January - 2016 VOLUME 3, EDITION 1

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MONTH IN REVIEW & OUTLOOK  December saw early weakness, with the indexbottomingoutinthemiddleofthemonth,butthe20 Investor Marijuana Index ended the yearithits11thlosingmonth:

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The index, which was rebalanced as part of theregularquarterlyprocessattheendofSeptember,had 26 members and saw 2 double‐digit and 1triple‐digitpercentagegainersand19double‐digitpercentagedeclinersduring themonth, includingseven that lost more than 33%. The indexdecreased 7.3% to 39.25 during December andwas down70.0% in 2015. The 420Opportunitymodelportfoliodecreased0.4%inDecemberandasdown33.3%in2015,fallingdramaticallyless

wthantheindex.Merrill Lynch issued a research report on thecannabisindustry,focusingonthebiotechandlabtesting opportunities. The University of Vermontwill offer the first medical cannabis taught in amedical school. The US Postal Service informednewspapers in the Northwest, initially, and thennationally, that it is illegal to deliver papers thatcontain cannabis advertising. The ObamaAdministration supported Colorado in its

Supreme Court case involving Oklahoma andNebraska.TheDEAmovedtomakeaccesstoCBDasier for researchersworking on FDA‐approvedeclinicaltrials.In California, the legalization initiative effort isnow centered upon what is known as the "SeanParker"initiative,withReformCAthrowinginthetowel on its effort. In Florida, the organizers oftheefforttogetlegalizationontheballotin2016decidedtopursueit in2018,citingtheir inabilityto gain enough petitions in time for certification.Maryland will delay awarding licenses for itsmedical cannabis program until next summer.One of two ballot initiatives in Massachusettsfailed to qualify. The leader announced that hewillwork to defeat the rival initiative sponsoredby Marijuana Policy Project, yet another sign ofthe discord between various proponents oflegalization. Minnesotaadded intractablepain toits list of qualifying conditions, a move that willdramatically expand the number of potentialpatients beginning in August. The ConfederatedTribes of Warm Springs in Oregon moved toverwhelmingly approve a cannabis cultivation,oprocessingandsaleprojectinalandslidevote.InCanada,theRCMPraidedillegaldispensariesinNanaimo, BC. To some, this is confusing, aslegalization is imminent, but the new systemwon't be a free‐for‐all, with unregulated supply.Health Canada approved the sale of extracts forthe first time and also conducted severalinspections of facilities awaiting licensing. TheTrudeau leadership teamappears tobe taking adeliberativeprocessthatwillbecarefulnottosettaxes too high. Colombia hasn't finalized details,utthePresidentsignedadecreeauthorizingthebcreationofamedicalcannabisprogram.Longer‐term fundamentals for the industryremain positive, as legal and medical cannabiscontinue to expand on a state‐by‐state basis andastheindustrymovesfromtheblack‐market.Theearly‐in‐the‐year explosion in demand for the

January - 2016 VOLUME 3, EDITION 1

stocks in 2014 led to unsustainable valuations(and a lot more supply of stock, much of whichwas from companies that appear to lacksubstance). This year, investorshave focusedonhe few companies with more visible near‐termtrevenueopportunities.Thebigthemesaheadarelikelytobethepotentialfor the DEA to reschedule cannabis and betterclarity from the federal government for banks(bothpartoftheproposedCARERSActandotherproposed legislation), resolution of theMMAR/MMPR lawsuit inCanada, the inclusionofextracts in Health Canada's MMPR program andits continued growth in patient enrollment,potentiallegalizationinCanada,progressin2015with respect to MMJ expansion and 2016 ballotinitiatives and legislative initiatives for legalcannabis (AZ, CA, MA, ME, MI, NV and possiblyothers),thePresidentialelectionin2016,rolloutsin Oregon and Alaska, congressional handling ofD.C.'sattemptstolegalize,andimplementationsofseveral state MMJ programs, including Florida(CBDonly),Hawaii, Illinois,Maryland,Minnesota,New York, Nevada, Massachusetts and Puertoico, and the implementation of the new stateRprograminCalifornia.Theslide,whichbeganinMarchof2014,reversedout the entire gains from early 2014, with themarket currently well below the summer 2013lows. Despite the correction, most valuationsremain high. Positively,we are seeing some newentrants into thepublicly‐traded sectorofhigherquality,andhopefullyweseemorein2016.Pleaserememberthatitremainsthecasethatmostofthepennystockswillnotsucceed.Iexpectthatthereill be just a few winners among the 300+ompaniesthatarecurrentlyonourBroadList.wc

