CANNABIS QUARTERLY UPDATE Q3 2018 - MNP LLP Library/mnp/pdf/CORP Corp... · changes begin to settle down. The industry is expected to benefit from substantial pent-up demand for recreational

QUARTERLY UPDATE Q3 2018

CANNABIS

Page 2

INDUSTRY OVERVIEWM&A TRANSACTIONS & PERFORMANCE

Source: Capital IQ. Data as of September 30, 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 $5mm and $500mm. Significant deals above the size threshold include Aurora/MedReleaf ($3.3b) & Aurora/CanniMed ($1.4b).

• M&A activity in the cannabis industry held pace with the prior three quarters as a result of continued anticipation of the legalization of cannabis in Canada on October 17, 2018.

• Deal volumes and sizes increased significantly in each of the first three quarters of 2018, marking the commencement of the expected industry consolidation, as companies positions themselves to take advantage of the looming recreational market. Overall transaction volume increased from 22 transactions in all of 2017 to just about match that number in each of the three quarters to date in 2018. In addition to volume of transaction, the total value of transaction increased dramatically above prior levels as well, with each of the last three quarters above $1b.

• The large players have all been involved in M&A, including • Aphria’s acquisition of Broken Coast ($225 million);• Canopy’s acquisitions of BC Tweed Joint Venture ($375 million), Canopy Health Innovations ($108 million), and

Hiku Brands ($345 million); and • Aurora’s acquisitions of MedReleaf ($3.3 billlion), Cannimed ($1.4 billion) and Anandia Labs ($115 million).

• Notably absent from making large M&A moves were Tilray, HEXO, Cronos, The Green Organic Dutchman, and CannTrust.

M&A MARKET UPDATE FOR Q3 2018

2016 2017 2018

$1,1

44

$1,1

48

$1,3

12

$1,3

69

$3,2

65

2 1 1

5 6

3 3

10

21

27

18

-

5

10

15

20

25

30

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

Tran

sact

ion

Volu

me

(Num

ber o

f Dea

ls)

Tran

sact

ion

Valu

e ($

Mill

ions

)

CANNABIS M&A TRANSACTIONS*

Transaction Value Deals Greater than $500mm Transaction Volume

Page 3

INDUSTRY OVERVIEWMACRO ECONOMIC LANDSCAPE

Source: IBISWorld Industry Reports.

Over the five years to 2018, the cannabis production industry in Canada has transitioned from a single government-sponsored provider of medical cannabis products to a highly competitive industry comprising hundreds of private companies, with hundreds more in development. This development has largely been shaped by the Canadian government's ongoing deregulation of medical marijuana consumption, as well as underlying demographic shifts and improving consumer conditions. And while the sale and consumption of nonmedical marijuana remains illegal in Canada, growing demand for cannabis products to treat chronic pain and other ailments has resulted in surging revenue growth for most industry operators. Overall, industry revenue is estimated to increase at an annualized rate of 128.8% to $501.9 million over the five years to 2018, including expected growth of 44.5% in 2018 alone.

In late 2013, Canada enacted the Marihuana for Medical Purposes Regulations (and later, the Access to Cannabis for Medical Purposes Regulations, ACMPR), which expanded access to medical marijuana by enabling Health Canada to issue licences for private companies to cultivate, produce and sell cannabis products to registered patients with medical prescriptions. This policy shift has resulted in surging demand for medical cannabis, with the number of clients registered at Health Canada's licensed providers increasing from just 15,545 clients in December 2014 to an estimated 269,502 clients in December 2017.

In April 2017, a bill to legalize cannabis was introduced in the Canadian Parliament. Since then, the bill has been passed bythe House of Commons of Canada, in addition to passing a second reading by the Senate of Canada in March 2018. According to the Canadian government, the proposed Cannabis Act would create a legal framework for controlling the production, distribution and consumption of recreational cannabis products in Canada. This bill follows favourable trends in the public perception of marijuana, with an estimated 68.0% of Canadians in favour of the expected legalization of marijuana, according to researchers at Dalhousie University. Moreover, the bill’s proponents argue that legalizing the possession and consumption of marijuana for nonmedical purposes would promote public health by establishing standards for product safety and quality, in addition to reducing criminal activity and limiting access to cannabis products for individuals under the age of 18. When the bill became law on October 17,2018, it allowed individuals aged 18 and older to be able to legally possess up to 30.0 grams of dried cannabis, purchase cannabis products from provincially licensed retailers and grow up to four cannabis plants per residence, substantially expanding the market for marijuana products.

