Professional Documents
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ADVISORY &CONFIDENTIALITY
REQUIREMENT
This Strategic Business Plan (hereinafter referred to as the Plan) contains proprietary information and is
not to be copied, reproduced, used or divulged to any person in whole or in part without proper
authorization, either verbal or in writing, from an Ocer or Director of CannabisRx. (CannabisRx or the
Company). This information is the property of the Company. The information contained in this Plan is
considered accurate as of its date. Such information is, however, subject to change at any time. Any
party reviewing this Plan should not construe its content as legal, tax or investment advice. This Plan
and any documents that may be delivered herewith should be reviewed by each prospective investor
and with such investors financial, legal and tax advisors. The statements, estimates and projections as
to the future revenues and results of operations of the Company are based upon estimates of
management.
This Business Plan contains forward-looking statements reflecting Company managements present
expectations. Investors are cautioned that all forward-looking statements involve risk and uncertainties,
including, without limitation, the Companys ability to develop commercially viable products.
Development delays, changing regulations, the Companys ability to attract and retain business partners,
future levels of funding, competition from other firms, competitive, evolving markets for pharmaceuticals,
the Companys ability to protect its intellectual property, the Companys ability to successfully market its
products and the Companys ability to secure the capital required for product development, operations
and marketing remains uncertain. The projections of future financial and operating performance have
been provided to assist in an evaluation of the projected business outlined in this Plan, but are not to be
relied upon as accurate representations of future results. Furthermore, because the projected financial
information is based upon estimates and hypothetical assumptions about circumstances and events that
have not yet taken place and are subject to variation, there are no representations or warranties
associated therewith, and there can be no assurance that the projected results will be attained. In fact,
the results will vary and may vary materially. The projections contained herein should be read in
conjunction with the hypothetical assumptions and qualifications set forth herein.
This Plan is based upon information developed by Company management solely for use by accredited
prospective investors in examining the factors and details regarding the Company. This document does
not purport to be all-inclusive or to contain all of the information that a prospective investor may desire.
No representation or warranty is made as to the accuracy or completeness of any of the information
contained herein. Each recipient of this document agrees that all of the information contained herein is
of a confidential nature, that he will treat it in a confidential manner, and that he will not directly or
indirectly, disclose, or permit his agents or aliates to disclose, any of such information without the prior
written consent of the Company.
Neither this Plan nor any accompanying memorandum(s), nor its delivery to any prospective investor,
shall constitute an oer to sell or solicit an oer to buy any securities of the Company and/or its
subsidiaries, nor shall this memorandum be construed to indicate that there has been no change in the
aairs of the Company and/or its subsidiaries at or near or since the date hereof.
Page 2
CORPORATE BACKGROUND
INTRODUCTION
CannabisRx CannabisRx Laboratories Inc. (the Company or CannabisRx Lab[s]) is a
development stage company that specializes in the expansion of specialty medical cannabis
clinics, laboratory and Cannabis Wellness Managed Services in Canada.
The Company strategy is a comprehensive synergistic model for the burgeoning medicinal
cannabis industry. The clinics focus primarily on providing medical guidance from qualified
doctors to help patients meet Health Canadas requirements for an Authorization to Possess
Marijuana for medical purposes (ATP). CannabisRx Labs which has quickly become an
innovative medicinal cannabis company dedicated in providing medical cannabis patients with
the best service and cannabis products available.
The Companys first priority of this model is building a network of clinics and health
practitioners to create access to a large database of patients while creating a demand for
product. CRX has been successfully building this network of doctors and patients for more
than two years.
CannabisRx Labs will research and develop medicinal cannabis products through its laboratory
facility. The formulas and recipes developed by the Company will be marketed by its wholly
owned subsidiary CannabisRx Distributing Inc. (CannabisRx Distributing). CannabisRx
Distributing will be responsible to manage and market the CannabisRx brand throughout
Canada and worldwide. The CannabisRx Lab model includes the medically and socially
acceptable delivery methods of standardized medical cannabis infused products. The
proprietary formulated products would include medicated beverages and tonics, cannabis
capsules, medicated lozenges and edibles as well as a selection of topicals and salves as part
of the CannabisRx Distributing line of products.
CannabisRx Labs will develop new products and joint venture with licensed producers to supply
patients their medicine in various forms. CannabisRx Distributing will also expand its portfolio of
medical cannabis products through acquisition and sublicense these products to specialty subdistributors around the world.
Page 4
INTRODUCTION
CannabisRx Labs believes that the real advancements in medicine are not going to be made in
farms but created in laboratories. Isolating the compounds, or cannabinoids, in their rare forms
is where the true medicinal benefits will be found. The Company is dedicated in providing the
most potent medicinal cannabis available - cannabis that contains high levels of cannabidiol, or
CBD.
In raw form, marijuana leaves and buds are non-psychoactive. They contain the antioxidants,
anti-inflammatories, and cannabidiol, an anti-cancer nutrient. This is proving to be a miracle
superfood capable of preventing and reversing a host of chronic illnesses.
The CBD found in the cannabis plant is a highly medicinal substance with unique immuneregulating capabilities. Since the human body already contains a built-in endogenous
cannabinoid system, complete with cannabinoid receptors, inputting CBD from cannabis can
help normalize the bodys functional systems, including cell communication and proper immune
function.
Individuals whose systems are compromised by autoimmune disorders, cellular dysfunction,
chronic inflammation, cancer cells, and various other illnesses can derive a wide range of
health-promoting benefits simply by consuming CBDs.
CannabisRx Labs will establish a production team, research lab, and extraction team to
produce High Value Cannabidiol Oil. CannabisRx Labs and CannabisRx Distributing are jointly
focused on the research and development of innovative delivery mechanisms for non-THC,
which is the psychoactive ingredient in cannabis that delivers the healing properties of
Cannabinoids (CBDs). The company is committed to finding and producing products that
contain the highest percentage of CBDs.
