UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934

(Amendment No.)

 

General Cannabis Corp.

(Name of Issuer)

 

Common Stock, $0.001 par value

(Title of Class of Securities)

 

36930V100

(CUSIP Number)

 

Eric B. Woldenberg, Esq.

Pryor Cashman LLP

7 Times Square

New York, NY 10036

(212) 421-4100

(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)

 

May 29, 2020

(Date of Event which Requires Filing of this Statement)

 

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box ¨.

 

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

 

 

 

 

 

 

CUSIP No. 36930V100    

 

1

NAME OF REPORTING PERSONS

 

 Hershey Management I, LLC

2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) x
(b) ¨
3 SEC USE ONLY
4

SOURCE OF FUNDS

WC

5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) ¨
6

CITIZENSHIP OR PLACE OF ORGANIZATION

Delaware

 

NUMBER OF

SHARES

BENEFICIALLY

OWNED BY

EACH

REPORTING

PERSON

WITH

7

SOLE VOTING POWER

0

8

SHARED VOTING POWER

3,514,938

9

SOLE DISPOSITIVE POWER

0

10

SHARED DISPOSITIVE POWER

3,514,938

 

11

AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

3,514,938

12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES ¨
13

PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

6.3%

14

TYPE OF REPORTING PERSON

IA

 

 

 

 

CUSIP No. 36930V100    

 

1

NAME OF REPORTING PERSONS

Hershey strategic capital, lp

2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) x
(b) ¨
3 SEC USE ONLY
4

SOURCE OF FUNDS

WC

5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) ¨
6

CITIZENSHIP OR PLACE OF ORGANIZATION

Delaware

 

NUMBER OF

SHARES

BENEFICIALLY

OWNED BY

EACH

REPORTING

PERSON

WITH

7

SOLE VOTING POWER

0

8

SHARED VOTING POWER

3,514,938

9

SOLE DISPOSITIVE POWER

0

10

SHARED DISPOSITIVE POWER

3,514,938

 

11

AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

3,514,938

12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES ¨
13

PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

6.3%

14

TYPE OF REPORTING PERSON

PN

 

 

 

 

CUSIP No. 36930V100    

 

1

NAME OF REPORTING PERSONS

Hershey Strategic Capital GP, LLC

2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) x
(b) ¨
3 SEC USE ONLY
4

SOURCE OF FUNDS

WC

5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) ¨
6

CITIZENSHIP OR PLACE OF ORGANIZATION

Delaware

 

NUMBER OF

SHARES

BENEFICIALLY

OWNED BY

EACH

REPORTING

PERSON

WITH

7

SOLE VOTING POWER

0

8

SHARED VOTING POWER

3,514,938

9

SOLE DISPOSITIVE POWER

0

10

SHARED DISPOSITIVE POWER

3,514,938

 

11

AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

3,514,938

12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES ¨
13

PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

6.3%

14

TYPE OF REPORTING PERSON

PN

 

 

 

 

 

CUSIP No. 36930V100    

 

1 NAME OF REPORTING PERSONS

Hershey Management IV, LLC
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) x
(b) ¨
3 SEC USE ONLY
4

SOURCE OF FUNDS

WC

5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) ¨
6

CITIZENSHIP OR PLACE OF ORGANIZATION

Delaware

 

NUMBER OF

SHARES

BENEFICIALLY

OWNED BY

EACH

REPORTING

PERSON

WITH

7

SOLE VOTING POWER

0

8

SHARED VOTING POWER

6,085,236

9

SOLE DISPOSITIVE POWER

0

10

SHARED DISPOSITIVE POWER

6,085,236

 

11

AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

6,085,236

12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES ¨
13

PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

10.6%

14

TYPE OF REPORTING PERSON

OO

 

 

 

 

CUSIP No. 36930V100    

 

1 NAME OF REPORTING PERSONS

SHORE VENTURES III, LP
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) x
(b) ¨
3 SEC USE ONLY
4

SOURCE OF FUNDS

WC

5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) ¨
6

CITIZENSHIP OR PLACE OF ORGANIZATION

Delaware

 

NUMBER OF

SHARES

BENEFICIALLY

OWNED BY

EACH

REPORTING

PERSON

WITH

7

SOLE VOTING POWER

0

8

SHARED VOTING POWER

6,085,236

9

SOLE DISPOSITIVE POWER

0

10

SHARED DISPOSITIVE POWER

6,085,236

 

11

AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

6,085,236

12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES ¨
13

PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

10.6%

14

TYPE OF REPORTING PERSON

PN

 

 

 

 

CUSIP No. 36930V100    

 

