MAJOR TOPICS: •Industry overview •Regulatory landscape •Valuation methodologies and metrics •Tax issues in the Cannabis industry •Transactional trends in the industry – M&A and financings

1. Moderator: Alexander B. Kasdan, Senior Managing Director, DelMorgan & Co.
Panel:
• Vanita K. Spaulding, CFS, ASA, Managing Director, Cogent Valuation
• Michael Goral, Partner in Charge Cannabis Practice, Squar Milner
• Emily Burns, Cannabis Law & Policy Expert, Attorney, Offit Kurman
• Eric Foster, Partner, Dentons Canada LLP
© Copyright 2018 Expert Webcast – All Rights Reserved
CANNABIS VALUATION, M&AAND TAX ISSUES
May 9, 2018

2. 1
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3. 2
MODERATOR: Alex Kasdan, Senior Managing Director, DelMorgan &
Co., brings more than twenty-five years of senior-level Wall Street advice to
middle market companies, entrepreneurs and institutional investors. He has
extensive experience in investment banking, corporate law and restructuring at
world’s leading firms, including Credit Suisse First Boston, O’Sullivan Graev &
Karabell LLP (now O'Melveny & Myers LLP), Battle Fowler LLP (now Paul
Hastings LLP) and Schlumberger Ltd., and as a founding partner of
Convergence Capital Partners. Alex has worked on more than 100 domestic and
cross-border transactions in North America, Europe and Africa.
Alex is a Senior Advisor to Governance and Transactions LLC, an advisory firm
established in 2003 by Mr. James L. Gunderson, former Secretary and General
Counsel of Schlumberger Limited, to assist boards, management and owners
with corporate governance, compliance, structuring and strategic transactions.
Alex is a frequent moderator and an interviewer at Expert Webcast roundtable
discussions attracting business leaders and leading professionals from around
the world.
Alex graduated magna cum laude from Middlebury College with a B.A. degree
in Economics and Italian and was elected to Phi Beta Kappa during his junior
year. In addition, he holds a J.D. degree from Columbia University Law School
and has studied at the University of Florence in Italy.
100 Wilshire Blvd.
Suite 750
Santa Monica, CA 90401
+1 310 980 1718 mobile
+1 310 935 3826 office
ak@delmorganco.com
www.delmorganco.com

4. 3
Speaker: Vanita K. Spaulding, CFA, ASA is a Managing Director
at Cogent Valuation’s Los Angeles office, providing valuation services to
local, national and multinational corporations, private equity firms,
attorneys, not-for-profit institutions, fiduciaries and individuals. Vanita is a
is a recognized cannabis industry valuation expert.
She has provided professional business valuation and related financial
advisory services full-time since 1982, has provided and/or managed over
1,500 valuation engagements involving companies ranging in size from
small closely held companies with under $1 million in revenue to
multinational, publicly traded companies with revenues in the tens of
billions, in virtually all major industries. The purposes for such
engagements include financial reporting and compliance, mergers and
acquisitions (including fairness and solvency opinions), corporate
restructuring, leveraged buyouts, equity investments in early stage
companies, estate and tax planning, employee stock ownership plan (ESOP)
transactions, and litigation support. She has provided expert testimony in
various courts in California as well as providing testimony before members
of the American Arbitration Association.
Ms. Spaulding holds a Bachelor of Science degree and an M.B.A. with an
emphasis in finance from California State University, Northridge. She is an
Accredited Senior Appraiser with the American Society of Appraisers in
Business Valuation and is a Chartered Financial Analyst.
Warner Center Towers
21700 Oxnard Street
Suite 1080
Woodland Hills, CA 91367
C:310.991.0960
O: 818.905.8330
Vanita@cogentvaluation.com

