i. executive summary -...

I. Executive Summary

Bud Brothers LLC was founded in 2012 and is a growing manufacturing and delivering of medical marijuana. Our principal office is located in Vancouver, WA.

Business Overview

Bud Brothers LLC provides both products and services to customers that have a valid Washington State Medical Marijuana Card. We offer a variety of strands of marijuana with different potency levels and a timely delivery service to our customers. So whether someone is a beginner or a seasoned vet, we can fulfill our customer’s wants and needs. The following are some benefits from using our products; prevention and treatment of glaucoma, increase in lung capacity, prevention of epileptic seizures, preventing the spread of cancer, decrease in anxiety, slow the progression of Alzheimer's disease, ease painful symptoms of multiple sclerosis (MS), lessen the side effects of treating hepatitis C, treating inflammatory bowel diseases, and helps relieve arthritis discomfort.

The Market

We define our market as an online medical marijuana dispensary. The total market size was approximately $1.7 billion at retail in 2011, and it is expected to double by the year 2017. We currently hold .001% of this market and we believe we can capture 10% of it by 2015.

Competition

We compete directly with Fully’s Wildflowers and Clear Mind Medical and alternatives to our product include Idrasil and Sativex (both of which are prescribed marijuana medication in pill form). Our product is superior because of its high quality at an affordable cost. We have a competitive advantage because of our speed to market and low cost producer status. We anticipate new companies to enter this market.

Risk/Opportunity

The greatest risks associated with our business today are federal legislation laws, competition, and negative publicity from the community. We feel we can overcome these risks because of the recent passing of Initiative – 502 in the State of Washington, which made marijuana legal for recreational use to persons over the age of 21. We also have plans to form an alliance with other medical marijuana dispensaries so we can offer our customers a wider variety of products and we also plan to use our profits to lobby the lawmakers in Washington, D.C. to make marijuana sales and use legal on a federal level.

Management Team

The management team is led by Chief Executive Officer Christopher Withers who founded the company in 2012. He was Honorable Discharged from the United States Navy in 2011 after serving six years as a Gas Turbine Systems Electrician. His extensive background in electricity has given way to a new low cost form of production of medical marijuana. He will also be receiving his AAS in Business Administration from Heald College in 2013. The Marketing and Promotion Manager is Robert Pierce. Mr. Pierce has held the position of Marketing Director for Roofing Unlimited and holds a Master’s Degree in Marketing from the University of Oregon.The Operations Supervisor is Michael Belcher. Mr. Belcher held the position of Supervisor at Oil Can Henry’s and has extensive experience in auto mechanics which makes him a critical asset to our delivery service.

Operations

We have manufacturing facilities and offices located in Vancouver, WA. We currently perform online services and a call center in house, while outsourcing our delivery services. Our total full time staff is 3 people and our products are distributed by our independent contractors.

Capital Requirements

We are currently seeking $100,000 which will enable us to purchase a bigger facility to house our growing operations and allow us to expand our product output so we will be able to handle the needs of our growing customer basis. We expect to provide an exit within 2 years by a dividend of excess profits.

II. Mission

Mission Statement

Our mission is to become the leading provider of medical marijuana in the Vancouver, WA area to help our clients’ better cope with their current medical conditions.

We solely exist to provide our clients with an alternative to prescription drugs. We aspire to carry a reputation in the marketplace for developing and delivering the highest grade quality of marijuana at competitive pricing. We feel we can achieve this by new product development and quicker response time to our client’s needs. We also have a better understanding of the current market trends and needs; and have a very close understanding of how profitable and helpful our products can be.

In pursuit of our goal, we resolve to treat stakeholders, customers, and the community with backing for non-profit organizations and hold community wellness and awareness meetings. These groups see our company as providing a greatly needed and appreciated service that can help one person at a time. Our involvement with these groups will only help strengthen our company’s core values which include building long lasting trust, loyalty, and confidentiality with our suppliers, customers, and our employees. These values will help build our reputation within the industry.

