5. Property, Plant and Equipment and Assets Held for Sale

Property, plant and equipment consisted of the following:

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During the years ended December 31, 2024 and 2023, the Company recognized depreciation expense of $5,525 and $7,654, respectively. Depreciation expense is included in cost of goods sold and depreciation and amortization in the consolidated statements of operations and comprehensive loss.

During the three months ended June 30, 2024, the Massachusetts market continued to experience challenges marked by increased cultivation and supply, market saturation, and pricing pressure, prompting CAC to revise its financial forecast to align with the prevailing market conditions. The forecast results indicated continuing losses associated with the use of a long-lived asset group, which resulted in the Company testing its CAC assets for impairment as of June 30, 2024. The result of that test indicated that the fair value of the asset group was less than the carrying value, which resulted in the Company recording an impairment charge of $15,678 for the three months ended June 30, 2024. This loss was allocated to the long-lived major assets of the group on a pro rata basis using the relative carrying amounts of the assets. No additional impairment was recognized related to CAC assets during the six months ended December 31, 2024.

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On February 15, 2023, the Company completed the Pennsylvania Transaction with IIP that included the sale of its White Haven Facility. The Company received cash proceeds of $15,000 and derecognized the property, plant and equipment with a net carrying value of $6,599, resulting in a gain on sale of assets of $8,401. The gain is included in gain on sale of assets and membership interests on the consolidated statements of operations and comprehensive loss.

During 2023, the Company refocused its Massachusetts retail operations, reducing the operating capacity of CAC’s Cambridge dispensary. As a result, the Company incurred a property and equipment impairment adjustment and loss of $2,788 during the year ended December 31, 2023. This loss is included in impairment loss and loss on disposal of assets in the consolidated statements of operations and comprehensive loss.