What changed in this filing

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Item 1. Business

2021-03-31 compared with 2020-03-26 · 536 added, 317 removed, 168 unchanged (84% of the section changed)

1 unchanged sentence

financial statements that appear elsewhere in this annual report on Form 10-K.

used in this annual report on Form 10-K and unless otherwise indicated, the terms the terms “Zoned Properties”, “Company,”

As used in this annual report on Form 10-K

and unless otherwise indicated, the terms the terms “Zoned Properties”, “Company,”

“we,”

2 unchanged sentences

refer to Zoned Properties, Inc.

and its wholly owned subsidiaries, Gilbert

Property Management, LLC, Green Valley Group, LLC, Kingman Property Group, LLC, Chino Valley Properties, LLC, Zoned Oregon Properties,

LLC, Zoned Colorado Properties, LLC, Zoned Illinois Properties, LLC, Zoned Arizona Properties, LLC and Zoned Advisory Services,

and its wholly owned subsidiaries, Gilbert Property Management, LLC, Green

Valley Group, LLC, Kingman Property Group, LLC, Chino Valley Properties, LLC, Zoned Oregon Properties, LLC, Zoned Colorado Properties,

LLC, Zoned Illinois Properties, LLC, Zoned Arizona Properties, LLC, Zoned Advisory Services, LLC and Zoned Properties Brokerage,

LLC, as the context may require.

2 unchanged sentences

or the “Company”), was incorporated in the State of Nevada on August

The Company is a strategic real estate development & services firm whose primary mission is to provide specialized

real estate and sustainability services for clients in the regulated cannabis industry, positioning the company for real estate

acquisitions and revenue growth .

We intend to pioneer sustainable development for emerging industries, including the regulated

cannabis industry.

We are an accredited member of the Better Business Bureau, the U.S.

Green Building Council, and the Forbes

Real Estate Council.

We focus on investing capital to acquire and develop commercial properties to be leased on a triple-net basis,

and engaging clients that face zoning, permitting, development, and operational challenges.

We provide development strategies

and advisory services that could potentially have a major impact on cash flow and property value.

We do not grow, harvest, sell

or distribute cannabis or any substances regulated under United States law such as the Controlled Substance Act of 1970, as amended

(the “CSA”).

Company has the following wholly owned subsidiaries:

Property Management, LLC (“Gilbert”) was organized in the State of Arizona on February 10, 2014.

Valley Properties, LLC (“Chino Valley”) was organized in the State of Arizona on April 15, 2014.

Property Group, LLC (“Kingman”) was organized in the State of Arizona on April 15, 2014.

Valley Group, LLC (“Green Valley”) organized in the State of Arizona on April 15, 2014.

Oregon Properties, LLC was organized in the State of Oregon on June 16, 2015.

Colorado Properties, LLC (“Zoned Colorado”) was organized in the State of Colorado on September 17, 2015.

Illinois Properties, LLC was organized in the State of Illinois on July 15, 2015.

Arizona Properties, LLC (“Zoned Arizona”) was organized in the State of Arizona on June 2, 2017.

Advisory Services, LLC (“Zoned Advisory”) was organized in the State of Arizona on July 27, 2018.

May 2018, we transitioned to a new and strategically important business model designed to better align our interests with those

of our tenants and clients, positioning us to benefit from the growth of the medical marijuana industry.

the new model, we and our primary tenants in Arizona, Broken Arrow Herbal Center, Inc.

(“Broken Arrow”) and CJK, Inc.

(“CJK”), have agreed to the following:

leased the entirety of our licensed medical marijuana facilities located in Arizona at Chino Valley, Green Valley, Tempe and

Kingman to CJK and Broken Arrow, with plans to further expand the developments as operational needs increase over

terms for the New Chino Valley Lease, New Tempe Lease, New Kingman Lease and New Green Valley Lease have been extended through

the year 2040.

rent rates have been modified to be in line with industry averages beginning May 1, 2018.

Broken Arrow, and CJK have entered into a long-term strategic advisory relationship, under which we will assist Broken Arrow

and CJK in all aspects of building and facility performance, aiming to increase efficiency, sustainability and profitability.

were to receive an advisory fee equal to 10% of gross revenues, paid monthly beginning in January 2019.

January 1, 2019, the Company, Christopher Carra, Alan Abrams, Clayton Abrams Revocable Trust (the “Clayton Abrams Trust”),

and Kyle Abrams Revocable Trust (the “Kyle Abrams Trust”

and together with the Clayton Abrams Trust, the “Trusts”)

entered into a Stock Redemption Agreement (the “Stock Redemption Agreement”).

Prior to entry into the Stock Redemption

Agreement, (i) Mr.

Carra was the owner 2,028,335 shares of the Company’s common stock, representing approximately 11.6%

of the Company’s outstanding shares as of January 1, 2019, and (ii) Mr.

Abrams, together with the Trusts (collectively,

the “Abrams Affiliates”), owned 3,611,669 shares of the Company’s common stock, representing approximately 20.7%

of the Company’s outstanding common stock as of January 1, 2019.

Pursuant to Securities and Exchange Commission (the “SEC”)

rules, each of Messrs.

Carra and Abrams was deemed to be a “related person”

due solely to their status as significant

stockholders of the Company.

Pursuant to the terms of the Stock Redemption Agreement, the parties agreed that the Company would

redeem an aggregate of 5,640,004 owned by Mr.

Carra and the Abrams Affiliates (the “Stock Redemption”) such that Messrs.

Carra and Abrams would no longer be significant and stockholders of the Company and would no longer be deemed to be “related

persons”

under SEC rules.

In exchange for the Stock Redemption, the parties agreed that:

Company and Broken Arrow, which was owned at the time of the transaction, in whole or in part, directly or indirectly, by

Abrams and Carra, amended the Broken Arrow CASA to reduce the gross revenue fee payable by Broken Arrow from 10% of

gross revenue to 0% of gross revenue,

Company and CJK, which was owned at the time of the transaction, in whole or in part, directly or indirectly, by Messrs.

and Carra, amended the CJK CASA to reduce the gross revenue fee payable by CJK from 10% of gross revenue to 0% of gross revenue,

Company and Mr.

Abrams amended the convertible debenture dated January 9, 2017 (the “Abrams Debenture”) to extend

the maturity date of the Abrams Debenture from January 9, 2022 until January 9, 2030, and

Valley and Broken Arrow amended the Licensed Medical Marijuana Facility Triple Net (NNN) Lease Agreement dated May 1, 2018

(the “Chino Valley Lease”) to increase the monthly base rent payable by Broken Arrow from $35,000 to $40,000.

was focused on the growth of a diversified revenue stream.

We intend to accomplish this by prospecting new advisory services across

the country for private and municipal clients.

We believe that strategic real estate advisory services are likely to emerge as

the growth engine for Zoned Properties and are moving to take advantage of new opportunities.

Properties is a strategic real estate development and services firm whose primary mission is to provide specialized real estate

and sustainability services for clients in the regulated cannabis industry, positioning the company for real estate acquisition

The Company is a strategic real estate development firm whose primary mission is to provide specialized real estate

and sustainability services for clients in the regulated cannabis industry, positioning the company for real estate investments

and revenue growth .

8 unchanged sentences

cannabis or any substances regulated under United States law such as the Controlled Substance Act of 1970, as amended (the “CSA”).

intend to develop and expand multiple business divisions, including a commercial real estate brokerage team, an advisory services

division, and a nonprofit charitable organization to focus on community prosperity.

Each of these operating divisions are important

elements of the overall business development strategy for long-term growth.

