What changed in this filing

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Item 1. Business

2024-03-07 compared with 2023-03-03 · 86 added, 82 removed, 81 unchanged (67% of the section changed)

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In 2018, we made the strategic decision to transition from an advisory business to a direct owner and operator of cannabis licenses in high-growth states.

Key to this transition was the acquisition and consolidation of our clients for whom we had played a key role in the success of such clients, including securing their cannabis licenses, developing facilities that are models of excellence, funding their operations and providing operational and corporate guidance.

Key to this transition was the acquisition and consolidation of our clients for whom we had played a key role in their success, including securing their cannabis licenses, developing facilities that are models of excellence, funding their operations, and providing operational and corporate guidance.

We have successfully acquired and integrated certain client businesses in several states and believe that our prior experience in managing these businesses has provided us with the skills and expertise required to manage the continuing growth of these operations.

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We invest in ongoing research and development and intend to continue to introduce new and innovative products in the future.

Today, we operate state-of-art, regulatory compliant cannabis cultivation and processing facilities that grow and manufacture our proprietary, high-quality, branded cannabis consumer products.

Today, we operate state-of-the-art, regulatory compliant cannabis cultivation and processing facilities that grow and manufacture our proprietary, high quality, branded cannabis consumer products.

We distribute our products via the wholesale market to hundreds of dispensaries operated by other cannabis license holders.

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We utilize dedicated sales teams to sell our products to wholesale buyers representing the dispensaries operated by other cannabis license holders.

Customers at our own dispensaries purchase cannabis for, among other reasons, the relief of pain and stress, promote better sleep and to address other health and wellness needs.

We deploy a variety of marketing strategies to drive the sales of our products, including customer loyalty programs, digital advertising, in-store displays, public relations, and more.

Customers at our own dispensaries purchase cannabis for, among other reasons, the relief of pain and stress, to promote better sleep, and to address other health and wellness needs.

We deploy a variety of marketing strategies to drive the sales of our products, including customer loyalty programs, digital advertising, in-store displays and public relations.

We generate additional revenue from licensing, management fees, and real estate income.

For the years ended December 31, 2022 and 2021, these revenues comprised approximately 6% and 11% of our total revenue, respectively.

This revenue has declined as we have acquired and consolidated the client businesses that had been paying us licensing, management, and facility rental fees.

This revenue accounted for approximately 3% and 6% of our total revenue in the years ended December 31, 2023 and 2022, respectively.

This revenue has declined in recent years as we have acquired and consolidated the client businesses that had previously paid us licensing, management, and facility rental fees.

Our Strategic Growth Plan

We continue to focus on executing our strategic growth plan, with priority on activities that include the following:

• increasing revenue organically in states where we currently do business by growing our product offerings, bolstering awareness via marketing campaigns, and developing additional assets within those states;

• completing the acquisition and consolidation of the client cannabis businesses the Company developed, managed, and advised prior to becoming a seed to sale multi-state operator.

There is one remaining client business that MariMed continues to manage and intends to acquire, Delaware operator First State Compassion Center

Delaware's current cannabis regulations prevent such an acquisition.

• increasing revenue organically in states where we currently do business by developing additional assets and increasing our product distribution within those states;

• expanding our footprint into high-growth legal cannabis states through new license applications and/or acquisitions of existing cannabis businesses;

• increasing revenue by producing and distributing our award-winning brands to qualified strategic partners or by acquiring production and distribution licenses.

• increasing product brand revenue by introducing new, innovative products that consumers want, expanding our award-winning brands to include new effects or to fill additional need-state opportunities, and by identifying qualified licensing partners that will expand our distribution into new markets.

In November 2023 we announced the closing of a $58.7 million secured credit facility with a United States chartered bank at a lower rate relative to both our previous outstanding debt with Chicago Atlantic Admin, LLC (“Chicago Atlantic”) and recent transactions announced by other cannabis companies.