III. Company Overview

The Company

Bud Brothers LLC was founded in November, 2012 and has begun to cultivate several different strands of marijuana plants for medicinal uses with current patients that have received a medical card from a licensed and approved doctor by the State of Washington. The legal name of our business is Bud Brothers Limited Liability Company doing business as Bud Brothers LLC.Our principle offices are located at 420 Cannabis Dr. Vancouver, WA 98682. We have approximately 100 sq. feet of office space and 1,000 sq. feet of growing space. Our current capacity is 2.5 pounds of product per month. If we exceed 3 pounds of product per month, we will need additional space. We expect this facility to be inadequate for the company’s needs 1 month after funding has been received and will plan to relocate to a bigger facility that will accompany our needs.

Regulations and permits

Bud Brothers LLC operates in the growing and distributing of a controlled substance in the manufacturing process and delivery of products and falls under the jurisdiction of the State of Washington.

Bud Brothers LLC has all the necessary permits to operate, and has an up-to-date record of inspections. These permits include; Documentation of Health Care Professional’s Authorization to Engage in the Medical Use of Cannabis in Washington State in accordance with RCW 69.51A and RCW 69.51A005. These agencies regulate our business in the following manner; under strict guidelines no more than 15 plants per person, no less than 4 people to allow a grower to grow for them. Also included are documentation and accountability for the use and disposal of all materials and a background check on all employees with access to the product.

Strategic Alliance

Bud Brothers LLC has developed important and profitable alliances with the following larger, and more established business; Clear Mind Medical, one of the key leaders in the marketplace. The have helped establish a clientele and more importantly have given guidelines for us to follow to ensure we get the maximum potential from our crops. Currently no risks are involved with this alliance; Clear Mind Medical has been very professional in helping us to achieve our goals. We have developed marketing agreements with Fully’s Wildflowers, the market leader in distributing medical marijuana which will enable us to sell, alongside them, our product.

The side by side positioning at retail, as well as the ability to share wholesale sales leads with their established customer base, can help us to penetrate the market more quickly and efficiently.

The risk in the relationship is that they may decide to sell just their product and cut us out of the process.

We have a strategic relationship with a number of suppliers. In exchange for a blanket commitment to purchase more than 70% of our supply from what our crops can produce, they have agreed to make it available to the market as soon as possible to give us the maximum potential growth within the first 6 months.

Bud Brothers LLC also has strategic Original Product Manufacturer relationships with a number of customers. This allows us to sell a large and steady volume of product to other distributors, who use this to sell other forms our product can be made into. This gets many units of our product out in the marketplace; however, it provides little or no brand awareness for us.

The Business

Bud Brothers LLC is a manufacturer and distributor of medical marijuana. Our company is at the start-up stage of business, having just cultivated our first batch of product.

Product and Service

Bud Brothers LLC produces the following products; Strawberry Cough, Pineapple Express, Vanilla Kush, Jack Herer, and L.A. Confidential. As well as an assortment of baked goods including; Mushi Kushi Brownies, Medi-cakes, Snicker Doodle Cookies, and Peanut Butter Bars for our customers to choose from.

Bud Brothers LLC will also make deliveries of our product to our customers provided they show proper identification. The number of drivers we will be hiring will depend on the size of our client basis.

Presently, our product is in the growth stage. We first developed our product in May, 2012 and have made improvements since then.

Unique Features

Our products are unique because of our specialized manufacturing process that helps us to yield the maximum potential growth of our products. Others in the area are able to provide somewhat similar products and services, but we are able to differentiate ourselves in the market because of our positive relationships we maintain with our clients.

We have unique value-added characteristics which include an expert marketing director and experienced and knowledgeable driving team to make sure our product lines and services we provide to our customers translate into a competitive advantage for our company.

Research and Development

Our research and development is headed by Chris Withers whose major objective is to use the market input to provide superior benefits to our customers. Last quarter, our R&D yielded the following products; Strawberry Cough, Pineapple Express, Vanilla Kush, Jack Herer, and L.A. Confidential. Bud Brothers LLC has spent 25% of revenues in the last quarter in R&D, and has plans to spend another 30% in the next quarter.