Moving forward, the cannabis production industry in Canada will continue to blaze a trail through the Canadian economy, though industry revenue growth will decelerate as the explosions of activity following recent and upcoming policy changes begin to settle down. The industry is expected to benefit from substantial pent-up demand for recreational marijuana, as many of the estimated 2.1 million individuals in Canada who consume cannabis at least once per week are now able to legally purchase cannabis products for the first time. This new source of industry revenue will be supplemented by increasingly favourable attitudes toward medical marijuana, causing demand for medical cannabis products to continue expanding. Overall, industry revenue is forecast to increase at an annualized rate of 29.0% over the next five years, reaching an estimated $1.8 billion in 2023, according to IBISWorld, and much higher according to other reports.

40%

33%19%

4%

4%

Flower Products ConcentratesEdible Products Pre-Rolled CigarettesOther Products

41%

25% 25%

5%

4%

Ages 25 to 44 Ages 18 to 24 Ages 45 to 64

65 and Older 17 and Younger

REVENUE SEGMENTATION AGE DEMOGRAPHICS

Page 4

SELECT RECENT M&A TRANSACTIONS

Source: Capital IQ.All figures are in CAD.

• While not technically an M&A transaction, this was one of the most critical developments during the quarter.

• The investment increases Constellation’s position in Canopy to approximately 38% when including the exercise of warrants which are included as part of the private placement. As part of the transaction, four directors of Constellation Brands will join Canopy's board of directors.

• This initiative highlights the importance of cannabis to the beverage industry, and provides a glimpse into where the market is likely headed. On August 1st, HEXO announced their own JV with Molson Coors to create a cannabis infused beverage (HEXO will own 42.5% of the JV). Additionally, in mid August, Heineken announced the launch of “Hi-Fi Hops”, a cannabis beverage in California.

• This is a major statement on the future of the cannabis market, and highlights some of the strategic partnerships that are likely to occur in the future.

• Aurora Cannabis Inc. acquired MedReleaf Corp. in exchange for shares of the company. MedReleaf’soperations include 265 thousand square feet of indoor cultivation and 1 million square feet of greenhouse.

• This combination of two of the largest Licensed Producers is a pivotal transaction for the industry. It gives the combined company national cultivation operations, and creates one of the largest cannabis companies traded on the TSX.

• At the time, Aurora’s acquisition of CanniMed was the largest in the industry, only to be surpassed by the two transactions above.

• CanniMed’s operations include 247 thousand square feet of cultivation space.

• This transaction was announced at $550 million as an all share hostile takeover, at the same time that CanniMed was under exclusivity to acquire NewstrikeResources Ltd. Ultimately Aurora increased their offer to $1.3 billion in a cash and share deal (subject to max $140 million cash), and forced the termination of the transaction announced with Newstrike. At the new price, the CanniMed board stated that this was a fair deal and completed the transaction on a friendly basis.

• The transaction finally closed Mar 25, 2018.

Announced Aug 15, 2018

Investment $5 billion

Announced May 14, 2018

TEV $3.3 billion

TEV/SQ FT $2,600

Announced Nov 14, 2017

TEV $1.4 billion

TEV/SQ FT $5,550

invested in

acquired

acquired

Page 5



• Aphria completed the acquisition for cash ($1/share) and shares ($7.50/share at announcement).

• Nuuvera Inc. is a cannabis company with international reach, specifically in Ontario, Germany, Israel, Italy, and Malta. In Ontario, Nuuvera owned a Licenced Dealer, which does not cultivate but rather is focused on oil extraction, testing and analysis. and vertical integration and cannabis oil extraction expertise.

• The acquisition allowed Aphria to expand vertically and geographically.

• The transaction closed on Mar 23, 2018, and on the closing date, the implied TEV of Nuuvera (as a result of the decline in Aphria’s share price) was $425 million.

• The transaction was completed for $10 million in cash and the remaining consideration in shares.

• Broken Coast Cannabis Ltd. produces medical cannabis products. The company’s products include god Kush, purple Kush, super lemon haze, killing fields, pink Kush, purple lightning, sugar punch, and purple white lightning. It offers its products online.

• The transaction was very smooth and closed in less than 1 month, adding Broaken Coast’s 26,000 square feet of cultivation, and 18,000 sq ft of “near complete” expansion.

