0001683168-21-003724 | 10-Q | XBRL Viewer | Medicine MAN Technologies INC

Cover - shares	6 Months Ended
Cover - shares	Jun. 30, 2021	Aug. 16, 2021
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Jun. 30, 2021
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2021
Current Fiscal Year End Date	--12-31
Entity File Number	000-55450
Entity Registrant Name	MEDICINE MAN TECHNOLOGIES, INC.
Entity Central Index Key	0001622879
Entity Tax Identification Number	46-5289499
Entity Incorporation, State or Country Code	NV
Entity Address, Address Line One	4880 Havana Street
Entity Address, Address Line Two	Suite 201
Entity Address, City or Town	Denver
Entity Address, State or Province	CO
Entity Address, Postal Zip Code	80239
City Area Code	303
Local Phone Number	371-0387
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Elected Not To Use the Extended Transition Period	true
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		45,139,297

CONDENSED BALANCE SHEETS (Unaudited) - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Current assets
Cash and cash equivalents	$ 21,130,769	$ 1,231,235
Accounts receivable, net of allowance for doubtful accounts	3,204,941	1,270,380
Accounts receivable – related party	0	80,494
Inventory	9,182,942	2,619,145
Note receivable – current, net	144,223	0
Notes receivable – related party	0	181,911
Prepaid expenses	1,865,138	614,200
Total current assets	35,528,013	5,997,365
Non-current assets
Fixed assets, net accumulated depreciation of $1,291,349 and $872,579, respectively	3,476,546	2,584,798
Goodwill	41,505,944	53,046,729
Intangible assets, net accumulated amortization of $4,553,827 and $200,456, respectively	94,861,253	3,082,044
Marketable securities, net of unrealized gain (loss) of $221,257 and $(129,992), respectively	498,039	276,782
Note receivable – noncurrent, net	71,667	0
Accounts receivable – litigation	3,063,968	3,063,968
Other noncurrent assets	419,472	51,879
Operating lease right of use assets	3,934,370	2,579,036
Total non-current assets	147,831,259	64,685,236
Total assets	183,359,272	70,682,601
Current liabilities
Accounts payable	2,335,217	3,508,478
Accounts payable – related party	40,323	48,982
Accrued expenses	10,279,124	2,705,445
Derivative liabilities	436,554	1,047,481
Deferred revenue	0	50,000
Notes payable – related party	0	5,000,000
Total current liabilities	13,091,218	12,360,386
Long-term liabilities
Long term debt	54,250,000	13,901,759
Lease liabilities	4,078,375	2,645,597
Total long-term liabilities	58,328,375	16,547,356
Total liabilities	71,419,593	28,907,742
Shareholders’ equity
Common stock $0.001 par value. 250,000,000 authorized, 42,925,303 shares issued and 42,408,259 outstanding as of June 30, 2021 and 42,601,773 shares issued and 42,169,041 outstanding as of December 31, 2020, respectively.	42,925	42,602
Preferred stock $0.001 par value. 10,000,000 authorized. 87,266 shares issued and outstanding as of June 30, 2021 and 19,716 shares issued and outstanding as of December 31, 2020, respectively.	87	20
Additional paid-in capital	158,787,183	85,357,835
Accumulated deficit	(45,373,480)	(42,293,098)
Common stock held in treasury, at cost, 517,044 shares held as of June 30, 2021 and 432,732 shares held as of December 31, 2020.	(1,517,036)	(1,332,500)
Total shareholders' equity	111,939,679	41,774,859
Total liabilities and stockholders’ equity	$ 183,359,272	$ 70,682,601

CONDENSED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2021	Dec. 31, 2020
Statement of Financial Position [Abstract]
Accumulated depreciation	$ 1,291,349	$ 872,579
Accumulated amortization	4,553,827	200,456
Marketable Securities, Unrealized Gain (Loss)	$ 221,257	$ (129,992)
Common stock par value	$ 0.001	$ 0.001
Common stock authorized	250,000,000	250,000,000
Common stock issued	42,925,303	42,601,773
Common stock outstanding	42,408,259	42,169,041
Preferred stock par value	$ 0.001	$ 0.001
Preferred stock authorized	10,000,000	10,000,000
Preferred stock issued	87,266	19,716
Preferred stock outstanding	87,266	19,716
Treasury Stock, Common, Shares	517,044	432,732

CONDENSED STATEMENT OF COMPREHENSIVE (LOSS) AND INCOME (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Operating revenues
Total revenue	$ 30,728,841	$ 5,424,329	$ 50,068,955	$ 8,627,463
Cost of goods and services
Cost of goods and services	15,826,341	3,106,686	27,913,451	5,255,221
Total cost of goods and services	15,826,341	3,106,686	27,913,451	5,255,221
Gross profit	14,902,500	2,317,643	22,155,504	3,372,242
Operating Expenses
Selling, general and administrative expenses	4,797,495	1,088,479	7,987,134	1,755,398
Professional services	1,519,016	2,371,743	3,714,124	3,620,731
Salaries	2,992,055	2,098,291	4,861,413	4,095,327
Stock based compensation	1,153,018	3,109,091	2,636,824	4,361,822
Total operating expenses	10,461,584	8,667,604	19,199,494	13,833,278
Income (loss) from operations	4,440,916	(6,349,961)	2,956,010	(10,461,036)
Other income (expense)
Interest income (expense), net	(1,713,770)	(11,447)	(2,675,053)	36,595
Gain on forfeiture of contingent consideration	0	0	0	1,462,636
Unrealized gain (loss) on derivative liabilities	1,864,741	(348,535)	610,927	843,428
Other income (expense)	0	32,621	0	32,621
Gain (loss) on sale of assets	0	0	292,479	0
Unrealized gain (loss) on investments	6,627	81,615	221,257	110,739
Total other income (expense)	157,598	(245,746)	(1,550,390)	2,486,019
Provision for income tax (benefit) expense	228,474	0	685,088	0
Net income (loss)	$ 4,370,040	$ (6,595,707)	$ 720,532	$ (7,975,017)
Earnings (loss) per share attributable to common shareholders:
Basic earnings (loss) per share	$ 0.10	$ (0.16)	$ 0.02	$ (0.20)
Diluted earnings (loss) per share	$ 0.08	$ (0.16)	$ 0.01	$ (0.20)
Weighted average number of shares outstanding - basic	42,332,144	41,568,147	42,286,168	40,742,462
Weighted average number of shares outstanding - diluted	53,975,521	41,568,147	53,886,727	40,742,462
Comprehensive income (loss)	$ 4,370,040	$ (6,595,707)	$ 720,532	$ (7,975,017)
Retail [Member]
Operating revenues
Total revenue	21,525,816	732,457	33,342,016	732,457
Wholesale [Member]
Operating revenues
Total revenue	9,186,181	4,106,197	16,632,445	6,635,128
Other [Member]
Operating revenues
Total revenue	$ 16,844	$ 585,675	$ 94,494	$ 1,259,878

STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited) - USD ($)	Preferred Stock [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Treasury Stock [Member]	Total
Beginning balance, value at Dec. 31, 2019		$ 39,953	$ 50,356,469	$ (22,816,477)	$ (1,000,000)	$ 26,579,945
Beginning balance, shares at Dec. 31, 2019		39,952,628			257,732
Net income (loss)				(7,975,017)		(7,975,017)
Issuance of common stock as payment for Mesa		$ 2,555	4,167,253			4,169,808
Issuance of common stock as payment for Mesa, shares		2,554,750
Return of common stock as compensation to employees, officers and/or directors		$ (500)				(500)
Return of common stock as compensation to employees, officers and/or directors, shares		(500,000)
Issuance of stock in connection with sales made under private or public offerings		$ 187	374,813			375,000
Issuance of common stock in connection with sales made under private or public offerings, shares		187,500
Stock based compensation expense related to common stock options			4,361,822			4,361,822
Ending balance, value at Jun. 30, 2020		$ 42,195	59,260,357	(30,791,494)	$ (1,000,000)	27,511,058
Ending balance, shares at Jun. 30, 2020		42,194,878			257,732
Beginning balance, value at Dec. 31, 2019		$ 39,953	50,356,469	(22,816,477)	$ (1,000,000)	26,579,945
Beginning balance, shares at Dec. 31, 2019		39,952,628			257,732
Ending balance, value at Dec. 31, 2020	$ 20	$ 42,602	85,357,835	(42,293,098)	$ (1,332,500)	41,774,859
Ending balance, shares at Dec. 31, 2020	19,716	42,601,773			432,732
Beginning balance, value at Mar. 31, 2020		$ 39,953	51,609,200	(24,195,787)	$ (1,000,000)	26,453,366
Beginning balance, shares at Mar. 31, 2020		39,952,628			257,732
Net income (loss)				(6,595,707)		(6,595,707)
Issuance of common stock as payment for Mesa		$ 2,555	4,167,253			4,169,808
Issuance of common stock as payment for Mesa, shares		2,554,750
Return of common stock as compensation to employees, officers and/or directors		$ (500)				(500)
Return of common stock as compensation to employees, officers and/or directors, shares		(500,000)
Issuance of stock in connection with sales made under private or public offerings		$ 187	374,813			375,000
Issuance of common stock in connection with sales made under private or public offerings, shares		187,500
Stock based compensation expense related to common stock options			3,109,091			3,109,091
Ending balance, value at Jun. 30, 2020		$ 42,195	59,260,357	(30,791,494)	$ (1,000,000)	27,511,058
Ending balance, shares at Jun. 30, 2020		42,194,878			257,732
Beginning balance, value at Dec. 31, 2020	$ 20	$ 42,602	85,357,835	(42,293,098)	$ (1,332,500)	41,774,859
Beginning balance, shares at Dec. 31, 2020	19,716	42,601,773			432,732
Net income (loss)				720,532		720,532
Issuance of stock as payment for acquisitions	$ 20		20,239,980			20,240,000
Issuance of stock as payment for acquisitions, shares	20,240
Issuance of common stock as compensation to employees, officers, and/or directors		$ 323	680,538			680,861
Issuance of common stock as compensation to employees, officers, and/or directors, shares		323,530
Issuance of stock in connection with sales made under private or public offerings	$ 47		50,449,159			50,449,206
Issuance of common stock in connection with sales made under private or public offerings, shares	47,310
Dividends declared				(3,800,914)		(3,800,914)
Return of common stock					$ (184,536)	(184,536)
Return of common stock, shares					84,312
Stock based compensation expense related to common stock options			2,059,671			2,059,671
Ending balance, value at Jun. 30, 2021	$ 87	$ 42,925	158,787,183	(45,373,480)	$ (1,517,036)	111,939,679
Ending balance, shares at Jun. 30, 2021	87,266	42,925,303			517,044
Beginning balance, value at Mar. 31, 2021	$ 87	$ 42,820	157,530,563	(46,823,076)	$ (1,445,696)	109,304,698
Beginning balance, shares at Mar. 31, 2021	87,266	42,819,815			488,220
Net income (loss)				4,370,040		4,370,040
Issuance of stock as payment for acquisitions
Issuance of common stock as compensation to employees, officers, and/or directors		$ 105	235,950			236,056
Issuance of common stock as compensation to employees, officers, and/or directors, shares		105,488
Issuance of stock in connection with sales made under private or public offerings
Dividends declared				(2,920,446)		(2,920,446)
Return of common stock					$ (71,340)	(71,340)
Return of common stock, shares					28,824
Stock based compensation expense related to common stock options			1,020,671			1,020,671
Ending balance, value at Jun. 30, 2021	$ 87	$ 42,925	$ 158,787,183	$ (45,373,480)	$ (1,517,036)	$ 111,939,679
Ending balance, shares at Jun. 30, 2021	87,266	42,925,303			517,044

STATEMENT OF CASH FLOWS (Unaudited) - USD ($)	6 Months Ended
STATEMENT OF CASH FLOWS (Unaudited) - USD ($)	Jun. 30, 2021	Jun. 30, 2020
Cash flows from operating activities
Net income (loss) for the period	$ 720,532	$ (7,975,017)
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	4,807,147	94,269
Gain on forfeiture of contingent consideration	0	0
(Gain) loss on change in derivative liabilities	(610,927)	(2,306,064)
(Gain) loss on investment, net	(221,257)	(110,739)
(Gain) loss on sale of asset	(292,479)	0
Stock based compensation	2,636,824	4,361,822
Changes in operating assets and liabilities
Accounts receivable	(1,854,067)	780,772
Inventory	(3,368,807)	445,345
Prepaid expenses and other current assets	(1,250,938)	107,417
Other assets	(367,593)	(41,879)
Operating lease right of use assets and liabilities	77,444	16,773
Accounts payable and other liabilities	1,169,537	575,153
Deferred Revenue	(50,000)	0
Income taxes payables	0	(1,940)
Net cash provided by (used in) operating activities	1,395,416	(4,054,088)
Cash flows from investing activities
Purchase of fixed assets - net	(1,203,180)	(593,785)
Cash consideration for acquisition of business	(66,082,072)	(2,609,500)
Collection (issuance) of notes receivable	181,911	(50,390)
Purchase of intangible assets	(29,580)	0
Net cash (used in) investing activities	(67,132,921)	(3,253,675)
Cash flows from financing activities
Proceeds from issuance of debt, net	40,348,241	374,500
Repayment of notes payable	(5,000,000)	0
Proceeds from issuance of stock, net of issuance costs	50,282,798	0
Net cash provided by financing activities	85,631,039	374,500
Net (decrease) increase in cash and cash equivalents	19,893,534	(6,933,263)
Cash and cash equivalents at beginning of period	1,237,235	12,351,580
Cash and cash equivalents at end of period	21,130,769	5,418,317
Supplemental disclosure of cash flow information:
Cash paid for interest	$ 2,131,495	$ 0

Organization and Nature of Operations

6 Months Ended

Jun. 30, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Nature of Operations

Organization and Nature of Operations

Medicine Man Technologies, Inc. (“we,” “us,” “our” or the “Company”) was incorporated in Nevada on March 20, 2014. On May 1, 2014, we entered into a non-exclusive Technology License Agreement with Futurevision, Inc., f/k/a Medicine Man Production Corp., dba Medicine Man Denver (“Medicine Man Denver”) pursuant to which Medicine Man Denver granted us a license to use all of the proprietary processes that they had developed, implemented and practiced at their cannabis facilities relating to the commercial growth, cultivation, marketing and distribution of medical and recreational marijuana pursuant to relevant state laws and the right to use and to license such information, including trade secrets, skills and experience (present and future) (the “License Agreement”) for 10 years.

