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QUARTERLY UPDATE Q4 2018
CANNABIS
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INDUSTRY OVERVIEWM&A TRANSACTIONS & PERFORMANCE
“Keep Source Formatting
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aligned to the top of the
Source: Capital IQ. Data as of December 31, 2018, based on publicly disclosed information. *All figures are in CAD unless otherwise stated.Dates are based on deal announcement. Includes announced and closed transactions between $5 million and $500 million.
• Merger and acquisition (M&A) activity in the cannabis industry rose in the fourth quarter, along with the legalization of recreational cannabis in Canada on October 17, 2018.
• Deal volumes and sizes increased in the last quarter of the year, in the early stages of the expected industry consolidation, as companies positions themselves to take advantage of the recreational market. Overall transaction volume increased to 40 transactions in the fourth quarter, surpassing each of the first three quarters of the year. In addition to volume of transactions, the total value of transactions increased dramatically above prior levels as well, with each of the last four quarters above $1 billion.
• The first and third quarters of 2018 each had one deal greater than $500 million in value (MedReleaf / Aurora $3.3 billion; CanniMed / Aurora $1.4 billion). However, fourth quarter 2018 had three deals surpassing this threshold, all focused on U.S. markets (MPX / iAnthus $835 million; ebbu / Canopy $530 million; PharmaCann / MedMen $890 million). All deals above $500 million are shown in the chart by the white bars, and are excluded from the number of transactions.
• In fourth quarter 2018, shares continue to be the preferred currency for M&A transactions, with only 14.8 percent of all M&A consideration paid in cash on closing. This is in line with the three year historical average of 12.9 percent of all transactions paid in cash on closing.
M&A MARKET UPDATE FOR Q4 2018
2016 2017 2018
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CANNABIS M&A TRANSACTIONS*
Transaction Value Deals Greater than $500 million Transaction Volume
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INDUSTRY OVERVIEWNEWS
• Oct 17, 2018 – The long anticipated legalization of recreational cannabis in Canada successfully occurred. Day One of recreational cannabis sales in Canada saw strong demand and short supplies as products quickly sold out on provincial websites and at some stores. In Ontario, products disappeared from the province’s online store, with 38,000 orders processed by mid-morning. By noon Eastern Standard Time, only one product was still listed on the Ontario Cannabis Store (OCS) site (a 3.5-gram bottle of DNA Genetics branded flower called Lemon Skunk, priced at $44.15, made by Canopy Growth Corp). Very few retail locations actually successfully opened in time for legalization, which ended up being a blessing in disguise, as there was not enough product to fill the shelves. Shopify, which provides the technology for many of the provincial online stores, said it had seen more than a million visitors, more than 100,000 orders, and more than 100 orders per minute on the first day of legalization. The supply shortages were well expected by almost all industry experts (including MNP) and expected by the provinces themselves, but still seemed to come as a surprise to many people.
• Nov 23, 2018 – Health Canada had announced previously that it had issued warnings to a number of Licensed Producers (LP), but did not identify which LPs or for what reason. However, on November 23, 2018 Health Canada took action by revoking its first license from Ascent Industries Corp (CNSX:ASNT). The issue related to security clearance, although Health Canada did not elaborate. The CEO resigned in the wake of the recantation of the company’s license.
• Dec 4, 2018 – Quintessential Capital Management released a short sellers report on Aphria Inc. (TSX:APHA). They alleged several acquisitions completed by the company were largely worthless and highlighted that insiders of Aphria held shares of the target companies, specifically narrowing in on the acquisition of LATAM Holdings Inc. from Scythian Biosciences Corp. (nka: SOL Global Investments Corp. (CNSX:SOL)), which closed on September 27, 2018. The shares of Aphria quickly fell more than 50 percent and created a drag on the industry, as the report highlighted the lack of credibility across the industry. On December 6, 2018, Aphria appointed a committee of independent directors to review the acquisition of LATAM Holdings Inc. While the investigation is on-going, nothing illegal has been discovered to date, and the only concern is with inflated valuations which is evident across the industry as many industry investments have been largely speculative. Green Growth Brands Ltd. (CNSX:GGB, formerly Xanthic Biopharma Inc.) was not deterred by the report and on December 27, 2018 announced a hostile takeover of Aphria, using shares of GGB and a brokered $300 million financing. The board of Aphria quickly released a statement highlighting why the hostile takeover was not accretive to shareholders. Cannabis stocks rebounded from the early December slump, but the saga with Aphriacontinued with the CEO of Aphria, Vic Neufeld, stepping down on January 11, 2019 and GGB pushing ahead with their hostile bid.