• Anandia Laboratories Inc. develops products through a combination of genomics, plant breeding, and pharmaceutical science.

• This acquisition provides Aurora access to its own oil extraction lab, providing further vertical integration.

• VIVO Cannabis Inc. manufactures and distributes medical cannabis. The company was formerly known as ABcann Global Corporation.

• Canna Farms Ltd. is a profitable licensed producer and seller of dried flower, cannabis resin, cannabis oil, and live plants.

• The share deal expands VIVO’s reach from Ontario to a key market in Hope, B.C. (lower mainland) and almost triples near term growing capacity.

Announced Jan 29, 2018

TEV $826 million


TEV $225 million

TEV/SQ FT $5,110


TEV $115 million

Announced Apr 12, 2018

TEV $127 million

TEV / SQ FT $6,350

acquired

acquired

acquired

acquired

Page 6



• BC Tweed Joint Venture Inc. is one of the largest greenhouse facilities, and when fully licenced, will have approx. three million square feet of grow space.

• The company is converting 1.3 million sq ft of existing greenhouse space, and has an exclusive option on a further 1.7 million sq ft of development greenhouse space.

• The acquisition was for the remaining 33% not previously owned by Canopy. The consideration included $1 million cash, and $374 million in earnouts payable in shares over fours years upon successfully completing production milestones.

• The announced acquisition of ICC Labs allows Aurora to expand into South America, as ICC Labs is the market leader in that region.

• ICC Labs is a fully licensed producer and distributor of medicinal cannabinoid extracts, recreational cannabis and industrial hemp products in Uruguay as well as a fully licensed producer of medicinal cannabis in Colombia. ICC presently has over 70% market share in Uruguay, the first country in the world to legalize cannabis for adult consumer use.

• ICC cultivates cannabis in both greenhouse locations (92,000 square feet currently, 1.1 million sq ft under construction) and outdoor locations (800 ac potential).

Announced May 14, 2018

TEV $1,125 million

TEV/SQ FT $865

Announced Jul 10, 2018

TEV $316 million

Announced Sep 10, 2018

TEV $290 million

acquired

acquired

acquired

• Hiku Brands Company Ltd. focuses on cultivation and sale of medical cannabis in Canada (via its LP DOJA). It also sells coffee, clothing, and curated accessories through its ownership in Tokyo Smoke in B.C., Alberta and Ontario.

• The transaction rationale is focused on Hiku’s brand portfolio, in which Canopy has been a market leader since inception of the company.

• The transaction was friendly and consideration was paid via shares of Canopy.

Page 7

PUBLIC COMPARABLE ANALYSISTRADING MULTIPLES & OPERATING STATISTICS

Source: Capital IQ. Data as of September 30, 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

Company Market Cap.

Ent. Value Cash

Annual-ized

Qrt. Rev.

Rev. Growth

Y/Y2018 2019 2020 2018 2019 2020 2019 2020

Integrated Licenced ProducersTilray, Inc. $17,292 $17,364 $33 $51 98% $53 $201 $456 -$23 $34 $113 506.6x 153.5xCanopy Growth Corporation $14,439 $15,059 $658 $104 48% $222 $815 $1,220 -$43 $182 $325 83.0x 46.3xAurora Cannabis Inc. $11,926 $12,129 $89 $77 132% $168 $676 $1,156 n/a n/a n/a n/a n/aAphria Inc. $4,490 $4,521 $60 $48 96% $81 $417 $546 $35 $151 $264 29.9x 17.2xCronos Group Inc. $2,542 $2,548 $90 $14 158% $35 $132 $205 $5 $34 $72 74.0x 35.4xThe Green Organic Dutchman $1,821 $1,821 $262 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aHEXO Corp. $1,700 $1,700 $1 $6 64% $56 $198 $308 $7 $62 $120 27.2x 14.2xCannTrust Holdings Inc. $1,324 $1,335 $12 $36 47% $72 $193 $300 $5 $57 $109 23.4x 12.2xMedian $74 96% 52.0x 26.3xMean $151 92% 124.0x 46.5x

