Overview September, 2018

Transcription

1 Overview September, 2018 A preliminary prospectus (the Prospectus ) containing important information relating to the securities described in this document has been filed with the securities regulatory authorities in each of the provinces and territories of Canada except Québec. A copy of the Prospectus, and any amendment, is required to be delivered with this document. The Prospectus is still subject to completion. There will not any sale or any acceptance of an offer to buy the securities until a receipt for the final prospectus has been issued. This document, dated July 16, 2018, does not provide full disclosure of all material facts relating to the securities offered. Investors should read the Prospectus, the final prospectus and any amendments for disclosure of those facts, especially risk factors relating to the securities offered, before making an investment decision.

2 Disclaimer The presented materials and accompanying oral presentation may constitute forward-looking information within the meaning of Canadian securities laws and are based on expectations, estimates and projections as of the date of this presentation. Forward-looking statements include, without limitation, statements with respect to: a) the completion of the Offering and receipt of all regulatory approvals in connection therewith; b) the use of the net proceeds of the Offering; c) the availability of investment opportunities; d) the performance of the Corporation s business and operations; e) applicable laws, regulations and any amendments thereof including, but not limited to, the legalization of adult use of cannabis and the timing thereto; f) the competitive and business strategies of the Corporation; g) statements related to the effect and consequences of certain regulatory initiatives; h) the expected growth of the cannabis sector; i) the competitive conditions of the industry; j) the Corporation s investments in the U.S. and consequences of those investments under U.S. federal law; and k) the anticipated changes to laws regarding the recreational use of cannabis and the business impacts on the Corporation s investments. Forward-looking statements are based upon management s perceptions of historical trends, current conditions and expected future developments, as well as a number of specific factors and assumptions that, while considered reasonable by management as of the date on which the statements are made in this presentation, are inherently subject to significant business, economic and competitive uncertainties and contingencies which could result in the forward-looking statements ultimately being incorrect. In addition to the various factors and assumptions set forth in this presentation, the material factors and assumptions used to develop the forward-looking information include, but are not limited to: general economic, financial market, regulatory and political conditions in which the Corporation operates; the Corporation will be able to compete in the industry; the Corporation will be able to make investments on suitable terms; issuers in the Portfolio will be able to meet their objectives and financial estimates and that the risk factors noted below, collectively, do not have a material impact on the Corporation. By its nature, forward-looking information is subject to inherent risks and uncertainties that may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, that assumptions may not be correct and that objectives, strategic goals and priorities will not be achieved. Known and unknown risk factors, many of which are beyond the control of the Corporation could cause actual results to differ materially from the forward-looking information in this presentation. Such factors, without limitation, include the following, (which are discussed in greater detail in the Risk Factors section of the Prospectus and the Risk Factors section of the IPO Prospectus): assurance that the Corporation will be able to achieve its investment objectives; discretion in the use of proceeds; additional financing; risk factors related to dilution; risk factors related to investments in the United States; investments may be pre-revenue; private companies and illiquid securities; limited operating history; competition; resale of securities; regulatory risks; risks relating to the performance of the Portfolio issuersand the valuation of the portfolio; risks relating to recent and future global financial developments; industry concentration risks; changes to the cannabis laws; United States anti-money laundering laws and regulations; sensitivity to interest rates and currency exposure risks; reliance on the Manager and Investment Manager; conflicts of interest; risks related to dilution; loss of investment; risks relating to foreign market exposure. These risk factors are not intended to represent a complete list of the factors that could affect the Corporation and investors are cautioned to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking statements. The Corporation disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, or to explain any material difference between subsequent actual events and such forward-looking statements, except to the extent required by applicable law. Terms undefined herein have the meanings ascribed to them in the Prospectus. An investor should rely only on the information contained in the Prospectus. This presentation is qualified in its entirety by reference to, and must be read in conjunction with, the detailed information appearing in the Prospectus. Neither the Corporation nor the Agent have authorized anyone to provide investors with different or additional information. The Corporation is not offering, or soliciting offers to acquire, the securities in any jurisdiction in which the offer is not permitted. For purchasers outside Canada, neither the Corporation nor the Agent have done anything that would permit the offering or distribution of this presentation together with the Prospectus in any jurisdiction where action for that purpose is required, other than in Canada. An investor is required to inform itself about and to observe any restrictions relating to the planned public offering and the distribution of this presentation and of the Prospectus. No securities regulatory authority has expressed an opinion about the securities of the Corporation discussed in this presentation and it is an offence to claim otherwise. The securities of the Corporation discussed in this presentation have not been, and will not be, registered under the U.S. Securities Act, or the securities laws of any state of the United States and, subject to certain exceptions, may not be offered, sold or delivered, directly or indirectly, in the United States except pursuant to an exemption from the registration requirements of the U.S. Securities Act and applicable state securities laws. This presentation does not constitute an offer to sell or solicitation of an offer to buy any of the securities of the Trust in the United States. An investment in the securities offered by the Prospectus must be considered speculative as the securities are subject to certain risk factors as set out under the heading Risk Factors in the Prospectus or IPO process or otherwise described in the Prospectus or IPO Prospectus. An investment in Units of the Corporation is appropriate only for investors who have the capacity to absorb a loss of some or all of their investment. Investors should also review the financial statements incorporated by reference in the Prospectus. 2

