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Acquisitions

12 Months Ended

Dec. 31, 2020

7.	ACQUISITIONS

The Company has determined that the below acquisitions are business combinations under ASC 805,

Business Combinations.

They are accounted for by applying the acquisition method, whereby the assets acquired and the liabilities assumed are recorded at their fair values with any excess of the aggregate consideration over the fair values of the identifiable net assets allocated to goodwill. Operating results have been included in these consolidated financial statements from the date of the acquisition. Any goodwill recognized is attributed based on reporting units.

(a)	2020 Business Acquisitions

(i)

Acquisition of Southern CT Wellness and Healing

On December 18, 2020, the Company acquired 100% of the ownership interests of a Connecticut-based dispensary. The total consideration paid was approximately $14.4 million which included cash of approximately $9.0 million and 230,031 Subordinate Voting Shares valued at approximately $5.4 million based on the fair value of the securities on the date of issuance, which was the closing price of Green Thumb’s Subordinate Voting Shares as traded on the CSE on the date of the transaction.

The assets acquired and liabilities assumed as part of the acquisition were not material. The Company recorded $9,615,751 and $6,326,523 in Goodwill and Intangible assets, respectively as part of the preliminary purchase price allocation. The preliminary valuation was based on Management’s estimates and assumptions which are subject to change within the purchase price allocation period (generally one year from the acquisition date). The primary areas of the purchase price allocation that are not yet finalized relate to the valuation of the tangible and intangible assets acquired and the residual goodwill. Acquisition related costs associated with the transaction were not material.

(b)	2019 Business Acquisitions

During the prior year, the Company closed on a number of business acquisitions. As of December 31, 2019, the Company completed preliminary allocations of the purchase prices of the assets acquired and liabilities assumed with the assistance of an independent valuation firm. During 2020, the purchase price allocations were finalized and adjustments, primarily to Goodwill and Intangible assets, were recorded by the Company. The following table summarizes the final acquisition-date fair value of the consideration transferred for each acquisition:


	Advanced Grow Labs, LLC		Integral Associates, LLC		Other Acquisitions
Cash Paid	$	15,481,967	$	52,807,500	$	44,147,694
Shares of the Company Issued		79,959,170		273,146,014		142,607,973
Deferred Share Issuance		5,380,000		—		11,207,798
Conversion of Previous Notes Receivable		—		—		27,121,559
Acquisition Liability		—		791,068		—
Contingent Consideration		7,831,000		39,985,000		8,926,000

Total Consideration	$	108,652,137	$	366,729,582	$	234,011,024

The Following table summarizes the final accounting estimates for each acquisition:


	Advanced Grow Labs, LLC			Integral Associates, LLC			Other Acquisitions
Cash	$	1,406,377		$	744,825		$	777,371
Inventory		1,906,828			10,107,303			1,732,525
Accounts Receivable		420,649			1,477,535			265,956
Prepaid Expenses		—			492,571			38,705
Property and Equipment		5,934,295			8,107,836			2,667,436
Right-of-Use Asset		565,336			4,840,609			2,056,008
Investment in CAL Funding		9,900,000			—			—
Deposits and Other Assets		246,843			122,826			1,405,986
Intangible Assets:
Licenses and Permits		28,920,000			175,845,000			48,155,000
Tradename		930,000			57,425,000			38,740,592
Customer Relationships		12,462,000			2,678,000			9,298,000
Non-competition Agreements		100,000			—			2,465,000
Liabilities Assumed		(1,230,441	)		(11,091,246	)		(6,172,243	)
Deferred Tax Liabilities		(12,731,349	)		—			(20,823,225	)

Total Identifiable Net Assets		48,830,538			250,750,259			80,607,111
Goodwill		59,821,599			115,979,323			153,403,913

Net Assets	$	108,652,137		$	366,729,582		$	234,011,024

Other Acquisitions consists of For Success Holding Company, Fiorello Pharmaceuticals, Inc., MC Brands, LLC as well as two dispensaries. The details of the transactions are discussed below. The Company also incurred approximately $812,000 of acquisition related costs which were expensed during the year ended December 31, 2019.

