newcann group, llc

BUSINESS PLAN CONFIDENTIAL

NewCann Group, LLC

PREPARED FOR

Town of Maynard Board of Selectpersons

Plan Date: June 18, 2019

This is a CONFIDENTIAL DOCUMENT and is to be redacted from public access documents. It sets forth details of the issuer’s Confidential Business Plan. It should not be copied, disseminated, shared, or otherwise disclosed without the issuer’s prior written approval or used for any other purpose other than regulatory review.

Town of Maynard

Contents OVERVIEW ..................................................................................................................................................... 1

Why NewCann should be given preference to operate in the Town of Maynard .................................... 1

Mission ...................................................................................................................................................... 1

MANAGEMENT & ORGANIZATION PROFILE ................................................................................................. 2

Legal Entity and Organization ................................................................................................................... 2

Founding Team ......................................................................................................................................... 2

MARIJUANA EXPERIENCE .............................................................................................................................. 3

LICENSING STATUS ........................................................................................................................................ 3

INDUSTRY ANALYSIS ...................................................................................................................................... 3

National Overview .................................................................................................................................... 3

Market Size - Massachusetts .................................................................................................................... 3

Massachusetts Sales Projections .............................................................................................................. 4

Maynard Sales Projections ........................................................................................................................ 4

Competition and Massachusetts Statewide Marijuana Map ................................................................... 5

Estimating Store Activity ........................................................................................................................... 6

PRODUCTS & SERVICES ................................................................................................................................. 7

Product Line .............................................................................................................................................. 7

Product Quality, Testing and Assurances – Disposal of Bad Product ....................................................... 9

PRODUCT STORAGE ...................................................................................................................................... 9

Safe Storage .............................................................................................................................................. 9

Secure Storage .......................................................................................................................................... 9

Required Product Labeling ...................................................................................................................... 10

Product Supply: Ownership of or Relationship with Cultivator(s) and Testing Facilities. ...................... 10

Product Delivery...................................................................................................................................... 11

RETAIL SHOP OVERVIEW ............................................................................................................................. 11

Customer Experience .............................................................................................................................. 11

Customer Loyalty Programs .................................................................................................................... 11

Conceptualization of Store Interior ........................................................................................................ 11

Displays of Educational Material ............................................................................................................ 12

Seminars for Seniors, Veterans, and Pet Owners ................................................................................... 12

QLess Appointment Scheduling App When Store Opens ....................................................................... 13

Customer Purchasing Experience ........................................................................................................... 13

Customer On-line Process ....................................................................................................................... 13

Town of Maynard

Cash Handling ......................................................................................................................................... 13

INTERNAL AUDITS ....................................................................................................................................... 13

Diversion Prevention ............................................................................................................................... 14

MARKETING STRATEGY ............................................................................................................................... 14

Customer Outreach ................................................................................................................................. 14

Guest Referral Program .......................................................................................................................... 14

MANAGING CUSTOMER TRAFFIC (TRAFFIC PLAN) ...................................................................................... 14

Parking Management .............................................................................................................................. 15

Customer Cycle Times ............................................................................................................................. 15

Relative Daily Customer Traffic Levels (Identifying Busy Days) .............................................................. 15

HOURS OF OPERATION ............................................................................................................................... 15

SECURITY ..................................................................................................................................................... 16

Overall Security ....................................................................................................................................... 16

External Security ..................................................................................................................................... 16

Internal Security ...................................................................................................................................... 16

LIFE AND FIRE SAFETY ................................................................................................................................. 17

IMPAIRED CUSTOMERS ............................................................................................................................... 17

STAFFING & TRAINING – Commitment to Diversity & Local Hiring ............................................................ 17

General Staffing and Recruitment .......................................................................................................... 17

Employee Training .................................................................................................................................. 18

Training Topics ........................................................................................................................................ 18

DIVERSITY PROGRAM .................................................................................................................................. 19

Positive Impact ........................................................................................................................................ 19

Marijuana-based Incubator .................................................................................................................... 19

Training Facility ....................................................................................................................................... 19

LOCATION.................................................................................................................................................... 20

START-UP FINANCING ................................................................................................................................. 20

PROPOSED TIMELINE TO BECOME OPERATIONAL ..................................................................................... 20

ESTABLISHED PROFESSIONAL SERVICE RELATIONSHIPS ............................................................................. 21

Banking .................................................................................................................................................... 21

Insurance ................................................................................................................................................. 21

Tax Advisor .............................................................................................................................................. 21

Attorney .................................................................................................................................................. 21

Security ................................................................................................................................................... 21

Point of Sale (POS System) ...................................................................................................................... 21

Town of Maynard

ANTICIPATED REVENUE TO MAYNARD ....................................................................................................... 21

COMMUNITY IMPACT SERVICES FOR MAYNARD........................................................................................ 21

Economic Development Participation .................................................................................................... 21

Youth Use Prevention and Education Services ....................................................................................... 22

Criminal Record Expungement ............................................................................................................... 22

Local Hiring and Vendor Preference ....................................................................................................... 22

Training Workshops ................................................................................................................................ 22

Senior Education Services ....................................................................................................................... 22

Volunteer Community Services............................................................................................................... 22

Police DRE (Drug Recognition Expert) Training ....................................................................................... 22

FINANCIAL PLAN.......................................................................................................................................... 23

END OF BUSINESS PLAN – Thank you! ........................................................................................................ 24

Appendix 1 – Team Biographies ................................................................................................................. 25

Appendix 2 – CORI filings ............................................................................................................................ 31

Appendix 3 – National Recreational Adoption and National Map ............................................................. 32

Appendix 4 – Massachusetts Market Size Analysis..................................................................................... 34

Appendix 5 – Colorado Annual Marijuana Sales – Trajectory and Plateau ................................................ 37

Appendix 6 – Massachusetts Sales Data – Annualized Sales Levels by Week ............................................ 40

Appendix 7 – Customer Cycle Time and Customer Capacity Calculations ................................................. 42

Appendix 8 – Relative Daily Customer Traffic Levels (Identifying Busy Days) ............................................ 45

Appendix 9 – Financial Plan Supplemental Data ........................................................................................ 47

CONFIDENTIAL BUSINESS PLAN June 18, 2019 NewCann Group, LLC

Town of Maynard Page 1

OVERVIEW NewCann Group is developing three retail marijuana stores and assisting local economic empowerment candidates to enter the retail marijuana market, all under a common store brand. NewCann provides business knowledge, guidance on the application process, and navigation of regulatory and compliance issues. These stores will offer a consistent customer experience, highlighting proper use and education. Our sister entity, CannaVenture Labs, is a business incubator that supports the development of local craft marijuana products (often developed by disadvantaged and marginalized segments of the community) that will be featured in our stores and distributed throughout the Commonwealth. NewCann Group, LLC (“NewCann”), 17 King Philip Trail, Norfolk, MA 02056-1405, is a Massachusetts limited liability company, No. 001357153, organized December 3, 2018, to pursue a retail marijuana establishment license with the Massachusetts Cannabis Control Commission (the “Commission” or “CCC”). NewCann seeks a Host Community Agreement with the Town of Maynard as a precursor to completing its license application with the Commission. See Tab 2 for Articles of Organization.

Why NewCann should be given preference to operate in the Town of Maynard 1. Each NewCann team member possesses 30+ years of diverse experience in a variety of fields

including Massachusetts medical marijuana, retail and cyber security, education and training, public policy, and start-up experience. One member is a current DPH and CCC license holder and operates the largest and most technologically advanced cultivation operation in the Commonwealth. Two team members have experience with the 2013 Massachusetts Registered Marijuana Dispensary licensing process. One member has consulted in the marijuana industry since 2010. All members are 25+ year Massachusetts residents.

2. We have identified suppliers, banking resources, insurance, and other critical service providers. 3. We have met with the Town Administrator and Assistant Administrator to understand Maynard’s

retail marijuana concerns. Our approach addresses security and operating concerns through our policies and procedures, coupled with technology and training, all to minimize risk.

4. We offer several Positive Community Impact programs for your review and consideration (page 21). 5. We focus on social equity: One member was one of seven training businesses approved by the CCC

to train social equity1 candidates how to launch and grow their businesses (see Tab 10). Another provides semi-monthly training workshops to support economic empowerment candidates.

6. We offer priority access for medical customers and veterans and feature products for pets. 7. We educate and incentivize our retail staff to become product experts. Product knowledge is a key

differentiating factor and vital to our mission as it instills faith, trust and respect with our customers. 8. We are involved in efforts to support initiatives that discourage youth drug use. 9. We are confident we can hire and train a diverse workforce drawn primarily from the local market. 10. We have estimated cyclical customer demands (through research) and addressed the business

workflows to minimize delays, traffic issues, and optimize the customer experience.

Mission “Operate a community-friendly, adult-use marijuana retail shop that serves as a model to regulatory authorities and is a shop the community trusts.”

1 Social Equity and Economic Empowerment are Commission programs created to help disadvantaged persons to

gain a foothold in the industry and share in the industry’s economic benefits



MANAGEMENT & ORGANIZATION PROFILE

Legal Entity and Organization NewCann Group, LLC is managed by a Board of Managers and will have an advisory board that includes outside advisors, each having relevant experience in the Massachusetts marijuana industry.

Founding Team Full team biographies are included at Tab 7. CORI information is included in Appendix 2 to this plan. David Rabinovitz, MBA: Managing Member and Chief Executive Officer

• A business consultant to engineering firms who has also consulted in the marijuana industry across multiple states for various clients since 2010

• David is responsible for developing and implementing business strategy and planning for NewCann retail shops and related activities (including social impact initiatives). He is also responsible for monitoring financial performance

Jack Madigan, MBA: Managing Member and Chief Operating Officer

• Jack has 20+ years of project management experience in the private and public sectors and was an operations analyst for Fidelity Investments. He has consulted on political campaigns, and served as Executive Director of the political lobbying organization, TechNet Massachusetts

• Jack is responsible for oversight of day-to-day business operations including security, inventory control, and staff development. Jack also assures compliance in all facets – Commission, tax, Host Community, and other regulatory bodies

Keith W. Cooper, CEO, Revolutionary Clinics: Managing Member

• Keith has led multiple companies in telecommunications services, internet telephony, web analytics, online backup, cloud services, venture capital, healthcare IT and Big Data

• Keith provides oversight from his experience managing Revolutionary Clinics, one of the state’s largest vertically integrated marijuana operators

Judy Leary, Operations and Security

• Judy co-founded Identity Force, an award-winning identity theft, privacy, and credit protection solutions firm serving consumers, businesses, and federal agencies. Judy managed operations, information technology, and client services. Judy holds a variety of federal security clearances

• Judy provides insight on data security, business process, and customer service

Beth Goldstein, MBA, EdD ‘21, Customer Engagement Officer

• Experienced educator and entrepreneur who teaches business and marketing strategy at Babson College, the Isenberg School at UMass-Amherst and Tecnológico de Monterrey (Mexico)

• Beth is one of seven social equity trainers qualified by the Commission to train entrepreneurs. She has extensive experience working with minority and women business owners, inner-city organizations, and provides guidance on training, marketing and customer engagement

Dr. Edward B. Kaiser, Founder and Advisor

• Ed has owned numerous businesses including two small airlines. As a dentist, he holds a DEA license and is well versed in highly regulated industries and provides general business guidance



MARIJUANA EXPERIENCE Applicant’s experience in the legal marijuana industry, include existing licenses and establishments within the Commonwealth of Massachusetts includes: ● Since 2010, David Rabinovitz has consulted with marijuana businesses in multiple states. He serves

as a Board Advisor to the Massachusetts Cannabis Reform Coalition (MassCann), the state affiliate of the National Organization for the Reform of Marijuana Laws. He provides training to Massachusetts Social Equity and Economic Empowerment Candidates seeking to enter the marijuana industry

● In 2013, Jack Madigan was instrumental in assisting Bio-Care Collaborative to assemble a Massachusetts medical marijuana business plan and DPH application

● Keith Cooper, CEO of Revolutionary Clinics, is the President of the Commonwealth Dispensary Association; the leading voice for the 25 largest vertically integrated medical marijuana establishments in Massachusetts. His firm, Revolutionary Clinics, operates DPH-licensed registered marijuana dispensaries in Somerville and Cambridge and is opening co-located retail stores in these locations. Revolutionary Clinics is a fully integrated marijuana business, from seed to sale. Their cultivation company, Revolutionary Farms, is the largest and most advanced cultivation facility in the state. They hold licenses from the Cannabis Control Commission for cultivation (MC281507) and manufacturing (MP281425).