 420 Investor Marijuana Index Update Each quarter, I rebalance the 420 InvestorMarijuana Index,which is designed to reflect theuniverse of publicly‐traded cannabis stocks. Theindex,whichisequallyweightedatthebeginningof the quarter, includes all cannabis stocks thathaveaveragedailytradingvalueinexcessof$15Kand a price of at least $0.0020. In the priorquarter, the threshold for the minimum dailyaveragetradingvaluewas$20K.Thisquarter,theindex will include 29 names, up from 26 for Q4andrepresentingabout8%oftheentireuniverseofcompanies.The420InvestorFocusList,whichurrently has 27 members, includes 8 namesc

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outsideofthisindex.Thepoorliquidityofthemarketandlowertradingvolumes resulted in the removal of 5 companies,including Cannabis Sativa (CBDS), CrowdGather(CGWG), GrowBlox Sciences (GBLX), GenerexBiotechnology (GNBT) and Green TechnologySolutions (GTSO). Additionally, American Green(ERBB)andPazoo(PZOO)fellbelowtheminimumprice. Affinor Growers (RSSFF) fell out becausenew management is no longer focused oncannabis.

January - 2016 VOLUME 3, EDITION 1

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Theelevenadditionsincludedfivenamesthathadpreviouslybeenpartoftheindex,withDirectviewHoldings(DIRV),NeutraCorp(NTRR),TwoRivers(TURV),VapeHoldings(VAPE)and22ndCenturyGroup (XXII) returning. ACBFF,TURV,VAPEandXII are theonlynamesamong the entrants that

st.XareontheFocusLiAuroraCannabis(ACBFF),theCanadianMMPRLPbased inAlbertathatrecentlyreceived its licensetosell.ItssharestradeontheOTCQBandtheCSEin Canada. DIRV is an overly promotionalcompany that provides security serviceequipment installations to the cannabis industryandothers.FBECWorldwide(FBEC)ismarketinghemp juice energy drinks, which ordinarilywouldn'tqualifythecompany,butit ismarketingCBD‐based products for a UK based firm andintends to launch a CBD‐infused drink as well.IndiaGlobalizationCapital(IGC)isaconglomeratethattradesontheNYSE‐MKTandisdevelopinganintellectual property portfolio. It also has aminority stake in Midtown Partners, aninvestment bank focused on the cannabisindustry. IPOWorld(IPOW)ischangingitsnameto CannaMatrix and also alleges to providebranding, consulting, colocation and securityservices to cannabis companies. MinercoResources (MINE) finally announced that it willinclude CBD in its The Herbal Collection tea, CBTea.NTRR isoneoftheworstOTCfakecannabiscompanies, now focused on topicals as well ascontinuallytalkingaboutitspesticidealternatives.Rocky Mountain High Brands (RMHB), formerlyTotallyHempCrazy,isgoingtoofferanewlineofbeverages,calledBlueLeaf,with25mgofCBDpercan. TURV controls GrowCo, which is growingcannabis in its Colorado greenhouse to beharvestedinearlyFebruary.VAPEhasanewCEOthat will refocus the company on its core HiveCeramicsproducts aswell asmarket a vapepen.XXII returns after recently recommitting to itsR&Donlow‐THChemp.ItsnewCEOhadsteppedawayfromanacquisitiondonebyhispredecessor.

