05/16/2024 | Press release | Distributed by Public on 05/16/2024 04:04
INDEX TO UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
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Unaudited Condensed Interim Consolidated Financial Statements:
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ConsolidatedBalance Sheets as of March 31, 2024 and December 31, 2023
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Consolidated Statements of Operations for the three months ended March 31, 2024 and March 31, 2023
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Consolidated Statements of ComprehensiveLoss for the three months ended March 31, 2024 and March 31, 2023
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Consolidated Statements of Changes in Shareholders' Equity for the three months ended March 31, 2024 and March 31, 2023
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Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and March 31, 2023
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Notes to the Unaudited Condensed Interim Consolidated Financial Statements:
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Note 1. Nature of Operations | |
Note 2. Summary of Significant Accounting Policies | |
Note 3. Inventory | |
Note 4. Property and Equipment | |
Note 5. Intangible Assets and Goodwill | |
Note 6. Share Capital | |
Note 7. Share-Based Compensation | |
Note 8. Loss Per Share | |
Note 9. Long-term Notes and Loans Payable, Net | |
Note 10. Revenues and Loyalty Programs | |
Note 11. Related Party Transactions | |
Note 12. Commitments and Contingencies | |
Note 13. Financial Instruments and Financial Risk Management | |
Note 14. Variable Interest Entities | |
Note 15. Segment Information | |
Note 16. Interest Expense, Net | |
Note 17. Provision for Income Taxes and Deferred Income Taxes | |
Note 18. Subsequent Events |
Cresco Labs Inc.
Unaudited Condensed Interim Consolidated Balance Sheets
As of March 31, 2024 and December 31, 2023
(In thousands of United States Dollars, except share amounts)
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March 31, | December 31, | |||
2024 | 2023 | |||
ASSETS | ||||
Current assets: | ||||
Cash and cash equivalents | $ | 123,155 | $ | 103,429 |
Restricted cash | 1,746 | 5,091 | ||
Accounts receivable, net | 49,828 | 51,070 | ||
Inventory, net | 98,390 | 107,789 | ||
Loans receivable, short-term | 1,432 | 1,421 | ||
Prepaid expenses | 7,588 | 6,417 | ||
Other current assets | 2,944 | 2,870 | ||
Total current assets | 285,083 | 278,087 | ||
Non-current assets: | ||||
Property and equipment, net | 359,984 | 368,308 | ||
Right-of-use assets | 117,298 | 117,882 | ||
Intangible assets, net | 298,069 | 296,966 | ||
Loans receivable, long-term | 826 | 826 | ||
Investments | 666 | 730 | ||
Goodwill | 279,697 | 279,697 | ||
Deferred tax asset | 10,732 | 11,547 | ||
Other non-current assets | 7,710 | 4,424 | ||
Total non-current assets | 1,074,982 | 1,080,380 | ||
TOTAL ASSETS | $ | 1,360,065 | $ | 1,358,467 |
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||
Current liabilities: | ||||
Accounts payable | $ | 17,403 | $ | 27,587 |
Accrued liabilities | 61,921 | 69,079 | ||
Short-term borrowings | 21,670 | 11,817 | ||
Income taxes payable | 98,060 | 82,343 | ||
Current portion of lease liabilities | 10,100 | 9,416 | ||
Total current liabilities | 209,154 | 200,242 | ||
Non-current liabilities: | ||||
Long-term notes and loans payable, net | 497,999 | 497,713 | ||
Lease liabilities | 163,254 | 163,811 | ||
Deferred tax liability | 40,976 | 40,457 | ||
Deferred consideration, long-term | 6,881 | 6,577 | ||
Other long-term liabilities | 21,829 | 21,600 | ||
Total non-current liabilities | 730,939 | 730,158 | ||
TOTAL LIABILITIES | $ | 940,093 | $ | 930,400 |
COMMITMENTS AND CONTINGENCIES (Note 12)
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SHAREHOLDERS' EQUITY | ||||
Super Voting Shares, no par value; 500,000 shares authorized, issued and outstanding at March 31, 2024 and December 31, 2023
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Subordinate Voting Shares, no par value; Unlimited shares authorized; 324,397,801 and 320,757,119 issued and outstanding at March 31, 2024 and December 31, 2023, respectively
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Proportionate Voting Shares1, no par value;Unlimited shares authorized; 17,780,624 and 18,949,596 issued and outstanding at March 31, 2024 and December 31, 2023, respectively
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Special Subordinate Voting Shares2, no par value; 1,589 shares authorized, issued and outstanding at March 31, 2024 and December 31, 2023
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Share capital | 1,695,565 | 1,689,452 | ||
Additional paid-in-capital | 82,823 | 82,927 | ||
Accumulated other comprehensive loss | (1,464) | (1,151) | ||
Accumulated deficit | (1,273,618) | (1,265,536) | ||
Equity of Cresco Labs Inc. | 503,306 | 505,692 | ||
Non-controlling interests | (83,334) | (77,625) | ||
TOTAL SHAREHOLDERS' EQUITY | 419,972 | 428,067 | ||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 1,360,065 | $ | 1,358,467 |
Cresco Labs Inc.
