Jushi Holdings Inc. Reports First Quarter 2022 Financial Results
Jushi Holdings Inc. (“Jushi” or the “Company”) (CSE: JUSH) (OTCQX: JUSHF), a vertically integrated, multi-state cannabis operator, is pleased to announce its financial results for the first quarter 2022 (“Q1 2022”) ended March 31, 2022. All financial information is provided in U.S. dollars unless otherwise indicated.
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First Quarter 2022 Highlights
Total revenue of $61.9 million, an increase of 48.5% year-over-year
Adjusted gross profit(1) of $25.5 million, an increase of 33.1% year-over-year
Net loss of $14.3 million
Adjusted EBITDA(1) of $1.1 million, or 1.7% of revenue
Cash and cash equivalents were $76.2 million as of the quarter end
First Quarter 2022 Operational Highlights
Completed the acquisition of The Apothecarium(2) in Las Vegas, Nevada (“Apothecarium Nevada”), an operating adult-use and medical retail dispensary
Debuted a series of cannabis brands and product launches in Massachusetts, beginning with the launch of flower brands The Bank and Sèchè
Closed a non-brokered private placement (the “Offering”), for total proceeds of approximately $13.7 million
Placed on The Globe and Mail’s Third-Annual Women Lead Here benchmark of executive gender diversity
Announced that Jim Cacioppo, Chief Executive Officer, Chairman, and Founder, purchased 66,800 Class B Subordinate Voting Shares of the Company in the open market for an approximate amount of $220,000
Recent Developments
Awarded a provisional medical marijuana dispensary license in Ohio, establishing the Company’s fifth vertically integrated state-level operation
Expanded the Company’s vertically integrated footprint in Nevada with the completion of the NuLeaf, Inc. (“NuLeaf”) acquisition, adding a 27,000 sq. ft. cultivation facility, 13,000 sq. ft. processing facility, and three adult-use and medical retail dispensaries in the state
Launched the Company’s first line of solventless cannabis extracts in the Pennsylvania market under its award-winning The Lab brand, comprised of high-quality live rosin vapes and concentrates
Opened the 32nd retail location nationwide and 3rd BEYOND / HELLO™ dispensary in California
Closed on the purchase of land adjacent to the Company’s Toledo Ohio grow facility which will allow Jushi to significantly expand its cultivation footprint at the Ohio grow facility, subject to regulatory approvals
Management Commentary
“Despite the seasonal weakness in the first quarter and a series of challenges including the loss of store hours due to Omicron, snowstorms, and the Pennsylvania distillate cartridges recall, I am pleased with our first quarter performance and the progress we have made in positioning our business for the long term,” said Jim Cacioppo, Chief Executive Officer, Chairman, and Founder of Jushi. “We remain focused on investing in our businesses, including building out our store base, significantly expanding our cultivation and processing facilities in both Pennsylvania and Virginia, scaling our wholesale channel in Massachusetts, Pennsylvania, and Virginia, and integrating our two recently acquired businesses in Nevada. At the same time, we have taken decisive steps to manage our costs across all operating units and are encouraged by the initial results. I am confident that our investments into the business and the cost savings measures we have recently implemented position us to achieve accelerated growth and profitability through the balance of the year.”
Jim Cacioppo concluded, “I am very encouraged by what we have accomplished to date and remain confident that we are creating one of the most robust and exciting platforms to capitalize on the growth in the U.S. cannabis industry. I am incredibly proud of our people and their contributions and look forward to scaling our operations in 2022 and beyond.”
(1) See “Reconciliation of Non-IFRS Financial Measures” at the end of this press release for more information regarding the Company’s use of non-IFRS financial measures.
(2) The Apothecarium is used under license with an affiliate of TerrAscend Corp.
Financial Results for the First Quarter 2022
The following is a tabular summary and commentary of revenue, gross profit, adjusted gross profit, net income (loss), and net income (loss) per share for the three-month periods ended March 31, 2022, December 31, 2021, and March 31, 2021.
