance with state and local laws with respect to cannabis may neither absolve the Company of liability under U.S. federal law, nor may it provide a defense to any federal proceeding which may be brought against the Company.

We directly or indirectly own and control the voting equity of all the subsidiaries in the percentages set forth in the table below.

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Holding Entity	% Owned	State	License Number	Expiry Date	Description
Healthy Pharms Inc.	100%	MA	MTC285 MR281754 MC281631 MP281450	October 25, 2024 August 06, 2024 August 06, 2024 August 06, 2024	Co-located Cultivation / Production / Dispensary
Mission MA, Inc.	100%	MA	MTC1125 MC281288 MR281259 LIC202074 B-17-2919 MR282028	January 15, 2025 December 19, 2024 December 19, 2024 May 31, 2024 December 31, 2023 (1) December 22, 2024	Co-located Cultivation / Production / Dispensary Adult-use Dispensary
New England Cannabis Corporation, Inc.	100%	MA	MC281251 MP281466	April 11, 2025 (1) April 11, 2025 (1)	Adult-use Cultivation & Production
MMA Capital, LLC	95%	MA	N/A	N/A	Finance Company
Harborside Illinois Grown Medicine, Inc.	100%	IL	DISP.000053 284.000341-DISP 284.000342-DISP 2529888 5516	June 8, 2024 March 31, 2026 March 31, 2026 May 15, 2025 December 31, 2023 (1)	Dispensary (allowing for the operation of 2 dispensaries) Adult use/Dispensary Adult use/Dispensary
IL Grown Medicine, LLC	100%	IL	1504160768- AU 1504160768 1504160768-TR	March 31, 2025 April 16, 2024 (1) July 14, 2024	Cultivation and Transportation
Real Estate Properties LLC	100%	WA	N/A	N/A	Real Estate Holding
Ag-Grow Imports LLC	100%	WA	N/A	N/A	Importer of Equipment
Brightleaf Development LLC	100%	WA	N/A	N/A	Holding Company
Fuller Hill Development Co, LLC	100%	WA	N/A	N/A	Real Estate Holding
Pure Ratios Holdings, Inc.	100%	DE	N/A	N/A	Online CBD Retail
4Front US Holdings, Inc.	100%	DE	N/A	N/A	Holding Company
4Front Holdings, LLC	100%	DE	N/A	N/A	Holding Company
Mission Partners IP, LLC	100%	DE	N/A	N/A	IP Holding Company
Mission Partners USA, LLC	100%	DE	N/A	N/A	Investment Company
Linchpin Investors, LLC	100%	DE	N/A	N/A	Finance Company
4Front Advisors, LLC	100%	AZ	N/A	N/A	Consulting Company
4Front Nevada Corp.	100%	NV	N/A	N/A	Holding Company

(1) Renewal application has been submitted and is in process.

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DESCRIPTION OF THE U.S. LEGAL CANNABIS INDUSTRY

In accordance with Canadian Securities Administrators Staff Notice 51-352 – Issuers with U.S. Marijuana-Related Activities (“Staff Notice 51-352”), below is a discussion of the federal and state-level U.S. regulatory regimes in those jurisdictions where the Company is directly involved through certain subsidiaries and investees and expects to be involved in the U.S. legal cannabis industry. The Company is, through certain subsidiaries, and intends to be, directly or indirectly, through additional subsidiaries and proposed acquisition targets, directly engaged in the cultivation, processing, sale and distribution of cannabis in Illinois and Massachusetts, and in the leasing of cannabis cultivation and production facilities, sale of equipment and supplies, and licensing of intellectual property in Washington.

In accordance with the licenses outlined below, the Company has approximately $0.275 million in surety bonds with states, where required. The surety bonds carry no further liability but provide a financial assurance that the Company will perform according to the laws and regulations governing the license.

The following table is intended to assist readers in identifying those parts of this Form 10-K that address the disclosure expectations outlined in Staff Notice 51-352.

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Industry Involvement	Specific Disclosure Necessary to Fairly Present all Material Facts, Risks and Uncertainties	Cross Reference
All issuers with U.S. Marijuana-Related Activities	Describe the nature of the Corporation’s involvement in the U.S. marijuana industry and include the disclosures indicated for at least one of the direct, indirect and ancillary industry involvement types noted in this table.	•Item 1. Business – Description of the U.S. Legal Cannabis Industry
	Prominently state that marijuana is illegal under U.S. federal law and that enforcement of relevant laws is a significant risk.	•Item 1. Business - Description of the U.S. Legal Cannabis Industry – Legal and Regulatory Matters
	Discuss any statements and other available guidance made by federal authorities or prosecutors regarding the risk of enforcement action in any jurisdiction where the Corporation conducts U.S. marijuana-related activities.	•Item 1. Business - Description of the U.S. Legal Cannabis Industry – Legal and Regulatory Matters
	Outline related risks including, among others, the risk that third-party service providers could suspend or withdraw services and the risk that regulatory bodies could impose certain restrictions on the Corporation’s ability to operate in the U.S.	•Item 1. Business - Description of the U.S. Legal Cannabis Industry – Legal and Regulatory Matters
	Given the illegality of marijuana under U.S. federal law, discuss the Corporation’s ability to access both public and private capital and indicate what financing options are/are not available in order to support continuing operations.	•Item 1. Business - Description of the U.S. Legal Cannabis Industry – Legal and Regulatory Matters
	Quantify the Corporation’s balance sheet and operating statement exposure to U.S. marijuana related activities.	• Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Disclose if legal advice has not been obtained, either in the form of a legal opinion or otherwise, regarding (a) compliance with applicable state regulatory frameworks and (b) potential exposure and implications arising from U.S. federal law.	•Item 1. Business – Description of the U.S. Legal Cannabis Industry and - Compliance

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U.S. Marijuana Issuers with direct involvement in cultivation or distribution	Outline the regulations for U.S. states in which the Corporation operates and confirm how the Corporation complies with applicable licensing requirements and the regulatory framework enacted by the applicable U.S. state.	•Item 1. Business – Description of the U.S. Legal Cannabis Industry - The Regulatory Landscape on a U.S. State Level
	Discuss the Corporation’s program for monitoring compliance with U.S. state law on an ongoing basis, outline internal compliance procedures and provide a positive statement indicating that the Corporation is in compliance with U.S. state law and the related licensing framework. Promptly disclose any non-compliance, citations or notices of violation which may have an impact on the Corporation’s license, business activities or operations.	• Item 1. Business - Compliance
U.S. Marijuana Issuers with indirect involvement in cultivation or distribution	Outline the regulations for U.S. states in which the Corporation’s investee(s) operate.	•Not applicable
	Provide reasonable assurance, through either positive or negative statements, that the investee’s business is in compliance with applicable licensing requirements and the regulatory framework enacted by the applicable U.S. state. Promptly disclose any non- compliance, citations or notices of violation, of which the Corporation is aware, that may have an impact on the investee’s license, business activities or operations.	•Not applicable
U.S. Marijuana Issuers with material ancillary involvement	Provide reasonable assurance, through either positive or negative statements, that the applicable customer’s or investee’s business is in compliance with applicable licensing requirements and the regulatory framework enacted by the applicable U.S. state.	•Item 1. Business - Description of the U.S. Legal Cannabis Industry - The Regulatory Landscape on a U.S. State Level and Compliance

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As of the date hereof, 100% of the Company’s business is derived from direct or ancillary U.S. cannabis-related activities. The following chart sets out, the U.S. state(s) in which the Company and its subsidiaries operates in, as more specifically described below.

State	Primary Cannabis Regulator(s)	Direct, Indirect, or Ancillary Involvement in the U.S. Cannabis Industry (1)	Currently Operational?	Brief Description of
IL	Dispensary: Illinois Department of Financial and Professional Regulation (IDFPR). Cultivation Center: Illinois Department of Agriculture (DOA)	Direct	Yes	Owner of 3 dispensary licenses (allowing for the operation of 2 dispensaries, one with adult use and medical, one with adult use only) and 1 cultivation/production license. Manager of 2 additional not-yet operational adult use dispensaries.
MA	Massachusetts Cannabis Control Commission (CCC)	Direct	Yes	Owner of 2 medical treatment center licenses for retail, cultivation and processing, 3 adult use retail licenses, and 5 adult use cultivation and processing licenses.
WA	Washington State Liquor and Cannabis Board	Ancillary	Yes	Landlord and packaging supplier to cultivation and production licensees.

Regulatory Matters

United States Federal Regulation of the Cannabis Market

Marijuana (the dried flowers, leaves, stems, and seeds of the cannabis plant) is illegal under U.S. federal law, and enforcement of relevant laws governing marijuana-related activities is a significant risk for the Company. The U.S. federal government regulates drugs through, among other things, the Controlled Substances Act (“CSA”), 21 U.S.C. § 801 et seq., which places controlled substances, including marijuana, in a schedule. Marijuana is a Schedule I drug. A Schedule I controlled substance is defined as having no currently accepted medical use, a high potential for abuse and a lack of accepted safety for use under medical supervision. With the limited exception of the U.S. Food and Drug Administration (“FDA”) approving Epidiolex (cannabidiol) (CBD) oral solution for the treatment of seizures associated with two rare and severe forms of epilepsy, Lennox-Gastaut syndrome and Dravet syndrome, the FDA has not approved any other cannabis or cannabis-derived compound as a safe and effective drug for any indication. The FDA has approved Marinol and Syndros for therapeutic uses in the U.S., including for the treatment of anorexia associated with weight loss in AIDS patients. Marinol and Syndros include the active ingredient dronabinol, a synthetic delta-9-tetrahydrocannabinol (“THC”). Another FDA-approved drug, Cesamet, contains the active ingredient nabilone, which has a chemical structure similar to THC and is synthetically derived.

Unlike in Canada, which has federal legislation governing the cultivation, distribution, sale, and possession of medical and adult-use cannabis, cannabis is largely regulated at the state level in the United States.

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State laws regulating cannabis are in direct conflict with the federal CSA, which makes cannabis use and possession federally illegal. As of December 31, 2023, 38 states, the District of Columbia, the Commonwealth of the Northern Mariana Islands, Guam, Puerto Rico, and the U.S. Virgin Islands have legalized cannabis for medical use, and 24 of those states and the District of Columbia, the Commonwealth of the Northern Mariana Islands, the U.S. Virgin Islands, and Guam have legalized adult use of cannabis for recreational purposes. Although many states and territories have and continue to legalize cannabis production and distribution by licensed entities, under U.S. federal law, the possession, use, cultivation, and transfer of cannabis and any related drug paraphernalia remains illegal under any and all circumstances.

On January 4, 2018, former U.S. Attorney General Jeff Sessions issued a memorandum to all U.S. Attorneys in which he rescinded previous guidance from the U.S. Department of Justice (“DOJ”) specific to cannabis enforcement in the United States, including a memorandum drafted by former Deputy Attorney General James Michael Cole in 2013 (the “Cole Memorandum”). With the Cole Memorandum rescinded, U.S. federal prosecutors have been given discretion in determining whether to prosecute cannabis related violations of U.S. federal law.

On November 7, 2018, Mr. Sessions resigned and William Barr was sworn in as United States Attorney General. During his confirmation hearing on January 15, 2019, Mr. Barr pledged not to pursue marijuana companies that comply with state law. This pledge was made in writing, when responding to written questions from Senators: “As discussed in my hearing, I do not intend to go after parties who have complied with the state law in reliance on the Cole Memorandum.” During William Barr’s tenure as Attorney General, DOJ did not pursue marijuana companies that comply with state law.

On March 10, 2021, the U.S. Senate confirmed President Biden’s nominee for Attorney General, Merrick Garland. During his confirmation hearing on February 22, 2021, Garland said, among other things, that “It does not seem to me a useful use of limited resources that we have, to be pursuing prosecutions in states that have legalized and that are regulating the use of marijuana, either medically or otherwise. I don’t think that’s a useful use. I do think we need to be sure there are no end-runs around the state laws that criminal enterprises are doing. So that kind of enforcement should be continued. But I don’t think it’s a good use of our resources, where states have already authorized. That only confuses people, obviously, within the state.” To date, there have been no new federal cannabis memorandums issued by the DOJ or any published change in federal enforcement policy.

On October 6, 2022, President Biden directed the Secretary of Health and Human Services and the Attorney General to initiate the administrative process to review expeditiously how marijuana is scheduled under U.S. federal law. Simultaneously, Biden also announced a pardon of all prior federal simple possession of marijuana offenses and urged state governors to do the same with regard to state level offenses.

On August 29, 2023, the U.S. Department of Health and Human Services (HHS) issued a recommendation to the U.S. Drug Enforcement Administration (DEA) that cannabis be reclassified from Schedule I to Schedule III under the Controlled Substances Act (CSA).1 In January, a review detailing the scientific findings underpinning this recommendation was provided to a Texas lawyer, Matthew Zorn, who had sued HHS for its release. While HHS Secretary Xavier Becerra previously confirmed that his agency had made a recommendation in light of President Biden’s October 2022 Executive Order, neither the text of the recommendation nor any accompanying documentation had been made public.

For fiscal years 2015 through 2018, Congress adopted budget riders to the Consolidated Appropriations Acts (sometimes referred to as the Rohrabacher-Farr or Rohrabacher-Blumenauer Amendment after its original lead sponsor, and now referred to as the Joyce Amendment after its current lead sponsor) to prevent the federal government from using appropriated funds to enforce federal marijuana laws against regulated medical cannabis actors operating in compliance with state and local law. The Rohrabacher-Blumenauer Amendment was included in the fiscal year 2018 budget passed on March 23, 2018.

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On September 27, 2019, the Joyce Amendment was renewed as part of a stopgap spending bill, in effect through November 21, 2019. On December 27, 2020, the Joyce Amendment was approved as part of the omnibus spending bill for fiscal year 2021, effective through September 30, 2021. Congress has renewed the amendment several times, on September 30, 2021, December 3, 2021, February 18, 2022, and March 11, 2022. On March 15, 2022 the amendment was renewed through the signing of the fiscal year 2022 omnibus spending bill, effective through September 30, 2022. As of March 21, 2024, the Joyce Amendment is effective through September 30, 2024.

United States Federal Regulation of Industrial Hemp

On December 20, 2018, the Agricultural Improvement Act of 2018 (commonly known as the “2018 Farm Bill”) was signed into law. The 2018 Farm Bill, among other things, removes industrial hemp and its derivatives, including cannabidiol (“CBD”), from the CSA and amends the Agricultural Marketing Act of 1946 to allow for industrial hemp production and sale in the United States. Under the Farm Bill, industrial hemp is defined as “the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9-tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.”

The 2018 Farm Bill did not legalize CBD derived from “marijuana” (as such term is defined in the CSA), which is and remains a Schedule I controlled substance under the CSA. The U.S. Department of Agriculture (“USDA”) is responsible for promulgating regulations under the 2018 Farm Bill. Pursuant to the 2018 Farm Bill, U.S. territories and tribal governments may adopt their own regulatory plans for hemp production even if more restrictive than federal regulations so long as they meet minimum federal standards approved by the USDA. Those territories or tribal governments which choose not to adopt their own hemp production regulations will be governed by USDA regulations.

On January 15, 2021, USDA issued its final hemp production program rule. The rule outlines various USDA requirements for state and tribal hemp programs and provides a process for submitting production plans to the USDA for approval or rejection within 60 days of submission.

The 2018 Farm Bill also preserved the FDA’s authority related to the introduction of hemp and hemp-derived compounds, such as CBD, in foods, beverages, cosmetics, and dietary supplements. The FDA’s current view is that it is unlawful under the Federal Food, Drug, and Cosmetic Act (“FD&C Act”) to introduce food containing added CBD or THC into interstate commerce, or to market CBD or THC products as, or in, dietary supplements. When a substance is excluded from the dietary supplement definition in the FD&C Act, like CBD is, the FDA can issue a regulation, after notice and comment, finding that CBD would be lawful under the FD&C Act. On January 26, 2023, the FDA announced that it had convened an internal working group to explore new potential regulatory pathways for CBD products, but as of the date of this annual report, has not yet proposed any regulations.

With regard to topical CBD products (i.e., cosmetics), the FDA has said that CBD is not a prohibited cosmetic ingredient (i.e., that CBD topicals are permissible) as long as the product is not intended to affect the structure or function of the body, or to diagnose, cure, mitigate, treat or prevent disease. Despite the FDA’s position on ingestible CBD products, to date, the FDA has not taken enforcement action against producers of such products absent therapeutic claims being made about use of such products. More specifically, the FDA has only issued Warning Letters to producers of ingestible CBD products for making therapeutic claims—with a focus on more aggressive claims—involving the treatment of conditions such as COVID-19, AIDS, diabetes, post-traumatic stress disorder, Alzheimer’s disease, cancer, neuropathy, chronic pain, and anxiety. So far, selling an ingestible CBD product, but not making treatment claims about the same, has not resulted in an FDA enforcement action. Accordingly, even though ingestible CBD products violate the FD&C Act, the FDA does not seem interested in pursuing enforcement action against such products unless they bear therapeutic claims. FDA has also issued Warning Letters to producers of topical CBD products that bear pain relief claims, for falsely claiming that products are FDA-registered, for falsely claiming that products are over-the-counter (“OTC”) drugs, for including OTC drug ingredients in a CBD product without approval to do so, and for violating current good manufacturing practices (“cGMPs”).

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Since the cultivation, processing, production, distribution, and sale of cannabis for any purpose, medical, adult use or otherwise, remains illegal under U.S. federal law, it is possible that we may be forced to cease activities. The United States federal government, through the DOJ, its sub agency the Drug Enforcement Administration, and the U.S. Internal Revenue Service, among other agencies, has the right to actively investigate, audit and shut down cannabis growing facilities, processors and retailers.

United States State Regulation of the Cannabis Market in the States in Which We Operate

Illinois

In January 2014, the Compassionate Use of Medical Cannabis Pilot Program Act, which allows individuals diagnosed with certain debilitating or “qualified” medical conditions to access medical marijuana, became effective in Illinois. In January 2019, the Illinois Department of Health launched the Opioid Alternative Pilot Program, that allows individuals who receive or are eligible to receive a prescription for opioids to access medical marijuana. In June 2019, Illinois legalized adult use marijuana pursuant to the Cannabis Regulation and Tax Act, and effective January 1, 2020, Illinois residents 21 years of age and older may possess up to 30 grams of marijuana flower, up to 5 grams of cannabis concentrate, and up to 500 milligrams of THC in an edible product; the limits for non-residents are half these amounts.

There are five main categories of licenses available in Illinois: cultivation centers, including processing; infusers; transporters; dispensaries; and testing laboratories. Dispensaries are regulated by the Illinois Department of Financial and Professional Regulation and the remaining categories are regulated by the Illinois Department of Agriculture. Licenses are independently issued for each approved activity. All licenses must be renewed annually, except for adult use dispensing organization licenses which are every two years. In addition, the agents of each licensee, such as employees, must also be licensed. Licensed operations must also remain compliant with a number of statutory and regulatory standards, including, without limitation: storage requirements, transportation requirements and inventory tracking through the State’s official seed-to-sale vendor, BioTrack.

We are the owner of one dispensary license (allowing for the operation of two dispensaries) and one cultivation/production license in Illinois.

Massachusetts

On November 6, 2012, Massachusetts voters approved a ballot initiative legalizing medical marijuana effective January 1, 2013. On November 8, 2016, Massachusetts voters approved a second ballot initiative legalizing adult-use marijuana and creating the Cannabis Control Commission (the “CCC”), the regulatory body responsible for overseeing both the medical and adult-use markets in Massachusetts. The adult-use provisions for home use and cultivation took effect on December 15, 2016, and, after some initial delays, the provisions for licensed recreational sales went into effect in November 2018.

There are several categories of licenses available in Massachusetts, including those for: (i) medical marijuana treatment center (“MTC”), which are vertically integrated businesses that cultivate, process, and retail their own marijuana and marijuana products for medical use, (ii) marijuana cultivators (“MCs”), which are businesses licensed to cultivate, process, and package cannabis and to transfer marijuana to other marijuana establishments (“MEs”)—but not to consumers, and (iii) marijuana retailers (“MR”), which are businesses authorized to purchase and transport marijuana and marijuana products from other MEs, and sell or otherwise transfer marijuana and marijuana products to other MEs and consumers through retail locations which may generally only be accessed by consumers who are 21 years or older. MEs include craft marijuana cooperative, cultivator (indoor or outdoor), independent testing laboratory, marijuana courier, marijuana delivery operator, marijuana research facility, microbusiness, product manufacturer, retailer, social consumption establishment, standards laboratory, transporter, or any other type of adult-use marijuana business, all as defined and licensed by the CCC, but exclude MTCs.

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All licenses must be renewed annually, except for adult use dispensing organization licenses which are every two years. In addition, the agents of each certain licensee, such as owners, employees and volunteers, must register with the CCC. Licensed operations must also remain compliant with a number of statutory and regulatory standards, including, without limitation: storage requirements, transportation requirements and recordkeeping and inventory tracking requirements.

We own two MTCs, as well as three adult-use cultivation licenses, three adult-use retail licenses, and two adult-use product manufacturing licenses.

Applicable Banking and Financial Services Laws and Regulations

We are subject to a variety of laws and regulations in the United States that involve banking, money laundering, financial record-keeping and proceeds of crime, including the U.S. Currency and Foreign Transactions Reporting Act of 1970 (commonly known as the “Bank Secrecy Act”), as amended by Title III of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, and the rules and regulations thereunder, and any related or similar rules, regulations or guidelines, issued, administered or enforced by governmental authorities in the United States. We are also subject to similar laws and regulations in Canada, including the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada), as amended. Further, under U.S. federal law, banks or other financial institutions that provide a cannabis business with a checking account, debit or credit card, small business loan, or any other service could be found guilty of money laundering, aiding and abetting, or conspiracy.

Despite these laws, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) issued a memorandum on February 14, 2014 (the “FinCEN Memorandum”) outlining the pathways for financial institutions to back state-sanctioned cannabis businesses in compliance with federal enforcement priorities. The FinCEN Memorandum echoed the enforcement priorities of the Cole Memorandum. Under these guidelines, financial institutions must submit a Suspicious Activity Report (“SAR”) in connection with all cannabis-related banking activities by any client of such financial institution, in accordance with federal money laundering laws. These cannabis-related SARs are divided into three categories—marijuana limited, marijuana priority, and marijuana termination—based on the financial institution’s belief that the business in question follows state law, is operating outside of compliance with state law, or where the banking relationship should be terminated, respectively.

The FinCEN Memorandum states that in some circumstances, it is permissible for banks to provide services to cannabis-related businesses without risking prosecution for violation of federal money laundering laws. The FinCEN Memorandum does not, however, provide banks or other financial institutions with any safe harbors or legal defenses from examination or regulatory or criminal enforcement actions by the DOJ, FinCEN or other federal regulators. In addition, the FinCEN Memorandum can be amended or revoked at any time. As a result, most banks and other financial institutions in the United States do not appear comfortable providing banking services to the cannabis industry.

In addition to the foregoing, banks may refuse to process debit card payments and credit card companies generally refuse to process credit card payments for cannabis-related businesses. As a result, we may have limited or no access to banking or other financial services in the United States. In addition, federal money laundering statutes and Bank Secrecy Act regulations discourage financial institutions from working with any organization that sells a controlled substance, regardless of whether the state it resides in permits cannabis sales.

While the U.S. House of Representatives has passed versions of the Secure and Fair Enforcement (“SAFE”) Act, which would permit federally insured banking institutions and related service providers such as insurers to offer services to cannabis companies that are in compliance with state law, multiple times, it has never passed in the U.S. Senate (although in September 2023 it passed the Senate Banking Committee).

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Constraints on Marketing Products

The development of the Company’s business and operating results may be hindered by applicable restrictions on sales and marketing activities imposed by government regulatory bodies for products containing cannabis or ingredients derived from cannabis, including but not limited, to the FDA, USDA, the Federal Trade Commission (“FTC”), and state regulatory agencies that may institute new regulatory requirements. The regulatory environment in the United States limits the Company’s ability to compete for market share in a manner similar to other industries. If the Company is unable to effectively market its products and compete for market share, or if the costs of compliance with government legislation and regulation cannot be absorbed through increased selling prices for its products, the Company’s sales and operating results could be adversely affected.

Tax Risks Related to Controlled Substances

Limits on U.S. deductibility of certain expenses may have a material adverse effect on our financial condition, results of operations and cash flows. Section 280E (“Section 280E”) of the Internal Revenue Code (the “Code”) prohibits businesses from deducting certain expenses associated with the trafficking of controlled substances (within the meaning of Schedule I and II of the CSA). IRS has applied Section 280E in tax audits against various cannabis businesses in the U.S. that are permitted under applicable state laws. Although the IRS issued a clarification allowing the deduction of certain expenses, the scope of such items is interpreted very narrowly, and the bulk of operating costs and general administrative costs are not permitted to be deducted. While there are currently several pending cases before various administrative and federal courts challenging these restrictions, there is no guarantee that these courts will issue an interpretation of Section 280E that is favorable to cannabis businesses. Several states have passed legislation decoupling from Section 280E, including Massachusetts and Illinois.

Limited Trademark Protection

We will not be able to register any U.S. federal trademarks in classes covering their cannabis-related products or services under the current state of federal law. Because producing, manufacturing, processing, possessing, distributing, and selling cannabis is illegal under the CSA, the United States Patent and Trademark Office (“USPTO”) will not permit the registration of any trademark that does not comply with the CSA. As a result, the Company will unlikely be able to protect its cannabis product trademarks beyond the geographic areas in which its subsidiaries conduct business pursuant to the relevant state’s law.

Civil Asset Forfeiture

Because the cannabis industry remains illegal under U.S. federal law, any real or personal property owned by participants in the cannabis industry, such as the Company, which is used in the course of conducting such business, or any property or monies deemed to be proceeds of an illegal cannabis business, could be subject to seizure by law enforcement and subsequent civil asset forfeiture, even in the absence of a criminal charge or conviction.

FDA Regulation

Cannabis containing more than 0.3% THC (tetrahydrocannabinol) remains a Schedule I controlled substance under U.S. federal law. If the federal government reclassifies cannabis to a Schedule III controlled substance, it is possible that the FDA would regulate it under the FD&C Act, or under the Public Health Service Act. Additionally, the FDA may issue rules, regulations or guidance including good manufacturing practices, related to the growth, cultivation, harvesting and processing of medical cannabis. If regulated by the FDA as a drug, clinical trials would be needed to demonstrate efficacy and safety. It is also possible that the FDA would require that facilities where medical-use cannabis is grown register with the FDA and comply with certain federally prescribed regulations.

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In addition, while the FDA has not yet pursued enforcement actions against the cannabis industry, it has sent numerous warning letters to sellers of CBD products making health claims. The FDA could turn its attention to the cannabis industry especially relating to claims of concern. In the event that some or all of these regulations or enforcement actions are imposed, what the impact this would have on the cannabis industry is unknown, including what costs, requirements and possible prohibitions may be enforced.

Laws and Regulations Affecting the Industry in which the Company Operates are Constantly Changing

The constant evolution of laws and regulations affecting the cannabis industry could detrimentally affect the Company. The current and proposed operations of the Company and its subsidiaries are subject to a variety of local, state and federal medical cannabis laws and regulations relating to the manufacture, management, transportation, storage and disposal of cannabis, as well as laws and regulations relating to consumable products health and safety, the conduct of operations and the protection of the environment. These laws and regulations are broad in scope and subject to evolving interpretations, which could require the Company to incur substantial costs associated with compliance or alter certain aspects of their business plans. In addition, violations of these laws, or allegations of such violations, could disrupt certain aspects of the business plans of the Company and result in a material adverse effect on certain aspects of their planned operations. These laws and regulations are rapidly evolving and subject to change with minimal notice. Regulatory changes may adversely affect the Company's profitability or cause it to cease operations entirely. The cannabis industry may come under scrutiny or further scrutiny by, the FDA, USDA, DEA, IRS, SEC, the DOJ, the Financial Industry Regulatory Advisory or other federal or applicable state or nongovernmental regulatory authorities or self-regulatory organizations that supervise or regulate the production, distribution, sale or use of cannabis for medical or adult use purposes in the United States. It is impossible to determine the extent of the impact of any new laws, regulations or initiatives that may be proposed, or whether any proposals will become law. The regulatory uncertainty surrounding the industry may adversely affect the business and operations of the Company, including without limitation, the costs to remain compliant with applicable laws and the impairment of its business or the ability to raise additional capital. In addition, the Company will not be able to predict the nature of any future laws, regulations, interpretations or applications, and it is possible that regulations may be enacted in the future that will be directly applicable to its business. For example, see the “Risk Factors - Heightened Scrutiny by Canadian Authorities” related to CDS above.

Limitation on Ownership of Licenses

In certain states, the cannabis laws and regulations limit not only the number of cannabis licenses issued, but also the number of cannabis licenses that one person or entity may own. For example, in Massachusetts, no person may have an ownership interest, or control over, more than three license holders in any category - cultivation, processing or dispensing. The Company believes that, where such restrictions apply, it may still capture significant share of revenue in the market through wholesale sales, exclusive marketing relations, provision of management or consulting services, franchising and similar arrangements with other operators. Nevertheless, such limitations on the acquisition of ownership of additional licenses within certain states may limit the Company’s ability to grow organically or to increase its market share in such states.

COMPLIANCE

Under the direction of the Company’s internal compliance team and outside legal counsel, the Company oversees, maintains, and implements a compliance program in conjunction with its operations in each jurisdiction. In addition, the Company has local regulatory/compliance counsel engaged in every state in which it operates. The Company, together with onsite management in each jurisdiction, is responsible for ensuring operations and that employees strictly comply with applicable laws, regulations, and licensing conditions and ensure that operations do not endanger the health, safety or welfare of the community. The Company designates a duly qualified and experienced manager at each location who is responsible to coordinate with operational units within each facility (to extent applicable) to ensure that the operation and all employees are following and complying with the Company’s written security procedures and all regulatory compliance standards.

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In conjunction with the Company’s human resources and operations departments, the compliance department helps oversee and implement training for all employees, including on compliance with state and local laws, compliance with state and local laws, cultivation/manufacturing/dispensing/transport procedures (as applicable), security and safety policies and procedures, inventory control, T&T, seed-to-sale, and point of sale systems training (as applicable).

The Company’s compliance program emphasizes security and inventory control to ensure strict monitoring of cannabis (including living plants and harvested plant material) and cannabis product inventory. Only authorized, properly trained employees in accordance with local and state regulations are allowed to access the Company’s inventory management systems.

The Company and local outside counsel monitor all compliance notifications from the regulators and inspectors in each market, timely resolving any issues identified. The team maintains records of all compliance notifications received from the state regulators or inspectors and how and when the issue was resolved. The Company has created comprehensive standard operating procedures that include detailed descriptions and instructions for receiving shipments of inventory, inventory tracking, recordkeeping and record retention practices related to inventory, as well as procedures for performing inventory reconciliation and ensuring the accuracy of inventory tracking and recordkeeping. The Company maintains accurate records of its inventory at all licensed facilities. Adherence to the Company’s standard operating procedures is mandatory and ensures that the Company’s operations are compliant with the rules set forth by the applicable state and local laws, regulations, ordinances, licenses and other requirements. Training on these standard operating procedures is mandatory by all employees and defined by function and role.

The Company has developed and continues to refine a robust compliance program designed to ensure operational and regulatory requirements continue to be satisfied and has worked closely with experts and outside counsel to develop compliance procedures intended to assist the Company in monitoring compliance with U.S. state law on an ongoing basis. The Company will continue to work closely with outside counsel and other compliance experts to further develop, enhance and improve its compliance and risk management and mitigation processes and procedures in furtherance of continued compliance with the complex regulatory frameworks of the states where the Company operates. The internal compliance program currently in place includes continued monitoring by the Company’s management team, outside counsel, and the Company’s subsidiaries to ensure that all operations conform to and comply with required laws, rules, regulations and standard operating procedures. The Company further requires its operating subsidiaries to report and disclose all instances of non-compliance, regulatory, administrative, or legal proceedings that may be initiated against them to the appropriate point of contact as set forth in the Company’s standard operating procedures.

Notwithstanding the foregoing, from time to time, as with all businesses and all rules, it is anticipated that the Company, through its subsidiaries and establishments to which the Company provides operational support, may experience incidences of non-compliance with applicable rules and regulations, which may include minor matters such as:

•improper illumination of external signage;

•missing fields entries in a visitor log;

•total or partial obstruction of camera views;

•supplemental use of onsite surveillance room (i.e., storage);

•minor inventory discrepancies with regulatory reporting software;

•uptime issues regarding regulatory reporting software;

•missing fields in regulatory reports;

•cleaning schedules not available on display;

•inability to strictly adhere to curbside purchase protocols as written;

•updated staffing plan not immediately available on site; and

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•marijuana infused product utensils improperly stored.

In addition, either on an inspection basis or in response to complaints, such as from neighbors, customers or former employees, State or local regulators may, among other things, issue investigatory- or demand-type letters, give warnings to or cite businesses which the Company operates or for which the Company provides operational support for violations, including those listed above. Such regulatory actions could lead to a requirement or directive to submit and thereafter comply with (for example) a plan of correction. Depending on the jurisdiction, it is also possible regulators may assess penalties and/or amendments, suspensions or revocations of licenses or otherwise take action that may impact the Company’s licenses, business activities, operational support activities or operations.

To address such potential notices of non-compliance, the Company has implemented ongoing compliance reviews to ensure its subsidiaries and establishments to which it provides operational support are operating in conformance with applicable State and local cannabis rules and regulations. In the event non-compliance is discovered, during a compliance review or via internal audit, the Company will promptly remedy the same, including by self-reporting to applicable State and local cannabis regulators as and when required by law and will make all requisite and appropriate public disclosures of non-compliance, citations, notices of violation and the like which may have an impact on its licenses, business activities, operational support activities or operations.

The Company is in compliance with the laws of each of the states of Illinois and Massachusetts and the related cannabis licensing framework. Other than as disclosed in this 10-K, there are no current incidences of non-compliance, citations or notices of violation outstanding which may have an impact on the Company’s licenses, business activities or operations in these states. Notwithstanding the foregoing, like all businesses the Company may from time to time experience incidences of non-compliance with applicable rules and regulations in the states in which the Company operates and such non-compliance may have an impact on the Company’s licenses, business activities or operations in the applicable state. However, the Company takes steps to minimize, disclose and remedy all incidences of non-compliance which may have an impact on the Company’s activities or operations in all states in which the Company operates.

Strict compliance with state and local laws with respect to cannabis may neither absolve the Company of liability under U.S. federal law, nor may it provide a defense to any federal proceeding which may be brought against the Company.

Industry Overview

The legal marijuana industry is comprised of several sub-sectors and is legal under different guidelines in many U.S. states though it remains illegal federally in the U.S. Notwithstanding, the overall sector is generally recognized to be one of the fastest growing in the U.S. Independent projections and publicized reports from sources such as Headset.io, expect total annual cannabis revenue of US$45.8 billion by 2025, both as the sector gains in credibility and acceptance, and as more and more states legalize either medical use or adult recreational use; or both. As of the date hereof, 38 states, the District of Columbia, and four U.S. territories have authorized cannabis for medical use. In addition, 24 states, the District of Columbia, and three U.S territories have authorized cannabis for adult use.

Product Research and Development

Our branded products portfolio includes stock keeping units (“SKUs”) across a range of product categories, including flower, pre-rolls, concentrates, vape, capsules, tinctures, edibles, topicals and other cannabis-related products. Furthermore, we engage in research and development activities focused on developing new extracted or infused cannabis consumer packaged products with a focus on providing consumers with a wide array of high-quality, low-cost products.

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Customers and Revenue

Customers of our consumer packaged goods business include legal state-licensed cannabis dispensaries within each U.S. state in which we operate, as well as national retail channels, including department stores and specialty boutiques. The majority of our branded consumer packaged goods are distributed to our vertically integrated retail locations with the remainder distributed to unrelated, third-party licensed retail cannabis stores. We also sell bulk product at wholesale, toll process for third parties, and do white label production.

We are not dependent upon a single customer, or a few customers, the loss of any one or more of which would not have a material adverse effect on the business. No customer accounted for 10% or more of our consolidated net revenue during fiscal year 2023 or 2022.

Sales, Marketing and Brand Development

The Company employs full-time, in-house marketing, retail, and brand development functions. These functions engage in a range of brand-building activities and strategies, including market research, consumer insights research, new brand development, product innovation, copy & content production, design, packaging, retail operations and sales, to support business performance and growth at the local and national levels.

The Company's branded products, which are developed, acquired and licensed, are sold in four states. The Company’s portfolio of product brands includes the following:

•Edibles: Chewee’s, Cosmic Candy, Hi-Burst, Koko Gemz, Mari’s Mints, Marmas

•Wellness and Pain Relief: Verdure

•Concentrates: Crystal Clear, Dabl, Evergreen, EZ Vape, Terp Stix

•Flower: 1988, Funky Monkey, Island, Legends, Mini Budz, The Hunt

Competition

The cannabis industry is highly competitive. We compete on quality, price, brand recognition, and distribution strength. Our cannabis products compete with other products for consumer purchases, as well as shelf space in retail dispensaries and wholesaler attention. We compete with thousands of cannabis producing companies from small “mom and pop” operations to multi-billion-dollar market cap multi-state operators. Our principal multi-state operator competitors include but are not limited to Curaleaf Holdings, Inc., Green Thumb Industries Inc., Cresco Labs Inc, Ascend Wellness Holdings, Inc., and MariMed, Inc.

Sources and Availability of Production Materials

The principal components in the production of our cannabis consumer packaged goods include cannabis grown internally or acquired through wholesale channels, other agricultural products, and packaging materials (including glass, plastic and cardboard). Due to the U.S. federal prohibition on cannabis, we must source cannabis within each individual state in which it is to be sold. While there are opportunities for centralized sourcing of some packaging materials, given each state’s unique regulatory requirements, multi-state operators do not currently have access to nationwide packaging solutions.

Seasonality

In certain regions, the cannabis industry can be subject to seasonality in some states that allow home grows. Because homegrown plants are typically harvested in the late summer or early fall, there can be some deceleration in retail and wholesale sales trends during these months as these private supplies are consumed.

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Intellectual Property

We protect our brands and trademarks to the extent permissible under applicable law. We hold certain state registered and unregistered trademarks in association with our cannabis goods listed below:

•Edibles: Chewee’s, Cosmic Candy, Hi-Burst, Koko Gemz, Mari’s Mints, Marmas

•Wellness and Pain Relief: Verdure

•Concentrates: Crystal Clear, Dabl, Evergreen, EZ Vape, Terp Stix

•Flower: 1988, Funky Monkey, Island, Legends, Mini Budz, The Hunt

Pure Ratios utilizes reservoir patch technology, trade secrets and other intangible knowhow in the creation and formulation of the proprietary blend of herbs and other ingredients which are combined with CBD in its products.

Employees

As of April 10, 2024, we had 374 full time employees, 25 part-time employees, and 7 consultants. None of our employees are represented by a union or parties to a collective bargaining agreement. We believe our employee relations to be good. We have demonstrated we can execute at scale in highly competitive environments, and now those proven operational capabilities are helping us successfully scale production, distribution and sales across our chosen states.

Corporate Information

Our website is http://www.4FrontVentures.com. The information regarding our website and its content is for your convenience only. The content of our website is not deemed to be incorporated by reference in this report or filed with the SEC.

The Company’s registered office is located at 550 Burrard St., Suite. 2900, Vancouver, BC and its head corporate office, which is the Company’s mailing address, is located at 7010 E. Chauncey Lane, Suite 235, Phoenix, AZ. The Company’s telephone number is (602) 633-3067.

Available Information

Our filings with the Securities and Exchange Commission (“SEC”), including our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports, filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, are accessible free of charge at http://www.4FrontVentures.com as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. Our website also provides links to the charters for our Audit and Compensation Committees as well as our Board Mandate and Code of Business Conduct and Ethics, which can be accessed free of charge at https://4frontventures.com/about-us/.The information provided on our website is not part of this Annual Report and is therefore not incorporated by reference unless such information is otherwise specifically referenced elsewhere in this Annual Report. The SEC also maintains a website at http://www.sec.gov that contains reports, proxy and information statements, and other information regarding our company that we file electronically with the SEC.

Implications of Being an Emerging Growth Company

We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). For as long as we are an emerging growth company, unlike public companies that are not emerging growth companies under the JOBS Act, we will not be required to:

•provide an auditor’s attestation report on management’s assessment of the effectiveness of our system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002 (the “Sarbanes Oxley Act”);

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•provide more than two years of audited financial statements and related management’s discussion and analysis of financial condition and results of operations;

•comply with any new requirements adopted by the Public Company Accounting Oversight Board (the “PCAOB”) requiring mandatory audit firm rotation or a supplement to the auditor’s report in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer;

•provide certain disclosure regarding executive compensation required of larger public companies or hold stockholder advisory votes on the executive compensation required by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”); or

•obtain stockholder approval of any golden parachute payments not previously approved.

We will cease to be an emerging growth company upon the earliest of the:

•last day of the fiscal year in which we have $1.07 billion or more in total annual gross revenues;

•date on which we become a “large accelerated filer” (the fiscal year-end on which the total market value of our common equity securities held by non-affiliates is $700,000 or more as of June 30);

•date on which we issue more than $1.0 billion of non-convertible debt over a three-year period; or

•last day of the fiscal year following the fifth anniversary of our initial public offering.

We have elected to take advantage of certain of the reduced disclosure obligations in this report, and may elect to take advantage of other reduced reporting requirements in future filings. As a result, the information that we provide to our stockholders may be different than you might receive from other public reporting companies in which you hold equity interests.

In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.

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Item 1A. Risk Factors.

Not applicable to smaller reporting companies.

Item 1B. Unresolved Staff Comments.

None.

Item 1C. Cybersecurity.

Risk Management and Strategy

The Company maintains processes designed to identify, assess and manage material risks from cybersecurity threats to its critical computer networks and data, including its intellectual property and confidential information. The Company also uses the services of a third-party managed information technology company to provide cybersecurity software, monitor certain of our endpoints, infrastructure, and networks for irregular activities, to assist in identifying, assessing, and managing material risks and to provide incident response services.

As of the date of this Form 10-K, cybersecurity threats, including as a result of any previous cybersecurity incidents, have not materially affected us, our business strategy, results of operations, or financial condition.

Governance

The Company’s board of directors is responsible for oversight of management, who is responsible for overseeing the Company’s risk management processes, including cybersecurity risks. The Company’s board of directors recognizes the critical importance of maintaining effective cybersecurity measures and management’s role in assessing and managing material risks from cybersecurity threats. The Company’s managements provides the board of directors with timely updates both on a periodic basis and as new cybersecurity risks arise.

Item 2. Properties.

The following table sets forth our owned and leased locations by geographic location as of April 15, 2024. The Company has entered into sale-and-leaseback transactions with Innovative Industrial Properties, Inc. and will continue to enter into such transactions with real estate investment trusts when deemed beneficial to the Company’s strategy. As a result, the Company’s real estate profile may continue to shift to leased properties.

Location	General Character of Property	Size of Property	Segments Using Property	Owned or Leased	Encumbrances
Phoenix, Arizona	Corporate office	2,000 sq. ft.	Corporate	Leased	None
Georgetown, Massachusetts	Retail dispensary and indoor cultivation and processing	80,000 sq. ft.	Cultivation, Production, and Retail	Leased	None
Worcester, Massachusetts	Retail dispensary and indoor cultivation and processing	24,424 sq. ft.	Cultivation and Retail	Leased	None
Holliston, Massachusetts	Indoor cultivation and processing	53,610 sq. ft.	Cultivation and Production	Leased	None
Brookline, Massachusetts	Retail dispensary	1,950 sq. ft.	Retail	Leased	None

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Elk Grove Village, Illinois	Indoor cultivation and processing	93,870 sq. ft.	Cultivation and Production	Leased	None
Matteson, Illinois	Indoor cultivation and processing	249,860 sq. ft.	Cultivation and Production	Leased	None
Chicago, Illinois	Retail dispensary	4,200 sq. ft.	Retail	Owned	None
Calumet City, Illinois	Retail dispensary	3,371 sq. ft.	Retail	Leased	None
Elma, Washington	Warehouse	60,000 sq. ft.	Corporate	Leased from the Port of Grays Harbor under a lease which allows the Company to extend the lease up to an additional 50 years from October 1, 2016, by exercising the nine (9) consecutive five (5) year extension rights under the lease. Subleased to a licensed cultivator and producer.	None
Lathrop Industrial Drive, Washington	Indoor Cultivation, 2 Buildings	116,500 sq. ft.	Legalized Marijuana Production	Leased from IIP. Sublease to a licensed cannabis cultivator and producer.	None

Item 3. Legal Proceedings.

On May 9, 2023, Florival LLC (“Florival”) sued the Company in the California Superior Court for the County of Santa Cruz. The lawsuit alleged the Company had breached an agreement with Florival under which Company subsidiary Island Global Holdings, Inc. (“Island”) agreed to purchase the membership interests of licensed cannabis cultivator Gold Coast Gardens, LLC. Florival claimed damages of $0.85 million. The Company denied it had any direct liability under the agreement, which was executed two years before the Company’s acquisition of Island and asserted an unclean hands defense on behalf of both the Company and Island based on Florival’s inequitable conduct during the litigation. On November 7, 2023, the court entered summary judgment against the Company and Island. The Company and Island have appealed the decision. Management has accrued $0.85 million related to this matter as of December 31, 2023.

On September 14, 2023, Teichman Enterprises, Inc. (“Teichman”) sued Company subsidiary 4Front California Capital Holdings, Inc. (“4Front CA”) in the California Superior Court for the County of Los Angeles. The lawsuit alleged 4Front CA had breached a lease with Teichman for 4Front CA’s facility in Commerce, California by failing to pay rent due under the lease. Teichman sought possession of the property and damages of $0.6 million. 4Front CA denied the allegations, but vacated the facility. Teichman dismissed the lawsuit in January 2024.

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On September 29, 2023, Teichman Enterprises, Inc. sued 4Front CA and the Company in the Superior Court for the County of Los Angeles. The lawsuit alleged the Company had breached a lease agreement with Teichman under which the Company entered into a 10 year lease commitment ending on January 31, 2029, and that the Company breached its guarantee of the lease. Teichman has alleged total rent owed under the lease agreement is $13.4 million in addition to a license fee of $1.0 million and additional damages. Total damages sought from Teichman under the lease contracts is $15.5 million. 4Front CA and the Company denied the allegations in the compliant, and denied that Teichman was entitled to the full amount of damages claimed due to Teichman's obligation to mitigate. Based on management's review of case, the Company has accrued $2.7 million associated with this legal liability as of December 31, 2023.

Apart from the foregoing and ongoing legal proceedings, from time to time, we may be subject to various other legal proceedings and claims that are routine and incidental to our business. Although some of the legal proceedings set forth herein may result in adverse decisions or settlements, Management believes that the final disposition of such matters will not have a material adverse effect on our business, financial position, results of operations or cash flows.

Item 4. Mine Safety Disclosures.

Not Applicable.

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

As of April 10, 2024, the Company has two classes of stock: (i) Class A Subordinate Voting Shares (“SVS”), and (ii) Class C Multiple Voting Shares (“MVS”), both with no par value. The Company is authorized to issue an unlimited number of SVS and an unlimited number of MVS. Holders of SVS are entitled to one vote in respect of each SVS. Holders of MVS are entitled to 800 votes in respect of each MVS and have certain conversion rights as further described in Note 12 of the Company’s Consolidated Financial Statements.

Market Information

Our SVS are listed and posted for trading on the CSE under the symbol “FFNT”. The table below sets forth the monthly high and low closing prices for the SVS traded through the CSE for the period from January 1, 2023 to December 31, 2023 in Canadian dollars.

	High	Low
January	$0.39	$0.30
February	$0.34	$0.30
March	$0.35	$0.23
April	$0.25	$0.21
May	$0.26	$0.21
June	$0.21	$0.16
July	$0.22	$0.16
August	$0.18	$0.11
September	$0.37	$0.22
October	$0.33	$0.28
November	$0.31	$0.14
December	$0.19	$0.13

The SVS are also quoted on the OTCQX under the symbol “FFNTF.” The table below sets forth the monthly high and low closing prices for the SVS traded through the OTCQX for the period from January 1, 2023 to December 31, 2023 in U.S. dollars.

	High	Low
January	$0.28	$0.23
February	$0.26	$0.22
March	$0.25	$0.18
April	$0.19	$0.16
May	$0.20	$0.16
June	$0.16	$0.13
July	$0.17	$0.13
August	$0.14	$0.09
September	$0.28	$0.16
October	$0.24	$0.20
November	$0.22	$0.12
December	$0.15	$0.09

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Holders of Record

The approximate number of holders of record of the SVS as of April 10, 2024 was 230.

Dividends

We have not historically declared dividends on our SVS, and we do not currently intend to pay dividends on our SVS. The declaration, amount and payment of any future dividends on SVS, if any, will be at the sole discretion of our board of directors, out of funds legally available for dividends. We anticipate that we will retain our earnings, if any, for the growth and development of our business.

Item 6. [RESERVED]

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion should be read in conjunction with the Consolidated Financial Statements and the accompanying notes presented in Item 8 of this Annual Report on Form 10-K. Except for historical information, the discussion in this section contains forward-looking statements that involve risks and uncertainties. Future results could differ materially from those discussed below for many reasons, including the risks described under the heading “Risk Factors” appearing elsewhere in this Annual Report on Form 10-K and as noted below.

Disclosure Regarding Forward-Looking Statements

This Annual Report on Form 10-K contains forward-looking information about the Company that is intended to be covered by the safe harbor for "forward-looking statements" provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical facts. Words such as "guidance," "expect," "will," "may," “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “suggests,” “potential” and similar expressions are intended to identify forward-looking statements. These statements include information regarding our plans, strategies, and expectations of future financial performance and prospects. Forward-looking statements are not guarantees of performance. These statements are based upon the current beliefs and expectations of our management and are subject to significant risk and uncertainties that could cause actual results to differ materiality from those expressed in, or implied or projected by, the forward-looking information and statements. Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot assure investors that the expectations will prove to be correct. Many factors, including those set forth under the heading :Risk Factors" appearing elsewhere in this Annual Report on Form 10-K, as well as factors such as changes in the legalization of marijuana across the United States could cause actual results to differ materially from the expectations reflected in the forward-looking statements. New risk factors emerge over time and it is not possible to predict all such risk factors, or to assess the impact such risk factors may have on the Company's business. We undertake no obligation to update publicly any forward-looking statements whether as a result of new information, future events or otherwise, except as required by law.

Overview

4Front Ventures Corp. ("4Front", the "Company", "we" or "our") has two primary operating segments: THC Cannabis and CBD Wellness. With regard to its THC Cannabis segment, the Company owns, operates, or manages five dispensaries and four cultivation and production facilities in Massachusetts and Illinois as of December 31, 2023. The Company's five "MISSION" branded dispensaries are located in: Brookline, MA; Georgetown, MA; Worcester, MA; South Shore (Chicago), IL; and Calumet City, IL. The Company's four cultivation and production assets differ by state as summarized below:

Massachusetts

•Indoor cultivation facility in Worcester, MA totaling 34,000 square feet, of which up to 27,000 square feet is and can be used for cultivation operations (4,500 square feet of flowering canopy). The Worcester facility includes an on-site dispensary of 6,000 square feet.

•Indoor cultivation and production facility in Georgetown, MA totaling 72,000 total square feet, of which 35,300 square feet is and can be used for cultivation operations (8,000 square feet of flowering canopy), and 23,500 square feet is used for manufacturing and other operations. The Georgetown facility includes an on-site dispensary of approximately 6,000 square feet.

•Indoor cultivation facility in Holliston, MA totaling 52,000 square feet, of which 49,000 square feet is and can be used for cultivation operations.

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Illinois

•Indoor cultivation and production facility in Elk Grove, IL totaling 94,000 square feet, of which 21,000 square feet is and can be used for cultivation operations and 17,000 square feet is used for manufacturing and other operations, and the remainder has been subleased or to be subleased.

•The Company continues to expand its footprint in the Illinois market with the construction of its Matteson facility, which is anticipated to start cultivation and production during the second quarter of 2024. Matteson is a 250,000 square feet state-of-the-art cannabis facility built from the ground up. The facility will have 108,000 square feet of cultivation space, 53,250 square feet manufacturing space, 12,500 square feet of office space, and approximately 76,250 square feet available for future expansion.

•The Company is also in the process of opening a third dispensary in the city of Chicago, which is anticipated to open in May 2024 with a fourth dispensary being planned and targeted to open during the second half of 2024. Additionally, the Company entered into an agreement to purchase a cannabis license to enable the Company to open an additional dispensary in the state of Illinois.

4Front’s operations are strategically situated in key geographic locations across its major markets to allow the Company to efficiently scale its operations, and competitively position it to take advantage of future growth opportunities as cannabis legalization efforts continue across the U.S. Management intends to continue scaling its operations in Illinois and Massachusetts to further increase its market share. The Company has made significant investments in manufacturing and production facilities in each of these markets. The Company remains focused on scaling and driving operational effectiveness throughout its portfolio, in addition to developing trusted brands and products to continue to grow revenue, build customer loyalty, and increase market share.

As part of its THC Cannabis segment, the Company also leases real estate and sells equipment, supplies, and intellectual property to cannabis producers in the state of Washington.

The Company’s CBD Wellness segment is focused upon its ownership and operation of its wholly owned subsidiary, Pure Ratios Holdings, Inc. (“Pure Ratios”), a CBD-focused wellness company that sells non-THC hemp derived products throughout the United States.

While marijuana is legal under the laws of several U.S. states (with varying restrictions), the United States Federal Controlled Substances Act classifies all “marijuana” as a Schedule I drug, whether for medical or recreational use. Under U.S. federal law, a Schedule I drug or substance has a high potential for abuse, no accepted medical use in the United States, and a lack of safety for the use of the drug under medical supervision.

Refer to "Item 1. Business" of this Form 10-K for recent developments during the current fiscal year.

Results of Operations

The Company’s Consolidated Financial Statements are prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”), and the financial information contained herein, are reported in thousands (000’s) of United States dollars (“$”) unless otherwise specified. Canadian dollar amounts are denoted by “C$”.

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The following table sets forth information regarding our consolidated results of operations for the years ended December 31, 2023 and 2022:

	For the Years Ended December 31,				Change
	2023		2022		$		%
Revenue from Sale of Goods	$	86,132	$	95,722	$	(9,590)	10	%
Real Estate Income	11,303		11,942		(639)		5	%
Total Revenues	97,435		107,664		(10,229)		10	%
Cost of Goods Sold	(51,543)		(56,239)		4,696		8	%
Gross Profit	45,892		51,425		(5,533)		11	%
Total Operating Expense	66,739		66,445		294		—	%
Income (Loss) from Operations	(20,847)		(15,020)		(5,827)		39	%
Total Other Income (Expense), net	(16,779)		3,806		(20,585)		(541)	%
Net Loss from Continuing Operations Before Income Taxes	(37,626)		(11,214)		(26,412)		236	%
Income Tax Expense	(7,092)		(10,077)		2,985		30	%
Net Loss from Continuing Operations	(44,718)		(21,291)		(23,427)		110	%
Net Income from Discontinued Operations, Net of Taxes	(46,914)		(25,586)		(21,328)		83	%
Net Loss	$	(91,632)	$	(46,877)	$	(44,755)	95	%

Revenue from Sale of Goods

Revenue from the sale of goods related to continuing operations for the year ended December 31, 2023, was $86.1 million – a decrease of $9.6 million or 10% when compared to $95.7 million for the year ended December 31, 2022. Refer to the segment discussion below for specific revenue drivers year over year.

Real Estate Income

Real estate income from leasing cannabis production facilities for the year ended December 31, 2023 was $11.3 million, which remained materially consistent when compared to $11.9 million for the year ended December 31, 2022.

Operating Segment Income

Total revenue from continuing operations in the reportable segments from which we operate were as follows:

	For the Years Ended December 31,				Change
	2023		2022		$		%
THC Cannabis	$	96,588	$	106,632	$	(10,044)	(9)	%
CBD Wellness	847		1,032		(185)		(18)	%
Total Net Revenues	$	97,435	$	107,664	$	(10,229)	(10)	%

Net revenues for the THC cannabis segment were $96.6 million for the year ended December 31, 2023, representing a decrease of $10.0 million or 9%, when compared to the year ended December 31, 2022. Revenue in Massachusetts decreased 7.4% to $44.1 million, primarily due to lower volumes as a result of underperforming flower yields and price declines year over year. Revenue in Illinois declined by 7.1% to $37.7 million primarily due to price compression. Other revenue decreased 28% to $3.5 million due to lower hardware and equipment sales.

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Net revenues for the CBD wellness segment were $0.8 million for the year ended December 31, 2023, resulting in a decrease of 18%, due primarily to the Company's strategy to focus on the THC business.

Cost of Goods Sold

Cost of goods sold for the year ended December 31, 2023 was $51.5 million, representing a decrease of $4.7 million or 8% when compared to $56.2 million for the year ended December 31, 2022. The decrease in cost of goods sold was directly related to the decrease in revenue from the sale of goods. Operating costs including labor, utilities, and purchased material also increased during the year, which the Company was not able to pass through to customers due to strong price competition in its respective markets.

Gross Profit

Gross profit for the year ended December 31, 2023 was $45.9 million, or 47% of revenue, compared to $51.4 million, or 48% of revenue, for the year ended December 31, 2022. The decrease in gross profit of $5.5 million was primarily due to the decrease in revenue as described above. In addition, the decrease in gross margin from 48% to 47% is attributable to the price compression seen in both Massachusetts and Illinois. During the fiscal third quarter ended September 30, 2023, the Company ceased operations in the California market and renewed its focus on core, profitable markets of Illinois and Massachusetts.

Total Operating Expenses

Operating expenses consist of selling, general and administrative expenses, depreciation and amortization, share-based compensation expense, and transaction and restructuring expenses. Total operating expenses for the year ended December 31, 2023, was $66.7 million, an increase of $0.3 million, as compared to the year ended December 31, 2022. The change was primarily driven by a $7.1 million increase in selling, general and administrative expenses, which includes an increase in lease related costs of $3.5 million related to the Matteson facility and another $1.0 million related to the other facilities, in addition to $7.1 million increase in bad debt expense, partially offset by a decline in salaries and benefits and professional fees, each declined by $1.3 million. The overall operating expense were offset by a decrease of $6.5 million in impairment on goodwill and intangible assets, as there was no impairment loss recognized during the current year. In addition, transaction and restructuring related expenses for the year ended December 31, 2023 decreased, $0.8 million compared to prior year, primarily due to the acquisition of NECC during fiscal year 2022. Refer to Note 16 of the Consolidated Financial Statements includes further detail on selling, general and administrative expenses.

Total Other Income (Expense), net

Other income (expense) consists primarily of interest expense, the change in fair value of derivative liability, and other income. Total other expense for the year ended December 31, 2023, was $16.8 million, as compared to total other income of $3.8 million for the year ended December 31, 2022. This decrease was primarily due to other income for the year ended December 31, 2022 which included $7.4 million related to the Employee Retention Tax Credit and $3.8 million related to our Prepaid Forward Purchase Agreement with Frisco SPV, LLC, versus no such transactions in the current year. Interest expense for the year ended December 31, 2023, increased by $1.2 million primarily due to the recognition and amortization of debt discount related to the restricted stock units issued to ALT Debt II, LP ("Altmore") during the same period in the amount of $2.1 million. The Company also recognized a loss on changes in fair value of derivative liability of $0.4 million in the current year as compared to a gain on changes in fair value of derivative liability of $3.5 million in the prior year. Refer to Note 20 of the consolidated financial statements which includes further detail on the Prepaid Forward Purchase Agreement.

Net Loss

Net loss from continuing operations for the year ended December 31, 2023, was $44.7 million, compared to $21.3 million for the year ended December 31, 2022. The increase in net loss from continuing operations for the year

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ended December 31, 2023, was primarily due to the decrease in gross profit of $5.5 million and changes in other income (expense) as described above, offset by a decrease of $3.0 million in income tax expense.

Non-GAAP Financial and Performance Measures

To supplement financial measurements prepared in accordance with U.S. GAAP management uses certain non-GAAP financial measures such as Adjusted EBITDA, to analyze and compare operating results across accounting periods, for financial and operational decision making, for planning and forecasting purposes and to evaluate the Company’s financial performance. Management believes the non-GAAP measurement of Adjusted EBITDA reflects our ongoing business in a manner that allows for meaningful comparisons and analysis of trends in the business, as it facilitates comparing financial results across accounting periods. We also believe that this non-GAAP financial measure is useful to investors because it enables investors to evaluate the Company’s operating results and future prospects in the same manner as management. However, non-GAAP financial measures are not prepared in accordance with U.S. GAAP and may exclude expenses and gains that may be unusual in nature, infrequent or not reflective of the Company’s ongoing operating results. As there are no standardized methods of calculating non-GAAP measures, our methods may differ from those used by others, and accordingly, the use of these measures may not be directly comparable to similarly titled measures used by other companies. Accordingly, non-GAAP measures are intended to provide additional information and should not be considered in isolation as a substitute for or superior to measures of performance prepared in accordance with U.S. GAAP. We caution investors not to place undue reliance on non-GAAP measures, but instead to consider them with the most directly comparable U.S. GAAP measures.

Adjusted EBITDA

Adjusted EBITDA is a financial measure that is not calculated in accordance with U.S. GAAP. Management believes that because Adjusted EBITDA excludes (a) certain non-cash expenses (such as depreciation, amortization and stock-based compensation) and (b) expenses that are not reflective of the Company’s core operating results over time, it represents a clearer picture of what the Company's operations could be doing. Adjusted EBITDA as defined by the Company is detailed below. We believe Adjusted EBITDA provides investors with additional useful information to measure the Company’s financial performance, particularly with respect to changes in performance from period to period. The Company’s management uses Adjusted EBITDA internally (a) as a measure of operating performance, (b) for planning and forecasting in future periods, and (c) in communications with the Company’s board of directors concerning the Company’s financial performance.

As there are no standardized methods of calculating non-GAAP measures, the Company’s presentation of Adjusted EBITDA are not necessarily comparable to other similarly titled captions of other companies and should not be considered by investors in isolation or used as a substitute for or alternative to net income or any measure of financial performance calculated and presented in accordance with U.S. GAAP. Instead, management believes Adjusted EBITDA should be used to supplement the Company’s financial measures derived in accordance with U.S. GAAP to provide investors with an understanding of the trends affecting the business as management views them.

Although Adjusted EBITDA is frequently used by investors and securities analysts in their evaluations of companies, Adjusted EBITDA has limitations as an analytical tool, and investors should not consider it in isolation or as a substitute for, or more meaningful than, amounts determined in accordance with U.S. GAAP. Some of the limitations to using non-GAAP measures as an analytical tool are (a) they do not reflect the Company’s interest income and expense, or the requirements necessary to service interest or principal payments on the Company’s debt, (b) they do not reflect future requirements for capital expenditures or contractual commitments, and (c) although depreciation and amortization charges are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and non-GAAP measures do not reflect any cash requirements for such replacements.

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The prior year reconciliation of Net Loss to Adjusted EBITDA has been adjusted for consistency with current year presentation. These adjustments did not affect net loss, revenues and stockholders’ equity.

The following table reconciles Net Loss (the most directly comparable U.S. GAAP measure) to Adjusted EBITDA for the years ended December 31, 2023 and 2022:

	For the Years Ended December 31,
	2023		2022
Net loss (U.S. GAAP)	$	(91,632)	$	(46,877)
Less: Net loss from discontinued operations, net of taxes	46,914		25,586
Net loss from continuing operations	(44,718)		(21,291)
Adjusted For:
Interest income	(3)		(32)
Interest expense (1)	30,920		26,733
Income tax expense	7,092		10,077
Depreciation and amortization (2)	9,373		8,397
EBITDA from Continuing Operations (Non-GAAP)	$	2,664	$	23,884
Share-based compensation (3)	6,860		7,214
Impairment of goodwill and intangible assets	—		6,484
Change in fair value of derivative liability	385		(3,502)
Change in fair value of contingent consideration	—		(2,393)
Loss on disposal and lease termination	149		228
Adjusted EBITDA from Continuing Operations (Non-GAAP)	$	10,058	$	31,915

(1) For the current period, interest expense includes interest related to leases of $17.1 million for the year ended December 31, 2023. Prior year amounts of $14.1 million for the year ended December 31, 2022 have been reclassified for consistency with the current year presentation. Non-cash interest expense related to leases was previously presented as a reconciling item from EBITDA from Continuing Operations (Non-GAAP) to Adjusted EBITDA from Continuing Operations (Non-GAAP).

(2) For the current period, depreciation and amortization expense includes amortization related to leases of $3.8 million for the year ended December 31, 2023. Prior year amounts of $3.3 million for the year ended December 31, 2022 have been reclassified for consistency with the current year presentation. Non-cash amortization expense related to leases was previously presented as a reconciling item from EBITDA from Continuing Operations (Non-GAAP) to Adjusted EBITDA from Continuing Operations (Non-GAAP).

(3) Although share-based compensation is an important component of employee and executive compensation, determining the fair value of share-based compensation involves a high degree of judgment and as a result the Company excludes share-based compensation from Adjusted EBITDA because its believes that the expense recorded may bear little resemblance to the actual value realized upon future exercise or termination of any related share-based compensation award.

Adjusted EBITDA should not be considered in isolation from, or as a substitute for or superior measure of, Net Loss. There are a number of limitations related to the use of Adjusted EBITDA as compared to Net Loss, the closest comparable U.S. GAAP measure. Adjusted EBITDA, as defined by the Company, excludes from Net Loss:

•Interest income and expense, including interest expense related to leases;

•Current income tax expense;

•Non-cash depreciation and amortization expense, including amortization of leases;

•Non-cash equity based compensation expense;

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•Non-cash impairment charges, as the charges are not expected to be a recurring business activity;

•Non-cash changes in fair value of derivative liability and contingent consideration; and

•Loss on disposal of assets and lease terminations.

Liquidity and Capital Resources

As of December 31, 2023, the Company had total current liabilities of $104.0 million and current assets of $33.9 million to meet our current obligations, as compared to $77.5 million and $53.3 million, respectively, as of December 31, 2022. The Company had a working capital deficit of $70.1 million and $24.2 million, as of As of December 31, 2023 and 2022, respectively. The decline in working capital of $45.9 million was primarily driven by a decrease in cash of $10.9 million as the Company executes its retail expansion strategy and completes the build out of the cultivation and production facility in Matteson, Illinois, which was completed in February 2024. This was coupled with the October 2021 Convertible Note of $15.8 million now classified as current on the consolidated balance sheet, an increase in taxes payable of $3.1 million, and an increase in derivative liability of $4.6 million due to the warrants issued in August 2023 to our senior secured lender, LI Lending, and the restricted stock units issued in November 2023 to Altmore. The conditions described above raise substantial doubt with respect to the Company’s ability to meet its obligations for at least one year from the issuance of the form 10-K as of and for the year ended As of December 31, 2023, and therefore, to continue as a going concern.

The Company is an early-stage growth company. It is generating cash from sales and is deploying its capital reserves to acquire and develop assets capable of producing additional revenues and earnings over both the immediate and near term. Capital reserves are being utilized for capital expenditures and improvements in existing facilities, product development and marketing, as well as customer, supplier and investor and industry relations. Historically, the Company has raised capital as needed however there is no guarantee the Company will be able to continue to raise funds in the same manner it has historically.

Cash Flows

Cash flows from discontinued operations are separately presented on the consolidated statements of cash flows for each operating, investing, and financing section of the statement. For liquidity purposes, the focus of this section is on the cash flow from continuing operations which is expected to affect future liquidity and capital resources.

Net Cash Provided by Continuing Operating Activities

Net cash provided by continuing operating activities was $3.9 million for the year ended December 31, 2023, compared to $23.4 million for the year ended December 31, 2022. The change was primarily attributable to the increase in net loss as a result of a decrease in gross profits and a decrease in other income as described above.

Net Cash Used in Continuing Investing Activities

Net cash used in continuing investing activities was $3.2 million for the year ended December 31, 2023, compared to $26.2 million for the year ended December 31, 2022. The change was primarily attributable to the cash paid for asset acquisitions and business combinations in fiscal year 2022, versus no comparable transactions for the year ended December 31, 2023.

Net Cash (Used in) Provided by Continuing Financing Activities

Net cash used in continuing financing activities was $5.5 million for the year ended December 31, 2023, compared to net cash provided by continuing financing activities of $10.7 million for the year ended December 31, 2022. The change was primarily attributable to the non-recurring nature of the proceeds from the construction finance liability of $16.0 million associated with the NECC acquisition during the year ended December 31, 2022. Refer to Note 7 of the audited consolidated financial statements which includes further detail on our acquisition of NECC.

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Availability of Additional Funds

While the Company believes that its current cash on hand is sufficient to meet operating and capital requirements for the next twelve months, there is substantial doubt about continuing as a going concern thereafter that the Company will be able to meet such requirements. The Company may need to raise further capital, through the sale of additional equity or debt securities or otherwise, to support its future operations. The Company’s operating needs include the planned costs to operate its business, including amounts required to fund working capital and capital expenditures. If the Company is unable to secure additional capital, it may be required to curtail its research and development initiatives and take additional measures to reduce costs in order to conserve its cash.

Our operating needs include the planned costs to operate our business, including amounts required to fund working capital and capital expenditures. Our future capital requirements and the adequacy of our available funds will depend on many factors, including our ability to successfully commercialize our products and services, competing technological and market developments, and the need to enter into collaborations with other companies or acquire other companies or technologies to enhance or complement our product and service offerings.

Contractual Obligations

The Company has the following contractual obligations as of December 31, 2023, which are expected to be payable in the respective periods:

	Less than 1 year		1 to 3 years		3 to 5 years		Greater than 5 years		Total
Accounts payable and accrued liabilities	$	20,429	$	977	$	—	$	—	$	21,406
Convertible notes, notes payable and accrued interest	25,630		47,513		11,030		—		84,173
Construction finance liability	—		16,000		—		—		16,000
Total	$	46,059	$	64,490	$	11,030	$	—	$	121,579

Subsequent Events

Refer to Note 24 of the Consolidated Financial Statements for events that have occurred through April 15, 2024.

Off-Balance Sheet Arrangements

We did not have, during the periods presented, and we do not currently have, any relationships with any organizations or financial partnerships, such as structured finance or special purpose entities, that would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Recent Accounting Pronouncements

A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in “Part IV, Item 15, Note 2 – Significant Accounting Policies” to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K.

Significant Accounting Judgments, Estimates and Assumptions

The Company makes estimates and assumptions about the future that affect the reported amounts of assets and liabilities. Estimates and judgments are continually evaluated based on historical experience and other factors,

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including expectations of future events that are believed to be reasonable under the circumstances. Actual experience may differ from these estimates and assumptions.

The effect of a change in an accounting estimate is recognized prospectively by including it in the statement of operations in the period of the change, if the change affects that period only, or in the period of the change and future periods, if the change affects both.

Information about critical judgments in applying accounting policies that have the most significant risk of causing material adjustment to the carrying amounts of assets and liabilities recognized in the financial statements within the next financial year are discussed below.

Significant estimates made in the preparation of these consolidated financial statements include the following areas:

Fair Value of Financial Instruments

The individual fair values attributed to the different components of a financing transaction, notably investment in equity securities, derivative financial instruments, convertible debt and loans, are determined using valuation techniques. The Company uses judgment to select the methods used to make certain assumptions and in performing the fair value calculations in order to determine (a) the values attributed to each component of a transaction at the time of their issuance; (b) the fair value measurements for certain instruments that require subsequent measurement at fair value on a recurring basis; and (c) for disclosing the fair value of financial instruments subsequently carried at amortized cost. These valuation estimates could be significantly different because of the use of judgment and the inherent uncertainty in estimating the fair value of these instruments that are not quoted in an active market. The assumptions regarding the derivative liabilities are disclosed in Note 21.

Inventory

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. 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.

Useful Lives of Property, Plant and Equipment and Intangible Assets

Property, plant and equipment are amortized or depreciated over their useful lives. Useful lives are based on management’s estimate of the period that the assets will generate revenue, which are periodically reviewed for continued appropriateness. Changes to estimates can result in significant variations in the carrying value and amounts charged to the consolidated statement of operations in specific periods.

Amortization of intangible assets is dependent upon estimates of useful lives based on management’s estimate.

Impairment of Goodwill & Long-Lived Assets

Goodwill arises from business combinations and is generally determined as the excess of the fair value of the consideration transferred, plus the fair value of any non-controlling interests in the acquiree, over the fair value of the net assets acquired and liabilities assumed as of the acquisition date. Goodwill acquired in a business combination is not amortized but tested for impairment at least annually, on October 31, or more frequently if events

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and circumstances exist that indicate that a goodwill impairment test should be performed. The Company uses the approach described in ASC Topic 350 which includes both qualitative and quantitative measures to test for impairment. In the impairment test, the Company measures the recoverability of goodwill by comparing a reporting unit’s carrying amount to the estimated fair value of the reporting unit. The carrying amount of each reporting unit is determined based upon the assignment of the Company’s assets and liabilities, including existing goodwill, to the identified reporting units. The Company relies on a number of factors, including historical results, business plans, forecasts and market data. Changes in the conditions for these judgments and estimates can significantly affect the recoverable amount.

Long-lived assets, including amortizable intangible assets, are tested annually for impairment if events or changes in circumstances indicate that the carrying amount may not be recoverable. Once a triggering event has occurred, the impairment test employed is based on whether the intent is to hold the asset for continued use or to hold the asset for sale. The impairment test for assets held for use requires a comparison of cash flows expected to be generated over the useful life of an asset group to the carrying value of the asset group. An asset group is established by identifying the lowest level of cash flows generated by a group of assets that are largely independent of the cash flows of other assets and could include assets used across multiple businesses or segments. If the carrying value of an asset group exceeds the estimated undiscounted future cash flows, an impairment would be measured as the difference between the fair value of the group’s long-lived assets and the carrying value of the group’s long-lived assets. The impairment is only to the extent the carrying value of each asset is above its fair value. For assets held for sale, to the extent the carrying value is greater than the asset’s fair value less costs to sell, an impairment loss is recognized for the difference. Determining whether a long-lived asset is impaired requires various estimates and assumptions, including whether a triggering event has occurred, the identification of the asset groups, estimates of future cash flows and the discount rate used to determine fair values.

The estimates and assumptions used in management’s impairment analysis are based on current facts, historical experience and various other factors that the Company believes to be reasonable under the circumstances, the results of which form the basis for making judgments about its impairment analysis. The impairment estimates and assumptions bear the risk of change due to its inherent nature and subjectivity. The unanticipated effects of a global pandemic and decreases in consumer demand could reasonably expected to negatively affect the key assumptions and estimates.

Business Combinations

Classification of an acquisition as a business combination or an asset acquisition depends on whether the assets acquired constitute a business, which can be a complex judgment. Whether an acquisition is classified as a business combination or asset acquisition can have a significant impact on the entries made on and after acquisition.

In determining the fair value of all identifiable assets, liabilities and contingent liabilities acquired, the most significant estimates relate to contingent consideration and intangible assets. Management exercises judgement in estimating the probability and timing of when earn-outs are expected to be achieved which is used as the basis for estimating fair value. For any intangible asset identified, depending on the type of intangible asset and the complexity of determining its fair value, an independent valuation expert or management may develop the fair value, using appropriate valuation techniques, which are generally based on a forecast of the total expected future net cash flows. The evaluations are linked closely to the assumptions made by management regarding the future performance of these assets and any changes in the discount rate applied. See Note 7 of the Consolidated Financial Statements for additional details.

Intangible assets acquired in a business combination are measured at fair value at the acquisition date. The Company must exercise judgment in identifying intangible assets, in determining their useful life, if any, and in testing for impairment.

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Share-Based Compensation

Share-based compensation expense is measured by reference to the fair value of the stock options, warrants or other equity instruments at the date at which they are granted. Estimating fair value for granted stock options requires determining the most appropriate valuation model which is dependent on the terms and conditions of the grant. This estimate also requires determining the most appropriate inputs to the valuation model including the expected life of the option, volatility, dividend yield, and rate of forfeitures. See Note 15 of the Consolidated Financial Statements.

Income Taxes

The Company must exercise judgment in determining the provision for income taxes. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The Company recognizes liabilities and contingencies for expected tax audit issues based on the Company’s current understanding of the tax law. For matters where it is probable that an adjustment will be made, the Company records its best estimate of the tax liability including the related interest and penalties in the current tax provision.

In addition, the Company recognizes deferred tax assets relating to tax losses carried forward to the extent there are sufficient taxable temporary differences (deferred tax liabilities) relating to the same taxation authority and the same taxable entity against which the unused tax losses can be utilized. However, utilization of the tax losses also depends on the ability of the taxable entity to satisfy certain tests at the time the losses are recouped.

Emerging Growth Company Status

The Company is an “emerging growth company” as defined in the Section 2(a) of the Exchange Act, as modified by the Jumpstart Our Business Start-ups Act of 2012, or the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 13(a) of the Exchange Act for complying with new or revised accounting standards applicable to public companies. The Company has elected to take advantage of this extended transition period and as a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Not required for smaller reporting companies.

Item 8. Financial Statements and Supplementary Data.

The information required by this item is included below in “Item 15. Exhibits and Financial Statement Schedules” and incorporated by reference herein.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures.

None.

Item 9A. Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures

An evaluation was performed pursuant to Rule 13a-15(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) under the supervision and with the participation of our management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this annual

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report. These disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in our reports under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that this information is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Based on the evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as a result of the material weaknesses in the Company’s internal control described below, the Company’s disclosure controls and procedures were not effective as of December 31, 2023.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in the Exchange Act Rule 13a-15(f). Our internal control over financial reporting is a process designed under the supervision of our Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with U.S. GAAP. The CEO and CFO are also responsible for disclosing any changes to the Company’s internal controls during the most recent period that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting. The Company’s management, under the supervision and with the participation of its CEO and CFO, conducted an evaluation of the effectiveness of the Company´s internal control over financial reporting as of December 31, 2023 based on the criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis by the Company’s internal controls. Management concluded that as of December 31, 2023, the Company had a material weakness relating to three components of the COSO framework. The material weaknesses are summarized below, and remediation efforts are outlined in the “Remediation of Material Weaknesses in Internal Control over Financial Reporting” section below

Material Weaknesses in Internal Control

The Company did not fully design and implement effective control activities based on the criteria established in the COSO framework. The Company has identified deficiencies that constitute a material weakness, either individually or in the aggregate. This material weakness is attributable to the following factors:

• We did not have sufficient accounting staff resources to timely perform closing, review and audit related procedures during the financial close process.

Due to the existence of the above material weakness, management, including the CEO and CFO, has concluded that our internal control over financial reporting was not effective as of December 31, 2023. This material weakness creates a reasonable possibility that a material misstatement to the consolidated financial statements will not be prevented or detected on a timely basis.

This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our independent registered public accounting firm pursuant to law, rules and regulations that permit us to provide only management’s report in this annual report.

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Remediation of Material Weaknesses in Internal Control over Financial Reporting

The Company continues to strengthen our internal control over financial reporting and is committed to ensuring that such controls are designed and operating effectively. The Company is implementing process and control improvements to address the above material weakness as follows:

• The Company will assess sufficient resources, both in accounting staff and related technology, needed to timely perform closing and audit related procedures and align identified resources.

The material weakness in the Company’s internal control over financial reporting will not be considered remediated until the remediated controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. The Company is working to have the material weaknesses remediated as soon as possible. However, there is no assurance that the remediation will be fully effective. As described above, the material weakness has not been remediated as of the filing date of this Form 10-K. If these remediation efforts do not prove effective and control deficiencies and material weaknesses persist or occur in the future, the accuracy and timing of the Company’s financial reporting may be materially and adversely affected.

Inherent Limitations on Effectiveness of Controls

Management recognizes that a control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud or error, if any, have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Changes in Internal Control over Financial Reporting

Other than those described above, there have been no changes in the Company’s internal control over financial reporting during the year ended December 31, 2023, that have materially affected, or that are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Item 9B. Other Information.

None.

Item 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections.

Not applicable.

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PART III

Item 10. Directors, Executive Officers and Corporate Governance.

Directors and Executive Officers

The following table sets forth information about our directors and executive officers as of April 10, 2024:

Name	Age	Position(s)
Executive Officers
Andrew Thut	50	Chief Executive Officer
Peter Kampian	65	Chief Financial Officer
Non-Employee Directors
Robert Hunt (1)	51	Chairman
Leonid Gontmakher	38	Director
David Daily (1) (2)	44	Director
Chetan Gulati (1)	46	Director
Kristopher Krane (2)	45	Director
Roman Tkachenko (2)	40	Director

(1)     Member of the Audit Committee

(2)     Member of the Compensation Committee

Executive Officers

Andrew Thut was an early investor in 4Front, joining the Company full time as Chief Investment Officer in October 2014 and was appointed Interim Chief Financial Officer in July 2021.He resigned his position as Interim Chief Financial Officer in June 2022 and remained Chief Investment Officer until January 2024, when he became Chief Executive Officer. He brings to the team a wealth of financial-management experience and business acumen having previously served as Managing Director of the BlackRock Small Cap Growth Fund at BlackRock Advisors LLC. During his 11-year involvement with BlackRock Small Cap Growth Fund, the $2 billion fund ranked in the top five percent of all domestic small cap growth funds. He also has held positions at MFS Investment Management and BT Alex Brown. Since joining 4Front, he has immersed himself in every facet of the cannabis industry, from the relevant financial drivers of the industry to hands-on experience with dispensaries and cultivation facilities. Mr. Thut holds a Bachelor of Arts from Dartmouth College.

Peter Kampian was appointed Cheif Financial Officer on December 1, 2023 and is a seasoned executive with over two decades of financial expertise gained through various roles, including his tenure as the Chief Financial Officer of Algonquin Power and Utilities Corp., where he led and supported debt and equity capital raising initiatives, along with numerous acquisitions. Mr. Kampian also held the role of CFO at Mettrum Health Corp., which was later acquired by Canopy Growth Corp., and serves as CFO at Electryon Power Inc. and Huxley Health Inc. In addition to his executive roles, Mr. Kampian has served on several boards, such as Aduro Clean Technologies Inc., Harborside Inc., Greenbutts Inc., Red Pine Exploration Inc., and as a director at Origin House, a cannabis branding and distribution company based in California. Most recently, he has applied his expertise as the Chief Restructuring Officer for the Canadian cannabis companies PharmHouse Inc. and Muskoka Grown Limited. Mr. Kampian holds Bachelor of Business Administration from Wilfrid Laurier University, a Chartered Professional Accountant and Corporate Director Designation.

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Non-Employee Directors

Robert Hunt has served as a member of the Company’s board of directors since April 2022. From January 2018 to the present, Mr. Hunt has served as Managing Member of Linnaea Holdings, a California based cannabis-focused private equity and operating company hybrid venture. From January 2017 to the present, Mr. Hunt has also worked as the Managing Member of Shingle Hill, a boutique cannabis consulting firm. From June 2016 to December 2016, he was employed as President of Teewinot Life Sciences, a cannabinoid producer. From August 2014 to May 2016, Mr. Hunt was a General Partner of Tuatara Capital, L.P., a private equity firm focused on the cannabis industry. In addition, Mr. Hunt has served on a number of boards of directors, including several in the cannabis industry, such as New Dia Fenway, LLC, Ardent, Inc., Wow Organics, and Canna Click, LLC. Mr. Hunt holds a Bachelor of Arts from the University of Vermont, and a Juris Doctor from Suffolk University Law School.

Leonid Gontmakher served as our Chief Executive Officer from March 2020 until January 2024 and has been a member of our board of directors since August 2019. From 2014 to 2018, Mr. Gontmakher co-founded and then operated Northwest Cannabis Solutions, which under his leadership grew to be one of the largest and most successful producers of cannabis products in Washington state. From March 2018 to July 2019, he also served as Chief Operating Officer at Cannex Capital Holdings, Inc., which merged with 4Front in July 2019. Mr. Gontmakher has significant experience in cannabis facility design, construction management, equipment sourcing, operations, branding, sales and marketing strategy, and software solutions. Before entering the cannabis industry, from 2008 to 2013 he served on the senior management team at North America’s largest processor and distributor of specialized seafood products. Mr. Gontmakher holds a Bachelor of Science from Arizona State University.

David Daily has served as a member of the Company’s board of directors since July 2019. Mr. Daily is the Chief Executive Officer of Gravitron, LLC which he founded in May 2004. Commonly known as Grav.com or GRAV®, its original invention was the first all-glass gravity bong, the Gravitron, which was an instant success and has become a cult classic. Since the Gravitron, Mr. Daily has designed or led the GRAV® design team to bring over 500 unique top-line products to the cannabis market. Mr. Daily is an investor, board member, mentor, and advisor to over a dozen start-up stage brands in cannabis and consumer packaged goods. He holds a Bachelor of Arts in Economics from The University of Texas at Austin.

Chetan Gulati has served as a member of the Company’s board of directors since December 2020. He has been a partner and head of research at Navy Capital, a New York-based asset manager focused on the rapidly growing global cannabis sector from 2019 to the present. Mr. Gulati began his career practicing law at Wachtell, Lipton, Rosen and Katz where he focused on corporate restructurings and finance. He then joined Perry Capital in 2007 and was ultimately appointed to run Perry's London operations from 2010-2016. From 2017-2018, Mr. Gulati was a Partner at Smith Cove Capital. He holds a Bachelor of Arts from the University of Rochester and a Juris Doctor from Yale Law School.

Kristopher Krane is a regulatory and business strategist and frequent speaker at cannabis conferences and events around the world and has spent the last two decades working to advance the cannabis industry and movement. He has served as Associate Director of the National Organization for the Reform of Marijuana Laws ("NORML"); Executive Director of Students for Sensible Drug Policy; and is currently Chair of the National Cannabis Industry Association Board of Directors. From 2011 through 2021, he served as President of 4Front, where he was instrumental in the Company's formation, success, and development. Kris concurrently serves as Director of Cannabis Development for KCSA Strategic Communications, a leading public relations and investor relations firm, and CEO of Kranewreck Enterprises, a strategic consulting firm that helps small cannabis operators grow their businesses. Mr. Krane holds a bachelor's of Political Science and Government from American University.

Roman Tkachenko has served as a member of the Company’s board of directors since December 2020. From March 2010 to the present, Mr. Tkachenko has served as the Chief Executive Officer and co-founder of Direct Source Seafood LLC, an importer/wholesaler of specialized frozen seafood products. Direct Source Seafood is the largest importer of king and snow crab from Russia, as well as one of the largest importers of Argentine wild caught

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shrimp. Direct Source Seafood, LLC has annual revenues of $300,000. From November 2013 to September 2017, Mr. Tkachenko served as the Chief Executive Officer of Marine Treasures International, a company specializing in international sourcing of frozen seafood. Mr. Tkachenko holds a Bachelor of Science in Accounting from Central Washington University.

Involvement in Certain Legal Proceedings

To our knowledge, none of our current directors or executive officers has, during the past ten years:

•been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);

•had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time;

•been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity;

•been found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;

•been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or

•been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

Except as set forth in our discussion below in “Certain Relationships and Related Party Transactions,” none of our directors or executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates, or associates which are required to be disclosed pursuant to the rules and regulations of the SEC.

Family Relationships

Leonid Gontmakher and Roman Tkachenko are cousins. There are no other family relationships among any of our executive officers or directors.

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Corporate Governance Overview

We are committed to having sound corporate governance principles, which are essential to running our business efficiently and maintaining our integrity in the marketplace. We understand that corporate governance practices change and evolve over time, and we seek to adopt and use practices that we believe will be of value to our stockholders and will positively aid in the governance of the Company. To that end, we regularly review our corporate governance policies and practices and compare them to the practices of other peer institutions and public companies. We will continue to monitor emerging developments in corporate governance and enhance our policies and procedures when required or when our board determines that it would benefit our Company and our stockholders.

Board’s Role in Risk Oversight and Management

Our board of directors, as a whole and through its committees, is responsible for the oversight of risk management, while our management is responsible for the day-to-day management of risks faced by us. The board of directors receives regular reports from members of senior management on areas of material risk to the Company, including operational, financial, legal, regulatory, strategic and reputational risks. In its risk oversight role, our board of directors has the responsibility to satisfy itself that the risk management processes designed and implemented by management are adequate and functioning as designed.

Role of Board in Risk Oversight Process

Our board of directors has responsibility for the oversight of the Company’s risk management processes and, either as a whole or through its committees, regularly discusses with management our major risk exposures, their potential impact on our business and the steps we take to manage them. The risk oversight process includes receiving regular reports from board committees and members of senior management to enable our board to understand the Company’s risk identification, risk management and risk mitigation strategies with respect to areas of potential material risk, including operations, finance, legal, regulatory, strategic and reputational risk.

The Audit Committee reviews information regarding liquidity and operations and oversees our management of financial risks. Periodically, the Audit Committee reviews our policies with respect to risk assessment, risk management, loss prevention and regulatory compliance. Oversight by the Audit Committee includes direct communication with our external auditors, and discussions with management regarding significant risk exposures and the actions management has taken to limit, monitor or control such exposures. The Compensation Committee is responsible for assessing whether any of our compensation policies or programs has the potential to encourage excessive risk-taking. The nominating and corporate governance committee manages risks associated with the independence of the board, corporate disclosure practices, and potential conflicts of interest. While each committee is responsible for evaluating certain risks and overseeing the management of such risks, the entire board is regularly informed through committee reports about such risks. Matters of significant strategic risk are considered by our board of directors as a whole.

Director Nomination Process

Our board of directors believes that its directors should have the highest professional and personal ethics and values, consistent with the Company’s longstanding values and standards. They should have broad experience at the policy-making level in business, government or civic organizations. They should be committed to enhancing stockholder value and should have sufficient time to carry out their duties and to provide insight and practical wisdom based on their own unique experience. Each director must represent the interests of all stockholders. When considering potential director candidates, our board of directors also considers the candidate’s independence, character, judgment, diversity, age, skills, including financial literacy, and experience in the context of our needs and those of our board of directors. Our board of directors believe that diversity is an important attribute of the members who comprise our board of directors and that the members should represent an array of backgrounds and experiences and

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should be capable of articulating a variety of viewpoints. Our board of directors' priority in selecting board members is the identification of persons who will further the interests of our stockholders through his or her record of professional and personal experiences and expertise relevant to our business.

Stockholder Nominations to the Board of Directors

Director nominations by a stockholder or group of stockholders for consideration by our stockholders at our annual meeting of stockholders, or at a special meeting of our stockholders that includes on its agenda the election of one or more directors, may only be made in accordance with our Articles and applicable law.

Stockholders’ notice for any proposals requested pursuant to Rule 14a-8 under the Exchange Act (including director nominations), must be made in accordance with that rule.

Board Mandate and Committees

The board of directors has a written mandate that governs the board of directors. Additionally, the board of directors is empowered by governing corporate law, the Company’s Articles and its corporate governance policies to manage or supervise the management of the affairs and business of the Company. The board of directors carries out its responsibilities directly and through two board of directors committees, the Audit Committee and the Compensation Committee, each of which operate under a written committee charters approved by the board of directors. The board of directors meets regularly on a quarterly basis and holds additional meetings as required to deal with the Company’s business.

Compliance with Section 16(a) of the Exchange Act

Section 16(a) of the Exchange Act requires our officers, directors, and persons who own more than ten percent of a registered class of our equity securities to file reports of securities ownership and changes in such ownership with the SEC. Officers, directors, and greater-than-ten-percent stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms that they file.

Based solely upon a review of Forms 3, Forms 4, and Forms 5 furnished to us pursuant to Rule 16a-3 under the Exchange Act, we believe that all such forms required to be filed pursuant to Section 16(a) of the Exchange Act during the year ended December 31, 2023 were timely filed, as necessary, by the officers, directors, and security holders required to file such forms, except for the following:

•Keith Adams did not timely file a Form 4 with respect to one transaction.

•Karl Chowscano did not timely file a Form 4 with respect to two transactions.

•Nicole Frederick did not timely file a Form 4 with respect to one transaction.

•Leonid Gontmakher did not timely file a Form 4 with respect to one transaction.

•Chetan Gulati did not timely file a Form 4 with respect to two transactions.

