12. Massachusetts Lease Liability

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On May 16, 2022, the Company entered into the Massachusetts Lease Liability with IIP for its vertically integrated marijuana facility in Taunton, Massachusetts (the “Taunton Facility”). Lease payments are due monthly and are subject to an annual escalation of 2.5% after two years. The Company anticipates no disruption to CAC’s operations as a result of these transactions.

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The transaction with IIP was accounted for as a failed sale and leaseback transaction, where the Company retained the Taunton Facility balances included in property, plant, and equipment, and recognized a note payable of $40,000.

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As of December 31, 2024, the Massachusetts Lease Liability had a balance of $41,556. Future minimum lease payments for the Massachusetts Lease Liability as of December 31, 2024 are as follows:

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