SELECTED FINANCIAL INFORMATION
The following tables set forth selected consolidated financial information derived from our unaudited condensed interim consolidated financial statements and the respective accompanying notes prepared in accordance with U.S. GAAP.
During the periods discussed herein, our accounting policies have remained consistent. The selected and summarized consolidated financial information below may not be indicative of our future performance.
Statement of Operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
|
March 31, 2023 |
|
|
March 31, 2022 |
|
|
$ Change |
|
|
% Change |
|
Revenues |
|
$ |
124,535 |
|
|
$ |
123,087 |
|
|
$ |
1,448 |
|
|
|
1 |
% |
Cost of sales related to inventory production |
|
|
(77,454 |
) |
|
|
(66,460 |
) |
|
|
(10,994 |
) |
|
|
17 |
% |
Gross profit |
|
|
47,081 |
|
|
|
56,627 |
|
|
|
(9,546 |
) |
|
|
(17 |
)% |
Selling, general and administrative expenses |
|
|
(55,350 |
) |
|
|
(71,292 |
) |
|
|
15,942 |
|
|
|
(22 |
)% |
Operating expenses |
|
|
(55,350 |
) |
|
|
(71,292 |
) |
|
|
15,942 |
|
|
|
(22 |
)% |
Other (expense) income, net |
|
|
(17,614 |
) |
|
|
(12,609 |
) |
|
|
(5,005 |
) |
|
|
40 |
% |
Income tax expense |
|
|
(10,689 |
) |
|
|
(632 |
) |
|
|
(10,057 |
) |
|
|
1591 |
% |
Net loss |
|
|
(36,572 |
) |
|
|
(27,906 |
) |
|
|
(8,666 |
) |
|
|
31 |
% |
Net loss attributable to non-controlling interest |
|
|
768 |
|
|
|
(1,270 |
) |
|
|
2,038 |
|
|
|
(160 |
)% |
Net loss attributable to Columbia Care Inc. |
|
$ |
(37,340 |
) |
|
$ |
(26,636 |
) |
|
$ |
(10,704 |
) |
|
|
40 |
% |
Loss per share attributable to Columbia Care Inc.—based and diluted |
|
$ |
(0.09 |
) |
|
$ |
(0.07 |
) |
|
$ |
(0.02 |
) |
|
|
31 |
% |
Weighted average number of shares outstanding—basic and diluted |
|
|
401,438,546 |
|
|
|
376,397,260 |
|
|
|
|
|
|
|
Summary of Balance Sheet items:
|
|
|
|
|
|
|
|
|
|
|
March 31, 2023 |
|
|
December 31, 2022 |
|
Total Assets |
|
$ |
973,021 |
|
|
$ |
994,726 |
|
Total Liabilities |
|
$ |
791,696 |
|
|
$ |
787,823 |
|
Total Long-Term Liabilities |
|
$ |
619,333 |
|
|
$ |
584,705 |
|
Total Equity |
|
$ |
181,325 |
|
|
$ |
206,903 |
|
RESULTS OF OPERATIONS
Comparison of the three months ended March 31, 2023 and 2022
The following tables summarizes our results of operations for the three months ended March 31, 2023 and 2022:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For three months ended |
|
|
|
March 31, 2023 |
|
|
March 31, 2022 |
|
|
$
Change |
|
|
%
Change |
|
Revenues |
|
$ |
124,535 |
|
|
$ |
123,087 |
|
|
$ |
1,448 |
|
|
|
1 |
% |
Cost of sales related to inventory production |
|
|
(77,454 |
) |
|
|
(66,460 |
) |
|
|
(10,994 |
) |
|
|
17 |
% |
Gross profit |
|
|
47,081 |
|
|
|
56,627 |
|
|
|
(9,546 |
) |
|
|
(17 |
)% |
Selling, general and administrative expenses |
|
|
(55,350 |
) |
|
|
(71,292 |
) |
|
|
15,942 |
|
|
|
(22 |
)% |
Operating expenses |
|
|
(55,350 |
) |
|
|
(71,292 |
) |
|
|
15,942 |
|
|
|
(22 |
)% |
Loss from operations |
|
|
(8,269 |
) |
|
|
(14,665 |
) |
|
|
6,396 |
|
|
|
(44 |
)% |
Other (expense) income, net |
|
|
(17,614 |
) |
|
|
(12,609 |
) |
|
|
(5,005 |
) |
|
|
40 |
% |
Loss before provision for income taxes |
|
|
(25,883 |
) |
|
|
(27,274 |
) |
|
|
1,391 |
|
|
|
(5 |
)% |
Income tax expense |
|
|
(10,689 |
) |
|
|
(632 |
) |
|
|
(10,057 |
) |
|
|
1591 |
% |
Net loss |
|
|
(36,572 |
) |
|
|
(27,906 |
) |
|
|
(8,666 |
) |
|
|
31 |
% |
Net loss attributable to non-controlling
interest |
|
|
768 |
|
|
|
(1,270 |
) |
|
|
2,038 |
|
|
|
(160 |
)% |