1 NAME OF REPORTING PERSONS

Adam hershey
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) x
(b) ¨
3 SEC USE ONLY
4

SOURCE OF FUNDS

WC

5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) ¨
6

CITIZENSHIP OR PLACE OF ORGANIZATION

Delaware

 

NUMBER OF

SHARES

BENEFICIALLY

OWNED BY

EACH

REPORTING

PERSON

WITH

7

SOLE VOTING POWER

0

8

SHARED VOTING POWER

9,600,174

9

SOLE DISPOSITIVE POWER

0

10

SHARED DISPOSITIVE POWER

9,600,174

 

11

AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

9,600,174

12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES ¨
13

PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

16.3%

14

TYPE OF REPORTING PERSON

IN

 

 

 

 

 

CUSIP No. 36930V100    

 

Item 1. Security and Issuer.

 

The title of the class of equity securities to which this statement relates is the common stock, par value $0.001 per share (“Common Stock”), of General Cannabis Corp., a Colorado corporation (the “Issuer”). The Issuer’s principal executive offices are located at 6565 E. Evans Avenue, Denver, Colorado 80224.

 

Item 2. Identity and Background.

 

(a) This Statement is a joint filing by Hershey Management I, LLC (“Hershey I”), Hershey Strategic Capital, LP (“HSC LP”), Hershey Strategic Capital GP, LLC (“HSC GP”), Shore Ventures III, LP (“Shore Ventures”), Hershey Management IV, LLC (“Hershey IV”) and Adam Hershey (each of the foregoing, individually, a “Reporting Person”, and collectively the “Reporting Persons”).

 

Hershey I is the investment advisor of HSC LP. HSC GP is the general partner of HSC LP. Adam Hershey is the sole managing member of both Hershey I and HSC GP. As the investment advisor of HSC LP, Hershey I, which is controlled by Mr. Hershey, has the voting and dispositive power with respect to all of the shares of Common Stock owned by HSC LP.

 

Hershey IV is the general partner of Shore Ventures. Adam Hershey is the sole managing member of Hershey IV. As the general partner of Shore Ventures, Hershey IV which is controlled by Mr. Hershey, has the voting and dispositive power with respect to all of the shares of Common Stock owned by Shore Ventures.

 

Each Reporting Person disclaims beneficial ownership of all securities reported herein except to the extent of such Reporting Person’s pecuniary interest therein and other than those securities reported herein as being held directly by such Reporting Person.

 

(b) The principal office and business address of the Reporting Persons is 6 Pompano Road, Rumson, NJ 07760.

 

(c) The principal business of the Reporting Persons is to invest in equity and equity-related securities and other securities of any kind or nature. Mr. Hershey is the sole managing member of Hershey I, Hershey IV and HSC GP.

 

(d) and (e) The Reporting Persons have not, during the last five years, been (a) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors), or (b) party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which it or he is or was subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

 

(f) Each of Hershey I, Hershey IV and HSC GP is a Delaware limited liability company. Each of HSC LP and Shore Ventures is a Delaware limited partnership. Adam Hershey is a citizen of the United States.

 

Item 3. Source and Amount of Funds or Other Consideration.

 

Pursuant to a Subscription Agreement, dated as of May 29, 2020 (the “Subscription Agreement”), among the Issuer, HSC LP and Shore Ventures, HSC LP and Shore Ventures purchased from the Issuer an aggregate of 5,485,814 shares of Common Stock and warrants to purchase up to an aggregate of 4,114,360 shares of Common Stock at closings effected on May 29, 2020 and June 3, 2020 for an aggregate purchase price of $2,185,000. Pursuant to the Subscription Agreement, HSC LP and Shore Ventures also committed to purchase from the Issuer an aggregate of 2,046,196 shares of Common Stock and warrants to purchase up to an aggregate of 1,534,647 shares of Common Stock for an aggregate purchase price of $815,000 upon the determination by the State of Colorado’s Marijuana Enforcement Division, on or prior to May 29, 2021, that Adam Hershey is “Approved for Suitability.”

 

The sources of funds used for the above described purchase by HSC LP and Shore Ventures was the working capital of such entities. None of the funds used in connection with such purchases were borrowed by HSC LP or Shore Ventures.

 

 

 

 

CUSIP No. 36930V100    

 

Item 4. Purpose of Transaction.

