Cannabis Industry Segments Report – Production Overview (Dec 2017)

Or LA “a Plan cre Cannabis Investment Report | December 2017 Cannabis Industry Segments E prove? n d Business Business quipmen an Software Services Supplies Distribution Digital Media Online Content Online and Networking Directories Consumer Products Vaporizers and Accessories | Involves “touching the plant” | Does not involve “touching the plant” = Production We divide the production segment of the cannabis industry into three subsegments: cultivation, pro- duction equipment and supplies, and production and testing services. Cultivation involves operating grow facilities, propagating cannabis strains, and harvesting and curing cannabis flower. Production equipment and supplies include the physical components used in production, such as extraction equipment, testing equipment, lighting, irrigation systems and plant nutrients. Production and testing services include services that support production, such as extraction or packaging, as well as testing ser- vices related to product safety, composition and quality control. Each of these production subsegments is described in more detail in the following discussion. Cultivation The principal function of a cannabis cultivator is to produce cannabis plants and flowers with the aromas, flavors, active compounds and overall quality demanded by consumers and production inter- mediaries. A cultivator can access hundreds of existing cannabis strains by purchasing seeds or clones from commercial seed banks or nurseries, or developing unique strains through selective breeding. A cultivator seeks to optimize the quality and quantity of a plant's yield by managing cultivation input variables such as light, air, nutrition, and drying and curing times. Cannabis Cultivation Process Ordinarily, a period of three to ten months is required to grow and prepare cannabis flower for con- sumption. The cultivation process generally can be organized into six phases: seed selection, seedling, vegetative, flowering, harvesting and curing. Each of these phases is summarized in the following table. 32 © 2017 Ackrell Capital, LLC | Member FINRA/SIPC HOUSE_OVERSIGHT_024668