Net loss attributable to Columbia Care Inc. |
|
$ |
(37,340 |
) |
|
$ |
(26,636 |
) |
|
$ |
(10,704 |
) |
|
|
40 |
% |
19
Revenues
The increase in revenue of $1,448 for the three months ended March 31, 2023, as compared to the prior year period, was driven by the expansion of new wholesale and retail facilities which contributed to a revenue growth of $4,914 as compared to the prior period and our acquisition of Medicine Man Longmont which contributed an additional $1,772 of revenue during the three months ended March 31, 2023, as compared to the prior period. This was offset by a net decline in revenue of $5,238 in our Legacy Columbia Care network, our 2020 acquisitions of The Green Solution and Project Cannabis, and our 2021 acquisitions of The Healing Center, Corsa Verde, Cannascend, Medicine Man (excluding Longmont), and Green Leaf.
Cost of Sales
The increase in cost of sales of $10,994 for the three months ended March 31, 2023, as compared to the prior year period, was driven by a cost of sales increase of $5,992 in our Legacy Columbia Care network, our 2020 acquisitions of The Green Solution and Project Cannabis, and our 2021 acquisitions of The Healing Center, Corsa Verde, Cannascend, Medicine Man (excluding Longmont), and Green Leaf. The expansion of new wholesale and retail facilities contributed to a cost of sales growth of $3,911 as compared to the prior period and our acquisition of Medicine Man Longmont contributed to an additional $1,091 of cost of sales during the three months ended March 31, 2023, as compared to the prior period.
Gross Profit
The decrease in gross profit of $9,546 for the three months ended March 31, 2023, as compared to the prior year period, was primarily driven by a gross profit decrease of $11,230 in our Legacy Columbia Care network, our 2020 acquisitions of The Green Solution and Project Cannabis, and our 2021 acquisitions of The Healing Center, Corsa Verde, Cannascend Medicine Man (excluding Longmont), and Green Leaf. This was offset by an expansion of new wholesale and retail facilities contributing gross profit growth of $1,003 as compared to the prior period and our acquisition of Medicine Man Longmont that contributed an additional $681 of gross profit during the three months ended March 31, 2023, as compared to the prior period.
Operating Expenses
The decrease of $15,942 in operating expenses for the three months ended March 31, 2023, as compared to the prior year period, was primarily attributable to a decrease in salary and benefits expenses of $1,805, depreciation and amortization of $7,121, professional fees of $3,956, advertisement and promotion expenses of $2,318, operating office and general expenses of $564, and other fees and expenses of $425. This was offset by an increase in operating facility cost of $247.
Other Expense, Net
The increase in other expense, net of $5,005 for the three months ended March 31, 2023, as compared to the prior year period, was primarily due to a increase in interest expense on debt of $969, amortization of debt issuance costs of $252, loss on deconsolidation of $2,473, and restructuring expense of $3,178. This was partially offset by a gain on disposal of group of $600, a decrease in change in fair valuation of the derivative liability of $653, other expenses of $314, and interest expense on leases of $328.
Provisions for Income Taxes
The Company recorded income tax expense of $10,689 for the three months ended March 31, 2023, as compared to an income tax expense of $632 for the three months ended March 31, 2022.
