1

From: Jeffrey Siskind <jeffsiskind@msn.com>

Sent: Monday, March 21, 2016 8:46 PM

To: jmayer@whartoncompanies.com; Angeline Nanni

Subject: CannaMed Mortgage Program

Attachments: CannaMed Mortgage Program.pdf

Case 19-01298-MAM Doc 473-10 Filed 10/22/20 Page 1 of 15
SOVEREIGN GAMING & ENTERTAINMENT, LLC

Sovereign Gaming & Entertainment, LLC (“Sovereign”) has entered into an 

agreement, to purchase a modern 46,000+ sq. ft. manufacturing facility located at

27120 Ocean Gateway in Hebron, Maryland, which it intends to improve and lease to 

CannaMed Pharmaceuticals, LLC (“CannaMed”).

The property will be purchased for $950,000, and Sovereign has already invested 

more than $300,000 toward the purchase price and to maintain the property. A recent 

appraisal valued the property at $1,130,000.

CannaMed has applied for one of 15 medical cannabis cultivation licenses which 

the State of Maryland legislature approved. CannaMed will lease the facility at a base 

rental of $15,000 per month, and will also pay 5% of its projected annual profit, or 

approximately $500,000 as percentage rent to Sovereign.

Sovereign seeks a first secured mortgage loan on the property in the amount of 

$700,000, at an annual 10% rate of interest, with repayment of principal within 24 

months. The loan will be evidenced by a standard form promissory note, and secured 

by a recorded first mortgage on the property.

In addition to a 10% rate of return on the mortgage loan, the mortgagee will 

receive half of the 5% of the net profits paid to Sovereign by CannaMed, which is 

estimated to be an additional $250,000 to the mortgagee annually, and which will 

continue indefinitely.

Notwithstanding the percentage rent payments which are payable by CannaMed,

the mortgagee will instead receive a minimum preferred return of $250,000 yearly over

each of the first four (4) years, or $1,000,000, in addition to interest and repayment of 

loan principal.

For example, provided that the mortgage principal is repaid 24 months after 

funding, the mortgagee will receive a minimum of $1,140,000 over the first 4 years in

addition to repayment of $700,000 principal, and annual future earnings equal to 2.5% 

of CannaMed’s net profits (estimated to be approximately $250,000 per year).

Please feel free to contact me if I can provide additional information.

Jeffrey M. Siskind, Esquire

Sovereign Gaming & Entertainment, LLC

525 South Flagler Drive, Suite 500

West Palm Beach, FL 33401

Office Phone: (561) 832-7720

Mobile Phone: (561) 352-9166

Email: jeffsiskind@msn.com

Case 19-01298-MAM Doc 473-10 Filed 10/22/20 Page 2 of 15
Executive Summary

Hebron, Maryland Manufacturing Plant

10% Annual Return plus 2.5% Interest in Tenant Income

Sovereign Gaming & Entertainment, LLC (“Sovereign”), the contract purchaser of a 

46,000+ sq. ft. Hebron, Maryland state-of-the-art manufacturing plant located on 7.4 acres is 

offering up to twenty (20) positions for participants in a syndicated first secured recorded 

mortgage set at 80% of the property’s estimated $1.5 million value.

The property possesses a necessary special industrial zoning exception, and is located in 

rural Wicomico County on Maryland’s eastern shore, just ten miles north of Salisbury. Modern 

improvements consist of ample manufacturing space, in addition to offices and employee 

facilities. Sovereign has obtained an environmental report indicating no existing hazards.

C&A plans to lease a portion of the property to CannaMed Pharmaceuticals, LLC 

(“CannaMed”), a Maryland limited liability company formed to apply for a license to operate 

one of fifteen licensed medical marijuana cultivation facilities, which license may be awarded in 

summer, 2016, and which lease will be on a triple-net basis.

In addition to a ten per cent (10%) return based upon a promissory note, recorded first 

secured mortgage and assignment of rents, the mortgagee will receive a 50% of percentage rents 

paid by CannaMed to Sovereign equal to a 2.5% share in the tenant’s overall business which is 

estimated to net in excess of $20 million annually. In the event that CannaMed does not obtain a 

license, Sovereign plans to lease or sell the property to the successful licensee.

