What changed in this filing

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Item 1A. Risk Factors

2026-03-12 compared with 2025-03-06 · 58 added, 35 removed, 298 unchanged (24% of the section changed)

1 unchanged sentence

Certain important factors may have a material adverse effect on our business prospects, financial condition and results of operations, and they should be carefully considered.

Accordingly, in evaluating our business, and a potential investment in our shares, we encourage you to consider the following discussion of risk factors in its entirety in addition to other information contained in or incorporated by reference into this Annual Report on Form 10-K and our other public filings with the United States Securities and Exchange Commission (“SEC”).

Other events that we do not currently anticipate or that we currently deem immaterial may also affect our business, prospects, financial condition and results of operations.

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In 2022, former President Biden directed the Drug Enforcement Administration (DEA) and the Department of Health and Human Services (“HHS”) to initiate an administrative process to review how cannabis is scheduled under federal law.

HHS later recommended that cannabis be recategorized to Schedule III, and as of February 2025 the DEA was still reviewing the HHS recommendation, with preliminary hearings anticipated to commence this spring.

recommended that cannabis be recategorized to Schedule III, and as of February 2025 the DEA was still reviewing the HHS recommendation, with preliminary hearings anticipated to commence this spring.

In 2025, President Trump issued an executive order directing the Department of Justice to "take all necessary steps to complete the rulemaking process related to rescheduling marijuana to Schedule III of the CSA in the most expeditious manner in accordance with Federal law, including 21 U.S.C.

811." Should cannabis be rescheduled, it would mean cannabis would be defined as having accepted medical use within federal law.

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The concepts of “medical cannabis,” “retail cannabis” and “adult-use cannabis” do not exist under United States federal law.

While we believe that our business activities are compliant with applicable state and local laws, strict compliance

with state and local cannabis laws would not provide a defense to any federal proceeding that may be brought against us.

While we believe that our business activities are compliant with applicable state and local laws, strict compliance with state and local cannabis laws would not provide a defense to any federal proceeding that may be brought against us.

The enforcement of applicable United States federal laws poses a significant risk to us.

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In addition, it is difficult for us to estimate the time or resources that would be needed for the investigation, settlement, or trial of any such proceedings or charges, and such time or resources could be substantial.

Additionally, its rescheduling would eliminate IRS Tax Code 280E, a punitive tax stipulation imposed on businesses like ours that sells products categorized as Schedule I or II, Specifically, the code stipulates that “no deduction or credit shall be allowed for any amount paid or incurred during the taxable year in carrying on any trade or business if such trade or business (or the activities that comprise such trade or business) consists of trafficking in controlled substances within the meaning of Schedule I and II of the Controlled Substances Act, which is prohibited by federal law or the law of any state in which such trade or business is conducted,” This provision has been applied by the United States Internal Revenue Service, or the “IRS,” to cannabis operations, prohibiting them from deducting expenses directly associated with cannabis businesses.

Additionally, its rescheduling would eliminate IRS Tax Code 280E, a punitive tax stipulation imposed on businesses like ours that sells products categorized as Schedule I or II, Specifically, the code stipulates that “no deduction or credit shall be allowed for any amount paid or incurred during the taxable year in carrying on any trade or business if such trade or business (or the activities that comprise such trade or business) consists of trafficking in controlled substances within the meaning of Schedule I or II of the Controlled Substances Act, which is prohibited by federal law or the law of any state in which such trade or business is conducted,” This provision has been applied by the United States Internal Revenue Service, or the “IRS,” to cannabis operations, prohibiting them from deducting expenses directly associated with cannabis businesses.

The elimination of 280E is anticipated to save the company several million dollars paid annually in federal taxes.

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The result is an adjacent segment to state-regulated cannabis that is not legally compelled to the same arduous regulations such as no interstate commerce, strict testing, banking access and advertising & marketing restrictions.

This emerging hemp-based segment is competing with similar products that, in many cases, are indistinguishable from state

regulated legal cannabis and have greater access to a larger consumer base at lower costs.

This emerging hemp-based segment is competing with similar products that, in many cases, are indistinguishable from state regulated legal cannabis and have greater access to a larger consumer base at lower costs.

To a lesser extent, as psilocybin mushrooms continue to be studied at the federal and state levels it remains possible that they could be legalized in more states.

