mrmd-20240930

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period ended September 30, 2024

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________________ to ___________________

Commission File number 0-54433

MARIMED INC.

(Exact Name of Registrant as Specified in Its Charter)


Delaware						27-4672745
(State or Other Jurisdiction of Incorporation or Organization)						(I.R.S. Employer Identification No.)

10 Oceana Way

Norwood, MA 02062

(Address of Principal Executive Offices)

781-277-0007

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act: None.

Title of each class

Ticker symbol(s)

Name of each exchange on which registered

Not Applicable

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated filer o

Accelerated filer

Non-accelerated filer o

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of November 7, 2024, 381,306,387 shares of the registrant’s common stock were outstanding.

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MariMed Inc.

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		Page
PART I – FINANCIAL INFORMATION

Cautionary Note Regarding Forward-Looking Statements		3
Item 1.	Financial Statements	4
	Condensed Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023 (unaudited)	4
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2024 and 2023 (unaudited)	6
	Condensed Consolidated Statements of Stockholders’ Equity for the Nine Months Ended September 30, 2024 and 2023 (unaudited)	7
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2024 and 2023 (unaudited)	9
	Notes to Condensed Consolidated Financial Statements (unaudited)	12
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3.	Quantitative and Qualitative Disclosure About Market Risk	42
Item 4.	Controls and Procedures	43

PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	43
Item 1A.	Risk Factors	43
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43
Item 3.	Defaults Upon Senior Securities	43
Item 4.	Mine Safety Disclosures	43
Item 5.	Other Information	44
Item 6.	Exhibits	45
Signature		46

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains certain forward-looking statements and information relating to MariMed Inc. that is based on the beliefs of MariMed Inc.’s management, as well as assumptions made by and information currently available to the Company. In some cases, you can identify these statements by forward-looking words such as “anticipates,” “believes,” “could,” “should,” “estimates,” “expects,” “intends,” “may,” “plans,” “predicts,” “projects,” “will,” or other similar or comparable words. Any statements contained in this Quarterly Report on Form 10-Q that are not statements of historical facts may be deemed to be forward-looking statements. Such statements reflect the current views of the Company with respect to future events, including consummation of pending transactions, launch of new products, expanded distribution of existing products, obtainment of new licenses, estimates and projections of revenue, EBITDA and Adjusted EBITDA and other information about the Company's business, business prospects and strategic growth plan, which are based on certain assumptions of its management, including those described in this Quarterly Report on Form 10-Q. These statements are not a guarantee of future performance and involve risk and uncertainties that are difficult to predict, including, among other factors, changes in demand for the Company’s services and products, changes in the law and its enforcement, timing and outcome of regulatory processes and changes in the economic environment.

Additional important factors that could cause actual results to differ materially from those in these forward-looking statements are also discussed in Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in this Quarterly Report on Form 10-Q and Part I, Item 1A, “Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. Any forward-looking statement made by the Company in this Quarterly Report on Form 10-Q speaks only as of the date on which this Quarterly Report on Form 10-Q was first filed. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise.

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PART I FINANCIAL INFORMATION

Item 1. Financial Statements

MariMed Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share amounts)

(unaudited)


	September 30, 2024		December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	9,788	$	14,645
Accounts receivable, net of allowances of $460 and $764 at September 30, 2024 and December 31, 2023, respectively	7,321		7,199
Inventory	34,975		25,306
Deferred rents receivable	575		630
Notes receivable, current portion	52		52
Investments, current portion	—		88
Due from related parties	302		105
Other current assets	3,667		3,407
Total current assets	56,680		51,432
Property and equipment, net	95,496		89,103
Intangible assets, net	19,522		17,012
Goodwill	15,812		11,993
Investments, net of current portion	—		221
Notes receivable, net of current portion	814		814
Operating lease right-of-use assets	8,977		9,716
Finance lease right-of-use assets	4,278		3,295
Other assets	11,102		12,537
Total assets	$	212,681	$	196,123

Liabilities, mezzanine equity and stockholders’ equity
Current liabilities:

Mortgages and notes payable, current portion	$	4,371	$	723
Accounts payable	12,983		9,001
Accrued expenses and other	6,276		3,549
Income taxes payable	17,042		14,434
Operating lease liabilities, current portion	1,974		1,945
Finance lease liabilities, current portion	1,951		1,210
Total current liabilities	44,597		30,862

Mortgages and notes payable, net of current portion	71,120		65,652

Operating lease liabilities, net of current portion	7,784		8,455
Finance lease liabilities, net of current portion	2,239		2,140

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MariMed Inc.

Condensed Consolidated Balance Sheets (continued)

(in thousands, except share and per share amounts)

(unaudited)


	September 30, 2024		December 31, 2023
Other liabilities	100		100
Total liabilities	125,840		107,209

Commitments and contingencies

Mezzanine equity
Series B convertible preferred stock, $0.001 par value; 4,908,333 shares authorized, issued and outstanding at September 30, 2024 and December 31, 2023	14,725		14,725
Series C convertible preferred stock $0.001 par value; 12,432,432 shares authorized; 1,155,274 shares issued and outstanding at both September 30, 2024 and December 31, 2023	4,275		4,275
Total mezzanine equity	19,000		19,000

Stockholders’ equity
Undesignated preferred stock, $0.001 par value; 32,659,235 shares authorized; zero shares issued and outstanding at September 30, 2024 and December 31, 2023	—		—
Common stock, $0.001 par value; 700,000,000 shares authorized; 380,992,386 and 375,126,352 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively	381		375

Additional paid-in capital	173,111		171,144
Accumulated deficit	(103,915)		(99,955)
Noncontrolling interests	(1,736)		(1,650)
Total stockholders’ equity	67,841		69,914
Total liabilities, mezzanine equity and stockholders’ equity	$	212,681	$	196,123

See accompanying notes to the unaudited condensed consolidated financial statements.

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MariMed Inc.

Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)

(unaudited)


	Three months ended				Nine months ended
	September 30,				September 30,
	2024		2023		2024		2023

Revenue	$	40,591	$	38,800	$	118,962	$	109,699
Cost of revenue	23,813		21,962		68,803		61,097
Gross profit	16,778		16,838		50,159		48,602

Operating expenses:
Personnel	7,255		5,916		20,678		16,191
Marketing and promotion	1,828		1,585		5,446		4,397
General and administrative	6,100		6,135		19,044		15,520
Acquisition-related and other	371		32		805		647
Bad debt	(116)		(122)		(131)		(127)
Total operating expenses	15,438		13,546		45,842		36,628

Income from operations	1,340		3,292		4,317		11,974

Interest and other (expense) income:
Interest expense	(1,705)		(2,482)		(5,058)		(7,627)
Interest income	25		29		76		243

Other expense, net	—		(646)		(50)		(1,556)
Total interest and other expense, net	(1,680)		(3,099)		(5,032)		(8,940)

(Loss) income before income taxes	(340)		193		(715)		3,034
Provision for income taxes	655		4,462		3,211		8,902

Net loss	(995)		(4,269)		(3,926)		(5,868)
Less: Net income (loss) attributable to noncontrolling interests	16		(10)		34		(6)
Net loss attributable to common stockholders	$	(1,011)	$	(4,259)	$	(3,960)	$	(5,862)

Net loss per share attributable to common stockholders:
Basic	$	(0.00)	$	(0.01)	$	(0.01)	$	(0.02)
Diluted	$	(0.00)	$	(0.01)	$	(0.01)	$	(0.02)

Weighted average common shares outstanding:
Basic	380,599		373,081		378,449		359,156
Diluted	380,599		373,081		378,449		359,156

See accompanying notes to the unaudited condensed consolidated financial statements.