Canadian Licenced ProducersOrganiGram Holdings Inc. $875 $973 $32 $15 74% $40 $146 $253 $5 $46 $95 21.1x 10.2xEmerald Health Therapeutics, Inc. $629 $632 $73 $1 nmf $5 n/a $128 -$12 n/a n/a n/a n/aTerrAscend Corp. $623 $623 $26 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aThe Supreme Cannabis Company, $580 $612 $56 $14 127% $20 $131 $188 -$6 $40 $67 15.5x 9.2xThe Flowr Corporation $604 $604 $10 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aVIVO Cannabis Inc. $448 $476 $130 $4 nmf $10 $33 $80 -$13 $2 $26 200.5x 18.3xAleafia Health Inc. $428 $428 $0 $5 nmf $6 $51 $210 -$7 $4 $69 116.1x 6.2xNewstrike Brands Ltd. $400 $401 $124 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aVillage Farms International, Inc. $310 $369 $17 $221 -1% $194 $217 $230 $6 $34 $50 10.8x 7.4xWayland Group Corp. $270 $287 $8 $5 61% $15 $126 $134 -$14 $16 $44 18.1x 6.5xAscent Industries Corp. $223 $229 $3 $4 -54% n/a n/a n/a n/a n/a n/a n/a n/aWeedMD Inc. $226 $229 $40 $8 486% $15 $67 $138 -$4 $18 $43 12.6x 5.3xEmblem Corp. $198 $222 $73 $6 154% $10 $51 $135 -$11 $6 $21 38.0x 10.6xChoom Holdings Inc. $211 $213 $3 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aInvictus MD Strategies Corp. $179 $179 $11 $2 nmf n/a n/a n/a n/a n/a n/a n/a n/aDelta 9 Cannabis Inc. $153 $153 $14 $3 136% n/a n/a n/a n/a n/a n/a n/a n/aHarvest One Cannabis Inc. $141 $141 $80 $0 nmf $12 $72 n/a -$3 $22 n/a 6.4x n/aRavenquest Biomed Inc. $109 $122 $1 $1 nmf $14 $55 $112 -$3 $11 $23 10.9x 5.2xEve & Co Incorporated $100 $108 $7 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aGTEC Holdings Ltd. $108 $108 $2 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aTHC Biomed Intl Ltd. $101 $102 $5 $1 nmf n/a n/a n/a n/a n/a n/a n/a n/aJames E. Wagner Cultivation $91 $94 $18 $0 nmf $9 $45 n/a -$5 $8 n/a 11.8x n/aBeleave Inc. $84 $91 $10 $1 nmf $4 $43 $130 -$27 -$14 $7 nmf 13.9xBenchmark Botanics Inc. $82 $82 $1 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aCanada House Wellness Group $72 $74 $6 $5 49% n/a n/a n/a n/a n/a n/a n/a n/aIndiva Limited $68 $73 $27 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aHeritage Cannabis Holdings Corp. $54 $54 $1 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/a48North Cannabis Corp. $54 $54 $12 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aPure Global Cannabis Inc. $52 $54 $0 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aViridium Pacific Group Ltd. $49 $49 $2 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aBlissCo Cannabis Corp. $45 $46 $3 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aMatica Enterprises Inc. $41 $41 $6 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aMedian $10 83% 19.6x 10.2xMean $25 106% 47.2x 13.7x

Page 8

PUBLIC COMPARABLE ANALYSISTRADING MULTIPLES & OPERATING STATISTICS

Source: Capital IQ. Data as of September 30, 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.


Company Market Cap.

Ent. Value Cash

Annual-ized

Qrt. Rev.

