Note 11  COMMITMENTS AND CONTINGENCIES Leases The Company leases property under operating leases. Property leases include retail and warehouse space with fixed rent payments and lease terms ranging from three to five years. The Company is obligated to pay the lessor for maintenance, real estate taxes, insurance and other operating expenses on certain property leases. These expenses are variable and are not included in the measurement of the lease asset or lease liability. These expenses are recognized as variable lease expense when incurred. The Company records the lease asset and lease liability at the present value of lease payments over the lease term. The leases typically do not provide an implicit rate; therefore, the Company uses its estimated incremental borrowing rate at the time of lease commencement to discount the present value of lease payments. The Companys discount rate for operating leases at September 30, 2020 was 12%. Leases often include rental escalation clauses, renewal options and/or termination options that are factored into the determination of lease payments when appropriate. Lease expense is recognized on a straight-line basis over the lease term to the extent that collection is considered probable. As a result, the Company been recognizing rents as they become payable. Our weighted-average remaining lease term is 3.64 years. As of September 30, 2020, the maturities of operating leases liabilities are as follows (in thousands): Operating Leases 2020 remaining $ 241 2021 863 2022 719 2023 733 2024 445 2025 and beyond 45 Total 3,046 Less: amount representing interest (576 ) Present value of future minimum lease payments 2,470 Less: current obligations under leases 678 Long-term lease obligations $ 1,793 The Company has executed a series of agreements that will cancel the master lease on it Elizabeth street cannabis cultivation facility in Denver on October 21, 2020. It will allow the Company to reduce its liability exposure in the Elizabeth Street cultivation facility while securing deferred rents due and future sublet payments for 3 years and 9 months, valued at $1,325,443. In addition, a $120,000 deposit on the property is being returned to the Company. This is a disclosed subsequent event, see Note 13. Rent expense is recognized on a straight-line basis over the life of the lease. Rent expense consists of the following: Nine months ended September 30, 2020 Operating lease costs $ 508,199 Variable rent costs 349,336 Total rent expense $ 857,535 Other information related to leases is as follows: Nine months ended September 30, 2020 Other information: Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 118,577 Weighted-average remaining lease term - operating leases 3.64 yr Weighted-average discount rate - operating leases 12 % The Company recognized sublease income of $1,080,382 and $1,257,255 during the nine months ended September 30, 2020 and 2019, respectively. These three leases have three to five years terms with optional extension, expiration dates range from July 2021 to June 2025, and monthly base rent approximately $20,000-$40,000 plus variable triple net. As of September 30, 2020, the maturities of expected base sublease income are as follows (in thousands): Operating Leases Remaining of 2020 $ 328 2021 1,154 2022 930 2023 944 2024 588 2025 and beyond 58 Total $ 4,002 The Master Lease and Sublease Agreements of the property located at Elizabeth St in Colorado have been terminated as of October 21, 2020. The sublease income associated with that property, constituting approximately $2,139,000 of the above projected income for 2020 through 2025 and beyond. This is a disclosed subsequent event, see Note 13. Employment Agreements As a condition of their employment, the Board of Directors approved employment agreements with three key executives. These agreement provided that additional shares will be granted each year over the term of the agreement should their shares as a percentage of the total shares outstanding fall below prescribed ownership percentages. Nello Gofiniatini III, who became the Companys CEO in October 2019 receives an annual grant of additional shares each year to maintain his ownership percentage at 10% of the outstanding stock. The Companys CFO received a similar grant each to maintain his ownership percentage at 2% of the outstanding stock. In addition, prior to his departure in October 2019, Ron Throgmartin, the Companys previous CEO, would receive a grant of additional shares to maintain his ownership at 7.5% of the Companys outstanding stock. During the nine months ended September 30, 2020, the Company accrued compensation expense of approximately $92,034 on 6,461,325 shares of common stock under these agreements. During the year ended December 31, 2019, the Company accrued compensation expense of approximately $593,000 on 20,782,014 shares of common stock under these agreements. As of September 30, 2020 and December 31, 2019, the ending balance of accrued compensation was $60,022 and $79,817, respectively. During the three and nine months ending September 30, 2020 and 2019, the Company accrued compensation expenses as follows: Three Months ending September 30, 2020 Three Months ending September 30, 2019 Nine Months ending September 30, 2020 Nine Months ending September 30, 2019 Compensation $ 46,092 $ 224,941 $ 92,034 $ 539,957 Number of Shares 4,216,438 6,518,625 6,461,325 15,233,729 Departure of Executive Officer On January 30, 2019, the Company executed a Separation Agreement and Release with David Thompson, its former Senior Vice President- Finance, finalizing his departure from the Company as an employee. Pursuant to its material terms, the Company agreed to pay Mr. Thompson aggregate cash payments of $206,250 , based upon the Companys receipt of certain gross sales receipts derived from its Alameda Store in Colorado, and certain stock grants based upon the Companys outstanding common shares as of February 1, 2019, including a stock grant of 53,717 restricted common shares for accrued salary and 122,934 restricted common shares in exchange for his approximate 122,000 of stock options. During the three and nine months ended September 30, 2020, $13,452 and $21,086 was paid under this agreement, respectively. During the three and nine months ended September 30, 2019 no amounts were paid under this agreement. As of September 30, 2020 and December 31, 2019, the outstanding balance was $175,714 and $196,800, respectively, and is included in Accrued Payable  Related Party in the accompanying Consolidated Balance Sheet. On October 29, 2019, Diego Pellicer Worldwide, Inc. (Registrant) accepted the resignation of Ron Throgmartin from his positions as CEO, President and Director. Mr. Throgmartins resignation was not the result of any disagreements with Registrants plan of operations, policies or management. On the same date, Registrant appointed Christopher D. Strachan, Registrants Chief Financial Officer, to membership on Registrants Board of Directors and appointed Nello Gonfiatini III, Regiatrants Chief Operations Officer, to the additional post of Chief Executive Officer. Ron Throgmartin signed a 5-year term Separation Agreement which, among other matters, terminated his Employment Agreement, as amended. On the date of the Separation Agreement, the Company acknowledged it owed Mr. Throgmartin the amount of $517,252.06 in principal and accrued interest of note payable, salary and fees, accrued during the 5 years of his employment. In addition, the Corporation further acknowledged that it will pay Mr Throgmartin fifty (50%) percent of his compensation due under the remaining Employment Agreement, or $614,583.33 under certain condition, which the Company accrued in full as of the date of Mr Throgmartins separation. This agreement provides that the Registrant will pay him $5,000 monthly against his accrued salary/fees and 50% of future compensation due under his terminated Employment Agreement, with certain accelerated payments in the event Registrants financial results attain certain EBITA benchmarks. Registrant shall have the right to require Mr. Throgmartin to provide consulting services to Registrant for a per diem fee of $500. As of September 30, 2020 and December 31, 2019, the outstanding balance was $895,597 and $940,597, respectively.