CannaMed is owned and operated by Jeffrey Siskind, a West Palm Beach, Florida real 

estate attorney who assisted in the formation of the Riverside Collective in 2009, and Collective 

Management Associates, LLC, which operated a California medical marijuana patient collective. 

Siskind, who is also licensed to practice law in Maryland, also manages Sovereign.

In addition to making monthly distribution payments, the mortgagor will provide annual 

audited financial statements authored by an independent CPA. CannaMed will pay distributions 

quarterly and will also provide annual CPA-audited statements.

Case 19-01298-MAM Doc 473-10 Filed 10/22/20 Page 3 of 15
Maryland Cultivation Center - Preliminary Full Operation P&L

Cultivation Revenues:

25,000 sq ft. @ 0.35 lbs./sq.ft/yr @ $2,200 19,250,000.00

Net after Sales taxes (projected) 18,287,500.00

Expenses:

General

Facility Manager 200,000.00

Assistant Manager 75,000.00

Bookkeeper 45,000.00

Clerical Assistant 45,000.00

Receptionist 40,000.00

Cultivation

Master Cultivator 175,000.00

Assistant Cultivators 5 @ $ $50,000 250,000.00

Attendants 5 @ $38,000 190,000.00

Trimming & Curing

Trimming Supervisor 60,000.00

Trimming Assistants 15 @ $35,000 525,000.00

Quality Control

Chief Lab Technician 90,000.00

Laboratory Assistant 44,000.00

Laboratory Attendant 35,000.00

Security

Director of Security 125,000.00

Security Officers 5 @ $38,000 190,000.00

Maintenance

Director of Maintenance 75,000.00

Maintenance Personnel 2 @ $42,000 84,000.00

Third Party Providers

Legal & Accounting 150,000.00

Community Relations 75,000.00

Computer, Phones, Internet 25,500.00

Supplies

Supplies - Office 18,000.00

Case 19-01298-MAM Doc 473-10 Filed 10/22/20 Page 4 of 15
Supplies - Building & Grounds $3/46,500 sq.ft 139,500.00

Supplies - Cultivation

$3/sq/ft, 3.5 

cycles, 25,000 

sq. ft. 262,500.00

Utilities

Electric - Ambient 36,000.00

Electric - Cultivation 300,000.00

Propane - Ambient 16,200.00

Propane - Cultivation 5,400.00

Licenses

Maryland Grower License Annual Fee 125,000.00

Maryland Processor License Annual Fee 40,000.00

Building Costs

Building Rental $15,000/month 180,000.00

Building Maintenance

$.25/sq.ft./mo., 

46,500 sq. ft. 139,500.00

Unusual Expenses

Science Dept Expense Contribution

7.5% of 

Revenues 1,371,562.50

Low Income Program

7.5% of 

Revenues 1,371,562.50

Insurance

Insurance - Property & Casualty

Includes 

Business 

Interruption 32,000.00

Insurance - Automobile 2 vehicles 3,300.00

Bonuses & Incentives

10% of Net 

Distribution 1,828,750.00

TOTAL EXPENSES 8,367,775.00

NET PROFIT BEFORE CONTINGENCY 9,919,725.00

CONTINGENCY

5% of Total 

Expenses 418,388.75

NET PROFIT 9,501,336.25

Net Profit as a percentage of gross revenues 51.96%

Case 19-01298-MAM Doc 473-10 Filed 10/22/20 Page 5 of 15
Case 19-01298-MAM Doc 473-10 Filed 10/22/20 Page 6 of 15
HEBRON FACILITY - AERIAL VIEW

INTERIOR - MAIN PRODUCTION FLOOR AREA

HEBRON FACILITY - FRONT

Case 19-01298-MAM Doc 473-10 Filed 10/22/20 Page 7 of 15
Case 19-01298-MAM Doc 473-10 Filed 10/22/20 Page 8 of 15
HEBRON FACILITY – TYPICAL INTERIOR, PRODUCTION FLOOR

