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 September 30, 2020

☐ 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 0-54433

MARIMED INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	27-4672745
(State or Other Jurisdiction of	(I.R.S. Employer
Incorporation or Organization)	Identification No.)

10 Oceana Way

Norwood, MA 02062

(Address of Principal Executive Offices)

617-795-5140

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act: None.

Title of each class	Ticker symbol(s)	Name of each exchange on which registered
Not Applicable.	Not Applicable.	Not Applicable.

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 such filing requirements for the past 90 days. Yes ☒ 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 during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ 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 provided 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 ☒

As of November 9, 2020, 300,416,773 shares of the registrant’s common stock were outstanding.

MariMed Inc.

Table of Contents

		Page
	PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets as of September 30, 2020 (Unaudited) and December 31, 2019	3
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2020 and 2019 (Unaudited)	4
	Condensed Consolidated Statements of Stockholders’ Equity for the Nine Months Ended September 30, 2020 and 2019 (Unaudited)	5
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2020 and 2019 (Unaudited)	6
	Notes to Condensed Consolidated Financial Statements (Unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	35
Item 3.	Quantitative and Qualitative Disclosure About Market Risk	44
Item 4.	Controls and Procedures	44
	PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	45
Item 1A.	Risk Factors	45
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	46
Item 3.	Defaults Upon Senior Securities	46
Item 4.	Mine Safety Disclosures	46
Item 5.	Other Information	46
Item 6.	Exhibits	47
Signatures		49

2

MariMed Inc.

Condensed Consolidated Balance Sheets

	September 30, 2020			December 31, 2019
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	2,261,327		$	738,688
Accounts receivable, net		4,077,902			1,669,139
Deferred rents receivable		1,968,500			1,796,825
Due from third parties, net		9,937			-
Notes receivable, current portion		540,319			311,149
Inventory		6,802,291			1,219,429
Investments		1,002,659			1,449,144
Other current assets		250,045			192,368
Total current assets		16,912,980			7,376,742
Property and equipment, net		45,507,577			42,792,369
Intangibles, net		2,311,181			2,364,042
Investments		1,085,528			1,324,661
Notes receivable, less current portion		1,084,671			1,639,496
Right-of-use assets under operating leases		5,381,761			5,787,423
Right-of-use assets under finance leases		86,591			111,103
Other assets		80,493			175,905
Total assets	$	72,450,782		$	61,571,741
Liabilities, mezzanine equity, and stockholders’ equity
Current liabilities:
Accounts payable	$	6,292,958		$	4,719,069
Accrued expenses		3,111,373			5,395,996
Notes payable, current portion		8,512,590			23,112,742
Mortgages payable, current portion		1,379,541			223,888
Debentures payable, current portion		2,928,047			-
Operating lease liabilities, current portion		1,002,171			917,444
Finance lease liabilities, current portion		38,412			38,412
Due to related parties		1,233,008			1,454,713
Other current liabilities		1,505,008			858,176
Total current liabilities		26,003,108			36,720,440
Notes payable, less current portion		11,653,775			-
Mortgages payable, less current portion		14,864,810			7,112,842
Debentures payable, less current portion		-			5,835,212
Operating lease liabilities, less current portion		4,967,583			5,399,414
Finance lease liabilities, less current portion		52,439			75,413
Other liabilities		100,200			100,200
Total liabilities		57,641,915			55,243,521
Mezzanine equity:
Series B convertible preferred stock, $0.001 par value; 4,908,333 and zero shares authorized, issued and outstanding at September 30, 2020 and December 31, 2019, respectively		14,725,000			-
Stockholders’ equity:
Series A convertible preferred stock, $0.001 par value; zero and 50,000,000 shares authorized at September 30, 2020 and December 31, 2019, respectively; zero shares issued and outstanding at September 30, 2020 and December 31, 2019		-			-
No designation preferred stock, $0.001 par value; 45,091,667 and zero shares authorized at September 30, 2020 and December 31, 2019, respectively; zero shares issued and outstanding at September 30, 2020 and December 31, 2019		-			-
Common stock, $0.001 par value; 500,000,000 shares authorized at September 30, 2020 and December 31, 2019; 289,729,854 and 228,408,024 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively		289,730			228,408
Common stock subscribed but not issued; 33,319 and 3,236,857 shares at September 30, 2020 and December 31, 2019, respectively		5,365			1,168,074
Additional paid-in capital		109,115,215			112,245,730
Accumulated deficit		(108,737,141	)		(106,760,527	)
Noncontrolling interests		(589,302	)		(553,465	)
Total stockholders’ equity		83,867			6,328,220
Total liabilities, mezzanine equity, and stockholders’ equity	$	72,450,782		$	61,571,741

See accompanying notes to condensed consolidated financial statements.

3

MariMed Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
Revenues	$	13,461,504		$	4,209,328		$	30,537,829		$	11,382,942
Revenues from related party		-			7,014,371			-			29,029,249
Total revenues		13,461,504			11,223,699			30,537,829			40,412,191
Cost of revenues		4,781,677			6,523,283			10,831,763			24,523,626
Gross profit		8,679,827			4,700,416			19,706,066			15,888,565
Operating expenses:
Personnel		1,354,644			1,241,535			4,075,168			2,740,039
Marketing and promotion		103,327			91,562			281,329			286,521
General and administrative		2,931,684			2,394,692			7,515,721			6,752,168
Bad debts		892,029			-			1,342,029			-
Total operating expenses		5,281,684			3,727,789			13,214,247			9,778,728
Operating income		3,398,143			972,627			6,491,819			6,109,837
Non-operating income (expenses):
Interest expense		(1,921,312	)		(4,516,576	)		(7,581,648	)		(9,076,583	)
Interest income		34,818			79,016			121,712			425,770
Loss on obligations settled with equity		-			-			(44,678	)		-
Equity in earnings of investments		51,511			(2,933,252	)		18,553			(1,020,310	)
Change in fair value of investments		217,374			-			(704,172	)		-
Other		(84,708	)		-			(84,708	)		2,948,917
Total non-operating income (expenses), net		(1,702,317	)		(7,370,812	)		(8,274,941	)		(6,722,206	)
Income (loss) before income taxes		1,695,826			(6,398,185	)		(1,783,122	)		(612,369	)
Provision for income taxes					901,477			-			1,886,072
Net income (loss)	$	1,695,826		$	(7,299,662	)	$	(1,783,122	)	$	(2,498,441	)
Net income (loss) attributable to noncontrolling interests	$	36,959		$	99,021		$	193,492		$	246,367
Net income (loss) attributable to MariMed Inc.	$	1,658,867		$	(7,398,683	)	$	(1,976,614	)	$	(2,744,808	)
Net income (loss) per share
Basic	$	0.006		$	(0.034	)	$	(0.008	)	$	(0.013	)
Diluted	$	0.005		$	(0.034	)	$	(0.008	)	$	(0.013	)
Weighted average common shares outstanding
Basic		281,535,212			217,417,326			254,387,761			214,274,342
Diluted		346,091,840			217,417,326			254,387,761			214,274,342

See accompanying notes to condensed consolidated financial statements.

4

MariMed Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

	Common Stock				Common Stock Subscribed But Not Issued						Additional Paid-In			Accumulated			Non-Controlling			Total Stockholders’
	Shares		Par Value		Shares			Amount			Capital			Deficit			Interests			Equity
Balances at December 31, 2018		211,013,043	$	211,013		97,136		$	169,123		$	87,180,165		$	(25,575,808	)	$	(220,032	)	$	61,764,461
Sales of common stock		799,995		800		-			-			2,599,200			-			-			2,600,000
Issuance of subscribed shares		97,136		97		(97,136	)		(169,123	)		169,026			-			-			-
MediTaurus acquisition		-		-		752,260			2,080,000			-			-			1,200,000			3,280,000
Terrace investment		500,000		500		-			-			1,589,500			-			-			1,590,000
Harvest payment		1,000,000		1,000		-			-			(1,000	)		-			-			-
Exercise of options		417,352		417		2,644,456			413,894			11,189			-			-			425,500
Exercise of warrants		686,104		686		-			-			611,756			-			-			612,442
Amortization of stock grants		108,820		109		-			-			193,601			-			-			193,710
Amortization of option grants		-		-		-			-			1,219,958			-			-			1,219,958
Amortization of stand-alone warrant issuances		-		-		-			-			139,015			-			-			139,015
Warrant discount on promissory notes		-		-		-			-			600,621			-			-			600,621
Warrant discount on debentures payable		-		-		-			-			1,148,056			-			-			1,148,056
Beneficial conversion feature on debentures		-		-		-			-			4,235,469			-			-			4,235,469
Conversion of debentures payable		3,591,523		3,592		3,206,816			2,464,438			5,391,253			-			-			7,859,283
Distributions		-		-		-			-			-			-			(376,993	)		(376,993	)
Net income (loss)		-		-		-			-			-			(2,744,808	)		246,367			(2,498,441	)
Balances at September 30, 2019		218,213,973	$	218,214		6,603,532		$	4,958,332		$	105,087,809		$	(28,320,616	)	$	849,342		$	82,793,081

	Common Stock						Common Stock Subscribed But Not Issued						Additional Paid-In			Accumulated			Non-Controlling			Total Stockholders’
	Shares			Par Value			Shares			Amount			Capital			Deficit			Interests			Equity
Balances at December 31, 2019		228,408,024		$	228,408			3,236,857		$	1,168,074		$	112,245,730		$	(106,760,527	)	$	(553,465	)		6,328,220
Issuance of subscribed shares		3,236,857			3,237			(3,236,857	)		(1,168,074	)		1,164,837			-			-			-
Stock grants		64,478			64			33,319			5,365			10,665			-			-			16,094
Stock forfeiture		(40,000)			(40)			-			-			40			-			-			-
Amortization of option grants		-			-			-			-			707,003			-			-			707,003
Issuance of stand-alone warrants		-			-									2,179			-			-			2,179
Issuance of warrants attached to debt		-			-			-			-			638,927			-			-			638,927
Discount on debentures payable		-			-			-			-			28,021			-			-			28,021
Beneficial conversion feature on debentures payable		-			-			-			-			379,183			-			-			379,183
Conversion of debentures payable		54,143,232			54,144			-			-			7,111,897			-			-			7,166,041
Conversion of common stock to preferred stock		(4,908,333	)		(4,908	)		-			-			(14,720,092	)		-			-			(14,725,000	)
Conversion of promissory note		2,525,596			2,525			-			-			457,525			-			-			460,050
Extinguishment of promissory note		1,900,000			1,900			-			-			350,100			-			-			352,000
Common stock issued to settle obligations		4,400,000			4,400			-			-			739,200			-			-			743,600
Distributions		-			-			-			-			-			-			(229,329	)		(229,329	)
Net income (loss)		-			-			-			-			-			(1,976,614	)		193,492			(1,783,122	)
Balances at September 30, 2020		289,729,854		$	289,730			33,319		$	5,365		$	109,115,215		$	(108,737,141	)	$	(589,302	)	$	$ 83,867	)

The above statements do not show columns for Series A convertible preferred stock and no designation

preferred stock as the balances were zero and there was no activity in the periods presented.

See accompanying notes to condensed consolidated financial statements.

5

MariMed Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Nine Months Ended September 30,
	2020			2019
Cash flows from operating activities:
Net income (loss) attributable to MariMed Inc.	$	(1,976,614	)	$	(2,744,808	)
Net income (loss) attributable to noncontrolling interests		193,492			246,367
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation		1,340,649			697,946
Asset write-off		84,708			-
Amortization of intangibles		307,861			154,167
Amortization of stock grants		16,094			193,710
Amortization of option grants		707,003			1,219,958
Amortization of stand-alone warrant issuances		2,179			139,016
Amortization of warrants attached to debt		631,895			1,836,892
Amortization of beneficial conversion feature		2,552,933			4,646,070
Amortization of original issue discount		286,353			107,256
Bad debt expense		1,342,029			-
Loss on obligations settled with equity		44,678			-
Equity in (earnings) losses of investments		(18,553	)		1,020,310
Change in fair value of investments		704,172			-
Changes in operating assets and liabilities:
Accounts receivable, net		(3,750,792	)		(4,788,303	)
Accounts receivable from related party, net					(33,200,000	)
Deferred rents receivable		(171,675	)		53,461
Due from third parties		-			(174,516	)
Inventory		(5,582,862	)		(942,399	)
Other current assets		(57,677	)		7,154
Other assets		95,412			(262,981	)
Accounts payable		2,272,810			(178,223	)
Accrued expenses		1,872,692			3,339,325
Deferred rents payable		-			(105,901	)
Operating lease payments		58,559			424,129
Finance lease interest payments		4,033			(1,824	)
Unearned revenue from related party		-			4,170,750
Other current liabilities		646,832			197,943
Other liabilities		-			(238,000	)
Net cash provided by (used in) operating activities		1,606,211			(24,182,501	)
Cash flows from investing activities:
Purchase of property and equipment		(4,116,053	)		(6,741,632	)
Purchase of cannabis licenses		(255,000	)		(150,000	)
Investment in notes receivable		-			(2,030,000	)
Interest on notes receivable		443,150			175,509
Acquisition		-			(655,804	)
Due from related parties		-			119,781
Net cash used in investing activities		(3,927,903	)		(9,282,146	)
Cash flows from financing activities:
Issuance of common stock		-			2,600,000
Issuance of promissory notes		5,249,763			17,000,000
Repayments of promissory notes		(10,770,011	)		-
Proceeds from issuance of debentures		935,000			9,600,000
Proceeds from mortgages		13,897,282			-
Payments on mortgages		(4,989,661	)		(142,170	)
Exercise of stock options		-			75,500
Exercise of warrants		-			612,442
Due to related parties		(221,705	)		139,402
Finance lease principal payments		(27,008	)		(11,167	)
Distributions		(229,329	)		(376,993	)
Net cash provided by financing activities		3,844,331			29,497,014
Net change to cash and cash equivalents		1,522,639			(3,967,633	)
Cash and cash equivalents at beginning of period		738,688			4,104,315
Cash and cash equivalents at end of period	$	2,261,327		$	136,682
Supplemental disclosure of cash flow information:
Cash paid for interest	$	1,236,464		$	699,582
Cash paid for income taxes	$	488,772		$	88,150
Non-cash activities:
Conversions of debentures payable	$	7,166,041		$	7,859,283
Beneficial conversion feature on debentures payable	$	379,183		$	4,235,469
Discount on debentures payable	$	28,021		$	1,148,056
Issuance of common stock associated with subscriptions	$	1,168,074		$	169,123
Discount on promissory notes	$	638,927		$	600,621
Conversion of promissory notes	$	460,050		$	-
Extinguishment of promissory note	$	352,000		$	-
Common stock issued to settle obligations	$	698,922		$	-
Exchange of common stock to preferred stock	$	14,725,000		$	-
Conversion of accrued interest to promissory note	$	3,908,654		$	-
Conversion of debentures receivable to investment	$	-		$	30,000,000
Operating lease right-of-use assets and liabilities	$	-		$	7,142,150
Finance lease right-of-use assets and liabilities	$	-		$	134,193
Conversion of notes receivable to investment	$	-		$	257,687
Conversion of advances to notes receivable	$	-		$	855,913
MediTaurus acquisition	$	-		$	2,500,000
Terrace investment	$	-		$	1,590,000
Harvest payment	$	-		$	1,000
Exercise of stock options via the reduction of an obligation	$	-		$	350,000
Cashless exercise of stock options	$	-		$	1,762
Reclass of accrued interest from notes payable	$	-		$	127,450
Reclass of accrued interest from debentures payable	$	-		$	62,748

See accompanying notes to condensed consolidated financial statements.

6

MariMed Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

MariMed Inc. (the “Company”) is a multi-state operator in the cannabis industry. The Company develops, operates, manages, and optimizes over 300,000 square feet of state-of-the-art, regulatory-compliant facilities for the cultivation, production and dispensing of medicinal and recreational cannabis. The Company also licenses its proprietary brands of cannabis and hemp-infused products, along with other top brands, in several domestic markets and overseas.

Upon its entry into the cannabis industry, the Company was an advisory firm that procured state-issued cannabis licenses on behalf of its clients, leased its cannabis facilities to these newly-licensed companies, and provided industry-leading expertise and oversight in all aspects of their cannabis operations. The Company also provided its clients with ongoing regulatory, accounting, real estate, human resources, and administrative services. 

In 2018, the Company commenced a strategic plan to transition from a consulting business to a direct owner of cannabis licenses and operator of seed-to-sale operations. The Company’s strategic plan consists of the acquisition of its cannabis-licensed clients located in five states—Delaware, Illinois, Maryland, Massachusetts, and Nevada—and the consolidation of these entities under the MariMed banner.

A goal in completing this transition is to present a simpler, more transparent financial picture of the full breadth of the Company’s efforts, with a clearer representation of the revenues, earnings, and other financial metrics the Company has generated for its clients. The Company has played a key role in the successes of these entities, from the securing of their cannabis licenses, to the development of facilities that are models of excellence, to providing industry best practices and corporate guidance. Accordingly, the Company believes it is well suited to own these facilities and manage the continuing growth of their operations.

To date, acquisitions of the licensed businesses in Massachusetts and Illinois have been state-approved and completed, and establishes the Company as a fully integrated seed-to-sale multi-state operator. The acquisitions of the remaining entities located in Maryland, Nevada, and Delaware are at various stages of completion and subject to each state’s laws governing the ownership and transfer of cannabis licenses, which in the case of Delaware requires a modification of current cannabis ownership laws to permit for-profit ownership. Meanwhile, the Company continues to develop additional revenue and business in these states and plans to leverage its success to expand into other markets where cannabis is and becomes legal.

The Company has also created its own brands of cannabis flower, concentrates, and precision-dosed products utilizing proprietary strains and formulations. These products are developed by the Company in cooperation with state-licensed operators who meet the Company’s strict standards, including all natural—not artificial or synthetic—ingredients. The Company licenses its product formulations only to certified manufacturing professionals who adhere to the Company’s precise scientific formulations and trademarked product recipes.

7

The Company’s branded cannabis products are licensed under brand names including Kalm Fusion™, Nature’s Heritage™, and Betty’s Eddies™, and are distributed in the form of dissolvable strips, tablets, powders, microwaveable popcorn, fruit chews, and other varieties in development. The Company also has exclusive sublicensing rights in certain states to distribute the Binske® line of cannabis products crafted from premium artisan ingredients, the Healer™ line of medical full-spectrum tinctures, and the clinically-tested medicinal cannabis strains developed in Israel by global medical cannabis research pioneer Tikun Olam™. The Company’s hemp division distributes hemp-derived CBD products, including its Florance™ brand, in the US and abroad. The Company intends to continue licensing and distributing its brands, as well as other top brands, in the Company’s current markets and in additional legal markets worldwide.

In March 2020, the World Health Organization declared the outbreak of COVID-19 a global pandemic. The spread of the virus in the United States and the measures implemented to contain it—including business shutdowns, indoor capacity restrictions, social distancing, and diminished travel—have negatively impacted the economy and have created significant volatility and disruption in financial markets. Consequently, the Company’s expansion efforts and implementation of its strategic plan have been delayed. Additionally, while the cannabis industry has been deemed an essential business and is not expected to suffer severe declines in revenue, the Company’s business, operations, financial condition, and liquidity have been adversely affected, as further discussed in Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations and the notes to the financial statements included in this report.

Continued disruption to the global economy may materially and adversely affect the future carrying values of certain of the Company’s assets, including inventories, accounts receivables, and intangibles, as well as negatively impact the Company’s ability to raise working capital to support its operations. The full extent to which COVID-19 and the measures to contain it will impact the Company’s business, operations financial condition, and liquidity will depend on the continued severity and duration of the COVID-19 outbreak and other future developments in response to the virus, all of which are highly uncertain at this time. As a result, the Company cannot predict the ultimate impact of COVID-19 on its operational and financial performance.

The Company’s stock is quoted on the OTCQX market under the ticker symbol MRMD.

The Company was incorporated in Delaware in January 2011 under the name Worlds Online Inc. Initially, the Company developed and managed online virtual worlds. By early 2014, this line of business effectively ceased operating and the Company pivoted into the legal cannabis industry.

8

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

In accordance with GAAP, interim financial statements are not required to contain all of the disclosures normally required in annual financial statements. In addition, the results of operations of interim periods may not necessarily be indicative of the results of operations to be expected for the full year. Accordingly, these interim financial statements should be read in conjunction with the Company’s most recent audited annual financial statements and accompanying notes for the year ended December 31, 2019.

Certain reclassifications have been made to prior periods’ data to conform to the current period presentation. These reclassifications had no effect on reported income (losses) or cash flows.

Going Concern

In connection with the preparation of its financial statements for the nine months ended September 30, 2020, the Company’s management evaluated the Company’s ability to continue as a going concern in accordance with ASU 2014-15, Presentation of Financial Statements–Going Concern (Subtopic 205-40), which requires an assessment of relevant conditions or events, considered in the aggregate, that are known or reasonably knowable by management on the issuance dates of the financial statements which indicate the probable likelihood that the Company will be unable to meet its obligations as they become due within one year after the issuance date of the financial statements.

As part of its evaluation, management assessed known events, trends, commitments, and uncertainties, which at the time included the status of the Company’s consolidation plan, the continuing impact of the COVID-19 pandemic on its operations, developments concerning GenCanna’s bankruptcy proceedings, recent cannabis industry investment activity, price movements of public cannabis stock, actions and/or results of certain bellwether cannabis companies, the level of cannabis investor confidence, and changes to state laws governing recreational (adult-use) and medical cannabis.

Management also reviewed certain key liquidity metrics of the Company, as further described below, as well as other factors in its evaluation, and determined that there currently exists a substantial doubt that the Company will be able to continue as a going concern within one year after the issuance date of these financial statements without additional funding or the continued profitability growth of its cannabis operations in Illinois and Massachusetts.

The Company produced the following improvements to key liquidity metrics during the reported period:

● During the nine months ended September 30, 2020, the Company’s operating activities provided positive cash flow of approximately $1.6 million, compared to approximately $24.2 million of negative cash flow used by such activities during the same period of 2019, a positive swing of approximately $25.8 million.

● At September 30, 2020, the Company’s negative working capital was approximately $9.1 million, a continued improvement from approximately $21.5 million at June 30, 2020 and approximately $29.3 million at December 31, 2019.

● The Company successfully restructured the terms of its short-term promissory notes payable to approximately $8.5 million at September 30, 2020 from approximately $17.2 million at June 30, 2020 and $23.1 million at December 31, 2019.

For further discussion of the Company’s liquidity and capital resources, please refer to Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Form 10-Q for the period ended September 30, 2020.

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Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of MariMed Inc. and the following majority-owned subsidiaries:

Subsidiary:	Percentage Owned
MariMed Advisors Inc.		100.0%
Mia Development LLC		89.5%
Mari Holdings IL LLC		100.0%
Mari Holdings MD LLC		97.4%
Mari Holdings NV LLC		100.0%
Hartwell Realty Holdings LLC		100.0%
iRollie LLC		100.0%
ARL Healthcare Inc.		100.0%
KPG of Anna LLC		100.0%
KPG of Harrisburg LLC		100.0%
MariMed Hemp Inc.		100.0%
MediTaurus LLC		70.0%

Intercompany accounts and transactions have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts within the financial statements and disclosures thereof. Actual results could differ from these estimates or assumptions.

Cash Equivalents

The Company considers all highly liquid investments with a maturity date of three months or less to be cash equivalents. The fair values of these investments approximate their carrying values.

The Company’s cash and cash equivalents are maintained with recognized financial institutions located in the United States. In the normal course of business, the Company may carry balances with certain financial institutions that exceed federally insured limits. The Company has not experienced losses on balances in excess of such limits and management believes the Company is not exposed to significant risks in that regard.

Accounts Receivable

Accounts receivable consist of trade receivables and are carried at their estimated collectible amounts.

The Company provides credit to its clients in the form of payment terms. The Company limits its credit risk by performing credit evaluations of its clients and maintaining a reserve, if deemed necessary, for potential credit losses. Such evaluations include the review of a client’s outstanding balances with consideration towards such client’s historical collection experience, as well as prevailing economic and market conditions and other factors. Based on such evaluations, the Company maintained an allowance for doubtful accounts of approximately $40.5 million and $39.7 million at September 30, 2020 and December 31, 2019, respectively. Please refer to Note 16 – Bad Debts for further discussion on receivable reserves.

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Inventory

Inventory is carried at the lower of cost or net realizable value, with the cost being determined on a first-in, first-out (FIFO) basis. The Company allocates a certain percentage of overhead cost to its manufactured inventory; such allocation is based on square footage and other industry-standard criteria. The Company reviews physical inventory for obsolescence and/or excess and will record a reserve if necessary. As of the date of this report, no reserve was deemed necessary.

Investments

Investments are comprised of equity holding of private companies. These investments are recorded at fair value on the Company’s consolidated balance sheet, with changes to fair value included in income. Investments are evaluated for permanent impairment and are written down if such impairments are deemed to have occurred.

Revenue Recognition

The Company recognizes revenue in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification (“ASC”) 606, Revenue from Contract with Customers, as amended by subsequently issued Accounting Standards Updates. This revenue standard requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to in exchange for those goods or services. The recognition of revenue is determined by performing the following consecutive steps:

● Identify the contract(s) with a customer;

● Identify the performance obligations in the contract(s);

● Determine the transaction price;

● Allocate the transaction price to the performance obligations in the contract(s); and

● Recognize revenue as the performance obligation is satisfied.

Additionally, when another party is involved in providing goods or services to the Company’s clients, a determination is made as to who—the Company or the other party—is acting in the capacity as the principal in the sale transaction, and who is merely the agent arranging for goods or services to be provided by the other party.

The Company is typically considered the principal if it controls the specified good or service before such good or service is transferred to its client. The Company may also be deemed to be the principal even if it engages another party (an agent) to satisfy some of the performance obligations on its behalf, provided the Company (i) takes on certain responsibilities, obligations and risks, (ii) possesses certain abilities and discretion, or (iii) other relevant indicators of the sale. If deemed an agent, the Company would not recognize revenue for the performance obligations it does not satisfy.

The Company’s main sources of revenue are comprised of the following:

● Product Sales – direct sales of cannabis and cannabis-infused products by the Company’s dispensary and wholesale operations in Massachusetts and Illinois, and direct sales of hemp and hemp-infused products by the Company’s hemp division. In 2019, this division participated in one-time sales of acquired hemp seed inventory, as further explained in Note 17 – Related Party Transactions. Future product sales are expected to include the Company’s planned cannabis-licensee acquisitions in Maryland, Nevada, and Delaware (upon this state’s amendment to permit for-profit ownership of cannabis entities). This revenue is recognized when products are delivered or at retail point-of-sale.

● Real Estate – rental income and additional rental fees generated from leasing of the Company’s state-of-the-art, regulatory-compliant cannabis facilities to its cannabis-licensed clients. Rental income is generally a fixed amount per month that escalates over the respective lease term, while additional rental fees are based on a percentage of tenant revenues that exceed specified amounts.

● Management – fees for providing the Company’s cannabis clients with comprehensive oversight of their cannabis cultivation, production, and dispensary operations. Along with this oversight, the Company provides human resources, regulatory, marketing, and other corporate services. These fees are based on a percentage of such clients’ revenue, and are recognized after services have been performed.

● Supply Procurement – the Company maintains volume discounts with top national vendors of cultivation and production resources, supplies, and equipment, which the Company acquires and resells to its clients or third parties within the cannabis industry. The Company recognizes this revenue after the delivery and acceptance of goods by the purchaser.

● Licensing – revenue from the sale of precision-dosed, cannabis-infused products—such as Kalm Fusion™, Nature’s Heritage™, and Betty’s Eddies™—to regulated dispensaries throughout the United States and Puerto Rico. The recognition of this revenue occurs when the products are delivered.

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Research and Development Costs

Research and development costs are charged to operations as incurred.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation, with depreciation recognized on a straight-line basis over the shorter of the estimated useful life of the asset or the lease term, if applicable. When assets are retired or disposed, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income. Repairs and maintenance are charged to expense in the period incurred.

The estimated useful lives of property and equipment are generally as follows: buildings and building improvements, seven to thirty-nine years; tenant improvements, the remaining duration of the related lease; furniture and fixtures, seven years; machinery and equipment, five to ten years. Land is not depreciated.

The Company’s property and equipment are individually reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable from the undiscounted future cash flows of such asset over the anticipated holding period. An impairment loss is measured by the excess of the asset’s carrying amount over its estimated fair value.

Impairment analyses are based on management’s current plans, asset holding periods, and currently available market information. If these criteria change, the Company’s evaluation of impairment losses may be different and could have a material impact to the consolidated financial statements. For the nine months ended September 30, 2020 and 2019, based on the results of management’s analyses, there were no impairment losses.

Leases

The consolidated financial statements reflect the Company’s adoption of ASC 842, Leases, as amended by subsequent accounting standards updates, utilizing the modified retrospective transition approach which calls for applying the new standard to all of the Company’s leases effective January 1, 2019, which is the effective date of adoption.

ASC 842 is intended to improve financial reporting of leasing transactions. The most prominent change from previous accounting guidance is the requirement to recognize right-of-use assets and lease liabilities on the consolidated balance sheet representing the rights and obligations created by operating leases that extend more than twelve months in which the Company is the lessee. The Company elected the package of practical expedients permitted under ASC 842. Accordingly, the Company accounted for its existing operating leases that commenced before the effective date as operating leases under the new guidance without reassessing (i) whether the contracts contain a lease, (ii) the classification of the leases, or (iii) the accounting for indirect costs as defined in ASC 842.

The Company determines if an arrangement is a lease at inception. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Non-lease components within lease agreements are accounted for separately. Right-of-use assets and obligations are recognized at the commencement date based on the present value of lease payments over the lease term, utilizing the Company’s incremental borrowing rate. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

Impairment of Long-Lived Assets

The Company evaluates the recoverability of its fixed assets and other assets in accordance with ASC 360-10-15, Impairment or Disposal of Long-Lived Assets. Impairment of long-lived assets is recognized when the net book value of such assets exceeds their expected cash flows, in which case the assets are written down to fair value, which is determined based on discounted future cash flows or appraised values.

Fair Value of Financial Instruments

The Company follows the provisions of ASC 820, Fair Value Measurement, to measure the fair value of its financial instruments, and ASC 825, Financial Instruments, for disclosures on the fair value of its financial instruments. To increase consistency and comparability in fair value measurements and related disclosures, ASC 820 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three levels of fair value hierarchy defined by ASC 820 are:

Level 1	Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
Level 2	Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
Level 3	Pricing inputs that are generally observable inputs and not corroborated by market data.

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The carrying amounts of the Company’s financial assets and liabilities, such as cash and accounts payable approximate their fair values due to the short maturity of these instruments.

The fair value of option and warrant issuances are determined using the Black-Scholes pricing model and employing several inputs such as the expected life of instrument, the exercise price, the expected risk-free interest rate, the expected dividend yield, the value of the Company’s common stock on issuance date, and the expected volatility of such common stock. The following table summarizes the range of inputs used by the Company during the nine months ended September 30, 2020 and 2019.

	Nine Months Ended September 30,
	2020		2019
Life of instrument		2.7 to 4.3 years		2.3 to 3.0 years
Volatility factors		1.059 to 1.180		1.059 to 1.106
Risk-free interest rates		0.26% to 1.30%		1.42% to 2.28%
Dividend yield		0%		0%

The expected life of an instrument is calculated using the simplified method pursuant to Staff Accounting Bulletin Topic 14, Share-Based Payment, which allows for using the mid-point between the vesting date and expiration date. The volatility factors are based on the historical two-year movement of the Company’s common stock prior to an instrument’s issuance date. The risk-free interest rate is based on U.S. Treasury rates with maturity periods similar to the expected instruments life on the issuance date.

The Company amortizes the fair value of option and warrant issuances on a straight-line basis over the requisite service period of each instrument.

Extinguishment of Liabilities

The Company accounts for extinguishment of liabilities in accordance with ASC 405-20, Extinguishments of Liabilities. When the conditions for extinguishment are met, the liabilities are written down to zero and a gain or loss is recognized.

Stock-Based Compensation

The Company accounts for stock-based compensation using the fair value method as set forth in ASC 718, Compensation—Stock Compensation, which requires a public entity to measure the cost of employee services received in exchange for an equity award based on the fair value of the award on the grant date, with limited exceptions. Such value will be incurred as compensation expense over the period an employee is required to provide service in exchange for the award, usually the vesting period. No compensation cost is recognized for equity awards for which employees do not render the requisite service.

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Income Taxes

The Company accounts for income taxes in accordance with ASC 740, Income Taxes. Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax basis of assets and liabilities, and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the consolidated statements of operations in the period that includes the enactment date.

ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. The Company did not take any uncertain tax positions and had no adjustments to unrecognized income tax liabilities or benefits for the nine months ended September 30, 2020 and 2019.

Related Party Transactions

The Company follows ASC 850, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions.

In accordance with ASC 850, the Company’s financial statements include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business, as well as transactions that are eliminated in the preparation of financial statements.

Comprehensive Income

The Company reports comprehensive income and its components following guidance set forth by ASC 220, Comprehensive Income, which establishes standards for the reporting and display of comprehensive income and its components in the consolidated financial statements. There were no items of comprehensive income applicable to the Company during the period covered in the financial statements.

Earnings Per Share

Earnings per common share is computed pursuant to ASC 260, Earnings Per Share. Basic earnings per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted net income per share is computed by dividing net income by the sum of the weighted average number of shares of common stock outstanding plus the weighted average number of potentially dilutive securities during the period.

At September 30, 2020 and 2019, there were 24,860,857 and 16,815,107, respectively, of potentially dilutive securities in the form of outstanding options and warrants. Also as of such dates, there were (i) $4.2 million and $11.1 million, respectively, of outstanding convertible debentures payable, (ii) 4,908,333 and zero shares, respectively, of Series B convertible preferred stock outstanding, and (iii) approximately $5.2 million and $350,000, respectively, of outstanding convertible promissory notes. All of these potentially dilutive securities are convertible into common stock based on either (i) a predetermined price, subject to adjustment, or (ii) the market value of common stock on or about the future conversion date.

For the three months ended September 30, 2020, all such potentially dilutive securities were convertible into approximately 64.6 million net shares of common stock, which were included in the number of weighted average common shares outstanding on a diluted basis, and in the calculation of diluted net income per share for this period as shown in the statement of operations. For the nine months ended September 30, 2020, and for the three and nine months ended Septembers 30, 2019, the potentially dilutive securities had an anti-dilutive effect on earnings per share, and in accordance with ASC 260, were excluded from the diluted net income per share calculations, resulting in identical basic and fully diluted net income per share for these periods.

Commitments and Contingencies

The Company follows ASC 450, Contingencies, which requires the Company to assess the likelihood that a loss will be incurred from the occurrence or non-occurrence of one or more future events. Such assessment inherently involves an exercise of judgment. In assessing possible loss contingencies from legal proceedings or unasserted claims, the Company evaluates the perceived merits of such proceedings or claims, and of the relief sought or expected to be sought.

If the assessment of a contingency indicates that it is probable that a material loss will be incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.

While not assured, management does not believe, based upon information available at this time, that a loss contingency will have material adverse effect on the Company’s financial position, results of operations or cash flows.

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Beneficial Conversion Features on Convertible Debt

Convertible instruments that are not bifurcated as a derivative pursuant to ASC 815, Derivatives and Hedging, and not accounted for as a separate equity component under the cash conversion guidance are evaluated to determine whether their conversion prices create an embedded beneficial conversion feature at inception, or may become beneficial in the future due to potential adjustments.

A beneficial conversion feature is a nondetachable conversion feature that is “in-the-money” at the commitment date. The in-the-money portion, also known as the intrinsic value of the option, is recorded in equity, with an offsetting discount to the carrying amount of convertible debt to which it is attached. The discount is amortized to interest expense over the life of the debt with adjustments to amortization upon full or partial conversions of the debt.

Risk and Uncertainties

The Company is subject to risks common to companies operating within the legal and medical marijuana industries, including, but not limited to, federal laws, government regulations and jurisdictional laws.

Noncontrolling Interests

Noncontrolling interests represent third-party minority ownership of the Company’s consolidated subsidiaries. Net income attributable to noncontrolling interests is shown in the consolidated statements of operations; and the value of net assets owned by noncontrolling interests are presented as a component of equity within the balance sheets.

Off Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements.

Recent Accounting Pronouncements

The Company has reviewed all recently issued, but not yet effective, accounting pronouncements, and does not believe the future adoption of any such pronouncements will have a material impact on its financial condition or the results of its operations.

NOTE 3 – ACQUISITIONS

KPG of Anna LLC and KPG of Harrisburg LLC

Effective October 1, 2019, the Illinois Department of Financial and Professional Regulation approved the Company’s acquisition of (i)100% of the ownership interests of KPG of Anna LLC and KPG of Harrisburg LLC, the Company’s two cannabis-licensed clients that operate medical marijuana dispensaries in the state of Illinois (both entities collectively, the “KPGs”), and (ii) the 40% ownership interests not already owned by the Company of Mari Holdings IL LLC, the Company’s subsidiary which owns the real estate in which the KPGs’ dispensaries are located (“Mari-IL”). On such date, 1,000,000 shares of the Company’s common stock, representing the entire purchase price, were issued to the sellers of the KPGs and Mari-IL, and these entities became wholly-owned subsidiaries of the Company.

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The acquisition was accounted for in accordance with ASC 805. The following table summarizes the allocation of the purchase price to the fair value of the assets acquired and liabilities assumed on the acquisition date:

Cash and cash equivalents	$	443,980
Inventory		113,825
Intangibles		2,067,727
Minority interests		138,356
Accounts payable		(642,033	)
Accrued expenses		(186,005	)
Due to third parties		(1,020,850	)
Total fair value of consideration	$	915,000

Based on an impairment analysis performed shortly before the filing date of this report, the Company determined the intangibles of approximately $2.1 million arising from this transaction were not impaired.

The Harvest Foundation LLC

In August 2019, the Company entered into a purchase agreement to acquire 100% of the ownership interests of The Harvest Foundation LLC (“Harvest”), the Company’s cannabis-licensed client in the state of Nevada. The acquisition is conditioned upon legislative approval of the transaction. At this time, the state has paused the processing of cannabis license transfers, without indicating when it will resume. Upon the resumption of these activities and the ensuing approval by the state, this agreement will be consummated and the operations of Harvest will be consolidated into the Company’s financial statements.

The purchase price is comprised of the issuance of (i) 1,000,000 shares of the Company’s common stock, in the aggregate, to two owners of Harvest, which as a good faith deposit, were issued upon execution of the purchase agreement, (ii) $1.2 million of the Company’s common stock at closing, based on the closing price of the common stock on the day prior to legislative approval of the transaction, and (iii) warrants to purchase 400,000 shares of the Company’s common stock at an exercise price equal to the closing price of the Company’s common stock on the day prior to legislative approval of the transaction. These shares are restricted and will be returned to the Company in the event the transaction does not close by a date certain. As the transaction has not been consummated, the issued shares were recorded at par value.

Kind Therapeutics USA Inc.

In December 2018, the Company entered into a memorandum of understanding (the “MOU”) to acquire Kind Therapeutics USA Inc. (“Kind”), its client in Maryland that holds licenses for the cultivation, production, and dispensing of medical cannabis. The MOU provides for a total purchase price of $6.3 million in cash, 2,500,000 shares of the Company’s common stock, and other consideration. The acquisition is subject to the approval by the Maryland Medical Cannabis Commission, which approval can be applied for starting in March 2021.

Also in December 2018, MariMed Advisors Inc, the Company’s wholly owned subsidiary, and Kind entered into a management agreement pursuant to which the Company provides comprehensive management services in connection with the business and operations of Kind, and Mari Holdings MD LLC, the Company’s majority-owned subsidiary, entered into a 20-year lease with Kind for its utilization of the Company’s 180,000 square foot cultivation and production facility in Hagerstown, MD. Additionally, in October 2019, Mari Holdings MD LLC purchased a 9,000 square foot building in Anne Arundel County, MD for the development of a dispensary which would be leased to Kind.

The sellers of Kind have attempted to renegotiate the terms of the MOU. Even though the MOU contains all the definitive material terms with respect to the acquisition transaction and confirms the management and lease agreements, the selling parties now allege that the MOU is not an enforceable agreement. The Company engaged with the sellers in good faith in an attempt to reach updated terms acceptable to both parties, however the sellers failed to reciprocate in good faith, resulting in an impasse, and both parties commencing legal proceedings which are pending in the Circuit Court for Washington County, Maryland. For further information, see Note 18 – Commitments and Contingencies and Part II, Item 1. Legal Proceedings in this report.

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MediTaurus LLC

In May 2019, the Company entered into a purchase agreement to acquire MediTaurus LLC (“MediTaurus”), a company formed and owned by Jokubas Ziburkas PhD, a neuroscientist and leading authority on CBD and its interactions with the brain and endocannabinoid system. MediTaurus currently operates in the United States and Europe and has developed proprietary CBD formulations sold under its Florance™ brand.

Pursuant to the purchase agreement, the Company acquired 70% of MediTaurus on June 1, 2019. The purchase price was $2.8 million, comprised of cash payments totaling $720,000 and 520,000 shares of the Company’s common stock valued at $2,080,000. The parties are currently in negotiations regarding the Company’s acquisition of the remaining 30% of MediTaurus.

The acquisition was accounted for in accordance with ASC 10. The following table summarizes the allocation, adjusted in September 2019, of the purchase price to the fair value of the assets acquired and liabilities assumed on the acquisition date:

Cash and cash equivalents	$	64,196
Accounts receivable		5,362
Inventory		519,750
Goodwill		2,662,669
Accounts payable		(777	)
Total value of MediTaurus		3,251,200
Noncontrolling interests in MediTaurus		(975,360	)
Total fair value of consideration	$	2,275,840

Based on a valuation of MediTaurus in late 2019, the goodwill on the transaction was adjusted to approximately $2.7 million, which was written off due to the impact of the COVID-19 pandemic on MediTaurus’ business.

AgriMed Industries of PA LLC

In July 2018, the Company entered into a purchase agreement to acquire 100% of the ownership interests of AgriMed Industries of PA LLC (“AgriMed”), an entity that holds a license from the state of Pennsylvania for the cultivation of cannabis. The purchase price was comprised of $8.0 million, payable in stock and cash, and the assumption of certain liabilities of AgriMed. In February 2019, the Company commenced legal proceedings against AgriMed seeking specific performance of the purchase agreement.

In May 2019, the dispute between the parties was resolved through the cash payment to the Company of $3.1 million and other good and valuable consideration, in exchange for the Company relinquishing its rights under the purchase agreement and releasing its claims against AgriMed. The net amount of approximately $2,949,000, representing the cash payment less legal fees and write-offs of assets and supplies, was recorded in Other Non-Operating Income in the Company’s consolidated statement of operations for the year ended December 31, 2019.

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NOTE 4 – INVESTMENTS

At September 30, 2020 and December 31, 2019, the Company’s investments were comprised of the following:

	September 30, 2020		December 31, 2019
Current investments:
Terrace Inc.	$	1,002,659	$	1,449,144
Total current investments		1,002,659		1,449,144
Non-current investments:
MembersRSVP LLC		1,085,528		1,066,975
Chooze Corp.		-		257,686
GenCanna Global Inc.		-		-
Iconic Ventures Inc.		-		-
Total non-current investments		1,085,528		1,324,661
Total investments	$	2,088,187	$	2,773,805

Terrace Inc.

In May 2019, the Company issued 500,000 shares of its common stock, valued at $1.59 million on the date of issuance, to purchase an 8.95% interest in Terrace Inc. (“Terrace”), a Canadian entity that develops and acquires international cannabis assets. The Company has no board representation, nor does it have the ability to exert operational or financial control over the entity.

In November 2019, the common stock of Terrace commenced public trading on the Toronto Stock Venture Exchange. In accordance with ASC 321, Investments – Equity Securities, this investment is carried at fair value, with changes to fair value recognized in net income. Prior to Terrace becoming publicly traded, the Company had elected the measurement alternative to value this equity investment without a readily determinable fair value.

