Medicine Man Technologies presentation to tekMountain on May 26th.

1. tekMountain
Cannabis Turn Key Solu4ons
May 26, 2017 – Wilmington, NC

2. Medicine Man Technologies
We are a cannabis consultancy and brand
warehouse who licenses the turn-key cul5va5on
and dispensary opera5ng solu5ons established
by Medicine Man and Three-A-Light.
We are a transparent, public company on the
OTC Markets, Symbol: MDCL.

3. Medicine Man Technologies
We have an IP agreement with Medicine
Man Produc5on Corpora5on.
We have two wholly owned subsidiaries;
Three-A-Light and Success Nutrients

4. Three A Light
Three A Light is the premier step-by-step
book on indoor cannabis cul5va5on, focused
on how to grow 3 pounds of dried, cured
flower per 1000W ligh5ng fixture.

5. Success Nutrients
Success Nutrients is a nine-part nutrient line
built specifically for cannabis cul5va5on.

6. Medicine Man Produc4on Corpora4on
Medicine Man was founded in 2009 with the goal of
producing high-quality, low-cost medical marijuana
sold with great customer service to Colorado pa5ents.
Today the company operates an industrial cul5va5on
facility, which grew 6,900 lbs. of marijuana in 2016,
while supplying medical and adult use marijuana to
its dispensaries in Denver, Aurora, and Thornton, CO.

9. State of the Industry

10. More than ½ of the US has either MED or REC

11. States that passed new ini4a4ves in November
• Medical
• Arkansas
• Florida
• Montana
• North Dakota
• Adult Use / Recrea5onal
• California
• Maine
• MassachuseYs
• Nevada

12. State of the North Carolina Cannabis Industry
• HB 185
• Introduced in late February by Representa5ve Kelly
Alexander, a Democrat
• “North Carolina Medical Cannabis Act” would establish a
comprehensive program
• Would allow pa5ents suffering from a variety of
condi5ons, including cancer, severe pain and Crohn’s
disease, to have access to cannabis medicine with a
doctor’s recommenda5on
• North Carolina’s program would force pa5ents to have a
“bona fide” rela5onship with a state-licensed physician
before par5cipa5ng

13. State of the South Carolina Cannabis Industry
• S212 / HB 3521
• “South Carolina Compassionate Care Act”
• Gained momentum but the legisla5ve session has
recessed for the year. Bills will pick up where they led
off when legislature reconvenes in January 2018
• Pa5ents must have a qualifying medical condi5on, their
doctor’s recommenda5on and a registra5on card issued
by the S.C. Department of Health and Environmental
Control
• Limits: A pa5ent could not possess more than two
ounces of dried cannabis per pa5ent in a 14-day period

14. State of the Tennessee Cannabis Industry
• HB0495
• Tennessee lawmakers heard tes5mony on medical
marijuana this session, however lawmakers’ adjourned
with issues surrounding medical marijuana unresolved.
• Many of the bills brought up this year can be brought
back in January when lawmakers return, since 2017
was the first part of a two-year session.
• House sponsor: Bill was being taken off no5ce for the
current legisla5ve session and a task force would be
established by legisla5ve leaders House Speaker Beth
Harwell and Lt. Gov. Randy McNally to discuss the
issue this summer.

15. State of the Virginia Cannabis Industry
• SB 1027
• Cannabidiol oil and THC-A oil; permiing of
pharmaceu5cal processors to manufacture and provide
• Authorizes a pharmaceu5cal processor, ader obtaining a
permit from the Board of Pharmacy (the Board) and
under the supervision of a licensed pharmacist, to
manufacture and provide cannabidiol oil and THC-A oil to
be used for the treatment of intractable epilepsy.
• The bill sets limits on the number of permits that the
Board may issue and requires that the Board adopt
regula5ons establishing health, safety, and security
requirements for permiYed processors.

16. State of the West Virginia Cannabis Industry
• SB 386
• Passed by the Legislature April 6 making West Virginia the 29th state
to adopt an effec5ve medical marijuana law. No flower allowed
• Beginning no sooner than July 2019, qualifying pa5ents whose doctors
have issued them a wriYen cer5fica5on for medical cannabis will be
allowed to register with the health department to use medical
cannabis and to buy it from regulated dispensaries.
• Qualified Medical Condi5ons: terminal illness, cancer, HIV/AIDS, ALS,
Parkinson’s disease, mul5ple sclerosis, spinal cord damage, epilepsy,
neuropathies, Hun5ngton’s disease, Crohn’s disease, post-trauma5c
stress disorder, intractable seizures, sickle cell anemia, or “severe
chronic or intractable pain in which conven5onal therapeu5c
interven5on and opiate therapy is contraindicated or has proved
ineffec5ve as determined as part of con5nuing care.”