For the period ended March 31, 2023 the company has a Deferred Tax Asset of approximately $16,900 related to its acquisition of VentureForth LLC, which occurred during 2022. The consideration paid to acquire 100% of the VentureForth Holdings LLC partnership interests was expensed for book purposes. For tax purposes, such consideration is capitalized as the transaction is treated as a deemed asset purchase for tax purposes. Such treatment results in a Deferred Tax Asset. However, because of the limitations of Section 280E of the Internal Revenue Code, the company does not expect to recognize the full tax benefit for this specific deferred tax asset.
Non-GAAP Measures
We use certain non-GAAP measures, referenced in this MD&A. These measures are not recognized measures under GAAP and do not have a standardized meaning prescribed by GAAP and therefore may not be comparable to similar measures presented by other companies. Accordingly, these measures should not be considered in isolation from nor as a substitute for our financial information reported under GAAP. We use non-GAAP measures including EBITDA, Adjusted EBITDA and Adjusted EBITDA margin which may be calculated differently by other companies. These non-GAAP measures and metrics are used to provide investors with supplemental measures of our operating performance and liquidity and thus highlight trends in our business that may not otherwise be apparent when relying solely on GAAP measures. These supplemental non-GAAP financial measures should not be considered superior to, as a substitute for, or as an alternative to, and should be considered in conjunction with, the GAAP financial measures presented. We also
20
recognize that securities analysts, investors and other interested parties frequently use non-GAAP measures in the evaluation of companies within our industry. Finally, we use non-GAAP measures and metrics in order to facilitate evaluation of operating performance comparisons from period to period, to prepare annual operating budgets and forecasts and to determine components of executive compensation.
The following table provides a reconciliation of net loss for the period to EBITDA and Adjusted EBITDA for the three months ended March 31, 2023, and 2022:
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
|
March 31, 2023 |
|
|
March 31, 2022 |
|
Net loss |
|
$ |
(36,572 |
) |
|
$ |
(27,906 |
) |
Income tax |
|
|
10,689 |
|
|
|
632 |
|
Depreciation and amortization |
|
|
15,063 |
|
|
|
21,210 |
|
Interest expense, net and debt amortization |
|
|
13,671 |
|
|
|
12,670 |
|
EBITDA (Non-GAAP measure) |
|
$ |
2,851 |
|
|
$ |
6,606 |
|
Adjustments: |
|
|
|
|
|
|
Share-based compensation |
|
|
6,515 |
|
|
|
6,374 |
|
Transaction and other non-core costs, including costs associated with the Cresco transaction, litigation expenses and other costs related to restructuring |
|
|
1,317 |
|
|
|
3,169 |
|
Fair-value changes on derivative liabilities |
|
|
30 |
|
|
|
683 |
|
Restructuring expense |
|
|
3,178 |
|
|
|
— |
|
Loss on deconsolidation |
|
|
2,473 |
|
|
|
— |
|
Adjusted EBITDA (Non-GAAP measure) |
|
$ |
16,364 |
|
|
$ |
16,832 |
|
Revenue |
|
$ |
124,535 |
|
|
$ |
123,087 |
|
Adjusted EBITDA (Non-GAAP measure) |
|
|
16,364 |
|
|
|
16,832 |
|
Adjusted EBITDA margin (Non-GAAP measure) |
|
|
13.1 |
% |
|
|
13.7 |
% |
Revenue |
|
$ |
124,535 |
|
|
$ |
123,087 |
|
Gross profit |
|
|
47,081 |
|
|
|
56,627 |
|
Gross margin |
|
|
37.8 |
% |
|
|
46.0 |
% |
Adjusted EBITDA
The decrease in Adjusted EBITDA for the quarter ended March 31, 2023, as compared to the prior year period, was primarily driven by margin pressures across the portfolio offset by improved leverage of revenues across selling, general, and administrative expenses such as facility costs, salary costs, and benefit costs.
Our future financial results are subject to significant potential fluctuations caused by, among other things, growth of sales volume in new and existing markets and our ability to control operating expenses. In addition, our financial results may be impacted significantly by changes to the regulatory environment in which we operate, both on a local, state and federal level.
