What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2021-03-23 compared with 2020-04-01 · 327 added, 368 removed, 33 unchanged (95% of the section changed)

(the “Company”) is a leader in the emerging cannabis industry.

The Company is an expert in the development, operation,

management and optimization of facilities for the cultivation, production and dispensing of medicinal and recreational cannabis

and cannabis-infused products.

To date, the Company has developed in excess of 300,000 square feet of state-of-the-art, regulatory-compliant

facilities in five states –

Delaware, Illinois, Maryland, Massachusetts, and Nevada.

the outset of the Company’s entrance into the cannabis industry, the Company provided advisory services and assistance to

its clients in the procurement of state-issued cannabis licenses, leased its aforementioned cannabis facilities to these newly-licensed

clients, and provided industry-leading expertise and oversight in all aspects of their cannabis operations, as well as ongoing

regulatory, accounting, human resources, and administrative services.

During this time, the Company successfully secured, on behalf

of its clients, 13 cannabis licenses across six states –

two in Delaware, three in Illinois, one in Nevada, one in Rhode

Island, three in Maryland, and three in Massachusetts.

entering the cannabis industry, the Company has demonstrated an excellent track record developing and operating licensed cannabis

facilities, implementing its proprietary operating procedures, and industry best practices.

In 2018, the Company commenced a strategic

plan to transition from an advisory firm that provides cannabis licensing, operational consulting and real estate services, to

a direct owner of cannabis licenses and operator of seed-to-sale operations, dedicated to the improvement of health and wellness

through the use of cannabinoids and cannabis products.

Company’s strategic plan consists of the acquisition of its cannabis-licensed clients who currently lease the Company’s

facilities, and the consolidation of these entities under the MariMed banner.

The Company has played a key role in the successes

of these entities, from the securing of their cannabis licenses, to the development of facilities that are models of excellence,

to providing operational and corporate guidance.

Accordingly, the Company believes it is well suited to own these facilities and

manage the continuing growth of their operations.

goal in completing this transition is to present a simpler, more transparent financial picture to the investor community.

the consolidation is complete, the Company’s financial statements will provide a clearer representation of the revenues,

earnings, and other financial metrics that the Company is generating, rather than a fee-for-service revenue model that reports

only consulting and management fees, and does not reflect the full breadth of the Company’s overall business.

date, acquisitions of the licensed businesses in Massachusetts and Illinois have been state-approved and completed, with the remaining

entities located in Maryland, Nevada, and Rhode Island at various stages of completion and state approvals as further discussed

When implemented, all of the Company’s cannabis-licensed clients will be fully consolidated into the Company, establishing

it as a fully integrated seed-to-sale multistate operator of licensed cannabis businesses.

of the remaining potential acquisitions is subject to the respective state’s approval under its laws governing the ownership

and transfer of cannabis licenses.

The completion of the entire plan requires a modification of current cannabis license ownership

laws in in Delaware and Rhode Island, and therefore there is no assurance that the Company will be successful in fully implementing

However, the Company continues to develop additional revenue and business in the states in which it operates and plans

to leverage its success in these markets to expand into other states where cannabis is and becomes legal.

Company has also created its own brands of precision-dosed, cannabis-infused products designed to treat specific health conditions,

alleviate medical symptoms, or achieve a certain effect.

These products are developed by the Company in cooperation with state-licensed

facilities and operators who meet the Company’s strict standards, including all natural—not artificial or synthetic—ingredients.

The Company licenses its product formulations only to knowledgeable manufacturing professionals who agree to adhere to the Company’s

precise scientific formulations using its trademarked product recipes.

Company’s branded products are licensed under brand names including Kalm Fusion™, Nature’s Heritage™,

and Betty’s Eddies™, and are distributed in the form of dissolvable strips, tablets, powders, microwaveable popcorn,

fruit chews, and with more varieties in development.

The Company also has exclusive sublicensing rights in certain states to distribute

DabTabs™

vaporization tablets infused with cannabis concentrates, the Binske ®

line of cannabis products made

from premium artisan ingredients, and the clinically tested medicinal cannabis strains developed in Israel by Tikun Olam™.

The Company intends to continue licensing and distributing its brands as well as other top brands in the Company’s current

markets and in partnerships in other state markets across the country where product sale is legal.

anticipation of the growing demand for hemp-derived cannabidiol (“CBD”), in 2018, the Company invested $30.0 million

in GenCanna Global Inc.

(“GenCanna”), a Kentucky-based cultivator, producer, and distributor of hemp and GMP-quality

CBD oils and isolates.

Concurrent with this investment, the Company acquired MediTaurus LLC (“MediTaurus”), a company

operating in the United States and Europe that has developed proprietary CBD formulations under its Florance™

transactions with GenCanna and MediTaurus, along with the Company’s cannabis platform and product experience, enabled the

Company to expand into the emerging global CBD market just as the U.S Farm Bill was adopted in late 2018 which descheduled industrial

hemp and hemp-derived CBD as controlled substances and classified them as agricultural commodities.

This new law enabled

a new emerging industry of CBD oils, isolates, and infused products within the United States.

In early 2019, the Company established

a wholly owned subsidiary, MariMed Hemp Inc.

(“MariMed Hemp”) to market and distribute hemp-derived CBD products across

several vertical markets.

the Company’s short history operating in the cannabis industry, it has fostered an excellent reputation for strong management,

with clients that have thrived in their respective markets.

The Company’s goal is to continue this success as it transitions

from a manager and advisor to an owner and operator of cannabis businesses.

The Company’s strengths can be summarized as

Company’s management is one of the most experienced and long-tenured in the cannabis industry.

had considerable success creating and developing defined business, operating and security plans;

sourcing real estate for cannabis

facilities in receptive municipalities;

and raising capital to purchase and develop facilities;

adhering operations to regulations

established by individual state governments, and writing award-winning applications for clients applying for licenses in new and

established cannabis-legal states.