LICENSING STATUS ● We have commenced the Massachusetts adult-use marijuana establishment license application

process with the Cannabis Control Commission. Our application number is: MRN282359 ● CORI forms have been submitted to the Cannabis Control Commission as part of application number

MRN282359 – see email in Appendix 2 ● Banking relationship with Safe Harbor / Gardner Federal Credit Union underway, pending receipt of

Host Community Agreement (see Tab 5)

INDUSTRY ANALYSIS

National Overview Eleven2 states and the District of Columbia have legalized adult-use marijuana. Thirty-three states have medical marijuana laws. Even more allow CBD, the non-psychoactive component of the marijuana plant. State legislators are increasingly taking the lead from voter initiative petitions. In 2018, 21 states considered adult-use legalization bills: Connecticut, Delaware, Georgia, Hawaii, Illinois, Kansas, Kentucky, Maryland, Minnesota, Mississippi, Missouri, New Hampshire, New Jersey, New Mexico, New York, Pennsylvania, Rhode Island, South Carolina, Wisconsin and West Virginia. By November 2020, adult-use marijuana will likely be legal for over 50% of the population. The northeast (bolded text) is expected to become a solid legalization block as respective state legislatures debate and finalize legalization details through 2020. Appendix 3 includes a table and national map.

Market Size - Massachusetts NewCann estimates Massachusetts’ adult-use market potential at $1.8 to $2.0 billion, based on our analysis of the Massachusetts market relative to Colorado, which is generally accepted as the most established, regulated adult-use market in the United States. Colorado sales per resident were $269 in

2 Illinois will be state #12. Illinois enacted legalization on May 31, 2019, to be effective January 1, 2020.



2017 and grew slightly to $272 in 2018, indicating the signs of a maturing market. Projecting that per capita number onto the Massachusetts’ 6.9 million population yields a $1.875B market. Considering Massachusetts’ 8.45% higher income, the state’s market potential exceeds $2.0 billion. See Appendix 4.

Massachusetts Sales Projections The following chart shows the progression of marijuana sales in Colorado as published by the Colorado Department of Revenue3. As you can see, Colorado reached a plateau within four years. Massachusetts will likely follow a similar trajectory. Therefore, sales will likely plateau by 2023. See Appendix 5 for additional details.

Maynard Sales Projections In reviewing the projections for the town of Maynard, we estimate the local market area (circled below) will serve approximately 75,000 residents. Adjoining towns have banned recreational marijuana stores (table below). By the time the Maynard store opens, consumers will drive no more than 20 minutes to reach a local marijuana retailer, equating to an eight to twelve-mile sales radius. Based upon population and other demographics, we project the Maynard store will generate revenue of approximately $6.5 million annually. Table 1: Population Surrounding Maynard

** Indicates a retail ban town

Based upon geography we estimate Maynard may capture 40% of the Acton market (some Acton customers will visit Littleton), all of Concord and Maynard, 50% of Stow (some Stow customers will find

3 https://www.colorado.gov/pacific/revenue/colorado-marijuana-sales-reports 4 Question 4 was the 2016 ballot question that legalized adult use marijuana in Massachusetts

Municipality Estimated Population Yes on 44

Median Household

Income

Acton** 22,291 52.1% $110,592

Concord** 18,442 50.9% $134,705

Maynard 10,211 59.2% $77,622

Stow** 6,737 53.7% $137,551

Sudbury** 17,922 48.9% $170,924

Total 75,603 52.2% $128,725



Hudson or Marlborough more convenient), and 40% of Sudbury (some Sudbury customers will find Marlborough or Framingham more convenient or may shop at the Natick Mall and find one of the two nearby Natick stores more accessible). Applying those percentages to the towns’ populations leads to a customer pool of 48,107. Applying a $271.93 average annual purchase rate (see further below and addendum), leads to a local market size for Maynard of $13,081,650; or $6.5 million per operator assuming two retailers.

Competition and Massachusetts Statewide Marijuana Map Competition is difficult to gauge in such a nascent industry. NewCann believes that as a retail store, competition will be local. The following map shows where Massachusetts retail marijuana stores will be located based upon application and license data published by the Commission as of March 7, 2019. See Appendix 5 for a larger version of this map.

Locally, retail marijuana Host Community Agreements have been granted in the following municipalities.

• Hudson will allow two stores with one store currently open.

• Marlborough has approved one store and should allow up to three additional.

• Littleton is in the process of reviewing applicants for two locations.

• Bolton and Harvard should each allow one store.

• Berlin may allow one store but is in moratorium through June 30, 2019.



Table 2: Massachusetts Marijuana Recreational Stores Open-to-Date

Store No. Opening Date Store Openings

Stores Open

1,2 Tue Nov 20, 2018 Cultivate & NETA (Leicester & Northampton) 2

3 Sat Dec 15, 2018 ATG (Salem) 3

4 Fri Dec 21, 2018 Verilife (Wareham) 4

5 Sat Dec 22, 2018 INSA (Easthampton) 5

6 Fri Jan 11, 2019 Theory Wellness (Great Barrington) 6

7 Tue Jan 15, 2019 Temescal Wellness (Pittsfield) 7

8 Sun Jan 20, 2019 Northeast Alternatives (Fall River) 8

9 Wed Feb 13, 2019 Temescal Wellness (Hudson) 9

Wed Feb 20, 2019 ATG Suspended (Salem) 8

10 Wed Mar 06, 2019 Sanctuary (Gardner) 9

11 Fri Mar 15, 2019 Caroline's Cannabis (Uxbridge) 10

12 Sat Mar 16, 2019 Patriot Care (Lowell) 11

13 Sat Mar 23, 2019 NETA (Brookline) 12

14 Tue Apr 02, 2019 Patriot Care (Greenfield) 13

Sat Apr 06, 2019 ATG Reopens (Salem) 14

15 Sat Apr 06, 2019 Berkshire Roots (Pittsfield) 15

16 Wed Apr 24, 2019 Silver Therapeutics (Williamstown) 16

17 Wed May 1, 2019 Good Chemistry (Worcester) 17

18 Sun May 12, 2019 RISE (Amherst) 18

19 Sat May 25, 2019 Garden Remedies (Newton) 19

20 Sun Jun 09, 2019 Garden Remedies (Marlborough) 20

Estimating Store Activity The Massachusetts Cannabis Control Commission has ● Granted authority to 20 retail marijuana stores to commence operations ● Issues final licenses to 3 additional stores, meaning those operations are stocking their shelves,

assuring all inventory is properly registered in METRC®, the state’s data tracking system, and preparing for authority to commence operations

● Issued provisional licenses to 43 stores, meaning those applicants’ application packets were deemed complete, acceptable, and approved by the Commission and those operators are now building out and developing their stores

● Received complete applications from 106 additional retail marijuana stores Therefore, 66 retail marijuana stores will likely be open by the fall of 2019 and at least 172 by the time our Maynard store opens.



Table 3: Status of Marijuana Retail Operations as of June 13, 2019

Marijuana Establishment Status APP

SUBMIT DENIED

* PROVISIONAL

LICENSE FINAL

LICENSE COMMENCE OPERATIONS TOTAL*

Independent Testing Laboratory 3 - 1 - 2 6

Retailer 106 - 43 3 20 172

Cultivator 77 1 33 6 14 131

Product Manufacturer 54 - 28 4 14 100

Existing Licensee Transporter 2 - - - 2 4

Microbusiness 9 - 2 1 - 12

Research Facility 5 - - - - 5

Third-Party Transporter 2 - 1 - - 3

Craft Cooperative 2 - - - - 2

* Denied applications are not included in the Total column count While the media has projected an image of long lines, snarled traffic, and general chaos, that perception is not representative of stores that have opened in 2019. It’s important to note that the first two stores that opened in November 2018 were not only the first to open in Massachusetts, but they were also the first to open on the East Coast, feeding pent up demand. Most stores now open with little fanfare and scant media publicity. They often have sophisticated, appointment-only scheduling, off-site parking, and significantly better management, informed by the problems experienced by the first few stores. In November, two stores opened and operated at a near $80 million annualized sales rate. By week 27, ended Sunday May 26, 2019, there were 19 stores open, operating at an average $27.7 million annualized sales rate (having fallen from $27.9 million average the week prior). Average sales rates per store are at much more manageable levels and are coming down. (See Appendix 6.) We believe Massachusetts will ultimately have ~300 stores with average per store revenue in the range of $6 million. It has been reported by the Boston Globe (April 23, 2019) that Theory Wellness in Great Barrington generates nearly half its customers from New York, with some driving five hours from Buffalo and others driving 2 ½ hours from New York City. While out of state customers will continue to patronize border town stores, we do not expect the Maynard store to participate in that activity. Furthermore, as neighboring states legalize recreational (adult-use) marijuana and implement their own programs, cross-border sales will diminish (though we do not foresee any material impact until late 2023 at the soonest).

PRODUCTS & SERVICES

Product Line All products will be purchased from established licensed cultivators and manufacturers as well as licensed, local craft producers. All products will be fully tested by licensed testing labs in accordance with State and municipal regulations. State regulations do not allow purchase of products from home growers, off-market sources, or otherwise unlicensed sources. Revolutionary Clinics will be NewCann’s primary wholesale supplier (see Tab 8).



Beyond Revolutionary Clinics, we intend to provide priority consideration to product cultivated (a) in Maynard, (b) by independent cultivators, and (c) by businesses that are generally privately-held and Massachusetts-owned. We acknowledge the importance of the Host Community benefiting from our purchase of products from local suppliers who employ residents and with local ownership (where possible). We support the goal that the money stays within the community whenever possible.

