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.