We believe in the value of building relationships

with clients and local communities in order to position the company for long-term portfolio and revenue growth backed by sophisticated,

safe, and sustainable assets and clients.

core of our business involves identifying and developing properties that intend to operate within highly regulated zoning and

permitting regions, including the regulated cannabis industry.

Within highly regulated industries, local municipalities typically

develop strict planning and zoning regulations that dictate the specific locations at which regulated properties can operate.

These regulations often complex permitting processes and can include non-standard setbacks for each location;

for example, restricting

a regulated property or facility from operating within a certain distance of any parks, schools, churches, or residential districts.

When an organization can collaborate with local representatives, a proactive set of rules and regulations can be established and

followed to meet the needs of both the regulated operators and the local community.

Company has the following wholly owned subsidiaries:

Gilbert Property

Management, LLC (“Gilbert”) was organized in the State of Arizona on February 10, 2014.

Chino Valley Properties,

LLC (“Chino Valley”) was organized in the State of Arizona on April 15, 2014.

Kingman Property

Group, LLC (“Kingman”) was organized in the State of Arizona on April 15, 2014.

Green Valley Group,

LLC (“Green Valley”) organized in the State of Arizona on April 15, 2014.

Zoned Oregon Properties,

LLC was organized in the State of Oregon on June 16, 2015.

Zoned Colorado Properties,

LLC (“Zoned Colorado”) was organized in the State of Colorado on September 17, 2015.

Zoned Illinois Properties, LLC was organized

in the State of Illinois on July 15, 2015.

Zoned Arizona Properties, LLC (“Zoned

Arizona”) was organized in the State of Arizona on June 2, 2017.

Zoned Advisory Services, LLC (“Zoned Advisory”)

was organized in the State of Arizona on July 27, 2018.

Zoned Properties Brokerage, LLC (“Zoned

Brokerage”) was organized in the State of Arizona on March 17, 2021.

March 2020, the World Health Organization declared COVID-19 a global pandemic and recommended containment and mitigation measures

The Company is monitoring this closely, and although operations have not been materially affected by the COVID-19 outbreak

to date, the ultimate duration and severity of the outbreak and its impact on the economic environment and our business is uncertain.

Currently, all of the properties in the Company’s portfolio are open to its Significant Tenants and their customers and

will remain open pursuant to state and local government requirements.

The Company did not experience in 2020, and does not foresee

in 2021, any material changes to its operations from COVID-19.

The Company’s tenants are continuing to generate revenue

at these properties and they have continued to make rental payments in full and on time and we believe the tenants’

position is sufficient to cover its expected rental obligations.

Accordingly, while the Company does not anticipate an impact

on its operations, it cannot estimate the duration of the pandemic and potential impact on its business if the properties must

close or if the tenants are otherwise unable or unwilling to make rental payments.

In addition, a severe or prolonged economic

downturn could result in a variety of risks to the Company’s business, including weakened demand for its properties and

a decreased ability to raise additional capital when needed on acceptable terms, if at all.

Properties is a strategic real estate development firm whose primary mission is to provide specialized real estate and sustainability

services for clients in the regulated cannabis industry, positioning the company for real estate investments and revenue growth .

We intend to pioneer sustainable development for emerging industries, including the regulated cannabis industry.

accredited member of the Better Business Bureau, the U.S.

Green Building Council, and the Forbes Real Estate Council.

on investing capital to acquire and develop commercial properties to be leased on a triple-net basis, and engaging clients that

face zoning, permitting, development, and operational challenges.

We provide development strategies and advisory services that

could potentially have a major impact on cash flow and property value.

We do not grow, harvest, sell or distribute cannabis or

any substances regulated under United States law such as the CSA.

are in the process of developing and expanding multiple business divisions;

including an advisory services division, a licensed

commercial real estate brokerage division, a real estate division focused on franchise services, a real estate division focused

on real estate data, and a nonprofit charitable organization to focus on community prosperity.

Each of these operating divisions

are important elements of the overall business development strategy for long-term growth.

We believe in the value of building

relationships with clients and local communities in order to position the Company for long-term portfolio and revenue growth backed

by sophisticated, safe, and sustainable assets and clients.

core of our business involves identifying and developing commercial properties that intend to operate within highly regulated

industries, including the regulated cannabis industry.

Within highly regulated industries, local municipalities typically develop

strict regulations, including zoning and permitting requirements related to commercial real estate, that dictate the specific

locations and parameters under which regulated properties can operate.

These regulations often include complex permitting processes

and can include non-standard codes governing each location;

for example, restricting a regulated property or facility from operating

within a certain distance of any parks, schools, churches, or residential districts, or restricting a regulated property from

operating outside a defined set of hours of operation.

When an organization can collaborate with local representatives, a proactive

set of rules and regulations can be established and followed to meet the needs of both the regulated operators and the local community.

Company currently maintains a portfolio of properties that we own, develop, and lease.

We currently lease land and building space

at all five of the properties in our portfolio.

Four of the properties are leased to licensed medical marijuana tenants and are

located in areas with established zoning and permitting procedures.

Two of the leased properties are zoned and permitted as licensed

medical marijuana dispensaries, and two of the leased properties are zoned and permitted as licensed medical marijuana cultivation

In addition, we provide on-going advisory services at each property that is leased to operating tenants.

Each property

undergoes a development life cycle.

Areas of development that may require advisory services can range from initial property identification

and zoning authorization to complete architectural design, utility installation, property management protocol, facilities management

systems, and security system installation.

are significant challenges that take place when zoning, permitting, and developing facilities specifically associated with the

regulated cannabis industry.

Each state and jurisdiction may adopt specific zoning and permitting regulations.

The Company has

gained valuable knowledge and best practices in this area by successfully completing four major projects in the state of Arizona,

a highly regulated market for licensed cannabis operators.

The Company intends to replicate this business model in other states

as markets mature and rules and regulations are established.

process of establishing zoning and permitting can directly impact our ability to place a licensed tenant in a long-term lease

In locations where the zoning and permitting process has not been comprehensively defined, the Company may attempt

to work with local representatives to collaboratively establish regulatory language to guide future developments.

where the zoning and permitting process may not allow for a currently feasible development, but could allow for the development

to be successful in the future, the Company may hold the undeveloped property and/or lease the property out in the interim.

approach these situations on a case-by-case basis.

generally confirm baseline zoning during the due diligence period and as a contingency of a prospective acquisition.

properties we consider for acquisition and subsequent development would already be zoned and permitted for use as a licensed cannabis

however, we do have the expertise to address these requirements if zoning and permitting are not in place at the time

of acquisition.

We currently lease land and/or building

space at all five of the properties in our portfolio.

Four of the properties are leased to licensed and regulated cannabis tenants

and are located in areas with established zoning and permitting procedures.

Two of the leased properties are zoned and permitted

as licensed and regulated cannabis dispensaries, and two of the leased properties are zoned and permitted as licensed and regulated

cannabis cultivation facilities.

Each regulated property may undergo a non-standard development process.

Various development requirements

in this process may include initial property identification, zoning authorization, and permitting guidance in order to qualify

a commercial property for subsequent architectural design, utility installation, construction and development, property management,

facilities management systems, and security system installation.

are significant challenges that take place when zoning, permitting, and developing facilities that intend to operate within a

regulated industry, including the regulated cannabis industry.

Each state and local jurisdiction may adopt specific zoning and

permitting regulations that may be unique compared to alternative jurisdictions.

The Company has gained valuable knowledge and

developed best practices in this area by successfully completing four major projects in the state of Arizona, a highly regulated

market for the regulated cannabis industry.

