MARIMED INC.
For the period ended Mar 31, 2025. Filed May 8, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 8, 2025
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What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-07.
0001522767-24-000091
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-08.
0001522767-25-000052
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 115 previous paragraphs and 113 current paragraphs.
60 unchanged; 29 reworded; 23 added; 25 removed; 1 previous and 1 current paragraphs rearranged.
Tables are not compared: 4 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (23)
Current report
We completed the acquisition of First State Compassion Center ("FSC"), the leading cannabis operator in Delaware, effective March 1, 2025 (the "FSC Acquisition Date"). Prior to its acquisition by us (the "FSC Acquisition"), FSC had been our managed services client. The financial results of FSC are included in our condensed consolidated financial statements for the period subsequent to the FSC Acquisition Date.
Current report
◦strengthening our cultivation and processing capabilities to ensure a reliable, high-quality supply of raw materials that will enhance product consistency, quality, and innovation;
Current report
◦developing and launching innovative new products that align with consumer preferences and demand;
Current report
◦offering new effects and formulations that differentiate our existing brands;
Current report
◦broadening our distribution network in existing markets to maximize our reach and brand visibility; and
Current report
•Increasing retail store revenue by:
Current report
◦driving additional and higher average transactions in our existing stores through an outstanding customer experience that prioritizes our product selection and the ease of the shopping experience; and
Current report
◦expanding our dispensary footprint in current markets where regulations allow and into new markets through new license applications and/or acquisitions of existing cannabis businesses.
Current report
•Other revenue. Our other revenue is comprised of real estate rentals to cannabis-licensed clients; supply procurement fees from facilitating purchases of resources, supplies and equipment for cannabis-licensed clients and third parties; management fees for providing cannabis-licensed clients with comprehensive oversight of their operations; and licensing fees from the licensing of our branded products to wholesalers and regulated dispensaries.
Current report
We recognize revenue in amounts that represent the consideration that we expect to receive in exchange for goods or services provided to customers as follows:
Current report
•Identify the contract(s) with a customer;
Current report
•Identify the performance obligations in the contract(s);
Current report
•Determine the transaction price;
Current report
•Allocate the transaction price to the performance obligations in the contract(s); and
Current report
•Recognize revenue as the performance obligation is satisfied.
Current report
Additionally, when another party is involved in providing goods or services to our clients, a determination is made as to who - us or the other party - is acting in the capacity as the principal in the sale transaction, and who is the agent arranging for goods or services to be provided by the other party.
Current report
We are typically considered the principal if we control the specified good or service before such good or service is transferred to our client, and typically considered the agent if we do not exert such control. We may also be deemed to be the principal even if we engage another party (an agent) to satisfy some of the performance obligations on our behalf, provided we (i) take on certain responsibilities, obligations and risks, (ii) possess certain abilities and discretion, or (iii) fulfill other relevant indicators of the sale. If deemed an agent, we do not recognize revenue for the performance obligations we do not satisfy.
Current report
Our general and administrative expenses increased slightly in the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The increase was primarily attributable to higher facilities, stock-based compensation and insurance expenses, which were largely offset by decreases in certain other general and administrative expenses, such as professional fees and depreciation.
Current report
We recorded $1.4 million of bad debt expense in the three months ended March 31, 2025, comprised of $1.3 million of expense to fully reserve an amount due from a credit card service provider (the "Service Provider Receivable") and $0.1 million of expense to reserve for certain trade accounts receivable accounts. The Service Provider Receivable was reported in our condensed consolidated balance sheets as a component of Other assets at March 31, 2025 and as a component of Cash at December 31, 2024. The reserve was reported as a component of Other assets in our condensed consolidated balance sheet at March 31, 2025.
Current report
Our net interest expense increased $0.1 million in the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily due to the interest on the notes issued in connection with the MedLeaf and Allgreens acquisitions and our entry into additional finance leases.
Current report
March 31, 2025 were primarily comprised of our outstanding CREM Loan, mortgages and promissory notes, and operating leases. Our CREM Loan, mortgage and promissory note obligations totaled approximately $74 million at March 31, 2025.
Current report
•inventory revaluation;
Removed paragraphs (25)
Previous report
On March 9, 2023 (the "Ermont Acquisition Date"), we acquired the operating assets of Ermont, Inc. ("Ermont"), a medical-licensed vertical cannabis operator located in Quincy, Massachusetts (the "Ermont Acquisition"). The financial results of Ermont are included in our condensed consolidated financial statements for the period subsequent to the Ermont Acquisition Date.