The other 18 returning members of the indexincludethe followingtickers: CANN,CANV,CBIS,FITX, GRNH, GWPH, HEMP, IMLFF, LXRP, MCIG,MDBX, MJNA, MSRT, OGRMF, PMCB, SPRWF,SRNA,andTRTC. Thecurrent indexincludes sixcompaniesbasedinoroperatinginCanada. Only11 of the 29 companies are trading with dailyaverage trading value in excess of $100K,including ACBFF, CBIS, GWPH, HEMP, MDBX,MJNA,OGRMF,PMCB,SPRWF,TRTCandXXII.

Health and Wellness Will Drive Cannabis Industry Growth  One of the most compelling aspects to the legalcannabis industry growth story is that the vastmajority of the growthwill come frommigratingtheblackmarket. Insimpleterms,thedemandisalreadythere,butthesupplywillshift.Whilethisone factor is certainly the key driver, there is anopportunity is to expand the overall market.Withintherecreationalmarket,forinstance,therecould be some shift over time from otherpsychoactives, like alcohol. With the medicalmarket, we will likely see substitution frompharmaceuticals into cannabis. This is why thelcohol and pharmaceutical industries areawatchinglegalizationdevelopmentsclosely.Many characterize cannabis consumers as either"recreational" or "medical", but this frameworkoversimplifies and also excludes significantoverlap of self‐medicating patients who aremisclassified as "recreational". To address theentire spectrum, themarket is likely to evolve tothree types of go‐to‐market strategies, includingthose who focus on purely the recreationalaspects looking to medicate the masses cost‐effectively, those that pursue an extremelyexpensive and time‐consuming pharmaceuticalapproach, like GW Pharmaceuticals and a fewothers that want to go the FDA route, and the

January - 2016 VOLUME 3, EDITION 1

balancethatwillpursuewhatmightbethebiggestopportunity,healthandwellness.Americansspendhundredsofbillionsofdollarsayear on health and wellness products andservices. A thoughtful research piece fromAlixPartners in early 2014 made no mentionwhatsoeverofcannabis,whichisn'tevenincludedin thiscategoryat this timebymost surveys,butsomeof the conclusionsareextremelyapplicabletotheindustry.

It's not hard to imagine that over time, as theybecome more aware of potential health benefitsandtheproductsbecomeavailableinmorestates,especially without the requirement of getting arecommendation from a doctor, consumers willeek out cannabis as a health and wellness

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sproduct.One missing ingredient is the lack of research.Unfortunately, the National Institute of DrugAbuse(NIDA),overseenby theDEA,approvesallresearchstudies,and,notsurprisingly,theagencyismore interested instudiespointingtotheevilsofcannabis.Fortunately,NIDAhasnooversightinCanada,where,withlegalmedicalcannabis,thereis a substantial push for research studies. Onethat caughtmyattention recentlywasan arthitisstudy sponsored by Aphria and Peace Naturals.Aphria, Emerald Health Botanicals, MedReleaf,Peace Naturals and Tilray sponsored a nationalmedical cannabis roundtable discussion inVancouver in December. The Arthritis Society

reports that65%ofpeopleaccessingcannabis inanada through MMPR are doing so to manage

is l i Carthrit ‐re atedpa n.There is plenty of anecdotal evidence thatcannabiscanhelp.ASApostsplentyofdoctorandpatienttestimonials.Still,thistypeofinformationisn'texactlymainstream.Forinstance,ifonegoesto WebMD, it's not mentioned as a treatmentoption. Thesame is thecase for theMayoClinic.Itwill takepublishedresearchbeforethesetypesof health portals, from which millions of peopleget their information, or themedia starts talkingboutthewonderdrug,cannabis.PerhapsSanjayaGuptawillneedtodoaWeed4.Healthcare spending in the U.S. is among thehighestintheworldandisapendingcrisisasourpopulationages. Thedata isquiteold,butdirectcosts for arthritis, for example, according to theCDC was $80 billion in 2003, and this doesn'tinclude indirect costs like lost earnings due toinabilitytoworkthattheagencyestimatedaddedanother $43 billion. This is just one easy target(pain reduction) where cannabis could displaceore costly treatment options that can have