Rev. Growth

Y/Y2018 2019 2020 2018 2019 2020 2019 2020

US/Int'l FocusedGreen Thumb Industries Inc. $3,255 $3,265 $148 $72 296% $83 $240 $492 -$3 $50 $165 65.2x 19.8xMedMen Enterprises Inc. $2,193 $2,267 $104 $154 1728% $171 $427 $869 -$5 $105 $227 21.5x 10.0xPyxus International, Inc. $292 $2,253 $266 $1,531 -32% n/a n/a n/a n/a n/a n/a n/a n/aiAnthus Capital Holdings, Inc. $520 $561 $36 $1 nmf $8 $266 $440 -$24 $57 $125 9.9x 4.5xLiberty Health Sciences Inc. $468 $477 $39 $5 nmf $16 $77 $151 -$13 $15 $46 31.5x 10.4xMPX Bioceutical Corporation $381 $439 $31 $58 228% $99 $185 n/a $17 $47 n/a 9.3x n/aPlanet 13 Holdings Inc. $297 $298 $23 $23 206% n/a n/a n/a n/a n/a n/a n/a n/aICC Labs Inc. $258 $258 $10 $1 nmf $3 $108 $209 -$2 $34 $64 7.5x 4.0xSunniva Inc. $180 $203 $18 $18 -2% $20 $219 $390 -$17 $49 $128 4.1x 1.6xTrulieve Cannabis Corp. $131 $173 $12 $123 195% $137 $299 $383 $60 $136 $173 1.3x 1.0xGolden Leaf Holdings Ltd. $154 $171 $21 $19 24% n/a n/a n/a n/a n/a n/a n/a n/a1933 Industries Inc. $113 $115 $13 $13 nmf n/a n/a n/a n/a n/a n/a n/a n/aNutritional High International Inc. $87 $94 $5 $8 669% n/a n/a n/a n/a n/a n/a n/a n/aLineage Grow Company Ltd. $8 $9 $1 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aFlower One Holdings Inc $0 $0 $0 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aMedian $21 206% 9.6x 4.5xMean $48 368% 18.8x 7.3x

Ancillary MarketsNamaste Technologies Inc. $719 $719 $44 $16 6% n/a n/a n/a n/a n/a n/a n/a n/aAlcanna Inc. $399 $472 $79 $644 -21% $623 $721 $827 $18 $32 $48 14.8x 9.7xRadient Technologies Inc. $312 $319 $18 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aScythian Biosciences Corp. $207 $207 $4 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aNational Access Cannabis Corp. $156 $156 $4 $2 32% n/a n/a n/a n/a n/a n/a n/a n/aIsodiol International Inc. $147 $147 $12 $37 82% $35 $60 n/a -$9 $8 n/a 18.1x n/aInMed Pharmaceuticals Inc. $137 $137 $24 $0 nmf n/a n/a n/a -$6 -$10 n/a nmf n/aValens Groworks Corp. $134 $134 $5 $0 nmf $3 $54 $93 -$5 $24 $42 5.5x 3.2xICC International Cannabis Corp. $133 $133 $2 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aCTT Pharmaceutical Holdings, Inc. $40 $40 $0 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aLift & Co. Corp. $34 $35 $1 $9 130% n/a n/a n/a n/a n/a n/a n/a n/aInternational Cannabrands Inc. $31 $32 $0 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aRISE Life Science Corp. $12 $13 $1 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aMediPharm Labs Corp. $0 $2 $20 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aMedian $5 32% 14.8x 6.5xMean $15 46% 12.8x 6.5x

Investment CompaniesCanopy Rivers Inc. $1,088 $1,088 $20 $0 nmf n/a $38 $84 n/a $6 $8 188.4x 143.6xAuxly Cannabis Group Inc. $660 $753 $296 $0 nmf $7 $165 $569 -$22 $35 $204 21.4x 3.7xOrigin House $391 $391 $16 $14 372% $43 $155 $283 $4 $21 $42 18.9x 9.4xCannex Capital Holdings Inc. $162 $171 $15 $12 97% n/a $33 n/a n/a $20 n/a 8.4x n/aTidal Royalty Corp. $59 $60 $6 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aCannabis Growth Opportunity $28 $28 $0 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aFinCanna Capital Corp. $26 $26 $6 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aMedian $15 234% 20.2x 9.4xMean $51 234% 59.3x 52.2x

Page 9

PUBLIC COMPARABLE ANALYSISGROWTH, CASH & MULTIPLES

0.0x

0.0x

0.0x

0.0x

0.0x

US/Int'l Focused

Ancillary Markets

Investment Companies

Canadian Licenced Producers

Integrated LicencedProducers

Median 2020 EV/EBITDA Multiple

9.6x

14.8x

19.6x

20.2x

52.0x

US/Int'l Focused

Ancillary Markets




Median 2019 EV/EBITDA Multiple

Source: Capital IQ. Data as of September 30, 2018.Valuation details provided on page 7 and 8.

Avg. 130% Avg. $25mm

Avg. 23x Avg. 11x

$5

$10

$15

$21

$74

Ancillary Markets



US/Int'l Focused


Median Cash

32%

83%

96%

206%

234%

Ancillary Markets



US/Int'l Focused


Median LTM Revenue Growth (y/y)

Page 10

PUBLIC COMPARABLE ANALYSISPERFORMANCE ANALYSIS

0.0x

10.0x

20.0x

30.0x

40.0x

50.0x

60.0x

Integrated Licenced Producers Canadian Licenced Producers US/Int'l Focused

Ancillary Markets Investment Companies

Source: Capital IQ. Data as of September 30, 2018.Constituent companies are the same as those provided on page 7 and 8.