($ in millions, except per share amounts)
Quarter Ended
March 31,
2022
Quarter Ended
December 31,
2021
% Change
Quarter Ended
March 31,
2022
Quarter Ended
March 31,
2021
% Change
Revenue
$
61.9
$
65.9
(6.1
)%
$
61.9
$
41.7
48.5
%
Gross profit
$
27.9
$
20.9
33.8
%
$
27.9
$
20.1
39.1
%
Adjusted gross profit(1)
$
25.5
$
26.4
(3.1
)%
$
25.5
$
19.2
33.1
%
Net income (loss)
$
(14.3
)
$
7.5
$
(14.3
)
$
(26.6
)
Net income (loss) per share – basic
$
(0.08
)
$
0.04
$
(0.08
)
$
(0.18
)
Net loss per share – diluted
$
(0.08
)
$
(0.15
)
$
(0.08
)
$
(0.18
)
Revenue in Q1 2022 increased 48.5% to $61.9 million as compared to $41.7 million in the first quarter of 2021 (“Q1 2021”), driven by the expansion of our retail footprint from 17 to 29 stores, the acquisition of Nature’s Remedy of Massachusetts, and increased wholesale sales at our Pennsylvania and Virginia grower-processor facilities. On a sequential quarterly basis, revenue declined 6.1% from $65.9 million in the fourth quarter of 2021 (“Q4 2021”). The 6.1% sequential decrease in revenue was driven primarily by a seasonal slowdown in activity, industry headwinds, such as continued inflationary pressures on consumer spending, regulatory delays impacting the expansion and sale of product offerings in select states, and temporary store closures related to the pandemic and snowstorms.
Adjusted gross profit(1) in Q1 2022 was $25.5 million, or 41.3% of revenue, compared to $26.4 million, or 40.0% of revenue, in Q4 2021. The increase in gross margin was primarily driven by margin improvement in Pennsylvania, partially offset by an increase in promotional activity at retail in Illinois and Massachusetts and pricing compression in wholesale as the Company continues to build out its brands across state markets.
Q1 2022 net loss was $14.3 million, or $0.08 per basic share and net loss of $0.08 per diluted share, compared to net income of $5.2 million, or $0.04 per basic share and net loss of $0.15 per diluted share, in Q4 2021. The net loss of $0.08 per diluted share in Q1 2022 was primarily due to the infrastructure and headcount investments that were completed in 2021 that are expected to have a transitional impact on our 2022 results.
Adjusted EBITDA(1) in Q1 2022 was $1.1 million, a decrease of $0.4 million as compared to $1.5 million in Q4 2021 and a decrease of $3 million compared to the $4 million in Q1 2021. The decrease in Adjusted EBITDA(1) on a sequential quarterly basis was driven by lower revenues and gross profit.
Balance Sheet and Liquidity
As of March 31, 2022, the Company had $76.2 million of cash and cash equivalents, including proceeds from the Offering closed in Q1 2022. The Company paid approximately $29 million in capital expenditures during Q1 2022, of which $10 million was paid for capital expenditures accrued at year end 2021. The Company expects to incur approximately $40 to $60 million of new cash capital expenditures for the full year 2022, subject to market conditions and regulatory changes. As of March 31, 2022, the Company had approximately $147 million in principal amount of total debt, excluding leases and property, plant, and equipment financing obligations. As of May 25, 2022, the Company’s Acquisition Facility had $60 million of available capacity, including the $25 million accordion feature. As of May 25, 2022, the Company’s issued and outstanding shares were 194,542,278 and its fully diluted shares outstanding were 281,438,589.
Outlook
Mr. Cacioppo commented, “Looking ahead to the remainder of the year, we expect to open an additional four dispensaries and continue to build-out the grow rooms in our Pennsylvania and Virginia grower-processor facilities, which will increase our margins and substantially grow our wholesale sales in 2022 and beyond.” Mr. Cacioppo added, “We are modestly revising our fourth quarter 2022 annualized revenue to be between $340 to $380 million, and our 2022 annualized Adjusted EBITDA to be between $60 to $80 million on an IFRS basis. The slight reduction in revenue and Adjusted EBITDA guidance was driven by (1) weakening in the macro environment; (2) ongoing regulatory delays; and (3) supply chain issues. We want to be conservative in regard to our projected revenue ramp through the remainder of the year. By the end of 2022, we are targeting 50 retail licenses across seven markets, including 36 operating retail locations and approximately 330,000 sq. ft. of cultivation and processing capacity.”
