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HomeMy WebLinkAboutACK Natural Response for RequestACK NATURAL LOCAL. NATURAL. NANTUCKET. January 31st, 2019 Marijuana RFQ Review Committee Attn: C. Elizabeth Gibson 16 Broad Street Nantucket, MA 02554 Dear Town Manager Gibson and Members of the Committee, Thank you for providing the additional questions to the Town of Nantucket’s Request for Qualifications (RFQ). Below Ack Natural, Inc. (“ACK”) has provided responses to each question. ACK was founded by Michael Sullivan, Chief Executive Officer, Douglas Leighton, Chief Financial Officer, and Zach Harvey, Chief Operations Officer (“the principals”). ACK’s three principals have significant and in-depth experience in the cannabis industry having invested in, managed, and helped lead the day-to-day operations of licensed cannabis operations here in Massachusetts. ACK’s interest in the Town of Nantucket stems from its long-time local ties to Nantucket and the principals’ past and present residency on the Island. ACK has a strong desire to bring a world-class marijuana facility to Nantucket with an approach that is appropriate and representative of the Island, including directly benefitting the Town and the residents in equal measure. Unlike the other applicant, ACK was named and founded by local residents with the singular objective to open a medical and adult-use marijuana facility on Nantucket by Nantucketers, for Nantucketers, and with Nantucketers and its culture solely in mind. We are a first-rate cannabis management team from the Island with first-hand experience in the cannabis industry in Massachusetts, the United States, and abroad, and we are committed to the Nantucket and its future. We have the resources and significant local support to see this project to fruition. We hope that the Committee will positively consider these responses to their additional questions and recommend ACK be awarded this proposal. Our only interest is to locate and serve Nantucket and its residents and our business success is directly tied to that goal. We hope to have the privilege to support this Island—our Island. 2 General Questions 1. Who is contributing capital resources for this project? The sole source of capital contributed for this project belongs to the three principals of ACK: Michael Sullivan, Chief Executive Officer, Douglas Leighton, Chief Financial Officer, and Zach Harvey, Chief Operations Officer. Following successful launch, additional capital, not to exceed 9.9% per individual, may be obtained from ACK’s Board of Advisors and Operations Team, as currently appointed and detailed on Page 93 and Page 90 of ACK’s Response to Nantucket’s Request for Qualifications (Response). To-date, members of ACK’s Board of Advisors and Operations Team have already signed commitment letters to provide funds to ACK totaling $650,000. Additionally, ACK has an ever-growing list of local Nantucketers that have indicated interest in investing with ACK to democratize investing on Nantucket as discussed on Page 96 of ACK’s Response. However, and more importantly, such contributions are not required for the successful launch of ACK—necessary funds are fully achieved through the commitments made by ACK’s three principals. As per the submitted letter from a certified public accountant on behalf of ACK’s three principals on Page 126 of ACK’s Response, bank statements from all three principals referenced in Question 3 below, and a letter from Douglas Leighton’s certified public account included as Exhibit 1, all necessary capital to support the successful launch of ACK is provided by these local principals. Investments made by members of ACK’s Board of Advisors and local Nantucketers, while not necessary for ACK’s successful launch, provide a unique, locally-driven investment opportunity for the company to maximize its positive impact for and within the community. 2. What is the total amount of capital available? ACK’s three principals have approximately $3.7 million currently available and committed to successfully launch ACK, nearly $500,000 more than the capital requirements outlined within ACK’s business plan on Page 96 of the Response. It is important to note that 3 ACK’s Binding Letter of Intent/Option to Lease with Arrowhead Drive LLC (G. Christopher “Chris” Yates and Linda Yates), which owns the property, unencumbered, located at 17 and 19 Spearhead Road (ACK’s proposed location), requires Arrowhead Drive LLC to develop and build out the property to meet ACK’s specified needs. When the Committee assesses the $3.7 million, they should note such capital is not required to directly account for the cost of building out 17 and 19 Spearhead Drive pursuant to the Binding Letter of Intent/Option to Lease found on Page 5 of the Response. Attached, please find Exhibit 2 which provides a letter from a certified public accountant on behalf of Arrowhead Drive LLC’s manager, Chris Yates, certifying that Chris and Linda Yates—who have redeveloped more than $50,000,000 of projects and launched multiple businesses on Nantucket over the last four decades—have more than sufficient funds to complete this redevelopment project. Attached, as Exhibit 3, please find a letter of support outlining Chris and Linda’s commitment to Nantucket and the success of ACK’s application. In the business plan as provided to the Committee on Page 85 of its Response, ACK described an investment opportunity for Nantucketers interested in being involved in ACK as an investor. While these funds are not necessary for the launch and continued operation of ACK, this investment opportunity is part of ACK’s commitment to its community engagement, ensuring opportunities for financial benefits to residents of the Town of Nantucket. Many members of our Board of Advisors and Operations Team have expressed interest in investing in ACK and have executed commitment letters to fund ACK with our proposed investment structure from our business plan. These commitment letters are included as Exhibit 4. 