SecProbe.io

CORRESP
 1
 filename1.htm

 John D. ("Jack") Hogoboom
 Partner

 1251 Avenue of the Americas
 New York, New York 10020

 T:	(973) 597-2382
 T:	(646) 414-6846
 M:	(973) 960-8926
 E:	jhogoboom@lowenstein.com

April
28, 2025

 Via EDGAR

 United States Securities and Exchange Commission

 Division of Corporation Finance

 Office of Manufacturing

 100 F Street, N.E.

 Washington, DC 20549

 Attn:
 Thomas Jones

 Jay Ingram

 Re:
 SmartKem, Inc.

 Registration Statement on Form S-1

 Filed April 8, 2025

 File No. 333-286437

 Ladies
and Gentlemen:

 On behalf of SmartKem, Inc. (the " Company "),
we are submitting this letter to the Securities and Exchange Commission (the " Commission ") via EDGAR in response to
the comment letter from the staff of the Commission (the " Staff "), dated April 24, 2025 (the " Comment Letter "),
pertaining to the Company's above-referenced Registration Statement on Form S-1 filed on April 8, 2025 (the " Registration
Statement "). In connection with such response, the Company is concurrently filing Amendment No. 1 to the Registration Statement
(the " Amended Registration Statement "). Capitalized terms used but not defined in this letter have the meaning given
in the Amended Registration Statement.

 To assist your review, we have reproduced the
text of the Staff's comments in italics below, followed by our responses on behalf of the Company.

 Registration Statement on Form S-1 filed April
8, 2025

 1. We note that you are registering the resale of "1,875,324 shares of our common stock issuable
upon the conversion of our Series A-1 Convertible Preferred Stock . . . including shares of our common stock issuable upon the exercise
of Class C Warrants into which shares of the Series A-1 Preferred Stock are convertible in certain circumstances." Please clarify
if this means that you are registering the resale of shares issuable upon exercise of Class C Warrants that are not yet outstanding and
will not be outstanding until the selling stockholders convert outstanding Series A-1 Preferred Stock. If this is so, it does not appear
appropriate at this time to register the resale of the associated common stock. Please revise your registration statement accordingly
or provide us with an analysis addressing why you are able to register these shares at this time. Refer generally to Securities Act Compliance
Disclosure and Disclosure Interpretation 139.11.

 Securities and Exchange Commission
 April 28, 2025

 Division of Corporation Finance

 Page 2

 In response to this Comment, clarifying disclosure
has been added to the Amended Registration Statement on the cover page of the Prospectus and page 7.

 On behalf of the Company, we hereby respectfully
advise the Staff that the Company believes it is appropriate to register the resale of the shares of common stock issuable upon the exercise
of the Class C Warrants which may be issued upon the automatic conversion of the Company's Series A-1 Preferred Stock for the reasons
set forth below.

 Background

 As described in the Company's Current Report
on Form 8-K, filed on June 15, 2023, the Company entered into a Securities Purchase Agreement on June 14, 2023 (the " Securities
Purchase Agreement ") pursuant to which it sold to certain accredited investors an aggregate of 9,229 shares of Series A-1 Preferred
Stock convertible into an aggregate of 36,916,000 shares of the Company's common stock at a conversion price of $0.25 per share
in a transaction exempt from registration under Section 4(a)(2) of the Securities Act.

 The terms of the Series A-1 Preferred Stock contain
customary "blocker" language that prohibits a holder from converting its shares of Series A-1 Preferred Stock if as a result
the holder would become the beneficial owner of more than 4.99% of the Company's common stock (subject to increase to up to 9.99%
upon not less than 61 days prior notice) (the " Beneficial Ownership Limitation "). As the Staff is aware, such blocker
provisions are commonplace and effectively prevent a holder from being required to file reports under Section 13(d) of the Securities
Exchange Act of 1934, as amended (the " Exchange Act "), at the 5.00% beneficial ownership level and from becoming subject
to reporting and potential short-swing profits liability under Section 16 of the Exchange Act at the 10.00% beneficial ownership level.
The legality and effectiveness of such blocker provisions are well established.

 As described in the Company's Current
Report on Form 8-K, filed on June 23, 2023, the Company sold to certain accredited investors pursuant to the Securities Purchase
Agreement an additional 1,870.36596 shares of Series A-1 Preferred Stock convertible into an aggregate of 7,481,464 shares of the
Company's common stock at a conversion price of $0.25 per share in a transaction exempt from registration under Section
4(a)(2) of the Securities Act. The 44,397,464 shares of common stock issuable upon the conversion of the Series A-1 Preferred Stock
outstanding as a result of these transactions are hereinafter referred to as the " Conversion Shares ".