Previous report
•Completing the acquisition and consolidation of the client cannabis businesses we developed, managed and advised prior to becoming a seed to sale multi-state operator. There is one remaining business that we continue to manage and intend to acquire - Delaware operator First State Compassion Center ("FSCC"). Delaware's current cannabis regulations prevent such an acquisition.
Previous report
•Increasing revenue organically in states where we currently do business by developing additional assets and increasing our product distribution within those states.
Previous report
In November 2023, we announced the closing of a $58.7 million secured credit facility with a Needham Bank at a lower rate relative to both our previous outstanding debt with Chicago Atlantic Admin, LLC (“Chicago Atlantic”) and recent transactions announced by other cannabis companies. This debt refinancing enabled us to pay off our term loan with Chicago Atlantic, pay off the mortgage on our New Bedford and Middleborough, Massachusetts facilities with Bank of New England, and reduce the principal outstanding on the note we issued to the sellers in connection with our acquisition of the operating assets of Ermont, Inc. Our new credit facility has allowed us to unencumber our operating assets in Illinois, Ohio, and Delaware, as well as our branded products, providing additional levers for future loans at attractive rates if we choose to increase our borrowings. Additionally, the credit facility bolsters our ability to continue to execute our strategic plan, particularly as it relates to growing the Company through mergers and acquisitions.
Previous report
Three and nine months ended September 30, 2024 and 2023
Previous report
•Supply procurement fees – fees from facilitating purchases of cultivation and production resources, supplies and equipment for our cannabis-licensed clients and third parties. We recognize this revenue after the delivery and acceptance of goods by a purchaser.
Previous report
•Real estate rentals - rental income generated from leasing of our state-of-the-art, regulatory-compliant cannabis facilities to our cannabis-licensed clients. Rental income is generally a fixed amount per month that escalates over the respective lease terms.
Previous report
•Management fees - fees for providing our cannabis clients with comprehensive oversight of their cannabis cultivation, production and dispensary operations.
Previous report
•Licensing fees - revenue from the licensing of our branded products, including Betty's Eddies, Bubby's Baked, Vibations and Kalm Fusion, to wholesalers and regulated dispensaries throughout the United States and Puerto Rico. We recognize this revenue when the products are delivered.
Previous report
Our total revenue increased $9.3 million, or 8.4%, in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily attributable to wholesale revenue, partially offset by lower retail sales and other revenue. The increase in wholesale revenue was attributable to the inclusion of wholesale revenue in Illinois in the current year, coupled with higher revenue in our other wholesale locations, particularly in Maryland. Our retail operations in Illinois reported lower revenue in the aggregate; however, this decrease was partially offset by higher net sales in our Massachusetts dispensaries and in Maryland. Our other revenue was relatively unchanged in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The increase in management fees principally related to Allgreens prior to the Allgreens Acquisition Date. This increase was offset by reductions to our remaining other revenue sources.
Previous report
Our general and administrative expenses in the three months ended September 30, 2024 were essentially flat compared to the three months ended September 30, 2023. The moderate increases in our deal costs and facility and related expenses were virtually offset by lower professional fees (i.e., legal, accounting and consulting), depreciation and amortization, and other general and administrative expenses. The increase in our general and administrative expenses in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 was primarily attributable to higher facility and related expenses, depreciation and amortization of fixed assets, and professional fees. These increases were primarily attributable to the addition of new facilities and related fixed assets, coupled with higher professional fees, primarily legal fees in connection with our acquisitive and financing activities.
Previous report
Our net interest expense decreased $0.8 million in the three months ended September 30, 2024 compared to the three months ended September 30, 2023, and $2.4 million in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. These decreases were primarily due to lower non-cash interest expense in the current year periods, coupled with lower interest rates on our CREM Loan compared to our previous financing facility.