Our R&D occasionally yields innovation with input from customers and the marketplace. Our product selection criteria on this cause is as follows; relatively low investment requirements, positive return on investment, and feasibility of development and production. Our R&D will require additional resources in the future. These will include capital expenditures to speed up

development and test results more efficiently.

IV. Marketplace Analysis

Products

Bud Brothers LLC would like to differentiate between the differences in some of our strands. Indica strands are shorter and the high is more of a body stone, due to the higher cannabinoid content than THC. A good way of describing the high would be 'couch lock'. Sativa are more uplifting, talkative, and generally better when you want to do something (writing, playing games, and being active). The different varieties you see are simply crosses or indica and sativa. Bud Brothers LLC will provide the following products to our customers.

Strands currently on hand:

Strawberry Cougho Grade: Bo Type: Hybrid – Sativa Dominanto Potency: Medium-Higho Price: $12 per gram

Pineapple Expresso Grade: Bo Type: Indica/sativa mix. Looks like Indica, smokes like a sativa.o Potency: Medium-High. Better as a morning/daytime smoke.o Price: $12 per gram

Vanilla Kusho Grade: A-o Type: Indica Dominanto Potency: Semi-strong, would do work on lightweights but a good weed for

regular smokerso Price: $10 per gram

Jack Herer o Grade: Ao Type: Sativao Potency: Very strongo Price: $15 per gram

L.A. Confidentialo Grade: Ao Type: Indicao Potency: Mediumo Price: $10 per gram

Edible products on hand:

Mushi Kushi Brownies – 2 for $8 Medi-cakes - $50 per cake (72 hour notice in advance) Snicker Doodle Cookies – 2 for $6 Peanut butter bars - $10 per bar

Services

Bud Brothers LLC will provide a delivery service to our customers. Anyone who purchases less than $40 worth of product will be charged a $5 delivery fee. Delivery drivers will be independent contractors and will be responsible for keeping track of all donations. Our delivery drivers will also be fully responsible for all products that they have in their possession. The delivery service will be operated Monday through Saturday from the hours of 12 p.m. to 10 p.m. The business will be closed on Sundays and holidays.

Price

At Bud Brothers LLC we consider ourselves to be consumer orientated. Since the prices we will be charging will be the same as the majority of our competitors, this forces us to price our products at the status-quo. The general prices we will charge our customers will be $10 per gram. We can, however, charge more for our higher potency strands. The most we will charge per gram is $15 for our highest quality strands. We will focus our break-even analysis based on the customer demand. Our prices will enable us to be competitive due to the low cost of production of growing our products. And our edibles will be available upon request.

Place

We plan to have a small office building located in central Vancouver to manage our call center, run our website operations, and coordinate our deliveries. Our customers will be able to access our products through the on-line website. They will also have the opportunity to sample different products before they make their final purchase. Our delivery service will be the front line of our business. The drivers themselves will be representative of Bud Brothers LLC. The online component of the business will have a list and pictures of all current strands that we have on hand, as well as a brief description about each specific strand and their prices.

Promotion

We plan to utilize all forms of promoting our business and our products. Our first form of promoting will be advertising. We are planning to use T.V. and radio commercials, as well as the Nickel ads. Our second form of promotion will be personal selling by using social media such as Facebook, Twitter, and Myspace to seek out and find new customers. Our third form of promotion shouldn’t be very hard since we are a controversial business; any publicity we can get will be put towards getting our business name out there, so customers can seek us out, not the other way around. The final form of promotion we will use will be our sales promotion, where we will offer discounts to first time customers, offer a free sample of current products to customers and we will have birthday specials for qualifying customers. This is to ensure the customer has a wide variety of products to choose from. We will also be using a push strategy as another form of promoting our products to gain new customers.

Primary Market

Our primary market will be customers that have a valid medical marijuana card in the State of Washington. Even though Initiative-502 passed in Washington, it does not legalize the buying or selling of marijuana. So even if our customers want to use our products for recreational purposes they still must poses a medical card.