In 2017, the Company acquired additional cultivation intellectual property through the acquisition of Success Nutrients™ and Pono Publications, including the rights to the book titled “Three A Light” and its associated cultivation techniques, which have been part of the Company’s products and services offerings since the acquisition. The Company acquired Two J’s LLC d/b/a The Big Tomato (“The Big Tomato”) in 2018, which operates a retail location in Aurora, Colorado. It has been a leading supplier of hydroponics and indoor gardening supplies in the metro Denver area since May 2001. The Company was focused on cannabis dispensary and cultivation consulting and providing equipment and nutrients to cannabis cultivators until its first plant touching acquisition in April of 2020. In 2019, due to the changes in Colorado law permitting non-Colorado resident and publicly traded investment into “plant-touching” cannabis companies, the Company made a strategic decision to move toward direct plant-touching operations. The Company developed a plan to roll up a number of direct plant-touching dispensaries, manufacturing facilities, and cannabis cultivations with a target to be one of the largest seed to sale cannabis businesses in Colorado. In April 2020, the Company acquired its first plant-touching business, Mesa Organics Ltd. (“Mesa Organics”), which consists of four dispensaries and one manufacturing infused products facility (“MIP”), d/b/a Purplebee’s.

On April 20, 2020, the Company rebranded and conducts its business under the trade name, Schwazze. The corporate name of the Company continues to be Medicine Man Technologies, Inc. Effective April 21, 2020, the Company commenced trading under the OTC ticker symbol SHWZ.

On December 17, 2020, the Company acquired the assets of (i) Starbuds Pueblo LLC; and (ii) Starbuds Alameda LLC under the applicable Asset Purchase Agreements (“APAs”). On December 18, 2020, the Company acquired the assets of (i) Starbuds Commerce City LLC; (ii) Lucky Ticket LLC; (iii) Starbuds Niwot LLC; and (iv) LM MJC LLC under the applicable APAs.

On February 4, 2021, the Company acquired the assets of Colorado Health Consultants LLC and Mountain View 44th LLC under the applicable APAs.

On March 2, 2021, the Company acquired the assets of (i) Starbuds Aurora LLC, (ii) SB Arapahoe LLC; (iii) Citi-Med LLC; (iv) Starbuds Louisville LLC; and (v) KEW LLC under the applicable APAs.

From December 2020 through March 2021 the Company completed a private placement of Series A Cumulative Convertible Preferred Stock (“Series A Preferred Stock”) for aggregate gross proceeds of $57.7 million dollars. In the private placement, the Company issued and sold an aggregate of 57,700 shares of Series A Preferred Stock at a price of $1,000 per share under securities purchase agreement with Dye Capital Cann Holdings II, LLC (“Dye Cann II”) and CRW Cann Holdings, LLC (“CRW”) as well as subscription agreements with unaffiliated investors. Among other terms, each share of Series A Preferred Stock (i) earns an annual dividend of 8% on the “preference amount,” which initially is equal to the $1,000 per-share purchase price and subject to increase, by having such dividends automatically accrete to, and increase, the outstanding preference amount; (ii) is entitled to a liquidation preference under certain circumstances, (iii) is convertible into shares of the Company’s common stock by dividing the preference amount by $1.20 per share under certain circumstances, and (iv) is subject to a redemption right or obligation under certain circumstances.

In addition, on December 16, 2020, the Company issued and sold a Convertible Promissory Note and Security Agreement in the original principal amount of $5,000,000 to Dye Capital & Company, LLC (“Dye Capital”). On February 26, 2021, Dye Capital converted all outstanding amounts under the note into 5,060 shares of Series A Preferred Stock.

The Company is focused on growing through internal growth, acquisition, and new licenses in the Colorado cannabis market. The Company is focused on building the premier vertically integrated cannabis company in Colorado. The company's leadership team has deep expertise in mainstream consumer packaged goods, retail, and product development at Fortune 500 companies as well as in the cannabis sector. The Company has a high-performance culture and a focus on analytical decision making, supported by data. Customer-centric thinking inspires the Company’s strategy and provides the foundation for the Company’s operational playbooks.

The Company’s operations are organized into three different segments as follows: (i) retail, consisting of retail locations for sale of cannabis products, (ii) wholesale, consisting of manufacturing and sale of wholesale cannabis products, nutrients for cannabis, and hydroponics and indoor gardening supplies, and (iii) other, consisting of all other income and expenses, including those related to licensing and consulting services, facility design services, facility management services, and corporate operations.

Liquidity and Capital Resources

6 Months Ended

Jun. 30, 2021

Liquidity And Capital Resources

Liquidity and Capital Resources

1.	Liquidity and Capital Resources

During the quarters ended June 30, 2021 and 2020, the Company primarily used revenues from its operations to fund its operations.

Cash and cash equivalents are carried at cost and represent cash on hand, deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date. The Company had $21,130,769 and $1,231,235 classified as cash and cash equivalents as of June 30, 2021, and December 31, 2020, respectively.

The Company maintains its cash balances with a high-credit-quality financial institution. At times, such cash may be more than the insured limit of $250,000. The Company has not experienced any losses in such accounts, and management believes the Company is not exposed to any significant credit risk on its cash and cash equivalents.

Critical Accounting Policies and Estimates

6 Months Ended

Jun. 30, 2021

Accounting Policies [Abstract]

Critical Accounting Policies and Estimates

2.	Critical Accounting Policies and Estimates

Management’s Representation of Interim Financial Statements

The accompanying unaudited consolidated financial statements have been prepared by the Company without audit pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted as allowed by such rules and regulations, and management believes that the disclosures are adequate to make the information presented not misleading. These unaudited consolidated financial statements include all of the adjustments, which in the opinion of management are necessary to a fair presentation of the Company’s financial position and results of operations. All such adjustments are of a normal and recurring nature. Interim results are not necessarily indicative of results for a full year. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of December 31, 2020 and 2019, as presented in the Company’s Annual Report on Form 10-K filed on March 31, 2021 with the SEC.

Basis of Presentation

These accompanying financial statements have been prepared in accordance with U.S. GAAP and pursuant to the rules and regulations of the SEC for interim financial statements. All intercompany accounts and transactions are eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported therein. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may be based upon amounts that differ from these estimates.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications had no impact on net earnings and financial position.

Fair Value Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability, in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy is based on three levels of inputs, of which the first two are considered observable and the last unobservable, as follows:

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the measurement of the fair value of the assets or liabilities.

The Company’s financial instruments include cash, accounts receivable, notes receivable, accounts payable and tenant deposits. The carrying values of these financial instruments approximate their fair value due to their short maturities. The carrying amount of the Company’s debt approximates fair value because the interest rates on these instruments approximate the interest rate on debt with similar terms available to us. The Company’s derivative liability was adjusted to fair market value at the end of each reporting period, using Level 3 inputs.

The following is the Company’s assets and liabilities measured at fair value on a recurring and nonrecurring basis at June 30, 2021 and December 31, 2020, using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3):

June 30,

2021

December 31,

2020

Level 1 – Marketable Securities Available-for-Sale – Recurring

498,039

276,782

Marketable Securities at Fair Value on a Recurring Basis

Certain assets are measured at fair value on a recurring basis. The Level 1 position consists of an investment in equity securities held in Canada House Wellness Group, Inc., a publicly-traded company whose securities are actively quoted on the Toronto Stock Exchange.

Fair Value of Financial Instruments

The carrying amounts of cash and current assets and liabilities approximate fair value because of the short-term maturity of these items. These fair value estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect these estimates. Available-for-sale securities are recorded at current market value as of the date of this report.

Accounts Receivable

The Company extends unsecured credit to its customers in the ordinary course of business. These accounts receivable relates to the Company’s wholesale and other revenue segments. Accounts receivable are recorded when a milestone is reached at a point in time resulting in funds being due for delivered goods or services, and where payment is reasonably assured. Wholesale revenues are generally collected within 14 to 30 days after invoice is sent. Consulting revenues are generally collected from 30 to 60 days after the invoice is sent.

The following table depicts the composition of our accounts receivable as of June 30, 2021, and December 31, 2020:

Schedule of Accounts Receivable
	June 30, 2021			December 31, 2020

Accounts receivable – trade	$	3,377,879		$	1,315,188
Accounts receivable – related party		–			80,494
Accounts receivable – litigation, non-current		3,063,968			3,063,968
Allowance for doubtful accounts		(172,938	)		(44,808	)
Total accounts receivable	$	6,268,909		$	4,414,842

The Company establishes an allowance for doubtful accounts based on management’s assessment of the collectability of trade receivables. A considerable amount of judgment is required in assessing the amount of the allowance. The Company makes judgments about the creditworthiness of each customer based on ongoing credit evaluations and monitors current economic trends that might impact the level of credit losses in the future. If the financial condition of the customers were to deteriorate, resulting in their inability to make payments, a specific allowance will be required.

Notes Receivable

On July 17, 2018, the Company entered into an intellectual property license agreement with Abba Medix Corp. (“AMC”), a wholly owned subsidiary of publicly traded Canada House Wellness Group, Inc.. The Company agreed to provide a lending facility to AMC in CAD$125,000 increments of up to CAD$500,000. The lending facility is for a term of 60 months and bears interest at a rate of 2%. On April 30, 2019, the terms of the loan were amended to reduce the term from 60 months to 36 months. As of June 30, 2021 and December 31, 2020, the outstanding balance, including accrued interest, on the notes receivable with AMC totaled $246,765 and $246,765, respectively. As of June 30, 2021 and December 31, 2020, the Company has recorded a full allowance on the note receivable balance.

On March 12, 2021, the Company sold equipment to Colorado Cannabis. The terms of sale included a zero interest note receivable, payable $11,944 on the first of each month for 24 months. As of June 30, 2021, the outstanding balance, including penalties for late payments, on the notes receivable with Colorado Cannabis totaled $215,890.

Other Assets (Current and Non-Current)

Other assets as of June 30, 2021 and December 31, 2020 were $2,284,610 and $666,079, respectively. As of June 30, 2021, this balance included $1,865,138 in prepaid expenses and $419,472 in security deposits. As of December 31, 2020, other assets included $345,777 in prepaid expenses, $268,423 in tax receivable, and $51,879 in security deposits. Prepaid expenses were primarily comprised of insurance premiums, membership dues, conferences and seminars, and other general and administrative costs.

Goodwill and Intangible Assets

Goodwill represents the future economic benefit arising from other assets acquired that could not be individually identified and separately recognized. The goodwill arising from the Company’s acquisitions is attributable to the value of the potential expanded market opportunity with new customers. Intangible assets have either an identifiable or indefinite useful life. Intangible assets with identifiable useful lives are amortized on a straight-line basis over their economic or legal life, whichever is shorter. The Company’s amortizable intangible assets consist of licensing agreements, product licenses and registrations, and intellectual property or trade secrets. Their estimated useful lives range from 10 to 15 years.

Goodwill and indefinite-lived assets are not amortized but are subject to annual impairment testing unless circumstances dictate more frequent assessments. The Company performs an annual impairment assessment for goodwill during the fourth quarter of each year and more frequently whenever events or changes in circumstances indicate that the fair value of the asset may be less than the carrying amount. Goodwill impairment testing is a two-step process performed at the reporting unit level. Step one compares the fair value of the reporting unit to its carrying amount. The fair value of the reporting unit is determined by considering both the income approach and market approaches. The fair values calculated under the income approach and market approaches are weighted based on circumstances surrounding the reporting unit. Under the income approach, the Company determines fair value based on estimated future cash flows of the reporting unit, which are discounted to the present value using discount factors that consider the timing and risk of cash flows. For the discount rate, the Company relies on the capital asset pricing model approach, which includes an assessment of the risk-free interest rate, the rate of return from publicly traded stocks, the Company’s risk relative to the overall market, the Company’s size and industry and other Company-specific risks. Other significant assumptions used in the income approach include the terminal value, growth rates, future capital expenditures and changes in future working capital requirements. The market approaches use key multiples from guideline businesses that are comparable and are traded on a public market. If the fair value of the reporting unit is greater than its carrying amount, there is no impairment. If the reporting unit’s carrying amount exceeds its fair value, then the second step must be completed to measure the amount of impairment, if any. Step two calculates the implied fair value of goodwill by deducting the fair value of all tangible and intangible net assets of the reporting unit from the fair value of the reporting unit as calculated in step one. In this step, the fair value of the reporting unit is allocated to all of the reporting unit’s assets and liabilities in a hypothetical purchase price allocation as if the reporting unit had been acquired on that date. If the carrying amount of goodwill exceeds the implied fair value of goodwill, an impairment loss is recognized in an amount equal to the excess.

Determining the fair value of a reporting unit is judgmental in nature and requires the use of significant estimates and assumptions, including revenue growth rates, strategic plans, and future market conditions, among others. There can be no assurance that the Company’s estimates and assumptions made for purposes of the goodwill impairment testing will prove to be accurate predictions of the future. Changes in assumptions and estimates could cause the Company to perform an impairment test prior to scheduled annual impairment tests.

The Company performed its annual fair value assessment as of December 31, 2020, on its subsidiaries with material goodwill and intangible asset amounts on their respective balance sheets and determined that no impairment exists. No additional factors or circumstances existed as of June 30, 2021 that would indicate impairment.

Long-Lived Assets

The Company evaluates the recoverability of its long-lived assets whenever events or changes in circumstances have indicated that an asset may not be recoverable. The long-lived asset is grouped with other assets at the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. If the sum of the projected undiscounted cash flows is less than the carrying value of the assets, the assets are written down to the estimated fair value.

The Company evaluated the recoverability of its long-lived assets on December 31, 2020 on its subsidiaries with material amounts on their respective balance sheets and determined that no impairment exists.

Accounts Payable

Accounts payable as of June 30, 2021 and December 31, 2020 were $2,375,540 and $3,557,461, respectively and were comprised of trade payables for various purchases and services rendered during the ordinary course of business.

Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities as of June 30, 2021 and December 31, 2020 were $10,279,124 and $2,705,445, respectively. As of June 30, 2021, this was comprised of customer deposits of $17,169, accrued payroll of $741,299, operating expenses of $5,719,742, and accrued dividends on preferred stock of $3,800,914. As of December 31, 2020, accrued expenses and other liabilities was comprised of customer deposits of $26,826, accrued payroll of $1,154,887, and operating expenses of $1,523,732.

