Exhibit 99.1
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GLASS HOUSE BRANDS INC.
UNAUDITED CONDENSED INTERIM
CONSOLIDATED FINANCIAL STATEMENTS
AS OF
JUNE 30, 2025 AND DECEMBER 31, 2024
AND FOR THE THREE AND SIX MONTHS ENDED
JUNE 30, 2025 AND 2024


GLASS HOUSE BRANDS INC.
Table of Contents
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GLASS HOUSE BRANDS INC.
Unaudited Condensed Consolidated Balance Sheets
(Amounts Expressed in United States Dollars in Thousands, Except Share Data, Unless Otherwise Stated)
 June 30, 2025December 31, 2024
ASSETS
Current Assets:
Cash$40,701 $33,923 
Restricted Cash— 3,000 
Accounts Receivable, Net9,842 5,221 
Income Taxes Receivable933 1,929 
Prepaid Expenses and Other Current Assets15,355 7,775 
Inventory19,669 14,252 
Total Current Assets86,500 66,100 
Operating Lease Right-of-Use Assets, Net4,388 8,168 
Finance Lease Right-of-Use Assets, Net2,586 2,568 
Long Term Investments172 2,341 
Property, Plant and Equipment, Net222,999 212,252 
Intangible Assets, Net11,939 14,200 
 Restricted Cash, Net of Current Portion3,500 — 
Other Assets2,477 4,873 
TOTAL ASSETS$334,561 $310,502 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:  
Accounts Payable and Accrued Liabilities$37,532 $31,128 
Income Taxes Payable3,725 2,408 
Contingent Shares Payable and Earnout Liabilities— 20,265 
Shares Payable— 2,579 
Current Portion of Operating Lease Liabilities1,122 1,565 
Current Portion of Finance Lease Liabilities989 889 
Current Portion of Notes Payable— 7,644 
Total Current Liabilities43,368 66,478 
Operating Lease Liabilities, Net of Current Portion3,370 6,860 
Finance Lease Liabilities, Net of Current Portion1,425 1,688 
Other Non-Current Liabilities28,237 20,869 
Notes Payable, Net of Current Portion65,845 50,552 
TOTAL LIABILITIES142,245 146,447 
MEZZANINE NON-CONTROLLING INTEREST:
GH Group, Inc. Preferred Series B Shares (no par value, 55,000 shares authorized, 49,969 shares issued and outstanding as of June 30, 2025 and December 31, 2024)
70,042 65,084 
GH Group, Inc. Preferred Series C Shares (no par value, 5,000 shares authorized, 5,000 shares issued and outstanding as of June 30, 2025 and December 31, 2024)
6,748 6,279 
GH Group, Inc. Preferred Series D Shares (no par value, 15,000 shares authorized, 15,000 shares issued and outstanding as of June 30, 2025 and December 31, 2024)
15,000 15,000 
SHAREHOLDERS' EQUITY:
Multiple Voting Shares (no par value, unlimited shares authorized, 4,754,979 shares issued and outstanding as of June 30, 2025 and December 31, 2024)
— — 
Subordinate Voting Shares (no par value, unlimited shares authorized, 72,193,165 and 69,888,086 shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively)
— — 
Exchangeable Shares (no par value, unlimited shares authorized, 6,887,347 and 7,017,866 shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively)
— — 
Additional Paid-In Capital
337,328 306,652 
Accumulated Deficit(191,807)(190,416)
Total Shareholders' Equity Attributable to the Company145,521 116,236 
Non-Controlling Interest(44,995)(38,544)
TOTAL SHAREHOLDERS' EQUITY192,316 164,055 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY$334,561 $310,502 
The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.
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GLASS HOUSE BRANDS INC.
Unaudited Condensed Interim Consolidated Statements of Operations
(Amounts Expressed in United States Dollars in Thousands, Except Share and Per Share Data, Unless Otherwise Stated)
Three Months Ended Six Months Ended
June 30,June 30,
2025202420252024
Revenues, Net$59,867 $53,938 $104,685 $84,038 
Cost of Goods Sold (Exclusive of Depreciation and Amortization Shown Separately Below)27,936 25,264 52,689 42,838 
Gross Profit31,931 28,674 51,996 41,200 
Operating Expenses:  
General and Administrative14,618 17,366 29,701 30,894 
Sales and Marketing803 682 1,490 1,159 
Professional Fees1,965 1,860 3,633 5,523 
Depreciation and Amortization3,905 3,723 7,742 7,439 
Impairment Expense for Intangible Assets— — 1,900 — 
Total Operating Expenses21,291 23,631 44,466 45,015 
Income (Loss) from Operations10,640 5,043 7,530 (3,815)
Other (Income) Expense:  
Interest Expense1,919 2,593 4,195 4,799 
Interest Income— — (288)— 
(Gain) Loss on Equity Method Investments(44)94 (84)76 
(Gain) Loss on Change in Fair Value of Derivative Asset and Liability328 (32)2,061 (145)
(Gain) Loss on Change in Fair Value of Contingent Liabilities and Shares Payable95 (7,910)— (1,445)
Loss on Extinguishment of Debt— — 292 — 
Other (Income) Expense, Net(5,371)56 (5,279)93 
Total Other (Income) Expense, Net(3,073)(5,199)897 3,378 
Income (Loss) From Operations Before Provision for Income Taxes13,713 10,242 6,633 (7,193)
Provision for Income Taxes4,969 203 7,897 1,037 
Net Income (Loss)8,744 10,039 (1,264)(8,230)
Net Income to Non-Controlling Interest75 43 127 105 
Net Income (Loss) Attributable to the Company$8,669 $9,996 $(1,391)$(8,335)
  
Income (Loss) Per Share - Basic$0.05 $0.08 $(0.13)$(0.22)
Income (Loss) Per Share - Diluted$0.05 $0.08 $(0.13)$(0.22)
  
Weighted-Average Shares Outstanding - Basic81,098,80673,807,71180,769,09073,522,518
Weighted-Average Shares Outstanding - Diluted82,821,41382,232,06880,769,09073,522,518
The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.
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GLASS HOUSE BRANDS INC.
Unaudited Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity
(Amounts Expressed in United States Dollars in Thousands, Except Share Data, Unless Otherwise Stated)
Units$ Amount
Multiple Voting SharesEquity SharesExchangeable Voting SharesAdditional Paid-In CapitalAccumulated DeficitTOTAL EQUITY ATTRIBUTABLE TO SHAREHOLDERSMezzanine Non-Controlling Equity Preferred Series BMezzanine Non-Controlling Equity Preferred Series CMezzanine Non-Controlling Equity Preferred Series DNon-Controlling InterestTOTAL SHAREHOLDERS' EQUITY
BALANCE AS OF DECEMBER 31, 20244,754,97969,888,0867,017,866$306,652 $(190,416)$116,236 $65,084 $6,279 $15,000 $(38,544)$164,055 
Net Income (Loss)———— (10,060)(10,060)— — — 52 (10,008)
Share-Based Compensation from Options and Restricted Stock Units———2,105 — 2,105 — — — — 2,105 
Contingent Shares Payable in Connection with Camarillo Acquisition———20,265 — 20,265 — — — — 20,265 
Shares Issued for Conversion of Exchangeable Shares—128,842(128,842)— — — — — — — — 
Shares Issued for Vesting of Restricted Stock Units—466,181—— — — — — — — — 
Shares Issued for Exercise of Options—26,604—82 — 82 — — — — 82 
Shares Issued for Payment of Interest on Convertible Debentures—8,495—— — — — — — — — 
Dividends - Preferred Shareholders———— — — 2,411 228 — (4,577)(1,938)
BALANCE AS OF MARCH 31, 20254,754,97970,518,2086,889,024329,104 (200,476)128,628 67,495 6,507 15,000 (43,069)174,561 
Net Income———— 8,669 8,669 — — — 75 8,744 
Share-Based Compensation from Options and Restricted Stock Units———2,944 — 2,944 — — — — 2,944 
Shares Issued and Shares Payable - NHC Business Acquisitions—116,427—2,579 — 2,579 — — — — 2,579 
Shares Issued in Connection with Camarillo Acquisition—500,000—— — — — — — — — 
Shares Issued for Conversion of Exchangeable Shares—1,677(1,677)— — — — — — — — 
Shares Issued for Vesting of Restricted Stock Units—623,189—— — — — — — — — 
Shares Issued for Exercise of Options—95,483—276 — 276 — — — — 276 
Shares Issued for 2024 Bonus—208,772—1,114 — 1,114 — — — — 1,114 
Shares Issued for Payment of Interest on Convertible Debentures—129,409—646 — 646 — — — — 646 
Variable Interest Entity Consolidation———665 — 665 — — — 2,724 3,389 
Dividends - Preferred Shareholders———— — — 2,547 241 — (4,725)(1,937)
BALANCE AS OF JUNE 30, 20254,754,97972,193,1656,887,347$337,328 $(191,807)$145,521 $70,042 $6,748 $15,000 $(44,995)$192,316 
The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.
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GLASS HOUSE BRANDS INC.
Unaudited Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity
(Amounts Expressed in United States Dollars in Thousands, Except Share Data, Unless Otherwise Stated)
Units$ Amount
Multiple Voting SharesEquity SharesExchangeable Voting SharesAdditional Paid-In CapitalAccumulated DeficitTOTAL EQUITY ATTRIBUTABLE TO SHAREHOLDERSMezzanine Non- Controlling Equity Preferred Series BMezzanine Non- Controlling Equity Preferred Series CMezzanine Non- Controlling Equity Preferred Series DNon-Controlling InterestTOTAL SHAREHOLDERS' EQUITY
BALANCE AS OF DECEMBER 31, 20234,754,97961,986,6868,953,951$280,696 $(190,935)$89,761 $57,545 $5,608 $15,000 $(22,678)$145,236 
Net Income (Loss)———— (18,331)(18,331)— — — 62 (18,269)
Share-Based Compensation from Options and Restricted Stock Units———3,272 — 3,272 — — — — 3,272 
Shares Issued for Exercise of Warrants—27,400—— — — — — — — — 
Shares Issued for Conversion of Exchangeable Shares—481,689(481,689)— — — — — — — — 
Shares Issued for Vesting of Restricted Stock Units—195,710—— — — — — — — — 
Shares Issued for Exercise of Options—65,883—149 — 149 — — — — 149 
Distributions to Non-Controlling Interest Holders———— — — — — — (47)(47)
Dividends - Preferred Shareholders———— — — 1,627 155 — (3,720)(1,938)
BALANCE AS OF MARCH 31, 20244,754,97962,757,3688,472,262284,117(209,266)74,85159,1725,76315,000(26,383)128,403
Net Income———— 9,996 9,996 — — — 43 10,039 
Share-Based Compensation from Options and Restricted Stock Units———3,621 — 3,621 — — — — 3,621 
Shares Issued for Exercise of Warrants—27,356—100 — 100 — — — — 100 
Shares Issued for Conversion of Exchangeable Shares—629,882(629,882)— — — — — — — — 
Shares Issued for Vesting of Restricted Stock Units—1,147,022—— — — — — — — — 
Shares Issued for Exercise of Options—153,520—369 — 369 — — — — 369 
Shares Issued for 2023 Bonus—286,406—2,715 — 2,715 — — — — 2,715 
Shares Issued for Vested GH Group Non-Qualified Options—1,433,810—2,757 — 2,757 — — — — 2,757 
Shares Issued for Payment of Interest on Convertible Debentures—92,643—646 — 646 — — — — 646 
Distributions to Non-Controlling Interest Holders———— — — — — — (31)(31)
Dividends - Preferred Shareholders———— — — 1,709 164 — (3,808)(1,935)
BALANCE AS OF JUNE 30, 20244,754,97966,528,0077,842,380$294,325 $(199,270)$95,055 $60,881 $5,927 $15,000 $(30,179)$146,684 
The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.
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GLASS HOUSE BRANDS INC.
