GENERAL CANNABIS CORP

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

Unaudited Pro Forma Condensed Combined Financial Information

The unaudited pro forma condensed combined balance sheet as of June 30, 2021 and the unaudited pro forma condensed combined statements of operations for each of the six months ended June 30, 2021 and for the year ended December 31, 2020 combine the financial statements of General Cannabis Corp (“General Cannabis”) and TDM, LLC (dba TREES Englewood (“TREES Colorado”) giving effect to the transaction described in the Asset Purchase Agreement, as if they had occurred on January 1, 2020 in respect of the unaudited pro forma condensed combined statements of operations and on June 30, 2021 in respect of the unaudited pro forma condensed combined balance sheet.

The unaudited pro forma condensed combined financial information should be read in conjunction with:

General Cannabis’s audited consolidated financial statements and accompanying notes as of and for the year ended December 31, 2020, as contained in the Form 10-K filed on April 1, 2021 with the United States Securities and Exchange Commission (the “SEC”)

● General Cannabis’s unaudited condensed consolidated financial statements and accompanying notes as of and for the six months ended June 30, 2021

● TREES Colorado audited financial statements as of and for the year ended December 31, 2020, contained elsewhere herein.

● TREES Colorado unaudited condensed financial statements as of and for the six months ended June 30, 2021 and 2020, contained elsewhere herein.

● The other information contained in or incorporated by reference into this filing.

The final purchase consideration and the allocation of the purchase consideration may materially differ from that reflected in the unaudited pro forma condensed combined financial information after final valuation procedures are performed and amounts are finalized following the completion of the acquisition.

The unaudited pro forma adjustments give effect to events that are directly attributable to the transaction and are based on available data and certain assumptions that management believes are factually supportable. In addition, with respect to the unaudited condensed combined statements of operations, the unaudited pro forma adjustments are expected to have a continuing impact on the combined results.

The unaudited pro forma condensed combined financial information is presented for informational purposes only and to aid you in your analysis of the financial aspects of the acquisition. The unaudited pro forma condensed combined financial information described above has been derived from the historical financial statements of General Cannabis and TREES Colorado and the related notes included elsewhere in this Form 8-K. The unaudited pro forma condensed combined financial information is based on General Cannabis’s accounting policies. Further review may identify additional differences between the accounting policies of General Cannabis and TREES Colorado. The unaudited pro forma adjustments and the pro forma condensed combined financial information don’t reflect the impact of synergies or post-transaction management actions and are not necessarily indicative of the financial position or results of operations that may have actually occurred had the transaction taken place on the dates noted, or of General Cannabis’s future financial position or operating results.

GENERAL CANNABIS CORP

Unaudited Pro Forma Condensed Combined Balance Sheet

June 30, 2021

	General		TREES		Pro Forma			Pro Forma
	Cannabis		Colorado		Adjustments			Combined
Assets
Current assets
Cash and cash equivalents	$	2,307,604	$	502,988	$	(470,047)	(A)	$	2,340,545
		—		—		(1,155,256)	(B)		(1,155,256)
Accounts receivable, net		178,784		—		—			178,784
Inventories, net		590,983		417,277		(417,277)	(A)		590,983
						586,495	(C)		586,495
Prepaid expenses and other current assets		198,176		11,086		(11,086)	(A)		198,176
Assets of discontinued operations - current portion		284,700		—		—			284,700
Total current assets		3,560,247		931,351		(1,467,171)			3,024,427
Right-of-use operating lease asset		1,816,632		396,194		—			2,212,826
Property and equipment, net		642,769		16,017		(16,017)	(A)		642,769
						59,335	(D)		59,335
Intangible assets, net		887,500		—		5,000,000	(E)		5,887,500
Goodwill		2,484,200		—		7,615,913	(E)		10,100,113
Assets of discontinued operations		35,178		—		—			35,178
Other non-current assets		—		7,500		(7,500)	(A)		—
Total assets	$	9,426,526	$	1,351,062	$	11,184,560		$	21,962,148
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable and accrued expenses	$	856,093	$	1,030,509	$	(1,030,509)	(A)	$	856,093
Interest payable		296,207		—		—			296,207
Operating lease liability, current		376,362		138,420		—			514,782
Accrued stock payable		60,900		—		—			60,900
Warrant derivative liability		134,234		—		—			134,234
Liabilities of discontinued operations		138,461		—		—			138,461
Total current liabilities		1,862,257		1,168,929		(1,030,509)			2,000,677
Operating lease liability, non-current		1,495,394		250,909		—			1,746,303
Long-term notes payable (net of discount)		4,272,858		—		1,732,884	(B)		6,005,742
Related party long-term notes payable (net of discount)		280,137		—		—			280,137
Total Liabilities		7,910,646		1,419,838		702,375			10,032,859
Commitments and contingencies		—		—		—			—
Stockholders’ Equity (Deficit)
Preferred stock, no par value; 5,000,000 shares authorized; no shares issued and outstanding, respectively		—		—		—			—
Common stock, $0.001 par value; 200,000,000 shares authorized; 62,266,275 shares issued and outstanding		62,264		—		—			62,264
Additional paid-in capital		80,140,373		—		10,406,844	(B)		90,547,217
Accumulated deficit		(78,686,757)		(68,776)		75,341	(A)		(78,680,192)
Total Stockholders’ Equity		1,515,880		(68,776)		10,482,185			11,929,289
Total Liabilities and Stockholders’ Equity (Deficit)	$	9,426,526	$	1,351,062	$	11,184,560		$	21,962,148