Revenue Recognition and Related Allowances

The Company’s revenue recognition policy is significant because the amount and timing of revenue is a key component of our results of operations. Certain criteria are required to be met in order to recognize revenue. If these criteria are not met, then the associated revenue is deferred until is the criteria are met. When consideration is received in advance of the delivery of goods or services, a contract liability is recorded. Revenue contracts are identified when accepted from customers and represent a single performance obligation to sell the Company’s products to a customer.

The Company has three main revenue streams: retail; wholesale; and other.

Retail and wholesale sales are recorded at the time that control of the products is transferred to customers. In evaluating the timing of the transfer of control of products to customers, the Company considers several indicators, including significant risks and rewards of products, its right to payment, and the legal title of the products. Based on the assessment of control indicators, sales are generally recognized when products are delivered to customers.

Other revenue consists of other income and expenses, including related to, licensing and consulting services, facility design services, facility management services, the Company’s Three A Light™ publication, and corporate operations. Revenue is recognized when the obligations to the client are fulfilled which is determined when milestones in the contract are achieved and target harvest yields are exceeded or earned upon the completion of the seminar. The Company also recognizes expense reimbursement from clients as revenue for expenses incurred during certain jobs.

Costs of Goods and Services Sold

Costs of goods and services sold are comprised of related expenses incurred while supporting the implementation and sales of the Company’s products and services.

General and Administrative Expenses

General and administrative expense are comprised of all expenses not linked to the production or advertising of the Company’s services.

Advertising and Marketing Costs

Advertising and marketing costs are expensed as incurred and totaled $196,908 and $308,593 for the three and six months ended June 30, 2021, respectively, as compared to $336,529 and $465,796, respectively, for the three and six months ended June 30, 2020.

Stock Based Compensation

The Company accounts for share-based payments pursuant to ASC 718, Stock Compensation and, accordingly, the Company records compensation expense for share-based awards based upon an assessment of the grant date fair value for stock options using the Black-Scholes option pricing model.

Stock compensation expense for stock options is recognized over the vesting period of the award or expensed immediately under ASC 718 and Emerging Issues Task Force (“EITF”) 96-18 when stock or options are awarded for previous or current service without further recourse.

Share-based expense paid through direct stock grants is expensed as occurred. Since the Company’s common stock is publicly traded, the value is determined based on the number of shares of common stock issued and the trading value of the common stock on the date of the transaction.

On June 20, 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-07 which simplifies the accounting for share-based payments granted to nonemployees for goods and services. Under the ASU, most of the guidance on such payments to nonemployees would be aligned with the requirements for share-based payments granted to employees. Previously, share-based payment arrangements to nonemployees were accounted for under ASC 718, while nonemployee share-based payments issued for goods and services were accounted for under ASC 505-50. Before the amendment, the major difference for the Company (but not limited to) was the determination of measurement date, which generally is the date on which the measurement of equity classified share-based payments becomes fixed. Equity classified share-based payments for employees was fixed at the time of grant. Equity-classified nonemployee share-based payment awards are no longer measured at the earlier of the date which a commitment for performance by the counterparty is reached or the date at which the counterparty’s performance is complete. They are now measured at the grant date of the award, which is the same as share-based payments for employees. The Company adopted the requirements of the new rule as of January 1, 2019, the effective date of the new guidance.

The Company recognized $1,153,018 and $2,636,824 in expense for stock-based compensation from common stock options and common stock issued to employees, officers, and directors during the three and six months ended June 30, 2021, respectively, and $3,109,091 and $4,361,822 in expenses for stock-based compensation from the issuance of common stock to employees, officers, directors and/or contractors during the three and six months ended June 30, 2020, respectively.

Income Taxes

ASC 740, Income Taxes requires the use of the asset and liability method of accounting for income taxes. Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

Deferred tax assets are regularly assessed to determine the likelihood they will be recovered from future taxable income. A valuation allowance is established when we believe it is more likely than not the future realization of all or some of a deferred tax asset will not be achieved. In evaluating our ability to recover deferred tax assets within the jurisdiction which they arise, we consider all available positive and negative evidence. Factors reviewed include the cumulative pre-tax book income for the past three years, scheduled reversals of deferred tax liabilities, our history of earnings and reliability of our forecasts, projections of pre-tax book income over the foreseeable future, and the impact of any feasible and prudent tax planning strategies.

The Company assesses all material positions taken in any income tax return, including all significant uncertain positions, in all tax years that are still subject to assessment or challenge by relevant taxing authorities. Assessing an uncertain tax position begins with the initial determination of the position’s sustainability, and the tax benefit to be recognized is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. We recognize the impact of a tax position in our financial statements only if that position is more likely than not of being sustained upon examination by taxing authorities, based on the technical merits of the position. Tax authorities regularly examine our returns in the jurisdictions in which we do business and we regularly assess the tax risk of our return filing positions. Due to the complexity of some of the uncertainties, the ultimate resolution may result in payments that are materially different from our current estimate of the tax liability. These differences, as well as any interest and penalties, will be reflected in the provision for income taxes in the period in which they are determined.

As the Company operates in the cannabis industry, it is subject to the limits of the Internal Revenue Code (IRC) Section 280E under which the Company is only allowed to deduct expenses directly related to sales of product. This results in permanent differences between ordinary and necessary business expenses deemed non-allowable under IRC Section 280E.

Right of Use Assets and Lease Liabilities

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The standard requires lessees to recognize almost all leases on the balance sheet as a Right-of-Use (“ROU”) asset and a lease liability and requires leases to be classified as either an operating or a finance type lease. The standard excludes leases of intangible assets or inventory. The standard became effective for the Company beginning January 1, 2019. The Company adopted ASC 842 using the modified retrospective approach, by applying the new standard to all leases existing at the date of initial application. Results and disclosure requirements for reporting periods beginning after January 1, 2019 are presented under ASC 842, while prior period amounts have not been adjusted and continue to be reported in accordance with our historical accounting under ASC 840. The Company elected the package of practical expedients permitted under the standard, which also allowed the Company to carry forward historical lease classifications. The Company also elected the practical expedient related to treating lease and non-lease components as a single lease component for all equipment leases as well as electing a policy exclusion permitting leases with an original lease term of less than one year to be excluded from the ROU assets and lease liabilities.

Under ASC 842, the Company determines if an arrangement is a lease at inception. ROU assets and liabilities are recognized at commencement date based on the present value of remaining lease payments over the lease term. For this purpose, the Company considers only payments that are fixed and determinable at the time of commencement. As most of the Company's leases do not provide an implicit rate, the Company estimated the incremental borrowing rate in determining the present value of lease payments. The ROU asset also includes any lease payments made prior to commencement and is recorded net of any lease incentives received. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options.

Operating leases are included in operating lease ROU assets and operating lease liabilities, current and non-current, on the Company's consolidated balance sheets.

Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2021

Accounting Standards Update and Change in Accounting Principle [Abstract]

Recent Accounting Pronouncements

3.	Recent Accounting Pronouncements

The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new pronouncements that have been issued that might have a material impact on its financial position or results of operations except as noted below:

In January 2017, the FASB issued ASU 2017-01, Clarifying the Definition of a Business (Topic 805), which changes the definition of a business to assist entities with evaluating when a set of transferred assets and activities is a business. The guidance requires an entity to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets; if so, the set of transferred assets and activities is not a business. The guidance also requires a business to include at least one substantive process and narrows the definition of outputs by more closely aligning it with how outputs are described in ASC 606. The ASU is effective for annual reporting periods beginning after December 15, 2017, and for interim periods within those years. Adoption of this ASU did not have a significant impact on the Company’s consolidated results of operations, cash flows and financial position.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740), which enhances and simplifies various aspects of the income tax accounting guidance, including requirements such as tax basis step-up in goodwill obtained in a transaction that is not a business combination, ownership changes in investments, and interim-period accounting for enacted changes in tax law. The amendment became effective for public companies with fiscal years beginning after December 15, 2020. The Company is evaluating the impact of this amendment on its consolidated financial statements.

In February 2020, the FASB issued ASU 2020-02, Financial Instruments-Credit Losses (Topic 326) and Leases (Topic 842) - Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No. 2016-02, Leases (Topic 842), which amends the effective date of the original pronouncement for smaller reporting companies. ASU 2016-13 and its amendments will be effective for the Company for interim and annual periods in fiscal years beginning after December 15, 2022. The Company believes the adoption will modify the way the Company analyzes financial instruments, but it does not anticipate a material impact on results of operations. The Company is in the process of determining the effects adoption will have on its consolidated financial statements.

- Definition

The entire disclosure for change in accounting principle. Includes, but is not limited to, nature, reason, and method of adopting amendment to accounting standards or other change in accounting principle.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 65
-Paragraph 1
-Subparagraph (g)(2)
-URI http://asc.fasb.org/extlink&oid=123338486&loc=SL49131195-203048

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-URI http://asc.fasb.org/topic&trid=2122394

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 105
-SubTopic 10
-Section 65
-Paragraph 6
-Subparagraph (f)
-URI http://asc.fasb.org/extlink&oid=124434974&loc=SL124442142-165695

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 65
-Paragraph 1
-Subparagraph (i)
-URI http://asc.fasb.org/extlink&oid=123338486&loc=SL49131195-203048

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 65
-Paragraph 8
-Subparagraph (e)(2)
-URI http://asc.fasb.org/extlink&oid=123459177&loc=SL121830611-158277

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section S99
-Paragraph 6
-URI http://asc.fasb.org/extlink&oid=122038215&loc=SL108384541-122693

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 310
-SubTopic 20
-Section 65
-Paragraph 2
-Subparagraph (d)(1)
-URI http://asc.fasb.org/extlink&oid=124402435&loc=SL124402458-218513

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 10
-Section 65
-Paragraph 6
-Subparagraph (e)(2)
-URI http://asc.fasb.org/extlink&oid=123597120&loc=SL121967933-165497

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 65
-Paragraph 1
-Subparagraph (i)(2)
-URI http://asc.fasb.org/extlink&oid=123338486&loc=SL49131195-203048

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 10
-Section 65
-Paragraph 6
-Subparagraph (e)(1)
-URI http://asc.fasb.org/extlink&oid=123597120&loc=SL121967933-165497

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 944
-SubTopic 40
-Section 65
-Paragraph 2
-Subparagraph (g)(2)(iii)
-URI http://asc.fasb.org/extlink&oid=124501264&loc=SL117420844-207641

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 1
-Subparagraph (b)(4)
-URI http://asc.fasb.org/extlink&oid=124431687&loc=d3e22499-107794

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 944
-SubTopic 40
-Section 65
-Paragraph 2
-Subparagraph (g)(2)(ii)
-URI http://asc.fasb.org/extlink&oid=124501264&loc=SL117420844-207641

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 944
-SubTopic 40
-Section 65
-Paragraph 2
-Subparagraph (g)(2)(i)
-URI http://asc.fasb.org/extlink&oid=124501264&loc=SL117420844-207641

Reference 15: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 65
-Paragraph 8
-Subparagraph (e)(1)
-URI http://asc.fasb.org/extlink&oid=123459177&loc=SL121830611-158277

Reference 16: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 718
-SubTopic 10
-Section 65
-Paragraph 15
-Subparagraph (g)(1)
-URI http://asc.fasb.org/extlink&oid=121322162&loc=SL121327923-165333

Reference 17: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 40
-Section 65
-Paragraph 1
-Subparagraph (e)(1)
-URI http://asc.fasb.org/extlink&oid=123482062&loc=SL123482106-238011

Reference 18: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 310
-SubTopic 20
-Section 65
-Paragraph 2
-Subparagraph (d)(2)
-URI http://asc.fasb.org/extlink&oid=124402435&loc=SL124402458-218513

Reference 19: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 65
-Paragraph 1
-Subparagraph (j)
-URI http://asc.fasb.org/extlink&oid=123338486&loc=SL49131195-203048

Reference 20: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 944
-SubTopic 40
-Section 65
-Paragraph 2
-Subparagraph (g)(2)(iv)
-URI http://asc.fasb.org/extlink&oid=124501264&loc=SL117420844-207641

Reference 21: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 926
-SubTopic 20
-Section 65
-Paragraph 2
-Subparagraph (f)(1)
-URI http://asc.fasb.org/extlink&oid=120154821&loc=SL120154904-197079

Reference 22: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section S99
-Paragraph 5
-Subparagraph (SAB Topic 11.M.Q2)
-URI http://asc.fasb.org/extlink&oid=122038215&loc=d3e31137-122693

Reference 23: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 926
-SubTopic 20
-Section 65
-Paragraph 2
-Subparagraph (f)(2)
-URI http://asc.fasb.org/extlink&oid=120154821&loc=SL120154904-197079

Reference 24: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 1
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=124431687&loc=d3e22499-107794

Reference 25: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 926
-SubTopic 20
-Section 65
-Paragraph 2
-Subparagraph (f)(3)
-URI http://asc.fasb.org/extlink&oid=120154821&loc=SL120154904-197079

Reference 26: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 10
-Section 65
-Paragraph 6
-Subparagraph (e)(3)
-URI http://asc.fasb.org/extlink&oid=123597120&loc=SL121967933-165497

Reference 27: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 326
-SubTopic 10
-Section 65
-Paragraph 4
-Subparagraph (e)(1)
-URI http://asc.fasb.org/extlink&oid=122640432&loc=SL121648383-210437

Reference 28: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 1
-Subparagraph (c)(1)
-URI http://asc.fasb.org/extlink&oid=124431687&loc=d3e22499-107794

Reference 29: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 944
-SubTopic 40
-Section 65
-Paragraph 2
-Subparagraph (h)(2)
-URI http://asc.fasb.org/extlink&oid=124501264&loc=SL117420844-207641

Reference 30: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 326
-SubTopic 10
-Section 65
-Paragraph 4
-Subparagraph (e)(2)
-URI http://asc.fasb.org/extlink&oid=122640432&loc=SL121648383-210437

Reference 31: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 1
-Subparagraph (b)(1)
-URI http://asc.fasb.org/extlink&oid=124431687&loc=d3e22499-107794

Reference 32: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 848
-SubTopic 10
-Section 65
-Paragraph 1
-Subparagraph (e)(1)
-URI http://asc.fasb.org/extlink&oid=122150657&loc=SL122150809-237846

Reference 33: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 65
-Paragraph 8
-Subparagraph (e)(3)
-URI http://asc.fasb.org/extlink&oid=123459177&loc=SL121830611-158277

Reference 34: http://www.xbrl.org/2003/role/disclosureRef
-Topic 848
-SubTopic 10
-Name Accounting Standards Codification
-Section 65
-Paragraph 2
-Publisher FASB
-Subparagraph (c)

+ Details

Property and Equipment

6 Months Ended

Jun. 30, 2021

Property, Plant and Equipment [Abstract]

Property and Equipment

4.	Property and Equipment

Property and equipment are recorded at cost, net of accumulated depreciation and are comprised of the following:

Property and equipment table
	June 30, 2021			December 31, 2020
Furniture and fixtures	$	294,204		$	228,451
Leasehold improvements		656,314			90,314
Machinery and tools		1,502,417			1,456,752
Office equipment		238,837			104,059
Software		1,308,387			1,308,387
Work in process		767,736			269,414
	$	4,767,895		$	3,457,377
Less: Accumulated depreciation		(1,291,349	)		(872,579	)
Total property and equipment, net of depreciation	$	3,476,546		$	2,584,798

Depreciation on equipment is provided on a straight-line basis over its expected useful lives at the following annual rates.


