The Cannabis Industry Annual Report:

2017 Legal Marijuana Outlook

Private & Confidential: Not to be disseminated without the expressed written consent of Frontier Financial Group, Inc.
© FRONTIER FINANCIAL GROUP, INC • FRONTIERFINANCIALS.COM
 AGENDA

• About New Frontier Data

• Meet The Speakers
• Giadha Aguirre De Carcer, New Frontier Data
• Leslie Bocksor, Electrum Partners
• John Kagia, New Frontier Data
• Key Findings: The Cannabis Industry Annual Report
• Q&A

© FRONTIER FINANCIAL GROUP, INC • 2

 MEET THE SPEAKERS

Giadha Aguirre De Carcer

Founder & CEO, New Frontier Data
De Carcer is the Founder and Chief Executive Officer
of Frontier Financial Group Inc. dba New Frontier
Data. She is an entrepreneur with over 20 years of
experience in business execution, management and
strategic business development with an emphasis on
emerging markets.

De Carcer worked in investment banking with

JPMorgan Chase in Manhattan and London, and served
as a senior consultant in the Defense, Technology,
Telecommunication sectors in both the commercial and
government sectors domestically and abroad. She has
successfully launched and operated four data-driven
businesses and is considered an expert in strategic
positioning and risk management in emerging high
growth markets.

© FRONTIER FINANCIAL GROUP, INC • 3

 MEET THE SPEAKERS

Leslie Bocksor
President & Founder, Electrum Partners
Committed to a culture of compassion at Electrum
Partners and throughout the industry, he takes pride
in ushering in changes that rewrite history, whether it’s
the empathic opening of patient access, or the
invention of a national innovation funding reset
button.
His far-reaching banking and entrepreneurial
experience and inimitable style are bolstered with his
knowledge of any cannabis vertical -- from domestic
and international policy to finding your niche investing
opportunity, from supercritical extraction to ERP
solutions, from seed-to-sale tracking to cannabidiol
(CBD) to the entourage effect of strategic business
integration. Bocskor has become one of the most
influential people in the cannabis space, guiding policy
and reform.

© FRONTIER FINANCIAL GROUP, INC • 4

 MEET THE SPEAKERS

John Kagia
Executive Vice President of Industry Analytics,
New Frontier Data
John Kagia is the Executive Vice President of Industry
Analytics for New Frontier. He applies his keen
understanding of market research, business strategy
and industry analysis to help high performing
organizations achieve their strategic objectives.

Leveraging his years of experience managing research

studies for industry-leading clients including
Accenture, Microsoft, The George Washington
University, and the U.S. Department of State, John
brings a keen understanding of how market insights
enable organizations to plan, grow, compete, and
measure performance more effectively.

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KEY FINDINGS

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 U.S. NATIONAL MARKET
GROWTH PROJECTIONS

Growth of Legal Medical & Adult Use Marijuana Sales

2016-2025

$24.07 BN
$30
Compound Annual

$22.87 BN
$21.46 BN
Growth Rate: 16%

$19.89 BN
$25

$18.37 BN
$16.02 BN
$20
$13.38 BN

$10.86
$10.55
$10.20
$10.82 BN

$9.83
$15 Recreational Total
$9.46
$7.97 BN

Medical Total
$6.56 BN

$8.22
$6.50

$10
$4.75

$13.22
$2.65

$12.33
$11.26
$10.06
$4.67 $1.89

$8.90

$5
$7.80
$6.88
$6.07
$5.32

$-
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

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 CAN CANNABIS SOLVE THE OPIOID CRISIS?

“There is conclusive or substantial evidence that cannabis [is] effective for the treatment of chronic
pain in adults.”
National Academies of Science (2017)

Chronic Pain Patients are the Majority in

100 MILLION+ MMJ Programs
Americans suffering from CHRONIC PAIN
81%
76%
2 MILLION+ 67%
63%
Americans ADDICTED to prescription pain 59%
killers

$1.96 BILLION
Medicare Opioids top 3 pain medication cost
(OxyContin, Hydrocodone, Fentanyl)
Arizona Hawaii Colorado Nevada Oregon

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 MEDICAL CANNABIS REDUCES DRUG
DEPENDENCY & OVERDOSE DEATHS

REDUCING PRESCRIPTION DRUG USE & COSTS

Annual Number of Daily Doses Prescribed Per Physician

11%
REDUCTION IN DAILY PHARMACEUTICAL
States Without a Medical DOSES PRESCRIBED
95,672
Cannabis Law

States With a Medical

85,148 $220 MILLION
Cannabis Law POTENTIAL MEDICAID SAVINGS IN
OPIOID PRESCIRPTIONS

REDUCING OPIOID RELATED DEATHS

25% =
8,300
FEWER OPIOID OVERDOSE DEATHS IN FEWER OPIOID OVERDOSE DEATHS IN
MEDICAL CANNABIS STATES MEDICAL CANNABIS STATES

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 CANNABIS TAX REVENUES
ARE A BOON FOR STATE COFFERS

TOTAL MEDICAL & ADULT USE RETAIL CANNABIS TAX REVENUES

2017 2020
$745 Million $2.3 Billion

ADULT USE MARKETS

State Cannabis Tax Revenue from Retail Sales

2017 $559 Million

Total Retail Taxes
Cannabis Retail Taxes
$655 Million $96 Million
State Sales Taxes