5. 4
Panelist: Mike Goral is Partner in Charge Cannabis Practice at Squar Milner. He
is responsible for all accounting issues for the firm’s cannabis clients.
With over 25 years of experience pertaining to federal, state and local tax matters, Mike
has worked with both large and small cannabis companies. This experience includes
cannabis companies located throughout California as well as other states such as
Washington, Oregon, Nevada and Colorado. Recently with the legalization of cannabis
in Canada, Mike is taking larger cannabis clients public on the TSX Canadian Stock
Exchange. In addition, Mike has extensive experience defending cannabis clients in
federal and state tax matters including one case involving the IRS where he helped
reduce a $1 million dollar assessment to approximately $80,000. During his tenure at
both Big 4 and regional accounting firms, Mr. Goral has drafted state tax legislation and
even written briefs to the U.S. Supreme Court.
Mike’s cannabis industry experience includes: everything from seed to dispensary
cannabis matters as well as cannabis business issues involving complex funding
mechanisms from private equity and venture capital funds and investment banking; loan
structuring, mergers and acquisitions; technology used in cannabis businesses including
software, cloud-based apps, SaaS, licensing; as well as manufacturing, transportation,
retailing and real estate matters.
Mr. Goral is recognized as an expert and frequent, sought-after speaker on various
cannabis topics. Mr. Goral has been published in numerous legal and business tax
publications. He holds a Masters of Tax Law from Emory Law School, a J.D. from
Cumberland Law and a B.S. from University of Alabama.
1111 Santa Monica Blvd.
Suite 800
Los Angeles, CA 90025
United States
310.826.4474
mgoral@squarmilner.com
www.squarmilner.com

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Panelist: Emily Burns is an attorney at Offit Kurman in Baltimore. She became
passionate about pursuing a legal career in the cannabis industry while attending
Vanderbilt Law School, as she had the opportunity to enroll in one of the nation's first
Marijuana Law and Policy courses, taught by leading marijuana law and policy scholar,
Professor Robert Mikos. She also assisted with writing a first-of-its-kind casebook
entitled, “Marijuana Law, Policy, and Authority,” acquiring in-depth knowledge of the
various state regulations governing cannabis consumers, producers, and other third
parties.
Prior to joining Offit Kurman, Ms. Burns was as an associate attorney at a boutique
marijuana business law firm located in Portland, Oregon. Her work ranged from helping
clients navigate Canadian and US laws governing cross-border securities transactions,
including those involving marijuana-related businesses, to preparing written testimony
for local land use hearings on behalf of individuals seeking OLCC processor licenses,
and drafting FDA-compliant disclaimers for CBD and Industrial-Hemp-derived
products in the absence of specific FDA guidance on the issue. Ms. Burns has also
completed a postdoctoral fellowship at the University of Maryland School of Law,
where her work focused on the regulation of cannabis and tobacco in the context of
public health policy.
In addition to her cannabis-related work, Ms. Burns has extensive knowledge of legal
and policy issues related to climate change, renewable energy generation, and general
environmental matters. Emily holds a J.D. from Vanderbilt University Law School, J.D.
(Honors Scholar), a Postdoctoral Fellowship from University of Maryland School of
Law, and a B.A. in Public Policy and minor in Political Science (Summa Cum Laude)
from St. Mary’s College of Maryland.
300 East Lombard Street
Suite 2010
Baltimore , MD 21202
410.209.6454
eburns@offitkurman.com
www.offitkurman.com

7. 6
Panelist: Eric Foster is a Partner at Dentons Canada LLP. He regularly
advises clients in the cannabis industry and is a leader of Dentons’ Canadian
and global cannabis practice.
Eric’s practice focuses on corporate finance, mergers and acquisitions,
regulatory compliance and corporate governance. He routinely acts as
counsel to both public and private issuers and securities dealers, with a
particular focus on the cannabis, life sciences and technology sectors. He
advises issuers, securities dealers and institutional investors on a wide range
of financing transactions, including IPOs, secondary offerings and other
forms of equity and debt financing. Eric has recently advised on bought deal
public offerings by several Canadian licensed cannabis producers, including
the first Canada/US cross-border public offering of securities by a cannabis
company. Eric is currently working with several Canadian and U.S.
cannabis companies in connection with their going public transactions and
also assists licensed producers and other cannabis industry stakeholders with
commercial agreements including cannabis royalty agreements, cannabis
offtake agreements, services agreements and licensing arrangements.
Eric graduated from Rotman School of Management, University of Toronto,
Business Leadership Program, received a Certificate in Mining Law from
Osgoode Hall Law School, and holds an LLB and an Honours B.A. (with
distinction) from University of Western Ontario.
77 King Street West
Suite 400,
Toronto-Dominion Centre
Toronto, ON M5K 0A1
Canada
D + 1 416 863 4462
M +1 416 558 3531
eric.foster@dentons.com
www.dentons.com