Unaudited Condensed Interim Consolidated Statements of Operations
For the Three Months Ended March 31, 2024 and 2023
(In thousands of United States Dollars, except share and per share amounts)
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Three Months Ended March 31, | ||||
2024 | 2023 | |||
Revenues, net | $ | 184,295 | $ | 194,202 |
Costs of goods sold | 92,083 | 108,322 | ||
Gross profit | 92,212 | 85,880 | ||
Operating expenses: | ||||
Selling, general and administrative | 63,049 | 82,294 | ||
Total operating expenses | 63,049 | 82,294 | ||
Income from operations | 29,163 | 3,586 | ||
Other income (expense), net: | ||||
Interest expense, net | (14,071) | (15,548) | ||
Other income, net | 856 | 959 | ||
Total other expense, net | (13,215) | (14,589) | ||
Income (loss) before income taxes | 15,948 | (11,003) | ||
Income tax expense | (18,003) | (16,809) | ||
Net loss | $ | (2,055) | $ | (27,812) |
Net income (loss) attributable to non-controlling interests, net of tax | 3,138 | (1,761) | ||
Net loss attributable to Cresco Labs Inc. | $ | (5,193) | $ | (26,051) |
Net loss per share - attributable to Cresco Labs Inc. shareholders: | ||||
Basic and diluted loss per share | $ | (0.02) | $ | (0.09) |
Basic and diluted weighted-average number of shares outstanding | 341,631,554 | 304,708,692 |
Cresco Labs Inc.
Unaudited Condensed Interim Consolidated Statements of Comprehensive Loss
For the Three Months Ended March 31, 2024 and 2023
(In thousands of United States Dollars)
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Three Months Ended March 31, | ||||
2024 | 2023 | |||
Net loss | $ | (2,055) | $ | (27,812) |
Foreign currency translation differences, net of tax | (313) | 7 | ||
Total comprehensive loss for the period | (2,368) | (27,805) | ||
Comprehensive income (loss) attributable to non-controlling interests, net of tax | 3,138 | (1,761) | ||
Total comprehensive loss attributable to Cresco Labs Inc. | $ | (5,506) | $ | (26,044) |
Cresco Labs Inc.
Unaudited Condensed Interim Consolidated Statements of Changes in Shareholders' Equity
For the Three Months Ended March 31, 2024 and 2023
(In thousands of United States Dollars)
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Share capital | Additional paid-in capital | Accumulated other comprehensive loss, net of tax | Accumulated deficit | Non-controlling interests | Total | |||||||
Balance as of January 1, 2024 | $ | 1,689,452 | $ | 82,927 | $ | (1,151) | $ | (1,265,536) | $ | (77,625) | $ | 428,067 |
Exercise of options | 3 | (1) | - | - | - | 2 | ||||||
Share-based compensation | 4,419 | 51 | - | - | - | 4,470 | ||||||
Payable pursuant to tax receivable agreements | 3 | - | - | - | - | 3 | ||||||
Equity issuances | (200) | - | - | - | - | (200) | ||||||
Tax distributions to non-controlling interest holders | - | (154) | - | - | (8,766) | (8,920) | ||||||
Excess cash distributions to non-controlling interest holders | - | - | - | - | (1,082) | (1,082) | ||||||
Cresco LLC shares redeemed | 1,888 | - | - | (2,889) | 1,001 | - | ||||||
Foreign currency translation | - | - | (313) | - | - | (313) | ||||||
Net (loss) income | - | - | - | (5,193) | 3,138 | (2,055) | ||||||
Ending Balance as of March 31, 2024 | $ | 1,695,565 | $ | 82,823 | $ | (1,464) | $ | (1,273,618) | $ | (83,334) | $ | 419,972 |
Balance as of January 1, 2023 | $ | 1,617,093 | $ | 87,537 | $ | (1,393) | $ | (1,076,198) | $ | (39,356) | $ | 587,683 |
Share-based compensation | 4,483 | 3,131 | - | - | - | 7,614 | ||||||
Employee taxes withheld on certain share-based payment arrangements | - | (93) | - | - | - | (93) | ||||||
Equity issued related to settlement of acquisition related contingent consideration | 9,723 | - | - | - | - | 9,723 | ||||||
Tax distributions to non-controlling interest holders | - | 3,017 | - | 787 | (13,371) | (9,567) | ||||||
Excess cash distributions to non-controlling interest holders | - | - | - | - | (180) | (180) | ||||||
Cresco LLC shares redeemed | 3,465 | - | - | (4,089) | 624 | - | ||||||
Foreign currency translation | - | - | 7 | - | - | 7 | ||||||
Net loss | - | - | - | (26,051) | (1,761) | (27,812) | ||||||
Ending Balance as of March 31, 2023 | $ | 1,634,764 | $ | 93,592 | $ | (1,386) | $ | (1,105,551) | $ | (54,044) | $ | 567,375 |
Cresco Labs Inc.
