The document summarizes The CannaBiz Report, which provides information on the emerging cannabis industry and issues surrounding public and private financing of cannabis companies. It covers many industries that support cannabis like real estate, agriculture, and banking. The legal cannabis market is estimated to be worth $1.53 billion currently and projected to reach $10.2 billion by 2018, though estimates vary. While some companies operate in cannabis-related businesses, none have conducted a traditional IPO due to cannabis being illegal federally. The SEC registration process provides disclosure on difficulties completing registration while operating in this industry.

1. Presenting:
TheCANNABIZReport
Reporting On The Business And Finance Of
The Cannabis Industry
Editor In Chief of The CannaBiz Report: Richard A. Friedman
Richard A. Friedman is also the Managing Partner of Sichenzia Ross Friedman Ference LLP, a NY-based Corporate and
Securitieslaw firm.

2. Report Overview
The CannaBiz Report is designed to provide public information regarding the
emerging cannabis industry, as well as issues surrounding public and private financing of
companies to anyone interested in this space.
It was created to cover the issues surrounding the business and finance of
cannabis against the backdrop of legal and other issues. The Report covers not only
medical and healthcare companies – it involves a number of industries – from travel and
tourism to lighting,real estate, agriculture, technology, e-commerce, banking and security.

3. Reasons for the Increase
in Interest in this Industry
• Economics Issues
– Growth Opportunity
– Need for supporting and ancillaryservices, productsand businesses
– Opportunityfor innovation
• Unique Legal Issues – Federal vs. State Law issues
• Medical Use Issues
• Increased Awareness - Rise in publications, websites, blogs, news reporting,
television series and stories covering these issues – Including coverage by
CNBC, CNN, 20/20 and 60 Minutes

4. Industry Estimates
• A November 2013 report from ArcView Market Research, a San Francisco-based investor group
focused on the marijuana industry, indicates that the amount the national legal marijuana market is
worth $1.53 billion, and that the estimated amount the national legal marijuana market will be worth
$10.2 billion in 2018.
• A 2011 Report sponsored by the American Cannabis Research Institute and published by Deal Flow,
indicates that the national market for medical marijuana was worth $1.7 Billionin 2011 and will be up
to $8.9 Billion by 2016.
• Other estimates have placed the size of the industry at $1.5 Billionin 2013, $2.6 Billion in 2014, and up
to $35 Billionby 2020.
• According to a December 2006 Report published by Jon Gettman and The Bulletin of Cannabis
Reform, American marijuana farmers grew 22.3 million pounds of marijuana in 2006 with a value of
$35.8 billion.
• Current reported revenue of the NFL was approximately $10 Billionin 2013 and the current state of the
US journal and publishing industry is estimated to be approximately $27 Billion.

5. Industries Involved and Need for Capital
Beyond medical and healthcare issues, the cannabis industry covers a
number of industries – from travel and tourism to lighting, real estate, agriculture,
technology, e-commerce, banking and security. It has even spread to Apps!
The cannabis debate and industry in the US has been evolving over a
number of years. However, recently, we have seen an increased awareness and
excitement, unlike most anything we have seen before. As laws continue to change
on a state by state basis, the need for supporting businesses and services has grown.
This has led to a burst of new companies, a rapidly increasing number of people
entering the business, and a greater need for capital.