8. 7
MAJOR TOPICS
• Industry overview
• Regulatory landscape
• Valuation methodologies and metrics
• Tax issues in the Cannabis industry
• Transactional trends in the industry – M&A and
financings
• Overview of Canada markets
• Industry outlook

9. 8
Los Angeles l Newport Beach l San Diego l Encino l Cayman Islands
San Francisco l San Mateo l Oakland l Silicon Valley

10. 9
Cannabis Tax Issues
Federal Tax Issues
• Schedule I drug
• IRC Section 280E
• CHAMP & Olive Cases
• Tax Cuts and Jobs Act (P.L. 115-97)
California Tax Issues

11. 10
Federal Tax Issues
• All forms of cannabis are considered a
Schedule I controlled substance under the
Federal Controlled Substance Act
• All income from cannabis activity are subject
to tax
• IRC 280E- limits deductions for cannabis
companies to only Cost of Goods Sold
expenses.

12. 11
Federal Tax Issues
COGS
a. IRC Section 471
b. IRC Section 263A – The Uniform
Capitalization Rules (UNICAP)

13. 12
Federal Tax Issues
Olive
a. Only COGS allowed
b. Poor facts with a lack of records in this
case
CHAMP (2007)
a. COGS allowed for medical marijuana
b. All costs for caregiving services are
deductible
Several more recent cases on appeal in Colorado

14. 13
Tax Cuts and Jobs Act
• C- Corp v. Partnership or S Corporation
• IRC Section 199A- 20% deduction for qualified
business income.

15. 14
California Tax Issues
Three separate types of taxes imposed
• Cannabis cultivation $1.29-$9.25 based on
weight and type of raw cannabis
• Excise Tax – 25% but medical exempt
• Sales Tax – 7.25% to 9.5%
• City Business Tax- approximately 6%

16. 15

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Few industries present more complex legal issues than the legal cannabis industry. In Canada, as a
result of the 2016 Access to Cannabis for Medical Purposes Regulations (ACMPR) and the anticipated
enactment of the Cannabis Act with respect to the legalization of recreational cannabis, the cannabis
industry is rapidly expanding and evolving.
The shift from prohibition to cautious legalization is creating opportunities not just for producers of
cannabis, but for a wide range of supporting and spin-off industries.
Legalization in Canada and the associated influx of investment capital is a springboard for opportunities
beyond Canada’s borders, in established and emerging legal cannabis markets. Canadian first-movers
are already becoming key players in the global cannabis industry. At the same time, cannabis producers
from the United States, South America and abroad are seeking access to the Canadian capital markets.
This sector is booming.
You have expertise, ideas, energy. You need representation, bench strength, guidance and clout.
We are your partner.
2
The industry landscape

18. 17
With Dentons you get more than a cursory understanding of the
industry; you get in-depth analysis and a micro-level understanding
of the issues and legislation to help you better navigate the
complexities of this booming industry.
• Already primary counsel for some of the largest producers and
distributors in North America and around the world
• Multi-practice expertise and specialization in:
• Legal, regulatory and financial considerations specific to the
cannabis industry
• Private and public financings
• Corporate transactions, including reverse takeovers
• Industry specific commercial agreements such as cannabis
offtake, cannabis royalty and licensing agreements
• Federal and provincial/state regulatory compliance
• Intellectual property and licensing
• Real estate
• Cross-border and domestic tax structuring
• Employment law
• In-depth understanding of the requirements of Canadian
companies that have financial interests, investments and
legislative considerations across borders and over continents
3
Why Dentons