34% of the total monthly amount consumers spend on food and beverage products, health and beauty aids, and household products combined goes to offerings that promise health and wellness benefits. According to our calculations, that equates to approximately $262 billion in expenditures annually, and many experts expect that number to grow.

mworsesideeffects.EarlydatafromNevadaindicatesthatthoseinthe55‐64 demographic are registering indisproportionate numbers. Is it any wonder?Pharmaceuticals, even with insurance coverage,are expensive. While generic co‐pays tend to be$10‐15foraone‐monthsupply,brandedproductscancost$40‐60permonth. Excluding insurance,the costsmultiply. But cost isn't themain issue.Baby Boomers are concerned that theseharmaceuticals are not effective and can havepsideeffectsthattheydon'twanttoexperience.Cannabis is somewhat of a commodity due todecadesofblackmarketsthatpreventedanysortofintellectualpropertyandcontinuingchallengesdue to federal illegality, and thegeneralpublic isjustnowlearningofsomeofthedifferentnuances,

January - 2016 VOLUME 3, EDITION 1

such as the different cannabinoids and terpenes,the variety of forms (flower, concentrates) , andeven the differing methods of consumption(smoke, vaporize, ingest, topical).Whatweknowis changing rapidly, and what we don't know isbecoming painfully obvious. Over the next fewyears, Iexpectthatwewillhavemoreandbetterinformation, and those seeking health andellness benefits will have more reliable data

evi wpointsthananecdotal denceorword‐of‐mouth.Technology will help on this front, whether it ismore and better lab tests to understand exactlywhat is in the products sold or big dataapplications to correlate the products withoutcomes. WhatMyDxandothers, likePotbotics,are doing is a step in the right direction, thoughthese pioneers may wander in the proverbialesertwithoutreachingthePromisedLanddueto

g s dfundin i sues.While a lot of money is being spent to createbrands out of thin air, like Privateer Holdings'MarleyNaturalorWillie'sReserve(WillieNelson),the real opportunity is going to be to create anexperience that resonates with baby boomers. Ihavenoticedatrendtowardsupscaledispensariesor retail stores that look to redefine thetereotypical cannabis purchasing . Here are aewexamples:sf

AjoyaLifeinColorado

SparcSFin California

HarborsideHealthCenterinCalifornia

If you want to see some more dispensaries thataregettingitrightwhenitcomestodesign,Katiehapiro shared some beautiful photos in thisSMerryJanearticle,includingSparcSF.I would argue that the companies that make iteasier for patients or consumers to enjoy theexperience will be able to best capitalize on themainstreamingofmarijuana.Harborsideseemstogetthisintegratedapproach. In2016,Iexpecttosee more retailers/dispensaries embrace healthand wellness as a driver of the industry. Tosucceed, they need to not only elevate thecustomerexperiencebutalsoprovide thedata todelivertherightsolutionsinsteadofrelyinguponbud‐tenderintuition.

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January - 2016 VOLUME 3, EDITION 1

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On Deck:  Two New Cannabis Stocks That Will Soon Debut  2015wasdisappointinginalotofregards,butoneof the biggest letdownswas the shortage of newcompanies offering promise. It's too early toprojectiftherewillbemuchimprovementonthisfront, but two companies that have caught myattention so far includeKushBottles (KSHB)andedicine Man Technologies, which doesn't yetM