Furniture and fixtures	3 years
Leasehold improvements	Lesser of the lease term or estimated useful life
Machinery and tools	3 years
Office equipment	3 years
Software	3-5 years

Depreciation expense for the three and six months ended June 30, 2021 was $260,843 and $455,480, respectively.

Intangible Asset

6 Months Ended

Jun. 30, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Asset

5.	Intangible Asset

Intangible assets as of June 30, 2021 and December 31, 2020 were comprised of the following:

Intangible assets
	June 30, 2021			December 31, 2020

License agreements	$	88,775,280		$	1,667,000
Tradenames		4,270,000			350,000
Customer relationships		5,150,000			1,055,000
Non-compete		1,130,000			120,000
Product license and registration		57,300			57,300
Trade secret – intellectual property		32,500			32,500
		99,415,080			3,282,500
Less: accumulated amortization		(4,553,827	)		(200,456	)
Total intangible assets, net of amortization	$	94,861,253		$	3,082,044

Amortization expense for the three and six months ended June 30, 2021 was $2,755,736 and $4,351,667, respectively.

Derivative Liability

6 Months Ended

Jun. 30, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Liability

6.	Derivative Liability

In 2019, the Company entered into certain employment agreements with key officers that contained contingent consideration provisions based upon the achievement of certain market condition milestones. The Company determined that each of these vesting conditions represented derivative instruments.

On January 8, 2019, the Company granted the right to receive 500,000 shares of restricted common stock to an officer and director, which will vest at such time that the Company’s stock price appreciates to $8.00 per share with defined minimum average daily trading volume thresholds.

On April 23, 2019, the Company granted the right to receive 1,000,000 shares of restricted common stock to an officer and director, which will vest at such time that the Company’s stock price appreciates to $8.00 per share with defined minimum average daily trading volume thresholds. On February 25, 2020, the director resigned from his remaining positions with the Company and forfeited his right to the contingent consideration. As a result, the Company recorded a gain of $1,462,636 as a component of other income (expense), net on its financial statements.

On June 11, 2019, the Company granted the right to receive 1,000,000 shares of restricted common stock to an officer, which will vest at such time that the Company’s stock price appreciates to $8.00 per share with defined minimum average daily trading volume thresholds. On May 3, 2021, the Company executed an agreement whereby the officer relinquished the 1,000,000 shares of restricted common stock.

The Company accounts for derivative instruments in accordance with the US GAAP accounting guidance under ASC 815, Derivatives and Hedging Activities. The Company estimated the fair value of these derivatives at the respective balance sheet dates using the Black-Scholes option pricing model based upon the following inputs: (i) stock price on the date of grant ranging between $1.32 - $3.75, (ii) a risk-free interest rate ranging between 1.45% - 2.57% and (iii) an expected volatility of the price of the underlying common stock ranging between 145% - 158%.

As of June 30, 2021, the fair value of these derivative liabilities is $436,554. The change in the fair value of derivative liabilities for the three months ended June 30, 2021 was $1,864,741, resulting in an aggregate unrealized gain on derivative liabilities. The change in the fair value of the derivative liabilities for the six months ended June 30, 2021 was $610,927, resulting in an aggregated unrealized gain on derivative liabilities.

Related Party Transactions

6 Months Ended

Jun. 30, 2021

Related Party Transactions

7.	Related Party Transactions

Transactions Involving Former Directors, Executive Officers or Their Affiliated Entities

During the year ended December 31, 2020, the Company recorded sales to Medicine Man Denver, totaling $997,262. The Company had an accounts receivable balance with Medicine Man Denver totaling $72,109 as of December 31, 2020. The Company’s former Chief Executive Officer, Andy Williams, maintains an ownership interest in Medicine Man Denver. Effective February 25, 2020 he was no longer an officer of the Company and therefore no longer a related party. As such, he is not included as a related party with respect to sales and accounts receivable from Medicine Man Denver during the period ended June 30, 2021.

During the year ended December 31, 2020, the Company recorded sales to MedPharm Holdings LLC (“MedPharm”) totaling $73,557. The Company had a net accounts receivable balance with MedPharm totaling $5,885 as of December 31, 2020. The Company’s former Chief Executive Officer, Andy Williams, maintains an ownership interest in MedPharm. Effective February 25, 2020 he was no longer an officer of the Company and therefore no longer a related party. As such, he is not included as a related party with respect to sales and accounts receivable from MedPharm during the period ended June 30, 2021.

Also, during the year ended December 31, 2019, the Company issued various notes receivable to MedPharm totaling $767,695 with original maturity dates ranging from September 21, 2019 through January 19, 2020 and all bearing interest at 8% per annum. The maturity date of all notes were extended to May 2020 by mutual agreement between the Company and the noteholder. On August 1, 2020, the Company entered into a Settlement Agreement and Mutual Release (the “Settlement Agreement”) with MedPharm. Pursuant to the terms of the Settlement Agreement, the Company and MedPharm agreed that the amount of the settlement to be furnished to the Company by MedPharm was $767,695 in principal and $47,161 in accrued interest. The Company received a $100,000 cash payment from MedPharm on August 1, 2020. On September 4, 2020, Andrew Williams, a member of the MedPharm Board of Directors and the Company’s former Chief Executive Officer, returned 175,000 shares of the Company’s common stock to the Company, as equity consideration at a price of $1.90 per share, a mutually agreed upon price per share. These shares are held in treasury. The remaining outstanding principal and interest of $181,911 due and payable by MedPharm under the Settlement Agreement was to be paid out in bi-weekly installments of product by scheduled deliveries through June 30, 2021. This 0 amount was paid off on April 19, 2021.

During the year ended December 31, 2020, the Company recorded sales to Baseball 18, LLC (“Baseball”) totaling $14,605, to Farm Boy, LLC (“Farm Boy”) totaling $16,125, to Emerald Fields LLC (“Emerald Fields”) totaling $16,605, and to Los Sueños Farms (“Los Sueños”) totaling $52,244. As of December 31, 2020 the Company had net accounts payable balances with Baseball of $31,250, and with Farm Boy of $93,944. One of the Company’s former directors, Robert DeGabrielle, owns the Colorado retail marijuana cultivation licenses for Farm Boy, Baseball, Emerald Fields, and Los Sueños. Effective June 19, 2020 he was no longer an officer of the Company and therefore no longer a related party. As such, he is not included as a related party with respect to sales and accounts receivable from Baseball, Farm Boy, Emerald Fields, or Los Sueños during the period ended June 30, 2021.

Transactions with Entities Affiliated with Justin Dye

The Company has participated in several transaction involving Dye Capital, Dye Capital Cann Holdings, LLC (“Dye Cann I”) and Dye Cann II. Justin Dye, the Company’s Chief Executive Officer, one of its directors, and the largest beneficial owner of the Company’s common stock and Series A Preferred Stock, controls Dye Capital and Dye Capital controls Dye Cann I and Dye Cann II. Dye Cann I is the largest holder of the Company’s outstanding common stock. Dye Cann II is a significant holder of the Series A Preferred Stock. Mr. Dye has sole voting and dispositive power over the securities held by Dye Capital, Dye Cann I, and Dye Cann II.

The Company entered into a Securities Purchase Agreement with Dye Cann I on June 5, 2019, (as amended, the “Dye Cann I SPA”) pursuant to which the Company agreed to sell to Dye Cann I up to between 8,187,500 and 10,687,500 shares of the Company’s common stock in several tranches at $2.00 per share and warrants to purchase 100% of the number of shares of common stock sold at a purchase price of $3.50 per share. At the initial closing on June 5, 2019, the Company sold to Dye Cann I 1,500,000 shares of common stock and warrants to purchase 1,500,000 shares of common stock for gross proceeds of $3,000,000, and the Company has consummated subsequent closings for an aggregate of 9,287,500 shares of common stock and warrants to purchase 9,287,500 shares of common stock for aggregate gross proceeds of $18,575,000 to the Company. The terms of the Dye Cann I SPA are disclosed in the Company’s Current Report on Form 8-K filed on June 6, 2019. The Company and Dye Cann I entered into a first amendment to the Dye Cann I SPA on July 15, 2019, as described in the Company’s Current Report on Form 8-K filed on July 17, 2019, a second amendment to the Dye Cann I SPA on May 20, 2020, as described in the Company’s Current Report on Form 8-K filed on May 22, 2020, and a Consent, Waiver and Amendment on December 16, 2020, as described in the Company’s Current Report on Form 8-K filed on December 23, 2020. At the time of the initial closing under the Dye Cann I SPA, Justin Dye became a director and the Company’s Chief Executive Officer.

The Company granted Dye Cann I certain demand and piggyback registration rights with respect to the shares of common stock sold under the Dye Cann I SPA and issuable upon exercise of the warrants sold under the Dye Cann I SPA. The Company also granted Dye Cann I the right to designate one or more individuals for election or appointment to the Company’s board of directors (the “Board”) and Board observer rights. Further, under the Dye Cann I SPA, until June 5, 2022, if the Company desires to pursue debt or equity financing, the Company must first give Dye Cann I an opportunity to provide a proposal to the Company with the terms upon which Dye Cann I would be willing to provide or secure such financing. If the Company does not accept Dye Cann I’s proposal, the Company may pursue such debt or equity financing from other sources but Dye Cann I has a right to participate in such financing to the extent required to enable Dye Cann I to maintain the percentage of the Company’s common stock (on a fully-diluted basis) that it then owns, in the case of equity securities, or, in the case of debt, a pro rata portion of such debt based on the percentage of the Company’s common stock (on a fully-diluted basis) that it then owns.

The Company entered into a Securities Purchase Agreement (as amended, the “Dye Cann II SPA”) with Dye Cann II on November 16, 2020 pursuant to which the Company agreed to sell to Dye Cann II shares of Series A Preferred Stock in one or more tranches at a price of $1,000 per share. The terms of the Dye Cann II SPA are disclosed in the Company’s Current Report on Form 8-K filed on December 23, 2020. The Company and Dye Cann II entered into an amendment to the Dye Cann II SPA on December 16, 2020, as described in the Company’s Current Report on Form 8-K filed on December 23, 2020, a second amendment to the Dye Cann II SPA on February 3, 2021, as described in the Company’s Form 8-K filed on February 9, 2021, and a third amendment to the Dye Cann II SPA on March 30, 2021, as described under Item 9B of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. The Company issued and sold to Dye Cann II 7,700 shares of Series A Preferred Stock on December 16, 2020, 1,450 shares of Series A Preferred Stock on December 18, 2020, 1,300 shares of Series Preferred Stock on December 22, 2020, 3,100 shares of Series A Preferred Stock on February 3, 2021, 3,800 shares of Series A Preferred Stock on March 2, 2021 and 4,000 shares of Series A Preferred Stock on March 30, 2021. As a result, the Company issued and sold an aggregate of 21,350 shares of Series A Preferred Stock to Dye Cann II for aggregate gross proceeds of $21,350,000.

The Company granted Dye Cann II certain demand and piggyback registration rights with respect to the shares of common stock issuable upon conversion of the Series A Preferred Stock under the Dye Cann II SPA. Further, the Company granted Dye Can II the right to designate one or more individuals for election or appointment to the Board and Board observer rights.

On December 16, 2020, the Company entered into a Secured Convertible Note Purchase Agreement with Dye Capital and issued and sold to Dye Capital a Convertible Note and Security Agreement in the principal amount of $5,000,000 as described in the Company’s Current Report on Form 8-K filed on December 23, 2020. On February 26, 2021, Dye Capital elected to convert the $5,000,000 principal amount and the $60,250 of accrued but unpaid interest under the Convertible Promissory Note and Security Agreement under its terms and Dye Capital and the Company entered into a Conversion Notice and Agreement pursuant to which the Company issued 5,060 shares of Series A Preferred Stock to Dye Capital and also paid Dye Capital $230.97 in cash in lieu of issuing any fractional shares of Series Preferred Stock upon conversion, as described in the Company’s Current Report on Form 8-K filed on March 4, 2021.

The Company previously reported the terms of the Series A Preferred Stock in the Company’s Current Report on Form 8-K filed on December 23, 2020 and under Item 1 of this Report, which disclosure is incorporated herein by reference.

During the year ended December 31, 2020, the Company recorded expenses of $66,264 with Tella Digital. During the quarter ended June 30, 2021, the Company recorded expenses of $193,120 with Tella Digital. Tella Digital provides on-premise digital experience solutions for our retail dispensary locations. Mr. Dye serves as Chairman of Tella Digital and has super majority rights.

Transactions with CRW and Affiliated Entities

On February 26, 2021, the Company entered into a Securities Purchase Agreement (the “CRW SPA”) with CRW pursuant to which the Company issued and sold 25,350 shares of Series A Preferred Stock to CRW at a price of $1,000 per share for aggregate gross proceeds of $25,350,000. The transaction made CRW a beneficial owner of more than 5% of the Company’s common stock. The Company granted CRW certain demand and piggyback registration rights with respect to the shares of common stock issuable upon conversion of the Series A Preferred Stock under the CRW SPA. On the same date, the Company entered into a letter agreement with CRW, granting CRW the right to designate one individual for election or appointment to the Board and Board observer rights. Under the letter agreement, for as long as CRW has the right to designate a Board member, if the Company, directly or indirectly, plans to issue, sell or grant any securities or options to purchase any of its securities, CRW has a right to purchase its pro rata portion of such securities, based on the number of shares of Series A Preferred Stock beneficially held by CRW on the applicable date on an as-converted to common stock basis divided by the total number of shares of common stock outstanding on such date on an as-converted, fully-diluted basis (taking into account all outstanding securities of the Company regardless of whether the holders of such securities have the right to convert or exercise such securities for common stock at the time of determination). Further, under the letter agreement, the Company will pay CRW Capital, LLC, the sole manager of CRW and a holder of a carried interest in CRW, a monitoring fee equal to $150,000 in monthly installments of $10,000. On March 14, 2021, the Board appointed Jeffrey A. Cozad as a director to fill a vacancy on the Board. Mr. Cozad is a manager and owns 50% of CRW Capital, LLC, and he shares voting and disposition power over the shares of Series A Preferred Stock held by CRW. Mr. Cozad and his family members indirectly own membership interests in CRW. The Company previously reported the terms of the CRW SPA and the CRW letter agreement in the Company’s Current Report on Form 8-K filed March 4, 2021.