The Company intends to replicate this business model in other states as markets mature

and rules and regulations are established.

process for obtaining zoning authorizations and permitting for a regulated cannabis facility can take several months to complete.

The process primarily involves working directly with the local Planning and Zoning Commission or Development Department.

Notwithstanding

proper zoning and permitted use, we may work with local zoning authorities in order to revise zoning laws.

The Company has been

involved with local representatives for each of the properties currently held in our portfolio.

For example, the Company worked

directly with local representatives in Tempe, Arizona to update the local zoning code that regulates licensed medical marijuana

The successfully adoption of these code amendments directly impact the continued development of any licensed medical

marijuana facilities that operate within municipal limits.

the event a property is not currently zoned or does not currently allow permitted use as a regulated cannabis or marijuana facility,

we may work with local authorities to seek changes to existing zoning or permitted use.

The process primarily involves working directly with the local government representatives.

Notwithstanding proper zoning and permitted

use, we may work with local zoning authorities in order to revise zoning codes and regulations.

The Company has been involved

with local representatives for each of the properties currently held in our portfolio and on behalf of third-part client properties.

For example, the Company worked directly with local representatives in Tempe, Arizona to update the local zoning code that regulates

licensed cannabis facilities.

The successfully adoption of these code amendments directly impact the continued development of

any licensed cannabis facilities that operate within municipal limits.

the event a property is not currently zoned or does not currently allow permitted use as a regulated cannabis facility, we may

work with local authorities to seek changes to existing zoning or permitted use.

Our efforts may not be successful.

example, our property located in Gilbert, Arizona has not been successfully zoned and permitted for a prospective licensed medical

marijuana dispensary nor has it been leased to a medical marijuana operator.

We plan to lease this property to a non-cannabis

tenant in the interim.

our property located in Gilbert, Arizona has not been successfully zoned and permitted for a prospective regulated cannabis facility

nor has it been leased to a licensed cannabis operator.

We may lease this property to a non-cannabis tenant in the interim or

divest our ownership of the property entirely.

Company has established a network of experts in the fields of real estate, design, construction, operations, and corporate social

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Zoned Arizona, Gilbert Management, Green Valley Group, Kingman Property, and Chino Valley Properties

have all acquired land and real property.

May 1, 2018, Zoned Arizona, Green Valley Group, Kingman Property, and Chino Valley Properties executed related party lease agreements

at the properties within their respective regions and generate rental revenue.

The lease agreements have a 22-year term, expiring

on April 30, 2040.

Additionally, we own land located in Gilbert, Arizona that is leased to a third party.

have all acquired land and/or real property.

state-licensed operators from across the United States have approached Zoned Properties for strategic partnership and/or advisory

services for development and prospective sale-lease back arrangements.

We are continuously evaluating these projects as we seek

development partnerships, prospective sale-lease back arrangements, and explore financing terms with capital funding sources.

believe that we are well positioned to benefit from ancillary development opportunities that the regulated cannabis industry presents

without having to deal with the risk of directly cultivating, distributing, or dispensing the product, which is still illegal

under federal law.

initial holdings and acquisition targets have been in the State of Arizona.

Unlike many other states that have legalized and regulated

cannabis, Arizona’s program has some of the strictest regulations in the country and limits the number of dispensaries that

will be allowed to be open and operate within the state.

While there are hundreds of dispensaries in Denver, Colorado, the entire

state of Arizona can have a maximum of 130 operating dispensaries under current legislation.

Two of our properties in Arizona

(Kingman and Green Valley) are leased to licensed operators that have been awarded dispensary licenses.

This limitation on the

number of dispensaries permitted to operate in Arizona under current legislation will limit our ability to purchase additional

property in Arizona for lease to dispensary operators.

Corporate History and Transactions

April 22, 2016, Zoned Colorado Properties, LLC (“Zoned Colorado”), a wholly owned subsidiary of the Company, entered

into a Contract to Buy and Sell Real Estate (the “Parachute Agreement”) with Parachute Development Corporation (“Seller”)

pursuant to which Zoned Colorado agreed to purchase, and Seller agreed to sell, property in Parachute, Colorado (the “Property”)

for a purchase price of $499,857.

Of the total purchase price, $274,857, or 55%, was to be paid in cash at closing and $225,000,

or 45%, was to be financed by Seller at an interest rate of 6.5%, amortized over a five-year period, with a balloon payment at

the end of the fifth year.

Pursuant to the terms of the Parachute Agreement, the parties cooperated in good faith to complete

due diligence during a period of 45 days following execution of the Parachute Agreement.

The closing was subject to certain contingencies,

including that Zoned Colorado must obtain acceptable financing for the purchase and development of the Property, the grant of

a special use permit by the Town of Parachute, approval of a protected development deal or equivalent agreement by the Town of

Parachute, execution of a lease agreement by a prospective tenant and the prospective tenant’s obtaining a license to cultivate

on the Property.

Pursuant to the terms of the Parachute Agreement, Zoned Colorado had a right of first refusal on eleven additional

lots owned by Seller in Parachute, Colorado.

In April 2016, the Company paid a refundable deposit of $45,000 into escrow in connection

with the Parachute Agreement.

In January 2021, the Parachute Agreement was mutually terminated and the refundable deposit of $45,000

was returned to the Company.

May 1, 2018, Zoned Arizona, Green Valley Group, Kingman Property, and Chino Valley Properties executed lease agreements with our

Significant Tenant at each of the respective properties.

These locations generate rental revenue.

The lease agreements have a

22-year term, expiring on April 30, 2040.

Additionally, we own land located in Gilbert, Arizona that is leased as vacant land.

leases dated May 1, 2018, with Zoned Arizona, Green Valley Group, Kingman Property, and Chino Valley Properties each include a

2 unchanged sentences

on May 1, 2018, the Company entered into that certain Confidential Advisory Services Agreement by and between the Company and

Broken Arrow (the “Broken Arrow CASA”), with a term expiring on April 30, 2040, unless earlier terminated as provided

in the Broken Arrow CASA.

Additionally, on May 1, 2018, the Company entered into that certain Confidential Advisory Services Agreement

by and between the Company and CJK (the “CJK CASA”), with a term expiring on April 30, 2040, unless earlier terminated

as provided in the CJK CASA.

Each of the Broken Arrow CASA and the CJK CASA may be terminated prior to the expiration of the respective

term upon the occurrence of any of the following:

Broken Arrow Herbal Center, Inc.

(“Broken Arrow”) (the “Broken Arrow CASA”), with a term expiring on April

30, 2040, unless earlier terminated as provided in the Broken Arrow CASA.

Additionally, on May 1, 2018, the Company entered into

that certain Confidential Advisory Services Agreement by and between the Company and CJK, Inc.

(“CJK”) (the “CJK

CASA”), with a term expiring on April 30, 2040, unless earlier terminated as provided in the CJK CASA.

Each of the Broken

Arrow CASA and the CJK CASA may be terminated prior to the expiration of the respective term upon the occurrence of any of the

(a) by the Company for any reason at any time upon 30 calendar days’

notice to the other party;

(b) by either party immediately upon the mutual agreement of the parties, evidenced by a writing signed

by the parties;

or (c) immediately by either party in the event of an actual finding, by a court of competent jurisdiction, of

fraud, gross negligence or willful misconduct of the other party in connection with these agreements.

Pursuant to the terms of

the Broken Arrow CASA and CJK CASA, Broken Arrow and CJK engaged the Company to perform certain advisory services in exchange

for a fee equal to 10% of Broken Arrow’s and CJK’s gross revenues (the “Revenue Fee”), commencing January

The Revenue Fee was to be paid on a monthly basis, no later than 30 calendar days following the end of the immediately preceding

calendar month, and the amount of such monthly payment of the Revenue Fee is equal to the product of (a) 10%, multiplied by (b)

the gross revenues of Broken Arrow or CJK, as the case may be, for such immediately preceding calendar month.