Unaudited Condensed Interim Consolidated Statements of Cash Flows
(Amounts Expressed in United States Dollars in Thousands Unless Otherwise Stated)
Six Months Ended
June 30,
20252024
CASH FLOWS FROM OPERATING ACTIVITIES:  
Net Loss$(1,264)$(8,230)
Adjustments to Reconcile Net Loss to Net Cash Provided by Operating Activities:  
Bad Debt Expense, Net of Recoveries51 145 
Depreciation and Amortization7,742 7,439 
(Gain) Loss on Equity Method Investments(84)76 
Impairment Expense for Intangible Assets1,900 — 
Non-Cash Operating Lease Costs848 792 
Loss on Extinguishment of Debt292 — 
Accretion of Debt Discount and Loan Origination Fees286 966 
(Gain) Loss on Change in Fair Value of Derivative Asset and Liability2,061 (145)
Gain on Change in Fair Value of Contingent Liabilities and Shares Payable— (1,445)
Share-Based Compensation5,049 6,893 
Changes in Operating Assets and Liabilities:  
Accounts Receivable(4,672)(3,883)
Income Taxes Receivable996 — 
Prepaid Expenses and Other Current Assets843 (493)
Inventory(5,417)(5,663)
Other Assets1,966 176 
Accounts Payable and Accrued Liabilities3,703 10,263 
Interest Payments on Finance Leases(145)(120)
Income Taxes Payable1,317 (167)
Operating Lease Liabilities(825)(760)
Other Non-Current Liabilities5,561 1,181 
NET CASH PROVIDED BY OPERATING ACTIVITIES20,208 7,025 
CASH FLOWS FROM INVESTING ACTIVITIES:  
Purchases of Property and Equipment(16,153)(6,317)
Cash Received from Consolidation of Variable Interest Entity190 — 
NET CASH USED IN INVESTING ACTIVITIES(15,963)(6,317)
CASH FLOWS FROM FINANCING ACTIVITIES:  
Proceeds from the Issuance of Notes Payable49,140 — 
Payments on Finance Leases(521)(242)
Payments on Notes Payable(42,069)(3,778)
Cash Received for Exercise of Options and Warrants358 618 
Distributions to Non-Controlling Interest Holders— (78)
Distributions to Preferred Shareholders(3,875)(3,873)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES3,033 (7,353)
NET INCREASE (DECREASE) IN CASH, RESTRICTED CASH AND CASH EQUIVALENTS7,278 (6,645)
Cash, Restricted Cash and Cash Equivalents, Beginning of Period36,923 32,524 
CASH, RESTRICTED CASH AND CASH EQUIVALENTS, END OF PERIOD$44,201 $25,879 
The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.
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GLASS HOUSE BRANDS INC.
Unaudited Condensed Interim Consolidated Statements of Cash Flows
(Amounts Expressed in United States Dollars in Thousands Unless Otherwise Stated)
Six Months Ended
June 30,
20252024
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash Paid for Interest$2,079 $2,978 
Cash Paid for Taxes22 25 
Non-Cash Investing and Financing Activities:
Contingent Shares Payable in Connection with Camarillo Acquisition20,265 — 
Variable Interest Entity Consolidation12,231 — 
Shares Issued to Settle Shares Payable - NHC Business Acquisitions2,579 — 
Shares Issued for 2024 and 2023 Bonus, respectively1,114 2,715 
Shares Issued for Payment of Interest on Convertible Debentures646 646 
Recognition of Right-of-Use Assets for Finance Leases403 937 
Issuance for Shares Reserved from Vested GH Group Non-Qualified Options— 2,757 
The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.
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GLASS HOUSE BRANDS INC.
Notes to Unaudited Condensed Interim Consolidated Financial Statements
(Amounts Expressed in United States Dollars Unless Otherwise Stated)
1.    NATURE OF OPERATIONS
Glass House Brands Inc. (the “Company”), formerly known as Mercer Park Brand Acquisition Corp. (“Mercer Park”), was incorporated under the Business Corporations Act (British Columbia) on April 16, 2019. As of June 30, 2025, the Company is a vertically integrated cannabis company that generates cannabis revenue in the state of California and has certain licensing agreements in Nevada and Florida. The Company, through its subsidiaries, cultivates, manufactures, and distributes cannabis bulk flower and trim to wholesalers and consumer packaged goods to third-party retail stores in the state of California. The Company also owns and operates retail cannabis stores in the state of California. The Company’s subordinate voting shares (“Subordinate Voting Shares”), restricted voting shares (“Restricted Voting Shares”) and limited voting shares (“Limited Voting Shares,” and collectively with the Subordinate Voting Shares and the Restricted Voting Shares, the “Equity Shares”), and certain common share purchase warrants (the “Listed Warrants”) are listed on Cboe Canada, trading under the symbols “GLAS.A.U” and “GLAS.WT.U,” respectively. The Equity Shares and Listed Warrants also trade on the OTCQX in the United States under the symbols “GLASF” and “GHBWF,” respectively. The head office and principal address of the Company is 3645 Long Beach Boulevard, Long Beach, California 90807. The Company’s registered office in Canada is 666 Burrard Street, Suite 2500, Vancouver, BC V6C 2X8, Canada.
Liquidity
Historically, the Company’s primary source of liquidity has been from its operations, capital contributions made by equity investors and preferred equity investors, and debt issuances. The Company is meeting its operational obligations as they become due from its current working capital and from operations. However, the Company has sustained losses since inception and may require additional capital in the future. As of and for the six months ended June 30, 2025, the Company had an accumulated deficit of $191.8 million, a net loss attributable to the Company of $1.4 million and net cash provided by operating activities of $20.2 million. The Company estimates that based on current business operations and working capital, it will continue to meet its obligations as they become due in the short term.
The Company is generating cash from revenues and deploying its capital reserves to acquire and develop assets capable of producing additional revenues and earnings over both the immediate and near term. Capital reserves are primarily being utilized for capital expenditures, facility improvements, product development and marketing. The Company expects to continue to finance its operations, capital expenditures, facility improvements, product development and marketing primarily through cash from sales to customers and may consider future equity issuances and debt financing arrangements.
Liquidity risk is the chance that the Company will not be able to meet its financial obligations associated with financial liabilities. The Company manages its liquidity risk through the management of its capital structure. The Company’s approach to managing liquidity is to ensure that it will have sufficient liquidity to settle obligations and liabilities when due. In the event sufficient cash flow is not available from operating activities, the Company may continue to raise equity or debt capital from investors in order to meet liquidity needs. If the Company is not able to secure adequate additional funding, the Company may be forced to make reductions in spending, extend payment terms with suppliers, liquidate assets where possible, or suspend or curtail planned programs. Any of these actions could materially harm the Company’s business, results of operations and future prospects. There can be no assurance that such financing will be available or will be on terms acceptable to the Company.
The significant accounting policies and critical estimates applied by the Company in these Unaudited Condensed Interim Consolidated Financial Statements are the same as those applied in the Company’s audited Consolidated Financial Statements and accompanying notes for the years ended December 31, 2024 and 2023, unless disclosed otherwise below. The Company’s audited Consolidated Financial Statements for the years ended December 31, 2024 and 2023, filed on March 25, 2025, can be found on SEDAR+ at www.sedarplus.ca.
2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Preparation
The accompanying Unaudited Condensed Interim Consolidated Financial Statements have been prepared on a going concern basis in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and reflect the accounts and operations of the Company and those of the Company’s subsidiaries in which the Company has a controlling financial interest. Investments in entities in which the Company has significant influence, but less than a controlling financial interest, are accounted for using the equity method.
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GLASS HOUSE BRANDS INC.
Notes to Unaudited Condensed Interim Consolidated Financial Statements
(Amounts Expressed in United States Dollars Unless Otherwise Stated)
All intercompany transactions and balances have been eliminated in consolidation. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of the consolidated financial position of the Company as of June 30, 2025 and December 31, 2024, the consolidated results of operations for the three and six months ended June 30, 2025 and 2024 and cash flows for the six months ended June 30, 2025 and 2024 have been included.
The accompanying Unaudited Condensed Interim Consolidated Financial Statements do not include all of the information required for full annual financial statements. Accordingly, certain information, footnotes and disclosures normally included in the annual financial statements, prepared in accordance with GAAP, have been condensed or omitted. The financial data presented herein should be read in conjunction with the Company’s audited Consolidated Financial Statements for the year ended December 31, 2024, and the related notes thereto, and have been prepared using the same accounting policies described therein.
Basis of Consolidation
These Unaudited Condensed Interim Consolidated Financial Statements as of June 30, 2025 and December 31, 2024 and for the three and six months ended June 30, 2025 and 2024 include the accounts of the Company, its wholly-owned subsidiaries and entities over which the Company has control as defined in Accounting Standards Codification (“ASC”) 810, Consolidation. Subsidiaries over which the Company has control are fully consolidated from the date control commences until the date control ceases. Control exists when the Company has ownership of a majority voting interest, and, therefore, as a general rule ownership by one reporting entity, directly or indirectly, of more than fifty percent of the outstanding voting securities of another entity. In assessing control, potential voting rights that are currently exercisable are considered.
Non-Controlling Interests
Non-controlling interests represent equity interests owned by parties that are not shareholders of the ultimate parent. The share of net assets attributable to non-controlling interests is presented as a component of equity. Their share of net income or loss is recognized directly in equity. Changes in the parent company’s ownership interest that do not result in a loss of control are accounted for as equity transactions.
Segmented Information
The Company currently operates in three reportable segments which are retail, wholesale biomass and cannabis-related consumer packaged goods (“CPG”). The retail segment includes Company owned and operated retail cannabis stores in the state of California. The wholesale biomass segment includes the propagation, nursery, flowering canopy, drying, processing and distribution of cannabis biomass. The CPG segment includes the manufacturing, extraction, infusion, conversion, packaging and distribution of the Company’s branded cannabis products. Certain economic characteristics such as production processes, types of products, classes of customers, as well as distribution models differ between segments. Operating segments are defined as components of an enterprise for which separate financial information is evaluated regularly by the Chief Operating Decision Maker (“CODM”), who is the Company’s chief executive officer, in deciding how to allocate resources and assess the Company’s financial and operational performance. As of June 30, 2025, all of the Company’s operations are in the United States of America in the State of California. Intercompany sales and transactions are eliminated in consolidation. See Note 19 – Segment Information for further information.
Employee Retention Tax Credits
On March 27, 2020, the U.S. government enacted the Coronavirus Aid Relief and Security Act (“CARES Act”) to provide certain relief as a result of the COVID-19 pandemic. The CARES Act provides tax relief, along with other stimulus measures, including a provision for an Employee Retention Credit (“ERC”). As there is no authoritative guidance under GAAP on accounting for government assistance to for-profit business entities, the Company accounts for the ERC by analogy to International Accounting Standard (“IAS”) 20, Accounting for Government Grants and Disclosure of Government Assistance. Since the filing of the ERCs through June 30, 2025, the Company filed with the Internal Revenue Service credits totaling $11.6 million during the year ended December 31, 2023, of which $0.4 million was received during the year ended December 31, 2024 and $5.0 million was received during the six months ended June 30, 2025, of which $0.8 million was accrued for interest. The Company will not recognize the remaining amount of $6.2 million claimed as of June 30, 2025 until it has been determined that the Company has reasonable assurance that the credits will be realized.
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GLASS HOUSE BRANDS INC.
Notes to Unaudited Condensed Interim Consolidated Financial Statements
(Amounts Expressed in United States Dollars Unless Otherwise Stated)
Restricted Cash
Restricted cash balances are those which meet the definition of cash and cash equivalents but are not available for use by the Company. As of June 30, 2025 and December 31, 2024, restricted cash was $3.5 million and $3.0 million, respectively, which is held in escrow accounts and used as an interest reserve primarily for the Senior Secured Credit Facility (as defined below) and Credit Agreement (as defined below), respectively. See Note 11 – Notes Payable and Convertible Debentures for further discussion.
Accounts Receivable
The Company extends non-interest-bearing trade credit to its customers in the ordinary course of business which is not collateralized. Accounts receivable are shown on the face of the Unaudited Condensed Consolidated Interim Balance Sheets, net of an allowance for credit losses. The Company analyzes the aging of accounts receivable, historical credit losses, customer creditworthiness and current economic trends in determining the allowance for credit losses. The Company does not accrue interest receivable on past due accounts receivable.
Accounts receivable, net is as follows (in thousands):
June 30, 2025December 31, 2024
Accounts Receivable Amortized Cost$10,288 $5,693 
Allowance for Credit Losses(446)(472)
Accounts Receivable, Net$9,842 $5,221 
The following table summarizes the changes in the allowance for credit losses for accounts receivable (in thousands):
Three Months Ended Six Months Ended
June 30,June 30,
2025202420252024
Balance, Beginning of Period$(372)$(630)$(472)$(717)
Provision for Expected Credit Losses(98)(154)(29)(145)
Write-offs24 161 55 239 
Balance, End of Period$(446)$(623)$(446)$(623)
Interest Rate Derivative
The Company utilizes an interest rate swap, expiring on February 28, 2030, to manage its exposure to variability in future cash flows from interest rate fluctuations on its Senior Secured Credit Facility (as defined below). This swap effectively converts the variable interest rate on the debt to a fixed rate and is classified as a derivative under ASC 815, Derivatives and Hedging. The Company has not designated this contract for hedge accounting.
