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OBusiness Plan Summary and Budgets Attachment D (3 -year Operations Pro Forma -Assumptions) 1 of 4 <br />Three -veer pro forma Operating Budget <br />Harborside San Leandro (HSL) developed its three-yearpro forma operating budget based on its nine <br />years of serving medical cannabis patients in the East Bay, including two dispensary locations and a <br />delivery service. This local, current, long-term, and historical basis for these projections gives HSL an <br />unrivaled understanding of how to build a sustainable, non-profit enterprise to serve patients far into <br />the future. The assumptions underpinning these projections also underscore HSL's commitment to the <br />non-profit, patientcentricmission of the medical cannabis laws and regulations of San Leandro and of <br />the State of California. <br />Key assumptions include: <br />Patient Visits: as illustrated in the "Patient Visits" graph, HSL expects to serve an average of 50 <br />patients per day in the initial month of operations, beginning in August 2015. HSL expects <br />patient visits to grow steadily over an 18 -month ramp -up period until reaching a steady state of <br />200 average visits per day, growing thereafter by 7% per year. This is based on HSL's familiarity <br />with East Bay medical cannabis patients, as well as with evaluating multiple potential dispensary <br />locations to maximize convenience for the greatest num her of patients possible. <br />Revenue: HSL expects each patient visit to generate an average transaction value of $85 in the <br />initial month of operations, growing steadily over an 18 -month ramp -up period until reaching a <br />steady state of $95, growing thereafter by 1% per year. This is based on HSL's experience <br />providing a similar mix of products to East Bay medical cannabis patients over the past nine <br />years. <br />Product Costs: based on its nine years of operating the world's single largest, state -legal <br />cannabis purchasing department, with a similar product mix as will be offered to patients in San <br />Leandro, HSL has projected Cost of Goods Sold to average 53% of gross revenue, for an average <br />Gross Margin of 47%. This assumption includes the extra costs of compliant, child -resistant <br />packaging, and with labels that clearly explain the purpose and warning for the medicine. <br />Gross Profit & Financial Sustainability: as illustrated in the "Financial Sustainability' graph, HSL <br />expects to generate sufficient Gross Profit (= Gross Revenue - Cost of Goods Sold) to cover its <br />Non -discretionary Expenses by its fifth month of revenue operations. Included in Non - <br />discretionary expenses are all Payroll, Facility, Insurance, Income Taxes and Debt Service <br />expenditures, as well as HSL's Community Benefit Fund. HSL will have sufficient capital to cover <br />all upfront expenses, including both capital outlays and covering operating expenses in the <br />ramp -up period. <br />Compensation of Employees: as it does at its two other East Bay dispensaries, HSL will provide <br />above -market compensation to all employees, including an above -living -wage base wage, in <br />addition to full health benefits (medical, dental and vision) and a 401k with employer matching <br />up to 4%. An attractive compensation package -complemented by upfront and ongoing job <br />training - is essential to achieve the highlyconsu ltative in-store experience that medical <br />cannabis patients deserve. HSLexpects to employ 13.5 FullTimeEquivalents( FTEs) by the end <br />of CY 2015, growing to 26.0 FTEs by the end of CY 2017. <br />Equipment Costs: included in EST's upfront capital budget are monies for the build -out of the <br />location, including especially security related items such as cameras, biometric locks and safes, <br />Application to Operate a Medical Cannabis Dispensary HeNorslde Health CenterSanLeandro. January 15, 2015_ <br />