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MariMed Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except share amounts)

(unaudited)


	Nine months ended September 30, 2024
	Common stock			Common stock subscribed but not issued			Additional paid-in capital		Accumulated deficit		Non- controlling interests		Total stockholders’ equity
	Shares	Par value		Shares	Amount
Balances at January 1, 2024	375,126,352	$	375	—	$	—	$	171,144	$	(99,955)	$	(1,650)	$	69,914





Release of shares under stock grants	335,300	—		—	—		—		—		—		—





Common stock issued under licensing agreement	3,614	—		—	—		1		—		—		1


Distributions to non-controlling interests	—	—		—	—		—		—		(46)		(46)
Stock-based compensation	—	—		—	—		244		—		—		244
Net (loss) income	—	—		—	—		—		(1,298)		6		(1,292)
Balances at March 31, 2024	375,465,266	375		—	—		171,389		(101,253)		(1,690)		68,821





Release of shares under stock grants	950,707	1		—	—		(1)		—		—		—
Standalone warrants issued as payment for services	—	—		—	—		218		—		—		218

Shares issued as purchase consideration - business acquisition	3,917,267	4		—	—		987		—		—		991



Common stock issued under licensing agreement	5,550	—		—	—		1		—		—		1


Distributions to non-controlling interests	—	—		—	—		—		—		(37)		(37)
Stock-based compensation	—	—		—	—		248		—		—		248
Net (loss) income	—	—		—	—		—		(1,651)		12		(1,639)
Balances at June 30, 2024	380,338,790	380		—	—		172,842		(102,904)		(1,715)		68,603





Release of shares under stock grants	719,462	1		—	—		(1)		—		—		—
Shares of newly vested common stock surrendered to the Company to satisfy tax withholding obligations	(85,071)	—		—	—		(15)		—		—		(15)





Common stock issued under licensing agreement	19,205	—		—	—		5		—		—		5


Distributions to non-controlling interests	—	—		—	—		—		—		(37)		(37)
Stock-based compensation	—	—		—	—		280		—		—		280
Net (loss) income	—	—		—	—		—		(1,011)		16		(995)
Balances at September 30, 2024	380,992,386	$	381	—	$	—	$	173,111	$	(103,915)	$	(1,736)	$	67,841

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MariMed Inc.

Condensed Consolidated Statements of Stockholders’ Equity (continued)

(in thousands, except share amounts)

(unaudited)


	Nine months ended September 30, 2023
	Common stock			Common stock subscribed but not issued			Additional paid-in capital		Accumulated deficit		Non- controlling interests		Total stockholders’ equity
	Shares	Par value		Shares	Amount
Balances at January 1, 2023	341,474,728	$	341	70,000	$	39	$	142,365	$	(83,924)	$	(1,511)	$	57,310
Common stock subscribed but not issued	—	—		5,025	2		—		—		—		2
Issuance of subscribed shares	70,000	—		(70,000)	(39)		39		—		—		—





Warrants issued in connection with debt	—	—		—	—		5,454		—		—		5,454
Shares issued as purchase consideration - Ermont Inc.	6,580,390	7		—	—		2,987		—		—		2,994





Common stock issued under licensing agreement	1,793	—		—	—		1		—		—		1




Distributions to non-controlling interests	—	—		—	—		—		—		(34)		(34)
Stock-based compensation	—	—		—	—		206		—		—		206
Net loss	—	—		—	—		—		(645)		(19)		(664)
Balances at March 31, 2023	348,126,911	348		5,025	2		151,052		(84,569)		(1,564)		65,269

Issuance of subscribed shares	5,025	—		(5,025)	(2)		2		—		—		—
Exercise of stock options	157,752	—		—	—		35		—		—		35



Release of shares under stock grants	349,999	1		—	—		(1)		—		—		—
Conversion of preferred stock to common stock	21,383,040	21		—	—		15,802		—		—		15,823

Purchase of minority interests in certain of the Company's subsidiaries	450,000	1		—	—		4		—		(5)		—




Common stock issued to settle obligations	400,000	—		—	—		160		—		—		160
Common stock issued under licensing agreement	1,290	—		—	—		—		—		—		—
Common stock issued to purchase property and equipment	740,741	1		—	—		299		—		—		300


Distributions to non-controlling interests	—	—		—	—		—		—		(47)		(47)
Stock-based compensation	—	—		—	—		299		—		—		299
Net (loss) income	—	—		—	—		—		(958)		23		(935)
Balances at June 30, 2023	371,614,758	372		—	$	—	167,652		(85,527)		(1,593)		80,904


Exercise of stock options	330,000	—		—	—		74		—		—		74




Conversion of preferred stock to common stock	3,921,670	4		—	—		2,898		—		—		2,902







Common stock issued under licensing agreement	5,530	—		—	—		2		—		—		2



Distributions to non-controlling interests	—	—		—	—		—		—		(47)		(47)
Stock-based compensation	—	—		—	—		296		—		—		296
Net loss	—	—		—	—		—		(4,259)		(10)		(4,269)
Balances at September 30, 2023	375,871,958	$	376	—	$	—	$	170,922	$	(89,786)	$	(1,650)	$	79,862

See accompanying notes to the unaudited condensed consolidated financial statements.

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MariMed Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)


	Nine months ended
	September 30,
	2024		2023
Cash flows from operating activities:
Net loss attributable to common stockholders	$	(3,960)	$	(5,862)
Net income (loss) attributable to noncontrolling interests	34		(6)
Adjustments to reconcile net loss to cash provided by operating activities:
Depreciation and amortization of property and equipment	5,749		3,838
Amortization of intangible assets	2,065		2,181
Stock-based compensation	772		801
Amortization of warrants issued as payment for services received	218		—


Amortization of original debt issuance discount	—		206
Amortization of debt discount	265		2,559
Amortization of debt issuance costs	55		—
Payment-in-kind interest	151		301

Bad debt income	(131)		(127)
Obligations settled with common stock	7		463

(Gain) loss on disposal of assets	(20)		906
Gain on finance lease adjustment	—		(31)
Write-down of prepaid purchase consideration	—		200


Loss (gain) on changes in fair value of investments	145		(16)


Changes in operating assets and liabilities:
Accounts receivable, net	9		(2,065)
Deferred rents receivable	55		55
Inventory	(9,669)		(4,728)
Other current assets	404		2,040
Other assets	1,434		(300)
Accounts payable	4,220		1,868
Accrued expenses and other	2,786		(132)
Income taxes payable	2,609		2,525
Net cash provided by operating activities	7,198		4,676

Cash flows from investing activities:
Purchases of property and equipment	(10,902)		(14,749)
Business combinations, net of cash acquired, and asset purchases	(4,250)		(2,987)
Advances toward future business combinations and asset purchases	—		(250)
Purchases of investments	—		(187)
Purchases and renewals of cannabis licenses	(663)		(626)
Issuance of notes receivable	—		(879)
Proceeds from notes receivable	13		99

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MariMed Inc.

Condensed Consolidated Statements of Cash Flows (continued)

(in thousands)

(unaudited)


	Nine months ended
	September 30,
	2024		2023
Return on investment	44		—
Proceeds from disposal of assets	22		—

Due from related party	(197)		(58)

Net cash used in investing activities	(15,933)		(19,637)

Cash flows from financing activities:
Proceeds from term loan	—		29,100
Proceeds from Construction to Permanent Commercial Real Estate Mortgage Loan	5,077		—
Proceeds from mortgages	1,163		—
Payment of third-party debt issuance costs in connection with debt	—		(1,798)
Principal payments of term loan	—		(1,500)


Principal payments of mortgages	(207)		(489)
Repayment and retirement of mortgages	—		(778)
Principal payments of promissory notes	(783)		(30)
Repayment and retirement of promissory notes	—		(5,503)
Proceeds from exercise of stock options	—		109


Principal payments of finance leases	(1,252)		(500)

Distributions	(120)		(128)
Net cash provided by financing activities	3,878		18,483

Net (decrease) increase in cash and cash equivalents	(4,857)		3,522
Cash and equivalents, beginning of year	14,645		9,737
Cash and cash equivalents, end of period	$	9,788	$	13,259

Supplemental disclosure of cash flow information:
Cash paid for interest	$	4,901	$	4,766
Cash paid for income taxes	$	877	$	6,904

Non-cash activities:
Common stock issued as purchase consideration	$	991	$	2,994
Common stock issued to purchase minority interests in certain of the Company's subsidiaries	$	—	$	5


Present value of promissory notes issued as purchase consideration	$	3,000	$	4,569

Warrants to purchase common stock issued with debt	$	—	$	5,454

Liability recorded for building improvements	$	—	$	1,997
Notes payable issued to purchase property and equipment	$	396	$	158

Entry into new operating leases	$	—	$	5,366
Entry into new finance leases	$	2,816	$	2,309
Write-off of finance leases	$	1,112	$	—

Return of stock to the Company	$	15	$	—
Issuance of common stock associated with subscriptions	$	—	$	41

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MariMed Inc.