• Dec 21, 2018 – Health Canada released draft regulations for the edibles and beverage market, open to a three-month public consultation period closing Feb 21, 2019, with final regulations expected to be published in summer 2019 in advance of the anticipated October 17, 2019 legalization date for the edibles and beverage market. Proposed regulations include: no added vitamins or alcohol, no added caffeine (and limitations on caffeine that is naturally occurring), plain and child resistant packaging that is not appealing to kids and labeling requirements (no health claims, warnings and labels as expected). Two of the more significant restrictions include the limitation of 10 milligrams THC per package or container and “no elements that would associate product with alcoholic beverages or brands of alcohol.” The limitation on THC per package is more stringent than restrictions in the U.S. This restriction would make, for example, a package of 20 gummies that are each 10 mg illegal, because they are packaged together. It is also unclear if multiple individually wrapped edibles or beverages could be sold in a larger combined package. “The cost to manufacture a 10-mg product is almost the same as the cost to manufacture a 100-mg product,” said Peggy Moore, CEO of Love’s Oven, a Colorado-based maker of infused products. “Depending on the packaging and labeling requirements, the cost to purchase a 10-mg edible is high for what you’re getting. And I think that will cause consumers to revert back to the illicit market or buy extracts and make edible products at home.” The limitation on association with alcoholic beverages is also concerning, as many of the industries early partnerships (Molson Coors/HEXO; AB InBev/Tilray; Constellation/Canopy; Heineken/absoluteXtracts) have been with beer companies, and it is not yet known if non-alcoholic beer with be permitted to be infused with cannabis.
Quarterly Highlights
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SELECT RECENT M&A TRANSACTIONS
• The transaction was funded by the assumption of US$1 million of existing LATAM Holdings debt with the remaining consideration funded by the issuance of 15,678,310 common shares of Aphria.
• The acquisition was meant to provide Aphria an important foothold in Latin America and the Caribbean by acquiring industry-leading cannabis-related companies in Colombia, Argentina and Jamaica as well as a right of first offer and refusal in respect of a majority interest in a Brazilian entity seeking a cannabis cultivation and sales license.
• The acquisition was one of the most controversial of the quarter, after the issuance of a short report by Quintessential Capital Management on December 4, 2018,as highlighted on the previous page of this report.
• MedMen’s acquisition of PharmaCann positions it as one of the largest operators in the U.S. The resulting pro-forma company (including pending acquisitions by MedMen) will operate 79 cannabis facilities.
• Founded in 2014, PharmaCann is one of the largest medical cannabis providers in the U.S. It currently operates 10 retail stores and three cultivation facilities across multiple states, including New York, Maryland and Massachusetts, and in Illinois, where it is the largest holder of medical cannabis licenses. The company also owns licenses for retail stores in Pennsylvania, Maryland, Massachusetts, Ohio, Virginia and Michigan and cultivation and production licenses in all of its markets, excluding Maryland.
• The combined company will operate in 12 states, which comprise a total estimated addressable market, as of 2030, of approximately $40 billion according to Cowen Group.
acquired
LATAM Holdings Inc.
from
Announced Jul 17, 2018
Closed Sept 27, 2018
TEV $130 million
announced the acquisition of the shares of
Announced Oct 11, 2018
TEVUS$682 million
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SELECT RECENT M&A TRANSACTIONS
• The agreement represents the first public-to-public merger transaction in U.S. cannabis history, an all-share transaction.
• The combined company, excluding MPX International, will encompass operations and cannabis licenses in 10 states that will permit iAnthus to operate 56 retail locations and 14 cultivation / processing facilities.
• As a result of the transaction, iAnthus will add retail and / or production capabilities in Arizona, Maryland, Nevada, California and Massachusetts, complementing iAnthus' existing assets in New York, Florida, Massachusetts, Vermont, Colorado, and New Mexico, forming super-regional footprints in both the eastern and western U.S.
• ebbu, Inc. is an Evergreen, Colorado-based hemp research leader. The transaction will complement and accelerate multiple core verticals operating under Canopy Growth’s group of companies.