17. QA Session / Break

18. Industry Trends
MED = Medical Marijuana
REC = Recrea4onal / Adult Use Marijuana

19. Industry Trends
• 29 States now have programs with legisla5ve ac5on increasing
• Flower is s5ll #1, but oils, concentrates, and edibles are on the rise
• Pricing commodi5za5on is underway in legal markets
• Research opportuni5es are opening up at the state level (PA, OH)
• Pes5cide management and associated regula5on is evolving quickly

20. Source: Marijuana Enforcement Division December ‘16
MED Demographics (Colorado)

21. Source: Headset Cannabis Intelligence July ‘16
REC Demographics (Na4onal)

22. Source: Headset Cannabis Intelligence July ‘16
REC Demographics (Na4onal)

23. Source: Headset Cannabis Intelligence July ‘16
Consumer Spending (Per Trip)
• Medicine Man Avg. MED Receipt: $102.46
• Medicine Man Avg. REC Receipt: $89.22 (Denver) $61.86 (Aurora)

24. Source: Headset Cannabis Intelligence July ‘16
REC Consumer Spending (Annual)

25. Recrea4onal Product Category Trends (Na4onal)
Source: Headset Cannabis Intelligence July ‘16

26. Colorado Year Over Year Product Sales

27. Colorado YOY MED / REC Sales
Source: The Cannabist

28. Industry Opportuni4es

29. Business Types
• Cul5va5on
• Processing / Extrac5ons (oils, edibles, concentrates)
• Dispensary (medical or recrea5onal)
• Tes5ng
• Security
• Supply Chain (consumables, nutrients, packaging)
• Professional Services (legal, tax, consul5ng, contrac5ng, seed to sale)
• Public / State Services (lobbying, legisla5ve, advisory)
• Investor Opportunity (ArcView or similar)

30. Cul4va4on
Pros Cons
ü Highest Revenue Poten5al ü Highest Startup Cost
ü Employment / Job Crea5on ü Highest Overhead
ü Local Capital Investment ü Rigorous Compliance
ü Limited State Licenses ü Ill-defined Marketplace
ü Precursor to Adult Use ü Federal Challenges

31. Processing / Extrac4ons
Pros Cons
ü High Product Margins ü High Equipment Cost
ü Increasing Market Share ü Variable Employment Costs
ü Lower Startup Costs ü Rapid Regulatory Changes
ü Robust Product Lines ü Source Material Consistency
ü Alterna5ve to Smoking ü Poor Public Educa5on

32. Dispensary
Pros Cons
ü Direct Pa5ent Care ü High Security/Cash Handling
ü Employment / Job Crea5on ü Higher Staff Turnover
ü Lower Overhead ü Higher Compe55on
ü Safe, Legal Alterna5ve ü Third Party Dependency
ü Precursor to Adult Use ü Tax Burden: IRS Code 280E

33. Ver4cal Integra4on
Pros Cons
ü Opera5onal Efficiency ü Aggregate Startup Cost
ü 280E Tax Offset ü Mul5ple Licenses/Compliance
ü Total Supply Chain Control ü Real Estate Management
ü Maximized Profit Margins ü Risk Management
ü Cross-Training Capabili5es ü Internal Communica5on

34. QA Session

35. Cul4va4on 101

36. Virtual Tour
Medicine Man - Cul5va5on Virtual Tour

37. Plant Basics
• Cannabis Sa5va, Cannabis Indica, Hybrid
• Female plants produce flowers, male plants produce pollen sacks
• If a male plant pollenates a female, she will produce seeds
• Marijuana plants are finicky – they prefer controlled environments
• Gene5cs can vary greatly and influence yield, potency, taste & aroma

38. Plant Basics

39. MOTHERS

40. CLONE

41. EARLY VEG

42. MID – LATE VEG

43. EARLY FLOWER

44. LATE FLOWER

45. TRIM

46. DRY

47. CURE

48. THREE A LIGHT

49. Inventory Control / Seed to Sale Tracking
• Most states require strict seed to sale tracking
• Tracks all physical plant inventory throughout the plant lifecycle
• Includes plant status, plant weights (wet, dry, waste), destruc5on
• Typically must interface with State system

50. Cul4va4on Facility Type
There is no wrong way to grow:
• Warehouse / Hardened Indoor Structure
• Greenhouse / Shade house
• Hybrid (Greenhouse + Warehouse)
• Outdoor

55. QA Session

56. Processing / Extrac4on 101

57. Extrac4on Methodology
• Popular methods include hydrocarbon (butane), ethanol, or CO2
• State and local laws may dictate which methodology is permiYed, be
sure to remain compliant and able to adjust to changing legisla5on
• Will influence facility design and equipment costs
• All have pros & cons – there are experts available in each field

58. Extrac4ons
• Highly concentrated marijuana extract which can yield high THC/
CBD percentages. Product Types include: Oil (BHO – Butane Hash
Oil, CO2 Oil), Wax (Budder, Crumble), ShaYer, Live Resin, Bubble
Hash, Kief.