The interest rate swap is recorded at fair value within other non-current liabilities on the Unaudited Condensed Consolidated Interim Balance Sheet and changes in fair value are recognized in (gain) loss on change in fair value of derivative asset and liability on the Unaudited Condensed Consolidated Interim Statement of Operations. The Company's policy is not to enter into derivative instruments for trading or speculative purposes. Cash flows resulting from this derivative instrument are included within net cash provided by operating activities on the Unaudited Condensed Consolidated Interim Statement of Cash Flows.
The Company's interest rate swap is measured at fair value using Level 2 inputs. The fair value is determined using a discounted cash flow method that incorporates observable inputs. The fair value calculation includes a credit valuation adjustment and forward interest rate curves for the same periods as the future maturity dates of the interest rate swap.
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GLASS HOUSE BRANDS INC.
Notes to Unaudited Condensed Interim Consolidated Financial Statements
(Amounts Expressed in United States Dollars Unless Otherwise Stated)
Earnings and Loss per Share
The Company calculates basic earnings or loss per share by dividing net earnings or loss by the weighted-average number of the Equity Shares (including the Exchangeable Shares, as defined herein, on an as-exchanged basis) outstanding during the period. Multiple Voting Shares, as defined herein, are excluded from the calculation of earnings or loss per share as they do not participate in earnings or losses. Diluted loss per share is the same as basic loss per share if the issuance of shares on the exercise of convertible debentures, contingent shares, warrants, restricted stock units and share options are anti-dilutive. Diluted earnings per share includes options, warrants, restricted stock units and contingently issuable shares that are determined to be dilutive using the treasury stock method for all equity instruments issuable in equity units and the “if converted” method for the Company’s convertible debentures. See Note 15 – Income (Loss) Per Share for further information.
Recent Accounting Pronouncements Not Yet Adopted
ASU 2025-05
In July 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-05, Measurement of Credit Losses for Accounts Receivable and Contract Assets. ASU 2025-05 amends ASC 326, Financial Instruments—Credit Losses, and introduces a practical expedient available for all entities and an accounting policy election available for all entities, other than public business entities, that elect the practical expedient. These changes apply to the estimation of expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASC 606, Revenue Recognition. Under the practical expedient, entities may assume that current conditions as of the balance sheet date remain unchanged for the remaining life of the asset when developing reasonable and supportable forecasts. This simplifies the estimation process for short-term financial assets. ASU 2025-05 is effective for the Company beginning in the first quarter of 2026. Early adoption is permitted. ASU 2025-05 should be applied on a prospective basis. The Company is currently assessing the impact this standard will have on the Company’s Consolidated Financial Statements.
ASU 2025-04
In May 2025, the FASB issued ASU 2025-04, Compensation—Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606). ASU 2025-04 revises the definition of the term performance condition for share-based consideration payable to a customer to incorporate conditions that are based on the volume or monetary amount of a customer’s purchases or potential purchases. ASU 2025-04 also eliminates the policy election to account for forfeitures as they occur for awards with service conditions. ASU 2025-04 also clarifies that ASC 606 variable consideration guidance does not apply to share-based payments to customers; instead, vesting probability should be assessed solely under ASC 718, Compensation—Stock Compensation. ASU 2025-04 is effective for the Company beginning in the first quarter of 2027. Early adoption is permitted. ASU 2025-04 may be applied on either a modified retrospective basis or on a retrospective basis. The Company is currently assessing the impact this standard will have on the Company’s Consolidated Financial Statements.
ASU 2025-03
In May 2025, the FASB issued ASU 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity. ASU 2025-03 clarifies the guidance to determine the accounting acquirer in a business combination that is effected primarily by exchanging equity interests, when the legal acquiree is a variable interest entity (“VIE”) that meets the definition of a business. ASU 2025-03 requires entities to consider the same factors in ASC 805, Business Combinations, required for determining which entity is the accounting acquirer in other acquisition transactions. ASU 2025-03 is effective for the Company beginning in the first quarter of 2027. Early adoption is permitted. ASU 2025-03 is required to be applied on a prospective basis to any acquisition transaction that occurs after the initial application date. The Company is currently assessing the impact this standard will have on the Company’s Consolidated Financial Statements.
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GLASS HOUSE BRANDS INC.
Notes to Unaudited Condensed Interim Consolidated Financial Statements
(Amounts Expressed in United States Dollars Unless Otherwise Stated)
ASU 2024-04
In November 2024, the FASB issued Accounting Standards Update 2024-04, Induced Conversions of Convertible Debt Instruments. ASU 2024-04 clarifies requirements for determining whether certain settlements of convertible debt instruments, including convertible debt instruments with cash conversion features or convertible debt instruments that are not currently convertible, should be accounted for as an induced conversion. To account for a settlement of a convertible debt instrument as an induced conversion, an inducement offer is required to provide the debt holder with, at a minimum, the consideration (in form and amount) issuable under the conversion privileges provided in the terms of the instrument. ASU 2024-04 is effective for the Company beginning in the first quarter of 2026. Early adoption is permitted. ASU 2024-04 may be applied either prospectively to any settlements of convertible debt instruments that occur after the effective date or retrospectively by recasting prior periods and recognize a cumulative-effect adjustment to equity. The Company is currently assessing the impact this standard will have on the Company’s Consolidated Financial Statements.
ASU 2024-03
In November 2024, the FASB issued ASU 2024-03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires disclosure of specified information about certain costs and expenses including purchases of inventory, employee compensation, depreciation and intangible asset amortization for each income statement line item that contains those expenses in the notes to financial statements on an annual and interim basis. ASU 2024-03 also requires entities to include certain amounts that are required to be disclosed under existing U.S. GAAP to be included in the disaggregated income statement expense line item disclosures, disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively and disclose the amount of selling expenses and the entity’s definition of selling expenses. ASU 2024-03 is effective for the Company beginning with the 2027 annual report. Early adoption is permitted. ASU 2024-03 may be applied either prospectively to financial statements issued for reporting periods after the effective date or retrospectively to any or all prior periods presented in the financial statements. The Company is currently assessing the impact this standard will have on the Company’s Consolidated Financial Statements.
ASU 2023-09
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires annual disclosures of specific categories in the rate reconciliation, additional information for reconciling items that meet a quantitative threshold and a disaggregation of income taxes paid, net of refunds. ASU 2023-09 also eliminates certain existing disclosure requirements related to uncertain tax positions and unrecognized deferred tax liabilities. ASU 2023-09 is effective for the Company beginning with the 2025 annual report. Early adoption is permitted. ASU 2023-09 should be applied prospectively. Retrospective adoption is permitted. The Company is currently assessing the impact this standard will have on the Company’s Consolidated Financial Statements.
3.    CONCENTRATIONS OF BUSINESS AND CREDIT RISK
The Company maintains certain cash balances at its physical locations, which are not currently insured, and with various U.S. banks and credit unions with balances in excess of the Federal Deposit Insurance Corporation and National Credit Union Share Insurance Fund limits, respectively. The failure of a bank or credit union where the Company has significant deposits could result in a loss of a portion of such cash balances in excess of the insured limit, which could materially and adversely affect the Company’s business, financial condition and results of operations. As of June 30, 2025 and December 31, 2024, the Company has not experienced any losses with regards to its cash balances.
The Company provides certain credit terms in the normal course of business to customers located throughout California. The Company performs ongoing credit evaluations of its customers and maintains allowances for doubtful accounts based on factors surrounding the credit risk of specific customers, historical and projected future trends and other information. For the three months ended June 30, 2025 and 2024, there was one customer that comprised 23% and 20%, respectively, of the Company’s revenues. For the six months ended June 30, 2025 and 2024, that customer comprised 21% and 18%, respectively, of the Company’s revenues. Revenue for the customer is included in the Company’s wholesale biomass segment. As of June 30, 2025 and December 31, 2024, the customer had a balance due to the Company of $3.5 million and $1.1 million, respectively.

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GLASS HOUSE BRANDS INC.
Notes to Unaudited Condensed Interim Consolidated Financial Statements
(Amounts Expressed in United States Dollars Unless Otherwise Stated)
4.    INVENTORY
Inventory consisted of the following (in thousands):
June 30, 2025December 31, 2024
Raw Materials$3,907 $2,913 
Work-in-Process7,488 4,572 
Finished Goods8,274 6,767 
Total Inventory$19,669 $14,252 
5.    INVESTMENTS
The Company has various investments in entities in which it holds a significant but non-controlling interest through voting equity or through representation on the entities’ board of directors or equivalent governing bodies. Accordingly, the Company was deemed to have significant influence resulting in the Company accounting for these investments under the equity method.
During the three months ended June 30, 2025 and 2024, the Company recorded a net gain and a net loss, respectively, from equity method investments of $44 thousand and $94 thousand, respectively. During the six months ended June 30, 2025 and 2024, the Company recorded a net gain and a net loss, respectively, from equity method investments of $84 thousand and $76 thousand, respectively. Equity investments are classified as Level 3 investments in the fair value hierarchy. These investments are recorded at the amount of the Company’s initial investment and adjusted for the Company’s share of the investee’s income or loss and dividends paid.
As of June 30, 2025, the Company consolidated 5042 Real Estate Investment, LLC and associated tenancy in common and recognized an increase of $3.4 million in total shareholders’ equity. See Note 6 – Property, Plant and Equipment.
On April 15, 2025, the Company entered into an agreement to acquire the remaining 76% ownership interest in a property located in Lompoc, California. See Note 6 – Property, Plant and Equipment. As of June 30, 2025, the Company consolidated the property held as a tenancy-in-common.
6.    PROPERTY, PLANT AND EQUIPMENT    
Property, plant and equipment consisted of the following (in thousands):
June 30, 2025December 31, 2024
Land$76,397 $70,888 
Buildings158,727 154,039 
Furniture and Fixtures1,745 1,483 
Leasehold Improvements15,571 15,574 
Equipment and Software10,885 11,094 
Construction in Progress12,815 6,456 
Total Property, Plant and Equipment276,140 259,534 
Less Accumulated Depreciation and Amortization(53,141)(47,282)
Property, Plant and Equipment, Net$222,999 $212,252 
During the three months ended June 30, 2025 and 2024, the Company recorded depreciation expense of $3.8 million and $3.6 million, respectively. During the six months ended June 30, 2025 and 2024, the Company recorded depreciation expense of $7.4 million and $7.1 million, respectively. The amount of amortization recognized for finance leases during the three months ended June 30, 2025 and 2024 was $0.2 million in each period. The amount of amortization recognized for finance leases during the six months ended June 30, 2025 and 2024 was $0.4 million and $0.3 million, respectively. See Note 10 – Leases for further information.
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GLASS HOUSE BRANDS INC.
Notes to Unaudited Condensed Interim Consolidated Financial Statements
(Amounts Expressed in United States Dollars Unless Otherwise Stated)
On April 15, 2025, the Company entered into an agreement to purchase the remaining 76% ownership interest in a property located in Lompoc, California, the site of the Company's manufacturing facility for a total purchase price of approximately $3.0 million. Title to the property is held as tenants-in-common (“TIC”) and the Company owns a 24% interest in this property. Upon completion of the acquisition, the Company will hold 100% ownership. Rent expense related to this property is considered a related party transaction as the selling tenant-in-common’s company, Neo Street Partners LLC, is partially owned by an executive and board member of the Company (as further described in 18 – Related Party Transactions). This acquisition will eliminate future related party rent expense associated with this property. The acquisition is subject to customary closing conditions and the Company obtaining financing. The transaction is expected to close during the three months ended September 30, 2025. As of June 30, 2025, the Company consolidated the property held as a tenancy-in-common which resulted in a $0.7 million increase in Land and $2.9 million increase in Buildings.
As of June 30, 2025, the Company consolidated 5042 Real Estate Investment, LLC and associated tenancy in common and recognized a $4.8 million increase in Land and $0.7 million increase in Buildings.
7.     INTANGIBLE ASSETS
Intangible assets consisted of the following (in thousands):
June 30, 2025December 31, 2024
Definite Lived Intangible Assets
Customer Relationships$587 $587 
Intellectual Property4,777 4,777 
Total Definite Lived Intangible Assets5,364 5,364 
Less Accumulated Amortization(3,395)(3,034)
Definite Lived Intangible Assets, Net1,969 2,330 
Indefinite Lived Intangible Assets  
Cannabis Licenses9,970 11,870 
Total Indefinite Lived Intangible Assets9,970 11,870 
Total Intangible Assets, Net$11,939 $14,200 
During the three months ended June 30, 2025 and 2024, the Company recorded amortization expense related to intangible assets of $0.2 million and $0.1 million, respectively. During the six months ended June 30, 2025 and 2024, the Company recorded amortization expense related to intangible assets of $0.4 million and $0.3 million, respectively.
