PART I.

ITEM 1. BUSINESS

This annual report on Form 10-K (including, but not limited to, the following disclosures regarding our Business) contains forward-looking statements regarding our business, financial condition, results of operations, and prospects. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates”“estimates,” and similar expressions or variations of such words are intended to identify forward-looking statements, but are not the exclusive means of identifying forward-looking statements in this annual report on Form 10-K. Additionally, statements concerning future matters such as the development of new products, enhancements or technologies, sales levels, expense levels, and other statements regarding matters that are not historical are forward-looking statements.

Forward-looking statements in this annual report on Form 10-K reflect our good faith judgment based on facts and factors currently known to us. Forward-looking statements are inherently subject to risks and uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this annual report on Form 10-K. We undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this annual report on Form 10-K. Readers are urged to carefully review and consider the various disclosures made in this annual report on Form 10-K, which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.

Company Background

American Cannabis Company, Inc. and its subsidiary is a publicly listed company quoted on the OTC Markets OTCQB Trading Tier under the symbol “AMMJ”.“AMMJ.” We are based in Denver,Colorado Springs, Colorado, and operate a fully-integratedfully integrated business model that features end-to-end solutions for businesses operating in the regulated cannabis industry in states and countries where cannabis is regulated and/or has been de-criminalizeddecriminalized for medical use and/or legalized for recreational use. We provide advisory and consulting services specific to this industry, design industry-specific products and facilities, and manage a strategic group partnership that offers bothoffering exclusive and non-exclusive customer products commonly used in the industry. We also are licensed operators of two medical cannabis dispensaries and a cannabis cultivation facility in Colorado Springs, CO.

We are a Delaware corporation formed on September 24, 2001 with the name Naturewell, Inc., which became Pursuant to a merger transaction on March 13, 2013, the Company changed its name to Brazil Interactive Media, Inc. (“BIMI”) on March 13, 2013 pursuant to a merger transaction that resulted in the Company becoming, and operated as the owner of a Brazilian interactive television technology and television production company named BIMI, Inc. We became American Cannabis Company, Inc. on September 29, 2014, pursuantPursuant to an Agreement and Plan of Merger dated May 15, 2014, (the “Merger Agreement”) between the Company, Cannamerica Corp. (“Merger Sub”), a wholly-owned subsidiary of BIMI, and Hollister & Blacksmith, Inc. d/b/a wholly owned subsidiary of American Cannabis Consulting (“American Cannabis Consulting”). we changed our name to American Cannabis Company, Inc. Pursuant to the Merger Agreement, which was consummated and became effective on September 29, 2014, Merger Sub was merged with and into American Cannabis Consulting through a reverse triangular merger transaction, (the “Reverse Merger”), we changed our name to “American Cannabis Company, Inc.”, and our officers and directors in office prior to the Merger Agreement resigned and American Cannabis Consulting appointed new officers and directors to serve our Company. In concert with the Merger Agreement, we consummated a complete divestiture of BIMI, Inc. pursuant to a Separation and Exchange Agreement dated May 16, 2014 (the “Separation Agreement”) between the Company, BIMI, Inc., a Delaware corporation and wholly-owned subsidiary of the Company, and Brazil Investment Holding, LLC (“Holdings”), a Delaware limited liability company. On October 10, 2014, we changed our stock symbol from BIMI to AMMJ.

The foregoing descriptions of the Merger Agreement and Separation Agreement do not purport to be complete and are qualified in their entirety by the terms of such agreements, which are filed as exhibits to the Current Report on Form 8-K filed by the Company with the U.S. Securities and Exchange Commission (“SEC”) on October 3, 2014.

Industry and Regulatory Overview

As of March 14, 2016, 23the date of this filing, thirty-nine states, andincluding the state of Colorado, the District of Columbia, allow their citizens toand four U.S. Territories, currently have laws broadly legalizing cannabis in some form for either medicinal or recreational use medicalgoverned by state-specific laws and regulations. Although legalized in some states, cannabis through de-criminalization. Voters inis a “Schedule 1” drug under the States of Oregon, Colorado, Washington, and Alaska have legalized cannabis for adult recreational use; Oregon’s law took effect on July 1, 2015; Alaska’s law was effective February 24, 2015; both the Colorado and Washington programs were enacted as of December 31, 2014. In 2016, Nevada California, Vermont, Arizona, Connecticut and Michigan have legislative bills in various stages of progress concerning cannabis legalization.

Additionally, there are active efforts by many advocacy groups seeking to expand the legalization of cannabis, including, but not limited to the Marijuana Policy Project, a leading advocate for major state-level marijuana policy reforms that have resulted in successful efforts to pass 10 of the 15 most recent state medical marijuana laws (in Arizona, Delaware, Illinois, Maryland, Michigan, Minnesota, Montana, New Hampshire, Rhode Island, and Vermont) and five of the seven most recent decriminalization laws (in Delaware, Maryland, Massachusetts, Rhode Island, and Vermont).

These advocacy groups and others are devoting significant resources to ending prohibition in 12 more states by 2019, including in the States of Arizona, California, Massachusetts, and Nevada, as well as lobbying and building coalitions to regulate marijuana in several states that do not have the option of voter initiatives, including in: Delaware, Illinois, Maryland, New Hampshire, Rhode Island, Texas, and Vermont and are also advocating for medical marijuana-related bills in several other states, including Georgia, Pennsylvania, Texas, and West Virginia.

These noted state laws, both proposed and enacted, are in conflict with the federal Controlled Substances Act which makes cannabis use(21 U.S.C. § 811) (“CSA”) and possessionis illegal on a national level. However, onunder federal law.