 The purchasers paid the entire purchase price
for the Series A-1 Preferred Stock on the date of issuance. In addition, the $0.25 conversion price was fixed and did not adjust based
on the Company's common stock trading price at the time of conversion or any other fluctuating ratio. Accordingly, at all times subsequent
to the respective closings, the purchasers were at market risk with respect to the Conversion Shares.

 Securities and Exchange Commission
 April 28, 2025

 Division of Corporation Finance

 Page 3

 On July 24, 2023, the Company filed with the Commission
a Registration Statement on Form S-1 (file no. 333-273392) (the " July 2023 Registration Statement ") which registered,
among other things, the Conversion Shares. The July 2023 Registration Statement was declared effective by the Commission on July 28, 2023.

 On September 20, 2023, the Company filed a Current
Report on Form 8-K reporting that pursuant to authority granted to the Company's Board of Directors (the " Board ")
by the stockholders at the Company's annual meeting of stockholders held on August 25, 2023, on September 19, 2023, the Board had
approved a reverse stock split of the Company's issued and outstanding common stock at a ratio of 1-for-35 (the " Reverse
Stock Split ") which became effective at 12:01 AM Eastern Time on September 21, 2023. The purpose of the Reverse Stock Split
was to assist the Company in its efforts to satisfy the $4.00 minimum bid requirement for listing of the common stock on the Nasdaq Capital
Market.

 As a result of the Reverse Stock Split, the conversion
price of the Series A-1 Preferred Stock increased to $8.75 and the number of Conversion Shares was reduced to approximately 1,268,499
shares 1 . In accordance with Rule 416, all of these shares remained registered pursuant to the July 2023 Registration Statement.

 On January 29, 2024, the Company filed a Current
Report on Form 8-K reporting that on January 26, 2024, the Company had entered into a Consent, Conversion and Amendment Agreement (the
" Consent Agreement ") with each holder of the Series A-1 Preferred Stock (each a "Holder" and together,
the " Holders "). Pursuant to the Consent Agreement, among other things, each Holder converted, subject to the terms
and conditions of the Consent Agreement, 90% of its Series A-1 Preferred Stock (the " Conversion Commitment ") into shares
of common stock at the then-effective conversion price, except as provided below for the Exchanging Holders (as defined below). Pursuant
to the Consent Agreement, in the event the conversion of all of the Series A-1 Preferred Stock held by a Holder would have resulted in
such Holder acquiring shares of common stock in excess of its Beneficial Ownership Limitation (an " Exchanging Holder "),
such Exchanging Holder agreed to (i) convert its shares of Series A-1 Preferred Stock subject to its Conversion Commitment into shares
of common stock up to its Beneficial Ownership Limitation, and (ii) exchange all of its remaining shares of Series A-1 Preferred Stock
subject to its Conversion Commitment for Class C warrants (each a " Class C Warrant ") covering the shares of common
stock that would have been issued to such Holder but for the Beneficial Ownership Limitation (the " Exchange "). The
conversion and the Exchange of the Series A-1 Preferred Stock were exempt from registration pursuant to Section 3(a)(9) of the Securities
Act.

 1
Number is approximate due to the rounding up of fractional shares and the existence of multiple positions held by related parties.

 Securities and Exchange Commission
 April 28, 2025

 Division of Corporation Finance

 Page 4

 The Class C Warrants have an exercise price of $0.0001, are exercisable
upon issuance and expire when exercised in full. The exercise price of the Class C Warrants is fixed is not based on the market price
of the Company's common stock or a fluctuating ratio. Accordingly, the Exchanging Holders who received Class C Warrants have been
at market risk with respect to the underlying common stock since the date of issuance.

 The Series C Warrants are exercisable at the election
of the holder either for cash or on a cashless basis. The Class C Warrants contain a blocker provision similar to the one contained in
the terms of the Series A-1 Preferred Stock. In connection with Conversion Commitment and the Exchange the Company issued (i) 412,293
shares of common stock and (ii) Class C Warrants to purchase up to 726,344 shares of common stock upon the conversion or Exchange of an
aggregate of 9,963 shares of Series A-1 Preferred Stock.

 Pursuant to the Consent Agreement, the Company
and the Holders also agreed to amend and restate the Certificate of Designation of Preferences, Rights and Limitations for the Series
A-1 Preferred Stock (the " Amended and Restated Series A-1 Certificate of Designation ") effective immediately following
the closing of the transactions described above to (i) make certain adjustments to reflect the Reverse Split, (ii) remove all voting rights,
except as required by applicable law, (iii) increase the stated value of the Series A-1 Preferred Stock to $10,000 from $1,000, and (iv)
adjust the conversion price of the Series A-1 Preferred Stock to $87.50 as a result of the increase in stated value.