• ebbu’s IP portfolio will contribute to the clinical formulations program being executed by Canopy Health Innovations, a wholly owned subsidiary of the company. Canopy Growth operates a hemp operation based in Saskatchewan and by applying ebbu’s IP, the company has the potential to reduce the cost of CBD production.
• Consideration included $25 million cash, $100 million contingent earnouts, and the balance in shares of Canopy.
• The proposed Transaction creates a new Canadian medical cannabis leader. It will operate the country’s largest national clinic network and enjoy improved operational scale with planned annual capacity of approximately 138,000 kilograms. Aleafia intends to capitalize on high growth opportunities and leverage international expansion across four verticals: cannabis production, health and wellness, cannabis education and the consumer experience.
• When the transaction is completed, it is expected that existing Aleafia and Emblem shareholders will own approximately 59.0 percent and 41.0 percent of Aleafia, respectively.
• The transaction is expected to form Western Canada’s largest indoor vertically integrated cannabis company, according to the company’s press release, with 400,000 square feet of funded purpose-built indoor cultivation which spans across B.C., Alberta and Ontario. The combined company will also have 30+ retail stores located across B.C., Alberta and Saskatchewan and two purpose-built state of the art extraction labs.
• Under the terms of the proposed transaction, holders of GTEC common shares will receive approximately 40 percent of the issued and outstanding shares of Invictus post closing.
announced the acquisition of the shares of
Announced Oct 18, 2018
TEV $835 million
announced the acquisition of the assets of
Announced Oct 15, 2018
Closed Nov 26, 2018
TEV $530 million
announced the acquisition of the shares of
Announced Dec 19, 2018
TEV $225 million
announced the acquisition of the shares of
Announced Nov 16, 2018
TEV $100 million
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PUBLIC COMPARABLE ANALYSISTRADING MULTIPLES & OPERATING STATISTICS
Source: Capital IQ. Data as of December 31, 2018.Estimates based on Capital IQ calendar year consensus. Enterprise value based on market cap. plus total debt. No adjustment for cash due to infancy of the industry and large capex programs for most companies.
(Figures In $CAD Millions, except percentages and ratios)Operating Figures Revenue EBITDA EV/EBITDA
CompanyMarket
Cap.Ent.
ValueCash
Annual-ized
Qrt. Rev.
Rev. Growth
Y/Y2018 2019 2020 2018 2019 2020 2019 2020
Integrated Licenced ProducersCanopy Growth Corporation $12,547 $13,457 $429 $93 7% $161 $661 $1,259 -$143 $104 $257 129.9x 52.4xTilray, Inc. $8,968 $8,991 $135 $52 92% $61 $191 $424 -$30 $19 $52 nmf 173.1xAurora Cannabis Inc. $6,766 $7,057 $148 $119 154% $117 $575 $1,077 -$40 $94 $304 75.1x 23.2xCronos Group Inc. $2,570 $2,576 $41 $15 133% $22 $115 $246 -$8 $36 $88 71.6x 29.3xAphria Inc. $1,961 $2,016 $152 $87 155% $59 $493 $939 -$3 $77 $253 26.0x 8.0xHEXO Corp. $933 $933 $23 $22 410% $22 $165 $305 -$33 $28 $74 33.6x 12.6xOrganiGram Holdings Inc. $627 $726 $55 $0 nmf $24 $146 $255 $2 $38 $95 19.1x 7.6xCannTrust Holdings Inc. $692 $703 $5 $50 80% $56 $187 $306 $1 $52 $96 13.5x 7.4xThe Green Organic Dutchman $662 $662 $208 $0 nmf $18 $373 $607 -$30 $46 $141 14.4x 4.7xTerrAscend Corp. $573 $573 $15 $7 nmf n/a n/a n/a n/a n/a n/a n/a n/aMedian $95 133% 29.8x 12.6xMean $121 147% 47.9x 35.4x