On August 29, 2013, the U.S.The Department of Justice issued a memorandum providingset out its prosecutorial priorities in light of various states legalizing cannabis for medicinal and/or recreational use. The “Cole Memorandum” provided that wherewhen states and local governments enact laws authorizing cannabis-related use, and implementhave implemented strong and effective regulatory and enforcement systems to control the cultivation, distribution, sale, and possession of cannabis, conduct in compliance with those laws and regulations is less likely to threaten the federal priorities. Indeed, a robust system may affirmatively address those priorities by, for example, implementing effective measures to prevent diversion of cannabis outside of the regulated system and to other states, prohibiting access to cannabis by minors, and replacing an illicit cannabis trade that funds criminal enterprises with a tightly regulated market in which revenues are tracked and accounted for. In those circumstances, consistent with the traditional allocation of federal-state efforts in this area, the Cole Memorandum provided that enforcement of state law by state and local law enforcement and regulatory bodies should remain the primary means of addressing cannabis-related activity. If state enforcement efforts are not sufficiently robust to protect against the harms set forth above, the federal government will rely upon states and localmay seek to challenge the regulatory structure itself in addition to continuing to bring individual enforcement agencies to address cannabis activity through the enforcement of their own state and local narcotics laws. The memorandum further stated that the U.S Justice Department’s limited investigative and prosecutorial resources will beactions, including criminal prosecutions, focused on eight priorities to prevent unintended consequences of the state laws, including distribution of cannabis to minors, preventing the distribution of cannabis from states where it is legal to states where it is not, and preventing money laundering, violence and drugged driving.those harms.

On December 11, 2014, the U.S. Department of JusticeJanuary 4, 2018, Attorney General Jeff Sessions issued anothera memorandum with regard to its position and enforcement protocol with regard to Indian Country, stating that the eight priorities in the previous federal memo would guide thefor all United States Attorneys'Attorneys concerning cannabis enforcement efforts in Indian Country. On December 16, 2014, as a component ofunder the federal spending bill, the Obama administration enacted regulations that prohibitCSA. Mr. Sessions rescinded all previous prosecutorial guidance issued by the Department of Justice regarding cannabis, including the August 29, 2013 “Cole Memorandum.”

In rescinding the Cole Memorandum, Mr. Sessions stated that U.S. Attorneys must decide whether or not to pursue prosecution of cannabis activity based upon factors including the seriousness of the crime, the deterrent effect of criminal prosecution, and the cumulative impact of particular crimes on the community. Mr. Sessions reiterated that the cultivation, distribution, and possession of marijuana continues to be a crime under the U.S. Controlled Substances Act.

On March 23, 2018, President Donald J. Trump signed into law a $1.3 trillion-dollar spending bill that included an amendment known as “Rohrabacher-Blumenauer.” This amendment prohibits the Justice Department from using federal funds to prosecute state-basedprevent certain states “from implementing their own State laws that authorize the use, distribution, possession or cultivation of medical cannabis.”

On December 20, 2018, President Donald J. Trump signed into law the Agriculture Improvement Act of 2018, otherwise known as the “Farm Bill.” Before its passage, hemp, a member of the cannabis family, was classified as a Schedule 1 controlled substance and so illegal under the federal CSA.

With the passage of the Farm Bill, hemp cultivation is now broadly permitted. The Farm Bill explicitly allows the transfer of hemp-derived products across state lines for commercial or other purposes. It also puts no restrictions on the sale, transport, or possession of hemp-derived products, so long as those items are produced in a manner consistent with the law.

Under Section 10113 of the Farm Bill, hemp cannot contain more than 0.3 percent THC. THC is the chemical compound found in cannabis that produces the psychoactive intoxicant associated with cannabis. Any cannabis plant that contains more than 0.3 percent THC would be considered non-hemp cannabis—or marijuana—under the CSA and would not be legally protected under this new legislation and would be treated as an illegal Schedule 1 drug.

Additionally, there will be significant, shared state-federal regulatory power over hemp cultivation and production. Under Section 10113 of the Farm Bill, state departments of agriculture must consult with the state’s governor and chief law enforcement officer to devise a plan that must be submitted to the Secretary of the United States Department of Agriculture (hereafter referred to as the “USDA”). A state’s plan to license and regulate hemp can only commence once the Secretary of USDA approves that state’s plan. In states opting not to devise a hemp regulatory program, USDA will construct a regulatory program under which hemp cultivators in those states must apply for licenses and comply with a federally run program. This system of shared regulatory programming is similar to options states had in other policy areas such as health insurance marketplaces under Affordable Care Act, or workplace safety plans under Occupational Health and Safety Act—both of which had federally-run systems for states opting not to set up their own systems.

The Farm Bill outlines actions that are considered violations of federal hemp law (including such activities as cultivating without a license or producing cannabis with more than 0.3 percent THC). The Farm Bill details possible punishments for such violations, pathways for violators to become compliant, and even which activities qualify as felonies under the law, such as repeat offenses.

One of the goals of the previous 2014 Farm Bill was to generate and protect research into hemp. The 2018 Farm Bill continues this effort. Section 7605 re-extends the protections for hemp research and the conditions under which such research can and should be conducted. Further, section 7501 of the Farm Bill extends hemp research by including hemp under the Critical Agricultural Materials Act. This provision recognizes the importance, diversity, and opportunity of the plant and the products that can be derived from it but also recognizes that there is still a lot to learn about hemp and its products from commercial and market perspectives.

As a result of the November 2020 federal elections and the election of Joseph R. Biden as president, there is speculation that the federal government may move to amend parts of the CSA and de-schedule cannabis as a Schedule 1 drug.

