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Item 9A. Controls and Procedures

2021-04-01 compared with 2020-05-14 · 73 added, 370 removed, 44 unchanged (91% of the section changed)

1 unchanged sentence

Evaluation of Disclosure Controls and Procedures

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

We carried out an evaluation under the supervision and with the participation of management, including our Principal Executive Officer and Principal Financial and Accounting Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2019, the end of the period covered by this report.

Based on that evaluation, our Principal Executive Officer and Principal Financial and Accounting Officer have concluded that our disclosure controls and procedures were effective as of December 31, 2019.

Internal Control over Financial Reporting

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

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

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

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

Because of inherent limitations, our internal control over financial reporting may not prevent or detect misstatements.

Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Assessment of Internal Control over Financial Reporting

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2019.

In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework (2013).

Based on managements assessment, management concluded that its internal control over financial reporting was effective as of December 31, 2019, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of December 31, 2020.

Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of December 31, 2020, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in the reports we file and submit under the Exchange Act is recorded, processed, summarized, and reported as and when required, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding its required disclosure.

Remediation of Material Weakness

In connection with our audit of the financial statements for the year ended December 31, 2019, we and our independent registered public accounting firm determined that we had a material weakness in our internal control over financial reporting.

The material weakness related to the failure to ensure timely application of the anti-dilution adjustment provisions contained in certain outstanding warrants.

During the year ended December 31, 2020, we implemented enhanced procedures to remediate the deficiency in our internal controls over financial reporting that resulted in the material weakness.

These procedures include adding personnel as well as redesigning existing quarterly control procedures to enhance management’s accounting for any derivative or convertible securities issued by the Company.

The actions we took are subject to ongoing senior management review, as well as audit committee oversight.

We have completed execution of our remediation plan and successfully remediated the material weakness in internal control over financial reporting described above as of December 31, 2020.

Changes in Internal Control over Financial Reporting

There have been no changes in our existing internal control structure over financial reporting during 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Except for the remediation measures described above, there were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended December 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the Effectiveness of Disclosure Controls and Procedures

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or internal control over financial reporting will prevent all errors and all fraud.

A control system, no matter how well designed and implemented, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met.

Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs.

Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues within a company are

The inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple errors or mistakes.

Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls.

Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

OTHER INFORMATION

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Our current officers and directors are listed below.

Directors are generally elected at an annual stockholders meeting and hold office until the next annual stockholders meeting, or until their successors are elected and qualified.

Executive officers are elected by directors and serve at the Boards discretion.

Michael Feinsod

Executive Chairman of Board and Director

Steve Gutterman

Chief Executive Officer and Director

Peter Boockvar

Principal Financial and Accounting Officer

Michael Feinsod was appointed a director and elected Executive Chairman of the Board on August 4, 2014.

Feinsod is the Managing Member of Infinity Capital, LLC, an investment management company he founded in 1999.

Since January 2014, Mr.

Feinsod has been an investor in the cannabis industry.

Feinsod was a director of The Kingstone Companies, Inc.

from 2008 through June 2015.

From 2006 through 2013, he served in various executive positions at Ameritrans Capital Corporation, a business development company.

Feinsod served as an officer and director of Elk Associates Funding Corporation, a Small Business Investment Company, from December 2006 until April 2013.

In April 2013, in connection with a settlement agreement, the United States Small Business Administration was appointed as the receiver of Elk Associates Funding Corporation.

Feinsod served as an investment analyst and portfolio manager at Mark Boyar & Company, Inc.

He is admitted to practice law in New York and served as an associate in the Corporate Law Department of Paul, Hastings, Janofsky & Walker LLP.

Feinsod holds a JD from Fordham University School of Law and a BA from The George Washington University.

We believe that Mr.

Feinsods corporate finance, legal and executive-level experience, as well as his service on the boards of other public companies, give him the qualifications and skills to serve as one of our directors.

Steve Gutterman was appointed a director and as our Chief Executive Officer on December 13, 2019.

Gutterman has more than two decades of experience leading high growth businesses in highly regulated industries.

Most recently, Mr.

Gutterman served as President of Harvest Health & Recreation, one of the largest cannabis multi-state operators in the US, where he led the companys public offering and led its global operations.

