What changed in this filing

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Item 1. Business

2024-04-10 compared with 2023-04-17 · 350 added, 158 removed, 80 unchanged (86% of the section changed)

Business Summary

TREES Corporation is a cannabis retailer and cultivator in the States of Colorado and Oregon.

We presently operate eight (8) cannabis dispensaries as follows:

TREES Corporation is a cannabis retailer and cultivator

in the States of Colorado and Oregon.

We presently operate six (6) cannabis dispensaries

● Englewood, Colorado – 5005 S.

Federal Boulevard – Recreational license only

● Two (2) in Denver, Colorado

Federal Boulevard – Recreational license only

● Denver, Colorado

o East Hampden Avenue (formerly Green Man) – Recreational license only

● Longmont, Colorado

107 th Street (formerly Green Tree/Ancient Alternatives) – Medical and Recreational licenses

● Berthoud, Colorado

2 nd Street (formerly Green Tree/Natural Alternatives for Life) – Medical and Recreational licenses

107 th Street (formerly Green Tree/Ancient Alternatives) – Medical and Recreational

● Three (3) in Oregon

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o 7050 NE MLK, Portland, OR – Medical and Recreational licenses

We also operate five (5) cultivation facilities in Colorado as follows:

We also operate two (2) cultivation facilities

in Colorado as follows:

● SevenFive Farm – 3705 N.

75 th Street, Boulder – Retail cultivation license only

Foothills Highway D-300 (formerly Green Tree/Ancient Alternatives) – Medical and Retail cultivation licenses

Foothills Highway C-100 (formerly Green Tree/Mountainside Industries) – Medical and Retail cultivation licenses

Foothills Highway E-100 (formerly Green Tree/Hillside Enterprises) – Retail cultivation license only

2 nd Street (formerly Green Tree/Natural Alternatives for Life) – Medical cultivation license only

Our principal business model is to acquire, integrate and optimize cannabis companies in the retail and cultivation segments utilizing the combined experience of entrepreneurs and synergistic operations of our vertically integrated network.

Foothills Highway E-100 (formerly Green Tree/Hillside Enterprises) – Retail cultivation

Our principal business model is to acquire, integrate

and optimize cannabis companies in the retail and cultivation segments utilizing the combined experience of entrepreneurs and synergistic

operations of our vertically integrated network.

Business Strategy and Recent Transactions

As the cannabis industry becomes more mature, we focus on (1) identifying licensed cannabis assets that we can acquire, (2) executing our business strategy to continue to generate cash and meet our financial commitments, and (3) moving with an urgency that reflects our conviction and confidence in our ability to create customer loyalty and advocacy.

To that end, during the years ended 2022 and 2021, we implemented the following significant actions in support of our continued growth:

● In February 2023, we completed the acquisition of Station 2, LLC, the assets of which consist of a dispensary located in Denver, CO.

The consideration paid by the Company consists of cash at closing equal to $256,582 plus an additional $385,873 in twenty-four (24) equal monthly payments commencing May 2023.

Brown, one of our Board members, was the sole owner of Station 2 and has and will receive all consideration described above.

● In December 2022, we completed the acquisition of substantially all of the assets of Green Man Cannabis (“Green Man”, the overall transaction is referred to as the “Green Man Acquisition”).

Green Man equity holders received cash equal to $1,225,000 together with an aggregate of 4,494,382 shares of the Common Stock.

An additional $1,500,000 in cash will be paid out in eighteen (18) equal monthly payments equal to $83,333.33 per month commencing on the 12-month anniversary of the closing.

● Also in December 2022, we completed the acquisition of substantially all of the assets of Ancient Alternatives LLC, Natural Alternatives For Life, LLC, Mountainside Industries, LLC, Hillside Enterprises, LLC, and GT Creations, LLC, each a Colorado limited liability company (collectively, the "Green Tree Entities”, the overall transaction is referred to herein as the “Green Tree Acquisition”).

At the closing, the Company delivered to the Green Tree Entities an aggregate of cash equal to $500,000 and delivered to equity holders of the Green Tree Entities an aggregate of 17,977,528 shares of Common Stock.

An additional $3,500,000 in cash will be paid by the Company to the Green Tree Entities in fifteen (15) equal monthly payments commencing on the 9-month anniversary of the closing.

As the cannabis industry becomes more mature, we focus on (1) identifying

licensed cannabis assets that we can acquire, (2) executing our business strategy to continue to generate cash and meet our financial

commitments, and (3) moving with an urgency that reflects our conviction and confidence in our ability to create customer loyalty and

To that end, during the years ended 2023 and 2022, we implemented the following significant actions in support of our continued

● In December 2023, we completed a restructuring of our senior secured debt with certain accredited investors

party to the September 2022 note offering.

We issued and sold senior secured convertible notes (the “Amended Notes”) with an

aggregate principal amount of $13,500,000 to such investors.

The material terms of the Amended Notes include no changes to the aggregate

principal amount;

the maturity date;

or the interest rate.

Material changes reflected in the Amended Notes include the following:

o 25% of the total principal, i.e., $3,375,000, contains different terms than the remaining principal.

o Principal mandatorily convertible at any time during term upon occurrence of trigger event based on trading

price and trading value.

o Interest subject to optional conversion by TREES if trigger event occurs.

o In the event of this conversion, the Principal Amount would be reduced to $10,125,000.

o Current interest payments are deferred until March 2024;

further, the Company shall make ‘catch-up’

interest payments beginning in December 2024 for deferred interest.

o Conversion:

Up to $3,375,000 of principal will be convertible at Investors’ option at a price per

share equal to $0.50.

o Warrant exercise price of previously granted senior debt warrants in respect of prior 12% and 10% note

offerings reduced to $0.40 per share;

warrant expiration date extended to September 15, 2029.

o Working capital – Lead Investor agreed to provide an additional $250,000 on or after closing in

a separate ‘Working Capital Note’ with a 1.25x liquidation preference, and up to an additional $250,000 at TREES’ option.

In such event, a 1.5x liquidation preference shall apply to entire amount (the initial $250,000 plus the additional $250,000).

o Lead Investor to provide up to $500,000 in additional M&A financing upon a mutually agreed transaction.