•Robert Hunt did not timely file a Form 4 with respect to one transaction.

•Kristopher Krane did not timely file a Form 4 with respect to one transaction.

•Andrew Thut did not timely file a Form 4 with respect to two transactions.

•Roman Tkachenko did not timely file a Form 4 with respect to one transaction.

Code of Business Conduct and Ethics

The board of directors has adopted the Code of Business Conduct and Ethics which applies to directors, officers, employees, consultants and contractors of the Company and its subsidiaries. The text of the Code of Conduct is available at www.4frontventures.com.

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The reference to our website address does not constitute incorporation by reference of the information contained at or available through our website, and you should not consider it to be a part of this report.

Item 11. Executive Compensation.

As an emerging growth company under the JOBS Act, we have opted to comply with the executive compensation disclosure rules applicable to “smaller reporting companies” as such term is defined in the rules promulgated under the Securities Act, which permit us to limit reporting of executive compensation to our principal executive officer and our two (2) other most highly compensated named executive officers.

Summary Compensation Table

The following table provides information regarding the compensation awarded to or earned during 2023 and 2022, as applicable, by our named executive officers. All amounts are in whole dollars.

Name and Principal Position	Year	Salary ($)	Bonus ($) (7)	Option Awards ($)	Total ($)
Leonid Gontmakher (1), Chief Executive Officer and Director	2023 2022	400,000 400,000	— —	297,144 400,000	697,144 800,000
Keith Adams (2), Chief Financial Officer	2023 2022	171,811 174,915	204,657 —	101,731 253,548	478,199 428,463
Andrew Thut (3), Chief Investment Officer & Interim Chief Financial Officer	2023 2022	350,552 340,475	297,683 —	986,764 1,173,794	1,634,999 1,514,269
Joseph Feltham (4), Chief Operating Officer	2023 2022	— 300,000	— —	— 167,136	— 467,136
Peter Kampian (5), Chief Financial Officer	2023 2022	28,000 —	— —	135,493 —	163,493 —
Nicole Frederick (6), Interim Chief Financial Officer	2023 2022	87,747 —	— —	135,493 —	223,240 —

(1)Mr. Gontmakher was appointed Chief Executive Officer on March 31, 2020. He resigned effective January 8, 2024.

(2)Mr. Adams was appointed Chief Financial Officer on June 9, 2022. He resigned effective July 31, 2023.

(3)Mr. Thut was appointed Interim Chief Financial Officer on July 15, 2021. Mr. Thut resigned his position as Interim Chief Financial Officer on June 9, 2022. He was appointed Chief Executive Officer on January 8, 2024.

(4)Mr. Feltham was appointed Chief Operating Officer on September 11, 2020. Mr. Feltham was relieved of his position as Chief Operating Officer on June 14, 2022. The vacancy has not been filled.

(5)Mr. Kampian was appointed Chief Financial Officer on December 1, 2023.

(6)Ms. Frederick was appointed Interim Chief Financial Officer on July 31, 2023. She resigned effective November 30, 2023. Ms. Frederick previously served as the Director of External Reporting since August 2022. The table above only includes compensation earned during 2023 as an executive officer.

(7)Bonus amounts reflect short-term incentive awards based upon performance in the applicable year and paid in the subsequent year.

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Narrative to Summary Compensation Table

Executive Compensation Considerations

The Company’s Compensation Committee reviews financial information and other performance metrics relative to the historical compensation of executive management and comparative information prepared internally. The Compensation Committee also reviews management’s recommendations for compensation levels of all of the Company’s named executive officers and considered these recommendations with reference to relative compensation levels of like-size institutions. The totality of the information reviewed by the Compensation Committee is considered when establishing current executive salary levels, and similar analysis is expected to be considered when reviewing and establishing future salaries and long-term incentives. The Company’s compensation

policies and practices are designed to ensure that they do not foster risk taking above the level of risk associated with the Company’s business model. For this purpose, the Compensation Committee generally considers the Company’s financial performance, comparing that performance to the performance metrics included in the Company’s strategic plan. The Compensation Committee also generally evaluates management’s compensation in light of other specific risk parameters. The Company’s compensation programs are aimed at enabling it to attract and retain the best possible executive talent and rewarding those executives commensurate with their ability and performance. The Company’s compensation programs consist primarily of base salary, bonus and option awards.

Base Salary

Base salaries for named executive officers are determined in the same manner as those other salaried employees. Salary guidelines are established by comparing the responsibilities of the individual’s position in relation to similar positions in other companies of similar size in our industry.

Section 162(m) of the Code

Section 162(m) generally disallows the corporate tax deduction for certain compensation paid in excess of $1,000,000 annually to “covered employees,” which include: (1) the Chief Executive Officer, (2) the Chief Financial Officer, and (3) any employee whose total compensation is required to be reported to shareholders under the Securities Exchange Act of 1934 by reason of such employee being among the three highest compensated officers for the taxable year (excluding the CEO and CFO); and (4) any executive who was a “covered employee” for any tax year beginning after December 31, 2016. A “covered employee” includes any individual who meets the definition of a “covered employee” at any time during the year, and also includes executives who are the top three highest paid officers (excluding the CEO or CFO) even if their compensation is not required to be disclosed under existing SEC rules. Section 162(m) of the Code was amended by the Tax Cut and Jobs Act of 2018 so that the exceptions for payment of “performance-based compensation” or commissions have been eliminated.

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Outstanding Equity Awards at 2023 Fiscal Year End

The following table provides information with respect to holdings of unvested options and stock awards held by our named executive officers as of December 31, 2023. All amounts are in whole dollars.

		Option Awards
Name and Principal Position	Grant Date		Number of Securities Underlying Unexercised Options (#) Exercisable	Number of Securities Underlying Unexercised Options (#) Unexercisable	Option Exercise Price (C$)		Option Expiration Date
Leonid Gontmakher, Chief Executive Officer and Director	6/23/2023		1233333	2466667	$	0.19	6/23/2028
Keith Adams, Chief Financial Officer	7/24/2023		—	1000000	$	.18	7/24/2028
Andrew Thut, Chief Investment Officer and Interim Chief Financial Officer	4/18/2023 6/23/2023		— 2,681,866	4,000,000 5,363,734	$ $	0.23  0.19	4/18/2028 6/23/2028
Joseph Feltham, Chief Operating Officer	8/22/2019 9/15/2020 3/18/2021 11/16/2022		750,000 390,800 750,000 1,288,000	— — — —	$ $ $ $	0.80  0.86 1.63 0.61	8/22/2024 9/15/2025 3/18/2026 11/16/2027
Nicole Federick, Interim Chief Financial Officer	9/1/2023		—	1,000,000	$	0.22	9/1/2028
Peter Kampian, Chief Financial Officer	12/28/2023		500,000	1,500,000	$	0.14	12/28/2028

Non-Employee Director Compensation

The table below shows the equity and other compensation granted to our non-employee directors during fiscal 2023. All amounts in the table are in whole dollars.

Name	Fees Earned or Paid in Cash ($)		Stock Awards ($)		Option Awards ($)		Non-Equity Incentive Plan Compensation ($)		Nonqualified Deferred Compensation Earnings ($)		All Other Compensation ($)		Total ($)
Robert Hunt	$	180,000	$	—	$	88,822	$	—	$	—	$	—	$	268,822
David Daily	$	80,333	$	—	$	96,371	$	—	$	—	$	—	$	176,704
Chetan Gulati	$	—	$	—	$	124,479	$	—	$	—	$	—	$	124,479
Kathi Lentzsch	$	8,917	$	—	$	—	$	—	$	—	$	—	$	8,917
Roman Tkachenko	$	68,667	$	—	$	159,336	$	—	$	—	$	—	$	228,003
Kristopher Krane	$	51,777	$	—	$	137,755	$	—	$	—	$	—	$	189,532
Amit Patel	$	31,250	$	—	$	—	$	—	$	—	$	—	$	31,250

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Effective January 1, 2024, the Compensation Committee set the compensation for the independent directors at $50,000 per year for directors not serving as chair of the board or any committee and $60,000 per year for directors serving as chair of a committee or the board. Directors who are officers, employees, or consultants of the Company receive no compensation. The Compensation Committee will review the compensation paid to the Company’s directors annually to ensure that the Company’s approach to Board compensation is competitive and reflects best practices taking into account current governance trends.

Compensation Committee Interlocks and Insider Participation

Not applicable to smaller reporting companies.

Compensation Committee Report

Not applicable to smaller reporting companies.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The following table sets forth the beneficial ownership of our common stock as of December 31, 2023 by:

•each stockholder known by us to beneficially own more than 5% of our SVS;

•each of our directors;

•each of our named executive officers; and

•all of our directors and executive officers as a group.

We have determined beneficial ownership in accordance with the rules of the SEC. These rules generally provide that a person is the beneficial owner of securities if such person has or shares the power to vote or direct the voting of securities, or to dispose or direct the disposition of securities. A security holder is also deemed to be, as of any date, the beneficial owner of all securities that such security holder has the right to acquire within 60 days after such date through (i) the exercise of any option or warrant, (ii) the conversion of a security, (iii) the power to revoke a trust, discretionary account or similar arrangement or (iv) the automatic termination of a trust, discretionary account or similar arrangement. Except as disclosed in the footnotes to this table and subject to applicable community property laws, we believe that each person identified in the table has sole voting and investment power over all of the shares shown opposite such person’s name.

The percentage of beneficial ownership is based on 668,243,141 SVS outstanding as of December 31, 2023.

The address for each director and executive officer is c/o 4Front Ventures Corp., 7010 E. Chauncey Lane, Suite 235, Phoenix, AZ 85054.

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The following table sets out information as of December 31, 2023 with respect to security ownership of certain beneficial owners and management.

	Subordinate Voting Shares			Multiple Voting Shares			Total			Voting
Name, Position and Address of Beneficial Owner	Number Beneficially Owned	% of Total Subordinate Voting Shares		Number Beneficially Owned	% of Total Multiple Voting Shares		Total Number of Capital Stock Beneficially Owned	% of Total Capital Stock		% of Voting Capital Stock
Leonid Gontmakher Chief Executive Officer	40,999,711	6.14	%	—	—	%	40,999,711	6.14	%	2.41	%
Keith Adams Chief Financial Officer	—	—	%	—	—	%	—	—	%	—	%
Andrew Thut Chief Investment Officer	11,678,960	1.75	%	154,956	12.14	%	11,833,916	1.77	%	8.03	%
David Daily Director	22,000	—	%	—	—	%	22,000	—	%	—	%
Chetan Gulati Director	21,561,581	3.23	%	—	—	%	21,561,581	3.23	%	1.28	%
Robert Hunt Director	—	—	%	—	—	%	—	—	%	—	%
Amit Patel Director	—	—	%	—	—	%	—	—	%	—	%
Kathi Lentzsch Former Director	—	—	%	—	—	%	—	—	%	—	%
Roman Tkachenko Director	11,624,560	1.74	%	—	—	%	11,624,560	1.74	%	0.69	%
Khristopher Krane Director	10,415,280	1.56	%	—	—	%	10,415,280	1.56	%	0.62	%
Peter Kampian Cheif Financial Officer	—	—	%		—	%	—	—	%	—	%
All Board directors and named executive officers as a group	96,302,092	14.42	%	154,956	12.14	%	96,457,048	14.44	%	13.03	%

Equity Compensation Plan Information

On July 31, 2019, shareholders approved the 4Front Ventures Corp. 2019 Stock and Incentive Plan, which was amended and restated as of April 15, 2020 (the “Stock and Incentive Plan”). The Stock and Incentive Plan permits the grant of: (i) nonqualified stock options (“NQSOs”) and incentive stock options (“ISOs”) (collectively, “Options”); (ii) restricted stock awards; (iii) restricted stock units (“RSUs”); (iv) stock appreciation rights (“SARs”); and (v) performance compensation awards, which are referred to herein collectively as “Awards,” as more fully described below.

On May 31, 2022, the Stock and Incentive Plan was amended to increase the number of options that can be granted from 10% to 15% of outstanding shares. As of December 31, 2023, the following awards were outstanding under the Stock and Incentive Plan: a total of 91,750,267 options, representing approximately 13.7% of the then outstanding

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share number. As of December 31, 2023, an aggregate of 8,677,635 options remained available for issuance under the Stock and Incentive Plan, representing approximately 1.3% of the then Outstanding Share Number.

The following table sets out information as of December 31, 2023 with respect to the Stock and Incentive Plan.

Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
	(a)	(b)		(c)
Equity compensation plans approved by security holders	91,750,267	$	0.34	8,677,635
Equity compensation plans not approved by security holders	—	$	—	—
Total	91,750,267	$	0.34	8,677,635

Summary of Terms and Conditions of the Incentive Plan

Purpose of the Incentive Plan

The purpose of the Stock and Incentive Plan is to enable the Company and its affiliated companies to: (i) promote and retain employees, officers, consultants, advisors and directors capable of assuring the future success of the Company; (ii) to offer such persons incentives to put forth maximum efforts; and (iii) to compensate such persons through various stock and cash-based arrangements and provide them with opportunities for stock ownership, thereby aligning the interests of such persons and shareholders.

Eligible Persons

Any of the Company’s employees, officers, directors, consultants (who are natural persons) are eligible to participate in the Stock and Incentive Plan if selected by the Compensation Committee (as defined herein) (the “Participants”). The basis of participation of an individual under the Stock and Incentive Plan, and the type and amount of any Award that an individual will be entitled to receive under the Stock and Incentive Plan, will be determined by the Compensation Committee based on its judgment as to the best interests of the Company and its shareholders, and therefore cannot be determined in advance.

The maximum number of SVS that may be issued under the Stock and Incentive Plan shall be determined by the board from time to time, but in no case shall exceed, in the aggregate, 15% of the Outstanding Share Number Notwithstanding the foregoing, a maximum of 20,000,000 SVS may be issued as ISOs, subject to adjustment as provided in the Stock and Incentive Plan. Any shares subject to an Award under the Stock and Incentive Plan that are forfeited, cancelled, expire unexercised, are settled in cash, or are used or withheld to satisfy tax withholding obligations of a Participant shall again be available for Awards under the Stock and Incentive Plan.

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In the event of any dividend, recapitalization, forward or reverse stock split, reorganization, merger, amalgamation, consolidation, split-up, split-off, combination, repurchase or exchange of SVS or other securities of the Company, issuance of warrants or other rights to acquire SVS or other securities of the Company, or other similar corporate transaction or event, which affects the SVS, or unusual or nonrecurring events affecting the Company, or the financial statements of the Company, or changes in applicable rules, rulings, regulations or other requirements of any governmental body or securities exchange or inter-dealer quotation system, accounting principles or law, the Compensation Committee may make such adjustment, which is appropriate in order to prevent dilution or enlargement of the rights of Participants under the Stock and Incentive Plan, to: (i) the number and kind of shares which may thereafter be issued in connection with Awards; (ii) the number and kind of shares issuable in respect of outstanding Awards; (iii) the purchase price or exercise price relating to any Award or, if deemed appropriate, make provision for a cash payment with respect to any outstanding Award; and (iv) any share limit set forth in the Stock and Incentive Plan.

Description of Awards

Pursuant to the Stock and Incentive Plan, the Company is authorized to issue option awards to participants.

Options

The Compensation Committee is authorized to grant Options to purchase Subordinate Voting Shares that are either ISOs meaning they are intended to satisfy the requirements of Section 422 of the U.S. Internal Revenue Code of 1986) (the “Code”), or NQSOs, meaning they are not intended to satisfy the requirements of Section 422 of the Code. Options granted under the Stock and Incentive Plan will be subject to the terms and conditions established by the Compensation Committee. Under the terms of the Stock and Incentive Plan, unless the Compensation Committee determines otherwise in the case of an Option substituted for another Option in connection with a corporate transaction, the exercise price of the Options will not be less than the fair market value (as determined under the Stock and Incentive Plan) of the shares at the time of grant. Options granted under the Stock and Incentive Plan will be subject to such terms, including the exercise price and the conditions and timing of exercise, as may be determined by the Compensation Committee and specified in the applicable award agreement. The maximum term of an Option granted under the Stock and Incentive Plan will be ten years from the date of grant (or five years in the case of an ISO granted to a 10% shareholder). Payment in respect of the exercise of an Option may be made in cash or by check, by surrender of unrestricted shares (at their fair market value on the date of exercise) or by such other method as the Compensation Committee may determine to be appropriate.

Administration of the Stock and Incentive Plan

The Compensation Committee may impose restrictions on the grant, exercise or payment of an Award as it determines appropriate. Generally, Awards granted under the Stock and Incentive Plan shall be nontransferable except by will or by the laws of descent and distribution. No Participant shall have any rights as a shareholder with respect to SVS covered by Options, SARs, restricted stock awards, or RSUs, unless and until such Awards are settled in SVS.

No Option (or, if applicable, SARs) shall be exercisable, no SVS shall be issued, no certificates for SVS shall be delivered and no payment shall be made under the Stock and Incentive Plan except in compliance with all applicable laws.

Tax Withholding

The Company may take such action as it deems appropriate to ensure that all applicable federal, state, local and/or foreign payroll, withholding, income or other taxes, which are the sole and absolute responsibility of a Participant, are withheld or collected from such Participant.

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Amendments and Termination

Subject to the provisions of the Stock and Incentive Plan, the board may from time to time amend, suspend or terminate the Stock and Incentive Plan, and the Compensation Committee may amend the terms of any previously granted Award, provided that no amendment to the terms of any previously granted Award may (except as expressly provided in the Stock and Incentive Plan) materially and adversely alter or impair the terms or conditions of the Award previously granted to a Participant under the Stock and Incentive Plan without the written consent of the Participant or holder thereof. Any amendment to the Stock and Incentive Plan, or to the terms of any Award previously granted, is subject to compliance with all applicable laws, rules, regulations and policies of any applicable governmental entity or securities exchange, including receipt of any required approval from the governmental entity or stock exchange, and any such amendment, alteration, suspension, discontinuation or termination of an Award will be in compliance with CSE policies.

For greater certainty and without limiting the foregoing, the board may amend, suspend, terminate or discontinue the Stock and Incentive Plan, and the Compensation Committee may amend or alter any previously granted Award, as applicable, without obtaining the approval of shareholders in order to: (i) amend the eligibility for, and limitations or conditions imposed upon, participation in the Stock and Incentive Plan; (ii) amend any terms relating to the granting or exercise of Awards; (iii) make changes that are necessary or desirable to comply with applicable laws, rules, regulations and policies of any applicable governmental entity or stock exchange (including amendments to Awards necessary or desirable to avoid any adverse tax results under the Section 409A of the Code; (iv) amend any terms relating to the administration of the Stock and Incentive Plan; or (v) correct any defect, supply any omission or reconcile any inconsistency in the Stock and Incentive Plan or in any Award or Award agreement.

Notwithstanding the foregoing, the Stock and Incentive Plan specifically provides that shareholder approval would be required for any amendments to the Stock and Incentive Plan or an Award that would: (i) require shareholder approval under the rules or regulations of securities exchange that is applicable to the Company; (ii) increase the number of shares authorized under the Stock and Incentive Plan; (iii) permit repricing of Options or SARs; (iv) permit the award of Options or SARs at a price less than 100% of the fair market value on the date of the grant; (v) permit Options to be transferable other than in accordance with the provisions of the Stock and Incentive Plan; (vi) amend the termination and amendment provisions of the Stock and Incentive Plan; or (vii) increase the maximum term permitted for Options and SARs under the Stock and Incentive Plan or extend the terms of any Options beyond their original expiry date.

Corporate Transactions

The Stock and Incentive Plan provides that, in the event of any reorganization, merger, consolidation, split-up, spin-off, combination, plan of arrangement, take-over bid or tender offer, repurchase or exchange of SVS or other securities of the Company or any other similar corporate transaction or event involving the Company (or the Company shall enter into a written agreement to undergo such a transaction or event), the Compensation Committee or the board may, in its sole discretion, provide for any of the following to be effective upon the consummation of the event (or effective immediately prior to the consummation of the event, provided that the consummation of the event subsequently occurs): (i) either (A) termination of the Award, whether or not vested, in exchange for an amount of cash and/or other property, if any, equal to the amount that would have been attained upon the exercise of the vested portion of the Award or realization of the Participant’s vested rights, or (B) the replacement of the Award with other rights or property selected by the Compensation Committee or the board, in its sole discretion; (ii) that the Award be assumed by the successor or survivor company, or a parent or subsidiary thereof, or shall be substituted for by similar Options, rights or awards covering the stock of the successor or survivor company, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of shares and prices; (iii) that the Award shall be exercisable or payable or fully vested with respect to all Shares covered thereby, notwithstanding anything to the contrary in the applicable Award agreement; or (iv) that the Award cannot vest, be exercised or become payable after a date certain in the future, which may be the effective date of the event.

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Item 13. Certain Relationships and Related Transactions, and Director Independence.

Related Party Transactions

Leonid Gontmakher, the Company’s director and former Chief Executive Officer, and Roman Tkachenko, a director, each hold a 14.28% ownership interest in LI Lending LLC, which extended the Company a real estate improvement/development loan of $45.0 million. The loan was drawn in two amounts: (i) $35.0 million bearing interest at a rate of 12.75% and (ii) $10.0 million bearing interest at a rate of 14.75%. Upon maturity in May 2024, an exit fee of $9.0 million is payable, for a total principal payable at maturity of $54.0 million. As of December 31, 2023, the outstanding balance on the related party loan was $47.5 million which includes accrued interest of $8.5 million and is net of debt discount of $4.6 million.

In July 2023, the related party loan was amended to extend the maturity date to May 1, 2026, to reduce the interest rate to 12.0% per annum beginning May 1, 2024, and to expand the amount of third-party financings allowed under the December 17, 2020 Amended and Restated Loan and Security Agreement (“Loan”) between 4Front and the LI Lending. The Company paid an extension fee of $0.5 million payable in cash on May 1, 2024. In addition, the Company issued 100,358,824 warrants to the Lender wherein each warrant shall be exercisable into one (1) Subordinate Voting Share of the Company at an exercise price of $0.17 through May 1, 2026. As compensation for the amendment, the Company issued 100,358,824 warrants to LI Lending on August 10, 2023 wherein each warrant shall be exercisable into 1 (1) Subordinate Voting Share at an exercise price of $0.17 through May 1, 2026. See Note 10 and Note 11 of the Consolidated Financial Statements.

If the Company unilaterally removes Mr. Gontmakher as its Chief Executive Officer or Karl Chowscano as its President without either cause or lender consent, the maturity date of the loan will be accelerated to the date that is 30 days after the first unilateral removal.

On January 29, 2024, the Company agreed with LI to convert $23.0 million of the Company’s loan to Class A Subordinate Voting Shares at market price and issued LI a warrant for 36,702,127 shares of Class A Subordinate Voting Shares at a price of $0.11, as well as a restricted stock unit agreement providing that, in the event of a financing by the Company at less than C$0.125 per share of Class A Subordinate Voting Shares, LI shall be entitled to receive a number of shares necessary to restore it to 18.43% of the voting interests of the Company.

Item 14. Principal Accounting Fees and Services.

Principal Independent Accountant Fees and Services

Davidson & Company LLC (“Davidson”) has served as our independent registered public accounting firm since July 31, 2019. The engagement of Davidson was approved by the Audit Committee and the board. Davidson completed the audits of the Company for the year ended December 31, 2023 and 2022.

During the years ended December 31, 2023 and 2022, there were no (1) disagreements with Davidson on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which, if not resolved to Davidson’s satisfaction, would have caused Davidson to make reference thereto in its report on the consolidated financial statements of the Company (as described in Item 304(a)(1)(iv) of Regulation S-K), (2) reportable events (as described in Item 304(a)(1)(v) of Regulation S-K) or (3) “reportable events as such term is defined in NI 51-102.

Aggregate fees billed by our independent auditors for the years ended December 31, 2023 and 2022 are detailed in the table below.

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Principal Independent Accountant Fees and Services

	2023		2022
Audit Fees(1)	$	800,000	$	600,000
Audit Related Fees(2)	105,000		98,000
All Other Fees(3)	35,000		35000
Total Fees Paid	$	940,000	$	733,000

(1)Fees for audit services on an accrued basis.

(2)Fees not included in audit fees that are billed by the auditor for assurance and related services that are reasonably related to the performance of the audit of the financial statements.

(3)All other fees billed by the auditor for products and services not included in the foregoing categories.

Pre-approval Policies and Procedures

Our Audit Committee has established a policy of reviewing, in advance, and either approving or not approving, all audit, audit-related, tax and other non-audit services that our independent registered public accounting firm provides to us. This policy requires that all services received from independent registered public accounting firms be approved in advance by the Audit Committee. The Audit Committee has delegated pre-approval responsibility to the chair of the Audit Committee with respect to non-audit related fees and services.

Our Audit Committee has determined that the provision of the services as set out above is compatible with the maintaining of Davidson’s independence in the conduct of their auditing functions.

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PART IV

Item 15. Exhibits, Financial Statement Schedules.

(a) The following documents included elsewhere in this annual report on Form 10-K (see F-pages herein regarding financial statement information) are incorporated herein by reference and filed as part of this report:

(1) Financial statements: The consolidated balance sheets as of December 31, 2023 and 2022, and the consolidated statements of operations, changes in shareholders' (deficit) equity, and statements of cash flows for the years ended December 31, 2023 and 2022, together with notes thereto.

(2) Financial statement schedule: None.

(3) Exhibits required by Item 601 of Regulation S-K: None.

Item 16. Form 10-K Summary.

None.

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EXHIBIT INDEX

		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	Filing Date	Exhibit Number	Filed Herewith
3.1	Notice of Articles of Registrant	20-F	June 30, 2020	1.1
3.2	Articles of Registrant	20-F	June 30, 2020	1.2
3.3	Amended and Restated Articles of Registrant dated December 23, 2020
4.1	Description of Securities	20-F	June 30, 2020	2.1
10.1	Business Combination Agreement dated March 1, 2019 between 4Front Holdings LLC, 4Front Corp., 1196260 B.C. Ltd. and Cannex Capital Holdings Inc.	20-F	June 30, 2020	4.1
10.2	Senior secured convertible notes issued by Cannex Capital Holdings Inc. on November 21, 2018 to Gotham Green Fund 1, L.P., Gotham Green Fund 1 (Q), L.P., and Gotham Green Credit Partners SPV 2, L.P.	20-F	June 30, 2020	4.3
10.3	Construction Loan Agreements dated May 10, 2019, by and between Linchpin Investors LLC, a subsidiary of the Corporation, and LI Lending LLC, in the amount of up-to $50,000,000 (later modified to up-to $45,000,000)	20-F	June 30, 2020	4.4
10.4	Stock Purchase Agreement by and among 4Front Holdings LLC, Paul Overgaag, Nathaniel Averill and Healthy Pharms, Inc. dated November 13, 2018	20-F	June 30, 2020	4.5
10.5	Contribution Agreement November 13, 2018 between Mission Partners USA, LLC and 4Front Holdings LLC	20-F	June 30, 2020	4.6
10.6	Agreement and Plan of Merger, dated as of October 6, 2021, by and among 4Front Ventures Corp., New England Cannabis Corporation, Inc., Kenneth V. Stevens, and 4Front NECC Acquisition Co.	8-K	October 08, 2021	10.1
10.7	Membership Interest Purchase Agreement, dated as of October 6, 2021, by and among 4Front Ventures Corp., Kenneth V. Stevens, and Mission Partners RE, LLC	8-K	October 08, 2021	10.2
10.8	Convertible Promissory Note Purchase Agreement, dated as of October 6, 2021, by and among 4Front Ventures Corp., Navy Capital Green Fund, LP, Navy Capital Green Co-Invest Fund, LLC, and HI 4Front, LLC	8-K	October 08, 2021	10.3
10.9	Amendment No. 1 to Convertible Promissory Note Purchase Agreement, by and among the Company, Navy Capital Green Fund, LP, Navy Capital Green Co- Invest Fund, LLC and HI 4Front, LLC	8-K	November 06, 2023		x

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10.10	First Amendment to Agreement and Plan of Merger, dated as of January 28, 2022, by and among 4Front Ventures Corp., New England Cannabis Corporation, Inc., Kenneth V. Stevens, and 4Front NECC Acquisition Co.	8-K	February 03, 2022	10.3
10.11	First Amendment to Membership Interest Purchase Agreement, dated as of January 28, 2022, by and among 4Front Ventures Corp., Kenneth V. Stevens, and Mission Partners RE, LLC.	8-K	February 03, 2022	10.4
10.12	Promissory Note and Pledge Agreement, dated as of January 28, 2022, between 4Front Ventures Corp. and Kenneth V. Stevens.	8-K	February 03, 2022	10.5
10.13	Agreement and Plan of Merger, dated as of April 6, 2022, by and among 4Front Ventures Corp., Island Merger Sub, Inc., Island Global Holdings, Inc., and Navy Capital SR LLC	8-K	April 06, 2022	10.1
10.14	Lock-up agreement dated August 22, 2019, by and among 4Front Ventures Corp. and each of Camelback Ventures, LLC, Joshua Rosen, Trevor Pratte, Karl Chowscano, Andrew Thut, Kris Krane, Leo Gontmakher, Arkadi Gontmakher, Vlad Orlovskii, Oleg Orlovskii, Roman Tkachenko and Glenn Backus	20-F	June 30, 2020	4.7
10.15	Amended and restated securities purchase agreement dated July 31, 2019 among Gotham Green Fund 1, L.P., Gotham Green Fund 1 (Q), L.P., Gotham Green Credit Partners SPV 2, L.P., Gotham Green Fund II, L.P., Gotham Green Fund II (Q), L.P., 4Front Ventures Corp., Cannex Holdings (Nevada) Inc., 4Front Ventures Corp., 4Front U.S. Holdings Inc. and Cannex Holdings (Nevada) Inc., as amended on January 29, 2020 and March 20, 2020	20-F	June 30, 2020	4.8
10.16	Industrial building lease dated September 1, 2015 by and between Kinzie Properties, LLC, 2400 Greenleaf Partners, LLC, and IL Grown Medicine LLC	20-F	June 30, 2020	4.9
10.17	Amended and Restated Class B Proportionate Shares Option Plan +	20-F	June 30, 2020	4.1
10.18	Amended and Restated Stock Option Plan +	20-F	June 30, 2020	4.11
10.19	Form of Director Indemnification Agreement	20-F	June 30, 2020	4.12
10.20	Amended and Restated Consulting Agreement with Ag-Grow Imports, LLC and Maha Consulting LLC	10-K	April 07, 2021	10.15
10.21	Separation Agreement and Release with Joshua N. Rosen dated January 2, 2021	10-K	April 07, 2021	10.16
10.22	Severance, General Waiver and Release Agreement with Nicolle Dorsey dated February 3, 2021 +	10-K	April 07, 2021	10.17

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10.23	Membership Interest Purchase Agreement – Denham dated January 1, 2020	10-K	April 07, 2021	10.18
10.24	Membership Interest Purchase Agreement Amendment 1 – Denham dated March 30, 2020	10-K	April 07, 2021	10.19
10.25	Membership Interest Purchase Agreement Amendment 2 – Denham dated August 12, 2020	10-K	April 07, 2021	10.20
10.26	Membership Interest Purchase Agreement – Ethos dated April 30, 2020	10-K	April 07, 2021	10.21
10.27	Asset Purchase Agreement – Ethos dated April 30, 2020	10-K	April 07, 2021	10.22
10.28	LI Lending Amended & Restated Promissory Note dated December 17, 2020	10-K	April 07, 2021	10.23
10.29	Premium Termination Agreement dated August 11, 2020	10-K	April 07, 2021	10.24
10.30	Amendment to Agreement and Plan of Merger by and among 4Front Ventures Corp., Island Merger Sub, Inc., Island Global Holdings, Inc., and Navy Capital SR LLC, dated April 8, 2022	8-K	April 22, 2022	10.1
10.31	Form of Merger Note	8-K	April 22, 2022	10.2
10.32	Amended and Restated Loan and Security Agreement dated December 17, 2020	8-K	April 07, 2021		x
10.33	Second Amendment to Amended and Restated Loan and Security Agreement, dated January 29, 2024, by and among the Company, LI Lending, LLC	8-K	January 31, 2024	10.1
10.34	First Amendment to Amended and Restated Loan and Security Agreement dated July 31, 2023	8-K	September 01, 2023	10.1
10.35	Loan Agreement by and among the Company, the Company’s wholly-owned subsidiaries, ALT Debt II, LP and GGG Partners, LLC, as collateral agent	8-K	October 19, 2023		x
21.1	List of Subsidiaries				x
31.1	Certification of the Chief Executive Officer (Principal Executive Officer) pursuant to Rule 13a-14(a) of the Securities Exchange Act				x
31.2	Certification of the Chief Financial Officer (Principal Financial Officer) pursuant to Rule 13a-14(a) of the Securities Exchange Act				x
32.1	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Rule 13a-14(b) Under the Securities Exchange Act of 1934 and Section 1350 of Chapter 60 of Title 18 of the United States Code *				x
101.INS	Inline XBRL Instance Document				x
101.SCH	Inline XBRL Taxonomy Extension Schema Document				x
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document				x

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101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document	x
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document	x
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document	x
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)	x

+    Indicates management contract or compensatory plan.

*    This certification is being furnished solely to accompany this Annual Report pursuant to 18 U.S.C. Section 1350, and it is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934 and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this annual report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.

	4FRONT VENTURES CORP.
Date: April 15, 2024	By:	/s/ Andrew Thut
		Andrew Thut
		Chief Executive Officer

 

 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature and Title:	Date:
/s/ Andrew Thut	April 15, 2024
Andrew Thut, Chief Executive Officer (Principal Executive Officer)
/s/ Peter Kampian	April 15, 2024
Peter Kampian, Chief Financial Officer (Principal Financial and Accounting Officer)
/s/ Robert Hunt	April 15, 2024
Robert Hunt, Director
/s/ Leonid Gontmakher	April 15, 2024
Leonid Gontmakher, Director
/s/ Roman Tkachenko	April 15, 2024
Roman Tkachenko, Director
/s/ David Daily	April 15, 2024
David Daily, Director
/s/ Chetan Gulati	April 15, 2024
Chetan Gulati, Director
/s/ Kristopher Krane	April 15, 2024
Kristopher Krane, Director

66

4FRONT VENTURES CORP.

INDEX TO FINANCIAL STATEMENTS

	Page
Report of Independent Registered Public Accounting Firm	F-1
Consolidated Balance Sheets as of December 31, 2023 and 2022	F-2
Consolidated Statements of Operations for the Years Ended December 31, 2023 and 2022	F-3
Consolidated Statements of Changes in Shareholders' (Deficit) Equity for the Years Ended December 31, 2023 and 2022	F-4
Consolidated Statements of Cash Flows for the Years Ended December 31, 2023 and 2022	F-5
Notes to Consolidated Financial Statements	F-7

67

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Directors of

4Front Ventures Corp.

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of 4Front Ventures Corp. (the “Company”), as of December 31, 2023 and 2022, and the related consolidated statements of operations, changes in shareholders’ (deficit) equity, and cash flows for the years ended December 31, 2023 and 2022, and the related notes (collectively referred to as the “financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of 4Front Ventures Corp. as of December 31, 2023 and 2022, and the results of its operations and its cash flows for the years ended December 31, 2023 and 2022 in conformity with accounting principles generally accepted in the United States of America.

Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has suffered recurring losses from operations and has a working capital deficit that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatements of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the Company’s auditor since 2019.

/s/ DAVIDSON & COMPANY LLP

Vancouver, Canada                                Chartered Professional Accountants

PCAOB ID: 731

April 15, 2024

F-1

4FRONT VENTURES CORP.

CONSOLIDATED BALANCE SHEETS

(Amounts expressed in thousands of U.S. dollars except for share data)

	As of December 31,
	2023		2022
ASSETS
Current assets:
Cash	$	3,398	$	14,271
Accounts receivable, net	3,682		5,448
Other receivables	735		93
Current portion of lease receivables	3,990		3,810
Inventory	17,087		18,888
Prepaid expenses and other assets	3,324		1,015
Assets held for sale or disposal	1,696		9,742
Total current assets	33,912		53,267
Property, plant, and equipment, net	36,549		34,414
Lease receivables	3,963		5,611
Intangible assets, net	26,793		29,240
Goodwill	41,807		41,807
Right-of-use assets	118,511		121,929
Deposits	2,419		4,996
Long term assets held for sale or disposal	—		53,468
TOTAL ASSETS	$	263,954	$	344,732
LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY
LIABILITIES
Current liabilities:
Accounts payable	$	11,415	$	11,101
Accrued expenses and other current liabilities	9,014		9,101
Taxes payable	39,634		36,577
Derivative liability	4,550		—
Current portion of convertible notes	15,818		—
Current portion of lease liability	1,720		2,767
Current portion of notes payable and accrued interest	9,812		9,059
Current liabilities held for sale or disposal	12,037		8,845
Total current liabilities	104,000		77,450
Convertible notes	—		14,843
Notes payable and accrued interest from related party	47,491		49,807
Long term notes payable	11,052		10,456
Long term accounts payable	977		962
Construction finance liability	16,000		16,000
Deferred tax liability	11,882		6,097
Lease liability	123,946		120,672
Long term liabilities held for sale or disposal	—		20,094
TOTAL LIABILITIES	315,348		316,381
SHAREHOLDERS' (DEFICIT) EQUITY
Subordinate Voting Shares (no par value, unlimited shares authorized, 669,519,349 and 643,416,275 shares issued and outstanding as of December 31, 2023 and 2022, respectively)	308,952		304,602
Additional paid-in capital	66,948		59,411
Deficit	(427,402)		(335,755)
Equity attributable to 4Front Ventures Corp.	(51,502)		28,258
Non-controlling interest	108		93
TOTAL SHAREHOLDERS' (DEFICIT) EQUITY	(51,394)		28,351
TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY	$	263,954	$	344,732

See accompanying notes to consolidated financial statements.

F-2

4FRONT VENTURES CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts expressed in thousands of U.S. dollars except for share and per share data)

	For the Years Ended December 31,
	2023		2022
REVENUE
Revenue from sale of goods	$	86,132	$	95,722
Real estate income	11,303		11,942
Total revenues	97,435		107,664
Cost of goods sold	(51,543)		(56,239)
Gross profit	45,892		51,425
OPERATING EXPENSES
Selling, general and administrative expenses	63,407		56,272
Depreciation and amortization	3,120		2,667
Transaction and restructuring related expenses	212		1,022
Impairment of goodwill and intangible assets	—		6,484
Total operating expenses	66,739		66,445
Income (loss) from operations	(20,847)		(15,020)
Other income (expense)
Interest income	3		32
Interest expense	(13,805)		(12,614)
Change in fair value of derivative liability	(385)		3,502
Loss on disposal	(149)		(228)
Gain on extinguishment of debt	29		—
Loss on litigation settlement	(3)		(250)
Other	(2,469)		13,364
Total other income (expense), net	(16,779)		3,806
Net loss from continuing operations before income taxes	(37,626)		(11,214)
Income tax expense	(7,092)		(10,077)
Net loss from continuing operations	(44,718)		(21,291)
Net loss from discontinued operations, net of taxes	(46,914)		(25,586)
Net loss	(91,632)		(46,877)
Net income attributable to non-controlling interest	15		21
Net loss attributable to shareholders	$	(91,647)	$	(46,898)
Basic and diluted loss per share - continuing operations	$	(0.14)	$	(0.03)
Basic and diluted loss per share - discontinued operations	$	(0.07)	$	(0.04)
Weighted average number of shares outstanding, basic and diluted	649,692,245		632,951,141

See accompanying notes to consolidated financial statements.

F-3

4FRONT VENTURES CORP.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' (DEFICIT) EQUITY

(Amounts expressed in thousands of U.S. dollars except for share data)

	Common Stock
	Shares	Amount		Additional Paid-In Capital		Deficit		Total 4Front Ventures Corp. Shareholders' Equity		Non-Controlling Interest		Total Shareholders' Equity
Balance, December 31, 2021	594,181,604	$	274,120	$	52,197	$	(288,857)	$	37,460	$	72	$	37,532
Shares issued for Island pursuant to acquisition	8,783,716	6,245		—		—		6,245		—		6,245
Warrants issued for Island pursuant to acquisition	—	732		—		—		732		—		732
Shares issued for NECC pursuant to acquisition	28,571,428	18,200		—		—		18,200		—		18,200
Shares issued for Bloom pursuant to acquisition	3,750,000	2,100		—		—		2,100		—		2,100
Share-based compensation	1,750,604	—		7,214		—		7,214		—		7,214
Conversion of notes to equity	6,235,512	3,122		—		—		3,122		—		3,122
Shares issued with exercise of stock options	51,975	33		—		—		33		—		33
Shares issued with exercise of warrants	91,436	50		—		—		50		—		50
Net loss	—	—		—		(46,898)		(46,898)		21		(46,877)
Balance, December 31, 2022	643,416,275	$	304,602	$	59,411	$	(335,755)	$	28,258	$	93	$	28,351
Shares issued for asset acquisition	2,380,952	447		—		—		447		—		447
Shares issued to settle payables	4,062,500	650		—		—		650		—		650
Shares issued for executive compensation	9,300,250	862				—		862		—		862
Conversion of notes to equity	10,359,372	2,391		—		—		2,391		—		2,391
Equity component of debt	—	—		1,333		—		1,333		—		1,333
Warrants issued	—	—		206		—		206		—		206
Share-based compensation	—	—		5,998		—		5,998		—		5,998
Net loss	—	—		—		(91,647)		(91,647)		15		(91,632)
Balance, December 31, 2023	669,519,349	$	308,952	$	66,948	$	(427,402)	$	(51,502)	$	108	$	(51,394)

F-4

4FRONT VENTURES CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts expressed in thousands of U.S. dollars)

	For the Years Ended December 31,
	2023		2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss from continuing operations	$	(44,718)	$	(21,291)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	5,560		5,114
Equity based compensation	7,066		7,214
Change in fair value of derivative liability	385		(3,502)
Accretion of lease liability	5,698		5,675
Loss on disposal	149		—
Write-off of fixed asset from terminated lease	—		228
Change in contingent consideration payable	—		(2,393)
Loss on extinguishment of debt	(29)		—
Accretion of debt discount	2,632
Accrued interest on convertible debenture and interest	1,072		1,326
Accrued interest on notes payable	9,596		8,184
Interest accrued - lease receivable	1,468		957
Deferred taxes	5,785		(4,642)
Impairment of goodwill and intangibles	—		6,484
Changes in operating assets and liabilities:
Accounts receivable, net	1,766		(3,518)
Other receivables	(252)		196
Prepaid expenses and other assets	(1,018)		1,025
Inventory	1,801		(568)
Accounts payable	1,150		10,395
Accrued expenses and other current liabilities	89		447
Taxes payable	3,083		12,609
Deposits	2,572		(502)
Net cash provided by continuing operating activities	3,855		23,438
Net cash used in discontinued operating activities	(5,691)		(14,537)
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES	(1,836)		8,901
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property and equipment	1,051		—
Proceeds from notes receivable	—		108
Cash paid for asset acquisitions and business combinations, net of cash received	(850)		(25,000)
Purchases of property and equipment	(3,361)		(1,278)
Net cash used in continuing investing activities	(3,160)		(26,170)
Net cash used in discontinued investing activities	(284)		(1,603)
NET CASH USED IN INVESTING ACTIVITIES	(3,444)		(27,773)
CASH FLOWS FROM FINANCING ACTIVITIES
Notes payable issued	3,410		3,000
Payment on construction finance liability	(640)		—
Proceeds from sales and leaseback transaction	—		16,000
Proceeds from the exercise of warrants	—		50
Proceeds from the exercise of stock options	—		33
Repayment of convertible debentures	—		(1,125)
Repayment of notes payable	(8,319)		(7,250)
Net cash (used in) provided by continuing financing activities	(5,549)		10,708
Net cash (used in) provided by discontinued financing activities	—		—
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES	(5,549)		10,708
NET (DECREASE) INCREASE IN CASH	(10,829)		(8,164)
Cash included in assets held for sale	(44)		—
CASH, BEGINNING OF YEAR	14,271		22,435
CASH, END OF YEAR	$	3,398	$	14,271

F-5

4FRONT VENTURES CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts expressed in thousands of U.S. dollars)

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest	$	6,718	$	1,750
Cash paid for income taxes	$	1,575	$	2,110
Non-cash investing and financing activities:
Issuance of warrants for debt amendments	$	4,165	$	—
Issuance of restricted stock units	$	1,333	$	—
Issuance of equity for business acquisitions	$	—	$	25,177
Issuance of equity for asset acquisitions	$	447	$	2,100
Shares issued to settle payables	$	650	$	2,783
Paid-in-kind interest capitalized to debt principal	$	175	$	—
Termination of new right-of-use assets and lease liabilities	$	—	$	2,020
Transfers of property and equipment from assets related to discontinued operations to continuing operations	$	3,556	$	—
Net assets transferred to held for sale	$	(117)	$	—

F-6

4 FRONT VENTURES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts expressed in thousands of U.S. dollars except for share and per share data)

Note 1: NATURE OF OPERATIONS

4Front Ventures Corp. (“4Front” or the “Company”) exists pursuant to the provisions of the British Columbia Corporations Act. The Company operates the business through two segments: THC Cannabis and CBD Wellness. As of December 31, 2023, the Company's THC Cannabis segment consists of five dispensaries and four production and cultivation facilities across Illinois and Massachusetts. Also, as part of its THC Cannabis segment, the Company leases real estate, sells equipment and supplies, and licenses intellectual property to cannabis producers in the state of Washington. The Company’s CBD Wellness segment sells non-THC hemp derived products across the United States.

While marijuana is legal under the laws of several U.S. states (with varying restrictions), the United States Federal Controlled Substances Act classifies all “marijuana” as a Schedule I drug, whether for medical or recreational use. Under U.S. federal law, a Schedule I drug or substance has a high potential for abuse, no accepted medical use in the United States, and a lack of safety for the use of the drug under medical supervision.

Management continues to evaluate the impact of the COVID-19 pandemic on the Company’s industry and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position and results of its operations the specific impact is not readily determinable as of the date of these consolidated financial statements. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Note 2: SIGNIFICANT ACCOUNTING POLICIES

(a)    Basis of Presentation

The consolidated financial statements include the accounts of 4Front and all entities in which the Company either has a controlling voting interest or is the primary beneficiary of a variable interest entity in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The Company has prepared these statements pursuant to the rules and regulations of the United States Securities and Exchange Commission ("SEC") and U.S. GAAP. All material intercompany accounts and transactions have been eliminated in consolidation.

The accompanying consolidated financial statements have been prepared on a going concern basis in accordance with accounting principles generally accepted in the U.S. GAAP and in accordance with the rules and regulations of the SEC for annual financial information. In the opinion of management, the financial statements include all adjustments necessary for the fair presentation of the results of the annual periods presented. All adjustments are of a normal recurring nature.

(b)    Use of Estimates

The preparation of the Company’s financial statements requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, and revenue and expenses. We cannot predict what future laws and regulations might be passed that could have a material effect on our results of operations. We assess the impact of significant changes in laws and regulations on a regular basis and update the assumptions and estimates used to prepare our financial statements when we deem it necessary. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. Actual results may differ from these estimates. The most critical and subjective areas are discussed in detail elsewhere in the Notes to Consolidated Financial Statements.

F-7

4 FRONT VENTURES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts expressed in thousands of U.S. dollars except for share and per share data)

(c)    Cash and Cash Equivalents

Cash and cash equivalents include cash deposits in financial institutions, other deposits that are readily convertible into cash, with original maturities of three months or less, and cash held at retail locations. For the years presented, the Company did not have any cash equivalents.

(d)    Trade Receivables

Accounts receivable represents receivables from customers stemming from sales in the ordinary course of business and leasing services which are recorded when billed or when the related revenue is earned. Accounts receivable are stated net of allowance for doubtful accounts and customer credits. The Company establishes an allowance for doubtful accounts based on various factors including the age of receivables outstanding, historical trends, economic conditions, and other information. The allowance for doubtful accounts was $7.7 million and nil as of December 31, 2023 and 2022, respectively.

(e)    Inventories

Raw materials consist of unharvested cannabis plants and materials used to manufacture CBD and cannabis products. Work in process consists of harvested cannabis, processed cannabis oil, and manufactured products that are not complete. Finished goods consist of cultivation supplies to be sold to cultivators, purchased and manufactured packaged flower, pre-rolls, vape cartridges, edibles, CBD products, and paraphernalia.

Inventories of purchased finished goods and packing materials are initially valued at cost and subsequently at the lower of cost or net realizable value. Costs incurred during the growing and production process are capitalized as incurred to the extent that cost is less than net realizable value. These costs include materials, labor and manufacturing overhead used in the growing and production processes. Products for resale, supplies and consumables are valued at lower of cost or net realizable value.

Net realizable value is determined as the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. Cost is determined using the weighted average cost basis and specific costs, with cost being determined on the first-in, first-out (“FIFO”) method of accounting. The Company reviews inventory for obsolete, redundant and slow-moving goods and any such inventories are written down to net realizable value.

(f)    Property and Equipment

Property, plant and equipment are stated at cost, including capitalized borrowing costs, net of accumulated depreciation and impairment losses. Expenditures that materially increase the life of the assets are capitalized. Ordinary repairs and maintenance are expensed as incurred. When property is disposed, the related cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in the consolidated statement of operations. The assets’ residual values, useful lives and methods of depreciation are reviewed at each financial year-end and adjusted prospectively if appropriate. Depreciation is calculated on a straight-line basis over the estimated useful life of the asset using the following terms and methods:

Land / Construction in process	Not depreciated
Buildings & improvements	10 - 39 years
Furniture & fixtures	5 - 7 years
Equipment	7 years
Software	5 years
Leasehold improvements	Lesser of remaining life of lease or useful life

F-8

4 FRONT VENTURES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts expressed in thousands of U.S. dollars except for share and per share data)

(g)    Impairment of Long-Lived Assets

The Company evaluates the recoverability of other long-lived assets, including property and equipment, and certain identifiable intangible assets, whenever events or changes in circumstances indicate that the carrying value of an asset or asset group may not be recoverable. The Company performs impairment tests of indefinite-lived intangible 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 overall business, a significant decrease in the market value of the assets or significant negative industry or economic trends. When the Company determines the carrying value of long-lived assets may not be recoverable based upon the existence of one or more of the indicators, the assets are assessed for impairment based on the estimated future undiscounted cash flows expected to result from the use of the asset and its eventual disposition. If the carrying value of an asset exceeds its estimated future undiscounted cash flows, an impairment loss is recorded for the excess of the asset’s carrying value over its fair value.

(h)    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 periods of assets with finite lives are based on management’s estimates at the date of acquisition and were as follows for each class of intangible asset:

Customer relationships	5 years
Tradenames & trademarks	1 - 10 years
Non-competition agreement	2 - 3 years
Know-how (trade secrets)	5 years

Intangible assets with finite lives are amortized 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. Indefinite-lived intangibles such as cannabis licenses are not amortized.

(i)    Goodwill

Goodwill arises from business combinations and is generally determined as the excess of the fair value of the consideration transferred, plus the fair value of any non-controlling interests in the acquiree, over the fair value of the net assets acquired and liabilities assumed as of the acquisition date. Goodwill acquired in a business combination is not amortized but tested for impairment at least annually or more frequently if events and circumstances exist that indicate that a goodwill impairment test should be performed.

In order to determine if goodwill is impaired, the Company may perform an optional qualitative assessment to determine whether indicators of impairment exist. If indicators of impairment are present, or if the Company elects to bypass the qualitative assessment and proceed directly to the quantitative test, the Company measures the impairment of goodwill by comparing the carrying amount of a reporting unit to its estimated fair value. If the carrying amount of a reporting unit is in excess of its fair value, the Company recognizes an impairment charge equal to the amount in excess.

F-9

4 FRONT VENTURES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts expressed in thousands of U.S. dollars except for share and per share data)

The estimate of fair value requires the use of significant unobservable inputs, representative of a Level 3 fair value measurement. The Company determines fair values for each reporting unit using the income approach, and when available and appropriate, the market approach, or a combination of both. The income approach involves forecasting projected financial information (such as revenue growth rates, profit margins, tax rates, working capital and capital expenditures) and selecting a discount rate that reflects the risk inherent in estimated future cash flows. Under the market approach, the fair value is based on observed market data. If multiple valuation methodologies are used, the results are weighted appropriately.

The Company performs an annual assessment of its goodwill as of October 31, or more frequently, to determine if any events or circumstances exist, such as an adverse change in business climate or a decline in overall industry demand, that would indicate that it would more likely than not reduce the fair value of a reporting unit below its carrying amount, including goodwill.

(j)    Business Combinations

Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The Company measures goodwill as the fair value of the consideration, less the net recognized amount of the identifiable assets and liabilities assumed, all measured at fair value as of the acquisition date. Any excess of the fair value of the net assets acquired over the consideration, is a gain on business acquisition and would be recognized as a gain in the consolidated statement of operations.

In determining the fair value of all identifiable assets, liabilities and contingent liabilities acquired, the most significant estimates relate to contingent consideration and intangible assets. Management exercises judgement in estimating the probability and timing of when earn-outs are expected to be achieved, which is used as the basis for estimating fair value.

(k)    Leases

Lessee

The Company primarily leases its retail dispensaries, certain cultivation and production facilities, and office space which are accounted for under Accounting Standards Codification ("ASC") Topic 842, "Leases" ("ASC Topic 842"). The Company determines if an arrangement is a lease at inception. The Company recognizes operating lease right-of-use assets and liabilities at the lease commencement date based on the estimated present value of the remaining lease payments over the lease term. An implicit borrowing rate is occasionally provided in lease agreements which the Company utilizes to calculate right-of-use assets and liabilities at the end of each reporting period. When an implicit borrowing rate is not provided, the Company uses a benchmark approach to derive an appropriate imputed discount rate. The Company will benchmark itself against other companies of similar credit ratings and comparable quality and derive an imputed rate. The Company includes options to extend or terminate a lease in the lease term when it is reasonably certain to exercise such options. The Company recognizes leases with an initial term of 12 months or less as lease expense over the lease term and those leases are not recorded on the consolidated balance sheets. Certain leases include variable payments related to common area maintenance, insurance, and property taxes, which are billed by the landlord, as is customary with these types of charges for office space, and are considered non-lease components. The Company accounts for real estate leases and the related fixed non-lease components together as a single component. For additional information on leases where the Company is the lessee, see Note 9.

At the commencement date, the Company must determine whether the lease is accounted for as an operating lease or finance lease under ASC Topic 842. 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.

F-10

4 FRONT VENTURES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts expressed in thousands of U.S. dollars except for share and per share data)

Lessor

Leases in which the Company is the lessor are classified as operating and finance leases under ASC Topic 842 where the lease components and non-lease components are accounted for separately. Rental income from operating leases is recognized on a straight-line basis over the term of each lease. Initial direct costs incurred in negotiating and arranging a operating lease are added to the carrying amount of the leased asset and recognized on a straight-line basis over the lease term. At the commencement date of each finance lease, the Company recognizes a lease receivable for the net present value of the future lease payments. Finance lease rental income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Company’s lease receivable over the life of the lease. Initial direct costs related to finance leases are deferred at the commencement date and included in the underlying lease receivable asset, and are recognized as income as part of the derecognition of the lease receivable over the life of the lease.

(l)    Sale and Leaseback Transactions

From time to time, the Company may enter into sale-leaseback transactions to finance certain property acquisitions and capital expenditures, pursuant to which the Company sells the property to a third party and agrees to lease the property back for a certain period of time. To determine whether the transfer of the property should be accounted for as a sale, the Company evaluates whether it has transferred control to the third party in accordance with the revenue recognition guidance set forth in ASC 606. If the transfer of the asset is deemed to be a sale at market terms, the Company recognizes the transaction price for the sale based on the cash proceeds received, derecognizes the carrying amount of the underlying asset and recognizes a gain or loss in the consolidated statements of operations and comprehensive loss for any difference between the carrying value of the asset and the transaction price. The Company then accounts for the leaseback in accordance with its lease accounting policy.

If the transfer of the asset is determined not to be a sale at market terms, the Company accounts for the transaction as a financing arrangement, and accordingly no asset sale is recognized. The Company retains the historical costs of the property and the related accumulated depreciation on its books and continues to depreciate the property over the lesser of its remaining useful life or its initial lease term. The asset is presented within property and equipment, net on the consolidated balance sheets. All proceeds from these transactions are accounted for as finance obligations and presented as non-current obligations on the consolidated balance sheets. A portion of the lease payments is recognized as a reduction of the financing obligation and a portion is recognized as interest expense based on an imputed interest rate.

(m)    Contract Assets and Liabilities

A contract liability is recorded on the consolidated balance sheet for consideration transferred prior to goods transfer. Amounts expected to be recognized as revenue within the twelve months following the balance sheet date are classified as the current portion of contract liabilities in the accompanying consolidated balance sheets with the remaining balance classified as long-term. When the Company has an unconditional right to payment, a receivable is classified on the consolidated balance sheet as current contract assets for amounts due within twelve months or long-term contract assets for amounts due after twelve months. The accompanying consolidated balance sheets reflect a contract liability for the amount of revenue to be recognized in the future as and when the Company satisfies its remaining performance obligations. As of December 31, 2023, contract liabilities are related to discontinued operations of which $2.3 million is included in the accompanying consolidated balance sheet.

(n)    Derivative Liabilities

The Company evaluates all of its agreements to determine if such instruments have derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations.

F-11

4 FRONT VENTURES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts expressed in thousands of U.S. dollars except for share and per share data)

In calculating the fair value of derivative liabilities, the Company uses a valuation model when Level 1 inputs are not available to estimate fair value at each reporting date. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the consolidated balance sheets as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within twelve months of the reporting date. Critical estimates and assumptions used in the model are discussed in Note 12.

(o)    Share Capital

Financial instruments issued by the Company are classified as equity only to the extent that they do not meet the definition of a financial liability or financial asset. The Company’s common shares, share options and warrants are classified as equity instruments. Incremental costs directly attributable to the issue of new shares, warrants or options are shown in equity as a deduction from the proceeds. The proceeds from the exercise of stock options are recorded as share capital. Income tax relating to transaction costs of an equity transaction is accounted for in accordance with ASC 740, "Income Taxes".

(p)    Share-based Compensation

The stock option plan (Note 15) allows Company directors, employees and consultants to acquire shares of the Company. The Company measures the fair value of services received in exchange for all options granted based on the fair market value of the award as of the grant date. The fair value of options granted is recognized as a share-based compensation expense with a corresponding increase in equity. Consideration paid on the exercise of stock options is credited to share capital. The fair value is measured at grant date and each tranche is recognized over the period during which the options vest. The fair value of the options granted is measured using the Black-Scholes option pricing model taking into account the terms and conditions upon which the options were granted. At each financial position reporting date, the amount recognized as an expense is adjusted to reflect the number of stock options that are expected to vest.

(q)    Revenue Recognition

Revenue is recognized by the Company in accordance with ASC Topic 606, "Revenue from Contracts with Customers" ("ASC Topic 606"). Revenue from the sale of goods consists of direct retail sales to customers at the Company-owned dispensaries and wholesale sales to third-party dispensaries, which are generally recognized at a point in time when control over the goods have been transferred to the customer and is recorded net of sales discounts. Payment is typically due upon transferring the goods to the customer or within a specified time period permitted under the Company’s credit policy. The Company recognized sales discounts of $11.2 million and $13.3 million for the year ended December 31, 2023 and 2022, respectively. Sales tax is excluded from the transaction price and recorded as liabilities upon collection at the point of sale.

Revenue related to real estate income on leases is recognized in accordance with ASC Topic 842. Lease payments received are primarily recognized as real estate income in the consolidated statements of operations. A portion of the lease payment amortizes the lease receivable.

The following table represents the Company’s disaggregated revenue by source:

	For the Years Ended December 31,
	2023		2022
Retail	$	73,149	$	86,712
Wholesale	12,983		9,010
Real estate	11,303		11,942
Total	$	97,435	$	107,664

F-12

4 FRONT VENTURES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts expressed in thousands of U.S. dollars except for share and per share data)

The Company treats shipping and handling activities as a fulfillment cost, classified as cost of sales. Accordingly, the Company accrues all fulfillment costs related to the shipping and handling of consumer goods at the time of shipment. The Company offers a loyalty reward program at certain dispensary locations. A portion of the revenue generated in a sale is allocated to the loyalty points earned which is deferred until the loyalty points are redeemed or expire. As of December 31, 2023 and 2022, the loyalty liability totaled $0.5 million and $1.5 million, respectively, and is included in accrued liabilities on the consolidated balance sheets.

(r)    Advertising Expenses

The Company expenses advertising costs as incurred in accordance with ASC 720-35, “Other Expenses – Advertising Cost”. Advertising expenses from continuing operations totaled $14.7 million and $19.9 million in the years ended December 31, 2023 and 2022, respectively.

(s)    Income Taxes

Deferred taxes are provided using an asset and liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are measured using the enacted tax rates. The effect on deferred tax assets and liabilities of a change in tax law or tax rates is recognized in income in the period that enactment occurs. As discussed further in Note 17, the Company is subject to the limitations of IRC Section 280E.

(t)    Loss per Share

Basic loss per share is calculated using the weighted average number of common shares outstanding during the year. Diluted loss per share has been calculated using the weighted average number of common shares that would have been outstanding during the respective period had all stock options and warrants outstanding and having a dilutive effect been converted into shares at the beginning of the period and the proceeds used to repurchase the Company’s common shares at the average market price for the period. If these computations prove to be anti-dilutive, diluted loss per share is the same as the basic loss per share.

(u)    Fair Value of Financial Instruments

The Company applies fair value accounting for all financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities that are required to be recorded at fair value, the Company considers all related factors of the asset by market participants in which the Company would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as inherent risk, transfer restrictions, and credit risk.

The Company provides information about its financial instruments measured at fair value at one of three levels according to the relative reliability of the inputs used to estimate the fair value:

•Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities;

•Level 2 – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and

F-13

4 FRONT VENTURES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts expressed in thousands of U.S. dollars except for share and per share data)

•Level 3 – Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

(v) Assets Held for Sale

Assets held for sale represent property, equipment, and leasehold improvements, right-of-use assets, and any other assets that are held for sale in conjunction with the sale of a business. The Company records assets held for sale in accordance with ASC 360 at the lower of carrying value or fair value less costs to sell. Fair value is the amount obtainable from the sale of the asset in an arm’s length transaction. The reclassification takes place when the assets are available for immediate sale and the sale is highly probable. All assets and liabilities classified as held for sale are presented separately in the consolidated balance sheets of the current period.

(w) Discontinued Operations

A component of an entity is identified as operations and cash flows that can be clearly distinguished, operationally and financially, from the rest of the entity. Under ASC Subtopic 205-20, “Presentation of Financial Statements - Discontinued Operations” (“ASC Subtopic 205-20”), a discontinued operation that is being disposed of other than by sale is considered held and used until the date of abandonment at which time it meets the criteria to be presented as discontinued operations. A component of an entity that is classified as discontinued operations is presented separately from continuing operations in the consolidated statements of operations and the consolidated statements of cash flows for all periods presented. All assets and liabilities related to such discontinued operations are presented separately in the consolidated balance sheets for all periods presented.

(x)    Foreign Currency

The Company and its subsidiaries’ functional currency, as determined by management, is the United States (“U.S.”) dollar. These consolidated financial statements are presented in U.S. dollars as this is the primary economic environment of the Company. All references to “C$” refer to Canadian dollars.

Each asset, liability, revenue and expense denominated in a foreign currency is recorded in the entity’s functional currency using the exchange rate in effect at the transaction date. At each reporting period, nonmonetary assets and liabilities and related revenue and expenses are remeasured using historical exchange rates and monetary assets and liabilities are remeasured using current exchange rates. Any adjustments resulting from remeasurement are recorded in other expense (income) within the consolidated statements of operations.

(y)    Recent Accounting Pronouncements

Accounting Pronouncements Not Yet Adopted

i.In June 2022, the FASB issued ASU 2022-03, "Fair Value Measurements - Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (Topic 820)". ASU 2022-03 clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. It also clarifies that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. For public business entities, the ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. The Company is currently assessing the impact of adopting ASU 2022-03 on the consolidated financial statements.

F-14

4 FRONT VENTURES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts expressed in thousands of U.S. dollars except for share and per share data)

ii.In March 2023, the FASB issued ASU 2023-01, “Leases (Topic 842) – Common Control Arrangements”, which require that leasehold improvements associated with common control leases be amortized by the lessee over the useful life of the leasehold improvements to the common control group (regardless of the lease term) as long as the lessee controls the use of the underlying asset. It also requires such leasehold improvements to be accounted for as a transfer between entities under common control through an adjustment to entity if, and when, the lessee no longer controls the use of the underlying asset. ASU 2023-01 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently assessing the impact of adopting ASU 2023-01 on the consolidated financial statements.

iii.In July 2023, the FASB issued ASU 2023-03, “Presentation of Financial Statement (Topic 205), Income Statement - Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation - Stock Compensation (Topic 718)”, to amend various SEC paragraphs in the Accounting Standards Codification to reflect the issuance of SEC Staff Accounting Bulletin No. 120, among other things. The ASU does not provide any new guidance so there is no transition or effective date associated with it. The Company is currently assessing the impact of adopting ASU 2023-03 on the consolidated financial statements.

iv.In October 2023, the FASB issued ASU 2023-06, "Disclosure Improvements," which incorporates certain existing or incremental disclosures and presentation requirements of SEC Regulations S-X and S-K into the FASB Accounting Standards Codification (the “Codification”). ASU 2023-06 is effective for the Company as of the effective date to remove the existing disclosure requirement from Regulations S-X and S-K. Early adoption is not permitted. The Company is currently assessing the impact of adopting ASU 2023-06 on the consolidated financial statements.

v.In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures” (“ASU 2023-07”), which is intended to improve the financial reporting by requiring disclosure of incremental segment information on an annual and interim basis for all public entities to enable investors to develop more decision-useful financial analyses. ASU 2023-07 is effective for the Company beginning January 1, 2024 with early adoption permitted. The Company is currently evaluating the effect of adopting this accounting standard.

vi.In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 280), Improvements to Income Tax Disclosures” (“ASU 2023-09”), which require that public business entities on an annual basis (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a certain quantitative threshold. ASU 2023-09 is effective for the Company beginning January 1, 2025 with early adoption permitted. The Company is currently evaluating the effect of adopting this accounting standard.

Note 3: GOING CONCERN

As of December 31, 2023, the Company had cash and cash equivalents of $3.4 million and working capital deficit of $70.1 million. The Company incurred net losses from continuing operations of $44.7 million and $21.3 million for the years ended December 31, 2023 and 2022, respectively. The conditions described above raise substantial doubt with respect to the Company’s ability to meet its obligations for at least one year from the issuance of these consolidated financial statements, and therefore, to continue as a going concern.

The Company plans to continue to fund its operations through cash generated from sales and is deploying its capital reserves to acquire and develop assets capable of producing additional revenues and earnings over both the immediate and near term. Capital reserves are being utilized for capital expenditures and improvements in existing facilities, product development and marketing, as well as customer, supplier and investor and industry relations. Historically, the Company has raised capital as needed however there is no guarantee the Company will be able to continue to raise funds in the same manner it has historically.

F-15

4 FRONT VENTURES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts expressed in thousands of U.S. dollars except for share and per share data)

Note 4: INVENTORY

The Company’s inventories include the following as of December 31, 2023 and 2022:

	December 31, 2023		December 31, 2022
Raw materials - unharvested cannabis	$	2,268	$	2,431
Raw materials - harvested and purchased cannabis	5,745		6,753
Packaging and other non-finished goods	1,072		713
Work in process - manufactured and purchased extracts	1,790		3,412
Finished goods	6,212		5,579
Total inventory	$	17,087	$	18,888

Note 5: PROPERTY, PLANT, AND EQUIPMENT

Property, plant and equipment and related depreciation are summarized in the table below:

	December 31, 2023		December 31, 2022
Land	$	774	$	774
Buildings & improvements	12,584		13,784
Construction in process	7,165		82
Furniture, equipment & other	8,855		8,963
Leasehold improvements	19,966		19,544
Total	$	49,344	$	43,147
Less: accumulated depreciation	(12,795)		(8,733)
Total property and equipment, net	$	36,549	$	34,414

Depreciation expense related to continuing operations for the year ended December 31, 2023 and 2022 was $3.1 million and $2.6 million respectively, of which $2.4 million and $2.4 million, respectively, is included in cost of goods sold.

Unless specifically excluded in the LI Lending note, all property, plant, and equipment is secured by LI Lending as collateral on the LI Lending note (Note 11). In November 2022, the Company amended the lease agreement for its facility in Matteson, Illinois to increase the tenant improvement allowance under the lease by $19.9 million. Refer to Note 9 for further information.

On November 17, 2023, the Company entered into an agreement with a third party to sell a significant piece of equipment for a sale price of $1.4 million, of which $0.95 million is to be received in cash with the remaining $0.5 million contemplated in a promissory note receivable.

F-16

4 FRONT VENTURES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts expressed in thousands of U.S. dollars except for share and per share data)

Note 6: INTANGIBLE ASSETS AND GOODWILL

Intangible Assets

Intangible assets and related amortization are summarized in the table below:

	Licenses		Customer Relationships		Non-Competition Agreements		Tradenames and Trademarks		Know-How		Total
Gross Carrying Amount, December 31, 2021	$	20,146	$	2,900	$	249	$	100	$	9,700	$	33,095
Acquisitions	12,000		—		—		1		—		12,001
Impairment	(6,485)		—		—		—		—		(6,485)
Gross Carrying Amount, December 31, 2022	$	25,661	$	2,900	$	249	$	101	$	9,700	$	38,611
Acquisitions	—		—		—		—		—		—
Impairment	—		—		—		—		—		—
Gross Carrying Amount, December 31, 2023	$	25,661	$	2,900	$	249	$	101	$	9,700	$	38,611
Accumulated Amortization, December 31, 2021	$	—	$	(1,811)	$	(250)	$	(100)	$	(4,688)	$	(6,849)
Amortization Expense	—		(581)		—		(1)		(1,940)		(2,522)
Accumulated Amortization, December 31, 2022	$	—	$	(2,392)	$	(250)	$	(101)	$	(6,628)	$	(9,371)
Amortization Expense	—		(508)		—		—		(1,939)		(2,447)
Accumulated Amortization, December 31, 2023	$	—	$	(2,900)	$	(250)	$	(101)	$	(8,567)	$	(11,818)

During the year ended December 31, 2022, the Company acquired intangible assets related to the New England Cannabis Company and Bloom Farms transactions. During the year ended December 31, 2023, the Company entered into agreements to acquire dispensary licenses from Euphoria, LLC and Westside Visionaries. Refer to Note 7 for further discussion.

During the year ended December 31, 2022, management noted indicators of impairment of its acquired long-lived assets due to recent cannabis market conditions in the state of Michigan. The Company used various Level 3 inputs and a discounted cash flow model to determine the fair value of these asset groups. Accordingly, the Company recorded an impairment loss of $6.5 million in the consolidated statements of operations for the year ended December 31, 2022.

For the purpose of the annual impairment test on October 31, 2023, the Company performed a qualitative assessment and noted no impairment of its indefinite-lived intangible assets as of October 31, 2023.

F-17

4 FRONT VENTURES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts expressed in thousands of U.S. dollars except for share and per share data)

Amortization expense related to continuing operations for the year ended December 31, 2023 and 2022 was $2.4 million and $2.5 million respectively. Expected annual amortization expense for intangible assets subject to amortization at December 31, 2023 is as follows for each of the next five fiscal years:

Year Ending December 31,
2024	$	1,134
2025	—
2026	—
2027	—
2028	—
Thereafter	—
Total Future Amortization Expense	$	1,134

Goodwill

Balance, December 31, 2021	$	23,155
Acquisitions	18,652
Balance, December 31, 2022	$	41,807
Balance, December 31, 2023	$	41,807

Goodwill as of December 31, 2023 is related to the THC Cannabis segment in which there is no accumulated impairment within this segment. Goodwill related to the CBD Wellness segment has an accumulated impairment charge of $13.4 million, which represented the entire balance and occurred during the year ended December 31, 2020. As of December 31, 2023 and 2022, all goodwill and intangibles are attributable to the THC Cannabis segment.

For the purpose of the annual impairment test on October 31, 2023, the Company performed a qualitative assessment and noted no impairment of goodwill as of October 31, 2023. As of December 31, 2023, the THC Cannabis reporting unit had negative carrying amounts of which $41.8 million of goodwill is allocated to the reporting unit.

Refer to Note 18 for discussion of intangible assets and goodwill related to the Company's operations in California classified as discontinued operations.

F-18

4 FRONT VENTURES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts expressed in thousands of U.S. dollars except for share and per share data)

Note 7: ACQUISITIONS AND BUSINESS COMBINATIONS

There were no business combinations during the year ended December 31, 2023. A summary of business combinations completed during the year ended December 31, 2022 is as follows:

	NECC		Island (1)		Total
Cash consideration	$	25,000	$	—	$	25,000
Note to seller	2,000		10,000		12,000
Equity consideration - common stock	18,200		6,245		24,445
Equity consideration - warrants	—		732		732
Total Consideration	$	45,200	$	16,977	$	62,177
Assets acquired:
Cash	$	—	$	466	$	466
Accounts receivable	—		511		511
Inventory	1,435		3,599		5,034
Prepaid expenses and other current assets	3		147		150
Property, Plant and equipment, net	16,000		1,887		17,887
Operating lease - right of use asset	—		8,418		8,418
Intangible assets	12,000		7,700		19,700
Total assets acquired	$	29,438	$	22,728	$	52,166
Liabilities assumed:
Accounts payable	$	—	$	1,423	$	1,423
Accrued expenses and other liabilities	—		2,342		2,342
Contract liabilities	—		3,535		3,535
Deferred tax liabilities	2,890		2,181		5,071
Lease liabilities	—		8,418		8,418
Total liabilities assumed	2,890		17,899		20,789
Estimated fair value of net assets acquired	$	26,548	$	4,829	$	31,377
Estimated Goodwill	$	18,652	$	12,148	$	30,800
Net Income (Loss) (2)	$	(2,171)	$	(10,986)	$	(13,157)
Revenues (2)	$	—	$	(119)	$	(119)

(1) During the year ended December 31, 2023, Island Global Holdings was classified as discontinued operations. Refer to Note 18 for further information.

(2) The respective amounts are revenues and net income (loss) recognized in the consolidated statement of operations for the year ended December 31, 2022.

The following unaudited pro forma financial information presents the results of operations of the acquired entities for the years ended December 31, 2022 as if the acquisitions had occurred as of January 1, 2022. The pro forma information does not necessarily reflect the results of operations that would have occurred had the entities been a single company during those periods.

	Years Ended December 31,
	2022
Pro Forma Net Income (Loss)	$	(53,071)
Pro Forma Revenues	$	120,305

F-19

4 FRONT VENTURES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts expressed in thousands of U.S. dollars except for share and per share data)

New England Cannabis Company ("NECC")

On January 28, 2022, the Company completed an acquisition for 100% of NECC (the "NECC Merger") for cash consideration of $9.0 million and 28,571,428 Class A Subordinate Voting Shares of the Company (the “SVS”) valued at $18.2 million based on the closing stock price of the SVS on the acquisition date. The acquisition increased the Company's presence in Massachusetts and the northeastern United States and provides additional opportunities for expansion in the Northeast.

In connection with the consummation of the NECC Merger on January 28, 2022, Mission Partners RE, LLC, a Delaware limited liability company wholly owned by the Company completed its acquisition of 100% of the issued and outstanding membership interests of 29 Everett Street LLC, a Massachusetts limited liability company (the “Everett LLC”) for cash consideration of $16.0 million and a promissory note of $2.0 million. The Everett LLC entity was solely comprised of property, plant and equipment that was leased to and used by NECC at the time of the transaction and consolidated into NECC operations post acquisition. The Merger and Purchase Agreement were recorded as one transaction (collectively, referred to as the "NECC Acquisitions"), as the entities were commonly owned by the same individual and the purchase of Everett LLC was contingent on the Merger with NECC.

Intangible assets acquired from NECC consist of cannabis licenses which are indefinite-lived assets. As a result of the NECC Acquisitions, the Company recognized $18.7 million of goodwill to the THC Cannabis segment based on the expected synergies from combining the acquired operations with the Company's existing operations in Massachusetts. Management does not expect acquired goodwill to be deductible for tax purposes.

As part of the NECC Acquisitions, the Company incurred $0.7 million in transaction and restructuring costs, which were included in transaction and restructuring related expenses and expensed as incurred during the year ended December 31, 2022.

Island Global Holdings

On April 25, 2022, the Company completed a merger acquisition for 100% of Island Global Holdings, Inc. ("Island") for non-cash consideration as follows: (i) 8,783,716 Class A Subordinated Voting Shares valued at $6.2 million based on the closing stock price of the SVS on the acquisition date; (ii) 6% 54-month, subordinated promissory notes (the “Island Merger Notes”) in the aggregate principal amount of $10.0 million; and (iii) warrants to purchase 2,999,975 SVS at a price of $1.00 per SVS. This acquisition enhanced the Company's growing brand portfolio, including diverse lines of pre-rolls, flower and infused products.

Intangible assets acquired from Island consist of cannabis licenses, trade names and trademarks. Utilizing like licenses as a benchmark, the Company determined that the licenses acquired are indefinite-lived assets and the trade names and trademarks have a life of ten years. As a result of the Island Merger, the Company recognized $12.1 million of goodwill to the THC Cannabis segment based on the expected enhancement to the Company's existing brand portfolio across synergies. Management does not expect acquired goodwill to be deductible for tax purposes.

As part of the Island Merger, the Company incurred $1.4 million in restructuring and transaction costs, which were included in transaction and restructuring related expenses and expensed as incurred during the year ended December 31, 2022.

During the year ended December 31, 2023, Island Global Holdings was classified as discontinued operations as part of the Company's California operations. Refer to Note 18 for further information.

F-20

4 FRONT VENTURES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts expressed in thousands of U.S. dollars except for share and per share data)

Bloom Farms

On August 19, 2022, the Company completed an asset acquisition to acquire certain assets of Bloom Farms for stock consideration of 3,750,000 Class A Subordinate Voting Shares valued at $2.1 million based on the closing stock price of the SVS on the acquisition date. In addition to the contracted purchase price, the Company incurred $0.06 million in transactional costs that were capitalized as part of the asset acquisition. This transaction increased the Company's brand portfolio in the California market. The allocation of the asset acquisition cost is detailed below:

Share consideration	$	2,100
Transaction costs	6
Total Purchase Price	$	2,106
Assets acquired:
Accounts receivable	$	508
Inventory	534
Equipment	142
Intangible assets - tradenames	922
Total assets acquired	$	2,106

In addition to the consideration transferred, there is an earn-out consideration based on the actual revenue in excess of $2.1 million generated from the brands within California during the first 12 months after the closing. This earn-out consideration cannot exceed $5.0 million. As of the transaction date, it is not probable this consideration will become payable and no liability has been recognized. As of December 31, 2023, Bloom Farms was classified as discontinued operations as part of the Company's California operations. Refer to Note 18 for further information.

Euphoria, LLC

On March 27, 2023, the Company entered into a Membership Interest Purchase Agreement to acquire 100% of the issued and outstanding equity interests in Euphoria, LLC ("Euphoria") for a total purchase price of $4.5 million to be paid in cash, promissory notes, and Class A Subordinate Voting Shares. Euphoria holds a conditional adult use dispensary license in the state of Illinois which shall convert to a final license upon regulatory approval. The transfer of the license is subject to regulatory approval. As of December 31, 2023, the Company has paid $0.3 million in cash and issued 2,308,952 Class A Subordinate Voting Shares valued at $0.4 million based on the closing stock price of the SVS on the issuance date, which is included as a component of prepaid expenses and other assets on the consolidated balance sheet as of December 31, 2023. In certain events as defined in this agreement, such as, but not limited to the inability to obtain regulatory approval, all consideration paid by the Company to the sellers are refundable. The remaining consideration will be due upon regulatory approval at the closing date. In the event of termination by the Company under certain circumstances, the Company shall pay a breakup fee of $3.5 million to the sellers, less any portion of the purchase price already paid. Conversely, in the event of termination by the sellers under certain circumstances, the sellers shall pay a breakup fee of $3.5 million to the Company. A subsidiary of the Company entered into a conditional management services agreement to manage the operations of Euphoria until a final license is issued.

Westside Visionaries

On November 17, 2023, the Company entered into a Membership Interest Purchase Agreement to acquire 100% of the issued and outstanding equity interests in Westside Visionaries, LLC ("Westside") for a total purchase price of $2.4 million of which $1.1 million shall be paid in cash, $1.2 million shall be in the form of a promissory note, and $0.1 million in the form of Class A Subordinate Voting Shares. In addition, Westside has issued a $2.0 million secured promissory note to Linchpin Investors, LLC, a subsidiary of the Company, to fund the permitted expansion for the dispensary build-out with a maturity date of the earlier of the second anniversary of closing (license approval) or the third anniversary of the date on which the note was executed.

F-21

4 FRONT VENTURES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts expressed in thousands of U.S. dollars except for share and per share data)

In the event of termination by mutual written consent of both parties or by the sellers based on the Company's breach, then any portion of the purchase price paid as of the termination date may be retained by the sellers. As of December 31, 2023, the Company has paid $0.6 million in cash which is included as a component of prepaid expenses and other assets on the consolidated balance sheet as of December 31, 2023.

Westside holds a conditional adult use dispensary license in the state of Illinois which shall convert to a final license upon regulatory approval. The transfer of the license is subject to regulatory approval. A subsidiary of the Company entered into a conditional management services agreement to manage the operations of Westside until a final license is issued.

Note 8: ASSETS HELD FOR SALE

On November 8, 2023, the Company ceased operations at its retail dispensary located in Ann Arbor, Michigan operating under Om of Medicine, LLC ("Om of Medicine"). The assets were classified as held for sale as of December 31, 2023 and did not meet the criteria for discontinued operations under ASC Subtopic 205-20. For the year ended December 31, 2023, Om of Medicine contributed $1.3 million in revenue and net loss of $0.6 million. As of December 31, 2023, assets and liabilities related to Om of Medicine was $0.9 million and $1.0 million, respectively, which are presented separately on the consolidated balance sheet as of December 31, 2023.

In May 2023, the Company entered into an Asset Purchase Agreement to sell the assets related to Om of Medicine, which was amended in January 2024. The transaction is subject to close upon regulatory approval which is expected within one year. In January 2024, the Company received confirmation of the legal dissolution of Om of Medicine, LLC.

Note 9: LEASES

(a)    The Company as a Lessee

The Company leases real estate for dispensaries, cultivation and production facilities, and office space which were all accounted for as operating leases as of December 31, 2023 and 2022. There are no material residual guarantees associated with any of the Company’s leases, and there are no significant restrictions or covenants included in the Company’s lease agreements. Total operating lease costs related to continuing operations were $20.9 million and $17.5 million for the years ended December 31, 2023 and 2022, respectively. Short-term lease costs during the years ended December 31, 2023 and 2022 were not material.

The below are the details of other disclosures regarding the Company's lessee transactions as of December 31, 2023 and 2022:

	Years Ended December 31,
	2023			2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	15,330		$	12,071
Non-cash additions to right-of-use assets and lease liabilities:
Recognition of right-of-use assets for operating leases	$	94		$	—
Weighted average remaining lease term (in years)	17.7			18.6
Weighted average discount rate	13.7		%	13.7		%

F-22

4 FRONT VENTURES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts expressed in thousands of U.S. dollars except for share and per share data)

Maturities of lease liabilities for third-party operating leases as of December 31, 2023 were as follows:

Year Ending December 31,
2024	$	16,336
2025	16,854
2026	17,295
2027	17,672
2028	18,119
Thereafter	305,054
Total lease payments	391,330
Less interest	(265,664)
Present value of lease liability	$	125,666

Modification of Lease Agreement

On October 27, 2022, the Company amended its lease agreement for the Company’s facility located in Matteson, Illinois by creating an option to increase the tenant improvement allowance for the facility by between $15.0 million and $19.9 million. On November 10, 2022, the Company exercised its option and entered into a Second Amendment to Lease Agreement, increasing the tenant improvement allowance under the lease by $19.9 million; extending the term of the lease to 20 years after the amendment; increasing the base rent by $0.2 million per month (abated until April 1, 2023); and increasing the security deposit by $2.2 million, to be funded pro rata out of draws on the tenant improvement allowance.

On July 7, 2023, the Company amended its lease agreement for the cultivation and production facility in Matteson, Illinois to apply its security deposit mainly to the monthly base rent for the four month period through November 30, 2023; to defer payment of the $2.2 million increase in security deposit to be funded as draws on the tenant improvement allowance through November 30, 2023; and to make pro rata payments of such deferred payments equal to 1/12 of the aggregate amount, concurrently with monthly base rent installments, for the twelve month period commencing January 1, 2024. There was no modification to the lease accounting as a result of this amendment to the timing of payments of the refundable security deposit.

New Lease Agreement

On August 23, 2023, the Company entered into a guaranty of a lease agreement for a third dispensary location in Illinois. Within five days of the agreement execution, the premise was available to the Company to begin leasehold improvements. The Company funded a security deposit with rent abated for the first nine calendar months following the rent commencement date. As of December 31, 2023, the Company recognized an initial right of use asset and lease liability of $1.2 million in connection with this agreement.

Discontinued Operations

During the fiscal quarter ended September 30, 2023, the Company ceased its cultivation and production operations in the state of California (together, the "California operations") as reported under the THC Cannabis segment. As a result, all prior year right-of-use assets and lease liabilities were reclassified as assets related to discontinued operations and liabilities related to discontinued operations, respectively in prior periods reflected. As of December 31, 2023, the right-of-use assets and lease liabilities related to the discontinued operations were written off.

F-23

4 FRONT VENTURES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts expressed in thousands of U.S. dollars except for share and per share data)

(b)    The Company as a Lessor

The Company leases real estate, sells equipment and supplies, and licenses intellectual property to cannabis producers in the state of Washington and Illinois where the Company is the lessor. Such leases in which the Company is the lessor do not contain variable lease payments or options to purchase. Lease income for operating and direct financing leases for the periods presented are as follows:

	Years Ended December 31,
	2023		2022
Real estate income:
Operating leases	$	8,961	$	9,269
Direct financing leases	2,342		2,673
Total real estate income	$	11,303	$	11,942

The Company leases buildings in Olympia, Washington and Elk Grove, Illinois that are subleased or partly subleased to a third party. The subleases are classified as operating leases under ASC 842 and the underlying assets are presented in the consolidated balance sheets as follows:

	December 31, 2023		December 31, 2022
Right-of-use assets	$	25,249	$	26,133
Current portion of lease liability	$	289	$	296
Long-term portion of lease liability	$	22,380	$	22,078

The Company leases a building in Elma, Washington that is subleased to a third party. This sublease is classified as a finance lease. A reconciliation of the lease receivables for the periods presented is as follows:

	December 31, 2023		December 31, 2022
Balance, beginning of the year	$	9,421	$	10,378
Interest	2,342		2,673
Lease payments received	(3,810)		(3,630)
Balance, end of the period	7,953		$	9,421
Less current portion	(3,990)		(3,810)
Long-term lease receivables	$	3,963	$	5,611

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

Year Ending December 31,
2024	$	3,990
2025	4,170
2026	2,880
2027	—
2028	—
Thereafter	—
Total minimum lease payments	11,040
Less: Interest	(3,087)
Total lease receivable	$	7,953
Current portion lease receivable	(3,990)
Long-term lease receivable	$	3,963

F-24

4 FRONT VENTURES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts expressed in thousands of U.S. dollars except for share and per share data)

Note 10: DERIVATIVE LIABILITY

On November 23, 2020, the Company closed a brokered private placement and issued 24,644,500 Units at a price of C$0.70 per Unit for net proceeds of $11.6 million. Each Unit is comprised of one subordinate voting share of the Company and one-half of a subordinate voting share purchase warrant. Each whole warrant entitles the holder to purchase one subordinate voting share for a period of two years from the date of issuance at an exercise price of C$0.90 per subordinate voting share. The warrants met the criteria in ASC 480, and are therefore classified as derivative liabilities at fair value with changes being reported through the statement of operations. In November 2022, such warrants expired unexercised and, accordingly, the balance of derivative liabilities was nil as of December 31, 2023 and 2022.

In connection with the amendment of the senior secured debt with LI Lending LLC in July 2023, the Company issued warrants to purchase a variable number of subordinate voting shares on August 10, 2023 wherein each warrant shall be exercisable into one (1) Subordinate Voting Share at an exercise price of $0.17 through May 1, 2026. If 4Front obtains a bona fide offer from a third party to refinance the loan within six months from the amendment date, the lender will have the option to match the proposed terms of the offer or keep the loan in force; upon exercise of either option, the lender's warrant coverage will be reduced from 33% to 30% of the loan balance divided by the exercise price as of the current maturity date. If 4Front obtains permitted secured debt senior to the loan up to $8.0 million, 75% of the warrants will become exercisable by cashless exercise. If 4Front obtains permitted secured debt senior to the loan in excess of $8.0 million (up to the $10.0 million maximum), 100% of the warrants will become exercisable by cashless exercise. The warrants met the criteria in ASC 480 due to the variability of the number of issuable shares, and are therefore classified as liabilities at fair value with changes being reported through the statement of operations. See Note 11 for further information on the July 2023 amendment.

The fair value of the warrants classified as liabilities was determined using the Black-Scholes simulation model based on Level 3 inputs on the fair value hierarchy. The following assumptions were used for the periods presented:

	Issuance Date			December 31, 2023
Share Price	$	0.10		$	0.10
Exercise Price	$	0.17		$	0.17
Expected Life	2.7 years			2.3 years
Annualized Volatility	84.5		%	98.8		%
Risk-Free Annual Interest Rate	4.5		%	4.2		%

In connection with the senior secured credit facility, the Company entered into a restricted stock unit (“RSU”) agreement (the “RSU Agreement”) dated November 13, 2023 wherein the Company granted 15,900,000 RSUs to the lender. Each RSU represents an unsecured promise to issue one Class A Subordinate Voting Share upon the earliest of certain distribution events at a price of CAD$0.31. If at the time of the distribution event, the number of SVS underlying the RSUs is less than 2.12% of the fully diluted SVS of the Company, an additional number of RSUs will be issuable to the lender at the closing market price on the Canadian Securities Exchange on the trading day prior to issuance. The additional RSUs met the criteria in ASC 480 due to the variability of the number of issuable shares, and are therefore classified as liabilities at fair value with changes being reported through the statement of operations. See Note 11 for further information on the senior secured credit facility. The fair value of the RSUs classified as liabilities was determined using the Company's share price which is considered a Level 1 input on the fair value hierarchy.

F-25

4 FRONT VENTURES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts expressed in thousands of U.S. dollars except for share and per share data)

A reconciliation of the changes in fair value of the derivative liabilities is as follows:

	For the Years Ended December 31,
	2023		2022
Balance, beginning of period	$	—	$	3,502
Issuance of derivative liability	4,165		—
Change in fair value of derivative liability	385		(3,502)
Balance, end of period	$	4,550	$	—

See Note 13 for warrants classified within equity.