19. 18
• Cultivation and production licensing: We work with clients in multiple provinces, states and countries
on cultivation, production and operating license applications and all related regulatory considerations
• Going-public transactions and financings: We work with some of Canada’s leading licensed producers
and industry participants on their going-public transactions and financing activities. We have also
counseled US cannabis business on going-public transactions in Canada
• M&A and Commercial Transactions: We counsel leading Canadian producers on international
acquisitions of distribution and patient aggregation targets. We also assist cannabis companies with their
complex commercial agreements, including cannabis offtake and royalty agreements, services
agreements, cannabis supply agreements and licensing agreements
• Distribution and marketing: We have deep technology, privacy and consumer protection expertise to
assist with the distribution and marketing platforms for cannabis and related products and services
• Real estate: We counsel producers and applicants on their real estate acquisitions, facility construction
and zoning matters
• Clinical trials: We counsel clients on all aspects of their clinical trials, including negotiating trial
agreements and all related procurement agreements
4
A diverse portfolio of experience

20. 19
Canopy Growth Corporation
• Regulatory advice
• Legislation and dispute risk
analysis
• Cross-border corporate
transactions, including the
acquisition of licensed entities in
Canada and Europe
• Licensing agreements and joint-
venture agreements
5
Cronos Group Inc.
• Counsel to underwriters for $100M
cross-border bought deal offering
• $15M bought deal offering
• $17.3M bought deal offering
• Regulatory, employment and
labour counsel
Emblem Corp.
• $54M bought deal unit and
debenture offering
• $28.8M bought deal unit offering
• General corporate, regulatory, real
estate and construction counsel
• Cannabis supply agreements
Green House Seed Co.
• Acquisition of a significant interest
and operational control of
Agripharm Corp.
• Cannabis offtake agreement and
cannabis royalty agreement
• Licensing agreements for
cannabis brands and genetics
Fire Cannabis Inc. d/b/a SLANG
• $16.4M private placement of
special warrants
• General corporate and regulatory
counsel
• Licensing agreements for
cannabis brands and genetics
DoseCann Inc.
• $38M sale to Cannabis Wheaton
• $7.5M private placement of
convertible debenture units
• General corporate and regulatory
counsel
Gene Simmons
• Counsel to Rock ‘n’ Roll Hall of
Famer in connection with his
appointment as Chief Evangelist
Officer of Invictus MD Strategies
Corp.
• Management services and
licensing agreements
Ample Organics
• General corporate counsel
• Counsel in connection with private
placement financing
• Licensing agreements
Strainprint Technologies Ltd.
• General corporate counsel
• Counsel in connection with private
placement financing
• Licensed producer
• Canadian corporate and
regulatory counsel
Fire & Flower Cannabis Co.
• General corporate and regulatory
counsel
• Provincial licensing for retail
cannabis distribution
• Cannabis supply agreements
Greenlane
• Canadian corporate and
regulatory counsel
• Supply and other commercial
agreements for vaporizers and
premium cannabis products
Avicanna Inc.
• General corporate and regulatory
counsel
• Counsel in connection with private
placement financing
• Intellectual property licensing and
protection
• Acquisition of cannabis licenses in
Colombia
Snapshot of our experience in the cannabis industry

21. 20
6
Unrivalled geographic footprint to support the
industry around the world
Dentons is the world's largest law
firm and is a leader on the Acritas
Global Elite Brand Index. These
include our Nextlaw Global
Referral Network locations.
We are your one-stop shop
for the cannabis industry
anywhere you do business in
the world.
We understand the Canadian, US
and European regulatory
landscape and employ a global
team of specialists who provide
thought leadership around the
world. The world’s largest companies choose Dentons
83 117 146 152
Of the 200 largest companies in the world Dentons represented:
2013 2014 2015 2016
160
2017

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7
Eric Foster
Partner, Toronto
D +1 416 863 4462
E eric.foster@dentons.com
James Wishart
Partner, Ottawa
D +1 613 783 9651
E james.wishart@dentons.com
Scott Rozansky
Partner, Montreal
D +1 514 878 5866
E scott.rozansky@dentons.com
Kris Miks
Partner, Toronto
D +1 416 863 4473
E kris.miks@dentons.com
Key contacts
Canada
Kathryn Ashton
Partner, Chicago
D +1 312 876 3157
E kathryn.ashton@dentons.com
US
Peter Homberg
Partner, Frankfurt
D +49 69 45 00 12 311
E peter.homberg@dentons.com
Europe
Santiago Gonzalez
Partner, Bogotá
D +57 1 746 7000
E santiago.gonzalez@dentons.com
South America

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