● In August 2023, we re-sold the Station 2 license and related assets to Timothy Brown, one of our Board

members, in exchange for extinguishment of all debt or other obligations of the Company, Trees Colorado, and any of their respective affiliates,

directors, officers or agents, pursuant to the original Asset Purchase Agreement of October 2022, and (ii) repayment by Brown of certain

debts of the Company in respect of a cultivation facility owned by the Company.

● In July 2023, we ‘reversed’ a portion of the Green Tree business combination transaction originally

consummated in December 2022, pursuant to a settlement agreement in which we sold back to the original Green Tree owners cannabis licenses

and the related assets associated with (i) GT Retail, a cultivation facility and retail dispensary located in Berthoud, Colorado;

(ii) GT MIP, a ‘marijuana infused product’ dispensary located in Boulder County, Colorado.

The consideration for this transaction

was the redemption and cancellation of 9,917,574 shares of our Common Stock owned by Allyson Feiler Downing and Loree Schwartz originally

issued in 2022.

As part of the settlement agreement, all parties waived any potential claims with limited exceptions.

In July 2023, Downing

and Schwartz were terminated from employment with the Company, and in August 2023, Downing resigned from the Board.

● In December 2022, we completed the acquisition of substantially all of the assets of Green Man Cannabis

(“Green Man”, the overall transaction is referred to as the “Green Man Acquisition”).

Green Man equity holders

received cash equal to $1,225,000 together with an aggregate of 4,494,382 shares of the Common Stock.

An additional $1,500,000 in cash

will be paid out in eighteen (18) equal monthly payments equal to $83,333.33 per month commencing on the 12-month anniversary of

● Also in December 2022, we completed the acquisition of substantially all of the assets of Ancient Alternatives

LLC, Natural Alternatives For Life, LLC, Mountainside Industries, LLC, Hillside Enterprises, LLC, and GT Creations, LLC, each a Colorado

limited liability company (collectively, the “Green Tree Entities”, the overall transaction is referred to herein as the “Green

Tree Acquisition”).

At the closing, the Company delivered to the Green Tree Entities an aggregate of cash equal to $500,000 and

delivered to equity holders of the Green Tree Entities an aggregate of 17,977,528 shares of Common Stock.

An additional $3,500,000 in

cash was paid by the Company to the Green Tree Entities in fifteen (15) equal monthly payments commencing on the 9-month anniversary

of the closing.

The number of shares is subject to adjustment based upon a formula specified in the definitive purchase agreement.

We assumed certain operating obligations at closing, including certain manufacturing agreements between GT Creations and affiliates of the Green Tree Entities.

Allyson Feiler, a principal owner of the Green Tree Entities, was elected to our Board of Directors of the effective December 12, 2022.

● In September 2022, we completed a private offering in which we issued and sold to accredited investors senior secured convertible notes (the "2022 Notes”) with an aggregate principal amount of $13,500,000 ("Principal Amount”) to such investors ("2022 Note Offering”), in exchange for payment to the Company by certain of the investors of an aggregate amount of $10,587,250 in cash, as well as cancellation of outstanding indebtedness in the aggregate amount of $2,912,750 represented by certain prior promissory notes we issued in December 2020 and April 2020.

In connection with the 2022 Note Offering, Investors received warrants to purchase shares of the Company’s Common Stock equal to 20% coverage of the aggregate principal amount at $0.70 per share, which equals an aggregate of warrants to purchase 3,857,150 shares of the Common Stock.

The lead Investor ("Lead Investor”) received an additional 10% warrant coverage on the aggregate principal amount of Notes for total additional warrants to purchase 1,928,571 shares of Common Stock.

The Lead Investor also will receive a five percent cash fee on the aggregate principal amount of Notes, payable by the Company;

assumed certain operating obligations at closing, including certain manufacturing agreements between GT Creations and affiliates of the

Green Tree Entities.

● In September 2022, we completed a private offering in which we issued and sold to accredited investors

senior secured convertible notes (the “2022 Notes”) with an aggregate principal amount of $13,500,000 (“Principal Amount”)

to such investors (“2022 Note Offering”), in exchange for payment to the Company by certain of the investors of an aggregate

amount of $10,587,250 in cash, as well as cancellation of outstanding indebtedness in the aggregate amount of $2,912,750 represented by

certain prior promissory notes we issued in December 2020 and April 2020.

In connection with the 2022 Note Offering, Investors

received warrants to purchase shares of the Company’s Common Stock equal to 20% coverage of the aggregate principal amount

at $0.70 per share, which equals an aggregate of warrants to purchase 3,857,150 shares of the Common Stock.

The lead Investor (“Lead

Investor”) received an additional 10% warrant coverage on the aggregate principal amount of Notes for total additional warrants

to purchase 1,928,571 shares of Common Stock.

The Lead Investor also will receive a five percent cash fee on the aggregate principal amount

of Notes, payable by the Company;

one-half of such fee may be deferred by the Company for up to five months from the closing.

The Notes will bear interest at an annual rate of 12% and will mature on September 16, 2026 (the "Maturity Date”).

Investors have the option to convert up to 50% of the outstanding unpaid principal and accrued interest of the Notes into Common Stock at a fixed conversion price equal to $1.00 per share.

The Warrants are exercisable at an exercise price of $0.70 per Warrant, subject to adjustment as provided in the Warrants, at any time prior to the earlier of the Maturity Date and an Acquisition (as defined in the Warrants).

Payment on the Notes is secured by substantially all of the assets of the Company pursuant to a Security Agreement by and among the Company and the Investors.

● In December 2021, we completed the acquisition of substantially all the assets of Trees Portland, LLC and Trees Waterfront, LLC, representing a portion of the overall Trees transaction ("Trees Transaction”).

The cash paid in connection with the Oregon Closing consisted of $331,581 and stock consideration of 6,423,575 shares of our Common Stock.

Further, cash equal to $497,371 will be paid to sellers in equal monthly installments over a period of 24 months from the Oregon Closing.