Condensed Consolidated Statements of Cash Flows (continued)

(in thousands)

(unaudited)


	Nine months ended
	September 30,
	2024		2023
Conversion of preferred stock to common stock	$	—	$	18,725
Adjustment to purchase price allocation to reclassify certain acquired intangible assets to goodwill	$	3,819	$	—

See accompanying notes to the unaudited condensed consolidated financial statements.

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MariMed Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

(1) BASIS OF PRESENTATION

Business

MariMed Inc. (“MariMed” or the “Company”) is a multi-state operator in the United States cannabis industry. MariMed develops, operates, manages and optimizes state-of-the-art, regulatory-compliant facilities for the cultivation, production, and dispensing of medical and adult-use cannabis. MariMed also licenses its proprietary brands of cannabis along with other top brands in domestic markets.

Basis of Presentation

In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting only of normal recurring items, necessary for their fair presentation in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

The Company completed two acquisitions during the nine months ended September 30, 2024 that it accounted for as asset purchases (see Note 2). On April 9, 2024 (the "Allgreens Acquisition Date"), the Company acquired 100% of the membership interests of Allgreens Dispensary, LLC ("Allgreens"), which held a conditional adult-use cannabis dispensary license in Illinois. On April 5, 2024 (the "MedLeaf Acquisition Date"), the Company acquired 100% of the membership interests of Our Community Wellness & Compassionate Care Center, Inc. ("MedLeaf"), which held a retail dispensary license in Maryland. The MedLeaf dispensary had been closed since July 1, 2023, but was reopened by the Company on August 19, 2024, upon receiving regulatory approval to commence adult use retail sales.

On March 9, 2023 (the "Ermont Acquisition Date"), the Company acquired the operating assets of Ermont, Inc. ("Ermont"), a medical-licensed vertical cannabis operator located in Quincy, Massachusetts (the "Ermont Acquisition"). The financial results of Ermont are included in the Company's condensed consolidated financial statements since the Ermont Acquisition Date (see Note 2).

Interim results are not necessarily indicative of results for the full fiscal year or any future interim period. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (the “Annual Report”), which was filed with the U.S. Securities and Exchange Commission (“SEC”) on March 7, 2024.

Certain reclassifications, not affecting previously reported net income or cash flows, have been made to the previously issued financial statements to conform to the current period presentation.

Significant Accounting Policies

The Company’s significant accounting policies are disclosed in Note 2 to the Consolidated Financial Statements in the Annual Report. There were no material changes to the Company's significant accounting policies during the nine-month period ended September 30, 2024.

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of MariMed and its wholly- and majority-owned subsidiaries. Intercompany transactions and balances have been eliminated in consolidation.

Noncontrolling interests represent third-party minority ownership interests in the Company’s majority-owned consolidated subsidiaries. Net income attributable to noncontrolling interests is reported in the condensed consolidated statements of operations, and the value of minority-owned interests is presented as a component of equity within the condensed consolidated balance sheets.

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Use of Estimates and Judgments

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting periods. Significant estimates and judgments relied upon in preparing these condensed consolidated financial statements include accounting for business combinations and asset purchases, inventory valuations, assumptions used to determine the fair value of stock-based compensation, and intangible assets and goodwill. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all highly liquid investments with a maturity date of three months or less to be cash equivalents. The fair values of these investments approximate their carrying values.

The Company had $0.2 million and $0.1 million of cash held in escrow at September 30, 2024 and December 31, 2023, respectively.

Fair Value of Financial Instruments

The carrying amounts of the Company’s financial instruments approximate their fair values and include cash equivalents, accounts receivable, deferred rents receivable, notes receivable, term loans, mortgages and notes payable, and accounts payable.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. The three-tier fair value hierarchy is based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is as follows:

•Level 1. Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

•Level 2. Level 2 applies to assets or liabilities for which there are inputs that are directly or indirectly observable in the marketplace, such as quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets).

•Level 3. Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

Recent Accounting Pronouncements

The Company has reviewed all recently issued, but not yet effective, Accounting Standards Updates (“ASUs”) and does not believe that the future adoption of any such ASUs will have a material impact on its financial condition or results of operations.

(2) BUSINESS COMBINATIONS AND ASSET PURCHASES

Business Combination

Ermont

On March 9, 2023, following approval by the Massachusetts Cannabis Control Commission (the "CCC"), the Company acquired the operating assets of Ermont, a medical-licensed vertical cannabis operator located in Quincy, Massachusetts. The Ermont Acquisition provided the Company with its third dispensary in Massachusetts, substantially completing its build-out to the maximum allowable by state regulations.

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As consideration for the Ermont Acquisition, which totaled $13.0 million, the Company paid $3.0 million of cash, issued 6,580,390 shares of the Company's common stock, and issued a $7.0 million promissory note (the "Ermont Note" and collectively, the "Ermont Consideration"). The Ermont Note has a six-year term and bears interest at 6.0% per annum, with payments of interest-only for two years and thereafter, quarterly payments of principal and interest in arrears. The outstanding balance on the Ermont Note is subject to prepayment in the event the Company raises $75.0 million of equity capital. The Company recorded the Ermont Note at the present value as of the Ermont Acquisition Date of $4.6 million. The difference between the present value and face value of the Ermont Note is being amortized to interest expense through the term of such note.

The Company rebranded the dispensary as Panacea Wellness Dispensary and commenced medical sales immediately after the Ermont Acquisition Date. The Ermont Acquisition also includes a Host Community Agreement with the city of Quincy to conduct adult-use cannabis sales. Adult-use sales commenced on July 23, 2024. The Company expanded the existing medical dispensary to accommodate expected increased traffic associated with adult-use sales and repurposed Ermont's existing cultivation facility.

The Company's condensed consolidated statement of operations for the three months ended September 30, 2023 included $1.2 million of revenue and $0.7 million of net loss attributable to Ermont. The Company's condensed consolidated statement of operations for the nine months ended September 30, 2023 included $2.6 million of revenue and $1.9 million of net loss attributable to Ermont for the period since the Ermont Acquisition Date.

The Ermont Acquisition has been accounted for as a business combination. The Company did not assume any of Ermont's liabilities. The Company recorded adjustments to the amounts allocated to certain identifiable intangible assets and goodwill to reflect more precise forecasts of future revenue streams. These adjustments resulted in an increase to the tradename and trademarks intangible asset of $0.1 million, a decrease to the customer base intangible asset of $3.9 million and an increase to goodwill of $3.8 million.

A summary of the final allocation of the Ermont Consideration to the acquired and identifiable intangible assets is as follows (in thousands):


Fair value of consideration transferred:
Cash consideration:
Cash paid	$	3,000
Less cash acquired	(13)
Net cash consideration	2,987
Common stock	2,994
Promissory note	4,569
Total fair value of consideration	$	10,550


Fair value of assets acquired and (liabilities assumed):

Property and equipment	$	800
Intangible assets:
Tradename and trademarks	1,118
Customer base	768
License	131

Goodwill	7,733

Fair value of net assets acquired	$	10,550

The Company is amortizing the identifiable intangible assets arising from the Ermont Acquisition in relation to the expected cash flows from the individual intangible assets over their respective useful lives, which have a weighted average life of 12.19 years (see Note 8). Goodwill results from assets not separately identifiable as part of the transaction and is not deductible for tax purposes.

The following unaudited pro forma information presents the condensed combined results of MariMed and Ermont for the three and nine months ended September 30, 2023 as if the Ermont Acquisition had been completed on January 1, 2023, with adjustments to give effect to pro forma events that are directly attributable to the Ermont Acquisition. These pro

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forma adjustments include amortization expense for the acquired intangible assets and interest expense related to the Ermont Note.