Market ReturnsMarket Capitalization Weighted Index Method

2019 EV / EBITDABased on Median Values

0

50

100

150

200

250

300

Integrated Licenced Producers Canadian Licenced Producers US/Int'l Focused

Ancillary Markets Investment Companies

204

131 128 125

87

Page 11

MNPCF – LEADERSHIP TEAM

DUE DILIGENCE LEADERSHIP

TRANSACTION LEADERSHIP

Aleem BandaliManaging Director

[email protected]

Dale AntonsenManaging Director

[email protected]

Wilma BraatManaging Director

[email protected]

John CaggianielloManaging Director

[email protected] 416.513.4177

Brett FranklinPresident

[email protected]

Mike ReynoldsManaging Director

[email protected]

Johnny EarlManaging Director

[email protected] 604.637.1514

Dan PorterManaging Director

[email protected]

Stephen ShawManaging Director

[email protected]

Jason BurgessManaging Director

[email protected]

Mark RegehrManaging Director

[email protected]

Craig MaloneyManaging Director

[email protected]

Patrick KhouzamManaging Director

[email protected]

Page 12

APPENDIX – NAME CHANGES

Current Name

Current Ticker

Former Name

Former Ticker

Effective Date

Origin House (d/b/a) CNSX:OH CannaRoyalty Corp. CNSX:CRZ 23-Oct-18

Wayland Group Corp. CNSX:WAYL Maricann Group Inc. CNSX:MARI 24-Sep-18

ICC International Cannabis Corp. CNSX:WLRD Kaneh Bosm

BioTechnology Inc. CNSX:KBB 20-Sep-18

1933 Industries Inc. CNSX:TGIF Friday Night Inc. no change 18-Sep-18

HEXO Corp. TSX:HEXO The HydropothecaryCorporation TSX:THCX 29-Aug-18

VIVO Cannabis Inc. TSXV:VIVO ABcann Global Corporation TSXV:ABCN 02-Aug-18

Auxly Cannabis Group Inc. TSXV:XLY Cannabis Wheaton

Income Corp. TSXV:CBW 08-Jun-18

SOL Global Investments Corp. TSXV:SOL Scythian Biosciences Corp. TSXV:SCYB 05-Jun-18

Newstrike Brands Ltd. TSXV:HIP Newstrike Resources Ltd. no change 01-Jun-18

Cronos Group Inc. TSX:CRON No change TSX:MJN 05-Mar-18

The Supreme Cannabis Company, Inc. TSXV:FIRE Supreme Pharmaceuticals, Inc. TSXV:SL 29-Dec-17

ICC Labs Inc. TSXV:ICC ICC International Cannabis Corporation no change 14-Dec-17

MPX BioceuticalCorporation CNSX:MPX The Canadian Bioceutical

Corporation CNSX:BCC 02-Nov-17

Page 13

MNPCF – RECENT TRANSACTIONS

NATIONAL

Page 14

APPENDIX –PUBLIC COMPARABLE OCT 31, 2018 UPDATE


Company Market Cap.

Ent. Value Cash

Annual-ized

Qrt. Rev.

Rev. Growth

Y/Y2018 2019 2020 2018 2019 2020 2019 2020

Integrated Licenced ProducersCanopy Growth Corporation $11,149 $11,769 $658 $104 48% $206 $857 $1,471 -$80 $197 $292 59.9x 40.3xTilray, Inc. $11,608 $11,680 $33 $51 98% $54 $204 $465 -$24 $34 $114 340.9x 102.1xAurora Cannabis Inc. $8,609 $8,812 $89 $77 132% $168 $676 $1,156 n/a n/a n/a n/a n/aAphria Inc. $3,921 $3,952 $60 $48 96% $77 $385 $681 $31 $135 $250 29.2x 15.8xCronos Group Inc. $1,737 $1,743 $90 $14 158% $27 $132 $205 $5 $34 $72 50.6x 24.2xHEXO Corp. $1,142 $1,142 $39 $6 28% $12 $178 $328 -$28 $56 $106 20.3x 10.8xCannTrust Holdings Inc. $968 $978 $12 $36 47% $66 $184 $298 $6 $54 $103 18.3x 9.5xThe Green Organic Dutchman $817 $817 $262 $0 nmf $18 $287 $500 -$30 $65 $157 12.6x 5.2xMedian $74 96% 29.2x 15.8xMean $155 87% 76.0x 29.7x