These skills are important as the Company expands its footprint into new states

on both a direct ownership and management services basis.

(the “Company”) is a multi-state operator in the United States cannabis industry.

The Company develops,

operates, manages, and optimizes over 300,000 square feet of state-of-the-art, regulatory-compliant facilities for the cultivation,

production and dispensing of medicinal and recreational cannabis.

The Company also licenses its proprietary brands of cannabis

and hemp-infused products, along with other top brands, in several domestic markets and overseas.

Upon its entry into the cannabis industry

in 2014, the Company was an advisory firm that procured state-issued cannabis licenses on behalf of its clients, developed

cannabis facilities which it leased to these newly-licensed companies, and provided industry-leading expertise and

oversight in all aspects of their cannabis operations.

The Company also provided its clients with ongoing regulatory, accounting,

real estate, human resources, and administrative services.

In 2018, the Company made the strategic decision

to transition from a consulting business to a direct owner of cannabis licenses and operator of seed-to-sale operations (hereinafter

referred to as the “Consolidation Plan”).

The Consolidation Plan calls for the acquisition of its cannabis-licensed

clients located in Delaware, Illinois, Maryland, Massachusetts, and Nevada.

In addition, the Consolidation Plan includes

the potential acquisition of a Rhode Island asset.

All of these acquisitions are subject to state approval, and once consolidated,

the entities will operate under the MariMed banner.

The Consolidation Plan is discussed in further detail in the section below

entitled Consolidation Plan .

To date, acquisitions of the licensed businesses

in Massachusetts and Illinois have been completed and establish the Company as a fully integrated seed-to-sale multi-state operator,

The acquisitions of the remaining entities located in Maryland, Nevada, and Delaware are at various stages of completion and subject

to each state’s laws governing the ownership transfer of cannabis licenses, which in the case of Delaware requires a modification

of current cannabis ownership laws to permit for-profit ownership.

Meanwhile, the Company continues to expand these businesses

and maximize the Company’s revenue from rental income, management fees, and licensing royalties.

goal in completing this transition from a consulting business to a direct owner of cannabis licenses and operator of seed-to-sale

operations is to present a simpler, more transparent financial picture of the full breadth of the Company’s efforts, with

a clearer representation of the revenues, earnings, and other financial metrics the Company has generated for its clients.

Company has played a key role in the successes of these entities, from the securing of their cannabis licenses, to the development

of facilities that are models of excellence, to providing operational and corporate guidance.

Accordingly, the Company believes

it is well suited to own these facilities and manage the continuing growth of their operations.

Company has also created its own brands of cannabis flower, concentrates, and precision-dosed products utilizing proprietary strains

and formulations.

These products are developed by the Company in cooperation with state-licensed operators who meet the Company’s

strict standards, including all natural—not artificial or synthetic—ingredients.

The Company licenses its brands

and product formulations only to certified manufacturing professionals who follow state cannabis laws and adhere to the Company’s

precise scientific formulations and trademarked product recipes.

The Company’s proprietary cannabis

genetics produce flowers and concentrates under the brand name Nature’s Heritage™, and cannabis-infused products under

the brand names Kalm Fusion®, in the form of chewable tablets and drink powder mixes, and the award-winning 1 Betty’s

Eddies® brand of all natural fruit chews.

Both cannabis-infused brands are top selling products in Maryland and Massachusetts 2

and the Company intends to introduce additional products under these brands in 2021.

The Company’s brand of hemp-infused

cannabidiol (“CBD”) products, Florance™, is distributed in the US and abroad.

The Company also has exclusive sublicensing

rights in certain states to distribute the Binske® line of cannabis products crafted from premium artisan ingredients, the

Healer™ line of medical full-spectrum cannabis tinctures, and the clinically tested medicinal cannabis strains developed

in Israel by global medical cannabis research pioneer Tikun Olam™.

The Company intends to continue licensing and distributing

its brands as well as other top brands in the Company’s current markets and in additional regulated markets worldwide.

March 2020, the World Health Organization declared the outbreak of COVID-19 a global pandemic.

The spread of the virus in the

United States and the measures implemented to contain it—including business shutdowns, indoor capacity restrictions, social

distancing, and diminished travel—have negatively impacted the economy and have created significant volatility and disruption

in financial markets.

Consequently, the Company’s implementation of its aforementioned Consolidation Plan has been

Additionally, while the cannabis industry has been deemed an essential business, and is not expected to suffer severe

declines in revenue, the Company’s business, operations, financial condition, and liquidity have been impacted, as further

discussed in this report.

the pandemic, the Company’s operations have improved significantly over the past year as reflected in the following financial

revenues increased 11.6% to approximately $50.9 million

in 2020 from $45.6 million in 2019

cannabis 3 revenues increased 207.1% to approximately $50.9 million in 2020 from $16.6 million in 2019

income increased to approximately $14.5 million in 2020 compared to an operating loss of $41.5 million in 2019

before income taxes increased to approximately $4.5 million

in 2020 compared to a loss before income taxes of $81.8 million in 2019

increased to approximately $16.3 million in

2020 compared to an EBITDA loss of $68.4 million in 2019

assets increased to approximately $76.4 million in 2020 from $61.6 million in 2019

and cash equivalents increased to approximately $3.0 million in 2020 from $739,000 in 2019

the course of the Company’s history in the emerging cannabis industry, it has developed an excellent reputation for

strong management, with clients that have thrived in their respective markets.

The Company’s goal is to continue this success

as it transitions from a manager and advisor to an owner and operator of cannabis businesses.

1 Awards won by the Company’s

Betty’s Eddies® brand include LeafLink 2020 Industry Innovator, Explore Maryland Cannabis 2020 Edible of the Year, and

LeafLink 2019 Best Selling Medical Product.

LeafLink Insights

Core cannabis operations exclude the one-time hemp seed sales transactions in 2019

between the Company and a related party (the “Seed Transactions”) as discussed

in the Results of Operations section within Item 7.

