SAN DIEGO, April 30, 2013 \/PRNewswire\/ — Medical Marijuana Inc. (OTC: MJNA)<\/p>\n
To The Shareholders of Medical Marijuana Inc.:<\/p>\n
From: Michelle Sides, Chairman, Chief Operating Officer and Shareholder<\/p>\n
It has become apparent that the Company needs to pause momentarily and address the concerns of a number of our valued shareholders that have been posed to us from the numerous emails, postings, phone calls and the like as it pertains to the recent blog articles on MJNA. These attacks, led by a collective group of individuals with personal motives have led to uncertainty within our shareholder base. Shareholders have also expressed concerns on the failure of management to address those accusations on a more diligent basis. I will begin with a brief overview of where the Company is headed and then directly address the questions that have been presented.<\/p>\n
Medical Marijuana Inc., is in the business of researching, developing, investing and selling products and services within the legal medicinal cannabis and industrial hemp industries. Over the past few years the Company has gone to great lengths and our team has worked tirelessly to develop innovative affective products, create supply chains that prior to our development and teams expertise did not exist. We have had to effectively navigate an ever changing legal and political environment at home and abroad, changes that have and have not affected the Company. We have had to decide which businesses, brands and products to invest in and develop, seeking legal guidance on the related matters, all while allowing us to comply with the United States and other countries laws we operate in. The cannabis industry is ever evolving and constantly on the move politically and within the context of products (both medicinal and not).<\/p>\n
The Company has chosen several paths to focus on. The first is our hemp based consumer products such as Dixie Botanicals (www.dixiebotanicals.com) and our CanChew Gum (www.CanChewgum.com). The second is on the raw ingredients supply chain with the development of PhytoSPHERE Systems (www.phytospheresystems.com) and its hemp production capabilities. Prior to our development and production of Phytosphere, the raw ingredients markets for our products did not exist. The third is actively and aggressively pursuing additional investments in companies that are in our core competency, such as our recent investment in KannaLife Sciences, Inc. (“KannaLife”). KannaLife holds an exclusive license agreement with the National Institutes of Health \u2013 Office of Technology Transfer (“NIH-OTT”) for the commercialization of U.S. Patent 6,630,507, “Cannabinoids as Antioxidants and Neuroprotectants” (the “‘507 Patent”). The 507 Patent includes among other things, claims directed to a method of treating diseases caused by oxidative stress by administering a therapeutically effective amount of a non-psychoactive cannabinoid that has substantially no binding to the NMDA receptor. KannaLife intends to move forward with its commercial development plan, and design a novel new drug compound for the treatment of Hepatic Encephalopathy (HE). The fourth is in the product sales, marketing and distribution pipelines for our products and within our products space. Prior to the Company’s investments there was not an overall hemp based products distribution platform. Our team has spent years developing its distribution pipeline and developing the online properties the Company is in the process of launching, this includes more than 3000 online sales and informational sites that are keyword based and being developed. These properties will lead to the Company’s overall sales, marketing and branding success.<\/p>\n
As new management was put in place at the end of March 2011, we have faced considerable obstacles such as: the present DTC Chill; short sellers who have made it a priority to relentlessly attack our Company as well as its executives for their own personal monetary gains; delays in reporting; individuals who do not like our industry as a whole and difficulties in getting products launched. Even in this volatile atmosphere and challenges, we are excited about what we have accomplished and where the company is headed. The MJNA team works literally 24\/7 to accomplish these business goals and we have surrounded ourselves with professionals who are experts in their fields to ensure that what is being done is being accomplished the right way. There are times this may cause a brief unanticipated delay \u2013 waiting for legal opinion letters, product marketing approvals, auditor schedule and legal guidance, but we will do what is required to protect MJNA shareholder interest. We have created an incredible opportunity with unlimited possibilities. We would like to emphasize that all of these activities are carried on in the most ethical and transparent way and with the primary objective of developing and delivering to the public the most effective, innovative products based on medicinal cannabis.<\/p>\n
There have been some questions with regards to the CannaVEST transaction with Phytosphere Systems. The current status of this transaction is as follows: MJNA currently owns and has owned 80% of Phytosphere Systems, which is a global phytocannabinoid biotechnology company specializing in the production of hemp based compounds, oils and extracts. These include Cannabidiol (CBD), Cannabidiol-Acid (CBD-A), Cannabigerol (CBG) and Cannabigerol-Acid (CBG-A) as well as other beneficial cannabinoinds, terpenoids and flavinoids. The Phytosphere Systems is also developing a pipeline of Terpenoids and flavinoids. As part of the company’s refocusing of management, time and capital, we decided to streamline our business focus.<\/p>\n