Liquidity and Capital Resources
Our primary need for liquidity is to fund working capital requirements of our business, capital expenditures and for general corporate purposes. Historically, we have relied on external financing as our primary source of liquidity. Our ability to fund our operations and to make capital expenditures depends on our ability to successfully secure financing through issuance of debt or equity, as well as our ability to improve our future operating performance and cash flows, which are subject to prevailing economic conditions and financial, business and other factors, some of which are beyond our control.
We are currently meeting our obligations and are earning revenues from our operations. However, we have sustained losses since inception and may require additional capital in the future. We estimate that based on our current business operations and working capital, we will continue to meet our obligations in the short term. As we continue to seek growth through expansion or acquisition, our cash flow requirements and obligations could materially change. As of March 31, 2023, we did not have any significant external capital requirements.
Recent Financing Transactions
Private Placement
On February 3, 2022, Columbia Care closed a private placement of $185,000 aggregate principal amount of 9.50% senior-secured first-lien notes due 2026 (the “2026 Notes”) and received aggregate gross proceeds of $153,250. The 2026 Notes are senior secured obligations of the Company and were issued at 100.0% of face value. The 2026 Notes accrue interest in arrears which is payable
21
semi-annually and mature on February 3, 2026, unless earlier redeemed or repurchased. The Company may redeem the 2026 Notes at par, in whole or in part, on or after February 3, 2024, as more particularly described in the fourth supplemental trust indenture governing the 2026 Notes. In connection with the offering of the 2026 Notes, the Company exchanged $31,750 of the Company’s existing 13.0% Term Debt, pursuant to private agreements in accordance with the trust indenture, for an equivalent amount of 2026 Notes plus accrued but unpaid interest and any negotiated premium thereon.
The premium and paid interest were paid out of funds raised from the February 2022 Private Placement. The total unamortized debt and debt issuance costs of $2,153, related to the modified portion of the Term Debt, will be amortized over the term of the 2026 Notes using the effective interest method. The Company incurred $7,189 in creditor fees in connection with the modified Term Debt and 2026 Notes and $301 in third-party legal fees related to 2026 Notes which were capitalized and will be amortized over the term of the 2026 Notes using the effective interest rate method.
Cash Flows
The following table summarizes the sources and uses of cash for each of the periods presented:
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
|
March 31, 2023 |
|
|
March 31, 2022 |
|
Net cash used in operating activities |
|
$ |
(3,405 |
) |
|
$ |
(27,822 |
) |
Net cash used in investing activities |
|
|
(2,552 |
) |
|
|
(29,555 |
) |
Net (used in)/cash provided by financing activities |
|
|
(2,037 |
) |
|
|
144,253 |
|
Net (decrease)/increase in cash and cash equivalents |
|
$ |
(7,994 |
) |
|
$ |
86,876 |
|
Operating Activities
During the three months ended March 31, 2023, operating activities used $3,405 of cash, primarily resulting from a net loss of $36,572, and net changes in operating assets and liabilities of $5,280; this was partially offset by depreciation and amortization of $15,063, equity-based compensation expense of $6,515, loss on deconsolidation of subsidiary of $2,473, and debt amortization expense of $2,291. The net change in operating assets and liabilities was primarily due to an decrease in other assets of $6,126, an increase in accounts payable of $8,134, and an increase in income tax payable of $9,194, which is offset by an increase in inventory of $6,315, an increase in accounts receivable of $2,322, an increase in prepaid expenses, an increase in other current assets of $2,442, a decrease in accrued expenses of $4,874, and a decrease other long term liabilities of $2,221.
During the three months ended March 31, 2022, operating activities used $27,822 of cash, primarily resulting from a net loss of $27,906, and net changes in operating assets and liabilities of $25,932, partially offset by depreciation and amortization of $21,210, equity-based compensation expense of $6,374, debt amortization expense of $1,936, change in fair value of derivative liability of $683 partially offset by change in deferred taxes of $4,560.