Management’s Discussion

And Analysis Of Financial Condition And Results Of Operations, and in the footnotes

accompanying the Company’s audited financial statements at December 31, 2020.

EBITDA is a non-GAAP financial measurement that is defined in Item 7.

Management’s Discussion And Analysis Of Financial

Condition And Results Of Operations.

The Company’s strengths can

be summarized as follows:

The Company’s management is one of the

most experienced and long-tenured in the cannabis industry.

It has had considerable success creating and growing business

in the industry by successfully applying for cannabis licenses on behalf of its clients, overseeing the development of such

clients’ cannabis operations and security plans;

sourcing real estate for cannabis facilities in receptive municipalities;

raising capital to purchase and develop facilities;

and adhering operations to regulations established by individual state

governments, including all environmental and social governance requirements.

The knowledge and experience of the Company’s

management provides a solid platform for the Company’s direct ownership through consolidation of the organic businesses

it developed and for expansion to other opportunities in other cannabis-legal states.

of State-of-the-Art Cannabis Facilities and Operations

Company has developed state-of-the-art cannabis cultivation, production, and dispensary facilities in multiple states utilizing

the Company’s proprietary practices and implementing industry best practices.

Its facilities are examples of operational

excellence under the Company’s proven management policies and processes.

Brand Creation

Company has developed unique brands of precision-dosed cannabis-infused

products which are currently licensed and distributed in cannabis-legal states.

The Company intends to continue expanding

both its brand portfolio and the licensing of its branded products into additional cannabis-legal states and

in Hemp Production, Branding, and Distribution

Company has the potential for vast growth in the hemp-derived CBD market.

It was one of the first cannabis companies to expand

in the CBD market with its investment in GenCanna, which will ensure the Company has access to a safe and reliable source of hemp-derived

CBD to meet the increasing market demand for CBD-infused products.

planted and harvested in excess of 6,000 acres in 2019, making it one of the largest hemp producers in the United States.

months GenCanna has found itself in a difficult financial situation which has had a direct impact on the Company’s financial

results as further described below.

Company has developed unique brands of precision-dosed cannabis-infused products which are currently licensed and distributed

in cannabis-legal states.

The Company intends to continue expanding both its brand portfolio and the licensing of its branded

products into additional cannabis-legal states and overseas.

Technological

and Scientific Innovation

Company is diligent in identifying and reviewing the latest

sciences and processes applicable to the cultivation, distillation, production, packaging, securing, and distribution of cannabis

and cannabis-infused products.

The Company has obtained the highest quality cannabis strains and genetics.

at the leading edge of patient education and physician outreach for cannabis, and it seeks strategic relationships with

companies that are at the forefront of extraction and distillation.

Company is diligent in identifying and reviewing the latest sciences and processes applicable to the cultivation, distillation,

production, packaging, securing, and distribution of cannabis and cannabis-infused products.

The Company has obtained the highest

quality cannabis strains and genetics.

It is at the leading edge of patient education and physician outreach for cannabis, and

it seeks strategic relationships with companies that are at the forefront of extraction and distillation.

and Knowledge Sharing

rapid growth of legal cannabis and hemp-derived CBD markets presents a global paradigm shift and challenges to medical professionals

and consumers who seek scientific knowledge and research regarding the medical benefits of certain strains and products of cannabis

The Company provides educational research and studies on its brands and products to its growing community of healthcare

professionals and consumers.

As cannabis becomes more mainstream, medical providers will need to be educated on how to prescribe

or make recommendations to their patients, and consumers will need to learn how to gain the most benefit from certain strains,

genetics, or formulations.

part of its education initiative, the Company is assembling a Scientific Advisory Board (the “SAB”) that includes

some of the most knowledgeable scientists and researchers focused on the scientific application of cannabis and hemp for health

and wellness.

The SAB’s goals will include the development of strategies to address the most widespread and debilitating

medical and dietary conditions through the utilization of cannabis- and hemp-based therapies.

rapid growth of the legal cannabis market presents a global paradigm shift and challenges to medical professionals and consumers

who seek scientific knowledge and research regarding the medical benefits of cannabis.

The Company provides educational research

and studies on its brands and products to its growing community of healthcare professionals and consumers.

As cannabis becomes

more mainstream, medical providers will need to be educated on how to prescribe or make recommendations to their patients, and

consumers will need to learn how to gain the most benefit from certain strains, genetics, or formulations.

part of its education initiative, the Company is assembling a Scientific Advisory Board (the “SAB”) that includes

some of the most knowledgeable scientists and researchers focused on the scientific application of cannabis for health and wellness.

The SAB’s goals will include the development of strategies to address the most widespread and debilitating medical and dietary

conditions through the utilization of cannabis- and hemp-based therapies.

Consolidation Plan

following is a summary of the progress the Company has

made towards its strategic transition from a management and advisory firm in the cannabis space, to a direct owner of cannabis

licenses and seed-to-sale operations across six states –

DE, IL, NV, MD, MA, and RI.

As mentioned above, the Company’s

Consolidation Plan consists of the strategic decision made in 2018 to transition from a management and advisory firm in the

cannabis space, to a direct owner of cannabis licenses and seed-to-sale operations in Massachusetts, Illinois, Maryland, Nevada,

Delaware and Rhode Island.

The following is a summary of the Company’s progress towards its Consolidation Plan.

Massachusetts

December 2018, the Massachusetts Cannabis Control Commission (the “MCCC”) approved the conversion of ARL Healthcare

(“ARL”), the Company’s cannabis-licensed client, from a non-profit entity to a for-profit corporation and

December 2018, the Massachusetts Cannabis Control Commission (the “MCCC”) approved the conversion of ARL Healthcare

(“ARL”), the Company’s cannabis-licensed client, from a non-profit entity to a for-profit corporation and

the transfer of ownership to the Company.

ARL holds cannabis licenses for cultivation, production and dispensing.