haveatradingsymbol.Kush Bottles, based in Santa Ana, California, is adistributor operating with warehouses inCalifornia, Colorado andWashington stocking allsortsofpackagingproducts.Thecompanyservesover 1000 locations, including dispensaries,smoke shops, andproducers andprocessor. Theompany offers custom packaging solutions ascwell.CEO Nick Kovacevich, who co‐founded thecompany with his brother, John, who serves asProcurement Officer, and Dallas Imbimbo, whoserves as Chairman of the Board, has beeninvolved with several start‐ups since graduatingfrom college in 2009. COO Ben Wu has aninvestmentbankingbackground,whileCFOChrisMartin, who joined in July 2014, is a CPA whoreviously served as Director of Accounting forpBillabongNorthAmerica.The company filed its 10‐K in November for theyear‐ending in August. Positively, the companyhas substantial sales, especially after the Aprilacquisition of Dank Bottles, previously itscustomer,for$374Kand3.5mmshares.SalesforFY15totaled$4mm,which includedDankBottlessalesof$1.2mmforalittleover41/2months.Theompany reported a loss of almost $400K, using

ic$229Kto funditsoperat ons.In FY15, the company, which has 29 employeesand46.1mmsharesoutstandingasof11/30(and

1mm options at $0.05), raised over $700K atapproximately$0.66pershare.Thecompanyhadabout$200Kat11/30andbelievesitwillneedateast$350Koverthenextyeartofundoperations

landplanstoraise$1mm fromequitysales.The balance sheet has tangible equity of about$1mm, mainly inventory, with liabilities of asimilar magnitude. There are no convertiblenotes. Insiders own about 59% of the company.The COO and CFO earn royalties through theompany they own that provides KSHB withcmoldings.Whileit'snotclearwherethestockwilltrade,itislikely that it will be at $0.75 or higher, at leastinitially, suggesting a market cap of nearly$35mm, which would make it one of the highervaluations in the publicly‐traded space, but onehat might be justified by the high level of salestandstronggrowth.Medicine Man Technologies is a consultingcompanybasedinDenver,CO.Thecompanywentpublic through the S‐1 process,with an effectivedate of September 30th (Prospectus). It haseceivedthetickerMDCLfromFINRAandexpectsrtobegintradinginlateJanuary.The company is affiliated with Medicine Man, awell‐known dispensary and cultivation operationin Denver with annual sales approximating$10mm. "Medicine Man Denver granted us alicense to use all of their proprietary processestheyhavedeveloped, implemented andpracticedatitscannabisfacilitiesrelatingtothecommercialgrowth,cultivation,marketinganddistributionofmedical marijuana and recreational marijuanapursuant to relevant state laws and the right touse and to license such information, includingtrade secrets, skills and experience (present andfuture).Weissued5,331,000millionsharesofourCommonStockinconsiderationforissuanceofthelicense." Note that this was NOT an exclusivelicense.

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MedicineMan'sCEO,AndyWilliams,servesas itsCEO. Paul Dickman is CFO, but the person whoruns the business is its COO,BrettRoper,who isalso COO of ChineseInvestors.com (CIIX). Roperowns 335K shares, while CIIX owns 2.8mm.Williamsowns1.765mm,whilehisbrother,Pete,owns 1.87mm and his mother, Michelle Zeman,owns760K.Thisgroupownsinaggregate4.9mmofthe9.972mmsharesoutstanding.Notincludedin this group are the two sisters of theWilliams,ally Vander Veer, who owns 400K shares, andSShelleySchneider,whoowns105K.Through the first three quarters of the year, thecompany generated about $600K in sales, about90%ofwhichwerelicensingfeesandthebalancefrom seminars. The bottom line was operatingincome of $139K and net income of $133K. In2014,thecompanyreportedsalesof$252Kwithanetlossofabout$30KfromMaythoughyear‐end.nQ3,consultingrevenuesfellslightlyfromyear‐Iagolevels.Thecompanyhasassetsof$530K, includingcashof $395K,with liabilities of just $18K. Themostrecent equity sales have been at $1, as theompany raised $270K there in late 2014 andcearly2015.Thecompanycharges$150Kforinitialconsultingand, if successful, scales up as productionincreases. The company reported a client inNevadaandthreeinIllinois.SubsequenttoQ3,itnnounced new clients in Hawaii, Oregon andaAlaska.Consultingcompaniesaretoughtovaluegiventhelumpiness of their business. What is interestingaboutthisone is thetie toMedicineManandtheway the company structures its contracts torequire itscustomerstopayongoingfeesastheyincrease in size. My best guess is that thecompanywilltradenear$1,implyingamarketcapof$10mm.

