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A CKREL LE CAPITAL Cannabis Investment Report | December 2017 Production Equipment and Supplies Production equipment and supplies include the physical components used in cannabis production. Many industry participants in this subsegment provide products to a broad range of fully legal indus- tries and do not “touch the plant’; therefore, these participants typically do not require special cannabis- related licenses and generally avoid legal risks related to violations of federal law. Some components of cannabis production are similar or identical to components used in other agricultural industries (such as irrigation systems), and some are specialized for application to the cannabis industry (such as extraction machines). Components supplied for many indoor and green- house cultivation facilities include electrical lighting equipment, air filtration and circulation systems, irrigation systems, nutrient management systems, drying and curing equipment, and computer- controlled automation and monitoring systems. Specialty cannabis equipment companies now provide “all-in-one” automated indoor cultivation systems that can be used for in-home cultivation or scaled for commercial purposes. Extraction System Cultivation System Production and Testing Services Production services include cannabis extraction and product manufacturing services provided primar- ily on a business-to-business basis to cultivators, consumer product companies and retail dispensaries. Extraction companies invest in specialized equipment that transforms cannabis flower into concen- trates intended for wholesale. Product manufacturing services companies process cannabis flower or concentrates, or provide packaging and wholesale services. Testing services include scientific testing of cannabis products and reporting of information about product quality, safety and composition. Cannabis products are tested at multiple stages of pro- duction for genetic information and strain verification, cannabinoid and terpene composition and 36 © 2017 Ackrell Capital, LLC | Member FINRA/SIPC HOUSE_OVERSIGHT_024672