Critical links to the Companys plan are the pharmacies who, in conjunction with CannabisRx
Distributing, will produce propriety products that will be available by a prescription from a
doctor. CannabisRx Distributing will be the first company in Canada to provide educational
programs relating to these standardized dosages of cannabis products created with traditional
medical protocols. The Company has created an exclusive relationship with a compounding
lab to produce cannabis products. These ground breaking products will be sold through
pharmacies and clinics.
The traditional medical protocols that CannabisRx Labs and our ability to scale all segments of
our business modelgives CannabisRx Labs a unique perspective and competitive advantage.
This advantage will allow us to gain market share both now and in the future. Based in
Vancouver, British Columbia, the Company is home to some of the best indoor growing in the
world. Vancouver provides the perfect environment for CannabisRx Labs to combine
innovative and imaginative ideologies with progressive methods for creating cannabis
products.
With Health Canadas new Medical Marihuana Proposed Regulations (MMPR) coming into
effect this year along with the rapid expansion of medicinal cannabis in the United States
continuing at its current rate, this will provide unprecedented growth for the medical cannabis
industry and CannabisRx Laboratories Inc.
Page 5
MARKET ANALYSIS
MARKET ANALYSIS
Taking note of strong Canadian and U.S. support, nine (9) European territories (Israel,
Austria, Germany, Netherlands, Spain, Italy, Finland, Portugal and most recently
Czechoslovakia) have already have medicinal marijuana programs in place and many
more are also beginning to introduce legalization processes.
The medicinal cannabis industry's estimated worth in 2011 was $1.7 billion, according to
a report by independent financial analysis firm See Change Strategy. The report goes on
to estimate growth will reach $8.9 billion by 2016 (500%+). Popularity of internet search
terms for medical cannabis have increased 3000% since 2009, and statistics show a
steady increase in interest as Health Canada and additional U.S. states enact legislation
authorizing the legal use of medical cannabis.
Tobacco and alcohol sales generate over $17 billion in federal tax revenue. States tax tobacco and alcohol
and benefit as well. Given the current economic environment and the deficits states are facing, it is
understandable why legalization is a topic of discussion. Assuming comparable taxes to tobacco of 40-50%
(excise and sales tax), a $40 billion marijuana market would yield $16-20 billion in taxes. 2010 CNBC.com
http://www.cnbc.com/id/36179677/How_Big_Is_The_Marij
Page 6
The cannabis industry is rapidly approaching the tipping point for majority acceptance. When
that point is reached, 75 years of accumulated consumer demand will be unleashed for
products that are healthy and sustainable solutions to a myriad of environmental, economic,
and social problems we face today.
There is a strong possibility that 64% of the United States will have legislation in place that
supports medical cannabis, greatly influencing the federal positions of legalization policies in
both Canada and the United States, as well as opening up new markets, and new possibilities.
MARKET ANALYSIS
Voters in Colorado and Washington State recently approved the legalization of marijuana for
recreational not medical purposes. This represents significant opportunities for growth in
the coming years. Legal marijuana is already big business in Colorado. In the past two years
the state approved 739 sites for growing marijuana some with 10,000 plants and the
industry leases a total of about 1 million square feet (93,000 sq. m) of space in the Denver area.
Pot is expected to be an even bigger business in Washington. Approximately 1,000 grow sites
will be needed to meet demand, with 363,000 consumers in the state anticipated to be
somehow ingesting in the neighbourhood of 187,000 lb. (85,000 kg) of dry marijuana annually.
More than 32% of the United States have already enacted legislation in favour of medical
cannabis, and a many more US states have bills slated for the ballot. According to Newsweek,
the U.S. had about 369,000 registered users in 13 states in 2010. Five years earlier, in 2005,
there were about 15,000 users in eight states, according to the Congressional Research
Service. Sea Change estimates there are about 800,000 current and nearly 25 million
potential medical marijuana patients in the U.S.
Page 7
The proposed Marihuana for Medical Purposes Regulations (MMPR) would treat dried marihuana
as much as possible like a medication by creating a licensing scheme for the commercial
production and distribution of dried marihuana for medical purposes. The proposed MMPR would
authorize three key activities: the possession of dried marihuana for medical purposes by
individuals who have the support of an authorized health care practitioner; the production of dried
marihuana by licensed producers; and the sale and distribution of dried marihuana by specific
regulated parties to individuals who can possess it. Licensed producers would be subject to
regulatory requirements related to security; good production practices; packaging, labelling and
shipping; record keeping and reporting; and distribution.
If the Program continues to grow at the current pace, it is estimated that by 2014, over 50,000
individuals will be authorized to possess marihuana for medical purposes.
Under both the status quo scenario and the proposed MMAR, the analysis assumed the historical
growth rate in authorized users of approximately 40% per annum from 20142024. Under the
status quo scenario, the number of potential users of marihuana for medical purposes was
projected to increase from a base number of 57,799 in 2014 to about 433,688 in 2024, slightly
below the upper limit of 450,000. While the absolute number of legal users is still expected to
increase over time, this increase was projected to be approximately 30% less over the 10-year
period under the proposed MMAR compared to the status quo scenario. This would mean an
increase from a low projected estimate of 41 384 in 2014 to approximately 308 755 users by the
end of the 10th year of implementation. Their analysis also assumes a price change from about
$7.60 per gram to about $8.80 per gram over the 10-year period. Therefore, an ounce of
marijuana can cost each patient $150 to $250 in Canada. In addition, the average daily amount
has continually increased since 2002 to almost 10 g per day.
Health Canada also stated in its report that business, especially medium-sized business, is a
beneficiary in terms of producer surplus benefits and the expansion of the legal marihuana supply
industry that could grow to more than $1.3 billion per year in annual sales by the end of the
forecast period.
Significant growth opportunities exist for cannabis business development including, but not
limited to, production, product safety controls, product tracking, ERP, commerce software, digital
marketing, social media, data mining, and patient education. Rapid industry growth has
compressed business cycles, fostering the necessity for technological advancements.