● In September 2021, we entered into a Securities Purchase Agreement with various accredited investors, pursuant to which the Company issued and sold Units consisting of Series A Convertible Preferred Stock (“Series A Preferred”) and warrants to purchase shares of our Common Stock The total number of Units sold

Each Unit consists of one (1) share of Series A Preferred and 300 Warrants.

The Notes will bear interest at an annual

rate of 12% and will mature on September 16, 2026 (the “Maturity Date”).

Investors have the option to convert up

to 50% of the outstanding unpaid principal and accrued interest of the Notes into Common Stock at a fixed conversion price equal to $1.00

The Warrants are exercisable at an exercise price of $0.70 per Warrant, subject to adjustment as provided in the Warrants,

at any time prior to the earlier of the Maturity Date and an Acquisition (as defined in the Warrants).

Payment on the Notes is secured

by substantially all of the assets of the Company pursuant to a Security Agreement by and among the Company and the Investors.

● In December 2021, we completed the acquisition of substantially all the assets of Trees Portland, LLC

and Trees Waterfront, LLC, representing a portion of the overall Trees transaction (“Trees Transaction”).

The cash paid in

connection with the Oregon Closing consisted of $331,581 and stock consideration of 6,423,575 shares of our Common Stock.

Further, cash

equal to $497,371 will be paid to sellers in equal monthly installments over a period of 24 months from the Oregon Closing.

● In September 2021, we entered into a Securities Purchase Agreement with various accredited investors,

pursuant to which the Company issued and sold Units consisting of Series A Convertible Preferred Stock (“Series A Preferred”)

and warrants to purchase shares of our Common Stock The total number of Units sold was 1,180.

Each Unit consists of one (1) share

of Series A Preferred and 300 Warrants.

The purchase price of each Unit was $1,000, for an aggregate amount sold of $1,180,000.

Each share of Series A Preferred is convertible into 1,000 shares of Common Stock upon the consummation of a capital raise of at least $5 million.

● Also in September 2021, we completed the acquisition of substantially all the assets of TDM, LLC, representing a portion of the overall Trees Transaction.

of Series A Preferred is convertible into 1,000 shares of Common Stock upon the consummation of a capital raise of at least $5 million.

● Also in September 2021, we completed the acquisition of substantially all the assets of TDM, LLC, representing

a portion of the overall Trees Transaction.

The cash paid by the Company consisted of $1,155,256.

We issued 22,380,310 shares of our Common Stock.

We issued 22,380,310 shares of our Common

Further, cash equal to $1,732,884 will be paid to Seller in equal monthly installments over a period of 24 months.

● In July 2021, we entered into an Asset Purchase Agreement with NBC Holdings LLC and Richard Cardinal (“NBC Buyer”) pursuant to which we agreed to sell substantially all the assets in our cultivation consulting business known as Next Big Crop (“NBC”) to Buyer.

The Board of Directors approved the Agreement in furtherance of its previously disclosed plan to identify and acquire licensed cannabis assets that will allow us to continue to generate cash and meet our financial commitments.

The purchase price for the sale consists of a payment by NBC Buyer of $75,000 payable upon signing, an additional $75,000 payable within one year of the closing, and ten percent (10%) of profits generated by NBC Buyer in the states of Michigan, Mississippi and Massachusetts for a period of twelve months from the Closing.

Pursuant to amendment, NBC Buyer paid the additional $75,000 in March 2022, and the 10% profit share described above was eliminated.

● In April 2021, we completed an offering with accredited investors, pursuant to which the Company issued and sold convertible notes (“2021 Notes”) with an aggregate principal amount of $2.3 million to such Investors (“2021 Note Offering”).

The notes are part of an over-allotment approved by the existing noteholders in connection with the original convertible note offering (and previous over-allotment) of $4.6 million consummated on December 23, 2020, and February 8, 2021.

In connection with the 2021 Note Offering, each holder received warrants to purchase shares of our common stock equal to 20% coverage of the aggregate principal amount at $0.56 per share, except that the warrant coverage to one investor acting as lead investor in the 2021 Note Offering received approximately 35.5% of the aggregate principal amount invested.

The notes bear interest at an annual rate of 10% and will mature on April 20, 2024.

The investors have the option to convert up to 50% of the outstanding unpaid principal and accrued interest of the notes into Common Stock at a variable price of 80% of the market price but no less than $0.65 per share and no more than $1.00 per share.

We determined the sale of our operations consulting and products segment represented a strategic shift that had a significant effect on our results of operations and, as a result, we have presented the disposal as discontinued operations in our financial statements.

Unless noted otherwise, discussion in this Annual Report on Form 10-K pertains to our continuing operations.

History and Corporate Structure

The accompanying consolidated financial statements include the results of TREES and its wholly-owned subsidiary companies, each a Colorado corporation or limited liability company:

The accompanying consolidated financial statements

include the results of TREES and its wholly-owned subsidiary companies, each a Colorado corporation or limited liability company:

Evans Owner LLC

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Competitive Strengths

We believe we possess certain competitive strengths and advantages in the industries in which we operate:

Our management teams have extensive experience with a proven track record of success in developing, launching, and managing grow operations and retail dispensaries.

We believe we possess certain competitive strengths

and advantages in the industries in which we operate:

Our management teams have extensive

experience with a proven track record of success in developing, launching, and managing grow operations and retail dispensaries.

Strategic Alliances.

We are dedicated to growing through strategic acquisitions, partnerships, and agreements that will enable us to enter and expand into new markets.

Our strategy is to pursue alliances with potential targets that have the ability to generate positive cash flow, effectively meet customer needs, and supply desirable products, services or technologies, among other considerations.

We are dedicated to

growing through strategic acquisitions, partnerships, and agreements that will enable us to enter and expand into new markets.

is to pursue alliances with potential targets that have the ability to generate positive cash flow, effectively meet customer needs, and

supply desirable products, services or technologies, among other considerations.

Regulatory Compliance.

The state and local laws regulating the cannabis industry change at a rapid pace.

We have resources committed to ensure our operations comply with all state and local laws, policies, guidance, and regulations to which we are subject.