 

The Reporting Persons consider the securities of the Issuer that they that they beneficially own to be investments made in their ordinary course of business. As described below under Item 6, pursuant to the Subscription Agreement, Adam Hershey has been appointed as a nonvoting observer to the Issuer’s board of directors, and, upon the satisfaction of certain conditions set forth in the Subscription Agreement, it is contemplated that Mr. Hershey (or his designee) will be appointed to serve as a member of the Issuer’s board of directors, and that he (or his designee) will continue to serve as a member of the Issuer’s board of directors until the Issuer’s 2023 annual meeting of stockholders, provided that HSC LP and Shore Ventures continue to hold in aggregate at least one-half of the shares of Common Stock purchased by them in aggregate pursuant to the Subscription Agreement (without giving effect to the exercise of the warrants to purchase shares of Common Stock).

 

The Reporting Persons intend to review on a continuing basis their investment in the Issuer, including the Issuer’s business, financial condition and operating results, general market and industry conditions and other investment opportunities and, based upon such review, acquire additional shares of Common Stock or other securities of the Issuer, or dispose of the shares of Common Stock or other securities of the Issuer, in each case, in the open market, in privately negotiated transactions or in any other lawful manner.

 

Except as set forth herein, the Reporting Persons have no present plan or proposal that relates to or would result in any other action specified in clauses (a) through (j) of Item 4 of Schedule 13D.

 

Item 5. Interest in Securities of the Issuer.

 

(a) As of the date hereof, the Reporting Persons beneficially own an aggregate of 9,600,174 shares of Common Stock (including 4,114,360 shares of Common Stock issuable upon exercise of warrants issued pursuant to the Subscription Agreement), representing approximately 16.3% of the outstanding shares of Common Stock (based upon 40,281,881 shares of Common Stock outstanding as of May 5, 2020, as reported in the Issuer’s annual report on Form 10-K for the fiscal year ended December 31, 2019, plus the 8,859,117 shares of Common Stock that the Issuer issued on May 25, 2020 in connection with the closing of its acquisition of Dalton Adventures, LLC (as disclosed in a Current Report on Form 8-K that was filed on May 29, 2020), plus the 5,485,814 shares of Common Stock (but not warrants to purchase shares of Common Stock) that have been issued pursuant to the Subscription Agreement). Of the shares of Common Stock owned by the Reporting Persons: (A) 2,008,536 shares of Common Stock (and warrants to purchase up to 1,506,402 shares of Common Stock) are held directly by HSC LP, representing approximately 6.3% of the outstanding shares of Common Stock, as a result of a closing effected under the Subscription Agreement on May 29, 2020; and (B) 3,477,278 shares of Common Stock (and warrants to purchase up to 2,607,958 shares of Common Stock) are held directly by Shore Ventures, representing approximately 10.6% of the outstanding shares of Common Stock, as a result of a closing effected under the Subscription Agreement on June 3, 2020. Pursuant to the Subscription Agreement, HSC LP and Shore Ventures also committed to purchase from the Issuer an aggregate of 2,046,196 shares of Common Stock and warrants to purchase up to an aggregate of 1,534,647 shares of Common Stock for an aggregate purchase price of $815,000 upon the determination by the State of Colorado’s Marijuana Enforcement Division, on or prior to May 29, 2021, that Adam Hershey is “Approved for Suitability.”

 

(b) As the investment advisor of HSC LP, Hershey I has the power to vote or to direct the vote and to dispose or direct the disposition of all of the securities reported herein that are held directly by HSC LP. As the general partner of Shore Ventures, Hershey IV has the power to vote or to direct the vote and to dispose or direct the disposition of all of the securities reported herein that are held directly by Shore Ventures.

 

(c) Other than the purchase of shares of Common Stock and warrants to purchase shares of Common Stock effected pursuant to the Subscription Agreement, as reported herein, no transactions in the Common Stock were effected by the Reporting Persons in the last 60 days.

 

(d) and (e) Not applicable.

 

 

 

 

Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to Securities of Issuer.

 

Securities Purchase Agreement

 

As described above, pursuant to the Subscription Agreement, HSC LP purchased from the Issuer 2,008,536 shares of Common Stock and warrants to purchase 1,506,402 shares of Common Stock on May 29, 2020, and Shore Ventures purchased from the Issuer 3,477,278 shares of Common Stock and warrants to purchase 2,607,958 shares of Common Stock on June 3, 2020.

 

In addition, pursuant to the Subscription Agreement, Adam Hershey has been named as a nonvoting observer to the Issuer’s board of directors, and, upon the satisfaction of certain conditions set forth in the Subscription Agreement, including the determination by the State of Colorado’s Marijuana Enforcement Division that Mr. Hershey is “Approved for Suitability”, Mr. Hershey (or his designee) will be appointed to serve as a member of the Issuer’s board of directors, and he (or his designee) will continue to serve as a member of the Issuer’s board of directors until the Issuer’s 2023 annual meeting of stockholders, provided that HSC LP and Shore Ventures continue to hold in aggregate at least one-half of the shares of Common Stock purchased by them in aggregate pursuant to the Subscription Agreement (without giving effect to the exercise of the warrants to purchase shares of Common Stock).