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January - 2016 VOLUME 3, EDITION 1

 Cannabis Industry Calendar   

 

1/8‐1/10:HempconinBakersfield,CAtonline

inSanBernardino,CA 1/23‐1/24:CannabisHealthSummi

1/30‐1/31:HighTimesCannabisCup 1/30‐1/31:IndoExpoinDenver,CO

OTCDisclosure,SECandCanadianReportingDeadlines*

FiscalYearendinginOctober:Annualreportdueonorbefore01/29

FiscalYearendingFebruary,MayorAugust:Quarterlyreportdueonorbefore01/14Canadian(Venture)FiscalYearendinginSeptember:Annualdue01/28

t:Quarterlydue01/29

Canadian(Venture)FiscalYearendinginFebruary,MayorAugus

NotethatmanyU.S.companiestakeadvantageofautomaticextensions*

January - 2016 VOLUME 3, EDITION 1

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SPOTLIGHTONTHEFOCUSLIST 420Investormaintainsa"BroadList"thatincludesover330companiesthatpurporttobeinthecannabissector.Atthesametime,itmonitorsanarrowergroupof27companies,the"FocusList",whichconsistsofwhat we consider the most important companies among the publicly‐traded stocks, including the mostactively traded aswell as several that are under‐the‐radar but that appearworthy of consideration. WeprovidenumericalratingstoVIPsubscribersonthreedifferentmeasuresforeachmemberoftheFocusList,cludingrelativevaluation,technicalsandrelativequality.TherewerenoadditionsduringDecember,andIin

removedPazoo,Inc.Our relativequality rankings,which range from1 (best) to5 (worst) area subjectiveassessmentof eachcompanyrelative to theentireFocusList andarebasedonmanagementcapability, corporategovernanceandtransparency,executionandcapitalstructure.Thecompaniesthatwecurrentlyrankbelowaverage(4or 5) include alphabetically by ticker CannaVest (CANV), Cannabis Sciences (CBIS), DigiPath (DIGP),mericanGreen (ERBB), GrowBlox (GBLX),Hemp, Inc. (HEMP),Medbox (MDBX),MedicalMarijuana, Inc.A

(MJNA),PharmaCyteBiotech(PMCB),andVapeHoldings(VAPE).

ereweH

resomeofthekeynewsitemsforFocusListcompaniesinDecember:

AmericanCannabisCompany(AMMJ)announcedaconsultingclientinHawaiiandextendeditsdistributioncontractforTheSatchel

AmericanGreen(ERBB)beganconstructingitsArizonacultivationfacilityanddroppeditsZaZZZbrand,favoringAmericanGreenMachine.ThecompanypromoteditsCOOtoCEO.Itsclientin

Arizonareceivedzoningapprovalforitsdispensary,whilethecompany'sproductsbecameavailableinColorado

Aphria(APHQF)namedanewCFOandannouncedfinalizedcontractsrepresentingwholesalesalesofupto$1.9mm.ThecompanyindicatedthatitsQ2salesgrewbymorethan100%fromQ1,with

capacitythepatientregistrationsrisingbymorethan50%.Itreceiveda43%boosttoitslicensed

(2000kg)

AuroraCannabis(ACBFF)filedfinancialsforQ1showingachallengedfinancialpositionCannabisScience(CBIS)announcedthatitwillworktoenteraPhase1clinicaltrial

retailstoresand200Cannavest(CANV)announcedthatithasproductsontheshelvesinover400

doctorofficesCanopyGrowth(TWMJF)receivedalicenserenewalforBedrocantoimport.