 After giving effect to prior conversions of
the Series A-1 Preferred Stock and the transactions contemplated by the Consent Agreement, 1,106 shares of Series A-1 Preferred
Stock remained outstanding which were convertible into an aggregate of 126,449 shares of common stock. All of such shares continued
to be registered under the July 2023 Registration Statement in accordance with Rule 416. The shares of common stock underlying the
Class C Warrants issued in the Exchange were registered for resale pursuant to a Registration Statement on Form S-1 (file no.
333-278630) filed on April 11, 2024 and declared effective by the Commission on April 17, 2024.

 On December 18, 2024, the Company filed a Current
Report on Form 8-K reporting that on December 17, 2024, it had entered into a Consent and Amendment Agreement with certain holders of
the Series A-1 Preferred Stock (the " Consent and Amendment Agreement ) pursuant to which, among other things, the parties
agreed to amend and restate the terms of the Series A-1 Preferred Stock, effective on the closing of a "Qualified Offering"
(the " Effective Time "), to, among other things: (i) remove the obligation of the Company to pay dividends on shares
of the Series A-1 Preferred Stock in certain circumstances; (ii) remove the provisions that required the Company to obtain the consent
of the holders of a majority of the outstanding shares of Series A-1 Preferred Stock to take certain actions, such as the incurrence of
certain indebtedness, the granting of liens and the purchase or redemption of outstanding equity securities; (iii) remove the liquidation
preference applicable to the Series A-1 Preferred Stock; (iv) reduce the conversion price of the Series A-1 Preferred Stock to $4.34;
(v) prevent the conversion of the Series A-1 Preferred Stock for a period ending on the earlier of (A) the effective date of a resale
registration statement covering the additional shares of common stock issuable upon the conversion of the Series A-1 Preferred Stock as
a result of the reduction in the conversion price (the "Effective Date") and (B) the six-month anniversary of the Effective
Time; (vi) provide for the automatic conversion of the Series A-1 Preferred Stock into either shares of common stock or the Company's
Class C Warrants at the conversion price upon the earlier of (A) the Effective Date or (B) as determined by the written consent of the
holders of at least a majority of the outstanding shares of Series A-1 Preferred Stock which must include AIGH Investment Partners LP
and its Affiliates (" AIGH ") for so long as AIGH holds at least $1,500,000 in aggregate Stated Value of Series A-1 Preferred
Stock acquired pursuant to the Purchase Agreement; and (vii) remove certain price protection provisions which had expired pursuant to
their terms.

 Securities and Exchange Commission
 April 28, 2025

 Division of Corporation Finance

 Page 5

 By Current Report on Form 8-K filed on December
20, 2024, the Company reported that it had consummated a "Qualified Offering" on December 20, 2024 and that, as a result,
the terms of the Series A-1 Preferred Stock had been amended as summarized above. As a result of the reduction in the conversion price
of the Series A-1 Preferred Stock, an additional 1,875,324 shares became issuable upon the conversion of the remaining shares of Series
A-1 Preferred Stock outstanding (the " Additional Conversion Shares ").

 The Company and the majority holders of the Series
A-1 Preferred Stock believed that converting the Series A-1 Preferred Stock into common stock was in the best interests of the Company
and the holders. Among other things, removing the restrictions contained in the Series A-1 Preferred Stock would simplify the Company's
capital structure and improve the Company's ability to raise additional capital through the public or private sale of its equity
securities. However, the blocker provision in the Series A-1 Preferred Stock would have prevented the automatic conversion of all of the
outstanding shares of Series A-1 Preferred Stock because the blocker provision in the Series A-1 Preferred Stock would have prevented
the conversion of any shares that would have resulted in a holder receiving Additional Conversion Shares in an amount that caused it to
exceed its Beneficial Ownership Limitation. Accordingly, the parties agreed to amend the terms of the Series A-1 Preferred Stock as described
above so that such a holder could receive Class C Warrants (which contain their own blocker provision) upon conversion of the holder's
Series A-1 Preferred Stock covering a number of shares of common stock equal to the amount of Additional Conversion Shares that, if issued,
would have caused such holder to exceed its Beneficial Ownership Limitation.

 As the description above shows, the amendment
of the Series A-1 Preferred Stock terms to allow the issuance of Class C Warrants was solely for the purpose of permitting the Company
to force the conversion of all of the outstanding shares of Series A-1 Preferred notwithstanding the blocker provision in the Series A-1
Preferred Stock, and not for the purpose of raising additional capital. It that regard, it is important for the Staff to note that the
Class C Warrants are "pre-funded warrants" exercisable for a nominal exercise price of $0.0001 per share.

 Based on the current number of shares of common stock outstanding and
the beneficial ownership of the holders of the Series A-1 Preferred Stock set forth in the Registration Statement, the Company believes
that it will issue Class C Warrants to purchase