10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☑ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the quarterly period ended March 31, 2022.

☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the transition period from ____________ to ____________.

Commission file number:  000-54457

GENERAL CANNABIS CORP

(Exact name of registrant as specified in its charter)

Colorado	90-1072649
(State of incorporation)	(IRS Employer Identification No.)
1901 S Navajo Street Denver, CO 80223
(Address of principal executive offices) (Zip Code)
(303) 759-1300
(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered	Ticker symbol
N/A	N/A	N/A

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days. Yes þ   No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ   No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company” and “emerging growth company” in rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☑	Smaller reporting company	☑
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act. ◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐   No þ

As of May 9, 2022, there were 96,192,184 issued and outstanding shares of the Company's common stock.

GENERAL CANNABIS CORP

FORM 10-Q

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	25
Item 4.	Controls and Procedures	25
PART II. OTHER INFORMATION		26
Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 3.	Defaults Upon Senior Securities	27
Item 4.	Mine Safety Disclosures	27
Item 5.	Other Information	27
Item 6.	Exhibits	28
	Signatures	29

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

GENERAL CANNABIS CORP

CONDENSED CONSOLIDATED BALANCE SHEETS

		March 31, 2022	December 31, 2021
		(unaudited)
Assets
Current assets
Cash and cash equivalents	$	1,651,063	$	2,054,050
Accounts receivable, net of allowance of $43,000 and $61,000, respectively		69,381		80,188
Current portion of notes receivable, net of allowance of nil and $43,108, respectively		—		73,000
Inventories, net		1,182,361		1,123,083
Prepaid expenses and other current assets		166,218		149,075
Total current assets		3,069,023		3,479,396
Right-of-use operating lease asset		3,176,007		3,065,152
Property and equipment, net		662,852		680,327
Intangible assets, net		6,819,163		5,999,813
Goodwill		9,758,038		8,799,657
Total assets	$	23,485,083	$	22,024,345
Liabilities and Stockholders' Equity
Current liabilities
	$	1,368,282	$	1,170,708
Interest payable		793,585		621,085
Operating lease liability, current		745,844		721,809
Accrued stock payable		60,900		444,894
Warrant derivative liability		88,981		28,317
Notes payable - current		1,259,449		1,094,398
Total current liabilities		4,317,041		4,081,211
Operating lease liability, non-current		2,535,492		2,427,762
Notes payable - long-term (net of discount)		5,791,658		5,619,570
Related party long-term notes payable (net of discount)		292,188		288,229
Total liabilities		12,936,379		12,416,772
Commitments and contingencies (Note 9)		—		—
Stockholders’ equity
Preferred stock, no par value; 5,000,000 shares authorized; 1,180 issued and outstanding, respectively		1,073,446		1,073,446
Common stock, $0.001 par value; 200,000,000 shares authorized; 96,192,184 shares and 89,551,993 shares issued and outstanding, respectively		96,191		89,550
Additional paid-in capital		94,060,938		92,265,392
Accumulated deficit		(84,681,871)		(83,820,815)
Total stockholders’ equity		10,548,704		9,607,573
Total liabilities and stockholders’ equity	$	23,485,083	$	22,024,345

See Notes to condensed consolidated financial statements.

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GENERAL CANNABIS CORP

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three months ended
	March 31,
	2022		2021
Revenue
Retail sales	$	3,297,546	$	—
Cultivation sales		275,762		649,333
Interest		—		14,472
Total revenue		3,573,308		663,805
Costs and expenses
Cost of sales		2,074,888		555,205
Selling, general and administrative		1,326,116		598,691
Stock-based compensation		76,117		103,932
Professional fees		281,384		262,315
Depreciation and amortization		231,846		117,681
Total costs and expenses		3,990,351		1,637,824
Operating loss		(417,043)		(974,019)
Other expenses (income)
Amortization of debt discount and equity issuance costs		214,281		68,330
Interest expense		174,351		103,056
Loss on derivative liability		60,664		1,198,744
Other expenses, net		—		1,467
Total other expenses, net		449,296		1,371,597
Net loss from continuing operations before income taxes		(866,339)		(2,345,616)
Provision for income taxes		—		—
Loss from continuing operations		(866,339)		(2,345,616)
Income (loss) from discontinued operations, net of tax		5,283		(13,452)
Net loss	$	(861,056)	$	(2,359,068)
Per share data - basic and diluted
Net loss from continuing operations per share	$	(0.01)	$	(0.04)
Net loss from discontinued operations per share	$	0.00	$	0.00
Net loss attributable to common stockholders per share	$	(0.01)	$	(0.04)
Weighted average number of common shares outstanding		95,749,505		61,563,379

See Notes to condensed consolidated financial statements.

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GENERAL CANNABIS CORP

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Three months ended March 31,
	2022		2021
Cash flows from operating activities
Net loss	$	(861,056)	$	(2,359,068)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of debt discount and equity issuance costs		214,281		68,330
Depreciation and amortization		231,846		121,941
Non-cash lease expense		298,484		103,450
Bad debt expense		(5,085)		(39,463)
Loss on disposal of property and equipment		—		2,964
Loss on warrant derivative liability		60,664		1,198,744
Stock-based compensation		76,117		103,932
Changes in operating assets and liabilities, net of acquisitions
Accounts receivable		13,892		157,369
Prepaid expenses and other assets		(17,142)		367,486
Inventories		(59,278)		(48,026)
Accounts payable and accrued liabilities		370,074		(1,034,883)
Operating lease liabilities		(277,574)		(92,701)
Net cash provided by (used) in operating activities:		45,223		(1,449,925)
Cash flows from investing activities
Purchase of property and equipment		(8,571)		(264,114)
Proceeds on notes receivable		75,000		—
Acquisition of TREES MLK		(256,582)		—
Proceeds from sale of investment		—		208,761
Net cash used in investing activities		(190,153)		(55,353)
Cash flows from financing activities
Proceeds from exercise of stock options		—		135,002
Proceeds from notes payable		—		1,660,000
Payments on notes payable		(258,057)		(200,000)
Net cash provided by (used in) financing activities		(258,057)		1,595,002
Net increase (decrease) in cash and cash equivalents		(402,987)		89,724
Cash and cash equivalents, beginning of period		2,054,050		755,769
Cash and cash equivalents, end of period	$	1,651,063	$	845,493
Supplemental schedule of cash flow information
Cash paid for interest	$	1,851	$	13,705
Non-cash investing & financing activities
Operating lease right-of-use asset/Operating lease liability	$	172,053	$	—
Issuance of accrued stock	$	383,994	$	—
Cashless warrant exercise	$	—	$	1,557,078
Beneficial conversion feature	$	—	$	417,539
10% Warrants recorded as a loss on extinguishment of debt and additional paid-in capital	$	—	$	429,300
Issuance of common stock to a consultant	$	—	$	100,000

See Notes to condensed consolidated financial statements.

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GENERAL CANNABIS CORP

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES

IN STOCKHOLDERS’ EQUITY (DEFICIT)

	For the three months ended March 31, 2022
	Preferred Stock			Common Stock			Additional		Accumulated
	Shares	Amount		Shares	Amount		Paid-in Capital		Deficit		Total
January 1, 2022	1,180	$	1,073,446	89,551,993	$	89,550	$	92,265,392	$	(83,820,815)	$	9,607,573
Common stock issued for acquisition of Trees Waterfront LLC	—		—	1,669,537		1,670		382,324		—		383,994
Common stock issued for acquisition of Trees MLK LLC	—		—	4,970,654		4,971		1,337,105		—		1,342,076
Share-based compensation	—		—	—		—		76,117		—		76,117
Net loss	—		—	—		—		—		(861,056)		(861,056)
March 31, 2022	1,180	$	1,073,446	96,192,184	$	96,191	$	94,060,938	$	(84,681,871)	$	10,548,704
	For the three months ended March 31, 2021
	Preferred Stock			Common Stock			Additional		Accumulated
	Shares	Amount		Shares	Amount		Paid-in Capital		Deficit		Total
January 1, 2021	—	$	—	60,813,673	$	60,813	$	75,891,414	$	(74,951,436)	$	1,000,791
Common stock issued to a consultant	—		—	112,359		112		99,888		—		100,000
Common stock issued upon exercise of stock options	—		—	213,860		214		134,788		—		135,002
Warrants issued with 10% Notes				—		—		429,300		—		429,300
Beneficial conversion feature				—		—		417,539		—		417,539
Cashless exercise of warrants				1,006,623		1,005		1,556,073		—		1,557,078
Share-based compensation				—		—		103,932		—		103,932
Net loss	—		—	—		—		—		(2,359,068)		(2,359,068)
March 31, 2021	—	$	—	62,146,515	$	62,144	$	78,632,934	$	(77,310,504)	$	1,384,574

See Notes to condensed consolidated financial statements.

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GENERAL CANNABIS CORP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1.  NATURE OF OPERATIONS, HISTORY, AND PRESENTATION

Nature of Operations

General Cannabis Corp, a Colorado Corporation (the “Company,” “we,” “us,” or “our,”) (formerly, Advanced Cannabis Solutions, Inc.), was incorporated on June 3, 2013, and provides services and products to the regulated cannabis industry. We currently trade on the OTCQB® Market under the trading symbol CANN. As of March 31, 2022, our operations are segregated into the following segments:

Retail (“Retail Segment”)

Through our acquisition of TDM, LLC (“TREES Englewood”) in September 2021, our acquisition of Trees Portland, LLC, Trees Waterfront, LLC in December 2021 and our acquisition of Trees MLK, LLC in January 2022, we operate a retail dispensary store in Englewood, Colorado and three retail stores in Portland, Oregon. The Trees MLK location, located in Portland, Oregon, is currently not in operation. This location should be operational in the second quarter of 2022.

Cultivation (“Cultivation Segment”)

Through our acquisition of SevenFive Farm ("SevenFive") in May 2020, we operate a 17,000 square foot licensed light deprivation greenhouse cultivation facility.

During the three months ended March 31, 2022 and 2021, 45% and 18% of SevenFive’s revenue was with one customer, respectively.

Discontinued Operations - Operations Consulting and Products (“Operations Segment”)

Through Next Big Crop (“NBC”), we delivered comprehensive consulting services to the cannabis industry that included obtaining licenses, compliance, cultivation, retail operations, logistical support, facility design and construction, and expansion of existing operations.

NBC oversaw our wholesale equipment and supply business, operating under the name “GC Supply,” which provided turnkey sourcing and stocking services to cultivation, retail, and infused products manufacturing facilities. Our products included building materials, equipment, consumables, and compliance packaging. NBC also provided operational support for our internal cultivation. On July 16, 2021, we entered into an Asset Purchase Agreement with an individual to sell substantially all the assets of NBC for a total of $150,000 and 10% of profits generated by the buyer in the states of Michigan, Mississippi, and Massachusetts for a period of twelve months from the closing. On August 2, 2021, the sale of NBC was completed. Pursuant to amendment, the buyer paid the additional $75,000 in March 2022, and the 10% profit share described above was eliminated.

Basis of Presentation

The accompanying condensed consolidated financial statements include all accounts of the Company and its wholly owned subsidiaries. All inter-company accounts and transactions have been eliminated in consolidation. These unaudited condensed consolidated financial statements have been prepared following the requirements of the Securities and Exchange Commission for interim reporting. As permitted under those rules, certain footnotes and other financial information that are normally required by accounting principles generally accepted in the United States of America ("U.S. GAAP") can be condensed or omitted. The condensed consolidated balance sheet for the year ended December 31, 2021, was derived from audited financial statements but does not include all disclosures required by U.S. GAAP. The information included in this quarterly report on Form 10-Q should be read in conjunction with the consolidated

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financial statements and notes thereto of the Company for the year ended December 31, 2021, which were included in the annual report on Form 10-K filed by the Company on March 25, 2022.

In the opinion of management, these condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and notes thereto of the Company and include all adjustments, consisting only of normal recurring adjustments, considered necessary for the fair presentation of the Company's financial position and operating results. The results for the three months ended March 31, 2022, are not necessarily indicative of the operating results for the year ending December 31, 2022, or any other interim or future periods. Since the date of the Annual Report, there have been no material changes to the Company’s significant accounting policies.

Reclassifications

Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations.

Use of Estimates

The preparation of our condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. Although these estimates are based on our knowledge of current events and actions we may undertake in the future, actual results may ultimately differ from these estimates and assumptions. Furthermore, when testing assets for impairment in future periods, if management uses different assumptions or if different conditions occur, impairment charges may result. In particular, the COVID-19 pandemic has adversely impacted and is likely to further adversely impact the Company's business and markets. The full extent to which the COVID-19 pandemic will directly or indirectly impact the Company's business, results of operations, and financial condition, including revenues, expenses, reserves and allowances, fair value measurements and asset impairment charges, will depend on future developments that are highly uncertain and difficult to predict. These developments include, but are not limited to, the duration and spread of the pandemic, its severity in our markets and elsewhere, governmental actions to contain the spread of the pandemic and respond to the reduction in global economic activity, and how quickly and to what extent normal economic and operating conditions can resume.

Discontinued Operations

On July 16, 2021, we entered into an Asset Purchase Agreement with an individual to sell substantially all of the assets of NBC for a total of $150,000 and 10% of profits generated by the buyer in the states of Michigan, Mississippi, and Massachusetts for a period of twelve months from the closing. On August 2, 2021, the sale of NBC was completed. Pursuant to amendment, the buyer paid the additional $75,000 in March 2022, and the 10% profit share described above was eliminated.

On January 1, 2021, we discontinued our investments segment. As this is not a materially significant segment, we have not shown the effects of the discontinued segment in the financial statements.

The cash flows related to discontinued operations have not been segregated and are included in the consolidated statements of cash flows.

Going Concern

We incurred net losses of $861,056 and $2,359,068 during the three months ended March 31, 2022, and 2021, respectively, and had an accumulated deficit of $84,681,871 as of March 31, 2022. We had cash and cash equivalents of $1,651,063 and $2,054,050 as of March 31, 2022, and December 31, 2021, respectively.

The accompanying consolidated financial statements have been prepared on the basis of continuity of operations, realization of assets, and the satisfaction of liabilities and commitments in the ordinary course of business. We have incurred recurring losses and negative cash flows from operations since inception and have primarily funded our

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operations with proceeds from the issuance of convertible debt. We expect our operating losses to continue into the foreseeable future as we continue to execute our acquisition and growth strategy.

We believe that our cash and cash equivalents as of March 31, 2022, will be sufficient to fund our operating expenses and capital expenditure requirements for at least twelve months from the date of filing this Quarterly Report on Form 10-Q due to the receipt of an additional $1.2 million of cash in September 2021 from the issuance of preferred stock and the acquisition of three dispensaries (See Note 2 for further information). We may need additional funding to support our planned investing activities. If we are unable to obtain additional funding, we would be forced to delay, reduce, or eliminate some or all of our acquisition efforts, which could adversely affect our growth plans.

Summary of Significant Accounting Policies

See our Annual Report on Form 10-K for the year ended December 31, 2021, for discussion of the Company's significant accounting policies.

Recently Issued Accounting Standards

FASB ASU 2020-06 – “Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”- In June 2020, the Financial Accounting Standards Board (“FASB”) issued guidance which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. Accounting Standards Updates (“ASU”) also removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and simplifies the diluted earnings per share calculation in certain areas. The amendments in this ASU are effective for annual and interim periods beginning after December 15, 2021, although early adoption is permitted. We adopted this ASU in the first quarter of 2022. This ASU did not have a material effect on our condensed consolidated financial statements.

FASB ASU 2019-12 – “Income Taxes (Topic 740)” – In December 2019, the FASB issued guidance which simplifies certain aspects of accounting for income taxes. The guidance is effective for interim and annual reporting periods beginning after December 15, 2020, and early adoption is permitted. We adopted this ASU in the first quarter of 2021. This ASU did not have a material effect on our condensed consolidated financial statements.

NOTE 2. BUSINESS ACQUISITION

On September 2, 2021, we completed the acquisition of substantially all of the assets of TREES Englewood, representing a portion of the overall Trees transaction (“Trees Transaction”) previously disclosed pursuant to that certain First Amended and Restated Agreement and Plan of Reorganization and Liquidation dated May 28, 2021, by and among the Company, seller and certain other sellers party thereto, that consists of the assets relating to the Trees dispensary located in Englewood, Colorado (“Englewood Closing”). We paid $1,155,256 in cash in connection with the Englewood Closing and stock consideration of 22,380,310 shares of our Common Stock. The closing price of our common stock on September 2, 2021, the date of license transfer, was $0.47 per share, as such, fair value of consideration is $10,518,746. Further, cash equal to $1,732,884 will be paid to the seller in equal monthly installments over a period of 24 months from the Englewood Closing.

The table below reflects the Company’s estimates of the acquisition date fair values of the assets acquired:

Cash	$	32,941
Fixed assets		59,335
Inventory		586,495
Tradename		5,000,000
Goodwill		7,615,913
	$	13,294,684

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The accompanying condensed consolidated financial statements include the results of Trees Englewood from the date of acquisition for financial reporting purposes, September 2, 2021. The pro-forma effects of the acquisition on the results of operations as if the transaction had been completed on January 1, 2020, are as follows:

	Three months ended
	March 31,
	2021
Total revenues	$	3,135,130
Net income (loss) attributable to common stockholders	$	410,591
Net income (loss) per common share	$	0.00
Weighted average number of basic and diluted common shares outstanding		83,943,689

The unaudited pro-forma results of operations are presented for information purposes only. The unaudited pro-forma results are not intended to present actual results that would have been attained had the acquisition been completed as of January 1, 2020, or to project potential operating results as of any future date or for any future periods.

On December 30, 2021, we completed the acquisition of substantially all the assets of Trees Portland, LLC and Trees Waterfront, LLC, representing a portion of the overall Trees Transaction, which consists of the assets relating to certain Trees dispensaries located in Portland, Oregon ("Oregon Closing”). We paid cash in the amount of $331,581 in connection with the Oregon Closing and stock consideration of 6,423,575 shares of our Common Stock. The closing price of our common stock on December 30, 2021, the date of license transfer, was $0.23 per share, as such, fair value of consideration is $1,477,422. Further, cash equal to $497,371 will be paid to the sellers in equal monthly installments over a period of 24 months from the Oregon Closing.

The table below reflects the Company’s estimates of the acquisition date fair values of the assets acquired:

Cash	$	14,568
Fixed assets		56,015
Inventory		202,046
Tradename		850,000
Goodwill		1,183,744
	$	2,306,373

The accompanying consolidated financial statements include the results of Trees Oregon from the date of acquisition for financial reporting purposes, December 30, 2021. The pro-forma effects of the acquisition on the results of operations as if the transaction had been completed on January 1, 2020, are as follows:

	Three months ended
	March 31,
	2021
Total revenues	$	1,255,095
Net income (loss) attributable to common stockholders	$	50,622
Net income (loss) per common share	$	0.00
Weighted average number of basic and diluted common shares outstanding		67,986,954

The unaudited pro-forma results of operations are presented for information purposes only. The unaudited pro-forma results are not intended to present actual results that would have been attained had the acquisition been completed as of January 1, 2020, or to project potential operating results as of any future date or for any future periods.