Canadian Licenced ProducersTerrAscend Corp. $885 $885 $26 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aOrganiGram Holdings Inc. $723 $821 $32 $15 74% $41 $149 $253 $6 $48 $95 17.2x 8.6xEmerald Health Therapeutics $532 $534 $73 $1 nmf $5 n/a $128 -$12 n/a n/a n/a n/aThe Supreme Cannabis $435 $467 $56 $14 127% $20 $131 $188 -$6 $40 $67 11.8x 7.0xVIVO Cannabis Inc. $299 $327 $130 $4 nmf $10 $33 $80 -$13 $2 $26 137.9x 12.6xVillage Farms International, Inc. $261 $320 $17 $221 -1% $194 $217 $230 $6 $34 $50 9.3x 6.4xAleafia Health Inc. $313 $313 $0 $5 nmf $6 $51 $210 -$7 $4 $69 84.7x 4.5xThe Flowr Corporation $312 $312 $10 $0 nmf $3 $46 $136 -$10 $7 $47 45.8x 6.7xWayland Group Corp. $268 $286 $8 $5 61% $15 $126 $134 -$14 $16 $44 18.0x 6.5xNewstrike Brands Ltd. $284 $285 $124 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aEmblem Corp. $146 $171 $73 $6 154% $8 $51 $142 -$8 $5 $19 31.3x 8.8xChoom Holdings Inc. $167 $167 $9 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aWeedMD Inc. $161 $163 $40 $8 486% $15 $67 $138 -$4 $18 $43 9.0x 3.8xAscent Industries Corp. $151 $157 $3 $4 -54% n/a n/a n/a n/a n/a n/a n/a n/aInvictus MD Strategies Corp. $143 $143 $11 $2 nmf n/a n/a n/a n/a n/a n/a n/a n/aDelta 9 Cannabis Inc. $133 $133 $14 $3 136% n/a n/a n/a n/a n/a n/a n/a n/aHarvest One Cannabis Inc. $97 $97 $57 $2 nmf $12 $72 n/a -$4 $22 n/a 4.4x n/aRavenquest Biomed Inc. $78 $90 $1 $1 nmf $14 $55 $112 -$3 $11 $23 8.1x 3.9xRubicon Organics Inc. $77 $82 $4 $3 nmf n/a n/a n/a n/a n/a n/a n/a n/aEve & Co Incorporated $68 $76 $7 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aTHC Biomed Intl Ltd. $74 $75 $5 $1 nmf n/a n/a n/a n/a n/a n/a n/a n/aBenchmark Botanics Inc. $71 $71 $1 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aGTEC Holdings Ltd. $70 $70 $2 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aJames E. Wagner Cultivation $68 $70 $18 $0 nmf $9 $45 n/a -$5 $8 n/a 8.9x n/aBeleave Inc. $56 $64 $10 $1 nmf $4 $36 $128 -$27 -$14 $7 nmf 9.6xIndiva Limited $49 $54 $27 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aHeritage Cannabis Holdings $49 $49 $1 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aPure Global Cannabis Inc. $46 $48 $0 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aMatica Enterprises Inc. $42 $42 $6 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/a48North Cannabis Corp. $41 $41 $12 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aViridium Pacific Group Ltd. $40 $40 $2 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aBlissCo Cannabis Corp. $39 $40 $3 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aCanada House Wellness Group $38 $40 $6 $5 53% n/a n/a n/a n/a n/a n/a n/a n/aMedian $10 87% 17.2x 6.8xMean $24 111% 33.6x 9.2x

Source: Capital IQ. Data as of October 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 15

APPENDIX –PUBLIC COMPARABLE OCT 31, 2018 UPDATE


Company Market Cap.

Ent. Value Cash

Annual-ized

Qrt. Rev.