Flower. Flower is presently the most popular product in adult-use marijuana stores and is typically smoked or vaporized. Ingestion is through the lungs. There are numerous cultivars (often referred to as strains) with varying levels of THC (the psychoactive component) and terpenes (a wide variety of chemicals within the plant that amongst other things provides aroma and flavor). Extracts. Extracts such as concentrates are manufactured by separating the trichomes (semi-transparent granular hair-like outgrowths) from the marijuana flowers to create a concentrated dose of this specific part of the marijuana plant, often called hash, wax, and shatter. Edibles. Edibles are foods cooked with butter or oil that have been infused with marijuana (e.g., bars or cookies). Edibles are ingested through the mouth, absorbed in the gastrointestinal tract, and usually take longer to take effect (20 minutes to an hour or more). The effects generally last longer than smoking or vaporizing. Vape Cartridges. Rather than burning and inhaling marijuana smoke, marijuana oil is heated to a vapor and inhaled through a vaping pen. Preparations. Preparations include tinctures, dermals, transdermals, nectars, and salves. Tinctures are a concentrated liquid herbal extract. It is typically made by soaking herbs and other plant parts in alcohol, for weeks to extract the active constituents. Topicals come in many forms, such as lotions, oils, salves, balms, creams, and bath bombs. Topicals work a bit differently than other marijuana products as they do not get the consumer high. Rather, topicals are often used to alleviate various ailments and provide long-lasting relief to those in need. Topicals are becoming increasingly popular since they allow the consumer to receive the beneficial qualities of marijuana without the psychoactive impact.

There are two primary types of topicals, dermal and transdermal.

Dermals are a marijuana-infused product, such as creams or lotions, that are absorbed through the skin. These topicals have an effect only on the application site and area, meaning that to be effective, they must be applied where the pain or ailment is. Dermal topicals are great for treating sore or swollen muscles, skin ailments and much more. To use, simply apply the desired amount of product to the area that needs relief.

Transdermal topicals differ from a dermal topical because they are absorbed through the skin and can have healing effects away from the site of application. They are applied the same way as dermal topicals but have more permeating effects. Transdermal topicals are great for those who are unable

https://www.coloradopotguide.com/colorado-marijuana-blog/article/marijuana-topicals-skin-care-re-imagined/

https://www.coloradopotguide.com/colorado-marijuana-blog/article/cannabinoid-education-characteristics-healing-benefits/

https://www.coloradopotguide.com/colorado-marijuana-blog/article/cannabinoid-education-characteristics-healing-benefits/



to consume marijuana in more traditional methods, contributing to their popularity. Transdermal topicals can provide full-body relief in a matter of moments, which is extremely appealing to people who don’t want to smoke or eat marijuana.

Accessories include grinders, vaporizers, pipes, bongs, rolling papers, storage containers, humidors, books and DVDs relating to marijuana use and cultivation.

Product Quality, Testing and Assurances – Disposal of Bad Product The store will request appropriate documentation to confirm items were properly tested (unless the product labeling is sufficient for this purpose). NewCann will only offer items which have passed purity standards, pursuant to 935 CMR 500.160 Testing of Marijuana and Marijuana Products. All Massachusetts marijuana is tracked in the state’s seed-to-sale software system provided by METRC®. Each plant receives a tag and is tracked through sale, whether packaged as raw flower or converted to an edible product, lotion, etc. NewCann intends to use the METRC® point of sale (POS) system. Any product or marijuana cultivar found to have a quality defect will be removed from sales and segregated to a locked container in the inventory room. The supplier and the Commission, as appropriate, will be notified as required by the regulations. Defective product will be returned to the supplier for proper destruction. As we will not be cultivating or manufacturing, our marijuana-related products will all be purchased from others and as part of our supplier agreements, out-of-date or defective product will be returned to the supplier for proper destruction. The store will recycle all other non-marijuana materials (i.e. plastics, paper, etc.) in a conventional fashion. Interior refuse will sit in the store for two days before being transferred to a dumpster and will be inspected by a manager before transfer to the dumpster to assure that no one has intentionally or inadvertently dropped marijuana product into a trash bin (to retrieve from the dumpster after hours).

PRODUCT STORAGE

Safe Storage To maintain freshness and product quality, packages marijuana is kept in light-resistant packaging and stored in temperature-controlled areas. Should we eventually deal in loose flower products, they will be stored in humidors to maintain quality, shelf-life, and protect from deterioration.

Secure Storage Product is kept in secured display cases or cabinets, and customers won’t be allowed to touch or sample the product before buying. All seed-to-sale products are integrated into the Massachusetts METRC® system. Inventory will be tracked through the retail shop’s POS system (Green Bits) and transferred to NewCann on the manifest, pursuant to 935 CMR 500.105(13)(f)(1-3) Manifests. Once the retail shop manager accepts the arrival of the new, pre-packaged inventory, in sealed, labeled, tamper-resistant packaging, pursuant to 935 CMR 500.105(13)(a)(10), will now be reflected in METRC®, as part of the retail shop’s inventory. Green Bits POS system will track this product from sitting in the locked safe and to a customer sale and reflected as real-time inventory. To protect from theft, daily product inventory will be close-by, but kept locked and secured, behind the counter with the check-out stations, while the greater inventory will be locked in a safe or similar secured vessel within the Limited Access room in the rear of the retail shop. Marijuana will be stored on the premises, pursuant to 935 CMR 500.105(11) Storage of Marijuana.



Required Product Labeling Staff will be trained to understand 935 CMR 500.150: Edible Marijuana Products and specifically prohibitions on edibles shaped in the distinct shape of a human, animal, or fruit (500.150(1)(b)1; or shapes that bear the likeness or contains characteristics of a realistic or fictional human, animal, or fruit, including artistic, caricature, or cartoon renderings (500.150(1)(b)2. Staff will be trained to identify any products that violate these regulations, aided by laminated checklists and wall posters. Staff will be required to understand and be fluent in 500.150(3) Additional Labeling and Packaging Requirements for Edible marijuana products. Inventory intake staff will be responsible to assure every container holding a marijuana product is properly labeled. Labels for perishable edible marijuana products must state that the product must be refrigerated and include the date it was produced. All products must disclose the total THC (measured in milligrams – MG) of the package, total serving count, THC per serving, and clearly state that these amounts do not exceed legal serving limits (5MG per serving and a maximum of 100MG per container). Inventory intake staff will confirm that packages contain a warning that the impairment effects of edible marijuana may be delayed by two hours or more. Inventory intake staff will confirm at intake and at time of sale that labels with a use-by date have not been altered, tampered with, or replaced with a new label over a prior label. Inventory intake staff, familiar with the product, will confirm that each single serving of an edible marijuana product is physically marked so our customers can clearly determine how much of the product constitutes a single serving of active THC. For multiple serving packages of edibles, each serving must be easily separable to allow our customers to physically separate them and each single serving must be marked, stamped, or otherwise imprinted with a symbol or easily recognizable mark issued by the Commission indicating that the package contains marijuana. Regardless of our suppliers’ legal responsibility for product quality, packaging, and labeling, NewCann will educate staff through training programs and detailed standard operating procedures so that all employees understand that we remain the stewards of our customers. Therefore, it is our responsibility to inspect and identify all products to avoid any confusion about the content or servings of our marijuana products.

Product Supply: Ownership of or Relationship with Cultivator(s) and Testing Facilities. Pursuant to 935 CMR 500.002, testing laboratories must be independent financially from any Medical Marijuana Treatment Center (RMD), Marijuana Establishment or licensee for which it conducts a test. NewCann does not have an interest of any kind in a testing facility. As a retail store, NewCann products must be tested by our suppliers and, therefore, we will not have a relationship with a testing lab. NewCann member, Revolutionary Clinics, owns licensed cultivation and manufacturing operations and is expected to be NewCann’s primary product supplier. Revolutionary Clinics does not have a financial relationship with a testing lab, but their products are tested as mandated by state and CCC regulations.



Product Delivery Products will be delivered by vendor delivery vehicles or licensed marijuana transport operators. Product delivery will be made during pre-operating hours. Deliveries will require, at minimum, two NewCann staff to be present. All product intake operations will be fully recorded and completed in accordance with 935 CMR 500.000 regulations. All scheduled deliveries will include an estimated delivery window, and a promise that if delivery is delayed, the driver will contact NewCann. Prior to purchasing product from a new supplier, NewCann will confirm the supplier is licensed with the Commission and that every delivery agent (either the supplier or their delivery service) has an emergency plan detailing how they will respond should the vehicle break down on a Maynard roadway. NewCann also intends to contract with a local tow operator such that if a vendor’s delivery vehicle breaks down and the vendor’s vehicle breakdown plan fails, NewCann will be able to seamlessly step in to provide a remedy. Rather than respond “it’s not our truck so it’s not our problem,” we have taken a community-centered focus. If it’s a truck intended for our shop and it’s disabled on our roads, it is our problem!

RETAIL SHOP OVERVIEW

Customer Experience NewCann places a high emphasis on providing educational information to enhance the customer experience to help choose products appropriately and understand how to use them correctly. We seek to be trusted by customers and known within the community as a business that provides accurate product awareness and knowledge. We will achieve this by offering financial incentives to motivate staff to constantly be learning and become subject matter experts in specific product and therapeutic uses of marijuana. Based on customer needs, we plan to offer a variety of educational workshops ranging from pain management to reduce opioid use (both to customers and local pharmacists) to cooking classes (e.g. oils, butter, edibles, etc.).

Customer Loyalty Programs NewCann’s customer loyalty program offers discounts, product alerts, and incentives for new customer referrals. We offer special programs for Veterans and current DPH Medical card holders.

Conceptualization of Store Interior Regulations provide that a retailer must ensure “that all marijuana products are kept out of plain sight and are not visible from a public place without the use of binoculars, optical aids or aircraft.” To the degree, the retail storefront is glass, they will be tinted or treated with a reflective coating to comply with 935 CMR 500.110(1)(l). Customers will enter the store through a vestibule that will house a security screener who will check and verify identification using advanced ID scanning equipment. Unlike a liquor store, where a minor may enter but may not purchase, access to retail marijuana establishments is prohibited by anyone under the age of 21 years old. Customers will only be allowed to enter the second door for entry to the store interior upon confirmation their ID is valid, and they are the person whose ID has been presented. The premise will be alcohol and smoke-free. Marijuana consumption will not be allowed on the grounds in any area.



The store’s interior will feature an open concept design and may include pocket areas for private consultation (depending on the space) where customers can speak privately with a member of our team. We will service our customers from behind a counter where the rear wall will have a secure doorway to a restricted area. The restricted area will include a locked and secure inventory room, a separate area for intake of new deliveries (new deliveries must be inspected and checked-in in compliance with regulations 500.105(13)(a) 8 through 10, shown below), an employee rest/kitchenette area, and a secure restricted access surveillance room. The secure inventory room will include vaults, safes, and/or other locked vessels for the storage of marijuana products.

500.105(13)(a): 8. Within eight hours after arrival at the destination Marijuana Establishment, the destination establishment

must re-weigh, re-inventory, and account for, on video, all marijuana products transported. 9. When videotaping the weighing, inventorying, and accounting of marijuana products before transportation or

after receipt, the video must show each product being weighed, the weight, and the manifest. 10. Marijuana products must be packaged in sealed, labeled, and tamper or child resistant packaging prior to and

during transportation.

Displays of Educational Material While many Massachusetts retail stores choose decorative wall décor from tile to stone to barn board, we will use most of the wall space for well-designed, educational material that can be viewed on handheld mobile devices (phones and tablets). A customer will scan a QR code to load a subject specific article or video onto their device. The shop will have café style seating for customers who are seeking more product information and wish to read or view/listen to videos. Audio will serve the needs of the visually impaired. We are researching solutions to serve hearing impaired customers. Subject to community needs, written materials will be available in alternative languages.

