Forchion Family Farms Cultivation Business Plan

Page 1

This document contains Confidential & Proprietary Information belonging exclusively to BUSINESS NAME Address Line, Address Line Phone: Number E-mail: info@businessname.com Web: www.businessname.com BUSINESS PLAN 2024 CANNABIS CULTIVATION
BUSINESSNAME/BUSINESSPLAN 2 Content Executive Summary...................................................3 CompanySummary 4 MarketOpportunities 5 Start-upSummary.....................................................6 FinancialSummary 7 Market Overview 8 GlobalMarket.............................................................9 NorthAmericanCannabisMarket 10 TheU.S.CannabisMarket....................................11 NewJerseyCannabisIndustry 14 SWOTAnalyses 16 Sales Strategy..............................................................17 MarketingPlan 18 Competition...............................................................18 SalesForecast...........................................................19 Operating Plan............................................................20 CultivationFacility 21 PhysicalSecurityPlan 25 PackagingandLabeling........................................28 Transportation 29 TrackingSolution 30 Organizational Structure......................................31 Financial Plan 34 Fundinganalysis......................................................35 DirectandOperatingExpenseBreakdown 37 Profit&LossForecast 38 CashFlowStatement.............................................39 BalanceSheet 40 MainRatios................................................................41 Appendix........................................................................43
www.businessname.com 3 Executive Summary Company Summary Market Opportunities Start-up Summary Financial Summary 01

Company Summary

CANNACULTisanewcompanywhichisintendingtopenetrateintothecannabiscultivationmarketin NewJersey CANNACULTisapplyingforaClassXXlicenseandintendstostartwithone greenhouse/warehouse7,200sq.ft.,Location. CANNACULTintendstostartitsgrowingbusinessfrom

CANNACULTistobeorganized/formedasaLimitedLiabilityCompany(LLC)/Corporationandwillbe ledby ,whowillserveasCEO/Owner

CANNACULTisacompanythatwillbebuiltonasolidfoundation.Fromourinception,wehavedecided torecruitonlyqualifiedpeopletomanvariousjobpositionsinourcompany.CANNACULTwillseekto leverageontheirexpertisetobuildourbusinessbrandasapremieremedical/recreationalcannabis cultivatorwithintheUnitedStates.

Main Goals

✓ GettingtheNewJerseyCannabisGrowerlicenseandtobuildasuccessfulcommercialcultivation facility.

✓ Tobefullycompliantwithallstateandlocalmunicipalitiesandbeprimedandreadyfornational expansionasfederallawsadjustandevolvetothebenefitofthecannabisindustry.

Mission

Togrowoneof the bestcannabis products, to establishaninnovative cannabisgrowing brand withaffordablepricestoretailersandmanufacturersofNewJersey

Products & Services

Companywillhavetheabilitytovegetateupto1,000plantsandflowersconcurrently,willgrowupto 11differentstrainsofcannabis,andwillhavetheabilitytogrowfromseedlingtofinishedproduct.

CANNACULTwilldryandprocessallcannabisflowersintolabeled/inventoriedvacuumsealedbags beforedelivery.

Objectives

Year1:SecuringthelicensetostartcultivationinthestateofNewJersey.

Year3:BrandanddistributeourproductlinethroughoutNewJersey.

Year5:TheCANNACULTbrandisnowatrustedandconsistentbrand.

Year7:Weintendtosecuremanufacturelicense.

BUSINESSNAME/BUSINESSPLAN 4

Market Opportunities

AccordingtothereportbyArcviewMarketResearchandBDSAnalytics:“TheRoadMaptoa$57Billion WorldwideMarket"1,spendingonlegalcannabisworldwideisexpectedtohit$57billionby2027.The recreationalcannabismarketwillcoverabout67%ofthespendingwhilemedicalcannabiswilltakeup theremaining33%.

TheNorthAmericalegalcannabismarketamountedtoabout$35billionin2022withthecompound annualgrowthrate(CAGR)at20%andwillgrowto$465billionfiveyearslaterbasedontheArcview MarketResearchreport2.TheU.S.legalcannabissalesreached$17.5billionin2020and$25billion (about$18billionofadult-usesalesand$7billionformedicalsales)in2021.Expertsestimatethat 2022salespassed$30billionandby2024couldbeashighas$35billion.

Withtheadoptionofrecentinitiatives,nearlyhalfofthepopulationnowlivesinjurisdictionsthathave legalizedrecreationalcannabis,and 76%ofallstateshaveapproved cannabisformedicaluse.

NewJerseylegalizedmedical cannabisin2010.TheNewJersey DepartmentofHealthhasreduced theregistrationfeeandhasadded seven“debilitatingmedical conditions”includingPTSD,by statutoryenactment;andsixnew conditions,bytheStateHealth Commissioner’sMarch22,2018, petitiondecision,andJanuary23,

2019revision Theexpansionhasaddedmorethan20,000medicalcannabispatientsin2019,bringing thetotaltoover63,000andtheprogramincreasedtoover100,000patients,1,259doctorsand3,930 caregiversin2020andgrewto122,337patientsin2021

AsofDecember2022,30dispensaries(incl.9ATC)acrossNewJerseyservedaround114,000 registeredcannabispatients3 EffectiveJuly1,2022,thesalestaxrateleviedonthesaleofmedical cannabishasbeenreducedto0%.Medicalsalestotaledabout$150millionin2020and$180millionin 2021.2022broughtinabout$226millioninmedicalcannabissales.

OnNovember3,2020,votersapprovedrecreationalcannabislegalization.Threequartersof2022 broughtinnearly$330millioninrecreationalcannabissales.Itisprojectedthatadult-usesalescould reach$950millionby2024.

AsofFebruary2023,1,434licenseswereawardedintotalincluding264forcultivation,171for manufacturing,601forretail,394formicrobusinessand4fortestingbusiness.

1 https://arcviewgroup.com/research/reports/

2 https://bdsanalytics.com/

3 https://www.nj.gov/cannabis/resources/reports-stats-info/index.shtml

www.businessname.com 5
994 1,330 1,388 1,500 1,768 1,769 1,900 1,907 2,293 5,279 Oregon Washington Arizona Pennsylvania Massachusetts Colorado Florida Illinois Michigan California 0 2,000 4,000 6,000 $million
Figure 1. Medical and recreational cannabis sales in top states, 2022

Start-up Summary

Thebusinesswillbefullyfundedwith$0.0million.Thiswillincludetotalcapitalcostofover$0.0 million,leavingnearly$0.0millionasworkingcapital.

BUSINESSNAME/BUSINESSPLAN 6
Table 1. Start-up expenses, $ $ Quarter 1 Quarter 2 Quarter 3 Quarter 4 CAPEX Land & Development 0 0 0 0 Building for Cultivation, build out 86,400 0 0 0 Growing Equipment 366,900 0 0 0 Lighting System 194,700 0 0 0 Alarm & Security System 31,104 0 0 0 Monitoring - Video & Camera System 21,773 0 0 0 Computer System 15,552 0 0 0 Other 0 0 0 0 Other 0 0 0 0 Other 0 0 0 0 OPEX COGS - Cost of Goods Sold 64,605 197,461 213,216 213,216 G&A Expenses - Initial & General Costs 73,375 23,375 23,375 23,375 G&A Expenses - Cultivation 70,583 107,899 108,911 108,911 SG&A ExpensesMarketing & Sales Expenses 4,583 13,750 13,750 13,750 Salaries & Benefits 20,064 20,064 20,064 20,064 SG&A Expenses - Misc. 4,927 7,251 7,302 7,302 Total 954,566 369,800 386,617 386,617

Financial Summary

CANNACULTwillfunditsstartupcostslargelythroughpersonalsavings/investments

Fromatotalinvestmentof$0.0million,CANNACULTisexpectedtogeneratenearly$0.0millionin grossrevenueswithnetincomeofnearly$0.0millioninYear2,itsfirstfullyearofoperations. Revenuesareexpectedtogrowtonearly$0.0millioninYear3and$0.0millioninYear5,withnet incomeofnearly$0.0millionandover$0.0millionrespectively.

Afterthefirstyearofoperations,itisexpectedthatCANNACULTwillbeabletotrimexpensesthrough realizingbusinessefficiencies,gainingoperationalexperienceandindustryknowledge.

Direct and Indirect Social Impacts

Companywillcreatemorethan…newjobsincountywithover$...millionsalaries,$...SocialSecurity taxes,…Medicaretaxesand$...forInsuranceeachyear.Companyalsointends0.5%ofsaleswillbe allocatedtotheschoolsanddifferentcommunityprograms.

www.businessname.com 7
Year 1 Year 2 Year 3 Year 4 Year 5 Federal Tax 195,450 380,718 420,719 425,940 424,783 State Tax 82,275 160,264 177,103 179,301 178,814 Community programs 8,096 14,168 15,585 15,787 15,787 -$500 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 Year1 Year2 Year3 Year4 Year5 千 Revenue&ProfitForecast Revenue GrossProfit NetIncome $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 -$300 -$200 -$100 $0 $100 $200 $300 $400 $500 $600 $700 Year1 Year2 Year3 Year4 Year5 千 CashFlowForecast OperationalCashFlow EndingPeriodCashFlow
Table 2. Taxes and social flow, $

Market Overview

Global Cannabis Market

North America Cannabis Market

The U.S. Cannabis Market

New Jersey Cannabis Industry

SWOT Analyses

BUSINESSNAME/BUSINESSPLAN 8
02

Global Market

TheBDSA’sgloballegalcannabisforecastshowsthatglobalcannabissalesfor2020reachingnearly $21.3billion4 ,anincreaseof48%over2019 Globalmarketwasvaluedat$306billionin2021,an increaseofabout44%over2020,andabout$37billionin2022,anincreaseofabout20.9%over2021.