During the six months ended June 30, 2025, the Company recognized $1.9 million of other than temporary impairment in its cannabis licenses related to its retail reportable segment as a result of updated earnings projections for unforeseen changes in the market from more than expected retail competition.
The following is the future minimum amortization expense to be recognized as of June 30, 2025 for each of the following years (in thousands):
2025 (Remaining)$362 
2026603 
2027470 
2028123 
2029123 
Thereafter288 
Total Future Amortization Expense$1,969 
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GLASS HOUSE BRANDS INC.
Notes to Unaudited Condensed Interim Consolidated Financial Statements
(Amounts Expressed in United States Dollars Unless Otherwise Stated)
8.    ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities consisted of the following (in thousands):
June 30, 2025December 31, 2024
Accounts Payable$8,552 $8,688 
Accrued Liabilities21,447 14,409 
Accrued Payroll and Related Liabilities4,349 4,058 
Sales Tax and Cannabis Taxes3,184 3,973 
Total Accounts Payable and Accrued Liabilities$37,532 $31,128 
The Company offers a customer loyalty rewards program that allows members to earn discounts on future purchases. Unused discounts earned by loyalty rewards program members are included in accrued liabilities and recorded as a sales discount at the time a qualifying purchase is made. The value of points accrued as of June 30, 2025 and December 31, 2024, was approximately $0.2 million and $0.4 million, respectively.
9.    CONTINGENT SHARES PAYABLE AND EARNOUT LIABILITIES
Activity related to the contingent shares and earnout liabilities consisted of the following (in thousands):
Balance at December 31, 2024$20,265 
Reclassification of Contingent Shares Payable to Additional Paid-In Capital(20,265)
Balance at June 30, 2025$— 
Balance at December 31, 2023$34,589 
Change in Fair Value of Contingent Liabilities6,453 
Balance at March 31, 202441,042 
Change in Fair Value of Contingent Liabilities(7,910)
Balance at June 30, 2024$33,132 
During the three months ended June 30, 2024, the Company recorded a gain for the change in fair value of contingent liabilities of $7.9 million. During the six months ended June 30, 2024, the Company recorded a gain for the change in fair value of contingent liabilities of $1.5 million. There was no change in the fair value of contingent liabilities recognized during the three and six months ended June 30, 2025. Contingent shares and contingent liabilities are classified as Level 3 investments in the fair value hierarchy. The value of contingent shares is based upon the value of the Company’s Equity Shares, the probability of future events occurring and other unobservable inputs. The value of contingent liabilities is based upon the potential earn-out of the facilities’ adjusted earnings during the earnout period and is measured at fair value using a discounted cash flow model that is based on unobservable inputs. There were no transfers into or out of Level 3 of the fair value hierarchy.
Contingent Earnout – Camarillo Transaction
During the year ended December 31, 2021, the Company purchased certain real property in Camarillo, California (the “Camarillo Transaction”). As a consideration for the option to purchase certain real property in conjunction with the Camarillo Transaction (the “Option Right”), the Company was obligated to pay a contingent earnout fee of up to $75 million, payable in Equity Shares, if certain conditions and financial metrics were met. The contingent consideration was classified as a Level 3 investment in the fair value hierarchy. The value of the contingent consideration was based upon the potential earn-out of the facilities’ adjusted earnings during the earnout period and was measured at fair value using a discounted cash flow model that was based on unobservable inputs. During the quarter ended March 31, 2025, the measurement period concluded, and it was determined that the financial metrics were not met.
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GLASS HOUSE BRANDS INC.
Notes to Unaudited Condensed Interim Consolidated Financial Statements
(Amounts Expressed in United States Dollars Unless Otherwise Stated)
Contingent Shares – Camarillo Transaction
As additional consideration for the Option Right, the Company issued 6,500,000 Equity Shares upon the closing of the Camarillo Transaction. In addition to the Equity Shares issued for the Option Right, the Company was obligated to issue up to 3,500,000 Equity Shares as a contingent payment, which are subject to certain conditions and events following closing. As conditions related to the 3,500,000 Equity Shares are expected to be satisfied, in accordance with U.S. GAAP, the Company reclassified the $20.3 million value of the shares from contingent shares payable and earnout liabilities to additional paid-in capital on the Unaudited Condensed Consolidated Interim Balance Sheet during the three months ended March 31, 2025. During the six months ended June 30, 2025, the Company issued 500,000 shares related to the contingent payment. The Company is obligated to issue up to an additional 3,000,000 Equity Shares as a contingent payment, which are subject to certain conditions and events.
10.    LEASES
The following table presents components of lease cost (in thousands):
Three Months Ended Six Months Ended
June 30,June 30,
2025202420252024
Finance Lease Cost:
Amortization of Finance Lease Right-of-Use Assets$207 $140 $385 $270 
Interest on Lease Liabilities74 62 145 120 
Operating Lease Cost390 640 1,039 1,278 
Short-Term Lease Costs226 258 627 564 
Total Lease Expenses$897 $1,100 $2,196 $2,232 
Additional information related to the Company’s leases is as follows (in thousands, except lease term and discount rate):
Six Months Ended
June 30,
20252024
Cash Paid for Amounts Included in the Measurement of Lease Liabilities:
Operating Cash Flows from Finance Leases$144 $114 
Operating Cash Flows from Operating Leases$1,275 $1,247 
Financing Cash Flows from Finance Leases$521 $242 
Non-Cash Additions to Right-of-Use Assets and Lease Liabilities:
Recognition of Right-of-Use Assets for Finance Leases$403 $937 
Recognition of Right-of-Use Assets for Operating Leases$— $— 
Weighted-Average Remaining Lease Term (Years) - Finance Leases33
Weighted-Average Remaining Lease Term (Years) - Operating Leases66
Weighted-Average Discount Rate - Finance Leases12.18%11.83%
Weighted-Average Discount Rate - Operating Leases11.53%11.37%
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GLASS HOUSE BRANDS INC.
Notes to Unaudited Condensed Interim Consolidated Financial Statements
(Amounts Expressed in United States Dollars Unless Otherwise Stated)
Future minimum lease payments under non-cancelable finance and operating leases as of June 30, 2025 for each of the following years were as follows (in thousands):
Operating LeasesFinance Leases
Third PartiesRelated PartiesThird PartiesTotal
2025 (Remaining)$689 $169 $625 $1,483 
20261,373 93 1,011 2,477 
20271,127 93 825 2,045 
2028537 93 332 962 
2029542 93 32 667 
Thereafter1,059 94 — 1,153 
Total Future Minimum Lease Payments5,327 635 2,825 8,787 
Less: Imputed Interest(1,308)(162)(411)(1,881)
Present Value of Lease Liability4,019 473 2,414 6,906 
Less: Current Portion of Lease Liability(688)(434)(989)(2,111)
Present Value of Lease Liability, Net of Current Portion$3,331 $39 $1,425 $4,795 
As of June 30, 2025, the Company leases certain business facilities from related parties and third parties under non-cancellable operating lease agreements that specify minimum rentals. The operating leases require monthly payments ranging from $800 to $25 thousand and expire through November 2032. Certain lease monthly payments may escalate up to 3.0% each year. In such cases, the variability in lease payments is included within the current and noncurrent operating lease liabilities.
11.    NOTES PAYABLE AND CONVERTIBLE DEBENTURES
Notes payable consisted of the following (in thousands):
June 30, 2025December 31, 2024
Senior Secured Credit Facility$50,000 $— 
Senior Secured Credit Agreement— 41,875 
Convertible Debentures16,006 16,006 
Other232 378 
Total Notes Payable66,238 58,259 
Less: Unamortized Debt Issuance Costs and Loan Origination Fees(393)(63)
Net Amount65,845 58,196 
Less: Current Portion of Notes Payable— (7,644)
Notes Payable, Net of Current Portion$65,845 $50,552 
Senior Secured Credit Facility
On February 28, 2025, the Company refinanced its Prior Credit Agreement (as defined below) and entered into a new senior secured credit facility for an aggregate principal amount of $50 million maturing on February 28, 2030 (the “Senior Secured Credit Facility”) with certain U.S.-based banks (together, the “Senior Secured Credit Facility Lender”). The Senior Secured Credit Facility is secured by a first priority lien on the Company’s Camarillo, Padaro and Casitas greenhouse farms and facilities and a first priority lien on the rest of the Company’s assets excluding other real estate and is jointly and severally guaranteed by several of the Company’s subsidiaries.
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GLASS HOUSE BRANDS INC.
Notes to Unaudited Condensed Interim Consolidated Financial Statements
(Amounts Expressed in United States Dollars Unless Otherwise Stated)
Payments for the first two years are interest-only. Principal and interest payments will be made during the last three years based on a straight-line amortization of the loan amount over a period of 15 years beginning on April 1, 2027, with a balloon payment of the remainder of the principal due on the maturity date. Interest payments began on April 1, 2025 and will be paid in monthly installments. The Senior Secured Credit Facility has optional and mandatory prepayments. The Company may make optional prepayments to repay the Senior Secured Credit Facility, in whole or in part, subject to paying an applicable premium. Mandatory prepayments include a change in control of the borrower subsidiaries including changes in parent company ownership or certain acquisition or controlling influence over the borrower subsidiaries.
The Senior Secured Credit Facility has a floating interest rate based on the Wall Street Journal’s prime rate, which was 7.50% as of June 30, 2025, plus 1.25%.
On February 28, 2025, the Company entered into an interest rate swap agreement with a notional amount of $50 million to convert the variability of cash flows resulting from fluctuations in variable rates to effectively set the interest rate at 8.58%. The interest rate swap agreement expires on February 28, 2030. See Note 12 – Derivative Instruments for more information.
Upon closing, the Company deposited an interest reserve in the amount of $3 million into an escrow account, which is included in restricted cash, net of current portion in the Unaudited Condensed Consolidated Interim Balance Sheet as of June 30, 2025.
The Senior Secured Credit Facility contains a covenant which requires the Company to maintain liquidity in excess of $10 million at all times. The Senior Secured Credit Facility also contains a covenant which requires the Company to maintain a Consolidated Fixed-Charge Coverage Ratio of at least 1.25x measured quarterly on a trailing-twelve-month basis commencing as of December 31, 2024. The Fixed-Charge Coverage Ratio is defined as Adjusted EBITDA minus income tax expense divided by the current portion of long-term debt plus interest expense plus the current portion of capital leases. Preferred equity dividend payments and convertible debt payments are not included in the Fixed-Charge Coverage Ratio calculation as the former can be suspended if needed and the latter can be paid in shares. As of June 30, 2025, the Company was in compliance with such financial covenants.
Prior Senior Secured Credit Agreement
On December 9, 2021 (the “Prior Senior Secured Closing Date”), the Company entered into a senior secured term loan agreement, as amended (the “Prior Credit Agreement”), for total available proceeds of up to $100 million with funds managed by a U.S.-based private credit investment fund and other participating third-party lenders (together, the “Prior Senior Secured Lender”). Effective December 10, 2021, the Company closed on an initial term loan through the Prior Credit Agreement of $50 million. Beginning 24 months following the Prior Senior Secured Closing Date, the principal amount was repaid in monthly installments in an aggregate amount equal to 1.25% per annum of the original principal amount through the November 30, 2026 maturity date. Beginning on December 31, 2021, interest was paid in monthly installments equal to the floating base rate plus the applicable term margin, or 5.25%. The interest rate was contractually set to be no less than 10% per annum or exceed 12% per annum. As of December 31, 2024, the interest rate was 12%.
The Company had optional and mandatory prepayments. Mandatory prepayments included any voluntary and involuntary sale or disposition of assets by the Company or any restricted subsidiaries. The outstanding principal amount of the obligation was to be repaid by 100% of cash proceeds received from the sale or disposition of assets with certain exemptions as defined in the Prior Credit Agreement. As of the Prior Senior Secured Closing Date, the Company deposited an interest reserve in the amount of $3 million into an escrow account, which was included as restricted cash in the Unaudited Condensed Consolidated Interim Balance Sheet as of December 31, 2024. Additionally, the Company’s equity interests held in its subsidiaries, including, without limitation, in Glass House Farm LLC, Magu Farm LLC and GH Camarillo LLC, which subsidiaries hold title to the Company’s real property, were pledged as security.