 

The Subscription Agreement also provides HSC LP and Shore Ventures with certain participation rights in future financings of the Issuer until June 3, 2021. The Subscription Agreement further provides that the Issuer shall, during the 90-day period ending September 1, 2020 (the “negotiation period”), endeavor to cause the existing holders of the promissory notes of the Issuer having an outstanding balance in the amount of approximately $2,331,000 as of the date hereof that are due on or about January 31, 2021, to extend the maturity date of such notes to a date that is not earlier than January 31, 2022. If, at the end of the negotiation period, all of the existing notes have not been amended to extend the maturity dates thereof, then the Issuer shall issue to HSC LP and Shore Ventures, on a pro rata basis, additional warrants to purchase shares of common stock. Any such additional warrants will be for a number of shares of common stock based on the dollar amount of the outstanding balance (as of the first closing) of the existing notes that were not extended, with each one dollar of existing notes that were not extended representing one share subject to such additional warrant. The exercise price of any such additional warrants will be equal to 100% of the 30-day volume weighted average price of the Issuer’s Common Stock on the last day of the negotiation period, provided that such exercise price shall not be lower than $0.45 per share nor higher than $0.56 per share.

 

Consultant Agreement

 

In connection with the transactions contemplated by the Subscription Agreement, the Issuer and Mr. Hershey entered into a Consultant Agreement dated as of June 3, 2020 pursuant to which Mr. Hershey shall serve as a strategic consultant to the Issuer for a period of one year.

 

During the term of the Consultant Agreement, Mr. Hershey will be paid a monthly rate of $8,333, provided that if the salary of the CEO of the Issuer is returned to the rate paid prior to the Issuer’s salary reductions made in connection with the COVID-19 pandemic (the “COVID-19 Salary Reductions”), then Mr. Hershey’s monthly rate shall increase to $16,667 (with it being expressly understood and agreed that (A) if the salary of the CEO of the Issuer is increased from its current level, but not to 100% of the rate paid prior to the COVID-19 Salary Reductions, Mr. Hershey’s monthly rate shall be increased simultaneously on a proportionate basis, and (B) if the CEO of the Issuer receives any retroactive payments or other remuneration relating to all or any portion of salary that was reduced due to the COVID-19 Salary Reductions, then Mr. Hershey shall receive payments on a pari passu basis with respect to the services performed under the Consultant Agreement at a monthly rate of less than $16,667).

 

The foregoing summaries of the agreements and instruments are qualified in their entirety by reference to the copies of such agreements and instruments which are incorporated by this reference.

 

 

 

 

Item 7. Materials to be Filed as Exhibits.

 

Exhibit No.   Description
1.   Subscription Agreement, dated as of May 29, 2020, among the Issuer, Hershey Strategic Capital, LP and Shore Ventures III, LP (incorporated by reference to Exhibit 10.1 of the Issuer’s Current Report on Form 8-K filed June 1, 2020).
2.   Form of warrant to purchase shares of the common stock of the Issuer (incorporated by reference to Exhibit 10.2 of the Issuer’s Current Report on Form 8-K filed June 1, 2020).
3.   Consultant Agreement dated as of June 3, 2020 by and between the Issuer and Adam Hershey.
4.   Joint Filing Agreement, dated June 8, 2020 among the Reporting Persons.

 

 

 

 

 

SIGNATURE

 

After reasonable inquiry and to the best of its knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true, complete and correct.

 

Dated: June 11, 2020

 

  HERSHEY MANAGEMENT I, LLC
   
  By: /s/ Adam Hershey
  Name:    Adam Hershey
  Title: Managing Member
   
  HERSHEY STRATEGIC CAPITAL, LP
   
  By: Hershey Strategic Capital GP, LLC,
    Its General Partner
   
  By: /s/ Adam Hershey
  Name: Adam Hershey
  Title: Managing Member
   
  HERSHEY STRATEGIC CAPITAL GP, LLC
   
  By: /s/ Adam Hershey
  Name: Adam Hershey
  Title: Managing Member
   
   
  HERSHEY MANAGEMENT IV, LLC
   
  By: /s/ Adam Hershey
  Name: Adam Hershey
  Title: Managing Member
   
  SHORE VENTURES III, LP
   
  By: Hershey Management IV, LLC,
    Its General Partner
   
  By: /s/ Adam Hershey
  Name: Adam Hershey
  Title: Managing Member
   
   
  /s/ Adam Hershey
  Adam Hershey

 

 

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