Cannabis Industry Risk Overview – Ackrell Capital Report (Dec 2017)

A > KR I P ELL TAL Cannabis Investment Report | December 2017 Other Risks to Companies in the Cannabis Industry ¢ The cannabis industry is extremely competitive in most segments, with certain companies hav- ing unique competitive advantages such as greater capital resources, first-mover advantage, more scalable business models and greater brand recognition. ¢ To date, the research conducted on cannabinoid-derived pharmaceuticals and other cannabis- based therapies is limited. There is no assurance that cannabinoid-derived pharmaceuticals or other medical products will prove effective in treating medical conditions or achieve broad mar- ket acceptance. * Given the emerging nature of the cannabis industry, there is a scarcity of qualified personnel with deep industry experience and significant competition for such qualified personnel. Many canna- bis companies may not be successful in attracting, training, integrating, motivating or retaining qualified management teams and other personnel. ¢ Cannabis is an agricultural product. The occurrence of diseases, insects, pests, mold and other infestations and severe adverse environmental conditions, such as fire, drought, hail, flood or frost, is unpredictable, may have a potentially devastating impact on agricultural production of cannabis and may otherwise adversely affect the supply of cannabis. ¢ The cannabis industry is particularly vulnerable to rapidly changing technology, government regulation and relatively high risks of obsolescence caused by scientific and technological advances. The success of cannabis companies will depend in part on their ability to anticipate market, legal, technological and other trends in the industry. Many cannabis companies will fail to accurately identify or predict industry trends. * Cannabis laws and regulations in jurisdictions outside the United States vary widely and, in some cases, are as complex, contradictory and rapidly changing as those within the United States. Cannabis companies operating outside the country’s borders are subject to risks related to the unsettled legal environment applicable to cannabis. ¢ Due to federal controls on cannabis within the United States and similar restrictions in many jurisdictions outside the country, there is a significant black market for cannabis products. Government-regulated cannabis businesses face competition from black market participants and are subject to different market forces than those of the black market. 168 © 2017 Ackrell Capital, LLC | Member FINRA/SIPC HOUSE_OVERSIGHT_024804