The Legalization of Marijuana

Justin and Will

Industry Overview Legal Cannabis is one of the fastest growing industries in the United States at a compounded annual rate of 30%. This industry comes with incredible opportunities, and significant

risks.

Overview of Legalization Models

Effective Medical

Treatments

UGA study estimated the Medicare program would have saved $468 million on prescription medications if all states had medical marijuana

Creates new demand from the medical community

Improves overall quality of life for suffering patients

HIV/Aids Insomnia Glaucoma

Inflammation Arthritis Epilepsy

PTSD

Political Views and Age Gap Presidential Election

will have an impact Clinton supports medical

legalization and more research Reclassification from schedule

I to II Trump supports medical

legalization with state by state decisions

Against adult legalization and regulation

Global Perspective The global tide around legal marijuana is slowly turning

Canada -100%

Jamaica -100%

Australia- Medical only

Top Trends To Watch

High Growth Potential Only 4 States allow for Adult use of Marijuana recreationally Key revenue-generating states like California are now voting on full

legalization Adult use only accounted for 8% of the $4.6B in sales made in

2014 but is predicted to account for 53% of the $22B predicted in 2020

Impact on Government Expenditures Legalization effect on

prison spending is a misconception

Harvard Economist Jeffrey Miron estimates $7.7B saved

Could save Justice Dept. $3.2B on minor prosecutions

Issues with detection and driving

Tax Benefits Major argument behind legalizing Marijuana $13.2 Million in Colorado state taxes collected in Aug. and Dec.

2015 setting record revenue highs and continuing growth.

Investment Flow & Performance

Investment into cannabis companies continued to gain ground in 2015 on the private side despite major losses in public sector

Private Investment Fundraising Hit New Heights Peter Thiels Founder’s Fund Snoop Dogg Sean Parker The ArcView Group

Opportunity for Large Corporate Involvement

Looking at the long term future, approval by the federal government will open doors for large corporations

Agriculture, Tobacco, Pharma, and Alcohol companies are expected to be in the mix

Well entrenched, experienced Marijuana companies will be ideal acquisition targets

The complex nature of the market makes acquisitions the best business path for large corps

Microsoft’s Unprecedented Big Move

Offering “seed to sale” tracking software Expanding cloud business Partnering with Kind, a kiosk and

software co. Microsoft is partnering only with the

“government solutions” department of Kind

Compliance play aimed to help keep tabs on sales and commerce

Major Risks and Problems A growing divide between Federal and

State legislation

Incredibly limited access to financial services and banking are hurting industry growth

Banks and large corporations are incredibly wary of coming under federal scrutiny/ prosecution

Social impact and fallout

The tax policy on marijuana is impeding business growth without COGS deducted

Most businesses pay 35% on their profits but with Marijuana tax can be up to 82% of profits

Personal Outlook & Conclusion

Growing enthusiasm has begun a national policy shift Drug reclassification and Gov. research will be largest driver

in market Federal legislation reform is essential Substitution effect and cheaper prices Too immature to be true commodity market Specialized private equity groups and funds are the best

entry point currently

Sources The ArcView Group Marijuana Business Daily New Frontier Research Colorado Marijuana Enforcement Division The Washington Post The Tax Foundation WebMD Business Insider Leafly.com The Gale Group