Seminars for Seniors, Veterans, and Pet Owners NewCann will host private educational sessions during pre-opening hours on CBD and THC cultivars, for Maynard seniors and veterans interested in understanding the therapeutic benefits of marijuana in coordination with the Maynard Council on Aging and Maynard Veterans Services. Our product experts will extend to pet applications as well as safe storage of marijuana products to prevent inadvertent ingestion by people or pets. NewCann anticipates that our formula: (education and information) + (approachable subject matter experts) + (a wide selection of high-quality products) = strong sales.

Scan the Code – try it!



QLess Appointment Scheduling App When Store Opens We believe that by the time we open there will be enough open stores that we will not experience an overload in demand. However, if statewide average daily sales rates remain high, we will use the QLess appointment-only app to schedule customer visits. This queue management system allows customers to wait in a virtual line rather than a physical line. If we use the QLess app during the opening week, we will only schedule appointments to 85% of capacity to ensure smooth operation. Should we find that customer traffic on certain days is excessively strong, we may elect to use QLess on those days.

Customer Purchasing Experience NewCann plans to offer various methods of customer purchasing and payment preferences. Customers will be able to pre-order from a computer or mobile device (an app) with an option to prepay or shop directly in store. We will have three separate customer service lines: 1) regular in-store transactions, 2) express line for pre-order customers, and 3) walk-in medical card holders and Veterans with a military ID card. Medical card holders a Veterans that pre-order will join the express line.

Customer On-line Process a. Customer selects product, submits on-line order, and indicates pick-up time b. The customer will receive a confirmation text that the order is received c. The order is gathered and placed in a small basket with a bag and seal d. The basket is marked with an order number that is sent to the customer by text e. When the customer arrives, the order is matched and retrieved, and their ID is

matched to the order f. The products are laid out on the counter while the order is confirmed. The bag is packed under view

of the customer and cameras, the bag is sealed, the customer pays (unless the order was a pre-pay) and leaves the store.

NewCann believes most customers will develop regular purchasing behaviors. By providing a convenient way to order, we hope to increase efficiency and decrease cycle times. This should increase our customer capacity while reducing traffic demands.

Cash Handling We believe by the time the store opens Congress will have passed banking legislation to allow marijuana companies to access all traditional banking services. That should reduce cash transactions to under 15% of total revenue. Cash will be routinely moved to a locked vault system. There are several systems in the market including some that have an under-counter cash collector where cash is deposited after each transaction, automatically counted and sorted, and maintained in a locked vessel that can be affixed to the floor. We expect to make daily cash deposits. Until banking services are widespread (or in the event those services are not widespread by the time we open), we expect to utilize an armored car delivery service for bank deposits.

INTERNAL AUDITS NewCann complies with all 935 CMR 500 regulations and will “conduct a monthly analysis of its equipment and sales data to determine that no software has been installed that could be utilized to



manipulate or alter sales data and that no other methodology has been employed to manipulate or alter sales data. A Marijuana Retailer shall maintain records that it has performed the monthly analysis and produce it upon request to the Commission.” In addition, the NewCann operating plan provides for:

• Daily inventory audits to reconcile sales receipts against cash collected and inventory.

• Weekly inventory audits are reviewed and scrutinized by store manager for accuracy.

• Monthly audit performed by the bookkeeper.

• Quarterly third-party audit performed by accountant.

• Annual review of financial statements.

Diversion Prevention Diversion generally refers to products taken by employees without authorization while theft refers to products taken by customers or intruders without authorization. We prevent theft by keeping all products behind the counter and not available to customers via self-service. We prevent diversion through training of staff, internal systems (such as audits), and widespread camera use, as discussed below under Security.

MARKETING STRATEGY

Customer Outreach Following regulatory marketing guidelines, NewCann will utilize local media to increase awareness about our products and services. Periodic press releases featuring in-store events and educational programs will be sent to appropriate community centers, hospice and adult community bulletin boards. By regulation, marketing can only be conducted through mediums or venues where at least 85% of the audience is expected to be 21 years of age or older.

NewCann will actively work to increase our customer base and inspire loyalty by offering promotions. Marketing will be permission-based and feature soft-sales tactics. Communications to members will be tasteful and will be educationally focused. All communications will be designed to respect privacy and strict compliance with Massachusetts laws or regulations. Messaging will include on-site promotional material, as well as occasional emailed communications to members who have specifically opted in.

Guest Referral Program Satisfied customers are the most effective means to grow a business. NewCann will develop a formal Guest Referral Program, giving customers the opportunity to recommend a new customer whom they believe will benefit from our services. Both the current and new customer will receive special rewards and discounts as members of the program.

MANAGING CUSTOMER TRAFFIC (TRAFFIC PLAN) We are committed to minimizing traffic congestion inside and outside the store. Providing a positive experience for our customers and the community of Maynard is of paramount concern. NewCann has proactively implemented the following processes: 1. Incentivize customers to review the menu before visiting the store to minimize visit time. 2. Overstaff the store until customer traffic normalizes. 3. Place associates on the floor to discuss menu options with customers in line, reducing counter visit

time and increasing customer throughput. 4. Pair counter associates with runners – to gather the order, reducing counter wait times.



5. Add temporary additional check-out stations, if needed. 6. Allow customers to order direct from their phone while in store and move to the express line. 7. Offer a discount for customers who pre-order during the opening weeks. 8. Employ the QLess app, when customer traffic is heavy in general or on specific days. 9. Use discounts to send customers to less congested time periods, during off peak hours and

normalize a consistent store traffic

Parking Management Subject to need and location, several attendants will manage parking during the opening weeks. If the final selected location lacks sufficient parking, we intend to contract with a neighboring business/landowner with excess parking to use their lot and bus customers to and from the store. If demand is excessive during the opening week, the store will open by appointment-only using the QLess scheduling app.

Customer Cycle Times To properly service customer traffic and minimize congestion, NewCann will balance expected customer traffic with customer check-out stations within the store. We expect to service 200 to 300 customers per day and estimate we will need 5 to 8 check-out stations for smooth operations. See Appendix 7 for details about how our analysis was completed.

Relative Daily Customer Traffic Levels (Identifying Busy Days) We analyzed daily sales data for Massachusetts retail marijuana establishments for the first 16 weeks of the adult-use program ended March 10, 2019. We determined if Monday and Tuesday sales are $100 per day, the store should be prepared to service $170 to $180 per day on Friday and Saturday. Detailed daily traffic levels are included in Appendix 8.

HOURS OF OPERATION In determining the Hours of Operation for the NewCann Retail Shop, we researched the operating hours of three existing dedicated Maynard liquor stores. Table 4: Maynard Alcohol Beverage Regulations and Existing Liquor Establishment Hours of Operation

Sunday Mon - Thursday Fri - Saturday WEEKLY HOURS Business Open Close Open Close Open Close

MAYNARD Alcohol Bev. Licensing Regs

12:00 PM 9:00 PM 8:00 AM 11:00 PM 8:00 AM 11:00 PM 99.0 hrs.

Online Wine & Liquors 12:00 PM 6:00 PM 11:00 AM 10:00 PM 11:00 AM 10:00 PM 73.0 hrs.

Main Street Liquors 12:00 PM 6:00 PM 9:30 AM 10:00 PM 9:30 AM 11:00 PM 83.0 hrs.

Merai Liquors CLOSED CLOSED 10:00 AM 10:00 PM 10:00 AM 11:00 PM 79. 0 hrs.

NEWCANN Proposed 10:00 AM 8:00 PM 10:00 AM 10:00 PM 10:00 AM 11:00 PM 82.0 hrs.



SECURITY

Overall Security We combine policies and procedure with technology, training and common sense. We seek the best practices from other industries. Our earlier description of the sale process, for example, is borrowed from the casino industry. Products are set out on the counter allowing overhead cameras to record all aspects of the transaction. In addition, we use chip-enabled ID cards and biometric locks to restrict access to sensitive areas. The locks are pre-programmed to ensure only authorized individuals can secure access to confirm security is functioning properly, we employ multiple internal and external cameras, 24x7 monitoring, and record, encrypt, and back up to the cloud. Within this Confidential Business Plan, we provide an overview of security. Our detailed security plan reviews in detail 935 CMR 500.110 “Security Requirements for Marijuana Establishments” and addresses every point and requirement. Employees are continuously trained on the retail shop’s security practices. All employees are trained on how to confirm age, identification, how to handle situations with fake IDs and other awkward situations. Training includes role playing scenarios to encourage the staff to anticipate what might go wrong and how to respond. Security extends to customer engagement, ensuring employees are properly trained to handle difficult situations like belligerent or unhappy customers or those who might pose a danger to others. When appropriate, training will be conducted by contracted industry experts. For critical issues, we will run safety drills.

External Security Outside security includes external motion detector cameras with two-way speakers. Cameras will be atop the around the building as well as in the parking lot and at entry / exit points. The exterior will be well lit but with consideration of residential neighbors, if any. If abnormal activity is detected through the monitoring cameras, the diagnostic software along with a fully staffed 24x7 Command Center, can observe any incident and respond accordingly with established security protocols. The two-way speakers allow the command center to listen and talk to trespassers and loiterers. All video is recorded and automatically encrypted and backed-up to the cloud. A date and time stamp are embedded on all recordings, synchronized, and set correctly, and will not significantly obscure the picture. The retail shop cameras are capable of being monitored on-site from the security room, at the 24x7 Command Center or from a monitor within the host community’s police department. In the event of a security incident, the Command Center can “push” a video feed directly to the police department or, with local PD permission, to an officer on scene.

Internal Security When a customer enters the vestibule of the retail shop, the individual is positioned to be fully on-camera and a staff member will verify their age via a state-issued identification card prior to allowing access. The customer’s state or government-issued ID will be scanned at time of entry and again at time of purchase. This ID scanner analyzes identification cards for fraud, alteration, or counterfeit, by utilizing ID technology commonly deployed in liquor stores.



In locations with an employee-only door, only system authorized persons will be allowed access and all persons will be captured on CCTV. The staff-only and limited access areas will have cameras at appropriate angles as will any employee-only entrance door and external cameras near that door. Further, the access systems can be programmed to only allow certain staff into certain restricted areas (such as the inventory room). High resolution digital cameras will be present at every entry and exit, check-out stations, throughout all areas (except rest rooms), and at product display counters. All windows and doorways will be equipped with alarm sensors. All limited access areas will be properly signed with “Authorized Personnel Only” or “Do Not Enter” signs. The Police Department and Fire Department will be notified of any security changes. At each check-out station, we (i) verify the customer’s ID, (ii) capture a picture of the ID, a picture of the person and (iii) connect both items to the purchase in a customer file within the POS system with a date and time stamp.

LIFE AND FIRE SAFETY The vestibule will be designed to be large enough so as not to impede movement of a fire department stretcher through the doorways. If there is a doorway offset between the street entrance and the inner door, all turns will be designed to allow easy movement of life safety equipment. The vestibule will also be equipped with a fire extinguisher and first aid kit in the event of an exterior emergency. The premises will be ADA (Americans with Disabilities) compliant and in compliance with all local/state building and fire codes.

IMPAIRED CUSTOMERS Staff will undergo training on how to handle impaired customers. We will not sell to or serve (show products, etc.) impaired customers. However, we may interact with an impaired customer if necessary, to delay their departure until local police can arrive to conduct an impairment assessment.