3. Do you have any bank records (private information may be redacted) verifying the existence of the capital? Attached as Exhibit 5, we have included a number of bank statements from Michael Sullivan, Douglas Leighton, and Zach Harvey (ACK’s principal executives). These statements show that ACK’s three principals have approximately $3.7 million available to fund ACK’s operation and successful launch. On Page 96 of ACK’s Response, within its business plan, ACK estimates that approximately $3.3 million is required for the company’s capital requirements. As further evidenced by the submitted letter from his certified public accountant (see Exhibit 1) on behalf of Douglas Leighton, Chief Financial Officer, ACK has more than sufficient capital to fund 4 the launch and operation of this company. As stated in Question 2 above and on Page 96 of ACK’s Response, Arrowhead Drive LLC (Chris and Linda Yates) will fund the construction of the interior and exterior shell of the building. 4. Are you able to provide certification that the funds used to invest in or finance the marijuana establishment were lawfully earned or obtained? Attached as Exhibit 6 is certification from Michael Sullivan, Douglas Leighton, and Zach Harvey that the funds used to invest in or finance the marijuana establishment were lawfully earned or obtained. 5. Who is a 10% or greater stakeholder – can we get names and contact information for individuals who have a 10% ownership or more, and what percentage. Consistent with ACK’s Response to the Town, the only individuals who have 10% or more ownership in ACK are Michael Sullivan, Douglas Leighton, and Zach Harvey. The Binding Letter of Intent/Option to Lease found on Page 5 of the Response within which includes Exhibit A, found on Page 8, includes a provision that grants Chris Yates 10% of founder stock in ACK for an agreement on a lease with Arrowhead Drive LLC for the property and construction design. Since the time that agreement was signed, founder stock of ACK has been diluted as a result of additional capital contributed by Michael Sullivan, Douglas Leighton, and Zach Harvey. This dilution has resulted in Chris Yates’s ownership of ACK to be valuated at less than 10%. Michael Sullivan, Chief Executive Officer – 30.33% ownership Douglas Leighton, Chief Financial Officer – 30.33% ownership Zach Harvey, Chief Operations Officer – 30.33% ownership 6. Who owns the underlying real estate at the proposed location? 5 Chris and Linda Yates are the managers of Arrowhead Drive, LLC which owns the real estate at the proposed location of 17 and 19 Spearhead Drive in Nantucket. Arrowhead Drive, LLC and its managers Chris and Linda Yates own the underlying real estate and have executed a Binding Letter of Intent/Option to Lease agreement with ACK included in the Response found on Page 5. 7. A P+L template is attached so that we can see a breakdown of projected annual costs and revenues – please complete this. Attached as Exhibit 7 is the P+L template completed by ACK. Additional Questions for Ack Natural, Inc. 1. The financial materials submitted in the RFQ indicate that the three named corporate officers are the only individuals supplying 10% or more of the capital for this company. A written letter from a CPA provides that the personal assets of the three corporate officers are sufficient to finance this company. a. Is the financial capital for this company coming solely from the three corporate officers or are there (or will there be in the future) other investors? Please see response to Questions 1 and 2 under the General Questions heading above. b. The only financial assurance given is a letter from a CPA indicating that there are sufficient personal assets to support this company. How is that sufficient for the Town to be assured that those personal assets will actually be committed to or used for the purpose of guaranteeing the successful operation of this business? Under what terms are these funds being provided to the business? ACK and its principals are committed to financing the establishment and continued operation of a vertically-integrated medical and adult-use cannabis dispensary on Nantucket for Nantucketers. Exhibit 5 includes bank statements from the three principals demonstrating that ACK has sufficient capital to operate its business and Exhibit 6 includes attestations from the principals that the funds are sufficient. Funds to date have been provided in exchange for equity in ACK as evidenced by the percentage ownership of each executive in Question 5 under the heading 6 General Questions above. Additional funds added by the three principals will follow this same structure. The principals of ACK