Prior to that, he served as Chief Executive Officer of market research company Mobile Accord and before that as Executive Vice President and Chief Operating Officer of E*TRADE Bank, a $35 billion federally regulated thrift.

Gutterman holds a JD/MBA from Columbia University and BA Cum Laude in Political Science from Tufts University.

We believe that Mr.

Gutterman is qualified to act as one of our directors due to his past experience serving as the President of a multi-state cannabis company.

Peter Boockvar was appointed a director on June 26, 2015.

Boockvar is the Chief Investment Officer of Bleakley Advisory Group, New Jersey based wealth management firm with approximately $6 billion in assets under management.

Boockvar manages the Investment Committee and is the portfolio manager of two investment strategies.

He has 26 years of investing experience after initially training as a corporate bond analyst at Donaldson, Lufkin and Jenrette.

He is also the Editor of The Boock Report, a macro economic and market newsletter that covers all areas of the globe.

Prior to this he was the Chief Market Analyst with The Lindsey Group, a macro economic and market research firm.

The firm is run by Larry Lindsey, a former Federal Reserve Governor and senior economic advisor to former President George W.

Boockvar spent a brief time at Omega Advisor, a New York based hedge fund run by Leon Cooperman, as a macro analyst and portfolio manager.

From October 1994 to December 2012, he was an employee and partner at Miller Tabak + Co where most recently he was the equity strategist and a portfolio manager.

Boockvar served as a director of Ameritrans Capital Corporation, a business development company, from May 2008 thru July 2013.

He also served as a director of Elk Associates Funding Corporation, a Small Business Investment Company, from May 2008 until April 2013.

In April 2013, in connection with a settlement agreement, the United States Small Business Administration was appointed as the receiver of Elk Associates Funding Corporation.

He is a CNBC contributor and appears regularly on their television network.

Boockvar graduated Magna Cum Laude with a BBA in Finance from The George Washington University.

We believe that Mr.

Boockvars extensive knowledge of financial systems and investment company experience gives him the qualifications and skills to serve as one of our directors.

Mark Green was appointed a director on January 27, 2017.

Green has over 18 years of investing experience across public and private markets, spanning several business cycles.

In various leadership positions at industry leading firms focused on investment banking, capital markets, private equity and investment management, Mr.

Green has been instrumental in the development of several successful platforms and ventures and has built an extensive network of industry contacts and relationships.

Mark Green is a Co-Founder and Managing Partner of Chatham Road Capital, a credit-focused investment firm that seeks to capitalize on market imbalances and inefficiencies in the public and private markets.

The firms investment philosophy is based upon fundamental and technical analysis, a comprehensive understanding of the capital markets and disciplined execution on investment ideas.

Green oversees all investment activities, portfolio and risk management, and business development.

Between 2010 and the beginning of 2017, Mr.

Green served as a Managing Director of Leucadia National Corporation, a diversified holding company, and Jeffries LLC, a subsidiary of Leucadia, where he managed real estate principal investment activities and the commercial real estate debt business.

From 2006 to 2010, Mr.

Green was a founding member of the U.S.

real estate finance group at UBS, where he oversaw the commitment of approximately $10 billion of principal debt and equity investments.

From 2005 to 2006, he was a Managing Director at Eurohypo AG, and from 2000 to 2005, he was an Executive Director at CIBC World Markets.

Green holds an MBA from Columbia Business School and a BS Cum Laude from Skidmore College.

Green has appeared as a guest speaker at Columbia University, New York University and the Urban Land Institute on various occasions, and is a founding member of Columbia Business Schools Real Estate Circle, a real estate industry group consisting of top executives.

We believe that Mr.

Green is qualified to act as one of our directors due to his significant real estate and land use experience.

Seth Oster was appointed a director on August 12, 2019.

Oster has over 25 years of experience leading corporate communications, marketing and public affairs efforts at high levels of the federal government and in the private sector.

He currently serves as Global Chief Communications Officer at leading talent and entertainment company United Talent Agency (UTA).

He has previously held positions as the top communications executive for Paul Allens Vulcan, Inc, accounting and consulting giant KPMG, and publicly traded companies, including Napster and Stamps.com.

Oster also has an extensive background in politicshaving served in both the legislative and executive branches of the U.S.

Oster was appointed by President Barack Obama in 2009 to lead public affairs at the U.S.

