Ackrell Capital Cannabis Investment Report (Dec 2017) outlines market size and federal‑state regulatory landscape

ACKRELL CAPITAL Cannabis Investment Report | December 2017 The U.S cannabis industry has proven adept at navigating this federal-state conflict, and is experi- encing rapid growth despite it. We estimate that the 2017 U.S. state-legal cannabis market was $8.0 billion, with more than four million consumers. While the overall state-legal market has grown sig- nificantly, the addressable market has been constrained due to the lack of access to purely recreational consumers and the sometimes-narrow scope of medical conditions that qualify a patient for access to medical cannabis. The breakdown of this market estimate by state is shown in the following chart. 2017 U.S. State-Legal Cannabis Market Estimate Other States $1.9B California $3.2B Colorado $1.5B Oregon Washington $470M $929M Source: Ackrell Capital U.S. Federal Law Current federal law effectively prohibits all cannabis use and all commercial cannabis activity in the United States. Producing, selling and possessing cannabis are federal crimes. No cannabis-derived drug has ever been federally approved for use in treating any medical condition. Otherwise legitimate busi- ness transactions conducted by cannabis companies—and their banks, for those who can access bank- ing services—are legally suspect. Certain intellectual property and bankruptcy protections critical to many U.S. businesses are not available to cannabis companies. Cannabis companies pay federal income tax at effective rates significantly higher than other businesses. Despite official prohibition, however, federal policies and laws recently passed by Congress have carved out a limited space in which the state-legal cannabis industry has managed to thrive. Enforce- ment policies published by the U.S. Department of Justice have unofficially invited cannabis business to proceed if certain conditions are respected. The U.S. Department of the Treasury established report- ing policies that create room for banks to service the cannabis industry. Federal budget legislation 4 © 2017 Ackrell Capital, LLC | Member FINRA/SIPC HOUSE_OVERSIGHT_024640