Mr. Cacioppo concluded, “We are putting in significant work, optimizing our resources, and making important investments where needed, to execute on our strategic initiatives and build out our business for long-term, sustained growth for our shareholders.”
The Company’s MD&A and consolidated financial statements for the first quarter ended March 31, 2022, will be filed in May. The Company’s previous public filings may be found on SEDAR at www.SEDAR.com.
Conference Call and Webcast Information
The Company will host a conference call to discuss its financial results for the first quarter 2022 at 9:00 a.m. ET today, Wednesday, May 25, 2022.
Event:
First Quarter 2022 Financial Results Conference Call
Date:
Wednesday, May 25, 2022
Time:
9:00 a.m. Eastern Time
Live Call:
+1-833-646-0490 (U.S. Toll-Free) or +1-918-922-6617 (International)
Conference ID:
6827238
Webcast:
Register
For interested individuals unable to join the conference call, a dial-in replay of the call will be available until June 24, 2022, and can be accessed by dialing +1-855-859-2056 (U.S. Toll-Free) or +1-404-537-3406 (International) and entering replay pin number: 6827238.
Consolidated Financial Statement
The financial information reported in this press release is based on unaudited management prepared financial statements for the three months March 31, 2022. These financial statements have been prepared in accordance with IFRS. This release contains certain preliminary financial results for first quarter 2022, including, but not limited to, Cost of goods sold; Gross profit; Income tax (expense) benefit; Net loss; Inventory, net; Goodwill, net; Deferred taxes, contingent consideration and accrued expenses. The Company expects to file its unaudited consolidated financial statements for the first quarter 2022 ended March 31, 2022, on SEDAR in May. Accordingly, such financial information may be subject to change. All financial information contained in this press release is qualified in its entirety with reference to such financial statements. While the Company does not expect there to be any material changes between the information contained in this press release and the consolidated financial statements it files on SEDAR, to the extent that the financial information contained in this press release is inconsistent with the information contained in the Company’s financial statements, the financial information contained in this press release shall be deemed to be modified or superseded by the Company’s filed financial statements. The making of a modifying or superseding statement shall not be deemed an admission for any purposes that the modified or superseded statement, when made, constituted a misrepresentation for purposes of applicable securities laws. Further, the reader should refer to the additional disclosures in the Company’s unaudited financial statements for the first quarter ended March 31, 2022.
About Jushi Holdings Inc.
We are a vertically integrated cannabis company led by an industry-leading management team. In the United States, Jushi is focused on building a multi-state portfolio of branded cannabis assets through opportunistic acquisitions, distressed workouts, and competitive applications. Jushi strives to maximize shareholder value while delivering high-quality products across all levels of the cannabis ecosystem. For more information, visit jushico.com or our social media channels, Instagram, Facebook, Twitter and LinkedIn.
Forward-Looking Information and Statements
This press release contains certain “forward-looking information” within the meaning of applicable Canadian securities legislation and may also contain statements that may constitute “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Such forward-looking information and forward-looking statements are not representative of historical facts or information or current conditions but instead represent only the Company’s beliefs regarding future events, plans or objectives, many of which, by their nature, involve estimates, projections, plans, goals, forecasts, and assumptions that may prove to be inaccurate. As a result, actual results could differ materially from those expressed by such forward-looking statements and such statements should not be relied upon. Generally, such forward-looking information or forward-looking statements can be identified by the use of forward-looking terminology such as “plans,” “expects” or “does not expect,” “is expected,” “budget,” “scheduled,” “estimates,” “forecasts,” “intends,” “anticipates” or “does not anticipate,” or “believes,” or variations of such words and phrases or may contain statements that certain actions, events or results “may,” “could,” “would,” “might” or “will be taken,” “will continue,” “will occur” or “will be achieved”. The forward-looking information and forward-looking statements contained herein may include but are not limited to, information concerning the expectations regarding Jushi, or the ability of Jushi to successfully achieve business objectives, and expectations for other economic, business, and/or competitive factors.
