ACKRELL CAPITAL CHAPTER Ill Cannabis Industry Segmentation Compared to indoor cultivation facilities that use electrical lighting, greenhouse and outdoor facili- ties are generally less expensive to operate and more appropriate for large-scale projects, but provide less control over growing conditions. The use of natural sunlight provides substantial savings on lighting equipment and energy costs, but may limit the number of grow cycles per year. Outdoor and green- house environments are more exposed to environmental risks that may negatively affect crops, such as pests, contaminants and adverse weather. Outdoor and greenhouse cultivation facilities are prevalent in Oregon, California and certain Latin American countries, which have climates conducive to outdoor growing. ~ = ‘< are | — Ge al ae ge | | dah”, hong ie, ; ie as aa s Aue yee: CAT MES Oe Che eS z = ? ey sf ore H = en aa. her S é i . — aS, £3 — : . ay as 4 a gee oi » ea gh ta Seer , a : i ‘ = F Mee ee : ‘ ee Sige S"5 Outdoor Greenhouses The Business of Cannabis Cultivation Cultivation businesses must navigate a host of operational challenges, including state and local licensing requirements, facility design and construction, research and acquisition of cannabis strains, intellectual property protection, cultivation process engineering, supply-chain management, yield optimization, facility management and security. Many cultivation businesses retain outside consultants to advise on one or more of these issues, although some businesses manage their entire cultivation operations internally. A cultivator may wholesale cannabis flower and other plant material to cannabis concentrate manufacturers or retail dispensaries, or it may be part of a vertically integrated production and retail business that sells its flower and other internally manufactured products through its own dispensaries. Certain U.S. laws, foreign laws and international treaties currently restrict interstate and some international movement of ca