RELATED PARTIES |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| RELATED PARTIES | NOTE 13. RELATED PARTIES In 2023, the Company entered into an agreement to rent an asset from an entity that is directly owned in part by the Company’s Chief Executive Officer and Chair of the Board of Directors. The expense related to the use of this asset was $0.2 million and $0.1 million for the three months ended September 30, 2026 and 2025, respectively, and $0.4 million and $0.2 million for the nine months ended September 30, 2026 and 2025, respectively, and recorded to selling, general, and administrative expenses on the condensed consolidated statements of operations. The Company also leases a cultivation facility and corporate office facility from an entity that is indirectly owned by the Company's Chief Executive Officer and Chair of the Board of Directors, another member of the Board of Directors, and a former member of the Board of Directors. The Company had the following related party operating leases on the condensed consolidated balance sheets, under ASC 842, as of:
Lease expense recognized on operating leases with related parties for the three and nine months ended September 30, 2026 and 2025 are immaterial. Pursuant to the MSA with Harvest, an affiliated VIE, the Company provides certain consulting, advisory, and administrative support services. The MSA provides for reimbursement of the Company’s costs incurred in providing such services plus a 5% margin, together with a fixed quarterly management fee. Revenue recognized under the MSA was approximately $4.9 million for the three months ended September 30, 2026, and $6.6 million for the nine months ended September 30, 2026, and is included within revenue in the condensed consolidated statements of operations. Management services receivables arising from these services were $21.3 million as of September 30, 2026 and are due within 15 days following quarter end. Transactions under the MSA are conducted pursuant to contractual terms approved by the parties and are intended to compensate the Company for services provided to Harvest. Each of the parties to the MSA has the ability to terminate the MSA at any time upon 90 days’ notice.
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