59. Infused Product Categories
• Edibles (sweets, savories)
• Beverages (soda, tea, juice, concentrated shots)
• Sublingual 5nctures, sprays
• Capsules, pills, lozenges
• Topicals (patches, salves, lo5ons, rubs)

60. Infused Product Packaging

61. Don’t Do This…

62. QA Session

63. Dispensary 101

64. Virtual Tour
Medicine Man - Dispensary Virtual Tour

70. IRS Tax Code 280E
• Prohibits marijuana businesses from deduc5ng their ordinary
business expenses because marijuana is classified as a Schedule 1
• 280E enables the Federal Government to collect taxes of gross sales
because it does not differen5ate between income derived from legal
sources or illegal sources
• More expenses can be deducted from the cul5va5on side than the
dispensary side, which the laYer ends up in the highest tax bracket

71. Customer Service
• Like any retail business, great customer service is paramount
• Transac5on can take over 15 minutes per pa5ent, especially first 5mers
who need more product educa5on
• Customers build rela5onships with budtenders, as a result budtenders can
heavily influence a retail sale and ongoing dispensary sales
• Online reviews are increasingly popular – respond in a 5mely manner
• Consider a pa5ent loyalty or rewards program for consumers

72. QA Session

73. Security 101

74. Security Systems
All security elements are focused on preven5ng diversion and providing for
pa5ent and employee safety. Marijuana facili5es are typically required to
have the following systems in place:
• Video monitoring requirements
• Alarm systems, panic buYons
• Locks, key-cards, biometrics
• Off-site record keeping

75. Physical Security
• Pa5ent, guest, visitor check-in sta5on
• Roaming security
• Lethal/non-lethal considera5on
• Third-party/in-house considera5on

76. Product and Cash Vaul4ng
• High-value finished products typically require vaul5ng, including
environmental controls (climate, refrigera5on, etc.)
• Typically an interior room, hardened construc5on, restricted access
• May require independent security monitoring

77. Cash Handling
• Medicine Man owns and operates their own on-site ATMs
• Cash is vaulted within an on-site secure loca5on and has restricted access
• Medicine Man u5lizes a third-party provider, Blueline Protec5on Group, to
transport cash from the facili5es on a regular basis
• Blueline is licensed to work directly with the Federal Reserve to deposit
cash upon no5fying our financial ins5tu5on of the transac5on, mi5ga5ng
the risk associated with off-premise employee cash handling

78. Transporta4on and Chain of Custody
• Transporta5on of finished goods between licensed facili5es requires
a transporta5on manifest which documents chain of custody
• State agencies can typically track and monitor this independently,
ensuring that diversion is not taking place
• Some states require GPS monitoring and provide specifica5ons for
transporta5on agents and vehicles to ensure integrity of the process

79. QA Session / Break

80. Cannabis Business Planning Basics

81. Business Plan Fundamentals
A well-founded business plan should be your group’s first order of business
• Get started early and tell your story
• Financial capabili5es and accountability are cri5cal
• Define opera5ng outlook and partners or consultants
• Product, Public, and Pa5ent safety are always paramount

82. Management Team / Advisors
• Consider Past Business Experience, Financial Capabili5es
• Cul5va5on: Agriculture (Hor5culture, Botany, Nursery, Farming)
• Retail: Medical (Pharm-D, Nurses, Physicians)
• Advisory Board (Cannabis Experts, Legal, etc.)

83. Market Assump4ons
• Determine current size and growth poten5al - u5lize historical data from
other states but have the crystal ball ready
• Pa5ent qualifying condi5ons list is key
• Physician/pa5ent rela5onship & recommenda5on vs. prescrip5on is key
• Product mix list is key - Flower, Oils, Edibles

84. MED Pa4ent
Condi4ons
(Mul4-State)

85. MED Pa4ent Condi4ons (Colorado)
Source: Marijuana Enforcement Division December ‘16

86. Pro Forma Setup
• Pre-Applica5on (Business Plan, Legal, Consultants, Travel)
• Applica5on (Technical Wri5ng, Prepara5on, Filing)
• Execu5on (Architectural, Construc5on, MEPs, Permiing)
• Pre-Opening (Hiring, Training, Consumables)
• Opera5onal (Staffing, Energy, Insurance, Con5ngencies)
Sample Pro Forma

