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KR L PI L AC BL CA TA CHAPTER Ill Cannabis Industry Segmentation = Consumer Products Cannabis may be consumed in many different forms, which fall into three broad categories: flower, concentrates and infused products. The most popular way to consume cannabis historically has been to smoke the flower or “bud” from the cannabis plant, which can be done using a pipe, a hand-rolled cigarette (often referred to as a “joint”) or a water pipe (often referred to as a “bong”). Cannabis flower can also be vaporized and inhaled (using a product known as a “vaporizer”). The active compounds in cannabis can be extracted and concentrated into oil or waxlike substances known as concentrates. Concentrates, in turn, can either be vaporized and inhaled or infused into products known as “infused products.” Infused products may be applied topically, such as lotions and creams, or consumed orally, such as food and drinks (known as “edibles”), capsules, pills and tinctures. When smoke or vapor from heated flower or a concentrate is inhaled, the active compounds travel directly to the central nervous system and the physiological effects typically begin within one to five minutes. When infused products are consumed orally, the active compounds are digested in the stom- ach and metabolized by the liver before taking effect, typically in one to two hours. Compared. to inhaled products, infused products deliver a smaller relative amount of cannabinoids to the blood- stream, but they produce longer-lasting effects. Innovative companies continue to expand the universe of cannabis products, developing brands with packaging that increasingly emphasizes education about the product’s effects and appeals to main- stream consumers. Cannabis flower is currently the most widely sold form of cannabis, but concen- trates and infused products are gaining in popularity. The following chart shows the combined relative sales by product category for Colorado, Oregon and Washington (three states with relatively mature recreational and medical cannabis markets) for the three months ended September 30, 2017. Product Sales by Category: Q3 2017 14% A L | i Flower @ Concentrates § Edibles i Other 51% Source: BDS Analytics © 2017 Ackrell Capital, LLC | Member FINRA/SIPC 45 HOUSE_OVERSIGHT_024681