At September 30, 2020, the carrying amount of this investment approximated $1,003,000, based on its publicly traded stock price on such date, which required the Company to record a charge to net income of approximately $447,000 for the nine months then ended that is reflected under Change In Fair Value Of Investments on the statement of operations.

MembersRSVP LLC

In August 2018, the Company invested $300,000, of a total contracted cash investment of $500,000, and issued 378,259 shares of its common stock, valued at approximately $915,000, in exchange for a 23% ownership in MembersRSVP LLC (“MRSVP”), an entity that has developed a customer relationship management and marketing platform, branded under the name Sprout, that is designed for and licensed to companies in the cannabis industry.

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The investment is accounted under the equity method. During the nine months ended September 30, 2020 and 2019, the Company recorded earnings of approximately $19,000 and a charge of approximately $105,000, respectively, based on the Company’s equity in MRSVP’s net income and losses during such periods. Since the inception of the investment, the Company has recorded cumulative equity in net losses of approximately $130,000, reducing the carrying value of the investment to approximately $1,086,000 at September 30, 2020.

Chooze Corp.

In January 2019, the entire principal and accrued interest balance of a note receivable from Chooze Corp. of approximately $258,000 was converted into a 2.7% equity interest in Chooze. In accordance with ASC 321, the Company elected the measurement alternative to value this equity investment without a readily determinable fair value. Accordingly, the investment was carried at its cost until June 2020 when the investment was fully reserved due to the Company’s determination that the investment was impaired. This reserve of approximately $258,000 is reflected under Change In Fair Value Of Investments on the statement of operations.

GenCanna Global Inc.

During 2018, in a series of transactions, the Company purchased $30 million of subordinated secured convertible debentures (the “GC Debentures”) of GenCanna. In February 2019, the Company converted the GC Debentures, plus unpaid accrued interest through the conversion date of approximately $229,000, into common stock of GenCanna equal to a 33.5% ownership interest in GenCanna on a fully diluted basis. Concurrent with the conversion, the Company’s CEO was appointed to GenCanna’s board and the Company was granted certain rights, including the rights of inspection, financial information, and participation in future security offerings of GenCanna. At conversion, the Company commenced accounting for this investment under the equity method.

In late January 2020, an involuntary bankruptcy proceeding under Chapter 11 was filed against GenCanna USA, GenCanna’s wholly-owned operating subsidiary, with the U.S. Bankruptcy Court in the Eastern District of Kentucky (the “Bankruptcy Court”). In the months leading up to the filing, GenCanna had faced several challenges including defaults under its senior credit facility with MGG Investment Group LP (“MGG”), a fire at its main processing and lab facility, the domestic decline of CBD selling prices, and the contraction of the cannabis capital markets. On February 6, 2020, GenCanna USA, under pressure from certain of its creditors and MGG, agreed to convert the involuntary bankruptcy proceeding into a voluntary Chapter 11 proceeding. In addition, GenCanna and GenCanna USA’s subsidiary, Hemp Kentucky LLC (collectively with GenCanna and GenCanna USA, the “GenCanna Debtors”), filed voluntary petitions under Chapter 11 in the Bankruptcy Court. As a result, the Company recorded a charge to net income of approximately $30.2 million in December 2019, which reduced the carrying value of this investment to zero.

On February 18, 2020, the GenCanna Debtors sought permission from the Bankruptcy Court to sell all or substantially all of their assets. After the entry of various orders to establish the bidding procedures and criteria for such sale, the GenCanna Debtors received only four proposals (including a credit bid from MGG) for the purchase of the GenCanna Debtors’ assets and a single proposal for a plan of reorganization which was submitted by the Company.

On May 19, 2020, after an abbreviated solicitation/bid/sale process, the Bankruptcy Court, over numerous objections by creditors and shareholders of the GenCanna Debtors which included the Company, entered an order authorizing the sale of all or substantially all of the assets of the GenCanna Debtors to MGG for its credit bid in the amount of $73.5 million and cash in the amount of $3.5 million.

Based on recent filings with the Bankruptcy Court, the GenCanna Debtors are proposing to file a liquidating plan of reorganization to collect various prepetition payments and commercial claims against third parties, liquidate the remaining assets of the GenCanna Debtors, and make payments to creditors. The Company and the unsecured creditors committee are exploring options, including litigation against MGG for lender liability, equitable subordination, and return of preference. In connection with this liquidation process, the Company has filed its proofs of claim for the $33.2 million of hemp seeds sold to GenCanna, which transaction is further discussed in Note 17 – Related Party Transactions.

Iconic Ventures Inc.

In December 2018, the Company purchased 2,500,000 shares of common stock of Iconic Ventures Inc. (“Iconic”), which equated to an ownership interest in Iconic of approximately 10%, for an aggregate cash payment of $500,000. Iconic has developed DabTabs™, a unique solution for cannabinoid vaporization. The Company has no board representation, nor does it have the ability to exert operational or financial control over the entity. In 2019, the Company wrote off the investment after an impairment review that considered the viability of the entity in light of the current economic climate.

Binske^®

In July 2019, the Company entered into a licensing agreement for the exclusive manufacturing and distribution in several eastern U.S. states of the Binske^® portfolio of products, a brand known for utilizing best-in-class proprietary strains and craft ingredients in its edibles, concentrates, vaporizers, and topicals. In consideration for the license and other rights, the Company agreed to pay a royalty of 10.0% to 12.5% of gross revenue, as defined, derived from the sale of Binske^® products, subject to an annual minimum royalty. No gross revenue was generated as of September 30, 2020.

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NOTE 5 – DEFERRED RENTS RECEIVABLE

The Company is the lessor under several operating leases which contain rent holidays, escalating rents over time, options to renew, requirements to pay property taxes, insurance and/or maintenance costs, and contingent rental payments based on a percentage of monthly tenant revenues. The Company is not the lessor under any finance leases.

The Company recognizes fixed rental receipts from such lease agreements on a straight-line basis over the expected lease term. Differences between amounts received and amounts recognized are recorded under Deferred Rents Receivable on the balance sheet. Contingent rentals are recognized only after tenants’ revenues are finalized and if such revenues exceed certain minimum levels.

During the reporting periods, the Company leased to third parties the following owned properties:

● Delaware – a 45,000 square foot facility purchased in September 2016 and developed into a cannabis cultivation, processing, and dispensary facility which is leased to a cannabis-licensed client occupying 100% of the space under a triple net lease that commenced in 2017 and expires in 2035.

● Maryland – a 180,000 square foot former manufacturing facility purchased in January 2017 and developed by the Company into a cultivation and processing facility which is leased to a licensed cannabis client under a triple net lease that commenced in 2018 and expires in 2037.

● Massachusetts – a 138,000 square foot industrial property of which approximately half of the available square footage is leased to a non-cannabis manufacturing company under a lease that commenced in 2017 and expires in 2022.

● Illinois – two 3,400 square foot free-standing retail dispensaries in the cities of Anna and Harrisburg and leased to the KPGs, each under a 20-year lease that commenced in 2018. With the acquisition of the KPGs as disclosed in Note 3 – Acquisitions, this lease was eliminated upon the consolidation of the KPGs in October 2019. Accordingly, the rental receipts on such leases have been removed from the table of future minimum rental receipts below.

During the reporting periods, the Company subleased to a third party the following property:

● Delaware – 4,000 square feet of retail space in a multi-use building which the Company developed into a cannabis dispensary and is subleased to its cannabis-licensed client under a under a triple net lease expiring in 2021 with a five-year option to extend.

As of September 30, 2020 and December 31, 2019, cumulative fixed rental receipts under such leases approximated $12.8 million and $9.5 million, respectively, compared to revenue recognized on a straight-line basis of approximately $14.8 million and $11.3 million. Accordingly, the deferred rents receivable balances at September 30, 2020 and December 31, 2019 approximated $2.0 million and $1.8 million, respectively.

Future minimum rental receipts for non-cancelable leases and subleases as of September 30, 2020 were:

2020	$	1,130,989
2021		4,667,497
2022		4,590,656
2023		4,292,769
2024		4,348,027
Thereafter		43,995,612
Total	$	63,025,550

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NOTE 6 – NOTES RECEIVABLE

At September 30, 2020 and December 31, 2019, notes receivable were comprised of the following:

	September 30, 2020		December 31, 2019
First State Compassion Center	$	484,240	$	527,261
Healer LLC		885,871		846,985
High Fidelity Inc.		254,879		252,873
Maryland Health & Wellness Center Inc.		-		323,526
Atalo Holdings Inc.		-		-
Total notes receivable		1,624,990		1,950,645
Notes receivable, current portion		540,319		311,149
Notes receivable, less current portion	$	1,084,671	$	1,639,496

The Company loaned approximately $700,000 to First State Compassion Center, its Delaware cannabis-licensee client, during the period from October 2015 to April 2016. In May 2016, this client issued a 10-year promissory note, as subsequently amended, to the Company bearing interest at a rate of 12.5% per annum. The monthly payments of approximately $10,100 will continue through April 2026, at which time the note will become due. At September 30, 2020 and December 31, 2019, the current portion of this note was approximately $64,000 and $58,000, respectively, and is included in Notes Receivable, Current Portion on the respective balance sheets.

From August 2018 to June 2019, the Company loaned an aggregate of $800,000 to Healer LLC (“Healer”), an entity that provides cannabis education, dosage programs, and products developed by Dr. Dustin Sulak, an integrative medicine physician and nationally renowned cannabis practitioner. The loans bear interest at 6% per annum, with principal and interest payable on the maturity dates which are three years from the respective loan dates. At September 30, 2020, the current portion of this note approximated $221,000. No portion was current at December 31, 2019.

In August 2019, the Company loaned $250,000 to High Fidelity Inc., a company that owns and operates two seed-to sale medical marijuana facilities in the state of Vermont and produces its own line of CBD products. Prior to the note’s maturity in August 2020, the parties agreed to continue the note on a month-to-month basis, with interest-only monthly payments ongoing at the rate of 10% per annum.

In January 2019, the Company provided Maryland Health & Wellness Center Inc. (“MHWC”), an entity that has been pre-approved by the state of Maryland for a cannabis dispensing license, with a $300,000 construction loan bearing interest at a rate of 8% per annum. In June 2020, MHWC repaid the principal and accrued interest thereon, at which time the parties agreed to terminate their business relationship and release each other from all other previously executed agreements.

From May 2019 to July 2019, the Company extended loans aggregating $980,000 to Atalo Holdings Inc. (“Atalo”), an agriculture and biotechnology firm specializing in research, development, and production of industrial hemp and hemp-derived CBD products. The loans initially bore interest at 6% per annum and matured in April 2020. The Company wrote off the entire carrying value of the Atalo note receivable balance as of December 2019, based upon the expectation that Atalo would be critically impacted by the COVID-19 pandemic. In 2020, Atalo filed for bankruptcy.

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NOTE 7 – INVENTORY

At September 30, 2020 and December 31, 2019, inventory was comprised of approximately (i) $3.1 million and $395,000, respectively, of plants and other raw materials, (ii) $188,000 and $226,000, respectively, of CBD isolate and hemp extract, and (iii) $3.5 million and $599,000 of work-in-process and finished cannabis and CBD products.

NOTE 8 – PROPERTY AND EQUIPMENT

At September 30, 2020 and December 31, 2019, property and equipment consisted of the following:

	September 30, 2020			December 31, 2019
Land	$	3,988,810		$	3,887,710
Buildings and building improvements		27,334,283			27,063,235
Tenant improvements		8,607,282			7,762,991
Furniture and fixtures		555,766			299,645
Machinery and equipment		4,490,186			4,086,691
Construction in progress		4,977,181			2,827,940
		49,953,508			45,928,212
Less: accumulated depreciation		(4,445,931	)		(3,135,843	)
Property and equipment, net	$	45,507,577		$	42,792,369

During the nine months ended September 30, 2020 and 2019, additions to property and equipment were approximately $4.1 million and $6.7 million, respectively.

Additions during the nine months ended September 30, 2020 consisted primarily of (i) the commencement of construction in Mt. Vernon, IL, and (ii) machinery and equipment purchases for facilities in Massachusetts, Maryland, Illinois, and Delaware. Additions during the nine months ended September 30, 2019 consisted primarily of (i) the commencement of construction in Milford, DE, (ii) the continued buildout of properties in Maryland and Massachusetts, and (iii) improvements to the Wilmington, DE and Las Vegas, NV properties.

During the nine months ended September 30, 2020, the Company disposed of an asset with a cost of approximately $91,000 and accumulated depreciation through the disposal date of approximately $6,000. The loss on disposal of approximately $85,000 is reflected in Other Non-Operating Expenses in the statement of operations at September 30, 2020. There were no disposals in 2019.

Depreciation expense for the nine months ended September 30, 2020 and 2019 approximated $1,341,000 and $698,000, respectively.

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NOTE 9 – DEBT

Mortgages Payable

At September 30, 2020 and December 31, 2019, mortgage balances, including accrued but unpaid interest, were comprised of the following:

	September 30, 2020			December 31, 2019
Bank of New England – Massachusetts properties	$	12,912,723		$	4,825,226
Bank of New England – Delaware property		1,602,730			1,682,275
DuQuoin State Bank – Illinois properties		822,245			829,229
South Porte Bank – Illinois property		906,653			-
Total mortgages payable		16,244,351			7,336,730
Mortgages payable, current portion		(1,379,541	)		(223,888	)
Mortgages payable, less current portion	$	14,864,810		$	7,112,842

In November 2017, the Company entered into a 10-year mortgage agreement with Bank of New England in the amount of $4,895,000 (the “Initial Mortgage”) for the purchase of a 138,000 square foot industrial property in New Bedford, Massachusetts, within which the Company has built a 70,000 square foot cannabis cultivation and processing facility. Pursuant to the Initial Mortgage, the Company made monthly payments of (i) interest-only from the mortgage date through May 2019 at a rate equal to the prime rate plus 2%, with a floor of 6.25% per annum, and (ii) principal and interest payments from May 2019 to July 2020 at a rate equal to the prime rate on May 2, 2019 plus 2%, with a floor of 6.25% per annum. In July 2020, at which time the Initial Mortgage had a remaining principal balance of approximately $4.8 million, the parties consummated an amended and restated mortgage agreement, secured by the Company’s properties in New Bedford and Middleboro in the amount of $13.0 million bearing interest at a rate of 6.5% per annum that matures in August 2025 (the “Refinanced Mortgage”). Proceeds from the Refinanced Mortgage were used to pay down the Initial Mortgage and approximately $7.2 million of promissory notes as further described below. The outstanding principal balance of the Refinanced Mortgage approximated $12.9 million on September 30, 2020, of which approximately $330,000 was current. The outstanding principal balance of the Initial Mortgage approximated $4.8 million on December 31, 2019, of which approximately $94,000 was current.

The Company maintains another mortgage with Bank of New England for the 2016 purchase of a 45,070 square foot building in Wilmington, Delaware which was developed into a cannabis seed-to-sale facility and is currently leased to the Company’s cannabis-licensed client in that state. The mortgage matures in 2031 with monthly principal and interest payments at a rate of 5.25% per annum through September 2021, and thereafter the rate adjusting every five years to the then prime rate plus 1.5% with a floor of 5.25% per annum. At September 30, 2020 and December 31, 2019, the outstanding principal balance on this mortgage was approximately $1,603,000 and $1,682,000, respectively, of which approximately $112,000 and $105,000, respectively, was current.

In May 2016, the Company entered into a mortgage agreement with DuQuoin State Bank (“DSB”) for the purchase of two properties which the Company developed into two 3,400 square foot free-standing retail dispensaries in Illinois. On May 5^th of each year, this mortgage is due to be repaid unless it is renewed for another year at a rate determined by DSB’s executive committee. The mortgage was renewed in May 2020 at a rate of 6.75% per annum. At September 30, 2020 and December 31, 2019, the outstanding principal balance on this mortgage was approximately $822,000 and $829,000 respectively, of which approximately $31,000 and $24,000, respectively, was current.

In February 2020, the Company entered into a mortgage agreement with South Porte Bank for the purchase and development of a property in Mt. Vernon, IL. Pursuant to the mortgage agreement, the Company made interest-only monthly payments at a rate of 5.5% per annum through its initial maturity date in August 2020. At that time, the parties amended the mortgage agreement to extend the maturity date through November 2020, and requiring continuing monthly interest-only payments at 5.5% per annum.

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Notes Payable

In February 2020, pursuant to an exchange agreement as further described in Note 11 – Mezzanine Equity, the Company issued two promissory notes in the aggregate principal amount of approximately $4.4 million, bearing interest at 16.5% per annum and maturing in August 2021 (the “$4.4M Notes”), in exchange for a loan in the same amount. The Company has the right to extend the maturity date through February 2022 upon payment of an extension fee equal to 2.5% of the principal amount of the loan. As of September 30, 2020, no principal payments were made on the $4.4M Notes and accrued interest through such date of approximately $439,000 was paid.

In June 2019, the Company and MariMed Hemp, its wholly-owned subsidiary, issued a secured promissory note in the principal amount of $10.0 million (the “$10M Note”) to an unaffiliated party (the “Noteholder”). The proceeds from the $10M Note were used to finance a portion of the purchases of hemp seed inventory that was sold to GenCanna (the “Seed Transactions”) as further discussed in Note 17 – Related Party Transactions. The $10M Note provided for the repayment of principal plus a payment of $1.5 million (the “$1.5M Payment”) on the maturity date of January 31, 2020. Such payment was charged to interest expense over the life of the $10M Note.

As part of the $10M Note transaction, the Company issued three-year warrants to purchase 375,000 shares of common stock at an exercise price of $4.50 per share to the Noteholder. The fair value of these warrants on the issuance date of approximately $601,000 was recorded as a discount to the $10M Note. Approximately $523,000 of the warrant discount was amortized to interest expense in 2019, with the remainder in January 2020. Accordingly, the carrying value of the $10M Note approximated $9.9 million at December 31, 2019.

The Company entered into an amendment agreement with the Noteholder in February 2020, whereby the Company and MariMed Hemp issued an amended and restated promissory note maturing in June 2020 in the principal amount of $11,500,000 (the “$11.5M Note”), comprised of the principal amount of the $10M Note and the $1.5M Payment (which the Company had accrued). The $11.5M Note bore interest at a rate of 15% per annum, requiring periodic interest payments and minimum amortization payments of $3,000,000 in the aggregate, which the Company made.

The Company entered into a second amendment agreement with the Noteholder in June 2020, whereby (i) $352,000 of outstanding principal of the $11.5M Note was converted into 1,900,000 shares of the Company’s common stock (which did not result in an extinguishment loss as the conversion price was higher than the price of the Company’s common stock on the conversion date), and (ii) the Company and MariMed Hemp issued a second amended and restated promissory note in the principal amount of approximately $8.8 million (the “$8.8M Note”), comprised of the outstanding principal and unpaid interest balances of the $11.5M Note, plus an extension fee of approximately $330,000. In addition, the Company issued three-year warrants to the Noteholder to purchase 750,000 shares of common stock at an exercise price of $0.50 per share. The fair value of these warrants on the issuance date of approximately $66,000 was recorded as a discount to the $8.8M Note, to be amortized to interest expense over the life of the $8.8M Note.

The $8.8M Note bears interest at a rate of 15% per annum, matures in June 2022, and required a minimum amortization payment of $4,000,000 in July 2020, which the Company paid with a portion of proceeds of the Refinanced Mortgage. The Company can prepay all, or a portion, of the outstanding principal and unpaid interest of the $8.8M Note, however if any prepayment is made prior to December 25, 2021, the Company shall be required to pay a prepayment premium equal to 10% of the principal amount being prepaid. The Noteholder has the right to require the redemption of up to $250,000 of principal and unpaid interest thereon per calendar month. Such monthly redemptions shall be paid in common stock if certain defined conditions of the $8.8M Note and of the Company’s common stock are met, or else in cash. The Noteholder has the option to convert the $8.8M Note, in whole or in part, into shares of the Company’s common stock at a conversion price of $0.30, subject to certain conversion limitations.

The $8.8M Note is secured by a first priority security interest in the assets of certain of the Company’s subsidiaries and brands, and a pledge of the Company’s ownership interest in certain of its subsidiaries. The $8.8M Note imposes certain covenants on the borrowers, all of which were complied with as of September 30, 2020. On such date, the carrying value of the $8.8M note approximated $4.8 million.

In April 2019, MariMed Hemp issued a secured promissory note in the principal amount of $1,000,000 (the “$1M Note”) to an unaffiliated party. The proceeds of the $1M Note were used to finance a portion of the Seed Transactions as further discussed in Note 17 – Related Party Transactions. The $1M Note is secured by the collateral assignment of certain receivables from GenCanna and certain obligations of GenCanna to MariMed Hemp. The principal balance plus a payment of $180,000, initially due in December 2019, was extended to March 2020 in accordance with the terms of the $1M Note, requiring an additional payment of $30,000 (the “$30,000 Fee”). Prior to the extended due date, the parties agreed that the $1M Note would continue on a month-to-month basis bearing interest at a rate of 15% per annum. In September 2020, the Company paid down $500,000 of principal on the $1M Note. At September 30, 2020, the outstanding balance consisted of $500,000 of principal and approximately $403,000 of accrued interest which included the $30,000 Fee.

24

In March 2019, the Company raised $6.0 million through the issuance of a secured promissory note (the “$6M Note”) to an unaffiliated party (the “Holding Party”) bearing interest at a rate of 13% per annum and a service fee of $900,000 (the “Service Fee”). The proceeds of the note were used to finance a portion of the Seed Transactions as further discussed in Note 17 – Related Party Transactions. The $6M Note is secured by the collateral assignment of certain receivables from and obligations of GenCanna to MariMed Hemp. The $6M Note’s initial maturity date of December 31, 2019 was extended to April 30, 2020 in accordance with its terms, with the Company paying a $300,000 extension fee in December 2019 which was charged to interest expense.

The Company and the Holding Party entered into a note extension agreement in April 2020 (the “Initial Extension Agreement”) pursuant to which (i) the $6M Note’s due date was extended to September 2020, and the $6M Note was modified to include unpaid accrued interest of $845,000 through the modification date and interest at a rate of 10% per annum (the “$6.8M Note”), and (iii) a new convertible note in the amount of $900,000 (the “$900k Note”) was issued evidencing the Service Fee, bearing interest at a rate of 12% per annum. The Company satisfied the $900k Note and accrued interest of $20,100 in full as of the June 2020 maturity date by the payment in July 2020 of $460,050 in cash, representing one-half of the principal and accrued interest, and the issuance in June 2020 of 2,525,596 shares of the Company’s common stock, representing the other half of the principal and accrued interest.

In September 2018, the Company raised $3.0 million from the issuance of a secured promissory note to the Holding Party, bearing interest at a rate of 10% per annum (the “$3M Note”). The maturity date of the $3M Note, initially in March 2020, was extended for an additional six months in accordance with its terms, with the interest rate increasing to 12% per annum during the extension period. Pursuant to the Initial Extension Agreement, the maturity date of the $3M Note was extended to December 2020. The Company may elect to prepay the $3M Note in whole or part without premium or penalty provided the Holding Party is given proper notice and the Company is not in default of the note agreement.

In consideration of the Initial Extension Agreement, the Company (i) paid the Holding Party a fee of $50,000, (ii) extended the security interest in the Company’s properties in Maryland to secure each note held by the Holding Party, and (iii) granted the Holding Party certain security interests in equity interests held by the Company. Each of the notes held by the Holding Party provides for cross-default and imposes certain covenants on the Company, all of which were complied with as of September 30, 2020.

As part of the $3M Note transaction, the Company issued three-year warrants to the Holding Party’s designees to purchase 750,000 shares of the Company’s common stock at an exercise price of $1.80 per share. The Company recorded a discount on the $3M Note of approximately $1,511,000 from the allocation of note proceeds to the warrants based on the fair value of such warrants on the issuance date. Approximately $882,000 of the warrant discount was amortized to interest expense during 2018, and the remaining $629,000 was amortized during 2019.

In October 2020, the Company and the Holding Party entered into a second note extension agreement effective September 30, 2020 (the “Second Extension Agreement”), whereby the Company (i) paid, in October 2020, $1 million of principal and all outstanding accrued interest of approximately $333,000 on the $6.8M Note; (ii) issued an amended and restated senior secured promissory note in the principal amount of $5,845,000 (the “$5.8M Note”) to replace the $6.8M Note; and (iii) amended and restated the $3M Note (the “New $3M Note”, and together with the $5.8M Note, the “Amended Notes”). At September 30, 2020, the $1 million of principal and approximately $333,000 of accrued interest on the $6.8M Note, both of which were paid in October 2020, were reflected in the current portion of outstanding notes payable and in accrued interest, respectively.

The Amended Notes bear interest at a rate of 12% per annum and mature in September 2022. If all principal and accrued interest on either or both of the Amended Notes are not paid on or prior to their respective maturity dates, the Holding Party shall have the right, exercisable in its sole discretion at any time from September 2022 through March 2023, to convert all or a portion of the principal and interest owed into shares of the Company’s common stock at a conversion price equal to the average closing price for the 20 consecutive trading days prior to the date of conversion. The $5.8M Note requires mandatory principal payments of $400,000 in February 2021, and $500,000 per quarter during the period from May 2021 to August 2022 (such quarterly payments amounting to $3.0 million in the aggregate). The $5.8M Note can be prepaid in whole or in part at any time without penalty. The New $3M Note can be prepaid in whole or in part without penalty only after the $5.8M Note has been fully repaid.

In consideration of the Second Extension Agreement, the Company (i) issued four-year warrants to the Holding Party’s designees to purchase up to 5,000,000 shares of the Company’s common stock at an exercise price of $0.25 per share; (ii) paid the Holding Party a fee of $100,000; and (iii) extended the security interest in certain Company properties and the pledge of certain equity interests to secure the Amended Notes. The Company recorded a discount on the Amended Notes of approximately $573,000 based on the fair value of such warrants on the issuance date, of which approximately $1,000 was amortized as of the end of the quarter, and the remainder to be amortized over the life of the Amended Notes. Accordingly, the carrying value of the Amended Notes approximated $8.3 million at September 30, 2020, of which $1.4 million was current.

In addition to the above transactions, the Company raised $800,000 and $2,760,000 during the nine months ended September 30, 2020 and December 31, 2019, respectively, from the issuance of promissory notes to accredited investors bearing interest at rates ranging from 6.5% to 18% per annum, and maturing in 2020 and 2021 (the “Third Party Notes”). $2,800,000 of the Third Party Notes was repaid in 2020, and accordingly, $760,000 remained outstanding at September 30, 2020 with related accrued interest of approximately $48,000.

Debt Maturities

As of September 30, 2020, the aggregate scheduled maturities of the Company’s total debt outstanding, inclusive of the promissory notes and mortgages described within this Note 9 – Debt, and the convertible debentures described in the following Note 10 – Debentures Payable, were:

2020	$	2,808,883
2021		11,024,306
2022		12,268,122
2023		544,571
2024		577,281
Thereafter		13,110,191
Total		40,333,354
Less discounts		(994,591	)
	$	39,338,763

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NOTE 10 – DEBENTURES PAYABLE

In a series of transactions from the period October 2018 through February 2020, the Company sold an aggregate of $21.0 million of convertible debentures (the “$21M Debentures”) to an accredited investor pursuant to an amended securities purchase agreement (the “SPA”). The following table summarizes the purchase dates and selected terms of each debenture transaction that comprises the $21M Debentures:

Issue Date	Maturity Date	Initial Principal		Interest Rate		Issue Discount		Warrant Discount		Ben. Conv. Feature		Converted To Common Stk.		Outstanding Principal
10/17/18	10/16/20	$	5,000,000	6.0	%	1.0	%	$	457,966	$	1,554,389	$	5,000,000	$	-
11/07/18	11/06/20		5,000,000	6.0	%	1.0	%		599,867		4,015,515		5,000,000		-
05/08/19	05/07/21		5,000,000	6.0	%	1.0	%		783,701		2,537,235		3,250,000		1,750,000
06/28/19	06/27/21		2,500,000	0.0	%	7.0	%		145,022		847,745		1,050,000		1,450,000
08/20/19	08/19/21		2,500,000	0.0	%	7.0	%		219,333		850,489		2,500,000		-
02/21/20	02/20/21		1,000,000	6.5	%	6.5	%		28,021		379,183		-		1,000,000

The holder of the $21M Debentures (the “Holder”) has the right at any time to convert all or a portion of the $21M Debentures, along with accrued and unpaid interest, into the Company’s common stock at conversion prices equal to 80% of a calculated average, as determined in accordance with the terms of the $21M Debentures, of the daily volume-weighted price during the ten consecutive trading days preceding the date of conversion, subject to a cap in certain conversions. Notwithstanding this conversion right, the Holder shall limit conversions in any given month to certain agreed-upon amounts based on the conversion price, and the Holder shall also be limited from beneficially owning more than 4.99% of the Company’s outstanding common stock (potentially further limiting the Holder’s conversion right).

The Company has the right to redeem all or a portion of the $21M Debentures, along with accrued and unpaid interest, at a 10% premium, provided that the Company first delivers advance written notice to the Holder of its intention to make a redemption, with the Holder allowed to effect certain conversions of the $21M Debentures during such notice period.

Upon a change in control transaction, as defined, the Holder may require the Company to redeem all or a portion of the $21M Debentures at a price equal to 110% of the outstanding principal amount of the $21M Debentures, plus all accrued and unpaid interest thereon. So long as the $21M Debentures are outstanding, in the event the Company enters into a Variable Rate Transaction (“VRT”), as defined in the SPA, the Holder may cause the Company to revise the terms of the $21M Debentures to match the terms of the convertible security issued in such VRT.

In conjunction with the issuance of the $21M Debentures, the Company issued the Holder three-year warrants to purchase an aggregate of 1,354,675 shares of the Company’s common stock at exercise prices ranging from $0.75 to $5.50 per share, of which warrants to purchase 180,000 shares of common stock at an exercise price of $0.75 were issued in the nine months ended September 30, 2020. The fair value of the warrants of approximately $2.2 million was recorded as a discount to the carrying amount of the $21M Debentures and are amortized to interest expense over the respective term of the individual debentures comprising the $21M Debentures.

Based on the conversion prices of the $21M Debentures in relation to the market value of the Company’s common stock, the $21M Debentures provided the Holder with a beneficial conversion feature, as the embedded conversion option was in-the-money on the commitment date. The aggregate intrinsic value of the beneficial conversion feature of approximately $10.2 million was recorded as a discount to the carrying amount of the $21M Debentures, with an offset to additional paid-in-capital. The beneficial conversion feature is amortized to interest expense over the respective term of the individual debentures comprising the $21M Debentures.

Pursuant to the terms of a registration rights agreement with the Holder, entered into concurrently with the SPA, the Company agreed to provide the Holder with certain registration rights with respect to any potential shares issued pursuant to the terms of the SPA and the $21M Debentures. An addendum to the SPA stipulates that the Holder has agreed not to undertake a conversion of all or a portion of the $21M Debentures that would require the Company to issue more shares than the amount of available authorized shares at the time of conversion, which amount of authorized shares shall not be less than the current authorized number of 500 million shares of common stock, thereby eliminating the requirement to bifurcate and account for the conversion feature of the $21M Debentures as a derivative.

The Holder converted, in several transactions from November 2018 through September 2020, an aggregate of $16.8 million of principal and approximately $768,000 of accrued interest into 64,470,063 shares of common stock at conversion prices ranging from $0.11 to $3.06 per share. Of these conversions, an aggregate of $6.8 million of principal and approximately $356,000 of accrued interest was converted into 54,143,232 shares of common stock at exercise prices of $0.11 and $0.34 per share during the nine months ended September 30, 2020.

All of the aforementioned conversions were performed in accordance with the terms of their respective convertible debenture agreements, and therefore the Company was not required to record a gain or loss on such conversions.

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During the nine months ended September 30, 2020 and 2019, amortization of the beneficial conversion features, after adjustment for the aforementioned conversions, approximated $2,553,000 and $4,646,000, respectively; amortization of the warrant discounts approximated $545,000 and $913,000 respectively; and the amortization of original issue discounts approximated $267,000 and $107,000, respectively. Additionally, accrued interest expense for such periods approximated $234,000 and $421,000, respectively.

At September 30, 2020, the aggregate outstanding principal balance of the $21M Debentures was $4,200,000. Also on such date, the unamortized balances of the beneficial conversion features, the warrant discounts, and original issue discounts were approximately $867,000, $300,000, and $105,000, respectively. Accordingly, at September 30, 2020, the carrying value of the $21M Debentures was approximately $2,928,000, all of which was current.

At December 31, 2019, the aggregate outstanding principal balance on the $21M Debentures was $10,000,000. Also on such date, the unamortized balances of the beneficial conversion features, the warrant discounts, and original issue discounts were approximately $3,041,000, $817,000, and $307,000, respectively. Accordingly, at December 31, 2019, the carrying value of the $21M Debentures was approximately $5,835,000, all of which was long term.

NOTE 11 – MEZZANINE EQUITY

Preferred Stock

In February 2020, the Company entered into an exchange agreement with two institutional shareholders (the “TIS Exchange Agreement”) whereby the Company (i) exchanged 4,908,333 shares of the Company’s common stock previously acquired by the two institutional shareholders for an equal number of shares of newly designated Series B convertible preferred stock, and (ii) issued the $4.4M Notes previously discussed in Note 9 – Debt.

In connection with the TIS Exchange Agreement, the Company filed (i) a certificate of designation with respect to the rights and preferences of the Series B convertible preferred stock, and (ii) a certificate of elimination to return all shares of the Series A convertible preferred stock, of which no shares were issued or outstanding at the time of filing, to the status of authorized and unissued shares of undesignated preferred stock.

The holders of Series B convertible preferred stock (the “Series B Holders”) are entitled to cast the number of votes equal to the number of shares of common stock into which the shares of Series B convertible preferred stock are convertible, together with the holders of common stock as a single class, on most matters. However, the affirmative vote or consent of the Series B Holders voting separately as a class is required for certain acts taken by the Company, including the amendment or repeal of certain charter provisions, liquidation or winding up of the Company, creation of stock senior to the Series B convertible preferred stock, and/or other acts defined in the certificate of designation.

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The Series B convertible preferred stock shall, with respect to dividend rights and rights on liquidation, winding up and dissolution, rank senior to the Company’s common stock. The Company shall not declare, pay, or set aside any dividends on shares of any other class or series of capital stock of the Company unless the Series B Holders then outstanding shall first receive, or simultaneously receive, a dividend on each outstanding share of Series B convertible preferred stock in an amount calculated pursuant to the certificate of designation.

In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, the Series B Holders then outstanding shall be entitled to be paid out of the assets of the Company available for distribution to its stockholders before any payment shall be made to the holders of common stock by reason of their ownership thereof, an amount per share equal to $3.00, plus any dividends declared but unpaid thereon, with any remaining assets distributed pro-rata among the holders of the shares of Series B convertible preferred stock and common stock, based on the number of shares held by each such holder, treating for this purpose all such securities as if they had been converted to common stock.

At any time on or prior to the six-year anniversary of the issuance date of the Series B convertible preferred stock, (i) the Series B Holders have the option to convert their shares of Series B convertible preferred stock into common stock at a conversion price of $3.00 per share, without the payment of additional consideration, and (ii) the Company has the option to convert all, but not less than all, shares of Series B convertible preferred stock into common stock at a conversion price of $3.00 if the daily volume weighted average price of common stock (the “VWAP”) exceeds $4.00 per share for at least twenty consecutive trading days prior to the date on which the Company gives notice of such conversion to the Series B Holders.

On the day following the six-year anniversary of the issuance of the Series B convertible preferred stock, all outstanding shares of Series B convertible preferred stock shall automatically convert into common stock as follows:

If the sixty-day VWAP is less than or equal to $0.50 per share, the Company shall have the option to (i) convert all shares of Series B convertible preferred stock into common stock at a conversion price of $1.00 per share, and pay cash to the Series B Holders equal to the difference between the 60-day VWAP and $3.00 per share, or (ii) pay cash to the Series B Holders equal to $3.00 per share.

If the sixty-day VWAP is greater than $0.50 per share, the Company shall have the option to (i) convert all shares of Series B convertible preferred stock into common stock at a conversion price per share equal to the quotient of $3.00 per share divided by the sixty-day VWAP, or (ii) pay cash to the Series B Holders equal to $3.00 per share, or (iii) convert all shares of Series B convertible preferred stock into common stock at a conversion price per share equal to the sixty-day VWAP per share and pay cash to the Series B Holders at the difference between $3.00 per share and the sixty-day VWAP per share.

The Company shall at all times when the Series B convertible preferred stock is outstanding, reserve and keep available out of its authorized but unissued capital stock, for the purpose of effecting the conversion of the Series B convertible preferred stock, such number of its duly authorized shares of common stock as shall from time to time be sufficient to effect the conversion of all outstanding Series B convertible preferred stock.

NOTE 12 – STOCKHOLDERS’ EQUITY

Common Stock

In February 2020, pursuant to the TIS Exchange Agreement, the 4,908,333 shares of common stock exchanged for shares of Series B convertible preferred stock were treated as an increase to treasury stock of $14,725,000 ($3.00 per share), and then immediately cancelled, thereby reducing treasury stock to zero, with corresponding reductions to common stock of approximately $5,000 (the par value of the exchanged common shares) and additional paid-in capital of approximately $14,720,000.

During the nine months ended September 30, 2020, the Company issued 4,400,000 shares of common stock to settle approximately $699,000 of obligations. Based on the price of the Company’s common stock on the settlement date, the Company incurred a loss of approximately $45,000 which is reflected under Loss On Obligations Settled With Equity on the statement of operations. No such settlements occurred during the nine months ended September 30, 2019.

During the nine months ended September 30, 2020, the Company granted 97,797 shares of common stock to a current employee. The fair value of the shares of approximately $16,000 was charged to employee compensation during the period. At September 30, 2020, 33,319 of these shares were yet to be issued. During the nine months ended September 30, 2019, the Company granted 108,820 shares of common stock to current employees. The fair value of the shares of approximately $194,000 was charged to employee compensation during the period.

During the nine months ended September 30, 2020, 40,000 shares of common stock granted to an employee in 2019 were forfeited. The Company recorded these returned shares at par value. No common stock forfeitures occurred in 2019.

During the nine months ended September 30, 2020 and 2019, the Company issued 3,236,857 and 97,136 shares of common stock, respectively, associated with previously issued subscriptions on common stock with a value of approximately $1,168,000 and $169,000, respectively.

During the nine months ended September 30, 2019, the Company sold 799,995 shares of common stock at a price of $3.25 per share, resulting in total proceeds of $2,600,000. No common stock was sold during the nine months ended September 30, 2020.

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As previously disclosed in Note 3 – Acquisitions, the Company issued in 2019 (i) 1,000,000 shares of common stock in connection with the acquisition of the KPGs and Mari-IL, (ii) 1,000,000 shares of common stock as a good faith deposit on the Harvest acquisition, and (iii) 520,000 shares of common stock in connection with the acquisition of MediTaurus.

As previously disclosed in Note 4 – Investments, the Company issued 500,000 shares of common stock in 2019 to purchase a minority interest in Terrace, and 378,259 shares of common stock in 2018 to purchase a minority interest in MRSVP.

As previously disclosed in Note 9 – Debt, the Company issued 4,425,596 shares of common stock during the nine months ended September 30, 2020 to retire approximately $812,000 of promissory notes (principal and accrued interest).

As previously disclosed in Note 10 – Debentures Payable, during the nine months ended September 30, 2020, the holder of the $21M Debentures converted approximately $7.2 million of principal and interest into 54,143,232 shares of common stock. During the nine months ended September 30, 2019, the holder of the $21M debentures converted approximately $7.9 million of principal and interest into 6,798,339 shares of common stock.

As further disclosed in Note 13 – Stock Options, during the nine months ended September 30, 2019, 417,352 shares of common stock were issued in connection with the exercise of stock options. No stock options were exercised during the nine months ended September 30, 2020.

As further disclosed in Note 14 – Warrants, during the nine months ended September 30, 2019, warrants to purchase 686,104 shares of common stock were exercised. No warrants were exercised during the nine months ended September 30, 2020.

Common Stock Issuance Obligations

At September 30, 2020, the Company was obligated to issue 33,319 shares of common stock, valued at approximately $5,000, in connection with a stock grant to a current employee. Such shares were subsequently issued in October 2020. At September 30, 2019, the Company was obligated to issue 6,603,532 shares of common stock, valued at approximately $5.0 million, in connection with the MediTaurus acquisition, stock option exercises, and debenture conversions. Such shares were subsequently issued in the fourth quarter of 2019.

Amended and Restated 2018 Stock Award and Incentive Plan

In August 2019, the Company’s board of directors approved the Amended and Restated 2018 Stock Award and Incentive Plan (the “Incentive Plan”), based on the board’s belief that awards authorized under the Incentive Plan provide incentives for the achievement of important performance objectives and promote the long-term success of the Company. In September 2019, the Incentive Plan was approved by the stockholders at the Company’s annual stock-holders meeting.

The Incentive Plan is an omnibus plan, authorizing a variety of equity award types as well as cash and long-term incentive awards. The Incentive Plan amends and restates the Company’s 2018 Stock Award and Incentive Plan (the “Previous Plan”), which was approved by the board of directors in July 2018 but never presented to stockholders for approval. Any grants made under the Previous Plan prior to the approval date of the Incentive Plan shall continue to be governed by the terms of the Previous Plan.

The Incentive Plan authorizes a broad range of awards, including stock options, stock appreciation rights, restricted stock, deferred stock, dividend equivalents, performance shares, cash-based performance awards, and other stock-based awards. Such awards can be granted to employees, non-employee directors and other persons who provide substantial services to the Company and its affiliates. Nothing in the Incentive Plan precludes the payment of other compensation to officers and employees, including bonuses based upon performance, outside of the Incentive Plan.

An aggregate of 40,000,000 shares are reserved for delivery to participants and may be used for any type of award under the Incentive Plan. Shares actually delivered in connection with an award will be counted against such number of reserved shares. Shares will remain available for new awards if an award under the Incentive Plan expires, is forfeited, canceled, or otherwise terminated without delivery of shares or is settled in cash. Each award under the Incentive Plan is subject to the Company’s claw back policy in effect at the time of grant of the award.

The board of directors may amend, suspend, discontinue, or terminate the Incentive Plan or the authority to grant awards thereunder without stockholder approval, except as required by law or regulation or under rules of the stock exchange, if any, on which the Company’s stock may then be listed. Unless earlier terminated, grants under the Incentive Plan will terminate ten years after stockholder approval of the Incentive Plan, and the Incentive Plan will terminate when no shares remain available and the Company has no further obligation with respect to any outstanding award.

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NOTE 13 – STOCK OPTIONS

During the nine months ended September 30, 2020, the Company granted five-year options to purchase up to 1,064,500 shares of common stock at exercise prices of $0.15 and $0.30 per share. During the same period in 2019, the Company granted options to purchase up to 900,000 shares of common stock, expiring four and five years from their grant dates, at exercise prices ranging from $0.99 to $1.95 per share.

The fair values of the aforementioned options granted in 2020 and 2019 of approximately $117,000 and $876,000, respectively, are being amortized to compensation expense over their vesting periods, of which approximately $100,000 and $101,000 was amortized during the nine months ended September 30, 2020 and 2019, respectively.

During the nine months ended September 30, 2019, options to purchase 3,585,000 shares of common stock were exercised at prices ranging from $0.08 to $0.77 per share. Of these exercised options, 2,285,000 were exercised on a cashless basis with the exercise prices paid via the surrender of 523,192 shares of common stock. No options were exercised during the nine months ended September 30, 2020.

During the nine months ended September 30, 2020 and 2019, options to purchase 210,000 and 80,000 shares of common stock, respectively, were forfeited, resulting in an aggregate reduction of amortized compensation expense of approximately $208,000 and $170,000, respectively.