MARKET ANALYSIS
According to a recent study released by Health Canada, as of August 13, 2012, individuals
authorized to possess marihuana for medical purposes had grown to 21 986 individuals under the
MMAR program. (See Marihuana for Medical Purposes Regulations December 15, 2012).
The Medical Cannabis industry in Canada is on the precipice of a major change in British
Columbia. Its estimated that the annual value of B.C.s cannabis industry is nearing $6 billion and
its estimated there are between 500,000 and 1,000,000 medical cannabis consumers in Canada.
(http://www.biv.com/article/20120703/BIV0119/307039918/-1/BIV/bc-146-s-medicinal-marijuanabusiness-growing)
Page 8
BOARD OF
DIRECTORS
A HEALTHY
CHOICE FOR
MEDICINAL
CANNABIS
Page 12
MISSION STATEMENT
Our mission is to provide
safe, compassionate and
reliable access to services
that support medical
cannabis as an alternative
treatment.
SHORT TERM
OBJECTIVES
1 Secure Financing.
- 48th Annual Post Graduate Review in Family Medicine Feb 27 -29 2013
Page 15
OBJECTIVES
Company management will be seeking strategic marketing and business partners in order to
develop long-term partnerships providing for positive eect on revenues and net income.
Partnering with greenhouse companies will be a key focus.
CannabisRx continues to research and develop new and innovative indoor growing equipment
as well as enhancing the existing technologies to increase eciencies and to improve profit
margins. A long-term commitment to research and development is critical to ensuring longterm sustainability and profitability of the Company.
CannabisRx will work closely with third party specialists engineers and designers worldwide
in the development of technologies as related to the Companys indoor horticulture solutions.
While the Company can leverage the knowledge and experience of third party specialists,
CannabisRx can also raise credibility of its products and technologies through independent
testing.
As the Company continues to expand and build up its operations and activities, additional
financings will be contemplated to fund continued growth. Such future growth will be a
combination of organic (through expansion) and technology acquisitions.
CannabisRx
anticipates additional financings will be secured through a second round of public financing.
USE OF FUNDS
Page 16
CannabisRx Laboratory
Our mission is to provide patients with a better basis of knowledge in order to find the best
medicine for their medical ailments. Medical cannabis potency has been virtually undefined
with patients having no means to regulate dosage.
CannabisRx Labs will research and develop medicinal cannabis products through its laboratory
facility. The formulas and recipes developed by the Company will be marketed by its wholly
owned subsidiary CannabisRx Cannabis Distributing Inc. (CannabisRx Distributing)
CannabisRx Labs will develop new products and joint venture with licensed producers to supply
patients their medicine in various forms. CannabisRx Distributing will also expand its portfolio of
medical cannabis products through acquisition and sublicense these products to specialty subdistributors around the world. (See the CannabisRx Labs Organizational Chart on Page??)
The CannabisRx Lab intends to be the leader in standardizing packaging and dosages for
dispensaries, licensed growers and patients. Our lab will also consult with a wide variety of
clients in the cannabis industry that are looking to make their medicine high quality and safe for
their customers.
CannabisRx Pharmacy
CannabisRx will build the first /lab/compounding pharmacy combination in Canada which
specializes in cannabis research and development. It will have a modern look using age-old
methodologies.
The very basis of the pharmacy profession is the triad. This triad is the patient-physicianpharmacist relationship. The cycle of this relationship starts with the patient needs being
determined by his physician. The physician then chooses a path of treatment that may include
a compounded medication.
Page 17
CannabisRx plans to meet this increasing demand by working with all members of the triad
relationship. Qualified CRX healthcare practitioners will be able to prescribe medication
specific to their patients individual needs in accordance to Health Canadas guidelines.
The pharmacy rules allow pharmacists to formulate a prescription when so ordered by the
licensed practitioner for a specific patient. Therefore, any medical doctor or nurse practitioner
that is licensed to prescribe medications can write prescriptions for compounded or formulated
products.
The CannabisRx lab/pharmacy will be dedicated in formulating high-quality pharmaceuticalgrade ingredients as prescribed by a healthcare practitioner, into specific dosage forms such
as capsules, creams, gels, tablets and lozenges. These forms may be taken either orally,
topically, sublingually or buccally. Healthcare practitioners can therefore be more easily finetuned or modified to the dose or prescription as an individuals needs change, or match an
individuals preferences and absorption abilities.
Potency Analysis
Being aware of the potency of medical cannabis is fundamental in allowing the patient to
choose the correct medicine for their needs, as well as determining how much to take.
In commercial medicine, the potency of a drug is clearly stated on the label so one knows the
correct dose. Unfortunately, this is not the case in medical cannabis. Cannabis Potency Testing
enables patients to know the amount of active ingredients so they can be confident they are
administering an appropriate dose. Taking the correct amount of medical cannabis can bring
welcome relief however taking too much can have very negative side eects such as feelings
of anxiety and paranoia.
Page 18
CannabisRx Labs Cannabis Potency Analysis will measure the major active compounds
present in medical cannabis:
Cannabidiol (CBD) A non-psychoactive important for pain relief and other health
related eects
Microbiological Screen
Exposure to high levels of microorganisms such as molds and bacteria are known to cause
health problems and can be particularly dangerous to patients that have existing medical
problems.
The CannabisRx Labs microbiological screening program will ensure the safety of medical
cannabis by identifying the type and level of microorganisms present in the medicine. Molds
are ubiquitous and small amounts are found in almost every sample. However, patients with
existing health problems should not be exposed to medicines that contain large amounts.
Medicines that contain bacteria should be destroyed.
Pesticide Screen
Pesticides used in growing operations can be present in the final form of the medicine. They
are toxic at high levels and can be harmful at lower doses, especially to those with serious
medical conditions.