guarantee the successful operation of the business because they are committed to the success of their company and will benefit alongside the Town and its residents if it thrives. To ensure that the Town has sufficient guarantees from ACK’s principals that they will use their personal assets to fund ACK, attached please find Exhibit 6 certifying that each individual is contributing 10% or more and is a controlling person of ACK as defined by 935 CMR 500.002. c. The application suggests that further local investment is (or will be) sought. Is that accurate? If so, how will that be structured? Consistent with our response provided to Question 3 above, executives of ACK have sufficient personal capital to support the successful launch of this business. In the business plan as provided to the Committee on Page 85 of its Response, ACK described an investment opportunity for Nantucketers interested in being involved in ACK as an investor. While these funds are not necessary for the launch and continued operation of ACK, this investment opportunity is part of ACK’s commitment to community engagement and financial benefit to residents of Nantucket. As a locally owned company, the three principals have been approached by many locals interested in investing in ACK. Future investor funds are being provided to the business pursuant to an equity-based profit-sharing plan. This profit-sharing plan is evidence of our executives’ long- term commitment to ACK and Nantucket because this structure prioritizes investors’ return on their money. Upon making their investments, investors shall receive 80% of the profits of ACK while principals shall receive 20% of profits. Only once capital has been returned to all investors in-full will this equation flip and 80% of the profits are distributed to the principals with 20% continuing to return to investors for the life of the business. Importantly, this profit structure delays profits to the principals until investors recoup their initial contribution—benefitting Nantucket residents who choose to invest. This structure also allows locals to receive a return on their investment over time and without the need of a sale of ACK. This investment structure was specifically chosen as ACK’s principals have no plans to sell the company. 7 d. Is ACK Natural actively soliciting large scale investment for this project (greater than 10% or more of the capital)? What will be the role of other potential investors in terms of managerial, financial and operational controls? No. ACK’s three principals have sufficient capital to fund the launch and operation of ACK as per the attached evidence. ACK is not soliciting large-scale investment for its company or this proposed medical and adult-use marijuana location. No individual or investor beyond the three principals will have a role in or control of managerial, financial and/or operational controls. e. Who will be funding the land development and construction costs? What are the general terms of that agreement? How can the Town be assured that the land development is sufficiently secured such that this facility will be built at the proposed location? As identified to the Town on Page 4 of its Response, ACK has identified only one site for its proposed location—a location that ACK has engaged the community around for some time. We have entered into a Binding Letter of Intent/Option to Lease for the property, found on Page 5 of the Response, and are committed to developing this site in partnership with Arrowhead Drive LLC (Chris and Linda Yates). Chris and Linda Yates, owners of the property at our proposed location of 17 and 19 Spearhead Road will be funding the land development and construction costs as per Exhibit A of the Binding Letter of Intent/Option to Lease, found on Page 8 of the Response. ACK and Arrowhead Drive LLC anticipates that the construction of its facility will create a number of jobs for Island residents, and Arrowhead Drive LLC is committed to hiring as many local contractors and vendors for the construction as possible. Due to this arrangement, ACK’s rent for the proposed location will reflect the cost that Arrowhead Drive LLC has and will continue to invest in the property. Because ACK is not leasing the land and then making its own improvements, it will pay a higher rent to its landlord to lease a property that is being built to suit the needs of ACK. ACK believes its long- term lease for the property provides significant incentive for the development of the land. Chris and Linda Yates own the land outright, without debt, and have already passed the Historic District Commission’s review, and have engaged Bracken Engineering, Inc. to begin the site work immediately. Moreover, ACK is confident that Chris and Linda Yates have more than sufficient 8 capital to fund the development and construction costs as evidenced by the CPA report in Exhibit 2 and their letter of support in Exhibit 3. 