Rev. Growth

Y/Y2018 2019 2020 2018 2019 2020 2019 2020

US/Int'l FocusedMedMen Enterprises Inc. $2,869 $2,942 $104 $154 1728% $158 $426 $848 n/a -$25 $224 nmf 13.1xPyxus International, Inc. $307 $2,268 $266 $1,531 -32% n/a n/a n/a n/a n/a n/a n/a n/aGreen Thumb Industries Inc. $2,226 $2,236 $148 $72 296% $83 $240 $492 -$3 $50 $165 44.7x 13.5xiAnthus Capital Holdings, Inc. $460 $502 $36 $1 nmf $8 $266 $440 -$24 $57 $125 8.8x 4.0xLiberty Health Sciences Inc. $437 $447 $39 $5 nmf $15 $77 $151 -$13 $15 $46 29.7x 9.7xMPX Bioceutical Corporation $366 $424 $31 $58 228% $99 $185 n/a $17 $47 n/a 9.0x n/aFlower One Holdings Inc $298 $298 $0 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aPlanet 13 Holdings Inc. $263 $264 $23 $23 206% $30 $144 $164 $3 $41 $43 6.4x 6.1xICC Labs Inc. $235 $235 $10 $1 nmf $3 $108 $209 -$2 $34 $64 6.9x 3.7xSunniva Inc. $173 $196 $18 $18 -2% $20 $219 $390 -$17 $49 $128 4.0x 1.5xTrulieve Cannabis Corp. $130 $172 $12 $123 195% $137 $299 $383 $60 $136 $173 1.3x 1.0xGolden Leaf Holdings Ltd. $111 $127 $21 $19 24% n/a n/a n/a n/a n/a n/a n/a n/a1933 Industries Inc. $100 $102 $13 $13 35% $23 $39 n/a $2 $10 n/a 10.6x n/aNutritional High International I $67 $73 $5 $8 nmf n/a n/a n/a n/a n/a n/a n/a n/aLineage Grow Company Ltd. $8 $9 $1 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aMedian $21 195% 8.8x 5.1xMean $48 298% 13.5x 6.6x

Ancillary MarketsNamaste Technologies Inc. $527 $527 $34 $16 6% n/a n/a n/a n/a n/a n/a n/a n/aAlcanna Inc. $349 $422 $79 $644 -21% $623 $721 $827 $18 $32 $48 13.2x 8.7xRadient Technologies Inc. $233 $239 $18 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aSOL Global Investments Corp. $153 $153 $4 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aMediPharm Labs Corp. $145 $147 $20 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aICC International Cannabis $144 $144 $0 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aNational Access Cannabis Corp. $129 $129 $4 $2 32% n/a n/a n/a n/a n/a n/a n/a n/aValens Groworks Corp. $128 $128 $3 $0 nmf $3 $54 $93 -$5 $24 $42 5.2x 3.1xInMed Pharmaceuticals Inc. $94 $94 $24 $0 nmf n/a n/a n/a -$6 -$10 n/a nmf n/aIsodiol International Inc. $67 $67 $12 $37 82% $35 $60 n/a -$9 $8 n/a 8.2x n/aCTT Pharmaceutical Holdings $40 $40 $0 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aLift & Co. Corp. $31 $32 $1 $9 130% n/a n/a n/a n/a n/a n/a n/a n/aInternational Cannabrands Inc. $29 $30 $0 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aRISE Life Science Corp. $9 $11 $1 $1 nmf n/a n/a n/a n/a n/a n/a n/a n/aMedian $4 32% 8.2x 5.9xMean $14 46% 8.9x 5.9x

Investment CompaniesCanopy Rivers Inc. $740 $740 $20 $0 nmf n/a $38 $84 n/a $6 $8 128.2x 97.7xAuxly Cannabis Group Inc. $541 $634 $296 $0 nmf $7 $165 $569 -$22 $35 $204 18.0x 3.1xOrigin House $422 $423 $16 $14 372% $41 $159 $278 $5 $23 $45 18.6x 9.5xCannex Capital Holdings Inc. $103 $112 $15 $12 97% n/a $33 n/a n/a $20 n/a 5.5x n/aTidal Royalty Corp. $43 $44 $34 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aCannabis Growth Opportunity $22 $22 $0 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aFinCanna Capital Corp. $19 $19 $6 $0 nmf n/a n/a n/a n/a n/a n/a n/a n/aMedian $16 234% 18.3x 9.5xMean $55 234% 42.6x 36.8x

Source: Capital IQ. Data as of October 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.

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CANNABIS QUARTERLY UPDATE Q3 2018 - MNP LLP Library/mnp/pdf/CORP Corp... · changes begin to settle down. The industry is expected to benefit from substantial pent-up demand for recreational