87. Financial Plan Elements
• Pre-Applica5on Expenses
• Applica5on Management and Filing Expenses
• Interim Applica5on Processing Expenses
• Post-Applica5on Capital Deployment
• Opera5ons Outlook & Staffing
• Burn Rate
• Con5ngencies
• Investors and Investor Preferences

88. Site Selec4on
• Proximity & local law (schools, churches, etc.)
• Loca5on: metro / rural and the transporta5on delta
• Ease of zoning and permiing
• Community buy-in
• Security and proximity to local law enforcement

89. Cul4va4on/Processing Facili4es Considera4on
• Loca5on
• Lease vs Own
• Tenant Improvements
• Power Demand
• Security

90. Retail Dispensary Facili4es Considera4on
• Accessibility
• Privacy
• Elegant security
• Finish preferences
• Environment

91. Banking Tips
• Its all about local rela5onships
• Be honest and declare your nature of business (retail)
• Bank under a non-cannabis related name
• Private Colorado banks are not taking out of state business
• Its easy to open accounts with big banks, but they inevitably come around
to the nature of your business and close accounts – be prepared

92. QA Session

93. License Applica4on Planning

94. Keys To A Successful Applica4on
1. A well-craded story explaining the applicant’s suitability
2. Technical wri5ng (legal or individuals with DOH RFP experience)
3. Ownership team and industry consultants
4. Control of real estate for cul5va5on/processing & dispensary
5. Adequate funding and opera5onal capital
6. Strong community and poli5cal support

95. Pre-Applica4on Planning
• Review your State rules and dates – stay ahead of the curve and par5cipate
• Retain competent consultants and advisors
• Preliminary work:
• Determine financial capabili5es and flush out a well-founded pro forma
• Background checks (don’t let this come back to haunt you)
• Begin reviewing real estate opportuni5es
• Engage your community officials
• Engage local zoning officials
• Engage local law enforcement

96. Resource / Consul4ng Planning
• Cul5va5on (Bou5que vs Commercial/Industrial)
• Processing & Manufacturing (Extrac5ons)
• Dispensary
• Security
• Seed To Sale Tracking / Inventory Control
• Lab Tes5ng
• Legal
• Technical Wri5ng
• Project Management

97. Applica4on Influencers (External)
• State Legisla5on
• Poli5cal Influence & Lobbying
• Real Estate & Zoning Requirements
• Public Hearings
• State Applica5on Process and Format

98. Applica4on Plan Elements
• Cul5va5on SOP, Processing SOP, Retail SOP – how will these be
established in a 5mely manner and who will be responsible?
• Consider sample plans for the following elements:
• Gene5cs, Post-Harvest, Batch Processing, Finished Goods Management,
Packaging, Quality Control, Waste Destruc5on, Security, Transporta5on,
Pa5ent/Product Educa5on, Community Impact & Outreach, Staffing/HR/
Employment, Facility Management, Compliance, Inventory Control, Tes5ng,
Product Alerts/Recalls

99. Applica4on Submical and Outlook
• Timelines can vary widely (Maryland experience)
• Be prepared for the wai5ng game
• Management of real estate deals can be cumbersome
• Interim prep work, be prepared for both scenarios

100. Post-Applica4on Outlook
• Follow state 5melines and fee schedules
• Construc5on management
• Hiring and training
• Permiing and inspec5ons
• Applica5on accountability and deployment

101. Medicine Man Technologies App Experience
• Colorado
• Illinois
• Nevada
• New York
• Maryland
• Hawaii
• Puerto Rico
• Pennsylvania
• Upcoming: Ohio, Arkansas, Michigan, California

102. QA Session

103. Local Outreach and Advocacy

104. Local Outreach & Community Support
• People do businesses with people they know, like, and trust
• At the local, state, and federal level its important to develop and
maintain good rela5onships with policy makers and policy enforcers
• Many communi5es are unprepared for cannabis business; developing
community impact and outreach plans in concert with local officials
can mi5gate their fears and beYer prepare them for the future

105. Industry Advocacy and Involvement
• Five reasons to get involved in a cannabis-related trade associa5on:
1. Networking
2. Educa5on
3. Compe55ve edge
4. Access to industry experts
5. Advocacy for the cause

106. Medicine Man Technologies
Licensing & Consul4ng

107. Licensing & Consul4ng Services
• Cul5va5on Licensing
• Financial Modeling, Real Estate Sufficiency, Facility and Room Design, Opera5ng
Procedures, Key Personnel Training, Job Descrip5ons
• Dispensary Licensing
• Financial Modeling, Facility Design, Opera5ng Procedures, Key Personnel Training,
Employee Handbooks, Job Descrip5ons
• Cul5va5on Max
• Hourly Consul5ng

108. Thank You