By identifying such information and statements in this manner, the Company is alerting the reader that such information and statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance, or achievements of the Company to be materially different from those expressed or implied by such information and statements. In addition, in connection with the forward-looking information and forward-looking statements contained in this press release, the Company has certain expectations and has made certain assumptions. Among the key factors that could cause actual results to differ materially from those projected in the forward- looking information and statements are the following: the ability of Jushi to successfully and/or timely achieve business objectives, including with regulatory bodies, employees, suppliers, customers and competitors; changes in general economic, business and political conditions, including changes in the financial markets; changes in applicable laws; and compliance with extensive government regulation, as well as other risks and uncertainties which are more fully described in the Company’s Management, Discussion and Analysis for the three and twelve months ended December 31, 2021, and other filings with securities and regulatory authorities which are available at www.sedar.com. Should one or more of these risks, uncertainties or other factors materialize, or should assumptions underlying the forward- looking information or statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated, or expected.
Although the Company believes that the assumptions and factors used in preparing, and the expectations contained in, the forward-looking information and statements are reasonable, undue reliance should not be placed on such information and statements, and no assurance or guarantee can be given that such forward-looking information and statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information and statements. The forward-looking information and forward-looking statements contained in this press release are made as of the date of this press release, and the Company does not undertake to update any forward-looking information and/or forward-looking statements that are contained or referenced herein, except in accordance with applicable securities laws. All subsequent written and oral forward-looking information and statements attributable to the Company or persons acting on its behalf is expressly qualified in its entirety by this notice.
Not for distribution to United States newswire services or for dissemination in the United States.
For further information, please contact:
Investor Relations Contact:
Michael Perlman
Executive Vice President of Investor Relations
561-281-0247
investors@jushico.com
Media Contact:
Ellen Mellody
570-209-2947
ellen@mattio.com
JUSHI HOLDINGS INC.
CONDENSED UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(in thousands of U.S. dollars, except share and per share amounts)
Three Months Ended
March 31,
2022 (1)
December 31,
2021
March 31,
2021
REVENUE, NET
$
61,888
$
65,892
$
41,675
COST OF GOODS SOLD
(42,014
)
(46,181
)
(22,934
)
GROSS PROFIT BEFORE FAIR VALUE CHANGES
$
19,874
$
19,711
$
18,741
Realized fair value changes included in inventory sold
(148
)
(2,892
)
(4,783
)
Unrealized fair value changes included in biological assets
8,217
4,059
6,135
GROSS PROFIT
$
27,943
$
20,878
$
20,093
OPERATING EXPENSES
$
37,062
$
45,413
$
21,195
LOSS FROM OPERATIONS BEFORE OTHER INCOME (EXPENSE)
$
(9,119
)
$
(24,535
)
$
(1,102
)
OTHER INCOME (EXPENSE):
Interest expense, net
$
(11,245
)
$
(10,369
)
$
(6,556
)
Fair value changes in derivatives
14,309
38,370
(9,358
)
Other, net
155
11,355
(3,352
)
Total other income (expense), net
$
3,219
$
39,356
$
(19,266
)
(LOSS) INCOME AND COMPREHENSIVE (LOSS) INCOME BEFORE INCOME TAXES
$
(5,900
)
$
14,821
$
(20,368
)
Current income tax expense
(6,346
)
(14,482
)
(6,473
)
Deferred income tax (expense) benefit
(2,063
)
4,831
40
NET (LOSS) INCOME AND COMPREHENSIVE (LOSS) INCOME
$
(14,309
)
$
5,170
$
(26,801
)
Net loss attributable to non-controlling interests
—
(2,345
)
(175
)
NET (LOSS) INCOME AND COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO JUSHI SHAREHOLDERS
$
(14,309
)
$
7,515
$
(26,626
)
NET (LOSS) INCOME AND COMPREHENSIVE (LOSS) INCOME PER SHARE ATTRIBUTABLE TO JUSHI SHAREHOLDERS – BASIC
$
(0.08
)
$
0.04
$
(0.18
)
Weighted average shares outstanding – basic
188,446,340
183,596,959
149,933,639
NET LOSS AND COMPREHENSIVE LOSS PER SHARE ATTRIBUTABLE TO JUSHI SHAREHOLDERS – DILUTED
$
(0.08
)
$
(0.15
)
$
(0.18
)
Weighted average shares outstanding – diluted
188,446,340
211,080,169
149,933,639
(1) Note that the financial statement review process for the three months ended March 31, 2022 has not been finalized, and accordingly final results could change.