Prior to Phytosphere, these pipelines of products did not exist in any large quantity or steady supply. Since then, we have been able to sign an exclusive license with CannaVest Corp, which would allow MJNA the benefit of its steady pipeline, while no longer having to deal with the day to day operating challenges. The company operates in five countries and three continents. Along with the licensing agreement, the Company agreed to sell its excess inventory as well as the contracts, subcontractors and production capabilities to CannaVest as part of the transaction. This again allows the Company to no longer have to deal with the day to day operations, legal, export, import, licensing, continued development, considerable financial investments, staffing and costs associated with the logistics of the business while still owning 80% of Phytosphere. CannaVest provides the raw ingredients to the Company for the same price MJNA received prior to the execution of the license agreement. Once Phytospheres production increases and creates a decrease in the cost of production, a drastic price reduction will be made available to MJNA and its subsidiaries.<\/p>\n
This obviously will lead to significantly increased profitability for MJNA and its shareholders. The payment structure is as follows: CannaVest is paying MJNA $35 million through the end of 2013. The payments can be made in stock or cash, or a combination of both (please look at legal disclosure for exact terms). If CannaVest pays in stock, MJNA becomes the majority shareholder in CannaVest and gets to realize a cost savings in production, while also the increase in value it may get from the continued growth of the brand. If CannaVest pays in cash, MJNA realizes a substantial increase in its cash position. To date MJNA received in the 4th<\/sup> quarter a $4.5m dollar payment in CannaVest stock payment towards its licensing obligation, and as disclosed in subsequent filings, the Company has also\u00a0 received $4.5m and a $1.5m payment in stock from CannaVest, for a total stock payment of $10.5m towards licensing and partial inventory. The first payment of $4.5mil was 100% credited as licensing, the second and third installments are credited as an inventory purchase. The details of the transaction will be addressed in our first quarter filings, on or before May 15, 2013. The balance of the $24.5m paymentsconsideration will be broken up between inventory purchases first, then against the production contracts and the agricultural production team that was acquired by CannaVest as part of the transaction.<\/p>\n In conclusion, we feel very positive about the transaction with CannaVest. As it pertains to MJNA, we are able to maintain our cost for raw materials through an exclusive licensing agreement, and over time decrease our costs of raw materials while increasing our profit margins. This will decrease our operating expenses by over $10 million dollars this year alone (which encompasses the cost of our next production run, new equipment, leasing and expansion), free our cash flow up for additional product launches, and no longer have the day to day managerial and operational burdens related to raw material procurements. Our team and I have been working tirelessly 7 days a week to create this raw ingredients pipeline and now that it is built we no longer have to keep up that pace, we can use that time to devote to our consumer products and clinical development.<\/p>\n 1<\/strong>ST<\/sup> QUARTER FINANCIAL FILINGS ON OR BEFORE MAY 15, 2013:<\/p>\n The auditor is performing the final verifications of the 1st<\/sup> Quarter filing and will have it posted shortly thereafter.<\/p>\n YIELD SIGN\/AMENDED 4TH<\/sup> QUARTER FILING:<\/p>\n The 4th<\/sup> Quarter filing was amended to include the annual financial results for the prior three quarters. The yield sign has now been removed and an updated legal opinion letter issued. To accomplish this, our updated attorney opinion letter was posted and the auditor revised the format as required. From this point forward, we have revised protocols to do our best to prevent this from happening again.<\/p>\n As stated previously, the Company has retained an auditor as we work towards an up listing of our stock. Our goal is to make sure that all reporting is done accurately and in compliance. This has been a cumbersome process and the DTC chill has caused a significant delay. However, the Company has allocated the resources needed and is diligently working towards this realization. It is not known at this time how long the process will take, but we will keep shareholders updated on progress.<\/p>\n EXECUTIVES ARE SELLING THEIR SHARES IN COMPANY:<\/p>\n The statements contained in certain analyst blogs relating to the Company’s Chairman\/COO liquidating millions of shares is completely inaccurate and again is no more than an attempt to create mistrust in the company’s leadership. Yes, I have registered my ability to liquidate 1% of the outstanding shares as required by the SEC. As of this date, I have personally NOT sold any shares. As with any other executive in other industries, shares are routinely provided as part of a person’s compensation, which is the case here. I am strictly regulated by securities laws and regulations and take compliance issues very seriously.