Environmental Protection Agency (EPA) and earlier in his career was a top aide to U.S.

Senator Dianne Feinstein.

Oster is a graduate of The George Washington University.

We believe that Mr.

Oster is qualified to act as one of our directors due to his significant experience leading corporate communications, marketing and public affairs efforts in the federal government and in the private sector.

Jessica Bast was appointed as our Principal Financial and Accounting Officer on February 18, 2020.

Prior to her appointment as Principal Accounting Officer, Ms.

Bast served as our Vice President/Controller beginning September 11, 2017.

In addition, Ms.

Bast was Technical Accounting Research Manager at Pinnacle Agricultural Distribution from July 2016 to September 2017, she was Controller of Active Fashion Group from May 2015 to May 2016, and she was Audit Manager of Hein & Associates, LLP (now Moss Adams) from September 2004 to April 2015.

Bast holds a Bachleor of Science degree in Accounting from Metropolitan State Unversity and is a licensed Certified Public Accountant in the state of Colorado.

Family Relationships

There are no family relationships among any of our officers or directors.

Involvement in Legal Proceedings

Based on information submitted by the directors and executive officers, none of the directors or executive officers is involved in, or has been involved in, legal proceedings during the past ten years that are material to an evaluation of the ability or integrity of any director or executive officer.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our directors, executive officers and persons who own more than 10% of our stock (collectively, Reporting Persons) to file with the SEC initial reports of ownership and changes in ownership of our common stock.

Reporting Persons are required by SEC regulations to furnish us with copies of all Section 16(a) reports they file.

Other than as disclosed herein and based solely on a review of the reports furnished to us, or written representations from reporting persons that all reportable transaction were reported, we believe that during the fiscal year ended December 31, 2019, our officers, directors and greater than ten percent stockholders timely filed all reports and did not miss any filings as required to file under Section 16(a).

Code of Ethics Policy

The Board has established a corporate Code of Ethics, as defined by Item 406 of Regulation S-K of the Exchange Act, and applies to our principal executive officer, principal financial officer, principal accounting officer or controller and all persons performing similar functions.

Among other matters, the Code of Ethics is designed to ensure that:

Company business is conducted in an ethical, moral and legal manner;

reports, documents and other public communications made by the Company are delivered in a timely, fair, complete, accurate and understandable manner;

mechanisms to monitor and promote compliance with applicable governmental laws, rules and regulations are established and maintained;

business transactions are properly authorized and completely and accurately recorded on the Companys books and records in accordance with generally accepted accounting principles and established Company financial policies;

employees work together in order to provide a mechanism for members of the organization to inform senior management of deviations from policies and procedures governing honest and ethical behavior.

Our Code of Ethics may be found at www.generalcannabis.com/code-of-ethics.

Corporate Governance

Director Independence

Peter Boockvar, Mr.

Seth Oster and Mr.

Mark Green are considered as independent as such term is defined by the natural securities exchanges.

Board Meetings and Committees

During 2019, the Board of Directors met six times, the Audit Committee met six times, the Compensation Committee met one time and the Nominating and Corporate Governance Committee (the Nominating Committee) met one time.

Each director who was on the Board during this timeframe attended at least 75% of the aggregate number of meetings held during his term of service.

Audit Committee

Our Audit Committee includes each Mr.

Boockvar and Mr.

The Audit Committee, among other things:

reviews the annual audited consolidated financial statements with management and the independent auditors and determines whether to recommend to the Board of Directors that they be included in our Annual Report on Form 10-K;

reviews proposed major changes to our auditing and accounting principles and practices;

reviews and evaluates our system of internal control;

reviews significant financial reporting issues raised by management or the independent auditors;

establishes procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters as well as the confidential and anonymous submission by our employees of concerns regarding questionable accounting or auditing matters.

The Board has determined that Mr.

Boockvar is an audit committee financial expert as defined in the applicable rules and regulations of the Exchange Act and that Mr.

Boockvar and Mr.

Green are independent directors as defined under the rules of the national securities exchanges.

Boockvar serves as chair of the Audit Committee.

Compensation Committee

The Compensation Committee oversees our executive compensation and recommends various incentives for key employees to encourage and reward increased corporate financial performance, productivity and innovation.