JUSHI HOLDINGS INC.
CONDENSED UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(in thousands of U.S. dollars)
(unaudited)
*
March 31,
2022 (1)
December 31,
2021
ASSETS
Current assets
$
140,425
$
163,316
Non-current assets
547,952
514,599
Total assets
$
688,377
$
677,915
LIABILITIES AND EQUITY
Current liabilities
$
179,714
$
121,847
Non-current liabilities
308,144
372,973
Total liabilities
$
487,858
$
494,820
Total equity
200,519
183,095
Total liabilities and equity
$
688,377
$
677,915
*Derived from audited consolidated financial statements
(1) Note that the financial statement review process for the three months ended March 31, 2022 has not been finalized, and accordingly final results could change.
JUSHI HOLDINGS INC.
CONDENSED UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of U.S. dollars)
Three Months Ended
March 31,
2022 (1)
2021
Net cash flows provided by operating activities
$
5,681
$
461
Net cash flows used in investing activities
(35,698
)
(9,039
)
Net cash flows provided by financing activities
10,781
84,846
Effect of currency translation on cash
(9
)
(40
)
Net change in cash and cash equivalents and restricted cash
$
(19,245
)
$
76,228
Cash and cash equivalents and restricted cash, beginning of period
95,487
85,857
Cash and cash equivalents and restricted cash, end of period
$
76,242
$
162,085
(1) Note that the financial statement review process for the three months ended March 31, 2022 has not been finalized, and accordingly final results could change.
JUSHI HOLDINGS INC.
Reconciliation of Non-IFRS Financial Measures
EBITDA, Adjusted EBITDA and Adjusted Gross Profit
In addition to providing financial measurements based on IFRS, the Company provides additional financial metrics that are not prepared in accordance with IFRS. Management uses non-IFRS financial measures, in addition to IFRS financial measures, to understand and compare operating results across accounting periods, for financial and operational decision making, for planning and forecasting purposes and to evaluate the Corporation’s financial performance. These non-IFRS financial measures are EBITDA, Adjusted EBITDA and Adjusted Gross Profit (defined below). Management believes that these non-IFRS financial measures reflect the Company’s ongoing business in a manner that allows for meaningful comparisons and analysis of trends in the business, as they facilitate comparing financial results across accounting periods and to those of peer companies. As there are no standardized methods of calculating these non-IFRS measures, the Company’s methods may differ from those used by others, and accordingly, the use of these measures may not be directly comparable to similar measures used by others, thus limiting their usefulness. Accordingly, these non-IFRS measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.
EBITDA and Adjusted EBITDA are financial measures that are not defined under IFRS. Management defines EBITDA as net income (loss), or “earnings”, before interest, income taxes, depreciation and amortization. Management defines Adjusted EBITDA as EBITDA before: (i) non-cash share-based compensation expense and other one-time charges; (ii) inventory-related adjustments; (iii) fair value changes in derivatives; (iv) other income/expense items (xiii) transaction costs; and (v) start-up costs. The financial measures noted above are metrics that have been adjusted from the IFRS net income (loss) measure in an effort to provide readers with a normalized metric in making comparisons more meaningful across the cannabis industry, as well as to remove non-recurring, irregular and one-time items that may otherwise distort the IFRS net income measure. Other companies in the Corporation’s industry may calculate this measure differently, limiting their usefulness as comparative measures. “Adjusted Gross Profit” represents gross profit, as reported, adjusted to exclude certain inventory-related adjustments and start-up costs (within COGS).
JUSHI HOLDINGS INC.
