MARIMED INC.

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If we fail to comply with the continued listing standards of the OTCQX tier of the OTC Markets Group, our common stock could be removed from the OTCQX marketplace. Any such removal could materially and adversely impact the market value and liquidity of our common stock.

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The continued listing of our common stock on the OTCQX is contingent on our compliance with the continued listing standards of the OTCQX. To maintain our listing, (i) our common stock must maintain a minimum bid price of $0.10 per share as of the close of business for at least one of every 30 consecutive calendar days; (ii) we must maintain current and adequate public disclosure; (iii) we must adhere to certain corporate governance standards, including having a board of directors that includes at least two independent directors and maintain an Audit Committee, a majority of the members of which are independent directors; (iv) we must continue to meet certain financial metrics, including a market capitalization of at least $5 million for at least one of every 30 consecutive calendar days; and (v) our common stock must be quoted by a minimum of two (2) market makers. There is no assurance that we will remain in compliance with these standards. On June 10, 2025, the OTC Markets Group notified us of our non-compliance with the minimum bid price requirement, thereby triggering a discretionary cure period. To regain compliance, we must maintain a bid price of at least $0.10 per share for a minimum of 10 consecutive trading days by September 8, 2025.

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If we are unable to regain compliance within the applicable period, the OTC Markets Group may remove our common stock from the OTCQX and downgrade us to a lower-tier market, such as the OTCQB or Pink Open Market. Such a downgrade could likely impair our ability to raise additional financing, reduce the visibility and liquidity of our stock, and limit our access to institutional investors and business opportunities. In addition, delisting could adversely affect our strategic flexibility and result in reduced analyst coverage, and impact employee morale and recruitment.

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As a cannabis business, the IRS takes the view that we are subject to certain tax deduction limitations that may have a material adverse effect on our business, financial condition and results of operations.

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Under Section 280E of the Code, “no deduction or credit shall be allowed for any amount paid or incurred during the taxable year in carrying on any trade or business if such trade or business (or the activities which comprise such trade or business) consists of trafficking in controlled substances (within the meaning of Schedule I and II of the CSA) which is prohibited by Federal law or the law of any state in which such trade or business is conducted.” The IRS has interpreted this provision to apply to cannabis operations, prohibiting cannabis operators such as us, from deducting expenses directly associated with cannabis businesses. Section 280E and related IRS enforcement activity has had a significant impact on the operations of cannabis companies. As a result, an otherwise profitable business may, in fact, operate at a loss, after taking into account its United States income tax expenses. The Company has taken a position that it may deduct certain ordinary and necessary business expenses and that such the deductibility of such expenses is not limited to the application of Section 280E of the Code.

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The IRS has asserted against various state-legal cannabis businesses in the U.S that Section 280E applies to limit deductions for such businesses. Although the IRS has clarified its position by allowing the deduction of certain expenses, the IRS has interpreted this allowance very narrowly, deeming substantial other customary operating and general administrative costs as non-deductible. While there are currently several pending cases before various administrative and federal courts challenging the applicability of Section 280E, there is no guarantee that these administrative and/or federal courts will issue an interpretation of Section 280E that aligns with our position or that is otherwise favorable to the cannabis industry.

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The IRS’s interpretations of Section 280E of the Code substantially limits our ability to deduct certain expenses from our federal taxable income for U.S. tax purposes.

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If the IRS determined, and courts upheld that Section 280E does apply to restrict our deduction of business expenses, our U.S. federal taxable income would likely exceed our actual profits, and the IRS would likely continue to apply Section 280E to us indefinitely. This result may change if cannabis is rescheduled as a Schedule III substance under the CSA or if federal legislation affects Section 280E. We cannot predict whether such rescheduling or federal legislation will occur within a given timeframe or at all, and thus cannot predict the future applicability or effect of Section 280E on our business operations and financial position.

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The Company may face enforcement actions by tax authorities if there are disagreements over the deductibility of operating expenses, particularly in areas subject to complex or evolving regulations.

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In June 2025, the IRS filed a lien against us in connection with an approximate $6 million 2023 alleged tax liability. We have filed a Collection Due Process (“CDP”) Hearing Request to challenge the IRS’s enforcement of the assessed 2023 federal income tax liability, and we shall be seeking to reduce the liability to the extent possible, and negotiate a collection alternative. We are currently working our way through the administrative process and, if necessary, intend to initiate Tax Court litigation. Pending final resolution of this CDP Hearing, with limited exceptions, while the matter is in dispute, the IRS is prohibited from enforcing its administrative levy rights. Although the liability is fully accrued in the accompanying condensed consolidated financial statements, if we do not ultimately prevail and the IRS initiates collection enforcement proceedings without the benefit of a collection alternative, it could have a material adverse impact on our ability to operate. In addition, the filing of the tax lien may have a material adverse impact on our business operations and financial position.