Canadian Licenced ProducersThe Supreme Cannabis Company $383 $414 $31 $21 206% $19 $116 $188 -$5 $37 $67 11.1x 6.2xEmerald Health Therapeutics, Inc. $400 $403 $53 $1 nmf $5 n/a $128 -$12 n/a n/a n/a n/aFSD Pharma Inc. $391 $391 $34 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aThe Flowr Corporation $381 $381 $40 $0 nmf $3 $19 $140 -$8 -$2 $46 nmf 8.3xVillage Farms International, Inc. $211 $267 $8 $205 11% $196 $219 $231 $5 $35 $49 7.7x 5.4xVIVO Cannabis Inc. $207 $235 $50 $9 642% $13 $33 $81 -$14 $2 $54 98.0x 4.3xAleafia Health Inc. $225 $225 $0 $6 nmf $5 $75 $158 -$6 $19 $48 12.2x 4.7xNewstrike Brands Ltd. $217 $218 $108 $14 nmf n/a n/a n/a n/a n/a n/a n/a n/aWayland Group Corp. $196 $213 $14 $1 nmf $11 $124 $132 -$28 $15 $43 13.7x 4.9xWeedMD Inc. $146 $148 $36 $8 133% $11 $59 $140 -$4 $16 $42 9.0x 3.5xEmblem Corp. $119 $143 $47 $9 243% $8 $67 $142 -$11 $6 $36 22.3x 4.0xDelta 9 Cannabis Inc. $105 $105 $23 $5 314% $10 $104 $174 -$6 $23 $32 4.5x 3.2xInvictus MD Strategies Corp. $95 $102 $24 $7 180% n/a n/a n/a n/a n/a n/a n/a n/aBiome Grow Inc. $76 $76 $3 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aHarvest One Cannabis Inc. $71 $71 $48 $7 nmf $10 $40 $141 -$10 -$3 $38 nmf 1.9xSproutly Canada, Inc. $66 $71 $0 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/a48North Cannabis Corp. $69 $69 $10 $5 nmf n/a n/a n/a n/a n/a n/a n/a n/aRavenquest Biomed Inc. $51 $64 $1 $1 nmf $12 $52 $106 -$4 $11 $23 5.7x 2.8xHeritage Cannabis Holdings Corp. $62 $62 $1 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aJames E. Wagner Cultivation $62 $62 $9 $0 nmf $8 $45 n/a -$6 $8 n/a 7.8x n/aEve & Co Incorporated $56 $60 $5 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aBeleave Inc. $48 $54 $4 $1 nmf $3 $31 n/a -$29 -$15 $7 nmf 8.2xGTEC Holdings Ltd. $44 $44 $2 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aPure Global Cannabis Inc. $32 $42 $15 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aTHC Biomed Intl Ltd. $39 $41 $2 $1 nmf n/a n/a n/a n/a n/a n/a n/a n/aIndiva Limited $32 $37 $24 $0 nmf $1 $20 $67 -$7 -$3 $20 nmf 1.9xCanada House Wellness Group $34 $35 $4 $5 54% n/a n/a n/a n/a n/a n/a n/a n/aBenchmark Botanics Inc. $35 $35 $2 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aBlissCo Cannabis Corp. $29 $30 $2 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aViridium Pacific Group Ltd. $30 $30 $2 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aMedian $9 193% 10.1x 4.3xMean $20 223% 19.2x 4.6x
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PUBLIC COMPARABLE ANALYSISTRADING MULTIPLES & OPERATING STATISTICS
(Figures In $CAD Millions, except percentages and ratios)Operating Figures Revenue EBITDA EV/EBITDA
CompanyMarket
Cap.Ent.
ValueCash
Annual-ized
Qrt. Rev.