We apply this compliance knowledge to our customers to ensure that they, too, are in full compliance.

The state and local

laws regulating the cannabis industry change at a rapid pace.

We have resources committed to ensure our operations comply with all state

and local laws, policies, guidance, and regulations to which we are subject.

We apply this compliance knowledge to our customers to ensure

that they, too, are in full compliance.

Industry Knowledge.

We continue to create, share, and leverage information and experiences with the purpose of creating awareness and identifying opportunities to increase shareholder value.

We continue to create,

share, and leverage information and experiences with the purpose of creating awareness and identifying opportunities to increase shareholder

Our management team has business expertise, extensive knowledge of the cannabis industry, and closely monitors changes in legislation.

We work with partners who enhance the breadth of our industry knowledge.

Overall, we believe we have a competitive advantage by providing a range of goods and services to the cannabis industry.

This allows us to provide integrated solutions to our customers, as well as sell additional goods and services to customers of a single segment.

However, there is no aspect of our business that is protected by patents or copyrights.

We will compete with a variety of different operators across the states in which we operate.

In most of such states, there are specific license caps that create high barriers to entry.

Overall, we believe we have a competitive advantage

by providing a range of goods and services to the cannabis industry.

This allows us to provide integrated solutions to our customers,

as well as sell additional goods and services to customers of a single segment.

However, there is no aspect of our business that is protected

by patents or copyrights.

We will compete with a variety

of different operators across the states in which we operate.

In most of such states, there are specific license caps that create high

barriers to entry.

However, in some markets, such as Colorado, there are few caps on licenses creating a more open marketplace.

The Colorado cultivation market is highly fragmented.

There are over one million cannabis plants cultivated for cannabis sales each year, and a typical 15,000 to 20,000 square foot grow facility contains approximately 5,000 to 7,500 plants.

The Colorado cultivation market

is highly fragmented.

There are over one million cannabis plants cultivated for cannabis sales each year, and a typical 15,000 to 20,000

square foot grow facility contains approximately 5,000 to 7,500 plants.

Government and Industry Regulation

Cannabis continues to be a Schedule I controlled substance under the Controlled Substances Act (“CSA”) and is, therefore, illegal under federal law.

Even in those states in which the use of cannabis has been legalized pursuant to state law, its use, possession, and/or cultivation remains a violation of federal law.

A Schedule I controlled substance is defined as one that has no currently accepted medical use in the United States, a lack of safety for use under medical supervision and a high potential for abuse.

Department of Justice (the “DOJ”) describes Schedule I controlled substances as “the most dangerous drugs of all the drug schedules with potentially severe psychological or physical dependence.” If the federal government decides to enforce the CSA in Colorado with respect to state-regulated cannabis activities in Colorado and other states, persons that are charged with distributing, possessing with intent to distribute or growing cannabis could be subject to fines and/or terms of imprisonment, the maximum being life imprisonment and a $50 million fine.

Considering the conflict between federal laws and state laws regarding cannabis, the administration under President Obama had effectively stated that it was not an efficient use of resources to direct federal law enforcement agencies to prosecute those lawfully abiding by state-designated laws allowing the use and distribution of medical cannabis.

Cannabis continues to be a Schedule I controlled

substance under the Controlled Substances Act (“CSA”) and is, therefore, illegal under federal law.

Even in those states in

which the use of cannabis has been legalized pursuant to state law, its use, possession, and/or cultivation remains a violation of federal

A Schedule I controlled substance is defined as one that has no currently accepted medical use in the United States, a lack of safety

for use under medical supervision and a high potential for abuse.

Department of Justice (the “DOJ”) describes Schedule

I controlled substances as “the most dangerous drugs of all the drug schedules with potentially severe psychological or physical

dependence.” If the federal government decides to enforce the CSA in Colorado with respect to state-regulated cannabis activities

in Colorado and other states, persons that are charged with distributing, possessing with intent to distribute or growing cannabis could

be subject to fines and/or terms of imprisonment, the maximum being life imprisonment and a $50 million fine.

Considering the conflict between federal laws and state laws regarding

cannabis, the administration under President Obama had effectively stated that it was not an efficient use of resources to direct federal

law enforcement agencies to prosecute those lawfully abiding by state-designated laws allowing the use and distribution of medical cannabis.

For example, the prior DOJ Deputy Attorney General of the Obama administration, James M.

Cole, issued a memorandum (the “Cole Memo”) to all United States Attorneys providing updated guidance to federal prosecutors concerning cannabis enforcement under the CSA.

In addition, the Financial Crimes Enforcement Network (“FinCEN”) provided guidelines (the “FinCEN Guidelines”) on February 14, 2014, regarding how financial institutions can provide services to cannabis-related businesses consistent with their Bank Secrecy Act (“BSA”) obligations (see “-- FinCEN”).

The policies of the Obama administration concerning federal law enforcement regarding cannabis, notwithstanding the rescission of the Cole Memo (see below), continued during the Trump administration and we expect them to be continued during the Biden administration.

Congress previously enacted an omnibus spending bill that included a provision (the “Rohrabacher-Blumenauer Amendment”) prohibiting the DOJ from using funds to prevent states with medical cannabis laws from implementing such laws.

Cole, issued a memorandum (the “Cole Memo”)

to all United States Attorneys providing updated guidance to federal prosecutors concerning cannabis enforcement under the CSA.

the Financial Crimes Enforcement Network (“FinCEN”) provided guidelines (the “FinCEN Guidelines”) on February

14, 2014, regarding how financial institutions can provide services to cannabis-related businesses consistent with their Bank Secrecy

Act (“BSA”) obligations (see “-- FinCEN”).

The policies of the Obama administration concerning federal law enforcement

regarding cannabis, notwithstanding the rescission of the Cole Memo (see below), continued during the Trump administration and continues

during the Biden administration.

Congress previously enacted an omnibus spending

bill that included a provision (the “Rohrabacher-Blumenauer Amendment”) prohibiting the DOJ from using funds to prevent states

with medical cannabis laws from implementing such laws.

This provision is renewed annually by Congress and is current through September

In August 2016, a Ninth Circuit federal appeals court ruled in United States v.

