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CHAPTER VII Capital Markets for Cannabis Companies Capital Raised by Publicly Traded Cannabis-Related Companies (LTM ended September 30, 2017) $1600 $1400 $1200 $1000 $800 (SU.S. millions) $600 $400 $200 $0 Canada United States Australia Total Amount Raised $1056 $268 $26 $1350 Number of Deals 60 15 3 78 Average Deal Size $18 $18 $9 $17 Source: S&P Global Market Intelligence. In December 2017, a $317 million financing was completed by GW Pharmaceuticals (Nasdaq: GWPH), but the transaction occurred outside the date range of the analysis. Due to the size of the transaction, it is worth noting here. = Public Capital Markets: United States As of November 30, 2017, four cannabis-related companies were trading on Nasdaq (all in the phar- maceutical industry and focused on receiving FDA approval for selected cannabinoid applications), one was trading on the NYSE (a real estate investment trust, or REIT, focused on the acquisition and management of properties leased to state-licensed operators for their regulated medical-use cannabis facilities), two were trading on the NYSE American (both in the pharmaceutical industry) and more than 200 cannabis-related companies were trading on the OTC, Most of the companies trading on the OTC (i) are “penny” stocks that trade at less than $5.00 per share, (ii) have limited trading volume and liquidity, (iii) have significant price volatility, and (iv) have little or no institutional investor support. The U.S. Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) have historically expressed concerns regarding the “penny” stock industry in general and both have issued alerts to warn investors about potential scams associated with purported cannabis-related stocks. In addition, the SEC has initiated actions against numerous purported cannabis-related companies and executives for fraud, insider trading, stock manipulation and other activities. The following table provides a summary of cannabis-related companies traded on the U.S. stock markets. © 2017 Ackrell Capital, LLC | Member FINRA/SIPC 121 HOUSE_OVERSIGHT_024757