Transactions with Entities Affiliated with Brian Ruden

The Company has participated in several transactions involving entities owned or affiliated with Brian Ruden, one of its directors and a beneficial owner of more than 5% of the Company’s common stock and a beneficial owner of more than 5% of the Series A Preferred Stock.

Between December 17, 2020 and March 2, 2021, the Company’s wholly-owned subsidiary SBUD, LLC acquired the Star Buds assets. The Company previously reported the terms of the applicable purchase agreements and related amendments in the Company’s Current Reports on Form 8-K filed June 8, 2020, September 21, 2020, December 22, 2020, and March 8, 2021.

The aggregate purchase price for the Star Buds assets was $118,000,000, paid as follows: (i) $44,250,000 in cash at the applicable closings, (ii) $44,250,000 in deferred cash, also referred to in this report as “seller note(s),” (iii) 29,500 shares of Series A Preferred Stock, of which 25,075 shares were issued at the applicable closings and 4,425 shares are held in held in escrow and will be released post-closing to either Star Buds or the Company depending on post-closing adjustments to the purchase price. In addition, the Company issued warrants to purchase an aggregate of 5,531,250 shares of the Company’s common stock to the sellers. As of June 30, 2021, the Company owed an aggregate principal amount of $44,250,000 under the seller notes. The Company has not paid any principal and has paid an aggregate of $1,752,662 of interest on the seller notes as of June 30, 2021. Mr. Ruden’s interest in the aggregate purchase price for the Star Buds assets is as follows: (i) $13,727,490 in cash at the applicable closings, (ii) $13,727,490 in seller notes, (iii) 9,152 shares of Series A Preferred Stock, of which 7,779 shares were issued at the applicable closings and 1,373 shares are held in held in escrow and will be released post-closing to either Mr. Ruden or the Company depending on post-closing adjustments to the purchase price. In addition, the Company issued warrants to purchase an aggregate of 1,715,936 shares of the Company’s common stock to Mr. Ruden. The Company has paid Mr. Ruden an aggregate of $544,889 in interest on his seller notes as of June 30, 2021.

Mr. Ruden was a part-owner of each of the Star Buds companies that sold assets to SBUD, LLC. Mr. Ruden owned 50% of Colorado Health Consultants LLC, 50% of Starbuds Aurora LLC, 50% of Starbuds Pueblo LLC, 50% of Starbuds Alameda LLC, 48% of SB Arapahoe LLC, 36% of Starbuds Commerce City LLC, 30% of Starbuds Louisville LLC, 25% of Starbuds Niwot LLC, 16.66% of Lucky Ticket LLC, 15% of KEW LLC, and 10% of LM MJC LLC.

In connection with acquiring the Star Buds assets for our Pueblo West and Commerce City locations, SBUD LLC entered into a lease with each of 428 S. McCulloch LLC and 5844 Ventures LLC on substantially the same terms. Each of the leases is for an initial three-year term. The lease with 428 S. McCulloch LLC is for the Company’s Pueblo West Star Buds location and was effective on December 17, 2020. The lease with 45844 Ventures LLC is for the Company’s Commerce City Star Buds location and was effective on December 18, 2020. Each lease provides for a monthly rent payment of $5,000. SBUD LLC expect to pay each landlord an aggregate of $180,000 during the initial term of the leases. During 2020, SBUD LLC made aggregate rent payments of $10,000. Between January 1, 2021 and June 30, 2021, SBUD LLC made aggregate rent payments of $60,000. In addition, SBUD LLC must pay each landlord’s expenses and disbursements incurred in connection with the ownership, operation, maintenance, repair and replacement of the premises. SBUD LLC has the option to renew each lease for two additional three-year terms. The rent increase to $5,500 per month during the first three-year renewal period, and to $6,050 during the second three-year renewal period. The Company has an option to purchase the premises at fair market value at any time during the lease term and also has a right of first refusal if the landlords desire to sell the premises to a third party.

On December 17, 2020, SBUD, LLC entered into a Trademark License Agreement with Star Brands LLC under which Star Brands LLC licenses certain trademarks to SBUD, LLC effective as of the closing of the acquisitions of all of the Star Buds assets. SBUD LLC has no payment obligation under this agreement. Mr. Ruden is a part-owner of Star Brands LLC.

In connection with the Star Buds acquisitions, the Company granted Mr. Ruden and Naser Joudeh the right designate individuals for election or appointment to the Board.

Inventory

6 Months Ended

Jun. 30, 2021

Inventory Disclosure [Abstract]

Inventory

8.	Inventory

As of June 30, 2021, and December 31, 2020, respectively, the Company had $5,948,853 and $2,090,887 of finished goods inventory. As of June 30, 2021, the Company had $858,628 of work in process and $2,375,461 of raw materials. As of December 31, 2020, the Company had $500,917 of work in process and $27,342 of raw materials. The Company uses the FIFO inventory valuation method. As of June 30, 2021 and December 31, 2020, the Company did not recognize any impairment for obsolescence within its inventory.

Goodwill

6 Months Ended

Jun. 30, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

9.	Goodwill

On June 3, 2017, the Company issued an aggregate of 7,000,000 shares of its common stock for 100% ownership of both Success Nutrients and Pono Publications. The Company utilized purchase price accounting stating that net book value approximates fair market value of the assets acquired. The purchase price accounting resulted in $6,301,080 of goodwill.

On July 21, 2017, the Company issued 2,258,065 shares of its common stock for 100% ownership of Denver Consulting Group (“DCG”). The Company utilized purchase price accounting stating that net book value approximates fair market value of the assets acquired. The purchase price accounting resulted in $3,003,226 of goodwill.

On September 17, 2018, we closed the acquisition of The Big Tomato. The Company issued an aggregate of 1,933,329 shares of its common stock for 100% ownership of The Big Tomato. The Company utilized purchase price accounting stating that net book value approximates fair market value of the assets acquired. The purchase price accounting resulted in the Company valuing the investment as $3,000,000 of goodwill.

On April 20, 2020, the Company closed the acquisition of Mesa Organics. The aggregate purchase price after working capital adjustments was $2,609,500 of cash and 2,554,750 shares of the Company’s Common Stock. The Company accounted for the transaction utilizing purchase price accounting stating that the book value approximates the fair market value of the assets acquired. The purchase price accounting resulted in the Company valuing the investment as $2,147,613 of goodwill.

From December 2020 through March 2021, the Company closed the acquisition of thirteen Star Buds dispensaries and one cultivation facility. The aggregate purchase price was $118,000,000. The Company accounted for the transaction utilizing purchase price accounting stating that the book value approximates the fair market value of the assets acquired. The purchase price accounting resulted in the Company valuing the investment as $27,054,025 of goodwill.

As of June 30, 2021, the Company had $41,505,944 of goodwill which consisted of $6,301,080 from Success Nutrients and Pono Publications, $3,003,226 from DCG, $3,000,000 from The Big Tomato, $2,147,613 from Mesa Organics, and $27,054,025 from Star Buds.

Debt

6 Months Ended

Jun. 30, 2021

Debt Disclosure [Abstract]

Debt

10.

Debt

Term Loan — On February 26, 2021, the Company entered into a Loan Agreement with SHWZ Altmore, LLC and GGG Partners LLC, as collateral agent. Upon execution of the Loan Agreement, the Company received $10,000,000. The term loan incurs 15% interest per annum, due quarterly on March 1, June 1, September 1, and December 1 of each year. Principal payments begin on June 1, 2023 in the amount of $500,000, with the remainder of the principal due upon maturity on February 26, 2025.

Under the terms of the loan, the Company must comply with certain restrictions. These include customary events of default and specified representations as well as various financial ratio requirements including, (i) a consolidated fixed charge coverage ratio of at least 1.3 at the end of each fiscal quarter beginning in the first quarter of 2022, and (ii) a minimum of $3,000,000 in a deposit account in which the lender has a security interest. As of June 30, 2021, the Company was in compliance with the requirements described above.

Seller Notes — As part of the acquisition of the Star Buds assets, the Company entered into a deferred payment arrangement with the sellers for $44,250,000. The deferred payment arrangement incurs 12% interest per annum, payable on the 1^st of every month through November 2025. Principal payments are due as follows: $13,901,759 on December 17, 2025, $3,474,519 on February 3, 2026, and $26,873,722 on March 2, 2026.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-URI http://asc.fasb.org/topic&trid=2208564

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1B
-Subparagraph (h)
-URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1C
-Subparagraph (c)
-URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1I
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1I
-Subparagraph (d)
-URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(c))
-URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1B
-Subparagraph (g)
-URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1C
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1C
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1E
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495348-112611

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1B
-URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1I
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1B
-Subparagraph (i)
-URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

+ Details

Leases

6 Months Ended

Jun. 30, 2021

Leases [Abstract]

Leases

11.	Leases

Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. Leases with a term greater than one year are recognized on the balance sheet at the time of lease commencement or modification of an ROU operating lease asset and a lease liability, initially measured at the present value of the lease payments. Lease costs are recognized in the income statement over the lease term on a straight-line basis. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

The Company's leases consist of real estate leases for office spaces. The Company elected to combine the lease and related non-lease components for its operating leases.

The Company’s operating leases include options to extend or terminate the lease, which are not included in the determination of the ROU asset or lease liability unless reasonably certain to be exercised. The Company's operating leases have remaining lease terms of less than two years. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

As the Company's leases do not provide an implicit rate, we used an incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. The discount rate used in the computations ranged between 6% and 12%.

Balance Sheet Classification of Operating Lease Assets and Liabilities

Balance Sheet Classification Table
	Balance Sheet Line	June 30, 2021
Asset
Operating lease right of use assets	Noncurrent assets	$	3,934,370
Liabilities
Lease liabilities	Noncurrent liabilities	$	4,078,375

Lease Costs

The table below summarizes the components of lease costs for the six months ended June 30, 2021.

Operating Lease Costs
	Six Months Ended June 30, 2021

Operating lease costs	$	650,692

Maturities of Lease Liabilities

Maturities of lease liabilities as of June 30, 2021 are as follows:

Maturities of Lease Liabilities
2021 fiscal year	$	4,809,658
Less: Interest		182,344
Present value of lease liabilities	$	4,627,314

The following table presents the Company’s future minimum lease obligation under ASC 840 as of June 30, 2021:

Future minimum lease obligations
2021 fiscal year	$	740,076
2022 fiscal year		1,479,393
2023 fiscal year		1,354,595
2024 fiscal year		723,590
2025 fiscal year		333,356
Total	$	4,631,010

Stockholders’ Equity

6 Months Ended

Jun. 30, 2021

Equity [Abstract]

Stockholders’ Equity

12.	Stockholders’ Equity

The Company is authorized to issue two classes of stock, designated preferred stock and common stock.

Preferred Stock

The number of shares of preferred stock authorized is 10,000,000, par value $0.001 per share. The preferred stock may be divided into such number of series as the Board may determine. The Board is authorized to determine and alter the rights, preferences, privileges and restrictions granted and imposed upon any wholly unissued series of preferred stock, and to fix the number and designation of shares of any series of preferred stock. The Board, within limits and restrictions stated in any resolution of the Board, originally fixing the number of shares constituting any series may increase or decrease, but not below the number of such series then outstanding, the shares of any subsequent series.

The Company had 87,266 shares of Series A Preferred Stock issued and outstanding as of June 30, 2021 and 19,716 shares of Series A Preferred Stock issued and outstanding as of December 31, 2020. Among other terms, each share of Series A Preferred Stock (i) earns an annual dividend of 8% on the “preference amount,” which initially is equal to the $1,000 per-share purchase price and subject to increase, by having such dividends automatically accrete to, and increase, the outstanding preference amount; (ii) is entitled to a liquidation preference under certain circumstances, (iii) is convertible into shares of the Company’s common stock by dividing the preference amount by $1.20 per share under certain circumstances, and (iv) is subject to a redemption right or obligation under certain circumstances.

Common Stock

The Company is authorized to issue 250,000,000 shares of common stock at a par value of $0.001. The Company had 42,925,303 shares of common stock issued and 42,408,259 shares of common stock outstanding as of June 30, 2021, and 42,601,773 shares of common stock issued and 42,169,041 shares of common stock outstanding as of December 31, 2020.

Common Stock Issued in Private Placements

During the year ended December 31, 2020, the Company issued 187,500 shares of common stock and warrants to purchase 187,500 shares of common stock, for gross proceeds of $375,000.

Common Stock Issued as Compensation to Employees, Officers, and Directors

On April 3, 2020, the Company cancelled 500,000 shares of common stock, with vesting conditions represented as derivative instruments. These shares were incorrectly issued as restricted shares instead of restricted stock units to an officer of the Company, Paul Dickman, on January 8, 2019.

During the six months ended December 31, 2020, the Company issued 406,895 shares of common stock valued at $497,301 to employees, officers, and directors as compensation.

During the period ended June 30, 2021, the Company issued 323,530 shares of common stock valued at $557,998 to employees, and directors as compensation.

Common and Preferred Stock Issued as Payment for Acquisitions

On April 20, 2020, the Company issued 2,554,750 shares of common stock valued at $4,167,253 for the acquisition of Mesa Organics, Ltd.

On December 17, 2020, the Company issued 2,862 shares of Series A Preferred Stock valued at $2,861,994 and on December 18, 2020, the Company issued 6,404 shares of Series A Preferred Stock valued at $6,403,987 for the acquisition of Star Buds assets.

On February 3, 2021, the Company issued 2,319 shares of Series A Preferred Stock valued at $2,318,998 and on March 3, 2021, the Company issued 17,921 shares of Series A Preferred Stock valued at $17,920,982 for the acquisition of Star Buds assets.

Warrants

The Company accounts for common stock purchase warrants in accordance with ASC 480, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock, Distinguishing Liabilities from Equity. The Company estimates the fair value of warrants at date of grant using the Black-Scholes option pricing model. There is a moderate degree of subjectivity involved when using option pricing models to estimate the warrants, and the assumptions used in the Black Scholes option-pricing model are moderately judgmental.