McIntosh that the Rohrabacher-Blumenauer Amendment bars the DOJ from spending funds on the prosecution of conduct that is allowed by state medical cannabis laws, provided that such conduct is in strict compliance with applicable state law.

In March 2015, bipartisan legislation titled the Compassionate Access, Research Expansion, and Respect States Act (the “CARERS Act”) was introduced, proposing to allow states to regulate the medical use of cannabis by changing applicable federal law, including by reclassifying cannabis under the Controlled Substances Act to a Schedule II controlled substance and thereby changing the plant from a federally-criminalized substance to one that has recognized medical uses.

McIntosh that the Rohrabacher-Blumenauer

Amendment bars the DOJ from spending funds on the prosecution of conduct that is allowed by state medical cannabis laws, provided that

such conduct is in strict compliance with applicable state law.

In March 2015, bipartisan legislation titled the Compassionate Access,

Research Expansion, and Respect States Act (the “CARERS Act”) was introduced, proposing to allow states to regulate the medical

use of cannabis by changing applicable federal law, including by reclassifying cannabis under the Controlled Substances Act to a Schedule

II controlled substance and thereby changing the plant from a federally-criminalized substance to one that has recognized medical uses.

More recently, the Respect State Marijuana Laws Act of 2017 has been introduced in the U.S.

House of Representatives, which proposes to exclude persons who produce, possess, distribute, dispense, administer, or deliver marijuana in compliance with state laws from the regulatory controls and administrative, civil, and criminal penalties of the CSA.

These developments previously were met with a certain amount of optimism in the cannabis industry, but (i) neither the CARERS Act nor the Respect State Marijuana Laws Act of 2017 have yet been adopted, (ii) the Rohrabacher-Blumenauer Amendment, being an amendment to an appropriations bill that must be renewed annually, has not currently been renewed beyond September 30, 2021, and (iii) the ruling in United States v.

McIntosh is only applicable precedent in the Ninth Circuit, which does not include Colorado, the state where we currently primarily operate.

House of Representatives, which proposes to

exclude persons who produce, possess, distribute, dispense, administer, or deliver marijuana in compliance with state laws from the regulatory

controls and administrative, civil, and criminal penalties of the CSA.

These developments previously were met with a

certain amount of optimism in the cannabis industry, but (i) neither the CARERS Act nor the Respect State Marijuana Laws Act of 2017 have

yet been adopted, (ii) the Rohrabacher-Blumenauer Amendment, being an amendment to an appropriations bill that must be renewed annually,

has not currently been renewed beyond September 30, 2021, and (iii) the ruling in United States v.

McIntosh is only applicable

precedent in the Ninth Circuit, which does not include Colorado, the state where we currently primarily operate.

Furthermore, on January 4, 2018, the former U.S.

Attorney General, Jeff Sessions, issued a memorandum for all U.S.

Attorneys (the “Sessions Memo”) stating that the Cole Memo was rescinded effectively immediately.

Attorneys (the “Sessions Memo”) stating that the Cole Memo

was rescinded effectively immediately.

In particular, Mr.

Sessions stated that “prosecutors should follow the well-established principles that govern all federal prosecutions,” which require “federal prosecutors deciding which cases to prosecute to weigh all relevant considerations, including federal law enforcement priorities set by the Attorney General, the seriousness of the crime, the deterrent effect of criminal prosecution, and the cumulative impact of particular crimes on the community.” The Sessions Memo went on to state that given the DOJ’s well-established general principles, “previous nationwide guidance specific to marijuana is unnecessary and is rescinded, effective immediately.”

Sessions stated that “prosecutors should follow the well-established principles

that govern all federal prosecutions,” which require “federal prosecutors deciding which cases to prosecute to weigh all relevant

considerations, including federal law enforcement priorities set by the Attorney General, the seriousness of the crime, the deterrent

effect of criminal prosecution, and the cumulative impact of particular crimes on the community.” The Sessions Memo went on to state

that given the DOJ’s well-established general principles, “previous nationwide guidance specific to marijuana is unnecessary

and is rescinded, effective immediately.”

In response to the Sessions Memo, U.S.

Attorney Bob Troy for the District of Colorado, the state in which our principal business operations are presently located, issued a statement on January 4, 2018, stating that the United States Attorney’s Office in Colorado is already guided by the well-established principles referenced in the Sessions Memo, “focusing in particular on identifying and prosecuting those who create the greatest safety threats to our communities around the state.

We will, consistent with the Attorney General’s latest guidance, continue to take this approach in all our work with our law enforcement partners throughout Colorado.”

It is unclear at this time whether the Sessions Memo will be rescinded by the Biden administration;

nor is it clear whether the Biden administration will strongly enforce the federal laws applicable to cannabis or what types of activities will be targeted for enforcement.

However, a significant change in the federal government’s enforcement policy with respect to current federal laws applicable to cannabis could cause significant financial damage to us.

Bob Troy for the District of Colorado, the state in which our principal business operations are presently located, issued a statement

on January 4, 2018, stating that the United States Attorney’s Office in Colorado is already guided by the well-established principles

referenced in the Sessions Memo, “focusing in particular on identifying and prosecuting those who create the greatest safety threats

to our communities around the state.

We will, consistent with the Attorney General’s latest guidance, continue to take this approach

in all our work with our law enforcement partners throughout Colorado.”

It is unclear at this time whether the Sessions

Memo will be rescinded by the Biden administration;

nor is it clear whether the Biden administration will strongly enforce the federal

laws applicable to cannabis or what types of activities will be targeted for enforcement.

However, a significant change in the federal

government’s enforcement policy with respect to current federal laws applicable to cannabis could cause significant financial damage

We currently cultivate, distribute, and sell cannabis.

We may be irreparably harmed by a change in enforcement policies of the federal government depending on the nature of such change.

As of the date of this Report, we have provided products and services to state-approved cannabis cultivators and dispensary facilities.

Accordingly, we could be subject to criminal prosecution, which could lead to imprisonment and/or the imposition of penalties, fines, or forfeiture.