The unaudited pro forma results do not reflect any operating efficiencies or potential cost savings that may result from the consolidation of the operations of MariMed and Ermont. Accordingly, these unaudited pro forma results are presented for illustrative purposes and are not intended to represent or be indicative of the actual results of operations of the combined company that would have been achieved had the Ermont Acquisition occurred on January 1, 2023, nor are they intended to represent or be indicative of future results of operations. These unaudited pro forma results for the three and nine months ended September 30, 2023 are as follows (in thousands):


	Three months ended September 30, 2023		Nine months ended September 30, 2023
	(unaudited)
Revenue	$	39,150	$	110,049
Net loss	$	(4,937)	$	(6,536)

Valuation of Acquired Intangible Assets

The valuation of acquired intangible assets is inherently subjective and relies on significant unobservable inputs. The Company uses an income approach to value acquired tradenames and trademarks, licenses and customer bases, and non-compete intangible assets. The valuation for each of these intangible assets is based on estimated projections of expected cash flows to be generated by the assets discounted to the present value at discount rates commensurate with perceived risk. The valuation assumptions take into consideration the Company’s estimates of new markets, products and customers and its outcome through key assumptions driving asset values, including sales growth, royalty rates and other related costs.

Asset Purchases

Allgreens

In August 2022, the Company entered into an agreement to purchase 100% of the membership interests in Allgreens Dispensary, LLC (the "Allgreens Agreement"), a conditional adult-use cannabis dispensary license in Illinois, for $3.25 million, comprised of $2.25 million of cash and a promissory note for $1.0 million, which note was issued to the Allgreens members on the Allgreens Acquisition Date. Completion of the acquisition was dependent upon certain conditions, including resolution of any remaining legal challenges affecting nearly 200 social equity dispensary licenses, and regulatory approval of the acquisition. With the closing conditions met and the acquisition completed, the Company now owns and operates five adult-use dispensaries in Illinois. For the interim period until the acquisition was completed, the Company entered into a management agreement with Allgreens, with the management fees calculated as a percentage of Allgreens' revenue. Under this management agreement, the Company funded the build-out of the dispensary, including purchasing and retaining ownership of the related fixed assets it intended to use upon the transfer ownership to the Company, hired and trained employees, and implemented the processes necessary to run the dispensary, all of which was completed prior to the state's approval of the license transfer to the Company. In connection with this agreement, the Company recorded expenses related to Allgreens aggregating approximately $250,000 for the period from January 1, 2024 through the Allgreens Acquisition Date as a component of Investments, net of current portion (the "Allgreens Expenses").

Pursuant to the Allgreens Agreement, the Company had made payments aggregating $1,375,000 to the Allgreens members prior to the Allgreens Acquisition Date. On the Allgreens Acquisition Date, the Company made the final cash payment of $875,000 and issued a $1.0 million promissory note (the "Allgreens Note"). The Allgreens Note bears interest at a rate of 7.5% per annum and matures one year from the date the dispensary is permitted to commence operations.

The Company has allocated the purchase price, including the Allgreens Expenses, to its licenses intangible asset, with an estimated useful life of 10 years (see Note 8).

Our Community Wellness & Compassionate Care Center, Inc. ("MedLeaf")

On February 1, 2024 (the "P&S Date"), the Company entered into an agreement to acquire 100% of the membership interests of MedLeaf (the "MedLeaf Agreement"), which held a retail dispensary license in Maryland. The MedLeaf dispensary had ceased its operations since July 1, 2023. Upon receiving regulatory approval, the Company reopened the

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dispensary and commenced adult-use retail sales on August 19, 2024. The acquisition of MedLeaf provides the Company with a second dispensary in the state of Maryland.

Pursuant to the MedLeaf Agreement, total purchase consideration was $5.25 million, comprised of $2.0 million of cash with adjustments to reflect amounts owed to the Company by the sellers of MedLeaf (the "MedLeaf Sellers"), a $2.0 million promissory note (the "MedLeaf Note"), and shares of the Company's common stock, valued at $1.25 million, with such number of shares calculated using the volume weighted average price based on the ten trading day period ending on the P&S Date. The Company made cash payments aggregating $0.5 million through the P&S Date, which funds were deposited into escrow. On the MedLeaf Acquisition Date, the outstanding cash balance was paid and the promissory note and 3.9 million shares of the Company's common stock were issued. The promissory note bears interest at a rate of 8.0% per annum and matures on October 5, 2025.

The Company has allocated the purchase price to its licenses intangible asset, with an estimated useful life of 10 years (see Note 8).

Pending Transaction at September 30, 2024

Robust Missouri Process and Manufacturing, LLC ("Robust")

In September 2022, the Company entered into an agreement to acquire 100% of the membership interests in Robust Missouri Processing and Manufacturing 1, LLC, a Missouri wholesale and cultivator ("Robust"), for $700,000 in cash (the "Robust Agreement"). Completion of the acquisition is dependent upon obtaining all requisite approvals from the Missouri Department of Health and Senior Services. In August 2024, the state of Missouri approved a facility license to conduct business, but has not yet approved the application to transfer the license from Robust to the Company (the "License Transfer"). The Company is currently conducting business under a managed service agreement until the final approval of the License Transfer. Pursuant to the Robust Agreement, the Company made an initial advance payment of $350,000, with the balance due at closing, which will occur upon the state of Missouri's approval of the License Transfer.

(3) EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares outstanding during the period. For periods in which the Company reports net income, diluted net income per share is determined by using the weighted average number of common and dilutive common equivalent shares outstanding during the period, unless the effect is antidilutive.

The shares used to compute loss per share were as follows (in thousands):


	Three months ended		Nine months ended
	September 30, 2024	September 30, 2023	September 30, 2024	September 30, 2023
Weighted average shares outstanding - basic	380,599	373,081	378,449	359,156
Potential dilutive common shares	—	—	—	—
Weighted average shares outstanding - diluted	380,599	373,081	378,449	359,156

(4) DEFERRED RENTS RECEIVABLE

The Company is the lessor under operating leases which contain escalating rents over time, rent holidays, options to renew, and requirements to pay property taxes, insurance and/or maintenance costs. The Company is not the lessor under any finance leases.

The Company recognizes fixed rental receipts from such lease agreements on a straight-line basis over the expected lease term. Differences between amounts received and amounts recognized are recorded in Deferred rents receivable in the condensed consolidated balance sheets.

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The Company currently leases a cannabis cultivation, processing and dispensary facility that it owns in Delaware to a cannabis-licensed client under a triple net lease that expires in 2035. The Company had previously leased a portion of an owned property in Massachusetts under a lease that expired in February 2023, after which the tenant continued to rent the space on a month-to-month basis through November 2023. The Company expanded its cultivation footprint into this space and accordingly, it is currently utilizing this space for its operations.

The Company currently subleases two properties - a cannabis production facility with offices under a sublease that expires in January 2026 and contains an option to negotiate an extension of the sublease term, and a dispensary under a sublease that expires in April 2027. The Company also subleases a portion of a third property that it developed into a cultivation facility under a sublease that expires in March 2030, with an option to extend the term for three additional five-year periods. These properties are all subleased to a cannabis-licensed client in Delaware.

The Company received rental payments aggregating $0.3 million and $0.5 million in the three months ended September 30, 2024 and 2023, respectively, and $0.9 million and $1.3 million in the nine months ended September 30, 2024 and 2023, respectively. Revenue from these payments was recognized on a straight-line basis and aggregated $0.3 million and $0.4 million in the three months ended September 30, 2024 and 2023, respectively, and $0.9 million and $1.2 million in the nine months ended September 30, 2024 and 2023, respectively.

Future minimum rental receipts for non-cancellable leases and subleases as of September 30, 2024 were as follows (in thousands):


Year ending December 31,
Remainder of 2024	$	303
2025	1,211
2026	1,057
2027	952
2028	907
Thereafter	2,837
	$	7,267

(5) NOTE RECEIVABLE AND OMNIBUS

Note Receivable

At both September 30, 2024 and December 31, 2023, the Company had a note receivable from Healer LLC, an entity that provides cannabis education, dosage programs and products developed by Dr. Dustin Sulak ("Healer"), of approximately $866,000. The note bears interest at 6% per annum and requires quarterly payments of interest through the April 2026 maturity date. The Company has the right to offset any licensing fees payable by the Company to Healer in the event Healer fails to make any payment when due.