During the period ended June 30, 2021, the Company issued warrants to purchase an aggregate of 3,793,530 shares of common stock as purchase consideration for the acquisition of certain Star Buds assets. These warrants have an exercise price of $1.20 per share and expiration dates five years from the date of issuance. In addition, the Company issued a warrant to purchase an aggregate 1,500,000 shares of common stock to an accredited investor in connection with entering into a loan agreement. This warrant has an exercise price of $2.50 per share and expires five years from the date of issuance. The Company estimated the fair value of these warrants at date of grant using the Black-Scholes option pricing model using the following inputs: (i) stock price on the date of grant of $1.20 of $2.50, respectively, (ii) the contractual term of the warrant of 5 years, (iii) a risk-free interest rate ranging between 0.46% - 0.75% and (iv) an expected volatility of the price of the underlying common stock ranging between 192.71% - 195.00%.

The following table reflects the change in common stock purchase warrants for the six months ended June 30, 2021.

Schedule of warrant activity
	Number of shares
Balance as of January 1, 2021		11,725,220
Warrants exercised		–
Warrants forfeited		–
Warrants issued		5,293,530
Balance as of June 30, 2021		17,018,750

Option Repricing

On December 15, 2020, the Board repriced certain outstanding stock options issued to the Company’s current employees. The repriced stock options had original exercise prices ranging from $1.52 per share to $3.83 per share. All of these stock options to current employees were repriced to have an exercise price of $1.26 per share, which was the closing price of the Company’s common stock on December 15, 2020. Each of the options has a new 10-year term from the repricing date.

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496158-112644

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 13
-URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496158-112644

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 14
-Subparagraph (c)
-URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496171-112644

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 14
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496171-112644

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.3-04)
-URI http://asc.fasb.org/extlink&oid=120397183&loc=d3e187085-122770

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 18
-Subparagraph (d)
-URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496189-112644

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (g)
-URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496158-112644

Reference 8: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-URI http://asc.fasb.org/topic&trid=2208762

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 18
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496189-112644

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (h)
-URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496158-112644

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 14
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496171-112644

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 18
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496189-112644

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 16
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496180-112644

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (i)
-URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496158-112644

Reference 15: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(e)(1))
-URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

+ Details

Segment Information

6 Months Ended

Jun. 30, 2021

Segment Reporting [Abstract]

Segment Information

13.	Segment Information

The Company has three identifiable segments as of June 30, 2021; (i) retail, (ii) wholesale and (iii) and other. The retail segment represents our dispensaries which sell merchandise directly to customers via retail locations and e-commerce portals. The wholesale segment represents our manufacturing and wholesale business which sell merchandise to customers via e-commerce portals, a retail location, and manufacturing facility. The other segment derives its revenue from licensing and consulting agreements with cannabis related entities, in addition to fees from seminars and expense reimbursements included in other revenue on the Company’s financial statements.

The following information represents segment activity for the three-month periods ended June 30, 2021 and June 30, 2020:


	For the Three Months Ended												For the Three Months Ended
	30-June-2021												30-June-2020
	Retail			Wholesale			Other			Total			Retail			Wholesale			Other			Total

Revenues	$	21,525,816		$	9,186,180		$	16,844		$	30,728,841		$	732,459		$	4,106,195		$	586,675		$	5,424,329
Cost of goods and services	$	(9,562,361	)	$	(6,208,416	)	$	(55,564	)	$	(15,826,341	)	$	(477,085	)	$	(2,356,159	)	$	(273,442	)	$	(3,106,686	)
Gross profit	$	11,963,455		$	2,977,764		$	(38,720	)	$	14,902,500		$	255,374		$	2,382,741		$	734,127		$	2,317,643
Intangible assets amortization	$	2,755,794		$	(191	)	$	134		$	2,755,736		$	–		$	3,027		$	268		$	1,647
Depreciation	$	136,500		$	5,385		$	118,957		$	260,843		$	76,448		$	4,593		$	9,933		$	86,510
Income (loss) from operations	$	6,643,360		$	2,519,461		$	(4,792,780	)	$	4,370,040		$	(76,789	)	$	1,448,547		$	(9,346,774	)	$	(6,595,707	)
Segment assets	$	133,063,287		$	24,484,790		$	25,811,195		$	183,359,272		$	1,730,156		$	20,783,819		$	12,498,980		$	36,012,965

The following information represents segment activity for the six-month periods ended June 30, 2021 and June 30, 2020:

	For the Six Months Ended												For the Six Months Ended
	30-June-2021												30-June-2020
	Retail			Wholesale			Other			Total			Retail			Wholesale			Other			Total
Revenues	$	33,342,016		$	16,632,445		$	94,494		$	50,068,955		$	732,459		$	6,635,126		$	1,259,878		$	8,627,463
COGS	$	(17,063,118	)	$	(10,692,109	)	$	(158,224	)	$	(27,913,451	)	$	(477,085	)	$	(4,252,385	)	$	(525,751	)	$	(5,255,221	)
Gross profit	$	16,278,898		$	5,940,336		$	(63,730	)	$	22,155,504		$	255,374		$	2,382,741		$	734,127		$	3,372,242
Intangible assets amortization	$	4,350,095		$	1,305		$	266		$	4,351,667		$	–		$	3,027		$	268		$	3,295
Depreciation	$	220,798		$	9,026		$	225,656		$	455,480		$	76,448		$	4,593		$	9,933		$	90,974
Income (loss) from operations	$	8,042,011		$	5,333,475		$	(12,654,954	)	$	720,532		$	(76,789	)	$	1,448,547		$	(9,346,774	)	$	(7,975,017	)
Segment assets	$	133,063,287		$	24,484,790		$	25,811,195		$	183,359,272		$	1,730,156		$	20,783,819		$	12,498,980		$	36,012,965

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 31
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8924-108599

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 34
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8981-108599

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 21
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8721-108599

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 40
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e9031-108599

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (f)
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8933-108599

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (e)
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8933-108599

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 26
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8844-108599

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 41
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e9038-108599

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (d)
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8933-108599

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 22
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8736-108599

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 42
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e9054-108599

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 15
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8657-108599

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 21
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8721-108599

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-URI http://asc.fasb.org/topic&trid=2134510

+ Details

Tax Provision

6 Months Ended

Jun. 30, 2021

Income Tax Disclosure [Abstract]

Tax Provision

14.	Tax Provision

The following table summarizes the Company’s income tax expense and effective tax rates for the three and six months ended June 30, 2021 and June 30, 2020:

Components of income tax expense
	Three Months Ended June 30,
	2021		2020
Income (Loss) before Income Taxes		4,598,515		(6,595,707	)
Income Tax Expense		228,474		–
Effective Tax Rate		4.97%		0%

	Six Months Ended June 30,
	2021		2020
Income (Loss) before Income Taxes		1,405,620		(7,975,017	)
Income Tax Expense		685,088		–
Effective Tax Rate		48.74%		0%

The Company has computed its provision for income taxes under the discrete method which treats the year-to-date period as if it were the annual period and determines the income tax expense or benefit on that basis. The discrete method is applied when application of the estimated annual effective tax rate is impractical because it is not possible to reliably estimate the annual effective tax rate. We believe that, at this time, the use of this discrete method is more appropriate than the annual effective tax rate method as the estimated annual effective tax rate method is not reliable due to the high degree of uncertainty in estimating annual pre-tax income due to the early growth stage of the business.

Due to its cannabis operations, the Company is subject to the limitations of Internal Revenue Code (“IRC”) Section 280E under which the Company is only allowed to deduct expenses directly related to sales of product. This results in permanent differences between ordinary and necessary business expenses deemed non-allowable under IRC Section 280E.

The effective tax rate for the three months and six months ended June 30, 2021 varies from the three months and six months ended June 30, 2020 primarily due to IRC Section 280E. The Company acquired plant-touching cannabis operations during 2020 and 2021 and these plant-touching operations are subject to the limitations of IRC Section 280E. In April 2020, the Company acquired its first plant-touching business, Mesa Organics. Prior to this acquisition, the Company was not subject to IRC Section 280E.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company's valuation allowance represents the amount of tax benefits that are likely to not be realized. Management assesses the need for a valuation allowance each period and continues to have a full valuation allowance on its deferred tax assets as of June 30, 2021.

The Federal statute of limitation remains open for the 2017 tax year to present. The state statute of limitation remains open for the 2016 tax year to present.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 21
-URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SAB Topic 11.C)
-URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 17
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SAB TOPIC 6.I.5.Q1)
-URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 14
-URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 270
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-URI http://asc.fasb.org/topic&trid=2144680

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 30
-Section 50
-Paragraph 2
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(h)(2))
-URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

+ Details

Subsequent Events

6 Months Ended

Jun. 30, 2021

Subsequent Events [Abstract]

Subsequent Events

15.	Subsequent Events

In accordance with FASB ASC 855-10, Subsequent Events, the Company has analyzed its operations subsequent to June 30, 2021 to the date these consolidated financial statements were issued, and has determined that it does not have any material subsequent events to disclose in these consolidated financial statements, except as follows:

On July 21, 2021, the Company, completed its previously announced asset purchase from SCG Services, LLC (the “APA Seller”), pursuant to the terms of an asset purchase agreement, dated May 27, 2021, among the Company, SCG Holding, LLC, a wholly-owned subsidiary of the Company (the “Purchaser”), the APA Seller, and John Sakun and Vladimir Sakun (together, the “APA Members”).

At the closing, the Purchaser purchased all of the assets of the APA Seller that are used in or held for use in or are related to the operation of the APA Seller’s business of growing, distributing and marketing recreational cannabis products, on the terms and subject to the conditions set forth in the asset purchase agreement, and assumed obligations under contracts acquired as part of the purchase.

The aggregate purchase price for the assets of the APA Seller was $6.725 million, approximately $1.2 million of which was paid in cash and the remainder of which was paid in shares of the Company’s common stock based on the volume weighted average price per share of the Company’s common stock for the prior 30 consecutive trading days, as determined in reasonable good faith by the Purchaser on the date that was three business days prior to the closing, or 1,992,593 shares. The Company held back 10% of each of the cash portion, approximately $0.1 million, and the stock portion, 221,400 shares, of the purchase price as collateral for potential claims for indemnification from the APA Seller and the APA Members under the asset purchase agreement. Any portion of the held-back cash portion and stock portion not used to satisfy indemnification claims will be released to the APA Members on the first anniversary of the closing.

Also, at the closing, the Purchaser acquired certain real estate from BWR L.L.C.(the “Real Estate Seller”), pursuant to the terms of an agreement of purchase and sale, dated May 27, 2021, between the Purchaser and the Real Estate Seller.

At closing, the Purchaser purchased and acquired from the Real Estate Seller certain real property consisting of approximately 36 acres located in Huerfano County, Colorado, together with, among other things, all structures and improvements thereon, all fixtures therein or thereto and all privileges, easements and appurtenances pertaining thereto, including all of the Real Estate Seller’s right, title and interest in and to any adjacent or adjoining streets, alleys, or rights-of-ways and any strips or gores. The aggregate purchase price for the property of the Real Estate Seller was $4.499 million, which was paid in cash.

On July 28, 2021, Mesa Organics Ltd, a wholly-owned subsidiary of the Company, in its capacity as the administrative borrower, entered into a First Amendment to Loan Agreement with SHWZ Altmore, LLC, as lender, and GGG Partners LLC, as collateral agent, effective as of June 25, 2021. The amendment amended two definitions in the Loan Agreement, dated February 26, 2021, among Mesa Organics Ltd., Mesa Organics II Ltd., Mesa Organics III Ltd., Mesa Organics IV Ltd., SCG Holding, LLC and PBS Holdco LLC, SHWZ Altmore LLC and GGG Partners LLC, to extend the time period during which the borrowers are eligible to request the final $5,000,000 advance under the Loan Agreement by 60 days, or until August 25, 2021. On July 28, 2021, SHWZ Altmore LLC made the final advance of $5,000,000 to the borrowers under the Loan Agreement. As previously reported, the final advance was conditioned on, among other things, the Company’s completing its asset purchase from SCG Services, LLC, which occurred on July 21, 2021.

Critical Accounting Policies and Estimates (Policies)

6 Months Ended

Jun. 30, 2021

Accounting Policies [Abstract]

Management’s Representation of Interim Financial Statements

Management’s Representation of Interim Financial Statements

Basis of Presentation

Basis of Presentation

Use of Estimates

Use of Estimates

Reclassifications

Reclassifications

Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications had no impact on net earnings and financial position.

Fair Value Measurements

Fair Value Measurements

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the measurement of the fair value of the assets or liabilities.

June 30,

2021

December 31,

2020

Level 1 – Marketable Securities Available-for-Sale – Recurring

498,039

276,782

Marketable Securities at Fair Value on a Recurring Basis

Marketable Securities at Fair Value on a Recurring Basis

Fair Value of Financial Instruments

Fair Value of Financial Instruments

Accounts Receivable

Accounts Receivable

The following table depicts the composition of our accounts receivable as of June 30, 2021, and December 31, 2020:

Schedule of Accounts Receivable
	June 30, 2021			December 31, 2020

Accounts receivable – trade	$	3,377,879		$	1,315,188
Accounts receivable – related party		–			80,494
Accounts receivable – litigation, non-current		3,063,968			3,063,968
Allowance for doubtful accounts		(172,938	)		(44,808	)
Total accounts receivable	$	6,268,909		$	4,414,842

Notes Receivable

Notes Receivable

Other Assets (Current and Non-Current)

Other Assets (Current and Non-Current)

Goodwill and Intangible Assets

Goodwill and Intangible Assets

Long-Lived Assets

Long-Lived Assets

Accounts Payable

Accounts Payable

Accrued Expenses and Other Liabilities

Accrued Expenses and Other Liabilities

Revenue Recognition and Related Allowances

Revenue Recognition and Related Allowances

The Company has three main revenue streams: retail; wholesale; and other.

Costs of Goods and Services Sold

Costs of Goods and Services Sold

Costs of goods and services sold are comprised of related expenses incurred while supporting the implementation and sales of the Company’s products and services.

General and Administrative Expenses

General and Administrative Expenses

General and administrative expense are comprised of all expenses not linked to the production or advertising of the Company’s services.