Spendingonlegalcannabis worldwideisexpectedtoreach about$50billionby2025ata compoundannualgrowthrate (CAGR)of13%from2021andhit $57billionby2027,whilecannabis marketintheUnitedStatesand Canadaisestimatedtobeabout $46.5billionandother$10.5billion wouldgotoothermarkets The largestgrowthrateispredicted withintherest-of-worldmarkets withprojected$2billionin2027.

Therecreationalcannabismarket willcoverabout67%ofthespendingwhilemedicalcannabiswilltakeuptheremaining33%.

LegalmedicalcannabisspendingoutsidetheU.S.andCanadaincreased30%in2021comparedto2020, from$1.1billiontonearly$1.4billion,largelyduetomarketsinGermanyandMexico.Accordingtothe report,internationalcannabissaleswillgrowinvaluetoabout$8billionin2026ataCAGRof40%.

KeyTrends:

• TheinitialdecisionbymanyU.S.statesandCanadatocreatemedical-onlycannabisregulations prompted many other countries to act similarly while legalization of adult recreational use in Canada and in more than 40% of U.S. states triggered a second wave of legalizing laws internationallytoincreaseaccesstocannabisproducts

• IntheseventheditionoftheEuropeanCannabisReport –producedbyLondon-basedadvisory groupProhibitionPartners–Europe’scannabismarketisprojectedtobeworth€354millionby theendof2022andtogrowwithaCAGRof60%toreach€2.3billionby2026.

• ThesizeoftheLatinAmericacannabismarkethasanestimatedmarketvalueof$60millionin 2022andisprojectedtobedrivenbyMexicowithaCAGRof104% Mexicoisexpectedtoaccount fornearly32%oflegalcannabisspendingoutsidetheU.S.andCanada.

• AccordingtoaNewFrontierDatareport,Africawithover10%ofglobalcannabisdemandwill rankfourthafterNorthAmerica,EuropeandLatinAmerica.

• Oceania’slegalcannabismarketisforecasttogrowfromabout$100millionin2021to$1.2billion in2027,the5thlargestintheworld.

• Israelhasasmallpopulationandalonghistoryoflegalmedicalcannabisuse.Itcontinuestobea leaderovertheyearsinthedevelopmentofcannabispharmaceuticals.

4 https://www.globenewswire.com/news-release/2021/03/02/2185408/0/en/BDSA-Reports-Global-CannabisSales-Exceeded-21-Billion-in-2020-Forecasts-55-9-Billion-by-2026.html

www.businessname.com 9
21.3 30.6 37.0 42.6 46.5 50.2 0.0 10.0 20.0 30.0 40.0 50.0 60.0 2020 2021 2022 2023 2024 2025 USA CANADA EUROPE LATAM ROW TOTAL
Figure 2. Global spending by region (in USD billions), BDSA forecast

North American Cannabis Market

TheNorthAmericalegalcannabismarketamountedtoabout$30billionin2021,growingbyalmost40 percentontheyear.ThelargestmarketwastheUnitedStates,whichtotaledalmost$25billion.Itwas followedbyCanadawithover$4billion.

Analystsestimatetheoverallcannabismarketforlegaladult-useandmedicalsalesinNorthAmerica reached$35billionin2022withthecompoundannualgrowthrate(CAGR)atabout20%andasmore stateslegalizecannabisforrecreationaluseandexistingmarketsmature,willgrowto$465billionfive yearslaterbasedontheArcviewMarketResearchreport5 .

BUSINESSNAME/BUSINESSPLAN 10
5 https://bdsanalytics.com/ 4.3 4.9 6.5 7.3 8.2 7.7 8.1 8.7 1.4 1.8 2.7 3.5 5.7 12.5 21.8 26.3 0 5 10 15 20 25 30 35 40 2015 2016 2017 2018 2019 2020 2021 2022
Figure 3. Medical and recreational cannabis sales forecast, billion $

The U.S. Cannabis Market

TheU.S.legalcannabissalesreached$17.5billionin2020and$25billion(about$18billionofadultusesalesand$7billionformedicalsales)in2021.Expertsestimatethat2022salespassed$30billion andby2024couldbeashighas$35billionaccordingtotheArcview/BDSreport.

Althoughtheuseofcannabisisillegalunderthefederallawandthefederalgovernmentclassifies cannabisasaschedule1drug,almost76%oftheU.S.stateshavelegalizeditinsomeform.Moststates legalizeditonlyformedicalpurposes,but21states–Alaska(2015),Arizona(2020),California(2016), Colorado(2012),Connecticut(2021),Illinois(2020),Maine(2017),Maryland(2023),Massachusetts (2016),Michigan(2018),Missouri(2022),Montana(2021),Nevada(2017),NewJersey(2021),New Mexico(2021),NewYork(2021),Oregon(2015),RhodeIsland(2022),Vermont(2018),Virginia (2021)andWashington(2012)–havegonefurther,legalizingtherecreationaluse.

Asaresult,38states,theDistrictofColumbia,PuertoRico,Guam,theNorthernMarianaIslands,andthe U.S.VirginIslandshaveeffectivemedicalcannabislaws,and21states,theDistrictofColumbia(2015), Guam(2019),andtheNorthernMarianaIslands(2018)nowallowcannabisforrecreationaluse.

www.businessname.com 11
lawslegalizing
Figure 4. U.S. legalization map Medical/Recreationalcannabislegalization Medicalcannabislegalization
Decriminalization No

Therearemorethan50,000activelicensesforcannabisbusinessesintheU.S.Thisincludescultivation, extractionandmanufacturing,retail,distribution,transportation,andtestinglicenses.

Theindustryemployed211,000peoplein2018andthenumberoffull-timecannabisemployeesgrew 17%to247,300in2019 In2021,107,059newjobswerecreatedcomparedto77,300in2020.Asof 2021,therewere428,059peopleemployedinthecannabisindustry,comparedto321,000in2020.

The2023VangstJobsReportrevealstherearenow417,493full-timejobssupportedbythelegal cannabisindustryintheUS,a2%dropinemploymentcomparingto2021.

BUSINESSNAME/BUSINESSPLAN 12
Figure 5 Medical and recreational cannabis sales in top states, 2020-2022
0.0 1.0 2.0 3.0 4.0 5.0 6.0 California Michigan Illinois Florida Colorado Massachusetts Pennsylvania Arizona Washington Oregon $billion 2022 2021 2020

Wholesale Pricing Benchmarks

Muchoflastyearwasmarkedingeneralbyadownwardtrendinthenationalcompositeprice.TheU.S. Spot6 decreasedby21.9%fromtheopeningtotheclosingweekof2022.Additionally,forQ4,the nationalcompositerateaveraged$984perpound,downby26.6%comparedtothequarterlyaverage priceof$1,341perpound,documentedinthesameperiodin2021.Yet,2023’smeangoingrateis projectedtobe4.2%higherfrom2022’sQ4priceof$1,025perpound.

✓ 2016U.S.SpotIndexaverage=$1,789

✓ 2017U.S.SpotIndexaverage=$1,562

✓ 2018U.S.SpotIndexaverage=$1,194

✓ 2019U.S.SpotIndexaverage=$1,286

✓ 2020U.S.SpotIndexaverage=$1,473

✓ 2021U.S.SpotIndexaverage=$1,490

✓ 2022U.S.SpotIndexaverage=$1,104

Theseasonalimpactofthefallharvestremainsundeniable,drivingpricestotheirannuallowin October-November.In2022,theU.S.Spotopenedtheyearat$1,277perpoundandslidtoitsannual lowof$954perpoundinthefourthweekofOctober:

✓ 2016lowwas$1,386onNovember11th

✓ 2017lowwas$1,368onNovember17th

✓ 2018lowwas$1,047onNovember9th

✓ 2019lowwas$1,066onApril4th

✓ 2020lowwas$1,322onMay22nd

✓ 2021lowwas$1,290onNovember26th

✓ 2022lowwas$954onOctober28th

TheU.S.Spotfluctuatedthroughthewinterandspringwhenitpeakedat$1,301perpoundinmid-April andthendownwardthroughthesummerandautumn.

6 https://www.cannabisbenchmarks.com/report-category/united-states/

www.businessname.com 13
500 1,000 1,500 2,000 2,500 Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 Jan-19 Mar-19 May-19 Jul-19 Sep-19 Nov-19 Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21 Mar-21 May-21 Jul-21 Sep-21 Nov-21 Jan-22 Mar-22 May-22 Jul-22 Sep-22 Nov-22 Jan-23 Mar-23 Outdoor Greenhouse Indoor SpotIndex
Figure 6. U.S. Wholesale flower prices, $/pound 2018-2022

New Jersey Cannabis Industry

NewJerseylegalizedmedicalcannabisin2010.SinceNewJersey'smedicalcannabisprogramlaunched, onlypatientswithalimitednumberofconditionswereabletoenroll.Thoseconditionsweremostly chronicanddebilitating,includingepilepsy,glaucoma,ALS,severevomitingfromAIDSorcancer treatment,multiplesclerosis,Crohn'sdisease,andotherterminalillnesses.

