4. 4New Business Introduction
CannaCult is a new company which is intending to penetrate
into the cannabis cultivation market in California.
CannaCult is applying for a Class B license and intends to start
with one greenhouse 7,200 sq. ft.
Company will have the ability to vegetate up to 500 plants and
flowers concurrently, will grow up to 11 different strains of
marijuana, and will have the ability to grow from seedling to
finished product. CannaCult will dry and process all cannabis
flowers into labeled/inventoried vacuum sealed bags before
delivery.
Produce and sell the highest-quality products
that are not currently available to dispensary
and concentrates/edible manufacturers.
Utilize cutting edge technology to create a
cost-efficient cultivation site.
Own and operate a medical/recreational
cannabis cultivation facilities in the state of
California.
INDUSTRY
TECHNOLOGY
PRODUCTS
5. 5Financial Summary
0
5
10
15
20
25
Year 1 Year 2 Year 3 Year 4 Year 5
Million$
Revenue Net Income
0 5 10 15 20 25 30 35
Year 1
Year 2
Year 3
Year 4
Year 5
Million $
Cash Flow (ending period)
Majority of profits will be re-invested
in company development and
expansion.
The cash flow projections show that
business will have sufficient cash to
support the activity.
7. 7Mission Statement
To provide high-quality cannabis to
the qualified dispensaries, processors
and manufactures
Main Goals:
A. To grow one of the best medical/recreational cannabis products
B. To be fully compliant with all state and local municipalities and be
primed and ready for national expansion as federal laws adjust and
evolve to the benefit of the cannabis industry.
C. To establish an innovative cannabis growing brand with affordable
prices to dispensaries and manufacturers of California.
8. 8Business Objectives
Own and operate a cannabis
cultivation facilities in the state of
California
Getting the California
Cannabis Grower license
CannaCult will seek to leverage
on expertise to build the business
brand as a premiere cannabis
cultivator within the state of
California
Brand and distribute our product line
throughout California
Maintaining exemplary production
standards and becoming a leading
supplier of cannabis products
Net annual income to support
operational expenses
Maintaining a nimble operational structure
and cultivation strong relationships with
dispensaries and edible manufactures that
will allow it to quickly respond to shifting
customer needs
Become profitable by
the end of the first year of operations
01 02
03 04
11. 11Start-Up Assets & Use of Funds
Start-Up Assets Quarter 1
Building for cultivation $400,000
Build-out $200,000
Growing Equipment $150,000
Lighting System $150,000
Security system $50,000
Computers and software $20,000
Total $970,000
Total Use of Funds $1,370,000
Use of Funds
Assets $970,000
Direct costs, cultivation $160,000
Initial and General expenses $70,000
Operating expenses, first 6 months $100,000
Salaries $90,000
13. 13Product & Services
Cannabis
Cultivation
Company will have the ability to
vegetate up to 500 plants and
flowers concurrently, up to 11
different strains, from seedling
to finished product.
Description:
Wholesale
Cannabis
CannaCult will dry and
process all cannabis flowers
into labeled/inventoried
vacuum sealed bags before
delivery.
Description:
Wholesale
Cannabis Oil
We intend to secure
manufacture license in the
future.
Description:
14. 14Target Customers
The company will distribute products
through wholesale transactions to
qualified, licensed and CLI vetted
marijuana establishments
Licensed dispensaries
Licensed concentrates processors
Licensed edible manufactures
16. 16Cannabis Legalization
29 states have
already legalized
cannabis
The biggest driver of growth in coming
years is the legalization of marijuana in
some forms by more states.
In 2015, legal cannabis sales in the U.S.
reached $5.7 billion, a 23% jump from
the year before.
In 2016, legal cannabis sales in the U.S.
reached $6.7 billion, a 17.5% jump from
the year before.
It is predicted that sales will further
grow in 2017, reaching an estimated
$8.1 billion in total U.S. sales.
17. 17Market Growth
According to the 5th edition of Cannabis Market research, the overall market projection for legal adult-use and medical sales in North America
will reach $20.2 billion by 2021. That brings the compound annual growth rate (CAGR) to 25% .
0
3
6
9
12
15
2018
Billion$
Medical Recreational
0
3
6
9
12
15
2019
0
3
6
9
12
15
2020
0
3
6
9
12
15
2021
57% 30% 19% 25%
18. 18Target Market
Wholesale Cultivation
Wholesale cultivators represent the backbone for much
of the cannabis industry. In recreational markets
especially, surging consumer demand prompted many
new entrepreneurs to enter this segment of the
market, raising the level of competition while driving
the price of wholesale cannabis to record-low levels.
That’s made it all the more important for growers to
find efficient ways of producing high-quality cannabis
on a consistent basis. The focus on efficiency can cut
production costs for indoor cultivation to less than
$300 a pound from more than $1,000.