<\/p>\n TRIPP KEBER NO LONGER ON BOARD OF DIRECTORS:<\/p>\n While it is true that Tripp Keber no longer holds a seat on the MJNA Board of Directors as of March 6, 2013, this is by no means a negative impact on the company. For any of you who have met Mr. Keber or seen his numerous interviews, you know that he and the entire Dixie team is an invaluable asset to Red Dice Holding by being on the ground floor using his talents to become more involved in political forum of Colorado for our industry, promoting our growing brands, facilitating new partnerships, educating the public and finding products that will continue to make our company a leader in this industry and being the President of Red Dice Holding. Mr. Keber works tirelessly getting our Dixie Botanical products out to the public and we have had great success with these efforts and will continue to do so.<\/p>\n In the meantime, we are actively searching for other qualified individual(s) to fill the vacant board seat(s). Specifically, we are looking for the right individuals who will bring valued experience and guidance in the growth of our Company. We will announce director the appointments at the proper time.<\/p>\n CANCHEW GUM PRODUCT LAUNCH AND NEW CORPORATE CANCHEW BIOTECH SITES:<\/p>\n The Company has successfully launched of the CanChew Gum website (www.canchewgum.com) and is taking sales and product requests. We experienced a delay in the launch of the products due to last minute changes and approvals that we required from attorneys involved to ensure that all marketing and packaging was done correctly and in compliance with the appropriate regulatory bodies. The Company launched its new Canchew Biotechnologies (www.canchewbiotech.com) website on April 20th<\/sup>, 2013. This is the informational website for the anticipated MedChewRX gum being clinically developed by Canchew Biotechnologies, with clinical trials in Europe set to begin in the 3rd<\/sup>quarter 2013.<\/p>\n DEPOSITORY TRUST COMPANY (DTC) CHILL UPDATE:<\/p>\n We received notification from the Depository Trust Company (“DTC”), that a deposit transaction restriction had been placed on MJNA to prevent additional share deposits until certain information was received. The DTC provided a list of over 140+ issuances that they were requiring supporting documentation for, as well as legal opinion letters relating to the same.\u00a0 As the issuances in questions were made prior to take over of management of the Company, we experienced significant difficulty obtaining the supporting documentation from former shareholders and officers.\u00a0 However have now been able to accomplish the task with the assistance of our Transfer Agent. The Company hired an attorney in January who has had significant experience working with the DTC to prepare the relevant opinion letters. All of this information has been provided to the DTC on February 6, 2013, the DTC informed us that they would respond no later than March 27, 2013.<\/p>\n Unfortunately, whether it is because of the industry we are in or because of a requirement the DTC has put in place, they have now decided on March 29,2013 that they would like opinion letters on all issuances placed with the DTC. We have again, gathered all of the requested information and the same was provided to our attorney as of April 23, 2013. Opinion letters are being drafted and will be submitted to the DTC as soon as they are made available. MJNA has done everything that has been asked, provided all of the relevant documentation, is in the process of gathering the additional opinion letters and will resubmit it back to the DTC within a few weeks depending on how long it takes to obtain the additional opinion letters. Unfortunately, we have no control over how long it will take for the DTC to review the information and, hopefully, remove the chill.<\/p>\n SEEKING ALPHA WRITERS LITIGATION:<\/p>\n I am aware that there are those who feel that litigation should have been commenced by now against Seeking Alpha blog writers that have published numerous negative articles attacking the Company and its management. Some have suggested that our failure to do so is negative reflection on MJNA. I have personally met with litigation counsel to go over the defamatory statements that were presented by Seeking Alpha writers in several of the article(s). The case is clearly laid out. However, it is also more complex than just pursuing defamation claims against a writer and a website as some have stated. The article(s) were a blatant attempts, albeit briefly successful, to manipulate our stock price, to damage our shareholders and to create fear and doubt about our credibility. The actions from this group of individuals commenced by the parties posting numerous positive articles about MJNA all while knowing these same individuals would then collectively post those defamatory article(s) right before our quarter financial posting to significantly drop the stock value for nothing more than their personal gain. MJNA had no part of these actions, did not authorize, benefit, participate or have knowledge of what was being written.<\/p>\n These individuals perform the same actions each quarter and shamefully boasted about their success. Our litigation attorneys are gathering relevant information, will assess the possible claims against all responsible individuals. The Company will move forward based upon the advice and conclusions of our legal counsel.<\/p>\n All we can ask of our shareholders is that you perform your own due diligence to find out the complete facts verses reacting to postings by individuals who are obviously manipulating the stock value for dubious reasons.<\/p>\n MICHAEL LLAMAS:<\/p>\n Michael Llamas is no longer an executive or board member of MJNA. As previously disclosed, in dealing with certain personal issues, Mr. Llamas decided it was in the best interest of MJNA for him to step down. There are no plans as of now or in the future to have him return to an executive position with MJNA. The restructuring of management has taken longer than anticipated. However we are diligently searching for highly qualified individuals to fill vacancies. It has always been our goal from the onset to retain individuals that will take MJNA to the next level and keep it the industry leader which it is and has always been.