Stock options outstanding and exercisable as of September 30, 2020 were:

Exercise Price		Shares Under Option				Remaining
per Share		Outstanding		Exercisable		Life in Years
$	0.130		200,000		200,000		0.01
$	0.140		550,000		550,000		0.25
$	0.149		500,000		500,000		5.25
$	0.300		554,500		-		4.50
$	0.330		50,000		50,000		0.44
$	0.417		900,000		400,000		4.24
$	0.450		125,000		125,000		1.01
$	0.590		15,000		15,000		4.19
$	0.630		300,000		300,000		1.25
$	0.770		200,000		200,000		2.25
$	0.900		50,000		50,000		2.62
$	0.910		50,000		50,000		2.06
$	0.950		50,000		30,000		2.25
$	0.992		300,000		300,000		3.99
$	1.000		125,000		75,000		4.09
$	1.350		100,000		50,000		2.83
$	1.950		375,000		250,000		2.75
$	2.320		100,000		100,000		2.95
$	2.450		2,000,000		2,000,000		2.23
$	2.500		100,000		100,000		2.91
$	2.650		200,000		200,000		2.98
$	2.850		56,250		43,750		2.20
$	2.850		100,000		75,000		3.20
$	3.000		25,000		25,000		3.21
$	3.725		100,000		100,000		3.19
			7,125,750		5,788,750

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NOTE 14 – WARRANTS

During the nine months ended September 30, 2020, in conjunction with the $21M Debentures previously disclosed in Note 10 – Debentures Payable, the Company issued three-year warrants to purchase up to 180,000 shares of common stock at an exercise price of $0.75 per share. The fair value of these warrants on the issuance date approximated $28,000, with approximately $17,000 of this amount amortized to interest expense during the period and the remainder to be amortized over the term of the respective debentures.

Also during this period, as previously disclosed in Note 9 – Debt, (i) as part of the $8.8M Note transaction, the Company issued three-year warrants to purchase up to 750,000 shares of common stock at an exercise price of $0.50 per share, and (ii) in consideration of the Second Extension Agreement, the Company issued four-year warrants to purchase up to 5,000,000 shares of the Company’s common stock at an exercise price of $0.25 per share. The fair value of these warrants on their issuance dates approximated $639,000, with approximately $10,000 of this amount amortized to interest expense during the period and the remainder to be amortized by the maturity dates of the respective promissory notes.

During the nine months ended September 30, 2019, in conjunction with the $21M Debentures previously disclosed in Note 10 – Debentures Payable, the Company issued three-year warrants to purchase 850,000 shares of common stock at exercise prices of $3.00 and $5.00 per share. The fair value of these warrants at issuance approximated $1,148,000, with approximately $517,000 of this amount amortized to interest expense during the period and the remainder to be amortized over the remaining term of the respective debentures.

Also during this period, as part of the $10M Note transaction previously disclosed in Note 9 – Debt, the Company issued three-year warrants to purchase 375,000 shares of common stock at an exercise price of $4.50 per share. The fair value of these warrants at issuance approximated $601,000, with approximately $294,000 of this amount amortized to interest expense during the period and the remainder amortized by the maturity date of the $10M Note.

The Company also issued stand-alone warrants to purchase up to 25,000 and 125,000 shares of common stock during the nine months ended September 30, 2020 and 2019, respectively. The fair value of these warrants at issuance approximated $2,000 in 2020 and $139,000 in 2019, and were charged to compensation expense during the periods.

During the nine months ended September 30, 2019, warrants to purchase up to 686,104 shares of common stock were exercised at exercise prices ranging from $0.12 to $1.75 per share, resulting in aggregate proceeds to the Company of approximately $612,000. No warrants were exercised during the nine months ended September 30, 2020.

At September 30, 2020 and 2019, warrants to purchase up to 17,735,107 and 11,270,107 shares of common stock, respectively, were outstanding with exercise prices ranging from $0.15 to $5.50 per share in both periods.

NOTE 15 – REVENUES

The Company’s revenues were comprised of the following major categories:

	Nine Months Ended September 30,
	2020		2019
Product sales		21,992,298		60,839
Product sales from related party		-		29,029,249
Real estate	$	5,065,538	$	5,250,084
Management		1,081,562		1,963,205
Supply procurement		1,218,334		2,830,555
Licensing		1,179,113		1,230,366
Other		984		47,893
Total revenues	$	30,537,829	$	40,412,191

The amount under Product Sales From Related Party shown in the table above represents the total revenues from the seed transactions with GenCanna, which is further disclosed in Note 17 – Related Party Transactions. Excluding these revenues, for the nine months ended September 30, 2020 and 2019, revenue from two clients represented 24% and 82%, respectively, of total revenues.

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NOTE 16 – BAD DEBTS

At September 30, 2020 and 2019, the Company maintained reserves against bad debts of approximately $44.3 million and $250,000, respectively.

The September 30, 2020 reserves were primarily comprised of (i) an allowance against the accounts receivable balance due from GenCanna of approximately $29.0 million, following the commencement of GenCanna’s Chapter 11 proceedings as previously discussed in Note 4 – Investments, (ii) an allowance against the accounts receivable balance of approximately $11.1 million, and reserve against the working capital balance of approximately $1.5 million, due from Kind, in light of the current litigation between the Company and Kind as further discussed in Note 18 – Commitments and Contingencies, and (iii) an allowance against the accounts receivable balance of approximately $314,000, and a reserve against the working capital balance of approximately $2.3 million due from Harvest, based on the Company’s expectation of the negative impact of the COVID-19 pandemic on Harvest’s local economy.

NOTE 17 – RELATED PARTY TRANSACTIONS

During 2019, the Company, through its MariMed Hemp subsidiary, entered into several hemp seed sale transactions with GenCanna whereby the Company acquired large quantities of top-grade feminized hemp seeds with proven genetics at volume discounts that it sold to GenCanna at market rates. The seeds met the U.S. government’s definition of federally legal industrial hemp, which was descheduled as a controlled substance and classified as an agricultural commodity upon the signing of the 2018 U.S. Farm Bill.

The Company purchased $20.75 million of hemp seed inventory which it sold and delivered to GenCanna for $33.2 million. The Company provided GenCanna with extended payment terms through December 2019, to coincide with the completion of the seeds’ harvest, although the payment by GenCanna was not contingent upon the success of such harvest or its yield. To partially fund the seed purchases, the Company raised $17.0 million in debt financings which is reflected in Notes Payable on the balance sheet and previously discussed in Note 9 – Debt.

By the end of 2019, GenCanna had not paid the amount it owed the Company for its seed purchases due to several challenges it faced late in the year, including defaults under its senior credit facility, a fire at its main processing and lab facility, the domestic decline of CBD selling prices, and the contraction of the cannabis capital markets. In February 2020, as previously discussed in Note 4 – Investments, under pressure from certain of its creditors, the GenCanna Debtors agreed to convert a previously-filed involuntary bankruptcy proceeding into a voluntary Chapter 11 proceeding, and filed voluntary petitions under Chapter 11 in the Bankruptcy Court.

As required by the relevant accounting guidance, the Company initially recorded the $33.2 million due from GenCanna as a related party receivable, with approximately $29.0 million recognized as related party revenue, and approximately $4.2 million classified as unearned revenue (such amount representing the Company’s 33.5% ownership portion of the profit on these transactions, which was to have been recognized as revenue upon payment by GenCanna). As a result of GenCanna’s Chapter 11 proceedings, the Company fully reserved the receivable balance of approximately $29.0 million and wrote off the entire unearned revenue balance of approximately $4.2 million.

In 2019, the Company granted five-year options to purchase up to 100,000 shares of common stock to each of the Company’s three independent board members at an exercise price of $0.99 per share. The aggregate fair value of these options of approximately $191,000 was fully amortized at March 31, 2020. No options were granted to related parties during the nine months ended September 30, 2020.

In 2019, options to purchase 200,000 and 132,499 shares of common stock were exercised by the Company’s CEO and an independent board member, respectively, at weighted average exercise prices of $0.11 and $0.08 per share, respectively. The independent board member’s options were exercised on a cashless basis with the exercise prices paid via the surrender of 3,108 shares of common stock. No options were exercised by related parties during the nine months ended September 30, 2020.

In 2019, options to purchase 117,501 shares of common stock were forfeited by board members. No options were forfeited by related parties during the nine months ended September 30, 2020.

The Company’s current corporate offices are leased from a company owned by a related party under a 10-year lease that commenced August 2018 and contains a five-year extension option. During the nine months ended September 30, 2020 and 2019, expenses incurred under this lease approximated $117,000 in both periods.

The balance of Due To Related Parties at September 30, 2020 and December 31, 2019 of approximately $1,233,000 and $1,455,000, respectively, were comprised of amounts owed of approximately (i) $515,000 and $420,000, respectively, to the Company’s CEO and CFO, (ii) $673,000 and $990,000, respectively, to companies partially owned by these officers, and (iii) $45,000 in both periods to a stockholder of the Company. Such amounts owed are not subject to repayment schedules.

Both of the Company’s mortgages with Bank of New England discussed in Note 9 – Debt, as well as the mortgage with Commonwealth Real Estate Ventures LLC disclosed in Note 19 – Subsequent Events, are personally guaranteed by the Company’s CEO and CFO.

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NOTE 18 – COMMITMENTS AND CONTINGENCIES

Lease Commitments

The Company is the lessee under five operating leases and four finance leases. These leases contain rent holidays and customary escalations of lease payments for the type of facilities being leased. The Company recognizes rent expense on a straight-line basis over the expected lease term, including cancelable option periods which the Company fully expects to exercise. Certain leases require the payment of property taxes, insurance, and/or maintenance costs in addition to the rent payments.

The details of the Company’s operating lease agreements are as follows:

● Delaware – 4,000 square feet of retail space in a multi-use building under a five-year lease that commenced in October 2016 and contains a five-year option to extend the term. The Company developed the space into a cannabis dispensary which is subleased to its cannabis-licensed client.

● Delaware – a 100,000 square foot warehouse leased in March 2019 that the Company is developing into a cultivation and processing facility to be subleased to the same Delaware client. The lease term is 10 years, with an option to extend the term for three additional five-year periods.

● Nevada – 10,000 square feet of an industrial building that the Company has built-out into a cannabis cultivation facility and plans to rent to its cannabis-licensed client under a sub-lease which will be coterminous with this lease expiring in 2024.

● Massachusetts – 10,000 square feet of office space which the Company utilizes as its corporate offices under a 10-year lease with a related party expiring in 2028, with an option to extend the term for an additional five-year period.

● Maryland – a 2,700 square foot 2-unit apartment under a lease that expires in July 2022 with an option to renew for a two-year term.

The Company leases machinery and office equipment under finance leases that expire in February 2022 through June 2024 with such terms being a major part of the economic useful life of the leased property.

The components of lease expense for the nine months ended September 30, 2020 were as follows:

Operating lease cost	$	737,993
Finance lease cost:
Amortization of right-of-use assets	$	24,512
Interest on lease liabilities		5,834
Total finance lease cost	$	30,346

The weighted average remaining lease term for operating leases is 8.7 years, and for the finance lease is 3.0 years. The weighted average discount rate used to determine the right-of-use assets and lease liabilities was 7.5% for all leases.

Future minimum lease payments as of September 30, 2020 under all non-cancelable leases having an initial or remaining term of more than one year were:

	Operating Leases			Finance Lease
2020	$	246,937		$	9,603
2021		1,008,227			38,412
2022		949,535			27,123
2023		910,166			23,201
2024		835,411			3,229
Thereafter		4,267,635			-
Total lease payments		8,217,911			101,568
Less: imputed interest		(2,248,157	)		(10,718	)
	$	5,969,754		$	90,850

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Terminated Employment Agreement

An employment agreement which commenced in 2012 with Thomas Kidrin, the former CEO of the Company, that provided Mr. Kidrin with salary, car allowances, stock options, life insurance, and other employee benefits, was terminated by the Company in 2017. At September 30, 2020 and December 31, 2019, the Company maintained an accrual of approximately $1,043,000 for any amounts that may be owed under this agreement, although the Company contends that such agreement is not valid and that no amount is due.

In July 2019, Mr. Kidrin, also a former director of the Company, filed a complaint in the Massachusetts Superior Court, that alleges the Company failed to pay all wages owed to him and breached the employment agreement, and requests multiple damages, attorney fees, costs, and interest. The Company has moved to dismiss certain counts of the complaint and has asserted counterclaims against Mr. Kidrin alleging breach of contract, breach of fiduciary duty, money had and received, and unjust enrichment. The Company believes that the allegations in the complaint are without merit and intends to vigorously defend this matter and prosecute its counterclaims.

Maryland Acquisition

As previously disclosed in Note 3 – Acquisitions, the sellers of Kind have attempted to renegotiate the terms of the MOU, alleging that the MOU is not an enforceable agreement, despite the MOU containing all the definitive material terms with respect to the acquisition transaction and confirming the management and lease agreements. The Company engaged with the sellers in a good faith attempt to reach updated terms acceptable to both parties, but the non-reciprocation of the sellers resulted in an impasse and both parties commencing legal proceedings.

On November 13, 2019, Kind Therapeutics USA Inc. (“Kind”) commenced an action in the Circuit Court for Washington County, MD captioned Kind Therapeutics USA, Inc. vs. MariMed, Inc., et al. (Case No. C-21-CV-19-000670) asserting claims against the Company, including breach of contract, breach of fiduciary duty, accounting, and unjust enrichment, and seeking declaratory judgment and damages in excess of $75,000. On November 15, 2019, the Company filed counterclaims against Kind and a third-party complaint against the Members of Kind (Jennifer DiPietro, Susan Zimmerman, and Sophia Leonard-Burns) and William Tham (the “Counterclaim”). The Counterclaim alleged breach of contract with respect to each of the MOU and the Management Agreement (the “MSA”), unjust enrichment, promissory estoppel/detrimental reliance, and fraud in the inducement, and seeking a declaratory judgement that the MOU is an enforceable contract, specific performance of such contact, and the establishment of a constructive trust for the Company’s benefit. The Counterclaim also seeks damages.

Both parties, MariMed (including MariMed Holdings MD, LLC and MariMed Advisors Inc.) and Kind, brought motions for a temporary restraining order and a preliminary injunction. By Opinion and Order entered on November 21, 2019, the Court denied both parties motions for a temporary restraining order. In its opinion, the Court specifically noted that, contrary to Kind’s allegations, the MSA and the 20-year lease agreement for Kind’s utilization of the Company’s cultivation and production facility (the “Lease”) “appear to be independent, valid and enforceable contracts.”

On or about April 3, 2020, the Company filed its First Amended Counterclaim and Third Party Complaint in which additional claims were added and clarified, including breach of Lease and breach of the Licensing and Manufacturing Agreement (the “LMA”) against Kind, along with other alternative claims and seeking damages. On August 11, 2020, the Company filed its Second Amended Counterclaim and Third Party Complaint in which additional clarifications were made and claims added for breach of fiduciary duty and breach of partnership. The Company believes that its claims for breach of contract with respect to the MOU, the MSA, the Lease, and the LMA, as well as all other claims are meritorious. Further, the Company believes that Kind’s claims against the Company are without merit. The Company intends to aggressively prosecute and defend the action. In light of this litigation, the Company has not recorded management fees charged to Kind of approximately $1.1 million for the nine months ended September 30, 2020. A hearing on the parties’ cross-motions for preliminary injunction was held on September 14 to 17, 2020 and November 2 and 4, 2020, and the Court’s ruling on the motions is pending. The trial is currently scheduled to start on June 7, 2021.

NOTE 19 – SUBSEQUENT EVENTS

Debentures Payable

In October 2020, the holder of the $21M Debentures converted an aggregate of approximately $1,259,000 of principal and accrued interest into 10,653,600 shares of common stock at conversion prices of $0.11 and $0.12 per share.

Notes Payable

In October 2020, as previously discussed in Note 9 – Debt, the Company and the Holding Party entered into the Second Extension Agreement whereby the Company (i) paid, in October 2020, $1 million of principal and all outstanding accrued interest of approximately $333,000 on the $6.8M Note, (ii) issued the $5.8M Note, which replaced the $6.8M Note, and the New $3M Note, both with maturity dates in September 2022.

Mortgage Agreement

In October 2020, the Company entered into a $1.3 million mortgage agreement with Commonwealth Real Estate Ventures LLC. The mortgage is secured by the Company’s properties in Illinois, and requires interest-only monthly payments at a rate of 15% per annum through its maturity date in October 2021. The mortgage contained an origination charge of 1% of the principal balance. Repayment of the mortgage is personally guaranteed by the Company’s CEO and CFO.

Common Stock Issuance Obligations

In October 2020, the Company issued 33,319 shares of common stock in connection with the stock grant to a current employee previously disclosed in Note 12 – Stockholders’ Equity.

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Item 2. Management’s Discussions and Analysis of Financial Condition and Results of Operations

Forward Looking Statements

When used in this form 10-Q and in future filings by the Company with the Commission, the words or phrases such as “anticipate,” “believe,” “could,” “should,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “will” or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Readers are cautioned not to place undue reliance on any such forward looking statements, each of which speak only as of the date made. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. The Company has no obligation to publicly release the result of any revisions which may be made to any forward-looking statements to reflect anticipated or unanticipated events or circumstances occurring after the date of such statements.

These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different. These factors include, but are not limited to, changes that may occur to general economic and business conditions; changes in current pricing levels that we can charge for our services or which we pay to our suppliers and business partners; changes in political, social and economic conditions in the jurisdictions in which we operate; changes to laws and regulations that pertain to our products and operations; and increased competition.

The following discussion should be read in conjunction with the unaudited financial statements and related notes which are included under Item 1 of this report.

We do not undertake to update our forward-looking statements or risk factors to reflect future events or circumstances.

Overview

General

MariMed Inc. (the “Company”) is a multi-state operator in the cannabis industry. The Company develops, operates, manages, and optimizes over 300,000 square feet of state-of-the-art, regulatory-compliant facilities for the cultivation, production and dispensing of medicinal and recreational cannabis. The Company also licenses its proprietary brands of cannabis and hemp-infused products, along with other top brands, in several domestic markets and overseas.

Upon its entry into the cannabis industry, the Company was an advisory firm that procured state-issued cannabis licenses on behalf of its clients, leased its cannabis facilities to these newly-licensed companies, and provided industry-leading expertise and oversight in all aspects of their cannabis operations. The Company also provided its clients with as ongoing regulatory, accounting, real estate, human resources, and administrative services.

In 2018, the Company commenced a strategic plan to transition from a consulting business to a direct owner of cannabis licenses and operator of seed-to-sale operations. The Company’s strategic plan consists of the acquisition of its cannabis-licensed clients located in five states—Delaware, Illinois, Maryland, Massachusetts, and Nevada—and the consolidation of these entities under the MariMed banner.

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A goal in completing this transition is to present a simpler, more transparent financial picture of the full breadth of the Company’s efforts, with a clearer representation of the revenues, earnings, and other financial metrics the Company has generated for its clients. The Company has played a key role in the successes of these entities, from the securing of their cannabis licenses, to the development of facilities that are models of excellence, to providing operational and corporate guidance. Accordingly, the Company believes it is well suited to own these facilities and manage the continuing growth of their operations.

To date, acquisitions of the licensed businesses in Massachusetts and Illinois have been state-approved and completed and establishes the Company as a fully integrated seed-to-sale multi-state operator, The acquisitions of the remaining entities located in Maryland, Nevada, and Delaware are at various stages of completion and subject to each state’s laws governing the ownership and transfer of cannabis licenses, which in the case of Delaware requires a modification of current cannabis ownership laws to permit for-profit ownership. Meanwhile, the Company continues to develop additional revenue and business in these states and plans to leverage its success to expand into other markets where cannabis is and becomes legal.

The Company has also created its own brands of cannabis flower, concentrates, and precision-dosed products utilizing proprietary strains and formulations. These products are developed by the Company in cooperation with state-licensed operators who meet the Company’s strict standards, including all natural—not artificial or synthetic—ingredients. The Company licenses its product formulations only to certified manufacturing professionals who adhere to the Company’s precise scientific formulations and trademarked product recipes.

The Company’s branded cannabis products are licensed under brand names including Kalm Fusion™, Nature’s Heritage™, and Betty’s Eddies™, and are distributed in the form of dissolvable strips, tablets, powders, microwaveable popcorn, fruit chews, and other varieties in development. The Company also has exclusive sublicensing rights in certain states to distribute the Binske® line of cannabis products crafted from premium artisan ingredients, the Healer™ line of medical full-spectrum tinctures, and the clinically tested medicinal cannabis strains developed in Israel by global medical cannabis research pioneer Tikun Olam™. The Company’s hemp division distributes hemp-derived CBD products, including its Florance™ brand, in the US and abroad. The Company intends to continue licensing and distributing its brands as well as other top brands in the Company’s current markets and in additional legal markets worldwide.

In March 2020, the World Health Organization declared the outbreak of COVID-19 a global pandemic. The spread of the virus in the United States and the measures implemented to contain it—including business shutdowns, indoor capacity restrictions, social distancing, and diminished travel—have negatively impacted the economy and have created significant volatility and disruption in financial markets. Consequently, the Company’s expansion efforts and implementation of its strategic plan have been delayed. Additionally, while the cannabis industry has been deemed an essential business, and is not expected to suffer severe declines in revenue, the Company’s business, operations, financial condition, and liquidity have been adversely affected, as further discussed in the notes accompanying the financial statements and within this Management’s Discussions and Analysis of Financial Condition and Results of Operations.

Continued disruption to the global economy may materially and adversely affect the future carrying values of certain of the Company’s assets, including inventories, accounts receivables, and intangibles, as well as negatively impact the Company’s ability to raise working capital to support its operations. The full extent to which COVID-19 and the measures to contain it will impact the Company’s business, operations financial condition, and liquidity will depend on the continued severity and duration of the COVID-19 outbreak and other future developments in response to the virus, all of which are highly uncertain at this time. As a result, the Company cannot predict the ultimate impact of COVID-19 on its operational and financial performance.

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Revenues

The Company’s revenues are currently comprised of the following primary categories:

● Product Sales – direct sales of cannabis and cannabis-infused products by the Company’s dispensary and wholesale operations in Massachusetts and Illinois, and direct sales of hemp and hemp-infused products by the Company’s hemp division. In 2019, this division participated in one-time sales of acquired hemp seed inventory, as further explained below in the section entitled Liquidity and Capital Resources. Future product sales are expected to include the Company’s planned cannabis-licensee acquisitions in Maryland, Nevada, and Delaware (upon this state’s amendment to permit for-profit ownership of cannabis entities).

● Real Estate – rental income and additional rental fees generated from leasing of the Company’s state-of-the-art, regulatory-compliant cannabis facilities to its cannabis-licensed clients.

● Management – fees for providing the Company’s cannabis clients with comprehensive oversight of their cannabis cultivation, production, and dispensary operations. Along with this oversight, the Company provides human resources, regulatory, marketing, and other corporate services.

● Supply Procurement – the Company maintains volume discounts with top national vendors of cultivation and production resources, supplies, and equipment, which the Company acquires and resells to its clients or third parties within the cannabis industry.

● Licensing – revenue from the sale of precision-dosed, cannabis-infused products—such as Kalm Fusion™, Nature’s Heritage™, and Betty’s Eddies™—to regulated dispensaries throughout the United States and Puerto Rico.

Expenses

The Company classifies its expenses into three broad categories:

● cost of revenues, which includes the direct costs associated with the generation of the Company’s revenues;

● operating expenses, which include the sub-categories of personnel, marketing and promotion, general and administrative, and bad debts; and

● non-operating income and expenses, which include the sub-categories of interest expense, interest income, equity in earnings of equity method investments, loss on obligations settled with equity, and changes in the fair value of non-consolidated investments.

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Liquidity and Capital Resources

At September 30, 2020, the Company had cash and cash equivalents of approximately $2.3 million and negative working capital of approximately $9.1 million, compared to cash and cash equivalents of approximately $739,000 and negative working capital of approximately $29.3 million at December 31, 2019.

The Company produced the following improvements to key liquidity metrics during the reported period:

● During the nine months ended September 30, 2020, the Company’s operating activities provided positive cash flow of approximately $1.6 million, compared to approximately $24.2 million of negative cash flow used by such activities during the same period of 2019, a positive swing of approximately $25.8 million.

● At September 30, 2020, the Company’s negative working capital was approximately $9.1 million, a continued improvement from approximately $21.5 million at June 30, 2020 and approximately $29.3 million at December 31, 2019.

● The Company successfully restructured the terms of its short term promissory notes payable to approximately $8.5 million at September 30, 2020 from approximately $17.2 million at June 30, 2020 and $23.1 million at December 31, 2019.

The large negative working capital balance at December 31, 2019 was primarily caused by GenCanna’s bankruptcy proceeding under Chapter 11 initiated in early 2020, the details of which are disclosed in the footnotes accompanying the Company financial statements included in this report. Prior to the commencement of these bankruptcy proceedings, during the period March 2019 to June 2019, the Company raised $17.0 million via the issuance of promissory notes to three unaffiliated third parties (the “Seed Funding Notes”). The proceeds from the Seed Funding Notes were used to fund the purchase of large quantities of top-grade hemp seeds at volume discounts which were then sold to GenCanna at market rates (the “Seed Transactions”). The Seed Funding Notes were committed to be repaid by the end of calendar 2019 utilizing a portion of the approximate $29.0 million of revenue to be generated from the Seed Transactions. Upon the commencement of the GenCanna bankruptcy proceedings, the Company recorded a bad debt reserve at December 31, 2019 against the entire $29.0 million receivable balance from GenCanna.

Also contributing to the large negative working capital balance at December 31, 2019 were the additional bad debt reserves recorded by the Company on such date of $11.2 million against the working capital and receivable balances due from Kind, in light of the pending litigation between the Company and Kind, and $2.2 million against the working capital and receivable balances due from Harvest, based on the impact of the COVID-19 pandemic on Harvest’s operations.

During 2020, the Company (i) successfully extended the maturity dates of all of the Seed Funding Notes, (i) converted $802,000 of accrued interest on the Seed Funding Notes into shares of the Company’s common stock, and (iii) paid down $4,450,000 of principal and accrued interest of the Seed Funding Notes with proceeds from newly-issued long-term debt and cash generated from operations. These actions, coupled with the continuing growth and profitability of the Company’s cannabis operations in Illinois and Maryland, and offset by the continued reserves on amounts due from GenCanna, Kind, and Harvest, resulted in a negative working capital balance of $9.1 million at September 30, 2020, an improvement from December 31, 2019 of approximately $20.2 million.

The approximate $1.5 million increase in cash and cash equivalents from December 31, 2019 to September 30, 2020 was primarily attributable to the proceeds from the Refinanced Mortgage, the $4.4M Notes, the Third Party Notes, and the $1M Note as discussed in Note 9 – Debt of the Company’s financial statements, coupled with the continuing growth in profitability of the Company’s cannabis operations in Illinois and Massachusetts as explained below, offset primarily by the buildup of inventory balances and the purchase of property and equipment.

With respect to the Company’s consolidation plan, the operations of the acquired entities in Illinois and Massachusetts have started to generate considerable liquidity and working capital for the Company. Since their acquisition in October 2019, the KPGs in Illinois have generated in excess of $4.6 million of pretax income for the Company, which continues to exceed forecasts, in part due to the legalization of adult-use cannabis in this state in January 2020. Additionally, the KPGs added a third dispensary in Mt. Vernon which commenced operations in September 2020. In Massachusetts, the cultivation and production facility acquired by the Company in December 2018 has ramped up its grow capabilities to full capacity. Additionally, the Company received final approval for adult-use cannabis production and sales from the Massachusetts Cannabis Control Commission, and commenced business in this state’s robust adult-use market in September 2020. 

In connection with the preparation of its financial statements for the nine months ended September 30, 2020, the Company’s management evaluated the Company’s ability to continue as a going concern in accordance with ASU 2014-15, Presentation of Financial Statements–Going Concern (Subtopic 205-40), which requires an assessment of relevant conditions or events, considered in the aggregate, that are known or reasonably knowable by management on the issuance dates of the financial statements which indicate the probable likelihood that the Company will be unable to meet its obligations as they become due within one year after the issuance date of the financial statements.

As part of its evaluation, management assessed known events, trends, commitments, and uncertainties, which at the time included the status of the Company’s consolidation plan, the continuing impact of the COVID-19 pandemic on its operations, developments concerning GenCanna’s bankruptcy proceedings, recent cannabis industry investment activity, price movements of public cannabis stock, actions and/or results of certain bellwether cannabis companies, the level of cannabis investor confidence, and changes to state laws governing recreational (adult-use) and medical cannabis.

Management also reviewed certain key liquidity metrics of the Company, as further described below, as well as other factors in its evaluation, and determined that there currently exists a substantial doubt that the Company will be able to continue as a going concern within one year after the issuance date of these financial statements without additional funding or the continued profitability growth of its cannabis operations in Illinois and Massachusetts.

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Operating Activities

Net cash provided by operating activities for the nine months ended September 30, 2020 approximated $1.6 million, compared to net cash used in operating activities of approximately $24.2 million for the same period in 2019. The year-over-year improvement was primarily attributable to (i) the increase in cannabis-derived profits in 2020 generated by the acquisition of the KPGs in Illinois and ARL in Massachusetts, (ii) the intentional slowing of payments of trade accounts payable and other liabilities in 2020, and (iii) the large purchase of hemp seeds in 2019 as part of the Seed Transactions, offset by higher cannabis inventory in 2020.

Investing Activities

Net cash used in investing activities for the nine months ended September 30, 2020 approximated $3.9 million, compared to approximately $9.3 million for the same period in 2019. The year-over-year decrease in the use of cash was due to the investments in Atalo, Healer, MHWC, and MediTaurus made in 2019. No similar investments were made in 2020. The year-over-year decrease is also due to reduced property and equipment purchases in 2020.

Financing Activities

Net cash provided by financing activities for the nine months ended September 30, 2020 approximated $3.8 million, compared to approximately $29.5 million for the same period in 2019. In 2020, the Company raised approximately $20.1 million from debt financings, offset by approximately $15.9 million of promissory note and mortgage repayments, compared to debt and equity financings in 2019 of $29.2 million in the aggregate with no repayments of debt.

The proceeds from the aforementioned financings were used to execute on the Company’s strategy to become a fully integrated multistate operator of seed-to-sale cannabis operations, to continue the development of its regulated facilities, to grow its hemp operations, to expand its branded licensing business, and for working capital purposes.

Results of Operations

Three months ended September 30, 2020 compared to three months ended September 30, 2019

Total revenues for the three months ended September 30, 2020 approximated $13.5 million compared to approximately $11.2 million for the same period in 2019, an increase of approximately $2.2 million or 19.9%. Excluding the Seed Transactions, core revenues for the three months ended September 30, 2020 grew to approximately $13.5 million from approximately $4.2 million for the same period in 2019, an increase of approximately $9.3 million or 219.8%. The year-over-year increase was due to aggregate cannabis sales during the quarter ended September 30, 2020 of approximately $10.8 million generated by the KPGs in Illinois, acquired by the Company in October 2019, and ARL in Massachusetts, acquired by the Company in late 2018 and whose selling operations commenced in December 2019. The cannabis sales were offset by decreases in procurement revenue and management fees charged to Kind, the Company’s cannabis-licensed client in Maryland, and with whom the Company is currently engaged in litigation.

Cost of revenues for the three months ended September 30, 2020 approximated $4.8 million compared to approximately $6.5 million for the same period in 2019, a decrease of approximately $1.7 million or 26.7%. The year-over-year variance was primarily attributable to the cost of seeds incurred by the Company during the quarter ended September 30, 2019 of approximately $5.0 million as part of the Seed Transactions. Excluding the Seed Transactions, cost of revenues for the three months ended September 30, 2020 increased to approximately $4.0 million from approximately $1.5 million for the same period in 2019. As a percentage of revenue, these costs remained relatively steady at 35.9% in 2020 and 35.9% in 2019, demonstrating the Company’s leveraging of its infrastructure to produce higher levels of revenue with minimal increases on cost of revenues.

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As a result of the foregoing, gross profit approximated $8.7 million, or 64.5% of total revenues for the three months ended September 30, 2020, from approximately $4.7 million, or 41.9% of total revenues, for the same period a year ago. Excluding the Seed Transactions, gross profit increased to approximately $8.7 million for the three months ended September 30, 2020 from approximately $2.7 million for the same period a year ago, an increase of approximately $6.0 million or 221.5%.

Personnel expenses increased to approximately $1.4 million for the three months ended September 30, 2020 from approximately $1.2 million for the same period a year ago. The increase was primarily due to the hiring of additional staff to support (i) higher levels of revenue, and (ii) the Company’s expansion into a direct owner and operator of seed-to-sale cannabis businesses. As a percentage of revenues excluding the Seed Transactions, personnel expenses dropped significantly to 10.1% in 2020 from to 29.5% in 2019.

Marketing and promotion costs increased slightly to approximately $103,000 for the three months ended September 30, 2020 from approximately $92,000 for the same period a year ago. As a percentage of revenues excluding the Seed Transactions, these costs fell to 0.8% in 2020 from 2.2% in 2019.

General and administrative costs increased to approximately $2.9 million for the three months ended September 30, 2020 from approximately $2.4 million for the same period a year ago. This increase is primarily due to taxes paid on the Company’s cannabis operation, and increases in corporate insurance. As a percentage of revenues excluding the Seed Transactions, these costs fell significantly to 21.8% in 2020 from 56.9% in 2019

During the three months ended September 30, 2020, the Company recorded additional bad debt reserves of approximately $892,000 to cover potential losses that would be incurred by the Company from the impact of COVID-19 and the measures enacted by local governments to reduce its spread.

As a result of the foregoing, the Company generated operating income of approximately $3.4 million for the three months ended September 30, 2020 compared to approximately $973,000 for the same period a year ago. Excluding the Seed Transactions, the Company generated operating income of approximately $3.4 million for the three months ended September 30, 2020 compared to an operating loss of approximately $1.0 million for the same period in 2019, a positive swing of approximately $4.4 million.

Net non-operating expenses decreased to $1.7 million for the three months ended September 30, 2020 from approximately $7.4 million for the same period in 2019. The decrease is primarily due to (i) a charge in the third quarter of 2019 of approximately $2.9 million from the Company’s equity in GenCanna’s net loss (GenCanna was accounted for as an equity investment at such time), and (ii) a decrease in interest expense of approximately $2.6 million attributable to a lower amount of remaining beneficial conversion feature on the $21M Debentures that was amortized in 2020 compared to 2019.

As a result of the foregoing, the Company generated net income of approximately $1.7 million for the three months ended September 30, 2020. For the same period a year ago, after a tax provision of approximately $901,000, the Company incurred a net loss of approximately $7.3 million, and excluding the Seed Transactions, incurred a net loss of approximately $8.4 million.

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Nine months ended September 30, 2020 compared to nine months ended September 30, 2019

Total revenues for the nine months ended September 30, 2020 approximated $30.5 million compared to $40.4 million for the same period in 2019. The year-over-year variance was primarily attributable to revenues of approximately $22.0 million generated from the Seed Transactions. Excluding the Seed Transactions, core revenues for the nine months ended September 30, 2020 grew to approximately $30.5 million from approximately $11.4 million for the same period in 2019, an increase of approximately $19.2 million or 168.3%. The year-over-year increase was due to aggregate cannabis sales in 2020 of approximately $22.0 million generated by the KPGs in Illinois, acquired by the Company in October 2019, and ARL in Massachusetts, acquired by the Company in late 2018 and whose selling operations commenced in December 2019. The cannabis sales were offset by decreases in procurement revenue and management fees charged to Kind, the Company’s cannabis-licensed client in Maryland, and with whom the Company is currently engaged in litigation.

Cost of revenues for the nine months ended September 30, 2020 approximated $10.8 million compared to approximately $24.5 million for the same period in 2019. The year-over-year variance was primarily attributable to the cost of seeds incurred by the Company of approximately $20.8 million as part of the Seed Transactions. Excluding the Seed Transactions, cost of revenues for the nine months ended September 30, 2020 increased to approximately $10.8 million from approximately $3.8 million for the same period in 2019. As a percentage of total revenues, these costs increased to 35.5% in 2020 from 33.2% in 2019, which is the result of Company’s transition from a cannabis advisory company to a multi-state operator of cannabis businesses, whereby the Company will generate less revenues from a rental income and management fees, which have minimal associated costs, to a vastly higher level of revenue from product sales, which have a relatively higher level of associated costs.

As a result of the foregoing, gross profit approximated $19.7 million, or 64.5% of total revenues, for the nine months ended September 30, 2020 from approximately $15.9 million, or 39.3% of total revenues, for the same period a year ago. Excluding the Seed Transactions, gross profit increased to approximately $19.7 million for the nine months ended September 30, 2020 from approximately $7.6 million for the same period a year ago, an increase of approximately $12.1 million or 159.0%.

Personnel expenses increased to approximately $4.1 million for the nine months ended September 30, 2020 from approximately $2.7 million for the same period a year ago. The increase was primarily due to the hiring of additional staff to support (i) higher levels of revenue, and (ii) the Company’s expansion into a direct owner and operator of seed-to-sale cannabis businesses. As a percentage of revenues excluding the Seed Transactions, personnel expenses dropped to 13.3% in 2020 from 24.1% in 2019.

Marketing and promotion costs decreased slightly to approximately $281,000 for the nine months ended September 30, 2020 from approximately $287,000 for the same period a year ago. As a percentage of revenues excluding the Seed Transactions, these costs fell to 0.9% in 2020 from 2.5% in 2019.

General and administrative costs increased to approximately $7.5 million for the nine months ended September 30, 2020 from approximately $6.8 million for the same period a year ago. The increase is primarily due to higher facility costs on additional properties owned and in service in 2020, higher depreciation expense on such properties, taxes paid on the Company’s cannabis operation, and increases in corporate insurance. As a percentage of revenue excluding the Seed Sales, general and administrative costs decreased significantly to 24.6% in 2020 from 59.3% in 2019, reflecting a more efficient use of the Company’s fixed overhead costs.

During the nine months ended September 30, 2020, the Company recorded an additional bad debt reserve of approximately $1.3 million to cover potential losses that would be incurred by the Company from the impact of COVID-19 and the measures enacted by local governments to reduce its spread.

As a result of the foregoing, the Company generated operating income of approximately $6.5 million for the nine months ended September 30, 2020 compared to approximately $6.1 million for the same period in 2019. Excluding the Seed Transactions, the Company generated operating income of approximately $6.5 million for the nine months ended September 30, 2020 compared to an operating loss of approximately $2.2 million for the same period in 2019, a positive swing of approximately $8.7 million.

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Net non-operating expenses were approximately $8.3 million for the nine months ended September 30, 2020 compared to approximately $6.7 million for the same period in 2019. The increase is primarily due to the approximate $2.9 million received by the Company in 2019 from the settlement of the AgriMed matter discussed in Note 3 – Acquisitions of the Company’s financial statements, and declines in value of the Company’s investments in Terrace, Chooze and MRSVP in 2020, offset by a decrease interest expense.

As a result of the foregoing, the Company incurred a net loss of approximately $1.8 million for the nine months ended September 30, 2020. For the same period a year ago, after a tax provision of approximately $1.9 million, the Company incurred a net loss of approximately $2.5 million, and excluding the Seed Transactions, incurred a net loss of approximately $8.9 million.

2020 Plans

For the balance of 2020, the Company’s focus will continue to be on the following key areas:

1)	In Massachusetts, increase production and wholesale revenue at its cultivation and production facility in New Bedford, and drive revenues at the recently approved for adult-use dispensary in Middleboro.
2)	In Illinois, increase sales and profits of the dispensaries in Anna, Harrisburg and recently-opened Mt. Vernon.
3)	Continue to expand the Company’s Nature’s Heritage™ branded flower and popular infused-product brands, such as Betty’s Eddies™ and Kalm Fusion™, into the robust Massachusetts medical and adult-use marketplace.
4)	Continue to execute its aforementioned strategic plan.

No assurances can be given that any of these plans will come to fruition or that if implemented will necessarily yield positive results.

2021 Plan

For 2021, the Company’s focus will to be on the following key areas:

1) Subject to the applicable state approvals, continue the execution of its aforementioned strategic plan.

2) Identify and open two new dispensary locations in Massachusetts that can service both the medical and adult-use marketplaces.

3) Identify and open a fourth dispensary location in Illinois.

4) Increase sales and profits in Delaware by expanding cultivation and processing facilities, and opening a third dispensary.

5) Complete the acquisition of Maryland and proceed with a plan to expand the cultivation and processing facilities as well as adding a dispensary location.

6) Drive licensing fees through the expansion of the Company’s Nature’s Heritage™ branded flower and popular infused-product brands, such as Betty’s Eddies™ Kalm Fusion™, into the Company’s owned and managed facilities and with strategic partners into additional markets. Expand the exclusively licensed Tropizen® and Binske® brands.

No assurances can be given that any of these plans will come to fruition or that if implemented will necessarily yield positive results

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Subsequent Events

Please refer to Note 19 – Subsequent Events of the Company’s financial statements included in this report for a discussion of material events that occurred after the balance sheet date.

The issuance of the shares of common stock described in Note 19 – Subsequent Events of the Company’s financial statements were deemed to be exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), in reliance upon Sections 4(a)(2) and/or 4(a)(5) of the Securities Act. A legend restricting the sale, transfer, or other disposition of these securities other than in compliance with the Securities Act was placed on the securities issued in the foregoing transactions.

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on its financial condition, changes in financial condition, revenues, or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Inflation

In the opinion of management, inflation has not had a material effect on the Company’s financial condition or results of its operations.

Seasonality

In the opinion of management, the Company’s financial condition and results of its operations are not materially impacted by seasonal sales.

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Item 3. Quantitative and Qualitative Disclosure About Market Risk

The Company is a “smaller reporting company” as defined by Regulation S-K and, as such, is not required to provide the information contained in this item pursuant to Regulation S-K.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our CEO and CFO, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of September 30, 2020 (the “Evaluation Date”). Based upon that evaluation, the chief executive officer and the chief financial officer concluded that, as of the Evaluation Date, our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act (i) are recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) are accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

During the nine months ended September 30, 2020 and past fiscal year, we implemented significant measures to remediate the previously disclosed ineffectiveness of our internal control over financial reporting, which included an insufficient degree of segregation of duties amongst our accounting and financial reporting personnel, and the lack of a formalized and complete set of policy and procedure documentation evidencing our system of internal controls over financial reporting. The remediation measures consisted of the engagement of accounting consultants as needed to provide expertise on specific areas of the accounting guidance, the continued hiring of individuals with appropriate experience in internal controls over financial reporting, and the modification of our accounting processes and enhancement to our financial controls, including the testing of such controls.

Other than as described above, there was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) under the Exchange Act) identified in connection with the evaluation required by Rules 13a-15(d) or 15d-15(d) that occurred during the nine months ended September 30, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

44

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

In July 2019, Thomas Kidrin, the former chief executive officer and a former director of the Company, filed a complaint in the Massachusetts Superior Court, Suffolk County, captioned Thomas Kidrin v. MariMed Inc., et. al., Civil Action No. 19-2173D. In the complaint, Mr. Kidrin alleges that the Company failed to pay all wages owed to him and breached his employment agreement, dated August 30, 2012, and requests multiple damages, attorney fees, costs, and interest. The Company has moved to dismiss certain counts of the complaint and has asserted counterclaims against Mr. Kidrin alleging breach of contract, breach of fiduciary duty, money had and received, and unjust enrichment. The Company believes that the allegations in the complaint are without merit and intends to vigorously defend this matter and prosecute its counterclaims.