Rev. Growth
Y/Y2018 2019 2020 2018 2019 2020 2019 2020
US/Int'l FocusedCuraleaf Holdings, Inc. $2,956 $3,105 $62 $110 299% $132 $401 $794 -$8 $154 $592 20.1x 5.2xPyxus International, Inc. $147 $2,110 $151 $2,042 -15% n/a n/a n/a n/a n/a n/a n/a n/aGreen Thumb Industries Inc. $1,846 $1,856 $194 $89 359% $84 $300 $655 -$3 $85 $256 21.7x 7.3xCharlotte's Web Holdings, Inc. $1,412 $1,413 $103 $92 63% $96 $216 $373 $33 $77 $133 18.5x 10.6xTrulieve Cannabis Corp. $1,229 $1,255 $54 $146 768% $136 $290 $390 $59 $128 $174 9.8x 7.2xGreen Growth Brands Inc. $832 $832 $0 $0 nmf $45 $139 $434 -$16 $32 $101 26.0x 8.2xHarvest Health & Recreation Inc. $478 $555 $36 $58 68% $58 $305 $760 $11 $73 $277 7.6x 2.0xiAnthus Capital Holdings, Inc. $408 $447 $20 $5 nmf $8 $250 $439 -$25 $50 $124 9.0x 3.6xMPX Bioceutical Corporation $356 $416 $18 $59 227% $99 $185 n/a $17 $47 n/a 8.8x n/aMedMen Enterprises Inc. $399 $399 $0 $111 1418% $156 $450 $934 -$112 -$57 -$157 nmf nmfLiberty Health Sciences Inc. $315 $325 $26 $9 nmf $15 $77 $151 -$12 $15 $46 21.0x 7.1xFlower One Holdings Inc. $256 $256 $0 $0 nmf n/a $131 $297 -$3 $40 $109 6.3x 2.3xCresco Labs Inc. $212 $212 $121 $63 350% $70 $377 $661 $15 $122 $233 1.7x .9xPlanet 13 Holdings Inc. $191 $192 $11 $25 68% $29 $125 $147 $3 $35 $41 5.5x 4.7xSunniva Inc. $126 $149 $4 $15 -36% $20 $219 $390 -$17 $49 $128 3.0x 1.2xGolden Leaf Holdings Ltd. $79 $95 $16 $26 31% n/a n/a n/a n/a n/a n/a n/a n/a1933 Industries Inc. $81 $93 $15 $18 87% $22 $36 n/a $0 $8 n/a 12.2x n/aNutritional High International Inc. $78 $87 $7 $23 nmf n/a n/a n/a n/a n/a n/a n/a n/aICC International Cannabis Corp. $62 $62 $0 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aBody and Mind Inc. $38 $41 $0 $6 nmf n/a n/a n/a n/a n/a n/a n/a n/aCordovaCann Corp. $41 $41 $1 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aNext Green Wave Holdings Inc. $40 $40 $7 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aCanna-V-Cell Sciences Inc. $18 $18 $0 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aMedian $11 87% 9.4x 5.0xMean $34 284% 12.2x 5.0x
Technology, Data, Retail and Ancillary MarketsTILT Holdings Inc. $945 $945 $0 $0 nmf $11 $615 $1,112 -$60 $199 $428 4.7x 2.2xMJardin Group, Inc. $390 $431 $3 $36 71% $38 $170 $263 $3 $82 $137 5.3x 3.1xNamaste Technologies Inc. $246 $246 $34 $16 -20% n/a n/a n/a n/a n/a n/a n/a n/aCannabix Technologies Inc. $140 $140 $11 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aNational Access Cannabis Corp. $97 $97 $4 $2 21% n/a n/a n/a n/a n/a n/a n/a n/aChoom Holdings Inc. $77 $77 $7 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aMYM Nutraceuticals Inc. $60 $60 $2 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aLeviathan Cannabis Group Inc. $38 $38 $0 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aAbattis Bioceuticals Corp. $34 $35 $6 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aAlternate Health Corp. $30 $32 $0 $2 20% n/a n/a n/a n/a n/a n/a n/a n/aFuture Farm Technologies Inc. $25 $27 $1 $3 nmf n/a n/a n/a n/a n/a n/a n/a n/aInner Spirit Holdings Ltd. $25 $25 $5 $6 47% n/a n/a n/a n/a n/a n/a n/a n/aCannaOne Technologies Inc. $21 $21 $0 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aNew Age Brands Inc. $19 $20 $0 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aLift & Co. Corp. $19 $20 $7 $1 nmf n/a n/a n/a n/a n/a n/a n/a n/aCannvas MedTech Inc. $14 $14 $1 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aGlobal Cannabis Applications $9 $10 $0 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aEmpower Clinics Inc. $7 $10 $0 $1 nmf n/a n/a n/a n/a n/a n/a n/a n/aBelgravia Capital International $8 $8 $5 $1 nmf n/a n/a n/a n/a n/a n/a n/a n/aQuadron Cannatech Corporation $8 $8 $2 $2 nmf n/a n/a n/a n/a n/a n/a n/a n/aHealthSpace Data Systems Ltd. $6 $7 $1 $3 22% n/a n/a n/a n/a n/a n/a n/a n/aGlobal Health Clinics Ltd. $7 $7 $3 $1 nmf n/a n/a n/a n/a n/a n/a n/a n/aAffinor Growers Inc. $6 $6 $0 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aMedian $2 22% 5.0x 2.7xMean $4 27% 5.0x 2.7x
Source: Capital IQ. Data as of December 31, 2018.Estimates based on Capital IQ calendar year consensus. Enterprise value based on market cap. plus total debt. No adjustment for cash due to infancy of the industry and large capex programs for most companies.