Note 11: NOTES PAYABLE AND CONVERTIBLE NOTES

The Company’s notes payable and convertible notes are as follows:

Terms	December 31, 2023		December 31, 2022
Secured promissory notes dated May 10, 2019, as subsequently amended, with a related party which mature on May 1, 2026 and bear interest at a rate of 16.5% through May 1, 2024 and 12% per annum thereafter	$	47,491	$	49,807
Promissory note dated October 13, 2023 under the senior secured credit facility which matured on December 1, 2023 and bears interest at a rate of 15.5% per annum. The Company is currently in negotiations to amend the terms of the agreement.	3,410		—
Convertible promissory note dated October 6, 2021, which matures on October 6, 2024 and bears interest at a rate of 10% per annum	15,818		14,843
Unsecured convertible promissory note at $0.50 per share due December 18, 2024 at 12% per annum with monthly cash payments of $50,000 beginning January 15, 2024 through maturity (1)	2,051		3,554
Promissory note issued for the acquisition of NECC due January 7, 2023 at 10% per annum (2)(5)	—		519
Promissory note issued for the acquisition of Island due October 25, 2026 at 6% per annum (5)	11,030		10,431
Secured promissory note due January 1, 2024 at 1.5% monthly interest through November 30, 2022 and 2% monthly interest through maturity (3)	2,734		3,230
Unsecured promissory note due November 30, 2024, monthly interest payments at 12% per annum through September 2023 and 11% per annum through November 2024 (4)	1,630		1,730
Various	9		51
Total Notes Payable and Convertible Notes	$	84,173	$	84,165

(1) In November 2022, the unsecured convertible note was amended to extend the maturity date to May 18, 2023. The Company concluded the extension resulted in a debt modification under ASC 470. On October 2, 2023, the Company amended the unsecured convertible promissory note with Healthy Pharms Inc. wherein the interest rate was amended to 12.0% per annum and the maturity date was extended to December 18, 2024. Beginning January 15, 2024, the Company shall make monthly cash payments of $50,000 through the maturity date. The amendment was deemed to be a substantial modification under ASC Subtopic 470-50 and a loss on extinguishment of $0.4 million was recorded in the consolidated statement of operations for the year ended December 31, 2023. In November 2023, the Company issued 10,359,372 Class A Subordinate Voting Shares to the note holder to settle $1,992,187 of the promissory note.

(2) On July 28, 2022, the parties amended the promissory note to provide for payment of half the principal on the initial maturity date, and the remaining principal and all accrued interest on November 15, 2022. Interest will continue at annual rate of 10%. On November 25, 2022, the note was further amended to extend the maturity date for one fourth of the principal and accrued and unpaid interest to January 7, 2023.

F-26

4 FRONT VENTURES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts expressed in thousands of U.S. dollars except for share and per share data)

(3) On August 30, 2022, the Company entered into a Promissory Note Purchase Agreement with HI 4Front, LCC and Navy Capital Green Fund, LP. Under the agreement, the Company sold promissory notes totaling $3.0 million with a six-month maturity bearing 1.5% monthly interest for three months and 2% monthly interest for three months. The notes were unsecured, but would become secured if not repaid within three months. On October 10, 2023, the Company amended the promissory note wherein the maturity date was extended to January 1, 2024. As consideration for the amendment, the Company paid an extension fee of C$65,000 in the form of 1,283,425 share purchase warrants, wherein each warrant is exercisable into one (1) Subordinate Voting Share at an exercise price of US$0.20 and expire on October 17, 2027. The amendment was not deemed to be a substantial modification under ASC Subtopic 470-50. As a result of the modification, the Company recorded an additional debt discount of $0.2 million for the issuance of the warrants.

(4) On September 16, 2022, the unsecured promissory note was modified to be due and payable in full on September 30, 2023. Interest will continue at an annual rate of 12% with payment of interest due monthly. On September 28, 2023, the Company entered into an amendment of this promissory note to reduce the interest rate to 11% and extend the maturity date to November 30, 2024. The amendment was classified as a troubled debt restructuring pursuant to ASC 470-60, "Troubled Debt Restructurings by Debtors".

(5) Refer to Note 7 for further information on the acquisition related promissory notes.

LI Lending LLC

On May 10, 2019, the Company entered into a loan agreement with LI Lending LLC, a related party, for $50.0 million, of which $45.0 million was drawn as of December 31, 2023 in two amounts: (i) $35.0 million bearing interest at a rate of 10.25% and (ii) $10.0 million bearing interest at a rate of 12.25%. The loan matures on May 10, 2024 upon which the Company shall pay an exit fee of 20% of the remaining principal balance.

In April 2020, the loan was amended to release certain assets previously held as collateral and to make principal prepayments totaling $2.0 million applied to the initial $35.0 million amount, decreasing the principal balance to $33.0 million. In December 2020, the loan was amended to increase the interest rate by 2.5% of which payments of the incremental interest were paid-in-kind until January 1, 2022. The Company was still required to make interest-only payments monthly of 10.25% on the initial $33.0 million and 12.25% on the final $10.0 million of the loan until January 1, 2022, when monthly interest payments rates were increased to 12.75% for the initial $33.0 million and 14.75% for the final $10.0 million for the remaining term.

In July 2023, the Company entered into the First Amendment to the loan agreement with LI Lending LLC to extend the maturity date of the related party loan to May 1, 2026, to reduce the interest rate to 12.0% per annum beginning May 1, 2024, and to expand the amount of third-party financings allowed under the loan agreement.

In addition, the exit fee of $9.0 million was removed and deferred interest in the amount of $9.2 million shall be added to the principal of the promissory note on May 1, 2024, for a total payable at maturity of $51.7 million. As compensation for the amendment, the Company shall pay an extension fee of $0.5 million payable in cash on May 1, 2024. In addition, the Company issued warrants to purchase a variable number of subordinate voting shares on August 10, 2023 wherein each warrant shall be exercisable into one (1) Subordinate Voting Share at an exercise price of $0.17 through May 1, 2026. See Note 10 for further information regarding the fair value of the warrants. The amendment to the related party loan was not deemed to be a substantial modification under ASC Subtopic 470-50. As a result of the modification, the Company recorded an additional debt discount of $4.7 million related to the extension fee and the fair value of the warrants.

For the years ended December 31, 2023 and 2022, the Company recognized accrued interest expense of $7.8 million and $7.0 million, respectively, on the related party loan and made $6.4 million and $5.5 million, respectively, in payments of principal and interest to the related party. See Note 19 for further discussion of this related party transaction.

F-27

4 FRONT VENTURES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts expressed in thousands of U.S. dollars except for share and per share data)

October 2021 Convertible Note

On October 6, 2021, the Company entered into a convertible promissory note for $15.0 million that is exercisable into Class A Subordinate Voting Shares for $1.03 per share at any time at the option of the holder. The notes bear interest at 6% per annum and mature on October 6, 2024 upon which any remaining balance is payable in cash. All accrued and unpaid interest is payable in cash on an annual basis beginning on October 6, 2022.

On October 6, 2023, the Company amended the October 2021 Convertible Note wherein payment of interest shall be deferred and become due and payable upon the earlier of the maturity date, a change of control, or event of default under the existing agreement terms. In addition, the outstanding balance, including any deferred interest payments, shall accrue interest at a rate of 10.0% per annum through maturity. The conversion price was amended to $0.23 per share. The amendment of the October 2021 Convertible Note was deemed to be a substantial modification under ASC Subtopic 470-50 and a gain on extinguishment of $0.4 million was recorded in the consolidated statement of operations for the year ended December 31, 2023.

As of December 31, 2023, payments of principal and interest totaling $1.1 million have been made for this loan. As of December 31, 2023 and 2022, the unamortized discount balance related to the October 2021 Convertible Note was $0.5 million and $0.4 million, respectively, with a remaining amortization period of 0.8 years and 1.75 years, respectively. For the years ended December 31, 2023 and 2022, the Company recognized interest expense of $1.1 million and $1.1 million, respectively, and accretion of debt discount of $0.3 million and $0.2 million, respectively, related to the October 2021 Convertible Note.

Senior Secured Credit Facility

On October 13, 2023, the Company entered into a senior secured credit facility agreement for an aggregate principal up to $10.0 million in which a term loan in the amount of $3.4 million was drawn on the closing date and a second tranche of $4.0 million is available to be drawn through July 13, 2024. The term loans accrue interest paid monthly in arrears at a rate equal to the greater of (a) the sum of the prime rate and 7.0% and (b) 15.5% per annum. The term loans mature on December 1, 2023 and include extension terms under certain circumstances no further than September 30, 2026. For each term loan, the Company shall pay an origination fee equal to 7.0% of the principal amount of the term loan upon issuance. In addition, the Company shall pay a commitment fee on the undrawn second tranche which shall accrue at a rate per annum of 2.0% through the earlier of July 13, 2024 and the date on which the maximum facility amount is drawn. The Company may prepay the term loans, in whole or in part, at any time subject to the prepayment fee based on the date of the prepayment. Further, the Company shall pay an exit fee of $1.4 million upon the earlier of the maturity date or the date on which the obligations are paid in full. The term loans shall be secured by senior liens on all assets of the Company and borrowing subsidiaries.

The agreement contains financial covenants that (a) require the Company to have minimum liquidity of at least $3.0 million beginning December 31, 2023, (b) have a fixed charge coverage ratio of no less than 1.10 to 1.00 beginning June 30, 2024 and (c) have a consolidated leverage ratio of no more than 3.00 to 1.00 beginning June 30, 2024. The Loan Agreement contains additional covenants that, among other things, limit the ability of the Company and its subsidiaries to incur certain additional debt and liens, pay certain dividends or make other restricted payments, make certain investments, make certain dispositions and enter into certain transactions with affiliates.

In connection with the senior secured credit facility, the Company entered into a restricted stock unit (“RSU”) agreement (the “RSU Agreement”) dated November 13, 2023 wherein the Company issued 15,900,000 RSUs to the lender. Each RSU represents an unsecured promise to issue one Class A Subordinate Voting Share upon the earliest of certain distribution events at a price of CAD$0.31. Refer to Note 10 for information on additional RSUs to be issued which are classified as a derivative liability.

F-28

4 FRONT VENTURES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts expressed in thousands of U.S. dollars except for share and per share data)

Future minimum payments on the notes payable and convertible debt are as follows:

Year Ending December 31,
2024	$	25,630
2025	—
2026	—
2027	58,543
2028	—
Thereafter	—
Total minimum payments	84,173
Less current portion	(25,630)
Long-term portion	$	58,543

Construction Finance Liability

On January 28, 2022, the Company acquired property at 29 Everett Street LLC in conjunction with the NECC Merger (see Note 7 for further details on the transaction). Concurrently, effective January 28, 2022, the Company sold a portion of the property it had acquired in the acquisition for $16.0 million. In connection with the sale of the property at Everett LLC, the Company agreed to lease the location back for cultivation, effective on January 28, 2022 with available repurchase options. This transaction did not meet the requirements of a sale leaseback transaction and as such was accounted for as a failed sale leaseback. On January 28, 2022, the Company recorded a construction finance liability for the proceeds received from the sale to recognize a liability resulting from the failed sale-leaseback transaction.

The initial term of the agreement is 20 years, with two options to extend the term for five years each. The initial monthly rent payment is equal to $0.1 million for the first year of the agreement, with 3% annual increases over the life of the agreement. As of December 31, 2023, the total finance liability associated with this transaction is $16.0 million. The total interest expense incurred during the year ended December 31, 2023 was nil.

Note 12: SHAREHOLDER'S EQUITY

The Company has authorized an unlimited number of Class A Subordinate Voting Shares (“SVS”) and Class C Multiple Voting Shares (“MVS”), all with no par value.

All share classes are included within share capital in the consolidated statements of shareholders’ equity on an as-converted basis. Each share class is entitled to notice of and to attend at any meeting of the shareholders, except a meeting of which only holders of another particular class of shares will have the right to vote. All share classes are entitled to receive dividends, as and when declared by the Company, on an as-converted basis, and no dividends will be declared by the Company on any individual class unless the Company simultaneously declares or pays dividends on all share classes. No subdivision or consolidation of any share class shall be made without simultaneously subdividing or consolidating all share classes in the same manner.

F-29

4 FRONT VENTURES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts expressed in thousands of U.S. dollars except for share and per share data)

Voting shares activity for the periods presented is summarized as follows:

	Class A Subordinate Voting Shares	Class C Multiple Voting Shares	Total
Balance, December 31, 2021	592,905,396	1,276,208	594,181,604
Share capital issuances	49,234,671	—	49,234,671
Balance, December 31, 2022	642,140,067	1,276,208	643,416,275
Share capital issuances	26,103,074	—	26,103,074
Balance, December 31, 2023	668,243,141	1,276,208	669,519,349

Class A Subordinate Voting Shares

Holders of Class A Subordinate Voting Shares are entitled to one vote in respect of each SVS.

Class C Multiple Voting Shares

Holders of Class C Multiple Voting Shares are entitled to 800 votes in respect of each MVS. One MVS can convert to one SVS but are not convertible until the aggregate number of MVS held by the Initial Holders (being the MVS holders on their initial issuance) are reduced to a number which is less than 50% of the aggregate number of MVS held by the Initial Holders on the date of completion of the Business Combination with Cannex.

Series	Shares outstanding as of December 31, 2023	As converted to SVS Shares
Class A - Subordinate Voting Shares	668,243,141	668,243,141
Class C - Multiple Voting Shares	1,276,208	1,276,208
Total shares outstanding	669,519,349	669,519,349

Note 13: WARRANTS

A reconciliation of the beginning and ending balance of outstanding share purchase warrants classified as equity is as follows:

	Number of Warrants	Weight-Average Exercise Price
Balance, December 31, 2021	26,192,237	$	0.75
Issued	2,999,975	1.00
Exercised	(91,436)	0.54
Expired	(22,748,498)	0.76
Balance, December 31, 2022	6,352,278	0.82
Issued	2,658,425	0.16
Expired	(2,227,303)	0.67
Balance, December 31, 2023	6,783,400	$	0.61

F-30

4 FRONT VENTURES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts expressed in thousands of U.S. dollars except for share and per share data)

As of December 31, 2023, the Company has the following warrants outstanding:

Warrants Outstanding		Exercise Price		Expiry Date
2,999,975		$	1.00	April 13, 2024
625,000	*	C$	0.80	October 6, 2024
500,000	*	C$	0.80	October 6, 2025
625,000		C$	0.23	May 10, 2027
750,000		$	0.10	September 1, 2027
1,283,425		$	0.20	October 17, 2027
6,783,400

*Represents warrants that are exercisable as of December 31, 2023.

See Note 10 for warrants for classified as derivative liabilities.

Note 14: NON-CONTROLLING INTERESTS

The non-controlling interests of the Company for each affiliate before intercompany elimination are summarized in the tables below:

	December 31, 2023		December 31, 2022
	MMA Capital		MMA Capital
Current assets	$	—	$	—
Current liabilities	—		—
Current net assets	—		—
Non-current assets	14,620		14,620
Non-current liabilities	—		—
Non-current net assets	$	14,620	$	14,620

	MMA Capital
Balance, December 31, 2021	$	72
Net income attributable to NCI	21
Balance, December 31, 2022	93
Net income attributable to NCI	15
Balance, December 31, 2023	$	108

Note 15: SHARE-BASED COMPENSATION

The Company adopted two equity incentive plans where the Company may grant Class A stock options. Under the terms of the plans, the maximum number of stock options which may be granted are a total of 10% of the number of shares outstanding assuming conversion of all shares to SVS. The exercise price for stock options issued under the plans will be set by the Compensation Committee of the Board of Directors but will not be less than 100% of the fair market value of the Company’s shares on the grant date. Stock options have a maximum term of 10 years from the date of grant. Stock options vest at the discretion of the Board.

As of December 31, 2023, the Company had 43,672,411 options exercisable and 91,702,766 options outstanding, with exercise prices ranging from C$0.10 to C$1.63. The following table summarizes the Company’s stock option activity and related information:

F-31

4 FRONT VENTURES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts expressed in thousands of U.S. dollars except for share and per share data)

	Number of Options	Weighted Average Price (CAD$)		Weighted Average Years
Balance, December 31, 2021	54,282,752	$	0.94	2.97
Granted	35,161,000	$	0.68	4.80
Exercised	(133,333)	$	0.80	—
Forfeited/Expired	(13,683,459)	$	0.96	—
Balance, December 31, 2022	75,626,960	$	0.86	3.46
Granted	68,294,666	$	0.20	4.52
Forfeited/Expired	(52,218,860)	$	0.84	—
Balance, December 31, 2023	91,702,766	$	0.34	3.78

During the year ended December 31, 2023 and 2022, the Company recognized share-based compensation of $6.0 million and $7.2 million respectively. In determining the amount of share-based compensation, the Company used the Black-Scholes option pricing model to establish the fair value of options granted during the year with the following key assumptions:

	For the Years Ended December 31,
	2023		2022
Risk-Free Interest Rate	4.02	%	3.44	%
Expected Life (years)	3.51		3.01
Expected Annualized Volatility	86.83	%	82.73	%
Expected Dividend Yield	—		—

Cashless Exercises

During the year ended December 31, 2023, there were no share issuances resulting from cashless exercises. During the year ended December 31, 2022, the Company issued an aggregate of 51,975 Class A shares pursuant to the exercise of 133,333 options. As part of the Company’s equity incentive plans, the Company may permit cashless exercise. The Company withheld exercised shares from the holders to cover the strike price upon issuance. The number of options exercised under the cashless method was 133,333 with shares withheld to cover these costs as of December 31, 2022 being 106,666, resulting in total shares issued to option holders upon cashless exercise of options being 26,667.

Restricted Share Units

On July 27, 2023, the Company issued a total of 9,853,830 restricted share units ("RSUs"), at a issue price of C$0.165 based on the closing price of its Subordinate Voting Shares, to certain officers and employees of the Company. The RSUs are fully vested as of the grant date and expire upon the earlier of 18 months following the grant date or the occurrence of certain events. As of December 31, 2023, the Company recognized share-based compensation of $1.2 million for these fully vested RSU grants.

On November 13, 2023, in connection with the $10.0 million senior secured credit facility agreement, the Company issued 15,900,000 restricted stock units to the lender, ALT Debt II, LP wherein each RSU is exercisable into one (1) Class A Subordinate Voting Share upon the earliest of certain specified conditions at an issue price of $0.20 per RSU.

F-32

4 FRONT VENTURES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts expressed in thousands of U.S. dollars except for share and per share data)

Note 16: SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

For the year ended December 31, 2023 and 2022, general and administrative expenses were comprised of:

	For the Years Ended December 31,
	2023		2022
Rent and lease related expenses	$	18,106	$	13,771
Salaries and benefits	16,906		18,239
Share-based compensation	6,860		7,214
Professional services	4,014		5,353
Bad debt expense	7,767		625
Licenses, fees and taxes	1,634		1,400
Advertising and promotions	1,485		1,614
Security expenses	1,353		1,253
Other general and administrative expenses	5,282		6,803
Total selling, general and administrative expenses	$	63,407	$	56,272

Note 17: INCOME TAXES

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, 2023 and 2022:

	December 31, 2023		December 31, 2022
Net current taxes:
U.S. Federal	$	2,645	$	12,031
U.S. State	$	825	$	2,518
Deferred Taxes:
U.S. Federal	$	2,606	$	(3,521)
U.S. State	$	1,017	$	(1,121)
Total (continuing and discontinued)	$	7,093	$	9,907

F-33

4 FRONT VENTURES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts expressed in thousands of U.S. dollars except for share and per share data)

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, 2023 and 2022:

	December 31, 2023			December 31, 2022
Loss before income taxes (continuing and discontinued operations)	$	(84,539)		$	(36,970)
Statutory tax rate	21.00		%	21.00		%
Expense based on statutory rates	(17,753)			(7,764)
Permanent non-deductible items	16,164			14,419
State taxes	(2,444)			280
Change in state rate	79			101
Change in valuation allowance	2,622			4,524
Change in uncertain tax position	8,524			—
Interest and penalties	3,464			2,689
Acquisition related adjustments	—			(6,142)
Lease deferred tax true-up	(683)			688
Return-to-provision	(2,221)			940
Other adjustments	(659)			172
Income tax expense (continued and discontinued)	$	7,093		$	9,907

The following tables set forth the components of deferred income taxes as of December 31, 2023 and 2022:

	December 31, 2023		December 31, 2022
Deferred tax assets
Net operating losses	$	8,521	$	5,898
Lease liabilities	10,257		16,595
Goodwill and intangible assets	1,677		1,785
Other	1,917		1,024
Total deferred tax assets	22,372		25,302
Valuation allowance	(8,521)		(5,898)
Total net deferred tax assets	13,851		19,404
Deferred tax liabilities
Property and equipment	(5,699)		(408)
Intangible assets	(8,937)		(9,338)
Right-of-use assets	(11,097)		(17,936)
Total net deferred tax liabilities	(25,733)		(27,682)
Total adjusted deferred tax liabilities (continued and discontinued)	$	(11,882)	$	(8,278)

As of December 31, 2023, the Company has gross state net operating losses of approximately $53.7 million, which begin to expire in 2029, and gross federal net operating losses of approximately $19.1 million, $0.9 million of which expire in 2037 and the remainder can be carried forward indefinitely. Pursuant to Section 382 of the Internal Revenue Code, utilization of net operating losses may be subject to annual limitations in the event of a change in ownership of the Company. These annual limitations may result in the expiration of net operating losses prior to utilization.

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. The Company assesses the positive and negative evidence to determine if sufficient future taxable income will be generated to use its existing deferred tax assets. The Company has recorded a valuation allowance related to its state and federal net operating loss carryforwards as of December 31, 2023 and 2022 in the amount of $8.5 million and $5.9 million, respectively.

F-34

4 FRONT VENTURES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts expressed in thousands of U.S. dollars except for share and per share data)

Activity in unrecognized tax benefits which are included as a component of taxes payable in the accompanying consolidated balance sheet were as follows:

	December 31, 2023		December 31, 2022
Balance, beginning of year	$	—	$	—
Increase related to positions taken in the current year	8,524		—
Balance, end of year	$	8,524	$	—

If recognized, $8.5 million of the gross unrecognized tax benefit balance at December 31, 2023 would favorably impact the Company's effective income tax rate. The Company does not expect any significant changes to its liability for unrecognized tax benefits during the next 12 months.

The Company recognizes interest and penalties related to income tax matters within income tax expense. The Company recorded penalties and interest related to outstanding income tax liabilities in the amount of $3.5 million and $2.7 million for the period ended December 31, 2023 and 2022, respectively. As of December 31, 2023 and 2022, the Company has recorded $8.2 million and $5.0 million, respectively of accrued penalties and interest related to outstanding income tax liabilities – which is included within Taxes Payable on the Company’s balance sheet.

The Company files income tax returns in the US, various state jurisdictions, and Canada, and is subject to examination of its income tax returns by tax authorities in these jurisdictions who may challenge any item on these returns. The corporate statute of limitations for these jurisdictions remains open for the 2019 tax year to the present. Prior to July 31, 2019, the Company was treated as a partnership for income tax purposes and tax income and losses generated from operations were passed through to the Company’s individual members.

Note 18: DISCONTINUED OPERATIONS

During the fiscal quarter ended September 30, 2023, the Company ceased its cultivation and production operations in the state of California (together, the "California operations") as reported under the THC Cannabis segment. The Company concluded that the abandonment of its California operations represented a strategic shift and thus all assets and liabilities to the operations within the state of California were classified as discontinued operations. Long-lived assets related to the California operations ceased to be used as of December 31, 2023 and thus considered disposed of other than by sale as of December 31, 2023. The assets associated with the California operations were measured at the lower of their carrying value or fair value less costs to sell. During the year ended December 31, 2023, the Company recognized a loss on disposal of $14.4 million for the net carrying value of the assets as of the disposition date which was determined as the book value less direct costs to sell and an impairment charge of $12.9 million for the write-off of its intangible assets and goodwill. The Company does not have significant continuing involvement with the California operations outside of the contract liabilities of $2.3 million and the litigation matters disclosed in Note 20.

Revenue and expenses, gains or losses relating to the discontinuation of California operations were eliminated from profit or loss from the Company’s continuing operations and are shown as a single line item in the consolidated statements of operations for all periods presented.

F-35

4 FRONT VENTURES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts expressed in thousands of U.S. dollars except for share and per share data)

The operating results of the discontinued operations are summarized as follows:

	Years Ended December 31,
	2023		2022
REVENUE
Revenue from sale of goods	$	9,412	$	10,495
Real estate income	411		418
Total revenues	9,823		10,913
Cost of goods sold	(22,482)		(21,187)
Gross profit	(12,659)		(10,274)
OPERATING EXPENSES
Selling, general and administrative expenses	4,901		6,527
Depreciation and amortization	212		521
Transaction and restructuring related expenses	860		1,135
Impairment of goodwill and intangible assets	12,856		6,700
Total operating expenses	18,829		14,883
Loss from operations	(31,488)		(25,157)
Other income (expense)
Interest expense	(32)		(71)
Loss on disposal	(14,368)		(381)
Other	(1,025)		(147)
Total other income (expense), net	(15,425)		(599)
Net loss from discontinued operations before income taxes	(46,913)		(25,756)
Income tax benefit	(1)		170
Net loss on discontinued operations	$	(46,914)	$	(25,586)

F-36

4 FRONT VENTURES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts expressed in thousands of U.S. dollars except for share and per share data)

The carrying amounts of assets and liabilities in the disposal group are summarized as follows:

	December 31, 2023		December 31, 2022
Carrying amount of the assets included in discontinued operations:
Current assets:
Cash	$	63	$	919
Accounts receivable, net	(49)		1,943
Other receivables	16		(16)
Inventory	33		6,704
Prepaid expenses and other assets	—		192
Total current assets (1)	63		9,742
Property, plant, and equipment, net	—		22,492
Intangible assets, net	738		1,687
Goodwill	—		12,148
Right-of-use assets	—		16,522
Deposits	14		619
Total non-current assets (1)	752		53,468
TOTAL ASSETS OF THE DISPOSAL GROUP	$	815	$	63,210
Carrying amount of the liabilities included in discontinued operations:
Current liabilities:
Accounts payable	3,552		1,600
Accrued expenses and other current liabilities	4,752		5,164
Taxes payable	72		—
Current portion of contract liabilities	48		369
Current portion of lease liability	—		1,712
Total current liabilities (1)	8,424		8,845
Long term notes payable	5		—
Long term accounts payable	330		400
Contract liabilities	2,280		2,000
Deferred tax liability	—		2,181
Lease liability	—		15,513
Total non-current liabilities (1)	2,615		20,094
TOTAL LIABILITIES OF THE DISPOSAL GROUP	$	11,039	$	28,939

(1) The assets and liabilities of the disposal group are classified as current on the consolidated balance sheets as of December 31, 2023 because it is probable that the sale or disposal other than by sale will occur within one year.

F-37

4 FRONT VENTURES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts expressed in thousands of U.S. dollars except for share and per share data)

Note 19: RELATED PARTIES

LI Lending LLC

Linchpin Investors LLC (“Linchpin”), a subsidiary of the Company, and LI Lending LLC (“LI Lending”) entered into a Construction Loan Agreement dated May 10, 2019, as amended, whereby Linchpin received an up-to $50.0 million loan from LI Lending of which $43.0 million was drawn as of December 31, 2023. Mr. Gontmakher, the CEO of the Company, and Roman Tkachenko, a director of the Company, each hold a 14.28% ownership interest in LI Lending. $52.1 million of the loan advanced includes the notes payable and accrued interest less debt discount of $4.6 million that was outstanding as of December 31, 2023. Of the $47.5 million outstanding at December 31, 2023, $8.5 million represents interest accrued through December 31, 2023. See Note 11 for details on the outstanding note payable.

In July 2023, the related party loan was amended wherein while the debt is outstanding, if the Company unilaterally removes Mr. Gontmakher as its Chief Executive Officer or Karl Chowscano as its President without either cause or lender consent, the maturity date of the loan will be accelerated to the date that is 30 days after the first unilateral removal. Refer to Note 11 for additional amendment terms.

As compensation for the amendment, the Company issued warrants to LI Lending to purchase a variable number of subordinate voting shares on August 10, 2023 wherein each warrant shall be exercisable into one (1) Subordinate Voting Share at an exercise price of $0.17 through May 1, 2026. See Note 10 for warrant terms.

Note 20: CONTINGENCIES

(a)    Cannabis Industry

While marijuana is legal under the laws of several U.S. states (with varying restrictions), the United States Federal Controlled Substances Act classifies all “marijuana” as a Schedule I drug, whether for medical or recreational use. Under U.S. federal law, a Schedule I drug or substance has a high potential for abuse, no accepted medical use in the United States, and a lack of safety for the use of the drug under medical supervision. As such, there is an inherent risk related to the federal government’s position on cannabis. There is additional risk associated with the Company’s business in cannabis that third-party service providers could suspend or withdraw services and regulatory bodies could impose certain restrictions on the issuer’s ability to operate in the U.S. As of December 31, 2023, Company has not estimated a potential liability related to the possible enforcement of laws against the medical cannabis industry.

(b)    Contingent consideration payable

As part of the acquisition of Om of Medicine, LLC, the Company is subject to contingent consideration payable to the sellers. The fair value of the contingent consideration, which is based on specific revenue levels achieved over a 2-3-year period, is as follows:

Balance, December 31, 2021	$	2,393
Changes in fair value	(2,393)
Balance, December 31, 2022	$	—
Changes in fair value	—
Balance, December 31, 2023	$	—

F-38

4 FRONT VENTURES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts expressed in thousands of U.S. dollars except for share and per share data)

The contingent consideration payable is measured at fair value based on unobservable inputs and is considered a Level 3 financial instrument. The determination of the fair value of these liabilities is primarily driven by the Company’s expectations of the respective subsidiaries achieving certain milestones. The expected milestones were assigned probabilities and the expected related cash flows were discounted to derive the fair value of the contingent consideration.

Om of Medicine: The contingent consideration payable is determined as the amount in excess of gross sales of $3.4 million (for fiscal 2020 and 2021) and $3.5 million (2022) to a maximum payable of $6.9 million. During the year ended December 31, 2021, the Company determined the outstanding current contingent consideration payable of $1.2 million was no longer deemed contingent and therefore reclassified the balance to accrued expenses and other current liabilities. During the year ended December 31, 2022, the Company performed analyses and determined it does not anticipate the subsidiaries to reach the required milestone for the year ended December 31, 2022. As a result, the Company estimated the contingent consideration to be nil as of December 31, 2022 and recorded a gain on the fair value adjustment. Refer to Note 8 for classification of Om of Medicine as held for sale as of December 31, 2023.

(c)    Legal Matters

From time to time, the Company may be involved in certain disputes arising in the ordinary course of business. Such disputes, taken in the aggregate, are not expected to have a material adverse effect on the Company. There are no proceedings in which any of the Company’s directors, officers, or affiliates is an adverse party or has a material interest adverse to the Company’s interest.

On May 9, 2023, Florival LLC (“Florival”) sued the Company in the California Superior Court for the County of Santa Cruz. The lawsuit alleged the Company had breached an agreement with Florival under which Company subsidiary Island Global Holdings, Inc. (“Island”) agreed to purchase the membership interests of licensed cannabis cultivator Gold Coast Gardens, LLC. Florival claimed damages of $0.85 million. The Company denied it had any direct liability under the agreement, which was executed two years before the Company’s acquisition of Island and asserted an unclean hands defense on behalf of both the Company and Island based on Florival’s inequitable conduct during the litigation. On November 7, 2023, the court entered summary judgment against the Company and Island. The Company and Island have appealed the decision. Management has accrued $0.85 million related to this matter as of December 31, 2023.

On September 14, 2023, Teichman Enterprises, Inc. (“Teichman”) sued Company subsidiary 4Front California Capital Holdings, Inc. (“4Front CA”) in the California Superior Court for the County of Los Angeles. The lawsuit alleged 4Front CA had breached a lease with Teichman for 4Front CA’s facility in Commerce, California by failing to pay rent due under the lease. Teichman sought possession of the property and damages of $0.6 million. 4Front CA denied the allegations, but vacated the facility. Teichman dismissed the case in January 2024.

On September 29, 2023, Teichman Enterprises, Inc. sued 4Front CA and the Company in the Superior Court for the County of Los Angeles. The lawsuit alleged the Company had breached a lease agreement with Teichman under which the Company entered into a 10-year lease commitment ending on January 31, 2029, and that the Company breached its guarantee of the lease. Teichman has alleged total rent owed under the lease agreement is $13.4 million in addition to a license fee of $1.0 million and additional damages. Total damages sought from Teichman under the lease contracts is $15.5 million. 4Front CA and the Company denied the allegations in the compliant, and denied that Teichman was entitled to the full amount of damages claimed due to Teichman's obligation to mitigate. Based on management's review of case, the Company has accrued $2.7 million associated with this legal liability as of December 31, 2023.

F-39

4 FRONT VENTURES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts expressed in thousands of U.S. dollars except for share and per share data)

(d) Other Contingencies

On October 13, 2022, the Company entered into a Prepaid Forward Purchase Agreement with Frisco SPV, LLC. Under the terms of the agreement, Frisco SPV, LLC agreed to advance the Company $3.8 million in exchange for a share of the proceeds of the Company’s planned litigation against four former licensing clients. The funder’s share is equal to 1.5 multiplied by the amount of the advance, plus 35% of the proceeds of the litigation after deducting the funder’s multiple return, plus, beginning October 2024, 15% interest on the advance, if not repaid sooner. On October 21 and 25, 2022, Frisco SPV, LLC completed the funding as agreed. The funding is unsecured and non-recourse in the event the Company is unsuccessful in these proceedings. The Company recognized the $3.8 million advance received in "Other Income" on the consolidated statement of operations for the year ended December 31, 2022.

Note 21: FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT

The fair value of the Company’s cash, accounts receivable, other receivables, accounts payable, and accrued expenses approximates carrying value due to their short-term nature. The Company’s lease receivables, convertible notes payable, and notes payable approximate fair value due to the instruments bearing market rates of interest. These measurements were identified as Level 1 measurements, due to the proximity of fair value to carrying values. The fair value of stock options granted were estimated based on a Black-Scholes model during the years ended December 31, 2023 and 2022. The estimated fair value of the derivative liabilities, which represent warrants classified as liabilities, represent Level 3 measurements. The assumptions that the Company used in the fair valuation of derivative liabilities are disclosed in Note 10.

The following table details the fair value measurements within the fair value hierarchy of the Company's financial instruments, which includes the Level 3 liabilities:

	Fair Value at December 31, 2023
	Total		Level 1		Level 2		Level 3
Liabilities:
Derivative liability	$	4,550	$	—	$	—	4,550
Total liabilities	$	4,550	$	—	$	—	$	4,550

	Fair Value at December 31, 2022
	Total		Level 1		Level 2		Level 3
Liabilities:
Derivative liability	$	—	$	—	$	—	$	—
Total liabilities	$	—	$	—	$	—	$	—

There were no transfers between fair value levels for the years ended December 31, 2023 and 2022.

(a)    Financial Risk Management

The Company is exposed in varying degrees to a variety of financial instruments related risks. The Board mitigates these risks by assessing, monitoring and approving the Company’s risk management processes.

(b)    Credit Risk

Credit risk is the risk of loss associated with counterparty’s inability to fulfill its payment obligations. The Company’s credit risk is primarily attributable to cash, accounts receivable, lease receivables, and other receivables. The risk to cash deposits is mitigated by holding these instruments with regulated financial institutions. Accounts

F-40

4 FRONT VENTURES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts expressed in thousands of U.S. dollars except for share and per share data)

receivable, lease receivables, and other receivables credit risk arises from the possibility that principal and interest due may become uncollectible. The Company mitigates this risk by managing and monitoring the underlying business relationships.

The Company maintains cash with federally insured financial institutions. As of December 31, 2023 and 2022, the Company exceeded federally insured limits by $0.3 million and $10.1 million, respectively. As of December 31, 2023 and 2022, the Company held an immaterial amount of cash in a Canadian trust account that is denominated in C$.

As of December 31, 2023 and 2022, the maximum credit exposure related to the carrying amounts of accounts receivable, lease receivables, and other receivables was $12.4 million and $15.0 million, respectively.

(c)    Liquidity Risk

The Company manages liquidity risk through the management of its capital structure. The Company’s approach to managing liquidity is to raise sufficient capital to settle obligations and liabilities when due. The Company has raised capital as needed, however there is no guarantee the company will be able to continue to raise funds in the same manor it has historically.

The Company has the following gross contractual obligations as of December 31, 2023, which are expected to be payable in the following respective periods:

	Less than 1 year		1 to 3 years		3 to 5 years		Greater than 5 years		Total
Accounts payable and accrued liabilities	$	20,429	$	977	$	—	$	—	$	21,406
Convertible notes, notes payable and accrued interest	25,630		47,513		11,030		—		84,173
Construction finance liability	—		16,000		—		—		$	16,000
Total	$	46,059	$	64,490	$	11,030	$	—	$	121,579

(d)    Foreign Exchange Risk

The Company is exposed to exchange rate fluctuations between United States and Canadian dollars. The Company’s share price is denominated in Canadian dollars. If the Canadian dollar declines against the United States dollar, the United States dollar amounts available to fund the Company through the exercise of stock options or warrants will be reduced. The Company also has bank accounts with immaterial balances in Canadian dollars. The value of these bank balances if converted to U.S. dollars will fluctuate. While the Company maintains a head office in Canada where it incurs expenses primarily denominated in Canadian dollars, such expenses are a small portion of overall expenses incurred by the Company. The Company does not have a practice of trading derivatives and does not engage in “natural hedging” for funds held in Canada.

F-41

4 FRONT VENTURES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts expressed in thousands of U.S. dollars except for share and per share data)

Note 22: SEGMENT INFORMATION

Operating segments are components of the Company that engage in business activities which generate revenues and incur expenses (including intercompany revenues and expenses related to transactions conducted with other components of the Company). The operations of an operating segment are distinct, and the operating results are regularly reviewed by the chief operating decision maker (“CODM”) for the purposes of resource allocation decisions and assessing its performance. The Company's Chief Executive Officer is the Company's CODM. As of December 31, 2023, the Company had two reportable segments as follows:

•THC Cannabis – Cultivation, manufacturing, and distribution of THC cannabis; and

•CBD Wellness – Sale of CBD products to third-party consumers.

The below table presents financial results of each segment as of and for the years ended December 31, 2023 and 2022:

	Years Ended December 31,
	2023		2022
Net Revenues
THC Cannabis	$	96,588	$	106,632
CBD Wellness	847		1,032
Total Net Revenues	$	97,435	$	107,664
Net (Income) Loss Attributable to Shareholders
THC Cannabis	$	11,481	$	6,288
CBD Wellness	(55)		(66)
Corporate	33,292		15,069
Total Net Loss from Continuing Operations	$	44,718	$	21,291
Assets
THC Cannabis	$	262,423	$	343,410
CBD Wellness	388		625
Corporate	1,143		697
Total Assets	$	263,954	$	344,732

F-42

4 FRONT VENTURES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts expressed in thousands of U.S. dollars except for share and per share data)

Note 23: GOVERNMENT ASSISTANCE PROGRAM

The CARES Act provides an employee retention credit (“CARES Employee Retention Credit”), which is a refundable tax credit against certain employment taxes of up to $5,000 per employee for eligible employers. The tax credit is equal to 50% of qualified wages paid to employees during a quarter, capped at $10,000 of qualified wages per employee through December 31, 2020. Additional relief provisions were passed by the United States government, which extend and slightly expand the qualified wage caps on these credits through December 31, 2021. Based on these additional provisions, the tax credit is now equal to 70% of qualified wages paid to employees during a quarter, and the limit on qualified wages per employee has been increased to $10,000 of qualified wages per quarter. The Company qualifies for the tax credit under the CARES Act. During the fiscal year ended December 31, 2022, the Company recorded and received $7.4 million related to the CARES Employee Retention Credit in other income on the Company’s Consolidated Statements of Operations.

Note 24: SUBSEQUENT EVENTS

The Company has evaluated subsequent events through April 15, 2024, which is the date these consolidated financial statements were issued, and has concluded that the following subsequent events have occurred that would require recognition or disclosure in the consolidated financial statements.

On January 29, 2024, the Company agreed with LI Lending, LLC to convert $23.0 million of the Company’s loan into 244,680,852 Class A Subordinate Voting Shares and issued LI Lending, LLC a warrant for 36,702,127 shares of Class A Subordinate Voting Shares at a price of $0.11, as well as a restricted stock unit agreement providing that, in the event of a financing by the Company at less than C$0.125 per share of Class A Subordinate Voting Shares, LI Lending, LLC shall be entitled to receive a number of shares necessary to restore it to 18.43% of the voting interests of the Company. In addition, the Company issued LI Lending, LLC a restricted stock unit agreement providing that, in the event of a financing by the Company at less than C$0.125 per share of Class A Subordinate Voting Shares, LI Lending, LLC shall be entitled to receive a number of shares necessary to restore it to 18.43% of the voting interests of the Company.

On February 14, 2024, the Company entered into a guaranty of a lease agreement for a fourth dispensary location in Illinois.

F-43

Exhibit 31.1

Certification of Chief Executive Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Andrew Thut, certify that:

1.I have reviewed this annual report on Form 10-K of 4Front Ventures Corp.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the Audit Committee of the registrant’s board of directors (or persons performing the equivalent functions):

Date: April 15, 2024	/s/ Andrew Thut
	Andrew Thut, Chief Executive Officer (principal executive officer)

F-44

Exhibit 31.2

Certification of Chief Financial Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Peter Kampian, certify that:

1.I have reviewed this annual report on Form 10-K of 4Front Ventures Corp.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

1.designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

2.designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

3.evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

4.disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the Audit Committee of the registrant’s board of directors (or persons performing the equivalent functions):

Date: April 15, 2024	/s/ Peter Kampian
	Peter Kampian, Chief Financial Officer (principal financial and accounting officer)

Exhibit 32.1

Certifications of Chief Executive Officer and Chief Financial Officer

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Andrew Thut, Chief Executive Officer (principal executive officer) of 4Front Ventures Corp. (the “Company”), and Peter Kampian, Chief Financial Officer (principal financial and accounting officer) of the Company, each hereby certifies that, to the best of his knowledge:

1)	The Company’s Annual Report on Form 10-K for the year ended December 31, 2023, to which this certification is attached as Exhibit 32.1 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: April 15, 2024

/s/ Andrew Thut

Andrew Thut

Chief Executive Officer

(principal executive officer)

/s/ Peter Kampian

Peter Kampian

Chief Financial Officer

(principal financial and accounting officer)

The foregoing certifications are being furnished pursuant to 18 U.S.C. Section 1350. They are not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and are not to be incorporated by reference into any filing of the Company, regardless of any general incorporation language in such filing.

EX-10.9

EXHIBIT 10.9

AMENDMENT NO. 1 TO CONVERTIBLE PROMISSORY NOTE PURCHASE AGREEMENT

This Amendment No. 1 to Convertible Promissory Note Purchase Agreement (this “Amendment”) is entered into as of October 6, 2023 (the “Effective Date”), by and among 4Front Ventures Corp., a British Columbia corporation (the “Company”) and Navy Capital Green Fund, LP, a Delaware limited partnership (the “Lead Investor”), Navy Capital Green Co- Invest Fund, LLC, a Delaware limited liability company (“Navy Co-Invest”) and HI 4Front, LLC, a Delaware limited liability company (“HI 4Front” and, together with the Lead Investor and Navy Co-Invest, the “Investors”). Reference is made to that certain Convertible Promissory Note Purchase Agreement (the “Purchase Agreement”), dated as of August 6, 2021, by and among the Company and the Investors. Capitalized terms not otherwise defined in this Amendment shall have the meanings ascribed to them in the Purchase Agreement. To the extent set forth herein, this Amendment also modifies the terms and conditions of the existing Notes.

Recitals

WHEREAS, pursuant to the terms of each Note, a payment of interest is due to each Investor on the date hereof and the Company has requested that such interest payment (with respect to each Investor, its “Deferral Amount”) be deferred and, subject to the terms and conditions set forth herein, the Investors are willing to agree to the same;

WHEREAS, Section 6.1 of the Purchase Agreement provides that the Purchase Agreement may be amended with the written consent of (a) the Company and (b) the Investors (collectively, the “Requisite Consent”);

Whereas, the Notes may be amended by the Requisite Consent in accordance with Section 8(b) of each such Note; and

NOW, THEREFORE, in consideration of the premises and the representations, warranties, covenants and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

1.Deferral. For the period of October 6, 2023 through October 6, 2024 (the “Deferral Period”), payment of the Deferral Amount shall be deferred and, subject to the following, shall only be due and payable by the Company on the earlier to occur of (x) the Maturity Date and (y) such sooner date when the Outstanding Balance is due and payable under the terms of Section 1(a) of each Note. The parties agree that the applicable Deferral Amount shall be part of the “unpaid principal balance” and the “Outstanding Balance” for all purposes under each Note (including, for the avoidance of doubt, calculating the interest payable thereunder).

2.Amendments to Purchase Agreement.

(a)The preamble of Exhibit A of the Purchase Agreement (and each Note) is hereby amended from and after the date hereof to delete all references to “six percent (6%)” and replace the same with “ten percent (10%),” it being intended that the Outstanding Balance of each Note accruing during the Deferral Period (and, if the Notes are not timely repaid, thereafter) shall accrue simple interest at a rate of ten percent (10%) per annum, calculated daily, computed on the basis of the actual number of days elapsed and a year of 365 days.

1.

NYC#: 490641.2

EXHIBIT 10.9

(b)The definition of the Conversion Price set forth in Section 7 of Exhibit A of the Purchase Agreement (and each Note) is hereby amended and modified as follows:

““Conversion Price” means a price per share equal to US$0.23 as may be adjusted from time to time pursuant to Section 5(b) hereof.”

3.Estoppel. The Company acknowledges and agrees that, as of the Effective Date, (i) each Transaction Document is in full force and effect and remains valid, binding and enforceable in its terms (and the Company has no defenses or offsets to the same), (ii) each representation and warranty of the Company contained in the Purchase Agreement or any other Transaction Document is true, correct and complete, and (iii) no Event of Default (or event which would constitute an Event of Default upon the passage of time) has occurred or is continuing. Nothing contained herein shall waive, amend or modify the Company’s obligation to repay in full the Outstanding Balance (including the Deferral Amount and all accrued and unpaid interest thereon), on the Maturity Date (or such sooner date on which the Outstanding Balance would otherwise become due and payable pursuant to Section 1(a) of each Note).

4.Effect. The Purchase Agreement, as amended hereby, remains in full force and effect. Except as amended by this Amendment, the Purchase Agreement is not amended or modified.

5.Counterparts. This Amendment may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Amendment delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Amendment.

6.Governing Law. All issues and questions concerning the application, construction, validity, interpretation and enforcement of this Amendment shall be governed by and construed in accordance with the internal laws of the State of New York, without giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of laws of any jurisdiction other than those of the State of New York.

[Signature Pages Follow]

2.

NYC#: 490641.2

EXHIBIT 10.9

DocuSign Envelope ID: E8B7C044-7CEE-47AD-81BA-F620F7352453

The parties have executed this Amendment as of the date first written above.

COMPANY:

4Front Ventures Corp.

By: Name: Leo Gontmakher

Title: CEO

INVESTORS:

NAVY CAPITAL GREEN FUND, LP

By: Name: Sean Stiefel

Title: CEO, Navy Capital Green Management, LLC, its Investment Advisor

NAVY CAPITAL GREEN CO-INVEST FUND, LLC

By: Name: Sean Stiefel

Title: CEO, Navy Capital Green Management, LLC, its Investment Advisor

HI 4FRONT LLC

By: Name:

Title:

NYC#: 490641.2

EXHIBIT 10.9

The parties have executed this Amendment as of the date first written above.

COMPANY:

4Front Ventures Corp.

By:

Name: Karl Chowscano

Title: Authorized Signatory

NYC#: 490641.2

EXHIBIT 10.9

INVESTORS:

NAVY CAPITAL GREEN FUND, LP

By: Name: Sean Stiefel

Title: CEO, Navy Capital Green Management, LLC, its Investment Advisor

NAVY CAPITAL GREEN CO-INVEST FUND, LLC

By: Name: Sean Stiefel

Title: CEO, Navy Capital Green Management, LLC, its Investment Advisor

HI 4FRONT LLC

By:

Name: Loren Rosenman

Title: Authorized Signatory

NYC#: 490641.2

EX-10.32

EXHIBIT 10.32

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

by and among

The Borrowers and Grantors named herein,

And

LI LENDING, LLC

a Delaware limited liability company, as Lender,

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EXHIBIT 10.32

Table of Contents

Article I General Information.    6

Section 1.1    Use of Proceeds.    6

Section 1.2    Conditions to this Agreement    6

Section 1.3    Schedules.    6

Section 1.4    Defined Terms.    6

Article II Advances of the Loan    6

Section 2.1    The Loan.    6

Section 2.2    Conditions Precedent to this Agreement    6

Section 2.3    Security    8

Section 2.4    Liability of Lender    8

Article III Representations and Warranties.    9

Section 3.1    Organization, Power and Authority of Grantor; Loan Documents    9

Section 3.2    Other Documents; Laws.    9

Section 3.3    Taxes.    9

Section 3.4    Legal Actions.    10

Section 3.5    Nature of Loan.    10

Section 3.6    Trade Names.    10

Section 3.7    Financial Statements.    10

Section 3.8    ERISA and Prohibited Transactions.    10

Section 3.9    Compliance with Zoning and Other Requirements; Borrower’s Trade and Business    10

Section 3.10    Plans and Specifications.    11

Section 3.11    Building Permits; Other Permits    11

Section 3.12    Utilities    11

Section 3.13    Access; Roads.    11

Section 3.14    Other Liens.    11

Section 3.15    No Material Adverse Change.    11

Section 3.16    Defaults    12

Section 3.17    OFAC and Other Sanctions    12

Section 3.18    Title    12

Section 3.19    Anti-Money Laundering    12

Article IV Affirmative Covenants and Agreements.    12

Section 4.1    Commencement and Completion of Construction; Compliance with Laws; Use of Proceeds.    13

Section 4.2    Approval of Construction.    13

Section 4.3    Intentionally Omitted    13

Section 4.4    Compliance with Laws; Encroachments.    13

Section 4.5    Inspections; Cooperation.    13

Section 4.6    Contracts, Vouchers and Receipts    14

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Section 4.7    Payment and Performance of Contractual Obligations    14

Section 4.8    Correction of Construction Defects    14

Section 4.9    Insurance    14

Section 4.10    Adjustment of Condemnation and Insurance Claims    16

Section 4.11    Utilization of Net Proceeds.    16

Section 4.12    Management    17

Section 4.13    Books and Records; Financial Statements; Tax Returns    17

Section 4.14    Estoppel Certificates    18

Section 4.15    Taxes.    18

Section 4.16    Lender's Rights to Pay and Perform    18

Section 4.17    Reimbursement; Interest    19

Section 4.18    Notification by Borrower    19

Section 4.19    Indemnification by Borrower    19

Section 4.20    Fees and Expenses    20

Section 4.21    Appraisals.    20

Section 4.22    Leasing    20

Section 4.23    Income from Property    20

Section 4.24    Board Composition.    20

Article V Negative Covenants.    21

Section 5.1    Conditional Sales    21

Section 5.2    Changes to Plans and Specifications    21

Section 5.3    Insurance Policies and Bonds    21

Section 5.4    Commingling    21

Section 5.5    No Additional Debt    21

Section 5.6    Sanctions.    22

Section 5.7    No Sale without Lender Consent    22

Section 5.8    No additional Liens    22

Section 5.9    No Name Change; Jurisdiction Change    22

Article VI Events of Default    22

Section 6.1    Payment Default    22

Section 6.2    Default Under Other Loan Documents.    22

Section 6.3    Accuracy of Information; Representations and Warranties.    23

Section 6.4    Deposits.    23

Section 6.5    Insurance Obligations    23

Section 6.6    Other Obligations    23

Section 6.7    Progress of Construction.    23

Section 6.8    Damage to Improvements    23

Section 6.9    Lapse of Permits or Approvals.    23

Section 6.10    Intentionally Omitted    24

Section 6.11    Mechanic's Lien    24

Section 6.12    Survey Matters.    24

Section 6.13    General Contractor Default    24

Section 6.14    Intentionally Omitted    24

Section 6.15    Bankruptcy    24

EXHIBIT 10.32

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EXHIBIT 10.32

Section 6.16    Appointment of Receiver, Trustee, Liquidator    24

Section 6.17    Inability to Pay Debts    24

Section 6.18    Judgment    24

Section 6.19    Dissolution; Change in Business Status.    25

Section 6.20    Intentionally Omitted    25

Section 6.21    Intentionally Omitted    25

Section 6.22    Material Adverse Change.    25

Section 6.23    Forfeiture    25

Section 6.24    Guaranty    25

Article VII Remedies on Default    25

Section 7.1    Remedies on Default    25

Section 7.2    No Release or Waiver; Remedies Cumulative and Concurrent    27

Article VIII Miscellaneous.    28

Section 8.1    Further Assurances; Authorization to File Documents.    28

Section 8.2    No Warranty by Lender    28

Section 8.3    Standard of Conduct of Lender    28

Section 8.4    No Partnership    29

Section 8.5    Severability    29

Section 8.6    Authorized Signers    29

Section 8.7    Notices.    29

Section 8.8    Permitted Successors and Assigns; Disclosure of Information    30

Section 8.9    Third Parties; Benefit    31

Section 8.10    Rules of Construction.    31

Section 8.11    Counterparts; Electronic Signatures    31

Section 8.12    Signs; Publicity    32

Section 8.13    Governing Law    32

Section 8.14    Time of Essence.    32

Section 8.15    Electronic Communications    32

Section 8.16    Forum    32

Section 8.17    Joint and Several Liability; Single Loan Account    32

Section 8.18    WAIVER OF JURY TRIAL    33

Section 8.19    USA Patriot Act Notice    34

Section 8.20    Entire Agreement    35

Section 8.21    WASHINGTON NOTICE    35

EXHIBIT 10.32

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EXHIBIT 10.32

Schedules to Amended and Restated Loan and Security Agreement
Schedule 1	Definitions

EXHIBIT 10.32

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EXHIBIT 10.32

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

This AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this “Agreement”)

is made as of the 17th day of December, 2020 (“Effective Date”), by and among LINCHPIN INVESTORS, LLC, a Delaware limited liability company, 401 EAST MAIN STREET LLC, a Delaware limited liability company, IL GROWN MEDICINE LLC, an Illinois limited liability company, 8554 S. COMMERCIAL AVE, LLC, a Delaware limited liability company, 883 HYDE PARK AVE, LLC, a Delaware limited liability company, HEALTHY PHARMS, INC., a Massachusetts corporation, and CANNEX CALIFORNIA CAPITOL HOLDINGS, INC., a California corporation (each a Borrower and together referred to herein as a “Borrower” and referred to collectively as the “Borrowers”), and 4FRONT HOLDINGS NEVADA CORP., a Nevada corporation, BRIGHTLEAF DEVELOPMENT, LLC, a

Washington limited liability company, REAL ESTATE PROPERTIES LLC, a Washington limited liability company, AG-GROW IMPORTS, LLC, a Washington limited liability company, FULLER HILL DEVELOPMENT CO. LLC, a Washington limited liability company, PURE RATIOS HOLDING INC., a Delaware corporation, 4FRONT U.S. HOLDINGS, INC., a Delaware corporation, 4FRONT HOLDINGS, LLC, a Delaware limited liability company, 4FRONT ADVISORS, LLC, a Delaware limited liability company, MISSION PARTNERS USA, LLC, a Delaware limited liability company, MISSION PARTNERS IP, LLC, a Delaware limited liability company, 4FRONT VENTURES CORP., a corporation organized under the laws of British Columbia, PHX INTERACTIVE LLC, an Arizona limited liability company, PURE RATIOS HOLDINGS INC., a Delaware corporation, and ADROIT CONSULTING GROUP LLC, a Maryland limited liability company (along with each Borrower and the Borrowers, each a “Grantor” and together the “Grantor” and collectively the “Grantors”) and LI LENDING, LLC, a Delaware limited liability company (“Lender”). This Agreement amends and restates the Construction Loan Agreement between Borrowers and Lender dated effective as of May 10, 2020, as amended by that Modification to Promissory Note and Loan Documents, in its entirety.

Recitals

Each Borrower has obtained from Lender one or more loans to finance the payment of interest on such loans and certain costs related to the acquisition, refinance, construction and/or development of improvements on real property and personal property used in the operation of such real property (including but not limited to equipment) by Borrower, including without limitation both fee and leasehold interests.

Borrowers have requested Lender’s approval to sell certain properties located at 401 East Main Street, Georgetown, MA 01833 and 9603 and 9631 Lathrop Industrial Drive SW in Olympia, WA 98512 (“Sold Properties”) and Lender’s approval to use the sale proceeds to pay any and all amounts outstanding on the loans (“GGP Loans”) from Gotham Green Partners (“GGP”) and discharge the obligations under the GGP Loans.

Lender has consented to the sales and release of its liens on the Sold Properties and Borrowers use of the sale proceeds to pay GGP on the condition that GGP releases and terminates any and interest they have in the collateral securing the GGP Loans (“GGP Collateral”) and Lender becoming the senior lender and obtaining a first position security interest in the GGP Collateral, among other things, all on the terms and conditions of this Agreement.

Now, therefore, in consideration of the premises, and in further consideration of the mutual covenants and agreements herein set forth, the parties covenant and agree as follows:

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EXHIBIT 10.32

Agreements

Article I General Information.

Section 1.1 Use of Proceeds.

Each Borrower shall use the proceeds of the Loan made under this Agreement for a Permitted

Use.

Section 1.2 Conditions to this Agreement.

The conditions precedent to this Agreement are set forth in Section 2.2. Section 1.3 Schedules.

The Schedules attached to this Agreement are incorporated herein and made a part hereof. Section 1.4 Defined Terms.

Capitalized terms in this Agreement shall have the meanings ascribed to such terms in the Preamble hereto and in Schedule 1.

Article II Advances of the Loan.

Section 2.1 The Loan.

Borrower and Lender acknowledge and stipulate that as of the Effective Date the outstanding principal balance outstanding on the Note is Forty Three Million and No/100 Dollars ($43,000,000.00). Borrower prepaid to Lender principal in the amount of Two Million and 00/100 Dollars ($2,000,000). Interest shall accrue and be payable in arrears only on sums advanced under the Note and hereunder for the period of time outstanding and shall be payable as set forth in the Note. The Loan is not a revolving loan; amounts repaid may not be re-borrowed.

Section 2.2 Conditions Precedent to this Agreement.

Lender’s obligation to release its liens on the Sold Properties and enter into this Agreement is subject to the following conditions precedent, with all documents, instruments, opinions, reports and other items required under this Agreement to be in form and substance satisfactory to Lender:

(a)All requisite corporate action and proceedings in connection with this Agreement and the other Loan Documents shall be satisfactory in form and substance to the Lender, and the Lender shall have received all information and copies of all documents, including records of requisite corporate action and proceedings which the Lender may have requested in connection therewith, such documents where requested by the Lender or its counsel to be certified by appropriate corporate officers, members, managers or governmental authorities.

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EXHIBIT 10.32

(b)Borrowers shall have duly executed by the appropriate parties and delivered to Lender in form and substance reasonably satisfactory to Lender an Amended and Restated Promissory Note.

(c)4Front Ventures shall have duly executed by the appropriate parties and delivered to Lender in form and substance reasonably satisfactory to Lender a Warrant Certificate granting Lender up to Ten Million and 00/100 ($10,000,000) in warrants at the market price as of the Effective Date.

(d)Each Grantor shall have duly executed by the appropriate party and delivered to Lender in form and substance reasonably satisfactory to Lender any and all documents and other instruments, including but not limited to additional security agreements, pledge agreements, trademark security agreements, mortgages, deeds of trust and certificates granting Lender a first position security interest in any and all assets now owned or hereafter acquired by Grantors, including, but not limited to the Collateral, all within thirty (30) days of the Effective Date.

(e)The obligations on the GGP Loans shall have been discharged and GGP shall have terminated and released any and all interest in the GGP Collateral.

(f)The Lender Director shall be appointed to the Board of Directors of 4Front Ventures on or before December 21, 2020.

(g)Grantors shall have provided Lender with a certified copy of all Governing Documents, together with a certified copy of resolutions properly adopted by the members of the Borrower and Grantor, under which the members authorized the execution and delivery of this Agreement, the Note, the Security Instruments and any other Loan Documents, and to consummate the borrowings and grant the security contemplated under this Agreement within thirty (30) days of the Effective Date.

(h)Grantors shall provide Lender with copies of any and all leases and execute any and all mortgages, deeds of trust or other security agreements to grant Lender a first position security interest in such leasehold interests.

(i)The other Loan Documents and all instruments and documents hereunder and thereunder shall have been duly executed and delivered to Lender, in form and substance satisfactory to the Lender.

(j)Each document (including any Uniform Commercial Code financing statements) required by the Loan Documents or under law or reasonably requested by Lender shall be in proper form for filing, registration or recordation and shall be recorded within thirty (30) days of the Effective Date.

(k)There shall exist no Event of Default or condition which would constitute an Event of Default under this Agreement or the other Loan Documents.

(l)The representations and warranties of the Borrowers and Grantors contained in this Agreement and the Guaranty by Guarantor shall be true and correct in all material respects and all covenants, agreements and conditions contained in this Agreement to be performed by the Borrowers shall have been performed or complied with in all material respects.

(m)There shall have been no material adverse change in the financial condition, business, affairs or prospects of any of the Borrowers, Grantors or the Guarantor, and the Borrowers, Grantors or Guarantor shall not have suffered any material loss (whether or not insured) by reason of physical damage caused by fire, earthquake, accident, theft or other calamity which substantially affects the value of its assets, properties or business.

EXHIBIT 10.32

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EXHIBIT 10.32

Section 2.3 Security.

The proceeds of the Loan advanced hereunder shall be secured by a first position security interest in any and all assets owned and hereafter acquired by a Grantor. Each Grantor hereby pledges, collaterally assigns and transfers to the Lender, and hereby grants to the Lender a first position security interest in any and all of the Collateral, whether now owned or at any time hereafter acquired by such Grantor or in which such Grantor now has or at any time in the future may acquire any right, title or interest, wherever located, as collateral security for the prompt and complete payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of the Obligations:

(a)Each Grantor acknowledges that: (i) value has been given; (ii) the Grantor has rights in the Collateral (other than after-acquired Collateral); and (iii) the parties have not agreed to postpone the time for attachment of the Security Interest. Each Grantor acknowledges that the security interest in this Agreement shall attach to existing Collateral upon the execution of this Agreement and to each item of after-acquired Collateral at the time that the Grantor acquires rights in such after-acquired Collateral.

(b)Each Grantor authorizes the Lender to file or record financing statements and other filing or recording documents or instruments with respect to the Collateral, without the signature of such Grantor, in such form (if no signature is required) and in such offices as the Lender determines appropriate to perfect the security interests of the Lender under this Agreement. Each Grantor authorizes the Lender to use the collateral description “all personal property”, “all assets” or words of similar effect, regardless of whether any particular asset comprised in the Collateral falls within the scope of Article 9 of the Uniform Commercial Code of any other applicable state, in any such financing statements. Such Grantor also hereby ratifies its authorization for Lender to have filed any initial financing statement or amendment thereto under the Uniform Commercial Code (or other similar laws) in effect in any jurisdiction if filed prior to the date hereof. Each Grantor hereby (i) waives any right under the Uniform Commercial Code or any other applicable law to receive notice and/or copies of any filed or recorded financing statements, amendments thereto, continuations thereof or termination statements and (ii) releases and excuses each Lender from any obligation under the Uniform Commercial Code or any other applicable law to provide notice or a copy of any such filed or recorded documents

(c)At any time and from time to time, upon the written request of the Lender, and at the sole expense of such Grantor, such Grantor will promptly duly execute and deliver, and have recorded, such further instruments and documents and take such further actions as the Lender may reasonably request for the purpose of obtaining or preserving the full benefits of this Agreement and of the rights and powers herein granted, including (i) the filing of any financing or continuation statements under the Uniform Commercial Code (or other similar laws) in effect in any jurisdiction with respect to the security interests created hereby, and (ii) in the case of Investment Property, Deposit Accounts, Securities Entitlements, Letter-of-Credit Rights and any other relevant Collateral, taking any actions reasonably necessary to enable the Agent to obtain “control” (within the meaning of the Uniform Commercial Code) with respect thereto, subject to the requirements of this Agreement.

Section 2.4 Liability of Lender.

Lender shall in no event be responsible or liable to any Person other than Borrowers for the disbursement of or failure to disburse the Loan proceeds or any part thereof and neither the General Contractor, Construction Inspector nor any subcontractor, laborer or material supplier shall have any right or claim against Lender under this Agreement or the other Loan Documents. The Loan has been fully disbursed and each Borrower hereby acknowledges and agrees that it has no claims, offsets, defenses,

EXHIBIT 10.32

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EXHIBIT 10.32

counterclaims or causes of action in connection with the Loan Documents or otherwise against Lender. Borrower hereby forever releases and discharges Lender, Lender’s predecessor in interest, and the officers, directors, and employees of each of and from any and all claims, offsets, defenses, counterclaims, causes of action, or liabilities of any kind or nature, now known or hereafter discovered, from whatever cause arising (collectively, the “Claims”), all of which Claims are expressly hereby waived, which release, discharge and waiver is unconditional, immediate, and binding on Borrower and their respective successors in interest, for all purposes in all proceedings hereafter, including without limitation, any proceedings under the United States Bankruptcy Code. This waiver and release of Claims is a material and expressly bargained-for consideration of this Agreement, severable, and independently enforceable notwithstanding a finding that any other provision hereof is unenforceable.

Article III Representations and Warranties.

Each Borrower and Grantor, as applicable, represents and warrants to Lender, on behalf of itself and each other Borrower and Grantor hereunder, as of the Effective Date and until such time as all Obligations shall be indefeasibly paid and performed in full, the following:

Section 3.1 Organization, Power and Authority of Grantor; Loan Documents.

Grantor (a) is a limited liability company, corporation or partnership, as applicable, duly organized, existing and in good standing under the Laws of the state in which it is organized and is duly qualified to do business and in good standing in the state in which the Land and other Collateral is located (if different from the state of its formation) and in any other state where the nature of Grantor's business or property requires it to be qualified to do business, and (b) has the power, authority and legal right to own its property and carry on the business now being conducted by it and to engage in the transactions contemplated by the Loan Documents. The Loan Documents to which Grantor is a party have been duly executed and delivered by Grantor, and the execution and delivery of, and the carrying out of the transactions contemplated by, such Loan Documents, and the performance and observance of the terms and conditions thereof, have been duly authorized by all necessary organizational action by and on behalf of Grantor. The Loan Documents to which Grantor is a party constitute the valid and legally binding obligations of Grantor and are fully enforceable against Grantor in accordance with their respective terms, except to the extent that such enforceability may be limited by Laws generally affecting the enforcement of creditors' rights.

Section 3.2 Other Documents; Laws.

The execution and performance of the Loan Documents to which Grantor is a party and the consummation of the transactions contemplated thereby will not conflict with, result in any breach of, or constitute a default under, the organizational documents of Grantor, or any contract, agreement, document or other instrument to which Grantor is a party or by which Grantor or any of its properties may be bound or affected, and such actions do not and will not, to the best of Grantor’s knowledge, violate or contravene any Law to which Grantor, the Property, or any tenant under any Lease is subject.

Section 3.3 Taxes.

Grantor has filed all federal, state, county and municipal tax returns required to have been filed by Grantor and has paid all Taxes which have become due pursuant to such returns or pursuant to any tax assessments received in writing by Grantor.

EXHIBIT 10.32

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EXHIBIT 10.32

Section 3.4 Legal Actions.

There are no Claims or investigations by or before any court or Governmental Authority, pending, or to the best of Grantor's knowledge and belief, threatened against or affecting Grantor, Grantor's business or the Property or Collateral. To the best of Grantor’s knowledge, Grantor is not in default with respect to any order, writ, injunction, decree or demand of any court or any Governmental Authority affecting Grantor or the Property or the Collateral.

Section 3.5 Nature of Loan.

Grantor is a business or commercial organization. The Loan is being obtained solely for business or investment purposes, and will not be used for personal, family, household or agricultural purposes.

Section 3.6 Trade Names.

Borrower and Grantor conducts its business solely under the name set forth in the Preamble to this Agreement or any Addendum attached hereto and makes use of no trade names in connection therewith, unless such trade names have been previously disclosed to Lender in writing.

Section 3.7 Financial Statements.

The financial statements heretofore delivered by Grantor and Guarantor to Lender are true and correct in all material respects, have been prepared in accordance with sound accounting principles consistently applied, and fairly present the respective financial conditions of the subjects thereof as of the respective dates thereof.

Section 3.8 ERISA and Prohibited Transactions.

As of the date hereof and throughout the term of the Loan: (a) Grantor is not and will not be (i) an “employee benefit plan,” as defined in Section 3(3) of ERISA, (ii) a “governmental plan” within the meaning of Section 3(32) of ERISA, or (iii) a “plan” within the meaning of Section 4975(e) of the Code;

(b) the assets of Grantor do not and will not constitute “plan assets” within the meaning of the United States Department of Labor Regulations set forth in Section 2510.3-101 of Title 29 of the Code of Federal Regulations; (c) transactions by or with Grantor are not and will not be subject to state statutes applicable to Grantor regulating investments of fiduciaries with respect to governmental plans; and (d) Grantor will not engage in any transaction that would cause any Obligation or any action taken or to be taken hereunder (or the exercise by Lender of any of its rights under the Security Instruments or any of the other Loan Documents) to be a non-exempt (under a statutory or administrative class exemption) prohibited transaction under ERISA or Section 4975 of the Code. Grantor agrees to deliver to Lender such certifications or other evidence of compliance with the provisions of this Section as Lender may from time to time reasonably request.

Section 3.9 Compliance with Zoning and Other Requirements; Borrower’s Trade and Business.

To the best of Borrower’s knowledge, (i) the anticipated use of the Property complies with applicable zoning ordinances, regulations and restrictive covenants affecting the Land; (ii) all use and other requirements of any Governmental Authority having jurisdiction over the Property have been satisfied; and

(iii) no material violation of any Law exists with respect to the Property. Notwithstanding anything to the contrary contained herein or in any of the other Loan Documents, Lender expressly acknowledges and agrees that Borrower’s trade and business involves the production and distribution of cannabis and

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cannabis-related products and that Borrower shall not be in breach or default of any representation, warranty, covenant, requirement or restriction set forth herein or in any of the other Loan Documents as a result of engaging in said trade and business and operating the Property in furtherance of said trade and business.

Section 3.10    Plans and Specifications.

The Plans and Specifications are complete and adequate for the Construction of the Improvements. The Plans and Specifications have been approved by all Governmental Authorities having or claiming jurisdiction over the Property and by the beneficiary of each restrictive covenant affecting the Property whose approval is required. To the best of Borrower's knowledge, the Improvements, if constructed substantially in accordance with the Plans and Specifications, will fully comply with all applicable Laws.

Section 3.11    Building Permits; Other Permits.

All building, construction and other permits necessary or required in connection with the Construction of the Improvements have been validly issued or will be issued in a timely manner by a date sufficient to ensure commencement of construction and Completion of Construction in accordance with the Project Schedule. All required fees have been paid and bonds and/or other security have been posted in connection with all permits that have been issued, and adequate amounts are included in the Borrower’s budget to pay all fees and the cost of all bonds and other security in connection with permits to be issued in the future. Following the issuance thereof, all permits will remain in full force and effect.

Section 3.12    Utilities.

All utility services necessary for the Construction of the Improvements and the operation thereof for their intended purposes are available at the boundaries of the Land (or will be available upon the completion of work shown in the Plans and Specifications), including telephone service, cable television, water supply, storm and sanitary sewer facilities, natural gas and electric facilities, including cabling for telephonic and data communication, and the capacity to send and receive wireless communication.

Section 3.13    Access; Roads.

All roads and other accesses necessary for the Construction of the Improvements and full utilization thereof for their intended purposes have either been completed or the necessary rights of way therefor have either been acquired by the appropriate Governmental Authority, or have been dedicated to public use and accepted by such Governmental Authority and all necessary steps have been taken by Borrower or such Governmental Authority to assure the complete construction and installation thereof by a date sufficient to ensure the Completion of Construction of the Improvements in accordance with the Project Schedule.

Section 3.14    Other Liens.

Except for contracts for labor, materials and services furnished or to be furnished in connection with the Construction of the Improvements, Borrower has made no contract or arrangement of any kind the performance of which by the other party thereto would give rise to a lien on the Property.

Section 3.15    No Material Adverse Change.

No material adverse change has occurred in the financial condition of Grantor or Guarantor from that reflected in the financial statements of Grantor or Guarantor provided to Lender in connection with

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Lender's approval of the Loan, and no material additional liabilities have been incurred by Grantor since the dates of such statements other than the borrowings contemplated herein or as approved in writing by Lender.

Section 3.16    Defaults.

There is no Event of Default under any of the Loan Documents that is continuing beyond expiration of any applicable notice and/or cure period, and there is no default or event of default under any material contract, agreement or other document related to the Construction of the Improvements or the operation thereof.

Section 3.17    OFAC and Other Sanctions.

Neither Grantor nor any of its subsidiaries or Affiliates (collectively, the “Company”) or, to the knowledge of the Company, any director, officer, employee, agent, Affiliate or representative of the Company is a Person currently the subject of any Sanctions, nor is the Company located, organized or resident in a country or territory that is the subject of Sanctions.

Section 3.18    Title.

Except as contemplated by this Agreement or as previously disclosed to and approved by Lender in writing, each Grantor owns and has good title to the Property and Collateral free and clear of any Liens or Security Interests except those of Lender.

Lender represents and warrants to Borrower, as of the closing of the Loan and the Effective Date, the following:

Section 3.19    Anti-Money Laundering.

The operations of the Lender and its subsidiaries are and have been conducted at all times in compliance with all applicable financial recordkeeping and reporting requirements, including those of the Bank Secrecy Act, as amended by Title III of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act), and the applicable anti-money laundering statutes of jurisdictions where the Lender and its subsidiaries conduct business, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “Anti-Money LaunderingLaws”), and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Lender or any of its subsidiaries with respect to the Anti-Money Laundering Laws is pending or, to the best knowledge of the Lender, threatened.

Article IV

Affirmative Covenants and Agreements.

Each Borrower and Grantor, as applicable covenants, on behalf of itself and each other Borrower and Grantor hereunder, as of the closing of the Loan and until such time as all Obligations shall be indefeasibly paid and performed in full, the following:

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Section 4.1 Commencement and Completion of Construction; Compliance with Laws; Use ofProceeds.

Borrower shall at all times act in good faith and use commercially reasonable efforts to cause the Construction of the Improvements to be commenced and prosecuted in a good and workmanlike manner and shall cause the same to be completed in accordance with the Project Schedule and substantially in accordance with the Plans and Specifications. Borrower shall comply with all Laws and all orders, writs, injunctions, decrees and demands of any court or any Governmental Authority affecting Borrower or the Property. Borrower shall use all proceeds of the Loan for the purposes contemplated herein and which are not in contravention of any Law or any Loan Document.

Section 4.2 Approval of Construction.

No work associated with the Construction of the Improvements shall be commenced by Borrower unless and until the Plans and Specifications have been approved by Lender (such approval not to be unreasonably withheld, conditioned or delayed), by all Governmental Authorities having or claiming jurisdiction over the Land and Improvements, by the beneficiary of any applicable restrictive covenant whose approval is required, and by any other party whose approval is required under applicable agreements, and unless and until all building, construction and other permits necessary or required in connection with the Construction of the Improvements have been validly issued and all fees, bonds and any other security required in connection therewith have been paid or posted.

Section 4.3 Intentionally Omitted.

Section 4.4 Compliance with Laws; Encroachments.

The Improvements shall be constructed and operated in accordance with all applicable (whether present or future) Laws. The Improvements shall be constructed entirely on the Land and shall not encroach upon any easement or right-of-way, or upon the land of others. Construction of the Improvements shall occur wholly within all applicable building restriction lines and set-backs, however established, and the Construction of the Improvements and their operations shall be in strict compliance with all applicable use or other restrictions and the provisions of any prior agreements, declarations, covenants and all applicable zoning and subdivision ordinances and regulations. Borrower shall obtain, preserve and maintain in good standing, as applicable, all rights, privileges and franchises necessary or desirable for the operation of the Property and the conduct of Borrower's business thereon or therefrom.

Section 4.5 Inspections; Cooperation.

Borrower shall permit representatives of Lender and the Construction Inspector to enter upon the Land during weekdays anytime between 9:00 am and 5:00 pm (local time), to inspect the Improvements and any and all materials to be used in connection with the Construction of the Improvements, to inspect and examine all detailed plans and shop drawings and similar materials as well as all books and records of Borrower (regardless of where maintained) and all supporting vouchers and data and to make copies and extracts therefrom and to discuss the affairs, finances and accounts pertaining to the Loan and the Improvements with representatives of Borrower. Borrower shall at all times cooperate and cause the General Contractor and each and every one of its subcontractors and material suppliers to cooperate with the representatives of Lender and the Construction Inspector in connection with or in aid of the performance of Lender's functions under this Agreement. Except in the event of an emergency, Lender shall give

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Borrower at least forty-eight (48) hours' notice by telephone in each instance before entering upon the Land and/or exercising any other rights granted in this Section.

Section 4.6 Contracts, Vouchers and Receipts.

Borrower shall furnish to Lender, promptly on demand, any contracts, subcontracts, bills of sale, statements, receipted vouchers or other agreements relating to the Construction of the Improvements, including any such items pursuant to which Borrower has any claim of title to any materials, fixtures or other articles delivered or to be delivered to the Land or incorporated or to be incorporated into the Improvements. Borrower shall furnish to Lender, promptly on demand, a verified written statement, in such form and detail as Lender may require, setting forth the names and addresses of all contractors, subcontractors and suppliers furnishing labor or materials in the Construction of the Improvements and showing all amounts paid for labor and materials and all items of labor and materials furnished or to be furnished for which payment has not been made and the amounts to be paid therefor.

Section 4.7 Payment and Performance of Contractual Obligations.

Borrower shall perform in a timely manner all of its material obligations under the Architect's Contract, the Construction Contract and any and all other contracts and agreements related to the Construction of the Improvements or the operation thereof, and Borrower will pay when due (subject to any applicable notice and/or cure period) all bills for services or labor performed and materials supplied in connection with the Construction of the Improvements. Within thirty (30) days after the filing of any mechanic's lien or other lien or encumbrance against the Property, Borrower will promptly discharge the same by payment or filing a bond or otherwise as permitted by Law. So long as Lender's security has been protected by the filing of a bond or otherwise in a manner satisfactory to Lender in its sole discretion, Borrower shall have the right to contest in good faith any claim, lien or encumbrance, provided that Borrower does so diligently and without prejudice to Lender or delay in completing Construction of the Improvements.

Section 4.8 Correction of Construction Defects.

Promptly following any demand by Lender, Borrower shall correct or cause the correction of any known structural defects in the Improvements, any work not of good quality, any work that fails to comply with the requirements of Section 4.4 and any material departures or deviations from the Plans and Specifications not approved in writing by Lender.

Section 4.9 Insurance.

Borrower and Grantor (as applicable) shall maintain the following insurance, as applicable, at its sole cost and expense:

(a)Insurance against Casualty to the Property and Collateral under a policy or policies covering such risks as are presently included in “special form” (also known as “all risk”) coverage, including such risks as are ordinarily insured against by similar businesses, but in any event including fire, lightning, windstorm, hail, explosion, riot, riot attending a strike, civil commotion, damage from aircraft, smoke, vandalism, malicious mischief and acts of terrorism. Such insurance shall name Lender as mortgagee and loss payee. Unless otherwise agreed in writing by Lender, such insurance shall be for the full insurable value of the Property, with a deductible amount, if any, satisfactory to Lender. No policy of insurance shall be written such that the proceeds thereof will produce less than the minimum coverage

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required by this Section by reason of co-insurance provisions or otherwise. The term “full insurable value” means one hundred percent (100%) of the actual replacement cost of the Property (excluding excavation costs and costs of underground flues, pipes, drains and other uninsurable items).

(b)Comprehensive (also known as commercial) general liability insurance on an “occurrence” basis against claims for “personal injury” liability and liability for death, bodily injury and damage to property, products and completed operations, in limits reasonably satisfactory to Lender with respect to any one occurrence and the aggregate of all occurrences during any given annual policy period. Such insurance shall name Lender as an additional insured.

(c)Workers' compensation insurance for all employees of Borrower in such amount as is required by Law and including employer's liability insurance, if required by Lender.

(d)During any period of construction upon the Property, Borrower shall maintain, or cause others to maintain, builder's risk insurance (non-reporting form) of the type customarily carried in the case of similar construction for one hundred percent (100%) of the full replacement cost of work in place and materials stored at or upon the Property.

(e)If at any time any portion of any structure on the Property is insurable against Casualty by flood and is located in a Special Flood Hazard Area under the Flood Disaster Protection Act of 1973, as amended, a flood insurance policy on the structure and Borrower owned contents in form and amount acceptable to Lender but in no amount less than the amount sufficient to meet the requirements of applicable Law as such requirements may from time to time be in effect. The flood insurance policy on contents shall be required upon completion of the structure or any unit or component thereof, or as soon thereafter as a flood insurance policy on such contents may be obtained.

(f)Loss of rental value insurance or business interruption insurance in an amount acceptable to Lender.

(g)Such other and further insurance as may be reasonably required from time to time by Lender in order to comply with regular requirements and practices of Lender in similar transactions including, if required by Lender, boiler and machinery insurance, pollution liability insurance, wind insurance and earthquake insurance, so long as any such insurance is generally available at commercially reasonable premiums as determined by Lender from time to time.

In addition to the foregoing, Borrower shall cause the General Contractor to provide and maintain comprehensive (commercial) general liability insurance and workers' compensation insurance for all employees of the General Contractor meeting, respectively, the requirements of Subsections (b) and (c), above.

Each policy of insurance (i) shall be issued by one or more insurance companies each of which must have an A.M. Best Company financial and performance rating of A-IX or better and are qualified or authorized by the Laws of the State to assume the risks covered by such policy, (ii) with respect to the insurance described under the preceding Subsections (a), (d), (e) and (f), shall have attached thereto standard non-contributing, non-reporting mortgagee clauses in favor of and entitling Lender without contribution to collect any and all proceeds payable under such insurance, either as sole payee or as joint payee with Borrower, (iii) shall provide that such policy shall not be canceled or modified without at least thirty (30) days prior written notice to Lender, and (iv) shall provide that any loss otherwise payable thereunder shall be payable notwithstanding any act or negligence of Borrower which might, absent such agreement, result

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in a forfeiture of all or a part of such insurance payment. Borrower shall promptly pay all premiums when due on such insurance and, not less than thirty (30) days prior to the expiration dates of each such policy, Borrower will deliver to Lender acceptable evidence of insurance, such as a renewal policy or policies marked “premium paid” or other evidence satisfactory to Lender reflecting that all required insurance is current and in force. Borrower will immediately give Notice to Lender of any cancellation of, or change in, any insurance policy. Lender shall not, because of accepting, rejecting, approving or obtaining insurance, incur any liability for (A) the existence, nonexistence, form or legal sufficiency thereof, (B) the solvency of any insurer, or (C) the payment of losses. Borrower may satisfy any insurance requirement hereunder by providing one or more “blanket” insurance policies, subject to Lender's approval in each instance as to limits, coverages, forms, deductibles, inception and expiration dates, and cancellation provisions.

Section 4.10    Adjustment of Condemnation and Insurance Claims.

Borrower shall give prompt Notice to Lender of any Casualty or any Condemnation or Condemnation threatened in writing impacting more than five percent (5%) of the value of the Property, as determined by Lender. Lender is authorized, at its sole and absolute option, to commence, appear in and prosecute, in its own or Borrower's name, any action or proceeding relating to any Condemnation or Casualty, and to make proof of loss for and to settle or compromise any Claim in connection therewith. In such case, Lender shall have the right to receive all Condemnation Awards and Insurance Proceeds, and may deduct therefrom any and all of its reasonable Expenses. However, so long as no Event of Default has occurred and is continuing beyond expiration of any applicable notice and/or cure period and Borrower is diligently pursuing its rights and remedies with respect to a Claim, Lender will obtain Borrower's written consent (which consent shall not be unreasonably withheld or delayed) before making proof of loss for or settling or compromising such Claim. Borrower agrees to diligently assert its rights and remedies with respect to each Claim and to promptly pursue the settlement and compromise of each Claim subject to Lender's approval, which approval shall not be unreasonably withheld or delayed. If, prior to the receipt by Lender of any Condemnation Award or Insurance Proceeds, the Property shall have been sold pursuant to the provisions of the Security Instruments, Lender shall have the right to receive such funds (a) to the extent of any deficiency found to be due upon such sale with interest thereon (whether or not a deficiency judgment on the Security instruments shall have been sought or recovered or denied), and (b) to the extent necessary to reimburse Lender for its Expenses. If any Condemnation Awards or Insurance Proceeds are paid to Borrower, Borrower shall receive the same in trust for Lender. Within ten (10) days after Borrower's receipt of any Condemnation Awards or Insurance Proceeds, Borrower shall deliver such awards or proceeds to Lender in the form in which they were received, together with any endorsements or documents that may be necessary to effectively negotiate or transfer the same to Lender. Borrower agrees to execute and deliver from time to time, upon the request of Lender, such further instruments or documents as may be requested by Lender to confirm the grant and assignment to Lender of any Condemnation Awards or Insurance Proceeds.

Section 4.11    Utilization of Net Proceeds.

(a)Net Proceeds must be utilized either for payment of the Obligations or for the restoration of the Property. Net Proceeds may be utilized for the restoration of the Property only if no Event of Default shall exist and only if in the reasonable judgment of Lender (i) there has been no material adverse change in the financial viability of the construction or operation of the Improvements, (ii) the Net Proceeds, together with other funds deposited with Lender for that purpose, are sufficient to pay the cost of the restoration pursuant to a budget and plans and specifications approved by Lender in its reasonable discretion, and (iii) the restoration can be completed prior to the final maturity of the Loan. Otherwise, Net Proceeds shall be

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utilized for payment of the Obligations. To the extent Net Proceeds are utilized for the payment of the Obligations, said payments shall be subject to the payment of the applicable Exit Fee as set forth in the Note.

(b)If Net Proceeds are to be utilized for the restoration of the Property, the Net Proceeds, together with any other funds deposited with Lender for that purpose, must be deposited in an interest- bearing account with Lender, which account will be assigned to Lender as additional security for the Loan. The account will be opened, managed and controlled in a manner consistent with the Funding Account. Disbursements of funds from the account will be made in a manner consistent with, and subject to, the requirements for the closing and funding of the Loan and the terms of this Agreement regarding the disbursement of Loan proceeds.

Section 4.12    Management.

Borrower at all times shall provide for the competent and responsible management and operation of the Property. At all times, Borrower shall cause the Property to be managed by an Approved Manager. Any management contract or contracts affecting the Property must be approved in writing by Lender prior to the execution of the same, such approval not to be unreasonably withheld, conditioned or delayed.

Section 4.13    Books and Records; Financial Statements; Tax Returns.

Borrower, Guarantor and each Grantor, as applicable, shall provide or cause to be provided to Lender all of the following:

4.13.1Financial statements of Grantor for each fiscal year of such reporting party, as soon as reasonably practicable and in any event within one hundred twenty (120) days after the close of each fiscal year.

4.13.2Financial statements of each Guarantor for each fiscal year of such reporting party, as soon as reasonably practicable and in any event within one hundred fifty (150) days after the close of each fiscal year.

4.13.3After the Improvements are placed in operation, for each calendar quarter (and for the fiscal year through the end of that quarter) property operating statements which include all income and expenses in connection with the Property. Items provided under this paragraph shall be in form and detail satisfactory to Lender.

4.13.5Copies of filed income tax returns (United States and Canada, if applicable) and any extensions thereof, of each Grantor and Guarantor for each taxable year (with all K-1s and other forms and supporting schedules attached if an individual), within thirty (30) days after filing the same.

4.13.6From time to time, upon Lender’s request, such additional information, reports and statements respecting the Property and the Improvements and Collateral, as Lender may reasonably request.

Grantor will keep and maintain full and accurate books and records administered in accordance with sound accounting principles, consistently applied, showing in detail the earnings and expenses of the Property and the operation thereof. All financial statements shall be in form and detail reasonably satisfactory to Lender and shall contain or be attached to the signed and dated written certification of the reporting party in form specified by Lender to certify that the financial statements are furnished to Lender in connection with the extension of credit by Lender and constitute a true and correct statement in all

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material respects of the reporting party's financial position. All certifications and signatures on behalf of corporations, partnerships, limited liability companies or other entities shall be by a representative of the reporting party reasonably satisfactory to Lender. All financial statements for a reporting party who is an individual shall be on Lender's then-current personal financial statement form or in another form reasonably satisfactory to Lender. All fiscal year-end Financial Statements of Grantor and each entity Guarantor may be prepared by the applicable reporting party and shall include a minimum of a balance sheet, income statement, and statement of cash flow. All quarterly Financial Statements may be prepared by the applicable reporting party and shall include a minimum of a balance sheet, income statement, and statement of cash flow. Grantor shall provide, upon Lender's request, convenient facilities for the audit and verification of any such statement. Additionally, Grantor will provide Lender at Grantor's expense with all evidence that Lender may from time to time reasonably request as to compliance with all provisions of the Loan Documents, but in no event shall such request be made by Lender more than once each quarter unless such information suggests, in Lender’s discretion, that Grantor is not in compliant with the Loan Documents. Grantor shall promptly notify Lender of any event or condition that could reasonably be expected to have a material adverse change in the financial condition of Grantor or Guarantor, the value of the Property or in the construction progress of the Improvements.

Section 4.14    Estoppel Certificates.

Within ten (10) days after any request by Lender or a proposed assignee or purchaser of the Loan or any interest therein, Borrower shall certify in writing to Lender, or to such proposed assignee or purchaser, the then unpaid balance of the Loan and whether Borrower claims any right of defense or setoff to the payment or performance of any of the Obligations, and if Borrower claims any such right of defense or setoff, Borrower shall give a detailed written description of such claimed right.

Section 4.15    Taxes.

Grantor shall pay and discharge all Taxes prior to the date on which penalties are attached thereto unless and to the extent only that such Taxes are contested in accordance with the terms of the Security Instrument.

Section 4.16    Lender's Rights to Pay and Perform.

If, following the occurrence of an Event of Default that continues beyond expiration of any applicable notice and/or cure period, Borrower fails to promptly pay or perform any of the Obligations within any applicable grace or cure periods, Lender, and without waiving or releasing any Obligation or Event of Default, may (but shall be under no obligation to) at any time thereafter make such payment or perform such act for the account and at the expense of Borrower. At the option of Lender, following the occurrence of an Event of Default that continues beyond expiration of any applicable notice and/or cure period, Lender may (i) enter upon the Property for that purpose and take all action thereon as Lender considers necessary or appropriate; and/or apply any undisbursed Loan proceeds to the satisfaction of the conditions of the Loan Documents, irrespective of the allocation of such Loan proceeds in the budget. Without limiting the generality of the foregoing, Lender may increase the Loan Amount to pay directly from the proceeds of the Loan all interest bills rendered by Lender in connection with the Loan, and following the occurrence of an Event of Default that continues beyond expiration of any applicable notice and/or cure period, may make additional advances on the Loan directly to the General Contractor, the title insurance company, any subcontractor or material supplier, or to any of them jointly. The execution hereof by Borrower shall, and hereby does, constitute an irrevocable authorization so to advance the proceeds of the Loan. No further direction or authorization from Borrower shall be necessary to warrant such direct

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advances. Each advance shall be secured by the Security Instruments and shall satisfy the obligations of Lender hereunder to the extent of the amount of the advance. Lender has the right but is under no obligation to make such additional advances or increase the Loan Amount.

Section 4.17    Reimbursement; Interest.

If Lender shall incur any Expenses or pay any Claims by reason of the Loan or the rights and remedies provided under the Loan Documents (regardless of whether or not any of the Loan Documents expressly provide for an indemnification by Borrower against such Claims), Lender's payment of such Expenses and Claims shall constitute advances to Borrower which shall be paid by Borrower to Lender on demand, together with interest thereon from the date incurred until paid in full at the rate of interest then applicable to the Loan under the terms of the Note. Each advance arising out of the Environmental Agreement shall not be secured by the Security Instrument. All other advances shall be secured by the Security Instrument and the other Loan Documents as fully as if made to Borrower, regardless of the disposition thereof by the party or parties to whom such advance is made. Notwithstanding the foregoing, however, in any action or proceeding to foreclose the Security Instruments or to recover or collect the Obligations, the provisions of Law governing the recovery of costs, disbursements and allowances shall prevail unaffected by this Section.

Section 4.18    Notification by Borrower.

Borrower will promptly give Notice to Lender of the occurrence of any Event of Default hereunder or under any of the other Loan Documents. Borrower will also promptly give Notice to Lender of any claim of a default by Borrower, or any claim by Borrower of a default by any other party, under the Architect's Contract, the Construction Contract or any Lease.

Section 4.19    Indemnification by Borrower.