In late January 2021, Senate Majority Leader Chuck Schumer said lawmakers are in the process of merging various cannabis bills, including his own legalization legislation. He is working to enact reform in this Congressional session. This would include the Marijuana Freedom and Opportunity Act, which would federally de-schedule cannabis, reinvest tax revenue into communities most affected by the drug war, and fund efforts to expunge prior cannabis records. It is likely that the Marijuana Opportunity, Reinvestment, and Expungement (MORE) Act would be incorporated.

Other federal legislation under review for possible submission includes the SAFE Banking Act (or Secure and Fair Enforcement Act), a bill that would allow cannabis companies to access the federally insured banking system and capital markets without the risk of federal enforcement action, and the Strengthening the Tenth Amendment Through Entrusting States Act (or STATES Act), a bill that seeks protections for businesses and individuals in states that have legalized and comply with state laws).

The fall of 2022 saw several key developments in federal and state marijuana regulation. In October 2022, President Biden granted clemency to certain low-level federal marijuana offenders and directed the Attorney General to review the status of marijuana under federal law. While some observers consider President Biden’s grant of clemency to represent a significant change in federal marijuana policy, as a legal medical cannabis programs. matter, it did little to alter the growing disparity between federal and state marijuana regulation. Then, in November 2022, voters in five states considered ballot initiatives to legalize recreational marijuana at the state level, two of which were adopted. Congress also subsequently enacted the Medical Marijuana and Cannabidiol Research Expansion Act, which aims to facilitate research on marijuana and cannabidiol (CBD). Legislators and commentators have proposed a number of other legal reforms that would alter federal marijuana regulation and potentially reduce the divergence between federal and state law.

As of March 9, 2015,the date of this filing, cannabis remains an illegal Schedule 1 drug under the CSA, and none of the legislative initiatives being discussed have become federal law.

Notably, with respect to our business, on November 1, 2019, Colorado Bill HB-19-1090 was passed and made effective. This law allows publicly traded corporations to apply for and qualify for the ownership of Colorado cannabis licenses. Other states that have legalized cannabis for recreational and/or medicinal use restrict public companies from owning interests in additionstate cannabis licenses altogether or have enacted regulations that make it difficult for corporations to comply with application requirements, including all shareholders submitting to and passing background checks.

On September 18, 2020, Colorado’s Marijuana Enforcement Division (MED) approved the 23 statesCompany’s application for suitability, establishing the Company as one of the few publicly traded companies authorized to acquire and operate various cannabis licenses throughout Colorado, in both the District of Columbia which had already passed legislation allowing citizens to use cannabis in some form, an additional 13 states had pending legislation or ballot measures to legalizerecreational and medical cannabis.markets.

Business Overview

We now primarily operate within two divisions within the regulated cannabis industry:industry with three operation divisions: (i) consulting and professional services; and, (ii) the sale of products and equipment commonly utilized in the cultivation, processing, transportation, or retail sale of cannabis. We do not hold any ownership interests, direct or indirect,cannabis; and (iii) our licensed owner-operator medical marijuana dispensaries and cultivation facilities located in businesses which hold a licenseColorado Springs, Colorado under the trade name “Naturaleaf.” Our operations are limited to produceonly those state jurisdictions where medical and/or sell cannabis. We do not sell, cultivate, manufacture, or transact cannabis.recreational cannabis business has been legalized.

Consulting Services

We offer consulting services for companies associated with the cannabis industry in all stages of development. Our service offerings include the following:

Equipment and Supplies

In addition to professional consulting services, we operate an equipment and supplies division for customers in the cannabis industry, including through American Cultivator CO, ourindustry. Our Group Purchasing Organization, thatAmerican Cultivator CO., enables customers to procure commonly used cultivation supplies at low prices associated with high volume purchases.competitive prices. Our major product offerings include the following:

liquidated damages.

Sales and Marketing

We sell our services and products throughout the United States in states that have implemented regulated cannabis programs as well as Canada. We intend to expand our offerings asto more new countries, states and jurisdictions as they adopt state-regulated or Federal programs.

Research and Development

As a component of our equipment and supplies offerings, from time-to-timetime to time, we design and develop our own proprietary products to meet demand in markets where current offerings are insufficient. These products include but are not limited to: theto The Satchel™, Cultivation Cube™, So-Hum Living Soils™Soils®, and the HDCS™. Costs associated with the development of new products are expensed as occurred as research and development operating expenses. During the yearyears ended December 31, 2015,2023, and 2022 our research and development costs were $51,115 as compared to $12,863 for the fiscal year ended December 31, 2014.de minimis.

Significant Customers

For the year ended December 31, 20152023, eleven customers accounted for 84.13% of the Company's total revenues from its retail and wholesale sales, consulting, soil, and product revenue lines. At December 31, 2014, in the aggregate, three2022, eight customers and two customers, respectively, accounted for 74% and 52%87.33% of the Company’s total revenues for each respective period.from its consulting, soil, and product revenue lines.

On a geographical basis, for the year endedAt December 31, 2015, approximately 91% and 9%2023, three customers accounted for 98.21% of accounts receivable, net, consisting of customers of our total revenues were generated from the United Statesretail and Canada, respectively. For the year endedwholesale sales, consulting services, and soil and products revenue streams. At December 31, 2014, approximately 70%2022, three customers accounted for 84.76% of accounts receivable, net, consisting of customers for our products, soil, and 30% of our total revenues for the period were generated from the United States and Canada, respectively.consulting services product streams.