Previous report
We reported net other expense of $0.6 million and $1.6 million in the three and nine months ended September 30, 2023. The expense for the three months ended September 30, 2023 primarily relates to a $0.7 million term loan payment that we initiated in error to an account provided in a fraudulent email we received. We were initially advised by JPM Chase, the recipient's bank ("Chase") that we had identified the problem before the payment was delivered to the account identified by the email, and that the funds were being held by Chase pending its completion of an internal investigation. Chase has subsequently advised us that the funds were delivered to the fraudulent recipient's account. We continue to pursue all channels through our bank to recover these funds. In addition, we initiated, and are pursuing, a claim under our insurance coverage to recover this amount. There is no assurance that we will successfully recover all or any portion of this amount, including under our insurance claim. We reduced our cash balance and included this amount as a component of Other expense, net, in our condensed consolidated statement of operations for the three and nine months ended September 30, 2023. If these funds, or any portion of these funds, are recovered, we will reverse the expense accordingly. We have implemented additional safeguards to protect ourselves from future fraudulent activity; please see Part I, Item 1A. Risk Factors and Item 1C. Cybersecurity of our 2023 10-K. In addition to the aforementioned payment, the amount for the nine months ended September 30, 2023 also includes the write-off of assets in the first quarter of 2023 in connection with our decision to abandon a project to expand into Nevada.
Previous report
CA Credit Agreement
Previous report
On January 24, 2023, we entered into a Loan and Security Agreement, by and among the Company, subsidiaries of the Company from time-to-time party thereto (collectively with the Company, the “CA Borrowers”), lenders from time-to-time party thereto (the “CA Lenders”), and Chicago Atlantic Admin, LLC (“Chicago Atlantic”), as administrative agent for the Lenders (the "CA Credit Agreement").
Previous report
Proceeds from the CA Credit Agreement were designated to complete the build-out of a new cultivation and processing facility in Illinois, complete the build-out of a new processing kitchen in Missouri, expand existing cultivation and processing facilities in Massachusetts and Maryland, fund certain capital expenditures, and repay in full the Kind Therapeutics seller notes incurred in connection with the Kind Acquisition, which repayment occurred on January 24, 2023. The remaining balance, if any, was expected to be used to fund acquisitions.
Previous report
The CA Credit Agreement provided for $35.0 million in principal borrowings at our option in the aggregate and further provided the CA Borrowers with the right, subject to customary conditions, to request an additional incremental term loan in the aggregate principal amount of up to $30.0 million; provided that the CA Lenders elect to fund such incremental term loan. $30.0 million of loan principal was funded at the initial closing (the "CA Term Loan") and we had the option, during the six-month period following the initial closing, to draw down an additional $5.0 million, which we did not elect to do. The loans required scheduled amortization payments of 1.0% of the principal amount outstanding under the CA Credit Agreement per month commencing in May 2023, and the remaining principal balance was due in full on January 24, 2026, subject to extension to January 24, 2028 under certain circumstances.
Previous report
The CA Credit Agreement provided the CA Borrowers with the right, subject to specified limitations, to incur (a) seller provided debt in connection with future acquisitions, (b) additional mortgage financing from third-party lenders secured by real estate currently owned and acquired after the closing date, and (c) additional debt in connection with equipment leasing transactions.
Previous report
The obligations under the CA Credit Agreement were secured by substantially all of the assets of the CA Borrowers, excluding specified parcels of real estate and other customary exclusions.
Previous report
The CA Credit Agreement provided for a floating annual interest rate equal to the prime rate then in effect plus 5.75%, which rate could be increased by 3.00% upon an event of default or 7.50% upon a material event of default as provided in the Credit Agreement.
Previous report
At any time, we could voluntarily prepay amounts due under the facility in $5.0 million increments, subject to a three-percent prepayment premium and, during the first 20-months of the term, a “make-whole” payment.
Previous report
The CA Credit Agreement also included customary negative covenants limiting our ability to incur additional indebtedness and grant liens that are otherwise not permitted, among others. Additionally, the CA Credit Agreement required us to meet certain financial tests. We were in compliance with the CA Credit Agreement covenants at all times while the Term Loan was outstanding.
Previous report
The CA Credit Agreement provided for 30% warrant coverage against amounts funded under the facility, priced at a 20% premium to the trailing 20-day average price on the closing date of each such funding. At the initial closing, upon funding of the initial $30.0 million under the facility, we issued to the CA Lenders warrants to purchase an aggregate of 19,148,936 shares of our common stock at $0.47 per share, exercisable for a five-year period following issuance.
Previous report
On November 16, 2023 (the "Payoff Date"), we repaid and retired the CA Term Loan (the "Term Loan Payoff") using proceeds from a new $58.7 million loan entered into on the same date (see "CREM Loan" below). The Term Loan Payoff amount totaled $32.7 million, comprised of $28.5 million for the outstanding principal, $3.7 million for the make-whole payment, $0.2 million for accrued unpaid interest and $0.3 million for transaction-related fees. We recognized a loss of $10.2 million in connection with the Term Loan Payoff.