On January 5, 2022, we completed the acquisition of substantially all of the assets of Trees MLK Inc. (“MLK”), representing the remaining Oregon dispensary in connection with the overall Trees transaction. We paid cash in the amount of $256,582 and stock consideration of 4,970,654 shares of our Common Stock. The closing price of our

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common stock on January 5, 2022, the date of license transfer, was $0.27 per share, as such, fair value of consideration is $1,342,076. Further, cash equal to $384,873 will be paid to the sellers in equal monthly installments over a period of 24 months from the MLK closing. The dispensary is a non-operating dispensary. We will be opening the store in the second quarter of 2022.

The table below reflects the Company’s estimates of the acquisition date fair values of the assets acquired:

Fixed assets	$	25,150
Tradename		1,000,000
Goodwill		958,381
	$	1,983,531

The accompanying consolidated financial statements include the results of Trees MLK from the date of acquisition for financial reporting purposes, January 5, 2022. The pro-forma effects of the acquisition on the results of operations as if the transaction had been completed on January 1, 2021, are as follows:

	Three months ended
	March 31,
	2022		2021
Total revenues	$	—	$	—
Net income (loss) attributable to common stockholders	$	(45,587)	$	(31,332)
Net income (loss) per common share	$	(0.00)	$	(0.00)
Weighted average number of basic and diluted common shares outstanding		96,080,882		66,534,033

The unaudited pro-forma results of operations are presented for information purposes only. The unaudited pro-forma results are not intended to present actual results that would have been attained had the acquisition been completed as of January 1, 2021, or to project potential operating results as of any future date or for any future periods.

We have not completed the allocation of the purchase price for the Trees acquisition. As of March 31, 2022, the consolidated balance sheets include a preliminary allocation of fixed assets, inventory, intangible assets, and goodwill. Management anticipates completing the purchase price allocation as soon as possible, but no later than one year from the acquisition dates.

NOTE 3. DISCONTINUED OPERATIONS

On July 16, 2021, we entered into an Asset Purchase Agreement with an individual to sell substantially all of the assets of NBC for a total of $150,000 and 10% of profits generated by the buyer in the states of Michigan, Mississippi, and Massachusetts for a period of twelve months from the closing. On August 2, 2021, the sale of NBC was completed. Pursuant to amendment, the buyer paid the additional $75,000 in March 2022, and the 10% profit share described above was eliminated.

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Assets and liabilities of discontinued operations for the Operations Segment included the following:

		March 31,		December 31,
	2022		2021
Accounts receivable, net	$	—	$	—
Prepaid expenses and other current assets		—		—
Current assets discontinued operations		—		—
Property and equipment, net		—		—
Noncurrent assets discontinued operations		—		—
Accounts payable and accrued expenses		—		—
Customer deposits		—		—
Current liabilities discontinued operations	$	—	$	—

A summary of the discontinued operations for the Operations Segment is presented as follows:

	Three months ended March 31,
	2022		2021
Product revenues	$	3,438	$	984,185
Service revenues
Total revenues
Cost of sales		—		840,892
Selling, general and administrative		(1,845)		151,886
Professional fees		—		599
Depreciation and amortization		—		4,260
Total costs and expenses		(1,845)		997,637
Income (loss) from discontinued operations	$	5,283	$	(13,452)

The cash flows related to discontinued operations have not been segregated and are included in the consolidated statements of cash flows. The following table provides selected information on cash flows related to discontinued operations for the Operations Segment for the three months ended March 31, 2022 and 2021.

	Three months ended
	March 31,
	2022		2021
Accounts receivables	$	—	$	(204,044)
Prepaid expenses and other current assets		—		487,415
Depreciation and amortization		—		4,260
Capital expenditures		—		(32,108)
Accounts payable and accrued expenses		—		(56,410)
Customer deposits		—		(35,906)

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NOTE 4. INVENTORIES, NET

Our inventories consisted of the following:

	March 31,		December 31,
	2022		2021
Raw materials	$	11,096	$	13,343
Work-in-progress and finished goods		1,171,265		1,109,740
Less: Inventory reserves		—		—
Inventories, net	$	1,182,361	$	1,123,083

NOTE 5. LEASES

On September 2, 2021, we entered into a commercial real estate lease with a related party (see Note 11) for retail space for our dispensary in Englewood, CO, with an initial term of five years and, at our option, two additional terms of three years each. Rent is $10,000 per month with 3% annual escalations during the initial term and 4% annual escalations during the option term. We also pay our portion of real estate taxes. We determined the present value of the future lease payments using a discount rate of 20% over a 11 year term, resulting in a right-of-use asset and lease liability of $602,140 which are being applied ratably over the term of the lease. As of March 31, 2022, the balance of the right-of-use asset and lease liability was $578,227 and $591,321, respectively.

Through the acquisition of Trees Englewood, we entered into a commercial real estate lease for office space in Denver, CO. This office space is our corporate office. The lease expires in November 2022. Rent is $7,150 per month with a 3% escalation beginning in November 2021. We also pay our portion of real estate taxes. We determined the present value of the future lease payments using a discount rate of 20% over a 15-month term, resulting in a right-of-use asset and lease liability of $98,211 which are being applied ratably over the term of the lease. As of March 31, 2022, the balance of the right-of-use asset and lease liability was $54,496 and $54,724, respectively.

Through the acquisition of Trees Portland, we entered into a commercial real estate lease in Portland, OR. The lease expires in April 2027. Rent is $5,124 per month with a 5% annual escalation beginning in May 2022. The rent includes payment of property taxes. We determined the present value of the future lease payments using a discount of 20% over a 5.5-year term, resulting in a right-of-use asset and lease liability of $229,501. As of March 31, 2022, the balance of the right-of-use asset and lease liability was $219,275 and $221,586, respectively.

Through the acquisition of Trees Waterfront, we entered into a commercial real estate lease in Portland, OR. The lease has an initial term of 5 years and, at our option an additional term of 5 years. The lease expires in March 2031. Rent is $6,683 per month with a 3% annual escalation. The rent includes payment of property taxes. We determined the present value of the future lease payments using a discount rate of 20% over a 10-year term, resulting in a right-of-use asset and lease liability of $381,272. As of March 31, 2022, the balance of the right-of-use asset and lease liability was $370,529 and $373,702, respectively.

Through the acquisition of Trees MLK, we entered into a commercial real estate lease in Portland, OR. The lease has an initial term of 3 years and at our option two additional terms of 3 years each. The lease expires in July 2029. Rent is $3,150 per month with a 5% annual escalation. The rent includes payment of property taxes. We determined the present value of the future lease payments using a discount rate of 20% over a 10-year term, resulting in a right-of-use asset and lease liability of $172,053. As of March 31, 2022, the balance of the right-of-use asset and lease liability was $166,297 and $168,227, respectively.

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Future remaining minimum lease payments were as follows:

Year ending December 31,	Amount
2022 (remaining nine months)	$	575,503
2023		703,868
2024		721,314
2025		739,303
2026		758,193
Thereafter		5,121,992
Total		8,620,173
Less: Present value adjustment		(5,338,837)
Operating lease liability	$	3,281,336

NOTE 6. ACCRUED STOCK PAYABLE

The following tables summarize the changes in accrued common stock payable:

			Number of
	Amount		Shares
Balance as of December 31, 2020	$	94,861		359,415
Trees Waterfront acquisition stock accrual		383,994		1,669,537
Stock issued		(33,961)		(259,415)
Balance as of December 31, 2021	$	444,894		1,769,537
Stock issued		(383,994)		(1,669,537)
Balance as of March 31, 2022	$	60,900		100,000

In December 2021, we completed the acquisition of Trees Waterfront. As part of the transaction, we granted 1,669,537 shares of our common stock. The stock was issued on January 6, 2022.

NOTE 7.   NOTES PAYABLE

Our notes payable consisted of the following:

	March 31,		December 31,
	2022		2021
2020 10% Notes	$	6,580,000	$	6,580,000
Related party note payable		320,000		320,000
Trees Acquisition Notes		2,140,461		2,013,644
Unamortized debt discount		(1,697,166)		(1,911,447)
		7,343,295		7,002,197
Less: Current portion		(1,259,449)		(1,094,398)
Long-term portion	$	6,083,846	$	5,907,799

10% Notes

In December 2020, we entered into a Securities Purchase Agreement (the “Securities Purchase Agreement’) with certain accredited investors (the “10% Investors”), pursuant to which we issued and sold senior convertible promissory notes (the “10% Notes”) with an aggregate principal amount of $2,940,000 in exchange for payment to us by certain 10% Investors of an aggregate amount of $1,940,000 in cash, as well as cancellation of outstanding indebtedness of the 15% Notes (defined below) in the aggregate amount of $1,000,000. In connection with the issuance of the 10% Notes, the holders of the 10% Notes received warrants (the “10% Warrants”) to purchase shares of our common stock equal to 20% coverage of the aggregate principal amount at $0.56 per share. In the aggregate, this equals 1,050,011 shares of our common stock. The 10% Notes bear interest at an annual rate of 10% and will mature on December 23, 2023. The 10% Investors have the option at any time to convert up to 50% of the outstanding unpaid principal and accrued interest of the

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10% Notes into Common Stock at a variable price of 80% of the market price but no less than $0.65 per share and no more than $1.00 per share. The 10% Warrants are exercisable at an exercise price of $0.56 per warrant.

The relative fair value of the new funding on the 10% Warrants was recorded as a debt discount and additional paid-in capital of $254,400.  The relative fair value of the cancellation of the outstanding indebtedness was recorded as an extinguishment of debt and additional paid-in capital of $131,000. We recorded amortization of debt discount expense from the 10% Notes of $21,393 for the three months ended March 31, 2022 and 2021, respectively. We determined there was no beneficial conversion feature on the 10% Notes issued in December 2020. The 10% Notes are treated as conventional debt.

For purposes of determining the debt discount, the underlying assumptions used in the binomial lattice model to determine the fair value of the 10% Warrants as of December 23, 2020, were:

Current stock price	$	0.53
Exercise price	$	0.56
Risk-free interest rate		0.38 %
Expected dividend yield		—
Expected term (in years)		5.0
Expected volatility		115%

On February 8, 2021, we entered into a Securities Purchase Agreement with an accredited 10% Investor, pursuant to which we issued and sold 10% Notes with an aggregate principal amount of $1,660,000 to such 10% Investor.  The 10% Notes are part of an over-allotment option exercised by us in connection with the convertible note offering consummated on December 23, 2020, as discussed above. In connection with the issuance of the 10% Notes, the holder received warrants to purchase shares of our common stock equal to 20% coverage of the aggregate principal amount at $0.56 per share. In the aggregate, this equals 592,858 shares of our common stock with a par value $0.001 per share. The 10% Notes bear interest at an annual rate of 10% and will mature on February 8, 2024.  The 10% Investor has the option to convert up to 50% of the outstanding unpaid principal and accrued interest of the 10% Notes into Common Stock at a variable price of 80% of the market price but no less than $0.65 per share and no more than $1.00 per share. The 10% Warrants are exercisable at an exercise price of $0.56 per warrant.

The relative fair value of the new funding on the 10% Warrants was recorded as a debt discount and additional paid-in capital of $429,300. We determined that this 10% Note had a beneficial conversion feature and is calculated at its intrinsic value (that is, the difference between the effective conversion price of $0.66 at the date of the note issuance and the fair value of the common stock into which the debt is convertible at the commitment date, per share being $0.90, multiplied by the number of shares into which the debt is convertible).  The valuation of the beneficial conversion feature recorded cannot be greater than the face value of the note issued.  We recorded $417,539 as additional paid in capital and a debt discount and included in our consolidated statement of operations. We recorded amortization of debt discount expense from the 10% Notes issued in February 2021 of $69,603 and $28,531 for the three months ended March 31, 2022 and 2021, respectively. The 10% Notes are treated as conventional debt.

For purposes of determining the debt discount, the underlying assumptions used in the binomial lattice model to determine the fair value of the 10% Warrants as of February 8, 2021, were:

Current stock price	$	1.12
Exercise price	$	0.56
Risk-free interest rate		0.48 %
Expected dividend yield		—
Expected term (in years)		5.0
Expected volatility		118%

On April 20, 2021, we entered into a Securities Purchase Agreement with accredited 10% Investors, pursuant to which we issued and sold 10% Notes with an aggregate principal amount of $2,300,000 to such 10% Investors. The 10% Notes

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are part of an over-allotment approved by the existing noteholders in connection with the original convertible note offering of $4,600,000 consummated on December 23, 2020, and February 8, 2021. In connection with the issuance of the 10% Notes, each holder received warrants to purchase shares of our common stock equal to 20% coverage of the aggregate principal amount at $0.56 per share, except that the warrants coverage to one Investor acting as lead investor in the raise received approximately 35.5% of the aggregate principal amount invested. The 10% Notes bear interest at an annual rate of 10% and will mature on April 20, 2024. The 10% Investors have the option to convert up to 50% of the outstanding unpaid principal and accrued interest of the 10% Notes into Common Stock at a variable price of 80% of the market price but no less than $0.65 per share and no more than $1.00 per share. The 10% Warrants are exercisable at an exercise price of $0.56 per warrant.

The relative fair value of the new funding on the 10% Warrants was recorded as a debt discount and additional paid-in capital of $810,000. We determined that these 10% Notes had a beneficial conversion feature and is calculated at its intrinsic value (that is, the difference between the effective conversion price of $0.49 at the date of the note issuance and the fair value of the common stock into which the debt is convertible at the commitment date, per share being $0.83, multiplied by the number of shares into which the debt is convertible).  The valuation of the beneficial conversion feature recorded cannot be greater than the face value of the note issued.  We recorded $692,500 as additional paid in capital and a debt discount and included in our consolidated statement of operations. We recorded amortization of debt discount expense from the 10% Notes issued in April 2021 of $123,285 and nil for the three months ended March 31, 2022 and 2021, respectively. The 10% Notes are treated as conventional debt.

For purposes of determining the debt discount, the underlying assumptions used in the binomial lattice model to determine the fair value of the 10% Warrants as of April 20, 2021, were:

Current stock price	$	0.83
Exercise price	$	0.56
Risk-free interest rate		0.81%
Expected dividend yield		—
Expected term (in years)		5.0
Expected volatility		115%

NOTE 8. WARRANT DERIVATIVE LIABILITY

On May 31, 2019, we received gross proceeds of $3 million by issuing three million shares of our common stock and three million warrants (“2019 Warrants”) to purchase shares of our common stock (“2019 Units”) in a registered direct offering for $1.00 per 2019 Unit (collectively defined as the “2019 Capital Raise”). The 2019 Warrants, issued with the 2019 Capital Raise, are accounted for as a derivative liability. The 2019 Warrant agreements contain a cash settlement provision whereby the holders could settle the warrants for cash based on the Black-Scholes value, upon certain fundamental transactions, as defined in the 2019 Warrant agreement, which are considered outside of the control of management, such as a change of control. The original exercise price of the 2019 Warrants was $1.30 per share. The 2019 Warrants contain certain anti-dilution adjustment provisions with respect to subsequent issuances of securities by the Company at a price below the exercise price of such warrants. As a result of such subsequent issuances of securities by the Company during the fourth quarter 2019, the exercise price of the 2019 Warrants decreased to $0.45 per share and the number of shares subject to the 2019 Warrants increased to 8,666,666 shares of common stock as of December 31, 2019. In May 2020, we issued securities at a price lower than the $0.45 per share above. As a result, the exercise price of the 2019 Warrants decreased to $0.3983 per share and the number of shares subject to the 2019 Warrants increased to 9,591,614 shares of common stock.

During the first quarter of 2021 the warrant holders exercised 1,323,000 warrants into 747,208 shares of our common stock through cashless exercise. We booked an adjustment to the derivative liability of $1,523,117 as a result. As of March 31, 2022, there were 322,807 of the 2019 Warrants outstanding.

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The following are the key assumptions that were used to determine the fair value of the 2019 Warrants

	December 31,			March 31,
	2021			2022
Number of shares underlying the warrants		322,807			322,807
Fair market value of stock	$	0.22		$	0.46
Exercise price	$	0.3983		$	0.3983
Volatility		94	%		103	%
Risk-free interest rate		1.26	%		2.42	%
Warrant life (years)		2.41			2.16

The following table sets forth a summary of the changes in the fair value of the warrant derivative liability, our Level 3 financial liabilities that are measured at fair value on a recurring basis:

	Three months ended March 31,
	2022		2021
Beginning balance	$	28,317	$	561,368
Warrant exercise		—		(1,539,981)
Change in fair value of warrants derivative liability		60,664		1,198,744
Ending balance	$	88,981	$	220,131

NOTE 9.  COMMITMENTS AND CONTINGENCIES

In July 2021, we were served with a Complaint in the District Court, County of Denver, Colorado, by plaintiff 2353 SB, LLC (“Plaintiff”). We entered into a lease with Plaintiff for the premises at 2353 South Broadway, Denver, CO with a term of three (3) years to commence on November 1, 2020. Monthly lease payments were to be $12,866.66. In 2020, we made initial payments (first month’s rent and security deposit) of $39,633.32; but subsequently did not take possession of the premises and have made no further payments in respect thereof, as a direct result of the COVID-19 pandemic. The lease contains a ‘force majeure’ clause which includes a provision that neither party is liable for failure to perform its obligations under the lease which have become practicably impossible because of circumstances beyond the reasonable control of the applicable party, including ‘pandemics or outbreak of communicable disease.’

We have taken the position that our failure to take possession and make any further payments under the lease is directly related to the COVID-19 pandemic. We intend to vigorously defend this action and believe that the above-referenced force majeure clause presents a complete defense to Plaintiff’s claims. Both parties have filed motions for summary judgment, and the parties are currently awaiting the decision of the court in respect thereof.

In June 2020, Michael Feinsod resigned as our Executive Chairman, claiming that his resignation was for "Good Reason" under the terms of his employment agreement. If it is ultimately determined that his resignation was, in fact, for "Good Reason", rather than a voluntary act absent "Good Reason", it could enable certain potential claims for benefits under his employment agreement, including potential claims for severance, for the vesting of his unvested options and/or for the extension of the term within which he can exercise his options in the future. We do not believe that Mr. Feinsod's resignation was for "Good Reason." Accordingly, we believe that Mr. Feinsod's resignation was voluntary, and that any such potential claims, if asserted, would be without substantial merit. Although the outcome of legal proceedings is subject to uncertainty, the Company will vigorously defend any future claims made by Mr. Feinsod alleging a "Good Reason" resignation.