This debt refinancing enabled us to pay off our term loan with Chicago Atlantic, pay off the mortgage on our New Bedford and Middleborough, Massachusetts facilities with Bank of New England, and reduce the principal outstanding on the note we issued to the sellers in connection with our acquisition of the operating assets of Ermont, Inc.

Our new credit facility has allowed us to unencumber our operating assets in Illinois, Ohio, and Delaware, as well as our branded products, providing additional levers for future loans at attractive rates if we choose to increase our borrowings.

Additionally, the credit facility bolsters our ability to continue to execute our strategic plan, particularly as it relates to growing the Company through mergers and acquisitions.

Our Competitive Strengths

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Our management is one of the most experienced and longest tenured in the cannabis industry.

Several of our executive team members, including our President and Chief Executive Officer, Chief Operating Officer, and Chief Revenue Officer, have worked in the industry for nearly a decade or more.

Our leadership team has achieved considerable success creating and growing businesses in the industry by successfully applying for cannabis licenses, overseeing the development of cannabis operations and facilities, raising capital to purchase and develop facilities, and conducting operations in adherence to regulations established by individual state governments, including all environmental and social governance requirements.

Additionally, we have substantially increased the depth and breadth of our executive team with the addition of a new Chief Financial Officer, a new Vice President of Retail Sales, and a new Vice President of Marketing and Research & Development.

These new executives have significant experience and expertise and increase the strength of our executive team and the overall company.

Several of our executive team members, including our President and Chief Executive Officer, our Chief Operating Officer, and our Chief Revenue Officer, have each worked in the industry for a decade or more.

Our leadership team has achieved considerable success creating and growing businesses in the industry by successfully applying for cannabis licenses, overseeing the development of cannabis operations and facilities, raising capital to purchase and develop facilities, and conducting operations in adherence with regulations established by individual state governments, including all environmental and social governance requirements.

The strength of our executive team is further enhanced by other members who have significant senior management experience and expertise working in the beer and alcohol, retail, consumer products, and marketing industries.

Craft Cannabis at Scale

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Every one of our plants is individually cared for by our trained staff and grown in dedicated rooms featuring customized HVAC, lighting, and nutrients that are designed for growing particular flower strains consistently.

Our proprietary approach to cultivation, curing, and processing has enabled us to sell our products at higher price points than most wholesale competitors.

At a time when price compression in many cannabis markets has become a challenge for licensed operators, our proprietary approach to cultivation, curing, and processing has enabled us to continue to sell our products at higher price points than most wholesale competitors.

Exceptional Retail Customer Service

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We invest in budtender and retail personnel training, as well as product programming displayed on in-store monitors to help deliver exceptional customer service throughout the shopping experience.

In Massachusetts, we complement our in-store operations with a home delivery option.

In Massachusetts and Delaware, we complement our in-store operations with a home delivery option.

We intend to do the same in other markets once permitted by state regulations.

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We are diligent in identifying and reviewing the latest science and processes applicable to the cultivation, distillation, production, packaging, securing, and distribution of cannabis and cannabis-infused products.

We have obtained the highest quality cannabis strains and genetics.

We have obtained the highest quality cannabis strains and genetics to use in both our existing products and our new product development.

We utilize proven consumer products goods (“CPG”) research and development methodologies and proprietary processing techniques to create innovative products that fill gaps in the marketplace and ensure consistency from market to market.

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• Bubby’s Baked™ , soft and chewy baked goods and a hot chocolate mix;

High + Energy , a cannabis-infused energy powder drink mix for discrete, on-the-go consumption;

• Vibations™ , a cannabis-infused hydrating drink mix for discrete, on-the-go consumption;

• Kalm Fusion™ and K Fusion™ , chewable cannabis-infused mint tablets;

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We believe that operating as a fully vertical, seed to sale cannabis company provides us the greatest opportunity to maximize revenue and profits in each state where we operate.

To date, we are fully vertical through businesses either owned or managed by us in Maryland, Massachusetts, and Delaware.

We plan to be fully vertical in Illinois with the opening of a new cultivation and processing facility in 2023.

To date, we are fully vertical through businesses we either own or manage in Illinois, Maryland, Massachusetts, and Delaware.