Previous report
During the nine months ended September 30, 2023, we received proceeds of $29.1 million from the CA Credit Agreement, of which we used $5.5 million to repay in full the notes issued in connection with our 2022 acquisition of Kind Therapeutics USA (the "Kind Acquisition"). Excluding the aforementioned repayment of the notes in connection with the Kind Acquisition, we made $1.3 million of aggregate principal payments on our outstanding mortgages and promissory notes, including the repayment in full in May 2023 of our mortgage with South Porte Bank. We also paid $1.8 million for third-party debt issuance costs in connection with the CA Credit Agreement, and made $1.5 million of payments toward the outstanding balance of the CA Credit Agreement, $0.5 million of principal payments of finance leases, and $0.1 million of distribution payments.
Reworded paragraphs (29)
Previous wording
We are a multi-state operator in the United States cannabis industry. We develop, operate, manage and optimize state-of-the-art, regulatory-compliant facilities for the cultivation, production and dispensing of medicinal and adult-use cannabis. We also license our proprietary brands of cannabis products, along with other top brands, in several domestic markets.
Current wording
We are a multi-state cannabis operator in the United States, headquartered in Norwood, Massachusetts, dedicated to improving lives every day through our high-quality products, our actions, and our values. We develop, own and manage seed to sale state-licensed, state-of-the-art, regulatory-compliant facilities for the cultivation, production and dispensing of medicinal and adult-use cannabis. We have created and continue to develop our own brands of premium cannabis flower, concentrates, edibles and other precision-dosed products utilizing our proprietary strains and formulations. We also license our proprietary brands, along with other top cannabis products, in domestic markets.
Previous wording
We completed two acquisitions during the nine months ended September 30, 2024, which we accounted for as asset purchase. On April 9, 2024, we acquired 100% of the membership interests of Allgreens Dispensary, LLC ("Allgreens"), which held a conditional adult-use cannabis dispensary license in Illinois. On April 5, 2024, we acquired 100% of the membership interests of Our Community Wellness & Compassionate Care Center, Inc. ("MedLeaf"), which held a retail dispensary license in Maryland. The MedLeaf dispensary had ceased operations since July 1, 2023, but we reopened it on August 19, 2024, upon receiving regulatory approval to commence adult use retail sales.
Current wording
We completed two acquisitions in the year ended December 31, 2024, which we accounted for as asset purchase. On April 9, 2024, we acquired 100% of the membership interests of Allgreens Dispensary, LLC ("Allgreens"), which held a conditional adult-use cannabis dispensary license in Illinois. On April 5, 2024, we acquired 100% of the membership interests of Our Community Wellness & Compassionate Care Center, Inc. ("MedLeaf"), which held a retail dispensary license in Maryland. The MedLeaf dispensary had ceased operations since July 1, 2023, but we reopened it on August 19, 2024, upon receiving regulatory approval to commence adult use retail sales.
Previous wording
During 2024, we continue to focus on executing our strategic growth plan, with priority on activities that include the following:
Current wording
We continue to focus on executing our strategic growth plan, with priority on activities that include the following:
Previous wording
•Increasing product brand revenue by introducing new, innovative products that consumers want, expanding our award-winning brands to include new effects or to fill additional customer needs, and by identifying qualified licensing partners that will expand our distribution into new markets.
Current wording
•Increasing our product brand revenue by:
Previous wording
•Expanding our footprint into high-growth legal cannabis states through new license applications and/or acquisitions of existing cannabis businesses.
Current wording
◦expanding our distribution into new markets through new license applications, acquisitions of existing cannabis businesses, and/or identification of qualified licensing partners.
Previous wording
•Product sales (retail and wholesale) - direct sales of cannabis and cannabis-infused products primarily by our retail dispensaries and wholesale operations in multiple states. We recognize this revenue when products are delivered or at retail points-of-sale.
Current wording
•Product sales (retail and wholesale). Our product sales are derived from direct sales of cannabis and cannabis-infused products primarily by our retail dispensaries and wholesale operations in multiple states. We recognize revenue when products are delivered to third parties or at our retail points-of-sale.