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While there may be ample public support for legislative proposals to legalize the sale of cannabis on a state level, key support must be created in the legislative process.

Any one of these factors could slow or halt the progress of legalization of cannabis for medical and/or recreational purposes, which would

limit the market for our products and negatively impact our ability to expand into new markets.

Any one of these factors could slow or halt the progress of legalization of cannabis for medical and/or recreational purposes, which would limit the market for our products and negatively impact our ability to expand into new markets.

These unknowns create a management risk as we are continually compelled to plan for multiple contingencies.

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Therefore, there are banks that will not accept for deposit funds from the sale of cannabis and may choose not to do business with the us.

While there is pending legislation in the United States Senate that will allow banks to transact business with state-authorized medical cannabis businesses, there can be no assurance his legislation will be successful, that banks will decide to do business with medical cannabis retailers, or that in the absence of legislation state and federal banking regulators will not create issues on banks

handling funds generated from an activity that is illegal under federal law.

Notwithstanding, we have been able to secure state-chartered banks that are in compliance with federal law and provide certain banking services to companies in the cannabis industry.

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Such a stock price decline could also occur even if we meet our publicly stated revenue and/or earnings guidance.

As a cannabis business, the IRS takes the view that we are subject to certain tax deduction limitations that may have a material adverse effect on our business, financial condition and results of operations.

Under Section 280E of the Code, “no deduction or credit shall be allowed for any amount paid or incurred during the taxable year in carrying on any trade or business if such trade or business (or the activities which comprise such trade or business) consists of trafficking in controlled substances (within the meaning of Schedule I and II of the CSA) which is prohibited by Federal law or the law of any state in which such trade or business is conducted.” The IRS has interpreted this provision to apply to cannabis operations, prohibiting cannabis operators such as us, from deducting expenses directly associated with cannabis businesses.

Section 280E and related IRS enforcement activity has had a significant impact on the operations of cannabis companies.

As a result, an otherwise profitable business may, in fact, operate at a loss, after taking into account its United States income tax expenses.

The Company has taken a position that it may deduct certain ordinary and necessary business expenses and that the deductibility of such expenses is not limited to the application of Section 280E of the Code.

The IRS has asserted against various state-legal cannabis businesses in the U.S that Section 280E applies to limit deductions for such businesses.

Although the IRS has clarified its position by allowing the deduction of certain expenses, the IRS has interpreted this allowance very narrowly, deeming substantial other customary operating and general administrative costs as non-deductible.

While there are currently several pending cases before various administrative and federal courts challenging the applicability of Section 280E, there is no guarantee that these administrative and/or federal courts will issue an interpretation of Section 280E that aligns with our position or that is otherwise favorable to the cannabis industry.

The IRS’s interpretations of Section 280E of the Code substantially limits our ability to deduct certain expenses from our federal taxable income for U.S.

tax purposes.

If the IRS determined, and courts upheld that Section 280E does apply to restrict our deduction of business expenses, our U.S.

federal taxable income would likely exceed our actual profits, and the IRS would likely continue to apply Section 280E to us indefinitely.

This result may change if cannabis is rescheduled as a Schedule III substance under the CSA or if federal legislation affects Section 280E.

811." We cannot predict whether such rescheduling or federal legislation will occur within a given timeframe or at all, and thus cannot predict the future applicability or effect of Section 280E on our business operations and financial position.

T he Company may face enforcement actions by tax authorities if there are disagreements over the deductibility of operating expenses, particularly in areas subject to complex or evolving regulations.

If we fail in our challenge of the validity of existing federal tax liens, or are unable to negotiate acceptable payment terms, our liquidity and business operations could be adversely affected.

In June 2025 and December 2025, the Internal Revenue Service (“IRS”) filed liens against MariMed and FSC, its subsidiary, for approximately $6 million and $1.3 million, respectively, in connection with federal income taxes the IRS alleges are due from past periods.

We have filed a Collection Due Process (“CDP”) Hearing Request with respect to each lien, challenging the IRS’s enforcement of the assessed federal income tax liability, and we shall be seeking to reduce the liability to the extent possible, and/or negotiate a collection alternative.

We are currently working our way through the administrative process and, if necessary, intend to initiate Tax Court litigation.