Notwithstanding

the foregoing, upon the filing of the federal or state tax returns of Broken Arrow or CJK, as the case may be, (i) the advisory

client shall calculate the Revenue Fee based on the amount of the advisory client’s gross revenue reported on such federal

or state tax returns, and (ii), if the amount of such calculation is greater than the sum of all monthly Revenue Fees payable

to the Company under the Broken Arrow CASA or the CJK CASA, as the case may be, the applicable advisory client is required to

pay to the Company the amount of such difference, which amount is in addition to all monthly Revenue Fees due to the Company under

the Broken Arrow CASA or the CJK CASA.

written notice to the other party;

either party immediately upon the mutual agreement of the parties, evidenced by a writing signed by the parties;

or (c) immediately

by either party in the event of an actual finding, by a court of competent jurisdiction, of fraud, gross negligence or willful

misconduct of the other party in connection with these agreements.

Pursuant to the terms of the Broken Arrow CASA and CJK CASA,

Broken Arrow and CJK engaged the Company to perform certain advisory services in exchange for a fee equal to 10% of Broken Arrow’s

and CJK’s gross revenues (the “Revenue Fee”), commencing January 2019.

The Revenue Fee was to be paid on a monthly

basis, no later than 30 calendar days following the end of the immediately preceding calendar month, and the amount of such monthly

payment of the Revenue Fee is equal to the product of (a) 10%, multiplied by (b) the gross revenues of Broken Arrow or CJK, as

the case may be, for such immediately preceding calendar month.

Notwithstanding the foregoing, upon the filing of the federal

or state tax returns of Broken Arrow or CJK, as the case may be, (i) the advisory client shall calculate the Revenue Fee based

on the amount of the advisory client’s gross revenue reported on such federal or state tax returns, and (ii), if the amount

of such calculation is greater than the sum of all monthly Revenue Fees payable to the Company under the Broken Arrow CASA or

the CJK CASA, as the case may be, the applicable advisory client is required to pay to the Company the amount of such difference,

which amount is in addition to all monthly Revenue Fees due to the Company under the Broken Arrow CASA or the CJK CASA.

December 31, 2018, each of Messrs.

18 unchanged sentences

Carra and Abrams would no longer

be significant and stockholders of the Company and would no longer be deemed to be “related persons”

be stockholders of the Company and would no longer be deemed to be “related persons”

under SEC rules.

In exchange for the Stock Redemption, the parties agreed that:

for the Stock Redemption, the parties agreed that:

Company and Broken Arrow, which was owned at the time of the transaction, in whole or in part, directly or indirectly, by

22 unchanged sentences

full force and effect.

state-licensed operators from across the United States have approached Zoned Properties for strategic partnership and/or advisory

services for development and prospective sale-lease back arrangements.

We are continuously evaluating these projects as we seek

development partnerships, prospective sale-lease back arrangements, and explore financing terms with capital funding sources.

believe that we are well positioned to benefit from ancillary development opportunities that the regulated cannabis industry presents

without having to deal with the risk of directly cultivating, distributing, or dispensing the product, which is still illegal

under federal law.

initial holdings and acquisition targets have been in the State of Arizona.

Unlike many other states that have legalized and regulated

cannabis, Arizona’s program has some of the strictest regulations in the country and limits the number of dispensaries that

will be allowed to be open and operate within the state.

While there are hundreds of dispensaries in Denver, Colorado, the entire

state of Arizona can have a maximum of 130 operating dispensaries under current legislation.

Two of our properties in Arizona

(Kingman and Green Valley) are leased to licensed operators that have been awarded dispensary licenses.

This limitation on the

number of dispensaries permitted to operate in Arizona under current legislation will limit our ability to purchase additional

property in Arizona for lease to dispensary operators.

Corporate History and Transactions

April 22, 2016, Zoned Colorado Properties, LLC (“Zoned Colorado”), a wholly owned subsidiary of the Company, entered

into a Contract to Buy and Sell Real Estate (the “Parachute Agreement”) with Parachute Development Corporation (“Seller”)

pursuant to which Zoned Colorado agreed to purchase, and Seller agreed to sell, property in Parachute, Colorado (the “Property”)

for a purchase price of $499,857.

Of the total purchase price, $274,857, or 55%, will be paid in cash at closing and $225,000,

or 45%, will be financed by Seller at an interest rate of 6.5%, amortized over a five-year period, with a balloon payment at the

end of the fifth year.

Payments will be made monthly and there will be no pre-payment penalty.

Pursuant to the terms of the Parachute

Agreement, the parties will cooperate in good faith to complete due diligence during a period of 45 days following execution of

the Parachute Agreement.

The closing is subject to certain contingencies, including that Zoned Colorado must obtain acceptable

financing for the purchase and development of the Property, the grant of a special use permit by the Town of Parachute, approval

of a protected development deal or equivalent agreement by the Town of Parachute, execution of a lease agreement by a prospective

tenant and the prospective tenant’s obtaining a license to cultivate on the Property.

Pursuant to the terms of the Parachute

Agreement, Zoned Colorado will have a right of first refusal on eleven additional lots owned by Seller in Parachute, Colorado.

In April 2016, the Company paid a refundable deposit of $45,000 into escrow in connection with the Parachute Agreement.

December 31, 2019, the Company and Seller have yet to complete the purchase.

discussed above, effective January 1, 2019, the Company, Christopher Carra, Alan Abrams, Clayton Abrams Trust, and Kyle Abrams

Trust and together with the Clayton Abrams Trust, the “Trusts”) entered into a Stock Redemption Agreement.

entry into the Stock Redemption Agreement, (i) Mr.

Carra was the owner 2,028,335 shares of the Company’s common stock, representing

approximately 11.6% of the Company’s outstanding shares as of January 1, 2019, and (ii) Mr.

Abrams, together with the Trusts

(collectively, the “Abrams Affiliates”), owned 3,611,669 shares of the Company’s common stock, representing

approximately 20.7% of the Company’s outstanding common stock as of January 1, 2019.

Pursuant to SEC rules, each of Messrs.

Carra and Abrams was deemed to be a “related person”

due solely to their status as significant stockholders of the

Pursuant to the terms of the Stock Redemption Agreement, the parties agreed that the Company would redeem an aggregate

of 5,640,004 owned by Mr.

Carra and the Abrams Affiliates such that Messrs.

Carra and Abrams would no longer be significant and

stockholders of the Company and would no longer be deemed to be “related persons”

under SEC rules.

May 29, 2020, Chino Valley and Broken Arrow entered into a second amendment to the 2018 Chino Valley Lease, as amended (the “2020

Chino Valley Amendment”), effective May 31, 2020 (“Effective Date”).

Pursuant to the terms of the 2020 Chino

Valley Amendment, among other things, the base rent was adjusted to $32,800 per month, and the base rent was abated from June

1, 2020 to July 31, 2020.

Any increase in the rentable area of the leased premises will result in an increase in all amounts calculated

based on the same, including, without limitation, base rent.

Pursuant to the terms of the 2020 Chino Valley Amendment, the parties

agreed that if there is any change in laws such that the dispensing, sale or cultivation of regulated cannabis upon the premises

is prohibited or materially and adversely affected as mutually and reasonably determined by Chino Valley and Broken Arrow, Broken

Arrow may terminate the 2018 Chino Valley Lease, as amended, by delivering written notice to Chino Valley, together with a termination

payment which shall be the sum of (i) any unpaid rent and interest, plus (ii) 5% of the base rent which would have been earned

after termination for the balance of the term.