GENERAL CANNABIS CORP

Unaudited Pro Forma Condensed Combined Statement of Operations

For the Six Months Ended June 30, 2021

	General		TREES		Pro Forma			Pro Forma
	Cannabis		Colorado		Adjustments			Combined
Revenue
Cultivation sales		1,347,941		—		—			1,347,941
Retail sales		—		6,079,238		—			6,079,238
Interest		14,472		—		—			14,472
Total revenue		1,362,413		6,079,238		—			7,441,651
Costs and expenses
Cost of sales		1,066,631		4,081,005		—			5,147,636
Selling, general and administrative		1,180,750		1,092,408		—			2,273,158
Stock-based compensation expense		62,284		—		—			62,284
Professional fees		616,148		266,815		—			882,963
Depreciation and amortization		190,469		2,788		253,146	(A)(B)		446,403
Total costs and expenses		3,116,282		5,443,016		253,146			8,812,444
Operating (loss) income		(1,753,869)		636,222		(253,146)			(1,370,793)
Other expenses (income)
Amortization of debt discount and equity issuance costs		253,790		—		—			253,790
Interest expense		293,683		—		—			293,683
Loss on derivative liability		1,095,983		—		—			1,095,983
Loss on sale of assets		1,467		—		—			1,467
Other (income), net		—		(2,501)		—			(2,501)
Total other expenses (income), net		1,644,923		(2,501)		—			1,642,422
Net (loss) income from continuing operations before income taxes	$	(3,398,792)	$	638,723	$	(253,146)		$	(3,013,215)
Loss from discontinued operations		(336,529)		—		—			(336,529)
(Loss) income from operations before income taxes	$	(3,735,321)	$	638,723	$	(253,146)		$	(3,349,744)
Provision for income taxes		—		—		—			—
Net (loss) income	$	(3,735,321)	$	638,723	$	(253,146)		$	(3,349,744)
Deemed dividend		—		—		—			—
Net (loss) income attributable to common stockholders	$	(3,735,321)	$	638,723	$	(253,146)		$	(3,349,744)
Per share data - Basic and diluted
Net loss from continuing operations per share	$	(0.05)		—	$	(0.01)		$	(0.04)
Net loss from discontinued operations per share	$	(0.01)		—	$	0.00		$	(0.00)
Net loss attributable to common stockholders per share	$	(0.06)		—	$	(0.01)		$	(0.04)
Weighted average number of common shares outstanding		62,183,748		—		22,380,310			84,564,058

GENERAL CANNABIS CORP

Unaudited Pro Forma Condensed Combined Statement of Operations

For the Year Ended December 31, 2020

	General		TREES		Pro Forma			Pro Forma
	Cannabis		Colorado		Adjustments			Combined
Revenue
Cultivation sales	$	2,279,867	$	—	$	—		$	2,279,867
Retail sales		—		13,500,618		—			13,500,618
Interest		103,837		—		—			103,837
Total revenue		2,383,704		13,500,618		—			15,884,322
Costs and expenses
Cost of sales		1,388,626		9,785,330		—			11,173,956
Selling, general and administrative		2,901,931		2,046,468		—			4,948,399
Stock-based compensation expense		1,504,389		—		—			1,504,389
Professional fees		2,263,717		383,825		—			2,647,542
Depreciation and amortization		199,683		2,807		509,060	(A)(B)		711,550
Total costs and expenses		8,258,346		12,218,430		509,060			20,985,836
Operating (loss) income		(5,874,642)		1,282,188		(509,060)			(5,101,514)
Other expenses (income)
Amortization of debt discount and equity issuance costs		295,256		—		—			295,256
Interest expense		453,522		—		—			453,522
Loss on extinguishment of debt		1,638,009		—		—			1,638,009
(Gain) on derivative liability		(735,796)		—		—			(735,796)
Other (income), net		(97,948)		(9,120)		—			(107,068)
Total other expenses (income), net		1,553,043		(9,120)		—			1,543,923
Net (loss) income from continuing operations before income taxes	$	(7,427,685)	$	1,291,308	$	(509,060)		$	(6,645,437)
Loss from discontinued operations		(252,007)		—		—			(252,007)
(Loss) income from operations before income taxes	$	(7,679,692)	$	1,291,308	$	(509,060)		$	(6,897,444)
Provision for income taxes		—		—		—			—
Net (loss) income	$	(7,679,692)	$	1,291,308	$	(509,060)		$	(6,897,444)
Deemed dividend		(830,494)		—		—			(830,494)
Net (loss) income attributable to common stockholders	$	(8,510,186)	$	1,291,308	$	(509,060)		$	(7,727,938)
Per share data - Basic and diluted
Net loss from continuing operations per share	$	(0.15)		—	$	(0.02)		$	(0.09)
Net loss from discontinued operations per share	$	(0.00)		—	$	0.00		$	(0.00)
Net loss attributable to common stockholders per share	$	(0.17)		—	$	(0.02)		$	(0.11)
Weighted average number of common shares outstanding		50,895,301		—		22,380,310			73,275,611