It has been found that pesticides used in growing operations can be present in the final form of
the medicine. Exposure to these chemicals can be harmful to patients; they are toxic at high
levels and can be harmful at lower doses, especially to those with other serious medical
conditions.
The CannabisRx Lab will oers residual pesticide testing so that medical cannabis patients can
avoid harmful pesticide contaminates via their medicines.
CannabisRx is in the process of acquiring a research and development license for controlled
substances through Health Canada. This will allow CannabisRx to import and export various
products and strains worldwide.
Compounding Services
The CannabisRx lab will contain a compounding pharmacy where our pharmacist will combine
one or more active ingredients into a customized treatment for an individual patients needs.
Our lab/pharmacy will be dedicated in formulating high-quality pharmaceutical-grade
ingredients as prescribed by a healthcare practitioner, into specific dosage forms such as
capsules, creams, gels, tablets, lozenges, and other forms.
Healthcare practitioners can more easily fine-tune or modify the dose or prescription as an
individuals needs change, or match an individuals preferences and absorption abilities.
Page 15
19
Currently, Health Canada grants access to cannabis for medical use to those Canadians who
are suering from severe and agonizing illnesses. It is not legal to grow or possess cannabis
except with legal permission by Health Canada under the current MMAR (Medical Marihuana
Access Regulations). Prairie Plant Systems is the only organization that can legally supply
cannabis seeds and dried cannabis to persons authorized to possess and/or licensed to
produce cannabis. The Prairie Plant Systems contract ends March 31,2014. This presents an
opportunity for commercial licensees who quality under the new Health Canada Regulations,
eective April 1, 2013 to compete in the market place which is estimated to be over 300,000
patients over the next 10 years. The market in Canada is estimated by Health Canada to be
over $1.5 billion. Our current patient flow gives CannabisRx Labs a ground floor advantage
with the upcoming proposed changes to the MMAR.
The proposed changes brought by Health Canada are looking to eliminate personal and
designated production sites. Patients will then only be able to purchase cannabis that has
been produced by commercial grow operations.
With proposed changes to Health Canadas medical marijuana program, our facility will fit well
with the governments mandate to provide medical cannabis, through physicians and other
Health Canadas approved practitioners, thereby increasing numbers of approved patients in
the country.
Page 20
MEDICINAL MARIJUANA
LICENSED PRODUCER
REVENUE
PROJECTIONS - LICENSED PRODUCER
REVENUE&PROJECTIONS&PRODUCTION&FACILITY&3&LARGE&BUILD&3&360&LIGHTS
360 LIGHTS
Price&Per&Gram:
$&&&&&&&&&&&&4.00
36
10
15,000
35
36
37
38
39
40
41
42
43
44
45
46
1
$&&2,288,160
$&&2,353,536
$&&2,418,912
$&&2,484,288
$&&2,549,664
$&&2,615,040
$&&2,680,416
$&&2,745,792
$&&2,811,168
$&&2,876,544
$&&2,941,920
$&&3,007,296
1.1
$&&2,516,976
$&&2,588,890
$&&2,660,803
$&&2,732,717
$&&2,804,630
$&&2,876,544
$&&2,948,458
$&&3,020,371
$&&3,092,285
$&&3,164,198
$&&3,236,112
$&&3,308,026
1.2
$&&2,745,792
$&&2,824,243
$&&2,902,694
$&&2,981,146
$&&3,059,597
$&&3,138,048
$&&3,216,499
$&&3,294,950
$&&3,373,402
$&&3,451,853
$&&3,530,304
$&&3,608,755
1.3
$&&2,974,608
$&&3,059,597
$&&3,144,586
$&&3,229,574
$&&3,314,563
$&&3,399,552
$&&3,484,541
$&&3,569,530
$&&3,654,518
$&&3,739,507
$&&3,824,496
$&&3,909,485
ProducKon&(lbs&per&light)
1.4
1.5
1.6
$&&3,203,424 $&&3,432,240 $&&&&3,661,056
$&&3,294,950 $&&3,530,304 $&&&&3,765,658
$&&3,386,477 $&&3,628,368 $&&&&3,870,259
$&&3,478,003 $&&3,726,432 $&&&&3,974,861
$&&3,569,530 $&&3,824,496 $&&&&4,079,462
$&&3,661,056 $&&3,922,560 $&&&&4,184,064
$&&3,752,582 $&&4,020,624 $&&&&4,288,666
$&&3,844,109 $&&4,118,688 $&&&&4,393,267
$&&3,935,635 $&&4,216,752 $&&&&4,497,869
$&&4,027,162 $&&4,314,816 $&&&&4,602,470
$&&4,118,688 $&&4,412,880 $&&&&4,707,072
$&&4,210,214 $&&4,510,944 $&&&&4,811,674
Notes:
Total&Annual&OperaJng&Cost&=&$3,000,000&(Health&Canada&=&+10%&Admin&cost&included)
"Sea&of&Green"&can&add&about&25&U&40%&increase&in&revenue&(Upgrade&cost&about&$250,000)
Cost&of&Land:&$1,250,000
Cost&of&Building:&$1,500,000
Cost&of&Equipment:&$800,000
Total:&$3.55M
1.7
$&&&&3,889,872
$&&&&4,001,011
$&&&&4,112,150
$&&&&4,223,290
$&&&&4,334,429
$&&&&4,445,568
$&&&&4,556,707
$&&&&4,667,846
$&&&&4,778,986
$&&&&4,890,125
$&&&&5,001,264
$&&&&5,112,403
1.8
$&&&&4,118,688
$&&&&4,236,365
$&&&&4,354,042
$&&&&4,471,718
$&&&&4,589,395
$&&&&4,707,072
$&&&&4,824,749
$&&&&4,942,426
$&&&&5,060,102
$&&&&5,177,779
$&&&&5,295,456
$&&&&5,413,133
1.9
$&&&&4,347,504
$&&&&4,471,718
$&&&&4,595,933
$&&&&4,720,147
$&&&&4,844,362
$&&&&4,968,576
$&&&&5,092,790
$&&&&5,217,005
$&&&&5,341,219
$&&&&5,465,434
$&&&&5,589,648
$&&&&5,713,862
2
$&&&&4,576,320
$&&&&4,707,072
$&&&&4,837,824
$&&&&4,968,576
$&&&&5,099,328
$&&&&5,230,080
$&&&&5,360,832
$&&&&5,491,584
$&&&&5,622,336
$&&&&5,753,088
$&&&&5,883,840
$&&&&6,014,592
REVENUE&PROJECTIONS&PRODUCTIO
Price&Per&Gram:
No.&of&Lights
No.&of&rooms
Sq.&Footage
Number&of&Crops&Per&Year
Number&of&Crops&Per&Year
No.&of&Lights
No.&of&rooms
Sq.&Footage
$&&&&&&&&&&&&4.00
36
10
15,000
35
36
37
38
39
40
41
42
43
44
45
46
1
$&&2,288,160
$&&2,353,536
$&&2,418,912
$&&2,484,288
$&&2,549,664
$&&2,615,040
$&&2,680,416
$&&2,745,792
$&&2,811,168
$&&2,876,544
$&&2,941,920
$&&3,007,296
1.1
$&&2,516,976
$&&2,588,890
$&&2,660,803
$&&2,732,717
$&&2,804,630
$&&2,876,544
$&&2,948,458
$&&3,020,371
$&&3,092,285
$&&3,164,198
$&&3,236,112
$&&3,308,026
1.