Pending final resolution of this CDP Hearing, with limited exceptions, while the matter is in dispute, the IRS is prohibited from enforcing its administrative levy rights.

Although the liability is fully accrued in the accompanying consolidated financial statements, if we fail to prevail in challenging the alleged liabilities and/or are unable to negotiate acceptable payment terms or other collection alternatives, our liquidity and business operations could be adversely affected.

Our medical marijuana business may be impacted by consumer perception of the cannabis industry, which we cannot control or predict.

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Previously unknown adverse reactions resulting from human or animal consumption of our products alone or in combination with other medications or substances could occur.

We may be subject to various product liability claims, including, among others, that our products cause injury or illness, include inadequate instructions for use, or include inadequate warnings concerning possible side effects or interactions with other substances.

effects or interactions with other substances.

While we have product liability insurance coverage and works with third party providers to ensure they do as well, a product liability claim or regulatory action against us, whether or not successful, could result in materially increases costs, adversely affect our reputation with our clients and consumers generally, and/or exceed our insurance coverage.

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In February 2014, the Financial Crimes Enforcement Network, or “FinCEN,” bureau of the United States Treasury Department issued guidance, which is not law, with respect to financial institutions providing banking services to cannabis businesses, including burdensome due diligence expectations and reporting requirements.

While the guidance advised prosecutors not to focus their enforcement efforts on banks or other financial institutions that serve marijuana-related businesses, so long as they meet certain conditions, this guidance does not provide any safe harbors or legal defenses from examination or regulatory or criminal enforcement actions by the United States Department of Justice, or the “DOJ,”

FinCEN, or other federal regulators.

As a result of this guidance and the fact that such guidance may be amended or revoked at any time, most banks and other financial institutions have not been willing to provide banking services to cannabis-related businesses.

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Failure to hire and retain key personnel, or the loss of any of our executive officers, could negatively impact our ability to meet our business objectives and impair our future growth.

The success of the Company’s business is currently dependent, in large part, on key managerial personnel, including Messrs.

Levine and Timothy Shaw, the Company’s Chief Executive Officer and Chief Operating Officer, respectively.

Moreover, our anticipated growth may require additional expertise and the addition of new qualified personnel.

Qualified individuals within the cannabis industry are in high demand and we may incur significant costs to attract and retain qualified managerial personnel, or be unable to attract or retain personnel necessary to operate or expand our business.

The loss of the services of existing personnel or our failure to recruit additional key managerial personnel in a timely manner, or at all, could have a material adverse effect on our business and our ability to manage day-to-day operations, attract collaboration partners, attract and retain other employees, and generate revenue.

Any inability to attract and retain qualified management and other key personnel could have a material adverse effect on the Company’s ability to grow its business and operations.

Failure to hire and retain key personnel, or the loss of any of our executive officers, could negatively impact our ability to meet our business objectives and impair our future growth.

Our business depends upon highly skilled technical, managerial, sales and marketing and customer support personnel with industry expertise.

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In September 2023, we experienced a cybersecurity incident resulting from a fraudulent email sent to our finance department which resulted in our initiating a $0.7 million electronic payment to a fraudulent bank account.

As a result of

this incident, we immediately launched an internal investigation, and engaged a cybersecurity consultant to fully assess the incident and recommend remediation measures, which have been implemented.

As a result of this incident, we immediately launched an internal investigation, and engaged a cybersecurity consultant to fully assess the incident and recommend remediation measures, which have been implemented.

As cybersecurity threats continue to evolve, we may be required to expend significant additional resources to continue to modify or enhance our protective measures or to investigate and remediate any security vulnerabilities.

While we have implemented the remediation measures recommended by our cybersecurity consultant, such measures may not prevent all such events in the future.

While we have implemented the remediation measures recommended by our cybersecurity consultant, such measures may not prevent all

such events in the future.

We will continually assess cybersecurity threats and make investments to increase internal protection, detection, and response capabilities to address this risk.

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Therefore, we are still authorized to issue a substantial number of additional shares of common stock without obtaining shareholder approval.

In addition, we currently have outstanding 4,908,333 shares of Series B preferred stock (which convert on a one-for-one basis into shares of our common stock) and 1,155,274 shares of Series C preferred stock (which convert on a five-for-one basis into shares of our common stock).