In addition, the parties agreed that from the period from the Effective Date to

June 30, 2022 (the “Improvement Period”), Broken Arrow will and/or Broken Arrow will cause its affiliate, CJK, to

invest a combined total of at least $8,000,000 of improvements (“Investment by Tenants”) in and to the property that

is the subject of the Chino Valley Lease and the property that is the subject of the Tempe Lease (discussed below, and collectively

referred to as the “Facilities”).

If Broken Arrow and/or CJK fails to deliver to the Company receipted bills for hard

and soft costs of improvements to the Facilities totaling at least $8,000,000 on or before June 30, 2022, Broken Arrow will be

in default under the Chino Valley Lease and Tempe Lease, as amended.

May 29, 2020, Green Valley and Broken Arrow entered into the First Amendment (the “Green Valley Amendment”) to the

Green Valley Lease, effective May 31, 2020.

Pursuant to the terms of the Green Valley Amendment, among other things, the parties

agreed to abate the fixed base rent of $3,500 from June 1, 2020 to July 31, 2020.

In addition, the Green Valley Amendment provides

that any increase in the rentable area of the leases premises will result in an increase in all amounts calculated based on the

same, including, without limitation, base rent.

The parties also agreed that if there is any change in laws such that the dispensing,

sale or cultivation of cannabis upon the premises is prohibited or materially and adversely affected as mutually and reasonably

determined by Green Valley and Broken Arrow, Broken Arrow may terminate the Green Valley Lease by delivering written notice to

Green Valley, together with a termination payment which shall be the sum of (i) any unpaid rent and interest, plus (ii) 5% of

the base rent which would have been earned after termination for the balance of the term.

May 29, 2020, Zoned Arizona and CJK entered into the First Amendment (the “Tempe Amendment”) to the Tempe Lease, effective

May 31, 2020.

Pursuant to the terms of the Tempe Amendment, among other things, the base rent was increased to $49,200 per month,

and the base rent was abated from June 1, 2020 to July 31, 2020.

Any increase in the rentable area of the leased premises will

result in an increase in all amounts calculated based on the same, including, without limitation, base rent.

Pursuant to the terms

of the Tempe Amendment, the parties agreed that if there is any change in laws such that the dispensing, sale or cultivation of

cannabis upon the premises is prohibited or materially and adversely affected as mutually and reasonably determined by Zoned Arizona

and CJK, CJK may terminate the Tempe Lease by delivering written notice to Zoned Arizona, together with a termination payment

which shall be the sum of (i) any unpaid rent and interest, plus (ii) 5% of the base rent which would have been earned after termination

for the balance of the term.

In addition, under the Tempe Amendment the parties agreed to an Investment by Tenant (as defined

above in the subheading Chino Valley ) to the property that is the subject of the Chino Valley Lease and the property that

is the subject of the Tempe Lease.

If Broken Arrow and/or CJK fails to deliver to the Company receipted bills for hard and soft

costs of improvements to the Facilities totaling at least $8,000,000 on or before June 30, 2022, Broken Arrow and CJK will be

in default under the Chino Valley Lease and Tempe Lease, as amended.

May 29, 2020, Kingman and CJK entered into the First Amendment (the “Kingman Amendment”) to the Kingman Lease, effective

May 31, 2020.

Pursuant to the terms of the Kingman Amendment, among other things, the parties agreed to abate the $4,000 base

rent from June 1, 2020 to July 31, 2020.

In addition, the Kingman Amendment provides that any increase in the rentable area of

the leases premises will result in an increase in all amounts calculated based on the same, including, without limitation, base

The parties also agreed that if there is any change in laws such that the dispensing, sale or cultivation of cannabis upon

the premises is prohibited or materially and adversely affected as mutually and reasonably determined by Kingman and CJK, CJK

may terminate the Kingman Lease by delivering written notice to Kingman, together with a termination payment which shall be the

sum of (i) any unpaid rent and interest, plus (ii) 5% of the base rent which would have been earned after termination for the

balance of the term.

and Broken Arrow, together, operate under the company brand, “Hana Meds”, and are referred to as the Company’s

Significant Tenants.

the years ended December 31, 2020 and 2019, substantially all of the Company’s real estate properties are leased under triple-net

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amounted to $1,176,666 and $1,146,654, which represents 96.8% and 91.0% of the Company’s total revenues, respectively.

the year ended December 31, 2018, rental revenue from significant tenants was classified as rental revenues –

related parties.

target clients who require assistance with the identification and development of regulated cannabis projects.

of December 31, 2020 and 2019, the Company had an asset concentration related to the Significant Tenants.

As of December 31, 2020

and 2019, the Significant Tenants represented approximately 83.2% and 87.1% of the Company’s total assets, respectively.

Jade Holdings, LLC Investment

March 19, 2020, the Company made an initial investment of $100,000 into KCB Jade Holdings, LLC (“KCB”).

for the investment, KCB issued to the Company a convertible debenture (the “Original Debenture”) dated March 19, 2020

(the “Issuance Date”) in the original principal amount of $100,000.

The Original Debenture bears interest at the rate

of 6.5% per annum and matures on March 19, 2025 (the “Maturity Date”).

on the outstanding principal sum of the Original Debenture commences accruing on the Issuance Date and is computed on the basis

of a 365-day year and the actual number of days elapsed, and shall be payable annually due by the first day of each calendar anniversary

following the Issuance Date.

may prepay the Original Debenture at any point after 18 months following the Issuance Date, in whole or in part.

However, if KCB

elects to prepay the Original Debenture prior to the Maturity Date or prior to any conversion as provided in the Original Debenture

in whole or in part, the Company will be entitled to receive a number of KCB units, in addition to such prepayment amount, constituting

10% of the total outstanding units and 10% of the total percentage interest following such issuance and at the time of such issuance.

or after six months from the Issuance Date, the Company may convert all or a portion of the principal balance and all accrued

and unpaid interest due into a number of units equal to the proportion of the outstanding amount being converted multiplied by

33% of the total number of units issued and outstanding at the time of conversion, constituting 33% of the total percentage interest

(the “Conversion Percentage”).

If KCB defaults on payment of the Original Debenture, the Company may, at its option,

extend all conversion rights, through and including the date KCB tenders or attempts to tender payment in full of all amounts

due under the Original Debenture.

Conversion rights terminate upon acceptance by the Company of payment in full of principal,

accrued interest and any other amounts due under the Original Debenture.