Previous wording
Our revenue for the three and nine months ended September 30, 2024 and 2023 was comprised of the following (in thousands):
Current wording
Revenue for the three months ended March 31, 2025 and 2024 was comprised of the following (in thousands):
Previous wording
Our total revenue increased $1.8 million, or 4.6%, in the three months ended September 30, 2024 compared to the three months ended September 30, 2023. Our total product revenue increased $1.9 million, or 5.1%, in the three months ended September 30, 2024, compared to the same prior year period. The $2.7 million increase in revenue from our wholesale operations was partially offset by a $0.7 million decrease in retail sales. The increase in wholesale revenue was attributable to the inclusion of wholesale revenue in Illinois in the current year, coupled with higher revenue in our other wholesale locations. Our retail operations in Massachusetts reported higher retail revenue in the three months ended September 30, 2024, partially offset by lower retail revenue in our other locations, primarily certain of our Illinois dispensaries. The decrease in other revenue in the three months ended September 30, 2024 compared to the three months ended September 30, 2023 was primarily attributable to lower real estate rentals, partially offset by management fees.
Current wording
Our total revenue for the three months ended March 31, 2025 was virtually unchanged from our total revenue in the three months ended March 31, 2024. The $2.3 million increase in revenue from our wholesale operations was offset by decreases of $1.6 million and $0.7 million in retail sales and other revenue, respectively. The increase in wholesale revenue was primarily attributable to higher wholesale revenue in Illinois and Maryland, coupled with higher revenue in certain of our other wholesale locations. Our retail operations reported higher revenue in certain of our dispensaries in Massachusetts, Illinois and Ohio, along with the impact of FSC since the FSC Acquisition Date; however, these increases were offset by lower retail sales in other locations. The decrease in other revenue was primarily due to lower management fees and real estate rentals arising from our acquisition of the businesses from whom we had previously recognized such revenue.
Previous wording
Our cost of revenue, gross profit and gross margin for the three and nine months ended September 30, 2024 and 2023 were as follows (in thousands, except percentages):
Current wording
Our cost of revenue, gross profit and gross margin for the three months ended March 31, 2025 and 2024 were as follows (in thousands, except percentages):
Previous wording
Our cost of revenue increased in both the three- and nine-month periods ended September 30, 2024 compared to the same periods in the prior year. These increases were primarily attributable to increases in employee-related expenses and materials costs aggregating approximately $2 million and $6 million in the three and nine months ended September 30, 2024, respectively. Our higher personnel costs were primarily due to our increased headcount in connection with our recent acquisitions and expanded footprint. These increases were partially offset by decreases in certain inventory-related expenses.
Current wording
Our cost of revenue increased $1.4 million while revenue remained virtually unchanged in the three months ended March 31, 2025 compared to the three months ended March 31, 2024. This increase was primarily attributable to higher employee-related and facilities and related costs. Our higher personnel costs were primarily due to our increased headcount in connection with our recent acquisitions and expanded footprint. These increases were partially offset by decreases in certain inventory-related expenses.
Previous wording
Our operating expenses are comprised of personnel, marketing and promotion, general and administrative, acquisition-related and other, and bad debt expenses. Our operating expenses for the three and nine months ended September 30, 2024 and 2023 were as follows (in thousands, except percentages):
Current wording
Our operating expenses are comprised of personnel, marketing and promotion, general and administrative, acquisition-related and other, and bad debt expenses. Our operating expenses for the three months ended March 31, 2025 and 2024 were as follows (in thousands, except percentages):
Previous wording
The increase in our personnel expenses in both the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023 was primarily due to the hiring of additional staff to support higher levels of projected revenue from existing operations and our recent acquisitions. Personnel costs increased to approximately 18% and 17% of revenue in the three and nine months ended September 30, 2024, respectively, compared to approximately 15% of revenue in both the three and nine months ended September 30, 2023.
Current wording
The increase in our personnel expenses in the three months ended March 31, 2025 compared to the three months ended March 31, 2024 was primarily due to the increased headcount to support our acquisitions and resulting additional facilities and presence. Personnel costs increased to approximately 19% of revenue in the three months ended March 31, 2025, compared to approximately 17% of revenue in the three months ended March 31, 2024.
Previous wording
The increase in our marketing and promotion expenses in both the three and nine months ended September 30, 2024, compared to the three and nine months ended September 30, 2023 was primarily attributable to our continued focus on upgrading our marketing initiatives in order to expand branding and distribution of our licensed products.
Current wording
The decrease in our marketing and promotion expenses in the three months ended March 31, 2025 compared to the three months ended March 31, 2024 was primarily attributable to our planned reductions to these expenses; however, we continue to focus on judicious marketing initiatives that expand the branding and distribution of our licensed products.