-
500
1,000
1,500
2,000
2,500
$perpound
2017
Outdoor Greenhouse Indoor Spot Index
19. 19SWOT Analyses
In California the weather conditions are ideal for cultivating cannabis outside
Diversification of greenhouse cultivation and outdoor cultivation
Greenhouses will allow significantly decrease electricity bills and increase profit while
competitive prices
STRENGTHS
Positive Negative
Internal
External
Strengths
S
Weaknesses
W
Threats
T
Opportunities
O
Product liability / legal issues
Enhanced risk of banking / financial / IRS scrutiny
Lack in professional workforce for a cannabis industry
Marketing and promotional Obstacles
WEAKNESSES
High growth industry
Trend toward greater cannabis legalization, including the use of cannabis for recreational
purposes
OPPORTUNITIES
A significant drop in wholesale pricing
Enforcement of federal law
Possible California law changing
Indicators of a slowed global economy
THREATS
21. 21Marketing Strategy and Positioning
TARGET
MARKET
PRODUCT
The highest-quality products that
are not currently available to
dispensaries and manufacturers.
PLACE
San Francisco and San Francisco
Bay area have the highest
number of dispensaries.
22. 22
TECHNOLOGY
Due to the high energy costs
Company intends to develop
cannabis growing business in
greenhouses. Those structures
are showing an average cost
savings of 33%.
PROMOTION
Website development, Branding
appearance development,
including mission statement, logo,
colours, brochures etc. SEO
optimization.
Special Platforms.
Marketing Strategy and Positioning
PEOPLE
Meeting with whole buyers and
dispensaries management.
Leverage existing business
relationships/contacts to prime
the revenue stream.
E-mail Marketing.
24. 24Growing Forecast
LBSCompany intends to mix outdoor cultivation from April to
October period and all around year greenhouse cultivation.
CannaCult will produce up to 2 strains within 5 months of
becoming a licensed cultivator. Company will have the
ability to vegetate up to 500 plants and flowers
concurrently, will grow up to 11 different strains of
marijuana, and will have the ability to grow from seedling
to finished product.
Company will use a Perpetual Harvest technique in which
growers utilize multiple grow tents/areas to ensure that
there are always plants in both the flowering stage and in
the vegetative stage.
1,080
1,620 1,620 1,620 1,620
-
233 233 233 233
YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
Indoor Outdoor
25. 25
Expenses Cut
Operating Needs
Sales Growth
Sales are expected to start
conservatively the first few months
and increase steadily through the
second, third and fourth quarters of
the first year of operations.
Cash will be retained in the business
to cover cash operating needs as well
as future expansion to meet the
demands.
After the first year of operations, it is
expected that CannaCult will be able to
trim expenses through realizing
business efficiencies, gaining
operational experience and industry
knowledge.
$000
Sales Forecast
$1,859
$3,188 $3,188 $3,188 $3,188
$1,445
$1,445 $1,445 $1,445 $1,445
YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
Indoor Outdoor
30. 30Projected Profit and Loss, $
YEAR 1 YEAR 2 YEAR 3
Revenue
Direct Costs
Gross Profit
% of revenue
Operating Expense
Initial & General Costs
Operating Expenses (cultivation business)
Total Sales & Marketing Expenses
Total Senior Management Salaries & Benefits
Total IT Salaries & Benefits
Total Other Salaries & Benefits
Misc.
Total Operating Expense
Operating Income (EBITDA)
% of revenue
Depreciation and Amortization
Earnings Before Interest & Taxes (EBIT)
Interest Expense
Earnings Before Taxes (EBT)
Income Tax
Net Income
% of revenue
31. 31Projected Cash Flow, $
YEAR 1 YEAR 2 YEAR 3
Net Income
Cash Flow from Operations
Depreciation
Change in Receivables
Change in Inventory
Change in Accounts Payable
Change in Accrued Expenses
Total Cash Flow from Operations
Cash Flow from Investing
Capital Expenditures (CAPEX)
Other
Total Cash Flow from Investing
Cash Flow from Financing
Revolver Issuance / (Repayment)
Long-Term Debt Issuance / (Repayment)
New Equity Investments
Dividends
Total Cash Flow from Financing
Total Change in Cash
Beginning Period Cash
Ending Period Cash
32. 32Ratio Analysis
Ratio Analysis Year 2 Year 3 Year 4 Year 5 Avg. (2-5 years)
Return on Equity 76.1% 47.5% 33.9% 25.3% 45.7%
Return on Assets
Return on Sales 29.9% 30.6% 30.9% 30.9% 30.6%
Asset turnover 2.55 1.55 1.10 0.82 1.50
Profitability
Gross margin 56.9% 57.7% 58.1% 58.1% 57.7%
SG&A as % of Sales 6.9% 6.5% 6.3% 6.3% 6.5%
Operating Margin 49.8% 51.0% 51.6% 51.6% 51.0%
Asset Turnover Ratios
Accounts Receivable Turnover 36.2 36.1 36.1 36.0 36.1
Fixed Asset Turnover 38.5 48.2 58.4 69.0 53.5
33. 33Funding Analyses, $
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
Long-Term Debt Beginning Balance
Long-Term Debt Repayment
Long-Term Debt Ending Balance
ROI
Profit Share (Investors)
Company intends to raise $ 00,000,000 for 5 years with ROI 15% and profit share 5%. First
repayment will start from 11th month.