The Prior Credit Agreement contained a financial covenant which required the Company to maintain liquidity in excess of $10 million at all times. As of December 31, 2024, the Company was in compliance with such financial covenant. Additionally, there were certain covenants which required the Company to maintain a specific minimum debt service coverage ratio (the “DSCR”) measured quarterly beginning with the quarter ended December 31, 2022.
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GLASS HOUSE BRANDS INC.
Notes to Unaudited Condensed Interim Consolidated Financial Statements
(Amounts Expressed in United States Dollars Unless Otherwise Stated)
Amendments to the Prior Credit Agreement
On January 21, 2022, the Company amended and restated the Prior Credit Agreement (the “1st Amendment”) wherein certain events of default were waived by the Prior Senior Secured Lender.
On May 12, 2022, the Company amended and restated the Prior Credit Agreement (the “2nd Amendment”) wherein certain events of default were waived by the Prior Senior Secured Lender, and the Company entered into an incremental term loan in the amount of $10 million (the “Incremental Term Loan”), for total available proceeds of $110 million payable in monthly installments at an interest rate of 10% per annum. In addition, a 1% fee of the outstanding principal amount of the Incremental Term Loan was payable in monthly installments beginning August 1, 2022, with a maturity date through October 31, 2022. In connection with the Incremental Term Loan, the Company issued 175,000 warrants to the Prior Senior Secured Lender, with an exercise price of $11.50 per share, to acquire Equity Shares until June 26, 2026. The fair value of the warrants were determined using Level 1 inputs as these warrants are openly traded on a stock exchange. During the year ended December 31, 2022, the Company recorded an additional debt discount of $89 thousand related to the change in terms of the Prior Credit Agreement. In addition to receiving the $10 million in Incremental Term Loan, the Company paid $0.6 million in direct loan fees, which were recorded as a debt discount. On August 30, 2022, the Company fully repaid the $10 million Incremental Term Loan in cash.
In March 2023, the Company entered into another amendment to the Prior Credit Agreement by which the Prior Senior Secured Lender waived and deferred enforcement of certain covenants which require the Company to maintain the DSCR beginning with the quarter ended on June 30, 2023. In connection with the amendment to the Prior Credit Agreement, the Company paid an amount equal to 2% of the aggregate principal amount of the loan outstanding as of August 1, 2023. The Company recognized amendment fees of $1.0 million as other expense and paid such fee on July 27, 2023.
On February 23, 2024, the Company entered into Amendment Number Five to Credit Agreement, Waiver, and Consent with the Prior Senior Secured Lender to among other things approve of the GH Group Series C Preferred and GH Group Series D Preferred offerings and to amend the Prior Credit Agreement to change the Minimum EBITDA requirement to have an annualized EBITDA of $20.0 million for the fiscal quarter period ended December 31, 2023, a Last Twelve Month (“LTM”) EBITDA of $20.0 million for the fiscal quarter period ended March 31, 2024 and June 30, 2024, and a LTM EBITDA of $22.5 million for each month ending on July 31, 2024 and for each month ending thereafter.
On February 28, 2025, the Company used proceeds from the Senior Secured Credit Facility to repay the remaining balance of the Prior Credit Agreement term loan in the amount of $40.6 million plus fees and extinguished in its entirety the Company’s obligations under the Prior Credit Agreement. As a result, the Company recognized $0.3 million as a loss on extinguishment of debt in its Unaudited Condensed Consolidated Interim Statement of Operations.
Convertible Debentures
On April 28, 2022, the Company completed the Plus Products acquisition in which the purchase price was payable in part through an aggregate of 20,005 unsecured convertible debenture notes which consist of 12,003 debenture notes (the “Series A Notes”) and 8,002 debenture notes (the “Series B Notes”) (collectively, the “Plus Convertible Notes”). The Plus Convertible Notes accrue interest at 8.00% per annum payable semi-annually in arrears until April 15, 2027 (the “Maturity Date”). Interest is payable either in cash, by the issuance of the Company’s Equity Shares, or a combination of both at the sole discretion of the Company, based on the 10-day VWAP of the Equity Shares ending 5 trading days prior to the interest payment date with a fixed exchange rate of USD $1.00 to CAD $1.27.
The Series A Notes are redeemable, at the sole option of the Company, in full or in part on a pro rata basis, and payable either in cash, by the issuance of the Company’s Equity Shares, or a combination of both, at any time through the Maturity Date based on the higher of (i) the 10-day VWAP of the Equity Shares ending 5 trading days prior to the redemption date, or (ii) CAD $4.08.
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GLASS HOUSE BRANDS INC.
Notes to Unaudited Condensed Interim Consolidated Financial Statements
(Amounts Expressed in United States Dollars Unless Otherwise Stated)
The Series B Notes are redeemable, at the sole option of the Company, in full or in part on a pro rata basis, and payable either in cash, by the issuance of the Company’s Equity Shares, or a combination of both, at any time through the Maturity Date based on the lower of (i) the 10-day VWAP of the Equity Shares ending 5 trading days prior to the redemption date, or (ii) $10.00 per Equity Share. In the event the Company’s Equity Shares achieve a closing price of $10.00 per share over any period greater than or equal to 20 consecutive trading days, each holder of the Series B Notes may elect to convert all or a portion of their holdings into the Company’s Equity Shares based on a conversion price of $10.00 per Equity Share. As of June 30, 2025, the balance of $11.9 million and $4.1 million for the Series A Notes and Series B Notes, respectively remain outstanding.
The conversion features of the Series A Notes and Series B Notes were bifurcated from the related notes and classified as derivatives due to the variability of price in accordance with ASC 815. See Note 12 – Derivative Instruments for further information.
As of June 30, 2025, the scheduled maturities of notes payable for each of the following years were as follows (in thousands):
Principal Payments
2025 (Remaining)$2 
20264 
202719,010 
20283,333 
20293,333 
Thereafter40,556 
Total Future Minimum Principal Payments$66,238 
12.    DERIVATIVE INSTRUMENTS
Assets or liabilities associated with our derivative instruments are recorded at fair value in other assets and other non-current liabilities on our Unaudited Condensed Consolidated Interim Balance Sheets. Gains and losses resulting from changes in fair value are recognized in (gain) loss on change in fair value of derivative asset and liability on the Unaudited Condensed Consolidated Interim Statements of Operations.
Interest Rate Risk
The Company utilizes an interest rate swap to manage its exposure to variability in future cash flows associated with fluctuations in interest rates on its Senior Secured Credit Facility. This swap effectively converts the variable interest rate on the debt to a fixed rate and is classified as a derivative under ASC 815. The Company has not designated this contract for hedge accounting.
The Company's interest rate swap is measured at fair value using Level 2 inputs. The fair value is determined using a discounted cash flow method that incorporates observable inputs. The fair value calculation includes a credit valuation adjustment and forward interest rate curves for the same periods as the future maturity dates of the interest rate swap. As of June 30, 2025 the interest rate swap fair value is in a liability position due to valuation inputs including projected changes in the forward interest rate curve.
Convertible Debenture Derivatives
The conversion features of the Series A Notes and Series B Notes were bifurcated from the related notes and classified as derivatives due to the variability of price in accordance with ASC 815. Accordingly, the fair value of the conversion features for the Series A Notes and Series B Notes were measured at fair value using a binomial lattice model that is based on unobservable inputs and are classified as Level 3 investments in the fair value hierarchy.
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GLASS HOUSE BRANDS INC.
Notes to Unaudited Condensed Interim Consolidated Financial Statements
(Amounts Expressed in United States Dollars Unless Otherwise Stated)
The following table presents the fair value of the Company’s derivative instruments not designated as hedging instruments (in thousands):
Derivative instrumentFinancial Statement Line ItemJune 30, 2025December 31, 2024
Interest Rate SwapOther Non-Current Liabilities$(1,807)$— 
Convertible Debenture Conversion FeatureOther Assets629 883 
Total$(1,178)$883 
The following table presents the change in fair value of the Company’s derivative instruments not designated as hedging instruments, including the initial recognition of fair value for the interest rate swap, as reported on the Unaudited Condensed Consolidated Interim Statements of Operations (in thousands):
Three Months Ended Six Months Ended
June 30,June 30,
Derivative instrumentFinancial Statement Line Item2025202420252024
Interest Rate Swap(Gain) Loss on Change in Fair Value of Derivative Asset and Liability$318 $— $1,807 $— 
Convertible Debenture Conversion Feature(Gain) Loss on Change in Fair Value of Derivative Asset and Liability10 (32)254 (145)
Total$328 $(32)$2,061 $(145)
13.    SHAREHOLDERS’ EQUITY
As of June 30, 2025 and December 31, 2024, the authorized share capital of the Company was comprised of an unlimited number of (i) Subordinate Voting Shares, (ii) Restricted Voting Shares, (iii) Limited Voting Shares, (iv) Multiple Voting Shares and (v) Preferred Shares.
Multiple Voting Shares
The Company is authorized to issue an unlimited number of Multiple Voting Shares without nominal or par value. Holders of Multiple Voting Shares are entitled to receive notice of any meeting of shareholders of the Company, and to attend, vote and speak at such meetings, except those meetings at which only holders of a specific class of shares are entitled to vote separately as a class under the Business Corporations Act (British Columbia). On all matters upon which holders of Multiple Voting Shares are entitled to vote, each Multiple Voting Share entitles the holder thereof to 50 votes per Multiple Voting Share. Multiple Voting Shares are not entitled to dividends and are not convertible. The Multiple Voting Shares had a three (3)-year sunset period that would have expired on June 29, 2024. At the annual general and special meeting of the shareholders of the Company held on June 23, 2023, shareholders passed a special resolution to amend the Articles of the Company to extend the “sunset” date for the Multiple Voting Shares to June 29, 2027, upon which they will be automatically redeemed for $0.001 per Multiple Voting Share.
Equity Shares
The holders of each class of Equity Shares are entitled to receive notice of, to attend (if applicable, virtually) and to vote at all meetings of shareholders of the Company, except that they are not able to vote (but are entitled to receive notice of, to attend and to speak) at those meetings at which the holders of a specific class are entitled to vote separately as a class under the Business Corporations Act (British Columbia) and except that holders of Limited Voting Shares are not entitled to vote for the election of directors of the Company. The Subordinate Voting Shares and Restricted Voting Shares carry one vote per share on all matters. The Limited Voting Shares carry one vote per share on all matters except the election of directors, as the holders of Limited Voting Shares do not have any entitlement to vote in respect of the election of directors of the Company.
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GLASS HOUSE BRANDS INC.
Notes to Unaudited Condensed Interim Consolidated Financial Statements
(Amounts Expressed in United States Dollars Unless Otherwise Stated)
In the case of liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, or in the event of any other distribution of assets of the Company among its shareholders for the purpose of winding up its affairs, the holders of Equity Shares are entitled, subject to the prior rights of the holders of any shares of the Company ranking in priority to the Equity Shares (including any liquidation preference on any issued and outstanding Multiple Voting Shares and/or Preferred Shares), to participate ratably in the Company’s remaining property along with all holders of the other classes of Equity Shares (on a per share basis).
Exchangeable Shares of MPB Acquisition Corp.
Exchangeable Shares are part of the authorized share capital of MPB Acquisition Corp. (“MPB”), a wholly-owned subsidiary of the Company, which entitle their holders to rights that are comparable to those rights attached to the Equity Shares. The Exchangeable Shares carry one vote per share, and the aggregate voting power of the Exchangeable Shares must not exceed 49.9% of the total voting power of all classes of shares of MPB. Until a holder exchanges its Exchangeable Shares for Equity Shares, the holder of such Exchangeable Shares will not have the right to vote at meetings of the shareholders of the Company, though it will have the right to vote at meetings of the shareholders of MPB, including with respect to altering the rights of holders of any of the Exchangeable Shares, or if MPB decides to take certain actions without fully protecting the holders of any of the Exchangeable Shares, or as otherwise required by law. The Exchangeable Shares are exchangeable at any time, on a one-for-one basis, for the Equity Shares at the option of the holder.
The Company treats the Exchangeable Shares as options, each with a value equal to an Equity Share, which represents the holder’s claim on the equity of the Company. Pursuant to the terms of the Exchangeable Shares, the Company and MPB are required to maintain the economic equivalency of such Exchangeable Shares with the publicly traded Equity Shares of the Company. This means the Exchangeable Shares are required to share the same economic benefits and retain the same proportionate ownership in the assets of the Company as the holders of the Equity Shares. The Company has presented these Exchangeable Shares as a part of shareholders’ equity within these Consolidated Financial Statements due to (i) the fact that they are economically equivalent to the Equity Shares, and (ii) the holders of the Exchangeable Shares are subject to restrictions on transfer under U.S. securities laws but may dispose of the Exchangeable Shares without such restriction by exchanging them for Equity Shares. Changes in these assumptions would affect the presentation of the Exchangeable Shares from shareholders’ equity to non-controlling interests; however, there would be no impact on earnings per share.