We may be irreparably harmed by a change in enforcement policies of the

federal government depending on the nature of such change.

As of the date of this Report, we have provided products and services to state-approved

cannabis cultivators and dispensary facilities.

Accordingly, we could be subject to criminal prosecution, which could lead to imprisonment

and/or the imposition of penalties, fines, or forfeiture.

Recent legislative proposals have been introduced:

● Capital Lending and Investment for Marijuana Businesses Act ( CLIMB Act) – introduced June 2022 – would:

● SAFER Banking Act.

This would protect financial institutions that offer services to state-legal cannabis-related business.

Originally called the ‘SAFE Banking Act’, it was reintroduced as the Secure and Fair Enforcement Regulation Banking Act (SAFER)

● Capital Lending and Investment for Marijuana Businesses Act ( CLIMB

Act) – introduced June 2022 – would:

● Permit public agencies to provide financial support to the cannabis industry;

● Provide protection to service providers (investment banks, law firms, accounting firms);

● Provide access to public capital markets by amending the Exchange Act to create a ‘safe harbor’ for the listing of cannabis businesses on a national securities exchange, such as the NYSE and Nasdaq.

● SAFE Banking Act.

This would protect financial institutions that offer services to state-legal cannabis-related business.

● Provide access to public capital markets by amending the Exchange Act to create a ‘safe harbor’

for the listing of cannabis businesses on a national securities exchange, such as the NYSE and Nasdaq.

● Marijuana Opportunity Reinvestment & Expungement Act (MORE Act).

Reintroduced in 2021, the MORE Act aims to end criminalization of cannabis related past criminal penalties and convictions, and provide criminal justice reform, social justice, and economic development for those affected by the ‘war on drugs.’ The MORE Act would also tax cannabis products starting at 5% to 8% (increasing by 1% over five years).

Reintroduced in 2021, the

MORE Act aims to end criminalization of cannabis related past criminal penalties and convictions, and provide criminal justice reform,

social justice, and economic development for those affected by the ‘war on drugs.’ The MORE Act would also tax cannabis products

starting at 5% to 8% (increasing by 1% over five years).

● States Reform Act.

This also seeks to decriminalize cannabis and provide retroactive expungement for non-violent federal cannabis offenses (except for persons involved in a drug cartel).

This also seeks to decriminalize cannabis and provide retroactive expungement

for non-violent federal cannabis offenses (except for persons involved in a drug cartel).

● Sensible Enforcement of Cannabis Act .

This would protect cannabis businesses and consumers in states where cannabis has been legalized, while continuing the federal cannabis prohibition to remain in place in states where cannabis has not been legalized.

● Marijuana Revenue and Regulation Act .

This would create a nationwide regulatory structure for legalizing cannabis and removing it from the CSA.

This would protect cannabis businesses and consumers in states

where cannabis has been legalized, while continuing the federal cannabis prohibition to remain in place in states where cannabis has not

been legalized.

None of the above proposals have been enacted;

and while the Biden administration appears to have a more friendly position toward legalization of cannabis generally than the Trump administration, it cannot presently be determined what position the current administration will take on either of these proposals.

and while the Biden administration appears to have a more friendly position toward legalization of cannabis generally than the Trump administration,

it cannot presently be determined what position the current administration will take on either of these proposals.

Further, the US Drug Enforcement Administration is currently weighing whether

to revise marijuana to a ‘Schedule 3’ controlled substance (rather than Schedule 1).

Such a move would end Internal Revenue

Code 280E’s application to the cannabis industry, and would then permit state-regulated companies to deduct, for federal income

tax purposes, all their ordinary and necessary business expenses, rather than only ‘cost of goods sold.’

The Cole Memo

Because of the discrepancy between the laws in some states, which permit the distribution and sale of medical and recreational cannabis, from federal law that prohibits any such activities, DOJ Deputy Attorney General James M.

Because of the discrepancy between the laws in

some states, which permit the distribution and sale of medical and recreational cannabis, from federal law that prohibits any such activities,

DOJ Deputy Attorney General James M.

Cole issued the Cole Memo concerning cannabis enforcement under the CSA.

At the time of its issuance, the Cole Memo reiterated Congress’s determination that cannabis is a dangerous drug and that the illegal distribution and sale of cannabis is a serious crime that provides a significant source of revenue to large-scale criminal enterprises, gangs, and cartels.

The Cole Memo noted that the DOJ was committed to enforcement of the CSA consistent with those determinations.

It also noted that the DOJ was committed to using its investigative and prosecutorial resources to address the most significant threats in the most effective, consistent, and rational way.

In furtherance of those objectives, the Cole Memo provided guidance to DOJ attorneys and law enforcement to focus their enforcement resources on persons or organizations whose conduct interferes with any one or more of the following important priorities (the “Enforcement Priorities”) in preventing:

At the time of its issuance, the Cole Memo reiterated

Congress’s determination that cannabis is a dangerous drug and that the illegal distribution and sale of cannabis is a serious crime

that provides a significant source of revenue to large-scale criminal enterprises, gangs, and cartels.

The Cole Memo noted that the DOJ

was committed to enforcement of the CSA consistent with those determinations.

It also noted that the DOJ was committed to using its investigative

and prosecutorial resources to address the most significant threats in the most effective, consistent, and rational way.

In furtherance

of those objectives, the Cole Memo provided guidance to DOJ attorneys and law enforcement to focus their enforcement resources on persons

or organizations whose conduct interferes with any one or more of the following important priorities (the “Enforcement Priorities”)

in preventing:

● the distribution of cannabis to minors;

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● the diversion of cannabis from states where it is legal under state law to other states;

● state-authorized cannabis activity from being used as a cover or pretext for the trafficking of other illegal drugs or other illegal activity;

● state-authorized cannabis activity from being used as a cover or pretext for the trafficking of other

illegal drugs or other illegal activity;

● violence and the use of firearms in the cultivation and distribution of cannabis;

● drugged driving and the exacerbation of other adverse public health consequences associated with cannabis use;

● the growing of cannabis on public lands and the attendant public safety and environmental dangers posed by cannabis production on public lands;

● drugged driving and the exacerbation of other adverse public health consequences associated with cannabis

● the growing of cannabis on public lands and the attendant public safety and environmental dangers posed

by cannabis production on public lands;

● cannabis possession or use on federal property.