In addition, as of February 24, 2026, there were 26,900,000 shares of an amended and restated class of Series B Convertible Preferred Stock outstanding (which convert on a one-for-one basis into shares of our common stock).

Our Board of Directors is authorized to issue up to a total of 50 million shares of preferred stock (including the previously issued shares) with terms it designates without any further shareholder approval.

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Additionally, the sale of such common stock or other common stock in the open market could adversely affect the market price of our common stock.

As of December 31, 2024, there were potentially dilutive securities convertible into shares of common stock comprised of stock options convertible into 34,271,921 shares of common stock;

warrants convertible into 38,089,476 shares of common stock;

shares of Series B preferred stock convertible into 4,908,333 shares of common stock;

shares of Series C preferred stock convertible into 5,776,370 shares of common stock;

and restricted stock units convertible into 7,706,125 shares of common stock.

As of December 31, 2025, there were potentially dilutive securities convertible into shares of common stock comprised of stock options exercisable for up to 19,155,921 shares of common stock;

warrants exercisable for up to 21,548,936 shares of common stock;

shares of Series B preferred stock convertible for up to 4,908,333 shares of common stock (the "Series B Preferred Stock");

and restricted stock units convertible for up to 9,887,289 shares of common stock.

In addition, in February 2026, pursuant to the Restructuring and Exchange Agreement (described below), we cancelled the Series B Preferred Stock then outstanding and issued 26,900,000 shares of New Series B Preferred Stock convertible for up to 26,900,000 shares of common stock.

Additional convertible securities will likely be granted to our officers, directors, employees, or consultants as part of their compensation and such convertible securities will likely be issued in connection with financings.

The exercise of outstanding stock options and warrants and the conversion of our notes and debentures will dilute the

percentage ownership of our other stockholders.

The exercise of outstanding stock options and warrants and the conversion of our notes and debentures will dilute the percentage ownership of our other stockholders.

Sales, or the expectation of sales, of a substantial number of shares of our common stock in the private or public markets could adversely affect the prevailing market price of our common stock.

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(c) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that are held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter;

or (d) the date on which we have issued more than $1 billion in non-convertible

debt during the preceding fiscal year period.

We expect to take advantage of these reporting exemptions described above until we are no longer an emerging growth company.

or (d) the date on which we have issued more than $1 billion in non-convertible debt during the preceding fiscal year period.

We expect to take advantage of these reporting exemptions described above

until we are no longer an emerging growth company.

Under the JOBS Act, emerging growth companies can also delay adopting new or revised accounting standards until such time as those standards apply to private companies.

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If some investors find that our common stock is less attractive as a result of any choices to reduce future disclosures, there may be a less active trading market for our common stock and the price of our stock may be more volatile.

If we fail to comply with the continued listing standards of the OTCQX tier of the OTC Markets Group, our common stock could be removed from the OTCQX marketplace.

Any such removal could materially and adversely impact the market value and liquidity of our common stock.

The continued listing of our common stock on the OTCQX is contingent on our compliance with the continued listing standards of the OTCQX.

To maintain our listing, (i) our common stock must maintain a minimum bid price of $0.10 per share as of the close of business for at least one of every 30 consecutive calendar days;

(ii) we must maintain current and adequate public disclosure;

(iii) we must adhere to certain corporate governance standards, including having a board of directors that includes at least two independent directors and maintain an Audit Committee, a majority of the members of which are independent directors;

(iv) we must continue to meet certain financial metrics, including a market capitalization of at least $5 million for at least one of every 30 consecutive calendar days;

and (v) our common stock must be quoted by a minimum of two (2) market makers.

There is no assurance that we will remain in compliance with these standards.

If we are unable to maintain compliance within the applicable period, the OTC Markets Group may remove our common stock from the OTCQX and downgrade us to a lower-tier market, such as the OTCQB or Pink Open Market.

Such a downgrade could likely impair our ability to raise additional financing, reduce the visibility and liquidity of our stock, and limit our access to institutional investors and business opportunities.

In addition, delisting could adversely affect our strategic flexibility and result in reduced analyst coverage, and impact employee morale and recruitment.

Our internal controls over financial reporting may not be effective, and our independent auditors may not be able to certify as to their effectiveness, which could have a significant and adverse effect on our business.

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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 1A. Risk Factors