The Compensation Committee is responsible for:

(a) assisting the Board in fulfilling its fiduciary duties with respect to the oversight of our compensation plans, policies and programs, including assessing our overall compensation structure, reviewing all executive compensation programs, incentive compensation plans and equity-based plans, and determining executive compensation;

and (b) reviewing the adequacy of the Compensation Committee charter on an annual basis.

Boockvar, Mr.

Oster and Mr.

Green are the members of the Compensation Committee, and Mr.

Green serves as chair of the Compensation Committee.

During the year ended December 31, 2019, no executive officer of the Company served as a member of the compensation committee (or any other board committee performing equivalent functions or, in the absence of any such committee, the entire board of directors) of another entity, one of whose executive officers served on the Companys Compensation Committee.

Our Chief Executive Officer, upon request, may attend selected meetings of the Compensation Committee.

Nominating and Corporate Governances Committee

The purpose of the Nominating Committee is to identify suitable qualified candidates to be proposed for appointment or election to the Board and to develop corporate governance policies for the Board.

The members of the Nominating Committee are Mr.

Boockvar and Mr.

Oster each of whom the Board has determined is an independent director as defined under the rules of the national securities exchanges.

Oster serves as Chair of the Nominating Committee.

Committee Charters

The Charters of the Audit Committee and the Compensation Committee are available on our website at https://www.generalcann.com/investor-relations/#board.

Role in Risk Oversight

Companies face a variety of risks, including credit risk, liquidity risk, and operational risk.

The Board of Directors believes an effective risk management system will allow the Company to (1) make timely identifications of the material risks that the Company faces, (2) communicate necessary information with respect to material risks to senior executives and, as appropriate, to the Board or Audit Committee, (3) implement appropriate and responsive risk management strategies consistent with the Companys risk profile, and (4) integrate risk management into Company decision-making.

The Board has designated the Audit Committee to take the lead in overseeing risk management.

The Audit Committee discusses with management the Companys major financial risk exposures and the steps management has taken to monitor and control such exposures, including the Companys risk assessment and risk management policies.

The Board encourages management to promote a corporate culture that incorporates risk management into the Companys corporate strategy and day-to-day business operations.

The Board also works, with the input of the Companys executive officers, to assess and analyze the most likely areas of future risk for the Company.

Attendance at Annual Meetings of the Stockholders

We have no policy requiring Directors and Director Nominees to attend its annual meeting of stockholders;

however, all Directors and Director Nominees are encouraged to attend.

Indemnification of Officers and Directors

Our Articles of Incorporation provide that we may indemnify any and all of our officers, directors, employees or agents or former officers, directors, employees or agents, against expenses actually and necessarily incurred by them, in connection with the defense of any legal proceeding or threatened legal proceeding, except as to matters in which such persons shall be determined to not have acted in good faith and in our best interest.

Stockholder Communications

Stockholders may send communications to our directors as a group or individually, by writing to those individuals or the group:

c/o the Chief Executive Officer c/o General Cannabis Corp, 6565 E.

Evans Avenue, Denver, CO 80224.

The Chief Executive Officer will review all correspondence received and will forward all correspondence that is relevant to the duties and responsibilities of the Board or the business of the Company to the intended director(s).

Examples of inappropriate communication include business solicitations, advertising and communication that is frivolous in nature, relates to routine business matters (such as product inquiries, complaints or suggestions), or raises grievances that are personal to the person submitting the communication.

Upon request, any director may review communication that is not forwarded to the directors pursuant to this policy.

The information required by this Item 10 is incorporated by reference to the sections entitled “Proposal One.

Election of Directors,” “Corporate Governance and Board Matters,” “Executive Officers,” and “Delinquent Section 16(a) Reports” in our definitive proxy statement for the 2021 Annual Meeting of Stockholders to be filed with the SEC.

EXECUTIVE COMPENSATION

The following table provides certain information regarding compensation awarded to, earned by or paid to each of our named executive officers in the years ended December 31, 2019 and 2018.

Summary Compensation Table

Name & Principal Position

Steve Gutterman

Chief Executive Officer

(Joined December 13, 2019)

Michael Feinsod (3)

Former Chief Executive Officer

Principal Financial and Accounting Officer

Robert Frichtel (1)

Former Chief Executive Officer

Brian Andrews (4)

Former Chief Financial Officer and Principal Financial and Accounting Officer

On January 7, 2019, Mr.