Preferred Shares of GH Group, Inc.
The authorized total number of preferred shares (the “GH Group Preferred Shares”) of GH Group, Inc. (“GH Group”) is 50,000,000 of which 45,000,000 shares were designated as shares of Series A Preferred Stock (“GH Group Series A Preferred”), 55,000 shares are designated as shares of Series B Preferred Stock (“GH Group Series B Preferred”), 5,000 shares are designated as shares of Series C Preferred Stock (“GH Group Series C Preferred”) and 15,000 shares are designated as shares of Series D Preferred Stock (“GH Group Series D Preferred”). GH Group Series A Preferred shares were fully redeemed or converted prior to December 31, 2022 and are no longer outstanding.
Holders of the GH Group Preferred Shares are entitled to receive notice of and attend any meeting of the shareholders of GH Group but are not entitled to vote except in connection with any changes to the Certificate of Incorporation or the Bylaws of GH Group that adversely affect the powers, preferences, privileges or rights of such GH Group Preferred Shares. Except as provided in the foregoing sentence, the GH Group Series B, Series C and Series D Preferred Shares do not carry any voting rights and are not convertible.
In the event of a liquidation, voluntary or involuntary, dissolution or winding-up of GH Group, the holders of outstanding GH Group Preferred Shares are entitled to be paid out of the assets of GH Group available for distribution to its stockholders, in the following order of priority and before any payment shall be made to the holders of GH Group common stock: (i) Series B Preferred, (ii) Series C Preferred and (iii) Series D Preferred. GH Group has the right to redeem all or a portion of the GH Group Preferred Shares from a holder for an amount equal to the liquidation value and all unpaid accrued and accumulated dividends.
The GH Group Series B Preferred and the GH Group Series C Preferred carry a 20% cumulative dividend rate, which increases by 2.5% annually after the second anniversary and until the 54-month anniversary of the initial issuance. The GH Group Series D Preferred carry a 15% cumulative dividend rate, which increases by 5% following the fifth anniversary of the original issuance. Dividends are payable if and when declared by GH Group’s board of directors.
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GLASS HOUSE BRANDS INC.
Notes to Unaudited Condensed Interim Consolidated Financial Statements
(Amounts Expressed in United States Dollars Unless Otherwise Stated)
There were 49,969 shares of the GH Group Series B Preferred issued and outstanding as of June 30, 2025 and December 31, 2024; there were 5,000 shares of the GH Group Series C Preferred issued and outstanding as of June 30, 2025 and December 31, 2024; and there were 15,000 shares of the GH Group Series D Preferred issued and outstanding as of June 30, 2025 and December 31, 2024. In accordance with the provisions above, the Company recorded dividends to the holders of the GH Group Preferred Shares in the amount of $4.7 million and $3.8 million for the three months ended June 30, 2025 and 2024, respectively, and $9.3 million and $7.5 million for the six months ended June 30, 2025 and 2024, respectively.
Share and Equity Transactions
During the six months ended June 30, 2025 the Company issued 47,635, 26,840 and 41,952 Equity Shares in relief of deferred Equity Shares payable as contractually required for the fiscal year 2022 acquisitions of Natural Healing Center, LLC, NHC Lemoore, LLC and NHC-MB LLC, respectively. The Company reclassified $2.6 million of shares payable to equity.
During the six months ended June 30, 2025, the Company issued 500,000 shares related to the Camarillo Transaction.
During the six months ended June 30, 2025, the Company issued 208,772 Equity Shares valued at $1.1 million as settlement for the fiscal year 2024 bonus.
During the six months ended June 30, 2025, the Company issued 137,904 shares in payment of $0.6 million of accrued interest.
Non-Controlling Interests
Non-controlling interests represent equity interests owned by parties that are not shareholders of the ultimate parent. The share of net assets attributable to non-controlling interests is presented as a component of equity. Their share of net income or loss is recognized directly in equity. Changes in the parent company’s ownership interest that do not result in a loss of control are accounted for as equity transactions.
The Company recorded income attributable to a non-controlling interest during the three months ended June 30, 2025 and 2024 of $75 thousand and $43 thousand, respectively. The Company recorded income attributable to a non-controlling interest and during the six months ended June 30, 2025 and 2024 of $127 thousand and $105 thousand, respectively. The value of the equity issuances issued to non-controlling interest members were determined using the estimated fair value of the equity of the Company.
Variable Interest Entity
The table below summarizes information for entities the Company has concluded to be VIEs as the Company possesses the power to direct activities through various agreements. Through these agreements, the Company can significantly impact the VIE and thus holds a controlling financial interest. This information represents amounts before intercompany eliminations.
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GLASS HOUSE BRANDS INC.
Notes to Unaudited Condensed Interim Consolidated Financial Statements
(Amounts Expressed in United States Dollars Unless Otherwise Stated)
The aggregate balances of VIEs included in the accompanying Unaudited Condensed Consolidated Interim Balance Sheets and Unaudited Condensed Consolidated Interim Statements of Operations were as follows below as of and for the six months ended June 30, 2025 (in thousands):
June 30, 2025
Current Assets$571 
Non-Current Assets7,594 
Total Assets$8,165 
Current Liabilities$5 
Non-Current Liabilities232 
Total Liabilities$237 
Revenues, Net$142 
Net Income Attributable to Non-Controlling Interest$79 
14.    SHARE-BASED COMPENSATION
The Company has an amended and restated equity incentive plan (the “Incentive Plan”) under which the Company may issue various types of equity instruments or instruments that track to equity, more particularly the Equity Shares, to employees, officers, consultants and non-employee directors. The types of equity instruments issuable under the Incentive Plan encompass, among other things, stock options, unrestricted stock bonus and restricted stock units (together, the “Awards”). The Awards are expensed and recorded as a component of general and administrative costs. The maximum number of the Awards that may be issued under the Incentive Plan is 10% of the fully-diluted Equity Shares of the Company (inclusive of the Equity Shares issuable in exchange for unrestricted Exchangeable Shares) as calculated using the treasury method. During the Company’s annual and special meeting of the shareholders held on June 20, 2025, disinterested shareholders approved a second amended and restated equity incentive plan (the “Second Amended Incentive Plan”) for purposes of instituting a one-time fixed increase to the rolling 10% share reserve to give effect to the number of shares issuable under the market-based restricted stock units as discussed below.
The Second Amended Incentive Plan is an “evergreen” plan, meaning that if an Award expires, becomes un-exercisable, or is cancelled, forfeited or otherwise terminated without having been exercised or settled in full, as the case may be, the Equity Shares allocable to the unexercised portion of an Award shall again become available for future grant or sale under the Second Amended Incentive Plan (unless the Second Amended Incentive Plan has terminated by its terms), and the number of the Awards available for grant will increase as the number of issued and outstanding Equity Shares increases. Granting and vesting of the Awards are determined by and recommended to the Board for approval by the Compensation, Nomination and Corporate Governance Committee of the Board of Directors. The exercise price for options (if applicable) will generally not be less than the fair market value of the Award at the time of grant and will generally expire after 5 years.
Stock Options
A reconciliation of the beginning and ending balance of stock options outstanding was as follows:
Number of Stock OptionsWeighted-Average Exercise Price 
Outstanding as of December 31, 2024529,002$3.10  
Exercised and Forfeited(148,270)3.11  
Outstanding as of June 30, 2025380,7323.09  
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GLASS HOUSE BRANDS INC.
Notes to Unaudited Condensed Interim Consolidated Financial Statements
(Amounts Expressed in United States Dollars Unless Otherwise Stated)
As of June 30, 2025 and December 31, 2024, options vested and exercisable were 380,732 and 529,002, respectively. During the six months ended June 30, 2024, the Company recognized $3 thousand in share-based compensation expense related to stock options which was included as a component of general and administrative expense in the Unaudited Condensed Interim Consolidated Statements of Operations. During the three months ended June 30, 2025 and 2024 and the six months ended June 30, 2025, there was no share-based compensation expense recognized related to stock options. As of June 30, 2025, options outstanding had a weighted-average remaining contractual life of 1 year.
Restricted Stock Units
A reconciliation of the beginning and ending balance of restricted stock units outstanding was as follows:
Number of Restricted Stock Units
Unvested as of December 31, 20243,334,286
Granted3,956,993
Vested(1,089,370)
Forfeited(7,499)
Unvested as of June 30, 20256,194,410
During the three months ended June 30, 2025 and 2024, the Company recognized $2.8 million and $3.6 million, respectively, in stock-based compensation related to restricted stock units and was included as a component of general and administrative expense in the Unaudited Condensed Consolidated Interim Statements of Operations. During the six months ended June 30, 2025 and 2024, the Company recognized $4.9 million and $6.9 million, respectively, in stock-based compensation related to restricted stock units and was included as a component of general and administrative expense in the Unaudited Condensed Interim Consolidated Statements of Operations. The fair value of the restricted stock units granted was determined using the value of the Equity Shares at the date of grant.
Market-Based Performance Restricted Stock Units
The Company’s market-based performance restricted stock units vest contingent upon the achievement of pre-determined market and service conditions. If market conditions are not met but service conditions are met, the market-based performance restricted stock units will not vest; however, any compensation expense that was recognized to date will not be reversed. The Company amortizes the fair value of market-based performance restricted stock units over the requisite service period and recognizes compensation cost on a straight-line basis over the service period. The number of shares of common stock, if any, to be issued for these awards is determined based on the achievement of specific share price targets during the performance period, as measured by the volume weighted average price over the 90 trading days ending on the last day of a fiscal quarter. The time-based vesting occurs on the third anniversary of the grant date and requires the participant to remain in the eligible service of the Company through that time. Awards that vest prior to the fourth anniversary of the grant date will settle out 50% on the fourth anniversary of the grant date, and 50% on the fifth anniversary of the grant date. Any additional awards that vest between the fourth and fifth anniversary of the grant date will settle 100% on the fifth anniversary of the grant date.
Fair value of the market-based restricted performance stock units is determined using the Monte-Carlo simulation with the following assumptions during the six months ended June 30, 2025:
Expected term (in years)3.00
Expected volatility72 %
Weighted-average volatility72 %
Risk-free interest rate3.92 %
Dividend rate— %
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GLASS HOUSE BRANDS INC.
Notes to Unaudited Condensed Interim Consolidated Financial Statements
(Amounts Expressed in United States Dollars Unless Otherwise Stated)
A reconciliation of the beginning and ending balances of market-based performance restricted stock units, presented with the maximum number of shares that could potentially vest, was as follows:
Number of Market-Based Restricted Stock UnitsWeighted-Average Grant Date Fair Value
Unvested as of December 31, 20240$— 
Granted3,000,0002.01 
Unvested as of June 30, 20253,000,0002.01 

The weighted-average grant date fair value of market-based performance restricted stock units granted during the six months ended June 30, 2025 was $2.01.
As of June 30, 2025, there was $6.0 million of unrecognized compensation expense related to unvested market-based performance restricted stock units which is expected to be recognized over a weighted-average period of approximately 2.88 years. The Company recognizes compensation cost on a straight-line basis over the service period for the entire award.
During the three months ended June 30, 2025, the Company recognized $0.1 million in stock-based compensation related to market-based performance restricted stock units and was included as a component of general and administrative expense in the Unaudited Condensed Consolidated Interim Statements of Operations.
Stock Appreciation Right Units
The Company has stock appreciation rights (“SARs”) which are issued to various employees of the Company. The SARs vested 33% one year after the grant date and the remaining 67% vested monthly over two years. Vested and exercised SARs will receive cash in the amount of the SARs exercised multiplied by the excess of the fair market value of an Equity Share as of the exercise date over the stated strike price of the SAR. As the SARs are cash-settled, the Company recognizes the value of the SARs as liabilities which are included in accounts payable and accrued liabilities in the Unaudited Condensed Consolidated Interim Balance Sheets. As of June 30, 2025 and December 31, 2024, the Company recorded a liability of $110 thousand and $121 thousand, respectively.
A reconciliation of the beginning and ending balance of the SARs outstanding was as follows:
Number of
Stock
Appreciation
Rights Units
Outstanding as of December 31, 202444,804
Exercised(2,922)
Forfeited(4,870)
Outstanding as of June 30, 202537,012
During the three months ended June 30, 2025 and 2024, the Company recognized $37 thousand and $51 thousand, respectively, of expense related to the SARs. During the six months ended June 30, 2025 and 2024, the Company recognized nil and $396 thousand, respectively, in expense related to SARs.