Intellectual Property

On February 23,March 29, 2016, we announced that the U.S. Patent and Trademark Office informed us thatissued patent number 9,296,524 B2 for The Satchel™, our child-proof container invented in response to meet state-mandated regulatory requirements, was deemed allowable, and that our patent applicationexit package solution for the Satchel™ will now move on to issuance.We may fileregulated cannabis industry. On March 14, 2015, the U.S. Patent and Trademark Office issued trademark #86574785 for additional patent protection as we deem appropriate to protect new products. We also had trademark applications pending to protect our branding and logos. These pending applications included trademarks for American Cannabis Company (stylized and/or with design logo), American Cannabis Consulting (stylized and/or with design logo), the design and colors used in our leaf logo, the Cultivation Cube (stylized and/or with design logo), our slogan (“Growing the Next Frontier”), and two wordtwo-word marks and the logo associated with SoHumSo-Hum Living Soil.Soil®.

Competition

Our competitors include professional services firms dedicated toand cannabis dispensaries in the regulated cannabis industry, as well as suppliers of equipment and supplies commonly utilized in the cultivation, processing, or retail sale of cannabis. We compete in markets where cannabis has been legalized and regulated, which includes various states within the United States, it’sits territories, and Indian Country therein, and Canada. We expect that the quantity and composition of our competitive environment will continue to evolve as the cannabis industry matures. Additionally, increased competition is possible to the extent that new states and geographies enter the marketplace as a result of continued enactment of regulatory and legislative changes that de-criminalize and regulate cannabis products. We believe that by being well established in the industry, our experience and success to date, and our continued expansion of service and product offerings in new and existing locations are factors that mitigate the risk associated with operating in a developing competitive environment. Additionally, the contemporaneous growth of the industry as a whole will result in new customers entering the marketplace, thereby further mitigating the impact of competition on our operations and results.

Employees

As of December 31, 2015,2023, we have 4 full-time and 9 full-timepart-time employees all of whom are U.S based, primarily in our Colorado at our Denver headquarters.Springs, Colorado dispensaries and cultivation facility. None of our U.SU.S. employees are represented by a labor union.

ITEM 1A. RISK FACTORS

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.item.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

Our corporate headquarters are locatedsituated at 1004 Tejon Street in Denver, Colorado whereSprings, CO. Below are details regarding the lease agreement for our corporate headquarters, which coincides with one of our Naturaleaf locations

As a result of our acquisition of Naturaleaf, we lease office space under a contract effective July 28, 2015, expiring on July 31, 2020.assumed the following leases and contingent extensions:

Our corporate headquarters associated with our Colorado Springs, Colorado dispensary and cultivation leases are adequate for our operations as of the date of this filing, providing productive capacity and complete utilization for our business.

ITEM 3. LEGAL PROCEEDINGS

On January 20, 2016, we were named as a defendant in a civil suit entitled: Anthony Baroud vs. Hollister & Blacksmith, Inc., dba American Cannabis Company filed in the Circuit Court of Cook County, Illinois. The lawsuit seeks damages of $100,000 related to an employment contract. The Company filed a motion to compel contractual arbitration that has yet to be ruled on by the Court.None.

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable.

PART II.

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.MARKET INFORMATION AND HOLDERS

Our common stock trades on the OTCQB. On October 10, 2014, we changed ourOTC Markets OTCQB Trading Tier under the ticker symbol from “BIMI” to “AMMJ”.“AMMJ.” As of December 31, 2015,2023, there were 500501 holders of record of our common stock.The following table sets forth, for the periods indicated, the high and low closing sales prices of our common stock:

DIVIDEND POLICY

We have never declared or paid, and do not anticipate declaring or paying, any cash dividends on our common stock. Instead, we currently anticipate that we will retain all of our future earnings, if any, to fund the operation and expansion of our business and to use as working capital and for other general corporate purposes. Any future determination as to the declaration and payment of dividends, if any, will be at the discretion of our board of directors and will depend on then-existing conditions, including our financial condition, operating results, contractual restrictions, capital requirements, business prospects, and other factors our board of directors may deem relevant.

ITEM 6. SELECTED FINANCIAL DATA

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The statements contained in this report that are not statements of historical fact, including, without limitation, statements containing the words “believes,” “expects,” “anticipates”“anticipates,” and similar words constitute forward-looking statements that are subject to a number of risks and uncertainties. From time to time, we may make other forward-looking statements. Investors are cautioned that such forward-looking statements are subject to an inherent risk that actual results may materially differ as a result of many factors, including the risks discussed from time to time in this report, including the risks described under “Risk Factors” in any filings we have made with the SEC.

Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses. On an on-goingongoing basis, we evaluate these estimates, including those related to useful lives of real estate assets, cost reimbursement income, bad debts, impairment, net lease intangibles, contingencies, and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. There can be no assurance that actual results will not differ from those estimates.

Background

American Cannabis Company, Inc. and its subsidiary is a publicly listed company quoted on the OTC Markets OTCQB Trading Tier under the symbol “AMMJ”.“AMMJ.” We are based in Denver,Colorado Springs, Colorado, and operate a fully-integrated business model that features end-to-end solutions for businesses operating inwithin the regulated cannabis industry with four operation divisions: (i) consulting and professional services; (ii) the sale of products and equipment commonly utilized in statesthe cultivation, processing, transportation or retail sale of cannabis; and, countries(iii) our licensed owner-operator medical marijuana dispensaries and cultivation facilities located in Colorado Springs, Colorado under the trade name “Naturaleaf.” Our operations are limited to only those state jurisdictions where cannabis is regulatedmedical and/or recreational cannabis business has been de-criminalized for medical use and/or legalized for recreational use. We provide advisorylegalized. American Cannabis Company, Inc. is a publicly listed company quoted on the OTCQB Tier under the symbol “AMMJ.” 

