ACKRELL CAPITAL CHAPTER IIl_ Cannabis Industry Segmentation Distribution Services Distribution services is emerging as a prominent subsegment of the cannabis industry; services in this subsegment include wholesale distribution of cannabis products to retailers and production inter- mediaries, as well as related transportation and logistics services. Historically, a high percentage of product manufacturers have sold directly to retail dispensaries, and some of those manufacturers with established “in-house” distribution channels are now leveraging their experience to offer distribution services to third-party manufacturers. Currently, distribution activities must be conducted only intrastate, and providers of distribution services must comply with regulations related to “touching the plant,” including testing and tax- collection requirements. As laws are changed to allow more interstate and international transportation, purchasers will be able to compare products and prices on a national or international basis, and dis- tributors who provide superior product selections and transportation logistics should have significant competitive advantage. Distribution Opportunities We believe opportunities in this segment include: E-Commerce Distribution. The ability to accept electronic orders and deliver cannabis products on demand represents an attractive distribution channel and growth opportunity. Companies that provide digital retail platforms for cannabis products will benefit as consumers migrate to e-commerce transactions. Branded and Vertically Integrated Dispensaries. We believe that consumers will ultimately con- centrate their purchases with a small group of branded dispensaries that provide a distinct, consistent and trusted retail experience and offer supporting e-commerce solutions. Dispensaries that integrate vertically to offer their own branded products should achieve superior margins on those products. High-profile Retail Locations. We see an opportuni