Rough Draft 1 - Equity Distribution Plan: [Mar's] NY / Canada / Germany

Equity Distribution Plan 1: New York

1. Total Company Equity (Shares/Units): * 5,000,000 total shares/units outstanding.

2. Ownership Allocation: (Mar's/Primary Owner): 4,000,000 shares/units (80% of total equity) Individual 1: 250,000 shares/units (5% of total equity) Individual 2: 250,000 shares/units (5% of total equity) Individual 3: 250,000 shares/units (5% of total equity) * Individual 4: 250,000 shares/units (5% of total equity)

3. Representation via Non-Fungible Tokens (NFTs): Your 80% Stake: Mar's 4,000,000 shares/units will be represented by a single, unique NFT ("Founder's Equity NFT"). Each Individual's 5% Stake: Each of the four individuals will receive a single, unique NFT ("Investor Equity NFT #1, #2, #3, #4"). * Each "Investor Equity NFT" will technically represent 250,000 shares/units.

4. The Role of NFTs: These NFTs serve as digital, verifiable proof of ownership of the specified shares/units in the cannabis dispensary's legal entity. They are designed to facilitate secure, trackable transfer of these equity blocks, albeit under strict conditions.

5. Legal Entity & Agreements (CRITICAL): Legal Entity: The cannabis dispensary will be formed as a formal legal entity (e.g., a New York State LLC or Corporation). This entity holds the actual license(s) and conducts the business operations. Operating Agreement (for LLC) / Shareholder Agreement (for Corporation): This is the most important document. It will legally define: The total share structure (5,000,000 shares). That specific NFT IDs correspond to the specified share counts (e.g., Investor Equity NFT #1 with ID 0x...xyz represents 250,000 shares). The full rights and responsibilities of all equity holders, including: Voting Rights: Proportionate to share count. Profit Distribution: How and when profits (dividends/distributions) are paid. Information Rights: Access to financial and operational data. Dissolution Rights: What happens in case of company sale or winding down. Specific clauses referencing compliance with New York Office of Cannabis Management (NY OCM) regulations and federal/state securities laws.

6. Blockchain & Smart Contract (Technology Layer): Chosen Blockchain: Polygon (MATIC) is recommended for its EVM compatibility, lower transaction fees, and speed. Smart Contract: A custom ERC-721 smart contract will be developed and deployed on Polygon. This contract will: Allow the minting of the specific NFTs representing the equity blocks. Crucially, contain built-in transfer restrictions (a "whitelist" mechanism). This means NFTs can only be transferred between pre-approved (whitelisted) wallet addresses. * Including metadata for each NFT, linking it to the legal entity and the specific number of shares it represents.

7. Regulatory Compliance (The Primary Challenge):

• True Parties of Interest (TPIs): You (80% owner) and each of the four individuals (5% owners) will all be considered True Parties of Interest (TPIs) by the NY OCM. This means:

  • Extensive Background Checks: All TPIs must undergo comprehensive criminal, financial, and personal history background checks by the OCM.

  • Detailed Disclosures: All TPIs must submit detailed financial and personal disclosures to the OCM.

  • Eligibility Criteria: All TPIs must meet and maintain eligibility criteria set by the OCM (e.g., no disqualifying felonies, often residency requirements, no prohibited interests in other tiers of the cannabis industry like cultivation or processing).

• Securities Laws: These NFTs, representing equity and profit participation, are almost certainly securities under both federal (SEC) and New York State ("Blue Sky") laws. This necessitates:

  • Compliance with an Exemption: The initial issuance of these NFTs must comply with a securities registration exemption (e.g., Regulation D for accredited investors). This dictates who can receive these NFTs and what disclosures are required.

  • Highly Restricted Transferability: Due to both cannabis and securities regulations, these NFTs cannot be freely traded on any public crypto exchange. Any future transfer will require:

    • Your express consent.

    • A thorough legal and regulatory review of the prospective transferee by your legal counsel.

    • The new transferee passing all NY OCM TPI checks and meeting securities law investor qualifications.

    • The transferee entering into a legally binding agreement to the company's operating/shareholder agreement.

    • Only after these off-chain requirements are met, will their wallet address be whitelisted on the smart contract to enable the on-chain transfer of the NFT.