Although the Sessions Memo has rescinded the Cole Memo and it is unclear at this time what the ultimate impact of that rescission will have on our business, if any, we intend to continue to conduct rigorous due diligence to verify the legality of all activities that we engage in and ensure that our activities do not interfere with any of the Enforcement Priorities set forth in the Cole Memo.

FinCEN provided guidance regarding how financial institutions can provide services to cannabis-related businesses consistent with their BSA obligations.

For purposes of the FinCEN guidelines, a “financial institution” includes any person doing business in one or more of the following capacities:

Although the Sessions Memo has rescinded the Cole

Memo and it is unclear at this time what the ultimate impact of that rescission will have on our business, if any, we intend to continue

to conduct rigorous due diligence to verify the legality of all activities that we engage in and ensure that our activities do not interfere

with any of the Enforcement Priorities set forth in the Cole Memo.

FinCEN provided guidance regarding how financial

institutions can provide services to cannabis-related businesses consistent with their BSA obligations.

For purposes of the FinCEN guidelines,

a “financial institution” includes any person doing business in one or more of the following capacities:

● bank (except bank credit card systems);

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● a person subject to supervision by any state or federal bank supervisory authority.

In general, the decision to open, close, or refuse any particular account or relationship should be made by each financial institution based on several factors specific to that institution.

These factors may include its particular business objectives, an evaluation of the risks associated with offering a particular product or service, and its capacity to manage those risks effectively.

In general, the decision to open, close, or refuse

any particular account or relationship should be made by each financial institution based on several factors specific to that institution.

These factors may include its particular business objectives, an evaluation of the risks associated with offering a particular product

or service, and its capacity to manage those risks effectively.

Thorough customer due diligence is a critical aspect of making this assessment.

In assessing the risk of providing services to a cannabis-related business, a financial institution should conduct customer due diligence that includes:

(i) verifying with the appropriate state authorities whether the business is duly licensed and registered;

(ii) reviewing the license application (and related documentation) submitted by the business for obtaining a state license to operate its cannabis-related business;

(iii) requesting from state licensing and enforcement authorities

available information about the business and related parties;

(iv) developing an understanding of the normal and expected activity for the business, including the types of products to be sold and the type of customers to be served (e.g., medical versus recreational customers);

(v) ongoing monitoring of publicly available sources for adverse information about the business and related parties;

In assessing the risk of providing services to

a cannabis-related business, a financial institution should conduct customer due diligence that includes:

(i) verifying with the appropriate

state authorities whether the business is duly licensed and registered;

(ii) reviewing the license application (and related documentation)

submitted by the business for obtaining a state license to operate its cannabis-related business;

(iii) requesting from state licensing

and enforcement authorities available information about the business and related parties;

(iv) developing an understanding of the normal

and expected activity for the business, including the types of products to be sold and the type of customers to be served (e.g., medical

versus recreational customers);

(v) ongoing monitoring of publicly available sources for adverse information about the business and related

(vi) ongoing monitoring for suspicious activity, including for any of the red flags described in this guidance;

and (vii) refreshing information obtained as part of customer due diligence on a periodic basis and commensurate with the risk.

With respect to information regarding state licensure obtained in connection with such customer due diligence, a financial institution may reasonably rely on the accuracy of information provided by state licensing authorities, where states make such information available.

As part of its customer due diligence, a financial institution should consider whether a cannabis-related business implicates one of the Cole Memo Enforcement Priorities or violates state law.

This is a particularly important factor for a financial institution to consider when assessing the risk of providing financial services to a cannabis-related business.

Considering this factor also enables the financial institution to provide information in BSA reports pertinent to law enforcement’s priorities.

A financial institution that decides to provide financial services to a cannabis-related business would be required to file suspicious activity reports.

It is unclear at this time what impact the Sessions Memo will have on customer due diligence by a financial institution.

While we believe we do not qualify as a financial institution in the United States, we cannot be certain that we do not fall under the scope of the FinCEN guidelines.

We plan to use the FinCEN Guidelines, as may be amended, as a basis for assessing our relationships with potential tenants, clients, and customers.

As such, as we engage in financing activities, we intend to adhere to the guidance of FinCEN in conducting and monitoring our financial transactions.

Because this area of the law is uncertain and is expected to evolve rapidly, we believe that FinCEN’s guidelines will help us best operate in a prudent, reasonable, and acceptable manner.

There is no assurance, however, that our activities will not violate some aspect of the CSA.

If we are found to violate the federal statute or any other in connection with our activities, our company could face serious criminal and civil sanctions.

Moreover, since the use of cannabis is illegal under federal law, we may have difficulty acquiring or maintaining bank accounts and insurance, and our stockholders may find it difficult to deposit their stock with brokerage firms.

and (vii) refreshing

information obtained as part of customer due diligence on a periodic basis and commensurate with the risk.

With respect to information

regarding state licensure obtained in connection with such customer due diligence, a financial institution may reasonably rely on the

accuracy of information provided by state licensing authorities, where states make such information available.

As part of its customer due diligence, a financial

institution should consider whether a cannabis-related business implicates one of the Cole Memo Enforcement Priorities or violates state

This is a particularly important factor for a financial institution to consider when assessing the risk of providing financial services

to a cannabis-related business.

Considering this factor also enables the financial institution to provide information in BSA reports pertinent

to law enforcement’s priorities.

A financial institution that decides to provide financial services to a cannabis-related business

would be required to file suspicious activity reports.

It is unclear at this time what impact the Sessions Memo will have on customer

due diligence by a financial institution.

While we believe we do not qualify as a financial

institution in the United States, we cannot be certain that we do not fall under the scope of the FinCEN guidelines.

We plan to use the

FinCEN Guidelines, as may be amended, as a basis for assessing our relationships with potential tenants, clients, and customers.

as we engage in financing activities, we intend to adhere to the guidance of FinCEN in conducting and monitoring our financial transactions.