On November 13, 2019, Kind Therapeutics USA Inc. (“Kind”) commenced an action in the Circuit Court for Washington County, MD captioned Kind Therapeutics USA, Inc. vs. MariMed, Inc., et al. (Case No. C-21-CV-19-000670) asserting claims against the Company, including breach of contract, breach of fiduciary duty, accounting, and unjust enrichment, and seeking declaratory judgment and damages in excess of $75,000. On November 15, 2019, the Company filed counterclaims against Kind and a third-party complaint against the Members of Kind (Jennifer DiPietro, Susan Zimmerman, and Sophia Leonard-Burns) and William Tham (the “Counterclaim”). The Counterclaim alleges breach of contract with respect to each of the Memorandum of Understanding (the “MOU”) and the Management Services Agreement (the “MSA”), unjust enrichment, promissory estoppel/detrimental reliance, and fraud in the inducement, and seeking a declaratory judgement that the MOU is an enforceable contract, specific performance of such contact, and the establishment of a constructive trust for the Company’s benefit. The Counterclaim also seeks damages. Both parties, MariMed (including MariMed Holdings MD, LLC and MariMed Advisors Inc.) and Kind, brought motions for a temporary restraining order and a preliminary injunction. By Opinion and Order entered on November 21, 2019, the Court denied both parties motions for a temporary restraining order. In its opinion, the Court specifically noted that, contrary to Kind’s allegations, the MSA and the 20-year lease agreement for Kind’s utilization of the Company’s cultivation and production facility (the “Lease”) “appear to be independent, valid and enforceable contracts.” On or about April 3, 2020, the Company filed its First Amended Counterclaim and Third Party Complaint in which additional claims were added and clarified, including breach of Lease and breach of the Licensing and Manufacturing Agreement (the “LMA”) against Kind, along with other alternative claims and seeking damages. On August 11, 2020, the Company filed its Second Amended Counterclaim and Third Party Complaint in which additional clarifications were made and claims added for breach of fiduciary duty and breach of partnership. The Company believes that its claims for breach of contract with respect to the MOU, the MSA, the Lease, and the LMA, as well as all other claims are meritorious. Further, the Company believes that Kind’s claims against the Company are without merit. The Company intends to aggressively prosecute and defend the action. A hearing on the parties’ cross-motions for preliminary injunction was held on September 14 to 17, 2020 and November 2 and 4, 2020, and the Court’s ruling on the motions is pending. The trial is currently scheduled to start on June 7, 2021.

Item 1A. Risk Factors

As a smaller reporting company, the Company is not required to provide the information contained in this item pursuant to Regulation S-K. However, information regarding the Company’s risk factors appears in Part I, Item 1A. of its Annual Report on Form 10-K for the year ended December 31, 2019. These risk factors describe some of the assumptions, risks, uncertainties, and other factors that could adversely affect the Company’s business or that could otherwise result in changes that differ materially from management’s expectations. There have been no material changes to the risk factors contained in the Annual Report except for the following additional risk related to COVID-19:

45

Our business, operations, financial condition, and liquidity have been and may continue to be materially and adversely affected by the outbreak of COVID-19.

In March 2020, the World Health Organization declared COVID-19 a global pandemic, and governmental authorities around the world implemented measures to reduce the spread of the virus. The spread of COVID-19 in the United States and the measures to contain it have negatively impacted the economy and created significant volatility and disruption in financial markets. Business shutdowns in certain states in response to stay-at-home orders and related measures have temporarily eliminated certain customers’, principally non-medical use customers’, access to our managed dispensaries, adversely impacting sales during this restricted period. In addition, these restrictions and other disruptions caused by the pandemic have impacted our expansion, consolidation, and administrative functions. Further, the volatility in the financial markets and investor uncertainty has delayed and adversely impacted our ability to consummate debt and equity financings to raise working capital to support our operations and expansion plans. As a result, our business, operations, financial condition, and liquidity have been and may continue to be materially and adversely affected. Further, the disruption to the global economy and to our business, along with the decline in our stock price, may also negatively impact the future carrying values of certain assets, including inventories, accounts receivables, intangibles, and goodwill. The full extent to which COVID-19 and the measures to contain it will impact our business, operations financial condition, and liquidity will depend on the severity and duration of the COVID-19 outbreak and other future developments related to the response to the virus, all of which are highly uncertain. As a result, we cannot predict the ultimate impact of COVID-19 on the Company and its operational and financial performance.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

During the quarter ended September 30, 2020, the Company issued 18,256,436 shares of common stock from the conversion of debentures, and 34,171 shares of common stock related to an employee stock grant.

The issuance of the shares of common stock described above were deemed to be exempt from registration under the Securities Act in reliance upon Sections 4(a)(2) and/or 4(a)(5) of the Securities Act. A legend restricting the sale, transfer, or other disposition of these securities other than in compliance with the Securities Act was placed on the securities issued in the foregoing transactions.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

46

Item 6. Exhibits

Exhibit No.	Description
3.1	Certificate of Incorporation of the Company (a)
3.1.1	Amended Certificate of Incorporation of the Company (b)
3.1.2	Series B Convertible Preferred Stock Certificate of Designation as filed with the Secretary of State of Delaware on February 27, 2020. (h)
3.1.3	Certificate Eliminating the Series A Preferred Stock as filed with the Secretary of State of Delaware on February 27, 2020. (h)
3.2	By-Laws - Restated as Amended (a)
4.1	Amended and Restated Promissory Note, dated February 10, 2020, in the principal amount of $11,500,000, issued by MariMed Hemp Inc. and MariMed Inc. (f)
4.1.1	Promissory Note, dated February 27, 2020, in the principal amount of $3,742,500, issued by MariMed Inc. to Navy Capital Green Fund, LP. (h)
4.1.2	Promissory Note, dated February 27, 2020, in the principal amount of $675,000, issued by MariMed Inc. to Navy Capital Green Co-Invest Fund, LLC. (h)
4.1.3	12% Convertible Promissory Note, dated April 23, 2020, in the principal amount of $900,000, issued by MariMed Inc. to Best Buds Funding LLC. (i)
4.2	Second Amended and Restated Promissory Note, dated June 24, 2020, in the principal amount of $8,811,653.84, issued by MariMed Hemp Inc. and MariMed Inc. to SYYM LLC. (j)
4.3	Common Stock Purchase Warrant, dated June 24, 2020, issued by MariMed Inc.to SYYM LLC. (k)
4.4	Amended and Restated Senior Secured Commercial Promissory Note, dated October 19, 2020, in the principal amount of $5,845,000, issued by MariMed Advisors, Inc. to Best Buds Funding LLC. (m)
4.5	Amended and Restated Senior Secured Commercial Promissory Note, dated October 19, 2020, in the principal amount of $3,000,000, issued by MariMed Advisors, Inc. to Best Buds Funding LLC. (m)
4.6	Common Stock Purchase Warrant, dated September 30, 2020, issued by MariMed Inc.to Best Buds Funding, LLC. and/or its designees. (m)
10.1	Employment Agreement dated as of August 30, 2012 between Worlds Online Inc. and Thomas Kidrin (o)
10.2	2011 Stock Option and Restricted Stock Award Plan (a)
10.3	Form of Convertible Debenture issued by the Company (c)
10.4	Form of Secured Convertible Debenture of GenCanna Global, Inc. (c)
10.5	Form of Securities Purchase Agreement between the Company and YA II PN, LTD. (c)
10.6	Amended and Restated Registration Rights Agreement dated as of November 5, 2018 between the Company and YA II PN, LTD. (c)
10.7	Amended and Restated 2018 Stock Award and Incentive Plan. (d)
10.8	Form of Stock Option Agreement, dated September 27, 2019, with each of David R. Allen, Eva Selhub, M.D., and Edward J. Gildea. (e)
10.9	Amendment Agreement, dated as of February 10, 2020, between SYYM LLC, as noteholder and collateral agent, and MariMed Inc. and MariMed Hemp Inc., as co-borrowers. (g)
10.10	Exchange Agreement, dated as of February 27, 2020, among MariMed Inc., Navy Capital Green Management, LLC, a Delaware limited liability company, as discretionary investment manager of Navy Capital Green Fund, LP, and Navy Capital Green Co-Invest Fund, LLC. (h)

47

10.11	Amendment Agreement dated June 24, 2020, between SYYM LLC, as noteholder and collateral agent, and MariMed Inc. and MariMed Hemp Inc., as co-borrowers. (l)
10.12	Note Extension Agreement, effective as of September 30, 2020, among Best Buds Funding LLC, as lender, and each of MariMed Inc., Mari Holdings MD LLC, and MariMed Advisors Inc., as the borrower parties. (n)
31.1.	Rule 13a-14(a)/15d-14(a) Certifications of Chief Executive Officer. *
31.2.	Rule 13a-14(a)/15d-14(a) Certifications of Chief Financial Officer. *
32.1.	Section 1350 Certifications of Chief Executive Officer. **
32.2.	Section 1350 Certifications of Chief Financial Officer. **
101.INS XBRL	Instance Document *
101.SCH XBRL	Taxonomy Extension Schema *
101.CAL XBRL	Taxonomy Extension Calculation Linkbase *
101.DEF XBRL	Taxonomy Extension Definition Linkbase *
101.LAB XBRL	Taxonomy Extension Label Linkbase *
101.PRE XBRL	Taxonomy Extension Presentation Linkbase *
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) *

* Filed herewith.

** Furnished herewith in accordance with Item 601 (32)(ii) of Regulation S-K.

(a)	Incorporated by reference to the same numbered Exhibit filed with the Registration Statement on Form 10-12G (File No. 000-54433) filed on June 9, 2011.
(b)	Incorporated by reference to Annual Report on Form 10-K for the year ended December 31, 2016, filed on April 17, 2017.
(c)	Incorporated by reference to Current Report on Form 8-K filed on November 9, 2018.
(d)	Incorporated herein by reference to Appendix A of the Company’s Definitive Proxy Statement on Schedule 14A, filed on August 26, 2019.
(e)	Incorporated by reference to Exhibit 10.2 filed with the Quarterly Report on Form 10-Q for the period ended September 30, 2019, filed on November 29, 2019.
(f)	Incorporated by reference to Exhibit 4.1 of the Current Report on Form 8-K filed on February 12, 2020.
(g)	Incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed on February 12, 2020.
(h)	Incorporated by reference to Current Report on Form 8-K filed on February 27, 2020.
(i)	Incorporated by reference to the Quarterly Report on Form 10-Q for the period ended March 31, 2020, filed on May 28, 2020.
(j)	Incorporated by reference to Exhibit 4.1 of the Current Report on Form 8-K filed on June 30, 2020.
(k)	Incorporated by reference to Exhibit 4.2 of the Current Report on Form 8-K filed on June 30, 2020.
(l)	Incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed on June 30, 2020.
(m)	Incorporated by reference to the same numbered exhibit of the Current Report on Form 8-K filed on October 26, 2020.
(n)	Incorporated by reference to Exhibit 10.13 of the Current Report on Form 8-K filed on October 26, 2020.
(o)	Incorporated by reference to the same numbered Exhibit filed with the Annual Report on Form 10-K for the year ended December 31, 2012 filed on March 29, 2013.

48

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 thereto duly authorized.

Date: November 9, 2020

MARIMED INC.
By:	/s/ Robert Fireman
	Robert Fireman
	President and Chief Executive Officer (Principal Executive Officer)
By:	/s/ Jon R. Levine
	Jon R. Levine
	Chief Financial Officer (Principal Financial Officer)

49

INDEX TO EXHIBITS

Exhibit No.	Description
3.1	Certificate of Incorporation of the Company (a)
3.1.1	Amended Certificate of Incorporation of the Company (b)
3.1.2	Series B Convertible Preferred Stock Certificate of Designation as filed with the Secretary of State of Delaware on February 27, 2020. (h)
3.1.3	Certificate Eliminating the Series A Preferred Stock as filed with the Secretary of State of Delaware on February 27, 2020. (h)
3.2	By-Laws - Restated as Amended (a)
4.1	Amended and Restated Promissory Note, dated February 10, 2020, in the principal amount of $11,500,000, issued by MariMed Hemp Inc. and MariMed Inc. (f)
4.1.1	Promissory Note, dated February 27, 2020, in the principal amount of $3,742,500, issued by MariMed Inc. to Navy Capital Green Fund, LP. (h)
4.1.2	Promissory Note, dated February 27, 2020, in the principal amount of $675,000, issued by MariMed Inc. to Navy Capital Green Co-Invest Fund, LLC. (h)
4.1.3	12% Convertible Promissory Note, dated April 23, 2020, in the principal amount of $900,000, issued by MariMed Inc. to Best Buds Funding LLC. (i)
4.2	Second Amended and Restated Promissory Note, dated June 24, 2020, in the principal amount of $8,811,653.84, issued by MariMed Hemp Inc. and MariMed Inc. to SYYM LLC. (j)
4.3	Common Stock Purchase Warrant, dated June 24, 2020, issued by MariMed Inc.to SYYM LLC. (k)
4.4	Amended and Restated Senior Secured Commercial Promissory Note, dated October 19, 2020, in the principal amount of $5,845,000, issued by MariMed Advisors, Inc. to Best Buds Funding LLC. (m)
4.5	Amended and Restated Senior Secured Commercial Promissory Note, dated October 19, 2020, in the principal amount of $3,000,000, issued by MariMed Advisors, Inc. to Best Buds Funding LLC. (m)
4.6	Common Stock Purchase Warrant, dated September 30, 2020, issued by MariMed Inc.to Best Buds Funding, LLC. and/or its designees. (m)
10.1	Employment Agreement dated as of August 30, 2012 between Worlds Online Inc. and Thomas Kidrin (o)
10.2	2011 Stock Option and Restricted Stock Award Plan (a)
10.3	Form of Convertible Debenture issued by the Company (c)
10.4	Form of Secured Convertible Debenture of GenCanna Global, Inc. (c)
10.5	Form of Securities Purchase Agreement between the Company and YA II PN, LTD. (c)
10.6	Amended and Restated Registration Rights Agreement dated as of November 5, 2018 between the Company and YA II PN, LTD. (c)
10.7	Amended and Restated 2018 Stock Award and Incentive Plan. (d)
10.8	Form of Stock Option Agreement, dated September 27, 2019, with each of David R. Allen, Eva Selhub, M.D., and Edward J. Gildea. (e)
10.9	Amendment Agreement, dated as of February 10, 2020, between SYYM LLC, as noteholder and collateral agent, and MariMed, Inc. and MariMed Hemp, Inc., as co-borrowers. (g)
10.10	Exchange Agreement, dated as of February 27, 2020, among MariMed Inc., Navy Capital Green Management, LLC, a Delaware limited liability company, as discretionary investment manager of Navy Capital Green Fund, LP, and Navy Capital Green Co-Invest Fund, LLC. (h)

50

10.11	Amendment Agreement dated June 24, 2020, between SYYM LLC, as noteholder and collateral agent, and MariMed Inc. and MariMed Hemp Inc., as co-borrowers. (l)
10.12	Note Extension Agreement, effective as of September 30, 2020, among Best Buds Funding LLC, as lender, and each of MariMed Inc., Mari Holdings MD LLC, and MariMed Advisors Inc., as the borrower parties. (n)
31.1.	Rule 13a-14(a)/15d-14(a) Certifications of Chief Executive Officer. *
31.2.	Rule 13a-14(a)/15d-14(a) Certifications of Chief Financial Officer. *
32.1.	Section 1350 Certifications of Chief Executive Officer. **
32.2.	Section 1350 Certifications of Chief Financial Officer. **
101.INS XBRL	Instance Document *
101.SCH XBRL	Taxonomy Extension Schema *
101.CAL XBRL	Taxonomy Extension Calculation Linkbase *
101.DEF XBRL	Taxonomy Extension Definition Linkbase *
101.LAB XBRL	Taxonomy Extension Label Linkbase *
101.PRE XBRL	Taxonomy Extension Presentation Linkbase *
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) *

* Filed herewith.

** Furnished herewith in accordance with Item 601 (32)(ii) of Regulation S-K.

(a)	Incorporated by reference to the same numbered Exhibit filed with the Registration Statement on Form 10-12G (File No. 000-54433) filed on June 9, 2011.
(b)	Incorporated by reference to Annual Report on Form 10-K for the year ended December 31, 2016, filed on April 17, 2017.
(c)	Incorporated by reference to Current Report on Form 8-K filed on November 9, 2018.
(d)	Incorporated herein by reference to Appendix A of the Company’s Definitive Proxy Statement on Schedule 14A, filed on August 26, 2019.
(e)	Incorporated by reference to Exhibit 10.2 filed with the Quarterly Report on Form 10-Q for the period ended September 30, 2019, filed on November 29, 2019.
(f)	Incorporated by reference to Exhibit 4.1 of the Current Report on Form 8-K filed on February 12, 2020.
(g)	Incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed on February 12, 2020.
(h)	Incorporated by reference to Current Report on Form 8-K filed on February 27, 2020.
(i)	Incorporated by reference to the Quarterly Report on Form 10-Q for the period ended March 31, 2020, filed on May 28, 2020.
(j)	Incorporated by reference to Exhibit 4.1 of the Current Report on Form 8-K filed on June 30, 2020.
(k)	Incorporated by reference to Exhibit 4.2 of the Current Report on Form 8-K filed on June 30, 2020.
(l)	Incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed on June 30, 2020.
(m)	Incorporated by reference to the same numbered exhibit of the Current Report on Form 8-K filed on October 26, 2020.
(n)	Incorporated by reference to Exhibit 10.13 of the Current Report on Form 8-K filed on October 26, 2020.
(o)	Incorporated by reference to the same numbered Exhibit filed with the Annual Report on Form 10-K for the year ended December 31, 2012 filed on March 29, 2013.

51

EX-31.1

EXHIBIT 31.1

Rule 13a-14(a)/15d-14(a) Certification

I, Robert Fireman, certify that:

1. I have reviewed this quarterly report on Form 10-Q of MariMed Inc.;

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 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 controls 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 caused 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 and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of 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 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 a significant role in the registrant’s internal control over financial reporting.

Date: November 9, 2020

/s/ Robert Fireman

Robert Fireman

Chief Executive Officer

(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

Rule 13a-14(a)/15d-14(a) Certification

I, Jon R. Levine, certify that:

1. I have reviewed this quarterly report on Form 10-Q of MariMed Inc.;

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 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 controls 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 caused 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 and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of 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 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 a significant role in the registrant’s internal control over financial reporting.

Date: November 9, 2020

/s/ Jon R. Levine

Jon R. Levine

Chief Financial Officer

(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of MariMed Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Robert Fireman, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, based on my 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 result of operations of the Company.

Date: November 9, 2020	/s/ Robert Fireman
	Robert Fireman
	Chief Executive Officer (Principal Executive Officer)

A signed original of this certification has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of MariMed Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jon R. Levine, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, based on my 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 result of operations of the Company.

Date: November 9, 2020	/s/ Jon R. Levine
	Jon R. Levine
	Chief Financial Officer (Principal Financial Officer)

A signed original of this certification has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

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Cover - shares	9 Months Ended
	Sep. 30, 2020	Nov. 09, 2020
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Sep. 30, 2020
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2020
Current Fiscal Year End Date	--12-31
Entity File Number	0-54433
Entity Registrant Name	MARIMED INC.
Entity Central Index Key	0001522767
Entity Tax Identification Number	27-4672745
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	10 Oceana Way
Entity Address, City or Town	Norwood
Entity Address, State or Province	MA
Entity Address, Postal Zip Code	02062
City Area Code	617
Local Phone Number	795-5140
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Elected Not To Use the Extended Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		300,416,773

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Condensed Consolidated Balance Sheets - USD ($)	Sep. 30, 2020	Dec. 31, 2019
Current assets:
Cash and cash equivalents	$ 2,261,327	$ 738,688
Accounts receivable, net	4,077,902	1,669,139
Deferred rents receivable	1,968,500	1,796,825
Due from third parties, net	9,937
Notes receivable, current portion	540,319	311,149
Inventory	6,802,291	1,219,429
Investments	1,002,659	1,449,144
Other current assets	250,045	192,368
Total current assets	16,912,980	7,376,742
Property and equipment, net	45,507,577	42,792,369
Intangibles, net	2,311,181	2,364,042
Investments	1,085,528	1,324,661
Notes receivable, less current portion	1,084,671	1,639,496
Right-of-use assets under operating leases	5,381,761	5,787,423
Right-of-use assets under finance leases	86,591	111,103
Other assets	80,493	175,905
Total assets	72,450,782	61,571,741
Current liabilities:
Accounts payable	6,292,958	4,719,069
Accrued expenses	3,111,373	5,395,996
Notes payable, current portion	8,512,590	23,112,742
Mortgages payable, current portion	1,379,541	223,888
Debentures payable, current portion	2,928,047
Operating lease liabilities, current portion	1,002,171	917,444
Finance lease liabilities, current portion	38,412	38,412
Due to related parties	1,233,008	1,454,713
Other current liabilities	1,505,008	858,176
Total current liabilities	26,003,108	36,720,440
Notes payable, less current portion	11,653,775
Mortgages payable, less current portion	14,864,810	7,112,842
Debentures payable, less current portion		5,835,212
Operating lease liabilities, less current portion	4,967,583	5,399,414
Finance lease liabilities, less current portion	52,439	75,413
Other liabilities	100,200	100,200
Total liabilities	57,641,915	55,243,521
Stockholders’ equity:
Preferred stock, value
Common stock, $0.001 par value; 500,000,000 shares authorized at September 30, 2020 and December 31, 2019; 289,729,854 and 228,408,024 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively	289,730	228,408
Common stock subscribed but not issued; 33,319 and 3,236,857 shares at September 30, 2020 and December 31, 2019, respectively	5,365	1,168,074
Additional paid-in capital	109,115,215	112,245,730
Accumulated deficit	(108,737,141)	(106,760,527)
Noncontrolling interests	(589,302)	(553,465)
Total stockholders’ equity	83,867	6,328,220
Total liabilities, mezzanine equity, and stockholders’ equity	72,450,782	61,571,741
Series B Convertible Preferred Stock [Member]
Mezzanine equity:
Temporary Equity, Carrying Amount, Attributable to Parent	14,725,000
Series A Convertible Preferred Stock [Member]
Stockholders’ equity:
Preferred stock, value

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Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2020	Dec. 31, 2019
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	45,091,667	0
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	500,000,000	500,000,000
Common stock, shares issued	289,729,854	228,408,024
Common stock, shares outstanding	289,729,854	228,408,024
Common stock, shares subscribed but unissued	33,319	3,236,857
Series B Convertible Preferred Stock [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Mezzanine equity, par value	$ 0.001	$ 0.001
Mezzanine equity, shares authorized	4,908,333	0
Mezzanine equity, shares issued	4,908,333	0
Mezzanine equity, shares outstanding	4,908,333	0
Series A Convertible Preferred Stock [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	0	50,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0

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Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Income Statement [Abstract]
Revenues	$ 13,461,504	$ 4,209,328	$ 30,537,829	$ 11,382,942
Revenues from related party		7,014,371		29,029,249
Total revenues	13,461,504	11,223,699	30,537,829	40,412,191
Cost of revenues	4,781,677	6,523,283	10,831,763	24,523,626
Gross profit	8,679,827	4,700,416	19,706,066	15,888,565
Operating expenses:
Personnel	1,354,644	1,241,535	4,075,168	2,740,039
Marketing and promotion	103,327	91,562	281,329	286,521
General and administrative	2,931,684	2,394,692	7,515,721	6,752,168
Bad debts	892,029		1,342,029
Total operating expenses	5,281,684	3,727,789	13,214,247	9,778,728
Operating income	3,398,143	972,627	6,491,819	6,109,837
Non-operating income (expenses):
Interest expense	(1,921,312)	(4,516,576)	(7,581,648)	(9,076,583)
Interest income	34,818	79,016	121,712	425,770
Loss on obligations settled with equity			(44,678)
Equity in earnings of investments	51,511	(2,933,252)	18,553	(1,020,310)
Change in fair value of investments	217,374		(704,172)
Other	(84,708)		(84,708)	2,948,917
Total non-operating income (expenses), net	(1,702,317)	(7,370,812)	(8,274,941)	(6,722,206)
Income (loss) before income taxes	1,695,826	(6,398,185)	(1,783,122)	(612,369)
Provision for income taxes		901,477		1,886,072
Net income (loss)	1,695,826	(7,299,662)	(1,783,122)	(2,498,441)
Net income (loss) attributable to noncontrolling interests	36,959	99,021	193,492	246,367
Net income (loss) attributable to MariMed Inc.	$ 1,658,867	$ (7,398,683)	$ (1,976,614)	$ (2,744,808)
Net income (loss) per share
Basic	$ 0.006	$ (0.034)	$ (0.008)	$ (0.013)
Diluted	$ 0.005	$ (0.034)	$ (0.008)	$ (0.013)
Weighted average common shares outstanding
Basic	281,535,212	217,417,326	254,387,761	214,274,342
Diluted	346,091,840	217,417,326	254,387,761	214,274,342

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Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($)	Common Stock [Member]	Common Stock Subscribed But Not Issued [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Noncontrolling Interest [Member]	Total
Balances at December 31, 2019 at Dec. 31, 2018	$ 211,013	$ 169,123	$ 87,180,165	$ (25,575,808)	$ (220,032)	$ 61,764,461
Shares, Outstanding, Beginning Balance at Dec. 31, 2018	211,013,043	97,136
Sales of common stock	$ 800		2,599,200			2,600,000
Sales of common stock, shares	799,995
Issuance of subscribed shares	$ 97	$ (169,123)	169,026
Issuance of subscribed shares, shares	97,136	(97,136)
MediTaurus acquisition		$ 2,080,000			1,200,000	3,280,000
MediTaurus acquisition, shares		752,260
Terrace investment	$ 500		1,589,500			1,590,000
Terrace investment, shares	500,000
Harvest payment	$ 1,000		(1,000)
Harvest payment, shares	1,000,000
Exercise of options	$ 417	$ 413,894	11,189			425,500
Exercise of options, shares	417,352	2,644,456
Exercise of warrants	$ 686		611,756			612,442
Exercise of warrants, shares	686,104
Stock grants, shares
Stock forfeiture, shares
Amortization of stock grants	$ 109		193,601			193,710
Amortization of stock grants, shares	108,820
Amortization of option grants			1,219,958			1,219,958
Amortization of stand-alone warrant issuances			139,015			139,015
Warrant discount on promissory notes			600,621			600,621
Warrant discount on debentures payable			1,148,056			1,148,056
Extinguishment of promissory note, shares
Common stock issued to settle obligations, shares
Beneficial conversion feature on debentures payable			4,235,469			4,235,469
Conversion of debentures payable	$ 3,592	$ 2,464,438	5,391,253			7,859,283
Conversion of debentures payable, shares	3,591,523	3,206,816
Conversion of common stock to preferred stock, shares
Conversion of promissory notes, shares
Distributions					(376,993)	(376,993)
Net income (loss)				(2,744,808)	246,367	(2,498,441)
Balances at September 30, 2020 at Sep. 30, 2019	$ 218,214	$ 4,958,332	105,087,809	(28,320,616)	849,342	82,793,081
Shares, Outstanding, Ending Balance at Sep. 30, 2019	218,213,973	6,603,532
Balances at December 31, 2019 at Dec. 31, 2018	$ 211,013	$ 169,123	87,180,165	(25,575,808)	(220,032)	61,764,461
Shares, Outstanding, Beginning Balance at Dec. 31, 2018	211,013,043	97,136
Balances at September 30, 2020 at Dec. 31, 2019	$ 228,408	$ 1,168,074	112,245,730	(106,760,527)	(553,465)	6,328,220
Shares, Outstanding, Ending Balance at Dec. 31, 2019	228,408,024	3,236,857
Issuance of subscribed shares	$ 3,237	$ (1,168,074)	1,164,837
Issuance of subscribed shares, shares	3,236,857	(3,236,857)
Stock grants	$ 64	$ 5,365	10,665			16,094
Stock grants, shares	64,478	33,319
Stock forfeiture	$ (40)		40
Stock forfeiture, shares	(40,000)
Amortization of stock grants						16,094
Amortization of option grants			707,003			707,003
Issuance of stand-alone warrants			2,179			2,179
Issuance of warrants attached to debt			638,927			638,927
Discount on debentures payable			28,021			28,021
Extinguishment of promissory note	$ 1,900		350,100			352,000
Extinguishment of promissory note, shares	1,900,000
Common stock issued to settle obligations	$ 4,400		739,200			743,600
Common stock issued to settle obligations, shares	4,400,000
Beneficial conversion feature on debentures payable			379,183			379,183
Conversion of debentures payable	$ 54,144		7,111,897			7,166,041
Conversion of debentures payable, shares	54,143,232
Conversion of common stock to preferred stock	$ (4,908)		(14,720,092)			(14,725,000)
Conversion of common stock to preferred stock, shares	(4,908,333)
Conversion of promissory note	$ 2,525		457,525			460,050
Conversion of promissory notes, shares	2,525,596
Distributions					(229,329)	(229,329)
Net income (loss)				(1,976,614)	193,492	(1,783,122)
Balances at September 30, 2020 at Sep. 30, 2020	$ 289,730	$ 5,365	$ 109,115,215	$ (108,737,141)	$ (589,302)	$ 83,867
Shares, Outstanding, Ending Balance at Sep. 30, 2020	289,729,854	33,319

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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Cash flows from operating activities:
Net income (loss) attributable to MariMed Inc.	$ 1,658,867	$ (7,398,683)	$ (1,976,614)	$ (2,744,808)
Net income (loss) attributable to noncontrolling interests	36,959	99,021	193,492	246,367
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation			1,340,649	697,946
Asset write-off			84,708
Amortization of intangibles			307,861	154,167
Amortization of stock grants			16,094	193,710
Amortization of option grants			707,003	1,219,958
Amortization of stand-alone warrant issuances			2,179	139,016
Amortization of warrants attached to debt			631,895	1,836,892
Amortization of beneficial conversion feature			2,552,933	4,646,070
Amortization of original issue discount			286,353	107,256
Bad debt expense	892,029		1,342,029
Loss on obligations settled with equity			44,678
Equity in (earnings) losses of investments			(18,553)	1,020,310
Change in fair value of investments			704,172
Changes in operating assets and liabilities:
Accounts receivable, net			(3,750,792)	(4,788,303)
Accounts receivable from related party, net				(33,200,000)
Deferred rents receivable			(171,675)	53,461
Due from third parties				(174,516)
Inventory			(5,582,862)	(942,399)
Other current assets			(57,677)	7,154
Other assets			95,412	(262,981)
Accounts payable			2,272,810	(178,223)
Accrued expenses			1,872,692	3,339,325
Deferred rents payable				(105,901)
Operating lease payments			58,559	424,129
Finance lease interest payments			4,033	(1,824)
Unearned revenue from related party				4,170,750
Other current liabilities			646,832	197,943
Other liabilities				(238,000)
Net cash provided by (used in) operating activities			1,606,211	(24,182,501)
Cash flows from investing activities:
Purchase of property and equipment			(4,116,053)	(6,741,632)
Purchase of cannabis licenses			(255,000)	(150,000)
Investment in notes receivable				(2,030,000)
Interest on notes receivable			443,150	175,509
Acquisition				(655,804)
Due from related parties				119,781
Net cash used in investing activities			(3,927,903)	(9,282,146)
Cash flows from financing activities:
Issuance of common stock				2,600,000
Issuance of promissory notes			5,249,763	17,000,000
Repayments of promissory notes			(10,770,011)
Proceeds from issuance of debentures			935,000	9,600,000
Proceeds from mortgages			13,897,282
Payments on mortgages			(4,989,661)	(142,170)
Exercise of stock options				75,500
Exercise of warrants				612,442
Due to related parties			(221,705)	139,402
Finance lease principal payments			(27,008)	(11,167)
Distributions			(229,329)	(376,993)
Net cash provided by financing activities			3,844,331	29,497,014
Net change to cash and cash equivalents			1,522,639	(3,967,633)
Cash and cash equivalents at beginning of period			738,688	4,104,315	$ 4,104,315
Cash and cash equivalents at end of period	$ 2,261,327	$ 136,682	2,261,327	136,682	$ 738,688
Supplemental disclosure of cash flow information:
Cash paid for interest			1,236,464	699,582
Cash paid for income taxes			488,772	88,150
Non-cash activities:
Conversions of debentures payable			7,166,041	7,859,283
Beneficial conversion feature on debentures payable			379,183	4,235,469
Discount on debentures payable			28,021	1,148,056
Issuance of common stock associated with subscriptions			1,168,074	169,123
Discount on promissory notes			638,927	600,621
Conversion of promissory notes			460,050
Extinguishment of promissory note			352,000
Common stock issued to settle obligations			698,922
Exchange of common stock to preferred stock			14,725,000
Conversion of accrued interest to promissory note			3,908,654
Conversion of debentures receivable to investment				30,000,000
Operating lease right-of-use assets and liabilities				7,142,150
Finance lease right-of-use assets and liabilities				134,193
Conversion of notes receivable to investment				257,687
Conversion of advances to notes receivable				855,913
MediTaurus acquisition				2,500,000
Terrace investment				1,590,000
Harvest payment				1,000
Exercise of stock options via the reduction of an obligation				350,000
Cashless exercise of stock options				1,762
Reclass of accrued interest from notes payable				127,450
Reclass of accrued interest from debentures payable				$ 62,748

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ORGANIZATION AND DESCRIPTION OF BUSINESS

9 Months Ended

Sep. 30, 2020

Accounting Policies [Abstract]

ORGANIZATION AND DESCRIPTION OF BUSINESS

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

MariMed Inc. (the “Company”) is a multi-state operator in the cannabis industry. The Company develops, operates, manages, and optimizes over 300,000 square feet of state-of-the-art, regulatory-compliant facilities for the cultivation, production and dispensing of medicinal and recreational cannabis. The Company also licenses its proprietary brands of cannabis and hemp-infused products, along with other top brands, in several domestic markets and overseas.

Upon its entry into the cannabis industry, the Company was an advisory firm that procured state-issued cannabis licenses on behalf of its clients, leased its cannabis facilities to these newly-licensed companies, and provided industry-leading expertise and oversight in all aspects of their cannabis operations. The Company also provided its clients with ongoing regulatory, accounting, real estate, human resources, and administrative services. 

In 2018, the Company commenced a strategic plan to transition from a consulting business to a direct owner of cannabis licenses and operator of seed-to-sale operations. The Company’s strategic plan consists of the acquisition of its cannabis-licensed clients located in five states—Delaware, Illinois, Maryland, Massachusetts, and Nevada—and the consolidation of these entities under the MariMed banner.

A goal in completing this transition is to present a simpler, more transparent financial picture of the full breadth of the Company’s efforts, with a clearer representation of the revenues, earnings, and other financial metrics the Company has generated for its clients. The Company has played a key role in the successes of these entities, from the securing of their cannabis licenses, to the development of facilities that are models of excellence, to providing industry best practices and corporate guidance. Accordingly, the Company believes it is well suited to own these facilities and manage the continuing growth of their operations.

To date, acquisitions of the licensed businesses in Massachusetts and Illinois have been state-approved and completed, and establishes the Company as a fully integrated seed-to-sale multi-state operator. The acquisitions of the remaining entities located in Maryland, Nevada, and Delaware are at various stages of completion and subject to each state’s laws governing the ownership and transfer of cannabis licenses, which in the case of Delaware requires a modification of current cannabis ownership laws to permit for-profit ownership. Meanwhile, the Company continues to develop additional revenue and business in these states and plans to leverage its success to expand into other markets where cannabis is and becomes legal.

The Company has also created its own brands of cannabis flower, concentrates, and precision-dosed products utilizing proprietary strains and formulations. These products are developed by the Company in cooperation with state-licensed operators who meet the Company’s strict standards, including all natural—not artificial or synthetic—ingredients. The Company licenses its product formulations only to certified manufacturing professionals who adhere to the Company’s precise scientific formulations and trademarked product recipes.

The Company’s branded cannabis products are licensed under brand names including Kalm Fusion™, Nature’s Heritage™, and Betty’s Eddies™, and are distributed in the form of dissolvable strips, tablets, powders, microwaveable popcorn, fruit chews, and other varieties in development. The Company also has exclusive sublicensing rights in certain states to distribute the Binske® line of cannabis products crafted from premium artisan ingredients, the Healer™ line of medical full-spectrum tinctures, and the clinically-tested medicinal cannabis strains developed in Israel by global medical cannabis research pioneer Tikun Olam™. The Company’s hemp division distributes hemp-derived CBD products, including its Florance™ brand, in the US and abroad. The Company intends to continue licensing and distributing its brands, as well as other top brands, in the Company’s current markets and in additional legal markets worldwide.

In March 2020, the World Health Organization declared the outbreak of COVID-19 a global pandemic. The spread of the virus in the United States and the measures implemented to contain it—including business shutdowns, indoor capacity restrictions, social distancing, and diminished travel—have negatively impacted the economy and have created significant volatility and disruption in financial markets. Consequently, the Company’s expansion efforts and implementation of its strategic plan have been delayed. Additionally, while the cannabis industry has been deemed an essential business and is not expected to suffer severe declines in revenue, the Company’s business, operations, financial condition, and liquidity have been adversely affected, as further discussed in Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations and the notes to the financial statements included in this report.

Continued disruption to the global economy may materially and adversely affect the future carrying values of certain of the Company’s assets, including inventories, accounts receivables, and intangibles, as well as negatively impact the Company’s ability to raise working capital to support its operations. The full extent to which COVID-19 and the measures to contain it will impact the Company’s business, operations financial condition, and liquidity will depend on the continued severity and duration of the COVID-19 outbreak and other future developments in response to the virus, all of which are highly uncertain at this time. As a result, the Company cannot predict the ultimate impact of COVID-19 on its operational and financial performance.

The Company’s stock is quoted on the OTCQX market under the ticker symbol MRMD.

The Company was incorporated in Delaware in January 2011 under the name Worlds Online Inc. Initially, the Company developed and managed online virtual worlds. By early 2014, this line of business effectively ceased operating and the Company pivoted into the legal cannabis industry.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2020

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

In accordance with GAAP, interim financial statements are not required to contain all of the disclosures normally required in annual financial statements. In addition, the results of operations of interim periods may not necessarily be indicative of the results of operations to be expected for the full year. Accordingly, these interim financial statements should be read in conjunction with the Company’s most recent audited annual financial statements and accompanying notes for the year ended December 31, 2019.

Certain reclassifications have been made to prior periods’ data to conform to the current period presentation. These reclassifications had no effect on reported income (losses) or cash flows.

Going Concern

In connection with the preparation of its financial statements for the nine months ended September 30, 2020, the Company’s management evaluated the Company’s ability to continue as a going concern in accordance with ASU 2014-15, Presentation of Financial Statements–Going Concern (Subtopic 205-40), which requires an assessment of relevant conditions or events, considered in the aggregate, that are known or reasonably knowable by management on the issuance dates of the financial statements which indicate the probable likelihood that the Company will be unable to meet its obligations as they become due within one year after the issuance date of the financial statements.

As part of its evaluation, management assessed known events, trends, commitments, and uncertainties, which at the time included the status of the Company’s consolidation plan, the continuing impact of the COVID-19 pandemic on its operations, developments concerning GenCanna’s bankruptcy proceedings, recent cannabis industry investment activity, price movements of public cannabis stock, actions and/or results of certain bellwether cannabis companies, the level of cannabis investor confidence, and changes to state laws governing recreational (adult-use) and medical cannabis.

Management also reviewed certain key liquidity metrics of the Company, as further described below, as well as other factors in its evaluation, and determined that there currently exists a substantial doubt that the Company will be able to continue as a going concern within one year after the issuance date of these financial statements without additional funding or the continued profitability growth of its cannabis operations in Illinois and Massachusetts.

The Company produced the following improvements to key liquidity metrics during the reported period:

● During the nine months ended September 30, 2020, the Company’s operating activities provided positive cash flow of approximately $1.6 million, compared to approximately $24.2 million of negative cash flow used by such activities during the same period of 2019, a positive swing of approximately $25.8 million.

● At September 30, 2020, the Company’s negative working capital was approximately $9.1 million, a continued improvement from approximately $21.5 million at June 30, 2020 and approximately $29.3 million at December 31, 2019.

● The Company successfully restructured the terms of its short-term promissory notes payable to approximately $8.5 million at September 30, 2020 from approximately $17.2 million at June 30, 2020 and $23.1 million at December 31, 2019.

For further discussion of the Company’s liquidity and capital resources, please refer to Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Form 10-Q for the period ended September 30, 2020.

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of MariMed Inc. and the following majority-owned subsidiaries:

Subsidiary:	Percentage Owned
MariMed Advisors Inc.		100.0%
Mia Development LLC		89.5%
Mari Holdings IL LLC		100.0%
Mari Holdings MD LLC		97.4%
Mari Holdings NV LLC		100.0%
Hartwell Realty Holdings LLC		100.0%
iRollie LLC		100.0%
ARL Healthcare Inc.		100.0%
KPG of Anna LLC		100.0%
KPG of Harrisburg LLC		100.0%
MariMed Hemp Inc.		100.0%
MediTaurus LLC		70.0%

Intercompany accounts and transactions have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts within the financial statements and disclosures thereof. Actual results could differ from these estimates or assumptions.

Cash Equivalents

The Company considers all highly liquid investments with a maturity date of three months or less to be cash equivalents. The fair values of these investments approximate their carrying values.

The Company’s cash and cash equivalents are maintained with recognized financial institutions located in the United States. In the normal course of business, the Company may carry balances with certain financial institutions that exceed federally insured limits. The Company has not experienced losses on balances in excess of such limits and management believes the Company is not exposed to significant risks in that regard.

Accounts Receivable

Accounts receivable consist of trade receivables and are carried at their estimated collectible amounts.

The Company provides credit to its clients in the form of payment terms. The Company limits its credit risk by performing credit evaluations of its clients and maintaining a reserve, if deemed necessary, for potential credit losses. Such evaluations include the review of a client’s outstanding balances with consideration towards such client’s historical collection experience, as well as prevailing economic and market conditions and other factors. Based on such evaluations, the Company maintained an allowance for doubtful accounts of approximately $40.5 million and $39.7 million at September 30, 2020 and December 31, 2019, respectively. Please refer to Note 16 – Bad Debts for further discussion on receivable reserves.

Inventory

Inventory is carried at the lower of cost or net realizable value, with the cost being determined on a first-in, first-out (FIFO) basis. The Company allocates a certain percentage of overhead cost to its manufactured inventory; such allocation is based on square footage and other industry-standard criteria. The Company reviews physical inventory for obsolescence and/or excess and will record a reserve if necessary. As of the date of this report, no reserve was deemed necessary.

Investments

Investments are comprised of equity holding of private companies. These investments are recorded at fair value on the Company’s consolidated balance sheet, with changes to fair value included in income. Investments are evaluated for permanent impairment and are written down if such impairments are deemed to have occurred.

Revenue Recognition

The Company recognizes revenue in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification (“ASC”) 606, Revenue from Contract with Customers, as amended by subsequently issued Accounting Standards Updates. This revenue standard requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to in exchange for those goods or services. The recognition of revenue is determined by performing the following consecutive steps:

● Identify the contract(s) with a customer;

● Identify the performance obligations in the contract(s);

● Determine the transaction price;

● Allocate the transaction price to the performance obligations in the contract(s); and

● Recognize revenue as the performance obligation is satisfied.

Additionally, when another party is involved in providing goods or services to the Company’s clients, a determination is made as to who—the Company or the other party—is acting in the capacity as the principal in the sale transaction, and who is merely the agent arranging for goods or services to be provided by the other party.

The Company is typically considered the principal if it controls the specified good or service before such good or service is transferred to its client. The Company may also be deemed to be the principal even if it engages another party (an agent) to satisfy some of the performance obligations on its behalf, provided the Company (i) takes on certain responsibilities, obligations and risks, (ii) possesses certain abilities and discretion, or (iii) other relevant indicators of the sale. If deemed an agent, the Company would not recognize revenue for the performance obligations it does not satisfy.

The Company’s main sources of revenue are comprised of the following:

● Product Sales – direct sales of cannabis and cannabis-infused products by the Company’s dispensary and wholesale operations in Massachusetts and Illinois, and direct sales of hemp and hemp-infused products by the Company’s hemp division. In 2019, this division participated in one-time sales of acquired hemp seed inventory, as further explained in Note 17 – Related Party Transactions. Future product sales are expected to include the Company’s planned cannabis-licensee acquisitions in Maryland, Nevada, and Delaware (upon this state’s amendment to permit for-profit ownership of cannabis entities). This revenue is recognized when products are delivered or at retail point-of-sale.

● Real Estate – rental income and additional rental fees generated from leasing of the Company’s state-of-the-art, regulatory-compliant cannabis facilities to its cannabis-licensed clients. Rental income is generally a fixed amount per month that escalates over the respective lease term, while additional rental fees are based on a percentage of tenant revenues that exceed specified amounts.