Simplified Flow:

1. Legal Setup: Establish NY legal entity. Draft comprehensive Operating/Shareholder Agreement, explicitly detailing NFT-represented equity and all regulatory compliance clauses (TPI, securities, transfer restrictions).

2. Blockchain Development: Hire experts to develop and audit the custom ERC-721 smart contract with a transfer whitelist.

3. NFT Minting: Mint your "Founder's Equity NFT" (4,000,000 shares) and four "Investor Equity NFTs" (250,000 shares each).

4. Distribution: Transfer the NFTs to the respective, secure crypto wallets of all owners after all legal agreements are signed and any required pre-issuance regulatory disclosures are made.

5. Ongoing Compliance: Continuously monitor OCM regulations, ensure all TPIs remain compliant, and strictly enforce transfer restrictions for any future sales of these NFTs.

Crucial Reminder: This is a simplified outline. The actual execution involves immense complexity, significant legal fees, and ongoing compliance burdens, especially in New York's highly regulated cannabis market. This project demands top-tier legal expertise from attorneys specialized in NY cannabis, US securities, and blockchain law.

Equity Distribution Plan 2: Canada

Jurisdiction: Canada (Federal cannabis legality, provincial cannabis regulation, provincial/federal securities regulation).

1. Legal Entity & Agreements: Legal Entity: Establish a Canadian legal entity (e.g., a Federal Corporation or a Provincial Corporation like an Ontario Corporation or BC Company). The choice of province will impact the specific provincial cannabis regulations. Shareholder Agreement: This will be the foundational legal document, legally defining: The total share structure (5,000,000 shares). That specific Polygon NFT IDs (ERC-721 token IDs) correspond to the specified share counts. Full rights and responsibilities of shareholders (voting, profit distribution, information rights, etc.). Crucial Clauses for Canadian Cannabis Regulation: Health Canada Licensing: Acknowledgement that the company (and its owners) must comply with the Cannabis Act and all regulations under Health Canada (the federal regulator). Provincial Cannabis Licensing: Compliance with the specific provincial cannabis retail and distribution framework (e.g., Ontario Cannabis Store (OCS) monopoly, or private retail in Alberta). This will involve "fit and proper" person requirements for all directors, officers, and significant shareholders (often 5% or 10% thresholds, requiring background checks and disclosures, similar to NY's TPIs but within a legal federal framework). "Control" and "Beneficial Ownership": Strict adherence to rules regarding who truly controls the licensed entity and who are the ultimate beneficial owners. Crucial Clauses for Canadian Securities Regulation: Securities Status: Explicit acknowledgement that the Polygon NFTs representing equity are "securities" under Canadian provincial securities laws. Prospectus Exemption: The initial issuance must qualify for a prospectus exemption (e.g., accredited investor exemption, private issuer exemption, offering memorandum exemption). This will dictate who can be an investor and the required disclosures. Transfer Restrictions: The NFTs cannot be freely traded. Any secondary transfer will be subject to: Legal opinion confirming an available exemption from prospectus requirements. Compliance with provincial cannabis ownership change approvals. Company's approval after KYC/AML and "fit and proper" checks on the new transferee. * Technical enforcement via the Polygon smart contract's whitelist.

2. Blockchain Implementation (Polygon): Smart Contract: Deploy a robust ERC-721 smart contract on the Polygon mainnet. mintEquityNFT(address initialRecipient, uint256 sharesRepresented, string metadataURI): Function to create 5 unique NFTs. transferRestricted(address from, address to, uint256 tokenId): This function will be critical. It must incorporate an on-chain whitelist, where only addresses approved by the company's designated officers (after legal and regulatory due diligence) can receive transfers. Metadata for each NFT stored immutably (e.g., IPFS), including company name, shares represented, and a direct link to the shareholder agreement. * Minting & Distribution: Mint the 5 NFTs (1 for you, 4 for individuals) and transfer them to the respective secure Polygon-compatible wallets of the owners.

3. Ongoing Compliance Specifics for Canada: Federal & Provincial Cannabis Reporting: Regular reporting to Health Canada and relevant provincial regulators (e.g., AGCO in Ontario, BCLDB in BC) regarding ownership structure, financial status, and operational metrics. Securities Commission Filings: Depending on the exemption used, ongoing filings with provincial securities commissions (e.g., OSC, BCSC) may be required. * Tax Compliance: Adherence to Canadian income tax laws (federal and provincial) for corporate profits and individual capital gains/income from distributions.