Unaudited Condensed Interim Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 2024 and 2023
(In thousands of United States Dollars)
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Three Months Ended March 31, | ||||
2024 | 2023 | |||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||
Net loss | $ | (2,055) | $ | (27,812) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||
Depreciation and amortization | 15,331 | 12,961 | ||
Amortization of operating lease assets | 1,964 | 1,685 | ||
Bad debt expense (recovery) and provision expensefor expected credit loss
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(263) | 2,945 | ||
Share-based compensation expense | 4,197 | 7,062 | ||
Loss on investments | 63 | 37 | ||
Loss on changes in fair value of deferred consideration | - | 1,204 | ||
Loss on inventory write-offs and provision | 4,900 | 1,460 | ||
Change in deferred taxes | 941 | (987) | ||
Accretion of discount and deferred financing costs on debt arrangements | 1,180 | 1,044 | ||
Foreign currency (gain) loss | (298) | 31 | ||
(Gain) loss on sale of assets | (110) | 66 | ||
Gain on lease termination | - | (1,135) | ||
Loss on other adjustments to net income | 24 | 92 | ||
Changes in operating assets and liabilities: | ||||
Accounts receivable | 1,959 | 3,817 | ||
Inventory | 2,681 | 297 | ||
Prepaid and other assets | (1,285) | 1,687 | ||
Accounts payable and other accrued liabilities | (6,909) | 20,132 | ||
Operating lease liabilities | (1,908) | (6,868) | ||
Income taxes payable | 16,059 | (14,448) | ||
NET CASH PROVIDED BY OPERATING ACTIVITIES | 36,471 | 3,270 | ||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||
Purchases of property and equipment | (3,782) | (20,546) | ||
Purchase of intangibles | (2,770) | (603) | ||
Proceeds from tenant improvement allowances | 478 | 437 | ||
Proceeds from sale and disposals of assets | 397 | 44 | ||
NET CASH USED IN INVESTING ACTIVITIES | (5,677) | (20,668) | ||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||
Proceeds from exercise of stock options | 2 | - | ||
Payment of acquisition-related contingent consideration | - | (277) | ||
Payment for equity transfer | (200) | - | ||
Excess cash distributions to non-controlling interest redeemable unit holders and other members | (1,082) | (180) | ||
Tax distributions to non-controlling interest redeemable unit holders and other members | (8,766) | (12,403) | ||
Principal payment of property, plant, and equipment vendor financing | (218) | - | ||
Principal payments on finance lease obligations | (885) | (775) | ||
NET CASH USED IN FINANCING ACTIVITIES | (11,149) | (13,635) | ||
Effect of exchange rate changes on cash and cash equivalents | (13) | (25) | ||
Net increase (decrease) in cash and cash equivalents | 19,632 | (31,058) | ||
Cash and cash equivalents and restricted cash, beginning of period | 108,520 | 121,510 | ||
Cash and cash equivalents, end of period | 123,155 | 88,799 | ||
Restricted cash, end of period | 1,746 | 1,653 | ||
Restricted cash included in other non-current assets, end of period | 3,251 | - | ||
Cash and cash equivalents and restricted cash, end of period | $ | 128,152 | $ | 90,452 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||
CASH PAID DURING THE PERIOD FOR: | ||||
Income tax, net | $ | 1,003 | $ | 32,242 |
Interest | 3,708 | 3,911 | ||
NON-CASH INVESTING AND FINANCING TRANSACTIONS: | ||||
Non-cash consideration for business combination | $ | - | $ | 9,723 |
Non-controlling interests redeemed for equity | 1,001 | 624 | ||
Increase to net lease liability | - | 394 | ||
Receivable due from seller of previous acquisition | 705 | 705 | ||
Liability incurred to purchase property, equipment and intangibles | 1,104 | 10,069 | ||
Liability of property, plant and equipment purchased through vendor financing | 830 | 1,655 | ||
Unpaid declared distributions to non-controlling interest redeemable unit holders | 10,322 | 9,948 | ||
Receivable related to financing lease transactions | 612 | 612 | ||
Liability incurred in accordance with tax receivable agreement | 14,509 | 1,053 |
Cresco Labs Inc.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the Three Months Ended March 31, 2024 and 2023
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NOTE 1. NATURE OF OPERATIONS
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NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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Cresco Labs Inc.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the Three Months Ended March 31, 2024 and 2023
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Entity | Location | Purpose |
Percentage Held |
Cresco Labs Inc. | British Columbia, Canada | Parent Company | |
Cali-Antifragile Corp. | California | Holding Company | 100% |
River Distributing Co., LLC | California | Holding Company | 100% |
Sonoma's Finest fka FloraCal | California | Cultivation | 100% |
Cub City, LLC | California | Cultivation | 100% |
CRHC Holdings Corp. | Ontario, Canada | Holding Company | 100% |
Cannroy Delaware Inc. | Delaware | Holding Company | 100% |
High Road Holdings LLC | Delaware | Holding Company | 100% |
Laurel Harvest Labs, LLC | Pennsylvania | Cultivation and Dispensary Facility | 100% |
JDRC Mount Joy, LLC | Illinois | Holding Company | 100% |
JDRC Scranton, LLC | Illinois | Holding Company | 100% |
Bluma Wellness Inc. | British Columbia, Canada | Holding Company | 100% |
Cannabis Cures Investments, LLC | Florida | Holding Company | 100% |
3 Boys Farm, LLC | Florida | Cultivation, Production and Dispensary Facility | 100% |