Registeredpatientsarelegallyallowedtopurchaseandpossessupto3ouncespermonthandcanbe authorizedformedicalcannabisforupto12monthsbasedonaphysician'sclinicaljudgment;thereare nopurchaselimitsforterminalpatients7 .Currently,cannabisedibleformsareonlyavailablefor qualifyingmedicalpatientsundertheageof18.Thereistherequirementthatallproductscontainno morethan10%THCisconsideredoverlyrestrictiveandonerous.

TheNewJerseyDepartmentofHealthhasreduced theregistrationfeefrom$200to$100,added seniorcitizensandmilitaryveteranstothelistof thosethatareeligibleforthereducedfeeof$20 andhasaddedseven“debilitatingmedical conditions”includingPTSD,bystatutory enactment;andsixnewconditions(anxiety, chronicpainofvisceralorigin,chronicpainrelated tomusculoskeletaldisorders,migraines,Tourette syndrome,andOpioidUseDisorder),bytheState HealthCommissioner’sMarch22,2018,petition decision,andJanuary23,2019revision8 . Additionally,therulecreatedaseparate permittingsystemforcultivation,manufacturing anddispensingmarijuanaformedicalpurposes.Theexpansionhasaddedmorethan20,000medical cannabispatientsin2019,bringingthetotaltoover63,000andtheprogramincreasedtoover100,000 patients,1,259doctorsand3,930caregiversin2020andgrewto122,337patientsin2021.

In2019,stateregulatorsrequestedapplicationsfor24newlicenses:4verticallyintegrated,5standalonecultivationfacilitiesand15dispensaries.In2021,theCannabisRegulatoryCommissiondoubled theproposednumberofcultivationsites.InOctober2021,NewJerseylicensed14newcannabis businesses(10cultivationand4verticallyintegratedlicenses).InDecember2021,thecommission approved30newlicensestocompanieswhowillsellmedicinalmarijuana

AsofDecember2022,30dispensaries(incl.9alternativetreatmentcenters)acrossNewJerseyserved around114,000medicinalregisteredcannabispatients9 EffectiveJuly1,2022,thesalestaxratelevied onthesaleofmedicalcannabishasbeenreducedto0%.

7 https://www.nj.gov/health/news/2019/approved/20190724b.shtml

8 https://www.nj.gov/health/news/2019/approved/20190513a.shtml

9 https://www.nj.gov/cannabis/resources/reports-stats-info/index.shtml

BUSINESSNAME/BUSINESSPLAN 14
70,000 84,000 101,229 113,921 124,402 127,700 111,987 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 Jul-21 Oct-21 Jan-22 Apr-22 Jul-22 Oct-22 Jan-23
Figure 7. Patient enrollment

NewJerseycannabismarketinretailpartrose roughly70%and50%in2016and2017tohitan estimated$30millionin2018(upfromarevised estimateof$20millionin2017)andover200%to reachalmost$100millionin2019.Medicalsales totaledabout$150millionin2020and$180 millionin2021.2022broughtinabout$226 millioninmedicalcannabissales.

Recreational Cannabis Legalization

OnNovember3,2020,votersapproved recreationalcannabislegalization.The Amendmentlegalizesthepossessionanduseof cannabisforpersonsage21andolder.Individuals willbeallowedtoconsumeupto1ounceof cannabis,16ouncesofinfusedsolidproducts,or 72ouncesinliquidform.Thebillalsolegalizesthe manufacture,distribution,andsaleofcannabis. Adult-useproductswillfacea6.625%salestaxandmunicipalitiescouldpassordinancestochargelocal taxesofupto2%.

Threequartersof2022broughtinnearly$330millioninrecreationalcannabissales.Itisprojectedthat adult-usesalescouldreach$950millionby2024.

AsofFebruary2023,1,434licenseswereawardedintotalincluding264forcultivation,171for manufacturing,601forretail,394formicrobusinessand4fortestingbusiness.

www.businessname.com 15
$59,023,485 $55,838,072 $59,262,014 $61,138,231 $49,874,667 $79,698,831 $116,572,533 $132,484,179
Q42021 Q12022 Q22022 Q32022 Q42022 MedicinalSales RecreationalSales Figure 8. Total sales of cannabis in New Jersey

SWOT Analyses

S• Newcultivation technologieswill allowsignificantly decrease electricitybills andincrease profitwhile competitive prices

• Extensive industry knowledge

• Proven, disciplined management team

• Productliability/ legalissues

• Enhancedriskof banking/ financial/IRS scrutiny

• Croploss possibilitydueto pests,heat, humanerror,etc.

• Lackin professional workforcefora cannabisindustry

• Highenergy consumption

OW• Highgrowth industry

• Growinginterest anddemandfor natural, alternative medicine

• Trendtoward greatercannabis legalization, includingtheuse ofcannabisfor recreational purposes

• GlobalMarket

T• Asignificantdrop inwholesale pricing

• Enforcementof federallaw

• Possiblecannabis lawchanging

• Indicatorsofa slowedglobal economy

• Largecompanies enteringthe market

BUSINESSNAME/BUSINESSPLAN 16

Marketing Plan Competition Sales Forecast

www.businessname.com 17 Sales Strategy
03

Marketing Plan

Becausecannabisisillegalunderfederallaw,stategovernmentsandonlineadvertisingplatformsare placingstrictrulesonhowcompaniescanmarkettheirproducts.

Google,FacebookandTwitterallhaveadvertisingpoliciesthatrestrictthepromotionofthesaleof cannabis.Google’spolicyprohibitsadsthatpromote“substancesthataltermentalstateforthepurpose ofrecreation.”Facebookrestrictsany“illegal,prescription,orrecreationaldrugs.”AndTwitterbans “illegaldrugs”aswellassubstancesthatcause“legalhighs.”InstagramandFacebookhavedecidedto goastepfurtherbyremovingpagesofcannabisrelatedbusinesses.

Themosteffectivestrategiesforlegalmarijuanacompaniesaredirectmarketingatindustry conferencesandotherevents,buildingcommunitiesaroundmarijuana-relatedconcernssuchashealth andwellness.ThemarketingandsalesstrategyofCANNACULTwillbebasedongeneratinglong-term personalizedrelationshipswithmanufacturesanddispensaries.

Marketingandadvertisingcampaignincludes:

- Meetingwithdistributorsandretailers

- E-mailMarketing

- AdvertisingandarticlesinthethematicMagazines

- Businesseventsandconferences

- Businessandindustryassociations

- Branddevelopment

- Brochures

- Websitedevelopmentwithsearchengineoptimization

- Cannabisbusinessdirectoriesandplatforms

WEEDMAP https://weedmaps.com/

LEAFLY https://www.leafly.com/

Competition

Cannabisandhemp/CBD productsandbusinessesfinder.

Servicesincludecannabisand hemp/CBDfinder,onlinestore, branding,doctors’portal.

15.83milliontotalvisits eachmonth

16.29milliontotalvisits eachmonth

Ineverybusinessthereiscompetition,however,webelievewepossessseveralstrengthsthatwillallow ustoremainvisibleonCANNACULTradaratalltimes.

Inthisindustry,mostofthecompetitivedynamicscenteraroundthequalityofcannabiscultivated,the serviceoffered,thelocationwherethecultivationwillbedone.ThebrandingofCANNACULTplaysa significantrole.Eventhoughcompetitionisstiffespeciallyfromthebig,well-backedenterprises, smallerenterprisescanstillgettheirfairshareofthemarketiftheystaytruetothecompetitive dynamics.Itisafactthatsmallcannabiscultivationoperationswillalwaysstrugglewithlargerbased cannabiscultivationoperationswhenitcomestopricingpowerandbrandrecognition,hencethe

BUSINESSNAME/BUSINESSPLAN 18
Table 3. Cannabis business directories

reasonwhysmallerbasedoperationswillalwaysgooutoftheirwaystodeliverexcellentclientservice. Itisthroughtop-notchclientservicethattheycansecureafairshareoftheavailablemarket.

Sales Forecast

Asgrowingstagewillstartfrom ,sales areprojectedtobestartedfrom…and theywillsignificantlyincreasefromthe secondyear.

Companyintendstomixoutdoor cultivationfromApriltoOctoberperiod andall-aroundyearindoor/greenhouse cultivation.

Growthrateforrevenueisabout70% forthesecondyear.

www.businessname.com 19
$ 1m 2m 3m 4m 5m 6m Year 1 0 0 0 0 202,401 202,401 7m 8m 9m 10m 11m 12m Year 1 202,401 202,401 202,401 202,401 202,401 202,401 1m 2m 3m 4m 5m 6m Year 2 202,401 202,401 242,881 242,881 242,881 242,881 7m 8m 9m 10m 11m 12m Year 2 242,881 242,881 242,881 242,881 242,881 242,881 1m 2m 3m 4m 5m 6m Year 3 242,881 242,881 263,121 263,121 263,121 263,121 7m 8m 9m 10m 11m 12m Year 3 263,121 263,121 263,121 263,121 263,121 263,121 1,387 2,428 2,670 2,705 2,705 2,705 2,705 139 243 267 271 271 271 271 YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 Indoor Greenhouse Outdoors Trim
Table 4. Sales Forecast for first three years, $ Figure 9. Sales forecast, lbs

Cultivation Facilities

Physical Security

Transportation

Packaging and Labeling

Tracking Solution

BUSINESSNAME/BUSINESSPLAN 20
Operating Plan
04

Whilemostbusinessesinanyindustrytrytokeepstartupcostsaslowaspossible,thatisn’tnecessarily thebestwaytoproceedwhenopeningagrow.Creatingacost-efficientcultivationsiteofteninvolves investingintechnologyandprocessesthatmayresultinabignear-termhit.