2. The RFQ application indicates that ACK Natural will be bringing in consultants and other individuals to manage and run operations. Other than the individuals disclosed in the RFQ, how many additional individuals or consultants with managerial, operational, or financial interest/control will be needed to run the operations? What types of additional consultants will be retained and what will be their managerial, operational or financial role and influence? ACK has disclosed on its application every individual it intends to bring in as a consultant to manage, run, or initiate operations. After an initial tutelage, ACK will be run by entirely by locals. As an example, C.S. Tate Keogan is a local Nantucketer with extensive experience and credentials to run ACK’s testing laboratory, having done so on Nantucket for the past 20+ years. Unlike the other applicant, no additional individuals or consultants with managerial, operational or financial interest/control—direct or indirect—will be needed or retained to run the operations proposed at 17 and 19 Spearhead Road. 3. The new Massachusetts commercial marijuana market has seen a significant number of individuals seeking to obtain licenses for purposes of selling to other large corporate marijuana companies based in other states. a. How can the Town be assured if it accepts this application that it is your intent to operate this business in accordance with the proposal submitted and not to profit on the limited number of licenses by selling or transferring your license to another company or investors that the Town has not reviewed and screened as part of this RFQ process? ACK has no plans to sell or transfer its license and has never had plans to sell the business. This is evidenced by the profit-sharing structure established by ACK, which prioritizes repayment of our investors via profits rather than a traditional exit, such as a sale. As residents of Nantucket, it is our goal to take all of the experience we have garnered in the marijuana industry over the past six (6) years and focus our experience on creating a world-class facility in our own town. ACK is dedicated to ensuring Nantucket residents benefit from the availability of cannabis for both wellness and medical purposes and an investment opportunity in an emerging industry. ACK and its executives want to see its Town reap the financial benefit of a medical and adult-use marijuana establishment within their jurisdiction. While ACK has no intent to sell or transfer its proposed 9 license, in order to demonstrate to the Town our commitment, we have attached affidavits (see Exhibit 8) from our principals certifying that ACK has no plans to sell or transfer its marijuana establishment license(s) for the Town of Nantucket to another company or investors that the Town has not reviewed and screened as part of its Request for Qualifications process. b. Is it your intent to sell or transfer this license if you are successful in the RFQ process? Have you made any overtures or sought to solicit interested companies to sell your interest in a potential license? As stated in its response to Question 3(a), ACK does not intend to sell or transfer its license if it is successful in the RFQ process. Other than engaging the Board of Advisors and Operations Team and having initial discussions regarding community investment consistent with our response to Questions 1 and 2 under the heading General Questions above, neither ACK nor any member of its executive team has sought or solicited, at any time, any potential buyer to sell any interest in a potential license. Prior to submitting its response to the Town’s RFQ, ACK was approached by three (3) multi-state operators, including Acreage Holdings LLC who sought to purchase ACK during the RFQ process. ACK’s principals terminated all channels of communication and made it explicit that ACK would and will not be selling its business or any portion thereof to an outside operator. We remain unwavering in that conviction. c. The Town’s draft HCA contains a provision limiting assignment of your interests without approval of the Select Board – are you aware that the Town will require a new HCA, including full review of any new individual or entities taking over control of this license/establishment? Do you accept that the Town will reserve the right to refuse to enter into a new HCA with a new owner(s) and operator(s) and that such decision is in the sole discretion of the Select Board? Yes. ACK is aware that the draft Host Community Agreement (HCA) contains a provision limiting assignment of its interests without prior approval of the Select Board. We accept that the Town will reserve the right to refuse to enter into a new HCA with a new owner and operator. ACK has no current or future plans to sell the business. d. Would you agree as part of the HCA to the Town’s review and approval of any license transfer prior to any sale or assignment taking place? Would you 10 agree to a term in the HCA that commits not to bring any legal challenge to the Town’s decision whether to enter into a new agreement with the any potential new owner/operator taking over the license? Would you agree to a term of the HCA that ACK Natural will not seek to transfer the license or a controlling interest, including any transfer of stock therein, for a 5-year period? Yes. As stated in Questions 3(a), 3(b), and 3(c), ACK has no plans to transfer, sell, or assign its license. 