Naturaleaf Acquisition

On April 30, 2021, the Company closed its acquisition of the assets of Medihemp, LLC ("Medihemp"), and consulting services specific to this industry, design industry-specific productsits wholly-owned subsidiary SLAM Enterprises, LLC ("SLAM"), and facilities,Medical Cannabis Caregivers, Inc. ("Medical Cannabis"), each an entity organized and sell both exclusive and non-exclusive customer products commonly used inoperating under the industry.

The Company was incorporated inlaws of the State of Delaware on September 24, 2001 under the name “Naturewell, Inc.” On March 13, 2013, the Company completed a merger transaction whereby it acquired Brazil Interactive Media, Inc. (“BIMI”), a Brazilian interactive television companyColorado, and television production company. The Company’s Articles of Incorporation were amended to reflect a new name: Brazil Interactive Media, Inc. On May 15, 2014 the Company entered into an Agreement and Plan of Merger with Cannamerica Corp. (the “Merger Sub”), a wholly-owned subsidiary of BIMI, and Hollister & Blacksmith, Inc.all doing business as American“Naturaleaf” operating in the medicinal cannabis industry in Colorado.

Medihemp and SLAM, respectively, owned fixed assets and operate two retail Medical Marijuana Centers in Colorado Springs, Colorado. Medical Cannabis Consulting (“American Cannabis Consulting”). The mergeralso owns and operates a Medical Marijuana Optional Premises Cultivation license and a Medical Marijuana-Infused Product Manufacturer license.

Naturaleaf agreed to sell or assign to the Company, and the Company purchased and was completed on September 29, 2014, resulting in American Cannabis Consulting being merged with and into the Merger Sub (the “Reverse Merger”). The Company subsequently amended its Articles of Incorporation to change its name to “American Cannabis Company, Inc.” Upon the closingassignee of the Reverse Merger,following assets:

As a result, the Company has expanded its business model to include the cultivation and retail sale of cannabis in the medicinal cannabis industry.

The aggregate consideration paid for the Assets was $2,890,000, which consisted of (i) a cash payment of $1,100,000, (ii) the issuance of a promissory note to the owner of Naturaleaf in the principal amount of $1,100,000 (the “Seller Note”), and (iii) the issuance of 3,000,000 shares of the Company’s restricted common stock valued at $0.23 per share or $690,000.

On April 30, 2022, the Company and Medihemp, SLAM, and Medical Cannabis amended the material definitive agreement to restructure the remaining payments due to be made by the Company under the Note. The parties agreed that in consideration of the Company's payment of $550,000 and outstanding interest of $110,000, a new promissory note in the principal amount of $550,000 and 12% interest accruing annually, due April 29, 2023, resolved all of the Company’s officersCompany's payment obligations for the purchase price. The parties executed the amendment, and directors appointed designee officers and directors from American Cannabis Consulting and resigned. Consistent with the Merger Agreement, the Company consummated a complete divestiturepaid the consideration of BIMI, Inc., a Delaware corporation$550,000 in principal and wholly-owned subsidiary of the Company, pursuant to a Separation and Exchange Agreement dated May 16, 2014 (the “Separation Agreement”) between the Company, BIMI, Inc., and Brazil Investment Holding, LLC (“Holdings”), a Delaware limited liability company. On October 10, 2014, the Company changed its stock symbol from BIMI to AMMJ.$110,000 in interest.

The foregoing descriptions of the Merger Agreement and Separation Agreement do not purport to be complete and are qualified in their entirety by the terms of such agreements, which are filed as exhibits to the Current Report on Form 8-K filed by the Company with the U.S. Securities and Exchange Commission (“SEC”) on October 3, 2014.

Results of Operations

Year ended December 31, 20152023 compared to year ended December 31, 20142022

The following table presents our operating results for the year ended December 31, 20152023, compared to December 31, 2014:2022:

AMERICAN CANNABIS COMPANY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

Revenues

Total revenues were $2,476,185 for the year ending December 31, 2023, compared to $18,808,545 for the year ending December 31, 2022. The decrease in total revenue of $16,332,360 for the year ended December 31, 2015 and December 31, 2014, were $2,799,887 and $1,259,012, respectively, an increase of $1,540,875. This increase2023, was primarily due to growtha result of a decrease of $16,515,186 in our client baseproduct and volume of operations as our business has matured following commencement of business operations in April 2013, specifically the establishment of our in-house product offerings and 3^rd party equipment sales were major contributing factors. Forassociated with the design and build projects for which the Company offers the design, management, and installation of associated products sold for the construction of cultivation and dispensary facilities. The Company's cannabis product sales from its licensed dispensaries and cultivation facility for the year ended December 31, 2015 and December 31, 2014, consulting services revenue was $693,225 and $677,633, respectively. For2023, were $756,905, as compared to $793,331 for the year ended December 31, 2015 and December 31, 2014, products and equipment revenue were $2,106,662 and $581,379, respectively. During2022, reflecting the years ended December 31, 2015 and December 31, 2014, the company generated revenue from the sale of productsgeneral decline in the amount of $25,214 and $0, respectively, to a Director.market for Cannabis in Colorado that began in 2022.

Costs of Revenues

Costs of revenues primarily consist of labor, travel, cost of equipment and soil sold, and other costs directly attributable to providing services or soil products. ForCosts of revenues related to our cannabis products include cultivation costs, including labor, utilities, supplies and cultivation facility rent. During the year ended December 31, 2015 and December 31, 2014,2023, our total costs of revenues were $2,000,1131,434,302, as compared to $16,271,331 for the year ended December 31, 2022, a decrease of $14,837,029. The decrease was due to costs incurred purchasing equipment for projects which the Company sold in conjunction with its design, management and $771,476, respectively. The increase ininstallation of associated products for the construction of cultivation and dispensary facilities. Our costs of revenues was primarily due to the increase in operating expenses related to overhead and salaries as well as sales volume discussed above. Asour cannabis products also decreased from $594,296 for the year ended December 31, 2023, compared to $979,437 for the year ended December 31, 2022, a percentagedecrease of total$385,411, reflecting the general decline in the market for Cannabis in Colorado that began in 2022.