Equity Distribution Plan 3: Germany

Jurisdiction: Germany (Federally evolving cannabis legality, strong existing framework for electronic securities).

1. Legal Entity & Agreements: Legal Entity: Establish a German legal entity (e.g., a GmbH - limited liability company, or AG - stock corporation). Shareholder Agreement (Gesellschaftervertrag / Satzung): This will be the core legal document, drafted in accordance with German corporate law. It will: Define the 5,000,000 shares/units. Legally bind the specific Polygon NFT IDs to the underlying shares/units. Outline all corporate governance rules, voting rights, profit distribution (dividends), etc., in line with German law. Crucial Clauses for German Cannabis Regulation: Cannabis Act (CanG) Compliance: Acknowledgement that the company must operate strictly within the evolving framework of Germany's Cannabis Act, which currently emphasizes non-commercial cultivation and distribution through "Cannabis Social Clubs" (CSCs). Operating a traditional "dispensary" (for-profit retail) is not currently part of the CanG model as of mid-2025, though pilot programs (Säule 2) are planned. This means your business model would likely need to adapt to a CSC structure or wait for commercial retail legalization. Responsible Persons: Compliance with "responsible person" requirements for the CSC or future commercial license. Crucial Clauses for German Securities Regulation (eWpG & MiCA): Electronic Securities Act (eWpG): Germany's eWpG provides a legal basis for "electronic securities" and "crypto securities" (which your Polygon NFTs could qualify as if properly structured). This is a significant advantage. MiCA Compliance (EU Markets in Crypto-Assets Regulation): While MiCA primarily covers utility tokens, asset-referenced tokens, and e-money tokens, it will influence the broader crypto landscape. Your NFTs, as equity, will likely fall under existing German securities law as supplemented by eWpG, rather than directly under MiCA, but MiCA's principles of transparency will apply. BaFin Approval/Licensing: Issuing and maintaining a "crypto securities register" (which is essentially what your tokenized equity system represents) requires authorization from BaFin (German Federal Financial Supervisory Authority). This is a significant regulatory hurdle but provides legal certainty. Prospectus Requirement: If the issuance is a public offering, a prospectus approved by BaFin will be required, unless a specific exemption applies (e.g., qualified investors). Transfer Restrictions: Similar to Canada, the NFTs cannot be freely traded. Transfers must comply with: German securities laws (eWpG provisions). BaFin requirements for changes in ownership of electronic securities. Company's approval after KYC/AML. Technical enforcement via Polygon's whitelist.

2. Blockchain Implementation (Polygon): Smart Contract: Deploy an ERC-721 smart contract on the Polygon mainnet. mintEquityNFT(address initialRecipient, uint256 sharesRepresented, string metadataURI): For the 5 NFTs. transferRestricted(address from, address to, uint256 tokenId): Crucial for legal and regulatory compliance, ensuring only whitelisted addresses (approved by company/BaFin where applicable) can receive transfers. Metadata for each NFT on IPFS, including legal entity details, shares represented, and link to the German shareholder agreement. * Minting & Distribution: Mint the 5 NFTs and transfer them to the respective secure Polygon-compatible wallets.

3. Ongoing Compliance Specifics for Germany: BaFin Reporting: Regular reporting and potential audits from BaFin regarding the crypto securities register and compliance with eWpG. Cannabis Regulatory Reporting: Compliance with reporting requirements for the Cannabis Social Club model, if that's the chosen initial business type. * Tax Compliance: Adherence to German corporate and individual tax laws.

Important Notes for Both Plans:

• No "Easy" Button: While these jurisdictions are comparatively more favorable than New York, neither is "easy." Both require extensive legal work, regulatory approvals, and ongoing compliance.

• Legal Counsel is Paramount: You must engage specialized legal counsel in the chosen jurisdiction with expertise in both cannabis regulation and digital asset/security token law. This is non-negotiable.

• Business Model Adaptability: Especially for Germany, the cannabis business model might need to be adapted initially (e.g., to a Cannabis Social Club) to align with current legislation, rather than a traditional for-profit dispensary.

• Liquidity: The tokenized shares will have very limited liquidity due to the necessary regulatory restrictions on transfer. They are not designed for public trading on open exchanges.