Yieldsandqualityofplantsgrownunderartificiallightsmostlydependon:

1. theseedvariety,

2. whethertheplantsaregrownfromseedsorclones,

3. afterhowmanydaysofgrowingtheplantsareputintoflowering,and

4. theoptimizationoftheclimaticconditionsofthegrow-room.

Cultivation Facility

Thecultivationpremiseswillbelocatedina7,200-sq.ft.buildingandwillbeadequatetohouseand growupto1,000plants.

Ourcultivation&processingareawillinclude:

• MotherRoom&Cloning

• Vegetative GrowthRooms

• FloweringRooms

• Drying&TrimRooms

• CuringRooms

• PackagingRooms

Ourcompanywillgrowfromseeds/clones ofthefollowingstrains:

Warehouse Design

A. A warehouse environment provideswithmaximumcontrol,andthereforethemostreliableconsistentcannabiscropscan beproducedinaproperlydesignedwarehousegrowroom.

B. Withoutnatural light, warehousegrow rooms dependonintelligentgrowlights which need to replicate the parts of the sunlight spectrum that the marijuana plants need at each stage of growth.Lightingisakeycomponentinanintegratedsystem.

C. Air filtrationandcirculationsystems areessentialfor controlling heat buildup andeliminating exhaust odors. It is critical that the air circulation in a marijuana warehouse is designed in conjunctionwiththegrowlightsbecauselightingsystemsemitlargeamountsofheat.

D. There are various irrigation systems for growing cannabis appropriate for growing in a warehouse:includingdripirrigation,hydroponicfloodbenches,ortroughbenches.

E. Theirrigationsystemshouldbedesignedinconjunctionwithanutrientmanagementsystemfor maximizingtheproductionyieldofthecannabisplants.

F. Environmentalcomputer.Thecomputercontrolsystems foracannabiswarehousecontroland monitorallthenutrients,lights,aircirculation,andirrigationneedsoftheplants

www.businessname.com 21

G. De-humidificationtooptimizegrowingenvironment.

H. ComputercontrolledCO2injectionandmonitoring.

Greenhouse Design

GreenhousescombinethelatesttechnologyinHVAC,lightdeprivation,environmentalcontrols, irrigation,insectexclusion,benchingsystems,hybridtechniques,andmuchmoretocreateasystematic andefficientgrowingapproach:

A. ThebiggestadvantageGreenhouseMarijuanaGrowershaveistheabundanceofnaturallightcoming intothegreenhouse.

B. Whilecannabislikeslongdaylightduringthevegetativestage,agoodblackoutsystemisrequiredfor thebestfloweringproduction.

C. HeatingandCoolingSystemsareanimportantcomponentofthemarijuanagreenhouse.

D. CO2isessentialformaximizingthequalityandproductionofMarijuana.

E. Ventilation is essential as with all greenhouse crops, however marijuana legislation, and local municipalityrequirementsmayalsoimposestrictrequirementsforeliminatingexhaustodors.Our integratedgrowingsolutionswillincludeairfiltrationsystemswhererequired.

F. Anutrientmanagementsystemisessentialformaximizingtheproductionyieldofthecannabisplants andensuringconsistentandreliablequality.

G. Thebrainsofthecompletemarijuanagrowingsystemwhetheragreenhouseproductionfacilityora warehousegrowupisourenvironmentalcomputer.Thecomputercontrolsystemsforamarijuana greenhousecontrolsandmonitorallthenutrients,lights,blackout,aircirculation,CO2andirrigation needsof the plants,itisdesigned tomaintaintheexactenvironmentneeded forasmanydifferent growingzonesasyouwantandcanhandledifferentenvironmentsforpropagation,cloning,flowering andforasmanydifferentvarietiesasyouwanttocontrol.

Companywilluserollingbenches/growingtableswhicharehighlyrecommendedforanycommercial cannabisgrowoperation.Theyprovideupto50%moreplantspacebyeliminatingtheneedfora dedicatedaisle.Withacrop,asvaluableasmarijuana,thisdirectlyequatestomuchhigherprofitsand maximumspaceefficiency.

Mainfeatures:

▪ Aluminumextrudedsidesandends

▪ Mitercutcorners

▪ Hotdippedgalvanizedsteelstands

▪ Aluminumcrossmembers

▪ Snaptogetherfittings

▪ Threadedrodsforadjustmentupto12"

▪ Topqualityplasticoraluminumfloodtrays

▪ 13gaugeexpandedmetalbenchtops

▪ 2"diameterrollingtubes

Outdoor Cannabis Farming

CANNACULTplansoutdoorcannabisfarmingin000acresofagriculturallandin .Cannabiswillbe plantedthroughmid-to-lateMonthandCompanyexpectstoharvest0,000plantsperacre.

BUSINESSNAME/BUSINESSPLAN 22

Phases of Production

• Germinationofseeds,genderingplants,male/female,orfeminizedplants(10weeks)

• 1st stage:takingandrootingclones(2weeks)

• 2nd stage:clone/vegetation(1week)

• 3rd stage:vegetation(2weeks)

• 4th stage:flowering(8weeks)

• 5th stage:processing/trimming(3days)

• 6th stage:dryingandcuring(11days)

• Totalelapsedtime:approximately15weeks

Drying&CuringRooms.Itistypicallyconsideredbesttodryacannabisharvestinstrictlycontrolled climateconditions:moderatelycooldryingroomsarepreferredforbetterpreservationofthehighest possiblelevelsofterpenes.Thecuringprocessisthelaststepinproducingofasuperior-quality product.Duringthedecarboxylationprocess,therateofmoisturereleasecanbemonitoredand controlled.Thefinalproductmaybestoredinappropriateconditionsforuptosixmonths,or alternativelyitmaybevacuumpackedforlongertermstorageandsale.

PackagingRooms.Flowercontainerandzipperpouchfillingmachines,bulkwholesalenitrogenand vacuumpackagingmachines.Pre-rollfillingandtwistingmachines.

www.businessname.com 23
Figure 10 Phases of production, cultivation Germination of Seeds Cloning Mother Plants & Rooting Clones
Harvesting Curing
Quarantine
Plant Vegetation Plant Flowering
Trimming & Processing
& Assessment
Inventory Shipping
Lab
Testing & Quality Assurance Preparation Vault Storage

Product Timeline and Production Schedule

Asgrowingstagewillstartfrom ,salesareprojectedtobestartedfromthe andtheywill significantlyincreasefromthesecondyear.

Companywillhavetheabilitytovegetateupto1,000plantsandflowersconcurrently,willgrowupto 11differentstrainsofcannabis,andwillhavetheabilitytogrowfromseedlingtofinishedproduct. Companyintendstogrow5-7exclusivestrainsthatothergrowersdonothave.

BUSINESSNAME/BUSINESSPLAN 24
M1 M2 M3 M4 M5 M6 Sq. ft available for "mother" - 280 280 280 280 280 Sq. ft available for clones' - 200 200 200 200 200 Sq. ft available for vegetative - - 1,224 1,224 1,224 1,224 Sq. ft available for flowering - - 6,936 6,936 6,936 6,936 Number of “mother” plants - 42 42 42 42 42 Number of clones - - 1,470 1,470 1,470 1,470 Number of Veg Plants - - 694 1,387 1,387 1,387 Number of Flower Plants - - - 694 1,387 1,387 Yields, pounds - - - 173 173 173
Table 5. Growing Assumptions, first six months
0 500 1,000 1,500 2,000 2,500 3,000 Year1 Year2 Year3 Indoor Greenhouse Outdoors
Figure 11. Yields forecast, pounds

Physical Security Plan

Physical Building

Thephysicaladdressofourcultivationfacilitywillbe…

Wehavelocatedourcultivationfacilityinalightindustrialcomplexareathatincludesmanufacturing andindustrialbusinesses. Locatedonalargelotwithinasecuredfence,thefacilityhasnumerous intrinsicsecurityfeaturesandiseasilyconvertedtohigh-securityuse.Thefacilitywillbethesole occupantofabuildingthat/willbehousedinabuildingthatdoesnotadjoinhigh-usepublicareas,sits inthemiddleofasecuredlotoflotsize,isnotvisiblefromthestreet,issetbackfromhightraffic intersections,isdistancefeetfromthenearestpublicroad,hassecuremeansofingressandegress,is locatedinalightindustrialcomplex,isnotaccessibletofoottraffic,isinanareaoflowvehiculartraffic, isinanareawithlittleornonon-commercialtraffic,isnotlocatednearanyschools,freeways, residentialhousing,orplacesofworship. Thereisoneentrance,onesideexit,andthreeroll-upsteel doorsfordeliveries. Therearenowindows. Caraccessalsowillbelimited

Asiteplanshowingtheentirestructureofthecultivationcenter,includingthestreet(s),parkinglot(s), othertenantswithinthefacility,andanyotherentitiesthatphysicallyborderthecultivationisshownin anattachment.