Frichtel retired as Chief Executive Officer and provided his resignation to the Board of Directors.

On January 7, 2019, the Board appointed Michael Feinsod, the Chairman of the Board, as Interim Chief Executive Officer of the Company.

Represents equity-based compensation expense calculated in accordance with the provisions of Accounting Standards Codification Section 718 — Compensation — Stock Compensation, using the Black-Scholes option pricing model as set forth in Notes to our consolidated financial statements in Item 8.

On January 7, 2019, Mr.

Feinsod was appointed Interim Chief Executive Officer of the Company.

On August 5, 2019, Mr.

Feinsod was appointed Chief Executive Officer of the Company.

On December 16, 2019, Mr.

Feinsod resigned as Chief Executive Officer, but has remained the Executive Chariman of the Board of Directors.

On December 31, 2019, Mr.

Andrews retired as Chief Financial Officer and provided his resignation to the Board of Directors.

Employment Agreements

Steve Gutterman In connection with his appointment as Chief Executive Officer, we entered into an employment agreement with Mr.

Gutterman dated December 13, 2019.

The term of the employment agreement will continue until December 13, 2023 unless terminated earlier as provided in the employment agreement.

The employment agreement provides for an annual base salary of $425,000 and Mr.

Gutterman is eligible to receive an annual bonus of up to 250% of Mr.

Guttermans base salary, with the bonus amount dependent on the level of achievement by the Company of certain performance metrics.

In light of the uncertainty and adverse economic conditions caused by the COVID-19 pandemic and its potential impact on the business of the Company, Mr.

Gutterman agreed to a 50% reduction in his base salary, effective April 29, 2020.

Gutterman entered into an amendment dated April 29, 2020, to his prior employment agreement with the Company dated December 13, 2019, in order to reflect the salary reduction,

In connection with his appointment as Chief Executive Officer, Mr.

Gutterman was also granted an option to purchase 1,250,000 shares of Common Stock, with 250,000 of the shares underlying the initial stock options being vested on the date of grant, and with the remaining 1,000,000 of the shares underlying the initial stock options vesting as to one-quarter of the shares on each yearly anniversary of the date of grant.

Gutterman is also entitled to receive an additional option to purchase 50,000 share of the Common Stock each fiscal quarter beginning on the first fiscal quarter of 2020.

The employment agreement provides that if we terminate Mr.

Guttermans employment at any time without cause (as defined in the employment agreement), Mr.

Gutterman will be entitled to receive, subject to his execution of a general release of claims in favor of the Company, an amount equal to 12 months of his then current annual base salary.

Michael Feinsod On December 13, 2019, Mr.

Feinsod resigned as Chief Executive Officer.

On August 5, 2019, the Board appointed Mr.

Feinsod as Chief Executive Officer.

Feinsod has held the position of Interim Chief Executive Officer of the Company since January 7, 2019.

In connection with his appointment as Chief Executive Officer, we entered into an amendment of Mr.

Feinsods prior employment agreements with the Company dated January 21, 2019 and December 8, 2017 (the Amendment).

Pursuant to the Amendment, Mr.

Feinsod was granted an option (the Stock Option) to purchase 1,000,000 shares of the Companys common stock, with a par value of $0.01 per share (Common Stock), with an exercise price equal to $0.83 per share, which was the closing price of the Common Stock on the OTCQX on the date of grant.

The Stock Option shall vest in full on the first date on which the closing price for Common Stock equals or exceeds $4.51 per share for five (5) consecutive trading days.

In connection with his appointment as Interim Chief Executive Officer, we entered into a new employment agreement with Mr.

Feinsod on January 21, 2019.

The new employment agreement provides for an annual base salary of $210,000.

Feinsod is also eligible for an annual discretionary bonus based on his achievement of pre-established performance goals and other criteria established by the board of directors.

In addition, on December 8, 2017, we entered into an agreement with Mr.

Feinsod for his continued service as Executive Chairman of our Board of Directors, which was previously filed by the Company with the SEC on a Form 8-K on December 14, 2017 (the Executive Chairman Employment Agreement).

Pursuant to the Executive Chairman Employment Agreement, Mr.