Omnibus Agreement

On July 1, 2023 (the "Omnibus Agreement Date"), the Company entered into an Omnibus Agreement with First State Compassion Center ("FSCC"), the Company's cannabis-licensed client in Delaware: (a) consolidating all amounts owed by FSCC to the Company and its affiliated entities as described below, aggregating $11.0 million (the "Omnibus"); (b) providing for the automatic conversion of all amounts owed by FSCC to the Company, upon the approval of adult cannabis use in Delaware, into 100% ownership of FSCC's licenses and business; and (c) extending to FSCC, in the Company's sole discretion, up to an additional $2.0 million of working capital loans. The Omnibus has a term of five years, with an automatic five-year extension if adult cannabis use is not approved in Delaware by the maturity date, and bears interest, compounded semiannually and payable annually, at the appropriate rate of interest in effect under Sections 1274(d), 482 and 7872 of the Internal Revenue Code of 1986, as amended, as calculated under Rev. Ruling 86-17, 1986-1 C.B. 377, for the period for which the amount of interest is being determined. The state of Delaware recently approved the adult use of cannabis, with the implementation period expected to extend through approximately November 2024. The Omnibus is included as a component of Other assets in the condensed consolidated balance sheets at both September 30, 2024 and December 31, 2023.

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(6) INVENTORY

Inventory at September 30, 2024 and December 31, 2023 consisted of the following (in thousands):


	September 30, 2024		December 31, 2023
Plants	$	4,514	$	3,296
Ingredients and other raw materials	7,931		4,932
Work-in-process	10,875		9,663
Finished goods	11,655		7,415
	$	34,975	$	25,306

(7) PROPERTY AND EQUIPMENT, NET

The Company’s property and equipment, net, at September 30, 2024 and December 31, 2023 was comprised of the following (in thousands):


	September 30, 2024		December 31, 2023
Land	$	6,151	$	4,819
Buildings and building improvements	55,262		54,737
Tenant improvements	26,406		25,451
Furniture and fixtures	2,225		2,191
Machinery and equipment	18,138		16,394
Construction in progress	7,095		427
	115,277		104,019
Less: accumulated depreciation	(19,781)		(14,916)
Property and equipment, net	$	95,496	$	89,103

The Company recorded depreciation expense related to property and equipment of $1.8 million and $1.6 million in the three months ended September 30, 2024 and 2023, respectively, and $5.7 million and $3.8 million in the nine months ended September 30, 2024 and 2023, respectively.

During the nine months ended September 30, 2024, the Company disposed of equipment and recorded a gain on the disposal of such assets aggregating approximately $20,000, net of insurance proceeds for such disposal of approximately $22,000.

In the first quarter of 2023, the Company disposed of equipment it had previously purchased in connection with its planned acquisition of The Harvest Foundation LLC ("Harvest") in Nevada as a result of the Company's withdrawal from the agreement to purchase Harvest. The Company recorded a loss on the disposal of assets aggregating $0.9 million, which is included as a component of Other expense, net, in the condensed consolidated statement of operations for the nine months ended September 30, 2023.

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(8) INTANGIBLE ASSETS AND GOODWILL

The Company’s acquired intangible assets at September 30, 2024 and December 31, 2023 consisted of the following (in thousands):


September 30, 2024	Weighted average amortization period (years)	Cost		Accumulated amortization		Net carrying value

Tradenames and trademarks	7.38	$	3,159	$	2,202	$	957
Licenses and customer base	7.96	22,553		3,988		18,565
Non-compete agreements	2.00	42		42		—
	7.89	$	25,754	$	6,232	$	19,522


December 31, 2023	Weighted average amortization period (years)	Cost		Accumulated amortization		Net carrying value

Tradenames and trademarks	7.11	$	3,104	$	1,335	$	1,769
Licenses and customer base	9.15	18,033		2,797		15,236
Non-compete agreements	2.00	42		35		7
	8.84	$	21,179	$	4,167	$	17,012

Estimated future amortization expense for the Company’s intangible assets at September 30, 2024 was as follows:


Year ending December 31,
Remainder of 2024	$	883
2025	3,077
2026	2,570
2027	2,477
2028	2,477
Thereafter	8,038
Total	$	19,522

The changes in the carrying value of the Company’s goodwill in the nine months ended September 30, 2024 and 2023 were as follows (in thousands):


	2024		2023
Balance at January 1,	$	11,993	$	8,079
Ermont Acquisition	3,819		3,914

Balance at September 30,	$	15,812	$	11,993

In connection with the finalization of the purchase price allocation for the Ermont Acquisition in the first quarter of 2024, the Company recorded reclassifications between its Tradename and trademarks intangible asset, Licenses and customer base intangible asset, and Goodwill (see Note 2).

(9) DEBT

Term Loan (the "CA Term Loan")

On January 24, 2023, the Company entered into a Loan and Security Agreement, by and among the Company, subsidiaries of the Company from time-to-time party thereto (collectively with the Company, the “CA Borrowers”), lenders from time-to-time party thereto (the “CA Lenders”), and Chicago Atlantic Admin, LLC (“Chicago Atlantic”), as administrative agent for the Lenders (the "CA Credit Agreement"). Proceeds from the CA Credit Agreement were designated to complete the build-out of a new cultivation and processing facility in Illinois, complete the build-out of a new processing kitchen in Missouri, expand existing cultivation and processing facilities in Massachusetts and Maryland, fund certain capital

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expenditures, and repay in full the notes payable issued in 2022 in connection with the acquisition of Kind Therapeutics USA, which repayment occurred on January 24, 2023. The remaining balance, if any, was expected to be used to fund acquisitions.

The CA Credit Agreement allowed for $35.0 million in principal borrowings at the CA Borrowers’ option in the aggregate and further provides the CA Borrowers with the right, subject to customary conditions, to request an additional incremental term loan in the aggregate principal amount of up to $30.0 million, provided that the CA Lenders elected to fund such incremental term loan. $30.0 million of loan principal was funded at the initial closing (the "CA Term Loan"), which amount was reduced by an original issuance discount of $0.9 million (the "CA Original Issuance Discount"). The Company had the option, during the six-month period following the initial closing, to draw down an additional $5.0 million, which it did not elect to do. The loan required scheduled amortization payments of 1.0% of the principal amount outstanding under the CA Credit Agreement per month commencing in May 2023, and the remaining principal balance was due in full on January 24, 2026, subject to extension to January 24, 2028 under certain circumstances.

The CA Credit Agreement provided the CA Borrowers with the right, subject to specified limitations, to incur (a) seller- provided debt in connection with future acquisitions, (b) additional mortgage financing from third-party lenders secured by real estate currently owned and acquired after the closing date, and (c) additional debt in connection with equipment leasing transactions. The obligations under the CA Credit Agreement were secured by substantially all of the assets of the CA Borrowers, excluding specified parcels of real estate and other customary exclusions.

The CA Credit Agreement provided for a floating annual interest rate equal to the prime rate then in effect plus 5.75%, which rate could be increased by 3.00% upon an event of default or 7.50% upon a material event of default as provided in the CA Credit Agreement. At any time, the Company could voluntarily prepay amounts due under the facility in $5.0 million increments, subject to a three-percent prepayment premium and, during the first 20-months of the term, a “make-whole” payment.

The CA Credit Agreement included customary representations and warranties and customary events of default, including, without limitation, payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to material indebtedness, and events of bankruptcy and insolvency. The CA Credit Agreement also included customary negative covenants limiting the CA Borrowers’ ability to incur additional indebtedness and grant liens that were otherwise not permitted, among others. Additionally, the Credit Agreement required the CA Borrowers to meet certain financial tests. The Company was in compliance with the CA Credit Agreement covenants throughout the term of the CA Credit Agreement.

The CA Credit Agreement provided for 30% warrant coverage against amounts funded under the facility, priced at a 20% premium to the trailing 20-day average price on the closing date of each such funding. At the initial closing, upon funding of the initial $30.0 million under the facility, the Company issued to the CA Lenders an aggregate of 19,148,936 warrants to purchase shares of the Company’s common stock at $0.47 per share, exercisable for a five-year period following issuance. The Company recorded the warrants at present value of $5.5 million as a component of Additional paid-in capital on the condensed consolidated balance sheet as of January 24, 2023, and discounted the CA Term Loan by $5.5 million (the "CA Warrant Discount"). The CA Warrant Discount was being amortized to interest expense over the term of the Credit Agreement.