Digipath(DIGP)announcedan$8mmcapitalraiseandsuggestedthatithasnowtestedmorethan240samples.ThecompanyislookingtoexpandintonewmarketsbeyondNevada

GWPharma(GWPH)sharedfavorabledataregardingitsExpandedAccesstrialsandpostedresultsforitsfiscalQ4whileoutliningaggressivespendinginthefirsthalfofFiscal2016relatedtoEpidiolex.TheChairmanandco‐foundersoldshareslateinthemonth.

IndoorHarvest(INQD)receivedtaxincentivesfromPasadena,TXforitsCLARAproject.ThecompanyhasformedanalliancewithcontainerizedfarmingcompanyFreightFarmsandhastappedNoesisEnergytoprovidecapitaltoitscustomers

Lexaria(LXRP)splititsstock1:1for1andfellveryshortofitsgoalstoraise$2.52mmwithjust$90Kraised.Thecompanyfiledadditionalpatents.

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January - 2016 VOLUME 3, EDITION 1

MassRoots(MSRT)formedcommitteesforitsBoardofDirectorsandnamedanadditionalIndependentDirector.Thecompanyprovidedacorporateupdatethatdetailedregisteredusers,

ndalsosharedanextensiveyear‐endrevenueandseveralnear‐termandlonger‐terminitiativesashareholderletter.

mCig(MCIG)expandedsalessignificantlybutpostedaloss Medbox(MDBX)announcedaMMJmanufacturerinCaliforniaasaconsultingclient,resolvedits

shareholderlitigationandannouncedacontractwithacompanytoprovidedeliveryservicesforaclientinSanDiego.ItalsoannouncedadealwithWholeHempCompanytogrowhempandhelpitmarketitsCBDproducts

portMedicalMarijuana,Inc.(MJNA)announcednewRSHOformulationsandreceivedapprovaltoimitsRSHOintoBrazilforathirdindication,chronicpain

Mettrum(MQTRF)receivedlicensingforitsnewfacilityandexpandeditsproductioncapacity,obereached5000patients,receivedfinancingfromFarmCreditCanadaandwasthesecondLPt

approvedtosellextracts NemusBioscience(NMUS)licensedCBDderivativesfromtheUniversityofMississippiand

heral

announcedaresearchpartnershiptopursueadrugtotreatchemotherapy‐inducedperipfcontract

neuropathy.FormerCEOHollisterfiledasuitagainstthecompanyforbreacho

OrganiGram(OGRMF)raiseditsguidanceforQ1salesfrom$900Ktoinexcessof$1mm.PharmacyteBiotech(PMCB)announcedapendingrestatementofitsfinancials

.TheSupremePharma(SPRWF)wasfinallyinspectedbyHealthCanada,withresultspendingcompanybecameafederalcorporation.

Surna(SRNA)nameditsCOOasaDirector,replacingTaeDarnell,wholeftthecompany TerraTech(TRTC)receivedthenextinstallmentofitsNJCleanEnergyPayforPerformancegrant

($213K) hecompanywasinthe22ndCenturyGroup(XXII)providedanextensiveupdatefromitsCEOast

middleofapaidpromotion VapeHoldings(VAPE)broughtinanewCEOandraisedadditionalcapital

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FOCUSLIST‐RETURNSFROMDECEMBER:

  

January - 2016 VOLUME 3, EDITION 1

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420InvestorCanadianCannabisModelPortfolio

 IamintroducinganewmodelportfoliothismonththatincludesthelicensedproducersinCanada.

Themodelportfolioselectsfromnamesintheindexandcanincludeaweightingof0‐200%ofthecompany'srepresentationintheindex.TheindexincludescompaniesthatoperateorareinvestedinfacilitiesapprovedbyHealthCanadatosellmedicalcannabis.Theindexweightsarebaseduponholdingalicensewithadditionalcredit(adouble‐weight)givenforsalesinthemostrecentquarterinexcessof$1mm.Thecriteriaarelikelytochangeovertime.Theinitialindexincludessevencompaniesandgivesextracredittothree.