(i)

Acquisition of Advanced Grow Labs, LLC

On February 12, 2019, the Company acquired 100% of the ownership interests of Connecticut-based Advanced Grow Labs, LLC (“AGL”). AGL is licensed in Connecticut to grow and process cannabis. The acquisition included a manufacturing license and an ownership stake in a Connecticut-based dispensary. The transaction consideration included $15.5 million of cash and approximately 7.3 million Subordinate Voting Shares of Green Thumb which were valued at approximately $85.1 million, based on the fair value of the securities on their date of issuance, which was the closing price of Green Thumb’s Subordinate Voting Shares as traded on the CSE on the date of the transaction. The purchase agreement also included contingent consideration ranging from $0 to $15 million in shares of Green Thumb and was dependent upon the EBITDA results of AGL over the twelve-month period following the close of the transaction.

During the year ended December 31, 2020, the Company issued 1,396,533 Subordinate Voting Shares of Green Thumb representing the full settlement of the contingent consideration. The shares had a fair value of $11,544,855 at the date of issuance. As of December 31, 2020 and 2019, the estimated fair value of the contingent consideration associated with the acquisition of AGL, which was valued using a probability weighting of the potential payouts, was $0 and $8,654,623, respectively on the consolidated balance sheets.

In addition, on August 12, 2020, the Company issued 472,500 deferred shares to the former owners of AGL. The deferred shares had a value of $5,380,000 and were valued as of the date of the initial transaction. As of December 31, 2020 and 2019, the Company had deferred shares associated with the acquisition of AGL of $0 and $5,380,000, respectively, recorded on the consolidated balance sheets.

(ii)

Acquisition of Integral Associates, LLC

On June 5, 2019, the Company acquired 100% of the ownership interests of Integral Associates, LLC (“Integral Associates”). The acquisition included Integral Associate’s retail brand Essence, three retail locations, as well as two cultivation and processing facilities. The transaction consideration included $52.8 million paid in cash and approximately 20.8 million in Subordinate Voting Shares which were valued at $235.4 million, and an additional 3.3 million milestone shares with a fair value of $37.7 million, for a total value of

273.1 million in share issuances. The fair value of the securities was based upon the closing price of Green Thumb’s Subordinate Voting Shares as traded on the CSE on the date of the transaction. The purchase agreement included additional consideration of up to $57 million in shares of Green Thumb depending upon the EBITDA results of Integral Associates over the twelve-month period following the close of the transaction along with

awarding of

conditional and/or final dispensary operating licenses.

During the year ended December 31, 2020, the Company issued 537,240 Subordinate Voting Shares to the former owners of Integral Associates in connection with the awarding of final operating licenses for two Nevada dispensaries. The shares had a fair value of $4,654,526 at the date of issuance. Additionally, the Company wrote off a portion of the contingent consideration in the amount of $7,582,001 associated with Integral Associates unsuccessful attainment of the EBTIDA targets over the first twelve months of operations, which was recorded through other income and expense on the consolidated statement of operations. As of December 31, 2020 and 2019, the estimated fair value of the contingent consideration associated with the acquisition of Integral Associates, which was valued using a probability weighting of the potential payouts, was $27,100,000 and $39,554,185, respectively of which $4,950,000 and $0, respectively, was recorded as a non-current liability.

(iii)

Acquisition of For Success Holding Company

On February 21, 2019, the Company acquired 100% of the ownership interests of For Success Holding Company, the Los Angeles-based creator of the lifestyle suite of Beboe branded products. Beboe is currently available in certain retail locations in California, Colorado and Illinois and via home delivery across California. The acquisition was an all stock transaction whereby consideration was satisfied through the issuance 6,463,553 of Green Thumb’s Subordinate Voting Shares (including 793,448 deferred shares) which were valued at $94.5 million, based on the fair value of the securities on their date of issuance, which was the closing price of Green Thumb’s Subordinate Voting Shares as traded on the CSE on the date of the transaction. The purchase agreement also included additional consideration ranging from $0 to $15 million in cash or shares of Green Thumb subject to Beboe achieving the placement of its products in specified retailers during the twelve months post acquisition of which $6.9 million was earned and paid during 2019 in the form of 808,614 Subordinated Voting Shares.

During the year ended December 31, 2020, the Company issued 779,690 Subordinate Voting Shares of Green Thumb representing the full settlement of the remaining contingent consideration. The shares had a fair value of $6,686,432 at the date of issuance.