Target Market

Our target market consists of people who are conflicted with one or more of the following health problems who could benefit from our products; prevention and treatment of glaucoma, wanting an increase in lung capacity, prevention of epileptic seizures, preventing the spread of cancer, decrease in anxiety, slow the progression of Alzheimer's disease, ease painful symptoms of multiple sclerosis (MS), lessen the side effects of treating hepatitis C, treating inflammatory bowel diseases, and help relieving arthritis discomfort.

V. Competition Analysis

Fully’s Wildflowers - One of the leading market competitors, they have been around for 3 years and shows no sign of going out of business anytime soon. They pride themselves on the quality of their product and will not sacrifice quantity over quality. They also provide a consulting service to help people with starting up their own growing operation and they keep confidentiality of all of their customers. They also offer free a delivery service.

Clear Mind Medical - Another leading competitor, they offer a variety of different strands as well as edibles. They also especially cater to senior citizens, disabled, and veterans. They also have a sales promotion on their bud of the month and offer a free gram of their top quality product to qualified customers on their birthdays. They also offer a discreet and confidential delivery service. They do however have a $10 delivery fee for sales less than $50 and do not have any kind of consulting service.

Just Buds - A new and upcoming competitor, they offer the better of the other two competitors mentioned earlier. Just Buds offers the highest grade quality of marijuana and edibles, while catering to the elderly, disabled, and veterans. They offer discreet and confidential delivery service and provide a sales promotion to customers on their birthday. They do not charge a fee for their delivery service. The only variable they are missing is having a consulting service to help customers set up their own grow op.

TMMC of SW Washington – Considered being a mobile dispensary. They offer free delivery to qualified customers. They offer several strands of high quality products and edibles. They are always looking for new glass blowers and growers to add products to their product line. They will soon be adding smoking apparatuses to their list of products. They have a program designed to help terminally ill customers. They do not offer a consulting service, but they do have a sales promotion for first time customers.

Competitive Advantage

To maintain a competitive advantage over our competition, Bud Brothers LLC will need to offer competitive prices for our products. We already will be offering several strands and edibles to our customers. Our sales promotions will definitely deem us to be competitive since we will offer a discount to our first customers and a free sample to our customers before they make their final purchase. Although we will charge customers a delivery fee, it will only be for orders less than $40. Our delivery service will be discreet and confidential to protect our customer’s anonymity. To gain a better advantage we will be looking into training our drivers to be able to help customers set up and run their own growing operation. We will also look into offering smoking apparatuses to our customers.

VI. Operational Plan

Budbrothers.biz will not disclose the exact locations of where our products will be housed. This is a safety measure taken to protect the anonymity of both the growers and the products. Instead we will rent a small office building where we will run our call center and web page hosting. This service will be set up to assist customers with their purchases and also answer any questions that the customers might have about our products. Customers will also be able to view which strands we currently have on stock. The cost of renting the office space, our utilities (which include electricity, internet, and telephone service) and wage expenses are as follows:

Expenses

Rent: $600

Electricity: $150

Internet and Phone Service: $100

Wage Expense: $4,800

Total Monthly Expenses: $5,650

The only person that we will have at this location will be our only employee on payroll. Our delivery drivers and growers will all be independent contractors. Therefore we will not incur unnecessary expenses such as grow lights, soil, water, and ventilation systems. All of our drivers are responsible to be licensed and insured within the State of Washington.

The delivery service we will offer operates legally within the State of Washington, being especially careful to abide by all laws and regulations that govern how we operate our business. This is also another safety measure that will be taken to lessen the risk of loss due to theft. To make sure our delivery drivers are also protected there is a mandatory protocol put in place, so if there is a first time customer our protocol will mandate that two people must be sent to that location. This safety measure will hopefully deter the risk of a customer from attempting to rob and/or injure our delivery team. Our drivers will carry less than $100 and also only have available to them 10% of the amount of our current stock on any one product.

VII. Management Plan

BudBrothers.biz management team has the experience and expertise to successfully execute on our business plan.

Management Team Members

Name: Christopher Withers

Title: Owner/Operator

Key Functional Areas Covered: Monitor transactions between growers and the business,

overseeing day to day operations of the business.

