UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


                                        


FORM 8-K


CURRENT REPORT


Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


Date of Report (Date of earliest event reported): August 1, 2019


GENERAL CANNABIS CORP

 (Exact Name of Registrant as Specified in Charter)


Colorado

000-54457

90-1072649

(State or other jurisdiction

of incorporation)

(Commission File Number)

(I.R.S. Employer Identification Number)


6565 E. Evans Avenue
Denver, Colorado

 

80224

(Address of principal executive offices)

 

(Zip Code)


Registrant’s telephone number, including area code: (303) 759-1300


(Former name or former address, if changed since last report)


Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:


[_]

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[_]

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[_]

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[_]

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


Securities registered pursuant to Section 12(b) of the Act:


Title of each class

Trading Symbol(s)

Name of each exchange
on which registered

N/A

N/A

N/A


Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).


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. ¨





Item 5.02

 

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.


Appointment of Chief Executive Officer


On August 5, 2019, the Board appointed Michael Feinsod as Chief Executive Officer of General Cannabis Corp (the “Company”). Mr. Feinsod has held the position of Interim Chief Executive Officer of the Company since January 7, 2019. The information required by Items 401 and 404(a) of Regulation S-K for Mr. Feinsod is hereby incorporated by reference from the Company’s Proxy Statement filed with the Securities and Exchange Commission on April 30, 2019.  


In connection with his appointment as Chief Executive Officer, Mr. Feinsod and the Company entered into an amendment to Mr. Feinsod’s prior employment agreements with the Company dated January 21, 2019 and December 8, 2017 (the “Amendment”). Pursuant to the Amendment, Mr. Feinsod was granted  an option (the “Stock Option) to purchase 1,000,000 shares of the Company’s common stock, with a par value of $0.01 per share (“Common Stock”), with an exercise price equal to $0.83 per share, which was the closing price of the Common Stock on the OTCQX on the date of grant.  The Stock Option shall vest in full on the first date on which the closing price for Common Stock equals or exceeds $4.51 per share for five (5) consecutive trading days.  The Amendment provides that in the event Mr. Feinsod’s service as Chief Executive Officer/Executive Chairman is terminated without Cause, Mr. Feinsod resigns with Good Reason, or upon Mr. Feinsod’s death or Disability (each as defined therein), (i) the Stock Option shall become immediately vested and exercisable, and (ii) Mr. Feinsod shall have the full 10-year option term to exercise the Stock Option as well as any other stock options held by Mr. Feinsod at such time. The foregoing description of Mr. Feinsod’s Amendment to Agreements is not complete and is qualified in its entirety by reference to the full text of the agreement, a copy of which is attached hereto as Exhibit 10.1 and is incorporated herein by reference.


Resignation of Director


On August 1, 2019, Duncan Levin notified the board of directors of the Company of his resignation from the board, effective immediately. Mr. Levin previously held positions on the Board’s audit committee and nominating and governance committee of the Company’s board of directors. Mr. Levin’s resignation from the Board was not due to any dispute or disagreement with the Company on any matter relating to the Company’s operations, policies or practices.


Item 7.01.

 

Regulation FD Disclosure.


On August 6, 2019, the Company issued a press release announcing it has entered into a non-binding term sheet to acquire substantially all of the assets of a licensed recreational cannabis cultivator in Colorado. A copy of the press release is filed and attached hereto as Exhibit 99.1.


The information in this Item 7.01 of this Current Report on Form 8-K and the related Exhibit 99.1 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.


Item 9.01

 

Financial Statements and Exhibits.


(d) Exhibits


Exhibit No.

 

Description

10.1

 

Amendment to Agreements, dated August 6, 2019, between Michael Feinsod and General Cannabis Corp.

99.1

 

Press release, dated August 6, 2019



SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Dated: August 6, 2019


 

GENERAL CANNABIS CORP

 

 

 

 

 

 

 

By:

/s/ Brian Andrews

 

Name:

Brian Andrews

 

Title:

Chief Financial Officer





Exhibit 10.1

AMENDMENT TO

AGREEMENTS

This Amendment, dated as of August 6, 2019 (the "Amendment") is by and between General Cannabis Corp. (the "Company") and Michael Feinsod (the "Employee").

WHEREAS, the Company and the Employee entered into an Employment Agreement dated as of January 21, 2019 with respect to Employee's services as Interim Chief Executive Officer of the Company (the "Employment Agreement");

WHEREAS, the Company and the Employee entered into an Employment Agreement dated as of December 8, 2017 with respect to Employee's services as Executive Chairman of the Company (the "Executive Chairman Agreement");

WHEREAS, the Company and the Executive desire to amend the Employment Agreement pursuant to the terms of Section 19 of the Employment Agreement and amend the Executive Chairman Agreement pursuant to the terms of Section 10(g) of the Executive Chairman Agreement; and

WHEREAS, capitalized terms not otherwise defined in this Amendment shall have the meanings set forth in the Employment Agreement or the Executive Chairman Agreement.

NOW THEREFORE, in consideration of the premises and mutual covenants contained herein and for other good and valuable consideration, the receipt of which is mutually acknowledged, the Company and the Employee agree as follows:

1.

For purposes of the Employment Agreement, all references to "Interim Chief Executive Officer" shall be replaced with "Chief Executive Officer."

2.