Borrower agrees to indemnify Lender and to hold Lender harmless from and against, and to defend Lender by counsel approved by Lender against, any and all Claims directly or indirectly arising out of or resulting from any transaction, act, omission, event or circumstance in any way connected with the Property or the Loan, including any Claim arising out of or resulting from (a) Construction of the Improvements, including any defective workmanship or materials; (b) any failure by Borrower to comply with the requirements of any Laws or to comply in all material ways with any agreement that applies or pertains to the Property, including any agreement with a broker or “finder” in connection with the Loan or other financing of the Property; (c) any other Event of Default hereunder or under any of the other Loan Documents that continues beyond expiration of any applicable notice and/or cure period; or (d) any assertion or allegation that Lender is liable for any act or omission of Borrower or any other Person in connection with the ownership, development, financing, operation or sale of the Property; provided,however, that Borrower shall not be obligated to indemnify Lender with respect to any Claim arising solely from the gross negligence or willful misconduct of Lender. The agreements and indemnifications contained in this Section shall apply to Claims arising both before and after the repayment of the Loan and shall survive the repayment of the Loan, any foreclosure or deed, assignment or conveyance in lieu thereof and any other action by Lender to enforce the rights and remedies of Lender hereunder or under the other Loan Documents.

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Section 4.20    Fees and Expenses.

Borrower shall pay all fees, charges, costs and expenses required to satisfy the conditions of the Loan Documents. Without limitation of the foregoing, Borrower will pay, when due, and if paid by Lender will reimburse Lender on demand for, all fees and expenses of the Construction Inspector, the title insurer, environmental engineers, appraisers, surveyors and Lender's counsel in connection with the closing, administration, modification or any “workout” of the Loan, or the enforcement of Lender's rights and remedies under any of the Loan Documents.

Section 4.21    Appraisals.

Lender may obtain from time to time an appraisal of all or any part of the Property and Collateral, prepared in accordance with written instructions from Lender, from a third-party appraiser reasonably satisfactory to, and engaged directly by, Lender. The cost of one such appraisal, including any costs for internal review thereof, obtained by Lender in each calendar year and the cost of each such appraisal obtained by Lender following the occurrence of an Event of Default that continues beyond expiration of any applicable notice and/or cure period shall be borne by such Borrower and shall be paid by such Borrower promptly following demand.

Section 4.22    Leasing.

Borrower agrees that it shall not allow all or any portion of the Property to be occupied pursuant a Lease or otherwise without first receiving Lender’s written consent, such consent not to be unreasonably , conditioned or delayed. In the event that Lender consents to Borrower’s leasing of said Property, Borrower agrees to fully comply with all material terms, conditions and provisions of such Leases.

Section 4.23    Income from Property.

Borrower shall first apply any and all income from the Property to pay any and all amounts due under the Loan Documents and any costs and expenses associated with the ownership and maintenance of the Property and Improvements to protect Lender’s security interest therein. Upon the occurrence and continuance of an Event of Default, no income from the Property shall be distributed or paid to any member, partner, shareholder, or, if Borrower is a trust, beneficiary or trustee, unless and until all such costs and expense which are due under the Loan Documents have been paid in full.

Section 4.24    Board Composition.

Borrower agrees that for so long as any Obligations remain outstanding under the Loan Documents and this Agreement, the Lender Director shall be so designated as a director on the Board of Directors of 4Front.

Section 4.25    Good Repair.

Grantor agrees to keep the Collateral in good repair and not commit any waste and to defend the title to the Collateral for the benefit of the Lender against all claims and demands;

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Article V Negative Covenants.

Each Borrower and Grantor covenants, on behalf of itself and each other Borrower and Grantor hereunder, as of the closing of the Loan and until such time as all Obligations shall be indefeasibly paid and performed in full, the following:

Section 5.1 Conditional Sales.

Except for copiers, scanners, printers, telephone systems and other general office equipment, Borrower shall not incorporate in the Improvements any property acquired under a conditional sales contract or lease or as to which the vendor retains title or a security interest, without the prior written consent of Lender.

Section 5.2 Changes to Plans and Specifications.

Borrower shall not make or permit any material changes in the Plans and Specifications, including any such changes that alter, diminish or add to the work to be performed or change the design of the Improvements in any material way, without the prior written consent of Lender and under such reasonable conditions as Lender may establish. Lender's prior written consent shall not be required, however, as to any change order which (a) individually does not cause the fixed or guaranteed maximum price of the Construction Contract to be increased or decreased by more than Three Hundred Thousand Dollars ($300,000) and, when added to all previous change orders, does not cause such price to be increased or decreased by more than Five Hundred Thousand Dollars ($500,000) in the aggregate, (b) does not result in a material change to the design of the Improvements, and (c) has been approved in writing by the Architect, and any Governmental Authority, tenant or other party whose approval is required.

Section 5.3 Insurance Policies and Bonds.

Borrower shall not do or permit to be done anything that would affect the coverage or indemnities provided for pursuant to the provisions of any insurance policy, performance bond, labor and material payment bond or any other bond given in connection with the Construction of the Improvements.

Section 5.4 Commingling.

Grantor shall not commingle the funds and other assets of Grantor with those of any Affiliate or any other Person.

Section 5.5 No Additional Debt.

Except as may otherwise be approved in advance in writing by Lender, Grantor shall not incur any additional debt, secured or unsecured, direct or contingent (including guaranteeing any obligation), other than (a) the Loan and (b) advances or trade debt or accrued expenses incurred in the ordinary course of business and (c) the existing debt of 4Front Ventures in the original principal amount of approximately

$5,000,0000.00.

No other debt may be secured by the Property or Collateral, whether senior, subordinate or pari

passu.

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Section 5.6 Sanctions.

Borrower shall not, directly or indirectly, use the proceeds of the Loan, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other Person, to fund the activities of or business with any Person, or in any country or territory, that, at the time of such funding, is the subject of Sanctions, or in any other manner that will result in a violation by any Person (including any Person participating in the transaction being financed by the Loan, whether as underwriter, advisor, investor or otherwise) of Sanctions.

Section 5.7 No Sale without Lender Consent.

Grantor shall not sell, exchange, transfer, assign, lease or otherwise dispose of or deal in any way with Collateral or release, surrender or abandon possession of Collateral or move or transfer Collateral, or enter into any agreement or undertaking to do any of the foregoing except as may be permitted in this Agreement or in the ordinary course of Grantor’s business, and any Proceeds therefrom shall be held in trust for the Lender.

Section 5.8 No additional Liens.

Grantor shall not create or permit to exist any encumbrance against any of the Collateral except the Security Interest created by this Agreement or approved by Lender in writing.

Section 5.9 No Name Change; Jurisdiction Change.

Grantor shall not to change its name, its principal place of business, its chief executive office, registered office, records office, head office, jurisdiction of formation or the location of any of the Collateral without giving 30 days’ prior written notice thereof to the Lender.

Article VI Events of Default.

The occurrence or happening, from time to time, of any one or more of the following shall constitute an “Event of Default” under this Agreement:

Section 6.1 Payment Default.

Any Borrower fails to pay any Obligation under this Agreement within fifteen (15) days following the date when due, whether on the scheduled due date or upon acceleration, maturity or otherwise; provided, however, the foregoing fifteen (15) day grace period shall not apply to amounts due at maturity.

Section 6.2 Default Under Other Loan Documents.

An Event of Default (as defined therein) occurs under the Note or the Security Instruments or any other Loan Document, or any Grantor or any Guarantor fails to promptly pay, perform, observe or comply with any term, obligation or agreement contained in any of the Loan Documents (within any applicable grace or cure period).

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Section 6.3 Accuracy of Information; Representations and Warranties.

Any information contained in any financial statement, schedule, report or any other document delivered by a Grantor or Guarantor to Lender in connection with the Loan proves at any time not to be true and accurate in all material respects, or any Grantor, Guarantor or any other Person shall have failed to state any material fact or any fact necessary to make such information not misleading, or any representation or warranty contained in this Agreement or in any other Loan Document or other document, certificate or opinion delivered to Lender in connection with the Loan, proves at any time to be incorrect or misleading in any material respect either on the date when made or on the date when reaffirmed pursuant to the terms of this Agreement.

Section 6.4 Deposits.

Any Borrower fails to deposit funds with Lender, in the amount requested by Lender, pursuant to the provisions of Section 4.3 or Section 4.11, within ten (10) days from the effective date of a Notice from Lender requesting such deposit, or any Borrower fails to deliver to Lender any Condemnation Awards or Insurance Proceeds within ten (10) days after such Borrower's receipt thereof.

Section 6.5 Insurance Obligations.

Any Grantor fails to promptly perform or comply with any of the covenants contained in the Loan Documents with respect to maintaining insurance, including the covenants contained in Section 4.9.

Section 6.6 Other Obligations.

Any Grantor fails to promptly perform or comply with any of the Obligations set forth in this Agreement (other than those expressly described in other Sections of this Article), and such failure continues uncured for a period of thirty (30) days after Notice from Lender to such Grantor, unless (a) such failure, by its nature, is not capable of being cured within such period, and (b) within such period, such Grantor commences to cure such failure and thereafter diligently prosecutes the cure thereof, and (c) such Grantor causes such failure to be cured no later than ninety (90) days after the date of such Notice from Lender.

Section 6.7 Progress of Construction.

Construction of the Improvements is abandoned or is discontinued for a period of more than thirty

(30) consecutive days other than as a result of Force Majeure and weather-related delays.

Section 6.8 Damage to Improvements.

The Improvements are substantially damaged or destroyed by fire or other casualty and Lender determines in its reasonable discretion that the Improvements cannot be restored and completed in accordance with the terms and provisions of this Agreement and the Security Instrument.

Section 6.9 Lapse of Permits or Approvals.

Any permit, license, certificate or approval that any Borrower is required to obtain with respect to the construction, operation, development, leasing or maintenance of the Improvements or the Property lapses or ceases to be in full force and effect.

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Section 6.10    Intentionally Omitted.

Section 6.11    Mechanic's Lien.

A lien for the performance of work or the supply of materials filed against the Property, or any stop notice served on any Borrower, the General Contractor or Lender, remains unsatisfied or unbonded for a period of thirty (30) days after the date of filing or service.

Section 6.12    Survey Matters.

Any Survey required by Lender during the period of construction shows any matter which in Lender's reasonable judgment would materially interfere with the Construction of the Improvements or the operation or use of the Property, and such matter is not removed within a period of thirty (30) days after Notice thereof by Lender to such Borrower.

Section 6.13    General Contractor Default.

The General Contractor defaults under the Construction Contract in a manner which Lender deems to be material, and, unless otherwise agreed in writing by Lender, any Borrower fails promptly to exercise its rights and remedies under the Construction Contract with respect to such default.

Section 6.14    Intentionally Omitted.

Section 6.15    Bankruptcy.

Any Grantor or any Guarantor files a bankruptcy petition or makes a general assignment for the benefit of creditors, or a bankruptcy petition is filed against any Grantor, or any Guarantor and such involuntary bankruptcy petition continues undismissed for a period of ninety (90) days after the filing thereof.

Section 6.16    Appointment of Receiver, Trustee, Liquidator.

Any Grantor or any Guarantor applies for or consents in writing to the appointment of a receiver, trustee or liquidator of any Borrower, any Guarantor, the Property, or all or substantially all of the other assets of any Grantor or any Guarantor, or an order, judgment or decree is entered by any court of competent jurisdiction on the application of a creditor appointing a receiver, trustee or liquidator of any Grantor any Guarantor, the Property, or all or substantially all of the other assets of Grantor or any Guarantor.

Section 6.17    Inability to Pay Debts.

Any Borrower or any Guarantor becomes unable or admits in writing its inability or fails generally to pay its debts as they become due.

Section 6.18    Judgment.

A final nonappealable judgment for the payment of money involving more than $250,000.00 is entered against any Grantor or any Guarantor, and such Grantor or such Guarantor fails to discharge the same, or fails to cause it to be discharged or bonded off to Lender's satisfaction, within sixty (60) days from the date of the entry of such judgment.

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Section 6.19    Dissolution; Change in Business Status.

Unless the written consent of Lender is previously obtained, all or substantially all of the business assets of any Grantor or any Guarantor are sold, any Grantor or any Guarantor is dissolved, or there occurs any change in the form of business entity through which any Grantor, or any Guarantor presently conducts its business or any merger or consolidation involving any Grantor, or any Guarantor.

Section 6.20    Intentionally Omitted.

Section 6.21    Intentionally Omitted.

Section 6.22    Material Adverse Change.

In the reasonable opinion of Lender, the prospect of payment or performance of all or any part of the Obligations has been impaired because of a material adverse change in the financial condition, results of operations, business or properties of any Grantor, any Guarantor or any other Person liable for the payment or performance of any of the Obligations.

Section 6.23    Forfeiture.

A judicial or nonjudicial forfeiture or seizure proceeding is commenced by a Governmental Authority and remains pending with respect to any Property or any part thereof, on the grounds that such Property or any part thereof had been used to commit or facilitate the commission of a criminal offense by any Person pursuant to any Law, regardless of whether or not the Property or the Security Instruments shall become subject to forfeiture or seizure in connection therewith.

Section 6.24    Guaranty

A default or failure of Guarantor to comply with the provisions set forth in the Guaranty.

Article VII Remedies on Default.

Section 7.1 Remedies on Default.

Upon the happening of any Event of Default, Lender shall have the right, in addition to any other rights or remedies available to Lender under the Security Instruments or any of the other Loan Documents or under applicable Law, to exercise any one or more of the following rights and remedies:

(a)Lender may terminate any obligation to advance any further principal of the Loan pursuant to this Agreement by Notice to Borrowers.

(b)Lender may accelerate all of Borrowers’ Obligations under the Loan Documents, whether or not matured and regardless of the adequacy of any other collateral securing the Loan, whereupon such Obligations shall become immediately due and payable, without notice of default, acceleration or intention to accelerate, presentment or demand for payment, protest or notice of nonpayment or dishonor, or notices or demands of any kind or character except as otherwise set forth in this Agreement (all of which are hereby waived by Borrowers).

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(c)Lender may apply to any court of competent jurisdiction for, and obtain appointment without bond of, a receiver for any and all Property and Collateral. Grantor consents to such rights and such appointment and hereby waives any objection such Grantor may have thereto or the right to have a bond or other security posted by the Lender.

(d)Lender may set off the amounts due to Lender under the Loan Documents, whether or not matured and regardless of the adequacy of any other collateral securing the Loan, against any and all accounts, credits, money, securities or other property of Borrowers now or hereafter on deposit with, held by or in the possession of Lender to the credit or for the account of Borrowers, without notice to or the consent of Borrowers.

(e)Lender may enter into possession of any and all Property and perform any and all work and labor necessary to complete the Construction of the Improvements (whether or not in accordance with the Plans and Specifications) and to employ watchmen to protect such Property and the Improvements. All sums expended by Lender for such purposes shall be deemed to have been advanced to Borrowers under the Note and shall be secured by the Security Instruments. For this purpose, each Borrower hereby constitutes and appoints Lender its true and lawful attorney-in-fact with full power of substitution, which power is coupled with an interest and cannot be revoked, to complete the work in the name of such Borrower, and hereby empowers said attorney or attorneys, in the name of any Borrower or Lender:

(i)To use any funds of Borrowers including any balance which may be held by Lender and any funds which may remain unadvanced hereunder for the purpose of completing the Construction of the Improvements, whether or not in the manner called for in the Plans and Specifications;

(ii)To make such additions and changes and corrections to the Plans and Specifications as shall be necessary or desirable in the commercially reasonable judgment of Lender to complete the Construction of the Improvements;

(iii)To employ such contractors, subcontractors, agents, architects and inspectors as shall be necessary or desirable for said purpose;

(iv)To pay, settle or compromise all existing bills and claims which are or may be liens against any Property, or may be necessary or desirable for the completion of the work or the clearance of title to any Property;

(v)To execute all applications and certificates which may be required in the name of

any Borrower;

(vii)To file for record, at Borrowers’ cost and expense and in any Borrower's name, any notices of completion, notices of cessation of labor, or any other notices that Lender in its sole and absolute discretion may consider necessary or desirable to protect its security;

(viii)To prosecute and defend all actions or proceedings in connection with the Construction of the Improvements and to take such actions and to require such performance as Lender may deem reasonably necessary; and

(ix)To do any and every act with respect to the Construction of the Improvements which any Borrower may do in its own behalf.

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(f)Lender may in such circumstances forthwith collect, receive, appropriate and realize upon the Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give option or options to purchase, or otherwise dispose of and deliver the Collateral or any part thereof (or contract to do any of the foregoing), in one or more parcels at public or private sale or sales, at any exchange, broker’s board or office of any Lender or elsewhere upon such commercially reasonable terms and conditions as it may deem advisable and at such prices as it may deem best, for cash or on credit, or for future delivery, without assumption of any credit risk. Lender shall have the right upon any such public sale or sales, and, to the extent permitted by law, upon any such private sale or sales, to purchase the whole or any part of the Collateral so sold, free of any right or equity of redemption in any Grantor, which right or equity is hereby waived and released. Each Grantor further agrees, at the Lender’s request, to assemble the Collateral, or any part thereof, and make it available to the Lender at places that the Lender shall reasonably select, whether at such Grantor’s premises or elsewhere. Lender shall have the right to enter Grantor’s premises to take possession of the Collateral by any method permitted by law and to collect any and all proceeds and rents, income, and profits received in connection with the Collateral.

(h) Lender may exercise any and all other rights and remedies under this Agreement, the Loan Documents or at Law (including the Uniform Commercial Code), equity or otherwise.

Without limitation of the foregoing, upon the occurrence of an actual or deemed entry of an order for relief with respect to any Borrower under the Bankruptcy Code (Title 11 of the United States Code, as in effect from time to time), any obligation of Lender to make advances shall automatically terminate, and the unpaid principal amount of the Loan outstanding and all interest and other amounts payable hereunder and under the Note and other Loan Documents shall automatically become due and payable, in each case without further act of Lender.

Section 7.2 No Release or Waiver; Remedies Cumulative and Concurrent.

Borrowers and Grantors shall not be relieved of any Obligation by reason of the failure of Lender to comply with any request of a Borrower or Grantor or of any other Person to take action to foreclose on the Property or Collateral under the Security Instruments or otherwise to enforce any provision of the Loan Documents, or by reason of the release, regardless of consideration, of all or any part of any Property. No delay or omission of Lender to exercise any right, power or remedy accruing upon the happening of an Event of Default shall impair any such right, power or remedy or shall be construed to be a waiver of any such Event of Default or any acquiescence therein. No delay or omission on the part of Lender to exercise any option for acceleration of the maturity of the Obligations, or for foreclosure of the Security Instruments following any Event of Default as aforesaid, or any other option granted to Lender hereunder in any one or more instances, or the acceptance by Lender of any partial payment on account of the Obligations shall constitute a waiver of any such Event of Default and each such option shall remain continuously in full force and effect. No remedy herein conferred upon or reserved to Lender is intended to be exclusive of any other remedies provided for in the Loan Documents, and each and every such remedy shall be cumulative, and shall be in addition to every other remedy given hereunder, or under the Loan Documents, or now or hereafter existing at Law or in equity or by statute. Every right, power and remedy given by the Loan Documents to Lender shall be concurrent and may be pursued separately, successively or together against any Borrower or any Property or any part thereof, and every right, power and remedy given by the Loan Documents may be exercised from time to time as often as may be deemed expedient by Lender. All notice and cure periods provided in this Agreement or in any Loan Document shall run concurrently with any notice or cure periods provided by Law. To the extent permitted by Law, each Grantor waives all claims, damages and demands it may acquire against any Lender arising out of the exercise by them of any rights hereunder. If any notice of a proposed sale or other disposition of Collateral shall be required by law, such

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notice shall be deemed reasonable and proper if given at least ten (10) days before such sale or other disposition.

Article VIII Miscellaneous.

Section 8.1 Further Assurances; Authorization to File Documents.

At any time, and from time to time, upon reasonable request by Lender, Borrowers and Grantors will, at Borrowers’ expense, (a) correct any defect, error or omission which may be discovered in the form or content of any of the Loan Documents, and (b) make, execute, deliver and record, or cause to be made, executed, delivered and recorded, any and all further instruments, certificates and other documents as may, in the opinion of Lender, be reasonably necessary or desirable in order to complete, perfect or continue and preserve the lien of the Security Instruments. Upon any failure by a Borrower or Grantor to do so, Lender may make, execute and record any and all such instruments, certificates and other documents for and in the name of such Borrower or Grantor, all at the sole expense of Borrowers, and Borrowers and Grantors hereby appoints Lender the agent and attorney-in-fact of Borrowers and Grantors to do so, this appointment being coupled with an interest and being irrevocable. Without limitation of the foregoing, Borrowers and Grantors irrevocably authorize Lender at any time and from time to time to file any initial financing statements, amendments thereto and continuation statements deemed necessary or desirable by Lender to establish or maintain the validity, perfection and priority of the security interests granted in the Security Instruments or hereunder, and each Borrower and Grantor ratifies any such filings made by Lender prior to the date hereof. In addition, at any time, and from time to time, upon request by Lender, Borrowers and Grantors will, at Borrowers’ expense, provide any and all further instruments, certificates and other documents as may, in the opinion of Lender, be reasonably necessary or desirable in order to verify Borrowers’ and Grantors’ identity and background in a manner reasonably satisfactory to Lender.

Section 8.2 No Warranty by Lender.

By accepting or approving anything required to be observed, performed or fulfilled by Borrowers or to be given to Lender pursuant to this Agreement, including any certificate, Survey, receipt, appraisal or insurance policy, Lender shall not be deemed to have warranted or represented the sufficiency, legality, effectiveness or legal effect of the same, or of any term, provision or condition thereof and any such acceptance or approval thereof shall not be or constitute any warranty or representation with respect thereto by Lender.

Section 8.3 Standard of Conduct of Lender.

Nothing contained in this Agreement or any other Loan Document shall limit the right of Lender to exercise its business judgment or to act, in the context of the granting or withholding of any advance or consent under this Agreement or any other Loan Document, in a subjective manner, whether or not objectively reasonable under the circumstances, so long as Lender's exercise of its business judgment or action is made or undertaken in good faith. Borrowers and Lender intend by the foregoing to set forth and affirm their entire understanding with respect to the standard pursuant to which Lender's duties and obligations are to be judged and the parameters within which Lender's discretion may be exercised hereunder and under the other Loan Documents. As used herein, “good faith” means honesty in fact in the conduct and transaction concerned.

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Section 8.4 No Partnership.

Nothing contained in this Agreement shall be construed in a manner to create any relationship between Borrowers and Lender other than the relationship of borrower and lender and Borrowers and Lender shall not be considered partners or co-venturers for any purpose on account of this Agreement.

Section 8.5 Severability.

In the event any one or more of the provisions of this Agreement or any of the other Loan Documents shall for any reason be held to be invalid, illegal or unenforceable, in whole or in part or in any other respect, or in the event any one or more of the provisions of any of the Loan Documents operates or would prospectively operate to invalidate this Agreement or any of the other Loan Documents, then and in either of those events, at the option of Lender, such provision or provisions only shall be deemed null and void and shall not affect the validity of the remaining Obligations, and the remaining provisions of the Loan Documents shall remain operative and in full force and effect and shall in no way be affected, prejudiced or disturbed thereby.

Section 8.6 Authorized Signers.

Lender is authorized to rely upon the continuing authority of the Authorized Signers to bind any Borrower and Grantor with respect to all matters pertaining to the Loan and the Loan Documents. Such authorization may be changed only upon written notice addressed to Lender accompanied by evidence, reasonably satisfactory to Lender, of the authority of the Person giving such notice. Such notice shall be effective not sooner than five (5) Business Days (as defined in the Note) following receipt thereof by Lender.

Section 8.7 Notices.

All Notices required or which any party desires to give hereunder or under any other Loan Document shall be in writing and, unless otherwise specifically provided in such other Loan Document, shall be deemed sufficiently given or furnished if delivered by personal delivery, by nationally recognized overnight courier service or by certified United States mail, postage prepaid, addressed to the party to whom directed at the applicable address set forth below (unless changed by similar notice in writing given by the particular party whose address is to be changed), by facsimile or by e-mail to the addresses set forth below. Any Notice shall be deemed to have been given either at the time of personal delivery or, in the case of courier or mail, as of the date of first attempted delivery at the address and in the manner provided herein, or, in the case of facsimile or e-mail, upon receipt; provided that service of a Notice required by any applicable statute shall be considered complete when the requirements of that statute are met. Notwithstanding the foregoing, no notice of change of address shall be effective except upon actual receipt. This Section shall not be construed in any way to affect or impair any waiver of notice or demand provided in this Agreement or in any other Loan Document or to require giving of notice or demand to or upon any Person in any situation or for any reason.

The address and fax number of Borrowers and Grantors are:

Linchpin Investors, LLC c/o 4Front Holdings LLC

5060 N. 40th Street, Suite 120

Phoenix, Arizona 85018

Attention: Leo Gontmakher, Member

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Email:

With a copy to:

Snell & Wilmer

Attn: Jeffrey A. Scudder 400 E Van Buren St., #1900

Phoenix, AZ 8500-2202 Email: jscudder@swlaw.com

The address and fax number of Lender are: LI Lending, LLC,

13037 NE Bel-Red Rd Suite 150,

Bellevue, WA 98005 Attention: Roman Tkachenko

Email: roman@directsourceseafood.com

With a copy to:

With courtesy copies to, which shall not constitute notice,

Peterson Russell Kelly Livengood PLLC Attn: David C. Kelly and Patrick M. Moran 10900 NE 4th Street, Suite 1850

Bellevue, Washington 98004

Fax No. (425) 451-0714

Email: pmoran@prklaw.com; dkelly@prklaw.com

Section 8.8 Permitted Successors and Assigns; Disclosure of Information.

(a)Each and every one of the covenants, terms, provisions and conditions of this Agreement and the Loan Documents shall apply to, bind and inure to the benefit of Borrowers and Grantors, its successors and those assigns of Borrowers and Grantors consented to in writing by Lender, and shall apply to, bind and inure to the benefit of Lender and the endorsees, transferees, successors and assigns of Lender, and all Persons claiming under or through any of them.

(b)Each Borrower agrees not to transfer, assign, pledge or hypothecate any right or interest in any payment or advance due pursuant to this Agreement, or any of the other benefits of this Agreement, without the prior written consent of Lender, which consent may be withheld by Lender in its sole and absolute discretion. Any such transfer, assignment, pledge or hypothecation made or attempted by any Borrower without the prior written consent of Lender shall be void and of no effect. No consent by Lender to an assignment shall be deemed to be a waiver of the requirement of prior written consent by Lender with respect to each and every further assignment and as a condition precedent to the effectiveness of such assignment.

(c)Upon at least fifteen (15) days prior written notice to Borrower, Lender may sell or offer to sell the Loan or interests therein to one or more assignees or participants. Upon receipt of such notice, Borrowers shall execute, acknowledge and deliver any and all instruments reasonably requested by Lender in connection therewith, and to the extent, if any, specified in any such assignment or participation, such

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assignee(s) or participant(s) shall have the same rights and benefits with respect to the Loan Documents as such Person(s) would have if such Person(s) were Lender hereunder. Lender may disseminate any information it now has or hereafter obtains pertaining to the Loan, including any security for the Loan, any credit or other information on any Property (including environmental reports and assessments), any Borrower, any of Borrower's principals or Guarantor, to any actual or prospective assignee or participant, to any regulatory body having jurisdiction over Lender, or to any other party as necessary or appropriate in Lender's reasonable judgment.

None of the terms or provisions of this Agreement may be changed, waived, modified, discharged or terminated except by instrument in writing executed by the party or parties against whom enforcement of the change, waiver, modification, discharge or termination is asserted. None of the terms or provisions of this Agreement shall be deemed to have been abrogated or waived by reason of any failure or failures to enforce the same.

Section 8.9 Third Parties; Benefit.

All conditions to the obligation of Lender to make advances hereunder are imposed solely and exclusively for the benefit of Lender and its assigns and no other Persons shall have standing to require satisfaction of such conditions in accordance with their terms or be entitled to assume that Lender will refuse to make advances in the absence of strict compliance with any or all thereof and no other Person shall, under any circumstances, be deemed to be the beneficiary of such conditions, any or all of which may be freely waived in whole or in part by Lender at any time in the sole and absolute exercise of its discretion. The terms and provisions of this Agreement are for the benefit of the parties hereto and, except as herein specifically provided, no other Person shall have any right or cause of action on account thereof.

Section 8.10    Rules of Construction.

The words “hereof,” “herein,” “hereunder,” “hereto,” and other words of similar import refer to this Agreement in its entirety. The terms “agree” and “agreements” mean and include “covenant” and “covenants.” The words “include” and “including” shall be interpreted as if followed by the words “withoutlimitation.” The captions and headings contained in this Agreement are included herein for convenience of reference only and shall not be considered a part hereof and are not in any way intended to define, limit or enlarge the terms hereof. All references (a) made in the neuter, masculine or feminine gender shall be deemed to have been made in all such genders, (b) made in the singular or plural number shall be deemed to have been made, respectively, in the plural or singular number as well, (c) to the Loan Documents are to the same as extended, amended, restated, supplemented or otherwise modified from time to time unless expressly indicated otherwise, (d) to the Land, the Improvements or the Property shall mean all or any portion of each of the foregoing owned by or leased by a Borrower, respectively, and (e) to Articles, Sections and Schedules are to the respective Articles, Sections and Schedules contained in this Agreement unless expressly indicated otherwise.

Section 8.11    Counterparts; Electronic Signatures.

This Agreement may be executed in any number of counterparts, each of which shall be considered an original for all purposes; provided, however, that all such counterparts shall together constitute one and the same instrument. An electronic transmission of this Agreement bearing any person’s signature or an electronic signature shall have the same force and effect as the original of this Agreement bearing such person’s signature or an original signature, as applicable.

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Section 8.12    Signs; Publicity.

At Lender's request, Borrowers shall place a sign at a location on any Property reasonably satisfactory to Lender, which sign shall recite, among other things, that Lender is financing the Construction of the Improvements. Each Borrower expressly authorizes Lender to prepare and to furnish to the news media for publication from time to time news releases with respect to the Property, specifically to include releases detailing Lender's involvement with the financing of the Property.

Section 8.13    Governing Law.

This Agreement shall be governed by and construed, interpreted and enforced in accordance with the Laws of the State.

Section 8.14    Time of Essence.

Time shall be of the essence for each and every provision of this Agreement of which time is an element.

Section 8.15    Electronic Communications.

Lender and Borrowers and Grantors agree that certain data related to the Loan (including confidential information, documents, applications and reports) may be transmitted electronically, including transmission over the Internet. This data may be transmitted to, received from or circulated among agents and representatives of Borrowers, Grantors and/or Lender and their Affiliates and other Persons involved with the subject matter of this Agreement.

Section 8.16    Forum.

Borrowers and Grantors hereby irrevocably submits generally and unconditionally for itself and in respect of its property to the non-exclusive jurisdiction of any state court or any United States federal court sitting in the State specified in the governing law section of this Agreement and to the non-exclusive jurisdiction of any state court or any United States federal court sitting in the state in which any of the Property is located, over any Dispute. Each Borrower and Grantor hereby irrevocably waives, to the fullest extent permitted by Law, any objection that such Borrower may now or hereafter have to the laying of venue in any such court and any claim that any such court is an inconvenient forum. Each Borrower and Grantor hereby agrees and consents that, in addition to any methods of service of process provided for under applicable Law, all service of process in any such suit, action or proceeding in any state court or any United States federal court sitting in the State specified in the governing law section of this Agreement or in which any of the Property or Collateral is located may be made by certified or registered mail, return receipt requested, directed to such Borrower or Grantor at its address for notice set forth in this Agreement, or at a subsequent address of which Lender received actual notice from such Borrower and Grantor in accordance with the notice section of this Agreement, and service so made shall be complete five (5) days after the same shall have been so mailed. Nothing herein shall affect the right of Lender to serve process in any manner permitted by Law or limit the right of Lender to bring proceedings against a Borrower and Grantor in any other court or jurisdiction.

Section 8.17    Joint and Several Liability; Single Loan Account

(a)Each Borrower agrees that it is jointly and severally, directly and primarily liable to Lender for payment, performance and satisfaction in full of the Obligations and that such liability is independent

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of the duties, obligations, and liabilities of any other Borrower. Lender may bring a separate action or actions on each, any, or all of the Obligations against any Borrower, whether action is brought against any other Borrower or whether any other Borrower is joined in such action. In the event that any Borrower fails to make any payment of any Obligations on or before the due date thereof, the other Borrower immediately shall cause such payment to be made or each of such Obligations to be performed, kept, observed, or fulfilled.

(b)This Agreement and the Loan Documents to which Borrowers are a party are a primary and original obligation of each Borrower, are not the creation of a surety relationship, and are an absolute, unconditional, and continuing promise of payment and performance which shall remain in full force and effect without respect to future changes in conditions, including any change of law or any invalidity or irregularity with respect to this Agreement or the Loan Documents to which any Borrower is a party. Each Borrower agrees that its liability under this Agreement and the Loan Documents which any Borrower is a party shall be immediate and shall not be contingent upon the exercise or enforcement by Lender of whatever remedies it may have against any other Borrower, or the enforcement of any lien or realization upon any security Lender may at any time possess. Each Borrower consents and agrees that Lender shall be under no obligation to marshal any assets of any Borrower against or in payment of any or all of the Obligations.

(c)Each Borrower acknowledges that it is presently informed as to the financial condition of each other Borrower and of all other circumstances which a diligent inquiry would reveal and which bear upon the risk of nonpayment of the Obligations. Each Borrower hereby covenants that it shall continue to keep informed as to the financial condition of each other Borrower, the status of each other Borrower and of all circumstances which bear upon the risk of nonpayment. Absent a written request from any Borrower to Lender for information, each Borrower hereby waives any and all rights it may have to require Lender to disclose to such Borrower any information which Lender may now or hereafter acquire concerning the condition or circumstances of any other Borrower.

(d)Lender shall have right to seek recourse against each Borrower to the fullest extent provided for herein, and no election by Lender to proceed in one form of action or proceeding, or against any party, or on any obligation, shall constitute a waiver of Lender’s right to proceed in any other form of action or proceeding or against other parties unless Lender has expressly waived such right in writing. Specifically, but without limiting the generality of the foregoing, no action or proceeding by Lender under this Agreement and the Loan Documents shall serve to diminish the liability of either Borrower under this Agreement and the Loan Documents to which Borrowers are a party except to the extent that Lender finally and unconditionally shall have realized indefeasible payment by such action or proceeding.

(e)Lender has agreed, in lieu of maintaining separate loan accounts on Lender’s books in the name of each of the Borrowers, that Lender may maintain a single loan account under the name of all Borrowers (the “Loan Account”). All Loans shall be made jointly and severally to Borrowers and shall be charged to the Loan Account, together with all interest and other charges as permitted under and pursuant to this Agreement. The Loan Account shall be credited with all repayments of Obligations received by Lender, on behalf of Borrowers, from either Borrower pursuant to the terms of this Agreement.

Section 8.18    WAIVER OF JURY TRIAL.

EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY

EXHIBIT 10.32

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EXHIBIT 10.32

JURY IN ANY LEGAL PROCEEDING OR ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTE, THE SECURITY INSTRUMENTS, OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).

EACH PARTY HERETO HEREBY:

(a)CERTIFIES THAT NO REPRESENTATIVE, AGENT, OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER;

(b)ACKNOWLEDGES THAT THIS WAIVER AND THE PROVISIONS OF THIS SECTION WERE A MATERIAL INDUCEMENT FOR THE PARTIES ENTERING INTO THE LOAN DOCUMENTS;

(c)CERTIFIES THAT THIS WAIVER IS KNOWINGLY, WILLINGLY, AND VOLUNTARILY MADE;

(d)AGREES AND UNDERSTANDS THAT THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY JURY OF ALL CLAIMS AGAINST ALL PARTIES TO SUCH PROCEEDING OR ACTION, INCLUDING CLAIMS AGAINST PARTIES WHO ARE NOT PARTIES TO THIS OR ANY OTHER AGREEMENT, AND FURTHER AGREES THAT SUCH PARTY SHALL NOT SEEK TO CONSOLIDATE ANY SUCH PROCEEDING OR ACTION WITH ANY OTHER PROCEEDING OR ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED;

(e)AGREES THAT BORROWERS AND LENDER ARE EACH HEREBY AUTHORIZED TO FILE A COPY OF THIS SECTION IN ANY PROCEEDING OR ACTION AS CONCLUSIVE EVIDENCE OF THIS WAIVER OF JURY TRIAL; AND

(f)REPRESENTS AND WARRANTS THAT SUCH PARTY HAS BEEN REPRESENTED IN THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, OR HAS HAD THE OPPORTUNITY TO BE REPRESENTED BY INDEPENDENT LEGAL COUNSEL SELECTED OF ITS OWN FREE WILL, AND THAT IT HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.

Section 8.19    USA Patriot Act Notice.

Lender hereby notifies Borrowers that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), Lender is required to obtain, verify and record information that identifies Borrowers, which information includes the name and address of Borrowers and other information that will allow Lender to identify Borrowers in accordance with the Act. Borrowers shall, promptly following a request by Lender, provide all documentation and other information that Lender requests in order to comply with its ongoing obligation under “know your customer” and anti- money laundering rules and regulations, including the Act.

EXHIBIT 10.32

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EXHIBIT 10.32

Section 8.20    Entire Agreement.

The Loan Documents constitute the entire understanding and agreement between Borrowers, Grantors and Lender with respect to the transactions arising in connection with the Loan, and supersede all prior written or oral understandings and agreements between Borrowers, Grantors and Lender with respect to the matters addressed in the Loan Documents. In particular, and without limitation, the terms of any commitment by Lender to make the Loan are merged into the Loan Documents. Except as incorporated in writing into the Loan Documents, there are no representations, understandings, stipulations, agreements or promises, oral or written, with respect to the matters addressed in the Loan Documents. If there is any conflict between the terms, conditions and provisions of this Agreement and those of any other instrument or agreement, including any other Loan Document, the terms, conditions and provisions of this Agreement shall prevail.

Section 8.21    WASHINGTON NOTICE.

ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, TO EXTEND CREDIT OR TO FORBEAR FROM ENFORCING A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.

[SIGNATURE PAGE FOLLOWS]

EXHIBIT 10.32

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EXHIBIT 10.32

[SIGNATURE PAGE TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT]

IN WITNESS WHEREOF, Borrowers, Grantor and Lender have caused this Amended and Restated Loan and Security Agreement executed as of the date first above written.

EXHIBIT 10.32

BORROWERS/GRANTORS:

LINCHPIN INVESTORS, LLC,

a Delaware limited liability company

By: 4Front Holdings LLC, a Delaware limited liability company, its sole member

By: 4Front U.S. Holdings, Inc., a Delaware Corporation, its sole member

LENDER:

LI LENDING, LLC,

a Delaware limited liability company as Lender

By: Name:

Title:

Name: Nicolle Dorsey Title: CFO

401 EAST MAIN STREET LLC, a Delaware limited liability company

By: Linchpin Investors, LLC,

a Delaware limited liability company

By: 4Front Holdings LLC, a Delaware limited liability company, its sole member

By: 4Front U.S. Holdings, Inc., a Delaware Corporation, its sole member

Name: Nicolle Dorsey Title: CFO

IL GROWN MEDICINE LLC, an Illinois limited liability company

By: Name: Joshua N. Rosen,

Title:    President

EXHIBIT 10.32

SIGNATURE PAGE TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT]

IN WITNESS WHEREOF, Borrower, Grantor and Lender have caused this Amended and Restated Loan and Security Agreement executed as of the date first above written.

EXHIBIT 10.32

BORROWERS/GRANTORS: LINCHPIN INVESTORS, LLC,

a Delaware limited liability company

By:

Name:

Title: Manager

401 EAST MAIN STREET LLC, a Delaware limited liability company

LENDER:

LI LENDING, LLC,

a Delaware limited liability company as Lender

By:Name: Roman Tkachenko

Title: Manager

By:

Name:

Title:    Manager

IL GROWN MEDICINE LLC, an Illinois limited liability company

By:

Name:

Title:    Manager

8554 S. COMMERCIAL AVE, LLC, a Delaware

limited liability company

By:

Name:

Title:    Manager

883 HYDE PARK AVE, LLC, a Delaware

limited liability company

By:

Name:

Title:    Manager

EXHIBIT 10.32

[SIGNATURE PAGE TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT]

IN WITNESS WHEREOF, Borrower, Grantor and Lender have caused this Amended and Restated Loan and Security Agreement executed as of the date first above written.

GRANTORS:    GRANTORS:

4FRONT NEVADA CORP., a Nevada corporation By: Name: Nicolle Dorsey Title:    Authorized Signor	4FRONT U.S. HOLDINGS, INC., a Delaware corporation By: Name: Nicolle Dorsey Title:    Authorized Signor
4FRONT VENTURES CORP. By: Name: Nicolle Dorsey Title:    Authorized Signor	4FRONT HOLDINGS, LLC, a Delaware limited liability company By: Name: Nicolle Dorsey Title:    Authorized Signor
BRIGHTLEAF DEVELOPMENT, LLC, a Washington limited liability company By: Name: Nicolle Dorsey Title:    Authorized Signor	PURE RATIOS HOLDINGS INC., a Delaware corporation By: Name: Nicolle Dorsey Title:    Authorized Signor
REAL ESTATE PROPERTIES LLC, a Washington limited liability company By: Name: Nicolle Dorsey Title:    Authorized Signor	4FRONT ADVISORS, LLC, a Delaware limited liability company By: Name: Nicolle Dorsey Title:    Authorized Signor
AG-GROW IMPORTS, LLC, a Washington limited liability company By: Name: Nicolle Dorsey Title:    Authorized Signor	MISSION PARTNERS USA, LLC, a Delaware limited liability company By: Name: Nicolle Dorsey Title:    Authorized Signor
FULLER HILL DEVELOPMENT CO. LLC, a Washington limited liability company By: Name: Nicolle Dorsey Title:    Authorized Signor	MISSION PARTNERS IP, LLC, a Delaware limited liability company By: Name: Nicolle Dorsey Title:    Authorized Signor

EXHIBIT 10.32

[SIGNATURE PAGE TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT]

IN WITNESS WHEREOF, Borrowers, Grantor and Lender have caused this Amended and Restated Loan and Security Agreement executed as of the date first above written.

8554 S. COMMERCIAL AVE, LLC, a Delaware

limited liability company

By: Linchpin Investors, LLC, a Delaware limited liability company

By: 4Front Holdings LLC, a Delaware limited liability company, its sole member By: 4Front U.S. Holdings, Inc., a Delaware Corporation, its sole member

Name: Nicolle Dorsey Title: CFO

883 HYDE PARK AVE, LLC, a Delaware

limited liability company

By: Linchpin Investors, LLC, a Delaware limited liability company

By: 4Front Holdings LLC, a Delaware limited liability company, its sole member By: 4Front U.S. Holdings, Inc., a Delaware Corporation, its sole member

Name: Nicolle Dorsey Title: CFO

EXHIBIT 10.32

[SIGNATURE PAGE TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT]

IN WITNESS WHEREOF, Borrowers, Grantor and Lender have caused this Amended and Restated Loan and Security Agreement executed as of the date first above written.

BORROWERS/GRANTORS:

4FRONT CALIFORNIA CAPITAL HOLDINGS, INC., a California

corporation F/K/A Cannex Holdings (California) Inc.

By: Name: Nicolle Dorsey

Title:    Authorized Signor

HEALTHY PHARMS, INC., a Massachusetts corporation

By: Name: Nicolle Dorsey

Title:    Authorized Signor

EXHIBIT 10.32

[SIGNATURE PAGE TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT]

IN WITNESS WHEREOF, Borrower, Grantor and Lender have caused this Amended and Restated Loan and Security Agreement executed as of the date first above written.

GRANTORS:    GRANTORS:

EXHIBIT 10.32

PHX INTERACTIVE LLC, an Arizona limited liability company

By: Name: Nicolle Dorsey

Title:    Authorized Signor

PURE RATIOS HOLDINGS INC., a Delaware

corporation

By: Name: Nicolle Dorsey

Title:    Authorized Signor

ADROIT CONSULTING GROUP LLC, a

Maryland limited liability company

By: Name: Nicolle Dorsey

Title: Authorized Signor

EXHIBIT 10.32

Schedule 1

Definitions

Unless the context otherwise specifies or requires, the following terms shall have the meanings herein specified, such definitions to be applicable equally to the singular and the plural forms of such terms and to all genders:

“4Front Ventures” means 4Front Ventures Corporation, a corporation existing under the laws of the Province of British Columbia.

“Affiliate” means, with respect to any Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.

“Approved Manager” means any Borrower, any manager of Borrower, or any other reputable and creditworthy property manager, subject to the prior written approval of Lender, which written approval may be evidenced by e-mail confirmation, not to be unreasonably withheld, conditioned or delayed.

“Architect” means one or more architects for the Improvements approved by Lender in its reasonable discretion.

“Architect's Contract” means the agreement by and between any Borrower, as owner or lessee of the Property, and the Architect, as architect, and any other contract for architectural services relating to the Construction of the Improvements between any Borrower and an architect, and approved in writing by Lender, as the same may be amended from time to time with the prior written approval of Lender, such approval not to be unreasonable withheld, conditioned or delayed.

“Authorized Signer” means any signer of this Agreement, acting alone, or any other representative of Borrower or Grantor duly designated and authorized by Borrower or Granor to bind Borrower or Grantor with respect to all matters pertaining to the Loan and the Loan Documents.

“Banking Day” means any day that is not a Saturday, Sunday or banking holiday in the State.

“Casualty” means any act or occurrence of any kind or nature that results in damage, loss or destruction to the Property.

“Civil Asset Forfeiture Reform Act” means the Civil Asset Forfeiture Reform Act of 2000 (18 U.S.C. Sections 983 et seq.), as amended from time to time, and any successor statute.

“Claim” means any liability, suit, action, claim, demand, loss, expense, penalty, fine, judgment or other cost of any kind or nature whatsoever, including reasonable fees, costs and expenses of attorneys, consultants, contractors and experts.

“Code” means the Internal Revenue Code of 1986, as amended.

“Collateral” means any and all assets now existing or hereafter acquired of the Grantors, including but not limited to, all Accounts; Chattel Paper; Contracts; Deposit Accounts and all moneys; Documents;

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EXHIBIT 10.32

Equipment; General Intangibles; Instruments; Intellectual Property; Inventory; Investment Property; Letter- of-Credit Rights; Farm Products; Goods; Contract Rights, insurance proceeds, licenses, patents, trademarks, goodwill, securities and a l l P r o ceed s, books and records pertaining to the foregoing. Capitalized used in this section shall have the meaning given to them in the Uniform Commercial Code in the jurisdiction where the Collateral is located.

“Company” shall have the meaning set forth in Section 3.17.

“Completion of Construction” means, with respect to the Construction of the Improvements or any component thereof, the satisfaction of all of the conditions of Section 4.

“Condemnation” means any taking of title to, use of, or any other interest in the Property under the exercise of the power of condemnation or eminent domain, whether temporarily or permanently, by any Governmental Authority or by any other Person acting under or for the benefit of a Governmental Authority.

“Condemnation Awards” means any and all judgments, awards of damages (including severance and consequential damages), payments, proceeds, settlements, amounts paid for a taking in lieu of Condemnation, or other compensation heretofore or hereafter made, including interest thereon, and the right to receive the same, as a result of, or in connection with, any Condemnation or threatened Condemnation.

“Construction Contract” means the agreement, by and between a Borrower, as owner or lessee, and the General Contractor, as general contractor, and any other contract for the Construction of the Improvements on the Property between a Borrower and a contractor, and approved in writing by Lender, as the same may be amended from time to time with the prior written approval of Lender, such approval not to be unreasonably withheld, conditioned or delayed.

“Construction Inspector” means one or more Persons appointed or designated by Lender from time to time to inspect the progress of the Construction of the Improvements and the conformity of construction with the Plans and Specifications, the Budget and the Project Schedule, and to perform such other acts and duties for such other purposes as Lender may from time to time deem appropriate or as may be reasonably required by the terms of this Agreement.

“Construction Inspector Report” means a written report from the Construction Inspector due to Lender on a specified predetermined day of each month, acceptable to Lender in its reasonable discretion.

“Construction of the Improvements” means the development of the Land and/or the construction of the Improvements.

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” or “Controlled” have meanings correlative thereto.

“Dispute” means any controversy, claim or dispute between or among the parties to this Agreement, including any such controversy, claim or dispute arising out of or relating to (a) this Agreement,

(b) any other Loan Document, (c) any related agreements or instruments, or (d) the transaction contemplated herein or therein (including any claim based on or arising from an alleged personal injury or business tort).

“Environmental Agreement” means an Environmental Indemnification and Release Agreement required by Lender that is entered into by each Borrower and Lender pertaining to the Borrower’s

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EXHIBIT 10.32

Property as a condition to obtaining Loan proceeds, as the same may from time to time be extended, amended,

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EXHIBIT 10.32

restated or otherwise modified. The Obligations arising out of the Environmental Agreement are not secured by the Security Instruments.

“Environmental Laws” shall have the meanings proscribed to them in the applicable Environmental Agreement.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“Event of Default” means any event or circumstance specified in Article VI and the continuance of such event or circumstance beyond the applicable grace and/or cure periods therefor, if any, set forth in Article VI.

“Expenses” means all fees, charges, costs and expenses of any nature whatsoever incurred at any time and from time to time (whether before or after an Event of Default) by Lender in making, funding, administering or modifying the Loan, in negotiating or entering into any “workout” of the Loan, or in exercising or enforcing any rights, powers and remedies provided in the Security Instruments or any of the other Loan Documents, including reasonable attorneys' fees, court costs, receiver's fees, management fees and costs incurred in the repair, maintenance and operation of, or taking possession of, or selling, the Property.

“Financial Statements” means (i) for each reporting party other than an individual, a balance sheet, income statement, statements of cash flow and additional schedules as reasonably determined by Lender: amounts and sources of contingent liabilities, reconciliation of changes in equity, liquidity verification, cash flow projections, real estate schedules providing details on each individual real property in the reporting party's portfolio, including raw land, land under development, construction in process and stabilized properties, any additional schedules as may be reasonably required by Lender, and unless Lender otherwise consents, consolidated and consolidating statements if the reporting party is a holding company or a parent of a subsidiary entity; and (ii) for each reporting party who is an individual, a balance sheet, statements of cash flow and additional schedules as reasonably determined by Lender, and amounts and sources of contingent liabilities, sources and uses of cash and liquidity verification, cash flow projections, real estate schedules providing details on each individual real property in the reporting party's portfolio, including raw land, land under development, any additional schedules as may be reasonably required by Lender, and unless Lender otherwise consents, Financial Statements for each entity owned or jointly owned by the reporting party. For purposes of this definition and any covenant requiring the delivery of Financial Statements, each party for whom Financial Statements are required is a “reporting party” and a specified period to which the required Financial Statements relate is a “reporting period”.

“Force Majeure” means strikes, lock-outs, war, civil disturbance, natural disaster, acts of terrorism or acts of God which cause a delay in Borrower's performance of an Obligation related to the work of construction; provided, however, that (a) Borrower must give Notice to Lender within ten (10) days after the occurrence of an event which it believes to constitute Force Majeure, (b) in no event shall Force Majeure extend the time for the performance of an Obligation by more than sixty (60) days, and (c) circumstances that can be remedied or mitigated through the payment of money shall not constitute Force Majeure hereunder to the extent such remedy or mitigation is deemed reasonable by Lender in its sole discretion.

“General Contractor” means one or more general contractors for the Construction of the Improvements approved by Lender in its reasonable discretion.

“GGP” means Gotham Green Partners

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EXHIBIT 10.32

“Governmental Authority” or “Governmental Authorities” means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

“Governing Documents” means the certificate or articles or certificate of incorporation, by-laws, articles or certificate of organization, operating agreement, or other organizational or governing documents of any Person.

“Guarantor” means 4Front Ventures.

“Guaranty” means the Guaranty Agreement of even date herewith executed by Guarantor for the benefit of Lender, as the same may from time to time be extended, amended, restated, supplemented or otherwise modified.

“Hazardous Materials” shall have the meaning proscribed to it in the applicable Environmental Agreement.

“Improvements” means any and all improvements on the Land owned or leased by any Borrower and encumbered by the Security Instruments and all plans, permits, and authorizations required by or associated with Improvements and the operations conducted in the Property.

Insurance Proceeds” means the insurance claims under and the proceeds of any and all policies of insurance covering the Property or any part thereof, including all returned and unearned premiums with respect to any insurance relating to the Property, in each case whether now or hereafter existing or arising.

“Land” means any and all of the land owned by the Borrowers and described in and encumbered by the Security Instruments.

“Law(s)” means all federal, state and local laws, statutes, rules, ordinances, regulations, codes, licenses, authorizations, decisions, injunctions, interpretations, orders or decrees of any court or other Governmental Authority having jurisdiction as may be in effect from time to time; provided, however, the Law shall not include the Controlled Substances Act.

“Lease(s)” means all leases, license agreements and other occupancy or use agreements (whether oral or written), now or hereafter existing, which cover or relate to the Property or any part thereof, together with all options therefor, amendments thereto and renewals, modifications and guaranties thereof, including any cash or security deposited under the Leases to secure performance by the tenants of their obligations under the Leases, whether such cash or security is to be held until the expiration of the terms of the Leases or applied to one or more of the installments of rent coming due thereunder.

“Lender Director” means the director designated from time to time by the Lender to the Board of Directors of 4Front Ventures.

“Loan” means the loan from Lender to the Borrowers, the repayment obligations in connection with which are evidenced by the Note.

“Loan Amount” means Forty-Five Million and No/100 Dollars ($45,000,000.00).

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EXHIBIT 10.32

“Loan Documents” means this Agreement, the Note, the Security Instruments, the Environmental Agreements, the Guaranty, the Warrant Certificate and any and all other documents which Borrowers, Guarantor, Grantor or any other party or parties have executed and delivered, or may hereafter execute and deliver, to evidence, secure or guarantee the Obligations, or any part thereof, as the same may from time to time be extended, amended, restated, supplemented or otherwise modified.

“Net Proceeds” when used with respect to any Condemnation Awards or Insurance Proceeds, means the gross proceeds from any Condemnation or Casualty remaining after payment of all expenses, including reasonable attorneys' fees, incurred in the collection of such gross proceeds.

“Note” means the Amended and Restated Promissory Note of even date herewith, in an amount equal to the Loan Amount, made by Borrowers to the order of Lender, as the same may from time to time be extended, amended, restated, supplemented or otherwise modified.

“Notice” means a notice, request, consent, demand or other communication given in accordance with the provisions of Section 8.7 of this Agreement.

“Obligations” means all present and future debts, obligations and liabilities of Borrowers to Lender arising pursuant to, or on account of, the provisions of this Agreement, the Note or any of the other Loan Documents, including the obligations: (a) to pay all principal, interest, late charges, prepayment premiums (if any) and other amounts due at any time under the Note; (b) to pay all Expenses, indemnification payments, fees and other amounts due at any time under the Security Instruments or any of the other Loan Documents, together with interest thereon as provided in the Security Instruments or such Loan Document; and (c) to perform, observe and comply with all of the terms, covenants and conditions, expressed or implied, which each Borrower is required to perform, observe or comply with pursuant to the terms of this Agreement, the Security Instruments or any of the other Loan Documents. Notwithstanding any language contained in the Loan Documents, the Obligations of each Borrower to pay and perform under the Environmental Agreements are unsecured.

“OFAC” means the U.S. Department of Treasury's Office of Foreign Assets Control.

“Permitted Use” means all costs and expenses in connection with the acquisition, refinance, construction and/or development, fit-out and leasing of Property in which a Borrower hereunder has acquired, or is acquiring an interest (including any fee interest or leasehold interest therein) for Borrower’s cannibas business or that is otherwise approved by Lender in its reasonable discretion and to which Lender has a first position security interest in pursuant to a Security Instrument, including without limitation, all closing costs in connection with an acquisition or refinance of real property, and all costs and expenses incurred in connection with the acquisition of machinery, equipment, supplies and other materials required to operate Borrower’s business. The Loan proceeds may also be used to pay interest on the Loan and pay any seller note or other debt obligation in connection with a Borrower’s purchase and acquisition of Property hereunder.

“Person” means an individual, a corporation, a partnership, a joint venture, a limited liability company, a trust, an unincorporated association, any Governmental Authority or any other entity.

“Plans and Specifications” means any and all plans and specifications prepared in connection with the Construction of the Improvements and approved in writing by Lender (such approval not to be unreasonably withheld, conditioned or delayed), as the same may from time to time be amended with the

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prior written approval of Lender. All of the Plans and Specifications for the Improvements shall be attached as Schedule 6.

“Project Schedule” means the schedule for commencement and completion of the Construction of the Improvements approved by the Lender.

“Property” means the Land, Improvements, plans and permits and tangible and intangible personal property owned (or, if consented to by Lender on terms reasonably satisfactory to Lender in its sole discretion, leased pursuant to a long-term lease of not less than 15 years) by any Borrower and conveyed and encumbered by the Security Instruments.

“Sanctions” means, collectively, any sanctions administered or enforced by the United States Government, including OFAC, the United Nations Security Council, the European Union, Her Majesty's Treasury, or other relevant sanctions authority.

“Security Instrument” means any deed of trust, mortgage, lien, charge, encumbrance, assignment, pledge, financing statement, lease or other document intended as a security device that is executed by a Borrower and/or Grantor for the benefit of Lender to secure the Obligations, except for the Obligations arising out of the Environmental Agreements, as the same may from time to time be extended, amended, restated, supplemented or otherwise modified. The Security Instrument shall include any and all such commercially reasonable terms, provisions, and conditions as shall be then required by Lender to grant to a first priority lien on the Property as provided in this Agreement, including, without limitation, assignment of all leases, plans, permits and authorizations.

“State” means the State of Washington.

“Survey” means a map or plat of survey of the Land.

“Taxes” means all taxes and assessments whether general or special, ordinary or extraordinary, or foreseen or unforeseen, which at any time may be assessed, levied, confirmed or imposed by any Governmental Authority or any communities facilities or other private district on Borrower or on any of its properties or assets or any part thereof or in respect of any of its franchises, businesses, income or profits.

“Warrant Certificate” means that Warrant Certificate executed by Guarantor and granting Lender Ten Million ($10,000,000) in Class A warrants in 4Front Ventures Corp.

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EX-10.35

EXHIBIT 10.35

Execution Version

LOAN AGREEMENT

by and among 4FRONT VENTURES CORP.,

ITS WHOLLY-OWNED SUBSIDIARIES,

and the Borrowers from time to time hereto (as Borrowers)

and

ALT DEBT II, LP,

(as Lender) and

GGG PARTNERS LLC,

(as Collateral Agent) dated as of

October 13, 2023

HB: 4868-8978-1628.11

EXHIBIT 10.35

TABLE OF CONTENTS

1

HB: 4868-8978-1628.11

EXHIBIT 10.35

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LOAN AGREEMENT

THIS LOAN AGREEMENT (this “Agreement”), dated as of October 13, 2023, is entered into by and among 4FRONT VENTURES CORP., a British Columbia corporation (“Ventures”), and the entities set forth on Schedule 1 attached hereto, (together with each Person that joins this Agreement as a borrower, each a “Borrower” and collectively, the “Borrowers”), ALT DEBT II, LP, a Delaware limited partnership (the “Lender”), and GGG Partners, LLC, a Georgia limited liability company (the “Collateral Agent”).

IN CONSIDERATION of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Borrowers, Lender, and Collateral Agent hereto agree as follows:

DEFINITIONS AND INTERPRETATION

Section 1.01 Definitions. As used in this Agreement, the following terms shall have the meanings set forth below:

“Adjusted Consolidated EBITDAR” means, for any Reference Period, with respect to the Loan Parties on a consolidated basis and without duplication, Consolidated EBITDAR less the total amount of (a) Taxes paid in cash for such period, and (b) Maintenance Capital Expenditures for such period, and (c) all license fees for such period paid or payable to any Governmental Authority to maintain Required Licenses.

“Administrative Borrower” has the meaning set forth in Section 3.01(a).

“Affiliate” as to any Person, means any other Person that, directly or indirectly through one or more intermediaries, is in control of, is controlled by, or is under common control with, such Person. For purposes of this definition, “control” of a Person means the power, directly or indirectly, either to (a) vote 25% or more of the securities having ordinary voting power for the election of directors (or persons performing similar functions) of such Person or (b) direct or cause the direction of the management and policies of such Person, whether by contract or otherwise.

“Anti-Corruption Laws” means all Legal Requirements concerning or relating to (a) bribery or corruption, including, without limitation, the United States Foreign Corrupt Practices Act of 1977, the Corruption of Foreign Public Officials Act (Canada), each, as amended, and the anti-bribery and anti-corruption laws and regulations of those jurisdictions in which any Borrower does business; and (b) terrorism or money laundering, including, without limitation, the Money Laundering Control Act of 1986 (18 U.S.C. §§ 1956-1957), the Currency and Foreign Transactions Reporting Act (also known as the “Bank Secrecy Act,” 31 U.S.C. §§ 5311-5332 and 12 U.S.C. §§ 1818(s), 1820(b) and §§ 1951-1959), the Anti-Money Laundering Act of 2020, Pub. L. No. 116- 283, Div. F §§ 6001-6511, the Canadian AML Acts, and the rules, regulations, and guidance issued by any Governmental Authority thereunder, and any law prohibiting or directed against the financing or support of terrorist activities (e.g., 18 U.S.C. §§ 2339A and 2339B), which for the avoidance of doubt in each case shall exclude the Federal Cannabis Laws;

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provided, that, for purposes of this Agreement, “Anti-Corruption Laws” shall not include the Racketeer Influenced

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and Corrupt Organizations Act (18 U.S.C. §§ 1961-1968 et seq.; also known as the Organized Crime Control Act of 1970) or similar laws.

“Applicable Rate” means a simple rate per annum equal to the greater of (a) the sum of the Prime Rate and seven percent (7%), and (b) fifteen and one-half percent (15.5%).

“Approved Strategy” has the meaning set forth in Section 6.14(b).

“Asset Sale” means any Disposition of property or series of related Dispositions of property (excluding any such Disposition permitted by Section 7.05) that yields gross proceeds to any Loan Party (valued at the principal amount thereof in the case of non-cash proceeds consisting of notes or other debt securities and valued at fair market value in the case of other non-cash proceeds) in excess of $100,000.

“Bankruptcy Code” means Title 11 of the United States Code, as amended from time to time, or any similar federal or state law for the relief of debtors.

“Blocked Person” means any Person that (a) is publicly identified on the most current list of “Specially Designated Nationals and Blocked Persons” published by the Office of Foreign Assets Control of the US Department of the Treasury (“OFAC”) or resides, is organized or chartered, or has a place of business in a country or territory subject to OFAC sanctions or embargo programs or (b) is publicly identified as prohibited from doing business with the United States under the International Emergency Economic Powers Act, the Trading With the Enemy Act, or any other Legal Requirement.

“Business Day” means a day other than a Saturday, Sunday, or other day on which commercial banks in New York City are authorized or required by law to close.

“Canadian AML Acts” means applicable Canadian law regarding anti-money laundering, anti-terrorist financing, government sanction and “know your client” matters, including the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada).

“Canadian Cannabis Laws” means the Cannabis Act (Canada), the Cannabis Control and Licensing Act (British Columbia), the Cannabis Distribution Act (British Columbia) and any other Canadian applicable law pertaining to Cannabis‐Related Activities, and the regulations thereunder.

“Canadian Defined Benefit Pension Plan” means a Canadian Pension Plan that contains or has ever contained a "defined benefit provision" as such term is defined in Section 147.1(1) of the Income Tax Act (Canada).

“Canadian Pension Plan” means a pension plan or plan that is subject to applicable pension benefits legislation in any jurisdiction of Canada and that is organized and administered to provide pensions, pension benefits or retirement benefits for employees and former employees of any Loan Party or any Subsidiary thereof.

“Canadian Sanctions List” means the list of names subject to the Regulations Establishing a List of Entities made under subsection 83.05(1) of the Criminal Code (Canada),

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the Regulations Implementing the United Nations Resolutions on the Suppression of Terrorism and/or the United

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Nations Al-Qaida and Taliban Regulations, or the Special Economic Measures Act (Canada).

“Canadian Security Agreement” means the Canadian Security Agreement made by certain of the Borrowers in favor of the Collateral Agent for the benefit of the Lender, dated as of the date hereof, as the same may be amended, amended and restated, supplemented, or otherwise modified from time to time to the extent permitted under the Loan Documents.

“Cannabis” means, collectively, Marijuana (as defined in 21 U.S.C. § 802(16), as amended), Hemp (as defined by 7 U.S.C. § 1639o(1), as amended), or the plant Cannabis sativa L., including both the Hemp and Marijuana strains of the plant.

“Cannabis Related Activities” means any activities, including advertising or promotional activities, relating to or in connection with the importation, cultivation, production, purchase, distribution or sale of Cannabis, dried marijuana, fresh marijuana, cannabis oil and starting materials with respect thereto or any products related thereto.

“Capital Expenditures” with respect to any Person, means the aggregate of all expenditures by such Person for the acquisition or leasing (pursuant to a capital lease) of fixed or capital assets, software, or additions to equipment (including replacements, capitalized repairs, and improvements) which are required to be capitalized under GAAP on the balance sheet of such Person.

“Capital Lease Obligations” with respect to any Person, means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases under GAAP on the balance sheet of such Person and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.

“Cash Equivalents” as to any Person, means (a) securities issued or directly and fully guaranteed or insured by the United States or any agency or instrumentality thereof (provided that the full faith and credit of the United States is pledged in support thereof) having maturities of not more than one year from the date of acquisition by such Person, (b) time deposits and certificates of deposit of any commercial bank having, or which is the principal banking subsidiary of a bank holding company organized under the laws of the United States, any State thereof or the District of Columbia having capital, surplus, and undivided profits aggregating in excess of $500,000,000, having maturities of not more than one year from the date of acquisition by such Person, (c) repurchase obligations with a term of not more than 90 days for underlying securities of the types described in clause (a) above entered into with any bank meeting the qualifications specified in clause (b) above, (d) commercial paper issued by any issuer rated at least A-1 by Standard & Poor’s Ratings Services, and any successor thereto or at least P-1 by Moody’s Investors Service, Inc., and any successor thereto (or carrying an equivalent rating by a nationally recognized rating agency if both of the two named rating agencies cease publishing ratings of commercial paper issuers generally), and in each case maturing not more than one year after the date of acquisition by such Person, or (e) investments in money market funds

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substantially all of whose assets are comprised of securities of the types described in clauses (a) through (d) above.

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“Change in Law” means the occurrence after the date of this Agreement of (a) the adoption or effectiveness of any law, rule, regulation, judicial ruling, judgment, or treaty, (b) any change in any law, rule, regulation, or treaty or in the administration, interpretation, implementation, or application by any Governmental Authority of any law, rule, regulation, or treaty, or (c) the making or issuance by any Governmental Authority of any request, rule, guideline, or directive, whether or not having the force of law; provided that, notwithstanding anything herein to the contrary (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, as amended, and all requests, rules, guidelines, or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines, or directives concerning capital adequacy promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority), or the United States, Canadian or foreign regulatory authorities shall, in each case, be deemed to be a “Change in Law,” regardless of the date enacted, adopted, or issued.

“Change of Control” means (a) the acquisition, directly or indirectly, by any Person or group (within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) of beneficial ownership of more than 50% of the aggregate outstanding voting power of the Equity Interests of a Person entitled to vote for members of the board of directors of such Person (or similar governing body) on a fully-diluted basis or economic power of the Equity Interests of such Person; (b) during any period of two consecutive years, individuals who at the beginning of such period constituted the board of directors of such Person (or similar governing body) (together with any new directors whose election by such Board of Directors or whose nomination for election by the shareholders of such Person was approved by a vote of at least a majority of the directors (or similar) of such Person then still in office who were either directors at the beginning of such period, or whose election or nomination for election was previously approved) cease for any reason to constitute a majority of the board of directors of such Person (or similar governing body); or (c) any Borrower shall cease to have beneficial ownership (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of the percentage of the Equity Interests held by such Borrower in any of its Subsidiaries that is equal to or greater than the percentage of the Equity Interests held by such Borrower in such Subsidiaries on the Closing Date (other than in connection with any Permitted Acquisition, free and clear of all Liens.

“Closing Date” means the date on which the conditions precedent set forth in Section 4.01 are satisfied or waived.

“Closing Date Tax Lien” means, collectively, the (i) Tax lien filed against Mission Partners USA LLC on or about September 29, 2023 in an approximate amount of $431,032.02 (plus amounts constituting additional penalties, interests, and costs as described therein) by the United States Internal Revenue Service (“IRS”), and (ii) that certain Notice of Levy from the IRS dated September 14, 2023 with respect to Mission Partners USA, LLC in the amount of

$573,888.02, as reduced to $135,532.03 pursuant to that certain Release of Levy/Release of Property from Levy dated September 29, 2023.

“Closing Date Term Loan” has the meaning set forth in Section 2.01(a).

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“Closing Date Term Loan Holdback” has the meaning set forth in Section 6.14(a). “Code” means the Internal Revenue Code of 1986, as amended.

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“Collateral” has the meaning for such term set forth in the Security Agreement.

“Collateral Agent” has the meaning set forth in the preamble, together with any successor appointed in accordance with this Agreement.

“Collateral Agent Advances” has the meaning set forth in Section 2.09(b).

“Consolidated Debt Expense” means, for any Reference Period, with respect to the Loan Parties on a consolidated basis and without duplication, the sum of (a) total consolidated interest expense (including capitalized interest, premium payments, debt discount, fees, charges, and related expenses with respect to all outstanding Debt of the Loan Parties on a consolidated basis, in each case to the extent recognized as an expense in accordance with GAAP during such period), plus (b) scheduled amortization payments or redemptions on Debt of the Loan Parties on a consolidated basis for such period.

“Consolidated EBITDAR” means, for any Reference Period, with respect to the Loan Parties on a consolidated basis and without duplication, Consolidated Net Income for such Reference Period plus, without duplication and only to the extent deducted in calculating Consolidated Net Income for such period, the sum of (a) all interest expense (as expressed in clause

(a) of the definition of Consolidated Debt Expense) for such period, (b) the sum of federal, state, local, and foreign income Taxes recognized as an expense in accordance with GAAP during such period, (c) the amount of depreciation and amortization recognized as an expense in accordance with GAAP during such period, (d) rent payable under leases of real and personal property (whether a capital lease or any other leases) for such period, (e) any extraordinary, unusual, or non-recurring expenses, losses or charges (including but not limited to non-recurring administrative costs or expenses incurred in obtaining a license and/or opening of any new cultivation, processing or dispensary facility, including lobbying expenses, pre-opening and opening costs and signing, retention and completion bonuses, and any item required to be recognized as an expense due to the issuance of stock) recognized as an expense in accordance with GAAP during such period, but not more than $1,500,000 on a rolling 12 month basis; provided that the foregoing cap shall not apply to non-cash stock compensation, (f) start-up costs in connection with the Matteson, Illinois facility in an amount not to exceed $5,000,000 during the term of this Agreement, (g) any costs or expenses relating to any acquisitions, whether by a Loan Party or a Loan Party’s Affiliate, including any break-up fees to the extent any such acquisition is not consummated, dispositions including legal, accounting, advisory or other transaction-related fees, signing, retention and completion or success bonuses recognized as an expense in accordance with GAAP during such period, but not more than $1,500,000 on a rolling 12 months basis, and

(h) any costs or expenses relating to non-recurring litigation and regulatory matters including investigations by Governmental Authorities recognized as an expense in accordance with GAAP during such period, but not more than $1,000,000 on a rolling 12 months basis, minus, without duplication and only to the extent deducted in calculating Consolidated Net Income for such period, the sum of (i) unusual or non-recurring gains and non-cash income, (ii) any other non-cash income or gains increasing Consolidated Net Income for such period (excluding any such

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non- cash gain to the extent it represents the reversal of an accrual or reserve for potential cash charge in any prior period) and (iii) any gains realized from the disposition of property outside of the ordinary course of business, all as determined on a consolidated basis.

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“Consolidated Fixed Charge Coverage Ratio” means, for the applicable Reference Period, the quotient of (a) Adjusted Consolidated EBITDAR divided by (b) Consolidated Fixed Charges; provided, however, that Consolidated Fixed Charge Coverage Ratio shall be calculated to exclude any Guaranty Obligations of Borrowers related that certain $16,000,000 failed sale-leaseback in connection with the NECC transaction dated January 28, 2022.

“Consolidated Fixed Charges” means, for any Reference Period, with respect to the Loan Parties on a consolidated basis and without duplication, the sum of (a) rent payable under leases of real and personal property (whether a capital lease or any other leases) for such period, plus (b) Consolidated Debt Expense for such period.

“Consolidated Leverage Ratio” means for the applicable Reference Period, the quotient of

(a) the aggregate Debt of Borrowers as of the date of calculation divided by (b) Consolidated EBITDAR; provided, however, that Consolidated Leverage Ratio shall be calculated to exclude any Guaranty Obligations of Borrowers related that certain $16,000,000 failed sale-leaseback in connection with the NECC transaction dated January 28, 2022.

“Consolidated Net Income” means, for any Reference Period, the consolidated net income (or loss) of the Loan Parties, determined on a consolidated basis in accordance with GAAP, and all calculations and deliverables under this Agreement or any other Loan Document shall be made or delivered, as applicable, in accordance therewith.

“Contractual Obligation” of any Person, means any provision of any security issued by such Person or of any agreement, instrument, or other undertaking to which such Person is a party or by which it or any of its property is bound, other than the Obligations.

“Debt” of any Person at any date, without duplication, means (a) all indebtedness of such Person for borrowed money, (b) all obligations of such Person for the deferred purchase price of property or services (other than (i) trade payables and accrued expenses incurred in the ordinary course of business and not past due for more than 61 days after the date on which each such trade payable or account payable was created and (ii) any earn-out, purchase price adjustment, or similar obligation until such obligation appears in the liabilities section of the balance sheet of such Person), (c) all obligations of such Person evidenced by notes, bonds, debentures, or other similar instruments, (d) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all obligations of such Person to purchase, redeem, retire, defease, or otherwise make any payment in respect of any Equity Interests in such Person or any other Person or any warrants, rights, or options to acquire such Equity Interests, valued, in the case of redeemable preferred interests, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends, (f) all obligations of such Person, contingent or otherwise, as an account party or applicant under acceptance, letter of credit, or similar facilities in respect of obligations of the kind referred to in subsections (a) through (e) of this definition, (g) all Guaranty Obligations of such Person in respect of obligations of the kind referred to in subsections (a) through (f) above, (h) all obligations of the kind referred to in subsections (a) through (g) above secured by (or which the holder of such obligation has an

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existing right, contingent or otherwise, to be secured by) any Lien on property (including accounts and contract

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rights) owned by such Person, whether or not such Person has assumed or become liable for the payment of such obligation, and (i) all debt of any partnership, unlimited liability company, or unincorporated joint venture in which such Person is a general partner, member, or a joint venturer, respectively (unless such Debt is expressly made non-recourse to such Person).

“Debtor Relief Law” means the Bankruptcy Code, the Bankruptcy and Insolvency Act (Canada), the Companies’ Creditors Arrangement Act (Canada), the Winding-Up and Restructuring Act (Canada) and all other liquidation, bankruptcy, assignment for the benefit of creditors, conservatorship, moratorium, receivership, insolvency, rearrangement, reorganization, or similar debtor relief laws of the US, Canada or other applicable jurisdictions in effect from time to time.

“Default” means any of the events specified in Section 8.01 which constitutes an Event of Default or which, upon the giving of notice, the lapse of time, or both pursuant to Section 8.01 would, unless cured or waived, become an Event of Default.

“Default Rate” means a rate of simple interest per annum equal to the Applicable Rate plus five percent (5%).

“Deposit Account” has the meaning set forth in the Security Agreement. “Disclosed Litigation” has the meaning set forth in Section 5.06.

“Disposition” or “Dispose” means the sale, transfer, license, lease, or other disposition (whether in one transaction or in a series of transactions, and including any sale and leaseback transaction) of any property (including, without limitation, any Equity Interests) by any Person (or the granting of any option or other right to do any of the foregoing), including any sale, assignment, transfer, or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith.

“Disqualified Institution” means (a) any Person designated by the Borrowers as a “Disqualified Institution” by written notice to the Lender at least ten Business Days prior to the Agent Resignation Date, (b) any other Person that is a competitor of the Borrowers or any of their Subsidiaries and that has been designated by the Borrower as a “Disqualified Institution” by written notice to the Lender from time to time, and (c) Affiliates of any entity referenced in clauses

(a) or (b) if designated by the Borrowers by written notice to Lender from time to time. Lender shall have no obligation to determine whether a Person is a “Disqualified Institution” unless such Person has been listed by Borrowers on the DQ List. If, on any relevant date, no DQ List has been provided to Lender by Borrowers, no Person shall be deemed a “Disqualified Institution.”

“Disqualified Stock” means any Equity Interest that, by its terms (or by the terms of any security or other Equity Interest into which it is convertible or for which it is exchangeable), or upon the happening of any event or condition, (a) matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, (b) is redeemable at the option of the holder

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thereof, in whole or in part, (c) provides for the scheduled payments of dividends or distributions in cash, or

(d) is or becomes convertible into or exchangeable for Debt or any other Equity Interests that would constitute Disqualified Stock, in each case, prior to the date that is 91 days after the Maturity Date.

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“Dollars” means the lawful currency of the United States.

“DQ List” means the list of Disqualified Institutions provided by the Borrowers as updated from time to time.

“Eligible Assignee” has the meaning set forth in Section 9.04.

“Employee Plan” at any one time, means any “employee benefit plan” that is covered by ERISA and in respect of which any Loan Party or an ERISA Affiliate is (or, if such plan were terminated at such time, would under §4062 or §4069 of ERISA be deemed to be) an “employer” as defined in §3(5) of ERISA.

“Environmental Action” means any action, suit, demand, demand letter, claim, notice of violation or non-compliance, notice of liability or potential liability, investigation, proceeding, consent order, or consent agreement relating in any way to any Environmental Law, any permit issued under any Environmental Law, or any Hazardous Material, or arising from alleged injury or threat to health, safety, or the environment including (a) by any Governmental Authority for enforcement, clean-up, removal, response, remedial or other actions, or damages and (b) any Governmental Authority or third party for damages, contribution, indemnification, cost recovery, compensation, or injunctive relief.

“Environmental Law” means any and all Federal, state, foreign, provincial, territorial, local, or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees, requirements of any Governmental Authority, or other Legal Requirements as now or may at any time hereafter be in effect, and any binding judicial or administrative interpretation thereof, including any binding judicial or administrative order, consent decree, or judgment, regulating, relating to, or imposing liability or standards of conduct concerning protection of the environment or, to the extent relating to exposure to substances that are harmful or detrimental to the environment, or human health, or safety.

“Equity Interests” means any and all shares, interests, participations, or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership (or profit) interests in a Person (other than a corporation), securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person, and any and all warrants, rights, calls, or options to purchase any of the foregoing, whether voting or nonvoting, and whether or not such shares, warrants, options, rights, or other interests are authorized or otherwise existing on any date of determination.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.

“ERISA Affiliate” means an entity, whether or not incorporated, that is under common control with any Borrower within the meaning of §4001 of ERISA or is part of a group that includes any Borrower and that is treated as a single employer under §414 of the Code.

“Event of Default” has the meaning set forth in Section 8.01.

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“Excluded Taxes” means any of the following Taxes, imposed on or with respect to the

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Lender (a) Taxes imposed on or measured by net income (however denominated) and franchise Taxes and (b) any branch profits Taxes imposed by the United States or any similar Tax imposed by any other jurisdiction.

“Federal Cannabis Laws” means any U.S. federal laws, civil, criminal or otherwise, as such relate, either directly or indirectly, to the cultivation, harvesting, production, distribution, sale and possession of Cannabis or related substances or products containing or relating to the same, including, without limitation, the prohibition on drug trafficking under 21 U.S.C. § 841(a), et seq., the conspiracy statute under 18 U.S.C. § 846, the bar against aiding and abetting the conduct of an offense under 18 U.S.C. § 2, the bar against misprision of a felony (concealing another’s felonious conduct) under 18 U.S.C. § 4, the bar against being an accessory after the fact to criminal conduct under 18 U.S.C. § 3, and federal money laundering statutes under 18 U.S.C. §§ 1956, 1957, and 1960 and the regulations and rules promulgated under any of the foregoing.

“Foreign Subsidiary” means any Subsidiary of any Borrower that is not a Subsidiary that is organized and existing under the laws of the United States or any state or commonwealth thereof or under the laws of the District of Columbia.

“GAAP” means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied.

“Governmental Authority” means the government of any nation or any political subdivision thereof, whether at the national, state, territorial, provincial, municipal, or any other level, and any agency, authority, instrumentality, regulatory body, court, central bank, or other entity exercising executive, legislative, judicial, taxing, regulatory, or administrative powers or functions of, or pertaining to, government.

“Guaranty Obligation” as to any Person, means any (a) obligation, contingent or otherwise, of such Person guaranteeing or having the effect of guaranteeing any Debt or other obligation payable or performable by another Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt or other obligation, (ii) to purchase or lease property, securities, or services for the purpose of assuring the obligee in respect of such Debt or other obligation of the payment or performance of such Debt or other obligation, (iii) to maintain working capital, equity capital, net worth, or solvency or liquidity, or any level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Debt or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Debt or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part) or (b) Lien on any assets of such Person securing any Debt or other obligation of any other Person, whether or not such Debt or other obligation is assumed by such Person (or

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any right, contingent or otherwise, of any holder of such Debt to obtain any such Lien). The amount of any Guaranty Obligation shall be deemed to be an amount equal to the stated or determinable amount of the

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related primary obligation, or portion thereof, in respect of which such Guaranty Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith.

“Hazardous Materials” means (a) any gasoline, petroleum or petroleum products or by- products, radioactive materials, friable asbestos or asbestos-containing materials, urea- formaldehyde insulation, polychlorinated biphenyls, and radon gas and (b) any other chemicals, materials, or substances designated, classified, or regulated as hazardous or toxic or as a pollutant or contaminant under any Environmental Law.

“IGH Litigation” means that case styled Florival, LLC v. Island Global Holdings, Inc, case number 23CV01053 filed on May 9, 2023, in the Superior Court of the State of California in and for the County of Santa Cruz.

“IGH Litigation Holdback” has the meaning set forth in Section 6.14(d).

“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by any Loan Party under any Loan Document and (b) to the extent not otherwise described in (a), Other Taxes.

“Insolvency” with respect to any Multiemployer Plan, means such Employee Plan is insolvent within the meaning of §4245 of ERISA.

“Intercompany Subordination Agreement” means an Intercompany Subordination Agreement made by the Borrowers in favor of the Collateral Agent for the benefit of the Collateral Agent and the Lender, in form and substance reasonably satisfactory to the Collateral Agent.

“Interest Payment Date” means the first Business Day of each calendar month occurring while the Loan is outstanding and the Maturity Date of such Loan.

“Investment” has the meaning set forth in Section 7.04.

“Island Intercreditor Agreement” means that certain Subordination and Intercreditor Agreement, dated as of the Closing Date, by and between Lender and HI 4Front, LLC, and acknowledged and agreed to by Borrowers, as it may be amended, restated, amended and restated, supplemented or otherwise modified from time to time.

“Island Note” means that certain promissory note issued by Ventures to HI 4Front, LLC, a Delaware limited liability company pursuant to that certain Promissory Note Purchase Agreement dated August 30, 2022, by and among Ventures, HI 4Front, LLC, and Navy Capital Green Fund, LP.

“Island Note Holdback” has the meaning set forth in Section 6.14(c).

“Joinder Agreement” means a Joinder Agreement, substantially in the form of Exhibit A, duly executed by a Borrower made a party hereto.

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“Landlord Agreement” has the meaning set forth in Section 4.01(a)(iii).

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“Legal Requirement” as to any Person, means any law (including common law), statute, ordinance, treaty, rule, regulation, order, decree, judgment, writ, injunction, settlement agreement, requirement or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject (including Canadian Cannabis Laws); provided that the Federal Cannabis Laws are excluded.

“Lender Note” means a promissory note of the Borrowers payable to the Lender, in substantially the form of Exhibit B hereto, evidencing the aggregate indebtedness of the Borrowers to the Lender resulting from the Loan, as the same may be amended, amended and restated, supplemented, or otherwise modified from time to time to the extent permitted under the Loan Documents.

“Lien” means any mortgage, pledge, hypothecation, assignment (as security), deposit arrangement, encumbrance, lien (statutory or other), charge, or other security interest, or any preference, priority, or other security agreement or preferential arrangement of any kind or nature whatsoever having substantially the same economic effect as any of the foregoing (including any conditional sale or other title retention agreement and any capital lease).

“LI Intercreditor Agreement” means that certain Subordination and Intercreditor Agreement, dated as of the Closing Date, by and between Lender and LI Lending, LLC, and acknowledged and agreed to by Borrowers, as it may be amended, restated, amended and restated, supplemented or otherwise modified from time to time.

“Loan” means each loan made by the Lender to the Borrowers pursuant to Section 2.01, including without limitation the Closing Date Term Loan and the Second Tranche Term Loans.

“Loan Documents” means, collectively, this Agreement, the Security Documents, the Lender Note, any intercreditor agreements, subordination agreements, and all other agreements, documents, certificates, and instruments executed and delivered to the Lender by any Loan Party in connection therewith.

“Loan Party” shall mean, individually, each Borrower and each of their Subsidiaries (excluding Unrestricted Subsidiaries), and “Loan Parties” shall mean, collectively, Borrowers and each of their Subsidiaries (excluding Unrestricted Subsidiaries).

“Maintenance Capital Expenditures” means, with respect to any Person, the aggregate of all expenditures by such Person for the acquisition of fixed or capital assets, software or additions to equipment (including replacements, capitalized repairs and improvements) to maintain the Person’s existing assets that are required to be capitalized under GAAP on the balance sheet of such Person.

“Make Whole Amount” means, as applicable an amount equal to, (i) if the entire outstanding principal amount of the Loans are being prepaid, the net present value of all interest payments that would have been due on such outstanding principal if the Loans were not prepaid but instead paid as scheduled, assuming the Applicable Rate in effect on the date of such

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prepayment were to apply for every day from such prepayment date through and including the Maturity Date, discounted at a reasonable rate calculated by Lender in its sole discretion (which

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calculation shall be binding absent manifest error), or (ii) if less than the entire outstanding principal amount of the Loans are being prepaid, the net present value of all interest payment that would have been due on such principal amount being prepaid if such principal amount were not prepaid but instead paid as scheduled, assuming the Applicable Rate in effect on the date of such prepayment were to apply for every day from such prepayment date through and including the Maturity Date, discounted at a reasonable rate calculated by Lender in its sole discretion (which calculation shall be binding absent manifest error).

“Material Adverse Effect” means a material adverse effect on (a) the business, assets, properties, liabilities (actual or contingent), operations, or condition (financial or otherwise) or prospects of any Borrower, individually, or any Borrower or any Borrower and any Subsidiaries of a Borrower taken as a whole, (b) the validity or enforceability of any Loan Document, (c) the perfection or priority of any material Lien purported to be created by any Loan Document, (d) the rights or remedies of the Lender under any Loan Document, or (e) the ability of any Loan Party to perform any of its material obligations under any Loan Document to which it is a party.

“Material Contracts” with respect to any Person, means each contract to which such Person is a party involving aggregate consideration payable by or to such Person equal to at least

$250,000 annually or otherwise material to the business, condition (financial or otherwise), operations, performance, properties, or prospects of such Person.

“Maturity Date” means December 1, 2023; provided, however, that the “Maturity Date” shall be extended by Lender as follows:

(a)if and only if Borrowers (x) are able to cause the maturity date of the Island Note to be extended to January 1, 2025 (or such other date as Lender may agree in its sole discretion) or (y) pay the obligations evidenced by the Island Note in full pursuant to the terms of Sections 6.14(c) and 6.15(a), then the Lender shall extend the Maturity Date to the earlier of: (i) September 6, 2024 and (ii) the date that is one month prior to the earliest maturity date of the Subordinated Debt;

(b)if and only if Borrowers are able to cause the maturity dates of the Subordinated Debt to be extended to a date that is, in the case of (i) Subordinated Debt other than the Island Note, at least one year from such Subordinated Debt’s maturity date as of the Closing Date, and (ii) if the Island Note is still outstanding, the Island Note, a date that is at least one year from the extended maturity date referred to in subsection (a) above, then to a date that is one month earlier than the then-earliest maturity date of the Subordinated Debt;

provided further, however, in no circumstance will the Maturity Date be extended to a date beyond September 30, 2026.

In connection with any extension of the Maturity Date (if any), Lender shall provide to Administrative Borrower a notice in substantially the form attached hereto as Exhibit F (each an “Extension Notice”). To the extent the Maturity Date set forth in this Agreement is inconsistent with an Extension Notice, the Maturity Date in the Extension Notice shall control.

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“Maximum Facility Amount” means an aggregate amount of principal equal to

$10,000,000.00.

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“Multiemployer Plan” means an Employee Plan which is a multiemployer plan as defined in § 4001(a)(3) of ERISA to which any Borrower or any ERISA Affiliate makes or is obligated to make contributions.

“Net Cash Proceeds” means (a) in connection with any Asset Sale or any Recovery Event, the proceeds thereof in the form of cash and Cash Equivalents (including any such proceeds actually received from deferred payments of principal pursuant to a note, a receivable, or otherwise), net of attorneys’ fees, accountants’ fees, closing or change of control bonuses, investment banking fees, amounts required to be reserved for indemnification, adjustment of purchase price, or similar obligations pursuant to the agreements governing such Asset Sale, amounts required to be applied to the repayment of Debt secured by a Lien expressly permitted hereunder on any asset that is the subject of such Asset Sale or Recovery Event (other than any Lien pursuant to a Loan Document) and other customary fees and expenses actually incurred in connection therewith and net of taxes paid or reasonably estimated to be payable as a result thereof (after taking into account any readily available tax credits or deductions and any tax sharing arrangements) and (b) in connection with any issuance or sale of Equity Interests or any incurrence of Debt, the cash proceeds received from such issuance or incurrence, net of attorneys’ fees, investment banking fees, accountants’ fees, underwriting discounts and commissions, and other customary fees and expenses actually incurred in connection therewith.

“Notice of Borrowing” shall mean a notice of a borrowing pursuant to Section 2.02, which shall be substantially in the form of Exhibit D.

“Obligations” means all advances to, and debts (including principal, interest, fees, costs, and expenses), liabilities, covenants, and indemnities of, any Loan Party arising under any Loan Document or otherwise with respect to any Loan, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising.

“Organizational Documents” means with respect to any Borrower its articles of incorporation, certificate of designation, operating agreement, bylaws, or other organizational document.

“Other Taxes” means any and all present or future stamp, court, recording, filing, intangible, documentary, or similar Taxes or any other excise or property Taxes, charges, or similar levies arising from any payment made hereunder or under any other Loan Document or from the execution, delivery, or enforcement or registration of, or performance under, or from the receipt or perfection of a security interest under or otherwise with respect to this Agreement or any other Loan Document (other than Excluded Taxes imposed with respect to an assignment).

“Participant” has the meaning set forth in Section 9.04(c). “Participant Register” has the meaning set forth in Section 9.04(c).

“Payment Office” means the office or offices of the Lender that the Lender may from time to time notify to the Collateral Agent and the Administrative Borrower.

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“PBGC” means the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA (or any successor thereto).

