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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 /> <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 /> <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 /> <br />Blum Las Vegas commenced operation on April 20, 2016 and has been operating for 30 days as of <br />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 <br />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 <br />Please see the following pages for our estimated tax payment calculation. <br /> <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.