Company’s 10,000 square foot dispensary, developed within

its 22,700 square foot property in Middleboro, received approval from the MCCC to commence operations in December 2019.

The Company’s recently- completed 70,000 square foot cultivation and production facility, developed within its 138,000

square foot property in New Bedford, received approval from the MCCC to commence operations in January 2020, with its

first harvest to be completed in the first quarter of 2020,

October 2019, the Illinois Department of Financial & Professional Regulation (the “IDFPR”) approved the Company’s

acquisition of KPG of Anna LLC and KPG of Harrisburg LLC, the Company’s two cannabis-licensed clients that operate Company-built

and -owned medical marijuana dispensaries in the state of Illinois (both entities collectively, the “KPGs”).

of this transaction, the Company also acquired the selling parties’

interests in Mari Holdings IL LLC (“Mari-IL”),

the Company’s subsidiary which owns the real estate in which the KPGs’

dispensaries are located.

October 1, 2019, 100% of the operations of these entities have been consolidated into the Company’s financial statements.

Additionally, on January 1, 2020, the IDFPR legalized recreational adult-use cannabis, allowing the Company to operate

both medical and recreational adult-use programs in the Anna and Harrisburg dispensaries.

Under this new law,

the Company has the right to open two additional dispensaries under the current licenses, which are in the planning stages.

December 2018, the Company entered into a memorandum of understanding (“MOU”) to acquire Kind Therapeutics USA Inc.

(“Kind”), its cannabis-licensed client that holds licenses for the cultivation, production, and dispensing of medical

The MOU provides for a total purchase price of $6.3 million in cash, 2,500,000 shares of the Company’s

common stock, and other consideration.

The acquisition is subject to approval by the Maryland Medical Cannabis Commission, which

approval is not expected prior to October 2020.

in December 2018, MariMed Advisors Inc, the Company’s wholly owned subsidiary, and Kind entered into a management

agreement to provide Kind with comprehensive management services in connection with the business and operations of Kind, and Mari

Holdings MD LLC, the Company’s majority-owned subsidiary, entered into a 20-year lease with Kind for Kind’s

utilization of the Company’s 180,000 square foot cultivation and production facility in Hagerstown, MD.

Additionally,

in October 2019, the Company purchased a 9,000 square foot building in Anne Arundel County which it is developing into

a dispensary.

current owners of Kind have attempted to renegotiate the terms of the MOU, even though the MOU contain all the definitive

material terms with respect to the acquisition transaction and confirms the management and lease agreements.

The Company engaged

with the sellers in good faith in an attempt to reach updated terms acceptable to both parties, however the sellers failed to

reciprocate in good faith, resulting in an impasse.

Incrementally, both parties through counsel further sought to resolve the

impasse, however such initiative resulted in both parties commencing legal proceedings.

As a result, the consummation of this

acquisition will likely be delayed and may not ultimately be completed.

For further information, see Part II, Item 1.

Proceedings in this report.

Company’s 10,000 square foot dispensary, developed within its 22,700 square foot property in Middleboro, received

approval from the MCCC to commence operations in December 2019.

The Company’s 70,000 square foot cultivation and

production facility, developed within its 138,000 square foot property in New Bedford, received approval from the MCCC to

commence operations in January 2020, with its first harvest completed in the first quarter of 2020.

The cultivation and

production facility is now operating at full capacity as product demand remains very strong.

The Company entered into an

agreement to acquire a second dispensary in Beverly in early 2021, and expects to complete the buildout and commence

operations, subject to approval by the MCCC, in late 2021.

October 2019, the Illinois Department of Financial & Professional Regulation (the “IDFPR”) approved the Company’s

acquisition of KPG of Anna LLC and KPG of Harrisburg LLC, the Company’s two cannabis-licensed clients that operate Company-built

and -owned medical marijuana dispensaries in the state of Illinois (both entities collectively, the “KPGs”).

of this transaction, the Company also acquired the selling parties’ interests in Mari Holdings IL LLC (“Mari-IL”),

the Company’s subsidiary which owns the real estate in which the KPGs’ dispensaries are located.

Effective October 1, 2019, 100% of the operations

of these entities have been consolidated into the Company’s financial statements.

Additionally, on January 1, 2020, the

state of Illinois legalized recreational adult-use cannabis, allowing the Company to operate both medical and recreational

adult-use programs in the Anna and Harrisburg dispensaries.

In September 2020, a third recreational dispensary was opened

Vernon, and a fourth recreational dispensary is under development in Metropolis, which the Company is in the

process of purchasing from the current landlord, and is expected to open in mid-2021, subject to final approval by

In the fall of 2016, the Company and

the members of Kind Therapeutics USA Inc., the Company’s client in Maryland that holds licenses for the cultivation,

production, and dispensing of medical cannabis (“Kind”), agreed to a partnership/joint venture whereby Kind would be owned 70% by the

Company and 30% by the members of Kind, subject to approval by the Maryland Medical Cannabis Commission (“MMCC”).

In reliance thereon, the Company purchased, designed, and developed a 180,000 square foot cultivation and production facility

in Hagerstown, MD for occupancy and use by Kind, which became operational in late 2017, and the Company further agreed to

manage and finance all aspects of Kind’s cannabis business, as Kind had no background or experience in the

Prior to finalizing the documents

confirming the partnership/joint venture, the Company and the members of Kind negotiated and entered into a memorandum of

understanding (“MOU”) for the Company to acquire 100% of the membership interests of Kind in December 2018.

at that time, MariMed Advisors Inc, the Company’s wholly owned subsidiary, and Kind entered into a management services

agreement to provide Kind with comprehensive management services in connection with the business and operations of Kind (the

“MSA”), and Mari Holdings MD LLC, the Company’s majority-owned subsidiary, entered into a 20-year lease

with Kind for Kind’s utilization of the Hagerstown facility (the “Lease”).

Additionally, in October 2019,

the Company purchased a 9,000 square foot building in Anne Arundel County which is to be developed into a dispensary to be

leased to Kind.