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“Permitted Acquisitions” means the purchase or acquisition (whether in one or a series of related transactions) by any Person of (a) Equity Interests collectively holding more than 50% of the ordinary voting power of another Person or (b) all or substantially all of the property (other than Equity Interests) of another Person or a division or line of business or business unit of another Person, whether or not involving a merger, amalgamation or consolidation with such Person; provided that (i) at the time thereof and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing or would result from such acquisition or purchase, (ii) the Loan Parties shall deliver to Lender copies of all acquisition documents, any quality of earnings or other financial information (including budgets and/or projections), any internal management analysis prepared by Borrowers regarding such purchase or acquisition, and any other information regarding such purchase or acquisition Lender may request for Lender’s review no later than thirty days prior to the consummation of such acquisition or purchase (or such later date as Lender may agree in its sole discretion), (iii) any earn-out or Debt (including, without limitation, Debt owed to the seller in such acquisition or purchase), shall be subordinated to the Obligations pursuant to subordination agreement(s) in form and substance acceptable to Lender in its sole discretion (including if such earn-out or Debt would otherwise be permitted under this Agreement, unless Lender shall otherwise agree in writing, in its sole discretion), and (iv) Lender shall have received from Loan Parties a certification executed by a Responsible Officer of the Loan Parties that the condition in subsection (i) above is true and correct.

“Permitted Cure Securities” means any equity security of Ventures other than Disqualified

Stock.

“Person” means any individual, corporation, limited liability company, trust, joint venture,

association, company, limited or general partnership, unincorporated organization, Governmental Authority, or other entity.

“Pledge Agreement” means the Pledge Agreement made by the Borrowers in favor of the Collateral Agent for the benefit of the Lender, dated as of the date hereof, as the same may be amended, amended and restated, supplemented, or otherwise modified from time to time to the extent permitted under the Loan Documents.

“PPSA” means the Personal Property Security Act as in effect in the Province of British Columbia from time to time.

“Prepayment Fee” means an amount equal to: (1) if such prepayment occurs on or prior to the first anniversary of the Closing Date (the “First Closing Anniversary Date”), an amount equal to the Make Whole Amount; (2) if such prepayment occurs after the First Closing Anniversary Date but on or prior to the date that is eighteen (18) months after the Closing Date (the “18-Month Anniversary Date”), $1,000,000.00; and (3) if such prepayment occurs after the 18-Month Anniversary Date and before the Maturity Date, $750,000.000.

“Prime Rate” means the rate of interest per annum last quoted by The Wall Street Journal as the “Prime Rate” in the U.S. or, if The Wall Street Journal ceases to quote such rate, the highest per annum interest rate published by the Federal Reserve Board in Federal Reserve Statistical Release H.15 (519) (Selected Interest Rates) as the “bank prime loan” rate or, if such

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rate is no longer quoted therein, any similar rate quoted therein (as determined by the Lender) or any similar

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release by the Federal Reserve Board (as determined by the Lender). Any change in the Prime Rate shall take effect at the opening of business on the day such change is publicly announced or quoted as being effective without the necessity of notice provided to the Borrowers or any other Person.

“Prohibited Activities” has the meaning set forth in Section 9.14. “Projections” has the meaning set forth in Section 6.02(a). “Properties” has the meaning set forth in Section 5.09(a).

“Recovery Event” means any settlement of or payment to any Loan Party in respect of any property or casualty insurance claim or any condemnation proceeding relating to any asset of any Loan Party.

“Reference Period” means, at any date of determination, the most recently completed four consecutive calendar quarters on or immediately prior to such date.

“Related Parties” with respect to any Person, means such Person’s Affiliates and the directors, officers, employees, partners, agents, trustees, administrators, managers, advisors, shareholders, stockholders, investors, members, and representatives of it and its Affiliates.

“Reorganization” with respect to any Multiemployer Plan, means that such plan is in reorganization within the meaning of §4241 of ERISA.

“Reportable Event” means any of the events set forth in §4043(c) of ERISA, other than those events as to which the thirty-day notice period is waived.

“Required License” means all Cannabis-related licenses, permits, or registrations required under the applicable Legal Requirements currently in effect necessary for the business of any Borrower.

“Responsible Officer” means, with respect to any Person, the chief executive officer, president, or chief financial officer of such Person, or if such Person does not have a chief executive officer, president, or chief financial officer, the secretary or treasurer of such Person, except that with respect to financial matters, the Responsible Officer shall be the chief financial officer or treasurer of such Person.

“Restricted Payments” has the meaning set forth in Section 7.07.

“Sanctions Laws” means individually and collectively, respectively, any and all economic or financial sanctions, sectoral sanctions, secondary sanctions, trade embargoes and anti-terrorism laws, including those imposed, administered or enforced from time to time by: (a) the United States of America, including those administered by OFAC, the U.S. Department of Commerce, the U.S. Department of State, or through any existing or future Executive Order or other executive action;

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(b) Canada; (c) the United Nations Security Council; or (d) any other governmental authorities with jurisdiction over any Party or its Subsidiaries.

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“Sanctioned Entity” means any individual, entity, group, or sector that is the target of any Sanctions Laws, including Blocked Persons, or any territory or country that is the subject to comprehensive Sanctions (currently Cuba, Iran, North Korea, Syria, and the Crimea region of Ukraine), including without limitation, any legal entity that is deemed to be a target of Sanctions based on the direct or indirect ownership or control of such entity by any other Sanctioned Entity.

“SEC” means the Securities and Exchange Commission (or successors thereto or an analogous Governmental Authority).

“Second Tranche Availability Period” means the period commencing on the Closing Date and ending at 2:00 pm New York City time on the date that is nine months from the Closing Date; provided, however, that in no event shall the Second Tranche Availability Period extend beyond the Maturity Date.

“Second Tranche Conditions” has the meaning set forth in Section 4.02. “Second Tranche Term Loans” has the meaning set forth in Section 2.01(b). “Secured Obligations” has the meaning set forth in the Security Agreement.

“Security Agreement” means the Security Agreement made by the Borrowers in favor of the Collateral Agent for the benefit of the Lender, dated as of the date hereof, as the same may be amended, amended and restated, supplemented, or otherwise modified from time to time to the extent permitted under the Loan Documents.

“Security Agreement Schedules” means the schedules to the Security Agreement. “Security Documents” means, collectively, the Security Agreement, the Pledge

Agreement, the Canadian Security Agreement, and each other security agreement or other instrument or document executed and delivered by any Loan Party to the Collateral Agent pursuant to this Agreement or any other Loan Document granting a Lien to secure any of the Obligations.

“Single Employer Plan” means any Employee Plan that is covered by Title IV of ERISA, other than a Multiemployer Plan.

“Solvent” with respect to any Person as of any date of determination, means that on such date (a) the present fair salable value of the property and assets of such Person exceeds the debts and liabilities, including contingent liabilities, of such Person, (b) the present fair salable value of the property and assets of such Person is greater than the amount that will be required to pay the probable liability of such Person on its debts and other liabilities, including contingent liabilities, as such debts and other liabilities become absolute and matured, (c) such Person does not intend to incur, or believe (nor should it reasonably believe) that it will incur, debts and liabilities, including contingent liabilities, beyond its ability to pay such debts and liabilities as they become absolute and matured, and (d) such Person does not have unreasonably small capital with which

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to conduct the business in which it is engaged as such business is now conducted and is proposed to be conducted. The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

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“Subordinated Debt” has the meaning set forth in Section 7.08(a).

“Subsidiary” means, with respect to any Borrower, any corporation, partnership, limited liability company, joint venture, trust or estate, or other Person of or in which (a) more than 50% of (i) the issued and outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether at the time capital stock of any other class of such corporation may have voting power upon the happening of a contingency), (ii) the interest in the capital or profits of such partnership, limited liability company, or joint venture,

(iii) the beneficial interest in such trust or estate, or (iv) the issued and outstanding Equity Interests of any other Person, is in each case directly or indirectly owned or controlled through one or more intermediaries, or both, by such Borrower; or (b) such Borrower has the ability to direct or cause the direction of the management and policies of such Person, whether by contract or otherwise.

“Tax Holdback” has the meaning set forth in Section 6.14(b).

“Taxes” means any and all present or future income, stamp, or other taxes, levies, imposts, duties, deductions, charges, fees, or withholdings (including backup withholding), or assessments imposed, levied, withheld, or assessed by any Governmental Authority, together with any interest, additions to tax, or penalties imposed thereon and with respect thereto.

“Teichman Litigation” means the case styled Teichman Enterprises, Inc. v. 4Front California Capital Holdings, Inc. f/k/a Cannex Holdings (California), Inc., case number 23STCV23660, filed September 29, 2023, in the Superior Court of the State of California in and for the County of Los Angeles.

“Teichman Litigation Holdback” has the meaning set forth in Section 6.14(e).

“Uniform Commercial Code” means the Uniform Commercial Code as in effect in the State of New York from time to time.

“Unrestricted Subsidiary” means (a) any Subsidiary of a Borrower that is formed or acquired after the Closing Date, provided that at such time (or promptly thereafter) such Borrower designates such Subsidiary as an Unrestricted Subsidiary in a written notice to the Lender, and provided, further that (x) such designation shall be deemed to be an Investment in such Unrestricted Subsidiary on the date of such designation in an amount equal to the sum of (i) such Borrower’s direct or indirect equity ownership percentage of the net worth of such Unrestricted Subsidiary immediately prior to such designation (such net worth to be calculated without regard to any guarantee provided by such Unrestricted Subsidiary) and (ii) the aggregate principal amount of any Debt owed by such designated Unrestricted Subsidiary to such Borrower or any other Subsidiary immediately prior to such designation, all calculated, except as set forth in the parenthetical to clause (i), on a consolidated basis in accordance with GAAP and (y) no Default or Event of Default would result from such designation and (b) each Subsidiary of an Unrestricted Subsidiary; provided that at the time of any written designation by the Borrower to the Lender that any Unrestricted Subsidiary shall no longer constitute an Unrestricted Subsidiary,

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such Unrestricted Subsidiary shall cease to be an Unrestricted Subsidiary to the extent no Default or Event of Default would result from such designation.

“Withdrawal Liability” has the meaning specified in Part I of Subtitle E of Title IV of

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ERISA.

“Wind Down Entities” means those entities set forth on Schedule 2 hereto. “Wind Down Entity” shall mean any one of them as applicable.

Section 1.02    Interpretation. With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:

(a)The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine, and neuter forms. The words “include,” “includes,” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall.” Unless the context requires otherwise (i) any definition of or reference to any agreement, instrument, or other document shall be construed as referring to such agreement, instrument, or other document as from time to time amended, supplemented, or otherwise modified (subject to any restrictions on such amendments, supplements, or modifications set forth herein or in any other Loan Document), (ii) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (iii) the words “herein,” “hereof,” and “hereunder,” and words of similar import when used in any Loan Document, shall be construed to refer to such Loan Document in its entirety and not to any particular provision thereof, (iv) all references in a Loan Document to Articles, Sections, Exhibits, and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, the Loan Document in which such references appear, (v) any reference to any law shall include all statutory and regulatory provisions consolidating, amending, replacing, or interpreting such law and any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified, or supplemented from time to time, (vi) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts, and contract rights, and (vii) the word “dispensary” shall mean a retail store that sells Cannabis products to end consumers in accordance with applicable Legal Requirements.

(b)In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including;” the words “to” and “until” each mean “to but excluding;” and the word “through” means “to and including.”

(c)Any reference herein or in any other Loan Document to the satisfaction, repayment, or payment in full of the Obligations shall mean the repayment in Dollars in full in cash or immediately available funds (and in the case of any asserted contingent Obligations, providing cash collateral or other collateral as may be requested by the Lender) of all of the Obligations other than unasserted contingent indemnification Obligations.

(d)All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP as in effect from time to time, and

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applied on a consistent basis in a manner consistent with that used in preparing any audited financial statements of the Borrowers, except as otherwise specifically prescribed herein.

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(e)For all purposes under the Loan Documents, in connection with any division or plan of division under New York law (or any comparable event under a different jurisdiction’s laws): (i) if any asset, right, obligation or liability of any Person becomes the asset, right, obligation or liability of a different Person, then it shall be deemed to have been transferred from the original Person to the subsequent Person, and (ii) if any new Person comes into existence, such new Person shall be deemed to have been organized and acquired on the first date of its existence by the holders of its equity interests at such time.

THE LOANS

Section 2.01    The Loans.

(a)Subject to the terms and conditions of this Agreement, the Lender agrees to make a term loan to the Borrowers on the Closing Date in an aggregate amount of Six Million Dollars ($6,000,000.00) (the “Closing Date Term Loan”) in immediately available funds by wire transfer.

(b)Subject to the terms and conditions of this Agreement, at any time during the Second Tranche Availability Period, the Lender agrees to make one or more additional term loans to the Borrowers up to an aggregate maximum amount of Four Million Dollars ($4,000,000.00) (the “Second Tranche Term Loans”) in immediately available funds by wire transfer. Unless the Lender agrees, in its sole discretion, the Lender’s obligation to make the Second Tranche Term Loans shall automatically and permanently expire at the conclusion of the Second Tranche Availability Period.

(c)The Borrowers may borrow one or more loans hereunder, but amounts borrowed under this Section 2.01 may not be reborrowed after repayment.

(d)The Loans shall be used only to (i) fund Permitted Acquisitions, (ii) build new or improve existing dispensaries in Illinois, (iii) fund the Tax Reserve, and (iv) and to pay certain expenses and fees related to the transactions contemplated by this Agreement.

(e)In no event shall the Lender make Loans pursuant to this Agreement in excess of the Maximum Facility Amount.

(f)Notwithstanding anything in the Agreement to the contrary, in the event that any Tax lien (other than the Closing Date Tax Lien) is filed against the Borrowers (or any of them), Lender shall not be required to advance any portion of the Second Tranche Term Loans unless Borrowers provide a Person acceptable to Lender in its sole and absolute discretion to act as a participant for 100% of the amount of the Second Tranche Term Loans to be advanced (which participant shall purchase its participation interest pursuant to a participation agreement in form and substance acceptable to Lender in its sole and absolute discretion (which participation interest shall not include any voting or consent rights with respect to the Loans)).

Section 2.02    Making the Loans.

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(a)Lender shall disburse the proceeds of the Closing Date Term Loan to a Deposit

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Account specified by the Administrative Borrower in writing prior to the Closing Date.

(b)In order to request any Second Tranche Term Loan, the Borrowers shall satisfy each of the Second Tranche Conditions and the Administrative Borrower shall deliver to Lender a Notice of Borrowing for such Loan, which specifies, among other things:

(i)The aggregate principal amount of the requested Second Tranche Term Loan from the Lender, which shall be in the minimum amount of $250,000; and

(ii)The date of the requested Loan, which shall be a Business Day.

(c)Administrative Borrower must deliver each Notice of Borrowing not later than 5:00 pm prevailing Eastern Time at least ten (10) Business Days prior to the requested funding date for such Loan.

Section 2.03    Repayment of the Loan.

(a)Interest Payments. Accrued interest on the Loans made hereunder at the Applicable Rate shall be paid by Borrowers monthly, in arrears, on each Interest Payment Date, commencing on the first Business Day of the first full month following the calendar month in which such Loan is made and at maturity (whether upon demand, by acceleration or otherwise). Accrued interest at the Default Rate shall be payable by Borrowers on demand.

(b)Principal Payments. For each Loan made hereunder, commencing with the first Interest Payment Date following the date that is six months after such Loan is made (each, a “Principal Payment Commencement Date”), the Borrowers shall repay the aggregate outstanding principal amount of the Loan in consecutive monthly installments on each Interest Payment Date in monthly payments consisting of principal pursuant to an amortization schedule consisting of the amount of months from and including the applicable Principal Payment Commencement Date for such Loan to and including the Maturity Date. Notwithstanding the foregoing to the contrary, all Loans shall begin amortizing in the manner described above no later than the First Closing Anniversary Date.

(c)Maturity Date. If not sooner paid, the outstanding principal of the Loan, all accrued but unpaid interest thereon, and all other amounts owing under the Loan Documents, shall be due and payable on the Maturity Date or any sooner repayment pursuant to the terms of this Agreement (whether upon demand, by acceleration or otherwise).

(d)Borrowers’ Account.

(i)Lender shall maintain, in accordance with its customary procedures, a loan account (the “Borrowers’ Account”) in the name of the Borrowers in which shall be recorded the date and amount of each Loan made by the Lender and the date and amount of each payment of interest and principal in respect thereof; provided, however, that, the failure by the Lender to record the date or amount of any Loan or any other item shall not adversely affect the Lender under this Agreement or any Loan Document or diminish any obligation of any Loan Party under

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this Agreement or any Loan Document. Each quarter, at the written request of the Administrative Borrower, the Lender shall send to the Administrative Borrower a statement showing the

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accounting for the Loans made, payments made or credited in respect thereof, and certain other transactions between the Lender and Borrowers, during such quarter. The quarterly statements shall be deemed correct and binding upon Borrowers in the absence of manifest error and shall constitute an account stated between Lender and Borrowers unless the Lender receives a written statement of the Administrative Borrower’s specific exceptions thereto within thirty (30) days after such statement is received by Administrative Borrower. The records of the Lender with respect to each Borrowers’ Account shall be conclusive evidence absent manifest error of the amounts of Loans and other charges thereto and of payments applicable thereto.

(ii)In consideration of Lender’s consideration to conditionally credit Borrowers’ Account as of the Business Day on which the Lender receives those items of payment, Borrowers agree that, in computing the charges under the Loan Documents, all items of payment shall be deemed applied by the Lender on account of the applicable Obligations on the date of confirmation to the Lender, that such items of payment have been collected in good funds and finally credited to the Lender’s account; provided however, that the Lender is not required to credit Borrowers’ Account for the amount of any item of payment which is unsatisfactory to the Lender and the Lender may charge Borrowers’ Account for the amount of any item of payment which is returned to the Lender unpaid.

(iii)All payments (including prepayments) of principal, interest and other amounts payable under this Agreement and any other Loan Document shall be made to the Lender at the Payment Office not later than 2:00 p.m. (New York City time) on the due date therefor (or, if such due date is not a Business Day, on the next Business Day) in lawful money of the United States of America in funds immediately available to the Lender. Any payment received by the Lender subsequent to 2:00 p.m. (New York City time) on any Business Day (regardless of whether such payment is due on such Business Day) shall be deemed received by the Lender, and shall be applied to the applicable Obligations intended to be paid thereby, on the next Business Day. The Lender shall have the right to effectuate payment on any and all Obligations due and owing hereunder by charging Borrowers’ Account.

(iv)The Borrowers shall pay principal, interest, and all other amounts payable under this Agreement and each other Loan Document without any deduction whatsoever, including, but not limited to, any deduction for any setoff or counterclaim.

Section 2.04 Evidence of Debt. Upon the request of the Lender, the Borrowers shall execute and deliver to the Lender a Lender Note, which shall evidence the Loan made by it pursuant to the terms hereof. The Lender may attach schedules to its Lender Note and endorse thereon the date, amount and maturity of its Loan and payments with respect thereto. Upon receipt of an affidavit of the Lender as to the loss, theft, destruction or mutilation of such Lender Note and upon cancellation of such Lender Note, the Borrowers will issue, in lieu thereof, a replacement Lender Note in favor of the Lender, in the same principal amount thereof and otherwise of like tenor.

Section 2.05    Optional Prepayments.

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(a)The Loan may not be prepaid, in whole or in part, without also paying the Prepayment Fee and complying with Section 2.06(d). Upon any prepayment of the Loan, whether

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due to acceleration or otherwise, the Borrowers shall pay a prepayment premium in an amount equal to the Prepayment Fee.

(b)The Borrowers may, subject to Sections 2.05(a) and 2.06(d), at any time and from time to time, upon five (5) Business Days prior written notice from the Administrative Borrower to the Lender (or such shorter time as may be mutually agreed by the Lender and the Administrative Borrower) delivered not later than 1:00 p.m. (New York City time), prepay the principal of the Loan, in whole or in part.

Section 2.06    Mandatory Prepayments.

(a)If (i) any Debt shall be incurred by any Borrower (excluding any Debt permitted to be incurred pursuant to Section 7.01 hereof), or (ii) during any period when an Event of Default exists, if any Equity Interests shall be issued by any Borrower and the proceeds therefrom are not used for the Cure Right described in Section 8.04, then, in each case, no later than five (5) Business Days after such Borrower receives the Net Cash Proceeds therefrom, the Loans shall be prepaid by an amount equal to 100% of the amount of the Net Cash Proceeds from such incurrence and applied as set forth in Section 2.07.

(b)If on any date any Borrower shall receive Net Cash Proceeds from any Asset Sale (other than Asset Sales in connection with Ventures’ Subsidiaries’ California operations) or Recovery Event in an amount for any such sale or event in excess of $500,000, then, unless Lender, in its sole discretion, has approved Borrower’s plan to reinvest such Net Cash Proceeds, within five Business Days of the date of receipt by such Borrower of such Net Cash Proceeds, the Loans shall be prepaid in an amount equal to such excess and applied as set forth in Section 2.07.

(c)If upon the occurrence and during the continuance of an Event of Default, the Obligations are accelerated pursuant to the terms hereof, Borrower shall also be required to pay Lender the Prepayment Fee.

(d)If any optional or mandatory payment is made pursuant to Section 2.05 or this Section 2.06 and such payment would result in the outstanding principal amount of the Loans being less than or equal to Three Million Dollars ($3,000,000), then in any such case the Borrowers shall also pay all remaining Obligations outstanding under the Loan Documents.

(e)In connection with any prepayment made pursuant to Section 2.05 or this Section 2.06, the Borrowers shall also pay a prepayment premium in an amount equal to the Prepayment Fee; provided, however, that unless Borrowers prepay all of the outstanding principal amount of the Loans in connection with such prepayment (including if so required by Section 2.06(d)), the amount of the Prepayment Fee owed in connection with such prepayment shall be a prorated amount equal to the percentage of the Obligations being prepaid; provided, further, however, the Make Whole Amount for any prorated Prepayment Fee shall be calculated as set forth in subsection

(ii) in the definition of “Make Whole Amount”.

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(f)The Prepayment Fee (including the Make Whole Amount) is hereby acknowledged and agreed to be liquidated damages and not a penalty. The parties acknowledge and agree that the damage caused Lender by prepayment of all or less than all of the principal amount would be impossible or very difficult to accurately estimate as of the Closing Date and that the Prepayment

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Fee is a reasonable estimate of such harm.

Section 2.07 Application of Payments. Amounts paid to the Lender shall be applied first, to outstanding Obligations (other than accrued interest or outstanding principal amount of the Loan), second, to accrued interest, and thereafter, to the installments of the Loan in inverse order of maturity.

Section 2.08    Interest.

(a)Applicable Rate. Subject to the provisions of Section 2.08(b), each Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Applicable Rate.

(b)Default Rate. Upon the occurrence and during the continuance of an Event of Default, the principal of, and all accrued and unpaid interest on, the Loan, fees, indemnities or any other monetary Obligations of the Loan Parties under this Agreement and the other Loan Documents, shall bear interest, from the date such Event of Default occurred until the date such Event of Default is cured or waived in writing in accordance herewith, at a rate per annum equal at all times to the Default Rate.

(c)Interest Act (Canada). For the purposes of the Interest Act (Canada), (i) whenever a rate of interest or fee rate hereunder is calculated on the basis of a year (the “deemed year”) that contains fewer days than the actual number of days in the calendar year of calculation, such rate of interest or fee rate shall be expressed as a yearly rate by multiplying such rate of interest or fee rate by the actual number of days in the calendar year of calculation and dividing it by the number of days in the deemed year, (ii) the principle of deemed reinvestment of interest shall not apply to any interest calculation hereunder and (iii) the rates of interest stipulated herein are intended to be nominal rates and not effective rates or yields.

Section 2.09    Certain Fees.

(a)Origination Fee. The Borrowers shall pay to the Lender for its own account, an origination fee equal to 7% of the principal amount of each Loan (including the Closing Date Term Loan and any Second Tranche Term Loan) on the day each such Loan is funded. Such fee shall be deemed fully earned when paid and shall not be refundable for any reason whatsoever.

(b)Commitment Fee. The Borrowers agree to pay to the Lender a commitment fee on the undrawn amount of the Second Tranche Term Loans and the undrawn amount of Closing Date Term Loan Holdback, which shall accrue at a rate per annum equal to two percent (2.00%) during the period from and including the Closing Date to but excluding the first to occur of (x) final day of the Second Tranche Availability Period and (y) the funding of a Second Tranche Term Loan that causes the total principal amount of Loans outstanding to equal the Maximum Facility Amount (such day, the “Commitment Fee Termination Date”). Accrued Commitment

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Fees shall be payable in arrears on each Interest Payment Date, commencing on the first such date to occur after the date hereof, and ending on the Commitment Fee Termination Date.

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(c)Collateral Agent Advances. During the existence of any Default or Event of Default, the Collateral Agent may from time to time make such disbursements and advances (“Collateral Agent Advances”) which the Collateral Agent, in its sole discretion, deems necessary or desirable to preserve, protect, prepare for sale or lease or dispose of the Collateral or any portion thereof, to enhance the likelihood or maximize the amount of repayment by the Borrowers of the Loan and other Obligations or to pay any other amount chargeable to the Borrowers pursuant to the terms of this Agreement, including, without limitation, costs, fees and expenses as described in Section 9.03. The Collateral Agent Advances shall be repayable on demand and be secured by the Collateral and shall bear interest at a rate per annum equal to the Applicable Rate. The Collateral Agent Advances shall constitute Obligations hereunder which shall be charged to the Borrowers’ Account in accordance with Section 2.03(d).

(d)Audit and Collateral Monitoring Fees.

(i)The Borrowers shall pay to Lender for its own account an annual collateral monitoring fee equal $48,000 on the first Business Day of January of each calendar year any Loans are outstanding. Such fee shall be deemed fully earned when paid and shall not be refundable for any reason whatsoever.

(ii)In addition to the above, the Borrowers also acknowledge that pursuant to the Loan Documents and subject to state and local cannabis regulatory requirements, representatives of the Collateral Agent may visit the Loan Parties and/or conduct inspections, audits, physical counts, valuations, appraisals, and/or examinations of any or all of the Loan Parties at any time and from time with prior notice during normal business hours. The Borrowers agree to pay the cost of all visits, inspections, audits, physical counts, valuations, appraisals, and/or examinations conducted by a third party on behalf of the Agents; provided, that so long as no Event of Default shall have occurred and be continuing, the Borrowers shall not be obligated to reimburse the Collateral Agent for more than one (1) appraisal and examination during any calendar year.

(d)Exit Fee. The Borrowers agree to pay to Lender for its own account, an exit fee equal to $1,400,000 (the “Exit Fee”) upon the earlier of the Maturity Date (including by acceleration) or, if the Obligations are paid in full prior to the Maturity Date, the date on which the Obligations are paid in full. The Exit Fee shall be deemed fully earned when due and non- refundable for any reason whatsoever.

Section 2.10    Computation of Interest and Fees.

(a)All computations of interest for the Loan and fees for any period and under and Loan Document (i) shall include the first day of such period and exclude the last day of such period; provided that any Loan or other Obligation that is repaid on the same day on which it is made shall bear interest for one day, and (ii) shall be calculated on the basis of a year of 360 days (consisting of four 90-day quarters) and actual days elapsed with respect to any time period of less than one full calendar quarter.

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(b)Each determination by the Lender of an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest error. Each Borrower confirms that it fully understands and is able to calculate the rate of interest applicable to the Loan based on the

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methodology for calculating per annum rates provided for in this Agreement.

Section 2.11    Taxes.

(a)Any and all payments by or on account of any obligation of any Loan Party hereunder or under any other Loan Document shall be made free and clear of and without deduction or withholding for any Taxes except as required by applicable Legal Requirements. If any Loan Party is required by applicable Legal Requirements to deduct or withhold any Taxes from such payments, then:

(i)if such Tax is an Indemnified Tax, the amount payable by the applicable Loan Party shall be increased so that after all such required deductions or withholdings are made (including deductions or withholdings applicable to additional amounts payable under this Section), the Lender receives an amount equal to the amount it would have received had no such deduction or withholding been made; and

(ii)the Loan Parties shall make such deductions or withholdings and timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable Legal Requirements.

(b)Without limiting the provisions of Section 2.11(a) above, the Loan Parties shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with applicable Legal Requirements.

(c)The Loan Parties shall indemnify and hold harmless the Lender, within ten days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed on or attributable to amounts payable under this Section) paid or payable by the Lender, on or with respect to an amount payable by any Loan Party under or in respect of this Agreement or under any other Loan Document, together with any expenses arising in connection therewith and with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate from the Lender as to the amount of such payment or liability delivered to the Administrative Borrower shall be conclusive absent manifest error.

(d)As soon as practicable after any payment of Taxes by any Loan Party to a Governmental Authority pursuant to this Section 2.11, such Loan Party shall deliver to the Lender the original or certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the relevant return reporting such payment or other evidence of such payment reasonably satisfactory to the Lender.

(e)If the Lender determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified by any Loan Party or with respect to which any Loan Party has paid additional amounts pursuant to this Section, it shall pay over such refund (or the amount of any credit in lieu of refund) to the applicable Loan Party (but only to the extent of indemnity payments made, or additional amounts paid, by the applicable Loan Party under this Section with respect to the Taxes giving rise to such refund or credit in lieu

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of refund), net of all out-of-pocket expenses of the Lender and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund or credit in lieu of

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refund); provided that, the applicable Loan Party, upon the request of the Lender, agrees to repay the amount paid over to the applicable Loan Party (plus any interest, penalties, or other charges imposed by the relevant Governmental Authority) to the Lender in the event the Lender is required to repay such refund or credit in lieu of refund to such Governmental Authority. Notwithstanding anything to the contrary in this paragraph (e), in no event will the Lender be required to pay any amount to the applicable Loan Party pursuant to this subsection if the payment of such amount would place the Lender in a less favorable net after-Tax position than it would have been in if the Tax subject to indemnification had not been deducted, withheld, or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. Nothing in this paragraph (e) shall be construed to require the Lender to make available its tax returns or any other information relating to its taxes that it deems confidential to any Borrower or any other Person.

(f)The obligations of the Borrowers under this Section 2.11 shall survive the termination of this Agreement and the payment of the Loan and all other amounts payable under the Loan Documents.

Section 2.12    Changes in Law; Impracticability or Illegality.

(a)The Applicable Rate may be adjusted by the Lender on a prospective basis to take into account any material additional or increased costs to the Lender due to any Change in Law occurring subsequent to the Closing Date, including changes in Tax laws (except changes of general applicability in corporate income Tax laws). In any such event, the Lender shall give the Administrative Borrower and the Collateral Agent advance prior written notice of such a determination and adjustment. Upon its receipt of such notice from the Lender, the Administrative Borrower may, by notice to the Lender (i) require the Lender to furnish to the Administrative Borrower a statement setting forth the basis for adjusting such Applicable Rate and the method for determining the amount of such adjustment, or (ii) repay the Loan with respect to which such adjustment is made (together with any amounts due under Section 2.11).

(b)In the event that any change in market conditions or any Change in Law, shall at any time after the date hereof, in the reasonable opinion of the Lender, make it unlawful or impractical for the Lender to maintain the Loan or to continue such maintaining, or to determine or charge interest rates at the Applicable Rate, the Lender shall give notice of such changed circumstances to the Administrative Borrower and the Collateral Agent.

(c)The obligations of the Borrowers under this Section 2.12 shall survive the termination of this Agreement and the payment of the Loan and all other amounts payable under the Loan Documents.

Section 2.13    Joint and Several Liability.

(a)All Borrowers shall be liable, on a joint and several basis, for all Obligations, including, without limitation, all amounts due to the Collateral Agent and Lenders under this Agreement and the other Loan Documents, regardless of which Borrower actually receives any proceeds of the Obligations or the manner in which the Collateral Agent and Lenders account for

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such Obligations on its books and records or for any other reason. The Obligations with respect to

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the Loan made to the Borrowers, and the Obligations arising as a result of the joint and several liability of a Borrower hereunder, shall be separate and distinct obligations, but all such Obligations shall be primary obligations of all Borrowers.

(b)The Obligations arising as a result of the joint and several liability of a Borrower hereunder with respect to the Loan or other Obligations shall, to the fullest extent permitted by law, be unconditional irrespective of (i) the validity or enforceability, avoidance or subordination of the Obligations of the other Borrowers or of any promissory note or other document evidencing all or any part of the Obligations of the other Borrowers, (ii) any incapacity or lack of power, authority or legal personality of any other Borrower or other Person, (iii) the absence of any attempt to collect the Obligations from the other Borrowers or any other security therefor, or the absence of any other action to enforce or failure to realize the full value of the same, (iv) any amendment (however fundamental) replacement variation, assignment termination and/or the waiver, consent, extension, forbearance or granting of any indulgence by the Collateral Agent or Lenders with respect to any provisions of any instrument evidencing the Obligations of the other Borrowers, or any part thereof, or any other agreement now or hereafter executed by the other Borrowers and delivered to the Collateral Agent or Lenders, (v) the failure by the Collateral Agent, Lenders or any other Person to take any steps to perfect and maintain its Lien in, or to preserve its rights and maintain its security or collateral for the Obligations of the other Borrowers, (vi) the election of the Collateral Agent, Lenders or any other Person in any proceeding instituted under the Bankruptcy Code, of the application of Section 1111(b)(2) of the Bankruptcy Code, or any similar provision of any other Debtor Relief Law, (vii) the disallowance of all or any portion of the claim(s) of the Collateral Agent, Lenders or any other Person for the repayment of the Obligations of the other Borrowers under Section 502 of the Bankruptcy Code or any similar provision of any other Debtor Relief Law, (viii) any insolvency, liquidation, administration or similar procedure or corporate action in respect of any other Borrower and/or any legal proceedings or procedures by any of the other Borrowers’ creditors or (ix) any other circumstances which might constitute a legal or equitable discharge or defense of the other Borrowers.

(c)With respect to the Obligations arising as a result of the joint and several liability of a Borrower hereunder with respect to Loan proceeds or other Obligations, each Borrower waives, until all of the Obligations have been paid in full, any right to enforce any right of subrogation or any remedy which the Collateral Agent, Lenders or any other Person now has or may hereafter have against Borrowers, any endorser or any guarantor of all or any part of the Obligations, and any benefit of, and any right to participate in, any security or collateral given to the Collateral Agent, Lenders or any other Person.

(d)Upon any Event of Default and for so long as the same is continuing, the Collateral Agent and Lenders may proceed directly and at once, without notice, against any Borrower to collect and recover the full amount, or any portion of the Obligations, without first proceeding against the other Borrowers or any other Person, or against any security or collateral for the Obligations. Each Borrower consents and agrees that none of the Collateral Agent, Lenders or any other Person shall be under any obligation to marshal any assets in favor of Borrowers or any other Person or against or in payment of any or all of the Obligations.

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(e)Each Borrower expressly waives any and all rights of subrogation, reimbursement, indemnity, exoneration, contribution of any other claim which such Borrower may now or

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hereafter have against the other Borrowers or any other Person directly or contingently liable for the Obligations hereunder, or against or with respect to the other Borrowers’ property (including, without limitation, any property which is Collateral for the Obligations), arising from the existence or performance of this Agreement.

ADMINISTRATIVE BORROWER; COLLATERAL AGENT

Section 3.01    Administrative Borrower.

(a)Each Borrower hereby irrevocably appoints Ventures as the borrowing agent and attorney-in-fact for the Borrowers (the “Administrative Borrower”) which appointment shall remain in full force and effect unless and until the Lender and Collateral Agent shall have received prior written notice signed by all of the Borrowers that such appointment has been revoked and that another Borrower has been appointed Administrative Borrower. Administrative Borrower hereby accepts the appointment by each Loan Party to act as the agent of Borrowers pursuant to this Section 3.01. Administrative Borrower shall ensure that the disbursement of any Loan proceeds to each Borrower requested by or paid to or for the account of Borrowers hereunder, shall be paid to or issued for the account of such Borrower.

(b)Each Borrower hereby irrevocably appoints and constitutes Administrative Borrower as its agent to receive Loan proceeds pursuant to this Agreement and the other Loan Documents from the Lender in the name or on behalf of such Borrower. The Lender may disburse the Loan proceeds to such bank account of Administrative Borrower or a Borrower or otherwise make such Loans to a Borrower, in each case as Administrative Borrower may designate or direct, without notice to any other Borrower or Loan Party. Notwithstanding anything to the contrary contained herein, the Collateral Agent may at any time and from time to time require that amounts be disbursed directly to an operating account of a Borrower or to any other Person.

(c)Each Loan Party hereby irrevocably appoints and constitutes Administrative Borrower as its agent to receive statements on account and all other notices from the Lender and Collateral Agent with respect to the Obligations or otherwise under or in connection with this Agreement and the other Loan Documents. Any notice, election, representation, warranty, agreement or undertaking by or on behalf of any Loan Party by Administrative Borrower shall be deemed for all purposes to have been made by such Loan Party and shall be binding upon and enforceable against such Loan Party to the same extent as if made directly by such Loan Party.

Section 3.02    Collateral Agent Matters.

(a)Appointment. Lender hereby irrevocably appoints the Collateral Agent, and the Borrowers hereby consent to the same, to act on Lender’s behalf as the Collateral Agent hereunder and under the other Loan Documents and authorizes the Collateral Agent to take such actions on Lender’s behalf and to exercise such powers as are delegated to the Collateral Agent by Lender herein and under the Loan Documents pursuant to the terms hereof or thereof for purposes of acquiring, holding and enforcing any and all Liens on Collateral granted by any of the Loan Parties to secure any of the Secured Obligations, together with such powers and

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discretion as are reasonably incidental thereto. Anything contained in any of the Loan Documents to the contrary

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notwithstanding, the Borrowers, Lender, and the Collateral Agent hereby agree that the Lender has delegated to the Collateral Agent all rights to realize upon any of the Collateral under any Loan Document or to enforce any Security Document, it being understood and agreed that all powers, rights and remedies under the Loan Documents have been delegated to the Collateral Agent and may be exercised solely by the Collateral Agent for the benefit of the Lender in accordance with the terms hereof and thereof.

(b)Collateral. The Borrowers and the Lender irrevocably authorize the Collateral Agent at its option and in its discretion: (i) to release any Lien on any property granted to or held by the Collateral Agent (on behalf of the Lender) under any Loan Document pursuant to and in accordance with the terms and conditions thereof (A) upon payment in full of all Obligations (other than contingent indemnification obligations), (B) that is sold or otherwise disposed of or to be sold or otherwise disposed of as part of or in connection with any sale or other disposition permitted hereunder or under any other Loan Document, or (C) if approved, authorized or ratified in writing by the Lender; (ii) to subordinate any Lien on any property granted to or held by the or the Collateral Agent under any Loan Document to the holder of any Lien on such property that is permitted by the Loan Documents; and (iii) to release any Borrower from its obligations under this Agreement (and each other applicable Loan Document) if such Borrower ceases to be a Borrower as a result of a transaction permitted hereunder.

(c)Reliance. The Collateral Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including, but not limited to, any electronic message, internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Collateral Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to exercising rights with respect to the Collateral, the Collateral Agent may presume that such condition has been satisfied upon the Collateral Agent’s written notice from the Lender of such satisfaction. The Collateral Agent may consult with legal counsel (who may be counsel for the Lender), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

(d)Exculpation.

(i)The Collateral Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents, which shall be ministerial and administrative in nature. Without limiting the generality of the foregoing, the Collateral Agent:

(A) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default or an Event of Default has occurred and is continuing; (B) shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Collateral Agent is required to exercise or as may otherwise be directed in writing by the Lender; provided that, the Collateral Agent shall not be required to take any action that, in its opinion or the opinion of its

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counsel, may expose the Collateral Agent to liability or that is contrary to any Loan Document or applicable law, including, for the avoidance of doubt, any Debtor Relief Law applicable to any

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Borrower; and (C) shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Loan Parties or any of their Affiliates that is communicated to or obtained by the Collateral Agent or any of its Affiliates in any capacity.

(ii)The Collateral Agent shall not be liable for any action taken or not taken by it (A) with the consent or at the request of the Lender, or (B) in the absence of its own gross negligence, fraud, or willful misconduct as determined by a final and non-appealable judgment of a court of competent jurisdiction.

(iii)The Collateral Agent shall not be deemed to have knowledge of any Default or Event of Default unless and until notice describing such Default or Event of Default is given to the Collateral Agent in writing by any Loan Party or the Lender. In the event that the Collateral Agent receives such notice, the Collateral Agent shall give prompt notice thereof to the Lender. Upon the occurrence of a Default or Event of Default, the Collateral Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Lender. Unless and until the Collateral Agent shall have received such direction, the Collateral Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to any such Default or Event of Default as it shall deem advisable in the best interest of the Lender. In no event shall the Collateral Agent be required to comply with any such directions to the extent that the Collateral Agent believes that its compliance with such directions would be unlawful.

(iv)The Collateral Agent shall not be responsible for or have any duty to ascertain or inquire into (A) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (B) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (C) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default or Event of Default, (D) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document or the creation, perfection or priority of any Lien purported to be created by the Security Documents, (E) the value or the sufficiency of any Collateral, or (F) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Collateral Agent.

(v)The Collateral Agent shall not be responsible or liable for or have any duty to ascertain, monitor or enforce, compliance with the provisions hereof relating to Disqualified Institutions. Without limiting the generality of the foregoing, the Collateral Agent shall have no

(A) obligation to ascertain, monitor or inquire whether the Lender or Participant or prospective Lender or Participant is a Disqualified Institution or (B) liability with respect to or arising out of any assignment or participation of Loans, or disclosure of Information, to any Disqualified Institution.

(vi)The Collateral Agent shall have no obligation whatsoever to the Lender to assure that the Collateral exists or is owned by the Borrowers or is cared for, protected or insured or has been encumbered or that the Lien granted to the Collateral Agent pursuant to this

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Agreement or any other Loan Document has been properly or sufficiently or lawfully created, perfected, protected or enforced or is entitled to any particular priority, or to exercise at all or in any particular

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manner or under any duty of care, disclosure or fidelity, or to continue exercising, any of the rights, authorities and powers granted or available to the Collateral Agent in any Loan Document, it being understood and agreed that in respect of the Collateral, or any act, omission or event related thereto, the Collateral Agent may act in any manner it may deem appropriate, in its sole discretion.

(d)Proofs of Claim. In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Borrower, the Collateral Agent (irrespective of whether the principal of any Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether any Agent shall have made any demand on the Borrowers) shall be entitled and empowered (but not obligated) by intervention in such proceeding or otherwise:

(i)to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loan and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the secured parties (including any claim for the compensation, expenses, disbursements and advances of the secured parties and their respective agents and counsel and all other amounts due the secured parties hereunder and under the other Loan Documents) allowed in such judicial proceeding; and

(ii)to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each secured party to make such payments to the Collateral Agent and, in the event that the Collateral Agent shall consent to the making of such payments directly to the Lender, to pay to the Collateral Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Collateral Agent and its agents and counsel, and any other amounts due the Collateral Agent hereunder and under the other Loan Documents.

(e)Indemnification. To the extent that the Collateral Agent or any Related Party of the foregoing is not reimbursed and indemnified by any Borrower, and whether or not the Collateral Agent has made demand on the Administrative Borrower for the same, the Lender will, within five (5) days of written demand by the Collateral Agent, reimburse the Collateral Agent and such Related Parties for and indemnify the Collateral Agent and such Related Parties from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses (including, without limitation, client charges and expenses of counsel or any other advisor to the Collateral Agent and such Related Parties), advances or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against the Collateral Agent and the Related Parties in any way relating to or arising out of this Agreement or any of the other Loan Documents or any action taken or omitted by the Collateral Agent and such Related Parties under this Agreement or any of the other Loan Documents; provided, however, that the Lender shall not be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses,

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advances or disbursements for which there has been a final non-appealable judicial determination that such liability resulted from the Collateral Agent’s or such Related Party’s gross negligence or willful misconduct. The Collateral Agent shall not be obliged to expend or risk its own funds or otherwise incur any financial liability in the performance

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of its duties, obligations or responsibilities or the exercise of any right, power, authority or discretion if it has grounds for believing the repayment of such funds or adequate indemnity against, or security for, such risk or liability is not reasonably assured to it. The obligations of the Lender under this Section 3.02(f) shall survive the payment in full of the Loan and the termination of this Agreement.

(f)Resignation and Removal.

(i)The Collateral Agent may at any time give thirty (30) days prior written notice of its resignation to the Lender and the Administrative Borrower. Upon receipt of any such notice of resignation, the Lender shall have the right to appoint a successor Collateral Agent selected by the Lender in its sole discretion. If no such successor shall have been so appointed by the Lender and shall have accepted such appointment within thirty (30) days after the retiring Collateral Agent gives notice of its resignation, or by such earlier date as agreed by the Lender (the “Agent Resignation Date”), then the retiring Collateral Agent may, but shall not be obligated to, on behalf of the Lender, appoint a successor Collateral Agent meeting the qualifications set forth above; provided that no successor Collateral Agent shall be an Affiliate of the Lender or a Disqualified Institution. Regardless of whether a qualifying Person has accepted such appointment, such resignation shall nonetheless become effective in accordance with such notice on the Agent Resignation Date.

(ii)The Collateral Agent may be removed as Collateral Agent at any time, with or without cause, by the Lender upon thirty (30) days’ prior written notice to the Collateral Agent (the “Agent Removal Date”). Upon any such removal, the Lender shall have the right to appoint a successor Collateral Agent selected by the Lender in its sole discretion. If no such successor shall have been so appointed by the Lender and shall have accepted such appointment on the Agent Removal Date, such removal shall nonetheless become effective in accordance with such notice on the Agent Removal Date.

(iii)With effect from the Agent Resignation Date or the Agent Removal Date, as applicable (A) the retiring or removed Collateral Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that in the case of any Collateral held by the Collateral Agent on behalf of the Lender under any of the Loan Documents, the retiring or removed Collateral Agent shall continue to hold such collateral security until such time as a successor Collateral Agent is appointed) and (B) except for any indemnity payments owing to the retiring or removed Collateral Agent, all payments, communications and determinations provided to be made by, to or through the Collateral Agent shall instead be made by or to the Lender directly, until such time, if any, as the Lender appoints a successor Collateral Agent as provided for above in this Section 3.02(g). Upon the acceptance of a successor’s appointment as Collateral Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring or removed Collateral Agent (except with respect to indemnity payments owed to the retiring or removed Collateral Agent), and the retiring or removed Collateral Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents. The fees payable by the Borrowers to a successor Collateral Agent shall be the same as those payable to its predecessor

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unless otherwise agreed between the Borrowers and such successor. After the retiring or removed Agent’s resignation or removal hereunder and under the other Loan Documents, the provisions of this Section 3.02(g)

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and Sections 3.02(f) and 9.03 shall continue in effect for the benefit of such retiring or removed Collateral Agent and its respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring or removed Collateral Agent was acting as Collateral Agent hereunder.

CONDITIONS PRECEDENT

Section 4.01 Conditions Precedent to the Closing Date Term Loan. The obligation of the Lender to make the Closing Date Term Loan requested to be made by it hereunder is subject to the satisfaction or the waiver by the Lender of the following conditions precedent:

(a)The Lender shall have received, in form and substance reasonably satisfactory to the Lender, as applicable:

(i)this Agreement, duly executed and delivered by an authorized officer of each of the Borrowers; and

(ii)the Security Documents, Intercompany Subordination Agreement, and other Loan Documents, in each case executed and delivered by the Loan Parties party thereto;

(iii)a Landlord Agreement with respect to all leases of real property under which any Borrower is the lessee, executed by the applicable landlord and Borrower lessee, substantially in the form attached hereto as Exhibit C or otherwise acceptable in form and substance to the Collateral Agent (“Landlord Agreement”);

(iv)[reserved];

(v)a flow of funds showing the funding of the Loan together with all deductions therefrom, approved by the Administrative Borrower;

(vi)results of a recent lien search in each of the jurisdictions where the Loan Parties are organized and the assets of the Loan Parties are located, and such searches confirm the priority of the Liens in favor of the Lender and reveal no liens on any of the assets of the Loan Parties, except for liens permitted under this Agreement or discharged on or prior to the Closing Date pursuant to documentation satisfactory to the Lender;

(vii)satisfactory evidence that each document (including any Uniform Commercial Code or PPSA financing statement and appropriate filings with the United States Patent and Trademark Office, the United States Copyright Office, or the Canadian Intellectual Property Office) required by the Loan Documents or any Legal Requirement or reasonably requested by the Lender to be filed, registered, or recorded in order to create in favor of the Lender a perfected first priority Lien on the Collateral described therein, prior and superior in right to any other Person (other than with respect to Liens expressly permitted under this Agreement), shall be in proper form for filing, registration, and recording and provided to the Lender for filing in each jurisdiction;

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(viii)(A) [reserved]; and (B) each promissory note (if any) pledged to the Lender

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pursuant to the Security Documents endorsed in blank (or accompanied by an undated executed note power in blank) by the pledgor thereof;

(ix)a customary FinCEN beneficial ownership certification in relation to each

Borrower; and

(x)all fees required to be paid, and all expenses for which invoices have been

presented (including the fees of legal counsel, which, for the due diligence prior to the Closing Date and negotiation and preparation of the Loan Documents prior to the Closing Date shall not exceed $150,000.00 and expenses of legal counsel, which, for the due diligence prior to the Closing Date, shall not exceed $15,000.00), on or before the Closing Date. All such amounts will be paid with proceeds of Loans made on the Closing Date and will be reflected in the funding instructions given by the Administrative Borrower to the Lender on or before the Closing Date.

(b)[reserved];

(c)There shall have occurred no Material Adverse Effect since July 31, 2023;

(d)The Lender shall have received, in form and substance satisfactory to it, a certificate of Ventures, certified by a secretary of such Ventures, dated the Closing Date, including:

(i)a certificate of formation, organization, or incorporation, as applicable, of each Loan Party certified by the relevant authority of the jurisdiction of organization of such Loan Party;

(ii)by-laws, operating agreements, and other governing documents, as applicable, for each Loan Party as in effect on the date on which the resolutions referred to below were adopted;

(iii)resolutions of the governing body of each Loan Party approving the transaction and each Loan Document to which it is or is to be a party, and of all documents evidencing other necessary corporate, partnership, or limited liability company action;

(iv)a certification that the names, titles, and signatures of the officers of each Loan Party authorized to sign each Loan Document to which it is or is to be a party and other documents to be delivered hereunder and thereunder are true and correct; and

(v)a good standing certificate for each Loan Party (A) from its jurisdiction of organization, and (B) from each state where it is qualified to do business (unless such qualification is not necessary for the conduct of such Loan Party’s business in such state(s));

(e)The Lender shall have received customary legal opinions of outside counsel to the Borrowers covering such matters incident to the transactions contemplated by this Agreement as the Lender may require;

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(f)The Lender shall have received evidence of insurance coverage in form, scope, and substance satisfactory to the Lender and otherwise in compliance with the terms of Section 5.10 and Section 6.06 of this Agreement;

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(g)The Lender shall have received copies of the financial statements referenced in Section 5.04;

(h)The Lender shall have received a pro forma consolidated balance sheet of the Borrowers as of the Closing Date, after giving effect to the Loan, and such pro forma consolidated balance sheet shall not be materially inconsistent with the forecasts previously provided by the Borrowers to the Lender;

(i)No statute, rule or regulation shall have been enacted or promulgated by any Governmental Authority that prohibits or restrains the consummation of the Closing, nor shall there be any order or injunction of a court of competent jurisdiction in effect precluding consummation of the Closing, nor shall any claim or action be pending before any Governmental Authority, which, if successful, would enjoin, restrain, or prohibit the consummation of the transactions contemplated by this Agreement;

(j)All proceedings in connection with the making of the Loan and the other transactions contemplated by this Agreement and the other Loan Documents, and all documents incidental hereto and thereto, shall be satisfactory to the Lender and its counsel, and the Lender and such counsel shall have received all such information and such counterpart originals or certified or other copies of such documents as the Collateral Agent or such counsel may reasonably request; and

(k)Collateral Agent shall have received a fee letter (in form and substance acceptable to Collateral Agent) duly executed by Borrowers (or any of them as required by Collateral Agent) and any fees that may be required to be paid on or before the Closing Date as described therein shall have been paid to Collateral Agent pursuant to the terms thereof.

(l)The Lender shall have completed its business, legal and collateral due diligence with respect to each Borrower and the results thereof shall be acceptable to the Lender, in its sole and absolute discretion.

Section 4.02 Conditions Precedent to each Second Tranche Term Loan. The obligation of the Lender (i) to make each Second Tranche Term Loan requested to be made by it hereunder or (ii) to advance any amounts subject to the terms of Section 6.14 is subject to the satisfaction (or the waiver by the Lender) of the following conditions precedent (collectively, the “Second Tranche Conditions”):

(a)Each of the representations and warranties made by any Loan Party in or pursuant to the Loan Documents shall be true and correct in all material respects (or, as to any representation and warranty that is qualified by materiality or Material Adverse Effect, in all respects) on and as of the date such Loan is made as if made on and as of such date;

(b)No Default or Event of Default shall have occurred and be continuing (or with nothing more than the passage of time, will occur) on such date or after giving effect to the Loans requested to be made on such date;

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(c)The Lender shall have received a certificate of a Responsible Officer of the Administrative Borrower that each of the conditions set forth in Section 4.02(a) and Section

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4.02(b) have been satisfied;

(d)The applicable Second Tranche Term Loan: (a) is made on a date that is prior to the date that is nine months from the Closing Date, and (b) does not cause the total principal amount of all Loans made hereunder to exceed the Maximum Facility Amount;

(e)Lender shall have received results of a recent lien search in each of the jurisdictions where the Loan Parties are organized and the assets of the Loan Parties are located, and such searches confirm the priority of the Liens in favor of the Lender and reveal no liens on any of the assets of the Loan Parties, except for liens permitted under this Agreement or discharged on or prior to the date of the funding of such Second Tranche Term Loan pursuant to documentation satisfactory to the Lender;

(f)Lender shall have received Landlord Agreements for any new locations of Borrowers since the later of the Closing Date or the date of the most recent Second Tranche Term Loan;

(g)Lender shall have received all fees owed in connection with the making of such Second Tranche Term Loan, and, to the extent any fees owing by Borrowers to Lender remain unpaid, Lender shall have received payment of such outstanding fees;

(h)All governmental and third party approvals necessary in connection with the Second Tranche Term Loan, if any, shall have been obtained and be in full force and effect, and all applicable waiting periods shall have expired without any action being taken or threatened by any competent authority that would restrain, prevent, or otherwise impose materially adverse conditions on the financing contemplated hereby;

(i)If such Second Tranche Term Loan is to be used to fund any portion of the purchase price of a Permitted Acquisition, all conditions set forth in the definition of Permitted Acquisition shall have been satisfied on or prior to the date of funding of such Second Tranche Term Loan;

(j)Lender shall have received, in form and substance acceptable to Lender, evidence of the status of the IGH Litigation and Teichman Litigation, including whether any judgments have been entered against any Loan Party part thereto;

(k)Borrowers shall have satisfied the covenants set forth in Section 6.15;

(l)Either (x) Borrowers shall have paid the obligations evidenced by the Island Note in full, and Borrowers shall have provided Lender with evidence (in form and substance acceptable to Lender in its sole discretion) of such payoff, or (y) the maturity date of the Island Note shall have been extended to January 1, 2025 (or to such other date as Lender may agree in its sole discretion).

(m)Lender shall have received an amendment to the Island Intercreditor Agreement, in form and substance acceptable to Lender in its sole discretion; and

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(n)The Lender shall have completed its business, legal and collateral due diligence with respect to the satisfaction of the conditions set forth herein and the results thereof shall be

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acceptable to the Lender, in its sole and absolute discretion.

REPRESENTATIONS AND WARRANTIES

To induce the Lender to enter into this Agreement and to make the Loans hereunder, the Borrowers hereby represent and warrant to the Lender that:

Section 5.01 Existence; Compliance With Laws. Each Loan Party (a) is duly organized, validly existing, and in good standing under the laws of the jurisdiction of its formation, (b) is duly qualified as a foreign corporation or other organization and in good standing under the laws of each jurisdiction where its ownership, lease, or operation of property or the conduct of its business requires such qualification except to the extent that the failure to qualify in such jurisdiction could not reasonably be expected to have a Material Adverse Effect, and (c) is in compliance with all applicable Legal Requirements (including all Canadian Cannabis Laws).

Section 5.02    Power; Authorization; Enforceability.

(a)Each Loan Party has the power and authority, and the legal right, to own or lease and operate its property, and to carry on its business as now conducted and as proposed to be conducted, and to execute, deliver, and perform the Loan Documents to which it is a party and, in the case of each Borrower, to obtain Loans hereunder. Each Loan Party has taken all necessary organizational action to authorize the execution, delivery, and performance of the Loan Documents to which it is a party and, in the case of each Borrower, to authorize the borrowing of Loans on the terms and conditions contained herein. No consent or authorization of, filing with, notice to, or other act by, or in respect of, any Governmental Authority or any other Person is required in connection with the extensions of credit hereunder or with the execution, delivery, performance, validity, or enforceability of this Agreement or any of the Loan Documents, except (i) consents, authorizations, filings, and notices described in Schedule 5.02, which consents, authorizations, filings, and notices have been obtained or made and are in full force and effect and (ii) the filings referred to in Section 4.01(a)(vii). Each Loan Document has been duly executed and delivered by each Loan Party thereto.

(b)This Agreement constitutes, and each other Loan Document when delivered hereunder will constitute, a legal, valid, and binding obligation of each Loan Party thereto, enforceable against each such Loan Party in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law).

Section 5.03 No Contravention. The execution, delivery, and performance of this Agreement and the other Loan Documents, the borrowing of Loans hereunder, and the use of the proceeds thereof (a) will not violate any applicable Legal Requirement, any Organizational Document, or any Contractual Obligation of any Loan Party and (b) will not result in, or require, the creation or imposition of any Lien on any of their respective properties or assets pursuant to

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any applicable Legal Requirement, Organizational Document, or any such Contractual Obligation

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(other than the Liens created by the Loan Documents). No applicable Legal Requirement or Contractual Obligation applicable to any Loan Party could reasonably be expected to have a Material Adverse Effect.

Section 5.04 Financial Statements. The audited consolidated balance sheets of the Borrowers for the fiscal years 2020, 2021, 2022, and 2023 (through August 31, 2023), and the related audited, if available, or unaudited, if audited versions are not available, consolidated statements of income and of cash flows for the period ended on each such date, duly certified by the chief financial officer of each Borrower, present fairly in all material respects the consolidated financial condition of the Borrowers as at such date, and the consolidated results of their operations and their consolidated cash flows for the period then ended on each such date, in accordance with GAAP (subject to normal year-end audit adjustments and the absence of footnotes).

Section 5.05 No Material Adverse Effect. Since July 31, 2023, no development or event has occurred that has had or could reasonably be expected to have a Material Adverse Effect with respect to any Borrower.

Section 5.06 No Litigation. No action, suit, litigation, investigation, or proceeding of or before any arbitrator or Governmental Authority is pending or, to the knowledge of any Borrower, threatened by or against any Loan Party or against any of its property or assets (a) with respect to any of the Loan Documents or any of the transactions contemplated hereby or thereby or (b) that could reasonably be expected to have a Material Adverse Effect, other than that set forth on Schedule 5.06 (the “Disclosed Litigation”), and there has been no adverse change in the status, or financial effect on any Borrower or any other Loan Party, of the Disclosed Litigation from that described on Schedule 5.06.

Section 5.07 No Default. No Default or Event of Default has occurred and is continuing and no default has occurred and is continuing under or with respect to any Contractual Obligation of any Borrower or any of its Subsidiaries that could reasonably be expected to have a Material Adverse Effect.

Section 5.08    Real Property Leases.

(a)Except as described on Schedule 5.08(a), each Loan Party holds a valid leasehold interest in all its real property, and good title to, or a valid leasehold interest in, all its other property, and none of such property is subject to any Lien except as permitted by Section 7.02.

(b)Schedule 5.08(b) sets forth a complete and accurate list as of the date hereof of all leases, subleases or licenses of or other agreement granting a possessory interest in real property to which any Borrower is a party as lessor, lessee, sublessor, sublessee, licensor or licensee of real property, showing as of the date hereof, the street address, state, lessor, lessee, and expiration date.

(c)No Borrower is a sublessor or grantor under any sublease or other instrument granting to any other Person any right to the possession, lease, occupancy or enjoyment of any of

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the real property leased by the Borrower that is the tenant under such lease The use and operation of the of the real property leased by each Borrower that is the tenant under such lease, sublease or license of or other agreement granting a possessory interest in real property to which any Borrower is a party as lessor, lessee, sublessor, sublessee, licensor or licensee in the conduct of such

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Borrower’s business does not violate any covenant, condition, restriction, easement, Legal Requirement, permit, license, authorization, approval, entitlement, accreditation, or Contractual Obligation.

(d)Except as set forth on Schedule 5.08(d), no Loan Party owns any real property.

Section 5.09    Environmental Matters. Except as set forth on Schedule 5.09:

(a)none of the facilities or properties currently or formerly owned, leased, or operated by any Loan Party (the “Properties”) contain or previously contained, any Hazardous Materials in amounts or concentrations or under circumstances that constitute or constituted a violation of, or could result in liability under, any Environmental Law;

(b)no Loan Party has received any notice of actual or alleged violation, non- compliance, or liability regarding compliance with Environmental Laws or other environmental matters or with respect to any of the Properties or the business operated by any Loan Party, nor is there any reason to believe that any such notice will be received or is being threatened;

(c)the Properties and all operations at the Properties are and formerly have been in compliance with all applicable Environmental Laws, and there is no contamination at, under, or about the Properties or violation of any Environmental Law with respect to the Properties or the business operated by any Loan Party.

Section 5.10 Insurance. The properties of the Loan Parties are insured with financially sound and reputable insurance companies, in such amounts, with such deductibles, and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where the applicable Loan Party operates. Schedule 5.10 sets forth a description of all insurance maintained by or on behalf of the Loan Parties as of the Closing Date. Each insurance policy listed on Schedule 5.10 is in full force and effect and, except as described on Schedule 5.10, all premiums in respect thereof that are due and payable have been paid.

Section 5.11 Material Contracts. Schedule 5.11 sets forth all Material Contracts to which any Loan Party is a party or is bound as of the Closing Date. The Administrative Borrower has delivered true, correct, and complete copies of such Material Contracts to the Lender on or before the Closing Date. Each Material Contract is in full force and effect and is binding upon and enforceable against each Loan Party that is a party thereto and, to the best knowledge of such Loan Party, all other parties to such Material Contracts, in accordance with its terms. The Loan Parties are not in breach or in default in any material respect of or under any Material Contract and have not received any notice of the intention of any other party thereto to terminate any Material Contract.

Section 5.12 Related Party Transactions. No Loan Party nor any of Subsidiaries have directly or indirectly, purchased, acquired or leased any property from, or sold, transferred or leased any property to, or made any payment to, entered into any Contract or transaction with, or otherwise dealt with, any Related Parties of any Loan Party except for (a) compensation,

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customary indemnification and benefits of employees, officers and managers; (b) transactions in the ordinary course of business (including ordinary course distributions and/or loans to cover income taxes on pass-through income), in any case on an arm’s length basis on terms no less

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favorable than terms which would have been obtainable from a Person other than a Related Party of a Loan Party; and (c) LI Lending, LLC, a Delaware limited liability company.

Section 5.13 Permits. Schedule 5.13 sets forth a list of all Required Licenses. Each Loan Party has, and is in compliance with, all permits, licenses, authorizations, approvals, entitlements and accreditations required for such Loan Party lawfully to own, lease, manage or operate, or to acquire, each business currently managed or operated, or to be acquired, by such Person, including but not limited to each Required License. Except as described on Schedule 5.13, no condition exists or event has occurred which, in itself or with the giving of notice or lapse of time or both, would result in the suspension, revocation, impairment, forfeiture or non-renewal of any material permit, license, authorization, approval, entitlement or accreditation necessary to the operation of the business of any Loan Party, including but not limited to each Required License, and there is no claim that any thereof is not in full force and effect.

Section 5.14    Taxes.

(a)Except as set forth on Schedule 5.14, (i) each Loan Party has filed timely all Federal, state, and other tax returns that are required to be filed and has paid all taxes shown thereon to be due, together with applicable interest and penalties, and all other taxes, fees, or other charges imposed on it or any of its property by any Governmental Authority, (ii) no tax Lien has been filed,

(iii) to the knowledge of any Borrower, no claim is being asserted, with respect to any such tax, fee, or other charge, and (iv) no Loan Party is a party to any tax sharing agreement.

(b)Except as set forth on Schedule 5.14, all Taxes imposed upon any Loan Party or any property of any Loan Party which have become due and payable on or prior to the date hereof have been paid, except Taxes not overdue by more than thirty (30) days or, if more than thirty (30) days overdue, that are being contested in good faith by proper proceedings which stay the imposition of any Lien resulting from the non-payment thereof and with respect to which adequate reserves have been set aside for the payment thereof on the Financial Statements in accordance with GAAP.

(c)Except as set forth on Schedule 5.14, other than the non-deductibility of certain expenses pursuant to Section 280E of the Code, no issues have been raised by the Internal Revenue Service or by any state, local, or foreign taxing authorities that, in the aggregate could reasonably be expected to have a Material Adverse Effect.

Section 5.15    ERISA, etc.

(a)To the extent applicable thereto, each Employee Plan is in compliance with ERISA, the Code and any other Legal Requirement, and neither a Reportable Event nor an “accumulated funding deficiency” (within the meaning of §412 or §430 of the Code or §302 of ERISA) has occurred (or is likely to occur) with respect to any Employee Plan. No Single Employer Plan has terminated, and no Lien has been incurred in favor of the PBGC or an Employee Plan. Based on the assumptions used to fund each Single Employer Plan, the present value of all accrued benefits under each such Employee Plan did not materially exceed the value

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of the assets of such Employee Plan allocable to such accrued benefit as of the last annual valuation date prior to the date on which this representation is made. Neither any Loan Party nor any ERISA Affiliate has incurred or is

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reasonably expected to incur any Withdrawal Liability that could reasonably be expected to result in a material liability under ERISA, in connection with any Employee Plan. There are no claims (other than routine claims for benefits) or lawsuits involving employees or independent contractors of a Loan Party that have been asserted or instituted against such Loan Party, or to the Loan Parties’ knowledge any Employee Plan. There are no claims (other than routine claims for benefits) or lawsuits involving employees or independent contractors of a Loan Party that have been asserted or instituted against such Loan Party, or to the Loan Parties’ knowledge any Employee Plan.

(b)To the extent applicable thereto, each Canadian Pension Plan is in compliance in with all Legal Requirements. Each Loan Party and each Subsidiary thereof has made all required contributions to each Canadian Pension Plan. There are no claims (other than routine claims for benefits) or lawsuits involving employees or independent contractors of a Loan Party that have been asserted or instituted against such Loan Party, or to the Loan Parties’ knowledge any Canadian Pension Plan. No Loan Party or Subsidiary maintains, contributes to, or has any liability or contingent liability with respect to, a Canadian Defined Benefit Pension Plan.

Section 5.16 Liens. Schedule 5.16 sets forth a complete and accurate list as of the date hereof of all Liens on the property or assets of any Loan Party, showing as of the date hereof the lienholder thereof and the property or assets of such Loan Party subject thereto.

Section 5.17 Good Title. Each Loan Party has good and marketable title to, valid leasehold interests in, or valid licenses to use, its tangible personal property and assets free and clear of all Liens other than Liens permitted by the Loan Documents. All such properties and assets are in good working order and condition, ordinary wear and tear and casualty excepted.

Section 5.18 Investment Company Act. No Loan Party is or is required to be registered as an “investment company” under the Investment Company Act of 1940, as amended.

Section 5.19    Equity Interests.

(a)Schedule 5.19(a) sets forth, an organizational chart of the Borrowers and the holders of Equity Interests in the Borrowers. No Borrower holds any Equity Interests in any other Person other than those disclosed on Schedule 5.19(a).

(b)All of the outstanding Equity Interests in each Borrower and each Subsidiary have been validly issued, are fully paid and non-assessable, and all of such outstanding Equity Interests are owned by the owner thereof free and clear of all Liens except those created under the Loan Documents and such entity’s applicable Organizational Documents.

Section 5.20 Labor Matters. There are no strikes, lockouts, or other labor disputes pending or, to the knowledge of the Borrower, threatened against any Loan Party. Hours worked by and wages paid to employees of each Loan Party have not violated the Fair Labor Standards Act or any other applicable Legal Requirement. All payments due in respect of employee health and welfare insurance from any Loan Party have been paid or properly accrued on the books of the relevant Loan Party.

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Section 5.21 Accuracy of Information, Etc. Each Loan Party has disclosed to the Lender all agreements, instruments, and corporate or other restrictions to which it or any of its

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Subsidiaries is subject as of the Closing Date, and all other matters known to it as of the Closing Date, that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. No statement or information contained in this Agreement, any other Loan Document, or any other document, certificate, or statement furnished by or on behalf of any Borrower to the Lender, for use in connection with the transactions contemplated by this Agreement or the other Loan Documents, contained, any untrue statement of a material fact or omitted to state a material fact necessary to make the statement contained herein or therein not misleading. The Projections included in such materials are based upon good faith estimates and assumptions believed by the Borrowers to be reasonable at the time made; it being recognized by the Lender that such Projections as to future events are not to be viewed as fact and that actual results during the period or periods covered by the Projections may differ from such projected results and such differences may be material.

Section 5.22    Security Documents.

(a)Each of the Security Documents creates in favor of the Lender a legal, valid, continuing, and enforceable security interest in the Collateral, the enforceability of which is subject to applicable bankruptcy, insolvency, reorganization, moratorium, or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law. The financing statements, releases and other filings are in appropriate form and have been or will be filed in the offices specified in the Security Agreement Schedules.

(b)Upon such filings and/or the obtaining of “control” (as defined in the Uniform Commercial Code or within the meaning of the PPSA), the Lender will have a perfected Lien on, and security interest in, to and under all right, title, and interest of the grantors thereunder in all Collateral that may be perfected by filing, recording, or registering a financing statement or analogous document (including without limitation the proceeds of such Collateral subject to the limitations relating to such proceeds in the Uniform Commercial Code or the PPSA) or by obtaining control, under the Uniform Commercial Code or the PPSA (in effect on the date this representation is made) in each case prior and superior in right to any other Person, except for Liens permitted under Section 7.02.

Section 5.23 Solvency. As of September 30, 2024 and for all periods thereafter, each Loan Party is, and after giving effect to the incurrence of all Debt and obligations incurred in connection herewith will be, Solvent.

Section 5.24    OFAC and Other Regulations.

(a)No Loan Party, any of its Subsidiaries, or, to the knowledge of each Loan Party, any of the Affiliates or respective officers, directors, brokers, or agents of such Loan Party, Subsidiary, or Affiliate: (i) has violated any Anti-Corruption Laws or Sanctions Laws; or (ii) has engaged in any transaction, investment, undertaking, or activity that conceals the identity, source, or destination of the proceeds from any category of prohibited offenses designated by the Organization for Economic Co-operation and Development’s Financial Action Task Force on Money Laundering.

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(b)No Loan Party, any of its Subsidiaries, or, to the knowledge of each Loan Party, any of the Affiliates or respective officers, directors, brokers, or agents of such Loan Party, Subsidiary, or Affiliate that is acting or benefiting in any capacity in connection with the Loans is a Sanctioned Entity.

(c)No Loan Party, any of its Subsidiaries, or, to the knowledge of each Loan Party, any of the Affiliates or respective officers, directors, brokers, or agents of such Loan Party, Subsidiary, or Affiliate acting or benefiting in any capacity in connection with the Loans: (i) conducts any business or engages in making or receiving any contribution of goods, services, or money to or for the benefit of any Sanctioned Entity; (ii) deals in, or otherwise engages in any transaction related to, any property or interests in property blocked pursuant to any Anti- Corruption Law or Sanctions Law; or (iii) engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Corruption Law or Sanctions Law.

AFFIRMATIVE COVENANTS

So long as any Loans or any other amounts payable to the Lender hereunder or under any other Loan Document have not been paid in full, the Borrowers shall, and shall cause their Subsidiaries to (except that, in the case of the covenants set forth in Section 6.01, Section 6.02, and Section 6.03, the Administrative Borrower shall furnish all applicable materials to the Lender):

Section 6.01    Financial Statements. Furnish to the Lender:

(a)As soon as available, but in any event within 120 days after the end of each fiscal year of the Borrowers, a copy of the annual audit report of the Borrowers and their Subsidiaries for such year including a copy of the audited consolidated balance sheet of the Borrowers and their Subsidiaries as at the end of such year and the related audited consolidated statements of income and of cash flows for such year, setting forth in each case in comparative form the figures for the previous year, together with an opinion as to such audit report of Davidson & Company or other independent certified public accountants of nationally recognized standing which does not contain a qualification arising out of the scope of the audit; provided that, in the event of any change in generally accepted accounting principles used in the preparation of such financial statements, the Administrative Borrower shall also provide a reconciliation of such financial statements to GAAP; and

(b)As soon as available, but in any event not later than 45 days after the end of each of the first three quarterly periods of each fiscal year of the Borrowers, the unaudited consolidated balance sheet of the Borrowers and their Subsidiaries as at the end of such quarter and the related unaudited consolidated statements of income and of cash flows for such quarter and the portion of the fiscal year through the end of such quarter, setting forth in each case in comparative form the figures for the previous year, certified by a Responsible Officer as being fairly stated in all material respects (subject to normal year-end audit adjustments); and

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(c)As soon as available, but in any event not later than 30 days after the end of each month occurring during each fiscal year of the Borrowers, the unaudited consolidated balance

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sheets of the Borrowers and their Subsidiaries as at the end of such month and the related unaudited consolidated statements of income and of cash flows for such month and the portion of the fiscal year through the end of such month, setting forth in each case in comparative form the figures for the previous year, certified by a Responsible Officer as being fairly stated in all material respects (subject to normal year-end audit adjustments).

All such financial statements delivered pursuant to this Section 6.01 shall be complete and correct in all material respects and shall be prepared in reasonable detail and in accordance with GAAP applied (except as approved by such accountants or Responsible Officer, as the case may be, and disclosed in reasonable detail therein) consistently throughout the periods reflected therein and with prior periods. Notwithstanding the foregoing, if the SEC extends the Borrowers’ filing deadlines of any such financial statements described above, the delivery dates set forth in 6.01(a) through (c) above for such financial statements shall be extended for the same period of time.

Section 6.02    Certificates; Other Information. Furnish the following to the Lender:

(a)As soon as available, but in any event (i) within 120 days after the end of each fiscal year of the Borrowers, forecasts prepared by the management of the Borrowers, in a form reasonably satisfactory to the Lender, of projected consolidated balance sheets, income statements, statements of cash flows, projected changes in financial position, and a description of the underlying assumptions applicable thereto, and as soon as available, significant revisions, if any, of such forecast with respect to such fiscal year (the “Projections”), which Projections shall in each case be accompanied by a certificate of the Responsible Officer stating that such Projections are based on reasonable estimates, information, and assumptions and that such Responsible Officer has no reason to believe that such Projections are incorrect or misleading in any material respect and (ii) within 45 days after the end of each fiscal quarter of the Borrowers, a narrative discussion and analysis of the financial condition and results of operations of the Borrowers and their Subsidiaries for such fiscal quarter, as compared to the portion of the Projections covering such periods and to the comparable periods of the previous year;

(b)On the same dates as delivery of the quarterly and annual financial statements in Section 6.01(a) and Section 6.01(b), a compliance certificate in the form attached hereto as Exhibit E (the “Compliance Certificate”) from a Responsible Officer of the Administrative Borrower:

(i)containing all information and calculations necessary for determining compliance by the Loan Parties with the provisions of this Agreement as of the last day of the fiscal quarter or fiscal year of the Borrowers, as the case may be; and

(ii)stating that, except as noted in any schedules to such Compliance Certificate, the representations and warranties made by the Borrowers contained in Article V of this Agreement and in each other Loan Document, certificate or other writing delivered to any secured party pursuant hereto or thereto remain true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations or warranties that already are qualified or modified as to materiality or “Material Adverse Effect” in the text

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thereof, which representations and warranties shall be true and correct in all respects subject to such qualification) on and as of such date as though made on and as of such date, except to the extent

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that any such representation or warranty expressly relates solely to an earlier date (in which case such representation or warranty shall be true and correct on and as of such earlier date); and

(iii)stating that each Loan Party during such period has observed and performed all of the covenants and other agreements, and satisfied every condition contained in this Agreement and the other Loan Documents to which it is a party to be observed, performed, or satisfied by it, and that such officer has not obtained any knowledge of any Default or Event of Default except as specified in such Compliance Certificate; and

(iv)attaching confirmation that there have been no changes to the information contained in each of the Security Agreement Schedules delivered on the Closing Date or the date of the most recently updated Security Agreement Schedules delivered pursuant to this clause (iii) and/or attaching an updated Security Agreement Schedules identifying any such changes to the information contained therein;

(c)Promptly, and in any event within 30 days thereafter, to the extent not previously disclosed to the Lender, a description of any change in the jurisdiction of organization of any Loan Party;

(d)Promptly after the same are sent, copies of all proxy statements, financial statements, and reports that any Loan Party sends to any of its securities holders, and copies of all reports and registration statements that any Loan Party files with the SEC or any national securities exchange (excluding insider trading reports);

(e)Promptly after the same are sent, copies of any statement or report sent to any holder of debt securities of any Loan Party pursuant to the terms of any indenture, loan agreement, or similar agreement and not otherwise required to be furnished to the Lender pursuant to any other clause of this Section;

(f)Promptly upon receipt of the same, copies of all notices, requests, and other documents received by any Loan Party under or pursuant to any Material Contract or instrument, indenture, or loan agreement regarding or related to any breach or default by any party thereto or any other event that could materially impair the value of the interests or the rights of any Loan Party or otherwise have a Material Adverse Effect, and such information and reports regarding Material Contracts and such instruments, indentures, and loan agreements as the Lender may request from time to time;

(g)As soon as available, and in any event within 30 days after the end of each fiscal year, a report summarizing the insurance coverage (specifying type, amount, and carrier) in effect for the Borrowers and containing such additional information as the Lender may reasonably specify;

(h)As soon as available, and in any event within 3 business days of such payment, evidence in form and substance acceptable to Lender that Borrowers have caused to be paid all rent then due to the landlord of any leased property of Borrowers which lease or any guaranty thereof by a Borrower constitutes a Material Contract; and

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(i)Such other information respecting the business, condition (financial or otherwise),

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operations, performance, properties, or prospects of any Loan Party as the Lender may from time to time reasonably request.

Section 6.03    Notices. Promptly, and in any event within three (3) Business Days, give notice to the Lender of:

(a)The occurrence of any Default or Event of Default;

(b)Any (i) default or event of default under any Material Contract of any Loan Party or (ii) litigation, investigation, or proceeding that may exist at any time between any Loan Party and any Governmental Authority other than, in respect of clause (ii), routine inquiries by any Governmental Authority;

(c)Any litigation or proceeding affecting any Loan Party (i) in which the amount involved is at least $250,000 and not covered in full by insurance, (ii) in which injunctive or similar relief is sought, or (iii) which relates to any Loan Document;

(d)The following events:

(i)the occurrence of any Reportable Event with respect to any Employee Plan, a failure to make any required contribution to an Employee Plan, the creation of any Lien in favor of the PBGC or any Multiemployer Plan; or

(ii)the institution of proceedings or the taking of any other action by the PBGC or any Borrower or any ERISA Affiliate or any Multiemployer Plan with respect to the withdrawal from, or the termination, Reorganization, or Insolvency of, any Employee Plan;

(e)The occurrence of any Environmental Action against or of any noncompliance by any Loan Party with any Environmental Law or relevant permit;

(f)Any loss, damage or destruction in excess of $1,000,000 of any of the Collateral to the extent not covered by insurance;

(g)Any change in the executives of Ventures (including without limitation any change in the chief executive officer, chief financial officer, or any other employee of Ventures who reports directly to the chief executive officer);

(h)Any notices of default that any Borrower receives or delivers in connection with any real property leased by a Borrower that is subject to a Landlord Agreement;

(i)Any notice from any Governmental Authority regarding any Lien or other encumbrance or charge that has been or may be filed against any Loan Party or otherwise affecting any of the Collateral; and

(j)Any development or event that has had or could reasonably be expected to have a Material Adverse Effect.

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Each notice pursuant to this Section 6.03 shall be accompanied by a statement of a

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Responsible Officer of the Administrative Borrower setting forth details of the occurrence referred to therein and stating what action the relevant Loan Party proposes to take with respect thereto, if any.

Section 6.04    Maintenance of Existence; Compliance.

(a)(i) Preserve, renew, and maintain in full force and effect its corporate or organizational existence and (ii) take all reasonable action to maintain all rights, licenses, privileges, and franchises necessary or desirable in the normal conduct of its business (including each Required License), except, in each case, as otherwise permitted under this Agreement.

(b)Comply in all material respects with all Contractual Obligations (provided that with respect to the Contractual Obligations to make payments to trade creditors, the obligation to comply with such Contractual Obligations in full shall be deferred until October 1, 2024), Legal Requirements, and the terms of each Required License. Ensure that all products designed, developed, investigated, manufactured, prepared, assembled, packaged, tested, labeled, distributed, promoted, sold or marketed by or on behalf of any Borrower or any of its direct or indirect Subsidiaries that are subject to the jurisdiction of any Governmental Authority shall be designed, developed, investigated, manufactured, prepared, assembled, packaged, tested, labeled, distributed, promoted, sold and marketed in compliance in all material respects with all Legal Requirements.

(c)Except as identified on Schedule 5.14, pay in full before delinquency or before the expiration of any extension period, all Taxes imposed upon any Borrower or any of its Subsidiaries or any property of any Borrower or any of its Subsidiaries, except (i) Taxes contested in good faith by proper proceedings which stay the imposition of any Lien resulting from the non-payment thereof and with respect to which adequate reserves have been set aside for the payment thereof in accordance with GAAP, or (ii) Taxes subject to a payment plan with the applicable Governmental Authority(ies) pursuant to which such Governmental Authority(ies) agrees to forebear or otherwise not file, record or make enforceable against third parties any Tax lien it may be legally entitled to file, record or otherwise make enforceable against third parties (or, any such Tax lien remains unfiled, unrecorded, or otherwise unenforceable against third parties during the negotiation of such a payment plan).

Section 6.05 Performance of Material Contracts. Perform and observe all the terms and provisions of each Material Contract to be performed or observed by it (provided that with respect to any Material Contract, the performance by Borrower of which is to make payments to trade creditors, the obligation to comply with such Contractual Obligations in full shall be deferred until October 1, 2024), maintain each Material Contract in full force and effect, enforce each such Material Contract in accordance with its terms, take all such action to such end as may be from time to time requested by the Lender and, upon request of the Lender, make to each other party to each Material Contract such demands and requests for information and reports or for action as any Borrower or any of its Subsidiaries is entitled to make under such Material Contract.

Section 6.06    Maintenance of Property; Insurance.

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(a)Maintain and preserve all of its property useful and necessary in its business in good

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working order and condition, ordinary wear and tear excepted.

(b)Maintain insurance with respect to its property and business (including without limitation, comprehensive general liability, hazard, rent, worker’s compensation, property and casualty, and business interruption insurance) with financially sound and reputable insurance companies that are not Affiliates of any Borrower, in such amounts and covering such risks as are usually insured against by similar companies engaged in the same or a similar business.

(c)All insurance policies covering the Collateral are to be made payable to the Collateral Agent for the benefit of the secured parties, as their interests may appear, in case of loss, under a standard non-contributory “lender” or “secured party” clause and are to contain such other provisions as the Collateral Agent may require to fully protect the Lender’s interest in the Collateral and to any payments to be made under such policies. All certificates of insurance are to be delivered to the Collateral Agent and the policies are to be premium prepaid or financed through a binding financing agreement, with (other than with respect to director and officer policies) the loss payable and additional insured endorsement in favor of the Collateral Agent for the benefit of the secured parties, as their respective interests may appear, and such other Persons as the Collateral Agent may designate from time to time, and shall provide for not less than 30 days’ (10 days’ in the case of non-payment) prior written notice to the Collateral Agent of the exercise of any right of cancellation. If any Borrower or any of its Subsidiaries fails to maintain such insurance, the Collateral Agent may arrange for such insurance, but at the Borrowers’ expense and without any responsibility on the Collateral Agent’s part for obtaining the insurance, the solvency of the insurance companies, the adequacy of the coverage, or the collection of claims. Upon the occurrence and during the continuance of an Event of Default, the Collateral Agent shall have the sole right, in the name of the Lenders, any Borrower and its Subsidiaries, to file claims under any insurance policies, to receive, receipt and give acquittance for any payments that may be payable thereunder, and to execute any and all endorsements, receipts, releases, assignments, reassignments or other documents that may be necessary to effect the collection, compromise or settlement of any claims under any such insurance policies.

Section 6.07    Inspection of Property; Books and Records; Discussions.

(a)Keep proper books of records and accounts, in which full, true, and correct entries in conformity with GAAP and all Legal Requirements shall be made of all dealings and transactions and assets in relation to its business and activities.

(b)Subject to state and local cannabis regulatory requirements, permit the Lender and the Collateral Agent to visit and inspect any of its properties and examine and make abstracts from any of its books and records at any reasonable time, on reasonable notice, and as often as may reasonably be desired by the Lender or Collateral Agent, and to discuss its business operations, properties, and financial and other condition with its officers and employees and its independent certified public accountants; provided that any discussion with such independent certified public accountants shall only be in the presence (either live or telephonically) of a representative of the Borrowers.

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(c)Promptly, and in any event within ten (10) Business Days, provide such other information concerning the condition or operations (financial or otherwise) of any Borrower as the

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Lender may from time to time may reasonably request.

Section 6.08    Environmental Laws.

(a)Obtain, comply and maintain in all respects, and ensure the same in all respects by all tenants and subtenants, if any, with all applicable Environmental Laws, any and all licenses, approvals, notifications, registrations, or permits required by applicable Environmental Laws.

(b)Conduct and complete all investigations, studies, sampling, and testing, and all remedial, removal, and other actions necessary to remove and clean up all Hazardous Materials from any of its properties required under Environmental Laws and promptly comply in all respects with all lawful orders and directives of all Governmental Authorities regarding Environmental Laws.

Section 6.09    Anti-Corruption Laws and Sanctions Laws.

(a)Maintain policies and procedures designed to promote compliance by each Borrower and their respective directors, officers, employees and agents with all applicable Anti- Corruption Laws and Sanctions Laws.

(b)Comply with all applicable Anti-Corruption Laws and Sanctions Laws.

(c)Neither Borrowers nor, to the best knowledge of any Borrower, any director, officer, employee or any Person acting on behalf of any Borrower will engage in any activity that would breach any Anti-Corruption Laws or Sanctions Laws.

(d)Promptly notify the Lender of any action, suit or investigations by any court or Governmental Authority in relation to an alleged breach of the Anti-Corruption Laws or Sanctions Laws.

(e)Not directly or indirectly use, lend or contribute the proceeds of any Loan for any purpose that would breach any Anti-Corruption Laws or Sanctions Laws.

(f)In order to comply with the “know your customer/borrower” requirements of the Anti-Corruption Laws, promptly provide to the Lender upon its reasonable request from time to time (A) information relating to individuals and entities affiliated with any Borrower that maintain a business relationship with the Lender, and (B) such identifying information and documentation as may be available for such Borrower in order to enable the Lender to comply with Anti- Corruption Laws or Sanctions Laws.

Section 6.10 Additional Borrowers. With respect to (i) any new Subsidiary created or acquired after the Closing Date by any Borrower, promptly, and in any event within 30 days of the creation or acquisition of such Subsidiary, or (ii) the failure to wind down and dissolve any of the Wind Down Entities by December 31, 2023, no later than January 31, 2024, the Borrowers shall cause such Subsidiary and Wind Down Entity to,:

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(a)execute and deliver to the Lender, a Joinder Agreement, pursuant to which such Subsidiary shall be made a party to this Agreement as a Borrower;

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(b)execute and deliver to the Collateral Agent, a joinder to the Security Documents, as provided in the Security Documents, together with such documents as may be required for such Subsidiary to comply with the Security Documents, including updated Security Agreement Schedules;

(c)execute and deliver to the Lender (as applicable), such other agreements, instruments, approvals or other documents reasonably requested by the Lender (including Landlord Agreements in the same manner as required by Section 6.13) in order to create, perfect, establish the first priority of or otherwise protect any Lien purported to be covered by the Security Documents or otherwise to effect the intent that such Subsidiary or Wind Down Entity shall become bound by all of the terms, covenants and agreements contained in the Loan Documents and that all property and assets of such Subsidiary or Wind Down Entity shall become Collateral for the Obligations (other than to the extent such property or assets are excluded pursuant to the terms of the Security Documents), including the filing of UCC-1 or PPSA financing statements in such jurisdictions as may be required by the Security Documents or by law or as may be requested by the Lender or Collateral Agent;

(d)execute, as applicable, and deliver to the Lender those documents and other deliverables required of the Borrowers at the Closing Date pursuant to Section 4.01(a) and Section 4.01(d); and

(e)if requested by the Lender, deliver to the Lender legal opinions relating to the matters described above, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Lender.

Section 6.11 Financial Covenants. So long as any principal of or interest on the Loan or any other Obligation (whether or not due) shall remain unpaid, the Borrowers shall cause the following to be true:

(a)Liquidity. Commencing with the calendar quarter ending December 31, 2023, on the last day of each calendar quarter have at least $3,000,000, in the aggregate, on deposit in Deposit Accounts that are subject to Deposit Account Control Agreements (as defined in the Security Documents) or that Borrowers can demonstrate by receipts or other reliable documentation, in each case satisfactory to Lender in its sole discretion, is held in a vault, in merchant accounts, or in transit from retail stores.

(b)Fixed Charge Coverage Ratio. Commencing with the calendar quarter ending June 30, 2024, and for each calendar quarter thereafter so long as any principal of or interest on the Loan or any other Obligation (whether or not due) shall remain unpaid, maintain a Consolidated Fixed Charge Coverage Ratio as of the last day of each such calendar quarter of no less than 1.10 to 1.00.

(c)Consolidated Leverage Ratio. Commencing with the calendar quarter ending June 30, 2024, and for each calendar quarter thereafter so long as any principal of or interest on the Loan or any other Obligation (whether or not due) shall remain unpaid, maintain a

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Consolidated Leverage Ratio as of the last day of each calendar quarter of not more than 3.00 to 1.00.

Section 6.12    Lender Meetings. Upon the request of the Lender (which request, so long

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as no Event of Default shall have occurred and be continuing, shall not be made more than once during each calendar quarter), participate in a meeting with the Lender telephonically, virtually, or at the Borrowers’ corporate offices (or at such other location as may be agreed to by the Administrative Borrower and the Lender) at such time as may be agreed to by the Administrative Borrower and the Lender.

Section 6.13 Landlord Agreements. At any time any Collateral with a book value in excess of $20,000 (when aggregated with all other Collateral at the same location) is located on any real property of a Borrower (whether such real property is now existing or acquired after the Closing Date) which is not owned by a Borrower, or is stored on the premises of a bailee, warehouseman, or similar party, obtain a Landlord Agreement in form and substance reasonably satisfactory to the Collateral Agent; provided, however, that such a Landlord Agreement shall not be required with respect to any such Collateral stored on the premises of a bailee, warehouseman or similar party if, as a part of transporting such Collateral in the ordinary course of a Borrower’s business consistent with past practices, such Collateral is stored at such a premises for less than three days (or such longer period as Lender may agree to in its sole discretion).

Section 6.14    Certain Reserves and Holdbacks.

(a)Closing Date Holdback. Lender shall withhold from the Closing Date Term Loan an amount of cash equal to $3,240,025.00 (the “Closing Date Term Loan Holdback”). So long as the Second Tranche Conditions have been satisfied (or waived in Lender’s sole and absolute discretion), the Lender shall release the Closing Date Term Loan Holdback to Borrowers on the date that Borrower shall deliver all of the items set forth in the definition of “Permitted Acquisition” with respect to the acquisition next following the acquisition of the Equity Interests of Euphoria, LLC, an Illinois limited liability company, the remaining $3,240,000.00 of the Closing Date Term Loan Holdback shall be advanced.