From time to time, we are a party to various litigation matters incidental to the conduct of its business. We are not presently a party to any legal proceedings that would have a material adverse effect on our business, operating results, financial condition, or cash flows.

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NOTE 10.  STOCKHOLDERS’ EQUITY

2021 Preferred stock offering

On September 10, 2021, we entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with various accredited investors (the “2021 Investors), pursuant to which we issued and sold Units consisting of Series A Convertible Preferred Stock (“Series A Preferred”) and warrants (the “Preferred Warrants”) to purchase shares of our common stock with a par value of $0.001 per share. The total number of Units sold was 1,180. Each Unit consists of one share of Series A Preferred and 354,000 Preferred Warrants. The purchase price of each Unit was $1,000, for an aggregate amount sold of $1,180,000. Each share of Series A Preferred is convertible into 1,000 shares of common stock upon the consummation of a capital raise of not less than $5,000,000. The Certificate of Designation of the Series A Preferred Stock (“Certificate of Designation”) was filed with the Secretary of the State of Colorado on September 14, 2021. The Certificate of Designations established the new preferred series entitled “Series A Convertible Preferred Stock” with no par value pers share, and sets forth the rights, restrictions, preferences and privileges of the Series A Preferred, summarized as follows:

● Authorized Number of Shares – 5,000

● Voting Rights – None

● Dividends – 6% per annum, ‘paid in kind’ in shares of Series A Preferred

● Conversion – Each share of Series A Preferred is mandatorily convertible into 1,000 shares of common stock upon a minimum capital raise of $5,000,000; sale, merger or business combination of the Company; or the Company listing on an exchange

● Redemption – No rights of redemption by 2021 Investors, nor mandatory redemption

The Preferred Warrants have a five-year term and an exercise price per Preferred Warrant share of $1.05. The warrants contain an anti-dilution provision pursuant to which upon we do a future capital raise at less than $1.00 per share, each Preferred Investor will be granted additional Preferred Warrants on a ‘full-ratchet’ basis.

The proceeds received in the sale of the Series A Preferred totaled $1,180,000, for the issuance of 1,180 Series A Preferred, plus 354,000 warrants. The warrants were valued using a Black Scholes model, at $117,131 and per the relative fair value allocation, $1,073,446 was allocated to the Series A proceeds.

Stock-based compensation

We use the fair value method to account for stock-based compensation. We recorded $76,117 and $103,932 in compensation expense for the three months ended March 31, 2022 and 2021, respectively. This includes expense related to options issued in prior years for which the requisite service period for those options includes the current period as well as options issued in the current period. Forfeited options result in a reversal in the period forfeited. The fair value of these instruments was calculated using the Black-Scholes option pricing method.

On September 3, 2021, we modified two employees stock options in conjunction with revised employment agreements. As a result of the modification, we recognized an additional $21,525 in compensation expense during the third quarter of 2021.

During the three months ended March 31, 2022, we granted options to purchase 125,000 common shares to directors. The options expire five years from the date of grant and vest over a period of one year. Fair value of the awards at the date of grants totaled $38,041.

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The following summarizes Employee Awards activity:

				Weighted-
		Weighted-		Average
		Average		Remaining
	Number of	Exercise Price		Contractual	Aggregate
	Shares	per Share		Term (in years)	Intrinsic Value
Outstanding as of December 31, 2021	4,903,545	$	1.11	5.3	$	22,000
Granted	125,000		0.46
Exercised	—		—
Forfeited or expired	(112,000)		0.63
Outstanding as of March 31, 2022	4,916,545	$	1.11	5.1	$	127,000
Exercisable as of March 31, 2022	4,331,665	$	1.19	5.3	$	71,000

As of March 31, 2022, there was approximately $66,574 of total unrecognized compensation expense related to unvested employee awards, which is expected to be recognized over a weighted-average period of two months.

NOTE 11. RELATED PARTY TRANSACTIONS

On June 3, 2020, we entered into a consulting agreement with Adam Hershey, Interim Chief Executive Officer, board member and investor, pursuant to which he would act as a strategic consultant for the Company, including providing assistance with the sourcing and evaluation of merger and acquisition deals, strategic capital, and strategic partnerships or joint ventures. Mr. Hershey is paid an initial monthly rate of $8,333 for the services, subject to certain adjustments. We paid $24,999 for the three months ended March 31, 2022 and 2021, respectively.

We currently have a lease agreement with Dalton Adventures, LLC in which we rent 17,000 square feet of greenhouse space in Boulder, Colorado for $34,518 a month, of which $31,827 is base rent and $2,691 is property taxes. The owner of Dalton Adventures, LLC is a principal shareholder and board member of the Company. We incurred approximately $112,000 and $115,000 in rent expense for the three months ended March 31, 2022 and 2021, respectively. In April 2022, we amended the lease agreement with Dalton Adventures, LLC. See Note 13 for discussion.

We currently have a lease agreement with Bellewood Holdings, LLC in which we rent retail space for the Trees Englewood retail store in Englewood, Colorado for $10,000 per month. The owner of Bellewood Holdings, LLC is a principal shareholder and board member of the Company. We incurred approximately $36,000 and nil of rent expense for the three months ended March 31, 2022 and 2021, respectively.

On December 23, 2020, four of our current board members purchased senior convertible promissory notes from the Company for an aggregate amount of $320,000. These notes are included in the 10% Notes discussed in Note 7. Accrued interest earned and owed to the board members was $41,435 as of March 31, 2022.

NOTE 12.  SEGMENT INFORMATION

Our operations are organized into two segments: Retail and Cultivation. All revenue originates, and all assets are located in the United States. Segment information is presented in accordance with ASC 280, "Segments Reporting." This standard is based on a management approach that requires segmentation based upon our internal organization and disclosure of revenue and certain expenses based upon internal accounting methods. Our financial reporting systems present various data for management to run the business, including internal profit and loss statements prepared on a basis not consistent with GAAP. The following information is presented net of discontinued operations.

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Three months ended March 31

2022	Retail		Cultivation		Eliminations		Total
Revenues	$	3,297,544	$	518,280	$	(242,516)	$	3,573,308
Costs and expenses		(2,593,269)		(707,549)		242,516		(3,058,301)
Segment operating income	$	704,275	$	(189,269)	$	—		515,006
Corporate expenses								(1,381,345)
Net loss from continuing operations before income taxes							$	(866,339)

2021	Cultivation		Eliminations		Total
Revenues	$	649,333	$	—	$	649,333
Costs and expenses		(786,932)		—		(786,932)
Segment operating income	$	(137,599)	$	—		(137,599)
Corporate expenses						(2,208,017)
Net loss from continuing operations before income taxes					$	(2,345,616)

	March 31,		December 31,
Total assets	2022		2021
Retail	$	18,977,570	$	16,831,580
Cultivation		3,878,742		3,483,269
Corporate		628,771		1,709,496
Total assets - segments		23,485,083		22,024,345
Intercompany eliminations		—		—
Total assets - consolidated	$	23,485,083	$	22,024,345

NOTE 13.  SUBSEQUENT EVENTS

On April 5, 2022, we entered into an Amendment to Lease with Dalton Farms, LLC, the landlord of our grow facility. Pursuant to the Lease Amendment, commencing April 1, 2022, base rent is decreased to $27,000 per month for the remainder of 2022. Increase in base rent become effective January 1, 2023 and are as otherwise provided for in the original lease.

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management’s Discussion and Analysis (“MD&A”) is intended to provide an understanding of our financial condition, results of operations and cash flows by focusing on changes in certain key measures from year to year. This discussion should be read in conjunction with the Condensed Consolidated Unaudited Financial Statements contained in this Quarterly Report on Form 10-Q and the Consolidated Financial Statements and related notes and MD&A appearing in our Annual Report on Form 10-K as of and for the year ended December 31, 2021. The results of operations for an interim period may not give a true indication of results for future interim periods or for the year.

Cautionary Statement Regarding Forward Looking Statements

This Quarterly Report on Form 10-Q, including the financial statements and related notes, contains forward-looking statements that discuss, among other things, future expectations and projections regarding future developments, operations and financial conditions. All forward-looking statements are based on management’s existing beliefs about present and future events outside of management’s control and on assumptions that may prove to be incorrect. If any underlying assumptions prove incorrect, our actual results may vary materially from those anticipated, estimated, projected or intended. We undertake no obligation to publicly update or revise any forward-looking statements to reflect actual results, changes in expectations or events or circumstances after the date of this Quarterly Report on Form 10-Q.

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When this report uses the words “we,” “us,” or “our,” and the “Company,” they refer to General Cannabis Corp (formerly, “Advanced Cannabis Solutions, Inc.”).

Our Products, Services, and Customers

Through our two reporting segments, Retail and Cultivation, we provide products to the regulated cannabis industry and its customers, which include the following:

Through our acquisition of TDM, LLC (“TREES Englewood”) in September 2021, our acquisition of Trees Portland, LLC, Trees Waterfront, LLC in December 2021, and our acquisition of Trees MLK, LLC in January 2022, we operate a retail dispensary store in Englewood, Colorado and three retail stores in Portland, Oregon. The Trees MLK location is currently not in operation. This location should be operational in the second quarter of 2022.

Cultivation (“Cultivation Segment”)

Through our acquisition of SevenFive Farm in May 2020, we operate a 17,000 square foot licensed light deprivation greenhouse cultivation facility.

During the three months ended March 31, 2022 and 2021, 45% and 18% of SevenFive’s revenue was with one customer, respectively.

Discontinued Operations - Operations Consulting and Products

Through Next Big Crop, we delivered comprehensive consulting services to the cannabis industry that included obtaining licenses, compliance, cultivation, retail operations, logistical support, facility design and construction, and expansion of existing operations.

NBC oversaw our wholesale equipment and supply business, operating under the name “GC Supply,” which provided turnkey sourcing and stocking services to cultivation, retail, and infused products manufacturing facilities. Our products included building materials, equipment, consumables, and compliance packaging. NBC also provided operational support for our internal cultivation. On July 16, 2021, we entered into an Asset Purchase Agreement with an individual to sell substantially all the assets of NBC for a total of $150,000 and 10% of profits generated by the buyer in the states of Michigan, Mississippi, and Massachusetts for a period of twelve months from the closing. On August 2, 2021, the sale of NBC was completed.

Results of Operations

The following tables set forth, for the periods indicated, statements of operations data. The tables and the discussion below should be read in conjunction with the accompanying condensed consolidated financial statements and the notes thereto in this report.

	Three months ended March 31,						Percent
	2022		2021		Change		Change
Revenues	$	3,573,308	$	663,805	$	2,909,503	438	%
Costs and expenses		(3,990,351)		(1,637,824)		(2,352,527)	144	%
Other expense		(449,296)		(1,371,597)		922,301	(67)	%
Net loss from continuing operations before income taxes		(866,339)		(2,345,616)		1,479,277	(63)	%
Loss from discontinued operations		5,283		(13,452)		18,735	(139)	%
Loss from operations before income taxes	$	(861,056)	$	(2,359,068)	$	1,498,012	(64)	%

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Revenues

The addition of our Retail segment contributed to the significant increase in revenues for the three months ended March 31, 2022. See Segment discussions below for further details.

Costs and expenses

	Three months ended March 31,						Percent
	2022		2021		Change		Change
Cost of sales	$	2,074,888	$	555,205	$	1,519,683	274	%
Selling, general and administrative		1,326,116		598,691		727,425	122	%
Stock-based compensation		76,117		103,932		(27,815)	(27)	%
Professional fees		281,384		262,315		19,069	7	%
Depreciation and amortization		231,846		117,681		114,165	97	%
	$	3,990,351	$	1,637,824	$	2,352,527	144	%

Cost of sales increased year over year due to the addition of the Retail Segment in the third and fourth quarters of 2021. See Segment discussions below for further details.

Selling, general and administrative expense increased for the three months ended March 31, 2022, as compared to March 31, 2021, due to the acquisition of three dispensaries in the third and fourth quarter of 2021. This resulted in an increase in employees and an increase in rent expense.

Professional fees consist primarily of accounting and legal expenses and increased slightly for the three months ended March 31, 2022, as compared to the three months ended March 31, 2021, due to the growth of our retail segment.

Stock-based compensation included the following:

	Three months ended March 31,						Percent
	2022		2021		Change		Change
Employee awards	$	76,117	$	103,932	$	(27,815)	(27)	%
	$	76,117	$	103,932	$	(27,815)	(27)	%

Employee awards are issued under our 2020 Omnibus Incentive Plan, which was approved by shareholders on November 23, 2020, and our 2014 Equity Incentive Plan, which was approved by shareholders on June 26, 2015. Expense varies primarily due to the number of stock options granted and the share price on the date of grant. The decrease in expense for the three months ended March 31, 2022, as compared to March 31, 2021, is due to the decrease in the number of options we grant on a quarterly basis and an increase in forfeitures in 2021 due to the departure of our Chief Executive Officer in May 2021, and the departure of our Chief Financial Officer in September 2021.

Other Expense

	Three months ended March 31,						Percent
	2022		2021		Change		Change
Amortization of debt discount	$	214,281	$	68,330	$	145,951	214	%
Interest expense		174,351		103,056		71,295	69	%
Loss (gain) on derivative liability		60,664		1,198,744		(1,138,080)	(95)	%
Other expenses, net		—		1,467		(1,467)	(100)	%
	$	449,296	$	1,371,597	$	(922,301)	(67)	%

Amortization of debt discount increased during the three months ended March 31, 2022, as compared to March 31, 2021, due to the senior convertible promissory notes with warrants (“10% Notes”) issued in December 2020, February 2021, and April 2021. Interest expense increased during the three months ended March 31, 2022, as compared to March 31,

22

2021, due to the addition of the 10% Notes with an interest rate of 10%. The gain on warrant derivative liability reflects the change in the fair value of the 2019 Warrants.

Retail

	Three months ended March 31,						Percent
	2022		2021		Change		Change
Revenues	$	3,297,544	$	—	$	3,297,544	100	%
Costs and expenses		(2,593,269)		—		(2,593,269)	100	%
	$	704,275	$	—	$	704,275	100	%

With the addition of the TREES Englewood dispensary on September 2, 2021, Trees Portland and Trees Waterfront on December 30, 2021, and Trees MLK on January 5, 2022, we have established our retail footprint in the Colorado and Oregon markets and have become a vertically integrated company. The Retail Segment will provide consistent positive cash flows which will significantly contribute to our working capital position.

Cultivation

	Three months ended March 31,						Percent
	2022		2021		Change		Change
Revenues	$	518,280	$	649,333	$	(131,053)	(20)	%
Costs and expenses		(707,549)		(786,932)		79,383	(10)	%
	$	(189,269)	$	(137,599)	$	(51,670)	38	%

The decrease in revenues for the three months ended March 31, 2022, over prior year is due to the decrease in overall market price of flower. The decrease in gross margin is due to overall increase in expenses due to inflation.

Liquidity

Sources of liquidity

Our sources of liquidity include cash generated from operations, the cash exercise of common stock options and warrants, debt, and the issuance of common stock or other equity-based instruments. We anticipate our significant uses of resources will include funding operations and developing infrastructure.

In September 2021, we received $1,180,000 in cash in a private placement with certain accredited investors pursuant to the Series A Convertible Preferred Stock to be used for the acquisition of dispensaries and for operating capital. (See Note 10 of the accompanying unaudited condensed consolidated financial statements).

In April 2021, we received $2,300,000 in cash in a private placement with certain accredited investors pursuant to the 10% Notes to be used for the acquisition of dispensaries (See Note 7 of the accompanying unaudited condensed consolidated financial statements).

In February 2021, we received $1,660,000 in cash in a private placement with certain accredited investors pursuant to the 10% Notes.

23

Sources and uses of cash

We had cash of $1,651,063 and $2,054,050 as of March 31, 2022, and December 31, 2021, respectively. Our cash flows from operating, investing and financing activities were as follows:

	Three months ended March 31,
	2022		2021
Net cash provided by (used in) operating activities	$	45,223	$	(1,449,925)
Net cash used in investing activities	$	(190,153)	$	(55,353)
Net cash provided by (used in) financing activities	$	(258,057)	$	1,595,002

Net cash provided by (used in) operating activities decreased in 2022 due to the acquisition of TREES Englewood, Trees Portland and Trees Waterfront which provides positive operating cash flows and adjustments relating to non-cash activities.

Net cash used in investing activities for the three months ended March 31, 2022, increased from March 31, 2021, due to the purchase of, Trees MLK, Inc and the purchase of property and equipment, offset by the receipt of notes receivable.

Net cash provided by (used in) financing activities for the three months ended March 31, 2022, related to the payment on notes payable of $258,057.

Capital Resources

We had no material commitments for capital expenditures as of March 31, 2022. Part of our growth strategy, however, is to acquire operating businesses. We expect to fund such activity through cash on hand, the issuance of debt, common stock, warrants for our common stock or a combination thereof.

Non-GAAP Financial Measures

Adjusted EBITDA is a non-GAAP financial measure. We define Adjusted EBITDA as net income (loss) attributable to common stockholders calculated in accordance with GAAP, adjusted for the impact of stock-based compensation expense, acquisition or disposal-related transaction costs , non-recurring professional fees in relation to litigation and other non-recurring expenses, depreciation and amortization, amortization of debt discounts and equity issuance costs, loss on extinguishment of debt, interest expense, income taxes and certain other non-cash items. Below we have provided a reconciliation of Adjusted EBITDA per share to the most directly comparable GAAP measure, which is net income (loss) per share.

We believe that the disclosure of Adjusted EBITDA provides investors with a better comparison of our period-to-period operating results. We exclude the effects of certain items when we evaluate key measures of our performance internally and in assessing the impact of known trends and uncertainties on our business. We also believe that excluding the effects of these items provides a more comparable view of the underlying dynamics of our operations. We believe such information provides additional meaningful methods of evaluating certain aspects of our operating performance from period to period on a basis that may not be otherwise apparent on a GAAP basis. This supplemental financial information should be considered in addition to, not in lieu of, our condensed consolidated financial statements.

24

The following table reconciles Adjusted EBITDA to the most directly comparable GAAP measure, which is net loss.

	Three months ended March 31,
	2022		2021
Loss from operations before income taxes	$	(866,339)	$	(2,345,616)
Adjustment for loss from discontinued operations		(5,283)		13,452
Net loss from continuing operations before income taxes		(871,622)		(2,332,164)
Adjustments:
Stock-based compensation		76,117		103,932
Depreciation and amortization		231,846		117,681
Amortization of debt discount and equity issuance costs		214,281		68,330
Interest expense		174,351		103,056
Gain on sale of assets		—		1,467
(Gain) loss on derivative liability		60,664		1,198,744
Severance		4,731		—
Acquisition related expenses		7,500		141,580
Total adjustments		769,490		1,734,790
Adjusted EBITDA	$	(102,132)	$	(597,374)

Off-balance Sheet Arrangements

We currently have no off-balance sheet arrangements.