Farm to Fresh Holdings, LLC | Florida | Holding Company | 100% |
Cresco U.S. Corp. | Illinois | Holding Company | 100% |
MedMar Inc. | Illinois | Holding Company | 100% |
MedMar Lakeview, LLC | Illinois | Dispensary | 88% |
MedMar Rockford, LLC | Illinois | Dispensary | 75% |
Gloucester Street Capital, LLC | New York | Holding Company | 100% |
Valley Agriceuticals, LLC | New York | Cultivation, Production and Dispensary Facility | 100% |
Valley Agriceuticals Real Estate | New York | Holding Company | 100% |
JDRC Ellenville, LLC | Illinois | Holding Company | 100% |
CMA Holdings, LLC | Illinois | Holding Company | 100% |
BL Real Estate, LLC | Massachusetts | Holding Company | 100% |
BL Pierce, LLC | Massachusetts | Holding Company | 100% |
BL Uxbridge, LLC | Massachusetts | Holding Company | 100% |
BL Main, LLC | Massachusetts | Holding Company | 100% |
BL Burncoat, LLC | Massachusetts | Holding Company | 100% |
BL Framingham, LLC | Massachusetts | Holding Company | 100% |
BL Worcester, LLC | Massachusetts | Holding Company | 100% |
Cresco Labs Inc.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the Three Months Ended March 31, 2024 and 2023
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Entity | Location | Purpose |
Percentage Held |
Cultivate Licensing LLC | Massachusetts | Holding Company | 100% |
Cultivate Worcester, Inc. | Massachusetts | Dispensary | 100% |
Cultivate Leicester, Inc. | Massachusetts | Cultivation, Production and Dispensary Facility | 100% |
Cultivate Framingham, Inc. | Massachusetts | Dispensary | 100% |
Cultivate Cultivation, LLC | Massachusetts | Cultivation and Production Entity | 100% |
SPS Management, LLC | Delaware | Holding Company | 100% |
GoodNews Holdings, LLC | Illinois | Licensing Company | 100% |
Wonder Holdings, LLC | Illinois | Licensing Company | 100% |
JDRC Seed, LLC | Illinois | Educational Company | 100% |
CP Pennsylvania Holdings, LLC | Illinois | Holding Company | 100% |
Bay, LLC | Pennsylvania | Dispensary | 100% |
Bay Asset Management, LLC | Pennsylvania | Holding Company | 100% |
Ridgeback, LLC | Colorado | Holding Company | 100% |
Encanto Green Cross Dispensary, LLC | Arizona | Holding Company | 100% |
Cresco Labs Texas, LLC | Texas | Holding Company | 100% |
Cresco Labs, LLC | Illinois | Operating Entity | 62% |
Cresco Labs Ohio, LLC | Ohio | Cultivation, Production and Dispensary Facility | 99% |
Cresco Labs Notes Issuer, LLC | Illinois | Holding Company | |
Wellbeings, LLC | Delaware | CBD Wellness Product Development | 100% |
Cresco Labs SLO, LLC | California | Holding Company | 100% |
SLO Cultivation Inc. | California | Holding Company | 80% |
Cresco Labs Joliet, LLC | Illinois | Cultivation and Production Facility | 100% |
Cresco Labs Kankakee, LLC | Illinois | Cultivation and Production Facility | 100% |
Cresco Labs Logan, LLC | Illinois | Cultivation and Production Facility | 100% |
Cresco Labs PA, LLC | Illinois | Holding Company | 100% |
Cresco Yeltrah, LLC | Pennsylvania | Cultivation, Production and Dispensary Facility | 100% |
Strip District Education Center | Pennsylvania | Holding Company | 100% |
AFS Maryland, LLC | Maryland | Holding Company | 100% |
JDC Newark, LLC | Ohio | Holding Company | 100% |
Verdant Creations Newark, LLC | Ohio | Dispensary | 100% |
Strategic Property Concepts, LLC | Ohio | Holding Company | 100% |
JDC Marion, LLC | Ohio | Holding Company | 100% |
Verdant Creations Marion, LLC | Ohio | Dispensary | 100% |
Strategic Property Concepts 4, LLC | Ohio | Holding Company | 100% |
JDC Chillicothe, LLC | Ohio | Holding Company | 100% |
Verdant Creations Chillicothe, LLC | Ohio | Dispensary | 100% |
Strategic Property Concepts 5, LLC | Ohio | Holding Company | 100% |
JDC Columbus, LLC | Ohio | Holding Company | 100% |
Care Med Associates, LLC | Ohio | Dispensary | 100% |
Arizona Facilities Supply, LLC | Arizona | Holding Company | 100% |
Cresco Labs TINAD, LLC | Illinois | Holding Company | 100% |
TINAD, LLC | Illinois | Holding Company | 100% |
PDI Medical III, LLC | Illinois | Dispensary | 100% |
Cresco Labs Phoenix Farms, LLC | Illinois | Holding Company | 100% |
Phoenix Farms Partners, LLC | Illinois | Holding Company | 100% |
Phoenix Farms of Illinois Asset Management, LLC | Illinois | Holding Company | 100% |
Phoenix Farms of Illinois, LLC | Illinois | Dispensary | 100% |
JDC Elmwood, LLC | Illinois | Holding Company | 100% |
FloraMedex, LLC | Illinois | Dispensary | 100% |
Cresco Edibles, LLC | Illinois | Holding Company | 100% |
TSC Cresco, LLC | Illinois | Licensing | 75% |
Cresco HHH, LLC | Massachusetts | Cultivation, Production and Dispensary Facility | 100% |
Cresco Labs Nevada, LLC | Nevada | Holding Company | 100% |
Cresco Labs Michigan Management, LLC | Michigan | Holding Company | 100% |
Cresco Labs Missouri Management, LLC | Missouri | Holding Company | 100% |
Cresco Labs Inc.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the Three Months Ended March 31, 2024 and 2023
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Entity | Location | Purpose |
Percentage Held |
JDRC Acquisitions, LLC | Illinois | Holding Company | 100% |
JDRC 7841 Grand LLC | Illinois | Holding Company | 100% |
JDRC Lincoln, LLC | Illinois | Holding Company | 100% |
JDRC Danville, LLC | Illinois | Holding Company | 100% |
JDRC Kankakee, LLC | Illinois | Holding Company | 100% |
JDRC Brookville, LLC | Illinois | Holding Company | 100% |
Cresco Labs Michigan, LLC (a) | Michigan | Cultivation and Production Facility | 85% |
(a) Legally, Cresco Labs Michigan, LLC is 85% owned by Cresco U.S. Corp.