(i) KCB does not elect to exercise its rights of prepayment prior to the Maturity Date, (ii) the Company does not elect to exercise

its rights of conversion, and (iii) KCB pays to the Company all outstanding principal and interest accrued and due under the terms

of the Original Debenture on the Maturity Date, the Company will still be entitled to receive a number of units, in addition to

such payment amount, constituting 8% of the total outstanding units and 8% of the total percentage interest following such issuance

and at the time of such issuance.

purposes of the Original Debenture, an “Event of Default”

will be deemed to have occurred upon the occurrence of any

of the following:

fails to make any payment of the principal, interest, costs, indemnities, or expenses

pursuant to the Original Debenture when and as the same shall become due and payable;

occurs any default, whether in whole or in part, in the due observance or performance

of any obligations or other covenants, terms or provisions to be performed by KCB under

the Original Debenture or any of the representations and warranties of KCB ceases to

be true and correct in all respects;

makes a general assignment for the benefit of its creditors;

applies for or consents to the appointment of a receiver, trustee, assignee, custodian,

sequestrator, conservator, liquidator or similar official for itself or any of its assets

and properties;

voluntarily commences any proceeding or file any petition seeking liquidation, reorganization

or other relief as a debtor under the United States Bankruptcy Code or any other liquidation,

conservatorship, bankruptcy, general assignment for the benefit of creditors, moratorium,

rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws

of the United States or other applicable jurisdictions from time to time in effect and

affecting the rights of creditors generally (collectively, the “Debtor Relief Laws”);

involuntary proceeding is commenced or an involuntary petition is filed against KCB seeking

(1) liquidation, reorganization or other relief in respect of KCB or its debts, or of

a substantial part of its assets, under any Debtor Relief Law, or (2) the appointment

of a receiver, trustee, assignee, custodian, sequestrator, conservator, liquidator or

similar official for itself or any of its assets and properties;

consents to the institution of or fails to contest in a timely and appropriate manner,

any proceeding or petition described in clause (f) above.

the occurrence of an Event of Default, the entire principal balance and accrued and unpaid interest outstanding under the Original

Debenture, and all other obligations of KCB under the Original Debenture, will be immediately due and payable and the Company

may exercise any and all rights, power and remedies available to it at law or in equity or other appropriate proceeding, whether

for the specific performance of any covenant or agreement contained in the Original Debenture and proceed to enforce the payment

thereof or any other legal or equitable right of the Company.

amount of principal or interest not paid when due will bear interest at the rate of 12% per annum from the due date thereof until

Original Debenture contains customary representations, warranties and covenants of KCB.

February 19, 2021, after the end of the 2020 fiscal year, the Company made an additional investment of $100,000 into KCB (the

“Additional Investment”).

In exchange, the KCB issued to the Company an amended and restated convertible debenture

(the “A&R Debenture”) on the same date (the “Amendment Date”).

A&R Debenture amends and restates in its entirety the Original Debenture.

Pursuant to the A&R Debenture, the Company and

KCB agreed to certain new terms that did not exist in the Original Debenture, which are described below.

Accrual Commencement.

Pursuant to the A&R Debenture, interest on the Initial Investment begins accruing as of March 19,

2020, while interest on the Additional Investment begins accruing on February 19, 2021.

In the A&R Debenture, the parties acknowledge that each time that KCB sells one of its franchise locations, KCB

earns a fee (an “Initial Fee”), and that KCB also earns a fee when one of its franchise locations renews its franchise

with KCB (a “Renewal Fee”).

Pursuant to the A&R Debenture, the Company and KCB agreed that, as additional consideration

for the Additional Investment, KCB will pay to the Company, in perpetuity, 5% of any Initial Fee received by KCB after the Amendment

Date, as well as 5% of any Renewal Fee received by KCB related to any franchise locations sold after the Amendment Date, in each

case to be paid within five (5) days of receipt of KCB thereof.

addition, following the Amendment Date, KCB agreed not to decrease the amount it charges its franchise locations for an Initial

Fee or any Renewal Fee as in effect on the Amendment Date without the prior written consent of the Company, or to take any other

actions that would reduce the value of KCB’s obligation to the Company with respect to these franchise fee payments.

obligation to pay the Company the franchise fees listed above will survive any termination, repayment or conversion of the A&R

Failure by KCB to pay the Company the franchise fees in the manner described above will result in an event of default,

and, among other things, any due and unpaid franchise fees will accrue interest at 12% per year from the date the obligation was

from the terms described above, the terms of the A&R Debenture are substantially identical to the terms of the Original Debenture.

Commercial Lease

March 3, 2021, subsequent to the 2020 fiscal year end, Gilbert Property Management, LLC (“Gilbert”), a wholly owned

subsidiary of Zoned Properties, Inc.

(the “Company”), entered into that certain Commercial Lease Agreement (the “Lease”),

dated as of February 26, 2021, between Gilbert and AZ2CAL Enterprises, LLC (the “Tenant”).

to the terms of the Lease, Gilbert agreed to rent the property located at 988 S.

182 nd Place, Gilbert, AZ (the

“Property”) to the Tenant for a term of 24 months, from April 1, 2021 to March 31, 2023, for monthly rent of $2,750;

provided, however, that no rent is due for the month of April 2021.

addition, pursuant to the terms of the Lease, the Tenant has an option to purchase the Property (the “Option”) that

can be exercised any time after the fourth month of the lease term, but no later than the end of the 12 th month

of the lease term.

The purchase price of the Property would be $335,000.

If the Tenant exercises its Option, $750 of each lease

payment made prior to close of escrow, along with the security deposit will be credited toward the purchase price of the Property.

If the Tenant exercises its Option, close of escrow will occur no later than 30 days after opening of escrow.

The parties agreed

to make every reasonable attempt to fully execute a purchase contract within seven business days of the Tenant’s notice

of its desire to exercise the Option.

target clients who require assistance with the identification and development of regulated cannabis properties.

Our ideal prospective

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companies with similar business models, independent investors, hedge funds and other real estate investors, hard money lenders,

as well as would be clients, marijuana operators themselves, all of whom, who may compete against us in our efforts to acquire

real estate zoned for cannabis grow and retail operations.

In some instances, we will be competing to acquire real estate with

persons who have no interest in the regulated cannabis business, but have identified value in a piece of real estate that we may

be interested in acquiring.

as well as would be clients, regulated cannabis operators themselves, all of whom, who may compete against us in our efforts to

acquire real estate zoned for cannabis grow and retail operations.

In some instances, we will be competing to acquire real estate

with persons who have no interest in the regulated cannabis business, but have identified value in a piece of real estate that

we may be interested in acquiring.

Estate & General Business Regulations

are subject to applicable provisions of federal and state securities laws and to regulations specifically governing the real estate

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We expect regulations to get tighter as time goes on.

November 2010, Arizona voters passed the Arizona Medical Marijuana Act (“AMMA”).

The AMMA designates the Arizona Department

of Health Services (“ADHS”) as the licensing authority for the program.

ADHS is tasked with issuing Registry Identification

Cards (“RIC”) to qualifying patients, designated caregivers, and dispensary agents, as well as selecting, registering,

and providing oversight for nonprofit medical marijuana dispensaries.

With permission from ADHS, qualifying patients or their

caregivers may cultivate marijuana if the patient lives more than 25 miles from a dispensary.

and State Regulation of Cannabis

Supreme Court has ruled that it is the federal government that has the right to regulate and criminalize cannabis, even for

medical purposes.

Therefore, federal law criminalizing the use of marijuana preempts state laws that legalize its use for medicinal

federal government regulates drugs through the CSA, which places controlled substances, including cannabis, in a schedule.

Cannabis is classified as a Schedule I controlled substance.

A Schedule I controlled substance is defined as a substance

that has no currently accepted medical use in the United States, a lack of safety for use under medical supervision and a high

potential for abuse.

Department of Justice (the “DOJ”) defines Schedule I drugs, substances or chemicals

as “drugs with no currently accepted medical use and a high potential for abuse.”

However, the U.S.

Food and Drug

Administration (the “FDA”) has approved Epidiolex, which contains a purified form of the drug CBD, a non-psychoactive ingredient

in the cannabis plant, for the treatment of seizures associated with two epilepsy conditions.

The FDA has not approved cannabis

or cannabis compounds as a safe and effective drug for any other condition.

Moreover, pursuant to the Agriculture Improvement

Act of 2018 (the “Farm Bill”), CBD remains a Schedule I controlled substance under the CSA, with a narrow exception

for CBD derived from hemp with a tetrahydrocannabinol (“THC”) concentration of less than 0.3%.