Critical Accounting Policies

Our unaudited condensed consolidated financial statements and accompanying notes have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires management to make estimates, judgments and assumptions that affect reported amounts of assets, liabilities, revenues, and expenses. We continually evaluate the accounting policies and estimates used to prepare the condensed financial statements. The estimates are based on historical experience and assumptions believed to be reasonable under current facts and circumstances. Actual amounts and results could differ from these estimates made by management. Certain accounting policies that require significant management estimates and are deemed critical to our results of operations or financial position are discussed in our Annual Report on Form 10-K for the year ended December 31, 2021, and Note 1 to the Unaudited Condensed Consolidated Financial Statements in this Form 10-Q.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act, is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial and Accounting Officer, as appropriate to allow timely decisions regarding required disclosure.

We carried out an evaluation under the supervision and with the participation of management, including our Principal Executive Officer and Principal Financial and Accounting Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2022, the end of the period covered by this report. Based on that

25

evaluation, our Principal Executive Officer and Principal Financial and Accounting Officer have concluded that our disclosure controls and procedures were effective as of March 31, 2022.

Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, our principal executive officer and principal financial officer and effected by the Board, management, and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and includes those policies and procedures that:

● Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;

● Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that our receipts and expenditures of are being made only in accordance with authorizations of our management and directors; and

● Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.

Because of inherent limitations, our internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Assessment of Internal Control over Financial Reporting

Our management assessed the effectiveness of our internal control over financial reporting as of March 31, 2022. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control - Integrated Framework (2013). Based on management’s assessment, management concluded that its internal control over financial reporting was effective as of March 31, 2022, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP.

Changes in Internal Control over Financial Reporting

None.

PART II. OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

In July 2021, we were served with a Complaint in the District Court, County of Denver, Colorado, by plaintiff 2353 SB, LLC (“Plaintiff”). We entered into a lease with Plaintiff for the premises at 2353 South Broadway, Denver, CO with a term of three (3) years to commence on November 1, 2020. Monthly lease payments were to be $12,866.66. In 2020, we made initial payments (first month’s rent and security deposit) of $39,633.32; but subsequently did not take possession of the premises and have made no further payments in respect thereof, as a direct result of the COVID-19 pandemic. The lease contains a ‘force majeure’ clause which includes a provision that neither party is liable for failure to perform its obligations under the lease which have become practicably impossible because of circumstances beyond the reasonable control of the applicable party, including ‘pandemics or outbreak of communicable disease.’

We have taken the position that our failure to take possession and make any further payments under the lease is directly related to the COVID-19 pandemic. We intend to vigorously defend this action and believe that the above-referenced force majeure clause presents a complete defense to Plaintiff’s claims. Both parties have filed motions for summary judgment, and the parties are currently awaiting the decision of the court in respect thereof.

26

ITEM 1A. RISK FACTORS

As of the date of this report, there have been no material changes to the Risk Factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021.

ITEM 2.   UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.   MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5.   OTHER INFORMATION

None.

27

ITEM 6. EXHIBITS

Exhibits
31.1	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	Inline XBRL Instance Document
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

28

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	GENERAL CANNABIS CORP
Date: May 13, 2022		/s/ Adam Hershey
		Adam Hershey, Interim Chief Executive Officer
		Principal Executive Officer
		/s/ Jessica Bast
		Jessica Bast, Chief Financial Officer
		Principal Financial and Accounting Officer

29

EX-31.1

Exhibit 31.1

CERTIFICATIONS

Pursuant To Section 906 of the Sarbanes-Oxley Act Of 2002

(Subsections (A) And (B) Of Section 1350, Chapter 63 of Title 18, United States Code)

I, Adam Hershey, certify that:

1. I have reviewed this quarterly report on Form 10-Q of General Cannabis Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

      a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

      b) designed such internal control over financial reporting, or cause such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

      c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

      d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of the internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

      a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

      b) any fraud, whether or not material, that involves management or other employees who have significant role in the registrant's internal control over financial reporting.

May 13, 2022	/s/ Adam Hershey
	Adam Hershey, Interim Chief Executive Officer,
	Principal Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

Pursuant To Section 906 of the Sarbanes-Oxley Act Of 2002

(Subsections (A) And (B) Of Section 1350, Chapter 63 of Title 18, United States Code)

I, Jessica Bast, certify that:

1. I have reviewed this quarterly report on Form 10-Q of General Cannabis Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

      a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

      b) designed such internal control over financial reporting, or cause such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

      c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

      d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of the internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

      a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

      b) any fraud, whether or not material, that involves management or other employees who have significant role in the registrant's internal control over financial reporting.

May 13, 2022	/s/ Jessica Bast
	Jessica Bast, Chief Financial Officer, Principal Financial
	and Accounting Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 USC, SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of General Cannabis Corporation (the "Company") on Form 10-Q for the period ended March 31, 2022, as filed with the Securities and Exchange Commission (the "Report"), Adam Hershey, the Company’s Principal Executive, and Jessica Bast, the Company’s Principal Financial and Accounting Officer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of their knowledge:

(1)      The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)      The information contained in the Report fairly presents, in all material respects, the financial condition and results of the Company.

May 13, 2022	/s/ Adam Hershey
	Adam Hershey, Interim Chief Executive Officer,
	Principal Executive Officer
May 13, 2022	/s/ Jessica Bast
	Jessica Bast, Chief Financial Officer,
	Principal Financial and Accounting Officer

XML

Document And Entity Information - shares	3 Months Ended
	Mar. 31, 2022	May 09, 2022
Document And Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2022
Document Transition Report	false
Entity File Number	000-54457
Entity Registrant Name	GENERAL CANNABIS CORP
Entity Incorporation, State or Country Code	CO
Entity Tax Identification Number	90-1072649
Entity Address, Address Line One	1901 S Navajo Street
Entity Address, City or Town	Denver
Entity Address, State or Province	CO
Entity Address, Postal Zip Code	80223
City Area Code	303
Local Phone Number	759-1300
Title of 12(b) Security	N/A
Security Exchange Name	NONE
No Trading Symbol Flag	true
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		96,192,184
Entity Central Index Key	0001477009
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q1
Amendment Flag	false

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Current assets
Cash and cash equivalents	$ 1,651,063	$ 2,054,050
Accounts receivable, net of allowance of $43,000 and $61,000, respectively	69,381	80,188
Current portion of notes receivable, net of allowance of nil and $43,108, respectively		73,000
Inventories, net	1,182,361	1,123,083
Prepaid expenses and other current assets	166,218	149,075
Total current assets	3,069,023	3,479,396
Right-of-use operating lease asset	3,176,007	3,065,152
Property and equipment, net	662,852	680,327
Intangible assets, net	6,819,163	5,999,813
Goodwill	9,758,038	8,799,657
Total assets	23,485,083	22,024,345
Current liabilities
Accounts payable and accrued expenses	1,368,282	1,170,708
Interest payable	793,585	621,085
Operating lease liability, current	745,844	721,809
Accrued stock payable	60,900	444,894
Warrant derivative liability	88,981	28,317
Notes payable - current	1,259,449	1,094,398
Total current liabilities	4,317,041	4,081,211
Operating lease liability, non-current	2,535,492	2,427,762
Notes payable - long-term (net of discount)	5,791,658	5,619,570
Related party long-term notes payable (net of discount)	292,188	288,229
Total liabilities	12,936,379	12,416,772
Commitments and contingencies (Note 9)
Stockholders' equity
Preferred stock, no par value; 5,000,000 shares authorized; 1,180 issued and outstanding, respectively	1,073,446	1,073,446
Common stock, $0.001 par value; 200,000,000 shares authorized; 96,192,184 shares and 89,551,993 shares issued and outstanding, respectively	96,191	89,550
Additional paid-in capital	94,060,938	92,265,392
Accumulated deficit	(84,681,871)	(83,820,815)
Total stockholders' equity	10,548,704	9,607,573
Total liabilities and stockholders' equity	$ 23,485,083	$ 22,024,345

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
CONSOLIDATED BALANCE SHEETS
Accounts receivable, net of allowance	$ 43,000	$ 61,000
Notes receivable, net of allowance	$ 0	$ 43,108
Preferred stock, par value (in dollars per share)	$ 0	$ 0
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	1,180	1,180
Preferred stock, shares outstanding	1,180	1,180
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	200,000,000	200,000,000
Common stock, shares issued	96,192,184	89,551,993
Common stock, shares outstanding	96,192,184	89,551,993

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Total revenue	$ 3,573,308	$ 663,805
Costs and expenses
Cost of sales	2,074,888	555,205
Selling, general and administrative	1,326,116	598,691
Stock-based compensation	76,117	103,932
Professional fees	281,384	262,315
Depreciation and amortization	231,846	117,681
Total costs and expenses	3,990,351	1,637,824
Operating loss	(417,043)	(974,019)
Other expenses (income)
Amortization of debt discount and equity issuance costs	214,281	68,330
Interest expense	174,351	103,056
Loss on derivative liability	60,664	1,198,744
Other expenses, net		1,467
Total other expenses, net	449,296	1,371,597
Net loss from continuing operations before income taxes	(866,339)	(2,345,616)
Loss from continuing operations	(866,339)	(2,345,616)
Income (loss) from discontinued operations, net of tax	5,283	(13,452)
Net loss	$ (861,056)	$ (2,359,068)
Per share data - basic and diluted
Net loss from continuing operations basic per share	$ (0.01)	$ (0.04)
Net loss from continuing operations diluted per share	(0.01)	(0.04)
Net loss from discontinued operations basic per share	0.00	0.00
Net loss from discontinued operations diluted per share	0.00	0.00
Net loss attributable to common stockholders basic per share	(0.01)	(0.04)
Net loss attributable to common stockholders diluted per share	$ (0.01)	$ (0.04)
Weighted average number of common shares outstanding, basic	95,749,505	61,563,379
Weighted average number of common shares outstanding, diluted	95,749,505	61,563,379
Retail sales
Total revenue	$ 3,297,546
Cultivation sales
Total revenue	$ 275,762	$ 649,333
Interest
Total revenue		$ 14,472

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Cash flows from operating activities
Net loss	$ (861,056)	$ (2,359,068)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of debt discount and equity issuance costs	214,281	68,330
Depreciation and amortization	231,846	121,941
Non-cash lease expense	298,484	103,450
Bad debt expense	(5,085)	(39,463)
Loss on disposal of property and equipment		2,964
Loss on warrant derivative liability	60,664	1,198,744
Stock-based compensation	76,117	103,932
Changes in operating assets and liabilities, net of acquisitions
Accounts receivable	13,892	157,369
Prepaid expenses and other assets	(17,142)	367,486
Inventories	(59,278)	(48,026)
Accounts payable and accrued liabilities	370,074	(1,034,883)
Operating lease liabilities	(277,574)	(92,701)
Net cash provided by (used) in operating activities:	45,223	(1,449,925)
Cash flows from investing activities
Purchase of property and equipment	(8,571)	(264,114)
Proceeds on notes receivable	75,000
Acquisition of TREES MLK	(256,582)
Proceeds from sale of investment		208,761
Net cash used in investing activities	(190,153)	(55,353)
Cash flows from financing activities
Proceeds from exercise of stock options		135,002
Proceeds from notes payable		1,660,000
Payments on notes payable	(258,057)	(200,000)
Net cash provided by (used in) financing activities	(258,057)	1,595,002
Net increase (decrease) in cash and cash equivalents	(402,987)	89,724
Cash and cash equivalents, beginning of period	2,054,050	755,769
Cash and cash equivalents, end of period	1,651,063	845,493
Supplemental schedule of cash flow information
Cash paid for interest	1,851	13,705
Non-cash investing & financing activities
Operating lease right-of-use asset/Operating lease liability	172,053
Issuance of accrued stock	$ 383,994
Cashless warrant exercise		1,557,078
Beneficial conversion feature		417,539
Issuance of common stock to a consultant		100,000
10% Warrants
Non-cash investing & financing activities
10% Warrants recorded as a loss on extinguishment of debt and additional paid-in capital		$ 429,300

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical)	Mar. 31, 2022	Apr. 20, 2021	Feb. 08, 2021	Dec. 31, 2020
10% Warrants
Interest rate (as a percent)	10.00%	10.00%	10.00%	10.00%

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CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($)	Preferred Stock	Common Stock Trees Waterfront LLC	Common Stock Trees MLK LLC	Common Stock	Additional Paid-in Capital Trees Waterfront LLC	Additional Paid-in Capital Trees MLK LLC	Additional Paid-in Capital 10% Warrants	Additional Paid-in Capital	Accumulated Deficit	Trees Waterfront LLC	Trees MLK LLC	10% Warrants	Total
Balance at the beginning of the year at Dec. 31, 2020				$ 60,813				$ 75,891,414	$ (74,951,436)				$ 1,000,791
Balance at the beginning of the year (in Shares) at Dec. 31, 2020				60,813,673
Common stock issued to a consultant				$ 112				99,888					100,000
Common stock issued to a consultant (in Shares)				112,359
Common stock issued upon exercise of stock options				$ 214				134,788					135,002
Common stock issued upon exercise of stock options (in shares)				213,860
Beneficial conversion feature								417,539					417,539
Warrants issued							$ 429,300					$ 429,300
Cashless exercise of warrants				$ 1,005				1,556,073					1,557,078
Cashless exercise of warrants (in shares)				1,006,623
Stock-based compensation								103,932					103,932
Net loss									(2,359,068)				(2,359,068)
Balance at the end of the year at Mar. 31, 2021				$ 62,144				78,632,934	(77,310,504)				1,384,574
Balance at the end of the year(in Shares) at Mar. 31, 2021				62,146,515
Balance at the beginning of the year at Dec. 31, 2021	$ 1,073,446			$ 89,550				92,265,392	(83,820,815)				9,607,573
Balance at the beginning of the year (in Shares) at Dec. 31, 2021	1,180			89,551,993
Common stock issued for acquisition		$ 1,670	$ 4,971		$ 382,324	$ 1,337,105				$ 383,994	$ 1,342,076
Common stock issued for acquisition (in shares)		1,669,537	4,970,654
Stock-based compensation								76,117					76,117
Net loss									(861,056)				(861,056)
Balance at the end of the year at Mar. 31, 2022	$ 1,073,446			$ 96,191				$ 94,060,938	$ (84,681,871)				$ 10,548,704
Balance at the end of the year(in Shares) at Mar. 31, 2022	1,180			96,192,184

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CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Parenthetical)	Mar. 31, 2022	Apr. 20, 2021	Feb. 08, 2021	Dec. 31, 2020
10% Warrants
Interest rate (as a percent)	10.00%	10.00%	10.00%	10.00%

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NATURE OF OPERATIONS, HISTORY AND PRESENTATION

3 Months Ended

Mar. 31, 2022

NATURE OF OPERATIONS, HISTORY AND PRESENTATION

NATURE OF OPERATIONS, HISTORY AND PRESENTATION

NOTE 1.  NATURE OF OPERATIONS, HISTORY, AND PRESENTATION

Nature of Operations

General Cannabis Corp, a Colorado Corporation (the “Company,” “we,” “us,” or “our,”) (formerly, Advanced Cannabis Solutions, Inc.), was incorporated on June 3, 2013, and provides services and products to the regulated cannabis industry. We currently trade on the OTCQB® Market under the trading symbol CANN. As of March 31, 2022, our operations are segregated into the following segments:

Retail (“Retail Segment”)

Through our acquisition of TDM, LLC (“TREES Englewood”) in September 2021, our acquisition of Trees Portland, LLC, Trees Waterfront, LLC in December 2021 and our acquisition of Trees MLK, LLC in January 2022, we operate a retail dispensary store in Englewood, Colorado and three retail stores in Portland, Oregon. The Trees MLK location, located in Portland, Oregon, is currently not in operation. This location should be operational in the second quarter of 2022.

Cultivation (“Cultivation Segment”)

Through our acquisition of SevenFive Farm ("SevenFive") in May 2020, we operate a 17,000 square foot licensed light deprivation greenhouse cultivation facility.

During the three months ended March 31, 2022 and 2021, 45% and 18% of SevenFive’s revenue was with one customer, respectively.

Discontinued Operations - Operations Consulting and Products (“Operations Segment”)

Through Next Big Crop (“NBC”), we delivered comprehensive consulting services to the cannabis industry that included obtaining licenses, compliance, cultivation, retail operations, logistical support, facility design and construction, and expansion of existing operations.

NBC oversaw our wholesale equipment and supply business, operating under the name “GC Supply,” which provided turnkey sourcing and stocking services to cultivation, retail, and infused products manufacturing facilities. Our products included building materials, equipment, consumables, and compliance packaging. NBC also provided operational support for our internal cultivation. On July 16, 2021, we entered into an Asset Purchase Agreement with an individual to sell substantially all the assets of NBC for a total of $150,000 and 10% of profits generated by the buyer in the states of Michigan, Mississippi, and Massachusetts for a period of twelve months from the closing. On August 2, 2021, the sale of NBC was completed. Pursuant to amendment, the buyer paid the additional $75,000 in March 2022, and the 10% profit share described above was eliminated.

Basis of Presentation

The accompanying condensed consolidated financial statements include all accounts of the Company and its wholly owned subsidiaries. All inter-company accounts and transactions have been eliminated in consolidation. These unaudited condensed consolidated financial statements have been prepared following the requirements of the Securities and Exchange Commission for interim reporting. As permitted under those rules, certain footnotes and other financial information that are normally required by accounting principles generally accepted in the United States of America ("U.S. GAAP") can be condensed or omitted. The condensed consolidated balance sheet for the year ended December 31, 2021, was derived from audited financial statements but does not include all disclosures required by U.S. GAAP. The information included in this quarterly report on Form 10-Q should be read in conjunction with the consolidated

financial statements and notes thereto of the Company for the year ended December 31, 2021, which were included in the annual report on Form 10-K filed by the Company on March 25, 2022.

In the opinion of management, these condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and notes thereto of the Company and include all adjustments, consisting only of normal recurring adjustments, considered necessary for the fair presentation of the Company's financial position and operating results. The results for the three months ended March 31, 2022, are not necessarily indicative of the operating results for the year ending December 31, 2022, or any other interim or future periods. Since the date of the Annual Report, there have been no material changes to the Company’s significant accounting policies.

Reclassifications

Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations.

