Leases |
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Dec. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leases |
Note 4 – Leases The Company mainly leases office space and cannabis cultivation, processing and retail dispensary space. Leases with an initial term of less than 12 months are not recorded on the consolidated balance sheets. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. Most leases include one or more options to renew, with renewal terms that can extend the lease term from one to five years or more. The Company has determined that it was reasonably certain that the renewal options on the majority of its cannabis cultivation, processing and retail dispensary space would be exercised based on previous history and knowledge, current understanding of future business needs and the level of investment in leasehold improvements, among other considerations. The incremental borrowing rate used in the calculation of the lease liability is based on the rate available to the parent company. The depreciable life of assets and leasehold improvements are limited by the expected lease term. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. Certain subsidiaries of the Company rent or sublease certain office space to/from other subsidiaries of the Company. These intercompany subleases are eliminated on consolidation and have lease terms ranging from less than 1 year to 15 years. The components of lease expense are as follows:
Supplemental balance sheet information related to leases are as follows:
Maturities of lease liabilities for operating leases as of December 31, 2021, were as follows:
The Company entered into multiple sublease agreements during the year ended December 31, 2021, pursuant to which it serves as lessor to the sublessees. The gross rental income and underlying lease expense are presented gross on the Company’s consolidated balance sheets. For the year ended December 31, 2021, the Company recorded sublease income of $0.6 million (December 31, 2020—$Nil), which is included in the other income line on the consolidated statements of operations. The sublease income to be earned over the remaining sublease term was determined to be less than the costs associated with the primary lease held by the Company. As a result, the Company tested its ROU assets of related subleased facilities for impairment and recorded impairment expense of $1.8 million for the year ended December 31, 2021 (December 31, 2020—$Nil).
In addition to above, as a result of declining performance of the Company’s CBD business during the year ended December 31, 2021, an impairment test was performed for iA CBD’s long-lived assets as of December 31, 2021 (Note 2). The Company concluded that the carrying amount of the long-lived assets exceeded the imputed fair value and as a result recorded an impairment loss on ROU assets of $0.3 million for the year ended December 31, 2021 (December 31, 2020—$Nil). |
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