Related Party Transactions

12 Months Ended

Dec. 31, 2023

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

NOTE 21. RELATED PARTY TRANSACTIONS

On September 16, 2022, the Company entered into a new consulting agreement with Adam Hershey, its Interim Chief Executive Officer, pursuant to which Mr. Hershey will continue to serve as the Company’s Interim Chief Executive Officer with compensation equal to $200,000 per annum, payable by the Company, monthly. The term of the consulting agreement is for a period of one year, with automatic six-month renewals thereafter unless terminated by either party. As part of the new consulting agreement, the Company has also agreed to extend warrants to purchase 7,280,007 shares of Common Stock, held by an affiliate of Mr. Hershey, for an additional two years until, May 29, 2027. The exercise price and all other terms and conditions of such warrants remain unchanged. We paid $200,000 and $125,000 under this consulting a for the years ended December 31, 2023 and 2022, respectively.

In February 2023, the Company completed the acquisition of Station 2, LLC’s assets. Station 2, LLC is owned by a board member, who is also a shareholder and executive level employee of the Company. See Note 3 for additional information regarding the Station 2 asset acquisition and Note 6 for the license transfer.

On July 7, 2023, the Company entered into a Transaction Services Agreement with Allyson Feiler Downing and Loree Schwartz as a result of the Settlement Agreement entered into with the Green Tree Parties as described in Note 3. Ms. Downing was a former officer of the Company and member of the Board of Directors, however, she had continued to serve on the Board under the Transaction Services Agreement. Under this Agreement, Ms. Downing and Ms. Schwartz provided certain administrative and management services related to the transferred assets in exchange for all revenue generated by the transferred assets. The Transaction Services Agreement was effective until the transferred assets were officially transferred to the Green Tree Parties, which took place in November 2023 (see Note 6). On August 3, 2023, Ms. Downing resigned from the Company’s Board of Directors.

The Company currently has a lease agreement with Dalton Adventures, LLC in which the Company leases 17,000 square feet of greenhouse space in Boulder, Colorado for $29,691 a month, of which $27,000 is base rent and $2,691 is property taxes. The base rent decreased to $10,000 per month starting in May 2023. The owner of Dalton Adventures, LLC is a principal shareholder and former board member of the Company. We have incurred $181,132 and $362,000 in related party lease expense for the years ended December 31, 2023 and 2022, respectively. See Note 11 for further discussion of the Company’s obligations associated with related party leases.

The Company had a lease agreement with JLA Enterprises, LLC in which the Company leased a retail dispensary in Longmont, Colorado. A former board member and a former executive level employee of the Company are owners of JLA Enterprises, LLC. The Company also had a lease agreement with ALJ 1090, LLC in which the Company leased a building that has a retail dispensary and cultivation facility in Berthoud, Colorado. The same former board member is an owner of ALJ 1090, LLC. These leases were assumed as part of the Green Tree Acquisition on December 12, 2022. In November 2023, these leases were transferred back to the former board member and former executive level employee and these individuals ceased employment with the Company, ending the related party relationship with the Company. We have incurred $209,752 and nil for the years ended December 31, 2023 and 2022, respectively. See Note 11 for further discussion of the Company’s obligations associated with related party leases.

The Company had a lease agreement with Bellewood Holdings, LLC in which the Company leased retail space for the Trees Englewood retail store in Englewood, Colorado for $11,287 per month, of which $10,000 is base rent and $1,287 is property taxes. The owner of Green Tree Holdings, LLC is a principal shareholder and board member of the Company. In June 2022, the building was sold to an unrelated party. We incurred nil and $66,000 of related party lease expense for the for the years ended December 31, 2023 and 2022, respectively. See Note 11 for further discussion of the Company’s obligations associated with related-party leases.