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Intangible Assets And Goodwill
 12 Months Ended
Dec. 31, 2020
Goodwill and Intangible Assets Disclosure [Abstract]  
Intangible Assets and Goodwill
8.
INTANGIBLE ASSETS AND GOODWILL
 
Intangible Assets
Intangible assets are recorded at cost less accumulated amortization and impairment losses, if any. Intangible assets acquired in a business combination are measured at fair value at the acquisition date. Amortization of definite life intangibles is provided on a straight-line basis over their estimated useful lives. The estimated useful lives, residual values, and amortization methods are reviewed at each year end, and any changes in estimates are accounted for prospectively.
At December 31, 2020, intangible assets consisted of the following:
 
 
  
Licenses and
Permits
 
 
Tradenames
 
  
Customer
Relationships
 
  
Non-Competition

Agreements
 
  
Total
 
Cost
  
   
 
   
  
   
  
   
  
   
As at January 1, 2020
  
$
336,954,213
 
 
$
97,455,590
 
  
$
25,258,000
 
  
$
2,585,480
 
  
$
462,253,283
 
Adjustments to Purchase Price Allocation
  
 
(145,000
) 
 
 
1,840,009
 
  
 
—  
 
  
 
—  
 
  
 
1,695,009
 
Additions from acquisitions
  
 
6,326,523
 
 
 
—  
 
  
 
—  
 
  
 
—  
 
  
 
6,326,523
 
 
  
 
 
 
 
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
As at December 31, 2020
  
$
343,135,736
 
 
$
99,295,599
 
  
$
25,258,000
 
  
$
2,585,480
 
  
$
470,274,815
 
 
  
 
 
 
 
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
      
Accumulated Amortization
  
   
 
   
  
   
  
   
  
   
As at January 1, 2020
  
$
18,477,500
 
 
$
4,121,800
 
  
$
3,932,416
 
  
$
474,669
 
  
$
27,006,385
 
Amortization
  
 
23,516,095
 
 
 
9,333,378
 
  
 
3,650,589
 
  
 
526,334
 
  
 
37,026,396
 
 
  
 
 
 
 
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
As at December 31, 2020
  
$
41,993,595
 
 
$
13,455,178
 
  
$
7,583,005
 
  
$
1,001,003
 
  
$
64,032,781
 
 
  
 
 
 
 
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
      
Net book value
  
   
 
   
  
   
  
   
  
   
As at January 1, 2020
  
$
318,476,713
 
 
$
93,333,790
 
  
$
21,325,584
 
  
$
2,110,811
 
  
$
435,246,898
 
As at December 31, 2020
  
$
301,142,141
 
 
$
85,840,421
 
  
$
17,674,995
 
  
$
1,584,477
 
  
$
406,242,034
 
At December 31, 2019, intangible assets consisted of the following:
 
 
  
Licenses and
Permits
 
  
Tradenames
 
  
Customer
Relationships
 
  
Non-Competition

Agreements
 
  
Total
 
Cost
  
   
  
   
  
   
  
   
  
   
As at January 1, 2019
  
$
89,705,213
 
  
$
360,000
 
  
$
820,000
 
  
$
20,480
 
  
$
90,905,693
 
Additions from acquisitions
  
 
247,249,000
 
  
 
97,095,590
 
  
 
24,438,000
 
  
 
2,565,000
 
  
 
371,347,590
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
As at December 31, 2019
  
$
336,954,213
 
  
$
97,455,590
 
  
$
25,258,000
 
  
$
2,585,480
 
  
$
462,253,283
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
      
Accumulated Amortization
  
   
  
   
  
   
  
   
  
   
As at January 1, 2019
  
$
2,322,715
 
  
$
—  
 
  
$
204,500
 
  
$
12,800
 
  
$
2,540,015
 
Amortization
  
 
16,154,785
 
  
 
4,121,800
 
  
 
3,727,916
 
  
 
461,869
 
  
 
24,466,370
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
As at December 31, 2019
  
$
18,477,500
 
  
$
4,121,800
 
  
$
3,932,416
 
  
$
474,669
 
  
$
27,006,385
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
      
Net book value
  
   
  
   
  
   
  
   
  
   
As at January 1, 2019
  
$
87,382,498
 
  
$
360,000
 
  
$
615,500
 
  
$
7,680
 
  
$
88,365,678
 
As at December 31, 2019
  
$
318,476,713
 
  
$
93,333,790
 
  
$
21,325,584
 
  
$
2,110,811
 
  
$
435,246,898
 
 
The Company recorded amortization expense for the years ended December 31, 2020, 2019 and 2018 of $37,026,396, $24,466,370 and $2,496,955, respectively.
 