2020 $1.4 Billion

Total Retail Taxes
$405 Million
$1.8 Billion

$- $500 $1,000 $1,500

$ Millions
© FRONTIER FINANCIAL GROUP, INC • 10
 LEGAL CANNABIS AS AN
ENGINE FOR NEW JOB CREATION

2020 Cannabis Industry Potential Job Creation Direct FTE Jobs by Sector

Agriculture
Total 283,422
12%
Retail
Operations
Management
Direct 198,195 35%
15%

Indirect 45,590
Manufacturing
16%

Induced 39,636 Administration

22%

© FRONTIER FINANCIAL GROUP, INC • 11

 A GROWING MAJORITY
NOW SUPPORT LEGAL CANNABIS

Cannabis Legalization Views

Cannabis should be legalized, regulated

55%
2017 New Frontier Data and taxed like cigarettes and alcohol

Cannabis Attitudes Survey

Cannabis should only be legal for
medical use with a doctor's 26%
1,671 Respondents recommendation
Fielded Jan. 12 – Jan. 15, 2017
Cannabis should be decriminalized,
eliminating criminal penalties but not 7%
Survey Partner: Full Circle regulating or taxing it
Research
Cannabis should be illegal 9%

Don't know 3%

0% 10% 20% 30% 40% 50% 60%

Source: New Frontier Data 2017 Cannabis Attitudes Survey

© FRONTIER FINANCIAL GROUP, INC • 12
 STRONG SUPPORT FOR F
FEDERAL LEGALIZATION & MEDICAL USE

Cannabis Attitudes
Views of Federal Policy

The federal government Cannabis has valid medical uses 86%

63%
should legalize cannabis
Cannabis is highly addictive 34%
Preventing cannabis use
should be a high priority for 17% Cannabis is a dangerous drug 28%
the federal government
I am more likely to consider using
28%
The U.S. government's war cannabis if it is legal
on drugs has been effective 13%
at reducing cannabis use If cannabis is legalized, the government
28%
should keep track of cannabis users
0% 20% 40% 60% 80% People who use cannabis should be
13%
arrested

People who use cannabis should be

12%
treated like criminals

0% 20% 40% 60% 80% 100%

Source: New Frontier Data 2017 Cannabis Attitudes Survey

© FRONTIER FINANCIAL GROUP, INC • 13
 2016: A LANDMARK YEAR
FOR CANNABIS LEGALIZATION

2016 Cannabis Legalization Initiative Results

Arizona 48.7%
ADULT USE

California 57.1% AVERAGE ADULT

USE VOTE

53%
Maine 50.3%

Massachusetts 53.7%

Nevada 54.5%

Arkansas 53.2%
AVERAGE
MEDICAL USE

MEDICAL USE
Florida 71.3%
VOTE
Montana

North Dakota
57.8%

63.8%
62%
0% 50% 100%

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 A MAJORITY NOW LIVE IN
STATES WITH LEGAL CANNABIS ACCESS

Percent of U.S. Population with Legal Cannabis Access

Any Cannabis Law (Adult Use,

95%
Medical or CBD)

Adult Use States 21% 31%

Population of States Which
Medical States 63% Expanded Legal Access in in 2016

CBD States 32%

0% 20% 40% 60% 80% 100%

NUMBER OF AMERICANS LIVING UNDER…

ANY CANNABIS LAW ADULT USE LAWS MEDICAL USE LAWS

306 Million 68 Million 203 Million

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 PLUNGING RETAIL PRICES HAVE FUELED
SALES, REVENUE GROWTH IN WASHINGTON

2015 2016
Retailers: 190 Retailers: 337
Revenue/Retailer: $2.27 Million Revenue/Retailer: $2.33 Million

As Avg. Price Per Single Gram Falls, Monthly Sales Have Soared
$80,000,000 $50.00
$44.50
$45.00
$70,000,000
$40.00
$60,000,000
$35.00
$50,000,000
$30.00

$40,000,000 $25.00 Monthly Retailer Sales

$20.00
$30,000,000 Price Per Single Gram
$15.00
$20,000,000
$12.77 $10.00
$10,000,000
$5.00

$- $-

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 GROWTH IN CONCENTRATE AND PRE-ROLL
SALES ARE ERODING FLOWER’S SHARE OF MARKET

2016 Share of Sales by Product Category

90%
84.7%
80%
72.0%
70%
64.4%
60%
Edibles
Share of Sales

50% Flower

40% Concentrates

Pre-Rolls
30%

20% 15.6% 21.0%

9.8%
10% 7.2% 7.7%
4.1%
5.3% 7.0%
0% 1.4%
Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16

Source: Baker
© FRONTIER FINANCIAL GROUP, INC • 17
 THE GROWING IMPERATIVE TO BE COMPLIANT

Average Compliance Scores by State* Washington Total Penalties 2014-2016

3%1% 3%
3%
Illinois 97.0

Colorado 82.9

Nevada 81.2
34%
56%
Washington 77.3

California 74.4

0 20 40 60 80 100 120

Source: Adherence Compliance Penalty Escalations

Destructions of Harvestable Plants
*Scores are based on a 100 point Revocations
weighted scale using the Adherence Suspensions
Score Application. Written Warnings

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Q&A

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