4. The Application materials suggest that ACK Natural intends to enter into a “robust wholesale cannabis market to other retailers” on the island. a. The building size proposed is 4,000 square feet – how much of that will be cultivation canopy? ACK’s proposed total building size will be 12,000 square feet. As stated on Page 101 of its Response, the footprint of the proposed building is 4,000 square feet. The design contains three floors: a basement floor, a main level, and a second floor. ACK’s draft exterior floor plan can be found on Page 115 of its Response. The cultivation canopy will be roughly 4,000 square feet and is expected to produce 1,500 pounds of marijuana per year. b. How much of that canopy will be processed and sold on site? Given the projected demands of Nantucket’s full-time and seasonal residents, ACK expects to process and sell about 1,300 pounds onsite or roughly 87% of what is produced. The remaining 200 pounds of unprocessed or processed marijuana may be sold to The Green Lady Dispensary in the wholesale market. c. Have you had any type of preliminary discussions with the other retailer to determine whether there is interest or a need for a robust wholesale market? ACK has spoken with The Green Lady Dispensary on several occasions about a reciprocal wholesale agreement. Included as Exhibit 9 is documentation disclosing these ongoing negotiations. 11 d. If you intend to grow product in excess of what you require for your own retail operation, how will that impact the ability of potential craft growers to compete in this marketplace? Under current state regulation, craft marijuana growers cannot sell marijuana legally within the marketplace. Craft growers can be licensed in two forms: (1) as a Personal Caregiver for a registered qualifying patient pursuant to 935 CMR 501.000; or (2) as a Craft Marijuana Cooperative under 925 CMR 500.000. Personal Caregivers can only provide marijuana to their registered qualifying patient on a 1-to-1 basis and cannot sell marijuana to others. A Craft Marijuana Cooperative must be licensed by the Cannabis Control Commission and is licensed marijuana cultivator to cultivate, obtain, manufacture, process, package and brand cannabis or marijuana products for transport to marijuana establishments, but not directly to consumers. By partnering with these licensed craft growers, ACK will make their marijuana and marijuana products readily available to consumers. Without a marijuana retailer as a partner, these products would otherwise not be able to reach patients or consumers in the marketplace. ACK does not expect that its cultivation and processing operations will impact the ability of potential craft growers to compete in this marketplace given that they cannot legally sell within it. If in the future craft growers are legally allowed to participate directly in the cannabis market we hope to support them by offering an incubator/accelerator program, seminars, and discounts on laboratory testing services as described in our Response on Pages 160 and 473. 5. The RFQ provides that ACK Natural anticipates that its retail location will draw less than 30 cars per day at the retail location (p. 463 of RFQ submissions). Have you made any seasonal adjustments for greater volume during the summer months? By comparison, the MMS application provides for 300 visits a day at a similar location. Why is there such a significant discrepancy? In ACK’s review of Mass Medi-Spa’s Response to the Town of Nantucket’s Request for Qualifications, it was unable to find a reference to 300 visits per day at either of their two proposed locations, or such materials have not been made available to ACK and the public. ACK has made seasonal adjustments for greater volume during the summer months. ACK expects approximately 170 patients and consumers a day during the summer season. On Page 463 of ACK’s Response, ACK details its plan to offer a free shuttle service and credits to consumers and patients who use 12 alternative transportation methods such as rideshares, public transportation, and/or bicycles. We believe ACK will see approximately 45 people per day by car (1.5 people per car), 80 people per day via the free shuttle, 20 people per day on bicycles, and 25 per day on public transportation. At the discretion of the Town and in accordance with Town bylaws, ACK will also offer delivery for medical patients with an expected volume of 10 patients per day. Page 463 and 464 discuss ACK’s plan to control Nantucket’s busiest months by requiring online appointments for adult-use consumers. This appointment scheduling and alternative transportation offerings will limit ACK’s projected visits by car to less than 30. 6. The application to the Cannabis Control Commission (p.422 of RFQ submissions) indicates that ACK Natural currently has a license from the Department of Public Health for a RMD and is in good standing. Can you explain why that assertion is being made? Item 15 on Page 5 of Nantucket’s Request for Qualifications asked for a copy of a draft application to the Cannabis Control Commission (CCC). ACK anticipates that it will receive its provisional medical license before submitting its applications for an adult-use cultivation license, product manufacturing license, and retailer license to the CCC. This assertion is being made because the RFQ requested a draft application which is prepared in anticipation of receiving approval from Nantucket. When the application to the CCC is sent, ACK anticipates that it will have its provisional medical license for a RMD and be in good standing. This statement will be updated to reflect the transfer of the Medical Use