The Company incurred $1.8 million of third party costs (i.e., legal fees, referral fees, etc.) in connection with the CA Term Loan, which were recorded as a discount to the CA Term Loan (the "CA Third-Party Costs Discount"), which was being amortized to interest expense over the term of the CA Credit Agreement.

The Company recorded $0.3 million of aggregate interest amortization for the three months ended March 31, 2023 related to the CA Original Issuance Discount, CA Warrant Discount and CA Third-Party Costs Discount.

On November 16, 2023, the Company repaid and retired the CA Term Loan (the "CA Term Loan Payoff") using proceeds from a new $58.7 million loan entered into on the same date (see "CREM Loan" below). The CA Term Loan Payoff amount totaled $32.7 million, comprised of $28.5 million for the outstanding principal, $3.7 million for the make-whole payment, $0.2 million for accrued unpaid interest and $0.3 million for transaction-related fees. The Company recognized a loss of $10.2 million in connection with the Term Loan Payoff, which it recorded in the fourth quarter of 2023.

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Mortgages and Notes Payable

The Company’s mortgages and notes payable are reported in the aggregate on the condensed consolidated balance sheets under the captions Mortgages and notes payable, current portion, and Mortgages and notes payable, net of current portion.

The Company’s mortgage and notes payable balances at September 30, 2024 and December 31, 2023 were comprised of the following (in thousands):


	September 30, 2024		December 31, 2023
Construction to Permanent Commercial Real Estate Mortgage Loan ("CREM Loan")	$	57,217	$	52,083

Bank of New England - Wilmington, DE property	1,120		1,219
DuQuoin State Bank - Anna, IL and Harrisburg, IL properties	695		719
DuQuoin State Bank - Metropolis, IL property	2,439		2,472
Du Quoin State Bank - Mt. Vernon, IL property (grow and production)	2,887		2,923
DuQuoin State Bank - Mt. Vernon, IL property (retail)	1,147		—
Promissory note issued as purchase consideration - Ermont Acquisition	2,856		2,591
Promissory note issued as purchase consideration - Greenhouse Naturals Acquisition	3,900		4,190
Promissory notes issued as purchase consideration - MedLeaf Acquisition	1,665		—
Promissory note issued as purchase consideration - Allgreens Acquisition	1,036		—
Promissory note issued to purchase land	352		—
Promissory notes issued to purchase motor vehicles	177		178
Total mortgages and notes payable	75,491		66,375
Less: Mortgages and notes payable, current portion	(4,371)		(723)
Mortgages and notes payable, net of current portion	$	71,120	$	65,652

Mortgages

CREM Loan

On November 16, 2023, Mari Holdings MD LLC, Hartwell Realty Holdings LLC, Kind Therapeutics USA, LLC, ARL Healthcare Inc., and MariMed Advisors, Inc., each a wholly-owned direct or indirect subsidiary of the Company (collectively, the "CREM Borrowers"), entered into a Loan Agreement (the "CREM Loan Agreement") by and among the CREM Borrowers, and Needham Bank, a Massachusetts co-operative bank (the "CREM Lender") pursuant to which the CREM Lender loaned to the CREM Borrowers an aggregate principal amount of $58.7 million (the "CREM Loan Transaction"). The Company guaranteed the obligations of the CREM Borrowers under the CREM Loan Transaction and pledged to the CREM Lender its equity ownership in each CREM Borrower. The CREM Lender has a first priority security interest in all of the CREM Borrowers' operating assets in Maryland and Massachusetts and first priority mortgages on the CREM Borrowers' properties owned in Maryland and Massachusetts.

The CREM Loan Transaction is for a term of ten years and has an interest rate for the initial five years of 8.43% per annum. The interest rate will reset after five years to the FHLB Rate (the Classic Advance Rate for Fixed Rate advances for a period of five years for an amount greater than or equal to the loan amount, as such rate is defined and published by the Federal Home Loan Bank of Boston), plus 3.50%. The Company will make interest-only payments for the first twelve months of the term of the loan, with payments thereafter based upon a twenty-year amortization schedule.

The CREM Lender initially released $52.8 million to the CREM Borrowers (the "Initial CREM Distribution"), with the remaining proceeds of $5.9 million placed into escrow to complete the expansion of the Company's Hagerstown, Maryland cultivation facility (the "Hagerstown Facility"), with any unused proceeds to be released to the Company after completion of the Hagerstown Facility expansion. The Company used $46.8 million of the Initial CREM Distribution to fully repay certain of its outstanding debt obligations. These payments were comprised of $32.7 million to pay off the Term Loan, $11.9 million to pay off the mortgage with Bank of New England for the New Bedford, MA and Middleborough, MA properties, and $2.2 million to reduce the outstanding balance of the note issued by the Company in connection with the Ermont Acquisition.

The Company incurred bank closing costs and third party costs (i.e., legal fees, etc.) aggregating $1.5 million in connection with the CREM Loan Transaction, which were recorded as a discount to the Loan Transaction (the "CREM Closing Costs

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Discount"), and which are being amortized to interest expense over the term of the CREM Loan Transaction. The Company recorded approximately $18,000 and $55,000 of interest amortization in the three and nine months ended September 30, 2024, respectively, related to the CREM Closing Costs Discount.

The CREM Loan Agreement includes customary representations and warranties and customary events of default, including, without limitation, payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to material indebtedness, and events of bankruptcy and insolvency. The CREM Loan Agreement also includes customary negative covenants limiting the CREM Borrowers' (but not the Company's) ability to incur additional indebtedness and grant liens that are otherwise not permitted, among others. The CREM Loan Agreement also requires the CREM Borrowers to meet certain periodic financial tests.

During the nine months ended September 30, 2024, $5.1 million of the escrowed portion of the loan proceeds was released to the Company, and the Company made interest-only payments to the CREM Lender aggregating $4.0 million. The current portion of the outstanding principal balance of the CREM Loan was $1.0 million at September 30, 2024.

Bank of New England (New Bedford, MA and Middleborough, MA)

The Company maintained an amended and restated mortgage secured by the Company's properties in New Bedford, MA and Middleborough MA in the original amount of $13.0 million and bearing interest of 6.5% per annum that would mature in August 2025 (the “Refinanced Mortgage”). On November 16, 2023, the Company used $11.9 million of proceeds from the CREM Loan Transaction to pay the outstanding principal of the Refinanced Mortgage, and such mortgage was retired. The Company recorded a loss of $0.2 million on the early repayment of the Refinanced Mortgage, which it recorded in the fourth quarter of 2023. Concurrent with the repayment of the Refinanced Mortgage, the Company refinanced the properties through the CREM Loan and accordingly, effective November 16, 2023, the mortgage on these properties is held by Needham Bank, which mortgage matures in 2033 and which outstanding amount is included as a component of the CREM Loan outstanding balance.

Bank of New England (Wilmington, DE)

The Company maintains a mortgage with Bank of New England for the 2016 purchase of a building in Wilmington, DE, which was developed into a cannabis seed to sale facility that is currently leased to the Company's cannabis-licensed client in that state. The mortgage matures in 2031, with monthly principal and interest payments at a rate of 5.25% per annum, with the rate adjusting every five years to the then-prime rate plus 1.5% with a floor of 5.25% per annum. The next interest rate adjustment will occur in September 2026. The current portions of the outstanding principal balance under this mortgage at September 30, 2024 and December 31, 2023 were approximately $138,000 and $133,000, respectively.

DuQuoin State Bank (Anna, IL and Harrisburg IL)

In May 2016, the Company entered into a mortgage agreement with DuQuoin State Bank ("DSB") for the purchase of properties in Anna, IL and Harrisburg, IL, which the Company developed into two free-standing retail dispensaries. On May 5th of each year, this mortgage is due to be repaid unless it is renewed for another year at a rate determined by DSB’s executive committee. The mortgage was renewed in May 2024 at a rate of 9.5% per annum. The current portions of the outstanding principal balance under this mortgage at September 30, 2024 and December 31, 2023 were approximately $26,000 and $27,000, respectively.