● Management – fees for providing the Company’s cannabis clients with comprehensive oversight of their cannabis cultivation, production, and dispensary operations. Along with this oversight, the Company provides human resources, regulatory, marketing, and other corporate services. These fees are based on a percentage of such clients’ revenue, and are recognized after services have been performed.

● Supply Procurement – the Company maintains volume discounts with top national vendors of cultivation and production resources, supplies, and equipment, which the Company acquires and resells to its clients or third parties within the cannabis industry. The Company recognizes this revenue after the delivery and acceptance of goods by the purchaser.

● Licensing – revenue from the sale of precision-dosed, cannabis-infused products—such as Kalm Fusion™, Nature’s Heritage™, and Betty’s Eddies™—to regulated dispensaries throughout the United States and Puerto Rico. The recognition of this revenue occurs when the products are delivered.

Research and Development Costs

Research and development costs are charged to operations as incurred.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation, with depreciation recognized on a straight-line basis over the shorter of the estimated useful life of the asset or the lease term, if applicable. When assets are retired or disposed, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income. Repairs and maintenance are charged to expense in the period incurred.

The estimated useful lives of property and equipment are generally as follows: buildings and building improvements, seven to thirty-nine years; tenant improvements, the remaining duration of the related lease; furniture and fixtures, seven years; machinery and equipment, five to ten years. Land is not depreciated.

The Company’s property and equipment are individually reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable from the undiscounted future cash flows of such asset over the anticipated holding period. An impairment loss is measured by the excess of the asset’s carrying amount over its estimated fair value.

Impairment analyses are based on management’s current plans, asset holding periods, and currently available market information. If these criteria change, the Company’s evaluation of impairment losses may be different and could have a material impact to the consolidated financial statements. For the nine months ended September 30, 2020 and 2019, based on the results of management’s analyses, there were no impairment losses.

Leases

The consolidated financial statements reflect the Company’s adoption of ASC 842, Leases, as amended by subsequent accounting standards updates, utilizing the modified retrospective transition approach which calls for applying the new standard to all of the Company’s leases effective January 1, 2019, which is the effective date of adoption.

ASC 842 is intended to improve financial reporting of leasing transactions. The most prominent change from previous accounting guidance is the requirement to recognize right-of-use assets and lease liabilities on the consolidated balance sheet representing the rights and obligations created by operating leases that extend more than twelve months in which the Company is the lessee. The Company elected the package of practical expedients permitted under ASC 842. Accordingly, the Company accounted for its existing operating leases that commenced before the effective date as operating leases under the new guidance without reassessing (i) whether the contracts contain a lease, (ii) the classification of the leases, or (iii) the accounting for indirect costs as defined in ASC 842.

The Company determines if an arrangement is a lease at inception. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Non-lease components within lease agreements are accounted for separately. Right-of-use assets and obligations are recognized at the commencement date based on the present value of lease payments over the lease term, utilizing the Company’s incremental borrowing rate. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

Impairment of Long-Lived Assets

The Company evaluates the recoverability of its fixed assets and other assets in accordance with ASC 360-10-15, Impairment or Disposal of Long-Lived Assets. Impairment of long-lived assets is recognized when the net book value of such assets exceeds their expected cash flows, in which case the assets are written down to fair value, which is determined based on discounted future cash flows or appraised values.

Fair Value of Financial Instruments

The Company follows the provisions of ASC 820, Fair Value Measurement, to measure the fair value of its financial instruments, and ASC 825, Financial Instruments, for disclosures on the fair value of its financial instruments. To increase consistency and comparability in fair value measurements and related disclosures, ASC 820 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three levels of fair value hierarchy defined by ASC 820 are:

Level 1	Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
Level 2	Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
Level 3	Pricing inputs that are generally observable inputs and not corroborated by market data.

The carrying amounts of the Company’s financial assets and liabilities, such as cash and accounts payable approximate their fair values due to the short maturity of these instruments.

The fair value of option and warrant issuances are determined using the Black-Scholes pricing model and employing several inputs such as the expected life of instrument, the exercise price, the expected risk-free interest rate, the expected dividend yield, the value of the Company’s common stock on issuance date, and the expected volatility of such common stock. The following table summarizes the range of inputs used by the Company during the nine months ended September 30, 2020 and 2019.

	Nine Months Ended September 30,
	2020		2019
Life of instrument		2.7 to 4.3 years		2.3 to 3.0 years
Volatility factors		1.059 to 1.180		1.059 to 1.106
Risk-free interest rates		0.26% to 1.30%		1.42% to 2.28%
Dividend yield		0%		0%

The expected life of an instrument is calculated using the simplified method pursuant to Staff Accounting Bulletin Topic 14, Share-Based Payment, which allows for using the mid-point between the vesting date and expiration date. The volatility factors are based on the historical two-year movement of the Company’s common stock prior to an instrument’s issuance date. The risk-free interest rate is based on U.S. Treasury rates with maturity periods similar to the expected instruments life on the issuance date.

The Company amortizes the fair value of option and warrant issuances on a straight-line basis over the requisite service period of each instrument.

Extinguishment of Liabilities

The Company accounts for extinguishment of liabilities in accordance with ASC 405-20, Extinguishments of Liabilities. When the conditions for extinguishment are met, the liabilities are written down to zero and a gain or loss is recognized.

Stock-Based Compensation

The Company accounts for stock-based compensation using the fair value method as set forth in ASC 718, Compensation—Stock Compensation, which requires a public entity to measure the cost of employee services received in exchange for an equity award based on the fair value of the award on the grant date, with limited exceptions. Such value will be incurred as compensation expense over the period an employee is required to provide service in exchange for the award, usually the vesting period. No compensation cost is recognized for equity awards for which employees do not render the requisite service.

Income Taxes

The Company accounts for income taxes in accordance with ASC 740, Income Taxes. Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax basis of assets and liabilities, and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the consolidated statements of operations in the period that includes the enactment date.

ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. The Company did not take any uncertain tax positions and had no adjustments to unrecognized income tax liabilities or benefits for the nine months ended September 30, 2020 and 2019.

Related Party Transactions

The Company follows ASC 850, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions.

In accordance with ASC 850, the Company’s financial statements include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business, as well as transactions that are eliminated in the preparation of financial statements.

Comprehensive Income

The Company reports comprehensive income and its components following guidance set forth by ASC 220, Comprehensive Income, which establishes standards for the reporting and display of comprehensive income and its components in the consolidated financial statements. There were no items of comprehensive income applicable to the Company during the period covered in the financial statements.

Earnings Per Share

Earnings per common share is computed pursuant to ASC 260, Earnings Per Share. Basic earnings per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted net income per share is computed by dividing net income by the sum of the weighted average number of shares of common stock outstanding plus the weighted average number of potentially dilutive securities during the period.

At September 30, 2020 and 2019, there were 24,860,857 and 16,815,107, respectively, of potentially dilutive securities in the form of outstanding options and warrants. Also as of such dates, there were (i) $4.2 million and $11.1 million, respectively, of outstanding convertible debentures payable, (ii) 4,908,333 and zero shares, respectively, of Series B convertible preferred stock outstanding, and (iii) approximately $5.2 million and $350,000, respectively, of outstanding convertible promissory notes. All of these potentially dilutive securities are convertible into common stock based on either (i) a predetermined price, subject to adjustment, or (ii) the market value of common stock on or about the future conversion date.

For the three months ended September 30, 2020, all such potentially dilutive securities were convertible into approximately 64.6 million net shares of common stock, which were included in the number of weighted average common shares outstanding on a diluted basis, and in the calculation of diluted net income per share for this period as shown in the statement of operations. For the nine months ended September 30, 2020, and for the three and nine months ended Septembers 30, 2019, the potentially dilutive securities had an anti-dilutive effect on earnings per share, and in accordance with ASC 260, were excluded from the diluted net income per share calculations, resulting in identical basic and fully diluted net income per share for these periods.

Commitments and Contingencies

The Company follows ASC 450, Contingencies, which requires the Company to assess the likelihood that a loss will be incurred from the occurrence or non-occurrence of one or more future events. Such assessment inherently involves an exercise of judgment. In assessing possible loss contingencies from legal proceedings or unasserted claims, the Company evaluates the perceived merits of such proceedings or claims, and of the relief sought or expected to be sought.

If the assessment of a contingency indicates that it is probable that a material loss will be incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.

While not assured, management does not believe, based upon information available at this time, that a loss contingency will have material adverse effect on the Company’s financial position, results of operations or cash flows.

Beneficial Conversion Features on Convertible Debt

Convertible instruments that are not bifurcated as a derivative pursuant to ASC 815, Derivatives and Hedging, and not accounted for as a separate equity component under the cash conversion guidance are evaluated to determine whether their conversion prices create an embedded beneficial conversion feature at inception, or may become beneficial in the future due to potential adjustments.

A beneficial conversion feature is a nondetachable conversion feature that is “in-the-money” at the commitment date. The in-the-money portion, also known as the intrinsic value of the option, is recorded in equity, with an offsetting discount to the carrying amount of convertible debt to which it is attached. The discount is amortized to interest expense over the life of the debt with adjustments to amortization upon full or partial conversions of the debt.

Risk and Uncertainties

The Company is subject to risks common to companies operating within the legal and medical marijuana industries, including, but not limited to, federal laws, government regulations and jurisdictional laws.

Noncontrolling Interests

Noncontrolling interests represent third-party minority ownership of the Company’s consolidated subsidiaries. Net income attributable to noncontrolling interests is shown in the consolidated statements of operations; and the value of net assets owned by noncontrolling interests are presented as a component of equity within the balance sheets.

Off Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements.

Recent Accounting Pronouncements

The Company has reviewed all recently issued, but not yet effective, accounting pronouncements, and does not believe the future adoption of any such pronouncements will have a material impact on its financial condition or the results of its operations.

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ACQUISITIONS

9 Months Ended

Sep. 30, 2020

Business Combinations [Abstract]

ACQUISITIONS

NOTE 3 – ACQUISITIONS

KPG of Anna LLC and KPG of Harrisburg LLC

Effective October 1, 2019, the Illinois Department of Financial and Professional Regulation approved the Company’s acquisition of (i)100% of the ownership interests of KPG of Anna LLC and KPG of Harrisburg LLC, the Company’s two cannabis-licensed clients that operate medical marijuana dispensaries in the state of Illinois (both entities collectively, the “KPGs”), and (ii) the 40% ownership interests not already owned by the Company of Mari Holdings IL LLC, the Company’s subsidiary which owns the real estate in which the KPGs’ dispensaries are located (“Mari-IL”). On such date, 1,000,000 shares of the Company’s common stock, representing the entire purchase price, were issued to the sellers of the KPGs and Mari-IL, and these entities became wholly-owned subsidiaries of the Company.

The acquisition was accounted for in accordance with ASC 805. The following table summarizes the allocation of the purchase price to the fair value of the assets acquired and liabilities assumed on the acquisition date:

Cash and cash equivalents	$	443,980
Inventory		113,825
Intangibles		2,067,727
Minority interests		138,356
Accounts payable		(642,033	)
Accrued expenses		(186,005	)
Due to third parties		(1,020,850	)
Total fair value of consideration	$	915,000

Based on an impairment analysis performed shortly before the filing date of this report, the Company determined the intangibles of approximately $2.1 million arising from this transaction were not impaired.

The Harvest Foundation LLC

In August 2019, the Company entered into a purchase agreement to acquire 100% of the ownership interests of The Harvest Foundation LLC (“Harvest”), the Company’s cannabis-licensed client in the state of Nevada. The acquisition is conditioned upon legislative approval of the transaction. At this time, the state has paused the processing of cannabis license transfers, without indicating when it will resume. Upon the resumption of these activities and the ensuing approval by the state, this agreement will be consummated and the operations of Harvest will be consolidated into the Company’s financial statements.

The purchase price is comprised of the issuance of (i) 1,000,000 shares of the Company’s common stock, in the aggregate, to two owners of Harvest, which as a good faith deposit, were issued upon execution of the purchase agreement, (ii) $1.2 million of the Company’s common stock at closing, based on the closing price of the common stock on the day prior to legislative approval of the transaction, and (iii) warrants to purchase 400,000 shares of the Company’s common stock at an exercise price equal to the closing price of the Company’s common stock on the day prior to legislative approval of the transaction. These shares are restricted and will be returned to the Company in the event the transaction does not close by a date certain. As the transaction has not been consummated, the issued shares were recorded at par value.

Kind Therapeutics USA Inc.

In December 2018, the Company entered into a memorandum of understanding (the “MOU”) to acquire Kind Therapeutics USA Inc. (“Kind”), its client in Maryland that holds licenses for the cultivation, production, and dispensing of medical cannabis. The MOU provides for a total purchase price of $6.3 million in cash, 2,500,000 shares of the Company’s common stock, and other consideration. The acquisition is subject to the approval by the Maryland Medical Cannabis Commission, which approval can be applied for starting in March 2021.

Also in December 2018, MariMed Advisors Inc, the Company’s wholly owned subsidiary, and Kind entered into a management agreement pursuant to which the Company provides comprehensive management services in connection with the business and operations of Kind, and Mari Holdings MD LLC, the Company’s majority-owned subsidiary, entered into a 20-year lease with Kind for its utilization of the Company’s 180,000 square foot cultivation and production facility in Hagerstown, MD. Additionally, in October 2019, Mari Holdings MD LLC purchased a 9,000 square foot building in Anne Arundel County, MD for the development of a dispensary which would be leased to Kind.

The sellers of Kind have attempted to renegotiate the terms of the MOU. Even though the MOU contains all the definitive material terms with respect to the acquisition transaction and confirms the management and lease agreements, the selling parties now allege that the MOU is not an enforceable agreement. The Company engaged with the sellers in good faith in an attempt to reach updated terms acceptable to both parties, however the sellers failed to reciprocate in good faith, resulting in an impasse, and both parties commencing legal proceedings which are pending in the Circuit Court for Washington County, Maryland. For further information, see Note 18 – Commitments and Contingencies and Part II, Item 1. Legal Proceedings in this report.

MediTaurus LLC

In May 2019, the Company entered into a purchase agreement to acquire MediTaurus LLC (“MediTaurus”), a company formed and owned by Jokubas Ziburkas PhD, a neuroscientist and leading authority on CBD and its interactions with the brain and endocannabinoid system. MediTaurus currently operates in the United States and Europe and has developed proprietary CBD formulations sold under its Florance™ brand.

Pursuant to the purchase agreement, the Company acquired 70% of MediTaurus on June 1, 2019. The purchase price was $2.8 million, comprised of cash payments totaling $720,000 and 520,000 shares of the Company’s common stock valued at $2,080,000. The parties are currently in negotiations regarding the Company’s acquisition of the remaining 30% of MediTaurus.

The acquisition was accounted for in accordance with ASC 10. The following table summarizes the allocation, adjusted in September 2019, of the purchase price to the fair value of the assets acquired and liabilities assumed on the acquisition date:

Cash and cash equivalents	$	64,196
Accounts receivable		5,362
Inventory		519,750
Goodwill		2,662,669
Accounts payable		(777	)
Total value of MediTaurus		3,251,200
Noncontrolling interests in MediTaurus		(975,360	)
Total fair value of consideration	$	2,275,840

Based on a valuation of MediTaurus in late 2019, the goodwill on the transaction was adjusted to approximately $2.7 million, which was written off due to the impact of the COVID-19 pandemic on MediTaurus’ business.

AgriMed Industries of PA LLC

In July 2018, the Company entered into a purchase agreement to acquire 100% of the ownership interests of AgriMed Industries of PA LLC (“AgriMed”), an entity that holds a license from the state of Pennsylvania for the cultivation of cannabis. The purchase price was comprised of $8.0 million, payable in stock and cash, and the assumption of certain liabilities of AgriMed. In February 2019, the Company commenced legal proceedings against AgriMed seeking specific performance of the purchase agreement.

In May 2019, the dispute between the parties was resolved through the cash payment to the Company of $3.1 million and other good and valuable consideration, in exchange for the Company relinquishing its rights under the purchase agreement and releasing its claims against AgriMed. The net amount of approximately $2,949,000, representing the cash payment less legal fees and write-offs of assets and supplies, was recorded in Other Non-Operating Income in the Company’s consolidated statement of operations for the year ended December 31, 2019.

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INVESTMENTS

9 Months Ended

Sep. 30, 2020

Schedule of Investments [Abstract]

INVESTMENTS

NOTE 4 – INVESTMENTS

At September 30, 2020 and December 31, 2019, the Company’s investments were comprised of the following:

	September 30, 2020		December 31, 2019
Current investments:
Terrace Inc.	$	1,002,659	$	1,449,144
Total current investments		1,002,659		1,449,144
Non-current investments:
MembersRSVP LLC		1,085,528		1,066,975
Chooze Corp.		-		257,686
GenCanna Global Inc.		-		-
Iconic Ventures Inc.		-		-
Total non-current investments		1,085,528		1,324,661
Total investments	$	2,088,187	$	2,773,805

Terrace Inc.

In May 2019, the Company issued 500,000 shares of its common stock, valued at $1.59 million on the date of issuance, to purchase an 8.95% interest in Terrace Inc. (“Terrace”), a Canadian entity that develops and acquires international cannabis assets. The Company has no board representation, nor does it have the ability to exert operational or financial control over the entity.

In November 2019, the common stock of Terrace commenced public trading on the Toronto Stock Venture Exchange. In accordance with ASC 321, Investments – Equity Securities, this investment is carried at fair value, with changes to fair value recognized in net income. Prior to Terrace becoming publicly traded, the Company had elected the measurement alternative to value this equity investment without a readily determinable fair value.

At September 30, 2020, the carrying amount of this investment approximated $1,003,000, based on its publicly traded stock price on such date, which required the Company to record a charge to net income of approximately $447,000 for the nine months then ended that is reflected under Change In Fair Value Of Investments on the statement of operations.

MembersRSVP LLC

In August 2018, the Company invested $300,000, of a total contracted cash investment of $500,000, and issued 378,259 shares of its common stock, valued at approximately $915,000, in exchange for a 23% ownership in MembersRSVP LLC (“MRSVP”), an entity that has developed a customer relationship management and marketing platform, branded under the name Sprout, that is designed for and licensed to companies in the cannabis industry.

The investment is accounted under the equity method. During the nine months ended September 30, 2020 and 2019, the Company recorded earnings of approximately $19,000 and a charge of approximately $105,000, respectively, based on the Company’s equity in MRSVP’s net income and losses during such periods. Since the inception of the investment, the Company has recorded cumulative equity in net losses of approximately $130,000, reducing the carrying value of the investment to approximately $1,086,000 at September 30, 2020.

Chooze Corp.

In January 2019, the entire principal and accrued interest balance of a note receivable from Chooze Corp. of approximately $258,000 was converted into a 2.7% equity interest in Chooze. In accordance with ASC 321, the Company elected the measurement alternative to value this equity investment without a readily determinable fair value. Accordingly, the investment was carried at its cost until June 2020 when the investment was fully reserved due to the Company’s determination that the investment was impaired. This reserve of approximately $258,000 is reflected under Change In Fair Value Of Investments on the statement of operations.

GenCanna Global Inc.

During 2018, in a series of transactions, the Company purchased $30 million of subordinated secured convertible debentures (the “GC Debentures”) of GenCanna. In February 2019, the Company converted the GC Debentures, plus unpaid accrued interest through the conversion date of approximately $229,000, into common stock of GenCanna equal to a 33.5% ownership interest in GenCanna on a fully diluted basis. Concurrent with the conversion, the Company’s CEO was appointed to GenCanna’s board and the Company was granted certain rights, including the rights of inspection, financial information, and participation in future security offerings of GenCanna. At conversion, the Company commenced accounting for this investment under the equity method.

In late January 2020, an involuntary bankruptcy proceeding under Chapter 11 was filed against GenCanna USA, GenCanna’s wholly-owned operating subsidiary, with the U.S. Bankruptcy Court in the Eastern District of Kentucky (the “Bankruptcy Court”). In the months leading up to the filing, GenCanna had faced several challenges including defaults under its senior credit facility with MGG Investment Group LP (“MGG”), a fire at its main processing and lab facility, the domestic decline of CBD selling prices, and the contraction of the cannabis capital markets. On February 6, 2020, GenCanna USA, under pressure from certain of its creditors and MGG, agreed to convert the involuntary bankruptcy proceeding into a voluntary Chapter 11 proceeding. In addition, GenCanna and GenCanna USA’s subsidiary, Hemp Kentucky LLC (collectively with GenCanna and GenCanna USA, the “GenCanna Debtors”), filed voluntary petitions under Chapter 11 in the Bankruptcy Court. As a result, the Company recorded a charge to net income of approximately $30.2 million in December 2019, which reduced the carrying value of this investment to zero.

On February 18, 2020, the GenCanna Debtors sought permission from the Bankruptcy Court to sell all or substantially all of their assets. After the entry of various orders to establish the bidding procedures and criteria for such sale, the GenCanna Debtors received only four proposals (including a credit bid from MGG) for the purchase of the GenCanna Debtors’ assets and a single proposal for a plan of reorganization which was submitted by the Company.

On May 19, 2020, after an abbreviated solicitation/bid/sale process, the Bankruptcy Court, over numerous objections by creditors and shareholders of the GenCanna Debtors which included the Company, entered an order authorizing the sale of all or substantially all of the assets of the GenCanna Debtors to MGG for its credit bid in the amount of $73.5 million and cash in the amount of $3.5 million.

Based on recent filings with the Bankruptcy Court, the GenCanna Debtors are proposing to file a liquidating plan of reorganization to collect various prepetition payments and commercial claims against third parties, liquidate the remaining assets of the GenCanna Debtors, and make payments to creditors. The Company and the unsecured creditors committee are exploring options, including litigation against MGG for lender liability, equitable subordination, and return of preference. In connection with this liquidation process, the Company has filed its proofs of claim for the $33.2 million of hemp seeds sold to GenCanna, which transaction is further discussed in Note 17 – Related Party Transactions.

Iconic Ventures Inc.

In December 2018, the Company purchased 2,500,000 shares of common stock of Iconic Ventures Inc. (“Iconic”), which equated to an ownership interest in Iconic of approximately 10%, for an aggregate cash payment of $500,000. Iconic has developed DabTabs™, a unique solution for cannabinoid vaporization. The Company has no board representation, nor does it have the ability to exert operational or financial control over the entity. In 2019, the Company wrote off the investment after an impairment review that considered the viability of the entity in light of the current economic climate.

Binske^®

In July 2019, the Company entered into a licensing agreement for the exclusive manufacturing and distribution in several eastern U.S. states of the Binske^® portfolio of products, a brand known for utilizing best-in-class proprietary strains and craft ingredients in its edibles, concentrates, vaporizers, and topicals. In consideration for the license and other rights, the Company agreed to pay a royalty of 10.0% to 12.5% of gross revenue, as defined, derived from the sale of Binske^® products, subject to an annual minimum royalty. No gross revenue was generated as of September 30, 2020.

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DEFERRED RENTS RECEIVABLE

9 Months Ended

Sep. 30, 2020

Deferred Rents Receivable

DEFERRED RENTS RECEIVABLE

NOTE 5 – DEFERRED RENTS RECEIVABLE

The Company is the lessor under several operating leases which contain rent holidays, escalating rents over time, options to renew, requirements to pay property taxes, insurance and/or maintenance costs, and contingent rental payments based on a percentage of monthly tenant revenues. The Company is not the lessor under any finance leases.

The Company recognizes fixed rental receipts from such lease agreements on a straight-line basis over the expected lease term. Differences between amounts received and amounts recognized are recorded under Deferred Rents Receivable on the balance sheet. Contingent rentals are recognized only after tenants’ revenues are finalized and if such revenues exceed certain minimum levels.

During the reporting periods, the Company leased to third parties the following owned properties:

● Delaware – a 45,000 square foot facility purchased in September 2016 and developed into a cannabis cultivation, processing, and dispensary facility which is leased to a cannabis-licensed client occupying 100% of the space under a triple net lease that commenced in 2017 and expires in 2035.

● Maryland – a 180,000 square foot former manufacturing facility purchased in January 2017 and developed by the Company into a cultivation and processing facility which is leased to a licensed cannabis client under a triple net lease that commenced in 2018 and expires in 2037.

● Massachusetts – a 138,000 square foot industrial property of which approximately half of the available square footage is leased to a non-cannabis manufacturing company under a lease that commenced in 2017 and expires in 2022.

● Illinois – two 3,400 square foot free-standing retail dispensaries in the cities of Anna and Harrisburg and leased to the KPGs, each under a 20-year lease that commenced in 2018. With the acquisition of the KPGs as disclosed in Note 3 – Acquisitions, this lease was eliminated upon the consolidation of the KPGs in October 2019. Accordingly, the rental receipts on such leases have been removed from the table of future minimum rental receipts below.

During the reporting periods, the Company subleased to a third party the following property:

● Delaware – 4,000 square feet of retail space in a multi-use building which the Company developed into a cannabis dispensary and is subleased to its cannabis-licensed client under a under a triple net lease expiring in 2021 with a five-year option to extend.

As of September 30, 2020 and December 31, 2019, cumulative fixed rental receipts under such leases approximated $12.8 million and $9.5 million, respectively, compared to revenue recognized on a straight-line basis of approximately $14.8 million and $11.3 million. Accordingly, the deferred rents receivable balances at September 30, 2020 and December 31, 2019 approximated $2.0 million and $1.8 million, respectively.

Future minimum rental receipts for non-cancelable leases and subleases as of September 30, 2020 were:

2020	$	1,130,989
2021		4,667,497
2022		4,590,656
2023		4,292,769
2024		4,348,027
Thereafter		43,995,612
Total	$	63,025,550

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NOTES RECEIVABLE

9 Months Ended

Sep. 30, 2020

Receivables [Abstract]

NOTES RECEIVABLE

NOTE 6 – NOTES RECEIVABLE

At September 30, 2020 and December 31, 2019, notes receivable were comprised of the following:

	September 30, 2020		December 31, 2019
First State Compassion Center	$	484,240	$	527,261
Healer LLC		885,871		846,985
High Fidelity Inc.		254,879		252,873
Maryland Health & Wellness Center Inc.		-		323,526
Atalo Holdings Inc.		-		-
Total notes receivable		1,624,990		1,950,645
Notes receivable, current portion		540,319		311,149
Notes receivable, less current portion	$	1,084,671	$	1,639,496

The Company loaned approximately $700,000 to First State Compassion Center, its Delaware cannabis-licensee client, during the period from October 2015 to April 2016. In May 2016, this client issued a 10-year promissory note, as subsequently amended, to the Company bearing interest at a rate of 12.5% per annum. The monthly payments of approximately $10,100 will continue through April 2026, at which time the note will become due. At September 30, 2020 and December 31, 2019, the current portion of this note was approximately $64,000 and $58,000, respectively, and is included in Notes Receivable, Current Portion on the respective balance sheets.

From August 2018 to June 2019, the Company loaned an aggregate of $800,000 to Healer LLC (“Healer”), an entity that provides cannabis education, dosage programs, and products developed by Dr. Dustin Sulak, an integrative medicine physician and nationally renowned cannabis practitioner. The loans bear interest at 6% per annum, with principal and interest payable on the maturity dates which are three years from the respective loan dates. At September 30, 2020, the current portion of this note approximated $221,000. No portion was current at December 31, 2019.

In August 2019, the Company loaned $250,000 to High Fidelity Inc., a company that owns and operates two seed-to sale medical marijuana facilities in the state of Vermont and produces its own line of CBD products. Prior to the note’s maturity in August 2020, the parties agreed to continue the note on a month-to-month basis, with interest-only monthly payments ongoing at the rate of 10% per annum.

In January 2019, the Company provided Maryland Health & Wellness Center Inc. (“MHWC”), an entity that has been pre-approved by the state of Maryland for a cannabis dispensing license, with a $300,000 construction loan bearing interest at a rate of 8% per annum. In June 2020, MHWC repaid the principal and accrued interest thereon, at which time the parties agreed to terminate their business relationship and release each other from all other previously executed agreements.

From May 2019 to July 2019, the Company extended loans aggregating $980,000 to Atalo Holdings Inc. (“Atalo”), an agriculture and biotechnology firm specializing in research, development, and production of industrial hemp and hemp-derived CBD products. The loans initially bore interest at 6% per annum and matured in April 2020. The Company wrote off the entire carrying value of the Atalo note receivable balance as of December 2019, based upon the expectation that Atalo would be critically impacted by the COVID-19 pandemic. In 2020, Atalo filed for bankruptcy.

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INVENTORY

9 Months Ended

Sep. 30, 2020

Inventory Disclosure [Abstract]

INVENTORY

NOTE 7 – INVENTORY

At September 30, 2020 and December 31, 2019, inventory was comprised of approximately (i) $3.1 million and $395,000, respectively, of plants and other raw materials, (ii) $188,000 and $226,000, respectively, of CBD isolate and hemp extract, and (iii) $3.5 million and $599,000 of work-in-process and finished cannabis and CBD products.

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PROPERTY AND EQUIPMENT

9 Months Ended

Sep. 30, 2020

Property, Plant and Equipment [Abstract]

PROPERTY AND EQUIPMENT

NOTE 8 – PROPERTY AND EQUIPMENT

At September 30, 2020 and December 31, 2019, property and equipment consisted of the following:

	September 30, 2020			December 31, 2019
Land	$	3,988,810		$	3,887,710
Buildings and building improvements		27,334,283			27,063,235
Tenant improvements		8,607,282			7,762,991
Furniture and fixtures		555,766			299,645
Machinery and equipment		4,490,186			4,086,691
Construction in progress		4,977,181			2,827,940
		49,953,508			45,928,212
Less: accumulated depreciation		(4,445,931	)		(3,135,843	)
Property and equipment, net	$	45,507,577		$	42,792,369

During the nine months ended September 30, 2020 and 2019, additions to property and equipment were approximately $4.1 million and $6.7 million, respectively.

Additions during the nine months ended September 30, 2020 consisted primarily of (i) the commencement of construction in Mt. Vernon, IL, and (ii) machinery and equipment purchases for facilities in Massachusetts, Maryland, Illinois, and Delaware. Additions during the nine months ended September 30, 2019 consisted primarily of (i) the commencement of construction in Milford, DE, (ii) the continued buildout of properties in Maryland and Massachusetts, and (iii) improvements to the Wilmington, DE and Las Vegas, NV properties.

During the nine months ended September 30, 2020, the Company disposed of an asset with a cost of approximately $91,000 and accumulated depreciation through the disposal date of approximately $6,000. The loss on disposal of approximately $85,000 is reflected in Other Non-Operating Expenses in the statement of operations at September 30, 2020. There were no disposals in 2019.

Depreciation expense for the nine months ended September 30, 2020 and 2019 approximated $1,341,000 and $698,000, respectively.

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DEBT

9 Months Ended

Sep. 30, 2020

Debt Disclosure [Abstract]

DEBT

NOTE 9 – DEBT

Mortgages Payable

At September 30, 2020 and December 31, 2019, mortgage balances, including accrued but unpaid interest, were comprised of the following:

	September 30, 2020			December 31, 2019
Bank of New England – Massachusetts properties	$	12,912,723		$	4,825,226
Bank of New England – Delaware property		1,602,730			1,682,275
DuQuoin State Bank – Illinois properties		822,245			829,229
South Porte Bank – Illinois property		906,653			-
Total mortgages payable		16,244,351			7,336,730
Mortgages payable, current portion		(1,379,541	)		(223,888	)
Mortgages payable, less current portion	$	14,864,810		$	7,112,842

In November 2017, the Company entered into a 10-year mortgage agreement with Bank of New England in the amount of $4,895,000 (the “Initial Mortgage”) for the purchase of a 138,000 square foot industrial property in New Bedford, Massachusetts, within which the Company has built a 70,000 square foot cannabis cultivation and processing facility. Pursuant to the Initial Mortgage, the Company made monthly payments of (i) interest-only from the mortgage date through May 2019 at a rate equal to the prime rate plus 2%, with a floor of 6.25% per annum, and (ii) principal and interest payments from May 2019 to July 2020 at a rate equal to the prime rate on May 2, 2019 plus 2%, with a floor of 6.25% per annum. In July 2020, at which time the Initial Mortgage had a remaining principal balance of approximately $4.8 million, the parties consummated an amended and restated mortgage agreement, secured by the Company’s properties in New Bedford and Middleboro in the amount of $13.0 million bearing interest at a rate of 6.5% per annum that matures in August 2025 (the “Refinanced Mortgage”). Proceeds from the Refinanced Mortgage were used to pay down the Initial Mortgage and approximately $7.2 million of promissory notes as further described below. The outstanding principal balance of the Refinanced Mortgage approximated $12.9 million on September 30, 2020, of which approximately $330,000 was current. The outstanding principal balance of the Initial Mortgage approximated $4.8 million on December 31, 2019, of which approximately $94,000 was current.

The Company maintains another mortgage with Bank of New England for the 2016 purchase of a 45,070 square foot building in Wilmington, Delaware which was developed into a cannabis seed-to-sale facility and is currently leased to the Company’s cannabis-licensed client in that state. The mortgage matures in 2031 with monthly principal and interest payments at a rate of 5.25% per annum through September 2021, and thereafter the rate adjusting every five years to the then prime rate plus 1.5% with a floor of 5.25% per annum. At September 30, 2020 and December 31, 2019, the outstanding principal balance on this mortgage was approximately $1,603,000 and $1,682,000, respectively, of which approximately $112,000 and $105,000, respectively, was current.

In May 2016, the Company entered into a mortgage agreement with DuQuoin State Bank (“DSB”) for the purchase of two properties which the Company developed into two 3,400 square foot free-standing retail dispensaries in Illinois. On May 5^th of each year, this mortgage is due to be repaid unless it is renewed for another year at a rate determined by DSB’s executive committee. The mortgage was renewed in May 2020 at a rate of 6.75% per annum. At September 30, 2020 and December 31, 2019, the outstanding principal balance on this mortgage was approximately $822,000 and $829,000 respectively, of which approximately $31,000 and $24,000, respectively, was current.

In February 2020, the Company entered into a mortgage agreement with South Porte Bank for the purchase and development of a property in Mt. Vernon, IL. Pursuant to the mortgage agreement, the Company made interest-only monthly payments at a rate of 5.5% per annum through its initial maturity date in August 2020. At that time, the parties amended the mortgage agreement to extend the maturity date through November 2020, and requiring continuing monthly interest-only payments at 5.5% per annum.

Notes Payable

In February 2020, pursuant to an exchange agreement as further described in Note 11 – Mezzanine Equity, the Company issued two promissory notes in the aggregate principal amount of approximately $4.4 million, bearing interest at 16.5% per annum and maturing in August 2021 (the “$4.4M Notes”), in exchange for a loan in the same amount. The Company has the right to extend the maturity date through February 2022 upon payment of an extension fee equal to 2.5% of the principal amount of the loan. As of September 30, 2020, no principal payments were made on the $4.4M Notes and accrued interest through such date of approximately $439,000 was paid.

In June 2019, the Company and MariMed Hemp, its wholly-owned subsidiary, issued a secured promissory note in the principal amount of $10.0 million (the “$10M Note”) to an unaffiliated party (the “Noteholder”). The proceeds from the $10M Note were used to finance a portion of the purchases of hemp seed inventory that was sold to GenCanna (the “Seed Transactions”) as further discussed in Note 17 – Related Party Transactions. The $10M Note provided for the repayment of principal plus a payment of $1.5 million (the “$1.5M Payment”) on the maturity date of January 31, 2020. Such payment was charged to interest expense over the life of the $10M Note.

As part of the $10M Note transaction, the Company issued three-year warrants to purchase 375,000 shares of common stock at an exercise price of $4.50 per share to the Noteholder. The fair value of these warrants on the issuance date of approximately $601,000 was recorded as a discount to the $10M Note. Approximately $523,000 of the warrant discount was amortized to interest expense in 2019, with the remainder in January 2020. Accordingly, the carrying value of the $10M Note approximated $9.9 million at December 31, 2019.

The Company entered into an amendment agreement with the Noteholder in February 2020, whereby the Company and MariMed Hemp issued an amended and restated promissory note maturing in June 2020 in the principal amount of $11,500,000 (the “$11.5M Note”), comprised of the principal amount of the $10M Note and the $1.5M Payment (which the Company had accrued). The $11.5M Note bore interest at a rate of 15% per annum, requiring periodic interest payments and minimum amortization payments of $3,000,000 in the aggregate, which the Company made.

The Company entered into a second amendment agreement with the Noteholder in June 2020, whereby (i) $352,000 of outstanding principal of the $11.5M Note was converted into 1,900,000 shares of the Company’s common stock (which did not result in an extinguishment loss as the conversion price was higher than the price of the Company’s common stock on the conversion date), and (ii) the Company and MariMed Hemp issued a second amended and restated promissory note in the principal amount of approximately $8.8 million (the “$8.8M Note”), comprised of the outstanding principal and unpaid interest balances of the $11.5M Note, plus an extension fee of approximately $330,000. In addition, the Company issued three-year warrants to the Noteholder to purchase 750,000 shares of common stock at an exercise price of $0.50 per share. The fair value of these warrants on the issuance date of approximately $66,000 was recorded as a discount to the $8.8M Note, to be amortized to interest expense over the life of the $8.8M Note.

The $8.8M Note bears interest at a rate of 15% per annum, matures in June 2022, and required a minimum amortization payment of $4,000,000 in July 2020, which the Company paid with a portion of proceeds of the Refinanced Mortgage. The Company can prepay all, or a portion, of the outstanding principal and unpaid interest of the $8.8M Note, however if any prepayment is made prior to December 25, 2021, the Company shall be required to pay a prepayment premium equal to 10% of the principal amount being prepaid. The Noteholder has the right to require the redemption of up to $250,000 of principal and unpaid interest thereon per calendar month. Such monthly redemptions shall be paid in common stock if certain defined conditions of the $8.8M Note and of the Company’s common stock are met, or else in cash. The Noteholder has the option to convert the $8.8M Note, in whole or in part, into shares of the Company’s common stock at a conversion price of $0.30, subject to certain conversion limitations.

The $8.8M Note is secured by a first priority security interest in the assets of certain of the Company’s subsidiaries and brands, and a pledge of the Company’s ownership interest in certain of its subsidiaries. The $8.8M Note imposes certain covenants on the borrowers, all of which were complied with as of September 30, 2020. On such date, the carrying value of the $8.8M note approximated $4.8 million.

In April 2019, MariMed Hemp issued a secured promissory note in the principal amount of $1,000,000 (the “$1M Note”) to an unaffiliated party. The proceeds of the $1M Note were used to finance a portion of the Seed Transactions as further discussed in Note 17 – Related Party Transactions. The $1M Note is secured by the collateral assignment of certain receivables from GenCanna and certain obligations of GenCanna to MariMed Hemp. The principal balance plus a payment of $180,000, initially due in December 2019, was extended to March 2020 in accordance with the terms of the $1M Note, requiring an additional payment of $30,000 (the “$30,000 Fee”). Prior to the extended due date, the parties agreed that the $1M Note would continue on a month-to-month basis bearing interest at a rate of 15% per annum. In September 2020, the Company paid down $500,000 of principal on the $1M Note. At September 30, 2020, the outstanding balance consisted of $500,000 of principal and approximately $403,000 of accrued interest which included the $30,000 Fee.

In March 2019, the Company raised $6.0 million through the issuance of a secured promissory note (the “$6M Note”) to an unaffiliated party (the “Holding Party”) bearing interest at a rate of 13% per annum and a service fee of $900,000 (the “Service Fee”). The proceeds of the note were used to finance a portion of the Seed Transactions as further discussed in Note 17 – Related Party Transactions. The $6M Note is secured by the collateral assignment of certain receivables from and obligations of GenCanna to MariMed Hemp. The $6M Note’s initial maturity date of December 31, 2019 was extended to April 30, 2020 in accordance with its terms, with the Company paying a $300,000 extension fee in December 2019 which was charged to interest expense.

The Company and the Holding Party entered into a note extension agreement in April 2020 (the “Initial Extension Agreement”) pursuant to which (i) the $6M Note’s due date was extended to September 2020, and the $6M Note was modified to include unpaid accrued interest of $845,000 through the modification date and interest at a rate of 10% per annum (the “$6.8M Note”), and (iii) a new convertible note in the amount of $900,000 (the “$900k Note”) was issued evidencing the Service Fee, bearing interest at a rate of 12% per annum. The Company satisfied the $900k Note and accrued interest of $20,100 in full as of the June 2020 maturity date by the payment in July 2020 of $460,050 in cash, representing one-half of the principal and accrued interest, and the issuance in June 2020 of 2,525,596 shares of the Company’s common stock, representing the other half of the principal and accrued interest.

In September 2018, the Company raised $3.0 million from the issuance of a secured promissory note to the Holding Party, bearing interest at a rate of 10% per annum (the “$3M Note”). The maturity date of the $3M Note, initially in March 2020, was extended for an additional six months in accordance with its terms, with the interest rate increasing to 12% per annum during the extension period. Pursuant to the Initial Extension Agreement, the maturity date of the $3M Note was extended to December 2020. The Company may elect to prepay the $3M Note in whole or part without premium or penalty provided the Holding Party is given proper notice and the Company is not in default of the note agreement.

In consideration of the Initial Extension Agreement, the Company (i) paid the Holding Party a fee of $50,000, (ii) extended the security interest in the Company’s properties in Maryland to secure each note held by the Holding Party, and (iii) granted the Holding Party certain security interests in equity interests held by the Company. Each of the notes held by the Holding Party provides for cross-default and imposes certain covenants on the Company, all of which were complied with as of September 30, 2020.

As part of the $3M Note transaction, the Company issued three-year warrants to the Holding Party’s designees to purchase 750,000 shares of the Company’s common stock at an exercise price of $1.80 per share. The Company recorded a discount on the $3M Note of approximately $1,511,000 from the allocation of note proceeds to the warrants based on the fair value of such warrants on the issuance date. Approximately $882,000 of the warrant discount was amortized to interest expense during 2018, and the remaining $629,000 was amortized during 2019.

In October 2020, the Company and the Holding Party entered into a second note extension agreement effective September 30, 2020 (the “Second Extension Agreement”), whereby the Company (i) paid, in October 2020, $1 million of principal and all outstanding accrued interest of approximately $333,000 on the $6.8M Note; (ii) issued an amended and restated senior secured promissory note in the principal amount of $5,845,000 (the “$5.8M Note”) to replace the $6.8M Note; and (iii) amended and restated the $3M Note (the “New $3M Note”, and together with the $5.8M Note, the “Amended Notes”). At September 30, 2020, the $1 million of principal and approximately $333,000 of accrued interest on the $6.8M Note, both of which were paid in October 2020, were reflected in the current portion of outstanding notes payable and in accrued interest, respectively.

The Amended Notes bear interest at a rate of 12% per annum and mature in September 2022. If all principal and accrued interest on either or both of the Amended Notes are not paid on or prior to their respective maturity dates, the Holding Party shall have the right, exercisable in its sole discretion at any time from September 2022 through March 2023, to convert all or a portion of the principal and interest owed into shares of the Company’s common stock at a conversion price equal to the average closing price for the 20 consecutive trading days prior to the date of conversion. The $5.8M Note requires mandatory principal payments of $400,000 in February 2021, and $500,000 per quarter during the period from May 2021 to August 2022 (such quarterly payments amounting to $3.0 million in the aggregate). The $5.8M Note can be prepaid in whole or in part at any time without penalty. The New $3M Note can be prepaid in whole or in part without penalty only after the $5.8M Note has been fully repaid.

In consideration of the Second Extension Agreement, the Company (i) issued four-year warrants to the Holding Party’s designees to purchase up to 5,000,000 shares of the Company’s common stock at an exercise price of $0.25 per share; (ii) paid the Holding Party a fee of $100,000; and (iii) extended the security interest in certain Company properties and the pledge of certain equity interests to secure the Amended Notes. The Company recorded a discount on the Amended Notes of approximately $573,000 based on the fair value of such warrants on the issuance date, of which approximately $1,000 was amortized as of the end of the quarter, and the remainder to be amortized over the life of the Amended Notes. Accordingly, the carrying value of the Amended Notes approximated $8.3 million at September 30, 2020, of which $1.4 million was current.

