Equities.com and Viridian Capital Advisors presents The Future of Cannabis. In their report on the broader macro environment for the industry, Viridian Capital Advisors breaks down the nuts and bolts of the cannabis opportunity. Of the over 250 public companies in the space, about 60 of them are actively tracked in the Viridian Cannabis Index. The companies are segmented into 12 sub-industries, which speaks to the breadth of the still-young cannabis market, ranging from technology to agriculture to biotech. For more on The Future of Cannabis, go here: http://www.equities.com/cannabis/the-future-of-cannabis

1. The Future of Cannabis Market Report
Week One: Macro Perspective on the Industry
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2. Industry Growth Drivers
◆ Nearly half of U.S. states have legalized marijuana
- Medical: 23 states; Recreational: 4 states plus D.C.
- An additional 7-13 states, most notably California, expected to introduce legalization initiatives in
2015 and placement on ballots for voting in November 2016.
◆ Legal Cannabis sales growing
- $2.7B in 2014, $1.5B in 2013, $800M in 2012
◆ Positive federal and state initiatives
- Supreme Court recognizes States’ rights to regulate marijuana
- Congress bans government from interfering with state medical marijuana laws
- Government to reduce regulation of Cannabis R&D initiatives
◆ Leading politicians call for change to Federal illegality (Schedule 1 status)
- Hillary Clinton, Bernie Sanders, Katherine Gellibrand
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3. Industry Challenges
◆ Core business fundamentals still evolving
◆ Business models, budgeting / forecasting, management / board depth, and financial reporting
standards all evolving
◆ Poor balance sheets and toxic financing structures hurt many public
companies
◆ Federal legal status continues to act as an overhang, impeding the
rollout of commercial banking in the industry
◆ Recent “no-vote” for legalization in Ohio gives some momentum to anti-
legalization efforts
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4. Tracking the Pace of Social Change
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"Alcohol prohibition fell when a sufficient number of states enacted legislation repealing
the state's alcohol prohibition laws.”
- Paul Armentano, Deputy Director of NORML

5. Viridian Cannabis Stock Index
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◆ Index Comprised of 60 Public Cannabis Companies
◆ Leading Index in the Cannabis Industry as Ranked by Barron’s
◆ Segmented into 12 Different Categories

6. Viridian Cannabis Index Performance
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7. Analysis of Public Company Stock Performance
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◆ Cannabis index outperformed all other indices in 2013, 2014 and Q1’2015
◆ However there was great variability in quarterly performance
◆ Performance turned down in Q2’2105 and Q3’2015
◆ Valuations remain over-extended relative to growth
◆ Speculative money came out of the sector as the general stock market
corrected
◆ Three sectors continue to outperform
◆ Cultivation and Retail
◆ Infused Products
◆ Biotech

8. Capital Markets in Cananbis Begins to Evolve
◆ Capital Raise Transactions Increase in Frequency and Size
◆ M&A Transactions Increase in Frequency and Size
◆ Increase in Number and Types of Investor Groups
◆ More Registration Statements Clear SEC Review
◆ More Pubcos Pursue OTCQX and Nasdaq listings
◆ First IPO
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9. 2014 Capital Raises
◆ 31 Companies Completed 47 Capital Raises for Total of $80.4 million
◆ Top Three Sectors that Raised the Most Capital
- Consulting Services (raising $20.1 million)
- Cultivation & Retail (raising $18.9 million)
- Biotechnology (raising $12.3 million)
◆ Most Capital Raises Less than $1 Million in Size
- Reflects the early stage nature of the industry and lack of institutional investors on
this market
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10. Q1’2015 Capital Raises
◆ 24 Companies Completed 42 Capital Raises for Total of $43.2 million
◆ Top Three Sectors that Raised the Most Capital
- AgTech (raising $15.9 million)
- Cultivation and Retail (raising $11.0 million)
- BioTech (raising $7.1 million)
◆ Size of Raise Increasing
- Reflects evolving nature of the industry
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11. Q2’2015 Capital Raises
◆ 21 companies completed a total of 41 capital raises for a total of
approximately $230.3 million
◆ Top Three Sectors that Raised the Most Capital
- BioTech (raising $208.4 million all for GW Pharmaceuticals)
- Software (raising $6.6 million)
- Consulting (raising $4.7 million)
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12. Q3’2015 Capital Raises
◆ 14 companies completed a total of 21 capital raises for a total of
approximately $70.5 million
◆ Top Three Sectors that Raised the Most Capital
- Consumption Devices (raising $42.0 million)
- Agricultural Technology (raising $12.9 million)
- Biotech (raising $5.5 million)
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13. 2014 M&A Transactions
◆ 29 Companies Completed 46 M&A Transactions in 2014
◆ Top Three Sectors with Regard to M&A
- Ancillary Cultivation & Retail (10 transactions)
- Biotechnology (9 transactions)
- Investment/M&A (7 transactions)
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14. Q1’2015 M&A Transactions
◆ 11 Companies Completed 13 M&A Transactions
◆ Top Four Sectors with Regard to M&A
- Consulting Services (4 transactions)
- Investment/M&A (2 transactions)
- Real Estate (2 transactions)
- Software (2 transactions)
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15. Q2’2015 M&A Transactions
◆ 4 Companies Completed 5 M&A Transactions in Q2’2015
◆ Top Three Sectors with Regard to M&A
- Investment/M&A (2 transactions)
- Real Estate (2 transactions)
- Biotechnology (1 transaction)
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16. Q3’2015 M&A Transactions
◆ 6 Companies Completed 7 M&A Transactions in Q3’2015
◆ Top Three Sectors with Regard to M&A
- Consumption Devices (3 transactions)
- Consulting Services (2 transactions)
- Cultivation and Retail (1 transaction)
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17. 2015: Spotlight on SEC Review
◆ 6 Companies Clear Registration Statements Through SEC Review
- MassRoots (MSRT)
- Terra Tech (TRTC)
- Cabinet Grow (CBNT)
- Medbox (MDBX)
- Advanced Cannabis Solutions, now General Cannabis (CANN)
◆ First IPO
- Zynerba Pharmaceuticals (ZYNE)
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