11. Massachusetts Lease Liability

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On May 16, 2022, the Company entered into a long-term lease with Innovative Industrial Properties (“IIP”) for a cultivation, processing and product manufacturing lab and medical and adult-use dispensary in Taunton, Massachusetts (the “Taunton Facility”) with a term of 20 years and a maturity date of May 15, 2042, with two five year extensions exercisable at the Company’s discretion (the “Massachusetts Lease Liability”). 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 March 31, 2024, the Massachusetts Lease Liability had a balance of $40,977. Future minimum lease payments for the Massachusetts Lease Liability as of March 31, 2024 are as follows:

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