<\/p>\n MARIJUANA AND THC BASED PRODUCT INVOLVEMENT<\/p>\n We have been asked by shareholders if MJNA is involved any marijuana or THC product sales and manufacturing. The company does own through its 60% ownership in Red Dice Holdings, LLC the formulations, brand names and intellectual property of over 70 products containing THC or marijuana from the Dixie brand purchase. However the company does not operate, distribute or sale those products, but has agreed to its use by a state licensed manufacture within Colorado and is in the process of expanding in several other states. Red Dice Holdings and MJNA does not and has not received any revenue from those operations and does not intend to, until and if marijuana is federally legalized. The company does plan on charging a fee for its use when it is in the best interest of the company via its licensing fee. So that it is clear, MJNA does not grow, sell or distribute marijuana under any circumstances as defined by the USCSA. Red Dice Holdings does sell hemp based products through Dixie Botanicals where these products are legalized and controlled.<\/p>\n THE DIFFERENCE BETWEEN, CANNABIS, HEMP, MARIJUANA AND MEDICAL MARIJUANA:<\/p>\n We get many questions on what we consider Cannabis, Hemp, Marijuana and Medical Marijuana as well as how do we define them. Cannabis L Sativa is a plant that encompasses both the industrial hemp and marijuana families. Marijuana is defined as containing a THC content (THC is the psycho-active ingredient) of more than 0.9% or products derived from the flower and leaves of hemp. In today’s marijuana market, many marijuana strains contain over 10% THC, some upwards of 20%. Industrial hemp would be defined as a variety of Cannabis L Sativa that contains less than 0.9% THC.<\/p>\n For informational purposes, marijuana has about 200 different strains (varieties) and generally refers to the recreational usage. In medical circles, the term “cannabis” refers to the medicinal usage of marijuana.<\/p>\n Industrial hemp was formerly a staple crop of the United States in Colonial times and hemp farmers include many famous names: George Washington, Thomas Jefferson and Benjamin Franklin. In all, over 30 industrialized countries allow for the growing and harvesting of industrial hemp, including our northern neighbor Canada. Industrial hemp has over 2,000 known cultivars and over 50,000 known industrial uses.<\/p>\n Marijuana, although classified as a Schedule 1 substance, seems to have many medicinal values and properties. In all, nineteen US States plus the District of Columbia have recognized medical marijuana and have programs where patients with certain needs, can obtain medical marijuana.There are well over 1,000,000 patients in the United States who are “medical marijuana” patients (www.procon.org) which means that a significant number of physicians in the United States do prescribe medicinal marijuana \/ cannabis for certain patients and their circumstances.<\/p>\n If one does not have a recommendation from a doctor for use, than use of marijuana is considered “recreational”.\u00a0 With all the stresses we face in today’s society, our opinion is that if there is something from natural sources that can help one to relax and deal with life’s stresses with minimal side effects (compared to alcohol or tobacco) \u2013 then this should be allowed.<\/p>\n Prohibition \u2013 this was an attempt to end alcohol usage in the United States and was unsuccessful. Today there are many successful businesses and many thousands of people successfully employed in the alcoholic beverage industry in the USA.\u00a0 Many feel that legalization of marijuana for medicinal purposes would provide a significant boost to our economy, providing jobs, secure employment and more importantly help people where traditional medications have failed.<\/p>\n Industrial hemp provides many extracts, known as cannabinoids that have shown therapeutic value.\u00a0 One of the most abundant of these cannabinoid extracts is known as cannabidiol, or CBD.\u00a0 CBD has shown positive benefits for health and wellness advocates and we are proud to provide this key futuristic component of hemp oil in many of our products.<\/p>\n Besides the health and wellness benefits, industrial hemp can provide a complete food source through hemp seed products, building and construction materials, bio-plastics (plastics that actually bio-degrade and do not clog landfills), textiles and bio-fuel.\u00a0 Our company is exploring futuristic uses of all these component products of hemp.<\/p>\n TRANSPARENCY:<\/p>\n Admittedly, the Company been so focused on moving forward with the growth of operations, acquisitions, forming new partnerships, finding new products and restructuring that perhaps we have fallen behind in keep shareholders adequately apprised of some developments.\u00a0 This will no longer be the case as it opens the door for those with their opinions or personal agendas to relentlessly attack our credibility and the business objectives of MJNA.\u00a0 As Chairman, I will make it a priority to address concerns and have more detailed updates on a more regular basis.\u00a0 We have retained numerous attorneys, hired auditors to not only perform audited financials going forward but to also go back and audit the last two years since the change in management at MJNA.\u00a0 This action is being taken not just to move the Company forward and to prepare for an uplisting of our stock, but more importantly to provide directors, officers and shareholders with confidence associated with the existence of audited financial statements.<\/p>\n