Use of Estimates

The preparation of our condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. Although these estimates are based on our knowledge of current events and actions we may undertake in the future, actual results may ultimately differ from these estimates and assumptions. Furthermore, when testing assets for impairment in future periods, if management uses different assumptions or if different conditions occur, impairment charges may result. In particular, the COVID-19 pandemic has adversely impacted and is likely to further adversely impact the Company's business and markets. The full extent to which the COVID-19 pandemic will directly or indirectly impact the Company's business, results of operations, and financial condition, including revenues, expenses, reserves and allowances, fair value measurements and asset impairment charges, will depend on future developments that are highly uncertain and difficult to predict. These developments include, but are not limited to, the duration and spread of the pandemic, its severity in our markets and elsewhere, governmental actions to contain the spread of the pandemic and respond to the reduction in global economic activity, and how quickly and to what extent normal economic and operating conditions can resume.

Discontinued Operations

On July 16, 2021, we entered into an Asset Purchase Agreement with an individual to sell substantially all of the assets of NBC for a total of $150,000 and 10% of profits generated by the buyer in the states of Michigan, Mississippi, and Massachusetts for a period of twelve months from the closing. On August 2, 2021, the sale of NBC was completed. Pursuant to amendment, the buyer paid the additional $75,000 in March 2022, and the 10% profit share described above was eliminated.

On January 1, 2021, we discontinued our investments segment. As this is not a materially significant segment, we have not shown the effects of the discontinued segment in the financial statements.

The cash flows related to discontinued operations have not been segregated and are included in the consolidated statements of cash flows.

Going Concern

We incurred net losses of $861,056 and $2,359,068 during the three months ended March 31, 2022, and 2021, respectively, and had an accumulated deficit of $84,681,871 as of March 31, 2022. We had cash and cash equivalents of $1,651,063 and $2,054,050 as of March 31, 2022, and December 31, 2021, respectively.

The accompanying consolidated financial statements have been prepared on the basis of continuity of operations, realization of assets, and the satisfaction of liabilities and commitments in the ordinary course of business. We have incurred recurring losses and negative cash flows from operations since inception and have primarily funded our

operations with proceeds from the issuance of convertible debt. We expect our operating losses to continue into the foreseeable future as we continue to execute our acquisition and growth strategy.

We believe that our cash and cash equivalents as of March 31, 2022, will be sufficient to fund our operating expenses and capital expenditure requirements for at least twelve months from the date of filing this Quarterly Report on Form 10-Q due to the receipt of an additional $1.2 million of cash in September 2021 from the issuance of preferred stock and the acquisition of three dispensaries (See Note 2 for further information). We may need additional funding to support our planned investing activities. If we are unable to obtain additional funding, we would be forced to delay, reduce, or eliminate some or all of our acquisition efforts, which could adversely affect our growth plans.

Summary of Significant Accounting Policies

See our Annual Report on Form 10-K for the year ended December 31, 2021, for discussion of the Company's significant accounting policies.

Recently Issued Accounting Standards

FASB ASU 2020-06 – “Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”- In June 2020, the Financial Accounting Standards Board (“FASB”) issued guidance which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. Accounting Standards Updates (“ASU”) also removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and simplifies the diluted earnings per share calculation in certain areas. The amendments in this ASU are effective for annual and interim periods beginning after December 15, 2021, although early adoption is permitted. We adopted this ASU in the first quarter of 2022. This ASU did not have a material effect on our condensed consolidated financial statements.

FASB ASU 2019-12 – “Income Taxes (Topic 740)” – In December 2019, the FASB issued guidance which simplifies certain aspects of accounting for income taxes. The guidance is effective for interim and annual reporting periods beginning after December 15, 2020, and early adoption is permitted. We adopted this ASU in the first quarter of 2021. This ASU did not have a material effect on our condensed consolidated financial statements.

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BUSINESS ACQUISITION

3 Months Ended

Mar. 31, 2022

BUSINESS ACQUISITION

BUSINESS ACQUISITION

NOTE 2. BUSINESS ACQUISITION

On September 2, 2021, we completed the acquisition of substantially all of the assets of TREES Englewood, representing a portion of the overall Trees transaction (“Trees Transaction”) previously disclosed pursuant to that certain First Amended and Restated Agreement and Plan of Reorganization and Liquidation dated May 28, 2021, by and among the Company, seller and certain other sellers party thereto, that consists of the assets relating to the Trees dispensary located in Englewood, Colorado (“Englewood Closing”). We paid $1,155,256 in cash in connection with the Englewood Closing and stock consideration of 22,380,310 shares of our Common Stock. The closing price of our common stock on September 2, 2021, the date of license transfer, was $0.47 per share, as such, fair value of consideration is $10,518,746. Further, cash equal to $1,732,884 will be paid to the seller in equal monthly installments over a period of 24 months from the Englewood Closing.

The table below reflects the Company’s estimates of the acquisition date fair values of the assets acquired:

Cash	$	32,941
Fixed assets		59,335
Inventory		586,495
Tradename		5,000,000
Goodwill		7,615,913
	$	13,294,684

The accompanying condensed consolidated financial statements include the results of Trees Englewood from the date of acquisition for financial reporting purposes, September 2, 2021. The pro-forma effects of the acquisition on the results of operations as if the transaction had been completed on January 1, 2020, are as follows:

	Three months ended
	March 31,
	2021
Total revenues	$	3,135,130
Net income (loss) attributable to common stockholders	$	410,591
Net income (loss) per common share	$	0.00
Weighted average number of basic and diluted common shares outstanding		83,943,689

The unaudited pro-forma results of operations are presented for information purposes only. The unaudited pro-forma results are not intended to present actual results that would have been attained had the acquisition been completed as of January 1, 2020, or to project potential operating results as of any future date or for any future periods.

On December 30, 2021, we completed the acquisition of substantially all the assets of Trees Portland, LLC and Trees Waterfront, LLC, representing a portion of the overall Trees Transaction, which consists of the assets relating to certain Trees dispensaries located in Portland, Oregon ("Oregon Closing”). We paid cash in the amount of $331,581 in connection with the Oregon Closing and stock consideration of 6,423,575 shares of our Common Stock. The closing price of our common stock on December 30, 2021, the date of license transfer, was $0.23 per share, as such, fair value of consideration is $1,477,422. Further, cash equal to $497,371 will be paid to the sellers in equal monthly installments over a period of 24 months from the Oregon Closing.

The table below reflects the Company’s estimates of the acquisition date fair values of the assets acquired:

Cash	$	14,568
Fixed assets		56,015
Inventory		202,046
Tradename		850,000
Goodwill		1,183,744
	$	2,306,373

The accompanying consolidated financial statements include the results of Trees Oregon from the date of acquisition for financial reporting purposes, December 30, 2021. The pro-forma effects of the acquisition on the results of operations as if the transaction had been completed on January 1, 2020, are as follows:

	Three months ended
	March 31,
	2021
Total revenues	$	1,255,095
Net income (loss) attributable to common stockholders	$	50,622
Net income (loss) per common share	$	0.00
Weighted average number of basic and diluted common shares outstanding		67,986,954

The unaudited pro-forma results of operations are presented for information purposes only. The unaudited pro-forma results are not intended to present actual results that would have been attained had the acquisition been completed as of January 1, 2020, or to project potential operating results as of any future date or for any future periods.

On January 5, 2022, we completed the acquisition of substantially all of the assets of Trees MLK Inc. (“MLK”), representing the remaining Oregon dispensary in connection with the overall Trees transaction. We paid cash in the amount of $256,582 and stock consideration of 4,970,654 shares of our Common Stock. The closing price of our

common stock on January 5, 2022, the date of license transfer, was $0.27 per share, as such, fair value of consideration is $1,342,076. Further, cash equal to $384,873 will be paid to the sellers in equal monthly installments over a period of 24 months from the MLK closing. The dispensary is a non-operating dispensary. We will be opening the store in the second quarter of 2022.

The table below reflects the Company’s estimates of the acquisition date fair values of the assets acquired:

Fixed assets	$	25,150
Tradename		1,000,000
Goodwill		958,381
	$	1,983,531

The accompanying consolidated financial statements include the results of Trees MLK from the date of acquisition for financial reporting purposes, January 5, 2022. The pro-forma effects of the acquisition on the results of operations as if the transaction had been completed on January 1, 2021, are as follows:

	Three months ended
	March 31,
	2022		2021
Total revenues	$	—	$	—
Net income (loss) attributable to common stockholders	$	(45,587)	$	(31,332)
Net income (loss) per common share	$	(0.00)	$	(0.00)
Weighted average number of basic and diluted common shares outstanding		96,080,882		66,534,033

The unaudited pro-forma results of operations are presented for information purposes only. The unaudited pro-forma results are not intended to present actual results that would have been attained had the acquisition been completed as of January 1, 2021, or to project potential operating results as of any future date or for any future periods.

We have not completed the allocation of the purchase price for the Trees acquisition. As of March 31, 2022, the consolidated balance sheets include a preliminary allocation of fixed assets, inventory, intangible assets, and goodwill. Management anticipates completing the purchase price allocation as soon as possible, but no later than one year from the acquisition dates.

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DISCONTINUED OPERATIONS

3 Months Ended

Mar. 31, 2022

DISCONTINUED OPERATIONS

DISCONTINUED OPERATIONS

NOTE 3. DISCONTINUED OPERATIONS

On July 16, 2021, we entered into an Asset Purchase Agreement with an individual to sell substantially all of the assets of NBC for a total of $150,000 and 10% of profits generated by the buyer in the states of Michigan, Mississippi, and Massachusetts for a period of twelve months from the closing. On August 2, 2021, the sale of NBC was completed. Pursuant to amendment, the buyer paid the additional $75,000 in March 2022, and the 10% profit share described above was eliminated.

Assets and liabilities of discontinued operations for the Operations Segment included the following:

		March 31,		December 31,
	2022		2021
Accounts receivable, net	$	—	$	—
Prepaid expenses and other current assets		—		—
Current assets discontinued operations		—		—
Property and equipment, net		—		—
Noncurrent assets discontinued operations		—		—
Accounts payable and accrued expenses		—		—
Customer deposits		—		—
Current liabilities discontinued operations	$	—	$	—

A summary of the discontinued operations for the Operations Segment is presented as follows:

	Three months ended March 31,
	2022		2021
Product revenues	$	3,438	$	984,185
Service revenues
Total revenues
Cost of sales		—		840,892
Selling, general and administrative		(1,845)		151,886
Professional fees		—		599
Depreciation and amortization		—		4,260
Total costs and expenses		(1,845)		997,637
Income (loss) from discontinued operations	$	5,283	$	(13,452)

The cash flows related to discontinued operations have not been segregated and are included in the consolidated statements of cash flows. The following table provides selected information on cash flows related to discontinued operations for the Operations Segment for the three months ended March 31, 2022 and 2021.

	Three months ended
	March 31,
	2022		2021
Accounts receivables	$	—	$	(204,044)
Prepaid expenses and other current assets		—		487,415
Depreciation and amortization		—		4,260
Capital expenditures		—		(32,108)
Accounts payable and accrued expenses		—		(56,410)
Customer deposits		—		(35,906)

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INVENTORIES, NET

3 Months Ended

Mar. 31, 2022

INVENTORIES, NET

INVENTORIES, NET

NOTE 4. INVENTORIES, NET

Our inventories consisted of the following:

	March 31,		December 31,
	2022		2021
Raw materials	$	11,096	$	13,343
Work-in-progress and finished goods		1,171,265		1,109,740
Less: Inventory reserves		—		—
Inventories, net	$	1,182,361	$	1,123,083

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LEASES

3 Months Ended

Mar. 31, 2022

LEASES

LEASES

NOTE 5. LEASES

On September 2, 2021, we entered into a commercial real estate lease with a related party (see Note 11) for retail space for our dispensary in Englewood, CO, with an initial term of five years and, at our option, two additional terms of three years each. Rent is $10,000 per month with 3% annual escalations during the initial term and 4% annual escalations during the option term. We also pay our portion of real estate taxes. We determined the present value of the future lease payments using a discount rate of 20% over a 11 year term, resulting in a right-of-use asset and lease liability of $602,140 which are being applied ratably over the term of the lease. As of March 31, 2022, the balance of the right-of-use asset and lease liability was $578,227 and $591,321, respectively.

Through the acquisition of Trees Englewood, we entered into a commercial real estate lease for office space in Denver, CO. This office space is our corporate office. The lease expires in November 2022. Rent is $7,150 per month with a 3% escalation beginning in November 2021. We also pay our portion of real estate taxes. We determined the present value of the future lease payments using a discount rate of 20% over a 15-month term, resulting in a right-of-use asset and lease liability of $98,211 which are being applied ratably over the term of the lease. As of March 31, 2022, the balance of the right-of-use asset and lease liability was $54,496 and $54,724, respectively.

Through the acquisition of Trees Portland, we entered into a commercial real estate lease in Portland, OR. The lease expires in April 2027. Rent is $5,124 per month with a 5% annual escalation beginning in May 2022. The rent includes payment of property taxes. We determined the present value of the future lease payments using a discount of 20% over a 5.5-year term, resulting in a right-of-use asset and lease liability of $229,501. As of March 31, 2022, the balance of the right-of-use asset and lease liability was $219,275 and $221,586, respectively.

Through the acquisition of Trees Waterfront, we entered into a commercial real estate lease in Portland, OR. The lease has an initial term of 5 years and, at our option an additional term of 5 years. The lease expires in March 2031. Rent is $6,683 per month with a 3% annual escalation. The rent includes payment of property taxes. We determined the present value of the future lease payments using a discount rate of 20% over a 10-year term, resulting in a right-of-use asset and lease liability of $381,272. As of March 31, 2022, the balance of the right-of-use asset and lease liability was $370,529 and $373,702, respectively.

Through the acquisition of Trees MLK, we entered into a commercial real estate lease in Portland, OR. The lease has an initial term of 3 years and at our option two additional terms of 3 years each. The lease expires in July 2029. Rent is $3,150 per month with a 5% annual escalation. The rent includes payment of property taxes. We determined the present value of the future lease payments using a discount rate of 20% over a 10-year term, resulting in a right-of-use asset and lease liability of $172,053. As of March 31, 2022, the balance of the right-of-use asset and lease liability was $166,297 and $168,227, respectively.

Future remaining minimum lease payments were as follows:

Year ending December 31,	Amount
2022 (remaining nine months)	$	575,503
2023		703,868
2024		721,314
2025		739,303
2026		758,193
Thereafter		5,121,992
Total		8,620,173
Less: Present value adjustment		(5,338,837)
Operating lease liability	$	3,281,336

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ACCRUED STOCK PAYABLE

3 Months Ended

Mar. 31, 2022

ACCRUED STOCK PAYABLE

ACCRUED STOCK PAYABLE

NOTE 6. ACCRUED STOCK PAYABLE

The following tables summarize the changes in accrued common stock payable:

			Number of
	Amount		Shares
Balance as of December 31, 2020	$	94,861		359,415
Trees Waterfront acquisition stock accrual		383,994		1,669,537
Stock issued		(33,961)		(259,415)
Balance as of December 31, 2021	$	444,894		1,769,537
Stock issued		(383,994)		(1,669,537)
Balance as of March 31, 2022	$	60,900		100,000

In December 2021, we completed the acquisition of Trees Waterfront. As part of the transaction, we granted 1,669,537 shares of our common stock. The stock was issued on January 6, 2022.

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NOTES PAYABLE

3 Months Ended

Mar. 31, 2022

NOTES PAYABLE

NOTES PAYABLE

NOTE 7.   NOTES PAYABLE

Our notes payable consisted of the following:

	March 31,		December 31,
	2022		2021
2020 10% Notes	$	6,580,000	$	6,580,000
Related party note payable		320,000		320,000
Trees Acquisition Notes		2,140,461		2,013,644
Unamortized debt discount		(1,697,166)		(1,911,447)
		7,343,295		7,002,197
Less: Current portion		(1,259,449)		(1,094,398)
Long-term portion	$	6,083,846	$	5,907,799

10% Notes

In December 2020, we entered into a Securities Purchase Agreement (the “Securities Purchase Agreement’) with certain accredited investors (the “10% Investors”), pursuant to which we issued and sold senior convertible promissory notes (the “10% Notes”) with an aggregate principal amount of $2,940,000 in exchange for payment to us by certain 10% Investors of an aggregate amount of $1,940,000 in cash, as well as cancellation of outstanding indebtedness of the 15% Notes (defined below) in the aggregate amount of $1,000,000. In connection with the issuance of the 10% Notes, the holders of the 10% Notes received warrants (the “10% Warrants”) to purchase shares of our common stock equal to 20% coverage of the aggregate principal amount at $0.56 per share. In the aggregate, this equals 1,050,011 shares of our common stock. The 10% Notes bear interest at an annual rate of 10% and will mature on December 23, 2023. The 10% Investors have the option at any time to convert up to 50% of the outstanding unpaid principal and accrued interest of the

10% Notes into Common Stock at a variable price of 80% of the market price but no less than $0.65 per share and no more than $1.00 per share. The 10% Warrants are exercisable at an exercise price of $0.56 per warrant.

The relative fair value of the new funding on the 10% Warrants was recorded as a debt discount and additional paid-in capital of $254,400.  The relative fair value of the cancellation of the outstanding indebtedness was recorded as an extinguishment of debt and additional paid-in capital of $131,000. We recorded amortization of debt discount expense from the 10% Notes of $21,393 for the three months ended March 31, 2022 and 2021, respectively. We determined there was no beneficial conversion feature on the 10% Notes issued in December 2020. The 10% Notes are treated as conventional debt.

For purposes of determining the debt discount, the underlying assumptions used in the binomial lattice model to determine the fair value of the 10% Warrants as of December 23, 2020, were:

Current stock price	$	0.53
Exercise price	$	0.56
Risk-free interest rate		0.38 %
Expected dividend yield		—
Expected term (in years)		5.0
Expected volatility		115%

On February 8, 2021, we entered into a Securities Purchase Agreement with an accredited 10% Investor, pursuant to which we issued and sold 10% Notes with an aggregate principal amount of $1,660,000 to such 10% Investor.  The 10% Notes are part of an over-allotment option exercised by us in connection with the convertible note offering consummated on December 23, 2020, as discussed above. In connection with the issuance of the 10% Notes, the holder received warrants to purchase shares of our common stock equal to 20% coverage of the aggregate principal amount at $0.56 per share. In the aggregate, this equals 592,858 shares of our common stock with a par value $0.001 per share. The 10% Notes bear interest at an annual rate of 10% and will mature on February 8, 2024.  The 10% Investor has the option to convert up to 50% of the outstanding unpaid principal and accrued interest of the 10% Notes into Common Stock at a variable price of 80% of the market price but no less than $0.65 per share and no more than $1.00 per share. The 10% Warrants are exercisable at an exercise price of $0.56 per warrant.