In addition to the above transactions, the Company raised $800,000 and $2,760,000 during the nine months ended September 30, 2020 and December 31, 2019, respectively, from the issuance of promissory notes to accredited investors bearing interest at rates ranging from 6.5% to 18% per annum, and maturing in 2020 and 2021 (the “Third Party Notes”). $2,800,000 of the Third Party Notes was repaid in 2020, and accordingly, $760,000 remained outstanding at September 30, 2020 with related accrued interest of approximately $48,000.

Debt Maturities

As of September 30, 2020, the aggregate scheduled maturities of the Company’s total debt outstanding, inclusive of the promissory notes and mortgages described within this Note 9 – Debt, and the convertible debentures described in the following Note 10 – Debentures Payable, were:

2020	$	2,808,883
2021		11,024,306
2022		12,268,122
2023		544,571
2024		577,281
Thereafter		13,110,191
Total		40,333,354
Less discounts		(994,591	)
	$	39,338,763

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DEBENTURES PAYABLE

9 Months Ended

Sep. 30, 2020

Debentures Payable

DEBENTURES PAYABLE

NOTE 10 – DEBENTURES PAYABLE

In a series of transactions from the period October 2018 through February 2020, the Company sold an aggregate of $21.0 million of convertible debentures (the “$21M Debentures”) to an accredited investor pursuant to an amended securities purchase agreement (the “SPA”). The following table summarizes the purchase dates and selected terms of each debenture transaction that comprises the $21M Debentures:

Issue Date	Maturity Date	Initial Principal		Interest Rate		Issue Discount		Warrant Discount		Ben. Conv. Feature		Converted To Common Stk.		Outstanding Principal
10/17/18	10/16/20	$	5,000,000	6.0	%	1.0	%	$	457,966	$	1,554,389	$	5,000,000	$	-
11/07/18	11/06/20		5,000,000	6.0	%	1.0	%		599,867		4,015,515		5,000,000		-
05/08/19	05/07/21		5,000,000	6.0	%	1.0	%		783,701		2,537,235		3,250,000		1,750,000
06/28/19	06/27/21		2,500,000	0.0	%	7.0	%		145,022		847,745		1,050,000		1,450,000
08/20/19	08/19/21		2,500,000	0.0	%	7.0	%		219,333		850,489		2,500,000		-
02/21/20	02/20/21		1,000,000	6.5	%	6.5	%		28,021		379,183		-		1,000,000

The holder of the $21M Debentures (the “Holder”) has the right at any time to convert all or a portion of the $21M Debentures, along with accrued and unpaid interest, into the Company’s common stock at conversion prices equal to 80% of a calculated average, as determined in accordance with the terms of the $21M Debentures, of the daily volume-weighted price during the ten consecutive trading days preceding the date of conversion, subject to a cap in certain conversions. Notwithstanding this conversion right, the Holder shall limit conversions in any given month to certain agreed-upon amounts based on the conversion price, and the Holder shall also be limited from beneficially owning more than 4.99% of the Company’s outstanding common stock (potentially further limiting the Holder’s conversion right).

The Company has the right to redeem all or a portion of the $21M Debentures, along with accrued and unpaid interest, at a 10% premium, provided that the Company first delivers advance written notice to the Holder of its intention to make a redemption, with the Holder allowed to effect certain conversions of the $21M Debentures during such notice period.

Upon a change in control transaction, as defined, the Holder may require the Company to redeem all or a portion of the $21M Debentures at a price equal to 110% of the outstanding principal amount of the $21M Debentures, plus all accrued and unpaid interest thereon. So long as the $21M Debentures are outstanding, in the event the Company enters into a Variable Rate Transaction (“VRT”), as defined in the SPA, the Holder may cause the Company to revise the terms of the $21M Debentures to match the terms of the convertible security issued in such VRT.

In conjunction with the issuance of the $21M Debentures, the Company issued the Holder three-year warrants to purchase an aggregate of 1,354,675 shares of the Company’s common stock at exercise prices ranging from $0.75 to $5.50 per share, of which warrants to purchase 180,000 shares of common stock at an exercise price of $0.75 were issued in the nine months ended September 30, 2020. The fair value of the warrants of approximately $2.2 million was recorded as a discount to the carrying amount of the $21M Debentures and are amortized to interest expense over the respective term of the individual debentures comprising the $21M Debentures.

Based on the conversion prices of the $21M Debentures in relation to the market value of the Company’s common stock, the $21M Debentures provided the Holder with a beneficial conversion feature, as the embedded conversion option was in-the-money on the commitment date. The aggregate intrinsic value of the beneficial conversion feature of approximately $10.2 million was recorded as a discount to the carrying amount of the $21M Debentures, with an offset to additional paid-in-capital. The beneficial conversion feature is amortized to interest expense over the respective term of the individual debentures comprising the $21M Debentures.

Pursuant to the terms of a registration rights agreement with the Holder, entered into concurrently with the SPA, the Company agreed to provide the Holder with certain registration rights with respect to any potential shares issued pursuant to the terms of the SPA and the $21M Debentures. An addendum to the SPA stipulates that the Holder has agreed not to undertake a conversion of all or a portion of the $21M Debentures that would require the Company to issue more shares than the amount of available authorized shares at the time of conversion, which amount of authorized shares shall not be less than the current authorized number of 500 million shares of common stock, thereby eliminating the requirement to bifurcate and account for the conversion feature of the $21M Debentures as a derivative.

The Holder converted, in several transactions from November 2018 through September 2020, an aggregate of $16.8 million of principal and approximately $768,000 of accrued interest into 64,470,063 shares of common stock at conversion prices ranging from $0.11 to $3.06 per share. Of these conversions, an aggregate of $6.8 million of principal and approximately $356,000 of accrued interest was converted into 54,143,232 shares of common stock at exercise prices of $0.11 and $0.34 per share during the nine months ended September 30, 2020.

All of the aforementioned conversions were performed in accordance with the terms of their respective convertible debenture agreements, and therefore the Company was not required to record a gain or loss on such conversions.

During the nine months ended September 30, 2020 and 2019, amortization of the beneficial conversion features, after adjustment for the aforementioned conversions, approximated $2,553,000 and $4,646,000, respectively; amortization of the warrant discounts approximated $545,000 and $913,000 respectively; and the amortization of original issue discounts approximated $267,000 and $107,000, respectively. Additionally, accrued interest expense for such periods approximated $234,000 and $421,000, respectively.

At September 30, 2020, the aggregate outstanding principal balance of the $21M Debentures was $4,200,000. Also on such date, the unamortized balances of the beneficial conversion features, the warrant discounts, and original issue discounts were approximately $867,000, $300,000, and $105,000, respectively. Accordingly, at September 30, 2020, the carrying value of the $21M Debentures was approximately $2,928,000, all of which was current.

At December 31, 2019, the aggregate outstanding principal balance on the $21M Debentures was $10,000,000. Also on such date, the unamortized balances of the beneficial conversion features, the warrant discounts, and original issue discounts were approximately $3,041,000, $817,000, and $307,000, respectively. Accordingly, at December 31, 2019, the carrying value of the $21M Debentures was approximately $5,835,000, all of which was long term.

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MEZZANINE EQUITY

9 Months Ended

Sep. 30, 2020

Mezzanine Equity

MEZZANINE EQUITY

NOTE 11 – MEZZANINE EQUITY

Preferred Stock

In February 2020, the Company entered into an exchange agreement with two institutional shareholders (the “TIS Exchange Agreement”) whereby the Company (i) exchanged 4,908,333 shares of the Company’s common stock previously acquired by the two institutional shareholders for an equal number of shares of newly designated Series B convertible preferred stock, and (ii) issued the $4.4M Notes previously discussed in Note 9 – Debt.

In connection with the TIS Exchange Agreement, the Company filed (i) a certificate of designation with respect to the rights and preferences of the Series B convertible preferred stock, and (ii) a certificate of elimination to return all shares of the Series A convertible preferred stock, of which no shares were issued or outstanding at the time of filing, to the status of authorized and unissued shares of undesignated preferred stock.

The holders of Series B convertible preferred stock (the “Series B Holders”) are entitled to cast the number of votes equal to the number of shares of common stock into which the shares of Series B convertible preferred stock are convertible, together with the holders of common stock as a single class, on most matters. However, the affirmative vote or consent of the Series B Holders voting separately as a class is required for certain acts taken by the Company, including the amendment or repeal of certain charter provisions, liquidation or winding up of the Company, creation of stock senior to the Series B convertible preferred stock, and/or other acts defined in the certificate of designation.

The Series B convertible preferred stock shall, with respect to dividend rights and rights on liquidation, winding up and dissolution, rank senior to the Company’s common stock. The Company shall not declare, pay, or set aside any dividends on shares of any other class or series of capital stock of the Company unless the Series B Holders then outstanding shall first receive, or simultaneously receive, a dividend on each outstanding share of Series B convertible preferred stock in an amount calculated pursuant to the certificate of designation.

In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, the Series B Holders then outstanding shall be entitled to be paid out of the assets of the Company available for distribution to its stockholders before any payment shall be made to the holders of common stock by reason of their ownership thereof, an amount per share equal to $3.00, plus any dividends declared but unpaid thereon, with any remaining assets distributed pro-rata among the holders of the shares of Series B convertible preferred stock and common stock, based on the number of shares held by each such holder, treating for this purpose all such securities as if they had been converted to common stock.

At any time on or prior to the six-year anniversary of the issuance date of the Series B convertible preferred stock, (i) the Series B Holders have the option to convert their shares of Series B convertible preferred stock into common stock at a conversion price of $3.00 per share, without the payment of additional consideration, and (ii) the Company has the option to convert all, but not less than all, shares of Series B convertible preferred stock into common stock at a conversion price of $3.00 if the daily volume weighted average price of common stock (the “VWAP”) exceeds $4.00 per share for at least twenty consecutive trading days prior to the date on which the Company gives notice of such conversion to the Series B Holders.

On the day following the six-year anniversary of the issuance of the Series B convertible preferred stock, all outstanding shares of Series B convertible preferred stock shall automatically convert into common stock as follows:

If the sixty-day VWAP is less than or equal to $0.50 per share, the Company shall have the option to (i) convert all shares of Series B convertible preferred stock into common stock at a conversion price of $1.00 per share, and pay cash to the Series B Holders equal to the difference between the 60-day VWAP and $3.00 per share, or (ii) pay cash to the Series B Holders equal to $3.00 per share.

If the sixty-day VWAP is greater than $0.50 per share, the Company shall have the option to (i) convert all shares of Series B convertible preferred stock into common stock at a conversion price per share equal to the quotient of $3.00 per share divided by the sixty-day VWAP, or (ii) pay cash to the Series B Holders equal to $3.00 per share, or (iii) convert all shares of Series B convertible preferred stock into common stock at a conversion price per share equal to the sixty-day VWAP per share and pay cash to the Series B Holders at the difference between $3.00 per share and the sixty-day VWAP per share.

The Company shall at all times when the Series B convertible preferred stock is outstanding, reserve and keep available out of its authorized but unissued capital stock, for the purpose of effecting the conversion of the Series B convertible preferred stock, such number of its duly authorized shares of common stock as shall from time to time be sufficient to effect the conversion of all outstanding Series B convertible preferred stock.

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STOCKHOLDERS’ EQUITY

9 Months Ended

Sep. 30, 2020

Equity [Abstract]

STOCKHOLDERS’ EQUITY

NOTE 12 – STOCKHOLDERS’ EQUITY

Common Stock

In February 2020, pursuant to the TIS Exchange Agreement, the 4,908,333 shares of common stock exchanged for shares of Series B convertible preferred stock were treated as an increase to treasury stock of $14,725,000 ($3.00 per share), and then immediately cancelled, thereby reducing treasury stock to zero, with corresponding reductions to common stock of approximately $5,000 (the par value of the exchanged common shares) and additional paid-in capital of approximately $14,720,000.

During the nine months ended September 30, 2020, the Company issued 4,400,000 shares of common stock to settle approximately $699,000 of obligations. Based on the price of the Company’s common stock on the settlement date, the Company incurred a loss of approximately $45,000 which is reflected under Loss On Obligations Settled With Equity on the statement of operations. No such settlements occurred during the nine months ended September 30, 2019.

During the nine months ended September 30, 2020, the Company granted 97,797 shares of common stock to a current employee. The fair value of the shares of approximately $16,000 was charged to employee compensation during the period. At September 30, 2020, 33,319 of these shares were yet to be issued. During the nine months ended September 30, 2019, the Company granted 108,820 shares of common stock to current employees. The fair value of the shares of approximately $194,000 was charged to employee compensation during the period.

During the nine months ended September 30, 2020, 40,000 shares of common stock granted to an employee in 2019 were forfeited. The Company recorded these returned shares at par value. No common stock forfeitures occurred in 2019.

During the nine months ended September 30, 2020 and 2019, the Company issued 3,236,857 and 97,136 shares of common stock, respectively, associated with previously issued subscriptions on common stock with a value of approximately $1,168,000 and $169,000, respectively.

During the nine months ended September 30, 2019, the Company sold 799,995 shares of common stock at a price of $3.25 per share, resulting in total proceeds of $2,600,000. No common stock was sold during the nine months ended September 30, 2020.

As previously disclosed in Note 3 – Acquisitions, the Company issued in 2019 (i) 1,000,000 shares of common stock in connection with the acquisition of the KPGs and Mari-IL, (ii) 1,000,000 shares of common stock as a good faith deposit on the Harvest acquisition, and (iii) 520,000 shares of common stock in connection with the acquisition of MediTaurus.

As previously disclosed in Note 4 – Investments, the Company issued 500,000 shares of common stock in 2019 to purchase a minority interest in Terrace, and 378,259 shares of common stock in 2018 to purchase a minority interest in MRSVP.

As previously disclosed in Note 9 – Debt, the Company issued 4,425,596 shares of common stock during the nine months ended September 30, 2020 to retire approximately $812,000 of promissory notes (principal and accrued interest).

As previously disclosed in Note 10 – Debentures Payable, during the nine months ended September 30, 2020, the holder of the $21M Debentures converted approximately $7.2 million of principal and interest into 54,143,232 shares of common stock. During the nine months ended September 30, 2019, the holder of the $21M debentures converted approximately $7.9 million of principal and interest into 6,798,339 shares of common stock.

As further disclosed in Note 13 – Stock Options, during the nine months ended September 30, 2019, 417,352 shares of common stock were issued in connection with the exercise of stock options. No stock options were exercised during the nine months ended September 30, 2020.

As further disclosed in Note 14 – Warrants, during the nine months ended September 30, 2019, warrants to purchase 686,104 shares of common stock were exercised. No warrants were exercised during the nine months ended September 30, 2020.

Common Stock Issuance Obligations

At September 30, 2020, the Company was obligated to issue 33,319 shares of common stock, valued at approximately $5,000, in connection with a stock grant to a current employee. Such shares were subsequently issued in October 2020. At September 30, 2019, the Company was obligated to issue 6,603,532 shares of common stock, valued at approximately $5.0 million, in connection with the MediTaurus acquisition, stock option exercises, and debenture conversions. Such shares were subsequently issued in the fourth quarter of 2019.

Amended and Restated 2018 Stock Award and Incentive Plan

In August 2019, the Company’s board of directors approved the Amended and Restated 2018 Stock Award and Incentive Plan (the “Incentive Plan”), based on the board’s belief that awards authorized under the Incentive Plan provide incentives for the achievement of important performance objectives and promote the long-term success of the Company. In September 2019, the Incentive Plan was approved by the stockholders at the Company’s annual stock-holders meeting.

The Incentive Plan is an omnibus plan, authorizing a variety of equity award types as well as cash and long-term incentive awards. The Incentive Plan amends and restates the Company’s 2018 Stock Award and Incentive Plan (the “Previous Plan”), which was approved by the board of directors in July 2018 but never presented to stockholders for approval. Any grants made under the Previous Plan prior to the approval date of the Incentive Plan shall continue to be governed by the terms of the Previous Plan.

The Incentive Plan authorizes a broad range of awards, including stock options, stock appreciation rights, restricted stock, deferred stock, dividend equivalents, performance shares, cash-based performance awards, and other stock-based awards. Such awards can be granted to employees, non-employee directors and other persons who provide substantial services to the Company and its affiliates. Nothing in the Incentive Plan precludes the payment of other compensation to officers and employees, including bonuses based upon performance, outside of the Incentive Plan.

An aggregate of 40,000,000 shares are reserved for delivery to participants and may be used for any type of award under the Incentive Plan. Shares actually delivered in connection with an award will be counted against such number of reserved shares. Shares will remain available for new awards if an award under the Incentive Plan expires, is forfeited, canceled, or otherwise terminated without delivery of shares or is settled in cash. Each award under the Incentive Plan is subject to the Company’s claw back policy in effect at the time of grant of the award.

The board of directors may amend, suspend, discontinue, or terminate the Incentive Plan or the authority to grant awards thereunder without stockholder approval, except as required by law or regulation or under rules of the stock exchange, if any, on which the Company’s stock may then be listed. Unless earlier terminated, grants under the Incentive Plan will terminate ten years after stockholder approval of the Incentive Plan, and the Incentive Plan will terminate when no shares remain available and the Company has no further obligation with respect to any outstanding award.

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STOCK OPTIONS

9 Months Ended

Sep. 30, 2020

Stock Options

STOCK OPTIONS

NOTE 13 – STOCK OPTIONS

During the nine months ended September 30, 2020, the Company granted five-year options to purchase up to 1,064,500 shares of common stock at exercise prices of $0.15 and $0.30 per share. During the same period in 2019, the Company granted options to purchase up to 900,000 shares of common stock, expiring four and five years from their grant dates, at exercise prices ranging from $0.99 to $1.95 per share.

The fair values of the aforementioned options granted in 2020 and 2019 of approximately $117,000 and $876,000, respectively, are being amortized to compensation expense over their vesting periods, of which approximately $100,000 and $101,000 was amortized during the nine months ended September 30, 2020 and 2019, respectively.

During the nine months ended September 30, 2019, options to purchase 3,585,000 shares of common stock were exercised at prices ranging from $0.08 to $0.77 per share. Of these exercised options, 2,285,000 were exercised on a cashless basis with the exercise prices paid via the surrender of 523,192 shares of common stock. No options were exercised during the nine months ended September 30, 2020.

During the nine months ended September 30, 2020 and 2019, options to purchase 210,000 and 80,000 shares of common stock, respectively, were forfeited, resulting in an aggregate reduction of amortized compensation expense of approximately $208,000 and $170,000, respectively.

Stock options outstanding and exercisable as of September 30, 2020 were:

Exercise Price		Shares Under Option				Remaining
per Share		Outstanding		Exercisable		Life in Years
$	0.130		200,000		200,000		0.01
$	0.140		550,000		550,000		0.25
$	0.149		500,000		500,000		5.25
$	0.300		554,500		-		4.50
$	0.330		50,000		50,000		0.44
$	0.417		900,000		400,000		4.24
$	0.450		125,000		125,000		1.01
$	0.590		15,000		15,000		4.19
$	0.630		300,000		300,000		1.25
$	0.770		200,000		200,000		2.25
$	0.900		50,000		50,000		2.62
$	0.910		50,000		50,000		2.06
$	0.950		50,000		30,000		2.25
$	0.992		300,000		300,000		3.99
$	1.000		125,000		75,000		4.09
$	1.350		100,000		50,000		2.83
$	1.950		375,000		250,000		2.75
$	2.320		100,000		100,000		2.95
$	2.450		2,000,000		2,000,000		2.23
$	2.500		100,000		100,000		2.91
$	2.650		200,000		200,000		2.98
$	2.850		56,250		43,750		2.20
$	2.850		100,000		75,000		3.20
$	3.000		25,000		25,000		3.21
$	3.725		100,000		100,000		3.19
			7,125,750		5,788,750

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WARRANTS

9 Months Ended

Sep. 30, 2020

Warrants

WARRANTS

NOTE 14 – WARRANTS

During the nine months ended September 30, 2020, in conjunction with the $21M Debentures previously disclosed in Note 10 – Debentures Payable, the Company issued three-year warrants to purchase up to 180,000 shares of common stock at an exercise price of $0.75 per share. The fair value of these warrants on the issuance date approximated $28,000, with approximately $17,000 of this amount amortized to interest expense during the period and the remainder to be amortized over the term of the respective debentures.

Also during this period, as previously disclosed in Note 9 – Debt, (i) as part of the $8.8M Note transaction, the Company issued three-year warrants to purchase up to 750,000 shares of common stock at an exercise price of $0.50 per share, and (ii) in consideration of the Second Extension Agreement, the Company issued four-year warrants to purchase up to 5,000,000 shares of the Company’s common stock at an exercise price of $0.25 per share. The fair value of these warrants on their issuance dates approximated $639,000, with approximately $10,000 of this amount amortized to interest expense during the period and the remainder to be amortized by the maturity dates of the respective promissory notes.

During the nine months ended September 30, 2019, in conjunction with the $21M Debentures previously disclosed in Note 10 – Debentures Payable, the Company issued three-year warrants to purchase 850,000 shares of common stock at exercise prices of $3.00 and $5.00 per share. The fair value of these warrants at issuance approximated $1,148,000, with approximately $517,000 of this amount amortized to interest expense during the period and the remainder to be amortized over the remaining term of the respective debentures.

Also during this period, as part of the $10M Note transaction previously disclosed in Note 9 – Debt, the Company issued three-year warrants to purchase 375,000 shares of common stock at an exercise price of $4.50 per share. The fair value of these warrants at issuance approximated $601,000, with approximately $294,000 of this amount amortized to interest expense during the period and the remainder amortized by the maturity date of the $10M Note.

The Company also issued stand-alone warrants to purchase up to 25,000 and 125,000 shares of common stock during the nine months ended September 30, 2020 and 2019, respectively. The fair value of these warrants at issuance approximated $2,000 in 2020 and $139,000 in 2019, and were charged to compensation expense during the periods.

During the nine months ended September 30, 2019, warrants to purchase up to 686,104 shares of common stock were exercised at exercise prices ranging from $0.12 to $1.75 per share, resulting in aggregate proceeds to the Company of approximately $612,000. No warrants were exercised during the nine months ended September 30, 2020.

At September 30, 2020 and 2019, warrants to purchase up to 17,735,107 and 11,270,107 shares of common stock, respectively, were outstanding with exercise prices ranging from $0.15 to $5.50 per share in both periods.

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REVENUES

9 Months Ended

Sep. 30, 2020

Revenue from Contract with Customer [Abstract]

REVENUES

NOTE 15 – REVENUES

The Company’s revenues were comprised of the following major categories:

	Nine Months Ended September 30,
	2020		2019
Product sales		21,992,298		60,839
Product sales from related party		-		29,029,249
Real estate	$	5,065,538	$	5,250,084
Management		1,081,562		1,963,205
Supply procurement		1,218,334		2,830,555
Licensing		1,179,113		1,230,366
Other		984		47,893
Total revenues	$	30,537,829	$	40,412,191

The amount under Product Sales From Related Party shown in the table above represents the total revenues from the seed transactions with GenCanna, which is further disclosed in Note 17 – Related Party Transactions. Excluding these revenues, for the nine months ended September 30, 2020 and 2019, revenue from two clients represented 24% and 82%, respectively, of total revenues.

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BAD DEBTS

9 Months Ended

Sep. 30, 2020

Bad Debts

BAD DEBTS

NOTE 16 – BAD DEBTS

At September 30, 2020 and 2019, the Company maintained reserves against bad debts of approximately $44.3 million and $250,000, respectively.

The September 30, 2020 reserves were primarily comprised of (i) an allowance against the accounts receivable balance due from GenCanna of approximately $29.0 million, following the commencement of GenCanna’s Chapter 11 proceedings as previously discussed in Note 4 – Investments, (ii) an allowance against the accounts receivable balance of approximately $11.1 million, and reserve against the working capital balance of approximately $1.5 million, due from Kind, in light of the current litigation between the Company and Kind as further discussed in Note 18 – Commitments and Contingencies, and (iii) an allowance against the accounts receivable balance of approximately $314,000, and a reserve against the working capital balance of approximately $2.3 million due from Harvest, based on the Company’s expectation of the negative impact of the COVID-19 pandemic on Harvest’s local economy.

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RELATED PARTY TRANSACTIONS

9 Months Ended

Sep. 30, 2020

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

NOTE 17 – RELATED PARTY TRANSACTIONS

During 2019, the Company, through its MariMed Hemp subsidiary, entered into several hemp seed sale transactions with GenCanna whereby the Company acquired large quantities of top-grade feminized hemp seeds with proven genetics at volume discounts that it sold to GenCanna at market rates. The seeds met the U.S. government’s definition of federally legal industrial hemp, which was descheduled as a controlled substance and classified as an agricultural commodity upon the signing of the 2018 U.S. Farm Bill.

The Company purchased $20.75 million of hemp seed inventory which it sold and delivered to GenCanna for $33.2 million. The Company provided GenCanna with extended payment terms through December 2019, to coincide with the completion of the seeds’ harvest, although the payment by GenCanna was not contingent upon the success of such harvest or its yield. To partially fund the seed purchases, the Company raised $17.0 million in debt financings which is reflected in Notes Payable on the balance sheet and previously discussed in Note 9 – Debt.

By the end of 2019, GenCanna had not paid the amount it owed the Company for its seed purchases due to several challenges it faced late in the year, including defaults under its senior credit facility, a fire at its main processing and lab facility, the domestic decline of CBD selling prices, and the contraction of the cannabis capital markets. In February 2020, as previously discussed in Note 4 – Investments, under pressure from certain of its creditors, the GenCanna Debtors agreed to convert a previously-filed involuntary bankruptcy proceeding into a voluntary Chapter 11 proceeding, and filed voluntary petitions under Chapter 11 in the Bankruptcy Court.

As required by the relevant accounting guidance, the Company initially recorded the $33.2 million due from GenCanna as a related party receivable, with approximately $29.0 million recognized as related party revenue, and approximately $4.2 million classified as unearned revenue (such amount representing the Company’s 33.5% ownership portion of the profit on these transactions, which was to have been recognized as revenue upon payment by GenCanna). As a result of GenCanna’s Chapter 11 proceedings, the Company fully reserved the receivable balance of approximately $29.0 million and wrote off the entire unearned revenue balance of approximately $4.2 million.

In 2019, the Company granted five-year options to purchase up to 100,000 shares of common stock to each of the Company’s three independent board members at an exercise price of $0.99 per share. The aggregate fair value of these options of approximately $191,000 was fully amortized at March 31, 2020. No options were granted to related parties during the nine months ended September 30, 2020.

In 2019, options to purchase 200,000 and 132,499 shares of common stock were exercised by the Company’s CEO and an independent board member, respectively, at weighted average exercise prices of $0.11 and $0.08 per share, respectively. The independent board member’s options were exercised on a cashless basis with the exercise prices paid via the surrender of 3,108 shares of common stock. No options were exercised by related parties during the nine months ended September 30, 2020.

In 2019, options to purchase 117,501 shares of common stock were forfeited by board members. No options were forfeited by related parties during the nine months ended September 30, 2020.

The Company’s current corporate offices are leased from a company owned by a related party under a 10-year lease that commenced August 2018 and contains a five-year extension option. During the nine months ended September 30, 2020 and 2019, expenses incurred under this lease approximated $117,000 in both periods.

The balance of Due To Related Parties at September 30, 2020 and December 31, 2019 of approximately $1,233,000 and $1,455,000, respectively, were comprised of amounts owed of approximately (i) $515,000 and $420,000, respectively, to the Company’s CEO and CFO, (ii) $673,000 and $990,000, respectively, to companies partially owned by these officers, and (iii) $45,000 in both periods to a stockholder of the Company. Such amounts owed are not subject to repayment schedules.

Both of the Company’s mortgages with Bank of New England discussed in Note 9 – Debt, as well as the mortgage with Commonwealth Real Estate Ventures LLC disclosed in Note 19 – Subsequent Events, are personally guaranteed by the Company’s CEO and CFO.

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COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2020

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 18 – COMMITMENTS AND CONTINGENCIES

Lease Commitments

The Company is the lessee under five operating leases and four finance leases. These leases contain rent holidays and customary escalations of lease payments for the type of facilities being leased. The Company recognizes rent expense on a straight-line basis over the expected lease term, including cancelable option periods which the Company fully expects to exercise. Certain leases require the payment of property taxes, insurance, and/or maintenance costs in addition to the rent payments.

The details of the Company’s operating lease agreements are as follows:

● Delaware – 4,000 square feet of retail space in a multi-use building under a five-year lease that commenced in October 2016 and contains a five-year option to extend the term. The Company developed the space into a cannabis dispensary which is subleased to its cannabis-licensed client.

● Delaware – a 100,000 square foot warehouse leased in March 2019 that the Company is developing into a cultivation and processing facility to be subleased to the same Delaware client. The lease term is 10 years, with an option to extend the term for three additional five-year periods.

● Nevada – 10,000 square feet of an industrial building that the Company has built-out into a cannabis cultivation facility and plans to rent to its cannabis-licensed client under a sub-lease which will be coterminous with this lease expiring in 2024.

● Massachusetts – 10,000 square feet of office space which the Company utilizes as its corporate offices under a 10-year lease with a related party expiring in 2028, with an option to extend the term for an additional five-year period.

● Maryland – a 2,700 square foot 2-unit apartment under a lease that expires in July 2022 with an option to renew for a two-year term.

The Company leases machinery and office equipment under finance leases that expire in February 2022 through June 2024 with such terms being a major part of the economic useful life of the leased property.

The components of lease expense for the nine months ended September 30, 2020 were as follows:

Operating lease cost	$	737,993
Finance lease cost:
Amortization of right-of-use assets	$	24,512
Interest on lease liabilities		5,834
Total finance lease cost	$	30,346

The weighted average remaining lease term for operating leases is 8.7 years, and for the finance lease is 3.0 years. The weighted average discount rate used to determine the right-of-use assets and lease liabilities was 7.5% for all leases.

Future minimum lease payments as of September 30, 2020 under all non-cancelable leases having an initial or remaining term of more than one year were:

	Operating Leases			Finance Lease
2020	$	246,937		$	9,603
2021		1,008,227			38,412
2022		949,535			27,123
2023		910,166			23,201
2024		835,411			3,229
Thereafter		4,267,635			-
Total lease payments		8,217,911			101,568
Less: imputed interest		(2,248,157	)		(10,718	)
	$	5,969,754		$	90,850

Terminated Employment Agreement

An employment agreement which commenced in 2012 with Thomas Kidrin, the former CEO of the Company, that provided Mr. Kidrin with salary, car allowances, stock options, life insurance, and other employee benefits, was terminated by the Company in 2017. At September 30, 2020 and December 31, 2019, the Company maintained an accrual of approximately $1,043,000 for any amounts that may be owed under this agreement, although the Company contends that such agreement is not valid and that no amount is due.

In July 2019, Mr. Kidrin, also a former director of the Company, filed a complaint in the Massachusetts Superior Court, that alleges the Company failed to pay all wages owed to him and breached the employment agreement, and requests multiple damages, attorney fees, costs, and interest. The Company has moved to dismiss certain counts of the complaint and has asserted counterclaims against Mr. Kidrin alleging breach of contract, breach of fiduciary duty, money had and received, and unjust enrichment. The Company believes that the allegations in the complaint are without merit and intends to vigorously defend this matter and prosecute its counterclaims.

Maryland Acquisition

As previously disclosed in Note 3 – Acquisitions, the sellers of Kind have attempted to renegotiate the terms of the MOU, alleging that the MOU is not an enforceable agreement, despite the MOU containing all the definitive material terms with respect to the acquisition transaction and confirming the management and lease agreements. The Company engaged with the sellers in a good faith attempt to reach updated terms acceptable to both parties, but the non-reciprocation of the sellers resulted in an impasse and both parties commencing legal proceedings.

On November 13, 2019, Kind Therapeutics USA Inc. (“Kind”) commenced an action in the Circuit Court for Washington County, MD captioned Kind Therapeutics USA, Inc. vs. MariMed, Inc., et al. (Case No. C-21-CV-19-000670) asserting claims against the Company, including breach of contract, breach of fiduciary duty, accounting, and unjust enrichment, and seeking declaratory judgment and damages in excess of $75,000. On November 15, 2019, the Company filed counterclaims against Kind and a third-party complaint against the Members of Kind (Jennifer DiPietro, Susan Zimmerman, and Sophia Leonard-Burns) and William Tham (the “Counterclaim”). The Counterclaim alleged breach of contract with respect to each of the MOU and the Management Agreement (the “MSA”), unjust enrichment, promissory estoppel/detrimental reliance, and fraud in the inducement, and seeking a declaratory judgement that the MOU is an enforceable contract, specific performance of such contact, and the establishment of a constructive trust for the Company’s benefit. The Counterclaim also seeks damages.

Both parties, MariMed (including MariMed Holdings MD, LLC and MariMed Advisors Inc.) and Kind, brought motions for a temporary restraining order and a preliminary injunction. By Opinion and Order entered on November 21, 2019, the Court denied both parties motions for a temporary restraining order. In its opinion, the Court specifically noted that, contrary to Kind’s allegations, the MSA and the 20-year lease agreement for Kind’s utilization of the Company’s cultivation and production facility (the “Lease”) “appear to be independent, valid and enforceable contracts.”

On or about April 3, 2020, the Company filed its First Amended Counterclaim and Third Party Complaint in which additional claims were added and clarified, including breach of Lease and breach of the Licensing and Manufacturing Agreement (the “LMA”) against Kind, along with other alternative claims and seeking damages. On August 11, 2020, the Company filed its Second Amended Counterclaim and Third Party Complaint in which additional clarifications were made and claims added for breach of fiduciary duty and breach of partnership. The Company believes that its claims for breach of contract with respect to the MOU, the MSA, the Lease, and the LMA, as well as all other claims are meritorious. Further, the Company believes that Kind’s claims against the Company are without merit. The Company intends to aggressively prosecute and defend the action. In light of this litigation, the Company has not recorded management fees charged to Kind of approximately $1.1 million for the nine months ended September 30, 2020. A hearing on the parties’ cross-motions for preliminary injunction was held on September 14 to 17, 2020 and November 2 and 4, 2020, and the Court’s ruling on the motions is pending. The trial is currently scheduled to start on June 7, 2021.

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SUBSEQUENT EVENTS

9 Months Ended

Sep. 30, 2020

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 19 – SUBSEQUENT EVENTS

Debentures Payable

In October 2020, the holder of the $21M Debentures converted an aggregate of approximately $1,259,000 of principal and accrued interest into 10,653,600 shares of common stock at conversion prices of $0.11 and $0.12 per share.

Notes Payable

In October 2020, as previously discussed in Note 9 – Debt, the Company and the Holding Party entered into the Second Extension Agreement whereby the Company (i) paid, in October 2020, $1 million of principal and all outstanding accrued interest of approximately $333,000 on the $6.8M Note, (ii) issued the $5.8M Note, which replaced the $6.8M Note, and the New $3M Note, both with maturity dates in September 2022.

Mortgage Agreement

In October 2020, the Company entered into a $1.3 million mortgage agreement with Commonwealth Real Estate Ventures LLC. The mortgage is secured by the Company’s properties in Illinois, and requires interest-only monthly payments at a rate of 15% per annum through its maturity date in October 2021. The mortgage contained an origination charge of 1% of the principal balance. Repayment of the mortgage is personally guaranteed by the Company’s CEO and CFO.

Common Stock Issuance Obligations

In October 2020, the Company issued 33,319 shares of common stock in connection with the stock grant to a current employee previously disclosed in Note 12 – Stockholders’ Equity.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2020

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

In accordance with GAAP, interim financial statements are not required to contain all of the disclosures normally required in annual financial statements. In addition, the results of operations of interim periods may not necessarily be indicative of the results of operations to be expected for the full year. Accordingly, these interim financial statements should be read in conjunction with the Company’s most recent audited annual financial statements and accompanying notes for the year ended December 31, 2019.

Certain reclassifications have been made to prior periods’ data to conform to the current period presentation. These reclassifications had no effect on reported income (losses) or cash flows.

Going Concern

Going Concern

In connection with the preparation of its financial statements for the nine months ended September 30, 2020, the Company’s management evaluated the Company’s ability to continue as a going concern in accordance with ASU 2014-15, Presentation of Financial Statements–Going Concern (Subtopic 205-40), which requires an assessment of relevant conditions or events, considered in the aggregate, that are known or reasonably knowable by management on the issuance dates of the financial statements which indicate the probable likelihood that the Company will be unable to meet its obligations as they become due within one year after the issuance date of the financial statements.

As part of its evaluation, management assessed known events, trends, commitments, and uncertainties, which at the time included the status of the Company’s consolidation plan, the continuing impact of the COVID-19 pandemic on its operations, developments concerning GenCanna’s bankruptcy proceedings, recent cannabis industry investment activity, price movements of public cannabis stock, actions and/or results of certain bellwether cannabis companies, the level of cannabis investor confidence, and changes to state laws governing recreational (adult-use) and medical cannabis.

Management also reviewed certain key liquidity metrics of the Company, as further described below, as well as other factors in its evaluation, and determined that there currently exists a substantial doubt that the Company will be able to continue as a going concern within one year after the issuance date of these financial statements without additional funding or the continued profitability growth of its cannabis operations in Illinois and Massachusetts.

The Company produced the following improvements to key liquidity metrics during the reported period:

● During the nine months ended September 30, 2020, the Company’s operating activities provided positive cash flow of approximately $1.6 million, compared to approximately $24.2 million of negative cash flow used by such activities during the same period of 2019, a positive swing of approximately $25.8 million.

● At September 30, 2020, the Company’s negative working capital was approximately $9.1 million, a continued improvement from approximately $21.5 million at June 30, 2020 and approximately $29.3 million at December 31, 2019.

● The Company successfully restructured the terms of its short-term promissory notes payable to approximately $8.5 million at September 30, 2020 from approximately $17.2 million at June 30, 2020 and $23.1 million at December 31, 2019.

For further discussion of the Company’s liquidity and capital resources, please refer to Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Form 10-Q for the period ended September 30, 2020.

Principles of Consolidation

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of MariMed Inc. and the following majority-owned subsidiaries:

Subsidiary:	Percentage Owned
MariMed Advisors Inc.		100.0%
Mia Development LLC		89.5%
Mari Holdings IL LLC		100.0%
Mari Holdings MD LLC		97.4%
Mari Holdings NV LLC		100.0%
Hartwell Realty Holdings LLC		100.0%
iRollie LLC		100.0%
ARL Healthcare Inc.		100.0%
KPG of Anna LLC		100.0%
KPG of Harrisburg LLC		100.0%
MariMed Hemp Inc.		100.0%
MediTaurus LLC		70.0%

Intercompany accounts and transactions have been eliminated.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts within the financial statements and disclosures thereof. Actual results could differ from these estimates or assumptions.

Cash Equivalents

Cash Equivalents

The Company considers all highly liquid investments with a maturity date of three months or less to be cash equivalents. The fair values of these investments approximate their carrying values.

The Company’s cash and cash equivalents are maintained with recognized financial institutions located in the United States. In the normal course of business, the Company may carry balances with certain financial institutions that exceed federally insured limits. The Company has not experienced losses on balances in excess of such limits and management believes the Company is not exposed to significant risks in that regard.

Accounts Receivable

Accounts Receivable

Accounts receivable consist of trade receivables and are carried at their estimated collectible amounts.

The Company provides credit to its clients in the form of payment terms. The Company limits its credit risk by performing credit evaluations of its clients and maintaining a reserve, if deemed necessary, for potential credit losses. Such evaluations include the review of a client’s outstanding balances with consideration towards such client’s historical collection experience, as well as prevailing economic and market conditions and other factors. Based on such evaluations, the Company maintained an allowance for doubtful accounts of approximately $40.5 million and $39.7 million at September 30, 2020 and December 31, 2019, respectively. Please refer to Note 16 – Bad Debts for further discussion on receivable reserves.

Inventory

Inventory

Inventory is carried at the lower of cost or net realizable value, with the cost being determined on a first-in, first-out (FIFO) basis. The Company allocates a certain percentage of overhead cost to its manufactured inventory; such allocation is based on square footage and other industry-standard criteria. The Company reviews physical inventory for obsolescence and/or excess and will record a reserve if necessary. As of the date of this report, no reserve was deemed necessary.

Investments

Investments

Investments are comprised of equity holding of private companies. These investments are recorded at fair value on the Company’s consolidated balance sheet, with changes to fair value included in income. Investments are evaluated for permanent impairment and are written down if such impairments are deemed to have occurred.

Revenue Recognition

Revenue Recognition

The Company recognizes revenue in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification (“ASC”) 606, Revenue from Contract with Customers, as amended by subsequently issued Accounting Standards Updates. This revenue standard requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to in exchange for those goods or services. The recognition of revenue is determined by performing the following consecutive steps:

● Identify the contract(s) with a customer;

● Identify the performance obligations in the contract(s);

● Determine the transaction price;

● Allocate the transaction price to the performance obligations in the contract(s); and

● Recognize revenue as the performance obligation is satisfied.

Additionally, when another party is involved in providing goods or services to the Company’s clients, a determination is made as to who—the Company or the other party—is acting in the capacity as the principal in the sale transaction, and who is merely the agent arranging for goods or services to be provided by the other party.

The Company is typically considered the principal if it controls the specified good or service before such good or service is transferred to its client. The Company may also be deemed to be the principal even if it engages another party (an agent) to satisfy some of the performance obligations on its behalf, provided the Company (i) takes on certain responsibilities, obligations and risks, (ii) possesses certain abilities and discretion, or (iii) other relevant indicators of the sale. If deemed an agent, the Company would not recognize revenue for the performance obligations it does not satisfy.

The Company’s main sources of revenue are comprised of the following:

● Product Sales – direct sales of cannabis and cannabis-infused products by the Company’s dispensary and wholesale operations in Massachusetts and Illinois, and direct sales of hemp and hemp-infused products by the Company’s hemp division. In 2019, this division participated in one-time sales of acquired hemp seed inventory, as further explained in Note 17 – Related Party Transactions. Future product sales are expected to include the Company’s planned cannabis-licensee acquisitions in Maryland, Nevada, and Delaware (upon this state’s amendment to permit for-profit ownership of cannabis entities). This revenue is recognized when products are delivered or at retail point-of-sale.

● Real Estate – rental income and additional rental fees generated from leasing of the Company’s state-of-the-art, regulatory-compliant cannabis facilities to its cannabis-licensed clients. Rental income is generally a fixed amount per month that escalates over the respective lease term, while additional rental fees are based on a percentage of tenant revenues that exceed specified amounts.

● Management – fees for providing the Company’s cannabis clients with comprehensive oversight of their cannabis cultivation, production, and dispensary operations. Along with this oversight, the Company provides human resources, regulatory, marketing, and other corporate services. These fees are based on a percentage of such clients’ revenue, and are recognized after services have been performed.

● Supply Procurement – the Company maintains volume discounts with top national vendors of cultivation and production resources, supplies, and equipment, which the Company acquires and resells to its clients or third parties within the cannabis industry. The Company recognizes this revenue after the delivery and acceptance of goods by the purchaser.

● Licensing – revenue from the sale of precision-dosed, cannabis-infused products—such as Kalm Fusion™, Nature’s Heritage™, and Betty’s Eddies™—to regulated dispensaries throughout the United States and Puerto Rico. The recognition of this revenue occurs when the products are delivered.

Research and Development Costs

Research and Development Costs

Research and development costs are charged to operations as incurred.

Property and Equipment

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation, with depreciation recognized on a straight-line basis over the shorter of the estimated useful life of the asset or the lease term, if applicable. When assets are retired or disposed, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income. Repairs and maintenance are charged to expense in the period incurred.

The estimated useful lives of property and equipment are generally as follows: buildings and building improvements, seven to thirty-nine years; tenant improvements, the remaining duration of the related lease; furniture and fixtures, seven years; machinery and equipment, five to ten years. Land is not depreciated.

The Company’s property and equipment are individually reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable from the undiscounted future cash flows of such asset over the anticipated holding period. An impairment loss is measured by the excess of the asset’s carrying amount over its estimated fair value.