In 2019, the members of Kind sought to

renegotiate the terms of the MOU and has subsequently sought to renege on both the original partnership/joint venture and the

The Company engaged with the members of Kind in good faith in an attempt to reach updated terms acceptable to both

parties, however the members of Kind failed to reciprocate in good faith, resulting in an impasse.

Incrementally, both

parties through counsel further sought to resolve the impasse, however such initiative resulted in both parties commencing

legal proceedings.

As a result, the consummation of this acquisition has been delayed and may not ultimately be completed.

For further information, see Part I, Item 3.

Legal Proceedings in this report.

August 2019, the Company entered into a purchase agreement to acquire 100% of the ownership interests of The Harvest Foundation

LLC (“Harvest”), its cannabis-licensed client.

Documentation requesting approval of the transaction has

been submitted to the state cannabis commission, which is pending.

Harvest holds both medical and recreational adult-use

cannabis cultivation licenses, and operates in approximately 10,000 square feet of an industrial building that the

Company leases and has built out into a cannabis cultivation facility.

Delaware’s

current cannabis program is for medical use only, and requires license holders to be not-for-profit entities.

The Company provides

comprehensive management and real estate services to First State Compassion Center (“FSCC”), its cannabis-licensed

client whom the Company assisted in its being granted Delaware’s first ever seed-to-sale medical cannabis license and the

holder of two of the four statewide licenses.

operates out of the Company’s 47,000 square foot seed-to-sale facility in Wilmington, and its 4,000 square

foot leased retail location in Lewes.

In 2019, the Company signed a lease with an option to purchase a 100,000 square

foot building in Milford, which it is currently developing into a second cultivation and production facility for FSCC.

state is expected to allow “for-profit”

ownership of cannabis licenses in the near future, at which time the Company

will seek to acquire FSCC and obtain ownership of the licenses and operations.

Island currently has a medical cannabis program where license holders must be not-for-profit entities.

The Company is in

continuing discussions to acquire, subject to state approval, ownership interests of the management company that oversees the

operations of the Company’s client, the Thomas C.

Slater Compassion Center (“Slater”).

If the transaction is

completed, the Company will generate management fees until the state allows “for-profit”

ownership, at which

time the Company will seek to acquire Slater’s cannabis licenses and operations.

Transactions in the Current Period

2019, the Company, through its MariMed Hemp subsidiary, entered into several hemp seed sale transactions with GenCanna whereby

the Company acquired large quantities of top-grade feminized hemp seeds with proven genetics at volume discounts that it sold

to GenCanna at market rates.

The seeds met the U.S.

government’s definition of federally legal industrial hemp, which was

descheduled as a controlled substance and classified as an agricultural commodity upon the signing of the 2018 U.S.

Company purchased $20.75 million of hemp seed inventory which it sold and delivered to GenCanna for $33.2 million.

provided GenCanna with extended payment terms through December 2019, to coincide with the completion of the seeds’

although the payment by GenCanna was not contingent upon the success of such harvest or its yield.

To partially fund the seed

purchases, the Company raised $17.0 million in debt financings.

the end of 2019, GenCanna had not paid the amount it owed the Company for its seed purchases due to several challenges it faced

late in the year, including a fire at its main processing and lab facility, the domestic decline of CBD selling prices, and the

contraction of the cannabis capital markets.

In February 2020, GenCanna filed for voluntary reorganization under Chapter 11 with

Bankruptcy Court in the Eastern District of Kentucky.

The filing is intended to permit GenCanna to operate its business

while working through a reorganization plan that could include refinancing of its existing indebtedness, or an alternative restructuring

transaction such as a sale.

required by the relevant accounting guidance, the Company initially recorded the $33.2 million due from GenCanna as a related

party receivable, with approximately $29.0 million recognized as related party revenue, and approximately $4.2 million classified

as unearned revenue (such amount representing the Company’s 33.5% ownership portion of the profit on these transactions,

which was to have been recognized as revenue upon payment by GenCanna).

As a result of GenCanna’s Chapter 11 filing, the

Company wrote off the receivable balance of approximately $29.0 million and the unearned revenue balance of approximately $4.2

Additionally, the Company recorded a charge to net income of approximately $30.2 million, which reduced to zero the carrying

value of the Company’s investment in GenCanna.

recently announced the completion of one the largest recorded hemp harvests in Kentucky, which exceeded 6,000 acres.

The Company’s

management believes that GenCanna’s Chapter 11 filing and ensuing restructuring will facilitate GenCanna’s ability

to refinance its senior debt and arrange for the orderly payment of amounts due to its creditors, including the $33.2 million

owed to the Company;

however, there are no assurances that it will achieve this outcome or that the amount owed to the Company

will be paid.

addition to the foregoing adjustments, the Company recorded bad debt reserves in 2019 against the receivable and working capital

balances due from (i) Kind of approximately $11.2 million in the aggregate, in light of the ongoing litigation between the Company

and Kind, and (ii) Harvest of approximately $2.2 million in the aggregate, due to the anticipated effect on Harvest’s operations

from a weakened local economy due to the coronavirus pandemic.

These charges are further described in the footnotes accompanying

the Company’s audited financial statements included in this report.

Company expects the coronavirus pandemic to likewise have a negative impact on the operations of certain entities in which the

Company has invested and to whom the Company has extended loans.

For that reason, the Company also wrote off (i) three notes receivable

balances of approximately $1.6 million in the aggregate, (ii) goodwill of approximately $2.7 million associated with the Company’s

acquisition of MediTaurus, and (iii) the carrying value of a $500,000 investment.

These items are further described in the footnotes

accompanying the Company’s audited financial statements included in this report.

LLC (“Harvest”), its cannabis-licensed client.

Documentation requesting approval of the transaction has been submitted

to the state cannabis commission, which is pending.