$&&2,745
$&&2,824
$&&2,902
$&&2,981
$&&3,059
$&&3,138
$&&3,216
$&&3,294
$&&3,373
$&&3,451
$&&3,530
$&&3,608
Notes:
Total&Annual&OperaJng&Cost&=&$3,000,000&(Health&Canad
"Sea&of&Green"&can&add&about&25&U&40%&increase&in&reven
Cost&of&Land:&$1,250,000
Cost&of&Building:&$1,500,000
Cost&of&Equipment:&$800,000
Page 21
RESOURCE CENTRE
Business opportunity
The lack of education about medicinal marijuana and combined with the slow and
challenging application process for Health Canada certification provides a ground floor
opportunity for expansion of the current model CRX clinics Canada wide.
CRX has created a procedures and operations manual for medical marijuana specialty
clinics and a reference manual on dosages and strains for our aliated doctors. These
manuals will be invaluable to parties looking for a competitive advantage. The company
is currently in the process of applying for a section 56 Controlled Substance exemption.
This licence will allow CRX to do clinical research using cannabis and allow reciprocal
trade and sale internationally to qualified countries.
CRX Services
CRX charges for its services to assist patients who qualify for an Authorisation to Possess
(ATP) under Health Canadas MMAR; and helps patients who might benefit from the use of
medicinal cannabis by providing the following services:
CRX has taken the lengthy and somewhat bureaucratic application process of obtaining
an MMAP and streamlined it to a simple and pain free process.. CRX also assists patients
who do not qualify for an ATP but do not qualify for membership at cannabis dispensaries
and compassion clubs by providing access to an aliatedDoctor.
Recent Google Analytics to the CRX website indicates a high percentage of unique
visitors (about 70%) and they are spending, on average 10 minutes and more on the
website which may indicate the importance of critical information provided by CRX (the
web average for all visitors is between 3.2 minutes to 5.14 minutes). 60% are new
visitors, 40% return and 87% of the visitors are from Canada with the other from the US,
and abroad. (See Google Analytics Graph - APPENDIX - C: Website snapshot: Jan 15
Feb 5, 2013)
CRX Google Analytics (Jan 15 to Feb 10, 2013)
Page 23
CannabisRx will expand the CRX model into Alberta, Manitoba, Ontario and Nova Scotia and,
potentially, additional locations in BC. These clinics will be a combination of corporately owned
and Co-operative partnerships.
CannabisRx will oer two types of clinics: (1) a Clinic based operation, similar to what CRX is
currently providing in its Vancouver Flag ship location (2) a combination of clinic / pharmacy
where patients can enter the clinic and receive their licence and then proceed to the
neighbouring CannabisRx pharmacy to pick up their prescription.
These structures will benefit from volume purchasing, ecient high tech delivery of pharmacy
products, custom designed retail and professional strategies, and a supportive peer network that
shares experiences, knowledge and philosophy. This collaborative infrastructure and vision will
assist each clinic to promote and support look the health of each patient.
CannabisRx will have a central admin operation for all expansion clinics. All support including
patient services (Patient intake, initial enrolment), marketing and branding will be handled out of
head oce, reducing cost and increase profits. This collaborative infrastructure and vision
allows for our expansion clinics and community pharmacist, to do what they do best look after
the health of their patients.
The new laws and regulations from Health Canada will aect compassion clubs licensing their
members. CannabisRx and CRX are well positioned with agreements to provide licensing and
renewal licensing services to all their patients.
Page 24
CannabisMDs mission is to strive to meet the needs of Canadians who require safe,
aordable, and legal access to high quality medical marihuana. We are committed to
improving our clients' well-being and standard of living by providing access to eective
pain management. Our online store provides information to allow clients to make a more
informed choice.
Many Law enforcement agencies, town and city councils have expressed concerns with
retail storefront dispensaries.
They site crime as being the biggest threat these
operations. Many of the new rules and regulations stipulate that storefronts must be a
quantified distance from schools. With online dispensaries we are able to limit the risk of
crime and the fact we do not need a storefront the location of our warehouse is located in
a safe zone.
Our Vision is to foster innovation and integrity through collaboration with doctors,
researchers, government, clients and their communities. In doing so, our goal is to
provide Canadians aicted with debilitating illnesses essential alternatives that respect
the patients' choice.