Warrants
There were no warrants granted, exercised or expired during the six months ended June 30, 2025.
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GLASS HOUSE BRANDS INC.
Notes to Unaudited Condensed Interim Consolidated Financial Statements
(Amounts Expressed in United States Dollars Unless Otherwise Stated)
The following table summarizes the warrants that remained outstanding as of June 30, 2025:
Security IssuableExercise PriceExpiration DateWarrants OutstandingWarrants Exercisable 
Equity Shares$11.50 June 202630,664,50030,664,500 
Equity Shares5.00 August 202710,739,54110,739,541 
Equity Shares6.00 August 20282,980,0002,980,000 
44,384,04144,384,041 
As of June 30, 2025, warrants outstanding had a weighted-average remaining contractual life of 1.42 years.
15.    INCOME (LOSS) PER SHARE
The following is a reconciliation for the calculation of basic and diluted income (loss) per share (in thousands, except share and per share data):
Three Months Ended Six Months Ended
June 30,June 30,
2025202420252024
Net Income (Loss) Attributable to the Company$8,669 $9,996 $(1,391)$(8,335)
Less: Dividends and Increase in Redemption Values of GH Group Preferred Shares(4,725)(3,808)(9,302)(7,528)
Adjusted Net Income (Loss) Attributable to the Company$3,944 $6,188 $(10,693)$(15,863)
Weighted-Average Shares Outstanding - Basic81,098,80673,807,71180,769,09073,522,518
Dilutive Potential Shares Related to Stock Award Plans and Warrants and Convertible Debentures1,722,607 8,424,357 — — 
Weighted-Average Shares Outstanding - Diluted82,821,41382,232,06880,769,09073,522,518
Income (Loss) Per Share - Basic$0.05 $0.08 $(0.13)$(0.22)
Income (Loss) Per Share - Diluted$0.05 $0.08 $(0.13)$(0.22)
For the three and six months ended June 30, 2025 and 2024, diluted loss per share was the same as basic loss per share as the potential issuance of shares related to stock-based award plans, warrants, contingent shares and convertible debentures were anti-dilutive.
The following common equivalent shares were excluded from the Income (Loss) Per Share - Diluted calculation because their inclusion would have been anti-dilutive:
For the Three Month Income Per ShareFor the Six Month Loss Per Share
As of June 30,As of June 30,
2025202420252024
Stock Award Plans5,919,860 — 9,575,142 4,942,161 
Warrants33,644,500 30,664,500 44,384,041 44,522,347 
Contingent Shares— 3,000,000 — 3,000,000 
Convertible Debentures2,992,910 2,247,414 2,992,910 2,247,414 
Total42,557,270 35,911,914 56,952,093 54,711,922 
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GLASS HOUSE BRANDS INC.
Notes to Unaudited Condensed Interim Consolidated Financial Statements
(Amounts Expressed in United States Dollars Unless Otherwise Stated)
Net income (loss) attributable to the Company is adjusted for dividends and various other adjustments as defined in ASC 260, Earnings Per Share. After adjustments as defined in ASC 260, if the Company is in a net loss position, diluted loss per share is the same as basic loss per share when the potential issuance of shares related to stock-based award plans, warrants, contingent shares and convertible debentures are antidilutive. After adjustments, as defined in ASC 260, if the Company is in a net income position, diluted earnings per share includes shares related to stock-based award plans, warrants, contingent shares and convertible debentures that are determined to be dilutive using the treasury stock method for all equity instruments issuable in equity units and the “if converted” method for the Company’s convertible debentures.
16.    PROVISION FOR INCOME TAXES AND DEFERRED INCOME TAXES
Provision for income taxes consisted of the following (in thousands):
Three Months Ended Six Months Ended
June 30,June 30,
2025202420252024
Current:
Federal$3,977 $1,290 $6,879 $2,095 
State992 (1,087)1,018 (1,058)
Total Current4,969 203 7,897 1,037 
  
Deferred:  
Federal— — — — 
State— — — — 
Total Deferred— — — — 
Total Provision for Income Taxes$4,969 $203 $7,897 $1,037 
The Company has used a discrete effective tax rate method to calculate taxes for the three and six months ended June 30, 2025 and 2024. The Company determined that since small changes in estimated ordinary income would result in significant changes in the estimated annual effective tax rate, the historical method would not provide a reliable estimate for the fiscal three and six-month periods ended June 30, 2025 and 2024.
As the Company operates in the legalized cannabis industry, it is subject to the limits of IRC Section 280E (“Section 280E”) for U.S. federal income tax purposes under which the Company is only allowed to deduct expenses directly related to the cost of goods sold. This results in permanent differences between ordinary and necessary business expenses deemed nonallowable under Section 280E, whereas the Company deducts all operating expenses on its state tax returns for which there is no comparable provision of Section 280E under the California Revenue and Taxation Code.
Based on legal interpretation, it is the Company's position that it does not owe taxes attributable to the application of Section 280E. Additionally, the Company has determined that the tax impact of its corporate overhead allocation was less likely than not to be sustained on the merits as required under ASC 740, Income Taxes, due to the evolving interpretations of Section 280E. The Company included in the balance of total unrecognized tax benefits as of June 30, 2025 a potential benefit of $26.4 million that if recognized would impact the effective tax rate on income from operations, of which $16.4 million is related to its tax positions based on legal interpretations that challenge the Company's tax liability under Section 280E. The Company included in the balance of total unrecognized tax benefits as of December 31, 2024 a potential benefit of $20.9 million that if recognized would impact the effective tax rate on income from operations, of which $12.1 million is related to its tax positions based on legal interpretations that challenge the Company's tax liability under Section 280E. Unrecognized tax benefits that reduce a net operating loss, similar to tax loss or tax credit carryforwards, are presented as a reduction to deferred income taxes.
The Company’s evaluation of tax positions was performed for those tax years which remain open to for audit. The Company may, from time to time, be assessed interest or penalties by the taxing authorities, although any such assessments historically have been minimal and immaterial to the Company’s financial results. In the event the Company is assessed for interest and/or penalties, such amounts will be classified as income tax expense in the financial statements.
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GLASS HOUSE BRANDS INC.
Notes to Unaudited Condensed Interim Consolidated Financial Statements
(Amounts Expressed in United States Dollars Unless Otherwise Stated)
As of June 30, 2025, the Company’s federal tax returns since 2020 and state tax returns since 2019 are still subject to adjustment upon audit. The 2020 federal tax return of CA Manufacturing Solutions LLC and 2019 federal tax return of Natural Healing Center LLC (pre-acquisition) are currently under IRS examination. No other tax returns are currently being examined by any taxing authorities. While it is reasonably possible that certain portions of the unrecognized tax benefit may change from a lapse in applicable statute of limitations, it is not possible to reasonably estimate the effect of any amount of such a change to previously recorded uncertain tax positions in the next 12 months.
17.    COMMITMENTS AND CONTINGENCIES
Contingencies
The Company’s operations are subject to a variety of local and state regulations. Failure to comply with one or more of these regulations could result in fines, restrictions on its operations, or revocation, cancellation, non-renewal or other losses of permits, licenses and entitlements that could result in the Company ceasing operations. While management of the Company believes that the Company was in compliance with applicable local and state statues, regulations, and ordinances as of June 30, 2025 and December 31, 2024, cannabis laws and regulations continue to evolve and are subject to differing interpretations. As a result, the Company may be subject to regulatory fines, penalties or restrictions in the future.
Claims and Litigation
From time to time, the Company may be involved in litigation relating to claims arising out of operations in the normal course of business. As of June 30, 2025 and December 31, 2024, there were no proceedings in which any of the Company’s directors, officers or affiliates were an adverse party to the Company or had a material interest adverse to the Company’s interest.
Element 7 Transaction and Litigation
On November 4, 2021, GH Group filed a lawsuit in the Superior Court for the County of Los Angeles, Central District (Case No. 21STCV40401) against Element 7 CA, LLC (“E7”) and its principals and owners Josh Black and Robert “Bobby” DiVito (together, “Element 7”) for a variety of claims, including fraud and breach of contract and demanded performance under the E7 Agreements. Through the process of litigation, on September 19, 2023, E7, APB and GH Group entered into a Settlement and General Mutual Release Agreement (the “Element 7 Settlement”), where E7 agreed to pay GH Group $2.9 million to settle the Element 7 Proceeding; provided, that if E7 paid GH Group $1.9 million by December 15, 2023, then E7 would have been entitled to a credit of $1.0 million towards the $2.9 million payment. In addition, E7 would retain ownership of its cannabis retail licenses.
E7 failed to pay GH Group $1.9 million by December 15, 2023, and it also failed to subsequently pay GH Group the $2.9 million that was due under the Element 7 Settlement.
On March 6, 2024, the Superior Court of Los Angeles entered into a Final Judgment and Order against E7 for the amount of $2.9 million in favor of GH Group. The Company is currently conducting debtor examinations in an effort to enforce the judgment.
On November 19, 2024, C and H Holdings (“C and H”) filed a breach of contract claim among other claims against E7 and other E7 related entities (“C and H Lawsuit”). In addition, C and H requested that the court appoint a receiver for E7 so that the assets could be used to satisfy C and H's claims under its loan agreement with E7 and the related E7 entities that were included in the lawsuit. C and H also named GH Group in the lawsuit to prevent GH Group from satisfying its judgment against E7.
GH Group opposed the C and H Lawsuit. On April 30, 2025, the court dismissed the lawsuit against GH Group.
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GLASS HOUSE BRANDS INC.
Notes to Unaudited Condensed Interim Consolidated Financial Statements
(Amounts Expressed in United States Dollars Unless Otherwise Stated)
Catalyst Litigation
The Company was the plaintiff in litigation in the Central District Superior Court of the County of Los Angeles against Elliot Lewis (“Lewis”), Damian Martin (“Martin”), South Cord Holdings LLC (“SCH”), and South Cord Management LLC (“SCM”) (collectively, “Catalyst Defendants”) following various public, false, and defamatory statements made by Lewis and Martin, co-founders of SCM and SCH, that the Company is the “largest black marketeer” of cannabis in the history of the United States, only 25% of the Company’s cultivated cannabis is sold through legal channels, and therefore 70-80% is sold illegally, and that the Company is engaging in illicit conduct to avoid taxes.
The Company is the defendant in litigation in the Central District Superior Court of the County of Los Angeles filed by 562 Discount Med, Inc. (“Discount Med” doing business as Catalyst Cannabis Co.), an affiliate of SCH and SCM. Discount Med has asserted claims against the Company for violation of California Business & Professions Code Section 17200 et seq., California's Unfair Competition Law. Discount Med similarly alleged, like the Catalyst Defendants, that the Company is the “largest black marketeer” of cannabis in the United States and has purposefully structured its business to profit from the illicit market. The Company has categorically denied all such allegations and asserted affirmative defenses.
On May 20, 2024, the Company voluntarily dismissed without prejudice the defamation lawsuit against the Catalyst Defendants.
On June 25, 2024, the Superior Court of California (Los Angeles County) dismissed the lawsuit filed by Discount Med against Glass House for unfair competition. The Court granted Glass House’s motion for judgment on the pleadings with prejudice. On July 15, 2024, the Court entered a judgment in Glass House’s favor, awarding costs against the plaintiff and concluding the case. On August 7, 2024, Discount Med filed a Notice of Appeal of the judgment of dismissal following an order granting a motion for judgment on the pleadings without leave to amend. No dates have been set as of yet for the appeal as the appellate record has not yet been finalized.
18.    RELATED PARTY TRANSACTIONS
Leases
Neo Street Partners LLC, a company partially owned by an executive and board member of the Company, entered into a five-year lease with a subsidiary of the Company. The lease, which commenced in October 2018, provides for an initial annual base rent payment of $213 thousand, increasing to $243 thousand for years two to five. The lease was renewed for one year starting in October 2024. Rent expense for the three months ended June 30, 2025 and 2024 was $94 thousand in each period. Rent expense for the six months ended June 30, 2025 and 2024 was $187 thousand in each period. On April 15, 2025, the Company entered into an agreement to acquire the remaining 76% ownership interest in a property located in Lompoc, California. See Note 6 – Property, Plant and Equipment.
3645 Long Beach LLC, a company partially owned by an executive and board member of the Company, entered into a five-year lease with a subsidiary of the Company. The lease, which commenced in December 2019, provides for an initial annual base rent payment of $64 thousand, increasing to $69 thousand for year two and increasing five percent per annum thereafter. Rent expense for the three months ended June 30, 2025 and 2024 was $20 thousand in each period. Rent expense for the six months ended June 30, 2025 and 2024 was $40 thousand in each period.