(b)Upon the Closing Date, Lender shall withhold from the Closing Date Term Loan, an amount of cash equal to $700,000 (the “Tax Holdback”). Unless, within 10 Business Days following the Closing Date, Borrowers are able to provide Lender with a strategy for reducing or eliminating the Closing Date Tax Lien that is satisfactory to Lender (in its sole discretion) (such strategy, the “Approved Strategy”), Lender shall be entitled to use the Tax Holdback to pay the Closing Date Tax Lien on behalf of Borrowers ; provided, however, Lender may at any time use the Tax Holdback to pay the Closing Date Tax Lien if Lender determines (in its sole discretion) that the IRS is enforcing its remedies with respect to the Closing Date Tax Lien or the Borrowers are not diligently pursuing the Approved Strategy. If Lender does not use the Tax Holdback to pay the Closing Date Tax Lien in accordance with the foregoing sentence, it shall not be obligated to release all or any portion of the Tax Holdback until such time as Borrowers request the release thereof to pay the obligations secured by the Closing Date Tax Lien in full or provide evidence (in form and substance acceptable to Lender in its sole discretion) that the obligations subject to the Closing Date Tax Lien have been paid in full, in all cases, such release to be subject to the other terms of this Agreement. Upon release, the funds of the Tax Holdback shall first be used to pay the obligations secured by the Closing Date Tax Lien in full (if not already

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paid in full prior to such release). If Lender uses (or releases to Borrowers to use according to the terms of this Section 6.14(b)) the Tax Holdback to pay the Closing Date Tax Lien in full and there remains excess funds in the Tax Holdback, upon the satisfaction (or waiver in Lenders sole and absolute discretion) of

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the Second Tranche Conditions, Lender shall release such excess funds to Borrowers to use as permitted by the terms and conditions of this Agreement.

(c)In the event that Borrowers are unable, prior to the date set out in Section 6.15(a), to cause the maturity date of the Island Note to be extended at least one year (or such other date as Lender may agree in its sole and absolute discretion) beyond January 1, 2024, the Lender shall withhold from the aggregate maximum amount of Second Tranche Term Loans permitted hereunder, an amount equal to the then-due-and-owing amounts under the Island Note (the “Island Note Holdback”). So long as the Second Tranche Conditions have been satisfied (or waived in Lender’s sole and absolute discretion), Lender shall release the Island Note Holdback to Borrowers. Borrowers shall use the Island Note Holdback to pay in full the obligations evidenced by the Island Note and for no other purpose. For the avoidance of doubt, if Borrowers are able to extend the maturity date of the Island Note as described above, there will be no Island Note Holdback and the funds subject to the Island Note Holdback shall be available to Borrowers subject to the terms and conditions of this Agreement and the other Loan Documents.

(d)In the event that Borrowers are unable to cause Ventures to be dismissed (or otherwise removed) from the IGH Litigation prior to the end of the Second Tranche Availability Period, Lender shall withhold from the aggregate maximum amount of Second Tranche Term Loans permitted hereunder an amount equal to $850,000 (the “IGH Litigation Holdback”). If Ventures is found to have liability under the IGH Litigation and so long as the Second Tranche Conditions have been satisfied (or waived in Lender’s sole and absolute discretion), Lender shall release the IGH Litigation Holdback to Borrowers. Borrowers shall use the IGH Litigation Holdback to pay in full Ventures’ liability under the IGH Litigation. If Ventures’ liability is less than the full amount of the IGH Litigation Holdback, Borrowers may use the excess funds for any purpose under this Agreement. For the avoidance of doubt, if Ventures is dismissed (or otherwise removed) from the IGH Litigation with no liability to the plaintiff prior to the expiration of the Second Tranche Availability Period, then there shall be no IGH Litigation Holdback from the date of such dismissal or removal and the funds in the IGH Litigation Holdback shall be available to Borrowers subject to the terms and conditions of this Agreement.

(e)If judgment is entered against Ventures in the Teichman Litigation prior to the end of the Second Tranche Availability Period, Lender shall withhold from the aggregate amount of Second Tranche Term Loans permitted hereunder an amount equal to $1,200,000 (the “Teichman Litigation Holdback”). If such judgment is entered and so long as the Second Tranche Conditions have been satisfied (or waived in Lender’s sole and absolute discretion), Lender shall release the Teichman Litigation Holdback to Borrowers. Borrowers shall use the Teichman Litigation Holdback to pay in full Ventures’ liability under the Teichman Litigation. If Ventures’ liability is less than the full amount of the Teichman Litigation Holdback, Borrowers may use the excess funds for any purpose under this Agreement. For the avoidance of doubt, if no judgment has been entered against Ventures in the Teichman Litigation at the time of Borrowers’ request for a Second Tranche Term Loan, then there shall be no Teichman Litigation Holdback and the funds in the Teichman Litigation Holdback shall be available to Borrowers subject to the terms and conditions of this Agreement.

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Section 6.15    Post-Close Covenants.

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(a)Borrowers shall cause the maturity date of the Island Note to be extended to January 1, 2025 (or such other date as Lender may agree to in its sole and absolute discretion), and provide evidence thereof in form and substance acceptable to Lender in its sole discretion, within forty- five (45) days from the Closing Date.

(b)Borrowers shall deliver Landlord Agreements for Borrowers’ locations other than Georgetown, MA and Calumet City, IL within thirty (30) days from the Closing Date.

(c)Borrowers shall deliver to Lender the following items within thirty (30) days from the Closing Date (or such later date as Lender may agree to in its sole and absolute discretion), all in form and substance acceptable to Lender in its sole and absolute discretion:

(i)An Officer’s certificate certifying to true and correct copies regarding the acquisition documents for Borrowers’ proposed Euphoria acquisition;

(ii)Deposit Account Control Agreement(s) (as defined in the Security Agreement) relating to each of Borrowers’ Deposit Accounts (as defined in the Security Agreement);

(iii)(A) the certificates (if any) representing the Equity Interests pledged to the Lender pursuant to the Security Documents, together with an undated stock power for each such certificate executed in blank by a duly authorized officer of the pledgor thereof, and (B) evidence that Borrowers’ (other than Ventures) Organizational Documents have been amended to opt into Article 8 of the Uniform Commercial Code;

(iv)Evidence of termination of Liens existing on the Closing Date which are not permitted pursuant to this Agreement;

(v)Secretary’s Certificates referred to 4.01(d) for the Loan Parties other than

Ventures; and

(vi)A legal opinion by Ventures’ Canadian counsel.

(d)Within 10 days of the Closing Date, Lender shall have received an executed Restricted Stock Unit Agreement in form and substance acceptable to Lender and the Equity Interests described therein shall have been issued to Lender.

(e)On or before December 1, 2023, Borrowers shall have provided evidence to Lender, in form and substance acceptable to Lender in its sole discretion, that all of Borrowers’ Required Licenses in Massachusetts are being renewed or able to be renewed.

Section 6.16    Further Assurances. Promptly upon the request of the Lender:

(a)Correct any material defect or error that may be discovered in any Loan Document or in the execution, acknowledgement, filing, or recordation thereof.

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(b)Do, execute, acknowledge, deliver, record, re-record, file, re-file, register, and re- register any and all such further acts, deeds, conveyances, pledge agreements, mortgages,

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debentures, deeds of trust, trust deeds, assignments, financing statements and continuations thereof, termination statements, notices of assignments, transfers, certificates, assurances, and other instruments as the Lender may require from time to time in order to:

(i)carry out the purposes of the Loan Documents;

(ii)to the fullest extent permitted by applicable law, subject any Borrower’s properties, assets, rights, or interests to the Liens now or hereafter intended to be covered by the Security Documents and the other Loan Documents;

(iii)perfect and maintain the validity, effectiveness and priority of the Liens intended to be created under the Security Documents and the other Loan Documents; and

(iv)assure, convey, grant, assign, transfer, preserve, protect, and confirm to the Lender, the rights granted or now or hereafter intended to be granted to the Lender under any Loan Document or under any other instruments executed in connection with any Loan Document to which any Loan Party is or is to be a party.

NEGATIVE COVENANTS

So long as any Loans or any other amounts payable to the Lender hereunder or under any other Loan Document have not been paid in full, the Borrowers shall not, and shall not permit their Subsidiaries to:

Section 7.01 Limitation on Debt. Create, incur, assume, permit to exist, or otherwise become liable with respect to any Debt, except:

(a)Debt of any Borrower existing or arising under this Agreement and any other Loan Document;

(b)Debt of any Borrower owed to another Borrower;

(c)Debt incurred to finance the acquisition, construction, or improvement of fixed or capital assets (including Capital Lease Obligations) secured by a Lien permitted under Section 7.02(h); provided that (i) such Debt is incurred prior to or within 180 days after such acquisition or the completion of such construction or improvement, (ii) such Debt when incurred shall not exceed the aggregate combined purchase price and construction costs of the asset financed, and

(iii) the aggregate principal amount of Debt permitted by this Section 7.01(c), shall not exceed

$500,000 in the aggregate at any time outstanding;

(d)Debt existing on the date hereof and listed on Schedule 7.1(d) and any refinancings, modifications, renewals, and extensions of any such Debt; provided that (i) the principal amount of such Debt shall not be increased from the principal amount outstanding at the time of such refinancing, modification, renewal, or extension, and (ii) the maturity of such Debt shall not be shortened, and (iii) the terms relating to collateral (if any) and subordination (if any) of any such refinancing, modification, renewing, or extending Debt, and of any agreement

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entered into and of any instrument issued in connection therewith, are not less favorable in any material respect to the

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Borrowers or the Lender than the terms of any agreement or instrument governing the Debt being so refinanced, modified, renewed, or extended;

(e)Debt of any Person that becomes a Borrower after the date hereof; provided that (i) such Debt exists at the time such Person becomes a Borrower and is not created in contemplation of, or in connection with, such Person becoming a Borrower, and (ii) the aggregate principal amount of Debt permitted by this Section 7.01(e) shall not exceed $500,000 at any time outstanding;

(f)Guaranty Obligations incurred in the ordinary course of business by any Borrower of obligations of any other Borrower;

(g)current liabilities incurred in the ordinary course of business including as incurred through the obtaining of credit and for credit on an open account basis customarily extended and in fact extended in connection with normal purchases of goods and services (excluding for the avoidance of doubt merchant cash advances or any sale of receivables);

(h)Debt of Borrowers that is subordinated to the Obligations pursuant to subordination agreement(s) in form and substance acceptable to Lender so long as such Debt remains subject to such subordination agreement(s).

(i)Other Debt of the Borrowers in an aggregate principal amount not to exceed

$1,000,000 at any time; provided that none of such Debt may be secured.

Section 7.02 Limitation on Liens. Create, incur, assume, or permit to exist any Lien on any property or assets (including Equity Interests of any Borrower or any of a Borrower) now owned or hereafter acquired by it or on any income or rights in respect of any thereof, except:

(a)Liens created pursuant to or arising under any Loan Document;

(b)Liens imposed by law for taxes, assessments, or governmental charges not yet due or which are being contested in good faith and by appropriate proceedings diligently conducted if adequate reserves with respect thereto are maintained in accordance with GAAP on the books of the applicable Person;

(c)Carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s, and other similar Liens imposed by law, arising in the ordinary course of business, and securing obligations that are not overdue by more than 30 days or that are being contested in good faith and by appropriate proceedings diligently conducted;

(d)Liens arising solely by virtue of any statutory or common law provision relating to banker’s liens rights or set-off or similar rights;

(e)Pledges and deposits and other Liens (i) made in the ordinary course of business in compliance with workers’ compensation, unemployment insurance, and other social security laws or regulations and (ii) securing liability for reimbursement or indemnification obligations of (including obligations in respect of letters of credit or bank guarantees for the benefit of)

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insurance carriers providing property, casualty, or liability insurance to a Borrower or another Borrower;

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(f)Liens (including deposits) to secure the performance of bids, tenders, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds, and other obligations of like nature, in each case in the ordinary course of business;

(g)Easements, zoning restrictions, rights-of-way, minor defects or irregularities in title, and similar encumbrances on real property imposed by law or arising in the ordinary course of business which, in the aggregate, are not material in amount and which do not materially detract from the value of the affected property or interfere materially with the ordinary conduct of business of a Borrower or any of its Subsidiaries;

(h)Liens on fixed or capital assets acquired, constructed, or improved by any Borrower after the date hereof; provided that (i) such security interests secure Debt permitted by Section 7.01(c), (ii) such Liens and the Debt secured thereby are incurred prior to or within 180 days of such acquisition or the completion of such construction or improvement, (iii) such Liens shall not apply to any other property or assets of any Borrower, and (iv) the amount of Debt initially secured thereby is not more than 100% of the purchase price or construction or improvement cost of such fixed or capital asset;

(i)Liens in existence as of the date hereof which are listed on Schedule 7.02(i), securing Debt permitted by Section 7.01(d), and any renewals, modifications, replacements, and extensions of such Liens; provided that (i) the aggregate principal amount of the Debt secured by such Liens does not increase from that amount outstanding at the time of any such renewal, modification, replacement, or extension and (ii) any such renewal, modification, replacement, or extension does not encumber any additional assets or properties of any Borrower;

(j)To the extent such transactions create a Lien thereunder, liens in favor of lessors securing operating leases or sale and leaseback transactions, in each case to the extent such operating leases or sale and leaseback transactions are permitted under the terms of this Agreement;

(k)Any Lien existing on any property or asset prior to the acquisition thereof by the Borrower or any Lien existing on any property or asset of any Person that becomes a Subsidiary of the Borrower at the time such Person becomes a Subsidiary of the Borrower; provided that (i) such Lien is not created in contemplation of, or in connection with, such acquisition or such Person becoming a Borrower, as the case may be, (ii) such Lien shall apply to the same category, type, and scope of assets, and (iii) such Lien shall secure only those obligations which it secures on the date of such acquisition or the date such Person becomes a Borrower, as the case may be, and any refinancing, refunding, extension, renewal, or replacement thereof that does not increase the outstanding principal amount thereof plus any accrued interest, premium, fee, and reasonable and documented out-of-pocket expenses payable in connection with any such refinancing, refunding, extension, renewal, or replacement;

(l)Judgment or other similar Liens in connection with legal proceedings in an aggregate principal amount up to $500,000 which, whether immediately or with the passage of time (i) do not give rise to an Event of Default under Section 8.01(i) and (ii) are being contested in good faith by appropriate proceedings diligently conducted;

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(m)Liens upon assets of the Borrowers or any of their Subsidiaries subject to Capital Lease Obligations to the extent such Capital Lease Obligations are permitted by Section 7.01; provided that (i) such Liens only serve to secure the payment of Debt arising under such Capital Lease Obligation and (ii) the Lien encumbering the asset giving rise to the Capital Lease Obligation does not encumber any other asset of the Borrower or any of its Subsidiaries;

(n)Liens arising from precautionary Uniform Commercial Code financing statement filings solely as a precautionary measure in connection with operating leases or consignment of goods;

(o)non-exclusive licenses of patents, trademarks and other intellectual property rights granted by any Loan Parties in the ordinary course of business and not interfering in any respect with the ordinary conduct of the business of the Loan Parties;

(p)Liens securing Debt permitted by Section 7.01(h) so long as such Liens are subordinated to the Lien of Lender under the Loan Documents pursuant to subordination agreement(s) in form and substance acceptable to Lender so long as such Liens remain subject to such subordination agreement(s); and

(q)Any other Liens on property not otherwise permitted by this Section 7.02 so long as neither (i) the aggregate principal amount of the Debt and other obligations secured thereby nor

(ii) the aggregate fair market value (determined as of the date such Lien is incurred) of the assets subject thereto exceeds $500,000 at any time outstanding.

Section 7.03    Mergers; Nature of Business.

(a)Merge into or amalgamate or consolidate with any other Person or permit any other Person to merge into or consolidate with it, or liquidate or dissolve, except that, any Borrower may merge into any other Borrower.

(b)Engage in any business other than businesses of the type conducted by the Borrowers on the date hereof and businesses reasonably related thereto.

Section 7.04 Limitation on Investments. Make any advance, loan, extension of credit (by way of guaranty or otherwise), or capital contribution to, or purchase, hold, or acquire any Equity Interests, bonds, notes, debentures, or other debt securities of, or any assets constituting a business unit of, or make any other investment in, any Person (all of the foregoing, an “Investment” and collectively, “Investments”), except:

(a)Investments in cash and Cash Equivalents;

(b)Investments existing on the date hereof and listed on Schedule 7.04(b);

(c)Guarantees permitted by Section 7.01;

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(d)Loans and advances to officers, directors, or employees of any Borrower in the ordinary course of business (including for travel, entertainment, and relocation expenses (but not to purchase or repurchase Equity Interests) in an aggregate amount not to exceed $100,000 at any

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time outstanding;

(e)Intercompany Investments by any Borrower of, in, or to another Borrower;

(f)Extensions of trade credit in the ordinary course of business (including any instrument evidencing the same and any instrument, security, or other asset acquired through bona fide collection efforts with respect to the same);

(g)Investments constituting Permitted Acquisitions;

(h)the ownership by a Borrower or any of its Subsidiaries of the equity interests of any of their respective Subsidiaries, including Subsidiaries established or created after the Closing Date in compliance with all applicable terms of this Agreement;

(i)prepaid expenses and deposits for lease obligations or in connection with the provision of goods or services, in each case incurred in the ordinary course of business;

(j)accounts created and trade debt extended in the ordinary course of business; and

(k)In addition to Investments otherwise expressly permitted by this Section 7.04, Investments by the Borrowers in an aggregate amount (valued at cost) not to exceed $500,000 during the term of this Agreement.

Section 7.05    Limitation on Dispositions. Dispose of any of its property, whether now owned or hereafter acquired, or issue or sell any Equity Interests to any Person, except:

(a)The sale or Disposition of machinery and equipment no longer used or useful in the business of any Borrower;

(b)The Disposition of obsolete or worn-out property in the ordinary course of business;

(c)The sale of inventory and immaterial assets, in each case in the ordinary course of business;

(d)The sale or issuance of any Borrower’s Equity Interests to any Loan Party;

(e)Dispositions resulting from any taking or condemnation of any property of the Borrower or any Subsidiary by any Governmental Authority or any assets subject to a casualty;

(f)Dispositions of other property in any fiscal year of the Borrowers, so long as such property, together with all other property Disposed of during such fiscal year, shall have a fair market value not exceeding $1,000,000;

(g)licensing, on a non-exclusive basis, intellectual property rights in the ordinary course of business;

(h)leasing or subleasing assets in the ordinary course of business;

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(i)the lapse of intellectual property of a Borrower to the extent not economically

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desirable in the conduct of its business;

(j)any involuntary loss, damage or destruction of property;

(k)The sale or Disposition of (i) Equity Interests constituting warrants pursuant to the terms of the LI Intercreditor Agreement or the Island Intercreditor Agreement, or (ii) Equity Interests, the net proceeds of which are used to pay off the Island Note in accordance with the terms of the Island Intercreditor Agreement; and

(l)Disposition of any property, interests, or assets to any Borrower.

Section 7.06 Limitation on Sales and Leasebacks. Enter into any arrangement with any Person whereby a Loan Party shall sell or otherwise transfer any property owned by such Loan Party to (a) such Person and thereafter rent or lease such property from such Person or (b) any other Person to whom funds have been or are to be advanced by such Person on the security of such property or rental obligations of such Loan Party.

Section 7.07 Limitation on Restricted Payments. Make, either directly or indirectly, whether in cash, property, or in obligations of any Borrower, (w) any payment on, or declare or pay any dividend with respect to, or make any payment on account of, any Equity Interests of any Borrower, whether now or hereafter outstanding; (x) any repurchase, redemption, retirement, defeasance, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any Equity Interests of any Borrower, now or hereafter outstanding; (y) any payment to retire, or to obtain the surrender of, any outstanding warrants, options or other rights for the purchase or acquisition of shares of any class of Equity Interests of any Borrower, now or hereafter outstanding; or (z) any payment of any management, consulting, monitoring or advisory fees or any other fees or expenses (including the reimbursement thereof by any Borrower) pursuant to any management, consulting, monitoring, advisory or other services agreement to any of the holder of any Equity Interests of any Borrower or any of their Affiliates (collectively, “Restricted Payments”), except that:

(a)The Borrowers may declare and pay dividends and make other distributions and payments with respect to its Equity Interests if payable solely in its Equity Interests;

(b)The Borrowers may purchase or otherwise acquire Equity Interests in any Subsidiary of the Borrowers using additional shares of their Equity Interests;

(c)The Borrowers may (i) make repurchases or redemptions of their Equity Interests

(x) in connection with the exercise of stock options or restricted stock awards if such Equity Interests represent all or a portion of the exercise price thereof or (y) deemed to occur upon the withholding of a portion of such Equity Interests issued to directors, officers, or employees of the Borrower or any Subsidiary under any stock option plan or other benefit plan or agreement for directors, officers, and employees of the Borrower and the Subsidiaries to cover withholding tax obligations of such Persons in respect of such issuance, and (ii) make other Restricted Payments, not exceeding $100,000 in the aggregate for any fiscal year, pursuant to and in accordance with

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stock option plans or other benefit plans or agreements for directors, officers, and employees of the Borrower and the Subsidiaries;

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(d)So long as no Default or Event of Default has occurred and is continuing or would result therefrom, payments under the consulting agreements set forth in Schedule 7.07 as they are in effect on the Closing Date; provided, however, that such payments may not be increased by more than three percent from year-to-year;

(e)To the extent any such sale or Disposition would constitute a Restricted Payments, sales or Dispositions of Equity Interests permitted by Section 7.05(k); and

(f)So long as no Default or Event of Default has occurred and is continuing or would result therefrom, the Borrower may make other Restricted Payments not otherwise permitted by this Section 7.07 in an amount not to exceed $500,000 during the term of this Agreement.

Section 7.08 Limitation on Prepayments of Debt and Amendments of DebtInstruments.

(a)Make or offer to make any optional or voluntary payment or prepayment on or redemption, defeasance, or purchase of any amounts (whether principal or interest) payable under any Debt which is subordinated in right of payment or collection to the Obligations (such Debt, the “Subordinated Debt”) except as may be expressly permitted by the subordination agreement subordinating such Subordinated Debt.

(b)Amend, modify, waive, or otherwise change, or consent or agree to any amendment, modification, waiver, or other change to any of the terms of any Debt that is subordinated in right of payment or collection to the obligations of the Borrowers pursuant to the Loan Documents, other than any amendment, modification, waiver, or other change which (i) would extend the maturity or reduce the amount of any payment of principal thereof or reduce the rate or extend any date for payment of interest thereon and (ii) does not involve the payment of a consent fee.

Section 7.09 Limitation on Transactions With Affiliates. Enter into, renew, extend or be a party to any transaction or series of related transactions (including, without limitation, the purchase, sale, lease, transfer or exchange of property or assets of any kind or the rendering of services of any kind), or the payment of any management, advisory, or similar fees, with any Affiliate (excluding other Borrowers) unless such transaction is:

(a)Otherwise permitted by the terms of this Agreement;

(b)In the ordinary course of business of the relevant Borrower(s);

(c)On fair and reasonable terms no less favorable to the relevant Borrower(s) than those that would have been obtained in a comparable transaction on an arm’s length basis from an unrelated Person; and

(d)that are disclosed in reasonable detail to the Lender prior to the consummation thereof, if such transaction(s) involve one or more payments by the Borrowers in excess of

$250,000 for any single transaction or series of related transactions.

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Section 7.10    Limitation on Restrictive Agreements. Enter into or permit to exist or

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become effective any consensual encumbrance or restriction on the ability of any Subsidiary of any Borrower to:

(a)Make Restricted Payments in respect of any Equity Interests of such Subsidiary held by, or pay any Debt owed to, the Borrower or any other Subsidiary of the Borrower;

(b)Make loans or advances to, or Investments in, the other Borrowers or any other Subsidiary of any Borrower; and

(c)Transfer any of its assets to another Borrower or any other Subsidiary of a Borrower, except for such encumbrances or restrictions (i) existing under the Loan Documents and (ii) with respect to a Subsidiary imposed pursuant to an agreement that has been entered into in connection with the Disposition of all or substantially all of the Equity Interests or assets of such Subsidiary.

Section 7.11 Foreign Subsidiaries. Create, maintain, or hold any Equity Interests in any Foreign Subsidiary.

Section 7.12 Limitation on Amendments of Material Contracts. Amend, supplement, or otherwise modify (pursuant to a waiver or otherwise): (a) Borrower’s Organizational Documents; or (b) the terms and conditions of any Material Contract; in each case, in any respect materially adverse to the interests of the Lender, without the Lender’s prior written consent.

Section 7.13 Merchant Cash Advance Transactions. Enter into any merchant cash advance transaction.

Section 7.14 Limitation on Canadian Defined Benefit Pension Plans. Create, maintain, contribute to, or incur any liability or contingent liability in respect of a Canadian Defined Benefit Pension Plan.

Section 7.15 Limitation on Cannabis Matters. Import Cannabis into the United States of America.

Section 7.16 Limitation on Lease Guaranties. Without Lender’s prior written consent (which such consent will not be unreasonably withheld, conditioned, or delayed), incur any Guaranty Obligations with respect to leases of real property if either the agreement creating such Guaranty Obligations or the applicable lease would constitute a Material Contract.

Section 7.17 Limitation on Comingling Funds. Prior to the date the Closing Date Tax Lien is satisfied in full, no Borrower shall commingle any of its funds or other property with any funds or property of Mission Partners USA LLC, including depositing or otherwise causing to be kept in any Deposit Account of Mission Partners USA LLC any monies of such Borrower.

EVENTS OF DEFAULT AND REMEDIES

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Section 8.01    Events of Default. Each of the following events or conditions shall

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constitute an “Event of Default” (whether it shall be voluntary or involuntary or come about or be affected by any Legal Requirement or otherwise):

(a)the Borrowers fail to pay (x) any interest on any Loan or any Collateral Agent Advance, or any fee or other amount payable hereunder or under any other Loan Document when due and such failure remains unremedied for a period of five (5) Business Days or (y) any principal of any Loan when due, whether at stated maturity, by acceleration, by mandatory prepayment, or otherwise;

(b)any representation, warranty, certification, or other statement of fact made or deemed made by or on behalf of any Loan Party herein or in any other Loan Document or any amendment or modification hereof or thereof or waiver hereunder or thereunder or in any certificate, document, report, financial statement, or other document furnished by or on behalf of any Loan Party under or in connection with this Agreement or any other Loan Document, proves to have been false or misleading in any material respect (or in any respect if such representation, warranty, certification or other statement of fact is qualified or modified as to materiality or material adverse effect or a similar materiality limitation in the text thereof) on or as of the date made or deemed made;

(c)any (i) Borrower fails to perform or observe any covenant, term, condition, or agreement contained in Section 6.03, Section 6.04(a), Section 6.09, Section 6.10, Section 6.11, Section 6.15 or Article 7 or (ii) Borrower fails to perform or observe any covenant, term, condition, or agreement contained in Section 6.01 or Section 6.02, and such failure, if capable of being remedied, shall remain unremedied for 5 Business Days;

(d)any Borrower fails to perform or observe any other covenant, term, condition, or agreement contained in this Agreement or any other Loan Document (other than as provided in subsections (a) through (c) of this Section 8.01) and such failure continues unremedied for a period of 20 days after written notice to the Administrative Borrower from the Lender;

(e)Any Loan Party:

(i)fails to pay any principal or interest in respect of any Debt (including any Guaranty Obligation, but excluding any Debt outstanding under this Agreement and any Debt related to trade payables (solely as permitted by Sections 6.04 and 6.05 of this Agreement)) when due and such failure continues after the applicable grace period, if any, specified in the agreement or instrument relating to such Debt; or

(ii)fails to perform or observe any other covenant, term, condition, or agreement relating to any such Debt or contained in any instrument or agreement evidencing or relating thereto, or any other event occurs or condition exists, the effect of which failure or other event or condition is to cause, or to permit the holder or beneficiary of such Debt (or a trustee or agent on behalf of such holder or beneficiary) to cause, with the giving of notice, if required, such Debt to become due prior to its stated maturity (or, in the case of any such Debt constituting a Guaranty Obligation, to become payable); or any such Debt is declared to be due and payable, or required to be prepaid or redeemed (other than by a regularly scheduled required prepayment

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or redemption or as a mandatory prepayment), purchased, or defeased, or an offer to prepay, redeem,

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purchase, or defease such Debt shall be required to be made, in each case prior to the stated maturity thereof;

provided that, a default, event, or condition described in clause (i) or (ii) of this subsection (e) shall not at any time constitute an Event of Default unless, at such time, one or more defaults, events, or conditions of the type described in clauses (i) and (ii) of this subsection (e) has occurred and is continuing with respect to Debt the outstanding principal amount of which exceeds in the aggregate $1,000,000;

(f)any of the following:

(i)Any Loan Party (x) commences any case, proceeding, or other action under any existing or future Debtor Relief Law, seeking (A) to have an order for relief entered with respect to it, or (B) to adjudicate it as bankrupt or insolvent, or (C) reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition, or other relief with respect to it or its debts, or (D) appointment of a receiver, trustee, custodian, conservator, or other similar official for it or for all or any substantial part of its assets or (y) makes a general assignment for the benefit of its creditors;

(ii)there is commenced against any Loan Party in a court of competent jurisdiction any case, proceeding, or other action of a nature referred to in clause (i) above which

(x) results in the entry of an order for relief or any such adjudication or appointment or (y) remains undismissed, undischarged, unstayed, or unbonded for thirty (30) days;

(iii)there is commenced against any Loan Party any case, proceeding, or other action seeking issuance of a warrant of attachment, execution, or similar process against all or any substantial part of its assets which results in the entry of an order for any such relief which has not been vacated, discharged, stayed, or bonded pending appeal within thirty (30) days from the entry thereof;

(iv)any Loan Party (A) admits in writing its inability to pay its debts as they become due, or (B) as of September 30, 2024 and after, is generally not or is unable to pay its debts as they become due; or

(v)any Loan Party takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above;

(g)any Borrower or any Subsidiary of a Borrower is enjoined, restrained or in any way prevented by the order of any court or any Governmental Authority from conducting, or otherwise ceases to conduct for any reason whatsoever, all or any material part of its business for more than fifteen (15) days;

(h)any material damage to, or loss, theft or destruction of any Collateral, whether or not insured, or any strike, lockout, labor dispute, embargo, condemnation, act of God or public enemy, or other casualty which causes, for more than fifteen (15) consecutive days, the cessation or substantial curtailment of revenue producing activities at any facility of any Borrower;

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(i)one or more judgments or decrees is entered against any Borrower by a court of

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competent jurisdiction involving, in the aggregate, a liability (not paid or fully covered by insurance as to which the relevant insurance company has been notified and has not denied coverage) in an amount in excess of $1,000,000 and all such judgments or decrees have not been vacated, discharged, stayed, or bonded pending appeal within 15 days from the entry thereof;

(j)any of the Security Documents cease for any reason to be valid, binding, and in full force and effect or any Lien created by any of the Security Documents shall fail or cease to create a valid and perfected and, except to the extent permitted by the terms hereof or thereof, first priority Lien in favor of the Collateral Agent for the benefit of the Collateral Agent and the Lender on any Collateral purported to be covered thereby;

(k)any of the following:

(i)any material provision of any Loan Document ceases for any reason to be valid, binding, and in full force and effect, other than as expressly permitted hereunder or thereunder;

(ii)any Loan Party contests in any manner the validity or enforceability of any provision of any Loan Document; or

(iii)any Loan Party denies that it has any or further liability or obligation under any provision of any Loan Document (other than as a result of repayment in full of the Obligations) or purports to revoke, terminate, or rescind any provision of any Loan Document;

(l)any Change of Control occurs with respect to any Loan Party;

(m)any Borrower loses a Required License and, if diligently attempting to cure such loss, is unable to cure such loss within twenty (20) Business Days;

(n)payment under any lease guaranty entered into by any Borrower is demanded of such Borrower and not paid in full, without causing any other Event of Default hereunder, within 15 days of such demand; and

(o)there occurs in the reasonable judgment of the Lender a Material Adverse Effect.

Section 8.02    Remedies Upon Event of Default. If any Event of Default occurs and is continuing, then:

(a)if such event is an Event of Default specified in subsection (f) above with respect to any Borrower, the Loans (with accrued interest thereon) and all fees (including the Prepayment Fee) and all other amounts owing under this Agreement and the other Loan Documents shall immediately become due and payable;

(b)if such event is an Event of Default (other than an Event of Default under Section 8.01(f)), any or all of the following actions may be taken:

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(i)the Lender may, by notice to the Administrative Borrower and Collateral Agent, declare the Loans (with accrued interest thereon) and all fees (including the Prepayment

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Fee) and all other amounts owing under this Agreement and the other Loan Documents to be due and payable forthwith, whereupon the same shall immediately become due and payable;

(ii)the Lender may exercise all rights and remedies available to it under the Security Documents, any other Loan Document, and pursuant to any Legal Requirements or other applicable law.

(c)If such Event of Default occurs during the Second Tranche Availability Period, any commitment of Lender to fund any further Second Tranche Term Loan (including any Second Tranche Term Loan requested pursuant to the terms of this Agreement by Borrowers but yet to be funded) shall be automatically terminated and Lender shall under no circumstance be required to fund any additional Second Tranche Term Loans.

Section 8.03    Additional Remedies Upon Event of Default.

(a)In addition and not in limitation of the remedies provided for in Section 8.02 above, if any Event of Default occurs and is continuing, then the Collateral Agent shall have the right, in its sole discretion, to select one or more cannabis dispensaries operated by one or more of the Borrowers (the “Selected Dispensaries”) to be sold to one or more third parties selected by the Collateral Agent in a manner selected by the Collateral Agent, in each case in its sole discretion (the “Sale Process”).

(b)The Sale Process shall be conducted as determined by the Collateral Agent, in its sole discretion, provided that the Sale Process shall be conducted in accordance with applicable Legal Requirements. Borrowers acknowledge that the Sale Process may, but is not required to, be conducted through a process designed to maximize the sale price of the Selected Dispensaries. Borrowers hereby waive any claim that the Sale Process was not conducted in a manner designed to maximize the sale price of the Selected Dispensaries.

(c)The Borrowers hereby covenant and agree not to appoint a chief restructuring officer or assignee in connection with an assignment for the benefit of creditors without providing at least ten (10) Business Days prior written notice to the Lender and obtaining the written consent of the Lender to such appointment, which such consent may be granted or withheld by the Lender in its sole discretion. Any appointment of a chief restructuring officer or assignee in connection with an assignment for the benefit of creditors without first obtaining the written consent of the Lender shall be presumptively invalid.

(d)If any Event of Default occurs and is continuing, the Lender and/or Collateral Agent may seek a receivership over all of some of the Borrowers or their assets (including the Selected Dispensaries). In the event the Lender and/or the Collateral Agent seek the appointment of a receiver to administer one or more of the Borrowers and/or the Selected Dispensaries, the Borrowers hereby covenant and agree to consent to and support the proposed appointment.

(e)Borrowers acknowledge that the transactions contemplated by this Section 8.03, may require approval from the Illinois Department of Agriculture, the Illinois Department of

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Financial and Professional Regulation, the Massachusetts Cannabis Control Commission, or other Governmental Authorities under applicable Legal Requirements (the “Applicable Regulator”).

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Promptly after the finalization of any documentation for a proposed sale of one or more of the Selected Dispensaries (the “Dispensary Sale”), the Lender and the Collateral Agent shall apply for approval from the Applicable Regulator for the Dispensary Sale (“Regulator Approval”). The Borrowers hereby agree and covenant to (i) execute all documents requested by the Applicable Regulator or required under applicable Legal Requirements for the transfer contemplated by the Dispensary Sale, and (ii) not take any action that would prevent or inhibit the Regulator Approval.

(f)Borrowers acknowledge and agree that (i) a breach or threatened breach by Borrowers (or any of them) of any of their obligations under this Section 8.03 would give rise to irreparable harm to Lender for which monetary damages would not be an adequate remedy and (ii) if a breach or a threatened breach by Borrowers (or any of them) of any such obligations occurs, Lender will, in addition to any and all other rights and remedies that may be available to it at law, at equity, or otherwise in respect of such breach, be entitled to equitable relief, including a temporary restraining order, an injunction, specific performance, and any other relief that may be available from a court of competent jurisdiction, without any requirement to (x) post a bond or other security, or (y) prove actual damages or that monetary damages will not afford an adequate remedy. Borrowers agree that they will not oppose or otherwise challenge the appropriateness of equitable relief or the entry by a court of competent jurisdiction of an order granting equitable relief, in each case, consistent with the terms of this Section 8.03.

(g)In furtherance and not in limitation of any of the foregoing or any other power of attorney provisions in the Loan Documents, each Borrower hereby appoints the Collateral Agent its attorney-in-fact, with full power and authority in the place and stead of such Borrower and in the name of such Borrower, or otherwise, from time to time, in the Collateral Agent’s discretion, to take any action and to execute any instrument consistent with the terms of this Section 8.03 which the Collateral Agent may deem necessary or advisable to accomplish the purposes hereof (but the Collateral Agent shall not be obligated to and neither the Collateral Agent nor Lender shall have any liability to such Borrower or any third party for failure to so do or take action). Except where prior notice is expressly required by the terms of this Agreement, the Collateral Agent shall use commercially reasonable efforts to provide notice to the Borrower prior to taking any action taken in the preceding sentence, provided that failure to deliver such notice shall not limit the Collateral Agent’s right to take such action or the validity of any such action. The foregoing grant of authority is a power of attorney coupled with an interest and such appointment shall be irrevocable for the term hereof. Each Borrower hereby ratifies all that such attorney shall lawfully do or cause to be done in accordance with the terms of this Section 8.03 and the Legal Requirements.

Section 8.04 Equity Cure Right. In the event that the Borrowers fail to comply with the requirements of any financial covenant set forth in Sections 6.11(b) and (c) until the tenth day after delivery of the related Compliance Certificate, Ventures shall have the right to issue Permitted Cure Securities for cash or otherwise receive cash contributions to the capital of Ventures, and, in each case, to contribute any such cash to the capital of the Borrowers, and apply the amount of the proceeds thereof to increase Consolidated EBITDAR with respect to such applicable quarter (the "Cure Right"); provided that (a) such proceeds are actually received

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by the Borrowers no later than 10 Business Days after the date on which financial statements are required to be delivered with respect to such fiscal quarter hereunder, (b) the Cure Right shall not be exercised more than two times during the term of the Loans, (d) in each period of four fiscal quarters, there shall be at

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least three consecutive fiscal quarters during which the Cure Right is not exercised, and (e) such proceeds shall be applied to prepay the Loans in accordance with Section 2.06. If, after giving effect to the foregoing pro forma adjustment (but not, for the avoidance of doubt, giving pro forma effect to any repayment of Debt in connection therewith), the Borrowers re in compliance with the financial covenants set forth in Sections 6.11(b) and (c), the Borrowers shall be deemed to have satisfied the requirements of such Sections as of the relevant date of determination with the same effect as though there had been no failure to comply on such date, and the applicable breach or default of such Sections 6.11(b) and (c) that had occurred shall be deemed cured for purposes of this Agreement. The parties hereby acknowledge that this Section may not be relied on for purposes of calculating any financial ratios other than as applicable to Sections 6.11(b) and

(c) and shall not result in any adjustment to any amounts other than the amount of Consolidated EBITDAR referred to in the immediately preceding sentence.

MISCELLANEOUS

Section 9.01 Notices. Notices to any party shall be in writing and shall be delivered personally, by certified mail return receipt requested, by nationally-recognized overnight delivery service, or email addressed to the parties at the addresses set forth below or otherwise designated in writing as set forth in this Section 9.01:

If to the Borrowers:

c/o 4Front Ventures Corp.

7010 E. Chauncey Lane, Suite 235

Phoenix, AZ 85054 Attention: Legal Department

Email: legal@4frontventures.com

If to the Lender:

ALT Debt II, LP

1310 N. Courthouse Road, Suite 110

Arlington, VA 22201 Attention: Michael Villapiano Email: mike@altmorecap.com

With a copy to (which shall not constitute notice): Husch Blackwell

1801 Pennsylvania Ave. NW, Suite 1000

Washington, DC 20006 Attention: Brent Salmons

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Email: brent.salmons@huschblackwell.com If to the Collateral Agent:

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GGG Partners, LLC

3155 Roswell Road NE, Suite 120

Atlanta, GA 30328 Attention: Richard B. Gaudet Email: rgaudet@gggmgt.com

Any communication hereunder will be deemed given and effective (a) when actually received, in the case of hand delivery, (b) the next Business Day in the case of an overnight delivery service, (c) three (3) Business Days in the case of certified mail return receipt requested, (d) when sent and received, as evidenced by a transmission report from sender’s facsimile machine, in the case of facsimile transmission, and (e) on the date sent by email of a PDF document if sent before 5:00 pm local time of the recipient, and on the next Business Day if sent at or after 5:00 pm local time of the recipient, provided in such case that such sent email is kept on file (whether electronically or otherwise) by the sender and the sender does not receive a genuine automatically generated message from the recipient’s email server that such email could not be delivered.

Section 9.02    Amendments and Waivers.

(a)No failure to exercise and no delay in exercising any right, remedy, power, or privilege hereunder or under the other Loan Documents shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power, or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power, or privilege. The rights, remedies, powers, and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers, and privileges provided by law. No waiver of any provision of any Loan Document or consent to any departure by any party therefrom shall in any event be effective unless the same shall comply with paragraph (b) of this Section, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan shall not be construed as a waiver of any Default, regardless of whether the Lender or Collateral Agent may have had notice or knowledge of such Default at the time.

(b)Neither this Agreement nor any other Loan Document nor any provision hereof or thereof may be waived, amended, or modified except (i) in the case of this Agreement, pursuant to an agreement or agreements in writing entered into by the Administrative Borrower, the Lender, and the Collateral Agent; or (ii) in the case of any other Loan Document, pursuant to an agreement or agreements in writing entered into by the Lender and the Loan Party or Loan Parties that are parties thereto.

Section 9.03    Expenses; Indemnity; Damage Waiver.

(a)The Borrowers shall pay, on demand:

(i)all reasonable and documented out-of-pocket expenses incurred by the Lender and its Affiliates, including the reasonable fees, charges, and disbursements of counsel

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for the Lender (including the allocated costs of internal counsel for the Lender and/or Collateral Agent,

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if any) in connection with the preparation, negotiation, execution, delivery, and administration of the Loan Documents and any amendments, waivers, or other modifications of the provisions of any Loan Document (whether or not the transactions contemplated by the Loan Documents are consummated); and1

(ii)all out-of-pocket expenses incurred by the Lender and/or Collateral Agent, including the fees, charges, and disbursements of any counsel for the Lender and Collateral Agent, (including the allocated costs for any internal counsel for the Lender or Collateral Agent), in connection with the enforcement or protection of its rights (i) in connection with the Loan Documents, including its rights under this Section 9.03 or (ii) in connection with the Loans issued under this Agreement, including all such out-of-pocket expenses incurred in connection with any restructuring, workout, or negotiations in respect of the Loan Documents or such Loans.

(b)The Borrowers agree to indemnify and hold harmless the Collateral Agent and Lender and each of their respective Related Parties (each, an “Indemnified Party”) from and against, any and all claims, damages, losses, liabilities, and related expenses (including the reasonable fees, charges, and expenses of any counsel for any Indemnified Party, and all allocated costs of internal counsel for such Indemnified Party, if any), incurred by any Indemnified Party or asserted against any Indemnified Party by any Person (including the Borrowers or any other Loan Party, but expressly excluding any and all claims, damages, losses, liabilities, and related expenses incurred by any such Indemnified Party and its Related Parties against another Indemnified Party or its Related Parties) arising out of, in connection with, or by reason of:

(i)the execution or delivery of any Loan Document or any agreement or instrument contemplated in any Loan Document, the performance by the parties thereto of their respective obligations under any Loan Document, or the consummation of the transactions contemplated by the Loan Documents;

(ii)any Loan or the actual or proposed use of the proceeds therefrom;

(iii)any actual or alleged presence or release of Hazardous Materials on or from any property currently or formerly owned or operated by any Borrowers or any of their Subsidiaries, or any Environmental Liability related to any Borrower or any of their Subsidiaries in any way; or

(iv)any actual or prospective claim, investigation, litigation, or proceeding relating to any of the foregoing, whether based on contract, tort, or any other theory, whether brought by a third party or by any Borrowers or any other Loan Party, and regardless of whether any Indemnified Party is a party thereto;

provided that, such indemnity shall not be available to any Indemnified Party to the extent that such claims, damages, losses, liabilities, or related expenses (A) are determined by a court of competent jurisdiction by final and non-appealable judgment to have resulted from the fraud, gross negligence or willful misconduct of such Indemnified Party or (B) result from a claim brought by any Borrower or any other Loan Party against any Indemnified Party for

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1NTD: Taking this out here as it includes administration of loan documents which isn’t part of the limit. It’s handled elsewhere.

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breach in bad faith of such Indemnified Party’s obligations under any Loan Document, if a court of competent jurisdiction has rendered a final and non-appealable judgment in favor of such Borrower or such Loan Party on such claim.

(c)The Borrowers agree, to the fullest extent permitted by applicable law, not to assert, and hereby waives, any claim against any Indemnified Party, on any theory of liability, for special, indirect, consequential, or punitive damages (including, without limitation, any loss of profits or anticipated savings), as opposed to actual or direct damages, resulting from this Agreement or any other Loan Document or arising out of such Indemnified Party’s activities in connection herewith or therewith (whether before or after the Closing Date).

(d)All amounts due under Section 9.03 shall be payable not later than ten (10) Business Days after demand is made for payment by the Lender and if not timely paid shall accrue interest at the Applicable Rate (or if applicable, the Default Rate).

(e)The Indemnified Parties agree that neither they nor any of their Subsidiaries will settle, compromise, or consent to the entry of any judgment in any pending or threatened claim, action, or proceeding in respect of which indemnification or contribution could be sought under Section 9.03 (whether or not any Indemnified Party is an actual or potential party to such claim, action, or proceeding) without the prior written consent of the applicable Indemnified Party, unless such settlement, compromise, or consent includes an unconditional release of such Indemnified Party from all liability arising out of such claim, action, or proceeding.

Section 9.04    Successors and Assigns.

(a)The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that the Borrowers may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Lender (and any attempted assignment or transfer by any Borrower without such consent shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby and, to the extent expressly contemplated hereby, the Related Parties of the Lender) any legal or equitable right, remedy, or claim under or by reason of this Agreement.

(b)The Lender may, at any time, without the consent of any Borrower, assign to one or more Eligible Assignees (as defined below) all or a portion of its rights and obligations under this Agreement (including all or a portion of the Loans at the time owing to it). For purposes of this Agreement, “Eligible Assignee” means any Person other than a natural Person that is (i) an Affiliate of the Lender, (ii) a commercial bank, insurance company, investment or mutual fund, or other Person that is an “accredited investor” (as defined in Regulation D under the Securities Act), or (iii) a corporate entity that possesses financial sophistication and standing similar to that of the Lender. Subject to notification of an assignment, the assignee shall be a party hereto and, to the extent of the interest assigned, have the rights and obligations of the Lender under this Agreement, and the Lender shall, to the extent of the interest assigned, be released from its obligations under this Agreement (and, in the case of an assignment covering all of the Lender’s

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rights and obligations under this Agreement, the Lender shall cease to be a party hereto but shall continue to

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be entitled to the benefits of Section 2.11, and Section 9.03). Each Borrower hereby agrees to execute any amendment and/or any other document that may be necessary to effectuate such an assignment, including an amendment to this Agreement to provide for multiple lenders and an administrative agent to act on behalf of such lenders. Any assignment or transfer by the Lender of rights or obligations under this Agreement that does not comply with this paragraph shall be treated for purposes of this Agreement as a sale by the Lender of a participation in such rights and obligations in accordance with paragraph (c) of this Section.

(c)The Lender may, at any time, without the consent of any Borrower, sell participations to one or more banks or other entities (each, a “Participant”) in all or a portion of the Lender’s rights and obligations under this Agreement (including all or a portion of the Loans owing to it); provided that (i) the Lender’s obligations under this Agreement shall remain unchanged, (ii) the Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, and (iii) each Borrower shall continue to deal solely and directly with the Lender in connection with the Lender’s rights and obligations under this Agreement. Each Borrower agrees that each Participant shall be entitled to the benefits of Section 2.11 to the same extent as if it were the Lender and had acquired its interest by assignment pursuant to paragraph

(b) of this Section; provided that, such Participant (A) agrees to be subject to the provisions of Section 2.11 and Section 2.07 as if it were an assignee under paragraph (b) of this Section and (B) shall not be entitled to receive any greater payment under Section 2.11 with respect to any participation, than the Lender would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation. The Lender shall, acting solely for this purpose as an agent of the Borrowers, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under the Loan Documents (the “Participant Register”); provided that, the Lender shall have no obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in the Loans or other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that any Loan or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and the Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary.

(d)To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 9.08 as though it were the Lender, as long as such Participant agrees to be subject to Section 2.07 as though it were the Lender.

Section 9.05 Survival. All covenants, agreements, representations, and warranties made by the Loan Parties in the Loan Documents and in the certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of the Loan Documents and the making of any Loans, regardless of any

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investigation made by any such other party or on its behalf and notwithstanding that the Lender may have notice or knowledge of any Event of Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of, or any accrued

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interest on, any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid. The provisions of Section 2.11, and ARTICLE IX shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, or the termination of this Agreement or any provision hereof.

Section 9.06    Integration; Counterparts Effectiveness.

(a)This Agreement, the other Loan Documents, the Fee Letters, and any other separate letter agreements with respect to fees payable to the Lender or Collateral Agent constitute the entire contract among the parties with respect to the subject matter hereof and supersede all previous agreements and understandings, oral or written, with respect to the subject matter hereof.

(b)Delivery of an executed counterpart of a signature page to this Agreement by facsimile or in electronic PDF format shall be effective as delivery of a manually executed counterpart of this Agreement. Each facsimile of any genuine signature shall be deemed enforceable to the same extent as an original signature. This Agreement and any amendments, waivers, consents, or supplements hereto may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. The words “execution,” “signed,” “signature,” and words of similar import in any Loan Document shall be deemed to include electronic or digital signatures or electronic records, each of which shall be of the same effect, validity, and enforceability as manually executed signatures or a paper-based recordkeeping system, as the case may be, to the extent and as provided for under applicable law, including the Electronic Signatures in Global and National Commerce Act of 2000 (15 USC § 7001 et seq.), the Uniform Electronic Transactions Act (UETA), or any state law based on the UETA, provided that notwithstanding anything contained herein to the contrary, the Lender is under no obligation to agree to accept electronic signatures in any form or in any format unless expressly agreed to by the Lender pursuant to procedures approved by it; and provided, further, the Lender reserves the right to require, at any time and at its sole discretion, the delivery of manually executed counterpart signature pages to this Agreement or any other Loan Document, and each Borrower agrees to promptly deliver such manually executed counterpart signature pages.

(c)Except as provided in Section 4.01, this Agreement shall become effective when it shall have been executed by the Lender and when the Lender shall have received a counterpart hereof executed by each Borrower and the Collateral Agent.

Section 9.07 Severability. If any term or provision of any Loan Document is invalid, illegal, or unenforceable in any jurisdiction, such invalidity, illegality, or unenforceability shall not affect any other term or provision thereof or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal, or unenforceable, the parties hereto shall negotiate in good faith to modify the applicable Loan Document so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.

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Section 9.08 Right of Setoff. If an Event of Default shall have occurred and be continuing, the Lender and each of its Affiliates is hereby authorized at any time and from time to

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time, to the fullest extent permitted by law, and without prior notice to the Administrative Borrower, any such notice being expressly waived by the Administrative Borrower, to set off and appropriate and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by the Lender or Affiliate to or for the credit or the account of the Borrowers or any Loan Party against any and all of the obligations of the Borrowers now or hereafter existing under the Loan Documents to the Lender or its Affiliates, whether direct or indirect, absolute or contingent, matured or unmatured, and irrespective of whether or not the Lender or any Affiliate shall have made any demand under the Loan Documents and although such obligations of such Loan Party are owed to a branch, office, or Affiliate of the Lender different from the branch, office, or Affiliate holding such deposit or obligated on such indebtedness. The Lender agrees to notify the Administrative Borrower promptly after any such set off and appropriation and application; provided that the failure to give such notice shall not affect the validity of such set off and appropriation and application.

Section 9.09    Governing Law; Jurisdiction; Consent to Service of Process.

(a)This Agreement and the other Loan Documents and any claim, controversy, dispute, or cause of action (whether in contract or tort or otherwise) based upon, arising out of, or relating to this Agreement or any other Loan Document (except, as to any other Loan Document, as expressly set forth therein) and the transactions contemplated hereby and thereby shall be governed by, and construed in accordance with, the laws of the State of New York, without regard to conflicts of laws principles.

(b)Each Loan Party irrevocably and unconditionally agrees that it will not commence any action, litigation, or proceeding of any kind whatsoever, whether in law or equity, or whether in contract or tort or otherwise, against the Lender or any of its Related Parties in any way relating to this Agreement or any other Loan Document or the transactions contemplated hereby or thereby, in any forum other than the courts of the State of New York sitting in New York County, and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, and each of the parties hereto irrevocably and unconditionally submits to the exclusive jurisdiction of such courts and agrees that any such action, litigation, or proceeding may be brought in any such New York state court or, to the fullest extent permitted by applicable law, in such federal court. Each of the parties hereto agrees that a final judgment in any such action, litigation, or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing herein or in any other Loan Document shall affect any right that the Lender may otherwise have to bring any action or proceeding relating to this Agreement or any other Loan Document against any Loan Party or its properties in the courts of any jurisdiction.

(c)Each Loan Party irrevocably and unconditionally waives, to the fullest extent permitted by applicable law, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Agreement or any other Loan Document in any such court referred to in subsection (b) of this Section. Each of the parties

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hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

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(d)Each Loan Party irrevocably consents to the service of process in the manner provided for notices in Section 9.01 and agrees that nothing herein will affect the right of any party hereto to serve process in any other manner permitted by applicable law.

Section 9.10 Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY WHETHER BASED ON CONTRACT, TORT, OR ANY OTHER THEORY. EACH PARTY HERETO (A) CERTIFIES THAT NO AGENT, ATTORNEY, REPRESENTATIVE, OR ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF LITIGATION AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

Section 9.11 Headings. The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.

Section 9.12    Confidentiality.

(a)The Lender and the Collateral Agent agree to maintain the confidentiality of all non-public information received from any Borrower or any other Loan Party relating to a Loan Party or any of its Subsidiaries or their respective businesses; provided that, in the case of information received from any Borrower or any Loan Party after the date hereof, such information is clearly identified at the time of delivery as being confidential information (the “Confidential Information”), except that Confidential Information may be disclosed: (i) to its Affiliates and its Related Parties in connection with the administration of this Agreement and the preservation, exercise, or enforcement of the rights of the Lender under this Agreement (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Confidential Information and instructed to keep such Confidential Information confidential); (ii) to the extent required or requested by any regulatory authority purporting to have jurisdiction over such Person or its Related Parties (including any self-regulatory authority); (iii) to the extent required by any Legal Requirement or regulations or by any subpoena, court order, or similar legal process; (iv) in connection with the exercise of any remedies hereunder or under any other Loan Document or any suit, action, or proceeding relating to this Agreement or any other Loan Document or the enforcement of its rights hereunder or thereunder; (v) to (x) any actual or potential assignee, transferee, or participant in connection with the assignment or transfer by the Lender of any Loans or any participations therein or (y) any actual or prospective party (or its Related Parties) to any swap, derivative, or other transaction under which payments are to be made by reference to any Borrower or any other Loan Party or any Subsidiary or any of their respective obligations, this Agreement or payments hereunder; provided that, any such potential assignee, transferee, participant, swap counterparty, or advisor is advised of, and agrees

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to be bound by, the provisions of this Section; (vi) with the consent of the Administrative Borrower; or (vii) to the extent such Confidential Information (x) becomes publicly available other than as a result of a breach of this

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Section, or (y) is available to the Lender on a non-confidential basis prior to disclosure by any Borrower, or (z) becomes available to the Lender or any of its Affiliates on a non-confidential basis from a source other than a Borrower or any other Loan Party.

(b)Any Person required to maintain the confidentiality of Confidential Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Confidential Information as such Person would accord to its own confidential information.

Section 9.13 Anti-Corruption Information. The Lender hereby notifies each Loan Party that pursuant to the requirements of 31 C.F.R. § 1010.230 (the “Beneficial Ownership Regulation”), Lender may be required to obtain, verify, and record information that identifies each Loan Party, which information includes the name and address of each Loan Party and other information that will allow the Lender to identify such Loan Party in accordance with the Beneficial Ownership Regulation, and each Borrower agrees to provide, or cause the other Loan Parties to provide, such information from time to time to the Lender.

Section 9.14 Federal Cannabis Laws. The parties expressly understand, acknowledge, and agree that, as of the Closing Date, the sale, transport, distribution, processing, manufacturing, cultivation or possession of cannabis (collectively, the “Prohibited Activities”) violates U.S. federal law, including, without limitation, the Federal Cannabis Laws. The parties further understand, acknowledge, and agree that they are entering into this Agreement in compliance with the cannabis laws, policies, and regulations of Massachusetts and Illinois, including the Legal Requirements. The parties understand, acknowledge, and agree that the Legal Requirements are subject to interpretation and further regulation regarding the Prohibited Activities. Each party covenants and agrees to adhere to the laws, policies, and regulations of all applicable governmental authorities (except to the extent otherwise noted in the first sentence of this Section), including the Legal Requirements.

Section 9.15 Interest Rate Limitation. Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable law (including, without limitation, the Criminal Code (Canada)) (the “Maximum Rate”). If the Collateral Agent, or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the Borrower. In determining whether the interest contracted for, charged, or received by the Collateral Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.

Section 9.16 Judgment Currency. If, for the purposes of obtaining judgment in any court, it is necessary to convert a sum due hereunder or any other Loan Document in one currency into another currency, the rate of exchange used shall be that at which in accordance with normal banking procedures the Lender could purchase the first currency with such other

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currency on the Business Day preceding that on which final judgment is given. The obligation of each Borrower

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in respect of any such sum due from it to the Lender or under the other Loan Documents shall, notwithstanding any judgment in a currency (the “Judgment Currency”) other than that in which such sum is denominated in accordance with the applicable provisions of this Agreement (the “Agreement Currency”), be discharged only to the extent that on the Business Day following receipt by the Lender of any sum adjudged to be so due in the Judgment Currency, the Lender, as may in accordance with normal banking procedures purchase the Agreement Currency with the Judgment Currency. If the amount of the Agreement Currency so purchased is less than the sum originally due to the Lender from any Borrower in the Agreement Currency, such Borrower agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Lender, as the against such loss. If the amount of the Agreement Currency so purchased is greater than the sum originally due to the Lender in such currency, the Lender agrees to return the amount of any excess to such Borrower (or to any other Person who may be entitled thereto under applicable law).

[ Signature Page Follows ]

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IN WITNESS WHEREOF, the undersigned have caused this Loan Agreement to be executed as of the date first written above.

BORROWERS:

4FRONT VENTURES CORP.

By: Name: Leo Gontmakher

Title: Chief Executive Officer

4FRONT U.S. HOLDINGS INC.

By: Name: Leo Gontmakher

Title: President

4FRONT HOLDINGS LLC

By: 4FRONT U.S. HOLDINGS INC., its

manager and sole member

By: Name: Leo Gontmakher

Title: President

MISSION PARTNERS USA, LLC, LINCHPIN INVESTORS LLC, and 4FRONT ADVISORS, LLC

By: 4FRONT HOLDINGS LLC, their sole member

By: 4FRONT U.S. HOLDINGS INC., its

manager and sole member

By: Name: Leo Gontmakher

Title: President

EXHIBIT 10.35

[ Signature Page to Loan Agreement]

EXHIBIT 10.35

IN WITNESS WHEREOF, the undersigned have caused this Loan Agreement to be executed as of the date first written above.

BORROWERS:

IL GROWN MEDICINE LLC, MISSION PARTNERS RE, LLC, and MISSION PARTNERS IP, LLC

By: MISSION PARTNERS USA, LLC, their

sole member

By: 4FRONT HOLDINGS LLC, its sole

member

By: 4FRONT U.S. HOLDINGS INC., its

manager and sole member

By: Name: Leo Gontmakher

Title: President

HARBORSIDE    ILLINOIS    GROWN MEDICINE, INC.

By: Name: Leo Gontmakher

Title: President

HEALTHY PHARMS, INC.

By: Name: Leo Gontmakher

Title: President

NEW    ENGLAND    CANNABIS CORPORATION, INC.

By: Name: Leo Gontmakher

Title: President

[ Signature Page to Loan Agreement Continued]

EXHIBIT 10.35

IN WITNESS WHEREOF, the undersigned have caused this Loan Agreement to be executed as of the date first written above.

BORROWERS:

MISSION MA, INC.

By: Name: Andrew Thut

Title: President

MMA CAPITAL, LLC

By: Name: Joshua Rosen

Title: Manager

4FRONT NEVADA CORP.

By: Name: Leo Gontmakher

Title: President

BRIGHTLEAF DEVELOPMENT LLC

By:    4FRONT    NEVADA    CORP.,    its

manager    and    sole member

By: Name: Leo Gontmakher

Title: President

[ Signature Page to Loan Agreement Continued]

EXHIBIT 10.35

IN WITNESS WHEREOF, the undersigned have caused this Loan Agreement to be executed as of the date first written above.

BORROWERS:

MISSION MA, INC.

By: Name: Andrew Thut

Title: President

MMA CAPITAL, LLC

By: Name: Joshua Rosen

Title: Manager

4FRONT NEVADA CORP.

By: Name: Leo Gontmakher

Title: President

BRIGHTLEAF DEVELOPMENT LLC

By:    4FRONT    NEVADA    CORP.,    its

manager    and    sole member

By: Name: Leo Gontmakher

Title: President

[ Signature Page to Loan Agreement Continued]

EXHIBIT 10.35

IN WITNESS WHEREOF, the undersigned have caused this Loan Agreement to be executed as of the date first written above.

BORROWERS:

MISSION MA, INC.

By: Name: Andrew Thut

Title: President

MMA CAPITAL, LLC

By: Name: Joshua Rosen

Title: Manager

4FRONT NEVADA CORP.

By: Name: Leo Gontmakher

Title: President

BRIGHTLEAF DEVELOPMENT LLC

By:    4FRONT    NEVADA    CORP.,    its

manager    and    sole member

By: Name: Leo Gontmakher

Title: President

[ Signature Page to Loan Agreement Continued]

EXHIBIT 10.35

IN WITNESS WHEREOF, the undersigned have caused this Loan Agreement to be executed as of the date first written above.

BORROWERS:

REAL ESTATE PROPERTIES, LLC,

FULLER HILL DEVELOPMENT CO. LLC, and AG-GROW IMPORTS, LLC

By: BRIGHTLEAF DEVELOPMENT LLC,

their sole member

By: 4FRONT NEVADA CORP., its

manager and sole member

By: Name: Leo Gontmakher

Title: President

8554 S. COMMERCIAL AVE, LLC

By: LINCHPIN INVESTORS LLC, its sole

member

By: 4FRONT HOLDINGS LLC, its sole

member

By: 4FRONT U.S. HOLDINGS INC., its

manager and sole member

By: Name: Leo Gontmakher

Title: President

[ Signature Page to Loan Agreement Continued]

EXHIBIT 10.35

IN WITNESS WHEREOF, the undersigned has caused this Loan Agreement to be executed as of the date first written above.

LENDER:

ALT DEBT II, LP

By: Name: Hyung-Jin Patrick Kim

Title: Manager

[ Signature Page to Loan Agreement]

EXHIBIT 10.35

IN WITNESS WHEREOF, the undersigned has caused this Loan Agreement to be executed as of the date first written above.

COLLATERAL AGENT:

GGG Partners, LLC

By: Name: Katie S. Goodman

Title: Managing Member

[ Signature Page to Loan Agreement]

EXHIBIT 10.35

EX-21.1

EXHIBIT 21.1

List of Subsidiaries

The following are the Company’s wholly owned subsidiaries and entities that are controlled by the Company that are included in these consolidated financial statements as of and for the years ended December 31, 2023 and 2022:

Business Name	Entity Type	State of Operations
4Front Holdings, LLC	Holding Company	DE
4Front Advisors, LLC	Consulting Company	AZ
Mission Partners USA, LLC	Investment Company	DE
Linchpin Investors, LLC	Finance Company	DE
Healthy Pharms Inc.	Collocated Cultivation / Production / Dispensary	MA
New England Cannabis Corporation, Inc.	Collocated Cultivation / Production	MA
MMA Capital, LLC (95% owned by Mission Partners USA, LLC)	Finance Company	MA
IL Grown Medicine, LLC	Cultivation	IL
Harborside IL Grown Medicine, Inc.	Dispensary	IL
Om of Medicine, LLC	Co-located Medical Provisioning Center (Dispensary); Co-located Adult-Use Dispensary	MI
Mission MA, Inc.	Collocated Cultivation / Production / Dispensary	MA
Real Estate Properties LLC	Real Estate Holding	WA
Fuller Hill Development Co, LLC	Real Estate Holding	WA
Ag-Grow Imports LLC	Importer of Equipment	WA
Pure Ratios Holdings, Inc.	Online CBD Retail	DE
4Front California Capital Holdings Inc.	Production	CA
Island Global Holdings, Inc.	Holding Company	CA
Carousel Bay LLC	Distribution	CA
Isla Buena Vista LLC	Cultivation	CA
Gold Coast Gardens LLC	Cultivation	CA
Robot Farms Inc.	Cultivation	CA
4Front Nevada Corp.	Holding Company	NV
Brightleaf Development LLC	Holding Company	WA
Mission Partners IP, LLC	IP Holding Company	DE
4Front US Holdings, Inc.	Holding Company	DE
4Front Ventures Corp.	Holding Company	Canada

XML

Cover Page - USD ($)

12 Months Ended

Dec. 31, 2023

Apr. 10, 2024

Jun. 30, 2023

Cover [Abstract]

Document Type

10-K

Document Annual Report

true

Document Period End Date

Dec. 31, 2023

Current Fiscal Year End Date

--12-31

Document Transition Report

false

Entity File Number

000-56075

Entity Registrant Name

4Front Ventures Corp.

Entity Incorporation, State or Country Code

A1

Entity Tax Identification Number

83-4168417

Entity Address, Address Line One

7010 E. Chauncey Lane

Entity Address, Address Line Two

Suite 235

Entity Address, City or Town

Phoenix

Entity Address, State or Province

AZ

Entity Address, Postal Zip Code

85054

City Area Code

602

Local Phone Number

633-3067

Title of 12(g) Security

Class A Subordinate Voting Shares, no par value

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

true

Entity Ex Transition Period

false

ICFR Auditor Attestation Flag

false

Document Financial Statement Error Correction

false

Entity Shell Company

false

Entity Public Float

$ 88,955,560

Entity Common Stock, Shares Outstanding

912,923,993

Documents Incorporated by Reference

None.

Entity Central Index Key

0001783875

Document Fiscal Year Focus

2023

Document Fiscal Period Focus

FY

Amendment Flag

false

XML

Audit Information	12 Months Ended
	Dec. 31, 2023
Auditor Information [Abstract]
Auditor Name	DAVIDSON & COMPANY LLP
Auditor Location	Vancouver, Canada
Auditor Firm ID	731

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Current assets:
Cash	$ 3,398	$ 14,271
Accounts receivable, net	3,682	5,448
Other receivables	735	93
Current portion of lease receivables	3,990	3,810
Inventory	17,087	18,888
Prepaid expenses and other assets	3,324	1,015
Assets held for sale or disposal	1,696	9,742
Total current assets	33,912	53,267
Property, plant, and equipment, net	36,549	34,414
Lease receivables	3,963	5,611
Intangible assets, net	26,793	29,240
Goodwill	41,807	41,807
Right-of-use assets	118,511	121,929
Deposits	2,419	4,996
Long term assets held for sale or disposal	0	53,468
TOTAL ASSETS	263,954	344,732
Current liabilities:
Accounts payable	11,415	11,101
Accrued expenses and other current liabilities	9,014	9,101
Taxes payable	39,634	36,577
Derivative liability	4,550	0
Current portion of convertible notes	15,818	0
Current portion of lease liability	1,720	2,767
Current portion of notes payable and accrued interest	9,812	9,059
Current liabilities held for sale or disposal	12,037	8,845
Total current liabilities	104,000	77,450
Convertible notes	0	14,843
Notes payable and accrued interest from related party	47,491	49,807
Long term notes payable	11,052	10,456
Long term accounts payable	977	962
Construction finance liability	16,000	16,000
Deferred tax liability	11,882	6,097
Lease liability	123,946	120,672
Long term liabilities held for sale or disposal	0	20,094
TOTAL LIABILITIES	315,348	316,381
SHAREHOLDERS' (DEFICIT) EQUITY
Subordinate Voting Shares (no par value, unlimited shares authorized, 669,519,349 and 643,416,275 shares issued and outstanding as of December 31, 2023 and 2022, respectively)	308,952	304,602
Additional paid-in capital	66,948	59,411
Deficit	(427,402)	(335,755)
Equity attributable to 4Front Ventures Corp.	(51,502)	28,258
Non-controlling interest	108	93
TOTAL SHAREHOLDERS' (DEFICIT) EQUITY	(51,394)	28,351
TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY	$ 263,954	$ 344,732

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - shares	Dec. 31, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Common stock, shares issued (in shares)	669,519,349	643,416,275
Common stock, shares outstanding (in shares)	669,519,349	643,416,275

XML

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
REVENUE
Revenue from sale of goods	$ 86,132	$ 95,722
Real estate income	11,303	11,942
Total revenues	97,435	107,664
Cost of goods sold	(51,543)	(56,239)
Gross profit	45,892	51,425
OPERATING EXPENSES
Selling, general and administrative expenses	63,407	56,272
Depreciation and amortization	3,120	2,667
Transaction and restructuring related expenses	212	1,022
Impairment of goodwill and intangible assets	0	6,484
Total operating expenses	66,739	66,445
Income (loss) from operations	(20,847)	(15,020)
Other income (expense)
Interest income	3	32
Interest expense	(13,805)	(12,614)
Change in fair value of derivative liability	(385)	3,502
Loss on disposal	(149)	(228)
Gain on extinguishment of debt	29	0
Loss on litigation settlement	(3)	(250)
Other	(2,469)	13,364
Total other income (expense), net	(16,779)	3,806
Net loss from continuing operations before income taxes	(37,626)	(11,214)
Income tax expense	(7,092)	(10,077)
Net loss from continuing operations	(44,718)	(21,291)
Net loss from discontinued operations, net of taxes	(46,914)	(25,586)
Net loss	(91,632)	(46,877)
Net income attributable to non-controlling interest	15	21
Net loss attributable to shareholders	$ (91,647)	$ (46,898)
Basic loss per share - continuing operations (in dollar per share)	$ (0.14)	$ (0.03)
Diluted loss per share - continuing operations (in dollar per share)	(0.14)	(0.03)
Basic loss per share - discontinued operations (in dollar per share)	(0.07)	(0.04)
Diluted loss per share - discontinued operations (in dollar per share)	$ (0.07)	$ (0.04)
Weighted average number of shares outstanding, basic (in shares)	649,692,245	632,951,141
Weighted average number of shares outstanding, diluted (in shares)	649,692,245	632,951,141

XML

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' (DEFICIT) EQUITY - USD ($) $ in Thousands	Total	Island Global Holdings, Inc.	New England Cannabis Corporation	Bloom Farms	Total 4Front Ventures Corp. Shareholders' Equity	Total 4Front Ventures Corp. Shareholders' Equity Island Global Holdings, Inc.	Total 4Front Ventures Corp. Shareholders' Equity New England Cannabis Corporation	Total 4Front Ventures Corp. Shareholders' Equity Bloom Farms	Common Stock	Common Stock Island Global Holdings, Inc.	Common Stock New England Cannabis Corporation	Common Stock Bloom Farms	Additional Paid-In Capital	Deficit	Non-Controlling Interest
Beginning balance (in shares) at Dec. 31, 2021									594,181,604
Beginning balance at Dec. 31, 2021	$ 37,532				$ 37,460				$ 274,120				$ 52,197	$ (288,857)	$ 72
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Shares issued pursuant to acquisition (in shares)										8,783,716	28,571,428	3,750,000
Shares issued pursuant to acquisition		$ 6,245	$ 18,200	$ 2,100		$ 6,245	$ 18,200	$ 2,100		$ 6,245	$ 18,200	$ 2,100
Shares issued to settle payables (in shares)	49,234,671
Warrants issued for Island pursuant to acquisition		732				$ 732				$ 732
Share-based compensation (in shares)									1,750,604
Share-based compensation	$ 7,214				7,214								7,214
Conversion of notes to equity (in shares)									6,235,512
Conversion of notes to equity	$ 3,122				3,122				$ 3,122
Shares issued with exercise of stock options, (in shares)	133,333								51,975
Shares issued with exercise of stock options	$ 33				33				$ 33
Shares issued with exercise of warrants (in shares)									91,436
Shares issued with exercise of warrants	50				50				$ 50
Net loss	$ (46,877)	$ (10,986)	$ (2,171)		(46,898)									(46,898)	21
Ending balance (in shares) at Dec. 31, 2022	643,416,275								643,416,275
Ending balance at Dec. 31, 2022	$ 28,351				28,258				$ 304,602				59,411	(335,755)	93
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Shares issued pursuant to acquisition (in shares)									2,380,952
Shares issued pursuant to acquisition	$ 447				447				$ 447
Shares issued to settle payables (in shares)	26,103,074								4,062,500
Shares issued to settle payables	$ 650				650				$ 650
Share-based compensation	5,998				5,998								5,998
Conversion of notes to equity (in shares)									10,359,372
Conversion of notes to equity	$ 2,391				2,391				$ 2,391
Shares issued with exercise of stock options, (in shares)	0
Shares issued for executive compensation (in shares)									9,300,250
Shares issued for executive compensation	$ 862				862				$ 862
Equity component of debt	1,333				1,333								1,333
Warrants issued	206				206								206
Net loss	$ (91,632)				(91,647)									(91,647)	15
Ending balance (in shares) at Dec. 31, 2023	669,519,349								669,519,349
Ending balance at Dec. 31, 2023	$ (51,394)				$ (51,502)				$ 308,952				$ 66,948	$ (427,402)	$ 108

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss from continuing operations	$ (44,718)	$ (21,291)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	5,560	5,114
Equity based compensation	7,066	7,214
Change in fair value of derivative liability	385	(3,502)
Accretion of lease liability	5,698	5,675
Loss on disposal	149	0
Write-off of fixed asset from terminated lease	0	228
Change in contingent consideration payable	0	(2,393)
Loss on extinguishment of debt	(29)	0
Accretion of debt discount	2,632
Accrued interest on convertible debenture and interest	1,072	1,326
Accrued interest on notes payable	9,596	8,184
Interest accrued - lease receivable	1,468	957
Deferred taxes	5,785	(4,642)
Impairment of goodwill and intangibles	0	6,484
Changes in operating assets and liabilities:
Accounts receivable, net	1,766	(3,518)
Other receivables	(252)	196
Prepaid expenses and other assets	(1,018)	1,025
Inventory	1,801	(568)
Accounts payable	1,150	10,395
Accrued expenses and other current liabilities	89	447
Taxes payable	3,083	12,609
Deposits	2,572	(502)
Net cash provided by continuing operating activities	3,855	23,438
Net cash used in discontinued operating activities	(5,691)	(14,537)
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES	(1,836)	8,901
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property and equipment	1,051	0
Proceeds from notes receivable	0	108
Cash paid for asset acquisitions and business combinations, net of cash received	(850)	(25,000)
Purchases of property and equipment	(3,361)	(1,278)
Net cash used in continuing investing activities	(3,160)	(26,170)
Net cash used in discontinued investing activities	(284)	(1,603)
NET CASH USED IN INVESTING ACTIVITIES	(3,444)	(27,773)
CASH FLOWS FROM FINANCING ACTIVITIES
Notes payable issued	3,410	3,000
Payment on construction finance liability	(640)	0
Proceeds from sales and leaseback transaction	0	16,000
Proceeds from the exercise of warrants	0	50
Proceeds from the exercise of stock options	0	33
Repayment of convertible debentures	0	(1,125)
Repayment of notes payable	(8,319)	(7,250)
Net cash (used in) provided by continuing financing activities	(5,549)	10,708
Net cash (used in) provided by discontinued financing activities	0	0
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES	(5,549)	10,708
NET (DECREASE) INCREASE IN CASH	(10,829)
Cash included in assets held for sale	(44)
NET (DECREASE) INCREASE IN CASH		(8,164)
CASH, BEGINNING OF YEAR	14,271	22,435
CASH, END OF YEAR	3,398	14,271
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest	6,718	1,750
Cash paid for income taxes	1,575	2,110
Non-cash investing and financing activities:
Issuance of warrants for debt amendments	4,165	0
Issuance of restricted stock units	1,333	0
Issuance of equity for business acquisitions	0	25,177
Issuance of equity for asset acquisitions	447	2,100
Shares issued to settle payables	650	2,783
Paid-in-kind interest capitalized to debt principal	175	0
Termination of new right-of-use assets and lease liabilities	0	2,020
Transfers of property and equipment from assets related to discontinued operations to continuing operations	3,556	0
Net assets transferred to held for sale	$ (117)	$ 0

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NATURE OF OPERATIONS

12 Months Ended

Dec. 31, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

NATURE OF OPERATIONS

NATURE OF OPERATIONS

4Front Ventures Corp. (“4Front” or the “Company”) exists pursuant to the provisions of the British Columbia Corporations Act. The Company operates the business through two segments: THC Cannabis and CBD Wellness. As of December 31, 2023, the Company's THC Cannabis segment consists of five dispensaries and four production and cultivation facilities across Illinois and Massachusetts. Also, as part of its THC Cannabis segment, the Company leases real estate, sells equipment and supplies, and licenses intellectual property to cannabis producers in the state of Washington. The Company’s CBD Wellness segment sells non-THC hemp derived products across the United States.

While marijuana is legal under the laws of several U.S. states (with varying restrictions), the United States Federal Controlled Substances Act classifies all “marijuana” as a Schedule I drug, whether for medical or recreational use. Under U.S. federal law, a Schedule I drug or substance has a high potential for abuse, no accepted medical use in the United States, and a lack of safety for the use of the drug under medical supervision.

Management continues to evaluate the impact of the COVID-19 pandemic on the Company’s industry and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position and results of its operations the specific impact is not readily determinable as of the date of these consolidated financial statements. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

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SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2023

Accounting Policies [Abstract]

SIGNIFICANT ACCOUNTING POLICIES

SIGNIFICANT ACCOUNTING POLICIES

(a)    Basis of Presentation

The consolidated financial statements include the accounts of 4Front and all entities in which the Company either has a controlling voting interest or is the primary beneficiary of a variable interest entity in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The Company has prepared these statements pursuant to the rules and regulations of the United States Securities and Exchange Commission ("SEC") and U.S. GAAP. All material intercompany accounts and transactions have been eliminated in consolidation.

The accompanying consolidated financial statements have been prepared on a going concern basis in accordance with accounting principles generally accepted in the U.S. GAAP and in accordance with the rules and regulations of the SEC for annual financial information. In the opinion of management, the financial statements include all adjustments necessary for the fair presentation of the results of the annual periods presented. All adjustments are of a normal recurring nature.

(b)    Use of Estimates

The preparation of the Company’s financial statements requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, and revenue and expenses. We cannot predict what future laws and regulations might be passed that could have a material effect on our results of operations. We assess the impact of significant changes in laws and regulations on a regular basis and update the assumptions and estimates used to prepare our financial statements when we deem it necessary. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. Actual results may differ from these estimates. The most critical and subjective areas are discussed in detail elsewhere in the Notes to Consolidated Financial Statements.

(c)    Cash and Cash Equivalents

Cash and cash equivalents include cash deposits in financial institutions, other deposits that are readily convertible into cash, with original maturities of three months or less, and cash held at retail locations. For the years presented, the Company did not have any cash equivalents.

(d)    Trade Receivables

Accounts receivable represents receivables from customers stemming from sales in the ordinary course of business and leasing services which are recorded when billed or when the related revenue is earned. Accounts receivable are stated net of allowance for doubtful accounts and customer credits. The Company establishes an allowance for doubtful accounts based on various factors including the age of receivables outstanding, historical trends, economic conditions, and other information. The allowance for doubtful accounts was $7.7 million and nil as of December 31, 2023 and 2022, respectively.

(e)    Inventories

Raw materials consist of unharvested cannabis plants and materials used to manufacture CBD and cannabis products. Work in process consists of harvested cannabis, processed cannabis oil, and manufactured products that are not complete. Finished goods consist of cultivation supplies to be sold to cultivators, purchased and manufactured packaged flower, pre-rolls, vape cartridges, edibles, CBD products, and paraphernalia.

Inventories of purchased finished goods and packing materials are initially valued at cost and subsequently at the lower of cost or net realizable value. Costs incurred during the growing and production process are capitalized as incurred to the extent that cost is less than net realizable value. These costs include materials, labor and manufacturing overhead used in the growing and production processes. Products for resale, supplies and consumables are valued at lower of cost or net realizable value.

Net realizable value is determined as the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. Cost is determined using the weighted average cost basis and specific costs, with cost being determined on the first-in, first-out (“FIFO”) method of accounting. The Company reviews inventory for obsolete, redundant and slow-moving goods and any such inventories are written down to net realizable value.

(f)    Property and Equipment

Property, plant and equipment are stated at cost, including capitalized borrowing costs, net of accumulated depreciation and impairment losses. Expenditures that materially increase the life of the assets are capitalized. Ordinary repairs and maintenance are expensed as incurred. When property is disposed, the related cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in the consolidated statement of operations. The assets’ residual values, useful lives and methods of depreciation are reviewed at each financial year-end and adjusted prospectively if appropriate. Depreciation is calculated on a straight-line basis over the estimated useful life of the asset using the following terms and methods:

Land / Construction in process	Not depreciated
Buildings & improvements	10 - 39 years
Furniture & fixtures	5 - 7 years
Equipment	7 years
Software	5 years
Leasehold improvements	Lesser of remaining life of lease or useful life

(g)    Impairment of Long-Lived Assets

The Company evaluates the recoverability of other long-lived assets, including property and equipment, and certain identifiable intangible assets, whenever events or changes in circumstances indicate that the carrying value of an asset or asset group may not be recoverable. The Company performs impairment tests of indefinite-lived intangible 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 overall business, a significant decrease in the market value of the assets or significant negative industry or economic trends. When the Company determines the carrying value of long-lived assets may not be recoverable based upon the existence of one or more of the indicators, the assets are assessed for impairment based on the estimated future undiscounted cash flows expected to result from the use of the asset and its eventual disposition. If the carrying value of an asset exceeds its estimated future undiscounted cash flows, an impairment loss is recorded for the excess of the asset’s carrying value over its fair value.

(h)    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 periods of assets with finite lives are based on management’s estimates at the date of acquisition and were as follows for each class of intangible asset:

Customer relationships	5 years
Tradenames & trademarks	1 - 10 years
Non-competition agreement	2 - 3 years
Know-how (trade secrets)	5 years

Intangible assets with finite lives are amortized 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. Indefinite-lived intangibles such as cannabis licenses are not amortized.

(i)    Goodwill

Goodwill arises from business combinations and is generally determined as the excess of the fair value of the consideration transferred, plus the fair value of any non-controlling interests in the acquiree, over the fair value of the net assets acquired and liabilities assumed as of the acquisition date. Goodwill acquired in a business combination is not amortized but tested for impairment at least annually or more frequently if events and circumstances exist that indicate that a goodwill impairment test should be performed.

In order to determine if goodwill is impaired, the Company may perform an optional qualitative assessment to determine whether indicators of impairment exist. If indicators of impairment are present, or if the Company elects to bypass the qualitative assessment and proceed directly to the quantitative test, the Company measures the impairment of goodwill by comparing the carrying amount of a reporting unit to its estimated fair value. If the carrying amount of a reporting unit is in excess of its fair value, the Company recognizes an impairment charge equal to the amount in excess.

The estimate of fair value requires the use of significant unobservable inputs, representative of a Level 3 fair value measurement. The Company determines fair values for each reporting unit using the income approach, and when available and appropriate, the market approach, or a combination of both. The income approach involves forecasting projected financial information (such as revenue growth rates, profit margins, tax rates, working capital and capital expenditures) and selecting a discount rate that reflects the risk inherent in estimated future cash flows. Under the market approach, the fair value is based on observed market data. If multiple valuation methodologies are used, the results are weighted appropriately.

The Company performs an annual assessment of its goodwill as of October 31, or more frequently, to determine if any events or circumstances exist, such as an adverse change in business climate or a decline in overall industry demand, that would indicate that it would more likely than not reduce the fair value of a reporting unit below its carrying amount, including goodwill.

(j)    Business Combinations

Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The Company measures goodwill as the fair value of the consideration, less the net recognized amount of the identifiable assets and liabilities assumed, all measured at fair value as of the acquisition date. Any excess of the fair value of the net assets acquired over the consideration, is a gain on business acquisition and would be recognized as a gain in the consolidated statement of operations.

In determining the fair value of all identifiable assets, liabilities and contingent liabilities acquired, the most significant estimates relate to contingent consideration and intangible assets. Management exercises judgement in estimating the probability and timing of when earn-outs are expected to be achieved, which is used as the basis for estimating fair value.

(k)    Leases

Lessee

The Company primarily leases its retail dispensaries, certain cultivation and production facilities, and office space which are accounted for under Accounting Standards Codification ("ASC") Topic 842, "Leases" ("ASC Topic 842"). The Company determines if an arrangement is a lease at inception. The Company recognizes operating lease right-of-use assets and liabilities at the lease commencement date based on the estimated present value of the remaining lease payments over the lease term. An implicit borrowing rate is occasionally provided in lease agreements which the Company utilizes to calculate right-of-use assets and liabilities at the end of each reporting period. When an implicit borrowing rate is not provided, the Company uses a benchmark approach to derive an appropriate imputed discount rate. The Company will benchmark itself against other companies of similar credit ratings and comparable quality and derive an imputed rate. The Company includes options to extend or terminate a lease in the lease term when it is reasonably certain to exercise such options. The Company recognizes leases with an initial term of 12 months or less as lease expense over the lease term and those leases are not recorded on the consolidated balance sheets. Certain leases include variable payments related to common area maintenance, insurance, and property taxes, which are billed by the landlord, as is customary with these types of charges for office space, and are considered non-lease components. The Company accounts for real estate leases and the related fixed non-lease components together as a single component. For additional information on leases where the Company is the lessee, see Note 9.

At the commencement date, the Company must determine whether the lease is accounted for as an operating lease or finance lease under ASC Topic 842. 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.

Lessor

Leases in which the Company is the lessor are classified as operating and finance leases under ASC Topic 842 where the lease components and non-lease components are accounted for separately. Rental income from operating leases is recognized on a straight-line basis over the term of each lease. Initial direct costs incurred in negotiating and arranging a operating lease are added to the carrying amount of the leased asset and recognized on a straight-line basis over the lease term. At the commencement date of each finance lease, the Company recognizes a lease receivable for the net present value of the future lease payments. Finance lease rental income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Company’s lease receivable over the life of the lease. Initial direct costs related to finance leases are deferred at the commencement date and included in the underlying lease receivable asset, and are recognized as income as part of the derecognition of the lease receivable over the life of the lease.

(l)    Sale and Leaseback Transactions

From time to time, the Company may enter into sale-leaseback transactions to finance certain property acquisitions and capital expenditures, pursuant to which the Company sells the property to a third party and agrees to lease the property back for a certain period of time. To determine whether the transfer of the property should be accounted for as a sale, the Company evaluates whether it has transferred control to the third party in accordance with the revenue recognition guidance set forth in ASC 606. If the transfer of the asset is deemed to be a sale at market terms, the Company recognizes the transaction price for the sale based on the cash proceeds received, derecognizes the carrying amount of the underlying asset and recognizes a gain or loss in the consolidated statements of operations and comprehensive loss for any difference between the carrying value of the asset and the transaction price. The Company then accounts for the leaseback in accordance with its lease accounting policy.

If the transfer of the asset is determined not to be a sale at market terms, the Company accounts for the transaction as a financing arrangement, and accordingly no asset sale is recognized. The Company retains the historical costs of the property and the related accumulated depreciation on its books and continues to depreciate the property over the lesser of its remaining useful life or its initial lease term. The asset is presented within property and equipment, net on the consolidated balance sheets. All proceeds from these transactions are accounted for as finance obligations and presented as non-current obligations on the consolidated balance sheets. A portion of the lease payments is recognized as a reduction of the financing obligation and a portion is recognized as interest expense based on an imputed interest rate.

(m)    Contract Assets and Liabilities

A contract liability is recorded on the consolidated balance sheet for consideration transferred prior to goods transfer. Amounts expected to be recognized as revenue within the twelve months following the balance sheet date are classified as the current portion of contract liabilities in the accompanying consolidated balance sheets with the remaining balance classified as long-term. When the Company has an unconditional right to payment, a receivable is classified on the consolidated balance sheet as current contract assets for amounts due within twelve months or long-term contract assets for amounts due after twelve months. The accompanying consolidated balance sheets reflect a contract liability for the amount of revenue to be recognized in the future as and when the Company satisfies its remaining performance obligations. As of December 31, 2023, contract liabilities are related to discontinued operations of which $2.3 million is included in the accompanying consolidated balance sheet.

(n)    Derivative Liabilities

The Company evaluates all of its agreements to determine if such instruments have derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations.

In calculating the fair value of derivative liabilities, the Company uses a valuation model when Level 1 inputs are not available to estimate fair value at each reporting date. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the consolidated balance sheets as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within twelve months of the reporting date. Critical estimates and assumptions used in the model are discussed in Note 12.

(o)    Share Capital

Financial instruments issued by the Company are classified as equity only to the extent that they do not meet the definition of a financial liability or financial asset. The Company’s common shares, share options and warrants are classified as equity instruments. Incremental costs directly attributable to the issue of new shares, warrants or options are shown in equity as a deduction from the proceeds. The proceeds from the exercise of stock options are recorded as share capital. Income tax relating to transaction costs of an equity transaction is accounted for in accordance with ASC 740, "Income Taxes".

(p)    Share-based Compensation

The stock option plan (Note 15) allows Company directors, employees and consultants to acquire shares of the Company. The Company measures the fair value of services received in exchange for all options granted based on the fair market value of the award as of the grant date. The fair value of options granted is recognized as a share-based compensation expense with a corresponding increase in equity. Consideration paid on the exercise of stock options is credited to share capital. The fair value is measured at grant date and each tranche is recognized over the period during which the options vest. The fair value of the options granted is measured using the Black-Scholes option pricing model taking into account the terms and conditions upon which the options were granted. At each financial position reporting date, the amount recognized as an expense is adjusted to reflect the number of stock options that are expected to vest.

(q)    Revenue Recognition

Revenue is recognized by the Company in accordance with ASC Topic 606, "Revenue from Contracts with Customers" ("ASC Topic 606"). Revenue from the sale of goods consists of direct retail sales to customers at the Company-owned dispensaries and wholesale sales to third-party dispensaries, which are generally recognized at a point in time when control over the goods have been transferred to the customer and is recorded net of sales discounts. Payment is typically due upon transferring the goods to the customer or within a specified time period permitted under the Company’s credit policy. The Company recognized sales discounts of $11.2 million and $13.3 million for the year ended December 31, 2023 and 2022, respectively. Sales tax is excluded from the transaction price and recorded as liabilities upon collection at the point of sale.

Revenue related to real estate income on leases is recognized in accordance with ASC Topic 842. Lease payments received are primarily recognized as real estate income in the consolidated statements of operations. A portion of the lease payment amortizes the lease receivable.

The following table represents the Company’s disaggregated revenue by source:

	For the Years Ended December 31,
	2023		2022
Retail	$	73,149	$	86,712
Wholesale	12,983		9,010
Real estate	11,303		11,942
Total	$	97,435	$	107,664

The Company treats shipping and handling activities as a fulfillment cost, classified as cost of sales. Accordingly, the Company accrues all fulfillment costs related to the shipping and handling of consumer goods at the time of shipment. The Company offers a loyalty reward program at certain dispensary locations. A portion of the revenue generated in a sale is allocated to the loyalty points earned which is deferred until the loyalty points are redeemed or expire. As of December 31, 2023 and 2022, the loyalty liability totaled $0.5 million and $1.5 million, respectively, and is included in accrued liabilities on the consolidated balance sheets.

(r)    Advertising Expenses

The Company expenses advertising costs as incurred in accordance with ASC 720-35, “Other Expenses – Advertising Cost”. Advertising expenses from continuing operations totaled $14.7 million and $19.9 million in the years ended December 31, 2023 and 2022, respectively.