Our current and pending operations are as follows:

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Massachusetts operates both adult-use and medical cannabis programs.

According to the Massachusetts Cannabis Control Commission (the "CCC"), the state’s cannabis market was expected to total over $1.8 billion in sales in 2022, a number that is expected to increase to $2.6 billion by 2025 (source:

According to the Massachusetts Cannabis Control Commission (the "CCC"), the state’s cannabis market was expected to total nearly $1.8 billion in sales in 2023, a number that is expected to increase to $2.6 billion by 2025 (source:

MJ Biz Factbook).

We operate a 10,000 square foot Panacea Wellness -branded dispensary in Middleborough and a 70,000 square foot cultivation and production facility in New Bedford.

We intend to expand our New Bedford facility to increase our production capacity to meet the high demand for our products.

Our Nature’s Heritage flower and concentrates brand, for example, is the #1-selling brand in the state, and we regularly sell all of our available inventory.

We hope to commence adult-use operations of our new dispensary in Beverly, on Boston’s north shore, during the first half of 2023.

This dispensary was the result of a 2022 asset purchase.

In February 2023, we announced our intention to acquire the operating assets of Ermont, Inc.

("Ermont"), a medical-licensed vertical cannabis operator, located in Quincy, MA.

This acquisition, which is subject to approval by the CCC, will provide us with our third dispensary in Massachusetts, substantially completing our buildout to the maximum allowable by state regulations.

We also intend to apply for an adult-use license for this dispensary.

Once fully operational, we expect our retail stores will be easily accessible to all cannabis consumers in eastern Massachusetts.

Additionally, we intend to offer home delivery as the result of an early 2023 acquisition (see Recent Developments below).

We operate three Panacea Wellness- branded dispensaries in the Boston area:

• a dispensary in Middleborough that is licensed for both medical and adult-use cannabis sales ;

• an adult-use dispensary in Beverly that opened in 2023;

• a medical dispensary in Quincy, for which we have applied to also conduct adult-use cannabis sales.

The Quincy dispensary was the result of the March 2023 acquisition of the operating assets of vertical cannabis operator Ermont, Inc.

The acquisition and subsequent re-branding of the dispensary substantially completed our expansion to the maximum allowable by state regulations.

Our three retail stores are easily accessible to all cannabis consumers in eastern Massachusetts.

We increased access further by introducing home delivery as the result of our April 2023 investment in Artis LLC (d/b/a Little Dog Delivery).

We also operate a 70,000 square foot cultivation and production facility in New Bedford, as well as an approximately 6,700 square foot grow facility in Quincy.

We intend to expand the facility in New Bedford to increase our production capacity to meet the high demand for our products.

Our Nature’s Heritage flower and concentrates brand, for example, is among the top selling brands in the state, and we regularly sell out of our available inventory.

Illinois operates both adult-use and medical cannabis programs.

According to the Illinois Department of Financial and Professional Regulation, the state reported $1.8 billion in total legal cannabis sales in 2021, which was up more than 100% compared to 2020, when adult-use cannabis was first legalized in the state.

With a population of nearly 13 million, Illinois is one of the largest, fastest-growing cannabis markets in the U.S.

We operate four Thrive -branded dispensaries in the state, including an adult-use dispensary in Metropolis, near the Kentucky border;

an adult-use dispensary in Mt.

and dispensaries in Anna and Harrisburg that each serve both medical and adult-use customers.

These four locations provide easy access for most residents in Southern Illinois and surrounding states, including Missouri, Kentucky, Indiana and Tennessee.

Our fifth dispensary, located in Casey near the Indiana border, is projected to open in 2023, the result of an August 2022 acquisition.

In May 2022, we took an important step toward becoming fully vertical in Illinois when we completed the acquisition of a craft cultivation” wholesale license.

We subsequently acquired a 40,000-square foot building in Mt.

Vernon that will house a cultivation and processing facility.