3 Our Value Proposition Creating an Opportunity for Long-term Cannabis Investing with Reduced Risk CGOC s qualified group of advisors have the knowledge and experience to conduct sound research and due diligence before making any investment decision Exposure to publicly traded companies in both Canada and the US Unique exposure to the private US Cannabis sector the future of legalization will drive growth Ability to invest globally and be a first mover in the global emerging markets Ultimately this diversification results in less volatility and ability to invest across the broad spectrum of Cannabis companies from producers to retails, and everything in between cgocorp.com 3

4 The CGOC Team Experienced leadership and operational team Jamie Blundell Director, President & COO Paul Andersen, CPA, CA Director & CFO Bruce Campbell CIO Nick J. Richards Independent Director Brayden Sutton Independent Director John Durfy Independent Director Gary Yeoman Independent Director 25+ years of experience in senior leadership roles, extensive experience with M&A, private equity firms and large corporate divestitures. Over 20 years of experience as a senior officer and/or director of numerous public and private. Cannabisspecific experience and currently serves as director of Canada House Wellness Group Inc., and has worked as a consultant with a privately owned Oregon-based cannabis company. 24+ years of investment management experience and an active cannabis investor since Founder and Portfolio Manager of StoneCastle Investment Management. A go to professional in the space from media such as Bloomberg, The Globe and Mail and Small Cap Power. Practicing tax attorney, adjunct professor of law and legal specialist to the United States cannabis industry, advising businesses and owners throughout the U.S., and is licensed to practice law in California and Colorado. Co-founded and served as EVP for Supreme Pharmaceuticals from and played an instrumental role in the early days of Invictus MD Strategies Corp., Aurora Cannabis Inc. and CannaRoyalty Corp. Throughout his career, Mr. Sutton has played a major role in restructurings, reverse takeovers, IPOs and M&As 25+ years of senior investment and financial management experience. Previously CIO at a hedge fund and prior to that, Managing Director of Global Equities for the Ontario Municipal Employees Retirement System ( OMERS ) from From 2005 to 2011, Mr. Yeoman served as the CEO of Altus Group, and led the company through a sevenyear growth period. Currently Chairman of the board of Golden Leaf Holdings and Executive Chair of ilookabout. cgocorp.com 4

5 Valuation & Performance CGOC: Performance Over Time Historical performance shows CGOC NAV limiting volatility, while growing % $2.75 $2.50 $2.50 $2.66 $2.44 $2.25 $2.00 $2.32 $2.27 $1.88 $2.28 $ % discount (SP vs NAV) $1.75 $1.57 $1.65 $1.50 Jan 26 Jun 1 Jul 3 Aug 13 Sep 4 CGOC NAV CGOC Share Price cgocorp.com 5