Harvest holds both medical and recreational adult-use cannabis cultivation

licenses, and operates in approximately 10,000 square feet of an industrial building that the Company leases and has built out

into a cannabis cultivation facility.

Delaware’s current cannabis program

is for medical use only, and requires license holders to be not-for-profit entities.

The Company provides comprehensive management

and real estate services to First State Compassion Center (“FSCC”), its cannabis-licensed client in this state.

The Company’s validated cannabis experience was instrumental in FSCC being granted Delaware’s first ever seed-to-sale

medical cannabis license, and two of the four statewide licenses.

FSCC leases the Company-developed 47,000

square foot seed-to-sale facility in Wilmington and the Company’s 4,000 square foot leased retail location

in Lewes which the Company developed into a cannabis dispensary.

In 2019, the Company signed a lease with an option to

purchase a 100,000 square foot building in Milford, which it is currently developing into a second cultivation and production

facility for FSCC.

The Delaware medical program has grown

to over 10,000 licensed medical patients.

FSCC, under the Company’s management, is currently operating two of the four cannabis

licenses in the state.

The additional cultivation and production facility in Milford will bring a much needed supply of product

to a state where demand continues to outpace supply.

The state is expected to allow “for-profit”

ownership of cannabis licenses in the near future, at which time the Company will seek to acquire FSCC and obtain ownership of

the licenses and operations, subject to state approval.

Rhode Island currently has a medical cannabis

program where license holders must be not-for-profit entities.

The Company is in discussions to potentially

acquire a licensed cannabis asset in this state.

Company was incorporated in the state of Delaware in January 2011 as a wholly-owned subsidiary of Worlds Inc.

(formerly Worlds.com

Inc.) under the name Worlds Online Inc.

In May 2011, Worlds Inc.

spun-off the Company to its stockholders.

At its inception, the

Company operated online virtual environments which did not gain traction with users.

early 2014, the Company transitioned its operational focus to the emerging cannabis industry and made its first acquisition of

a cannabis business.

June 2017, the Company changed its name to MariMed Inc.

its ticker symbol to MRMD.

The Company’s common stock is quoted on the OTCQX exchange.

July 2017, Robert Fireman was named as the Company’s CEO and President, and Jon R.

under the name Worlds Online Inc., which was later spun-off to its stockholders.

At its inception, Worlds Online Inc.

online virtual environments.

In 2014, the Company transitioned

its operational focus to the emerging cannabis industry and led the effort to win the cannabis license in Delaware on

behalf of its client.

To date, the Company has won a total of 17 cannabis licenses on behalf of itself and its cannabis

The following is a summary of the Company’s

history over the past three calendar years:

2017, Robert Fireman was named as the Company’s CEO and President, and Jon R.

Levine as the CFO, Treasurer, and Secretary.

October 2017, the Company acquired the intellectual property, formulations, recipes, proprietary equipment, know-how, and other

certain assets of the Betty’s Eddies™

brand of cannabis-infused fruit chews.

April 2018, the Company acquired iRollie LLC, a manufacturer of branded cannabis products and accessories for consumers, and custom

product and packaging for companies in the cannabis industry.

August 2018, the Company purchased a 23% ownership interest in an entity that provides a customer relationship management and

marketing platform, branded under the name Sprout, specifically designed for companies in the cannabis industry.

In early 2020,

Sprout was being used by over 150 cannabis dispensaries.

the period September 2018 to November 2018, in a series of investments, the Company purchased an aggregate of $30.0 million

of subordinated secured convertible debentures of GenCanna.

In February 2019, the Company converted the debentures plus accrued

interest through the conversion date into a 33.5% equity interest of GenCanna on a fully diluted basis.

October 2018, the Company entered into a purchase agreement to acquire KPG of Anna LLC and KPG of Harrisburg LLC, the Company’s

The Company changed its name to MariMed Inc.

and its ticker symbol to MRMD, which is quoted on the OTCQX exchange.

Also in 2017,

the Company acquired the intellectual property, formulations, recipes, know-how, and certain other assets of the Betty’s

Eddies® brand of cannabis-infused fruit chews.

October 2018, the Company entered into a purchase agreement to acquire KPG of Anna LLC and KPG of Harrisburg LLC, the Company’s

two cannabis-licensed clients that operate medical marijuana dispensaries in the state of Illinois (both entities collectively,

the “KPGs”), and the KPGs’

owners’

interests in Mari Holdings IL LLC, the Company’s subsidiary that

owns the real estate where the KPGs’

two dispensaries are located.

the “KPGs”), and the KPGs’ owners’ interests in Mari Holdings IL LLC, the Company’s subsidiary that

owns the real estate where the KPGs’ two dispensaries are located.

On October 1, 2019, the Illinois Department of Financial

& Professional Regulation approved the Company’s acquisition of the KPGs and Mari-IL.

As of such date, the KPGs and

Mari-IL are wholly-owned subsidiaries of the Company.

On January 1, 2020, the state legalized adult-use cannabis, which was

added to the Company’s two existing cannabis licenses, thereby increasing the Company’s operations in the state to

service both medical and recreational cannabis consumers.

October 2018, the Company’s cannabis-licensed client in Massachusetts, ARL Healthcare Inc.

(“ARL”), filed a

and Professional Regulation approved the Company’s acquisition of the KPGs and Mari-IL, and the acquisition transaction

was consummated.

October 2018, the Company’s cannabis-licensed client in Massachusetts, ARL Healthcare Inc.

(“ARL”), filed a

plan of entity conversion with the state to convert from a non-profit entity to a for-profit corporation, with the Company as

the sole shareholder of the for-profit corporation.

ARL holds three cannabis licenses from the state of Massachusetts for the

cultivation, production and dispensing of cannabis.

In November 2018, the Company received written confirmation of state approval

of the conversion plan from the state, making ARL a wholly-owned subsidiary of the Company.

