The Company has operating leases for its retail stores, processing and cultivation facilities and corporate office space. Operating lease right-of-use assets and operating lease liabilities are recognized based on the present value of future minimum lease payments over the lease term at commencement date.

The Company records material real estate and equipment leases with an initial term of twelve months or more on the balance sheet. Real estate lease agreements for some locations provide for rent escalations and renewal options. Certain real estate leases require payment for fixed and variable non-lease components, such as taxes, insurance and maintenance, as part of base rent. In those circumstances, the Company elected the practical expedient to not separate the lease components from non-lease components.

The Company determines if an arrangement is a lease at inception. The Company must consider whether the contract conveys the right to control the use of an identified asset. Certain arrangements require significant judgment to determine if an asset is specified in the contract and if the Company directs how and for what purpose the asset is used during the term of the contract. For the three months ended March 31, 2026 and 2025, the Company recorded operating lease expense of $13,448 thousand and $12,768 thousand, respectively.

Other information related to operating leases as of March 31, 2026 and December 31, 2025 were as follows:


	March 31, 2026	December 31, 2025
Weighted average remaining lease term (years)	9.61	9.80
Weighted average discount rate	12.13%	12.16%

Maturities of lease liabilities for operating leases as of March 31, 2026 were as follows:


		Maturities of Lease Liability
Year Ending December 31,		Third-Party		Related Party		Total

		(in thousands)
Remainder of 2026	$	37,950	$	395	$	38,345
2027		50,474		491		50,965
2028		49,210		282		49,492
2029		45,769		287		46,056
2030		43,571		293		43,864
2031 and thereafter		258,164		475		258,639
Total lease payments		485,138		2,223		487,361
Less: interest		(214,325)		(593)		(214,918)
Present value of lease liability	$	270,813	$	1,630	$	272,443

Mosaic Real Estate, LLC, which owns certain facilities leased by the Company, is owned in part by Benjamin Kovler, the Chairman and Chief Executive Officer of the Company (through KP Capital, LLC), and Anthony Georgiadis, the President and a director of the Company (through Three One Four Holdings, LLC). For the three months ended March 31, 2026 and 2025, the Company recorded lease expense of $126 thousand, associated with these leasing arrangements.