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10 <br />Workers’ Compensation and Insurance: <br />The medical cannabis industry continues to face banking challenges. One consequence is that few <br />Workers Compensation Insurance Carriers will provide coverage to the industry. As a result Blüm <br />Oakland pays a slightly high premium rate for such coverage than would a similarly sized company in <br />another industry. <br /> <br />Blum Oakland’s present carrier is AIG, whose premium rate is about 6%. This rate is determined by <br />multiplying the job description rate for each employee times the wage paid per employee. AIG <br />determines the job description rate, which is approved by the State Insurance Commissioner. The <br />calculated annual premium is then divided into twelve monthly payments. <br /> <br />The majority of Oakland Blüm's staff is considered low risk, as their duties do not require manual labor. <br />When Oakland Blüm began operation four years ago, its initial Workers Compensation rate was about <br />9% however Blum Oakland’s excellent low claim track record has resulted in a reduction of premium to <br />the present approximately 6% figure. <br /> Insurance: <br />At Blum Oakland, our insurance cost during year one was $34,000. Since Blum San Leandro will <br />operate a dispensary of similar composition we expect that the insurance cost to remain the same. <br />Our pro forma has a $2,000 margin incase adjustments are made by our Insurance provider. Blum San <br />Leandro will carry the full coverage insurance general liability, property protection and product liability. <br /> Taxes: <br />Salwa Ibrahim, the Executive Director for Blum SL serves as the Executive Director for Blum Oakland <br />and Blum Las Vegas. Blum Oakland and Blum Las Vegas currently operate permitted dispensaries in <br />their respective jurisdictions. To date the entities are current with their tax payments required by their <br />local jurisdictions. <br /> <br />To date Blum Oakland has paid $1,315,096.34 to the City of Oakland; by year-end the total amount <br />paid will increase to $1,945,357.08. In addition Blum Oakland has paid $288,500.11 to the Franchise <br />Tax Board, $2,957,241.15 to the State Board of Equalization and $1,253,104.21 to the IRS. Please <br />see the supporting documents in the following pages. <br /> Blum Las Vegas commenced operation on April 20, 2016 and has been operating for 30 days as of May 19, 2016. To date a tax payment has not been due to the City of Las Vegas or the State of <br />Nevada. Our first tax payment is due on May 31st. Blum Las Vegas will pay all taxes owed on time following the respective local ordinance. The amount of said bill is unknown at this date as it will be <br />directly contingent upon the gross sales receipts of the dispensary business operations from April 20th <br />to May 20th. At which time our estimated revenue has us projecting a tax bill will due for $4,000.00 Please see the following pages for our estimated tax payment calculation. <br />As noted above Blum SL will self-impose a 5% gross receipts fee in lieu of a local tax. Should the <br />voters of San Leandro adopt a cannabis business gross receipts tax, Blum SL will comply with the any <br />local San Leandro based cannabis business gross receipts tax. <br />423