GENERAL CANNABIS CORP

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

NOTE 1.BASIS OF PRESENTATION

The unaudited pro forma condensed combined financial information set forth herein is based upon the consolidated financial statements of General Cannabis Corp and TREES Colorado. The unaudited pro forma condensed combined financial information is presented as if the transaction had been completed on January 1, 2020 with respect to the unaudited pro forma condensed combined statements of operations for each of the six months ended June 30, 2021 and for the year ended December 31, 2020 and on June 30, 2021 in respect of the unaudited pro forma condensed combined balance sheet.

The unaudited pro forma condensed combined financial information is presented for informational purposes only and is not necessarily indicative of the combined financial position or results of operations had the transaction occurred as of the dates indicated, nor is it meant to be indicative of any anticipated combined financial position or future results of operations that the combined company will experience after the completion of the transactions.

We have accounted for the acquisition in this unaudited pro forma condensed combined financial information using the acquisition method of accounting, in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 805 “Business Combinations” (“ASC 805”). In accordance with ASC 805, we use our best estimates and assumptions to assign fair value to the tangible and intangible assets acquired and liabilities assumed at the acquisition date. Goodwill as of the acquisition date is measured as the excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired.

Pro forma adjustments reflected in the unaudited pro forma condensed combined balance sheet are based on items that are factually supportable and directly attributable to the transaction. Pro forma adjustments reflected in the pro forma condensed combined statements of operations are based on items that are factually supportable, directly attributable to the transaction and expected to have a continuing impact on the combined results. The unaudited pro forma condensed combined financial information does not reflect the cost of any integration activities or benefits from the transaction, including potential synergies that may be generated in future periods.

NOTE 2. DESCRIPTION OF THE TRANSACTION

On September 2, 2021, General Cannabis completed the acquisition of substantially all of the assets of TREES Colorado, representing a portion of the overall Trees transaction previously disclosed pursuant to that certain First Amended and Restated Agreement and Plan of Reorganization and Liquidation dated May 28, 2021 by and among the Company, Seller and certain other sellers party thereto, that consists of the assets relating to the Trees dispensary located in Englewood, Colorado (“Englewood Closing”). The cash paid by the Company in connection with the Englewood Closing consisted of $1,154,956.09 and the stock consideration shall be 22,380,310 shares of the Company’s Common Stock. Further, cash equal to $1,732,884.14 will be paid to Seller in equal monthly installments over a period of 24 months from the Englewood Closing.

NOTE 3.PURCHASE PRICE ALLOCATION

The preliminary allocation for the consideration recorded for the acquisition is as follows:

Cash	$	32,941
Fixed assets		59,335
Inventory		586,495
Tradename		5,000,000
Goodwill		7,615,913
Total Purchase Price Consideration	$	13,294,684

The purchase price allocation is preliminary. The purchase price allocation will continue to be preliminary until a valuation is finalized and the fair value and useful life of the assets acquired is determined. The amounts from the final valuation may significantly differ from the preliminary allocation.

NOTE 4.PRO FORMA ADJUSTMENTS

The following pro forma adjustments give effect to the transaction:

Unaudited Pro Forma Condensed Combined Balance Sheet – As of June 30, 2021

Note ATo remove TREES Colorado assets, liabilities, and equity that were not acquired or assumed

Note BTo record cash, additional paid in capital, common stock, and promissory note as consideration

Note CTo record certain inventory from TREES Colorado

Note DTo record certain property, plant, and equipment acquired from TREES Colorado

Note ETo record goodwill and intangibles from acquisition

Unaudited Pro Forma Condensed Statement of Operations – For The Six Months Ended June 30, 2021

Note ATo adjust depreciation expense to remove depreciation for assets not acquired

Note BTo record amortization of intangibles acquired from TREES Colorado

Unaudited Pro Forma Condensed Statement of Operations – For The Year Ended December 31, 2020

Note ATo adjust depreciation expense to remove depreciation for assets not acquired

Note BTo record amortization of intangibles acquired from TREES Colorado