Past positions, successes and/or unique qualities: Managed several subordinates in the

daily operations of maintenance to Landing Craft Air Cushions (LCAC). Conducted

training and safety inspections of tools and equipment on a weekly basis.

Name: Robert Pierce

Title: Marketing and Promotion Manager

Key Functional Areas Covered: Responsible for compiling market data research to zero

in on our target market. Planning promotional events to spread the word about the

business and our products.

Past positions, successes and/or unique qualities: Marketing Director Roofing Unlimited

Educational background: Master’s Degree in Marketing

Name: Mike Belcher

Title: Supervisor/Delivery Driver

Key Functional Areas Covered: Scheduling and Delivery Driver

Past positions, successes and/or unique qualities: Supervisor at Oil Can Henry’s

Management Team Gaps

Title/Role: Information Technician

Key Functional Areas Covered: Responsible for building and maintaining the company’s

website.

Qualities of the individual who will be sought to fill this role: Web site design and

maintenance, minimum 2 years’ experience

Title/Role: Certified Public Accountant/Tax Professional

Key Functional Areas Covered: Bookkeeping, Payroll, and Tax Statements

Qualities of the individual who will be sought to fill this role: CPA certified, minimum 5

years’ experience

Title/Role: Customer Service Representative

Key Functional Areas Covered: Take phone calls, answer customer questions about

products, schedule deliveries

Qualities of the individual who will be sought to fill this role: Associates Degree,

minimum 2 years’ experience

Title/Role: Delivery Drivers

Key Functional Areas Covered: Deliver products to customers

Qualities of the individual who will be sought to fill this role: Owns their own vehicle,

has valid driver’s license, carries a minimum of liability insurance, and are over the age

of 25

VIII. SWOT Analysis

Strengths Experienced growers Technological skills Production quality Customer loyalty Growing market

Weaknesses New business Limited experience operating a

business Acquiring start-up capital Small customer basis Management

Opportunities State legislation Passed I-502 Statewide expansion Changes in product

availability Possible “brick and mortar”

store Technological advances

Threats Federal legislation Competition Supply Economic downturn Customer dissatisfaction

After completing the SWOT diagram, overall the outcome of Bud Brothers LLC should be successful. There are a few problem areas such as federal legislation keeping marijuana illegal on a federal scale and the geographical area that we can operate out of. As we move forward into the future I would like to have the first mover advantage of owning an actually store-front where customers could come and purchase our products. I do, however, have the necessary skills which include advanced knowledge of generating and disbursing of electricity and the knowledge and ability to run the business strictly from a website.

After analyzing the market I intend to enter, our strengths mesh well with our opportunities. The growers who will be supplying our products have the greatest determining factor on which products will be available and how long their availability will last. This will lead to customer loyalty improving if we can continue to deliver the quantity and quality that the customer desires. The technological skills that our business has will also be one of the company’s greatest assets, wherein, the business can appeal to different customers, in the same market place, and still be able to compete with our competitors. Also, with the passing of Initiative-502, which will make marijuana legal to persons over the age of 21, our market will already be able to accompany the market trends set by this legislation that has been passed by the State of Washington.

The business’ plan to deal with our threats is limited due to the federal legislation that makes marijuana illegal on a federal level, which we will use a portion of our profits to lobby the lawmakers in Washington, D.C. to make medical marijuana legal on a federal level. We do, however, have plans to deal with the competition by offering promotions for first time customers, one of which will include one free gram of the strand of their choice for every $20 spent on their first order. We are already prepared to deal with the growing demand of our product by setting up independent contractors who will be able to provide us with extensive amounts of product, which will be priced based on its potency. As people have seen the results of an economic downturn, we have a plan to allow long term customers the option to pay on account for orders not exceeding $250.

We plan to overcome our weaknesses by quickly and efficiently establishing ourselves in our market. We plan to do this by setting up contractual relationships with our competitors so we can share our market and products with our customers. This will allow us to be able to offer our customers with a wider variety of products. With the right investor Bud Brothers, LLC will quickly be able to grow our management structure, expand our customer basis, and by being able to acquire more space for our growing operation, we will be able to eliminate all of our weaknesses.