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NOTE 3. INVENTORY
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($ in thousands) | March 31, 2024 | December 31, 2023 | ||
Raw materials | $ | 13,919 | $ | 12,649 |
Raw materials - non-cannabis | 13,157 | 17,937 | ||
Work-in-process | 40,262 | 51,538 | ||
Finished goods | 29,476 | 24,138 | ||
Finished goods - non-cannabis | 1,576 | 1,527 | ||
Total Inventory | $ | 98,390 | $ | 107,789 |
Cresco Labs Inc.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the Three Months Ended March 31, 2024 and 2023
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NOTE 4. PROPERTY AND EQUIPMENT
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($ in thousands) | March 31, 2024 | December 31, 2023 | ||
Land and Buildings | $ | 203,461 | $ | 207,194 |
Machinery and Equipment | 43,084 | 41,928 | ||
Furniture and Fixtures | 38,787 | 37,912 | ||
Leasehold Improvements | 179,148 | 173,614 | ||
Website, Computer Equipment and Software | 11,054 | 11,124 | ||
Vehicles | 2,776 | 2,892 | ||
Construction In Progress | 13,197 | 14,483 | ||
Total property and equipment, gross | 491,507 | 489,147 | ||
Less: Accumulated depreciation | (131,523) | (120,839) | ||
Property and equipment, net | $ | 359,984 | $ | 368,308 |
($ in thousands) | March 31, 2024 | March 31, 2023 | ||
Depreciation expense included in cost of goods sold and ending inventory | $ | 7,271 | $ | 9,215 |
Depreciation expense included in selling, general and administrative expense | 4,040 | 2,670 | ||
Total depreciation expense | $ | 11,311 | $ | 11,885 |
Cresco Labs Inc.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the Three Months Ended March 31, 2024 and 2023
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NOTE 5. INTANGIBLE ASSETS AND GOODWILL
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March 31, 2024 | ||||||
($ in thousands) | Gross Carrying Amount | Accumulated Amortization | Net | |||
Definite-Lived Intangible Assets | ||||||
Customer Relationships | $ | 30,999 | $ | (12,599) | $ | 18,400 |
Trade Names | 2,100 | (1,697) | 403 | |||
Permit Application Costs | 20,070 | (16,565) | 3,505 | |||
Other Intangibles(a)
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6,013 | (5,923) | 90 | |||
Indefinite-Lived Intangible Assets | ||||||
Licenses | 275,671 | - | 275,671 | |||
Total Intangible Assets | $ | 334,853 | $ | (36,784) | $ | 298,069 |
December 31, 2023 | ||||||
($ in thousands) | Gross Carrying Amount | Accumulated Amortization | Net | |||
Definite-Lived Intangible Assets | ||||||
Customer Relationships | $ | 31,000 | $ | (11,623) | $ | 19,377 |
Trade Names | 2,100 | (1,680) | 420 | |||
Permit Application Costs | 17,351 | (15,980) | 1,371 | |||
Other Intangibles(b)
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6,013 | (5,886) | 127 | |||
Indefinite-Lived Intangible Assets | ||||||
Licenses | 275,671 | - | 275,671 | |||
Total Intangible Assets | $ | 332,135 | $ | (35,169) | $ | 296,966 |
($ in thousands) | March 31, 2024 | March 31, 2023 | ||
Amortization expense included in cost of goods sold and ending inventory | $ | 791 | $ | 882 |
Amortization expense included in selling, general and administrative expense | 720 | 1,014 | ||
Total amortization expense | $ | 1,511 | $ | 1,896 |
Cresco Labs Inc.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the Three Months Ended March 31, 2024 and 2023
|
($ in thousands) | Estimated Amortization | |
2024 | $ | 4,825 |
2025 | 5,260 | |
2026 | 4,270 | |
2027 | 3,281 | |
2028 | 2,963 | |
Thereafter | 1,799 | |
Total estimated amortization | $ | 22,398 |
($ in thousands) | Total | |
Balance at January 1, 2023 | $ | 330,555 |
Impairment loss | (50,858) | |
Balance at December 31, 2023 | 279,697 | |
Balance at March 31, 2024 | $ | 279,697 |
NOTE 6. SHARE CAPITAL
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Cresco Labs Inc.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the Three Months Ended March 31, 2024 and 2023
|
(shares in thousands) |
Redeemable Units |
SVS1
|
PVS2
|
MVS3
|
SSVS4
|
Beginning balance, January 1, 2024
|
96,699 | 320,757 | 18,950 | 500 | 2 |
Options exercised | - | 1 | - | - | - |
RSUs issued | - | 1,277 | - | - | - |
Cresco LLC redemptions | (1,194) | 1,194 | - | - | - |
PVS converted to SVS | - | 1,169 | (1,169) | - | - |
Ending balance, March 31, 2024 | 95,505 | 324,398 | 17,781 | 500 | 2 |
Beginning balance, January 1, 2023
|
106,106 | 280,994 | 20,082 | 500 | 1 |
RSUs issued | - | 797 | - | - | - |
Issuance of shares related to acquisitions | - | 5,013 | - | - | - |
Cresco LLC redemptions | (1,800) | 1,800 | - | - | - |
PVS converted to SVS | - | 180 | (180) | - | - |
Issuances related to employee taxes on certain share-based payment arrangements | - | 226 | - | - | - |
Ending balance, March 31, 2023 | 104,306 | 289,010 | 19,902 | 500 | 1 |
(in thousands) | Acquisition date | SVS shares issued | Equity-based consideration | |
Three Months Ended March 31, 2023
|
||||