6. Recent News Developments
Advanced Cannabis Solutions& Spector Group Sign
Master Services Agreement to Create“The Greenhouse”
On January 8, 2015, Advanced Cannabis Solutions, Inc. (Advanced Cannabis) announced that a Master Services
Agreement (MSA) with Spector Group has been signed. Through the MSA, Spector Group, which is one of the most recognized New
York-based architecture, interiors, and master planning firms, will renovate a 15,000 square foot facility in Denver owned by
Advanced Cannabis. The finished product will be known as “The Greenhouse”, securing tenants engaged in legal cannabis-related
business, and expected to be a highly lucrative property.
Bryon Jorgenson as the new COO of Surna Inc.
Surna, Inc., a manufacturing company specializing in equipment for the legal cannabis industry, announced Bryon
Jorgenson as their Chief Operating Officer on January 6th, 2015. Jorgenson has 25 years of experience, as Miropex, LLC was a big
contributor to that exposure; a management consulting firm serving technology-based companies to which Jorgenson had founded and
was the COO.
Former US Senator Joins Forces with Marijuana Company
Cannabis Sativa Inc.’s wholly owned subsidiary, KUSH, is reorganized as of December 31, 2014. KUSH’s reactivation
brought along with it former US Senator of Alaska, Mike Gravel, a very distinguished medical marijuana advocate. The objective of
KUSH is to further develop new cannabis products such as a noteworthy medicinallozenge called the “Kubby”.

7. In The News Continued…
Former PayPal Co-Founder, Peter Thiel, Invests Millions in Marijuana Industry
Founders Fund, a venture capital firm under the instruction of high-profile investor Peter Thiel, made a
multimillion-dollar investment in Privateer Holdings, Inc. (Privateer), a marijuana investment company. SEC filings
show that Privateer was seeking to raise up to $75 million and had raised $18,665,595 as of July 15, 2014. While the
exact amount of the contribution by Founders Fund has not been disclosed, it is expected that the investment will lead
to more institutionalinvestmentsin the cannabis industry.
This exchange lead to countless positive headlines like one from The Los Angeles Times: “Venture
Capital Firm Gives Marijuana Industry A Shot Of Credibility”,but many stillquestion if all of this is actually “ethical”.
M&A Activity
Medical Marijuana, Inc. a publicly-traded company announced, on January 22, 2015, the signing of a definitive
agreement to acquire Kannaway LLC, a startup hemp products company that was recently valued between $120 million and $243
million. The acquisition is likely to likely rank as the largest M&A deal in the history of the medical cannabis and hemp industry,
based on the valuation of the company.

8. Key Issues & Questions
• Cannabis is categorized as a schedule I – controlled substance under the U.S.
Controlled Substances Act (“CSA”), and federal law deems “participating” in
the cultivation, distribution or use of cannabis to be illegal
• How do companies in the cannabis industry raise money, who invests in them
and can anyone own them?
• Existing U.S. public companies in this space have resulted from reverse mergers
or entry into new lines of business.

9. IPO’s & Cannabis-Related
Publicly-Listed Companies
While we estimate that there are approximately 400 publicly-listed
companies that are in businesses which are in some way related to the cannabis
industry, none of them have gone public through the traditional initial public
offering, or IPO, process. These companies have either gone public through a
reverse merger process or have expanded or proposed to expand their already current
operations into the cannabis space. Thus, most of these companies have not gone
through the traditional SEC registration process.

10. Cannabis & Registration Statements
To date, a limited number of companies that are engaged in businesses that are in some
way related to the cannabis industry have undertaken the Securities and Exchange Commission
registration statement process and even fewer have cleared the process. Some of these registration
statements were cleared prior to the company expanding or engaging in cannabis-related business.
A review of some of the filings that contain cannabis business related disclosure reveals some
interestingdisclosure and facts, including the difficulties of completing the registration process.
The registration process is the SEC’s best opportunity to comment on a public
company’s business and disclosures. It is also the place where the SEC is most likely to make
policy on an industry wide basis. Since cannabis is a schedule I – controlled substance under the
CSA, federal law still deems “participating” in the cultivation, distribution or use of cannabis to be
illegal. This places the SEC in an interesting and powerful position to determine the ability of
cannabis companies to access capital in the public markets.

11. SEC Registration Process
and Disclosure Issues
Each company is being required to analyze and affirmatively state whether
they are engaged in activities that could be deemed to be facilitating the selling or
distribution of cannabis in violation of the CSA or to constitute “aiding or abetting or
being an accessory” to a violation of the CSA.

12. Additional Areas of Coverage
• Industry Conferences
• Database of Companies and Filings
• Economic Indicators
• Legal Developments
• Stocks/Indexes