As of December 31, 2020 and 2019, the estimated fair value of the contingent consideration associated with the acquisition of For Success Holding Company, which was valued using a probability weighting of the potential payouts, was $0 and $2,432,373, respectively, on the consolidated balance sheets.

In addition, on August 26, 2020, the Company issued 646,353 deferred shares to the former owners of For Success Holding Company. The deferred shares associated with the acquisition of For Success Holding Company had a value of $8,064,668 and were valued as of the date of the initial transaction. As of December 31, 2020 and 2019, the Company had deferred shares of $1,835,332 and $9,900,000, respectively, recorded on the consolidated balance sheets.

(iv)

Acquisition of Fiorello Pharmaceuticals, Inc

On August 23, 2019, the Company acquired 100% of the ownership interests of New York-based Fiorello Pharmaceuticals, Inc. The acquisition consideration paid included $42.6 million of cash and 1.7 million of the Company’s Subordinate Voting Shares which were valued at $14.1 million, based on the fair value of the securities on the date of issuance, which was the closing price of Green Thumb’s Subordinate Voting Shares as traded on the CSE on the date of the transaction. The acquisition included the license and assets for one cultivation, one processing, and four retail facilities in New York.

(v)

MC Brands, LLC

On June 12, 2019, the Company acquired the remaining 75% interest in MC Brands, LLC which is based in Colorado through the issuance of 1.7 million Subordinate Voting Shares valued at $19.4 million. The transaction was accounted for as an asset acquisition.

(c)	Pro Forma Financial Information—Significant 2019 Acquisitions

The following unaudited financial information reflects the results of operations of AGL and Integral Associates from the transaction date (the date of acquisition for AGL of February 12, 2019 and for Integral Associates of June 5, 2019) through the year ended December 31, 2019 and the results of operations for AGL and Integral Associates for the year ended December 31, 2018:


	Transaction Date through December 31, 2019					For the Year Ended December 31, 2018
	Advanced Grow Labs, LLC		Integral Associates, LLC			Advanced Grow Labs, LLC		Integral Associates, LLC
Revenues, net of discounts	$	16,377,199	$	39,246,745		$	17,016,743	$	60,261,432
Net income (loss)		3,612,455		(6,375,800	)		7,497,696		13,218,159

The following unaudited pro forma financial information reflects the combined results of operations of Green Thumb, AGL and Integral Associates for the period from January 1, 2019 through December 31, 2019 (presented as if the acquisitions had occurred at January 1, 2019):


	For the Year Ended December 31, 2019
	Green Thumb Industries Inc.			Advanced Grow Labs, LLC		Integral Associates, LLC			Pro Forma Adjustments			Notes		Pro Forma Combined
				Unaudited		Unaudited
Revenues, net of discounts	$	160,808,662		$	18,516,074	$	79,146,937		$	—				$	258,471,673
Net income (loss) attributable to Green Thumb Industries Inc.		(56,353,062	)		4,586,122		(1,110,610	)		(8,394,854	)		(a), (b)		(61,272,404	)

(a)	Includes estimated amortization expense on intangible assets acquired as part of the acquisition of AGL and Integral Associates of $327,302 representing one month of amortization expense and $6,639,127 representing five months of amortization expense, respectively.

(b)	Includes estimated income tax expense of AGL of $164,780 and Integral Associates of $1,263,645 based on a 24% effective tax rate.

The following unaudited pro forma financial information reflects the combined results of operations of Green Thumb, AGL and Integral Associates for the period from January 1, 2018 through December 31, 2018 (presented as if the acquisitions had occurred at January 1, 2018):


	For the Year Ended December 31, 2018
	Green Thumb Industries Inc.			Advanced Grow Labs, LLC		Integral Associates, LLC		Pro Forma Adjustments			Notes		Pro Forma Combined
				Unaudited		Unaudited
Revenues, net of discounts	$	62,493,680		$	17,016,743	$	60,261,432	$	—				$	139,771,855
Net income (loss) attributable to Green Thumb Industries Inc.		(5,243,917	)		7,497,696		13,218,159		(24,006,529	)		(a), (b)		(8,534,591	)

(a)	Includes estimated amortization expense on intangible assets acquired as part of the acquisition of AGL and Integral Associates of $3,927,619 and $15,933,905 each representing twelve months of amortization expense, respectively.

(b)	Includes estimated income tax expense of AGL of $972,647 and Integral Associates of $3,172,358 based on a 24% effective tax rate.