HOUSE_OVERSIGHT_024667.jpg

CHAPTER Ill Cannabis Industry Segmentation The nascent cannabis industry is often viewed by investors and others as a single, homogeneous indus- try, in much the same way the “technology” industry was viewed in the early 1990s. As the technology industry became more important to the global economy and was better understood by the investment community, however, investment banks and other industry analysts tracked an increasing number of discrete yet related industry segments. In the cannabis industry we are seeing a similar trend, which we expect to continue as the industry evolves. To help investors better evaluate investment opportunities in the cannabis industry, we currently define five primary segments: production, distribution, consumer products, business solutions and digital media. We further divide each segment into multiple subsegments. Each segment has unique opportunities and risks. For example, companies that possess, manufacture or distribute cannabis (commonly known as “touching the plant”) face risks related to violating federal law—and state-law compliance obligations—not generally faced by providers of business software or digital media con- tent. Many businesses operate in multiple segments, and we expect industry leaders to emerge in each segment. The five primary segments and their subsegments are illustrated in the following chart. © 2017 Ackrell Capital, LLC | Member FINRA/SIPC 31 HOUSE_OVERSIGHT_024667