Areaswherecannabiswillbekeptorhandledhavenoexternaldoorsorwindowsandcanbeaccessed onlyfromwithinthefacility.

Allmainaccesspointdoorhingeswillbeequippedwithhinge-pin-lockingscrewstoincreasesecurity. Thisconfigurationyieldsoptimalconditionsforsurveillance. Theseexistingdesignelementswillnot onlymakeunauthorizedaccessextremelyunlikely,butalsoactasadeterrentdiscouragingtheft.

Floor Plan

Afloorplanofthecultivationfacilitydetailingthelocationofthefollowing:

1. Allentrancesandexits;

2. Thelocationofanywindows,skylights,androofhatches;

3. Thelocationofallcameras,andtheirfieldofview;

4. The locationof all alarm inputs (door contacts, motiondetectors, duress/hold up devices)and alarmsirens;

5. Thelocationofthedigitalvideorecorderandalarmcontrolpanel;and

6. RestrictedandpublicareasisshownattheDiagram

www.businessname.com 25
InsertFloorPlan

Lighting

Themainobjectivesofoursecuritylightingsystemaretoilluminatedarkareasanddetectand recognizemovementintheprotectedarea.Thebestvisionwithoutdoorlightingisobtainedfrom downwarddirectedandshieldedsecuritylightingthatisconstantlyon,supplementedwithinstant-on lightingtriggeredbymotiondetectors.

CANNACULTwillensurethatsufficientlightingrequirementsaremetbetweenduskanddawn. Wewilladdexternalsecuritylighting,includinghighfloodspotlightstobothfacilities.Eachfacilityand allwalkwaysofeachfacilitywillbewellilluminatedtomaximizevisibility. Lightingwillbeoperated automaticallybyaphoto-sensor,ensuringthatlightingwillatalltimesbeoptimalforvideocapture.

Guards

Onceeachfacilityisoperational,wewillemploynameofcompany,aprivatecompanythatwillprovide securityguards. Uniformedarmedandunarmedsecuritypersonnelwillbeonsitemonitoringthe facilityduringhoursofoperation. Allsecuritypersonnelwillbethoroughlyscreened,trained,and strictlysupervisedbyourSecurityDepartmentworkinginconjunctionwithSecurityConsultantto ensuretheyareofthehighestcapability.

Duringoperatinghours,wewillhaveatleastoneortotalofnumberon-sitesecurityguardsatthe cultivationentrance.Afteroperatinghours,wewillhavetotalofnumberon-sitesecurityguardsatthe cultivationfacility.

Securitypersonnelwillperformandkeeprecordsofhavingperformedroutineregularinspectionsofall securitysystems,barriers,gates,doors,andlocks,immediatelyreportinganymalfunctioningor compromisedsecurityfeaturetotheSecurityAgent. Anyincidentsqualifyingasirregularorsuspicious willbehandledimmediately.

Perimeter Security

Wewillsecuretheperimeterofourfacilitiestopreventunauthorizedintrusion. Withourcultivation facility,weplantouseoneormoreofthefollowingcriticalelementstosecuretheperimeterofour building:securityfencing,securityguards,andelectronicsurveillance(round-the-clockmannedor alarmedcamerasurveillanceandelectronicintrusiondetection).

Thecultivationfacilitycurrentlyhastypeoffencingonthelocationsideandaheightfoothighmaterial fencearoundtheentireperimeterwithnumberlockedgateentries. Anynewfencingwillbeinstalledin suchawaythatnogapswillbeleftbetweenthefencingandareaswhereitbuttsupagainstthebuilding oryard.Thesecurityofanyperimeterfencingwillbecheckedbyguardsdaily.

Theperimeterofeachbuildingwillbesecuredbyvideosurveillanceandadequateoutsidesecurity lighting. Inaddition,duringnon-operationalhours,allentrywaysandexitsandallwindowswillbe externallycoveredbyaccordingmetalfencing.

Nameofcompanymotiondetectorswillmonitortheinsideofallexteriordoorsandwindows. These areseparatesensorsfromourvideocameramotiondetectors.

BUSINESSNAME/BUSINESSPLAN 26

Internal Access-Point Control

Movementwithineachfacilitywillbetightlycontrolled. Allmainaccessdoorsanddoorstothe cultivationroomswillrequirekeycardsandelectronicpasscodes.Onlypermittedemployeeswillbe allowedtoenterintothecultivationfacility. Thecultivationfacility[describeinteriorlayout,including doors,locks,access].

Limited Access to Secured Areas and Visitors

CANNACULThasthelimitedaccessareas.CANNACULTensuresthatthesecuredareasareaccessible onlytolicensee,licenseerepresentatives,andauthorizedpersonnel,servicepersonnelordistributors.

Video Surveillance

Wewillinstallacomprehensiveelectronicsecuritysystemwithvideosurveillance/recording capability,third-partymonitoring,intrusiondetection,andpanicbuttons.

Wewillemploystate-of-theartexternalandinternalcameras,eachwithaminimumresolutioncapacity of704x480pixelspersq.inch. Thisissufficienttoallowfacialidentificationofanyoneinornearing thefacility. Allcamerasareequippedwithmotiondetectionandwillhaveinfraredtechnologyforlow lightconditions,capableofidentifyingactivityatnightorinunlitrooms.OurCCTVcamerasystemwith digitalrecorderincludes:

Insertspecs

Externalvideosurveillancewillcoverallareasofpossibleingressandegress. Internalvideo surveillancewillcoverthewaitingroom,receptionoffice,andcultivationrooms. Thiscoversallareas wherecannabisispresentorhandled,includingallpoint-of-salelocations,andallmeansofaccessto suchareas. Videosurveillancewillcoverexternalandinternalareas24/7.

ElectricalbackupwillbeprovidedbyaNamebrandUninterruptedPowerSupplyunitsufficientto supplyaminimumoffiveminutesofbackuppowertoourcamerasandcomputers. Wehavebothon andoff-sitestoragecapacityof2TB,enablingustostoreatleast60daysofvideosurveillancerecording. Afailurenotificationsystemwillprovidebothaudibleandvisiblenotificationsifthereisanyfailurein theelectronicmonitoringsystem.

Third-Party Monitoring

Weanticipatecontractingwithvendortohelpdeter,detect,anddocumentsecurityeventsateach facilityfromaremotelocation.Vendorwillmonitorforfireandforsecuritybreachofdoorsor windows.Trainedprofessionalsfromtheirmonitoringcenterswillbeabletoaccessoursecurity surveillancesystematalltimesandwillreportanddocumentanysuspiciousactivity. Ourinternal securitypersonnelwillworkwithvendortoestablishguidelinesforwhatentailssuspiciousactivityand toensureregulatorycompliance.

Therewillbetriggersaroundthefacilitytoalertourmonitoringteamofapossibleintrusionor unauthorizedaccess. Triggerscanbe:

✓ Motion-sensorsurveillancecameras

✓ Motion-sensorlaserbeams

✓ Unauthorizedelectronicaccess

www.businessname.com 27

✓ Securityandfirealarms

Intrusion and Motion Detection

Ouralarmsystemwillhavemotiondetectorscoveringentrywaysandexits,hallways,cultivationrooms, storagerooms,andwindows.Vendormotiondetectorswillbeutilizedtomonitortheinteriorsideofall exteriorwindowsanddoors.(Theseareseparatefromourvideocameramotiondetectors.)

Burglary Alarm System

Weshallinstall,maintain,anduseaprofessionallymonitoredrobberyandburglaryalarmsystem; whichmeetthefollowingrequirements:

✓ Atestsignalshallbetransmittedtothecentralstationeverytwenty-four(24)hours;

✓ Ataminimum,thesystemshallprovidecoverageofallfacilityentrancesandexits,roomswith exteriorwindows,roomswithexteriorwallsorwallssharedwithotherfacilitytenants,roof hatches,skylights,andstorageroom(s)thatcontainsafe(s);

✓ Thesystemshallincludeatleastone(1)holdupalarmforstaffuse;and

✓ Thesystemshallbeinspected,andalldevicestestedannuallybyaqualifiedalarmvendor.

Panic Buttons and Internal Communications

Panicbuttonswillbeinstalledatthe….

Fire Security

TheCultivationFacilitywillcomplywithalllocalfirecoderequirements. FirePreventionisavital aspectofcultivationsafety.AspartofCANNACULTcommitmenttothesafetyofouremployees,we havedevelopedacomprehensiveFirePlantoaddresshowfireswillbepreventedand managed/containediftheydooccur.Knowingthatpeopleareourmostvaluableresources,all employeeswillbetrainedandrequiredtoconductthemselveswithconsistentduediligencetoprevent firesfromoccurring.