Currently all of our customers must meet Health Canadas licensing requirements to
obtain an MMAR card in order to purchase medical Cannabis for his or her medical
condition. Once a customer has an MMAR card they can join our online collective and
start ordering high quality cannabis reliable medical cannabis.
As a client of CannabisMD, we can provide our qualified clients with a supply of product
based on their MMAR approved maximum dosage. We sell in minimum single gram units
that range from $2.50 to $10.00 per gram depending on the strain. All clients are
responsible to pay for their own shipping fees that we will add to the total bill. We provide
several dierent courier options, which vary depending on where you are located.
DISTRIBUTION
Page 26
Page 11
Currently, most online distribution companies oer a limited amount of strains in some cases
only one strain. Most of the brick and mortar companies oer a variety of strains at a high cost.
(Averaging $8.50-$15.50 a gram). CannabisMD will oer a high quality superior product at
$12.50 and a variety of lower end product at $2.50. CMD is able to market its product at a rate
better suited for our consumers because of its in house production facility and its commitment
to oering high quality strains at a lower cost for the patient.
There are a number of small competitors in this market. However, online in Canada only three
standout. (Natural Order Health Services http://www.naturalorder.me; Bud Buddy http://
www.budbuddy.biz; and Prairie Farms http://www.prairieplant.com)
Natural Order Health Services is located in Victoria, BC and oers one strain of medical
cannabis to its customers at medium $5.50 per gram. They sell to patients through out Canada.
Bud Buddy is located in Vancouver, BC, caters to recreational users and pushes the limits of
being legal. They service all of Canada and sell three types of strains a low quality, medium
quality and a high quality, ranging in price form $11.50 to $15.00. Prairie Plant is currently the
government sanctified online distributer for medical cannabis. Prairie oers only one low quality
strain at $5.50 per gram.
Indirect competition comes in many forms including oine retailers or dispensaries. However
many government, police ocials and local communities have stated they wish to move away
from the retail brick and mortar type of operations.
DISTRIBUTION
COMPETITION
CannabisMD will oer ten strains from medium to high quality only, including some exclusively
licensed strains and strains that are completely organic. One of CannabisMDs mandate is to
research and identify strains that work best for a specific ailments.
Page 27
CannabisMD)*)Year)1
Month)1
Expenses
Legal'Exp
Accoun#ng
Oce
Oce'Equipment
Inventory
licensing
Marke#ng'
Selling'Expense
Website
PKG'materials
Employee'1
Employee
Misc.
sales'person
Management
2%'of'sales'Net
Total)Expenses
Net)Revenue
Beginning'Bank'Balance
Closing'Bank'Balance
Month)2
Month)5
Month)6
Month)7
Month)8
Month)9
Month)10
Month)11
Month)12
30
50
100
250
196
196
196
196
$''''''''5,880 $''''''9,800 $'''''19,600 $'''49,000
105
105
105
105
$''''''''3,150 $''''''5,250 $'''''10,500 $'''26,250
$''''''''500
$''''''''2,730 $''''''4,550 $'''''''9,100 $'''23,250
500
196
$'''98,000
105
$'''52,500
$''''''''500
$'''46,000
650
196
$''127,400
105
$''''68,250
$''''''1,000
$''''60,150
800
196
$'156,800
105
$''''84,000
$''''''1,000
$''''73,800
1000
196
$'''196,000
105
$'''105,000
$'''''''1,000
$'''''92,000
1250
196
$''''''245,000
105
$''''''131,250
$'''''''''''1,500
$''''''115,250
1500
196
$'''294,000
105
$'''157,500
$'''''''1,500
$'''138,000
1750
196
$'''343,000
105
$'''183,750
$'''''''1,500
$'''160,750
2000
196
$''392,000
105
$''210,000
$'''''''2,000
$''184,000
$''''''''5,000
$''''''''2,000
$'''''''''''500
$''''''''6,000
$''''''1,274
$''''''''200
$''''''''200
$'''''''''''500
$'''''''1,000
$'''''''''''400
$'''''''''''2,450
$''''''''''''''500
$''''''''''''''500
$'''''''''''1,000
$''''''''''''''600
$'''''''2,940
$'''''''''500
$''''''1,000
$'''''''''400
$''''''1,568
$'''''''''500
$'''''''''500
$''''''1,000
$'''''''''400
$'''''''1,960
$''''''''500
$''''''''980
$''''''''500
$''''''''500
$'''''''''''500
$'''''''1,000
$'''''''''''600
$'''''''3,430
$'''''''''''500
$'''''''''''500
$'''''''1,000
$'''''''''''600
$'''''''3,920
$'''''''1,500
$''''''''''500
$'''''''1,000
$''''''''''800
$'''''''1,000
$'''''''''''500
$'''''''''''500
$'''''''''''500
$'''''''4,000
$'''''''3,000
$'''''''''''300
$'''''''4,000
$'''''''''''1,000
$''''''''''''''500
$''''''''''''''500
$''''''''''''''500
$'''''''''''4,000
$'''''''''''3,000
$''''''''''''''500
$'''''''''''4,000
$'''''''1,000
$'''''''''''500
$'''''''''''500
$'''''''''''500
$'''''''4,000
$'''''''3,000
$'''''''''''500
$'''''''4,000
$'''''''1,000
$'''''''''''500
$'''''''''''500
$'''''''1,000