STAFFING & TRAINING – Commitment to Diversity & Local Hiring We will recruit staff from the local Maynard community. Preference will be given to Veterans and individuals with knowledge and/or experience in the therapeutic use of marijuana. It is of utmost importance to NewCann that we hire a staff that is diverse in age, gender, and race and represents the communities and customers whom we serve. New staff will be evaluated for presentation, people skills, communication abilities, and attitude. Industry publications have often referenced restaurant and food service workers as having the quick task-changing skill set best suited for a position in a retail marijuana shop. Staff will dress in a common outfit (e.g. pants color and company-supplied shirt in various styles) and will always display a name badge.

General Staffing and Recruitment The store will be staffed with a manager, assistant manager, senior associates trained and trusted to open or close the store, and 12 to 18 budtenders (customer service representatives). We expect to have three receptionist positions (one on-site at a time) as well as parking attendants as needed.



Staff will be recruited either directly from local advertising, via job fairs, or through staffing firms (there are several local Massachusetts marijuana staffing firms and Hemp Staff is on retainer with NewCann – see Tab 9). We will also recruit through the Commission’s social equity connector program. The Commission has a Local Employment Leader rating system that requires 51% or more of the licensee’s employees have been a Massachusetts resident for 12 months or more. Our staffing goal is at least 50% of the team from Maynard and surrounding towns. Store staff will report to the operations executives.

Employee Training NewCann strives for best-in-class employees and our vision for staff training and competence is to inspire loyalty in our team, ensuring they want to continue working with us. All employees are required to undergo training specific to their role prior to commencing employment. All staff will complete the state mandated Responsible Vendor Training Program. We require a minimum of twenty hours of annual ongoing job training, exceeding the state requirement of eight hours a year, NewCann will provide financial incentives for staff to become experts in our product features and benefits, as deemed important to our customers. Our training plan will be designed around the following levels of knowledge:

● Conversant: The employee understands the subject matter and is sufficiently familiar to participate in basic conversation. These staff members are training or assisting budtenders.

● Fluent: The employee has a sufficient understanding and grasp of the subject matter such that they can explain it to others, provide examples, and answer questions.

● Expert: The employee has read or studied the subject matter to understand the nuances of the subject and is sufficiently understands the material that they can teach it to others. These are our subject matter experts called upon when a customer has a specific technical question.

Training Topics We are a continuous learning organization and have embedded diverse and important topics into our ongoing training programs. Training will be offered in various formats including onsite workshops, webinars and videos, and written material. Training sessions will be offered on multiple occasions to ensure the opportunity for all employees to participate. Topics could include the following:

● Understanding products ● Understanding flower strains ● Absorption & effect based upon delivery

system (lungs, stomach, skin) ● Cooking with marijuana oils ● Proper storage of marijuana product – both

consumer and in store ● Handling inventory, stocking, intake ● Procedure for storing and disposing of bad

product ● Customer facing systems (POS and ID

scanners) ● Handling age confirmations, fake IDs, and

IDs of another person

● Handling awkward customer situations – the law, regulations, and safe solutions

● Provisions for confiscating fraudulent identifications (who owns that license – named person or the issuer?)

● Common mistakes made in ID and age verification

● Managing belligerent or under the influence customers

● Responding to a medical emergency ● Managing inventory ● Transportation regulations and problems ● General security ● Preventing diversion (theft)



● Understanding types of product contaminants

● Understanding product testing - what do the labs do and why

● Proper record keeping ● Managing people, estimating staffing levels

● Effective communication skills and diffusing employee anger

● Understanding performance reports from the POS system

● Responding to a robbery ● Other subjects as necessary

Staff will be held to a high standard. Violations of security or inventory handling policies will be grounds for termination and all employees will understand NewCann enforces a zero-tolerance policy for these matters.

DIVERSITY PROGRAM The Commission requires a diversity plan from each applicant. The following discussion is above and beyond staff training and diverse local hiring.

Positive Impact

NewCann believes it can promote diversity, as identified in 935 CMR 500.040 and 500.100, with plans to establish a Marijuana-based Incubator and Training Facility; CannaVenture Labs (operated with its own CCC Application and License process). NewCann will target individuals from areas of disproportionate impact, to act as Agents and operate under the CannaVenture Labs license, as entrepreneurs and business training in the marijuana industry. With license approval, the incubator and training facility could be an attractive vehicle for diversity funding by other retail marijuana industry participants seeking to make an impact.

Marijuana-based Incubator

Each CCC licensee is required to create and promote a diversity plan. An incubator and training facility could be a perfect opportunity. The incubator will be a business launch facility; that includes an industrial kitchen, conference room, work cubicles and a receptionist. The training facility will constantly be industry speakers and lecturers. The professional services offered will be business and technology subjects. There will be business training offered within the incubator to participants from the host community and our impacted areas. Individuals with recently sealed marijuana records, could use it to launch careers in the marijuana industry. This effort will offer resources and assistance:

• Access to traditional sources of capital and provide debt and/or equity funding; • Offer business mentors and business support groups for individual entrepreneurs; • Work with LISC Boston to identify individuals (21+) from areas of disproportionate impact,

knowledgeable about entrepreneurship and interested in the marijuana industry; • Utilize the MA Supplier Diversity Office to identify certified minority, women, and veteran-

owned businesses for vending and contracting services and opportunities.

Training Facility

Professional services & instructional training will be held at the location during the day and evenings and weekend days. Providing professors, entrepreneurs, and business professionals to conduct training in business, entrepreneurship and the marijuana industry:

http://www.lisc.org/about-us/

https://www.mass.gov/supplier-diversity-office



• Business: accounting, marketing, finance, compliance, regulations

• Technology: phone, web, computers, POS systems, spreadsheets, MS Word

• Workspace: industrial kitchen, conference rooms, receptionist, work cubicles

LOCATION NewCann is prepared to find a location that meets with the Town’s approval.

START-UP FINANCING Management has estimated a preliminary start-up budget of $450,000 as follows:

Table 5: Start-up Financing Budget

Working capital through opening (rent, fees, professionals) $30,000

Demolition and Fit-up $50,000

Retail Fixtures $40,000

Security, Lighting $30,000

Start-up Capital (90-days costs) $200,000

Misc. and Contingencies $100,000

The NewCann team members have ample resources to fund the costs without need of investors or borrowing. However, our intention is to allow investors to participate once we have secured an HCA and completed the Commission application process. All investors will be vetted by the Commission with CORIs completed and submitted.

PROPOSED TIMELINE TO BECOME OPERATIONAL Table 6: Timeline to Become Operational

Step Day Event

1 0 Secure Host Community Agreement approval

2 15 Execute Host Community Agreement document (2 weeks)

3 45 Secure a location (30 days)

4 75 Secure site approval for location (30 days)

5 105 Architectural plans completed (30 days)

6 105 Finalize application to CCC

7 195 Receive Provisional License (90-day process)

8 270 Complete store build-out (75 days)

9 270 Apply for Final License

10 315 CCC site inspection and receive final license (45-day process)

11 329 Stock the store and enter all data into METRC® system (2 weeks)

12 343 Final CCC inspection (2 weeks)

13 343 Receive Authorization to Commence Operations

14 346 3-day waiting period from Authorization to Commence Operations to opening



ESTABLISHED PROFESSIONAL SERVICE RELATIONSHIPS

Banking NewCann has commenced the process to establish a banking relationship with Safe Harbor, an affiliate of Gardner Federal Credit Union (“GFCU”) and one of the two institutions to publicly state they will bank adult-use marijuana operations. GFCU requests operators first secure a Host Community Agreement before completing the account set-up process. See Tab 5 for the application to GFCU.

Insurance NewCann has identified several Massachusetts insurance brokers that will cover retail marijuana establishments. Licensing is a precursor to insurance coverage as carriers will only insure state licensed marijuana establishments. These agents include Pearson Wallace Insurance (Pittsfield) and Gordon Atlantic Insurance (Norwell).

Tax Advisor Edward Leary, CPA. Edward specialized in accounting and tax regulations with a large start-up practice. Ed is a 30+ year experienced CPA, Certified Financial Planner and Certified Fraud Examiner.

Attorney Blake M. Mensing, The Mensing Group, LLC, Holliston, MA. The Mensing Group LLC is the first, and only, homegrown legal and business advisory firm solely dedicated to marijuana in Massachusetts.

Security DCRM Solutions (Princeton, MA)

Point of Sale (POS System) Green Bits POS System, a system designed for retail-only operators that fully integrates with METRC®

ANTICIPATED REVENUE TO MAYNARD Provide “estimates of municipal revenues to be generated by the proposed marijuana establishment (local sales tax, real & personal property taxes, vehicle excise taxes, etc.)” NewCann projects the store will ultimately generate $6.5 million of annual revenue. This translates to $390,000 of tax revenue to the town from the 3% excise tax and 3% community impact fee. Store fixtures will likely be subject to personal property taxes.

COMMUNITY IMPACT SERVICES FOR MAYNARD We have developed several community impact services (listed below) and will work with Maynard town officials to select those programs that will bring the greatest value to Maynard. Those services include:

Economic Development Participation We understand Maynard is interested in economic development of the downtown area as well as capitalizing on revenue opportunities from marijuana establishments. NewCann would be interested in participating in this effort and assisting Maynard in two primary ways:



1. Leveraging our store traffic to generate sales for other neighboring businesses. This could take the form of coupons or some other consumer incentive.

2. Encouraging other non-retail marijuana businesses to locate or co-locate in Maynard. We are presently assisting other teams with business plan development and other matters pertaining to establishing their entity and securing the necessary approvals. Should Maynard be interested in attracting other marijuana businesses to the community, we could be of valuable assistance in that effort.

Youth Use Prevention and Education Services We will assist the Town with and participate in, community educational programs on public health, drug abuse prevention (including youth use prevention programs).

Criminal Record Expungement Low wages and lack of opportunity often contribute to crime and drug use. The Massachusetts adult-use marijuana law includes a provision to help individuals expunge certain criminal records. This feature of the law is intended to help impacted persons access mainstream society by removing an obstacle that can hinder meaningful employment. NewCann is willing to develop a workshop to assist qualified candidates to secure expungement. Once expungement is secured, we will introduce these individuals to MassHire to help them obtain available education, skills training, and find employment opportunities.

Local Hiring and Vendor Preference NewCann will provide preference to hiring of Maynard residents and use of Maynard licensed suppliers.

Training Workshops NewCann will host Business Training Workshops for residents interested in launching a craft business. Founder, Professor Beth Goldstein has worked with MassMEP and the Workforce Development Fund.

Senior Education Services We will work with the town and your Senior Center to support marijuana education programs for seniors and others interested in learning about the benefits of marijuana. This will include information on a variety of ailments including glaucoma, Parkinson’s, Multiple Sclerosis, Crohn’s, Hepatitis C, ALS, cancer, and other diseases.

Volunteer Community Services We will provide volunteer community services to the town aimed at mitigating the actual or potentially negative impact of marijuana sales on the town.

Police DRE (Drug Recognition Expert) Training Massachusetts’ Special Commission on Operating Under the Influence and Impaired Driving developed 19 recommendations for state officials to consider. One recommendation calls for the Municipal Police Training Committee to expand training of drug recognition experts. NewCann would be interested in working with the Maynard Police Department to sponsor and underwrite DRE training.