We intend to sell our award-winning branded products throughout the state when the facility commences operations, which we expect to occur in 2023, and grow, produce, and wholesale our branded products throughout the state beginning in 2024.

We became fully vertical in Maryland in 2022.

First, we completed the acquisition and consolidation of our client, Kind Therapeutics USA Inc.

(“Kind”), in April 2022.

The acquired cultivation, production, and wholesale business sells our premium branded cannabis flower, concentrates, vapes, and edibles from a 180,000-square foot facility in Hagerstown.

That business was subsequently augmented by the opening of our Panacea Wellness -branded medical dispensary in Annapolis, which commenced operations in October 2022.

Maryland operates a successful medical cannabis program, which will expand to include adult-use sales in 2023 following a November 2022 ballot referendum.

According to the Maryland Medical Cannabis Commission, the state generated more than $511 million in medical cannabis sales in 2022, with nearly 150,000 registered medical cannabis patients.

With a population of 6.2 million, Maryland’s cannabis program has some of the highest rates of registered medical consumers, incidence use and spending, on a per capita basis, among all legal medical cannabis programs in the U.S.

Delaware’s medical cannabis program has grown to over 20,000 licensed patients, according to the Delaware Department of Health and Social Services.

The program generated approximately $37 million in sales in 2022, according to third-party industry data.

According to the Illinois Department of Financial and Professional Regulation, the state reported $1.9 billion in total legal cannabis sales in 2023.

With a population of nearly 13 million, Illinois is one of the largest, fastest-growing cannabis markets in the United States.

We operate five Thrive -branded dispensaries in the state, including an adult-use dispensary in Metropolis, near the Kentucky border, an adult-use dispensary in Casey, near the Indiana border, and an adult-use dispensary in Mt.

We also operate dispensaries in Anna and Harrisburg that each serve both medical and adult-use customers.

These five locations provide easy access for most residents in southern Illinois and surrounding states, including Missouri, Kentucky, Indiana and Tennessee.

In December 2023, we completed construction of and received regulatory approval to commence operations of our processing facility in Mt.

We expect to receive final approval for cultivation in the Mt.

Vernon facility in mid-2024, at which time our Illinois operations will be fully vertical.

The facility is housed in a building that we acquired following the 2022 acquisition of a craft cultivation wholesale license.

We began selling certain of our award-winning branded edibles products and InHouse vape products in our own dispensaries and in certain other dispensaries in the state during the final weeks of 2023.

We expect to significantly increase distribution of our core products throughout the state in 2024, including our Nature’s Heritage flower and concentrates brand.

Maryland’s successful medical cannabis program expanded to include adult-use sales on July 1, 2023.

According to the Maryland Cannabis Administration, the state reported $787 million in medical and adult-use cannabis sales in 2023, positioning it among the top legal cannabis markets in the United States.

Following our acquisition of our client, Kind Therapeutics USA Inc.

(“Kind”) in April 2022, we became fully vertical in Maryland.

We operate a 180,000-square foot cultivation and processing facility in Hagerstown which produces and distributes all of our premium branded cannabis flower, concentrates, vapes, and edibles.

In 2023 we began an expansion of the facility to increase our cultivation capacity by nearly 17,000 square feet to meet the increased demand for all of our products.

We also operate a Thrive -branded medical and adult-use dispensary in Annapolis, which commenced operations in October 2022.

Delaware’s medical cannabis program has approximately 17,000 registered patients, according to the Delaware Department of Health and Social Services 2023 annual report.

It became the 22 nd state to legalize recreational cannabis in 2023 and adult-use sales are expected to commence in late 2024.

We provide comprehensive management and real estate services to First State Compassion Center (“FSCC”), our longstanding client in Delaware.

We were instrumental in helping FSCC obtain Delaware’s first ever seed to sale medical cannabis license.2014.

We were instrumental in helping FSCC obtain Delaware’s first-ever seed to sale medical cannabis license in 2014.

Today, FSCC operates under two of only eleven cannabis licenses in the state.