(s)    Income Taxes

Deferred taxes are provided using an asset and liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are measured using the enacted tax rates. The effect on deferred tax assets and liabilities of a change in tax law or tax rates is recognized in income in the period that enactment occurs. As discussed further in Note 17, the Company is subject to the limitations of IRC Section 280E.

(t)    Loss per Share

Basic loss per share is calculated using the weighted average number of common shares outstanding during the year. Diluted loss per share has been calculated using the weighted average number of common shares that would have been outstanding during the respective period had all stock options and warrants outstanding and having a dilutive effect been converted into shares at the beginning of the period and the proceeds used to repurchase the Company’s common shares at the average market price for the period. If these computations prove to be anti-dilutive, diluted loss per share is the same as the basic loss per share.

(u)    Fair Value of Financial Instruments

The Company applies fair value accounting for all financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities that are required to be recorded at fair value, the Company considers all related factors of the asset by market participants in which the Company would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as inherent risk, transfer restrictions, and credit risk.

The Company provides information about its financial instruments measured at fair value at one of three levels according to the relative reliability of the inputs used to estimate the fair value:

•Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities;

•Level 2 – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and

•Level 3 – Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

(v) Assets Held for Sale

Assets held for sale represent property, equipment, and leasehold improvements, right-of-use assets, and any other assets that are held for sale in conjunction with the sale of a business. The Company records assets held for sale in accordance with ASC 360 at the lower of carrying value or fair value less costs to sell. Fair value is the amount obtainable from the sale of the asset in an arm’s length transaction. The reclassification takes place when the assets are available for immediate sale and the sale is highly probable. All assets and liabilities classified as held for sale are presented separately in the consolidated balance sheets of the current period.

(w) Discontinued Operations

A component of an entity is identified as operations and cash flows that can be clearly distinguished, operationally and financially, from the rest of the entity. Under ASC Subtopic 205-20, “Presentation of Financial Statements - Discontinued Operations” (“ASC Subtopic 205-20”), a discontinued operation that is being disposed of other than by sale is considered held and used until the date of abandonment at which time it meets the criteria to be presented as discontinued operations. A component of an entity that is classified as discontinued operations is presented separately from continuing operations in the consolidated statements of operations and the consolidated statements of cash flows for all periods presented. All assets and liabilities related to such discontinued operations are presented separately in the consolidated balance sheets for all periods presented.

(x)    Foreign Currency

The Company and its subsidiaries’ functional currency, as determined by management, is the United States (“U.S.”) dollar. These consolidated financial statements are presented in U.S. dollars as this is the primary economic environment of the Company. All references to “C$” refer to Canadian dollars.

Each asset, liability, revenue and expense denominated in a foreign currency is recorded in the entity’s functional currency using the exchange rate in effect at the transaction date. At each reporting period, nonmonetary assets and liabilities and related revenue and expenses are remeasured using historical exchange rates and monetary assets and liabilities are remeasured using current exchange rates. Any adjustments resulting from remeasurement are recorded in other expense (income) within the consolidated statements of operations.

(y)    Recent Accounting Pronouncements

Accounting Pronouncements Not Yet Adopted

i.In June 2022, the FASB issued ASU 2022-03, "Fair Value Measurements - Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (Topic 820)". ASU 2022-03 clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. It also clarifies that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. For public business entities, the ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. The Company is currently assessing the impact of adopting ASU 2022-03 on the consolidated financial statements.

ii.In March 2023, the FASB issued ASU 2023-01, “Leases (Topic 842) – Common Control Arrangements”, which require that leasehold improvements associated with common control leases be amortized by the lessee over the useful life of the leasehold improvements to the common control group (regardless of the lease term) as long as the lessee controls the use of the underlying asset. It also requires such leasehold improvements to be accounted for as a transfer between entities under common control through an adjustment to entity if, and when, the lessee no longer controls the use of the underlying asset. ASU 2023-01 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently assessing the impact of adopting ASU 2023-01 on the consolidated financial statements.

iii.In July 2023, the FASB issued ASU 2023-03, “Presentation of Financial Statement (Topic 205), Income Statement - Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation - Stock Compensation (Topic 718)”, to amend various SEC paragraphs in the Accounting Standards Codification to reflect the issuance of SEC Staff Accounting Bulletin No. 120, among other things. The ASU does not provide any new guidance so there is no transition or effective date associated with it. The Company is currently assessing the impact of adopting ASU 2023-03 on the consolidated financial statements.

iv.In October 2023, the FASB issued ASU 2023-06, "Disclosure Improvements," which incorporates certain existing or incremental disclosures and presentation requirements of SEC Regulations S-X and S-K into the FASB Accounting Standards Codification (the “Codification”). ASU 2023-06 is effective for the Company as of the effective date to remove the existing disclosure requirement from Regulations S-X and S-K. Early adoption is not permitted. The Company is currently assessing the impact of adopting ASU 2023-06 on the consolidated financial statements.

v.In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures” (“ASU 2023-07”), which is intended to improve the financial reporting by requiring disclosure of incremental segment information on an annual and interim basis for all public entities to enable investors to develop more decision-useful financial analyses. ASU 2023-07 is effective for the Company beginning January 1, 2024 with early adoption permitted. The Company is currently evaluating the effect of adopting this accounting standard.

vi.In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 280), Improvements to Income Tax Disclosures” (“ASU 2023-09”), which require that public business entities on an annual basis (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a certain quantitative threshold. ASU 2023-09 is effective for the Company beginning January 1, 2025 with early adoption permitted. The Company is currently evaluating the effect of adopting this accounting standard.

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GOING CONCERN

12 Months Ended

Dec. 31, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

GOING CONCERN

GOING CONCERN

As of December 31, 2023, the Company had cash and cash equivalents of $3.4 million and working capital deficit of $70.1 million. The Company incurred net losses from continuing operations of $44.7 million and $21.3 million for the years ended December 31, 2023 and 2022, respectively. The conditions described above raise substantial doubt with respect to the Company’s ability to meet its obligations for at least one year from the issuance of these consolidated financial statements, and therefore, to continue as a going concern.

The Company plans to continue to fund its operations through cash generated from sales and is deploying its capital reserves to acquire and develop assets capable of producing additional revenues and earnings over both the immediate and near term. Capital reserves are being utilized for capital expenditures and improvements in existing facilities, product development and marketing, as well as customer, supplier and investor and industry relations. Historically, the Company has raised capital as needed however there is no guarantee the Company will be able to continue to raise funds in the same manner it has historically.

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INVENTORY

12 Months Ended

Dec. 31, 2023

Inventory Disclosure [Abstract]

INVENTORY

INVENTORY

The Company’s inventories include the following as of December 31, 2023 and 2022:

	December 31, 2023		December 31, 2022
Raw materials - unharvested cannabis	$	2,268	$	2,431
Raw materials - harvested and purchased cannabis	5,745		6,753
Packaging and other non-finished goods	1,072		713
Work in process - manufactured and purchased extracts	1,790		3,412
Finished goods	6,212		5,579
Total inventory	$	17,087	$	18,888

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PROPERTY, PLANT, AND EQUIPMENT

12 Months Ended

Dec. 31, 2023

Property, Plant and Equipment [Abstract]

PROPERTY, PLANT, AND EQUIPMENT

PROPERTY, PLANT, AND EQUIPMENT

Property, plant and equipment and related depreciation are summarized in the table below:

	December 31, 2023		December 31, 2022
Land	$	774	$	774
Buildings & improvements	12,584		13,784
Construction in process	7,165		82
Furniture, equipment & other	8,855		8,963
Leasehold improvements	19,966		19,544
Total	$	49,344	$	43,147
Less: accumulated depreciation	(12,795)		(8,733)
Total property and equipment, net	$	36,549	$	34,414

Depreciation expense related to continuing operations for the year ended December 31, 2023 and 2022 was $3.1 million and $2.6 million respectively, of which $2.4 million and $2.4 million, respectively, is included in cost of goods sold.

Unless specifically excluded in the LI Lending note, all property, plant, and equipment is secured by LI Lending as collateral on the LI Lending note (Note 11). In November 2022, the Company amended the lease agreement for its facility in Matteson, Illinois to increase the tenant improvement allowance under the lease by $19.9 million. Refer to Note 9 for further information.

On November 17, 2023, the Company entered into an agreement with a third party to sell a significant piece of equipment for a sale price of $1.4 million, of which $0.95 million is to be received in cash with the remaining $0.5 million contemplated in a promissory note receivable.

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INTANGIBLE ASSETS AND GOODWILL

12 Months Ended

Dec. 31, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

INTANGIBLE ASSETS AND GOODWILL

INTANGIBLE ASSETS AND GOODWILL

Intangible Assets

Intangible assets and related amortization are summarized in the table below:

	Licenses		Customer Relationships		Non-Competition Agreements		Tradenames and Trademarks		Know-How		Total
Gross Carrying Amount, December 31, 2021	$	20,146	$	2,900	$	249	$	100	$	9,700	$	33,095
Acquisitions	12,000		—		—		1		—		12,001
Impairment	(6,485)		—		—		—		—		(6,485)
Gross Carrying Amount, December 31, 2022	$	25,661	$	2,900	$	249	$	101	$	9,700	$	38,611
Acquisitions	—		—		—		—		—		—
Impairment	—		—		—		—		—		—
Gross Carrying Amount, December 31, 2023	$	25,661	$	2,900	$	249	$	101	$	9,700	$	38,611
Accumulated Amortization, December 31, 2021	$	—	$	(1,811)	$	(250)	$	(100)	$	(4,688)	$	(6,849)
Amortization Expense	—		(581)		—		(1)		(1,940)		(2,522)
Accumulated Amortization, December 31, 2022	$	—	$	(2,392)	$	(250)	$	(101)	$	(6,628)	$	(9,371)
Amortization Expense	—		(508)		—		—		(1,939)		(2,447)
Accumulated Amortization, December 31, 2023	$	—	$	(2,900)	$	(250)	$	(101)	$	(8,567)	$	(11,818)

During the year ended December 31, 2022, the Company acquired intangible assets related to the New England Cannabis Company and Bloom Farms transactions. During the year ended December 31, 2023, the Company entered into agreements to acquire dispensary licenses from Euphoria, LLC and Westside Visionaries. Refer to Note 7 for further discussion.

During the year ended December 31, 2022, management noted indicators of impairment of its acquired long-lived assets due to recent cannabis market conditions in the state of Michigan. The Company used various Level 3 inputs and a discounted cash flow model to determine the fair value of these asset groups. Accordingly, the Company recorded an impairment loss of $6.5 million in the consolidated statements of operations for the year ended December 31, 2022.

For the purpose of the annual impairment test on October 31, 2023, the Company performed a qualitative assessment and noted no impairment of its indefinite-lived intangible assets as of October 31, 2023.

Amortization expense related to continuing operations for the year ended December 31, 2023 and 2022 was $2.4 million and $2.5 million respectively. Expected annual amortization expense for intangible assets subject to amortization at December 31, 2023 is as follows for each of the next five fiscal years:

Year Ending December 31,
2024	$	1,134
2025	—
2026	—
2027	—
2028	—
Thereafter	—
Total Future Amortization Expense	$	1,134

Goodwill

Balance, December 31, 2021	$	23,155
Acquisitions	18,652
Balance, December 31, 2022	$	41,807
Balance, December 31, 2023	$	41,807

Goodwill as of December 31, 2023 is related to the THC Cannabis segment in which there is no accumulated impairment within this segment. Goodwill related to the CBD Wellness segment has an accumulated impairment charge of $13.4 million, which represented the entire balance and occurred during the year ended December 31, 2020. As of December 31, 2023 and 2022, all goodwill and intangibles are attributable to the THC Cannabis segment.

For the purpose of the annual impairment test on October 31, 2023, the Company performed a qualitative assessment and noted no impairment of goodwill as of October 31, 2023. As of December 31, 2023, the THC Cannabis reporting unit had negative carrying amounts of which $41.8 million of goodwill is allocated to the reporting unit.

Refer to Note 18 for discussion of intangible assets and goodwill related to the Company's operations in California classified as discontinued operations.

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ACQUISITIONS AND BUSINESS COMBINATIONS

12 Months Ended

Dec. 31, 2023

Business Combination and Asset Acquisition [Abstract]

ACQUISITIONS AND BUSINESS COMBINATIONS

ACQUISITIONS AND BUSINESS COMBINATIONS

There were no business combinations during the year ended December 31, 2023. A summary of business combinations completed during the year ended December 31, 2022 is as follows:

	NECC		Island (1)		Total
Cash consideration	$	25,000	$	—	$	25,000
Note to seller	2,000		10,000		12,000
Equity consideration - common stock	18,200		6,245		24,445
Equity consideration - warrants	—		732		732
Total Consideration	$	45,200	$	16,977	$	62,177
Assets acquired:
Cash	$	—	$	466	$	466
Accounts receivable	—		511		511
Inventory	1,435		3,599		5,034
Prepaid expenses and other current assets	3		147		150
Property, Plant and equipment, net	16,000		1,887		17,887
Operating lease - right of use asset	—		8,418		8,418
Intangible assets	12,000		7,700		19,700
Total assets acquired	$	29,438	$	22,728	$	52,166
Liabilities assumed:
Accounts payable	$	—	$	1,423	$	1,423
Accrued expenses and other liabilities	—		2,342		2,342
Contract liabilities	—		3,535		3,535
Deferred tax liabilities	2,890		2,181		5,071
Lease liabilities	—		8,418		8,418
Total liabilities assumed	2,890		17,899		20,789
Estimated fair value of net assets acquired	$	26,548	$	4,829	$	31,377
Estimated Goodwill	$	18,652	$	12,148	$	30,800
Net Income (Loss) (2)	$	(2,171)	$	(10,986)	$	(13,157)
Revenues (2)	$	—	$	(119)	$	(119)

(1) During the year ended December 31, 2023, Island Global Holdings was classified as discontinued operations. Refer to Note 18 for further information.

(2) The respective amounts are revenues and net income (loss) recognized in the consolidated statement of operations for the year ended December 31, 2022.

The following unaudited pro forma financial information presents the results of operations of the acquired entities for the years ended December 31, 2022 as if the acquisitions had occurred as of January 1, 2022. The pro forma information does not necessarily reflect the results of operations that would have occurred had the entities been a single company during those periods.

	Years Ended December 31,
	2022
Pro Forma Net Income (Loss)	$	(53,071)
Pro Forma Revenues	$	120,305

New England Cannabis Company ("NECC")

On January 28, 2022, the Company completed an acquisition for 100% of NECC (the "NECC Merger") for cash consideration of $9.0 million and 28,571,428 Class A Subordinate Voting Shares of the Company (the “SVS”) valued at $18.2 million based on the closing stock price of the SVS on the acquisition date. The acquisition increased the Company's presence in Massachusetts and the northeastern United States and provides additional opportunities for expansion in the Northeast.

In connection with the consummation of the NECC Merger on January 28, 2022, Mission Partners RE, LLC, a Delaware limited liability company wholly owned by the Company completed its acquisition of 100% of the issued and outstanding membership interests of 29 Everett Street LLC, a Massachusetts limited liability company (the “Everett LLC”) for cash consideration of $16.0 million and a promissory note of $2.0 million. The Everett LLC entity was solely comprised of property, plant and equipment that was leased to and used by NECC at the time of the transaction and consolidated into NECC operations post acquisition. The Merger and Purchase Agreement were recorded as one transaction (collectively, referred to as the "NECC Acquisitions"), as the entities were commonly owned by the same individual and the purchase of Everett LLC was contingent on the Merger with NECC.

Intangible assets acquired from NECC consist of cannabis licenses which are indefinite-lived assets. As a result of the NECC Acquisitions, the Company recognized $18.7 million of goodwill to the THC Cannabis segment based on the expected synergies from combining the acquired operations with the Company's existing operations in Massachusetts. Management does not expect acquired goodwill to be deductible for tax purposes.

As part of the NECC Acquisitions, the Company incurred $0.7 million in transaction and restructuring costs, which were included in transaction and restructuring related expenses and expensed as incurred during the year ended December 31, 2022.

Island Global Holdings

On April 25, 2022, the Company completed a merger acquisition for 100% of Island Global Holdings, Inc. ("Island") for non-cash consideration as follows: (i) 8,783,716 Class A Subordinated Voting Shares valued at $6.2 million based on the closing stock price of the SVS on the acquisition date; (ii) 6% 54-month, subordinated promissory notes (the “Island Merger Notes”) in the aggregate principal amount of $10.0 million; and (iii) warrants to purchase 2,999,975 SVS at a price of $1.00 per SVS. This acquisition enhanced the Company's growing brand portfolio, including diverse lines of pre-rolls, flower and infused products.

Intangible assets acquired from Island consist of cannabis licenses, trade names and trademarks. Utilizing like licenses as a benchmark, the Company determined that the licenses acquired are indefinite-lived assets and the trade names and trademarks have a life of ten years. As a result of the Island Merger, the Company recognized $12.1 million of goodwill to the THC Cannabis segment based on the expected enhancement to the Company's existing brand portfolio across synergies. Management does not expect acquired goodwill to be deductible for tax purposes.

As part of the Island Merger, the Company incurred $1.4 million in restructuring and transaction costs, which were included in transaction and restructuring related expenses and expensed as incurred during the year ended December 31, 2022.

During the year ended December 31, 2023, Island Global Holdings was classified as discontinued operations as part of the Company's California operations. Refer to Note 18 for further information.

Bloom Farms

On August 19, 2022, the Company completed an asset acquisition to acquire certain assets of Bloom Farms for stock consideration of 3,750,000 Class A Subordinate Voting Shares valued at $2.1 million based on the closing stock price of the SVS on the acquisition date. In addition to the contracted purchase price, the Company incurred $0.06 million in transactional costs that were capitalized as part of the asset acquisition. This transaction increased the Company's brand portfolio in the California market. The allocation of the asset acquisition cost is detailed below:

Share consideration	$	2,100
Transaction costs	6
Total Purchase Price	$	2,106
Assets acquired:
Accounts receivable	$	508
Inventory	534
Equipment	142
Intangible assets - tradenames	922
Total assets acquired	$	2,106

In addition to the consideration transferred, there is an earn-out consideration based on the actual revenue in excess of $2.1 million generated from the brands within California during the first 12 months after the closing. This earn-out consideration cannot exceed $5.0 million. As of the transaction date, it is not probable this consideration will become payable and no liability has been recognized. As of December 31, 2023, Bloom Farms was classified as discontinued operations as part of the Company's California operations. Refer to Note 18 for further information.

Euphoria, LLC

On March 27, 2023, the Company entered into a Membership Interest Purchase Agreement to acquire 100% of the issued and outstanding equity interests in Euphoria, LLC ("Euphoria") for a total purchase price of $4.5 million to be paid in cash, promissory notes, and Class A Subordinate Voting Shares. Euphoria holds a conditional adult use dispensary license in the state of Illinois which shall convert to a final license upon regulatory approval. The transfer of the license is subject to regulatory approval. As of December 31, 2023, the Company has paid $0.3 million in cash and issued 2,308,952 Class A Subordinate Voting Shares valued at $0.4 million based on the closing stock price of the SVS on the issuance date, which is included as a component of prepaid expenses and other assets on the consolidated balance sheet as of December 31, 2023. In certain events as defined in this agreement, such as, but not limited to the inability to obtain regulatory approval, all consideration paid by the Company to the sellers are refundable. The remaining consideration will be due upon regulatory approval at the closing date. In the event of termination by the Company under certain circumstances, the Company shall pay a breakup fee of $3.5 million to the sellers, less any portion of the purchase price already paid. Conversely, in the event of termination by the sellers under certain circumstances, the sellers shall pay a breakup fee of $3.5 million to the Company. A subsidiary of the Company entered into a conditional management services agreement to manage the operations of Euphoria until a final license is issued.

Westside Visionaries

On November 17, 2023, the Company entered into a Membership Interest Purchase Agreement to acquire 100% of the issued and outstanding equity interests in Westside Visionaries, LLC ("Westside") for a total purchase price of $2.4 million of which $1.1 million shall be paid in cash, $1.2 million shall be in the form of a promissory note, and $0.1 million in the form of Class A Subordinate Voting Shares. In addition, Westside has issued a $2.0 million secured promissory note to Linchpin Investors, LLC, a subsidiary of the Company, to fund the permitted expansion for the dispensary build-out with a maturity date of the earlier of the second anniversary of closing (license approval) or the third anniversary of the date on which the note was executed.

In the event of termination by mutual written consent of both parties or by the sellers based on the Company's breach, then any portion of the purchase price paid as of the termination date may be retained by the sellers. As of December 31, 2023, the Company has paid $0.6 million in cash which is included as a component of prepaid expenses and other assets on the consolidated balance sheet as of December 31, 2023.

Westside holds a conditional adult use dispensary license in the state of Illinois which shall convert to a final license upon regulatory approval. The transfer of the license is subject to regulatory approval. A subsidiary of the Company entered into a conditional management services agreement to manage the operations of Westside until a final license is issued.

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ASSETS HELD FOR SALE

12 Months Ended

Dec. 31, 2023

Discontinued Operations and Disposal Groups [Abstract]

ASSETS HELD FOR SALE

ASSETS HELD FOR SALE

On November 8, 2023, the Company ceased operations at its retail dispensary located in Ann Arbor, Michigan operating under Om of Medicine, LLC ("Om of Medicine"). The assets were classified as held for sale as of December 31, 2023 and did not meet the criteria for discontinued operations under ASC Subtopic 205-20. For the year ended December 31, 2023, Om of Medicine contributed $1.3 million in revenue and net loss of $0.6 million. As of December 31, 2023, assets and liabilities related to Om of Medicine was $0.9 million and $1.0 million, respectively, which are presented separately on the consolidated balance sheet as of December 31, 2023.

In May 2023, the Company entered into an Asset Purchase Agreement to sell the assets related to Om of Medicine, which was amended in January 2024. The transaction is subject to close upon regulatory approval which is expected within one year. In January 2024, the Company received confirmation of the legal dissolution of Om of Medicine, LLC.

DISCONTINUED OPERATIONS

During the fiscal quarter ended September 30, 2023, the Company ceased its cultivation and production operations in the state of California (together, the "California operations") as reported under the THC Cannabis segment. The Company concluded that the abandonment of its California operations represented a strategic shift and thus all assets and liabilities to the operations within the state of California were classified as discontinued operations. Long-lived assets related to the California operations ceased to be used as of December 31, 2023 and thus considered disposed of other than by sale as of December 31, 2023. The assets associated with the California operations were measured at the lower of their carrying value or fair value less costs to sell. During the year ended December 31, 2023, the Company recognized a loss on disposal of $14.4 million for the net carrying value of the assets as of the disposition date which was determined as the book value less direct costs to sell and an impairment charge of $12.9 million for the write-off of its intangible assets and goodwill. The Company does not have significant continuing involvement with the California operations outside of the contract liabilities of $2.3 million and the litigation matters disclosed in Note 20.

Revenue and expenses, gains or losses relating to the discontinuation of California operations were eliminated from profit or loss from the Company’s continuing operations and are shown as a single line item in the consolidated statements of operations for all periods presented.

The operating results of the discontinued operations are summarized as follows:

	Years Ended December 31,
	2023		2022
REVENUE
Revenue from sale of goods	$	9,412	$	10,495
Real estate income	411		418
Total revenues	9,823		10,913
Cost of goods sold	(22,482)		(21,187)
Gross profit	(12,659)		(10,274)
OPERATING EXPENSES
Selling, general and administrative expenses	4,901		6,527
Depreciation and amortization	212		521
Transaction and restructuring related expenses	860		1,135
Impairment of goodwill and intangible assets	12,856		6,700
Total operating expenses	18,829		14,883
Loss from operations	(31,488)		(25,157)
Other income (expense)
Interest expense	(32)		(71)
Loss on disposal	(14,368)		(381)
Other	(1,025)		(147)
Total other income (expense), net	(15,425)		(599)
Net loss from discontinued operations before income taxes	(46,913)		(25,756)
Income tax benefit	(1)		170
Net loss on discontinued operations	$	(46,914)	$	(25,586)

The carrying amounts of assets and liabilities in the disposal group are summarized as follows:

	December 31, 2023		December 31, 2022
Carrying amount of the assets included in discontinued operations:
Current assets:
Cash	$	63	$	919
Accounts receivable, net	(49)		1,943
Other receivables	16		(16)
Inventory	33		6,704
Prepaid expenses and other assets	—		192
Total current assets (1)	63		9,742
Property, plant, and equipment, net	—		22,492
Intangible assets, net	738		1,687
Goodwill	—		12,148
Right-of-use assets	—		16,522
Deposits	14		619
Total non-current assets (1)	752		53,468
TOTAL ASSETS OF THE DISPOSAL GROUP	$	815	$	63,210
Carrying amount of the liabilities included in discontinued operations:
Current liabilities:
Accounts payable	3,552		1,600
Accrued expenses and other current liabilities	4,752		5,164
Taxes payable	72		—
Current portion of contract liabilities	48		369
Current portion of lease liability	—		1,712
Total current liabilities (1)	8,424		8,845
Long term notes payable	5		—
Long term accounts payable	330		400
Contract liabilities	2,280		2,000
Deferred tax liability	—		2,181
Lease liability	—		15,513
Total non-current liabilities (1)	2,615		20,094
TOTAL LIABILITIES OF THE DISPOSAL GROUP	$	11,039	$	28,939

(1) The assets and liabilities of the disposal group are classified as current on the consolidated balance sheets as of December 31, 2023 because it is probable that the sale or disposal other than by sale will occur within one year.

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LEASES

12 Months Ended

Dec. 31, 2023

Leases [Abstract]

LEASES

LEASES

(a)    The Company as a Lessee

The Company leases real estate for dispensaries, cultivation and production facilities, and office space which were all accounted for as operating leases as of December 31, 2023 and 2022. There are no material residual guarantees associated with any of the Company’s leases, and there are no significant restrictions or covenants included in the Company’s lease agreements. Total operating lease costs related to continuing operations were $20.9 million and $17.5 million for the years ended December 31, 2023 and 2022, respectively. Short-term lease costs during the years ended December 31, 2023 and 2022 were not material.

The below are the details of other disclosures regarding the Company's lessee transactions as of December 31, 2023 and 2022:

	Years Ended December 31,
	2023			2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	15,330		$	12,071
Non-cash additions to right-of-use assets and lease liabilities:
Recognition of right-of-use assets for operating leases	$	94		$	—
Weighted average remaining lease term (in years)	17.7			18.6
Weighted average discount rate	13.7		%	13.7		%

Maturities of lease liabilities for third-party operating leases as of December 31, 2023 were as follows:

Year Ending December 31,
2024	$	16,336
2025	16,854
2026	17,295
2027	17,672
2028	18,119
Thereafter	305,054
Total lease payments	391,330
Less interest	(265,664)
Present value of lease liability	$	125,666

Modification of Lease Agreement

On October 27, 2022, the Company amended its lease agreement for the Company’s facility located in Matteson, Illinois by creating an option to increase the tenant improvement allowance for the facility by between $15.0 million and $19.9 million. On November 10, 2022, the Company exercised its option and entered into a Second Amendment to Lease Agreement, increasing the tenant improvement allowance under the lease by $19.9 million; extending the term of the lease to 20 years after the amendment; increasing the base rent by $0.2 million per month (abated until April 1, 2023); and increasing the security deposit by $2.2 million, to be funded pro rata out of draws on the tenant improvement allowance.

On July 7, 2023, the Company amended its lease agreement for the cultivation and production facility in Matteson, Illinois to apply its security deposit mainly to the monthly base rent for the four month period through November 30, 2023; to defer payment of the $2.2 million increase in security deposit to be funded as draws on the tenant improvement allowance through November 30, 2023; and to make pro rata payments of such deferred payments equal to 1/12 of the aggregate amount, concurrently with monthly base rent installments, for the twelve month period commencing January 1, 2024. There was no modification to the lease accounting as a result of this amendment to the timing of payments of the refundable security deposit.

New Lease Agreement

On August 23, 2023, the Company entered into a guaranty of a lease agreement for a third dispensary location in Illinois. Within five days of the agreement execution, the premise was available to the Company to begin leasehold improvements. The Company funded a security deposit with rent abated for the first nine calendar months following the rent commencement date. As of December 31, 2023, the Company recognized an initial right of use asset and lease liability of $1.2 million in connection with this agreement.

Discontinued Operations

During the fiscal quarter ended September 30, 2023, the Company ceased its cultivation and production operations in the state of California (together, the "California operations") as reported under the THC Cannabis segment. As a result, all prior year right-of-use assets and lease liabilities were reclassified as assets related to discontinued operations and liabilities related to discontinued operations, respectively in prior periods reflected. As of December 31, 2023, the right-of-use assets and lease liabilities related to the discontinued operations were written off.

(b)    The Company as a Lessor

The Company leases real estate, sells equipment and supplies, and licenses intellectual property to cannabis producers in the state of Washington and Illinois where the Company is the lessor. Such leases in which the Company is the lessor do not contain variable lease payments or options to purchase. Lease income for operating and direct financing leases for the periods presented are as follows:

	Years Ended December 31,
	2023		2022
Real estate income:
Operating leases	$	8,961	$	9,269
Direct financing leases	2,342		2,673
Total real estate income	$	11,303	$	11,942

The Company leases buildings in Olympia, Washington and Elk Grove, Illinois that are subleased or partly subleased to a third party. The subleases are classified as operating leases under ASC 842 and the underlying assets are presented in the consolidated balance sheets as follows:

	December 31, 2023		December 31, 2022
Right-of-use assets	$	25,249	$	26,133
Current portion of lease liability	$	289	$	296
Long-term portion of lease liability	$	22,380	$	22,078

The Company leases a building in Elma, Washington that is subleased to a third party. This sublease is classified as a finance lease. A reconciliation of the lease receivables for the periods presented is as follows:

	December 31, 2023		December 31, 2022
Balance, beginning of the year	$	9,421	$	10,378
Interest	2,342		2,673
Lease payments received	(3,810)		(3,630)
Balance, end of the period	7,953		$	9,421
Less current portion	(3,990)		(3,810)
Long-term lease receivables	$	3,963	$	5,611

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

Year Ending December 31,
2024	$	3,990
2025	4,170
2026	2,880
2027	—
2028	—
Thereafter	—
Total minimum lease payments	11,040
Less: Interest	(3,087)
Total lease receivable	$	7,953
Current portion lease receivable	(3,990)
Long-term lease receivable	$	3,963

LEASES

LEASES

(a)    The Company as a Lessee

The Company leases real estate for dispensaries, cultivation and production facilities, and office space which were all accounted for as operating leases as of December 31, 2023 and 2022. There are no material residual guarantees associated with any of the Company’s leases, and there are no significant restrictions or covenants included in the Company’s lease agreements. Total operating lease costs related to continuing operations were $20.9 million and $17.5 million for the years ended December 31, 2023 and 2022, respectively. Short-term lease costs during the years ended December 31, 2023 and 2022 were not material.

The below are the details of other disclosures regarding the Company's lessee transactions as of December 31, 2023 and 2022:

	Years Ended December 31,
	2023			2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	15,330		$	12,071
Non-cash additions to right-of-use assets and lease liabilities:
Recognition of right-of-use assets for operating leases	$	94		$	—
Weighted average remaining lease term (in years)	17.7			18.6
Weighted average discount rate	13.7		%	13.7		%

Maturities of lease liabilities for third-party operating leases as of December 31, 2023 were as follows:

Year Ending December 31,
2024	$	16,336
2025	16,854
2026	17,295
2027	17,672
2028	18,119
Thereafter	305,054
Total lease payments	391,330
Less interest	(265,664)
Present value of lease liability	$	125,666

Modification of Lease Agreement

On October 27, 2022, the Company amended its lease agreement for the Company’s facility located in Matteson, Illinois by creating an option to increase the tenant improvement allowance for the facility by between $15.0 million and $19.9 million. On November 10, 2022, the Company exercised its option and entered into a Second Amendment to Lease Agreement, increasing the tenant improvement allowance under the lease by $19.9 million; extending the term of the lease to 20 years after the amendment; increasing the base rent by $0.2 million per month (abated until April 1, 2023); and increasing the security deposit by $2.2 million, to be funded pro rata out of draws on the tenant improvement allowance.

On July 7, 2023, the Company amended its lease agreement for the cultivation and production facility in Matteson, Illinois to apply its security deposit mainly to the monthly base rent for the four month period through November 30, 2023; to defer payment of the $2.2 million increase in security deposit to be funded as draws on the tenant improvement allowance through November 30, 2023; and to make pro rata payments of such deferred payments equal to 1/12 of the aggregate amount, concurrently with monthly base rent installments, for the twelve month period commencing January 1, 2024. There was no modification to the lease accounting as a result of this amendment to the timing of payments of the refundable security deposit.

New Lease Agreement

On August 23, 2023, the Company entered into a guaranty of a lease agreement for a third dispensary location in Illinois. Within five days of the agreement execution, the premise was available to the Company to begin leasehold improvements. The Company funded a security deposit with rent abated for the first nine calendar months following the rent commencement date. As of December 31, 2023, the Company recognized an initial right of use asset and lease liability of $1.2 million in connection with this agreement.

Discontinued Operations

During the fiscal quarter ended September 30, 2023, the Company ceased its cultivation and production operations in the state of California (together, the "California operations") as reported under the THC Cannabis segment. As a result, all prior year right-of-use assets and lease liabilities were reclassified as assets related to discontinued operations and liabilities related to discontinued operations, respectively in prior periods reflected. As of December 31, 2023, the right-of-use assets and lease liabilities related to the discontinued operations were written off.

(b)    The Company as a Lessor

The Company leases real estate, sells equipment and supplies, and licenses intellectual property to cannabis producers in the state of Washington and Illinois where the Company is the lessor. Such leases in which the Company is the lessor do not contain variable lease payments or options to purchase. Lease income for operating and direct financing leases for the periods presented are as follows:

	Years Ended December 31,
	2023		2022
Real estate income:
Operating leases	$	8,961	$	9,269
Direct financing leases	2,342		2,673
Total real estate income	$	11,303	$	11,942

The Company leases buildings in Olympia, Washington and Elk Grove, Illinois that are subleased or partly subleased to a third party. The subleases are classified as operating leases under ASC 842 and the underlying assets are presented in the consolidated balance sheets as follows:

	December 31, 2023		December 31, 2022
Right-of-use assets	$	25,249	$	26,133
Current portion of lease liability	$	289	$	296
Long-term portion of lease liability	$	22,380	$	22,078

The Company leases a building in Elma, Washington that is subleased to a third party. This sublease is classified as a finance lease. A reconciliation of the lease receivables for the periods presented is as follows:

	December 31, 2023		December 31, 2022
Balance, beginning of the year	$	9,421	$	10,378
Interest	2,342		2,673
Lease payments received	(3,810)		(3,630)
Balance, end of the period	7,953		$	9,421
Less current portion	(3,990)		(3,810)
Long-term lease receivables	$	3,963	$	5,611

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

Year Ending December 31,
2024	$	3,990
2025	4,170
2026	2,880
2027	—
2028	—
Thereafter	—
Total minimum lease payments	11,040
Less: Interest	(3,087)
Total lease receivable	$	7,953
Current portion lease receivable	(3,990)
Long-term lease receivable	$	3,963

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DERIVATIVE LIABILITY

12 Months Ended

Dec. 31, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE LIABILITY

DERIVATIVE LIABILITY

On November 23, 2020, the Company closed a brokered private placement and issued 24,644,500 Units at a price of C$0.70 per Unit for net proceeds of $11.6 million. Each Unit is comprised of one subordinate voting share of the Company and one-half of a subordinate voting share purchase warrant. Each whole warrant entitles the holder to purchase one subordinate voting share for a period of two years from the date of issuance at an exercise price of C$0.90 per subordinate voting share. The warrants met the criteria in ASC 480, and are therefore classified as derivative liabilities at fair value with changes being reported through the statement of operations. In November 2022, such warrants expired unexercised and, accordingly, the balance of derivative liabilities was nil as of December 31, 2023 and 2022.

In connection with the amendment of the senior secured debt with LI Lending LLC in July 2023, the Company issued warrants to purchase a variable number of subordinate voting shares on August 10, 2023 wherein each warrant shall be exercisable into one (1) Subordinate Voting Share at an exercise price of $0.17 through May 1, 2026. If 4Front obtains a bona fide offer from a third party to refinance the loan within six months from the amendment date, the lender will have the option to match the proposed terms of the offer or keep the loan in force; upon exercise of either option, the lender's warrant coverage will be reduced from 33% to 30% of the loan balance divided by the exercise price as of the current maturity date. If 4Front obtains permitted secured debt senior to the loan up to $8.0 million, 75% of the warrants will become exercisable by cashless exercise. If 4Front obtains permitted secured debt senior to the loan in excess of $8.0 million (up to the $10.0 million maximum), 100% of the warrants will become exercisable by cashless exercise. The warrants met the criteria in ASC 480 due to the variability of the number of issuable shares, and are therefore classified as liabilities at fair value with changes being reported through the statement of operations. See Note 11 for further information on the July 2023 amendment.

The fair value of the warrants classified as liabilities was determined using the Black-Scholes simulation model based on Level 3 inputs on the fair value hierarchy. The following assumptions were used for the periods presented:

	Issuance Date			December 31, 2023
Share Price	$	0.10		$	0.10
Exercise Price	$	0.17		$	0.17
Expected Life	2.7 years			2.3 years
Annualized Volatility	84.5		%	98.8		%
Risk-Free Annual Interest Rate	4.5		%	4.2		%

In connection with the senior secured credit facility, the Company entered into a restricted stock unit (“RSU”) agreement (the “RSU Agreement”) dated November 13, 2023 wherein the Company granted 15,900,000 RSUs to the lender. Each RSU represents an unsecured promise to issue one Class A Subordinate Voting Share upon the earliest of certain distribution events at a price of CAD$0.31. If at the time of the distribution event, the number of SVS underlying the RSUs is less than 2.12% of the fully diluted SVS of the Company, an additional number of RSUs will be issuable to the lender at the closing market price on the Canadian Securities Exchange on the trading day prior to issuance. The additional RSUs met the criteria in ASC 480 due to the variability of the number of issuable shares, and are therefore classified as liabilities at fair value with changes being reported through the statement of operations. See Note 11 for further information on the senior secured credit facility. The fair value of the RSUs classified as liabilities was determined using the Company's share price which is considered a Level 1 input on the fair value hierarchy.

A reconciliation of the changes in fair value of the derivative liabilities is as follows:

	For the Years Ended December 31,
	2023		2022
Balance, beginning of period	$	—	$	3,502
Issuance of derivative liability	4,165		—
Change in fair value of derivative liability	385		(3,502)
Balance, end of period	$	4,550	$	—

See Note 13 for warrants classified within equity.

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NOTES PAYABLE AND CONVERTIBLE NOTES

12 Months Ended

Dec. 31, 2023

Debt Disclosure [Abstract]

NOTES PAYABLE AND CONVERTIBLE NOTES

NOTES PAYABLE AND CONVERTIBLE NOTES

The Company’s notes payable and convertible notes are as follows:

Terms	December 31, 2023		December 31, 2022
Secured promissory notes dated May 10, 2019, as subsequently amended, with a related party which mature on May 1, 2026 and bear interest at a rate of 16.5% through May 1, 2024 and 12% per annum thereafter	$	47,491	$	49,807
Promissory note dated October 13, 2023 under the senior secured credit facility which matured on December 1, 2023 and bears interest at a rate of 15.5% per annum. The Company is currently in negotiations to amend the terms of the agreement.	3,410		—
Convertible promissory note dated October 6, 2021, which matures on October 6, 2024 and bears interest at a rate of 10% per annum	15,818		14,843
Unsecured convertible promissory note at $0.50 per share due December 18, 2024 at 12% per annum with monthly cash payments of $50,000 beginning January 15, 2024 through maturity (1)	2,051		3,554
Promissory note issued for the acquisition of NECC due January 7, 2023 at 10% per annum (2)(5)	—		519
Promissory note issued for the acquisition of Island due October 25, 2026 at 6% per annum (5)	11,030		10,431
Secured promissory note due January 1, 2024 at 1.5% monthly interest through November 30, 2022 and 2% monthly interest through maturity (3)	2,734		3,230
Unsecured promissory note due November 30, 2024, monthly interest payments at 12% per annum through September 2023 and 11% per annum through November 2024 (4)	1,630		1,730
Various	9		51
Total Notes Payable and Convertible Notes	$	84,173	$	84,165

(1) In November 2022, the unsecured convertible note was amended to extend the maturity date to May 18, 2023. The Company concluded the extension resulted in a debt modification under ASC 470. On October 2, 2023, the Company amended the unsecured convertible promissory note with Healthy Pharms Inc. wherein the interest rate was amended to 12.0% per annum and the maturity date was extended to December 18, 2024. Beginning January 15, 2024, the Company shall make monthly cash payments of $50,000 through the maturity date. The amendment was deemed to be a substantial modification under ASC Subtopic 470-50 and a loss on extinguishment of $0.4 million was recorded in the consolidated statement of operations for the year ended December 31, 2023. In November 2023, the Company issued 10,359,372 Class A Subordinate Voting Shares to the note holder to settle $1,992,187 of the promissory note.

(2) On July 28, 2022, the parties amended the promissory note to provide for payment of half the principal on the initial maturity date, and the remaining principal and all accrued interest on November 15, 2022. Interest will continue at annual rate of 10%. On November 25, 2022, the note was further amended to extend the maturity date for one fourth of the principal and accrued and unpaid interest to January 7, 2023.

(3) On August 30, 2022, the Company entered into a Promissory Note Purchase Agreement with HI 4Front, LCC and Navy Capital Green Fund, LP. Under the agreement, the Company sold promissory notes totaling $3.0 million with a six-month maturity bearing 1.5% monthly interest for three months and 2% monthly interest for three months. The notes were unsecured, but would become secured if not repaid within three months. On October 10, 2023, the Company amended the promissory note wherein the maturity date was extended to January 1, 2024. As consideration for the amendment, the Company paid an extension fee of C$65,000 in the form of 1,283,425 share purchase warrants, wherein each warrant is exercisable into one (1) Subordinate Voting Share at an exercise price of US$0.20 and expire on October 17, 2027. The amendment was not deemed to be a substantial modification under ASC Subtopic 470-50. As a result of the modification, the Company recorded an additional debt discount of $0.2 million for the issuance of the warrants.

(4) On September 16, 2022, the unsecured promissory note was modified to be due and payable in full on September 30, 2023. Interest will continue at an annual rate of 12% with payment of interest due monthly. On September 28, 2023, the Company entered into an amendment of this promissory note to reduce the interest rate to 11% and extend the maturity date to November 30, 2024. The amendment was classified as a troubled debt restructuring pursuant to ASC 470-60, "Troubled Debt Restructurings by Debtors".

(5) Refer to Note 7 for further information on the acquisition related promissory notes.

LI Lending LLC

On May 10, 2019, the Company entered into a loan agreement with LI Lending LLC, a related party, for $50.0 million, of which $45.0 million was drawn as of December 31, 2023 in two amounts: (i) $35.0 million bearing interest at a rate of 10.25% and (ii) $10.0 million bearing interest at a rate of 12.25%. The loan matures on May 10, 2024 upon which the Company shall pay an exit fee of 20% of the remaining principal balance.

In April 2020, the loan was amended to release certain assets previously held as collateral and to make principal prepayments totaling $2.0 million applied to the initial $35.0 million amount, decreasing the principal balance to $33.0 million. In December 2020, the loan was amended to increase the interest rate by 2.5% of which payments of the incremental interest were paid-in-kind until January 1, 2022. The Company was still required to make interest-only payments monthly of 10.25% on the initial $33.0 million and 12.25% on the final $10.0 million of the loan until January 1, 2022, when monthly interest payments rates were increased to 12.75% for the initial $33.0 million and 14.75% for the final $10.0 million for the remaining term.

In July 2023, the Company entered into the First Amendment to the loan agreement with LI Lending LLC to extend the maturity date of the related party loan to May 1, 2026, to reduce the interest rate to 12.0% per annum beginning May 1, 2024, and to expand the amount of third-party financings allowed under the loan agreement.

In addition, the exit fee of $9.0 million was removed and deferred interest in the amount of $9.2 million shall be added to the principal of the promissory note on May 1, 2024, for a total payable at maturity of $51.7 million. As compensation for the amendment, the Company shall pay an extension fee of $0.5 million payable in cash on May 1, 2024. In addition, the Company issued warrants to purchase a variable number of subordinate voting shares on August 10, 2023 wherein each warrant shall be exercisable into one (1) Subordinate Voting Share at an exercise price of $0.17 through May 1, 2026. See Note 10 for further information regarding the fair value of the warrants. The amendment to the related party loan was not deemed to be a substantial modification under ASC Subtopic 470-50. As a result of the modification, the Company recorded an additional debt discount of $4.7 million related to the extension fee and the fair value of the warrants.

For the years ended December 31, 2023 and 2022, the Company recognized accrued interest expense of $7.8 million and $7.0 million, respectively, on the related party loan and made $6.4 million and $5.5 million, respectively, in payments of principal and interest to the related party. See Note 19 for further discussion of this related party transaction.

October 2021 Convertible Note

On October 6, 2021, the Company entered into a convertible promissory note for $15.0 million that is exercisable into Class A Subordinate Voting Shares for $1.03 per share at any time at the option of the holder. The notes bear interest at 6% per annum and mature on October 6, 2024 upon which any remaining balance is payable in cash. All accrued and unpaid interest is payable in cash on an annual basis beginning on October 6, 2022.

On October 6, 2023, the Company amended the October 2021 Convertible Note wherein payment of interest shall be deferred and become due and payable upon the earlier of the maturity date, a change of control, or event of default under the existing agreement terms. In addition, the outstanding balance, including any deferred interest payments, shall accrue interest at a rate of 10.0% per annum through maturity. The conversion price was amended to $0.23 per share. The amendment of the October 2021 Convertible Note was deemed to be a substantial modification under ASC Subtopic 470-50 and a gain on extinguishment of $0.4 million was recorded in the consolidated statement of operations for the year ended December 31, 2023.

As of December 31, 2023, payments of principal and interest totaling $1.1 million have been made for this loan. As of December 31, 2023 and 2022, the unamortized discount balance related to the October 2021 Convertible Note was $0.5 million and $0.4 million, respectively, with a remaining amortization period of 0.8 years and 1.75 years, respectively. For the years ended December 31, 2023 and 2022, the Company recognized interest expense of $1.1 million and $1.1 million, respectively, and accretion of debt discount of $0.3 million and $0.2 million, respectively, related to the October 2021 Convertible Note.

Senior Secured Credit Facility

On October 13, 2023, the Company entered into a senior secured credit facility agreement for an aggregate principal up to $10.0 million in which a term loan in the amount of $3.4 million was drawn on the closing date and a second tranche of $4.0 million is available to be drawn through July 13, 2024. The term loans accrue interest paid monthly in arrears at a rate equal to the greater of (a) the sum of the prime rate and 7.0% and (b) 15.5% per annum. The term loans mature on December 1, 2023 and include extension terms under certain circumstances no further than September 30, 2026. For each term loan, the Company shall pay an origination fee equal to 7.0% of the principal amount of the term loan upon issuance. In addition, the Company shall pay a commitment fee on the undrawn second tranche which shall accrue at a rate per annum of 2.0% through the earlier of July 13, 2024 and the date on which the maximum facility amount is drawn. The Company may prepay the term loans, in whole or in part, at any time subject to the prepayment fee based on the date of the prepayment. Further, the Company shall pay an exit fee of $1.4 million upon the earlier of the maturity date or the date on which the obligations are paid in full. The term loans shall be secured by senior liens on all assets of the Company and borrowing subsidiaries.

The agreement contains financial covenants that (a) require the Company to have minimum liquidity of at least $3.0 million beginning December 31, 2023, (b) have a fixed charge coverage ratio of no less than 1.10 to 1.00 beginning June 30, 2024 and (c) have a consolidated leverage ratio of no more than 3.00 to 1.00 beginning June 30, 2024. The Loan Agreement contains additional covenants that, among other things, limit the ability of the Company and its subsidiaries to incur certain additional debt and liens, pay certain dividends or make other restricted payments, make certain investments, make certain dispositions and enter into certain transactions with affiliates.

In connection with the senior secured credit facility, the Company entered into a restricted stock unit (“RSU”) agreement (the “RSU Agreement”) dated November 13, 2023 wherein the Company issued 15,900,000 RSUs to the lender. Each RSU represents an unsecured promise to issue one Class A Subordinate Voting Share upon the earliest of certain distribution events at a price of CAD$0.31. Refer to Note 10 for information on additional RSUs to be issued which are classified as a derivative liability.

Future minimum payments on the notes payable and convertible debt are as follows:

Year Ending December 31,
2024	$	25,630
2025	—
2026	—
2027	58,543
2028	—
Thereafter	—
Total minimum payments	84,173
Less current portion	(25,630)
Long-term portion	$	58,543

Construction Finance Liability

On January 28, 2022, the Company acquired property at 29 Everett Street LLC in conjunction with the NECC Merger (see Note 7 for further details on the transaction). Concurrently, effective January 28, 2022, the Company sold a portion of the property it had acquired in the acquisition for $16.0 million. In connection with the sale of the property at Everett LLC, the Company agreed to lease the location back for cultivation, effective on January 28, 2022 with available repurchase options. This transaction did not meet the requirements of a sale leaseback transaction and as such was accounted for as a failed sale leaseback. On January 28, 2022, the Company recorded a construction finance liability for the proceeds received from the sale to recognize a liability resulting from the failed sale-leaseback transaction.

The initial term of the agreement is 20 years, with two options to extend the term for five years each. The initial monthly rent payment is equal to $0.1 million for the first year of the agreement, with 3% annual increases over the life of the agreement. As of December 31, 2023, the total finance liability associated with this transaction is $16.0 million. The total interest expense incurred during the year ended December 31, 2023 was nil.

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SHAREHOLDER'S EQUITY

12 Months Ended

Dec. 31, 2023

Equity [Abstract]

SHAREHOLDER'S EQUITY

SHAREHOLDER'S EQUITY

The Company has authorized an unlimited number of Class A Subordinate Voting Shares (“SVS”) and Class C Multiple Voting Shares (“MVS”), all with no par value.

All share classes are included within share capital in the consolidated statements of shareholders’ equity on an as-converted basis. Each share class is entitled to notice of and to attend at any meeting of the shareholders, except a meeting of which only holders of another particular class of shares will have the right to vote. All share classes are entitled to receive dividends, as and when declared by the Company, on an as-converted basis, and no dividends will be declared by the Company on any individual class unless the Company simultaneously declares or pays dividends on all share classes. No subdivision or consolidation of any share class shall be made without simultaneously subdividing or consolidating all share classes in the same manner.

Voting shares activity for the periods presented is summarized as follows:

	Class A Subordinate Voting Shares	Class C Multiple Voting Shares	Total
Balance, December 31, 2021	592,905,396	1,276,208	594,181,604
Share capital issuances	49,234,671	—	49,234,671
Balance, December 31, 2022	642,140,067	1,276,208	643,416,275
Share capital issuances	26,103,074	—	26,103,074
Balance, December 31, 2023	668,243,141	1,276,208	669,519,349

Class A Subordinate Voting Shares

Holders of Class A Subordinate Voting Shares are entitled to one vote in respect of each SVS.

Class C Multiple Voting Shares

Holders of Class C Multiple Voting Shares are entitled to 800 votes in respect of each MVS. One MVS can convert to one SVS but are not convertible until the aggregate number of MVS held by the Initial Holders (being the MVS holders on their initial issuance) are reduced to a number which is less than 50% of the aggregate number of MVS held by the Initial Holders on the date of completion of the Business Combination with Cannex.

Series	Shares outstanding as of December 31, 2023	As converted to SVS Shares
Class A - Subordinate Voting Shares	668,243,141	668,243,141
Class C - Multiple Voting Shares	1,276,208	1,276,208
Total shares outstanding	669,519,349	669,519,349

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WARRANTS

12 Months Ended

Dec. 31, 2023

Warrants and Rights Note Disclosure [Abstract]

WARRANTS

WARRANTS

A reconciliation of the beginning and ending balance of outstanding share purchase warrants classified as equity is as follows:

	Number of Warrants	Weight-Average Exercise Price
Balance, December 31, 2021	26,192,237	$	0.75
Issued	2,999,975	1.00
Exercised	(91,436)	0.54
Expired	(22,748,498)	0.76
Balance, December 31, 2022	6,352,278	0.82
Issued	2,658,425	0.16
Expired	(2,227,303)	0.67
Balance, December 31, 2023	6,783,400	$	0.61

As of December 31, 2023, the Company has the following warrants outstanding:

Warrants Outstanding		Exercise Price		Expiry Date
2,999,975		$	1.00	April 13, 2024
625,000	*	C$	0.80	October 6, 2024
500,000	*	C$	0.80	October 6, 2025
625,000		C$	0.23	May 10, 2027
750,000		$	0.10	September 1, 2027
1,283,425		$	0.20	October 17, 2027
6,783,400

*Represents warrants that are exercisable as of December 31, 2023.

See Note 10 for warrants for classified as derivative liabilities.

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NON-CONTROLLING INTERESTS

12 Months Ended

Dec. 31, 2023

Noncontrolling Interest [Abstract]

NON-CONTROLLING INTERESTS

NON-CONTROLLING INTERESTS

The non-controlling interests of the Company for each affiliate before intercompany elimination are summarized in the tables below:

	December 31, 2023		December 31, 2022
	MMA Capital		MMA Capital
Current assets	$	—	$	—
Current liabilities	—		—
Current net assets	—		—
Non-current assets	14,620		14,620
Non-current liabilities	—		—
Non-current net assets	$	14,620	$	14,620

	MMA Capital
Balance, December 31, 2021	$	72
Net income attributable to NCI	21
Balance, December 31, 2022	93
Net income attributable to NCI	15
Balance, December 31, 2023	$	108

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SHARE-BASED COMPENSATION

12 Months Ended

Dec. 31, 2023

Share-Based Payment Arrangement [Abstract]

SHARE-BASED COMPENSATION

SHARE-BASED COMPENSATION

The Company adopted two equity incentive plans where the Company may grant Class A stock options. Under the terms of the plans, the maximum number of stock options which may be granted are a total of 10% of the number of shares outstanding assuming conversion of all shares to SVS. The exercise price for stock options issued under the plans will be set by the Compensation Committee of the Board of Directors but will not be less than 100% of the fair market value of the Company’s shares on the grant date. Stock options have a maximum term of 10 years from the date of grant. Stock options vest at the discretion of the Board.

As of December 31, 2023, the Company had 43,672,411 options exercisable and 91,702,766 options outstanding, with exercise prices ranging from C$0.10 to C$1.63. The following table summarizes the Company’s stock option activity and related information:

	Number of Options	Weighted Average Price (CAD$)		Weighted Average Years
Balance, December 31, 2021	54,282,752	$	0.94	2.97
Granted	35,161,000	$	0.68	4.80
Exercised	(133,333)	$	0.80	—
Forfeited/Expired	(13,683,459)	$	0.96	—
Balance, December 31, 2022	75,626,960	$	0.86	3.46
Granted	68,294,666	$	0.20	4.52
Forfeited/Expired	(52,218,860)	$	0.84	—
Balance, December 31, 2023	91,702,766	$	0.34	3.78

During the year ended December 31, 2023 and 2022, the Company recognized share-based compensation of $6.0 million and $7.2 million respectively. In determining the amount of share-based compensation, the Company used the Black-Scholes option pricing model to establish the fair value of options granted during the year with the following key assumptions:

	For the Years Ended December 31,
	2023		2022
Risk-Free Interest Rate	4.02	%	3.44	%
Expected Life (years)	3.51		3.01
Expected Annualized Volatility	86.83	%	82.73	%
Expected Dividend Yield	—		—

Cashless Exercises

During the year ended December 31, 2023, there were no share issuances resulting from cashless exercises. During the year ended December 31, 2022, the Company issued an aggregate of 51,975 Class A shares pursuant to the exercise of 133,333 options. As part of the Company’s equity incentive plans, the Company may permit cashless exercise. The Company withheld exercised shares from the holders to cover the strike price upon issuance. The number of options exercised under the cashless method was 133,333 with shares withheld to cover these costs as of December 31, 2022 being 106,666, resulting in total shares issued to option holders upon cashless exercise of options being 26,667.

Restricted Share Units

On July 27, 2023, the Company issued a total of 9,853,830 restricted share units ("RSUs"), at a issue price of C$0.165 based on the closing price of its Subordinate Voting Shares, to certain officers and employees of the Company. The RSUs are fully vested as of the grant date and expire upon the earlier of 18 months following the grant date or the occurrence of certain events. As of December 31, 2023, the Company recognized share-based compensation of $1.2 million for these fully vested RSU grants.

On November 13, 2023, in connection with the $10.0 million senior secured credit facility agreement, the Company issued 15,900,000 restricted stock units to the lender, ALT Debt II, LP wherein each RSU is exercisable into one (1) Class A Subordinate Voting Share upon the earliest of certain specified conditions at an issue price of $0.20 per RSU.

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SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

12 Months Ended

Dec. 31, 2023

General and Administrative Expense [Abstract]

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

For the year ended December 31, 2023 and 2022, general and administrative expenses were comprised of:

	For the Years Ended December 31,
	2023		2022
Rent and lease related expenses	$	18,106	$	13,771
Salaries and benefits	16,906		18,239
Share-based compensation	6,860		7,214
Professional services	4,014		5,353
Bad debt expense	7,767		625
Licenses, fees and taxes	1,634		1,400
Advertising and promotions	1,485		1,614
Security expenses	1,353		1,253
Other general and administrative expenses	5,282		6,803
Total selling, general and administrative expenses	$	63,407	$	56,272

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INCOME TAXES

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

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, 2023 and 2022:

	December 31, 2023		December 31, 2022
Net current taxes:
U.S. Federal	$	2,645	$	12,031
U.S. State	$	825	$	2,518
Deferred Taxes:
U.S. Federal	$	2,606	$	(3,521)
U.S. State	$	1,017	$	(1,121)
Total (continuing and discontinued)	$	7,093	$	9,907

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, 2023 and 2022:

	December 31, 2023			December 31, 2022
Loss before income taxes (continuing and discontinued operations)	$	(84,539)		$	(36,970)
Statutory tax rate	21.00		%	21.00		%
Expense based on statutory rates	(17,753)			(7,764)
Permanent non-deductible items	16,164			14,419
State taxes	(2,444)			280
Change in state rate	79			101
Change in valuation allowance	2,622			4,524
Change in uncertain tax position	8,524			—
Interest and penalties	3,464			2,689
Acquisition related adjustments	—			(6,142)
Lease deferred tax true-up	(683)			688
Return-to-provision	(2,221)			940
Other adjustments	(659)			172
Income tax expense (continued and discontinued)	$	7,093		$	9,907

The following tables set forth the components of deferred income taxes as of December 31, 2023 and 2022:

	December 31, 2023		December 31, 2022
Deferred tax assets
Net operating losses	$	8,521	$	5,898
Lease liabilities	10,257		16,595
Goodwill and intangible assets	1,677		1,785
Other	1,917		1,024
Total deferred tax assets	22,372		25,302
Valuation allowance	(8,521)		(5,898)
Total net deferred tax assets	13,851		19,404
Deferred tax liabilities
Property and equipment	(5,699)		(408)
Intangible assets	(8,937)		(9,338)
Right-of-use assets	(11,097)		(17,936)
Total net deferred tax liabilities	(25,733)		(27,682)
Total adjusted deferred tax liabilities (continued and discontinued)	$	(11,882)	$	(8,278)

As of December 31, 2023, the Company has gross state net operating losses of approximately $53.7 million, which begin to expire in 2029, and gross federal net operating losses of approximately $19.1 million, $0.9 million of which expire in 2037 and the remainder can be carried forward indefinitely. Pursuant to Section 382 of the Internal Revenue Code, utilization of net operating losses may be subject to annual limitations in the event of a change in ownership of the Company. These annual limitations may result in the expiration of net operating losses prior to utilization.

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. The Company assesses the positive and negative evidence to determine if sufficient future taxable income will be generated to use its existing deferred tax assets. The Company has recorded a valuation allowance related to its state and federal net operating loss carryforwards as of December 31, 2023 and 2022 in the amount of $8.5 million and $5.9 million, respectively.

Activity in unrecognized tax benefits which are included as a component of taxes payable in the accompanying consolidated balance sheet were as follows:

	December 31, 2023		December 31, 2022
Balance, beginning of year	$	—	$	—
Increase related to positions taken in the current year	8,524		—
Balance, end of year	$	8,524	$	—

If recognized, $8.5 million of the gross unrecognized tax benefit balance at December 31, 2023 would favorably impact the Company's effective income tax rate. The Company does not expect any significant changes to its liability for unrecognized tax benefits during the next 12 months.

The Company recognizes interest and penalties related to income tax matters within income tax expense. The Company recorded penalties and interest related to outstanding income tax liabilities in the amount of $3.5 million and $2.7 million for the period ended December 31, 2023 and 2022, respectively. As of December 31, 2023 and 2022, the Company has recorded $8.2 million and $5.0 million, respectively of accrued penalties and interest related to outstanding income tax liabilities – which is included within Taxes Payable on the Company’s balance sheet.

The Company files income tax returns in the US, various state jurisdictions, and Canada, and is subject to examination of its income tax returns by tax authorities in these jurisdictions who may challenge any item on these returns. The corporate statute of limitations for these jurisdictions remains open for the 2019 tax year to the present. Prior to July 31, 2019, the Company was treated as a partnership for income tax purposes and tax income and losses generated from operations were passed through to the Company’s individual members.

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DISCONTINUED OPERATIONS

12 Months Ended

Dec. 31, 2023

Discontinued Operations and Disposal Groups [Abstract]

DISCONTINUED OPERATIONS

ASSETS HELD FOR SALE

On November 8, 2023, the Company ceased operations at its retail dispensary located in Ann Arbor, Michigan operating under Om of Medicine, LLC ("Om of Medicine"). The assets were classified as held for sale as of December 31, 2023 and did not meet the criteria for discontinued operations under ASC Subtopic 205-20. For the year ended December 31, 2023, Om of Medicine contributed $1.3 million in revenue and net loss of $0.6 million. As of December 31, 2023, assets and liabilities related to Om of Medicine was $0.9 million and $1.0 million, respectively, which are presented separately on the consolidated balance sheet as of December 31, 2023.

In May 2023, the Company entered into an Asset Purchase Agreement to sell the assets related to Om of Medicine, which was amended in January 2024. The transaction is subject to close upon regulatory approval which is expected within one year. In January 2024, the Company received confirmation of the legal dissolution of Om of Medicine, LLC.

DISCONTINUED OPERATIONS

During the fiscal quarter ended September 30, 2023, the Company ceased its cultivation and production operations in the state of California (together, the "California operations") as reported under the THC Cannabis segment. The Company concluded that the abandonment of its California operations represented a strategic shift and thus all assets and liabilities to the operations within the state of California were classified as discontinued operations. Long-lived assets related to the California operations ceased to be used as of December 31, 2023 and thus considered disposed of other than by sale as of December 31, 2023. The assets associated with the California operations were measured at the lower of their carrying value or fair value less costs to sell. During the year ended December 31, 2023, the Company recognized a loss on disposal of $14.4 million for the net carrying value of the assets as of the disposition date which was determined as the book value less direct costs to sell and an impairment charge of $12.9 million for the write-off of its intangible assets and goodwill. The Company does not have significant continuing involvement with the California operations outside of the contract liabilities of $2.3 million and the litigation matters disclosed in Note 20.

Revenue and expenses, gains or losses relating to the discontinuation of California operations were eliminated from profit or loss from the Company’s continuing operations and are shown as a single line item in the consolidated statements of operations for all periods presented.

The operating results of the discontinued operations are summarized as follows:

	Years Ended December 31,
	2023		2022
REVENUE
Revenue from sale of goods	$	9,412	$	10,495
Real estate income	411		418
Total revenues	9,823		10,913
Cost of goods sold	(22,482)		(21,187)
Gross profit	(12,659)		(10,274)
OPERATING EXPENSES
Selling, general and administrative expenses	4,901		6,527
Depreciation and amortization	212		521
Transaction and restructuring related expenses	860		1,135
Impairment of goodwill and intangible assets	12,856		6,700
Total operating expenses	18,829		14,883
Loss from operations	(31,488)		(25,157)
Other income (expense)
Interest expense	(32)		(71)
Loss on disposal	(14,368)		(381)
Other	(1,025)		(147)
Total other income (expense), net	(15,425)		(599)
Net loss from discontinued operations before income taxes	(46,913)		(25,756)
Income tax benefit	(1)		170
Net loss on discontinued operations	$	(46,914)	$	(25,586)

The carrying amounts of assets and liabilities in the disposal group are summarized as follows:

	December 31, 2023		December 31, 2022
Carrying amount of the assets included in discontinued operations:
Current assets:
Cash	$	63	$	919
Accounts receivable, net	(49)		1,943
Other receivables	16		(16)
Inventory	33		6,704
Prepaid expenses and other assets	—		192
Total current assets (1)	63		9,742
Property, plant, and equipment, net	—		22,492
Intangible assets, net	738		1,687
Goodwill	—		12,148
Right-of-use assets	—		16,522
Deposits	14		619
Total non-current assets (1)	752		53,468
TOTAL ASSETS OF THE DISPOSAL GROUP	$	815	$	63,210
Carrying amount of the liabilities included in discontinued operations:
Current liabilities:
Accounts payable	3,552		1,600
Accrued expenses and other current liabilities	4,752		5,164
Taxes payable	72		—
Current portion of contract liabilities	48		369
Current portion of lease liability	—		1,712
Total current liabilities (1)	8,424		8,845
Long term notes payable	5		—
Long term accounts payable	330		400
Contract liabilities	2,280		2,000
Deferred tax liability	—		2,181
Lease liability	—		15,513
Total non-current liabilities (1)	2,615		20,094
TOTAL LIABILITIES OF THE DISPOSAL GROUP	$	11,039	$	28,939

(1) The assets and liabilities of the disposal group are classified as current on the consolidated balance sheets as of December 31, 2023 because it is probable that the sale or disposal other than by sale will occur within one year.

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RELATED PARTIES

12 Months Ended

Dec. 31, 2023

Related Party Transactions [Abstract]

RELATED PARTIES

RELATED PARTIES

LI Lending LLC

Linchpin Investors LLC (“Linchpin”), a subsidiary of the Company, and LI Lending LLC (“LI Lending”) entered into a Construction Loan Agreement dated May 10, 2019, as amended, whereby Linchpin received an up-to $50.0 million loan from LI Lending of which $43.0 million was drawn as of December 31, 2023. Mr. Gontmakher, the CEO of the Company, and Roman Tkachenko, a director of the Company, each hold a 14.28% ownership interest in LI Lending. $52.1 million of the loan advanced includes the notes payable and accrued interest less debt discount of $4.6 million that was outstanding as of December 31, 2023. Of the $47.5 million outstanding at December 31, 2023, $8.5 million represents interest accrued through December 31, 2023. See Note 11 for details on the outstanding note payable.

In July 2023, the related party loan was amended wherein while the debt is outstanding, if the Company unilaterally removes Mr. Gontmakher as its Chief Executive Officer or Karl Chowscano as its President without either cause or lender consent, the maturity date of the loan will be accelerated to the date that is 30 days after the first unilateral removal. Refer to Note 11 for additional amendment terms.

As compensation for the amendment, the Company issued warrants to LI Lending to purchase a variable number of subordinate voting shares on August 10, 2023 wherein each warrant shall be exercisable into one (1) Subordinate Voting Share at an exercise price of $0.17 through May 1, 2026. See Note 10 for warrant terms.

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CONTINGENCIES

12 Months Ended

Dec. 31, 2023

Commitments and Contingencies Disclosure [Abstract]

CONTINGENCIES

CONTINGENCIES

(a)    Cannabis Industry

While marijuana is legal under the laws of several U.S. states (with varying restrictions), the United States Federal Controlled Substances Act classifies all “marijuana” as a Schedule I drug, whether for medical or recreational use. Under U.S. federal law, a Schedule I drug or substance has a high potential for abuse, no accepted medical use in the United States, and a lack of safety for the use of the drug under medical supervision. As such, there is an inherent risk related to the federal government’s position on cannabis. There is additional risk associated with the Company’s business in cannabis that third-party service providers could suspend or withdraw services and regulatory bodies could impose certain restrictions on the issuer’s ability to operate in the U.S. As of December 31, 2023, Company has not estimated a potential liability related to the possible enforcement of laws against the medical cannabis industry.

(b)    Contingent consideration payable

As part of the acquisition of Om of Medicine, LLC, the Company is subject to contingent consideration payable to the sellers. The fair value of the contingent consideration, which is based on specific revenue levels achieved over a 2-3-year period, is as follows:

Balance, December 31, 2021	$	2,393
Changes in fair value	(2,393)
Balance, December 31, 2022	$	—
Changes in fair value	—
Balance, December 31, 2023	$	—

The contingent consideration payable is measured at fair value based on unobservable inputs and is considered a Level 3 financial instrument. The determination of the fair value of these liabilities is primarily driven by the Company’s expectations of the respective subsidiaries achieving certain milestones. The expected milestones were assigned probabilities and the expected related cash flows were discounted to derive the fair value of the contingent consideration.

Om of Medicine: The contingent consideration payable is determined as the amount in excess of gross sales of $3.4 million (for fiscal 2020 and 2021) and $3.5 million (2022) to a maximum payable of $6.9 million. During the year ended December 31, 2021, the Company determined the outstanding current contingent consideration payable of $1.2 million was no longer deemed contingent and therefore reclassified the balance to accrued expenses and other current liabilities. During the year ended December 31, 2022, the Company performed analyses and determined it does not anticipate the subsidiaries to reach the required milestone for the year ended December 31, 2022. As a result, the Company estimated the contingent consideration to be nil as of December 31, 2022 and recorded a gain on the fair value adjustment. Refer to Note 8 for classification of Om of Medicine as held for sale as of December 31, 2023.

(c)    Legal Matters

From time to time, the Company may be involved in certain disputes arising in the ordinary course of business. Such disputes, taken in the aggregate, are not expected to have a material adverse effect on the Company. There are no proceedings in which any of the Company’s directors, officers, or affiliates is an adverse party or has a material interest adverse to the Company’s interest.

On May 9, 2023, Florival LLC (“Florival”) sued the Company in the California Superior Court for the County of Santa Cruz. The lawsuit alleged the Company had breached an agreement with Florival under which Company subsidiary Island Global Holdings, Inc. (“Island”) agreed to purchase the membership interests of licensed cannabis cultivator Gold Coast Gardens, LLC. Florival claimed damages of $0.85 million. The Company denied it had any direct liability under the agreement, which was executed two years before the Company’s acquisition of Island and asserted an unclean hands defense on behalf of both the Company and Island based on Florival’s inequitable conduct during the litigation. On November 7, 2023, the court entered summary judgment against the Company and Island. The Company and Island have appealed the decision. Management has accrued $0.85 million related to this matter as of December 31, 2023.

On September 14, 2023, Teichman Enterprises, Inc. (“Teichman”) sued Company subsidiary 4Front California Capital Holdings, Inc. (“4Front CA”) in the California Superior Court for the County of Los Angeles. The lawsuit alleged 4Front CA had breached a lease with Teichman for 4Front CA’s facility in Commerce, California by failing to pay rent due under the lease. Teichman sought possession of the property and damages of $0.6 million. 4Front CA denied the allegations, but vacated the facility. Teichman dismissed the case in January 2024.

On September 29, 2023, Teichman Enterprises, Inc. sued 4Front CA and the Company in the Superior Court for the County of Los Angeles. The lawsuit alleged the Company had breached a lease agreement with Teichman under which the Company entered into a 10-year lease commitment ending on January 31, 2029, and that the Company breached its guarantee of the lease. Teichman has alleged total rent owed under the lease agreement is $13.4 million in addition to a license fee of $1.0 million and additional damages. Total damages sought from Teichman under the lease contracts is $15.5 million. 4Front CA and the Company denied the allegations in the compliant, and denied that Teichman was entitled to the full amount of damages claimed due to Teichman's obligation to mitigate. Based on management's review of case, the Company has accrued $2.7 million associated with this legal liability as of December 31, 2023.

(d) Other Contingencies

On October 13, 2022, the Company entered into a Prepaid Forward Purchase Agreement with Frisco SPV, LLC. Under the terms of the agreement, Frisco SPV, LLC agreed to advance the Company $3.8 million in exchange for a share of the proceeds of the Company’s planned litigation against four former licensing clients. The funder’s share is equal to 1.5 multiplied by the amount of the advance, plus 35% of the proceeds of the litigation after deducting the funder’s multiple return, plus, beginning October 2024, 15% interest on the advance, if not repaid sooner. On October 21 and 25, 2022, Frisco SPV, LLC completed the funding as agreed. The funding is unsecured and non-recourse in the event the Company is unsuccessful in these proceedings. The Company recognized the $3.8 million advance received in "Other Income" on the consolidated statement of operations for the year ended December 31, 2022.

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FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT

12 Months Ended

Dec. 31, 2023

Investments, All Other Investments [Abstract]

FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT

FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT

The fair value of the Company’s cash, accounts receivable, other receivables, accounts payable, and accrued expenses approximates carrying value due to their short-term nature. The Company’s lease receivables, convertible notes payable, and notes payable approximate fair value due to the instruments bearing market rates of interest. These measurements were identified as Level 1 measurements, due to the proximity of fair value to carrying values. The fair value of stock options granted were estimated based on a Black-Scholes model during the years ended December 31, 2023 and 2022. The estimated fair value of the derivative liabilities, which represent warrants classified as liabilities, represent Level 3 measurements. The assumptions that the Company used in the fair valuation of derivative liabilities are disclosed in Note 10.

The following table details the fair value measurements within the fair value hierarchy of the Company's financial instruments, which includes the Level 3 liabilities:

	Fair Value at December 31, 2023
	Total		Level 1		Level 2		Level 3
Liabilities:
Derivative liability	$	4,550	$	—	$	—	4,550
Total liabilities	$	4,550	$	—	$	—	$	4,550

	Fair Value at December 31, 2022
	Total		Level 1		Level 2		Level 3
Liabilities:
Derivative liability	$	—	$	—	$	—	$	—
Total liabilities	$	—	$	—	$	—	$	—

There were no transfers between fair value levels for the years ended December 31, 2023 and 2022.

(a)    Financial Risk Management

The Company is exposed in varying degrees to a variety of financial instruments related risks. The Board mitigates these risks by assessing, monitoring and approving the Company’s risk management processes.

(b)    Credit Risk

Credit risk is the risk of loss associated with counterparty’s inability to fulfill its payment obligations. The Company’s credit risk is primarily attributable to cash, accounts receivable, lease receivables, and other receivables. The risk to cash deposits is mitigated by holding these instruments with regulated financial institutions. Accounts

receivable, lease receivables, and other receivables credit risk arises from the possibility that principal and interest due may become uncollectible. The Company mitigates this risk by managing and monitoring the underlying business relationships.

The Company maintains cash with federally insured financial institutions. As of December 31, 2023 and 2022, the Company exceeded federally insured limits by $0.3 million and $10.1 million, respectively. As of December 31, 2023 and 2022, the Company held an immaterial amount of cash in a Canadian trust account that is denominated in C$.

As of December 31, 2023 and 2022, the maximum credit exposure related to the carrying amounts of accounts receivable, lease receivables, and other receivables was $12.4 million and $15.0 million, respectively.

(c)    Liquidity Risk

The Company manages liquidity risk through the management of its capital structure. The Company’s approach to managing liquidity is to raise sufficient capital to settle obligations and liabilities when due. The Company has raised capital as needed, however there is no guarantee the company will be able to continue to raise funds in the same manor it has historically.

The Company has the following gross contractual obligations as of December 31, 2023, which are expected to be payable in the following respective periods:

	Less than 1 year		1 to 3 years		3 to 5 years		Greater than 5 years		Total
Accounts payable and accrued liabilities	$	20,429	$	977	$	—	$	—	$	21,406
Convertible notes, notes payable and accrued interest	25,630		47,513		11,030		—		84,173
Construction finance liability	—		16,000		—		—		$	16,000
Total	$	46,059	$	64,490	$	11,030	$	—	$	121,579

(d)    Foreign Exchange Risk

The Company is exposed to exchange rate fluctuations between United States and Canadian dollars. The Company’s share price is denominated in Canadian dollars. If the Canadian dollar declines against the United States dollar, the United States dollar amounts available to fund the Company through the exercise of stock options or warrants will be reduced. The Company also has bank accounts with immaterial balances in Canadian dollars. The value of these bank balances if converted to U.S. dollars will fluctuate. While the Company maintains a head office in Canada where it incurs expenses primarily denominated in Canadian dollars, such expenses are a small portion of overall expenses incurred by the Company. The Company does not have a practice of trading derivatives and does not engage in “natural hedging” for funds held in Canada.

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SEGMENT INFORMATION

12 Months Ended

Dec. 31, 2023

Segment Reporting [Abstract]

SEGMENT INFORMATION

SEGMENT INFORMATION

Operating segments are components of the Company that engage in business activities which generate revenues and incur expenses (including intercompany revenues and expenses related to transactions conducted with other components of the Company). The operations of an operating segment are distinct, and the operating results are regularly reviewed by the chief operating decision maker (“CODM”) for the purposes of resource allocation decisions and assessing its performance. The Company's Chief Executive Officer is the Company's CODM. As of December 31, 2023, the Company had two reportable segments as follows:

•THC Cannabis – Cultivation, manufacturing, and distribution of THC cannabis; and

•CBD Wellness – Sale of CBD products to third-party consumers.

The below table presents financial results of each segment as of and for the years ended December 31, 2023 and 2022:

	Years Ended December 31,
	2023		2022
Net Revenues
THC Cannabis	$	96,588	$	106,632
CBD Wellness	847		1,032
Total Net Revenues	$	97,435	$	107,664
Net (Income) Loss Attributable to Shareholders
THC Cannabis	$	11,481	$	6,288
CBD Wellness	(55)		(66)
Corporate	33,292		15,069
Total Net Loss from Continuing Operations	$	44,718	$	21,291
Assets
THC Cannabis	$	262,423	$	343,410
CBD Wellness	388		625
Corporate	1,143		697
Total Assets	$	263,954	$	344,732

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GOVERNMENT ASSISTANCE PROGRAM

12 Months Ended

Dec. 31, 2023

Government Assistance [Abstract]

GOVERNMENT ASSISTANCE PROGRAM

GOVERNMENT ASSISTANCE PROGRAM

The CARES Act provides an employee retention credit (“CARES Employee Retention Credit”), which is a refundable tax credit against certain employment taxes of up to $5,000 per employee for eligible employers. The tax credit is equal to 50% of qualified wages paid to employees during a quarter, capped at $10,000 of qualified wages per employee through December 31, 2020. Additional relief provisions were passed by the United States government, which extend and slightly expand the qualified wage caps on these credits through December 31, 2021. Based on these additional provisions, the tax credit is now equal to 70% of qualified wages paid to employees during a quarter, and the limit on qualified wages per employee has been increased to $10,000 of qualified wages per quarter. The Company qualifies for the tax credit under the CARES Act. During the fiscal year ended December 31, 2022, the Company recorded and received $7.4 million related to the CARES Employee Retention Credit in other income on the Company’s Consolidated Statements of Operations.

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SUBSEQUENT EVENTS

12 Months Ended

Dec. 31, 2023

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

The Company has evaluated subsequent events through April 15, 2024, which is the date these consolidated financial statements were issued, and has concluded that the following subsequent events have occurred that would require recognition or disclosure in the consolidated financial statements.

On January 29, 2024, the Company agreed with LI Lending, LLC to convert $23.0 million of the Company’s loan into 244,680,852 Class A Subordinate Voting Shares and issued LI Lending, LLC a warrant for 36,702,127 shares of Class A Subordinate Voting Shares at a price of $0.11, as well as a restricted stock unit agreement providing that, in the event of a financing by the Company at less than C$0.125 per share of Class A Subordinate Voting Shares, LI Lending, LLC shall be entitled to receive a number of shares necessary to restore it to 18.43% of the voting interests of the Company. In addition, the Company issued LI Lending, LLC a restricted stock unit agreement providing that, in the event of a financing by the Company at less than C$0.125 per share of Class A Subordinate Voting Shares, LI Lending, LLC shall be entitled to receive a number of shares necessary to restore it to 18.43% of the voting interests of the Company.

On February 14, 2024, the Company entered into a guaranty of a lease agreement for a fourth dispensary location in Illinois.

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SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2023

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The consolidated financial statements include the accounts of 4Front and all entities in which the Company either has a controlling voting interest or is the primary beneficiary of a variable interest entity in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The Company has prepared these statements pursuant to the rules and regulations of the United States Securities and Exchange Commission ("SEC") and U.S. GAAP. All material intercompany accounts and transactions have been eliminated in consolidation.

The accompanying consolidated financial statements have been prepared on a going concern basis in accordance with accounting principles generally accepted in the U.S. GAAP and in accordance with the rules and regulations of the SEC for annual financial information. In the opinion of management, the financial statements include all adjustments necessary for the fair presentation of the results of the annual periods presented. All adjustments are of a normal recurring nature.

Use of Estimates

Use of Estimates

The preparation of the Company’s financial statements requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, and revenue and expenses. We cannot predict what future laws and regulations might be passed that could have a material effect on our results of operations. We assess the impact of significant changes in laws and regulations on a regular basis and update the assumptions and estimates used to prepare our financial statements when we deem it necessary. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. Actual results may differ from these estimates. The most critical and subjective areas are discussed in detail elsewhere in the Notes to Consolidated Financial Statements.

Cash and Cash Equivalents

Cash and Cash Equivalents

Cash and cash equivalents include cash deposits in financial institutions, other deposits that are readily convertible into cash, with original maturities of three months or less, and cash held at retail locations. For the years presented, the Company did not have any cash equivalents.

Trade Receivables

Trade ReceivablesAccounts receivable represents receivables from customers stemming from sales in the ordinary course of business and leasing services which are recorded when billed or when the related revenue is earned. Accounts receivable are stated net of allowance for doubtful accounts and customer credits. The Company establishes an allowance for doubtful accounts based on various factors including the age of receivables outstanding, historical trends, economic conditions, and other information.

Inventories

Inventories

Raw materials consist of unharvested cannabis plants and materials used to manufacture CBD and cannabis products. Work in process consists of harvested cannabis, processed cannabis oil, and manufactured products that are not complete. Finished goods consist of cultivation supplies to be sold to cultivators, purchased and manufactured packaged flower, pre-rolls, vape cartridges, edibles, CBD products, and paraphernalia.

Inventories of purchased finished goods and packing materials are initially valued at cost and subsequently at the lower of cost or net realizable value. Costs incurred during the growing and production process are capitalized as incurred to the extent that cost is less than net realizable value. These costs include materials, labor and manufacturing overhead used in the growing and production processes. Products for resale, supplies and consumables are valued at lower of cost or net realizable value.

Net realizable value is determined as the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. Cost is determined using the weighted average cost basis and specific costs, with cost being determined on the first-in, first-out (“FIFO”) method of accounting. The Company reviews inventory for obsolete, redundant and slow-moving goods and any such inventories are written down to net realizable value.

Property and Equipment

Property and Equipment

Property, plant and equipment are stated at cost, including capitalized borrowing costs, net of accumulated depreciation and impairment losses. Expenditures that materially increase the life of the assets are capitalized. Ordinary repairs and maintenance are expensed as incurred. When property is disposed, the related cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in the consolidated statement of operations. The assets’ residual values, useful lives and methods of depreciation are reviewed at each financial year-end and adjusted prospectively if appropriate. Depreciation is calculated on a straight-line basis over the estimated useful life of the asset using the following terms and methods:

Land / Construction in process	Not depreciated
Buildings & improvements	10 - 39 years
Furniture & fixtures	5 - 7 years
Equipment	7 years
Software	5 years
Leasehold improvements	Lesser of remaining life of lease or useful life

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets

The Company evaluates the recoverability of other long-lived assets, including property and equipment, and certain identifiable intangible assets, whenever events or changes in circumstances indicate that the carrying value of an asset or asset group may not be recoverable. The Company performs impairment tests of indefinite-lived intangible 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 overall business, a significant decrease in the market value of the assets or significant negative industry or economic trends. When the Company determines the carrying value of long-lived assets may not be recoverable based upon the existence of one or more of the indicators, the assets are assessed for impairment based on the estimated future undiscounted cash flows expected to result from the use of the asset and its eventual disposition. If the carrying value of an asset exceeds its estimated future undiscounted cash flows, an impairment loss is recorded for the excess of the asset’s carrying value over its fair value.

Intangible Assets

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 periods of assets with finite lives are based on management’s estimates at the date of acquisition and were as follows for each class of intangible asset:

Customer relationships	5 years
Tradenames & trademarks	1 - 10 years
Non-competition agreement	2 - 3 years
Know-how (trade secrets)	5 years

Intangible assets with finite lives are amortized 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. Indefinite-lived intangibles such as cannabis licenses are not amortized.

Goodwill

Goodwill

Goodwill arises from business combinations and is generally determined as the excess of the fair value of the consideration transferred, plus the fair value of any non-controlling interests in the acquiree, over the fair value of the net assets acquired and liabilities assumed as of the acquisition date. Goodwill acquired in a business combination is not amortized but tested for impairment at least annually or more frequently if events and circumstances exist that indicate that a goodwill impairment test should be performed.

In order to determine if goodwill is impaired, the Company may perform an optional qualitative assessment to determine whether indicators of impairment exist. If indicators of impairment are present, or if the Company elects to bypass the qualitative assessment and proceed directly to the quantitative test, the Company measures the impairment of goodwill by comparing the carrying amount of a reporting unit to its estimated fair value. If the carrying amount of a reporting unit is in excess of its fair value, the Company recognizes an impairment charge equal to the amount in excess.

The estimate of fair value requires the use of significant unobservable inputs, representative of a Level 3 fair value measurement. The Company determines fair values for each reporting unit using the income approach, and when available and appropriate, the market approach, or a combination of both. The income approach involves forecasting projected financial information (such as revenue growth rates, profit margins, tax rates, working capital and capital expenditures) and selecting a discount rate that reflects the risk inherent in estimated future cash flows. Under the market approach, the fair value is based on observed market data. If multiple valuation methodologies are used, the results are weighted appropriately.

The Company performs an annual assessment of its goodwill as of October 31, or more frequently, to determine if any events or circumstances exist, such as an adverse change in business climate or a decline in overall industry demand, that would indicate that it would more likely than not reduce the fair value of a reporting unit below its carrying amount, including goodwill.

Business Combinations

Business Combinations

Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The Company measures goodwill as the fair value of the consideration, less the net recognized amount of the identifiable assets and liabilities assumed, all measured at fair value as of the acquisition date. Any excess of the fair value of the net assets acquired over the consideration, is a gain on business acquisition and would be recognized as a gain in the consolidated statement of operations.

In determining the fair value of all identifiable assets, liabilities and contingent liabilities acquired, the most significant estimates relate to contingent consideration and intangible assets. Management exercises judgement in estimating the probability and timing of when earn-outs are expected to be achieved, which is used as the basis for estimating fair value.

Leases and Sale and Leaseback Transactions

Leases

Lessee

The Company primarily leases its retail dispensaries, certain cultivation and production facilities, and office space which are accounted for under Accounting Standards Codification ("ASC") Topic 842, "Leases" ("ASC Topic 842"). The Company determines if an arrangement is a lease at inception. The Company recognizes operating lease right-of-use assets and liabilities at the lease commencement date based on the estimated present value of the remaining lease payments over the lease term. An implicit borrowing rate is occasionally provided in lease agreements which the Company utilizes to calculate right-of-use assets and liabilities at the end of each reporting period. When an implicit borrowing rate is not provided, the Company uses a benchmark approach to derive an appropriate imputed discount rate. The Company will benchmark itself against other companies of similar credit ratings and comparable quality and derive an imputed rate. The Company includes options to extend or terminate a lease in the lease term when it is reasonably certain to exercise such options. The Company recognizes leases with an initial term of 12 months or less as lease expense over the lease term and those leases are not recorded on the consolidated balance sheets. Certain leases include variable payments related to common area maintenance, insurance, and property taxes, which are billed by the landlord, as is customary with these types of charges for office space, and are considered non-lease components. The Company accounts for real estate leases and the related fixed non-lease components together as a single component. For additional information on leases where the Company is the lessee, see Note 9.

At the commencement date, the Company must determine whether the lease is accounted for as an operating lease or finance lease under ASC Topic 842. 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.

Sale and Leaseback Transactions

From time to time, the Company may enter into sale-leaseback transactions to finance certain property acquisitions and capital expenditures, pursuant to which the Company sells the property to a third party and agrees to lease the property back for a certain period of time. To determine whether the transfer of the property should be accounted for as a sale, the Company evaluates whether it has transferred control to the third party in accordance with the revenue recognition guidance set forth in ASC 606. If the transfer of the asset is deemed to be a sale at market terms, the Company recognizes the transaction price for the sale based on the cash proceeds received, derecognizes the carrying amount of the underlying asset and recognizes a gain or loss in the consolidated statements of operations and comprehensive loss for any difference between the carrying value of the asset and the transaction price. The Company then accounts for the leaseback in accordance with its lease accounting policy.

If the transfer of the asset is determined not to be a sale at market terms, the Company accounts for the transaction as a financing arrangement, and accordingly no asset sale is recognized. The Company retains the historical costs of the property and the related accumulated depreciation on its books and continues to depreciate the property over the lesser of its remaining useful life or its initial lease term. The asset is presented within property and equipment, net on the consolidated balance sheets. All proceeds from these transactions are accounted for as finance obligations and presented as non-current obligations on the consolidated balance sheets. A portion of the lease payments is recognized as a reduction of the financing obligation and a portion is recognized as interest expense based on an imputed interest rate.

Lessor

Lessor

Leases in which the Company is the lessor are classified as operating and finance leases under ASC Topic 842 where the lease components and non-lease components are accounted for separately. Rental income from operating leases is recognized on a straight-line basis over the term of each lease. Initial direct costs incurred in negotiating and arranging a operating lease are added to the carrying amount of the leased asset and recognized on a straight-line basis over the lease term. At the commencement date of each finance lease, the Company recognizes a lease receivable for the net present value of the future lease payments. Finance lease rental income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Company’s lease receivable over the life of the lease. Initial direct costs related to finance leases are deferred at the commencement date and included in the underlying lease receivable asset, and are recognized as income as part of the derecognition of the lease receivable over the life of the lease.

Contract Assets and Liabilities and Revenue Recognition

Contract Assets and LiabilitiesA contract liability is recorded on the consolidated balance sheet for consideration transferred prior to goods transfer. Amounts expected to be recognized as revenue within the twelve months following the balance sheet date are classified as the current portion of contract liabilities in the accompanying consolidated balance sheets with the remaining balance classified as long-term. When the Company has an unconditional right to payment, a receivable is classified on the consolidated balance sheet as current contract assets for amounts due within twelve months or long-term contract assets for amounts due after twelve months. The accompanying consolidated balance sheets reflect a contract liability for the amount of revenue to be recognized in the future as and when the Company satisfies its remaining performance obligations.Revenue Recognition

Revenue is recognized by the Company in accordance with ASC Topic 606, "Revenue from Contracts with Customers" ("ASC Topic 606"). Revenue from the sale of goods consists of direct retail sales to customers at the Company-owned dispensaries and wholesale sales to third-party dispensaries, which are generally recognized at a point in time when control over the goods have been transferred to the customer and is recorded net of sales discounts. Payment is typically due upon transferring the goods to the customer or within a specified time period permitted under the Company’s credit policy. The Company recognized sales discounts of $11.2 million and $13.3 million for the year ended December 31, 2023 and 2022, respectively. Sales tax is excluded from the transaction price and recorded as liabilities upon collection at the point of sale.

Revenue related to real estate income on leases is recognized in accordance with ASC Topic 842. Lease payments received are primarily recognized as real estate income in the consolidated statements of operations. A portion of the lease payment amortizes the lease receivable.