Page 8
PUBLIC COMPARABLE ANALYSISTRADING MULTIPLES & OPERATING STATISTICS
(Figures In $CAD Millions, except percentages and ratios)Operating Figures Revenue EBITDA EV/EBITDA
CompanyMarket
Cap.Ent.
ValueCash
Annual-ized
Qrt. Rev.
Rev. Growth
Y/Y2018 2019 2020 2018 2019 2020 2019 2020
Extraction, Pharma, Food and Beverage DevelopmentAlcanna Inc. $156 $230 $60 $675 nmf $627 $725 $791 $15 $25 $41 9.1x 5.6xRadient Technologies Inc. $196 $203 $43 $1 nmf n/a n/a n/a n/a n/a n/a n/a n/aMediPharm Labs Corp. $170 $172 $6 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aValens Groworks Corp. $141 $141 $3 $0 nmf $0 $49 $106 -$7 $22 $55 6.3x 2.6xDixie Brands Inc. $99 $100 $24 $13 117% n/a n/a n/a n/a n/a n/a n/a n/aLexaria Bioscience Corp. $98 $98 $4 $0 nmf $1 $2 $9 -$8 -$4 $3 nmf 36.6xLiveWell Canada Inc. $64 $74 $1 $1 nmf n/a n/a n/a n/a n/a n/a n/a n/aInMed Pharmaceuticals Inc. $58 $58 $17 $0 nmf n/a n/a n/a -$6 -$10 n/a nmf n/aIsodiol International Inc. $52 $55 $3 $32 36% $35 $60 n/a -$9 $8 n/a 6.7x n/aThe Tinley Beverage Company Inc. $52 $52 $6 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aLifestyle Delivery Systems Inc $36 $36 $1 $2 nmf n/a n/a n/a n/a n/a n/a n/a n/aPhivida Holdings Inc. $34 $34 $16 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aPivot Pharmaceuticals Inc. $28 $32 $1 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aCanntab Therapeutics Limited $29 $29 $3 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aCTT Pharmaceutical Holdings, Inc. $25 $25 $0 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aGlobal Hemp Group Inc. $25 $25 $1 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aGabriella's Kitchen Inc. $24 $24 $1 $1 nmf n/a n/a n/a n/a n/a n/a n/a n/aNanoSphere Health Sciences Inc. $23 $23 $0 $2 nmf n/a n/a n/a n/a n/a n/a n/a n/aPreveCeutical Medical Inc. $20 $23 $1 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aKoios Beverage Corp. $17 $18 $1 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aHill Street Beverage Company Inc. $15 $15 $3 $3 33% n/a n/a n/a n/a n/a n/a n/a n/aEviana Health Corporation $15 $15 $1 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aRISE Life Science Corp. $11 $12 $1 $1 nmf n/a n/a n/a n/a n/a n/a n/a n/aIntegrated Cannabis Company $12 $12 $0 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aOvation Science Inc. $7 $7 $0 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aMedian $1 36% 6.7x 5.6xMean $8 62% 7.4x 14.9x
Branded ProductsPlus Products Inc. $109 $109 $14 $13 642% $10 $20 $99 -$8 -$10 $2 nmf 58.6xDionyMed Brands Inc. $50 $55 $0 $0 nmf $14 $203 $330 -$12 $26 $62 2.1x .9xWildflower Brands Inc. $35 $43 $0 $4 34% n/a n/a n/a n/a n/a n/a n/a n/aCannAmerica Brands Corp. $35 $41 $0 $2 nmf n/a n/a n/a n/a n/a n/a n/a n/aWeekend Unlimited Inc. $21 $21 $0 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aInternational Cannabrands Inc. $15 $17 $2 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aMedian $0 338% 2.1x 29.7xMean $3 338% 2.1x 29.7x
Source: Capital IQ. Data as of December 31, 2018.Estimates based on Capital IQ calendar year consensus. Enterprise value based on market cap. plus total debt. No adjustment for cash due to infancy of the industry and large capex programs for most companies.