Previous wording
Acquisition-related and other expenses include those expenses related to acquisitions and other significant transactions that we would otherwise not have incurred, and include professional and services fees, such as legal, audit, consulting, paying agent and other fees. Our acquisition-related and other expense in both the three and nine months ended September 30, 2024 primarily related to the acquisitions of MedLeaf and Allgreens, which were both consummated in April 2024, and non-cash expense for warrants to purchase our common stock issued to an entity in consideration for introductory and other services rendered in connection with certain funding and acquisitive transactions. Our acquisition-related and other expense in the three and nine months ended September 30, 2023 primarily related to our acquisitions and professional fees incurred to obtain the CA Credit Agreement (described below).
Current wording
Acquisition-related and other expenses include those expenses related to acquisitions and other significant transactions that we would otherwise not have incurred, and include professional and services fees, such as legal, audit, consulting, paying agent and other fees. Our acquisition-related and other expense in the three months ended March 31, 2025 primarily related to the FSC Acquisition. Our acquisition-related and other expense in the three months ended March 31, 2024 primarily related to the acquisitions of MedLeaf and Allgreens, which were both consummated in April 2024.
Previous wording
Interest expense primarily relates to interest on mortgages and notes payable, as well as the CREM Loan (described below) in 2024 and the CA Term Loan (described below) in 2023. Interest income primarily relates to our notes receivable.
Current wording
Interest expense primarily relates to interest on mortgages and notes payable, as well as the CREM Loan (described below). Interest income primarily relates to our notes receivable.
Previous wording
We reported net other expense of approximately $50,000 in the nine months ended September 30, 2024. We did not record other income or expense in the three months ended September 30, 2024.
Current wording
We reported net other expense of approximately $20,000 in the three months ended March 31, 2024, which was related to the change in the fair value of our investments. We did not recognize any other income or expense in the three months ended March 31, 2025.
Previous wording
We recorded income tax provisions of $3.2 million and $8.9 million in the nine months ended September 30, 2024 and 2023, respectively. Our income tax provisions are impacted by Section 280E of the Internal Revenue Code, which prohibits the deduction of certain ordinary business expenses.
Current wording
We recorded income tax provisions of $2.8 million and $1.7 million in the three months ended March 31, 2025 and 2024, respectively. Our income tax provisions are impacted by Section 280E of the Internal Revenue Code, which prohibits the deduction of certain ordinary business expenses.
Previous wording
We had cash and cash equivalents of $9.8 million and $14.6 million at September 30, 2024 and December 31, 2023, respectively. In addition to the discussions below of our cash flows from operating, investing, and financing activities, please also see our discussion of non-GAAP Adjusted EBITDA in the section “Non-GAAP Measurement” below, which discusses an additional financial measure not defined by GAAP which our management also uses to measure our liquidity.
Current wording
We had cash and cash equivalents of $7.2 million and $7.3 million at March 31, 2025 and December 31, 2024, respectively. In addition to the discussions below of our cash flows from operating, investing, and financing activities, please also see our discussion of non-GAAP Adjusted EBITDA in the section “Non-GAAP Measurement” below, which discusses an additional financial measure not defined by GAAP which our management also uses to measure our liquidity.
Previous wording
The CREM Loan Transaction is for a term of ten years and has an interest rate for the initial five years of 8.43% per annum. The interest rate will reset after five years to the FHLB Rate (the Classic Advance Rate for Fixed Rate advances for a period of five years for an amount greater than or equal to the loan amount, as such rate is defined and published by the Federal Home Loan Bank of Boston), plus 3.50%. We will make interest-only payments for the first twelve months of the term of the loan, with payments thereafter based upon a twenty-year amortization schedule.
Current wording
The CREM Loan Transaction is for a term of ten years and has an interest rate for the initial five years of 8.43% per annum. The interest rate will reset after five years to the FHLB Rate (the Classic Advance Rate for Fixed Rate advances for a period of five years for an amount greater than or equal to the loan amount, as such rate is defined and published by the Federal Home Loan Bank of Boston), plus 3.50%. We made interest-only payments for the first twelve months of the term of the loan, with payments thereafter based upon a twenty-year amortization schedule.