The relative fair value of the new funding on the 10% Warrants was recorded as a debt discount and additional paid-in capital of $429,300. We determined that this 10% Note had a beneficial conversion feature and is calculated at its intrinsic value (that is, the difference between the effective conversion price of $0.66 at the date of the note issuance and the fair value of the common stock into which the debt is convertible at the commitment date, per share being $0.90, multiplied by the number of shares into which the debt is convertible).  The valuation of the beneficial conversion feature recorded cannot be greater than the face value of the note issued.  We recorded $417,539 as additional paid in capital and a debt discount and included in our consolidated statement of operations. We recorded amortization of debt discount expense from the 10% Notes issued in February 2021 of $69,603 and $28,531 for the three months ended March 31, 2022 and 2021, respectively. The 10% Notes are treated as conventional debt.

For purposes of determining the debt discount, the underlying assumptions used in the binomial lattice model to determine the fair value of the 10% Warrants as of February 8, 2021, were:

Current stock price	$	1.12
Exercise price	$	0.56
Risk-free interest rate		0.48 %
Expected dividend yield		—
Expected term (in years)		5.0
Expected volatility		118%

On April 20, 2021, we entered into a Securities Purchase Agreement with accredited 10% Investors, pursuant to which we issued and sold 10% Notes with an aggregate principal amount of $2,300,000 to such 10% Investors. The 10% Notes

are part of an over-allotment approved by the existing noteholders in connection with the original convertible note offering of $4,600,000 consummated on December 23, 2020, and February 8, 2021. In connection with the issuance of the 10% Notes, each holder received warrants to purchase shares of our common stock equal to 20% coverage of the aggregate principal amount at $0.56 per share, except that the warrants coverage to one Investor acting as lead investor in the raise received approximately 35.5% of the aggregate principal amount invested. The 10% Notes bear interest at an annual rate of 10% and will mature on April 20, 2024. The 10% Investors have the option to convert up to 50% of the outstanding unpaid principal and accrued interest of the 10% Notes into Common Stock at a variable price of 80% of the market price but no less than $0.65 per share and no more than $1.00 per share. The 10% Warrants are exercisable at an exercise price of $0.56 per warrant.

The relative fair value of the new funding on the 10% Warrants was recorded as a debt discount and additional paid-in capital of $810,000. We determined that these 10% Notes had a beneficial conversion feature and is calculated at its intrinsic value (that is, the difference between the effective conversion price of $0.49 at the date of the note issuance and the fair value of the common stock into which the debt is convertible at the commitment date, per share being $0.83, multiplied by the number of shares into which the debt is convertible).  The valuation of the beneficial conversion feature recorded cannot be greater than the face value of the note issued.  We recorded $692,500 as additional paid in capital and a debt discount and included in our consolidated statement of operations. We recorded amortization of debt discount expense from the 10% Notes issued in April 2021 of $123,285 and nil for the three months ended March 31, 2022 and 2021, respectively. The 10% Notes are treated as conventional debt.

For purposes of determining the debt discount, the underlying assumptions used in the binomial lattice model to determine the fair value of the 10% Warrants as of April 20, 2021, were:

Current stock price	$	0.83
Exercise price	$	0.56
Risk-free interest rate		0.81%
Expected dividend yield		—
Expected term (in years)		5.0
Expected volatility		115%

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WARRANT DERIVATIVE LIABILITY

3 Months Ended

Mar. 31, 2022

WARRANT DERIVATIVE LIABILITY.

WARRANT DERIVATIVE LIABILITY

NOTE 8. WARRANT DERIVATIVE LIABILITY

On May 31, 2019, we received gross proceeds of $3 million by issuing three million shares of our common stock and three million warrants (“2019 Warrants”) to purchase shares of our common stock (“2019 Units”) in a registered direct offering for $1.00 per 2019 Unit (collectively defined as the “2019 Capital Raise”). The 2019 Warrants, issued with the 2019 Capital Raise, are accounted for as a derivative liability. The 2019 Warrant agreements contain a cash settlement provision whereby the holders could settle the warrants for cash based on the Black-Scholes value, upon certain fundamental transactions, as defined in the 2019 Warrant agreement, which are considered outside of the control of management, such as a change of control. The original exercise price of the 2019 Warrants was $1.30 per share. The 2019 Warrants contain certain anti-dilution adjustment provisions with respect to subsequent issuances of securities by the Company at a price below the exercise price of such warrants. As a result of such subsequent issuances of securities by the Company during the fourth quarter 2019, the exercise price of the 2019 Warrants decreased to $0.45 per share and the number of shares subject to the 2019 Warrants increased to 8,666,666 shares of common stock as of December 31, 2019. In May 2020, we issued securities at a price lower than the $0.45 per share above. As a result, the exercise price of the 2019 Warrants decreased to $0.3983 per share and the number of shares subject to the 2019 Warrants increased to 9,591,614 shares of common stock.

During the first quarter of 2021 the warrant holders exercised 1,323,000 warrants into 747,208 shares of our common stock through cashless exercise. We booked an adjustment to the derivative liability of $1,523,117 as a result. As of March 31, 2022, there were 322,807 of the 2019 Warrants outstanding.

The following are the key assumptions that were used to determine the fair value of the 2019 Warrants

	December 31,			March 31,
	2021			2022
Number of shares underlying the warrants		322,807			322,807
Fair market value of stock	$	0.22		$	0.46
Exercise price	$	0.3983		$	0.3983
Volatility		94	%		103	%
Risk-free interest rate		1.26	%		2.42	%
Warrant life (years)		2.41			2.16

The following table sets forth a summary of the changes in the fair value of the warrant derivative liability, our Level 3 financial liabilities that are measured at fair value on a recurring basis:

	Three months ended March 31,
	2022		2021
Beginning balance	$	28,317	$	561,368
Warrant exercise		—		(1,539,981)
Change in fair value of warrants derivative liability		60,664		1,198,744
Ending balance	$	88,981	$	220,131

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COMMITMENTS AND CONTINGENCIES

3 Months Ended

Mar. 31, 2022

COMMITMENTS AND CONTINGENCIES.

COMMITMENTS AND CONTINGENCIES

NOTE 9.  COMMITMENTS AND CONTINGENCIES

In July 2021, we were served with a Complaint in the District Court, County of Denver, Colorado, by plaintiff 2353 SB, LLC (“Plaintiff”). We entered into a lease with Plaintiff for the premises at 2353 South Broadway, Denver, CO with a term of three (3) years to commence on November 1, 2020. Monthly lease payments were to be $12,866.66. In 2020, we made initial payments (first month’s rent and security deposit) of $39,633.32; but subsequently did not take possession of the premises and have made no further payments in respect thereof, as a direct result of the COVID-19 pandemic. The lease contains a ‘force majeure’ clause which includes a provision that neither party is liable for failure to perform its obligations under the lease which have become practicably impossible because of circumstances beyond the reasonable control of the applicable party, including ‘pandemics or outbreak of communicable disease.’

We have taken the position that our failure to take possession and make any further payments under the lease is directly related to the COVID-19 pandemic. We intend to vigorously defend this action and believe that the above-referenced force majeure clause presents a complete defense to Plaintiff’s claims. Both parties have filed motions for summary judgment, and the parties are currently awaiting the decision of the court in respect thereof.

In June 2020, Michael Feinsod resigned as our Executive Chairman, claiming that his resignation was for "Good Reason" under the terms of his employment agreement. If it is ultimately determined that his resignation was, in fact, for "Good Reason", rather than a voluntary act absent "Good Reason", it could enable certain potential claims for benefits under his employment agreement, including potential claims for severance, for the vesting of his unvested options and/or for the extension of the term within which he can exercise his options in the future. We do not believe that Mr. Feinsod's resignation was for "Good Reason." Accordingly, we believe that Mr. Feinsod's resignation was voluntary, and that any such potential claims, if asserted, would be without substantial merit. Although the outcome of legal proceedings is subject to uncertainty, the Company will vigorously defend any future claims made by Mr. Feinsod alleging a "Good Reason" resignation.

From time to time, we are a party to various litigation matters incidental to the conduct of its business. We are not presently a party to any legal proceedings that would have a material adverse effect on our business, operating results, financial condition, or cash flows.

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STOCKHOLDERS' EQUITY

3 Months Ended

Mar. 31, 2022

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY

NOTE 10.  STOCKHOLDERS’ EQUITY

2021 Preferred stock offering

On September 10, 2021, we entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with various accredited investors (the “2021 Investors), pursuant to which we issued and sold Units consisting of Series A Convertible Preferred Stock (“Series A Preferred”) and warrants (the “Preferred Warrants”) to purchase shares of our common stock with a par value of $0.001 per share. The total number of Units sold was 1,180. Each Unit consists of one share of Series A Preferred and 354,000 Preferred Warrants. The purchase price of each Unit was $1,000, for an aggregate amount sold of $1,180,000. Each share of Series A Preferred is convertible into 1,000 shares of common stock upon the consummation of a capital raise of not less than $5,000,000. The Certificate of Designation of the Series A Preferred Stock (“Certificate of Designation”) was filed with the Secretary of the State of Colorado on September 14, 2021. The Certificate of Designations established the new preferred series entitled “Series A Convertible Preferred Stock” with no par value pers share, and sets forth the rights, restrictions, preferences and privileges of the Series A Preferred, summarized as follows:

● Authorized Number of Shares – 5,000

● Voting Rights – None

● Dividends – 6% per annum, ‘paid in kind’ in shares of Series A Preferred

● Conversion – Each share of Series A Preferred is mandatorily convertible into 1,000 shares of common stock upon a minimum capital raise of $5,000,000; sale, merger or business combination of the Company; or the Company listing on an exchange

● Redemption – No rights of redemption by 2021 Investors, nor mandatory redemption

The Preferred Warrants have a five-year term and an exercise price per Preferred Warrant share of $1.05. The warrants contain an anti-dilution provision pursuant to which upon we do a future capital raise at less than $1.00 per share, each Preferred Investor will be granted additional Preferred Warrants on a ‘full-ratchet’ basis.

The proceeds received in the sale of the Series A Preferred totaled $1,180,000, for the issuance of 1,180 Series A Preferred, plus 354,000 warrants. The warrants were valued using a Black Scholes model, at $117,131 and per the relative fair value allocation, $1,073,446 was allocated to the Series A proceeds.

Stock-based compensation

We use the fair value method to account for stock-based compensation. We recorded $76,117 and $103,932 in compensation expense for the three months ended March 31, 2022 and 2021, respectively. This includes expense related to options issued in prior years for which the requisite service period for those options includes the current period as well as options issued in the current period. Forfeited options result in a reversal in the period forfeited. The fair value of these instruments was calculated using the Black-Scholes option pricing method.

On September 3, 2021, we modified two employees stock options in conjunction with revised employment agreements. As a result of the modification, we recognized an additional $21,525 in compensation expense during the third quarter of 2021.

During the three months ended March 31, 2022, we granted options to purchase 125,000 common shares to directors. The options expire five years from the date of grant and vest over a period of one year. Fair value of the awards at the date of grants totaled $38,041.

The following summarizes Employee Awards activity:

				Weighted-
		Weighted-		Average
		Average		Remaining
	Number of	Exercise Price		Contractual	Aggregate
	Shares	per Share		Term (in years)	Intrinsic Value
Outstanding as of December 31, 2021	4,903,545	$	1.11	5.3	$	22,000
Granted	125,000		0.46
Exercised	—		—
Forfeited or expired	(112,000)		0.63
Outstanding as of March 31, 2022	4,916,545	$	1.11	5.1	$	127,000
Exercisable as of March 31, 2022	4,331,665	$	1.19	5.3	$	71,000

As of March 31, 2022, there was approximately $66,574 of total unrecognized compensation expense related to unvested employee awards, which is expected to be recognized over a weighted-average period of two months.

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RELATED PARTY TRANSACTIONS

3 Months Ended

Mar. 31, 2022

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

NOTE 11. RELATED PARTY TRANSACTIONS

On June 3, 2020, we entered into a consulting agreement with Adam Hershey, Interim Chief Executive Officer, board member and investor, pursuant to which he would act as a strategic consultant for the Company, including providing assistance with the sourcing and evaluation of merger and acquisition deals, strategic capital, and strategic partnerships or joint ventures. Mr. Hershey is paid an initial monthly rate of $8,333 for the services, subject to certain adjustments. We paid $24,999 for the three months ended March 31, 2022 and 2021, respectively.

We currently have a lease agreement with Dalton Adventures, LLC in which we rent 17,000 square feet of greenhouse space in Boulder, Colorado for $34,518 a month, of which $31,827 is base rent and $2,691 is property taxes. The owner of Dalton Adventures, LLC is a principal shareholder and board member of the Company. We incurred approximately $112,000 and $115,000 in rent expense for the three months ended March 31, 2022 and 2021, respectively. In April 2022, we amended the lease agreement with Dalton Adventures, LLC. See Note 13 for discussion.

We currently have a lease agreement with Bellewood Holdings, LLC in which we rent retail space for the Trees Englewood retail store in Englewood, Colorado for $10,000 per month. The owner of Bellewood Holdings, LLC is a principal shareholder and board member of the Company. We incurred approximately $36,000 and nil of rent expense for the three months ended March 31, 2022 and 2021, respectively.

On December 23, 2020, four of our current board members purchased senior convertible promissory notes from the Company for an aggregate amount of $320,000. These notes are included in the 10% Notes discussed in Note 7. Accrued interest earned and owed to the board members was $41,435 as of March 31, 2022.

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SEGMENT INFORMATION

3 Months Ended

Mar. 31, 2022

SEGMENT INFORMATION

SEGMENT INFORMATION

NOTE 12.  SEGMENT INFORMATION

Our operations are organized into two segments: Retail and Cultivation. All revenue originates, and all assets are located in the United States. Segment information is presented in accordance with ASC 280, "Segments Reporting." This standard is based on a management approach that requires segmentation based upon our internal organization and disclosure of revenue and certain expenses based upon internal accounting methods. Our financial reporting systems present various data for management to run the business, including internal profit and loss statements prepared on a basis not consistent with GAAP. The following information is presented net of discontinued operations.

Three months ended March 31

2022	Retail		Cultivation		Eliminations		Total
Revenues	$	3,297,544	$	518,280	$	(242,516)	$	3,573,308
Costs and expenses		(2,593,269)		(707,549)		242,516		(3,058,301)
Segment operating income	$	704,275	$	(189,269)	$	—		515,006
Corporate expenses								(1,381,345)
Net loss from continuing operations before income taxes							$	(866,339)

2021	Cultivation		Eliminations		Total
Revenues	$	649,333	$	—	$	649,333
Costs and expenses		(786,932)		—		(786,932)
Segment operating income	$	(137,599)	$	—		(137,599)
Corporate expenses						(2,208,017)
Net loss from continuing operations before income taxes					$	(2,345,616)

	March 31,		December 31,
Total assets	2022		2021
Retail	$	18,977,570	$	16,831,580
Cultivation		3,878,742		3,483,269
Corporate		628,771		1,709,496
Total assets - segments		23,485,083		22,024,345
Intercompany eliminations		—		—
Total assets - consolidated	$	23,485,083	$	22,024,345

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SUBSEQUENT EVENTS

3 Months Ended

Mar. 31, 2022

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

NOTE 13.  SUBSEQUENT EVENTS

On April 5, 2022, we entered into an Amendment to Lease with Dalton Farms, LLC, the landlord of our grow facility. Pursuant to the Lease Amendment, commencing April 1, 2022, base rent is decreased to $27,000 per month for the remainder of 2022. Increase in base rent become effective January 1, 2023 and are as otherwise provided for in the original lease.

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NATURE OF OPERATIONS, HISTORY AND PRESENTATION (Policies)

3 Months Ended

Mar. 31, 2022

NATURE OF OPERATIONS, HISTORY AND PRESENTATION

Nature of Operations

Nature of Operations

General Cannabis Corp, a Colorado Corporation (the “Company,” “we,” “us,” or “our,”) (formerly, Advanced Cannabis Solutions, Inc.), was incorporated on June 3, 2013, and provides services and products to the regulated cannabis industry. We currently trade on the OTCQB® Market under the trading symbol CANN. As of March 31, 2022, our operations are segregated into the following segments:

Retail (“Retail Segment”)

Through our acquisition of TDM, LLC (“TREES Englewood”) in September 2021, our acquisition of Trees Portland, LLC, Trees Waterfront, LLC in December 2021 and our acquisition of Trees MLK, LLC in January 2022, we operate a retail dispensary store in Englewood, Colorado and three retail stores in Portland, Oregon. The Trees MLK location, located in Portland, Oregon, is currently not in operation. This location should be operational in the second quarter of 2022.

Cultivation (“Cultivation Segment”)

Through our acquisition of SevenFive Farm ("SevenFive") in May 2020, we operate a 17,000 square foot licensed light deprivation greenhouse cultivation facility.

During the three months ended March 31, 2022 and 2021, 45% and 18% of SevenFive’s revenue was with one customer, respectively.

Discontinued Operations - Operations Consulting and Products (“Operations Segment”)

Through Next Big Crop (“NBC”), we delivered comprehensive consulting services to the cannabis industry that included obtaining licenses, compliance, cultivation, retail operations, logistical support, facility design and construction, and expansion of existing operations.

NBC oversaw our wholesale equipment and supply business, operating under the name “GC Supply,” which provided turnkey sourcing and stocking services to cultivation, retail, and infused products manufacturing facilities. Our products included building materials, equipment, consumables, and compliance packaging. NBC also provided operational support for our internal cultivation. On July 16, 2021, we entered into an Asset Purchase Agreement with an individual to sell substantially all the assets of NBC for a total of $150,000 and 10% of profits generated by the buyer in the states of Michigan, Mississippi, and Massachusetts for a period of twelve months from the closing. On August 2, 2021, the sale of NBC was completed. Pursuant to amendment, the buyer paid the additional $75,000 in March 2022, and the 10% profit share described above was eliminated.

Basis of Presentation

Basis of Presentation

The accompanying condensed consolidated financial statements include all accounts of the Company and its wholly owned subsidiaries. All inter-company accounts and transactions have been eliminated in consolidation. These unaudited condensed consolidated financial statements have been prepared following the requirements of the Securities and Exchange Commission for interim reporting. As permitted under those rules, certain footnotes and other financial information that are normally required by accounting principles generally accepted in the United States of America ("U.S. GAAP") can be condensed or omitted. The condensed consolidated balance sheet for the year ended December 31, 2021, was derived from audited financial statements but does not include all disclosures required by U.S. GAAP. The information included in this quarterly report on Form 10-Q should be read in conjunction with the consolidated

financial statements and notes thereto of the Company for the year ended December 31, 2021, which were included in the annual report on Form 10-K filed by the Company on March 25, 2022.

In the opinion of management, these condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and notes thereto of the Company and include all adjustments, consisting only of normal recurring adjustments, considered necessary for the fair presentation of the Company's financial position and operating results. The results for the three months ended March 31, 2022, are not necessarily indicative of the operating results for the year ending December 31, 2022, or any other interim or future periods. Since the date of the Annual Report, there have been no material changes to the Company’s significant accounting policies.