November 2018, the Company issued a letter of intent to acquire The Harvest Foundation LLC, the Company’s client awarded

At the time, ARL held three cannabis licenses from the state of Massachusetts

for the cultivation, production and dispensing of cannabis.

In November 2018, the Company received written confirmation of state

approval of the conversion plan, resulting in ARL becoming a wholly-owned subsidiary of the Company.

November 2018, the Company issued a letter of intent to acquire The Harvest Foundation LLC, the Company’s client awarded

a cannabis license for cultivation in the state of Nevada.

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the transaction.

The acquisition is conditional upon state approval, which is expected to occur by the end of 2020.

December 2018, the Company executed a memorandum of understanding (“MOU”) to acquire Kind Therapeutics USA Inc.

(“Kind”),

its client in the state of Maryland that holds licenses for the cultivation, production, and dispensing of medical cannabis.

MOU provides for a total purchase price of $6.3 million in cash, 2,500,000 shares of the Company’s common stock, and other

consideration.

The transaction is subject to the approval by the Maryland Medical Cannabis Commission, which approval was not

expected prior to October 2020.

Recently, the sellers of Kind have attempted to renegotiate the terms of the MOU.

the MOU contains all the definitive material terms with respect to the acquisition transaction and confirms certain management

and lease agreements, the selling parties now allege that the MOU is not an enforceable agreement.

The Company engaged with the

sellers in good faith in an attempt to reach updated terms acceptable to both parties, however the sellers failed to reciprocate

in good faith, resulting in an impasse.

Incrementally, both parties through counsel further sought to resolve the impasse, however

such initiative resulted in both parties commencing legal proceedings, which are currently pending.

For further information,

see Part II, Item 1.

Legal Proceedings in this report.

December 2018, the Company and Kind entered into a management service agreement to whereby the Company provides Kind with comprehensive

management services, and a 20-year lease with for the leasing to Kind of the Company’s 180,000 square foot facility in Hagerstown,

January 2019, the Company entered into an agreement with Maryland Health & Wellness Center Inc.

(“MHWC”), an entity

that has been pre-approved for a cannabis dispensing license, to provide MHWC with a $300,000 construction loan in connection

with the buildout of MHWC’s proposed dispensary location.

Upon the two-year anniversary of final state approval of MHWC’s

dispensing license, the Company shall have the right, subject to state approval, to convert the promissory note underlying the

construction loan into 20% ownership of MHWC.

The Company also entered into a consulting services agreement to provide MHWC with

advisory and oversight services over a three-year period relating to the development, administration, operation, and management

of MHWC’s proposed dispensary in Maryland.

January 2019, the Company converted a $250,000 note receivable from Chooze Corp., an entity that develops CBD- and THC-infused

products intended to prevent debilitating side effects, into a 2.7% ownership interest in the entity.

January 2019, the Company established MariMed Hemp Inc., a wholly-owned subsidiary to develop, market, and distribute hemp-based

CBD brands and products, and to provide hemp producers with bulk quantities of hemp genetics and biomass.

During the quarter ended

September 30, 2019, MariMed Hemp launched Hemp Engine™, a store-within-a-store turnkey distribution platform of CBD-based

products for retailers.

The acquisition is conditional upon state approval of the transaction.

At this time, the state has paused the

processing of cannabis license transfers, without indicating when it will resume.

Upon the resumption of these activities and

the ensuing approval by the state, the Company expects to consummate this transaction whereby the operations of Harvest will be

consolidated into the Company’s financial statements.

In November 2018, the Company finalized

the purchase of an aggregate of $30.0 million of subordinated secured convertible debentures of GenCanna Global Inc., a Kentucky-based

cultivator, producer, and distributor of hemp and CBD (“GenCanna”).

In February 2019, the Company converted the debentures

plus accrued interest through the conversion date into a 33.5% equity interest of GenCanna on a fully diluted basis.

This investment

was written off in December 2019 as further discussed in the footnotes to the audited financial statements.

In December 2018, the Company and Kind entered into the aforementioned MSA and Lease.

In the fall of 2016, the Company and the members of Kind agreed to a partnership/joint venture whereby Kind would be owned 70%

by the Company and 30% by the members of Kind.

In December 2018, prior to finalizing documents confirming the partnership/joint

venture, the Company and the members of Kind negotiated and executed the aforementioned MOU for the Company to acquire 100%

of the membership interests of Kind, subject to approval by the MMCC.

As discussed in Part I, Item 3.

Legal Proceedings in this report, the Company is currently in litigation

May 2019, the Company issued 500,000 shares of its common stock in exchange for an 8.95% interest in Terrace Inc.

(“Terrace”),

a Canadian entity that develops and acquires international cannabis assets.

In November 2019, the common stock of Terrace

commenced public trading on the Toronto Stock Venture Exchange

June 2019, the Company executed a purchase agreement to acquire MediTaurus LLC, a company established by Jokubas Ziburkas PhD,

a neuroscientist and leading authority on hemp-based CBD and the endocannabinoid system.

MediTaurus operates in the United States

and Europe and has developed proprietary CBD formulations sold under its Florance™

In November 2019, the common stock of Terrace commenced

public trading on the Toronto Stock Venture Exchange.

In December 2020, Terrace was acquired by Flowr Corp., a Toronto-headquartered

cannabis company with operations in Canada, Europe, and Australia, and the Company’s investment was converted into publicly

traded shares of Flowr Corp.

June 2019, the Company executed a purchase agreement to acquire a majority of MediTaurus LLC, a company established by Jokubas

Ziburkas PhD, a neuroscientist and leading authority on hemp-based CBD and the endocannabinoid system.

MediTaurus operates in

the United States and Europe and has developed proprietary CBD formulations sold under its Florance™ brand.

July 2019, the Company entered into a licensing agreement for the exclusive manufacturing and distribution in seven states of

the Binske®

portfolio of products, a brand known for utilizing best-in-class proprietary strains and craft ingredients in

the Binske® portfolio of products, a brand known for utilizing best-in-class proprietary strains and craft ingredients in

its edibles, concentrates, vaporizers, and topicals.