We developed and currently lease to FSCC a number of facilities in the state, including:

• a 47,000-square foot cultivation facility and dispensary in Wilmington;

• an 8,000-square foot production kitchen, also located in Wilmington, that opened in 2022;

• a 100,000-square foot cultivation facility in Milford that commenced operations in 2022;

• a 4,000-square foot dispensary in Lewes.

FSCC began licensing and distributing a selection of our top-selling edibles brands in the state in 2022.

• a cultivation facility, production kitchen, and dispensary in Wilmington;

• a cultivation facility in Milford;

• a dispensary in Lewes.

FSCC licenses and distributes a selection of our top selling edibles brands in the state.

Missouri operates a successful medical cannabis program, which expanded to include adult-use sales in February 2023 following a November 2022 ballot referendum.

According to the Missouri Department of Health and Senior Services (“DHSS”), $210 million in cannabis sales were generated during 2021, the first full year of the state’s medical cannabis program.

With a population of more than six million, Missouri’s medical cannabis program has more than 160,000 registered medical cannabis patients.

First-year adult-use sales are expected to reach $550 million, according to MJBizDaily estimates.

As the result of a management contract we announced in September 2022, we expect to distribute our award-winning portfolio of cannabis-infused edibles in Missouri beginning mid-2023, which we plan to produce at a new production kitchen near Kansas City that we are developing and intend to manage.

In addition, we have entered into an agreement to obtain the license of a Missouri wholesaler and cultivator, contingent upon obtaining all requisite approvals from the State of Missouri, which we expect to occur in 2023.

Ohio operates a successful medical cannabis program, with more than 159,000 actively registered patients in a state with a population of nearly 12 million.

According to the Ohio Department of Commerce, 2022 medical cannabis sales were approximately $479 million.

As the result of being awarded a provisional dispensary license by the Ohio Board of Pharmacy in May 2022, we expect to commence operations of a new dispensary in Tiffin, located south of Toledo and home to Tiffin University, in 2023.

According to the Missouri Department of Health and Senior Services, $1.3 billion worth of legal cannabis was sold in Missouri in 2023.

As the result of a management contract that we announced in September 2022, we expect to distribute our award-winning portfolio of cannabis-infused edibles in Missouri beginning in 2024.

We plan to produce our branded products at a recently constructed production kitchen that we will own and operate.

We have entered into an agreement to obtain all requisite approvals from the State of Missouri, which we expect to occur in 2024.

Ohio operates a successful medical cannabis program.

In November 2023, Ohio citizens approved a measure to legalize adult-use cannabis sales, which are anticipated to begin in 2024.

BDSA, a leading provider of market intelligence for the cannabis industry, estimates that total cannabis sales in Ohio will reach $802 million in 2025.

We expect that our Thrive -branded medical cannabis dispensary in Tiffin, which we opened in 2023, will achieve expanded sales from the new adult-use program.

Recent Developments

We have had several recent developments that we believe are critical to the implementation of our strategic growth plan:

• On January 17, 2023, we announced that two executives had joined the Company to help drive retail and wholesale revenue and product innovations:

Matt Truppo joined us as Vice President of Retail Sales and Jay O’Malley joined us as Vice President of Marketing and Research & Development.

• On January 24, 2023, we entered into a Loan and Security Agreement (the “Credit Agreement”) with Chicago Atlantic Admin, LLC as administrative agent for the lenders.

Proceeds from the Credit Agreement are designated to complete the build-out of a new cultivation and processing facility in Illinois, complete the buildout of a new processing kitchen in Missouri, expand existing cultivation and processing facilities in Massachusetts and Maryland, fund certain capital expenditures, and to repay in full the Kind Therapeutics seller notes incurred in connection with the Kind acquisition in April 2022.

The remaining balance, if any, is expected to be used to fund acquisitions, including, among others, the acquisitions in Quincy, MA;, Casey, IL;

and Tiffin, OH.

• On February 21, 2023, we announced our intention to acquire the operating assets of Ermont in Quincy, MA, as previously described.

