Eric B. Woldenberg, Esq.
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).
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
|
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
|
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
|
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
|
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
|
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
|
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.
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
|