Investing Activities
During the three months ended March 31, 2023, investing activities used $2,552 of cash pursuant to purchases of property and equipment of $5,724. This was partially offset by proceeds from the deconsolidation of the Company's Missouri entity of $3,040 and cash received from deposits of $132.
During the three months ended March 31, 2022, investing activities used $29,555 of cash, purchases of property and equipment of $29,511 partially offset by proceeds from sale of property and equipment of $179.
Financing Activities
During the three months ended March 31, 2023, financing activities used $2,037 of cash, mainly due to the payment of lease liabilities of $1,588 and repayment of a seller's note of $375.
During the three months ended March 31, 2022, financing activities provided $144,253 of cash, $145,984 in net proceeds received from issuance of debt partially offset by lease liability payments of $1,642.
22
Contractual Obligations and Commitments
The following table summarizes contractual obligations as of March 31, 2023 and the effects that such obligations are expected to have on our liquidity and cash flows in future periods:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments Due by Period |
|
|
|
Total |
|
|
Year 1 |
|
|
Year 2 |
|
|
Year 3 |
|
|
Year 4 |
|
|
Year 5 |
|
|
Year 6
and
beyond |
|
Lease commitments |
|
$ |
378,118 |
|
|
$ |
21,878 |
|
|
$ |
32,267 |
|
|
$ |
28,721 |
|
|
$ |
26,322 |
|
|
$ |
25,825 |
|
|
$ |
243,105 |
|
Sale-Leaseback commitments |
|
$ |
205,308 |
|
|
$ |
9,844 |
|
|
$ |
10,162 |
|
|
$ |
10,490 |
|
|
$ |
10,829 |
|
|
$ |
11,179 |
|
|
$ |
152,804 |
|
2026 Notes |
|
$ |
185,000 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
185,000 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Term debt (principal) |
|
$ |
38,215 |
|
|
$ |
— |
|
|
$ |
38,215 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Acquisition related term debt |
|
$ |
3,188 |
|
|
$ |
106 |
|
|
$ |
110 |
|
|
$ |
114 |
|
|
$ |
119 |
|
|
$ |
124 |
|
|
$ |
2,615 |
|
Interest on term debt |
|
$ |
61,322 |
|
|
$ |
22,669 |
|
|
$ |
18,281 |
|
|
$ |
17,692 |
|
|
$ |
1,701 |
|
|
$ |
107 |
|
|
$ |
872 |
|
Convertible debt (principal) |
|
$ |
80,100 |
|
|
$ |
5,600 |
|
|
$ |
— |
|
|
$ |
74,500 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Interest on convertible debt |
|
$ |
11,334 |
|
|
$ |
4,672 |
|
|
$ |
4,470 |
|
|
$ |
2,192 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Mortgage notes (principal) |
|
$ |
35,820 |
|
|
$ |
513 |
|
|
$ |
577 |
|
|
$ |
639 |
|
|
$ |
18,465 |
|
|
$ |
15,626 |
|
|
$ |
— |
|
Mortgage notes (interest) |
|
$ |
14,504 |
|
|
$ |
3,659 |
|
|
$ |
3,596 |
|
|
$ |
3,534 |
|
|
$ |
3,173 |
|
|
$ |
542 |
|
|
$ |
— |
|
Closing promissory note (principal) |
|
$ |
2,625 |
|
|
$ |
1,125 |
|
|
$ |
1,500 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Closing promissory note (interest) |
|
$ |
210 |
|
|
$ |
135 |
|
|
$ |
75 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Acquisition related real estate notes (principal) |
|
$ |
7,000 |
|
|
$ |
2,000 |
|
|
$ |
5,000 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Acquisition related real estate notes (interest) |
|
$ |
435 |
|
|
$ |
375 |
|
|
$ |
60 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Total contractual obligations |
|
$ |
1,023,179 |
|
|
$ |
72,576 |
|
|
$ |
114,313 |
|
|
$ |
322,882 |
|
|
$ |
60,609 |
|
|
$ |
53,403 |
|
|
$ |
399,396 |
|
The above table excludes purchase orders for inventory in the normal course of business.
Effects of Inflation
Rising inflation rates have had a substantial impact on our financial performance to date and may have an impact on our financial performance in the future as our ability to pass on an increase in costs is not entirely within our control.