Reclassifications

Reclassifications

Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations.

Use of Estimates

Use of Estimates

The preparation of our condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. Although these estimates are based on our knowledge of current events and actions we may undertake in the future, actual results may ultimately differ from these estimates and assumptions. Furthermore, when testing assets for impairment in future periods, if management uses different assumptions or if different conditions occur, impairment charges may result. In particular, the COVID-19 pandemic has adversely impacted and is likely to further adversely impact the Company's business and markets. The full extent to which the COVID-19 pandemic will directly or indirectly impact the Company's business, results of operations, and financial condition, including revenues, expenses, reserves and allowances, fair value measurements and asset impairment charges, will depend on future developments that are highly uncertain and difficult to predict. These developments include, but are not limited to, the duration and spread of the pandemic, its severity in our markets and elsewhere, governmental actions to contain the spread of the pandemic and respond to the reduction in global economic activity, and how quickly and to what extent normal economic and operating conditions can resume.

Discontinued Operations

Discontinued Operations

On July 16, 2021, we entered into an Asset Purchase Agreement with an individual to sell substantially all of the assets of NBC for a total of $150,000 and 10% of profits generated by the buyer in the states of Michigan, Mississippi, and Massachusetts for a period of twelve months from the closing. On August 2, 2021, the sale of NBC was completed. Pursuant to amendment, the buyer paid the additional $75,000 in March 2022, and the 10% profit share described above was eliminated.

On January 1, 2021, we discontinued our investments segment. As this is not a materially significant segment, we have not shown the effects of the discontinued segment in the financial statements.

The cash flows related to discontinued operations have not been segregated and are included in the consolidated statements of cash flows.

Going Concern

Going Concern

We incurred net losses of $861,056 and $2,359,068 during the three months ended March 31, 2022, and 2021, respectively, and had an accumulated deficit of $84,681,871 as of March 31, 2022. We had cash and cash equivalents of $1,651,063 and $2,054,050 as of March 31, 2022, and December 31, 2021, respectively.

The accompanying consolidated financial statements have been prepared on the basis of continuity of operations, realization of assets, and the satisfaction of liabilities and commitments in the ordinary course of business. We have incurred recurring losses and negative cash flows from operations since inception and have primarily funded our

operations with proceeds from the issuance of convertible debt. We expect our operating losses to continue into the foreseeable future as we continue to execute our acquisition and growth strategy.

We believe that our cash and cash equivalents as of March 31, 2022, will be sufficient to fund our operating expenses and capital expenditure requirements for at least twelve months from the date of filing this Quarterly Report on Form 10-Q due to the receipt of an additional $1.2 million of cash in September 2021 from the issuance of preferred stock and the acquisition of three dispensaries (See Note 2 for further information). We may need additional funding to support our planned investing activities. If we are unable to obtain additional funding, we would be forced to delay, reduce, or eliminate some or all of our acquisition efforts, which could adversely affect our growth plans.

Recently Issued Accounting Standards

Recently Issued Accounting Standards

FASB ASU 2020-06 – “Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”- In June 2020, the Financial Accounting Standards Board (“FASB”) issued guidance which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. Accounting Standards Updates (“ASU”) also removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and simplifies the diluted earnings per share calculation in certain areas. The amendments in this ASU are effective for annual and interim periods beginning after December 15, 2021, although early adoption is permitted. We adopted this ASU in the first quarter of 2022. This ASU did not have a material effect on our condensed consolidated financial statements.

FASB ASU 2019-12 – “Income Taxes (Topic 740)” – In December 2019, the FASB issued guidance which simplifies certain aspects of accounting for income taxes. The guidance is effective for interim and annual reporting periods beginning after December 15, 2020, and early adoption is permitted. We adopted this ASU in the first quarter of 2021. This ASU did not have a material effect on our condensed consolidated financial statements.

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BUSINESS ACQUISITION (Tables)

3 Months Ended

Mar. 31, 2022

TREES Englewood

Schedule of purchase price allocation

Cash	$	32,941
Fixed assets		59,335
Inventory		586,495
Tradename		5,000,000
Goodwill		7,615,913
	$	13,294,684

Trees Oregon

Schedule of purchase price allocation

Cash	$	14,568
Fixed assets		56,015
Inventory		202,046
Tradename		850,000
Goodwill		1,183,744
	$	2,306,373

Trees MLK, Inc.

Schedule of purchase price allocation

Fixed assets	$	25,150
Tradename		1,000,000
Goodwill		958,381
	$	1,983,531

TREES Englewood

Schedule of pro forma results of operations

	Three months ended
	March 31,
	2021
Total revenues	$	3,135,130
Net income (loss) attributable to common stockholders	$	410,591
Net income (loss) per common share	$	0.00
Weighted average number of basic and diluted common shares outstanding		83,943,689

Trees Oregon

Schedule of pro forma results of operations

	Three months ended
	March 31,
	2021
Total revenues	$	1,255,095
Net income (loss) attributable to common stockholders	$	50,622
Net income (loss) per common share	$	0.00
Weighted average number of basic and diluted common shares outstanding		67,986,954

Trees MLK, Inc.

Schedule of pro forma results of operations

	Three months ended
	March 31,
	2022		2021
Total revenues	$	—	$	—
Net income (loss) attributable to common stockholders	$	(45,587)	$	(31,332)
Net income (loss) per common share	$	(0.00)	$	(0.00)
Weighted average number of basic and diluted common shares outstanding		96,080,882		66,534,033

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DISCONTINUED OPERATIONS (Tables)

3 Months Ended

Mar. 31, 2022

DISCONTINUED OPERATIONS

Schedule of asset and liabilities from discontinued operations

		March 31,		December 31,
	2022		2021
Accounts receivable, net	$	—	$	—
Prepaid expenses and other current assets		—		—
Current assets discontinued operations		—		—
Property and equipment, net		—		—
Noncurrent assets discontinued operations		—		—
Accounts payable and accrued expenses		—		—
Customer deposits		—		—
Current liabilities discontinued operations	$	—	$	—

Schedule of net income (loss) from discontinued operations

	Three months ended March 31,
	2022		2021
Product revenues	$	3,438	$	984,185
Service revenues
Total revenues
Cost of sales		—		840,892
Selling, general and administrative		(1,845)		151,886
Professional fees		—		599
Depreciation and amortization		—		4,260
Total costs and expenses		(1,845)		997,637
Income (loss) from discontinued operations	$	5,283	$	(13,452)

Schedule of selected information on cash flows related to discontinued operations

	Three months ended
	March 31,
	2022		2021
Accounts receivables	$	—	$	(204,044)
Prepaid expenses and other current assets		—		487,415
Depreciation and amortization		—		4,260
Capital expenditures		—		(32,108)
Accounts payable and accrued expenses		—		(56,410)
Customer deposits		—		(35,906)

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INVENTORIES, NET (Tables)

3 Months Ended

Mar. 31, 2022

INVENTORIES, NET

Schedule of inventories

	March 31,		December 31,
	2022		2021
Raw materials	$	11,096	$	13,343
Work-in-progress and finished goods		1,171,265		1,109,740
Less: Inventory reserves		—		—
Inventories, net	$	1,182,361	$	1,123,083

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LEASES (Tables)

3 Months Ended

Mar. 31, 2022

LEASES

Schedule of future remaining minimum lease payments

Year ending December 31,	Amount
2022 (remaining nine months)	$	575,503
2023		703,868
2024		721,314
2025		739,303
2026		758,193
Thereafter		5,121,992
Total		8,620,173
Less: Present value adjustment		(5,338,837)
Operating lease liability	$	3,281,336

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ACCRUED STOCK PAYABLE (Tables)

3 Months Ended

Mar. 31, 2022

ACCRUED STOCK PAYABLE

Schedule of accrued common stock payable

			Number of
	Amount		Shares
Balance as of December 31, 2020	$	94,861		359,415
Trees Waterfront acquisition stock accrual		383,994		1,669,537
Stock issued		(33,961)		(259,415)
Balance as of December 31, 2021	$	444,894		1,769,537
Stock issued		(383,994)		(1,669,537)
Balance as of March 31, 2022	$	60,900		100,000

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NOTES PAYABLE (Tables)

3 Months Ended

Mar. 31, 2022

Class of Warrant or Right [Line Items]

Schedule of notes payable

	March 31,		December 31,
	2022		2021
2020 10% Notes	$	6,580,000	$	6,580,000
Related party note payable		320,000		320,000
Trees Acquisition Notes		2,140,461		2,013,644
Unamortized debt discount		(1,697,166)		(1,911,447)
		7,343,295		7,002,197
Less: Current portion		(1,259,449)		(1,094,398)
Long-term portion	$	6,083,846	$	5,907,799

10% Warrants

Class of Warrant or Right [Line Items]

Summary of underlying assumptions used in the binomial lattice model to determine the fair value of Warrants

For purposes of determining the debt discount, the underlying assumptions used in the binomial lattice model to determine the fair value of the 10% Warrants as of December 23, 2020, were:

Current stock price	$	0.53
Exercise price	$	0.56
Risk-free interest rate		0.38 %
Expected dividend yield		—
Expected term (in years)		5.0
Expected volatility		115%

For purposes of determining the debt discount, the underlying assumptions used in the binomial lattice model to determine the fair value of the 10% Warrants as of February 8, 2021, were:

Current stock price	$	1.12
Exercise price	$	0.56
Risk-free interest rate		0.48 %
Expected dividend yield		—
Expected term (in years)		5.0
Expected volatility		118%

For purposes of determining the debt discount, the underlying assumptions used in the binomial lattice model to determine the fair value of the 10% Warrants as of April 20, 2021, were:

Current stock price	$	0.83
Exercise price	$	0.56
Risk-free interest rate		0.81%
Expected dividend yield		—
Expected term (in years)		5.0
Expected volatility		115%

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WARRANT DERIVATIVE LIABILITY (Tables)

3 Months Ended

Mar. 31, 2022

WARRANT DERIVATIVE LIABILITY.

Summary of key assumptions used to determine fair value of warrants

	December 31,			March 31,
	2021			2022
Number of shares underlying the warrants		322,807			322,807
Fair market value of stock	$	0.22		$	0.46
Exercise price	$	0.3983		$	0.3983
Volatility		94	%		103	%
Risk-free interest rate		1.26	%		2.42	%
Warrant life (years)		2.41			2.16

Summary of the changes in the fair value of the warrant derivative liability

	Three months ended March 31,
	2022		2021
Beginning balance	$	28,317	$	561,368
Warrant exercise		—		(1,539,981)
Change in fair value of warrants derivative liability		60,664		1,198,744
Ending balance	$	88,981	$	220,131

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STOCKHOLDERS' EQUITY (Tables)

3 Months Ended

Mar. 31, 2022

STOCKHOLDERS' EQUITY

Summary of Employee Awards activity

				Weighted-
		Weighted-		Average
		Average		Remaining
	Number of	Exercise Price		Contractual	Aggregate
	Shares	per Share		Term (in years)	Intrinsic Value
Outstanding as of December 31, 2021	4,903,545	$	1.11	5.3	$	22,000
Granted	125,000		0.46
Exercised	—		—
Forfeited or expired	(112,000)		0.63
Outstanding as of March 31, 2022	4,916,545	$	1.11	5.1	$	127,000
Exercisable as of March 31, 2022	4,331,665	$	1.19	5.3	$	71,000

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SEGMENT INFORMATION (Tables)

3 Months Ended

Mar. 31, 2022

SEGMENT INFORMATION

Schedule of segment reporting information, by segment

Three months ended March 31

2022	Retail		Cultivation		Eliminations		Total
Revenues	$	3,297,544	$	518,280	$	(242,516)	$	3,573,308
Costs and expenses		(2,593,269)		(707,549)		242,516		(3,058,301)
Segment operating income	$	704,275	$	(189,269)	$	—		515,006
Corporate expenses								(1,381,345)
Net loss from continuing operations before income taxes							$	(866,339)

2021	Cultivation		Eliminations		Total
Revenues	$	649,333	$	—	$	649,333
Costs and expenses		(786,932)		—		(786,932)
Segment operating income	$	(137,599)	$	—		(137,599)
Corporate expenses						(2,208,017)
Net loss from continuing operations before income taxes					$	(2,345,616)

Reconciliation of assets from segment to consolidated

	March 31,		December 31,
Total assets	2022		2021
Retail	$	18,977,570	$	16,831,580
Cultivation		3,878,742		3,483,269
Corporate		628,771		1,709,496
Total assets - segments		23,485,083		22,024,345
Intercompany eliminations		—		—
Total assets - consolidated	$	23,485,083	$	22,024,345

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NATURE OF OPERATIONS, HISTORY AND PRESENTATION (Details)			1 Months Ended	3 Months Ended
	Aug. 02, 2021 USD ($)	Jul. 16, 2021 USD ($)	Sep. 30, 2021 USD ($)	Mar. 31, 2022 USD ($) customer store	Mar. 31, 2021 USD ($) customer	Dec. 31, 2021 USD ($)	May 31, 2020 ft²
NATURE OF OPERATIONS, HISTORY AND PRESENTATION
Number of retail stores operated | store				3
Cash and cash equivalents				$ 1,651,063		$ 2,054,050
Net loss				(861,056)	$ (2,359,068)
Accumulated deficit				$ (84,681,871)		$ (83,820,815)
Proceeds from preferred stock offering			$ 1,200,000
Next Big Crop [Member] | Discontinued Operations, Held-for-sale
NATURE OF OPERATIONS, HISTORY AND PRESENTATION
Total of consideration		$ 150,000
Percentage of profits generated		10.00%
Period for percentage of profit		twelve months
Additional consideration	$ 75,000
Percentage of profit eliminated	10.00%
SevenFive Farm | Cultivation segment [Member]
NATURE OF OPERATIONS, HISTORY AND PRESENTATION
Leased space (in sq ft) | ft²							17,000
SevenFive Farm | Cultivation segment [Member] | Revenue Benchmark | Customer Concentration Risk
NATURE OF OPERATIONS, HISTORY AND PRESENTATION
Concentration risk, percentage				45.00%	18.00%
Number of customers | customer				1	1

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BUSINESS ACQUISITION - Summary (Details) - USD ($)				3 Months Ended
	Jan. 05, 2022	Dec. 30, 2021	Sep. 02, 2021	Mar. 31, 2022
BUSINESS ACQUISITION
Cash paid for acquisition				$ 256,582
TREES Englewood
BUSINESS ACQUISITION
Stock issued in exchange for purchase of assets (in shares)			22,380,310
Cash paid for acquisition			$ 1,155,256
Consideration payable in equal monthly installments			$ 1,732,884
Term of consideration payable in equal monthly installments			24 months
Share price on acquisition date (in dollars per share)			$ 0.47
Fair value of consideration transferred			$ 10,518,746
Trees Oregon
BUSINESS ACQUISITION
Stock issued in exchange for purchase of assets (in shares)		6,423,575
Cash paid for acquisition		$ 331,581
Consideration payable in equal monthly installments		$ 497,371
Term of consideration payable in equal monthly installments		24 months
Share price on acquisition date (in dollars per share)		$ 0.23
Fair value of consideration transferred		$ 1,477,422
Trees MLK, Inc.
BUSINESS ACQUISITION
Stock issued in exchange for purchase of assets (in shares)	4,970,654
Cash paid for acquisition	$ 256,582
Consideration payable in equal monthly installments	$ 384,873
Term of consideration payable in equal monthly installments	24 months
Share price on acquisition date (in dollars per share)	$ 0.27
Fair value of consideration transferred	$ 1,342,076

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BUSINESS ACQUISITION - Purchase Price Allocation (Details) - USD ($)	Mar. 31, 2022	Jan. 05, 2022	Dec. 31, 2021	Dec. 30, 2021	Sep. 02, 2021
Preliminary purchase price allocation
Goodwill	$ 9,758,038		$ 8,799,657
TREES Englewood
Preliminary purchase price allocation
Cash					$ 32,941
Inventories					586,495
Fixed assets					59,335
Tradename					5,000,000
Goodwill					7,615,913
Preliminary purchase price					$ 13,294,684
Trees Oregon
Preliminary purchase price allocation
Cash				$ 14,568
Inventories				202,046
Fixed assets				56,015
Tradename				850,000
Goodwill				1,183,744
Preliminary purchase price				$ 2,306,373
Trees MLK, Inc.
Preliminary purchase price allocation
Fixed assets		$ 25,150
Tradename		1,000,000
Goodwill		958,381
Preliminary purchase price		$ 1,983,531

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BUSINESS ACQUISITION - Pro Forma (Details) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
TREES Englewood
Pro forma effects of the acquisition on the results of operations
Total revenues		$ 3,135,130
Net income (loss) attributable to common stockholders		$ 410,591
Net income (loss) per common share		$ 0.00
Weighted average number of basic and diluted common shares outstanding		83,943,689
Trees Oregon
Pro forma effects of the acquisition on the results of operations
Total revenues		$ 1,255,095
Net income (loss) attributable to common stockholders		$ 50,622
Net income (loss) per common share		$ 0.00
Weighted average number of basic and diluted common shares outstanding		67,986,954
Trees MLK, Inc.
Pro forma effects of the acquisition on the results of operations
Net income (loss) attributable to common stockholders	$ (45,587)	$ (31,332)
Net income (loss) per common share	$ 0.00	$ 0.00
Weighted average number of basic and diluted common shares outstanding	96,080,882	66,534,033

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DISCONTINUED OPERATIONS (Details) - Discontinued Operations, Held-for-sale - Next Big Crop [Member] - USD ($)	Aug. 02, 2021	Jul. 16, 2021
DISCONTINUED OPERATIONS
Total of consideration		$ 150,000
Percentage of profits generated		10.00%
Period for percentage of profit		twelve months
Additional consideration	$ 75,000
Percentage of profit eliminated	10.00%

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DISCONTINUED OPERATIONS - Summary of the Discontinued Operations (Details) - Operations Segment - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
DISCONTINUED OPERATIONS
Cost of sales		$ 840,892
Selling, general and administrative	$ (1,845)	151,886
Professional fees		599
Depreciation and amortization		4,260
Total costs and expenses	(1,845)	997,637
Income (loss) from discontinued operations	5,283	(13,452)
Product revenues
DISCONTINUED OPERATIONS
Total revenues	$ 3,438	$ 984,185

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DISCONTINUED OPERATIONS - Cash Flows Related to Discontinued Operations (Details) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
DISCONTINUED OPERATIONS
Accounts receivable	$ 13,892	$ 157,369
Prepaid expenses and other assets	(17,142)	367,486
Accounts payable and accrued expenses	$ 370,074	(1,034,883)
Operations Segment
DISCONTINUED OPERATIONS
Accounts receivable		(204,044)
Prepaid expenses and other assets		487,415
Depreciation and amortization		4,260
Capital expenditures		(32,108)
Accounts payable and accrued expenses		(56,410)
Customer deposits		$ (35,906)