Company maintains its operations so as to remain in compliance with the CSA.

Even in those jurisdictions in which the manufacture

and use of medical marijuana has been legalized at the state level, the possession, use and cultivation all remain violations

of federal law that are punishable by imprisonment and substantial fines, and the prescription of marijuana is a violation of

Moreover, individuals and entities may violate federal law if they intentionally aid and abet another in violating

these federal controlled substance laws, or conspire with another to violate them.

inconsistencies between federal and state regulation of cannabis were addressed in a memorandum (the “Cole Memo”)

which then-Deputy Attorney General James Cole sent to all U.S.

District Attorneys in 2013 outlining certain priorities for the

DOJ relating to the prosecution of cannabis offenses.

The Cole Memo acknowledged that, notwithstanding the designation of cannabis

as a Schedule I controlled substance at the federal level, several states had enacted laws authorizing the use of cannabis for

medical purposes.

The Cole Memo noted that jurisdictions that have enacted laws legalizing cannabis in some form have also implemented

strong and effective regulatory and enforcement systems to control the cultivation, processing, distribution, sale and possession

As such, conduct in compliance with those laws and regulations is less likely to implicate the Cole Memo’s

enforcement priorities.

The DOJ did not provide (and has not provided since) specific guidelines for what regulatory and enforcement

systems would be deemed sufficient under the Cole Memo.

In light of limited investigative and prosecutorial resources, the Cole

Memo concluded that the DOJ should be focused on addressing only the most significant threats related to cannabis, such as distribution

of cannabis from states where cannabis is legal to those where cannabis is illegal, the diversion of cannabis revenues to illicit

drug cartels and sales of cannabis to minors.

January 4, 2018, former U.S.

Attorney General Jeff Sessions issued a new memorandum which rescinded the Cole Memo (the “Sessions

Memo”).

The Sessions Memo stated, in part, that current law reflects “Congress’

determination that cannabis

is a dangerous drug and cannabis activity is a serious crime,”

Sessions directed all U.S.

Attorneys to enforce

the laws enacted by Congress by following well-established principles when pursuing prosecutions related to cannabis activities.

The Company is not aware of any prosecutions of investment companies doing routine business with licensed marijuana related businesses

in light of the DOJ position following issuance of the Sessions Memo.

However, there can be no assurance that the federal government

will not enforce federal laws relating to cannabis in the future.

As a result of the Sessions Memo, federal prosecutors are now

free to utilize their prosecutorial discretion to decide whether to prosecute cannabis activities, despite the existence of state-level

laws that may be inconsistent with federal prohibitions.

No direction was given to federal prosecutors in the Sessions Memo as

to the priority they should ascribe to such cannabis activities, and thus it is uncertain how active U.S.

federal prosecutors

will be in relation to such activities.

prosecutors appear to continue to use the Cole Memo’s priorities as an enforcement guide.

Merrick Garland, who became Attorney

General on March 10, 2021 has indicated that he would deprioritize enforcement of low-level cannabis crimes such

as possession, and has shared his view that the government should focus on large-scale criminal enterprises that circumvent state

legalization laws instead of going after people who abide by local cannabis policies.

The Company believes it is too soon to determine

what prosecutorial effects will be created by the rescission of the Cole Memo or any replacement thereof and when or if the Sessions

Memo will be rescinded.

President Joseph R.

Biden, who assumed office in January 2021, has not yet indicated whether and when

he will decriminalize or legalize cannabis and has previously stated that he is opposed to legalization.

The sheer size of the

cannabis industry, in addition to participation by state and local governments and investors, suggests that a large-scale federal

enforcement operation would more than likely create unwanted political backlash for the DOJ and the current administration.

is also possible that the change of Congressional leadership in January 2021 could change the priorities of Congress and encourage

reconciliation of federal and state laws.

Regardless, at this time, cannabis remains a Schedule I controlled substance at

the federal level.

federal government has always reserved the right to enforce federal law in regard to the sale and

disbursement of medical or adult use cannabis, even if state law authorizes such sale and disbursement.

It is unclear whether

the risk of enforcement has been altered.

legislative safeguard for the medical cannabis industry, appended to the federal budget bill, remains in place following the rescission

of the Cole Memo.

For fiscal years 2015, 2016, 2017 and 2018, Congress adopted a so-called “rider”

to the Consolidated Appropriations Acts (formerly referred to as the Rohrabacher-Farr Amendment and currently referred to as the

Rohrabacher-Blumenauer Amendment) to prevent the federal government from using congressionally appropriated funds to enforce federal

cannabis laws against regulated medical cannabis actors operating in compliance with state and local law.

The Rohrabacher-Blumenauer

Amendment was included in the fiscal year 2018 budget passed on March 23, 2018.

The Rohrabacher-Blumenauer Amendment was

included in the consolidated appropriations bill signed into legislation by former President Trump in February 2019.

the Rohrabacher-Blumenauer Amendment, former President Trump issued a signing statement noting that the Rohrabacher-Blumenauer

Amendment “provides that the Department of Justice may not use any funds to prevent implementation of medical marijuana

laws by various States and territories,”

and further stating “I will treat this provision consistent with the President’s

constitutional responsibility to faithfully execute the laws of the United States.”

On June 20, 2019, the House approved

a broader amendment that, in addition to protecting state medical cannabis programs, would also protect state adult use programs.

On September 26, 2019, the Senate Appropriations Committee declined to take up the broader amendment but did approve the

Rohrabacher-Blumenauer Amendment for the fiscal year 2020 spending bill.

On September 27, 2019, the Rohrabacher-Blumenauer

Amendment was renewed as part of a stopgap spending bill, in effect through November 21, 2019, and was then renewed through

a series of stopgap spending bills passed in 2020.

On December 27, 2020, the amendment was renewed through the signing of

the fiscal year 2021 omnibus spending bill, effective through September 30, 2021.

Despite the rescission of the Cole Memo,

the DOJ appears to continue to adhere to the enforcement priorities set forth in the Cole Memo.

Cole Memo and the Rohrabacher-Blumenauer Amendment gave licensed cannabis operators (particularly medical cannabis operators)

and investors in states with legal regimes greater certainty regarding the DOJ’s enforcement priorities and the risk of

operating cannabis businesses.

While the Sessions Memo has introduced some uncertainty regarding federal enforcement, the cannabis

industry continues to experience growth in legal medical and adult use markets across the United States.

Vice President Kamala

Harris is the lead sponsor of the Marijuana Opportunity, Reinvestment, and Expungement (MORE) Act, which seeks to end the federal

prohibition of marijuana, among other things, but in March 2020, it was reported that Vice President Harris has adopted the same

position as President Biden, who opposes legalization.

Currently, there is no guarantee that state laws legalizing and regulating

the sale and use of cannabis will remain in place or that local governmental authorities will not limit the applicability of state

laws within their respective jurisdictions.

Unless and until the U.S.

Congress amends the CSA with respect to cannabis (and as

to the timing or scope of any such potential amendments there can be no assurance), there is a risk that federal authorities may

enforce current U.S.

federal law criminalizing cannabis.

Supreme Court has ruled that it is the federal government that has the right to regulate and criminalize cannabis, and

federal law criminalizing the use of marijuana preempts state laws that legalize its use, cannabis is largely regulated at the

laws that permit and regulate the production, distribution and use of cannabis for adult use or medical purposes are in direct

conflict with the CSA, which makes cannabis use and possession federally illegal.

Although certain states and territories of the

authorize medical and/or adult use cannabis production and distribution by licensed or registered entities, under U.S.

law, the possession, use, cultivation and transfer of cannabis and any related drug paraphernalia is illegal and any such acts

are criminal acts under federal law under any and all circumstances under the CSA.