Previous wording
The CREM Lender initially released $52.8 million to the CREM Borrowers (the "Initial CREM Distribution"), with the remaining proceeds of $5.9 million placed into in escrow to complete the expansion of our Hagerstown, Maryland cultivation facility (the "Hagerstown Facility"). Any unused proceeds would be released to us after completion of the Hagerstown Facility expansion. We used $46.8 million of the Initial CREM Distribution to fully repay certain of our outstanding debt obligations. These payments were comprised of $32.7 million to repay the Term Loan, $11.9 million to repay the mortgage with Bank of New England for our New Bedford, MA and Middleborough, MA properties (the "BNE Mortgage"), and $2.2 million to reduce the outstanding balance of the note we issued in connection with the Ermont Acquisition. Concurrent with the repayment of the BNE Mortgage, we refinanced these properties through the CREM Loan and accordingly, effective November 16, 2023, the mortgage on these properties is held by Needham Bank, which mortgage matures in 2033 and which outstanding amount is included as a component of the CREM Loan amount in our consolidated balance sheet at December 31, 2023. During the nine months ended September 30, 2024, $5.1 million of the escrowed portion of the loan proceeds was released to us,
Current wording
The CREM Lender initially released $52.8 million to the CREM Borrowers (the "Initial CREM Distribution"), with the remaining proceeds of $5.9 million placed into in escrow to complete the expansion of our Hagerstown, Maryland cultivation facility (the "Hagerstown Facility"). Any unused proceeds would be released to us after completion of the Hagerstown Facility expansion. We used $46.8 million of the Initial CREM Distribution to fully repay certain of our outstanding debt obligations. These payments were comprised of $32.7 million to repay the previous term loan with Chicago Atlantic Admin, LLC, $11.9 million to repay the mortgage with Bank of New England for our New Bedford, MA and Middleborough, MA properties (the "BNE Mortgage"), and $2.2 million to reduce the outstanding balance of the note we issued in connection with the 2023 acquisition of Ermont, Inc. in Quincy, Massachusetts. Concurrent with the repayment of the BNE Mortgage, we refinanced these properties through the CREM Loan and accordingly, effective November 16, 2023, the mortgage on these properties is held by the CREM Lender, which mortgage matures in 2033 and which outstanding amount is included as a component of the CREM Loan amount in our consolidated balance sheets at March 31, 2025 and December 31, 2024.
Previous wording
Our operating activities provided $7.2 million and $4.7 million of cash in the nine months ended September 30, 2024 and 2023, respectively. The change in cash from operating activities in the current year period compared to the prior year was primarily attributable to higher costs and operating expenses arising from expanding our sales activities, facilities and geographic footprint, both in the states where we currently operate and to expand into other states. These higher costs primarily relate to personnel, cultivation/manufacturing and facility expenses.
Current wording
Our operating activities provided $1.3 million and $3.2 million of cash in the three months ended March 31, 2025 and 2024, respectively. The change in cash from operating activities in the current year period compared to the prior year was primarily attributable to higher personnel costs and operating expenses arising from expanding our geographic presence. These higher costs primarily relate to personnel, cultivation/manufacturing and facility expenses.
Previous wording
Our investing activities used $15.9 million and $19.6 million of cash in the nine months ended September 30, 2024 and 2023, respectively. During the nine months ended September 30, 2024, we used $10.9 million of cash for capital expenditures, $4.3 million for purchase consideration in connection with the MedLeaf Acquisition and Allgreens Acquisition, and $0.7 million for purchases of cannabis licenses. During the nine months ended September 30, 2023, we used $14.7 million of cash for capital expenditures, $3.0 million as part of the purchase consideration for the Ermont Acquisition, $0.6 million for cannabis licenses, $0.3 million for advances toward future acquisitions and $0.2 million for the purchase of certain investments. We also issued $0.9 million of notes receivable to a cannabis-licensed client.
Current wording
Our investing activities used $0.1 million and $4.3 million of cash in the three months ended March 31, 2025 and 2024, respectively. During the three months ended March 31, 2025, we used $0.3 million of cash for capital expenditures and $0.1 million in the aggregate for advances toward future business acquisitions and purchases of cannabis licenses. These amounts were partially offset by $0.2 million of cash acquired in connection with the FSC Acquisition and approximately $26,000 of proceeds from notes receivable. During the three months ended March 31, 2024, we used $3.4 million of cash for capital expenditures, $0.5 million for advances toward future business acquisitions, $0.3 million for purchases of cannabis licenses an $0.1 million for the purchase of certain investments.