Laurel Harvest - Contingent Consideration | December 9, 2021 | 5,013 | $ | 9,723 |
Cresco Labs Inc.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the Three Months Ended March 31, 2024 and 2023
|
($ in thousands) | TSC Cresco, LLC |
MedMar Inc. (Lakeview) |
MedMar Inc. (Rockford) |
Cresco Labs Ohio, LLC |
SLO Cultivation Inc. |
Cresco Labs Michigan, LLC4
|
Cresco Labs, LLC1,3
|
|||||||||||||
Revenue | $ | - | $ | 11,164 | $ | 16,883 | $ | 2,325 | $ | - | $ | 6,153 | $ | 92,264 | ||||||
Gross profit | (332) | 7,439 | 11,437 | 497 | - | 483 | 49,501 | |||||||||||||
Net income (loss)
|
$ | (135) | $ | 4,357 | $ | 8,644 | $ | (1,552) | $ | 12 | $ | (1,190) | $ | (651) | ||||||
Net (loss) income allocated to NCI
|
$ | (5) | $ | 540 | $ | 2,162 | $ | (18) | $ | 2 | $ | (166) | $ | 623 | ||||||
NCI percentage as of March 31, 2024
|
25.0 | % |
1
|
12.4 | % |
2
|
25.0 | % |
2
|
1.2 | % |
1
|
20.0 | % |
1
|
15.0 | % |
1
|
37.8 | % |
($ in thousands) | TSC Cresco, LLC |
MedMar Inc. (Lakeview) |
MedMar Inc. (Rockford) |
Cresco Labs Ohio, LLC |
SLO Cultivation Inc. |
Cresco Labs, LLC1,3
|
|||||||||||
Revenue | $ | 2,414 | $ | 11,968 | $ | 19,831 | $ | 2,231 | $ | (154) | $ | 99,967 | |||||
Gross profit | 1,218 | 6,980 | 12,661 | 93 | (1,620) | 51,990 | |||||||||||
Net income (loss) | $ | 3,042 | $ | 2,046 | $ | 8,005 | $ | (1,301) | $ | (582) | $ | (9,483) | |||||
Net income (loss) allocated to NCI | $ | 760 | $ | 254 | $ | 2,001 | $ | (13) | $ | (116) | $ | (4,647) | |||||
NCI percentage as of March 31, 2023
|
25.0 | % |
1
|
12.4 | % |
2
|
25.0 | % |
2
|
1.2 | % |
1
|
20.0 | % |
1
|
41.3 | % |
($ in thousands) | March 31, 2024 | March 31, 2023 | ||
Net loss attributable to Cresco Labs Inc. | $ | (5,193) | $ | (26,051) |
Changes in Cresco Labs Inc. equity due to redemptions of Cresco Labs, LLC shares: | ||||
Share Capital | 1,888 | 3,465 | ||
Accumulated Deficit | (2,889) | (4,089) | ||
Total change from net loss attributable to Cresco Labs Inc. and change in ownership interest in Cresco Labs, LLC.
|
$ | (6,194) | $ | (26,675) |
Cresco Labs Inc.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the Three Months Ended March 31, 2024 and 2023
|
NOTE 7. SHARE-BASED COMPENSATION
|
(Options and intrinsic value in thousands) | Number of stock options outstanding | Weighted-average exercise price | Weighted average remaining contractual life (years) | Aggregate intrinsic value | ||
Outstanding - January 1, 2024 | 24,103 | $ | 4.45 | 6.60 | $ | 328 |
Granted | 3,811 | 1.46 | ||||
Exercised | (1) | 1.81 | ||||
Forfeited | (664) | 3.72 | ||||
Outstanding - March 31, 2024
|
27,249 | $ | 4.06 | 6.81 | $ | 4,096 |
Exercisable - March 31, 2024
|
17,936 | $ | 4.15 | 5.91 | $ | 2,246 |
March 31, 2024 | March 31, 2023 | |
Risk-free annual interest rate |
3.9% to 4.1%
|
3.7% to 3.9%
|
Expected annual dividend yield | 0% |
0%
|
Expected stock price volatility |
80.3% to 83.2%
|
78.2% to 80.2%
|
Expected life of stock options |
5.5 to 7.0 years
|
5.0 to 7.0 years
|
Forfeiture rate |
9.9% to 34.0%
|
7.2% to 28.0%
|
Fair value at grant date |
$0.94 to $1.55
|
$1.10 to $1.37
|
Stock price at grant date |
$1.35 to $2.05
|
$1.60 to $1.83
|
Exercise price range |
$1.35 to $2.05
|
$1.60 to $1.83
|
Cresco Labs Inc.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the Three Months Ended March 31, 2024 and 2023
|
(Shares in thousands) | Number of RSUs outstanding | Weighted-average fair value | |
Outstanding - January 1, 2024 | 6,862 | $ | 2.91 |
Granted | 4,034 | 1.36 | |
Vested and settled | (885) | 1.54 | |
Forfeited | (209) | 2.73 | |
Outstanding - March 31, 2024
|
9,802 | $ | 2.18 |
($ in thousands) | March 31, 2024 | March 31, 2023 | ||
Cost of goods sold | $ | 414 | $ | 802 |
Selling, general and administrative expense | 1,467 | 3,353 | ||
Total share-based compensation expense for option awards
|
$ | 1,881 | $ | 4,155 |
($ in thousands) | March 31, 2024 | March 31, 2023 | ||
Cost of goods sold | $ | 442 | $ | 692 |
Selling, general and administrative expense | 2,147 | 2,770 | ||
Total share-based compensation expense for RSU awards
|
$ | 2,589 | $ | 3,462 |
Cresco Labs Inc.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the Three Months Ended March 31, 2024 and 2023
|
NOTE 8. LOSS PER SHARE
|
March 31, 2024 | March 31, 2023 | |||
($ in thousands, except shares and per share amounts) | ||||
Numerator: | ||||
Net loss | $ | (2,055) | $ | (27,812) |
Less: Net income (loss) attributable to non-controlling interests, net of tax | 3,138 | (1,761) | ||
Net loss attributable to Cresco Labs Inc. | $ | (5,193) | $ | (26,051) |
Denominator: | ||||
Weighted-average basic and diluted shares outstanding | 341,631,554 | 304,708,692 | ||
Loss per Share: | ||||
Basic and diluted loss per share | $ | (0.02) | $ | (0.09) |
Three Months Ended March 31, |
||
(shares in thousands) | 2024 | 2023 |
Redeemable Units | 95,505 | 104,793 |
Options | 27,249 | 27,708 |
RSUs | 9,802 | 8,375 |
Total potentially dilutive shares | 132,556 | 140,876 |
