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Friends,

The Benzinga Cannabis Capital Conference in Chicago had a large turnout, with many new attendees and lots of familiar faces from the events in Toronto and Miami from earlier this year as well. The challenges the sector faces in terms of capital availability were front and center, and many companies discussed candidly how they are adapting to the environment in terms of focusing their growth and altering their approach to M&A.

We met some new folks and heard of quiet success stories in places like Hawaii, Oklahoma and California, and we will be sharing these stories with you in the very near future. The conference helped remind us that the market is not homogeneous, and it will be important, as we have discussed in the past, to drill down into the operations of each company and assess their activities state-by-state. The large publicly-traded MSOs have different geographical exposures.

Given that the conference was in Chicago, we took the time to meet with management at Cresco and GTI. Illinois is just two months away from legalizing for adult-use. 14 months ago, it was still finger-printing medical patients! We expect that the state’s legalization efforts, the first time this has happened legislatively rather than by referendum, will be perceived as one of the very best. The new rules seem to be very favorable to incumbent medical cannabis operators. Both of these companies see tremendous opportunity in Pennsylvania as well.

We have already emphasized the importance for investors to assess potential cannabis investments in terms of access to capital and operational cash use. Some companies are very poorly positioned and will not succeed without raising additional cash at likely very poor terms. It is also important to understand that many companies will be scaling back expansion plans and focusing their capital on the most promising markets. This process may help protect incumbents in some markets. Florida has been dominated by Trulieve, which has built remarkable share in a rapidly growing market. While some other license holders continue to open stores aggressively, others seem to be slowing their plans to focus on other markets. This is an example of the capital crunch actually helping some companies, and we expect this will be the case in many markets.

In addition to assessing the financial strength of cannabis operators, we think investors should be focused on understanding the state-by-state market dynamics. Some markets will prove to be better than others, and the capital crunch may limit competition in several markets as well.

As one of Canada’s first outdoor grows that is near harvesting this fall, 48North Cannabis Corp has worked towards differentiating itself with smaller complimentary acquisitions and a profit oriented approach driven by disciplined investments, operational excellence and low-cost production.

With a C$53 million cash balance as of 6/30, CEO Alison Gordon believes the company is “the right size for success.” 48North has been developing proprietary formulations and organic manufacturing capabilities for its own next-generation cannabis products for the health and wellness markets, as well as positioning itself to manufacture similar products for third-parties. The company has been determined to achieve a position as the preferred consumer cannabis brand in Canada while introducing itself to the emerging U.S marketplace.

To learn more, visit the 48North Investor Dashboard that we maintain on their behalf as a client of New Cannabis Ventures. Click the blue Follow Company button in order to stay up to date with their progress.

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Sincerely,

Alan & Joel

Exclusive article by Alan Brochstein, CFA Facebook | LinkedIn | Email Based in Houston, Alan leverages his experience as founder of online communities 420 Investor , the first and still largest due diligence platform focused on the publicly-traded stocks in the cannabis industry. With his extensive network in the cannabis community, Alan continues to find new ways to connect the industry and facilitate its sustainable growth. At New Cannabis Ventures , he is responsible for content development and strategic alliances. Before shifting his focus to the cannabis industry in early 2013, Alan, who began his career on Wall Street in 1986, worked as an independent research analyst following over two decades in research and portfolio management. A prolific writer, with over 650 articles published since 2007 at Seeking Alpha , where he has 70,000 followers, Alan is a frequent speaker at industry conferences and a frequent source to the media, including the NY Times, the Wall Street Journal, Fox Business, and Bloomberg TV. Contact Alan: Twitter