FINANCIAL PLAN Summary of Project Costs Facility cost assumes a rent rate of $15 per foot for 3,000 square feet. NewCann has also assumed a $5 per square foot rate for common charges (the retail space is a triple-net lease). We have assumed monthly charges for electricity ($400), communications ($300), security ($1,000), and miscellaneous expenses ($350). Total annual facility costs are estimated at $78,600. Personnel costs assume a shop manager ($1,235 per week = $64,220 per year, pre-bonus), an assistant manager ($840 per week = $43,680 per year, pre-bonus and pre-overtime), and staffing of 12 to 18 people at $15 to $19 per hour. We have further assumed a 3% of payroll retirement contribution, and 15 full-time employees will receive benefits valued at $1,500 each per month. Total annual personnel costs are estimated at $1,081,325. General overhead costs include insurance, payroll processing, banking fees, web site and technology maintenance, compliance, ongoing staff training, cleaning, misc. shop supplies, and promotion. Total annual overhead costs are estimated at $517,600.

Break-Even Cost Assumptions Start-up financial projections are often based upon revenues and revenues are often simply a best guess. We have instead applied a “bottom-up” financial planning approach. Under this approach, we estimate our operating costs including certain assumptions as to staffing levels. We then assume a range of gross margin on sold items, deduct any direct selling expenses (such as merchant card fees) to arrive at a percentage contribution to operating costs. Because we are subject to IRC 280E which essentially taxes retail marijuana shops on their gross profit (and disallows deductions for normal operating costs – though we believe 280E will be overturned as to state-law compliant marijuana operators by the time our shop opens), we deduct taxes at a rate of 21% multiplied by the gross profit contribution. We use the resulting percentage to estimate a break-even revenue level and apply a logical test as to whether that revenue level appears reasonable, attainable, and likely, as a minimum. See Appendix 9 for further details. Table 7: Break-even Analysis

Product Margin 60% 55% 50% 45% 40%

Breakeven Sales 3,865,000 4,250,000 4,720,000 5,310,000 6,070,000

Cost of Goods 1,546,000 1,912,500 2,360,000 2,920,500 3,642,000

Margin on Goods 2,319,000 2,337,500 2,360,000 2,389,500 2,428,000

Card Fees (5%) 193,250 212,500 236,000 265,500 303,500

Gross Profit 2,125,750 2,125,000 2,124,000 2,124,000 2,124,500

280E Taxes (21%) 446,408 446,250 446,040 446,040 446,145

Total Costs 1,677,525 1,677,525 1,677,525 1,677,525 1,677,525

Facility Expense 78,600 78,600 78,600 78,600 78,600

Personnel Exp. 1,081,325 1,081,325 1,081,325 1,081,325 1,081,325

Overhead Exp. 517,600 517,600 517,600 517,600 517,600

Earnings 1,818 1,225 435 435 830



END OF BUSINESS PLAN – Thank you!

We appreciate your interest and time. If there are any questions, comments, or discussion points, please contact us as follows: David Rabinovitz (617) 281-0710 [email protected]

Jack Madigan (978) 394-1679 [email protected]

Visit us at https://www.cannaventurelabs.com/team/

mailto:[email protected]


https://www.cannaventurelabs.com/team/

Appendix 1 – Team Biographies

David Rabinovitz: In lieu of a resume or CV we attached David’s LinkedIn profile Brief biography of David Rabinovitz

Professional Biography: David earned a BS in Business Administration from Northeastern (1982) and an MBA from Babson (2005). From 1982 to 2004 he worked in the equipment leasing industry. After his MBA he entered the consulting industry, working for boutique firms typically on finance, transactional (mergers and acquisitions), or strategy issues. Marijuana Expertise: In 2010, a former client (Natick, MA) referred David to a doctor in Arizona who needed a consultant to help him analyze and structure a deal in the marijuana business. Three months later, the doctor referred David to someone in the marijuana business in Los Angeles who needed some strategy assistance. In mid-2011 David was asked to prepare a private placement memorandum for a marijuana fund raising which precipitated his deep dive into understanding the marijuana industry. By 2013 David was fluent in marijuana laws and regulations in numerous states and he assembled a team to pursue a Massachusetts Registered Marijuana Dispensary license. The team eventually elected not to pursue the application. David continued to provide consulting in the marijuana sector and in 2018 assembled a team to pursue an adult-use marijuana license focused on retail only (versus the more complex fully integrated medical license scheme where a licensee must grow, process, manufacture, transport, and retail medical marijuana). David is fluent in the business of marijuana and current on key business issues in the industry. On a daily basis he reads four separate news feeds to stay current and conducts further research in issues of interest. David is a long-standing volunteer for the Pan Mass Challenge and part of a select team that arrives a week before the event and remains a week after to handle set-up and break-down logistics. David also manages excess supplies to assure nothing goes to waste. He was instrumental in the PMC receiving the Second Helping Award from the Greater Boston Food Bank.

John E. Madigan: resume attached Brief biography of John E. Madigan

Professional Biography: John earned a BS in Finance (1987) from Babson College and an MBA from F.W. Olin School of Business at Babson College with concentrations in Global Management and Strategy (2005). John is a Concord, Massachusetts native. From 1987 to 2004 he worked in politics, campaigns, and policy and legislation. After his MBA, he worked in cyber security and then spent over five years working with Fidelity Investments as an operations consultant. As an individual contributor, he served as a subject matter expert on business unit metrics with the goal of creating process efficiencies that reduced labor intensive tasks and operating costs.

Marijuana Expertise: In 2013, John joined David Rabinovitz’s RMD team to pursue a Massachusetts Registered Marijuana Dispensary license. The team eventually elected to not pursue the application. Nonetheless, John continued to keep abreast of the industry, tracking state legislation and following the implementation of adult-use regulations in legal states across the nation and Massachusetts.

Volunteer & Civic Engagement

• Boston Symphony Orchestra’s Young Professionals Group (YoPro) – Founder, Steering Committee Member, consistently recruited 225+ (25 to 45-year-old) “next generation” patrons, introduced and attended classical music concerts and events, 2017-18 is the 5th year of YoPro program (Boston, MA)

• Democratic National Committee Convention (Podium Operations Team) – Speaker Tracker, convention speaker advance (city arrival, rehearsals, tele-prompter, make-up, speech delivery, media availability, through city departure); 1992, 1996, 2000, 2012 & 2016

• HeadCount – Volunteer; register concert-attendees to vote, 3rd year (Boston, MA)

• Babson’s Coaching for Leadership and Teamwork Program (CLTP) – Coach, 7th year

• Alzheimer’s Walk Participant – Volunteer, Team Sully Strong, 5th year (Plymouth, MA)

• Brain Tumor Society Ride – Operations Volunteer, 3rd year (Watertown, MA)

• Cape Cod National Seashore Lifeguard Alumni Association (CCNSLAA) – Member (Brewster, MA)

Keith W. Cooper: In lieu of a resume or CV we attached Keith’s LinkedIn profile Brief Biography of Keith Cooper

Professional Biography: Keith graduated from Harvard University with a Bachelor of Arts degree in Psychology in 1983. He earned an MBA from Harvard Business School in 1988. Keith is an experienced startup, growth and turn-around CEO with multiple significant wins for investors and employees. He has led companies in telecommunications services, internet telephony, web analytics, online backup, cloud services, venture capital, health care IT and Big Data. In 2012 he accepted a two-year assignment to rationalize and grow a Rutgers' technology spin-out. He acquired and merged three companies to create the leading provider of web extraction and monitoring solutions for information service providers and corporations worldwide. In March 2015 Keith joined Constant Therapy as their CEO. Constant Therapy provides a science-based mobile solution for highly personalized, continuous therapy tools to patients with traumatic brain injury, stroke, aphasia, and learning disabilities. Clients included Spaulding Rehabilitation Network, the Stroke Comeback Center, and The Moss Rehab Aphasia Center. The company acquired by West Partners in May 2017. Keith has led six different VC-backed technology companies including Constant Therapy (CT), Connotate, Carbonite (NASDAQ:CARB), webHancer, FaxNet and Trans National Communications. Marijuana Expertise: In July 2017, Keith joined Revolutionary Clinics (RC), a leading medicinal marijuana company in MA. RC has a cultivation and processing facility in Fitchburg, retail locations in Cambridge and Somerville and a home delivery business.

Judy Leary, CV attached

Brief biography of Judy Leary

Professional Biography: Judy holds a BA in Business Retail Marketing (1978) from the University of

Massachusetts, Amherst. In 1980, she attended Harvard University’s Extension program. After several years

as a buyer for Filene’s Basement, Judy joined her family’s business, Stop Loss Associates, (Framingham), a

security and loss prevention company. In 1985, during the early stage of the internet Judy and Steven (her

brother) started Bearak Reports, an asset search and information services company specializing in

background screening, credit services and loan workout. They developed a secure Bulletin Board Service

“Bearak Live” which allowed clients to order online and retrieve report results. In 1995, Bearak Reports was

awarded a 5-year contract (followed by 2 additional 3-year contracts) with the Department of Justice (FBI) to

provide copies of “Employment Credit Reports” and pre-employment screening services. Bearak Reports

staffed an office inside the J. Edgar Hoover FBI building in DC. Every employee of the federal government

was subject to undergo credit checks for both pre-employment as well as during their tenure with the

agency with the exception of the CIA and NSA. Judy was required to maintain Security Clearance while

working with the Department of Justice.

In 2005 responding to the massive ChoicePoint data breach, Judy and Steven founded IdentityForce

(IDF). IDF provides security, credit, privacy and identity protection services to enterprise customers,

government agencies and consumers. As President, Judy was responsible for all aspects of company

operations, including the Information Technology, Client Services, Suppliers and Customer Support

teams. IDF provides Identity Theft Protection and Data Breach services to corporations, government

agencies, and consumers. Over the course of 12 years IdentityForce received multiple industry awards from

Javelin Strategy and Research an independent research teams. In August 2018 IdentityForce was acquired

by EZShield, a private equity backed cyber protection firm. IDF numerous multi-year government contracts

remain active as does Judy’s security clearance with the federal government.

Marijuana Expertise: One of her daughters suffers from major anxiety challenges and is a regular user of

marijuana. Judy has seen the positive effects and increased functionality experienced by her daughter

resulting from marijuana use.

Community Service: Judy is a lifelong resident of Framingham. During her daughters’ school years, she was

active in the Framingham school system where she served on the town’s “Middle School Task Force” and

“Redistricting Committee”. She and her husband were Co-Presidents of the Potter Road Elementary

School’s PTO for 4 years and promoted programming and assimilation for the new Brazilian families and

students that were bussed across town from south Framingham and spoke little English. Judy currently

serves on the Board of Directors and Executive Committee of the Better Business Bureau of Eastern New

England, volunteers for The Alzheimer’s Association and Sunshine Golden Retriever Rescue. From 2016 thru

2018 Judy participated in the Mazie Mentoring Program at Framingham High School where she mentored a

young woman from Brazil who entered our country legally but had never been out of Brazil and spoke no

English. Her mentee, Hadassah, just finished her first semester at UMass Boston and achieved a 3.4 GPA.