Feinsod received (a) 600,000 stock options that vest on the anniversary date of the agreement for the next three years, or 200,000 per year ( “ Time-based Options ” ) ; and (b) three tranches of 100,000 stock options that vest when our stock price has an average trading price for 20 days of $3.50, $5.00 and $6.50 (Market-based Options).

The options have an exercise price of $3.45 per share and a ten-year life.

These options were not issued under our 2014 Equity Incentive Plan.

In light of the uncertainty and adverse economic conditions caused by the COVID-19 pandemic and its potential impact on the business of the Company, Mr.

Feinsod agreed to a 100% reduction in his base salary, effective April 24, 2020.

Gutterman entered into an amendment dated April 24, 2020, to his prior employment agreement with the Company dated December 8, 2017, in order to reflect the salary reduction.

The table below reflects all outstanding equity awards made to any named executive officer that were outstanding at December 31, 2019.

OUTSTANDING EQUITY AWARDS

Option Awards

Unexercisable

Steve Gutterman

December 13, 2019

December 13, 2024

October 2, 2019

October 2, 2024

July 29, 2019

July 29, 2024

April 24, 2019

April 24, 2024

January 21, 2019

January 21, 2024

December 23, 2018

December 23, 2023

October 12, 2018

October 12, 2023

June 27, 2018

June 27, 2023

March 30, 2018

March 30, 2023

December 21, 2017

December 21, 2022

September 11, 2017

September 11, 2022

Brian Andrews

June 30, 2020

December 23, 2018

June 30, 2020

October 12, 2018

June 30, 2020

September 20, 2018

June 30, 2020

June 27, 2018

June 30, 2020

March 30, 2018

June 30, 2020

December 21, 2017

June 30, 2020

September 15, 2017

June 30, 2020

June 20, 2017

June 30, 2020

March 31, 2017

June 30, 2020

January 24, 2017

June 30, 2020

Compensation of Directors

The following table shows information regarding the compensation earned during the fiscal year ended December 31, 2019 by our Board of Directors for service on the board of directors.

Fees Earned or

Michael Feinsod

Robert Frichtel

Peter Boockvar

Outstanding Director Option Awards at Fiscal Year End

The following options granted as director compensation were outstanding as of December 31, 2019:

Michael Feinsod — 3,673,080;

Robert Frichtel — 0;

Peter Boockvar — 1,975,000;

Mark Green — 775,000;

Duncan Levin — 400,000;

and Seth Oster — 175,000 .

The information required by this Item 11 is incorporated by reference to the sections entitled “Executive Compensation” in our definitive proxy statement for the 2021 Annual Meeting of Stockholders to be filed with the SEC.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth certain information regarding beneficial ownership of our common stock as of May 5, 2020:

(i) by each of our directors, (ii) by each of the Named Executive Officers, (iii) by all of our executive officers and directors as a group, and (iv) by each person or entity known by us to beneficially own more than five percent (5%) of any class of our outstanding shares.

As of May 5, 2020, there were 40,281,881 shares of our common stock outstanding.

Common Stock Beneficially Owned

Named Executive Officers and Directors:

Percentage of

Steve Gutterman (1)

Jessica Bast (2)

Brian Andrews (3)

Michael Feinsod (4)

Peter Boockvar (5)

Mark Green (6)

Seth Oster (7)

All current directors and executive officers as a group ((6) persons)

Indicates less than 1%.

Includes options to purchase 250,000 shares of common stock.

Includes options to purchase 115,695 shares of common stock.

Includes options to purchase 557,500 shares of common stock.

Includes 996,800 shares of common stock beneficially owned by Mr.

Feinsod and Infinity Capital, options to purchase 4,844,180 shares of common stock, and warrants to purchase 409,000 shares of common stock.

As the managing member of Infinity Capital, Mr.

Feinsod may be deemed to be the beneficial owner of the shares of common stock that are held by Infinity Capital

Includes options to purchase 1,825,000 shares of common stock.

Includes options to purchase 625,000 shares of common stock.

Includes warrants to purchase 25,000 shares of common stock.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, DIRECTOR INDEPENDENCE

Transactions with Related Persons

Director Independence

Peter Boockvar, Mr.

Seth Oster and Mr.