Previous wording
Our financing activities provided $3.9 million of cash in the nine months ended September 30, 2024 and $18.5 million of cash in the nine months ended September 30, 2023. During the nine months ended September 30, 2024, we received $5.1 million of additional proceeds from the CREM Loan and $1.2 million of proceeds from the refinancing of our retail facility in Mt. Vernon, Illinois. We made $2.2 million of aggregate principal payments on our outstanding mortgages, promissory notes and finance leases, and approximately $120,000 of distribution payments.
Current wording
Our financing activities used $1.3 million of cash in the three months ended March 31, 2025 and provided $1.6 million of cash in the three months ended March 1, 2024. During the three months ended March 31, 2025, we made $1.2 million of aggregate principal payments on our outstanding mortgages, promissory notes and finance leases, and approximately $58,000 of distribution payments. During the three months ended March 31, 2024, we received $1.0 million of proceeds from the CREM Loan (described above) and $1.2 million of proceeds from the refinancing of our retail facility in Mt. Vernon, Illinois. We made $0.5 million of aggregate principal payments on our outstanding mortgages, promissory notes and finance leases and approximately $45,000 of distribution payments.
Previous wording
Based on our current expectations, we believe our current cash and future funding opportunities will be sufficient to meet our anticipated cash needs for working capital and capital expenditures for at least the next twelve months. The rate at which we consume cash is dependent on the cash needs of our future operations, including our contractual obligations at September 30, 2024, and our ability to raise additional cash through financing activities. We anticipate devoting substantial capital resources to continue our efforts to execute our strategic growth plan as described above.
Current wording
Based on our current expectations, we believe our current cash and future funding opportunities will be sufficient to meet our anticipated cash needs for working capital and capital expenditures for at least the next twelve months. The rate at which we consume cash is dependent on the cash needs of our future operations, including our contractual obligations at March 31, 2025, and our ability to raise additional cash through financing activities. Our contractual obligations at
Previous wording
Management defines Adjusted EBITDA as income from operations, determined in accordance with GAAP, excluding the following:
Current wording
Our management defines Adjusted EBITDA as income from operations, determined in accordance with GAAP, excluding the following:
Previous wording
Management believes that Adjusted EBITDA is a useful measure to assess our performance and liquidity, as it provides meaningful operating results by excluding the effects of expenses that are not reflective of our operating business performance. In addition, our management uses Adjusted EBITDA to understand and compare operating results across accounting periods, and for financial and operational decision-making. The presentation of Adjusted EBITDA is not intended to be considered in isolation or as a substitute for the financial information prepared in accordance with GAAP.
Current wording
Our management believes that Adjusted EBITDA is a useful measure to assess our performance and liquidity, as it provides meaningful operating results by excluding the effects of expenses that are not reflective of our operating business performance. In addition, our management uses Adjusted EBITDA to understand and compare operating results across accounting periods, and for financial and operational decision-making. The presentation of Adjusted EBITDA is not intended to be considered in isolation or as a substitute for the financial information prepared in accordance with GAAP.
Previous wording
Management believes that investors and analysts benefit from considering Adjusted EBITDA in assessing our financial results and our ongoing business, as it allows for meaningful comparisons and analysis of trends in the business. Adjusted EBITDA is used by many investors and analysts themselves, along with other metrics, to compare financial results across accounting periods and to those of peer companies.
Current wording
Our management believes that investors and analysts benefit from considering Adjusted EBITDA in assessing our financial results and our ongoing business, as it allows for meaningful comparisons and analysis of trends in the business. Adjusted EBITDA is used by many investors and analysts themselves, along with other metrics, to compare financial results across accounting periods and to those of peer companies.
Previous wording
The table below reconciles income from operations to Adjusted EBITDA for the three and nine months ended September 30, 2024 and 2023 (in thousands):
Current wording
The table below reconciles income from operations to Adjusted EBITDA for the three months ended March 31, 2025 and 2024 (in thousands):
Previous wording
In the opinion of management, inflation has impacted the Company through increased costs of ingredients, nutrients and packaging. We recently negotiated with certain of our suppliers to reduce our costs for future purchases of ingredients, nutrients and packaging, all of which have increased significantly as a result of current economic conditions.
Current wording
In the opinion of management, inflation has impacted us through increased costs of ingredients, nutrients and packaging. We recently negotiated with certain of our suppliers to reduce our costs for future purchases of ingredients, nutrients and packaging, all of which have increased significantly as a result of current economic conditions.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Three months ended March 31, 2025 and 2024
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
The CA Credit Agreement included customary representations and warranties and customary events of default, including, without limitation, payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to material indebtedness, and events of bankruptcy and insolvency.