Page 9
PUBLIC COMPARABLE ANALYSISTRADING MULTIPLES & OPERATING STATISTICS
(Figures In $CAD Millions, except percentages and ratios)
Operating Figures Revenue EBITDA EV/EBITDA
CompanyMarket
Cap.Ent.
ValueCash
Annual-ized
Qrt. Rev.
Rev. Growth
Y/Y2018 2019 2020 2018 2019 2020 2019 2020
Investment CompaniesAcreage Holdings, Inc. $2,060 $2,135 $96 $28 169% $100 $379 $730 -$14 $91 $214 23.5x 10.0xAuxly Cannabis Group Inc. $532 $625 $237 $0 nmf $4 $165 $569 -$25 $35 $204 17.8x 3.1xCanopy Rivers Inc. $526 $526 $106 $0 nmf n/a $36 n/a n/a $1 n/a nmf n/aOrigin House $395 $423 $75 $26 518% $29 $156 $275 -$7 $25 $51 16.7x 8.3xCannex Capital Holdings Inc. $169 $179 $15 $12 99% n/a $22 n/a n/a $14 n/a 12.8x n/aSOL Global Investments Corp. $108 $108 $3 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aAustralis Capital Inc. $103 $103 $5 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aCaptor Capital Corp. $49 $50 $19 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aTidal Royalty Corp. $41 $41 $28 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aC21 Investments Inc. $35 $39 $9 $2 nmf n/a n/a n/a n/a n/a n/a n/a n/aCrop Infrastructure Corp. $39 $39 $1 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aQuinsam Capital Corporation $29 $29 $1 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aHigh Hampton Holdings Corp. $25 $25 $15 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aTop Strike Resources Corp. $22 $22 $0 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aChemistree Technology Inc. $19 $19 $2 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aCannabis Growth Opportunity $15 $15 $0 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aRedfund Capital Corp. $12 $12 $0 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aFinCanna Capital Corp. $11 $11 $3 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aRockshield Capital Corp. $5 $5 $1 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aMedian $5 169% 17.2x 8.3xMean $32 262% 17.7x 7.1x
Canadian Pre-LicenceRubicon Organics Inc. $70 $73 $3 $3 nmf n/a n/a n/a n/a n/a n/a n/a n/aAscent Industries Corp. $61 $66 $3 $4 nmf n/a n/a n/a n/a n/a n/a n/a n/aChemesis International Inc. $66 $66 $0 $8 nmf n/a n/a n/a n/a n/a n/a n/a n/aRMMI Corp. $22 $22 $6 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aSpeakEasy Cannabis Club Ltd. $20 $20 $3 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aMatica Enterprises Inc. $20 $20 $6 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aLotus Ventures Inc. $16 $16 $2 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aNorth Bud Farms Inc. $14 $14 $0 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aMedian $3Mean $3
Source: Capital IQ. Data as of December 31, 2018.Estimates based on Capital IQ calendar year consensus. Enterprise value based on market cap. plus total debt. No adjustment for cash due to infancy of the industry and large capex programs for most companies.
Page 10
PUBLIC COMPARABLE ANALYSISGROWTH, CASH & MULTIPLES
“Keep Source Formatting
The chart should stretch
aligned to the top of the
0.0x
0.0x
2.7x
4.3x
5.0x
5.6x
8.3x
12.6x
Canadian Pre-Licence
Branded Products
Ancillary Markets
Canadian Licenced Producers
US/Int'l Focused
Extraction, Pharma, Foodand Beverage Development
Investment Companies
Integrated LicencedProducers
Median 2020 EV/EBITDA Multiple
Source: Capital IQ. Data as of December 31, 2018.Valuation details provided on page 6 to 9.