of Marijuana Program from the Department of Public Health (DPH) to the CCC which took place on December 23, 2018. In closing, we are a world-class cannabis management team, from the Island who is committed to the Island and its future, and with significant resources and local support to see this project to fruition. ACK’s interest in the Town of Nantucket stems from its longtime local ties to Nantucket, the principals’ past and present residency on the Island, and a desire to bring a safe and accessible marijuana facility to Nantucket with an approach that is appropriate and representative of the Island it serves, including by seeking to directly benefit the Town and the residents in equal measure. We hope that the Committee will positively consider these responses to their additional questions and recommend ACK be awarded this proposal. Our only interest is to locate and serve Nantucket and 13 its residents and our business success is directly tied to that goal. We hope to have the privilege to support this Island—our Island. Sincerely, Michael Sullivan Chief Executive Officer Ack Natural, Inc. Exhibit 1 January 30, 2019 Town of Nantucket Attn: C. Elizabeth Gibson – Town Manager 16 Broad Street Nantucket, MA 02554 Ms. Gibson, This letter is written to you at the direction of Douglas Leighton. Mr. Leighton is a member of Ack Natural, Inc. Ack Natural is submitting a response to your request for qualifications (“RFQ”) related to the “Co-Located Adult Use Marijuana Retail Establishment and Medical Marijuana Dispensary” (the “MREMMD”). I am a Certified Public Accountant licensed and in good standing with the Commonwealth of Massachusetts. I have requested and reviewed Mr. Leighton’s bank statements, brokerage statements, real estate holdings and publicly available financial instrument documents that pertain to all of Mr. Leighton’s significant assets. I have determined that Mr. Leighton’s net worth, calculated on a conservative basis, exceeds . Based on my ongoing conversations with Mr. Leighton, who I have worked with for the last 15 years, I am convinced of his commitment to Ack Natural and the MREMMD. He controls substantial capital, is a long-time Nantucket resident and should be fully capable of funding the development costs and maintaining the financial stability of the MREMMD as outlined in Ack Natural’s enclosed business plan. If you should wish to discuss Ack Natural’s RFQ response, Section II 3 in particular, I would be pleased to speak with you. Please feel free to contact me by email at jcrane@jcraneco.com or at my office at 617-418-3880. Best regards, James Crane, CPA President – Crane & Company Exhibit 2 Exhibit 3 Exhibit 4 Exhibit 5 Exhibit 6 Exhibit 7 Profit and Loss Statement Ack Natural For the years 1, 2 and 3 Stated in 000s Gross margin [L/J] Return on sales [T/J] (Prior Period) Year 1 (Budget) Year 2 (Current Period) Year 3 See Note #1 Current Period as % of Sales See Note #1 % Change from Prior See Note #1 % Change from Budget Sales Revenue (Product/Service 1) Flower 1,498 1,723 1,981 (Product/Service ) Infused Products 4,255 4,894 5,628 (Product/Service 3) Wholesale 805 925 1,064 Product/Service 4 (none) 0 0 0 Total Sales Revenue [J]6,558 7,542 8,673 Cost of Sales (Product/Service 1) Water 10 10 10 (Product/Service 2) Electricity 180 190 201 (Product/Service 3) Rent 421 483 555 (Product/Service 4) Misc grow exp 71 82 94 (Product/Service 5) Infused product materials 61 70 81 Total Cost of Sales [K]743 835 941 Gross Profit [L=J-K]5,815 6,707 7,732 Operating Expenses Sales and Marketing Advertising 12 12 12 Direct marketing 0 0 0 (Other expenses (specify)) Town of Nantucket 197 226 260 Other expenses (specify) Total Sales and Marketing Expenses [M]209 238 272 Research and Development (Technology licenses) State license 30 30 30 Patents 0 0 0 Other expenses (specify)0 0 0 Other expenses (specify)0 0 0 Total Research and Development Expenses [N]30 30 30 General and Adminstrative Wages and salaries 1,217 1,399 1,609 Outside services(waste water clean up) 12 13 14 Supplies 25 30 35 Meals and entertainment 6 9 11 Rent -see above Telephone 2 2 2 (Utilities) Software license 12 12 12 Depreciation 0 0 0 Insurance 10 10 10 Repairs and maintenance 25 40 55 (Other expenses (specify)) Banking Fees 15 17 19 Other expenses (specify) Total General and Adminstrative Expenses [O]1,324 1,532 1,767 Total Operating Expenses [P=M+N+O]1,563 1,800 2,069 Income from Operations [Q=L-P]4,252 4,907 5,663 Other Income [R] Taxes Income taxes 2,002 2,542 2,648 Payroll taxes 255 293 337 Real estate taxes 0 0 0 (Other taxes (specify)) Tax Prep 5 5 5 Other taxes (specify)0 0 0 Total Taxes [S]2,262 2,840 2,990 Net Profit [T=Q+R-S]1,990 2,067 2,673 Notes: 1) Please note that the formulas for Columns E-G have been removed as no Current and Prior period has yet occurred. As such, ACK has completed the the attachment forcasting Year 1, Year 2, and Year 3 anticipated profit and loss statement. 2) Pursuant to IRS Chapter 280E federal tax code, ACK has submitted anticipated profit and loss calculations that conform with IRS code, such that certain expenses that would normally be reflect in a standard non-cannabis profit and loss statement have been moved from SG&A to Cost of Goods Sold. 3)Gross margin and Return on sales formula has been removed in recognition of Note #1. Exhibit 8 Exhibit 9