DuQuoin State Bank (Metropolis, IL)

In July 2021, the Company purchased the land and building in which it operates its cannabis dispensary in Metropolis, Illinois. In connection with this purchase, the Company entered into a mortgage agreement with DSB in the amount of $2.7 million that matures in July 2041, and which currently bears interest at a rate of 11.25% per annum, which rate is adjusted each year based on a certain interest rate index plus a margin. As part of this transaction, the seller was provided with a 30.0% ownership interest in Mari Holdings Metropolis LLC (“Metro”), the Company’s subsidiary that owns the property and holds the related mortgage obligation, reducing the Company’s ownership interest in Metro to 70.0%. The current portions of the outstanding principal balance of this mortgage at September 30, 2024 and December 31, 2023 were approximately $55,000 and $46,000, respectively.

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DuQuoin State Bank (Mt. Vernon, IL)

In July 2022, Mari Holdings Mt Vernon LLC, a wholly owned subsidiary of the Company, entered into a $3.0 million loan agreement and mortgage with DSB secured by property owned by the Company in Mt. Vernon, Illinois, which it is developing into a grow and production facility. The mortgage has a 20-year term and currently bears interest at the rate of 11.25% per annum, subject to upward adjustment on each annual anniversary date to the Wall Street Journal U.S. Prime Rate (with an interest rate floor of 7.75%). The proceeds of this loan are being utilized for the build-out of the property and other working capital needs. The current portions of the outstanding principal balance of this mortgage were approximately $59,000 and $48,000 at September 30, 2024 and December 31, 2023, respectively.

DuQuoin State Bank (Mt. Vernon, IL)

In February 2020, the Company entered into a mortgage agreement with South Porte Bank for the purchase and development of a property in Mt. Vernon, Illinois. Beginning in August 2021, pursuant to an amendment of the South Porte Bank Mortgage, the monthly payments of principal and interest aggregated approximately $6,000, with such payment amounts effective through June 2023, at which time all remaining principal, interest and fees were due. On May 26, 2023, the Company repaid the outstanding balance on this mortgage, which totaled approximately $778,000. In January 2024, the Company refinanced this property and entered into a $1.2 million mortgage with DSB. The mortgage with DSB has a 17-year term and bears interest of 9.50% per annum. The current portion of the outstanding principal balance of this mortgage was approximately $31,000 at September 30, 2024.

Promissory Notes

Promissory Notes Issued as Purchase Consideration

Ermont

In connection with the Ermont Acquisition, the Company issued the Ermont Note (see Note 2), totaling $7.0 million. The Ermont Note matures in March 2029, and bears interest at 6.0% per annum, with payments of interest-only for two years, and quarterly payments of principal and interest in arrears thereafter. The outstanding balance on the Ermont Note is subject to prepayment in full in the event the Company raises $75.0 million or more of equity capital. The Company recorded the Ermont Note at a present value of $4.6 million. This amount is net of the $2.4 million recorded as a debt discount, which is being accreted through the term of the Ermont Note to interest expense. As discussed above, on November 26, 2023, the Company used $2.2 million of the proceeds from the CREM Loan Transaction to reduce the outstanding balance of the Ermont Note. The difference between the face value of the Ermont Note and the present value recorded at the time of the Ermont Acquisition is being amortized to interest expense over the term of the Ermont Note. The fair value of the Ermont Note was $2.9 million and $2.6 million at September 30, 2024 and December 31, 2023, respectively. The current portion of the outstanding principal balance of the Ermont Note was $0.3 million at September 30, 2024. The Ermont Note did not have a current portion recorded at December 31, 2023.

Greenhouse Naturals LLC

In December 2022, the Company completed the acquisition from Greenhouse Naturals LLC of the assets associated with a cannabis dispensary in Beverly, Massachusetts (the "Beverly Dispensary"). In connection with this transaction, the Company issued a $5.0 million promissory note to the sellers, payable on a monthly basis as a percentage of the monthly gross sales of the Beverly Dispensary (the "Greenhouse Naturals Note"). The Company recorded $0.7 million as a debt discount, which is being accreted to interest expense through the term of the Greenhouse Naturals Note, which matures in July 2026. In the third quarter of 2023, the Company updated its forecast of revenue attributable to the Beverly Dispensary and, accordingly, adjusted the schedule of estimated future payments on the Greenhouse Naturals Note. The fair value of the Greenhouse Naturals Note was $3.9 million and $4.2 million at September 30, 2024 and December 31, 2023, respectively. The Company estimated that the current portion of the Greenhouse Naturals Note was $0.4 million and $0.3 million at September 30, 2024 and December 31, 2023, respectively.

MedLeaf

In connection with the MedLeaf Acquisition, the Company issued the MedLeaf Note, totaling $2.0 million (See Note 2). The MedLeaf Note bears interest at a rate of 8.0% per annum and matures on October 5, 2025. The MedLeaf Note calls for

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six equal principal payments, paid quarterly, which payments began on July 5, 2024. At September 30, 2024, the current portion of the MedLeaf Note was $1.3 million.

Allgreens

In connection with the Allgreens Acquisition, the Company issued promissory notes aggregating $1.0 million (See Note 2). The Allgreens Notes bear interest at a rate of 7.5% per annum and will mature one year from the date that the dispensary is permitted to commence operations. The Allgreens Notes had an aggregate outstanding balance of $1.0 million at September 30, 2024, all of which was recorded as current.

Kind Acquisition

In connection with the 2022 acquisition of Kind Therapeutics USA ("Kind"), the Company issued four-year promissory notes aggregating $6.5 million with an interest rate of 6.0% per annum to the members of Kind (the “Kind Notes”). In connection with the CA Credit Agreement (described above), on January 24, 2023, the Company repaid the Kind Notes in full, aggregating $5.4 million, including approximately $420,000 of accrued interest. There was no penalty in connection with the early repayment of the Kind Notes.

Promissory Notes Issued to Purchase Property and Equipment

The Company had five outstanding promissory notes in connection with the purchase of commercial motor vehicles at both September 30, 2024 and December 31, 2023. At September 30, 2024, the outstanding notes had an aggregate outstanding balance of approximately $177,000, of which approximately $35,000 was current. At December 31, 2023, the outstanding notes had an aggregate outstanding balance of approximately $178,000, of which approximately $33,000 was current. The weighted average interest rates of the outstanding balances were 11.33% and 11.07% at September 30, 2024 and December 31, 2023, respectively. The weighted average remaining terms of these notes were 4.50 years and 4.61 years at September 30, 2024 and December 31, 2023, respectively.

The Company had an outstanding note in connection with the purchase, in the second quarter of 2024, of a parking lot adjacent to its Middleborough, MA dispensary totaling $352,000 (the "Middleborough Note"). The note bears interest at 4.0%, with monthly interest-only payments and a balloon payment for the entire principal amount due on February 1, 2029.

Future Payments

The future principal amounts due under the Company outstanding mortgages and notes payable at September 30, 2024 were as follows (in thousands):


Year ending December 31,
Remainder of 2024	$	600
2025	4,521
2026	2,704
2027	3,009
2028	3,179
Thereafter	65,398
Total future principal payments	79,411
Less: discount	(3,920)
Total future principal payments, net of discount	$	75,491

(10) MEZZANINE EQUITY

Series B Convertible Preferred Stock

The Company had 4,908,333 shares of Series B Convertible Preferred Stock (the "Series B Stock") outstanding at both September 30, 2024 and December 31, 2023, which shares are held by three institutional shareholders. The holders of Series B Stock (the “Series B Holders”) are entitled to cast a number of votes equal to the number of shares of the Company's common stock into which the shares of Series B Stock are convertible, together with the holders of the

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Company's common stock as a single class, on most matters. However, the affirmative vote or consent of the Series B Holders voting separately as a class is required for certain acts taken by the Company, including an amendment or repeal of certain charter provisions, liquidation or winding up of the Company, creation of stock senior to the Series B Stock, and/or other acts defined in the certificate of designation.

The Series B Stock shall, with respect to dividend rights and rights on liquidation, winding up and dissolution, rank senior to the Company’s common stock. The Company shall not declare, pay, or set aside any dividends on shares of any other class or series of capital stock of the Company unless the Series B Holders shall first receive, or simultaneously receive, a dividend on each outstanding share of Series B Stock in an amount calculated pursuant to the certificate of designation.

