10B Action 2016 0718 - Laserfiche WebLink

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7 1 Finance DSWC, Inc. is incorporated as a private, members-only Medical Marijuana collective under current California law. Specifically, DSWC is formed as a California Mutual Benefit Corporation. As such DSWC will reinvest excess money received beyond the cost of operating expenses to further the goals of the organization including community service, patient advocacy, and educating the public regarding the medical uses of Cannabis. DSWC will conduct business in a transparent manner that is compliant with all regulations and generally accepted accounting principles. DSWC will manage all resources according to the highest standards for nonprofit organizations within the medical Cannabis industry and elsewhere. These practices will minimize a number of risks associated with operating a nonprofit dispensary and will support long-term sustainability. In an effort to develop long lasting absolute trust between DSWC and the City of San Leandro, DSWC will provide the City access to all books, records, accounts and relevant data upon request. 1.A Pro Forma and Operating Costs The projected three-year quarterly estimates for operations are outlined in the Projected Income and Expenditures (“Pro Forma”) statements (Exhibits 1-3). Core assumptions of the projections are as follows. Line numbers are included in the Pro Forma for reference. Timing – It is assumed DSWC will open within 90 days after approval of our application by the City Council. Within these 90 days DSWC will work diligently with City staff to obtain all permits and approvals required by the City’s ordinances, rules, and regulations, including a conditional use permit and building permit. Assuming a decision by the City Council during the third quarter of this year DSWC intends to open for business at the beginning of the fourth quarter of 2016. See Exhibit 4 for our anticipated timeline. Revenue (Lines 1-3) – The main drivers of quarterly revenue are total average patient visits per day, total average purchase size, and total operational days per quarter. The following assumptions are based on comparable dispensary locations in the East Bay and general population demographics and consumption rates. • 250 Patients per day on average with 15% quarterly growth; • Average individual purchase of $65† with 1% quarterly decrease attributed to competitive retail margin compression and pass through savings as production efficiencies are realized; • 78 operational days per quarter or 26 operational days per month DSWC assumes the potential patient pool to be 3%‡ of the total population within a 30-minute drive of San Leandro. Considering the total population of Alameda County (1.6M) and Contra Costa County (1.1M) we assume the total population within 30-minutes drive of San Leandro to be approximately 1.0M. Thus, DSWC assumes a potential patient pool of 30K individual patients within a 30-minute drive of San Leandro. Due to competition, mostly from Oakland dispensaries, it is assumed that 2/3 of this potential patient pool, or 20K patients, will frequent San Leandro dispensaries. DSWC further assumes that these patients obtain medical Cannabis once per month. Thus, based on these assumptions approximately 20K patient transactions will occur within San Leandro each month. Assuming a 50% share of San Leandro’s market, DSWC estimates that approximately 10K patient transactions will be realized by DSWC each month, or 385 patient transactions per day. To be conservative, DSWC chose to start our predictive model at 250 patients per day † Marijuana Business Daily (https://mjbizdaily.com/chart-week-average-marijuana-dispensary-purchase-amounts-range-60-100) ‡ Extrapolated from the percent of medical Cannabis patients statewide (1.9%; http://medicalmarijuana.procon.org/view.resource.php?resourceID=005889) adjusted higher to reflect the progressive leanings of the Bay Area relative to the rest of California. 471