NEXT PAGE: TYPICAL OFFICE

Case 19-01298-MAM Doc 473-10 Filed 10/22/20 Page 9 of 15
Case 19-01298-MAM Doc 473-10 Filed 10/22/20 Page 10 of 15
HEBRON FACILITY – TRIMMING AREA

Case 19-01298-MAM Doc 473-10 Filed 10/22/20 Page 11 of 15
HEBRON FACILITY – SECURITY CORRIDOR

Case 19-01298-MAM Doc 473-10 Filed 10/22/20 Page 12 of 15
HEBRON FACILITY - CAFETERIA

Case 19-01298-MAM Doc 473-10 Filed 10/22/20 Page 13 of 15
MARYLAND FACILITY PROJECTED BUILD-OUT COSTS

General Building Improvements:

Roof Repairs 30,000.00

Driveway & Parking Lot resealing 22,000.00

HVAC Repairs 10,500.00

Interior Painting 35,000.00

Exterior Painting 42,000.00

Office Interior Ceilings 18,000.00

Office Interior Flooring 20,000.00

Furnishings 14,400.00

TOTAL GENERAL BUILDING IMPROVEMENTS 191,900.00

Cultivation Space:

Lighting Equipment (LE) 1 light/50 sq ft @ $300 150,000.00

LE Installation $75/light 18,750.00

Hydroponic Equipment (HE) $4/sq ft 100,000.00

HE Installation $.75/sq ft 18,750.00

Water Quality Equipment Includes Installation 45,000.00

Air Quality Equipment (AQ) $1.25/sq ft 31,250.00

AQ Installation $.25/sq ft 6,250.00

Grow Room Partitioning Ten @ 2,500 sq ft 37,500.00

General Electrical $2.50/sq ft 62,500.00

General Plumbing $.50/sq ft 12,500.00

TOTAL CULTIVATION SPACE COSTS 482,500.00

Trimming & Packaging:

Furnishings 7,500.00

Trimming Equipment Four Trim Machines & Hand Tools 11,000.00

Packaging Equipment Computerized Labelling & Inventory 12,500.00

General Electrical $1/sq ft 2,500.00

General Plumbing Sanitary Sink, Cleanup Area 1,000.00

Initial Packaging Inventory Containers, Labels, Etc. 6,000.00

TOTAL TRIMMING & PACKING COSTS 40,500.00

Extraction Department:

Extraction Machines Three @ $115,000 345,000.00

Installation and Training $4,000/machine 12,000.00

Misc. Equipment Carts, Trays, Locking Cabinets 5,000.00

TOTAL EXTRACTION DEPT. 362,000.00

Laboratory/Quality Control:

Laboratory Furnishings Workstations & Misc. Furniture 25,000.00

Laboratory Equipment 125,000.00

Laboratory Inventory 10,500.00

Case 19-01298-MAM Doc 473-10 Filed 10/22/20 Page 14 of 15
Equipment Installation & Training 6,000.00

TOTAL LABORATORY 166,500.00

Security Department:

Gatehouse Construction 125,000.00

Gatehouse Utilities Electric, Phone, Internet 4,500.00

Automated Entrance Gate 10,500.00

Perimeter Fencing 48,000.00

Command Center Equipment Furnishings & Misc. Equipment 11,000.00

Video Surveillance System - Interior $1/sq ft 46,500.00

Video Surveillance System - Exterior Building & Grounds 20,000.00

Uniforms & Supplies 5,000.00

TOTAL SECURITY DEPARTMENT 270,500.00

Total Projected Build-out Costs

Contractor Overhead & Profit 15.5% on construction items only 91,721.25

Owner construction Representative 8.5 months @ $1,100/wk 40,205.00

Contingency 7% of total costs 109,957.84

TOTAL ANTICIPATED BUILD-OUT COSTS 1,755,784.09

Rev. 9-24-2015

Case 19-01298-MAM Doc 473-10 Filed 10/22/20 Page 15 of 15