Packaging and Labeling

Companywillconductthefollowingregulationsforpackagingandlabeling:

1. Cannabispackagesandlabelsshallnotbemadetobeattractivetochildren.

2. Allcannabisproductlabelsshallincludethefollowinginformation,prominentlydisplayedandin aclearandlegiblefont:

a. Manufacturedateandsource.

b. Thestatement“SCHEDULEICONTROLLEDSUBSTANCE.”

c. Thestatement“KEEPOUTOFREACHOFCHILDRENANDANIMALS”inboldprint.

d. Thestatement“FORMEDICALUSEONLY.”

e. Thestatement“THEINTOXICATINGEFFECTSOFTHISPRODUCTMAYBEDELAYEDBY UPTOTWOHOURS.”

f. The statement “THIS PRODUCT MAY IMPAIR THE ABILITY TO DRIVE OR OPERATE MACHINERY.PLEASEUSEEXTREMECAUTION.”

g. For packages containing only dried flower, the net weight of medical cannabis in the package.

h. Awarningifnutsorotherknownallergensareused.

BUSINESSNAME/BUSINESSPLAN 28

i. List of pharmacologically active ingredients, including, but not limited to, tetrahydrocannabinol(THC),cannabidiol(CBD),andothercannabinoidcontent,theTHC andothercannabinoidamountinmilligramsperserving,servingsperpackage,andthe THCandothercannabinoidamountinmilligramsforthepackagetotal.

j. Clearindication,inboldtype,thattheproductcontainsmedicalcannabis.

k. Identificationofthesourceanddateofcultivationandmanufacture.

l. Anyotherrequirementssetbyregulations.

Transportation

1. Cannabis items will be transferred only between licensed premises by a licensee or licensee representative.

2. AnindividualauthorizedtotransportcannabisitemswillhaveavalidDriver’sLicense.

3. CANNACULTintendto:

• Keepmarijuanaitemsintransitshieldedfrompublicview;

• Useavehiclefortransportthatis:

- InsuredatorabovethelegalrequirementsinNewJersey;

- Capableofsecuring(locking)thecannabisitemsduringtransportation;

- Equippedwithanalarmsystem;and

- Capable of being temperature controlled if perishable marijuana items are being transported.

• Use CTS, generate a printed transport manifest that accompanies every transport of cannabis itemsthatcontainsthefollowinginformation:

- The name, contact information of a licensee representative, licensed premises address andlicensenumberofthelicenseetransportingthecannabisitems;

- Thename,contactinformationofthelicenseerepresentative,licensedpremisesaddress, andlicensenumberofthelicenseereceivingthedelivery;

- Productnameandquantities(byweightorunit)ofeachcannabisitemcontainedineach transport,alongwiththeUIDsforeveryitem;

- Thedateoftransportandapproximatetimeofdeparture;

- Arrivaldateandestimatedtimeofarrival;

- Deliveryvehiclemakeandmodelandlicenseplatenumber;and

- Nameandsignatureofthelicensee’srepresentativeaccompanyingthetransport.

4. Company will generate the manifest of this rule at least 24 hours in advance of initiating transportation.

5. All cannabis items will be packaged inshipping containers andlabeled witha UID tag prior to transport.

6. Company will be able to provide a copy of the transport manifest to each licensed premise receivingtheinventorydescribedinthetransportmanifest.

7. Companywillbeabletoprovideacopyoftheprintedtransportmanifestandanyprintedreceipts for marijuana items delivered to law enforcement officers or other representatives of a governmentagencyifrequestedtodosowhileintransit.

8. CANNACULT will contact the Department immediately, or as soon as possible under the circumstances,ifavehicletransportingcannabisitemsisinvolvedinanyaccidentthatinvolves productloss.

9. Companywillprovidetemperaturecontrolforperishablemarijuanaitemsduringtransport.

www.businessname.com 29

10. Company will notify the Department in advance of the location of every stop at an unlicensed locationthatexceedstwohoursindurationandwillmakethevehicleanditscontentsavailable forinspectionupontherequest.

Tracking Solution

CompanyintendstouseMETRC’sseed-to-saletrackingsystemforthecannabiscultivationbusiness, whichallowslicensedoperatorstoremaincompliant:

(A)CustomCompliance-FocusedReporting

(B)TrackWaste,Destruction,AccountforConversionandMoistureLoss

(C) Real-TimeProductandStrainRecalls

(D)EasilyTrackClonesBacktoMothers

(E)TransportManifestswithAllRequiredInfo,includingTransportProductwithEase

(F) Compliance-FocusedLabels

CANNACULTwillalsousespecialseed-tosalestrackingsolutiontohelptoidentifykeydatapointsto streamlineandoptimizeinventorymanagementateachphaseoftheoperation.Thesolutionincludes thefollowingmodules:

Yield Forecasting –Monitoringandanalyzingtheharvestdatatooptimizeforlargeryields.

Grower-Centric –Customizingworkflowstosupporttheweighingofmultipleplantby-products(wet ordry),plusmultipledatacollectionpointsandabilitytogradeproductqualityuponcuring.

Analyze Efforts –MonitoringPesticidesandNutrientsapplied,logStrainNotesdetailinglightand wateringcycles,plusreviewPastHarvestDatatooptimizeyourfutureyields.

BUSINESSNAME/BUSINESSPLAN 30

Structure Ownership

www.businessname.com 31
Structure
Organizational
05

CANNACULTisabusinessthatwillbebuiltonasolidfoundation.Fromtheoutset,wehavedecidedto recruitonlyqualifiedpeopletomanvariousjobpositionsinourcompany.Wearequiteawareofthe rulesandregulationsgoverningthecannabisindustryofwhichmedicalmarijuanagrowingfallsunder whichiswhywedecidedtorecruitexperiencedandqualifyemployeesasfoundationalstaffofthe organization.Wehopetoleverageontheirexpertisetobuildourbusinessbrandtobewellacceptedin theUnitedStates.

ThesearethepositionsthatwillbeavailableatCANNACULT:

BUSINESSNAME/BUSINESSPLAN 32
Table 6. Personnel plan Board HeadCultivator
Maintenance
SalesRepresentatives Position Year 1 Year 2 Year 3 Annual Salary Operating Director 1 1 1 % Master Grower 1 1 1 50,000 Assistant to master grower 1 2 2 45,000 Trimming, per pound 2 3 3 100 Plant maintenance and general labor 3 5 5 90,000 Admin and Logistics Personnel 1 2 2 72,000 Sales & Marketing Personnel 1 1 1 60,000 Security 1 2 2 50,000
Assistant Trimmers/Packagers GeneralManager &General Labor Figure 12. Organizational structure

Training Plans

1. Trainemployeesattimeofhireonbusinessoperationsandcompliance.

2. Trainemployeesregularlyafterhire.

3. Trainingplanandtraininglogwillbeavailableforinspectiononthelicensedpremises.

4. Any person entering data into the Cannabis Tracking System (CTS) first be trained by the CTS administratorforthelicense.

5. AllindividualswillberequiredtohaveavalidMarijuanaWorkerPermitcompletetherequired trainingandmaintaintheirpermitwhileworkingonbehalfoftheLicensee.

Ownership

www.businessname.com 33

Financial Plan

Funding Analyses

Direct and Operating Expenses

Profit & Loss Forecast

Cash Flow Statement

Balance Sheet

Main Ratios

BUSINESSNAME/BUSINESSPLAN 34
06

Funding analysis

Companyintendstoraise$0,000,000for5yearswithROI12%andprofitshare5%.Firstrepayment willstartfrom11th month.