Isla Vista GHG LLC, a company partially owned by executives and board members of the Company, entered into a ten-year lease with a subsidiary of the Company. The lease, which commenced on the first calendar day after the Company publicly announced the opening of a retail cannabis location at the leased property (the “Commencement Date”), provides for an initial monthly rent of $5 thousand starting April 19, 2022 until the Commencement Date. Effective on the Commencement Date, the initial annual base rent payment is $144 thousand and increasing three percent per annum thereafter. Rent expense for the three months ended June 30, 2025 and 2024 was $36 thousand and $68 thousand, respectively. Rent expense for the six months ended June 30, 2025 and 2024 was $72 thousand and $135 thousand, respectively.
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GLASS HOUSE BRANDS INC.
Notes to Unaudited Condensed Interim Consolidated Financial Statements
(Amounts Expressed in United States Dollars Unless Otherwise Stated)
In August 2022, the Kazan Trust dated December 10, 2004, a trust of which the trustee is an executive and board member of the Company, acquired partial ownership of a real estate entity that entered into a ten-year lease with a subsidiary of the Company. The lease, which commenced in July 2022, provides for an initial annual base rent payment of $36 thousand, increasing three percent per annum thereafter. Rent expense for the three months ended June 30, 2025 and 2024 was $9 thousand in each period. Rent expense for the six months ended June 30, 2025 and 2024 was $18 thousand in each period.
Consulting Agreement
Beach Front Property Management Inc., a company that is majority-owned by an executive and certain board members of the Company, entered into a consulting agreement with the Company dated September 28, 2020. The monthly consulting fee is $11 thousand for mergers and acquisitions advisory and assistance and real estate acquisition and financing services. The agreement may be terminated by either party for any/or no reason without penalty upon seven days written notice. Consulting fees for the three months ended June 30, 2025 and 2024 were $35 thousand in each period. Consulting fees for the six months ended June 30, 2025 and 2024 were $70 thousand in each period.
19.    SEGMENT INFORMATION
Operations by reportable segment for the three months ended June 30, 2025 were as follows (in thousands):
Three Months Ended June 30, 2025 
RetailWholesale BiomassCPGCorporate and OtherTotal 
Revenues, Net$12,262 $42,122 $5,483 $— $59,867 
Cost of Goods Sold6,401 18,001 3,534 — 27,936 
Gross Profit5,861 24,121 1,949 — 31,931 
Operating Expenses:
General and Administrative3,458 2,748 129 8,283 14,618 
Sales and Marketing479 60 15 249 803 
Professional Fees— 115 5 1,845 1,965 
Depreciation and Amortization365 3,095 198 247 3,905 
Income (Loss) from Operations1,559 18,103 1,602 (10,624)10,640 
Other (Income) Expense:
Interest Expense33 1,172 4 710 1,919 
Gain on Equity Method Investments— — — (44)(44)
Loss on Change in Fair Value of Derivative Asset and Liability— 318 — 10 328 
Loss on Change in Fair Value of Contingent Liabilities and Shares Payable— — — 95 95 
Other Income, Net(1,428)(1,917)(1)(2,025)(5,371)
Total Other (Income) Expense Net(1,395)(427)3 (1,254)(3,073)
Income (Loss) Before Income Taxes$2,954 $18,530 $1,599 $(9,370)$13,713 
Total Assets as of June 30, 2025$18,970 $253,728 $16,132 $45,731 $334,561 

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GLASS HOUSE BRANDS INC.
Notes to Unaudited Condensed Interim Consolidated Financial Statements
(Amounts Expressed in United States Dollars Unless Otherwise Stated)
Operations by reportable segment for the three months ended June 30, 2024 were as follows (in thousands):
Three Months Ended June 30, 2024
RetailWholesale BiomassCPGCorporate and OtherTotal
Revenues, Net$10,885 $39,074 $3,979 $— $53,938 
Cost of Goods Sold5,723 16,448 3,093 — 25,264 
Gross Profit5,162 22,626 886 — 28,674 
Operating Expenses:
General and Administrative3,386 3,670 573 9,737 17,366 
Sales and Marketing482 49 8 143 682 
Professional Fees— 47 (1)1,814 1,860 
Depreciation and Amortization378 2,938 190 217 3,723 
Income (Loss) from Operations916 15,922 116 (11,911)5,043 
Other (Income) Expense:     
Interest Expense42 16 6 2,529 2,593 
Loss on Equity Method Investments— — — 94 94 
Gain on Change in Fair Value of Derivative Asset— — — (32)(32)
Gain on Change in Fair Value of Contingent Liabilities and Shares Payable— — — (7,910)(7,910)
Other (Income) Expense, Net43 38 (1)(24)56 
Total Other (Income) Expense Net85 54 5 (5,343)(5,199)
Income (Loss) Before Income Taxes$831 $15,868 $111 $(6,568)$10,242 
Total Assets as of December 31, 2024$26,216 $235,576 $12,589 $36,121 $310,502 
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GLASS HOUSE BRANDS INC.
Notes to Unaudited Condensed Interim Consolidated Financial Statements
(Amounts Expressed in United States Dollars Unless Otherwise Stated)
Operations by reportable segment for the six months ended June 30, 2025 were as follows (in thousands):
Six Months Ended June 30, 2025 
RetailWholesale BiomassCPGCorporate and OtherTotal 
Revenues, Net$24,050 $70,405 $10,230 $— $104,685 
Cost of Goods Sold12,536 33,093 7,060 — 52,689 
Gross Profit11,514 37,312 3,170 — 51,996 
Operating Expenses:
General and Administrative7,023 5,710 279 16,689 29,701 
Sales and Marketing927 193 33 337 1,490 
Professional Fees1 189 5 3,438 3,633 
Depreciation and Amortization735 6,123 389 495 7,742 
Impairment Expense for Intangible Assets— — — 1,900 1,900 
Income (Loss) from Operations2,828 25,097 2,464 (22,859)7,530 
Other (Income) Expense:
Interest Expense68 1,595 9 2,523 4,195 
Interest Income— (288)— — (288)
Gain on Equity Method Investments— — — (84)(84)
Loss on Change in Fair Value of Derivative Asset and Liability— 1,807 — 254 2,061 
Loss on Extinguishment of Debt— — — 292 292 
Other Income, Net(1,510)(1,741)(1)(2,027)(5,279)
Total Other (Income) Expense Net(1,442)1,373 8 958 897 
Income (Loss) Before Income Taxes$4,270 $23,724 $2,456 $(23,817)$6,633 
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GLASS HOUSE BRANDS INC.
Notes to Unaudited Condensed Interim Consolidated Financial Statements
(Amounts Expressed in United States Dollars Unless Otherwise Stated)
Operations by reportable segment for the six months ended June 30, 2024 were as follows (in thousands):
Six Months Ended June 30, 2024
RetailWholesale BiomassCPGCorporate and OtherTotal
Revenues, Net$20,806 $55,000 $8,232 $— $84,038 
Cost of Goods Sold10,391 26,166 6,281 — 42,838 
Gross Profit10,415 28,834 1,951 — 41,200 
Operating Expenses:
General and Administrative6,780 5,496 764 17,854 30,894 
Sales and Marketing825 53 18 263 1,159 
Professional Fees9 99 33 5,382 5,523 
Depreciation and Amortization753 5,803 380 503 7,439 
Income (Loss) from Operations2,048 17,383 756 (24,002)(3,815)
Other (Income) Expense:
Interest Expense83 28 12 4,676 4,799 
Loss on Equity Method Investments— — — 76 76 
Gain on Change in Fair Value of Derivative Asset— — — (145)(145)
Gain on Change in Fair Value of Contingent Liabilities and Shares Payable— — — (1,445)(1,445)
Other (Income) Expense, Net42 49 13 (11)93 
Total Other Expense Net125 77 25 3,151 3,378 
Income (Loss) Before Income Taxes$1,923 $17,306 $731 $(27,153)$(7,193)
20.    SUBSEQUENT EVENTS
Preferred Equity Refinancing
On July 16, 2025, the Company announced a recapitalization and non-brokered private placement (collectively, the “Offering”) of Series E Convertible Preferred Stock, face value of $1,000 per share (the “Series E Preferred Stock”), of GH Group, Inc. (“GH Group”). The Series E Preferred Stock will replace GH Group’s existing Series B and Series C Preferred Stock. Any holders of Series B and Series C Preferred Stock who elected not to exchange into the Series E Preferred Stock are being redeemed by GH Group, which effectively cancels the Series B and Series C Preferred Stock on a go-forward basis.
Investors subscribing for Series E Preferred Stock will receive an annual 12% dividend rate, which will accrue and be paid quarterly. The Series E Preferred Stock is convertible into a new class of GH Group Class B common stock at a conversion price of $9.00 per share at any time, and ultimately, exchangeable into the Company’s publicly-traded equity shares (the “Equity Shares”) on a one-for-one basis at any time. GH Group also will have a 5-year redemption right with respect to the Series E Preferred Stock upon the occurrence of each of the following: (i) the 60-day volume weighted average price of the Equity Shares is greater than or equal to $12.00, (ii) the average daily trading volume of the Equity Shares exceeds one million shares and (iii) the Equity Shares are trading on a major United States stock exchange. If the Company exercises its redemption right, the redemption price for the Series E Preferred Stock will be equal to the original purchase price per share plus any accrued and unpaid dividends.
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GLASS HOUSE BRANDS INC.
Notes to Unaudited Condensed Interim Consolidated Financial Statements
(Amounts Expressed in United States Dollars Unless Otherwise Stated)
The Offering is anticipated to be approximately $77.5 million, with more than 75% of the investors of Series B and C Preferred Stock of GH Group exchanging into Series E Preferred Stock while all other non-participating Series B and Series C Preferred Stock investors of GH Group are redeemed in full. As of the date of this report, in total, approximately $15.7 million of new capital was from new investors and GH Group redeemed $18.5 million of Series B and Series C Preferred Stock.
Federal Law Enforcement Raids at Company Farms
On August 4, 2025, the Company provided updates to recent events related to raids led by U.S. Immigration and Customs Enforcement (“ICE”) at two of the Company’s farms.
On July 10, 2025, ICE executed search warrants at two of the Company’s farms. The warrants authorized searches for evidence of potential immigration violations under Title 8 of the United States Code. According to public reports, approximately 360 individuals were detained or arrested. The Company has been unable to verify the actual number or the identities of those detained. Nine employees of the Company were detained or arrested. Any other individuals detained or arrested would have been either employees of third-party contractors providing services at the Company’s Camarillo farm, including the Farm Labor Contractors (“FLC”) providing labor for the agricultural operations, or were unassociated with the Company. One individual employed by a third-party contractor died from injuries sustained during the raid. To the Company’s knowledge, none of the individuals working at the Company’s facilities on July 10, 2025 were paid less than either the federal or California minimum wage. The Company has always paid a competitive and legal wage for workers, including both its employees and any third-party workers.
Following the July 10, 2025 ICE raid, the Company has undertaken series of significant changes to strengthen its labor and compliance practices. The Company terminated its relationship with the two FLCs providing workers for its farms. The Company has revised its FLC agreements to ensure that their compliance processes are best in class and in accordance with the latest Company standards. The Company has engaged new FLCs to provide workers pursuant to the best in class agreements. The Company has required the two FLCs who had been terminated to agree to and implement the new enhanced compliance procedures before any of its workers would be allowed access to Glass House facilities. The Company has made significant changes to labor practices that are above and beyond legal requirements.
Since July 10, 2025, the Company has hired leading compliance consultants Guidepost Solutions, led by former Director of ICE and Assistant Secretary of Homeland Security Julie Myers Wood, to assist the Company’s counsel with implementing best practices for determining employment eligibility for its employees and for ensuring eligibility of employees of contractors. All employees of the Company and Farm labor are now E-verified and the underlying documents are reviewed by experts for validity and age gating. The Company has enhanced age gating controls for everyone entering the farms including contracted employees, third party vendors, visitors, customers, and employees of the Company. The Company has signed a Labor Peace Agreement for its license-holding entities (including the farm facilities) with the International Brotherhood of Teamsters. The agreement allows for the Teamsters to present to employees throughout the Company, and the Company will cooperate with those efforts.
Management has initiated an assessment to evaluate whether any accrual or disclosure is required in connection with this matter. As of the date of this filing, no specific items have been identified that meet the criteria for accrual or further disclosure, and no loss has been determined to be both probable and reasonably estimable.
The Company decided to reduce production due to temporary labor constraints at its farms amidst changes made in response to recent events which is anticipated to reduce revenue as compared to previous estimates for the second half of 2025.
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