v3.26.1
10-K Property, plant and equipment, net
 3 Months Ended
Mar. 31, 2026
Property, Plant, and Equipment [Abstract]  
Property, plant and equipment, net Property, plant and equipment, net
Property, plant and equipment, net consist of the following as of December 31, 2025 and 2024:
As of December 31,
2025
2024
Land
$
12,937 
$
7,616 
Building and improvements
548,388 
499,279 
Furniture and fixtures
108,750 
86,606 
Machinery and equipment
133,648 
114,904 
Information technology
27,668 
27,376 
Construction in progress
22,618 
67,579 
Property, plant and equipment, gross
854,009 
803,360 
Less: Accumulated depreciation
(333,623)
(260,756)
Property, plant and equipment, net
$
520,386 
$
542,604 
Assets included in construction in progress represent projects related to the Company's dispensary, cultivation, manufacturing and corporate office facilities not yet completed or otherwise not ready for use.
The components of the Company’s depreciation expense for the years ended December 31, 2025, 2024 and 2023 were as follows:
Years Ended December 31,
Depreciation expense(1):
2025
2024
2023
Cost of goods sold
$
48,526 
$
49,399 
$
48,228 
Operating expenses
35,359 
33,867 
26,286 
Total depreciation expense
$
83,885 
$
83,266 
$
74,514 
(1) Includes depreciation expense associated with assets under failed sale and leaseback arrangements. See Note 12 — Failed sale and leaseback arrangements for further detail.
Asset specific impairments
2025
As a result of ongoing efforts to optimize its cultivation and manufacturing operations, during the year ended December 31, 2025, the Company recognized an impairment loss primarily related to outdated lighting technology and other idled assets of $8.0 million.
2024
In the first quarter of 2024, the Company made the strategic decision to introduce a new line of hemp-derived THC products via an online direct-to-consumer marketplace and to repurpose its Kentucky Facility for the production of said THC products. Accordingly, the Company ceased marketing the Kentucky Facility and recognized an impairment recovery of $3.9 million during the year ended December 31, 2024.
During 2024, the Company invested in the modernization of several cultivation facilities, resulting in improved yields and a reduction in the Company’s grow canopy requirements. These improvements led to the Company’s decision to shut down operations in certain cultivation facilities, as the additional capacity was no longer required or of no further benefit to the Company. Accordingly, the Company recognized an impairment loss of $12.4 million during the year ended December 31, 2024.
In Florida, the Company anticipated passage of the November 2024 Florida ballot initiative to legalize adult use cannabis and expanded its production capacity in the state accordingly. Following the ballot initiative's failure in November 2024, the Company reassessed its cultivation capacity in Florida and concluded excess capacity existed in the wake of the failed ballot initiative. In an effort to optimize cultivation operations in Florida, the Company identified assets for closure, halted construction and idled certain assets. Accordingly, during the year ended December 31, 2024, the Company recognized an impairment loss of $43.7 million, which is inclusive of $18.9 million in connection with assets the Company had retained from a prior period failed sale and leaseback arrangement. See Note 12 — Failed sale leaseback arrangements for further detail.
2023
In the third quarter of 2023, the Company ceased all of its operations in Kentucky related to the manufacturing and wholesale distribution of hemp-derived products, and classified its Kentucky business component as discontinued operations in the Annual Financial Statements. Upon this classification, the Company recognized a total impairment loss of $7.1 million, including $1.1 million for the related property, plant and equipment, within Loss on impairment on the Consolidated Statements of Operations, during the year ended December 31, 2023. All equipment specific to the Company’s hemp-derived operations in Kentucky was sold or disposed as of March 31, 2024.
Due to reduced forecasts for future operating performance at three of the Company’s operations in Nevada, the Company evaluated the recoverability of the associated property, plant and equipment and determined that the carrying values of these assets were not recoverable. Therefore, the Company recorded impairment losses of $7.5 million during the year ended December 31, 2023 for the property, plant and equipment associated with the three Nevada entities including Acres Cultivation, Acres Dispensary and House of Herbs.