6 The Cannabis Industry Opportunity Canada leading a unique value-creation opportunity Canadian Market By 2025, Canadian Cannabis market is forecasted to be on par with the size of beer & tobacco today. (1) 2018 est. $1.4B (2) 8.6x over 7 years 2025 proj. $12B+ (2) US Market While the current regulatory environment remains challenging, change is happening fast. New research estimates suggest increasing long-term industry potential. Canada in the Global Market Canadian companies and investors have tremendous opportunities globally, given Canada s current position as a change leader in the global industry $5.9B 9.7x over 11 years (1) Source: Eight Capital (2) Source: Latest Research reports from Cowen and Company (3) Source: Arcview 2027 proj. $57B (3) Canada leading the world ACMPR legislation becoming a standard framework globally Canadian companies expanding globally: 14 companies expanding across 13 markets Global medical market growth: +21% CAGR (3) cgocorp.com 6

7 The Cannabis Industry Opportunity Investing across the whole ecosystem multiplies the potential $12B Canadian Cannabis industry estimate based on base market business models: cultivation and extraction shown below in dark green (1) The whole ecosystem projected to reach $23B, after factoring in ancillary services shown below (2) Suppliers Production Seeds, fertilizers, etc. Production equipment, security & infrastructure Software Cultivation Extraction Research and development Analytical equipment & services Consumer Products Retail and Distribution Flower and oil extracts Edibles, tinctures, topicals, infused etc. Delivery Systems (vaporizers, pipes, rolling papers, etc.) Apparel Online / ecommerce Stores, consumption locations Packaging & distribution Business, regulatory, legal, etc. Services Cannabinoid Therapeutics Finance Real Estate Hemp Capital, Buildings, Marketing Pharmaceuticals Nutraceuticals Fiber, seeds, food structuring equipment (1) Source: Latest Research reports from Cowen and Company (2) Source: Deloitte Traditional Industry CGOC has also invested in cgocorp.com 7

8 Future catalysts for the evolving cannabis industry Canada M&A Supply agreements / retail distribution October 17 = supply / demand imbalance Regulation on extracted products Investment by pharma / alcohol / tobacco companies United States M&A Continued public offerings Additional state legislation Mid-term elections International Supply agreements Medical program adoption Canadian partnerships cgocorp.com 8

9 The Cannabis Industry Challenge An early, volatile and complex industry In order to effectively manage risk requires dedicated experts actively managing a diversified portfolio cgocorp.com 9

10 The CGOC Difference The Cannabis Growth Opportunity Corporation Access to the expertise and focus needed to build and grow an international portfolio of public and private investments to minimize downside risk, while participating in the longterm upside. A portfolio of Public Cannabis Businesses Diversified to minimize downside Actively managed Global focus ~60% of invested capital A portfolio of Private Cannabis Businesses Unique access Global focus Target month liquidity ~40% of invested capital cgocorp.com 10

11 CGOC Network Effect Creating value that results in proprietary deal flow Gain access to private investments Investors Gain access to professionally managed diversified portfolio Gain name exposure to public markets Private Co s Gain strategic advisory from CGOC CGOC Partnerships and M&A opportunities Gain exposure to more sophisticated institutional shareholders Public Co s cgocorp.com 11

12 US Investments CGOC: your gateway to the US cannabis market Unique access to private US Cannabis investment opportunities Strong industry connections providing proprietary deal flow CGOC Network Effect in full force south of the border Private US Investments 8 investments across 18 states 7 investments across 7 states in pipeline cgocorp.com 12

13 Portfolio Breakdown CGOC helps bring access to key investments in Canada, USA and International markets, driven by its private portfolio. Breakdown of Portfolio* Geographical Breakdown of Public and Private Portfolios 4% Public Portfolio 0% Private Portfolio 4% 56% 40% 22% 38% 58% 78% Cash Private Portfolio Public Portfolio *Portfolio breakdown at cost cgocorp.com 13