Because this area of the law is uncertain and is expected to evolve rapidly, we believe that FinCEN’s guidelines will help us best

operate in a prudent, reasonable, and acceptable manner.

There is no assurance, however, that our activities will not violate some aspect

If we are found to violate the federal statute or any other in connection with our activities, our company could face serious

criminal and civil sanctions.

Moreover, since the use of cannabis is illegal

under federal law, we may have difficulty acquiring or maintaining bank accounts and insurance, and our stockholders may find it difficult

to deposit their stock with brokerage firms.

Licensing and Local Regulations

Where applicable, we apply for state licenses or similar approvals that are necessary to conduct our business in compliance with local laws.

Our subsidiary, GC Corp., has been registered with the MED as an approved vendor since September 8, 2014.

GCS, another subsidiary, has been registered as a MED approved vendor since March 11, 2015.

On May 1, 2020, the MED granted regulatory approval to the Company as a qualified and suitable buyer of licensed cannabis operations in the State.

This authorization, known as a Suitability Approval, establishes the Company as one of the first public companies authorized to acquire licensed cultivation, manufacturing, and retail operations throughout Colorado.

Local laws at the county and municipal level add an additional layer of complexity to legalized cannabis.

Despite a state’s adoption of legislation legalizing cannabis, counties and municipalities within the state may have the ability to otherwise restrict cannabis activities, including but not limited to cultivation, retail, distribution, manufacturing or consumption.

Zoning sets forth the approved use of land in any given city, county, or municipality.

Zoning is set by local governments or local voter referendum and may otherwise be restricted by state laws.

Where applicable, we apply for state licenses

or similar approvals that are necessary to conduct our business in compliance with local laws.

Our subsidiary, GC Corp., has been registered

with the MED as an approved vendor since September 8, 2014.

GCS, another subsidiary, has been registered as a MED approved vendor since

March 11, 2015.

On May 1, 2020, the MED granted regulatory approval

to the Company as a qualified and suitable buyer of licensed cannabis operations in the State.

This authorization, known as a Suitability

Approval, establishes the Company as one of the first public companies authorized to acquire licensed cultivation, manufacturing, and

retail operations throughout Colorado.

Local laws at the county and municipal level add

an additional layer of complexity to legalized cannabis.

Despite a state’s adoption of legislation legalizing cannabis, counties

and municipalities within the state may have the ability to otherwise restrict cannabis activities, including but not limited to cultivation,

retail, distribution, manufacturing or consumption.

Zoning sets forth the approved use of land in

any given city, county, or municipality.

Zoning is set by local governments or local voter referendum and may otherwise be restricted

by state laws.

For example, under certain state laws a seller of liquor may not be allowed to operate within 1,000 feet of a school.

There may be similar restrictions imposed on cannabis operators, which will restrict where cannabis operations may be located and the manner and size to which they can grow and operate.

Zoning can be subject to change or withdrawal, discretionary approvals may be required for certain uses, and properties can be re-zoned.

may be similar restrictions imposed on cannabis operators, which will restrict where cannabis operations may be located and the manner

and size to which they can grow and operate.

Zoning can be subject to change or withdrawal, discretionary approvals may be required for

certain uses, and properties can be re-zoned.

The zoning of our properties will have a direct impact on our business operations.

Human Capital

As of December 31, 2022, we had approximately 150 full-time employees.

Executing our strategic vision requires that we attract and retain the best talent.

As of December 31, 2023, we had approximately

91 full-time employees.

Executing our strategic vision requires that we attract and retain the best

The Company must appropriately reward high-performers and offer competitive benefits.

The Company offers comprehensive benefits, including medical, dental and vision insurance for employees, their spouses or domestic partners, and their dependents.

We also provide retirement programs, life insurance, family assistance, short-term disability and paid vacation and sick time.

As a people-first company, our values help us achieve our purpose of cultivating an inclusive environment by hiring world-class individuals dedicated to fostering a culture that champions diversity, ensures equity, and celebrates inclusion.

We provide opportunities for our employees to drive our strategy by creating programs that raise awareness, allowing courageous conversations and a more inclusive culture.

The Company offers comprehensive benefits,

including medical, dental and vision insurance for employees, their spouses or domestic partners, and their dependents.

We also provide

retirement programs, life insurance, family assistance, short-term disability and paid vacation and sick time.

As a people-first company,

our values help us achieve our purpose of cultivating an inclusive environment by hiring world-class individuals dedicated to fostering

a culture that champions diversity, ensures equity, and celebrates inclusion.

We provide opportunities for our employees to drive our

strategy by creating programs that raise awareness, allowing courageous conversations and a more inclusive culture.

Corporate Contact Information

Our principal executive offices are located at 215 Union Boulevard, Suite 415, Lakewood, Colorado 80228;

Our principal executive offices are located at

215 Union Boulevard, Suite 415, Lakewood, Colorado 80228;

Telephone No.:

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The content on our website is available for informational purposes only.

It should not be relied upon for investment purposes, nor is it incorporated by reference into this Form 10-K.

It should not be relied upon for investment purposes, nor is

it incorporated by reference into this Form 10-K.

Available Information

We maintain a website at www.treescann.com and make available, free of charge, on our website, our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K (including any amendments thereto), registration statements and other information filed with, or furnished to, the SEC, as soon as reasonably practicable after such documents are so filed or furnished, as well as our Code of Ethics.

Any materials we file with the SEC, including our annual reports, quarterly reports, current reports, proxy statements, information statements and other information, are also available at the SEC’s Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at http://www.sec.gov .

We maintain a website at www.treescann.com and

make available, free of charge, on our website, our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on

Form 8-K (including any amendments thereto), registration statements and other information filed with, or furnished to, the SEC, as soon

as reasonably practicable after such documents are so filed or furnished, as well as our Code of Ethics.

Any materials we file with the

SEC, including our annual reports, quarterly reports, current reports, proxy statements, information statements and other information,

are also available at the SEC’s Internet site that contains reports, proxy and information statements, and other information regarding

issuers that file electronically with the SEC at http://www.sec.gov .

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business