Critical Accounting Estimates
We make judgements, estimates and assumptions about the future that affect assets and liabilities, and revenues and expenses. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the review affects both current and future periods.
Judgements estimates and assumptions with the most significant effect on the amounts recognized in the consolidated financial statements are described below.
FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT
Our financial instruments consist of cash and cash equivalents, accounts receivable, notes receivable, deposits and other current assets, accounts payable, accrued expenses, current taxes payable and other current liabilities like interest payable and payroll liabilities, derivative liability, debt and lease liabilities. The fair values of cash and restricted cash, accounts and notes receivable, deposits, accounts payable and accrued expenses and other current liabilities like interest payable and payroll liabilities, short-term debt and lease liabilities approximate their carrying values due to the relatively short-term to maturity or because of the market rate of interest used on initial recognition. Columbia Care classifies its derivative liability as fair value through profit and loss (FVTPL).
Financial instruments recorded at fair value are classified using a fair value hierarchy that reflects the significance of the inputs to fair value measurements. The three levels of fair value contained within the hierarchy are:
Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities;
Level 2 – Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly; and
Level 3 – Inputs for the asset or liability that are not based on observable market data.
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Our assets measured at fair value on a nonrecurring basis include investments, assets and liabilities held for sale, long-lived assets and indefinite-lived intangible assets. We review the carrying amounts of such assets whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable or at least annually, for indefinite-lived intangible assets. Any resulting asset impairment would require that the asset be recorded at its fair value. The resulting fair value measurements of the assets are considered Level 3 measurements.
Financial Risk Management
We are exposed in varying degrees to a variety of financial instrument related risks. Our risk exposures and the impact on our financial instruments is summarized below:
Credit Risk
Credit risk is the risk of a potential loss to us if a customer or third party to a financial instrument fails to meet its contractual obligations. The maximum credit exposure at March 31, 2023 and December 31, 2022, is the carrying amount of cash and cash equivalents, subscription receivable, accounts receivable and notes receivable. We do not have significant credit risk with respect to our customers. All cash deposits are with regulated U.S. financial institutions.
We provide credit to our customers in the normal course of business and have established credit evaluation and monitoring processes to mitigate credit risk but have limited risk as the majority of our sales are transacted with cash. Through our Columbia Care National Credit program, we provide credit to customers in certain markets in which we operate.
Liquidity Risk
Liquidity risk is the risk that we will not be able to meet our financial obligations associated with financial liabilities. We manage liquidity risk through the management of our capital structure. Our approach to managing liquidity is to estimate cash requirements from operations, capital expenditures and investments and ensure that we have sufficient liquidity to fund our ongoing operations and to settle obligations and liabilities when due.
To date, we have incurred significant cumulative net losses and we have not generated positive cash flows from our operations. We have therefore depended on financing from sale of our equity and from debt financing to fund our operations. Overall, we do not expect the net cash contribution from our operations and investments to be positive in the near term, and we therefore expect to rely on financing from equity or debt.
Market Risk
In addition to business opportunities and challenges applicable to any business operating in a fast-growing environment, our business operates in a highly regulated and multi-jurisdictional industry, which is subject to potentially significant changes outside of our control as individual states as well as the U.S. federal government may impose restrictions on our ability to grow our business profitably or enact new laws and regulations that open up new markets.
Interest Rate Risk
Interest rate risk is the risk that the fair value or future cash flows of our financial instrument will fluctuate because of changes in market interest rates. Our cash deposits bear interest at market rates.
Currency Risk
Our operating results and financial position are reported in thousands of U.S. dollars. We may enter into financial transactions denominated in other currencies, which would result in Columbia Care’s operations and financial position to be subject to currency transaction and translation risks.
As of March 31, 2023, and December 31, 2022, we had no hedging agreements in place with respect to foreign exchange rates. We have not entered into any agreements or purchased any instruments to hedge possible currency risks at this time.
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Price Risk
Price risk is the risk of variability in fair value due to movements in equity or market prices. We are subject to the risk of price variability pursuant to our products due to competitive or regulatory pressures.