Section 4(c) of the Employment Agreement shall be amended to add the following as a new Section 4(c)(3):

On the date of this Amendment, Employee shall be granted an option to purchase 1,000,000 shares of the Company's Common Stock.  The option shall vest in full on the first date on which the closing price for the Company's Common Stock equals or exceeds $4.51 per share for five (5) consecutive trading days; provided, that, notwithstanding any provision contained in the Employment Agreement, the Executive Chairman Agreement, any stock option agreement or the Plan to the contrary, in the event that Employee's employment as Chief Executive Officer/Executive Chairman is terminated without Cause, the Employee resigns with Good Reason or upon the Employee's death or Disability, the option shall become immediately vested and exercisable and the Employee shall have the full 10-year option term to exercise such option.  The option shall have an exercise price equal to the closing price of the Company's Common Stock on the date of this Amendment.  The option shall be granted under the Plan and shall be subject to the terms and conditions of the Plan and the applicable stock option agreement but subject to the terms of this Section 4(c)(3).

3.

Notwithstanding any provision contained in the Employment Agreement, the Executive Chairman Agreement, any stock option agreement or the Plan to the contrary, in the event that Employee's employment as Chief Executive Officer/Executive Chairman is terminated without Cause, the Employee resigns with Good Reason or upon the Employee's death or Disability, all options shall become immediately vested and exercisable and the Employee shall have the full 10-year option term to exercise such options.


IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the date first set forth above.

COMPANY

General Cannabis Corp.

By: /s/ Brian Andrews                                   

Name: Brian Andrews

Title: Chief Financial Officer

EMPLOYEE

/s/ Michael Feinsod                                       

Name:  Michael Feinsod



Exhibit 99.1


General Cannabis Announces Entry into Term Sheet For Strategic Acquisition of Premium Cultivation Facility


Denver, August 6, 2019 – General Cannabis Corp (OTCQX: CANN) (the “Company”), the comprehensive national resource to the regulated cannabis industry, today announced that it has entered into a non-binding term sheet to acquire substantially all of the assets of a licensed recreational cannabis cultivator in Colorado (the “Business”).  The seller of the Business operates a light deprivation greenhouse facility with approximately 15,000 square feet and an additional 2,000 square feet of indoor space used to manage the Business.  


This potential transaction follows the Company’s recent announcement of its entry into a non-binding term sheet to acquire substantially all of the assets of The Organic Seed, LLC, doing business as Cannaseur. The Company is taking these actions based on the signing of Colorado House Bill 1090 (“HB-1090”), a recently approved law allowing public companies to own Colorado-licensed cannabis companies.  Once the regulations surrounding the implementation of the law are finalized, the Company plans to enter into a binding transaction for the Business.


It is anticipated that General Cannabis will pay consideration consisting of half cash and half in shares of the Company’s common stock for virtually all of the tangible and intangible assets of the Business.  The number of common shares issued at closing will be determined based on the 30-day volume weighted average price, subject to a ceiling and a floor. The term sheet also provides that General Cannabis will enter into a five-year lease for the cultivation facility with options for extension and the management team of the Business will stay on after the acquisition.


“We are pleased to announce our plans to acquire a second licensed Colorado cannabis operator,” said Michael Feinsod, Executive Chairman and CEO of General Cannabis.  “This facility will pair us with a premier cultivator and expands our solid base for us to leverage our skill set as HB-1090 is implemented.  We look forward to integrating this facility, and its team, into the General Cannabis family.  This acquisition will bring our anticipated cultivation space to approximately 30,000 square feet.”  


“Colorado has been the national leader in legalized cannabis rollout.  With statewide trailing twelve month retail sales of over $1.5 billion, we believe Colorado cannabis cultivators and retailers are poised to take advantage of this new significant access to the public capital markets,” said Feinsod.  “The leading operators in Colorado have achieved success operating at scale and, we believe, are excellent acquisition candidates.  We plan to continue to acquire additional licensed cannabis assets within Colorado and other regulated markets.  Our strong platform can create a synergistic opportunity for Colorado operators looking to grow with us.”


About General Cannabis Corp


General Cannabis Corp is the comprehensive national resource for the highest quality service providers available to the regulated cannabis industry. We are a trusted partner to the cultivation, production and retail sides of the cannabis business. We do this through a combination of strong operating divisions such as security, operational consulting and products, consumer goods and marketing consulting, and capital investments and real estate.  As a synergistic holding company, our divisions are able to leverage the strengths of each other, as well as a larger balance sheet, to succeed. Our website address is www.generalcann.com.


Forward-looking Statements


This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.   Such forward-looking statements include statements regarding the Company’s plans to enter into a binding agreement to purchase the Business, the proposed terms of the transaction, the timing of the implementation of HB-1090, the expected benefits of HB-1090, and the Company’s plans to acquire additional licensed cannabis assets within Colorado.


Any statements that are not statements of historical fact, such as the statements described above, should be considered forward-looking statements.  Some of these statements may be identified by the use of the words “may,” “will,” “believes,” “plans,” “anticipates,” “expects” and similar expressions.  The Company has based these forward-looking statements on current expectations and projections about future events as of the date of this press release.  These forward-looking statements are not guarantees of future performance, conditions or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including the possibility that the proposed transaction is not consummated, changes in the Company’s share price, the benefits from the potential transaction may not be fully realized or may take longer to realize than expected, and those factors described from time to time in the Company’s most recent Annual Report on Form 10-K and most recent Quarterly Report on Form 10-Q under the heading “Risk Factors” and in subsequent filings with the Securities and Exchange Commission. The Company undertakes no duty to update any forward-looking statements made herein.



Contact


Brian Andrews

Chief Financial Officer

General Cannabis Corp

(303) 759-1300


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