Consulting Services

Consulting service revenues for the year ended December 31, 2023, were $695,089, compared to $475,837 for the year ended December 31, 2022, an increase of $219,252. The increase was due to changesthree states legalizing cannabis during fiscal 2022 and other activities for consulting services clients whose projects are in development.

Costs of consulting services were $115,085 for the year ended December 31, 2023, as compared to $61,246 for the year ended December 31, 2022, an increase of $53,839. The increase was due to the growth in consulting activity during the period.

Product and Equipment Revenues

Our product and equipment revenues for the year ended December 31, 2023, were $1,024,091 as compared to $17,539,377 for the year ended December 31, 2022, a decrease of $16,515,186. The decrease in product mix,and equipment sales was primarily the result of the termination of a contract that the company first secured in 2021. Under this contract, the Company was retained to provide equipment sales, design, management, and installation services for the construction of multiple cultivation and dispensary facilities throughout the fiscal year ending December 31, 2022. The termination of the aforementioned contract had a significant impact on our product and equipment revenues for the fiscal year ended December 31, 2023, with the Company experiencing a substantial reduction in project-related sales and service revenues as compared with equipment sales and facility construction services provided during the previous fiscal year.

Costs of Products and Equipment were $724,921 for the fiscal year ending December 31, 2023, compared to $15,230,648 for the year ending December 31, 2022, a decrease of $14,505,727. Costs associated with products and equipment which havedecreased as a lower gross margin compared to consulting and advisory services, made up a higher percentageresult of revenues and costs ofdecreased equipment sales during the year ended December 31, 2023.

Cannabis Product Revenues

Cannabis product revenues during the year ended December 31, 20152023, were $756,905, as compared to December 31, 2014. For$793,330 for the year ended December 31, 2015, consulting related costs were $182,161 or 6.5%2022, a decrease of $36,426. The decrease was due to the general decline in the market for Cannabis in Colorado in 2023 and 2022, with Colorado's annual 2023 total revenues and costs related with costssales of $1.5 billion representing a 16% decline from 2022's $1.76 billion sales total.

Costs associated with cannabis products consist of those costs incurred in the cultivation of the plants and equipment were $1,817,952 or 64.9%the retail sale of total revenues. Forthe products. During the year ended December 31, 2014, consulting related2023, such costs were $322,134, or 25.6% of total revenue, and costs associated with products and equipment were $449,342, or 35.7% of total revenue.

Gross Profit

For$594,296, as compared to $979,437 for the year ended December 31, 20152022, a decrease of $426,101. This decrease was due to the elimination of costs associated with improvements, including upgrading and December 31, 2014,replacing machinery and equipment in the Company's Colorado Springs cultivation facility and maintenance to the Company's Colorado Springs dispensary facilities.

Gross Profit

Total gross profit was $799,774 and $487,536, respectively. This increase was primarily due to growth in our client base and volume of operations including product sales as our business has matured following commencement of business operations since 2013. As a percentage of total revenues, gross profit was 28.6% and 38.7%$1,041,882 for the years ended December 31, 2015 and December 31, 2014, respectively. This decrease was primarily due to the year ended December 31, 2015 having a higher proportion2023, comprised of total revenues from productconsulting services gross profit of $580,004, products and equipment salesgross profit of $299,170, and cannabis products gross profit of $162,609, as compared to $2,537,214 for the year ended December 31, 2022, comprised of consulting services as productgross profit of $414,591, products and equipment sales havegross profit of $2,308,729, and a lowergross profit margin compared to revenues generated by consulting and advisory services.(loss) of ($186,107) for cannabis products.

Operating Expenses

Total operating expenses were $48,93,035 for the yearsyear ended December 31, 2015 and2023, compared with $3,142,870 for the year ended December 31, 2014 was $1,352,740 and 3,878,340, respectively. This decrease2022, an increase of $2,525,600 was$1,750,165. The increase is mainly attributed to stock-baseda reduction in general and administrative expenses of $1,182,642, offset by the impairment of goodwill and increase stock based compensation expense of $319,187 in 2015 versus $3,370,128 in 2014. The decrease in Stock-based compensation expense reflected grants for whichduring the awards were vested. A higher amount was reflected in 2014 due to the Reverse Merger activities during 2014. In addition, we experienced an increase in investor relations which was $307,069 during 2015 versus $23,132 incurred in 2014 as the company began working with investor funding opportunities.year. 

Other Income (Expense)

Other income (expense) for the yearsyear ended December 31, 2015 and December 31, 20142023 was income of $37,313 and expense of $228,388, respectively. This increases in other income was due$190,736 compared to less interest incurred during 2015, $35,458 versus $263,388 of interest expense attributed to initial amortization of the discount on our convertible notes payable. In addition,$(27,356) for December 31, 2015 and December 31, 2014 we had a gain on debt extinguishment of $72,771 and $35,000, respectively, which was attributed to negotiations with legal counsel in the forgiveness of debt, which was deemed fully satisfied as an aspect of the issuance of convertible notes payable.