Advertising and Marketing Costs

Advertising and Marketing Costs

Stock Based Compensation

Stock Based Compensation

Income Taxes

Income Taxes

Right of Use Assets and Lease Liabilities

Right of Use Assets and Lease Liabilities

Operating leases are included in operating lease ROU assets and operating lease liabilities, current and non-current, on the Company's consolidated balance sheets.

Critical Accounting Policies and Estimates (Tables)

6 Months Ended

Jun. 30, 2021

Accounting Policies [Abstract]

Schedule of fair value measurement

June 30,

2021

December 31,

2020

Level 1 – Marketable Securities Available-for-Sale – Recurring

498,039

276,782

Schedule of Accounts Receivable

Schedule of Accounts Receivable
	June 30, 2021			December 31, 2020

Accounts receivable – trade	$	3,377,879		$	1,315,188
Accounts receivable – related party		–			80,494
Accounts receivable – litigation, non-current		3,063,968			3,063,968
Allowance for doubtful accounts		(172,938	)		(44,808	)
Total accounts receivable	$	6,268,909		$	4,414,842

Property and Equipment (Tables)

6 Months Ended

Jun. 30, 2021

Property, Plant and Equipment [Abstract]

Property and equipment table

Property and equipment table
	June 30, 2021			December 31, 2020
Furniture and fixtures	$	294,204		$	228,451
Leasehold improvements		656,314			90,314
Machinery and tools		1,502,417			1,456,752
Office equipment		238,837			104,059
Software		1,308,387			1,308,387
Work in process		767,736			269,414
	$	4,767,895		$	3,457,377
Less: Accumulated depreciation		(1,291,349	)		(872,579	)
Total property and equipment, net of depreciation	$	3,476,546		$	2,584,798

Schedule of property and equipment useful lives


Furniture and fixtures	3 years
Leasehold improvements	Lesser of the lease term or estimated useful life
Machinery and tools	3 years
Office equipment	3 years
Software	3-5 years

Intangible Asset (Tables)

6 Months Ended

Jun. 30, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible assets

Intangible assets
	June 30, 2021			December 31, 2020

License agreements	$	88,775,280		$	1,667,000
Tradenames		4,270,000			350,000
Customer relationships		5,150,000			1,055,000
Non-compete		1,130,000			120,000
Product license and registration		57,300			57,300
Trade secret – intellectual property		32,500			32,500
		99,415,080			3,282,500
Less: accumulated amortization		(4,553,827	)		(200,456	)
Total intangible assets, net of amortization	$	94,861,253		$	3,082,044

Leases (Tables)

6 Months Ended

Jun. 30, 2021

Leases [Abstract]

Balance Sheet Classification Table

Balance Sheet Classification Table
	Balance Sheet Line	June 30, 2021
Asset
Operating lease right of use assets	Noncurrent assets	$	3,934,370
Liabilities
Lease liabilities	Noncurrent liabilities	$	4,078,375

Operating Lease Costs

Operating Lease Costs
	Six Months Ended June 30, 2021

Operating lease costs	$	650,692

Maturities of Lease Liabilities

Maturities of Lease Liabilities
2021 fiscal year	$	4,809,658
Less: Interest		182,344
Present value of lease liabilities	$	4,627,314

Future minimum lease obligations

Future minimum lease obligations
2021 fiscal year	$	740,076
2022 fiscal year		1,479,393
2023 fiscal year		1,354,595
2024 fiscal year		723,590
2025 fiscal year		333,356
Total	$	4,631,010

Stockholders’ Equity (Tables)

6 Months Ended

Jun. 30, 2021

Equity [Abstract]

Schedule of warrant activity

Schedule of warrant activity
	Number of shares
Balance as of January 1, 2021		11,725,220
Warrants exercised		–
Warrants forfeited		–
Warrants issued		5,293,530
Balance as of June 30, 2021		17,018,750

Segment Information (Tables)

6 Months Ended

Jun. 30, 2021

Segment Reporting [Abstract]

Schedule of Segment Reporting Information


	For the Three Months Ended												For the Three Months Ended
	30-June-2021												30-June-2020
	Retail			Wholesale			Other			Total			Retail			Wholesale			Other			Total

Revenues	$	21,525,816		$	9,186,180		$	16,844		$	30,728,841		$	732,459		$	4,106,195		$	586,675		$	5,424,329
Cost of goods and services	$	(9,562,361	)	$	(6,208,416	)	$	(55,564	)	$	(15,826,341	)	$	(477,085	)	$	(2,356,159	)	$	(273,442	)	$	(3,106,686	)
Gross profit	$	11,963,455		$	2,977,764		$	(38,720	)	$	14,902,500		$	255,374		$	2,382,741		$	734,127		$	2,317,643
Intangible assets amortization	$	2,755,794		$	(191	)	$	134		$	2,755,736		$	–		$	3,027		$	268		$	1,647
Depreciation	$	136,500		$	5,385		$	118,957		$	260,843		$	76,448		$	4,593		$	9,933		$	86,510
Income (loss) from operations	$	6,643,360		$	2,519,461		$	(4,792,780	)	$	4,370,040		$	(76,789	)	$	1,448,547		$	(9,346,774	)	$	(6,595,707	)
Segment assets	$	133,063,287		$	24,484,790		$	25,811,195		$	183,359,272		$	1,730,156		$	20,783,819		$	12,498,980		$	36,012,965

The following information represents segment activity for the six-month periods ended June 30, 2021 and June 30, 2020:

	For the Six Months Ended												For the Six Months Ended
	30-June-2021												30-June-2020
	Retail			Wholesale			Other			Total			Retail			Wholesale			Other			Total
Revenues	$	33,342,016		$	16,632,445		$	94,494		$	50,068,955		$	732,459		$	6,635,126		$	1,259,878		$	8,627,463
COGS	$	(17,063,118	)	$	(10,692,109	)	$	(158,224	)	$	(27,913,451	)	$	(477,085	)	$	(4,252,385	)	$	(525,751	)	$	(5,255,221	)
Gross profit	$	16,278,898		$	5,940,336		$	(63,730	)	$	22,155,504		$	255,374		$	2,382,741		$	734,127		$	3,372,242
Intangible assets amortization	$	4,350,095		$	1,305		$	266		$	4,351,667		$	–		$	3,027		$	268		$	3,295
Depreciation	$	220,798		$	9,026		$	225,656		$	455,480		$	76,448		$	4,593		$	9,933		$	90,974
Income (loss) from operations	$	8,042,011		$	5,333,475		$	(12,654,954	)	$	720,532		$	(76,789	)	$	1,448,547		$	(9,346,774	)	$	(7,975,017	)
Segment assets	$	133,063,287		$	24,484,790		$	25,811,195		$	183,359,272		$	1,730,156		$	20,783,819		$	12,498,980		$	36,012,965

Tax Provision (Tables)

6 Months Ended

Jun. 30, 2021

Income Tax Disclosure [Abstract]

Components of income tax expense

Components of income tax expense
	Three Months Ended June 30,
	2021		2020
Income (Loss) before Income Taxes		4,598,515		(6,595,707	)
Income Tax Expense		228,474		–
Effective Tax Rate		4.97%		0%

	Six Months Ended June 30,
	2021		2020
Income (Loss) before Income Taxes		1,405,620		(7,975,017	)
Income Tax Expense		685,088		–
Effective Tax Rate		48.74%		0%

Organization and Nature of Operations (Details Narrative) - USD ($)	2 Months Ended	4 Months Ended	6 Months Ended
	Feb. 26, 2021	Mar. 31, 2021	Jun. 30, 2021	Jun. 30, 2020	Dec. 16, 2020
Class of Stock [Line Items]
Proceeds from issuance of stock			$ 50,282,798	$ 0
Dye Capital [Member]
Class of Stock [Line Items]
Debt Instrument, Face Amount					$ 5,000,000
Debt Conversion, Converted Instrument, Amount	$ 5,000,000
Debt converted, shares issued	5,060
Series A Cumulative Convertible Preferred Stock [Member] \| Dye Cann II and CRW [Member]
Class of Stock [Line Items]
Proceeds from issuance of stock		$ 57,700,000
Stock issued new, shares		57,700
Share Price			$ 1,000
Preferred Stock, Dividend Rate, Percentage		8.00%

Liquidity and Capital Resources (Details Narrative) - USD ($)	Jun. 30, 2021	Dec. 31, 2020	Jun. 30, 2020
Liquidity And Capital Resources
Cash and cash equivalents	$ 21,130,769	$ 1,231,235	$ 5,418,317

Critical Accounting Policies and Estimates (Details - Level 3) - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Fair Value, Inputs, Level 1 [Member] \| Fair Value, Recurring [Member] \| Marketable Securities [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair value assets	$ 498,039	$ 276,782

Critical Accounting Policies and Estimates (Details - Receivables) - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total accounts receivable	$ 6,268,909	$ 4,414,842
Allowance for doubtful accounts	(172,938)	(44,808)
Trade Accounts Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total accounts receivable	3,377,879	1,315,188
Accounts receivable - related party [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total accounts receivable	0	80,494
Accounts receivable - litigation [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total accounts receivable	$ 3,063,968	$ 3,063,968

Critical Accounting Policies and Estimates (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
AccountingPoliciesLineItems [Line Items]
Other assets	$ 2,284,610		$ 2,284,610		$ 666,079
Accounts payable	2,375,540		2,375,540		3,557,461
Accrued expenses and other liabilities	10,279,124		10,279,124		2,705,445
Advertising and marketing expense	196,908	$ 336,529	308,593	$ 465,796
Stock based compensation expense	1,153,018	$ 3,109,091	$ 2,636,824	$ 4,361,822
Minimum [Member]
AccountingPoliciesLineItems [Line Items]
Intangible assets useful lives			10 years
Maximum [Member]
AccountingPoliciesLineItems [Line Items]
Intangible assets useful lives			15 years
Prepaid Expenses [Member]
AccountingPoliciesLineItems [Line Items]
Other assets	1,865,138		$ 1,865,138		345,777
Security Deposits [Member]
AccountingPoliciesLineItems [Line Items]
Other assets	419,472		419,472		51,879
Tax Receivable [Member]
AccountingPoliciesLineItems [Line Items]
Other assets					268,423
Customer Deposits [Member]
AccountingPoliciesLineItems [Line Items]
Accrued expenses and other liabilities	17,169		17,169		26,826
Accrued Payroll [Member]
AccountingPoliciesLineItems [Line Items]
Accrued expenses and other liabilities	741,299		741,299		1,154,887
Operating Expenses [Member]
AccountingPoliciesLineItems [Line Items]
Accrued expenses and other liabilities	5,719,742		5,719,742		1,523,732
Dividends On Preferred Stock [Member]
AccountingPoliciesLineItems [Line Items]
Accrued expenses and other liabilities	3,800,914		3,800,914
Colorado Cannabis [Member]
AccountingPoliciesLineItems [Line Items]
Notes receivable	215,890		215,890
Abba Medix Corp [Member]
AccountingPoliciesLineItems [Line Items]
Notes receivable	$ 246,765		$ 246,765		$ 246,765

Property and Equipment (Details) - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Property, Plant and Equipment [Line Items]
Property and Equipment, gross	$ 4,767,895	$ 3,457,377
Less: Accumulated Depreciation	(1,291,349)	(872,579)
Property and equipment, net	3,476,546	2,584,798
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Property and Equipment, gross	294,204	228,451
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property and Equipment, gross	656,314	90,314
Machinery and Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and Equipment, gross	1,502,417	1,456,752
Office Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and Equipment, gross	238,837	104,059
Software and Software Development Costs [Member]
Property, Plant and Equipment [Line Items]
Property and Equipment, gross	1,308,387	1,308,387
Work In Progress [Member]
Property, Plant and Equipment [Line Items]
Property and Equipment, gross	$ 767,736	$ 269,414

Property and Equipment (Details - Expected life)	6 Months Ended
Property and Equipment (Details - Expected life)	Jun. 30, 2021
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life	3 years
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life	Lesser of the lease term or estimated useful life
Machinery and Equipment [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life	3 years
Office Equipment [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life	3 years
Software and Software Development Costs [Member] \| Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life	3 years
Software and Software Development Costs [Member] \| Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life	5 years

Property and Equipment (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
Property and Equipment (Details Narrative) - USD ($)	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Property, Plant and Equipment [Abstract]
Depreciation expense	$ 260,843	$ 86,510	$ 455,480	$ 90,974

Intangible Asset (Details) - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	$ 99,415,080	$ 3,282,500
Less: accumulated amortization	(4,553,827)	(200,456)
Intangible assets, net	94,861,253	3,082,044
Licensing Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	88,775,280	1,667,000
Trade Names [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	4,270,000	350,000
Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	5,150,000	1,055,000
Noncompete Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	1,130,000	120,000
Product License and Registration [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	57,300	57,300
Trade Secret [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	$ 32,500	$ 32,500

Intangible Asset (Details Narrative) - USD ($)	3 Months Ended	6 Months Ended
Intangible Asset (Details Narrative) - USD ($)	Jun. 30, 2021	Jun. 30, 2021
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization expense	$ 2,755,736	$ 4,351,667

Derivative Liability (Details Narrative) - USD ($)		2 Months Ended	3 Months Ended		4 Months Ended	5 Months Ended	6 Months Ended
Derivative Liability (Details Narrative) - USD ($)	Jan. 08, 2019	Feb. 25, 2020	Jun. 30, 2021	Jun. 30, 2020	Apr. 23, 2019	Jun. 11, 2019	Jun. 30, 2021	Jun. 30, 2020
Derivative [Line Items]
Gain on forfeiture of contingent consideration			$ 0	$ 0			$ 0	$ 1,462,636
Fair value of derivative liabilities			436,554				436,554
Unrealized gain (loss) on derivative liabilities			$ 1,864,741	$ (348,535)			$ 610,927	$ 843,428
Officer And Director [Member] \| Restricted Stock [Member]
Derivative [Line Items]
Restricted stock granted, shares	500,000				1,000,000
Officer And Director [Member] \| Restricted Stock [Member] \| Director Resignation [Member]
Derivative [Line Items]
Gain on forfeiture of contingent consideration		$ 1,462,636
An Officer [Member] \| Restricted Stock [Member]
Derivative [Line Items]
Restricted stock granted, shares						1,000,000