Beth Goldstein, CV attached

Brief biography of Beth Goldstein, MBA

Professional Biography: Beth works as a professional educator, trainer, and consultant. She founded her consulting firm, Marketing Edge Consulting Group, in 1999 and established the company's training division, Edge Institute, in 2013 with a focus on helping small business owners, executives, students and entrepreneurs better understand how their key stakeholders think, what they value and what influences their purchasing decisions. She then shows them how to apply this knowledge to create targeted business growth programs that drive revenue growth while increasing profitability and customer loyalty. Beth is currently pursuing her Doctorate in Education from Johns Hopkins University with a focus on entrepreneurship education in global and emerging markets. Marijuana Expertise: Beth’s company is one of seven Massachusetts firms approved by the Cannabis Control Commission to provide business training to Social Equity candidates in the marijuana sector. Beth taught entrepreneurial sales and marketing at the Boston University Questrom School of Business from 2001 to 2014, managed BU’s New Venture Competition for ten years and served as the Faculty Director for the university’s top ranked Online Graduate Certificate in Entrepreneurship Program. Since 2014, Beth has taught entrepreneurship and marketing at Babson College and serves as a business advisor in Babson’s Summer Venture Program (incubator). Beth is currently working with Sage Publishing on her third book: Entrepreneurial Marketing Strategy. Her first book, The Ultimate Small Business Marketing Toolkit (McGraw-Hill) has been used in 30+ cities around the U.S. to teach business owners the critical skills they need to accelerate growth. In her second book, Lucky By Design, Beth examined the fallacies of underestimating your ability to control the destiny of your company and create powerful business opportunities. Peking University Press is publishing her book in Chinese. Her advice was featured in the McGraw-Hill Small Business Resource Guide for QuickBooks Users (2009) distributed to 100,000+ QuickBooks users. Beth conducts business growth workshops throughout the U.S. for organizations ranging from publicly funded groups like the MA Supplier Diversity Office to Fortune 500 companies like Fidelity Investments and Carrier Corporation. She served as the Lead Instructor for Interise’s nationwide training program, run in conjunction with the US SBA: Small Business Association's Emerging Leaders (e200) Initiative, providing training to hundreds of business owners throughout the U.S. She was the Managing Director for the BU Urban Business Accelerator Program, a program that matched students with business owners in economically disadvantaged neighborhoods in Boston with the goal of improving financial capacity & business success. For Babson Global, Beth was on a 3-person MBA design team that created an innovative MBA program for the Mohammad Bin Salman College of Business and Entrepreneurship, Saudi Arabia. She led the design teams for the Masters in Entrepreneurial Leadership and the undergraduate marketing degree. Beth specializes in custom-designing classroom and online business growth training programs ranging from half-day workshops to intensive nine-month programs for companies, government agencies and organizations. She has taught in the U.S. and abroad including: China, Egypt, Germany, Indonesia, Kuwait, Lebanon, Mexico, Nigeria, Oman, Saudi Arabia, Thailand and the U.K.

Dr. Edward B. Kaiser, CV omitted Brief biography of Ed Kaiser

Professional Biography: Dr. Kaiser was born in Brooklyn and located to Massachusetts in approximately 1972 after having served at various air bases as a Captain in the Air Force. He is a dentist and licensed to practice in Massachusetts and Rhode Island. He founded Norfolk County Dental in Norfolk, Massachusetts, and Oaklawn Family Dental in Warwick, Rhode Island. He has been involved in numerous business ventures over a 50+ year career. He is semi-retired and remains active in the Oaklawn practice. He was an avid pilot and owned several small airlines including an air freight transport business flying out of Opa Locka airport in Miami and servicing the islands. Dr. Kaiser is a member of the Norfolk Lions Club and through a non-profit, worked with prisoners at MCI-Norfolk, the state’s largest medium security level facility in Massachusetts, housing criminally sentences males.

Appendix 2 – CORI filings

From: [email protected] Subject: Notification from the Cannabis Control Commission: License Application Started Date: January 30, 2019 at 4:00:27 PM EST To: [email protected]

1-30-2019

Application Number: MRN282359

Dear john madigan:

Your application for a Marijuana Retailer license was started in the Massachusetts Cannabis Industry Portal (MassCIP). As each step in the license process is completed, you may receive a confirmation email.

Sincerely, The Cannabis Control Commission



Appendix 3 – National Recreational Adoption and National Map

Table 8: Adult-use (recreational) Marijuana States

Jurisdiction Year In Favor Size Rank Population

% U. S. Pop.

1 Colorado 2012 55% 21 5,695,564 1. 72%

2 Washington 2012 56% 13 7,535,591 2. 28%

3 Alaska 2014 53% 48 737,438 0. 22%

4 Oregon 2014 56% 27 4,190,713 1. 27%

5 D. C. 2014 65% 49 702,455 0. 21%

6 California 2016 57% 1 39,557,045 11. 96%

7 Maine 2016 50% 42 1,338,404 0. 40%

8 Massachusetts 2016 54% 15 6,902,149 2. 09%

9 Vermont 2018 * 49 626,299 0. 19%

10 Nevada 2016 54% 32 3,034,392 0. 92%

11 Michigan 2018 56% 10 9,998,915 3. 02%

Subtotal 80,318,965 24. 30%

United States 330,489,940 100. 00%

* enacted by Vermont legislature || Data Source: ProCon.org

See map on following page

As the following illustration shows, it is difficult to find a state in the U. S. (ID and SD) that has not decriminalized or legalized some form of marijuana use. (Map source: NORML. org)

Appendix 4 – Massachusetts Market Size Analysis Market Size - Massachusetts NewCann estimates the Massachusetts adult-use market ($) potential at $1.8 to $2.0 billion. To develop this estimate, we compared Massachusetts to Colorado, generally accepted as the most established regulated adult-use market in the United States. Colorado has 5.6 million residents (21st largest) versus 6.86 million in Massachusetts (15th largest) – relatively similar size. The five intermediate states between 15 and 21 are not established adult-use markets (TN, IN, MO, MD, WI). Several larger marijuana-legal states have a less restrictive regulatory and enforcement framework that we do not believe reflect the Massachusetts market.

1. Colorado’s age distribution population mirrors Massachusetts. 33% of their population is age 25 or under as compared to 32% for Massachusetts. Thereafter, the age distribution is nearly identical.

Age Distribution 0-18 19-25 26-34 35-54 55-64 65+

Colorado 24% 9% 14% 26% 12% 15% Massachusetts 22% 10% 14% 26% 14% 15% 2.

Educationally, the two states are very similar in education based on national rankings.

Education High School

Diploma Rank Bachelor’s

Degree Rank Advanced

Degree Rank

Colorado 90.7% 14 38.1% 2 14.0% 7 Massachusetts 89.8% 19 40.5% 1 17.7% 1

However, Massachusetts households have greater purchasing power, even when adjusted for a higher cost of living. Adjusting for cost of living, a Massachusetts household needs to earn $69,431 to be equal to $65,685 of earnings in Colorado. In Massachusetts, however, the average household income is $75,297.

Colorado Massachusetts Average Income $65,685 -------

Cost of Living Index 131.5 139.0 Comparable Income $69,431

At $75,297, the Massachusetts actual household income is 8.45% greater than the $69,431 cost of living adjusted household income, translating to greater discretionary income. Colorado residents legalized marijuana by a voter initiative in 2012, Massachusetts residents followed a similar path in 2016. Both states sought a defined regulatory structure. With similar political leanings toward marijuana legalization and similar demographics, Colorado marijuana consumption serves as a good comparison for estimating Massachusetts marijuana consumption. Of course, the key metric to understand is projected sales revenue. Sales per resident in Colorado were approximately $269 in 2017 and grew slightly to $272 in 2018. That leveling indicates the signs of a maturing market. If that per capita number is projected onto the Massachusetts’ population of almost 6. 9 million people, assuming similar purchasing behavior, it would yield a $1.875B market.

Colorado Massachusetts Colorado Massachusetts

2017 MJ Sales $1.508B ----------- 2018 Sales $1.546B Residents 5.6MM 6.86MM 5.68MM 6.89MM

Sales per Resident $269.29 $269.29 $271.93 $271.93 Comparable Sales $1.847B $1.875B

If marijuana captures its share of the market, then considering Massachusetts’ higher level of discretionary income, an 8.45% boost to the $1.875 billion revenue level could bring the Massachusetts market potential to $2.0 billion. Setting aside basic costs of living, the excess discretionary income in Massachusetts is much higher than 8.45%. However, this must be balanced against the number of out of state visitors. Not all marijuana consumed in Colorado is purchased by Coloradoans. Colorado welcomed an unprecedented 84.7 million visitors in 2017, up from the 82.4 million who visited in 2016. Comparatively, Massachusetts welcomed 28.3 million visitors. In terms of physical land mass, Colorado dwarfs Massachusetts (table below). As a matter of fact, Colorado could absorb not just Massachusetts, but all 71,992 square miles of New England, and still have room for a few cases of Harpoon, some Legal Seafood’s Chowdah, and a few wicked good pints of Ben & Jerry’s. Resident count per square mile translate into more residents within reasonable driving distance to a marijuana store.

Population Density

Rank by Population

Rank by Population

Density

Residents per Square

Mile Square Miles

Colorado 22 37 52 103,642 Massachusetts 15 3 871 7,800 In summary, Massachusetts appears to be a $2 billion market opportunity and based on Colorado’s experience, will likely take until 2022 or 2023 to reach its full market potential5. Average Market Rate (AMR) At $2 billion, the market is expressed in dollars, not pounds. A major influencing factor on market size ($) is price per pound (known as the Average Market Rate, or simply the “AMR”). Marijuana spot pricing varies widely. It is the only commodity that cannot be transported legally across state lines. That means pricing is local. Colorado’s $1.55 billion market is a function of the local Colorado AMR. Massachusetts

5 Population data: United States Census Bureau, State Population Totals and Components of Change: 2010-2017.

Cost of Living Index: BestPlaces.net. Education: United States Census Bureau, American Fact Finder, S1501 Educational Attainment, 2011-2015 American Community Survey 5-Year Estimates Age Distribution: Henry J. Kaiser Family Foundation, Population Distribution by Age (2016) Population Density: United States Census Bureau, American Fact Finder, PEPANNRES Annual Estimates of the Resident Population: April 1, 2010 to July 1, 2015, 2015 Population Estimates AMR: Colorado Department of Revenue

has opened with strong pricing but as more cultivation facilities are licensed and reach the harvest stage, the AMR will eventually drop. In October 2018, a Massachusetts CEO shared that they are working to drive their current (2018) $1,500 cost per pound down to $300 by the end of 2019. While consumers may buy more marijuana product as the AMR drops, the relationship is not likely to be linear; meaning that industry revenue growth will be influenced by the AMR. PriceofWeed.com reports (Jan 2019) that the average cost per ounce of high-quality marijuana is $339. 50 in Massachusetts (5,574 sample size) versus $241.86 in Colorado (4,108 sample size); 40% higher in Massachusetts. Medium quality product follows a similar premium (41% higher). At similar levels of consumption, the overall market will be influenced by the AMR. However, the AMR will decrease as more cultivators begin to produce and harvest product. Otherwise, the Massachusetts market will be closer to $2.8 billion – an unlikely event.