Mark Green are considered as independent directors under the applicable definition of the listing standards of the NASDAQ Capital Market.

The information required by this Item 12 is incorporated by reference to the sections entitled “Security Ownership of Certain Beneficial Owners and Management” in our definitive proxy statement for the 2021 Annual Meeting of Stockholders to be filed with the SEC.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

The information required by this Item 13 is incorporated by reference to the sections entitled “Certain Relationships and Related Party Transactions” and “Corporate Governance and Board Matters” in our definitive proxy statement for the 2021 Annual Meeting of Stockholders to be filed with the SEC.

PRINCIPAL ACCOUNTING FEES AND SERVICES

Audit fees consist of fees for professional services rendered for the audit of our consolidated financial statements included in our Annual Report on Form 10-K and the review of financial statements included in our Quarterly Reports on Form 10-Q.

Audit-related fees relate to procedures performed in conjunction with our Form S-1 and Form S-8 filings.

The aggregate fees billed for professional services rendered by our principal accountants, Marcum LLP and Hall and Company, Inc., were as follows:

Audit-related

PreApproval Policy of Services Performed by Independent Registered Public Accounting Firms

The Audit Committee pre-approves all auditing services and permitted non-audit services, if any, including tax services, to be performed for us by our independent auditor, subject to the de minimis exceptions for non-audit services described in Section 10A(i)(1)(B) of the Exchange Act, which are approved by the Audit Committee prior to the completion of the audit.

The scope of the pre-approval includes pre-approval of all fees and terms of engagement.

The Audit Committee may form and delegate authority to subcommittees consisting of one or more members when appropriate, including the authority to grant pre-approvals of audit and permitted non-audit services, provided that decisions of such subcommittee to grant pre-approvals shall be presented to the full Audit Committee at its next scheduled meeting.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES

The information required by this Item 14 is incorporated by reference to the section entitled “Proposal Two.

Ratification of Appointment of Independent Auditors” in our definitive proxy statement for the 2021 Annual Meeting of Stockholders to be filed with the SEC.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

The following Exhibits are filed with this Report:

Exhibit Number

Securities Purchase Agreement (Incorporated by reference to Exhibit 1 to our Form 8-K filed on August 3, 2015)

Articles of Merger (Acquisition of shares in Advanced Cannabis Solutions) (Incorporated by reference to Exhibit 2 to our registration statement on Form S-1, File No.

Asset Purchase Agreement dated as of January 24, 2020, by and between the Company and Dalton Adventures, LLC

Asset Purchase Agreement, dated as of April 7, 2020, between the Company and the Organic Seed, LLC

Asset Purchase Agreement dated as of January 24, 2020, by and between the Company and Dalton Adventures, LLC (incorporated by reference to Exhibit 2.2 to our Form 10-K filed May 14, 2020)

Asset Purchase Agreement, dated as of April 7, 2020, between the Company and the Organic Seed, LLC (incorporated by reference to Exhibit 2.3 to our Form 10-K filed May 14, 2020)

Amended and Restated Articles of Incorporation (Incorporated by reference to Exhibit 3.3 to our registration statement on Form S-1, File No.

Articles of Amendment (name change) (Incorporated by reference to Exhibit 3.1 to our Form 8-K filed on June 18, 2015)

Amendment to Amended and Restated Articles of Incorporation effective November 23, 2020 (incorporated by reference to Exhibit 3.1 to our Form 8-K filed on November 25, 2020)

Amended and Restated Bylaws (Incorporated by reference to Exhibit 3.1 to our Form 8-K filed on February 1, 2017)

Description of Company’s Common Stock

Warrant to Purchase Common Stock (Incorporated by reference to Exhibit 4.2 to our Form 8-K filed on April 6, 2016)

25 unchanged sentences

Promissory Note Exchange Agreement (Incorporated by reference to Exhibit 10.4 to our Form 8-K filed February 24, 2020)

Employment Agreement, dated December 13, 2019, between Steve Gutterman and the Company

Amendment to Employment Agreement, dated April 29, 2020, between Steve Gutterman and the Company

Amendment to Employment Agreement, dated April 24, 2020, between Michael Feinsod and the Company

Code of Ethics

Consent of Hall & Company

Employment Agreement, dated December 13, 2019, between Steve Gutterman and the Company (incorporated by reference to Exhibit 10.28 to our Form 10-K filed May 14, 2020)

