Who earns a profit, and what are the costs and taxes for a pound of California cannabis. aBIZinaBOX Inc., CPA's CPG offers some insights.

1. Who Gets The Cash From A
Pound of California Cannabis
Illustrations of How The Pie
Gets Sliced Up
March 5, 2019 (c) aBIZinaBOX Inc., CPA's - CPG 1

2. Tax Assumptions
This table summarizes our
assumptions for the CCT, CET,
State Sales Tax and local
cannabis tax
March 5, 2019 (c) aBIZinaBOX Inc., CPA's - CPG 2

3. Cultivator Production Assumptions
The assumptions for Cultivator costs, how CCT is paid, and the price that a
Distributor pays for product
March 5, 2019 (c) aBIZinaBOX Inc., CPA's - CPG 3

4. Dispensary Costs and Pricing
The Dispensary marks up the price it paid
to the Distributor. We use 60% for
illustration as it represents the CDTFA
assumed mark-up . A Dispensary is NOT
bound by that mark-up, but it must charge
CET on its actual markup. We push the
mark-up down to the 1/8 level so that
pricing is relevant to the consumer.
March 5, 2019 (c) aBIZinaBOX Inc., CPA's - CPG 4

5. Dispensary to Consumer
We believe that what is
relevant to the consumer
is that the 1/8 package
with the $25.00 price tag
is going to cost $34.79
”out the door” or $9.79
additional [CCT included]
– 39% more to cover the
taxes.
March 5, 2019 (c) aBIZinaBOX Inc., CPA's - CPG 5

6. How Much Tax Is Paid On That Pound
March 5, 2019 (c) aBIZinaBOX Inc., CPA's - CPG 6

7. Recap of
Total Costs
Now that we have illustrated
the process and you sees
what the costs are…we can
share some variations
(c) aBIZinaBOX Inc., CPA's - CPG March 5, 2019 7

8. First Scenario
The Cultivator is paid
$1,200/lb with Distributor
assuming CCT, add Distributor
Costs of $450, marks up to
$2,000, the Dispensary Costs
add $450 marks up to $3,200
[60%] or $30 for a 1/8
package
March 5, 2019 (c) aBIZinaBOX Inc., CPA's - CPG 8

9. First Scenario – Medical Card
If we happen to have a Medical Card
when we by that pound, we save
$404 in taxes or $3.16 on a 1/8
package
March 5, 2019 (c) aBIZinaBOX Inc., CPA's - CPG 9

10. Second Scenario
The Cultivator receives $1,300 an
increase of $100 from the
preceding, and the Distributor
increases mark-up its by $500 to
$2,600. The Dispensary increase
the retail price to $4,160 or
$32.50 for a 1/8 package
March 5, 2019 (c) aBIZinaBOX Inc., CPA's - CPG 10

11. Third Scenario
The Cultivator is paid
$1,400/lb, with CCT
assumed [Net $1,252/lb.,
the Distributor marks up the
price to the Dispensary to
$3,000 which increases the
cost of a 1/8 to $37.50 pre-
tax
March 5, 2019 (c) aBIZinaBOX Inc., CPA's - CPG 11

12. More Realistic Alternative
A more realistic scenario drops
the price to the Cultivator to
$1,000 per pound, and reduces
the Cultivator’s costs to
$452/pound. The Distributor
sells to the Dispensary at
$2,500/pound. The Dispensary
turns around and marks up by
60% which prices a 1/8 at
$31.25, exclusive of the taxes
paid by the consumer
March 5, 2019 (c) aBIZinaBOX Inc., CPA's - CPG 12

13. Who Is Taking
Home The
Cash?
• If we use the last scenario and focus for a
moment, the shares of the cash are
• Cultivator - 9.09%
• Distributor - 24.92%
• Dispensary – 24.92%
• CDTFA and Local Tax – 40.67%
• We suggest that something is VERY wrong with
this outcome

14. Cultivator
and
Distributor
Cash
Movement
March 5, 2019 (c) aBIZinaBOX Inc., CPA's - CPG 14