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Cannabis Investment Report | December 28, 2017 Foreword Ackrell Capital is pleased to present our 2018 Cannabis Investment Report. Much has happened in the nearly two years since we published our inaugural report: the cannabis industry grew significantly, com- panies in the industry raised large amounts of capital and their stock prices performed well, and the legal- ization movement continued worldwide as more countries and U.S. states implemented a framework for legal cannabis access. There was also a presidential election in the United States; its ultimate impact on the cannabis industry remains uncertain. What did not happen since we launched our inaugural report? Federal legalization: “marijuana” continues to be classified as a Schedule I controlled substance under the Controlled Substances Act in the United States. In this new edition, we introduce an outlook on global cannabis markets, analyze capital markets for cannabis companies and present updated market estimates. We also expand on the first edition by providing more in-depth analyses of the various market segments within—and analyzing the legal issues pertinent to—the cannabis industry. The Zop 100 Private Cannabis Companies list has been updated and our industry landscape, The Green Field, has been updated and expanded to include more than 500 companies. Cannabis legalization has accelerated domestically and internationally. In the 2016 U.S. elections, four states, including California, legalized recreational cannabis (bringing the total number of states with recre- ational laws to eight) and an additional four states legalized medical cannabis. Cannabis use is now state- legal in some form in 46 states. In January 2018, California will implement its recreational law, making it the largest market globally for the recreational use of cannabis. Similarly, Canada is expected to pass its recreational law in mid-2018. And in 2017, Germany became the most populous country in the world to pass a medical cannabis law. Cannabis has mass consumer appeal around the world. (According to the United Nations, more than 180 million people per year use cannabis and it is the most-consumed drug worldwide). While it is clear that there is significant demand for cannabis, less clear is how quickly illegal markets will transition to legal markets, as well as the extent to which legalization may increase overall demand. We continue to believe that it is a question of when—not if—the U.S. federal prohibition on cannabis will end. We believe that a path toward federal legalization exists and we believe this process has com- menced. According to Gallup, 64% of Americans today believe that cannabis use should be legal. Who is the cannabis consumer? It is the 80-year-old cancer patient ingesting cannabis to treat side effects of chemotherapy. It is the 12-year-old child using cannabis extracts on a doctor's recommendation to reduce epileptic seizures. It is the 30-something mother or father seeking to relax after a full day. It is a group of 20-year-olds on a Friday night heading to a concert. It is the millions of people suffering from anxiety and depression. It is the millions of people treating chronic pain and nausea. It is the millions of people using cannabis recreationally. Our team has met with more than 1,000 companies in the cannabis industry. We understand the oppor- tunities and challenges facing the industry, and we are happy to provide our insights. Sincerely, The Ackrell Capital Cannabis Team © 2017 Ackrell Capital, LLC | Member FINRA/SIPC HOUSE_OVERSIGHT_024635