www.businessname.com 35
Long-term Debt 1 2 3 4 5 6 Long-Term Debt Beginning Balance 750,000 750,000 750,000 750,000 750,000 750,000 Long-Term Debt Repayment 0 0 0 0 0 0 Long-Term Debt Ending Balance 750,000 750,000 750,000 750,000 750,000 750,000 ROI 7,500 7,575 7,651 7,727 7,805 7,883 Profit Share (Investors) 0 0 0 0 0 0 Long-term Debt 7 8 9 10 11 12 Long-Term Debt Beginning Balance 750,000 750,000 750,000 750,000 750,000 734,375 Long-Term Debt Repayment 0 0 0 0 15,625 15,625 Long-Term Debt Ending Balance 750,000 750,000 750,000 750,000 734,375 718,750 ROI 7,961 8,041 8,121 8,203 8,128 8,053 Profit Share (Investors) 0 0 0 0 0 0 Long-term Debt 13 14 15 16 17 18 Long-Term Debt Beginning Balance 718,750 703,125 687,500 671,875 656,250 640,625 Long-Term Debt Repayment 15,625 15,625 15,625 15,625 15,625 15,625 Long-Term Debt Ending Balance 703,125 687,500 671,875 656,250 640,625 625,000 ROI 7,978 7,901 7,824 7,746 7,667 7,588 Profit Share (Investors) 0 0 0 0 0 0 Long-term Debt 19 20 21 22 23 24 Long-Term Debt Beginning Balance 625,000 609,375 593,750 578,125 562,500 546,875 Long-Term Debt Repayment 15,625 15,625 15,625 15,625 15,625 15,625 Long-Term Debt Ending Balance 609,375 593,750 578,125 562,500 546,875 531,250 ROI 7,507 7,426 7,344 7,261 7,178 7,093 Profit Share (Investors) 0 0 0 0 0 0 Long-term Debt 25 26 27 28 29 30 Long-Term Debt Beginning Balance 531,250 515,625 500,000 484,375 468,750 453,125 Long-Term Debt Repayment 15,625 15,625 15,625 15,625 15,625 15,625 Long-Term Debt Ending Balance 515,625 500,000 484,375 468,750 453,125 437,500 ROI 7,008 6,922 6,835 6,747 6,658 6,568 Profit Share (Investors) 0 0 0 0 0 0
Table 7. Long-term debt schedule, $
BUSINESSNAME/BUSINESSPLAN 36 Long-term Debt 31 32 33 34 35 36 Long-Term Debt Beginning Balance 437,500 421,875 406,250 390,625 375,000 359,375 Long-Term Debt Repayment 15,625 15,625 15,625 15,625 15,625 15,625 Long-Term Debt Ending Balance 421,875 406,250 390,625 375,000 359,375 343,750 ROI 6,478 6,386 6,294 6,201 6,106 6,011 Profit Share (Investors) 0 0 0 0 0 0 Long-term Debt 37 38 39 40 41 42 Long-Term Debt Beginning Balance 343,750 328,125 312,500 296,875 281,250 265,625 Long-Term Debt Repayment 15,625 15,625 15,625 15,625 15,625 15,625 Long-Term Debt Ending Balance 328,125 312,500 296,875 281,250 265,625 250,000 ROI 5,915 5,818 5,720 5,621 5,521 5,420 Profit Share (Investors) 0 0 0 0 0 0 Long-term Debt 43 44 45 46 47 48 Long-Term Debt Beginning Balance 250,000 234,375 218,750 203,125 187,500 171,875 Long-Term Debt Repayment 15,625 15,625 15,625 15,625 15,625 15,625 Long-Term Debt Ending Balance 234,375 218,750 203,125 187,500 171,875 156,250 ROI 5,318 5,215 5,110 5,005 4,899 4,792 Profit Share (Investors) 0 0 0 0 0 0 Long-term Debt 49 50 51 52 53 54 Long-Term Debt Beginning Balance 156,250 140,625 125,000 109,375 93,750 78,125 Long-Term Debt Repayment 15,625 15,625 15,625 15,625 15,625 15,625 Long-Term Debt Ending Balance 140,625 125,000 109,375 93,750 78,125 62,500 ROI 4,684 4,574 4,464 4,352 4,239 4,125 Profit Share (Investors) 0 0 0 0 0 0 Long-term Debt 55 56 57 58 59 60 Long-Term Debt Beginning Balance 62,500 46,875 31,250 15,625 0 0 Long-Term Debt Repayment 15,625 15,625 15,625 15,625 0 0 Long-Term Debt Ending Balance 46,875 31,250 15,625 0 0 0 ROI 4,010 3,894 3,777 3,658 0 0 Profit Share (Investors) 0 0 0 0 0 0

Direct and Operating Expense Breakdown

www.businessname.com 37
Direct Costs Table 8. Direct costs, $ $ Year 1 Year 2 Year 3 Year 4 Year 5 Cultivation Electricity 322,599 512,339 562,157 568,263 568,263 Cultivation Water 4,788 7,716 8,474 8,572 8,572 Cultivation Labor 150,800 222,040 242,060 243,360 243,360 Growing Solutions 44,505 69,517 76,159 76,888 76,888 Seeds/Clones 4,704 6,321 6,865 6,880 6,880 Trimming & Packaging 3,745 5,909 6,450 6,492 6,492 Transport 9,710 16,993 18,693 18,935 18,935 Lab testing 27,000 44,250 45,000 45,000 45,000 Other Direct Cultivation Costs Grow Light Bulbs 12,960 12,960 15,552 16,848 16,848 Other Supplies 17,280 10,224 11,160 11,232 11,232 Other costs 0 0 0 0 0 Taxes Cultivation Taxes 0 0 0 0 0 Total 598,092 908,270 992,571 1,002,470 1,002,470 Operating Expenses Table 9 Operating costs, $ $ Year 1 Year 2 Year 3 Year 4 Year 5 G&A Expenses - Initial & General Costs Legal Fees & Licensing for setting up 50,000 0 0 0 0 Licensing, renewal 0 25,750 26,500 27,250 28,000 Professional fees, Insurance 93,500 96,305 99,110 101,915 104,720 Other general expenses 0 0 0 0 0 G&A Expenses - Cultivation Building Renting 272,250 305,910 314,820 323,730 332,640 Building Maintenance, including utilities (non-production) 10,083 11,330 11,660 11,990 12,320 Equipment Maintenance 7,563 8,498 8,745 8,993 9,240 Administrative expenses, including phone and internet 17,646 19,828 20,405 20,983 21,560 Inventory Control Systems, Security & Other Software Services 80,667 90,640 93,280 95,920 98,560 Community Service (% of sales) 8,096 14,168 15,585 15,787 15,787 SG&A ExpensesMarketing & Sales Expenses Marketing Expenses, including PR, Branding, Online and Offline advertising 45,833 56,650 58,300 59,950 61,600 Brokers and Sellers Fees 0 0 0 0 0 SG&A Expenses - Misc. 26,782 30,166 31,095 31,963 32,821 Salaries & Benefits 80,255 84,268 88,280 92,293 96,306 TOTAL 692,675 743,512 767,781 790,774 813,555

Profit & Loss Forecast

Business’srevenueisprojectedtogrowsignificantlyforthefirsttwoyears’timeframe.Theyearly projectionsareinthetablebelow:

BUSINESSNAME/BUSINESSPLAN 38
$ YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 Revenue 1,619,209 2,833,616 3,116,978 3,157,458 3,157,458 COGS - Cost of Goods Sold 688,497 1,020,674 1,113,553 1,129,171 1,134,680 Gross Profit 930,712 1,812,943 2,003,424 2,028,287 2,022,778 % of revenue 57% 64% 64% 64% 64% SG&A Expenses G&A Expenses - Initial & General Costs 143,500 122,055 125,610 129,165 132,720 G&A Expenses - Cultivation 396,304 450,373 464,495 477,402 490,107 SG&A ExpensesMarketing & Sales Expenses 45,833 56,650 58,300 59,950 61,600 Senior Management Salaries & Benefits 26,782 30,166 31,095 31,963 32,821 IT Salaries & Benefits 80,255 84,268 88,281 92,293 96,306 Other Salaries & Benefits 0 0 0 0 0 SG&A Expenses - Misc. 0 0 0 0 0 Total SG&A Expenses 692,675 743,512 767,781 790,774 813,555 Operating Income (EBITDA) 238,038 1,069,430 1,235,644 1,237,513 1,209,224 % of revenue 15% 38% 40% 39% 38% Depreciation and Amortization 42,967 46,873 46,873 46,873 46,873 Earnings Before Interest & Taxes (EBIT) 195,071 1,022,557 1,188,771 1,190,640 1,162,350 Interest Expense -94,648 -90,514 -78,213 -64,353 -41,778 Earnings Before Taxes (EBT) 100,422 932,044 1,110,557 1,126,287 1,120,572 Income Tax 277,725 540,982 597,822 605,241 603,597 Net Income -177,302 391,061 512,735 521,046 516,975 % of revenue -11% 14% 16% 17% 16%
Table 10. Income Statement, $

Cash Flow Statement

Thecashflowprojectionsshowthatbusinesswillhavesufficientcashtosupporttheactivity.The followingtablepresentsaviewofprojectedcashflowofthebusiness.

www.businessname.com 39
$ YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 Net Income -177,302 391,061 512,735 521,046 516,975 Cash Flow from Operations Depreciation 42,967 46,873 46,873 46,873 46,873 Change in Receivables -101,201 -20,240 -10,120 0 0 Change in Inventory -46,976 -10,409 -4,470 0 0 Change in Accounts Payable 35,536 7,217 3,364 230 230 Total Cash Flow from Operations -246,976 414,502 548,383 568,149 564,078 Cash Flow from Investing Capital Expenditures (CAPEX) -716,429 0 0 0 0 Other 0 0 0 0 0 Total Cash Flow from Investing -716,429 0 0 0 0 Cash Flow from Financing Revolver Issuance / (Repayment) 0 0 0 0 0 Long-Term Debt Issuance / (Repayment) 718,750 -187,500 -187,500 -187,500 -156,250 Paid in Capital 500,000 0 0 0 0 Drawings (profit share) 0 0 0 0 0 Total Cash Flow from Financing 1,218,750 -187,500 -187,500 -187,500 -156,250 Total Change in Cash 255,345 227,002 360,883 380,649 407,828 Beginning Period Cash 0 255,345 482,347 843,231 1,223,880 Ending Period Cash 255,345 482,347 843,231 1,223,880 1,631,708
Table 11. Cash Flow Statement, $

Balance Sheet

Thebalancesheetshowshealthygrowthofnetworthandstrongfinancialposition.