UNAUDITED RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA
(in thousands of U.S. dollars)
Three Months Ended
March 31,
2022 (1)
December 31,
2021
March 31,
2021
NET INCOME (LOSS) (2)
$
(14,309
)
$
5,170
$
(26,801
)
Income tax expense
8,409
9,651
6,433
Interest expense, net
11,245
10,369
6,556
Depreciation and amortization (3)
3,675
3,278
1,769
EBITDA (Non-IFRS)
$
9,020
$
28,468
$
(12,043
)
Non-cash share-based compensation and other one-time charges (4) (10)
6,958
8,224
3,563
Inventory-related adjustments (5)
(4,328
)
1,399
(1,352
)
Fair value changes in derivatives
(14,309
)
(38,370
)
9,358
Other (income) expense items (6)
381
(11,235
)
3,449
Start-up costs (7) (10)
2,563
5,015
1,266
Transaction costs (8) (10)
780
1,038
238
Impairment charges (9)
—
$
6,945
—
Adjusted EBITDA (Non-IFRS)
$
1,065
$
1,484
$
4,479
(1) Note that the financial statement review process for the three months ended March 31, 2022 has not been finalized, and accordingly final results could change for the three months ended March 31, 2022.
(2) Net income (loss) includes amounts attributable to non-controlling interests.
(3) Includes amounts that are included in cost of goods sold and in operating expenses.
(4) Includes: (i) non-cash share-based compensation expense for the period; (ii) severance costs; and (iii) loan forgiveness. Severance costs for the year ended December 31, 2021 primarily relate to separation costs for executives. In addition, loans to certain executives were forgiven in preparation for the Company’s registration with the SEC in 2022 and treated as incremental incentive compensation.
(5) Includes: (i) fair value changes included in inventory sold and biological assets; (ii) inventory step-up on business combinations; (iii) inventory recall reserves; and (iv) reserves for discontinued products. The inventory step-up on business combination relates to the fair value write-up on inventory acquired in the Nature’s Remedy and Apothecarium acquisitions and sold subsequent to the respective acquisition dates. The inventory recall reserves relate to the potential impact of the Pennsylvania Department of Health recall and ban of vape products containing certain cannabis concentrates.
(6) Includes: (i) net (gains) reductions on business combinations; (ii) losses (gains) on legal settlements; (ii) losses (gains) on investments and financial assets; (iv) losses on debt modifications; and (v) fair value adjustments to contingent consideration for acquisitions.
(7) Expansion and start-up costs incurred in order to prepare a location for its intended use. Start-up costs are expensed as incurred and are not indicative of ongoing operations of each new location.
(8) Transaction costs include: (i) registration statement costs such as professional fees and other costs relating to our SEC registration; and (ii) acquisition and deal costs.
(9) Relates to impairments of FBS Nevada goodwill and Jushi Europe fixed assets.
(10) During the second quarter of 2021, we revised our methodology for calculating Adjusted EBITDA to also adjust for the effects of acquisition and deal costs, severance costs and start-up costs. We revised our methodology for calculating Adjusted EBITDA because we believe that the fluctuations caused in our operating results from these items are not reflective of our core performance, and that the revised methodology provides management and investors more useful information to evaluate the operations of our business. The prior period data for these items has been added to conform to current period presentation.
JUSHI HOLDINGS INC.
UNAUDITED RECONCILIATION OF GROSS PROFIT TO ADJUSTED GROSS PROFIT
(in thousands of U.S. dollars)
Three Months Ended
March 31,
2022 (1)
December 31,
2021
March 31,
2021
Gross profit
$
27,943
$
20,878
$
20,093
Inventory-related adjustments (2)
$
(4,328
)
$
1,399
$
(1,352
)
Start-up costs (within COGS) (3)
$
1,929
$
4,080
$
448
Adjusted gross profit
$
25,544
$
26,357
$
19,189
(1) Note that the financial statement review process for the three months ended March 31, 2022 has not been finalized, and accordingly final results could change for the three months ended March 31, 2022.
(2) Includes: (i) fair value changes included in inventory sold and biological assets; (ii) inventory step-up on business combinations; (iii) inventory recall reserves; and (iv) reserves for discontinued products. The inventory step-up on business combination relates to the fair value write-up on inventory acquired in the Nature’s Remedy and Apothecarium acquisitions and sold subsequent to the respective acquisition dates. The inventory recall reserves relate to the potential impact of the Pennsylvania Department of Health recall and ban of vape products containing certain cannabis concentrates.
(3) Expansion and start-up costs incurred in order to prepare a location for its intended use. Start-up costs are expensed as incurred and are not indicative of ongoing operations of each new location.
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