Hereistheindexweightingalongwiththemodelportfolioexposurethismonth(postedat3PMET12/31):

Myrationalefortherelativeexposures:

AuroraCannabis(ACB)hasamarketcapinexcessof$100mmwithoutyethavingcommencedsales

Aphria(APH)hasamarketcapof$92mmandabalancedmodelthatincludeswholesaleandisalowcostproducer

CanopyGrowth(CGC)istheclearleaderbutthe$315mmmarketcapisfull

EmeraldHealth(EMH)hasamarketcapofjust$10mmbutneedstoraisecapitalandestablishitsbrand

PharmaCanCapital(MJN)hasamarketcapof$15mmandfaceschallenges

Mettrum(MT)hasamarketcapof$70mmandrecentlyexpandedcapacity(valueplay)

OrganiGram(OGI)hasamarketcapof$55mm,whichisreasonable,butthestockisabitoverbought,tradingat188%ofits150daymovingaverage

January - 2016 VOLUME 3, EDITION 1

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January - 2016 VOLUME 3, EDITION 1

ABOUT THE 420 INVESTOR – ALAN BROCHSTEIN, CFA: 

  Ihavespentdecadesinsidetheinvestmentindustry.PriortoearningmyCFAcharterin1997,IworkedinNYCforKidder,Peabody,&Co.inbondsfrom1986to1992.In1992,IjoinedFirstBoston’sinvestmentmanagementsubsidiarybeforebecomingaportfoliomanagerwithCriterionInvestmentManagementin1994—co‐managing$10billioninfixed‐incomeinvestments.In2000,Imadethemovetostocks,joiningasmallfirminHoustonasananalystandportfoliomanager.Iremainedatthefirm,whichgrewto$550mminassetsundermanagement,until2006,whenIlefttoformmyownbusiness,ABAnalyticalServices—workingasaresearchconsultantforseveralinvestmentadvisors.

In2008,IbeganofferingInvestByModel,amodelportfolioservice,toindividualinvestors.ImetMarketfyin2013andcreatedTheAnalyticalTrader,aservicefocusedonprovidingswing‐tradingideas.Bothoftheseservicesdeliveredstrongperformance.IalsobecamealeadingcontributortoSeekingAlpha.Afterseeingastrongneedformoreinvestortransparencyamongcannabiscompaniesinearly2013,Ilaunched420Investor—aservicecommittedtoprovidingreal‐time,objectiveinformationaboutthetopmarijuanacompaniesinthemarket.420Investorhasevolvedintoacollaborativeduediligenceplatform,andIamproudtoleadourefforts.Ialsoamresponsiblefor420Funders,whichisfocusedonconnectingprivatecompaniesorpubliccompaniesissuingprivatesecuritieswithaccreditedinvestors.Finally,Iamaco‐founderofNewCannabisVentures,whichprovidescuratedcontentandotherresourcestohelpinformcannabisinvestorsandentrepreneursaboutthemostexcitingcompaniesandthemostinfluentialinvestorsintherapidlychangingcannabisindustry.Intheprocessoflaunchingthe420Investor,Ibecameamuch‐neededallytomarijuanainvestors,beinghailedasaleadingauthorityintheindustryasIdevelopedanetworkofinvestorsandindustryprofessionals.Inearly2014,Iexitedallofmyotherbusinessinordertofocusexclusivelyonthecannabissector.Ihavesupportedmarijuanalegalizationsince1980,whenIbecameactiveintheLibertarianParty.IurrentlysponsorAmericansforSafeAccess,theDrugPolicyAlliance,theMarijuanaPolicyProject,the

tryAss bleDrugPolicy,andWomenGrow.cNationalCannabisIndus ociation,NORML,StudentsforSensiFollowAlanonTwitter: http://www.twitter.com/Invest420ollowAlanonFacebook: http://www.facebook.com/420investorFJoinAlan'sLinkedInGroup:CannabisInvestors&EntrepreneursThe420InvestorNewsletterisavailableviaannualsubscription($149/yr)andisincludedaspartofthemonthly($42/mo)ortheannual($420/yr)420InvestorVIPsubscription.