BUSINESSNAME/BUSINESSPLAN 40
$ YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 Assets Current Assets Cash 255,345 482,347 843,231 1,223,880 1,631,708 Receivables 101,201 121,441 131,561 131,561 131,561 Inventory 46,976 57,386 61,855 61,855 61,855 Total Current Assets 403,522 661,174 1,036,647 1,417,296 1,825,124 Long Term Assets Property Plant & Equipment (PPE), gross 716,429 716,429 716,429 716,429 716,429 Accumulated Depreciation of PPE -42,967 -89,840 -136,714 -183,587 -230,460 PP&E, net 673,462 626,588 579,715 532,842 485,969 Total Assets 1,076,984 1,287,762 1,616,362 1,950,137 2,311,092 Liabilities Current Liabilities Accounts Payable 35,536 42,753 46,117 46,347 46,576 Accrued Expenses 0 0 0 0 0 Total Current Liabilities 35,536 42,753 46,117 46,347 46,576 Long Term Liabilities 718,750 531,250 343,750 156,250 0 Total Liabilities 754,286 574,003 389,867 202,597 46,576 Equity Paid-in Capital/Drawings 500,000 500,000 500,000 500,000 500,000 Retained Earnings -177,302 213,759 726,495 1,247,541 1,764,516 Current Period Retained Earnings 322,698 713,759 1,226,495 1,747,541 2,264,516 Total Equity 322,698 713,759 1,226,495 1,747,541 2,264,516 Total Liabilities and Equity 1,076,984 1,287,762 1,616,362 1,950,137 2,311,092
Table 12. Balance Sheet, $

Main Ratios

Thereturnonequityratio(ROE)measureshowmuchtheownerandinvestorsearnfortheir investmentinthecompany.Thehighertheratiopercentage,thebetterreturnis.Ingeneral,financial analystsconsiderreturnonequityratiosinthe15-20%rangeasrepresentingattractivelevelsof investmentquality.AswecanseeROE(DuPont)forourprojectishigheranddrawup23%.

Returnonassets(ROA)givesanideaastohowefficientmanagementisatusingitsassetstogenerate earnings.

Profitabilityratiosareaclassoffinancialmetricsthatareusedtoassessabusiness'sabilitytogenerate earningsascomparedtoitsexpensesandotherrelevantcostsincurredduringaspecificperiodoftime.

www.businessname.com 41
Ratio Analysis Year 2 Year 3 Year 4 Year 5 Avg. (2-5 years) Return on Equity 75.5% 52.9% 35.0% 25.8% 47.3% Return on Assets 27.7% 31.5% 26.7% 22.9% 27.2% Financial Leverage 2.28 1.50 1.20 1.06 1.51 Correction Factor 1.19 1.12 1.09 1.06 1.12 Return on Assets Return on Sales 11.6% 14.7% 15.1% 15.4% 14.2% Asset turnover 2.40 2.15 1.77 1.48 1.95 Profitability Gross margin 64.0% 64.3% 64.2% 64.1% 64.1% SG&A as % of Sales 26.2% 24.6% 25.0% 25.8% 25.4% Operating Margin 36.1% 38.1% 37.7% 36.8% 37.2% Interest Expense as % of Sales 3.2% 2.5% 2.0% 1.3% 2.3% Effective Tax Rate 58.0% 53.8% 53.7% 53.9% 54.9% Asset Turnover Ratios Accounts Receivable Turnover 25.5 24.6 24.0 24.0 24.5 Inventory Turnover 19.6 18.7 18.3 18.3 18.7 Accounts Payable Turnover 26.3 25.2 24.4 24.4 25.1 Fixed Asset Turnover 4.4 5.2 5.7 6.2 5.4 Days Turnover Ratios Days Receivables 14.3 14.8 15.2 15.2 14.9 Days Inventory 18.7 19.5 20.0 19.9 19.5 Days Payables 13.9 14.5 14.9 14.9 14.6 Net Trade Cycle 19.1 19.8 20.3 20.2 19.9
Table 13. Main Ratios for five years
BUSINESSNAME/BUSINESSPLAN 42 Liquidity Analysis Solvency Ratio 0.76 1.44 2.80 12.11 4.3 Current Ratio 15.46 22.48 30.58 39.19 26.9 Quick Ratio 14.12 21.14 29.25 37.86 25.6 CFO-to-Current Liabilities 10.59 12.34 12.29 12.14 11.8 Interest Coverage 11.82 15.80 19.23 28.94 18.9 Cash Interest Coverage 11.56 15.65 19.23 28.95 18.8 DuPont Analyses Net Profit Margin 14% 16% 17% 16% 16% Asset Turnover 2.20 1.93 1.62 1.37 1.78 Equity Multiplier 1.80 1.32 1.12 1.02 1.31 DuPont Return on Equity 55% 42% 30% 23% 37%
www.businessname.com 43 Appendix 07

Cultivation Site Description.Ageneraldescriptionoftheproposedcultivationsite,includingthe streetaddress,parcelnumber,thetotalsquarefootageofthesite,thetotalsquarefootageofmarijuana canopy,andthecharacteristicsofthesurroundingarea.

Floor plan. Ascaledfloorplanforeachlevelofeachbuildingthatmakesupthecultivationsite, includingtheentrances,exits,walls,andcultivationareas.Thefloorplanmustbeprofessionally preparedbyalicensedcivilengineerorarchitect.

Site plan. Ascaledsiteplanofthecultivationsite,includingallbuildings,structures,driveways,parking lots,landscapeareas,andboundaries.Thesiteplanmustbeprofessionallypreparedbyalicensedcivil engineerorarchitect.

Acultivationsiteshallcomplywiththefollowingrequirements:

A.Entrances.Allentrancesintothebuildingsonthecultivationsiteshallbelockedatalltimeswith entrycontrolledbythemarijuanacultivationmanagersandstaff.

B.Mainentranceandlobby.Thecultivationsiteshallhaveabuildingwithamainentrancethatis clearlyvisiblefromthepublicstreetorsidewalk.Themainentranceshallbemaintainedclearof barriers,landscaping,andotherobstructions.Insideofthemainentrance,thereshallbealobbyto receivepersonsintothesiteandtoverifywhethertheyareallowedinthecultivationareas.

C.Cultivationarea.Allcultivationareasinanybuildingonthecultivationsiteshallbeseparatedfrom themainentranceandlobbyandshallbesecuredbyalockaccessibleonlytomanagersandstaffofthe marijuanacultivationpermittee.

D.Transportarea.Eachbuildingwithacultivationareashallhaveanareadesignedforthesecure transferofmarijuanafromthecultivationareatoavehiclefortransportation.

E.Storagearea.Eachbuildingwithacultivationareashallhaveadequatestoragespaceformarijuana thathascompletedthecultivationprocessorisotherwisenotbeingcultivated.Thestorageareasshall beseparatedfromthemainentranceandlobbyandshallbesecuredbyalockaccessibleonlyto managersandstaffofthemarijuanacultivationpermittee.

Security plan. Adetailedsecurityplanoutliningthemeasuresthatwillbetakentoensurethesafetyof personsandpropertyonthecultivationsite.Thesecurityplanmustbepreparedbyaqualified professional.

Acultivationsiteshallcomplywiththefollowingsecurityrequirements:

A.Amarijuanacultivationpermitteeshallcomplywiththesecurityplanthatisapprovedbythecity manager,whichplanmayincludebuildingspecifications,lighting,alarms,andstate-licensedsecurity personnel.

B.Eachsecurityplanapprovedbythecitymanagermustincludethefollowing:

1.Securitysurveillancecameras.Securitysurveillancecamerasandavideorecordingsystemmustbe installedtomonitoralldoorsintothebuildingsonthecultivationsite,theparkinglot,loadingareas, andallexteriorsidesofthepropertyadjacenttothepublicrightsofway.Thecamerasandrecording systemmustbeofadequatequality,colorrendition,andresolutiontoallowtheidentificationofany

BUSINESSNAME/BUSINESSPLAN 44

individualpresentonthecultivationsite.Therecordingsystemmustbecapableofexportingthe recordedvideoinstandardMPEGformatstoanothercommonmedium,suchasaDVDorUSBdrive.

2.Securityvideorecordingandretention.Videofromthesecuritysurveillancecamerasmustbe recordingatalltimes(24hoursaday,sevendaysaweek)andtherecordingshallbemaintainedforat least30days.Thevideorecordingsshallbemadeavailabletothecityuponrequest.

3.Alarmsystem.Professionallyandcentrally-monitoredfire,robbery,andburglaralarmsystemsmust beinstalledandmaintainedingoodworkingcondition.Thealarmsystemmustincludeaprivate securitycompanythatisrequiredtorespondtoeveryalarm.

C.Amarijuanacultivationpermitteeshallreporttothecitypolicedepartmentallcriminalactivity occurringonthecultivationsite.

Lighting plan. Alightingplanshowingexistingandproposedexteriorandinteriorlightsthatwill provideadequatesecuritylightingfortheuse.

Odor control. Adetailedplandescribingtheairtreatmentsystem,orothermethodsthatwillbe implementedtopreventodorsgeneratedfromthecultivationandstorageofmarijuanafrombeing detectedoutsidethebuildingsonthecultivationsite.

Amarijuanacultivationpermitteeshallpreventallodorsgeneratedfromthecultivationandstorageof marijuanafromescapingfromthebuildingsonthecultivationsite,suchthattheodorcannotbe detectedbyareasonablepersonofnormalsensitivityoutsidethebuildings.

Compliance with the Planning and Development Code. Acopyofavalidconditionalusepermit approvedbythecityfortheproposedlocation.

Statement of owner’s consent. Writtenconsentoftheownerorlandlordoftheproposedsiteto operateamarijuanacultivationbusiness,specifyingthestreetaddressandparcelnumber.

Price list. Alistofthemostrecentpricesforallproductsandservicesprovidedbytheapplicant.

www.businessname.com 45

Turn static files into dynamic content formats.

Create a flipbook
Issuu converts static files into: digital portfolios, online yearbooks, online catalogs, digital photo albums and more. Sign up and create your flipbook.