Amendment to Employment Agreement, dated April 29, 2020, between Steve Gutterman and the Company (incorporated by reference to Exhibit 10.29 to our Form 10-K filed May 14, 2020)

Amendment to Employment Agreement, dated April 24, 2020, between Michael Feinsod and the Company (incorporated by reference to Exhibit 10.30 to our Form 10-K filed May 14, 2020)

Subscription Agreement entered into as of May 31, 2020 by the Company, Hershey Strategic Capital, LP and Shore Ventures III, LP (Incorporated by reference to Exhibit 10.1 to our Form 8-K filed June 1, 2020)

Form of Warrant (Incorporated by reference to Exhibit 10.2 to our Form 8-K filed June 1, 2020)

Letter Agreement between General Cannabis Corp and Hershey Strategic Capital, LP and Shore Ventures III, LP, dated September 13, 2020 (incorporated by reference to Exhibit 10.1 to our Form 8-K filed September 14, 2020)

General Cannabis Corp 2020 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.1 to our Form 8-K filed on November 25, 2020)

Form of Senior Convertible Promissory Note issued by General Cannabis Corp to certain investors (incorporated by reference to Exhibit 10.1 to our Form 8-K filed December 30, 2020)

Form of Warrant issued by General Cannabis Corp to certain investors(incorporated by reference to Exhibit 10.2 to our Form 8-K filed December 30, 2020)

Form of Securities Purchase Agreement between General Cannabis Corp and certain investors (incorporated by reference to Exhibit 10.3 to our Form 8-K filed December 30, 2020)

Form of Supplemental Note Exchange Agreement for 15% Note Holders between General Cannabis Corp and certain investors (incorporated by reference to Exhibit 10.4 to our Form 8-K filed December 30, 2020)

Code of Ethics (Incorporated by reference to Exhibit 14.1 to our Form 10-K filed March 31, 2017)

Subsidiaries (incorporated by reference to Exhibit 21.1 to our Form 10-K filed May 14, 2020)

Consent of Marcum LLP

Certification pursuant to Section 302 of the SarbanesOxley Act of 2002 of Principal Executive Officer

Certification pursuant to Section 302 of the SarbanesOxley Act of 2002 of Principal Financial and Accounting Officer

Certification pursuant to Section 906 of the SarbanesOxley Act of 2002 of the Principal Executive and Financial Officers

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Certification pursuant to Section 302 of the Sarbanes—Oxley Act of 2002 of Principal Executive Officer

Certification pursuant to Section 302 of the Sarbanes—Oxley Act of 2002 of Principal Financial and Accounting Officer

Certification pursuant to Section 906 of the Sarbanes—Oxley Act of 2002 of the Principal Executive and Financial Officers

Inline XBRL Instance Document

Inline XBRL Taxonomy Extension Schema Document

Inline XBRL Taxonomy Extension Calculation Linkbase Document

Inline XBRL Taxonomy Extension Definition Linkbase Document

Inline XBRL Taxonomy Extension Label Linkbase Document

Inline XBRL Taxonomy Extension Presentation Linkbase Document

Cover Page Interactive Data File (embedded within the Inline XBRL document)

(**) Filed herewith.

(†) Denotes management contract or compensatory plan, contract or arrangement

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

/s/ Steve Gutterman

Principal Executive Officer

Steve Gutterman

In accordance with the Exchange Act, this Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

/s/ Steve Gutterman

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

/s/ Steven D.

Chief Executive Officer

April 1, 2021

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

/s/ Steven D.

Principal Executive Officer and Director

Steve Gutterman

/s/ Jessica Bast

Principal Financial and Accounting Officer

/s/ Michael Feinsod

Chairman of the Board of Directors

Michael Feinsod

/s/ Seth Oster

/s/ Peter Boockvar

Peter Boockvar

/s/ Mark Green

April 1, 2021

/s/ Diane Jones

Chief Financial Officer (Principal Financial and Accounting Officer)

April 1, 2021

/s/ John Barker Dalton

April 1, 2021

John Barker Dalton

/s/ Adam Hershey

April 1, 2021

/s/ Richard C.

April 1, 2021

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 9A. Controls and Procedures