During 2020, the Company recorded a measurement period adjustment in connection with its June 27, 2019 acquisition of MC Brands, LLC of $1,840,009 which increased intangible assets and share capital. The remainder of the adjustments to purchase price allocations were not significant and related to the finalization of several 2019 acquisitions. The Company also recorded an increase of $6,326,523 from the acquisition of a Connecticut-based dispensary during 2020 (see Note 7—Acquisitions for additional details).
In addition, the Company reviewed the estimated useful lives of its intangible assets as part of the Company’s plans to rebrand one of its retail stores. Based on that review, the Company determined that certain intangible assets associated with the Company’s retail tradenames have a useful life shorter than initially estimated.
Beginning July 1, 2020, the Company adjusted the useful life of its retail tradename associated with the acquisition of Essence from 15 years to 7 years. The change in useful life was made as a prospective adjustment and resulted in an increase in amortization expense of $5,161,946 annually for years 2021 through 2025, and a net reduction in amortization expense of $25,809,730 thereafter.
The following table outlines the estimated annual amortization expense related to intangible assets as of December 31, 2020 and illustrates the effect of the change in useful life of the Essence tradename discussed above:
 
Year Ending December 31,
  
Estimated

Amortization

(Prior to Change in
Useful Life)
   
Increase (Decrease)
from Change in

Useful Life
   
Estimated
Amortization

(After Change in
Useful Life)
 
2021
  $34,032,387   $5,161,946   $39,194,333 
2022
   33,601,647    5,161,946    38,763,593 
2023
   33,518,831    5,161,946    38,680,777 
2024
   32,937,498    5,161,946    38,099,444 
2025
   32,839,831    5,161,946    38,001,777 
Thereafter
   239,311,840    (25,809,730)    213,502,110 
   
 
 
   
 
 
   
 
 
 
   
$
406,242,034
 
  
$
—  
 
  
$
406,242,034
 
   
 
 
   
 
 
   
 
 
 
Goodwill
At December 31, 2020, Goodwill consisted of the following:
 
   
Retail
   
Consumer
Packaged Goods
   
Total
 
As at January 1, 2020
  $119,873,759   $255,211,232   $375,084,991 
Acquisitions
   9,615,751    —      9,615,751 
Adjustments to Purchase Price Allocations
   1,191,425    (3,194,700)    (2,003,275) 
   
 
 
   
 
 
   
 
 
 
As at December 31, 2020
  
$
130,680,935
 
  
$
252,016,532
 
  
$
382,697,467
 
   
 
 
   
 
 
   
 
 
 

 
At December 31, 2019, Goodwill consisted of the following:
 
   
Retail
   
Consumer
Packaged Goods
   
Total
 
As at January 1, 2019
  $15,286,360   $23,918,000   $39,204,360 
Acquisition of Advanced Grow Labs, LLC
   16,756,250    44,572,349    61,328,599 
Acquisition of Integral Associates, LLC
   46,655,753    69,323,570    115,979,323 
Other Acquisitions
   32,936,590    120,963,598    153,900,188 
Adjustments to Purchase Price Allocations
   8,238,806    (3,566,285)    4,672,521 
   
 
 
   
 
 
   
 
 
 
As at December 31, 2019
  
$
119,873,759
 
  
$
255,211,232
 
  
$
375,084,991
 
   
 
 
   
 
 
   
 
 
 
For the year ended December 31, 2020, the Company recorded measurement period adjustments resulting in a net decrease in goodwill of $2,003,275 associated with various acquisitions. In regard to the Consumer Packaged Goods segment, the Company recorded measurement period adjustments associated with its acquisition of For Success Holding Company and Advanced Grow Labs, LLC of $1,687,700 and $1,507,000, respectively, which represented a reduction in the value of goodwill and deferred tax liabilities. 
Regarding the Retail segment, the Company recorded an increase of $9,615,751 from the acquisition of a Connecticut-based dispensary during 2020. The Company also recorded measurement period adjustments associated with its 2019 acquisition of Fiorello Pharmaceuticals, Inc. of $1,000,000 which represented an increase in the value of goodwill and corresponding adjustment to current liabilities. The remainder of the adjustments to the Retail segment represent the finalization of purchase price allocations related to other 2019 acquisitions.