14 US Cannabis Market Legalization history overview cgocorp.com 14

15 Performance To Date CGOC strategy has resulted in portfolio gains through industry volatility. NAV increase of % since inception on January 26 th. Value Change Since CGOC Inception (Jan 26 at close) MJJ* MJ Opportunities SEED* Evolve MJ ETF HMJR* Horizons Emerging MJ NAMMAR NA MJ Index HMMJ Horizons MJ Life Sciences WEED Canopy Growth Corporation APH Aphria Inc ACB Aurora Cannabis Inc CGOC NAV** 96.15% 30.00% 10.60% 12.59% 0.18% -2.61% % -7.99% *MJJ from February 1, 2018, HMJR from February 14, 2018, SEED from February 12, 2018, **Jan 26 starting NAV after agents fee $ % cgocorp.com 15

16 Public Portfolio Diversified across ecosystem Strategy for public portfolio construction is to actively manage and diversify in three ways: by geography, by sub-sector and by company. Diversification Strategy Cultivation & Beyond Canopy Growth Hexo Organigram Canntrust Specialty LPs James E Wagner Indiva Charlotte s Web Namaste Retail Focused Solo Cannabis Ravenquest Planet 13 Vertical Integration / Multi-State Green Thumb Industries C21 Sunniva Vivo Cannabis Harvest One Testing and Extraction Valens Groworks Friday Night Cannex Canada and United States cgocorp.com 16

17 Top 10 Public Investments A diversified portfolio of public companies focused on maximizing longterm growth USA // CXXI Acquisitions of vertical operations Canada // WEED Global market leader Canada // NDVA Niche producer with strain experience Canada // HEXO Low Cost High Margin Canada // OGI East Coast leader / internationally expanding USA // SNN Nevada vertical integration and super dispensary Canada // HEXO Canadian Retail USA // SNN Low-cost producer, pharma and production experience Canada // VGW Extraction & testing Canada // VIVO Pharma and Rec Canada cgocorp.com 17

18 Private Portfolio Diversified portfolio focused on mid to late stage pre IPO s across the value chain, including US/International investments Delivering long-term growth opportunities USA California Medical Cannabis USA Multi-state medical cannabis USA Cannabis extraction Canada & USA Cannabis healthcare technology Canada Medical cannabis producer USA Vertically integrated cannabis company Canada Organic medical cannabis producer Israel Medical cannabis producer Canada & USA Active investments in U.S. cannabis Jamaica Low cost and energy efficient producer Canada Retail, distribution, manufacturing, innovation USA Artisan cannabis chocolate bars Canada & USA Vertical producer focused on wellness cgocorp.com 18

19 Private Portfolio Successes Private portfolio investments already producing valuation increases due to further funding and liquidity events Acquired 55% ROI in 3 months Raised a subsequent round of funding 35% markup Now traded publicly Now traded publicly Now traded publicly Now traded publicly Two Subsequent Raise s cgocorp.com 19

20 Coming Up Special Shareholders Meeting Record date September 14, 2018 Meeting date October 15, 2018 Positive Changes Proposed to Corporation Structure Removing the investment restrictions will allow: More flexibility in managing the business Enable more US private investments Why are the US private investments so important? They offer greater upside in the long-term cgocorp.com 20

21 A Changing Environment Keeping up to date on a fast changing environment on the regulatory as well as investor sentiment side We stay in the know! Rapid regulatory change (local & global) Implication Key investing behaviors required to succeed: Active management, access to privates, timing investments US market attractiveness increasing Reasons Experienced operators + meaningful REV & EBITDA US capital is starting to increase rapidly Implication Need to focus & actively invest in US privates Privates need help navigating capital markets CGOC network effect working Implication Continue to focus and build capabilities to help privates access, navigate and succeed with the capital markets and M&A opportunities Implication Continue to connect investors, publics and privates and drive the CGOC network effect: trust cgocorp.com 21

22 Use of Proceeds Highlights From The CGOC Private Investment Pipeline A number of private pipeline opportunities Focus Medical / recreational & vertically integrated Location UNITED STATES Medical & vertically integrated UNITED STATES Recreational & vertically integrated UNITED STATES Cultivation & Nursery UNITED STATES Software & decision support platform CANADA & UNITED STATES cgocorp.com 22

23 Summary NAV continues to trend well Remain undervalued with a -32% discount to NAV Several US privates in the pipeline Private holding liquidity events Positive changes to the Corporation structure cgocorp.com 23

24 Delivering long-term returns in cannabis investing through public and private diversification