Avg. 122% Avg. $16 million
Avg. 11.5x Avg. 6.4x
$0
$1
$2
$3
$5
$9
$11
$95
Branded Products
Extraction, Pharma, Foodand Beverage Development
Ancillary Markets
Canadian Pre-Licence
Investment Companies
Canadian Licenced Producers
US/Int'l Focused
Integrated LicencedProducers
Median Cash
0.0x
2.1x
5.0x
6.7x
9.4x
10.1x
17.2x
29.8x
Canadian Pre-Licence
Branded Products
Ancillary Markets
Extraction, Pharma, Foodand Beverage Development
US/Int'l Focused
Canadian Licenced Producers
Investment Companies
Integrated LicencedProducers
Median 2019 EV/EBITDA Multiple
0%
22%
36%
87%
133%
169%
193%
338%
Canadian Pre-Licence
Technology, Data, Retail andAncillary Markets
Extraction, Pharma, Foodand Beverage Development
US/Int'l Focused
Integrated LicencedProducers
Investment Companies
Canadian Licenced Producers
Branded Products
MedianLTM Revenue Growth (y/y)
Page 11
PUBLIC COMPARABLE ANALYSISPERFORMANCE ANALYSIS
“Keep Source Formatting
The chart should stretch
aligned to the top of the
0.0x
5.0x
10.0x
15.0x
20.0x
25.0x
30.0x
35.0x
40.0x
Integrated Licenced Producers Canadian Licenced ProducersUS/Int'l Focused Technology, Data, Retail and Ancillary MarketsExtraction, Pharma, Food and Beverage Development Branded ProductsInvestment Companies
Source: Capital IQ. Data as of December 31, 2018.Constituent companies are the same as those provided on page 6 to 9.
Market ReturnsMarket Capitalization Weighted Index Method
2019 EV / EBITDABased on Median Values
0
20
40
60
80
100
120
140
Integrated Licenced Producers Canadian Licenced Producers
US/Int'l Focused Technology, Data, Retail and Ancillary Markets
Extraction, Pharma, Food and Beverage Development Branded Products
Investment Companies Canadian Pre-Licence
56
65
53
80
67
65
54
45
Page 12
MNPCF – LEADERSHIP TEAM
DUE DILIGENCE LEADERSHIP
TRANSACTION LEADERSHIP
Aleem BandaliManaging Director
Dale AntonsenManaging Director
John CaggianielloManaging Director
[email protected] 416.513.4177
Brett FranklinPresident
Mike ReynoldsManaging Director
Johnny EarlManaging Director
[email protected] 604.637.1514
Dan PorterManaging Director
Stephen ShawManaging Director
Jason BurgessManaging Director
Mark RegehrManaging Director
Craig MaloneyManaging Director
Patrick KhouzamManaging Director
Page 13
MNPCF – RECENTLY CLOSED DEALS
NATIONAL
Page 14
APPENDIXINDUSTRY NAME CHANGES
Current NameCurrent Ticker
Former Name Former TickerEffective
Date
Green Growth Brands Inc.
CNSX:GGBXanthicBiopharma Inc.
CNSX:XTHC 02-Jan-19
CannaRoyalty Corp. d/b/a Origin House
CNSX:OHCannaRoyaltyCorp.
CNSX:CRZ 23-Oct-18
LihtCannabis Corp.
CNSX:LIHTMarapharmVentures Inc.
CNSX:MDM 24-Oct-18
Wayland Group Corp.
CNSX:WAYLMaricann Group Inc.
CNSX:MARI 24-Sep-18
ICC International Cannabis Corp.
CNSX:WLRDKaneh BosmBioTechnology Inc.
CNSX:KBB 20-Sep-18
1933 Industries Inc. CNSX:TGIF Friday Night Inc. no change 18-Sep-18
HEXO Corp. TSX:HEXOThe HydropothecaryCorporation
TSX:THCX 29-Aug-18
VIVO Cannabis Inc. TSXV:VIVOABcann Global Corporation
TSXV:ABCN 02-Aug-18
Auxly Cannabis Group Inc.
TSXV:XLYCannabis Wheaton Income Corp.
TSXV:CBW 08-Jun-18
SOL Global Investments Corp.
TSXV:SOLScythian Biosciences Corp.
TSXV:SCYB 05-Jun-18
NewstrikeBrands Ltd.
TSXV:HIPNewstrikeResources Ltd.
no change 01-Jun-18
Cronos Group Inc. TSX:CRON no change TSX:MJN 05-Mar-18
The Supreme Cannabis Company, Inc.
TSXV:FIRESupreme Pharmaceuticals, Inc.
TSXV:SL 29-Dec-17
ICC Labs Inc. TSXV:ICCICC International Cannabis Corporation
no change 14-Dec-17
MPX BioceuticalCorporation
CNSX:MPXThe Canadian Bioceutical Corporation
CNSX:BCC 02-Nov-17