NOTE 9. LONG-TERM NOTES AND LOANS PAYABLE, NET
|
($ in thousands) | March 31, 2024 | December 31, 2023 | ||
Senior Loan | $ | 400,000 | $ | 400,000 |
Mortgage Loans | 20,060 | 20,160 | ||
Short-term borrowings and interest payable | 19,523 | 9,813 | ||
Financing liability | 95,019 | 95,698 | ||
Total borrowings and interest payable | $ | 534,602 | $ | 525,671 |
Less: Unamortized debt issuance costs | (14,933) | (16,141) | ||
Less: Short-term borrowings and interest payable | (19,523) | (9,813) | ||
Less: Current portion of financing liability | (2,147) | (2,004) | ||
Total Long-term notes and loans payable, net | $ | 497,999 | $ | 497,713 |
Cresco Labs Inc.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the Three Months Ended March 31, 2024 and 2023
|
Cresco Labs Inc.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the Three Months Ended March 31, 2024 and 2023
|
NOTE 10. REVENUES AND LOYALTY PROGRAMS
|
($ in thousands) | March 31, 2024 | March 31, 2023 | ||
Wholesale | $ | 66,311 | $ | 82,419 |
Dispensary | 117,984 | 111,783 | ||
Total Revenues | $ | 184,295 | $ | 194,202 |
NOTE 11. RELATED PARTY TRANSACTIONS
|
Cresco Labs Inc.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the Three Months Ended March 31, 2024 and 2023
|
($ in thousands) | Classification | March 31, 2024 | March 31, 2023 | ||
Operating Leases | |||||
Lessor has minority interest in MedMar | Rent expense | $ | 73 | $ | 73 |
Lessor is an MVS shareholder1
|
Rent expense | 98 | 296 | ||
Finance Leases | |||||
Lessor has minority interest in MedMar | Depreciation expense | $ | 76 | $ | 76 |
Lessor has minority interest in MedMar | Interest expense | 57 | 63 | ||
Lessor is an MVS shareholder1
|
Depreciation expense | 8 | 22 | ||
Lessor is an MVS shareholder1
|
Interest expense | 5 | 19 |
March 31, 2024
|
December 31, 2023
|
|||||||
($ in thousands) | ROU Asset | Lease Liability | ROU Asset | Lease Liability | ||||
Operating Leases | ||||||||
Lessor has minority interest in MedMar | $ | 1,261 | $ | 1,316 | $ | 1,294 | $ | 1,345 |
Lessor is an MVS shareholder1
|
- | - | 5,332 | 5,429 | ||||
Finance Leases | ||||||||
Lessor has minority interest in MedMar | $ | 1,652 | $ | 2,143 | $ | 1,729 | $ | 2,210 |
Lessor is an MVS shareholder1
|
- | - | 583 | 502 |
NOTE 12. COMMITMENTS AND CONTINGENCIES
|
Cresco Labs Inc.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the Three Months Ended March 31, 2024 and 2023
|
NOTE 13. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT
|
Cresco Labs Inc.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the Three Months Ended March 31, 2024 and 2023
|
March 31, 2024 | ||||||||||
($ in thousands) | Amortized Cost | Level 1 | Level 2 | Level 3 | Total | |||||
Financial Assets: | ||||||||||
Cash and cash equivalents | $ | 123,155 | $ | - | $ | - | $ | - | $ | 123,155 |
Restricted cash1
|
4,997 | - | - | - | 4,997 | |||||
Security deposits2
|
4,342 | - | - | - | 4,342 | |||||
Accounts receivable, net | 49,828 | - | - | - | 49,828 | |||||
Loans receivable, short-term | 1,432 | - | - | - | 1,432 | |||||
Loans receivable, long-term | 826 | - | - | - | 826 | |||||
Investments | - | 66 | - | 600 | 666 | |||||
Financial Liabilities: | ||||||||||
Accounts payable | $ | 17,403 | $ | - | $ | - | $ | - | $ | 17,403 |
Accrued liabilities | 61,921 | - | - | - | 61,921 | |||||
Short-term borrowings | 21,670 | - | - | - | 21,670 | |||||
Current portion of lease liabilities | 10,100 | - | - | - | 10,100 | |||||
Lease liabilities | 163,254 | - | - | - | 163,254 | |||||
Deferred consideration, long-term | - | - | - | 6,881 | 6,881 | |||||
Long-term notes and loans payable, net | 497,999 | - | - | - | 497,999 | |||||
Other long-term liabilities3
|
21,829 | - | - | - | 21,829 |
Cresco Labs Inc.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the Three Months Ended March 31, 2024 and 2023
|
December 31, 2023 | ||||||||||
($ in thousands) | Amortized Cost | Level 1 | Level 2 | Level 3 | Total | |||||
Financial Assets: | ||||||||||
Cash and cash equivalents | $ | 103,429 | $ | - | $ | - | $ | - | $ | 103,429 |
Restricted cash1
|
5,091 | - | - | - | 5,091 | |||||
Security deposits2
|
4,408 | - | - | - | 4,408 | |||||
Accounts receivable, net | 51,070 | - | - | - | 51,070 | |||||
Loans receivable, short-term | 1,421 | - | - | - | 1,421 | |||||
Loans receivable, long-term | 826 | - | - | - | 826 | |||||
Investments | - | 49 | 81 | 600 | 730 | |||||
Financial Liabilities: | ||||||||||
Accounts payable | $ | 27,587 | $ | - | $ | - | $ | - | $ | 27,587 |
Accrued liabilities | 69,079 | - | - | - | 69,079 | |||||
Short-term borrowings | 11,817 | - | - | - | 11,817 | |||||
Current portion of lease liabilities | 9,416 | - | - | - | 9,416 | |||||
Lease liabilities | 163,811 | - | - | - | 163,811 | |||||
Deferred consideration, long-term | - | - | - | 6,577 | 6,577 | |||||
Long-term notes and loans payable, net | 497,713 | - | - | - | 497,713 | |||||
Other long-term liabilities3