Appendix 5 – Colorado Annual Marijuana Sales – Trajectory and Plateau INSIGHTS FROM COLORADO MARIJUANA SALES The following chart shows the progression of monthly marijuana sales in Colorado from January 2014 through January 2019 as published by the Colorado Department of Revenue6. Monthly Marijuana Sales - Colorado

6 https://www. colorado.gov/pacific/revenue/colorado-marijuana-sales-reports

As shown in the following table and chart, it took four years for Colorado sales to plateau. Table 9: Colorado Annual Marijuana Sales

Year Colorado

Marijuana Sales

Annual Growth

Rate

2014 $683,523,739 2015 $995,591,255 45. 7%

2016 $1,307,203,473 31. 3%

2017 $1,507,702,219 15. 3%

2018 $1,545,691,080 2. 5%

$0

$200,000,000

$400,000,000

$600,000,000

$800,000,000

$1,000,000,000

$1,200,000,000

$1,400,000,000

$1,600,000,000

$1,800,000,000

2014 2015 2016 2017 2018

Colorado Annual Marijuana Sales

Appendix 6 – Massachusetts Sales Data – Annualized Sales Levels by Week The following table shows average daily sales per store of operating Massachusetts retail marijuana establishments and the annual “run-rate” per store. Run rate means if the stores continued to generate that level of revenue, the level of annual sales they would achieve. Table 10: Average Daily Sales per Store and Annualized Revenue Rate – week ended March 10, 2019

Program Week# Week Ended

Weekly Sales Stores

Avg. Daily Sales per

Store

Annualized Run Rate per Store

1 Sun, Nov 25, 2018 2,217,621 2 221,762 79,834,356

2 Sun, Dec 02, 2018 2,586,863 2 184,776 66,519,334

3 Sun, Dec 09, 2018 2,218,208 2 158,443 57,039,634

4 Sun, Dec 16, 2018 2,268,416 3 141,776 51,039,360

5 Sun, Dec 23, 2018 2,813,260 5 108,202 38,952,831

6 Sun, Dec 30, 2018 2,805,902 5 93,530 33,670,824

7 Sun, Jan 06, 2019 2,547,557 5 72,787 26,203,443

8 Sun, Jan 13, 2019 3,049,385 6 80,247 28,888,911

9 Sun, Jan 20, 2019 3,360,210 8 68,576 24,687,257

10 Sun, Jan 27, 2019 4,085,233 8 72,951 26,262,212

11 Sun, Feb 03, 2019 3,694,637 8 65,976 23,751,238

12 Sun, Feb 10, 2019 4,290,498 8 76,616 27,581,773

13 Sun, Feb 17, 2019 4,416,514 9 72,402 26,064,673

14 Sun, Feb 24, 2019 4,287,235 8 73,918 26,610,424

15 Sun, Mar 03, 2019 4,218,496 8 75,330 27,118,903

16 Sun, Mar 10, 2019 4,430,904 9 72,638 26,149,597

On Sunday March 17, 2019, The Boston Herald reported that Patriot Care, located in Lowell, opened “the Merrimack Valley’s first recreational marijuana store… Saturday with little fanfare and little traffic… Though customers were eager, the scene was calm in Patriot Care’s parking lot. The first recreational customers arrived at 8:30 a. m. and by 10 a. m., just a handful of customers were gathered in line. Among them were Bob Bella of Dracut and Bill Mitchell of Lawrence, who arrived just after 9 a. m., anticipating long lines. ‘I thought there’d be a lot more people here,’ Bella said. Like many in line, the novelty of a recreational store drew Bella and Mitchell to make the trip…To curb anticipated traffic, recreational customers were directed to two satellite lots at 190 Plain St. and 30 Industrial Ave. In the morning, the Plain Street lot was busy according to a member of Patriot Care’s security detail, but by 1 p.m. activity had quieted down. Traffic on Industrial Avenue was likewise free-moving.” Patriot Care – Lowell is the 12th recreational store to open in the state. While Lowell should be a brisk market, marijuana aficionados and enthusiasts have likely satiated their curiosity at prior store openings and activity is rapidly subsiding to a more normal commercial pace. On March 23, 2019, the first Greater Boston area recreational marijuana store opened in Brookline. According to the Boston Globe, “The first day of recreational marijuana sales in the Boston area brought in more customers than either of the state’s first two adult-use pot shops did upon opening back in

November — but without the same degree of disruption. New England Treatment Access served 2,515 customers Saturday at its Brookline dispensary… [and] despite concerns about potential disruption, Brown said traffic remained light and lines Saturday stayed within NETA’s parking lot Saturday. Brookline police tweeted Saturday afternoon that the opening was an overall success.”

Rise Holdings opened the state’s 18th store on Sunday, May 12. Amherst Police maintained a daily presence at the store. On Thursday June 6, a little more than three weeks since the opening, Police Chief Scott Livingstone decided to end the details, citing no issues necessitating continued monitoring. (Daily Hampshire Gazette, June 8, 2019)

Appendix 7 – Customer Cycle Time and Customer Capacity Calculations Expected Daily Customer Counts We considered the population of the market area and our discussions with other Massachusetts retail marijuana establishments. We expect to service 200 to 300 customers per day. Table 11: Monthly Customer Foot Traffic Estimates

Customers per Day 200 250 300

Days per Month (363/12) 30 30 30

Customers per Month 6,000 7,500 9,000

Estimating Necessary Number of Check-out Stations to Minimize Customer Wait Times For this analysis, NewCann assumes 80% of customer traffic will occur during either a six or eight-hour peak activity period (“Peak Hours” in the tables below), a customer will spend 7. 5 minutes (from arriving at the counter to departure) on average, and therefore our throughput will be eight customers per hour per check-out station. At this rate, the store will require five check-out stations. For the reasons shown below, the interior design will allow for up to eight stations. First, we walk through the analysis. We start by assuming a 7. 5-minute customer cycle time. We then repeat the analysis using a 10-minute customer cycle time. We then present a third table predicated upon a 12-minute customer cycle time. Drawing from our earlier discussion regarding express lines for customers who order in advance and for customers who order and pay in advance, we mix the various cycle times together at Table 11 to estimate the number of check-out stations likely needed to serve customer traffic during peak hour and peak days.

Table 12: Estimated Check-out Station Needs (Average: 7. 5-minute customer cycle)

Customers per Day A 200 250 300 200 250 300

Peak Hour Traffic B 80% 80% 80% 80% 80% 80%

Daily Customers During Peak Hours C A x B 160 200 240 160 200 240

Peak Hours per Day D 6 6 6 8 8 8

Customers per Hour (Rounded) E C ÷ D 27 42 50 25 32 38

Hourly Customers per Check-out Station* F Note 1 8 8 8 8 8 8

Min. Required Check-out Stations (Rounded) G E ÷ F 4 5 5 3 4 4

Rounded indicates rounded up to the next highest number *Note 1: 60 minutes divided by a 7. 5-minute cycle equals 8 customers per check-out station per hour

If instead, we assume an average customer visit will be 10 minutes, the throughput reduces to six per hour and the minimum number of check-out stations increases to seven.

Table 13: Estimated Check-out Station Needs (Average: 10-minute customer cycle)

Customers per Day 200 250 300 200 250 300

Peak Hour Traffic 80% 80% 80% 80% 80% 80%

Daily Customers During Peak Hours 160 200 240 160 200 240

Peak Hours per Day 6 6 6 8 8 8

Customers per Hour (Rounded) 27 34 40 20 25 30

Hourly Customers per Check-out Station* 6 6 6 6 6 6

Min. Required Check-out Stations 5 6 7 4 5 5 *Note: 60 minutes divided by a 10-minute cycle equals 6 customers per check-out station per hour

Finally, if we assume an average customer visit will be 12 minutes, the throughput reduces to five per hour and the minimum number of check-out stations increases to eight.

Table 14: Estimated Check-out Station Needs (Average: 12-minute customer cycle)

Customers per Day 200 250 300 200 250 300

Peak Hour Traffic 80% 80% 80% 80% 80% 80%

Daily Customers During Peak Hours 160 200 240 160 200 240

Peak Hours per Day 6 6 6 8 8 8

Customers per Hour (Rounded) 27 42 50 25 32 38

Hourly Customers per Check-out Station* 5 5 5 5 5 5

Min. Required Check-out Stations 6 7 8 4 5 6 *Note: 60 minutes divided by a 12-minute cycle equals 5 customers per check-out station per hour

Estimating Customer Capacity We believe we will be able to service 70 customers per hour. We expect to have eight check-out stations; six regular and two express (with the ability to adjust those lanes as demand dictates – e. g. if more customers pre-order we may expand the express lines to three). We budget a 7. 5 to ten minutes’ cycle time per regular customer (arriving at the sales counter, through to when the next customer arrives at the sales counter) which equates to six to eight customers per station, per hour; or 36 to 48 customers per hour based on six regular customer stations. The two express stations will each service twenty customers per hour on three-minute cycles; or 40 customers per hour. While our antiseptic math indicates capacity to serve 76 to 88 customers per hour, allowing for imperfections and the natural uneven customer flows, we expect to reasonably service 70 customers per hour. Table 15: Estimated Check-out Stations

Station #1 #2 #3 #4 #5 #6 #7 #8 Type (see below) PP Exp Reg Reg Reg Reg Reg Reg TOTALS Cycle Time (minutes) 3.0 5.0 7.5 7.5 7.5 10.0 10.0 10.0 Customers per Hour 20.0 12.0 8.0 8.0 8.0 6.0 6.0 6.0 74.0 Total Visit Time (minutes) 7.5 10.0 12.0 12.0 12.0 15.0 15.0 15.0

Station types:

PP = Pre-pay customers. Order and pay in advance Exp = Express customers. Order in advance Reg = Regular customers. Orders and pays at counter

We have set a mix of three 7.5-minute regular stations and three 10-minute stations.

Appendix 8 – Relative Daily Customer Traffic Levels (Identifying Busy Days) We analyzed daily sales data for Massachusetts retail marijuana establishments for the first 16 weeks of the adult use program ended March 10, 2019. We determined if Monday and Tuesday sales are $100 per day, the store should be prepared to service $170 to $180 per day on Friday and Saturday.

Table 16: Relative Daily Customer Traffic Levels

Day of Week Activity Level

Monday 1.0x 1. 0x = Baseline sales activity

Tuesday 1.0x 1. 0x = Baseline sales activity

Wednesday 1.2x Wednesday sales are typically 20% greater than baseline

Thursday 1.2x Thursday sales are typically 20% greater than baseline

Friday 1.7x Friday sales are typically 70% greater than baseline

Saturday 1.8x Saturday sales are typically 80% greater than baseline

Sunday 1.3x Sunday sales are typically 30% greater than baseline

Appendix 9 – Financial Plan Supplemental Data

General Staffing Expense ● Shop Manager (1) $65K to $75K annually (~$26/hr.) ● Asst. Manager (1) $40K to $45K annually (~$21/hr.)

Expected hourly staff and rates: o 90-day Probationary Period* $15/hr. o Post-Probation Period $17/hr. o Key Holder (Opens or closes shop on lighter days) $19/hr. o (*Post-probation receives a $2/hr. equalization bonus for probation period)

ANNUAL WEEKLY ANNUAL Manager $1,235 $64,220 Rent ($15 x 3,000) $45,000 Asst Manager $840 $43,680 NNN ($3 x 3,000) $9,000 15 FTE Staff x $19/hr. x 40 hrs. $11,400 $592,800 Electric $4,800 Total Payroll $13,475 $700,700 Communications $3,600 Employer PRT $1,031 $53,604 Security $12,000 401(k) $404 $21,021 Misc. $4,200 Benefits (17 x $1,500/mo.) $25,500 $306,000 FACILITY COSTS $78,600 PERSONNEL COSTS $1,081,325

ANNUAL Insurance BOP $120,000 Payroll Processing $46,800 Banking $60,000 Tech Maintenance $19,200 Web Site $9,000 Promotion $180,000 Compliance $24,000 Training $30,000 Cleaning $15,600 Misc. shop supplies $13,000 OVERHEAD COSTS $517,600

newcann group, llc

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