Impairment analyses are based on management’s current plans, asset holding periods, and currently available market information. If these criteria change, the Company’s evaluation of impairment losses may be different and could have a material impact to the consolidated financial statements. For the nine months ended September 30, 2020 and 2019, based on the results of management’s analyses, there were no impairment losses.

Leases

Leases

The consolidated financial statements reflect the Company’s adoption of ASC 842, Leases, as amended by subsequent accounting standards updates, utilizing the modified retrospective transition approach which calls for applying the new standard to all of the Company’s leases effective January 1, 2019, which is the effective date of adoption.

ASC 842 is intended to improve financial reporting of leasing transactions. The most prominent change from previous accounting guidance is the requirement to recognize right-of-use assets and lease liabilities on the consolidated balance sheet representing the rights and obligations created by operating leases that extend more than twelve months in which the Company is the lessee. The Company elected the package of practical expedients permitted under ASC 842. Accordingly, the Company accounted for its existing operating leases that commenced before the effective date as operating leases under the new guidance without reassessing (i) whether the contracts contain a lease, (ii) the classification of the leases, or (iii) the accounting for indirect costs as defined in ASC 842.

The Company determines if an arrangement is a lease at inception. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Non-lease components within lease agreements are accounted for separately. Right-of-use assets and obligations are recognized at the commencement date based on the present value of lease payments over the lease term, utilizing the Company’s incremental borrowing rate. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets

The Company evaluates the recoverability of its fixed assets and other assets in accordance with ASC 360-10-15, Impairment or Disposal of Long-Lived Assets. Impairment of long-lived assets is recognized when the net book value of such assets exceeds their expected cash flows, in which case the assets are written down to fair value, which is determined based on discounted future cash flows or appraised values.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The Company follows the provisions of ASC 820, Fair Value Measurement, to measure the fair value of its financial instruments, and ASC 825, Financial Instruments, for disclosures on the fair value of its financial instruments. To increase consistency and comparability in fair value measurements and related disclosures, ASC 820 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three levels of fair value hierarchy defined by ASC 820 are:

Level 1	Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
Level 2	Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
Level 3	Pricing inputs that are generally observable inputs and not corroborated by market data.

The carrying amounts of the Company’s financial assets and liabilities, such as cash and accounts payable approximate their fair values due to the short maturity of these instruments.

The fair value of option and warrant issuances are determined using the Black-Scholes pricing model and employing several inputs such as the expected life of instrument, the exercise price, the expected risk-free interest rate, the expected dividend yield, the value of the Company’s common stock on issuance date, and the expected volatility of such common stock. The following table summarizes the range of inputs used by the Company during the nine months ended September 30, 2020 and 2019.

	Nine Months Ended September 30,
	2020		2019
Life of instrument		2.7 to 4.3 years		2.3 to 3.0 years
Volatility factors		1.059 to 1.180		1.059 to 1.106
Risk-free interest rates		0.26% to 1.30%		1.42% to 2.28%
Dividend yield		0%		0%

The expected life of an instrument is calculated using the simplified method pursuant to Staff Accounting Bulletin Topic 14, Share-Based Payment, which allows for using the mid-point between the vesting date and expiration date. The volatility factors are based on the historical two-year movement of the Company’s common stock prior to an instrument’s issuance date. The risk-free interest rate is based on U.S. Treasury rates with maturity periods similar to the expected instruments life on the issuance date.

The Company amortizes the fair value of option and warrant issuances on a straight-line basis over the requisite service period of each instrument.

Extinguishment of Liabilities

Extinguishment of Liabilities

The Company accounts for extinguishment of liabilities in accordance with ASC 405-20, Extinguishments of Liabilities. When the conditions for extinguishment are met, the liabilities are written down to zero and a gain or loss is recognized.

Stock-Based Compensation

Stock-Based Compensation

The Company accounts for stock-based compensation using the fair value method as set forth in ASC 718, Compensation—Stock Compensation, which requires a public entity to measure the cost of employee services received in exchange for an equity award based on the fair value of the award on the grant date, with limited exceptions. Such value will be incurred as compensation expense over the period an employee is required to provide service in exchange for the award, usually the vesting period. No compensation cost is recognized for equity awards for which employees do not render the requisite service.

Income Taxes

Income Taxes

The Company accounts for income taxes in accordance with ASC 740, Income Taxes. Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax basis of assets and liabilities, and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the consolidated statements of operations in the period that includes the enactment date.

ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. The Company did not take any uncertain tax positions and had no adjustments to unrecognized income tax liabilities or benefits for the nine months ended September 30, 2020 and 2019.

Related Party Transactions

Related Party Transactions

The Company follows ASC 850, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions.

In accordance with ASC 850, the Company’s financial statements include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business, as well as transactions that are eliminated in the preparation of financial statements.

Comprehensive Income

Comprehensive Income

The Company reports comprehensive income and its components following guidance set forth by ASC 220, Comprehensive Income, which establishes standards for the reporting and display of comprehensive income and its components in the consolidated financial statements. There were no items of comprehensive income applicable to the Company during the period covered in the financial statements.

Earnings Per Share

Earnings Per Share

Earnings per common share is computed pursuant to ASC 260, Earnings Per Share. Basic earnings per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted net income per share is computed by dividing net income by the sum of the weighted average number of shares of common stock outstanding plus the weighted average number of potentially dilutive securities during the period.

At September 30, 2020 and 2019, there were 24,860,857 and 16,815,107, respectively, of potentially dilutive securities in the form of outstanding options and warrants. Also as of such dates, there were (i) $4.2 million and $11.1 million, respectively, of outstanding convertible debentures payable, (ii) 4,908,333 and zero shares, respectively, of Series B convertible preferred stock outstanding, and (iii) approximately $5.2 million and $350,000, respectively, of outstanding convertible promissory notes. All of these potentially dilutive securities are convertible into common stock based on either (i) a predetermined price, subject to adjustment, or (ii) the market value of common stock on or about the future conversion date.

For the three months ended September 30, 2020, all such potentially dilutive securities were convertible into approximately 64.6 million net shares of common stock, which were included in the number of weighted average common shares outstanding on a diluted basis, and in the calculation of diluted net income per share for this period as shown in the statement of operations. For the nine months ended September 30, 2020, and for the three and nine months ended Septembers 30, 2019, the potentially dilutive securities had an anti-dilutive effect on earnings per share, and in accordance with ASC 260, were excluded from the diluted net income per share calculations, resulting in identical basic and fully diluted net income per share for these periods.

Commitments and Contingencies

Commitments and Contingencies

The Company follows ASC 450, Contingencies, which requires the Company to assess the likelihood that a loss will be incurred from the occurrence or non-occurrence of one or more future events. Such assessment inherently involves an exercise of judgment. In assessing possible loss contingencies from legal proceedings or unasserted claims, the Company evaluates the perceived merits of such proceedings or claims, and of the relief sought or expected to be sought.

If the assessment of a contingency indicates that it is probable that a material loss will be incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.

While not assured, management does not believe, based upon information available at this time, that a loss contingency will have material adverse effect on the Company’s financial position, results of operations or cash flows.

Beneficial Conversion Features on Convertible Debt

Beneficial Conversion Features on Convertible Debt

Convertible instruments that are not bifurcated as a derivative pursuant to ASC 815, Derivatives and Hedging, and not accounted for as a separate equity component under the cash conversion guidance are evaluated to determine whether their conversion prices create an embedded beneficial conversion feature at inception, or may become beneficial in the future due to potential adjustments.

A beneficial conversion feature is a nondetachable conversion feature that is “in-the-money” at the commitment date. The in-the-money portion, also known as the intrinsic value of the option, is recorded in equity, with an offsetting discount to the carrying amount of convertible debt to which it is attached. The discount is amortized to interest expense over the life of the debt with adjustments to amortization upon full or partial conversions of the debt.

Risk and Uncertainties

Risk and Uncertainties

The Company is subject to risks common to companies operating within the legal and medical marijuana industries, including, but not limited to, federal laws, government regulations and jurisdictional laws.

Noncontrolling Interests

Noncontrolling Interests

Noncontrolling interests represent third-party minority ownership of the Company’s consolidated subsidiaries. Net income attributable to noncontrolling interests is shown in the consolidated statements of operations; and the value of net assets owned by noncontrolling interests are presented as a component of equity within the balance sheets.

Off Balance Sheet Arrangements

Off Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

The Company has reviewed all recently issued, but not yet effective, accounting pronouncements, and does not believe the future adoption of any such pronouncements will have a material impact on its financial condition or the results of its operations.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

9 Months Ended

Sep. 30, 2020

Accounting Policies [Abstract]

SCHEDULE OF MAJORITY OWNED SUBSIDIARIES

The accompanying condensed consolidated financial statements include the accounts of MariMed Inc. and the following majority-owned subsidiaries:

Subsidiary:	Percentage Owned
MariMed Advisors Inc.		100.0%
Mia Development LLC		89.5%
Mari Holdings IL LLC		100.0%
Mari Holdings MD LLC		97.4%
Mari Holdings NV LLC		100.0%
Hartwell Realty Holdings LLC		100.0%
iRollie LLC		100.0%
ARL Healthcare Inc.		100.0%
KPG of Anna LLC		100.0%
KPG of Harrisburg LLC		100.0%
MariMed Hemp Inc.		100.0%
MediTaurus LLC		70.0%

SCHEDULE OF ASSUMPTIONS USED

	Nine Months Ended September 30,
	2020		2019
Life of instrument		2.7 to 4.3 years		2.3 to 3.0 years
Volatility factors		1.059 to 1.180		1.059 to 1.106
Risk-free interest rates		0.26% to 1.30%		1.42% to 2.28%
Dividend yield		0%		0%

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ACQUISITIONS (Tables)

9 Months Ended

Sep. 30, 2020

KPG of Anna LLC and KPG of Harrisburg LLC [Member]

Business Acquisition [Line Items]

SCHEDULE OF FAIR VALUE OF ASSETS ACQUIRED ON ACQUISITION

The acquisition was accounted for in accordance with ASC 805. The following table summarizes the allocation of the purchase price to the fair value of the assets acquired and liabilities assumed on the acquisition date:

Cash and cash equivalents	$	443,980
Inventory		113,825
Intangibles		2,067,727
Minority interests		138,356
Accounts payable		(642,033	)
Accrued expenses		(186,005	)
Due to third parties		(1,020,850	)
Total fair value of consideration	$	915,000

MediTaurus LLC [Member]

Business Acquisition [Line Items]

SCHEDULE OF FAIR VALUE OF ASSETS ACQUIRED ON ACQUISITION

The acquisition was accounted for in accordance with ASC 10. The following table summarizes the allocation, adjusted in September 2019, of the purchase price to the fair value of the assets acquired and liabilities assumed on the acquisition date:

Cash and cash equivalents	$	64,196
Accounts receivable		5,362
Inventory		519,750
Goodwill		2,662,669
Accounts payable		(777	)
Total value of MediTaurus		3,251,200
Noncontrolling interests in MediTaurus		(975,360	)
Total fair value of consideration	$	2,275,840

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INVESTMENTS (Tables)

9 Months Ended

Sep. 30, 2020

Schedule of Investments [Abstract]

SCHEDULE OF INVESTMENTS

At September 30, 2020 and December 31, 2019, the Company’s investments were comprised of the following:

	September 30, 2020		December 31, 2019
Current investments:
Terrace Inc.	$	1,002,659	$	1,449,144
Total current investments		1,002,659		1,449,144
Non-current investments:
MembersRSVP LLC		1,085,528		1,066,975
Chooze Corp.		-		257,686
GenCanna Global Inc.		-		-
Iconic Ventures Inc.		-		-
Total non-current investments		1,085,528		1,324,661
Total investments	$	2,088,187	$	2,773,805

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DEFERRED RENTS RECEIVABLE (Tables)

9 Months Ended

Sep. 30, 2020

Deferred Rents Receivable

SCHEDULE OF FUTURE MINIMUM RENTAL RECEIPTS FOR NON-CANCELABLE LEASES AND SUBLEASES

Future minimum rental receipts for non-cancelable leases and subleases as of September 30, 2020 were:

2020	$	1,130,989
2021		4,667,497
2022		4,590,656
2023		4,292,769
2024		4,348,027
Thereafter		43,995,612
Total	$	63,025,550

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NOTES RECEIVABLE (Tables)

9 Months Ended

Sep. 30, 2020

Receivables [Abstract]

SCHEDULE OF NOTES RECEIVABLE

At September 30, 2020 and December 31, 2019, notes receivable were comprised of the following:

	September 30, 2020		December 31, 2019
First State Compassion Center	$	484,240	$	527,261
Healer LLC		885,871		846,985
High Fidelity Inc.		254,879		252,873
Maryland Health & Wellness Center Inc.		-		323,526
Atalo Holdings Inc.		-		-
Total notes receivable		1,624,990		1,950,645
Notes receivable, current portion		540,319		311,149
Notes receivable, less current portion	$	1,084,671	$	1,639,496

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PROPERTY AND EQUIPMENT (Tables)

9 Months Ended

Sep. 30, 2020

Property, Plant and Equipment [Abstract]

SCHEDULE OF PROPERTY AND EQUIPMENT

At September 30, 2020 and December 31, 2019, property and equipment consisted of the following:

	September 30, 2020			December 31, 2019
Land	$	3,988,810		$	3,887,710
Buildings and building improvements		27,334,283			27,063,235
Tenant improvements		8,607,282			7,762,991
Furniture and fixtures		555,766			299,645
Machinery and equipment		4,490,186			4,086,691
Construction in progress		4,977,181			2,827,940
		49,953,508			45,928,212
Less: accumulated depreciation		(4,445,931	)		(3,135,843	)
Property and equipment, net	$	45,507,577		$	42,792,369

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DEBT (Tables)

9 Months Ended

Sep. 30, 2020

Debt Disclosure [Abstract]

SCHEDULE OF MORTGAGES PAYABLE

At September 30, 2020 and December 31, 2019, mortgage balances, including accrued but unpaid interest, were comprised of the following:

	September 30, 2020			December 31, 2019
Bank of New England – Massachusetts properties	$	12,912,723		$	4,825,226
Bank of New England – Delaware property		1,602,730			1,682,275
DuQuoin State Bank – Illinois properties		822,245			829,229
South Porte Bank – Illinois property		906,653			-
Total mortgages payable		16,244,351			7,336,730
Mortgages payable, current portion		(1,379,541	)		(223,888	)
Mortgages payable, less current portion	$	14,864,810		$	7,112,842

SCHEDULE OF AGGREGATE MATURITIES OF DEBT OUTSTANDING

2020	$	2,808,883
2021		11,024,306
2022		12,268,122
2023		544,571
2024		577,281
Thereafter		13,110,191
Total		40,333,354
Less discounts		(994,591	)
	$	39,338,763

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DEBENTURES PAYABLE (Tables)

9 Months Ended

Sep. 30, 2020

Debentures Payable

SCHEDULE OF DEBENTURE TRANSACTION

Issue Date	Maturity Date	Initial Principal		Interest Rate		Issue Discount		Warrant Discount		Ben. Conv. Feature		Converted To Common Stk.		Outstanding Principal
10/17/18	10/16/20	$	5,000,000	6.0	%	1.0	%	$	457,966	$	1,554,389	$	5,000,000	$	-
11/07/18	11/06/20		5,000,000	6.0	%	1.0	%		599,867		4,015,515		5,000,000		-
05/08/19	05/07/21		5,000,000	6.0	%	1.0	%		783,701		2,537,235		3,250,000		1,750,000
06/28/19	06/27/21		2,500,000	0.0	%	7.0	%		145,022		847,745		1,050,000		1,450,000
08/20/19	08/19/21		2,500,000	0.0	%	7.0	%		219,333		850,489		2,500,000		-
02/21/20	02/20/21		1,000,000	6.5	%	6.5	%		28,021		379,183		-		1,000,000

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STOCK OPTIONS (Tables)

9 Months Ended

Sep. 30, 2020

Stock Options

SCHEDULE OF STOCK OPTIONS OUTSTANDING AND EXERCISABLE

Stock options outstanding and exercisable as of September 30, 2020 were:

Exercise Price		Shares Under Option				Remaining
per Share		Outstanding		Exercisable		Life in Years
$	0.130		200,000		200,000		0.01
$	0.140		550,000		550,000		0.25
$	0.149		500,000		500,000		5.25
$	0.300		554,500		-		4.50
$	0.330		50,000		50,000		0.44
$	0.417		900,000		400,000		4.24
$	0.450		125,000		125,000		1.01
$	0.590		15,000		15,000		4.19
$	0.630		300,000		300,000		1.25
$	0.770		200,000		200,000		2.25
$	0.900		50,000		50,000		2.62
$	0.910		50,000		50,000		2.06
$	0.950		50,000		30,000		2.25
$	0.992		300,000		300,000		3.99
$	1.000		125,000		75,000		4.09
$	1.350		100,000		50,000		2.83
$	1.950		375,000		250,000		2.75
$	2.320		100,000		100,000		2.95
$	2.450		2,000,000		2,000,000		2.23
$	2.500		100,000		100,000		2.91
$	2.650		200,000		200,000		2.98
$	2.850		56,250		43,750		2.20
$	2.850		100,000		75,000		3.20
$	3.000		25,000		25,000		3.21
$	3.725		100,000		100,000		3.19
			7,125,750		5,788,750

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REVENUES (Tables)

9 Months Ended

Sep. 30, 2020

Revenue from Contract with Customer [Abstract]

SCHEDULE OF REVENUES COMPRISED OF MAJOR CATEGORIES

The Company’s revenues were comprised of the following major categories:

	Nine Months Ended September 30,
	2020		2019
Product sales		21,992,298		60,839
Product sales from related party		-		29,029,249
Real estate	$	5,065,538	$	5,250,084
Management		1,081,562		1,963,205
Supply procurement		1,218,334		2,830,555
Licensing		1,179,113		1,230,366
Other		984		47,893
Total revenues	$	30,537,829	$	40,412,191

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COMMITMENTS AND CONTINGENCIES (Tables)

9 Months Ended

Sep. 30, 2020

Commitments and Contingencies Disclosure [Abstract]

SCHEDULE OF COMPONENTS OF LEASE EXPENSE

The components of lease expense for the nine months ended September 30, 2020 were as follows:

Operating lease cost	$	737,993
Finance lease cost:
Amortization of right-of-use assets	$	24,512
Interest on lease liabilities		5,834
Total finance lease cost	$	30,346

SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS UNDER ALL NON-CANCELABLE OPERATING LEASES

Future minimum lease payments as of September 30, 2020 under all non-cancelable leases having an initial or remaining term of more than one year were:

	Operating Leases			Finance Lease
2020	$	246,937		$	9,603
2021		1,008,227			38,412
2022		949,535			27,123
2023		910,166			23,201
2024		835,411			3,229
Thereafter		4,267,635			-
Total lease payments		8,217,911			101,568
Less: imputed interest		(2,248,157	)		(10,718	)
	$	5,969,754		$	90,850

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ORGANIZATION AND DESCRIPTION OF BUSINESS (Details Narrative)	Sep. 30, 2020 ft²
Accounting Policies [Abstract]
Area of Land	300,000

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SCHEDULE OF MAJORITY OWNED SUBSIDIARIES (Details)	Sep. 30, 2020
MariMed Advisors Inc. [Member]
Condensed Cash Flow Statements, Captions [Line Items]
Percentage Owned	100.00%
Mia Development LLC [Member]
Condensed Cash Flow Statements, Captions [Line Items]
Percentage Owned	89.50%
Mari Holdings IL LLC [Member]
Condensed Cash Flow Statements, Captions [Line Items]
Percentage Owned	100.00%
Mari Holdings MD LLC [Member]
Condensed Cash Flow Statements, Captions [Line Items]
Percentage Owned	97.40%
Mari Holdings NV LLC [Member]
Condensed Cash Flow Statements, Captions [Line Items]
Percentage Owned	100.00%
Hartwell Realty Holdings LLC [Member]
Condensed Cash Flow Statements, Captions [Line Items]
Percentage Owned	100.00%
iRollie LLC [Member]
Condensed Cash Flow Statements, Captions [Line Items]
Percentage Owned	100.00%
ARL Healthcare Inc. [Member]
Condensed Cash Flow Statements, Captions [Line Items]
Percentage Owned	100.00%
KPG of Anna LLC [Member]
Condensed Cash Flow Statements, Captions [Line Items]
Percentage Owned	100.00%
KPG of Harrisburg LLC [Member]
Condensed Cash Flow Statements, Captions [Line Items]
Percentage Owned	100.00%
MariMed Hemp Inc. [Member]
Condensed Cash Flow Statements, Captions [Line Items]
Percentage Owned	100.00%
MediTaurus LLC [Member]
Condensed Cash Flow Statements, Captions [Line Items]
Percentage Owned	70.00%

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SCHEDULE OF ASSUMPTIONS USED (Details) - $ / shares	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Property, Plant and Equipment [Line Items]
Debt Instrument, Measurement Input	0	0
Minimum [Member]
Property, Plant and Equipment [Line Items]
Fair value assumptions, measurement input, volatility factor	$ 1.059	$ 1.059
Fair value assumptions, measurement input, risk free interest rates	0.26%	1.42%
Maximum [Member]
Property, Plant and Equipment [Line Items]
Fair value assumptions, measurement input, volatility factor	$ 1.180	$ 1.106
Fair value assumptions, measurement input, risk free interest rates	1.30%	2.28%
Measurement Input, Expected Term [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Fair value assumptions, measurement input, term	2 years 8 months 12 days	2 years 3 months 18 days
Measurement Input, Expected Term [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Fair value assumptions, measurement input, term	4 years 3 months 18 days	3 years

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)	3 Months Ended	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2020	Sep. 30, 2019	Jun. 30, 2020	Dec. 31, 2019
Property, Plant and Equipment [Line Items]
Net cash provided by (used in) operating activities		$ 1,600,000	$ 24,200,000
Positive net cash provided by (used in) operating activities			25,800,000
Working capital	$ 9,100,000	9,100,000		$ 21,500,000	$ 29,300,000
Short-term Debt	8,500,000	8,500,000		$ 17,200,000	23,100,000
Accounts Receivable, Allowance for Credit Loss	40,500,000	40,500,000			$ 39,700,000
Asset Impairment Charges		0	0
Unrecognized Tax Benefits	$ 0	$ 0	$ 0
Dilutive securities convertible	64.6
Series B Convertible Preferred Stock [Member]
Property, Plant and Equipment [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount		4,908,333	0
Convertible Debentures Payable [Member]
Property, Plant and Equipment [Line Items]
Potentially dilutive securities, amount		$ 4,200,000	$ 11,100,000
Convertible Promissory Notes [Member]
Property, Plant and Equipment [Line Items]
Potentially dilutive securities, amount		$ 5,200,000	$ 350,000
Options and Warrants [Member]
Property, Plant and Equipment [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount		24,860,857	16,815,107
Building and Building Improvements [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Property and equipment useful life, description		seven
Building and Building Improvements [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Property and equipment useful life, description		thirty-nine
Tenant Improvements [Member]
Property, Plant and Equipment [Line Items]
Property and equipment useful life, description		the remaining duration of the related lease
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Property and equipment useful life, description		seven
Machinery and Equipment [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Property and equipment useful life, description		five
Machinery and Equipment [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Property and equipment useful life, description		ten

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SCHEDULE OF FAIR VALUE OF ASSETS ACQUIRED ON ACQUISITION (Details) - USD ($)	Oct. 02, 2019	May 31, 2019
KPG of Anna LLC and KPG of Harrisburg LLC [Member]
Business Acquisition [Line Items]
Cash and cash equivalents	$ 443,980
Inventory	113,825
Intangibles	2,067,727
Minority interests	138,356
Accounts payable	(642,033)
Accrued expenses	(186,005)
Due to third parties	(1,020,850)
Total value of MediTaurus	$ 915,000
MediTaurus LLC [Member]
Business Acquisition [Line Items]
Cash and cash equivalents		$ 64,196
Inventory		519,750
Accounts payable		(777)
Total value of MediTaurus		3,251,200
Accounts receivable		5,362
Goodwill		2,662,669
Noncontrolling interests in MediTaurus		(975,360)
Total fair value of consideration		$ 2,275,840

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ACQUISITIONS (Details Narrative)				1 Months Ended				9 Months Ended		12 Months Ended
	Oct. 02, 2019 shares	Oct. 02, 2019 USD ($)	Jun. 02, 2019 USD ($) shares	Aug. 31, 2019 USD ($) shares	May 31, 2019 USD ($)	Dec. 31, 2018 USD ($) ft² shares	Jul. 31, 2018 USD ($)	Sep. 30, 2020 USD ($) ft² shares	Sep. 30, 2019 USD ($) shares	Dec. 31, 2019 shares	Oct. 31, 2019 ft²
Business Acquisition [Line Items]
Impairment of intangible assets		$ 2,100,000
Number common shares issued during period | shares								0	799,995
Sale of common stock amount									$ 2,600,000
Area of land | ft²								300,000
Cash used for acquisition									$ 655,804
KPG of Anna LLC and KPG of Harrisburg LLC [Member]
Business Acquisition [Line Items]
Percentage of interests acquired in business acquisition	100.00%	100.00%
Stock issued during period, shares, acquisitions | shares	1,000,000
Mari Holdings IL LLC [Member]
Business Acquisition [Line Items]
Ownership percentage	40.00%	40.00%
The Harvest Foundation LLC [Member]
Business Acquisition [Line Items]
Percentage of interests acquired in business acquisition				100.00%
Number common shares issued during period | shares										1,000,000
The Harvest Foundation LLC [Member] | Two Owners [Member]
Business Acquisition [Line Items]
Number common shares issued during period | shares				1,000,000
Sale of common stock amount				$ 1,200,000
Warrants to purchase shares of common stock | shares				400,000
Kind Therapeutics USA Inc. [Member]
Business Acquisition [Line Items]
Stock issued during period, shares, acquisitions | shares						2,500,000
Payment for business acquisition						$ 6,300,000
Kind Therapeutics USA LLC [Member]
Business Acquisition [Line Items]
Area of land | ft²						180,000
Kind Therapeutics USA LLC [Member] | Anne Arundel County, MD [Member]
Business Acquisition [Line Items]
Area of land | ft²											9,000
MediTaurus LLC [Member]
Business Acquisition [Line Items]
Goodwill					$ 2,662,669
MediTaurus LLC [Member] | Purchase Agreement [Member]
Business Acquisition [Line Items]
Percentage of interests acquired in business acquisition			70.00%		30.00%
Stock issued during period, shares, acquisitions | shares			520,000
Payment for business acquisition			$ 2,800,000
Cash used for acquisition			720,000
Stock Issued During Period, Value, Acquisitions			$ 2,080,000
AgriMed Industries of PA LLC [Member] | Purchase Agreement [Member]
Business Acquisition [Line Items]
Percentage of interests acquired in business acquisition							100.00%
Payment for business acquisition					$ 2,949,000
Cash used for acquisition					$ 3,100,000
Stock Issued During Period, Value, Acquisitions							$ 8,000,000.0

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SCHEDULE OF INVESTMENTS (Details) - USD ($)	Sep. 30, 2020	Dec. 31, 2019	Jan. 31, 2019	Aug. 31, 2018
Schedule of Investments [Line Items]
Total current investments	$ 1,002,659	$ 1,449,144
Non-current investments	1,085,528	1,324,661
Total investments	2,088,187	2,773,805
MembersRSVP LLC [Member]
Schedule of Investments [Line Items]
Non-current investments	1,085,528	1,066,975
Total investments				$ 300,000
Chooze Corp [Member]
Schedule of Investments [Line Items]
Non-current investments		257,686
Total investments			$ 258,000
GenCanna Global, Inc. [Member]
Schedule of Investments [Line Items]
Non-current investments
Iconic Ventures Inc. [Member]
Schedule of Investments [Line Items]
Non-current investments
Terrace Inc [Member]
Schedule of Investments [Line Items]
Total current investments	$ 1,002,659	$ 1,449,144

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INVESTMENTS (Details Narrative) - USD ($)		1 Months Ended						3 Months Ended		9 Months Ended
	May 19, 2020	Dec. 31, 2019	Jul. 31, 2019	May 31, 2019	Feb. 28, 2019	Dec. 31, 2018	Aug. 31, 2018	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Jan. 31, 2019
Schedule of Investments [Line Items]
Investments		$ 2,773,805						$ 2,088,187		$ 2,088,187
Number of common stock shares issued, values											$ 2,600,000
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest								1,695,826	$ (7,299,662)	(1,783,122)	(2,498,441)
Debt Conversion, Converted Instrument, Amount										460,050
Equity non-cash, non-operating loss										18,553	(1,020,310)
Revenue from Contract with Customer, Excluding Assessed Tax								13,461,504	4,209,328	30,537,829	11,382,942
GenCanna Global, Inc. [Member]
Schedule of Investments [Line Items]
Investments	$ 3,500,000	0
Ownership percentage					33.50%
Debt Conversion, Converted Instrument, Amount					$ 229,000
Equity non-cash, non-operating loss		$ 30,200,000
Credit bid amount	73,500,000
GenCanna Global, Inc. [Member] | Hemp Seeds [Member]
Schedule of Investments [Line Items]
Revenue from Contract with Customer, Excluding Assessed Tax	$ 33,200,000
Binske [Member] | Maximum [Member] | Licensing Agreement [Member]
Schedule of Investments [Line Items]
Percentage for royalty			12.50%
Binske [Member] | Minimum [Member] | Licensing Agreement [Member]
Schedule of Investments [Line Items]
Percentage for royalty			10.00%
MembersRSVP LLC [Member]
Schedule of Investments [Line Items]
Investments							$ 300,000
Contracted cash investment							$ 500,000
Number of common stock issued during period							378,259
Number of common stock shares issued, values							$ 915,000
Ownership percentage							23.00%
Equity Method Investments								19,000	$ 105,000	19,000	$ 105,000
Equity Method Investment, Quoted Market Value								130,000		130,000
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest										1,086,000
Convertible Subordinated Debt						$ 30,000,000
Chooze Corp [Member]
Schedule of Investments [Line Items]
Investments												$ 258,000
Note receivable												$ 258,000
Ownership percentage												2.70%
Iconic Ventures Inc. [Member] | Maximum [Member]
Schedule of Investments [Line Items]
Ownership percentage						10.00%
Terrace Inc [Member]
Schedule of Investments [Line Items]
Shares of common stock exchanged				500,000
Shares of common stock exchanged, value				$ 1,590,000
Percentage for acquired interest rate				8.95%
Investment Owned, at Cost								$ 1,003,000		1,003,000
Net Investment Income										$ 447,000
Iconic Ventures Inc. [Member]
Schedule of Investments [Line Items]
Number of shares purchased during the period						2,500,000
Value of shares purchased during period						$ 500,000

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SCHEDULE OF FUTURE MINIMUM RENTAL RECEIPTS FOR NON-CANCELABLE LEASES AND SUBLEASES (Details)	Sep. 30, 2020 USD ($)
Deferred Rents Receivable
2020	$ 1,130,989
2021	4,667,497
2022	4,590,656
2023	4,292,769
2024	4,348,027
Thereafter	43,995,612
Total	$ 63,025,550

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DEFERRED RENTS RECEIVABLE (Details Narrative) $ in Millions		9 Months Ended	11 Months Ended	12 Months Ended
	Sep. 30, 2019 ft²	Sep. 30, 2020 USD ($) ft²	Dec. 02, 2019 USD ($)	Dec. 31, 2019 USD ($)	Jan. 31, 2017 ft²	Sep. 30, 2016 ft²
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Area of land		300,000
Operating Lease, Lease Income | $		$ 12.8	$ 9.5
Contract with Customer, Liability, Revenue Recognized | $		14.8		$ 11.3
Loans and Leases Receivable, Deferred Income | $		$ 2.0		$ 1.8
GERMANY
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Area of land	100,000					45,000
Percentage of space occupied		100.00%
Lease commencement description		commenced in 2017
Lease expiration description	The lease term is 10 years, with an option to extend the term for three additional five-year periods.	expires in 2035
GERMANY | Retails Space [Member]
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Area of land		4,000
Lessor, Operating Lease, Option to Extend		lease expiring in 2021 with a five-year option to extend.
MOLDOVA
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Area of land					180,000
Lease commencement description		commenced in 2018
Lease expiration description		expires in 2037
MOROCCO
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Area of land		10,000
Lease expiration description		expiring in 2028
MOROCCO | Non-Cannabis [Member]
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Area of land		138,000
Lease commencement description		commenced in 2017
Lease expiration description		expires in 2022.
ISRAEL
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Area of land		3,400
Lease commencement description		commenced in 2018
Non-cancelable lease agreement, term		20 years

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SCHEDULE OF NOTES RECEIVABLE (Details) - USD ($)	Sep. 30, 2020	Dec. 31, 2019
Entity Listings [Line Items]
Total notes receivable	$ 1,624,990	$ 1,950,645
Notes receivable, current portion	540,319	311,149
Notes receivable, less current portion	1,084,671	1,639,496
First State Compassion Center [Member]
Entity Listings [Line Items]
Total notes receivable	484,240	527,261
Healer LLC [Member]
Entity Listings [Line Items]
Total notes receivable	885,871	846,985
High Fidelity Inc [Member]
Entity Listings [Line Items]
Total notes receivable	254,879	252,873
Maryland Health & Wellness Center Inc. [Member]
Entity Listings [Line Items]
Total notes receivable		323,526
Atalo Holdings Inc. [Member]
Entity Listings [Line Items]
Total notes receivable

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NOTES RECEIVABLE (Details Narrative) - USD ($)	1 Months Ended	7 Months Ended	9 Months Ended		11 Months Ended
	May 31, 2016	Apr. 30, 2016	Sep. 30, 2020	Sep. 30, 2019	Jun. 30, 2019	Dec. 31, 2019	Aug. 31, 2019	Jul. 31, 2019	Jan. 31, 2019
Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves [Line Items]
Proceeds from Sale of Notes Receivable			$ 443,150	$ 175,509
Notes Receivable, Related Parties, Current			540,319			$ 311,149
Due to Related Parties, Current			1,233,008			1,454,713
Delaware Cannabis-licensee [Member]
Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves [Line Items]
Proceeds from Sale of Notes Receivable		$ 700,000
Debt Instrument, Term	10 years
Debt Instrument, Interest Rate, Stated Percentage	12.50%
Debt Instrument, Periodic Payment	$ 10,100
Notes Receivable, Related Parties, Current			64,000			$ 58,000
Healer LLC [Member] | Dr. Dustin Sulak [Member]
Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves [Line Items]
Proceeds from Sale of Notes Receivable					$ 800,000
Debt Instrument, Interest Rate, Stated Percentage					6.00%
Debt maturity description					principal and interest payable on the maturity dates which are three years from the respective loan dates
Dr. Dustin Sulak [Member]
Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves [Line Items]
Due to Related Parties, Current			$ 221,000
High Fidelity Inc [Member]
Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves [Line Items]
Debt Instrument, Interest Rate, Stated Percentage							10.00%
Due to Related Parties							$ 250,000
Maryland Health & Wellness Center Inc. [Member] | Construction Loan [Member]
Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves [Line Items]
Debt Instrument, Interest Rate, Stated Percentage									8.00%
Due to Related Parties									$ 300,000
Atalo Holdings Inc. [Member]
Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves [Line Items]
Debt Instrument, Interest Rate, Stated Percentage								6.00%
Due to Related Parties								$ 980,000

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INVENTORY (Details Narrative) - USD ($)	Sep. 30, 2020	Dec. 31, 2019
SEC Schedule, 12-17, Insurance Companies, Reinsurance [Line Items]
Inventory, Net	$ 6,802,291	$ 1,219,429
CBD Isolate and Hemp Extract [Member]
SEC Schedule, 12-17, Insurance Companies, Reinsurance [Line Items]
Inventory, Plants and other raw materials	3,100,000	395,000
Inventory, Net	188,000	226,000
Inventory, Work in Process, Gross	$ 3,500,000	$ 599,000

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SCHEDULE OF PROPERTY AND EQUIPMENT (Details) - USD ($)	Sep. 30, 2020	Dec. 31, 2019
Property, Plant and Equipment [Line Items]
Property plant and equipment, gross	$ 49,953,508	$ 45,928,212
Less: accumulated depreciation	(4,445,931)	(3,135,843)
Property and equipment, net	45,507,577	42,792,369
Land [Member]
Property, Plant and Equipment [Line Items]
Property plant and equipment, gross	3,988,810	3,887,710
Buildings and Building Improvements [Member]
Property, Plant and Equipment [Line Items]
Property plant and equipment, gross	27,334,283	27,063,235
Tenant Improvements [Member]
Property, Plant and Equipment [Line Items]
Property plant and equipment, gross	8,607,282	7,762,991
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Property plant and equipment, gross	555,766	299,645
Machinery and Equipment [Member]
Property, Plant and Equipment [Line Items]
Property plant and equipment, gross	4,490,186	4,086,691
Construction in Progress [Member]
Property, Plant and Equipment [Line Items]
Property plant and equipment, gross	$ 4,977,181	$ 2,827,940

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PROPERTY AND EQUIPMENT (Details Narrative) - USD ($)	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Property, Plant and Equipment [Abstract]
Property, Plant and Equipment, Additions	$ 4,100,000	$ 6,700,000
Disposed of an asset	91,000
Accumulated depreciation	6,000
Loss on disposal of property and equipment	85,000	0
Depreciation, Depletion and Amortization, Nonproduction	$ 1,341,000	$ 698,000

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SCHEDULE OF MORTGAGES PAYABLE (Details) - USD ($)	Sep. 30, 2020	Dec. 31, 2019
Short-term Debt [Line Items]
Total mortgages payable	$ 39,338,763
Mortgage [Member]
Short-term Debt [Line Items]
Total mortgages payable	16,244,351	$ 7,336,730
Mortgages payable, current portion	(1,379,541)	(223,888)
Mortgages payable, less current portion	14,864,810	7,112,842
Mortgage [Member] | Bank of New England - Massachusetts property [Member]
Short-term Debt [Line Items]
Total mortgages payable	12,912,723	4,825,226
Mortgage [Member] | Bank of New England - Delaware Property [Member]
Short-term Debt [Line Items]
Total mortgages payable	1,602,730	1,682,275
Mortgage [Member] | DuQuoin State Bank - Illinois Properties [Member]
Short-term Debt [Line Items]
Total mortgages payable	822,245	829,229
Mortgage [Member] | South Porte Bank - Illinois Property [Member]
Short-term Debt [Line Items]
Total mortgages payable	$ 906,653

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SCHEDULE OF AGGREGATE MATURITIES OF DEBT OUTSTANDING (Details)	Sep. 30, 2020 USD ($)
Debt Disclosure [Abstract]
2020	$ 2,808,883
2021	11,024,306
2022	12,268,122
2023	544,571
2024	577,281
Thereafter	13,110,191
Total	40,333,354
Less discounts	(994,591)
Long-term debt, net	$ 39,338,763