Income Tax Expense (Benefit)

We did not have any income tax expense or benefit for the years ended December 31, 2015 and December 31, 2014, respectively. Although our tax status changed from a non-taxable pass-through entity (S-Corporation) to a taxable entity (C-Corporation) during the year ended December 31, 2014,2021. The increase is a direct result of increases in interest expenses resulting from travel and miscellaneous referral fees due to cumulative losses since we became a C-Corporation, we recorded a valuation allowance against our related deferred tax asset which netted our deferred tax assetfor the sale of products and benefit for income taxes to zero. We were an S-Corporation throughout the period from Inception (March 5, 2013) through December 31, 2013, and accordingly, no provision or benefit for income taxes was applicable. The years 2010 to 2015 remain subject to examination by the Company’s major tax jurisdictions.equipment.

Net Income (Loss)Loss

As a result of the factors discussed above, net

Net loss for the year ended December 31, 2015 and2023, was $3,660,416 as compared to $633,192 for the year ended December 31, 2014 was net loss of $515,653 and $3,619,192, respectively. For December 31, 2015 and December 31, 2014, these net2022. The decrease in losses represented a 18.4% and 287.5% of total revenues fordirectly results from the respective periods.decline in cannabis product sales.

Liquidity and Capital ResourcesLIQUIDITY AND CAPITAL RESOURCES

As of December 31, 2015 and December 31, 2014,2023, our primary internal sources of liquidity were our working capital, which included cash and cash equivalents of $555,780$21,085 and $165,213, respectively. We also have the ability to raise additional capital as needed through external equity financing transactions. For the years ended December 31, 2015 and December 31, 2014, the Company had a sourceaccounts receivable of cash from operations of $149,225 and $34,062, respectively. For December 31, 2015 and December 31, 2014 we generated non-cash expenses of $124,099 and $3,320,398, respectively related to stock-based compensation which contributed to our net cash derived from operating activities. This non-cash expense offset net losses of $515,653 and $3,619,192 for December 31, 2015 and December 31, 2014. Due to this factor, and$234,330. Additionally, considering that our fixed overhead costs are relatively low, we have the ability to issue stock to compensate employees and management, andmanagement. Management believes that it will need to raise short-term capital to mitigate any periodic delays in receipt of accounts receivable, as payments from third-party vendors are scheduled on a less-than-periodic timetable. Management believes this strategy will adequately provide the level of future revenue we expect to generate from executed client contracts, we believe ournecessary liquidity and capital resources to be adequate to fund our operational and general, and administrative expenses for at least the next 12 months.

During the year ended December 31, 2023, the Company issued 79,250,000 common shares.

Operating Activities

Net cash providedused by operating activities for the year ended December 31, 20152023, was $149,225, which consists of net loss for the period of $515,653 which was offset by a non-cash adjustments used$49,792, compared to reconcile net loss for stock-based compensation to employees, a reduction in deposits and accrued and other liabilities. Net cash provided by operating activities$198,965 for the year ended December 31, 2014 $34,062, was primarily due to the net loss for the period2022. Increases in cash used were a result of $3,619,192, which was offset by a non-cash adjustment for stock-based compensation to employeeincreases in accrued and providers of $3,320,328.other current liabilities, and an increase in operating lease liability.

Investing Activities

For the years ended December 31, 20152023, and December 31, 2014, net cash used in2022, investing activities was $8,658 and a source ofused cash of $82,504,39,103 and $103,675, respectively. ForThe decrease represents less cash spent for the year ended December 31, 2015, the cash used in investing was attributed to the purchase of equipment for operations. For the year ended December 31, 2014 the cash provided of $82,504 was primarily the result of $90,181 net cash received in connection with the reverse merger with Brazil Interactive Media Inc., which went effective on September 29, 2014 and resulted in our becoming a public Company and SEC registrant. These funds represented the residual remaining balance of cash that Brazil Interactive Media, Inc. held after it raised $395,000 from convertible notes payable and paid down expenses. We also spent $7,677 on purchases of property and equipment.

Financing Activities

For the years ended December 31, 2015 and December 31, 2014, financing activities were a source of cash of $250,000 and $31,050, respectively. For December 31, 2015 the cash provided from financing activities was attributed to proceeds from the issuance of common shareholders to founders. ForDuring the year ended December 31, 2014,2023, cash used in financing activities were $14,567 compared to $250,236 for the cash source was due to a use of $4,000 for distributions to owners, which was substantially offset by $35,000 from the issuance of short-term notes payable during the period, which was offset when we repaid the short-term notes payable in full. .

For the yearsyear ended December 31, 2015 and2022. The Funds used during the year ended December 31, 2014 we had cash and cash equivalents of $555,780 and $165,213, respectively. We believe our liquidity and capital resources to be adequate to fund our operational and general and administrative expenses for at least the next 12 months.2023 werefrom paymest made onnotes payable.

Off BalanceOff-Balance Sheet Arrangements

As of December 31, 20152023, and December 31, 2014,2022, we did not have any off balanceoff-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Non-GAAP Financial Measures

We use Adjusted EBITA, a non-GAAP metric, to monitor our overall business performance. We define Adjusted EBITA as net income (loss) before interest expense, net, provision for (benefit from) income taxes, stock-based compensation and certain non-recurring expenses, which for the year ended December 31, 2014 were limited to costs associated with the Reverse Merger. We believe that such adjustments to arrive at Adjusted EBITA provides us with a more comparable measure for managing our business. We also believe that it is a useful measure for securities analysts, investors, and other interested parties in the evaluation of our Company.