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INVENTORIES, NET (Details) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
INVENTORIES, NET
Raw materials	$ 11,096	$ 13,343
Work-in-progress and finished goods	1,171,265	1,109,740
Inventories, net	$ 1,182,361	$ 1,123,083

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LEASES (Details)				1 Months Ended
	Jan. 05, 2022 USD ($) item	Dec. 30, 2021 USD ($)	Sep. 02, 2021 USD ($) item	Nov. 30, 2021	Mar. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)
OPERATING LEASE RIGHT-OF-USE ASSET / OPERATING LEASE LIABILITY
Right-of-use asset					$ 3,176,007	$ 3,065,152
Lease liability					3,281,336
Retail space (Englewood, CO)
OPERATING LEASE RIGHT-OF-USE ASSET / OPERATING LEASE LIABILITY
Initial term of lease (in years)			5 years
Number of options to renew lease | item			2
Lease renewal term (in years)			3 years
Monthly lease payments			$ 10,000
Escalation percentage			3.00%
Percentage of annual escalation			4.00%
Discount rate			20.00%
Borrowing term			11 years
Right-of-use asset			$ 602,140		578,227
Lease liability			602,140		591,321
Office space (Denver, CO)
OPERATING LEASE RIGHT-OF-USE ASSET / OPERATING LEASE LIABILITY
Monthly lease payments			$ 7,150
Escalation percentage				3.00%
Discount rate			20.00%
Borrowing term			15 months
Right-of-use asset			$ 98,211		54,496
Lease liability			$ 98,211		54,724
Lease Portland (Portland, OR)
OPERATING LEASE RIGHT-OF-USE ASSET / OPERATING LEASE LIABILITY
Monthly lease payments		$ 5,124
Percentage of annual escalation		5.00%
Discount rate		20.00%
Borrowing term		5 years 6 months
Right-of-use asset		$ 229,501			219,275
Lease liability		$ 229,501			221,586
Lease Waterfront (Portland, OR)
OPERATING LEASE RIGHT-OF-USE ASSET / OPERATING LEASE LIABILITY
Initial term of lease (in years)		5 years
Lease renewal term (in years)		5 years
Monthly lease payments		$ 6,683
Percentage of annual escalation		3.00%
Discount rate		20.00%
Borrowing term		10 years
Right-of-use asset		$ 381,272			370,529
Lease liability		$ 381,272			373,702
Lease Trees MLK (Portland, OR)
OPERATING LEASE RIGHT-OF-USE ASSET / OPERATING LEASE LIABILITY
Initial term of lease (in years)	3 years
Number of options to renew lease | item	2
Lease renewal term (in years)	3 years
Monthly lease payments	$ 3,150
Percentage of annual escalation	5.00%
Discount rate	20.00%
Borrowing term	10 years
Right-of-use asset	$ 172,053				166,297
Lease liability	$ 172,053				$ 168,227

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LEASES - Future Remaining Minimum Lease Payments (Details)	Mar. 31, 2022 USD ($)
Future remaining minimum lease payments
2022 (remaining nine months)	$ 575,503
2023	703,868
2024	721,314
2025	739,303
2026	758,193
Thereafter	5,121,992
Total	8,620,173
Less: Present value adjustment	(5,338,837)
Operating lease liability	$ 3,281,336

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ACCRUED STOCK PAYABLE (Details) - USD ($)	1 Months Ended	3 Months Ended	12 Months Ended
	Dec. 31, 2021	Mar. 31, 2022	Dec. 31, 2021
Trees Waterfront LLC
ACCRUED STOCK PAYABLE
Number of shares granted	1,669,537
Common Stock awards | Common Stock
ACCRUED STOCK PAYABLE
Balance at beginning of the period, Amount		$ 444,894	$ 94,861
Balance at beginning of the period, Shares		1,769,537	359,415
Trees Waterfront acquisition stock accrual, Amount			$ 383,994
Trees Waterfront acquisition stock accrual, Shares			1,669,537
Stock issued, Amount		$ (383,994)	$ (33,961)
Stock issued, Shares		(1,669,537)	(259,415)
Balance at end of the period, Amount	$ 444,894	$ 60,900	$ 444,894
Balance at end of the period, Shares	1,769,537	100,000	1,769,537

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NOTES PAYABLE - Schedule of Notes Payable (Details) - USD ($)	Mar. 31, 2022	Dec. 31, 2021	Feb. 08, 2021	Dec. 31, 2020	Dec. 23, 2020
NOTES PAYABLE
Unamortized debt discount	$ (1,697,166)	$ (1,911,447)
Total	7,343,295	7,002,197
Less: Current portion	(1,259,449)	(1,094,398)
Long-term portion	6,083,846	5,907,799
10% Notes
NOTES PAYABLE
Debt carrying amount	$ 6,580,000	$ 6,580,000
Interest rate (as a percent)	10.00%	10.00%	10.00%	10.00%	10.00%
15% Notes [Member]
NOTES PAYABLE
Interest rate (as a percent)				15.00%
Related party note payable
NOTES PAYABLE
Debt carrying amount	$ 320,000	$ 320,000			$ 320,000
Trees Acquisition Notes
NOTES PAYABLE
Debt carrying amount	$ 2,140,461	$ 2,013,644

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NOTES PAYABLE - 2020 10 Notes (Details) - USD ($)			1 Months Ended	3 Months Ended
	Apr. 20, 2021	Feb. 08, 2021	Dec. 31, 2020	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021	Sep. 10, 2021	Dec. 23, 2020
Debt Instrument [Line Items]
Additional paid-in capital				$ 94,060,938		$ 92,265,392
Beneficial conversion feature					$ 417,539
Common stock, par value (in dollars per share)				$ 0.001		$ 0.001	$ 0.001
10% Warrants
Debt Instrument [Line Items]
Interest rate (as a percent)	10.00%	10.00%	10.00%	10.00%
Percentage of aggregate principal amount coverage		20.00%	20.00%
Exercise price of warrants	$ 0.56	$ 0.56	$ 0.56
Additional paid-in capital	$ 810,000
10% Notes
Debt Instrument [Line Items]
Interest rate (as a percent)		10.00%	10.00%	10.00%		10.00%		10.00%
Aggregate principal amount			$ 2,940,000
Stock issued			1,050,011
Amortization of debt discount				$ 21,393	21,393
Beneficial conversion feature			$ 0
10% Notes 2021
Debt Instrument [Line Items]
Interest rate (as a percent)		10.00%
Aggregate principal amount		$ 1,660,000
Stock issued		592,858
Conversion price (in dollars per share)		$ 0.66
Debt conversion commitment price (in dollars per share)		0.90
Amortization of debt discount				69,603	28,531
Common stock, par value (in dollars per share)		$ 0.001
10% Notes April 2021
Debt Instrument [Line Items]
Interest rate (as a percent)	10.00%
Aggregate principal amount	$ 2,300,000
Percentage of aggregate principal amount coverage	20.00%
Exercise price of warrants	$ 0.56
Conversion price (in dollars per share)	0.49
Debt conversion commitment price (in dollars per share)	$ 0.83
Amortization of debt discount				$ 123,285	$ 0
Convertible note offering amount	$ 4,600,000
Number of lead investor	1
Aggregate principal amount invested	35.50%
10% Investors
Debt Instrument [Line Items]
Interest rate (as a percent)	10.00%	10.00%	10.00%
Proceeds from debt			$ 1,940,000
Conversion price trigger (as a percent)	80.00%	80.00%	80.00%
10% Investors | Minimum
Debt Instrument [Line Items]
Conversion price (in dollars per share)	$ 0.65	$ 0.65	$ 0.65
10% Investors | Maximum
Debt Instrument [Line Items]
Percentage of aggregate principal amount coverage	50.00%	50.00%	50.00%
Conversion price (in dollars per share)	$ 1.00	$ 1.00	$ 1.00
15% Notes [Member]
Debt Instrument [Line Items]
Interest rate (as a percent)			15.00%
Aggregate indebtedness amount			$ 1,000,000
Debt discount | 10% Warrants
Debt Instrument [Line Items]
Additional paid-in capital		$ 429,300	254,400
Debt discount | 10% Notes 2021
Debt Instrument [Line Items]
Additional paid-in capital		$ 417,539
Debt discount | 10% Notes April 2021
Debt Instrument [Line Items]
Additional paid-in capital	$ 692,500
Extinguishment of debt | 10% Warrants
Debt Instrument [Line Items]
Additional paid-in capital			$ 131,000

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NOTES PAYABLE - Assumptions Used to Calculate Fair Value of Warrants (Details) - 10% Warrants	Apr. 20, 2021 USD ($) $ / shares Y	Feb. 08, 2021 Y $ / shares	Dec. 23, 2020 $ / shares
Current stock price
NOTES PAYABLE
Measurement input used to calculate fair value of warrants | $ / shares	0.83	1.12	0.53
Exercise price
NOTES PAYABLE
Measurement input used to calculate fair value of warrants	0.56	0.56	0.56
Risk-free interest rate
NOTES PAYABLE
Measurement input used to calculate fair value of warrants	0.81	0.48	0.38
Expected term (in years)
NOTES PAYABLE
Measurement input used to calculate fair value of warrants | Y	5.0	5.0
Expected volatility
NOTES PAYABLE
Measurement input used to calculate fair value of warrants	115	118	115

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WARRANT DERIVATIVE LIABILITY - Summary (Details) - USD ($)		1 Months Ended	3 Months Ended		12 Months Ended
	May 31, 2019	May 31, 2020	Mar. 31, 2021	Dec. 31, 2019	Dec. 31, 2020	Mar. 31, 2022	Dec. 31, 2021
WARRANT DERIVATIVE LIABILITY
Common stock, shares issued						96,192,184	89,551,993
2019 Warrants [Member}
WARRANT DERIVATIVE LIABILITY
Proceeds from issuance of common stock and warrants	$ 3,000,000
Shares issued in cashless exercise of warrants			747,208
Common stock, shares issued	3,000,000
Number of warrants issued	3,000,000
Share price	$ 1.00
Exercise price of warrants					$ 1.30
Warrant exercise price, decrease (in dollars per share)		$ 0.45		$ 0.45	$ 0.3983
Common stock, other shares, outstanding				8,666,666	9,591,614	322,807
Warrants exercised			1,323,000
Adjustment to derivative liability			$ 1,523,117

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WARRANT DERIVATIVE LIABILITY - Assumptions Used to Calculate Fair Value of 2019 Warrants (Details) - 2019 Warrants [Member}	Mar. 31, 2022 item Y	Dec. 31, 2021 Y item
Number of shares underlying the warrants
WARRANT DERIVATIVE LIABILITY
Measurement input used to calculate fair value of warrants	322,807	322,807
Current stock price
WARRANT DERIVATIVE LIABILITY
Measurement input used to calculate fair value of warrants	0.46	0.22
Exercise price
WARRANT DERIVATIVE LIABILITY
Measurement input used to calculate fair value of warrants	0.3983	0.3983
Expected volatility
WARRANT DERIVATIVE LIABILITY
Measurement input used to calculate fair value of warrants	103	94
Risk-free interest rate
WARRANT DERIVATIVE LIABILITY
Measurement input used to calculate fair value of warrants	2.42	1.26
Expected term (in years)
WARRANT DERIVATIVE LIABILITY
Measurement input used to calculate fair value of warrants | Y	2.16	2.41

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WARRANT DERIVATIVE LIABILITY - Schedule of Level 3 Financial Liabilities (Details) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Changes in the fair value of the warrant derivative liability
Beginning balance	$ 28,317	$ 561,368
Warrant exercise		(1,539,981)
Change in fair value of warrants derivative liability	60,664	1,198,744
Ending balance	$ 88,981	$ 220,131

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COMMITMENTS AND CONTINGENCIES (Details) - 2353 SB, LLC - USD ($)		12 Months Ended
	Nov. 01, 2020	Dec. 31, 2020
COMMITMENTS AND CONTINGENCIES
Lease agreement terms	3 years
Monthly lease payments	$ 12,866.66
Initial payment (including security deposit)		$ 39,633.32

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STOCKHOLDERS' EQUITY (Details) - USD ($)	Sep. 14, 2021	Sep. 10, 2021	Mar. 31, 2022	Dec. 31, 2021
STOCKHOLDERS' EQUITY
Common stock, par value (in dollars per share)		$ 0.001	$ 0.001	$ 0.001
Preferred stock, par value (in dollars per share)			$ 0	$ 0
Preferred stock, shares authorized			5,000,000	5,000,000
Series A Preferred
STOCKHOLDERS' EQUITY
Value of shares issued during the period		$ 1,180,000
Number of common shares issued		1,180
Purchase price per unit		$ 1,000
Number of units issued		1,180
Aggregate amount sold		$ 1,180,000
Number of common stock issuable for each preferred share	1,000	1,000
Number of preferred shares per unit		1
Minimum capital raise	$ 5,000,000	$ 5,000,000
Preferred stock, par value (in dollars per share)	$ 0
Preferred stock, shares authorized	5,000
Preferred stock, voting rights	None
Preferred stock, dividend (percentage)	6.00%
Preferred Warrants
STOCKHOLDERS' EQUITY
Exercise price of warrants	$ 1.05
Term of warrants	5 years
Number of warrants per unit		354,000
Threshold per share price during future capital raise	$ 1.00
Preferred Warrants | Series A Preferred
STOCKHOLDERS' EQUITY
Number of warrants per unit		354,000
Warrants fair value		$ 117,131
Amount of warrants allocated to preferred stock		$ 1,073,446

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STOCKHOLDERS' EQUITY - Share-Based Compensation (Details)		3 Months Ended			12 Months Ended
	Sep. 03, 2021 USD ($)	Mar. 31, 2022 USD ($) $ / shares shares	Sep. 30, 2021 USD ($)	Mar. 31, 2021 USD ($)	Dec. 31, 2021 USD ($) $ / shares shares
Share-based compensation
Stock-based compensation (income)/expense		$ 76,117		$ 103,932
Granted | shares		125,000
Stock-based compensation options, expiration period		5 years
Vesting period		1 year
Fair value of awards, grant date		$ 38,041
Unrecognized compensation expense related to unvested Employee Awards		$ 66,574
Number of stock options modified	2
Recognition period related to unvested Employee Awards		2 months
Number of Shares
Outstanding, beginning of period | shares		4,903,545
Granted | shares		125,000
Forfeited or expired | shares		(112,000)
Outstanding, end of period | shares		4,916,545			4,903,545
Exercisable, end of period | shares		4,331,665
Weighted-average Exercise Price per Share
Outstanding, beginning of period | $ / shares		$ 1.11
Granted | $ / shares		0.46
Forfeited or expired | $ / shares		0.63
Outstanding, end of period | $ / shares		1.11			$ 1.11
Exercisable, end of period | $ / shares		$ 1.19
Weighted-average Remaining Contractual Term (in years)
Outstanding contractual term (in years)		5 years 1 month 6 days			5 years 3 months 18 days
Exercisable, end of period		5 years 3 months 18 days
Aggregate Intrinsic Value
Outstanding, end of period		$ 127,000			$ 22,000
Exercisable, end of period		$ 71,000
Employee Awards [Member]
Share-based compensation
Stock-based compensation expense			$ 21,525

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RELATED PARTY TRANSACTIONS (Details)			3 Months Ended
	Dec. 23, 2020 USD ($) item	Jun. 03, 2020 USD ($)	Mar. 31, 2022 USD ($) ft²	Mar. 31, 2021 USD ($)	Dec. 31, 2021 USD ($)	Feb. 08, 2021	Dec. 31, 2020
RELATED PARTY TRANSACTIONS
Number of board members | item	4
Accrued interest earned and owed			$ 41,435
Related party note payable
RELATED PARTY TRANSACTIONS
Aggregate amount	$ 320,000		320,000		$ 320,000
10% Notes
RELATED PARTY TRANSACTIONS
Aggregate amount			$ 6,580,000		$ 6,580,000
Interest rate (as a percent)	10.00%		10.00%		10.00%	10.00%	10.00%
Consulting agreement | Board of Directors Chairman
RELATED PARTY TRANSACTIONS
Initial monthly consulting fees paid		$ 8,333
Aggregate amount of consulting fees paid			$ 24,999	$ 24,999
Lease agreement | Dalton Adventures, LLC
RELATED PARTY TRANSACTIONS
Leased space (in sq ft) | ft²			17,000
Monthly rent expenses			$ 34,518
Monthly rent attributable to base rent			31,827
Monthly rent attributable to property taxes			2,691
Aggregate rent expense			112,000	115,000
Lease agreement | Bellewood Holdings, LLC
RELATED PARTY TRANSACTIONS
Monthly rent expenses			10,000
Aggregate rent expense			$ 36,000

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SEGMENT INFORMATION - Net Loss by Segment (Details)	3 Months Ended
	Mar. 31, 2022 USD ($) segment	Mar. 31, 2021 USD ($)
Segment Reporting Information
Number of operating segments | segment	2
Total revenue	$ 3,573,308	$ 663,805
Continuing Operations
Segment Reporting Information
Total revenue	3,573,308	649,333
Costs and expenses	(3,058,301)	(786,932)
Segment operating income (loss)	515,006	(137,599)
Corporate expenses	(1,381,345)	(2,208,017)
Net loss from continuing operations before income taxes	(866,339)	(2,345,616)
Operating segments | Retail
Segment Reporting Information
Total revenue	3,297,544
Costs and expenses	(2,593,269)
Segment operating income (loss)	704,275
Operating segments | Cultivation
Segment Reporting Information
Total revenue	518,280	649,333
Costs and expenses	(707,549)	(786,932)
Segment operating income (loss)	(189,269)	$ (137,599)
Eliminations
Segment Reporting Information
Total revenue	(242,516)
Costs and expenses	$ 242,516

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SEGMENT INFORMATION - Total Assets by Segment (Details) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
SEGMENT INFORMATION
Total assets	$ 23,485,083	$ 22,024,345
Operating segments
SEGMENT INFORMATION
Total assets	23,485,083	22,024,345
Operating segments | Retail
SEGMENT INFORMATION
Total assets	18,977,570	16,831,580
Operating segments | Cultivation
SEGMENT INFORMATION
Total assets	3,878,742	3,483,269
Operating segments | Corporate
SEGMENT INFORMATION
Total assets	$ 628,771	$ 1,709,496

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SUBSEQUENT EVENTS (Details)	Apr. 05, 2022 USD ($)
Lease agreement | Dalton Farms LLC
SUBSEQUENT EVENTS
Monthly rent attributable to base rent	$ 27,000