We have had several recent developments since December 31, 2023 that we believe are critical to the implementation of our strategic growth plan:

• On February 26, 2024, we received our Certificate of Occupancy from the Illinois Cannabis Control Commission to commence operations in our permanent brick-and-mortar facility for our Casey, Illinois adult-use dispensary.

We anticipate transition from our temporary facility at the same location and commencing operations in the new facility during the first quarter of 2024.

• On February 1, 2024, we entered into an agreement to acquire the medical cannabis retail license and certain assets of Our Community Wellness & Compassionate Care Center, Inc.

("Medleaf") in Prince George's County, Maryland in exchange for $5.25 million, adjusted for certain items.

The purchase consideration is comprised of $2.0 million of cash in the aggregate, a $2.0 million note to be issued to the sellers of Medleaf (the "Medleaf Sellers") at the time of closing, and shares of our common stock with a fair value of $1.25 million based on a formulaic calculation, to be issued at the time of closing.

As of the date of this report, we have made advance payments to the Medleaf Sellers totaling $0.5 million.

Completion of the acquisition is dependent upon certain conditions, including regulatory approval of the acquisition.

We expect this acquisition to be completed in 2024;

however, there is no assurance that the required regulatory approvals will be obtained.

In the markets where we currently operate, we compete against other fully vertical multi-state operators (“MSOs”).

We believe that our experience in building our business organically from the ground up is a key factor that differentiates us from the majority of other MSOs.

We successfully developed and managed our clients' businesses, which we subsequently acquired and consolidated, created our own brands and branded products, and have retained the core management team since inception.

While other MSOs have raised significantly more capital, they have generally acquired licensed businesses from sellers with whom they had no prior direct operating relationship.

We believe our approach is significantly more cost-efficient, carries less risks, and results in a more seamless integration of processes, personnel, operating philosophies, and culture.

We believe our approach is

significantly more cost-efficient, carries less risks, and results in a more seamless integration of processes, personnel, operating philosophies, and culture.

In addition to MSOs, we face competition from companies of varying sizes and geographic reach.

Some, called Single State Operators, are fully vertical in just one state, others focus solely on producing and selling similar products and others solely operate dispensaries and sell the goods of other businesses.

Some of our competitors that create and sell their own products are able to produce products that are on par with those we offer.

Some of our competitors that create and sell their own products have offerings that are on par with those we offer.

We believe that by utilizing our own best practices and operational expertise, we are able to produce premium cannabis products at one of the lowest cost structures in the industry, which enables us to remain competitive in our markets.

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We have upgraded our marketing efforts to expand branding and distribution, as well as implemented home delivery, where permissible, and other business strategies developed by more conventional industries.

As a result, we have had success in increasing both the number of retail transactions and the average amount of sales underlying those transactions.

As a result, we have successfully increased both the number of retail transactions and the average amount of sales underlying those transactions.

We have also developed a loyal customer base at our retail locations and improved product visibility and sales of our proprietary portfolio of cannabis products.

Intellectual Property

We own registered trademarks for Betty’s Eddies, Kalm Fusion, Mari Melts and Nature’s Heritage , and have filed to register the Bubby’s Baked and Vibations:

High + Energy trademarks with the U.S.

Patent and Trademark Office.

We own registered trademarks for Betty’s Eddies and Nature’s Heritage and are pursuing registration of the Bubby’s Baked, InHouse, K Fusion, Kalm Fusion, and Vibations trademarks with the United States Patent and Trademark Office.

Our proprietary processing and manufacturing techniques and technologies, while not patented, are kept strictly confidential.

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Our Employees

As of December 31, 2022, we had a total of 681 employees, of which 592 were full-time.

At December 31, 2023, we had a total of 721 employees, of which 643 were full-time, plus an additional 99 employees, primarily full-time, who are employed by our managed cannabis-licensed client.

Website Access to Company Reports

Our 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, or as filed with the Canadian securities regulatory authorities on the SEDAR website.

Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Definitive Proxy Statements, 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 SEC, or as filed with the Canadian securities regulatory authorities on the SEDAR website.

In addition, copies of our 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