Table of Contents I. EXECUTIVE SUMMARY ...................................................................................................... 1 II. PROHIBITION - HOW CANNABIS BECAME ILLEGAL ..................................................... 4 III. THE LEGAL LANDSCAPE .................................................................................................... 7 A. Federal Law And Its Impact On The Cannabis Industry ..................................................... 7 1. Cannabis Is A Schedule 1 Substance ............................................................................ 7 2. Access To Capital Markets Restricted ......................................................................... 9 3. Banking Services Limited .......................................................................................... 10 4. Tax Burdens .............................................................................................................. 11 5. Interstate And International Commerce Restrictions ................................................. 11 6. Insurance Options Limited ........................................................................................ 12 7. Medical Research And Clinical Trials Stymied .......................................................... 12 8. Professional Services Harder To Find ........................................................................ 13 9. Real Estate Challenges .............................................................................................. 13 B. The States - Legalization And Regulation .......................................................................... 14 1. Nine States And DC: Adult-Use Legalization ............................................................. 14 2. Medical Cannabis Legalization – 30 States And DC ................................................... 15 IV. THE INEVITABILITY OF FEDERAL LEGALIZATION ..................................................... 17 A. Dramatic Shift In Public Opinion ..................................................................................... 17 B. Federal Legislative Efforts Garnering Broader Support .................................................... 18 1. Marijuana Justice Act ............................................................................................... 18 2. STATES Act ............................................................................................................. 19 3. Marijuana Freedom And Opportunity Act, And Others ............................................ 19 4. The Prohibitionist Chairman Of The House Rules Committee ................................... 20 C. FDA Approval Of GW’s Cannabis-Based Epilepsy Drug .................................................. 23 D. Second Circuit Court Of Appeals: Washington v. Sessions ................................................ 25 E. The Midterm Elections And The Trump Card .................................................................. 27 F. Spurred On By Northeast And Midwest States .................................................................. 32 1. New York .................................................................................................................. 32 2. New Jersey ................................................................................................................ 38 3. Pennsylvania ............................................................................................................. 41 4. Illinois ....................................................................................................................... 44 5. Michigan ................................................................................................................... 46 6. Florida ...................................................................................................................... 48 7. Maryland .................................................................................................................. 50 8. Other States To Watch .............................................................................................. 51 G. Tax Revenues Collected In Legal States ............................................................................ 53 H. The Sky Has Not Fallen - Success In Legal States ............................................................. 54 I. The Canada Effect: Foreign Progress ............................................................................... 56 J. Politics Is Local And Personal: Jobs In The US Cannabis Industry ................................... 60 K. Cannabis Banking Is A Federal Priority ........................................................................... 61 L. Cannabis Normalization ................................................................................................... 63 M. The Influence Of California Culture ................................................................................ 63 N. Increased Lobbying Efforts, Support From Other Industries ........................................... 65 O. Forces Opposing Legalization .......................................................................................... 67 P. Selected Quotes On Legalization And Cannabis ............................................................... 68 V. THE MANY FACETS OF THE US CANNABIS INDUSTRY ................................................. 75 A. Myriad Medical Applications, Many Still Not Known/Tested ............................................ 75 1. Severe Illnesses And Disorders .................................................................................. 78 2. Incurable Epilepsy..................................................................................................... 79 3. Replacing Opioids And Healing Opioid Addiction ..................................................... 80 4. Post-Traumatic Stress Disorder ................................................................................. 83 5. Sleep Aid ................................................................................................................... 86 6. Elderly Patients ......................................................................................................... 87 7. The Future ................................................................................................................ 87 B. Rapidly-Growing Adult-Use Sector ................................................................................... 89 C. Sports ............................................................................................................................... 92 D. Skin Care ......................................................................................................................... 93 E. Pets .................................................................................................................................. 94 VI. FEDERAL ILLEGALITY CREATES THE ARBITRAGE OPPORTUNITY ........................ 95 A. Institutional Capital Almost Entirely Excluded ............................................................... 101 B. Pharmaceutical, Alcohol, Tobacco, Related Industry Capital Mostly Excluded ............... 102 VII. MULTI-STATE, VERTICALLY-INTEGRATED, AND POISED TO CAPITALIZE ......... 105 A. Operating In Limited-License Versus Unrestricted-License Markets .............................. 106 B. Branding Advantage ....................................................................................................... 108 C. No Interstate/International Commerce Under Federal Legalization ................................ 109 D. Former Import Black Markets, No Existing Cultivation Infrastructure .......................... 110 E. Falling Dry Leaf Prices ................................................................................................... 111 F. Best Practices .................................................................................................................. 112 G. Streamlined Support And Scale ...................................................................................... 112 H. Obtaining New Licenses ................................................................................................. 113 I. Institutional Capital Will Flow To Large, Well-Capitalized Diversified Entities .............. 113 VIII. SELECTED US MULTI-STATE VERTICALLY-INTEGRATED COMPANIES ............. 114 A. Acreage Holdings ........................................................................................................... 115 B. Cresco Labs .................................................................................................................... 121 C. 4Front Ventures ............................................................................................................. 125 D. iAnthus Capital .............................................................................................................. 126 E. Other Companies ............................................................................................................ 132 IX. SUGGESTIONS FOR US CANNABIS INDUSTRY INVESTORS ....................................... 134 About the Author ....................................................................................................................... 136 I. EXECUTIVE SUMMARY We will witness history, a once-in-a-lifetime type event. The long overdue end of cannabis Prohibition in the United States. From an investment perspective, nothing compares. The demand