If an investor could put aside moral and ethical issues with our business and look at the bigger picture from a business perspective, we hope that they will see that there is an enormous profit margin to be made. Especially with the passing of I-502 in the State of Washington, the customer basis has grown from being only used for medicinal purposes but now is legal for recreational use for persons over the age of 21. With this new information, now is the prime time to invest and market in our business. This will soon show to be as big as the dot.com revolution.

Bud Brothers, LLC will be successful due to the growing demand for our products and the passing of I-502 in the State of Washington. Our market demand has grown because of I-502; this new legislation in the State of Washington will soon allow anyone over the age of 21 to be able to legally use marijuana for recreational purpose. This will extremely help our client basis grow as we will no longer have to only sell to customers with a medical marijuana card. We plan on making our money by the direct sales and distribution from our business to our customers. As of right now our business is strictly an e-business, but as soon as we are able to open an actually store, our profit margins will increase exponentially.

Our short term goals will include making contractual relationships with different growers who will be our secondary providers of different strands, so we will be able to offer more variety to our customers. We also plan to have our website up and running as soon as we have the capability to do so. We are also working on growing our customer basis using different methods of marketing which are internet, radio, and TV. We are still in the process of acquiring the necessary start-up capital, but once we have received the funds needed we will be able to move forward with our business plans.

Our long term goals include a store front operation, mass expansion, and growing our customer basis. We plan to achieve these goals by first putting our product in a physical location for our customers to be able to shop at. By doing this we will be able to partner with local glass blowers, so we will be able to offer different methods of smoking such as pipes, water bongs, and vaporizers. This will allow us to expand on our market and set the curve for the current marketplace. With the first mover advantage we will also be able to capitalize on a new market and set ourselves up for maximum profits. With one store in place this will allow us to move from city to city and set up new operations as we see fit. Eventually down the line the government will have no option but to legalize marijuana for recreational use on a federal level. Once this happens those how have not already taken advantage of this new business opportunity will find it very difficult to try and compete with those of us who are seasoned veterans in the business. Granted that, every state will legalize marijuana on a state level, it is only a matter of time before this opportunity will cease to exist and will only become harder and harder to enter into this market. Those who are opposed to our business can simply voice their opinion, but we do not anticipate any negativity that will have any substantial effect on the business. Simply put, we welcome all publicity.

IX. Exit Strategy

We expect that investors will be able to cash out on their investment in our company when we have made double the return of the initial investment or when the business goes public. We expect to achieve one of these goals by January 15, 2014. If the current legislation changes, which will make selling medical marijuana illegal we will immediately liquefy all of our immediate assets and cash out the business to return investors their money.

X. Financial Statement

Pro-forma Financial Statement

INCOME STATEMENT ASSUMPTIONSYear 1 projected units of sales 60Year 2 projected units of sales 90Selling price 5,500$ Fixed costs of goods sold 35,000$ Fixed operating expense 67,800$ Depreciation expense 500$ Variable cost of goods sold 20%Variable operating expenses 30%Income tax rate 25%

Year 1 Year 2Sales 330,000$ 495,000$ Cost of goods sold 12,000$ 18,000$ Fixed cost of goods sold 35,000$ 35,000$ Variable cost of goods sold (20% of sales) 66,000$ 99,000$ Total cost of goods sold 101,000$ 134,000$ Gross profits 229,000$ 361,000$ Operating expenses 20,000$ 20,000$ Fixed operating expenses 67,800$ 67,800$ Depreciation expense 500$ 500$ Variable operating expenses (30% of sales) 99,000$ 148,500$ Total operating expenses 167,300$ 216,800$ Operating profits 61,700$ 144,200$ Interest expense 500$ 1,500$ Profits before taxes 61,200$ 142,700$ Taxes (25% of earnings before taxes) 15,300$ 35,675$ Net profits 45,900$ 107,025$

Chart 1.1

i. executive summary -...

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