$'''''''4,000
$'''''''3,000
$'''''''''''500
$'''''''4,000
$'''''17,660
$'''''74,340
$'''114,074
$'''188,414
$'''''''''19,050
$'''''''''96,200
$''''''188,414
$''''''284,614
$'''''19,040
$'''118,960
$'''284,614
$'''403,574
$'''''20,530
$'''140,220
$'''403,574
$'''543,794
$'''''''1,000
$''''''''''500
$'''''''1,000
$'''''''1,000
$'''''''4,000
$'''''''3,000
$''''''''''500
$'''''''2,000
$'''''32,500
$'''''18,192
$'''''71,412
$''112,588
$''543,794
$''656,382
$'''''''''''98
$'''''''''500
Month)3
$''''''''''196
$''''''''''500
$''''''''''500
Month)4
$''''''''490
$''''''''5,000
$''''''1,000
$'''''''1,000
$'''''1,000
$'''''1,000
$''''''1,000
$''''''''3,000
$''''''''1,000
$''''''''2,000
$''''''''1,500
$'''''''''''700
$''''''''4,000
$''''''1,000
$'''''''''500
$''''''2,000
$''''''1,500
$'''''''''200
$''''''4,000
$'''''''1,000
$''''''''''500
$'''''''2,000
$'''''''1,500
$''''''''''200
$'''''''4,000
$''''''''500
$'''''2,000
$'''''1,500
$''''''''200
$'''''4,000
$''''''''500
$''''''''500
$'''''2,000
$'''''1,500
$''''''''300
$'''''4,000
$'''''''''500
$''''''2,000
$''''''1,500
$'''''''''300
$''''''4,000
$''''''1,000
$'''''''''500
$'''''''''500
$'''''''''500
$''''''4,000
$''''''3,000
$'''''''''300
$''''''4,000
$''''12,474
$''''47,676
$''''10,366
$''''58,042
$''''17,768
$''''56,032
$''''58,042
$'114,074
Total
$''1,936,480
$''1,037,400
$''''''''10,500
$'''''909,580
$''''''''24,306
$''''''''''6,000
$''''''''''6,000
$''''''''13,000
$''''''''''4,200
$''''''''''''''L
$''''''''16,000
$''''''''''3,000
$''''''''''9,000
$''''''''''7,500
$''''''''36,000
$''''''''27,000
$''''''''''4,500
$''''''''46,000
$''''''''32,500
$''''''''18,192
$'''''253,198
$'''''656,382
YEAR ONE
Revenue
Pa#ent'sales'per'month
Average'28'grams'per'month
$7.00'per'gram
Cost'per'28'grams'
Product'cost
addi#on'rev'streams
Total)Revenue)Less)Cost)of)Goods
AssumpJons:
legal'at'1%'of'revenues'beginning'in'month'2
Each'client'will'purchase'an'average'of'28'grams'per'month
Average'pa#ent'cost'per'gram'='$7.00
Management'Year'End'Bonus'='5%'of'Net
PROFORMA
CannabisMD)*)Year)2
Expenses
Legal'Exp
Accoun#ng
Oce
Oce'Equipment
Inventory
licensing
Marke#ng'
Selling'Expense
Website
PKG'materials
Employee'1
Employees
Misc.
sales'person
Management
2%'of'sales'Net
Total)Expenses
Net)Revenue
Beginning'Bank'Balance
Closing'Bank'Balance
Month)13
Month)14
Month)15
Month)16
Month)17
Month)18
Month)19
Month)20
Month)21
Month)22
Month)23
Month)24
2250
196
$''''''441,000
105
$''''''236,250
$''''''''''3,000
$''''''207,750
2500
196
$'''''490,000
105
$'''''262,500
$''''''''''3,000
$'''''230,500
2750
196
$'''''539,000
105
$'''''288,750
$'''''''''3,500
$'''''253,750
3000
196
$''''''588,000
105
$''''''315,000
$'''''''''''4,000
$''''''277,000
3250
196
$''''''637,000
105
$''''''341,250
$'''''''''''4,000
$''''''299,750
3500
196
$'''''686,000
105
$'''''367,500
$'''''''''5,000
$'''''323,500
3750
196
$'''''735,000
105
$'''''393,750
$''''''''''6,000
$'''''347,250
4000
196
$'''''784,000
105
$'''''420,000
$'''''''''6,000
$'''''370,000
4250
196
$''''''833,000
105
$''''''446,250
$''''''''''8,000
$''''''394,750
4500
196
$'''''882,000
105
$'''''472,500
$''''''''''8,000
$'''''417,500
4750
196
$'''''931,000
105
$'''''498,750
$''''''''''8,000
$'''''440,250
5000
196
$'''''980,000
105
$'''''525,000
$''''''''10,000
$'''''465,000
$''''''''''4,410
$''''''''''''''500
$''''''''''''''500
$''''''''''''''500
$''''''''''1,200
$''''''''''2,000
$''''''''''1,000
$''''''''''1,000
$''''''''''1,000
$''''''''''1,000
$''''''''''5,000
$''''''''''6,000
$''''''''''''''500
$''''''''''4,000
$''''''''''4,900
$'''''''''''''500
$'''''''''''''500
$'''''''''''''500
$''''''''''1,200
$''''''''''2,000
$''''''''''1,000
$''''''''''1,000
$''''''''''1,000
$'''''''''''''500
$''''''''''5,000
$''''''''''6,000
$'''''''''''''500
$''''''''''4,000
$'''''''''5,390
$'''''''''''''500
$'''''''''''''500
$'''''''''''''500
$'''''''''1,400
$'''''''''2,000
$'''''''''1,000
$'''''''''1,000
$'''''''''1,000
$'''''''''1,000
$'''''''''5,000
$'''''''''6,000
$'''''''''''''500
$'''''''''4,000
$'''''''''''5,880
$''''''''''''''500
$''''''''''''''500
$''''''''''''''500
$'''''''''''1,600
$'''''''''''2,000
$'''''''''''1,000
$'''''''''''1,000
$'''''''''''1,000
$''''''''''''''500
$''''''''10,000
$'''''''''''8,000
$''''''''''''''500
$'''''''''''4,000
$'''''''''''6,370
$''''''''''''''500
$''''''''''''''500
$''''''''''''''500
$'''''''''''1,600
$'''''''''''2,000
$'''''''''''2,000
$'''''''''''1,000
$'''''''''''1,000
$'''''''''''1,000
$''''''''10,000
$'''''''''''8,000
$''''''''''''''500
$'''''''''''4,000
$'''''''''6,860
$'''''''''''''500
$'''''''''''''500
$'''''''''''''500
$'''''''''2,000
$'''''''''2,000
$'''''''''2,000
$'''''''''1,000
$'''''''''1,000
$'''''''''''''500
$'''''''10,000
$'''''''''8,000
$'''''''''''''500
$'''''''''4,000
$''''''''''7,350
$'''''''''''''500
$'''''''''''''500
$'''''''''''''500