Although the Company’s activities are

believed to be compliant with applicable state and local laws, strict compliance with state and local laws with respect to cannabis

may neither absolve the Company of liability under U.S.

federal law, nor may it provide a defense to any federal proceeding which

may be brought against the Company.

of December 31, 2020, 35 states, plus the District of Columbia (and the territories of Guam, Puerto Rico, the U.S.

Islands and the Northern Mariana Islands), have legalized the cultivation and sale of cannabis for medical purposes.

those states, the sale and possession of cannabis is legal for both medical and adult use, and the District of Columbia has legalized

adult use but not commercial sale.

In November 2020, voters in Arizona, Montana, New Jersey and South Dakota voted by referendum

to legalize cannabis for adult use, and voters in Mississippi and South Dakota voted to legalized cannabis for medical use, and

in February 2021, the Virginia legislature approved a bill that would legalize cannabis for adult use beginning in 2024.

bill is awaiting signature by the governor, and if signed, Virginia will be the first southern state to legalize cannabis for

Also in February 2021, New Jersey Governor Phil Murphy signed three bills into law that legalize cannabis for adult

addition, in November 2010, Arizona voters passed the Arizona Medical Marijuana Act (“AMMA”).

The AMMA designates

the Arizona Department of Health Services (“ADHS”) as the licensing authority for the program.

ADHS is tasked with

issuing Registry Identification Cards (“RIC”) to qualifying patients, designated caregivers, and dispensary agents,

as well as selecting, registering, and providing oversight for nonprofit medical marijuana dispensaries.

With permission from

ADHS, qualifying patients or their caregivers may cultivate marijuana if the patient lives more than 25 miles from a dispensary.

patients can legally possess and purchase medical marijuana under Arizona law as long as they hold a RIC.

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will be about 112 dispensaries statewide - one in each CHAA not part of one of Arizona’s Native American Indian Reservations.

Government classifies marijuana as a schedule-I controlled substance under the CSA.

The CSA makes it illegal under federal

law to manufacture, distribute, or dispense marijuana.

The Company maintains its operations so as to remain in compliance with

Even in those jurisdictions in which the manufacture and use of medical marijuana has been legalized at the state level,

the possession, use and cultivation all remain violations of federal law that are punishable by imprisonment and substantial fines,

and the prescription of marijuana is a violation of federal law.

Moreover, individuals and entities may violate federal law if

they intentionally aid and abet another in violating these federal controlled substance laws, or conspire with another to violate

Supreme Court has ruled in United States v.

Oakland Cannabis Buyers’

Raich that it is the federal government that has the right to regulate and criminalize cannabis, even for medical purposes.

Therefore, federal law criminalizing the use of marijuana pre-empts state laws that legalize its use for medicinal purposes.

January 4, 2018, then-U.S.

Attorney General Jeff Sessions issued the Sessions Memo, rescinding the Cole Memo and related internal

guidance issued by the DOJ regarding federal law enforcement priorities involving marijuana.

The Sessions Memo instructs federal

prosecutors that when determining which marijuana-related activities to prosecute under federal law with the DOJ’s finite

resources, prosecutors should follow the well-established principles set forth in the U.S.

Attorneys’

Manual governing all

federal prosecutions.

The Sessions Memo states that “these principles require federal prosecutors deciding which cases to

prosecute to weigh all relevant considerations, including federal law enforcement priorities set by the Attorney General, the

seriousness of the crime, the deterrent effect of criminal prosecution, and the cumulative impact of particular crimes on the

community.”

The Sessions Memo went on to state that given the DOJ’s well-established general principles, “previous

nationwide guidance specific to marijuana is unnecessary and is rescinded, effective immediately.”

is unclear at this time what impact the Sessions Memo will have on the medical-use marijuana industry.

In addition, pursuant to

the current omnibus spending bill previously approved by Congress, the DOJ was prohibited from using funds appropriated by Congress

to prevent states from implementing their medical-use cannabis laws.

This provision, however, will expire on September 30, 2020.

There is no assurance that Congress will approve inclusion of a similar prohibition on DOJ spending in the appropriations bill

for future years.

Although we are not engaged in the purchase, sale, growth, cultivation, harvesting, or processing of medical-use

marijuana products, we lease our properties to tenants who engage in such activities, and therefore strict enforcement of federal

prohibitions regarding marijuana could irreparably harm our business, subject us to criminal prosecution and/or adversely affect

the trading price of our securities.

Additionally,

financial transactions involving proceeds generated by marijuana-related conduct can form the basis for prosecution under the

federal money laundering statutes, unlicensed money transmitter statutes and the Bank Secrecy Act.

Prior to the DOJ’s rescission

of the “Cole Memo”, supplemental guidance from the DOJ issued under the Obama Administration directed federal prosecutors

to consider the federal enforcement priorities enumerated in the “Cole Memo”

when determining whether to charge institutions

or individuals with any of the financial crimes described above based upon marijuana-related activity.

It is unclear what impact

the recent rescission of the “Cole Memo”

will have, but federal prosecutors may increase enforcement activities against

institutions or individuals that are conducting financial transactions related to marijuana activities.

prosecutors have significant discretion and no assurance can be given that the federal prosecutor in each judicial district where

we own a property will not choose to strictly enforce the federal laws governing marijuana production or distribution.

in the federal government’s enforcement posture with respect to state-licensed cultivation of medical-use cannabis, including

the enforcement postures of individual federal prosecutors in judicial districts where we own or may purchase properties, would

result in our inability to execute our business plan, and we would likely suffer significant losses with respect to our investment

in marijuana facilities in the United States, which would adversely affect the trading price of our securities.

Furthermore, following

any such change in the federal government’s enforcement position, we could be subject to criminal prosecution, which could lead

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

will continue to monitor compliance on an ongoing basis in accordance with our compliance program and standard operating procedures.

While our operations are in full compliance with all applicable state laws, regulations and licensing requirements, such activities

remain illegal under federal law.

For the reasons described above and the risks further described in the section entitled “Risk

Factors,”

there are significant risks associated with our business.

transactions involving proceeds generated by marijuana-related conduct can form the basis for prosecution under the federal money

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institutions can provide services to marijuana-related businesses consistent with their obligations under the Bank Secrecy Act.

Prior to the DOJ’s announcement in January 2018 of the rescission of the “Cole Memo”

and related memoranda,

supplemental guidance from the DOJ directed federal prosecutors to consider the federal enforcement priorities enumerated in the

“Cole Memo”

when determining whether to charge institutions or individuals with any of the financial crimes described

above based upon marijuana-related activity.

Prior to the DOJ’s announcement in 2018 of the rescission of the Cole Memo and related memoranda, supplemental guidance

from the DOJ directed federal prosecutors to consider the federal enforcement priorities enumerated in the Cole Memo when determining

whether to charge institutions or individuals with any of the financial crimes described above based upon marijuana-related activity.

Consequently,

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governmental regulations or administrative policies and procedures, when and if promulgated, could have on our business.

of December 31, 2019, we had three full-time employees, our chief executive officer, a Director of Sustainability Services and

an administrative staff member.

We have established an extensive network of external partners, contractors, and consultants to

outsource to in an effort to minimize administrative overhead and maximize efficiency.

of December 31, 2020, we had one full-time employee, our chief executive officer, and multiple part-time employees who operate

as independent contractors of the Company.

We have established an extensive network of external partners, contractors, and consultants

to which we outsource various operational tasks in an effort to minimize administrative overhead and maximize efficiency.

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