|
21,600 | - | - | - | 21,600 |
Three Months Ended March 31, 2024 | ||||
Level 3 Fair Value Measurements | ||||
($ in thousands) | Investments | Deferred consideration, long-term | ||
Balance as of December 31, 2023
|
$ | 600 | $ | 6,577 |
Change in fair value recorded in Interest expense, net | - | 304 | ||
Balance as of March 31, 2024
|
$ | 600 | $ | 6,881 |
Cresco Labs Inc.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the Three Months Ended March 31, 2024 and 2023
|
Three Months Ended March 31, 2023 | ||||||
Level 3 Fair Value Measurements | ||||||
($ in thousands) | Investments |
Deferred consideration, and other payables, short-term |
Deferred consideration, long-term | |||
Balance as of December 31, 2022
|
$ | 660 | $ | 47,821 | $ | 7,770 |
Change in fair value recorded in Interest expense, net | - | 1,555 | - | |||
Payments | - | (10,000) | - | |||
Other1
|
- | 1,658 | (1,658) | |||
Balance as of March 31, 2023
|
$ | 660 | $ | 41,034 | $ | 6,112 |
($ in thousands) |
Valuation classification |
March 31, 2024 | December 31, 2023 | ||
Short-term loans receivable - Kurvana, net of ECL | Amortized cost | $ | 506 | $ | 493 |
Short-term loans receivable - 280E, net of ECL | Amortized cost | 926 | 928 | ||
Total Loans receivable, short-term | $ | 1,432 | $ | 1,421 |
($ in thousands) |
Valuation classification |
March 31, 2024 | December 31, 2023 | ||
Long-term loans receivable - Illinois Incubator, net of ECL | Amortized cost | $ | 826 | $ | 826 |
Total Loans receivable, long-term | $ | 826 | $ | 826 |
Cresco Labs Inc.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the Three Months Ended March 31, 2024 and 2023
|
Cresco Labs Inc.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the Three Months Ended March 31, 2024 and 2023
|
($ in thousands) | March 31, 2024 | December 31, 2023 | ||
0 to 60 days | $ | 41,886 | $ | 41,820 |
61 to 120 days | 5,463 | 8,117 | ||
120 days + | 10,553 | 9,097 | ||
Total accounts receivable, gross | 57,902 | 59,034 | ||
Allowance for doubtful accounts | 8,074 | 7,964 | ||
Total accounts receivable, net | $ | 49,828 | $ | 51,070 |
Cresco Labs Inc.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the Three Months Ended March 31, 2024 and 2023
|
($ in thousands) | < 1 Year | 1 to 3 Years | 3 to 5 Years | > 5 Years | Total | |||||
Accounts payable & Accrued liabilities | $ | 77,832 | $ | - | $ | - | $ | - | $ | 77,832 |
Operating leases liabilities | 21,671 | 59,073 | 59,136 | 162,235 | 302,115 | |||||
Finance lease liabilities | 3,674 | 10,166 | 10,357 | 18,337 | 42,534 | |||||
Deferred consideration, long-term | - | 6,881 | - | - | 6,881 | |||||
Short-term borrowings and Long-term notes and loans payable | 29,686 | 428,095 | 29,522 | 122,013 | 609,316 | |||||
Tax receivable agreement liability | 1,492 | 2,192 | 2,123 | 8,702 | 14,509 | |||||
Other long-term liabilities | - | 8,813 | - | - | 8,813 | |||||
Total obligations as of March 31, 2024
|
$ | 134,355 | $ | 515,220 | $ | 101,138 | $ | 311,287 | $ | 1,062,000 |
Cresco Labs Inc.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the Three Months Ended March 31, 2024 and 2023
|
NOTE 14. VARIABLE INTEREST ENTITIES
|
Cresco Labs Inc.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the Three Months Ended March 31, 2024 and 2023
|
March 31, 2024 | December 31, 2023 | |||
($ in thousands) | Cresco Labs Michigan, LLC | Cresco Labs Michigan, LLC | ||
Current assets | $ | 16,384 | $ | 15,485 |
Non-current assets | 76,926 | 75,622 | ||
Current liabilities | (1,126) | (1,476) | ||
Non-current liabilities | (128,454) | (124,793) | ||
Non-controlling interests | 424 | 258 | ||
Deficit attributable to Cresco Labs Inc. | 35,846 | 34,904 |
March 31, 2024 | March 31, 2023 | |||
($ in thousands) | Cresco Labs Michigan, LLC | Cresco Labs Michigan, LLC | ||
Revenue | $ | 6,153 | $ | 4,757 |
Net loss attributable to non-controlling interests | (166) | - | ||
Net loss attributable to Cresco Labs Inc. | (1,024) | (2,945) | ||
Net loss | (1,190) | (2,945) |
NOTE 15. SEGMENT INFORMATION
|
NOTE 16. INTEREST EXPENSE, NET
|
($ in thousands) | March 31, 2024 | March 31, 2023 | ||
Interest expense - notes and loans payable | $ | (9,606) | $ | (9,500) |
Interest expense - financing activities | (2,915) | (2,959) | ||
Accretion of debt discount and amortization of deferred financing fees | (1,180) | (1,044) | ||
Interest expense - leases | (797) | (935) | ||
Interest income | 748 | 462 | ||
Other interest expense1
|
(321) | (1,572) | ||
Interest expense, net | $ | (14,071) | $ | (15,548) |
NOTE 17. PROVISION FOR INCOME TAXES AND DEFERRED INCOME TAXES
|
Cresco Labs Inc.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the Three Months Ended March 31, 2024 and 2023
|
($ in thousands) | March 31, 2024 | March 31, 2023 | ||
Income (loss) before income taxes | $ | 15,948 | $ | (11,003) |
Income tax expense | 18,003 | 16,809 | ||
Effective tax rate | 112.9 | % | (152.8) | % |
NOTE 18. SUBSEQUENT EVENTS
|