The Company treats shipping and handling activities as a fulfillment cost, classified as cost of sales. Accordingly, the Company accrues all fulfillment costs related to the shipping and handling of consumer goods at the time of shipment. The Company offers a loyalty reward program at certain dispensary locations. A portion of the revenue generated in a sale is allocated to the loyalty points earned which is deferred until the loyalty points are redeemed or expire. As of December 31, 2023 and 2022, the loyalty liability totaled $0.5 million and $1.5 million, respectively, and is included in accrued liabilities on the consolidated balance sheets.

Derivative Liabilities

Derivative Liabilities

The Company evaluates all of its agreements to determine if such instruments have derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations.

In calculating the fair value of derivative liabilities, the Company uses a valuation model when Level 1 inputs are not available to estimate fair value at each reporting date. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the consolidated balance sheets as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within twelve months of the reporting date. Critical estimates and assumptions used in the model are discussed in Note 12.

Share Capital

Share Capital

Financial instruments issued by the Company are classified as equity only to the extent that they do not meet the definition of a financial liability or financial asset. The Company’s common shares, share options and warrants are classified as equity instruments. Incremental costs directly attributable to the issue of new shares, warrants or options are shown in equity as a deduction from the proceeds. The proceeds from the exercise of stock options are recorded as share capital. Income tax relating to transaction costs of an equity transaction is accounted for in accordance with ASC 740, "Income Taxes".

Share-based Compensation

Share-based Compensation

The stock option plan (Note 15) allows Company directors, employees and consultants to acquire shares of the Company. The Company measures the fair value of services received in exchange for all options granted based on the fair market value of the award as of the grant date. The fair value of options granted is recognized as a share-based compensation expense with a corresponding increase in equity. Consideration paid on the exercise of stock options is credited to share capital. The fair value is measured at grant date and each tranche is recognized over the period during which the options vest. The fair value of the options granted is measured using the Black-Scholes option pricing model taking into account the terms and conditions upon which the options were granted. At each financial position reporting date, the amount recognized as an expense is adjusted to reflect the number of stock options that are expected to vest.

Advertising Expenses

Advertising ExpensesThe Company expenses advertising costs as incurred in accordance with ASC 720-35, “Other Expenses – Advertising Cost”.

Income Taxes

Income Taxes

Deferred taxes are provided using an asset and liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are measured using the enacted tax rates. The effect on deferred tax assets and liabilities of a change in tax law or tax rates is recognized in income in the period that enactment occurs. As discussed further in Note 17, the Company is subject to the limitations of IRC Section 280E.

Loss per Share

Loss per Share

Basic loss per share is calculated using the weighted average number of common shares outstanding during the year. Diluted loss per share has been calculated using the weighted average number of common shares that would have been outstanding during the respective period had all stock options and warrants outstanding and having a dilutive effect been converted into shares at the beginning of the period and the proceeds used to repurchase the Company’s common shares at the average market price for the period. If these computations prove to be anti-dilutive, diluted loss per share is the same as the basic loss per share.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The Company applies fair value accounting for all financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities that are required to be recorded at fair value, the Company considers all related factors of the asset by market participants in which the Company would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as inherent risk, transfer restrictions, and credit risk.

The Company provides information about its financial instruments measured at fair value at one of three levels according to the relative reliability of the inputs used to estimate the fair value:

•Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities;

•Level 2 – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and

•Level 3 – Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Assets Held for Sale

Assets Held for Sale

Assets held for sale represent property, equipment, and leasehold improvements, right-of-use assets, and any other assets that are held for sale in conjunction with the sale of a business. The Company records assets held for sale in accordance with ASC 360 at the lower of carrying value or fair value less costs to sell. Fair value is the amount obtainable from the sale of the asset in an arm’s length transaction. The reclassification takes place when the assets are available for immediate sale and the sale is highly probable. All assets and liabilities classified as held for sale are presented separately in the consolidated balance sheets of the current period.

Discontinued Operations

Discontinued Operations

A component of an entity is identified as operations and cash flows that can be clearly distinguished, operationally and financially, from the rest of the entity. Under ASC Subtopic 205-20, “Presentation of Financial Statements - Discontinued Operations” (“ASC Subtopic 205-20”), a discontinued operation that is being disposed of other than by sale is considered held and used until the date of abandonment at which time it meets the criteria to be presented as discontinued operations. A component of an entity that is classified as discontinued operations is presented separately from continuing operations in the consolidated statements of operations and the consolidated statements of cash flows for all periods presented. All assets and liabilities related to such discontinued operations are presented separately in the consolidated balance sheets for all periods presented.

Foreign Currency

Foreign Currency

The Company and its subsidiaries’ functional currency, as determined by management, is the United States (“U.S.”) dollar. These consolidated financial statements are presented in U.S. dollars as this is the primary economic environment of the Company. All references to “C$” refer to Canadian dollars.

Each asset, liability, revenue and expense denominated in a foreign currency is recorded in the entity’s functional currency using the exchange rate in effect at the transaction date. At each reporting period, nonmonetary assets and liabilities and related revenue and expenses are remeasured using historical exchange rates and monetary assets and liabilities are remeasured using current exchange rates. Any adjustments resulting from remeasurement are recorded in other expense (income) within the consolidated statements of operations.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Accounting Pronouncements Not Yet Adopted

i.In June 2022, the FASB issued ASU 2022-03, "Fair Value Measurements - Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (Topic 820)". ASU 2022-03 clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. It also clarifies that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. For public business entities, the ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. The Company is currently assessing the impact of adopting ASU 2022-03 on the consolidated financial statements.

ii.In March 2023, the FASB issued ASU 2023-01, “Leases (Topic 842) – Common Control Arrangements”, which require that leasehold improvements associated with common control leases be amortized by the lessee over the useful life of the leasehold improvements to the common control group (regardless of the lease term) as long as the lessee controls the use of the underlying asset. It also requires such leasehold improvements to be accounted for as a transfer between entities under common control through an adjustment to entity if, and when, the lessee no longer controls the use of the underlying asset. ASU 2023-01 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently assessing the impact of adopting ASU 2023-01 on the consolidated financial statements.

iii.In July 2023, the FASB issued ASU 2023-03, “Presentation of Financial Statement (Topic 205), Income Statement - Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation - Stock Compensation (Topic 718)”, to amend various SEC paragraphs in the Accounting Standards Codification to reflect the issuance of SEC Staff Accounting Bulletin No. 120, among other things. The ASU does not provide any new guidance so there is no transition or effective date associated with it. The Company is currently assessing the impact of adopting ASU 2023-03 on the consolidated financial statements.

iv.In October 2023, the FASB issued ASU 2023-06, "Disclosure Improvements," which incorporates certain existing or incremental disclosures and presentation requirements of SEC Regulations S-X and S-K into the FASB Accounting Standards Codification (the “Codification”). ASU 2023-06 is effective for the Company as of the effective date to remove the existing disclosure requirement from Regulations S-X and S-K. Early adoption is not permitted. The Company is currently assessing the impact of adopting ASU 2023-06 on the consolidated financial statements.

v.In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures” (“ASU 2023-07”), which is intended to improve the financial reporting by requiring disclosure of incremental segment information on an annual and interim basis for all public entities to enable investors to develop more decision-useful financial analyses. ASU 2023-07 is effective for the Company beginning January 1, 2024 with early adoption permitted. The Company is currently evaluating the effect of adopting this accounting standard.

vi.In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 280), Improvements to Income Tax Disclosures” (“ASU 2023-09”), which require that public business entities on an annual basis (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a certain quantitative threshold. ASU 2023-09 is effective for the Company beginning January 1, 2025 with early adoption permitted. The Company is currently evaluating the effect of adopting this accounting standard.

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SIGNIFICANT ACCOUNTING POLICIES (Tables)

12 Months Ended

Dec. 31, 2023

Accounting Policies [Abstract]

Schedule of Property and Equipment Estimated Useful Lives

Depreciation is calculated on a straight-line basis over the estimated useful life of the asset using the following terms and methods:

Land / Construction in process	Not depreciated
Buildings & improvements	10 - 39 years
Furniture & fixtures	5 - 7 years
Equipment	7 years
Software	5 years
Leasehold improvements	Lesser of remaining life of lease or useful life

Schedule of Estimated Amortization Periods of Intangible Assets with Finite Lives At Acquisition Date

Amortization periods of assets with finite lives are based on management’s estimates at the date of acquisition and were as follows for each class of intangible asset:

Customer relationships	5 years
Tradenames & trademarks	1 - 10 years
Non-competition agreement	2 - 3 years
Know-how (trade secrets)	5 years

Schedule of Disaggregated Revenue

The following table represents the Company’s disaggregated revenue by source:

	For the Years Ended December 31,
	2023		2022
Retail	$	73,149	$	86,712
Wholesale	12,983		9,010
Real estate	11,303		11,942
Total	$	97,435	$	107,664

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INVENTORY (Tables)

12 Months Ended

Dec. 31, 2023

Inventory Disclosure [Abstract]

Schedule of Inventory

The Company’s inventories include the following as of December 31, 2023 and 2022:

	December 31, 2023		December 31, 2022
Raw materials - unharvested cannabis	$	2,268	$	2,431
Raw materials - harvested and purchased cannabis	5,745		6,753
Packaging and other non-finished goods	1,072		713
Work in process - manufactured and purchased extracts	1,790		3,412
Finished goods	6,212		5,579
Total inventory	$	17,087	$	18,888

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PROPERTY, PLANT, AND EQUIPMENT (Tables)

12 Months Ended

Dec. 31, 2023

Property, Plant and Equipment [Abstract]

Schedule of Property and Equipment and Related Depreciation

Property, plant and equipment and related depreciation are summarized in the table below:

	December 31, 2023		December 31, 2022
Land	$	774	$	774
Buildings & improvements	12,584		13,784
Construction in process	7,165		82
Furniture, equipment & other	8,855		8,963
Leasehold improvements	19,966		19,544
Total	$	49,344	$	43,147
Less: accumulated depreciation	(12,795)		(8,733)
Total property and equipment, net	$	36,549	$	34,414

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INTANGIBLE ASSETS AND GOODWILL (Tables)

12 Months Ended

Dec. 31, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Indefinite-Lived Intangible Assets

Intangible assets and related amortization are summarized in the table below:

	Licenses		Customer Relationships		Non-Competition Agreements		Tradenames and Trademarks		Know-How		Total
Gross Carrying Amount, December 31, 2021	$	20,146	$	2,900	$	249	$	100	$	9,700	$	33,095
Acquisitions	12,000		—		—		1		—		12,001
Impairment	(6,485)		—		—		—		—		(6,485)
Gross Carrying Amount, December 31, 2022	$	25,661	$	2,900	$	249	$	101	$	9,700	$	38,611
Acquisitions	—		—		—		—		—		—
Impairment	—		—		—		—		—		—
Gross Carrying Amount, December 31, 2023	$	25,661	$	2,900	$	249	$	101	$	9,700	$	38,611
Accumulated Amortization, December 31, 2021	$	—	$	(1,811)	$	(250)	$	(100)	$	(4,688)	$	(6,849)
Amortization Expense	—		(581)		—		(1)		(1,940)		(2,522)
Accumulated Amortization, December 31, 2022	$	—	$	(2,392)	$	(250)	$	(101)	$	(6,628)	$	(9,371)
Amortization Expense	—		(508)		—		—		(1,939)		(2,447)
Accumulated Amortization, December 31, 2023	$	—	$	(2,900)	$	(250)	$	(101)	$	(8,567)	$	(11,818)

Schedule of Finite-Lived Intangible Assets

Intangible assets and related amortization are summarized in the table below:

	Licenses		Customer Relationships		Non-Competition Agreements		Tradenames and Trademarks		Know-How		Total
Gross Carrying Amount, December 31, 2021	$	20,146	$	2,900	$	249	$	100	$	9,700	$	33,095
Acquisitions	12,000		—		—		1		—		12,001
Impairment	(6,485)		—		—		—		—		(6,485)
Gross Carrying Amount, December 31, 2022	$	25,661	$	2,900	$	249	$	101	$	9,700	$	38,611
Acquisitions	—		—		—		—		—		—
Impairment	—		—		—		—		—		—
Gross Carrying Amount, December 31, 2023	$	25,661	$	2,900	$	249	$	101	$	9,700	$	38,611
Accumulated Amortization, December 31, 2021	$	—	$	(1,811)	$	(250)	$	(100)	$	(4,688)	$	(6,849)
Amortization Expense	—		(581)		—		(1)		(1,940)		(2,522)
Accumulated Amortization, December 31, 2022	$	—	$	(2,392)	$	(250)	$	(101)	$	(6,628)	$	(9,371)
Amortization Expense	—		(508)		—		—		(1,939)		(2,447)
Accumulated Amortization, December 31, 2023	$	—	$	(2,900)	$	(250)	$	(101)	$	(8,567)	$	(11,818)

Schedule of Expected Annual Amortization Expense for Intangible Assets

Expected annual amortization expense for intangible assets subject to amortization at December 31, 2023 is as follows for each of the next five fiscal years:

Year Ending December 31,
2024	$	1,134
2025	—
2026	—
2027	—
2028	—
Thereafter	—
Total Future Amortization Expense	$	1,134

Schedule of Goodwill

Goodwill

Balance, December 31, 2021	$	23,155
Acquisitions	18,652
Balance, December 31, 2022	$	41,807
Balance, December 31, 2023	$	41,807

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ACQUISITIONS AND BUSINESS COMBINATIONS (Tables)

12 Months Ended

Dec. 31, 2023

Business Combination and Asset Acquisition [Abstract]

Schedule of Purchase Price Allocation

A summary of business combinations completed during the year ended December 31, 2022 is as follows:

	NECC		Island (1)		Total
Cash consideration	$	25,000	$	—	$	25,000
Note to seller	2,000		10,000		12,000
Equity consideration - common stock	18,200		6,245		24,445
Equity consideration - warrants	—		732		732
Total Consideration	$	45,200	$	16,977	$	62,177
Assets acquired:
Cash	$	—	$	466	$	466
Accounts receivable	—		511		511
Inventory	1,435		3,599		5,034
Prepaid expenses and other current assets	3		147		150
Property, Plant and equipment, net	16,000		1,887		17,887
Operating lease - right of use asset	—		8,418		8,418
Intangible assets	12,000		7,700		19,700
Total assets acquired	$	29,438	$	22,728	$	52,166
Liabilities assumed:
Accounts payable	$	—	$	1,423	$	1,423
Accrued expenses and other liabilities	—		2,342		2,342
Contract liabilities	—		3,535		3,535
Deferred tax liabilities	2,890		2,181		5,071
Lease liabilities	—		8,418		8,418
Total liabilities assumed	2,890		17,899		20,789
Estimated fair value of net assets acquired	$	26,548	$	4,829	$	31,377
Estimated Goodwill	$	18,652	$	12,148	$	30,800
Net Income (Loss) (2)	$	(2,171)	$	(10,986)	$	(13,157)
Revenues (2)	$	—	$	(119)	$	(119)

(1) During the year ended December 31, 2023, Island Global Holdings was classified as discontinued operations. Refer to Note 18 for further information.

(2) The respective amounts are revenues and net income (loss) recognized in the consolidated statement of operations for the year ended December 31, 2022.

Schedule of Pro Forma Information

The pro forma information does not necessarily reflect the results of operations that would have occurred had the entities been a single company during those periods.

	Years Ended December 31,
	2022
Pro Forma Net Income (Loss)	$	(53,071)
Pro Forma Revenues	$	120,305

Schedule of Asset Acquisition

The allocation of the asset acquisition cost is detailed below:

Share consideration	$	2,100
Transaction costs	6
Total Purchase Price	$	2,106
Assets acquired:
Accounts receivable	$	508
Inventory	534
Equipment	142
Intangible assets - tradenames	922
Total assets acquired	$	2,106

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LEASES (Tables)

12 Months Ended

Dec. 31, 2023

Leases [Abstract]

Schedule of Lease Cost

The below are the details of other disclosures regarding the Company's lessee transactions as of December 31, 2023 and 2022:

	Years Ended December 31,
	2023			2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	15,330		$	12,071
Non-cash additions to right-of-use assets and lease liabilities:
Recognition of right-of-use assets for operating leases	$	94		$	—
Weighted average remaining lease term (in years)	17.7			18.6
Weighted average discount rate	13.7		%	13.7		%

Schedule of Maturities Lease Liabilities for Third-Party Operating Leases

Maturities of lease liabilities for third-party operating leases as of December 31, 2023 were as follows:

Year Ending December 31,
2024	$	16,336
2025	16,854
2026	17,295
2027	17,672
2028	18,119
Thereafter	305,054
Total lease payments	391,330
Less interest	(265,664)
Present value of lease liability	$	125,666

Schedule of Direct Financing Lease, Lease Income

Lease income for operating and direct financing leases for the periods presented are as follows:

	Years Ended December 31,
	2023		2022
Real estate income:
Operating leases	$	8,961	$	9,269
Direct financing leases	2,342		2,673
Total real estate income	$	11,303	$	11,942

Schedule of Balance Sheet Information

The subleases are classified as operating leases under ASC 842 and the underlying assets are presented in the consolidated balance sheets as follows:

	December 31, 2023		December 31, 2022
Right-of-use assets	$	25,249	$	26,133
Current portion of lease liability	$	289	$	296
Long-term portion of lease liability	$	22,380	$	22,078

Schedule of Changes in Lease Receivables

A reconciliation of the lease receivables for the periods presented is as follows:

	December 31, 2023		December 31, 2022
Balance, beginning of the year	$	9,421	$	10,378
Interest	2,342		2,673
Lease payments received	(3,810)		(3,630)
Balance, end of the period	7,953		$	9,421
Less current portion	(3,990)		(3,810)
Long-term lease receivables	$	3,963	$	5,611

Schedule of Future Minimum Lease Payments (Principal and Interest) on Leases (Lessor)

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

Year Ending December 31,
2024	$	3,990
2025	4,170
2026	2,880
2027	—
2028	—
Thereafter	—
Total minimum lease payments	11,040
Less: Interest	(3,087)
Total lease receivable	$	7,953
Current portion lease receivable	(3,990)
Long-term lease receivable	$	3,963

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DERIVATIVE LIABILITY (Tables)

12 Months Ended

Dec. 31, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Measurement Input Valuation Techniques

The fair value of the warrants classified as liabilities was determined using the Black-Scholes simulation model based on Level 3 inputs on the fair value hierarchy. The following assumptions were used for the periods presented:

	Issuance Date			December 31, 2023
Share Price	$	0.10		$	0.10
Exercise Price	$	0.17		$	0.17
Expected Life	2.7 years			2.3 years
Annualized Volatility	84.5		%	98.8		%
Risk-Free Annual Interest Rate	4.5		%	4.2		%

Schedule of Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation

A reconciliation of the changes in fair value of the derivative liabilities is as follows:

	For the Years Ended December 31,
	2023		2022
Balance, beginning of period	$	—	$	3,502
Issuance of derivative liability	4,165		—
Change in fair value of derivative liability	385		(3,502)
Balance, end of period	$	4,550	$	—

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NOTES PAYABLE AND CONVERTIBLE NOTES (Tables)

12 Months Ended

Dec. 31, 2023

Debt Disclosure [Abstract]

Schedule of Debt

The Company’s notes payable and convertible notes are as follows:

Terms	December 31, 2023		December 31, 2022
Secured promissory notes dated May 10, 2019, as subsequently amended, with a related party which mature on May 1, 2026 and bear interest at a rate of 16.5% through May 1, 2024 and 12% per annum thereafter	$	47,491	$	49,807
Promissory note dated October 13, 2023 under the senior secured credit facility which matured on December 1, 2023 and bears interest at a rate of 15.5% per annum. The Company is currently in negotiations to amend the terms of the agreement.	3,410		—
Convertible promissory note dated October 6, 2021, which matures on October 6, 2024 and bears interest at a rate of 10% per annum	15,818		14,843
Unsecured convertible promissory note at $0.50 per share due December 18, 2024 at 12% per annum with monthly cash payments of $50,000 beginning January 15, 2024 through maturity (1)	2,051		3,554
Promissory note issued for the acquisition of NECC due January 7, 2023 at 10% per annum (2)(5)	—		519
Promissory note issued for the acquisition of Island due October 25, 2026 at 6% per annum (5)	11,030		10,431
Secured promissory note due January 1, 2024 at 1.5% monthly interest through November 30, 2022 and 2% monthly interest through maturity (3)	2,734		3,230
Unsecured promissory note due November 30, 2024, monthly interest payments at 12% per annum through September 2023 and 11% per annum through November 2024 (4)	1,630		1,730
Various	9		51
Total Notes Payable and Convertible Notes	$	84,173	$	84,165

(1) In November 2022, the unsecured convertible note was amended to extend the maturity date to May 18, 2023. The Company concluded the extension resulted in a debt modification under ASC 470. On October 2, 2023, the Company amended the unsecured convertible promissory note with Healthy Pharms Inc. wherein the interest rate was amended to 12.0% per annum and the maturity date was extended to December 18, 2024. Beginning January 15, 2024, the Company shall make monthly cash payments of $50,000 through the maturity date. The amendment was deemed to be a substantial modification under ASC Subtopic 470-50 and a loss on extinguishment of $0.4 million was recorded in the consolidated statement of operations for the year ended December 31, 2023. In November 2023, the Company issued 10,359,372 Class A Subordinate Voting Shares to the note holder to settle $1,992,187 of the promissory note.

(2) On July 28, 2022, the parties amended the promissory note to provide for payment of half the principal on the initial maturity date, and the remaining principal and all accrued interest on November 15, 2022. Interest will continue at annual rate of 10%. On November 25, 2022, the note was further amended to extend the maturity date for one fourth of the principal and accrued and unpaid interest to January 7, 2023.

(3) On August 30, 2022, the Company entered into a Promissory Note Purchase Agreement with HI 4Front, LCC and Navy Capital Green Fund, LP. Under the agreement, the Company sold promissory notes totaling $3.0 million with a six-month maturity bearing 1.5% monthly interest for three months and 2% monthly interest for three months. The notes were unsecured, but would become secured if not repaid within three months. On October 10, 2023, the Company amended the promissory note wherein the maturity date was extended to January 1, 2024. As consideration for the amendment, the Company paid an extension fee of C$65,000 in the form of 1,283,425 share purchase warrants, wherein each warrant is exercisable into one (1) Subordinate Voting Share at an exercise price of US$0.20 and expire on October 17, 2027. The amendment was not deemed to be a substantial modification under ASC Subtopic 470-50. As a result of the modification, the Company recorded an additional debt discount of $0.2 million for the issuance of the warrants.

(4) On September 16, 2022, the unsecured promissory note was modified to be due and payable in full on September 30, 2023. Interest will continue at an annual rate of 12% with payment of interest due monthly. On September 28, 2023, the Company entered into an amendment of this promissory note to reduce the interest rate to 11% and extend the maturity date to November 30, 2024. The amendment was classified as a troubled debt restructuring pursuant to ASC 470-60, "Troubled Debt Restructurings by Debtors".

(5) Refer to Note 7 for further information on the acquisition related promissory notes.

Schedule of Future Minimum Payments of Notes Payable and Convertible Notes

Future minimum payments on the notes payable and convertible debt are as follows:

Year Ending December 31,
2024	$	25,630
2025	—
2026	—
2027	58,543
2028	—
Thereafter	—
Total minimum payments	84,173
Less current portion	(25,630)
Long-term portion	$	58,543

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SHAREHOLDER'S EQUITY (Tables)

12 Months Ended

Dec. 31, 2023

Equity [Abstract]

Schedule of Voting Shares Activity

Voting shares activity for the periods presented is summarized as follows:

	Class A Subordinate Voting Shares	Class C Multiple Voting Shares	Total
Balance, December 31, 2021	592,905,396	1,276,208	594,181,604
Share capital issuances	49,234,671	—	49,234,671
Balance, December 31, 2022	642,140,067	1,276,208	643,416,275
Share capital issuances	26,103,074	—	26,103,074
Balance, December 31, 2023	668,243,141	1,276,208	669,519,349

Schedule of Share Capital and Equity

Series	Shares outstanding as of December 31, 2023	As converted to SVS Shares
Class A - Subordinate Voting Shares	668,243,141	668,243,141
Class C - Multiple Voting Shares	1,276,208	1,276,208
Total shares outstanding	669,519,349	669,519,349

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WARRANTS (Tables)

12 Months Ended

Dec. 31, 2023

Warrants and Rights Note Disclosure [Abstract]

Schedule of Warrants Outstanding to Purchase Shares

A reconciliation of the beginning and ending balance of outstanding share purchase warrants classified as equity is as follows:

	Number of Warrants	Weight-Average Exercise Price
Balance, December 31, 2021	26,192,237	$	0.75
Issued	2,999,975	1.00
Exercised	(91,436)	0.54
Expired	(22,748,498)	0.76
Balance, December 31, 2022	6,352,278	0.82
Issued	2,658,425	0.16
Expired	(2,227,303)	0.67
Balance, December 31, 2023	6,783,400	$	0.61

Schedule of Warrants Outstanding And Exercisable

As of December 31, 2023, the Company has the following warrants outstanding:

Warrants Outstanding		Exercise Price		Expiry Date
2,999,975		$	1.00	April 13, 2024
625,000	*	C$	0.80	October 6, 2024
500,000	*	C$	0.80	October 6, 2025
625,000		C$	0.23	May 10, 2027
750,000		$	0.10	September 1, 2027
1,283,425		$	0.20	October 17, 2027
6,783,400

*Represents warrants that are exercisable as of December 31, 2023.

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NON-CONTROLLING INTERESTS (Tables)

12 Months Ended

Dec. 31, 2023

Noncontrolling Interest [Abstract]

Schedule of Non-controlling Interests of the Company in Each Affiliate Before Intercompany Elimination

The non-controlling interests of the Company for each affiliate before intercompany elimination are summarized in the tables below:

	December 31, 2023		December 31, 2022
	MMA Capital		MMA Capital
Current assets	$	—	$	—
Current liabilities	—		—
Current net assets	—		—
Non-current assets	14,620		14,620
Non-current liabilities	—		—
Non-current net assets	$	14,620	$	14,620

	MMA Capital
Balance, December 31, 2021	$	72
Net income attributable to NCI	21
Balance, December 31, 2022	93
Net income attributable to NCI	15
Balance, December 31, 2023	$	108

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SHARE-BASED COMPENSATION (Tables)

12 Months Ended

Dec. 31, 2023

Share-Based Payment Arrangement [Abstract]

Schedule of Stock Option Activity

The following table summarizes the Company’s stock option activity and related information:

	Number of Options	Weighted Average Price (CAD$)		Weighted Average Years
Balance, December 31, 2021	54,282,752	$	0.94	2.97
Granted	35,161,000	$	0.68	4.80
Exercised	(133,333)	$	0.80	—
Forfeited/Expired	(13,683,459)	$	0.96	—
Balance, December 31, 2022	75,626,960	$	0.86	3.46
Granted	68,294,666	$	0.20	4.52
Forfeited/Expired	(52,218,860)	$	0.84	—
Balance, December 31, 2023	91,702,766	$	0.34	3.78

Schedule of Stock Options Values using Black-Scholes Model with Key Assumptions

In determining the amount of share-based compensation, the Company used the Black-Scholes option pricing model to establish the fair value of options granted during the year with the following key assumptions:

	For the Years Ended December 31,
	2023		2022
Risk-Free Interest Rate	4.02	%	3.44	%
Expected Life (years)	3.51		3.01
Expected Annualized Volatility	86.83	%	82.73	%
Expected Dividend Yield	—		—

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SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Tables)

12 Months Ended

Dec. 31, 2023

General and Administrative Expense [Abstract]

Schedule Of Components Of Selling, General And Administrative Expenses

For the year ended December 31, 2023 and 2022, general and administrative expenses were comprised of:

	For the Years Ended December 31,
	2023		2022
Rent and lease related expenses	$	18,106	$	13,771
Salaries and benefits	16,906		18,239
Share-based compensation	6,860		7,214
Professional services	4,014		5,353
Bad debt expense	7,767		625
Licenses, fees and taxes	1,634		1,400
Advertising and promotions	1,485		1,614
Security expenses	1,353		1,253
Other general and administrative expenses	5,282		6,803
Total selling, general and administrative expenses	$	63,407	$	56,272

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INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Schedule of Income Tax Expense

The following table sets forth the components of income tax (benefit) expense for the years ended December 31, 2023 and 2022:

	December 31, 2023		December 31, 2022
Net current taxes:
U.S. Federal	$	2,645	$	12,031
U.S. State	$	825	$	2,518
Deferred Taxes:
U.S. Federal	$	2,606	$	(3,521)
U.S. State	$	1,017	$	(1,121)
Total (continuing and discontinued)	$	7,093	$	9,907

Schedule of Reconciliation of Income Taxes at Statutory Rates

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, 2023 and 2022:

	December 31, 2023			December 31, 2022
Loss before income taxes (continuing and discontinued operations)	$	(84,539)		$	(36,970)
Statutory tax rate	21.00		%	21.00		%
Expense based on statutory rates	(17,753)			(7,764)
Permanent non-deductible items	16,164			14,419
State taxes	(2,444)			280
Change in state rate	79			101
Change in valuation allowance	2,622			4,524
Change in uncertain tax position	8,524			—
Interest and penalties	3,464			2,689
Acquisition related adjustments	—			(6,142)
Lease deferred tax true-up	(683)			688
Return-to-provision	(2,221)			940
Other adjustments	(659)			172
Income tax expense (continued and discontinued)	$	7,093		$	9,907

Schedule of Components of Deferred Tax Assets and Liabilities

The following tables set forth the components of deferred income taxes as of December 31, 2023 and 2022:

	December 31, 2023		December 31, 2022
Deferred tax assets
Net operating losses	$	8,521	$	5,898
Lease liabilities	10,257		16,595
Goodwill and intangible assets	1,677		1,785
Other	1,917		1,024
Total deferred tax assets	22,372		25,302
Valuation allowance	(8,521)		(5,898)
Total net deferred tax assets	13,851		19,404
Deferred tax liabilities
Property and equipment	(5,699)		(408)
Intangible assets	(8,937)		(9,338)
Right-of-use assets	(11,097)		(17,936)
Total net deferred tax liabilities	(25,733)		(27,682)
Total adjusted deferred tax liabilities (continued and discontinued)	$	(11,882)	$	(8,278)

Schedule of Unrecognized Tax Benefits Roll Forward

Activity in unrecognized tax benefits which are included as a component of taxes payable in the accompanying consolidated balance sheet were as follows:

	December 31, 2023		December 31, 2022
Balance, beginning of year	$	—	$	—
Increase related to positions taken in the current year	8,524		—
Balance, end of year	$	8,524	$	—

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DISCONTINUED OPERATIONS (Tables)

12 Months Ended

Dec. 31, 2023

Discontinued Operations and Disposal Groups [Abstract]

Schedule of Operating Results and Carrying Value of Assets and Liabilities of Discontinued Operations

The operating results of the discontinued operations are summarized as follows:

	Years Ended December 31,
	2023		2022
REVENUE
Revenue from sale of goods	$	9,412	$	10,495
Real estate income	411		418
Total revenues	9,823		10,913
Cost of goods sold	(22,482)		(21,187)
Gross profit	(12,659)		(10,274)
OPERATING EXPENSES
Selling, general and administrative expenses	4,901		6,527
Depreciation and amortization	212		521
Transaction and restructuring related expenses	860		1,135
Impairment of goodwill and intangible assets	12,856		6,700
Total operating expenses	18,829		14,883
Loss from operations	(31,488)		(25,157)
Other income (expense)
Interest expense	(32)		(71)
Loss on disposal	(14,368)		(381)
Other	(1,025)		(147)
Total other income (expense), net	(15,425)		(599)
Net loss from discontinued operations before income taxes	(46,913)		(25,756)
Income tax benefit	(1)		170
Net loss on discontinued operations	$	(46,914)	$	(25,586)

The carrying amounts of assets and liabilities in the disposal group are summarized as follows:

	December 31, 2023		December 31, 2022
Carrying amount of the assets included in discontinued operations:
Current assets:
Cash	$	63	$	919
Accounts receivable, net	(49)		1,943
Other receivables	16		(16)
Inventory	33		6,704
Prepaid expenses and other assets	—		192
Total current assets (1)	63		9,742
Property, plant, and equipment, net	—		22,492
Intangible assets, net	738		1,687
Goodwill	—		12,148
Right-of-use assets	—		16,522
Deposits	14		619
Total non-current assets (1)	752		53,468
TOTAL ASSETS OF THE DISPOSAL GROUP	$	815	$	63,210
Carrying amount of the liabilities included in discontinued operations:
Current liabilities:
Accounts payable	3,552		1,600
Accrued expenses and other current liabilities	4,752		5,164
Taxes payable	72		—
Current portion of contract liabilities	48		369
Current portion of lease liability	—		1,712
Total current liabilities (1)	8,424		8,845
Long term notes payable	5		—
Long term accounts payable	330		400
Contract liabilities	2,280		2,000
Deferred tax liability	—		2,181
Lease liability	—		15,513
Total non-current liabilities (1)	2,615		20,094
TOTAL LIABILITIES OF THE DISPOSAL GROUP	$	11,039	$	28,939

(1) The assets and liabilities of the disposal group are classified as current on the consolidated balance sheets as of December 31, 2023 because it is probable that the sale or disposal other than by sale will occur within one year.

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CONTINGENCIES (Tables)

12 Months Ended

Dec. 31, 2023

Commitments and Contingencies Disclosure [Abstract]

Schedule of Fair Value of Contingent Consideration

The fair value of the contingent consideration, which is based on specific revenue levels achieved over a 2-3-year period, is as follows:

Balance, December 31, 2021	$	2,393
Changes in fair value	(2,393)
Balance, December 31, 2022	$	—
Changes in fair value	—
Balance, December 31, 2023	$	—

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FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (Tables)

12 Months Ended

Dec. 31, 2023

Investments, All Other Investments [Abstract]

Schedule of Fair Value Measurements With in the Fair Value Hierarchy of The Financial Instruments

The following table details the fair value measurements within the fair value hierarchy of the Company's financial instruments, which includes the Level 3 liabilities:

	Fair Value at December 31, 2023
	Total		Level 1		Level 2		Level 3
Liabilities:
Derivative liability	$	4,550	$	—	$	—	4,550
Total liabilities	$	4,550	$	—	$	—	$	4,550

	Fair Value at December 31, 2022
	Total		Level 1		Level 2		Level 3
Liabilities:
Derivative liability	$	—	$	—	$	—	$	—
Total liabilities	$	—	$	—	$	—	$	—

Schedule of Gross Contractual Obligations

The Company has the following gross contractual obligations as of December 31, 2023, which are expected to be payable in the following respective periods:

	Less than 1 year		1 to 3 years		3 to 5 years		Greater than 5 years		Total
Accounts payable and accrued liabilities	$	20,429	$	977	$	—	$	—	$	21,406
Convertible notes, notes payable and accrued interest	25,630		47,513		11,030		—		84,173
Construction finance liability	—		16,000		—		—		$	16,000
Total	$	46,059	$	64,490	$	11,030	$	—	$	121,579

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SEGMENT INFORMATION (Tables)

12 Months Ended

Dec. 31, 2023

Segment Reporting [Abstract]

Schedule of Revenue By Type

The below table presents financial results of each segment as of and for the years ended December 31, 2023 and 2022:

	Years Ended December 31,
	2023		2022
Net Revenues
THC Cannabis	$	96,588	$	106,632
CBD Wellness	847		1,032
Total Net Revenues	$	97,435	$	107,664
Net (Income) Loss Attributable to Shareholders
THC Cannabis	$	11,481	$	6,288
CBD Wellness	(55)		(66)
Corporate	33,292		15,069
Total Net Loss from Continuing Operations	$	44,718	$	21,291
Assets
THC Cannabis	$	262,423	$	343,410
CBD Wellness	388		625
Corporate	1,143		697
Total Assets	$	263,954	$	344,732

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NATURE OF OPERATIONS (Details)	12 Months Ended
	Dec. 31, 2023 Dispensary facility Segment
Nature Of Operations [Line Items]
Number of operating segments | Segment	2
THC Cannabis
Nature Of Operations [Line Items]
Number of dispensaries | Dispensary	5
Number of production facilities | facility	4

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SIGNIFICANT ACCOUNTING POLICIES - Additional Information (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Accounting Policies [Abstract]
Allowance for doubtful accounts	$ 7.7	$ 0.0
Contract with customer, liability	2.3
Revenue discount	11.2	13.3
Loyalty program liability	0.5	1.5
Selling and marketing expense	$ 14.7	$ 19.9

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SIGNIFICANT ACCOUNTING POLICIES - Summary of Property and Equipment Estimated Useful Lives (Details)	Dec. 31, 2023
Equipment
Property, Plant and Equipment [Line Items]
Property, plant and equipment, estimated useful life	7 years
Software
Property, Plant and Equipment [Line Items]
Property, plant and equipment, estimated useful life	5 years
Minimum | Buildings & improvements
Property, Plant and Equipment [Line Items]
Property, plant and equipment, estimated useful life	10 years
Minimum | Furniture & fixtures
Property, Plant and Equipment [Line Items]
Property, plant and equipment, estimated useful life	5 years
Maximum | Buildings & improvements
Property, Plant and Equipment [Line Items]
Property, plant and equipment, estimated useful life	39 years
Maximum | Furniture & fixtures
Property, Plant and Equipment [Line Items]
Property, plant and equipment, estimated useful life	7 years

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SIGNIFICANT ACCOUNTING POLICIES - Summary of Estimated Amortization Periods of Intangible Assets with Finite Lives At Acquisition Date (Details)	Dec. 31, 2023
Customer relationships
Finite Lived Intangible Assets [Line Items]
Intangible assets, useful life	5 years
Know-how (trade secrets)
Finite Lived Intangible Assets [Line Items]
Intangible assets, useful life	5 years
Minimum | Tradenames & trademarks
Finite Lived Intangible Assets [Line Items]
Intangible assets, useful life	1 year
Minimum | Non-competition agreement
Finite Lived Intangible Assets [Line Items]
Intangible assets, useful life	2 years
Maximum | Tradenames & trademarks
Finite Lived Intangible Assets [Line Items]
Intangible assets, useful life	10 years
Maximum | Non-competition agreement
Finite Lived Intangible Assets [Line Items]
Intangible assets, useful life	3 years

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SIGNIFICANT ACCOUNTING POLICIES - Schedule Of Disaggregated Revenue (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Disaggregation of Revenue [Line Items]
Total	$ 97,435	$ 107,664
Retail
Disaggregation of Revenue [Line Items]
Total	73,149	86,712
Wholesale
Disaggregation of Revenue [Line Items]
Total	12,983	9,010
Real estate
Disaggregation of Revenue [Line Items]
Total	$ 11,303	$ 11,942

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GOING CONCERN (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Cash	$ 3,398	$ 14,271
Working capital deficit	70,100
Total Net Loss from Continuing Operations	$ 44,718	$ 21,291

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INVENTORY (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Inventory [Line Items]
Packaging and other non-finished goods	$ 1,072	$ 713
Work in process - manufactured and purchased extracts	1,790	3,412
Finished goods	6,212	5,579
Total inventory	17,087	18,888
Unharvested Cannabis
Inventory [Line Items]
Raw materials	2,268	2,431
Harvested and purchased cannabis
Inventory [Line Items]
Raw materials	$ 5,745	$ 6,753

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PROPERTY, PLANT, AND EQUIPMENT - Summary of Property and Equipment and Related Depreciation (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 49,344	$ 43,147
Less: accumulated depreciation	(12,795)	(8,733)
Total property and equipment, net	36,549	34,414
Land
Property, Plant and Equipment [Line Items]
Property and equipment, gross	774	774
Buildings & improvements
Property, Plant and Equipment [Line Items]
Property and equipment, gross	12,584	13,784
Construction in process
Property, Plant and Equipment [Line Items]
Property and equipment, gross	7,165	82
Furniture, equipment & other
Property, Plant and Equipment [Line Items]
Property and equipment, gross	8,855	8,963
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 19,966	$ 19,544

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PROPERTY, PLANT, AND EQUIPMENT - Additional Information (Details) - USD ($) $ in Thousands				1 Months Ended	12 Months Ended
	Nov. 17, 2023	Nov. 10, 2022	Jan. 28, 2022	Nov. 30, 2022	Dec. 31, 2023	Dec. 31, 2022
Property, Plant and Equipment [Line Items]
Depreciation expense					$ 3,100	$ 2,600
Depreciation in COGS					$ 2,400	$ 2,400
Consideration on sale of equipment	$ 1,400
Proceeds from sale of property	950		$ 16,000
Consideration on sale of equipment, promissory note receivable	$ 500
IL Grown Medicine, LLC
Property, Plant and Equipment [Line Items]
Tenant improvement allowance, increase		$ 19,900		$ 19,900

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INTANGIBLE ASSETS AND GOODWILL - Schedule of Indefinite-Lived and Finite-Lived Intangible Assets (Details) - USD ($)		12 Months Ended
	Oct. 31, 2023	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Indefinite-Lived Intangible Assets [Line Items]
Impairment, Intangible Asset, Indefinite-Lived (Excluding Goodwill), Statement of Income or Comprehensive Income [Extensible Enumeration]		Impairment of goodwill and intangibles
Indefinite-Lived Intangible Assets [Roll Forward]
Impairment	$ 0
Finite-Lived Intangible Assets [Roll Forward]
Accumulated amortization, beginning balance		$ (9,371,000)	$ (6,849,000)
Amortization Expense		(2,447,000)	(2,522,000)
Accumulated amortization, ending balance		(11,818,000)	(9,371,000)
Total
Beginning balance		38,611,000	33,095,000
Acquisitions		0	12,001,000
Impairment		0	(6,485,000)
Ending balance		38,611,000	38,611,000
Licenses
Indefinite-Lived Intangible Assets [Roll Forward]
Gross carrying amount, beginning balance		25,661,000	20,146,000
Acquisitions		0	12,000,000
Impairment		0	(6,485,000)
Gross carrying amount, ending balance		25,661,000	25,661,000
Customer relationships
Finite-Lived Intangible Assets [Roll Forward]
Gross carrying amount, beginning balance		2,900,000	2,900,000	$ 2,900,000
Acquisitions		0	0
Impairment		0	0
Gross carrying amount, ending balance		2,900,000	2,900,000
Accumulated amortization, beginning balance		(2,392,000)	(1,811,000)
Amortization Expense		(508,000)	(581,000)
Accumulated amortization, ending balance		(2,900,000)	(2,392,000)
Non-competition agreement
Finite-Lived Intangible Assets [Roll Forward]
Gross carrying amount, beginning balance		249,000	249,000	249,000
Acquisitions		0	0
Impairment		0	0
Gross carrying amount, ending balance		249,000	249,000
Accumulated amortization, beginning balance		(250,000)	(250,000)
Amortization Expense		0	0
Accumulated amortization, ending balance		(250,000)	(250,000)
Tradenames & trademarks
Finite-Lived Intangible Assets [Roll Forward]
Gross carrying amount, beginning balance		101,000	101,000	100,000
Acquisitions		0	1,000
Impairment		0	0
Gross carrying amount, ending balance		101,000	101,000
Accumulated amortization, beginning balance		(101,000)	(100,000)
Amortization Expense		0	(1,000)
Accumulated amortization, ending balance		(101,000)	(101,000)
Know-how (trade secrets)
Finite-Lived Intangible Assets [Roll Forward]
Gross carrying amount, beginning balance		9,700,000	9,700,000	$ 9,700,000
Acquisitions		0	0
Impairment		0	0
Gross carrying amount, ending balance		9,700,000	9,700,000
Accumulated amortization, beginning balance		(6,628,000)	(4,688,000)
Amortization Expense		(1,939,000)	(1,940,000)
Accumulated amortization, ending balance		$ (8,567,000)	$ (6,628,000)

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INTANGIBLE ASSETS AND GOODWILL - Additional Information (Details) - USD ($)		12 Months Ended
	Oct. 31, 2023	Dec. 31, 2023	Dec. 31, 2022
Disclosure Of Intangible Assets And Goodwill [Line Items]
Impairment loss		$ 0	$ 6,485,000
Impairment of indefinite-lived intangible assets	$ 0
Amortization of intangible assets		2,447,000	$ 2,522,000
Goodwill impairment	$ 0
Negative carrying amount of goodwill		41,800,000
THC Cannabis
Disclosure Of Intangible Assets And Goodwill [Line Items]
Accumulated impairment		0
CBD Wellness
Disclosure Of Intangible Assets And Goodwill [Line Items]
Accumulated impairment		$ 13,400,000

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INTANGIBLE ASSETS AND GOODWILL - Schedule of Expected Annual Amortization Expense for Intangible Assets (Details) $ in Thousands	Dec. 31, 2023 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
2024	$ 1,134
2025	0
2026	0
2027	0
2028	0
Thereafter	0
Total Future Amortization Expense	$ 1,134

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INTANGIBLE ASSETS AND GOODWILL - Summary of Goodwill (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2022 USD ($)
Goodwill [Roll Forward]
Beginning balance	$ 23,155
Acquisitions	18,652
Ending balance	$ 41,807

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ACQUISITIONS AND BUSINESS COMBINATIONS - Summary of Purchase Price Allocation (Details) - USD ($) $ in Thousands			12 Months Ended
	Apr. 25, 2022	Jan. 28, 2022	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Business Acquisition [Line Items]
Equity consideration - common stock			$ 0	$ 25,177
Liabilities assumed:
Estimated Goodwill			41,807	41,807	$ 23,155
Net Income (Loss)			(91,632)	(46,877)
Total Net Revenues			$ 97,435	107,664
New England Cannabis Corporation and Island Global Holdings, Inc.
Business Acquisition [Line Items]
Cash consideration				25,000
Note to seller				12,000
Equity consideration - common stock				24,445
Equity consideration - warrants				732
Total Consideration				62,177
Assets acquired:
Cash				466
Accounts receivable				511
Inventory				5,034
Prepaid expenses and other current assets				150
Property, Plant and equipment, net				17,887
Operating lease - right of use asset				8,418
Intangible assets				19,700
Total assets acquired				52,166
Liabilities assumed:
Accounts payable				1,423
Accrued expenses and other liabilities				2,342
Contract liabilities				3,535
Deferred tax liabilities				5,071
Lease liabilities				8,418
Total liabilities assumed				20,789
Estimated fair value of net assets acquired				31,377
Estimated Goodwill				30,800
Net Income (Loss)				(13,157)
Total Net Revenues				(119)
New England Cannabis Corporation
Business Acquisition [Line Items]
Cash consideration		$ 9,000		25,000
Note to seller				2,000
Equity consideration - common stock		18,200		18,200
Equity consideration - warrants				0
Total Consideration				45,200
Assets acquired:
Cash				0
Accounts receivable				0
Inventory				1,435
Prepaid expenses and other current assets				3
Property, Plant and equipment, net				16,000
Operating lease - right of use asset				0
Intangible assets				12,000
Total assets acquired				29,438
Liabilities assumed:
Accounts payable				0
Accrued expenses and other liabilities				0
Contract liabilities				0
Deferred tax liabilities				2,890
Lease liabilities				0
Total liabilities assumed				2,890
Estimated fair value of net assets acquired				26,548
Estimated Goodwill		$ 18,700		18,652
Net Income (Loss)				(2,171)
Total Net Revenues				0
Island Global Holdings, Inc.
Business Acquisition [Line Items]
Cash consideration				0
Note to seller	$ 10,000			10,000
Equity consideration - common stock	6,200			6,245
Equity consideration - warrants				732
Total Consideration				16,977
Assets acquired:
Cash				466
Accounts receivable				511
Inventory				3,599
Prepaid expenses and other current assets				147
Property, Plant and equipment, net				1,887
Operating lease - right of use asset				8,418
Intangible assets				7,700
Total assets acquired				22,728
Liabilities assumed:
Accounts payable				1,423
Accrued expenses and other liabilities				2,342
Contract liabilities				3,535
Deferred tax liabilities				2,181
Lease liabilities				8,418
Total liabilities assumed				17,899
Estimated fair value of net assets acquired				4,829
Estimated Goodwill	$ 12,100			12,148
Net Income (Loss)				(10,986)
Total Net Revenues				$ (119)

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ACQUISITIONS AND BUSINESS COMBINATIONS - Summary Of Pro Forma Information (Details) - New England Cannabis Corporation and Island Global Holdings, Inc. $ in Thousands	12 Months Ended
	Dec. 31, 2022 USD ($)
Business Acquisition [Line Items]
Pro Forma Net Income (Loss)	$ (53,071)
Pro Forma Revenues	$ 120,305

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ACQUISITIONS AND BUSINESS COMBINATIONS - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands						9 Months Ended	12 Months Ended
	Nov. 17, 2023	Mar. 27, 2023	Aug. 19, 2022	Apr. 25, 2022	Jan. 28, 2022	Dec. 31, 2023	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Business Acquisition [Line Items]
Equity consideration - common stock							$ 0	$ 25,177
Goodwill						$ 41,807	$ 41,807	$ 41,807	$ 23,155
Share purchase warrants outstanding (in shares)						6,783,400	6,783,400	6,352,278	26,192,237
Bloom Farms
Business Acquisition [Line Items]
Asset acquisition, consideration transferred, equity interest value			$ 2,100
Asset acquisition, consideration transferred, transaction cost			6
Asset acquisition, contingent consideration, revenue threshold amount			$ 2,100
Asset acquisition, contingent consideration, revenue threshold term			12 months
Asset acquisition, purchase price			$ 2,106
Bloom Farms | Maximum
Business Acquisition [Line Items]
Asset acquisition, contingent consideration, liability			$ 5,000
Euphoria, LLC
Business Acquisition [Line Items]
Asset acquisition, stock consideration (in shares)						2,308,952
Asset acquisition, consideration transferred, equity interest value						$ 400
Asset acquisition, percentage of voting interests acquired		100.00%
Asset acquisition, purchase price		$ 4,500
Payments for asset acquisitions						300
Breakup fee in case of buyer termination		3,500
Breakup fee in case of seller termination		$ 3,500
Westside
Business Acquisition [Line Items]
Asset acquisition, consideration transferred, equity interest value	$ 100
Payments to acquire machinery and equipment	1,100
Asset acquisition, contingent consideration, liability	$ 2,000
Asset acquisition, percentage of voting interests acquired	100.00%
Asset acquisition, purchase price	$ 2,400
Asset acquisition, transfer of license subject to regulatory approval						$ 600	$ 600
Asset acquisition, consideration, promissory note assumed	$ 1,200
Subordinate Voting Shares | Bloom Farms
Business Acquisition [Line Items]
Asset acquisition, stock consideration (in shares)			3,750,000
Asset acquisition, consideration transferred, equity interest value			$ 2,100
Asset acquisition, consideration transferred, transaction cost			$ 60
New England Cannabis Corporation (NECC)
Business Acquisition [Line Items]
Percentage of voting interests acquired					100.00%
Cash consideration					$ 9,000			$ 25,000
Equity consideration - common stock					18,200			18,200
Note to seller								2,000
Goodwill					18,700			18,652
Transaction and restructuring costs					$ 700
New England Cannabis Corporation (NECC) | Subordinate Voting Shares
Business Acquisition [Line Items]
Business acquisition, number of shares issued (in shares)					28,571,428
29 Everett Street LLC
Business Acquisition [Line Items]
Percentage of voting interests acquired					100.00%
Cash consideration					$ 16,000
Note to seller					$ 2,000
Island Global Holdings, Inc.
Business Acquisition [Line Items]
Percentage of voting interests acquired				100.00%
Cash consideration								0
Equity consideration - common stock				$ 6,200				6,245
Note to seller				10,000				10,000
Goodwill				12,100				$ 12,148
Transaction and restructuring costs				$ 1,400
Debt interest rate				6.00%
Debt instrument, term				54 months
Island Global Holdings, Inc. | Tradenames & trademarks
Business Acquisition [Line Items]
Acquired finite-lived intangible assets, amortization period				10 years
Island Global Holdings, Inc. | Island Acquisition Warrants
Business Acquisition [Line Items]
Share purchase warrants outstanding (in shares)				2,999,975
Warrants purchase price per share (in dollar per share)				$ 1.00
Island Global Holdings, Inc. | Subordinate Voting Shares
Business Acquisition [Line Items]
Business acquisition, number of shares issued (in shares)				8,783,716

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ACQUISITIONS AND BUSINESS COMBINATIONS - Summary of Asset Acquisition (Details) - Bloom Farms $ in Thousands	Aug. 19, 2022 USD ($)
Asset Acquisition [Line Items]
Share consideration	$ 2,100
Transaction costs	6
Total Purchase Price	2,106
Assets acquired:
Accounts receivable	508
Inventory	534
Equipment	142
Intangible assets - tradenames	922
Total assets acquired	$ 2,106

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ASSETS HELD FOR SALE (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Net loss	$ 46,914	$ 25,586
Disposal Group, Held-for-Sale | Om Of Medicine
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Total revenues	1,300
Net loss	600
Assets of the disposal group	900
Liabilities of the disposal group	$ 1,000

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LEASES - Additional Information (Details) - USD ($) $ in Thousands			1 Months Ended	12 Months Ended
	Aug. 23, 2023	Nov. 10, 2022	Nov. 30, 2022	Dec. 31, 2023	Dec. 31, 2022	Jul. 07, 2023	Oct. 27, 2022
Leases [Line Items]
Operating lease cost				$ 20,900	$ 17,500
Modification of lease agreement, deferred pro rata payments as percentage of aggregate amount						8.33%
Right-of-use assets				118,511	$ 121,929
Present value of lease liability				125,666
Lease Agreement For Cultivation And Production Facility In Matteson, Illinois
Leases [Line Items]
Modification of lease agreement, portion of security deposit to pay monthly base rent, period						4 months
Modification of lease agreement, defer payment amount, increase in security deposit to be funded						$ 2,200
Modification of lease agreement, deferred pro rata payments, period						12 months
Lease Agreement For The Third Dispensary location In Illinois
Leases [Line Items]
Lease operating lease agreement execution period	5 days
Lease operating lease security deposits with number of rent abated months	9 months
Right-of-use assets				1,200
Present value of lease liability				$ 1,200
IL Grown Medicine, LLC
Leases [Line Items]
Tenant improvement allowance, increase		$ 19,900	$ 19,900
Remaining lease term		20 years
Increase in base rent		$ 200
Increase in security deposit		$ 2,200
IL Grown Medicine, LLC | Minimum
Leases [Line Items]
Tenant improvement allowance, increase option							$ 15,000
IL Grown Medicine, LLC | Maximum
Leases [Line Items]
Tenant improvement allowance, increase option							$ 19,900

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LEASES - Summary of Operating Lease Right of Use Asset Lease Cost Expense - (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Leases [Abstract]
Operating cash flows from operating leases	$ 15,330	$ 12,071
Recognition of right-of-use assets for operating leases	$ 94	$ 0
Weighted average remaining lease term (in years)	17 years 8 months 12 days	18 years 7 months 6 days
Weighted average discount rate	13.70%	13.70%

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LEASES - Summary of Maturities Lease Liabilities For Third-Party Operating Leases (Details) $ in Thousands	Dec. 31, 2023 USD ($)
Leases [Abstract]
2024	$ 16,336
2025	16,854
2026	17,295
2027	17,672
2028	18,119
Thereafter	305,054
Total lease payments	391,330
Less interest	(265,664)
Present value of lease liability	$ 125,666

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LEASES - Lease Income (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Leases [Abstract]
Operating leases	$ 8,961	$ 9,269
Direct financing leases	2,342	2,673
Total real estate income	$ 11,303	$ 11,942

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LEASES - Summary of Underlying Assets Leased (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Leases [Line Items]
Right-of-use assets	$ 118,511	$ 121,929
Current portion of lease liability	1,720	2,767
Lease liability	123,946	120,672
Building
Leases [Line Items]
Right-of-use assets	25,249	26,133
Current portion of lease liability	289	296
Lease liability	$ 22,380	$ 22,078

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LEASES - Summary of Changes in Lease Receivables (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Lease Receivables [Roll Forward]
Balance, beginning of the year	$ 9,421	$ 10,378
Interest	2,342	2,673
Lease payments received	(3,810)	(3,630)
Balance, end of the period	7,953	9,421
Less current portion	(3,990)	(3,810)
Long-term lease receivable	$ 3,963	$ 5,611

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LEASES - Summary of Future Minimum Lease Payments (Principal and Interest) on Leases (Lessor) (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Leases [Abstract]
2024	$ 3,990
2025	4,170
2026	2,880
2027	0
2028	0
Thereafter	0
Total minimum lease payments	11,040
Less: Interest	(3,087)
Total lease receivable	7,953	$ 9,421	$ 10,378
Current portion lease receivable	(3,990)	(3,810)
Long-term lease receivable	$ 3,963	$ 5,611

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DERIVATIVE LIABILITY - Additional Information (Details) $ / shares in Units, $ in Millions					12 Months Ended
	Nov. 13, 2023 $ / shares shares	Aug. 10, 2023 USD ($) $ / shares shares	Jul. 27, 2023 shares	Nov. 23, 2020 USD ($) shares	Dec. 31, 2023 $ / shares shares	Dec. 31, 2022 $ / shares shares	Aug. 09, 2023	Dec. 31, 2021 shares	Nov. 23, 2020 $ / shares shares
Derivative [Line Items]
Share capital issuances (in shares)					26,103,074	49,234,671
Share purchase warrants outstanding (in shares)					6,783,400	6,352,278		26,192,237
Weighted average price, granted (in canadian dollars per share) | $ / shares					$ 0.20	$ 0.68
Restricted Stock Units (RSUs)
Derivative [Line Items]
Awards issued (in shares)	15,900,000		9,853,830
Weighted average price, granted (in canadian dollars per share) | $ / shares	$ 0.31
Minimum exercise price of stock options issued, percentage of fair market value of shares on grant date	2.12%
Debt Instrument, Refinance Term One
Derivative [Line Items]
Debt refinance bona fide offer, permitted secured debt senior to the loan amount | $		$ 8.0
Debt Instrument, Refinance Term Two
Derivative [Line Items]
Debt refinance bona fide offer, permitted secured debt senior to the loan amount | $		$ 10.0
First Amendment To LI Lending LLC Loan Agreement
Derivative [Line Items]
Debt refinance bona fide offer, period from amendment date		6 months
Warrants Exercisable Through May 1, 2026
Derivative [Line Items]
Warrant coverage percentage of loan balance upon exercise of option		30.00%					33.00%
Warrants Exercisable Through May 1, 2026 | Related Party
Derivative [Line Items]
Units issued, price per unit (in dollar per share)		1
Warrants purchase price per share (in dollar per share) | $ / shares		$ 0.17
Warrants Exercisable Through May 1, 2026 | Debt Instrument, Refinance Term One
Derivative [Line Items]
Percentage of warrant exercised by cashless exercise		75.00%
Warrants Exercisable Through May 1, 2026 | Debt Instrument, Refinance Term Two
Derivative [Line Items]
Percentage of warrant exercised by cashless exercise		100.00%
Private Placement
Derivative [Line Items]
Net proceeds from issuance of stock with warrants | $				$ 11.6
Number of voting shares in each unit (in shares)									1
Units issued, price per unit (in dollar per share)									1
Warrant term									2 years
Private Placement | Exercise Price
Derivative [Line Items]
Warrants measurement input (in dollar per share) | $ / shares									0.90
Share Capital with Unit Price | Private Placement
Derivative [Line Items]
Share capital issuances (in shares)				24,644,500
Units issued, price per unit (in dollar per share) | $ / shares									$ 0.70

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DERIVATIVE LIABILITY - Schedule of Warrants Classified as Liabilities using Black-Scholes Model with Key Assumptions (Details) - Level 3	Dec. 31, 2023 $ / shares yr	Nov. 23, 2020 yr $ / shares
Share Price
Derivative [Line Items]
Warrants measurement input	0.10	0.10
Exercise Price
Derivative [Line Items]
Warrants measurement input	0.17	0.17
Expected Life
Derivative [Line Items]
Warrants measurement input | yr	2.3	2.7
Annualized Volatility
Derivative [Line Items]
Warrants measurement input	0.988	0.845
Risk-Free Annual Interest Rate
Derivative [Line Items]
Warrants measurement input	0.042	0.045

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DERIVATIVE LIABILITY - Summary of Changes in Fair Value of the Derivative Liabilities Measured on a Recurring Basis (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair Value, Liability, Recurring Basis, Unobservable Input Reconciliation, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration]	Change in fair value of derivative liability	Change in fair value of derivative liability
Derivative Financial Instruments, Liabilities
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance, beginning of period	$ 0	$ 3,502
Change in fair value of derivative liability	385	(3,502)
Balance, end of period	4,550	0
Warrant Liabilities
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Issuance	$ 4,165	$ 0

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NOTES PAYABLE AND CONVERTIBLE NOTES - Summary of Notes Payable and Convertible Notes (Details) $ / shares in Units, $ in Thousands				1 Months Ended	12 Months Ended
	Oct. 10, 2023 CAD ($)	Oct. 02, 2023 USD ($)	Aug. 30, 2022 USD ($)	Nov. 30, 2023 USD ($) shares	Dec. 31, 2023 USD ($) $ / shares shares	Dec. 31, 2022 USD ($) shares	Oct. 10, 2023 $ / shares shares	Nov. 25, 2022	Sep. 16, 2022	Jul. 28, 2022	Dec. 31, 2021 shares
Debt Instrument [Line Items]
Long-term debt					$ 84,173,000	$ 84,165,000
Loss on extinguishment of debt					$ (29,000)	$ 0
Share purchase warrants outstanding (in shares) | shares					6,783,400	6,352,278					26,192,237
Secured Promissory Note Dated May 10, 2019
Debt Instrument [Line Items]
Long-term debt					$ 47,491,000	$ 49,807,000
Secured Promissory Note Dated May 10, 2019 | Interest Rate, Period One
Debt Instrument [Line Items]
Debt interest rate					16.50%
Secured Promissory Note Dated May 10, 2019 | Interest Rate, Period Two
Debt Instrument [Line Items]
Debt interest rate					12.00%
Promissory note dated October 13, 2023 under the senior secured credit facility which matured on December 1, 2023 and bears interest at a rate of 15.5% per annum. The Company is currently in negotiations to amend the terms of the agreement.
Debt Instrument [Line Items]
Debt interest rate					15.50%
Long-term debt					$ 3,410,000	0
Convertible promissory note dated October 6, 2021, which matures on October 6, 2024 and bears interest at a rate of 10% per annum
Debt Instrument [Line Items]
Debt interest rate					10.00%
Long-term debt					$ 15,818,000	14,843,000
Unsecured Convertible Promissory Note With Healthy Pharms Inc. | Unsecured Debt
Debt Instrument [Line Items]
Debt interest rate		12.00%			12.00%
Debt instrument, convertible, conversion price (in dollars per share) | $ / shares					$ 0.50
Long-term debt					$ 2,051,000	$ 3,554,000
Debt periodic payment		$ 50,000
Loss on extinguishment of debt					400,000
Conversion of notes to equity (in shares) | shares				10,359,372
Debt settlement amount				$ 1,992,187
Promissory note issued for the acquisition of NECC due January 7, 2023 at 10% per annum
Debt Instrument [Line Items]
Debt interest rate						10.00%				10.00%
Long-term debt					$ 0	$ 519,000
Debt, percentage of principal extended maturity date								25.00%
Promissory note issued for the acquisition of Island due October 25, 2026 at 6% per annum
Debt Instrument [Line Items]
Debt interest rate					6.00%
Long-term debt					$ 11,030,000	10,431,000
Promissory note due February 28, 2023 at 1.5% per month
Debt Instrument [Line Items]
Long-term debt					$ 2,734,000	3,230,000
Debt instrument, face amount			$ 3,000,000
Debt instrument, term			6 months
Debt become secured if not repaid, period			3 months
Promissory note due February 28, 2023 at 1.5% per month | Interest Rate, Period One
Debt Instrument [Line Items]
Debt interest rate			1.50%		1.50%
Debt interest period			3 months
Promissory note due February 28, 2023 at 1.5% per month | Interest Rate, Period Two
Debt Instrument [Line Items]
Debt interest rate			2.00%		2.00%
Debt interest period			3 months
Unsecured Promissory Note Due November 30, 2024
Debt Instrument [Line Items]
Long-term debt					$ 1,630,000	1,730,000
Unsecured Promissory Note Due November 30, 2024 | Interest Rate, Period One
Debt Instrument [Line Items]
Debt interest rate					12.00%				12.00%
Unsecured Promissory Note Due November 30, 2024 | Interest Rate, Period Two
Debt Instrument [Line Items]
Debt interest rate					11.00%				11.00%
Various
Debt Instrument [Line Items]
Long-term debt					$ 9,000	$ 51,000
Promissory Note Purchase Agreement With HI 4Front, LLC And Navy Capital Green Fund, LP
Debt Instrument [Line Items]
Extension fee	$ 65
Promissory Note Purchase Agreement With HI 4Front, LLC And Navy Capital Green Fund, LP | Warrants, For Extension Fee
Debt Instrument [Line Items]
Share purchase warrants outstanding (in shares) | shares							1,283,425
Units issued, price per unit (in dollar per share) | shares							1
Warrants purchase price per share (in dollar per share) | $ / shares							$ 0.20

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NOTES PAYABLE AND CONVERTIBLE NOTES - LI Lending LLC (Details) $ / shares in Units, $ in Thousands		1 Months Ended		6 Months Ended	12 Months Ended
	Apr. 30, 2020 USD ($)	Jul. 31, 2023 USD ($)	Dec. 31, 2020 USD ($)	Dec. 31, 2023 USD ($) draw shares	Dec. 31, 2023 USD ($) draw shares	Dec. 31, 2022 USD ($) shares	Aug. 10, 2023 $ / shares shares	Jan. 01, 2022 USD ($)	Dec. 31, 2021 shares	May 10, 2019 USD ($)
Debt Instrument [Line Items]
Long-term debt				$ 84,173	$ 84,173	$ 84,165
Share purchase warrants outstanding (in shares) | shares				6,783,400	6,783,400	6,352,278			26,192,237
Related Party | Warrants Exercisable Through May 1, 2026
Debt Instrument [Line Items]
Units issued, price per unit (in dollar per share) | shares							1
Warrants purchase price per share (in dollar per share) | $ / shares							$ 0.17
LI Lending, LLC
Debt Instrument [Line Items]
Maximum borrowing capacity under credit facility										$ 50,000
Amount drawn				$ 45,000	$ 45,000
Number of draws made | draw				2	2
Percentage of exit fee of the principal balance					20.00%
Increase in interest rate			2.50%
Accrued interest				$ 7,800	$ 7,800	$ 7,000
Loan payment					6,400	$ 5,500
LI Lending, LLC | LI Lending Facility, Draw One
Debt Instrument [Line Items]
Amount drawn	$ 33,000		$ 33,000	$ 35,000	$ 35,000			$ 33,000
Interest rate				10.25%	10.25%			10.25%
Debt prepayment	$ 2,000
Interest rate on initial loan amount								12.75%
LI Lending, LLC | LI Lending Facility, Draw Two
Debt Instrument [Line Items]
Amount drawn				$ 10,000	$ 10,000			$ 10,000
Interest rate				12.25%	12.25%			12.25%
Interest rate on final loan amount								14.75%
First Amendment To LI Lending LLC Loan Agreement
Debt Instrument [Line Items]
Debt interest rate		12.00%
Extension fee		$ 500
Additional discount related to extension fee and warrant				$ 4,700
First Amendment To LI Lending LLC Loan Agreement | Related Party
Debt Instrument [Line Items]
Line of credit facility, exit fee		9,000
Deferred interest		9,200
Long-term debt		$ 51,700

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NOTES PAYABLE AND CONVERTIBLE NOTES - October 2021 Convertible Note (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Oct. 06, 2023	Oct. 06, 2021
Debt Instrument [Line Items]
Gain on extinguishment of debt	$ 29	$ 0
Accretion of debt discount	2,632
October 2021 Convertible Note | Convertible Note
Debt Instrument [Line Items]
Debt instrument, face amount				$ 15,000
Debt instrument, convertible, conversion price (in dollars per share)			$ 0.23	$ 1.03
Debt interest rate			10.00%	6.00%
Gain on extinguishment of debt	400
Loan payment	1,100	1,100
Debt instrument, unamortized discount	$ 500	$ 400
Debt instrument, convertible, remaining discount amortization period	9 months 18 days	1 year 9 months
Interest expense, debt	$ 1,100	$ 1,100
Accretion of debt discount	$ 300	$ 200

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NOTES PAYABLE AND CONVERTIBLE NOTES - Senior Secured Credit Facility (Details)				12 Months Ended
	Nov. 13, 2023 USD ($) $ / shares shares	Oct. 13, 2023 USD ($)	Jul. 27, 2023 shares	Dec. 31, 2023 $ / shares	Dec. 31, 2022 $ / shares
Debt Instrument [Line Items]
Weighted average price, granted (in dollars per share) | $ / shares				$ 0.20	$ 0.68
Restricted Stock Units (RSUs)
Debt Instrument [Line Items]
Awards issued (in shares) | shares	15,900,000		9,853,830
Weighted average price, granted (in dollars per share) | $ / shares	$ 0.31
Senior Secured Credit Facility | Line of Credit
Debt Instrument [Line Items]
Maximum borrowing capacity under credit facility	$ 10,000,000	$ 10,000,000
Proceeds from Long-Term Lines of Credit		3,400,000
Remaining borrowing capacity		$ 4,000,000
Debt interest rate		15.50%
Origination fee percentage		7.00%
Commitment fee percentage		2.00%
Line of credit facility, exit fee		$ 1,400,000
Liquidity amount		$ 3,000,000
Fixed charge coverage ratio		1.10
Consolidated leverage ratio		3.00
Senior Secured Credit Facility | Line of Credit | Prime Rate
Debt Instrument [Line Items]
Variable rate		7.00%

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NOTES PAYABLE AND CONVERTIBLE NOTES - Summary of Future Minimum Payments of Notes and Convertible Notes (Details) $ in Thousands	Dec. 31, 2023 USD ($)
Debt Disclosure [Abstract]
2024	$ 25,630
2025	0
2026	0
2027	58,543
2028	0
Thereafter	0
Total minimum payments	84,173
Less current portion	(25,630)
Long-term portion	$ 58,543

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NOTES PAYABLE AND CONVERTIBLE NOTES - Construction Finance Liability (Details) $ in Thousands			12 Months Ended
	Nov. 17, 2023 USD ($)	Jan. 28, 2022 USD ($) extensionOption	Dec. 31, 2023 USD ($)
Debt Disclosure [Abstract]
Proceeds from sale of property	$ 950	$ 16,000
Finance liability, term of contract		20 years
Finance liability, number of extension options | extensionOption		2
Finance liability, renewal term		5 years
Finance liability, monthly payment amount		$ 100
Finance liability, payment amount, annual increase percentage		3.00%
Finance liability			$ 16,000
Finance liability, interest expense			$ 0

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SHAREHOLDER'S EQUITY - Summary of Voting Shares Activity (Details) - shares	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance (in shares)	643,416,275	594,181,604
Share capital issuances (in shares)	26,103,074	49,234,671
Ending balance (in shares)	669,519,349	643,416,275
Class A Subordinate Voting Shares
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance (in shares)	642,140,067	592,905,396
Share capital issuances (in shares)	26,103,074	49,234,671
Ending balance (in shares)	668,243,141	642,140,067
Class C Multiple Voting Shares
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance (in shares)	1,276,208	1,276,208
Share capital issuances (in shares)	0	0
Ending balance (in shares)	1,276,208	1,276,208

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SHAREHOLDER'S EQUITY - Additional Information (Details)	12 Months Ended
	Dec. 31, 2023 vote
Class A Subordinate Voting Shares
Class Of Stock [Line Items]
Number of votes each shareholder is entitled to for each share	1
Class C Multiple Voting Shares
Class Of Stock [Line Items]
Number of votes each shareholder is entitled to for each share	800
Common stock, conversion ratio	1
Percentage of shares of one class held as a percentage of shares of another class	50.00%

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SHAREHOLDER'S EQUITY - Summary of Share Capital and Equity (Details) - shares	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Class Of Stock [Line Items]
Number of shares outstanding (in shares)	669,519,349	643,416,275	594,181,604
Class A Shares
Class Of Stock [Line Items]
Number of shares outstanding (in shares)	668,243,141
Class C Shares
Class Of Stock [Line Items]
Number of shares outstanding (in shares)	1,276,208
Class A Subordinate Voting Shares
Class Of Stock [Line Items]
Number of shares outstanding (in shares)	668,243,141	642,140,067	592,905,396
Class C Multiple Voting Shares
Class Of Stock [Line Items]
Number of shares outstanding (in shares)	1,276,208	1,276,208	1,276,208

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WARRANTS - Summary of Warrants Outstanding to Purchase Shares (Details) - $ / shares	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Number of Warrants
Number of warrants, beginning balance (in shares)	6,352,278	26,192,237
Number of warrants, issued (in shares)	2,658,425	2,999,975
Number of warrants, exercised (in shares)		(91,436)
Number of warrants, expired (in shares)	(2,227,303)	(22,748,498)
Number of warrants, ending balance (in shares)	6,783,400	6,352,278
Weight-Average Exercise Price
Weighted average exercise price, beginning balance (in dollars per share)	$ 0.82	$ 0.75
Weighted average exercise price, Issued (in dollars per share)	0.16	1.00
Weighted average exercise price, Exercised (in dollars per share)		0.54
Weighted average exercise price, Expired (in dollars per share)	0.67	0.76
Weighted average exercise price, ending balance (in dollars per share)	$ 0.61	$ 0.82

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WARRANTS - Summary of Warrants Outstanding And Exercisable (Details)	Dec. 31, 2023 $ / shares shares	Dec. 31, 2023 $ / shares shares	Dec. 31, 2022 shares	Dec. 31, 2021 shares
Class Of Warrant Or Right [Line Items]
Warrants outstanding (in shares)	6,783,400	6,783,400	6,352,278	26,192,237
Warrant, Expiring April 13, 2024
Class Of Warrant Or Right [Line Items]
Warrants outstanding (in shares)	2,999,975	2,999,975
Exercise price (in dollar per share) | $ / shares	$ 1.00
Warrant, Expiring October 6, 2024
Class Of Warrant Or Right [Line Items]
Warrants outstanding (in shares)	625,000	625,000
Exercise price (in dollar per share) | $ / shares		$ 0.80
Warrant, Expiring October 6, 2025
Class Of Warrant Or Right [Line Items]
Warrants outstanding (in shares)	500,000	500,000
Exercise price (in dollar per share) | $ / shares		$ 0.80
Warrant, Expiring May 10, 2027
Class Of Warrant Or Right [Line Items]
Warrants outstanding (in shares)	625,000	625,000
Exercise price (in dollar per share) | $ / shares		$ 0.23
Warrant, Expiring September 1, 2027
Class Of Warrant Or Right [Line Items]
Warrants outstanding (in shares)	750,000	750,000
Exercise price (in dollar per share) | $ / shares	$ 0.10
Warrant, Expiring October 17, 2027
Class Of Warrant Or Right [Line Items]
Warrants outstanding (in shares)	1,283,425	1,283,425
Exercise price (in dollar per share) | $ / shares	$ 0.20

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NON-CONTROLLING INTERESTS - Summary of Non-Controlling Interests in Each Affiliate Before Intercompany Elimination (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Noncontrolling Interest [Line Items]
Current assets	$ 33,912	$ 53,267
Current liabilities	104,000	77,450
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward]
Balance, beginning of year	93
Net income attributable to non-controlling interest	15	21
Balance, ending of year	108	93
Related Party | MMA Capital, LLC
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward]
Balance, beginning of year	93	72
Net income attributable to non-controlling interest	15	21
Balance, ending of year	108	93
Related Party | Non-Controlling Interest | MMA Capital, LLC
Noncontrolling Interest [Line Items]
Current assets	0	0
Current liabilities	0	0
Current net assets	0	0
Non-current assets	14,620	14,620
Non-current liabilities	0	0
Non-current net assets	$ 14,620	$ 14,620

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SHARE-BASED COMPENSATION - Additional Information (Details)			12 Months Ended
	Nov. 13, 2023 USD ($) $ / shares shares	Jul. 27, 2023 $ / shares shares	Dec. 31, 2023 USD ($) plan shares	Dec. 31, 2022 USD ($) shares	Dec. 31, 2023 $ / shares shares	Oct. 13, 2023 USD ($)	Dec. 31, 2021 shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of equity incentive plans | plan			2
Exercisable options (in shares)					43,672,411
Options outstanding (in shares)				75,626,960	91,702,766		54,282,752
Shares issued with exercise of stock options, (in shares)			0	133,333
Senior Secured Credit Facility | Line of Credit
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Maximum borrowing capacity under credit facility | $	$ 10,000,000					$ 10,000,000
Class A Shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares issued with exercise of stock options, (in shares)				51,975
Minimum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Strike price (in Canadian dollar per share) | $ / shares					$ 0.10
Maximum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Strike price (in Canadian dollar per share) | $ / shares					$ 1.63
Equity Incentive Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Maximum number of stock options available for grant, percentage of number of outstanding shares			10.00%
Minimum exercise price of stock options issued, percentage of fair market value of shares on grant date			100.00%
Maximum term of stock options granted			10 years
Recognized share-based compensation expense | $			$ 6,000,000	$ 7,200,000
Equity Incentive Plan | Cashless Exercises Option
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of options exercised under the cashless method (in shares)				133,333
Number of options withheld to cover the costs (in shares)				106,666
Aggregate number of shares issued (in shares)				26,667
Restricted Stock Units (RSUs)
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Minimum exercise price of stock options issued, percentage of fair market value of shares on grant date	2.12%
Maximum term of stock options granted		18 months
Recognized share-based compensation expense | $			$ 1,200,000
Awards issued (in shares)	15,900,000	9,853,830
Awards issue price (in CAD per share) | $ / shares	$ 0.20	$ 0.165
Awards exercisable, per share (in shares)	1

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SHARE-BASED COMPENSATION - Summary of Stock Option Activity (Details) - $ / shares	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Number of Options
Number of options, beginning balance (in shares)	75,626,960	54,282,752
Number of options, granted (in shares)	68,294,666	35,161,000
Number of options, exercised (in shares)	0	(133,333)
Number of options, forfeited/ expired (in shares)	(52,218,860)	(13,683,459)
Number of options, ending balance (in shares)	91,702,766	75,626,960	54,282,752
Weighted Average Price (CAD$)
Weighted average price, beginning balance (in dollars per share)	$ 0.86	$ 0.94
Weighted average price, granted (in dollars per share)	0.20	0.68
Weighted average price, exercised (in dollars per share)		0.80
Weighted average price, forfeited/ expired (in dollars per share)	0.84	0.96
Weighted average price, ending balance (in dollars per share)	$ 0.34	$ 0.86	$ 0.94
Weighted Average Years
Weighted average years	3 years 9 months 10 days	3 years 5 months 15 days	2 years 11 months 19 days
Weighted average years, granted	4 years 6 months 7 days	4 years 9 months 18 days

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SHARE-BASED COMPENSATION - Summary of Stock Options Values using Black-Scholes Model with Key Assumptions (Details) - Stock Option	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Risk-Free Interest Rate	4.02%	3.44%
Expected Life (years)	3 years 6 months 3 days	3 years 3 days
Expected Annualized Volatility	86.83%	82.73%
Expected Dividend Yield	0.00%	0.00%

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SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
General and Administrative Expense [Abstract]
Rent and lease related expenses	$ 18,106	$ 13,771
Salaries and benefits	16,906	18,239
Share-based compensation	6,860	7,214
Professional services	4,014	5,353
Bad debt expense	7,767	625
Licenses, fees and taxes	1,634	1,400
Advertising and promotions	1,485	1,614
Security expenses	1,353	1,253
Other general and administrative expenses	5,282	6,803
Selling, general and administrative expenses	$ 63,407	$ 56,272

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INCOME TAXES - Summary of Income Tax Expense (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Net current taxes:
U.S. Federal	$ 2,645	$ 12,031
U.S. State	825	2,518
Deferred Taxes:
U.S. Federal	2,606	(3,521)
U.S. State	1,017	(1,121)
Total (continuing and discontinued)	$ 7,093	$ 9,907

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INCOME TAXES - Summary of Reconciliation of Income Taxes at Statutory Rates (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Income Tax Disclosure [Abstract]
Loss before income taxes (continuing and discontinued operations)	$ (84,539)	$ (36,970)
Statutory tax rate	21.00%	21.00%
Expense based on statutory rates	$ (17,753)	$ (7,764)
Permanent non-deductible items	16,164	14,419
State taxes	(2,444)	280
Change in state rate	79	101
Change in valuation allowance	2,622	4,524
Change in uncertain tax position	8,524	0
Interest and penalties	3,464	2,689
Acquisition related adjustments		(6,142)
Lease deferred tax true-up	(683)	688
Return-to-provision	(2,221)	940
Other adjustments	(659)	172
Income tax expense (continued and discontinued)	$ 7,093	$ 9,907

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INCOME TAXES - Components of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Deferred tax assets
Net operating losses	$ 8,521	$ 5,898
Lease liabilities	10,257	16,595
Goodwill and intangible assets	1,677	1,785
Other	1,917	1,024
Total deferred tax assets	22,372	25,302
Valuation allowance	(8,521)	(5,898)
Total net deferred tax assets	13,851	19,404
Deferred tax liabilities
Property and equipment	(5,699)	(408)
Intangible assets	(8,937)	(9,338)
Right-of-use assets	(11,097)	(17,936)
Total net deferred tax liabilities	(25,733)	(27,682)
Total adjusted deferred tax liabilities (continued and discontinued)	$ (11,882)	$ (8,278)

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INCOME TAXES - Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]
Balance, beginning of year	$ 0	$ 0
Increase related to positions taken in the current year	8,524	0
Balance, end of year	$ 8,524	$ 0

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INCOME TAXES - Additional Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Operating Loss Carryforwards [Line Items]
Deferred tax assets, valuation allowance	$ 8,521	$ 5,898
Unrecognized tax benefits	8,524	0	$ 0
Unrecognized tax benefits, income tax penalties and interest expense	3,500	2,700
Unrecognized tax benefits, income tax penalties and interest expense accrued	8,200	$ 5,000
State and Local Jurisdiction
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards	53,700
Domestic Tax Authority
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards	19,100
Operating loss carryforwards, subject to expiration	$ 900

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DISCONTINUED OPERATIONS - Additional Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Impairment of goodwill and intangibles	$ 0	$ 6,484
Discontinued Operations, Disposed of by Means Other than Sale, Abandonment | California Operations
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Loss on disposal	14,368	381
Impairment of goodwill and intangibles	12,856	$ 6,700
Contract liabilities	$ 2,300

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DISCONTINUED OPERATIONS - Summary of Net Income or Loss from Discontinued Operations (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
OPERATING EXPENSES
Impairment of goodwill and intangibles	$ 0	$ 6,484
Other income (expense)
Net loss from discontinued operations, net of taxes	(46,914)	(25,586)
Discontinued Operations, Disposed of by Means Other than Sale, Abandonment | California Operations
REVENUE
Revenue from sale of goods	9,412	10,495
Real estate income	411	418
Total revenues	9,823	10,913
Cost of goods sold	(22,482)	(21,187)
Gross profit	(12,659)	(10,274)
OPERATING EXPENSES
Selling, general and administrative expenses	4,901	6,527
Depreciation and amortization	212	521
Transaction and restructuring related expenses	860	1,135
Impairment of goodwill and intangibles	12,856	6,700
Total operating expenses	18,829	14,883
Loss from operations	(31,488)	(25,157)
Other income (expense)
Interest expense	(32)	(71)
Loss on disposal	(14,368)	(381)
Other	(1,025)	(147)
Total other income (expense), net	(15,425)	(599)
Net loss from discontinued operations before income taxes	(46,913)	(25,756)
Income tax benefit	(1)	170
Net loss from discontinued operations, net of taxes	$ (46,914)	$ (25,586)

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DISCONTINUED OPERATIONS - Schedule of Carrying Amount of Assets and Liabilities in the Disposal Group (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Current assets:
Total current assets	$ 1,696	$ 9,742
Total non-current assets	0	53,468
Current liabilities:
Total current liabilities	12,037	8,845
Total non-current liabilities	0	20,094
Discontinued Operations, Disposed of by Means Other than Sale, Abandonment | California Operations
Current assets:
Cash	63	919
Accounts receivable, net	(49)	1,943
Other receivables	16	(16)
Inventory	33	6,704
Prepaid expenses and other assets	0	192
Total current assets	63	9,742
Property, plant, and equipment, net	0	22,492
Intangible assets, net	738	1,687
Goodwill	0	12,148
Right-of-use assets	0	16,522
Deposits	14	619
Total non-current assets	752	53,468
TOTAL ASSETS OF THE DISPOSAL GROUP	815	63,210
Current liabilities:
Accounts payable	3,552	1,600
Accrued expenses and other current liabilities	4,752	5,164
Taxes payable	72	0
Current portion of contract liabilities	48	369
Current portion of lease liability	0	1,712
Total current liabilities	8,424	8,845
Long term notes payable	5	0
Long term accounts payable	330	400
Contract liabilities	2,280	2,000
Deferred tax liability	0	2,181
Lease liability	0	15,513
Total non-current liabilities	2,615	20,094
TOTAL LIABILITIES OF THE DISPOSAL GROUP	$ 11,039	$ 28,939

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RELATED PARTIES (Details) - USD ($) $ in Thousands	1 Months Ended
	Jul. 31, 2023	Dec. 31, 2023	Dec. 31, 2022	May 10, 2019
Leadership consulting Agreement In Force And Effect For A Period
Long term debt, gross		$ 84,173
Long-term debt		$ 84,173	$ 84,165
Related Party | LI Lending LLC | Chief Executive Officer
Leadership consulting Agreement In Force And Effect For A Period
Ownership percentage by noncontrolling owner		14.28%
Related Party | LI Lending LLC | Director
Leadership consulting Agreement In Force And Effect For A Period
Ownership percentage by noncontrolling owner		14.28%
Secured Promissory Note Dated May 10, 2019
Leadership consulting Agreement In Force And Effect For A Period
Long-term debt		$ 47,491	$ 49,807
Secured Promissory Note Dated May 10, 2019 | Related Party
Leadership consulting Agreement In Force And Effect For A Period
Maximum borrowing capacity under credit facility				$ 50,000
Long-term line of credit		43,000
Long term debt, gross		52,100
Debt instrument, unamortized discount		4,600
Long-term debt		47,500
Accrued interest		$ 8,500
First Amendment To LI Lending LLC Loan Agreement | Related Party
Leadership consulting Agreement In Force And Effect For A Period
Long-term debt	$ 51,700
Debt, maturity date accelerated period after first unilateral removal	30 days
Line of credit facility, exit fee	$ 9,000
Deferred interest	$ 9,200

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CONTINGENCIES - Additional Information (Details) $ in Thousands				12 Months Ended
	Sep. 29, 2023 USD ($)	Sep. 14, 2023 USD ($)	May 09, 2023 USD ($)	Dec. 31, 2023 USD ($)	Dec. 31, 2021 USD ($)	Dec. 31, 2022 USD ($)	Oct. 13, 2022 USD ($) defendant	Dec. 31, 2020 USD ($)
Loss Contingencies [Line Items]
Prepaid forward purchase agreement, amount							$ 3,800
Planned litigation, number of defendants | defendant							4
Prepaid forward purchase agreement, funder's share multiplier							1.5
Percent of the proceeds of the litigation after deducting multiple return							35.00%
Stated interest rate, if not repaid before October 2024							15.00%
Income from prepaid forward purchase agreement				$ 3,800
Litigation Sued By Florival
Loss Contingencies [Line Items]
Loss contingency damages sought value			$ 850
Acquisition execution period			2 years
Loss contingency accrual				850
Litigation Sued By Teichman September 14, 2023
Loss Contingencies [Line Items]
Loss contingency damages sought value		$ 600
Litigation Sued By Teichman September 29, 2023
Loss Contingencies [Line Items]
Loss contingency damages sought value	$ 15,500
Loss contingency accrual				2,700
Lease commitment period	10 years
Loss contingency rental amount owed	$ 13,400
Loss contingency, license fee	$ 1,000
Om Of Medicine
Loss Contingencies [Line Items]
Contingent consideration liability, determination amount, gross sales threshold					$ 3,400	$ 3,500		$ 3,400
Business combination, contingent consideration, liability				$ 0	2,393	0
Reclassed to accrued expenses and other current liabilities					$ 1,200
Minimum
Loss Contingencies [Line Items]
Contingent consideration evaluation period				2 years
Maximum
Loss Contingencies [Line Items]
Contingent consideration evaluation period				3 years
Maximum | Om Of Medicine
Loss Contingencies [Line Items]
Business combination, contingent consideration, liability						$ 6,900

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CONTINGENCIES - Summary of Fair Value of Contingent Consideration (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Loss Contingency Accrual [Roll Forward]
Changes in fair value	$ 0	$ (2,393)
Om Of Medicine
Loss Contingency Accrual [Roll Forward]
Beginning balance	0	2,393
Changes in fair value	0	(2,393)
Ending balance	$ 0	$ 0

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FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT - Schedule of Fair Value Measurements With in the Fair Value Hierarchy of The Financial Instruments (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Liabilities:
Derivative liability	$ 4,550	$ 0
Total liabilities	4,550	0
Level 1
Liabilities:
Derivative liability	0	0
Total liabilities	0	0
Level 2
Liabilities:
Derivative liability	0	0
Total liabilities	0	0
Level 3
Liabilities:
Derivative liability	4,550	0
Total liabilities	$ 4,550	$ 0

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FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT - Additional information (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Investments, All Other Investments [Abstract]
Cash, uninsured amount	$ 0.3	$ 10.1
Maximum credit exposure	$ 12.4	$ 15.0

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FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT - Schedule of Gross Contractual Obligations (Details) $ in Thousands	Dec. 31, 2023 USD ($)
Financial Instruments [Line Items]
Less than 1 year	$ 46,059
1 to 3 years	64,490
3 to 5 years	11,030
Greater than 5 years	0
Total	121,579
Accounts payable and accrued liabilities
Financial Instruments [Line Items]
Less than 1 year	20,429
1 to 3 years	977
3 to 5 years	0
Greater than 5 years	0
Total	21,406
Convertible notes, notes payable and accrued interest
Financial Instruments [Line Items]
Less than 1 year	25,630
1 to 3 years	47,513
3 to 5 years	11,030
Greater than 5 years	0
Total	84,173
Construction finance liability
Financial Instruments [Line Items]
Less than 1 year	0
1 to 3 years	16,000
3 to 5 years	0
Greater than 5 years	0
Total	$ 16,000

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SEGMENT INFORMATION - Additional Information (Details)	12 Months Ended
	Dec. 31, 2023 Segment
Segment Reporting [Abstract]
Number of reportable segments	2

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SEGMENT INFORMATION - Summary of Revenues By Type (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Segment Reporting Information [Line Items]
Total Net Revenues	$ 97,435	$ 107,664
Total Net Loss from Continuing Operations	44,718	21,291
Total Assets	263,954	344,732
Operating Segments | THC Cannabis
Segment Reporting Information [Line Items]
Total Net Revenues	96,588	106,632
Total Net Loss from Continuing Operations	11,481	6,288
Total Assets	262,423	343,410
Operating Segments | CBD Wellness
Segment Reporting Information [Line Items]
Total Net Revenues	847	1,032
Total Net Loss from Continuing Operations	(55)	(66)
Total Assets	388	625
Corporate
Segment Reporting Information [Line Items]
Total Net Loss from Continuing Operations	33,292	15,069
Total Assets	$ 1,143	$ 697

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GOVERNMENT ASSISTANCE PROGRAM (Details) $ in Millions	12 Months Ended
	Dec. 31, 2022 USD ($)
Government Assistance [Abstract]
Employee Retention Credit income, CARES Act	$ 7.4

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SUBSEQUENT EVENTS (Details) - Subsequent Event - LI Lending, LLC $ / shares in Units, $ in Millions	Jan. 29, 2024 USD ($) shares $ / shares $ / shares
Subsequent Event [Line Items]
Debt amount agreed to convert | $	$ 23.0
Debt Instrument agreed to be converted into equity instruments (in shares) | shares	244,680,852
Debt conversion, stock price trigger (in dollars per share) | $ / shares	$ 0.125
Debt conversion, restoring of voting interest percentage	18.43%
Loan Conversion Warrants
Subsequent Event [Line Items]
Number of shares called by warrant | shares	36,702,127
Warrants purchase price per share (in dollar per share) | $ / shares	$ 0.11