In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, the Series B Holders shall be entitled to be paid out of the assets of the Company available for distribution to its stockholders before any payment shall be made to the holders of the Company's common stock by reason of their ownership thereof, an amount per share of Series B Stock equal to $3.00, plus any dividends declared but unpaid thereon, with any remaining assets distributed pro-rata among the Series B Holders and the holders of the Company's common stock, based on the number of shares held by each such holder, treating for this purpose all such securities as if they had been converted into shares of the Company's common stock.

At any time on or prior to the six-year anniversary of the 2020 issuance date of the Series B Stock, (i) the Series B Holders have the option to convert their shares of Series B Stock into shares of the Company's common stock at a conversion price of $3.00 per share, without the payment of additional consideration, and (ii) the Company has the option to convert all, but not less than all, shares of Series B Stock into shares of the Company's common stock at a conversion price of $3.00 if the daily volume weighted average price of the Company's common stock (the “VWAP”) exceeds $4.00 per share for at least twenty consecutive trading days prior to the date on which the Company gives notice of such conversion to the Series B Holders.

On the day following the six-year anniversary of the issuance of the Series B Stock (February 28, 2026), all outstanding shares of Series B Stock (4,908,333 shares) shall automatically convert into shares of the Company's common stock as follows:

If the sixty-day VWAP is less than or equal to $0.50 per share, the Company shall have the option to:

•convert all shares of Series B Stock into shares of the Company's common stock at a conversion ratio of 1:1 (4,908,333 shares), subject to adjustment upon the occurrence of certain events, and pay cash to the Series B Holders equal to the difference between the sixty-day VWAP and $3.00 per share; or

•pay cash to the Series B Holders equal to $3.00 per share ($14,725,000).

If the sixty-day VWAP is greater than $0.50 per share, the Company shall have the option to:

•convert all shares of Series B Stock into shares of the Company's common stock at a conversion price per share equal to $3.00 per share divided by the sixty-day VWAP; or

•pay cash to the Series B Holders equal to $3.00 per share ($14,725,000); or

•convert a number of shares of Series B Stock, such number at the Company's sole discretion, into shares of the Company's common stock valued at the sixty-day VWAP (the "Conversion Value") and pay cash to the Series B Holders equal to the difference between $14,725,000 and the Conversion Value (shares issued multiplied by the sixty-day VWAP).

The Company shall at all times when the Series B Stock is outstanding, reserve and keep available out of its authorized but unissued capital stock, for the purpose of effecting the conversion of the Series B Stock, such number of its duly authorized shares of common stock as shall from time to time be sufficient to effect the conversion of all outstanding Series B Stock.

Series C Convertible Preferred Stock

The Company's Series C Convertible Preferred Stock (the "Series C Stock") is held by Hadron Healthcare Master Fund (“Hadron”). In 2021, the Company issued to Hadron 6,216,216 shares of Series C Stock and warrants to purchase up to an aggregate of 15,540,540 shares of its common stock in connection with a financing facility between the Company and Hadron. Each share of Series C Stock is convertible, at Hadron’s option, into five shares of the Company's common stock, and each warrant is exercisable at an exercise price of $1.087 per share. The warrants are subject to early termination if

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certain milestones are achieved and the market value of the Company’s common stock reaches certain predetermined levels.

The Series C Stock is zero coupon, non-voting, and has a liquidation preference equal to its original issuance price plus declared but unpaid dividends. Holders of Series C Stock are entitled to receive dividends on an as-converted basis.

During the year ended December 31, 2023, the Company converted, at Hadron's request in accordance with the terms and conditions of the Series C Stock certificate of designation, a total of 5,060,942 shares of Series C Stock into 25,304,710 shares of the Company's common stock (the "Conversions), comprised of 784,334 shares of Series C Stock converted into 3,921,670 shares of the Company's common stock in the third quarter of 2023 and 4,276,608 shares of Series C Stock converted into 21,383,040 shares of the Company's common stock in the second quarter of 2023. The Conversions were effected at a conversion rate of five shares of the Company's common stock for each share of Series C Stock converted. The Company did not recognize a gain or loss on the Conversions as they were effected in accordance with the Series C Stock certificate of designation. At both September 30, 2024 and December 31, 2023, 1,155,274 shares of Series C Stock remained outstanding.

(11) STOCKHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION

Amended and Restated 2018 Stock Award and Incentive Plan

The Company’s Amended and Restated 2018 Stock Award and Incentive Plan (the “Plan”) provides for the award of options to purchase the Company’s common stock (“stock options”), restricted stock units ("RSUs"), stock appreciation rights (“SARs”), restricted stock, deferred stock, dividend equivalents, performance shares or other stock-based performance awards and other stock- or cash-based awards. Awards can be granted under the Plan to the Company’s employees, officers and non-employee directors, as well as consultants and advisors of the Company and its subsidiaries.

On June 8, 2023, the Company's Board of Directors approved an amendment to the Plan to modify the one-year minimum vesting requirements.

Stock Options

A summary of the Company's stock option activity during the nine months ended September 30, 2024 is below:


	Shares	Weighted average exercise price
Outstanding at January 1, 2024	35,599,421	$	0.78
Granted	60,000	$	0.14
Exercised	—	$	—
Forfeited	(3,750)	$	0.44
Expired	(406,250)	$	0.93
Outstanding at September 30, 2024	35,249,421	$	0.78

Stock options granted under the Plan generally expire five years from the date of grant. At September 30, 2024, the stock options outstanding had a weighted average remaining life of approximately two years.

The grant date fair value of the stock options granted in the nine months ended September 30, 2024 was estimated using the Black-Scholes valuation model with the following assumptions:



Estimated life (in years)			1.18
Weighted average volatility			64.81%
Weighted average risk-free interest rate			5.12%
Dividend yield			—

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Restricted Stock Units

Holders of unvested restricted stock units ("RSUs") do not have voting or dividend rights. The grant date fair values of RSUs are recognized as expense on a straight-line basis over the requisite service periods. The fair value of RSUs is determined based on the market value of the shares of the Company's common stock on the date of grant.

The activity related to the Company's RSUs for the nine months ended September 30, 2024 was as follows:


	RSUs	Weighted average grant date fair value
Unvested at January 1, 2024	5,825,538	$	0.42
Granted	3,189,428	$	0.20
Vested	(2,005,469)	$	0.43
Forfeited	(273,075)	$	0.38
Outstanding at September 30, 2024	6,736,422	$	0.31

Of the 2,005,469 RSUs reported as vested in the table above, 85,071 shares, with an aggregate fair value of approximately $15,000, were surrendered to the Company to satisfy the tax withholding obligations that arose in connection with the vesting of such RSUs.

Warrants

On May 2, 2024, the Company issued warrants to purchase 1,000,000 shares of the Company's common stock to an entity in consideration for introductory and other services rendered in connection with certain funding and acquisition transactions. The warrants have an exercise price of $0.32 per share, vested immediately, and expire on May 1, 2029. The Company calculated that the grant date fair value of the warrants was approximately $218,000 in the aggregate using the Black-Scholes valuation model. This expense is included as a component of Acquisition-related and other in the Company's condensed consolidated statements of operations for the nine months ended September 30, 2024.

At September 30, 2024, warrants to purchase up to 43,089,476 shares of the Company's common stock were outstanding, with a weighted average exercise price of $0.67.

Other Common Stock Issuances

In addition to the activity related to stock options and RSUs, described above, during the nine months ended September 30, 2024, the Company also issued 3,917,267 shares of restricted common stock as purchase consideration (see Note 2) with a grant date fair value of approximately $1 million, and 28,369 shares of restricted common stock with an aggregate fair value of approximately $7,000, under a royalty agreement.

Stock-Based Compensation

The Company recorded stock-based compensation of $0.3 million in each of the three months ended September 30, 2024 and 2023, and $0.8 million in each of the nine months ended September 30, 2024 and 2023.

(12) REVENUE

The Company’s main sources of revenue are comprised of the following:

•Product sales (retail and wholesale) – direct sales of cannabis and cannabis-infused products by the Company’s retail dispensaries and wholesale operations. This revenue is recognized when products are delivered or at retail points-of-sale.

•Real estate rental income – rental income generated from leasing of the Company’s state-of-the-art, regulatory-compliant cannabis facilities to its cannabis-licensed clients. Rental income is generally a fixed amount per month that escalates over the respective lease terms.