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DEBT (Details Narrative)				1 Months Ended												9 Months Ended		12 Months Ended
	Oct. 31, 2020 USD ($) $ / shares shares	Jul. 31, 2020 USD ($) $ / shares	Feb. 29, 2020 USD ($)	Oct. 31, 2020 USD ($) $ / shares shares	Sep. 30, 2020 USD ($) ft² $ / shares shares	Jul. 31, 2020 USD ($) $ / shares	Jun. 30, 2020 USD ($) $ / shares shares	Apr. 30, 2020 USD ($)	Feb. 29, 2020 USD ($)	Jun. 30, 2019 USD ($) $ / shares shares	Apr. 30, 2019 USD ($)	Mar. 31, 2019 USD ($)	Sep. 30, 2018 USD ($) $ / shares shares	Nov. 30, 2017 USD ($) ft²	May 31, 2016 ft²	Sep. 30, 2020 USD ($) ft² $ / shares shares	Sep. 30, 2019 USD ($) ft² $ / shares shares	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Mar. 30, 2019 USD ($)	Sep. 30, 2016 ft²
Debt Instrument [Line Items]
Area of Land | ft²					300,000											300,000
Proceeds from Notes Payable																$ 5,249,763	$ 17,000,000
Repayments of notes payable																$ 10,770,011
Minimum [Member]
Debt Instrument [Line Items]
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares					$ 0.15											$ 0.15	$ 0.15
Maximum [Member]
Debt Instrument [Line Items]
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares					$ 5.50											$ 5.50	$ 5.50
8.8M Note [Member]
Debt Instrument [Line Items]
Debt Instrument, Interest Rate During Period						15.00%
Debt Instrument, Maturity Date, Description						matures in June 2022
Debt principal amount, current					$ 4,800,000											$ 4,800,000
Percentage of prepayment debt						0.10
Debt Instrument, Convertible, Conversion Price | $ / shares		$ 0.30				$ 0.30
8.8M Note [Member] | Minimum [Member]
Debt Instrument [Line Items]
Amortization of Debt Discount (Premium)						$ 4,000,000
8.8M Note [Member] | Maximum [Member]
Debt Instrument [Line Items]
Redemption of principal and unpaid interest						250,000
Secured Promissory Notes [Member] | 6M Note [Member]
Debt Instrument [Line Items]
Debt Instrument, Interest Rate During Period												1300.00%
Debt instrument, extended maturity description												The $6M Note’s initial maturity date of December 31, 2019 was extended to April 30, 2020
Interest and Debt Expense																		$ 300,000
Debt Instrument, Fee Amount																				$ 900,000
Notes Issued												$ 6,000,000.0
Secured Promissory Notes [Member] | 3M Note [Member]
Debt Instrument [Line Items]
Debt Instrument, Interest Rate During Period													10.00%
Debt Instrument, Maturity Date, Description													March 2020
Debt instrument, extended maturity description													extended for an additional six months in accordance with its terms, with the interest rate increasing to 12% per annum during the extension period. Pursuant to the Initial Extension Agreement, the maturity date of the $3M Note was extended to December 2020
Fair Value Adjustment of Warrants													$ 1,511,000
Notes Issued													$ 3,000,000.0
Promissory Note [Member]
Debt Instrument [Line Items]
Debt Instrument, Description			the “$11.5M Note”), comprised of the principal amount of the $10M Note and the $1.5M Payment (which the Company had accrued).
Promissory Note [Member] | 11.5M Note [Member]
Debt Instrument [Line Items]
Debt Instrument, face amount			$ 11,500,000						$ 11,500,000
Debt Instrument, Interest Rate During Period			15.00%
Debt Instrument, Maturity Date, Description			maturing in June 2020 in
Promissory Note [Member] | 11.5M Note [Member] | Minimum [Member]
Debt Instrument [Line Items]
Amortization of Debt Discount (Premium)			$ 3,000,000
Promissory Notes [Member] | Individuals and Accredited Investors [Member]
Debt Instrument [Line Items]
Debt Instrument, face amount					760,000											$ 760,000
Debt Instrument, Maturity Date, Description																maturing in 2020 and 2021
Proceeds from Notes Payable																$ 800,000		2,760,000
Repayments of notes payable																2,800,000
Interest Payable					48,000											$ 48,000
Promissory Notes [Member] | Minimum [Member] | Individuals and Accredited Investors [Member]
Debt Instrument [Line Items]
Debt Instrument, Interest Rate During Period																6.50%
Promissory Notes [Member] | Maximum [Member] | Individuals and Accredited Investors [Member]
Debt Instrument [Line Items]
Debt Instrument, Interest Rate During Period																18.00%
Promissory Notes [Member] | 3M Note [Member]
Debt Instrument [Line Items]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | shares													750,000
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares													$ 1.80
Amortization of Debt Discount (Premium)																		629,000	$ 882,000
MariMed Hemp Inc. [Member] | Secured Promissory Notes [Member]
Debt Instrument [Line Items]
Repayments of notes payable					500,000
MariMed Hemp Inc. [Member] | Secured Promissory Notes [Member] | Note Holder [Member]
Debt Instrument [Line Items]
Debt Instrument, face amount					500,000											$ 500,000
Interest and Debt Expense																403,000
Debt Instrument, Fee Amount					30,000											30,000
MariMed Hemp Inc. [Member] | Secured Promissory Notes [Member] | 10M Note [Member]
Debt Instrument [Line Items]
Debt Instrument, face amount										$ 10,000,000.0
Debt Instrument, Maturity Date, Description										maturity date of January 31, 2020
Repayments of notes payable										$ 1,500,000
Warrants and rights outstanding term, description										three
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | shares										375,000							375,000
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares										$ 4.50							$ 4.50
Fair Value Adjustment of Warrants										$ 601,000							$ 601,000
Interest and Debt Expense																		523,000
Notes Payable, Fair Value Disclosure																		9,900,000
MariMed Hemp Inc. [Member] | Secured Promissory Notes [Member] | 1M Note [Member] | GenCanna [Member]
Debt Instrument [Line Items]
Debt Instrument, face amount											$ 1,000,000
MariMed Hemp Inc. [Member] | Secured Promissory Notes [Member] | 1M Note [Member] | Note Holder [Member]
Debt Instrument [Line Items]
Debt Instrument, Interest Rate During Period											15.00%
Repayments of notes payable											$ 30,000
GERMANY
Debt Instrument [Line Items]
Area of Land | ft²																	100,000				45,000
Mortgage Agreement [Member]
Debt Instrument [Line Items]
Agreement term														10 years
Mortgage Agreement [Member] | DuQuoin State Bank [Member]
Debt Instrument [Line Items]
Area of Land | ft²															3,400
Debt Instrument, face amount					822,000											822,000		829,000
Debt Instrument, Interest Rate During Period															6.75%
Debt principal amount, current					31,000											31,000		24,000
Mortgage Agreement [Member] | South Porte Bank [Member]
Debt Instrument [Line Items]
Debt Instrument, Interest Rate During Period									5.50%
Debt Instrument, Maturity Date, Description									maturity date in August 2020
Debt instrument, extended maturity description									the maturity date through November 2020,
Mortgage Agreement [Member] | Prime Rate [Member]
Debt Instrument [Line Items]
Debt Instrument, Basis Spread on Variable Rate														2.00%
Mortgage Agreement [Member] | Prime Rate [Member] | July 31, 2020 [Member]
Debt Instrument [Line Items]
Debt Instrument, Basis Spread on Variable Rate														2.00%
Mortgage Agreement [Member] | Floor Rate [Member]
Debt Instrument [Line Items]
Debt Instrument, Basis Spread on Variable Rate														6.25%
Mortgage Agreement [Member] | Floor Rate [Member] | July 31, 2020 [Member]
Debt Instrument [Line Items]
Debt Instrument, Basis Spread on Variable Rate														6.25%
Mortgage Agreement [Member] | New Bedford, Massachusetts [Member]
Debt Instrument [Line Items]
Debt Instrument, Face Amount														$ 4,895,000
Area of Land | ft²														138,000
Cultivating and processing facility | ft²														70,000
Debt Instrument, face amount														$ 4,800,000
Mortgage Agreement [Member] | GERMANY
Debt Instrument [Line Items]
Area of Land | ft²														45,070
Debt Instrument, face amount					1,603,000											1,603,000		1,682,000
Debt Instrument, Maturity Date, Description														mortgage matures in 2031
Debt principal amount, current					112,000											112,000		105,000
Mortgage Agreement [Member] | GERMANY | September 2021 [Member]
Debt Instrument [Line Items]
Debt Instrument, Interest Rate During Period														5.25%
Mortgage Agreement [Member] | GERMANY | Prime Rate [Member]
Debt Instrument [Line Items]
Debt Instrument, Interest Rate During Period														1.50%
Mortgage Agreement [Member] | GERMANY | Floor Rate [Member]
Debt Instrument [Line Items]
Debt Instrument, Interest Rate During Period														5.25%
Refinanced Mortgage [Member]
Debt Instrument [Line Items]
Debt Instrument, face amount		$ 13,000,000.0			12,900,000	13,000,000.0										12,900,000		4,800,000
Debt Instrument, Interest Rate During Period		6.50%
Debt Instrument, Maturity Date, Description		matures in August 2025
Proceeds from Notes Payable		$ 7,200,000
Debt principal amount, current					330,000											330,000		$ 94,000
Exchange Agreement [Member] | 4.4 Million Notes [Member]
Debt Instrument [Line Items]
Debt Instrument, Interest Rate During Period									16.50%
Debt Instrument, Maturity Date, Description									maturing in August 2021
Debt instrument, extended maturity description									The Company has the right to extend the maturity date through February 2022 upon payment of an extension fee equal to 2.5% of the principal amount of the loan
Exchange Agreement [Member] | 4.4 Million Notes [Member]
Debt Instrument [Line Items]
Debt Instrument, face amount			$ 4,400,000						$ 4,400,000
Interest Payable					$ 439,000											$ 439,000
Second Amendment Agreement [Member] | 11.5M Note [Member]
Debt Instrument [Line Items]
Debt Instrument, face amount							$ 352,000
Debt Conversion, Converted Instrument, Shares Issued | shares							1,900,000
Debt conversion fee							$ 330,000
Second Amendment Agreement [Member] | 8.8M Note [Member]
Debt Instrument [Line Items]
Debt Instrument, face amount							$ 8,800,000
Warrants and rights outstanding term, description							three-year
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | shares					750,000		750,000									750,000
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares					$ 0.50		$ 0.50									$ 0.50
Fair Value Adjustment of Warrants							$ 66,000
GenCanna [Member] | MariMed Hemp Inc. [Member] | Secured Promissory Notes [Member] | 1M Note [Member]
Debt Instrument [Line Items]
Repayments of notes payable											$ 180,000
Extension Agreement [Member]
Debt Instrument [Line Items]
Debt Conversion, Converted Instrument, Shares Issued | shares							2,525,596
Extension Agreement [Member] | 6M Note [Member]
Debt Instrument [Line Items]
Interest Payable								$ 845,000
Debt Conversion, Converted Instrument, Rate								10.00%
Extension Agreement [Member] | 900K Note [Member]
Debt Instrument [Line Items]
Interest Payable								$ 20,100
Debt Conversion, Converted Instrument, Rate								12.00%
Payment of service fee								$ 900,000
Principal and accrued interest		$ 460,050				$ 460,050
Initial Extension Agreement [Member] | 3M Note [Member]
Debt Instrument [Line Items]
Payment of holding party fee					$ 50,000											$ 50,000
Second Extension Agreement [Member] | 8.8M Note [Member]
Debt Instrument [Line Items]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | shares					5,000,000											5,000,000
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares					$ 0.25											$ 0.25
Second Extension Agreement [Member] | Promissory Notes [Member]
Debt Instrument [Line Items]
Debt Instrument, face amount					$ 8,300,000											$ 8,300,000
Debt principal amount, current					$ 1,400,000											$ 1,400,000
Second Extension Agreement [Member] | Promissory Notes [Member] | Subsequent Event [Member]
Debt Instrument [Line Items]
Debt Instrument, Interest Rate During Period	12.00%
Debt Instrument, Maturity Date, Description				September 2022
Debt instrument, extended maturity description	mature in September 2022
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | shares	5,000,000			5,000,000
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares	$ 0.25			$ 0.25
Interest and Debt Expense				$ 573,000
Debt Instrument, Description	If all principal and accrued interest on either or both of the Amended Notes are not paid on or prior to their respective maturity dates, the Holding Party shall have the right, exercisable in its sole discretion at any time from September 2022 through March 2023, to convert all or a portion of the principal and interest owed into shares of the Company’s common stock at a conversion price equal to the average closing price for the 20 consecutive trading days prior to the date of conversion.
Amortization of Debt Discount (Premium)				1,000
Payment of service fee				100,000
Second Extension Agreement [Member] | Promissory Notes [Member] | 6.8M Note [Member] | Subsequent Event [Member]
Debt Instrument [Line Items]
Debt Instrument, face amount	$ 1,000,000			1,000,000
Interest and Debt Expense	333,000			333,000
Second Extension Agreement [Member] | Promissory Notes [Member] | 5.8M Note [Member] | Subsequent Event [Member]
Debt Instrument [Line Items]
Debt Instrument, face amount	$ 5,845,000			5,845,000
Second Extension Agreement [Member] | February 2021 [Member] | Promissory Notes [Member] | 5.5M Note [Member] | Subsequent Event [Member]
Debt Instrument [Line Items]
Repayments of notes payable				400,000
Second Extension Agreement [Member] | May 2021 to August 2021 [Member] | Promissory Notes [Member] | 5.5M Note [Member] | Subsequent Event [Member]
Debt Instrument [Line Items]
Repayments of notes payable				$ 3,000,000.0
Debt Instrument, Description				The New $3M Note can be prepaid in whole or in part without penalty only after the $5.8M Note has been fully repaid.
Debt Instrument, Periodic Payment, Principal				$ 500,000

XML

SCHEDULE OF DEBENTURE TRANSACTION (Details)	9 Months Ended
	Sep. 30, 2020 USD ($) shares
Convertible Debentures One [Member]
Schedule of Capitalization, Long-term Debt [Line Items]
Debt Instrument, Issuance Date	Oct. 17, 2018
Debt Instrument, Maturity Date	Oct. 16, 2020
Initial Principa	$ 5,000,000
Debt Instrument, Interest Rate, Stated Percentage	6.00%
Issuance discount percentage	1.00%
Warrant Discount	$ 457,966
Ben. Conv. Feature	$ 1,554,389
Converted To Common Stock | shares	5,000,000
Outstanding Principal
Convertible Debentures Two [Member]
Schedule of Capitalization, Long-term Debt [Line Items]
Debt Instrument, Issuance Date	Nov. 07, 2018
Debt Instrument, Maturity Date	Nov. 06, 2020
Initial Principa	$ 5,000,000
Debt Instrument, Interest Rate, Stated Percentage	6.00%
Issuance discount percentage	1.00%
Warrant Discount	$ 599,867
Ben. Conv. Feature	$ 4,015,515
Converted To Common Stock | shares	5,000,000
Outstanding Principal
Convertible Debentures Three [Member]
Schedule of Capitalization, Long-term Debt [Line Items]
Debt Instrument, Issuance Date	May 08, 2019
Debt Instrument, Maturity Date	May 07, 2021
Initial Principa	$ 5,000,000
Debt Instrument, Interest Rate, Stated Percentage	6.00%
Issuance discount percentage	1.00%
Warrant Discount	$ 783,701
Ben. Conv. Feature	$ 2,537,235
Converted To Common Stock | shares	3,250,000
Outstanding Principal	$ 1,750,000
Convertible Debentures Four [Member]
Schedule of Capitalization, Long-term Debt [Line Items]
Debt Instrument, Issuance Date	Jun. 28, 2019
Debt Instrument, Maturity Date	Jun. 27, 2021
Initial Principa	$ 2,500,000
Debt Instrument, Interest Rate, Stated Percentage	0.00%
Issuance discount percentage	7.00%
Warrant Discount	$ 145,022
Ben. Conv. Feature	$ 847,745
Converted To Common Stock | shares	1,050,000
Outstanding Principal	$ 1,450,000
Convertible Debentures Five [Member]
Schedule of Capitalization, Long-term Debt [Line Items]
Debt Instrument, Issuance Date	Aug. 20, 2019
Debt Instrument, Maturity Date	Aug. 19, 2021
Initial Principa	$ 2,500,000
Debt Instrument, Interest Rate, Stated Percentage	0.00%
Issuance discount percentage	7.00%
Warrant Discount	$ 219,333
Ben. Conv. Feature	$ 850,489
Converted To Common Stock | shares	2,500,000
Outstanding Principal
Convertible Debentures Six [Member]
Schedule of Capitalization, Long-term Debt [Line Items]
Debt Instrument, Issuance Date	Feb. 21, 2020
Debt Instrument, Maturity Date	Feb. 20, 2021
Initial Principa	$ 1,000,000
Debt Instrument, Interest Rate, Stated Percentage	6.50%
Issuance discount percentage	6.50%
Warrant Discount	$ 28,021
Ben. Conv. Feature	$ 379,183
Converted To Common Stock | shares
Outstanding Principal	$ 1,000,000

XML

DEBENTURES PAYABLE (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended	9 Months Ended		17 Months Ended	23 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Jun. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Feb. 29, 2020	Sep. 30, 2020	Dec. 31, 2019
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Amortization of original issue discount				$ 286,353	$ 107,256
Interest Expense	$ 1,921,312	$ 4,516,576		7,581,648	9,076,583
21M Debentures Holder [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Debt Instrument, Face Amount	4,200,000			4,200,000			$ 4,200,000
Unamortized balances of the beneficial conversion feature	867,000			867,000			867,000	$ 3,041,000
Unamortized balance of warrants discount	300,000			300,000			300,000	817,000
Unamortized balance of original issue discount	105,000			105,000			105,000	307,000
Debt Instrument, Fair Value Disclosure	2,928,000			2,928,000			2,928,000	$ 5,835,000
Convertible Debentures [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Debt Instrument, Face Amount	6,800,000			6,800,000			6,800,000
Interest Payable	$ 356,000			$ 356,000			$ 356,000
Debt Conversion, Converted Instrument, Shares Issued				54,143,232
Amortization				$ 2,553,000	4,646
Amortization of the warrants discount				545,000	913,000
Amortization of original issue discount				267,000	107,000
Interest Expense				$ 234,000	$ 421,000
Convertible Debentures [Member] | Minimum [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Debt Instrument, Convertible, Conversion Price	$ 0.11			$ 0.11			$ 0.11
Convertible Debentures [Member] | Maximum [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Debt Instrument, Convertible, Conversion Price	$ 0.34			$ 0.34			$ 0.34
Convertible Debentures [Member] | 21M Debentures Holder [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Debt Instrument, Face Amount						$ 21,000,000.0
Debt interest rate						80.00%
Ownership percentage						4.99%
Accrued unpaid interes						10.00%
Debt redemption percentage						110.00%
Warrant term			three-year	three-year warrants	three-year warrants
Class of Warrant or Right, Number of Securities Called by Warrants or Rights	180,000	850,000		180,000	850,000		180,000
Debt Instrument, Convertible, Conversion Price	$ 0.75			$ 0.75			$ 0.75
Fair Value Adjustment of Warrants				$ 2,200,000	$ 1,148,000
Intrinsic value of the beneficial conversion feature				$ 10,200,000
Common stock shares description				current authorized number of 500 million shares of common stock
Convertible Debentures [Member] | 21M Debentures Holder [Member] | Minimum [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Debt Instrument, Convertible, Conversion Price		$ 3.00			$ 3.00
Convertible Debentures [Member] | 21M Debentures Holder [Member] | Maximum [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights	180,000			180,000			180,000
Debt Instrument, Convertible, Conversion Price		$ 5.00			$ 5.00
Convertible Debentures [Member] | 21M Debentures Holder [Member] | Warrant [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights	1,354,675			1,354,675			1,354,675
Convertible Debentures [Member] | 21M Debentures Holder [Member] | Warrant [Member] | Minimum [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Debt Instrument, Convertible, Conversion Price	$ 0.75			$ 0.75			$ 0.75
Convertible Debentures [Member] | 21M Debentures Holder [Member] | Warrant [Member] | Maximum [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Debt Instrument, Convertible, Conversion Price	$ 5.50			$ 5.50			$ 5.50
Convertible Debentures [Member] | Holder [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Debt Instrument, Face Amount	$ 16,800,000			$ 16,800,000			$ 16,800,000
Interest Payable	$ 768,000,000			$ 768,000,000			$ 768,000,000
Debt Conversion, Converted Instrument, Shares Issued							64,470,063
Convertible Debentures [Member] | Holder [Member] | Minimum [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Debt Instrument, Convertible, Conversion Price	$ 0.11			$ 0.11			$ 0.11
Convertible Debentures [Member] | Holder [Member] | Maximum [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Debt Instrument, Convertible, Conversion Price	$ 3.06			$ 3.06			$ 3.06

XML

MEZZANINE EQUITY (Details Narrative)	1 Months Ended
	Feb. 29, 2020 $ / shares shares
Series B Convertible Preferred Stock [Member] | Volume Weighted Average Price of Common Stock [Member]
Entity Listings [Line Items]
Preferred stock, conversion price	$ 4.00
Number of trading days, description	twenty consecutive trading days
Series B preferred stock conversion price, description	If the sixty-day VWAP is less than or equal to $0.50 per share, the Company shall have the option to (i) convert all shares of Series B convertible preferred stock into common stock at a conversion price of $1.00 per share, and pay cash to the Series B Holders equal to the difference between the 60-day VWAP and $3.00 per share, or (ii) pay cash to the Series B Holders equal to $3.00 per share.
Series B Holders [Member]
Entity Listings [Line Items]
Share issued price	$ 3.00
Preferred stock, conversion price	$ 3.00
Exchange Agreement [Member] | Two Institutional Shareholders [Member] | Series B Convertible Preferred Stock [Member]
Entity Listings [Line Items]
Stock Issued During Period Shares Exchanged | shares	4,908,333
Treasury stock per share value	$ 3.00

XML

STOCKHOLDERS’ EQUITY (Details Narrative) - USD ($)	1 Months Ended	9 Months Ended		12 Months Ended
	Feb. 29, 2020	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019	Dec. 31, 2018	Aug. 31, 2019
Class of Stock [Line Items]
Additional Paid in Capital		$ 109,115,215		$ 112,245,730
Loss on obligations of settled with equity		45,000	$ 0
Shares Granted, Value, Share-based Payment Arrangement, after Forfeiture		$ 16,094
Stock Issued During Period, Value, New Issues			$ 2,600,000
Sale of Stock, Number of Shares Issued in Transaction		0	799,995
Sale of Stock, Price Per Share			$ 3.25
Sale of Stock, Consideration Received on Transaction			$ 2,600,000
Incentive Plan [Member]
Class of Stock [Line Items]
Number of shares reserved						40,000,000
KPG of Anna LLC and Mari Holdings MD LLC [Member]
Class of Stock [Line Items]
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares				1,000,000
The Harvest Foundation LLC [Member]
Class of Stock [Line Items]
Sale of Stock, Number of Shares Issued in Transaction				1,000,000
MediTaurus LLC [Member]
Class of Stock [Line Items]
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares				520,000
Previously Issued Subscription [Member]
Class of Stock [Line Items]
Number of common stock issued during period		3,236,857	97,136
Stock Issued During Period, Value, New Issues		$ 1,168,000	$ 169,000
Promissory Note [Member]
Class of Stock [Line Items]
Stock Issued During Period, Shares, Conversion of Convertible Securities		4,425,596
Debt Instrument, Periodic Payment		$ 812,000
21M Debentures Holder [Member]
Class of Stock [Line Items]
Stock Issued During Period, Shares, Conversion of Convertible Securities			6,798,339
Debt Instrument, Face Amount		$ 7,200,000
Debt Conversion, Converted Instrument, Shares Issued		54,143,232
Stock Issued During Period, Value, Conversion of Convertible Securities			$ 7,900,000
Current Employee [Member]
Class of Stock [Line Items]
Shares Granted, Value, Share-based Payment Arrangement, after Forfeiture		$ 16,000	$ 194,000
Stock to be issued, options		33,319
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures			108,820
Number of shares forfeited during the period		$ 40,000	$ 0
Common Stock [Member]
Class of Stock [Line Items]
Common stock issued to settle obligations, shares		4,400,000
Common stock issued to settle obligations value		$ 699,000
Share-based Compensation Arrangement Grants in Period, Net		97,797
Shares Granted, Value, Share-based Payment Arrangement, after Forfeiture		$ 64
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures		64,478
Number of common stock issued during period			799,995
Stock Issued During Period, Value, New Issues			$ 800
Debt Conversion, Converted Instrument, Shares Issued		2,525,596
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period			417,352
Class of Warrant or Right, Number of Securities Called by Warrants or Rights		17,735,107	11,270,107
Common Stock [Member] | 10M Note [Member]
Class of Stock [Line Items]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights			125,000
Stock Options [Member]
Class of Stock [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period		0	417,352
Warrant [Member] | 10M Note [Member]
Class of Stock [Line Items]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights		0	686,104
Common Stock Subscribed But Not Issued [Member]
Class of Stock [Line Items]
Shares Granted, Value, Share-based Payment Arrangement, after Forfeiture		$ 5,365
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures		33,319
Stock Issued During Period, Value, New Issues
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period			2,644,456
MediTaurus acquisition, shares			6,603,532
Number of stock issued, value acquisitions			$ 5,000,000.0
Common Stock Issuance Obligations [Member]
Class of Stock [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross		33,319
Number of stock options granted, value		$ 5,000
Terrace Inc [Member]
Class of Stock [Line Items]
Number of common stock issued during period				500,000
CVP Worldwide LLC [Member]
Class of Stock [Line Items]
Number of common stock issued during period					378,259
Exchange Agreement [Member] | Two Institutional Shareholders [Member] | Series B Convertible Preferred Stock [Member]
Class of Stock [Line Items]
Stock issued during the period, exchanged	4,908,333
Treasury Stock, Preferred, Value	$ 14,725,000
Treasury Stock, Common, Value	5,000
Additional Paid in Capital	$ 14,720,000

XML

SCHEDULE OF STOCK OPTIONS OUTSTANDING AND EXERCISABLE (Details)	9 Months Ended
	Sep. 30, 2020 $ / shares shares
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Outstanding shares under option	7,125,750
Exercisable shares under option	5,788,750
Range One [Member]
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Outstanding and exercisable exercise price per share | $ / shares	$ 0.130
Outstanding shares under option	200,000
Exercisable shares under option	200,000
Remaining Life in Years	3 days
Range Two [Member]
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Outstanding and exercisable exercise price per share | $ / shares	$ 0.140
Outstanding shares under option	550,000
Exercisable shares under option	550,000
Remaining Life in Years	3 months
Range Three [Member]
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Outstanding and exercisable exercise price per share | $ / shares	$ 0.149
Outstanding shares under option	500,000
Exercisable shares under option	500,000
Remaining Life in Years	5 years 3 months
Range Four [Member]
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Outstanding and exercisable exercise price per share | $ / shares	$ 0.300
Outstanding shares under option	554,500
Exercisable shares under option
Remaining Life in Years	4 years 6 months
Range Five [Member]
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Outstanding and exercisable exercise price per share | $ / shares	$ 0.330
Outstanding shares under option	50,000
Exercisable shares under option	50,000
Remaining Life in Years	5 months 8 days
Range Six [Member]
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Outstanding and exercisable exercise price per share | $ / shares	$ 0.417
Outstanding shares under option	900,000
Exercisable shares under option	400,000
Remaining Life in Years	4 years 2 months 26 days
Range Seven [Member]
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Outstanding and exercisable exercise price per share | $ / shares	$ 0.450
Outstanding shares under option	125,000
Exercisable shares under option	125,000
Remaining Life in Years	1 year 3 days
Range Eight [Member]
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Outstanding and exercisable exercise price per share | $ / shares	$ 0.590
Outstanding shares under option	15,000
Exercisable shares under option	15,000
Remaining Life in Years	4 years 2 months 8 days
Range Nine [Member]
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Outstanding and exercisable exercise price per share | $ / shares	$ 0.630
Outstanding shares under option	300,000
Exercisable shares under option	300,000
Remaining Life in Years	1 year 3 months
Range Ten [Member]
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Outstanding and exercisable exercise price per share | $ / shares	$ 0.770
Outstanding shares under option	200,000
Exercisable shares under option	200,000
Remaining Life in Years	2 years 3 months
Range Eleven [Member]
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Outstanding and exercisable exercise price per share | $ / shares	$ 0.900
Outstanding shares under option	50,000
Exercisable shares under option	50,000
Remaining Life in Years	2 years 7 months 13 days
Range Twelve [Member]
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Outstanding and exercisable exercise price per share | $ / shares	$ 0.910
Outstanding shares under option	50,000
Exercisable shares under option	50,000
Remaining Life in Years	2 years 21 days
Range Thirteen [Member]
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Outstanding and exercisable exercise price per share | $ / shares	$ 0.950
Outstanding shares under option	50,000
Exercisable shares under option	30,000
Remaining Life in Years	2 years 3 months
Range Fourteen [Member]
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Outstanding and exercisable exercise price per share | $ / shares	$ 0.992
Outstanding shares under option	300,000
Exercisable shares under option	300,000
Remaining Life in Years	3 years 11 months 26 days
Range Fifteen [Member]
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Outstanding and exercisable exercise price per share | $ / shares	$ 1.000
Outstanding shares under option	125,000
Exercisable shares under option	75,000
Remaining Life in Years	4 years 1 month 2 days
Range Sixteen [Member]
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Outstanding and exercisable exercise price per share | $ / shares	$ 1.350
Outstanding shares under option	100,000
Exercisable shares under option	50,000
Remaining Life in Years	2 years 9 months 29 days
Range Seventeen [Member]
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Outstanding and exercisable exercise price per share | $ / shares	$ 1.950
Outstanding shares under option	375,000
Exercisable shares under option	250,000
Remaining Life in Years	2 years 9 months
Range Eighteen [Member]
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Outstanding and exercisable exercise price per share | $ / shares	$ 2.320
Outstanding shares under option	100,000
Exercisable shares under option	100,000
Remaining Life in Years	2 years 11 months 12 days
Range Nineteen [Member]
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Outstanding and exercisable exercise price per share | $ / shares	$ 2.450
Outstanding shares under option	2,000,000
Exercisable shares under option	2,000,000
Remaining Life in Years	2 years 2 months 23 days
Range Twenty [Member]
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Outstanding and exercisable exercise price per share | $ / shares	$ 2.500
Outstanding shares under option	100,000
Exercisable shares under option	100,000
Remaining Life in Years	2 years 10 months 28 days
Range Twenty One [Member]
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Outstanding and exercisable exercise price per share | $ / shares	$ 2.650
Outstanding shares under option	200,000
Exercisable shares under option	200,000
Remaining Life in Years	2 years 11 months 23 days
Range Twenty Two [Member]
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Outstanding and exercisable exercise price per share | $ / shares	$ 2.850
Outstanding shares under option	56,250
Exercisable shares under option	43,750
Remaining Life in Years	2 years 2 months 12 days
Range Twenty Three [Member]
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Outstanding and exercisable exercise price per share | $ / shares	$ 2.850
Outstanding shares under option	100,000
Exercisable shares under option	75,000
Remaining Life in Years	3 years 2 months 12 days
RangeTwenty Four [Member]
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Outstanding and exercisable exercise price per share | $ / shares	$ 3.000
Outstanding shares under option	25,000
Exercisable shares under option	25,000
Remaining Life in Years	3 years 2 months 15 days
Range Twenty Five [Member]
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Outstanding and exercisable exercise price per share | $ / shares	$ 3.725
Outstanding shares under option	100,000
Exercisable shares under option	100,000
Remaining Life in Years	3 years 2 months 8 days

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STOCK OPTIONS (Details Narrative) - USD ($)	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Payment Arrangement, Expense	$ 100,000	$ 101,000
Cashless Basis [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Amortized fair value of options granted		$ 2,285,000
Share-based Payment Arrangement, Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term	five-year
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross		900,000
Fair value of options granted	$ 117,000	$ 876,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period		3,585,000
Stock Repurchased During Period, Shares		523,192
Share-based Compensation Arrangement by Share-based Payment Award, Options, Expirations in Period	210,000	80,000
Amortization	$ 208,000	$ 170,000
Share-based Payment Arrangement, Option [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	1,064,500
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price	$ 0.30	$ 1.95
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price		0.77
Share-based Payment Arrangement, Option [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price	$ 0.15	0.99
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price		$ 0.08

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WARRANTS (Details Narrative) - USD ($)	1 Months Ended		3 Months Ended		6 Months Ended	9 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Jun. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Jul. 31, 2020
SEC Schedule, 12-18, Supplemental Information, Property-Casualty Insurance Underwriters [Line Items]
Interest Expense			$ 1,921,312	$ 4,516,576		$ 7,581,648	$ 9,076,583
Warrant [Member]
SEC Schedule, 12-18, Supplemental Information, Property-Casualty Insurance Underwriters [Line Items]
Proceeds from Issuance of Warrants							$ 612,000
Common Stock [Member]
SEC Schedule, 12-18, Supplemental Information, Property-Casualty Insurance Underwriters [Line Items]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights			17,735,107	11,270,107		17,735,107	11,270,107
8.8M Note [Member]
SEC Schedule, 12-18, Supplemental Information, Property-Casualty Insurance Underwriters [Line Items]
Debt Instrument, Convertible, Conversion Price								$ 0.30
10M Note [Member] | Warrant [Member]
SEC Schedule, 12-18, Supplemental Information, Property-Casualty Insurance Underwriters [Line Items]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights			0	686,104		0	686,104
10M Note [Member] | Common Stock [Member]
SEC Schedule, 12-18, Supplemental Information, Property-Casualty Insurance Underwriters [Line Items]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights				125,000			125,000
Interest Expense						$ 2,000	$ 139,000
Second Amendment Agreement [Member] | 8.8M Note [Member]
SEC Schedule, 12-18, Supplemental Information, Property-Casualty Insurance Underwriters [Line Items]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights	750,000		750,000			750,000
Class of Warrant or Right, Exercise Price of Warrants or Rights	$ 0.50		$ 0.50			$ 0.50
Fair Value Adjustment of Warrants	$ 66,000
Second Extension Agreement [Member] | 8.8M Note [Member]
SEC Schedule, 12-18, Supplemental Information, Property-Casualty Insurance Underwriters [Line Items]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights			5,000,000			5,000,000
Class of Warrant or Right, Exercise Price of Warrants or Rights			$ 0.25			$ 0.25
Maximum [Member]
SEC Schedule, 12-18, Supplemental Information, Property-Casualty Insurance Underwriters [Line Items]
Class of Warrant or Right, Exercise Price of Warrants or Rights			$ 5.50	$ 5.50		$ 5.50	$ 5.50
Maximum [Member] | Warrant [Member]
SEC Schedule, 12-18, Supplemental Information, Property-Casualty Insurance Underwriters [Line Items]
Class of Warrant or Right, Exercise Price of Warrants or Rights				1.75			1.75
Maximum [Member] | 10M Note [Member] | Warrant [Member]
SEC Schedule, 12-18, Supplemental Information, Property-Casualty Insurance Underwriters [Line Items]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights			25,000			25,000
Minimum [Member]
SEC Schedule, 12-18, Supplemental Information, Property-Casualty Insurance Underwriters [Line Items]
Class of Warrant or Right, Exercise Price of Warrants or Rights			$ 0.15	0.15		$ 0.15	0.15
Minimum [Member] | Warrant [Member]
SEC Schedule, 12-18, Supplemental Information, Property-Casualty Insurance Underwriters [Line Items]
Class of Warrant or Right, Exercise Price of Warrants or Rights				$ 0.12			$ 0.12
Convertible Debentures [Member]
SEC Schedule, 12-18, Supplemental Information, Property-Casualty Insurance Underwriters [Line Items]
Interest Expense						$ 234,000	$ 421,000
Convertible Debentures [Member] | Maximum [Member]
SEC Schedule, 12-18, Supplemental Information, Property-Casualty Insurance Underwriters [Line Items]
Debt Instrument, Convertible, Conversion Price			0.34			$ 0.34
Convertible Debentures [Member] | Minimum [Member]
SEC Schedule, 12-18, Supplemental Information, Property-Casualty Insurance Underwriters [Line Items]
Debt Instrument, Convertible, Conversion Price			$ 0.11			$ 0.11
Convertible Debentures [Member] | 21M Debentures Holder [Member]
SEC Schedule, 12-18, Supplemental Information, Property-Casualty Insurance Underwriters [Line Items]
Warrants term					three-year	three-year warrants	three-year warrants
Class of Warrant or Right, Number of Securities Called by Warrants or Rights			180,000	850,000		180,000	850,000
Debt Instrument, Convertible, Conversion Price			$ 0.75			$ 0.75
Fair value of warrants						$ 28,000
Amortization of interest expense for warrants						17,000	$ 517,000
Fair Value Adjustment of Warrants						$ 2,200,000	$ 1,148,000
Convertible Debentures [Member] | 21M Debentures Holder [Member] | Maximum [Member]
SEC Schedule, 12-18, Supplemental Information, Property-Casualty Insurance Underwriters [Line Items]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights			180,000			180,000
Debt Instrument, Convertible, Conversion Price				$ 5.00			$ 5.00
Convertible Debentures [Member] | 21M Debentures Holder [Member] | Minimum [Member]
SEC Schedule, 12-18, Supplemental Information, Property-Casualty Insurance Underwriters [Line Items]
Debt Instrument, Convertible, Conversion Price				$ 3.00			$ 3.00
Secured Promissory Notes [Member] | 10M Note [Member] | MariMed Hemp Inc. [Member]
SEC Schedule, 12-18, Supplemental Information, Property-Casualty Insurance Underwriters [Line Items]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights		375,000		375,000	375,000		375,000
Fair value of warrants							$ 639,000
Amortization of interest expense for warrants							$ 10,000
Class of Warrant or Right, Exercise Price of Warrants or Rights		$ 4.50		$ 4.50	$ 4.50		$ 4.50
Fair Value Adjustment of Warrants		$ 601,000					$ 601,000
[custom:AmortizationOfInterestExpenseForWarrant]							$ 294,000

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SCHEDULE OF REVENUES COMPRISED OF MAJOR CATEGORIES (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Disaggregation of Revenue [Line Items]
Total revenues	$ 13,461,504	$ 4,209,328	$ 30,537,829	$ 11,382,942
Total revenues	$ 13,461,504	$ 11,223,699	30,537,829	40,412,191
Product Sales [Member]
Disaggregation of Revenue [Line Items]
Total revenues			21,992,298	60,839
Product Sales From Related Party [Member]
Disaggregation of Revenue [Line Items]
Total revenues				29,029,249
Real Estate [Member]
Disaggregation of Revenue [Line Items]
Total revenues			5,065,538	5,250,084
Management Service [Member]
Disaggregation of Revenue [Line Items]
Total revenues			1,081,562	1,963,205
Supply Procurement [Member]
Disaggregation of Revenue [Line Items]
Total revenues			1,218,334	2,830,555
License and Service [Member]
Disaggregation of Revenue [Line Items]
Total revenues			1,179,113	1,230,366
Other [Member]
Disaggregation of Revenue [Line Items]
Total revenues			$ 984	$ 47,893

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REVENUES (Details Narrative)	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Revenue from Contract with Customer Benchmark [Member] | Two Clients [Member]
Ceded Credit Risk [Line Items]
Concentration Risk, Percentage	24.00%	82.00%

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BAD DEBTS (Details Narrative) - USD ($)	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves [Line Items]
Amount of expense (reversal of expense) for expected credit loss on accounts receivable	$ 44,300,000	$ 250,000
Accounts Receivable, Allowance for Credit Loss, Writeoff	29,000,000.0
Accounts Receivable, Allowance for Credit Loss	40,500,000		$ 39,700,000
GenCanna Global, Inc. [Member]
Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves [Line Items]
Accounts Receivable, Related Parties, Current	11,100,000
Due from Related Parties	1,500,000
Accounts Receivable, Allowance for Credit Loss	314,000
Harvest Foundation LLC [Member]
Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves [Line Items]
Due from Related Parties	$ 2,300,000

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RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)	1 Months Ended	3 Months Ended			9 Months Ended		12 Months Ended
	Aug. 31, 2018	Sep. 30, 2020	Mar. 31, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Related Party Transaction [Line Items]
Revenues		$ 13,461,504		$ 4,209,328	$ 30,537,829	$ 11,382,942
Accounts receivable, write off					29,000,000.0
Lease term, description	10-year lease
Operating Lease, Expense					117,000	$ 117,000
Due to Other Related Parties		1,233,000			1,233,000		$ 1,455,000
Common Stock [Member]
Related Party Transaction [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period						417,352
Three Independent Board Members [Member]
Related Party Transaction [Line Items]
Weighted-average remaining contractual term, description.							five-year options
Share-based Compensation Arrangement by Share-based Payment Award, Per Share Weighted Average Price of Shares Purchased							$ 0.99
Fair value of options granted			$ 191,000
Three Independent Board Members [Member] | Maximum [Member]
Related Party Transaction [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Shares Purchased for Award							100,000
CEO and Independent Board Member [Member] | Options One [Member]
Related Party Transaction [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period							200,000
CEO and Independent Board Member [Member] | Common Stock [Member]
Related Party Transaction [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period							132,499
CEO and Independent Board Member [Member] | Maximum [Member] | Options One [Member]
Related Party Transaction [Line Items]
Shares Issued, Price Per Share							$ 0.08
CEO and Independent Board Member [Member] | Minimum [Member] | Options One [Member]
Related Party Transaction [Line Items]
Shares Issued, Price Per Share							$ 0.11
Two Board Members [Member]
Related Party Transaction [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures in Period							117,501
C E Oand C F O [Member]
Related Party Transaction [Line Items]
Due to Other Related Parties		515,000			515,000		$ 420,000
C E Oand C F O [Member] | Partially Owned Companies [Member]
Related Party Transaction [Line Items]
Due to Other Related Parties		$ 673,000			$ 673,000		990,000
Two Stockholders [Member]
Related Party Transaction [Line Items]
Due to Other Related Parties							45,000
GenCanna [Member]
Related Party Transaction [Line Items]
Payment of related party							20,750,000
Sold and delivered to related party							33,200,000
Raise of debt financings							17,000,000.0
Due from related parties							33,200,000
Unearned revenue							$ 4,200,000
Ownership percentage							33.50%
Accounts receivable, write off							$ 29,000,000.0
Unearned revenue balance							4,200,000
GenCanna [Member] | Related Party [Member]
Related Party Transaction [Line Items]
Revenues							$ 29,000,000.0

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SCHEDULE OF COMPONENTS OF LEASE EXPENSE (Details)	9 Months Ended
	Sep. 30, 2020 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Operating lease cost	$ 737,993
Amortization of right-of-use assets	24,512
Interest on lease liabilities	5,834
Total finance lease cost	$ 30,346

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SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS UNDER ALL NON-CANCELABLE OPERATING LEASES (Details)	Sep. 30, 2020 USD ($)
Lessor, Lease, Description [Line Items]
Operating Leases, 2020	$ 1,130,989
Operating Leases, 2021	4,667,497
Operating Leases, 2022	4,590,656
Operating Leases, 2023	4,292,769
Operating Leases, 2024	4,348,027
Operating Leases, Thereafter	43,995,612
Total	63,025,550
Operating Leases [Member]
Lessor, Lease, Description [Line Items]
Operating Leases, 2020	246,937
Operating Leases, 2021	1,008,227
Operating Leases, 2022	949,535
Operating Leases, 2023	910,166
Operating Leases, 2024	835,411
Operating Leases, Thereafter	4,267,635
Total	8,217,911
Less: Operating Leases, Imputed Interest	(2,248,157)
Operating Leases	5,969,754
Financing Leases [Member]
Lessor, Lease, Description [Line Items]
Finance Lease, 2020	9,603
Finance Lease, 2021	38,412
Finance Lease, 2022	27,123
Finance Lease, 2023	23,201
Finance Lease, 2024	3,229
Finance Lease, Thereafter
Finance Lease, Total lease payments	101,568
Less: Finance Lease, imputed interest	(10,718)
Finance Lease	$ 90,850

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COMMITMENTS AND CONTINGENCIES (Details Narrative)				1 Months Ended		9 Months Ended
	Sep. 30, 2020 USD ($) ft²	Nov. 13, 2019 USD ($)	Sep. 30, 2019 ft²	Aug. 31, 2018	Oct. 31, 2016 ft²	Sep. 30, 2020 USD ($) ft²	Dec. 31, 2019 USD ($)	Jan. 31, 2017 ft²	Sep. 30, 2016 ft²
Product Liability Contingency [Line Items]
Number of operating leases, description						five operating leases
Number of finance leases, description						four finance leases
Area of land	300,000					300,000
Lease term, description				10-year lease
Agreement term description						An employment agreement which commenced in 2012 with Thomas Kidrin, the former CEO of the Company, that provided Mr. Kidrin with salary, car allowances, stock options, life insurance, and other employee benefits, was terminated by the Company in 2017.
Accrued Liabilities, Current | $	$ 3,111,373					$ 3,111,373	$ 5,395,996
Management Fee Expense | $						$ 1,100,000
Maryland Acquisition [Member]
Product Liability Contingency [Line Items]
Lease term, description		20-year lease agreement
Loss Contingency, Damages Sought, Value | $		$ 75,000
Terminated Employment Agreement [Member]
Product Liability Contingency [Line Items]
Accrued Liabilities, Current | $							$ 1,043,000
Finance Lease Commitments [Member] | Machinery [Member]
Product Liability Contingency [Line Items]
Lease expiration, description						expire in February 2022 through June 2024
Lease Commitments [Member]
Product Liability Contingency [Line Items]
Weighted-average remaining lease, term	8 years 8 months 12 days					8 years 8 months 12 days
Lease liabilities, weighted-average remaining lease term	3 years					3 years
Weighted-average discount rate for lease liabilities	7.50%					7.50%
GERMANY
Product Liability Contingency [Line Items]
Area of land			100,000						45,000
Lease term, description	10 years
Lease expiration, description			The lease term is 10 years, with an option to extend the term for three additional five-year periods.			expires in 2035
GERMANY | Operating Lease Commitments [Member]
Product Liability Contingency [Line Items]
Area of land					4,000
Lease term, description					five-year
NEVADA
Product Liability Contingency [Line Items]
Area of land	10,000					10,000
Lease expiration, description						expiring in 2024
MOROCCO
Product Liability Contingency [Line Items]
Area of land	10,000					10,000
Lease term, description						10-year lease
Lease expiration, description						expiring in 2028
Lease extension option						option to extend the term for an additional five-year period
MOLDOVA
Product Liability Contingency [Line Items]
Area of land								180,000
Lease expiration, description						expires in 2037
MOLDOVA | Operating Lease Commitments [Member]
Product Liability Contingency [Line Items]
Area of land	2,700					2,700
Lease expiration, description						expires in July 2022

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SUBSEQUENT EVENTS (Details Narrative) - USD ($)		1 Months Ended	9 Months Ended
	Oct. 31, 2020	Oct. 31, 2020	Sep. 30, 2020
Subsequent Event [Line Items]
Debt conversion, converted instrument, amount			$ 460,050
Common Stock Issuance Obligations [Member]
Subsequent Event [Line Items]
Number of shares granted to current employees			33,319
Promissory Notes [Member] | Second Extension Agreement [Member]
Subsequent Event [Line Items]
Debt Instrument, Face Amount			$ 8,300,000
Subsequent Event [Member] | Common Stock Issuance Obligations [Member]
Subsequent Event [Line Items]
Number of shares granted to current employees		33,319
Subsequent Event [Member] | Mortgage Agreement [Member]
Subsequent Event [Line Items]
Mortgage loan interest rate	1.00%	1.00%
Subsequent Event [Member] | Mortgage Agreement [Member] | Commonwealth Real Estate Ventures L L C [Member]
Subsequent Event [Line Items]
Mortgage loan maturity		October 2021
Mortgage secured loan	$ 1,300,000	$ 1,300,000
Mortgage loan interest rate	15.00%	15.00%
Subsequent Event [Member] | 21M Debentures [Member]
Subsequent Event [Line Items]
Debt conversion, converted instrument, amount		$ 1,259,000
Debt Conversion, Converted Instrument, Shares Issued		10,653,600
Subsequent Event [Member] | 21M Debentures [Member] | Conversion Price One [Member]
Subsequent Event [Line Items]
Debt Instrument, Convertible, Conversion Price	$ 0.11	$ 0.11
Subsequent Event [Member] | 21M Debentures [Member] | Conversion Price Two [Member]
Subsequent Event [Line Items]
Debt Instrument, Convertible, Conversion Price	$ 0.12	$ 0.12
Subsequent Event [Member] | Promissory Notes [Member] | Second Extension Agreement [Member]
Subsequent Event [Line Items]
Interest and debt expense		$ 573,000
Mortgage loan maturity		September 2022
Subsequent Event [Member] | Promissory Notes [Member] | Second Extension Agreement [Member] | 6.8M Note [Member]
Subsequent Event [Line Items]
Debt Instrument, Face Amount	$ 1,000,000	$ 1,000,000
Interest and debt expense	$ 333,000	$ 333,000