Related Party Transactions (Details Narrative) - USD ($)	1 Months Ended	2 Months Ended			3 Months Ended	4 Months Ended	5 Months Ended	6 Months Ended		7 Months Ended	8 Months Ended	12 Months Ended					22 Months Ended	25 Months Ended
	Feb. 03, 2021	Mar. 02, 2021	Mar. 02, 2021	Feb. 26, 2021	Mar. 30, 2021	Apr. 19, 2021	Jun. 05, 2019	Jun. 30, 2021	Jun. 30, 2020	Jul. 31, 2020	Sep. 04, 2020	Dec. 31, 2020	Dec. 22, 2020	Dec. 18, 2020	Dec. 16, 2020	Dec. 31, 2019	Mar. 31, 2021	Jun. 30, 2021	Aug. 01, 2020
Related Party Transaction [Line Items]
Cash paid at closing								$ 66,082,072	$ 2,609,500
Star Buds [Member]
Related Party Transaction [Line Items]
Consideration transferred			$ 118,000,000
Cash paid at closing			44,250,000
Deferred cash			$ 44,250,000
Dye Capital [Member]
Related Party Transaction [Line Items]
Convertible note															$ 5,000,000
Debt converted, amount converted				$ 5,000,000
Debt converted, interest converted				$ 60,250
Seller Notes [Member] \| Star Buds [Member]
Related Party Transaction [Line Items]
Note payable balance								44,250,000										$ 44,250,000
Interest paid								$ 1,752,662
Warrants [Member] \| Star Buds [Member]
Related Party Transaction [Line Items]
Stock issued			5,531,250					3,793,530
Warrants [Member] \| Dye Capital [Member]
Related Party Transaction [Line Items]
Debt converted, shares issued				5,060
Cash paid on conversion of debt				$ 230
Series A Preferred Stock [Member] \| Star Buds [Member]
Related Party Transaction [Line Items]
Stock issued			29,500
Dye Cann II SPA [Member]
Related Party Transaction [Line Items]
Stock issued new, shares								21,350
Proceeds from sale of equity								$ 21,350,000
Dye Cann II SPA [Member] \| Series A Preferred Stock [Member]
Related Party Transaction [Line Items]
Stock issued new, shares	3,100	3,800			4,000								1,300	1,450	7,700
CRW SPA [Member] \| Series A Preferred Stock [Member]
Related Party Transaction [Line Items]
Stock issued new, shares				25,350
Proceeds from sale of equity				$ 25,350,000
Med Man Denver [Member]
Related Party Transaction [Line Items]
Revenue from related parties												$ 997,262
Accounts receivable from related parties												72,109
Med Pharm Holdings [Member]
Related Party Transaction [Line Items]
Revenue from related parties												73,557
Accounts receivable from related parties												5,885
Notes receivable issued																$ 767,695
Note receivable balance								0										0	$ 767,695
Accrued interest receivable																			$ 47,161
Note receivable balance						$ 181,911				$ 100,000
Med Pharm Holdings [Member] \| Andrew Williams [Member]
Related Party Transaction [Line Items]
Shares returned for payment of note receivable											175,000
Baseball 18 [Member]
Related Party Transaction [Line Items]
Revenue from related parties												14,605
Accounts payable from related party												31,250
Farm Boy [Member]
Related Party Transaction [Line Items]
Revenue from related parties												16,125
Accounts payable from related party												93,944
Emerald Fields [Member]
Related Party Transaction [Line Items]
Revenue from related parties												16,605
Los Suenos [Member]
Related Party Transaction [Line Items]
Revenue from related parties												52,244
Dye Cann I [Member] \| Securities Purchase Agreement [Member]
Related Party Transaction [Line Items]
Proceeds from sale of equity							$ 3,000,000											$ 18,575,000
Dye Cann I [Member] \| Securities Purchase Agreement [Member] \| Common Stock [Member]
Related Party Transaction [Line Items]
Stock issued new, shares							1,500,000											9,287,500
Dye Cann I [Member] \| Securities Purchase Agreement [Member] \| Warrants [Member]
Related Party Transaction [Line Items]
Warrants issued							1,500,000										9,287,500
Tella Digital [Member]
Related Party Transaction [Line Items]
Costs and expenses to related party								193,120				$ 66,264
Brian Ruden [Member] \| Star Buds [Member]
Related Party Transaction [Line Items]
Cash paid at closing			$ 13,727,490
Deferred cash			$ 13,727,490
Brian Ruden [Member] \| Seller Notes [Member] \| Star Buds [Member]
Related Party Transaction [Line Items]
Interest paid								$ 544,889
Brian Ruden [Member] \| Warrants [Member] \| Star Buds [Member]
Related Party Transaction [Line Items]
Stock issued			1,715,936
Brian Ruden [Member] \| Series A Preferred Stock [Member] \| Star Buds [Member]
Related Party Transaction [Line Items]
Stock issued			9,152

Inventory (Details Narrative) - USD ($)	6 Months Ended	12 Months Ended
Inventory (Details Narrative) - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Inventory Disclosure [Abstract]
Finished goods inventory	$ 5,948,853	$ 2,090,887
Inventory work in process	858,628	27,342
Raw materials inventory	2,375,461	500,917
Inventory obsolescence	$ 0	$ 0

Goodwill (Details Narrative) - USD ($)	2 Months Ended	4 Months Ended	5 Months Ended	6 Months Ended		7 Months Ended	9 Months Ended
Goodwill (Details Narrative) - USD ($)	Mar. 02, 2021	Apr. 20, 2020	Jun. 03, 2017	Jun. 30, 2021	Jun. 30, 2020	Jul. 21, 2017	Sep. 17, 2018	Dec. 31, 2020
Acquired Indefinite-lived Intangible Assets [Line Items]
Goodwill				$ 41,505,944				$ 53,046,729
Cash paid for acquisition				66,082,072	$ 2,609,500
Success And Pono [Member]
Acquired Indefinite-lived Intangible Assets [Line Items]
Stock issued for acquisition, shares			7,000,000
Goodwill			$ 6,301,080	6,301,080
Denver Consulting [Member]
Acquired Indefinite-lived Intangible Assets [Line Items]
Stock issued for acquisition, shares						2,258,065
Goodwill				3,003,226		$ 3,003,226
Big Tomato [Member]
Acquired Indefinite-lived Intangible Assets [Line Items]
Stock issued for acquisition, shares							1,933,329
Goodwill				3,000,000			$ 3,000,000
Mesa Organics [Member]
Acquired Indefinite-lived Intangible Assets [Line Items]
Stock issued for acquisition, shares		2,554,750
Goodwill		$ 2,147,613		2,147,613
Cash paid for acquisition		$ 2,609,500
Star Buds [Member]
Acquired Indefinite-lived Intangible Assets [Line Items]
Goodwill	$ 27,054,025			$ 27,054,025
Cash paid for acquisition	$ 44,250,000

Debt (Details Narrative) - USD ($)	1 Months Ended	2 Months Ended		3 Months Ended	6 Months Ended	12 Months Ended
Debt (Details Narrative) - USD ($)	Feb. 03, 2026	Mar. 02, 2026	Feb. 26, 2021	Mar. 31, 2021	Jun. 30, 2021	Dec. 17, 2025
Star Buds Assets [Member] \| Seller Notes [Member]
Debt Instrument [Line Items]
Debt Instrument, Interest Rate During Period					12.00%
Periodic principal payment				$ 44,250,000
Star Buds [Member] \| Seller Notes [Member] \| Subsequent Event [Member]
Debt Instrument [Line Items]
Periodic principal payment	$ 3,474,519	$ 26,873,722				$ 13,901,759
Loan Agreement [Member]
Debt Instrument [Line Items]
Proceeds from Issuance of Debt			$ 10,000,000
Debt Instrument, Interest Rate During Period			15.00%
Periodic principal payment			$ 500,000
Debt Instrument, Maturity Date			Feb. 26, 2025

Leases (Details - Balance Sheet Classification) - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Leases [Abstract]
Operating lease asset - non-current	$ 3,934,370	$ 2,579,036
Operating lease liability - non-current	$ 4,078,375	$ 2,645,597

Leases (Details - Operating lease cost)	6 Months Ended
Leases (Details - Operating lease cost)	Jun. 30, 2021 USD ($)
Leases [Abstract]
Operating lease costs	$ 650,692

Leases (Details - Lease maturities)	Jun. 30, 2021 USD ($)
Leases [Abstract]
2021 fiscal year	$ 4,809,658
Less: Interest	(182,344)
Present value of lease liabilities	$ 4,627,314

Leases (Details - Minimum lease obligation)	Jun. 30, 2021 USD ($)
Leases [Abstract]
2021 fiscal year	$ 740,076
2022 fiscal year	1,479,393
2023 fiscal year	1,354,595
2024 fiscal year	723,590
2025 fiscal year	333,356
Total	$ 4,631,010

Leases (Details Narrative)	Jun. 30, 2021
Minimum [Member]
Lessee, Lease, Description [Line Items]
Weighted average lease discount rate	6.00%
Maximum [Member]
Lessee, Lease, Description [Line Items]
Weighted average lease discount rate	12.00%

Stockholders' Equity (Details Warrant Activity) - Warrant [Member]	6 Months Ended
	Jun. 30, 2021 shares
Class of Warrant or Right [Line Items]
Warrants outstanding, beginning balance	11,725,220
Warrants exercised	0
Warrants forfeited	0
Warrants issued	5,293,530
Warrants outstanding, ending balance	17,018,750

Stockholders’ Equity (Details Narrative) - USD ($)		1 Months Ended	2 Months Ended		3 Months Ended	4 Months Ended	6 Months Ended	12 Months Ended
Stockholders’ Equity (Details Narrative) - USD ($)	Apr. 03, 2020	Feb. 03, 2021	Mar. 03, 2021	Mar. 02, 2021	Jun. 30, 2021	Apr. 20, 2020	Jun. 30, 2021	Dec. 31, 2020	Dec. 18, 2020	Dec. 17, 2020
Class of Stock [Line Items]
Preferred stock authorized					10,000,000		10,000,000	10,000,000
Preferred stock par value					$ 0.001		$ 0.001	$ 0.001
Preferred stock issued					87,266		87,266	19,716
Preferred stock outstanding					87,266		87,266	19,716
Common stock authorized					250,000,000		250,000,000	250,000,000
Common stock par value					$ 0.001		$ 0.001	$ 0.001
Common stock issued					42,925,303		42,925,303	42,601,773
Common stock outstanding					42,408,259		42,408,259	42,169,041
Shares cancelled	500,000
Stock issued for compensation, value					$ 236,056		$ 680,861
Shares issued for acquisition, value							$ 20,240,000
Warrant [Member] \| Various Accredited Investor [Member]
Class of Stock [Line Items]
Contractual term							5 years
Warrant [Member] \| Various Accredited Investor [Member] \| Minimum [Member]
Class of Stock [Line Items]
Stock price					$ 1.20		$ 1.20
Risk-free interest rate							0.46%
Expected volatility rate							192.71%
Warrant [Member] \| Various Accredited Investor [Member] \| Maximum [Member]
Class of Stock [Line Items]
Stock price					$ 2.50		$ 2.50
Risk-free interest rate							0.75%
Expected volatility rate							195.00%
Star Buds [Member] \| Preferred Stock [Member]
Class of Stock [Line Items]
Stock issued for acquisition, shares		2,319	17,921						6,404	2,862
Shares issued for acquisition, value		$ 2,318,998	$ 17,920,982						$ 6,403,987	$ 2,861,994
Star Buds [Member] \| Warrants [Member]
Class of Stock [Line Items]
Stock issued for acquisition, shares				5,531,250			3,793,530
Employees Officers Directors [Member]
Class of Stock [Line Items]
Stock issued for compensation, shares							323,530	406,895
Stock issued for compensation, value							$ 557,998	$ 497,301
Mesa Organics Ltd [Member]
Class of Stock [Line Items]
Stock issued for acquisition, shares						2,554,750
Shares issued for acquisition, value						$ 4,167,253
Private Placements [Member]
Class of Stock [Line Items]
Stock issued new, shares								187,500
Warrants issued								187,500
Proceeds from sale of equity								$ 375,000

Segment Information (Details- Segment Information) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Segment Reporting Information [Line Items]
Revenues	$ 30,728,841	$ 5,424,329	$ 50,068,955	$ 8,627,463
Cost of goods and services	(15,826,341)	(3,106,686)	(27,913,451)	(5,255,221)
Gross profit	14,902,500	2,317,643	22,155,504	3,372,242
Intangible assets amortization	2,755,736	1,647	4,351,667	3,295
Depreciation	260,843	86,510	455,480	90,974
Net income (loss)	4,370,040	(6,595,707)	720,532	(7,975,017)
Segment assets	183,359,272	36,012,965	183,359,272	36,012,965
Products [Member]
Segment Reporting Information [Line Items]
Revenues	21,525,816	732,459	33,342,016	732,459
Cost of goods and services	(9,562,361)	(477,085)	(17,063,118)	(477,085)
Gross profit	11,963,455	255,374	16,278,898	255,374
Intangible assets amortization	2,755,794	0	4,350,095	0
Depreciation	136,500	76,448	220,798	76,448
Net income (loss)	6,643,360	(76,789)	8,042,011	(76,789)
Segment assets	133,063,287	1,730,156	133,063,287	1,730,156
Licensing and Consulting [Member]
Segment Reporting Information [Line Items]
Revenues	9,186,180	4,106,195	16,632,445	6,635,126
Cost of goods and services	(6,208,416)	(2,356,159)	(10,692,109)	(4,252,385)
Gross profit	2,977,764	2,382,741	5,940,336	2,382,741
Intangible assets amortization	(191)	3,027	1,305	3,027
Depreciation	5,385	4,593	9,026	4,593
Net income (loss)	2,519,461	1,448,547	5,333,475	1,448,547
Segment assets	24,484,790	20,783,819	24,484,790	20,783,819
Infrastructure [Member]
Segment Reporting Information [Line Items]
Revenues	16,844	586,675	94,494	1,259,878
Cost of goods and services	(55,564)	(273,442)	(158,224)	(525,751)
Gross profit	(38,720)	734,127	(63,730)	734,127
Intangible assets amortization	134	268	266	268
Depreciation	118,957	9,933	225,656	9,933
Net income (loss)	(4,792,780)	(9,346,774)	(12,654,954)	(9,346,774)
Segment assets	$ 25,811,195	$ 12,498,980	$ 25,811,195	$ 12,498,980

Tax Provision (Details - Components of Income Tax) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Income Tax Disclosure [Abstract]
Income (Loss) before Income Taxes	$ 4,598,515	$ (6,595,707)	$ 1,405,620	$ (7,975,017)
Income Tax Expense	$ 228,474	$ 0	$ 685,088	$ 0
Effective Tax Rate	4.97%	0.00%	48.74%	0.00%

- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

+ References + Details