A reconciliation of net incomeincome(loss) to Adjusted EBITAEBITDA is provided below.below:

As of December 31, 2015 and December 31, 2014, our remaining convertible notes payable had a net face value of $60,252 and $24.551, respectively. For December 31, 2015 our convertible notes payable had a face value of $71,500 and a discount of $11,258, for a net carrying amount of debt of $60,252. For December 31, 2014 our convertible notes payable had a face value of $71,500 and a discount of $46,949, for a net carrying amount of debt of$24,551. As of April 11^th, 2016, the maturity date on this note was renegotiated to April 24^th, 2018. On April 12, 2016, the Company received notice of partial conversion of this note in the amount of $58,000 convertible into 725,000 shares of restricted common stock at a price of $0.08 per share.

Under the terms of our agreement with the manufacturer of our exit packing product, the Satchel^TM, we were committed to the purchase of a total of 500,000 units. During 2015 the Company met its purchase obligation, and on September 2015 the Company exercised its contractual right to purchase additional units at a negotiated price. With the exception of our lease for office space for a five-year term, we had no other contractual obligations as of December 31, 2015.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the amounts reported in those statements. We have made our best estimates of certain amounts contained in our consolidated financial statements. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities. However, the application of our accounting policies involves the exercise of judgment and use of assumptions as to future uncertainties, and, as a result, actual results could differ materially from these estimates.

Management believes that the estimates, assumptions, and judgments involved in the accounting policies described below have the most significant impact on our consolidated financial statements.

We cannot predict what future laws and regulations might be passed that could have a material effect on our results of operations. We assess the impact of significant changes in laws and regulations on a regular basis and update the assumptions and estimates used to prepare our financial statements when we deem it necessary.

Cash and Cash Equivalents

We consider all highly liquid investments with original maturities of three months or less to be cash equivalents. Cash and cash equivalents are held in operating accounts at a major financial institution.

Restricted Cash

Restricted cash is recorded at cost, which approximates fair value. There was no restricted cash included in current assets on our consolidated balance sheets as of December 31, 2015 and December 31, 2014. Restricted cash previously related to remaining proceeds from a short-term note entered into on March 21, 2014 and fully satisfied on May 15, 2014 (see Note 7. “Convertible Notes Payable” of Item 8 “Financial Statements and Supplementary Data” to this form 10-K for further information).

Inventory

Inventory is primarily comprised of products and equipment to be sold to end-customers.end customers. Inventory is valued at cost, based on the specific identification method, unless and until the market value for the inventory is lower than cost, in which case an allowance is established to reduce the valuation to market value. As of December 31, 20152023, and December 31, 2014,2022, our inventory's market values of all of our inventory were greater than cost, and accordingly, no such valuation allowances waswere recognized. As of December 31, 2015 and December 31, 2014, the Company had capitalized $57,170 and $40,051 of costs associated with the construction of demo inventory, including but not limited to parts for the assembly of scalable cultivation systems; this asset had yet to be placed into service as of December 31, 2015 and as of December 31, 2014, and accordingly, no amortization or depreciation expense was recorded related to this asset for each year, then ended.

Deposits

Deposits is comprised of advance payments made to third parties, primarily for inventory for which we have not yet taken title. When we take title to inventory for which deposits are made, the related amount is classified as inventory, then recognized as a cost of revenues upon sale (see “Costs of Revenues” below).

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets isare primarily comprised of advance payments made to third parties for independent contractors’ services or other general expenses. Prepaid services and general expenses are amortized over the applicable periods which approximate the life of the contract or service period.

Accounts Receivable

Accounts receivable are recorded at the net value of face amount less any allowance for doubtful accounts. On a periodic basis, we evaluate our accounts receivable and, based on a method of specific identification of any accounts receivable for which we deemsdeem the net realizable value to be less than the gross amount of accounts receivable recorded, we establish an allowance for doubtful accounts for those balances. In determining our need for an allowance for doubtful accounts, we consider historical experience, analysis of past due amounts, client creditworthiness and any other relevant available information. However, our actual experience may vary from our estimates. If the financial condition of our clients were to deteriorate, resulting in their inability or unwillingness to pay our fees, we may need to record additional allowances or write-offs in future periods. This risk is mitigated to the extent that we collect retainers from our clients prior to performing significant services.

The allowance for doubtful accounts, if any, is recorded as a reduction in revenue to the extent the provision relates to fee adjustments and other discretionary pricing adjustments. To the extent the provision relates to a client's inability to make required payments on accounts receivables, the provision is recorded in operating expenses. As of December 31, 20152023, and December 31, 20142022, our allowance for doubtful accounts was $8,419$4,071 and $9,338,$64,344, respectively. For December 31, 20152023, and December 31, 2014,2022, we recorded bad debt expenseexpenses of $30,753$20,933 and $9,338, respectively, which$5,438, respectively.

Operating Leases Right-of-use Assets

The Company recognizes its leases in accordance with ASC 842 - Leases. Under ASC 842, operating lease right-of-use (“ROU”) assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. 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 initial lease liability equals the future fixed minimum lease payments discounted using the Company’s incremental borrowing rate on a secured basis. The lease term includes option renewal periods and early termination payments when it is reflectedreasonably certain that the Company will exercise those rights. The initial measurement of the ROU asset equals the initial lease liability plus any initial direct costs and prepayments, less any lease incentives. The Company elected the short-term lease exemption for contracts with lease terms of 12 months or less. The Company accounts for the lease and non-lease components of its leases as a componentsingle lease component. Lease expense is recognized on a straight-line basis over the lease term. The Company had no leases as of generalDecember 31, 2023, and administrative expenses on the consolidated statement of operations.2022 that had financing components.

AMERICAN CANNABIS COMPANY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

The accompanying notes are an integral part of these  consolidated financial statements

AMERICAN CANNABIS COMPANY, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

FOR THE YEARS  ENDED DECEMBER 31, 2023 AND 2022