August 2019, the Company extended a loan of $250,000 to High Fidelity Inc., a company that owns and operates two seed-to sale

medical marijuana facilities in the state of Vermont, and produces its own line of CBD products.

October 2019, the Company closed on the purchase of a 9,000 square foot building in Annapolis, MD which it intends to develop

into a medical marijuana dispensary.

Company’s goal is to become a fully integrated multistate operator (“MSO”) of seed-to-sale cannabis operations.

The Company is different than some of the other MSO’s in that it has incubated its client businesses from the bottom up,

October 2019, the Company closed on the purchase of a 9,000 square foot building in Annapolis, MD which it is developing into

a medical marijuana dispensary.

October 1, 2019, the Illinois Department of Financial and Professional Regulation approved the Company’s acquisition of

the KPGs and Mari-IL, and as of such date, the KPGs and Mari-IL became wholly-owned subsidiaries of the Company.

January 2020, the Illinois legalized adult-use cannabis, which was added to the Company’s two existing cannabis licenses,

thereby increasing the Company’s operations in Illinois to service both medical and recreational cannabis consumers.

February 2020, the Company purchased a 4,800 square foot stand-alone retail building in Mt Vernon, IL which it developed into

state-approved adult-use cannabis dispensary that opened in September 2020.

July 2020, the Company refinanced a mortgage secured by its properties in Massachusetts generating proceeds of $13.0 million that

were used to pay down the initial mortgage and short term promissory notes.

February 2021, the Company entered into a five-year lease agreement for a 12,000 square foot premises located in Wilmington, DE

which the Company intends to develop into a cannabis production facility with offices, and sublease to its cannabis-licensed client

in this state.

March 2021, the Company entered into a securities purchase agreement with Hadron Healthcare Master Fund with respect to

a financing facility of up to $46.0 million in exchange for newly-designated Series C convertible preferred stock of the Company

and warrants to purchase the Company’s common stock.

The initial proceeds of $23.0 million from the facility

were used to pay down debt, and will be used to upgrade certain of the Company’s owned and managed facilities.

The balance of the facility will fund the completion of the Company’s Consolidation Plan.

Company’s goal is to become a fully integrated multistate operator (“MSO”) of seed-to-sale cannabis operations.

The Company is different than some of the other MSOs in that it has incubated its client businesses from the bottom up,

built its own brands and branded products, and has retained its core management team from inception.

Other MSO’s have raised

significantly more capital, including on the Canadian Stock Exchange, and acquired assets in more states than the Company has

Other MSOs have raised

significantly more capital, including on the Canadian Securities Exchange, and acquired assets in more states than the Company

Additionally,

1 unchanged sentence

of varying sizes and geographic reach, who produce and sell similar products.

Some of these companies provide a subset

of the Company’s product and service offerings, while others are able to provide an equivalent level of the products

and services offered by the Company.

The Company’s sales could be reduced significantly if its competitors

develop and market products that are more effective, more convenient, or are less expensive than its products.

Going forward,

as cannabis and hemp products become more mainstream and have greater acceptance, it is likely that larger and more established

Some of these companies provide a subset of the

Company’s product and service offerings, while others are able to provide an equivalent level of the products and services

offered by the Company.

The Company, using its best practices and operational expertise, is able to produce cannabis products

at one of the lowest costs in the industry which enables the Company to remain competitive in its markets.

That said, the Company’s

sales could be reduced significantly if its competitors develop and market products that are more effective, more convenient,

or are less expensive than its products.

forward, as cannabis products become more mainstream and have greater acceptance, it is likely that larger and more established

companies, with greater available resources including name recognition and national distribution networks, will enter the field.

At the same time, the Company believes the emerging cannabis industry is growing at such a pace that there are more opportunities

available than current cannabis businesses can support.

With abundant opportunities, the Company at times works with others

to insure a positive image in new and emerging states.

Until recently, the black market and illegal cannabis traffickers that

controlled this industry years ago from the shadows are a lesser competitive threat as such groups are diminishing.

Company has currently filed for trademark protection for its Kalm Fusion™

and Betty’s Eddies™

product lines.

Company’s proprietary processing, and manufacturing techniques

and technologies, while not patented at this time, are kept strictly confidential.

The Company enters into and enforces

confidentiality agreements with key employees and consultants to protect its IP and general know-how.

However, the Company believes that there are many barriers to entry and that to duplicate its licenses, know how, and facilities

would take years at a great expense.

At the same time, the Company believes the emerging cannabis industry is growing at such

a pace that there are more opportunities available than current cannabis businesses can support.

The Company is developing

marketing and software systems to expand branding and distribution, as well as database marketing, home delivery, and business

tactics developed by more conventional industries that will be important to the cannabis industry as it becomes more mainstream.

Company’s Kalm Fusion® and Betty’s Eddies® branded product lines are trademarked.

The company has filed for

trademark protection for its Nature’s Heritage™ and Kiss my RSO™ product lines.

Company’s proprietary processing, and manufacturing techniques and technologies, while not patented, are kept strictly confidential.

The Company enters into and enforces confidentiality agreements with key employees and consultants to protect its IP and general

of December 31, 2020, the Company had a total of 233 employees, of which 181 were full-time.

In addition, the

Company utilized a variety of supporting consultants and oversaw many employees of its cannabis-licensee clients

to implement its policies and procedures.

In addition, the Company utilized

a variety of supporting consultants and oversaw many employees of its cannabis-licensee clients to implement its policies and

Access to Company Reports

Company’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to

those reports are available free of charge on the Company’s website at www.marimedinc.com as soon as reasonably practicable

Company’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to

those reports are available free of charge on the Company’s website at www.marimedinc.com as soon as reasonably practicable

after such material is electronically filed with, or furnished to, the Securities and Exchange Commission.

addition, copies of the Company’s annual report will be made available, free of charge, on written request.

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