$''''''''''2,400
$''''''''''2,000
$''''''''''2,000
$''''''''''1,000
$''''''''''1,000
$''''''''''1,000
$''''''''10,000
$''''''''10,000
$'''''''''''''500
$''''''''''4,000
$'''''''''7,840
$'''''''''''''500
$'''''''''''''500
$'''''''''1,000
$'''''''''2,400
$'''''''''2,000
$'''''''''3,000
$'''''''''1,000
$'''''''''1,000
$'''''''''''''500
$'''''''10,000
$'''''''10,000
$'''''''''''''500
$'''''''''4,000
$''''''''''8,330
$''''''''''''''500
$''''''''''''''500
$''''''''''1,000
$''''''''''3,200
$''''''''''2,000
$''''''''''3,000
$''''''''''1,000
$''''''''''1,000
$''''''''''1,000
$''''''''10,000
$''''''''10,000
$''''''''''''''500
$''''''''''4,000
$''''''''''8,820
$'''''''''''''500
$'''''''''''''500
$''''''''''1,000
$''''''''''3,200
$''''''''''2,000
$''''''''''3,000
$''''''''''1,000
$''''''''''1,000
$'''''''''''''500
$''''''''10,000
$''''''''10,000
$'''''''''''''500
$''''''''''4,000
$''''''''''9,310
$'''''''''''''500
$'''''''''''''500
$''''''''''1,000
$''''''''''3,200
$''''''''''2,000
$''''''''''3,000
$''''''''''1,000
$''''''''''1,000
$''''''''''1,000
$''''''''10,000
$''''''''10,000
$'''''''''''''500
$''''''''''4,000
$''''''''28,610
$''''''179,140
$''''''656,382
$''''''835,522
$''''''''28,600
$'''''201,900
$'''''835,522
$''1,037,422
$'''''''29,790
$'''''223,960
$''1,037,422
$''1,261,382
$''''''''36,980
$''''''240,020
$'''1,261,382
$'''1,501,402
$''''''''38,970
$''''''260,780
$'''1,501,402
$'''1,762,182
$'''''''39,360
$'''''284,140
$''1,762,182
$''2,046,322
$''''''''42,750
$'''''304,500
$''2,046,322
$''2,350,822
$'''''''44,240
$'''''325,760
$''2,350,822
$''2,676,582
$''''''''46,030
$''''''348,720
$''2,676,582
$''3,025,302
$''''''''46,020
$'''''371,480
$''3,025,302
$''3,396,782
$''''''''47,010
$'''''393,240
$''3,396,782
$''3,790,022
$''''''''''9,800
$'''''''''''''500
$'''''''''''''500
$''''''''''1,000
$''''''''''4,000
$''''''''''2,000
$''''''''''3,000
$''''''''''1,000
$''''''''''1,000
$'''''''''''''500
$''''''''10,000
$''''''''10,000
$'''''''''''''500
$''''''''''4,000
$'''''165,000
$''''''''80,540
$'''''293,340
$'''''171,660
$''3,790,022
$''3,961,682
Total
$''8,526,000
$''4,567,500
$''''''''68,500
$''4,027,000
$''''''''85,260
$''''''''''6,000
$''''''''''6,000
$''''''''''8,500
$''''''''27,400
$''''''''24,000
$''''''''25,000
$''''''''12,000
$''''''''12,000
$''''''''''9,000
$'''''105,000
$'''''102,000
$''''''''''6,000
$''''''''48,000
$'''''165,000
$''''''''80,540
$'''''721,700
$''3,305,300
YEAR TWO
Revenue
Pa#ent'sales'per'month
Average'28'grams'per'month
$7.00'per'gram
Cost'per'28'grams'
Product'cost
addi#on'rev'streams
Total)Revenue)Less)Cost)of)Goods
Page 28
CannabisRx is expected to have substantial growth through the clinics and Wellness Managed
Services to licensed producers. These services include: CannabisRx Products; Brain Trust
Business Compliance; Record Keeping; Accounting; Licensing Approvals; Computer Management
system; Sales and Marketing; Secure Delivery services; and, Testing and Standardizations.
Licensed Producer Brain Trust Joint Venture
Record Keeping
Licensed producers will have to keep records of their activities with cannabis, including all
transactions (sale, exportation, importation), all dried marihuana returned from clients, and an
inventory of cannabis (e.g. seeds, fresh harvested marihuana, dried marihuana and packaged
marihuana). All records will have to be kept for a period of at least two years, in a format that
would be easily auditable, and would have to be made available to Health Canada upon request.
Health Canadas regulations also include very specific processes for registering and verifying each
individual as a client. This includes verifying that the supporting authorized health care practitioner
is entitled to practice their profession in the province in which the prospective client consulted them
and that they have not been prohibited from prescribing narcotics. These tasks are similar to those
conducted by a pharmacist when filling out a prescription. The licensed producer would also have
to confirm with the office of the authorized health care practitioner that the information in the
medical document, including the daily quantity, is correct and complete. Law enforcement needs a
way to verify whether a named individual is a registered client of the producer confirm as soon
as practicable whether the individual is a registered client or an individual who is responsible for a
registered client and the daily quantity of dried marihuana specified in the medical document.
We provide a secure log-in website that provides immediate access by an authorized user and any
smart mobile device.
Maintaining the confidentiality of patient records is paramount and our security procedures are
industry leading and protect the licensed producer, compassion club and the patient.
Page 29
Page 11
Page 30
CONTACT